UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 10-K
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| (Mark One) | |
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2025 |
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Commission File Number: 001-31911
American National Group Inc.
(Exact name of registrant as specified in its charter)
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Delaware | 42-1447959 |
| (State or other jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
One Moody Plaza
Galveston, Texas, 77550
(Address of principal executive offices, including zip code)
(888) 221-1234
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Depositary Shares, each representing a 1/1,000th interest in a share of 7.375% Fixed-Rate Non-Cumulative Preferred Stock, Series D | | ANGpD | | New York Stock Exchange |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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| Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☐ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No x
As of March 27, 2026, 10,000 shares of our common shares were outstanding, all of which are held by Brookfield Wealth Solutions Ltd. and its affiliates.
American National Group Inc. meets the conditions set forth in General Instruction (I)(1)(a) and (b) for Form 10-K and therefore is filing this Form 10-K in the reduced disclosure format.
AMERICAN NATIONAL GROUP INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
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| Exhibit 23.1 | Consent of Independent Registered Public Accounting Firm | |
| Exhibit 31.1 | Certification | |
| Exhibit 31.2 | Certification | |
| Exhibit 32.1 | Certification | |
| Exhibit 32.2 | Certification | |
PART I
Item 1. Business
Introduction
American National Group Inc., together with its subsidiaries (collectively, “ANGI”, “we”, “our”, “us”, or the “Company”), is focused on being a source of certainty for individuals and institutions through a range of insurance and retirement services. Our business is presently conducted through our subsidiaries under two operating segments, which we refer to as our Annuities and Life Insurance segments. We conduct our business in 50 states, the District of Columbia, Bermuda, Guam, and Puerto Rico. Throughout this report, unless otherwise specified or the context otherwise requires, all references to "ANGI", the "Company", "we", "our" and similar references are to American National Group Inc. and its consolidated subsidiaries.
On May 2, 2024, the Company's predecessor, American Equity Investment Life Holding Company, an Iowa corporation ("AEL" or "American Equity") merged with and into Arches Merger Sub Inc., an indirect wholly-owned subsidiary of Brookfield Wealth Solutions Ltd. ("Brookfield Wealth Solutions"), with AEL surviving and becoming an indirect wholly-owned subsidiary of Brookfield Wealth Solutions (the "Merger"). In connection with the Merger, each issued and outstanding share of AEL's common stock was converted into the right to receive cash and class A limited voting shares of Brookfield Asset Management Ltd. (“BAM”). On May 7, 2024, American National Group, LLC, an indirect, wholly-owned subsidiary of Brookfield Wealth Solutions (“American National”), merged with and into AEL, with AEL surviving as an indirect, wholly-owned subsidiary of Brookfield Wealth Solutions (the "Post-Effective Merger"). Subsequently, AEL discontinued its existence as an Iowa corporation and continued its existence as a corporation incorporated in the State of Delaware (the "Reincorporation"). In connection with the Reincorporation, AEL changed its name to American National Group Inc. ANGI is an indirect, wholly-owned subsidiary of Brookfield Wealth Solutions. On September 4, 2024, Brookfield Wealth Solutions changed its name from Brookfield Reinsurance Ltd. to Brookfield Wealth Solutions Ltd. and, on September 6, 2024, changed its trading symbol from “BNRE” to “BNT”.
As a result of the Post-Effective Merger, the consolidated financial statements for the periods prior to the Post-Effective Merger represent the results of American National as the accounting acquirer. For periods subsequent to the Post-Effective Merger, the consolidated financial statements represent the combined results of American National and AEL.
On October 1, 2025, the Company completed the transfer of all of its property and casualty subsidiaries, including American National Property And Casualty Company, United Farm Family Insurance Company and Farm Family Casualty Insurance Company and their wholly owned subsidiaries (collectively, the “P&C Subsidiaries”) to Argo Group International Holdings, Inc., which was subsequently renamed to Clearbrook Group Holdings Inc. (“Clearbrook”). Clearbrook and the Company are both wholly-owned subsidiaries of Brookfield Wealth Solutions Ltd. Amounts in the financial statements and notes thereto have been retrospectively adjusted and reported as discontinued operations. Refer to Note 28 - Discontinued Operations in the notes to the consolidated financial statements for more information.
Products
Annuities
Our Annuities business includes both retail and institutional annuities and is operated through our insurance subsidiaries. Our primary insurance products and coverages are as follows:
Fixed Index Annuities – Fixed index annuities allow policyholders to earn index credits based on the performance of a particular index without the risk of loss of their account value. Certain products offer a premium bonus in which the initial annuity deposit on these policies is increased at issuance by a specified premium bonus rate. Generally, the surrender charge and bonus vesting provisions of our policies are structured such that we have comparable protection from early termination between bonus and non-bonus products. The annuity contract value is equal to the sum of premiums paid, premium bonuses and interest credited (“index credits” for funds allocated to an index based strategy), which is based upon an overall limit (or “cap”) or a percentage (the “participation rate”) of the appreciation (based in certain situations on monthly averages or monthly point-to-point calculations) in a recognized index or benchmark. Caps and participation rates limit the amount of interest the policyholder may earn in any one contract year and may be adjusted by us annually subject to stated minimums.
Fixed Rate Annuities – Fixed rate deferred annuities include annual, multi-year rate guaranteed products (“MYGAs”) and single premium deferred annuities (“SPDAs”). Our annual reset fixed rate annuities have an annual interest rate (the “crediting rate”) that is guaranteed for the first policy year. After the first policy year, we have the discretionary ability to change the crediting rate once annually to any rate at or above a guaranteed minimum rate. Our MYGAs and SPDAs are similar to our annual reset products except that the initial crediting rates on MYGAs and SPDAs are guaranteed for stated periods of time before they may be changed at our discretion.
Pension Risk Transfer – Pension risk transfer is the transfer by a corporate sponsor of the risks, or some of the risks, associated with the sponsorship and administration of a pension plan, in particular, investment risk and longevity risk. Longevity risk represents the risk of an increase in life expectancy of plan beneficiaries. These risks can be transferred either to an insurer like us through a group annuity transaction commonly referred to as PRT, or to an individual through a lump-sum settlement payment. PRT using insurance typically involves a single premium group annuity contract that is issued to a pension plan by an insurer, permitting the corporate pension plan sponsor to discharge certain pension plan liabilities from its balance sheet.
Funding Agreements - Funding agreements include those issued to a special-purpose unaffiliated trust in connection with our funding agreement-backed note (“FABN”) program and those directly issued to our institutional counterparties. Our FABN program allows American National Global Funding, a Delaware statutory trust, to offer its senior secured medium-term notes. The net proceeds of the issuance of notes are used by the trust to purchase one or more funding agreements from certain of our insurance subsidiaries with matching interest and maturity payment terms.
Single Premium Immediate Annuities – A single premium immediate annuity is purchased with one premium payment, providing periodic (usually monthly or annual) payments to the annuitant for a specified period, such as for the remainder of the annuitant’s life. Return of the original deposit may or may not be guaranteed, depending on the terms of the annuity contract.
Our annuities segment reported total revenues of $7.2 billion for the year ended December 31, 2025, $6.8 billion for the year ended December 31, 2024, and $2.0 billion for the year ended December 31, 2023, respectively.
Life Insurance
Our Life business is operated through our insurance subsidiaries. Our primary insurance products and coverages are as follows:
Whole Life – Whole life products provide a guaranteed benefit upon the death of the insured in return for the periodic payment of a fixed premium over a predetermined period. Premium payments may be required for the entire life of the contract, to a specified age or a fixed number of years, and may be level or change in accordance with a predetermined schedule. Whole life insurance includes some policies that provide a participation feature in the form of dividends. Policyholders may receive dividends in cash or apply them to increase death benefits or cash values available upon surrender, or reduce the premiums required to maintain the contract in-force.
Universal Life – Universal life insurance products provide coverage through a contract that gives the policyholder flexibility in premium payments and coverage amounts. Universal life products may allow the policyholder, within certain limits, to increase or decrease the amount of death benefit coverage over the term of the contract and to adjust the frequency and amount of premium payments. Universal life products are interest rate sensitive, and we determine the interest crediting rates during the contract period, subject to policy specific minimums. An equity-indexed universal life product is credited with interest using a return that is based, in part, on changes in an index, such as the Standard & Poor’s 500 Index (“S&P 500”), subject to a specified minimum.
Variable Universal Life – Variable universal life products provide insurance coverage on a similar basis as universal life, except that the policyholder bears the investment risk because the value of the policyholder’s account balance varies with the investment experience of the securities selected by the policyholder held in the separate account.
The Company’s insurance subsidiaries ceased offering new life insurance policies through its multiple-line and independent agent distribution channels effective May 31, 2025, however, certain life insurance products continue to be offered through its career agent distribution channel.
Our Life Insurance segment reported total revenues of $603 million for the year ended December 31, 2025, $1.0 billion for the year ended December 31, 2024, and $1.2 billion for the year ended December 31, 2023, respectively.
Investment Strategy
Our ability to match liabilities with a portfolio of high-quality investments is integral to our overall strategy. Our loan portfolio consists of both fixed and variable rate notes with borrowers across diverse geographical locations and property types. Generally, mortgage loans are collateralized by the related property. Please refer to Note 5 - Mortgage Loans on Real Estate and Note 6 - Private Loans in the notes to the consolidated financial statements for additional information on our mortgage and private loan portfolios. We leverage our strategic relationship with Brookfield Asset Management Ltd. (“BAM”) in order to gain access to higher-yielding alternative assets that are well-matched to our liabilities and in turn earn attractive risk-adjusted returns within our business.
BAM is a leading global alternative asset manager with over $1 trillion of assets under management across renewable power and transition infrastructure, private equity, real estate and credit. It invests client capital for the long-term with a focus on real assets and essential service businesses that form the backbone of the global economy. It offers a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. It draws on Brookfield’s heritage as an owner and operator to invest for value and seeks to generate strong returns for its clients, across economic cycles.
BAM provides certain of our insurance subsidiaries with a full suite of services relating to our investment portfolios, including direct investment management, asset allocation and portfolio optimization, direct origination and investment structuring and various associated support services including investment compliance, accounting, reporting, tax and legal. We receive these services from BAM under the terms of the Investment Management Agreements between a BAM subsidiary and our participating insurance subsidiaries.
In sourcing investment opportunities for our company, BAM takes into consideration the unique characteristics of our business, including the nature of our liabilities, our overall risk tolerance and the macroeconomic environment in which we operate. In its capacity as investment manager, BAM is bound at all times by the investment guidelines attaching to our various investment accounts, which are set by our insurance companies in consideration of the specific legal, contractual, commercial and regulatory requirements of such accounts in addition to our overall investment objectives.
Competition
The insurance industry is highly regulated. As a result, it can be difficult for insurance companies to differentiate their products, which results in a highly competitive market based largely on price and the customer experience. Our business faces competition from both well established competitors and new entrants in the industry, including insurance and reinsurance companies, financial institutions and traditional and alternative asset managers.
Across our annuities and life insurance businesses where we directly underwrite various insurance policies and coverages, competition may come from both large international carriers and smaller regional carriers in the jurisdictions in which we operate. Strong competition for customers from such firms has led to increased marketing and advertising by our competitors, many of whom have well-established national reputations and greater financial and marketing resources, as well as the introduction of new insurance products and aggressive pricing. These competitive pressures could result in increased pricing pressures on a number of our products and services, particularly as competitors seek to win market share, and may limit our ability to maintain or increase our profitability. Because of its relatively low cost of entry, the digital marketplace has emerged as a prominent arena for new competition, both from existing competitors and new entrants. In addition, product development and life-cycles have shortened in many product segments, leading to intense competition with respect to product features.
There is also growing competition in the pursuit of inorganic growth through investments and/or strategic partnerships in insurers and reinsurers. Overall, we face competition from other well-capitalized insurance companies, financial institutions and alternative asset managers looking to grow through direct investment and platform acquisitions.
Financial Strength and Credit Ratings
Financial strength and credit ratings are an important competitive factor in the insurance and reinsurance industries. They directly affect our company’s ability to access funding and the related cost of borrowing, the attractiveness of our products to customers and requirements for derivatives collateral posting. Ratings are subject to revision or withdrawal at any time by the assigning rating organization. Ratings are not a recommendation to buy, sell or hold securities, and each rating should be evaluated independently of any other rating.
Financial strength ratings are directed toward policyholders and not holders of securities. Financial strength ratings represent the opinion of rating organizations regarding the ability of an insurance company to pay obligations under insurance policies and contracts in accordance with their terms.
Credit ratings indicate the rating organization’s opinion regarding a debt issuer’s ability to meet the terms of debt obligations in a timely manner. They are important factors in our overall funding profile and ability to access certain types of liquidity. Each rating organization has its own capital adequacy evaluation methodology, and assessments are generally based on a combination of factors. In addition to heightening the level of scrutiny that they apply to insurance companies, rating organizations have increased and may continue to increase the frequency and scope of their credit reviews, may request additional information from the companies that they rate and may change the capital and other requirements employed in the rating organization models for maintenance of certain ratings levels.
Rating organizations use an “outlook statement” of “positive,” “stable,” “negative” or “developing” to indicate a medium- or long-term trend in credit fundamentals which, if continued, may lead to a rating change. A rating may have a “stable” outlook to indicate that the rating is not expected to change; however, a “stable” rating does not preclude a rating organization from changing a rating at any time, without notice. Certain rating organizations assign rating modifiers such as “credit watch” or “under review” to indicate their opinion regarding the potential direction of a rating. These ratings modifiers are generally assigned in connection with certain events such as potential mergers, acquisitions, dispositions or material changes in a company’s results, in order for the rating agency to perform its analysis to fully determine the rating implications of the event.
A.M. Best’s Financial Strength Ratings range from “A++” (Superior) to “D” (Poor) and include 13 separate ratings categories. A.M. Best’s Long-Term Issuer Credit Ratings range from “aaa” (Exceptional) to “c” (Poor) and include 21 separate ratings categories. As of December 31, 2025, A.M. Best had issued credit or financial strength ratings and outlook statements regarding us as follows:
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| Company | Financial Strength Rating | Issuer Credit Rating | Outlook |
American Equity Investment Life Insurance Company | A (3rd of 13) | a (6th of 21) | Stable |
| American National Insurance Company | A (3rd of 13) | a (6th of 21) | Stable |
Eagle Life Insurance Company | A (3rd of 13) | a (6th of 21) | Stable |
| American National Life Insurance Company of New York | A (3rd of 13) | a (6th of 21) | Stable |
American Equity Investment Life Insurance Company of New York | A (3rd of 13) | a (6th of 21) | Stable |
| American National Life Insurance Company of Texas | A (3rd of 13) | a (6th of 21) | Stable |
Garden State Life Insurance Company | Au (3rd of 13) | a (6th of 21) | Developing |
Fitch’s Financial Strength Ratings range from “AAA” (Exceptionally Strong) to “C” (Distressed) and include 22 separate ratings categories. Fitch’s Issuer Default Ratings and Issue Credit Ratings range from “AAA” (Highest Credit Quality) to “D” (Default) and include 22 separate ratings categories. As of December 31, 2025, Fitch Ratings had issued credit or financial strength ratings and outlook statements regarding us as follows:
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| Company | Financial
Strength Rating | Issuer
Default Rating | Issue Credit Rating | Outlook |
American Equity Investment Life Insurance Company | A (6th of 22) | - | - | Stable |
| American National Insurance Company | A (6th of 22) | - | - | Stable |
Eagle Life Insurance Company | A (6th of 22) | - | - | Stable |
| American National Life Insurance Company of New York | A (6th of 22) | - | - | Stable |
American Equity Investment Life Insurance Company of New York | A (6th of 22) | - | - | Stable |
| American National Group Inc. | - | BBB+ (8th of 22) | - | Stable |
| American National Group Inc.: | | | | |
| — Senior Unsecured Notes | - | - | BBB (9th of 22) | - |
| — Preferred Stock | - | - | BB+ (11th of 22) | - |
| — Subordinated Notes | - | - | BB+ (11th of 22) | - |
| American National Global Funding: | | | | |
| — Senior Secured Notes | - | - | A (6th of 22) | - |
S&P’s Insurer Financial Strength Ratings range from “AAA” (Extremely Strong) to “D” (Default) and include 21 separate ratings categories. S&P’s Long-term Issuer Credit Ratings range from “AAA” (Investment Grade) to “D” (Default) and include 21 separate ratings categories. As of December 31, 2025, S&P Global Ratings had issued credit or financial strength ratings and outlook statements regarding us as follows:
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| Company | Financial Strength Rating | Issuer Default Rating | Issue Credit Rating | Outlook |
American Equity Investment Life Insurance Company | A (6th of 21) | A (6th of 21) | - | Stable |
| American National Insurance Company | A (6th of 21) | A (6th of 21) | - | Stable |
Eagle Life Insurance Company | A (6th of 21) | A (6th of 21) | - | Stable |
| American National Life Insurance Company of New York | A (6th of 21) | A (6th of 21) | - | Stable |
American Equity Life Insurance Company of New York | A (6th of 21) | A (6th of 21) | - | Stable |
| Freestone Re Ltd. | A (6th of 21) | A (6th of 21) | - | Stable |
| American National Group Inc. | - | BBB (9th of 21) | - | Stable |
American National Group Inc.: | | | | |
— Senior Unsecured Notes | - | - | BBB (9th of 21) | - |
— Preferred Stock | - | - | BB+ (11th of 21) | - |
— Subordinated Notes | - | - | BB+ (11th of 21) | - |
American National Global Funding: | | | | |
— Senior Secured Notes | - | - | A (6th of 21) | - |
Regulation
Our subsidiaries are subject to extensive regulation, primarily at the state level. Such regulation varies by state but generally has its source in statutes that establish requirements for the business of insurance and that grant broad regulatory authority to a state agency.
Insurance regulation governs a wide variety of matters including, without limitation:
•insurance company licensing;
•agent and adjuster licensing;
•policy benefits;
•price setting;
•accounting practices;
•product suitability;
•the payment of dividends;
•the nature and amount of investments;
•underwriting practices;
•reserve requirements;
•sales and advertising practices;
•privacy practices;
•information systems security;
•policy forms;
•reinsurance reserve requirements;
•risk and solvency assessments;
•mergers and acquisitions;
•corporate governance practices;
•capital adequacy and liquidity management;
•transactions with affiliates;
•participation in shared markets and guaranty associations;
•claims practices;
•the remittance of unclaimed property; and
•enterprise risk management requirements.
Other types of regulations that affect us include insurable interest laws, employee benefit plan laws, antitrust laws, employment and labor laws, and federal and state tax laws. Failure to comply with federal and state laws and regulations may result in censure; the issuance of cease-and-desist orders; reputational damage; suspension, termination or limitation of the activities of our operations and/or our employees and agents; or the obligation to pay fines, penalties, assessments, interest, or additional taxes and wages. In some cases, severe penalties may be imposed for breach of these laws. We cannot predict the impact of these actions on our business, results of operations or financial condition.
The models for state laws and regulations often emanate from the National Association of Insurance Commissioners (“NAIC”). While it is not mandatory for insurers to comply with an NAIC model law, nor for states to adopt a model law, state and federal legislators and regulators generally look to the model law for guidance in proposing new legislation and regulation.
State insurance departments monitor compliance with regulations through periodic reporting procedures and examinations. At any given time, financial, market conduct or other examinations of our U.S. subsidiaries may be occurring.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) expanded the U.S. federal government presence in insurance oversight. Dodd-Frank also established the Federal Insurance Office within the U.S. Department of Treasury, which is authorized to, among other things, gather data and information to monitor aspects of the insurance industry, identify certain issues in the regulation of insurers, and preempt state insurance measures under certain circumstances. Provisions of Dodd-Frank are or may become applicable to us, our competitors, or certain entities with which we do business. For example, Dodd-Frank has significantly increased regulations applicable to derivatives markets and transactions, including mandating certain transaction and regulatory reporting requirements, clearing through central counterparties and execution through regulated swap execution facilities for certain swaps, and margin and collateral requirements applicable to certain derivatives transactions. Increased regulation of derivatives markets and transactions has increased and could further increase the cost of our trading and hedging activities and reduce the availability of customized hedging and derivatives solutions. The Federal Insurance Office, as a result of various studies it conducts, may also recommend changes in laws or regulations that affect our business. There may be further federal involvement in the business of insurance in the future, which may add significant legal complexity and associated costs to our business.
Regulatory matters having the most significant effects on our insurance operations and related financial reporting are described further below.
Holding Company Regulation
We are an insurance holding company system under the insurance laws of the states where we do business. Our insurance companies are organized in multiple U.S. jurisdictions. Insurance holding company system laws and regulations in such states generally require periodic reporting to state insurance regulators of various business, enterprise risk management, corporate governance, and financial matters, as well as advance notice to, and in some cases approval by, such regulators prior to certain transactions between insurers and their affiliates. These laws also generally require regulatory approval prior to the acquisition of a controlling interest in an insurance company. These requirements may deter or delay certain transactions considered desirable by management or our stockholders.
Limitations on Dividends by Subsidiaries
The ability of our U.S. subsidiaries to pay dividends is generally limited by state law. This includes restrictions on certain of our subsidiaries’ ability to distribute cash to us, which may limit the movement of capital to us from certain subsidiaries.
Guaranty Associations
State laws allow insurers to be assessed, subject to prescribed limits, insurance guaranty fund fees to pay certain obligations of insolvent insurance companies.
Investment Regulation
Insurance company investment regulations require investment portfolio diversification and limit the amount of investment in certain asset categories. Failure to comply with these regulations leads to the treatment of non-conforming investments as non-admitted assets for measuring statutory surplus. In some instances, these rules require the sale of non-conforming investments.
Exiting Geographic Markets, Canceling and Non-Renewing Policies
Most states regulate an insurer’s ability to exit a market by limiting the ability to cancel and non-renew policies. Some states prohibit an insurer from withdrawing one or more types of insurance business from the state, except pursuant to an approved plan. These regulations may restrict our ability to exit unprofitable markets.
Statutory Accounting
Financial reports to state insurance regulators utilize statutory practices as defined in the Accounting Practices and Procedures Manual of the NAIC, which are different from U.S. GAAP. Statutory accounting practices, in keeping with the intent to assure the protection of policyholders, are generally based on a solvency concept, while financial statements under U.S. GAAP are prepared on a going-concern basis. While not a substitute for U.S. GAAP performance measures, statutory information is used by industry analysts and reporting sources to compare the performance of insurance companies and impacts the ability of subsidiaries to pay dividends to the Company. Maintaining both U.S. GAAP and statutory financial records increases our business costs.
Pursuant to state insurance laws, we establish statutory reserves, which are reported as liabilities in the separate standalone statutory-basis financial statements of our U.S. subsidiaries, and which generally differ from future policy benefits determined using U.S. GAAP on our respective policies. These statutory reserves are established in amounts sufficient to meet policy and contract obligations, when taken together with expected future premiums and interest at prescribed rates.
Insurance Reserves
State insurance laws require life insurers to annually analyze the adequacy of statutory reserves. Our appointed actuaries must submit opinions annually for our subsidiaries confirming that policyholder and claim reserves are adequate.
Risk-Based Capital and Solvency Requirements
The NAIC has a formula for analyzing capital levels of insurance companies called Risk-Based Capital (“RBC”). The RBC formula has minimum capital thresholds that vary with the size and mix of a company’s business and assets. It is designed to identify companies with capital levels that may require regulatory attention. As of December 31, 2025, the capital level of each of our U.S. subsidiaries exceeded their regulatory action levels.
Risk Management and ORSA
State insurance laws enacted in nearly all U.S. states require insurers that exceed specified premium thresholds to maintain a framework for managing the risks associated with their entire holding company group, including non-insurance companies. In addition, these laws require that, at least annually, the insurer must prepare a summary report (the “ORSA Report”) regarding its internal assessment of risk management, capital adequacy and liquidity management for the entire holding company group. The ORSA Report is filed, on a confidential basis, with the insurance holding company group’s lead regulator and made available to other domiciliary regulators within the holding company group.
Securities Regulation
The sale and administration of variable life insurance and variable annuities are subject to extensive regulation at the federal and state level, including by the United States Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”). Our variable annuity contracts and variable life insurance policies, other than group unallocated, were issued through separate accounts that are registered with the SEC as investment companies under the Investment Company Act of 1940. Each registered separate account is generally divided into sub-accounts, each of which invests in an underlying mutual fund that is itself a registered investment company under such act. Additionally, the variable annuity contracts and variable life insurance policies issued by the separate accounts generally are registered with the SEC under the Securities Act. In addition, two of our subsidiaries are registered with the SEC as broker-dealers under the Exchange Act and members of, and subject to regulation by, FINRA. The U.S. federal and state regulatory authorities and FINRA, from time to time, make inquiries and conduct examinations regarding our compliance with securities and other laws and regulations.
Suitability
FINRA rules require broker-dealers selling variable insurance products to determine that transactions in such products are “suitable” to the circumstances of the particular customer. In addition, most states have enacted the NAIC’s Suitability in Annuity Transactions Model Regulation that, in adopting states, places suitability responsibilities on insurance companies in the sale of fixed and indexed annuities, including responsibilities for training agents. The NAIC has adopted revisions to this model regulation that would further elevate the standard of care for annuity sales and align it with the SEC’s Regulation Best Interest. Several states have either adopted the model regulation or are considering adopting the model regulation. New York has already taken further action, through the adoption by the New York Department of Financial Services (“NYDFS”) of a regulation that requires in part that life insurance policies and annuity contracts delivered or issued for delivery in New York be in the best interest of the consumer.
Protection of Consumer Information
U.S. federal laws, such as the Gramm-Leach-Bliley Act (“GLB”), and state laws regulate disclosure of certain customer information and require us to protect the security and confidentiality of such information. Such laws also require us to notify customers about our policies and practices relating to the collection, protection and disclosure of confidential customer information. State and federal laws, such as the federal Health Insurance Portability and Accountability Act (“HIPAA”), regulate our use, protection and disclosure of certain protected health information. In addition, most states have laws or regulations that require us to notify regulators and affected customers in the event of a data breach, and some of these laws and regulations are becoming more stringent by requiring faster notifications and creating private causes of action for violations.
On June 28, 2018, California enacted a sweeping new privacy law known as the California Consumer Privacy Act of 2018 (“CCPA”). The CCPA requires enhanced consumer disclosure about how a business collects and uses personal data, how such data is used in business processes, and with and to whom consumer data is shared or sold. In addition, the CCPA also affords a consumer a “right to request deletion” in certain circumstances. On August 31, 2018, the California State Legislature passed SB-1121, a bill that delayed enforcement of the CCPA until July 1, 2020, and made other amendments and clarifications to the law. Such clarifications include exempting from certain requirements of the CCPA information that is collected, processed, sold or disclosed pursuant to the California Financial Information Privacy Act, GLB, the federal Fair Credit Reporting Act (“FCRA”), HIPAA, or the federal Driver’s Privacy Protection Act. The revisions, however, do not exempt such information from the CCPA’s private right of action provision in all instances. Additionally, the definition of “personal information” in the CCPA is broad and may encompass other information that we maintain in our California business beyond that excluded under GLB, FCRA, HIPAA, the Driver’s Privacy Protection Act, or the California Financial Information Privacy Act exemption. In addition, in November 2020, California enacted the Consumer Privacy Rights Act, which became effective as of January 1, 2023 and grants additional consumer rights regarding personal information and strengthens certain provisions of the CCPA. Other states have adopted comprehensive privacy laws like California, but most of these state laws include a GLB entity-level exemption. In light of this, we anticipate further efforts at the federal and state levels to strengthen the protection of consumer information, and such efforts will continue to have a significant impact on our information practices.
In addition, FCRA is a federal law that governs the use and sharing of consumer credit information provided by a consumer reporting agency. Requirements under FCRA apply to an insurer if such insurer obtains and uses consumer credit information to underwrite insurance or for employment purposes. Such requirements may include obtaining the consumer’s consent and providing various notices to the consumer. While the use of consumer credit information in the underwriting process is expressly authorized by FCRA, various states have issued regulations that limit or prohibit the use of consumer credit information by insurers, and some consumer groups continue to criticize the use of credit-based insurance scoring in underwriting and rating processes. There may be additional efforts at the federal or state level to regulate the use of consumer credit information by insurers. Any such regulation could force changes in our underwriting practices and impact our profitability.
Cybersecurity
In recent years, millions of consumers and businesses have been impacted by data breaches of companies in various industries, increasing the regulatory focus on consumer information protection and data privacy. On August 28, 2017, New York became the first state to adopt minimum cybersecurity standards for certain financial institutions. On November 1, 2023, NYDFS issued an amendment to the cybersecurity regulation, which included substantive changes to the initial requirements. NYDFS requires financial institutions authorized to do business under New York banking, insurance or other financial services laws, including certain of our subsidiaries, to develop and maintain a cybersecurity program and policy based on an assessment of the institution’s cybersecurity risks, designate a Chief Information Security Officer, maintain written policies and procedures with respect to third-party service providers, limit who has access to data or systems, use qualified cybersecurity personnel to manage cybersecurity risks, notify NYDFS of a cybersecurity event within 72 hours and of an extortion payment made in connection with a cybersecurity event within 24 hours, maintain a written incident response plan, and annually provide NYDFS with either a written certification of material compliance or a written acknowledgement of material non-compliance.
In addition, the NAIC has adopted the Cybersecurity Bill of Rights, a set of directives aimed at protecting consumer data, and the Insurance Data Security Model Law, a model law patterned after New York’s cybersecurity standards. The Insurance Data Security Model Law establishes standards for data security in the insurance industry, including standards for investigating a data breach and requiring certain notifications to regulators, producers and consumers. South Carolina became the first state to adopt the Insurance Data Security Model Law in May 2018. Since then, more states have adopted the model law in some form. In states that have not adopted the Insurance Data Security Model Law, it is not mandatory for insurers to comply with the model law; however, state and federal legislators and regulators are likely to look to the model law, as well as the NYDFS regulation, for guidance in proposing new legislation and regulation. The NAIC has also strengthened and enhanced the cybersecurity guidance included in its financial handbook for state insurance examiners. We expect a continuing focus at the state and federal levels on the privacy and security of personal information.
Additionally, on April 4, 2024, the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”) published a proposed rule, The Cyber Incident Reporting for Critical Infrastructure Act (“CIRCIA”) Reporting Requirements. The proposed rule is the first significant regulatory step of CISA’s implementation of CIRCIA since the law was enacted in March 2022 and includes broadly applicable reporting requirements for companies in certain sectors, including the financial services sector in which we operate, including a requirement that “substantial” cyber incidents be reported to CISA within 72 hours and ransom payments be reported to CISA within 24 hours. The final rule is expected to be published in May of 2026.
Anti-Money Laundering
Federal law and regulations require us to take certain steps to help prevent and detect money laundering activities. The USA PATRIOT Act of 2001 contains anti-money laundering and financial transparency requirements applicable to certain financial services companies, including insurance companies. The Bank Secrecy Act requires insurers to implement a risk-based compliance program to detect, deter and (in some cases) report financial or other illicit crimes including, but not limited to, money laundering and terrorist financing. The Office of Foreign Assets Control (“OFAC”) administers and enforces economic and trade sanctions. For certain transactions, an insurer may be required to search policyholder, agent, vendor and employee databases for specially designated nationals or suspected terrorists, in order to comply with OFAC obligations.
ERISA
We provide products and services to certain employee benefit plans that are subject to the Employee Retirement Income Security Act ("ERISA") and the Internal Revenue Code of 1986, as amended (the “Code”). ERISA and the Code impose restrictions, including fiduciary duties to perform solely in the interests of ERISA plan participants and beneficiaries, and to avoid certain prohibited transactions. The applicable provisions of ERISA and the Code are subject to enforcement by the U.S. Department of Labor (“DOL”), the Internal Revenue Service (“IRS”) and the Pension Benefit Guaranty Corporation.
The prohibited transaction rules of ERISA and the Code generally restrict the provision of investment advice to ERISA plans and participants and individual retirement accounts (“IRAs”) if the investment recommendation results in fees paid to an individual advisor, or to the firm (or its affiliates) that employs the advisor, that vary according to the investment recommendation chosen, unless an exemption or exception is available. Similarly, without an exemption or exception, fiduciary advisors are prohibited from receiving compensation from third parties in connection with their advice. ERISA also affects certain of our in-force insurance policies and annuity contracts, as well as insurance policies and annuity contracts we may sell in the future.
Heightened standards of conduct as a result of a fiduciary or best interest standard or other similar rules or regulations could increase the compliance and regulatory burdens on our sales representatives.
On April 23, 2024, DOL released changes to the rules determining when a person who makes a recommendation to someone responsible for the investment of the assets of an employee benefit plan or IRA is deemed to be a fiduciary for purposes of ERISA and the prohibited transaction provisions of section 4975 of the Code. The rule sought to significantly expand the instances when a person will be a fiduciary and would have affected all financial services companies that sell products to retirement plans and IRAs by rendering someone an ERISA fiduciary for a one-time recommendation to rollover assets from an employee benefit plan to an IRA. Two lawsuits were filed in federal district courts in Texas challenging the rule. In July 2024, both courts in those cases agreed to stay the effective dates of the rule, pending resolution of the cases. DOL initially appealed the stay orders to the 5th Circuit Court of Appeals, resulting in the pause of litigation activity. However, in March 2026, the DOL agreed to dismiss its appeal, and the district court vacated the rule in its entirety. We will continue to monitor developments for any further DOL activity with respect to this subject.
Pandemic and Public Health Related Conditions and Regulation
In the case of pandemics or public health crises, government, regulatory, business, and social reactions may have significant effects on our business and the conditions in which we operate. Actions taken by governments for disease control may disrupt distribution channels through which we sell our products, including independent agents and their clients, and depress economic activity that affects demands for our products. They may also materially affect our investment portfolio.
Environmental Laws and Regulations
We are subject to environmental laws and regulations as an owner and operator of real property, which can include liabilities and costs in connection with any required remediation of such properties. In addition, we hold equity interests in companies that could potentially be subject to environmental liabilities. We assess real estate we acquire for environmental exposure, but unexpected environmental liabilities may arise.
Climate change, and the need to develop regulatory tools to ensure that insurers are managing the potential associated financial risks, has come under scrutiny by state legislatures, federal regulators, the NAIC, state insurance regulators, such as NYDFS, and other state regulatory agencies. In 2020, the NAIC established a Climate and Resiliency Task Force to coordinate engagement on climate-related risk and resiliency issues. The Task Force has implemented the NAIC's annual Climate Risk Disclosure Survey and developed proposed enhancements to existing regulatory tools to address climate-related risks. Several states, including California, Minnesota, and Washington have required entities in their states to submit climate disclosure surveys. NYDFS also monitors insurer compliance by examining responses to the NAIC’s climate disclosure survey. Additionally, in April 2024, the NAIC adopted a new NAIC National Climate Resilience Strategy for Insurance which, among other goals, aims to collect data to help identify and close protection gaps and advocate for pre-disaster mitigation funding. We anticipate additional regulation is likely to develop in this area.
Bermuda Regulation
The Bermuda Monetary Authority regulates Bermuda's financial services sector, supervising, regulating and inspecting financial institutions operating in its jurisdiction. Bermuda’s regulations address matters such as fitness and adequate knowledge and expertise to engage in insurance, and impose solvency, auditing, reporting, and governance requirements. See Item 1A ''Risk Factors - Risks Relating to Regulation - The insurance regulatory framework and legislation enacted in Bermuda as to economic substance may affect our operations.'' See also Item 1A ''Risk Factors - Risks Relating to Taxation - The recently enacted Bermuda corporate income tax, or other changes in Bermuda tax laws, may impact the earnings and results from operations of our Bermuda affiliates.''
Item 1A. Risk Factors
The following summarizes some, but not all, of the risks provided below. Please carefully consider all of the information discussed in this Item 1A “Risk Factors” in this Form 10-K for a more thorough description of these and other risks.
If any of the following risks were actually to occur, our business, financial condition and results of operations would likely suffer:
•We make assumptions and estimates when underwriting insurance risks, and significant deviations from such assumptions and estimates could adversely affect our business, financial condition, results of operations, liquidity and cash flows.
•If we are unable to attract and retain independent marketing organization (“IMOs”), agents, banks and broker-dealers, sales of our insurance products may be adversely affected.
•A rating downgrade or the absence of a rating of us or any of our subsidiaries could adversely affect our existing business and our ability to compete for further business.
•If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risks or reduce the level of our underwriting commitments.
•If the counterparties to our reinsurance arrangements or to the derivatives we use to hedge our business risks default or fail to perform, we may be exposed to risks we had sought to mitigate, which could adversely affect our financial condition and results of operations.
•The insurance industry is highly competitive; competitive pressures may result in lower volumes of policies written, fewer insurance contracts underwritten, lower premium rates, increased expense for customer acquisition and retention and less favorable policy terms and conditions.
•Failure to maintain the security of our information and technology systems could have an adverse effect on our business.
•Compliance with laws and regulations governing the processing of personal data and information may impede our services or result in increased costs. The failure to comply with such data privacy laws and regulations could result in material fines or penalties imposed by data protection or financial services conduct regulators and/or awards of civil damages, and any data breach may have an adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.
•Compliance with existing and emerging rules and regulations governing the use of artificial intelligence (“AI”) and generative AI could result in increased compliance costs and/or lead to changes in business practices and policies, and challenges with properly managing the use of AI could result in reputational harm, competitive harm and legal liability.
•We may be unable to attract and retain key executives and skilled employees, and because our employees are located throughout the U.S., we may incur additional compliance and litigation costs that could adversely impact us.
•We may be unable to protect our intellectual property and may face infringement claims.
•We have incurred indebtedness and intend to incur additional indebtedness. We may not be able to generate sufficient cash flows from operations and our investments to service our indebtedness.
•Our debt and any future debt we incur may subject us or our subsidiaries to certain covenants that restrict our ability to engage in certain types of activities.
•We may require additional capital in the future, including to fund future growth, which may not be available or may only be available on unfavorable terms, including as a result of increasing barriers to free trade and the free flow of capital and fluctuations in the financial markets.
•We may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal processes or systems, or from external events.
•We are at risk of becoming involved in disputes and possible litigation.
•We may be subject to negative publicity in the insurance industry.
•We are a holding company with no operations and limited assets of our own and as a result, our ability to service our debt obligations or to pay dividends is limited or otherwise restricted, and dependent on the ability of our subsidiaries to distribute cash to us.
•We may fail to authorize and pay dividends on our preferred stock.
•Our failure to maintain effective internal controls could have an adverse effect on our business in the future.
•Changes in interest rates and credit spreads, which are out of our control, can adversely affect our financial condition and results of operations.
•We may incur significant losses resulting from catastrophic events, including natural disasters, public health crises, illness, epidemics or pandemics and their related effects.
•All of our subsidiaries are subject to changes in government policy and legislation.
•We are exposed to counterparty credit risk which, in turn, increases our exposure to liabilities.
•Our valuation of securities and investments, as well as the determination of the amount of allowances and impairments taken on our investments, are subjective and, if changed, could adversely affect our results of operations or financial condition.
•Our investment portfolio may be subject to concentration risk, which could threaten our financial condition.
•A number of our company’s assets are illiquid, and our company may be required to dispose of such assets if there is significant amount of unanticipated policyholder withdrawal, lapse or claim activity, or to meet other obligations.
•Our investments are subject to credit risk, market risk, servicing risk, loss from catastrophic events and other risks, which could diminish the value that we obtain from such investments.
•Our investment portfolio may include investments in securities of issuers based outside of the U.S., including emerging markets, which may be riskier than securities of U.S. issuers.
•Our insurance business is highly regulated, and such regulation and any supervisory and enforcement policies, or changes thereto, may materially impact our capitalization or cash flows, reduce our profitability and limit our growth.
•Our failure to obtain or maintain licenses and/or other regulatory approvals as required for the operations of our subsidiaries may have an adverse effect on our business, financial condition, results of operations, liquidity, cash flows and profitability.
•Any future regulatory changes, including political, regulatory and industry initiatives by state and/or international authorities, could result in the imposition of significant restrictions on our ability to do business.
•A decrease in applicable capital ratios/calculations of our subsidiaries could result in increased scrutiny by insurance regulators and rating agencies and have an adverse effect on our results of operations and financial condition.
•Potential government intervention in the insurance industry and instability in the marketplace for insurance products could hinder our flexibility and negatively affect the business opportunities that may be available to us in the market.
•The insurance regulatory framework and legislation enacted in Bermuda as to economic substance may affect our operations.
•Regulatory regimes and changes to accounting rules may adversely impact our financial results irrespective of business operations.
•We only list preferred shares on the New York Stock Exchange (the “NYSE”) and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements. Holders of our preferred shares will not have the same protections afforded to shareholders of companies that are subject to such requirements.
•The interests of the sole holder of our common shares may differ from the interests of holders of our preferred shares and our outstanding indebtedness.
•We depend on affiliates of BAM under certain Investment Management Agreements, and our business may experience an adverse impact should we lose any of the services provided to our company thereunder.
•The U.S. federal base erosion and anti-abuse tax, and the U.S. corporate alternative minimum tax, may significantly increase our tax liability.
•Our company may be subject to U.S. federal income taxation in amounts greater than expected, which could have an adverse effect on our financial condition and operating results.
•Changes in U.S. tax law might adversely affect us or our shareholders.
•The recently enacted Bermuda corporate income tax, or other changes in Bermuda tax laws, may impact the earnings and results from operations of our Bermuda affiliates.
Risks Relating to Our Business and Industry
We make assumptions and estimates when underwriting insurance risks, and significant deviations from such assumptions and estimates could adversely affect our business, financial condition, results of operations, liquidity and cash flows.
We make and rely on certain assumptions and estimates in order to make decisions regarding pricing, target returns, reserve levels and other factors affecting our business operations. Our underwriting results depend upon the extent to which our benefit payments on our insurance policies are consistent with the assumptions we use in setting prices and establishing liabilities for such contracts. Such amounts are established based on actuarial estimates of how much we will need to pay for future benefits and claims based on data and models that include many assumptions and projections, which are inherently uncertain and involve significant judgment, including assumptions as to the levels and/or timing of receipt or payment of premiums, benefits, claims, expenses, interest credits and investment results (including equity and other market returns). If the data we rely on in our underwriting is inaccurate, or if our assumptions and estimates differ significantly from the actual outcomes and results, our business, financial condition, results of operations, liquidity and cash flows may be adversely affected. Similarly, if we fail to assess accurately the risks we underwrite or fail to comply with our internal guidelines on underwriting, or if events or circumstances cause our risk assessment to be incorrect, our reserves may prove to be inadequate to cover future claims and benefit payments.
In particular, our life and annuity products expose our company to lapse, mortality and longevity risks. Lapse risk is the risk that the timing of policyholder withdrawals differ from underwritten assumptions. Mortality risk is the risk that the timing of death benefits differ from underwritten assumptions. Longevity risk is the risk that the length of time we pay pension or annuity benefits may exceed that which we assumed in pricing our insurance contracts. Lapse, mortality and longevity products, including PRT and other annuity products, may experience adverse impacts due to higher-than-expected mortality improvement. Lapse, mortality and longevity experience that is less favorable than the rates that we used in pricing an insurance policy or a reinsurance agreement may cause our net income to be less than otherwise expected, because the premiums we receive for the risks we assume may not be sufficient to cover the claims and profit margin. We may use a variety of strategies to manage mortality, lapse and longevity risks, including the use of reinsurance and derivative instruments. These strategies, however, may not be fully effective and may lead to payments to counterparties in excess of recoveries depending on how actual experience emerges. Moreover, advances in technology, including predictive medical technology that enables consumers to select products better matched to their individual risk profile and other medical breakthroughs that extend lives, could cause our future experience to deviate significantly from our actuarial assumptions, which could adversely impact timing of payments, and our required level of reserves and profitability.
In addition, social, economic, political and environmental issues, including rising income inequality, unemployment, climate change, prescription drug use and addiction, exposures to new substances or those previously considered to be safe, along with the use of social media to proliferate messaging around such issues, has expanded the theories for reporting claims, which may increase the amounts we are required to pay out under certain of our policies and may also increase our claims administration and/or litigation costs. Governments’ increased efforts to respond to the costs and concerns associated with these types of issues may also lead to expansive new theories for reporting claims or may lead to the passage of “reviver” statutes that extend the statute of limitations for the reporting of these claims. These and other social, economic, political and environmental issues may also either extend coverage beyond our underwriting intent or increase the frequency or severity of claims.
We regularly review our reserves and associated assumptions as part of our ongoing assessment of our business performance and risks. If we conclude that our reserves are insufficient to cover actual or expected policy and contract benefits and claim payments as a result of changes in experience, assumptions or otherwise, we may update the assumptions used to calculate reserves for our in-force business, which could result in additional assets needed to meet the higher, earlier, or more frequent than expected payments and claims. An increase in reserves due to revised assumptions would have an immediate impact on our results of operations and financial condition; however, economically the impact is generally long term as the excess outflow is paid over time.
If we are unable to attract and retain IMOs, agents, banks and broker-dealers, sales of our insurance products may be adversely affected.
We distribute our insurance products through a variable cost distribution network, which includes numerous IMOs, independent and multiple line agents, banks, independent broker-dealers, and program administrators (the “distributors”). We must attract and retain distributors to sell our products. In particular, insurance companies compete vigorously for productive agents.
We compete with other insurance companies for marketers, agents and financial institutions primarily on the basis of our product pricing, support services, compensation, credit ratings and product features. Such distributors may promote products offered by other insurance companies that may offer a larger variety of products than we do. Our competitiveness for such distributors also depends upon the long-term relationships that we develop with them. There can be no assurance that such relationships will continue in the future. In addition, our growth plans include increasing the distribution of annuity products through banks and broker-dealers. If we are unable to attract and retain sufficient marketers and agents to sell our products or if we are not successful in expanding our distribution channels within the bank and broker-dealer markets, our ability to compete and our sales volumes and results of operations could be adversely affected.
Advances in medical technology may adversely affect certain segments of our business.
Genetic testing and diagnostic imaging technology is advancing rapidly. Increases in the prevalence, availability (particularly in the case of direct-to-consumer genetic testing) and accuracy of such testing may increase our adverse selection risk, as people who learn that they are predisposed to certain medical conditions associated with reduced life expectancy may be more likely to purchase and maintain life insurance. Conversely, people who learn that they lack genetic predisposition to conditions associated with reduced life expectancy may forego the purchase of life insurance, or permit existing policies to lapse, and may be more likely to purchase certain annuity products. Our access to and ability to use medical information, including the results of genetic and diagnostic testing, that is known to our prospective policyholders is important to our underwriting of life insurance and annuities. All of the jurisdictions in which our businesses operate limit and/or restrict insurers’ access to and use of genetic information, and similar additional regulations and legislation may be adopted. Such regulation and legislation likely would exacerbate adverse risk selection related to genetic and diagnostic testing, which may in turn have an adverse effect on our businesses.
In addition to earlier diagnosis and knowledge of disease risk, medical advances (including the increasing use of GLP-1) may increase overall health, longevity and life expectancy. If this were to occur, the duration of payments made under certain of our annuity products would be extended beyond our actuarial assumptions, reducing the profitability of such business. This may require us to modify our assumptions, models or reserves.
A rating downgrade or the absence of a rating of any of our subsidiaries could adversely affect our existing business and our ability to compete for further business.
Financial strength ratings are an important competitive factor in the insurance industry. Ratings organizations periodically review the financial performance and condition of insurers. Ratings are based on a company’s ability to pay its obligations and are not directed toward the protection of investors. Ratings organizations assign ratings based upon several factors, including historical experience, and while most of these factors relate to the underlying company, some of the factors relate to general economic conditions and circumstances outside of the Company’s control. Ratings are subject to revision or withdrawal at any time by the assigning ratings organization. Financial strength ratings are directed toward policyholders and not holders of securities, and are not a recommendation to buy, sell or hold securities, and each rating should be evaluated independently of any other rating. There can be no assurance that the financial strength rating assigned to any of our subsidiaries will remain in effect for any given period of time or that the rating will not be lowered, withdrawn or revised by the rating agency at any time.
Any downgrade in the financial strength rating of any of our subsidiaries could adversely affect our company’s ability to sell products, retain existing business and compete for attractive acquisition opportunities and could result in our company being removed from the approved lists of some customers and may adversely affect the ability of our company to write business to such customers. Accordingly, we may suffer a loss of business as a result.
In addition, a significant downgrade in a rating or outlook of any of our subsidiaries, among other factors, could adversely affect our ability to raise and then contribute capital to our subsidiaries for the purpose of facilitating or supporting their business or any reinsurance opportunities that may arise and may also increase our cost of capital or exclude us from participating in the issuance of Funding Agreement Backed Notes (“FABNs”) or similar instruments. Accordingly, a ratings downgrade of any such subsidiaries could adversely affect our ability to conduct business, including reducing new sales of insurance products or increasing the number or amount of surrenders and withdrawals, requiring us to offer higher crediting rates or greater policyholder guarantees on our insurance products in order to remain competitive, affecting our relationships with independent sales intermediaries and credit counterparties and affecting our ability to obtain reinsurance at reasonable prices.
There is no assurance that our subsidiaries will be able to maintain or obtain a rating. No assurance can be provided that any action taken by a rating agency would not result in an adverse effect on the business of our company and/or the results of operations, financial condition, liquidity or prospects of our company.
If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risks or reduce the level of our underwriting commitments.
As part of our overall risk and capacity management strategy, we may choose to purchase reinsurance for certain types or amounts of risk underwritten within our business or assumed through agreements where we reinsure liabilities from others. Market conditions beyond our control determine the availability and cost of the reinsurance protection we seek to purchase, which may affect the level of our businesses and profitability. The premium rates and other fees that we charge are based, in part, on the assumption that reinsurance will be available at a certain cost. Accordingly, we may be forced to incur additional expenses for reinsurance, which could adversely affect our ability to write future business. In addition, we may be unable to obtain reinsurance on terms acceptable to us relating to certain lines of business that we intend to begin underwriting.
If the counterparties to our reinsurance arrangements or to the derivatives we use to hedge our business risks default or fail to perform, we may be exposed to risks we had sought to mitigate, which could adversely affect our financial condition and results of operations.
We use reinsurance and derivatives to mitigate our risks in various circumstances. In general, reinsurance and derivatives do not relieve us of our direct liabilities. Accordingly, we bear credit risk with respect to our counterparties. A counterparty’s insolvency, inability or unwillingness to make payments under the terms of reinsurance agreements, indemnity agreements or derivatives agreements with us or inability or unwillingness to return collateral could have an adverse effect on our financial condition and results of operations. While we may manage these risks through transaction-related diligence, contract terms, collateral requirements, hedging, and other oversight mechanisms, our efforts may not be successful.
In addition, we may use derivatives to hedge various business risks. We may enter into a variety of derivatives, including options; forwards; and interest rate, credit default, total return, longevity and currency swaps with a number of counterparties on a bilateral basis for uncleared over-the-counter (“OTC”) derivatives and with clearing brokers and central clearinghouses for OTC-cleared derivatives (OTC derivatives that are cleared and settled through central clearing counterparties). If our counterparties, clearing brokers or central clearinghouses fail or refuse to honor their obligations under these derivatives, our hedges of the related risk will be ineffective. Such failure could have an adverse effect on our financial condition and results of operations. We seek to reduce the risks associated with such derivative transactions by entering into such agreements with large, well-established financial institutions. However, there can be no assurance that we will not suffer losses in the event a derivative counterparty fails to perform or fulfill its obligations.
The insurance industry is highly competitive; competitive pressures may result in lower volumes of policies written, fewer insurance contracts underwritten, lower premium rates, increased expense for customer acquisition and retention and less favorable policy terms and conditions.
We operate in highly competitive markets. Customers may evaluate us and our competitors on a number of factors, including capital and perceived financial strength, underwriting capacity, expertise, innovation, local presence, reputation, experience and qualifications of employees, client relationships, geographic scope of business, products and services offered (including ease of doing business over the electronic placement platforms), premiums charged, ratings assigned by independent rating agencies, contract terms and conditions and the speed of claims payment.
Within our business, strong competition for customers has led to increased marketing and advertising by our competitors, many of whom have well-established national reputations and greater financial and marketing resources, as well as the introduction of new insurance products and aggressive pricing practices. These competitive pressures could result in increased pricing pressures on a number of our products and services, particularly as competitors seek to win market share, and may limit our ability to maintain or increase our sales volume and profitability. Because of its relatively low cost of entry, technology and the Insurtech industry has emerged as a significant place of new competition, both from existing competitors and new competitors. In addition, product development and life-cycles have shortened in many product segments, leading to intense competition with respect to product features.
We compete for customers’ funds with a variety of investment products offered by financial services companies other than insurance companies, such as banks, investment advisors, mutual fund companies and other financial institutions. Moreover, customer expectations are evolving as technology advances and consumers become accustomed to enjoying tailored, easy to-use-services and products from various industries. This is reshaping and raising consumer expectations when dealing with insurance. We are addressing these changing consumer expectations by investing in technology with a particular focus on consumer-facing sales and service platforms, by internally promoting a
strategically-focused innovative culture initiative, and by creating internal forums to drive next generation solutions based on consumer insights. However, if we cannot effectively respond to increased competition and such increased consumer expectations, we may not be able to grow our business or we may lose market share.
We compete with other insurers for producers primarily on the basis of our financial position, reputation, longevity, support services, compensation, product features and pricing. We may be unable to compete for producers with insurers that adopt more aggressive pricing or compensation, that offer a broader array of products or packages of products, or that have extensive promotional and advertising campaigns. Attracting qualified individuals and retaining existing employees continues to be a challenge for employers. Businesses have become extremely competitive in the ever-changing landscape of the talent marketplace. As a result, it is an increasing challenge to distinguish us as an employer of choice. See Item 1A ''Risk Factors - Risks Relating to Our Business and Industry - We may be unable to attract and retain key executives and skilled employees, and because our employees are located throughout the United States, we may incur additional compliance and litigation costs that could adversely impact our business, financial condition and our results of operations.''
Within our business, we directly compete with a number of well-established competitors. Our competitors vary by offered product line and covered territory. Some of these competitors have greater financial resources, have established long term and continuing business relationships throughout their respective industries, have greater market share, assume a greater level of risk while maintaining financial strength ratings, or have higher financial strength, claims-paying or credit ratings than we do, each of which can be a significant competitive advantage. In addition, the lack of strong barriers to entry into the reinsurance business and the entry of alternative capital markets products and vehicles provide additional capacity and increased competition.
We compete with new companies that enter the insurance market, particularly companies with new or “disruptive” technologies or business models. Certain technology companies and other third parties have created, and may in the future create, technology-enabled business models, processes or platforms that may adversely impact our competitive position. New services and technologies can affect the demand for insurance products and services, the premiums payable, the profitability of such products and services and the risks associated with underwriting certain lines of business. Recently, the insurance industry has faced increased competition from new underwriting capacity, such as the investment of significant amounts of capital by pension funds, mutual funds, hedge funds and other sources of alternative capital into the insurance businesses. The failure of our company to assess new services and technologies that may be applicable or disruptive to the reinsurance and insurance industries may have an adverse effect on our business, financial condition and results of operations.
The nature of the competition we face may be affected by disruption and deterioration in global financial markets and economic downturns, as well as by governmental responses thereto. For example, (i) government intervention might result in capital or other support for our competitors, (ii) governments may provide reinsurance and insurance capacity in markets and to consumers that we target or (iii) governments may take actions to reduce interest rates, impacting the value of and returns on fixed income investments. In addition, since numerous aspects of our business are subject to regulation, legislative and other changes affecting the regulatory environment for our business may have, over time, the effect of supporting or burdening some aspects of the financial services industry. This can affect our competitive position within the insurance industry and within the broader financial services industry.
We compete with other companies to attract and retain talented key personnel and employees. The insurance industry relies on recruiting and developing individuals with specialized skills and knowledge in various areas, including actuarial science, underwriting, technology, investment management, and data and analytics. Any challenges in attracting and retaining employees with such specialized skills may adversely impact our operations.
Because of the highly competitive nature of the insurance industry, there can be no assurance that we will maintain or grow our market share, continue to identify attractive opportunities in either our individual or institutional channels, or that competitive pressure will not have an adverse effect on our business, results of operations and/or financial condition.
Consolidation in the insurance industry could adversely impact us.
Participants in the insurance industry, including our competitors, customers, and insurance brokers, have been consolidating. There has been a large amount of merger and acquisition activity in the insurance industry in recent years which may continue. We may experience increased competition as a result of that consolidation, with larger entities having enhanced market power. Increased competition could result in fewer submissions, lower premium rates and/or profitability, less favorable policy terms and conditions and greater costs of customer acquisition and retention.
Should the market continue to consolidate, competitors may try to use their enhanced market power to obtain a larger market share through increased line sizes or price competition. If competitive pressures reduce our pricing power, this could in turn lead to reduced premiums and/or a reduction in expected earnings. As the insurance industry consolidates, competition for customers will become more intense and the importance of sourcing and properly servicing each customer will become greater. We could incur greater expenses relating to customer acquisition and retention, further reducing our operating margins. In addition, insurance companies that merge may be able to spread their risks across a larger capital base so that they require less reinsurance. The number of companies offering reinsurance to competitors may decline. Reinsurance intermediaries could also continue to consolidate, potentially adversely impacting our ability to access and write business. We could also experience more robust competition from larger, better capitalized competitors. As a result of the consolidation in the industry, we may experience rate declines and possibly write less business. Any of the foregoing could adversely affect our business, results of operations, growth and prospects.
Failure to maintain the security of our information and technology systems could have an adverse effect on our business.
We rely on the use of technology and information systems, many of which are controlled by third-party service providers, to monitor and process internal and customer-facing transactions, and to assist us in other work, such as performing actuarial analyses and updating our financial statements. If any of these systems were to encounter an operational failure or glitch, it may result in our employees and agents failing to monitor any modifications, enhancements or other errors. Additionally, our information systems and technology may not be able to accommodate our growth, may increase in cost and may also become subject to cyber-terrorism or other compromises and shutdowns, and any failures or interruptions of these systems could adversely affect our business and results of operations.
We rely heavily on certain financial, accounting, communications and other data processing systems. We collect, store and use large amounts of sensitive information, including personally identifiable information, through our information technology systems. While we rely on internal controls to protect the confidentiality of this information, it is possible that an employee could, intentionally or unintentionally, disclose or misappropriate confidential information. If we fail to maintain adequate internal controls, or if our employees fail to comply with our policies, misappropriation or intentional or unintentional disclosure or misuse of personal information could occur. Such internal control inadequacies or non-compliance could materially damage our reputation or lead to civil, regulatory or criminal penalties, which, in turn, could have an adverse effect on our business, financial condition and results of operations. Further, the failure or compromise of our systems as a result of any actions or errors made by our employees or agents that cause a significant interruption to our operations, may adversely impact our reputation and brand in the insurance industry, as well as our operations, financial reporting ability and business.
We rely on our information technology systems to function as intended, and these systems face ongoing cybersecurity threats and attacks, which could result in the failure of such infrastructure. This technology includes the computer systems used for information processing for administrative and commercial operations. The information and embedded systems of key business partners and regulatory agencies are also important to our company’s operations. We may in the future be subject to cyber-terrorism or other cybersecurity risks or other breaches of information technology security, with the increasing frequency, sophistication and severity of these kinds of incidents having increased in recent years. In particular, our information technology systems may be subject to cyber-terrorism intended to obtain unauthorized access to our proprietary information, personally identifiable information or to client or third-party data stored on our systems, destroy or disable our data, and/or that of our business partners, disclose confidential data in breach of data privacy legislation, destroy data or disable, degrade or sabotage our systems through the introduction of computer viruses, cyber-attacks and other means. Such attacks could originate from a wide variety of sources, including internal actors or unknown third parties. These various threats, attacks and incidents that have occurred to date have not been material to our operations and are not expected to be material to our operations based on information presently known to management. The sophistication of the threats continues to evolve and grow, including the risk associated with the use of emerging technologies, such as AI and quantum computing, for nefarious purposes.
Further, our operations may be negatively affected and our business would be at risk if any of the following occurs; (1) threat actors gain physical access to our facilities, infiltrate our information systems or attempt to gain access to information and data, (2) threat actors circumvent our existing security system measures and controls and obtain access to our systems (which may include the ability to view, alter, or delete information, including personally identifiable customer information and proprietary business information) or cause system and operational disruptions or shutdown, (3) threat actors access, misappropriate or otherwise compromise protected personal information or proprietary or confidential information or that of third parties, or (4) threat actors develop and deploy viruses, ransomware and other malware that can attack our systems, exploit any security vulnerabilities and disrupt or shut down our systems and operations. Such risks are also extended to portable electronic devices, such as laptops, which are particularly vulnerable to loss and theft. We cannot predict what effects such cyber-attacks or compromises or shutdowns may have on our business and on the privacy of the individuals or entities affected, and the consequences could be material.
Cyber incidents may also remain undetected for an extended period, which could exacerbate these consequences. A significant actual or potential theft, loss, corruption, exposure, fraudulent, unauthorized or accidental use or misuse of investor, policyholder, employee or other personally identifiable or proprietary business data, whether by third parties or as a result of employee malfeasance or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property, or a violation of our privacy and security policies with respect to such data, could result in significant remediation and other costs, fines, litigation and regulatory actions against us by governments, various regulatory organizations or exchanges, or affected individuals, in addition to significant reputational harm and/or financial loss. It may not be possible to recover losses suffered from such incidents under our insurance policies, including if our insurers deny coverage as to any particular claim in the future or if such loss is not fully covered by insurance maintained, which may not take into account reputational damage, the costs of which are impossible to quantify. In addition, our insurance coverage with respect to cyber incidents may increase in cost or cease to be available on commercially reasonable terms, or at all, in the future.
While we currently have internal controls and security measures in place, including regularly scheduled testing, our systems may be at risk to physical or electronic intrusions, computer viruses or other malicious codes, unauthorized or fraudulent access, cyber incidents such as ransomware, social-engineering attacks, or denial-of-service attacks, programming or other human errors, and other breaches of cybersecurity and information security systems and similar disruptions, and we may not be able to anticipate, detect, repel or implement effective preventative measures against all such threats since the sophistication of the threats continue to evolve and grow, including the risk associated with the use of emerging technologies, such as artificial intelligence and quantum computing, for nefarious purposes.
We are also reliant on third-party service providers for support of certain aspects of our business, including for certain information systems and technology platforms, trustee services, legal services, technology, actuarial and accounting matters. A disaster, disruption or compromise
in technology or infrastructure that supports our company’s business, including a disruption involving electronic communications or other services used by us, our vendors or third parties with whom we conduct business, may have an adverse impact on our ability to continue to operate our businesses without interruption which could have an adverse effect on us. These risks could increase as we increasingly use cloud-based software services offered by vendors, rather than software services that can be operated within our own data centers. These risks also increase to the extent we engage in operations in jurisdictions with which we are not familiar. Certain of our third-party service providers have experienced threats, attacks and incidents related to these described risks, although those that have occurred to date have not been material to our operations and are not expected to be material to our operations based on information presently known to management.
Our systems may also be at risk due to disruptions from various events beyond our control, including, but not limited to, war, acts of terrorism, natural disasters, epidemics, pandemics, telecommunication or electrical outages, computer viruses, a prolonged global failure of cloud services, and other coordinated cyber incidents. In addition, our operating equipment may not continue to perform as it has in the past, and there is a risk of equipment failure due to wear and tear, latent defect, design or operator errors or early obsolescence.
Failure to protect the confidentiality of information, including as the result of a cybersecurity attack, could adversely affect our reputation and have an adverse effect on our business, financial condition and results of operations.
Many jurisdictions in which we operate have enacted laws to safeguard the privacy and security of personal information. Additionally, various government agencies have established rules protecting the privacy and security of such information. These laws and rules vary greatly by jurisdiction. As described above, our company’s business relies on the use of technology, including to store and safeguard personal information of policyholders. Additionally, some of our employees have access to personal information of policyholders. We rely on our internal controls and security measures and those of our cloud-based software service vendors to protect the confidentiality of this information. It is possible that our data could be the subject of a cybersecurity attack or an employee could, intentionally or unintentionally, disclose or misappropriate confidential information. See Item 1A ''Risk Factors - Risks Relating to Our Business and Industry - Failure to maintain the security of our information and technology systems could have an adverse effect on our business.''
If we or our vendors fail to protect against the risk of a cyber-attack or maintain adequate internal controls, or if employees fail to comply with applicable policies, misappropriation or intentional or unintentional disclosure or misuse of personal information could occur. Such internal control inadequacies or non-compliance could materially damage our reputation or lead to civil, regulatory or criminal penalties, which, in turn, could have an adverse effect on our business, financial condition and results of operations.
Compliance with laws and regulations governing the processing of personal data and information may impede our services or result in increased costs. The failure to comply with such data privacy laws and regulations could result in material fines or penalties imposed by data protection or financial services conduct regulators and/or awards of civil damages, and any data breach may have an adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.
Our business relies on the processing of data in many jurisdictions and the movement of data across national borders. The collection, storage, handling, disclosure, use, transfer and security of personal information that occurs in connection with our business is subject to federal, state and foreign data privacy laws. These legal requirements are not uniform and continue to evolve, and regulatory scrutiny in this area is increasing around the world. In many cases, these laws apply not only to third-party transactions, but also to transfers of information among us and our subsidiaries. Privacy and data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements.
In addition, unauthorized disclosure or transfer of sensitive or confidential client or company data, whether through systems failure, human error, fraud or misappropriation, by us or other parties with whom we do business, could subject us to significant litigation, monetary damages, regulatory enforcement actions, fines and criminal prosecution in one or more jurisdictions. Such events could also result in negative publicity and damage to our reputation and cause us to lose business, which could therefore have an adverse effect on our results of operations.
Compliance with existing and emerging rules and regulations governing the use of AI and generative AI could result in increased compliance costs and/or lead to changes in business practices and policies, and challenges with properly managing the use of AI could result in reputational harm, competitive harm and legal liability.
We analyze personal information to better manage our business. There has been increased scrutiny, including from U.S. state and federal regulators, regarding the use of AI on large data sets for activities such as price optimization. In August 2020, members of the NAIC unanimously adopted guiding principles on AI to inform and articulate general expectations for businesses, professionals and stakeholders across the insurance industry as they implement AI tools to facilitate operations. More recently, in December 2023, the NAIC adopted a model bulletin on the use of AI by insurers, which was intended to remind insurance carriers that decisions impacting consumers that are made or supported by advanced analytical and computational technologies, including AI, must comply with all applicable insurance laws and regulations, including unfair trade practices. The bulletin also sets forth state insurance regulators’ expectations on how insurers should govern the use of such technologies by or on behalf of the insurer to make or support such decisions. About half of the states have adopted the bulletin. Additionally, in October 2023, President Biden issued an Executive Order on the Safe, Secure, and Trustworthy Development and Use of AI, which directed federal agencies and departments to create standards and regulations for the use or oversight of AI. In December 2025, President Trump issued an Executive Order on Ensuring a National Policy Framework for Artificial Intelligence, which aims to reduce barriers to IA development, decrease state AI regulatory inconsistencies, and create an AI Litigation Task Force to challenge state laws that are considered to be inconsistent with the policy set forth in the executive order. We cannot predict how existing and emerging guidance,
rules and regulations governing the use of AI will be interpreted or applied, or what, if any, actions may be taken regarding AI, but any applicable regulations and limitations could result in increased compliance costs and/or lead to changes in business and employment practices and policies, which could have a material impact on our business, financial condition and results of operations.
In addition, if the data sets, processes or outputs that AI systems produce are or are alleged to be deficient, inaccurate, unfairly biased, lacking in transparency or explainability, or do not meet evolving legal requirements, our business, financial condition and results of operations may be adversely affected. AI also presents emerging ethical issues and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm or legal liability. These same risks may affect us if a third-party service provider uses AI. Our use or our service provider’s use of AI systems could also result in cybersecurity incidents that may involve the personal information of end users of such applications. Any such cybersecurity incidents could adversely affect our reputation and business, financial condition and results of operations. For additional information regarding cybersecurity risks, see Item 1A ''Risk Factors - Risks Relating to Our Business and Industry - Failure to maintain the security of our information and technology systems could have an adverse effect on our business.''
We may be unable to protect our intellectual property and may face infringement claims.
We may be unable to prevent third parties from infringing on or misappropriating our intellectual property. We may incur litigation costs to enforce and protect our intellectual property or to determine its scope or validity, and we may not be successful. In addition, we may be subject to claims by third parties for infringement of intellectual property, breach of license usage rights, or misappropriation of trade secrets. We may incur significant expenses for any such claims. If we are found to have infringed or misappropriated a third-party intellectual property right, we may be enjoined from providing certain products or services to our customers or from utilizing and benefiting from certain intellectual property. Alternatively, we could be required to enter into costly licensing arrangements with third parties or implement a costly alternative.
We may be unable to attract and retain key executives and skilled employees, and because our employees are located throughout the United States, we may incur additional compliance and litigation costs that could adversely impact our business, financial condition and our results of operations.
Our success depends in large part on continued employment of senior management and key personnel who can effectively operate our business, which is necessary in the highly regulated insurance sector. This complexity requires us to attract and retain experienced executive management and employees with specialized skills and knowledge across many disciplines. If any of these employees leave us and we fail to effectively manage a transition to new personnel, or if we fail to attract and retain qualified and experienced professionals on acceptable terms, our business, financial condition and results of operations could be adversely affected.
Our success also depends on our having highly trained financial, technical, recruiting, sales and marketing personnel. We will need to continue to hire additional personnel as our business grows. A shortage in the number of people with these skills or our failure to attract them to our company could impede our ability to increase revenues from our existing products and services, ensure full compliance with federal and state regulations, launch new product offerings, and would have an adverse effect on our business and financial results.
We are subject to the Fair Labor Standards Act and other state and federal employment laws. These laws govern such matters as minimum wage, overtime, leave, and other working conditions that can increase our labor costs or subject us to liabilities to our employees. In addition, many state and local jurisdictions are adopting their own laws, such as paid sick leave, to address conditions of employment not covered by federal law and/or to provide additional rights and benefits to employees. These developments and disparate laws could increase our costs of doing business, lead to litigation, or have an adverse effect on our business, financial condition and results of operations.
We have incurred indebtedness and intend to incur additional indebtedness which may result in us not being able to generate sufficient cash flows from operations and our investments to service our indebtedness.
We have entered into a term loan credit facility, are party to bilateral revolving credit facilities, have issued notes and expect to incur additional indebtedness in the future. Our ability to service our debt obligations and comply with debt covenants depends on our financial performance. If we fail to meet our debt service obligations or are unable to modify, obtain a waiver, or cure a debt covenant on terms acceptable to us or at all, we could be in default of our debt agreements and instruments. If an event of default occurs, or minimum covenant requirements are not satisfied, this can result in a requirement to immediately repay any drawn amounts or the imposition of other restrictions, any of which may result in the acceleration of our other indebtedness or otherwise adversely impact our business, financial condition, results of operations, liquidity and cash flows. Such a default may also require us to change capital allocation or engage in distressed debt transactions on terms unfavorable to us, which could have a material negative impact on our operations and financial performance.
In the event we need to refinance all or a portion of our outstanding debt as it matures or incur additional debt to fund our operations, we may not be able to refinance our existing debt or incur additional debt to fund our operations on terms acceptable to us or at all. If prevailing interest rates or other factors result in higher interest rates upon refinancing, then the interest expense relating to our debt would increase. Furthermore, if any rating agency changes any of our subsidiaries’ credit ratings or outlook, our debt securities could be negatively affected, which could adversely affect our ability to refinance existing debt or raise additional capital and likely increase the interest costs under our existing credit facilities.
In addition, we from time to time use unaffiliated entities to issue instruments and other obligations (which may involve related purchase and sale transactions and similar transactions with our consolidated subsidiaries) that does not constitute consolidated indebtedness under U.S. GAAP, including through FABNs. The amount of these obligations and related purchase and sale and similar transactions will vary from time
to time and could be substantial at any time, and can create risks similar to those risks described in this “Risk Factors” section related to our indebtedness.
Our debt and any future debt we incur may subject us or our subsidiaries to certain covenants that restrict our ability to engage in certain types of activities and may require us to utilize significant cash flow to service our debt.
Our term loan credit facility and notes indenture contain, and any agreement governing indebtedness we incur in the future may contain, covenants applicable to us and our subsidiaries and events of default. These covenants include limitations that could limit our ability to borrow money or guarantee debt, create liens, pay dividends on or redeem or repurchase stock, make specified types of investments and acquisitions, enter into agreements that limit the ability of our subsidiaries to pay dividends or other payments to us, enter into transactions with affiliates, and sell assets or merge with other companies.
Various risks, uncertainties, and events beyond our control could affect our ability to comply with these covenants. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all our obligations.
In addition, our term loan credit agreement requires us, and any agreement governing indebtedness we incur in the future may require us, to maintain specified financial ratios and satisfy other financial condition tests. We cannot provide assurance that we will be in compliance with these ratios and tests. Our ability to meet those financial ratios and tests will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, market, and competitive factors, many of which are beyond our control. A breach of any of these covenants could result in a default. Any failure to meet required payments on our debt, or failure to comply with any covenants in the instruments governing our debt, could result in a downgrade to our credit ratings. A downgrade in our credit ratings could limit our access to capital and increase our borrowing costs.
We will have to generate significant cash flows from operations to meet our debt service requirements. If we do not generate sufficient cash flow to meet our debt service and working capital requirements, we may be required to seek additional capital, reduce capital expenditures, restructure or refinance all or a portion of our existing indebtedness, and/or sell assets. Moreover, insufficient cash flow may make it more difficult for us to obtain financing on terms that are acceptable to us, or at all.
We may require additional capital in the future, including to fund future growth, which may not be available or may only be available on unfavorable terms, including as a result of increasing barriers to free trade and the free flow of capital and fluctuations in the financial markets.
Our future capital requirements depend on many factors, including regulatory requirements, the nature of any future business we write and the requirement to hold appropriate capital against the liabilities we assume thereunder, the amount of which is determined based on a variety of risks inherent in our transactions, including credit risk, interest rate risk, insurance risk and operational risk, among others. Furthermore, in order to write or assume new business through our subsidiaries, we need sufficient capital to be held by these entities. Our ability to move capital to or from these entities without adverse consequence may be limited by regulatory restrictions on dividends from our other subsidiaries, restrictions on intercompany transactions more generally, tax consequences and/or other considerations.
Any equity or debt financing, or financing derived from the issuance of FABNs or similar instruments, if available at all, is subject to market factors outside of our control and may be transacted on unfavorable terms. Any disruption in the financial markets may limit our ability to access capital required to operate our business, and we may be forced to delay raising capital or bear a higher cost of capital, which could decrease our profitability and significantly reduce our financial flexibility. For instance, prolonged and severe disruptions in the overall public and private debt and equity markets, such as those occurring during 2008 and in connection with COVID-19, could result in an inability to access capital and the incurrence of significant realized and unrealized losses. In addition, interest rate volatility could impact the Company through changes in financing availability and the cost and terms of such financing. Public and private debt and equity markets may experience disruption in individual market sectors, for example the energy sector. If we cannot obtain adequate capital on favorable terms or at all, our business, results of operations and financial condition could be adversely affected.
In addition, political initiatives to impose tariffs, restrict free trade and the renegotiation and/or potential termination of existing bilateral and multilateral trade arrangements, could adversely affect the insurance industry and our business. The insurance industry is disproportionately impacted by restraints on the free flow of capital and risk because the value it provides depends on the ability to globally diversify risk.
Given ongoing global economic uncertainties, evolving market conditions may affect our results of operations, financial position and capital resources. In the event that there is deterioration or volatility in financial markets or general economic conditions, our results of operations, financial position, capital resources and competitive landscape could be adversely affected.
We may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal processes or systems, or from external events.
We may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts by our company’s employees or those of companies providing services to our company, inadequate or failed internal processes or systems, or from external events, such as security threats affecting our ability to operate. We operate in different markets and rely on our employees to follow our policies and processes as well
as applicable laws in their activities. Risk of illegal acts or failed systems is managed through our company’s infrastructure, controls, systems and people, complemented by a focus on enterprise-wide management of specific operational risks such as fraud, bribery and corruption, as well as personnel and systems risks. Further, our employees, including executives and others who manage sales, investments, products, wholesaling, underwriting, and others, may take excessive risks. Our compensation programs and practices, and our other controls, may not effectively deter excessive risk-taking or misconduct. Specific programs, policies, standards and methodologies have been developed to support the management of these risks. However, these cannot guarantee that such conduct does not occur, and if it does, it can result in direct or indirect financial loss, reputational impact or regulatory consequences.
We are at risk of becoming involved in disputes and possible litigation.
Litigation or other disputes may result in significant financial losses and harm our reputation. Plaintiffs have brought and may bring lawsuits, including class actions, against us relating to, among other things, sales or underwriting practices, alleged agent misconduct, product design, product disclosure, product administration, fees charged, denial or delay of claims and benefits, rescission of policies, product suitability, claims-handling practices, loss valuation methodology, refund practices, employment and producer contracting matters, and breaches of duties to customers. Plaintiffs may seek very large or indeterminate amounts, including punitive and treble damages, and our reputation could be harmed. The damages claimed and the amount of any probable and estimable liability, if any, may remain unknown for substantial periods of time. Even when successful in the defense of such actions, we may incur significant attorneys’ fees, direct litigation costs and substantial amounts of management time that otherwise would be devoted to our business.
We may be subject to negative publicity in the insurance industry.
From time to time, the participants in the insurance industry have been subject to investigations, litigation and regulatory scrutiny by various insurance, governmental and enforcement authorities concerning certain industry practices. In particular, financial services companies have been the subject of broad industry inquiries by state regulators and attorneys general that do not appear to be company-specific, such as those concerning business practices upon notification of death. We may receive inquiries and informational requests from insurance regulators and other government agencies in the jurisdictions in which our company operates. In addition, consumer advocacy groups or the media may also focus attention on certain insurance industry practices. We cannot predict the effect that investigations, litigation or regulatory activity or negative publicity from consumers or the media will have on the insurance industry or our company. Moreover, press coverage and other public statements that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, could result in inquiry or investigation by regulators, legislators and/or law enforcement officials or in lawsuits. The involvement of our company in any investigations or litigation may cause our company to incur legal costs and can divert the time and effort of senior management., In the event our company was found to have violated any laws, we could be required to pay fines and damages, potentially in material amounts. Our company could also be adversely affected by negative publicity and the implementation of any new industry-wide regulations that may result from such publicity, which could increase the regulatory burdens under which our company operates. Adverse publicity can also have an adverse effect on our reputation, the morale and performance of employees, and on business retention, which could adversely affect our results of operations.
We are a holding company with no operations and limited assets of our own and as a result, our ability to service our debt obligations or pay dividends is limited or otherwise restricted, and dependent on the ability of our subsidiaries to distribute cash to us.
Our company has no direct operations and no significant assets other than the stock of our subsidiaries. Our ability to service our debt obligations or to pay dividends is limited by our status as a holding company. Moreover, none of our company’s subsidiaries are obligated to make funds available to us for the payment of our debt obligations, to pay dividends or otherwise. Additionally, our subsidiaries are subject to significant regulation which includes restrictions on certain of our subsidiaries’ ability to distribute cash to us, which may limit or restrict entirely our ability to service our debt obligations or to pay dividends on our preferred stock.
Our failure to maintain effective internal controls could have an adverse effect on our business in the future.
As a public company, we are subject to the reporting and controls requirements of the Exchange Act, the Sarbanes-Oxley Act, and certain stock exchange rules promulgated in response to the Sarbanes-Oxley Act. Any failure to maintain adequate internal controls over financial reporting or to implement required, new or improved controls, or difficulties encountered in their implementation, could cause material weaknesses or significant deficiencies in our internal controls over financial reporting, including with respect to the integration of the American Equity and American National internal controls, and could result in errors or misstatements in our consolidated financial statements that could be material. If we were to conclude that our internal controls over financial reporting were not effective, investors could lose confidence in our reported financial information.
Our failure to achieve and maintain effective internal controls could have an adverse effect on our business, our ability to access capital markets and investors’ perception of us. In addition, material weaknesses in our internal controls could require significant expense and management time to remediate.
We may also make errors or fail to detect incorrect or incomplete information in any of the large number of transactions we process through our complex customer application, suitability review, administrative, financial reporting, and accounting systems. Our controls and procedures to prevent such errors may not be effective. For example, we may fail to escheat property timely and completely, or fail to detect, deter or mitigate fraud against us or our customers.
Changes in accounting estimates and assumptions could negatively affect our financial position and results of operations.
Changes in our accounting estimates and assumptions could negatively affect our financial position and results of operations. We prepare our consolidated financial statements in accordance with U.S. GAAP. These accounting principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as reported amounts of revenues and expenses.
We periodically evaluate our estimates and assumptions and base our estimates on historical experience and various assumptions we believe to be reasonable based on specific circumstances. These assumptions and estimates involve the exercise of judgment and discretion, which may evolve over time in light of operational experience, regulatory direction, developments and other factors.
Authorities may change accounting standards that apply to us, and we may adopt changes earlier than required. Changes in accounting rules applicable to our business may have an adverse impact on our results of operations and financial condition.
Risks Relating to General Economic Conditions
Changes in interest rates and credit spreads, which are out of our control, can adversely affect our financial condition and results of operations.
Interest rates have a significant impact on our business both in terms of consumer demand for our products and on our investment performance. Substantial and sustained increases or decreases in market interest rates could adversely affect our business, investment returns, financial condition, results of operations, liquidity and cash flows.
Rapidly rising interest rates could result in reduced persistency of our spread-based products if contract holders shift assets into higher yielding investments. Increasing rates on other insurance or investment products offered by competitors may also lead to higher surrenders by customers within certain segments of our insurance business. We may react to market conditions by increasing our crediting rates, which narrows our “spread,” or the difference between the amounts we earn on investments and the amount we must pay under our contracts. In addition, an increase in market interest rates could reduce the value of certain of our investments held as collateral under reinsurance agreements and require us to provide additional collateral, thereby reducing our available capital and potentially creating a need for additional capital which may not be available to us on favorable terms, or at all.
During periods of prolonged low interest rates, investment earnings may be lower because the interest earned on floating rate fixed income investments will likely have declined with the market interest rates, which in turn may impact the performance of our business. Further, we may also be forced to reinvest proceeds from investments that have matured or have been prepaid or sold at lower yields, which will reduce our “net investment spread” or the difference between the amounts that we are required to pay under the contracts in our general account and the rate of return we earn on general account investments intended to support the obligations under such contracts. A decline in market interest rates or credit spreads could have an adverse effect on our investment income as we invest cash in new investments that may earn less than the portfolio’s average yield. Although during such periods we may seek to mitigate the impact of low interest rates through actions such as reducing the guaranteed minimum crediting rates on new fixed annuity contracts and reducing crediting rates on in-force contracts, where permitted to do so, there is no guarantee that such actions may completely offset the impact of a low interest rate environment, and our sales volume may be negatively impacted as a result. Our ability to decrease product crediting rates in response may be limited by market and competitive conditions and by regulatory or contractual minimum rate guarantees. Furthermore, a low-interest rate environment with reduced investment market returns could encourage alternative capital providers to enter the insurance market in order to achieve higher returns. This could have the effect of increasing the level of competition in the insurance market and applying pressure on premiums, which could affect the gross written premium that we are able to generate.
A gradual increase in longer-term interest rates relative to short-term rates generally will have a favorable effect on the profitability of products within our insurance business – particularly interest-sensitive life insurance and fixed annuities.
While we maintain a diversified investment portfolio comprised of assets with various maturities to support product liabilities and ensure liquidity and use asset liability management processes to mitigate the effect on our spreads of changes in interest rates, they may not be fully effective.
The interest rate environment affects estimated future profit projections, which could impact the estimates of policyholder liabilities within our insurance business. Significantly lower future estimated profits may require us to establish additional policyholder liabilities, thereby reducing earnings. We periodically review assumptions with respect to future earnings to ensure they remain appropriate considering the current interest rate environment.
Fluctuations in credit spreads can also contribute to the industry’s cyclicality and may have an adverse effect on our investment performance, including investment income, or cause realized and unrealized losses. We are subject to risks associated with potential declines in credit quality related to specific issuers or specific industries and a general weakening in the economy, which are typically reflected through credit spreads. Our exposure to credit spreads primarily relates to market price volatility and investment risk associated with the fluctuation in credit spreads. Additionally, fluctuations in credit spreads may adversely impact the actuarial balances such as policyholder reserves. Credit spreads increase or decrease in response to the market’s perception of risk and liquidity of a specific issuer or specific sector and are influenced by the credit ratings, and the reliability of those ratings, published by external rating agencies. Widening credit spreads may cause unrealized losses in our investment portfolio and increase losses associated with written credit protection derivatives used in replication transactions. Increases in credit spreads of issuers due to credit deterioration may result in higher levels of impairments. Tightening credit spreads may reduce our
investment income and cause an increase in the reported value of certain liabilities that are valued using a discount rate that reflects our own credit spread.
One key factor that contributes to the cyclicality in insurers’ underwriting results are interest rate movements. In a high-interest rate environment, increased investment returns may reduce insurers’ required contribution from underwriting performance to achieve an attractive overall return. This may result in a less-disciplined approach to underwriting in the market generally as some underwriters could be inclined to offer lower premium rates to generate more business. An increase in market interest rates or credit spreads could also have an adverse effect on the value of our investment portfolio by decreasing the fair values of the fixed income securities in our investment portfolio. Further, an increase in market interest rates could reduce the value of certain of our alternative investments held as collateral under reinsurance agreements and require us to provide additional collateral, thereby reducing our available capital and potentially creating a need for additional capital which may not be available to us on favorable terms, or at all.
General economic and business conditions that impact the debt or equity markets could impact our ability to access credit markets.
General economic and business conditions that impact the debt or equity markets could impact the availability of credit to, and cost of credit for, our company. Actions to reduce inflation, including raising interest rates, increase our cost of borrowing, which in turn could make it more difficult to obtain financing for our operations or investments on favorable terms. We utilize other short-term borrowings and the amount of interest charged on these facilities will fluctuate based on changes in underlying short-term interest rates. Any economic event that affects interest rates or the ability to refinance borrowings could materially adversely impact our financial condition. Continued movements in interest rates could also affect the discount rates used to value our assets, which in turn could cause their valuations to be reduced resulting in a material reduction in our equity value.
In addition, some of our operations either currently have a credit rating or may have a credit rating in the future. A credit rating downgrade may result in an increase in the cost of debt for the relevant businesses and reduced access to debt markets.
Some assets in our portfolio have a requirement for significant capital expenditure. For other assets, cash, cash equivalents and short-term investments combined with cash flow generated from operations are believed to be sufficient for it to make the foreseeable required level of capital investment. However, no assurance can be given that additional capital investments will not be required in these businesses. If we are unable to generate enough cash to finance necessary capital expenditures through operating cash flow, then we may be required to issue additional equity or incur additional indebtedness. The issue of additional equity would be dilutive to existing shareholders at the time. Any additional indebtedness would increase our leverage and debt payment obligations, and may negatively impact our business, financial condition and results of operations.
Our business relies on continued access to capital to fund new investments and capital projects. While we aim to prudently manage our capital requirements and ensure access to capital is always available, it is possible we may overcommit ourselves or misjudge the requirement for capital or the availability of liquidity. Such a misjudgment may require capital to be raised quickly and the inability to do so could result in negative financial consequences or in extreme cases bankruptcy.
Inflation may adversely reduce the profitability of our subsidiaries and results of operations.
Our subsidiaries are impacted by inflationary pressures, escalating tariffs and trade barriers, as well as increased geopolitical risks, adds uncertainty to the long-term outlook for inflation and interest rates, and a reacceleration of inflation could trigger a reversal in recent interest rate decreases. Interest rate increases or other government actions taken to reduce inflation could also result in recessionary pressures in many parts of the world. Higher interest rates or elevated interest rates for a sustained period could also result in an economic slowdown. Economic contraction or further deceleration in the rate of growth in certain industries, sectors or geographies may contribute to poor financial results at our subsidiaries.
Rising inflation could adversely impact returns on our investment portfolio and results of operations. The effects of inflation can increase expense risk, resulting in increased costs in servicing and maintaining insurance, savings or reinsurance contracts, including direct expenses and allocations of overhead costs. Rising inflation could also negatively impact consumer confidence and spending power, decreasing demand for our products. Failure to accurately factor in continued rising inflation in our pricing assumptions may result in mispricing of our subsidiaries’ products, which could adversely impact our results of operations. In addition, inflation can also impact our investment portfolio rate of return and corresponding investment income.
All of our subsidiaries are subject to general economic and political conditions and risks relating to the markets in which our company operates.
The industries in which our company operates are impacted by political and economic conditions, and in particular, adverse events in financial markets, which may have a significant effect on global or local economies. Some key impacts of general financial market turmoil include contraction in credit markets resulting in a widening of credit spreads, devaluations and enhanced volatility in global equity, commodity and foreign exchange markets, and a general lack of market liquidity. A slowdown in the financial markets or other key measures of the global economy or the local economies of the regions in which our company operates, including, but not limited to, employment rates, business conditions, inflation, lack of available credit, the state of the financial markets, interest rates and tax rates, may adversely affect our company’s growth and profitability.
The demand for services provided by our subsidiaries are, in part, dependent upon and correlated to general economic conditions and economic growth of the regions in which our subsidiaries conduct business. Poor economic conditions or lower economic growth in a region or regions may, either directly or indirectly, reduce demand for the services provided by our company.
In addition, our company may be affected by political uncertainties that may have global repercussions, including in markets where our company currently operates or intends to expand into the future. The uncertainties include geopolitical concerns and other global events, including, without limitation, trade conflict, civil unrest, national and international political circumstances (including outbreak of war, terrorist acts or security operations) and pandemics or other severe public health events, that have contributed and may continue to contribute to volatility in global equity and debt markets. For example, the ongoing war between Russia and Ukraine and the conflict in the Middle East and the global response to each, including the imposition of widespread economic and other sanctions, has significantly impacted the global economy and financial markets.
We may incur significant losses resulting from catastrophic events, including natural disasters, public health crises, illness, epidemics or pandemics and their related effects.
Our business could be exposed to effects of catastrophic events, including natural disasters, pandemics and epidemics, which could adversely affect our results of operations and financial condition due to disruptions to commerce, reduced economic activity and other unforeseen consequences that are beyond our control.
Our life, annuity and health products and services are exposed to the risk of catastrophic mortality or illness, such as a pandemic, an outbreak of an easily communicable disease, or another event that causes a large number of deaths or high morbidity. Certain of our investments are also exposed to catastrophes, including certain of our real estate and infrastructure investments. Our operating results may vary significantly from one period to the next since the likelihood, timing, severity, number or type of catastrophe events cannot be accurately predicted. Our losses in connection with catastrophic events are primarily a function of the severity of the event and the amount of our exposure in the affected area.
Climate change, and increasing regulation with respect to climate change, may adversely impact our results of operations.
There are concerns that the increased frequency and severity of weather-related catastrophes, such as floods, hurricanes and wildfires, are indicative of changing weather patterns, whether as a result of global climate change caused by human activities or otherwise, which could cause such events to persist. The effects of climate change could lead to increased credit risk of the counterparties we transact business with, including reinsurers. In addition, climate change could have an impact on assets in which we invest, resulting in realized and unrealized losses in future periods that could have an adverse impact on our results of operations and/or financial position. Such investment risks can include, but are not limited to, changes in supply and demand characteristics for fossil fuels, advances in low-carbon technology and renewable energy development, effects of extreme weather events on the physical and operating exposure of industries and issuers, and the transition that issuers make towards addressing climate risk in their own businesses. It is not possible to foresee with certainty which, if any, assets, industries or markets will be adversely affected, nor is it possible to foresee the magnitude of such effect.
We are subject to complex and changing regulation and public policy debates relating to climate change that are difficult to predict and quantify and that may have an adverse impact on our business. We cannot predict how legal, regulatory and social responses to concerns about climate change will impact our business or the value of our investments.
All of our subsidiaries are subject to changes in government policy and legislation.
Our financial condition and results of operations could also be affected by changes in economic or other government policies or other political or economic developments in each country or region, as well as regulatory changes or administrative practices over which our company has no control, such as the regulatory environment related to our company’s business operations, concession agreements and periodic regulatory resets; interest rates; benchmark interest rate reforms; currency fluctuations; exchange controls and restrictions; inflation; tariffs; liquidity of domestic financial and capital markets; policies relating to tax; and other political, social, economic, and environmental developments that may occur in or affect the jurisdictions in which our subsidiaries are located or conduct business or the jurisdictions in which the customers of our subsidiaries are located or conduct business or both. For a description of insurance regulations, see Item 1A ''Risk Factors - Risks Relating to Regulation - Our insurance business is highly regulated, and such regulation and any supervisory and enforcement policies, or changes thereto, may materially impact our capitalization or cash flows, reduce our profitability and limit our growth.''
In addition, operating costs can be influenced by a wide range of factors, including the need to comply with the directives of central and local government authorities. It is difficult to predict government policies and what form of laws and regulations will be adopted or how they will be construed by the relevant courts, or the extent to which any changes may adversely affect our company. Any reforms to benchmark interest rates could create significant risks and challenges for our company and our subsidiaries. The discontinuance of, or changes to, benchmark interest rates require adjustments to agreements to which our company and other market participants are parties, as well as to related systems and processes.
Risks Relating to Our Investments
We could suffer losses if our investment strategy is unsuccessful.
The success of our investment strategy is central to the success of our business, and there can be no guarantee that we will be able to achieve any particular return for our investment portfolio in the future. In particular, we structure our investments to take into account and appropriately match our anticipated liabilities under our insurance contracts. There is no guarantee that our investment strategy will be successful, or that we will be able to originate future investment opportunities that are appropriately matched to our current and future liabilities. A failure to source attractive investment opportunities or to deploy our assets in line with our investment strategy would have a significant and adverse effect on our investment returns, and in turn on our operations and financial performance.
If our investments underperform or if they are not adequately structured to match our liabilities, we may be forced to liquidate investments prior to maturity at a significant loss or we may be forced to reinvest cash flows from our investments at a potentially lower yield than anticipated. Additionally, a portion of our investment portfolio is considered less liquid and may be more difficult to value. As a result, we may fail to properly value, and may not be able to realize our full carrying value in, such instruments.
The success of any investment activity is affected by general economic conditions. General economic conditions may adversely affect the markets for corporate debt securities and structured securities such as commercial mortgage-backed or other asset backed securities. Unexpected volatility or illiquidity in the markets in which we directly or indirectly hold positions could adversely affect us.
Before making investments, we typically undertake a robust due diligence process. However, the due diligence process may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating the investment opportunity, and, as a result, our results of operations, financial condition and cash flows may be adversely affected.
We are exposed to counterparty credit risk which, in turn, increases our exposure to liabilities.
We are exposed to counterparty credit risk, which is the uncertainty of whether a counterparty will honor its obligation under the terms of a security, loan or contract. While we undertake extensive diligence on all credit investments and creditworthiness of our borrowers or investment counterparties, we are exposed to the risks of missed payment, default loss or investment underperformance due to credit risk. We have counterparty credit risk with other companies through reinsurance, including as that term is defined for U.S. statutory purposes.
We also have exposure to many other counterparties, including in the financial services industry. Many of these transactions expose us to credit risk in the event of default of our counterparty, either with respect to insufficient collateral that cannot be realized or is liquidated at prices not sufficient to recover the full amount of the related loan or derivative exposure, or in the case of default of unsecured debt instruments or derivative transactions. Our derivative counterparties may fail to perform. Our efforts to maintain quality and credit exposure concentration limits may be inadequate to mitigate this risk. Counterparties’ failure to deliver on their derivative instrument obligations may impose costs on us to fund payments and credits on our products in excess of what we expected. We may be unable to enforce our counterparties’ obligations to post collateral to secure their obligations to us. Among other things, a downturn in the U.S. or other economies could increase any or all of these risks.
Our valuation of securities and investments, as well as the determination of the amount of allowances and impairments taken on our investments, are subjective and, if changed, could adversely affect our results of operations or financial condition.
Valuations of investments, including any property received in exchange for any investments, that are calculated will be done in good faith in accordance with guidelines prepared in accordance with U.S. GAAP. Valuations are subject to determinations, judgments, projections and opinions, and third parties or investors may disagree with such valuations. Accordingly, the carrying value of an investment will not necessarily reflect the price at which the investment could be sold in the market, and the difference between carrying value and the ultimate sales price could be material. We generally will not, unless otherwise required to pursuant to applicable law and/or regulation, seek an independent view, opinion, support and/or appraisal for such valuation determinations.
During periods of market disruption, including periods of significantly rising or high interest rates, rapidly widening credit spreads or illiquidity, it may be difficult to value certain of our securities, including fixed maturity and equity securities, as well as short-term investments that are reported at estimated fair value, if trading becomes less frequent and/or market data becomes less observable. In addition, in times of financial market disruption, the valuation process for certain asset classes that were in active markets with observable valuations may include inputs that are less observable and require more subjectivity and management judgment. Valuations may result in estimated fair values that vary significantly from the amount at which the investments may ultimately be sold. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of securities as reported within our consolidated financial statements and the period to period changes in estimated fair value could vary significantly. Decreases in the estimated fair value of securities we hold may have an adverse effect on our financial condition.
The determination of the amount of allowances and impairments varies by investment-type and is based upon our periodic evaluation and assessment of known and inherent risks associated with the respective asset class. However, historical trends may not be indicative of future impairments or allowances, and any such future impairments or allowances could have an adverse effect on our earnings and financial position.
We have a risk management framework in place to identify, assess and prioritize risks, including the market and credit risks to which our investments are subject. As part of that framework, we test our investment portfolio based on various market scenarios. Under certain stressed market scenarios, unrealized losses on our investment portfolio could lead to material reductions in its carrying value. Under some extreme scenarios, total shareholders’ equity could be negative for the period of time prior to any potential market recovery.
Our investment portfolio may be subject to concentration risk, which could threaten our financial condition.
Concentration risk arises from exposure to significant asset defaults of a single issuer, industry or class of securities, based on economic conditions, geography or as a result of adverse regulatory or court decisions. When an investor’s assets are concentrated and that particular asset or class of assets experiences significant defaults, the default of such assets could threaten the investor’s financial condition, results of operations and cash flows. Although we seek to mitigate concentration risk through our investment policies and guidelines, there is no assurance that we will be successful in managing this risk.
A number of our company’s assets are illiquid, and our company may be required to dispose of such assets if there is significant amount of unanticipated policyholder withdrawal, lapse or claim activity, or to meet other obligations.
Our company strives to maintain a sufficient level of liquidity to support the risk of withdrawal, lapse or claim activity under our insurance obligations. However, in order to provide necessary long-term returns and achieve our strategic goals, a portion of our assets are relatively illiquid. Many of our investments are in securities that are not publicly traded or that otherwise lack liquidity, such as our privately placed fixed maturity securities, below investment grade securities, investments in mortgage loans and alternative investments. In addition, our liquid assets may experience reduced liquidity during periods of market volatility or disruption.
If there is a significant amount of unanticipated policyholder withdrawal, lapse or claim activity, our company may be required to dispose of such illiquid assets on unfavorable terms. We may be forced to sell investments as a result of a lapse or surrender of all or some of the policies. If we were forced to sell certain of our assets, there can be no assurance that we would be able to sell them for the values at which such assets are recorded, and we might be forced to sell them at significantly lower prices. In addition, in many cases we may be prohibited by contract or applicable securities laws from selling such securities for a period of time. When we hold a security or position, it is vulnerable to price and value fluctuations and may experience losses if we are unable to timely sell, hedge or transfer the position. Thus, it may be impossible or costly for us to liquidate positions rapidly in order to meet unexpected withdrawal obligations. If we are unable to liquidate assets to offset withdrawal or lapse activity, it could have an adverse effect on our financial position and results of operations, as well as our financial ratios, which could affect compliance with our credit instruments and rating agency capital adequacy measures.
Our investments are subject to credit risk, market risk, servicing risk, loss from catastrophic events and other risks, which could diminish the value that we obtain from such investments.
Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition.
Our investments are subject to risks of changes in market values and credit defaults. Periods of macroeconomic weakness or recession, volatility or disruption in the financial and credit markets could increase these risks and could potentially result in impairment of assets in our investment portfolio. In addition, the impact of political developments or tension, including any resulting sanctions, trade barriers or other restrictive actions that may be imposed by countries against governmental or other entities in other countries, also could lead to disruption, instability and volatility in the global markets, which may have an impact on our investments across negatively impacted sectors or geographies.
We are also subject to the risk that cash flows generated from the collateral underlying the structured products we own may differ from our expectations in timing or amount. In addition, many of our classes of investments, but in particular our alternative investments, may produce investment income that fluctuates significantly from period to period. Any event reducing the estimated fair value of these securities, other than on a temporary basis, could have a material adverse effect on our business, results of operations, financial condition, liquidity and cash flows.
Certain of our investments are linked to real estate, including fixed maturity and equity securities such as commercial mortgage-backed securities and commercial mortgage loans. Defaults by third parties in the payment or performance of their obligations underlying these assets could reduce our investment income and realized investment gains or result in the recognition of investment losses. In addition, changes in laws and other regulatory developments relating to mortgage loans may impact the investments of our portfolio linked to real estate in the future. Additionally, cash flow variability arising from an unexpected acceleration in the rate of mortgage prepayments can be significant and could cause a decline in the estimated fair value of certain “interest only” securities.
Control over the underlying assets in all of our real estate-related investments is exercised through servicers that we do not control. If a servicer is not vigilant in seeing that borrowers make their required periodic payments, borrowers may be less likely to make these payments, resulting in a higher frequency of delinquency and default. If a servicer takes longer to liquidate nonperforming mortgages, our losses related to those loans may be higher than we expected.
Our investments in assets linked to real estate are also subject to loss in the event of catastrophic events, such as earthquakes, hurricanes, floods, tornadoes and fires. Climate change has exacerbated these risks and is likely to further increase both the likelihood of occurrence and
the magnitude of impact in future periods. While loss experience in the event of a catastrophic event is contingent upon many factors, including the insured status of the underlying property and the seniority of our investment, in the case of structured securities, a catastrophic event impacting one or more of the regions of our real estate investments may cause some portion of the invested assets linked to real estate to become impaired, which may have an adverse impact on our financial condition and results of operations.
In addition to the credit and market risk that we face in relation to all of our real estate-related investments, certain of these investments may expose us to various environmental, regulatory or other risks. We are currently unable to predict the impact of such regulation on our business. Any adverse environmental claim or regulatory action against us resulting from our investments in real estate-related investments could adversely impact our reputation, business, financial condition and results of operations.
Our investment portfolio may include investments in issuers or assets outside the U.S., including emerging markets, which may be riskier than investments in U.S. issuers and assets.
We may invest in issuers or assets organized or located outside the U.S. that may involve heightened risks in comparison to the risks of investing in U.S. assets, including unfavorable changes in currency rates and exchange control regulations, reduced and less reliable information about issuers and markets, less stringent accounting standards, illiquidity of securities and markets, higher brokerage commissions, transfer taxes and custody fees, local economic or political instability and greater market risk in general. In particular, investing in issuers or assets located in emerging market countries involves additional risks, such as exposure to economic structures that are generally less diverse and mature than, and to political systems that can be expected to have less stability than, those of developed countries; national policies that restrict investment by foreigners in certain issuers or industries of that country; the absence of legal structures governing foreign investment and private property; an increased risk of foreclosure on collateral located in such countries; a lack of liquidity due to the small size of markets for securities of issuers located in emerging markets; and price volatility.
Risks Relating to Regulation
Our insurance business is highly regulated, and such regulation and any supervisory and enforcement policies, or changes thereto, may materially impact our capitalization or cash flows, reduce our profitability and limit our growth.
We are subject to extensive insurance laws and regulations that affect nearly every aspect of our business. We are also subject to additional laws and regulations administered and enforced by a number of different governmental authorities in the jurisdictions in which we operate.
The laws and regulations applicable to us are complex and subject to change, and compliance is time consuming and personnel intensive. Changes in these laws and regulations, or interpretations by courts or regulators, may materially increase our costs of doing business and may result in changes to our practices that may limit our ability to grow and improve our profitability. Regulatory developments or actions against us could have material adverse financial effects and could harm our reputation. Among other things, we could be fined, prohibited from engaging in some or all of our business activities, or made subject to limitations or conditions on our business activities.
We face the risk that any particular regulator’s or enforcement authority’s interpretation of a legal issue may conflict with that of another regulator or enforcement authority or may change over time to our detriment. Regulatory investigations and examinations, which can be broad and unpredictable, may raise issues not identified previously and could result in new legal actions against us and industry-wide regulations that could adversely affect us. Further, we are experiencing increasing information requests from regulators without corresponding direct regulation being applicable to us, on issues such as climate change, cyber risks, AI, operational resilience, diversity and our investments in certain companies or industries. Responding to such requests adds to our compliance costs.
Insurance company supervision and regulation is generally intended for the benefit of policyholders and creditors rather than shareholders or other investors of the business. Among other things, the insurance laws and regulations applicable to us:
•impose rules and restrictions on the marketing, distribution, administration and amendment of our annuity products and insurance policies;
•require the maintenance of certain solvency levels, including minimum levels of capital and surplus;
•require the maintenance of target capital levels, general and long-term business minimum solvency margins, enhanced capital requirements and a minimum liquidity ratio;
•require periodic examinations of our financial condition;
•require local offices, representatives and activities to be conducted in the relevant jurisdiction;
•restrict agreements with large revenue-producing agents;
•require us to obtain licenses or authorizations from regulators;
•regulate transactions, including the use of funded reinsurance, investments in or transactions with affiliates or related parties and intra-group guarantees;
•in certain jurisdictions, restrict the payment of dividends or other distributions of capital;
•require the disclosure of financial and other information to regulators, including financial statements, financial conditions reports, and annual capital and solvency reports;
•impose restrictions on the nature, quality and concentration of investments;
•regulate the admissibility of assets and capital;
•provide for involvement in the payment or adjudication of claims beyond the terms of the policies;
•establish certain minimum operational requirements or customer service standards, such as the timeliness of finalized policy language or lead time for notice of non-renewal, or changes in terms and conditions; and
•allow for the performance of certain periodic examinations of its financial condition.
The impact of these regulations, including, in particular the restrictions on investments in affiliates or related parties, may have an adverse effect on our investment portfolio returns. As part of regular mandated risk assessments, regulators may take steps that have the effect of restricting our business activities, which may in turn have a material impact on our ability to achieve growth objectives and earnings targets.
All of our subsidiaries are subject to minimum capital and surplus requirements. Any failure to meet applicable requirements or minimum statutory capital requirements could subject us to examination or corrective action by regulators, including limitations on our writing additional business or engaging in finance activities, supervision, receivership, or liquidation. In addition, each regulated insurance business we operate is subject to a number of restrictions on assets we may hold under relevant regulations and tax rules, and regulators may, as has happened in the past, alter such restrictions, thus potentially affecting our investment policy and any associated projected income or growth return from our investments. In addition, based on our perceived risk profile, regulators may require additional regulatory capital to be held by us (including as part of guidance provided by the regulator to us on a confidential basis), which, among other things, may affect the business we can write and the amount of dividends we are able to pay out.
As a result, in connection with the conduct of our various subsidiaries, we believe it is crucial to establish and maintain good working relationships with the various regulatory authorities having jurisdiction over our subsidiaries. If those relationships and that reputation were to deteriorate, our subsidiaries could be adversely affected. For example, we require various consents and approvals from our regulators, both with respect to transactions we enter into and in the ordinary course of business of our subsidiaries. If we fail to maintain good working relationships with our regulators, it may become more difficult or impossible for us to obtain those consents and approvals, either on a timely basis or at all.
The insurance industry has experienced substantial volatility as a result of investigations, litigation and regulatory activity by various insurance, governmental and enforcement authorities, concerning various practices within the reinsurance and insurance industry. If we or any of our subsidiaries were to be found to be in breach of any existing or new laws or regulations now or in the future, we would be exposed to the risk of intervention by regulatory authorities, including investigation and surveillance, and judicial or administrative proceedings. In addition, our reputation could suffer and we could be fined, sanctioned or suspended or prohibited from engaging in some or all of our business activities or could be sued by counterparties, as well as forced to devote significant resources to cooperate with regulatory investigations, any of which could have an adverse effect on our results of operations. These events, if they occur, could affect the competitive market, and the way we conduct our business and manage our capital and could result in lower revenues and higher costs.
Lastly, international standards continue to emerge in response to the globalization of the insurance industry and evolving standards of regulation, privacy, solvency measurement and risk management. Any international conventions or mandates that directly or indirectly impact or influence the nature of regulation or industry operations in the jurisdictions in which we operate could negatively affect us.
Our failure to obtain or maintain licenses and/or other regulatory approvals as required for the operations of our subsidiaries may have an adverse effect on our business, financial condition, results of operations, liquidity, cash flows and profitability.
Each regulator retains the authority to license insurers in its jurisdiction, and an insurer generally may not operate in a jurisdiction in which it is not licensed. The licenses currently held by our subsidiaries are limited in scope with respect to the products that may be sold within the respective jurisdictions. Currently, our subsidiaries maintain licenses in the United States, the District of Columbia, Bermuda, Guam, and Puerto Rico. Our ability to retain licenses depends on our company’s and our subsidiaries’ ability to meet requirements established by applicable regulators.
To the extent our subsidiaries seek to sell products for which we are currently not licensed, such subsidiaries would be required to become licensed in each of the respective jurisdictions in which such products are expected to be sold. There is no assurance that our subsidiaries would be able to obtain the relevant licenses. The process of obtaining licenses is time consuming and costly and we may not be able to become licensed in jurisdictions other than those in which our subsidiaries are currently licensed and/or for products for which we are currently licensed. The modification of the conduct of our business resulting from our subsidiaries becoming licensed in certain jurisdictions or for certain products could significantly and negatively affect our business.
In addition, licensing regulations differ as to products and jurisdictions and may be subject to interpretation as to whether certain licenses are required with respect to the manner in which we may sell or service some of our products in certain jurisdictions. The degree of complexity is heightened based on the type of products that are issued, including where such products may cover risks in multiple jurisdictions. If a state regulator interprets a licensing requirement differently than we do and/or we are unable to meet their requirements, our subsidiaries could lose their licenses to do business in certain jurisdictions; be subject to additional regulatory oversight; have their licenses suspended; be subject to rescission requests, fines, administrative penalties or payments to policyholders or be subject to seizure of assets. A loss or suspension of any of our subsidiaries’ licenses or an inability of any of our subsidiaries to be able to sell or service certain of our insurance products in one or more jurisdictions may negatively impact our reputation in the insurance market, impair our competitive position and result in our subsidiaries’ inability to write new business, distribute funds or pursue our investment strategy.
Any future regulatory changes, including political, regulatory and industry initiatives by state and international authorities, could result in the imposition of significant restrictions on our ability to do business.
Changes to the laws and regulations, and interpretations and enforcement of such laws and regulations, that govern the conduct of our business could adversely affect our operations and profitability. In addition, legislation and other regulatory initiatives taken, or which may be
taken in response to conditions in the financial markets, global supervision and other factors may lead to additional regulation of the insurance industry in the coming years. Such changes could increase our regulatory and compliance burden, resulting in increased costs, or limit the type, amount or structure of compensation arrangements into which we may enter with certain of our associates, which could negatively impact our ability to compete with other companies in recruiting and retaining key personnel. Changes in regulatory approval processes, rules and other dynamics in the regulatory process could adversely impact our ability to react to such changing conditions. We cannot predict what proposals may be made, what legislation or regulations may be introduced or enacted, or what impact any future legislation or regulations may have on our business, results of operations and financial condition. In addition, changes in the laws or regulations to which our subsidiaries are subject or in the interpretation thereof by enforcement or regulatory agencies, as well as increased monitoring of compliance by international bodies of certain jurisdictions in which our subsidiaries operate, could have an adverse effect on our business and cause reputational damage to our subsidiaries.
Further, as insurance industry practices and legal, judicial, social and other conditions outside of our control change, unexpected issues related to claims and coverage may emerge. These changes may include modifications to long-established business practices or policy interpretations, which may adversely affect us by extending coverage beyond our underwriting intent or by increasing the type, number or size of claims. For example, in July 2024, NYDFS issued Circular Letter No. 7, in which the department imposed significant obligations on insurers using artificial intelligence systems (“AIS”) or external consumer data and information sources (“ECDIS”). Circular Letter No. 7 expands the applicability of the department’s 2019 Circular Letter No. 1, which set out the department’s views concerning the use of ECDIS in the underwriting of life insurance. Circular Letter No. 7 incorporates the general obligations from Circular Letter No. 1 while adding more detailed requirements, expanding the scope beyond life insurance, and adding significant governance and documentation requirements. Circular Letter No. 7 outlines qualitative and quantitative assessment requirements to demonstrate that similarly situated individuals or insureds of a protected class do not face disproportionate adverse effects from AIS or ECDIS in underwriting and pricing. Circular Letter No. 7 also clarifies that insurers bear the burden of ensuring that ECDIS or AIS provided by vendors complies with anti-discrimination law.
Other states may undertake regulatory efforts similar to NYDFS. For example, on July 6, 2021, the governor of Colorado signed Senate Bill 21-169, which also regulates an insurer’s use of ECDIS. The Colorado Division of Insurance has subsequently passed regulations that impose requirements on the Colorado-licensed life insurance companies that use ECDIS and AIS in insurance practices. In addition, in October 2023, the NAIC released a Model Bulletin on the Use of Artificial Intelligence Systems by Insurers, which sets out a draft comprehensive framework for insurers’ AI governance. As of March 2025, 24 jurisdictions have adopted this model bulletin. The NAIC has also formed a committee on race and insurance, which is focused on underwriting practices that may be an unintentional proxy for discrimination. As a result of these regulatory efforts, there is a great deal of uncertainty whether traditional underwriting criteria will be restricted by new state laws or regulations. Such regulatory efforts may significantly hinder our use of technological and innovative advances to underwrite and price life insurance accurately.
A decrease in applicable capital ratios/calculations of our subsidiaries could result in increased scrutiny by insurance regulators and rating agencies and have an adverse effect on our results of operations and financial condition.
In any particular year, statutory surplus amounts and applicable capital ratios in respect of our subsidiaries may increase or decrease depending on a variety of factors, including the amount of statutory income or losses generated by the insurance subsidiary (which itself is sensitive to equity market and credit market conditions), recognition of write-downs or other losses on investments held in the subsidiary’s investment portfolio, the amount of additional capital such insurer must hold to support business growth, changes in equity market levels, the value and credit ratings of certain fixed income and equity securities in its investment portfolio, the value of certain derivative instruments that do not receive hedge accounting and changes in interest rates, as well as changes to the applicable capital formulas and the interpretation of the applicable regulator’s instructions with respect to capital calculation methodologies. Our financial strength and credit ratings are significantly influenced by statutory surplus amounts and the capital ratios of our subsidiaries. In addition, rating agencies may implement changes to their own internal models, which differ from the prescribed capital models in the United States or Bermuda, as applicable, that have the effect of increasing or decreasing the amount of statutory capital our subsidiaries should hold relative to the rating agencies’ expectations. Under stressed or stagnant capital market conditions and with the aging of existing insurance liabilities, without offsets from new business, the amount of additional statutory reserves that an insurance subsidiary is required to hold may materially increase. This increase in reserves would decrease the statutory surplus available for use in calculating the relevant subsidiary’s required capital ratio(s). To the extent that the capital ratios of any of our subsidiaries are deemed to be insufficient, we may seek to take actions to increase the capitalization of that subsidiary or to reduce the capitalization requirements. If we were unable to accomplish such actions, the rating agencies may view this as a reason for a ratings downgrade. The failure of our subsidiaries to meet their respective capital requirements or any other applicable minimum capital and surplus requirements could subject them or us to further examination or corrective action imposed by insurance regulators, including limitations on the ability to write additional business, supervision by regulators or seizure or liquidation. Any corrective action imposed could have an adverse effect on our business, results of operations and financial condition. A decline in the capital ratios of any our subsidiaries, whether or not such decline results in a failure to meet the applicable capital requirement, may limit the ability of that subsidiary to make dividends or distributions to us, could result in a loss of new business, or could be a factor in causing ratings agencies to downgrade financial strength ratings, each of which could have an adverse effect on our business, results of operations and financial condition. Moreover, future revisions to the applicable capital calculations relevant to our subsidiaries could result in a reduction in those capital ratios below certain prescribed levels, and in case of such a reduction we may be required to hold additional capital in the applicable insurance subsidiary.
Potential government intervention in the insurance industry and instability in the marketplace for insurance products could hinder our flexibility and negatively affect the business opportunities that may be available to us in the market.
Government intervention in the insurance industry and the possibility of future government intervention have created uncertainty in the insurance markets. Governmental authorities worldwide have become increasingly interested in potential risks posed by the insurance industry as a whole to commercial and financial systems in general, and there could be increased regulatory intervention in the reinsurance and insurance industries in the future.
Government regulators are generally concerned with the protection of policyholders to the exclusion of other constituencies, including shareholders of insurers. While we cannot predict the exact nature, timing or scope of possible governmental initiatives, such proposals could adversely affect our business by, among other things:
•providing insurance capacity in markets and to consumers that we target;
•requiring our participation in industry pools and guaranty associations;
•further regulating the terms of reinsurance and insurance policies; or
•disproportionately benefiting the companies of one country over those of another.
Government intervention has in the recent past taken the form of financial support of certain companies in the reinsurance and insurance industry. Governmental support of individual competitors can lead to increased pricing pressure and a distortion of market dynamics. The insurance industry is also affected by political, judicial and legal developments that may create new and expanded theories of liability, which may result in unexpected claims frequency and severity and delays or cancellations of products and services by insureds, insurers and reinsurers, which could adversely affect our business.
Additionally, governments and regulatory bodies may take unpredictable action to ensure continued supply of insurance, particularly where a given event leads to withdrawal of capacity from the market. For example, regulators may seek to force us to offer certain covers to insureds, constrain our flexibility to apply certain terms and conditions or constrain our ability to make changes to the pricing of our policies. There can be no assurance as to the effect that any such governmental or regulatory actions will have on the financial markets generally or on our competitive position, business and financial condition. See Item 1A ''Risk Factors - Risks Relating to Regulation - Any future regulatory changes, including political, regulatory and industry initiatives by state and international authorities, could result in the imposition of significant restrictions on our ability to do business.''
The insurance regulatory framework and legislation enacted in Bermuda as to economic substance may affect our operations.
Pursuant to the Bermuda Economic Substance Act (“ Bermuda ESA”) that came into force in December 2018, a registered entity other than an entity which is resident for tax purposes in certain jurisdictions outside Bermuda, which we refer to as a non-resident entity, that carries on as a business any one or more of the “relevant activities” referred to in the Bermuda ESA, must comply with economic substance requirements. The “relevant activities” are carrying on any one or more of the following activities: banking, insurance, fund management, financing and leasing, headquarters, shipping, distribution and service center, intellectual property and holding entity.
In this jurisdiction, an in-scope entity which is engaged in any one or more of the “relevant activities” must satisfy an economic substance test, by performing core income-generating activities in the jurisdiction, being directed and managed in an appropriate manner in the jurisdiction and, having within the jurisdiction (i) an adequate amount of operating expenditure incurred in each jurisdiction, (ii) an adequate physical presence and (iii) an adequate number of qualified full-time employees or other personnel.
The Bermuda ESA could affect the manner in which we operate the business of our subsidiaries domiciled in Bermuda, which could adversely affect our business, financial condition and results of operations. Non-compliance with the Bermuda ESA could result in significant financial penalties and other sanctions.
Regulatory regimes and changes to accounting rules may adversely impact our financial results irrespective of business operations.
Accounting standards and regulatory changes may require modifications to our accounting principles, both prospectively and for prior periods, and such changes could have an adverse impact on our financial results. Required modification of our existing principles, and new disclosure requirements, could have an impact on our results of operations and increase our expenses in order to implement and comply with any new requirements. Future changes to U.S. GAAP or Statutory Accounting Principles could impact our product profitability, reserve and capital requirements, financial condition or results of operations.
Risks Relating to Our Relationship with Brookfield Wealth Solutions
We depend on affiliates of BAM under certain Investment Management Agreements and our business may experience an adverse impact should we lose any of the services provided to our company thereunder.
We rely on affiliates of BAM as an investment manager of certain of our subsidiaries under certain Investment Management Agreements. BAM is not required to maintain the employment of any of its professionals or to cause any particular professionals to provide services to us or on our behalf. In addition, the employees of BAM that provide services to our company are not required to have as their primary responsibility the provision of investment management services to our company or to act exclusively for our company. BAM may provide similar services to other companies, including those who compete with us. If our company were to lose the investment management services
provided by BAM, or if BAM fails to perform its obligations under the Investment Management Agreements adequately, we may experience an adverse impact on our business operations.
Risks Relating to Our Preferred Shares
We may fail to authorize and pay dividends on our preferred stock.
We may fail to authorize and pay dividends on our preferred stock. Unpaid dividends could result in our inability to repurchase, redeem or otherwise acquire for consideration our preferred stock. The historical performance of us and of our affiliates should not be considered indicative of future results of our company’s investment portfolio or our ability to declare or pay dividends on our preferred stock. Ownership of our preferred stock may also give preferred shareholders other corporate governance rights that could weaken the rights and interests of other stakeholders.
We only list preferred shares on the NYSE and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements. Holders of our preferred shares will not have the same protections afforded to shareholders of companies that are subject to such requirements.
Following the Merger and Post-Effective Merger, our common shares were delisted from the NYSE and only our preferred shares remain listed on the NYSE. As a result, certain of the listing rules, corporate governance requirements and provisions of the Exchange Act, are no longer applicable to us.
Following the Merger and Post-Effective Merger, we have elected to utilize certain of the exemptions available to us and may elect to utilize all of the exemptions available to us in the future. Accordingly, holders of our preferred shares no longer have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE or certain of the reporting obligations under the Exchange Act.
The interests of the sole holder of our common shares may differ from the interests of holders of our preferred shares and our outstanding indebtedness.
Following the Merger and Post-Effective Merger, Brookfield Wealth Solutions indirectly owns all of the Company’s outstanding common shares and has the ability to appoint and remove from time to time all of the members of our Board of Directors (the "Board"). As a result, we are controlled by Brookfield Wealth Solutions, and it has significant influence over our business. The interests of Brookfield Wealth Solutions in many cases will differ from those of holders of our outstanding indebtedness and preferred shares in material respects. For example, Brookfield Wealth Solutions may have an interest in pursuing acquisitions, divestitures, financings or other transactions that might involve risks to or otherwise adversely affect holders of our outstanding indebtedness or preferred shares. In addition, Brookfield Wealth Solutions may from time to time in the future, acquire interests in businesses that directly or indirectly compete with certain portions of our business or are our suppliers or customers. The companies in which Brookfield Wealth Solutions invests may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
Our currently outstanding preferred shares could be adversely affected by the issuance of additional preferred shares and by other transactions.
The issuance of additional preferred shares on parity with or senior to our currently outstanding preferred shares would adversely affect the economic interests of the holders of such outstanding preferred shares, and any issuance of preferred shares senior to such outstanding preferred shares, or any issuance of additional indebtedness, could affect our ability to pay dividends on, redeem or pay the liquidation preference on such outstanding preferred shares in the event of our liquidation, dissolution or winding-up. We may at any time and from time to time, without notice to or the consent of holders of our preferred shares, issue additional preferred shares either through public or private sales. We may also authorize additional shares of preferred stock (including other series of preferred stock in addition to the currently outstanding Series D preferred shares) and issue additional shares of other series of preferred stock at any time and from time to time, without notice to or the consent of holders of our preferred shares. Such actions could adversely affect the market price of our preferred shares.
We may redeem our Series D preferred shares.
As provided by our Certificate of Incorporation, we may, at our option, redeem the Series D preferred shares (a) in whole or in part, from time to time, on or after their First Call Date specified in the Certificate of Designations for such shares included in our Certificate of Incorporation, or (b) in whole but not in part, at any time prior to the First Call Date, within 90 days after the occurrence of a “rating agency event” or a “regulatory capital event,” as defined in such Certificate of Designations. Events that would constitute a “rating agency event” or a “regulatory capital event” could occur at any time and could result in our Series D preferred shares being redeemed earlier than would otherwise be the case. If we choose to redeem our Series D preferred shares, holders of such shares may not be able to reinvest the redemption proceeds in a comparable security at an effective dividend or interest rate as high as the dividend payable on such preferred shares.
The voting rights of our preferred shares are limited.
Holders of our preferred shares have no voting rights with respect to matters that generally require the approval of voting stockholders. In accordance with our Certificate of Incorporation, the limited voting rights of holders of such shares include the right to vote as a class on certain fundamental matters that may affect the preferences or special rights of the series and to elect two additional directors in the event that
dividends on the Series D preferred shares have not been declared or paid for the equivalent of six dividend payments, whether or not for consecutive dividend periods.
Our preferred shares are equity and are subordinate to our existing and future indebtedness.
Our preferred shares are equity interests and do not constitute indebtedness. As such, our preferred shares will rank junior to all indebtedness and other non-equity claims on us (including intercompany and related party indebtedness and other claims) with respect to assets available to satisfy claims on us, including in a bankruptcy, liquidation or dissolution of us. As of December 31, 2025, our total indebtedness was approximately $3.2 billion (excluding intercompany indebtedness). We from time to time issue intercompany indebtedness to our subsidiaries, which does not constitute consolidated indebtedness under generally accepted accounting principles. The amount of our intercompany indebtedness will vary from time to time and could be substantial at any time. In addition, our existing and future indebtedness may restrict payments of dividends on our preferred shares.
Additionally, unlike indebtedness, where principal and interest would customarily be payable on specified due dates, in the case of our preferred shares (1) dividends are payable only if declared by our board of directors (or a duly authorized committee of the board) and (2) dividends and any redemption price, if applicable, may be paid by us, as a corporation, only out of lawfully available funds. Further, our preferred shares place no restrictions on our business or operations or on our ability to incur indebtedness or engage in any transactions, subject only to the limited voting rights applicable to such shares as provided under our Certificate of Incorporation.
Risks Relating to Taxation
Recent changes in U.S. federal income tax law may significantly increase our tax liability.
Our company and its U.S. subsidiaries may be subject to the base erosion and anti-abuse tax (“BEAT”). The BEAT operates as a minimum tax and generally is calculated as 10.5% of the “modified taxable income” of an “applicable taxpayer.” 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 certain payments made to non-U.S. affiliates, as well as the “base erosion percentage” of any net operating loss deductions. The BEAT applies only to the extent it exceeds a taxpayer’s regular corporate income tax liability (determined without regard to certain tax credits) and only in years in which the “base erosion percentage” exceeds a specified percentage.
Under the Inflation Reduction Act of 2022, a 15% corporate alternative minimum tax (“CAMT”) is imposed on the adjusted financial statement income of certain large corporations, effective for taxable years beginning after December 31, 2022. The impact of the CAMT, if any, will vary from year to year, based on the relationship between our adjusted financial statement income and our taxable income. Certain of our U.S. subsidiaries may be subject to CAMT for taxable year ending December 31, 2025, and may be subject to CAMT in the current or future taxable years. If applicable in any given year, the BEAT or CAMT may significantly increase the tax liability of our U.S. subsidiaries for such year.
Changes in U.S. tax law might adversely affect us or our shareholders.
The tax treatment of our company and our subsidiaries may be the subject of future U.S. tax legislation. We cannot predict whether any particular proposed legislation will be enacted or, if enacted, what the specific provisions or the effective date of any such legislation would be, or whether it would have any effect on our company or our subsidiaries. No assurance can be provided that future legislative, administrative, or judicial developments will not result in an increase in the amount of U.S. tax payable by our company, our subsidiaries, or shareholders. Any such developments could have a material and adverse effect on shareholders or our business, financial condition, and operating results.
Generally, U.S. federal tax law permits tax deferral on the inside build-up of investment value of certain retirement savings, including annuity products, until a contract distribution has occurred. In general, death benefits paid under a life insurance contract are excluded from taxation. Attractiveness of the Company's products for some individuals may depend on the enacted tax rates and the impact on the value of the deferral. Congress from time to time may enact other changes to the tax law that could make our products less attractive to consumers, including legislation that would modify the tax favored treatment of retirement savings, life insurance and annuity products.
The recently enacted Bermuda corporate income tax, or other changes in Bermuda tax laws, may impact the earnings and results from operations of our Bermuda affiliates.
In December 2023, the government of Bermuda enacted the Corporate Income Tax Act 2023 (“Bermuda CIT”). The Bermuda CIT imposes a corporate income tax on certain multinational groups earning income in Bermuda beginning January 1, 2025. The new Bermuda CIT also introduced an economic transition adjustment (“ETA”) which allows for an elective increase or decrease in the tax basis of assets and liabilities (excluding goodwill) held as of September 30, 2023 to fair value. It also allows for the recognition of a DTA related to the value of “identifiable intangible assets” that may be amortized over 10 years, beginning January 1, 2025. On December 11, 2025, the Government of Bermuda enacted further amendments to the Bermuda Tax Act to align the calculation of the ETA with the Administrative Guidance issued by OECD in January 2025. Under these changes, any deferred tax liability that would otherwise arise solely from the mechanical calculation of the ETA is eliminated by reducing the amount to zero.
Our Bermuda based subsidiaries and affiliates generally will be subject to tax under the Bermuda CIT. The headline rate will be 15% but may be reduced by any available applicable tax credits. We are continuing to assess and monitor the impact of the Bermuda CIT on our operations, including any transitional provisions and elections available to mitigate such impact.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy; Governance
The Company maintains a documented Information Security Risk Management Program (“Program”) that includes risk assessments regularly conducted by the Company and third-party experts, assessors and auditors to evaluate potential security threats that may have a negative impact on the organization, detect potential vulnerabilities and mitigate any identified security risks. The Program is integrated into the Company’s overall risk management program. The Program is informed by industry standards, regulatory requirements, and frameworks and is evaluated on an ongoing basis to address the evolving cyber threat landscape and seek alignment with industry standards such as applicable legal and regulatory guidance and mandates. In addition, the Company regularly self-assesses the Program against its internal policies.
As part of the Program, the Company deploys technical and organizational safeguards designed to protect the Company’s networks, systems, and data from cybersecurity threats; maintains a threat management program that continuously monitors evolving cybersecurity risks; has established and maintains incident response plans that address the Company’s response to a cybersecurity incident; maintains a third-party risk management program that includes a due diligence and ongoing assessment process for service providers based on the risk they present and the adequacy of their safeguards; and provides ongoing education and training to employees regarding information security threats. The Company also conducts periodic penetration testing and tabletop exercises.
The Company’s Chief Information Security Officers, experienced information systems security professionals with many years of experience across a variety of technology sub-specialties, provide oversight and direction for the Program and regularly communicate the information security risk posture and the prevention, detection, mitigation, and remediation of cybersecurity incidents to the Company’s executive team and the Company’s Audit and Risk Management Committee. Our Chief Information Security Officers and the Audit and Risk Management Committee oversee the Program and management of risks from cybersecurity threats and review and monitor the Company’s business and technology strategy.
As of the reporting date, no risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition. See also Item 1A ''Risk Factors - Risks Relating to Our Business and Industry - Failure to maintain the security of our information and technology systems could have an adverse effect on our business.''
Item 2. Properties
The Company owns and leases office spaces for our primary operations but does not own properties that are material to the Company and its subsidiaries.
Item 3. Legal Proceedings
See Note 27 - Financial Commitments and Contingencies to the audited consolidated financial statements.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
None.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's discussion and analysis reviews our consolidated financial position at December 31, 2025 compared with December 31, 2024, and our consolidated results of operations for the years ended December 31, 2025, 2024, and 2023, and where appropriate, factors that may affect future financial performance. This analysis should be read in conjunction with our audited consolidated financial statements, notes thereto and selected consolidated financial data appearing elsewhere in this report.
Cautionary Statement Regarding Forward-Looking Information
All statements, trend analysis and other information contained in this report and elsewhere (such as in filings by us with the SEC, press releases, presentations by us or management or oral statements) may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give expectations or forecasts of future events and do not relate strictly to historical or current facts. They may relate to markets for our products, trends in our operations or financial results, strategic alternatives, future operations, strategies, plans, partnerships, investments, share buybacks and other financial developments. They use words and terms such as anticipate, assume, believe, can, continue, could, enable, estimate, expect, foreseeable, goal, improve, intend, likely, may, model, objective, opportunity, outlook, plan, potential, project, remain, risk seek, should, strategy, target, will, would, and other words and terms of similar meaning or that are otherwise tied to future periods or future performance, in each case in all forms of speech and derivative forms, or similar words, as well as any projections of future events or results. Forward-looking statements, by their nature, are subject to a variety of assumptions, risks, and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by the Company. Factors that may cause our actual decisions or results to differ materially from those contemplated by these forward-looking statements include, among other things:
•results differing from assumptions, estimates, and models.
•interest rate condition changes.
•investments losses or failures to grow as quickly as expected due to market, credit, liquidity, concentration, default, and other risks.
•option costs increases.
•counterparty credit risks.
•third parties service-provider failures to perform or to comply with legal or regulatory requirements.
•poor attraction and retention of customers or distributors due to competitors’ greater resources, broader array of products, and higher ratings.
•information technology and communication systems failures or security breaches.
•credit or financial strength downgrades.
•inability to raise additional capital to support our business and sustain our growth on favorable terms.
•U.S. and global capital market and economic deterioration due to major public health issues, including political or social developments, or otherwise.
•failure to authorize and pay dividends on our preferred stock.
•subsidiaries’ inability to pay dividends or make other payments to us.
•failure at reinsurance, investment management, or third-party capital arrangements.
•failure to prevent excessive risk-taking.
•failure of policies and procedures to protect from operational risks.
•increased litigation, regulatory examinations, and tax audits.
•changes to laws, regulations, accounting, and benchmarking standards.
•takeover or combination delays or deterrence by laws, corporate governance documents, or change-in-control agreements.
•effects of climate change, or responses to it.
•failure of efforts to meet environmental, social, and governance standards and to enhance sustainability.
For a detailed discussion of these and other factors that might affect our performance, see Item 1A of this report.
Overview of our Business
As a result of the Post-Effective Merger of American National into AEL, the consolidated financial statements for the periods prior to the Post-Effective Merger represent the results of American National as the accounting acquirer. For periods subsequent to the Post-Effective Merger, the consolidated financial statements represent the combined results of American National and AEL. Throughout this report, unless otherwise specified or the context otherwise requires, all references to “ANGI", the "Company", "we", "our" and similar references are to American National Group Inc. and its consolidated subsidiaries.
Key Financial Data
The following table presents key financial data of the Company:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Total assets | $ | 130,257 | | | $ | 121,221 | | | $ | 35,855 | |
| Net income attributable to American National Group Inc. common stockholder | 469 | | | 696 | | | 392 | |
| Segment distributable operating earnings (1) | 1,750 | | | 1,267 | | | 598 | |
(1)Distributable Operating Earnings is a Non-GAAP measure. See “Reconciliation of Non-GAAP Measures”.
Results of Operations
The results of operations discussed below comprise results for American National for the periods prior to the Post-Effective Merger and the combined results of American National and AEL for periods subsequent to the Post-Effective Merger.
Net Premiums
The breakdown of premiums by product, net of ceded premiums is as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Annuities | | | | | |
| Retail (1) | | | | | |
| Fixed Index | $ | — | | | $ | 5 | | | $ | — | |
| Fixed Rate | 2 | | | 2 | | | 1 | |
| | | | | |
| Total Retail Annuities | 2 | | | 7 | | | 1 | |
| Institutional | | | | | |
| Pension Risk Transfer (2) | 1,337 | | | 3,161 | | | 1,148 | |
| Total Institutional Annuities | 1,337 | | | 3,161 | | | 1,148 | |
| | | | | |
| Total Annuities | 1,339 | | | 3,168 | | | 1,149 | |
| | | | | |
| Life | 377 | | | 511 | | | 520 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Total net premiums | $ | 1,716 | | | $ | 3,679 | | | $ | 1,669 | |
(1)Premiums received from retail annuities are generally recorded as deposits and are not included in net premiums on the Consolidated Statements of Operations.
(2)Premiums differ from gross annuity sales in Pension Risk Transfer (“PRT”), since premiums are recognized as revenue when due while they are included in sales upon deal close, which is confirmed by the counterparty.
2025 vs. 2024
For the year ended December 31, 2025, we reported total net premiums of $1.7 billion, compared to net premiums of $3.7 billion in the prior year. The decrease of $2.0 billion is driven by a decrease of $1.8 billion in the Annuities segment due to a more competitive PRT market resulting in our decision to allocate capital to our retail annuity and funding agreement opportunities in 2025, coupled with a decrease of $134 million due to the impact of reinsurance agreements executed in our Life Insurance segment.
2024 vs. 2023
For the year ended December 31, 2024, we reported total net premiums of $3.7 billion, compared to $1.7 billion in the prior year. The increase of $2.0 billion is primarily driven by continued growth within the PRT business and the execution of the Company’s first U.K. reinsurance transaction, reinsuring $1.3 billion of pension liabilities. Net premiums for our Annuities segment increased by $2.0 billion due to growth in PRT business as noted.
Gross Annuity Sales
Gross annuity sales are comprised of directly written retail and institutional annuity deposits, which generally are not included in revenues on the Consolidated Statements of Operations.
The breakdown of gross annuity sales follows:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Retail: | | | | | |
Fixed Index | $ | 9,213 | | | $ | 5,474 | | | $ | 393 | |
Fixed Rate | 6,471 | | | 4,932 | | | 3,921 | |
| Variable (1) | 5 | | | 63 | | | 63 | |
Total Retail Annuities | 15,689 | | | 10,469 | | | 4,377 | |
| | | | | |
| Institutional: | | | | | |
| Pension Risk Transfer (2) | 1,532 | | | 3,151 | | | 1,008 | |
| Funding Agreements | 2,289 | | | — | | | — | |
Total Institutional Annuities | 3,821 | | | 3,151 | | | 1,008 | |
| | | | | |
| Total gross annuity sales | $ | 19,510 | | | $ | 13,620 | | | $ | 5,385 | |
(1)Variable sales represent additional premiums on previously issued policies.
(2)Gross annuity sales differ from premiums in Pension Risk Transfer, since premiums are recognized as revenue when due while they are included in sales upon deal close, which is confirmed by the counterparty.
2025 vs. 2024
For the year ended December 31, 2025, we reported total gross annuity sales of $19.5 billion, compared to gross annuity sales of $13.6 billion in the prior year. The increase of $5.9 billion is primarily due to the addition of a full year of fixed index annuity deposits generated by American Equity subsequent to the completion of the acquisition as well as the commencement of our funding agreement programs in 2025. These increases were partially offset by a decrease in PRT sales during 2025 due to a more competitive PRT market resulting in our decision to allocate capital to our retail annuity and funding agreement opportunities in 2025.
2024 vs 2023
For the year ended December 31, 2024, we reported total gross annuity sales of $13.6 billion, compared to gross annuity sales of $5.4 billion in the prior year. The increase of $8.2 billion is primarily due to the addition of fixed index annuity deposits generated by American Equity subsequent to the completion of the acquisition as well as an increase in PRT sales due to continued scaling of that segment of business.
The following table summarizes the financial results of our business for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Net premiums | $ | 1,716 | | | $ | 3,679 | | | $ | 1,669 | |
| Other policy revenue | 691 | | | 657 | | | 414 | |
| Net investment income | 4,888 | | | 3,481 | | | 1,240 | |
| Investment related gains (losses) | 92 | | | (333) | | | (2) | |
| | | | | |
| Other income | 100 | | | 35 | | | 74 | |
| Total revenues | 7,487 | | | 7,519 | | | 3,395 | |
| | | | | |
| Policyholder benefits and claims incurred | 2,210 | | | 4,048 | | | 1,855 | |
| Interest sensitive contract benefits | 2,026 | | | 1,745 | | | 480 | |
| Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired | 1,008 | | | 587 | | | 112 | |
| Change in fair value of insurance-related derivatives and embedded derivatives | 216 | | | (94) | | | 36 | |
| Change in fair value of market risk benefits | 725 | | | (3) | | | (69) | |
| | | | | |
| Operating expenses | 725 | | | 701 | | | 430 | |
| Interest expense | 183 | | | 165 | | | 99 | |
| Total benefits and expenses | 7,093 | | | 7,149 | | | 2,943 | |
| Net income before income taxes | 394 | | | 370 | | | 452 | |
| Income tax expense (benefit) | (20) | | | (199) | | | 43 | |
| Income from continuing operations | 414 | | | 569 | | | 409 | |
| Income (loss) from discontinuing operations, net of tax | 126 | | | 111 | | | (12) | |
| Net income | 540 | | | 680 | | | 397 | |
| Less: Net income (loss) from continuing operations attributable to noncontrolling interests, net of tax | 7 | | | (49) | | | 5 | |
| | | | | |
| Net income attributable to American National Group Inc. stockholders | 533 | | | 729 | | | 392 | |
| Less: Preferred stock dividends and redemption | 64 | | | 33 | | | — | |
| Net income attributable to American National Group Inc. common stockholder | $ | 469 | | | $ | 696 | | | $ | 392 | |
2025 vs. 2024
The results of operations discussed below comprise results for American National for the periods prior to the Post-Effective Merger and the combined results of American National and AEL for periods subsequent to the Post-Effective Merger.
For the year ended December 31, 2025, we reported net income of $533 million, compared to a net income of $729 million in the prior year. The decrease is primarily due to a decline in net premiums and policyholder benefits and claims incurred as a result of a more competitive PRT market in the current year resulting in our decision to allocate capital to our retail annuity and funding agreement opportunities in 2025. In addition, unfavorable fair value movements in our fixed index annuity reserves driven by movements in interest rates and equity market performance used in the valuation of these liabilities and an increase in amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired as a result of the acquisition of American Equity contributed to a decrease in net income. These impacts were offset by increased net investment income due to the inclusion of American Equity for a full year following the acquisition. Additionally, the prior year included investment related losses due to the transfer of assets associated with the RGA reinsurance transaction and a non-recurring deferred income tax recovery in relation to the corporate income tax regime in Bermuda.
Net premiums and other policy revenue were $2.4 billion for the year ended December 31, 2025, compared to $4.3 billion in the prior year. The decrease of $1.9 billion is primarily a result of lower PRT related premiums in the current year due to a more competitive PRT market which resulted in our decision to allocate capital to our retail annuity and funding agreement opportunities during 2025. Additionally, there was an increase in ceded premiums with the cession of certain life insurance business beginning in Q3 2024.
Net investment income increased by $1.4 billion for the year ended December 31, 2025, relative to the prior year. Net investment income is comprised of interest and dividends earned on fixed income investments and equity investments, as well as other miscellaneous income from equity accounted investments primarily consisting of real estate partnerships and investment funds. The increase was primarily driven by the growth in our investment portfolio due to a full year contribution from American Equity following the acquisition, coupled with the continued rotation into higher yielding investment strategies.
Investment related gains (losses) increased by $425 million relative to the prior year. The increase was primarily due to the non-recurrence of realized losses on investments driven by the transfer of assets pursuant to the RGA reinsurance transaction, which was effective July 1, 2024, as well as volatility on equity positions.
Policyholder benefits and claims incurred decreased by $1.8 billion for the year ended December 31, 2025, relative to the prior year. The decrease is primarily due to a decrease in the PRT business in 2025 which resulted in lower reserves year over year. Additionally, there was a decrease in claims incurred due to the impact of business ceded to RGA beginning in Q3 2024.
Interest sensitive contract benefits represent interest credited to policyholders’ account balances (“PAB”) from our investment contracts with customers. For the year ended December 31, 2025, interest sensitive contract benefits increased by $281 million, which was primarily driven by an increase in the in-force block of annuities business following the acquisition of American Equity with a full year of that impact in 2025.
Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired were $1.0 billion for the year ended December 31, 2025, compared to $587 million in the prior year. The increase of $421 million was due to an increase in the amortization of VOBA due to a full year impact of the increase in the VOBA asset and related amortization following the acquisition of American Equity, as well as the continued growth of the annuities business, which increases the deferred acquisition cost and deferred sales inducements asset.
Change in fair value of insurance-related derivatives and embedded derivatives represents the fair value change of call options used to fund the equity-indexed annuity and universal life contracts as well as the fair value change of embedded derivatives of these contracts. Fair value changes are impacted by the expected and actual performance of the indices the call options relate to as well as interest rates used to estimate our embedded derivatives. The increase in expense of $310 million is attributable to the impact of interest rates and equity market performance on the fair value of the embedded derivatives and equity-indexed options as well as the net impact of assumption updates from the annual assumption review used in the calculation of the fair value of the embedded derivatives .
Change in fair value of market risk benefits represents the mark-to-market movements of our liability based on the protection to the policyholder from capital market risks. The loss of $725 million for the year ended December 31, 2025 or an increase of $728 million year-over-year is primarily due to the impact of interest rates and equity markets on the valuation of these liabilities as well as the net impact of assumption updates as a result of the annual assumption review used in the calculation of the fair value of market risk benefits. Additionally, the market risk benefit liabilities increased as a result of the acquisition of American Equity leading to increases in the change in the fair value of these liabilities.
Operating expenses were $725 million for the year ended December 31, 2025 compared to $701 million to the prior year, which represents an increase of $24 million. The increase was primarily driven by additional costs incurred to support the continued growth of our business as well as a full year of American Equity’s operating expenses following the acquisition in 2024, partially offset by a non-recurring expense saving at American National related to changes in its pension plan.
Interest expense on borrowings increased by $18 million for the year ended December 31, 2025 compared to the prior year. The increase is primarily as a result of increased borrowings with the new term loan entered into in May 2024, senior notes issued in June 2025, junior subordinated notes issued in August 2025, as well as the acquisition of American Equity which included legacy senior notes and subordinated debt. These increases in interest expense were partially offset by recurring repayments of the term loan during 2025.
Income tax expense (benefit) was $(20) million for the year ended December 31, 2025 compared to $(199) million in the prior year. In both years, the tax benefit was due to the recognition of a deferred tax asset related to the recently enacted Bermuda corporate income tax. Excluding this benefit, the company’s effective tax rate was slightly higher than the U.S federal statutory rate of 21% primarily due to changes in its valuation allowance on its deferred tax assets.
Income (loss) from discontinuing operations, net of tax was $126 million for the year ended December 31, 2025 compared to $111 million in the prior year or an increase of $15 million. The increase was largely attributable to improvements in our loss experience arising from underwriting actions implemented over the past twelve months on the property casualty block of business which was disposed of during 2025 as discussed in Note 28 - Discontinued Operations.
2024 vs. 2023
For the year ended December 31, 2024, we reported net income of $729 million, compared to a net income of $392 million in the prior year. The increase is primarily due to an increase in net premiums as a result of the closing of a reinsurance transaction with respect to a U.K. pension risk transfer deal during Q4 2024. In addition, net investment income and other policy revenue increased due to the inclusion of American Equity following the acquisition. This increase was partially offset by an increase in policyholder benefits and claims incurred due to growth in the PRT business, an increase in investment related losses due to the transfer of assets associated with the RGA reinsurance transaction and volatility on equity positions, an increase in interest sensitive contract benefits, amortization of deferred policy acquisition costs, deferred sales inducements, and value of business acquired and operating expenses due to the inclusion of American Equity following the acquisition.
Net premiums and other policy revenue were $4.3 billion for the year ended December 31, 2024, compared to $2.1 billion in the prior year. The increase of $2.3 billion is primarily due to growth in the PRT business. Additionally, there was an increase in other policy revenue which reflects surrender fee and rider fee income recognized on annuity policies added following the acquisition of American Equity.
Net investment income increased by $2.2 billion for the year ended December 31, 2024, relative to the prior year. Net investment income is comprised of interest and dividends earned on fixed income investments and equity investments, as well as other miscellaneous income from equity accounted investments primarily consisting of real estate partnerships and investment funds. The increase was primarily driven by the increase in assets under management following the acquisition of American Equity, as well as the continued growth in the existing investment portfolio and the rotation into higher yielding investment strategies.
Investment related gains (losses) increased by $331 million relative to the prior year. The increase was primarily due to realized losses on investments driven by the transfer of assets pursuant to the RGA reinsurance transaction, which was effective July 1, 2024, as well as volatility on equity positions.
Policyholder benefits and claims incurred increased by $2.2 billion for the year ended December 31, 2024, relative to the prior year. The increase is primarily due to an increase in growth of the PRT business which resulted in higher reserves. These increases were partially offset by a decrease in claims incurred due to the impact of business ceded to RGA beginning in Q2 2024.
Interest sensitive contract benefits represent interest credited to PAB from our investment contracts with customers. For the year ended December 31, 2024, interest sensitive contract benefits increased by $1.3 billion, which was primarily driven by an increase in the in-force block of annuities business following the acquisition of American Equity.
Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired were $587 million for the year ended December 31, 2024, compared to $112 million in the prior year. The increase of $475 million was primarily due to an increase in the amortization of VOBA due to the increase in the VOBA asset following the acquisition of American Equity, as well as the continued growth of the annuities business, which increases the deferred acquisition cost and deferred sales inducements asset.
Change in fair value of insurance-related derivatives and embedded derivatives represents the fair value change of call options used to fund the equity-indexed annuity and universal life contracts as well as the fair value change of embedded derivatives of these contracts. Fair value changes are impacted by the expected and actual performance of the indices the call options relate to as well as interest rates used to estimate our embedded derivatives. The decrease in expense of $130 million is attributable to the impact of interest rates and equity market performance on the fair value of the embedded derivatives and equity-indexed options and an update to the short term option budget assumption used in the calculation of the fair value of the embedded derivatives associated with fixed index annuity products.
Change in fair value of market risk benefits represents the mark-to-market movements of our liability based on the protection to the policyholder from capital market risks. The gain of $3 million for the year ended December 31, 2024 is primarily due to the impact of interest rates and equity markets on the valuation of these liabilities as well as the net impact of updates to the option budget assumption and policyholder lapse assumption used in the calculation of the fair value of market risk benefits. Additionally, the impact of these changes were offset by an increase in market risk benefit liabilities as a result of the acquisition of American Equity leading to increases in the change in the fair value of these liabilities.
Operating expenses were $701 million for the year ended December 31, 2024, compared to $430 million for the prior year, which represents an increase of $271 million. The increase was primarily driven by transaction expenses incurred related to the acquisition of American Equity as well as an increase associated with eight months of operating expenses from American Equity subsequent to the acquisition.
Interest expense on borrowings increased by $66 million for the year ended December 31, 2024 compared to the prior year. The increase is primarily driven by increased borrowings with the new term loan entered into in May and new senior notes entered into in October 2024 as well as the acquisition of American Equity which included legacy senior notes and subordinated debt.
Income tax expense (benefit) was $(199) million for the year ended December 31, 2024 compared to $43 million in the prior year. In both years, the Company recognized a tax benefit due to the recognition of a deferred tax asset related to the recently enacted Bermuda corporate income tax. Excluding this benefit, the company’s effective tax rate in 2024 was slightly higher than the U.S federal statutory rate of 21% primarily due to changes in its valuation allowance on its deferred tax assets. In 2023 the tax rate was slightly lower than the U.S. federal rate primarily due to tax credit benefits.
Income (loss) from discontinuing operations, net of tax was $111 million for the year ended December 31, 2024 compared to $(12) million in the prior year or an increase of $123 million. The increase was largely attributable to improvements in our loss experience arising from underwriting actions implemented in the prior year on the property casualty block of business which was disposed of during 2025 as discussed in Note 28 - Discontinued Operations.
Distributable Operating Earnings
We measure operating performance primarily using Distributable Operating Earnings (“DOE”) which is a non-GAAP metric which measures our ability to acquire net insurance assets at a positive margin, and invest these assets at a return that is greater than the cost of policyholder liabilities. See “Performance Measures Used by Management” for the reconciliation of GAAP consolidated net income to DOE.
The following table presents DOE of each of our reporting segments for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Annuities | $ | 1,597 | | | $ | 1,073 | | | $ | 400 | |
| | | | | |
| Life Insurance | 153 | | | 194 | | | 198 | |
| Segment DOE | $ | 1,750 | | | $ | 1,267 | | | $ | 598 | |
2025 vs. 2024
Annuities – DOE within our annuities business represents contribution from both our retail and institutional platforms. DOE increased by $524 million for the year ended December 31, 2025 to the prior year. The increase is primarily attributable to an increased asset base from the acquisition of American Equity and continued growth of the business as well as deployment into higher yielding investment strategies.
Life Insurance – DOE decreased by $41 million for the year ended December 31, 2025 compared to the prior year. The decrease was primarily driven by the impact of the RGA reinsurance treaty executed during the third quarter of 2024.
2024 vs. 2023
Annuities – DOE within our annuities business represents contribution from both our retail and institutional platforms. DOE increased by $673 million for the year ended December 31, 2024 to the prior year. The increase is primarily attributable to earnings contributed from AEL as well as increased investment income from our continued deployment into higher yielding investment strategies.
Life Insurance – DOE decreased by $4 million for the year ended December 31, 2024 compared to the prior year. The decrease was primarily driven by the impact of the RGA reinsurance treaty executed during the third quarter partially offset by improved investment income from our continued deployment into higher yielding investment strategies.
Financial Condition
The following table summarizes the financial position as of December 31, 2025 and 2024:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Assets | | | |
| Investments | $ | 90,516 | | | $ | 77,961 | |
| Cash and cash equivalents | 11,660 | | | 10,867 | |
| Accrued investment income | 799 | | | 736 | |
| Deferred policy acquisition costs, deferred sales inducements and value of business acquired | 11,513 | | | 10,504 | |
| | | |
| | | |
| | | |
| Deferred tax asset | 460 | | | 495 | |
| Reinsurance recoverables and deposit assets | 9,255 | | | 9,862 | |
| Property and equipment | 161 | | | 154 | |
| Intangible assets | 1,501 | | | 1,526 | |
| Goodwill | 748 | | | 748 | |
| Other assets | 2,822 | | | 2,617 | |
| Separate account assets | 822 | | | 1,343 | |
| Assets related to discontinued operations | — | | | 4,408 | |
| Total assets | $ | 130,257 | | | $ | 121,221 | |
| | | |
| Liabilities | | | |
| Future policy benefits | $ | 10,962 | | | $ | 9,170 | |
| Policyholders’ account balances | 92,992 | | | 83,079 | |
| Policy and contract claims | 410 | | | 396 | |
| | | |
| Market risk benefits | 4,536 | | | 3,655 | |
| | | |
| Due to related parties | 103 | | | 77 | |
| Other policyholder funds | 353 | | | 340 | |
| Notes payable | 205 | | | 189 | |
| | | |
| Long term borrowings | 2,951 | | | 2,957 | |
| Funds withheld for reinsurance liabilities | 3,088 | | | 3,321 | |
| Other liabilities | 4,166 | | | 3,921 | |
| Separate account liabilities | 822 | | | 1,343 | |
| Liabilities related to discontinued operations | — | | | 2,745 | |
| Total liabilities | 120,588 | | | 111,193 | |
| | | |
| Equity | | | |
| Preferred stock, Series A | — | | | 389 | |
| Preferred stock, Series B | — | | | 296 | |
| Preferred stock, Series D | 292 | | | — | |
| Additional paid-in capital | 6,404 | | | 7,569 | |
| Accumulated other comprehensive income, net of taxes | 1,094 | | | 340 | |
| Retained earnings | 1,759 | | | 1,356 | |
| Non-controlling interests | 120 | | | 78 | |
| Total equity | 9,669 | | | 10,028 | |
| Total liabilities and equity | $ | 130,257 | | | $ | 121,221 | |
Comparison as of December 31, 2025 and 2024
Total assets increased by $9.0 billion during the year to $130.3 billion. The increase is primarily driven by net annuity inflows which results in increased cash and investment purchases.
Total investments increased by $12.6 billion from December 31, 2024 to December 31, 2025. The increase is primarily driven by the net annuity inflows and redeployment of cash and cash equivalents into fixed maturity investments resulting in increased investment purchases.
Cash and cash equivalents increased by $793 million from December 31, 2024 to December 31, 2025. The increase is primarily driven by annuity sales during the period not yet deployed into our investments. We continue to maintain a strong liquidity position across our segments. For further information, refer to “Liquidity and Capital Resources” section within this MD&A.
Deferred policy acquisition costs (“DAC”), deferred sales inducements (“DSI”) and value of business acquired (“VOBA”) are capitalized costs directly related to writing new policyholder contracts and include the VOBA intangible assets. During the year, the balance increased by $1.0 billion, primarily driven by deferral of acquisition costs and sales inducements associated with writing new business during the period, partially offset by the amortization of existing DAC, DSI and VOBA.
Net deferred tax assets (liabilities) were $(279) million at December 31, 2025 compared to $27 million at December 31, 2024 or a decrease of $306 million. The decrease is due to an increase in the deferred tax liability attributable to the deferral of acquisition costs from new business written during the period offset by changes in our deferred tax assets associated with our loss carryforwards.
Reinsurance recoverables and deposit assets are estimated amounts due to the Company from reinsurers and include reinsurance receivables and recoverables from reinsurers and deposit assets associated with reinsurance agreements. The amount decreased by $607 million in the year primarily driven by the run off of certain blocks of business ceded to external reinsurers.
Intangible assets decreased by $25 million from December 31, 2024 to December 31, 2025, primarily due to the amortization of intangible assets during the period.
Other assets were $2.8 billion as of December 31, 2025, an increase of $205 million from December 31, 2024. The balance includes current tax asset, market risk benefit asset, as well as other miscellaneous receivables and the increase is primarily attributable to an increase in the market risk benefit asset as a result of assumption updates made during the annual assumption review.
Separate account assets and liabilities both decreased by $521 million from December 31, 2024 to December 31, 2025, primarily due to the reversion of assets and the release of associated liabilities related to the termination of a qualified defined benefit pension plan during Q3 2025 as well as policyholder benefits and withdrawals during the year.
Assets related to to discontinued operations decreased by $4.4 billion due to the disposition of the P&C Subsidiaries in 2025 as described in Note 28 - Discontinued Operations, in the notes to the consolidated financial statements.
Future policy benefits and policyholders’ account balances increased by $11.7 billion from December 31, 2024 to December 31, 2025, primarily driven by annuity sales during the period as well as assumption updates as a result of the annual assumption review and the impact of changes in interest rates and equity markets on the valuation of the embedded derivatives during the period.
Market risk benefits increased by $881 million from December 31, 2024 to December 31, 2025, primarily driven by the impact of changes in interest rates and equity markets as well as assumption updates as a result of the annual assumption review on the valuation of market risk benefits.
Funds withheld for reinsurance liabilities decreased by $233 million from December 31, 2024 to December 31, 2025, as a result of the decrements on the existing ceded liabilities and the corresponding funds withheld payable as flow business is not being ceded to external reinsurers.
Other liabilities increased by $245 million from December 31, 2024 to December 31, 2025. The balance includes the reinsured market risk benefits liability, accrued interest on debt and other miscellaneous payables. The increase is primarily due to an increase in debt and payables from consolidated variable interest entities (“VIEs”).
Liabilities related to to discontinued operations decreased by $2.7 billion due to the disposition of the P&C Subsidiaries in 2025 as described in Note 28 - Discontinued Operations, in the notes to the consolidated financial statements.
Liquidity and Capital Resources
Capital Resources
We strive to maintain sufficient financial liquidity at all times so that we are able to participate in attractive opportunities as they arise, better withstand sudden adverse changes in economic circumstances within our operating subsidiaries and maintain payments to policyholders. Our principal sources of liquidity are cash flows from our operations and access to the Company’s third-party credit facilities. We proactively manage our liquidity position to meet liquidity needs and continue to develop relationships with lenders who provide borrowing capacity at competitive rates, while looking to minimize adverse impacts on investment returns. We look to structure the ownership of our assets to enhance our ability to monetize them to provide additional liquidity, if needed. Our liquidity for the periods noted below consisted of the following:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Cash and cash equivalents | $ | 11,660 | | | $ | 10,867 | |
| Liquid financial assets | 42,041 | | | 30,813 | |
| Undrawn credit facilities | 1,505 | | | 881 | |
| Total liquidity (1) | $ | 55,206 | | | $ | 42,561 | |
(1)Total Liquidity is a non-GAAP measure. See “Performance Measures used by Management.”
Today, we have significant liquidity within our insurance portfolios, giving us flexibility to secure attractive investment opportunities. In addition to a portfolio of highly liquid financial assets, our operating companies have additional access to liquidity from sources such as the Federal Home Loan Bank (“FHLB”) and access to a sub-allocation under the Brookfield Wealth Solutions revolving credit facility. As of December 31, 2025, the Company had no drawings and a total of $1.5 billion undrawn commitment available related to the FHLB program, and access to $300 million of capacity under the revolving credit facility.
Liquidity within our insurance subsidiaries may be restricted from time to time due to regulatory constraints. As of December 31, 2025, the Company’s total liquidity was $55.2 billion, which included $580 million of cash and cash equivalents held outside of the regulated insurance companies.
The following table presents a summary of our cash flows and ending cash balances for the years ended December 31, 2025, 2024, and 2023:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Operating activities | $ | 2,782 | | | $ | 2,522 | | | $ | 1,186 | |
| Investing activities | (9,746) | | | 2,520 | | | (1,301) | |
| Financing activities | 7,294 | | | 3,096 | | | 1,918 | |
| Cash and cash equivalents: | | | | | |
| Cash and cash equivalents, beginning of period | 11,330 | | | 3,192 | | | 1,389 | |
| Net change during the period | 330 | | | 8,138 | | | 1,803 | |
| | | | | |
| Cash and cash equivalents, end of period | 11,660 | | | 11,330 | | | 3,192 | |
| Less: Cash and cash equivalents of discontinued operations | — | | | 463 | | | 138 | |
| Cash and cash equivalents, end of period | $ | 11,660 | | | $ | 10,867 | | | $ | 3,054 | |
Operating Activities
2025 vs. 2024
For the year ended December 31, 2025, we generated $2.8 billion of cash from operating activities compared to $2.5 billion generated during the prior year. The increase is primarily due to a full year contribution of American Equity’s operating activities partially offset by the decline in net income, the drivers of which are discussed in Item 7 - Results of Operations.
2024 vs. 2023
For the year ended December 31, 2024, we generated $2.5 billion of cash from operating activities compared to $1.2 billion generated during the prior year. The increase is primarily due to higher investment income from the growth in the investment portfolio, coupled with the addition of American Equity’s investments.
Investing Activities
2025 vs. 2024
For the year ended December 31, 2025, we purchased $17.2 billion of available-for-sale fixed maturity securities compared to $8.6 billion in the prior year, partially offset by increased proceeds from sales and maturities of investments as we continue to optimize the performance of our investment portfolio. Additionally, in 2024 we acquired $10.8 billion of cash and cash equivalents from the acquisition of American Equity, net of cash proceeds paid. As this cash was deployed, there was a net deployment of $9.7 billion of cash from investing activities in the current year, compared to net inflow of $2.5 billion in the prior year.
2024 vs. 2023
For the year ended December 31, 2024, we acquired $10.8 billion of cash and cash equivalents from the acquisition of American Equity, net of cash proceeds paid, partially offset by net deployment into investments during the period. This resulted in net inflow of $2.5 billion of cash from investing activities, compared to net deployment of $1.3 billion in the prior year.
Financing Activities
2025 vs. 2024
For the year ended December 31, 2025, we recorded a net cash inflow of $7.3 billion from our financing activities, compared to a net cash inflow of $3.1 billion in the prior year period. The increase was mainly as a result of $7.4 billion net payments received on policyholders’ account deposits, partially offset by an increase in withdrawals on such accounts as well as the non-recurrence of cash flows associated with debt raised through the acquisition of American Equity in 2024.
2024 vs. 2023
For the year ended December 31, 2024, we recorded a net cash inflow of $3.1 billion from our financing activities, compared to a net cash inflow of $1.9 billion in the prior year period. The increase was mainly as a result of $2.1 billion net payments received on policyholders’ account deposits, partially offset by withdrawals on such accounts coupled with debt raised through the acquisition of American Equity.
Financial Instruments
To the extent that we believe it is economically prudent to do so, our strategy is to hedge a portion of our equity investments and/or cash flows exposed to foreign currencies by the Company. The following key principles form the basis of our foreign currency hedging strategy:
•We leverage any natural hedges that may exist within our operations;
•We utilize local currency debt financing to the extent possible; and
•We may utilize derivative contracts to the extent that natural hedges are insufficient.
Future Capital Obligations and Requirements
As of December 31, 2025, the Company and its subsidiaries, in aggregate, had outstanding investment commitments of $4.9 billion. The funded commitments are primarily recognized as mortgage loans, private loans, investment funds, investment real estate and other invested assets. For additional information, see Note 27 - Financial Commitments and Contingencies in the notes to the consolidated financial statements.
The following is the maturity by year on long term borrowings:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Payments Due by Year |
| Total | | Unamortized
Discount and
Issuance Costs | | Less Than
1 year | | 1-2 Years | | 2-3 Years | | 3-4 Years | | 4-5 Years | | More Than
5 Years |
| (Dollars in millions) |
As of December 31, 2025 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Long term borrowings | $ | 2,951 | | | $ | (49) | | | $ | — | | | $ | 600 | | | $ | — | | | $ | 600 | | | $ | — | | | $ | 1,800 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
As of December 31, 2024 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Long term borrowings | $ | 2,957 | | | $ | (43) | | | $ | — | | | $ | — | | | $ | 1,800 | | | $ | — | | | $ | 600 | | | $ | 600 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
For additional information, See Note 21 - Long Term Borrowings of the financial statements.
Lease Obligations - Our lease obligations primarily represent payments for operating leases of office space and improvements to office space, technological equipment, and automobiles.
Capital Management
Capital management is the ongoing process of determining and maintaining the quantity and quality of capital appropriate to take advantage of the Company’s growth opportunities, to support the risks associated with the business and to optimize shareholder returns while fully complying with the regulatory capital requirements.
The Company and its subsidiaries take an integrated approach to risk management that involves the Company’s risk appetite and capital requirements. The operating capital levels are determined by the Company’s risk appetite and Own Risk and Solvency Assessment (“ORSA”). Furthermore, additional stress techniques are used to evaluate the Company’s capital adequacy under sustained adverse scenarios.
American National and AEL are required to follow Risk Based Capital (“RBC”) requirements based on guidelines of the NAIC. RBC is a method of measuring the level of capital appropriate for an insurance company to support its overall business operations, in light of its size and risk profile. It provides a means of assessing capital adequacy, where the degree of risk taken by the insurer is the primary determinant.
The Company has determined that it is in compliance with all capital requirements as of December 31, 2025 and 2024.
Performance Measures Used by Management
To measure performance, we focus on net income and total assets, as well as certain non-GAAP measures, including DOE and Total Liquidity, which we believe are useful to investors to provide additional insights into assets within the business available for redeployment. See “Results of Operations”, “Financial Condition,” and “Liquidity and Capital Resources” sections of this MD&A for further discussion on our performance and Non-GAAP measures for the years ended December 31, 2025, 2024, and, 2023.
Non-GAAP Measures
We regularly monitor certain Non-GAAP measures that are used to evaluate our performance and analyze underlying business performance and trends. We use these measures to establish budgets and operational goals, manage our business and evaluate our performance. We also believe that these measures help investors compare our operating performance with our results in prior years. These Non-GAAP financial measures are provided as supplemental information to the financial measures presented in this MD&A that are calculated and presented in accordance with GAAP. These Non-GAAP measures are not comparable to GAAP and may not be comparable to similarly described Non-GAAP measures reported by other companies, including those within our industry.
Consequently, our Non-GAAP measures should not be evaluated in isolation, but rather, should be considered together with the most directly comparable GAAP measure in our consolidated financial statements for the years presented. The Non-GAAP financial measures we present in this MD&A should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP.
Distributable Operating Earnings
We use DOE to assess operating results and the performance of our businesses. We define DOE as net income after applicable taxes, excluding the impact of depreciation and amortization, deferred income taxes related to basis and other changes, and breakage and transaction costs, as well as certain investment and insurance reserve gains and losses, including gains and losses related to asset and liability matching strategies, non-operating adjustments related to changes in cash flow assumptions for future policy benefits and change in market risk benefits. DOE is inclusive of returns on equity invested in certain variable interest entities and our share of adjusted earnings from our investments in certain associates.
DOE is a measure of operating performance that is not calculated in accordance with, and does not have any standardized meaning prescribed by GAAP. DOE is, therefore, unlikely to be comparable to similar measures presented by other issuers.
We believe our presentation of DOE is useful to investors because it supplements investors’ understanding of our operating performance by providing information regarding our ongoing performance that excludes items we believe do not directly affect our core operations. Our presentation of DOE also provides investors enhanced comparability of our ongoing performance across years.
Total Liquidity
Total Liquidity is a measure of our liquidity position and includes cash and cash equivalents, undrawn revolving credit facilities and liquid financial assets held by our regulated insurance entities.
The following table contains further details regarding our use of the Non-GAAP measures, as well as a reconciliation of GAAP consolidated net income from continuing operations to DOE:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
Income from continuing operations (1) | $ | 343 | | | $ | 585 | | | $ | 404 | |
| Mark-to-market losses (gains) on investments, including reinsurance funds withheld (2) | 459 | | | 444 | | | 139 | |
| Mark-to-market losses (gains) on insurance contracts and other net assets (3)(4) | 667 | | | 167 | | | (24) | |
| Deferred income tax expense (recovery) relating to basis and other changes | (343) | | | (366) | | | 50 | |
Transaction costs | 54 | | | 189 | | | 12 | |
| Depreciation and amortization expenses | 170 | | | 76 | | | 19 | |
| Corporate and other DOE | 400 | | | 172 | | | (2) | |
| Segment DOE | $ | 1,750 | | | $ | 1,267 | | | $ | 598 | |
(1)Income from continuing operations is net income attributable to American National Group Inc. common stockholder less income (loss) from discontinuing operations, net of tax.
(2)“Mark-to-market losses (gains) on investments, including reinsurance funds withheld” primarily represent mark-to-market gains or losses on our investments and reinsurance funds withheld. Mark-to-market gains or losses on our invested assets are presented as “Investment related gains (losses)” on the Consolidated Statements of Operations. See Note 10 - Net Investment Income and Investment Related Gains (Losses) in the notes to the consolidated financial statements for additional details.
(3)“Mark-to-market losses (gains) on insurance contracts and other net assets” principally represents the mark-to-market effect on insurance-related liabilities, net of reinsurance, due to changes in market risks (e.g., interest rates, equity markets and equity index volatility). These mark-to-market effects are primarily included in “Interest sensitive contract benefits”, “Change in fair value of insurance-related derivatives and embedded derivatives” and “Change in fair value of market risk benefits” on the Consolidated Statements of Operations. See the following notes to the consolidated financial statements for additional information: (i) Note 9 - Derivative Instruments; (ii) Note 18 - Policyholders' Account Balances; and (iii) Note 19 - Market Risk Benefits.
(4)Included in “Mark-to-market losses (gains) on insurance contracts and other net assets” are “returns on equity invested in certain variable interest entities” and “our share of adjusted earnings from our investments in certain associates” as stated in the definition of DOE. “Returns on equity invested in certain variable interest entities” primarily represent equity-accounted income from our investments in real estate partnerships and investment funds and are included in “Net investment income” on the Consolidated Statements of Operations.
Critical Accounting Estimates
The preparation of the financial statements requires management to make critical judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses that are not readily apparent from other sources, during the reporting period. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.
Critical judgments made by management and used in preparing the financial statements, are summarized below:
Fair value of investments – In determining fair value of our investments in our consolidated financial statements, we perform regular analysis and review of our valuation techniques, assumptions and inputs to evaluate if the valuation approaches are appropriate and consistently applied and if the various assumptions are reasonable. Investments categorized as Level 3 in the fair value hierarchy are subject to significant management judgment and estimation due to the use of significant unobservable inputs. Where appropriate, we assess the reasonableness of unobservable inputs and assumptions used in the fair value measurement. For example, we validate the reasonableness of quotes from independent pricing sources and broker price opinions received by performing a market-based fair value analysis. For investments fair valued using a discounted cash flow methodology, we perform a review of the cash flow models for reasonability. Valuation methodologies, assumptions and inputs utilized in the valuation of our investments recorded at fair value in the statements of financial position are described in Note 11 - Fair Value of Financial Instruments in the notes to the consolidated financial statements.
Value of business acquired (“VOBA”) – VOBA is an intangible asset or liability resulting from a business combination that represents the difference between the policyholder liabilities measured in accordance with the acquiring company’s accounting policies and the estimated fair value of the same acquired policyholder liabilities in-force at the acquisition date. The estimated fair value of the acquired liabilities upon the acquisition includes assumptions on discount rate and the net investment earned rate. These assumptions are subject to inherent uncertainties and involve a significant level of management judgment and estimation and may have a material impact on our financial condition upon the initial recognition of VOBA. Refer to Note 16 - Acquisitions in the notes to the consolidated financial statements for additional details on VOBA.
Future policy benefits (“FPB”) – Relate to long-duration insurance contracts such as deferred and immediate annuities with life contingencies, including our PRT contracts, and certain life products. Assumptions used in the establishment of the FPB, inclusive of associated reinsurance balances, include longevity, mortality and lapse rates as well as discount rates, which require significant judgment and may materially impact the valuation of these liabilities. The Company reviews and updates cash flow assumptions, including significant policyholder behavior assumptions, at least annually during the third quarter of each year, and at the same time every year by cohort or product. The Company also reviews more frequently and updates its cash flow assumptions during an interim period if evidence suggests cash flow assumptions should be revised.
Embedded derivatives in policyholders’ account balances (“PAB”) – Our PAB liabilities relate to investment-type contracts and universal life-type policies. Our indexed product account balances with returns linked to the performance of a specified market index (e.g., fixed index annuity contracts and equity-indexed universal life policies) include an embedded derivative that is bifurcated from the host (or guaranteed) component of the contracts. The fair value of the embedded derivatives is estimated at each valuation date by (i) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (ii) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for the Company’s non-performance risk related to those liabilities. Significant assumptions include option budget, lapse rates and non-performance risk.
Market risk benefits (“MRB”) – Relate to certain fixed indexed annuity and fixed rate annuity contracts that provide minimum guarantees to policyholders including guaranteed minimum withdrawal benefits and guaranteed minimum death benefits. MRBs are fair valued using stochastic models that incorporate a spread reflecting our non-performance risk. The actuarial assumptions used in the MRB calculation are best estimate assumptions based on a combination of historical data and actuarial judgment. Significant assumptions include utilization, option budget, non-performance risk as well as mortality and lapse rates.
Deferred income tax – We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) for the expected future tax consequences of events that have been included in the financial statements. We recognize DTAs to the extent that management believes that these assets are more likely than not to be realized, considering, among other items, projections of future taxable income. Accordingly, the estimation of DTAs including valuation allowance require significant management judgment. Additionally, actual realization of DTAs and DTLs may materially differ from these estimates as a result of changes in tax laws as well as unanticipated future transactions impacting related income tax balances.
New Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements in this Form 10-K, which is incorporated by reference in this Item 2.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Industry Trends and Factors Affecting Our Performance
We are affected by numerous factors, including global economic and financial market conditions. Price fluctuations within equity, credit, commodity and foreign exchange markets, as well as interest rates, which may be volatile and mixed across geographies, can significantly impact the performance of our business. We also monitor factors such as consumer spending, business investment, the volatility of capital markets, interest rates, unemployment and the risk of inflation or deflation, which affect the business and economic environment and, in turn, impact the demand for the type of financial and insurance products offered by our business. We believe the following current trends present significant opportunities for us to grow our business:
•Financial market volatility and dislocations across asset classes favor insurers with diverse investment portfolios and access to alternative credit. Insurers primarily invest in public market fixed income products and are exposed to public market valuations. Insurers with an ability to diversify investment portfolios to include alternative and private credit assets provide more favorable investment performance.
•Many insurers are looking for ways to shift toward less asset-intensive insurance products. Given the capital-intensive nature of life and annuity liabilities, many insurance companies with diversified exposure are looking to reduce their exposure to life and annuity products, including through reinsurance, in order to free up capital that they can deploy in support of less asset-intensive products and business lines.
•Recent market conditions are exposing under-capitalized companies. Some writers of annuity products are facing higher hedging costs amidst volatile markets, and changes in regulatory standards are increasing the transparency of liability valuations in the current low-rate environment. This has necessitated a need to raise or otherwise free up capital, and the reinsurance market offers writers of annuity products an opportunity to do so. We have access to capital and are able to provide capital support to these companies.
•Public market valuations have compressed while capital needs have grown. Insurers are trading at cyclical lows, and given the prevailing market environment, are looking to partner with organizations like ours that can provide solutions to address capital needs.
Market Risk
Our Consolidated Statements of Financial Position within our financial statements include substantial amounts of assets and liabilities whose fair values are subject to market risks. Our significant market risks are primarily associated with interest rates, foreign currency exchange rates and credit risk. The fair values of our investment portfolios remain subject to considerable volatility. The following sections address the significant market risks associated with our business activities.
Foreign Exchange Rate Risk
The Company’s obligations under its insurance contracts are predominantly denominated in U.S. dollars, but a portion of the assets supporting these liabilities are denominated in non-U.S. dollars. In addition, we have exposure to foreign currency risk in connection with a U.K. pension risk transfer transaction that we are reinsuring. We manage foreign exchange risk primarily using foreign exchange forwards and cross currency swaps. Our investment policy sets out the foreign currency exposure limits and types of derivatives permitted for hedging purposes. Our net assets are subject to financial statement translation into U.S. dollars. All of our financial statement translation-related impact from changes in foreign currency rates is recorded in other comprehensive income. Gains and losses from foreign currency transactions of the Company’s invested assets are reported in “Investment related gains (losses)” in the Consolidated Statements of Operations. The impact on net income resulting from a hypothetical 10% decrease in foreign currencies against the U.S. Dollar, net of the impact of foreign exchange hedging strategies, would not be expected to be material.
Interest Rate Risk
Substantial and sustained increases or decreases in interest rates may cause certain market dislocations that could negatively impact our financial performance.
We manage interest rate risk through our asset liability management, which we refer to as ALM, the framework whereby the effective and key rate durations of the investment portfolio are closely matched to those of the insurance liabilities. Within the context of the ALM framework, we use derivatives including interest rate swaps, options and futures to reduce market risk. For the annuities business, where the timing and amount of the benefit payment obligations can be readily determined, the matching of asset and liability cash flows is effectively controlled through this comprehensive duration management process.
Our primary interest rate risk exposure is the exposure of our fixed maturity investment portfolio to interest rate risk and the changes in interest rates. In addition, our insurance-related liabilities, net of reinsurance (consisting of Future policy benefits, Policyholders’ account balances, Policy and contract claims, and Market risk benefits) are subject to interest rate risk exposure. If interest rates were to increase by 50 basis points from levels at December 31, 2025 and 2024 through a parallel shift in the yield curve, we estimate that (i) the fair value of our fixed maturity securities would decrease by approximately $1.4 billion and $881 million in 2025 and 2024, respectively; and (ii) the carrying amount of our insurance-related liabilities (net of reinsurance) would decrease by approximately $853 million and $729 million in 2025 and 2024, respectively. The net impact on total equity of such a decrease (net of income taxes) would be an increase of approximately $448 million and $120 million in 2025 and 2024, respectively. The models used to estimate the impact of an increase in market interest rates by 50 basis points incorporate numerous assumptions, require significant estimates and assume an immediate and parallel change in interest rates without any management of the investment portfolio in reaction to such change. Consequently, potential changes in the value of our financial instruments and our insurance-related liabilities indicated by the simulations will likely be different from the actual changes experienced under given interest rate scenarios, and the differences may be material. Because we actively manage our investments and liabilities, our net exposure to interest rates can vary over time. However, any such decreases in the fair value of our fixed maturity securities (unless related to credit concerns of the issuer requiring recognition of a credit loss) would generally be realized only if we were required to sell such securities at losses prior to their maturity to meet our liquidity needs, which we proactively manage. See the “Liquidity and Capital Resources” section for a further discussion on liquidity.
Other Price Risk
Other price risk is the risk of variability in fair value due to movements in equity prices or other market prices such as commodity prices and credit spreads.
The Company’s exposure to the equity markets is managed by sector and individual security, and the Company mitigates the equity price risk by diversification of the investment portfolio.
The Company also has equity price risk associated with the equity-indexed life and annuity products the Company issues and assumes. The Company has entered into derivative transactions, primarily over-the-counter equity call options, to hedge the exposure to equity-index changes.
Assuming all other factors are constant, if there was a decline in public equity market prices of 10% as of December 31, 2025 and 2024, we estimate a net decrease to our point-in-time net income (loss) from changes in the fair value of these financial instruments of $53 million and $8 million, respectively. The financial instruments included in the sensitivity analysis are carried at fair value and changes in fair value are recognized in the Consolidated Statement of Operations.
Credit Risk
Credit risk is the risk of loss from amounts owed by counterparties and arises any time funds are extended, committed, owed or invested through actual or implied contractual arrangements including reinsurance. The Company is primarily exposed to credit risk through its fixed income investments, which include debt securities and private loans.
We manage exposure to credit risk by establishing concentration limits by counterparty, credit rating and asset class. To further minimize credit risk, the financial condition of the counterparties is monitored on a regular basis. These requirements are outlined in our investment policy.
Insurance Risk
The Company makes assumptions and estimates when assessing insurance and reinsurance risks, and significant deviations, particularly with regards to mortality, morbidity, longevity and other policyholder behavior, could adversely affect our business, financial condition, results of operations, liquidity and cash flows. All transaction terms are likely to be determined by qualitative and quantitative factors, including our estimates.
We manage insurance risk through choosing whether to purchase reinsurance for certain amounts of risk underwritten across our Annuities and Life Insurance segments.
Legal Risk
In the future, we may be parties in actions that routinely arise out of the normal course of business, including legal actions seeking to establish liability directly through insurance contracts. Plaintiffs occasionally seek punitive or exemplary damages. We do not believe that such normal and routine litigation will have a material effect on our financial condition or results of operations. We are also involved from time to time in other kinds of legal actions, some of which assert or may assert claims or seek to impose fines and penalties. We believe that any liability that may arise as a result of other pending legal actions will not have a material effect on our financial statements.
Operational Risk
Operational risk is the potential for loss resulting from inadequate or failed internal processes, people and systems, or from external events. The Company’s internal control processes are supported by the maintenance of a risk register and independent internal audit review. The risk of fraud is managed through a number of processes including background checks on staff on hire, annual code of conduct confirmations, anti-bribery training and segregation of duties.
We have outsourcing arrangements in respect of certain administrative and operational functions. These arrangements are subject to agreements with formal service levels, operate within agreed authority limits and are subject to regular review by senior management. Material outsourcing arrangements are approved and monitored by the Board of Directors.
Disaster recovery and business continuity plans have also been established to manage the Company’s ability to operate under adverse conditions.
Item 8. Consolidated Financial Statements and Supplementary Data
The audited consolidated financial statements are included as a part of this report on Form 10-K on pages F-1 through F-79. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a)Evaluation of Disclosure Controls and Procedures
In accordance with the Securities Exchange Act Rules 13a-15(e) and 15d-15(e), our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of December 31, 2025 in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.
(b)Management’s Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2025 based upon criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the assessment, management has determined that we maintained effective internal control over financial reporting as of December 31, 2025.
(c)Changes in Internal Control over Financial Reporting
The Company completed the transfer of all of its property and casualty subsidiaries, including American National Property And Casualty Company, United Farm Family Insurance Company and Farm Family Casualty Insurance Company and their respective wholly-owned subsidiaries (collectively, the “P&C Subsidiaries”) to Argo Group International Holdings, Inc., subsequently renamed to Clearbrook Group Holdings Inc. (“Clearbrook”). Management designed and implemented responsive control procedures related to its financial reporting, which were assessed as of December 31, 2025, during the annual operation of these controls.
Item 9B. Other Information
Not applicable
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
Item 11. Executive Compensation
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
Item 14. Principal Accountant Fees and Services
Our independent auditor is Deloitte & Touche LLP. Its PCAOB Auditor ID is 34.
The table below summarizes the fees for professional services rendered by Deloitte & Touche LLP for the audit of our annual financial statements for the years ended December 31, 2025 and December 31, 2024.
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
Audit fees (1) | $ | 14 | | | $ | 10 | |
Audit-related fees (2) | — | | | — | |
| Tax fees | 1 | | | — | |
(1)Audit fees include fees for the audit of our annual consolidated financial statements, the interim reviews of the consolidated financial statements included in our quarterly reports on Form 10-Q, the issuance of comfort letters, and annual audits of certain of our subsidiaries and audits required by regulatory authorities.
(2)Audit-related fees primarily include fees associated with other attestation services.
Our Audit Committee pre-approved all audit and non-audit services provided to our company by Deloitte & Touche LLP.
PART IV
Item 15. Exhibits and Financial Statement Schedules
Financial Statements and Financial Statement Schedules. See Index to Consolidated Financial Statements and Schedules on page F-1 for a list of financial statements and financial statement schedules included in this report.
All other schedules to the audited consolidated financial statements required by Article 7 of Regulation S-X are omitted because they are not applicable, not required, or because the information is included elsewhere in the audited consolidated financial statements or notes thereto.
Note Regarding Reliance on Statements in Our Contracts and Other Exhibits: We include agreements and other exhibits to this Annual Report on Form 10-K to provide information regarding their terms and not to provide any other factual or disclosure information about us, our subsidiaries or affiliates, or the other parties to the agreements, or for any other purpose. The agreements and other exhibits may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement or other arrangement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have in many cases been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or other exhibit, or such other date or dates as may be specified in the document and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
The following exhibits are included with this report or incorporated herein by reference:
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| Exhibit Number | | Description |
| 2.1 | | |
| 2.2 | | |
| 2.3 | | |
| 3.1 | | |
| 3.2 | | |
| 3.3 | | |
| 4.1 | | |
| 4.2 | | |
| 4.3 | | |
| 4.4 | | Instruments of Resignation, Appointment and Acceptance, effective September 12, 2006, among American National Group Inc. (formerly known as American Equity Investment Life Holding Company), Wilmington Trust Company, West Des Moines State Bank and Delaware Trust Company, National Association (formerly known as First Union Trust Company, National Association) (Incorporated by reference to Exhibit 4.10A to Form 10-K for the year ended December 31, 2008 filed on March 16, 2009) |
| 4.5 | | |
| 4.6 | | |
| 4.7 | | |
| 4.8 | | |
| 4.9 | | |
| 4.10 | | |
| 4.11 | | |
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| Exhibit Number | | Description |
| 4.12 | | |
| 4.13 | | |
| 4.14 | | |
| 4.15 | | |
| 4.16 | | Deposit Agreement, dated November 21, 2019, among the Company, Computershare Inc. and Computershare Trust Company, N.A., collectively, as depositary, Computershare Inc., as registrar and transfer agent, and the holders from time to time of the depositary receipts (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on November 21, 2019) |
| 4.17 | | |
| 4.18 | | |
| 4.19 | | |
| 4.20 | | Deposit Agreement, dated as of January 10, 2025, among the Company, Computershare Inc. and Computershare Trust Company, N.A., collectively, as Depositary, Computershare Trust Company, N.A., as Registrar and Transfer Agent and the holders from time to time of the depositary receipts described therein (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on January 10, 2025) |
| 4.21 | | |
| 4.22** | | |
10.1* | | |
10.2 | | |
10.3 | | |
10.4* | | |
10.5* | | |
10.6* | | |
10.7* | | |
10.8* | | |
10.9* | | |
10.10* | | |
10.11* | | |
10.12* | | |
10.13* | | |
10.14 | | |
10.15* | | |
10.16* | | |
10.17* | | |
10.18* | | |
10.19* | | |
10.20 | | |
10.21* | | |
10.22 | | |
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| Exhibit Number | | Description |
10.23* | | |
10.24* | | |
10.25* | | |
10.26* | | |
10.27* | | |
10.28* | | |
10.29* | | |
10.30* | | |
10.31* | | |
10.32* | | |
10.33* | | |
10.34* | | |
10.35* | | |
10.36* | | |
10.37* | | |
10.38* | | |
10.39* | | |
10.40* | | |
10.41* | | |
10.42* | | Assignment, Assumption and Consent Agreement, dated as of December 21, 2023, by and among Brookfield Corporation, Brookfield Reinsurance Ltd., North End Re (Cayman) SPC, Freestone Re Ltd., BAM Re Holdings Ltd., American National Group, LLC and American Equity Investment Life Holding Company (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 21, 2023) |
10.43* | | |
10.44* | | |
10.45* | | |
10.46* | | |
10.47* | | |
10.48* | | |
10.49* | | |
10.50* | | |
| | | | | | | | |
| Exhibit Number | | Description |
10.51* | | |
| 19.1** | | |
23.1** | | |
| 31.1** | | |
| 31.2** | | |
| 32.1** | | |
| 32.2** | | |
97 | | |
| 101 | | The following materials from American National Group Inc.'s Annual Report on Form 10-K for the year ended December 31, 2025 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Financial Position, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements, (vii) Schedule I - Summary of Investments - Other Than Investments in Related Parties, (viii) Schedule II - Condensed Financial Information of Registrant, (ix) Schedule III - Supplementary Insurance Information, (x) Schedule IV - Reinsurance |
| 104 | | The cover page from American National Group Inc.'s Annual Report on Form 10-K for the year ended December 31, 2025, formatted in iXBRL and contained in Exhibit 101. |
† Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.
* This exhibit is a management contract or compensatory plan or arrangement required to be filed as an exhibit to this report.
** Filed electronically herewith.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 30th day of March 2026.
| | | | | | | | | | | | | | | | | |
| Date: | March 30, 2026 | | AMERICAN NATIONAL GROUP INC. | |
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| | | | |
| | | By: | /s/ Timothy A. Walsh | |
| | | | Timothy A. Walsh | |
| | | | President and Chief Executive Officer | |
| | | | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this registration statement has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
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| Signature | | Title (Capacity) | | Date |
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/s/ Timothy A. Walsh | | President and Chief Executive Officer (Principal Executive Officer) | | March 30, 2026 |
Timothy A. Walsh | | | |
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/s/ Reza Syed | | Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | | March 30, 2026 |
Reza Syed | | | |
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/s/ Jonathan Bayer | | Director | | March 30, 2026 |
Jonathan Bayer | | | | |
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/s/ Gregory Morrison | | Director | | March 30, 2026 |
Gregory Morrison | | | | |
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/s/ Anne Schaumburg | | Director | | March 30, 2026 |
Anne Schaumburg | | | | |
| | | | |
/s/ Sachin Shah | | Director | | March 30, 2026 |
Sachin Shah | | | | |
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
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(Deloitte & Touche LLP, Houston, Texas, Auditor Firm ID: 34) | |
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Report of Independent Registered Public Accounting Firm
To the stockholders and the Board of Directors of American National Group Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of American National Group Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, statement of changes in equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
Emphasis of a Matter
As discussed in Note 1 to the financial statements, on October 1, 2025, the Company completed the transfer of its property and casualty subsidiaries, including American National Property And Casualty Company, United Farm Family Insurance Company and Farm Family Casualty Insurance Company and their wholly-owned subsidiaries to Clearbrook Group Holdings, Inc. Amounts in the financial statements and notes thereto have been retrospectively adjusted and reported as discontinued operations.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Market Risk Benefits – Fixed Annuity Contracts – Valuation of Market Risk Benefits – Refer to Notes 2, 11 and 19 to the financial statements
Critical Audit Matter Description
The Company issues certain fixed indexed annuity and fixed rate annuity contracts that provide minimum guarantees to policyholders including guaranteed minimum withdrawal benefits that meet the definition of Market Risk Benefits (“MRB”). MRBs are measured at fair value. The fair value is calculated using stochastic models that incorporate a spread. The actuarial assumptions used in the MRB calculation are best estimate assumptions based on a combination of historical data and actuarial judgment. Significant assumptions include utilization, option budget, non-performance risk as well as mortality and lapse rates. MRBs with positive values are recorded as “Other assets” and negative fair values are reported as “Market risk benefit” liabilities in the Consolidated Statements of Financial Position.
We have assessed the significant judgements used in the determination of certain assumptions used in determination of the fair value of MRBs, the related audit effort in evaluating management’s selection of the significant assumption related to the lifetime income benefit rider utilization required a high degree of auditor judgment, and an increased extent of effort, including involvement of our actuarial specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the lifetime income benefit rider utilization assumption selected by management for the valuation of the MRBs included the following:
•We tested the effectiveness of controls related to the valuation of MRBs, including management’s controls over the development, selection, and implementation of the significant assumptions used in the estimate.
•We evaluated the methods and assumptions used by the Company to estimate the fair value of the MRBs by performing the following:
◦We tested the completeness and accuracy of the underlying data used in the determination of the significant assumptions.
◦We evaluated the reasonableness of the Company’s selected significant assumptions through use of our actuarial specialists, drawing upon standard actuarial and industry practices.
◦With the assistance of our actuarial specialists, we evaluated the appropriateness of the methodologies used to determine the significant assumptions, evaluated the key inputs into those significant assumptions, evaluated the consistency of the selected assumptions used in the Company’s valuation models, and tested the mathematical accuracy of the valuation models.
/s/ Deloitte & Touche LLP
Houston, Texas
March 30, 2026
We have served as the Company’s auditor since 2020.
| | | | | | | | | | | |
| AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES |
|
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|
(Dollars in millions, except share and per share data) |
|
| December 31, |
| 2025 | | 2024 |
| Assets | | | |
| Investments: | | | |
Available-for-sale fixed maturity securities, at fair value (net of allowance for credit losses of $3 and $25, respectively; amortized cost of $56,854 and $45,371, respectively) | $ | 57,992 | | | $ | 45,591 | |
| Equity securities, at fair value | 1,179 | | | 611 | |
Mortgage loans on real estate, at amortized cost (net of allowance for credit losses of $100 and $153, respectively) | 11,113 | | | 11,986 | |
Private loans, at amortized cost (net of allowance for credit loss of $149 and $63, respectively) | 8,926 | | | 5,647 | |
Real estate and real estate partnerships (net of accumulated depreciation of $228 and $228, respectively) | 5,800 | | | 4,656 | |
| | | |
| Investment funds | 3,187 | | | 3,012 | |
| Policy loans | 234 | | | 274 | |
| Short-term investments, at estimated fair value | 600 | | | 4,177 | |
| Other invested assets | 1,485 | | | 2,007 | |
| Total investments | 90,516 | | | 77,961 | |
| | | |
| Cash and cash equivalents | 11,660 | | | 10,867 | |
| Accrued investment income | 799 | | | 736 | |
| Deferred policy acquisition costs, deferred sales inducements and value of business acquired | 11,513 | | | 10,504 | |
| | | |
| | | |
| | | |
| Deferred tax asset | 460 | | | 495 | |
| Reinsurance recoverables and deposit assets | 9,255 | | | 9,862 | |
Property and equipment (net of accumulated depreciation of $352 and $326, respectively) | 161 | | | 154 | |
Intangible assets (net of accumulated amortization of $154 and $56, respectively) | 1,501 | | | 1,526 | |
| Goodwill | 748 | | | 748 | |
| Other assets | 2,822 | | | 2,617 | |
| Separate account assets | 822 | | | 1,343 | |
| Assets related to discontinued operations | — | | | 4,408 | |
| Total assets | $ | 130,257 | | | $ | 121,221 | |
| | | |
| | | | | | | | | | | |
| AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES |
|
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|
(Dollars in millions, except share and per share data) |
|
| December 31, |
| 2025 | | 2024 |
| Liabilities | | | |
| Future policy benefits | $ | 10,962 | | | $ | 9,170 | |
| Policyholders’ account balances | 92,992 | | | 83,079 | |
| Policy and contract claims | 410 | | | 396 | |
| | | |
| Market risk benefits | 4,536 | | | 3,655 | |
| | | |
| Due to related parties | 103 | | | 77 | |
| Other policyholder funds | 353 | | | 340 | |
| Notes payable | 205 | | | 189 | |
| | | |
| Long term borrowings | 2,951 | | | 2,957 | |
| Funds withheld for reinsurance liabilities | 3,088 | | | 3,321 | |
| Other liabilities | 4,166 | | | 3,921 | |
| Separate account liabilities | 822 | | | 1,343 | |
| Liabilities related to discontinued operations | — | | | 2,745 | |
| Total liabilities | 120,588 | | | 111,193 | |
| | | |
Commitments and Contingencies (Note 27) | | | |
| | | |
| Equity | | | |
Preferred stock, Series A; par value $1 per share; $25,000 per share liquidation preference; 20,000 shares authorized; issued and outstanding: 2025 - no shares 2024 - 16,000 shares | — | | | 389 | |
Preferred stock, Series B; par value $1 per share; $25,000 per share liquidation preference; 12,000 shares authorized; issued and outstanding: 2025 - no shares 2024 - 12,000 shares | — | | | 296 | |
Preferred stock, Series D; par value $1 per share; $25,000 per share liquidation preference; 12,000 shares authorized; issued and outstanding: 2025 - 12,000 shares 2024 - no shares | 292 | | | — | |
| Additional paid-in capital | 6,404 | | | 7,569 | |
| Accumulated other comprehensive income, net of taxes | 1,094 | | | 340 | |
| Retained earnings | 1,759 | | | 1,356 | |
| Non-controlling interests | 120 | | | 78 | |
| Total equity | 9,669 | | | 10,028 | |
| Total liabilities and equity | $ | 130,257 | | | $ | 121,221 | |
See accompanying notes to the consolidated financial statements.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Net premiums | $ | 1,716 | | | $ | 3,679 | | | $ | 1,669 | |
| Other policy revenue | 691 | | | 657 | | | 414 | |
| Net investment income | 4,888 | | | 3,481 | | | 1,240 | |
| Investment related gains (losses) | 92 | | | (333) | | | (2) | |
| | | | | |
| Other income | 100 | | | 35 | | | 74 | |
| Total revenues | 7,487 | | | 7,519 | | | 3,395 | |
| | | | | |
| Policyholder benefits and claims incurred | 2,210 | | | 4,048 | | | 1,855 | |
| Interest sensitive contract benefits | 2,026 | | | 1,745 | | | 480 | |
| Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired | 1,008 | | | 587 | | | 112 | |
| Change in fair value of insurance-related derivatives and embedded derivatives | 216 | | | (94) | | | 36 | |
| Change in fair value of market risk benefits | 725 | | | (3) | | | (69) | |
| | | | | |
| Operating expenses | 725 | | | 701 | | | 430 | |
| Interest expense | 183 | | | 165 | | | 99 | |
| Total benefits and expenses | 7,093 | | | 7,149 | | | 2,943 | |
| Net income before income taxes | 394 | | | 370 | | | 452 | |
| Income tax expense (benefit) | (20) | | | (199) | | | 43 | |
| Income from continuing operations | 414 | | | 569 | | | 409 | |
| Income (loss) from discontinuing operations, net of tax | 126 | | | 111 | | | (12) | |
| Net income | 540 | | | 680 | | | 397 | |
| Less: Net income (loss) from continuing operations attributable to noncontrolling interests, net of tax | 7 | | | (49) | | | 5 | |
| | | | | |
| Net income attributable to American National Group Inc. stockholders | 533 | | | 729 | | | 392 | |
| Less: Preferred stock dividends and redemption | 64 | | | 33 | | | — | |
| Net income attributable to American National Group Inc. common stockholder | $ | 469 | | | $ | 696 | | | $ | 392 | |
See accompanying notes to the consolidated financial statements.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Net income | $ | 540 | | | $ | 680 | | | $ | 397 | |
| Other comprehensive income, net of tax: | | | | | |
| | | | | |
| Change in net unrealized investment gains | 712 | | | 448 | | | 423 | |
| | | | | |
| Change in discount rate for future policy benefits | (120) | | | 174 | | | (148) | |
| Change in instrument-specific credit risk for market risk benefits | 181 | | | (197) | | | (20) | |
| Defined benefit pension plan adjustment | (30) | | | 18 | | | 84 | |
| | | | | |
| Total other comprehensive income | 743 | | | 443 | | | 339 | |
| Comprehensive income | 1,283 | | | 1,123 | | | 736 | |
| Less: Comprehensive income (loss) attributable to noncontrolling interests | 7 | | | (49) | | | 5 | |
| Comprehensive income attributable to American National Group Inc. stockholders | $ | 1,276 | | | $ | 1,172 | | | $ | 731 | |
See accompanying notes to the consolidated financial statements.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred
Stock | | Additional
Paid-In
Capital | | Accumulated
Other
Comprehensive
Income (Loss) | | Retained
Earnings | | Noncontrolling
Interest | | Total
Equity |
Balance at December 31, 2022 | $ | — | | | $ | 3,805 | | | $ | (448) | | | $ | 324 | | | $ | 74 | | | $ | 3,755 | |
| Net income for period | — | | | — | | | — | | | 392 | | | 5 | | | 397 | |
| Other comprehensive income | — | | | — | | | 339 | | | — | | | — | | | 339 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Contributions from (distributions to) noncontrolling interests | — | | | — | | | — | | | — | | | 28 | | | 28 | |
| Dividends | — | | | (750) | | | — | | | — | | | — | | | (750) | |
| Capital contribution | — | | | 2,130 | | | — | | | — | | | — | | | 2,130 | |
Balance at December 31, 2023 | — | | | 5,185 | | | (109) | | | 716 | | | 107 | | | 5,899 | |
| Net income (loss) for period | — | | | — | | | — | | | 729 | | | (49) | | | 680 | |
| Other comprehensive income | — | | | — | | | 443 | | | — | | | — | | | 443 | |
| Contributions from (distributions to) shareholders, net of tax | — | | | 631 | | | — | | | — | | | — | | | 631 | |
| Consolidations (deconsolidations) of noncontrolling interests | — | | | — | | | 5 | | | 5 | | | (32) | | | (22) | |
| Contributions from (distributions to) noncontrolling interests | — | | | — | | | — | | | — | | | 51 | | | 51 | |
| Dividends | — | | | — | | | — | | | (98) | | | — | | | (98) | |
| Impact of common control acquisition | 685 | | | 1,750 | | | — | | | — | | | — | | | 2,435 | |
| Other | — | | | 3 | | | 1 | | | 4 | | | 1 | | | 9 | |
Balance at December 31, 2024 | 685 | | | 7,569 | | | 340 | | | 1,356 | | | 78 | | | 10,028 | |
| Net income for period | — | | | — | | | — | | | 533 | | | 7 | | | 540 | |
| Other comprehensive income | — | | | — | | | 743 | | | — | | | — | | | 743 | |
| Contributions from (distributions to) shareholders, net of tax | — | | | (1,154) | | | 11 | | | (72) | | | — | | | (1,215) | |
| Consolidations (deconsolidations) of noncontrolling interests | — | | | — | | | — | | | — | | | 43 | | | 43 | |
| Contributions from (distributions to) noncontrolling interests | — | | | — | | | — | | | — | | | (8) | | | (8) | |
| Dividends | — | | | — | | | — | | | (49) | | | — | | | (49) | |
| Preferred stock issuance | 292 | | | — | | | — | | | — | | | — | | | 292 | |
| Preferred stock redemption | (685) | | | — | | | — | | | (15) | | | — | | | (700) | |
| Other | — | | | (11) | | | — | | | 6 | | | — | | | (5) | |
Balance at December 31, 2025 | $ | 292 | | | $ | 6,404 | | | $ | 1,094 | | | $ | 1,759 | | | $ | 120 | | | $ | 9,669 | |
See accompanying notes to the consolidated financial statements.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Operating activities: | | | | | |
| Net income | $ | 540 | | | $ | 680 | | | $ | 397 | |
| Less: net (income) loss from discontinued operations | (126) | | | (111) | | | 12 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Other policy revenue | (691) | | | (657) | | | (414) | |
| Accretion on investments | (681) | | | (458) | | | (151) | |
| Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired | 1,008 | | | 587 | | | 112 | |
| Deferral of policy acquisition costs | (1,245) | | | (860) | | | (363) | |
| Gains on investments and derivatives | (512) | | | (286) | | | (103) | |
| Other losses (gains) | 32 | | | — | | | 77 | |
| Provisions for credit losses | 37 | | | 105 | | | 27 | |
| Income from real estate partnerships, investment funds and corporations | (378) | | | (311) | | | (100) | |
| Distributions from real estate partnerships, investment funds and corporations | 250 | | | 390 | | | 80 | |
| Interest credited to policyholders' account balances | 2,026 | | | 2,144 | | | 480 | |
| Change in fair value of embedded derivatives | 531 | | | 405 | | | 36 | |
| Depreciation and amortization | 168 | | | 70 | | | 50 | |
| Deferred income taxes | 89 | | | (105) | | | 50 | |
| Changes in operating assets and liabilities: | | | | | |
| Insurance-related liabilities | 1,506 | | | 1,362 | | | 1,029 | |
| Premiums due and other receivables | (53) | | | 37 | | | 8 | |
| Funds withheld for reinsurance liabilities | (284) | | | (452) | | | — | |
| Reinsurance recoverables and deposit assets | 902 | | | 1,307 | | | 23 | |
| Accrued investment income | (63) | | | (148) | | | 99 | |
| Working capital and other | (5) | | | (1,116) | | | (160) | |
| Cash used by operating activities - discontinued operations | (269) | | | (61) | | | (3) | |
| Cash flows provided by operating activities | 2,782 | | | 2,522 | | | 1,186 | |
| | | | | |
| Investing activities: | | | | | |
| Acquisition of subsidiary, net of cash acquired | 58 | | | 8,015 | | | — | |
| Disposition of subsidiary, net of cash disposed | (626) | | | 653 | | | 72 | |
| Purchase of investments: | | | | | |
| Available-for-sale fixed maturity securities | (17,221) | | | (8,618) | | | (2,124) | |
| Equity securities | (217) | | | (332) | | | (189) | |
| Mortgage loans on real estate | (1,776) | | | (1,839) | | | (604) | |
| Private loans | (3,234) | | | (2,385) | | | — | |
| Investment real estate and real estate partnerships | (1,253) | | | (217) | | | (415) | |
| Investment funds | (2,513) | | | (307) | | | — | |
| | | | | |
| Short-term investments | (11,234) | | | (13,024) | | | (705) | |
| Other invested assets | (416) | | | (89) | | | (21) | |
| Proceeds from sales and maturities of investments: | | | | | |
| Available-for-sale fixed maturity securities | 8,389 | | | 5,288 | | | 2,641 | |
| Equity securities | 234 | | | 9 | | | 109 | |
| Mortgage loans on real estate | 2,704 | | | 2,145 | | | 623 | |
| Private loans | 1,250 | | | 713 | | | — | |
| Investment real estate and real estate partnerships | 145 | | | 311 | | | 40 | |
| | | | | |
| Investment funds | 414 | | | 393 | | | — | |
| Short-term investments | 14,673 | | | 10,815 | | | — | |
| Other invested assets | 109 | | | 58 | | | 185 | |
| Purchases of derivatives | (1,183) | | | (605) | | | — | |
| Proceeds from sales and maturities of derivatives | 1,220 | | | 1,292 | | | — | |
| Purchase of intangibles and property and equipment | (61) | | | (37) | | | (133) | |
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Dollars in millions)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Proceeds from sales of intangibles and property and equipment | — | | | 35 | | | — | |
| Purchase of equity accounted investments | — | | | — | | | (739) | |
| Distributions from equity accounted investments | — | | | 7 | | | 61 | |
| | | | | |
| Change in collateral held for derivatives | 283 | | | (78) | | | 110 | |
| Other | 128 | | | (65) | | | (213) | |
| Cash from investing activities - discontinued operations | 381 | | | 382 | | | 1 | |
| Cash flows provided by (used in) investing activities | (9,746) | | | 2,520 | | | (1,301) | |
| | | | | |
| Financing activities: | | | | | |
| Contributions from (distributions to) shareholders | 361 | | | — | | | — | |
| Issuance of preferred equity | 292 | | | — | | | — | |
| Redemption of preferred equity | (700) | | | — | | | — | |
| Dividends paid to stockholders | (49) | | | (33) | | | (750) | |
| | | | | |
| | | | | |
| | | | | |
| Borrowings from related parties | 12 | | | — | | | — | |
| Repayment of borrowings to related parties | (41) | | | (239) | | | — | |
| Borrowings from external parties | 1,216 | | | 2,500 | | | — | |
| Repayment of borrowings to external parties | (1,200) | | | (887) | | | — | |
| Borrowings issued to reinsurance entities | 3 | | | — | | | — | |
| Repayment of borrowings issued to reinsurance entities | 4 | | | (201) | | | — | |
| Policyholders’ account deposits | 17,650 | | | 10,866 | | | 4,921 | |
| Policyholders’ account withdrawals | (10,299) | | | (8,753) | | | (2,281) | |
| Debt issuance costs | (13) | | | (4) | | | — | |
| | | | | |
| | | | | |
| Payment related to recapture of reinsurance agreement | — | | | (114) | | | — | |
| Issuance of equity, noncontrolling interests | 72 | | | 42 | | | — | |
| Distributions to noncontrolling interests | (14) | | | (81) | | | 28 | |
| Cash flows provided by financing activities | 7,294 | | | 3,096 | | | 1,918 | |
| | | | | |
| Cash and cash equivalents | | | | | |
| Cash and cash equivalents, beginning of period | 11,330 | | | 3,192 | | | 1,389 | |
| Net change during the period | 330 | | | 8,138 | | | 1,803 | |
| | | | | |
| Cash and cash equivalents, end of period | 11,660 | | | 11,330 | | | 3,192 | |
| Less: Cash and cash equivalents of discontinued operations | — | | | 463 | | | 138 | |
| Cash and cash equivalents, end of period | $ | 11,660 | | | $ | 10,867 | | | $ | 3,054 | |
| | | | | |
| Supplementary cash flow disclosure: | | | | | |
| Cash interest paid | $ | 158 | | | $ | 153 | | | $ | 99 | |
| | | | | |
| Non-cash transactions: | | | | | |
| Available-for-sale fixed maturity securities received in connection with pension risk transfer transactions | $ | 175 | | | $ | 1,629 | | | $ | — | |
| Equity securities transferred as consideration paid for acquisition of a subsidiary | — | | | — | | | 2,130 | |
| | | | | |
| Non-cash deposit on reinsurance | — | | | 3,394 | | | — | |
| Transfer of invested assets | — | | | (1,803) | | | — | |
| Available-for-sale fixed maturity securities received as proceeds from investment fund sales | 786 | | | — | | | — | |
| Assets reverted in connection with pension termination | 295 | | | — | | | — | |
| Private loans received as proceeds from other invested assets as part of common control transactions | 638 | | | — | | | — | |
See accompanying notes to the consolidated financial statements.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2025
1. Organization and Description of the Company
American National Group Inc., together with its subsidiaries (collectively, “ANGI”, “we”, “our”, “us”, or the “Company”), is focused on securing the financial futures of individuals and institutions through a range of insurance and retirement services. Our business is presently conducted through our subsidiaries under two segments, which we refer to as our Annuities and Life Insurance segments. We conduct our business in 50 states, the District of Columbia, Bermuda, Guam, and Puerto Rico.
On May 2, 2024, the Company's predecessor, American Equity Investment Life Holding Company, an Iowa corporation ("AEL" or "American Equity") merged with and into Arches Merger Sub Inc., an indirect wholly-owned subsidiary of Brookfield Wealth Solutions Ltd. ("Brookfield Wealth Solutions"), with AEL surviving and becoming an indirect wholly-owned subsidiary of Brookfield Wealth Solutions (the "Merger"). In connection with the Merger, each issued and outstanding share of AEL's common stock was converted into the right to receive cash and class A limited voting shares of Brookfield Asset Management Ltd. (“BAM”). On May 7, 2024, American National Group, LLC ("American National"), an indirect, wholly-owned subsidiary of Brookfield Wealth Solutions, merged with and into AEL, with AEL surviving as an indirect, wholly-owned subsidiary of Brookfield Wealth Solutions (the "Post-Effective Merger"). Subsequently, AEL discontinued its existence as an Iowa corporation and continued its existence as a corporation incorporated in the State of Delaware (the "Reincorporation"). In connection with the Reincorporation, AEL changed its name to American National Group Inc. ANGI is an indirect, wholly-owned subsidiary of Brookfield Wealth Solutions. In September 2024, Brookfield Wealth Solutions changed its name from Brookfield Reinsurance Ltd. to Brookfield Wealth Solutions Ltd. and changed its trading symbol from “BNRE” to “BNT”. For purposes of these notes to the consolidated financial statements (“financial statements”), the “Company” refers to either ANGI or AEL, as required by the context.
As a result of the Post-Effective Merger, the consolidated financial statements for the periods prior to the Post-Effective Merger represent the results of American National as the accounting acquirer. For periods subsequent to the Post-Effective Merger, the consolidated financial statements represent the combined results of American National and AEL.
On October 1, 2025 the Company completed the transfer of all of its property and casualty subsidiaries, including American National Property And Casualty Company, United Farm Family Insurance Company and Farm Family Casualty Insurance Company and their respective wholly-owned subsidiaries (collectively, the “P&C Subsidiaries”) to Argo Group International Holdings, Inc., subsequently renamed to Clearbrook Group Holdings Inc. (“Clearbrook”). Amounts in the financial statements and notes thereto have been retrospectively adjusted and reported as discontinued operations. See Note 28 - Discontinued Operations for additional information.
2. Summary of Significant Accounting Policies
The consolidated financial statements and notes thereto, including all prior periods presented, have been prepared under accounting principles generally accepted in the United States of America (“GAAP”). The financial statements are prepared on a going concern basis and have been presented in U.S. dollars (“USD”) rounded to the nearest million unless otherwise indicated. These financial statements reflect all adjustments (consisting of normal recurring adjustments, including reclassifications) which are, in the opinion of management, necessary for a fair statement of results for the periods presented in accordance with GAAP.
The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Included among the material (or potentially material) reported amounts and disclosures that require the use of estimates are fair value of certain financial assets, value of business acquired (“VOBA”), future policy benefits (“FPB”), market risk benefits (“MRB”), valuation of embedded derivatives in policyholders’ account balances (“PAB”), and deferred income taxes, including the recoverability of deferred tax assets. Such estimates and assumptions are subject to inherent uncertainties, which may result in actual amounts differing from reported amounts.
Adoption of New Accounting Standards
During the year, the Company adopted the following Accounting Standard Update (“ASU”), issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or insignificant in presentation or amount.
ASU 2023-09 – On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU aim to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. Among other things, it requires, on an annual basis, the disclosure of the following: (i) specific categories in the rate reconciliation; (ii) additional information for reconciling items that meet a quantitative threshold; (iii) the amount of income taxes paid disaggregated by federal, state, and foreign taxes; and (iv) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid. This ASU was effective for fiscal years beginning after December 15, 2024 to be applied prospectively with an option for retrospective application, with early adoption permitted. This ASU was adopted by the Company on a retrospective basis.See updated financial statement disclosures included in Note 21 - Income Taxes.
Basis of Consolidation
These financial statements include the accounts of the Company and its consolidated subsidiaries, which are legal entities where the Company has a controlling financial interest by either holding a majority voting interest or as the primary beneficiary of the variable interest entity (“VIE”). All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
For a legal entity in which the Company holds a variable interest, the Company first considers whether it meets the definition of a VIE and therefore should apply the guidance under the VIE model. An entity is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient for the legal entity to finance its activities without additional subordinated financial support; (b) the holders of the equity investment at risk as a group lack either the power to direct the most significant activities of the entity, the obligation to absorb the expected losses, or the right to receive the expected residual returns; or (c) the entity is structured with non-substantive voting rights, where the voting rights of some investors are disproportionate to their obligation to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of the investor with disproportionately few voting rights.
The Company consolidates all VIEs for which it is the primary beneficiary, which is the case when the Company has both (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
Entities that are determined not to be VIEs are voting interest entities (“VOEs”), which are evaluated under the voting interest model, under which a controlling financial interest is established through a majority voting interest or through other means.
The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the specific facts and circumstances for each entity and requires judgment.
Accounting Policies
Business combinations are accounted for using the acquisition method. The purchase consideration of a business acquisition is measured at the aggregate of the fair values at the date of exchange of assets transferred, liabilities incurred, and equity instruments issued in exchange for control of the acquiree. The acquiree’s identifiable assets, liabilities and contingent liabilities are recognized at their fair values at the acquisition date. The interest of non-controlling shareholders in the acquiree, if applicable, is initially measured at the non-controlling shareholders’ proportion of the net fair value of the identifiable assets, liabilities and contingent liabilities recognized.
To the extent the fair value of consideration paid exceeds the fair value of the net identifiable tangible and intangible assets, the excess is recorded as goodwill.
Transaction costs are recorded as operating expenses on the Consolidated Statements of Operations.
Available-for-sale fixed maturity securities primarily include bonds, asset backed securities and private debt securities. Available-for-sale fixed maturity securities, which may be sold prior to their contractual maturity, are classified as available-for-sale and are carried at fair value with changes in fair value recognized in other comprehensive income, except for those that are designated as hedged items in a fair value hedge, for which changes in fair value are recognized during the period of the hedge in “Investment related gains (losses)” within the Consolidated Statements of Operations.
For available-for-sale fixed maturity securities in an unrealized loss position, the Company first assesses whether it intends to sell the security or will be required to sell the security before recovery of its amortized cost basis. If either of these criteria are met, the security’s amortized cost basis is written down to fair value through income in “Investment related gains (losses)” within the Consolidated Statements of Operations. Refer to Credit Loss Allowances and Impairments within this note for impairment or credit loss-related considerations.
Equity securities primarily include common stock, preferred stock and private equity. Equity securities are carried at fair value with changes in fair value recognized in “Investment related gains (losses)” within the Consolidated Statements of Operations.
Mortgage loans on real estate and private loans are both measured at amortized cost using the effective interest rate method. The amortized cost basis includes the unamortized principal, interest, discounts or premiums and deferred expenses, net of allowances for expected credit loss. Interest income, prepayment fees, amortization of premiums and origination fees, and accrual of discounts are reported in “Net investment income” in the Consolidated Statements of Operations. However, interest ceases to accrue for loans that are impaired or in default, which is when payments are more than 90 days past due, when collection is not probable, or when a loan is in foreclosure. When a loan is placed on non-accrual status, uncollected past due accrued interest income that is considered uncollectible is charged off against net investment income. Income on impaired loans is reported on a cash basis. When collection of the impaired loan becomes probable again, it is placed back into accrual status. Cash receipts on impaired loans are recorded as a reduction of principal, interest income, expense reimbursement, or other manner in accordance with the loan agreement. In the Consolidated Statements of Operations, gains and losses from the sale of loans and changes in allowances are reported in “Investment related gains (losses)” within the Consolidated Statements of Operations.
Mortgage loans and private loans are both presented net of the Company’s recorded allowance for expected credit loss, which represents the portion of amortized cost basis that the Company does not expect to collect. Refer to Credit Loss Allowances and Impairments within this note.
Real estate and real estate partnerships are comprised of investment real estate, as well as real estate joint ventures and other limited partnerships.
Certain investment real estate, including related improvements and investment real estate held through consolidation of VIEs, are stated at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset (typically 15 to 50 years). Rental income is recognized on a straight-line basis over the term of the respective lease in “Net investment income” within the Consolidated Statements of Operations.
The Company holds certain residential investment real estate through consolidation of investment company VIEs in accordance with Accounting Standards Codification (“ASC”) 946, Financial Services - Investment Companies (“ASC 946”), which are reported at fair value with the change in fair value on these investments reported in “Net investment income” within the Consolidated Statements of Operations. Fair values of residential investment real estate are initially based on the cost to purchase the properties and subsequently determined using broker price opinions. The residential investment real estate are leased to renters through operating lease arrangements. Rental income is recognized on a straight-line basis over the term of the respective leases in “Net investment income” within the Consolidated Statements of Operations.
The Company periodically reviews its investment real estate held at depreciated cost for impairment and tests properties for recoverability whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable and the carrying value of the property exceeds its estimated fair value. Properties whose carrying values are greater than their undiscounted cash flows are written down to their estimated fair value, with the impairment loss included as an adjustment to “Investment related gains (losses)” in the Consolidated Statements of Operations. Impairment losses are based upon the estimated fair value of real estate, which is generally computed using the present value of expected future cash flows from the real estate discounted at a rate commensurate with the underlying risks as well as other appraisal methods. Real estate acquired upon foreclosure is recorded at the lower of its cost or its estimated fair value at the date of foreclosure.
The Company classifies a property as held-for-sale if it commits to a plan to sell a property within one year and actively markets the property in its current condition for a price that is reasonable in comparison to its estimated fair value. Real estate held-for-sale is stated at the lower of depreciated cost or estimated fair value less expected disposition costs and is not depreciated while it is classified as held-for-sale.
Real estate joint ventures and other limited partnership interests include VIEs for which the Company has significant influence over the investee’s operations without a controlling financial interest, and are accounted for using the equity method of accounting. For these joint ventures or limited partnerships, the Company records its share of earnings using a lag methodology of one to three months when timely financial information is not available, and the contractual right does not exist to receive such financial information.
Certain real estate joint ventures and other limited partnership interests are consolidated VIEs for which the underlying joint ventures are investment companies within scope of ASC Topic 946. These investments are fair valued on a recurring basis with the change in fair value reported in “Net investment income”in the Consolidated Statements of Operations. Fair values are calculated based on a discounted cash flow methodology.
The Company routinely evaluates its investments in those investees for impairment. The Company considers financial and other information provided by the investee, other known information, and inherent risks in the underlying investments, as well as future capital commitments, in determining whether impairment has occurred. When an impairment is deemed to have occurred at the joint venture level, the Company recognizes its share as an adjustment to “Net investment income” within the Consolidated Statements of Operations to record the investment at its fair value. When an impairment results from the Company’s separate analysis, an adjustment is made through “Investment related gains (losses)” in the Consolidated Statements of Operations to record the investment at its fair value.
Investment funds are comprised of certain non-fixed income, alternative investments in the form of limited partnerships or similar legal structures for which the Company is not the primary beneficiary and therefore is not required to consolidate. The Company typically accounts for investment funds using the equity method of accounting, where the cost is recorded as an investment in the fund upon initial recognition, unless fair value option is elected. Under equity method, adjustments to the carrying amount reflect the Company’s pro rata ownership percentage of the operating results as indicated by net asset value (“NAV”) in the investment fund financial statements, which can be on a lag of up to three months when investee information is not received in a timely manner.
In addition, the Company has concluded that it is the primary beneficiary for certain investments funds, which are investment company funds in scope of ASC Topic 946, and consolidates the funds. The investments held by those consolidated funds are measured at fair value and valuation methods include NAV as a practical expedient and fair value based on discounted cash flow models. Income is reported on a quarter lag due to the availability of the related financial statements of these investment funds.
Policy loans are carried at the outstanding balance plus any accrued interest. Due to the collateralized nature of policy loans such that they cannot be separated from the policy contracts, the unpredictable timing of repayments, and the fact that settlement is at outstanding value, the carrying value of policy loans approximates fair value.
Short-term investments include highly liquid securities and other investments with original maturities of over 90 days and less than one year at the date of acquisition. Securities included within short-term investments are stated at fair value with amortized cost used as an approximation of fair value for certain investments.
Other invested assets are primarily comprised of derivatives assets, net of qualifying collaterals held. Also included within other invested assets are financing receivables, certain investments accounted for under the equity method, and company owned life insurance (“COLI”). The Company elected the fair value option under ASC 825 for its residual tranche investments as accounting for such investments at fair value is consistent with how the Company manages and evaluates them.
Derivative instruments include call options used to fund fixed indexed annuity contracts and equity-indexed universal life contracts (“insurance-related derivatives”) as well as other derivative instruments purchased to manage foreign currency exposure and other market risks associated with certain assets and liabilities. Derivative instruments are recorded at fair value on the acquisition date and subsequently revalued at fair value at each reporting date. Derivative instruments with positive values are recorded as derivative assets within “Other invested assets” and derivative instruments with negative fair values are reported as derivative liabilities within “Other liabilities” in the Consolidated Statements of Financial Position. If a derivative is not designated for hedge accounting, changes in the fair value of derivatives are recorded in “Investment related gains (losses)” in the Consolidated Statements of Operations, except for insurance-related derivatives, whose fair value changes are recorded in “Change in fair value of insurance-related derivatives and embedded derivatives”, along with fair value changes from embedded derivatives on related fixed indexed annuity and equity-indexed universal life contracts.
Where the Company has a master netting agreement with its counterparty that allows for the netting of the Company’s derivative asset and liability positions, the Company elects to offset such derivative assets and liabilities and present them on a net basis on the Consolidated Statements of Financial Position. Further, in some instances, the Company holds collateral to offset exposure from, or pledges collateral to offset exposure to, its counterparties relating to its derivative instruments. The Company elects to offset collateral supporting credit risk that is restricted to the Company’s use for the derivative exposure when a master netting arrangement is in place and all offsetting criteria are met.
Hedge accounting can be qualified for when at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company identifies (i) how the hedging instrument is expected to hedge the designated risks related to the hedged item; (ii) the method that will be used to retrospectively and prospectively assess the hedge effectiveness; and (iii) the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at each reporting period throughout the life of the hedge accounting relationship.
The Company applies fair value hedge accounting treatment to certain of its qualifying derivative instruments in relation to foreign currency risks of certain available-for-sale fixed maturity securities as well as interest rate risks related to certain funding agreements. Under a fair value hedge, the changes in the fair value of the hedging derivative and changes in the fair value of the hedged items related to the designated risk being hedged are reported on the Consolidated Statements of Operations in the same line item. When the hedged items are available-for-sale fixed maturity securities, changes in fair value of the hedged items that relate to the designated risk are recognized in earnings instead of other comprehensive income, and the carrying values of the hedged items are not remeasured.
The Company discontinues hedge accounting prospectively when (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value of a hedged item; (ii) the derivative expires, is sold, terminated or exercised; or (iii) the derivative is de-designated as a hedging instrument. When the hedge accounting is discontinued, the derivative continues to be carried at fair value on the Consolidated Statements of Financial Position, with changes in the fair value recognized in “Investment related gains (losses)” in the Consolidated Statements of Operations.
Allowance for credit loss on available-for-sale fixed maturity securities is determined by evaluating available-for-sale fixed maturity securities in an unrealized loss position. If the Company does not intend to sell a security or will not be required to sell the security before recovery of its amortized cost basis, the Company evaluates whether the decline in fair value has resulted from credit loss or market factors.
In making this assessment, management first calculates the extent to which fair value is less than amortized cost, consider any changes to the rating of the security by a rating agency, and any specific conditions related to the security. If this qualitative assessment indicates that a credit loss may exist, and management does not anticipate recovery of all contractual or expected cash flows, the present value of projected future cash flows expected to be collected is compared to the amortized cost basis of the security. The net present value of the expected cash flows is calculated by discounting management’s best estimate of expected cash flows at the effective interest rate implicit in the available-for-sale fixed maturity security when acquired.’
If the present value of expected cash flows is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded through income in “Investment related gains (losses)” within the Consolidations Statements of Operations limited to the amount fair value is less than amortized cost. If the fair value is less than the net present value of its expected cash flows at the impairment measurement date, a non-credit loss exists which is recorded in other comprehensive income (loss) for the difference between the fair value and the net present value of the expected cash flows.
Allowances for credit loss on mortgage loans and private loans are determined when management applies significant judgment to estimate expected lifetime credit loss, including: (i) pooling loans that share similar risk characteristics, (ii) considering expected lifetime credit loss over the contractual term of its loans adjusted for expected prepayments and any extensions, and (iii) considering past events and current and forecasted economic conditions. The allowance is calculated quarterly for each loan type based on its unique inputs. The Company uses the discounted cash flow model to assess expected credit loss.
On an ongoing basis, mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality) and collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is probable) may be evaluated individually for credit loss.
The valuation allowances for each of our mortgage loan portfolios are estimated by deriving probability of default and recovery rate assumptions based on the characteristics of the loans in each portfolio, historical economic data and loss information, and current and forecasted economic conditions. Key loan characteristics impacting the estimate for our commercial mortgage loan portfolio include the current state of the borrower’s credit quality, which considers factors such as loan-to-value and debt service coverage ratios, loan performance, underlying collateral type, delinquency status, time to maturity, and original credit scores. Key loan characteristics impacting the estimate for our agricultural and residential mortgage loan portfolios include the current state of the borrowers' credit quality, delinquency status, time to maturity and original credit scores.
The allowance for a collateral dependent loan, which is typically a mortgage loan, is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is reasonably possible or probable. Accordingly, the change in the estimated fair value of collateral dependent loans is recorded as a change in the allowance for credit losses which is recorded on a quarterly basis as a charge or credit to earnings within “Investment related gains (losses)”.
The Company’s mortgage loans are primarily originated and are not purchased in the secondary market; as such, the mortgage loans would not generally be subject to purchased credit deteriorated considerations. For any purchased mortgage loans, the Company performs an analysis that includes both qualitative and quantitative considerations to determine whether any purchases have had more-than-insignificant credit deterioration since origination.
For private loans, credit loss allowances are estimates of expected credit losses, established for loans upon origination or purchase, considering all relevant information available, including past events, current conditions, and reasonable and supportable forecasts over the life of the loans. The estimates of expected credit losses are developed using a quantitative probability of default and loss given default methodology, in which default assumptions reflect applicable agency credit ratings or, when such external credit ratings are not available, internally developed ratings. Loans are evaluated on a pooled basis when they share similar risk characteristics; otherwise, they are evaluated individually.
Cash and cash equivalents have durations that do not exceed 90 days at the date of acquisition, include cash on-hand and in banks, as well as amounts invested in money market funds, and are reported as “Cash and cash equivalents” in the Consolidated Statements of Financial Position.
Accrued investment income is presented separately on the Consolidated Statements of Financial Position and excluded from the carrying value of the related investments, primarily available-for-sale fixed maturity securities and mortgage loans. The Company has made an accounting policy election not to measure an allowance for credit losses for accrued interest receivable on amortized cost investments and to directly write off the uncollectible balance.
Deferred policy acquisition costs (“DAC”) and Deferred sales inducements (“DSI”) are capitalized costs related directly to the successful acquisition of new or renewal insurance contracts. Significant costs are incurred to successfully acquire insurance, reinsurance and annuity contracts, including commissions and certain underwriting, policy issuance and processing expenses as well as premium bonus.
Insurance contracts are grouped into cohorts by contract type and issue year consistent with estimating the associated liability for future policy benefits. DAC and DSI are amortized on constant level basis for the grouped contracts over the expected term of the related contracts to approximate straight-line amortization. DAC and DSI will be amortized over the bases selected by product as listed below, all of which provide a constant level representation of contract term.
| | | | | | | | | |
| Product(s) | | Amortization Base | |
| Traditional life products | | Nominal face amount | |
| Life contingent payout annuities | | Annualized benefit amount in force | |
| | | |
| Fixed deferred annuities, fixed index annuities, variable annuities | | Policy count | |
| Universal life products | | Initial face amount | |
The assumptions used in the calculation for DAC and DSI are impacted by the changes in actuarial assumptions as a result of assumption reviews and updates for associated insurance liabilities, which include full surrenders, partial withdrawals, mortality, utilization, premium persistency, reset assumptions associated with lifetime income benefit riders and the option budget assumption. The Company reviews and updates actuarial experience assumptions serving as inputs to the models that establish the expected life for DAC and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. The Company makes model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively.
Amortization of DAC and DSI is included in the “Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired” on the Consolidated Statements of Operations.
Value of business acquired (“VOBA”) is an intangible asset or liability resulting from a business combination that represents the difference between the policyholder liabilities measured in accordance with the acquiring company’s accounting policies and the estimated fair value of the same acquired policyholder liabilities in-force at the acquisition date. The estimated fair value of the acquired liabilities includes assumptions on future policy benefits and contract charges, premiums, discount rates, and the net investment earned rate. VOBA can be either positive or negative. Positive VOBA is recorded in the “Deferred policy acquisition costs, deferred sales inducements and value of business acquired” line in the Consolidated Statements of Financial Position. Negative VOBA occurs when the estimated fair value of in-force contracts in a life insurance company acquisition is more than the amount recorded as insurance contract liabilities, and is recorded in the “Future policy benefits” in the Consolidated Statements of Financial Position.
VOBA is amortized on a basis consistent with the related policyholder liabilities over the remaining life of the acquired underlying policies using the same methodology, factors and assumptions used to amortize DAC and DSI. Amortization of VOBA intangible asset is included in the “Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired” on the Consolidated Statements of Operations. Amortization of VOBA intangible liability is included in “Policyholder benefits and claims incurred” on the Consolidated Statements of Operations. VOBA asset balances are subject to periodic recoverability and impairment testing.
Reinsurance recoverables and deposit assets include the reinsurance receivables from reinsurers, reinsurance recoverables from reinsurers, and deposit assets associated with reinsurance agreements.
Each reinsurance agreement is assessed to determine whether the agreement transfers significant insurance risk to the reinsurer. If insurance risk is transferred, the Company utilizes the reinsurance method of accounting. If the agreement does not transfer significant insurance risk, the Company utilizes the deposit method of accounting. The reinsurance recoverable and deposit assets include deposit assets, reinsurance market risk benefits, amounts due from reinsurers for paid or unpaid claims, policyholder account balances and future policy benefits. The reinsurance recoverables are presented net of a reserve for collectability. The Company has ceded disability, medical and long-term care insurance, and annuity contracts including lifetime income benefit riders with significant insurance risk to other insurance companies through reinsurance. The Company also cedes annuity contracts without significant insurance risk to other insurance companies.
Reinsurance receivables include amounts receivable from third-party reinsurers. The reinsurance receivables which will be settled within a year are short-term in nature, and their carrying values approximate fair value.
Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of assets include the cost of materials and direct labor, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the cost of dismantling and removing the items and restoring the site on which they are located.
Depreciation of property and equipment commences when it is available for use. Property and equipment are depreciated on a straight-line basis over the estimated useful lives of each component of the property and equipment. The estimated useful lives of the property and equipment are three to 30 years.
Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, on a straight-line basis. The right-of-use asset is depreciated on the straight-line basis over the lease term. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each annual reporting period, with the effect of any changes recognized on a prospective basis.
Intangible assets include definite-lived intangible assets which are carried at cost less accumulated amortization and indefinite-lived intangible assets not subject to amortization, carried at cost. Amortization expense is primarily calculated using the straight-line amortization method.
The Company assesses the impairment of definite-lived intangible assets in accordance with its policy for the impairment of property and equipment. The Company assesses the impairment of indefinite-lived intangible assets in accordance with its policy for the impairment of goodwill.
The Company’s intangible assets are primarily from the acquisition of AEL and American National. Definite-lived intangible assets include distributor relationships and trade names, as well as other intangible assets such as capitalized software and leases. Indefinite-lived intangible assets represent insurance licenses held by the acquired insurance companies.
Distributor Relationships - The distribution assets reflect relationships AEL and American National have with their respective third-party intermediaries that generate new business for the Company. These assets were valued using the multi-period excess-earnings method, which derives value based on the present value of the after-tax cash flows attributable to the intangible asset only. The useful life of distributor relationships ranges approximately from 15 to 30 years from the date of acquisition.
Trade Names - This represents trade names of AEL and American National and was valued using the relief from royalty method, which derives value based on present value of the after-tax royalty savings attributable to owning the intangible asset. The useful life of the trade name is ten years for AEL and ten years for American National, both from the date of acquisition.
Insurance Licenses - Given the highly regulated nature of the insurance industry, companies are required to hold certain licenses to operate. These licenses are valued using the comparable transaction method based on observable license transactions in the insurance industry. Insurance licenses represent an indefinite-lived intangible asset.
Goodwill represents the excess of amounts paid for acquiring businesses over the fair value of the net assets acquired, less any impairment recognized.
Goodwill is not amortized but is tested for impairment at least annually by first assessing whether there are events or changes in circumstances, such as deteriorating or adverse market conditions, indicating that it is more likely than not that the carrying amount of the reporting unit including goodwill may exceed the fair value. If this qualitative assessment indicates that an impairment may exist, a quantitative impairment assessment is then performed and impairment is measured and recognized as the amount by which a reporting unit's carrying value, including goodwill, exceeds its fair value, limited to the carrying amount of goodwill of the reporting unit.
Assets received or pledged as collateral – The Company receives and pledges collateral in respect to certain derivative contracts, in order to meet its contractual obligations. The amount of collateral required is determined by the valuation of each contract on a mark-to-market basis and the type of collateral to be deposited is specified within the agreement with each counterparty.
Collateral pledged continues to be recognized in the Consolidated Statements of Financial Position as the Company retains all rights related to these assets.
Collateral received is not recognized in the Consolidated Statements of Financial Position unless the Company acquires the rights relating to the economic risks and rewards related to these assets.
Collateralized lending transactions – Securities purchased under reverse repurchase agreements are collateralized lending transactions that do not qualify for sale accounting under ASC 860, Transfers and Servicing (“ASC 860”). A reverse repurchase agreement provides the Company the right to resell the same securities to the counterparty at the maturity of the agreement. These transactions are measured at amortized cost and are recorded at amounts at which the securities were initially sold.
For reverse repurchase agreements, the Company recognizes a short-term investment for cash provided in the Consolidated Statements of Financial Position. Securities purchased under reverse repurchase agreements are not recognized in the Consolidated Statements of Financial Position.
Separate account assets and liabilities are funds that are held separate from the general assets and liabilities of the Company. Separate account assets include funds representing the investments of variable insurance product contract holders, who bear the investment risk of such funds. Investment income and investment gains and losses from these separate funds accrue to the benefit of the contract holders. The Company reports separately, as assets and liabilities, investments held in such separate accounts and liabilities of the separate accounts if (i) such separate accounts are legally recognized; (ii) assets supporting the contract liabilities are legally insulated from the Company’s general account liabilities; (iii) investments are directed by the contract holder; and (iv) all investment performance, net of contract fees and assessments, is passed through to the contract holder. The assets of separate accounts are carried at fair value. Deposits, net investment income, and realized investment gains and losses for these accounts are excluded from revenues, and related liability increases are excluded from benefits and expenses in the Consolidated Statements of Operations. Separate accounts are established in conformity with insurance laws and are not chargeable with liabilities that arise from any other business of the Company.
Future policy benefits (“FPB”) is calculated as the present value of expected future policy benefits to be paid or on behalf of policyholders and certain related expenses, reduced by the present value of expected net premiums to be collected from policyholders. FPB relates to long duration insurance contracts such as deferred and immediate annuities with life contingencies, including PRT contracts, and certain life products. Significant assumptions used in the establishment of the FPB include mortality and lapse rates as well as discount rates. Other principal assumptions include morbidity, incidence, terminations, claim-related expenses and other contingent events based on the respective product type. The Company groups contracts into annual or deal level cohorts based on product type and contract inception date for the purposes of calculating the liability for future policy benefits. Ceded future policy benefits are presented in “Reinsurance recoverables and deposit assets” on the Consolidated Statements of Financial Position.
The Company updates its estimate of cash flows over the entire life of a group of contracts using actual historical experience and current future cash flow assumptions. The Company reviews and updates cash flow assumptions at least annually during the third quarter of each year, and at the same time every year by cohort or product. The Company also reviews more frequently and updates its cash flow assumptions during an interim period if evidence suggests cash flow assumptions should be revised. Assumption revisions will be reflected in the net premium ratio and FPB calculation in the quarter in which assumptions are revised. The effects of changes in such estimated liabilities are included in the Consolidated Statements of Operations in the period in which the changes occur. The change in the liability due to actual experience is recognized in “Policyholder benefits and claims incurred” in the Consolidated Statements of Operations.
The change in FPB that is recognized in “Policyholder benefits and claims incurred” in the Consolidated Statements of Operations is calculated using a locked-in discount rate. The Company measures the FPB at each reporting period using both the locked-in discount rate and the current discount rate curves. For contracts issued subsequent to the transition date of Targeted Improvements to the Accounting for Long-Duration Insurance Contracts (“LDTI”), the upper-medium grade discount rate used for interest accretion is locked in for the cohort and represents the original discount rate at the issue date of the underlying contracts. The FPB for all cohorts is remeasured to a current upper-medium grade discount rate at each reporting date through other comprehensive income. The Company generally interprets the original discount rate to be a rate comparable to that of a U.S. corporate single A rate that reflects the duration characteristics of the liability. The upper-medium grade discount rate is determined using observable market data, including published upper-medium grade discount curves. In situations where market data for an upper-medium grade discount curve is not available (e.g., in certain foreign jurisdictions), spreads are applied to adjust the available observable market data to an upper-medium grade discount curve. For certain long-tailed life insurance liabilities with expected future cash flows longer than the last observable tenor (30 years), the discount rate for future cash flows beyond 30 years will be held constant at the ultimate (30 years) observable forward rate.
Should the present value of actual and future expected benefits less day one FPB balance exceed the present value of actual and future expected gross premiums, the net premium ratio will be capped at 100% and a gross premium FPB will be held. The immediate charge, recognized in earnings through “Policyholder benefits and claims incurred”, will be the amount by which the uncapped net premium ratio exceeds 100% times the present value of future expected gross premium. This assessment will be performed at the cohort level.
Deferred profit liability (“DPL”) is gross premiums received in excess of net premiums deferred at initial recognition for limited-payment products. Gross premiums are measured using assumptions consistent with those used in the measurement of the liability for future policy benefits, including discount rate, mortality, lapses and expenses.
The DPL is amortized and recognized as “Policyholder benefits and claims incurred” in the Consolidated Statements of Operations in proportion to expected future benefit payments from the respective insurance contracts. Interest is accreted on the balance of the DPL using the discount rate determined at contract issuance. The Company reviews and updates its estimate of cash flows from the DPL at the same time as the estimates of cash flows for the liability for future policy benefits. When cash flows are updated, the updated estimates are used to recalculate the DPL at contract issuance. The recalculated DPL as of the beginning of the current reporting period is compared to the carrying amount of the DPL as of the beginning of the current reporting period, and any difference is recognized as “Policyholder benefits and claims incurred” in the Consolidated Statements of Operations.
DPL is recorded in “Future policy benefits” on the Consolidated Statements of Financial Position.
Policyholders’ account balances (“PAB”) represent the contract value that has accrued to the benefit of the policyholders related to universal-life and investments-type contracts and include balances related to funding agreements such as those in connection with our FABN program. For fixed products, these are generally equal to the accumulated deposits plus interest credited, reduced by withdrawals, payouts and accumulated policyholder assessments. Indexed product account balances with returns linked to the performance of a specified market index are equal to the sum of the host (or guaranteed) component of the contracts and the fair value of the embedded derivatives which include funded benefits in excess of the host guarantee. The host value is established at inception of the contract and accreted over the policy’s life at a constant level of interest. The fair value of the embedded derivative is estimated by projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and discounting the excess of the projected contract value amounts at the applicable risk-free interest rates adjusted for non-performance risk related to those liabilities. Interest credited or index credits to policyholders’ account balances pursuant to accounting by insurance companies for certain long-duration contracts are included in “Interest sensitive contract benefits” in the Consolidated Statements of Operations. Changes in the fair value of the embedded derivatives are included in the “Change in fair value of insurance-related derivatives and embedded derivatives” in the Consolidated Statements of Operations. Ceded policyholders’ account balances are presented in “Reinsurance recoverables and deposit assets” on the Consolidated Statements of Financial Position.
Market risk benefits (“MRB”) are contracts or contract features that provide protection to the policyholder from other-than-nominal capital market risk and expose us to such risk. The Company issues certain fixed indexed annuity and fixed rate annuity contracts that provide minimum guarantees to policyholders including guaranteed minimum withdrawal benefits and guaranteed minimum death benefits that are MRBs. MRBs are measured at fair value, at the individual contract level, and can be either an asset or a liability. Contracts which contain more than one MRB feature are combined into one single MRB. The fair value is calculated using stochastic models. At contract inception, attributed fees are calculated based on the present value of the fees and assessments collectible from the policyholder relative to the present value of expected benefits paid attributable to the MRB. The attributed fees remain static over the life of the MRB and are used to calculate the fair value of the MRB using a risk neutral valuation method. The attributed fees cannot be negative and cannot exceed the total explicit fees collectible from the policyholder. The periodic change in fair value is recognized in earnings with the exception of the periodic change in fair value related to the instrument-specific credit risk, which is recognized in other comprehensive income (“OCI”).
The actuarial assumptions used in the MRB calculation are the Company’s best estimate assumptions. Assumptions are adjusted to reflect fair value by applying a margin for non-hedgeable risk and an adjustment for own credit spread through the discount rate. The risk-free discount rate is the scenario specific US treasury rate.
Market risk benefits with positive values are recorded as “Other assets” and negative fair values are reported as “Market risk benefits” liabilities in the Consolidated Statements of Financial Position. The ceded MRB assets and liabilities are presented in “Reinsurance recoverables and deposit assets” on the Consolidated Statements of Financial Position.
Funds withheld for reinsurance liabilities represent the payable for amounts contractually withheld in accordance with reinsurance agreements where certain of the Company’s subsidiaries act as cedants. While the assets in the funds withheld are legally owned by the cedant, the reinsurer is subject to all investment performance and economic rights and obligations to the funds withheld assets similar to invested assets held directly by the reinsurer. The assets in the funds withheld account, including cash and cash equivalents, fixed income securities and derivatives carried at fair value, are recorded in respective investment line items in the Consolidated Statements of Financial Position. These funds withheld assets are offset by recognizing a corresponding liability. The funds withheld for reinsurance liability includes an embedded derivative that is bifurcated from the host contract. The fair value of the embedded derivative is calculated based upon the change in the fair value of the underlying assets in the funds withheld account. These embedded derivatives are included within “Funds withheld for reinsurance liabilities” along with the host contract on the Consolidated Statements of Financial Position. Changes in the fair value of these embedded derivatives are included in “Change in fair value of insurance-related derivatives and embedded derivatives” in the Consolidated Statements of Operations.
Other policyholder funds include the liabilities for participating life insurance policies. For the majority of participating life insurance business, profits earned are reserved for the payment of dividends to policyholders, except for the stockholders’ share of profits on participating policies, which is limited to the greater of 10% of the profit on participating business, or 50 cents per thousand dollars of the face amount of participating life insurance in-force.
Participating policyholders’ interest includes the accumulated net income from participating policies reserved for payment to such policyholders in the form of dividends (less net income allocated to stockholders as indicated above) as well as a pro rata portion of unrealized investment gains (losses).
For certain blocks of participating life insurance business, the allocation of dividends to participating policy owners is based upon a comparison of experienced rates of mortality, interest and expenses, as determined periodically for representative plans of insurance, issue ages and policy durations, with the corresponding rates assumed in the calculation of premiums.
Net premiums, Other policy revenue, and policyholder benefits and claims incurred include policyholder activity from our various insurance contracts, including annuity products.
Traditional ordinary life and health premiums are recognized as revenue when due within “Net premiums” on the Consolidated Statements of Operations. Benefits and expenses are associated with earned premiums to result in recognition of profits over the term of the insurance contracts within “Policyholder benefits and claims incurred” on the Consolidated Statements of Operations.
Annuity premiums received on limited-pay and supplemental annuity contracts involving a significant life contingency, including PRT contracts, are recognized as revenue when due in “Net premiums” on the Consolidated Statements of Operations. When premiums are recognized, future policy benefits are computed, whereby premiums are offset by changes in future policy benefits included within “Policyholder benefits and claims incurred” on the Consolidated Statements of Operations, provided that the net premium ratio does not exceed 100% (i.e., present value of total policyholder benefits and expenses does not exceed gross premiums).
Deferred annuity premiums are recorded as deposits rather than recognized as revenue. Revenues from deferred annuity contracts are principally surrender charges and living income benefit rider charges assessed against policyholder account balances during the period. In the case of variable annuities, revenues include administrative fees assessed to contract holders. These revenues are included within “Other policy revenue” in the Consolidated Statements of Operations.
Universal life and single premium whole life revenues represent amounts assessed to policyholders including amounts recorded as “Other policy revenue” in the Consolidated Statements of Operations such as mortality charges, surrender charges actually paid, and earned policy service fees. Amounts included in the Consolidated Statements of Operations as “Policyholder benefits and claims incurred” are claims in excess of account balances returned to policyholders. Interest credited to account balances is within “Interest sensitive contract benefits” in the Consolidated Statements of Operations.
Premiums and benefits ceded are recognized when due or incurred and in accordance with the terms of the contractual agreement between the Company and reinsurer.
Net investment income includes interest and dividend income on investments as well as the change in fair value on investments reported at fair value under ASC 946 or for those which we elect the fair value option under ASC 825. Additionally, net investment income includes our share of income from equity method investments. Interest income on investments is calculated using the effective interest method. Dividend income is recognized when the right to receive payments is established.
Investment related gains (losses) include realized gains and losses on investments representing the difference between net sale proceeds and the carrying value, mark-to-market gains (losses) on equity securities carried at fair value, allowance for credit loss and foreign exchange gains (losses), determined on the basis of specific identification based on the trade date for all security transactions.
Change in fair value of insurance-related derivatives and embedded derivatives include the change in fair value of embedded derivatives for fixed indexed annuities, equity-indexed universal life contracts and funds withheld for reinsurance liabilities, as well as the change in fair value of insurance-related derivatives, which are call options used to fund fixed indexed annuity contracts and equity-indexed universal life contracts. The change in fair value of embedded derivatives for fixed index annuities equals the change in the difference between policy benefit reserves for fixed index annuities computed under the derivative accounting standard and the long-duration contracts accounting standard as of each reporting date.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities within a year. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted at the end of each year.
Deferred income tax assets (“DTAs”) and liabilities (“DTLs”) are recognized for the expected future tax consequences of events that have been included in the financial statements under the asset and liability method. Under this method, we determine DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date.
We recognize DTAs to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law and results of recent operations. If we determine that we would not be able to realize our DTAs in the future, we would recognize a DTA valuation allowance, which would increase the provision for income taxes. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets.
We record uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (i) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position; and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on unrecognized tax benefits in the provision for income taxes.
Segments
In accordance with ASC 280, Operating Segments, the Company uses a management approach to determine operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocation of resources and assessing performance. The Company’s CODM has been identified as the Brookfield Wealth Solutions Chief Executive Officer and the Brookfield Wealth Solutions Chief Financial Officer who review the results of operations when making decisions about capital allocation and investment strategies, as well as product mix and pricing of insurance products. Our operations are organized into two reportable segments: Annuities and Life Insurance (see Note 26 - Segment Reporting).
Litigation contingencies
Existing and potential litigation is reviewed quarterly to determine if any adjustments to liabilities for probable losses are necessary. Reserves for losses are established whenever they are probable and reasonably estimable. If not one estimate within the range of possible losses is more probable than any other, a reserve is recorded based on the lowest amount of the range.
Recently Issued Accounting Pronouncements
The Company continues to assess the impacts of the ASUs issued but not yet adopted as of December 31, 2025 on the consolidated financial statements. ASUs not listed below were assessed and determined to be either not applicable or insignificant in presentation or amount.
ASU 2024-03 – On November 4, 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU require public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU will be effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, to be applied on either a retrospective or prospective basis subject to certain exceptions, with early adoption permitted. We are currently evaluating the impact of this ASU on our financial statements. However, as they apply to disclosure requirements, the adoption of this ASU is not anticipated to have a material impact on our profitability, financial position or cash flows.
ASU 2025-06 – On September 18, 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Improvements to Accounting for Internal-Use Software. The amendments in this ASU aim to simplify and modernize the guidance for internal-use software costs by removing stage-based development references and introducing a principle-based approach for capitalization criteria. Among other things, it clarifies when costs should be capitalized versus expensed, eliminates certain terminology, and aligns the guidance more closely with current software development practices. This ASU will be effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, and should be applied prospectively, with early adoption permitted. Entities may also elect retrospective application or a modified retrospective application. The Company is currently assessing the potential impact of adopting this standard on its consolidated financial statements and related disclosures.
3. Available-For-Sale Fixed Maturity Securities
The total amortized cost, fair value, allowance for credit losses, gross unrealized gains and losses of available-for-sale fixed maturity securities are shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Allowance for Credit Losses | | Fair Value |
| (Dollars in millions) |
| December 31, 2025 | | | | | | | | | |
| U.S. treasury and government | $ | 68 | | | $ | — | | | $ | — | | | $ | — | | | $ | 68 | |
| U.S. state and municipal | 2,866 | | | 105 | | | (19) | | | (3) | | | 2,949 | |
| Foreign governments | 1,118 | | | 51 | | | — | | | — | | | 1,169 | |
| Corporate debt securities | 42,310 | | | 974 | | | (143) | | | — | | | 43,141 | |
| Residential mortgage-backed securities | 966 | | | 44 | | | (2) | | | — | | | 1,008 | |
| Commercial mortgage-backed securities | 3,051 | | | 101 | | | (31) | | | — | | | 3,121 | |
| Collateralized debt securities | 6,475 | | | 108 | | | (47) | | | — | | | 6,536 | |
| Total fixed maturity securities | $ | 56,854 | | | $ | 1,383 | | | $ | (242) | | | $ | (3) | | | $ | 57,992 | |
| | | | | | | | | |
| December 31, 2024 | | | | | | | | | |
| U.S. treasury and government | $ | 67 | | | $ | — | | | $ | (1) | | | $ | — | | | $ | 66 | |
| U.S. state and municipal | 2,931 | | | 37 | | | (23) | | | — | | | 2,945 | |
| Foreign governments | 1,568 | | | 6 | | | (33) | | | — | | | 1,541 | |
| Corporate debt securities | 31,428 | | | 453 | | | (303) | | | (24) | | | 31,554 | |
| Residential mortgage-backed securities | 1,081 | | | 25 | | | (3) | | | (1) | | | 1,102 | |
| Commercial mortgage-backed securities | 2,755 | | | 65 | | | (24) | | | — | | | 2,796 | |
| Collateralized debt securities | 5,541 | | | 75 | | | (29) | | | — | | | 5,587 | |
| Total fixed maturity securities | $ | 45,371 | | | $ | 661 | | | $ | (416) | | | $ | (25) | | | $ | 45,591 | |
The amortized cost and fair value of available-for-sale fixed maturity securities at December 31, 2025, by contractual maturity are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Residential mortgage-backed securities, commercial mortgage-backed securities, and collateralized debt securities, which are not due at a single maturity, have been separately presented below.
| | | | | | | | | | | |
| Available-For-Sale |
| Amortized Cost | | Fair Value |
| (Dollars in millions) |
| Due in one year or less | $ | 1,669 | | | $ | 1,669 | |
| Due after one year through five years | 20,115 | | | 20,523 | |
| Due after five years through ten years | 9,731 | | | 9,930 | |
| Due after ten years | 14,847 | | | 15,205 | |
| 46,362 | | | 47,327 | |
| Residential mortgage-backed securities | 966 | | | 1,008 | |
| Commercial mortgage-backed securities | 3,051 | | | 3,121 | |
| Collateralized debt securities | 6,475 | | | 6,536 | |
| $ | 56,854 | | | $ | 57,992 | |
Proceeds from sales of available-for-sale fixed maturity securities, with the related gross realized gains and losses, are shown below:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Proceeds from sales of available-for-sale fixed maturity securities | $ | 8,389 | | | $ | 5,288 | | | $ | 2,641 | |
| Gross realized gains | 81 | | | 17 | | | 2 | |
| Gross realized (losses) | (69) | | | (174) | | | (53) | |
The Company has pledged bonds in connection with certain agreements and transactions, such as financing and reinsurance agreements. The carrying value of bonds pledged was $10.4 billion and $8.8 billion as of December 31, 2025 and December 31, 2024, respectively.
In accordance with various regulations, the Company has securities on deposit with regulating authorities with a carrying value of $52 million and $49 million as of December 31, 2025 and December 31, 2024, respectively. There are no restrictions on these assets.
As of December 31, 2025 and December 31, 2024, amounts loaned under reverse repurchase agreements were $400 million and $400 million, respectively, and the fair value of the collateral, comprised of equity securities, was $872 million and $783 million, respectively.
The gross unrealized losses and fair value of available-for-sale fixed maturity securities, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position due to market factors are shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Less than 12 months | | 12 months or more | | Total |
| Number of Issues | | Gross Unrealized Losses (1) | | Fair Value | | Number of Issues | | Gross Unrealized Losses (1) | | Fair Value | | Number of Issues | | Gross Unrealized Losses (1) | | Fair Value |
| (Dollars in millions) |
| December 31, 2025 | | | | | | | | | | | | | | | | | |
| U.S. treasury and government | 1 | | | $ | — | | | $ | 2 | | | 3 | | | $ | — | | | $ | 37 | | | 4 | | | $ | — | | | $ | 39 | |
| U.S. state and municipal | 43 | | | (5) | | | 345 | | | 32 | | | (14) | | | 190 | | | 75 | | | (19) | | | 535 | |
| Foreign governments | 6 | | | — | | | 148 | | | 2 | | | — | | | 12 | | | 8 | | | — | | | 160 | |
| Corporate debt securities | 930 | | | (74) | | | 5,737 | | | 237 | | | (69) | | | 1,661 | | | 1,167 | | | (143) | | | 7,398 | |
| Residential mortgage-backed securities | 22 | | | — | | | 64 | | | 16 | | | (2) | | | 95 | | | 38 | | | (2) | | | 159 | |
| Commercial mortgage-backed securities | 29 | | | (8) | | | 196 | | | 29 | | | (23) | | | 290 | | | 58 | | | (31) | | | 486 | |
| Collateralized debt securities | 62 | | | (17) | | | 577 | | | 17 | | | (30) | | | 225 | | | 79 | | | (47) | | | 802 | |
| Total | 1,093 | | | $ | (104) | | | $ | 7,069 | | | 336 | | | $ | (138) | | | $ | 2,510 | | | 1,429 | | | $ | (242) | | | $ | 9,579 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2024 | | | | | | | | | | | | | | | | | |
| U.S. treasury and government | 2 | | | $ | — | | | $ | 17 | | | — | | | $ | (1) | | | $ | 31 | | | 2 | | | $ | (1) | | | $ | 48 | |
| U.S. state and municipal | 146 | | | (19) | | | 816 | | | 15 | | | (4) | | | 55 | | | 161 | | | (23) | | | 871 | |
| Foreign governments | 8 | | | (33) | | | 1,206 | | | — | | | — | | | — | | | 8 | | | (33) | | | 1,206 | |
| Corporate debt securities | 1,474 | | | (160) | | | 6,415 | | | 193 | | | (143) | | | 2,966 | | | 1,667 | | | (303) | | | 9,381 | |
| Residential mortgage-backed securities | 44 | | | (3) | | | 178 | | | 11 | | | — | | | 57 | | | 55 | | | (3) | | | 235 | |
| Commercial mortgage-backed securities | 104 | | | (24) | | | 667 | | | — | | | — | | | — | | | 104 | | | (24) | | | 667 | |
| Collateralized debt securities | 174 | | | (29) | | | 1,170 | | | 4 | | | — | | | 20 | | | 178 | | | (29) | | | 1,190 | |
| Total | 1,952 | | | $ | (268) | | | $ | 10,469 | | | 223 | | | $ | (148) | | | $ | 3,129 | | | 2,175 | | | $ | (416) | | | $ | 13,598 | |
(1)Unrealized losses have been reduced to exclude the allowance for credit losses of $3 million and $25 million as of December 31, 2025 and 2024, respectively.
The unrealized losses at December 31, 2025 are principally related to the timing of the purchases of certain securities, which carry less yield than those available at December 31, 2025. Approximately 92% and 88% of the unrealized losses on fixed maturity securities shown in the above table for December 31, 2025 and 2024, respectively, are on securities that are rated investment grade, defined as being the highest two National Association of Insurance Commissioners (“NAIC”) designations.
The Company expects to recover the amortized cost on all securities except for those securities on which we recognized an allowance for credit loss. In addition, as the Company did not have the intent to sell fixed maturity securities with unrealized losses and it was not more likely than not that the Company would be required to sell these securities prior to recovery of the amortized cost, which may be maturity, the Company did not write down these investments to fair value through the Consolidated Statements of Operations.
Allowance for Credit Losses
Several assumptions and underlying estimates are made in the evaluation of allowance for credit loss. Examples include financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry conditions and trends and implications of rating agency actions and offering prices. Based on this evaluation, unrealized losses on available-for-sale securities where an allowance for credit loss was not recorded were concentrated within the financials sector as of December 31, 2025 and 2024.
The rollforward of the allowance for credit losses for available-for-sale fixed maturity securities is shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. State and Political Subdivisions | | Corporate Securities | | Residential Mortgage Backed Securities | | | | Collateralized Debt Securities | | Total |
| (Dollars in millions) |
Balance as of December 31, 2022 | $ | — | | | $ | (21) | | | $ | — | | | | | $ | (5) | | | $ | (26) | |
| | | | | | | | | | | |
| Credit losses recognized on securities for which credit losses were not previously recorded | — | | | (33) | | | (1) | | | | | (7) | | | (41) | |
| Reductions for securities sold during the period | — | | | 3 | | | — | | | | | — | | | 3 | |
| | | | | | | | | | | |
| Allowance on securities that had an allowance recorded in a previous period | — | | | 35 | | | — | | | | | 9 | | | 44 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Balance as of December 31, 2023 | — | | | (16) | | | (1) | | | | | (3) | | | (20) | |
| | | | | | | | | | | |
| Credit losses recognized on securities for which credit losses were not previously recorded | — | | | (41) | | | — | | | | | — | | | (41) | |
| Reductions for securities sold during the period | — | | | 5 | | | — | | | | | 1 | | | 6 | |
| | | | | | | | | | | |
| Allowance on securities that had an allowance recorded in a previous period | — | | | 28 | | | — | | | | | 2 | | | 30 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Balance as of December 31, 2024 | — | | | (24) | | | (1) | | | | | — | | | (25) | |
| | | | | | | | | | | |
| Credit losses recognized on securities for which credit losses were not previously recorded | (3) | | | (9) | | | — | | | | | (2) | | | (14) | |
| Reductions for securities sold during the period | — | | | 16 | | | — | | | | | — | | | 16 | |
| | | | | | | | | | | |
| Allowance on securities that had an allowance recorded in a previous period | — | | | 19 | | | 1 | | | | | 2 | | | 22 | |
| | | | | | | | | | | |
| Recoveries of amounts previously written off | — | | | (2) | | | — | | | | | — | | | (2) | |
Balance as of December 31, 2025 | $ | (3) | | | $ | — | | | $ | — | | | | | $ | — | | | $ | (3) | |
No accrued interest receivables were written off as of December 31, 2025 and 2024.
4. Equity Securities
The net gains (losses) on equity securities recognized in “Investment related gains (losses)” on the Consolidated Statements of Operations are shown below:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Unrealized gains (losses) on equity securities | $ | 78 | | | $ | (46) | | | $ | 35 | |
| Net gains on equity securities sold | 14 | | | 8 | | | 12 | |
| Net gains (losses) on equity securities | $ | 92 | | | $ | (38) | | | $ | 47 | |
Equity securities by market sector distribution are shown below, based on carrying value:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| | | |
| Education | 21 | % | | 34 | % |
| Energy and utilities | 6 | % | | 6 | % |
| Finance | 49 | % | | 35 | % |
| Healthcare | 4 | % | | 4 | % |
| Industrials | 9 | % | | 16 | % |
| Information technology | 7 | % | | — | % |
| Other | 4 | % | | 5 | % |
| Total | 100 | % | | 100 | % |
5. Mortgage Loans on Real Estate
The Company disaggregates its mortgage loan investments into two portfolio segments: commercial and residential. Commercial mortgage loans include agricultural mortgage loans. The breakdown of mortgage loans on real estate by portfolio segment is as follows:
| | | | | | | | | | | |
| December 31, 2025 | | December 31, 2024 |
| (Dollars in millions) |
| Commercial mortgage loans | $ | 8,800 | | | $ | 9,443 | |
| Residential mortgage loans | 2,413 | | | 2,696 | |
| Total | 11,213 | | | 12,139 | |
| Allowance for credit losses | (100) | | | (153) | |
| Total, net of allowance | $ | 11,113 | | | $ | 11,986 | |
The Company’s commercial mortgage loan portfolio consists of loans collateralized by the related properties and diversified as to property type, location and loan size. The geographic categories come from the U.S. Census Bureau’s “Census Regions and Divisions of the United States”. The commercial mortgage loan portfolio is summarized by geographic region and property type as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Amount | | Percentage | | Amount | | Percentage |
| (Dollars in millions) |
| Geographic distribution | | | | | | | |
| Pacific | $ | 2,230 | | | 25 | % | | $ | 2,060 | | | 22 | % |
| Mountain | 1,400 | | | 16 | % | | 1,678 | | | 18 | % |
| West North Central | 232 | | | 3 | % | | 280 | | | 3 | % |
| West South Central | 1,173 | | | 13 | % | | 1,443 | | | 15 | % |
| East North Central | 800 | | | 9 | % | | 999 | | | 10 | % |
| East South Central | 135 | | | 2 | % | | 144 | | | 2 | % |
| Middle Atlantic | 658 | | | 7 | % | | 538 | | | 6 | % |
| South Atlantic | 1,805 | | | 20 | % | | 1,984 | | | 21 | % |
| New England | 140 | | | 2 | % | | 133 | | | 1 | % |
| Other (multi-region, non-US) | 227 | | | 3 | % | | 184 | | | 2 | % |
| 8,800 | | | 100 | % | | 9,443 | | | 100 | % |
| Allowance for credit losses | (87) | | | | | (144) | | | |
| Total, net of allowance | $ | 8,713 | | | | | $ | 9,299 | | | |
| | | | | | | |
| Property type distribution | | | | | | | |
| Agricultural | $ | 349 | | | 4 | % | | $ | 447 | | | 5 | % |
| Apartment | 2,346 | | | 27 | % | | 2,272 | | | 24 | % |
| Hotel | 967 | | | 11 | % | | 1,188 | | | 13 | % |
| Industrial | 1,797 | | | 21 | % | | 1,850 | | | 20 | % |
| Office | 1,435 | | | 16 | % | | 1,425 | | | 15 | % |
| Parking | 207 | | | 2 | % | | 326 | | | 3 | % |
| Retail | 1,352 | | | 15 | % | | 1,559 | | | 16 | % |
| Storage | 114 | | | 1 | % | | 176 | | | 2 | % |
| Other | 233 | | | 3 | % | | 200 | | | 2 | % |
| 8,800 | | | 100 | % | | 9,443 | | | 100 | % |
| Allowance for credit losses | (87) | | | | | (144) | | | |
| Total, net of allowance | $ | 8,713 | | | | | $ | 9,299 | | | |
There was $7 million, $2 million, and $2 million of interest income recognized on loans in non-accrual status for the years ended December 31, 2025, 2024, and 2023, respectively. Impaired loans were not significant for any of the periods presented.
Allowance for Credit Losses
The Company establishes a valuation allowance to provide for the risk of credit losses inherent in its mortgage loan portfolios. The valuation allowance is maintained at a level believed adequate by management to absorb estimated expected credit losses. The valuation allowance is based on amortized cost, which excludes accrued interest receivable. The Company does not measure a credit loss allowance on accrued interest receivable, and any uncollectible accrued interest receivable balances are written off to net investment income in a timely manner. The Company has written off $5 million of uncollectible accrued interest receivable on its mortgage loan portfolios for the year ended December 31, 2025, $3 million for the year ended December 31, 2024, and none for the year ended December 31, 2023.
The rollforward of the allowance for credit losses for mortgage loans for the years ended December 31, 2025, 2024 and 2023 is shown below:
| | | | | | | | | | | | | | | | | | | | |
| | Commercial | | Residential | | Total |
| | (Dollars in millions) |
Balance as of December 31, 2022 | | $ | (38) | | | $ | — | | | $ | (38) | |
| | | | | | |
| Recovery (provision) | | (15) | | | — | | | (15) | |
| Writeoffs charged against the allowance | | (15) | | | — | | | (15) | |
| Recoveries of amounts previously written off | | 15 | | | — | | | 15 | |
Balance as of December 31, 2023 | | (53) | | | — | | | (53) | |
| Acquisition from business combination | | (13) | | | — | | | (13) | |
| Recovery (provision) | | (82) | | | (9) | | | (91) | |
| | | | | | |
| Recoveries of amounts previously written off | | 4 | | | — | | | 4 | |
| Balance as of December 31, 2024 | | (144) | | | (9) | | | (153) | |
| Acquisition from business combination | | — | | | — | | | — | |
| Recovery (provision) | | 47 | | | (4) | | | 43 | |
| Writeoffs charged against the allowance | | 6 | | | — | | | 6 | |
| Recoveries of amounts previously written off | | 4 | | | — | | | 4 | |
Balance as of December 31, 2025 | | $ | (87) | | | $ | (13) | | | $ | (100) | |
Credit Quality Indicators
Mortgage loans are segregated by property-type and quantitative and qualitative allowance factors are applied. Qualitative factors are developed quarterly based on the pooling of assets with similar risk characteristics and historical loss experience adjusted for the expected trend in the current market environment. Credit losses are pooled by property type as it represents the most similar and reliable risk characteristics in our portfolio. The amortized cost of mortgage loans by year of origination by aging category are shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortized Cost Basis by Origination Year | | |
| 2025 | | 2024 | | 2023 | | 2022 | | 2021 | | Prior | | Total |
| As of December 31, 2025: | (Dollars in millions) |
| Commercial mortgage loans | | | | | | | | | | | | | |
| Current | $ | 1,093 | | | $ | 354 | | | $ | 442 | | | $ | 1,929 | | | $ | 978 | | | $ | 3,647 | | | $ | 8,443 | |
| 30 - 59 days past due | — | | | 83 | | | — | | | 94 | | | — | | | — | | | 177 | |
| 60 - 89 days past due | — | | | — | | | 29 | | | 10 | | | — | | | 2 | | | 41 | |
| Non-accrual | — | | | — | | | — | | | 9 | | | 33 | | | 97 | | | 139 | |
| Residential mortgage loans | | | | | | | | | | | | | |
| Current | 376 | | | 300 | | | 390 | | | 764 | | | 182 | | | 114 | | | 2,126 | |
| 30 - 59 days past due | 3 | | | 9 | | | 18 | | | 34 | | | 11 | | | 5 | | | 80 | |
| 60 - 89 days past due | 1 | | | 2 | | | 11 | | | 22 | | | 2 | | | 2 | | | 40 | |
| Non-accrual | 1 | | | 4 | | | 76 | | | 66 | | | 10 | | | 10 | | | 167 | |
| Total mortgage loans on real estate | $ | 1,474 | | | $ | 752 | | | $ | 966 | | | $ | 2,928 | | | $ | 1,216 | | | $ | 3,877 | | | 11,213 | |
| Allowance for credit losses | | | | | | | | | | | | | (100) | |
| Total, net of allowance | | | | | | | | | | | | | $ | 11,113 | |
| | | | | | | | | | | | | |
| Amortized Cost Basis by Origination Year | | |
| 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior | | Total |
| As of December 31, 2024: | (Dollars in millions) |
| Commercial mortgage loans | | | | | | | | | | | | | |
| Current | $ | 478 | | | $ | 538 | | | $ | 2,191 | | | $ | 1,270 | | | $ | 943 | | | $ | 3,736 | | | $ | 9,156 | |
| 30 - 59 days past due | — | | | 25 | | | 4 | | | — | | | 10 | | | 48 | | | 87 | |
| 60 - 89 days past due | — | | | — | | | 50 | | | 30 | | | — | | | — | | | 80 | |
| Non-accrual | — | | | 8 | | | 42 | | | 16 | | | 6 | | | 48 | | | 120 | |
| Residential mortgage loans | | | | | | | | | | | | | |
| Current | 294 | | | 790 | | | 970 | | | 222 | | | 121 | | | 7 | | | 2,404 | |
| 30 - 59 days past due | 3 | | | 41 | | | 45 | | | 2 | | | 4 | | | — | | | 95 | |
| 60 - 89 days past due | — | | | 7 | | | 20 | | | 2 | | | 4 | | | 5 | | | 38 | |
| Non-accrual | 3 | | | 51 | | | 76 | | | 18 | | | 8 | | | 3 | | | 159 | |
| Total mortgage loans on real estate | $ | 778 | | | $ | 1,460 | | | $ | 3,398 | | | $ | 1,560 | | | $ | 1,096 | | | $ | 3,847 | | | 12,139 | |
| Allowance for credit losses | | | | | | | | | | | | | (153) | |
| Total, net of allowance | | | | | | | | | | | | | $ | 11,986 | |
It is the Company’s policy to not accrue interest on loans that are 90 days delinquent and where amounts are determined to be uncollectible. As of December 31, 2025 and 2024, 275 mortgage loans and 263 mortgage loans, respectively, were past due over 90 days or in nonaccrual status.
The Company’s commercial and residential mortgage loans may be subject to loan modifications. Loan modifications may be granted to borrowers experiencing financial difficulty and could include principal forgiveness, interest rate reduction, an other-than-significant delay or a term extension. A loan modification typically does not result in a change in valuation allowance as it is already incorporated into the Company’s allowance methodology. However, if the Company grants a borrower experiencing financial difficulty principal forgiveness, the amount of principal forgiven would be written off, which would reduce the amortized cost of the loan and result in an adjustment to the valuation allowance. The carrying amount of mortgage loans experiencing financial difficulty, for which modifications have been granted, was $150 million, $260 million, and $219 million for years ended December 31, 2025, 2024, and 2023 respectively.
6. Private Loans
The following table summarizes the credit ratings of our private loans:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| A or higher | $ | 2,006 | | | $ | 1,423 | |
| BBB | 1,316 | | | 669 | |
| BB and below | 2,587 | | | 686 | |
| Unrated (1) | 3,017 | | | 2,869 | |
| Total | $ | 8,926 | | | $ | 5,647 | |
(1)Due to the nature of private loans, external agency credit ratings may not be readily available. Where appropriate, the Company obtains non-published credit ratings from one or more third-party rating agencies, which are determined based on an independent evaluation of the transaction. For other loans without published or private credit ratings, the Company assigns internal risk ratings, based on its investment selection and monitoring process and policies. These internal risk ratings are categorized as “Unrated” above.
Allowance for Credit Losses
The rollforward of the allowance for credit losses for private loans is shown below for the years ended December 31, 2025, 2024 and 2023:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Balance at beginning of period | $ | (63) | | | $ | (8) | | | $ | — | |
| | | | | |
| Provision | (84) | | | (55) | | | (8) | |
| Write-offs charged against the allowance | (2) | | | — | | | — | |
| | | | | |
| Balance at end of period | $ | (149) | | | $ | (63) | | | $ | (8) | |
The Company’s private loans may be subject to loan modifications. Loan modifications may be granted to borrowers experiencing financial difficulties and could include term extensions. For the years ended December 31, 2025, 2024 and 2023, the Company did not have a significant amount of private loans that it modified to borrowers experiencing financial difficulty. Impaired loans were not significant for any of the periods presented.
7. Real Estate and Real Estate Partnerships
The carrying amounts of real estate investments are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 | | December 31, 2024 |
| Real Estate | | Real Estate |
| Amount | | Percentage | | Amount | | Percentage |
| (Dollars in millions) | | | | (Dollars in millions) | | |
| Hotel | $ | 178 | | | 6 | % | | $ | 135 | | | 6 | % |
| Industrial | 56 | | | 2 | % | | 9 | | | — | % |
| Land | 807 | | | 28 | % | | 279 | | | 13 | % |
| Office | 174 | | | 6 | % | | 208 | | | 9 | % |
| Retail | 161 | | | 6 | % | | 186 | | | 8 | % |
| Apartments | 46 | | | 2 | % | | 47 | | | 2 | % |
| | | | | | | |
| Single family residential | 1,311 | | | 46 | % | | 1,342 | | | 61 | % |
| Other | 112 | | | 4 | % | | 15 | | | 1 | % |
| Total real estate | 2,845 | | | 100 | % | | 2,221 | | | 100 | % |
| Real estate partnerships | 2,955 | | | | | 2,435 | | | |
| Total real estate and real estate partnerships | $ | 5,800 | | | | | $ | 4,656 | | | |
As of December 31, 2025 and 2024, real estate investments of $63 million and $12 million, respectively, met the criteria as held-for-sale.
8. Variable Interest Entities and Equity Method Investments
Through our investment activities, we regularly invest in various entities including limited partnerships (“LPs”) and limited liability companies (“LLCs”) and frequently participates in the design with their sponsor, but in most cases, our involvement is limited to financing. Some of these investments have been determined to be VIEs. In certain instances, in addition to an economic interest in the entity, the Company holds the power to direct the most significant activities of the entity and is deemed the primary beneficiary. The Company consolidates all VIEs for which it is the primary beneficiary. The assets of consolidated VIEs are restricted and must first be used to settle their liabilities. Creditors or beneficial interest holders of these VIEs have no recourse to the general credit of the Company, as the Company’s obligation is limited to the amount of its committed investment. The Company has not provided financial or other support to these consolidated VIEs in the form of liquidity arrangements, guarantees or other commitments to third-parties that may affect the fair value or risk of its variable interest in these VIEs as of December 31, 2025 and 2024.
In addition to investment activities, certain of the Company’s subsidiaries are deemed VIEs. The Company is the primary beneficiary and consolidates these entities in the same manner as other entities in which the Company has a controlling financial interest by holding a majority voting interest.
Consolidated Variable Interest Entities
The assets and liabilities relating to the consolidated VIEs from our investment activities included in the financial statements are as follows:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Available-for-sale fixed maturity securities | $ | 74 | | | $ | 105 | |
| Equity securities | 693 | | | 90 | |
| Mortgage loans on real estate, net of allowance | 248 | | | 205 | |
| Private loans, net of allowance | 2,007 | | | 1,308 | |
| Investment real estate | 2,660 | | | 2,037 | |
| Real estate partnerships | 1,479 | | | 1,109 | |
| Investment funds | 2,604 | | | 2,331 | |
| Short-term investments | 2 | | | 75 | |
Other invested assets | 326 | | | 330 | |
| Cash and cash equivalents | 293 | | | 219 | |
| Other assets | 166 | | | 307 | |
| Total assets of consolidated VIEs | $ | 10,552 | | | $ | 8,116 | |
| | | |
| Notes payable | $ | 205 | | | $ | 189 | |
| Other liabilities | 733 | | | 562 | |
| Total liabilities of consolidated VIEs | $ | 938 | | | $ | 751 | |
Unconsolidated Variable Interest Entities
For certain of the Company’s investments in various entities that are determined to be VIEs, the Company is not the primary beneficiary. In some instances, a consolidated VIE involves one or more underlying entities for which the Company is not the primary beneficiary because it does not have the power to direct the most significant activities of these entities. These unconsolidated VIEs that are part of consolidated VIEs are reported primarily in “Real estate and real estate partnerships” on the Consolidated Statements of Financial Position. Creditors or beneficial interest holders of these VIEs have no recourse to the general credit of the Company, as the Company’s obligation is limited to the amount of its committed investment. The Company has not provided financial or other support to these unconsolidated VIEs in the form of liquidity arrangements, guarantees or other commitments to third-parties that may affect the fair value or risk of its variable interest in these VIEs as of December 31, 2025 and 2024.
The carrying amount and maximum exposure to loss relating to these unconsolidated VIEs are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Carrying
Amount | | Maximum
Exposure to Loss | | Carrying
Amount | | Maximum
Exposure to Loss |
| (Dollars in millions) |
| Available-for-sale fixed maturity securities | $ | 2,829 | | | $ | 3,137 | | | $ | 2,146 | | | $ | 3,007 | |
| Equity securities | — | | | — | | | 154 | | | 154 | |
| Mortgage loans on real estate, net of allowance | 562 | | | 562 | | | 663 | | | 678 | |
| Private loans, net of allowance | 1,809 | | | 1,809 | | | 1,160 | | | 1,160 | |
| | | | | | | |
| Real estate partnerships | 2,681 | | | 2,685 | | | 2,560 | | | 2,591 | |
| Investment funds | 2,182 | | | 3,470 | | | — | | | — | |
| Short-term investments | — | | | — | | | 99 | | | 99 | |
| Other invested assets | 524 | | | 524 | | | 2,084 | | | 2,100 | |
| Cash and cash equivalents | — | | | — | | | 7 | | | 7 | |
| Total | $ | 10,587 | | | $ | 12,187 | | | $ | 8,873 | | | $ | 9,796 | |
Equity Method Investments
The Company’s investments in investment funds, real estate partnerships, and other partnerships, of which substantially all are LLCs or limited partnerships, are accounted for using the equity method of accounting, except for certain investments that are fair valued due to the application of fair value option under ASC 825 or the consolidation of investment company VIEs under ASC 946. Fair value of certain investments are estimated using NAV as a practical expedient.
The Company’s investments that would require the use of equity method accounting, absent the election of the fair value option under ASC 825, were $6.4 billion and $6.3 billion as of December 31, 2025 and 2024, respectively. As of December 31, 2025, these equity method investments are primarily composed of $2.9 billion of real estate partnerships and $3.0 billion of investment funds within the Consolidated Statements of Financial Position.
The Company generally recognizes its share of earnings in its equity method investments within “Net investment income”. For the years ended December 31, 2025, 2024, and 2023, net investment income for Real estate partnerships and Investment funds in Note 10 - Net Investment Income and Investment Related Gains (Losses) principally represent our share of earnings in our equity method investments, including fair value changes from investments under ASC 825.
The following aggregated summarized financial data reflects the latest available financial information, inclusive of investments to which we would have applied the equity method had we not elected the fair value option under ASC 825, and does not represent the Company’s pro rata share of the assets or earnings of such entities. Aggregated total assets of these entities totaled $49.7 billion and $74.6 billion as of December 31, 2025 and 2024, respectively. Aggregate net income of these entities totaled $972 million and $760 million for the years ended December 31, 2025 and 2024, respectively. Aggregate net income from the underlying entities in which the Company invests is primarily comprised of investment income, including recurring investment income (loss) and realized and unrealized investment gains (losses), from investment funds, investment real estate, real estate partnerships and other invested assets.
9. Derivative Instruments
The Company manages risks associated with certain assets and liabilities by using derivative financial instruments. Derivative financial instruments are financial contracts whose value is derived from underlying interest rates, exchange rates or other financial instruments. The Company does not invest in derivatives for speculative purposes.
Foreign exchange forwards, cross currency and interest rate swaps, and equity-indexed options are over-the-counter contractual agreements negotiated between counterparties. The Company purchases equity-indexed options as economic hedges against fluctuations in the equity markets to which equity-indexed products are exposed. Equity-indexed contracts include a fixed host universal-life insurance or annuity contract and an equity-indexed embedded derivative. Foreign exchange forwards, cross currency swaps, and interest rate swaps are used to manage our exposure to foreign currency risk, interest rate risk or both.
The notional principal represents the amount to which a rate or price is applied to determine the cash flows to be exchanged periodically and does not represent credit exposure. Maximum credit risk is the estimated cost of replacing derivative financial instruments which have a positive value, should the counterparty default.
Derivatives, except for embedded derivatives, are included in “Other invested assets” or “Other liabilities”, at fair value in the Consolidated Statements of Financial Position. Embedded derivative liabilities on funds withheld and modified coinsurance (“Modco”) arrangements and embedded derivative liabilities on indexed annuity and variable annuity products are included in the Consolidated Statements of Financial Position within the “Reinsurance funds withheld” and “Policyholders’ account balances” lines respectively, at fair value.
The notional and fair values of derivative instruments, presented in the Consolidated Statements of Financial Position, are shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | December 31, |
| Primary
Underlying
Risk | Location in the
Consolidated Statements of
Financial Position | | 2025 | | 2024 |
| Notional
Amount | | Carrying Value / Fair Value (1) | | Notional
Amount | | Carrying Value / Fair Value (1) |
| | Assets | | Liabilities | | | Assets | | Liabilities |
| | | | (Dollars in millions) |
| Derivatives Designated as Hedging Instruments: |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Foreign exchange forwards | Foreign Currency | Other invested assets, Other liabilities | | $ | 656 | | | $ | — | | | $ | 11 | | | $ | 863 | | | $ | 19 | | | $ | — | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Interest rate swaps | Interest rate | Other invested assets, Other liabilities | | 1,797 | | | 12 | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Derivatives Not Designated as Hedging Instruments: |
| Equity-indexed options | Equity | Other invested assets, Other liabilities | | 46,883 | | | 1,570 | | | — | | | 46,374 | | | 1,303 | | | 5 | |
| | | | | | | | | | | | | | |
| Foreign exchange forwards | Foreign Currency | Other invested assets, Other liabilities | | 3,218 | | | 4 | | | 24 | | | 884 | | | 17 | | | — | |
| Cross currency swaps | Foreign Currency | Other invested assets, Other liabilities | | 949 | | | 35 | | | 14 | | | — | | | — | | | — | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Embedded Derivatives: | | | | | | | | | | | | | | |
| Indexed annuity and variable annuity product | Interest rate | Policyholders’ account balances | | — | | | — | | | 6,414 | | | — | | | — | | | 1,123 | |
| Funds withheld and Modco arrangements | Interest rate | Funds withheld for reinsurance liabilities | | — | | | — | | | 74 | | | — | | | — | | | 37 | |
| | | | $ | 53,503 | | | $ | 1,621 | | | $ | 6,537 | | | $ | 48,121 | | | $ | 1,339 | | | $ | 1,165 | |
(1)The asset and liability balances are presented on a gross basis. Amounts are reporting “Other invested assets” and “Other liabilities” in the Consolidated Statements of Financial Position after the evaluation for rights of offset. See “Derivative Exposure” section of this note for further details.
Derivatives Designated as Hedging Instruments
The Company has designated and accounted for certain foreign exchange forwards (“foreign currency derivatives”) as fair value hedges to protect a portion of the available-for-sale fixed maturity securities against changes in fair value due to changes in exchange rates. The Company has also designated and accounted for certain interest rate swaps (“interest rate derivatives”) as fair value hedges to convert a portion of PAB from a fixed rate liability to a floating rate liability.
For derivative financial instruments that were designated and qualified as fair value hedges, the gain or loss on the portion of the derivative instrument included in the assessment of hedge effectiveness and the offsetting gain or loss on the hedged item attributable to the hedged risk were recognized in the same line item in the Consolidated Statements of Operations. The unrealized gain or loss attributable to changes in exchange rates on the available-for-sale fixed maturity securities that were designated as part of the hedge were reclassified out of OCI into “Investment related gains (losses)” in the Consolidated Statements of Operations. The remaining change in unrealized gain or loss on the hedged item not associated with the risk being hedged remained as a component of OCI. The gains (losses) on interest rate derivatives designated as fair value hedging instruments for certain PAB are included in “Interest sensitive contract benefits” in the Consolidated Statements of Operations.
The following represents the amount of gains (losses) related to the derivatives and hedged items that qualify for fair value hedges:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Foreign currency derivatives: | | | | | |
| Hedged items | $ | 65 | | | $ | (21) | | | $ | — | |
| Derivatives designated as hedging instruments | (65) | | | 20 | | | — | |
| Interest rate derivatives: | | | | | |
| Hedged items | (12) | | | — | | | — | |
| Derivatives designated as hedging instruments | 12 | | | — | | | — | |
| Gains (losses) on fair value hedges | $ | — | | | $ | (1) | | | $ | — | |
The amortized cost of available-for-sale fixed maturity securities designated and qualifying as hedged items in fair value hedges in relation to foreign currency derivatives was $593 million and $541 million as of December 31, 2025 and 2024, respectively.
The following table presents the carrying amount and cumulative fair value hedging adjustments for a portion of PAB designated and qualifying as hedged items in fair value hedges in relation to interest rate derivatives:
| | | | | | | | | | | | | | | | | | | | | | | |
| Carrying Amount of the
Hedged Assets (Liabilities) | | Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedge Assets (Liabilities) |
| December 31, 2025 | | December 31, 2024 | | December 31, 2025 | | December 31, 2024 |
| (Dollars in millions) |
Location in the Consolidated
Statements of Financial Position: | | | | | | | |
| | | | | | | |
| Policyholders’ account balances | $ | (2,224) | | | $ | — | | | $ | (11) | | | $ | — | |
Derivatives Not Designated as Hedging Instruments
The following represents the financial statement location and amount of gains (losses) related to the derivatives not designated as hedging instruments:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Derivative Gains (Losses) Recognized in Income |
| Location in the Consolidated
Statements of Operations | | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| | | (Dollars in millions) |
| Equity-indexed options | Change in fair value of insurance-related derivatives and embedded derivatives | | $ | 314 | | | $ | 489 | | | $ | 112 | |
| | | | | | | |
| Foreign exchange forwards | Investment related gains (losses) | | (46) | | | 21 | | | — | |
| Cross currency swaps | Investment related gains (losses) | | 22 | | | — | | | — | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Embedded derivatives: | | | | | | | |
| Indexed annuity and variable annuity product | Change in fair value of insurance-related derivatives and embedded derivatives | | (491) | | | (233) | | | (148) | |
| Funds withheld and Modco arrangements | Change in fair value of insurance-related derivatives and embedded derivatives | | (39) | | | (162) | | | — | |
| | | $ | (240) | | | $ | 115 | | | $ | (36) | |
Derivative Exposure
The Company’s use of derivative instruments exposes it to credit risk in the event of non-performance by counterparties. The Company has a policy of only dealing with counterparties it believes are creditworthy and obtaining sufficient collateral where appropriate, as a means to mitigating the financial loss from defaults. The minimum credit rating of our counterparties is A- as of December 31, 2025 and BBB+ as of December 31, 2024, and all derivatives have been appropriately collateralized by the Company and the counterparties in accordance with the terms of the derivative agreements. The Company holds collateral in cash and notes secured by U.S. government-backed assets. The non-performance risk is the net counterparty exposure based on fair value of open contracts less fair value of collateral held. The Company maintains master netting agreements with its current active trading partners. A right of offset has been applied to collateral that supports credit risk and has been recorded in the Consolidated Statements of Financial Position as an offset to “Other invested assets” with an associated payable to “Other liabilities” for excess collateral. A right of offset has also been applied to derivative assets and liabilities with the same counterparty under the same master netting agreement, and such derivative instruments are presented on a net basis in the Consolidated Statements of Financial Position.
Information regarding the Company’s exposure to credit loss on the derivatives it holds, including the effect of rights of offset, is presented below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Gross Amounts Offset
in the Consolidated
Statements of
Financial Position | | | | | | |
| Gross Amount
of Derivative
Instruments
(1) | | Counterparty Netting
(2) | | Cash
Collateral
(3) | | Net Amount
Presented in the
Consolidated
Statements of
Financial Position | | Collateral
(Received)
Pledged in
Invested Assets
(3) | | Net
Amount
After
Collateral |
| (Dollars in millions) |
As of December 31, 2025 | | | | | | | | | | | |
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| Total derivative assets | $ | 1,621 | | | $ | (35) | | | $ | (1,548) | | | $ | 38 | | | $ | (28) | | | $ | 10 | |
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| Total derivative liabilities | (49) | | | 35 | | | — | | | (14) | | | — | | | (14) | |
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As of December 31, 2024 | | | | | | | | | | | |
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| Total derivative assets | $ | 1,339 | | | $ | (5) | | | $ | (1,298) | | | $ | 36 | | | $ | — | | | $ | 36 | |
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| Total derivative liabilities | (5) | | | 5 | | | — | | | — | | | — | | | — | |
(1)Represents derivative assets and liabilities on a gross basis, which are not offset under enforceable master netting agreements that meet all offsetting criteria.
(2)Represents netting of derivative exposures covered by qualifying master netting agreements.
(3)Excludes a portion of collateral held in cash and invested assets that are excess collateral. As of December 31, 2025 and 2024, the Company held excess collateral of $115 million and $76 million, respectively.
10. Net Investment Income and Investment Related Gains (Losses)
Net investment income is shown below:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Available-for-sale fixed maturity securities | $ | 2,786 | | | $ | 1,806 | | | $ | 596 | |
| Equity securities | 19 | | | 12 | | | 11 | |
| Mortgage loans | 780 | | | 598 | | | 297 | |
| Private loans | 517 | | | 211 | | | 16 | |
| Real estate | 46 | | | 50 | | | 13 | |
| Real estate partnerships | 99 | | | 24 | | | 9 | |
| Investment funds | 283 | | | 307 | | | 84 | |
| Policy loans | 21 | | | 18 | | | — | |
| Short-term investments | 151 | | | 204 | | | 164 | |
| Other | 186 | | | 251 | | | 50 | |
| Total net investment income | $ | 4,888 | | | $ | 3,481 | | | $ | 1,240 | |
Net unrealized and realized investment gains (losses) are shown below:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Available-for-sale fixed maturity securities | $ | 19 | | | $ | (181) | | | $ | (50) | |
| Equity securities | 92 | | | (38) | | | 47 | |
| Mortgage loans | 54 | | | (78) | | | (26) | |
| Private loans | (59) | | | (28) | | | (9) | |
| Investment real estate | 41 | | | (11) | | | (4) | |
| Real estate partnerships | (36) | | | (7) | | | 29 | |
| Investments funds | (25) | | | (21) | | | — | |
| Short-term investments and other invested assets | 6 | | | 31 | | | 11 | |
| Total investment related gains (losses), net | $ | 92 | | | $ | (333) | | | $ | (2) | |
11. Fair Value of Financial Instruments
The carrying amount and fair value of financial instruments are shown below:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Carrying
Amount | | Fair
Value | | Carrying
Amount | | Fair
Value |
| (Dollars in millions) |
| Financial assets: | | | | | | | |
| Available-for-sale fixed maturity securities | $ | 57,992 | | | $ | 57,992 | | | $ | 45,591 | | | $ | 45,591 | |
| Equity securities | 1,179 | | | 1,179 | | | 611 | | | 611 | |
| Mortgage loans on real estate, net of allowance | 11,113 | | | 11,211 | | | 11,986 | | | 11,794 | |
| Private loans, net of allowance | 8,926 | | | 8,982 | | | 5,647 | | | 5,705 | |
| Real estate partnerships (1) | 1,894 | | | 1,894 | | | 900 | | | 900 | |
| Investment funds (2) | 152 | | | 152 | | | 124 | | | 124 | |
| Policy loans | 234 | | | 234 | | | 274 | | | 274 | |
| Short-term investments (3) | 600 | | | 600 | | | 4,177 | | | 4,177 | |
| Other invested assets: | | | | | | | |
| Derivative assets | 1,586 | | | 1,586 | | | 1,341 | | | 1,341 | |
| Collaterals received on derivatives (excluding excess collateral) | (1,548) | | | (1,548) | | | (1,298) | | | (1,298) | |
| Separately managed accounts | 54 | | | 54 | | | 71 | | | 71 | |
| Other (4) | 1,178 | | | 1,178 | | | 934 | | | 936 | |
| Cash and cash equivalents | 11,660 | | | 11,660 | | | 10,867 | | | 10,867 | |
| Deposit assets, included in reinsurance recoverable and deposit assets (5) | 5,440 | | | 5,352 | | | 6,165 | | | 6,026 | |
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| Other assets - market risk benefits | 1,174 | | | 1,174 | | | 857 | | | 857 | |
| Separate account assets (6) | 822 | | | 822 | | | 1,343 | | | 1,343 | |
| Total financial assets | $ | 102,456 | | | $ | 102,522 | | | $ | 89,590 | | | $ | 89,318 | |
| | | | | | | |
| Financial liabilities: | | | | | | | |
| Policyholders' account balances – excluding embedded derivative (5) | $ | 83,782 | | | $ | 83,782 | | | $ | 79,384 | | | $ | 79,384 | |
| Policyholders’ account balances – embedded derivative | 6,414 | | | 6,414 | | | 1,123 | | | 1,123 | |
| Market risk benefits | 4,536 | | | 4,536 | | | 3,655 | | | 3,655 | |
| Other liabilities: | | | | | | | |
| Derivative liabilities | 14 | | | 14 | | | — | | | — | |
| Funds withheld for reinsurance liabilities | 74 | | | 74 | | | 37 | | | 37 | |
| Notes payable | 205 | | | 205 | | | 189 | | | 189 | |
| Long term borrowings | 2,951 | | | 3,045 | | | 2,957 | | | 2,977 | |
| Separate account liabilities (6) | 822 | | | 822 | | | 1,343 | | | 1,343 | |
| Total financial liabilities | $ | 98,798 | | | $ | 98,892 | | | $ | 88,688 | | | $ | 88,709 | |
(1)Balances represent real estate partnerships in which the Company has elected fair value option under ASC 825. Real estate partnerships accounted for as equity method investments are $1.1 billion and directly held real estate is $2.8 billion as of December 31, 2025. Real estate partnerships accounted for as equity method investments are $1.8 billion and directly held real estate is $2.2 billion as of December 31, 2024.
(2)Balances represent financial assets that are fair valued as a result of consolidation of investment company VIE in accordance with ASC 946. Investment funds accounted for as equity method investments are $2.4 billion and investment funds measured using NAV as a practical expedient are $640 million as of December 31, 2025. Investment funds accounted for as equity method investments are $2.5 billion and investment funds measured using NAV as a practical expedient are $353 million as of December 31, 2024.
(3)Balance as of December 31, 2025 includes $400 million of amounts loaned under reverse repurchase agreements. The fair value of the collateral received under these agreements were $872 million as of December 31, 2025. Balance as of December 31, 2024 includes $400 million of amounts loaned under reverse repurchase agreements. The fair value of the collateral received under these agreements were $783 million as of December 31, 2024.
(4)Other invested assets accounted for as equity method investments, and therefore excluded from the table, are $215 million and $959 million as of December 31, 2025 and December 31, 2024.
(5)Excludes balances associated with contracts that involve significant mortality or morbidity risks, as these fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value.
(6)Balance includes $0 million and $31 million of assets, and corresponding liabilities, that are not subject to fair value hierarchy as of December 31, 2025 and December 31, 2024, respectively.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability. A fair value hierarchy is used to determine fair value based on a hypothetical transaction as of the measurement date from the perspective of a market participant. The Company has evaluated the types of securities in its investment portfolio to determine an appropriate hierarchy level based upon trading activity and the observability of market inputs. The classification of assets or liabilities within the fair value hierarchy is based on the lowest level of significant input to its valuation. The input levels are defined as follows:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2 - Quoted prices in markets that are not active or inputs that are observable directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and third-party evaluation, as well as instruments for which the determination of fair value requires significant management judgment or estimation
Valuation Techniques for Financial Instruments Recorded at Fair Value
Available-for-sale Fixed Maturity Securities — The Company utilizes pricing services to estimate fair value measurements. The fair value for available-for-sale fixed maturity securities that are disclosed as Level 1 measurements are based on unadjusted quoted market prices for identical assets that are readily available in an active market. The estimates of fair value for most available-for-sale fixed maturity securities, including municipal bonds, provided by the pricing service are disclosed as Level 2 measurements as the estimates are based on observable market information rather than market quotes. The pricing service utilizes market quotations for available-for-sale fixed maturity securities that have quoted prices in active markets. Since available-for-sale fixed maturity securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements for these securities using its proprietary pricing applications, which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. Additionally, an option adjusted spread model is used to develop prepayment and interest rate scenarios.
The pricing service evaluates each asset class based on relevant market information, credit information, perceived market movements and sector news. The market inputs utilized in the pricing evaluation, listed in the approximate order of priority, include: benchmark yields, reported trades, pricing source quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and economic events. The extent of the use of each market input depends on asset class and the market conditions. Depending on the security, the priority of the use of inputs may change or some market inputs may not be relevant. For some securities, additional inputs may be necessary.
The Company has reviewed the inputs and methodology used and the techniques applied by the pricing service to produce quotes that represent the fair value of a specific security. The review confirms that the pricing service is utilizing information from observable transactions or a technique that represents a market participant’s assumptions. The Company does not adjust quotes received from the pricing service. The pricing service utilized by the Company has indicated that they will only produce an estimate of fair value if there is objectively verifiable information available.
The Company holds private placement debt and available-for-sale fixed maturity securities that have characteristics that make them unsuitable for matrix pricing. For these securities, a quote from an independent pricing source (typically a market maker) is obtained. Due to the disclaimers on the quotes that indicate the price is indicative only, the Company includes these fair value estimates in Level 3.
For securities priced using a quote from an independent pricing source, such as certain available-for-sale fixed maturity securities, the Company uses a market-based fair value analysis to validate the reasonableness of prices received. Price variances above a certain threshold are analyzed further to determine if any pricing issue exists. This analysis is performed quarterly.
Equity Securities — For publicly-traded equity securities, prices are received from a nationally recognized pricing service that are based on observable market transactions, and these securities are classified as Level 1 measurements. For certain preferred stock, current market quotes in active markets are unavailable. In these instances, an estimated fair value is received from the pricing service. The service utilizes similar methodologies to price preferred stocks as it does for available-for-sale fixed maturity securities. If applicable, these estimates would be disclosed as Level 2 measurements, depending on the use of at least one significant unobservable input. The Company tests the accuracy of the information provided by reference to other services annually. For certain private equity securities without readily determinable fair values, fair value estimates are unavailable and are not disclosed.
Real estate and Real Estate Partnerships — The fair values of residential real estate investments held through consolidation of investment company VIEs are initially recorded based on the cost to purchase the properties and subsequently recorded at fair value on a recurring basis and falls within Level 3 of the fair value hierarchy. The fair value of the residential real estate properties was determined using broker price opinions (BPOs). A BPO is an appraisal methodology commonly used in the industry to estimate net proceeds from the sale of a home. The significant inputs into the valuation include market comparable home sales, age and size of the home, location and property conditions.
For certain of the Company’s interest in consolidated variable interest entities, the Company elected the fair value option in accordance with ASC 825. The fair value of such interest is derived using discounted cash flow methodology and falls within Level 3 of the fair value hierarchy.
Certain of the Company’s consolidated VIEs that are fair valued on a recurring basis invest in LLCs that invest in operating entities which hold multi-family real estate properties. The fair value of the LLCs is obtained from a third-party and is based on the fair value of the underlying real estate held by the various operating entities. The real estate is initially calculated based on the cost to purchase the properties and subsequently calculated based on a discounted cash flow methodology. Such investments are classified as Level 3 measurements.
Investment Funds — The Company owns certain investments in infrastructure LLCs through a consolidated VIE that is measured at fair value on a recurring basis. We initially recorded the investment at the cost to purchase the investment and subsequently recorded based on a discounted cash flow methodology. Investment funds that are fair valued are classified as Level 3 measurements. Certain LP funds are measured at estimated fair value using NAV as a practical expedient.
Short-term Investments — Short-term investments include fixed maturity securities with original maturities of over 90 days and less than one year at the date of acquisition, some of which are disclosed as Level 1 measurements as their fair values are based on unadjusted quoted market prices for identical assets that are readily available in an active market. Short-term investments also include commercial paper rated A2 or P2 or better by Standard & Poor’s and Moody’s, respectively, as well as certain private loans with original maturities of less than one year at the date of acquisition and amounts loaned under reverse repurchase agreements. Commercial paper, short-term private loans and amounts loaned under reverse repurchase agreements are carried at amortized cost which approximates fair value. These investments are classified as Level 2 or Level 3 measurements, depending on the use of at least one significant unobservable input.
Other Invested Assets – The Company holds interest in an investment company limited partnership, which invests in residual tranche investments, and is a consolidated VIE. We also hold residual tranche investments to which we applied the fair value option in accordance with ASC 825. These investments were initially recorded at cost and are subsequently recorded at fair value using discounted cash flow methodology and fall within Level 3 of the fair value hierarchy.
Separately Managed Accounts — The separately managed account manager uses the mid-point of a range from a third-party to price these securities. Discounted cash flows (yield analysis) and market transactions approach are used in the valuation. They use discount rates which is considered an unobservable input.
Derivative Assets/Derivative Liabilities — Equity index options are valued using industry accepted valuation models and are adjusted for the nonperformance risk of each counterparty net of any collateral held. Inputs include market volatility and risk-free interest rates and are used in income valuation techniques in arriving at a fair value for each option contract. The nonperformance risk for each counterparty is based upon its credit default swap rate. The Company has no performance obligations related to the call options purchased to fund its fixed index annuity and equity-indexed universal life policy liabilities. Certain equity-index options are valued based on vendor sourced prices and are classified as Level 3 measurements due to the use of significant unobservable inputs by the vendor.
Foreign exchange forwards are valued using observable market inputs, including forward currency exchange rates. These are classified as Level 2 measurements.
Interest rate and cross currency swaps are valued using market observable inputs and are determined by discounting expected future cash flows. As the significant inputs are observable, these are classified as Level 2 measurements.
Cash and Cash Equivalents — Amounts reported in the Consolidated Statements of Financial Position for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category.
Market Risk Benefits — MRBs are valued using stochastic models that incorporate a spread reflecting our non-performance risk. The key assumptions for calculating the fair value of the MRBs are market assumptions such as equity market returns, interest rate levels, market volatility and correlations and policyholder behavior assumptions such as lapse, mortality, utilization and withdrawal patterns. Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. MRBs are classified as Level 3 fair value measurements as the fair value is based on unobservable inputs. The following significant unobservable inputs are used for measuring the fair value:
(1)Utilization – The utilization assumption represents the percentage of policyholders who will elect to receive lifetime income benefit payments in a given year. The range and weighted average of this assumption can vary from year to year depending on the characteristics of policies in a given cohort within the rate.
(2)Option budget – The option budget assumption represents the expected cost of annual call options we will purchase in the future.
(3)Nonperformance risk – The nonperformance risk assumption impacts the discount rate used in the discounted future cash flow valuation and includes our own credit risk based on the current market credit spreads for debt-like instruments the Company has issued and are available in the market, adjusted for instrument specific features. Additionally, the nonperformance risk assumption includes the counterparty credit risk used in the fair value measurement of ceded market risk benefits which is determined using the current market credit spreads based on the counterparty credit rating.
(4)Mortality rates – The mortality rate assumptions are set based on a combination of company and industry experience, adjusted for improvement factors. Mortality rates vary by age and by demographic characteristics such as gender.
(5)Lapse rates – The lapse rate assumptions represent the expected rate of full surrenders which are set based on product type or feature and whether a policy is subject to surrender charges.
Separate Account Assets and Liabilities — The separate account assets included on the quantitative disclosures fair value hierarchy table are comprised of short-term investments, equity securities, and available-for-sale fixed maturity securities. Equity securities are classified as Level 1 measurements. Short-term investments and available-for-sale fixed maturity securities are classified as Level 2 measurements. These classifications for separate account assets reflect the same fair value level methodologies as listed above as they are derived from the same vendors and follow the same process.
Policyholders’ Account Balances – Embedded Derivatives —The fair value of the embedded derivative component of the Company’s fixed index annuity and equity-indexed universal life policyholders’ account balances is estimated at each valuation date by (i) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (ii) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for the Company’s non-performance risk related to those liabilities. The following significant unobservable inputs are used for measuring the fair value: (i) option budget; (ii) lapse rates; and (iii) non-performance risk. For the details of these significant unobservable inputs, refer to significant unobservable inputs for “Market risk benefits”.
Funds Withheld for Reinsurance Liabilities – Embedded Derivatives — The fair value of the embedded derivative is estimated based on the fair value of the assets supporting the funds withheld payable under modified coinsurance and funds withheld coinsurance reinsurance agreements. The fair value of the embedded derivative is classified as Level 3 based on valuation methods used for the assets held supporting the reinsurance agreements.
The fair value hierarchy measurements for assets and liabilities measured at fair value on a recurring basis are shown below:
| | | | | | | | | | | | | | | | | | | | | | | |
| Assets and Liabilities Carried at Fair Value by Hierarchy Level |
| Total
Fair Value | | Level 1 | | Level 2 | | Level 3 |
| (Dollars in millions) |
| December 31, 2025 | | | | | | | |
| Financial assets | | | | | | | |
| Available-for-sale fixed maturity securities: | | | | | | | |
| U.S. treasury and government | $ | 68 | | | $ | 54 | | | $ | 14 | | | $ | — | |
| U.S. state and municipal | 2,949 | | | — | | | 2,949 | | | — | |
| Foreign governments | 1,169 | | | — | | | 1,147 | | | 22 | |
| Corporate debt securities | 43,141 | | | — | | | 41,915 | | | 1,226 | |
| Residential mortgage-backed securities | 1,008 | | | — | | | 989 | | | 19 | |
| Commercial mortgage-backed securities | 3,121 | | | — | | | 3,012 | | | 109 | |
| Collateralized debt securities | 6,536 | | | — | | | 2,247 | | | 4,289 | |
| Total available-for-sale fixed maturity securities | 57,992 | | | 54 | | | 52,273 | | | 5,665 | |
| Equity securities: | | | | | | | |
| Common stock | 757 | | | 670 | | | 2 | | | 85 | |
| Preferred stock | 414 | | | 5 | | | 63 | | | 346 | |
| | | | | | | |
| Total equity securities | 1,171 | | | 675 | | | 65 | | | 431 | |
| Real estate at fair value (1) | 1,253 | | | — | | | — | | | 1,253 | |
| Real estate partnerships at fair value (1) | 1,894 | | | — | | | — | | | 1,894 | |
| Investment funds (1)(2) | 152 | | | — | | | — | | | 152 | |
| Short-term investments | 600 | | | — | | | 379 | | | 221 | |
| Other invested assets: | | | | | | | |
| Derivative assets | 1,586 | | | — | | | 1,383 | | | 203 | |
| Collaterals received on derivatives (excluding excess collateral) | (1,548) | | | (1,548) | | | — | | | — | |
| Separately managed accounts | 54 | | | — | | | — | | | 54 | |
| Other | 410 | | | — | | | — | | | 410 | |
| Cash and cash equivalents | 11,660 | | | 11,660 | | | — | | | — | |
| | | | | | | |
| Other assets – market risk benefit assets | 1,174 | | | — | | | — | | | 1,174 | |
| Separate account assets | 822 | | | 804 | | | 18 | | | — | |
| Total financial assets | $ | 77,220 | | | $ | 11,645 | | | $ | 54,118 | | | $ | 11,457 | |
| | | | | | | |
| Financial liabilities | | | | | | | |
| Policyholders’ account balances – embedded derivative | $ | 6,414 | | | $ | — | | | $ | — | | | $ | 6,414 | |
| Market risk benefits | 4,536 | | | — | | | — | | | 4,536 | |
| Funds withheld for reinsurance liabilities – embedded derivatives | 74 | | | — | | | — | | | 74 | |
| Other liabilities – derivative liabilities | 14 | | | — | | | 14 | | | — | |
| Separate account liabilities | 822 | | | 804 | | | 18 | | | — | |
| Total financial liabilities | $ | 11,860 | | | $ | 804 | | | $ | 32 | | | $ | 11,024 | |
(1)Balances include financial assets that are fair valued in accordance with ASC 825 as well as financial assets that are fair valued as a result of consolidation of investment company VIE in accordance with ASC Topic 946.
(2)Balance excludes $640 million of investments measured at estimated fair value using NAV as a practical expedient.
| | | | | | | | | | | | | | | | | | | | | | | |
| Assets and Liabilities Carried at Fair Value by Hierarchy Level |
| Total
Fair Value | | Level 1 | | Level 2 | | Level 3 |
| (Dollars in millions) |
| December 31, 2024 | | | | | | | |
| Financial assets | | | | | | | |
| Available-for-sale fixed maturity securities: | | | | | | | |
| U.S. treasury and government | $ | 66 | | | $ | 56 | | | $ | 10 | | | $ | — | |
| U.S. state and municipal | 2,945 | | | — | | | 2,889 | | | 56 | |
| Foreign governments | 1,541 | | | — | | | 1,541 | | | — | |
| Corporate debt securities | 31,554 | | | — | | | 28,947 | | | 2,607 | |
| Residential mortgage-backed securities | 1,102 | | | — | | | 1,083 | | | 19 | |
| Commercial mortgage-backed securities | 2,796 | | | — | | | 2,721 | | | 75 | |
| Collateralized debt securities | 5,587 | | | — | | | 2,985 | | | 2,602 | |
| Total available-for-sale fixed maturity securities | 45,591 | | | 56 | | | 40,176 | | | 5,359 | |
| Equity securities: | | | | | | | |
| Common stock | 239 | | | 100 | | | 25 | | | 114 | |
| Preferred stock | 368 | | | 22 | | | 12 | | | 334 | |
| Private equity and other | 4 | | | — | | | — | | | 4 | |
| Total equity securities | 611 | | | 122 | | | 37 | | | 452 | |
| Real estate at fair value (1) | 1,283 | | | — | | | — | | | 1,283 | |
| Real estate partnerships at fair value (1) | 900 | | | — | | | — | | | 900 | |
| Investment funds (1)(2) | 124 | | | — | | | — | | | 124 | |
| Short-term investments | 4,177 | | | 3,003 | | | 821 | | | 353 | |
| Other invested assets: | | | | | | | |
| Derivative assets | 1,334 | | | — | | | 1,111 | | | 223 | |
| Collaterals received on derivatives (excluding excess collateral) | (1,298) | | | (1,298) | | | — | | | — | |
| Separately managed accounts | 71 | | | — | | | — | | | 71 | |
| Other | 315 | | | — | | | 11 | | | 304 | |
| Cash and cash equivalents | 10,867 | | | 10,867 | | | — | | | — | |
| | | | | | | |
| Other assets – market risk benefit assets | 857 | | | — | | | — | | | 857 | |
| Separate account assets (3) | 1,312 | | | 258 | | | 1,054 | | | — | |
| Total financial assets | $ | 66,144 | | | $ | 13,008 | | | $ | 43,210 | | | $ | 9,926 | |
| | | | | | | |
| Financial liabilities | | | | | | | |
| Policyholders’ account balances – embedded derivative | $ | 1,123 | | | $ | — | | | $ | — | | | $ | 1,123 | |
| Market risk benefits | 3,655 | | | — | | | — | | | 3,655 | |
| Funds withheld for reinsurance liabilities – embedded derivatives | 37 | | | — | | | — | | | 37 | |
| | | | | | | |
| Separate account liabilities (3) | 1,312 | | | 258 | | | 1,054 | | | — | |
| Total financial liabilities | $ | 6,127 | | | $ | 258 | | | $ | 1,054 | | | $ | 4,815 | |
(1)Balances represent financial assets that are fair valued in accordance with ASC 825 as well as financial assets that are fair valued as a result of consolidation of investment company VIE in accordance with ASC 946.
(2)Balance excludes $353 million of investments measured at estimated fair value using NAV as a practical expedient.
(3)Balance includes $31 million of assets, and corresponding liabilities, that are not subject to fair value hierarchy.
Fair Value Information About Financial Instruments Not Recorded at Fair Value
Information about fair value estimates for financial instruments not measured at fair value is discussed below:
Mortgage Loans — The fair value of mortgage loans is estimated using discounted cash flow analyses on a loan-by-loan basis by applying a discount rate to expected cash flows from future installment and balloon payments. The discount rate takes into account general market trends and specific credit risk trends for the individual loan. Factors used to arrive at the discount rate include inputs from spreads based on U.S. Treasury notes and the loan’s credit quality, region, property-type, lien priority, payment type and current status.
Private Loans — The fair value of private loans is estimated using discounted cash flow analyses on a loan-by-loan basis by applying a discount rate to expected cash flows from future installment and balloon payments. The discount rate takes into account general market trends and specific credit risk trends for the individual loan. For certain of our collateral loans, we have concluded the carrying value approximates fair value.
Policy Loans — The carrying value of policy loans is the outstanding balance plus any accrued interest. Due to the collateralized nature of policy loans such that they cannot be separated from the policy contracts, the unpredictable timing of repayments and the fact that settlement is at outstanding value, as such the carrying value of policy loans approximates fair value.
Other Invested Assets — The common stock of FHLB is carried at cost which approximates fair value. The fair value of our COLI is equal to the cash surrender value of the policies.
Policyholder’s account balances - investments contracts, excluding embedded derivative and deposit assets — The fair values of the policyholder account balances’ not involving significant mortality or morbidity risks, are stated at the cost we would incur to extinguish the liability (i.e., the cash surrender value) as these contracts are generally issued without an annuitization date. The deposit assets related to the annuity benefit reserves have fair values determined in a similar fashion. For period-certain annuity benefit contracts, the fair value is determined by discounting the benefits at the interest rates currently in effect for newly issued immediate annuity contracts. All of the fair values presented within these categories fall within Level 3 of the fair value hierarchy as most of the inputs are unobservable market data.
Long Term Borrowings — Long term borrowings are carried at outstanding principal balance. The carrying value approximates fair value because the carrying value represents the amount owing and payable to the creditor at the reporting date. Fair values for subordinated debentures are estimated using discounted cash flow calculations principally on observable inputs including the Company’s incremental borrowing rates, which reflect our credit rating, for similar types of borrowings with maturities consistent with those remaining for the debt being valued.
Notes Payable — Notes payable are carried at outstanding principal balance. For a majority of the notes, the carrying value of the notes payable approximates fair value because the underlying interest rates approximate market rates at the reporting date.
The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis are shown below. The table below excludes accrued investment income, which is recorded at amortized cost in the statements of financial position, as their carrying amounts approximate the fair values due to their short-term nature.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Carrying Amount | | Fair Value | | Fair Value Hierarchy Level |
| | | Level 1 | | Level 2 | | Level 3 |
| (Dollars in millions) |
| December 31, 2025 | | | | | | | | | |
| Financial assets | | | | | | | | | |
| Mortgage loans on real estate, net of allowance | $ | 11,113 | | | $ | 11,211 | | | $ | — | | | $ | — | | | $ | 11,211 | |
| Private loans, net of allowance | 8,926 | | | 8,982 | | | — | | | 74 | | | 8,908 | |
| Policy loans | 234 | | | 234 | | | — | | | — | | | 234 | |
| Deposit assets, included in reinsurance recoverables and deposit assets (1) | 5,440 | | | 5,352 | | | — | | | — | | | 5,352 | |
| Other invested assets | 768 | | | 768 | | | — | | | 417 | | | 351 | |
| Total financial assets | $ | 26,481 | | | $ | 26,547 | | | | | | | |
| | | | | | | | | |
| Financial liabilities | | | | | | | | | |
| Policyholders' account balances – excluding embedded derivative (1) | $ | 83,782 | | | $ | 83,782 | | | $ | — | | | $ | — | | | $ | 83,782 | |
| | | | | | | | | |
| Long term borrowings | 2,951 | | | 3,045 | | | — | | | — | | | 3,045 | |
| Notes payable | 205 | | | 205 | | | — | | | — | | | 205 | |
| Total financial liabilities | $ | 86,938 | | | $ | 87,032 | | | | | | | |
| | | | | | | | | |
| Carrying Amount | | Fair Value | | Fair Value Hierarchy Level |
| | | Level 1 | | Level 2 | | Level 3 |
| (Dollars in millions) |
| December 31, 2024 | | | | | | | | | |
| Financial assets | | | | | | | | | |
| Mortgage loans on real estate, net of allowance | $ | 11,986 | | | $ | 11,794 | | | $ | — | | | $ | — | | | $ | 11,794 | |
| Private loans, net of allowance | 5,647 | | | 5,705 | | | — | | | 143 | | | 5,562 | |
| Policy loans | 274 | | | 274 | | | — | | | — | | | 274 | |
Deposit assets, included in reinsurance recoverables and deposit
assets (1) | 6,165 | | | 6,026 | | | — | | | — | | | 6,026 | |
| Other invested assets | 619 | | | 621 | | | — | | | 406 | | | 215 | |
| Total financial assets | $ | 24,691 | | | $ | 24,419 | | | | | | | |
| | | | | | | | | |
| Financial liabilities | | | | | | | | | |
| Policyholders' account balances – excluding embedded derivative (1) | $ | 79,384 | | | $ | 79,384 | | | $ | — | | | $ | — | | | $ | 79,384 | |
| | | | | | | | | |
| Long term borrowings | 2,957 | | | 2,977 | | | — | | | — | | | 2,977 | |
| Notes payable | 189 | | | 189 | | | — | | | — | | | 189 | |
| Total financial liabilities | $ | 82,530 | | | $ | 82,551 | | | | | | | |
(1)Excludes balances associated with contracts that involve significant mortality or morbidity risks, as these fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value.
For financial assets and financial liabilities measured at fair value on a recurring basis using Level 3 inputs during the periods, reconciliations of the beginning and ending balances are shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | Liabilities (2) |
| Invested
Assets (1) | | Derivative Assets | | | | | | Policyholders’ Account Balances – Embedded Derivative | | | | Funds Withheld for Reinsurance Liabilities - Embedded Derivative | | |
| (Dollars in millions) |
Balance at December 31, 2022 | $ | 3,110 | | | $ | 121 | | | | | | | $ | 726 | | | | | $ | — | | | |
| | | | | | | | | | | | | | | |
| Fair value changes in net income | 49 | | | 19 | | | | | | | 147 | | | | | — | | | |
| | | | | | | | | | | | | | | |
| Fair value changes in other comprehensive income | 148 | | | 89 | | | | | | | — | | | | | — | | | |
| | | | | | | | | | | | | | | |
| Purchases | 6,856 | | | 133 | | | | | | | — | | | | | — | | | |
| Sales | (4,905) | | | — | | | | | | | — | | | | | — | | | |
| Settlements or maturities | — | | | (135) | | | | | | | — | | | | | — | | | |
| Premiums less benefits | — | | | — | | | | | | | (1) | | | | | — | | | |
| | | | | | | | | | | | | | | |
| Transfers out of Level 3 | (194) | | | — | | | | | | | — | | | | | — | | | |
Balance at December 31, 2023 | 5,064 | | | 227 | | | | | | | 872 | | | | | — | | | |
| Transfer in due to consolidation / deconsolidation | 4,288 | | | — | | | | | | | — | | | | | — | | | |
| Fair value changes in net income | 19 | | | 124 | | | | | | | 229 | | | | 37 | | |
| | | | | | | | | | | | | | | |
| Fair value changes in other comprehensive income | 77 | | | — | | | | | | | — | | | | | — | | | |
| Purchases | 1,876 | | | 148 | | | | | | | — | | | | | — | | | |
| Sales | (662) | | | (67) | | | | | | | — | | | | | — | | | |
| Settlements or maturities | (926) | | | (209) | | | | | | | (32) | | | | | — | | | |
| Premiums less benefits | — | | | — | | | | | | | 54 | | | | | — | | | |
| Transfers into Level 3 | 346 | | | — | | | | | | | — | | | | | — | | | |
| Transfers out of Level 3 | (1,202) | | | — | | | | | | | — | | | | | — | | | |
Balance at December 31, 2024 | 8,880 | | | 223 | | | | | | | 1,123 | | | | | 37 | | | |
| Transfer in due to consolidation / deconsolidation | 283 | | | — | | | | | | | — | | | | | — | | | |
| Fair value changes in net income | 75 | | | 102 | | | | | | | 31 | | | | | 37 | | | |
| | | | | | | | | | | | | | | |
| Fair value changes in other comprehensive income | 61 | | | — | | | | | | | — | | | | | — | | | |
| Purchases | 4,169 | | | 139 | | | | | | | — | | | | | — | | | |
| Sales | (1,928) | | | — | | | | | | | — | | | | | — | | | |
| Settlements or maturities | (564) | | | (261) | | | | | | | — | | | | | — | | | |
| Premiums less benefits | — | | | — | | | | | | | 194 | | | | | — | | | |
| Transfers into Level 3 | 1,106 | | | — | | | | | | | 5,066 | | | | | — | | | |
| Transfers out of Level 3 | (2,002) | | | — | | | | | | | — | | | | | — | | | |
Balance at December 31, 2025 | $ | 10,080 | | | $ | 203 | | | | | | | $ | 6,414 | | | | | $ | 74 | | | |
(1)Balance includes separately managed accounts.
(2)See Note 19 - Market Risk Benefits for the reconciliation of the beginning and ending balances for market risk benefits.
Transfers into and out of Level 3 during the year ended December 31, 2025 were primarily the result of consolidation or deconsolidation of certain entities and changes in observable pricing. The Company’s valuation of financial instruments categorized as Level 3 in the fair value hierarchy are based on valuation techniques that use significant inputs that are unobservable or had a decline in market activity that obscured observability. The indicators considered in determining whether a significant decrease in the volume and level of activity for a specific asset has occurred include the level of new issuances in the primary market, trading volume in the secondary market, the level of credit spreads over historical levels, applicable bid-ask spreads, and price consensus among market participants and other pricing sources. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and discounted cash flow methodology based on spread/yield assumptions.
Quantitative Information about Level 3 Fair Value Measurements
The following summarizes the valuation techniques and significant unobservable inputs used for recurring Level 3 fair value measurements. See Note 19 - Market Risk Benefits for information on the unobservable inputs used in the fair value measurements of market risk benefits.
| | | | | | | | | | | |
| Type of Asset | Valuation Techniques | Significant Unobservable Inputs | Range |
Available-for-sale fixed maturity securities | Discounted cash flows | Discount rate | •2% - 9% |
Real estate and real estate partnerships | Broker price opinions | | |
Short-term investments | Discounted cash flows | Discount rate | •4% - 30% |
Derivative assets | Vendor sourced prices | Equity index volatility | |
| | Forward price / dividend | |
Separately managed accounts | Current value method | NCY EBITDA (1) | |
(1)NCY EBITDA uses forecasted Earnings Before Interest, Taxes, Depreciation, and Amortization (“ EBITDA”) expected to be achieved over the next calendar year.
12. Reinsurance
The Company reinsures its business through a diversified group of reinsurers (“reinsurance ceded”) and assumes certain business by entering into agreements with third-party insurers (“reinsurance assumed”). Under reinsurance ceded transactions, the Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. The Company monitors trends in arbitration and any litigation outcomes with its reinsurers. Collectability of reinsurance balances is evaluated by monitoring ratings and the financial strength of its reinsurers.
The effect of reinsurance on the applicable line items in our Consolidated Statements of Operations are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Premiums earned: | | | | | |
| Gross amounts, including reinsurance assumed | $ | 1,986 | | | $ | 4,032 | | | $ | 2,313 | |
| Reinsurance ceded | (270) | | | (353) | | | (644) | |
| Net amount | $ | 1,716 | | | $ | 3,679 | | | $ | 1,669 | |
| | | | | |
| Other policy revenue: | | | | | |
| Gross amounts, including reinsurance assumed | $ | 1,006 | | | $ | 779 | | | $ | 414 | |
| Reinsurance ceded | (315) | | | (122) | | | — | |
| Net amount | $ | 691 | | | $ | 657 | | | $ | 414 | |
| | | | | |
| Policyholder benefits and claims incurred: | | | | | |
| Gross amounts, including reinsurance assumed | $ | 2,652 | | | $ | 5,910 | | | $ | 2,269 | |
| Reinsurance ceded | (442) | | | (1,862) | | | (414) | |
| Net amount | $ | 2,210 | | | $ | 4,048 | | | $ | 1,855 | |
| | | | | |
| Change in fair value of market risk benefits: | | | | | |
| Gross amounts, including reinsurance assumed | $ | 800 | | | $ | 92 | | | $ | (69) | |
| Reinsurance ceded | (75) | | | (95) | | | — | |
| Net amount | $ | 725 | | | $ | (3) | | | $ | (69) | |
| | | | | |
| Interest sensitive contract benefits: | | | | | |
| Gross amounts, including reinsurance assumed | $ | 2,285 | | | $ | 2,184 | | | $ | 480 | |
| Reinsurance ceded | (259) | | | (439) | | | — | |
| Net amount | $ | 2,026 | | | $ | 1,745 | | | $ | 480 | |
The following summarizes our significant life and annuity reinsurance treaties and related recoverable:
| | | | | | | | | | | | | | | | | | | | | | | |
| Reinsurance Recoverable | | Agreement Type | | Products Covered |
| December 31, 2025 | | December 31, 2024 | | | | |
| (Dollars in millions) | | | | |
| Principal Reinsurers: | | | | | | | |
| EquiTrust Life Insurance Company | $ | 195 | | | $ | 231 | | | Coinsurance | | Certain Fixed Index and Fixed Rate Annuities |
| Athene Life Re Ltd. | 1,367 | | | 1,747 | | | Coinsurance Funds Withheld, Modified Coinsurance | | Certain Fixed Annuities and Multi-Year Guaranteed Annuities |
| | | | | | | |
| AeBe ISA LTD | 3,860 | | | 4,166 | | | Coinsurance Funds Withheld, Coinsurance | | Certain Fixed Index and Fixed Rate Annuities |
| Reinsurance Group of America Inc. (RGA) | 3,569 | | | 3,420 | | | Coinsurance | | Certain Term, Whole, Indexed Universal, Universal, and Universal with Secondary Guarantee Life Insurance Policies |
| $ | 8,991 | | | $ | 9,564 | | | | | |
The Company incurred risk charge fees of $30 million, $13 million and $0 million during the years ended December 31, 2025, 2024 and 2023, respectively, in relation to reinsurance agreements.
The following summarizes significant changes to third-party reinsurance agreements for the years ended December 31, 2025 and 2024:
Assumed Reinsurance Agreements
Effective November 14, 2025, American National Insurance Company (“ANICO”) entered into a Modified Coinsurance (“Modco”) reinsurance agreement with Nationwide Life and Annuity Insurance Company (“Nationwide”) to reinsure a pension risk transfer group annuity contract on a 20% quota share. The Modco assets are segregated by sub-accounts that legally remain at Nationwide with all the risk and rewards of the assets in the Modco accounts recognized by ANICO. Business assumed under this agreement was not significant during 2025 and is not expected to become significant in future periods as there is no business assumed on a flow basis.
Effective October 1, 2025, ANICO entered into a coinsurance reinsurance agreement with a third-party insurer in Japan, Dai-ichi Frontier Life, whereby ANICO will reinsure certain policies on a flow basis. Business assumed under this agreement during 2025 was not significant.
Effective December 16, 2024, ANICO entered into PRT transactions under a coinsurance reinsurance agreement with a third-party insurer in the United Kingdom, whereby this subsidiary recognized approximately $1.3 billion of investments and future policy benefits liability assumed.
Ceded Reinsurance Agreements
Effective July 1, 2021, American Equity Investment Life Insurance Company (“AEILIC”) entered into a reinsurance agreement with North End Re (the "North End Re reinsurance treaty”), a wholly owned subsidiary of Brookfield Wealth Solutions and an affiliate of the Company through the AEL acquisition, to reinsure 70% on a Modco and 30% on a coinsurance basis certain in-force and ongoing flow fixed indexed annuity product liabilities. The liabilities reinsured on a coinsurance basis are secured by assets held in a statutory and supplemental trust (collectively referred to as the “Trusts”) with AEILIC as the sole beneficiary. The liabilities reinsured on a Modco basis are secured by assets held by AEILIC in a segregated Modco account. The North End Re reinsurance treaty was subsequently amended in 2022 to include additional in-force and flow fixed indexed annuity products and in 2023 to stop the reinsurance of flow products effective as of October 1, 2023.
Effective December 1, 2024, both parties mutually entered into a Recapture Agreement whereby 100% of the liabilities and obligations were recaptured. All balances previously recorded by the Company were written off the balance sheet at the carrying amount as of December 1, 2024. The assets held in the Trusts were transferred to AEILIC and recognized at fair value in the Consolidated Statements of Financial Position as of December 1, 2024. As this is considered a common control transaction, the net impact of the recapture was recognized as a capital contribution of approximately $762 million. The capital contribution was recognized in “Additional Paid In Capital” in the Consolidated Statements of Financial Position.
Effective July 1, 2024, certain of American National’s subsidiaries entered into a reinsurance agreements with certain subsidiaries of Reinsurance Group of America Inc. (“RGA”), a third-party reinsurance group. In accordance with the terms of this agreement, such American National subsidiaries ceded to the reinsurer, on a coinsurance basis, mortality risk and approximately $3.4 billion of reserves associated with a diversified block of term life insurance, whole life insurance, indexed universal life insurance, universal life insurance and universal life insurance with secondary guarantee. Policies written by American National Insurance Company, American National Life Insurance Company of Texas and Garden State Life Insurance Company are ceded on a 100% quota share basis, while policies written by American National Life Insurance Company of New York were ceded on an 80% quota share basis through April 1, 2025, and 100% thereafter. This reinsurance transaction represents approximately half of the Company’s in-force life business. As part of this reinsurance transaction, the Company recognized a deferred gain of $1.6 billion, which was recorded in Other liabilities in the Consolidated Statements of Financial Position as of December 31, 2024. This deferred gain represents the unamortized portion of the cost of reinsurance related to the in-force business which will be amortized over the life of the underlying reinsured policies. The deferred gain represents primarily the difference between liabilities
ceded and assets transferred as part of the reinsurance agreement. The amortization of the deferred gain recognized in Other income in the Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 were $95 million and $35 million, respectively.
There were no other significant changes to third-party reinsurance agreements for the year ended December 31, 2025 or December 31, 2024.
Intercompany Reinsurance Agreements
The Company executes various intercompany reinsurance agreements between its subsidiaries, including offshore entities, for purposes of managing regulatory statutory capital and risk. All intercompany balances have been eliminated in the preparation of the accompanying financial statements.
13. Separate Account Assets and Liabilities
The following table presents the change of the Company’s separate account assets and liabilities:
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Balance, beginning of period | $ | 1,343 | | | $ | 1,189 | |
| Additions (deductions): | | | |
| | | |
| | | |
| Policyholder deposits | 65 | | | 74 | |
| Net investment income | 87 | | | 66 | |
| Net realized capital gains (losses) on investments | 57 | | | 117 | |
| Policyholder benefits and withdrawals | (649) | | | (119) | |
| Net transfer from (to) general account | (65) | | | 33 | |
| Policy charges | (16) | | | (17) | |
| Total changes | (521) | | | 154 | |
| Balance, end of period | $ | 822 | | | $ | 1,343 | |
| | | |
| Cash surrender value | $ | 794 | | | $ | 724 | |
14. Deferred Policy Acquisition Costs, Deferred Sales Inducements and Value of Business Acquired
The following tables present a rollforward of DAC, DSI and VOBA for the periods indicated:
| | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2025 |
| Annuities | | | | Life
Insurance | | Total |
| (Dollars in millions) |
| DAC | | | | | | | |
| Balance, beginning of year | $ | 892 | | | | | $ | 306 | | | $ | 1,198 | |
| Additions | 1,139 | | | | | 105 | | | 1,244 | |
| Amortization | (138) | | | | | (34) | | | (172) | |
| | | | | | | |
| Net change | 1,001 | | | | | 71 | | | 1,072 | |
| Balance, end of year | 1,893 | | | | | 377 | | | 2,270 | |
| | | | | | | |
| DSI | | | | | | | |
Balance, beginning of year | 393 | | | | | — | | | 393 | |
| Additions | 773 | | | | | — | | | 773 | |
| Amortization | (52) | | | | | — | | | (52) | |
| Net change | 721 | | | | | — | | | 721 | |
Balance, end of year | 1,114 | | | | | — | | | 1,114 | |
| | | | | | | |
| VOBA | | | | | | | |
Balance, beginning of year | 8,848 | | | | | 65 | | | 8,913 | |
| | | | | | | |
| | | | | | | |
| Amortization | (780) | | | | | (4) | | | (784) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Balance, end of year | 8,068 | | | | | 61 | | | 8,129 | |
| Total DAC, DSI, and VOBA asset | $ | 11,075 | | | | | $ | 438 | | | $ | 11,513 | |
| | | | | | | |
| Year Ended December 31, 2024 |
| Annuities | | | | Life
Insurance | | Total |
| (Dollars in millions) |
| DAC | | | | | | | |
Balance, beginning of year | $ | 213 | | | | | $ | 218 | | | $ | 431 | |
| Additions | 770 | | | | | 108 | | | 878 | |
| Amortization | (91) | | | | | (20) | | | (111) | |
| Net change | 679 | | | | | 88 | | | 767 | |
Balance, end of year | 892 | | | | | 306 | | | 1,198 | |
| | | | | | | |
| DSI | | | | | | | |
Balance, beginning of year | 8 | | | | | — | | | 8 | |
| Additions | 393 | | | | | — | | | 393 | |
| Amortization | (8) | | | | | — | | | (8) | |
| Net change | 385 | | | | | — | | | 385 | |
Balance, end of year | 393 | | | | | — | | | 393 | |
| | | | | | | |
| VOBA | | | | | | | |
Balance, beginning of year | 59 | | | | | 305 | | | 364 | |
| Acquisition from business combinations (1) | 7,239 | | | | | — | | | 7,239 | |
| Additions | 2,000 | | | | | — | | | 2,000 | |
| Amortization | (450) | | | | | (18) | | | (468) | |
| Other (2) | — | | | | | (222) | | | (222) | |
| Net change | 8,789 | | | | | (240) | | | 8,549 | |
Balance, end of year | 8,848 | | | | | 65 | | | 8,913 | |
| Total DAC, DSI, and VOBA asset | $ | 10,133 | | | | | $ | 371 | | | $ | 10,504 | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Year Ended December 31, 2023 |
| Annuities | | | | Life
Insurance | | Total |
| (Dollars in millions) |
| DAC | | | | | | | |
Balance, beginning of year | $ | 54 | | | | | $ | 88 | | | $ | 142 | |
| Additions | 220 | | | | | 139 | | | 359 | |
| Amortization | (61) | | | | | (9) | | | (70) | |
| Net change | 159 | | | | | 130 | | | 289 | |
Balance, end of year | 213 | | | | | 218 | | | 431 | |
| | | | | | | |
| DSI | | | | | | | |
Balance, beginning of year | 4 | | | | | — | | | 4 | |
| Additions | 5 | | | | | — | | | 5 | |
| Amortization | (1) | | | | | — | | | (1) | |
| Net change | 4 | | | | | — | | | 4 | |
Balance, end of year | 8 | | | | | — | | | 8 | |
| | | | | | | |
| VOBA | | | | | | | |
Balance, beginning of year | 70 | | | | | 335 | | | 405 | |
| | | | | | | |
| | | | | | | |
| Amortization | (11) | | | | | (30) | | | (41) | |
| | | | | | | |
| Net change | (11) | | | | | (30) | | | (41) | |
Balance, end of year | 59 | | | | | 305 | | | 364 | |
| Total DAC, DSI, and VOBA asset | $ | 280 | | | | | $ | 523 | | | $ | 803 | |
(1)See Note 16 - Acquisitions for details of the measurement period adjustment to VOBA asset included within this amount, which was recognized at the Company’s acquisition of AEL in May 2024.
(2)See Note 12 - Reinsurance for details of a reinsurance transaction in relation to the Company’s Life Insurance business, resulting in an adjustment to the VOBA asset recognized upon the acquisition of American National in 2022.
Value of Business Acquired
As stated in Note 2 - Summary of Significant Accounting Policies, VOBA asset is included in “Deferred policy acquisition costs, deferred sales inducements and value of business acquired” in the Consolidated Statements of Financial Position. The amortization of VOBA asset is recorded in “Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired” in the Consolidated Statements of Operations.
The following table provides the projected VOBA asset amortization expenses for a five-year period and thereafter as of December 31, 2025:
| | | | | |
| Years | (Dollars in millions) |
| 2026 | $ | 745 | |
| 2027 | 680 | |
| 2028 | 624 | |
| 2029 | 569 | |
| 2030 | 521 | |
| Thereafter | 4,990 | |
| Total amortization expense | $ | 8,129 | |
15. Intangible Assets
Intangible Assets
The components of definite-lived and indefinite-lived intangible assets are as follows. Refer to Note 14 - Deferred Policy Acquisition Costs, Deferred Sales Inducements and Value of Business Acquired for VOBA asset, which is an actuarial intangible asset arising from a business combination.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount |
| (Dollars in millions) |
| Definite-lived intangible assets: | | | | | | | | | | | |
| Distributor relationships | $ | 1,445 | | | $ | (103) | | | $ | 1,342 | | | $ | 1,445 | | | $ | (41) | | | $ | 1,404 | |
| Trade name | 58 | | | (11) | | | 47 | | | 58 | | | (6) | | | 52 | |
| | | | | | | | | | | |
| Software and other | 125 | | | (40) | | | 85 | | | 52 | | | (9) | | | 43 | |
| Total definite-lived intangible assets | 1,628 | | | (154) | | | 1,474 | | | 1,555 | | | (56) | | | 1,499 | |
| | | | | | | | | | | |
| Indefinite-lived intangible assets: | | | | | | | | | | | |
| Insurance licenses | 27 | | | — | | | 27 | | | 27 | | | — | | | 27 | |
| Total indefinite-lived intangible assets | 27 | | | — | | | 27 | | | 27 | | | — | | | 27 | |
| Total intangible assets | $ | 1,655 | | | $ | (154) | | | $ | 1,501 | | | $ | 1,582 | | | $ | (56) | | | $ | 1,526 | |
No impairment expenses of intangible assets were recognized for the years ended December 31, 2025, 2024, and 2023. The Company estimates that its intangible assets do not have any significant residual value in determining their amortization. Amortization expenses for definite-lived intangible assets were $98 million, $55 million and $2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The following table outlines the estimated future amortization expense related to definite-lived intangible assets held as of December 31, 2025.
| | | | | |
| Years | (Dollars in millions) |
| 2026 | $ | 95 | |
| 2027 | 85 | |
| 2028 | 78 | |
| 2029 | 70 | |
| 2030 | 70 | |
| Thereafter | 1,076 | |
| Total amortization expense | $ | 1,474 | |
Goodwill
The changes in the carrying amount of goodwill by reporting segment were as follows:
| | | | | | | | | | | | | | | | | | | |
| Annuities | | | | Life
Insurance | | Total |
| (Dollars in millions) |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Balance as of December 31, 2022 and 2023 | $ | 51 | | | | | $ | 35 | | | $ | 86 | |
| Acquisitions from business combinations | 662 | | | | | — | | | 662 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Balance as of December 31, 2024 and 2025 | $ | 713 | | | | | $ | 35 | | | $ | 748 | |
The Company performed its annual goodwill impairment tests as of October 1, 2025 and did not identify any impairment. There were no accumulated impairments associated with our goodwill for the years ended December 31, 2025, 2024 and 2023.
16. Acquisitions
On May 2, 2024, in conjunction with the Merger, Brookfield Wealth Solutions indirectly acquired all of AEL’s issued and outstanding common stock not already owned for a consideration of approximately $2.5 billion in cash and 28,803,599 shares of class A limited voting shares of BAM (“BAM Shares”).
Following the Merger, on May 7, 2024, American National and AEL completed the Post-Effective Merger and subsequent Reincorporation. The Post-Effective Merger has been accounted for as a common control transaction as if the parent, American National, acquired the shares of its subsidiary, AEL, similar to that of a reverse acquisition without a change in basis for the assets acquired and liabilities assumed. American National is therefore regarded as the predecessor reporting entity from an accounting perspective even though AEL is the surviving legal entity.
The business operations of AEL, which are now part of ANGI, contributed revenues of $2.1 billion and net income of $187 million to the Company for the period from May 2, 2024 to December 31, 2024. Had the Merger occurred on January 1, 2023, the consolidated unaudited pro forma revenue and net income would be (i) $10.3 billion and $1.1 billion, respectively, for the year ended December 31, 2024; and (ii) $7.9 billion and $562 million, respectively, for the year ended December 31, 2023. The pro forma amounts have been calculated using the subsidiary’s results and adjusting them for the revised depreciation and amortization that would have been charged assuming the fair value adjustments to investments, property and equipment and intangible assets had applied from January 1, 2023, together with the consequential tax effects.
As part of re-assessing the final valuation of certain assets, such as intangible assets and goodwill, and certain liabilities, the Company recognized measurement period adjustments to reflect new information obtained about facts and circumstances that existed as of the acquisition date. This resulted in a $45 million increase in both the VOBA asset and market risk benefits liability. In addition, discount rate and tax assumptions relating to intangible assets were updated, resulting in a $40 million decrease in intangible assets, $8 million increase to deferred tax asset and a $32 million increase in goodwill. Final valuation of the assets acquired and liabilities assumed and the completion of the purchase price allocation occurred in the second quarter of 2025.
Goodwill recognized is not deductible for income tax purposes. In conjunction with the Merger and Post-Effective Merger, Brookfield Wealth Solutions agreed to indemnify ANGI for certain liabilities that could arise as a result of merger-related activities, including tax liabilities.
The following summarizes the consideration transferred, fair value of assets acquired and liabilities assumed as of the acquisition date:
| | | | | |
| (Dollars in millions) |
Fair value of consideration transferred: | |
Cash | $ | 2,525 | |
| BAM Shares transferred by Brookfield Wealth Solutions | 1,111 | |
| Fair value of the Brookfield Wealth Solutions’ pre-existing interest in AEL | 897 | |
Total consideration | $ | 4,533 | |
| |
| Assets acquired: | |
Investments | $ | 42,960 | |
Cash and cash equivalents | 13,367 | |
Accrued investment income | 414 | |
Value of business acquired | 7,239 | |
Reinsurance recoverables and deposit assets | 14,963 | |
Property and equipment | 42 | |
Intangible assets | 1,540 | |
Other assets | 671 | |
Total assets acquired | $ | 81,196 | |
| |
| Liabilities assumed: | |
Future policy benefits | $ | 311 | |
Policyholders’ account balances | 61,473 | |
Market risk benefits | 3,023 | |
Notes payable | 768 | |
Subsidiary borrowings | 84 | |
Funds withheld for reinsurance liabilities | 8,601 | |
Other liabilities | 2,352 | |
Total liabilities assumed | 76,612 | |
| Less: Fair value of AEL preferred stock | 685 | |
| Less: Non-controlling interest | 28 | |
Net assets acquired | 3,871 | |
Goodwill | $ | 662 | |
Acquisition-related costs of $126 million incurred during the second quarter of 2024 were recorded as “Operating expenses” in the Consolidated Statements of Operations for that period.
17. Future Policy Benefits
The reconciliation of the balances described in the table below to the “Future policy benefits” in the Consolidated Statements of Financial Position is as follows.
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Future policy benefits: | | | |
| Annuities | $ | 7,142 | | | $ | 5,532 | |
| Life Insurance | 1,917 | | | 1,816 | |
| Deferred profit liability: | | | |
| Annuities | 76 | | | 81 | |
| Life Insurance | 99 | | | 76 | |
| Other contracts and VOBA liability | 1,728 | | | 1,665 | |
| Total future policy benefits | $ | 10,962 | | | $ | 9,170 | |
Future Policy Benefits
The balances and changes in the liability for future policy benefits are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2025 |
| Annuities | | Life
Insurance | | Total |
| (Dollars in millions) |
| Present Value of Expected Net Premiums: | | | | | |
| Balance, beginning of period | $ | — | | | $ | 2,353 | | | $ | 2,353 | |
| Beginning balance at original discount rate | — | | | 2,507 | | | 2,507 | |
| Effect of changes in cash flow assumptions (1) | — | | | 71 | | | 71 | |
| Effect of actual variances from expected experience | (25) | | | (97) | | | (122) | |
| Adjusted beginning of period balance | (25) | | | 2,481 | | | 2,456 | |
| | | | | |
| Issuances | 1,458 | | | 14 | | | 1,472 | |
| Interest accrual | 12 | | | 95 | | | 107 | |
| Net premiums collected | (1,450) | | | (288) | | | (1,738) | |
| Derecognitions (lapses and withdrawals) | 5 | | | — | | | 5 | |
| | | | | |
| Ending balance at original discount rate | — | | | 2,302 | | | 2,302 | |
| Effect of changes in discount rate assumptions | — | | | (119) | | | (119) | |
| Balance, end of period | $ | — | | | $ | 2,183 | | | $ | 2,183 | |
| | | | | |
| Present Value of Expected Future Policy Benefits: | | | | | |
| Balance, beginning of period | $ | 5,532 | | | $ | 4,169 | | | $ | 9,701 | |
| Beginning balance at original discount rate | 5,668 | | | 4,601 | | | 10,269 | |
| Effect of changes in cash flow assumptions (1) | 15 | | | 74 | | | 89 | |
| Effect of actual variances from expected experience | (44) | | | (75) | | | (119) | |
| Adjusted beginning of period balance | 5,639 | | | 4,600 | | | 10,239 | |
| | | | | |
| Issuances | 1,658 | | | 14 | | | 1,672 | |
| Interest accrual | 289 | | | 177 | | | 466 | |
| Benefit payments | (571) | | | (332) | | | (903) | |
| Derecognitions (lapses and withdrawals) | 39 | | | — | | | 39 | |
| Foreign currency translation | 81 | | | — | | | 81 | |
| Ending balance at original discount rate | 7,135 | | | 4,459 | | | 11,594 | |
| Effect of changes in discount rate assumptions | 7 | | | (359) | | | (352) | |
| | | | | |
| Balance, end of period | $ | 7,142 | | | $ | 4,100 | | | $ | 11,242 | |
| | | | | |
| Liability for future policy benefits | $ | 7,142 | | | $ | 1,917 | | | $ | 9,059 | |
| Less: Reinsurance recoverables | (2) | | | (1,269) | | | (1,271) | |
| Net liability for future policy benefits, after reinsurance recoverable | $ | 7,140 | | | $ | 648 | | | $ | 7,788 | |
| | | | | |
| Weighted-average liability duration of future policy benefits (years) | 9 years | | 14 years | | |
| | | | | |
| Weighted average interest accretion rate | 5.31 | % | | 4.72 | % | | |
| Weighted average current discount rate | 5.27 | % | | 5.65 | % | | |
| | | | | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2024 |
| Annuities | | Life
Insurance | | Total |
| (Dollars in millions) |
| Present Value of Expected Net Premiums: | | | | | |
| Balance, beginning of period | $ | — | | | $ | 3,145 | | | $ | 3,145 | |
| Beginning balance at original discount rate | — | | | 3,254 | | | 3,254 | |
| Effect of changes in cash flow assumptions (1) | — | | | (245) | | | (245) | |
| Effect of actual variances from expected experience | 11 | | | (343) | | | (332) | |
| Adjusted beginning of period balance | 11 | | | 2,666 | | | 2,677 | |
| | | | | |
| Issuances | 1,970 | | | 48 | | | 2,018 | |
| Interest accrual | 11 | | | 112 | | | 123 | |
| Net premiums collected | (1,992) | | | (320) | | | (2,312) | |
| Derecognitions (lapses and withdrawals) | — | | | 1 | | | 1 | |
| | | | | |
| Ending balance at original discount rate | — | | | 2,507 | | | 2,507 | |
| Effect of changes in discount rate assumptions | — | | | (154) | | | (154) | |
| Balance, end of period | $ | — | | | $ | 2,353 | | | $ | 2,353 | |
| | | | | |
| Present Value of Expected Future Policy Benefits: | | | | | |
| Balance, beginning of period | $ | 2,213 | | | $ | 5,040 | | | $ | 7,253 | |
| Beginning balance at original discount rate | 2,217 | | | 5,277 | | | 7,494 | |
| Effect of changes in cash flow assumptions (1) | 1 | | | (236) | | | (235) | |
| Effect of actual variances from expected experience | (5) | | | (369) | | | (374) | |
| Adjusted beginning of period balance | 2,213 | | | 4,672 | | | 6,885 | |
| Acquisition of business combination | 311 | | | — | | | 311 | |
| Issuances | 3,289 | | | 49 | | | 3,338 | |
| Interest accrual | 168 | | | 190 | | | 358 | |
| Benefit payments | (336) | | | (311) | | | (647) | |
| Derecognitions (lapses and withdrawals) | 23 | | | 1 | | | 24 | |
| | | | | |
| Ending balance at original discount rate | 5,668 | | | 4,601 | | | 10,269 | |
| Effect of changes in discount rate assumptions | (136) | | | (432) | | | (568) | |
| | | | | |
| Balance, end of period | $ | 5,532 | | | $ | 4,169 | | | $ | 9,701 | |
| | | | | |
| Liability for future policy benefits | $ | 5,532 | | | $ | 1,816 | | | $ | 7,348 | |
| Less: Reinsurance recoverables | (2) | | | (1,298) | | | (1,300) | |
| Net liability for future policy benefits, after reinsurance recoverable | $ | 5,530 | | | $ | 518 | | | $ | 6,048 | |
| | | | | |
| Weighted-average liability duration of future policy benefits (years) | 9 years | | 15 years | | |
| | | | | |
| Weighted average interest accretion rate | 5.23 | % | | 4.75 | % | | |
| Weighted average current discount rate | 5.53 | % | | 5.83 | % | | |
| | | | | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2023 |
| Annuities | | Life
Insurance | | Total |
| (Dollars in millions) |
| Present Value of Expected Net Premiums: | | | | | |
| Balance, beginning of period | $ | — | | | $ | 3,520 | | | $ | 3,520 | |
| Beginning balance at original discount rate | — | | | 3,826 | | | 3,826 | |
| Effect of changes in cash flow assumptions (1) | — | | | (353) | | | (353) | |
| Effect of actual variances from expected experience | 2 | | | (59) | | | (57) | |
| Adjusted beginning of period balance | 2 | | | 3,414 | | | 3,416 | |
| | | | | |
| Issuances | 984 | | | 90 | | | 1,074 | |
| Interest accrual | 8 | | | 121 | | | 129 | |
| Net premiums collected | (995) | | | (373) | | | (1,368) | |
| Derecognitions (lapses and withdrawals) | 1 | | | 2 | | | 3 | |
| | | | | |
| Ending balance at original discount rate | — | | | 3,254 | | | 3,254 | |
| Effect of changes in discount rate assumptions | — | | | (109) | | | (109) | |
| Balance, end of period | $ | — | | | $ | 3,145 | | | $ | 3,145 | |
| | | | | |
| Present Value of Expected Future Policy Benefits: | | | | | |
| Balance, beginning of period | $ | 1,288 | | | $ | 5,330 | | | $ | 6,618 | |
| Beginning balance at original discount rate | 1,368 | | | 5,875 | | | 7,243 | |
| Effect of changes in cash flow assumptions (1) | (1) | | | (362) | | | (363) | |
| Effect of actual variances from expected experience | (25) | | | (59) | | | (84) | |
| Adjusted beginning of period balance | 1,342 | | | 5,454 | | | 6,796 | |
| | | | | |
| Issuances | 988 | | | 89 | | | 1,077 | |
| Interest accrual | 73 | | | 188 | | | 261 | |
| Benefit payments | (189) | | | (456) | | | (645) | |
| Derecognitions (lapses and withdrawals) | 3 | | | 2 | | | 5 | |
| | | | | |
| Ending balance at original discount rate | 2,217 | | | 5,277 | | | 7,494 | |
| Effect of changes in discount rate assumptions | (4) | | | (237) | | | (241) | |
| | | | | |
| Balance, end of period | $ | 2,213 | | | $ | 5,040 | | | $ | 7,253 | |
| | | | | |
| Liability for future policy benefits | $ | 2,213 | | | $ | 1,895 | | | $ | 4,108 | |
| Less: Reinsurance recoverables | — | | | (45) | | | (45) | |
| Net liability for future policy benefits, after reinsurance recoverable | $ | 2,213 | | | $ | 1,850 | | | $ | 4,063 | |
| | | | | |
| Weighted-average liability duration of future policy benefits (years) | 8 years | | 16 years | | |
| | | | | |
| Weighted average interest accretion rate | 4.94 | % | | 4.60 | % | | |
| Weighted average current discount rate | 4.88 | % | | 5.03 | % | | |
| | | | | |
(1)For the year ended December 31, 2025, the Company recognized liability remeasurement impacts of $112 million, from the net effect of the changes in cash flow assumptions, which were included in “Policyholder benefits and claims incurred” in the Consolidated Statements of Operations.
The Company performs its annual assumptions review during the third quarter of each year. In 2025, assumption updates resulted in a $31 million increase to future policy benefit liabilities. The notable changes to assumptions in the third quarter of 2025 resulted in (i) an increase in the liability for net future policy benefits related to annuity products driven by unfavorable mortality. The change in mortality resulted in an offsetting decrease to the deferred profit liability and (ii) an increase in the liability for net future policy benefits for universal life products primarily driven by unfavorable mortality, partially offset by a favorable update to premium persistency.
For the year ended December 31, 2024, the Company recognized liability remeasurement losses of $66 million, which were included in “Policyholder benefits and claims incurred” in the Consolidated Statements of Operations. The amounts include the effect of the Company’s annual assumption review which was conducted during the third quarter of 2024. The notable changes to cash flow assumptions resulted in (i) a decrease in the liability for net future policy benefits related to annuity products driven by favorable mortality. The change in mortality resulted in an offsetting increase to the deferred profit liability; (ii) a decrease in the liability for net future policy benefits for term life products primarily driven by favorable mortality and favorable updates to policyholder lapse behavior assumptions; and (iii) an increase in the net future policy benefits liability for universal life products driven by unfavorable updates in policyholder lapse assumptions and unfavorable mortality.
For the year ended December 31, 2023, the Company recognized liability remeasurement gains of $3 million, from the net effect of the changes in cash flow assumptions, which were included in “Policyholder benefits and claims incurred” in the Consolidated Statements of Operations.
The amounts of undiscounted and discounted expected gross premiums and future benefit payments follow:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Undiscounted | | Discounted | | Undiscounted | | Discounted |
| (Dollars in millions) |
| Annuities | | | | | | | |
| Expected future benefit payments | $ | 12,409 | | | $ | 7,142 | | | $ | 9,853 | | | $ | 5,505 | |
| Expected future gross premiums | — | | | — | | | — | | | — | |
| | | | | | | |
| Life Insurance | | | | | | | |
| Expected future benefit payments | 8,432 | | | 4,100 | | | 8,819 | | | 4,169 | |
| Expected future gross premiums | 5,265 | | | 3,105 | | | 5,669 | | | 3,356 | |
| | | | | | | |
| Total | | | | | | | |
| Expected future benefit payments | 20,841 | | | 11,242 | | | 18,672 | | | 9,674 | |
| Expected future gross premiums | 5,265 | | | 3,105 | | | 5,669 | | | 3,356 | |
The amount of revenue and interest recognized in the Consolidated Statements of Operations follows:
| | | | | | | | | | | | | | | | | |
| Gross Premiums or Assessments |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Annuities | $ | 1,478 | | | $ | 3,299 | | | $ | 1,027 | |
| Life Insurance | 401 | | | 436 | | | 452 | |
| | | | | |
| Interest Expense |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Annuities | $ | 277 | | | $ | 157 | | | $ | 83 | |
| Life Insurance | 82 | | | 78 | | | 95 | |
18. Policyholders' Account Balances
Policyholders’ account balances relate to investment-type contracts and universal life-type policies as well as balances relating to funding agreements. Investment-type contracts principally include traditional individual fixed rate annuities and fixed index annuities in the accumulation phase and non-variable group annuity contracts.
The balances and changes in policyholders’ account balances are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2025 |
| Annuities | | Life
Insurance | | Total |
| (Dollars in millions) |
| Balance, beginning of period | $ | 80,046 | | | $ | 2,107 | | | $ | 82,153 | |
| Issuances | 18,684 | | | 42 | | | 18,726 | |
| | | | | |
| | | | | |
| Premiums received | 109 | | | 432 | | | 541 | |
| Policy charges | (619) | | | (367) | | | (986) | |
| Surrenders and withdrawals | (10,827) | | | (123) | | | (10,950) | |
| Interest credited | 3,097 | | | 102 | | | 3,199 | |
| Benefit payments | (1,126) | | | — | | | (1,126) | |
| | | | | |
| Other | 7 | | | — | | | 7 | |
| Balance, end of period | $ | 89,371 | | | $ | 2,193 | | | $ | 91,564 | |
| | | | | |
| Reconciling items: | | | | | |
| Supplemental contracts | $ | 589 | | | $ | — | | | $ | 589 | |
| Variable universal life | — | | | 39 | | | 39 | |
| Variable deferred annuity | 6 | | | — | | | 6 | |
| Embedded derivative and other | 740 | | | 54 | | | 794 | |
| Total PAB balance, end of period | $ | 90,706 | | | $ | 2,286 | | | $ | 92,992 | |
| | | | | |
| Weighted-average crediting rate | 3.53 | % | | 4.69 | % | | |
| Net amount at risk (1) | $ | 13,419 | | | $ | 39,405 | | | |
| Cash surrender value | $ | 80,202 | | | $ | 1,965 | | | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2024 |
| Annuities | | Life
Insurance | | Total |
| (Dollars in millions) |
| Balance, beginning of period | $ | 14,694 | | | $ | 1,975 | | | $ | 16,669 | |
| Issuances | 11,647 | | | 62 | | | 11,709 | |
Acquisition from business combination (2) | 61,296 | | | — | | | 61,296 | |
| | | | | |
| Premiums received | 67 | | | 423 | | | 490 | |
| Policy charges | (442) | | | (374) | | | (816) | |
| Surrenders and withdrawals | (8,958) | | | (66) | | | (9,024) | |
| Interest credited | 2,383 | | | 87 | | | 2,470 | |
| Benefit payments | (646) | | | — | | | (646) | |
| | | | | |
| Other | 5 | | | — | | | 5 | |
| Balance, end of period | $ | 80,046 | | | $ | 2,107 | | | $ | 82,153 | |
| | | | | |
| Reconciling items: | | | | | |
| Supplemental contracts | $ | 514 | | | $ | — | | | $ | 514 | |
| Variable universal life | — | | | 39 | | | 39 | |
| Variable deferred annuity | 7 | | | — | | | 7 | |
| Embedded derivative and other | 319 | | | 47 | | | 366 | |
| Total PAB balance, end of period | $ | 80,886 | | | $ | 2,193 | | | $ | 83,079 | |
| | | | | |
| Weighted-average crediting rate | 4.19 | % | | 4.21 | % | | |
| Net amount at risk (1) | $ | 12,475 | | | $ | 38,733 | | | |
| Cash surrender value | $ | 73,832 | | | $ | 1,860 | | | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2023 |
| Annuities | | Life
Insurance | | Total |
| (Dollars in millions) |
| Balance, beginning of period | $ | 12,012 | | | $ | 1,899 | | | $ | 13,911 | |
| Issuances | 4,382 | | | 84 | | | 4,466 | |
| | | | | |
| | | | | |
| Premiums received | 34 | | | 399 | | | 433 | |
| Policy charges | (39) | | | (362) | | | (401) | |
| Surrenders and withdrawals | (2,132) | | | (110) | | | (2,242) | |
| Interest credited | 437 | | | 65 | | | 502 | |
| | | | | |
| | | | | |
| | | | | |
| Balance, end of period | $ | 14,694 | | | $ | 1,975 | | | $ | 16,669 | |
| | | | | |
| Reconciling items: | | | | | |
| Supplemental contracts | $ | 291 | | | $ | — | | | $ | 291 | |
| Variable universal life | — | | | 36 | | | 36 | |
| Variable deferred annuity | 8 | | | — | | | 8 | |
| Embedded derivative and other | 135 | | | 38 | | | 173 | |
| Total PAB balance, end of period | $ | 15,128 | | | $ | 2,049 | | | $ | 17,177 | |
| | | | | |
| Weighted-average crediting rate | 3.27 | % | | 3.34 | % | | |
| Net amount at risk (1) | $ | 417 | | | $ | 38,365 | | | |
| Cash surrender value | $ | 15,000 | | | $ | 1,796 | | | |
(1)Net amount at risk is defined as the current guarantee amount in excess of the current account balance.
(2)Amount for the year ended December 31, 2024 excludes $177 million of liabilities relating to supplemental contracts at acquisition date.
The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums follow.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Range of
Guaranteed Minimum
Crediting Rate | | At Guaranteed Minimum | | 1 - 50 Basis Points Above | | 51 - 150 Basis Points Above | | > 150 Basis Points Above | | Other (1) | | Total |
| | | (Dollars in millions) |
| Annuities | 0% - 1% | | $ | 3,380 | | | $ | 2,553 | | | $ | 4,245 | | | $ | 5,572 | | | $ | — | | | $ | 15,750 | |
| 1% - 2% | | 1,876 | | | 278 | | | 862 | | | 1,193 | | | — | | | 4,209 | |
| 2% - 3% | | 1,918 | | | 470 | | | 256 | | | 14,748 | | | — | | | 17,392 | |
| Greater than 3% | | 258 | | | 5 | | | 8 | | | 10 | | | — | | | 281 | |
| Products with either a fixed rate or no guaranteed minimum crediting rate | | — | | | — | | | — | | | — | | | 51,739 | | | 51,739 | |
| Total | | $ | 7,432 | | | $ | 3,306 | | | $ | 5,371 | | | $ | 21,523 | | | $ | 51,739 | | | $ | 89,371 | |
| | | | | | | | | | | | | |
| Life Insurance | 0% - 1% | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| 1% - 2% | | 39 | | | 2 | | | 70 | | | 847 | | | — | | | 958 | |
| 2% - 3% | | 418 | | | — | | | 219 | | | — | | | — | | | 637 | |
| Greater than 3% | | 598 | | | — | | | — | | | — | | | — | | | 598 | |
| Products with either a fixed rate or no guaranteed minimum crediting rate | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | $ | 1,055 | | | $ | 2 | | | $ | 289 | | | $ | 847 | | | $ | — | | | $ | 2,193 | |
| | | | | | | | | | | | | |
| December 31, 2024 |
| Range of
Guaranteed Minimum
Crediting Rate | | At Guaranteed Minimum | | 1 - 50 Basis Points Above | | 51 - 150 Basis Points Above | | > 150 Basis Points Above | | Other (1) | | Total |
| | | (Dollars in millions) |
| Annuities | 0% - 1% | | $ | 3,963 | | | $ | 2,838 | | | $ | 3,768 | | | $ | 4,787 | | | $ | — | | | $ | 15,356 | |
| 1% - 2% | | 1,501 | | | 341 | | | 1,159 | | | 1,826 | | | — | | | 4,827 | |
| 2% - 3% | | 1,839 | | | 411 | | | 159 | | | 9,321 | | | — | | | 11,730 | |
| Greater than 3% | | 282 | | | 7 | | | 2 | | | 9 | | | — | | | 300 | |
| Products with either a fixed rate or no guaranteed minimum crediting rate | | — | | | — | | | — | | | — | | | 47,833 | | | 47,833 | |
| Total | | $ | 7,585 | | | $ | 3,597 | | | $ | 5,088 | | | $ | 15,943 | | | $ | 47,833 | | | $ | 80,046 | |
| | | | | | | | | | | | | |
| Life Insurance | 0% - 1% | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| 1% - 2% | | 32 | | | 2 | | | 60 | | | 735 | | | — | | | 829 | |
| 2% - 3% | | 422 | | | — | | | 222 | | | — | | | — | | | 644 | |
| Greater than 3% | | 634 | | | — | | | — | | | — | | | — | | | 634 | |
| Products with either a fixed rate or no guaranteed minimum crediting rate | | — | | | — | | | — | | | — | | | — | | | — | |
| Total | | $ | 1,088 | | | $ | 2 | | | $ | 282 | | | $ | 735 | | | $ | — | | | $ | 2,107 | |
(1)Other includes products with either a fixed rate or no guaranteed minimum crediting rate or allocated to index strategies.
In the third quarter of 2025, the Company performed its annual assumption review related to investment-type contracts and universal life- type contracts, which resulted in a $257 million net decrease primarily in the value of embedded derivatives related to fixed-index annuity products, which was included in “Change in fair value of insurance-related derivatives and embedded derivatives” in the Consolidated Statements of Operations. The notable changes made to cash flow assumptions from the annual assumption review were a net decrease in option budget primarily from a decrease in observed short-term option costs and an increase in our own credit spread through the update of the risk premium to reflect current market rates.
In the third quarter of 2024, the Company performed its annual assumption review related to investment-type contracts and universal life-type contracts, which resulted in $60 million net increase primarily in the value of embedded derivatives related to fixed-index annuity products, which was included in “Change in fair value of insurance-related derivatives and embedded derivatives” in the Consolidated Statements of Operations. The notable changes made to cash flow assumptions from the annual assumption review were a net increase in option budget primarily from an increase in investment portfolio rates and an increase in the utilization assumption for the lifetime income benefit riders partially offset by favorable updates to policyholder lapse behavior assumptions.
19. Market Risk Benefits
Market Risk Benefits
The net balance of market risk benefit (MRB) assets and liabilities of, and changes in guaranteed minimum withdrawal benefits associated with, annuity contracts is as follows:
| | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | | |
| 2025 | | 2024 | | 2023 | | | |
| (Dollars in millions) | | | |
| Balance, beginning of period | $ | 2,799 | | | $ | — | | | $ | 44 | | | | |
| Balance, beginning of period, before effect of changes in the instrument-specific credit risk | 2,549 | | | 1 | | | 70 | | | | |
| Acquisition from business combination (1) | — | | | 2,420 | | | — | | | | |
| Issuances | (8) | | | 7 | | | 1 | | | | |
| Interest accrual | 150 | | | 100 | | | 3 | | | | |
| Attributed fees collected | 265 | | | 146 | | | 13 | | | | |
| | | | | | | | |
| Effect of changes in interest rates | 12 | | | (112) | | | (117) | | | | |
| Effect of changes in equity markets | 161 | | | 39 | | | 171 | | | | |
| Effect of changes in equity index volatility | (48) | | | (97) | | | (46) | | | | |
| Actual policyholder behavior different from expected behavior | — | | | — | | | (7) | | | | |
| Effect of changes in future expected policyholder behavior | 57 | | | 2 | | | — | | | | |
| Effect of changes in other future expected assumptions | 211 | | | 43 | | | (87) | | | | |
| Balance, end of period, before effect of changes in the instrument-specific credit | 3,349 | | | 2,549 | | | 1 | | | | |
| Effect of changes in the ending instrument-specific credit risk | 13 | | | 250 | | | (1) | | | | |
| Balance, end of period | 3,362 | | | 2,799 | | | — | | | | |
| Less: Reinsured MRB, end of period | (601) | | | (526) | | | — | | | | |
| Balance, end of period, net of reinsurance | $ | 2,761 | | | $ | 2,273 | | | $ | — | | | | |
| | | | | | | | |
| Net amount at risk (2) | $ | 12,962 | | | $ | 12,051 | | | $ | — | | | | |
| Weighted average attained age of contract holders (years) | 71 years | | 71 years | | 65 years | | | |
(1)See Note 16 - Acquisitions for the details of the measurement period adjustment to market risk benefits liability included within this amount which was assumed upon the Company’s acquisition of AEL in May 2024.
(2)Net amount at risk is defined as the current guarantee amount in excess of the current account balance.
The reconciliation of market risk benefits by amounts in an asset position and in a liability position to “Market risk benefits” amount in the Consolidated Statements of Financial Position follows.
| | | | | | | | | | | | | | | | | |
| December 31, 2025 |
| Asset | | Liability | | Net Liability |
| (Dollars in millions) |
| Market risk benefits | $ | 1,174 | | | $ | 4,536 | | | $ | 3,362 | |
| | | | | |
| | | | | |
| | | | | |
| December 31, 2024 |
| Asset | | Liability | | Net Liability |
| (Dollars in millions) |
| Market risk benefits | $ | 856 | | | $ | 3,655 | | | $ | 2,799 | |
| | | | | |
| | | | | |
In the third quarter of 2025, the Company performed its annual assumption review for annuity contracts, which resulted in a $202 million net increase to net market risk benefits liability, net of market risk benefits asset and reinsured MRB, which was included in “Change in fair value of market risk benefits” in the Consolidated Statements of Operations. The notable changes to cash flow assumptions from the annual assumption review were a net increase in the utilization assumption for the lifetime income benefit riders, a decrease in option budget primarily from a decrease in observed short-term option costs partially offset by favorable updates to policyholder lapse behavior assumptions.
In the third quarter of 2024, the Company performed its annual assumption review for annuity contracts, which resulted in a $40 million net decrease in the net market risk benefits liability, which was included in “Change in fair value of market risk benefits” in the Consolidated Statements of Operations. The notable changes to cash flow assumptions from the annual assumption review were a net increase in option budget primarily from an increase in investment portfolio rates and favorable updates to policyholder lapse behavior assumptions.
In 2023, the Company performed its annual assumptions review in the fourth quarter, resulting in no material changes to the net market risk benefits liability.
The following summarizes the valuation technique and significant unobservable inputs used for the fair value measurement of market risk benefits as of December 31, 2025:
| | | | | | | | | | | | | | | | | | | | |
| Valuation Technique | | Significant Unobservable Inputs | | Range |
| Discounted cash flows | | Utilization | | 0.02% | - | 51.54% |
| | Option budget | | 1.36% | - | 4.18% |
| | Non-performance risk | | 0.35% | - | 1.80% |
| | Mortality rates | | 0.00% | - | 46.18% |
| | Lapse rates | | 0.25% | - | 42.50% |
20. Long Term Borrowings
The following is a summary of our long term borrowings:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
Term Loan Credit Facility - due May 25, 2027 | $ | 98 | | | $ | 1,297 | |
5.000% Senior Notes - due June 15, 2027 | 490 | | | 485 | |
5.750% Senior Notes - due October 1, 2029 | 596 | | | 595 | |
6.144% Senior Notes - due June 13, 2032 | 497 | | | 496 | |
6.000% Senior Notes - due July 15, 2035 | 692 | | | — | |
5.000% American Equity Capital Trust II - due June 1, 2047 | 84 | | | 84 | |
7.000% Fixed-Rate Reset Junior Subordinated Notes - due December 1, 2055 | 494 | | | — | |
| Total long term borrowings | $ | 2,951 | | | $ | 2,957 | |
Term Loan Credit Facility - On May 7, 2024, the Company entered into a new $1.9 billion term loan agreement. The term loan will mature on May 25, 2027. Interest on the amount borrowed under the term loan is tied to SOFR plus a margin and is reset and paid quarterly. On October 2, 2024, the Company repaid $600 million under this agreement using proceeds of the Senior Notes issued on October 2, 2024. On June 27, 2025, the Company repaid $700 million under this agreement using proceeds of the 2035 Senior Notes issued on June 27, 2025. On October 29, 2025, the Company repaid $500 million under this agreement using proceeds from the capital contribution received from Brookfield Wealth Solutions along with additional funds. See Note 22 - Stockholders' Equity for additional information on the capital contribution received.
5.000% Senior Notes - As part of the acquisition of American Equity, the Company assumed $500 million aggregate principal amount of senior unsecured notes due 2027 which bear interest at 5.0% per year and will mature on June 15, 2027. Contractual interest is payable semi-annually in arrears each June 15th and December 15th.
5.750% Senior Notes - On October 2, 2024, the Company issued $600 million aggregate principal amount of 5.750% Senior Notes due 2029 (the “2029 Senior Notes”). The Company pays interest on the 2029 Senior Notes semi-annually in cash in arrears on April 1 and October 1 of each year, which began on April 1, 2025. At the Company’s option, the 2029 Senior Notes may be redeemed, in whole or in part, at any time or from time to time, prior to their maturity at the applicable redemption price, plus any accrued and unpaid interest thereon to, but excluding, the redemption date for the 2029 Senior Notes. We used the net proceeds from this offering to repay a portion of the outstanding indebtedness under our Term Loan Credit Facility.
6.144% Senior Notes - In June 2022, the Company issued $500 million of 6.144% unsecured Senior Notes maturing June 13, 2032. Interest is payable in arrears on June 13 and December 13 of each year. The proceeds from the Senior Notes were used to repay a portion of the Term Loan Agreement as noted below.
6.000% Senior Notes - On June 27, 2025, the Company issued $700 million aggregate principal amount of 6.000% Senior Notes due 2035 (the “2035 Senior Notes”). Interest on the 2035 Senior Notes is payable semi-annually on January 15 and July 15, beginning on January 15, 2026. The 2035 Senior Notes will mature on July 15, 2035; however the Company may, at its option, redeem some or all of the 2035 Senior Notes, at any time or from time to time prior to their maturity at the applicable redemption price, plus any accrued and unpaid interest thereon to, but excluding, the redemption date for the 2035 Senior Notes. We used the net proceeds from this offering to repay a portion of the outstanding indebtedness under our Term Loan Credit Facility.
5.000% American Equity Capital Trust II - Our wholly-owned subsidiary trust (which is not consolidated) has issued fixed rate and floating rate trust preferred securities and has used the proceeds from these offerings to purchase subordinated debentures from us. We also issued subordinated debentures to the trust in exchange for all of the common securities of the trust. The sole assets of the trust are the subordinated debentures and any interest accrued thereon. The interest payment dates on the subordinated debentures correspond to the distribution dates on the trust preferred securities issued by the trust. The trust preferred securities mature simultaneously with the subordinated debentures. Our obligations under the subordinated debentures and related agreements provide a full and unconditional guarantee of payments due under the trust preferred securities. The Company assumed this debt obligation as part of the acquisition of American Equity.
The principal amount of the subordinated debentures issued by us to American Equity Capital Trust II ("Trust II") is $100 million. The subordinated debentures will mature on June 1, 2047. These debentures were assigned a fair value of $75 million at the date of issue (based upon an effective yield-to-maturity of 6.8%). The difference between the fair value at the date of issue and the principal amount is being accreted over the life of the debentures. The trust preferred securities issued by Trust II were issued to Iowa Farm Bureau Federation, which owns a majority of FBL Financial Group, Inc. ("FBL"). The consideration received by Trust II in connection with the issuance of its trust preferred securities consisted of fixed income securities of equal value which were issued by FBL.
7.000% Fixed-Rate Reset Junior Subordinated Notes - On August 22, 2025, the Company issued $500 million aggregate principal amount of 7.000% Fixed-Rate Reset Junior Subordinated Notes due 2055 (the “2055 Notes”). The 2055 Notes are unsecured and junior subordinated obligations of the Company that rank equally in right of payment with all of the Company’s future equally-ranking junior subordinated indebtedness and that rank junior in right of payment to all of the Company’s existing and future senior indebtedness. The 2055 Notes are effectively subordinated to all of the existing and future indebtedness and other liabilities of the Company’s subsidiaries. The 2055 Notes bear interest (i) until, but excluding, December 1, 2030 (the “First Reset Date”), at the rate of 7.000% per annum and (ii) from, and including, December 1, 2030, at a rate per annum equal to the Five-year U.S. Treasury Rate (as defined in the applicable indenture) plus 3.183%, to be reset on each Reset Date (as defined in the applicable indenture), provided that such rate will not reset below 7.000%. The 2055 Notes will mature on December 1, 2055; however the Company may, at its option, redeem some or all of the 2055 Notes at any time or from time to time prior to their maturity (i) during the three-month period prior to, and including, the First Reset Date and (ii) after the First Reset Date, on any interest payment date, at the applicable redemption price, plus any accrued and unpaid interest thereon (including compounded interest, if any) to, but excluding, the date of redemption for the 2055 Notes. We used the net proceeds from this offering to redeem the Fixed-Rate Reset Non-Cumulative Preferred Stock, Series B as discussed in Note 22 - Stockholders' Equity.
The agreements above require the Company and its subsidiaries to maintain minimum net worth covenants. As of December 31, 2025 and 2024, the Company was in compliance with its financial covenants.
Redemptions
On February 15, 2022, the Company entered into a five-year, $300 million unsecured delayed draw term loan credit agreement. On July 6, 2022, we borrowed $300 million under this agreement. Interest was tied to Secured Overnight Financing Rate (“SOFR”) adjusted for a credit spread. In May 2024, the Company repaid in full all indebtedness and other obligations outstanding under, and terminated, this credit agreement using proceeds of the Term Loan Credit Facility issued on May 7, 2024 that is summarized above.
On May 25, 2022, the Company assumed a term loan agreement with a consortium of banks providing for five-year term loans in the aggregate principal amount of $1.5 billion maturing May 23, 2027 (the “Term Loan Agreement”). Interest is tied to SOFR and reset and paid quarterly. On June 13, 2022, the Company repaid $500 million under the Term Loan Agreement, and in May 2024 repaid the remaining $1.0 billion outstanding using proceeds of the Term Loan Credit Facility issued on May 7, 2024 that is summarized above. The Term Loan Agreement was subsequently terminated.
The following is the maturity by year on long term borrowings:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Payments Due by Year |
| Total | | Unamortized Discount and Issuance Costs | | | | 1-2
Years | | 2-3
Years | | 3-4
Years | | 4-5
Years | | More Than
5 Years |
| (Dollars in millions) |
As of December 31, 2025: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Long term borrowings | $ | 2,951 | | | $ | (49) | | | | | $ | 600 | | | $ | — | | | $ | 600 | | | $ | — | | | $ | 1,800 | |
| | | | | | | | | | | | | | | |
As of December 31, 2024: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Long term borrowings | $ | 2,957 | | | $ | (43) | | | | | $ | — | | | $ | 1,800 | | | $ | — | | | $ | 600 | | | $ | 600 | |
21. Income Taxes
Income taxes are recognized for the amount of taxes payable by our subsidiaries and for the impact of deferred income tax assets and liabilities related to such subsidiaries.
The following presents the income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign jurisdictions:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
U.S. Federal (1) | $ | (565) | | | $ | (127) | | | $ | 262 | |
| Foreign (Bermuda) | 959 | | | 497 | | | 190 | |
| Total | $ | 394 | | | $ | 370 | | | $ | 452 | |
(1)In prior years, income (loss) from our Bermuda-domiciled subsidiary that has elected to pay U.S. income taxes under section 953(d) of the Internal Revenue code was not separately reported. Following the adoption of Accounting Standards Update 2023-09, this income is now reflected as foreign income with prior period amounts conformed accordingly.
Our income tax expense is as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Consolidated Statements of Operations: | | | | | |
| Current tax expense (benefit): | | | | | |
| U.S. Federal | $ | (66) | | | $ | 65 | | | $ | (6) | |
| U.S. State | 1 | | | — | | | — | |
| Foreign (Bermuda) | (44) | | | — | | | — | |
| Total current tax expense (benefit) | (109) | | | 65 | | | (6) | |
| | | | | |
| Deferred tax expense (benefit): | | | | | |
| U.S. Federal | 170 | | | 28 | | | 84 | |
| U.S. State | — | | | — | | | — | |
| Foreign (Bermuda) | (81) | | | (292) | | | (35) | |
| Total deferred tax expense (benefit) | 89 | | | (264) | | | 49 | |
| Total income tax expense (benefit) from continuing operations | $ | (20) | | | $ | (199) | | | $ | 43 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Following is a summary of income taxes paid by jurisdiction:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| U.S Federal | $ | (21) | | | $ | 346 | | | $ | 40 | |
| U.S. State | 4 | | | 43 | | | 7 | |
| Foreign | — | | | — | | | — | |
| Total | $ | (17) | | | $ | 389 | | | $ | 47 | |
Income tax expense (recovery) differed from the amount computed at the statutory federal income tax rate of 21% as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Amount | | Percent | | Amount | | Percent | | Amount | | Percent |
| (Dollars in millions) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| U.S. federal statutory tax rate | $ | 83 | | | 21.0 | % | | $ | 78 | | | 21.0 | % | | $ | 95 | | | 21.0 | % |
| U.S. state and local income tax, net of federal income tax effect | 1 | | | 0.3 | % | | 2 | | | 0.5 | % | | — | | | — | % |
| Foreign tax effects: | | | | | | | | | | | |
| Bermuda: | | | | | | | | | | | |
| Statutory tax rate difference between the U.S. and Bermuda | (58) | | | (14.7) | % | | (104) | | | (28.1) | % | | (40) | | | (8.8) | % |
| Effect of changes in tax laws or rates enacted in the current period | (125) | | | (31.7) | % | | (292) | | | (78.9) | % | | (35) | | | (7.7) | % |
| Foreign tax credits | (144) | | | (36.5) | % | | — | | | — | | | — | | | — | |
| Effect of cross border tax laws | 186 | | | 47.2 | % | | 119 | | | 32.2 | % | | 40 | | | 8.8 | % |
| Tax credits, net | (2) | | | (0.5) | % | | (3) | | | (0.8) | % | | (12) | | | (2.7) | % |
| Changes in valuation allowances | 19 | | | 4.8 | % | | — | | | — | % | | 2 | | | 0.4 | % |
| Nontaxable or nondeductible items | 7 | | | 1.8 | % | | 9 | | | 2.4 | % | | 2 | | | 0.4 | % |
| Changes in unrecognized tax benefits. | — | | | — | % | | — | | | — | % | | — | | | — | % |
| Other, net | 13 | | | 3.3 | % | | (8) | | | (2.2) | % | | (9) | | | (2.0) | % |
| Total income tax expense (benefit) | $ | (20) | | | (5.0) | % | | $ | (199) | | | (53.9) | % | | $ | 43 | | | 9.4 | % |
The tax effects of temporary differences that gave rise to the deferred tax assets and liabilities are shown below:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Deferred tax assets: | | | |
| Investments | $ | 1,011 | | | $ | 1,428 | |
| | | |
| Policyholders' account balances | 63 | | | 60 | |
| | | |
| Bermuda deferred tax asset | 457 | | | 377 | |
| Reinsurance recoverables | 3,877 | | | 3,920 | |
| Loss carryforwards | 890 | | | 622 | |
| Tax credit carryforwards | 42 | | | 88 | |
| | | |
| Other | 108 | | | 44 | |
| Gross deferred tax assets | 6,448 | | | 6,539 | |
| Valuation allowance | (23) | | | (20) | |
| Deferred tax assets, net of valuation allowance | 6,425 | | | 6,519 | |
| | | |
| Deferred tax liabilities: | | | |
| Deferred policy acquisition costs | 549 | | | 171 | |
| Pension asset | 18 | | | 62 | |
| VOBA | 1,912 | | | 2,060 | |
| Future policy benefits | 4,126 | | | 4,199 | |
| | | |
| Other | 99 | | | — | |
| Total deferred tax liabilities | 6,704 | | | 6,492 | |
| Deferred tax assets (liabilities), net | $ | (279) | | | $ | 27 | |
Below is a reconciliation of deferred tax assets (liabilities) as reported on the financial statements:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Deferred tax asset | $ | 460 | | | $ | 495 | |
| Deferred tax liability (1) | (739) | | | (468) | |
| Deferred tax assets (liabilities), net | $ | (279) | | | $ | 27 | |
| | | |
| | | |
(1) Deferred tax liabilities are included within “Other liabilities” in the Consolidated Statements of Financial Position.
The Company, excluding certain of its subsidiaries which file separate tax returns, are parties to a U.S. tax sharing agreement with its U.S. parent entity, BWS US Holdings, LLC. In accordance with its agreement, if the Company has taxable income, it pays its share of the consolidated federal income tax liability to its parent. However, if the Company incurs a tax loss, the tax benefit is recovered by decreasing subsequent year’s federal income tax payments to its parent.
Certain Bermuda subsidiaries of the Company are parties to a Bermuda tax sharing agreement with BWS Holdings Ltd., a direct subsidiary of Brookfield Wealth Solutions Ltd., the Company’s ultimate parent entity. Under this agreement, BWS Holdings Ltd. reimburses the Company’s Bermuda subsidiaries to the extent that BWS Holdings Ltd. or other Bermuda tax-resident affiliates utilize the Bermuda corporate income tax attributes of the Company’s Bermuda subsidiaries.
The Company evaluates its deferred tax assets based on, among other factors, historical operating results, expectation of future profitability, and the duration of the applicable statutory carryforward periods. As of December 31, 2025, the Company reported a valuation allowance of $23 million related to net operating loss and foreign tax credit carryforwards. Based on our evaluation, as of December 31, 2025, the Company determined that its remaining deferred tax assets would be realized within the applicable statutory carryforward period and that no additional valuation allowance was required.
Refer to Note 23 - Accumulated Other Comprehensive Income for deferred income tax recovery (expense) recognized in other comprehensive income.
As of December 31, 2025, the Company had net operating loss carryforwards of $4.2 billion and capital loss carryforwards of $75 million. Net operating loss carryforwards can be carried forward indefinitely. Capital loss carryforwards will begin to expire in 2029. In addition, the Company had foreign tax credits of $20 million and general business credit carryforwards of $22 million. Foreign tax credits expire in 2030. General business credit carryforwards expire in 2045.
As of December 31, 2025, there were no material income tax contingencies requiring recognition in our consolidated financial statements. Our tax returns are subject to audit by various federal, state and local tax authorities. The Company's income tax returns are subject to examination by the IRS and state tax authorities, generally for three years after they are due or filed, whichever is later. Federal income tax returns for tax years 2022 to 2024 are open to examination by the IRS.
Under the Inflation Reduction Act of 2022, a 15% corporate alternative minimum tax (“CAMT”) is imposed on the adjusted financial statement income of certain large corporations, effective for taxable years beginning after December 31, 2022. The impact of the CAMT, if any, will vary from year to year, based on the relationship between our adjusted financial statement income and our taxable income and if incurred, is creditable against future CAMT liabilities. As of December 31, 2025, the Company is not expected to be subject to the CAMT and as such, had no impact to our Consolidated Statements of Operations.
Bermuda Corporate Income Tax Regime
In December 2023, the Government of Bermuda enacted a corporate income tax (“CIT”) regime, designed to align with the Organization for Economic Cooperation and Development’s (“OECD”) global minimum tax rules. The Corporate Income Tax Act 2023 came into operation in its entirety on January 1, 2025. The regime applies a 15% CIT to Bermuda businesses that are part of Multinational Enterprise (“MNE”) groups with annual revenue of €750 million or more. On December 11, 2025, the Government of Bermuda enacted further amendments to the Bermuda Tax Act to align the calculation of the ETA with the Administrative Guidance issued by OECD in January 2025. Under these changes, any deferred tax liability that would otherwise arise solely from the mechanical calculation of the ETA is eliminated by reducing the amount to zero. As a result of these amendments, the Company increased its deferred tax asset by $80 million in 2025. As of December 31, 2025, the Company had a current tax asset of $44 million and a deferred tax asset of $457 million related to this regime.
Other Tax Matters
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes provisions that allow for the immediate expensing of domestic research and development expenses, immediate expensing of certain capital expenditures and other changes to the U.S. taxation of profits derived from foreign operations. The new legislation did not have a material impact to our consolidated financial statements.
22. Stockholders' Equity
Common Stock
As a result of and following the Merger and the Reincorporation, the Company had 10,000 shares of common stock with a par value of $0.01 per share authorized and outstanding, all of which are held by Brookfield Wealth Solutions Ltd. and its affiliates. See Note 1 - Organization and Description of the Company for additional information.
Preferred Stock - Issuance and Redemptions
On January 10, 2025, the Company issued an aggregate of 12,000 shares of 7.375% Fixed-Rate Non-Cumulative Preferred Stock, Series D with a $1.00 par value per share and a liquidation preference of $25,000 per share, for aggregate net proceeds of $292 million. The Company used the net proceeds from this offering, together with cash on hand, to redeem in full the Series A preferred shares described below.
As part of the acquisition of American Equity, the Company assumed the issuance of 16,000 shares of 5.95% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series A ("Series A") with a $1.00 par value per share and a liquidation preference of $25,000 per share, for aggregate net proceeds of $389 million. On February 24, 2025, the Company redeemed all of the 16,000 outstanding shares of Series A and the corresponding 16,000,000 depositary shares, each representing a 1/1,000th interest in one share of Series A with a total redemption payment of $408 million. As part of the redemption, the Company recognized a loss of $11 million.
As part of the acquisition of American Equity, the Company assumed the issuance of 12,000 shares of 6.625% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series B ("Series B") with a $1.00 par value per share and a liquidation preference of $25,000 per share, for aggregate net proceeds of $290 million. On October 6, 2025, the Company redeemed all of the 12,000 outstanding shares of Series B and the corresponding 12,000,000 depositary shares, each representing a 1/1,000th interest in one share of Series B with a total redemption payment of $303 million. The Company funded the redemption with the net proceeds from the issuance of the 2055 Notes (see Note 21 - Long Term Borrowings).
Preferred Stock - Dividends
Dividends on the Series D preferred stock are payable on a non-cumulative basis only when, as and if declared, quarterly in arrears on the 15th day of January, April, July and October of each year, commencing on April 15, 2025. The Series D preferred stock are not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or similar provisions. During the year ended December 31, 2025, we paid dividends totaling $18 million and during the fourth quarter of 2025, we accrued for dividends totaling $5 million for the Series D preferred stock, respectively.
For the years ended December 31, 2025 and 2024, we paid dividends totaling $8 million and $18 million for Series A preferred stock, respectively.
For the years ended December 31, 2025 and 2024, we paid dividends totaling $18 million and $15 million for Series B preferred stock, respectively.
No dividends were recognized prior to 2024 as the preferred stock was acquired during the acquisition of American Equity during 2024.
Distribution to Parent
On October 1, 2025 the Company distributed its property and casualty subsidiaries, including American National Property And Casualty Company, United Farm Family Insurance Company and Farm Family Casualty Insurance Company and their respective wholly-owned subsidiaries (collectively, the “P&C Subsidiaries”) to Brookfield Wealth Solutions, in facilitation of the transfer of the P&C Subsidiaries to Clearbrook. The impact to stockholders’ equity as a result of this transaction was a decrease of $1.7 billion. For further discussion, see Note 28 - Discontinued Operations.
Contribution from Parent
On October 27, 2025, the Company received a capital contribution of $400 million from Brookfield Wealth Solutions. This capital contribution along with additional funds were used to repay a portion of the Term Loan Credit Facility. See Note 20 - Long Term Borrowings for additional information.
23. Accumulated Other Comprehensive Income
The components of and changes in the accumulated other comprehensive income (“AOCI”), and the related tax effects, are shown below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Change in
Net Unrealized
Investment
Gains (Losses) | | | | Change in
Discount Rate
for Future
Policy Benefits | | Change in
Instrument-
Specific
Credit Risk
for Market
Risk Benefits | | Defined
Benefit
Pension
Plan
Adjustment | | Total |
| (Dollars in millions) |
Balance as of December 31, 2022 | $ | (723) | | | | | $ | 253 | | | $ | 21 | | | $ | 1 | | | $ | (448) | |
| Other comprehensive income (loss) before reclassifications | 461 | | | | | (188) | | | (25) | | | — | | | 248 | |
| Amounts reclassified to (from) AOCI | 75 | | | | | — | | | — | | | 107 | | | 182 | |
| Deferred income tax benefit (expense) | (113) | | | | | 40 | | | 5 | | | (23) | | | (91) | |
Balance as of December 31, 2023 | (300) | | | | | 105 | | | 1 | | | 85 | | | (109) | |
| Other comprehensive income (loss) before reclassifications | 574 | | | | | 221 | | | (249) | | | 23 | | | 569 | |
| Amounts reclassified to (from) AOCI | 13 | | | | | — | | | — | | | — | | | 13 | |
| Deferred income tax benefit (expense) | (133) | | | | | (47) | | | 52 | | | (5) | | | (133) | |
Balance as of December 31, 2024 | 154 | | | | | 279 | | | (196) | | | 103 | | | 340 | |
| Other comprehensive income (loss) before reclassifications | 871 | | | | | (152) | | | 230 | | | (38) | | | 911 | |
| Amounts reclassified to (from) AOCI | 42 | | | | | — | | | — | | | — | | | 42 | |
| Deferred income tax benefit (expense) | (201) | | | | | 32 | | | (49) | | | 8 | | | (210) | |
| Disposition of P&C Subsidiaries | 14 | | | | | — | | | — | | | (3) | | | 11 | |
Balance at December 31, 2025 | $ | 880 | | | | | $ | 159 | | | $ | (15) | | | $ | 70 | | | $ | 1,094 | |
24. Statutory Financial Information and Dividend Restrictions
The Company’s insurance subsidiaries are subject to insurance laws and regulations in the jurisdictions in which they operate, including the U.S. and Bermuda. Certain regulations include restrictions that limit the dividends or other distributions, such as loans or cash advances, available to stockholders without prior approval of the insurance regulatory authorities. The differences between financial statements prepared for insurance regulatory authorities and GAAP financial statements vary by jurisdiction.
U.S. Statutory Requirements
The Company’s U.S. insurance subsidiaries prepare financial statements in accordance with statutory accounting practices prescribed or permitted by the insurance department of each subsidiary's state of domicile, which include certain components of the NAIC Statutory Accounting Principles ("SAP"). NAIC SAP is intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting practices continue to be established by individual state laws and permitted practices. Modifications by the various state insurance departments may impact the statutory capital and surplus of our insurance subsidiaries.
Statutory accounting differs from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefits liabilities using different actuarial assumptions, and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus.
Our U.S. insurance subsidiaries are subject to certain Risk Based Capital (“RBC”) requirements as defined by the NAIC. RBC requirements require a certain amount of capital and surplus to be maintained based upon various risk factors of the insurance company. Our insurance subsidiaries met the minimum regulatory requirements.
Bermuda Statutory Requirements
The Company’s Bermuda-domiciled insurance subsidiary, Freestone Re Ltd., is licensed by the Bermuda Monetary Authority (“BMA”). AEL Re Bermuda was a licensed Bermuda-domiciled insurance subsidiary until its deregistration, effective December 31, 2024, following the recapture of the North End Re reinsurance treaty. Freestone prepares statutory financial statements that are generally equivalent to GAAP financial statements, with the exception of prudential filters, which include adjustments to eliminate assets non-admissible for solvency purposes, and permitted practices granted by the BMA.
Freestone is subject to the Insurance Act 1978, as amended (the “Bermuda Insurance Act”). Under the Bermuda Insurance Act, Freestone is required to maintain minimum statutory capital and surplus equal to the greater of a minimum solvency margin and the enhanced capital requirement as determined by the BMA. Freestone met the minimum solvency and minimum liquidity regulatory requirements, which include the Enhanced Capital Requirement (“ECR”), calculated based on the Bermuda Solvency Capital Requirement (“BSCR”) model, which is a risk-based model that takes into account the risk characteristics of different aspects of the insurance company’s business.
Statutory Financial Information
The statutory capital and surplus and statutory net income (loss) of our primary insurance entities in accordance with statutory accounting practices are shown below:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Statutory capital and surplus: | | | |
| American Equity Investment Life Insurance Company (1) | $ | 2,761 | | | $ | 3,214 | |
| American National’s U.S. life insurance entities (2) | 2,809 | | | 2,652 | |
| Freestone Re Ltd. | 2,634 | | | 1,345 | |
| | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | | |
| 2025 | | 2024 | | 2023 | | | |
| (Dollars in millions) |
| Statutory net income (loss): | | | | | | | | |
| American Equity Investment Life Insurance Company (3) | $ | 12 | | | $ | (747) | | | $ | — | | | | |
| American National’s U.S. life insurance entities (2) | 71 | | | (185) | | | (355) | | | | |
| Freestone Re Ltd. | 1,069 | | | 625 | | | 150 | | | | |
(1)American Equity Investment Life Insurance Company’s statutory capital and surplus incorporates its investment in other insurance company subsidiaries including Eagle Life Insurance Company, American Equity Investment Life Insurance Company of New York, AEL Re Vermont, and AEL Re Vermont II.
(2)American National’s U.S. life insurance entities include American National Insurance Company, American National Life Insurance Company of New York, Garden State Life Insurance Company, and American National Life Insurance Company of Texas.
(3)American Equity Investment Life Insurance Company’s statutory net income (loss) for the year ended December 31, 2023 is not provided as the Company acquired AEL on May 2, 2024. Statutory net income (loss) for the year ended December 31, 2024 presented above represent earnings reported to its regulator and are inclusive of earnings prior to the Company’s acquisition of AEL.
Prescribed and Permitted Statutory Accounting Practices
American Equity Investment Life Insurance Company (“AEILIC”) is domiciled in the State of Iowa and is regulated by the Iowa Insurance Division (“IID”). AEILIC uses certain statutory accounting practices prescribed by the IID. AEILIC uses a prescribed practice which allows for call option derivatives instruments hedging the interest credited on fixed indexed annuities to be recorded at amortized cost and the related fixed index annuity reserve to be valued using an assumption that the market value of the call options associated with the current index crediting term is zero. The use of this prescribed practice resulted in lower statutory capital and surplus of $140 million as of December 31, 2025. AEILIC also uses a prescribed practice which defines the mortality table allowed for determining the minimum standard of valuation of reserve liabilities for annuities. The use of this prescribed practice resulted in higher statutory capital and surplus of $48 million as of December 31, 2025. The statutory capital and surplus of AEILIC would have remained above the authorized control level RBC had it not used these prescribed practices.
AEILIC cedes certain lifetime income benefit rider payments in excess of PAB to three captive insurers in Vermont, AEL Re Vermont, AEL Re Vermont II and AEL Re Vermont III. The Vermont subsidiaries have been granted permitted practices from the Vermont Department to recognize, as an admitted asset, an excess of loss reinsurance agreement with a third-party which reinsures the lifetime income benefit rider payments in excess of policyholder fund values upon exhaustion of a funds withheld account balance. The permitted practice increased the statutory capital of these Vermont subsidiaries by $6.5 billion at December 31, 2025. Without such permitted practices, the risk based capital at the Vermont entities would fall below the minimum regulatory requirements.
Effective September 30, 2025, ANICO entered into an excess of loss reinsurance agreement (“the ANICO XOL treaty”) with Hannover Life Reassurance Company of America (Bermuda) Ltd., a third-party reinsurance group to reinsure aggregate claims incurred during the agreement term associated with a closed block of life insurance policies exceeding an attachment point as defined in the agreement. ANICO is permitted, by the Texas Department of Insurance, to carry the ANICO XOL treaty as an admitted asset which increased the statutory capital and surplus of ANICO by $370 million at December 31, 2025. The statutory capital and surplus of ANICO would have remained above authorized control level RBC had it not used the permitted practice.
Statutory Dividend Restrictions
The ability of the Company’s insurance subsidiaries to pay dividends, or other distributions, to their parent companies (and ultimately the Company) is subject to certain restrictions imposed by the jurisdictions of domicile that regulate these insurance subsidiaries, and each jurisdiction typically has calculations for the amount of dividends that an insurance company can pay without the prior approval of the insurance regulatory authorities.
The following provides a summary of statutory restrictions on the payment of dividends for the Company’s insurance subsidiaries in various jurisdictions:
U.S. insurance entities – Various state insurance laws restrict the amount that may be transferred to the parent company by its insurance subsidiaries in the form of dividends without prior approval of the insurance regulatory authorities. These restrictions are based, in part, on the prior year’s statutory income and surplus. In general, dividends up to specified levels are considered ordinary and may be paid without prior regulatory approval. Dividends in larger amounts, or extraordinary dividends, are subject to the approval by the insurance commissioner of the applicable state of domicile.
The following are dividend restrictions applicable to the Company’s primary U.S. insurance subsidiaries:
•AEILIC is permitted without prior approval of the Iowa Insurance Division to pay total dividends of up to $276 million during 2026; and
•ANICO is permitted without prior approval of the Texas Department of Insurance to pay total dividends of up to $242 million during 2026.
Bermuda insurance entities – Under the Bermuda Insurance Act, Bermuda insurance entities are generally prohibited from declaring or paying, in any financial year, dividends of more than 25% of its prior financial year’s total statutory capital and surplus unless it files with the BMA an affidavit signed by at least two directors and the principal representative in Bermuda stating that it will continue to meet its relevant margins. The maximum amount available for payment of dividends without prior regulatory approval during 2026 is $659 million for Freestone Re Ltd.
25. Related Party Transactions
The Company has entered into recurring transactions and agreements with certain related parties. The impact on the Consolidated Financial Statements of significant related party transactions is discussed below.
Investment Management
For the years ended December 31, 2025, 2024, and 2023, the Company paid investment management fees pursuant to investment management agreements with an affiliate of BAM of $220 million, $112 million, and $43 million, respectively. The Company had $57 million and $44 million of investment management fees payable to an affiliate of BAM as of December 31, 2025 and 2024, respectively, which are included in “Due to related parties” on the Consolidated Statements of Financial Position.
Reinsurance Agreements
AEILIC had a coinsurance agreement with North End Re (Cayman) SPC, a wholly-owned subsidiary Brookfield Wealth Solutions, to reinsure a portion of fixed indexed annuity product liabilities, 70% on a Modco basis and 30% on a coinsurance basis. AEILIC and North End Re entered into a recapture agreement which terminated this coinsurance agreement, effective December 1, 2024. See Note 12 - Reinsurance for the impacts of the recapture agreement.
Other Related Party Transactions
As of December 31, 2025 and 2024, we held investments in related parties of $9.6 billion and $7.1 billion, respectively, not including equity method investments. See Note 8 - Variable Interest Entities and Equity Method Investments for details on our equity method investments. Our investments in related parties as of December 31, 2025 include approximately $4.2 billion of private loans with subsidiaries of Brookfield Corporation. The Company’s investments in related parties are net of maturities, prepayments and sales that occurred during the year and reflect any other changes in carrying values during the year, such as fair value changes for investments carried at fair value.
Our investment transactions with related parties for the year ended December 31, 2025 include approximately $322 million of financing provided to a subsidiary of Brookfield Renewable Partners L.P. Investment transactions with related parties are accounted for in the same manner as those with unrelated parties in the financial statements except for certain transactions with counterparties under common control.
Subsidiaries of the Company had demand deposit agreements with Brookfield Treasury Management Inc. (“BTMI”), a subsidiary of Brookfield Corporation and BAMR US Holdings LLC (“BAMR”), an indirect wholly-owned subsidiary of Brookfield Wealth Solutions. As of December 31, 2025 and 2024, the balance under the BTMI agreement was $265 million and $254 million, respectively. The balance outstanding under the agreement with BAMR at December 31, 2025 and 2024 was $532 million and $464 million, respectively. These amounts are included in “Cash and cash equivalents” in the Company's Consolidated Statements of Financial Position. For the years ended December 31, 2025, 2024, and 2023, the Company earned interest income from these agreements of $32 million, $43 million, and $33 million, respectively.
26. Segment Reporting
Management organizes the business into two reporting segments:
–Annuities - consists of fixed, fixed index, and variable annuity products, as well as PRT contracts and funding agreements. Products are primarily sold through independent agents, brokers, and financial institutions, along with multiple-line and career agents.
–Life Insurance - consists primarily of whole, term, universal, indexed and variable life insurance sold through career, multiple-line, and independent agents as well as direct marketing channels. American National ceased selling new life insurance policies through its multiple-line and independent agent distribution channels effective May 31, 2025. American National continues to sell certain life insurance products through its career agent distribution channel.
Corporate and other consists of net investment income from investments and certain expenses not allocated to the insurance segments and revenues and related expenses from non-insurance operations.
Prior to October 1, 2025, the Company was organized into three segments, annuities, life insurance, and property and casualty. As discussed in Note 28 - Discontinued Operations, the Company completed the transfer of the P&C Subsidiaries on October 1, 2025. The transfer represented a strategic shift for ANGI and accordingly, the property and casualty segment is no longer a segment. The prior period disclosures below have been recast to present segment information on a comparative basis.
These segments are regularly reviewed by the Company’s chief operating decision maker (“CODM”) for the purpose of allocating resources to the segment and to assess its performance. The Company’s CODM has been identified as the Brookfield Wealth Solutions Chief Executive Officer and the Brookfield Wealth Solutions Chief Financial Officer.
The key measure used by the CODM in assessing performance and in making resource allocation decisions is Distributable Operating Earnings (“DOE”). DOE provides the CODM with insights on capital allocation and investment strategies, as well as product mix and pricing of insurance products offered by the Annuities and Life Insurance segments.
DOE is calculated as net income after applicable taxes excluding the impact of depreciation and amortization, deferred income taxes related to basis and other changes, and breakage and transaction costs, as well as certain investment and insurance reserve gains and losses, including gains and losses related to asset and liability matching strategies, non-operating adjustments related to changes in cash flow assumptions for future policy benefits, change in the fair value of embedded derivatives, and change in market risk benefits, and is inclusive of returns on equity invested in certain variable interest entities and the Company’s share of adjusted earnings from investments in certain associates. DOE allows the CODM to evaluate the Company’s segments on the basis of return on invested capital generated by its operations and allows the Company to evaluate the performance of its segments.
The tables below provide each segment’s results in the format that the CODM reviews its reporting segments to make decisions and assess performance.
| | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2025 |
| Annuities | | | | Life
Insurance | | Total |
| (Dollars in millions) |
| Net premiums and other policy related revenues | $ | 2,091 | | | | | $ | 396 | | | |
| Net investment income, including reinsurance funds withheld | 5,107 | | | | | 207 | | | |
| Segment revenues (1)(2) | 7,198 | | | | | 603 | | | $ | 7,801 | |
| Policyholder benefits, net | 1,787 | | | | | 340 | | | |
| Interest sensitive contract benefits, excluding index credits | 2,011 | | | | | 6 | | | |
| Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired | 915 | | | | | 38 | | | |
| Other insurance and reinsurance expenses (3) | 407 | | | | | — | | | |
| Operating expenses, excluding transactions costs | 481 | | | | | 66 | | | |
| | | | | | | |
| | | | | | | |
| Segment DOE | $ | 1,597 | | | | | $ | 153 | | | 1,750 | |
| Corporate and other DOE | | | | | | | (400) | |
| Depreciation and amortization expenses | | | | | | | (170) | |
| Deferred income tax recovery (expense) relating to basis and other changes | | | | | | | 343 | |
| Transaction costs | | | | | | | (54) | |
| Mark-to-market gains (losses) on investments, including reinsurance funds withheld | | | | | | | (459) | |
| Mark-to-market gains (losses) on insurance contracts and other net assets | | | | | | | (667) | |
Income from continuing operations (4) | | | | | | | $ | 343 | |
| | | | | | | |
| Year Ended December 31, 2024 |
| Annuities | | | | Life
Insurance | | Total |
| (Dollars in millions) |
| Net premiums and other policy related revenues | $ | 3,681 | | | | | $ | 657 | | | |
| Net investment income, including reinsurance funds withheld | 3,139 | | | | | 362 | | | |
| Segment revenues (1)(2) | 6,820 | | | | | 1,019 | | | $ | 7,839 | |
| Policyholder benefits, net | 3,559 | | | | | 493 | | | |
| Interest sensitive contract benefits, excluding index credits | 1,208 | | | | | 53 | | | |
| Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired | 486 | | | | | 48 | | | |
| Other insurance and reinsurance expenses (3) | 157 | | | | | — | | | |
| Operating expenses, excluding transactions costs | 265 | | | | | 219 | | | |
| | | | | | | |
| Income tax expense (recovery), net | 72 | | | | | 12 | | | |
| Segment DOE | $ | 1,073 | | | | | $ | 194 | | | 1,267 | |
| Corporate and other DOE | | | | | | | (172) | |
| Depreciation and amortization expenses | | | | | | | (76) | |
| Deferred income tax recovery (expense) relating to basis and other changes | | | | | | | 366 | |
| Transaction costs | | | | | | | (189) | |
| Mark-to-market gains (losses) on investments, including reinsurance funds withheld | | | | | | | (444) | |
| Mark-to-market gains (losses) on insurance contracts and other net assets | | | | | | | (167) | |
Income from continuing operations (4) | | | | | | | $ | 585 | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2023 |
| Annuities | | | | Life
Insurance | | Total |
| (Dollars in millions) |
| Net premiums and other policy related revenues | $ | 1,052 | | | | | $ | 876 | | | |
| Net investment income, including reinsurance funds withheld | 983 | | | | | 281 | | | |
| Segment revenues (1)(2) | 2,035 | | | | | 1,157 | | | $ | 3,192 | |
| Policyholder benefits, net | 1,118 | | | | | 622 | | | |
| Interest sensitive contract benefits, excluding index credits | 455 | | | | | 66 | | | |
| Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired | 20 | | | | | 44 | | | |
| Other insurance and reinsurance expenses (3) | (30) | | | | | — | | | |
| Operating expenses, excluding transactions costs | 80 | | | | | 222 | | | |
| | | | | | | |
| Income tax expense (recovery), net | (8) | | | | | 5 | | | |
| Segment DOE | $ | 400 | | | | | $ | 198 | | | 598 | |
| Corporate and other DOE | | | | | | | 2 | |
| Depreciation and amortization expenses | | | | | | | (19) | |
| Deferred income tax recovery (expense) relating to basis and other changes | | | | | | | (50) | |
| Transaction costs | | | | | | | (12) | |
| Mark-to-market gains (losses) on investments, including reinsurance funds withheld | | | | | | | (139) | |
| Mark-to-market gains (losses) on insurance contracts and other net assets | | | | | | | 24 | |
Income from continuing operations (4) | | | | | | | $ | 404 | |
(1)For the years ended December 31, 2025, 2024 and 2023 there were no material intersegment revenues.
(2)Our consolidated revenues in the Consolidated Statements of Operations principally represent the sum of “Segment revenues” and “Mark-to-market gains (losses) on investments, including reinsurance funds withheld” in the tables above.
(3)“Other insurance and reinsurance expenses” primarily represent “Change in fair value of market risk benefits” excluding the effect of changes in market risks (e.g., interest rates, equity markets and equity index volatility), net of reinsurance. See Note 19 - Market Risk Benefits for the details of market risk benefits.
(4)Income from continuing operations is net income attributable to American National Group Inc. common stockholder less income (loss) from discontinuing operations, net of tax.
The Company’s Annuities segment offers annuity-based products to individuals and institutions. Total premium revenues recorded within Annuities segment for the years ended December 31, 2025, 2024 and 2023 were primarily from PRT transactions with institutions in the United States and United Kingdom. Premiums received from retail annuities are generally recorded as deposits and are not included in net premiums.
The Company’s Life Insurance business is principally provided by American National. Total premium revenues recorded within this segment for the years ended December 31, 2025, 2024 and 2023 were primarily from transactions with U.S. retail customers.
In addition to DOE, the CODM also monitors the assets, including investments accounted for using the equity method, liabilities and equity attributable to each segment.
| | | | | | | | | | | | | | | | | | | |
| Annuities | | | | Life
Insurance | | Total (1) |
| (Dollars in millions) |
As of December 31, 2025 | | | | | | | |
| Assets | $ | 118,834 | | | | | $ | 8,872 | | | $ | 127,706 | |
| Liabilities | 108,829 | | | | | 8,016 | | | 116,845 | |
| Equity | 10,005 | | | | | 856 | | | 10,861 | |
| | | | | | | |
As of December 31, 2024 | | | | | | | |
| Assets | $ | 107,208 | | | | | $ | 9,232 | | | $ | 116,440 | |
| Liabilities | 98,851 | | | | | 6,396 | | | 105,247 | |
| Equity | 8,357 | | | | | 2,836 | | | 11,193 | |
(1)Table excludes amounts related to Corporate and other which is not a reportable segment for ANGI.
A subsidiary of American National held $1.4 billion and $1.3 billion of assets pledged under a coinsurance reinsurance agreement with a customer domiciled in the United Kingdom as of December 31, 2025 and 2024, respectively. There were no other material assets held in jurisdictions outside of the United States as of December 31, 2025 and 2024.
A subsidiary of American National generated $1.3 billion of revenue from a transaction with a customer domiciled in the United Kingdom during the year ended December 31, 2024. See Note 12 - Reinsurance for the details. Other than that transaction, there was no material revenue generated in jurisdictions outside of the United States for the years ended December 31, 2025, 2024 and 2023.
27. Financial Commitments and Contingencies
Commitments
As of December 31, 2025, the Company and its subsidiaries, in aggregate, had outstanding unfunded commitments to purchase, expand or improve real estate and to fund mortgage loans, private loans and investment funds of $4.9 billion.
The Company’s subsidiaries lease office space, technological equipment and automobiles. The remaining long-term lease commitments as of December 31, 2025 were approximately $109 million and are included in the Company’s Consolidated Statements of Financial Position within “Other liabilities”.
Federal Home Loan Bank Agreements
Certain of the Company’s subsidiaries have access to the FHLB’s financial services including advances that provide an attractive funding source for short-term borrowing and for access to other funding agreements. As of December 31, 2025, certain municipal bonds and collateralized mortgage obligations with a fair value of approximately $793 million and commercial mortgage loans of approximately $1.1 billion were on deposit with the FHLB as collateral for borrowing. As of December 31, 2025, the collateral provided borrowing capacity of approximately $1.5 billion. The deposited securities and commercial mortgage loans are included in the Consolidated Statements of Financial Position within “Available-for-sale fixed maturity securities” and “Mortgage loans on real estate”, respectively.
Funding Agreements
Starting in 2025, we have a funding agreement-backed note (“FABN”) program under which a subsidiary of the Company (a statutory trust that is not consolidated or affiliated with us) issues its senior secured medium-term notes. The FABN notes are underwritten and marketed by major investment banks’ broker-dealer operations and are sold to institutional investors for the purposes of generating a spread-based return. As of December 31, 2025, we had $1.5 billion outstanding under the FABN program. The maximum aggregate principal amount permitted to be outstanding at any one time is $4.0 billion. In addition, we had $0.8 billion outstanding under other funding agreements at December 31, 2025.
Litigation
Certain of the Company’s subsidiaries are defendants in various lawsuits concerning alleged breaches of contracts, various employment matters, allegedly deceptive insurance sales and marketing practices, and miscellaneous other causes of action arising in the ordinary course of operations. Certain lawsuits include claims for compensatory and punitive damages. The Company provide accruals for these items to the extent it deems the losses probable and reasonably estimable. After reviewing these matters with legal counsel, based upon information presently available, management is of the opinion that the ultimate resultant liability, if any, would not have a material adverse effect on the statements of financial position, liquidity or results of operations; however, assessing the eventual outcome of litigation necessarily involves forward-looking speculation as to judgments to be made by judges, juries and appellate courts in the future.
Such speculation warrants caution, as the frequency of large damage awards, which bear little or no relation to the economic damages incurred by plaintiffs in some jurisdictions, continues to create the potential for an unpredictable judgment in any given lawsuit. These lawsuits are in various stages of development, and future facts and circumstances could result in management changing its conclusions. It is possible that, if the defenses in these lawsuits are not successful, and the judgments are greater than management can anticipate, the resulting liability could have a material impact on the Company’s financial position, liquidity, or results of operations. With respect to the existing litigation, management currently believes that the possibility of a material judgment adverse to the Company is remote. Accruals for losses are established whenever they are probable and reasonably estimable. If no one estimate within the range of possible losses is more probable than any other, an accrual is recorded based on the lowest amount of the range.
28. Discontinued Operations
As discussed in Note 1 - Organization and Description of the Company, the Company completed the transfer of the P&C Subsidiaries on October 1, 2025. The results of the P&C Subsidiaries have been presented as discontinued operations as the transfer represented a strategic shift for ANGI. The transfer of the P&C Subsidiaries resulted in the removal of the P&C segment which is further discussed in Note 26 - Segment Reporting.
The following table summarizes the carrying values of major categories of assets and liabilities classified as held for disposal related to the distribution in the accompanying Consolidated Statements of Financial Position for the year ended December 31, 2024.
| | | | | | | |
| | | December 31, |
| | | 2024 |
| | | (Dollars in millions) |
| Assets | | | |
| Investments | | | $ | 2,794 | |
| Cash and cash equivalents | | | 463 | |
| Accrued investment income | | | 25 | |
| Deferred policy acquisition costs, deferred sales inducements and value of business acquired | | | 127 | |
| Premiums due and other receivables | | | 424 | |
| Ceded unearned premiums | | | 147 | |
| Deferred tax asset | | | 34 | |
| Reinsurance recoverables and deposit assets | | | 193 | |
Property and equipment (net of accumulated depreciation of $26) | | | 21 | |
Intangible assets (net of accumulated amortization of $0) | | | 19 | |
| Goodwill | | | 35 | |
| Other assets | | | 126 | |
| | | |
| | | |
| Total assets related to discontinued operations | | | $ | 4,408 | |
| | | |
| Liabilities | | | |
| Policy and contract claims | | | $ | 1,471 | |
| Unearned premium reserve | | | 1,016 | |
| Due to related parties | | | 3 | |
| Other policyholder funds | | | 7 | |
| Other liabilities | | | 248 | |
| Total liabilities related to discontinued operations | | | $ | 2,745 | |
The following table summarizes the major components of net income (loss) from discontinued operations, net of tax related to the distribution, for the years ended December 31, 2025, 2024 and 2023.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Net premiums | $ | 1,189 | | | $ | 1,840 | | | $ | 1,852 | |
| Net investment income | 88 | | | 147 | | | 148 | |
| Investment related gains (losses) | 112 | | | (13) | | | 1 | |
| Other income | 6 | | | 10 | | | 9 | |
| Total revenues | 1,395 | | | 1,984 | | | 2,010 | |
| | | | | |
| Policyholder benefits and claims incurred | 861 | | | 1,313 | | | 1,434 | |
| Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired | 243 | | | 352 | | | 413 | |
| Operating expenses | 137 | | | 179 | | | 171 | |
| Total benefits and expenses | 1,241 | | | 1,844 | | | 2,018 | |
| | | | | |
| Net income (loss) before income taxes from discontinued operations | 154 | | | 140 | | | (8) | |
| Income tax expense | 28 | | | 29 | | | 4 | |
| Net income (loss) from discontinued operations | $ | 126 | | | $ | 111 | | | $ | (12) | |
29. Subsequent Events
The Company evaluated all events and transactions through March 30, 2026, the date the accompanying consolidated financial statements were issued.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
Schedule I - Summary of Investments, Other Than Investments in Related Parties
December 31, 2025
The financial information required under Schedule I is included within the Company’s Consolidated Statements of Financial Position and Note 3 - Available-For-Sale Fixed Maturity Securities, Note 4 - Equity Securities, Note 5 - Mortgage Loans on Real Estate, Note 6 - Private Loans, Note 7 - Real Estate and Real Estate Partnerships, Note 11 - Fair Value of Financial Instruments, and Note 25 - Related Party Transactions within the Notes to the consolidated financial statements.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
Schedule II - Condensed Financial Information of Registrant
| | | | | | | | | | | |
| Condensed Statements of Financial Position (Parent Company Only) |
| | | |
| December 31, |
| 2025 | | 2024 |
| (Dollars in millions) |
| Assets | | | |
| Available-for-sale fixed maturity securities | $ | 254 | | | $ | — | |
| Equity securities | 241 | | | 657 | |
| Short-term investments | 163 | | | — | |
| Cash and cash equivalents | 553 | | | 315 | |
| Investments in subsidiaries | 12,380 | | | 13,184 | |
| Due from related party | 101 | | | 1,848 | |
| Other assets | 245 | | | 142 | |
| Total assets | $ | 13,937 | | | $ | 16,146 | |
| | | |
| Liabilities | | | |
| Long-term debt | $ | 2,951 | | | $ | 2,957 | |
| Accounts payable and accrued liabilities | 29 | | | 12 | |
| Due to related party | 1,330 | | | 3,180 | |
| Other liabilities | 78 | | | 47 | |
| Total liabilities | 4,388 | | | 6,196 | |
| | | |
| Equity | | | |
| Preferred stock, Series A | — | | | 389 | |
| Preferred stock, Series B | — | | | 296 | |
| Preferred stock, Series D | 292 | | | — | |
| Additional paid-in capital | 6,690 | | | 8,103 | |
| Accumulated other comprehensive income (loss), net of taxes | (166) | | | (118) | |
| Retained earnings | 2,733 | | | 1,280 | |
| | | |
| Total equity | 9,549 | | | 9,950 | |
| Total liabilities and equity | $ | 13,937 | | | $ | 16,146 | |
| | | | | | | | | | | | | | | | | |
| Condensed Statements of Comprehensive Income (Parent Company Only) | | | | | |
| | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Net investment income | $ | 115 | | | $ | 253 | | | $ | 23 | |
| Net gains (losses) on equity securities | 51 | | | (44) | | | 1 | |
| Operating expenses | (9) | | | (136) | | | (114) | |
| Interest expense | (304) | | | (240) | | | — | |
| Income tax benefit | 73 | | | 64 | | | 25 | |
| Income from subsidiaries, net of tax | 607 | | | 832 | | | 457 | |
| Net income attributable to American National Group Inc. stockholders | 533 | | | 729 | | | 392 | |
| | | | | |
| Less: Preferred stock dividends | 64 | | | 33 | | | — | |
| Net income attributable to American National Group Inc. common stockholder | $ | 469 | | | $ | 696 | | | $ | 392 | |
| | | | | |
| Net income attributable to American National Group Inc. stockholders | $ | 533 | | | $ | 729 | | | $ | 392 | |
| Other comprehensive income from subsidiaries | 743 | | | 443 | | | 339 | |
| | | | | |
| Total comprehensive income attributable to American National Group Inc. stockholders | $ | 1,276 | | | $ | 1,172 | | | $ | 731 | |
The accompanying notes are an integral part of the combined financial information.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
Schedule II - Condensed Financial Information of Registrant
| | | | | | | | | | | | | | | | | |
| Condensed Statements of Cash Flows (Parent Company Only) | | | | | |
| | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| (Dollars in millions) |
| Operating activities: | | | | | |
| Net income | $ | 533 | | | $ | 729 | | | $ | 392 | |
| Adjustments to reconcile net income to net cash provided by operating activities | | | | | |
| Net gains (losses) on equity securities | (51) | | | 1 | | | (1) | |
| Deferred federal income tax expense (benefit) | (6) | | | 270 | | | (11) | |
| Equity in earnings of subsidiaries | (607) | | | (832) | | | (457) | |
| Dividends from subsidiaries | 812 | | | 257 | | | 557 | |
| Changes in: | | | | | |
| Changes in working capital | (65) | | | 23 | | | — | |
| Current tax receivable/payable | (1) | | | (323) | | | — | |
| Other, net | (158) | | | (34) | | | 2 | |
| Net cash provided by operating activities | 457 | | | 91 | | | 482 | |
| | | | | |
| Investing activities: | | | | | |
| Investments in subsidiaries | (150) | | | (1,871) | | | (78) | |
| | | | | |
| Change in short-term investments | 1 | | | — | | | 15 | |
| Net cash used in investing activities | (149) | | | (1,871) | | | (63) | |
| | | | | |
| Financing activities: | | | | | |
| Issuance of preferred equity | 292 | | | — | | | — | |
| Redemption of preferred equity | (685) | | | — | | | — | |
| Capital contributions from common stockholder | 400 | | | — | | | — | |
| Borrowings from related parties | — | | | 1,300 | | | — | |
| Borrowings from external parties | 1,200 | | | 2,500 | | | — | |
| Repayment of borrowings to external parties | (1,200) | | | (1,900) | | | — | |
| Debt issuance costs | (13) | | | (4) | | | — | |
| Dividends paid to stockholders | (64) | | | (105) | | | (750) | |
| Net cash provided by (used in) financing activities | (70) | | | 1,791 | | | (750) | |
| | | | | |
| Cash and cash equivalents | | | | | |
| Cash and cash equivalents, beginning of period | 315 | | | 304 | | | 635 | |
| Net change during the period | 238 | | | 11 | | | (331) | |
| Cash and cash equivalents, end of period | $ | 553 | | | $ | 315 | | | $ | 304 | |
| | | | | |
| Supplemental cash flow information | | | | | |
| Equity contribution and invested assets received | $ | 30 | | | $ | — | | | $ | 2,130 | |
| Investment in subsidiaries contribution | (30) | | | — | | | (1,231) | |
The accompanying notes are an integral part of the combined financial information.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
Schedule II - Condensed Financial Information of Registrant
Notes to the Condensed Financial Information of Registrant (Parent Company Only)
1. Basis of Presentation
These condensed financial statements of American National Group Inc. (the “Parent Company”) should be read in conjunction with the consolidated financial statements and notes thereto of the Parent Company and its subsidiaries.
All operating activities of the Parent Company are conducted by its operating subsidiaries. The Parent Company is a holding company that does not conduct any substantive business operations and does not have any assets other than available-for-sale fixed maturity securities, equity securities, short-term investments, cash and cash equivalents, investments in its subsidiaries, due from related party, and other assets. The operating subsidiaries are regulated insurance companies and therefore have restrictions on the ability to pay dividends, loan funds and make other upstream distributions to the Parent Company without prior approval by local regulators.
For the purposes of these condensed financial statements, the Parent Company’s wholly-owned subsidiaries are presented under the equity method of accounting. Under this method, the assets and liabilities of subsidiaries are not consolidated. The investments in subsidiaries are recorded on the condensed statements of financial position. The earnings of its subsidiaries are reported on a net basis as income (loss) of equity method investments on the condensed statements of comprehensive income (loss).
During the years ended December 31, 2025, 2024 and 2023, the Parent Company received dividends from subsidiaries of $842 million, $257 million, and $557 million respectively. See Note 24 - Statutory Financial Information and Dividend Restrictions to the consolidated financial statements for additional information on subsidiary dividend restrictions.
2. Commitments and Contingencies
See Note 20 - Long Term Borrowings to our audited consolidated financial statements in this Form 10-K for a description of the Parent Company's notes payable and subordinated debentures payable to subsidiary trusts.
The Parent Company had no other material commitments or contingencies during the reported periods.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES |
|
| Schedule III—Supplementary Insurance Information |
| | | | | | | | | | | | | | | | | | | |
| DAC, DSI
and VOBA | | FPB, PAB,
policy and
contract claims,
deposit liabilities
and MRB (1) | | Unearned
premiums | | Other policy
claims and
benefits
payable (2) | | Premium
revenue (5) | | Net
investment
income | | Policyholder
benefits and
claims incurred,
interest sensitive
contract benefits
and change in
fair value
of MRB (3) | | Amortization
of DAC, DSI
and VOBA | | Other
operating
expenses | | Net
premiums
written |
| (Dollars in millions) |
| Year Ended December 31, 2025 | | | | | | | | | | | | | | | | | | | |
| Annuities | $ | 11,075 | | | $ | 102,937 | | | $ | — | | | $ | 19 | | | $ | 2,105 | | | $ | 4,619 | | | $ | 4,618 | | | $ | 970 | | | $ | 607 | | | $ | — | |
| Life Insurance | 438 | | | 5,963 | | | 3 | | | 46 | | | 302 | | | 187 | | | 343 | | | 38 | | | 63 | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total (4) | $ | 11,513 | | | $ | 108,900 | | | $ | 3 | | | $ | 65 | | | $ | 2,407 | | | $ | 4,806 | | | $ | 4,961 | | | $ | 1,008 | | | $ | 670 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2024 | | | | | | | | | | | | | | | | | | | |
| Annuities | $ | 10,133 | | | $ | 90,612 | | | $ | — | | | $ | 11 | | | $ | 3,713 | | | $ | 3,092 | | | $ | 5,157 | | | $ | 549 | | | $ | 321 | | | $ | — | |
| Life Insurance | 371 | | | 5,688 | | | — | | | — | | | 623 | | | 301 | | | 633 | | | 38 | | | 224 | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total (4) | $ | 10,504 | | | $ | 96,300 | | | $ | — | | | $ | 11 | | | $ | 4,336 | | | $ | 3,393 | | | $ | 5,790 | | | $ | 587 | | | $ | 545 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2023 | | | | | | | | | | | | | | | | | | | |
| Annuities | $ | 280 | | | $ | 17,886 | | | $ | — | | | $ | 50 | | | $ | 1,283 | | | $ | 872 | | | $ | 1,551 | | | $ | 73 | | | $ | 142 | | | $ | — | |
| Life Insurance | 523 | | | 5,885 | | | — | | | — | | | 800 | | | 324 | | | 715 | | | 39 | | | 224 | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total (4) | $ | 803 | | | $ | 23,771 | | | $ | — | | | $ | 50 | | | $ | 2,083 | | | $ | 1,196 | | | $ | 2,266 | | | $ | 112 | | | $ | 366 | | | $ | — | |
(1)Represents policyholders’ account balances, future policy benefits, policy and contract claims, and market risk benefits on the Consolidated Statements of Financial Position.
(2)Included in “Other liabilities” on the Consolidated Statements of Financial Position.
(3)Represents interest sensitive contract benefits, future policy and other policy benefits and market risk benefits remeasurement (gains) losses on the Consolidated Statements of Operations.
(4)Excludes amounts attributable to Corporate and Other which is not a reportable segment for ANGI.
(5)Represents net premiums and other policy revenue on the Consolidated Statements of Operations.
See accompanying Report of Independent Registered Public Accounting Firm.
AMERICAN NATIONAL GROUP INC. AND SUBSIDIARIES
Schedule IV—Reinsurance
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross
Amount | | Ceded to
Other
Companies | | Assumed
From
Other
Companies | | Net
Amount | | Percent of
Amount
Assumed
to Net |
| (Dollars in millions) | | |
| December 31, 2025 | | | | | | | | | |
| Life insurance in force | $ | 127,280 | | | $ | 105,267 | | | $ | 67 | | | $ | 22,080 | | | 0.3 | % |
| Premiums earned: | | | | | | | | | |
| Life & Annuity | $ | 1,775 | | | $ | 235 | | | $ | 161 | | | $ | 1,701 | | | 9.5 | % |
| Health | 50 | | | 35 | | | — | | | 15 | | | — | % |
| $ | 1,825 | | | $ | 270 | | | $ | 161 | | | $ | 1,716 | | | 9.4 | % |
| | | | | | | | | |
| December 31, 2024 | | | | | | | | | |
| Life insurance in force | $ | 135,195 | | | $ | 109,782 | | | $ | 83 | | | $ | 25,496 | | | 0.3 | % |
| Premiums earned: | | | | | | | | | |
| Life & Annuity | $ | 2,475 | | | $ | 106 | | | $ | 1,291 | | | $ | 3,660 | | | 35.3 | % |
| Health | 89 | | | 247 | | | 177 | | | 19 | | | 931.6 | % |
| $ | 2,564 | | | $ | 353 | | | $ | 1,468 | | | $ | 3,679 | | | 39.9 | % |
| | | | | | | | | |
| December 31, 2023 | | | | | | | | | |
| Life insurance in force | $ | 139,899 | | | $ | 20,020 | | | $ | 120 | | | $ | 119,999 | | | 0.1 | % |
| Premiums earned: | | | | | | | | | |
| Life & Annuity | $ | 1,534 | | | $ | 134 | | | $ | 196 | | | $ | 1,596 | | | 12.3 | % |
| Health | 163 | | | 510 | | | 420 | | | 73 | | | 575.3 | % |
| $ | 1,697 | | | $ | 644 | | | $ | 616 | | | $ | 1,669 | | | 36.9 | % |
See accompanying Report of Independent Registered Public Accounting Firm.
F-79