0000898174srt:OtherPropertyMember2022-12-31
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
(Mark One)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-11848
REINSURANCE GROUP OF AMERICA, INCORPORATED
(Exact name of Registrant as specified in its charter)
MISSOURI                        Missouri43-1627032
(State or other jurisdiction                  (IRS employer
of incorporation or organization)  identification number)
16600 Swingley Ridge Road
Chesterfield, Missouri 63017
(Address of principal executive offices)
(636) 736-7000
(Registrant’s telephone number, including area code)
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x     Accelerated filer o     Non-accelerated filer o
Smaller reporting company o☐     Emerging growth company o☐
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒
Yes o  No xSecurities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01RGANew York Stock Exchange
5.75% Fixed-To-Floating Rate Subordinated Debentures due 2056RZBNew York Stock Exchange
7.125% Fixed Rate Subordinated Debentures due 2052RZCNew York Stock Exchange
As of October 31, 2017, 64,404,061April 30, 2023, 66,542,169 shares of the registrant’s common stock were outstanding.


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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
Item     Page
  PART I – FINANCIAL INFORMATION  
1Financial Statements (Unaudited) as of March 31, 2023 and December 31, 2022 and for the Three Months Ended March 31, 2023 and 2022
    
3
    
4
    
5
6
    
7
  Notes to Condensed Consolidated Financial Statements (Unaudited)  
8
Note 2 Impact of New Accounting Standard
12
24
     Note 4 Equity
24
Note 5 Future Policy Benefits
27
Note 6 Policyholder Account Balances
34
Note 7 Unpaid Claims and Claim Expense – Short-Duration Contracts
36
Note 8 Market Risk Benefits
37
Note 9 Deferred Policy Acquisition Costs
38
Note 10 Reinsurance Ceded Receivables and Other
39
40
49
53
Note 14 Income Tax
58
59
60
61
62
62
2    
63
3    
92
4    
92
  PART II – OTHER INFORMATION  
1    
93
1A    
93
2    
93
6    
93
    
94
95
    
100
Item     Page
   
   PART I – FINANCIAL INFORMATION   
   
1  
Financial Statements
   
   
Condensed Consolidated Balance Sheets (Unaudited)
September 30, 2017 and December 31, 2016
  
3
   
Condensed Consolidated Statements of Income (Unaudited)
Three and nine months ended September 30, 2017 and 2016
  
4
   
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Three and nine months ended September 30, 2017 and 2016
  
5
   
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30, 2017 and 2016
  
6
   
Notes to Condensed Consolidated Financial Statements (Unaudited):
  
7
  
     1. Business and Basis of Presentation
 
7
  
     2. Earnings Per Share
 
7
  
     3. Equity
 
8
  
     4. Investments
 
10
  
     5. Derivative Instruments
 
20
  
     6. Fair Value of Assets and Liabilities
 
28
  
     7. Segment Information
 
43
  
     8. Commitments, Contingencies and Guarantees
 
44
  
     9. Income Tax
 
45
  
     10. Employee Benefit Plans
 
46
  
     11. Reinsurance
 
46
  
     12. New Accounting Standards
 
47
2  
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
  
49
3  
Quantitative and Qualitative Disclosures About Market Risk
  
81
4  
Controls and Procedures
  
82
   
   PART II – OTHER INFORMATION   
   
1  
Legal Proceedings
  
83
1A  
Risk Factors
  
83
2  
Unregistered Sales of Equity Securities and Use of Proceeds
  
83
6  
Exhibits
  
83
   
Signatures
  
85
   
Index to Exhibits
  
84

2
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PART I - – FINANCIAL INFORMATION
ITEM 1. Financial Statements


REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
(Unaudited)
 September 30,
2017		 December 31,
2016
 (Dollars in thousands, except share data)March 31,
2023		December 31,
2022
Assets
    Assets
Fixed maturity securities:    
Available-for-sale at fair value (amortized cost of $33,889,968 and $30,211,787) $36,381,742
 $32,093,625
Mortgage loans on real estate (net of allowances of $9,137 and $7,685) 4,322,329
 3,775,522
Fixed maturity securities available-for-sale, at fair value (amortized cost of $61,494 and $59,663; allowance for credit losses of $79 and $37)Fixed maturity securities available-for-sale, at fair value (amortized cost of $61,494 and $59,663; allowance for credit losses of $79 and $37)$56,085 $52,901 
Equity securities, at fair valueEquity securities, at fair value138 134 
Mortgage loans (net of allowance for credit losses of $48 and $51)Mortgage loans (net of allowance for credit losses of $48 and $51)6,833 6,590 
Policy loans 1,340,146
 1,427,602
Policy loans1,221 1,231 
Funds withheld at interest 6,020,336
 5,875,919
Funds withheld at interest5,976 6,003 
Limited partnerships and real estate joint venturesLimited partnerships and real estate joint ventures2,405 2,327 
Short-term investments 80,582
 76,710
Short-term investments246 154 
Other invested assets 1,532,523
 1,591,940
Other invested assets1,111 1,140 
Total investments 49,677,658
 44,841,318
Total investments74,015 70,480 
Cash and cash equivalents 1,204,590
 1,200,718
Cash and cash equivalents3,294 2,927 
Accrued investment income 420,111
 347,173
Accrued investment income672 630 
Premiums receivable and other reinsurance balances 2,411,777
 1,930,755
Premiums receivable and other reinsurance balances3,114 3,013 
Reinsurance ceded receivables 779,118
 683,972
Reinsurance ceded receivables and otherReinsurance ceded receivables and other2,723 2,671 
Deferred policy acquisition costs 3,315,237
 3,338,605
Deferred policy acquisition costs4,257 4,128 
Other assets 885,540
 755,338
Other assets1,045 1,055 
Total assets $58,694,031
 $53,097,879
Total assets$89,120 $84,904 
Liabilities and Stockholders’ Equity    
Liabilities and equityLiabilities and equity
Future policy benefits $21,084,562
 $19,581,573
Future policy benefits$38,222 $35,689 
Interest-sensitive contract liabilities 16,370,090
 14,029,354
Interest-sensitive contract liabilities30,405 30,342 
Market risk benefits, at fair valueMarket risk benefits, at fair value261 247 
Other policy claims and benefits 4,899,367
 4,263,026
Other policy claims and benefits2,558 2,480 
Other reinsurance balances 415,692
 388,989
Other reinsurance balances851 725 
Deferred income taxes 3,180,545
 2,770,640
Deferred income taxes1,446 1,383 
Other liabilities 1,061,352
 1,041,880
Other liabilities3,206 2,906 
Long-term debt 2,788,480
 3,088,635
Long-term debt4,455 3,961 
Collateral finance and securitization notes 796,825
 840,700
Total liabilities 50,596,913
 46,004,797
Total liabilities81,404 77,733 
Commitments and contingent liabilities (See Note 8) 

 

Stockholders’ Equity:    
Preferred stock - par value $.01 per share, 10,000,000 shares authorized, no shares issued or outstanding —
 —
Common stock - par value $.01 per share, 140,000,000 shares authorized, 79,137,758 shares issued at September 30, 2017 and December 31, 2016 791
 791
Additional paid-in capital 1,865,699
 1,848,611
Commitments and contingent liabilities (See Note 16)Commitments and contingent liabilities (See Note 16)
Equity Equity
Preferred stock – par value $0.01 per share, 10,000,000 shares authorized, no shares issued or outstandingPreferred stock – par value $0.01 per share, 10,000,000 shares authorized, no shares issued or outstanding— — 
Common stock – par value $0.01 per share, 140,000,000 shares authorized, 85,310,598 shares issued at March 31, 2023 and December 31, 2022Common stock – par value $0.01 per share, 140,000,000 shares authorized, 85,310,598 shares issued at March 31, 2023 and December 31, 20221 1 
Additional paid-in-capitalAdditional paid-in-capital2,506 2,502 
Retained earnings 5,712,590
 5,199,130
Retained earnings8,336 8,169 
Treasury stock, at cost - 14,769,487 and 14,835,256 shares (1,107,719) (1,094,779)
Accumulated other comprehensive income 1,625,757
 1,139,329
Total stockholders’ equity 8,097,118
 7,093,082
Treasury stock, at cost – 18,770,132 and 18,634,390 sharesTreasury stock, at cost – 18,770,132 and 18,634,390 shares(1,756)(1,720)
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(1,461)(1,871)
Total RGA, Inc. stockholders’ equityTotal RGA, Inc. stockholders’ equity7,626 7,081 
Noncontrolling interestNoncontrolling interest90 90 
Total equityTotal equity7,716 7,171 
Total liabilities and stockholders’ equity $58,694,031
 $53,097,879
Total liabilities and stockholders’ equity$89,120 $84,904 
See accompanying notes to condensed consolidated financial statements (unaudited).

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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(Unaudited)
 
Three months ended March 31,
 Three months ended September 30, Nine months ended September 30, 20232022
 2017 2016 2017 2016
Revenues: (Dollars in thousands, except per share data)
RevenuesRevenues
Net premiums $2,489,797
 $2,251,758
 $7,335,944
 $6,755,708
Net premiums$3,385 $3,155 
Investment income, net of related expenses 556,918
 489,727
 1,589,820
 1,414,659
Investment related gains (losses), net:        
Other-than-temporary impairments on fixed maturity securities (390) —
 (20,980) (34,663)
Other investment related gains (losses), net 23,043
 86,624
 160,451
 118,665
Total investment related gains (losses), net 22,653
 86,624
 139,471
 84,002
Net investment incomeNet investment income856 810 
Investment related gains (losses), netInvestment related gains (losses), net(77)(139)
Other revenues 75,942
 72,468
 218,091
 197,844
Other revenues87 91 
Total revenues 3,145,310
 2,900,577
 9,283,326
 8,452,213
Total revenues4,251 3,917 
Benefits and Expenses:        
Benefits and expensesBenefits and expenses
Claims and other policy benefits 2,100,680
 1,993,064
 6,371,188
 5,877,330
Claims and other policy benefits3,063 2,871 
Future policy benefits remeasurement (gains) lossesFuture policy benefits remeasurement (gains) losses(26)58 
Market risk benefits remeasurement (gains) lossesMarket risk benefits remeasurement (gains) losses14 (34)
Interest credited 126,099
 116,848
 349,068
 300,602
Interest credited215 141 
Policy acquisition costs and other insurance expenses 365,424
 300,962
 1,064,645
 940,406
Policy acquisition costs and other insurance expenses331 344 
Other operating expenses 168,417
 152,556
 481,279
 469,875
Other operating expenses250 227 
Interest expense 36,836
 43,063
 108,590
 96,201
Interest expense50 42 
Collateral finance and securitization expense 7,692
 6,484
 21,235
 19,396
Collateral finance and securitization expense3 1 
Total benefits and expenses 2,805,148
 2,612,977
 8,396,005
 7,703,810
Total benefits and expenses3,900 3,650 
Income before income taxes
 340,162
 287,600
 887,321
 748,403
Income before income taxes
351 267 
Provision for income taxes 112,571
 88,881
 282,028
 237,109
Provision for income taxes98 70 
Net income $227,591
 $198,719
 $605,293
 $511,294
Net income253 197 
Earnings per share:        
Net income attributable to noncontrolling interestNet income attributable to noncontrolling interest1 — 
Net income available to RGA, Inc. shareholdersNet income available to RGA, Inc. shareholders$252 $197 
Earnings per shareEarnings per share
Basic earnings per share $3.53
 $3.10
 $9.39
 $7.95
Basic earnings per share$3.77 $2.93 
Diluted earnings per share $3.47
 $3.07
 $9.23
 $7.87
Diluted earnings per share$3.72 $2.91 
Dividends declared per share $0.50
 $0.41
 $1.32
 $1.15
See accompanying notes to condensed consolidated financial statements (unaudited).

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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Comprehensive income (Dollars in thousands)
Net income $227,591
 $198,719
 $605,293
 $511,294
Other comprehensive income, net of tax:        
Foreign currency translation adjustments 46,733
 (28,233) 68,085
 59,442
Net unrealized investment gains (93,574) 254,658
 415,870
 1,445,776
Defined benefit pension and postretirement plan adjustments 700
 527
 2,473
 (1,176)
Total other comprehensive income, net of tax (46,141) 226,952
 486,428
 1,504,042
Total comprehensive income $181,450
 $425,671
 $1,091,721
 $2,015,336
 Three months ended March 31,
 20232022
Comprehensive income (loss)
Net income$253 $197 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments22 22 
Net unrealized investment gains (losses)1,103 (3,790)
Effect of updating discount rates on future policy benefits(721)3,414 
Change in instrument-specific credit risk for market risk benefits1 (4)
Defined benefit pension and postretirement plan adjustments5 — 
Total other comprehensive income (loss), net of tax410 (358)
Total comprehensive income (loss)663 (161)
Comprehensive income attributable to noncontrolling interest1 — 
Total comprehensive income (loss) attributable to RGA, Inc.$662 $(161)
See accompanying notes to condensed consolidated financial statements (unaudited).

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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions except per share amounts)
(Unaudited)

RGA, Inc. Stockholders’ Equity
Common
Stock		Additional Paid In CapitalRetained
Earnings		Treasury
Stock		Accumulated Other Comprehensive Income (Loss)Total RGA, Inc. Stockholders’ EquityNoncontrolling InterestTotal Equity
Balance, December 31, 2022$1 $2,502 $8,169 $(1,720)$(1,871)7,081 $90 $7,171 
Change in equity of noncontrolling interest(1)(1)
Net income252 252 1 253 
Total other comprehensive income (loss)410 410 410 
Dividends to stockholders, $0.80 per share(53)(53)(53)
Purchase of treasury stock(67)(67)(67)
Reissuance of treasury stock4 (32)31 3 3 
Balance, March 31, 2023$1 $2,506 $8,336 $(1,756)$(1,461)$7,626 $90 $7,716 

RGA, Inc. Stockholders’ Equity
Common
Stock		Additional Paid In CapitalRetained
Earnings		Treasury
Stock		Accumulated Other Comprehensive Income (Loss)Total RGA, Inc. Stockholders’ EquityNoncontrolling InterestTotal Equity
Balance, December 31, 2021$1 $2,461 $7,871 $(1,653)$(500)8,180 $— $8,180 
Issuance of preferred interests by subsidiary90 90 
Net income197 197 197 
Total other comprehensive income (loss)(358)(358)(358)
Dividends to stockholders, $0.73 per share(49)(49)(49)
Purchase of treasury stock(27)(27)(27)
Reissuance of treasury stock4 (5)5 4 4 
Balance, March 31, 2022$1 $2,465 $8,014 $(1,675)$(858)$7,947 $90 $8,037 

See accompanying notes to condensed consolidated financial statements (unaudited).


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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
  Nine months ended September 30,
  2017 2016
  
 (Dollars in thousands)
Cash Flows from Operating Activities:    
Net income $605,293
 $511,294
Adjustments to reconcile net income to net cash provided by operating activities:    
Change in operating assets and liabilities:    
Accrued investment income (63,321) (58,863)
Premiums receivable and other reinsurance balances (421,027) (3,619)
Deferred policy acquisition costs 67,471
 (15,059)
Reinsurance ceded receivable balances (120,013) (77,741)
Future policy benefits, other policy claims and benefits, and other reinsurance balances 982,164
 479,606
Deferred income taxes 236,185
 165,988
Other assets and other liabilities, net 78,848
 29,343
Amortization of net investment premiums, discounts and other (95,227) (55,967)
Depreciation and amortization expense 21,384
 19,489
Investment related (gains) losses, net (139,471) (84,002)
Other, net (47,787) 109,403
Net cash provided by operating activities 1,104,499
 1,019,872
Cash Flows from Investing Activities:    
Sales of fixed maturity securities available-for-sale 6,364,236
 3,649,187
Maturities of fixed maturity securities available-for-sale 385,993
 349,836
Sales of equity securities 192,821
 331,978
Principal payments on mortgage loans on real estate 208,052
 377,671
Principal payments on policy loans 93,286
 59,518
Purchases of fixed maturity securities available-for-sale (7,450,749) (5,938,302)
Purchases of equity securities (60,790) (523,499)
Cash invested in mortgage loans on real estate (751,702) (857,445)
Cash invested in policy loans (5,830) (5,685)
Cash invested in funds withheld at interest (12,597) (31,222)
Purchases of property and equipment (33,242) —
Change in short-term investments 65,664
 418,625
Change in other invested assets (51,476) (78,068)
Net cash used in investing activities (1,056,334) (2,247,406)
Cash Flows from Financing Activities:    
Dividends to stockholders (85,086) (74,034)
Repayment of collateral finance and securitization notes (56,637) (60,971)
Proceeds from long-term debt issuance —
 799,984
Debt issuance costs —
 (9,026)
Principal payments of long-term debt (301,927) (1,850)
Purchases of treasury stock (41,360) (121,896)
Exercise of stock options, net 4,450
 11,752
Change in cash collateral for derivative positions and other arrangements (46,206) 24,749
Deposits on universal life and other investment type policies and contracts 1,007,563
 874,708
Withdrawals on universal life and other investment type policies and contracts (568,789) (386,900)
Net cash provided by financing activities (87,992) 1,056,516
Effect of exchange rate changes on cash 43,699
 25,436
Change in cash and cash equivalents 3,872
 (145,582)
Cash and cash equivalents, beginning of period 1,200,718
 1,525,275
Cash and cash equivalents, end of period $1,204,590
 $1,379,693
Supplemental disclosures of cash flow information:    
Interest paid $129,136
 $114,043
Income taxes paid, net of refunds $27,385
 $47,312
Non-cash transactions:    
Transfer of invested assets $2,247,136
 $3,621
(Unaudited)

 Three months ended March 31,
20232022
 
Net cash provided by operating activities1,574 163 
Cash flows from investing activities
Sales of fixed maturity securities available-for-sale1,973 2,608 
Purchases of fixed maturity securities available-for-sale(3,664)(4,762)
Maturities of fixed maturity securities available-for-sale241 228 
Sales of equity securities1 4 
Purchases of equity securities(2)— 
Principal payments on mortgage loans70 188 
Cash invested in mortgage loans(323)(443)
Net change in policy loans10 13 
Cash invested in funds withheld at interest, net81 (5)
Sales of limited partnerships and real estate joint ventures93 375 
Purchases of limited partnerships and real estate joint ventures(119)(145)
Change in short-term investments(90)(232)
Change in other invested assets29 (58)
Purchases of property and equipment(5)(6)
Net cash used in investing activities(1,705)(2,235)
Cash flows from financing activities
Dividends to stockholders(53)(49)
Repayment of collateral finance and securitization notes— (14)
Proceeds from long-term debt issuance500 — 
Debt issuance costs(6)— 
Principal payments of long-term debt(1)(1)
Purchases of treasury stock(67)(27)
Change in cash collateral for derivative positions and other arrangements17 (6)
Change in deposit asset on reinsurance11 (3)
Deposits on investment-type policies and contracts976 2,369 
Withdrawals on investment-type policies and contracts(880)(505)
Net change in noncontrolling interest— 90 
Net cash provided by financing activities497 1,854 
Effect of exchange rate changes on cash1 (21)
Change in cash and cash equivalents367 (239)
Cash and cash equivalents, beginning of period2,927 2,948 
Cash and cash equivalents, end of period$3,294 $2,709 
Supplemental disclosures of cash flow information
Interest paid$43 $33 
Income taxes paid, net of refunds$29 $81 
Non-cash investing activities
Transfer of invested assets$109 $— 
See accompanying notes to condensed consolidated financial statements (unaudited).

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REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 
1.Business and Basis of Presentation
NOTE 1 BUSINESS AND BASIS OF PRESENTATION
Business
Reinsurance Group of America, Incorporated (“RGA”) is an insurance holding company that was formed on December 31, 1992. The accompanying unaudited condensed consolidated financial statements of RGA and its subsidiaries (collectively, the “Company”) is engaged in providing traditional reinsurance, which includes individual and group life and health, disability and critical illness reinsurance. The Company also provides financial solutions, which includes longevity reinsurance, asset-intensive products (primarily annuities), financial reinsurance, capital solutions and stable value products.
Basis of Presentation
The unaudited condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.S-X of the Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. statements and should be read in conjunction with the Company’s 2022 Annual Report on Form 10-K filed with the SEC on February 24, 2023 (the “2022 Annual Report”).
In the opinion of management, all adjustments, including normal recurring adjustments necessary for a fair presentation have been included. Results for the nine months ended September 30, 2017Interim results are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. 2023.
Consolidation
These unaudited condensed consolidated financial statements include the accounts of RGA and its subsidiaries and all intercompany accounts and transactions have been eliminated. Entities in which the Company has significant influence over the operating and financing decisions but are not required to be consolidated are reported under the equity method of accounting.
Standards Issued and Implemented
In the first quarter of 2023, the Company adopted Accounting Standards Update (“ASU”): ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”). ASU 2018-12 updates certain requirements for the accounting for long-duration insurance contracts.
•Cash flow assumptions and measuring liability for future policy benefits – ASU 2018-12 requires the Company to review its cash flow assumptions at least annually and update, if necessary, with the impact recognized in net income in the period of the change. The liability for future policy benefits includes required adjustments at the cohort level to cap the net premium ratio at 100% and eliminate negative reserves.
Upon adoption, an adjustment was recorded to retained earnings as a result of capping the net premium ratio at 100% and eliminating negative reserves on certain issue year cohorts.
•Discount rate – The discount rate assumption is prescribed by ASU 2018-12 as an upper-medium (low credit risk) fixed-income yield and is required to be updated every quarter. The change in the liability as a result of updating the discount rate assumption is recognized in other comprehensive income (loss) (“OCI”).
Upon adoption, an adjustment was recorded to accumulated other comprehensive income (loss) (“AOCI”) as a result of remeasuring in force contract liabilities using the current upper-medium grade fixed income instrument yields as of the date of transition. The adjustment reflects the difference between discount rates locked-in at contract inception versus current discount rates at transition.
•Deferred policy acquisition costs and similar balances – Deferred policy acquisition costs (“DAC”) and other capitalized costs such as unearned revenue should be amortized on a constant level or straight-line basis over the expected term of the contracts.
Upon adoption, an adjustment was recorded to AOCI for the removal of cumulative adjustments to DAC associated with unrealized investment gains and losses previously recorded in accumulated other comprehensive income (loss).
•Market risk benefits – Market risk benefits, which are contracts or contract features that provide protection to the policyholder from capital market risk and expose the Company to other-than-nominal capital market risk, are
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measured at fair value. The periodic change in fair value is recognized in net income with the exception of the periodic change in fair value related to the liability’s instrument-specific credit risk, which is recognized in OCI.
Upon adoption, an adjustment was recorded to retained earnings for the difference between the fair value and carrying value of the contracts at the transition date, excluding changes in the instrument-specific credit risks, and an adjustment to AOCI for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date.
Change in Certain Segment Allocations
Investment income for each segment has been adjusted to reflect the impacts of adopting ASU 2018-12 and due to an update to the Company’s internally developed economic capital model. Internal excess capital charges, included in each segment’s policy acquisition costs and other insurance expenses, were also updated as a result of adopting ASU 2018-12 and updates to the Company’s internally developed economic capital model. These changes did not impact the recognition or presentation of investment income or policy acquisition costs and other insurance expenses in the condensed consolidated financial statements.
Significant Accounting Polices – Update
The Company’s significant accounting policies are discussed in Note 2 – “Significant Accounting Policies and Pronouncements” of the 2022 Annual Report. The significant accounting policies discussed below have been updated to reflect the impact of adopting ASU 2018-12.
Liability for Future Policy Benefits
Utilizing the net premium model, a liability for future policy benefits for life and long-term health business is established to meet the estimated future benefits to be paid on assumed life and health reinsurance in force less the present value of estimated future new premiums to be collected. The liability is estimated using the Company’s mortality, morbidity, and persistency assumptions that reflect the Company’s historical experience, industry data, cedant specific experience, and discount rates based on the current yields of upper-medium grade fixed income instruments. These assumptions vary with the characteristics of the reinsurance contract, the year the risk was assumed, age of the insured and other appropriate factors.
Liabilities for future benefits for annuities in the payout phase have been established in an amount adequate to meet the estimated future obligations on policies in force using expected mortality, discount rates and other assumptions. These assumptions vary with the characteristics of the plan of insurance, year of issue, age of insured, and other appropriate factors. The mortality assumptions are based on the Company’s historical experience, industry data and cedant specific experience.
A deferred profit liability is established when the insurance benefit extends beyond the period in which premiums are collected, and the gross premium exceeds the net premium. The deferred profit liability is amortized in proportion to insurance in force for traditional life insurance and expected future benefits for annuity contracts. The deferred profit liability is included in the liabilities for future policy benefits, and the amortization of the deferred profit liability is recognized as a reduction in claims and other policy benefits.
For the purpose of calculating the liability for future policy benefits, the Company’s reinsurance contracts for its Traditional business are grouped into annual cohorts based on the effective date of the reinsurance contract. The annual groupings are further disaggregated based on:
•How the reinsurance contracts are priced and managed;
•Geographical locations;
•Underlying currency of the contract;
•Ceding company and other factors.
Given the unique risks and highly customized nature of the Company’s financial solutions business, reinsurance contracts for the Financial Solutions business are not aggregated with other contracts for the purpose of calculating the liability for future policy benefits.
Each quarter, the Company updates its estimate of cash flows expected over the entire life of a group of contracts using actual historical experience and current future cash flow assumptions. These updated cash flows, discounted using the original contract issuance discount rates, are used to calculate the revised net premium ratio, as of the beginning of the current reporting period. The present value of these updated cash flows is compared to the carrying amount of the liability as of that same date, before updating cash flow assumptions, to determine the current period change in the liability’s estimate. This current period change in the liability is a component of the liability remeasurement gain or loss. In subsequent periods, the revised net premium ratio is used to measure the liability for future policy benefits, subject to future revisions. The Company also reviews actual and anticipated experience compared to the assumptions used to establish the liability for future policy benefits on a quarterly basis. If evidence suggests that the assumptions should be revised, the cumulative effect of the change is reflected in
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future policy benefits remeasurement (gains) losses in the current period. The Company has elected to lock-in claims expense assumptions at contract inception and those assumptions are not subsequently reviewed or updated.
The discount rates used to measure the liability are based on upper-medium grade fixed-income instruments (A rated credit) with similar tenor to the expected liability cash flows. The discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change reflected in other comprehensive income (loss). For unobservable discount rates, the Company uses estimates consistent with fair value guidance, maximizing the use of relevant, observable market prices and minimizing the use of unobservable inputs.
The Company utilizes the discount rate curve at contract inception for purposes of interest accretion and updating the net premium ratio. Interest accretion is recognized in claims and other policy benefits on the condensed consolidated statements should be readof income. The locked-in discount curve at contract inception for contracts entered into after the adoption of ASU 2018-12 (i.e., January 1, 2021 and after) is based on the average upper-medium grade fixed-income instrument yields during the first calendar year of the reinsurance contract. The locked-in discount rates at contract inception for contracts that were effective prior to the adoption of ASU 2018-12 (i.e., prior to January 1, 2021) are the discount rate assumptions used prior to the adoption of ASU 2018-12, which were based on estimates of expected investment yields.
Included in conjunctionthe liability for future policy benefits are unpaid claims related to long-duration contracts and an accrual for incurred but not reported losses (“IBNR”). The Company’s IBNR accrual related to long-duration contracts is determined using case-basis estimates and lag studies of past experience. The time lag from the date of the claim or death to when the ceding company reports the claim to the Company can vary significantly by ceding company, business segment and product type, but generally averages around 3 months. Incurred but not reported claims are estimates on an undiscounted basis, using actuarial estimates of historical claims expense, adjusted for current trends and conditions. These estimates are continually reviewed and the ultimate liability may vary significantly from the amount recognized. Claims payable for incurred but not reported losses for long-duration contracts are included in the liability for future policy benefits on the condensed consolidated balance sheets. Prior to the adoption of ASU 2018-12, unpaid claims and IBNR related to long-duration contracts were included in other policy claims and benefits. Upon adoption of ASU 2018-12, the Company revised prior period amounts to conform to the current period’s presentation. See Note 2 – “Impact of New Accounting Standard” for additional information.
Interest-Sensitive Contract Liabilities and Policyholder Account Balances
Liabilities for future benefits on interest-sensitive life and investment-type contract liabilities are carried at the accumulated contract holder values without reduction for potential surrender or withdrawal charges. The Company reinsures asset-intensive products, including annuities and corporate-owned life insurance. The investment portfolios for these products are segregated for management purposes within the general account of the respective legal entity. The liabilities under asset-intensive insurance contracts or reinsurance contracts reinsured on a coinsurance basis are included in interest-sensitive contract liabilities on the condensed consolidated balance sheets. Asset-intensive contracts principally include individual fixed annuities in the accumulation phase, single premium immediate annuities, with no significant life contingency, equity-indexed annuities, individual variable annuities, corporate-owned life and interest-sensitive whole life insurance contracts. Interest-sensitive contract liabilities are equal to (i) policy account values, which consist of an accumulation of gross premium payments; (ii) credited interest less expenses, mortality charges, and withdrawals; and (iii) fair value adjustments relating to business combinations. Liabilities for immediate annuities are calculated as the present value of the expected cash flows, with the Company’s 2016 Annual Reportlocked-in discount rate determined such that there is no gain or loss at inception.
Equity-indexed annuity contracts reinsured by the Company allow the contract holder to elect an interest rate return or an equity market component where interest credited is based on Form 10-K filedthe performance of common stock market indices, such as the S&P 500 Index®, the Dow Jones Industrial Average, or the NASDAQ. The equity market option is considered an embedded derivative, similar to a call option, which is reflected at fair value on the condensed consolidated balance sheets in interest-sensitive contract liabilities. The fair value of embedded derivatives is computed based on a projection of future equity option costs using a budget methodology, discounted back to the balance sheet date using current market indicators of volatility and interest rates. Changes in the fair value of the embedded derivatives are included as a component of interest credited on the condensed consolidated statements of income (loss).
The Company reviews its estimates of actuarial liabilities for interest-sensitive contract liabilities and compares them with its actual experience. Differences between actual experience and the assumptions used in pricing these guarantees and benefits and in the establishment of the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur.
Market Risk Benefits
Market risk benefits are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk and expose the Company to other-than-nominal capital market risk. Market risk benefits are measured at fair value using an option-based valuation model based on current net amounts at risk, market data, Company
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experience, and other factors. Changes in fair value are recognized in net income each period with the Securitiesexception of the portion of the change in fair value due to a change in the liability’s instrument-specific credit risk, which is recognized in other comprehensive income.
Market risk benefits include the following contract features on certain annuity products that provide minimum guarantees to policyholders:
•Guaranteed minimum income benefits (“GMIB”) provide the contract holder, after a specified period of time determined at the time of issuance of the variable annuity contract, with a minimum level of income (annuity) payments. Under the reinsurance treaty, the Company makes a payment to the ceding company equal to the GMIB net amount-at-risk at the time of annuitization.
•Guaranteed minimum withdrawal benefits (“GMWB”) guarantee the contract holder a return of their purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that the contract holder’s cumulative withdrawals in a contract year do not exceed a certain limit. The initial guaranteed withdrawal amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts).
•Guaranteed minimum accumulation benefits (“GMAB”) provide the contract holder, after a specified period of time determined at the time of issuance of the variable annuity contract, with a minimum accumulation of their purchase payments even if the account value is reduced to zero. The initial guaranteed accumulation amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts).
•Guaranteed minimum death benefits (“GMDB”) provides the beneficiary a guaranteed minimum amount upon the death of the contract holder, regardless of the account balance.
The fair values of the GMIB, GMWB, GMDB and Exchange Commission (“SEC”)GMAB contract features are reflected in market risk benefits and are calculated based on February 28, 2017 (the “2016 Annual Report”actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges over the lives of the contracts. These projected cash flows incorporate expectations concerning policyholder behavior, such as lapses, withdrawals and benefit selections, and capital market assumptions such as interest rates and equity market volatilities. In measuring the fair value of GMIBs, GMWBs, GMABs and GMDBs, the Company attributes a portion of the fees collected from the policyholder equal to the present value of expected future guaranteed minimum income, withdrawal and accumulation and death benefits (at inception). The changes in fair value are reported in market risk benefits remeasurement (gains) losses. Any additional fees represent “excess” fees and are reported in other revenues. These variable annuity guaranteed living and death benefits may be more costly than expected in volatile or declining equity markets or falling interest rate markets, causing an increase in market risk benefit liabilities.
Deferred Policy Acquisition Costs
Costs of acquiring new business, which vary with and are directly related to the production of new business, have been deferred to the extent that such costs are deemed recoverable from future premiums or gross profits. Such costs include commissions and allowances as well as certain costs of policy issuance and underwriting. Non-commission costs related to the acquisition of new and renewal insurance contracts may be deferred only if they meet the following criteria:
•Incremental direct costs of a successful contract acquisition
•Portions of employees’ salaries and benefits directly related to time spent performing specified acquisition activities for a contract that has been acquired or renewed
•Other costs directly related to the specified acquisition or renewal activities that would not have been incurred had that acquisition contract transaction not occurred
DAC related to traditional life and interest-sensitive contracts are grouped by contract type and issue year into cohorts for consistency with the groupings used in estimating the associated liability. DAC is amortized on a constant level basis for the grouped contracts over the expected term of the related contracts to approximate straight-line amortization. The constant level basis used is based on the number of policies or policy face amount of the risk assumed in the reinsurance contract. The constant level bases used for amortization are projected using mortality and actuarial assumptions for policyholder behavior that are based on the Company’s experience, industry data and other factors and are consistent with those used for the liability for future policy benefits. Changes in assumptions are reflected in DAC amortization prospectively, and actual experience relating to number of policies reinsured will likely differ from the experience previously estimated.
Amortization of DAC is included in policy acquisition costs and other insurance expenses.
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Reinsurance Ceded Receivables
The Company generally reports retrocession activity on a gross basis. Amounts paid or deemed to have been paid for reinsurance are reflected in reinsurance ceded receivables and other. Reinsurance ceded receivables related to long-duration contracts are estimated using mortality, morbidity, and persistency assumptions that are similar to the liability for future policy benefits ceded. The discount rate used to measure the ceded receivable is based on the current yields of an upper-medium grade fixed income instrument. Similar to the liability for future policy benefits, ceded receivables are grouped into annual cohorts based on the effective date of the reinsurance contract.
NOTE 2 IMPACT OF NEW ACCOUNTING STANDARD
As discussed in Note 1, the Company adopted ASU 2018-12 during the first quarter of 2023. The updated guidance materially changed how the Company accounts for its long-duration insurance contracts. Below is a summary of the impact of adopting ASU 2018-12:
•For the liability for future policy benefits, the net transition adjustment recorded in accumulated other comprehensive income (loss) is related to the difference in the discount rate used prior to the adoption of ASU 2018-12 and the discount rate at January 1, 2021, and the removal of shadow adjustments previously recorded in accumulated other comprehensive income (loss) for the impact of unrealized gains and losses that were included in the expected gross profits amortization calculation as of the transition date of $8,593 million, pretax.
•At transition, the Company identified certain cohorts in its Traditional segments where the present value of future expected benefits and expenses exceeded the sum of existing benefit reserve and the present value of future gross premiums, resulting in a decrease to retained earnings, net of reinsurance (and a corresponding increase in the liabilities for future policy benefits and reinsurance recoverable) of approximately $1,462 million, pretax. See “Impact of Adoption by Segment” for the transition impact by reportable segment.
•At transition, the Company identified certain cohorts, primarily longevity swaps, where the present value of future premiums exceeded the present value of future benefits resulting in a negative liability. The elimination of the negative liability at transition resulted in a decrease to retained earnings (and a corresponding increase in the liabilities for future policy benefits) of $284 million, pretax. See “Impact of Adoption by Segment” for the transition impact by reportable segment.
•For DAC, the Company removed shadow adjustments previously recorded in AOCI in the amount of $114 million, pretax, for the impact of unrealized gains and losses that were included in the pre-ASU 2018-12 expected gross profits amortization calculation as of the transition date. See “Impact of Adoption by Segment” for the transition impact by reportable segment.
•For market risk benefits, the transition adjustment of $45 million, pretax, recognized in AOCI relates to the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date. The remaining difference of $(72) million, pretax between the fair value and carrying value of the market risk benefits at transition, excluding the amounts recorded in AOCI, was recorded as an adjustment to retained earnings as of the transition date. See “Impact of Adoption by Segment” for the transition impact by reportable segment.
Impact on Shareholders’ Equity
The following table provides the after-tax transition impact on January 1, 2021, to the reinsurance ceded receivables, liability for future policy benefits, market risk benefits, deferred policy acquisition costs and deferred tax asset and liability for the Company's adoption of ASU 2018-12 (dollars in millions):
 January 1, 2021
 Retained EarningsAccumulated Other Comprehensive Income (Loss)
Reinsurance ceded receivables and other$254 $388 
Future policy benefits(1,746)(8,593)
Market risk benefits(72)45 
Deferred policy acquisition costs— 114 
Deferred tax asset (included in other assets)8 — 
Deferred tax liability (included in deferred income taxes)311 1,778 
Total$(1,245)$(6,268)

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Impact of Adoption by Segment
Traditional Business
The following table provides the pre-tax transition impact to the liability for future policy benefits for the Company's adoption of Financial Services – Insurance on January 1, 2021, for its Traditional business (dollars in millions):
U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Future policy benefits
Balance, January 1, 2021 pre-adoption$10,444 $3,477 $1,379 $3,568 
Adjustment to retained earnings (1)
896 33 70 463 
Effect of changes in discount rate assumptions4,542 2,651 320 (772)
Reclassification of claims and benefits payable (2)
1,750 203 901 1,160 
Balance, January 1, 2021 post-adoption$17,632 $6,364 $2,670 $4,419 
Less: reinsurance recoverable(1,123)(386)(85)(212)
Balance, January 1, 2021 post-adoption, after reinsurance$16,509 $5,978 $2,585 $4,207 
(1)Includes adjustments for capping the net premium ratio at 100% and eliminating negative reserves on certain issue year cohorts.
(2)Amount includes certain reclassifications to conform with the revised presentation upon adoption of ASU 2018-12, such as reclassifying claims and benefits payable on long-duration contracts to liability for future policy benefits.
Financial Solutions Business
The following table provides the pre-tax transition impact to the liability for future policy benefits, market risk benefits and deferred policy acquisitions costs for the Company's adoption of Financial Services – Insurance on January 1, 2021, for its Financial Solutions business (dollars in millions):
U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Future policy benefits
Balance, January 1, 2021 pre-adoption$5,037 $16 $5,657 $1,874 
Adjustment to retained earnings (1)
— 20 256 8 
Effect of changes in discount rate assumptions857 9 1,011 3 
Amounts previously recorded in AOCI (2)
(28)— — — 
Reclassification of claims and benefits payable (3)
17 4 67 2 
Balance, January 1, 2021 post-adoption$5,883 $49 $6,991 $1,887 
Less: reinsurance recoverable— — — — 
Balance, January 1, 2021 post-adoption, after reinsurance$5,883 $49 $6,991 $1,887 
Market risk benefits
Balance, January 1, 2021 pre-adoption$— $— $— $— 
Cumulative effect of change in credit risk in AOCI(45)— — — 
Cumulative effect to retained earnings72 — — — 
Reclassification from interest-sensitive contract liabilities239 — — — 
Balance, January 1, 2021 post-adoption$266 $— $— $— 
Less: reinsurance recoverable— — — — 
Balance, January 1, 2021 post-adoption, after reinsurance$266 $— $— $— 
Deferred policy acquisition costs
Balance, January 1, 2021 pre-adoption$254 $— $— $41 
Amounts previously recorded in AOCI (2)
114 — — — 
Balance, January 1, 2021 post-adoption$368 $— $— $41 
(1)Includes adjustments for capping the net premium ratio at 100% and eliminating negative reserves on certain issue year cohorts.
(2)Adjustment to remove amounts associated with unrealized gains and losses previously recorded in AOCI (i.e., “shadow adjustments”).
(3)Amount includes certain reclassifications to conform with the revised presentation upon adoption of ASU 2018-12, such as reclassifying claims and benefits payable on long-duration contracts to liability for future policy benefits.

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Impact to Previously Reported Amounts
The adoption of ASU 2018-12 impacted the Company’s previously reported consolidated balance sheets as of December 31, 2021 and 2022, and related statements of income, comprehensive income and equity for the each of the two years in the period ended December 31, 2022 as follows (dollars in millions). The adoption of ASU 2018-12 did not materially impact the Company’s previously reported consolidated statements of cash flows for the two years in the period ended December 31, 2022.
 As Previously ReportedAdoption of ASU 2018-12As Adjusted
Consolidated Balance Sheets
December 31, 2022
Assets
Fixed maturity securities available-for-sale, at fair value$52,901 $— $52,901 
Equity securities, at fair value134 — 134 
Mortgage loans6,590 — 6,590 
Policy loans1,231 — 1,231 
Funds withheld at interest6,003 — 6,003 
Limited partnerships and real estate joint ventures2,327 — 2,327 
Short-term investments154 — 154 
Other invested assets1,140 — 1,140 
Total investments70,480 — 70,480 
Cash and cash equivalents2,927 — 2,927 
Accrued investment income630 — 630 
Premiums receivable and other reinsurance balances3,013 — 3,013 
Reinsurance ceded receivables and other2,462 209 2,671 
Deferred policy acquisition costs3,974 154 4,128 
Other assets1,220 (165)1,055 
Total assets$84,706 $198 $84,904 
Liabilities and equity
Future policy benefits35,220 469 35,689 
Interest-sensitive contract liabilities30,572 (230)30,342 
Market risk benefits, at fair value— 247 247 
Other policy claims and benefits6,571 (4,091)2,480 
Other reinsurance balances756 (31)725 
Deferred income taxes736 647 1,383 
Other liabilities2,655 251 2,906 
Long-term debt3,961 — 3,961 
Total liabilities80,471 (2,738)77,733 
Equity
Preferred stock— — — 
Common stock1 — 1 
Additional paid-in-capital2,502 — 2,502 
Retained earnings8,967 (798)8,169 
Treasury stock, at cost(1,720)— (1,720)
Accumulated other comprehensive income (loss)(5,605)3,734 (1,871)
Total RGA, Inc. stockholders’ equity4,145 2,936 7,081 
Noncontrolling interest90 — 90 
Total equity4,235 2,936 7,171 
Total liabilities and stockholders’ equity$84,706 $198 $84,904 

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As Previously ReportedAdoption of ASU 2018-12As Adjusted
December 31, 2021
Assets
Fixed maturity securities available-for-sale, at fair value$60,749 $— $60,749 
Equity securities, at fair value151 — 151 
Mortgage loans6,283 — 6,283 
Policy loans1,234 — 1,234 
Funds withheld at interest6,954 — 6,954 
Limited partnerships and real estate joint ventures1,996 — 1,996 
Short-term investments87 — 87 
Other invested assets1,074 — 1,074 
Total investments78,528 — 78,528 
Cash and cash equivalents2,948 — 2,948 
Accrued investment income533 — 533 
Premiums receivable and other reinsurance balances2,888 — 2,888 
Reinsurance ceded receivables and other2,580 585 3,165 
Deferred policy acquisition costs3,690 170 3,860 
Other assets1,008 11 1,019 
Total assets$92,175 $766 $92,941 
Liabilities and equity
Future policy benefits35,782 11,667 47,449 
Interest-sensitive contract liabilities26,377 (258)26,119 
Market risk benefits, at fair value— 262 262 
Other policy claims and benefits6,993 (4,883)2,110 
Other reinsurance balances613 (56)557 
Deferred income taxes2,886 (1,387)1,499 
Other liabilities2,663 255 2,918 
Long-term debt3,667 — 3,667 
Collateral finance and securitization notes180 — 180 
Total liabilities79,161 5,600 84,761 
Equity
Preferred stock— — — 
Common stock1 — 1 
Additional paid-in-capital2,461 — 2,461 
Retained earnings8,563 (692)7,871 
Treasury stock, at cost(1,653)— (1,653)
Accumulated other comprehensive income (loss)3,642 (4,142)(500)
Total RGA, Inc. stockholders’ equity13,014 (4,834)8,180 
Noncontrolling interest— — — 
Total equity13,014 (4,834)8,180 
Total liabilities and stockholders’ equity$92,175 $766 $92,941 
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 As Previously ReportedAdoption of ASU 2018-12As Adjusted
Consolidated Statements of Income
Year ended December 31, 2022
Revenues
Net premiums$13,078 $— $13,078 
Net investment income3,161 — 3,161 
Investment related gains (losses), net(506)(33)(539)
Other revenues525 2 527 
     Total revenues16,258 (31)16,227 
Benefits and expenses
Claims and other policy benefits12,046 (64)11,982 
Future policy benefits remeasurement (gains) losses— 291 291 
Market risk benefits remeasurement (gains) losses— 10 10 
Interest credited682 — 682 
Policy acquisition costs and other insurance expenses1,499 (155)1,344 
Other operating expenses1,009 — 1,009 
Interest expense184 — 184 
Collateral finance and securitization expense7 — 7 
Total benefits and expenses15,427 82 15,509 
Income before income taxes831 (113)718 
Provision for income taxes204 (7)197 
Net income$627 $(106)$521 
Net income attributable to noncontrolling interest4 — 4 
Net income available to RGA, Inc. shareholders$623 $(106)$517 
 As Previously ReportedAdoption of ASU 2018-12As Adjusted
Year ended December 31, 2021
Revenues
Net premiums$12,513 $— $12,513 
Net investment income3,138 — 3,138 
Investment related gains (losses), net560 7 567 
Other revenues447 2 449 
Total revenues16,658 9 16,667 
Benefits and expenses
Claims and other policy benefits12,776 (1,103)11,673 
Future policy benefits remeasurement (gains) losses— 567 567 
Market risk benefits remeasurement (gains) losses— (58)(58)
Interest credited700 — 700 
Policy acquisition costs and other insurance expenses1,416 (91)1,325 
Other operating expenses936 — 936 
Interest expense127 — 127 
Collateral finance and securitization expense12 — 12 
Total benefits and expenses15,967 (685)15,282 
Income before income taxes691 694 1,385 
Provision for income taxes74 141 215 
Net income$617 $553 $1,170 
Net income attributable to noncontrolling interest— — — 
Net income available to RGA, Inc. shareholders$617 $553 $1,170 
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 As Previously ReportedAdoption of ASU 2018-12As Adjusted
Consolidated Statements of Comprehensive Income
Year ended December 31, 2022
Net income$627 $(106)$521 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments(162)60 (102)
Net unrealized investment gains (losses)(9,108)(168)(9,276)
Effect of updating discount rates on future policy benefits— 7,964 7,964 
Change in instrument-specific credit risk for market risk benefits— 20 20 
Defined benefit pension and postretirement plan adjustments23 — 23 
Total other comprehensive income (loss), net of tax(9,247)7,876 (1,371)
Total comprehensive income (loss)(8,620)7,770 (850)
Comprehensive income (loss) attributable to noncontrolling interest4 — 4 
Total comprehensive income (loss) available to RGA, Inc.$(8,624)$7,770 $(854)
Year ended December 31, 2021
Net income$617 $553 $1,170 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments60 (4)56 
Net unrealized investment gains (losses)(1,799)(34)(1,833)
Effect of updating discount rates on future policy benefits— 2,207 2,207 
Change in instrument-specific credit risk for market risk benefits— (43)(43)
Defined benefit pension and postretirement plan adjustments22 — 22 
Total other comprehensive income (loss), net of tax(1,717)2,126 409 
Total comprehensive income (loss)(1,100)2,679 1,579 
Comprehensive income (loss) attributable to noncontrolling interest— — — 
Total comprehensive income (loss) available to RGA, Inc.$(1,100)$2,679 $1,579 
RGA, Inc. Stockholders’ Equity
Common
Stock		Additional Paid In CapitalRetained
Earnings		Treasury
Stock		Accumulated Other Comprehensive Income (Loss)Total RGA, Inc. Stockholders’ EquityNoncontrolling InterestTotal Equity
Balance, December 31, 2020 as previously reported$1 $2,406 $8,148 $(1,562)$5,359 $14,352 $— $14,352 
Cumulative effect of modified retrospective adoption of Financial Services – Insurance on long-duration contracts
(1,187)(6,304)(7,491)(7,491)
Cumulative effect of full retrospective adoption of Financial Services – Insurance on market risk benefits
(58)36 (22)(22)
Adjusted balance, January 1, 20211 2,406 6,903 (1,562)(909)6,839 — 6,839 
Net income1,170 1,170 1,170 
Total other comprehensive income (loss)409 409 409 
Dividends to stockholders, $2.86 per share(194)(194)(194)
Purchase of treasury stock(99)(99)(99)
Reissuance of treasury stock55 (8)8 55 55 
Balance, December, 31, 20211 2,461 7,871 (1,653)(500)8,180 — 8,180 
Issuance of preferred interests by subsidiary90 90 
Change in equity of noncontrolling interest(4)(4)
Net income517 517 4 521 
Total other comprehensive income (loss)(1,371)(1,371)(1,371)
Dividends to stockholders, $3.06 per share(205)(205)(205)
Purchase of treasury stock(81)(81)(81)
Reissuance of treasury stock41 (14)14 41 41 
Balance, December 31, 2022$1 $2,502 $8,169 $(1,720)$(1,871)$7,081 $90 $7,171 

17
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Additional Transition and Other Disclosures
ASU 2018-12 expanded the disclosure requirements for long-duration contracts in the annual and interim financial statements. The following tables provide additional information regarding the transition adjustments and disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits and deferred policy acquisition costs for the years ended December 31, 2022 and 2021 (dollars in millions).
Liability for Future Policy Benefits
For the year ended December 31, 2022:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate$73,447 $21,989 $14,440 $37,943 
Effect of changes in cash flow assumptions(805)189 123 1,604 
Effect of actual variances from expected experience(4)212 835 197 
Adjusted balance, beginning of year72,638 22,390 15,398 39,744 
Issuances (1)
3,329 635 1,083 3,663 
Interest accrual (2)
3,423 748 500 1,032 
Net premiums collected (3)
(5,182)(950)(1,324)(1,989)
Derecognition (4)
— — — — 
Foreign currency translation(1)(1,493)(1,413)(1,944)
Ending balance at original discount rate74,207 21,330 14,244 40,506 
Effect of changes in discount rate assumptions(6,303)(4,899)(2,639)(10,927)
Balance, end of period$67,904 $16,431 $11,605 $29,579 
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate$84,075 $25,440 $15,664 $41,971 
Effect of changes in cash flow assumptions(675)191 136 1,681 
Effect of actual variances from expected experience85 212 813 234 
Adjusted balance, beginning of year83,485 25,843 16,613 43,886 
Issuances (1)
3,333 635 1,083 3,667 
Interest accrual (2)
3,940 958 530 1,171 
Benefit payments (5)
(5,472)(1,051)(1,260)(1,832)
Derecognition (4)
— — — — 
Foreign currency translation(1)(1,730)(1,512)(2,107)
Ending balance at original discount rate85,285 24,655 15,454 44,785 
Effect of changes in discount rate assumptions(7,907)(4,273)(2,808)(12,858)
Balance, end of period$77,378 $20,382 $12,646 $31,927 
Liability for future policy benefits$9,474 $3,951 $1,041 $2,348 
Less: reinsurance recoverable(421)(265)(31)(100)
Net liability for future policy benefits$9,053 $3,686 $1,010 $2,248 
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

18
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For the year ended December 31, 2021:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Present Value of Expected Net Premiums
Balance, beginning of year$70,319$21,332$14,033$34,167
Effect of adoption of Financial Services – Insurance
20,7581,7852,599(3,385)
Adjusted balance, beginning of year$91,077$23,117$16,632$30,782
Beginning of year balance at original discount rate$70,317$21,299$13,999$34,133
Effect of changes in cash flow assumptions984(45)48600
Effect of actual variances from expected experience254(24)379402
Adjusted balance, beginning of year71,55521,23014,42635,135
Issuances (1)
3,5227612,4174,575
Interest accrual (2)
3,400775553970
Net premiums collected (3)
(5,025)(947)(1,488)(2,038)
Derecognition (4)
——(1,167)—
Foreign currency translation(5)170(301)(699)
Ending balance at original discount rate73,44721,98914,44037,943
Effect of changes in discount rate assumptions15,771(199)1,280(5,458)
Balance, end of period$89,218$21,790$15,720$32,485
Present Value of Expected Future Policy Benefits
Balance, beginning of year$80,275$24,587$15,246$37,335
Effect of adoption of Financial Services – Insurance
26,1964,4692,989(3,694)
Adjusted balance, beginning of year106,47129,05618,23533,641
Beginning of year balance at original discount rate$81,172$24,587$15,281$37,765
Effect of changes in cash flow assumptions1,021(45)42699
Effect of actual variances from expected experience517(24)422559
Adjusted balance, beginning of year82,71024,51815,74539,023
Issuances (1)
3,5377612,4364,585
Interest accrual (2)
3,9169925981,107
Benefit payments (5)
(6,083)(1,025)(1,609)(1,971)
Derecognition (4)
——(1,176)—
Foreign currency translation(5)194(330)(773)
Ending balance at original discount rate84,07525,44015,66441,971
Effect of changes in discount rate assumptions19,1851,9051,445(6,475)
Balance, end of period$103,260$27,345$17,109$35,496
Liability for future policy benefits$14,042$5,555$1,389$3,011
Less: reinsurance recoverable(697)(367)(34)(116)
Net liability for future policy benefits$13,345$5,188$1,355$2,895
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on the revised assumptions.
19
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For the year ended December 31, 2022:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate$228 $3,329 $31,973 $1,051 
Effect of changes in cash flow assumptions(31)— (126)3 
Effect of actual variances from expected experience(22)(12)573 29 
Adjusted balance, beginning of year175 3,317 32,420 1,083 
Issuances (1)
1,580 574 12,594 1,465 
Interest accrual (2)
41 112 698 24 
Net premiums collected (3)
(125)(354)(3,169)(764)
Derecognition (4)
— — — — 
Foreign currency translation— (255)(3,761)(203)
Ending balance at original discount rate1,671 3,394 38,782 1,605 
Effect of changes in discount rate assumptions(284)(433)(8,805)25 
Balance, end of period$1,387 $2,961 $29,977 $1,630 
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate$4,628 $3,393 $38,196 $6,062 
Effect of changes in cash flow assumptions(34)— (140)3 
Effect of actual variances from expected experience(46)(24)566 36 
Adjusted balance, beginning of year4,548 3,369 38,622 6,101 
Issuances (1)
1,580 574 12,594 1,465 
Interest accrual (2)
220 115 856 70 
Benefit payments (5)
(525)(351)(3,355)(227)
Derecognition (4)
— — — — 
Foreign currency translation— (260)(4,387)(848)
Ending balance at original discount rate5,823 3,447 44,330 6,561 
Effect of changes in discount rate assumptions(617)(432)(9,719)(435)
Balance, end of period$5,206 $3,015 $34,611 $6,126 
Liability for future policy benefits$3,819 $54 $4,634 $4,496 
Less: reinsurance recoverable— — — — 
Net liability for future policy benefits$3,819 $54 $4,634 $4,496 
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
20
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For the year ended December 31, 2021:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Balance, beginning of year$285 $3,568 $28,055 $781 
Effect of adoption of Financial Services – Insurance
102 343 3,634 114 
Adjusted balance, beginning of year387 3,911 31,689 895 
Beginning of year balance at original discount rate$314 $3,556 $27,799 $781 
Effect of changes in cash flow assumptions(33)(30)(76)— 
Effect of actual variances from expected experience(29)17 997 777 
Adjusted balance, beginning of year252 3,543 28,720 1,558 
Issuances (1)
— — 8,357 3,156 
Interest accrual (2)
3 109 714 28 
Net premiums collected (3)
(27)(349)(3,590)(3,621)
Derecognition (4)
— — (1,669)— 
Foreign currency translation— 26 (559)(70)
Ending balance at original discount rate228 3,329 31,973 1,051 
Effect of changes in discount rate assumptions28 97 668 247 
Balance, end of period$256 $3,426 $32,641 $1,298 
Present Value of Expected Future Policy Benefits
Balance, beginning of year$4,951 $3,584 $33,410 $2,645 
Effect of adoption of Financial Services – Insurance
931 372 4,901 125 
Adjusted balance, beginning of year5,882 3,956 38,311 2,770 
Beginning of year balance at original discount rate$4,951 $3,592 $33,410 $2,653 
Effect of changes in cash flow assumptions(33)6 (76)— 
Effect of actual variances from expected experience(37)6 1,000 777 
Adjusted balance, beginning of year4,881 3,604 34,334 3,430 
Issuances (1)
— — 8,357 3,156 
Interest accrual (2)
193 112 890 63 
Benefit payments (5)
(446)(350)(3,064)(162)
Derecognition (4)
— — (1,682)— 
Foreign currency translation— 27 (639)(425)
Ending balance at original discount rate4,628 3,393 38,196 6,062 
Effect of changes in discount rate assumptions575 114 1,174 250 
Balance, end of period$5,203 $3,507 $39,370 $6,312 
Liability for future policy benefits$4,947 $81 $6,729 $5,014 
Less: reinsurance recoverable— — — — 
Net liability for future policy benefits$4,947 $81 $6,729 $5,014 
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
Policyholder Account Balances
The following tables provide the balances and changes in the Company’s policyholder account balances as of and for the years ending December 31, 2022 and 2021 (dollars in millions):
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For the year ended December 31, 2022:U.S. and Latin America – TraditionalU.S. and Latin America – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$1,719 $18,758 $1,621 
Deposits24 1,289 2,521 
Policy charges(32)(33)(134)
Surrenders and withdrawals(17)(1,258)(639)
Benefit payments(76)(448)(46)
Interest credited65 598 51 
Foreign currency translation— — (23)
Balance, end of period$1,683 $18,906 $3,351 
Less: reinsurance recoverable— (1,543)— 
Balance, end of period, after reinsurance$1,683 $17,363 $3,351 
For the year ended December 31, 2021:U.S. and Latin America – TraditionalU.S. and Latin America – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$1,752 $16,273 $809 
Deposits25 3,290 868 
Policy charges(32)(31)(1)
Surrenders and withdrawals(13)(1,015)(36)
Benefit payments(79)(404)(24)
Interest credited66 645 19 
Foreign currency translation— — (14)
Balance, end of period$1,719 $18,758 $1,621 
Less: reinsurance recoverable— (1,561)— 
Balance, end of period, after reinsurance$1,719 $17,197 $1,621 
Market Risk Benefits
The following tables provide the balances and changes in the Company’s liabilities for market risk benefits as of and for the years ending December 31, 2022 and 2021 (dollars in millions):
2.For the year ended December 31, 2022:Earnings Per ShareU.S. and Latin America – Financial Solutions
Balance, beginning of year$262 
Balance, beginning of year, before effect of changes in the instrument-specific credit risk254 
Interest accrual54 
Attributed fees collected28 
Benefit payments(9)
Effect of changes in future assumptions18 
Effect of changes in interest rates(175)
Effect of changes in equity markets48 
Effect of changes in volatility19 
Other market impacts7 
Actual policyholder behavior different from expected behavior19 
Balance, end of period, before effect of changes in the instrument-specific credit risk263 
Effect of changes in the instrument-specific credit risk(16)
Balance, end of period247 
Less: reinsurance recoverable— 
Balance, end of period, after reinsurance$247 
22
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For the year ended December 31, 2021:U.S. and Latin America – Financial Solutions
Balance, beginning of year$— 
Effect of adoption of Financial Services – Insurance
266 
Adjusted balance, beginning of year266 
Balance, beginning of year, before effect of changes in the instrument-specific credit risk311 
Interest accrual3 
Attributed fees collected12 
Benefit payments(14)
Effect of changes in future assumptions25 
Effect of changes in interest rates(51)
Effect of changes in equity markets(49)
Effect of changes in volatility(2)
Other market impacts5 
Actual policyholder behavior different from expected behavior14 
Balance, end of period, before effect of changes in the instrument-specific credit risk254 
Effect of changes in the instrument-specific credit risk8 
Balance, end of period262 
Less: reinsurance recoverable— 
Balance, end of period, after reinsurance$262 
Deferred Policy Acquisition Costs
The following tables provide the balances and changes in the Company’s deferred policy acquisition costs as of and for the years ending December 31, 2022 and 2021 (dollars in millions):
For the year ended December 31, 2022:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Balance, beginning of year$1,947 $191 $270 $1,056 
Capitalization284 10 83 86 
Amortization expense(144)(17)(38)(67)
Foreign currency translation— (13)(21)(32)
Balance, end of period$2,087 $171 $294 $1,043 
For the year ended December 31, 2022:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$312 $— $— $81 
Capitalization87 — — 121 
Amortization expense(58)— — (13)
Foreign currency translation— — — (1)
Balance, end of period$341 $— $— $188 
For the year ended December 31, 2021:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Balance, beginning of year$1,816 $195 $264 $1,046 
Effect of adoption of Financial Services – Insurance
— — — — 
Adjusted balance, beginning of year1,816 195 264 1,046 
Capitalization254 8 42 83 
Amortization expense(123)(13)(24)(55)
Foreign currency translation— 1 (12)(18)
Balance, end of period$1,947 $191 $270 $1,056 
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For the year ended December 31, 2021:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$254 $— $— $41 
Effect of adoption of Financial Services – Insurance
114 — — — 
Adjusted balance, beginning of year368 — — 41 
Capitalization8 — — 49 
Amortization expense(64)— — (8)
Foreign currency translation— — — (1)
Balance, end of period$312 $— $— $81 
NOTE 3 EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share on net income (in thousands,millions, except per share information):
Three months ended March 31,
 20232022
Earnings:
Net income$253 $197 
Less: Net income attributable to noncontrolling interest1 — 
Net income available to RGA, Inc. shareholders$252 $197 
Shares:
Weighted average outstanding shares67 67 
Equivalent shares from outstanding stock awards1 1 
Denominator for diluted calculation68 68 
Earnings per share:
Basic$3.77 $2.93 
Diluted$3.72 $2.91 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Earnings:        
Net income (numerator for basic and diluted calculations) $227,591
 $198,719
 $605,293
 $511,294
Shares:        
Weighted average outstanding shares (denominator for basic calculation) 64,488
 64,146
 64,430
 64,281
Equivalent shares from outstanding stock options 1,165
 669
 1,174
 663
Denominator for diluted calculation 65,653
 64,815
 65,604
 64,944
Earnings per share:        
Basic $3.53
 $3.10
 $9.39
 $7.95
Diluted $3.47
 $3.07
 $9.23
 $7.87
The calculation of common equivalent shares does not include the impact of options havingstock awards with a strike or conversion price that exceeds the average stock price for the earnings period as the result would be antidilutive. The calculation of common equivalent shares also excludes the impact of outstanding performance contingent shares,awards as the conditions necessary for their issuance have not been satisfied as of the end of the reporting period. For the three months ended September 30, 2017, 0.1 million stock options and approximately 0.3 million performance contingent shares were excluded from the calculation. For the three months ended September 30, 2016, no stock options and approximately 0.7 million performance contingent shares were excluded from the calculation. Year-to-date amounts for equivalent shares from outstanding stock options and performance contingent shares are the weighted average of the individual quarterly amounts.

7NOTE 4 EQUITY
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3.Equity
Common Stockstock
The changes in number of common stock shares issued, held in treasury and outstanding are as follows for the periods indicated:
IssuedHeld In TreasuryOutstanding
Balance, December 31, 202285,310,598 18,634,390 66,676,208 
Common stock acquired— 371,343 (371,343)
Stock-based compensation (1)
— (235,601)235,601 
Balance, March 31, 202385,310,598 18,770,132 66,540,466 
  Issued Held In Treasury Outstanding
Balance, December 31, 2016 79,137,758
 14,835,256
 64,302,502
Common stock acquired —
 208,680
 (208,680)
Stock-based compensation (1)
 —
 (274,449) 274,449
Balance, September 30, 2017 79,137,758
 14,769,487
 64,368,271
IssuedHeld In TreasuryOutstanding
Balance, December 31, 202185,310,598 18,139,868 67,170,730 
Common Stock acquired— 219,116 (219,116)
Stock-based compensation (1)
— (36,639)36,639 
Balance, March 31, 202285,310,598 18,322,345 66,988,253 
(1)Represents net shares issued from treasury pursuant to the Company’s equity-based compensation programs.
  Issued Held In Treasury Outstanding
Balance, December 31, 2015 79,137,758
 13,933,232
 65,204,526
Common stock acquired —
 1,356,892
 (1,356,892)
Stock-based compensation (1)
 —
 (358,639) 358,639
Balance, September 30, 2016 79,137,758
 14,931,485
 64,206,273
(1)Represents net shares issued from treasury pursuant to the Company’s equity-based compensation programs.
Common Stock Held in Treasury
Common stock held in treasury is accounted for at average cost. Gains resulting from the reissuance of common stock held in treasury are credited to additional paid-in capital. Losses resulting from the reissuance of common stock held in treasury are charged first to additional paid-in capital to the extent the Company has previously recorded gains on treasury share transactions, then to retained earnings.

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On January 26, 2017,February 25, 2022, RGA’s board of directors authorized a share repurchase program for up to $400.0$400 million of RGA’s outstanding common stock. The authorization was effective immediately and does not have an expiration date. In connection with this new authorization, the board of directors terminated the stock repurchase authority granted in 2016. During the first ninethree months of 2017,ended March 31, 2023, RGA repurchased 0.2 million371,343 shares of common stock under this programprogram.
Noncontrolling Interest
In 2022, Papara Financing LLC (“Papara”), a subsidiary of RGA Reinsurance Company, issued nonconvertible preferred interests to an unaffiliated third party. The membership interests in Papara consist of (1) common interests, which are held by RGA Reinsurance Company and (2) preferred interests. The preferred interests total $90 million. The preferred interests are included in noncontrolling interest, and net income attributable to noncontrolling interest was $1 million for $26.9 million.the three months ended March 31, 2023.
Accumulated Other Comprehensive Income (Loss)
The balance of and changes in each component of accumulated other comprehensive income (loss) (“AOCI”) for the ninethree months ended September 30, 2017March 31, 2023 and 20162022 are as follows (dollars in thousands)millions):
 Accumulated Other Comprehensive Income (Loss), Net of Income Tax
 Foreign Currency Translation Adjustments
Net Unrealized Investment Gains (Losses)(1)
Pension and
Postretirement
Benefits		Effect of Updating Discount Rates on Future Policy BenefitsInstrument-Specific Credit Risk for Market Risk BenefitsTotal
Balance, December 31, 2022$(116)$(5,496)$(27)$3,755 $13 $(1,871)
Other comprehensive income (loss) before reclassifications28 1,316 5 (927)2 424 
Amounts reclassified to (from) AOCI88 1 — — 89 
Deferred income tax benefit (expense)(6)(301)(1)206 (1)(103)
Balance, March 31, 2023$(94)$(4,393)$(22)$3,034 $14 $(1,461)
Accumulated Other Comprehensive Income (Loss), Net of Income Tax
 
Accumulated
Currency
Translation
Adjustments
 
Unrealized
Appreciation
(Depreciation)
of Investments(1)
 
Pension and
Postretirement
Benefits
 Total Foreign Currency Translation Adjustments
Net Unrealized Investment Gains (Losses)(1)
Pension and
Postretirement
Benefits		Effect of Updating Discount Rates on Future Policy BenefitsInstrument-Specific Credit Risk for Market Risk BenefitsTotal
Balance, December 31, 2016 $(172,541) $1,355,033
 $(43,163) $1,139,329
Balance, December 31, 2021Balance, December 31, 2021$(13)$3,779 $(50)$(4,209)$(7)$(500)
Other comprehensive income (loss) before reclassifications 23,117
 671,564
 (191) 694,490
Other comprehensive income (loss) before reclassifications27 (4,886)(1)4,375 (5)(490)
Amounts reclassified to (from) AOCI —
 (51,407) 4,006
 (47,401)Amounts reclassified to (from) AOCI— 36 1 — — 37 
Deferred income tax benefit (expense) 44,968
 (204,287) (1,342) (160,661)Deferred income tax benefit (expense)(6)1,061 — (961)1 95 
Balance, September 30, 2017 $(104,456) $1,770,903
 $(40,690) $1,625,757
Balance, March 31, 2022Balance, March 31, 2022$8 $(10)$(50)$(795)$(11)$(858)
(1)Includes cash flow hedges of $(198) and $(205) as of March 31, 2023 and December 31, 2022, respectively, and $(81) and $(22) as of March 31, 2022 and December 31, 2021, respectively. See Note 12 – “Derivative Instruments” for additional information on cash flow hedges.

25
  
Accumulated
Currency
Translation
Adjustments
 
Unrealized
Appreciation
(Depreciation)
of Investments(1)
 
Pension and
Postretirement
Benefits
 Total
Balance, December 31, 2015 $(181,151) $935,697
 $(46,262) $708,284
Other comprehensive income (loss) before reclassifications 68,271
 2,191,823
 (6,079) 2,254,015
Amounts reclassified to (from) AOCI —
 (109,145) 4,253
 (104,892)
Deferred income tax benefit (expense) (8,829) (636,902) 650
 (645,081)
Balance, September 30, 2016 $(121,709) $2,381,473
 $(47,438) $2,212,326
(1)Includes cash flow hedges of $347 and $(2,496) as of September 30, 2017 and December 31, 2016, respectively, and $(40,597) and $(29,397) as of September 30, 2016 and December 31, 2015, respectively. See Note 5 - “Derivative Instruments” for additional information on cash flow hedges.

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The following table presents the amounts of AOCI reclassifications for the three and nine months ended September 30, 2017March 31, 2023 and 20162022 (dollars in thousands)millions):
Amount Reclassified from AOCI
Three months ended March 31,Affected Line Item in 
Statements of Income
Details about AOCI Components20232022
Net unrealized investment gains (losses):
Net unrealized gains (losses) on available-for-sale securities$(87)$(35)Investment related gains (losses), net
Cash flow hedges – Interest rate2 — (1)
Cash flow hedges – Currency/Interest rate(3)(1)(1)
Total(88)(36)
Provision for income taxes18 7 
Net unrealized gains (losses), net of tax$(70)$(29)
Amortization of defined benefit plan items:
Prior service cost (credit)$— $— (2)
Actuarial gains (losses)(1)(1)(2)
Total(1)(1)
Provision for income taxes— — 
Amortization of defined benefit plans, net of tax$(1)$(1)
Total reclassifications for the period$(71)$(30)
  Amount Reclassified from AOCI  
  Three months ended September 30, Nine months ended September 30,  
Details about AOCI Components 2017 2016 2017 2016 
Affected Line Item in 
Statements of Income
Net unrealized investment gains (losses):          
Net unrealized gains and losses on available-for-sale securities $10,515
 $72,351
 $39,032
 $84,250
 Investment related gains (losses), net
Cash flow hedges - Currency/Interest rate 230
 200
 560
 454
 (1)
Cash flow hedges - Forward bond purchase commitments 224
 137
 286
 (120) (1)
Deferred policy acquisition costs attributed to unrealized gains and losses 1,116
 12,090
 11,529
 24,561
 (2)
Total 12,085
 84,778
 51,407
 109,145
  
Provision for income taxes (3,991) (27,680) (16,015) (32,676)  
Net unrealized gains (losses), net of tax $8,094
 $57,098
 $35,392
 $76,469
  
Amortization of defined benefit plan items:          
Prior service cost (credit) $590
 $391
 $732
 $238
 (3)
Actuarial gains/(losses) (1,661) (1,177) (4,738) (4,491) (3)
Total (1,071) (786) (4,006) (4,253)  
Provision for income taxes 375
 276
 1,402
 1,489
  
Amortization of defined benefit plans, net of tax $(696) $(510) $(2,604) $(2,764)  
           
Total reclassifications for the period $7,398
 $56,588
 $32,788
 $73,705
  
(1)See Note 5 - “Derivative Instruments” for additional information on cash flow hedges.
(2)This AOCI component is included in the computation of the deferred policy acquisition cost. See Note 8 – “Deferred Policy Acquisition Costs” of the 2016 Annual Report for additional details.
(3)This AOCI component is included in the computation of the net periodic pension cost. See Note 10 – “Employee Benefit Plans” for additional details.

(1)See Note 12 – “Derivative Instruments” for additional information on cash flow hedges.
(2)This AOCI component is included in the computation of the net periodic pension cost. See Note 15 – “Employee Benefit Plans” for additional details.
Equity Based Compensation
Equity compensation expense was $17.1$4 million for the three months ended March 31, 2023 and $27.1 million in the first nine months of 2017 and 2016, respectively.2022. In the first quarter of 2017,2023, the Company granted 0.2 million129,146 stock appreciation rights at $129.72$138.34 weighted average exercise price per share, and 0.2 million185,311 performance contingent shares and 105,122 restricted stock units to employees. Additionally, non-employee directors were granted a total of 7,696 shares of common stock. As of September 30, 2017, 1.6 millionMarch 31, 2023, 1,737,943 share optionsawards at a weighted average strike price per share of $60.77$113.12 were vested and exercisable with a remaining weighted average exercise period of 4.64.5 years. As of September 30, 2017,March 31, 2023, the total compensation cost of non-vested awards not yet recognized in the condensed consolidated financial statements was $32.5$31 million. It is estimated that these costs will vest over a weighted average period of 1.2 years.

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NOTE 5 FUTURE POLICY BENEFITS
Liability for Future Policy Benefits – Traditional Business
The following tables provide the balances of and changes in the Company’s liability for future policy benefits for long-duration reinsurance contracts for its Traditional business, which primarily consists of individual life, group life and critical illness reinsurance for the three months ended March 31, 2023 and 2022 (dollars in millions):
Three months ended March 31, 2023:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate$74,207 $21,330 $14,244 $40,506 
Effect of changes in cash flow assumptions— — — (8)
Effect of actual variances from expected experience(103)97 (256)128 
Adjusted balance, beginning of year74,104 21,427 13,988 40,626 
Issuances (1)
1,016 110 382 619 
Interest accrual (2)
851 182 119 256 
Net premiums collected (3)
(1,229)(231)(344)(490)
Derecognition (4)
(35)— — — 
Foreign currency translation— 46 184 (113)
Ending balance at original discount rate74,707 21,534 14,329 40,898 
Effect of changes in discount rate assumptions(4,074)(4,376)(2,515)(11,029)
Balance, end of period$70,633 $17,158 $11,814 $29,869 
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate$85,285 $24,655 $15,454 $44,785 
Effect of changes in cash flow assumptions— — — (8)
Effect of actual variances from expected experience(79)98 (258)121 
Adjusted balance, beginning of year85,206 24,753 15,196 44,898 
Issuances (1)
1,018 110 382 619 
Interest accrual (2)
981 233 127 293 
Benefit payments (5)
(1,486)(256)(331)(458)
Derecognition (4)
(54)— — — 
Foreign currency translation1 56 201 (125)
Ending balance at original discount rate85,666 24,896 15,575 45,227 
Effect of changes in discount rate assumptions(5,188)(3,607)(2,686)(12,914)
Balance, end of period$80,478 $21,289 $12,889 $32,313 
Liability for future policy benefits$9,845 $4,131 $1,075 $2,444 
Less: reinsurance recoverable(417)(277)(37)(99)
Net liability for future policy benefits$9,428 $3,854 $1,038 $2,345 
Weighted-average duration of the liability (in years)1215816
Weighted-average interest accretion rate4.7 %3.6 %3.4 %2.6 %
Weighted-average current discount rate4.9 %4.7 %5.4 %4.3 %
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
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Three months ended March 31, 2022:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate$73,447$21,989$14,440$37,943
Effect of changes in cash flow assumptions————
Effect of actual variances from expected experience(33)16690(1,504)
Adjusted balance, beginning of year73,41422,15514,53036,439
Issuances (1)
8322062972,217
Interest accrual (2)
845194127239
Net premiums collected (3)
(1,207)(248)(337)(502)
Derecognition (4)
————
Foreign currency translation3235(234)(549)
Ending balance at original discount rate73,88722,54214,38337,844
Effect of changes in discount rate assumptions6,120(2,933)(234)(7,976)
Balance, end of period$80,007$19,609$14,149$29,868
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate$84,075$25,440$15,664$41,971
Effect of changes in cash flow assumptions————
Effect of actual variances from expected experience7217488(1,501)
Adjusted balance, beginning of year84,14725,61415,75240,470
Issuances (1)
8332062972,162
Interest accrual (2)
970250135272
Benefit payments (5)
(1,628)(299)(346)(506)
Derecognition (4)
————
Foreign currency translation4271(264)(563)
Ending balance at original discount rate84,32626,04215,57441,835
Effect of changes in discount rate assumptions7,446(1,621)(197)(9,362)
Balance, end of period$91,772$24,421$15,377$32,473
Liability for future policy benefits$11,765$4,812$1,228$2,605
Less: reinsurance recoverable(572)(322)(36)(115)
Net liability for future policy benefits$11,193$4,490$1,192$2,490
Weighted-average duration of the liability (in years)13161016
Weighted-average interest accretion rate4.7 %3.7 %3.5 %2.6 %
Weighted-average current discount rate3.9 %4.1 %3.7 %3.9 %
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
Significant assumptions used to compute the liability for future policy benefits for the Traditional business include mortality, morbidity, lapse rates and discount rates (both accretion and current). The Company updated the underlying market data used to determine the current discount rate resulting in changes to the discount rate assumption used to measure the net liability for future policy benefits each period. The Company’s Traditional business actual-to-expected variances and the effects of changes in discount rate assumption for the three months ending March 31, 2023 and 2022 are summarized in the tables below:
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4.Three months ended March 31, 2023:
SegmentInvestmentsNet liability for future policy benefits at original discount rateActual-to-expected varianceImpact of updating discount rate recognized in OCICommentary
U.S. and Latin America – Traditional
$11.0 billion$24 million$490 millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
1.1% decrease0.2% increase4.4% increase
Canada – Traditional
$3.4 billion$1 million$143 millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
1.1% increase0.0% increase4.3% increase
Europe, Middle East and Africa – Traditional
$1.2 billion$(2) million$(2) millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any material changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
3.0% increase0.2% decrease0.2% decrease
Asia Pacific – Traditional
$4.3 billion$(7) million$46 millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any material changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
1.2% increase0.2% decrease1.1% increase
Three months ended March 31, 2022:
SegmentNet liability for future policy benefits at original discount rateActual-to-expected varianceImpact of updating discount rate recognized in OCICommentary
U.S. and Latin America – Traditional
$10.4 billion$105 million$(2,088) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions. The actual-to-expected variance was predominately related to COVID-19.
1.8% decrease1.0% increase19.6% decrease
Canada – Traditional
$3.5 billion$8 million$(792) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
1.4% increase0.2% increase22.9% decrease
Europe, Middle East and Africa – Traditional
$1.2 billion$(2) million$(128) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
2.7% decrease0.2% decrease10.5% decrease
Asia Pacific – Traditional
$4.0 billion$3 million$(369) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
0.9% decrease0.1% increase9.2% decrease
Liability for Future Policy Benefits – Financial Solutions Business
The deferred profit liability related to the longevity business is presented together with the liability for future policy benefits. The following tables provide the balances of and changes in the Company’s liability for future policy benefits for its Financial Solutions business, which primarily consists of longevity reinsurance, asset-intensive products, primarily annuities and financial reinsurance for the three months ending March 31, 2023 and 2022 (dollars in millions):
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Three months ended March 31, 2023:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate$1,671 $3,394 $38,782 $1,605 
Effect of changes in cash flow assumptions— — — — 
Effect of actual variances from expected experience(7)(2)42 — 
Adjusted balance, beginning of year1,664 3,392 38,824 1,605 
Issuances (1)
146 — 3,681 1,244 
Interest accrual (2)
13 27 185 6 
Net premiums collected (3)
(186)(84)(764)(1,260)
Derecognition (4)
— — — — 
Foreign currency translation— 9 742 (21)
Ending balance at original discount rate1,637 3,344 42,668 1,574 
Effect of changes in discount rate assumptions(223)(336)(8,323)74 
Balance, end of period$1,414 $3,008 $34,345 $1,648 
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate$5,823 $3,447 $44,330 $6,561 
Effect of changes in cash flow assumptions— — — — 
Effect of actual variances from expected experience(11)(6)31 (1)
Adjusted balance, beginning of year5,812 3,441 44,361 6,560 
Issuances (1)
154 — 3,681 1,289 
Interest accrual (2)
56 28 225 18 
Benefit payments (5)
(138)(83)(858)(68)
Derecognition (4)
— — — — 
Foreign currency translation(16)8 852 (77)
Ending balance at original discount rate5,868 3,394 48,261 7,722 
Effect of changes in discount rate assumptions(460)(332)(9,191)(250)
Balance, end of period$5,408 $3,062 $39,070 $7,472 
Liability for future policy benefits$3,994 $54 $4,725 $5,824 
Less: reinsurance recoverable— — — — 
Net liability for future policy benefits$3,994 $54 $4,725 $5,824 
Weighted-average duration of the liability (in years)87915
Weighted-average interest accretion rate3.5 %3.3 %1.9 %1.3 %
Weighted-average current discount rate5.0 %4.7 %4.7 %1.5 %
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
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Three months ended March 31, 2022:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate$228 $3,329 $31,973 $1,051 
Effect of changes in cash flow assumptions— — — — 
Effect of actual variances from expected experience(3)(7)111 47 
Adjusted balance, beginning of year225 3,322 32,084 1,098 
Issuances (1)
— 581 10,932 1,325 
Interest accrual (2)
1 26 185 6 
Net premiums collected (3)
(7)(88)(799)(613)
Derecognition (4)
— — — — 
Foreign currency translation— 41 (1,175)(77)
Ending balance at original discount rate219 3,882 41,227 1,739 
Effect of changes in discount rate assumptions(36)(193)(3,365)187 
Balance, end of period$183 $3,689 $37,862 $1,926 
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate$4,628 $3,393 $38,196 $6,062 
Effect of changes in cash flow assumptions— — — — 
Effect of actual variances from expected experience(23)(12)103 48 
Adjusted balance, beginning of year4,605 3,381 38,299 6,110 
Issuances (1)
— 581 10,932 1,325 
Interest accrual (2)
47 27 228 17 
Benefit payments (5)
(111)(87)(895)(50)
Derecognition (4)
— — — — 
Foreign currency translation— 42 (1,354)(346)
Ending balance at original discount rate4,541 3,944 47,210 7,056 
Effect of changes in discount rate assumptions107 (184)(3,472)51 
Balance, end of period$4,648 $3,760 $43,738 $7,107 
Liability for future policy benefits$4,465 $71 $5,876 $5,181 
Less: reinsurance recoverable— — — — 
Net liability for future policy benefits$4,465 $71 $5,876 $5,181 
Weighted-average duration of the liability (in years)1081016
Weighted-average interest accretion rate3.0 %2.9 %2.1 %1.4 %
Weighted-average current discount rate3.9 %3.9 %2.8 %1.3 %
(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.
(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.
(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.
(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.
(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.
Significant assumptions used to compute the liability for future policy benefits for the Financial Solutions business include mortality, morbidity, lapse rates and discount rates (both accretion and current). The Company updated the underlying market data used to determine the current discount rate resulting in changes to the discount rate assumption used to measure the net liability for future policy benefits. The Company’s Financial Solutions business actual-to-expected variances and the effects of changes in discount rate assumption for the three months ending March 31, 2023 and 2022 are summarized in the tables below:
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Three months ended March 31, 2023:
SegmentNet liability for future policy benefits at original discount rateActual-to-expected varianceImpact of updating discount rate recognized in OCICommentary
U.S. and Latin America – Financial Solutions
$4.2 billion$(4) million$96 millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
1.9% increase0.1% decrease2.3% increase
Canada – Financial Solutions
$0.1 billion$(4) million$3 millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
5.7% decrease7.5% decrease5.7% increase
Europe, Middle East and Africa – Financial Solutions
$5.6 billion$(11) million$46 millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
0.8% increase0.2% decrease0.8% increase
Asia Pacific – Financial Solutions
$6.1 billion$(1) million$136 millionDuring the first quarter of 2023, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
24.1% increase0.0% decrease2.7% increase
For the three months ended March 31, 2022:
SegmentNet liability for future policy benefits at original discount rateActual-to-expected varianceImpact of updating discount rate recognized in OCICommentary
U.S. and Latin America – Financial Solutions
$4.3 billion$(20) million$(404) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
1.8% decrease0.5% decrease9.2% decrease
Canada – Financial Solutions
$0.1 billion$(5) million$(8) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
3.1% decrease7.8% decrease12.5% decrease
Europe, Middle East and Africa – Financial Solutions
$6.0 billion$(8) million$(613) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
3.9% decrease0.1% decrease9.9% decrease
Asia Pacific – Financial Solutions
$5.3 billion$1 million$(139) millionDuring the first quarter of 2022, the Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
6.1% increase0.0% increase2.8% decrease

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Reconciliation and Other Disclosures
The reconciliation of the rollforward of the liability for future policy benefits to the condensed consolidated balance sheets as of March 31, 2023 and 2022 is as follows (dollars in millions):
March 31,
20232022
Liability for future policy benefits included in the rollforwards:
Traditional:
U.S. and Latin America$9,845$11,765
Canada4,1314,812
Europe, Middle East and Africa1,0751,228
Asia Pacific2,4442,605
Financial Solutions:
U.S. and Latin America3,994 4,465 
Canada54 71 
Europe, Middle East and Africa4,725 5,876 
Asia Pacific5,824 5,181 
Other long-duration contracts181 177 
Claims liability and incurred but not reported claims5,417 5,659 
Unearned revenue liability532 567 
Total liability for future policy benefits$38,222 $42,406 
The amount of undiscounted and discounted expected future gross premiums and expected future benefit payments for the liability for future policy benefits included in the rollforwards as of March 31, 2023 and 2022 is as follows (dollars in millions):
March 31,
20232022
UndiscountedDiscountedUndiscountedDiscounted
Expected future gross premiums
Traditional:
U.S. and Latin America$172,081 $82,288 $172,097 $93,268 
Canada53,244 21,317 56,648 24,355 
Europe, Middle East and Africa24,591 13,611 25,517 16,254 
Asia Pacific92,305 37,986 84,355 38,094 
Financial Solutions:
U.S. and Latin America3,112 1,975 972 686 
Canada4,738 3,149 5,506 3,843 
Europe, Middle East and Africa64,424 37,636 56,874 41,655 
Asia Pacific2,977 2,478 3,280 2,840 
Expected future benefit payments
Traditional:
U.S. and Latin America$181,123 $80,478 $181,789 $91,772 
Canada56,223 21,289 60,162 24,421 
Europe, Middle East and Africa24,150 12,889 24,939 15,377 
Asia Pacific88,496 32,313 82,052 32,473 
Financial Solutions:
U.S. and Latin America9,214 5,408 7,360 4,648 
Canada4,602 3,062 5,387 3,760 
Europe, Middle East and Africa66,775 39,070 59,907 43,738 
Asia Pacific10,144 7,472 9,175 7,107 
The amount of gross premiums and interest expense recognized in the consolidated statements of income for the liability for future policy benefits included in the rollforwards for the three months ended March 31, 2023 and 2022 is as follows (dollars in millions):
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Gross PremiumsInterest Expense
March 31,March 31,
2023202220232022
Traditional:
U.S. and Latin America$1,422 $1,397 $130 $125 
Canada262 272 51 56 
Europe, Middle East and Africa355 361 8 8 
Asia Pacific620 629 37 33 
Financial Solutions:
U.S. and Latin America156 8 43 46 
Canada23 23 1 1 
Europe, Middle East and Africa161 163 40 43 
Asia Pacific63 43 12 11 
Total$3,062 $2,896 $322 $323 
There were no material charges incurred for the three months ended March 31, 2023 and 2022, resulting from net premiums exceeding gross premiums.
NOTE 6 POLICYHOLDER ACCOUNT BALANCES
Policyholder Account Balances
The following tables provide the balances of and changes in the Company’s liability for its policyholder account balances for the three months ended March 31, 2023 and 2022 (dollars in millions):
Three months ended March 31, 2023:U.S. and Latin America – TraditionalU.S. and Latin America – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$1,683 $18,906 $3,351 
Deposits3 41 431 
Policy charges(8)(8)— 
Surrenders and withdrawals(5)(528)(19)
Benefit payments(43)(116)(22)
Interest credited16 142 32 
Foreign currency translation— — (15)
Balance, end of period$1,646 $18,437 $3,758 
Less: reinsurance recoverable— (1,532)— 
Balance, end of period, after reinsurance$1,646 $16,905 $3,758 
Weighted-average crediting rate4.0 %3.3 %2.9 %
Net amount at risk$697 $2,468 $— 
Cash surrender value$1,635 $18,398 $3,340 
Three months ended March 31, 2022:U.S. and Latin America – TraditionalU.S. and Latin America – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$1,719 $18,758 $1,621 
Deposits3 152 246 
Policy charges(8)(8)(1)
Surrenders and withdrawals(4)(296)(15)
Benefit payments(27)(115)(6)
Interest credited16 153 6 
Foreign currency translation— — 13 
Balance, end of period$1,699 $18,644 $1,864 
Less: reinsurance recoverable— (1,552)— 
Balance, end of period, after reinsurance$1,699 $17,092 $1,864 
Weighted-average crediting rate4.0 %3.2 %1.4 %
Net amount at risk$728 $2,561 $— 
Cash surrender value$1,688 $18,552 $1,636 
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Information regarding the Company’s policyholder account balances as of March 31, 2023 and 2022 is as follows (dollars in millions):
March 31,
20232022
Policyholder account balances included in the rollforwards:
Traditional:
U.S. and Latin America$1,646 $1,699 
Financial Solutions:
U.S. and Latin America18,437 18,644 
Asia Pacific3,758 1,864 
Other policyholder account balances
U.S. and Latin America – Financial Solutions70 49 
Total policyholder account balances$23,911 $22,256 
The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums as of March 31, 2023 and 2022 is as follows (dollars in millions):
March 31, 2023
Range of Guaranteed Minimum Crediting RateAt Guaranteed Minimum1 Basis Point – 50 Basis Points Above51 Basis Points – 150 Basis Points AboveGreater Than 150 Basis Points AboveTotal
U.S. and Latin America – TraditionalLess than 1.00%$— $— $— $— $— 
1.00 – 1.99%— — — — — 
2.00 – 2.99%— — — — — 
3.00 – 3.99%— — — — — 
4.00% and Greater1,646 — — — 1,646 
Total$1,646 $— $— $— $1,646 
U.S. and Latin America – Financial SolutionsLess than 1.00%$— $— $— $— $— 
1.00 – 1.99%1,844 14 97 40 1,995 
2.00 – 2.99%1,831 9 727 14 2,581 
3.00 – 3.99%4,718 240 79 1 5,038 
4.00% and Greater8,773 50 — — 8,823 
Total$17,166 $313 $903 $55 $18,437 
Asia Pacific – Financial SolutionsLess than 1.00%$291 $— $— $— $291 
1.00 – 1.99%717 — — — 717 
2.00 – 2.99%804 — — — 804 
3.00 – 3.99%1,225 — — — 1,225 
4.00% and Greater721 — — — 721 
Total$3,758 $— $— $— $3,758 
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March 31, 2022
Range of Guaranteed Minimum Crediting RateAt Guaranteed Minimum1 Basis Point – 50 Basis Points Above51 Basis Points – 150 Basis Points AboveGreater Than 150 Basis Points AboveTotal
U.S. and Latin America – TraditionalLess than 1.00%$— $— $— $— $— 
1.00 – 1.99%— — — — — 
2.00 – 2.99%— — — — — 
3.00 – 3.99%— — — — — 
4.00% and Greater1,699 — — — 1,699 
Total$1,699 $— $— $— $1,699 
U.S. and Latin America – Financial SolutionsLess than 1.00%$— $— $— $— $— 
1.00 – 1.99%1,995 16 85 57 2,153 
2.00 – 2.99%2,140 6 788 — 2,934 
3.00 – 3.99%4,782 258 60 — 5,100 
4.00% and Greater8,403 54 — — 8,457 
Total$17,320 $334 $933 $57 $18,644 
Asia Pacific – Financial SolutionsLess than 1.00%$651 $— $— $— $651 
1.00 – 1.99%954 — — — 954 
2.00 – 2.99%10 — — — 10 
3.00 – 3.99%240 — — — 240 
4.00% and Greater9 — — — 9 
Total$1,864 $— $— $— $1,864 
NOTE 7     UNPAID CLAIMS AND CLAIM EXPENSE – SHORT-DURATION CONTRACTS
Rollforward of Claims and Claim Adjustment Expenses
The liability for unpaid claims for short-duration contracts is reported in other policy claims and benefits on the Company’s condensed consolidated balance sheets. Activity associated with unpaid claims is summarized below (dollars in millions):
Three months ended March 31,
20232022
Balance, beginning of year$2,480 $2,110 
Less: reinsurance recoverable(57)(81)
Net balance, beginning of year2,423 2,029 
Incurred:
Current year363 726 
Prior years(25)(51)
Total incurred338 675 
Payments:
Current year(23)(25)
Prior years(249)(260)
Total payments(272)(285)
Other changes:
Interest accretion8 8 
Foreign exchange adjustments(6)36 
Total other changes2 44 
Net balance, end of period2,491 2,463 
Plus: reinsurance recoverable67 94 
Balance, end of period$2,558 $2,557 
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Incurred claims associated with prior periods are primarily due to the development of short-duration business claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated.  These trends have been considered in establishing the current year liability for unpaid claims.
NOTE 8 MARKET RISK BENEFITS
The following table provides the balances of and changes in the Company’s market risk benefits for the three months ended March 31, 2023 and 2022 (dollars in millions):
U.S. and Latin America – Financial Solutions
Three months ended March 31,
20232022
Balance, beginning of year$247 $262 
Balance, beginning of year, before effect of changes in the instrument-specific credit risk263 254 
Interest accrual4 — 
Attributed fees collected6 7 
Benefit payments— (5)
Effect of changes in interest rates21 (61)
Effect of changes in equity markets(17)13 
Effect of changes in volatility(5)3 
Other market impacts— 2 
Actual policyholder behavior different from expected behavior5 6 
Balance, end of period, before effect of changes in the instrument-specific credit risk277 219 
Effect of changes in the instrument-specific credit risk(18)14 
Balance, end of period259 233 
Less: reinsurance recoverable— — 
Balance, end of period, after reinsurance$259 $233 
Net amount at risk$1,428 $1,220 
Weighted-average attained age of contract holders (in years)7168
The reconciliation of the rollforward for market risk benefits to the condensed consolidated balance sheets as of March 31, 2023 and 2022 is as follows (dollars in millions):
March 31,March 31,
20232022
Asset (1)
LiabilityNet
Asset (1)
LiabilityNet
U.S. and Latin America – Financial Solutions$2 $261 $(259)$— $233 $(233)
Total market risk benefits$2 $261 $(259)$— $233 $(233)
(1)Included in Other assets
Fair Value Measurement
See Note 13 – “Fair Value of Assets and Liabilities” for information about fair value measurement of assets and liabilities, except for market risk benefits.
Market risk benefits are classified within Level 3 on the fair value hierarchy. The fair value of market risk benefits is monitored through the use of attribution reports to quantify the effect of underlying sources of fair value change, including capital market inputs based on policyholder account values, interest rates and short-term and long-term implied volatilities from period to period.
During the three months ended March 31, 2023 and 2022, there were no material changes made to the inputs in the market risk benefit calculations, and nonfinancial assumptions were unchanged.
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NOTE 9 DEFERRED POLICY ACQUISITION COSTS
The following tables provide the balances of and changes in deferred policy acquisition costs for the Company’s Traditional business for the three months ended March 31, 2023 and 2022 (dollars in millions):
Three months ended March 31, 2023:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Balance, beginning of year$2,087 $171 $294 $1,043 
Capitalization57 3 25 19 
Amortization expense(35)(3)(10)(15)
Foreign currency translation— — — (3)
Balance, end of period$2,109 $171 $309 $1,044 
Three months ended March 31, 2022:U.S. and Latin America – TraditionalCanada – TraditionalEurope, Middle East and Africa – TraditionalAsia Pacific – Traditional
Balance, beginning of year$1,947 $191 $270 $1,056 
Capitalization70 2 15 34 
Amortization expense(36)(3)(11)(23)
Foreign currency translation— 2 4 (6)
Balance, end of period$1,981 $192 $278 $1,061 
The following tables provide the balances of and changes in deferred policy acquisition costs for the Company’s Financial Solutions business for the three months ended March 31, 2023 and 2022 (dollars in millions):
Three months ended March 31, 2023:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$341 $— $— $188 
Capitalization— — — 108 
Amortization expense(11)— — (6)
Foreign currency translation— — — (1)
Balance, end of period$330 $— $— $289 
Three months ended March 31, 2022:U.S. and Latin America – Financial SolutionsCanada – Financial SolutionsEurope, Middle East and Africa – Financial SolutionsAsia Pacific – Financial Solutions
Balance, beginning of year$312 $— $— $81 
Capitalization6 — — 13 
Amortization expense(20)— — (3)
Foreign currency translation— — — — 
Balance, end of period$298 $— $— $91 
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The reconciliation of deferred policy acquisition costs to the condensed consolidated balance sheets as of March 31, 2023 and 2022 is as follows (dollars in millions):
March 31,
20232022
Deferred policy acquisition costs included in the rollforwards:
Traditional:
U.S. and Latin America$2,109 $1,981 
Canada171 192 
Europe, Middle East and Africa309 278 
Asia Pacific1,044 1,061 
Financial Solutions:
U.S. and Latin America330 298 
Canada— — 
Europe, Middle East and Africa— — 
Asia Pacific289 91 
Other long-duration business:
Corporate and Other5 5 
Total deferred policy acquisition costs$4,257 $3,906 
NOTE 10 REINSURANCE CEDED RECEIVABLES AND OTHER
Retrocession reinsurance treaties do not relieve the Company from its obligations to direct writing companies. Failure of retrocessionaires to honor their obligations could result in losses to the Company. Consequently, allowances would be established for amounts deemed uncollectible. The Company regularly evaluates the financial condition of the insurance companies from which it assumes and to which it cedes reinsurance. At March 31, 2023 and December 31, 2022, no allowances were deemed necessary.
Two major reinsurance companies account for approximately 76% of reinsurance ceded receivables and other as of March 31, 2023. Retrocessions are arranged through the Company’s retrocession pools for amounts in excess of the Company’s retention limit. As of March 31, 2023, all rated retrocession pool participants followed by the A.M. Best Company were rated “A- (excellent)” or better. The Company verifies retrocession pool participants’ ratings on a quarterly basis. For a majority of the retrocessionaires that were not rated, security in the form of letters of credit or trust assets have been posted. In addition, the Company performs annual financial reviews of its retrocessionaires to evaluate financial stability and performance.
Included in the total reinsurance ceded receivables and other balance are $183 million and $183 million of claims recoverable, of which $17 million and $16 million were in excess of 90 days past due, as of March 31, 2023 and December 31, 2022, respectively. Also included in the total reinsurance ceded receivable and other is a deposit asset on reinsurance of $1.6 billion and $1.6 billion as of March 31, 2023 and December 31, 2022, respectively.
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NOTE 11 INVESTMENTS
Fixed Maturity and Equity Securities Available-for-Sale
The Company holds various types of fixed maturity securities available-for-sale and classifies them as corporate securities (“Corporate”), Canadian and Canadian provincial government securities (“Canadian government”), Japanese government and agencies (“Japanese government”), asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), residential mortgage-backed securities (“RMBS”), U.S. government and agencies (“U.S. government”), state and political subdivisions, and other foreign government, supranational and foreign government-sponsored enterprises (“Other foreign government”). ABS, CMBS and RMBS are collectively “structured securities.”
The following tables provide information relating to investments in fixed maturity and equity securities by sectortype as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
March 31, 2023:AmortizedAllowance forUnrealizedUnrealizedEstimated Fair% of
 CostCredit LossesGainsLossesValueTotal
Available-for-sale:
Corporate$39,621 $69 $255 $4,330 $35,477 63.3 %
Canadian government3,345 — 455 45 3,755 6.7 
Japanese government3,749 — 9 315 3,443 6.1 
ABS4,470 10 8 365 4,103 7.3 
CMBS1,882 — — 212 1,670 3.0 
RMBS1,120 — 2 98 1,024 1.8 
U.S. government1,923 — 6 184 1,745 3.1 
State and political subdivisions1,261 — 9 132 1,138 2.0 
Other foreign government4,123 — 31 424 3,730 6.7 
Total fixed maturity securities$61,494 $79 $775 $6,105 $56,085 100.0 %
September 30, 2017: Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value % of Total Other-than-
temporary impairments in AOCI
Available-for-sale:            
Corporate securities $21,418,741
 $1,209,999
 $92,910
 $22,535,830
 61.9% $—
Canadian and Canadian provincial governments 2,850,982
 1,142,635
 2,432
 3,991,185
 11.0
 —
Residential mortgage-backed securities 1,645,379
 42,202
 8,276
 1,679,305
 4.6
 —
Asset-backed securities 1,680,918
 18,713
 5,063
 1,694,568
 4.7
 275
Commercial mortgage-backed securities 1,293,296
 25,471
 5,445
 1,313,322
 3.6
 —
U.S. government and agencies 1,621,053
 13,614
 30,998
 1,603,669
 4.4
 —
State and political subdivisions 614,099
 52,919
 5,987
 661,031
 1.8
 —
Other foreign government, supranational and foreign government-sponsored enterprises 2,765,500
 145,025
 7,693
 2,902,832
 8.0
 —
Total fixed maturity securities $33,889,968
 $2,650,578
 $158,804
 $36,381,742
 100.0% $275
Non-redeemable preferred stock $41,878
 $312
 $3,289
 $38,901
 34.4%  
Other equity securities 74,514
 633
 1,117
 74,030
 65.6
  
Total equity securities $116,392
 $945
 $4,406
 $112,931
 100.0%  
December 31, 2022:AmortizedAllowance forUnrealizedUnrealizedEstimated Fair% of
 CostCredit LossesGainsLossesValueTotal
Available-for-sale:
Corporate$38,963 $27 $168 $5,135 $33,969 64.2 %
Canadian government3,311 — 381 66 3,626 6.9 
Japanese government3,033 — 4 478 2,559 4.8 
ABS4,324 10 4 440 3,878 7.3 
CMBS1,835 — — 212 1,623 3.1 
RMBS1,054 — 1 114 941 1.8 
U.S. government1,690 — 4 212 1,482 2.8 
State and political subdivisions1,282 — 10 173 1,119 2.1 
Other foreign government4,171 — 22 489 3,704 7.0 
Total fixed maturity securities$59,663 $37 $594 $7,319 $52,901 100.0 %
December 31, 2016: Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value % of Total Other-than-
temporary impairments in AOCI
Available-for-sale:            
Corporate securities $18,924,711
 $911,618
 $217,245
 $19,619,084
 61.1% $—
Canadian and Canadian provincial governments 2,561,605
 1,085,982
 3,541
 3,644,046
 11.4
 —
Residential mortgage-backed securities 1,258,039
 33,917
 13,380
 1,278,576
 4.0
 (375)
Asset-backed securities 1,443,822
 9,350
 23,828
 1,429,344
 4.5
 275
Commercial mortgage-backed securities 1,342,440
 28,973
 7,759
 1,363,654
 4.2
 —
U.S. government and agencies 1,518,702
 12,644
 63,044
 1,468,302
 4.6
 —
State and political subdivisions 566,761
 37,499
 12,464
 591,796
 1.8
 —
Other foreign government, supranational and foreign government-sponsored enterprises 2,595,707
 123,054
 19,938
 2,698,823
 8.4
 —
Total fixed maturity securities $30,211,787
 $2,243,037
 $361,199
 $32,093,625
 100.0% $(100)
Non-redeemable preferred stock $55,812
 $1,648
 $6,337
 $51,123
 18.6%  
Other equity securities 229,767
 1,792
 7,321
 224,238
 81.4
  
Total equity securities $285,579
 $3,440
 $13,658
 $275,361
 100.0%  
The Company enters into various collateral arrangements with counterparties that require both the pledging and acceptance of fixed maturity securities as collateral. Pledged fixed maturity securities are included in fixed maturity securities available-for-sale in the condensed consolidated balance sheets. Fixed maturity securities received as collateral are held in separate custodial accounts and are not recorded on the Company’s condensed consolidated balance sheets. Subject to certain constraints, the Company is permitted by contract to sell or repledge collateral it receives; however, as of September 30, 2017March 31, 2023 and December 31, 2016,2022, none of the collateral received had been sold or repledged. The Company also holds assets in trust to satisfy collateral requirements under derivative transactions and certain third-party reinsurance treaties. The following table includes fixed maturity securities pledged and received as collateral and assets in trust held to satisfy collateral requirements under derivative transactions and certain third-party reinsurance treaties as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):

March 31, 2023December 31, 2022
Amortized
Cost		Estimated
Fair Value		Amortized
Cost		Estimated
Fair Value
Fixed maturity securities pledged as collateral$414 $366 $355 $292 
Fixed maturity securities received as collateraln/a1,506 n/a1,428 
Assets in trust held to satisfy collateral requirements31,586 28,622 31,510 27,817 
10
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 September 30, 2017 December 31, 2016
 
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Fixed maturity securities pledged as collateral$68,841
 $72,365
 $207,066
 $210,676
Fixed maturity securities received as collateraln/a
 461,237
 n/a
 300,925
Assets in trust held to satisfy collateral requirements14,598,404
 15,598,457
 12,135,258
 12,874,370
The Company monitors its concentrations of financial instruments on an ongoing basis and mitigates credit risk by maintaining a diversified investment portfolio whichthat limits exposure to any one issuer. The Company’s exposure to concentrations of credit risk from single issuers greater than 10% of the Company’s stockholders’ equity included securities of the U.S. government and its agencies and the Japanese government and its agencies, as well as the securities disclosed below, as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions).
March 31, 2023December 31, 2022
Amortized
Cost		Estimated
Fair Value		Amortized
Cost		Estimated
Fair Value
Fixed maturity securities guaranteed or issued by:
Canadian province of Quebec$1,388 $1,642 $1,436 $1,649 
Canadian province of Ontario1,033 1,146 982 1,068 
 September 30, 2017 December 31, 2016
 
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Fixed maturity securities guaranteed or issued by:       
Canadian province of Quebec$1,115,505
 $1,766,749
 $1,004,261
 $1,612,957
Canadian province of Ontario932,872
 1,231,201
 832,764
 1,126,433
The amortized cost and estimated fair value of fixed maturity securities classified as available-for-sale at September 30, 2017as of March 31, 2023, are shown by contractual maturity in the table below (dollars in thousands)millions). Actual maturities can differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset and mortgage-backedStructured securities are shown separately in the table below, as they are not due at a single maturity date.
 Amortized Cost Estimated Fair ValueAmortized CostEstimated Fair Value
Available-for-sale:    Available-for-sale:
Due in one year or less $910,821
 $915,586
Due in one year or less$1,899 $1,849 
Due after one year through five years 7,339,134
 7,618,692
Due after one year through five years10,092 9,879 
Due after five years through ten years 9,581,912
 10,090,704
Due after five years through ten years11,375 10,513 
Due after ten years 11,438,508
 13,069,565
Due after ten years30,656 27,047 
Asset and mortgage-backed securities 4,619,593
 4,687,195
Structured securitiesStructured securities7,472 6,797 
Total $33,889,968
 $36,381,742
Total$61,494 $56,085 
Corporate Fixed Maturity Securities
The tables below show the major industry typessectors of the Company’s corporate fixed maturity holdings as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
March 31, 2023: Estimated 
 Amortized CostFair Value% of Total
Finance$14,732 $13,043 36.8 %
Industrial19,945 18,108 51.0 
Utility4,944 4,326 12.2 
Total$39,621 $35,477 100.0 %
December 31, 2022: Estimated 
 Amortized CostFair Value% of Total
Finance$14,551 $12,680 37.3 %
Industrial19,624 17,257 50.8 
Utility4,788 4,032 11.9 
Total$38,963 $33,969 100.0 %
41
September 30, 2017:   Estimated  
  Amortized Cost     Fair Value % of Total           
Finance $7,797,576
 $8,146,891
 36.2%
Industrial 11,323,024
 11,914,845
 52.8
Utility 2,298,141
 2,474,094
 11.0
Total $21,418,741
 $22,535,830
 100.0%
       
December 31, 2016:   Estimated  
  Amortized Cost Fair Value % of Total
Finance $6,725,199
 $6,888,968
 35.2%
Industrial 10,228,813
 10,639,613
 54.2
Utility 1,970,699
 2,090,503
 10.6
Total $18,924,711
 $19,619,084
 100.0%

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Other-Than-TemporaryAllowance for Credit Losses and Impairments - – Fixed Maturity and Equity Securities Available-for-Sale
As discussed in Note 2 – “Summary of Significant“Significant Accounting Policies”Policies and Pronouncements” of the 2016Company’s 2022 Annual Report, a portion of certain other-than-temporary impairment (“OTTI”)allowances for credit losses on fixed maturity securities isare recognized in AOCI. For these securities, the netinvestment related gains (losses), net. The amount recognized in the condensed consolidated statements of income (“credit loss impairments”) represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debtfixed maturity security prior to impairment.the allowance for credit losses. Any remaining difference between the fair value and amortized cost is recognized in AOCI. OCI.
The following table sets forthtables present the amountrollforward of pre-taxthe allowance for credit loss impairments onlosses in fixed maturity securities held by type for the Company as of the dates indicated, for which a portion of the OTTI loss was recognizedthree months ended March 31, 2023 and 2022 (dollars in AOCI, and the corresponding changes in such amounts (dollars in thousands)millions):
For the three months ended March 31, 2023:
 CorporateABSCMBSOther Foreign GovernmentTotal
Balance, beginning of year$27 $10 $— $— $37 
Credit losses recognized on securities for which credit losses were not previously recorded43 — — — 43 
Reductions for securities sold during the period(3)— — — (3)
Additional increases or decreases for credit losses on securities that had an allowance recorded in a previous period2 — — — 2 
Balance, end of period$69 $10 $— $— $79 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Balance, beginning of period $3,677
 $6,974
 $6,013
 $7,284
Credit loss OTTI previously recognized on securities which matured, paid down, prepaid or were sold during the period —
 —
 (2,336) (310)
Balance, end of period $3,677
 $6,974
 $3,677
 $6,974

For the three months ended March 31, 2022:
 CorporateABSCMBSOther Foreign GovernmentTotal
Balance, beginning of year$26 $— $1 $4 $31 
Credit losses recognized on securities for which credit losses were not previously recorded6 5 — — 11 
Reductions for securities sold during the period(1)— — (1)(2)
Additional increases or decreases for credit losses on securities that had an allowance recorded in a previous period2 — — — 2 
Balance, end of period$33 $5 $1 $3 $42 
Unrealized Losses for Fixed Maturity and Equity Securities Available-for-Sale
The following table presents the total gross unrealized losses for the 1,165 and 1,535 fixed maturity and equity securities as of September 30, 2017 and December 31, 2016, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (dollars in thousands):
  September 30, 2017 December 31, 2016
  
Gross
Unrealized
Losses
 % of Total     
Gross
Unrealized
Losses
 % of Total    
Less than 20% $140,313
 86.0% $337,831
 90.1%
20% or more for less than six months 3,407
 2.1
 19,438
 5.2
20% or more for six months or greater 19,490
 11.9
 17,588
 4.7
Total $163,210
 100.0% $374,857
 100.0%
The Company’s determination of whether a decline in value is other-than-temporary includes analysis ofnecessitates the underlying credit and the extent and duration of a decline in value. The Company’s credit analysisrecording of an investmentallowance for credit losses includes determiningan analysis of whether the issuer is current on its contractual payments, evaluating whether it is probable that the Company will be able to collect all amounts due according to the contractual terms of the security and analyzing the overall ability of the Company to recover the amortized cost of the investment. In the Company’s impairment review process, the duration and severity of an unrealized loss position for equity securities are given greater weight and consideration given the lack of contractual cash flows or deferability features.
The following tables present the estimated fair values and gross unrealized losses including other-than-temporary impairment losses reported in AOCI, for 1,165the 6,228 and 1,5356,441 fixed maturity securities for which an allowance for credit loss has not been recorded as of March 31, 2023 and equity securities that haveDecember 31, 2022, and the estimated fair valuesvalue had declined and remained below amortized cost as of September 30, 2017 and December 31, 2016, respectively (dollars in thousands)millions). These investments are presented by class and grade of security, as well as the length of time the related fair value has continuously remained below amortized cost.


12
42
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 Less than 12 months12 months or greaterTotal
  Gross Gross Gross
March 31, 2023:EstimatedUnrealizedEstimatedUnrealizedEstimatedUnrealized
 Fair ValueLossesFair ValueLossesFair ValueLosses
Investment grade securities:
Corporate$9,861 $486 $18,130 $3,705 $27,991 $4,191 
Canadian government395 15 165 30 560 45 
Japanese government379 4 2,291 311 2,670 315 
ABS811 38 2,777 311 3,588 349 
CMBS341 20 1,271 188 1,612 208 
RMBS332 16 513 82 845 98 
U.S. government909 5 606 179 1,515 184 
State and political subdivisions350 10 635 122 985 132 
Other foreign government1,073 38 1,763 325 2,836 363 
Total investment grade securities14,451 632 28,151 5,253 42,602 5,885 
 
Below investment grade securities:
Corporate550 58 546 79 1,096 $137 
ABS45 3 46 10 91 13 
Other foreign government— — 187 61 187 61 
Total below investment grade securities595 61 779 150 1,374 211 
Total fixed maturity securities$15,046 $693 $28,930 $5,403 $43,976 $6,096 
  Less than 12 months 12 months or greater Total
    Gross   Gross   Gross
September 30, 2017: Estimated Unrealized Estimated Unrealized Estimated Unrealized
  Fair Value Losses Fair Value Losses Fair Value Losses
Investment grade securities:            
Corporate securities $2,035,856
 $15,923
 $1,213,026
 $49,422
 $3,248,882
 $65,345
Canadian and Canadian provincial governments 97,100
 1,320
 46,663
 1,112
 143,763
 2,432
Residential mortgage-backed securities 507,372
 5,084
 154,469
 3,189
 661,841
 8,273
Asset-backed securities 516,613
 2,318
 133,848
 2,213
 650,461
 4,531
Commercial mortgage-backed securities 293,834
 3,224
 61,707
 2,221
 355,541
 5,445
U.S. government and agencies 1,302,732
 29,712
 56,595
 1,286
 1,359,327
 30,998
State and political subdivisions 53,977
 743
 62,530
 5,156
 116,507
 5,899
Other foreign government, supranational and foreign government-sponsored enterprises 327,813
 2,529
 104,333
 4,865
 432,146
 7,394
Total investment grade securities 5,135,297
 60,853
 1,833,171
 69,464
 6,968,468
 130,317
 
Below investment grade securities:
            
Corporate securities 170,023
 3,780
 95,089
 23,785
 265,112
 27,565
Residential mortgage-backed securities —
 —
 93
 3
 93
 3
Asset-backed securities —
 —
 5,611
 532
 5,611
 532
State and political subdivisions 919
 88
 —
 —
 919
 88
Other foreign government, supranational and foreign government-sponsored enterprises 11,219
 77
 15,667
 222
 26,886
 299
Total below investment grade securities 182,161
 3,945
 116,460
 24,542
 298,621
 28,487
Total fixed maturity securities $5,317,458
 $64,798
 $1,949,631
 $94,006
 $7,267,089
 $158,804
Non-redeemable preferred stock $6,712
 $345
 $25,983
 $2,944
 $32,695
 $3,289
Other equity securities 6,446
 396
 58,206
 721
 64,652
 1,117
Total equity securities $13,158
 $741
 $84,189
 $3,665
 $97,347
 $4,406
  Less than 12 months 12 months or greater Total
    Gross   Gross   Gross
December 31, 2016: Estimated Unrealized Estimated Unrealized Estimated Unrealized
  Fair Value Losses Fair Value Losses Fair Value Losses
Investment grade securities:            
Corporate securities $4,661,706
 $124,444
 $549,273
 $43,282
 $5,210,979
 $167,726
Canadian and Canadian provincial governments 101,578
 3,541
 —
 —
 101,578
 3,541
Residential mortgage-backed securities 490,473
 9,733
 112,216
 3,635
 602,689
 13,368
Asset-backed securities 563,259
 12,010
 257,166
 9,653
 820,425
 21,663
Commercial mortgage-backed securities 368,465
 6,858
 10,853
 166
 379,318
 7,024
U.S. government and agencies 1,056,101
 63,044
 —
 —
 1,056,101
 63,044
State and political subdivisions 187,194
 9,396
 13,635
 3,068
 200,829
 12,464
Other foreign government, supranational and foreign government-sponsored enterprises 524,236
 13,372
 51,097
 2,981
 575,333
 16,353
Total investment grade securities 7,953,012
 242,398
 994,240
 62,785
 8,947,252
 305,183
Below investment grade securities:            
Corporate securities 330,757
 7,914
 163,152
 41,605
 493,909
 49,519
Residential mortgage-backed securities —
 —
 412
 12
 412
 12
Asset-backed securities 5,904
 700
 12,581
 1,465
 18,485
 2,165
Commercial mortgage-backed securities 5,815
 735
 —
 —
 5,815
 735
Other foreign government, supranational and foreign government-sponsored enterprises 32,355
 1,258
 39,763
 2,327
 72,118
 3,585
Total below investment grade securities 374,831
 10,607
 215,908
 45,409
 590,739
 56,016
Total fixed maturity securities $8,327,843
 $253,005
 $1,210,148

$108,194
 $9,537,991
 $361,199
Non-redeemable preferred stock $10,831
 $831
 $21,879
 $5,506
 $32,710
 $6,337
Other equity securities 202,068
 7,020
 6,751
 301
 208,819
 7,321
Total equity securities $212,899
 $7,851
 $28,630

$5,807
 $241,529
 $13,658

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 Less than 12 months12 months or greaterTotal
  Gross Gross Gross
December 31, 2022:EstimatedUnrealizedEstimatedUnrealizedEstimatedUnrealized
 Fair ValueLossesFair ValueLossesFair ValueLosses
Investment grade securities:
Corporate$21,867 $2,756 $6,840 $2,225 $28,707 $4,981 
Canadian government554 42 71 23 625 65 
Japanese government815 86 1,694 392 2,509 478 
ABS1,596 153 1,931 269 3,527 422 
CMBS1,314 144 281 65 1,595 209 
RMBS664 62 181 53 845 115 
U.S. government1,202 64 253 148 1,455 212 
State and political subdivisions819 124 131 50 950 174 
Other foreign government1,942 167 1,026 260 2,968 427 
Total investment grade securities30,773 3,598 12,408 3,485 43,181 7,083 
Below investment grade securities:
Corporate767 87 305 61 1,072 148 
ABS52 6 38 9 90 15 
Other foreign government39 2 164 60 203 62 
Total below investment grade securities858 95 507 130 1,365 225 
Total fixed maturity securities$31,631 $3,693 $12,915 $3,615 $44,546 $7,308 
The Company has no intention to sell, nor does it expect to be required to sell, the securities outlined in the tabletables above, as of the dates indicated. However, unforeseen facts and circumstances may cause the Company to sell fixed maturity and equity securities in the ordinary course of managing its portfolio to meet certain diversification, credit quality and liquidity guidelines.
Unrealized losses on below investment grade securities as of September 30, 2017 are primarily related to high-yield corporate securities. Changes in unrealized losses are primarily being driven by changes in risk-free interest rates and credit spreads and interest rates.spreads.


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Net Investment Income Net of Related Expenses
Major categories of net investment income net of related expenses, consist of the following (dollars in thousands)millions):
Three months ended September 30, Nine months ended September 30, Three months ended March 31,
2017 2016 2017 2016 20232022
Fixed maturity securities available-for-sale$359,157
 $325,089
 $1,039,392
 $961,096
Fixed maturity securities available-for-sale$645 $533 
Mortgage loans on real estate50,040
 39,802
 138,829
 121,494
Equity securitiesEquity securities2 2 
Mortgage loansMortgage loans74 73 
Policy loans15,404
 15,391
 45,870
 47,897
Policy loans13 13 
Funds withheld at interest102,144
 104,609
 327,089
 273,482
Funds withheld at interest72 51 
Limited partnerships and real estate joint venturesLimited partnerships and real estate joint ventures54 161 
Short-term investments and cash and cash equivalents1,977
 1,752
 5,266
 6,265
Short-term investments and cash and cash equivalents21 2 
Other invested assets47,595
 21,138
 90,488
 57,896
Other invested assets9 2 
Investment income576,317
 507,781
 1,646,934
 1,468,130
Investment income890 837 
Investment expense(19,399) (18,054) (57,114) (53,471)Investment expense(34)(27)
Investment income, net of related expenses$556,918
 $489,727
 $1,589,820
 $1,414,659
Net investment incomeNet investment income$856 $810 
Investment Related Gains (Losses), Net
Investment related gains (losses), net consist of the following (dollars in thousands)millions):
 Three months ended March 31,
 20232022
Fixed maturity securities available-for-sale:
Change in allowance for credit losses$(42)$(11)
Impairments on fixed maturities(1)(1)
Realized gains on investment activity31 11 
Realized losses on investment activity(75)(36)
Net gains (losses) on equity securities2 (8)
Change in mortgage loan allowance for credit losses3 (2)
Change in fair value of certain limited partnership investments(3)19 
Other, net2 8 
Net gains (losses) on derivatives6 (119)
Total investment related gains (losses), net$(77)$(139)
44
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
Fixed maturity and equity securities available for sale:       
Other-than-temporary impairment losses on fixed maturity securities recognized in earnings$(390) $—
 $(20,980) $(34,663)
Impairment losses on equity securities(889) —
 (889) —
Gain on investment activity19,522
 46,346
 91,635
 127,153
Loss on investment activity(7,678) (9,054) (30,712) (43,397)
Other impairment losses and change in mortgage loan provision(2,446) (262) (9,220) (2,111)
Derivatives and other, net14,534
 49,594
 109,637
 37,020
Total investment related gains (losses), net$22,653
 $86,624
 $139,471
 $84,002
The fixed maturity impairments for the three and nine months ended September 30, 2017 and 2016 were largely related to high-yield and emerging market corporate securities. The equity impairments for the three and nine months ended September 30, 2017 were related to an equity position received as part of a debt restructuring. The other impairment losses and change in mortgage loan provision for the three and nine months ended September 30, 2017 and 2016 were primarily due to impairments on limited partnerships. The fluctuations in investment related gains (losses) for derivatives and other for the three and nine months ended September 30, 2017, compared to the same periods in 2016, are primarily due to changes in the fair value of embedded derivatives and interest rate swaps.
During the three months ended September 30, 2017 and 2016, the Company sold fixed maturity and equity securities with fair values of $484.7 million and $317.3 million at losses of $7.7 million and $9.1 million, respectively. During the nine months ended September 30, 2017 and 2016, the Company sold fixed maturity and equity securities with fair values of $1,771.4 million and $903.1 million at losses of $30.7 million and $43.4 million, respectively. The Company generally does not buy and sell securities on a short-term basis.

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Securities Borrowing, Lending and OtherRepurchase/Reverse Repurchase Agreements
The Company participates infollowing table provides information relating to securities borrowing, programs whereby securities, whichlending and repurchase/reverse repurchase agreements as of March 31, 2023 and December 31, 2022 (dollars in millions):
March 31, 2023December 31, 2022
Amortized
Cost		Estimated
Fair Value		Amortized
Cost		Estimated
Fair Value
Securities borrowing agreements:
Securities borrowed (1)
n/a$930 n/a$852 
Securities pledged as collateral (2)
922 804 859 693 
Securities lending agreements:
Securities loaned (2)
60 56 59 55 
Securities received as collateral (3)
n/a66 n/a66 
Repurchase/reverse repurchase agreements:
Securities sold (2)
1,071 964 898 779 
Securities purchased (3)
n/a629 n/a619 
Cash received (4)
248 248 149 149 
(1)Securities borrowed are not reflected on the Company’s condensed consolidated balance sheets, are borrowed from third parties. The borrowed securities are used to provide collateral under affiliated reinsurance transactions. The Company is required to maintain a minimum of 100% of the fair value, or par value, under certain programs, of the borrowed securities as collateral. The collateral consists of rights to reinsurance treaty cash flows. If cash flows from the reinsurance treaties are insufficient to maintain the minimum collateral requirement, the Company may substitute cash or securities to meet the requirement. No cash or securities have been pledged by the Company for this purpose.
The Company also participates in a securities lending program whereby securities, reflected as investments on the Company’s condensed consolidated balance sheets, are loaned to a third party. The Company receives securities as collateral, in an amount equal to a minimum of 105% of the fair value of the securities lent. The securities received as collateral are not reflected on the Company’s condensed consolidated balance sheets.
The Company also participates in repurchase/reverse repurchase programs in which securities, reflected as investments on the Company’s condensed consolidated balance sheets, are pledged to third parties. In return, the Company receives securities from the third parties with an estimated fair value equal to a minimum of 100% of the securities pledged. The securities received are not reflected on the Company’s condensed consolidated balance sheets.
The Company also participates in a repurchase program in which securities, reflected as investments on the Company’s condensed consolidated balance sheets, are pledged to a third party. In return, the Company receives cash from the third party, which is reflected as a payable to the third party and included in other liabilities on the condensed consolidated balance sheets. The Company is required to maintain a minimum collateral balance with a fair value of 102% of the cash received.
The following table includes the amount of borrowed securities, securities lent and securities collateral received as part of the securities lending program and repurchased/reverse repurchased securities pledged and received as of September 30, 2017 and December 31, 2016 (dollars in thousands).
 September 30, 2017 December 31, 2016
 
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Borrowed securities$360,475
 $379,101
 $263,820
 $279,186
Securities lending:       
Securities loaned117,219
 121,958
 74,389
 73,625
Securities receivedn/a
 120,000
 n/a
 80,000
Repurchase program/reverse repurchase program:       
Securities pledged491,824
 512,613
 476,531
 499,891
Securities receivedn/a
 522,354
 n/a
 515,200
The Company also held cash collateral for securities lending and the repurchase program/reverse repurchase programs of $38.5 million and $28.8 million at September 30, 2017 and December 31, 2016, respectively.

15
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The following table presents information on the Company’s securities lending and repurchase transactions as of September 30, 2017 and December 31, 2016 (dollars in thousands). Collateral associated with certain borrowed securities is not included within thethis table as the collateral pledged to eachthe counterparty is the right to reinsurance treaty cash flows.
(2)Securities loaned, pledged or sold to counterparties are included within fixed maturity securities.
 September 30, 2017
 Remaining Contractual Maturity of the Agreements
 Overnight and Continuous Up to 30 Days 30-90 Days Greater than 90 Days Total
Securities lending transactions:         
Corporate securities$—
 $—
 $—
 $121,958
 $121,958
Total—
 —
 —
 121,958
 121,958
Repurchase transactions:         
Corporate securities—
 1,472
 5,402
 175,258
 182,132
Residential mortgage-backed securities—
 —
 —
 87,418
 87,418
U.S. government and agencies—
 —
 23,206
 196,040
 219,246
Foreign government—
 —
 —
 21,370
 21,370
Other2,447
 —
 —
 —
 2,447
Total2,447
 1,472
 28,608
 480,086
 512,613
Total transactions$2,447
 $1,472
 $28,608
 $602,044
 $634,571
          
Gross amount of recognized liabilities for securities lending and repurchase transactions in preceding table $680,850
Amounts related to agreements not included in offsetting disclosure $46,279
 December 31, 2016
 Remaining Contractual Maturity of the Agreements
 Overnight and Continuous Up to 30 Days 30-90 Days Greater than 90 Days Total
Securities lending transactions:         
Corporate securities$—
 $—
 $4,017
 $69,608
 $73,625
Total$—
 $—
 $4,017
 $69,608
 $73,625
Repurchase transactions:         
Corporate securities$—
 $—
 $3,220
 $166,979
 $170,199
Residential mortgage-backed securities—
 —
 —
 92,546
 92,546
U.S. government and agencies—
 —
 —
 216,000
 216,000
Foreign government—
 —
 —
 19,900
 19,900
Other1,246
 —
 —
 —
 1,246
Total1,246
 —
 3,220
 495,425
 499,891
Total borrowings$1,246
 $—
 $7,237
 $565,033
 $573,516
          
Gross amount of recognized liabilities for securities lending and repurchase transactions in preceding table $624,032
Amounts related to agreements not included in offsetting disclosure $50,516
The Company has elected to offset amounts recognized(3)Securities received as receivables and payables resultingcollateral or purchased from the repurchase/reverse repurchase programs. After the effect of offsetting, the net amount presentedcounterparties are not reflected on the condensed consolidated balance sheets was a liabilityfinancial statements.
(4)A payable for the cash received by the Company is included within other liabilities.
The following tables present information on the remaining contractual maturity of $7.9 millionthe Company’s securities lending and $5.5 millionrepurchase agreements as of September 30, 2017March 31, 2023 and December 31, 2016, respectively. As of September 30, 2017 and December 31, 2016, the Company recognized payables resulting from cash received as collateral associated with a repurchase agreement as discussed above. Amounts owed to and due from the counterparties may be settled2022 (dollars in cash or offset, in accordance with the agreements.millions):

March 31, 2023
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30 – 90 DaysGreater than 90 DaysTotal
Securities lending agreements:
Corporate$— $— $— $40 $40 
Canadian government— — — 5 5 
State and political subdivisions— — — 6 6 
Other foreign government— — — 5 5 
Total— — — 56 56 
Repurchase agreements:
Corporate— — — 342 342 
Japanese government— — — 290 290 
ABS— — — 57 57 
CMBS— — — 111 111 
RMBS— — — 53 53 
U.S. government— — — 13 13 
Other foreign government— — — 98 98 
Total— — — 964 964 
Total agreements$— $— $— $1,020 $1,020 
16
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December 31, 2022
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30 – 90 DaysGreater than 90 DaysTotal
Securities lending agreements:
Corporate$— $— $— $42 $42 
Canadian government— — — 5 5 
State and political subdivisions— — — 3 3 
Other foreign government— — — 5 5 
Total— — — 55 55 
Repurchase agreements:
Corporate— — — 279 279 
Japanese government— — — 278 278 
ABS— — — 54 54 
CMBS— — — 63 63 
RMBS— — — 10 10 
U.S. government— — — — — 
Other foreign government— — — 95 95 
Total— — — 779 779 
Total agreements$— $— $— $834 $834 
Mortgage Loans on Real Estate
Mortgage loans represented approximately 8.7% and 8.4%As of the Company’s total investments as of September 30, 2017 and DecemberMarch 31, 2016. The Company makes2023, mortgage loans on income producing properties that arewere geographically diversifieddispersed throughout the U.S. with the largest concentration beingconcentrations in California (12.8%), Texas (12.0%) and Washington (8.0%), in addition to loans secured by properties in Canada (3.5%) and the state of California, which represented 21.2% and 22.1% of mortgage loans on real estate as of September 30, 2017 and December 31, 2016, respectively.United Kingdom (2.3%). The recorded investment in mortgage loans on real estate presented below is gross of unamortized deferred loan origination fees and expenses and valuation allowances.allowance for credit losses.
The following table presents the distribution of the Company’s recorded investment in mortgage loans by property type is as follows as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
 March 31, 2023December 31, 2022
 Property type:Carrying Value% of TotalCarrying Value% of Total
Office$1,710 24.8 %$1,706 25.6 %
Retail2,319 33.6 2,290 34.4 
Industrial1,602 23.3 1,518 22.8 
Apartment835 12.1 763 11.5 
Other commercial429 6.2 376 5.7 
Recorded investment6,895 100.0 %6,653 100.0 %
Unamortized balance of loan origination fees and expenses(14)(12)
Allowance for credit losses(48)(51)
Total mortgage loans$6,833 $6,590 
  September 30, 2017 December 31, 2016
 Property type: Carrying Value % of Total Carrying Value % of Total
Office building $1,426,673
 32.9% $1,270,113
 33.6%
Retail 1,316,463
 30.4
 1,179,936
 31.2
Industrial 891,051
 20.6
 713,461
 18.8
Apartment 508,367
 11.7
 447,088
 11.8
Other commercial 191,443
 4.4
 172,609
 4.6
Recorded investment 4,333,997
 100.0% $3,783,207
 100.0%
Unamortized balance of loan origination fees and expenses (2,531)   —
  
Valuation allowances (9,137)   (7,685)  
Total mortgage loans on real estate $4,322,329
   $3,775,522
  
The following table presents the maturities of the Company’s recorded investment in mortgage loans as of September 30, 2017March 31, 2023 and December 31, 2016 are as follows2022 (dollars in thousands)millions):
March 31, 2023December 31, 2022
Recorded
Investment		% of TotalRecorded
Investment		% of Total
Due within five years$2,827 41.0 %$2,652 39.9 %
Due after five years through ten years3,101 45.0 2,930 44.0 
Due after ten years967 14.0 1,071 16.1 
Total$6,895 100.0 %$6,653 100.0 %
46
  September 30, 2017 December 31, 2016
  
Recorded
Investment
 % of Total 
Recorded
Investment
 % of Total
Due within five years $1,086,700
 25.1% $822,073
 21.7%
Due after five years through ten years 2,334,113
 53.8
 2,099,559
 55.5
Due after ten years 913,184
 21.1
 861,575
 22.8
Total $4,333,997
 100.0% $3,783,207
 100.0%
Table of Contents

The following tables set forth certain key credit quality indicators of the Company’s recorded investment in mortgage loans as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
Recorded Investment
Debt Service RatiosConstruction loans
>1.20x1.00x – 1.20x<1.00xTotal% of Total
March 31, 2023:
Loan-to-Value Ratio
0% – 59.99%$3,740 $210 $82 $30 $4,062 58.9 %
60% – 69.99%1,811 140 70 — 2,021 29.3 
70% – 79.99%529 41 21 — 591 8.6 
80% or greater59 30 132 — 221 3.2 
Total$6,139 $421 $305 $30 $6,895 100.0 %
 Recorded Investment
 Debt Service Ratios    
 >1.20x 1.00x - 1.20x <1.00x Total % of Total
September 30, 2017:         
Loan-to-Value Ratio         
0% - 59.99%$2,060,277
 $51,162
 $4,698
 $2,116,137
 48.8%
60% - 69.99%1,515,469
 86,613
 44,358
 1,646,440
 38.0
70% - 79.99%424,195
 32,664
 19,850
 476,709
 11.0
Greater than 80%51,348
 19,951
 23,412
 94,711
 2.2
Total$4,051,289
 $190,390
 $92,318
 $4,333,997
 100.0%
Recorded Investment
Debt Service RatiosConstruction loans
>1.20x1.00x – 1.20x<1.00xTotal% of Total
December 31, 2022:
Loan-to-Value Ratio
0% – 59.99%$3,466 $215 $56 $18 $3,755 56.4 %
60% – 69.99%1,894 119 71 — 2,084 31.3 
70% – 79.99%475 49 91 — 615 9.3 
80% or greater81 — 118 — 199 3.0 
Total$5,916 $383 $336 $18 $6,653 100.0 %

17
TableThe following table sets forth credit quality grades by year of Contents


 Recorded Investment
 Debt Service Ratios    
 >1.20x 1.00x - 1.20x <1.00x Total % of Total
December 31, 2016:         
Loan-to-Value Ratio         
0% - 59.99%$1,859,640
 $64,749
 $1,366
 $1,925,755
 50.8%
60% - 69.99%1,257,788
 34,678
 —
 1,292,466
 34.2
70% - 79.99%370,092
 20,869
 24,369
 415,330
 11.0
Greater than 80%114,297
 —
 35,359
 149,656
 4.0
Total$3,601,817
 $120,296
 $61,094
 $3,783,207
 100.0%
Noneorigination of the payments due to the Company on itsCompany’s recorded investment in mortgage loans were delinquent as of September 30, 2017March 31, 2023 and December 31, 2016.2022 (dollars in millions):
Recorded Investment
Year of Origination
20232022202120202019PriorTotal
March 31, 2023:
Internal credit quality grade:
High investment grade$66 $694 $676 $335 $531 $1,944 $4,246 
Investment grade245 599 283 238 306 754 2,425 
Average— — 6 — 39 160 205 
Watch list— — — — — — — 
In or near default— — — — — 19 19 
Total$311 $1,293 $965 $573 $876 $2,877 $6,895 
Recorded Investment
Year of Origination
20222021202020192018PriorTotal
December 31, 2022:
Internal credit quality grade:
High investment grade$698 $684 $327 $561 $422 $1,565 $4,257 
Investment grade586 284 248 279 252 531 2,180 
Average— 6 — 39 52 83 180 
Watch list— — — — — — — 
In or near default— — — — — 36 36 
Total$1,284 $974 $575 $879 $726 $2,215 $6,653 

47
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The following table presents the current and past due composition of the Company’s recorded investment in mortgage loans by method of measuring impairment, and the related valuation allowances as of September 30, 2017March 31, 2023 and December 31, 2016 (dollars in thousands):2022.
 March 31, 2023December 31, 2022
Current$6,869 $6,617 
31 – 60 days past due7 — 
Greater than 90 days past due19 36 
Total$6,895 $6,653 
  September 30, 2017 December 31, 2016
Mortgage loans:    
Individually measured for impairment $5,856
 $2,216
Collectively measured for impairment 4,328,141
 3,780,991
Recorded investment $4,333,997
 $3,783,207
Valuation allowances:    
Individually measured for impairment $—
 $—
Collectively measured for impairment 9,137
 7,685
Total valuation allowances $9,137
 $7,685
InformationThe following table presents information regarding the Company’s loan valuation allowancesallowance for credit losses for mortgage loans for the three and nine months ended September 30, 2017March 31, 2023 and 2016 is as follows2022 (dollars in thousands)millions):
 Three months ended March 31,
 20232022
Balance, beginning of period$51 $35 
Change in allowance for credit losses(3)2 
Balance, end of period$48 $37 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Balance, beginning of period $8,156
 $6,499
 $7,685
 $6,813
Provision (release) 977
 247
 1,444
 (67)
Translation adjustment 4
 —
 8
 —
Balance, end of period $9,137
 $6,746
 $9,137
 $6,746

18
TableDuring the three months ended March 31, 2023, the Company converted one mortgage loan in the amount of Contents


Information regarding$17 million to an owned property through a deed in lieu of foreclosure. During the portionthree months ended March 31, 2022, the Company restructured three mortgage loans to interest only payments as a result of the Company’slower occupancy levels, one of which was paid in full as of December 31, 2022. The total recorded investment before allowance for credit losses for mortgage loans that were impairedmodified or met the criteria of Troubled Debt Restructuring (“TDR”) is $77 million as of September 30, 2017 and DecemberMarch 31, 2016 is as follows (dollars2022. The Company had one mortgage loan in thousands):
  
Unpaid
Principal
Balance
 
Recorded
Investment
 
Related
Allowance
 
Carrying
Value
September 30, 2017:        
Impaired mortgage loans with no valuation allowance recorded $6,427
 $5,856
 $—
 $5,856
Impaired mortgage loans with valuation allowance recorded —
 —
 —
 —
Total impaired mortgage loans $6,427
 $5,856
 $—
 $5,856
December 31, 2016:        
Impaired mortgage loans with no valuation allowance recorded $2,758
 $2,216
 $—
 $2,216
Impaired mortgage loans with valuation allowance recorded —
 —
 —
 —
Total impaired mortgage loans $2,758
 $2,216
 $—
 $2,216
         
The Company’s average investment in impaired mortgage loans and the related interest income are reflected in the table below for the periods indicated (dollars in thousands):
  Three months ended September 30,
  2017 2016
  
Average
Recorded
Investment(1)
 
Interest
Income
 
Average
Recorded
  Investment(1)
 
Interest
Income
Impaired mortgage loans with no valuation allowance recorded $3,967
 $33
 $6,953
 $107
 
Impaired mortgage loans with valuation allowance recorded
 —
 —
 —
 —
Total impaired mortgage loans $3,967
 $33
 $6,953
 $107
         
  Nine months ended September 30,
  2017 2016
  
Average
Recorded
Investment(1)
 
Interest
Income
 
Average
Recorded
Investment(1)
 
Interest
Income
Impaired mortgage loans with no valuation allowance recorded $3,062
 $100
 $4,687
 $324
 
Impaired mortgage loans with valuation allowance recorded
 —
 —
 5,459
 —
Total impaired mortgage loans $3,062
 $100
 $10,146
 $324
(1) Average recorded investment represents the average loan balancesamount of $19 million that was on a nonaccrual status as of the beginning of period and all subsequent quarterly end of period balances.

The Company did not acquire any impaired mortgage loans during the nine months ended September 30, 2017 and 2016.March 31, 2023. The Company had no mortgage loans that were on a nonaccrual status at September 30, 2017as of March 31, 2022. The Company did not acquire any impaired mortgage loans during the three months ended March 31, 2023 and December 31, 2016.2022.
Policy Loans
Policy loans comprised approximately 2.7% and 3.2% of the Company’s total investments as of September 30, 2017 and December 31, 2016, respectively, theThe majority of whichpolicy loans are associated with one client. These policy loans present no credit risk becauseas the amount of the loan cannot exceed the obligation due to the ceding company upon the death of the insured or surrender of the underlying policy. The provisions of the treaties in force and the underlying policies determine the policy loan interest rates. The Company earns a spread between the interest rate earned on policy loans and the interest rate credited to corresponding liabilities.
Funds Withheld at Interest
Funds withheld at interest comprised approximately 12.1% and 13.1%As of the Company’s total investments asMarch 31, 2023, $3.7 billion of September 30, 2017 and December 31, 2016, respectively. Of the $6.0 billion funds withheld at interest balance net of embedded derivatives, as of September 30, 2017, $4.0 billion of the balance is primarily associated with one client.two clients. For reinsurance agreements written on a modified coinsurancemodco basis and certain agreements written on a coinsurance funds withheld basis, assets equal to the net statutory reserves are withheld and legally owned and managed by the ceding company and are reflected as funds withheld at interest on the Company’s condensed consolidated balance sheets.interest. In the event of a ceding company’s insolvency, the Company would need to assert a claim on the assets supporting its reserve liabilities. However, the risk of loss to the Company is mitigated by its ability to offset amounts it owes the ceding company for claims or allowances against amounts owed to the Company from the ceding company.

Limited Partnerships and Real Estate Joint Ventures
19
TableThe carrying values of Contentslimited partnerships and real estate joint ventures as of March 31, 2023 and December 31, 2022 are as follows (dollars in millions):


March 31, 2023December 31, 2022
Limited partnerships – equity method$970 $934 
Limited partnerships – fair value726 683 
Limited partnerships – cost method54 49 
Real estate joint ventures655661 
Total limited partnerships and real estate joint ventures$2,405 $2,327 
Other Invested Assets
Other invested assets include equity securities, limited partnership interests, joint ventures (other than operating joint ventures),lifetime mortgages and derivative contracts and fair value option (“FVO”) contractholder-directed unit-linked investments.contracts. Other invested assets also include Federal Home Loan Bank of Des Moines (“FHLB”)includes FHLB common stock, equity release mortgagesunit-linked investments, and structured loans, all ofreal estate held for investment, which are included in other“Other” in the table below. The fair value option was elected for contractholder-directed investments supporting unit-linked variable annuity type liabilities which do not qualify for presentation and reporting as separate accounts. Other invested assets represented approximately 3.1% and 3.6%As of the Company’s total investments as of September 30, 2017March 31, 2023 and December 31, 2016, respectively. Carrying2022, the allowance for credit losses for lifetime mortgages was not material. The carrying values of theseother invested assets as of September 30, 2017March 31, 2023 and December 31, 20162022 are as follows (dollars in thousands)millions):
48
Table of Contents

March 31, 2023December 31, 2022
 September 30, 2017 December 31, 2016
Equity securities $112,931
 $275,361
Limited partnership interests and real estate joint ventures 761,739
 687,522
Lifetime mortgagesLifetime mortgages$897 $868 
Derivatives 133,405
 229,108
Derivatives100 170 
FVO contractholder-directed unit-linked investments 210,660
 190,120
Other 313,788
 209,829
Other114 102 
Total other invested assets $1,532,523
 $1,591,940
Total other invested assets$1,111 $1,140 

NOTE 12 DERIVATIVE INSTRUMENTS
5.See Note 2 – “Significant Accounting Policies and Pronouncements” of the Company’s 2022 Annual Report for a detailed discussion of the accounting treatment for derivative instruments, including embedded derivatives. See Note 13 – “Fair Value of Assets and Liabilities” for additional disclosures related to the fair value hierarchy for derivative instruments, including embedded derivatives.
Commonly used derivative instruments include, but are not necessarily limited to: credit default swaps, equity futures, equity options, foreign currency swaps, foreign currency forwards, interest rate swaps, interest rate options, interest rate futures, total return swaps, synthetic guaranteed investment contracts (“GICs”), consumer price index (“CPI”) swaps, forward bond purchase commitments, other derivatives and embedded derivatives. For detailed information on these derivative instruments and the related strategies, see Note 12 – “Derivative Instruments” of the Company’s 2022 Annual Report.
Summary of Derivative InstrumentsPositions
Derivatives, except for embedded derivatives, and longevity and mortality swaps, are carried on the Company’s condensed consolidated balance sheetsincluded in other invested assets or other liabilities, at fair value. Longevity and mortality swaps are included on the condensed consolidated balance sheets in other assets or other liabilities, at fair value. Embedded derivative assets and liabilities on modified coinsurancemodco or funds withheld arrangements are included on the condensed consolidated balance sheets with the host contract in funds withheld at interest or other liabilities, at fair value. Embedded derivative liabilities on indexed annuity and variable annuity products are included on the condensed consolidated balance sheets with the host contract in interest-sensitive contract liabilities, at fair value. The following table presents the notional amounts and gross fair value of derivative instruments prior to taking into account the netting effects of master netting agreements as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
 March 31, 2023December 31, 2022
 Primary Underlying RiskNotionalCarrying Value/Fair ValueNotionalCarrying Value/Fair Value
 AmountAssetsLiabilitiesAmountAssetsLiabilities
Derivatives not designated as hedging instruments:
Interest rate swapsInterest rate$1,578 $13 $1 $1,271 $2 $2 
Interest rate optionsInterest rate7,957 11 — 7,756 34 — 
Total return swapsInterest rate500 19 — 500 18 — 
Interest rate futuresInterest rate97 — — 96 — — 
Equity futuresEquity186 — — 164 — — 
Foreign currency swapsForeign currency150 16 — 150 18 — 
Foreign currency forwardsForeign currency1,006 4 8 766 50 — 
CPI swapsCPI478 19 5 496 20 3 
Credit default swapsCredit1,528 2 14 1,523 2 21 
Equity optionsEquity336 24 — 358 38 — 
Synthetic GICsInterest rate17,280 — — 17,411 — — 
Embedded derivatives in:
Modco or funds withheld arrangements— 362 333 — 363 371 
Indexed annuity products— — 495 — — 530 
Total non-hedging derivatives31,096 470 856 30,491 545 927 
Derivatives designated as hedging instruments:
Interest rate swapsForeign currency/Interest rate1,701 5 112 1,310 3 113 
Foreign currency swapsForeign currency114 — 3 114 — — 
Foreign currency forwardsForeign currency1,161 29 2 1,019 38 1 
Forward bond purchase commitmentsInterest rate407 — 86 407 — 96 
Total hedging derivatives3,383 34 203 2,850 41 210 
Total derivatives$34,479 $504 $1,059 $33,341 $586 $1,137 

49
  September 30, 2017 December 31, 2016
  Notional Carrying Value/Fair Value Notional Carrying Value/Fair Value
  Amount Assets Liabilities Amount Assets Liabilities
Derivatives not designated as hedging instruments:            
Interest rate swaps $946,726
 $61,263
 $1,825
 $949,556
 $78,405
 $5,949
Financial futures 448,600
 —
 —
 475,968
 —
 —
Foreign currency forwards 6,000
 (84) —
 25,000
 —
 5,070
Consumer price index swaps 132,081
 589
 420
 20,615
 —
 262
Credit default swaps 948,000
 7,905
 490
 926,000
 12,012
 2,871
Equity options 541,532
 20,006
 —
 525,894
 33,459
 —
Longevity swaps 945,120
 37,827
 —
 841,360
 26,958
 —
Mortality swaps 50,000
 —
 1,683
 50,000
 —
 2,462
Synthetic guaranteed investment contracts 9,119,434
 —
 —
 8,834,700
 —
 —
Embedded derivatives in:            
Modified coinsurance or funds withheld arrangements —
 84,325
 —
 —
 —
 22,529
Indexed annuity products —
 —
 821,821
 —
 —
 805,672
Variable annuity products —
 —
 168,119
 —
 —
 184,636
Total non-hedging derivatives 13,137,493
 211,831
 994,358
 12,649,093
 150,834
 1,029,451
Derivatives designated as hedging instruments:            
Interest rate swaps 435,000
 —
 22,133
 435,000
 27,901
 31,223
Foreign currency swaps 796,489
 71,032
 13,876
 928,505
 104,359
 734
Foreign currency forwards 331,135
 1,418
 10,203
 —
 —
 —
Total hedging derivatives 1,562,624
 72,450
 46,212
 1,363,505
 132,260
 31,957
Total derivatives $14,700,117
 $284,281
 $1,040,570
 $14,012,598
 $283,094
 $1,061,408
Netting Arrangements
Certain of the Company’s derivatives are subject to enforceable master netting arrangements and reported as a net asset or liability in the condensed consolidated balance sheets. The Company nets all derivatives that are subject to such arrangements.

20
Table of Contents



The Company has elected to include all derivatives, except embedded derivatives, in the tables below, irrespective of whether they are subject to an enforceable master netting arrangement or a similar agreement. See Note 4 – “Investments” for information regarding the Company’s securities borrowing, lending, repurchase and repurchase/reverse repurchase programs. See “Embedded Derivatives” below for information regarding the Company’s bifurcated embedded derivatives.
The following table provides information relating to the Company’s derivative instruments as of September 30, 2017 and December 31, 2016 (dollars in thousands):
        
Gross Amounts Not
Offset in the Balance Sheet
  
  
Gross Amounts   
Recognized
 
Gross Amounts
Offset in the
Balance Sheet   
 
Net Amounts
Presented in the
Balance Sheet   
 
Financial
Instruments (1)    
 
Cash Collateral   
Pledged/
Received
 Net Amount   
September 30, 2017:            
Derivative assets $199,956
 $(28,724) $171,232
 $(17,782) $(174,120) $(20,670)
Derivative liabilities 50,630
 (28,724) 21,906
 (58,360) (30,771) (67,225)
December 31, 2016:            
Derivative assets $283,094
 $(27,028) $256,066
 $(16,913) $(254,498) $(15,345)
Derivative liabilities 48,571
 (27,028) 21,543
 (95,863) (1,441) (75,761)
(1)Includes initial margin posted to a central clearing partner.
Accounting for Derivative Instruments and Hedging Activities
The Company does not enter into derivative instruments for speculative purposes. As discussed below under “Non-qualifying Derivatives and Derivatives for Purposes Other Than Hedging,” the Company uses various derivative instruments for risk management purposes that either do not qualify or have not been qualified for hedge accounting treatment. As of September 30, 2017 and December 31, 2016, the Company held interest rate swaps that were designated and qualified as cash flow hedges of interest rate risk, for variable rate liabilities and foreign currency assets, foreign currency swaps and foreign currency forwards that were designated and qualified as hedges of a portion of its net investment in its foreign operations, foreign currency swaps that were designated and qualified as fair value hedges of foreign currency risk, and derivative instruments that were not designated as hedging instruments. See Note 2 – “Summary of Significant Accounting Policies” of the Company’s 2016 Annual Report for a detailed discussion of the accounting treatment for derivative instruments, including embedded derivatives. Derivative instruments are carried at fair value and generally require an insignificant amount of cash at inception of the contracts.
Fair Value Hedges
The Company designates and reports certain foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets as fair value hedges when they meet the requirements of the general accounting principles for Derivatives and Hedging. The gain or loss on the hedged item attributable to a change in foreign currency and the offsetting gain or loss on the related foreign currency swaps as of September 30, 2017March 31, 2023 and 2016,2022 were as follows (dollars in thousands)millions):
Type of Fair Value Hedge Hedged Item Gains (Losses) Recognized for Derivatives Gains (Losses) Recognized for Hedged Items Ineffectiveness Recognized in Investment Related Gains (Losses), net
For the three months ended September 30, 2017:      
Foreign currency swaps Foreign-denominated fixed maturity securities $2,100
 $(2,100) $—
For the three months ended September 30, 2016:      
Foreign currency swaps Foreign-denominated fixed maturity securities $3,205
 $(3,205) $—
For the nine months ended September 30, 2017:      
Foreign currency swaps Foreign-denominated fixed maturity securities $9,541
 $(9,541) $—
For the nine months ended September 30, 2016:      
Foreign currency swaps Foreign-denominated fixed maturity securities $5,317
 $(5,317) $—
A regression analysis was used, both at inception of the hedge and on an ongoing basis, to determine whether each derivative used in a hedged transaction is highly effective in offsetting changes in the hedged item. For the foreign currency swaps, the change in fair value related to changes in the benchmark interest rate and credit spreads are excluded from the hedge effectiveness. For the three and nine months ended September 30, 2017, $0.2 million and $0.8 million, respectively, of the change in the estimated fair value of derivatives, was excluded from hedge effectiveness. For the three and nine months ended September 30, 2016, $1.6 million and $(5.4) million, respectively, of the change in the estimated fair value of derivatives, was excluded from hedge effectiveness.



21
Table of Contents


Type of Fair Value HedgeHedged ItemGains (Losses) Recognized for DerivativesGains (Losses) Recognized for Hedged Items
Investment Related Gains (Losses), Net
For the three months ended March 31, 2023:
Foreign currency swapsForeign-denominated fixed maturity securities$(3)$2 
For the three months ended March 31, 2022:
Foreign currency swapsForeign-denominated fixed maturity securities$7 $(3)
Cash Flow Hedges
Certain derivative instruments are designated as cash flow hedges when they meet the requirements of the general accounting principles for Derivatives and Hedging.Hedging. The Company designates and accounts for the following as cash flows:flow hedges: (i) certain interest rate swaps, in which the cash flows of assets and liabilities are variable based on a benchmark rate; (ii) certain interest rate swaps, in which the cash flows of assets are denominated in different currencies, commonly referred to as cross-currency swaps; (iii) certain interest rate swaps, in which floating rate assets are converted to fixed rate assets; and (iii)(iv) forward bond purchase commitments.
The following table presents the components of AOCI, before income tax, and the condensed consolidated income statement classification where the gain or loss is recognized related to cash flow hedges for the three and nine months ended September 30, 2017March 31, 2023 and 20162022 (dollars in thousands)millions):
  Three months ended September 30,
  2017 2016
Balance beginning of period $7,690
 $(41,192)
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges (6,889) 932
Amounts reclassified to investment related (gains) losses, net (183) (116)
Amounts reclassified to investment income (271) (221)
Balance end of period $347
 $(40,597)
     
  Nine months ended September 30,
  2017 2016
Balance beginning of period $(2,496) $(29,397)
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges 3,689
 (10,866)
Amounts reclassified to investment related (gains) losses, net (142) 53
Amounts reclassified to investment income (704) (387)
Balance end of period $347
 $(40,597)
 Three months ended March 31,
 20232022
Balance, beginning of period$(205)$(22)
Gains (losses), net deferred in other comprehensive income (loss)6 (60)
Amounts reclassified to net investment income3 — 
Amounts reclassified to interest expense(2)1 
Balance, end of period$(198)$(81)
As of September 30, 2017,March 31, 2023, approximately $1 million of before-tax deferred net losses recorded in AOCI are expected to be reclassified to investment income during the next twelve months. For the same time period, $10 million of before-tax deferred net gains (losses) on derivative instruments recorded in AOCI that are expected to be reclassified to earningsinterest expense during the next twelve months are approximately $(0.4) million. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities that will occur over the next twelve months, at which time the Company will recognize the deferred net gains (losses) as an adjustment to investment income over the term of the investment cash flows.months.

22
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The following table presents the effective portioneffect of derivatives in cash flow hedging relationships on the condensed consolidated statements of income and the condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2017March 31, 2023 and 20162022 (dollars in thousands)millions):
Derivative TypeGains (Losses) Deferred in OCIGains (Losses) Reclassified into Income from AOCI
Net Investment IncomeInterest Expense
For the three months ended March 31, 2023:
Interest rate$14 $— $2 
Foreign currency/interest rate(8)(3)— 
Total$6 $(3)$2 
For the three months ended March 31, 2022:
Interest rate$(64)$— $(1)
Foreign currency/interest rate4 — — 
Total$(60)$— $(1)
  Effective Portion
Derivative Type Gain (Loss) Deferred in OCI Gain (Loss) Reclassified into Income from OCI
    Investment Related Gains (Losses) Investment Income
For the three months ended September 30, 2017:      
Interest rate $(8,421) $—
 $—
Currency/Interest rate 1,544
 —
 230
Forward bond purchase commitments (12) 183
 41
Total $(6,889) $183
 $271
For the three months ended September 30, 2016:      
Interest rate $(3,282) $—
 $—
Currency/Interest rate 4,214
 —
 200
Forward bond purchase commitments —
 116
 21
Total $932
 $116
 $221
       
For the nine months ended September 30, 2017:      
Interest rate $(6,205) $—
 $—
Currency/Interest rate 9,894
 —
 560
Forward bond purchase commitments —
 142
 144
Total $3,689
 $142
 $704
For the nine months ended September 30, 2016:      
Interest rate $(15,617) $—
 $—
Currency/Interest rate 4,751
 —
 454
Forward bond purchase commitments —
 (53) (67)
Total $(10,866) $(53) $387
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. For the three and nine months ended September 30, 2017March 31, 2023 and 2016, the ineffective portion of derivatives reported as cash flow hedges was not material to the Company’s results of operations. Also,2022, there were no material amounts reclassified into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by
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the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging.
Hedges of Net Investments in Foreign Operations
The Company uses foreign currency swaps and foreign currency forwards to hedge a portion of its net investment in certain foreign operations against adverse movements in exchange rates. The following table illustrates the Company’s net investments in foreign operations (“NIFO”) hedges and the gains (losses) deferred in OCI for the three and nine months ended September 30, 2017March 31, 2023 and 20162022 (dollars in thousands)millions):
 Derivative Gains (Losses) Deferred in OCI   
 For the three months ended March 31,
Type of NIFO Hedge20232022
Foreign currency forwards$— $(16)
  Derivative Gains (Losses) Deferred in AOCI     
  For the three months ended September 30, For the nine months ended September 30,
Type of NIFO Hedge (1) (2)
 2017 2016 2017 2016
Foreign currency swaps $(35,198) $8,341
 $(60,723) $(23,151)
Foreign currency forwards 4,627
 —
 8,785
 —
Total $(30,571) $8,341
 $(51,938) $(23,151)
(1)There were no sales or substantial liquidations of net investments in foreign operations that would have required the reclassification of gains or losses from accumulated other comprehensive income (loss) into investment income during the periods presented.
(2)There was no ineffectiveness recognized for the Company’s hedges of net investments in foreign operations.

The cumulative foreign currency translation gain recorded in AOCI related to these hedges was $109.7$210 million as of March 31, 2023 and $161.6 million at September 30, 2017 and December 31, 2016, respectively.2022. If a hedged foreign operation was sold or substantially liquidated, the amounts in AOCI would be reclassified to the condensed consolidated statements of income. A pro rata portion would be reclassified upon partial sale of a hedged foreign operation.

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net investments in foreign operations that would have required the reclassification of gains or losses from AOCI into investment income during the periods presented.
Non-qualifying Derivatives and Derivatives for Purposes Other Than Hedging
The Company uses various other derivative instruments for risk management purposes that either do not qualify or have not been qualifiedelected for hedge accounting treatment. The gain or loss related to the change in fair value for these derivative instruments is recognized in investment related gains (losses), net, in the condensed consolidated statements of income, except where otherwise noted.
A summary of the effect of non-hedging derivatives, including embedded derivatives, on the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2017March 31, 2023 and 20162022 is as follows (dollars in thousands)millions):
   Gain (Loss) for the three months ended September 30,  Gains (Losses) for the three months ended     
March 31,
Type of Non-hedging Derivative Income Statement Location of Gain (Loss) 2017 2016Type of Non-hedging DerivativeIncome Statement Location of Gains (Losses)20232022
Interest rate swaps Investment related gains (losses), net $641
 $4,122
Interest rate swapsInvestment related gains (losses), net$20 $(52)
Financial futures Investment related gains (losses), net (8,890) (11,677)
Interest rate optionsInterest rate optionsInvestment related gains (losses), net(23)— 
Total return swapsTotal return swapsInvestment related gains (losses), net3 — 
Interest rate futuresInterest rate futuresInvestment related gains (losses), net— 2 
Equity futuresEquity futuresInvestment related gains (losses), net(9)5 
Foreign currency swapsForeign currency swapsInvestment related gains (losses), net— 7 
Foreign currency forwards Investment related gains (losses), net 24
 507
Foreign currency forwardsInvestment related gains (losses), net(19)(23)
CPI swaps Investment related gains (losses), net 220
 76
CPI swapsInvestment related gains (losses), net1 29 
Credit default swaps Investment related gains (losses), net 4,137
 6,672
Credit default swapsInvestment related gains (losses), net11 (58)
Equity options Investment related gains (losses), net (8,295) (13,648)Equity optionsInvestment related gains (losses), net(14)— 
Longevity swaps Other revenues 3,334
 8,921
Mortality swaps Other revenues (132) (400)
Subtotal (8,961) (5,427)Subtotal(30)(90)
Embedded derivatives in:    Embedded derivatives in:
Modified coinsurance or funds withheld arrangements Investment related gains (losses), net 23,044
 49,078
Modco or funds withheld arrangementsModco or funds withheld arrangementsInvestment related gains (losses), net37 (33)
Indexed annuity products Interest credited (13,133) (20,104)Indexed annuity productsInterest credited16 36 
Variable annuity products Investment related gains (losses), net (6,205) 7,988
Total non-hedging derivatives $(5,255) $31,535
Total non-hedging derivatives$23 $(87)
    
   
Gain (Loss) for the nine months ended        
September 30,
Type of Non-hedging Derivative Income Statement Location of Gain (Loss) 2017 2016
Interest rate swaps Investment related gains (losses), net $12,318
 $108,149
Financial futures Investment related gains (losses), net (28,107) (30,285)
Foreign currency forwards Investment related gains (losses), net 577
 6,584
CPI swaps Investment related gains (losses), net 211
 (624)
Credit default swaps Investment related gains (losses), net 15,374
 13,536
Equity options Investment related gains (losses), net (34,757) (19,576)
Longevity swaps Other revenues 7,180
 11,402
Mortality swaps Other revenues (921) 222
Subtotal (28,125) 89,408
Embedded derivatives in:    
Modified coinsurance or funds withheld arrangements Investment related gains (losses), net 106,854
 33,795
Indexed annuity products Interest credited (35,490) (20,730)
Variable annuity products Investment related gains (losses), net 16,518
 (83,089)
Total non-hedging derivatives $59,757
 $19,384
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Types of Derivatives Used by the Company
Interest Rate Swaps
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates, to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches) and to manage the risk of cash flows of liabilities that are variable based on a benchmark rate. With an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between two rates, which can be either fixed-rate or floating-rate interest amounts, tied to an agreed-upon notional principal amount. These transactions are executed pursuant to master agreements that provide for a single net payment or individual gross payments at each due date. The Company utilizes interest rate swaps in cash flow and non-qualifying hedging relationships.
Financial Futures
Exchange-traded futures are used primarily to economically hedge liabilities embedded in certain variable annuity products. With exchange-traded futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the relevant indices, and to post variation margin on a daily basis in an amount equal to the difference between the daily estimated fair values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange.
Equity Options
Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products. To hedge against adverse changes in equity indices volatility, the Company buys put options. The contracts are net settled in cash based on differentials in the indices at the time of exercise and the strike price. Equity warrants are also used by the Company to economically hedge the variability in anticipated cash flows for the acquisition of investment securities.
Consumer Price Index Swaps
Consumer price index (“CPI”) swaps are used by the Company primarily to economically hedge liabilities embedded in certain insurance products where value is directly affected by changes in a designated benchmark consumer price index. With a CPI swap transaction, the Company agrees with another party to exchange the actual amount of inflation realized over a specified period of time for a fixed amount of inflation determined at inception. These transactions are executed pursuant to master agreements that provide for a single net payment or individual gross payments to be made by the counterparty at each due date. Most of these swaps will require a single payment to be made by one counterparty at the maturity date of the swap.
Foreign Currency Swaps
Foreign currency swaps are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. With a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a forward exchange rate calculated by reference to an agreed upon principal amount. The principal amount of each currency is exchanged at the termination of the currency swap by each party. The Company uses foreign currency swaps in hedges of net investments in foreign operations and non-qualifying hedge relationships.
Foreign Currency Forwards
Foreign currency forwards are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. With a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made in a different currency at the specified future date. The Company uses foreign currency forwards in hedges of net investments in foreign operations and non-qualifying hedge relationships.
Forward Bond Purchase Commitments
Forward bond purchase commitments have been used by the Company to hedge against the variability in the anticipated cash flows required to purchase securities. With forward bond purchase commitments, the forward price is agreed upon at the time of the contract and payment for such contract is made at the future specified settlement date of the securities.

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Credit Default SwapsDerivatives
The Company sells protection under single name credit default swaps and credit default swap index tranches to diversify its credit risk exposure in certain portfolios and, in combination with purchasing securities, to replicate characteristics of similar investments based on the credit quality and term of the credit default swap. Credit default triggers for indexed reference entities and single name reference entities are defined in the contracts. The Company’s maximum exposure to credit loss equals the notional value for credit default swaps. In the event of default of a referencing entity, the Company is typically required to pay the protection holder the full notional value less a recovery amount determined at auction.
The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of credit default swaps sold by the Company at September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
 March 31, 2023December 31, 2022
Rating Agency Designation of Referenced Credit Obligations(1)
Estimated Fair
Value of Credit 
Default Swaps
Maximum
Amount of Future
Payments under
Credit Default
Swaps(2)
Weighted
Average
Years to
Maturity(3)
Estimated Fair
Value of Credit 
Default Swaps
Maximum
Amount of Future
Payments under
Credit Default
Swaps(2)
Weighted
Average
Years to
Maturity(3)  
AAA/AA+/AA/AA-/A+/A/A-
Single name credit default swaps$(13)$428 18.5$(18)$428 18.7
BBB+/BBB/BBB-
Single name credit default swaps2 160 31 155 3.3
Credit default swaps referencing indices— 915 5.8— 915 6.2
Subtotal2 1,075 5.41 1,070 5.8
BB+/BB/BB-
Single name credit default swaps(1)25 2.9(2)25 3.2
Total$(12)$1,528 9$(19)$1,523 9.4
  September 30, 2017 December 31, 2016
Rating Agency Designation of Referenced Credit Obligations(1)
 
Estimated Fair
Value of Credit  
Default Swaps
 
Maximum
Amount of Future
Payments under
Credit Default
Swaps(2)
 
Weighted
Average
Years to
Maturity(3)
 
Estimated Fair
Value of Credit  
Default Swaps
 
Maximum
Amount of Future
Payments under
Credit Default
Swaps(2)
 
Weighted
Average
Years to
Maturity(3)  
AAA/AA+/AA/AA-/A+/A/A-            
Single name credit default swaps $2,975
 $155,500
 3.2 $1,726
 $150,500
 3.8
Subtotal 2,975
 155,500
 3.2 1,726
 150,500
 3.8
BBB+/BBB/BBB-            
Single name credit default swaps 4,209
 368,200
 3.2 1,426
 347,200
 3.7
Credit default swaps referencing indices 56
 416,000
 4.2 6,295
 416,000
 5.0
Subtotal 4,265
 784,200
 3.7 7,721
 763,200
 4.4
BB+/BB/BB-            
Single name credit default swaps 21
 5,000
 1.7 (477) 9,000
 3.5
Subtotal 21
 5,000
 1.7 (477) 9,000
 3.5
Total $7,261
 $944,700
 3.6 $8,970
 $922,700
 4.3
(1)The rating agency designations are based on ratings from Standard and Poor’s (“S&P”).
(2)Assumes the value of the referenced credit obligations is zero.
(1)The rating agency designations are based on ratings from Standard and Poor’s (“S&P”).
(2)Assumes the value of the referenced credit obligations is zero.
(3)
(3)The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts.
The Company also purchases credit default swaps is calculated based on weighted average notional amounts.
Netting Arrangements and Credit Risk
Certain of the Company’s derivatives are subject to reduce its risk againstenforceable master netting arrangements and reported as a dropnet asset or liability in bond prices due to credit concerns of certain bond issuers. If a credit event, as defined by the contract, occurs, the Company is able to put the bond back to the counterparty at par.
Longevity Swaps
condensed consolidated balance sheets. The Company enters into longevity swaps in the form of out-of-the-money options, which provide protection against changes in mortality improvementnets all derivatives that are subject to retirement plans and insurers of such plans. With a longevity swap transaction, the Company agrees with another party to exchange a proportion of a notional value. The proportion is determined by the difference between a predefined benefit, and the realized benefit plus the future expected benefit, calculated by reference to a population index for a fixed premium.
Mortality Swaps
Mortality swaps are used by the Company to hedge risk from changes in mortality experience associated with its reinsurance of life insurance risk. The Company agrees with another party to exchange, at specified intervals, a proportion of a notional value determined by the difference between a predefined expected and realized claim amount on a designated index of reinsured lives, for a fixed percentage (premium) each term.
Synthetic Guaranteed Investment Contracts
The Company sells fee-based synthetic guaranteed investment contracts to retirement plans which include investment-only, stable value contracts. The assets are owned by the trustees of such plans, who invest the assets under the terms of investment guidelines to which the Company agrees. The contracts contain a guarantee of a minimum rate of return on participant balances supported by the underlying assets, and a guarantee of liquidity to meet certain participant-initiated plan cash flow requirements. These contracts are reported as derivatives and recorded at fair value.
Embedded Derivativesarrangements.
The Company has certainelected to include all derivatives, except embedded derivatives, whichin the table below, irrespective of whether they are requiredsubject to an enforceable master netting arrangement or a similar agreement. See Note 11 – “Investments” for information regarding the Company’s securities borrowing, lending and repurchase/reverse repurchase agreements.
The following table provides information relating to the netting of the Company’s derivative instruments as of March 31, 2023 and December 31, 2022 (dollars in millions):
Gross Amounts  
Recognized		Gross Amounts
Offset in the
Balance Sheet   		Net Amounts
Presented in the
Balance Sheet   
Financial
Instruments/Collateral (1)
Net Amount   
March 31, 2023:
Derivative assets$142 $(42)$100 $(100)$— 
Derivative liabilities231 (42)189 (189)— 
December 31, 2022:
Derivative assets223 (53)170 (170)— 
Derivative liabilities236 (53)183 (183)— 
(1)Includes initial margin posted to a central clearing partner for financial instruments and excludes the excess of collateral received/pledged from/to the counterparty.
The Company may be separated from their hostexposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments. Generally, the credit exposure of the Company’s derivative contracts and reported as derivatives. Host contracts include reinsurance treaties structured on a modified coinsurance (“modco”) or funds withheld basis. Additionally, the Company reinsures equity-indexed annuity and variable annuity contracts with benefits that are considered

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embedded derivatives, including guaranteed minimum withdrawal benefits, guaranteed minimum accumulation benefits, and guaranteed minimum income benefits. The changes in fair values of embedded derivatives on equity-indexed annuities described below relateis limited to changes in the fair value associated with capital market and other related assumptions. Theaccrued interest of non-collateralized derivative contracts in an asset position at the reporting date. As of March 31, 2023, the Company had credit exposure of $15 million.
Derivatives may be exchange-traded or they may be privately negotiated contracts, which are referred to as over-the-counter (“OTC”) derivatives. Certain of the Company’s utilization of a credit valuation adjustmentOTC derivatives are cleared and settled through central clearing counterparties (“CVA”) did not have a material effect on the change in fair value of its embedded derivatives for the three and nine months ended September 30, 2017 and 2016.
The related gains (losses) and the effect on net income after amortization of deferred acquisition costs (“DAC”OTC cleared”) and income taxes for the three and nine months ended September 30, 2017 and 2016others are reflected in the following table (dollars in thousands):
 Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
Embedded derivatives in modco or funds withheld arrangements included in investment related gains$23,044
 $49,078
 $106,854
 $33,795
After the associated amortization of DAC and taxes, the related amounts included in net income7,515
 9,653
 36,300
 1,683
Embedded derivatives in variable annuity contracts included in investment related gains(6,205) 7,988
 16,518
 (83,089)
After the associated amortization of DAC and taxes, the related amounts included in net income(1,074) 2,595
 30,785
 (63,415)
Amounts related to embedded derivatives in equity-indexed annuities included in benefits and expenses(13,133) (20,104) (35,490) (20,730)
After the associated amortization of DAC and taxes, the related amounts included in net income(9,737) (13,397) (38,059) (9,979)
Credit Risk
bilateral contracts between two counterparties. The Company manages its credit risk related to over-the-counter (“OTC”)OTC derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master netting agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination.
The credit exposure of the Company’s OTC derivative transactions is represented by the contracts with a positive fair value (market value) at the reporting date. To reduce credit exposures, the Company seeks to (i) enter into OTC derivative transactions pursuant to master netting agreements that provide for a netting of payments and receipts with a single counterparty, and (ii) enter into agreements that allow the use of credit support annexes, which are bilateral rating-sensitive agreements that require collateral postings at established threshold levels. Certain of the Company’s OTC derivatives are cleared derivatives, which are bilateral transactions between the Company and a counterparty where the transactions are cleared through a clearinghouse, such that each derivative counterparty is only exposed to the default of the clearinghouse. Thesecentral clearing counterparties for OTC cleared derivatives, and these transactions require initial and daily variation margin collateral postings and include certain interest rate swaps and credit default swaps entered into on or after June 10, 2013, related to guidelines implemented under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Also, the Company enters into exchange-traded futures through regulated exchanges and these transactionspostings. Exchange-traded derivatives are settled on a daily basis, thereby reducing the credit risk exposure in the event of non-performance by counterparties to such financial instruments.
The Company enters into various collateral arrangements, which require both the posting and accepting of collateral in connection with its derivative instruments. Collateral agreements contain attachment thresholds that may vary depending on the posting party’s ratings. Additionally, a decline in the Company’s or the counterparty’s credit ratings to specified levels could result in potential settlement of the derivative positions under the Company’s agreements with its counterparties. The Company also has exchange-traded futures, which require the maintenance of a margin account. As exchange-traded futures are affected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties.
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The Company’s credit exposure related to derivative contracts is generally limited to the fair value at the reporting date plus or minus any collateral posted or held by the Company. The Company’s credit exposure to mortality swaps is minimal, as they are fully collateralized by a counterparty. Information regarding the Company’s credit exposure related to its over-the-counter derivative contracts, centrally cleared derivative contracts and margin account for exchange-traded futures, excluding mortality swaps, at September 30, 2017 and December 31, 2016 are reflected in the following table (dollars in thousands):
  September 30, 2017 December 31, 2016
Estimated fair value of derivatives in net asset position $151,009
 $236,985
Cash provided as collateral(1)
 30,771
 1,441
Securities pledged to counterparties as collateral(2)
 58,360
 95,863
Cash pledged from counterparties as collateral(3)
 (174,120) (254,498)
Securities pledged from counterparties as collateral(4)
 (17,782) (16,913)
Initial margin for cleared derivatives(2)
 (58,360) (73,571)
Net amount after application of master netting agreements and collateral $(10,122) $(10,693)
Margin account related to exchange-traded futures(5)
 $7,832
 $9,687
(1)Consists of receivable from counterparty, included in other assets.
(2)Included in available-for-sale securities, primarily consists of U.S. Treasury and government agency securities.
(3)Included in cash and cash equivalents, with obligation to return cash collateral recorded in other liabilities.
(4)Consists of U.S. Treasury and government securities.
(5)Included in other assets.

6.    Fair Value of Assets and LiabilitiesNOTE 13 FAIR VALUE OF ASSETS AND LIABILITIES
Fair Value Measurement
General accounting principles for Fair Value Measurements and Disclosures define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. These principles also establish a three-level fair value hierarchy whichthat requires an entity to maximize the use of observable inputs and to minimize the use of unobservable inputs when measuring fair value and describes three levels of inputs that may be used to measure fair value:
Level 1 -– Unadjusted quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assetsActive markets are defined through various characteristics for the measured asset/liability, such as having many transactions and liabilities are traded in active exchange markets.narrow bid/ask spreads.
Level 2 -– Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or market standard valuation techniques and assumptions that use significant inputs that are observable or can be 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 that are significant to the fair value of the related assets or liabilities.liabilities and include those whose value is determined using market standard valuation techniques described above. Prices are determined using valuation methodologies such as discounted cash flow models and other similar techniques that require management’s judgment or estimation in developing inputs that are consistent with those other market participants would use when pricing similar assets and liabilities. Additionally,
For a discussion of the Company’s embedded derivatives, all of which are associated with reinsurance treatiesvaluation methodologies for assets and longevityliabilities measured at fair value and mortality swaps, are classified in Level 3 since their values include significant unobservable inputs.
When inputs used to measure the fair value hierarchy, see Note 6 – “Fair Value of an asset or liability fall within different levels ofAssets and Liabilities” in the hierarchy,Notes to Consolidated Financial Statements included in the level within which theCompany’s 2022 Annual Report.
See Note 8 – “Market Risk Benefits” for information about fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety, except for fair value measurements using net asset value. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, gains and losses for such assets and liabilities categorized within Level 3 may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

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market risk benefits.
Assets and Liabilities by Hierarchy Level
Assets and liabilities measured at fair value on a recurring basis as of September 30, 2017March 31, 2023 and December 31, 20162022 are summarized below (dollars in thousands)millions):
September 30, 2017:   Fair Value Measurements Using:
  Total     Level 1         Level 2     Level 3    
Assets:        
Fixed maturity securities – available-for-sale:        
Corporate securities $22,535,830
 $615,433
 $20,648,377
 $1,272,020
Canadian and Canadian provincial governments 3,991,185
 —
 3,465,820
 525,365
Residential mortgage-backed securities 1,679,305
 —
 1,561,310
 117,995
Asset-backed securities 1,694,568
 —
 1,549,371
 145,197
Commercial mortgage-backed securities 1,313,322
 —
 1,311,375
 1,947
U.S. government and agencies 1,603,669
 1,480,357
 100,061
 23,251
State and political subdivisions 661,031
 —
 619,519
 41,512
Other foreign government supranational and foreign government-sponsored enterprises 2,902,832
 319,147
 2,578,057
 5,628
Total fixed maturity securities – available-for-sale 36,381,742
 2,414,937
 31,833,890
 2,132,915
Funds withheld at interest – embedded derivatives 84,325
 —
 —
 84,325
Cash equivalents 332,186
 332,186
 —
 —
Short-term investments 56,454
 —
 53,095
 3,359
Other invested assets:        
Non-redeemable preferred stock 38,901
 38,901
 —
 —
Other equity securities 74,030
 74,030
 —
 —
Derivatives:        
Interest rate swaps 46,258
 —
 46,258
 —
Foreign currency forwards 1,418
 —
 1,418
 —
CPI swaps 230
 —
 230
 —
Credit default swaps 6,903
 —
 6,903
 —
Equity options 9,700
 —
 9,700
 —
Foreign currency swaps 68,896
 —
 68,896
 —
FVO contractholder-directed unit-linked investments 210,660
 209,136
 1,524
 —
Total other invested assets 456,996
 322,067
 134,929
 —
Other assets - longevity swaps 37,827
 —
 —
 37,827
Total $37,349,530
 $3,069,190
 $32,021,914
 $2,258,426
Liabilities:        
Interest sensitive contract liabilities – embedded derivatives $989,940
 $—
 $—
 $989,940
Other liabilities:        
Derivatives:        
Interest rate swaps 8,953
 —
 8,953
 —
Foreign currency forwards 10,287
 —
 10,287
 —
CPI swaps 61
 —
 61
 —
Credit default swaps (512) —
 (512) —
Equity options (10,306) —
 (10,306) —
Foreign currency swaps 11,740
 —
 11,740
 —
Mortality swaps 1,683
 —
 —
 1,683
Total $1,011,846
 $—
 $20,223
 $991,623

March 31, 2023: Fair Value Measurements Using:
 Total    Level 1        Level 2    Level 3    
Assets: (1)
Fixed maturity securities available-for-sale:
Corporate$35,477 $— $30,864 $4,613 
Canadian government3,755 — 3,755 — 
Japanese government3,443 — 3,443 — 
ABS4,103 — 2,699 1,404 
CMBS1,670 — 1,614 56 
RMBS1,024 — 1,023 1 
U.S. government1,745 1,649 88 8 
State and political subdivisions1,138 — 1,118 20 
Other foreign government3,730 — 3,693 37 
Total fixed maturity securities available-for-sale56,085 1,649 48,297 6,139 
Equity securities138 70 — 68 
Funds withheld at interest – embedded derivatives(322)— — (322)
Funds withheld at interest53 — — 53 
Cash equivalents1,654 1,653 — 1 
Short-term investments203 118 78 7 
Other invested assets:
Derivatives100 — 100 — 
Other24 — 24 — 
Total other invested assets124 — 124 — 
Total$57,935 $3,490 $48,499 $5,946 
Liabilities:
Interest-sensitive contract liabilities – embedded derivatives$495 $— $— $495 
Other liabilities:
Funds withheld at interest – embedded derivatives(351)— — (351)
Derivatives189 — 189 — 
Total$333 $— $189 $144 
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December 31, 2016:   Fair Value Measurements Using:
  Total Level 1 Level 2 Level 3
Assets:        
Fixed maturity securities – available-for-sale:        
Corporate securities $19,619,084
 $310,995
 $18,035,836
 $1,272,253
Canadian and Canadian provincial governments 3,644,046
 —
 3,168,081
 475,965
Residential mortgage-backed securities 1,278,576
 —
 1,118,285
 160,291
Asset-backed securities 1,429,344
 —
 1,210,064
 219,280
Commercial mortgage-backed securities 1,363,654
 —
 1,342,509
 21,145
U.S. government and agencies 1,468,302
 1,345,755
 98,059
 24,488
State and political subdivisions 591,796
 —
 550,130
 41,666
Other foreign government, supranational and foreign government-sponsored enterprises 2,698,823
 276,729
 2,409,225
 12,869
Total fixed maturity securities – available-for-sale 32,093,625
 1,933,479
 27,932,189
 2,227,957
Funds withheld at interest – embedded derivatives (22,529) —
 —
 (22,529)
Cash equivalents 338,601
 338,601
 —
 —
Short-term investments 44,241
 8,276
 32,619
 3,346
Other invested assets:        
Non-redeemable preferred stock 51,123
 38,317
 12,806
 —
Other equity securities 224,238
 224,238
 —
 —
Derivatives:        
Interest rate swaps 93,508
 —
 93,508
 —
Credit default swaps 9,136
 —
 9,136
 —
Equity options 26,070
 —
 26,070
 —
Foreign currency swaps 100,394
 —
 100,394
 —
FVO contractholder-directed unit-linked investments 190,120
 188,891
 1,229
 —
Other 11,036
 11,036
 —
 —
Total other invested assets 705,625
 462,482
 243,143
 —
Other assets - longevity swaps 26,958
 —
 —
 26,958
Total $33,186,521
 $2,742,838
 $28,207,951
 $2,235,732
Liabilities:        
Interest sensitive contract liabilities – embedded derivatives $990,308
 $—
 $—
 $990,308
Other liabilities:        
Derivatives:        
Interest rate swaps 24,374
 —
 24,374
 —
Foreign currency forwards 5,070
 —
 5,070
 —
CPI swaps 262
 —
 262
 —
Credit default swaps (5) —
 (5) —
Equity options (7,389) —
 (7,389) —
Foreign currency swaps (3,231) —
 (3,231) —
Mortality swaps 2,462
 —
 —
 2,462
Total $1,011,851
 $—
 $19,081
 $992,770
The Company may utilize information from third parties, such as pricing services and brokers, to assist in determining the fair value for certain assets and liabilities; however, management is ultimately responsible for all fair values presented in the Company’s condensed consolidated financial statements. This includes responsibility for monitoring the fair value process, ensuring objective and reliable valuation practices and pricing of assets and liabilities, and approving changes to valuation methodologies and pricing sources. The selection of the valuation technique(s) to apply considers the definition of an exit price and the nature of the asset or liability being valued and significant expertise and judgment is required.

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The Company performs initial and ongoing analysis and review of the various techniques utilized in determining fair value to ensure(1)Excludes limited partnerships that they are appropriate and consistently applied, and that the various assumptions are reasonable. The Company analyzes and reviews the information and prices received from third parties to ensure that the prices represent a reasonable estimate of the fair value and to monitor controls around pricing, which includes quantitative and qualitative analysis and is overseen by the Company’s investment and accounting personnel. Examples of procedures performed include, but are not limited to, review of pricing trends, comparison of a sample of executed prices of securities sold to the fair value estimates, comparison of fair value estimates to management’s knowledge of the current market, and ongoing confirmation that third party pricing services use, wherever possible, market-based parameters for valuation. In addition, the Company utilizes both internal and external cash flow models to analyze the reasonableness of fair values utilizing credit spread and other market assumptions, where appropriate. As a result of the analysis, if the Company determines there is a more appropriate fair value based upon the available market data, the price received from the third party is adjusted accordingly. The Company also determines if the inputs used in estimated fair values received from pricing services are observable by assessing whether these inputs can be corroborated by observable market data.
For assets and liabilities reported at fair value, the Company utilizes, when available, fair values based on quoted prices in active markets that are regularly and readily obtainable. Generally, these are very liquid investments and the valuation does not require management judgment. When quoted prices in active markets are not available, fair value is based on market valuation techniques, market comparable pricing and the income approach. The use of different techniques, assumptions and inputs may have a material effect on the estimated fair values of the Company’s securities holdings. For the periods presented, the application of market standard valuation techniques applied to similar assets and liabilities has been consistent.
The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below.
Fixed Maturity Securities – The fair values of the Company’s publicly-traded fixed maturity securities are generally based on prices obtained from independent pricing services. Prices from pricing services are sourced from multiple vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company generally receives prices from multiple pricing services for each security, but ultimately uses the price from the vendor that is highest in the hierarchy for the respective asset type. To validate reasonableness, prices are periodically reviewed as explained above. Consistent with the fair value hierarchy described above, securities with quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If the pricing information received from third party pricing services is not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service.
If the Company ultimately concludes that pricing information received from the independent pricing service is not reflective of fair value, non-binding broker quotes are used, if available. If the Company concludes that the values from both pricing services and brokers are not reflective of fair value, an internally developed valuation may be prepared; however, this occurs infrequently. Internally developed valuations or non-binding broker quotes are also used to determine fair value in circumstances where vendor pricing is not available. These valuations may use significant unobservable inputs, which reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset. Observable market data may not be available in certain circumstances, such as market illiquidity and credit events related to the security. Pricing service overrides, internally developed valuations and non-binding broker quotes are generally based on significant unobservable inputs and are reflected as Level 3 in the valuation hierarchy.
The inputs used in the valuation of corporate and government securities include, but are not limited to standard market observable inputs which are derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer. For structured securities, valuation is based primarily on matrix pricing or other similar techniques using standard market inputs including spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans.
When observable inputs are not available, the market standard valuation techniques for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. These unobservable inputs can be based in large part on management judgment or estimation, and cannot be supported by reference to market activity. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and are believed to be consistent with what other market participants would use when pricing such securities.

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The fair values of private placement securities are primarily determined using a discounted cash flow model. In certain cases these models primarily use observable inputs with a discount rate based upon the average of spread surveys collected from private market intermediaries who are active in both primary and secondary transactions, taking into account, among other factors, the credit quality and industry sector of the issuer and the reduced liquidity associated with private placements. Generally, these securities have been reflected within Level 3. For certain private fixed maturities, the discounted cash flow model may also incorporate significant unobservable inputs, which reflect the Company’s own assumptions about the inputs market participants would use in pricing the security. To the extent management determines that such unobservable inputs are not significant to the price of a security, a Level 2 classification is made. Otherwise, a Level 3 classification is used.
Embedded Derivatives – The fair value of embedded derivative liabilities, including those calculated by third parties, are monitored through the use of attribution reports to quantify the effect of underlying sources of fair value change, including capital market inputs based on policyholder account values, interest rates and short-term and long-term implied volatilities, from period to period. Actuarial assumptions are based on experience studies performed internally in combination with available industry information and are reviewed on a periodic basis, at least annually.
For embedded derivative liabilities associated with the underlying products in reinsurance treaties, primarily equity-indexed and variable annuity treaties, the Company utilizes a discounted cash flow model, which includes an estimate of future equity option purchases and an adjustment for a CVA. The variable annuity embedded derivative calculations are performed by third parties based on methodology and input assumptions provided by the Company. To validate the reasonableness of the resulting fair value, the Company’s internal actuaries perform reviews and analytical procedures on the results. The capital market inputs to the model, such as equity indexes, short-term equity volatility and interest rates, are generally observable. The valuation also requires certain significant inputs, which are generally not observable and accordingly, the valuation is considered Level 3 in the fair value hierarchy, see “Level 3 Measurements and Transfers” below for a description.
The fair value of embedded derivatives associated with funds withheld reinsurance treaties is determined based upon a total return swap technique with reference to the fair value of the investments held by the ceding company that support the Company’s funds withheld at interest asset with an adjustment for a CVA. The fair value of the underlying assets is generally based on market observable inputs using industry standard valuation techniques. The valuation also requires certain significant inputs, which are generally not observable and accordingly, the valuation is considered Level 3 in the fair value hierarchy, see “Level 3 Measurements and Transfers” below for a description.
Credit Valuation Adjustment – The Company uses a structural default risk model to estimate a CVA. The input assumptions are a combination of externally derived and published values (default threshold and uncertainty), market inputs (interest rate, equity price per share, debt per share, equity price volatility) and insurance industry data (Loss Given Default), adjusted for market recoverability.
Cash Equivalents and Short-Term Investments – Cash equivalents and short-term investments include money market instruments, commercial paper and other highly liquid debt instruments. Money market instruments are generally valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1. The fair value of certain other cash equivalents and short-term investments, such as floating rate notes and bonds with original maturities less than twelve months, are based upon other market observable data and are typically classified as Level 2. However, certain short-term investments may incorporate significant unobservable inputs resulting in a Level 3 classification. Various time deposits carried as cash equivalents or short-term investments are not measured at estimated fair value and therefore are excluded fromusing the tables presented.
Equity Securities – Equity securities consist principallyNAV per share (or its equivalent) as a practical expedient. As of exchange-traded funds and preferred stock of publicly and privately traded companies. The fair values of publicly traded equity securities are primarily based on quoted market prices in active markets and are classified within Level 1 in the fair value hierarchy. The fair values of preferred equity securities, for which quoted market prices are not readily available, are based on prices obtained from independent pricing services and these securities are generally classified within Level 2 in the fair value hierarchy. Non-binding broker quotes for equity securities are generally based on significant unobservable inputs and are reflected as Level 3 in the fair value hierarchy.
FVO Contractholder-Directed Unit-Linked Investments – FVO contractholder-directed investments supporting unit-linked variable annuity type liabilities primarily consist of exchange-traded funds and, to a lesser extent, fixed maturity securities and cash and cash equivalents. The fair values of the exchange-traded securities are primarily based on quoted market prices in active markets and are classified within Level 1 of the hierarchy. The fair value of the fixed maturity contractholder-directed securities is determined on a basis consistent with the methodologies described above for fixed maturity securities and are classified within Level 2 of the hierarchy.

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Derivative Assets and Derivative Liabilities – All of the derivative instruments utilized by the Company, except for longevity and mortality swaps, are classified within Level 2 on the fair value hierarchy. These derivatives are principally valued using an income approach. Valuations of interest rate contracts are based on present value techniques, which utilize significant inputs that may include the swap yield curve, London Interbank Offered Rate (“LIBOR”) basis curves, and repurchase rates. Valuations of foreign currency contracts, are based on present value techniques, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, currency spot rates, and cross currency basis curves. Valuations of credit contracts are based on present value techniques, which utilize significant inputs that may include the swap yield curve, credit curves, and recovery rates. Valuations of equity market contracts, are based on present value techniques, which utilize significant inputs that may include the swap yield curve, spot equity index levels, and dividend yield curves. Valuations of equity market contracts, option-based, are based on option pricing models, which utilize significant inputs that may include the swap yield curve, spot equity index levels, dividend yield curves, and equity volatility. The Company does not currently have derivatives, except for longevity and mortality swaps, included in Level 3 measurement.
Longevity and Mortality Swaps – The Company utilizes a discounted cash flow model to estimateMarch 31, 2023, the fair value of longevity and mortality swaps. Thesuch investments was $726 million.
December 31, 2022: Fair Value Measurements Using:
 TotalLevel 1Level 2Level 3
Assets: (1)
Fixed maturity securities available-for-sale:
Corporate$33,969 $— $29,670 $4,299 
Canadian government3,626 — 3,626 — 
Japanese government2,559 — 2,559 — 
ABS3,878 — 2,603 1,275 
CMBS1,623 — 1,555 68 
RMBS941 — 931 10 
U.S. government1,482 1,388 85 9 
State and political subdivisions1,119 — 1,093 26 
Other foreign government3,704 — 3,669 35 
Total fixed maturity securities available-for-sale52,901 1,388 45,791 5,722 
Equity securities134 68 — 66 
Funds withheld at interest – embedded derivatives(371)— — (371)
Funds withheld at interest54 — — 54 
Cash equivalents1,535 1,535 — — 
Short-term investments121 54 54 13 
Other invested assets:
Derivatives170 — 170 — 
Other23 — 23 — 
Total other invested assets193 — 193 — 
Total$54,567 $3,045 $46,038 $5,484 
Liabilities:
Interest-sensitive contract liabilities – embedded derivatives$530 $— $— $530 
Other liabilities:
Funds withheld at interest – embedded derivatives(363)— — (363)
Derivatives183 — 183 — 
Total$350 $— $183 $167 
(1)Excludes limited partnerships that are measured at estimated fair value of these swaps includes an accrual for premiums payable and receivable. Some inputs tousing the valuation model are generally observable, suchNAV per share (or its equivalent) as interest rates and actual population mortality experience. The valuation also requires significant inputs that are generally not observable and, accordingly, the valuation is considered Level 3 in the fair value hierarchy.
Level 3 Measurements and Transfers
a practical expedient. As of September 30, 2017 and December 31, 2016, the Company classified approximately 5.9% and 6.9%, respectively, of its fixed maturity securities in the Level 3 category. These securities primarily consist of private placement corporate securities and bank loans as well as Canadian provincial strips with inactive trading markets. Additionally, the Company has included asset-backed securities with subprime exposure and mortgage-backed securities with below investment grade ratings in the Level 3 category due to market uncertainty associated with these securities and the Company’s utilization of unobservable information from third parties for the valuation of these securities.

The significant unobservable inputs used in the fair value measurement of the Company’s corporate, sovereign, government-backed, and other political subdivision investments are probability of default, liquidity premium and subordination premium. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumptions used for the liquidity premium and subordination premium. For securities with a fair value derived using the market comparable pricing valuation technique, liquidity premium is the only significant unobservable input.
The significant unobservable inputs used in the fair value measurement of the Company’s asset and mortgage-backed securities are prepayment rates, probability of default, liquidity premium and loss severity in the event of default. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the liquidity premium and loss severity and a directionally opposite change in the assumption used for prepayment rates.
The actuarial assumptions used in2022, the fair value of embedded derivatives which include assumptions related to lapses, withdrawals, and mortality, are based on experience studies performed by the Company in combination with available industry information and are reviewed on a periodic basis, at least annually. The significant unobservable inputs used in the fair value measurement of embedded derivatives are assumptions associated with policyholder experience and selected capital market assumptions for equity-indexed and variable annuities. The selected capital market assumptions, which include long-term implied volatilities, are projections based on short-term historical information. Changes in interest rates, equity indices, equity volatility, CVA, and actuarial assumptions regarding policyholder experience may result in significant fluctuations in the value of embedded derivatives.
Fair value measurements associated with funds withheld reinsurance treaties are generally not materially sensitive to changes in unobservable inputs associated with policyholder experience. The primary drivers of change in these fair values are related to movements of credit spreads, which are generally observable. Increases (decreases) in market credit spreads tend to decrease (increase) the fair value of embedded derivatives. Increases (decreases) in the CVA assumption tend to decrease (increase) the magnitude of the fair value of embedded derivatives.
Fair value measurements associated with variable annuity treaties are sensitive to both capital markets inputs and policyholder experience inputs. Increases (decreases) in lapse rates tend to decrease (increase) the value of the embedded derivatives associated with variable annuity treaties. Increases (decreases) in the long-term volatility assumption tend to increase (decrease) the fair value of embedded derivatives. Increases (decreases) in the CVA assumption tend to decrease (increase) the magnitude of the fair value of embedded derivatives.

such investments was $683 million.
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Quantitative Information Regarding Internally Priced Assets and Liabilities
The actuarial assumptions used in the fair value of longevity and mortality swaps include assumptions related to the level and volatility of mortality. The assumptions are based on studies performed by the Company in combination with available industry information and are reviewed on a periodic basis, at least annually.
The following table presents quantitative information about significant unobservable inputs used in Level 3 fair value measurements that are developed internally by the Company as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
Estimated Fair Value      Valuation TechniqueUnobservable InputsRange (Weighted Average) 
March 31, 2023December 31, 2022March 31, 2023December 31, 2022
Assets:
Corporate$25 $25 Market comparable securitiesLiquidity premium1%1%
EBITDA Multiple5.3x5.3x
ABS272 274 Market comparable securitiesLiquidity premium0-18% (2%)0-18% (2%)
U.S. government8 9 Market comparable securitiesLiquidity premium0-1% (1%)0-1% (1%)
Equity securities9 9 Market comparable securitiesEBITDA Multiple8.4x-11.2x (9.7x)8.4x-11.2x (9.6x)
Funds withheld at interest – embedded derivatives4 (34)Total return swapMortality0-100%  (3%)0-100%  (3%)
Lapse0-35%  (15%)0-35%  (17%)
Withdrawal0-5%  (4%)0-5%  (4%)
CVA0-5%  (0%)0-5%  (0%)
Crediting rate1-4%  (2%)1-4%  (2%)
Liabilities:
Interest-sensitive contract liabilities – embedded derivatives – indexed annuities495 530 Discounted cash flowMortality0-100%  (3%)0-100% (3%)
Lapse0-35%  (14%)0-35% (16%)
Withdrawal0-5%  (4%)0-5% (3%)
Option budget projection1-4%  (2%)1-4% (2%)

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 Estimated Fair Value       Valuation Technique Unobservable Inputs Range (Weighted Average) 
September 30, 2017 December 31, 2016   September 30, 2017 December 31, 2016
Assets:           
Corporate securities$150,170
 $167,815
 Market comparable securities Liquidity premium 0-2% (1%)
 0-2%  (1%)
U.S. government and agencies23,251
 24,488
 Market comparable securities Liquidity premium 0-1% (1%)
 0-1%  (1%)
State and political subdivisions4,544
 4,670
 Market comparable securities     Liquidity premium 1% 1%
Funds withheld at interest- embedded derivatives84,325
 (22,529) Total return swap Mortality 0-100%  (3%)
 0-100%  (2%)
       Lapse 0-35%  (10%)
 0-35%  (8%)
       Withdrawal 0-5%  (4%)
 0-5%  (3%)
       CVA 0-5%  (1%)
 0-5%  (1%)
       Crediting rate 2-4%  (3%)
 2-4%  (2%)
Longevity swaps37,827
 26,958
 Discounted cash flow Mortality 0-100%  (2%)
 0-100%  (2%)
       Mortality improvement (10%)-10%  (3%)
 (10%)-10%  (3%)
Liabilities:           
Interest sensitive contract liabilities- embedded derivatives- indexed annuities821,821
 805,672
 Discounted cash flow Mortality 0-100%  (3%)
 0-100% (2%)
       Lapse 0-35%  (10%)
 0-35% (8%)
       Withdrawal 0-5%  (4%)
 0-5% (3%)
       Option budget projection 2-4%  (3%)
 2-4% (2%)
            
Interest sensitive contract liabilities- embedded derivatives- variable annuities168,119
 184,636
 
Discounted cash 
flow
 Mortality 0-100% (1%)
 0-100% (2%)
       Lapse 0-25% (5%)
 0-25% (6%)
       Withdrawal 0-7% (3%)
 0-7% (3%)
       CVA 0-5% (1%)
 0-5% (1%)
       Long-term volatility 0-27% (9%)
 0-27% (14%)
Mortality swaps1,683
 2,462
 Discounted cash flow Mortality 0-100%  (1%)
 0-100%  (1%)
Changes in Level 3 Assets and Liabilities
The Company recognizes transfers of assets and liabilities into and out of levels within the fair value hierarchy at the beginning of the quarter in which the actual event or change in circumstances that caused the transfer occurs. Assets and liabilities transferred into Level 3 are due to a lack of observable market transactions and price information. Assets and liabilities are transferred out of Level 3 when circumstances change such that significant inputs can be corroborated with market observable data. This may be due to a significant increase in market activity for the asset or liability, a specific event, one or more significant input(s) becoming observable. Transfers out of Level 3 wereare primarily the result of the Company obtaining observable pricing information or a third partythird-party pricing quotation that appropriately reflects the fair value of those assets and liabilities. In addition, certain transfers out
For further information on the Company’s valuation processes, see Note 6 – “Fair Value of Level 3 were also dueAssets and Liabilities” in the Notes to ratings upgradesConsolidated Financial Statements included in the Company’s 2022 Annual Report.
The reconciliations for all assets and liabilities measured at fair value on mortgage-backed securities thata recurring basis using significant unobservable inputs (Level 3) are as follows (dollars in millions):
For the three months ended March 31, 2023:Fixed maturity securities available-for-sale
Funds 
withheld at interest –embedded derivatives, net (1)
Funds 
withheld at interest		Interest-sensitive contract 
liabilities – embedded derivatives
 CorporateForeign govtStructured securitiesU.S. and local govtEquity securitiesCash equivalentsShort-term investments
Fair value, beginning of period$4,299 $35 $1,353 $35 $66 $— $13 $(8)$54 $(530)
Total gains/losses (realized/unrealized)
Included in earnings, net:
Net investment income1 — 1 — — — — — (2)— 
Investment related gains (losses), net(1)— 1 — — — (1)37 — — 
Interest credited— — — — — — — — — 16 
Included in other comprehensive income (loss)55 2 33 (1)— — — — 1 — 
Purchases (2)
318 — 98 — 2 1 1 — — 2 
Sales (2)
— — — — — — — — — — 
Settlements (2)
(59)— (62)(1)— — — — — 17 
Transfers into Level 3— — 64 — — — — — — — 
Transfers out of Level 3— — (27)(5)— — (6)— — — 
Fair value, end of period$4,613 $37 $1,461 $28 $68 $1 $7 $29 $53 $(495)
Total gains/losses (realized/unrealized) recorded for the period relating to those Level 3 assets and liabilities that were still held at the end of the period
Included in earnings, net:
Net investment income$1 $— $1 $— $— $— $— $— $(2)$— 
Investment related gains (losses), net(2)— — — — — (1)37 — — 
Interest credited— — — — — — — — — (1)
Included in other comprehensive income (loss)52 2 33 (1)— — — — 1 — 
(1)Funds withheld at interest – embedded derivatives assets and liabilities are presented net for purposes of the rollforward.
(2)The amount reported within purchases, sales and settlements is the purchase price (for purchases) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased or sold/settled. Items purchased and sold/settled in the same period are excluded from the rollforward. The Company had previously had below investment-grade ratings.

no issuances during the period.
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For the three months ended March 31, 2022:Fixed maturity securities available-for-sale
Funds 
withheld at interest –embedded derivatives, net (1)
Funds 
withheld at interest		Interest-sensitive contract 
liabilities – embedded derivatives
 CorporateForeign govtStructured securitiesU.S. and local govtEquity securitiesCash equivalentsShort-term investments
Fair value, beginning of period$3,888 $33 $1,179 $45 $50 $— $28 $165 $83 $(693)
Total gains/losses (realized/unrealized)
Included in earnings, net:
Net investment income1 — — — — — — — (5)— 
Investment related gains (losses), net— — (5)— (1)— — (33)— — 
Interest credited— — — — — — — — — 36 
Included in other comprehensive income (loss)(144)(4)(72)(1)— — — — (2)— 
Purchases (2)
365 — 95 — — — 20 — 1 (6)
Sales (2)
(16)— (51)— (1)— — — — — 
Settlements (2)
(26)— (38)(2)— — — — (2)18 
Transfers into Level 3— — 13 6 — — — — — — 
Transfers out of Level 3(22)— — (4)— — — — — — 
Fair value, end of period$4,046 $29 $1,121 $44 $48 $— $48 $132 $75 $(645)
Total gains/losses (realized/unrealized) recorded for the period relating to those Level 3 assets and liabilities that were still held at the end of the period
Included in earnings, net:
Net investment income$1 $— $— $— $— $— $— $— $(5)$— 
Investment related gains (losses), net— — (5)— (1)— — (33)— — 
Claims and other policy benefits— — — — — — — — — — 
Interest credited— — — — — — — — — 18 
Included in other comprehensive income (loss)(144)(4)(71)(1)— — — — (2)— 
Transfers from Level 1 to Level 2 are due to the lack of observable market data when pricing these securities, while transfers from Level 2 to Level 1 are due to an increase in the availability of market observable data in an active market. There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2016. The following tables present the transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2017 (dollars in thousands):
  2017
  
Transfers from    
Level 1 to
Level 2
 
Transfers from    
Level 2 to
Level 1
Three months ended September 30:    
Fixed maturity securities - available-for-sale:    
Corporate securities $—
 $—
     
Nine months ended September 30:    
Fixed maturity securities - available-for-sale:    
Corporate securities $—
 $88,674
The tables below provide a summary of the changes in fair value of Level 3(1)Funds withheld at interest – embedded derivatives assets and liabilities are presented net for the three and nine months ended September 30, 2017, as well as the portion of gains or losses included in income for the three and nine months ended September 30, 2017 attributable to unrealized gains or losses related to those assets and liabilities still held at September 30, 2017 (dollars in thousands):
For the three months ended September 30, 2017: Fixed maturity securities - available-for-sale
  
Corporate
securities
 Canadian and Canadian provincial governments 
Residential
mortgage-
backed
securities
 
Asset-backed
securities
Fair value, beginning of period $1,291,054
 $533,270
 $148,685
 $201,589
Total gains/losses (realized/unrealized)        
Included in earnings, net:        
Investment income, net of related expenses (383) 3,460
 (30) 160
Investment related gains (losses), net 396
 —
 44
 —
Included in other comprehensive income (2,700) (11,365) 104
 (101)
Purchases(1)
 107,670
 —
 26,765
 —
Sales(1)
 (26,337) —
 (3,553) —
Settlements(1)
 (88,551) —
 (3,645) (15,243)
Transfers into Level 3 3,844
 —
 15
 36,994
Transfers out of Level 3 (12,973) —
 (50,390) (78,202)
Fair value, end of period $1,272,020
 $525,365
 $117,995
 $145,197
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period        
Included in earnings, net:        
Investment income, net of related expenses $(394) $3,460
 $(27) $156

35
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For the three months ended September 30, 2017 (continued): Fixed maturity securities available-for-sale
  Commercial    
mortgage-
backed
securities		 U.S. government
and agencies		 State
and political
subdivisions		 Other foreign government, supranational  and foreign government-sponsored enterprises
Fair value, beginning of period $1,943
 $23,567
 $34,434
 $11,994
Total gains/losses (realized/unrealized)        
Included in earnings, net:        
Investment income, net of related expenses —
 (116) 26
 (1)
Included in other comprehensive income 5
 6
 (208) (7)
Purchases(1)
 —
 134
 —
 495
Settlements(1)
 (1) (340) (35) —
Transfers into Level 3 —
 —
 7,295
 —
Transfers out of Level 3 —
 —
 —
 (6,853)
Fair value, end of period $1,947
 $23,251
 $41,512
 $5,628
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period        
Included in earnings, net:        
Investment income, net of related expenses $—
 $(116) $26
 $(1)
For the three months ended September 30, 2017 (continued): Short-term Investments 
Funds withheld
at interest-
embedded
derivatives
 Other assets - longevity swaps Interest sensitive contract liabilities embedded derivatives Other liabilities - mortality swaps
Fair value, beginning of period $3,548
 $61,281
 $33,349
 $(974,631) $(1,552)
Total gains/losses (realized/unrealized)          
Included in earnings, net:          
Investment related gains (losses), net —
 23,044
 —
 (10,047) —
Interest credited —
 —
 —
 (8,335) —
Included in other comprehensive income (3) —
 1,144
 —
 1
Other revenues —
 —
 3,334
 —
 (132)
Purchases(1)
 3,164
 —
 —
 (18,736) —
Settlements(1)
 (114) —
 —
 21,809
 —
Transfers out of Level 3 (3,236) —
 

 —
 —
Fair value, end of period $3,359
 $84,325
 $37,827
 $(989,940) $(1,683)
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period          
Included in earnings, net:          
Investment related gains (losses), net —
 23,044
 —
 (11,900) —
Other revenues —
 —
 3,334
 —
 (132)
Interest credited —
 —
 —
 (30,145) —

36
Table of Contents


For the nine months ended September 30, 2017: Fixed maturity securities - available-for-sale
  
Corporate
securities
 Canadian and Canadian provincial governments 
Residential
mortgage-
backed
securities
 
Asset-backed
securities
Fair value, beginning of period $1,272,253
 $475,965
 $160,291
 $219,280
Total gains/losses (realized/unrealized)        
Included in earnings, net:        
Investment income, net of related expenses (1,202) 9,731
 (304) 1,689
Investment related gains (losses), net 7,592
 —
 524
 —
Interest credited 

 

 

 

Included in other comprehensive income (2,300) 39,669
 2,716
 6,802
Purchases(1)
 257,671
 —
 72,582
 45,215
Sales(1)
 (49,511) —
 (18,624) —
Settlements(1)
 (234,552) —
 (15,084) (60,966)
Transfers into Level 3 35,042
 —
 5,515
 75,752
Transfers out of Level 3 (12,973) —
 (89,621) (142,575)
Fair value, end of period $1,272,020
 $525,365
 $117,995
 $145,197
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period        
Included in earnings, net:        
Investment income, net of related expenses $(1,213) $9,731
 $(155) $556
Investment related gains (losses), net (2,788) —
 (346) —
For the nine months ended September 30, 2017 (continued): Fixed maturity securities available-for-sale
  Commercial    
mortgage-
backed
securities		 U.S. government
and agencies		 State
and political
subdivisions		 Other foreign government, supranational  and foreign government-sponsored enterprises
Fair value, beginning of period $21,145
 $24,488
 $41,666
 $12,869
Total gains/losses (realized/unrealized)        
Included in earnings, net:        
Investment income, net of related expenses 709
 (348) (68) (1)
Investment related gains (losses), net (595) —
 —
 —
Included in other comprehensive income (57) 269
 (228) (210)
Other revenues —
 —
 —
 —
Purchases(1)
 —
 370
 —
 495
Sales(1)
 (3,720) —
 —
 —
Settlements(1)
 (5,403) (1,528) (309) (672)
Transfers into Level 3 —
 —
 7,295
 —
Transfers out of Level 3 (10,132) —
 (6,844) (6,853)
Fair value, end of period $1,947
 $23,251
 $41,512
 $5,628
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period        
Included in earnings, net:        
Investment income, net of related expenses $—
 $(348) $(68) $(1)


37
Table of Contents


For the nine months ended September 30, 2017 (continued): Short-term Investments 
Funds withheld
at interest-
embedded
derivatives
 Other assets - longevity swaps Interest sensitive contract liabilities embedded derivatives Other liabilities - mortality swaps
Fair value, beginning of period $3,346
 $(22,529) $26,958
 $(990,308) $(2,462)
Total gains/losses (realized/unrealized)          
Included in earnings, net:          
Investment related gains (losses), net —
 106,854
 —
 9,005
 —
Interest credited —
 —
 —
 (20,408) —
Included in other comprehensive income 1
 —
 3,689
 —
 1
Other revenues —
 —
 7,180
 —
 (922)
Purchases(1)
 3,520
 —
 —
 (51,276) —
Settlements(1)
 (272) —
 —
 63,047
 1,700
Transfers out of Level 3 (3,236) —
 —
 —
 —
Fair value, end of period $3,359
 $84,325
 $37,827
 $(989,940) $(1,683)
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period          
Included in earnings, net:          
Investment related gains (losses), net —
 106,854
 —
 2,934
 —
Other revenues —
 —
 7,180
 —
 (922)
Interest credited —
 —
 —
 (83,456) —

(1)The amount reported within purchases, sales and settlements is the purchase price (for purchases) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased or sold/settled. Items purchased and sold/settled in the same period are excluded from the rollforward. The Company had no issuances during the period.

The tables below provide a summarypurposes of the changesrollforward.
(2)The amount reported within purchases, sales and settlements is the purchase price (for purchases) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased or sold/settled. Items purchased and sold/settled in fair value of Level 3 assets and liabilities for the three and nine months ended September 30, 2016, as well assame period are excluded from the portion of gains or losses included in income forrollforward. The Company had no issuances during the three and nine months ended September 30, 2016 attributable to unrealized gains or losses related to those assets and liabilities still held at September 30, 2016 (dollars in thousands):period.
For the three months ended September 30, 2016: Fixed maturity securities - available-for-sale
  
Corporate
securities
 Canadian and Canadian provincial governments 
Residential
mortgage-
backed
securities
 
Asset-backed
securities
 
Commercial    
mortgage-
backed
securities
 
U.S. government
and agencies
Fair value, beginning of period $1,297,382
 $554,192
 $165,979
 $298,816
 $37,935
 $26,255
Total gains/losses (realized/unrealized)            
Included in earnings, net:            
Investment income, net of related expenses (567) 3,085
 (40) 173
 304
 (122)
Investment related gains (losses), net 17,917
 —
 —
 —
 —
 —
Included in other comprehensive income (19,635) 16,342
 2,597
 3,410
 (94) (135)
Purchases(1)
 54,492
 —
 27,548
 5,013
 —
 147
Sales(1)
 (26,320) —
 —
 —
 —
 —
Settlements(1)
 (44,110) —
 (6,935) (18,602) (1) (312)
Transfers into Level 3 —
 —
 1,544
 28,285
 —
 —
Transfers out of Level 3 (23,255) —
 —
 (93,444) (637) —
Fair value, end of period $1,255,904
 $573,619
 $190,693
 $223,651
 $37,507
 $25,833
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period            
Included in earnings, net:            
Investment income, net of related expenses $(489) $3,085
 $(40) $173
 $304
 $(122)

38
Table of Contents


For the three months ended September 30, 2016 (continued): 
Fixed maturity securities
available-for-sale
        
  State
and political
subdivisions		 Other foreign government, supranational and foreign government-sponsored enterprises 
Funds withheld
at interest-
embedded
derivatives
 Other assets - longevity swaps Interest sensitive contract liabilities embedded derivatives Other liabilities - mortality swaps
Fair value, beginning of period $35,246
 $13,706
 $(91,981) $17,781
 $(1,125,380) $(1,997)
Total gains/losses (realized/unrealized)            
Included in earnings, net:            
Investment income, net of related expenses 10
 —
 —
 —
 —
 —
Investment related gains (losses), net —
 —
 49,078
 —
 7,988
 —
Interest credited —
 —
 —
 —
 (20,104) —
Included in other comprehensive income 553
 48
 —
 327
 —
 —
Other revenues —
 —
 —
 8,921
 —
 (400)
Purchases(1)
 1,986
 —
 —
 —
 (11,853) —
Sales(1)
 —
 —
 —
 —
 —
 —
Settlements(1)
 (32) (328) —
 —
 19,225
 329
Transfers into Level 3 —
 —
 —
 —
 —
 —
Transfers out of Level 3 —
 —
 —
 —
 —
 —
Fair value, end of period $37,763
 $13,426
 $(42,903) $27,029
 $(1,130,124) $(2,068)
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period            
Included in earnings, net:            
Investment income, net of related expenses $10
 $—
 $—
 $—
 $—
 $—
Investment related gains (losses), net —
 —
 49,078
 —
 3,969
 —
Other revenues —
 —
 —
 8,921
 —
 (400)
Interest credited —
 —
 —
 —
 (39,329) —
For the nine months ended September 30, 2016: Fixed maturity securities - available-for-sale
  
Corporate
securities
 Canadian and Canadian provincial governments 
Residential
mortgage-
backed
securities
 
Asset-backed
securities
 
Commercial    
mortgage-
backed
securities
 
U.S. government
and agencies
Fair value, beginning of period $1,226,970
 $416,076
 $330,649
 $303,836
 $68,563
 $26,265
Total gains/losses (realized/unrealized)            
Included in earnings, net:            
Investment income, net of related expenses (1,986) 9,136
 (411) 599
 1,437
 (367)
Investment related gains (losses), net (3,939) —
 (1,922) 1,101
 (3,289) —
Interest credited —
 —
 —
 —
 —
 —
Included in other comprehensive income 36,438
 148,407
 2,104
 (4,324) (2,453) 922
Other revenues —
 —
 —
 —
 —
 —
Purchases(1)
 195,070
 —
 99,776
 102,063
 1,545
 404
Sales(1)
 (36,803) —
 (167,684) (38,681) (25,976) —
Settlements(1)
 (141,065) —
 (31,839) (26,523) (138) (1,391)
Transfers into Level 3 10,206
 —
 1,544
 53,081
 —
 —
Transfers out of Level 3 (28,987) —
 (41,524) (167,501) (2,182) —
Fair value, end of period $1,255,904
 $573,619
 $190,693
 $223,651
 $37,507
 $25,833
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period            
Included in earnings, net:            
Investment income, net of related expenses $(1,917) $9,136
 $2
 $523
 $1,335
 $(367)

39
Table of Contents


For the nine months ended September 30, 2016 (continued): 
Fixed maturity securities
available-for-sale
        
  State
and political
subdivisions		 Other foreign government, supranational and foreign government-sponsored enterprises 
Funds withheld
at interest-
embedded
derivatives
 Other assets - longevity swaps Interest sensitive contract liabilities embedded derivatives Other liabilities - mortality swaps
Fair value, beginning of period $38,342
 $14,065
 $(76,698) $14,996
 $(1,070,584) $(2,619)
Total gains/losses (realized/unrealized)            
Included in earnings, net:            
Investment income, net of related expenses 205
 —
 —
 —
 —
 —
Investment related gains (losses), net —
 —
 33,795
 —
 (83,089) —
Interest credited —
 —
 —
 —
 (20,730) —
Included in other comprehensive income 1,725
 336
 —
 631
 —
 —
Other revenues —
 —
 —
 11,402
 —
 222
Purchases(1)
 1,986
 —
 —
 —
 (9,817) —
Sales(1)
 —
 —
 —
 —
 —
 —
Settlements(1)
 (290) (975) —
 —
 54,096
 329
Transfers into Level 3 —
 —
 —
 —
 —
 —
Transfers out of Level 3 (4,205) —
 —
 —
 —
 —
Fair value, end of period $37,763
 $13,426
 $(42,903) $27,029
 $(1,130,124) $(2,068)
Unrealized gains and losses recorded in earnings for the period relating to those Level 3 assets and liabilities that were still held at the end of the period            
Included in earnings, net:            
Investment income, net of related expenses $205
 $—
 $—
 $—
 $—
 $—
Investment related gains (losses), net —
 —
 33,795
 —
 (92,842) —
Other revenues —
 —
 —
 11,402
 —
 222
Interest credited —
 —
 —
 —
 (74,826) —

(1)The amount reported within purchases, sales and settlements is the purchase price (for purchases) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased or sold/settled. Items purchased and sold/settled in the same period are excluded from the rollforward. The Company had no issuances during the period.

40
Table of Contents


Nonrecurring Fair Value Measurements
The following table presents information forCompany has certain assets measuredsubject to measurement at estimated fair value on a nonrecurring basis, duringin periods subsequent to their initial recognition if they are determined to be impaired. During the periods presentedthree months ended March 31, 2023 and still held2022, the Company did not have any material assets that were measured at the reporting date (for example, when there is evidence of impairment). The estimated fair values for these assets were determined using significant unobservable inputs (Level 3).
  Carrying Value After Measurement Net Investment Gains (Losses)  
  At September 30, Three months ended September 30, Nine months ended September 30,
(dollars in thousands) 2017 2016 2017 2016 2017 2016
Mortgage loans(1)
 $—
 $6,913
 $—
 $747
 $—
 $45
Limited partnership interests(2)
 4,656
 4,460
 (896) —
 (7,204) (2,039)
Private equities(3)
 106
 —
 (531) —
 (531) —
(1)Estimated fair values for impaired mortgage loans are based on internal valuation models using unobservable inputs or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, are based on external appraisals of the underlying collateral.
(2)The impaired limited partnership interests presented above were accounted for using the cost method. Impairments on these cost method investments were recognized at estimated fair value determined using the net asset values of the Company’s ownership interest as provided in the financial statements of the investees. The market for these investments has limited activity and price transparency.
(3)The fair value of the Company’s private equity investments is based on external valuation models.

value due to impairment.
Fair Value of Financial Instruments
The Company is required by general accounting principles for Carried at Other Than Fair Value Measurements and Disclosures to disclose the fair value of certain financial instruments including those that are not carried at fair value.
The following table presents the carrying amountsvalues and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis, as of September 30, 2017March 31, 2023 and December 31, 20162022 (dollars in thousands)millions). For additional information regarding the methods and significant assumptions used by the Company to estimate these fair values, see Note 6 – “Fair Value of Assets and Liabilities” in the Notes to Consolidated Financial Statements included in the Company’s 2022 Annual Report. This table excludes any payables or receivables for collateral under repurchase/reverse repurchase agreements and other transactions. The estimated fair value of the excluded amount approximates carrying value as they equal the amount of cash collateral received/paid.
57
September 30, 2017: Carrying Value     
Estimated 
Fair Value
 Fair Value Measurement Using:
Level 1 Level 2 Level 3 NAV
Assets:            
Mortgage loans on real estate $4,322,329
 $4,494,964
 $—
 $—
 $4,494,964
 $—
Policy loans 1,340,146
 1,340,146
 —
 1,340,146
 —
 —
Funds withheld at interest(1)
 5,931,416
 6,309,369
 —
 —
 6,309,369
 —
Cash and cash equivalents(2)
 872,404
 872,404
 872,404
 —
 —
 —
Short-term investments(2)
 24,128
 24,128
 24,128
 —
 —
 —
Other invested assets(2)
 601,905
 627,650
 28,267
 68,342
 230,355
 300,686
Accrued investment income 420,111
 420,111
 —
 420,111
 —
 —
Liabilities:            
Interest-sensitive contract liabilities(1)
 $12,616,104
 $12,960,161
 $—
 $—
 $12,960,161
 $—
Long-term debt 2,778,480
 2,997,791
 —
 —
 2,997,791
 —
Collateral finance and securitization notes 796,825
 708,342
 —
 —
 708,342
 —
             
December 31, 2016: Carrying Value 
Estimated
Fair Value
 Fair Value Measurement Using:
Level 1 Level 2 Level 3 NAV
Assets:            
Mortgage loans on real estate $3,775,522
 $3,786,987
 $—
 $—
 $3,786,987
 $—
Policy loans 1,427,602
 1,427,602
 —
 1,427,602
 —
 —
Funds withheld at interest(1)
 5,893,381
 6,193,166
 —
 —
 6,193,166
 —
Cash and cash equivalents(2)
 862,117
 862,117
 862,117
 —
 —
 —
Short-term investments(2)
 32,469
 32,469
 32,469
 —
 —
 —
Other invested assets(2)
 477,132
 510,640
 26,294
 55,669
 131,904
 296,773
Accrued investment income 347,173
 347,173
 —
 347,173
 —
 —
Liabilities:            
Interest-sensitive contract liabilities(1)
 $10,225,099
 $10,234,544
 $—
 $—
 $10,234,544
 $—
Long-term debt 3,088,635
 3,186,173
 —
 —
 3,186,173
 —
Collateral finance and securitization notes 840,700
 745,805
 —
 —
 745,805
 —
(1)Carrying values presented herein differ from those presented in the condensed consolidated balance sheets because certain items within the respective financial statement caption are embedded derivatives and are measured at fair value on a recurring basis.
(2)Carrying values presented herein differ from those presented in the condensed consolidated balance sheets because certain items within the respective financial statement caption are measured at fair value on a recurring basis.

41
Table of Contents



March 31, 2023:
Carrying Value (1)
Estimated 
Fair Value		Fair Value Measurement Using:
Level 1Level 2Level 3
Assets:
Mortgage loans$6,833 $6,367 $— $— $6,367 
Policy loans1,221 1,221 — 1,221 — 
Funds withheld at interest6,245 5,821 — — 5,821 
Limited partnerships – cost method54 57 — — 57 
Cash and cash equivalents1,640 1,640 1,640 — — 
Short-term investments43 43 43 — — 
Other invested assets974 780 5 64 711 
Accrued investment income672 672 — 672 — 
Liabilities:
Interest-sensitive contract liabilities$23,515 $23,213 $— $— $23,213 
Other liabilities – funds withheld at interest1,593 1,316 — — 1,316 
Long-term debt4,455 4,260 — — 4,260 
December 31, 2022:
Assets:
Mortgage loans$6,590 $6,109 $— $— $6,109 
Policy loans1,231 1,231 — 1,231 — 
Funds withheld at interest6,319 5,884 — — 5,884 
Limited partnerships – cost method49 52 — — 52 
Cash and cash equivalents1,392 1,392 1,392 — — 
Short-term investments33 33 33 — — 
Other invested assets947 758 4 65 689 
Accrued investment income630 630 — 630 — 
Liabilities:
Interest-sensitive contract liabilities$23,493 $23,065 $— $— $23,065 
Other liabilities – funds withheld at interest1,596 1,321 — — 1,321 
Long-term debt3,961 3,670 — — 3,670 
Mortgage Loans on Real Estate – The(1)Carrying values presented herein may differ from those in the Company’s condensed consolidated balance sheets because certain items within the respective financial statement captions may be measured at fair value on a recurring basis.
NOTE 14 INCOME TAX
On August 16, 2022, the Inflation Reduction Act of mortgage loans2022 (“the Act”) was enacted in the U.S. The Act includes law changes relating to tax, climate change, energy and health care. In particular, for tax years ending after December 31, 2022, the Act imposes a 15% minimum tax on real estate is estimated by discounting cash flows, both principal and interest, using current interest ratesadjusted financial statement income for mortgage loansapplicable corporations with similar credit ratings and similar remaining maturities. As such, inputs include current treasury yields and spreads, which are basedaverage financial statement income over $1 billion for the previous 3-year period ending in 2022 or after. Based on the credit rating and average lifecurrent guidance, the Company is not an applicable corporation for 2023. The Act also imposes a 1% excise tax on stock buybacks of the loan, correspondinga publicly traded corporation. The Act is not expected to have a material impact to the market spreads. Company’s tax expense.
The valuation of mortgage loanseffective tax rate for the three months ending March 31, 2023, was 28.0% on real estate is considered Level 3pre-tax income. The tax rate was higher than the U.S. statutory rate primarily due to income earned in jurisdiction with tax rates greater than the fair value hierarchy.
Policy Loans – Policy loans typically carry an interestU.S. statutory tax rate, that is adjusted annually based on an observable market indexGlobal Intangible Low-Taxed income (“GILTI”), Subpart F income and therefore carrying value approximates fair value. The valuation of policy loans is considered Level 2 in the fair value hierarchy.
Funds Withheld at Interest – The carrying value of funds withheld at interest approximates fair value except where the funds withheld are specifically identified in the agreement. When funds withheld are specifically identified in the agreement, the fair value is based on the fair value of the underlying assets which are held by the ceding company. Ceding companies use a variety of sources and pricing methodologies, which are not transparentadjustments to the Companyvaluation allowance. The effective tax rate for the three months ending March 31, 2022, was 26.3%. The tax rate was higher than the U.S. statutory rate primarily as a result of income in jurisdictions with tax rates higher than the U.S. and may include significant unobservable inputs, to valuebasis adjustments in foreign jurisdictions. These increases were partially offset with benefits received from tax credits generated during the securities that are held in distinct portfolios, therefore the valuation of these funds withheld assets are considered Level 3 in the fair value hierarchy.
Cash and Cash Equivalents and Short-term Investments – The carrying values of cash and cash equivalents and short-term investments approximates fair values due to the short-term maturities of these instruments and are considered Level 1 in the fair value hierarchy.
Other Invested Assets – This primarily includes limited partnership interests accounted for using the cost method, structured loans, FHLB common stock, cash collateral and equity release mortgages. The fair value of limited partnership interests and other investments accounted for using the cost method is determined using the net asset value (“NAV”) of the Company’s ownership interest as provided in the financial statements of the investees. The fair value of structured loans is estimated based on a discounted cash flow analysis using discount rates applicable to each structured loan, this is considered Level 3 in the fair value hierarchy. The fair value of the Company’s common stock investment in the FHLB is considered to be the carrying value and it is considered Level 2 in the fair value hierarchy. The fair value of the Company’s cash collateral is considered to be the carrying value and considered to be Level 1 in the fair value hierarchy. The fair value of the Company’s equity release mortgage loan portfolio, considered Level 3 in the fair value hierarchy, is estimated by discounting cash flows, both principal and interest, using a risk free rate plus an illiquidity premium. The cash flow analysis considers future expenses, changes in property prices, and actuarial analysis of borrower behavior, mortality and morbidity.
Accrued Investment Income – The carrying value for accrued investment income approximates fair value as there are no adjustments made to the carrying value. This is considered Level 2 in the fair value hierarchy.
Interest-Sensitive Contract Liabilities – The carrying and fair values of interest-sensitive contract liabilities reflected in the table above exclude contracts with significant mortality risk. The fair value of the Company’s interest-sensitive contract liabilities utilizes a market standard technique with both capital market inputs and policyholder behavior assumptions, as well as cash values adjusted for recapture fees. The capital market inputs to the model, such as interest rates, are generally observable. Policyholder behavior assumptions are generally not observable and may require use of significant management judgment. The valuation of interest-sensitive contract liabilities is considered Level 3 in the fair value hierarchy.
Long-term Debt/Collateral Finance and Securitization Notes – The fair value of the Company’s long-term, debt and collateral finance and securitization notes is generally estimated by discounting future cash flows using market rates currently available for debt with similar remaining maturities and reflecting the credit risk of the Company, including inputs when available, from actively traded debt of the Company or other companies with similar credit quality. The valuation of long-term debt, and collateral finance and securitization notes are generally obtained from brokers and is considered Level 3 in the fair value hierarchy.

year.
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7.Segment Information
The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies in Note 2 of the consolidated financial statements accompanying the 2016 Annual Report. The Company measures segment performance primarily based on profit or loss from operations before income taxes. There are no intersegment reinsurance transactions and the Company does not have any material long-lived assets.NOTE 15 EMPLOYEE BENEFIT PLANS
The Company allocates capital to its segments basedcomponents of net periodic benefit cost, included in other operating expenses on an internally developed economic capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model considers the unique and specific nature of the risks inherent in the Company’s businesses. As a resultcondensed consolidated statements of income, for the economic capital allocation process, a portion of investment income is attributed to the segments based on the level of allocated capital. In addition, the segments are charged for excess capital utilized above the allocated economic capital basis. This charge is included in policy acquisition coststhree months ended March 31, 2023 and other insurance expenses.
The Company has geographic-based and business-based operational segments. Geographic-based operations are further segmented into traditional and financial solutions businesses. Information related to revenues, income (loss) before income taxes and total assets of the Company for each reportable segment are summarized below2022 were as follows (dollars in thousands).millions):
 Pension BenefitsOther Benefits
 Three months ended March 31,Three months ended March 31,
 2023202220232022
Service cost$3 $4 $— $1 
Interest cost2 1 1 — 
Expected return on plan assets(3)(3)— — 
Amortization of prior service cost (credit)— — — — 
Amortization of prior actuarial losses1 1 — — 
Net periodic benefit cost$3 $3 $1 $1 
59
  Three months ended September 30, Nine months ended September 30,
Revenues: 2017 2016 2017 2016
U.S. and Latin America:        
Traditional $1,521,383
 $1,444,917
 $4,532,584
 $4,339,737
Financial Solutions 264,170
 276,135
 834,992
 620,117
Total 1,785,553
 1,721,052
 5,367,576
 4,959,854
Canada:        
Traditional 281,095
 280,959
 814,643
 827,871
Financial Solutions 12,430
 12,359
 36,240
 34,897
Total 293,525
 293,318
 850,883
 862,768
Europe, Middle East and Africa:        
Traditional 360,972
 289,070
 1,024,978
 880,346
Financial Solutions 77,041
 99,752
 230,435
 248,485
Total 438,013
 388,822
 1,255,413
 1,128,831
Asia Pacific:        
Traditional 561,660
 427,647
 1,628,419
 1,299,417
Financial Solutions 16,932
 19,037
 55,368
 56,153
Total 578,592
 446,684
 1,683,787
 1,355,570
Corporate and Other 49,627
 50,701
 125,667
 145,190
Total $3,145,310
 $2,900,577
 $9,283,326
 $8,452,213
  Three months ended September 30, Nine months ended September 30,
Income (loss) before income taxes: 2017 2016 2017 2016
U.S. and Latin America:        
Traditional $160,512
 $77,081
 $281,066
 $239,609
Financial Solutions 89,118
 102,714
 299,689
 196,672
Total 249,630
 179,795
 580,755
 436,281
Canada:        
Traditional 28,789
 34,275
 80,953
 97,679
Financial Solutions 4,472
 1,160
 12,489
 3,880
Total 33,261
 35,435
 93,442
 101,559
Europe, Middle East and Africa:        
Traditional 15,421
 8,515
 40,751
 14,233
Financial Solutions 30,953
 43,786
 91,776
 96,679
Total 46,374
 52,301
 132,527
 110,912
Asia Pacific:        
Traditional 26,564
 19,822
 121,574
 95,464
Financial Solutions (229) 7,549
 11,020
 16,029
Total 26,335
 27,371
 132,594
 111,493
Corporate and Other (15,438) (7,302) (51,997) (11,842)
Total $340,162
 $287,600
 $887,321
 $748,403

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Assets: September 30, 2017 December 31, 2016
U.S. and Latin America:    
Traditional $18,707,824
 $18,140,825
Financial Solutions 16,101,746
 13,712,106
Total 34,809,570
 31,852,931
Canada:    
Traditional 4,177,125
 3,846,682
Financial Solutions 88,609
 85,405
Total 4,265,734
 3,932,087
Europe, Middle East and Africa:    
Traditional 2,978,701
 2,559,124
Financial Solutions 4,094,518
 3,876,131
Total 7,073,219
 6,435,255
Asia Pacific:    
Traditional 4,750,652
 3,968,081
Financial Solutions 1,187,514
 676,281
Total 5,938,166
 4,644,362
Corporate and Other 6,607,342
 6,233,244
Total $58,694,031
 $53,097,879
8.    Commitments, Contingencies and GuaranteesNOTE 16 COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments
Funding of Investments
The Company’s commitments to fund investments as of September 30, 2017March 31, 2023 and December 31, 20162022, are presented in the following table (dollars in thousands)millions):
 September 30, 2017 December 31, 2016
Limited partnership interests and real estate joint ventures$349,157
 $332,169
Commercial mortgage loans75,492
 126,248
Bank loans and private placements51,479
 58,318
Equity release mortgages156,777
 130,324
March 31, 2023December 31, 2022
Limited partnerships and real estate joint ventures$955 $937 
Mortgage loans189 137 
Bank loans and private placements644 682 
Lifetime mortgages33 59 
The Company anticipates that the majority of its current commitments will be invested over the next five years; however, these commitments could become due any time at the request of the counterparties. Investments in limited partnership interests and real estate joint ventures are carried at cost or reported using the equity method and included in other invested assets in the condensed consolidated balance sheets. Bank loans and private placements are carried at fair value and included in fixed maturity securities available-for-sale. Equity release mortgages are carried at unpaid principal balances, net of any amortized premium or discount and valuation allowance and
The Company has an immaterial liability, included in other invested assets.liabilities, for expected credit losses associated with unfunded commitments as of March 31, 2023 and December 31, 2022.
Funding Agreements
Federal Home Loan Bank of Des Moines
The Company is a member of the FHLB and, through membership, has issued funding agreements to the FHLB in exchange for cash advances. As of March 31, 2023 and December 31, 2022, the Company had $1.3 billion of FHLB funding agreements outstanding. The Company is required to provide collateral in excess of the funding agreement amounts outstanding, considering any discounts to the securities posted and prepayment penalties.
Funding Agreement Backed Notes
The Company’s Funding Agreement Backed Notes (“FABN”) program allows RGA Global Funding, a special-purpose, unaffiliated statutory trust, to offer its senior secured medium-term notes to investors. RGA Global Funding uses the net proceeds from each sale to purchase one or more funding agreements from the Company. As of both March 31, 2023 and December 31, 2022, the Company had $900 million of FABN agreements outstanding and are included within interest-sensitive contract liabilities.
Contingencies
Litigation
The Company is subject to litigation and regulatory investigations or actions from time to time. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental matters will have a material adverse effect on the financial condition, results of operations or cash flows of the Company. However, in light of the normal courseinherent uncertainties involved in future or pending legal, regulatory and governmental matters, some of its business. The Company currently has nowhich are beyond the Company’s control, and indeterminate or potentially substantial amount of damages sought in any such matters, an adverse outcome could be material litigation.to the Company’s financial condition, results of operations or cash flows for any particular reporting period. A legal reserve is established when the Company is notified of an arbitration demand, litigation or litigationregulatory action or is notified that an arbitration demand, litigation or litigationregulatory action is imminent, it is probable that the Company will incur a loss as a result and the amount of the probable loss is reasonably capable of being estimated.
Other Contingencies
The Company indemnifies its directors and officers as provided in its charters and by-laws. Since this indemnity generally is not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount due under this indemnity in the future.
Guarantees
Statutory Reserve Support
Certain RGA through wholly-owned subsidiaries hashave committed to provide statutory reserve support to third parties, in exchange for a fee, by funding loans if certain defined events occur. Such statutory reserves are required under the U.S. Valuation of Life Policies Model Regulation (commonly referred to as Regulation XXX for term life insurance policies and Regulation A-XXX for universal life secondary guarantees). The third partiesIn addition, certain subsidiaries have recourse to RGA should the subsidiary failalso committed to provide capital support to a third party, in exchange for a fee, by agreeing to assume real estate leases in the required funding,

event of a severe and prolonged decline in the commercial
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however, aslease market. Upon assumption of September 30, 2017,a lease, the Company would recognize a right to use asset and lease obligation. As of March 31, 2023, the Company does not believe that it will be required to provide any funding under these commitments as the occurrence of the defined events is considered remote. The following table presents the maximum potential obligation for these commitments as of September 30, 2017March 31, 2023 (dollars in millions):
Commitment PeriodMaximum Potential Obligation
2034$1,243 
20352,630 
20363,599 
20376,850 
2038800 
20398,751 
20463,000 
NOTE 17 SEGMENT INFORMATION
Commitment Period:Maximum Potential Obligation
2023$500.0
2033450.0
20342,000.0
20351,314.2
20362,932.0
20375,750.0
The accounting policies of the segments are the same as those described in Note 2 – “Significant Accounting Policies and Pronouncements” in the Notes to Consolidated Financial Statements included in the Company’s 2022 Annual Report. The Company measures segment performance primarily based on profit or loss from operations before income taxes. There are no intersegment reinsurance transactions and the Company does not have any material long-lived assets.
Other Guarantees
RGA has issued guaranteesThe Company allocates capital to third partiesits segments based on behalfan internally developed economic capital model, the purpose of its subsidiaries forwhich is to measure the payment of amounts due under certain securities borrowingrisk in the business and repurchase arrangements, financing arrangements and office lease obligations, whereby, if a subsidiary fails to meet an obligation, RGA or one of its other subsidiaries will make a payment to fulfill the obligation. Additionally, in limited circumstances, treaty guarantees are granted to ceding companies in order to provide them additional security, particularlya basis upon which capital is deployed. The economic capital model considers the unique and specific nature of the risks inherent in cases where RGA’s subsidiary is relatively new, unrated, or not of a significant size, relative to the ceding company. Liabilities supported by the treaty guarantees, before consideration for any legally offsetting amounts due from the guaranteed party are reflected on the Company’s condensed consolidated balance sheets in future policy benefits. Potential guaranteed amounts of future payments will vary depending on production levels and underwriting results. Guarantees related to securities borrowing and repurchase arrangements provide additional security to third parties should a subsidiary fail to provide securities when due. RGA’s guarantees issued as of September 30, 2017 and December 31, 2016 are reflected in the following table (dollars in thousands):
 September 30, 2017 December 31, 2016
Treaty guarantees$936,032
 $902,216
Treaty guarantees, net of assets in trust810,870
 780,786
Securities borrowing and repurchase arrangements295,285
 263,820
Financing arrangements100,602
 119,073
Lease obligations1,895
 2,428

9.Income Tax
Provision for income tax expense differed from the amounts computed by applying the U.S. federal income tax statutory rate of 35.0% to pre-tax income asbusinesses. As a result of the following for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Tax provision at U.S. statutory rate $119,057
 $100,660
 $310,562
 $261,941
Increase (decrease) in income taxes resulting from:        
Foreign tax rate differing from U.S. tax rate (3,635) (2,335) (14,049) (14,617)
Differences in tax bases in foreign jurisdictions 2,126
 (7,078) (14,633) (21,567)
Deferred tax valuation allowance (2,501) 4,411
 11,627
 13,698
Amounts related to tax audit contingencies 299
 (3,979) (873) (175)
Corporate rate changes (1,139) —
 (2,332) —
Subpart F 64
 1,779
 1,390
 3,212
Foreign tax credits 1,230
 (1,934) (834) (2,655)
Equity compensation excess benefit (2,762) —
 (7,226) —
Return to provision adjustments 452
 (1,996) 133
 (2,227)
Other, net (620) (647) (1,737) (501)
Total provision for income taxes $112,571
 $88,881
 $282,028
 $237,109
Effective tax rate 33.1% 30.9% 31.8% 31.7%

45
Tableeconomic capital allocation process, a portion of Contents


The effective tax rate for the third quarter of 2017 was lower than the U.S. Statutory rate of 35.0% primarily as a result ofinvestment income generated in non-U.S. jurisdictions with lower tax rates than the U.S. The first nine months of 2017 also includes a reduction related to differences in tax bases in foreign jurisdictions and a tax benefit from the filing of amended returns, which was partially offset with a valuation allowance established related to amended return filings. The third quarter of 2016 effective tax rate was lower than the U.S. Statutory rate of 35.0% primarily as a result of effectively settling an uncertain tax position during the quarter and adjustments relatedis attributed to the filingsegments based on the level of allocated capital. In addition, the US Federal Income tax return. The first nine months of 2016 effective tax rate was lower thansegments are charged for excess capital utilized above the U.S. Statutory rate of 35.0% primarily as a result of tax benefits from income in non-U.S. jurisdictions with lower tax rates than the U.S.
10.    Employee Benefit Plans
The components of net periodic benefit costs,allocated economic capital basis. This charge is included in policy acquisition costs and other operating expenses on the condensed consolidated statements of income, for the three and nine months ended September 30, 2017 and 2016 were as follows (dollars in thousands):
  Pension Benefits Other Benefits
  Three months ended September 30, Three months ended September 30,
  2017 2016 2017 2016
Service cost $2,699
 $2,479
 $465
 $131
Interest cost 1,314
 1,168
 459
 408
Expected return on plan assets (1,554) (1,285) —
 —
Amortization of prior service cost 85
 76
 (675) (467)
Amortization of prior actuarial loss 1,081
 1,040
 580
 137
Settlements 256
 —
 —
 —
Net periodic benefit cost $3,881
 $3,478
 $829
 $209
  Pension Benefits Other Benefits
  Nine months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Service cost $8,098
 $7,437
 $1,907
 $2,162
Interest cost 3,943
 3,503
 1,589
 1,694
Expected return on plan assets (4,662) (3,854) —
 —
Amortization of prior service cost 254
 229
 (986) (467)
Amortization of prior actuarial loss 3,244
 3,121
 1,494
 1,370
Settlements 769
 —
 —
 —
Net periodic benefit cost $11,646
 $10,436
 $4,004
 $4,759
insurance expenses.
The Company has made $5.0 million in pension contributions during the first nine monthsgeographic-based and business-based operational segments. Geographic-based operations are further segmented into Traditional and Financial Solutions businesses. Information related to revenues, income (loss) before income taxes and total assets of 2017 and expects to make total pension contributions between $5.0 million and $10.0 million in 2017.
11.Reinsurance
Retrocession reinsurance treaties do not relieve the Company fromfor each reportable segment are summarized below (dollars in millions):
 Three months ended March 31,
Revenues:20232022
U.S. and Latin America:
Traditional$1,812 $1,851 
Financial Solutions515 233 
Total2,327 2,084 
Canada:
Traditional359 365 
Financial Solutions27 26 
Total386 391 
Europe, Middle East and Africa:
Traditional460 473 
Financial Solutions169 183 
Total629 656 
Asia Pacific:
Traditional729 703 
Financial Solutions131 20 
Total860 723 
Corporate and Other49 63 
Total$4,251 $3,917 
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 Three months ended March 31,
Income (loss) before income taxes:20232022
U.S. and Latin America:
Traditional$121 $60 
Financial Solutions114 57 
Total235 117 
Canada:
Traditional29 15 
Financial Solutions10 9 
Total39 24 
Europe, Middle East and Africa:
Traditional27 34 
Financial Solutions59 67 
Total86 101 
Asia Pacific:
Traditional79 108 
Financial Solutions(13)(56)
Total66 52 
Corporate and Other(75)(27)
Total$351 $267 
Assets:March 31, 2023December 31, 2022
U.S. and Latin America:
Traditional$22,671 $22,612 
Financial Solutions25,111 25,203 
Total47,782 47,815 
Canada:
Traditional4,898 4,826 
Financial Solutions196 177 
Total5,094 5,003 
Europe, Middle East and Africa:
Traditional4,011 3,652 
Financial Solutions5,561 5,215 
Total9,572 8,867 
Asia Pacific:
Traditional9,615 9,254 
Financial Solutions14,693 12,023 
Total24,308 21,277 
Corporate and Other2,364 1,942 
Total$89,120 $84,904 
NOTE 18 FINANCING ACTIVITIES
On March 23, 2023, Chesterfield Reinsurance Company, a subsidiary of RGA, issued 7.125% Surplus Notes due 2043, with a face amount of $500 million. Capitalized issue costs were approximately $6 million.
On March 13, 2023, the Company entered into a new syndicated revolving credit facility with a five year term and an overall capacity of $850 million, replacing its obligationsexisting $850 million syndicated revolving credit facility, which was scheduled to direct writing companies. Failure of retrocessionaires to honor their obligations could resultmature in losses to the Company. Consequently, allowances would be established for amounts deemed uncollectible. At September 30, 2017 and December 31, 2016, no allowances were deemed necessary.August 2023. The Company regularly evaluates the financial condition of the insurance companies from which it assumesmay borrow cash and to which it cedes reinsurance.
Retrocessions are arranged through the Company’s retrocession pools for amounts in excess of the Company’s retention limit. As of September 30, 2017 and December 31, 2016, all rated retrocession pool participants followed by the A.M. Best Company were rated “A- (excellent)” or better. The Company verifies retrocession pool participants’ ratings on a quarterly basis. For a majority of the retrocessionaires that were not rated, security in the form ofmay obtain letters of credit or trust assets has been posted. In addition, the Company performs annual financial reviews of its retrocessionaires to evaluate financial stability and performance. In addition to its third party retrocessionaires, various RGA reinsurance subsidiaries retrocede amounts in excess of their retention to affiliated subsidiaries.multiple currencies under this facility.

46NOTE 19 NEW ACCOUNTING STANDARDS NOT YET ADOPTED
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The following table presents information for the Company’s reinsurance ceded receivable assets, including the respective amount and A.M. Best rating for each reinsurer representing in excess of five percent of the total as of September 30, 2017 and December 31, 2016 (dollars in thousands):
    September 30, 2017 December 31, 2016
Reinsurer A.M. Best Rating Amount % of Total Amount % of Total
Reinsurer A A+ $291,115
 37.4
 $240,894
 35.2%
Reinsurer B A+ 203,584
 26.1
 183,881
 26.9
Reinsurer C A+ 65,528
 8.4
 68,832
 10.1
Reinsurer D A++ 40,860
 5.2
 36,202
 5.3
Reinsurer E A+ 40,387
 5.2
 35,484
 5.2
Other reinsurers   137,644
 17.7
 118,679
 17.3
Total   $779,118
 100.0% $683,972
 100.0%
Included in the total reinsurance ceded receivables balance were $268.1 million and $242.0 million of claims recoverable, of which $0.9 million and $4.0 million were in excess of 90 days past due, as of September 30, 2017 and December 31, 2016, respectively.
12.New Accounting Standards
Changes to the general accounting principles are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates to the FASB Accounting Standards Codification™. AccountingThere are no accounting standards updates not listed below were assessed and determined to be either notyet adopted that are applicable or are expected to have more than a minimal impact on the Company’s condensed consolidated financial statements.
Adoption of New Accounting Standards
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Stock Compensation

In March 2016, the FASB updated the general accounting principal for Stock Compensation which changed how companies account for certain aspects of share-based payment awards to employees. The updated guidance requires excess tax benefits and deficiencies from share-based payment awards be recorded in income tax expense in the income statement. Previously, excess tax benefits and deficiencies were recognized in shareholders’ equity or deferred taxes on the balance sheet depending on the tax situation of the Company. In addition, the updated guidance also changes the accounting for forfeitures and statutory tax withholding requirements, as well as the classification in the statement of cash flows. The new standard generally requires a modified retrospective transition through a cumulative-effect adjustment as of the beginning of the period of adoption, with certain provisions requiring either a prospective or retrospective transition. The Company adopted the new guidance on January 1, 2017. Upon adoption, the Company recognized excess tax benefits of approximately $17.7 million in deferred tax assets that were previously not recognized in a cumulative-effect adjustment increasing retained earnings by $17.7 million. The Company also recorded excess tax benefits of approximately $2.8 million and $7.2 million in the provision for income taxes for the three and nine months ended September 30, 2017, respectively. The number of weighted average diluted shares outstanding were also adjusted to exclude excess tax benefits from the assumed proceeds in the diluted shares calculation resulting in an immaterial increase in the number of dilutive shares outstanding. The Company also elected to continue estimating forfeitures for purposes of recognizing share-based compensation. Other aspects of the adoption of the updated guidance did not have a material impact to the Company’s financial statements.
Future Adoption of New Accounting Standards
Financial Instruments
In January 2016, the FASB amended the general accounting principle for Financial Instruments, effective for the Company January 1, 2018. The amendment revises the accounting related to (1) the classification and measurement of investments in equity securities, (2) the presentation of certain fair value changes for financial liabilities measured at fair value, (3) certain disclosure requirements associated with the fair value of financial instruments. The new guidance should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The adoption of this amendment is not expected to have a material impact on the Company’s financial statements; however, it could result in net income volatility depending on the composition of the Company’s investment portfolio and changes in the fair value of equity securities.
In June 2016, the FASB amended the existing impairment guidance of Financial Instruments. The amendment adds to U.S. GAAP an impairment model, known as current expected credit loss (“CECL”) model that is based on expected losses rather than incurred

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losses. For traditional and other receivables, held-to-maturity debt securities, loans and other instruments entities will be required to use the new forward-looking “expected loss” model that generally will result in earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses similar to what they do today, except the losses will be recognized as allowances rather than reduction to the amortized cost of the securities. This guidance is effective for the Company January 1, 2020, with early adoption permitted. The guidance will be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company is currently evaluating the impact of this amendment on its condensed consolidated financial statements.
Leases
In February 2016, the FASB issued guidance which will replace most existing lease accounting guidance. The new standard, based on the principle that entities should recognize assets and liabilities arising from leases, does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard. Leases are classified as finance or operating. The new standard’s primary change is the requirement for entities to recognize a lease liability for payments and a right of use asset representing the right to use the leased asset during the term of operating lease arrangements. Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve months or less. Lessors’ accounting is largely unchanged from the previous accounting standard. In addition, the new standard expands the disclosure requirements of lease arrangements. Lessees and lessors will use a modified retrospective transition approach, which includes a number of practical expedients. This guidance is effective for the Company January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of this amendment on its condensed consolidated financial statements.
Income Taxes
In October 2016, the FASB amended the general accounting principal for Income Taxes, effective for the Company January 1, 2018. The amendment requires entities to recognize the tax consequences of intercompany asset transfers, except for inventory, at the transaction date. Current GAAP prohibits entities from recognizing the income tax consequences from intercompany asset transfers. The seller defers any net tax effect, and the buyer is prohibited from recognizing a deferred tax asset on the difference between the newly created tax basis of the asset in its tax jurisdiction and its financial statement carrying amount as reported in the condensed consolidated financial statements. The amendment requires entities to recognize these tax consequences in the period in which the transfer occurred. There will be an immediate effect on earnings if the tax rates in the seller’s and buyer’s tax jurisdictions are different. This amendment will be applied using a modified retrospective transition method with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The adoption of this amendment will not have a material impact on the Company’s condensed consolidated financial statements.
Derivative and Hedging
In August 2017, the FASB updated the general accounting principal for Derivatives and Hedging. The updated guidance improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting in current GAAP related to the assessment of hedge effectiveness. The updated guidance is effective for the Company January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of this amending on its condensed consolidated financial statements.


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ITEM 2.        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
This reportdocument contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws including, among others, statements relating to projections of the future operations, strategies, earnings, revenues, income or loss, ratios, future financial performance and growth potential of the Company. TheForward-looking statements often contain words “intend,and phrases such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “project,“if,” “estimate,“intend,” “predict,“likely,” “anticipate,“may,” “plan,” “potential,” “pro forma,” “project,” “should,” “believe,“will,” “would,” and other words and terms of similar expressions alsomeaning or that are intendedotherwise tied to identify forward-looking statements.future periods or future performance, in each case in all derivative forms. Forward-looking statements are inherentlybased on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements are not a guarantee of future performance and are subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results, performance, and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.
Numerous important factorsFactors that could also cause actual results andor events to differ, possibly materially, from those expressed or implied by forward-looking statements, including, without limitation,include, among others: (1) adverse changes in mortality (whether related to COVID-19 or otherwise), morbidity, lapsation or claims experience, (2) inadequate risk analysis and underwriting, (3) adverse capital and credit market conditions and their impact on the Company’s liquidity, access to capital and cost of capital, (2) the impairment of other financial institutions and its effect on the Company’s business, (3) requirements to post collateral or make payments due to declines in market value of assets subject to the Company’s collateral arrangements, (4) the fact that the determination of allowances and impairments taken on the Company’s investments is highly subjective, (5) adverse changes in mortality, morbidity, lapsation or claims experience, (6) changes in the Company’s financial strength and credit ratings and the effect of such changes on the Company’s future results of operations and financial condition, (5) the availability and cost of collateral necessary for regulatory reserves and capital, (6) requirements to post collateral or make payments due to declines in the market value of assets subject to the Company’s collateral arrangements, (7) inadequate risk analysisaction by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (8) the effect of the Company parent’s status as an insurance holding company and underwriting, (8)regulatory restrictions on its ability to pay principal of and interest on its debt obligations, (9) general economic conditions or a prolonged economic downturn affecting the demand for insurance and reinsurance in the Company’s current and planned markets, (9)(10) the availabilityimpairment of other financial institutions and cost of collateral necessary for regulatory reservesits effect on the Company’s business, (11) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and capital, (10)real estate markets, (12) market or economic conditions that adversely affect the value of the Company’s investment securities or result in the impairment of all or a portion of the value of certain of the Company’s investment securities that in turn could affect regulatory capital, (11)(13) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (12)(14) risks inherent in the Company’s risk management and investment strategy, including changes in investment portfolio yields due to interest rate or credit quality changes, (13) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and real estate markets, (14) adverse litigation or arbitration results, (15) the adequacyfact that the determination of reserves, resourcesallowances and accurate information relating to settlements, awards and terminated and discontinued lines of business,impairments taken on the Company’s investments is highly subjective, (16) the stability of and actions by governments and economies in the markets in which the Company operates, including ongoing uncertainties regarding the amount of U.S. sovereign debt and the credit ratings thereof, (17) competitive factors and competitors’ responses to the Company’s initiatives, (18) the success of the Company’s clients, (19) successful execution of the Company’s entry into new markets, (20) successful development and introduction of new products and distribution opportunities, (21) the Company’s ability to successfully integrate acquired blocks of business and entities, (22) action by regulators who have authority over the Company’s reinsurance operations in the jurisdictions in which it operates, (23) the Company’s dependence on third parties, including those insurance companies and reinsurers to which the Company cedes some reinsurance, third-party investment managers and others, (24)(18) financial performance of the Company’s clients, (19) the threat of natural disasters, catastrophes, terrorist attacks, pandemics, epidemics or pandemicsother major public health issues anywhere in the world where the Company or its clients do business, (25)(20) competitive factors and competitors’ responses to the Company’s initiatives, (21) development and introduction of new products and distribution opportunities, (22) execution of the Company’s entry into new markets, (23) integration of acquired blocks of business and entities, (24) interruption or failure of the Company’s telecommunication, information technology or other operational systems, or the Company’s failure to maintain adequate security to protect the confidentiality or privacy of personal or sensitive data and intellectual property stored on such systems, (25) adverse developments with respect to litigation, arbitration or regulatory investigations or actions (26) the adequacy of reserves, resources and accurate information relating to settlements, awards and terminated and discontinued lines of business, (27) changes in laws, regulations, and accounting standards applicable to the Company its subsidiaries, or its business, (27) the effect of the Company’s status as an insurance holding company and regulatory restrictions on its ability to pay principal of and interest on its debt obligations,including Long Duration Targeted Improvement accounting changes and (28) other risks and uncertainties described in this document and in the Company’s other filings with the SEC.Securities and Exchange Commission (“SEC”).
Forward-looking statements should be evaluated together with the many risks and uncertainties that affect the Company’s business, including those mentioned in this document and described in the periodic reports the Company files with the SEC. These forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligationsobligation to update these forward-looking statements, even though the Company’s situation may change in the future. For a discussion of these risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements, you are advised to see Item 1A – “Risk Factors” in the 20162022 Annual Report.Report, as may be supplemented by Item 1A – “Risk Factors” in the Company’s subsequent Quarterly Reports on Form 10-Q.
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Overview
The Company is one ofamong the leading global providers of life reinsurers in North America based on premiumsreinsurance and the amountfinancial solutions, with $3.4 trillion of life reinsurance in force providing traditional reinsurance and financial solutions to its clients.assets of $89.1 billion as of March 31, 2023. Traditional reinsurance includes individual and group life and health, disability, and critical illness reinsurance. Financial solutionsSolutions includes longevity reinsurance, asset-intensive reinsurance, capital solutions, including financial reinsurance and financial reinsurance.stable value products. The Company derives revenues primarily from renewal premiums from existing reinsurance treaties, new business premiums from existing or new reinsurance treaties, fee income from financial solutionsFinancial Solutions business and income earned on invested assets.
Historically, the Company’s primary business has been traditional life reinsurance, which involves reinsuring life insurance policies that are often in force for the remaining lifetime of the underlying individuals insured, with premiums earned typically over a

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period of 10 to 30 years. To a lesser extent, the Company also reinsures health business typically reinsured for one to three years. Each year, however, a portion of the business under existing treaties terminates due to, among other things, lapses or voluntary surrenders of underlying policies, deaths of insureds, and the exercise of recapture options by ceding companies. The Company has expanded its financial solutionsFinancial Solutions business, including significant asset-intensive and longevity risk transactions, which allow its clients to take advantage of growth opportunities and manage their capital, longevity and investment risk.
TheFor its traditional business, the Company’s long-term profitability largely depends on the volume and amount of death- and health-related claims incurred and the ability to adequately price the risks it assumes. While death claims are reasonably predictable over a period of many years, claims become less predictable over shorter periods and are subject to significant fluctuation from quarter to quarter and year to year. For longevity business, the Company’s profitability depends on the lifespan of the underlying contract holders and the investment performance for certain contracts. Additionally, the Company generates profits on investment spreads associated with the reinsurance of investment type contracts and generates fees from financial reinsurance transactions, which are typically shorter duration than its traditional life reinsurance business. The Company believes its sources of liquidity are sufficient to cover potential claims payments on both a short-term and long-term basis.
As is customary in the reinsurance business, clients continually update, refine, and revise reinsurance information provided to the Company. Such revised information is used by the Company in preparation of its condensed consolidated financial statements and the financial effects resulting from the incorporation of revised data are reflected in the current period.
In the first quarter of 2023, the Company adopted Accounting Standards Update (“ASU”): ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”). ASU 2018-12 updates certain requirements for the accounting for long-duration insurance contracts. See Note 2 – “Impact of New Accounting Standard” in the Notes to Condensed Consolidated Financial Statements for additional information.
Segment Presentation
The Company has geographic-based and business-based operational segments. Geographic-based operations are further segmented into traditionalTraditional and financial solutionsFinancial Solutions businesses. The Company allocates capital to its segments based on an internally developed economic capital model, the purpose of which is to measure the risk in the business and to provide a consistent basis upon which capital is deployed. The economic capital model considers the unique and specific nature of the risks inherent in RGA’s businesses.
As a result of the economic capital allocation process, a portion of investment income is credited to the segments based on the level of allocated capital. In addition, the segments are charged for excess capital utilized above the allocated economic capital basis. This charge is included in policy acquisition costs and other insurance expenses. Segment investment performance varies with the composition of investments and the relative allocation of capital to the operating segments.
Segment premiumrevenue levels can be significantly influenced by currency fluctuations, large transactions, mix of business and reporting practices of ceding companies, and therefore may fluctuate from period to period. Although reasonably predictable over a period of years, segment claims experience can be volatile over shorter periods. See “Results of Operations by Segment” below for further information about the Company’s segments.
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Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews estimates and assumptions used in the preparation of financial statements. If management determines that modifications in assumptions and estimates are appropriate given current facts and circumstances, results of operations and financial position as reported in the condensed consolidated financial statements could change significantly.
Management believes the critical accounting policies relating to the following areas are most dependent on the application of estimates and assumptions:
    Premiums receivable;
Deferred policy acquisition costs;
    Liabilities for future policy benefits and incurred but not reported claims;
    Valuation of investments, allowance for credit losses and impairments to specific investments;
    Valuation of embedded derivatives and market risk benefits; and
    Income taxes.
A discussion of each of the critical accounting policies may be found in the Company’s 2022 Annual Report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies.” The critical accounting polices related to Deferred Policy Acquisition Costs, estimating the Company’s Liability for Future Policy Benefits and Valuation of Embedded Derivatives and Market Risk Benefits presented below have been updated to reflect the adoption of ASU 2018-12.
Deferred Policy Acquisition Costs
ASU 2018-12 simplified the accounting for deferred policy acquisition costs by eliminating the requirement to test deferred policy acquisition costs for impairment or recoverability, an interest component is no longer accrued, and the requirement to adjust deferred policy acquisition costs for unrealized gains and losses (i.e., “shadow adjustments”) has been eliminated. ASU 2018-12 also clarified that deferred policy acquisition costs should only include costs that have been incurred and estimates of future contract renewal costs shall no longer be included, and capitalized costs should be amortized using a simplified method that approximates straight line amortization. As result of these simplifications, the Company no longer considers the accounting for deferred policy acquisition costs to be a critical accounting policy.
Liabilities for Future Policy Benefits and Incurred but Not Reported Claims
The liability for future policy benefits is estimated using the Company’s mortality, morbidity, and persistency assumptions that reflect the Company’s historical experience, industry data, cedant specific experience, and discount rates based on the current yields of upper-medium grade fixed income instruments (A rated credit). These assumptions vary with the characteristics of the reinsurance contract, the year the risk was assumed, age of the insured and other appropriate factors.
The liability for annuities in the payout phase is calculated using expected mortality, discount rates and other assumptions. These assumptions vary with the characteristics of the plan of insurance, year of issue, age of insured, and other appropriate factors. The mortality assumptions are based on the Company’s experience as well as industry experience and standards.
For the purpose of calculating the liability for future policy benefits, the Company’s reinsurance contracts for its Traditional business are grouped into annual cohorts based on the effective date of the reinsurance contract. The annual groupings are further disaggregated based on:
•How the reinsurance contracts are priced and managed;
•Geographical locations;
•Underlying currency of the contract;
•Ceding company and other factors.
Given the unique risks and highly customized nature the Company’s financial reinsurance business, reinsurance contracts for the Financial Solutions business are not aggregated with other contracts for the purpose of calculating the liability for future policy benefits.
With the exception of the expense assumptions, the Company reviews actual and anticipated experience compared to the assumptions used to establish policy benefits on a quarterly basis and will update those assumptions if evidence suggests that they should be revised. The Company has elected to lock-in claims expense assumptions at contract inception and those assumptions are not subsequently reviewed or updated.
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The discount rates used to estimate the liability are based on upper-medium grade fixed-income instruments (A rated credit) with similar tenor to the expected liability cash flows. The discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change reflected in other comprehensive income (loss). For unobservable discount rates, the Company uses estimates consistent with fair value guidance, maximizing the use of relevant, observable market prices and minimizing the use of unobservable inputs.
Valuation of Market Risk Benefits and Embedded Derivatives
The Company reinsures certain annuity products that contain terms that are deemed to be market risk benefits or embedded derivatives, primarily variable annuities with guaranteed minimum benefits and equity-indexed annuities.
Variable annuities with guaranteed minimum benefits have been identified as market risk benefits. Market risk benefits are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk and expose the Company to other-than-nominal capital market risk. Market risk benefits are measured at fair value using an option-based valuation model based on current net amounts at risk, market data, Company experience, and other factors. Changes in fair value are recognized in net income each period with the exception of the portion of the change in fair value due to a change in the liability’s credit valuation adjustment (“CVA”), which is recognized in other comprehensive income (loss).
The Company reinsures certain annuity products that contain terms that are deemed to be embedded derivatives, primarily equity-indexed annuities and variable annuities with guaranteed minimum benefits. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated under the general accounting principles for Derivatives and Hedging. If the instrument would not be reported in its entirety at fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried on the consolidated balance sheets at fair value with the host contract.
Additionally, reinsurance treaties written on a modified coinsurance or funds withheld basis are subject to the general accounting principles for Derivatives and Hedging related to embedded derivatives. The majority of the Company’s funds withheld at interest balances are associated with its reinsurance of annuity contracts, the majority of which are subject to the general accounting principles for Derivatives and Hedging related to embedded derivatives. Management believes the embedded derivative feature in each of these reinsurance treaties is similar to a total return swap on the assets held by the ceding companies.
The valuation of the various embedded derivatives requires complex calculations based on actuarial and capital markets inputs and assumptions related to estimates of future cash flows and interpretations of the primary accounting guidance continue to evolve in practice. The valuation of embedded derivatives is sensitive to the investment credit spread environment. Changes in investment credit spreads are also affected by the application of a credit valuation adjustment (“CVA”). The fair value calculation of an embedded derivative in an asset position utilizes a CVA based on the ceding company’s credit risk. Conversely, the fair value calculation of an embedded derivative in a liability position utilizes a CVA based on the Company’s credit risk. Generally, an increase in investment credit spreads, ignoring changes in the CVA, will have a negative impact on the fair value of the embedded derivative (decrease in income).


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ConsolidatedCritical Accounting Policies
The preparation of financial statements in conformity with GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews estimates and assumptions used in the preparation of financial statements. If management determines that modifications in assumptions and estimates are appropriate given current facts and circumstances, results of operations and financial position as reported in the condensed consolidated financial statements could change significantly.
Management believes the critical accounting policies relating to the following areas are most dependent on the application of estimates and assumptions:
    Premiums receivable;
Deferred policy acquisition costs;
    Liabilities for future policy benefits and incurred but not reported claims;
    Valuation of investments, allowance for credit losses and impairments to specific investments;
    Valuation of embedded derivatives and market risk benefits; and
    Income taxes.
A discussion of each of the critical accounting policies may be found in the Company’s 2022 Annual Report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies.” The critical accounting polices related to Deferred Policy Acquisition Costs, estimating the Company’s Liability for Future Policy Benefits and Valuation of Embedded Derivatives and Market Risk Benefits presented below have been updated to reflect the adoption of ASU 2018-12.
Deferred Policy Acquisition Costs
ASU 2018-12 simplified the accounting for deferred policy acquisition costs by eliminating the requirement to test deferred policy acquisition costs for impairment or recoverability, an interest component is no longer accrued, and the requirement to adjust deferred policy acquisition costs for unrealized gains and losses (i.e., “shadow adjustments”) has been eliminated. ASU 2018-12 also clarified that deferred policy acquisition costs should only include costs that have been incurred and estimates of future contract renewal costs shall no longer be included, and capitalized costs should be amortized using a simplified method that approximates straight line amortization. As result of these simplifications, the Company no longer considers the accounting for deferred policy acquisition costs to be a critical accounting policy.
Liabilities for Future Policy Benefits and Incurred but Not Reported Claims
The liability for future policy benefits is estimated using the Company’s mortality, morbidity, and persistency assumptions that reflect the Company’s historical experience, industry data, cedant specific experience, and discount rates based on the current yields of upper-medium grade fixed income instruments (A rated credit). These assumptions vary with the characteristics of the reinsurance contract, the year the risk was assumed, age of the insured and other appropriate factors.
The liability for annuities in the payout phase is calculated using expected mortality, discount rates and other assumptions. These assumptions vary with the characteristics of the plan of insurance, year of issue, age of insured, and other appropriate factors. The mortality assumptions are based on the Company’s experience as well as industry experience and standards.
For the purpose of calculating the liability for future policy benefits, the Company’s reinsurance contracts for its Traditional business are grouped into annual cohorts based on the effective date of the reinsurance contract. The annual groupings are further disaggregated based on:
•How the reinsurance contracts are priced and managed;
•Geographical locations;
•Underlying currency of the contract;
•Ceding company and other factors.
Given the unique risks and highly customized nature the Company’s financial reinsurance business, reinsurance contracts for the Financial Solutions business are not aggregated with other contracts for the purpose of calculating the liability for future policy benefits.
With the exception of the expense assumptions, the Company reviews actual and anticipated experience compared to the assumptions used to establish policy benefits on a quarterly basis and will update those assumptions if evidence suggests that they should be revised. The Company has elected to lock-in claims expense assumptions at contract inception and those assumptions are not subsequently reviewed or updated.
65
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Revenues: (Dollars in thousands, except per share data)
Net premiums $2,489,797
 $2,251,758
 $7,335,944
 $6,755,708
Investment income, net of related expenses 556,918
 489,727
 1,589,820
 1,414,659
Investment related gains (losses), net 22,653
 86,624
 139,471
 84,002
Other revenues 75,942
 72,468
 218,091
 197,844
Total revenues 3,145,310
 2,900,577
 9,283,326
 8,452,213
Benefits and Expenses:        
Claims and other policy benefits 2,100,680
 1,993,064
 6,371,188
 5,877,330
Interest credited 126,099
 116,848
 349,068
 300,602
Policy acquisition costs and other insurance expenses 365,424
 300,962
 1,064,645
 940,406
Other operating expenses 168,417
 152,556
 481,279
 469,875
Interest expense 36,836
 43,063
 108,590
 96,201
Collateral finance and securitization expense 7,692
 6,484
 21,235
 19,396
Total benefits and expenses 2,805,148
 2,612,977
 8,396,005
 7,703,810
 Income before income taxes
 340,162
 287,600
 887,321
 748,403
Provision for income taxes 112,571
 88,881
 282,028
 237,109
Net income $227,591
 $198,719
 $605,293
 $511,294
Earnings per share:        
Basic earnings per share $3.53
 $3.10
 $9.39
 $7.95
Diluted earnings per share $3.47
 $3.07
 $9.23
 $7.87
Dividends declared per share $0.50
 $0.41
 $1.32
 $1.15

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Consolidated income before income taxes increased $52.6 million, or 18.3%, and $138.9 million, or 18.6%, forThe discount rates used to estimate the three and nine months ended September 30, 2017, respectively, as comparedliability are based on upper-medium grade fixed-income instruments (A rated credit) with similar tenor to the same periodsexpected liability cash flows. The discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change reflected in 2016. other comprehensive income (loss). For unobservable discount rates, the Company uses estimates consistent with fair value guidance, maximizing the use of relevant, observable market prices and minimizing the use of unobservable inputs.
Valuation of Market Risk Benefits and Embedded Derivatives
The increaseCompany reinsures certain annuity products that contain terms that are deemed to be market risk benefits or embedded derivatives, primarily variable annuities with guaranteed minimum benefits and equity-indexed annuities.
Variable annuities with guaranteed minimum benefits have been identified as market risk benefits. Market risk benefits are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk and expose the Company to other-than-nominal capital market risk. Market risk benefits are measured at fair value using an option-based valuation model based on current net amounts at risk, market data, Company experience, and other factors. Changes in fair value are recognized in net income for third quartereach period with the exception of 2017 was primarilythe portion of the change in fair value due to improved mortality experiencea change in the U.S. operations, increased investmentliability’s credit valuation adjustment (“CVA”), which is recognized in other comprehensive income new business growth in the Europe, Middle East and Africa (“EMEA”) and Asia Pacific operations and lower interest expense. The increase in income for the first nine months of 2017 was primarily due to improved mortality experience in the U.S., EMEA and Asia Pacific operations and increased investment income, partially offset by higher interest expense. The increases in investment income are discussed below and the changes in interest expense for the third quarter and first nine months are discussed within the Corporate and Other section. Foreign currency fluctuations resulted in an increase (decrease) in income before income taxes by $2.0 million and $(7.4) million for the third quarter and first nine months of 2017, as compared to the same periods in 2016.(loss).
The Company recognizesreinsures certain annuity products that contain terms that are deemed to be embedded derivatives, primarily equity-indexed annuities and variable annuities with guaranteed minimum benefits. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated under the general accounting principles for Derivatives and Hedging. If the instrument would not be reported in consolidated income, any changes in theits entirety at fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives on modco or funds withheld treaties, equity-indexed annuity treaties (“EIAs”) and variable annuity products. The combined changes in these three types of embedded derivatives, after adjustment for deferred acquisition costs and retrocession, resulted in a decrease in consolidated income before income taxes of $8.9 million in the third quarter of 2017 and an increase of $218.2 million in the first nine months of 2017, respectively, as compared to the same periods in 2016. This fluctuation does not affect current cash flows, crediting rates or spread performanceare carried on the underlying treaties. Therefore, management believes it is helpful to distinguish betweenconsolidated balance sheets at fair value with the effects of changes in these embedded derivatives, net of related hedging activity and deferred acquisition costs, and the primary factors that drive profitability of the underlying treaties, namely investment income, fee income, and interest credited. The individual effect on income before income taxes for these three types of embedded derivatives is as follows:host contract.

The change in the value of embedded derivatives related toAdditionally, reinsurance treaties written on a modcomodified coinsurance or funds withheld basis are subject to the general accounting principles for derivativesDerivatives and hedgingHedging related to embedded derivatives. The unrealized gains and losses associated with these embedded derivatives, after adjustment for deferred acquisition costs, resulted in a decrease in income before income taxesmajority of $3.3 million in the third quarter of 2017 and an increase of $53.3 million in the first nine months of 2017, as compared to the same periods in 2016.
Changes in risk-free rates used in the fair value estimates of embedded derivatives associated with EIAs affect the amount of unrealized gains and losses the Company recognizes. The unrealized gains and losses associated with EIAs, after adjustment for deferred acquisition costs and retrocession, increased income before income taxes by $0.1 million and $20.0 million in the third quarter and first nine months of 2017, respectively, as compared to the same periods in 2016.
The change in the Company’s liability for variable annuities associated with guaranteed minimum living benefits affects the amount of unrealized gains and losses the Company recognizes. The unrealized gains and losses associated with guaranteed minimum living benefits, after adjustment for deferred acquisition costs, resulted in a decrease in income before income taxes of $5.7 million in the third quarter of 2017 and an increase of $144.9 million in the first nine months of 2017, as compared to the same periods in 2016. After consideration of the change in fair value of freestanding derivatives used to hedge this liability, income before income taxes decreased by $2.2 million in the third quarter of 2017 and increased by $6.9 million in the first nine months of 2017, as compared to the same periods in 2016.
Consolidated net premiums increased $238.0 million, or 10.6%, and $580.2 million, or 8.6%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, primarily due to growth in life reinsurance in force. Foreign currency fluctuations resulted in an increase (decrease) in net premiums of $18.3 million and $(17.3) million for the third quarter and first nine months of 2017, as compared to the same periods in 2016. Consolidated assumed life insurance in force increased to $3,297.9 billion as of September 30, 2017 from $3,082.8 billion as of September 30, 2016 due to new business production and in force transactions. The Company added new business production, measured by face amount of insurance in force, of $90.7 billion and $81.3 billion during the third quarter of 2017 and 2016, respectively, and $304.8 billion and $296.4 billion during the first nine months of 2017 and 2016, respectively. Foreign currency fluctuations contributed $43.6 billion to the increase in assumed life insurance in force from September 30, 2016. Management believes industry consolidation, regulatory changes and the established practice of reinsuring mortality and morbidity risks should continue to provide opportunities for growth, albeit at rates less than historically experienced in some markets.
Consolidated investment income, net of related expenses, increased $67.2 million, or 13.7%, and $175.2 million, or 12.4%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. Market value changes related to the Company’s funds withheld at interest investmentbalances are associated with theits reinsurance of certain EIAs increased (decreased) investment income by $(1.3) million and $73.3 million inannuity contracts, the third quarter and first nine monthsmajority of 2017, respectively, as comparedwhich are subject to the same periodsgeneral accounting principles for Derivatives and Hedging related to embedded derivatives. Management believes the embedded derivative feature in 2016. each of these reinsurance treaties is similar to a total return swap on the assets held by the ceding companies.
The effect on investment incomevaluation of the EIA's marketvarious embedded derivatives requires complex calculations based on actuarial and capital markets inputs and assumptions related to estimates of future cash flows and interpretations of the primary accounting guidance continue to evolve in practice. The valuation of embedded derivatives is sensitive to the investment credit spread environment. Changes in investment credit spreads are also affected by the application of a credit valuation adjustment (“CVA”). The fair value changes is substantially offset by a corresponding change in interest credited to policyholder account balances resultingcalculation of an embedded derivative in an insignificant effectasset position utilizes a CVA based on net income.
Also contributing to the ceding company’s credit risk. Conversely, the fair value calculation of an embedded derivative in a liability position utilizes a CVA based on the Company’s credit risk. Generally, an increase in investment income is a larger average invested asset base, excluding spread related business, partially offset by a decreasecredit spreads, ignoring changes in the average investment yield. Average invested assets at amortized cost, excluding spread related business, forCVA, will have a negative impact on the nine months ended September 30, 2017 totaled $25.1 billion, a 9.4% increase over September 30, 2016. Thefair value of the embedded derivative (decrease in income).



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average yield earned on investments, excluding spread related business, was 4.81% and 4.43% for the third quarter of 2017 and 2016, respectively, and 4.61% and 4.53% for the first nine months ended September 30, 2017 and 2016, respectively. The average yield will vary from quarter to quarter and year to year depending on a number of variables, including the prevailing interest rate and credit spread environment, prepayment fees and make-whole premiums, changes in the mix of the underlying investments and cash balances, and the timing of dividends and distributions on certain investments. The third quarter of 2017, in particular, benefited from a higher level of bond make-whole premiums and distributions from joint ventures and limited partnerships. A continued low interest rate environment is expected to put downward pressure on this yield in future reporting periods.
Total investment related gains (losses), net changed favorably (unfavorably) by $(64.0) million and $55.5 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. A significant portion of theses variances in the third quarter and first nine months are due to changes in the value of embedded derivatives related to reinsurance treaties written on a modco or funds withheld basis, reflecting the impact of changes in interest rates and credit spreads on the calculation of fair value. During the third quarter and first nine months of 2017, the favorable (unfavorable) changes in the value of these embedded derivatives was $(26.0) million and $73.1 million respectively, as compared to the same periods in 2016. Impairments on fixed maturity securities decreased by $13.7 million in the first nine months of 2017, as compared to the same period in 2016. See Note 4 - “Investments” and Note 5 - “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for additional information on the impairment losses and derivatives.
The effective tax rate on a consolidated basis was 33.1% and 30.9% for the third quarter 2017 and 2016, respectively, and 31.8% and 31.7% for the first nine months of 2017 and 2016, respectively. The effective tax rate for the third quarter of 2017 was lower than the U.S. Statutory rate of 35% primarily as a result of income generated in non-U.S. jurisdictions with lower tax rates than the U.S. The first nine months of 2017 also includes a reduction related to differences in tax bases in foreign jurisdictions and a tax benefit from the filing of amended returns, which was partially offset with a valuation allowance established related to amended return filings. The effective tax rate for the third quarter of 2016 was lower than the U.S. Statutory rate of 35.0% primarily as a result of effectively settling an uncertain tax position during the quarter and adjustments related to the filing of the US Federal Income tax return. The first nine months of 2016 effective tax rate was lower than the U.S. Statutory rate of 35.0% primarily as a result of tax benefits from income in non-U.S. jurisdictions with lower tax rates than the U.S.

Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires the application of accounting policies that often involve a significant degree of judgment. Management, on an ongoing basis, reviews estimates and assumptions used in the preparation of financial statements. If management determines that modifications in assumptions and estimates are appropriate given current facts and circumstances, results of operations and financial position as reported in the condensed consolidated financial statements could change significantly.
Management believes the critical accounting policies relating to the following areas are most dependent on the application of estimates and assumptions:
Premiums receivable;
Deferred policy acquisition costs;
Liabilities for future policy benefits and incurred but not reported claims;
Valuation of investments, allowance for credit losses and other-than-temporary impairments to specific investments;
Valuation of embedded derivatives;derivatives and market risk benefits; and
Income taxes.
A discussion of each of the critical accounting policies may be found in the Company’s 20162022 Annual Report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies.” The critical accounting polices related to Deferred Policy Acquisition Costs, estimating the Company’s Liability for Future Policy Benefits and Valuation of Embedded Derivatives and Market Risk Benefits presented below have been updated to reflect the adoption of ASU 2018-12.

Deferred Policy Acquisition Costs

ASU 2018-12 simplified the accounting for deferred policy acquisition costs by eliminating the requirement to test deferred policy acquisition costs for impairment or recoverability, an interest component is no longer accrued, and the requirement to adjust deferred policy acquisition costs for unrealized gains and losses (i.e., “shadow adjustments”) has been eliminated. ASU 2018-12 also clarified that deferred policy acquisition costs should only include costs that have been incurred and estimates of future contract renewal costs shall no longer be included, and capitalized costs should be amortized using a simplified method that approximates straight line amortization. As result of these simplifications, the Company no longer considers the accounting for deferred policy acquisition costs to be a critical accounting policy.
Liabilities for Future Policy Benefits and Incurred but Not Reported Claims
The liability for future policy benefits is estimated using the Company’s mortality, morbidity, and persistency assumptions that reflect the Company’s historical experience, industry data, cedant specific experience, and discount rates based on the current yields of upper-medium grade fixed income instruments (A rated credit). These assumptions vary with the characteristics of the reinsurance contract, the year the risk was assumed, age of the insured and other appropriate factors.
The liability for annuities in the payout phase is calculated using expected mortality, discount rates and other assumptions. These assumptions vary with the characteristics of the plan of insurance, year of issue, age of insured, and other appropriate factors. The mortality assumptions are based on the Company’s experience as well as industry experience and standards.
For the purpose of calculating the liability for future policy benefits, the Company’s reinsurance contracts for its Traditional business are grouped into annual cohorts based on the effective date of the reinsurance contract. The annual groupings are further disaggregated based on:
•How the reinsurance contracts are priced and managed;
•Geographical locations;
•Underlying currency of the contract;
•Ceding company and other factors.
Given the unique risks and highly customized nature the Company’s financial reinsurance business, reinsurance contracts for the Financial Solutions business are not aggregated with other contracts for the purpose of calculating the liability for future policy benefits.
With the exception of the expense assumptions, the Company reviews actual and anticipated experience compared to the assumptions used to establish policy benefits on a quarterly basis and will update those assumptions if evidence suggests that they should be revised. The Company has elected to lock-in claims expense assumptions at contract inception and those assumptions are not subsequently reviewed or updated.
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The discount rates used to estimate the liability are based on upper-medium grade fixed-income instruments (A rated credit) with similar tenor to the expected liability cash flows. The discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change reflected in other comprehensive income (loss). For unobservable discount rates, the Company uses estimates consistent with fair value guidance, maximizing the use of relevant, observable market prices and minimizing the use of unobservable inputs.
Valuation of Market Risk Benefits and Embedded Derivatives
The Company reinsures certain annuity products that contain terms that are deemed to be market risk benefits or embedded derivatives, primarily variable annuities with guaranteed minimum benefits and equity-indexed annuities.
Variable annuities with guaranteed minimum benefits have been identified as market risk benefits. Market risk benefits are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk and expose the Company to other-than-nominal capital market risk. Market risk benefits are measured at fair value using an option-based valuation model based on current net amounts at risk, market data, Company experience, and other factors. Changes in fair value are recognized in net income each period with the exception of the portion of the change in fair value due to a change in the liability’s credit valuation adjustment (“CVA”), which is recognized in other comprehensive income (loss).
The Company reinsures certain annuity products that contain terms that are deemed to be embedded derivatives, primarily equity-indexed annuities and variable annuities with guaranteed minimum benefits. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated under the general accounting principles for Derivatives and Hedging. If the instrument would not be reported in its entirety at fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried on the consolidated balance sheets at fair value with the host contract.
Additionally, reinsurance treaties written on a modified coinsurance or funds withheld basis are subject to the general accounting principles for Derivatives and Hedging related to embedded derivatives. The majority of the Company’s funds withheld at interest balances are associated with its reinsurance of annuity contracts, the majority of which are subject to the general accounting principles for Derivatives and Hedging related to embedded derivatives. Management believes the embedded derivative feature in each of these reinsurance treaties is similar to a total return swap on the assets held by the ceding companies.
The valuation of the various embedded derivatives requires complex calculations based on actuarial and capital markets inputs and assumptions related to estimates of future cash flows and interpretations of the primary accounting guidance continue to evolve in practice. The valuation of embedded derivatives is sensitive to the investment credit spread environment. Changes in investment credit spreads are also affected by the application of a credit valuation adjustment (“CVA”). The fair value calculation of an embedded derivative in an asset position utilizes a CVA based on the ceding company’s credit risk. Conversely, the fair value calculation of an embedded derivative in a liability position utilizes a CVA based on the Company’s credit risk. Generally, an increase in investment credit spreads, ignoring changes in the CVA, will have a negative impact on the fair value of the embedded derivative (decrease in income).


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Consolidated Results of Operations
Results from Operations – 2023 compared to 2022
The following table summarizes net income for the periods presented.
For the three months ended March 31,
(Dollars in millions, except per share data)202320222023 vs 2022
Revenues
Net premiums$3,385 $3,155 $230 
Net investment income856 810 46 
Investment related gains (losses), net(77)(139)62 
Other revenues87 91 (4)
Total revenues4,251 3,917 334 
Benefits and expenses
Claims and other policy benefits3,063 2,871 192 
Future policy benefits remeasurement (gains) losses(26)58 (84)
Market risk benefits remeasurement (gains) losses14 (34)48 
Interest credited215 141 74 
Policy acquisition costs and other insurance expenses331 344 (13)
Other operating expenses250 227 23 
Interest expense50 42 8 
Collateral finance and securitization expense3 1 2 
Total benefits and expenses3,900 3,650 250 
 Income (loss) before income taxes
351 267 84 
Provision for income taxes98 70 28 
Net income (loss)$253 $197 $56 
Net income attributable to noncontrolling interest1 — 1 
Net income (loss) available to RGA, Inc. shareholders$252 $197 $55 
Earnings per share
Basic earnings per share$3.77 $2.93 $0.84 
Diluted earnings per share$3.72 $2.91 $0.81 
The increase in income for the three months ended March 31, 2023, was primarily the result of:
•Favorable claims experience in the U.S. and Latin America Traditional segment. The unfavorable experience in the prior period, included in future policy benefits remeasurement (gains) losses, was primarily attributable to higher claims as a result of COVID-19.
•Changes in the fair value of embedded derivatives, associated with modco/funds withheld treaties, increased investment related gains by $37 million for the three month period ended March 31, 2023, compared to a decrease of $33 million for the three month period ended March 31, 2022.
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency exchange fluctuation decreased income before taxes for the three months ended March 31, 2023, by $13 million primarily due to the weakening of the Great British Pound and Canadian Dollar compared to the U.S. dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Premiums and business growth
The increase in premiums is primarily due to a single premium pension risk transfer (“PRT”) transaction completed in the first quarter of 2023. The PRT single premium was offset by an increase in reserves. The remaining increase in premiums is attributable to organic growth on existing treaties and new business production, measured by the face amount of life reinsurance in force, of $80.6 billion and $119.4 billion during the three months ended March 31, 2023 and 2022, respectively. The increases in premiums were partially offset by unfavorable foreign currency fluctuations of $112 million. Consolidated assumed life reinsurance in force decreased to $3,426.7 billion as of March 31, 2023, from $3,495.1 billion as of March 31, 2022, due to lapses and mortality claims, partially offset by new business production.
Net investment income and investment related gains (losses), net
The increase in net investment income is primarily attributable to an increase in the average invested asset base and higher risk-free rates earned on new investments, partially offset by a decrease in variable investment income associated with joint venture and limited partnership investments:
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•The average invested assets at amortized cost, excluding spread related business, totaled $35.9 billion and $35.3 billion in 2023 and 2022, respectively.
•The average yield earned on investments, excluding spread related business, was 4.71% and 5.29% for the three-month periods ended March 31, 2023 and 2022, respectively.
The average yield will vary from period to period depending on several variables, including the prevailing risk-free interest rate and credit spread environment, prepayment fees and make-whole premiums, changes in the mix of the underlying investments and cash and cash equivalents balances. Variable investment income from joint ventures and limited partnerships will also vary from period to period and is highly dependent on the timing of dividends and distributions on certain investments. Investment income is allocated to the operating segments based upon average assets and related capital levels deemed appropriate to support segment operations.
The decrease in investment related losses, net is primarily attributable to the following:
•Changes in the fair value of embedded derivatives, associated with modco/funds withheld treaties, decreased investment related losses, net by $37 million for the three month period ended March 31 2023, compared to a loss of $33 million for the three month period ended March 31, 2022.
•The Company uses various derivative instruments such as interest rate swaps, credit default swaps and foreign exchange forwards for risk management purposes that either do not qualify or have not been elected for hedge accounting treatment. Changes in the fair value of these instruments are included in investment related gains (losses), net. During the three months period ended March 31, 2023, the fair value of these instruments decreased by $30 million, compared to a decrease of $90 million during the first three months of 2022. See Note 12 – “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for additional information.
•The decreases in investment related losses were partially offset by the following:
◦During the three months ended March 31, 2023, the Company incurred $43 million of impairments and change in allowance for credit losses on fixed maturity securities compared to $12 million during the first three months of 2022.
◦During the three months ended March 31, 2023, the Company repositioned select investment portfolios generating net realized losses of $44 million compared to net realized losses of $25 million during the first three months of 2022.
The effective tax rate was 28.0% and 26.3% for the three months ended March 31, 2023 and 2022, respectively. See Note 14 – “Income Tax” for additional information on the Company’s consolidated effective tax rate.
Impact of certain derivatives and market risk benefits
The Company recognizes in consolidated income any changes in the fair value of embedded derivatives on modco or funds withheld treaties and equity index annuities (“EIAs”). In addition, the Company recognizes the changes in fair value of market risk benefits associated with guaranteed minimum benefit riders in market risk benefits remeasurement gains (losses). The Company utilizes freestanding derivatives to minimize the income statement volatility due to changes in the fair value of market risk benefits associated with guaranteed minimum benefit riders. The following table presents the effect of embedded derivatives, market risk benefits and related freestanding derivatives on income before income taxes for the periods indicated (dollars in millions):
Three months ended March 31,
202320222023 vs. 2022
Modco/Funds withheld:
Change in fair value of funds withheld embedded derivatives$37 $(33)$70 
EIAs:
Embedded derivatives – interest credited7 17 (10)
Market Risk Benefits:
Market risk benefits remeasurement gains (losses)(14)34 (48)
Related freestanding derivatives2 (35)37 
Net effect(12)(1)(11)
Total net effect after freestanding derivatives$32 $(17)$49 
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Results of Operations by Segment

U.S. and Latin America Operations
The U.S. and Latin America operations include business generated by its offices in the U.S., Mexico and Brazil. The offices in Mexico and Brazil provide services to clients in other Latin American countries. U.S. and Latin America operations consist of two major segments: Traditional and Financial Solutions. The Traditional segment primarily specializes in the reinsurance of individual mortality-risk, reinsurancehealth and long-term care and to a lesser extent, group health and long-term care reinsurance. The Financial Solutions segment consists of Asset-Intensive and Financial Reinsurance.Capital Solutions. Asset-Intensive within the Financial Solutions segment providesincludes coinsurance of annuities and corporate-owned life insurance policies and to a lesser extent, also issues fee-based synthetic guaranteed investment contracts, which include investment-only, stable value contracts. Financial ReinsuranceCapital Solutions within the Financial Solutions segment primarily involves assisting ceding companies in meeting applicable regulatory requirements by enhancing the ceding companies’ financial strength and regulatory surplus position through relatively low risk reinsurance and other transactions. Typically, these transactions do not qualify as reinsurance under GAAP, due to the low-risk nature of the transactions, sotherefore only the related net fees are reflected in other revenues on the condensed consolidated statements of income.
For the three months ended September 30, 2017:   Financial Solutions  
(dollars in thousands)   Asset-Intensive 
Financial
Reinsurance
 Total U.S. and Latin America
  Traditional 
Revenues:        
Net premiums $1,327,181
 $6,423
 $—
 $1,333,604
Investment income, net of related expenses 191,904
 188,176
 2,984
 383,064
Investment related gains (losses), net (1,503) 12,832
 —
 11,329
Other revenues 3,801
 26,899
 26,856
 57,556
Total revenues 1,521,383
 234,330
 29,840
 1,785,553
Benefits and expenses:        
Claims and other policy benefits 1,118,401
 11,959
 —
 1,130,360
Interest credited 20,673
 94,120
 —
 114,793
Policy acquisition costs and other insurance expenses 189,291
 54,441
 5,674
 249,406
Other operating expenses 32,506
 6,684
 2,174
 41,364
Total benefits and expenses 1,360,871
 167,204
 7,848
 1,535,923
Income before income taxes $160,512
 $67,126
 $21,992
 $249,630
         
For the three months ended September 30, 2016:   Financial Solutions  
(dollars in thousands)   Asset-Intensive 
Financial
Reinsurance
 Total U.S. and Latin America
  Traditional 
Revenues:        
Net premiums $1,277,491
 $5,369
 $—
 $1,282,860
Investment income, net of related expenses 167,898
 167,683
 1,038
 336,619
Investment related gains (losses), net (3,394) 59,661
 —
 56,267
Other revenues 2,922
 23,417
 18,967
 45,306
Total revenues 1,444,917
 256,130
 20,005
 1,721,052
Benefits and expenses:        
Claims and other policy benefits 1,131,507
 18,927
 —
 1,150,434
Interest credited 20,628
 86,742
 —
 107,370
Policy acquisition costs and other insurance expenses 184,766
 56,497
 3,492
 244,755
Other operating expenses 30,935
 5,232
 2,531
 38,698
Total benefits and expenses 1,367,836
 167,398
 6,023
 1,541,257
Income before income taxes $77,081
 $88,732
 $13,982
 $179,795

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For the nine months ended September 30, 2017:   Financial Solutions  
(dollars in thousands)   Asset-Intensive 
Financial
Reinsurance
 Total U.S. and Latin America
  Traditional 
Revenues:        
Net premiums $3,966,842
 $18,186
 $—
 $3,985,028
Investment income, net of related expenses 554,612
 553,286
 6,501
 1,114,399
Investment related gains (losses), net (192) 103,229
 —
 103,037
Other revenues 11,322
 76,324
 77,466
 165,112
Total revenues 4,532,584
 751,025
 83,967
 5,367,576
Benefits and expenses:        
Claims and other policy benefits 3,538,958
 53,998
 —
 3,592,956
Interest credited 61,800
 260,941
 —
 322,741
Policy acquisition costs and other insurance expenses 556,476
 176,305
 17,234
 750,015
Other operating expenses 94,284
 19,883
 6,942
 121,109
Total benefits and expenses 4,251,518
 511,127
 24,176
 4,786,821
Income before income taxes $281,066
 $239,898
 $59,791
 $580,755
         
For the nine months ended September 30, 2016:   Financial Solutions  
(dollars in thousands)   Asset-Intensive 
Financial
Reinsurance
 Total U.S. and Latin America
  Traditional 
Revenues:        
Net premiums $3,819,280
 $17,250
 $—
 $3,836,530
Investment income, net of related expenses 515,159
 462,579
 6,031
 983,769
Investment related gains (losses), net (6,376) 7,940
 —
 1,564
Other revenues 11,674
 70,806
 55,511
 137,991
Total revenues 4,339,737
 558,575
 61,542
 4,959,854
Benefits and expenses:        
Claims and other policy benefits 3,400,614
 58,267
 —
 3,458,881
Interest credited 62,873
 217,736
 —
 280,609
Policy acquisition costs and other insurance expenses 544,129
 113,919
 9,145
 667,193
Other operating expenses 92,512
 16,772
 7,606
 116,890
Total benefits and expenses 4,100,128
 406,694
 16,751
 4,523,573
Income before income taxes $239,609
 $151,881
 $44,791
 $436,281
IncomeThe following table summarizes income before income taxes increased by $69.8 million, or 38.8%, and $144.5 million, or 33.1%, for the threeCompany’s U.S. and nine months ended September 30, 2017, as compared toLatin America operations for the same periods in 2016. presented:
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$1,778 $1,556 $222 
Net investment income474 546 (72)
Investment related gains (losses), net19 (78)97 
Other revenues56 60 (4)
Total revenues2,327 2,084 243 
Benefits and expenses
Claims and other policy benefits1,646 1,516 130 
Future policy benefits remeasurement (gains) losses3 83 (80)
Market risk benefits remeasurement (gains) losses14 (34)48 
Interest credited147 124 23 
Policy acquisition costs and other insurance expenses223 223 — 
Other operating expenses59 55 4 
Total benefits and expenses2,092 1,967 125 
Income (loss) before income taxes$235 $117 $118 
The increase in income before income taxes forwas the third quarter was primarily due to strong mortality experience in the Traditional segment as well as higher variable investment income. The increase was offset somewhat by a decreaseresult of increases in investment related gains in the Financial Solutions segment. The increase in income before income taxes for the first nine months is the result of several factors, includingdue to changes in the fair value of the embedded derivatives associated with reinsurance treaties structured on a modco or modco/funds withheld an increasetreaties within Financial Solutions, as well as favorable claims experience in investment related capital gains and additional variable investment income.the U.S. Traditional lines of business.

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Traditional Reinsurance
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$1,615 $1,541 $74 
Net investment income193 289 (96)
Investment related gains (losses), net(1)15 (16)
Other revenues5 6 (1)
Total revenues1,812 1,851 (39)
Benefits and expenses
Claims and other policy benefits1,447 1,447 — 
Future policy benefits remeasurement (gains) losses7 103 (96)
Market risk benefits remeasurement (gains) losses— — — 
Interest credited18 17 1 
Policy acquisition costs and other insurance expenses175 181 (6)
Other operating expenses44 43 1 
Total benefits and expenses1,691 1,791 (100)
Income (loss) before income taxes$121 $60 $61 
Key metrics
Life reinsurance in force$1,676.8 billion$1,645.1 billion
Future policy benefits remeasurement (gains) losses
Effect of changes in cash flow assumptions$— $— 
Effect of actual variances from expected experience$7 $103 
Loss ratio (1)
90.0 %100.6 %
Policy acquisition costs and other insurance expenses as a percentage of net premiums10.8 %11.7 %
Other operating expenses as a percentage of net premiums2.7 %2.8 %
(1)Includes Claims and other policy benefits and Future policy benefits remeasurement (gains) losses
The U.S. and Latin America Traditional segment provides life and health reinsurance to clients for a variety of products through yearly renewable term, coinsurance and modco agreements. These reinsurance arrangements may involve either facultative or automatic agreements.
Incomeincrease in income before income taxes for the U.S. and Latin America Traditional segment increased by $83.4 million, or 108.2%, and $41.5 million, or 17.3%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increase in the third quarter iswas primarily due to favorable mortalityclaims experience as compared to same period in 2016 and higherover period, primarily the U.S. Individual Mortality business, partially offset by lower variable investment income. The favorable mortality experience was driven by both a lower number and average size of large claims. income in the current period.
Revenues
•The increase in income for the first nine monthsnet premiums was primarily due to higher variable investment.
Net premiums increased $49.7 million, or 3.9%, and $147.6 million, or 3.9%, for the three and nine months ended September 30, 2017,organic growth as compared to the same periods in 2016. The increases were primarily due to expected organic premium growth.well as new business treaties. The segment added new individual life business production, measured by face amount of insurancelife reinsurance in force, of $24.8$34.1 billion and $19.7$39.5 billion forduring the third quarterthree months ended March 31, 2023 and $75.1 billion and $93.0 billion for the first nine months of 2017 and 2016,2022, respectively.
Net•The decrease in net investment income increased $24.0 million, or 14.3%, and $39.5 million, or 7.7%, forduring the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases wereMarch 31, 2023, was primarily due to highera decrease in variable investment income. Investment relatedincome associated with investments in real estate joint ventures and realized gains (losses), net increased $1.9 millionassociated with investments in limited partnerships and $6.2 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.

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Claims and other policy benefits as a percentage of net premiums (“loss ratios”) were 84.3% and 88.6% for the third quarter and 89.2% and 89.0%, for the nine months ended September 30, 2017 and 2016, respectively. The decrease in the loss ratio for the third quarter of 2017,private equity funds as compared to the same period in 2016 was primarily due2022.
Benefits and expenses
•The decrease in future policy benefits remeasurement losses and the loss ratio is attributable to favorable mortalityimpacts of in-force management actions offset somewhat by unfavorable claims experience specifically the lower number and average size of large claims. Forin the first ninethree months of 2017,ended March 31, 2023, as compared to unfavorable claims, predominantly related to COVID-19, in the same period in 2016, mortality experience was relatively consistent.2022.
Interest credited expense decreased $1.1 million, or 1.7%, for the nine months ended September 30, 2017, as compared to the same period•The decrease in 2016. Interest credited in this segment relates to amounts credited on cash value products which also have a significant mortality component. Income before income taxes is affected by the spread between the investment income and the interest credited on the underlying products.
Policypolicy acquisition costs and other insurance expenses as a percentage of net premiums were 14.3%is less than 1% and 14.5% for the third quarter and 14.0% and 14.2% for the nine months ended September 30, 2017 and 2016, respectively. While these ratios are expected to remain in a predictable range, they may fluctuate from period to periodis primarily due to varying allowance levels within coinsurance-type arrangements. In addition, the amortization pattern of previously capitalized amounts, which are subject to the form of the reinsurance agreementcoinsurance type arrangements and the underlying insurance policies, may vary. Also, the mix of first yearnew business between coinsurance business versus yearly renewable term business can cause the percentage to fluctuate from period to periodterm.
Other operating expenses, as a percentage
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Table of net premiums remained constant at 2.4% and 2.4% for the third quarter and 2.4% and 2.4% first nine months of 2017 and 2016, respectively. The expense ratio tends to fluctuate only slightly from period to period due to the maturity and scale of this segment.Contents

Financial Solutions - Asset-Intensive Reinsurance
Asset-Intensive reinsurance within
For the three months ended March 31,202320222023 vs 2022
(dollars in millions)Asset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotal
Revenues
Net premiums$163 $— $163 $15 $— $15 $148 $— $148 
Net investment income280 1 281 256 1 257 24 — 24 
Investment related gains (losses), net20 — 20 (93)— (93)113 — 113 
Other revenues25 26 51 26 28 54 (1)(2)(3)
Total revenues488 27 515 204 29 233 284 (2)282 
Benefits and expenses
Claims and other policy benefits199 — 199 69 — 69 130 — 130 
Future policy benefits remeasurement (gains) losses(4)— (4)(20)— (20)16 — 16 
Market risk benefits remeasurement (gains) losses14 — 14 (34)— (34)48 — 48 
Interest credited129 — 129 107 — 107 22 — 22 
Policy acquisition costs and other insurance expenses46 2 48 41 1 42 5 1 6 
Other operating expenses11 4 15 9 3 12 2 1 3 
Total benefits and expenses395 6 401 172 4 176 223 2 225 
Income before income taxes$93 $21 $114 $32 $25 $57 $61 $(4)$57 
The increase in income before income taxes for the U.S. and Latin America Financial Solutions segment was primarily involves assuming investment risk within underlying annuities and corporate-owned life insurance policies. Mostdue to the change in the fair value of these agreements are coinsurance, coinsurance withembedded derivatives on funds withheld or modco. The Company recognizes profits or losses primarily from the spread between the investment income earned and theat interest credited on the underlying deposit liabilities, income associated with longevity risk,treaties written on a modco or funds withheld basis.
The invested asset base supporting asset-intensive transactions decreased to $23.2 billion as of March 31, 2023, from $23.7 billion as of March 31, 2022.
•The decrease in the asset base was primarily due to $1.7 billion of net run off of existing in force transactions, partially offset by $1.2 billion from new transactions.
•As of March 31, 2023 and fees2022, $4.1 billion and $4.4 billion, respectively, of the invested assets were funds withheld at interest, of which greater than 90% was associated with variable annuity account valuestwo clients.
As of March 31, 2023 and guaranteed investment contracts.2022, the amount of reinsurance assumed in capital solutions transactions, as measured by pre-tax statutory surplus, risk based capital and other financial structures was $25.8 billion and $23.3 billion, respectively.
Impact of certain derivatives:derivatives and market risk benefits
The Company recognizes in consolidated income any changes in the fair value of embedded derivatives on modco or funds withheld treaties and equity indexed annuities (“EIAs”). In addition, the Company recognizes the changes in fair value of market risk benefits associated with guaranteed minimum benefit riders. The Company utilizes freestanding derivatives to minimize the income statement volatility due to changes in the fair value of market risk benefits associated with guaranteed minimum benefit riders.
Income from the asset-intensive business tends to be volatile due to changes in the fair value of certain derivatives, including embedded derivatives associated with reinsurance treaties structured on a modco or funds withheld basis, as well as embedded derivatives associated with the Company’s reinsurance of equity-indexed annuitiesEIAs, and variable annuitieschanges in the fair value of market risk benefits associated with guaranteed minimum benefit riders. Fluctuations occur period to period primarily due to changing investment conditions including, but not limited to, interest rate movements (including risk-free rates and credit spreads), implied volatility the Company’s own credit risk and equity market performance, all of which are factors in the calculations of the fair value. Therefore, management believes it is helpful to distinguish between the effects of changes in these derivatives, net of related hedging activity, and the primary factors that drive profitabilityvalue of the underlying treaties, namely investment income, fee income (included in other revenues),assets and interest credited. These fluctuations are considered unrealized by management and do not affect current cash flows, crediting rates or spread performance on the underlying treaties.liabilities.
The following table summarizes the asset-intensive results and quantifies the impact of these embedded derivatives and market risk benefits for the periods presented. Revenues before certain derivatives, benefits and expenses before certain derivatives, and income before income taxes and certain derivatives should not be viewed as substitutes for GAAP revenues, GAAP benefits and expenses, and GAAP income before income taxes.

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(dollars in millions)Three months ended March 31,
 20232022
Revenues
Total revenues$488 $204 
Less:
Embedded derivatives – modco/funds withheld treaties38 (48)
Guaranteed minimum benefit riders and related free standing derivatives1 (35)
Revenues before certain derivatives and market risk benefits449 287 
Benefits and expenses
Total benefits and expenses395 172 
Less:
Equity-indexed annuities(7)(17)
Market risk benefits remeasurement (gains) losses13 (34)
Benefits and expenses before certain derivatives and market risk benefits389 223 
Income before income taxes:
Income (loss) before income taxes93 32 
Less:
Embedded derivatives – modco/funds withheld treaties38 (48)
Market risk benefits remeasurement (gains) losses and related free standing derivatives(12)(1)
Equity-indexed annuities7 17 
Income before income taxes and certain derivatives$60 $64 
(dollars in thousands) Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Revenues:        
Total revenues $234,330
 $256,130
 $751,025
 $558,575
Less:        
Embedded derivatives – modco/funds withheld treaties 24,539
 52,540
 107,039
 40,174
Guaranteed minimum benefit riders and related free standing derivatives (17,058) (12,647) (20,935) (24,710)
Revenues before certain derivatives 226,849
 216,237
 664,921
 543,111
Benefits and expenses:        
Total benefits and expenses 167,204
 167,398
 511,127
 406,694
Less:        
Embedded derivatives – modco/funds withheld treaties 11,481
 34,226
 51,008
 31,206
Guaranteed minimum benefit riders and related free standing derivatives (5,379) (3,135) (6,565) (3,439)
Equity-indexed annuities 481
 549
 (13,603) 6,449
Benefits and expenses before certain derivatives 160,621
 135,758
 480,287
 372,478
Income before income taxes:        
Income before income taxes 67,126
 88,732
 239,898
 151,881
Less:        
Embedded derivatives – modco/funds withheld treaties 13,058
 18,314
 56,031
 8,968
Guaranteed minimum benefit riders and related free standing derivatives (11,679) (9,512) (14,370) (21,271)
Equity-indexed annuities (481) (549) 13,603
 (6,449)
Income before income taxes and certain derivatives $66,228
 $80,479
 $184,634
 $170,633
Embedded Derivatives -– Modco/Funds Withheld Treaties -– Represents the change in the fair value of embedded derivatives on funds withheld at interest associated with treaties written on a modco or funds withheld basis. The fair value changes of embedded derivatives on funds withheld at interest associated with treaties written on a modco or funds withheld basis are reflected in revenues, while the related impact on deferred acquisition expenses is reflected in benefits and expenses. The Company’s utilization of a credit valuation adjustment, did not have a material effect on the change in fair value of these embedded derivatives for the ninethree months ended September 30, 2017March 31, 2023 and 2016.2022.
The change in fair value of the embedded derivatives -related to modco/funds withheld treaties, increased (decreased) income before income taxes by $13.1$38 million and $18.3$(48) million for the third quarter and $56.0 million and $9.0 million for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. The increases in income for the third quarter of 2016 and 2017 were primarily due to tightening credit spreads. The increase in income for the ninethree months ended September 30, 2017March 31, 2023, was primarily due to tightening credit spreads. Thespreads, and the decrease in income for the nine months ended September 30, 20162022 was primarily due to shifts in the yield curve.driven by higher risk-free interest rates and wider credit spreads.
Guaranteed Minimum Benefit Riders -Market Risk Benefits – Represents the impact related to market risk benefits, which consist of guaranteed minimum benefits associated with the Company’s reinsurance of variable and equity-indexed annuities. The fair value changes of the guaranteed minimummarket risk benefits along with the changes in fair value of the free standing derivatives (interest rate swaps, financial futures and equity options), purchased by the Company to substantially hedge the liability are reflected in revenues, while the related impact on deferred acquisition expenses is reflected in benefits and expenses. The Company’s utilization of a credit valuation adjustment did not have a material effect on therevenues. The change in fair value of these embedded derivativesthe market risk benefits for the nine months ended September 30, 2017 and 2016.
The change in fair value of the guaranteed minimum benefits, after allowing for changes in the associated free standing derivatives, decreased income before income taxes by $11.7$12 million and $9.5$1 million for the third quarter and $14.4 million and $21.3 million for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. The decrease in income for all periods was primarily due to the annual update of best estimate actuarial assumptions to account for lower policyholder lapse experience.
Equity-Indexed Annuities - –Represents changes in the liability for equity-indexed annuities in excess of changes in account value, after adjustments for related deferred acquisition expenses.value. The change in fair value of embedded derivative liabilities associated with equity-indexed annuities increased (decreased) income before income taxes by $(0.5)$7 million and $(0.5)$17 million for the third quarter and $13.6 million and $(6.4) million for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively.  The decreases in income for the third quarter of 2017 and 2016 were primarily due to shifts in the yield curve. The increase in income for the first ninethree months of 2017ended March 31, 2023, was primarily due to declining long-terman increase in risk free interest rates. The decrease in income forrates which has the first nine monthsimpact of 2016 was primarily due to increasing short-term interest rates.lowering the fair value of the liability.

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Discussion and analysis before certain derivatives and market risk benefits
The changes in derivatives and market risk benefits discussed above are considered unrealized by management and do not affect current cash flows, crediting rates or spread performance on the underlying treaties. Fluctuations occur period to period primarily due to changing investment conditions including, but not limited to, interest rate movements (including benchmark rates and credit spreads), credit valuation adjustments, implied volatility and equity market performance, all of which are factors in the calculations of fair value. Therefore, management believes it is helpful to distinguish between the effects of changes in these derivatives and market risk benefits as the primary factors that drive profitability of the underlying treaties namelyare investment income, fee income (included in other revenues) and interest credited.
Discussion and analysis before certain derivatives:
•Income before income taxes and certain derivatives decreased by $14.3 million and increased by $14.0 millionmarket risk benefits was consistent for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decrease in the third quarter was primarily due to lower investment related gains (losses), net of the corresponding impact to deferred acquisition costs, associated with coinsurance and funds withheld portfolios, which was partially offset by favorable policyholder experience in payout annuities. Funds withheld capital gains (losses) are reported in investment income. The increase in the first nine months was primarily due to favorable policyholder experience in payout annuities and higher variable investment income.
Revenue before certain derivatives increased by $10.6 million and $121.8 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increase in the third quarter was primarily due to the impact to investment income from a new coinsurance transaction in 2017 which was partially offset by lower investment related gains (losses) associated with coinsurance and funds withheld portfolios. The increase in the first nine months was primarily due to the change in fair value of equity options associated with the reinsurance of certain EIAs and higher investment related gains (losses) associated with coinsurance and funds withheld portfolios. The effect on investment income related to equity options is substantially offset by a corresponding change in interest credited.
Benefits and expenses before certain derivatives increased by $24.9 million and $107.8 million for the three and nine months ended September 30, 2017,March 31, 2023, as compared to the same period in 2016.2022.
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•Revenue before certain derivatives and market risk benefits increased by $162 million for the three months ended March 31, 2023, as compared to the same period in 2022. The increase in the thirdfirst quarter of 2023 was primarily due to net premiums from a single premium PRT transaction, which is offset by a corresponding increase in reserves.
•Benefits and expenses before certain derivatives and market risk benefits increased by $166 million for the three months ended March 31, 2023, as compared to the same period in 2022. The increase in the current quarter was primarily due to the impact to interest creditedestablishment of a new coinsurance transaction in 2017 and the corresponding impact to deferred acquisition costs from investment related gains (losses) in coinsurance and funds withheld portfolios. The increase in the first nine months was primarily due to higher interest creditedliabilities for future policy benefits associated with the reinsurance of EIAs and the corresponding impact to deferred acquisition costs from investment related gains (losses) in coinsurance and funds withheld portfolios. The effect on interest credited related to equity options is substantially offset by a corresponding change in investment income.single premium transaction.
The invested asset base supporting this segment increased to $15.5 billion as of September 30, 2017 from $13.2 billion as of September 30, 2016. The increase in the asset base was due primarily to the aforementioned new coinsurance transaction in 2017. As of September 30, 2017, $4.1 billion of the invested assets were funds withheld at interest, of which greater than 90% is associated with one client.
Financial Solutions - Financial Reinsurance
Financial Reinsurance within the U.S. and Latin America Financial Solutions segment income before income taxes consists primarily of net fees earned on financial reinsurance transactions. Additionally, a portion of the business is brokered business in which the Company does not participate in the assumption of risk. The fees earned from financial reinsurance contracts and brokered business are reflected in other revenues, and the fees paid to retrocessionaires are reflected in policy acquisition costs and other insurance expenses.
Income before income taxes increased $8.0 million, or 57.3%, and $15.0 million, or 33.5%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases were primarily due to growth in new transactions and organic growth on existing transactions which was partially offset by the termination of certain agreements.
At September 30, 2017 and 2016, the amount of reinsurance assumed from client companies, as measured by pre-tax statutory surplus, risk based capital and other financial structures was $12.6 billion and $7.9 billion, respectively. The increase was primarily due to new transactions, as well as organic growth on existing transactions. Fees earned from this business can vary significantly depending on the size of the transactions and the timing of their completion and therefore can fluctuate from period to period.

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Canada Operations
The Company conducts reinsurance business in Canada primarily through RGA Canada, which assists clients with capital management activity and mortality and morbidity risk management. The Canada operations are primarily engaged in Traditional reinsurance, which consists mainly of traditional individual life reinsurance, as well asand to a lesser extent creditor, group life and health, critical illness and disability reinsurance. Creditor insurance covers the outstanding balance on personal, mortgage or commercial loans in the event of death, disability or critical illness and is generally shorter in duration than traditional individual life insurance. The Canada Financial Solutions segment consists of longevity and financial reinsurance.capital solutions.
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$318 $327 $(9)
Net investment income62 59 3 
Investment related gains (losses), net2 1 1 
Other revenues4 4 — 
Total revenues386 391 (5)
Benefits and expenses
Claims and other policy benefits291 308 (17)
Future policy benefits remeasurement (gains) losses(2)(4)2 
Market risk benefits remeasurement (gains) losses— — — 
Interest credited— — — 
Policy acquisition costs and other insurance expenses46 53 (7)
Other operating expenses12 10 2 
Total benefits and expenses347 367 (20)
Income (loss) before income taxes$39 $24 $15 
(dollars in thousands)Three months ended September 30,
 2017 2016
Revenues:Traditional Financial Solutions Total Canada Traditional Financial Solutions Total Canada
Net premiums$225,841
 $9,874
 $235,715
 $231,154
 $9,946
 $241,100
Investment income, net of related expenses51,593
 1,120
 52,713
 45,239
 1,037
 46,276
Investment related gains (losses), net2,380
 —
 2,380
 3,832
 —
 3,832
Other revenues1,281
 1,436
 2,717
 734
 1,376
 2,110
Total revenues281,095
 12,430
 293,525
 280,959
 12,359
 293,318
Benefits and expenses:           
Claims and other policy benefits193,978
 7,170
 201,148
 175,618
 10,567
 186,185
Interest credited6
 —
 6
 8
 —
 8
Policy acquisition costs and other insurance expenses50,023
 221
 50,244
 61,019
 285
 61,304
Other operating expenses8,299
 567
 8,866
 10,039
 347
 10,386
Total benefits and expenses252,306
 7,958
 260,264
 246,684
 11,199
 257,883
Income before income taxes$28,789
 $4,472
 $33,261
 $34,275
 $1,160
 $35,435
(dollars in thousands)Nine months ended September 30,
 2017 2016
Revenues:Traditional Financial Solutions Total Canada Traditional Financial Solutions Total Canada
Net premiums$662,983
 $28,598
 $691,581
 $686,724
 $29,089
 $715,813
Investment income, net of related expenses140,929
 3,515
 144,444
 134,121
 1,649
 135,770
Investment related gains (losses), net8,821
 —
 8,821
 7,757
 —
 7,757
Other revenues1,910
 4,127
 6,037
 (731) 4,159
 3,428
Total revenues814,643
 36,240
 850,883
 827,871
 34,897
 862,768
Benefits and expenses:           
Claims and other policy benefits566,227
 21,888
 588,115
 524,497
 29,005
 553,502
Interest credited15
 —
 15
 17
 —
 17
Policy acquisition costs and other insurance expenses143,302
 571
 143,873
 178,178
 1,002
 179,180
Other operating expenses24,146
 1,292
 25,438
 27,500
 1,010
 28,510
Total benefits and expenses733,690
 23,751
 757,441
 730,192
 31,017
 761,209
Income before income taxes$80,953
 $12,489
 $93,442
 $97,679
 $3,880
 $101,559
Income before income taxes decreased by $2.2 million, or 6.1%, and $8.1 million, or 8.0%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. •The decrease in income for the third quarter and first nine months is primarily due to unfavorable traditional individual life mortality experience compared to favorable experience in the same periods in 2016, partially offset by favorable experience on longevity business in the current year. Foreign currency exchange fluctuations in the Canadian dollar resulted in an increase in income before income taxes of $1.7 million and $1.6 million for the three and nine months ended September 30, 2017,March 31, 2023, as compared to the same periodsperiod in 2016.
Traditional Reinsurance
Income before income taxes for2022, is primarily due to more favorable claims experience in the Canada Traditional segment decreased by $5.5 million, or 16.0%, and $16.7 million, or 17.1%, for the three and nine months ended September 30, 2017,individual mortality line of business as compared to the same periodsperiod in 2016. The2022 and lower policy acquisition costs and other insurance expenses.
•Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in a $3 million decrease in income before income taxes for the third quarterthree months ended March 31, 2023. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
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Traditional Reinsurance
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$295 $304 $(9)
Net investment income61 58 3 
Investment related gains (losses), net2 1 1 
Other revenues1 2 (1)
Total revenues359 365 (6)
Benefits and expenses
Claims and other policy benefits270 287 (17)
Future policy benefits remeasurement (gains) losses3 1 2 
Market risk benefits remeasurement (gains) losses— — — 
Interest credited— — — 
Policy acquisition costs and other insurance expenses45 52 (7)
Other operating expenses12 10 2 
Total benefits and expenses330 350 (20)
Income (loss) before income taxes$29 $15 $14 
Key metrics
Life reinsurance in force$469.5 billion$484.5 billion
Future policy benefits remeasurement (gains) losses
Effect of changes in cash flow assumptions$— $— 
Effect of actual variances from expected experience$3 $1 
Loss ratio (1)
92.5 %94.7 %
Policy acquisition costs and other insurance expenses as a percentage of net premiums15.3 %17.1 %
Other operating expenses as a percentage of net premiums4.1 %3.3 %
(1)Includes Claims and first nine months is primarily due to unfavorable traditional individual life mortality experience compared to favorable experience in the same periods in 2016. Foreign currency exchange fluctuations in the Canadian dollar resulted in another policy benefits and Future policy benefits remeasurement (gains) losses
The increase in income before income taxes of $1.5 million and $1.4 million for the three and nine months ended September 30, 2017,March 31, 2023, is primarily due to more favorable claims experience in the individual mortality line of business as compared to the same periodsperiod in 2016.2022 and lower policy acquisition costs and other insurance expenses.

Revenues
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Net premiums decreased $5.3 million, or 2.3%, and $23.7 million, or 3.5%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. •The decreasesdecrease in net premiums were primarilyis due to an anticipated decreaseforeign currency fluctuations. Excluding the impact of foreign currency fluctuations, premiums increased primarily on individual mortality business due to organic growth and Group business due to increased volume in creditor premiums of $21.0 million and $60.4 million for the third quarter and first nine months, respectively. These decreases were partially offset by an increase in traditional individualsome treaties.
•The segment added new life business premiums from annually increasing premium rates on yearly renewable term treatiesproduction, measured by face amount of life reinsurance in force, of $10.8 billion and favorable foreign currency exchange fluctuation. Foreign currency exchange fluctuations in the Canadian dollar resulted in an increase in net premiums of approximately $9.0 million and $7.0 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Net investment income increased $6.4 million, or 14.0%, and $6.8 million, or 5.1%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases in investment income for the third quarter and$12.7 billion during the first ninethree months were primarily the result of an increase in the invested asset base due to growth in the underlying business volume2023 and an increase in investment yields from a higher level of variable investment income. Foreign currency exchange fluctuation in the Canadian dollar resulted in an2022, respectively.
•The increase in net investment income of approximately $2.1 million and $1.7 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Other revenues increased by $0.5 million and $2.6 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increase in other revenues for the third quarter of 2017 is primarily due to foreign currency exchange fluctuations. The increase in other revenues for the first nine months of 2017 is primarily due to fee income from the recapture of a previously assumed block of individual life business during the second quarter of 2017.
Loss ratios for this segment were 85.9% and 76.0% for the third quarter and 85.4% and 76.4% for the nine months ended September 30, 2017 and 2016, respectively. The increases in the loss ratio for the three and nine months of 2017, as compared to the same periods in 2016, are due to unfavorable traditional life mortality experience compared to favorable experience in the same periods in 2016 and a decrease in creditor business premiums. Loss ratios for the traditional individual life mortality business were 99.5% and 94.4% for the third quarter and 98.7% and 93.4% for the first nine months ended September 30, 2017 and 2016, respectively. Historically, the loss ratio increased primarily as the result of several large permanent level premium in force blocks assumed in 1997 and 1998. These blocks are mature blocks of long-term permanent level premium business in which mortality as a percentage of net premiums is expected to be higher than historical ratios. The nature of permanent level premium policies requires the Company to set up actuarial liabilities and invest the amounts received in excess of early-year claims costs to fund claims in later years when premiums, by design, continue to be level as compared to expected increasing mortality or claim costs. As such, investment income becomes a more significant component of profitability of these in force blocks. Excluding creditor business, claims and other policy benefits, as a percentage of net premiums and investment income were 77.7% and 73.7% for the third quarter and 77.7% and 73.5% for the nine months ended September 30, 2017 and 2016, respectively.
Policy acquisition costs and other insurance expenses as a percentage of net premiums were 22.1% and 26.4% for the third quarter and 21.6% and 25.9% for the nine months ended September 30, 2017 and 2016, respectively. Overall, while these ratios are expected to remain in a predictable range, they may fluctuate from period to period due to varying allowance levels and product mix. The decrease for the third quarter and first nine months reflects a lower level of creditor business which typically has a higher level of acquisition costs. In addition, the amortization patterns of previously capitalized amounts, which are subject to the form of the reinsurance agreement and the underlying insurance policies, may vary.
Other operating expenses decreased $1.7 million, or 17.3%, and $3.4 million, or 12.2%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, primarily due to a decrease in corporate overhead expenses. Other operating expenses as a percentage of net premiums were 3.7% and 4.3% for the third quarter and 3.6% and 4.0% for the nine month periods ended September 30, 2017 and 2016, respectively.
Financial Solutions Reinsurance
Income before income taxes increased by $3.3 million and $8.6 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases in income for both the three and nine month periods are primarily due to favorable experience on longevity business in the current-year periods. Foreign currency exchange fluctuations in the Canadian dollar resulted in an increase in income before income taxes of $0.2 million for both the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Net premiums decreased $0.1 million, or 0.7%, and $0.5 million, or 1.7%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. Foreign currency exchange fluctuations in the Canadian dollar resulted in an increase in net premiums of approximately $0.4 million for both the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Net investment income increased $0.1 million and $1.9 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016was primarily due to an increase in the invested asset base.

Benefits and expenses
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Claims and other policy benefits decreased $3.4 million, or 32.1%, and $7.1 million, or 24.5%,•The decrease in the loss ratio for the three and nine months ended September 30, 2017March 31, 2023, as compared to the same periodsperiod in 2016. The decreases for the third quarter and first nine months are2022, was primarily due to more favorable claims experience in the individual mortality line of business.

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Financial Solutions
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$23 $23 $— 
Net investment income1 1 — 
Investment related gains (losses), net— — — 
Other revenues3 2 1 
Total revenues27 26 1 
Benefits and expenses
Claims and other policy benefits21 21 — 
Future policy benefits remeasurement (gains) losses(5)(5)— 
Market risk benefits remeasurement (gains) losses— — — 
Interest credited— — — 
Policy acquisition costs and other insurance expenses1 1 — 
Other operating expenses— — — 
Total benefits and expenses17 17 — 
Income (loss) before income taxes$10 $9 $1 
Key metrics
Future policy benefits remeasurement (gains) losses
Effect of changes in cash flow assumptions$— $— 
Effect of actual variances from expected experience$(5)$(5)
The increase in income before income taxes was due to higher other revenues related to favorable experience on longevity business.the capital solutions business in the three months ended March 31, 2023, as compared to the same period in 2022.
Europe, Middle East and Africa Operations
The Europe, Middle East and Africa (“EMEA”) segment includesoperations include business primarily generated by its offices principally in the United Kingdom (“UK”), South Africa, France, Germany, Ireland, Italy, the Middle East, the Netherlands, Poland, South Africa, Spain and the United Arab EmiratesKingdom (“UAE”UK”). EMEA consists of two major segments: Traditional and Financial Solutions. The Traditional segment primarily provides reinsurance through yearly renewable term and coinsurance agreements on a variety of life, health and critical illness products. Reinsurance agreements may be facultative or automatic agreements covering primarily individual risks and, in some markets, group risks. The Financial Solutions segment consists of reinsurance and other transactions associated with longevity closed blocks, payout annuities, capital management solutions and financial reinsurance.
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$563 $579 $(16)
Net investment income69 55 14 
Investment related gains (losses), net(6)16 (22)
Other revenues3 6 (3)
Total revenues629 656 (27)
Benefits and expenses
Claims and other policy benefits494 514 (20)
Future policy benefits remeasurement (gains) losses(17)(19)2 
Market risk benefits remeasurement (gains) losses— — — 
Interest credited— (9)9 
Policy acquisition costs and other insurance expenses20 24 (4)
Other operating expenses46 45 1 
Total benefits and expenses543 555 (12)
Income (loss) before income taxes$86 $101 $(15)
(dollars in thousands)Three months ended September 30,
 2017 2016
Revenues:Traditional Financial Solutions Total EMEA Traditional Financial Solutions Total EMEA
Net premiums$344,211
 $39,294
 $383,505
 $275,514
 $47,018
 $322,532
Investment income, net of related expenses14,727
 30,892
 45,619
 13,067
 33,187
 46,254
Investment related gains (losses), net—
 1,192
 1,192
 —
 8,159
 8,159
Other revenues2,034
 5,663
 7,697
 489
 11,388
 11,877
Total revenues360,972
 77,041
 438,013
 289,070
 99,752
 388,822
Benefits and expenses:           
Claims and other policy benefits285,071
 35,648
 320,719
 241,763
 45,805
 287,568
Interest credited—
 2,475
 2,475
 —
 5,540
 5,540
Policy acquisition costs and other insurance expenses35,751
 327
 36,078
 14,133
 (304) 13,829
Other operating expenses24,729
 7,638
 32,367
 24,659
 4,925
 29,584
Total benefits and expenses345,551
 46,088
 391,639
 280,555
 55,966
 336,521
Income before income taxes$15,421
 $30,953
 $46,374
 $8,515
 $43,786
 $52,301
(dollars in thousands)Nine months ended September 30,
 2017 2016
Revenues:Traditional Financial Solutions Total EMEA Traditional Financial Solutions Total EMEA
Net premiums$979,733
 $119,809
 $1,099,542
 $838,810
 $126,108
 $964,918
Investment income, net of related expenses41,032
 88,602
 129,634
 38,556
 95,288
 133,844
Investment related gains (losses), net7
 8,225
 8,232
 5
 8,623
 8,628
Other revenues4,206
 13,799
 18,005
 2,975
 18,466
 21,441
Total revenues1,024,978
 230,435
 1,255,413
 880,346
 248,485
 1,128,831
Benefits and expenses:           
Claims and other policy benefits846,476
 108,381
 954,857
 745,342
 126,252
 871,594
Interest credited—
 6,297
 6,297
 —
 8,914
 8,914
Policy acquisition costs and other insurance expenses66,263
 1,070
 67,333
 46,465
 226
 46,691
Other operating expenses71,488
 22,911
 94,399
 74,306
 16,414
 90,720
Total benefits and expenses984,227
 138,659
 1,122,886
 866,113
 151,806
 1,017,919
Income before income taxes$40,751
 $91,776
 $132,527
 $14,233
 $96,679
 $110,912
Income•The decrease in income before income taxes decreased by $5.9 million, or 11.3%, and increased by $21.6 million, or 19.5%, for the three and nine months ended September 30, 2017,March 31, 2023, as compared to the same periodsperiod in 2016. 2022, was primarily due to decreased net premiums and an increase in investment related losses, partially offset by increased net investment income.
•Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in a $7 million decrease in income before income taxes for the three months ended March 31, 2023. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
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Traditional Reinsurance
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$438 $451 $(13)
Net investment income23 19 4 
Investment related gains (losses), net— — — 
Other revenues(1)3 (4)
Total revenues460 473 (13)
Benefits and expenses
Claims and other policy benefits390 396 (6)
Future policy benefits remeasurement (gains) losses(8)(11)3 
Market risk benefits remeasurement (gains) losses— — — 
Interest credited— — — 
Policy acquisition costs and other insurance expenses18 22 (4)
Other operating expenses33 32 1 
Total benefits and expenses433 439 (6)
Income (loss) before income taxes$27 $34 $(7)
Key metrics
Life reinsurance in force$759.6 billion$850.7 billion
Future policy benefits remeasurement (gains) losses
Effect of changes in cash flow assumptions$— $— 
Effect of actual variances from expected experience$(8)$(11)
Loss ratio (1)
87.2 %85.4 %
Policy acquisition costs and other insurance expenses as a percentage of net premiums4.1 %4.9 %
Other operating expenses as a percentage of net premiums7.5 %7.1 %
(1)Includes Claims and other policy benefits and Future policy benefits remeasurement (gains) losses
The decrease in income before income taxes for the third quarterthree months ended March 31, 2023, as compared to the same period in 2022, was primarily due to lower payout annuity income partially offsetdecreased net premiums.
Revenues
•The decrease in net premiums was due to foreign currency fluctuations. Excluding the impact of foreign currency fluctuations, business volume on new and existing treaties increased in the first three months of 2023.
•The segment added new life business production, measured by favorable mortality experience. face amount of life reinsurance in force, of $30.1 billion and $50.5 billion during the three months ended March 31, 2023, and the same period in 2022, respectively.
Benefits and expenses
•The increase in the loss ratio for the first three months of 2023 is primarily due to a decrease in premiums and claims provisions related to the earthquake in Turkey.

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Financial Solutions
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$125 $128 $(3)
Net investment income46 36 10 
Investment related gains (losses), net(6)16 (22)
Other revenues4 3 1 
Total revenues169 183 (14)
Benefits and expenses
Claims and other policy benefits104 118 (14)
Future policy benefits remeasurement (gains) losses(9)(8)(1)
Market risk benefits remeasurement (gains) losses— — — 
Interest credited— (9)9 
Policy acquisition costs and other insurance expenses2 2 — 
Other operating expenses13 13 — 
Total benefits and expenses110 116 (6)
Income (loss) before income taxes$59 $67 $(8)
Key metrics
Future policy benefits remeasurement (gains) losses
Effect of changes in cash flow assumptions$— $— 
Effect of actual variances from expected experience$(9)$(8)
The decrease in income before income taxes for the first ninethree months of 2023 was primarily due to investment related losses, partially offset by favorable individual mortality andclaims experience related to closed longevity experience. Foreign currency exchange fluctuations resultedblocks.
Revenues
•The decrease in an increase (decrease) in income before income taxes of $0.8 million and $(8.5) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.

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Traditional Reinsurance
Income before income taxes increased by $6.9 million, or 81.1%, and $26.5 million, or 186.3%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increase in income for the third quarternet premiums was primarily due to favorable mortality experience. The increases in income before income taxes for the first nine months was primarily due to business growth and favorable individual mortality experience partially offset by unfavorable morbidity experience. Foreign currency exchange fluctuations resulted in an increase (decrease) in income before income taxesdecreased volumes of $0.7 million and $(0.5) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.closed block longevity transactions.
Net premiums increased $68.7 million, or 24.9%, and $140.9 million, or 16.8%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. •The increase in the three and nine monthsnet investment income was primarily due to increased business volumes, most notably in the UAE, Italy and South Africa related to new treaties in 2017 and favorable growth from existing treaties. Foreign currency exchange fluctuations increased (decreased) net premiums by approximately $7.3 million and $(27.8) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
A portion of the net premiums for the segment, in each period presented, relates to reinsurance of critical illness coverage, primarily in the UK. This coverage provides a benefit in the event of the diagnosis of a pre-defined critical illness. Net premiums earned from this coverage totaled $49.0 million and $49.5 million for the third quarter and $144.2 million and $157.0 million for the first nine months of 2017 and 2016, respectively.
Net investment income increased $1.7 million, or 12.7%, and $2.5 million, or 6.4%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases were primarily due to an increase in invested assets supporting the invested asset basesegment.
•The increase in investment related losses was attributable to increased business volumes. Foreign currency exchange fluctuations resulted in an increase (decrease) in net investment incomethe fair market value of approximately $0.4 million and $(0.8) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Loss ratios for this segment were 82.8% and 87.7% for the third quarter and 86.4% and 88.9% for the first nine months ended September 30, 2017 and 2016, respectively. The decreases in loss ratios were primarilyCPI swap derivatives due to changes in the mix of business in the third quarter of 2017 reflecting increased volumes of new business withfuture inflation expectations and lower loss ratios, but with higher commissions. These higher commissions are reflected in the increases of 2017 policy acquisition cost ratios below.investment related gains on fixed-income securities.
Policy acquisition costsBenefits and other insurance expenses as a percentage of net premiums were 10.4% and 5.1% for the third quarter and 6.8% and 5.5% for the first nine months ended September 30, 2017 and 2016, respectively. The increases in policy acquisition cost ratios are due primarily to changes in the mix of business in the third quarter of 2017 reflecting increased volumes of new business with higher commissions.
Other operating expenses increased $0.1 million, or 0.3%, and decreased $2.8 million, or 3.8%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. •The decrease in the first nine months was primarily due to lower corporate overhead expense timing and the effect of foreign currency exchange fluctuations. Foreign currency exchange fluctuations resulted in an increase (decrease) in operating expenses of approximately $0.8 million and $(0.4) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. Other operating expenses as a percentage of net premiums totaled 7.2% and 9.0% for the third quarter and 7.3% and 8.9% for the first nine months ended September 30, 2017 and 2016, respectively.
Financial Solutions Reinsurance
Income before income taxes decreased by $12.8 million, or 29.3%, and $4.9 million, or 5.1%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decreases in income before income taxes were primarily due to payout annuity experience normalizing after a particularly positive 2016, partly offset by favorable longevity business results. Foreign currency exchange fluctuations resulted in an increase (decrease) in income before income taxes totaling $0.1 million and $(7.9) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Net premiums decreased by $7.7 million, or 16.4%, and $6.3 million, or 5.0%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decreases in net premiums were due to a new retrocession treaty, executed for risk management purposes effective in the first quarter of 2017, which cedes longevity risk to third parties, partially offset by an increase in premiums from new transactions. Foreign currency exchange fluctuations increased (decreased) net premiums by approximately $0.1 million and $(10.5) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.

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Net investment income decreased $2.3 million, or 6.9%, and $6.7 million, or 7.0%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decreases in investment income for the third quarter was due to decreases in both investment yields and the invested asset base, while the decrease for the nine-month period was primarily due to foreign currency exchange fluctuations. Foreign currency exchange fluctuations resulted in an increase (decrease) in net investment income of approximately $0.1 million and $(7.3) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Other revenues decreased by $5.7 million, or 50.3%, and $4.7 million, or 25.3%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decreases in other revenues were due to experience from a longevity swap normalizing after a particularly positive 2016.
Claims and other policy benefits decreased $10.2 million, or 22.2%, and $17.9 million, or 14.2%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decrease in the third quarter and first nine months was primarily due to the aforementioned new longevity retrocession treaty that cedes longevity risk to third parties, net of an increase in claims and other policy benefits from new transactions. Foreign currency exchange fluctuations resulted in a decrease in claims and other policy benefits is the result of approximately $9.6 million for the nine months ended September 30, 2017, as compared to the same period in 2016.favorable longevity experience.
Interest credited expense decreased by $3.1 million, or 55.3%, and $2.6 million, or 29.4%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. Interest credited in this segment relates to amounts credited to the contractholders

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Table of unit-linked products. This amount will fluctuate according to contractholder investment selections, equity returns and interest rates. The effect on interest credited related to unit-linked products is substantially offset by a corresponding change in investment income.Contents
Other operating expenses increased $2.7 million, or 55.1%, and $6.5 million, or 39.6%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases are primarily due to increased administration costs related to longevity transactions and are offset partially by the effect of foreign currency exchange fluctuations. Foreign currency exchange fluctuations resulted in an increase (decrease) in operating expenses of approximately $0.2 million and $(1.0) million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Asia Pacific Operations
The Asia Pacific operations include business generated by its offices principally in Australia, China, Hong Kong, India, Japan, Malaysia, New Zealand, Singapore, South Korea and Taiwan. The Traditional segment’s principal types of reinsurance include individual and group life and health, critical illness, disability and superannuation. Reinsurance agreements may be facultative or automatic agreements covering primarily individual risks, and in some markets, group risks. Superannuation is the Australian government mandated compulsory retirement savings program. Superannuation funds accumulate retirement funds for employees, and, in addition, typically offer life and disability insurance coverage. The Financial Solutions segment includes financial reinsurance, asset-intensive and certain disability and life blocks. Reinsurance agreements may be facultative or automatic agreements covering primarily individual risks and
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$726 $693 $33 
Net investment income169 91 78 
Investment related gains (losses), net(48)(81)33 
Other revenues13 20 (7)
Total revenues860 723 137 
Benefits and expenses
Claims and other policy benefits632 533 99 
Future policy benefits remeasurement (gains) losses(10)(2)(8)
Market risk benefits remeasurement (gains) losses— — — 
Interest credited54 20 34 
Policy acquisition costs and other insurance expenses62 66 (4)
Other operating expenses56 54 2 
Total benefits and expenses794 671 123 
Income (loss) before income taxes$66 $52 $14 
•The increase in some markets, group risks.

(dollars in thousands)Three months ended September 30,
 2017 2016
Revenues:Traditional Financial Solutions Total Asia Pacific Traditional Financial Solutions Total Asia Pacific
Net premiums$536,931
 $19
 $536,950
 $404,451
 $743
 $405,194
Investment income, net of related expenses23,858
 10,556
 34,414
 21,273
 5,827
 27,100
Investment related gains (losses), net—
 758
 758
 —
 6,108
 6,108
Other revenues871
 5,599
 6,470
 1,923
 6,359
 8,282
Total revenues561,660
 16,932
 578,592
 427,647
 19,037
 446,684
Benefits and expenses:           
Claims and other policy benefits442,358
 6,110
 448,468
 365,115
 3,777
 368,892
Interest credited—
 7,026
 7,026
 —
 3,308
 3,308
Policy acquisition costs and other insurance expenses55,891
 653
 56,544
 4,157
 1,482
 5,639
Other operating expenses36,847
 3,372
 40,219
 38,553
 2,921
 41,474
Total benefits and expenses535,096
 17,161
 552,257
 407,825
 11,488
 419,313
Income (loss) before income taxes$26,564
 $(229) $26,335
 $19,822
 $7,549
 $27,371

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(dollars in thousands)Nine months ended September 30,
 2017 2016
Revenues:Traditional Financial Solutions Total Asia Pacific Traditional Financial Solutions Total Asia Pacific
Net premiums$1,557,590
 $2,094
 $1,559,684
 $1,233,222
 $4,936
 $1,238,158
Investment income, net of related expenses68,105
 24,662
 92,767
 61,601
 18,086
 79,687
Investment related gains (losses), net—
 11,525
 11,525
 14
 14,322
 14,336
Other revenues2,724
 17,087
 19,811
 4,580
 18,809
 23,389
Total revenues1,628,419
 55,368
 1,683,787
 1,299,417
 56,153
 1,355,570
Benefits and expenses:           
Claims and other policy benefits1,221,091
 14,170
 1,235,261
 977,860
 15,487
 993,347
Interest credited—
 15,595
 15,595
 —
 9,474
 9,474
Policy acquisition costs and other insurance expenses180,007
 4,111
 184,118
 116,432
 4,436
 120,868
Other operating expenses105,747
 10,472
 116,219
 109,661
 10,727
 120,388
Total benefits and expenses1,506,845
 44,348
 1,551,193
 1,203,953
 40,124
 1,244,077
Income before income taxes$121,574
 $11,020
 $132,594
 $95,464
 $16,029
 $111,493
Incomeincome before income taxes decreased by $1.0 million, or 3.8%, and increased by $21.1 million, or 18.9%, for the three and nine months ended September 30, 2017, as compared to the same periodsperiod in 2016. 2022 was primarily due to increased net investment income related to an increase in the asset base from new asset-intensive transactions, increased net premiums and lower investment related losses, partially offset by lower underwriting results.
•Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in an $3 million decrease in income before income taxes during the three months ended March 31, 2023. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
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Traditional Reinsurance
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$662 $650 $12 
Net investment income61 47 14 
Investment related gains (losses), net3 — 3 
Other revenues3 6 (3)
Total revenues729 703 26 
Benefits and expenses
Claims and other policy benefits563 494 69 
Future policy benefits remeasurement (gains) losses(9)(2)(7)
Market risk benefits remeasurement (gains) losses— — — 
Interest credited— — — 
Policy acquisition costs and other insurance expenses46 54 (8)
Other operating expenses50 49 1 
Total benefits and expenses650 595 55 
Income (loss) before income taxes$79 $108 $(29)
Key metrics
Life reinsurance in force$508.2 billion$508.4 billion
Future policy benefits remeasurement (gains) losses
Effect of changes in cash flow assumptions$— $— 
Effect of actual variances from expected experience$(9)$(2)
Loss ratio (1)
83.7 %75.7 %
Policy acquisition costs and other insurance expenses as a percentage of net premiums6.9 %8.3 %
Other operating expenses as a percentage of net premiums7.6 %7.5 %
(1)Includes Claims and other policy benefits and Future policy benefits remeasurement (gains) losses
The decrease in income before income taxes foris primarily the third quarter was due to an increase in policy lapses on a financial solutions closed blockresult of business in Japanlower underwriting results, partially offset by favorable results in the traditional segment. higher net investment income and increased net premiums.
Revenues
•The increase in income before income taxes for the first nine monthsnet premiums was primarily due to higher income from offices in Asia driven bycontinued business growth most notably in Hong Kongthe segment.
•The segment added new life business production, measured by face amount of life reinsurance in force, of $3.9 billion and Southeast Asia.$16.6 billion during the three months ended March 31, 2023 and 2022, respectively, due to new business production. The prior-year period also included poor claims experiencenew business was partially offset by lapses and deaths of approximately $14 billion.
•The increase in Australia. net investment income is attributable to higher investment yield.
Benefits and expenses
•The third quarter of 2016 also included a higher level of benefit expense associated withincrease in the timing of client reporting on one large treaty in Hong Kong. Foreign currency exchange fluctuations resulted in a decrease to income before income taxes totaling approximately $0.8 million and $0.3 millionloss ratio for the three and nine months ended September 30, 2017,March 31, 2023, as compared to the same periodsperiod in 2016.2022 was primarily due to unfavorable claims experience across the segment.
Traditional Reinsurance
Income
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Financial Solutions
For the three months ended March 31,
(dollars in millions)202320222023 vs 2022
Revenues
Net premiums$64 $43 $21 
Net investment income108 44 64 
Investment related gains (losses), net(51)(81)30 
Other revenues10 14 (4)
Total revenues131 20 111 
Benefits and expenses
Claims and other policy benefits69 39 30 
Future policy benefits remeasurement (gains) losses(1)— (1)
Market risk benefits remeasurement (gains) losses— — — 
Interest credited54 20 34 
Policy acquisition costs and other insurance expenses16 12 4 
Other operating expenses6 5 1 
Total benefits and expenses144 76 68 
Income (loss) before income taxes$(13)$(56)$43 
Key metrics
Future policy benefits remeasurement (gains) losses
Effect of changes in cash flow assumptions$— $— 
Effect of actual variances from expected experience$(1)$— 
The decrease in loss before income taxes increased by $6.7 million, or 34.0%, and $26.1 million, or 27.4%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases in income before income taxes areis primarily due to higher incomenet investment income. The invested asset base supporting asset-intensive transactions increased to $14.4 billion as of March 31, 2023, from offices$10.3 billion as of March 31, 2022. The increase in Asia driven by business growth. Foreign currency exchange fluctuations resulted in a decrease to income before income taxes totaling approximately $1.0 million and $0.4 million for the three and nine months ended September 30, 2017, asasset base compared to the same periods in 2016.
Net premiums increased by $132.5 million, or 32.8%, and $324.4 million, or 26.3%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases were driven by both new and existing business written throughout the segment. Foreign currency exchange fluctuations resulted in an increase in net premiums of approximately $1.0 million and $14.2 million for the three and nine months of 2017, as compared to the same periods in 2016.
A portion of the net premiums for the segment, in each period presented, relates to reinsurance of critical illness coverage. This coverage provides a benefit in the event of the diagnosis of a pre-defined critical illness. Reinsurance of critical illness in the segment is offered primarily in South Korea, Australia and Hong Kong. Net premiums earned from this coverage totaled $158.6 million and $100.6 million for the third quarter and $474.8 million and $312.3 million for the first nine months ended September 30, 2017 and 2016, respectively.
Net investment income increased $2.6 million, or 12.2%, and $6.5 million, or 10.6%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increases wereMarch 31, 2022, was primarily due to a higher invested asset base. Foreign currency exchange fluctuations resulted in an increase inapproximately $3.0 billion from recently executed transactions and net investment incomeorganic growth of approximately $0.5 million and $1.3 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Other revenues decreased by $1.1 million, or 54.7%, and $1.9 million, or 40.5%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. These variances are primarily due to gains and losses related to foreign currency transactions.
Loss ratios for this segment were 82.4% and 90.3% for the third quarter and 78.4% and 79.3% for the first nine months ended September 30, 2017 and 2016, respectively.billion from existing in-force blocks. The decreases in the loss ratios for the third quarter and first nine months of 2017 were primarily due to improved claims experience in Australia compared to the prior year.

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Policy acquisition costs and other insurance expenses as a percentage of net premiums were 10.4% and 1.0% for the third quarter and 11.6% and 9.4% for the nine months ended September 30, 2017 and 2016, respectively. The third quarter 2016 included the affect of adjustments associated with client reporting on one large treaty in Hong Kong. These percentages fluctuate due to timing of client company reporting, premium refunds, variations in the mixture of business and the relative maturity of the business.In addition, as the segment grows, renewal premiums, which have lower allowances than first-year premiums, represent a greater percentage of the total net premiums.
Other operating expenses decreased $1.7 million, or 4.4%, and $3.9 million, or 3.6%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016 mainly due to the timing of travel and consultant expenditures. Other operating expenses as a percentage of net premiums totaled 6.9% and 9.5% for the third quarter and 6.8% and 8.9% for the first nine months ended September 30, 2017 and 2016, respectively. The timing of premium flows and the level of costs associated with the entrance into and development of new markets within the segment may cause other operating expenses as a percentage of net premiums to fluctuate over periods of time.
Financial Solutions Reinsurance
Income before income taxes decreased by $7.8 million and $5.0 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decreases in income before income taxes are primarily due to lower income from higher lapses on policies of the aforementioned closed block of business in Japan. Foreign currency exchange fluctuations resulted in an increase in income before income taxes of approximately $0.1 million for both the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Net premiums decreased $0.7 million or 97.4%, and $2.8 million, or 57.6%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decreases for the third quarter and first nine months were due to higher lapses from policies of the aforementioned closed block of business in Japan. Foreign currency exchange fluctuations had a negligible effect on net premiums for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Net investment income increased $4.7 million, or 81.2%, and $6.6 million, or 36.4%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016 mainly due to growth in the invested asset base. Foreign currency exchange fluctuations resulted in an increase in net investment income of approximately $0.2 million and $0.4 million for the three and nine months ended September 30, 2017, as compared to the same periods in 2016.
Other revenues decreased by $0.8 million, or 12.0%, and $1.7 million, or 9.2%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. At September 30, 2017 and 2016, the amount of reinsurance assumed from client companies, as measured by pre-tax statutory surplus, risk based capital and other financial reinsurance structures was $2.4$1.1 billion and $1.0$1.3 billion for the three months ended March 31, 2023 and 2022, respectively. Fees earned from this business can vary significantly depending on the size, complexity and timing of the transactions and the timing of their completion and, therefore, can fluctuate from period to period.
Claims and other policy benefits increased by $2.3 million, or 61.8%, and decreased by $1.3 million, or 8.5%,Revenues
•The increase in net premiums is attributable to contributions from recently executed transactions for the three and nine months ended September 30, 2017,March 31, 2023, as compared to the same periodsperiod in 2016. 2022.
•The increase in net investment income is due to the third quarter wasincrease in the asset base and increased yields due increased interest rates.
•The increase in investment related gains (losses), net is primarily due to higher lapses from policies of the aforementioned closed block of business in Japan. The decreasefavorable fluctuations in the first nine monthsfair value of derivatives of $68 million primarily due to strengthening in the Japanese yen, partially offset by losses due to investment activity of $33 million.
Expenses
•The increase in claims and other policy benefits and interest credited is attributable to lower lapses from policies from a closed block of business in Japan.
Other operating expenses increased by $0.5 million, or 15.4%, and decreased by $0.3 million, or 2.4%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016, respectively. The timing of premium flows and the level of costsprimarily associated with the entrance into and development of new markets within the segment may cause other operating expenses to fluctuate over periods of time.recently executed transactions.

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Corporate and Other
Corporate and Other revenues primarily include investment income from unallocated invested assets, and investment related gains and losses.losses and service fees. Corporate and Other expenses consist of the offset to capital charges allocated to the operating segments within the policy acquisition costs and other insurance income line item, unallocated overhead and executive costs, interest expense related to debt, and the investment income and expense associated with the Company’s collateral finance and securitization transactions.transactions and service business expenses. Additionally, Corporate and Other includes results from certain wholly-owned subsidiaries, such as RGAX, and joint ventures that, among other activities, develop and market technology, and provide consulting and outsourcing solutions for the insurance industry.and reinsurance industries. The Company continues to invest in this area in an effort to both support its clients and accelerate the development of new solutions and services to increase consumer engagement within the life insurance industry and hence generate new future revenue streams.
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(dollars in thousands) Three months ended September 30, Nine months ended September 30,
 2017 2016 2017 2016
Revenues:        
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202320222023 vs 2022
RevenuesRevenues
Net premiums $23
 $72
 $109
 $289
Net premiums$— $— $— 
Investment income, net of related expenses 41,108
 33,478
 108,576
 81,589
Net investment incomeNet investment income82 59 23 
Investment related gains (losses), net 6,994
 12,258
 7,856
 51,717
Investment related gains (losses), net(44)3 (47)
Other revenues 1,502
 4,893
 9,126
 11,595
Other revenues11 1 10 
Total revenues 49,627
 50,701
 125,667
 145,190
Total revenues49 63 (14)
Benefits and expenses:        
Benefits and expensesBenefits and expenses
Claims and other policy benefits (15) (15) (1) 6
Claims and other policy benefits— — — 
Future policy benefits remeasurement (gains) lossesFuture policy benefits remeasurement (gains) losses— — — 
Market risk benefits remeasurement (gains) lossesMarket risk benefits remeasurement (gains) losses— — — 
Interest credited 1,799
 622
 4,420
 1,588
Interest credited14 6 8 
Policy acquisition costs and other insurance income (26,848) (24,565) (80,694) (73,526)
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses(20)(22)2 
Other operating expenses 45,601
 32,414
 124,114
 113,367
Other operating expenses77 63 14 
Interest expense 36,836
 43,063
 108,590
 96,201
Interest expense50 42 8 
Collateral finance and securitization expense 7,692
 6,484
 21,235
 19,396
Collateral finance and securitization expense3 1 2 
Total benefits and expenses 65,065
 58,003
 177,664
 157,032
Total benefits and expenses124 90 34 
Income (loss) before income taxes $(15,438) $(7,302) $(51,997) $(11,842)
Loss before income taxesLoss before income taxes$(75)$(27)$(48)
Loss before income taxes increased by $8.1 million, or 111.4% and $40.2 million, or 339.1%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The increase in loss before income taxes for the third quarter and the first nine months is primarily due to decreased net investment related gains, decreased other revenues and higher other operating expenses partially offset by increased investment income.
Total revenues decreased by $1.1 million, or 2.1%, and $19.5 million, or 13.4%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. The decrease for the third quarter is primarily due to a $5.3 million decrease in investment related gains (losses), net largely caused by an increase in other-than-temporary impairments on fixed maturity securities and increased other impairment charges of $3.2 million. The third quarter decrease wasoperating expenses, partially offset by a $7.6 millionhigher net investment income.
Revenues
•The increase in net investment income related to an increase in unallocatedis a result of higher income on Corporate invested assets and higher investment yields, primarily due to higher yields and a higher level of variable investment income. asset base.
•The decrease for the first nine months is primarily due to a decrease of $43.9 million in investment related gains (losses), net mainly relatedis attributable to an$16 million increase in other-than-temporary impairmentsallowance for credit losses on fixed maturity securities and other impairment charges$29 million of $12.9 million and a reductionchange in net gains on the salefair value of investments of $25.2 million. The decrease forderivatives primarily related to derivatives used to economically hedge disintermediation risk in the first ninethree months was partially offset by an increase of $27.0 million in investment income related to an increase in unallocated invested assets and higher investment yields, primarily due to a higher level of variable investment income.2023.
Total benefits and expenses increased by $7.1 million, or 12.2%, and $20.6 million, or 13.1%, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. Expenses
•The increase of total benefits and expenses in the third quarter is primarily due to a $13.2 million increase in other operating expenses primarily related to compensation and consulting expenses, partially offset by a reduction in interest expense of $6.2 million. The increase in total benefits and expenses in the first nine months wasis primarily due to an increase in interest expense and other operating expenses offset by an increase in other insurance income, related to the offset to capital charges allocated to the operating segments. The increase in interest expense in the first nine months is primarily due to the issuance of $800.0 million in long-term debt in June 2016, which was partially offset by the repayment of $300.0 million of long-term debt in 2017, and a lower reduction in tax-related interest expense primarily resulting from settlement with the taxing authority in 2016.compensation expense.

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Liquidity and Capital Resources
Overview
The Company believes that cash flows from the source of funds available to it will provide sufficient cash flows for the next twelve months to satisfy the current liquidity requirements of RGA, Inc. and its subsidiariesthe Company under various scenarios that include the potential risk of early recapture of reinsurance treaties, market events and higher than expected claims. The Company performs periodic liquidity stress testing to ensure its asset portfolio includes sufficient high quality liquid assets that could be utilized to bolster its liquidity position under stress scenarios. These assets could be utilized as collateral for secured borrowing transactions with various third parties or by selling the securities in the open market if needed. The Company’s liquidity requirements have been and will continue to be funded through net cash flows from operations. However, in the event of significant unanticipated cash requirements beyond normal liquidity needs, the Company has multiple liquidity alternatives available based on market conditions and the amount and timing of the liquidity need. These alternatives include borrowings under committed credit facilities, secured borrowings, the ability to issue long-term debt, preferred securities or common equity and, if necessary, the sale of invested assets subject to market conditions.conditions, borrowings under committed credit facilities, secured borrowings, and if necessary, issuing long-term debt, preferred securities or common equity.
Current Market Environment
The current interest rate environment in select markets, primarily the U.S. and Canada, continues to negatively affect the Company’s earnings. However, the Company’s average investment yield, excluding spread related business, has begun to increase, which for the ninethree months ended September 30, 2017March 31, 2023, was 4.61%4.71%, 858 basis points abovebelow the same period in 2016.2022 primarily due to decreased variable investment income from real estate joint ventures, partially offset by increased yield from the increased interest rates. The Company’s insurance liabilities,average yield will vary from year to year depending on several variables, including the prevailing risk-fee interest rate and credit spread environment, prepayment fees and make-whole premiums, changes in particular its annuity products, are sensitivethe mix of the underlying investments and cash and cash equivalents balances. Variable investment income from joint ventures and limited partnerships will also vary from year to changing market factors.year and is highly dependent on the timing of dividends and distributions on certain investments. Gross unrealized gains on fixed maturity and equity securities available-for-saleavailable-for-
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sale increased from $2,246.5 million$0.6 billion at December 31, 20162022, to $2,651.5 million$0.8 billion at September 30, 2017. GrossMarch 31, 2023. Additionally, gross unrealized losses decreased from $374.9 million$7.3 billion at December 31, 20162022, to $163.2 million$6.1 billion at September 30, 2017.March 31, 2023.
The Company continues to be in a position to hold any investment security showing an unrealized loss until recovery, provided it remains comfortable with the credit of the issuer. As indicated above, gross unrealized gains on investment securities of $2,651.5 million remain well in excess of gross unrealized losses of $163.2 million as of September 30, 2017. The Company does not rely on short-term funding or commercial paper and to date it has experienced no liquidity pressure, nor does it anticipate such pressure in the foreseeable future.
The Company projects its reserves to be sufficient, and it would not expect to write down deferred acquisition costs or be required to take any actions to augment capital, even if interest rates remain at current levels for the next five years, assuming all other factors remain constant. While the Company has felt the pressures of sustained low interest rates and volatile equity markets and may continue to do so, its business and results of operations are not overly sensitive to these risks. Mortality and morbidity risks continue to be the most significant risk for the Company. Although management believes the Company’s current capital base is adequate to support its business at current operating levels, it continues to monitor new business opportunities and any associated new capital needs that could arise from the changing financial landscape.
The Holding Company
RGA is an insurance holding company whose primary uses of liquidity include, but are not limited to, the immediate capital needs of its operating companies, dividends paid to its shareholders, repurchase of common stock and interest payments on its indebtedness. The primary sources of RGA’s liquidity include proceeds from its capital-raising efforts, interest income on undeployed corporate investments, interest income received on surplus notes with RGA Reinsurance RCMCompany (“RGA Reinsurance”), RGA Life and Annuity Insurance Company (“RGA Life and Annuity”) and Rockwood ReReinsurance Company (“Rockwood Re”) and dividends from operating subsidiaries. As the Company continues its expansiongrowth efforts, RGA will continue to be dependent upon these sources of liquidity. The following tables provide comparative information for RGA (dollars in thousands)millions):
Three months ended March 31,
 20232022
Interest expense$49 $41 
Capital contributions to subsidiaries8 7 
Dividends to shareholders53 49 
Purchase of common stock50 25 
Interest and dividend income37 108 
  Three months ended September 30, Nine months ended September 30,
  2017 2016 2017 2016
Interest expense $44,697
 $50,826
 $132,018
 $119,700
Capital contributions to subsidiaries 10,000
 46,002
 28,500
 87,002
Dividends to shareholders 32,271
 26,288
 85,086
 74,034
Interest and dividend income 23,635
 227,819
 75,916
 283,712
Issuance of unaffiliated debt —
 —
 —
 799,984
  September 30, 2017 December 31, 2016
Cash and invested assets $862,480
 $1,443,755
 March 31, 2023December 31, 2022
Cash and invested assets$762 $903 
See Item 15, Schedule II -– “Condensed Financial Information of the Registrant” in the 20162022 Annual Report for additional financial information related to RGA.

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The undistributed earnings of substantially all of the Company’s foreign subsidiaries have been reinvested indefinitely in those non-U.S. operations, as described in Note 9 -14 – “Income Tax” ofin the Notes to Consolidated Financial Statements in the 20162022 Annual Report. Under current tax laws, shouldAs U.S. Tax Reform generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, the Company repatriate such earnings, it may be subjectdoes not expect to additional U.S.incur material income taxes and foreign withholding taxes.if these funds are repatriated.
RGA endeavors to maintain a capital structure that provides financial and operational flexibility to its subsidiaries, credit ratings that support its competitive position in the financial services marketplace, and shareholder returns. As part of the Company’s capital deployment strategy, isit has in recent years repurchased shares of RGA common stock and paid dividends to RGA shareholders, as authorized by the board of directors.
On February 25, 2022, RGA’s currentboard of directors authorized a share repurchase program whichfor up to $400 million of RGA’s outstanding common stock. The authorization was approved byeffective immediately and does not have an expiration date. In connection with this authorization, the board of directors terminated the stock repurchase authority granted in January 2017, authorizes2019. During the repurchase of up to $400.0 millionthree months ended March 31, 2023, RGA repurchased 371,343 shares of common stock. stock under this program for $50 million.
The pace of repurchase activity depends on various factors such as the level of available cash, an evaluation of the costs and benefits associated with alternative uses of excess capital, such as acquisitions and in force reinsurance transactions, and RGA’s stock price.

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Details underlying dividend and share repurchase program activity were as follows (in thousands,millions, except share data):
Three months ended March 31,
20232022
Dividends to shareholders$53 $49 
Purchase of common stock (1)
50 25 
Total amount paid to shareholders$103 $74 
Number of common shares purchased (1)
371,343 219,116 
Average price per share$134.64 $114.09 
 Nine months ended September 30,
 2017 2016
Dividends to shareholders$85,086
 $74,034
Repurchases of treasury stock26,897
 116,522
Total amount paid to shareholders$111,983
 $190,556
    
Number of shares repurchased208,680
 1,356,892
Average price per share$128.89
 $85.87
(1)Excludes shares utilized to execute and settle certain stock incentive awards.
In October 2017,April 2023, RGA’s board of directors declared a quarterly dividend of $0.50$0.80 per share. All future payments of dividends are at the discretion of RGA’s board of directors and will depend on the Company’s earnings, capital requirements, insurance regulatory conditions, operating conditions, and other such factors as the board of directors may deem relevant. The amount of dividends that RGA can pay will depend in part on the operations of its reinsurance subsidiaries. See Note 3 -4 – “Equity” in the Notes to Condensed Consolidated Financial Statements for information on the Company’s share repurchase program.
Debt
Certain of the Company’s debt agreements contain financial covenant restrictions related to, among others, liens, the issuance and disposition of stock of restricted subsidiaries, minimum requirements of consolidated net worth, maximum ratios of debt to capitalization and change of control provisions. The Company renewed its syndicated credit facility in the first quarter of 2023. Under the terms of the new facility the Company is required to maintain a minimum consolidated net worth, as defined in the debt agreements, of $3.5$6.3 billion. Subsequent to the adoption of ASU 2018-12, the minimum consolidated net worth, as defined in the debt agreements, was reduced to $5.8 billion calculated as ofeffective with the last day of each fiscal quarter.June 30, 2023, covenant calculations. Also, consolidated indebtedness, calculated as of the last day of each fiscal quarter, cannot exceed 35% of the sum of the Company’s consolidated indebtedness plus adjusted consolidatedRGA Inc’s stockholders’ equity. A material ongoing covenant default could require immediate payment of the amount due, including principal, under the various agreements. Additionally, the Company’s debt agreements contain cross-defaultcross-acceleration covenants, which would make outstanding borrowings immediately payable in the event of a material uncured covenant default under any of the agreements, including, but not limited to, non-payment of indebtedness when due for an amount in excess of $100.0 million,the amounts set forth in those agreements, bankruptcy proceedings, or any other event whichthat results in the acceleration of the maturity of indebtedness.
As of September 30, 2017March 31, 2023 and December 31, 2016,2022, the Company had $2.8$4.5 billion and $3.1$4.0 billion, respectively, in outstanding borrowings under its debt agreements and was in compliance with all covenants under those agreements. As of March 31, 2023 and December 31, 2022, the average interest rate on long-term debt outstanding was 4.98% and 4.71%, respectively. The ability of the Company to make debt principal and interest payments depends on the earnings and surplus of subsidiaries, investment earnings on undeployed capital proceeds, available liquidity at the holding company, and the Company’s ability to raise additional funds.
The Company enters into derivative agreements with counterparties that reference either the Company’s debt rating or its financial strength rating. If either rating is downgraded in the future, it could trigger certain terms in the Company’s derivative agreements, which could negatively affect overall liquidity. For the majority of the Company’s derivative agreements, there is a termination event at the Company’s option, should the long-term senior debt ratings drop below either BBB+ (S&P) or Baa1 (Moody’s) or the financial strength ratings drop below either A- (S&P) or A3 (Moody’s).
The Company may borrow up to $850.0$850 million in cash and obtain letters of credit in multiple currencies on aits revolving credit facility that expiresmatures in September 2019.March 2028. As of September 30, 2017,March 31, 2023, the Company had no cash borrowings outstanding and $97.2$1 million in issued, but undrawn, letters of credit under this facility. As
On March 23, 2023, Chesterfield Reinsurance Company, a subsidiary of September 30, 2017 and December 31, 2016, the average interest rate on short-term and long-term debt outstanding was 5.15% and 5.16%, respectively.

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TableRGA, issued 7.125% Surplus Notes due 2043, with a face amount of Contents


$500 million. Capitalized issue costs were approximately $6 million.
Based on the historic cash flows and the current financial results of the Company, management believes RGA’s cash flows will be sufficient to enable RGA to meet its obligations for at least the next 12 months.
Credit and Committed Facilities
At September 30, 2017,On March 13, 2023, The Company entered into a new syndicated revolving credit facility with a five year term and an overall capacity of $850 million. The new facility replaced the Company maintained an $850.0existing $850 million syndicated revolving credit facility, and certain committed letter of credit facilities aggregating $1,349.1 million.which was scheduled to mature in August 2023. See Note 13 -– “Debt” in the Notes to Consolidated Financial Statements in the 20162022 Annual Report for further information about these facilities.
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The Company has obtained bank letters of credit in favor of various affiliated and unaffiliated insurance companies from which the Company assumes business. These letters of credit represent guarantees of performance under the reinsurance agreements and allow ceding companies to take statutory reserve credits. Certain of these letters of credit contain financial covenant restrictions similar to those described in the “Debt” discussion above. At September 30, 2017,March 31, 2023, there were approximately $133.4$128 million of outstanding bank letters of credit in favor of third parties. Additionally, in accordance with applicable regulations, the Company utilizes letters of credit to secure statutory reserve credits when it retrocedes business to its affiliated subsidiaries. The Company cedes business to its affiliates to help reduce the amount of regulatory capital required in certain jurisdictions, such as the U.S. and the UK. The Company believes the capital required to support the business in the affiliates reflects more realistic expectations than the original jurisdiction of the business, where capital requirements are often considered to be quite conservative. As of September 30, 2017, $1.5 billionMarch 31, 2023, $740 million in letters of credit from various banks were outstanding, but undrawn, backing reinsurance between the various subsidiaries of the Company.
Cash Flows
The Company’s principal cash inflows from its reinsurance operations include premiums and deposit funds received from ceding companies. The primary liquidity concerns with respect to these cash flows are early recapture of the reinsurance contract by the ceding company and lapses of annuity products reinsured by the Company. The Company’s principal cash inflows from its invested assets result from investment income and the maturity and sales of invested assets. The primary liquidity concernconcerns with respect to these cash inflows relates to the risk of default by debtors and interest rate volatility. The Company manages these risks very closely. See “Investments” and “Interest Rate Risk” below.
Additional sources of liquidity to meet unexpected cash outflows in excess of operating cash inflows and current cash and equivalents on hand include selling short-term investments or fixed maturity securities andalso includes drawing funds under a revolving credit facility, under which the Company had availability of $752.8$849 million as of September 30, 2017.March 31, 2023. The Company also has $1.1 billion$631 million of funds available through collateralized borrowings from the FHLB as of September 30, 2017.March 31, 2023. As of September 30, 2017,March 31, 2023, the Company could have borrowed these additional amounts without violating any of its existing debt covenants.
The Company’s principal cash outflows relate to the payment of claims liabilities, interest credited, operating expenses, income taxes, dividends to shareholders, purchases of treasury stock, and principal and interest under debt and other financing obligations. The Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under excess coverage and coinsurance contracts (See Note 2 “Summary of Significant– “Significant Accounting Policies”Policies and Pronouncements” in the Notes to Consolidated Financial Statements in the 20162022 Annual Report). The Company performs annual financial reviews of its retrocessionaires to evaluate financial stability and performance. The Company has never experienced a material default in connection with retrocession arrangements, nor has it experienced any difficulty in collecting claims recoverable from retrocessionaires; however, no assurance can be given as to the future performance of such retrocessionaires nor to the recoverability of future claims. The Company’s management believes its cash and cash equivalents along with its current sources of liquidity are adequate to meet its cash requirements for the next 12 months.months, despite the uncertainty associated with the pandemic.


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Summary of Primary Sources and Uses of Liquidity and Capital
The Company’s primary sources and uses of liquidity and capital are summarized as follows:follows (dollars in millions):
For the three months ended March 31,
20232022
Sources:
Net cash provided by operating activities$1,574 $163 
Proceeds from long-term debt issuance500 — 
Change in cash collateral for derivative positions and other arrangements17 — 
Change in deposit asset on reinsurance11 — 
Net deposits to investment-type policies and contracts96 1,864 
Net change in noncontrolling interest— 90 
Effect of exchange rate changes on cash1 — 
Total sources2,199 2,117 
Uses:
Net cash used in investing activities1,705 2,235 
Dividends to stockholders53 49 
Repayment of collateral finance and securitization notes— 14 
Debt issuance costs6 — 
Principal payments of long-term debt1 1 
Purchases of treasury stock67 27 
Change in cash collateral for derivative positions and other arrangements— 6 
Change in deposit asset on reinsurance— 3 
Effect of exchange rate changes on cash— 21 
Total uses1,832 2,356 
Net change in cash and cash equivalents$367 $(239)
  For the nine months ended September 30,
  2017 2016
  (Dollars in thousands)
Sources:   
 Net cash provided by operating activities$1,104,499
 $1,019,872
 Proceeds from long-term debt issuance—
 799,984
 Exercise of stock options, net4,450
 11,752
 Change in cash collateral for derivative positions and other arrangements—
 24,749
 Cash provided by changes in universal life and other   
 investment type policies and contracts438,774
 487,808
 Effect of exchange rate changes on cash43,699
 25,436
 Total sources1,591,422
 2,369,601
     
Uses:   
 Net cash used in investing activities1,056,334
 2,247,406
 Dividends to stockholders85,086
 74,034
 Repayment of collateral finance and securitization notes56,637
 60,971
 Debt issuance costs—
 9,026
 Principal payments of long-term debt301,927
 1,850
 Purchases of treasury stock41,360
 121,896
 Change in cash collateral for derivatives and other arrangements46,206
 —
 Total uses1,587,550
 2,515,183
Net change in cash and cash equivalents$3,872
 $(145,582)
Cash Flows from Operations - – The principal cash inflows from the Company’s reinsurance activities come from premiums, investment and fee income, annuity considerations and deposit funds. The principal cash outflows relate to the liabilities associated with various life and health insurance, annuity and disability products, operating expenses, income tax payments and interest on outstanding debt obligations. The primary liquidity concern with respect to these cash flows is the risk of shortfalls in premiums and investment income, particularly in periods with abnormally high claims levels.
Cash Flows from Investments - – The principal cash inflows from the Company’s investment activities come from repayments of principal on invested assets, proceeds from maturities of invested assets, sales of invested assets and settlements of freestanding derivatives. The principal cash outflows relate to purchases of investments, issuances of policy loans and settlements of freestanding derivatives. The Company typically has a net cash outflow from investing activities because cash inflows from insurance operations are reinvested in accordance with its asset/liability management discipline to fund insurance liabilities. The Company closely monitors and manages these risks through its credit risk management process. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption.disruption, which could make it difficult for the Company to sell investments.
Financing Cash Flows - – The principal cash inflows from the Company’s financing activities come from issuances of RGA debt and equity securities, and deposit funds associated with universal life and other investment type policies and contracts. The principal cash outflows come from repayments of debt, payments of dividends to stockholders, purchases of treasury stock, and withdrawals associated with universal life and other investment type policies and contracts. A primary liquidity concern with respect to these cash flows is the risk of early contractholder and policyholder withdrawal.
Contractual Obligations
There were no material changes in the Company’s contractual obligations from those previously reported.reported in the 2022 Annual Report.
Asset / Liability Management
The Company actively manages its cash and invested assets using an approach that is intended to balance quality, diversification, asset/liability matching, liquidity and investment return. The goals of the investment process are to optimize after-tax, risk-adjusted investment income and after-tax, risk-adjusted total return while managing the assets and liabilities on a cash flow and duration basis.
The Company has established target asset portfolios for each major insurance product,its operating segments, which represent the investment strategies intended to profitably fund its liabilities within acceptable risk parameters. These strategies include objectives and limits for effective duration, yield curve sensitivity and convexity, liquidity, asset sector concentration and credit quality.

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The Company’s asset-intensive products are primarily supported by investments in fixed maturity securities reflected on the Company’s balance sheet and under funds withheld arrangements with the ceding company. Investment guidelines are established to structure the investment portfolio based upon the type, duration and behavior of products in the liability portfolio so as to achieve targeted levels of profitability. The Company manages the asset-intensive business to provide a targeted spread between the interest rate earned on investments and the interest rate credited to the underlying interest-sensitive contract liabilities. The Company periodically reviews models projecting different interest rate scenarios and their effect on profitability. Certain of these asset-intensive agreements, primarily in the U.S. and Latin America Financial Solutions operating segment, are generally funded by fixed maturity securities that are withheld by the ceding company.
The Company’s liquidity position (cash and cash equivalents and short-termshort term investments) was $1,285.2 million$3.5 billion and $1,277.4 million$3.1 billion at September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively. Cash and cash equivalents includes cash collateral received from derivative counterparties of $174.1 million and $254.5 million as of September 30, 2017 and December 31, 2016, respectively. This unrestricted cash collateral is included in cash and cash equivalents and the obligation to return it is included in other liabilities in the Company’s condensed consolidated balance sheets. Liquidity needs are determined from valuation analyses conducted by operational units and are driven by product portfolios. Periodic evaluations of demand liabilities and short-term liquid assets are designed to adjust specific portfolios, as well as their durations and maturities, in response to anticipated liquidity needs.
See “Securities Borrowing, Lending and Other”Repurchase/Reverse Repurchase Agreements” in Note 4 -11 – “Investments” in the Notes to Condensed Consolidated Financial Statements for information related to the Company’s securities borrowing, lending and repurchase/reverse repurchase programs. In addition to its security agreements with third parties, certain RGA’s subsidiaries have entered into intercompany securities lending agreements to more efficiently source securities for lending to third parties and to provide for more efficient regulatory capital management.
The Company is a member of the FHLB and holds $67.9$64 million of FHLB common stock, which is included in other invested assets on the Company’s condensed consolidated balance sheets. Membership provides the Company access to borrowing arrangements (“advances”) and funding agreements, discussed below, with the FHLB. The Company did not have any advances from the FHLB at September 30, 2017 and December 31, 2016. The Company’s average outstanding balance of advances was $8.2 million and $17.0 million during the third quarter and the first nine months of 2017, respectively, and was $0.5 million and $29.5 million during the third quarter and the first nine months of 2016, respectively. Interest on advances is reflected in interest expense on the Company’s condensed consolidated statements of income.
In addition, the Company has also entered into funding agreements with the FHLB under guaranteed investment contracts whereby the Company has issued the funding agreements in exchange for cash and for which the FHLB has been granted a blanket lien on the Company’s commercial and residential mortgage-backed securities and commercial mortgage loans used to collateralize the Company’s obligations under the funding agreements. The Company maintains control over these pledged assets, and may use, commingle, encumber or dispose of any portion of the collateral as long as there is no event of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. The funding agreements and the related security agreements represented by this blanket lien provide that upon any event of default by the Company, the FHLB’s recovery is limited to the amount of the Company’s liability under the outstanding funding agreements. The amount of the Company’s liability for the funding agreements with the FHLB under guaranteed investment contracts was $1.4 billion and $1.1$1.3 billion at September 30, 2017March 31, 2023 and December 31, 2016, respectively,2022, which is included in interest sensitiveinterest-sensitive contract liabilities on the Company’s condensed consolidated balance sheets. The advances on these agreements are collateralized primarily by commercial and residential mortgage-backed securities, commercial mortgage loans, and U.S. Treasury and government agency securities. The amount of collateral exceeds the liability and is dependent on the type of assets collateralizing the guaranteed investment contracts.
Investments
Management of Investments
The Company’s investment and derivative strategies involve matching the characteristics of its reinsurance products and other obligations and to seekobligations. The Company seeks to closely approximate the interest rate sensitivity of the assets with estimated interest rate sensitivity of the reinsurance liabilities. The Company achieves its income objectives through strategic and tactical asset allocations, applying security and derivative strategies within an asset/liability management and disciplined risk management framework.frameworks. Derivative strategies are employed within the Company’s risk management framework to help manage duration, currency, and other risks in assets and/or liabilities and to replicate the credit characteristics of certain assets. For a discussion of the Company’s risk management process see “Market and Credit Risk” in the “Enterprise Risk Management” section below.

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The Company’s portfolio management groups work with the Enterprise Risk Management function to develop the investment policies for the assets of the Company’s domestic and international investment portfolios. All investments held by the Company, directly or in a funds withheld at interest reinsurance arrangement, are monitored for conformance with the Company’s stated investment policy limits as well as any limits prescribed by the applicable jurisdiction’s insurance laws and regulations. See Note 411 – “Investments” in the Notes to Condensed Consolidated Financial Statements for additional information regarding the Company’s investments.
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Portfolio Composition
The Company had total cash and invested assets of $50.9$77.3 billion and $46.0$73.4 billion at September 30, 2017as of March 31, 2023 and December 31, 2016,2022, respectively, as illustrated below (dollars in thousands)millions):
March 31, 2023% of TotalDecember 31, 2022% of Total
Fixed maturity securities available-for-sale$56,085 72.6 %$52,901 72.0 %
Equity securities138 0.2 134 0.2 
Mortgage loans6,833 8.8 6,590 9.0 
Policy loans1,221 1.6 1,231 1.7 
Funds withheld at interest5,976 7.7 6,003 8.2 
Limited partnerships and real estate joint ventures2,405 3.1 2,327 3.2 
Short-term investments246 0.3 154 0.2 
Other invested assets1,111 1.4 1,140 1.5 
Cash and cash equivalents3,294 4.3 2,927 4.0 
Total cash and invested assets$77,309 100.0 %$73,407 100.0 %
  September 30, 2017 % of Total December 31, 2016 % of Total
Fixed maturity securities, available-for-sale $36,381,742
 71.5% $32,093,625
 69.6%
Mortgage loans on real estate 4,322,329
 8.5
 3,775,522
 8.2
Policy loans 1,340,146
 2.6
 1,427,602
 3.1
Funds withheld at interest 6,020,336
 11.8
 5,875,919
 12.8
Short-term investments 80,582
 0.2
 76,710
 0.2
Other invested assets 1,532,523
 3.0
 1,591,940
 3.5
Cash and cash equivalents 1,204,590
 2.4
 1,200,718
 2.6
Total cash and invested assets $50,882,248
 100.0% $46,042,036
 100.0%
Investment Yield
The following table presents consolidated average invested assets at amortized cost, net investment income, investment yield, variable investment income (“VII”), and investment yield excluding VII, which can vary significantly from period to period (dollars in millions). The table excludes spread related business. Spread related business is primarily associated with contracts on which the Company earns an interest rate spread between assets and liabilities. To varying degrees, fluctuations in the yield on other spread related business is generally subject to corresponding adjustments to the interest credited on the liabilities (dollars in thousands).liabilities.
Three months ended September 30, Nine months ended September 30, Three months ended March 31,
2017 2016 
  Increase/  
  (Decrease)  
 2017 2016 
  Increase/  
  (Decrease)  
 20232022  Increase/  
  (Decrease)
Average invested assets at amortized cost$25,887,338
 $24,128,430
 7.3% $25,136,119
 $22,982,245
 9.4%Average invested assets at amortized cost$35,863 $35,271 $592 
Net investment income305,632
 263,111
 16.2% 863,724
 777,157
 11.1%Net investment income$415 $457 $(42)
Investment yield (ratio of net investment income to average invested assets)4.81% 4.43% 38 bps
 4.61% 4.53% 8 bps
Annualized investment yield (ratio of net investment income to average invested assets at amortized cost)Annualized investment yield (ratio of net investment income to average invested assets at amortized cost)4.71 %5.29 %(58) bps
VII (included in net investment income)VII (included in net investment income)$39 $141 $(102)
Annualized investment yield excluding VII (ratio of net investment income, excluding VII, to average invested assets, excluding assets with only VII, at amortized cost)Annualized investment yield excluding VII (ratio of net investment income, excluding VII, to average invested assets, excluding assets with only VII, at amortized cost)4.45 %3.80 %65 bps
Investment yield increaseddecreased for the three and nine months ended September 30, 2017March 31, 2023, in comparison to the same period in the prior year, primarily due to increaseddecreased variable income from bond make-whole premiums and limited partnership andreal estate joint venture investments, both of which are includedventures, partially offset by increased yield from the recent increase in other invested assets on the condensed consolidated balance sheets.interest rates.
Fixed Maturity and Equity Securities Available-for-Sale
See “Fixed Maturity and Equity Securities Available-for-Sale” in Note 411 – “Investments” in the Notes to Condensed Consolidated Financial Statements for tables that provide the amortized cost, allowance for credit losses, unrealized gains and losses and estimated fair value of fixed maturity and equitythese securities and the other-than-temporary impairments in AOCI by sectortype as of September 30, 2017March 31, 2023 and December 31, 2016.2022.
The Company’s fixed maturity securities are invested primarily in corporate bonds, mortgage- and asset-backed securities, and U.S. and foreign government securities. As of September 30, 2017March 31, 2023 and December 31, 2016,2022, approximately 95.7%94.5% and 95.0%94.3%, respectively, of the Company’s consolidated investment portfolio of fixed maturity securities were investment grade.
Important factors in the selection of investments include diversification, quality, yield, call protection and total rate of return potential. The relative importance of these factors is determined by market conditions and the underlying reinsurance liability and existing portfolio characteristics. The Company owns floating rate securities that represent approximately 7.2% and 7.4% of the total fixed maturity securities as of March 31, 2023 and December 31, 2022, respectively. These investments have a higher degree of income variability than the other fixed income holdings in the portfolio due to fluctuations in interest payments. The Company holds floating rate investments to match specific floating rate liabilities primarily reflected in the condensed consolidated balance sheets as collateral finance notes, as well as to enhance asset management strategies.
The largest asset class in which fixed maturity securities were invested was corporate securities, which represented approximately 61.9%63.3% and 61.1%64.2% of total fixed maturity securities as of September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively. See “Corporate Fixed Maturity Securities” in Note 411 – “Investments” in the Notes to Condensed Consolidated Financial Statements for tables showing the major industrysector types, which comprise the corporate fixed maturity holdings at September 30, 2017as of March 31, 2023 and December 31, 2016.

2022.
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As of September 30, 2017,March 31, 2023 and December 31, 2022, the Company’s investments in Canadian and Canadian provincial government securities represented 11.0%6.7% and 6.9%, respectively, of the fair value of total fixed maturity securities compared to 11.4% of the fair value of total fixed maturity securities at December 31, 2016.securities. These assets are primarily high quality, long duration provincial strips,strip bonds, the valuation of which is closely linked to the interest rate curve. These assets are longer in duration and held primarily for asset/liability management to meet Canadian regulatory requirements. See “Fixed Maturity and Equity Securities Available-for-Sale” in Note 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements for tables showing the various sectors as
As of September 30, 2017March 31, 2023 and December 31, 2016.2022, the Company’s investments in Japanese government securities represented 6.1% and 4.8%, respectively, of the fair value of total fixed maturity securities. These assets are primarily long duration government bonds matching the liability profile of the Company’s Japanese business.
The Company references rating agency designations in some of its investments disclosures. These designations are based on the ratings from nationally recognized statistical rating organizations, primarily those assigned by S&P. In instances where aMoody’s, S&P rating is not available the Company references the rating provided by Moody’s and in the absence of both the Company will assign equivalent ratings based on information from the NAIC. The NAIC assigns securities quality ratings and uniform valuations called “NAIC Designations” which are used by insurers when preparing their U.S. statutory filings.Fitch. Structured securities (mortgage-backed and asset-backed securities) held by the Company’s insurance subsidiaries that maintain the NAIC statutory basis of accounting utilize the NAIC rating methodology. The NAIC assigns designations to publicly traded as well as privately placed securities. The designations assigned by the NAIC range from class 1 to class 6, with designations in classes 1 and 2 generally considered investment grade (BBB or higher rating agency designation). NAIC designations in classes 3 through 6 are generally considered below investment grade (BB or lower rating agency designation). If no rating is available from a rating agency or the NAIC, then an internally developed rating is used.
The quality of the Company’s available-for-sale fixed maturity securities portfolio, as measured at fair value and by the percentage of fixed maturity securities invested in various ratings categories, relative to the entire available-for-sale fixed maturity securitysecurities portfolio, at September 30, 2017as of March 31, 2023 and December 31, 20162022 was as follows (dollars in thousands)millions):
  March 31, 2023December 31, 2022
NAIC
  Designation  		Rating Agency
Designation		Amortized Cost Estimated
Fair Value		% of Total     Amortized Cost Estimated
Fair Value		% of Total     
1AAA/AA/A$38,291 $35,308 63.0 %$36,217 $32,295 61.1 %
2BBB19,832 17,658 31.5 20,188 17,580 33.2 
3BB2,811 2,698 4.8 2,734 2,607 5.0 
4B402 340 0.6 397 331 0.6 
5CCC and lower100 69 0.1 103 71 0.1 
6In or near default58 12 — 24 17 — 
Total$61,494 $56,085 100.0 %$59,663 $52,901 100.0 %

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    September 30, 2017 December 31, 2016
NAIC
  Designation  
 
Rating Agency
Designation
 Amortized Cost  
Estimated
Fair Value
 % of Total      Amortized Cost  
Estimated
     Fair  Value     
 % of Total     
1 AAA/AA/A $22,095,642
 $23,989,873
 66.0% $19,813,653
 $21,369,081
 66.5%
2 BBB 10,233,331
 10,792,989
 29.7
 8,834,469
 9,162,483
 28.5
3 BB 1,107,086
 1,143,449
 3.1
 944,839
 955,735
 3.0
4 B 360,643
 374,478
 1.0
 414,087
 411,138
 1.3
5 CCC and lower 86,984
 74,093
 0.2
 187,744
 177,481
 0.6
6 In or near default 6,282
 6,860
 —
 16,995
 17,707
 0.1
  Total $33,889,968
 $36,381,742
 100.0% $30,211,787
 $32,093,625
 100.0%

The Company’s fixed maturity portfolio includes structured securities. The following table shows the types of structured securities the Company held at September 30, 2017as of March 31, 2023 and December 31, 20162022 (dollars in thousands)millions):
  September 30, 2017 December 31, 2016
  Amortized Cost 
Estimated
Fair Value
 Amortized Cost 
Estimated
Fair Value
Residential mortgage-backed securities:        
Agency $891,508
 $917,589
 $579,686
 $602,549
Non-agency 753,871
 761,716
 678,353
 676,027
Total residential mortgage-backed securities 1,645,379
 1,679,305
 1,258,039
 1,278,576
Commercial mortgage-backed securities 1,293,296
 1,313,322
 1,342,440
 1,363,654
Asset-backed securities 1,680,918
 1,694,568
 1,443,822
 1,429,344
Total $4,619,593
 $4,687,195
 $4,044,301
 $4,071,574
 March 31, 2023December 31, 2022
Amortized CostEstimated
Fair Value		% of TotalAmortized CostEstimated
Fair Value		% of Total
ABS:
Collateralized loan obligations (“CLOs”)$1,880 $1,775 26.1 %$1,825 $1,702 26.4 %
ABS, excluding CLOs2,590 2,328 34.2 2,499 2,176 33.8 
Total ABS4,470 4,103 60.3 4,324 3,878 60.2 
CMBS1,882 1,670 24.6 1,835 1,623 25.2 
RMBS:
Agency473 432 6.4 476 427 6.6 
Non-agency647 592 8.7 578 514 8.0 
Total RMBS1,120 1,024 15.1 1,054 941 14.6 
Total$7,472 $6,797 100.0 %$7,213 $6,442 100.0 %
The residential mortgage-backedCompany’s ABS portfolio primarily consists of CLOs, aircraft, and single-family rentals. The principal risks in holding ABS are structural, credit, capital market and interest rate risks. Structural risks include the securities’ cash flow priority in the capital structure and the inherent prepayment sensitivity of the underlying collateral. Credit risks include the adequacy and ability to realize proceeds from the collateral. Credit risks are mitigated by credit enhancements that include excess spread, over-collateralization and subordination. Capital market risks include general level of interest rates and the liquidity for these securities in the marketplace.
The Company’s CMBS portfolio primarily consists of large pool securitizations that are diverse by property type, borrower and geographic dispersion. The principal risks in holding CMBS are structural and credit risks. Structural risks include the securities’ cash flow priority in the capital structure and the inherent prepayment sensitivity of the underlying collateral. Credit risks include the adequacy and ability to realize proceeds from the collateral. The Company focuses on investment grade rated tranches that provide additional credit support beyond the equity protection in the underlying loans. These assets are viewed as an attractive alternative to other fixed income asset classes.
The Company’s RMBS portfolio includes agency-issued pass-through securities and collateralized mortgage obligations. A majority of the agency-issuedAgency-issued pass-through securities are guaranteed or otherwise supported by the Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, or the Government National Mortgage Association. The principal risks inherent in holding mortgage-backed securitiesRMBS are prepayment and extension risks, which will affect the timing of when cash will be received and are dependent on the level of mortgage interest rates. Prepayment risk is the unexpected increase in principal payments from the expected, primarily as a result of owner refinancing. Extension risk relates to the unexpected slowdown in principal payments from the expected. In addition, non-agency mortgage-backed securitiesRMBS face credit risk should the borrower be unable to pay the contractual interest or principal on their obligation. The Company monitors its mortgage-backed securities to mitigate exposure to the cash flow uncertainties associated with these risks.
Asset-backed securities include credit card and automobile receivables, student loans, home equity loans and collateralized debt obligations (primarily collateralized loan obligations). The Company owns floating rate securities that represent approximately

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14.0% and 12.9% of the total fixed maturity securities at September 30, 2017March 31, 2023 and December 31, 2016, respectively. These investments have a higher degree2022, the Company had $6,105 million and $7,319 million, respectively, of income variability than the othergross unrealized losses related to its fixed income holdings in the portfolio due to the floating rate nature of the interest payments. The Company holds these investments to match specific floating rate liabilities primarily reflected in the condensed consolidated balance sheets as collateral finance notes, as well as to enhance asset management strategies. In addition to the risks associated with floating rate securities, principal risks in holding asset-backed securities are structural, credit and capital market risks. Structural risks include the securities’ cash flow priority in the capital structure and the inherent prepayment sensitivity of the underlying collateral. Credit risks include the adequacy and ability to realize proceeds from the collateral. Credit risks are mitigated by credit enhancements which include excess spread, over-collateralization and subordination. Capital market risks include general level of interest rates and the liquidity for these securities in the marketplace.
maturity securities. The Company monitors its fixed maturity and equity securities to determine impairments in value and evaluates factors such as financial condition of the issuer, payment performance, the length of time and the extent to which the market value has been below amortized cost, compliance with covenants, general market and industry sector conditions, current intent and ability to hold securities, and various other subjective factors. Based on management’s judgment, an allowance for credit losses in the amount that fair value is less than the amortized cost is recorded for securities determined to have an other-than-temporary impairmentexpected credit losses.
Mortgage Loans
The Company’s mortgage loan portfolio consists of U.S., Canada and UK based investments primarily in value are written downcommercial offices, light industrial properties and retail locations. The mortgage loan portfolio is diversified by geographic region and property type as discussed further under “Mortgage Loans” in Note 11 – “Investments” in the Notes to fair value. Condensed Consolidated Financial Statements. Most of the mortgage loans in the Company’s portfolio range in size up to $30 million, with the average mortgage loan investment as of March 31, 2023, totaling approximately $10 million.

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As of March 31, 2023 and December 31, 2022, the Company’s recorded investment in mortgage loans, gross of unamortized deferred loan origination fees and expenses and allowance for credit losses, were distributed geographically as follows (dollars in millions):
 March 31, 2023December 31, 2022
Recorded
Investment		% of TotalRecorded
Investment		% of Total
U.S. Region:
West$2,533 36.7 %$2,420 36.4 %
South2,316 33.6 2,215 33.3 
Midwest1,177 17.1 1,147 17.2 
Northeast470 6.8 474 7.1 
Subtotal - U.S.6,496 94.2 6,256 94.0 
Canada238 3.5 239 3.6 
United Kingdom161 2.3 158 2.4 
Total$6,895 100.0 %$6,653 100.0 %
See “Investments – Other-than-Temporary Impairment”“Allowance for Credit Losses and Impairments” in Note 2 – “Summary“Significant Accounting Policies and Pronouncements” of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in the 2016Company’s 2022 Annual Report for additional information. The table below summarizes other-than-temporary impairments and changes in the mortgage loan provision for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands).
 Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Impairment losses on available-for-sale securities:       
Fixed maturity securities$390
 $—
 $20,980
 $34,663
Equity securities889
 —
 889
 —
Other impairment losses1,469
 15
 7,776
 2,178
Change in mortgage loan provision977
 247
 1,444
 (67)
Total$3,725
 $262
 $31,089
 $36,774
The fixed maturity impairments for the three and nine months ended September 30, 2017 and 2016 were largely related to high-yield corporate securities. The equity impairments for the three and nine months ended September 30, 2017 were related to an equity position received as part of a debt restructuring. In addition, other impairment losses for the three and nine months ended September 30, 2017 and 2016 are primarily due to impairments on limited partnerships.
At September 30, 2017 and December 31, 2016, the Company had $163.2 million and $374.9 million, respectively, of gross unrealized losses related to its fixed maturity and equity securities. The distribution of the gross unrealized losses related to these securities is shown below.
  September 30, 2017 December 31, 2016
Sector:    
Corporate securities 59.6% 61.6%
Canadian and Canada provincial governments 1.5
 0.9
Residential mortgage-backed securities 5.1
 3.6
Asset-backed securities 3.1
 6.4
Commercial mortgage-backed securities 3.3
 2.1
State and political subdivisions 3.7
 3.3
U.S. government and agencies 19.0
 16.8
Other foreign government, supranational and foreign government-sponsored enterprises 4.7
 5.3
Total 100.0% 100.0%
Industry:    
Finance 15.3% 20.1%
Asset-backed 3.1
 6.4
Industrial 40.1
 32.9
Mortgage-backed 8.4
 5.7
Government 28.9
 26.3
Utility 4.2
 8.6
Total 100.0% 100.0%

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See “Unrealized Losses for Fixed Maturity and Equity Securities Available-for-Sale”“Mortgage Loans” in Note 411 – “Investments” in the Notes to Condensed Consolidated Financial Statements for a table that presentsinformation regarding the total gross unrealizedCompany’s policy for allowance for credit losses on mortgage loans.
Allowance for fixed maturityCredit Losses and equity securities at September 30, 2017 and December 31, 2016, respectively, where the estimated fair value had declined and remained below amortized cost by less than 20% or more than 20%.Impairments
The Company’s determination of whether a decline in value is other-than-temporary includes analysis ofnecessitates the underlying credit and the extent and duration of a decline in value. The Company’s credit analysisrecording of an investmentallowance for credit losses includes determiningan analysis of whether the issuer is current on its contractual payments, evaluating whether it is probable that the Company will be able to collect all amounts due according to the contractual terms of the security and analyzing the overall ability of the Company to recover the amortized cost of the investment. InSee “Allowance for Credit Losses and Impairments” in Note 2 – “Significant Accounting Policies and Pronouncements” of the Company’s impairment review process,2022 Annual Report for additional information. The table below summarizes investment related gains (losses), net related to allowances for credit losses and impairments for the durationthree months ended March 31, 2023 and severity2022 (dollars in millions).
Three months ended March 31,
20232022
Change in allowance for credit losses on fixed maturity securities$(42)$(11)
Impairments on fixed maturity securities(1)(1)
Change in mortgage loan allowance for credit losses3 (2)
Total$(40)$(14)
The change in allowance for credit losses on fixed maturity securities for the three months ended March 31, 2023, was primarily related to securities for banks that collapsed in March 2023. The change in allowance for credit losses on fixed maturity securities for the three months ended March 31, 2022, was primarily related to high-yield securities. The decrease in mortgage loan allowance for credit losses for the three months ended March 31, 2023, reflects the receipt of an unrealized loss position for equity securities are given greater weight and consideration given the lacka deed in lieu of contractual cash flows and the deferability features of these securities.foreclosure on property associated with one previously impaired mortgage loan.
See “Unrealized Losses for Fixed Maturity and Equity Securities Available-for-Sale” in Note 411 – “Investments” in the Notes to Condensed Consolidated Financial Statements for tables that present the estimated fair valuesvalue and gross unrealized losses including other-than-temporary impairment losses reported in AOCI, for fixed maturity and equity securities that have estimated fair values below amortized cost by class and grade, security, as well as the length of time the related marketestimated fair value has remained below amortized cost as of September 30, 2017March 31, 2023 and December 31, 2016.2022.
As of September 30, 2017March 31, 2023 and December 31, 2016,2022, the Company classified approximately 5.9%10.9% and 6.9%10.8%, respectively, of its fixed maturity securities in the Level 3 category (refer to Note 613 – “Fair Value of Assets and Liabilities” in the Notes to Condensed Consolidated Financial Statements for additional information). These securities primarily consist of private placement corporate securities, bank loans, Canadian provincial strips, below investment grade mortgage-backed securities and subprime asset-backed securities with inactive trading markets.securities.
See “Securities Borrowing, Lending and Other”Repurchase/Reverse Repurchase Agreements” in Note 4 -11 – “Investments” in the Notes to Condensed Consolidated Financial Statements for information related to the Company’s securities borrowing, repurchaselending and repurchase/reverse repurchase programs.agreements.
Mortgage Loans on Real Estate
Mortgage loans represented approximately 8.5% and 8.2% of the Company’s cash and invested assets as of September 30, 2017 and December 31, 2016, respectively. The Company’s mortgage loan portfolio consists of U.S. and Canada based investments primarily in commercial offices, light industrial properties and retail locations. The mortgage loan portfolio is diversified by geographic region and property type. Additional information on geographic concentration and property type can be found under “Mortgage Loans on Real Estate” in Note 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements.
As of September 30, 2017 and December 31, 2016, the Company’s mortgage loans, gross of unamortized deferred loan origination fees and expenses and valuation allowances, were distributed geographically as follows (dollars in thousands):
90
  September 30, 2017 December 31, 2016
  
Recorded
Investment
 % of Total 
Recorded
Investment
 % of Total
U.S. Region:        
Pacific $1,304,056
 30.1
 $1,112,636
 29.4%
South Atlantic 858,474
 19.8
 782,509
 20.7
Mountain 688,609
 15.9
 615,915
 16.3
East North Central 529,007
 12.2
 422,512
 11.2
West North Central 305,894
 7.1
 318,212
 8.4
West South Central 359,680
 8.3
 317,194
 8.4
Middle Atlantic 107,453
 2.5
 92,683
 2.4
East South Central 97,379
 2.2
 57,216
 1.5
New England 9,191
 0.2
 9,346
 0.2
Subtotal - U.S. 4,259,743
 98.3
 3,728,223
 98.5
Canada 74,254
 1.7
 54,984
 1.5
Total $4,333,997
 100.0% $3,783,207
 100.0%

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Valuation allowances on mortgage loans are established based upon inherent losses expected by management to be realized in connection with future dispositions or settlement of mortgage loans, including foreclosures. The valuation allowances are established after management considers, among other things, the value of underlying collateral and payment capabilities of debtors. Any subsequent adjustments to the valuation allowances will be treated as investment gains or losses. See “Mortgage Loans on Real Estate” in Note 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements for information regarding valuation allowances and impairments.
Policy Loans
Policy loans comprised approximately 2.6% and 3.1% of the Company’s cash and invested assets as of September 30, 2017 and December 31, 2016, respectively, the majority of which are associated with one client. These policy loans present no credit risk because the amount of the loan cannot exceed the obligation due the ceding company upon the death of the insured or surrender of the underlying policy. The provisions of the treaties in force and the underlying policies determine the policy loan interest rates. The Company earns a spread between the interest rate earned on policy loans and the interest rate credited to corresponding liabilities.
Funds Withheld at Interest
Funds withheld at interest comprised approximately 11.8% and 12.8% of the Company’s cash and invested assets as of September 30, 2017 and December 31, 2016, respectively. For reinsurance agreements written on a modified coinsurance basis and certain agreements written on a coinsurance basis, assets equal to the net statutory reserves are withheld and legally owned and managed by the ceding company, and are reflected as funds withheld at interest on the Company’s condensed consolidated balance sheets. In the event of a ceding company’s insolvency, the Company would need to assert a claim on the assets supporting its reserve liabilities. However, the risk of loss to the Company is mitigated by its ability to offset amounts it owes the ceding company for claims or allowances against amounts owed by the ceding company. Interest accrues to the total funds withheld at interest assets at rates defined by the treaty terms. Additionally, under certain treaties theThe Company is subject to the investment performance on the withheld assets, although it does not directly control them. These assets are primarily fixed maturity investment securities and pose risks similar to the fixed maturity securities the Company owns. To mitigate this risk, the Company helps set the investment guidelines followed by the ceding company and monitors compliance. Ceding companies with funds withheld at interest had an average financial strength rating of “A” at September 30, 2017as of March 31, 2023 and December 31, 2016.2022. Certain ceding companies maintain segregated portfolios for the benefit of the Company.
Other Invested Assets
Other invested assets include equity securities, limited partnership interests, joint ventures (other than operating joint ventures), structured loans,lifetime mortgages, derivative contracts, FVO contractholder-directed unit-linked investments, FHLB common stock, unit-linked investments, and equity release mortgages. Other invested assets represented approximately 3.0% and 3.5% of the Company’s cash and invested assets as of September 30, 2017 and December 31, 2016, respectively.real estate held for investment. See “Other Invested Assets” in Note 411 – “Investments” in the Notes to Condensed Consolidated Financial Statements for a table that presents the carrying value of the Company’s other invested assets by type as of September 30, 2017March 31, 2023 and December 31, 2016.2022.
The Company utilizes derivative financial instruments to protect the Company against possible changes in the fair value of its investment portfolio as a result of interest rate changes, to hedge against risk of changes in the purchase price of securities, to hedge liabilities associated with the reinsurance of variable annuities with guaranteed living benefits and to manage the portfolio’s effective yield, maturity and duration. In addition, the Company utilizes derivative financial instruments to reduce the risk associated with fluctuations in foreign currency exchange rates. The Company uses both exchange-traded, centrally cleared, and customized over-the-counter derivative financial instruments.
See Note 5 -12 – “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for a table that presents the notional amounts and fair value of investment related derivative instruments held at September 30, 2017as of March 31, 2023 and December 31, 2016.2022.
The Company may be exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments. Generally, the credit exposure of the Company’s derivative contracts is limited to the fair value and accrued interest of non-collateralized derivative contracts in an asset position at the reporting date plus or minus any collateral posted or held bydate. As of March 31, 2023, the Company. The Company had no net credit exposure related to its derivative contracts, excluding futures and mortality swaps, at September 30, 2017 and December 31, 2016, as the net amount of collateral pledged to the Company from counterparties exceeded the fair value of the derivative contracts.$15 million.
The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Certain of the Company’s OTC derivatives are cleared derivatives, which are bilateral transactions between the Company and a counterparty where the transactions are cleared through a clearinghouse, such that each derivative counterparty is only exposed to the default of the clearinghouse. As exchange-

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tradedexchange-traded futures are affected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties. See Note 5 -12 – “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for more information regarding the Company’s derivative instruments.
Enterprise Risk Management
RGA maintainsThe Company holds $897 million and $868 million of beneficial interest in lifetime mortgages in the UK, net of allowance for credit losses, as of March 31, 2023 and December 31, 2022, respectively. Investment income includes $10 million in interest income earned on lifetime mortgages for the three months ended March 31, 2023 and 2022. Lifetime mortgages represent loans provided to individuals 55 years of age and older secured by the borrower’s residence. Lifetime mortgages are comparable to a dedicated Enterprise Risk Management (“ERM”) function that is responsible for analyzing and reportinghome equity loan by allowing the Company’s risks on an aggregated basis; facilitating monitoringborrower to ensureutilize the Company’s risks remain within its appetites and limits; and ensuring, on an ongoing basis, that RGA’s ERM objectives are met. This includes ensuring proper risk controls areequity in place; risks are effectively identified, assessed, and managed; and key risks to which the Company is exposed are disclosed to appropriate stakeholders.their home as collateral. The ERM function plays an important role in fostering the Company’s risk management culture and practices.
Enterprise Risk Management Structure and Governance
The Board of Directors (“the Board”) oversees enterprise risk through its standing committees. The Finance, Investments, and Risk Management (“FIRM”) Committeeamount of the Board oversees the management of the Company’s ERM program and policies. The FIRM receives regular reports and assessments which describe the Company’s key risk exposures and include quantitative and qualitative assessments and information about breaches, exceptions, and waivers.
The Company’s Global Chief Risk Officer (“CRO”) leads the dedicated ERM function. The CRO reports to the Chief Executive Officer (“CEO”) and has direct access to the Board through the FIRM Committee with formal reporting occurring quarterly. The CROloan is supported by a network of Business Unit Chief Risk Officers and Risk Management Officers throughout the business who are responsible for the analysis and management of risks within their scope. A Lead Risk Management Officer is assigned to each risk to take overall responsibility to monitor and assess the risk consistently across all markets.
In addition to leading the ERM function, the CRO also chairs the Company’s Risk Management Steering Committee (“RMSC”), which is made up of senior management executives, including the CEO, the Chief Financial Officer (“CFO”), and the Chief Operating Officer, among others. The RMSC provides oversight for the Insurance, Market and Credit, Capital, and Operational risk committees and retains direct risk oversight responsibilities for the following:
Company’s global ERM framework, activities, and issues.
Identification, assessments, and management of all known, new and emerging strategic risk exposures.
Risk appetite statement, including the ongoing alignment of the risk appetite statement with the Company’s strategy and capital plans.
Review, revise and approve RGA group-level strategic risk limits consistent with the risk appetite statement
The Insurance, Market and Credit, Capital, and Operational risk committees have direct oversight accountability for their respective risks areas including the identification, assessments, and management of known, new and emerging risk exposures and the review and approval of RGA group-level risk limits
To ensure appropriate oversight of enterprise-wide risk management issues without unnecessary duplication, as well as to foster cross-committee communication and coordination regarding risk issues, risk committee chairs attend RMSC meetings. In addition to the risk committees, their sub-committees and working groups, some RGA operating entities have risk management committees that oversee relevant risks related to segment-level risk limits.
Enterprise Risk Management Framework
RGA’s ERM framework provides a platform to assess the risk / return profiles of risks throughout the organization to enable enhanced decision making by business leaders. The ERM framework also guides the development and implementation of mitigation strategies to reduce exposures to these risks to acceptable levels.
RGA’s ERM framework includes the following elements:
1.Risk Culture: Risk management is an integral part of the Company’s culture and is embedded in RGA’s business processes in accordance with RGA’s risk philosophy. As the cornerstone of the ERM framework, a culture of prudent risk management reinforced by senior management plays a preeminent role in the effective management of risks assumed by RGA.
2.Risk Appetite Statement: A general and high level overview of the risk profile RGA aims to achieve to meet its strategic objectives. This statement is then supported by more granular risk limits guiding the businesses to achieve this Risk Appetite Statement.

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3.Risk Limits: Risk Limits establish the maximum amount of defined risk that the Company is willing to assume to remain within the Company’s overall risk appetite. These risks have been identified by the management of the Company as relevant to manage the overall risk profile of the Company while allowing achievement of strategic objectives.
4.Risk Assessment Process: RGA uses qualitative and quantitative methods to assess key risks through a portfolio approach, which analyzes established and emerging risks in conjunction with other risks.
5.Business Specific Limits/Controls: These limits/controls provide additional safeguards against undesired risk exposures and are embedded in business processes. Examples include maximum retention limits, pricing and underwriting reviews, per issuer limits, concentration limits, and standard treaty language.
Proactive risk monitoring and reporting enable early detection and mitigation of emerging risks. The RMSC and its subcommittees monitor adherence to risk limits through the ERM function, which reports regularly to the RMSC and FIRM Committee. The frequency of monitoring is tailored to the volatility assessment and relative priority of each risk. Risk escalation channels coupled with open communication lines enhance the mitigants explained above. The Company has devoted significant resources to developing its ERM program and expects to continue to do so in the future. Nonetheless, the Company’s policies and procedures to identify, manage, and monitor risks may not be fully effective. Many of the Company’s methods for managing risk are based on historical information, which may not be a good predictor of future risk exposures, such as the risk of a pandemic causing a large number of deaths. Management of operational, legal, and regulatory risk relies on policies and procedures which may not be fully effective under all scenarios.
Risk Categories
The Company groups its risks into the following categories: Insurance risk, Market and Credit risk, Capital risk, Operational risk and Strategic risk. Specific risk assessments and descriptions can be found below and in Item 1A - “Risk Factors” of the 2016 Annual Report.
Insurance Risk
Insurance risk is the risk of lower or negative earnings and potentially a reduction in enterprise value due to a greater amount of benefits and related expenses paid than expected, or from non-market related adverse policyholder or client behavior. The Company uses multiple approaches to managing insurance risk: active insurance risk assessment and pricing appropriately for the risks assumed, transferring undesired risks, and managing the retained exposure prudently. These strategies are explained below.
Insurance Risk Assessment and Pricing
The Company has developed extensive expertise in assessing insurance risks which ultimately forms an integral part of ensuring that it is compensated commensurately for the risks it assumes and that it does not overpay for the risks it transfers to third parties. This expertise includes a vast array of market and product knowledge supported by a large information database of historical experience which is closely monitored. Analysis and experience studies derived from this database help form the basis for the Company’s pricing assumptions which are used in developing rates for new risks. If actual mortality or morbidity experience is materially adverse, some reinsurance treaties allow for increases to future premium rates.
Misestimation of any key risk can threaten the long term viability of the enterprise. Further, the pricing process is a key operational risk and significant effort is applied to ensuring the appropriateness of pricing assumptions. Some of the safeguards the Company uses to ensure proper pricing are: experience studies, strict underwriting, sensitivity and scenario testing, pricing guidelines and controls, authority limits and internal and external pricing reviews. In addition, the ERM function provides pricing oversight which includes periodic pricing audits.
Risk Transfer
To minimize volatility in financial results and reduce the impact of large losses, the Company transfers some of its insurance risk to third parties using vehicles such as retrocession and catastrophe coverage.
Individual Exposure Retrocession
In the normal course of business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of claims paid by ceding reinsurance to other insurance enterprises (or retrocessionaires) under excess coverage and coinsurance contracts. In individual life markets, the Company retains a maximum of $8.0 million of coverage per individual life. In certain limited situations the Company has retained more than $8.0 million per individual life. The Company enters into agreements with other reinsurers to mitigate the residual risk related to the over-retained policies. Additionally, due to some lower face amount reinsurance coverages provided by the Company in addition to individual life, such as group life, disability and health, under certain circumstances, the Company could potentially incur claims totaling more than $8.0 million per individual life.


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Catastrophic Excess Loss Retrocession
The Company seeks to limit its exposure to loss on its assumed catastrophic excess of loss reinsurance agreements by ceding a portion of its exposure to multiple retrocessionaires through retrocession line slips or directly to retrocession markets. The Company’s policy is to retain a maximum of $20.0 million of catastrophic loss exposure per agreement and to retrocede up to $30.0 million additional loss exposures to the retrocession markets. The Company limits its exposure on a country-by-country (and state-by-state in the U.S.) basis by managing its total exposure to all catastrophic excess of loss agreements bound within a given country to established maximum aggregate exposures. The maximum exposures are established and managed both on gross amounts issued prior to including retrocession and for amounts net of exposures retroceded.
Catastrophe Coverage
The Company accesses the markets each year for annual catastrophic coverages and reviews current coverage and pricing of current and alternate designs. The coverage may vary from year to year baseddependent on the Company’s perceived value of such protection. The current policy covers events involving 8 or more insured deaths from a single occurrence and covers $100.0 million of claims in excess of the Company’s $25.0 million deductible.
Managing Retained Exposure
The Company retains most of the inbound insurance risk. The Company manages the retained exposure proactively using various mitigating factors such as diversification and limits. Diversification is the primary mitigating factor of short term volatility risk, but it also mitigates adverse impacts of changes in long term trends and catastrophic events. The Company’s insured populations are dispersed globally, diversifying the insurance exposure because factors that cause actual experience to deviate materially from expectations do not affect all areas uniformly and synchronously or in close sequence. A variety of limits mitigate retained insurance risk. Examples of these limits include geographic exposure limits, which set the maximum amount of business that can be written in a given country, and jumbo limits, which prevent excessive coverage on a given individual.
In the event that mortality or morbidity experience develops in excess of expectations, some reinsurance treaties allow for increases to future premium rates. Other treaties include experience refund provisions, which may also help reduce RGA’s mortality risk.
RGA has various methods to manage its insurance risks, including access to the capital and reinsurance markets.
Market and Credit Risk
Market and Credit risk is the risk of lower or negative earnings and potentially a reduction in enterprise value due to changes in the market prices of asset and liabilities.
Interest Rate Risk
Interest Rate risk is risk that changes in the level and volatility of nominal interest rates affect the profitability, value or solvency position of the Company. This includes credit spread changes and inflation but excludes credit quality deterioration. This risk arises from many of the Company’s primary activities, as the Company invests substantial funds in interest-sensitive assets, primarily fixed maturity securities, and also has certain interest-sensitive contract liabilities. A prolonged period where market yields are significantly below the book yields of the Company’s asset portfolio puts downward pressure on portfolio book yields. The Company has been proactive in its investment strategies, reinsurance structures and overall asset-liability management practices to reduce the risk of unfavorable consequences in this type of environment.
The Company manages interest rate risk to optimize the return on the Company’s capital and to preserve the value created by its business operations within certain constraints. For example, certain management and monitoring processes are designed to minimize the effect of sudden and/or sustained changes in interest rates on fair value, cash flows, and net interest income. The Company manages its exposure to interest rates principally by managing the relative matching of the cash flows of its liabilities and assets.
The Company’s exposure to interest rate price risk and interest rate cash flow risk is reviewed on a quarterly basis. Interest rate price risk exposure is measured using interest rate sensitivity analysis to determine the change in fairappraised value of the Company’s financial instruments inhome at the eventtime of origination, the borrower's age and interest rate. Unlike a hypothetical change inhome equity loan, no payment of principal or interest rates. Interest rate cash flow risk exposure is measured using interest rate sensitivity analysis to determinerequired until the Company’s variability in cash flows in the event of a hypothetical change in interest rates.
In order to reduce the exposure to changes in fair values from interest rate fluctuations, the Company has developed strategies to manage the net interest rate sensitivity of its assets and liabilities. In addition, from time to time, the Company has utilized the swap market to manage the sensitivity of fair values to interest rate fluctuations.
Inflation can also have direct effects on the Company’s assets and liabilities. The primary direct effect of inflation is the increase in operating expenses. A large portiondeath of the Company’s operating expenses consistsborrower or sale of salaries, whichthe home. Lifetime mortgages may also be either fully funded at origination, or the borrower can request periodic funding similar to a line of credit. Lifetime mortgages are subject to wage increases at least partly affected by therisks, including market, credit, interest rate, of inflation.liquidity, operational, reputational and legal risks.

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The Company reinsures annuities with benefits indexed to the cost of living. Some of these benefits are hedged with a combination of CPI swaps and indexed bonds when material.
Long Term Care products have an inflation component linked to the future cost of such services. If health care costs increase at a much larger rate than what is prevalent in the nominal interest rates available in the markets, the Company may not earn enough investment yield to pay future claims on such products.
Foreign Currency Risk
Foreign currency risk is the risk of changes in level and volatility of currency exchange rates affect the profitability, value or solvency position of the Company. The Company manages its exposure to currency principally by currency matching invested assets with the underlying liabilities to the extent possible. The Company has in place net investment hedges for a portion of its investments in its Canadian operations to reduce excess exposure to these currencies. Translation differences resulting from translating foreign subsidiary balances to U.S. dollars are reflected in stockholders’ equity on the condensed consolidated balance sheets.
The Company generally does not hedge the foreign currency exposure of its subsidiaries transacting business in currencies other than their functional currency (transaction exposure). However, the Company has entered into cross currency swaps to manage exposure to specific currencies. The majority of the Company’s foreign currency transactions are denominated in Australian dollars, British pounds, Canadian dollars, Euros, Japanese yen, Korean won, and the South African rand. The maximum amount of assets held in a specific currency (with the exception of the U.S. dollar) is measured relative to risk targets and is monitored regularly.
Real Estate Risk
Real Estate risk is the risk that changes in the level and volatility of real estate market valuations may impact the profitability, value or solvency position of the Company. The Company has investments in direct real estate equity and debt instruments collateralized by real estate (“real estate loans”). Real estate equity risks include significant reduction in valuations, which could be caused by downturns in the broad economy or in specific geographic regions or sectors. In addition, real estate loan risks include defaults, borrower or tenant bankruptcy and reduced liquidity. Real estate loan risks are partially mitigated by the excess of the value of the property over the loan principle, which provides a buffer should the value of the real estate decrease. The Company manages its real estate loan risk by diversifying by property type and geography and through exposure limits.
Equity Risk
Equity risk is the risk that changes in the level and volatility of equity market valuations affect the profitability, value or solvency position of the company. This risk includes Variable Annuity and other equity linked exposures and asset related equity exposure. The Company assumes equity risk from alternative investments, fixed indexed annuities and variable annuities. The Company uses derivatives to hedge its exposure to movements in equity markets that have a direct correlation with certain of its reinsurance products.
Alternative Investments
Alternative investments are investments in non-traditional asset classes that primarily back the Company’s capital and surplus. The Company generally restricts the alternative investments portfolio to non-liability supporting assets: that is, free surplus. Alternative investments generally encompass: hedge funds, emerging markets debt, distressed debt, commodities, infrastructure, tax credits, and equities, both public and private. The Company mitigates its exposure to alternative investments by limiting the size of the alternative investments holding and using per-issuer investment limits.
Fixed Indexed Annuities
The Company reinsures fixed indexed annuities (“FIAs”). Credits for FIAs are affected by changes in equity markets. Thus the fair value of the benefit is primarily a function of index returns and volatility. The Company hedges most of the underlying FIA equity exposure with derivatives.

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Variable Annuities
The Company reinsures variable annuities including those with guaranteed minimum death benefits (“GMDB”), guaranteed minimum income benefits (“GMIB”), guaranteed minimum accumulation benefits (“GMAB”) and guaranteed minimum withdrawal benefits (“GMWB”). Strong equity markets, increases in interest rates and decreases in equity market volatility will generally decrease the fair value of the liabilities underlying the benefits. Conversely, a decrease in the equity markets along with a decrease in interest rates and an increase in equity market volatility will generally result in an increase in the fair value of the liabilities underlying the benefits, which has the effect of increasing reserves and lowering earnings. The Company maintains a customized dynamic hedging program that is designed to substantially mitigate the risks associated with income volatility around the change in reserves on guaranteed benefits, ignoring the Company’s own credit risk assessment. However, the hedge positions may not fully offset the changes in the carrying value of the guarantees due to, among other things, time lags, high levels of volatility in the equity and derivative markets, extreme swings in interest rates, unexpected contract holder behavior, and divergence between the performance of the underlying funds and hedging indices. These factors, individually or collectively, may have a material adverse effect on the Company’s net income, financial condition or liquidity. The table below provides a summary of variable annuity account values and the fair value of the guaranteed benefits as of September 30, 2017 and December 31, 2016.
(dollars in millions) September 30, 2017 December 31, 2016
No guaranteed minimum benefits $940
 $731
GMDB only 180
 58
GMIB only 23
 5
GMAB only 25
 28
GMWB only 1,361
 1,334
GMDB / WB 340
 335
Other 33
 19
Total variable annuity account values $2,902
 $2,510
Fair value of liabilities associated with living benefit riders $168
 $185
Credit Risk
Credit risk, which includes default risk, is risk of loss due to credit quality deterioration of an individual financial asset, derivative or non-derivative contract or instrument. Credit quality deterioration may or may not be accompanied by a ratings downgrade. Generally, the credit exposure for an asset is limited to the fair value, net of any collateral received, at the reporting date.
Investment Credit Risk
Investment credit risk is credit risk related to invested assets. The Company manages investment credit risk using per-issuer investment limits. In addition to per-issuer limits, the Company also limits the total amounts of investments per rating category. An automated compliance system checks for compliance for all investment positions and sends warning messages when there is a breach. The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because futures are transacted through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments.
The Company enters into various collateral arrangements, which require both the posting and accepting of collateral in connection with its derivative instruments. Collateral agreements contain attachment thresholds that vary depending on the posting party’s financial strength ratings. Additionally, a decrease in the Company’s financial strength rating to a specified level results in potential settlement of the derivative positions under the Company’s agreements with its counterparties. A committee is responsible for setting rules and approving and overseeing all transactions requiring collateral. See “Credit Risk” in Note 5 - “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for additional information on credit risk related to derivatives.
Counterparty Risk
Counterparty risk is the potential for the Company to incur losses due to a client, retrocessionaire, or partner becoming distressed or insolvent. This includes run-on-the-bank risk and collection risk.
Run-on-the-Bank
The risk that a client’s in force block incurs substantial surrenders and/or lapses due to credit impairment, reputation damage or other market changes affecting the counterparty. Substantially higher than expected surrenders and/or lapses could result in inadequate in force business to recover cash paid out for acquisition costs.

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Collection Risk
For clients and retrocessionaires, this includes their inability to satisfy a reinsurance agreement because the right of offset is disallowed by the receivership court; the reinsurance contract is rejected by the receiver, resulting in a premature termination of the contract; and/or the security supporting the transaction becomes unavailable to RGA.
The Company manages counterparty risk by limiting the total exposure to a single counterparty and by only initiating contracts with creditworthy counterparties. In addition, some of the counterparties have set up trusts and letters of credit, reducing the Company’s exposure to these counterparties.
Generally, RGA’s insurance subsidiaries retrocede amounts in excess of their retention to certain other RGA insurance subsidiaries. External retrocessions are arranged through the Company’s retrocession pools for amounts in excess of its retention. As of September 30, 2017, all retrocession pool members in this excess retention pool rated by the A.M. Best Company were rated “A-” or better. A rating of “A-” is the fourth highest rating out of sixteen possible ratings. For a majority of the retrocessionaires that were not rated, letters of credit or trust assets have been given as additional security. In addition, the Company performs annual financial and in force reviews of its retrocessionaires to evaluate financial stability and performance.
The Company has never experienced a material default in connection with retrocession arrangements, nor has it experienced any material difficulty in collecting claims recoverable from retrocessionaires; however, no assurance can be given as to the future performance of such retrocessionaires or as to the recoverability of any such claims.
Aggregate Counterparty Limits
In addition to investment credit limits and counterparty limits, there are aggregate counterparty risk limits which include counterparty exposures from reinsurance, financing and investment activities at an aggregated level to control total exposure to a single counterparty. Counterparty risk aggregation is important because it enables the Company to capture risk exposures at a comprehensive level and under more extreme circumstances compared to analyzing the components individually.
All counterparty exposures are calculated on a quarterly basis, reviewed by management and monitored by the ERM function.
Capital Risk
Capital risk is the risk of lower or negative earnings and a potential reduction in enterprise value, and/or the ability to conduct business due to insufficient financial capacity. Collateral, financing, liquidity and tax risks are important to the operations of the Company and its ability to meet obligations with its clients, shareholders and regulators.
Operational Risk
Operational risk is the risk of lower or negative earnings and a potential reduction in enterprise value caused by the inadequacy or failure of internal processes, people and systems, or from the adverse impact of external events or actors. The Company regularly monitors the risks related to human capital, fraud, business conduct and governance, disruption of operations, business operations and privacy and security related matters. Operational risks are core to managing the Company’s brand and market confidence as well as maintaining its ability to acquire and retain the appropriate expertise to execute and operate the business.
Strategic Risk
Strategic risk is the risk of lower or negative earnings and a potential reduction in enterprise value related to the planning, implementation, and management of the Company’s business plans and strategies. This includes the risks associated with the global environment in which it operates; future law and regulation changes; political and sovereign risks; and relationships with key external parties.
New Accounting Standards
Changes to the general accounting principles are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates to the FASB Accounting Standards CodificationTM.
See Note 12 — “New2 – “Impact of Adoption of New Accounting Standards”Standard” in the Notes to Condensed Consolidated Financial Statements.Statements for information on the Company’s adoption of ASU 2018-12 on January 1, 2023. See Note 19 – “New Accounting Standards Not Yet Adopted” in the Notes to Condensed Consolidated Financial Statements for information on new accounting pronouncements and their impact, if any, on the Company’s results of operations and financial position.

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ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk
There hasMarket risk is the risk of fluctuations in the value of financial instruments as a result of absolute or relative changes in interest rates, foreign currency exchange rates, equity prices or commodity prices. To varying degrees, the Company products and services, and the investment activities supporting them, generate exposure to market risk. The market risk incurred, and the Company’s strategies for managing this risk, vary by product.  As of March 31, 2023, there have been no significant changematerial changes in the Company’s quantitative or qualitative aspects ofeconomic exposure to market risk duringor the quarterCompany’s Enterprise Risk Management function from December 31, 2022, a description of which may be found in its Annual Report on Form 10-K, for the year ended September 30, 2017 from that disclosed inDecember 31, 2022, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” filed with the 2016 Annual Report. See “Item 2 – Management’s DiscussionSecurities and Analysis of Financial Condition and Results of Operations – Market and Credit Risk”, which is included herein, for additional information.Exchange Commission.

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ITEM 4.  Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective.
There was no change in the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the quarter ended September 30, 2017,March 31, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

During the first quarter of 2023, the Company implemented and modified certain internal controls over financial reporting relating to the adoption and ongoing operation of ASU 2018-12.
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PART II - OTHER INFORMATION
ITEM 1.  Legal Proceedings
The Company is subject to litigation and regulatory investigations or actions from time to time. Based on current knowledge, management does not believe that loss contingencies arising from pending legal, regulatory and governmental matters will have a material adverse effect on the financial condition, results of operations or cash flows of the Company. However, in light of the normal courseinherent uncertainties involved in future or pending legal, regulatory and governmental matters, some of its business. The Company currently has nowhich are beyond the Company’s control, and indeterminate or potentially substantial amount of damages sought in any such matters, an adverse outcome could be material litigation.to the Company’s financial condition, results of operations or cash flows for any particular reporting period. A legal reserve is established when the Company is notified of an arbitration demand, litigation or litigationregulatory action or is notified that an arbitration demand, litigation or litigationregulatory action is imminent, it is probable that the Company will incur a loss as a result and the amount of the probable loss is reasonably capable of being estimated.
ITEM 1A.  Risk Factors
There werehave been no material changes from the risk factors previously disclosed in the 2016Company’s 2022 Annual Report.
ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table summarizes RGA’s repurchase activity of its common stock during the quarter ended September 30, 2017:March 31, 2023:
Total Number of Shares
Purchased (1)
Average Price Paid per   
Share
Total Number of Shares
Purchased as Part of
Publicly Announced Plans
or Programs (1)
Maximum Number (or
Approximate Dollar
Value) of Shares that May
Yet Be Purchased Under
the Plan or Program
January 1, 2023 – January 31, 202387,598 $140.84 — $350,001,793 
February 1, 2023 – February 28, 202331,272 $149.28 — $350,001,793 
March 1, 2023 – March 31, 2023371,784 $134.63 371,343 $300,003,480 
(1)RGA repurchased 371,343 shares of common stock under its share repurchase program in March 2023. The Company net settled – issuing 255,132, 81,873, and 1,168 shares from treasury and repurchasing from recipients 87,598, 31,272 and 441 shares in January, February and March 2023, respectively, in settlement of income tax withholding requirements incurred by the recipients of equity incentive awards.
  
Total Number of Shares
Purchased (1)
 
Average Price Paid per   
Share
 
Total Number of Shares
Purchased as Part of
Publicly Announced Plans
or Programs (1)
 
Maximum Number (or
Approximate Dollar
Value) of Shares that May
Yet Be Purchased Under
the Plan or Program
July 1, 2017 -
July 31, 2017		 1,320
 $131.02
 —
 $400,000,000
August 1, 2017 -
August 31, 2017		 25,841
 $140.23
 —
 $400,000,000
September 1, 2017 -
September 30, 2017		 209,344
 $128.91
 208,680
 $373,103,074
(1)RGA repurchased 208,680 shares of common stock under its share repurchase program for $26.9 million during September 2017. The Company net settled - issuing 3,190, 65,078 and 2,648 shares from treasury and repurchasing from recipients 1,320, 25,841 and 664 shares in July, August and September, respectively, in settlement of income tax withholding requirements incurred by the recipients of an equity incentive award.
On January 26, 2017,February 25, 2022, RGA’s board of directors authorized a share repurchase program with no expiration date, for up to $400.0$400 million of RGA’s outstanding common stock. The authorization was effective immediately and does not have an expiration date. In connection with this authorization, the board of directors terminated the stock repurchase authority granted in 2016.2019. During the three months ended March 31, 2023, RGA repurchased 371,343 shares of common stock under this program for $50 million.
The pace of repurchase activity depends on various factors such as the level of available cash, an evaluation of the costs and benefits associated with alternative uses of excess capital, such as acquisitions and in force reinsurance transactions, and RGA’s stock price.
ITEM 6.  Exhibits
See index to exhibits.

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INDEX TO EXHIBITS
 
Exhibit
Number		Description
Exhibit
Number3.1
Description
3.1
Amended and Restated Articles of Incorporation, effective May 21, 2020, incorporated by reference to Exhibit 3.1(i) to Current Report on Form 8-K filed May 22, 2020
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.2002
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.2002
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.2002
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.2002
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document


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104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101).

* Represents a management contract or compensatory plan or arrangement
GLOSSARY OF SELECTED TERMS
Throughout this quarterly report on Form 10-Q, the Company may use certain abbreviations, acronyms and terms which are defined below.
Entities
Term or AcronymDefinition
RGA ReinsuranceRGA Reinsurance Company
Parkway ReParkway Reinsurance Company
Rockwood ReRockwood Reinsurance Company
Castlewood ReCastlewood Reinsurance Company
Chesterfield ReChesterfield Reinsurance Company
Chesterfield FinancialChesterfield Financial Holdings LLC
RGA Life and AnnuityRGA Life and Annuity Insurance Company
Timberlake ReTimberlake Reinsurance Company II
Timberlake FinancialTimberlake Financial L.L.C.
RGA CanadaRGA Life Reinsurance Company of Canada
RGA BarbadosRGA Reinsurance Company (Barbados) Ltd.
RGA AmericasRGA Americas Reinsurance Company, Ltd.
Manor ReManor Reinsurance, Ltd.
RGA AtlanticRGA Atlantic Reinsurance Company Ltd.
RGA WorldwideRGA Worldwide Reinsurance Company, Ltd.
RGA GlobalRGA Global Reinsurance Company, Ltd.
RGA AustraliaRGA Reinsurance Company of Australia Limited
RGA InternationalRGA International Reinsurance Company dac
RGA South AfricaRGA Reinsurance Company of South Africa, Limited
Aurora NationalAurora National Life Assurance Company
OmnilifeOmnilife Insurance Company, Limited
PaparaPapara Financing LLC
Certain Terms and Acronyms
Term or AcronymDefinition
A.M. BestA.M. Best Company
ABSAsset-backed securities
ActuaryA specialist in the mathematics of risk, especially as it relates to insurance calculations such as premiums, reserves, dividends, insurance rates and annuity rates.
AllowanceAn amount paid by the reinsurer to the ceding company to help cover the ceding company's acquisition and other costs, especially commissions. Allowances are usually calculated as a large percentage (often 100%) of first-year premiums reinsured and smaller percentages of renewal premiums reinsured.
AOCIAccumulated other comprehensive income (loss)
Asset-Intensive ReinsuranceA transaction (usually coinsurance or funds withheld and often involving reinsurance of annuities) where performance of the underlying assets, more so than any mortality risk, is a key element.
Assumed reinsuranceInsurance risk that a reinsurer accepts (assumes) from a ceding company.
ASUAccounting Standards Update
ASU 2018-12
Accounting Standards Update Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts
Automatic ReinsuranceReinsurance arrangement whereby the ceding company and reinsurer agree that all business of a certain description will be ceded to the reinsurer. Under this arrangement, the ceding company performs underwriting decision-making within agreed-upon parameters for all business reinsured.
Bermuda Insurance ActBermuda's Insurance Act 1978 which distinguishes between insurers carrying on long-term business, insurers carrying on special purpose business and insurers carrying on general business.
BMABermuda Monetary Authority
BSCRBermuda Solvency Capital Requirement
CCPACalifornia Consumer Privacy Act of 2018
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Capital-motivated reinsuranceReinsurance, including financial reinsurance, whose primary purpose is to enhance the cedant's capital position.
Captive insurerAn insurance or reinsurance entity designed to provide insurance or reinsurance coverage for risks of the entity or entities by which it is owned or to which it is affiliated.
CECLAccounting for current expected credit losses using the model based on expected losses rather than incurred losses.
Ceding company (also known as cedant)An insurer that transfers, or cedes, risk to a reinsurer
CEORGA’s Chief Executive Officer
CessionThe insurance risk associated with a policy that is reinsured from an insurer to a reinsurer.
CFORGA’s Chief Financial Officer
CLOsCollateralized loan obligations
CMBSCommercial mortgage-backed securities, a part of our investment portfolio that consists of securities made up of commercial mortgages. Stated on our balance sheet at fair value.
Coinsurance (also known as original terms reinsurance)A form of reinsurance under which the ceding company shares its premiums, death claims, surrender benefits, dividends and policy loans with the reinsurer, and the reinsurer pays expense allowances to reimburse the ceding company for a share of its expenses.
Coinsurance funds-withheldA variant on coinsurance, in which the ceding company withholds assets equal to reserves and shares investment income on those assets with the reinsurer.
CounterpartyA party to a contract requiring or offering the exchange of risk.
Counterparty riskThe risk that a party to an agreement will be unable to fulfill its contractual obligations
CPIConsumer price index
Critical illness (CI) insurance (also known as dread disease insurance)Insurance that provides a guaranteed fixed sum upon diagnosis of a specified illness or condition such as cancer, heart disease, or permanent total disability. The coverage can be offered on a stand-alone basis or as an add-on to a life insurance policy.
CRORGA’s Chief Risk Officer
CVACredit valuation adjustment
DACDeferred policy acquisition costs: Costs of acquiring new business, which vary with and are directly related to the production of new business, have been deferred to the extent that such costs are deemed recoverable from future premiums or gross profits.
“Directors Plan”Flexible Stock Plan for Directors
EBITDAEarnings before interest, taxes, depreciation and amortization
EBSEconomic balance sheet framework as part of the Bermuda Solvency Capital Requirement that forms the basis for an insurer's enhanced capital requirements.
ECREnhanced capital requirement in accordance with the provisions of the Bermuda Insurance Act.
EEAEuropean Economic Area
EGPEstimated gross profits.
EIAsEquity-Indexed Annuities
EMEAEurope, Middle East and Africa geographic segment
Enterprise Risk Management (ERM)An enterprise-wide framework used by a firm to assess all risks facing the organization, manage mitigation strategies, monitor ongoing risks and report to interested audiences.
ESGEnvironmental, social, and governance
ESTEREuro Short-term Rate, an alternative to LIBOR being recommended by the European Central Bank
EUEuropean Union
Expected mortalityNumber of deaths predicted to occur in a defined group of people.
FABNFunding Agreement Backed Notes
Face amountAmount payable at the death of the insured or at the maturity of the policy.
Facultative reinsuranceA type of reinsurance in which the reinsurer underwrites an individual risk submitted by the ceding company for a risk that is unusual, large, highly substandard or not covered by an automatic reinsurance treaty. Such risks are typically submitted to multiple reinsurers for competitive offers.
FASBFinancial Accounting Standards Board
FCAFinancial Conduct Authority
FHLBFederal Home Loan Bank
FIAFixed indexed annuities
Financial reinsurance (also known as financially-motivated reinsurance)A form of capital-motivated reinsurance that satisfies all regulatory requirements for risk transfer and is often designed to produce very predictable reinsurer profits as a percentage of the capital provided.
FSBFinancial Stability Board which consists of representatives of national financial authorities of the G20 nations.
FVOFair value option
GAAPU.S. generally accepted accounting principles
GDPRGeneral Data Protection Regulation which establishes uniform data privacy laws across the European Union.
GICsGuaranteed investment contracts
GILTIGlobal intangible low-taxed income; a provision of U.S. Tax Reform that generally eliminates U.S. Federal income tax deferral on earnings of foreign subsidiaries.
GMABGuaranteed minimum accumulation benefits; a feature of some variable annuities that the Company reinsures
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GMDBGuaranteed minimum death benefits; a feature of some variable annuities that the Company reinsures
GMIBGuaranteed minimum income benefits; a feature of some variable annuities that the Company reinsures
GMWBGuaranteed minimum withdrawal benefits; a feature of some variable annuities that the Company reinsures
Group life insuranceInsurance policy under which the lives of a group of people, most commonly employees of a single company, are insured in accordance with the terms of one master contract.
Guaranteed issue life insuranceInsurance products that are guaranteed upon application, regardless of past health conditions.
IAIGInternationally Active Insurance Group
IAISInternational Association of Insurance Supervisors
IBNRIncurred but not reported; a liability on claims that are based on historical reporting patterns, but have not yet been reported.
IFRS (International Financial Reporting Standards)Standards and interpretations adopted by the International Accounting Standards Board (IASB).
Individual life insuranceAn insurance policy that insures the life of usually one and sometimes two or more related individuals, rather than a group of people.
In-force sum insuredA measure of insurance in effect at a specific date.
Initial public offering (IPO)The first sale to the public of shares of common stock issued by a private company. IPOs often are issued by smaller companies seeking the capital to expand, but they also can be used by large mutual or privately owned companies seeking to become publicly traded.
LIBORLondon Interbank Offered Rate
Liquidity positionCombination of the company's cash, cash equivalents, and short-term investments
Longevity productAn insurance product that mitigates longevity risk by providing a stream of income for the duration of the policyholder's life.
Loss ratioClaims and other policy benefits and Future policy benefits remeasurement (gains) losses as a percentage of net premiums
Market risk benefitsContracts or contract features that provide protection to the policyholder from capital market risk and expose the Company to other-than-nominal capital market risk and are measured at fair value.
MDCIMissouri Department of Commerce and Insurance
MMSMinimum margin of solvency required to be maintained by the Company's Bermuda subsidiaries.
ModcoModified coinsurance
Modified coinsuranceA variant on coinsurance in which the ceding company retains all the reserves, as well as assets backing reserves, and pays the reinsurer interest on the reinsurer's share of the reserves.
Moody’sMoody’s Investors Service
MorbidityA measure of the incidence of sickness or disease within a specific population group.
Mortality experienceActual number of deaths occurring in a defined group of people.
Mortality risk reinsuranceReinsurance that focuses primarily on transfer of mortality risk through coinsurance of term products or YRT.
NAICNational Association of Insurance Commissioners
NAIC SAPNAIC statutory accounting practices
NAVNet asset value
NIFONet investments in foreign operations
NOLNet operating loss
Non-traditional reinsuranceUsually synonymous with capital-motivated reinsurance, but includes any reinsurance of non-biometrical risks
NovationThe act of replacing one participating member of a contract with another, with all rights, duties and terms being transferred to the new party upon consent of all parties affected.
NYSENew York Stock Exchange: the exchange where RGA is traded under the symbol “RGA”
OCIOther comprehensive income (loss)
OTCDerivatives that are privately negotiated contracts, which are known as over-the-counter derivatives
OTC ClearedOTC derivatives that are cleared and settled through central clearing counterparties.
PBRPrinciples-based reserves
PCAOBPublic Company Accounting Oversight Board (United States)
PCSPerformance Contingent Shares
Pension PlansThe Company's sponsored or administrated qualified and non-qualified defined benefit pension plans
PortfolioThe totality of risks assumed by an insurer or reinsurer.
Preferred risk coverageCoverage designed for applicants who represent a better-than-average risk to an insurer.
PremiumAmount paid to insure a risk.
Primary insurance (also known as direct insurance)Insurance business relating to contracts directly between insurers and policyholders. The insurance company is directly responsible to the policyholder.
ProductionNew business produced during a specified period.
PSUPerformance Share Units
Quota share (also known as 'first dollar' quota share)A reinsurance arrangement in which the reinsurer receives a certain percentage of each risk reinsured.
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RBCRisk-Based Capital, which are guidelines promulgated by the NAIC and identify minimum capital requirements based upon business levels and asset mix.
RecaptureThe right of the ceding company to cancel reinsurance under certain conditions.
Regulation XXX/Regulation A-XXXU.S. Valuation of Life Policies Model Regulation implemented beginning in 2002 for various types of life insurance business, significantly increased the level of reserves that U.S. life insurance and life reinsurance companies must hold on their statutory financial statements for various types of life insurance business, primarily certain level premium term life products.
ReinsuranceThe transfer of insurance risk from an insurer, referred to as the ceding company, to a reinsurer, in conjunction with the payment of a reinsurance premium. Through reinsurance, a reinsurer 'insures' an insurer.
ReservesThe amount required to be carried as a liability in the financial statement of an insurer or reinsurer to provide for future commitments under outstanding policies and contracts.
RetakafulA form of reinsurance that is acceptable within Islamic law. See Takaful.
Retention limitThe maximum amount of risk a company will insure on one life.
RetrocessionA transfer of reinsurance risk from a reinsurer to another reinsurer, referred to as the retrocessionaire, in conjunction with the payment of a retrocession premium. Through retrocession, a retrocessionaire reinsures a reinsurer.
RetrocessionaireA reinsurer that reinsures another reinsurer; see Retrocession.
RMBSResidential mortgage-backed securities, a part of our investment portfolio that consists of securities made up of residential mortgages. Stated on our balance sheet at fair value.
RMSCThe Company's Risk Management Steering Committee
RSUsRestricted Stock Units
S&PStandard & Poor's
SARsStock Appreciation Rights
SECSecurities and Exchange Commission
SecuritizationThe structuring of financial assets as collateral against which securities can be issued to investors.
Simplified issue life insuranceInsurance products with limited face amounts that require no or minimal underwriting.
SOFRSecured Overnight Financing Rate, an alternative to LIBOR being proposed by the Federal Reserve Board
SPLRCSpecial Purpose Life Reinsurance Captives
Statutory capitalThe excess of statutory assets over statutory reserves, both of which are calculated in accordance with standards established by insurance regulators.
“Stock Plans”The RGA flexible stock plan and the Flexible Stock Plan for Directors, collectively
TakafulA form of insurance that is acceptable within Islamic law, and that is devised upon the principles of mutual advantage and group security.
TDRTroubled Debt Restructuring
Tele-underwritingA telephone interview process, during which an applicant's qualifications to be insured are assessed.
The “County”The County of St. Louis, Missouri
The “Plan”RGA Flexible Stock Plan
The BoardRGA's board of directors
The CARES ActThe Coronavirus Aid, Relief, and Economic Security Act
The Companies ActThe Bermuda's Companies Act of 1981
The CompanyReinsurance Group of America, Incorporated and its subsidiaries, all of which are wholly owned, collectively
Treaty (also known as a contract)A reinsurance agreement between a reinsurer and a ceding company. The three most common types of reinsurance treaties are YRT (yearly renewable term), coinsurance and modified coinsurance. The three most common methods of accepting reinsurance are automatic, facultative and facultative-obligatory.
TVaRTail Value-at-Risk used for calculated capital requirement for Bermuda subsidiaries.
U.S. Tax ReformThe U.S. Tax Cuts and Jobs Act of 2017
UAEUnited Arab Emirates
UKUnited Kingdom
ULUniversal life insurance
UnderwritingThe process that assesses the risk inherent in an application for insurance prior to acceptance of the policy.
ValuationThe periodic calculation of reserves, the funds that insurance companies are required to hold in order satisfy all future insurance obligations.
Variable life insuranceA form of whole life insurance under which the death benefit and the cash value of the policy fluctuate according to the performance of an investment fund. Most variable life insurance policies guarantee that the death benefit will not fall below a specified minimum.
VIIVariable investment income
VOCRAValue of customer relationships acquired which represents the present value of the expected future profits associated with the expected future business acquired through existing customers of the acquired company or business.
VODAValue of distribution agreements which represents the present value of future profits associated with the expected future business derived from distribution agreements.
WebcastsPresentation of information broadcast over the Internet.
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WorkWiseThe Company's hybrid approach to flexible work arrangements.
Yearly Renewable Term (YRT)A type of reinsurance which covers only mortality risk, with each year's premium based on the current amount of risk.
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SIGNATURES
 
 
Pursuant to the requirements 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.


Reinsurance Group of America, Incorporated
 
 
Date: November 2, 2017May 5, 2023By: /s/ Anna Manning
Anna Manning
President & Chief Executive Officer
(Principal Executive Officer)
 
 
 
 
Date: November 2, 2017May 5, 2023By:/s/ Todd C. Larson
Todd C. Larson
Senior Executive Vice President &and Chief Financial Officer
(Principal Financial and Accounting Officer)


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