0000898174us-gaap:EquitySecuritiesMember2020-03-31CustomerConcentrationRiskMemberrga:ReinsuranceCededReceivablesBenchmarkMemberrga:ReinsurerBMembersrt:AMBestAPlusRatingMember2022-01-012022-03-31
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021March 31, 2022
 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  43-1627032
(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 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   No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x     Accelerated filer o     Non-accelerated filer o     
Smaller reporting company      Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes   No
Securities 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
6.20% Fixed-To-Floating Rate Subordinated Debentures due 2042RZANew York Stock Exchange
5.75% Fixed-To-Floating Rate Subordinated Debentures due 2056RZBNew York Stock Exchange
As of July 31, 2021, 67,996,937April 30, 2022, 66,989,863 shares of the registrant’s common stock were outstanding.


Table of Contents

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
 
ItemItem     PageItem     Page
  PART I – FINANCIAL INFORMATION    PART I – FINANCIAL INFORMATION  
11    1    
    
        
        
    
    
        
    
     3. Equity
     4. Investments
     3. Equity
     4. Investments
     9. Income Tax
     9. Income Tax
     11. Reinsurance
     11. Reinsurance
22    2    
33    3    
44    4    
  PART II – OTHER INFORMATION    PART II – OTHER INFORMATION  
11    1    
1A1A    1A    
22    2    
66    6    
        
        

2

Table of Contents

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)
June 30,
2021
December 31,
2020
(Dollars in millions, except share data)March 31,
2022
December 31,
2021
Assets
Assets
Assets
Fixed maturity securities available-for-sale, at fair value (amortized cost of $52,797 and $49,548; allowance for credit losses of $16 and $20)$58,287 $56,735 
Fixed maturity securities available-for-sale, at fair value (amortized cost of $57,849 and $55,873; allowance for credit losses of $42 and $31)Fixed maturity securities available-for-sale, at fair value (amortized cost of $57,849 and $55,873; allowance for credit losses of $42 and $31)$57,922 $60,749 
Equity securities, at fair valueEquity securities, at fair value147 132 Equity securities, at fair value139 151 
Mortgage loans on real estate (net of allowance for credit losses of $45 and $64)6,481 5,787 
Mortgage loans on real estate (net of allowance for credit losses of $37 and $35)Mortgage loans on real estate (net of allowance for credit losses of $37 and $35)6,535 6,283 
Policy loansPolicy loans1,254 1,258 Policy loans1,221 1,234 
Funds withheld at interestFunds withheld at interest7,049 5,432 Funds withheld at interest6,737 6,954 
Short-term investmentsShort-term investments184 227 Short-term investments315 87 
Other invested assetsOther invested assets2,924 2,829 Other invested assets3,033 3,070 
Total investmentsTotal investments76,326 72,400 Total investments75,902 78,528 
Cash and cash equivalentsCash and cash equivalents3,254 3,408 Cash and cash equivalents2,709 2,948 
Accrued investment incomeAccrued investment income525 511 Accrued investment income578 533 
Premiums receivable and other reinsurance balancesPremiums receivable and other reinsurance balances3,102 2,842 Premiums receivable and other reinsurance balances2,883 2,888 
Reinsurance ceded receivablesReinsurance ceded receivables1,093 983 Reinsurance ceded receivables2,595 2,580 
Deferred policy acquisition costsDeferred policy acquisition costs3,622 3,616 Deferred policy acquisition costs3,797 3,690 
Other assetsOther assets1,022 896 Other assets1,297 1,008 
Total assetsTotal assets$88,944 $84,656 Total assets$89,761 $92,175 
Liabilities and Stockholders’ Equity
Liabilities and EquityLiabilities and Equity
Future policy benefitsFuture policy benefits$33,761 $31,453 Future policy benefits$35,946 $35,782 
Interest-sensitive contract liabilitiesInterest-sensitive contract liabilities26,161 23,276 Interest-sensitive contract liabilities28,083 26,377 
Other policy claims and benefitsOther policy claims and benefits6,795 6,413 Other policy claims and benefits7,079 6,993 
Other reinsurance balancesOther reinsurance balances531 598 Other reinsurance balances582 613 
Deferred income taxesDeferred income taxes2,699 3,263 Deferred income taxes1,843 2,886 
Other liabilitiesOther liabilities2,057 1,340 Other liabilities3,123 2,663 
Long-term debtLong-term debt3,173 3,573 Long-term debt3,667 3,667 
Collateral finance and securitization notesCollateral finance and securitization notes323 388 Collateral finance and securitization notes166 180 
Total liabilitiesTotal liabilities75,500 70,304 Total liabilities80,489 79,161 
Commitments and contingent liabilities (See Note 8)Commitments and contingent liabilities (See Note 8)00Commitments and contingent liabilities (See Note 8)00
Stockholders’ Equity:
Preferred 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 June 30, 2021 and December 31, 2020
Additional paid-in capital2,430 2,406 
Equity: Equity:
Preferred stock – par value $.01 per share, 10,000,000 shares authorized, no shares issued or outstandingPreferred 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, 85,310,598 shares issued at March 31, 2022 and December 31, 2021Common stock – par value $.01 per share, 140,000,000 shares authorized, 85,310,598 shares issued at March 31, 2022 and December 31, 2021
Additional paid-in-capitalAdditional paid-in-capital2,465 2,461 
Retained earningsRetained earnings8,531 8,148 Retained earnings8,446 8,563 
Treasury stock, at cost – 17,313,661 and 17,353,697 shares(1,559)(1,562)
Accumulated other comprehensive income4,041 5,359 
Total stockholders’ equity13,444 14,352 
Total liabilities and stockholders’ equity$88,944 $84,656 
Treasury stock, at cost – 18,322,345 and 18,139,868 sharesTreasury stock, at cost – 18,322,345 and 18,139,868 shares(1,675)(1,653)
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(55)3,642 
Total Reinsurance Group of America, Inc. stockholders’ equityTotal Reinsurance Group of America, Inc. stockholders’ equity9,182 13,014 
Noncontrolling interestNoncontrolling interest90 — 
Total equityTotal equity9,272 13,014 
Total liabilities and equityTotal liabilities and equity$89,761 $92,175 
See accompanying notes to condensed consolidated financial statements (unaudited).
3

Table of Contents

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(Unaudited)
 
Three months ended June 30,Six months ended June 30, Three months ended March 31,
2021202020212020 20222021
Revenues:Revenues:(Dollars in millions, except per share data)Revenues:
Net premiumsNet premiums$3,098 $2,790 $6,012 $5,609 Net premiums$3,155 $2,914 
Investment income, net of related expenses759 645 1,571 1,239 
Net investment incomeNet investment income810 812 
Investment related gains (losses), netInvestment related gains (losses), net112 81 414 (204)Investment related gains (losses), net(126)302 
Other revenuesOther revenues168 90 259 166 Other revenues91 91 
Total revenuesTotal revenues4,137 3,606 8,256 6,810 Total revenues3,930 4,119 
Benefits and Expenses:Benefits and Expenses:Benefits and Expenses:
Claims and other policy benefitsClaims and other policy benefits2,813 2,700 6,005 5,364 Claims and other policy benefits3,225 3,192 
Interest creditedInterest credited218 187 364 333 Interest credited141 146 
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses339 290 672 538 Policy acquisition costs and other insurance expenses355 333 
Other operating expensesOther operating expenses240 188 454 383 Other operating expenses226 214 
Interest expenseInterest expense43 42 88 83 Interest expense42 45 
Collateral finance and securitization expenseCollateral finance and securitization expense10 Collateral finance and securitization expense
Total benefits and expensesTotal benefits and expenses3,655 3,411 7,588 6,711 Total benefits and expenses3,990 3,933 
Income before income taxes
482 195 668 99 
Income (loss) before income taxes
Income (loss) before income taxes
(60)186 
Provision for income taxesProvision for income taxes138 37 185 29 Provision for income taxes47 
Net income$344 $158 $483 $70 
Net income (loss)Net income (loss)$(63)$139 
Earnings per share:Earnings per share:Earnings per share:
Basic earnings per shareBasic earnings per share$5.06 $2.49 $7.11 $1.12 Basic earnings per share$(0.93)$2.04 
Diluted earnings per shareDiluted earnings per share$5.02 $2.48 $7.06 $1.11 Diluted earnings per share$(0.93)$2.03 
See accompanying notes to condensed consolidated financial statements (unaudited).
4

Table of Contents

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
 
Three months ended June 30,Six months ended June 30, Three months ended March 31,
2021202020212020 20222021
Comprehensive income (loss)Comprehensive income (loss)(Dollars in millions)Comprehensive income (loss)
Net income$344 $158 $483 $70 
Net income (loss)Net income (loss)$(63)$139 
Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:
Foreign currency translation adjustmentsForeign currency translation adjustments19 13 49 (118)Foreign currency translation adjustments13 30 
Net unrealized investment gains (losses)Net unrealized investment gains (losses)1,020 2,663 (1,367)790 Net unrealized investment gains (losses)(3,710)(2,387)
Defined benefit pension and postretirement plan adjustmentsDefined benefit pension and postretirement plan adjustments(5)(8)Defined benefit pension and postretirement plan adjustments— — 
Total other comprehensive income (loss), net of taxTotal other comprehensive income (loss), net of tax1,039 2,671 (1,318)664 Total other comprehensive income (loss), net of tax(3,697)(2,357)
Total comprehensive income (loss)Total comprehensive income (loss)$1,383 $2,829 $(835)$734 Total comprehensive income (loss)$(3,760)$(2,218)
See accompanying notes to condensed consolidated financial statements (unaudited).
5

Table of Contents

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

Three months ended June 30, 2021 and 2020Reinsurance Group of America, Inc. Stockholders’ Equity
Common
Stock
Additional Paid In CapitalRetained
Earnings
Treasury
Stock
Accumulated Other Comprehensive IncomeTotalCommon
Stock
Additional Paid In CapitalRetained
Earnings
Treasury
Stock
Accumulated Other Comprehensive Income (Loss)Total RGA, Inc. Stockholders’ EquityNoncontrolling InterestTotal Equity
Balance, March 31, 2021$$2,411 $8,235 $(1,559)$3,002 $12,090 
Balance, December 31, 2021Balance, December 31, 2021$$2,461 $8,563 $(1,653)$3,642 $13,014 $— $13,014 
Issuance of preferred interests by subsidiaryIssuance of preferred interests by subsidiary— 90 90 
Net incomeNet income344 344 Net income(63)(63)(63)
Total other comprehensive income (loss)Total other comprehensive income (loss)1,039 1,039 Total other comprehensive income (loss)(3,697)(3,697)(3,697)
Dividends to stockholders, $0.70 per share(47)(47)
Dividends to stockholders, $0.73 per shareDividends to stockholders, $0.73 per share(49)(49)(49)
Purchase of treasury stockPurchase of treasury stock(1)(1)Purchase of treasury stock(27)(27)(27)
Reissuance of treasury stockReissuance of treasury stock19 (1)19 Reissuance of treasury stock(5)
Balance, June 30, 2021$$2,430 $8,531 $(1,559)$4,041 $13,444 
Balance, March 31, 2022Balance, March 31, 2022$$2,465 $8,446 $(1,675)$(55)$9,182 $90 $9,272 
Balance, March 31, 2020$$1,942 $7,802 $(1,574)$1,130 $9,301 
Net income158 158 
Total other comprehensive income (loss)2,671 2,671 
Dividends to stockholders, $0.70 per share(43)(43)
Issuance of common stock, net of expenses481 481 
Purchase of treasury stock(6)(6)
Reissuance of treasury stock(10)(16)17 (9)
Balance, June 30, 2020$$2,413 $7,901 $(1,563)$3,801 $12,553 

Six months ended June 30, 2021 and 2020
Common
Stock
Additional Paid In CapitalRetained
Earnings
Treasury
Stock
Accumulated Other Comprehensive IncomeTotal
Balance, December 31, 2020$$2,406 $8,148 $(1,562)$5,359 $14,352 
Adoption of new accounting standards
Net income483 483 
Total other comprehensive income (loss)(1,318)(1,318)
Dividends to stockholders, $1.40 per share(95)(95)
Issuance of common stock, net of expenses0
Purchase of treasury stock(2)(2)
Reissuance of treasury stock24 (5)24 
Balance, June 30, 2021$$2,430 $8,531 $(1,559)$4,041 $13,444 
Balance, December 31, 2019$$1,937 $7,952 $(1,426)$3,137 $11,601 
Adoption of new accounting standards(12)(12)
Net income70 70 
Total other comprehensive income (loss)664 664 
Dividends to stockholders, $1.40 per share(87)(87)
Issuance of common stock, net of expenses481 481 
Purchase of treasury stock(162)(162)
Reissuance of treasury stock(5)(22)25 (2)
Balance, June 30, 2020$$2,413 $7,901 $(1,563)$3,801 $12,553 
Reinsurance Group of America, 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$$2,406 $8,148 $(1,562)$5,359 $14,352 $— $14,352 
Issuance of preferred interests by subsidiary— — 
Net income139 139 139 
Total other comprehensive income (loss)(2,357)(2,357)(2,357)
Dividends to stockholders, $0.70 per share(48)(48)(48)
Purchase of treasury stock(1)(1)(1)
Reissuance of treasury stock(4)
Balance, March 31, 2021$$2,411 $8,235 $(1,559)$3,002 $12,090 $— $12,090 

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


6

Table of Contents

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
(Unaudited)
 Six months ended June 30,
 20212020
 
 (Dollars in millions)
Net cash provided by (used in) operating activities$2,330 $2,579 
Cash flows from investing activities:
Sales of fixed maturity securities available-for-sale7,235 3,835 
Maturities of fixed maturity securities available-for-sale545 406 
Sales of equity securities180 
Principal payments and sales of mortgage loans on real estate417 283 
Principal payments on policy loans12 15 
Purchases of fixed maturity securities available-for-sale(9,885)(4,875)
Purchases of equity securities(1)(21)
Cash invested in mortgage loans on real estate(783)(604)
Cash invested in policy loans(8)(6)
Cash invested in funds withheld at interest(52)(49)
Proceeds from sale of businesses, net of cash transferred of $4319 
Purchases of property and equipment(10)(11)
Change in short-term investments223 (19)
Change in other invested assets112 (158)
Net cash provided by (used in) investing activities(2,173)(1,024)
Cash flows from financing activities:
Dividends to stockholders(95)(87)
Proceeds from issuance of common stock, net481 
Repayment of collateral finance and securitization notes(65)(160)
Proceeds from long-term debt issuance598 
Debt issuance costs(5)
Principal payments of long-term debt(401)(1)
Purchases of treasury stock(2)(162)
Exercise of stock options, net
Change in cash collateral for derivative positions and other arrangements184 93 
Deposits on universal life and other investment type policies and contracts599 1,004 
Withdrawals on universal life and other investment type policies and contracts(520)(429)
Net cash provided by (used in) financing activities(300)1,333 
Effect of exchange rate changes on cash(11)(24)
Change in cash and cash equivalents(154)2,864 
Cash and cash equivalents, beginning of period3,408 1,449 
Cash and cash equivalents, end of period$3,254 $4,313 
Supplemental disclosures of cash flow information:
Interest paid$85 $80 
Income taxes paid (received), net of refunds$185 $(12)
Non-cash investing activities:
Transfer of invested assets$1,557 $
Sale of businesses:
Assets disposed, net of cash transferred$(512)$
Liabilities disposed$504 $
 Three months ended March 31,
20222021
 
Net cash provided by operating activities163 2,366 
Cash Flows from Investing Activities:
Sales of fixed maturity securities available-for-sale2,608 2,738 
Maturities of fixed maturity securities available-for-sale228 216 
Sales of equity securities
Principal payments on mortgage loans on real estate188 164 
Principal payments on policy loans13 10 
Purchases of fixed maturity securities available-for-sale(4,762)(5,293)
Cash invested in mortgage loans on real estate(443)(356)
Cash invested in policy loans— (4)
Cash invested in funds withheld at interest, net(5)(26)
Purchases of property and equipment(6)(4)
Change in short-term investments(232)64 
Change in other invested assets172 (2)
Net cash used in investing activities(2,235)(2,492)
Cash Flows from Financing Activities:
Dividends to stockholders(49)(48)
Repayment of collateral finance and securitization notes(14)(42)
Principal payments of long-term debt(1)(1)
Purchases of treasury stock(27)(1)
Change in cash collateral for derivative positions and other arrangements(6)(25)
Change in deposit asset on reinsurance(3)— 
Deposits to investment-type policies and contracts2,369 255 
Withdrawals from investment-type policies and contracts(505)(281)
Issuance of preferred interests by subsidiary90 — 
Net cash provided by (used in) financing activities1,854 (143)
Effect of exchange rate changes on cash(21)(17)
Change in cash and cash equivalents(239)(286)
Cash and cash equivalents, beginning of period2,948 3,408 
Cash and cash equivalents, end of period$2,709 $3,122 
Supplemental disclosures of cash flow information:
Interest paid$33 $36 
Income taxes paid, net of refunds$81 $61 
See accompanying notes to condensed consolidated financial statements (unaudited).
7

Table of Contents

REINSURANCE GROUP OF AMERICA, INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 
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. 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 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 and should be read in conjunction with the Company’s 20202021 Annual Report on Form 10-K filed with the SEC on February 26, 202125, 2022 (the “2020“2021 Annual Report”).
In the opinion of management, all adjustments, including normal recurring adjustments necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.2022.
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.
2.    Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share on net income (in millions, except per share information):
Three months ended June 30,Six months ended June 30,Three months ended March 31,
2021202020212020 20222021
Earnings:Earnings:Earnings:
Net income$344 $158 $483 $70 
Net income (loss)Net income (loss)$(63)$139 
Shares:Shares:Shares:
Weighted average outstanding sharesWeighted average outstanding shares68 63 68 63 Weighted average outstanding shares67 68 
Equivalent shares from outstanding stock options
Equivalent shares from outstanding stock awardsEquivalent shares from outstanding stock awards— 
Denominator for diluted calculationDenominator for diluted calculation69 64 69 64 Denominator for diluted calculation68 68 
Earnings per share:Earnings per share:Earnings per share:
BasicBasic$5.06 $2.49 $7.11 $1.12 Basic$(0.93)$2.04 
DilutedDiluted$5.02 $2.48 $7.06 $1.11 Diluted$(0.93)$2.03 

As a result of the net loss for the three months ended March 31, 2022, the Company is required to use basic weighted average common shares outstanding of 67 million in the calculation of diluted loss per share, since the inclusion of shares for outstanding stock awards would be anti-dilutive to the loss per share calculations.
The calculation of common equivalent shares does not include the impact of stock awards with a 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. Approximately 0.9 million and 1.31.2 million stock awards and approximately 0.50.2 million performance contingent shares were excluded from the calculation of common equivalent shares during the three and six month periodsmonths ended June 30, 2021, respectively.March 31, 2022.

8

Table of Contents

3.    Equity
Common Stockstock
The changes in the number of common stock shares issued, held in treasury and outstanding are as follows for the periods indicated:
IssuedHeld In TreasuryOutstanding
Balance, December 31, 202085,310,598 17,353,697 67,956,901 
Issuance of common stock
Common stock acquired
Stock-based compensation (1)
(40,036)40,036 
Balance, June 30, 202185,310,598 17,313,661 67,996,937 
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 
IssuedHeld In TreasuryOutstanding
Balance, December 31, 201979,137,758 16,481,656 62,656,102 
Issuance of common stock6,172,840 6,172,840 
Common stock acquired1,074,413 (1,074,413)
Stock-based compensation (1)
(181,330)181,330 
Balance, June 30, 202085,310,598 17,374,739 67,935,859 
IssuedHeld In TreasuryOutstanding
Balance, December 31, 202085,310,598 17,353,697 67,956,901 
Common Stock acquired— — — 
Stock-based compensation (1)
— (28,342)28,342 
Balance, March 31, 202185,310,598 17,325,355 67,985,243 
(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.
InOn January 24, 2019, RGA’s board of directors authorized a share repurchase program for up to $400 million of RGA’s outstanding common stock. During the three months ended March 31, 2022, RGA repurchased 219,116 shares of common stock under this program for $25 million.
On February 25, 2022, RGA’s board of directors authorized a share repurchase program for up to $400 million of RGA’s outstanding common stock. The authorization was effective immediately and does not have an expiration date. On August 3, 2021,In connection with this authorization, the Company announcedboard of directors terminated the lifting of the existing suspension on share repurchases.stock repurchase authority granted in 2019. During the sixthree months ended June 30, 2021,March 31, 2022, RGA did not repurchase any shares of common stock under this program. During
Noncontrolling Interest
In 2022, Papara Financing LLC (“Papara”), a subsidiary of RGA Reinsurance Company, issued nonconvertible preferred interests to an unaffiliated third party. Papara holds investments in mortgage loans on real estate.
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 and pay an initial preferred distribution at an annual rate of 2.375% plus three month LIBOR. The applicable rate of interest is reset every five years. Distributions are paid quarterly, if declared by Papara. RGA can call the first sixPapara preferred interests at the issue price beginning five years from the issuance date or upon the receipt of proceeds from the sale of the underlying assets.
The holders of the Papara preferred interests have the option to require redemption upon the occurrence of certain contingent events, such as the failure of Papara to pay the preferred distribution for two or more periods or to meet certain other requirements, including a minimum credit rating. If notice is given upon such an event, all other holders of equal or more subordinate classes of membership interests in Papara are entitled to receive the same form of consideration payable to the holders of the preferred interests, resulting in a deemed liquidation for accounting purposes. The preferred interests are included in noncontrolling interest, and net income attributable to noncontrolling interest was $0.4 million for the three months ended March 31, 2022.

9

Table of 2020, RGA repurchased 1,074,413 shares of common stock under this program for $153 million.Contents

Accumulated Other Comprehensive Income (Loss)
The balance of and changes in each component of accumulated other comprehensive income (loss) (“AOCI”) for the sixthree months ended June 30,March 31, 2022 and 2021 and 2020 are as follows (dollars in millions):
Accumulated
Currency
Translation
Adjustments
Unrealized
Appreciation
(Depreciation)
of Investments(1)
Pension and
Postretirement
Benefits
Total Accumulated Other Comprehensive Income (Loss), Net of Income Tax
Balance, December 31, 2020$(69)$5,500 $(72)$5,359 
Accumulated
Currency
Translation
Adjustments
Unrealized
Appreciation
(Depreciation)
of Investments(1)
Pension and
Postretirement
Benefits
Total
Balance, December 31, 2021Balance, December 31, 2021$(9)$3,701 $(50)$3,642 
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications55 (1,607)(3)(1,555)Other comprehensive income (loss) before reclassifications14 (4,888)(1)(4,875)
Amounts reclassified to (from) AOCIAmounts reclassified to (from) AOCI(154)(151)Amounts reclassified to (from) AOCI— 138 139 
Deferred income tax benefit (expense)Deferred income tax benefit (expense)(6)394 388 Deferred income tax benefit (expense)(1)1,040 — 1,039 
Balance, June 30, 2021$(20)$4,133 $(72)$4,041 
Balance, March 31, 2022Balance, March 31, 2022$$(9)$(50)$(55)
Accumulated
Currency
Translation
Adjustments
Unrealized
Appreciation
(Depreciation)
of Investments(1)
Pension and
Postretirement
Benefits
Total Accumulated Other Comprehensive Income (Loss), Net of Income Tax
Balance, December 31, 2019$(92)$3,299 $(70)$3,137 
Accumulated
Currency
Translation
Adjustments
Unrealized
Appreciation
(Depreciation)
of Investments(1)
Pension and
Postretirement
Benefits
Total
Balance, December 31, 2020Balance, December 31, 2020$(69)$5,500 $(72)$5,359 
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications(116)1,034 (12)906 Other comprehensive income (loss) before reclassifications35 (2,947)(1)(2,913)
Amounts reclassified to (from) AOCIAmounts reclassified to (from) AOCIAmounts reclassified to (from) AOCI— (113)(112)
Deferred income tax benefit (expense)Deferred income tax benefit (expense)(2)(244)(244)Deferred income tax benefit (expense)(5)673 — 668 
Balance, June 30, 2020$(210)$4,089 $(78)$3,801 
Balance, March 31, 2021Balance, March 31, 2021$(39)$3,113 $(72)$3,002 
(1)Includes cash flow hedges of $(40)$(81) and $(22) as of March 31, 2022 and December 31, 2021, respectively, and $(71) and $(49) as of June 30,March 31, 2021 and December 31, 2020, respectively, and $(74) and $(26) as of June 30, 2020 and December 31, 2019, respectively. See Note 5 – “Derivative Instruments” for additional information on cash flow hedges.


9

Table of Contents

The following table presents the amounts of AOCI reclassifications for the three and six months ended June 30,March 31, 2022 and 2021 and 2020 (dollars in millions):
Amount Reclassified from AOCIAmount Reclassified from AOCI
Three months ended June 30,Six months ended June 30,Three months ended March 31,Affected Line Item in 
Statement of Income
Details about AOCI ComponentsDetails about AOCI Components2021202020212020Affected Line Item in Statements of IncomeDetails about AOCI Components20222021
Net unrealized investment gains (losses):Net unrealized investment gains (losses):Net unrealized investment gains (losses):
Net unrealized gains (losses) on available-for-sale securitiesNet unrealized gains (losses) on available-for-sale securities$26 $11 $183 $(28)Investment related gains (losses), netNet unrealized gains (losses) on available-for-sale securities$(35)$157 Investment related gains (losses), net
Cash flow hedges – Interest rate(1)(2)(1)(1)
Cash flow hedges – Currency/Interest rateCash flow hedges – Currency/Interest rate(4)(4)(1)Cash flow hedges – Currency/Interest rate(1)(2)(1)
Deferred policy acquisition costs attributed to unrealized gains and lossesDeferred policy acquisition costs attributed to unrealized gains and losses19 131 (23)29 (2)Deferred policy acquisition costs attributed to unrealized gains and losses(102)(42)(2)
TotalTotal41 141 154 Total(138)113 
Provision for income taxesProvision for income taxes(9)(29)(33)(2)Provision for income taxes29 (24)
Net unrealized gains (losses), net of taxNet unrealized gains (losses), net of tax$32 $112 $121 $(2)Net unrealized gains (losses), net of tax$(109)$89 
Amortization of defined benefit plan items:Amortization of defined benefit plan items:Amortization of defined benefit plan items:
Prior service cost (credit)Prior service cost (credit)$$$$(3)Prior service cost (credit)$— $— (3)
Actuarial gains (losses)Actuarial gains (losses)(3)(2)(4)(3)(3)Actuarial gains (losses)(1)(1)(3)
TotalTotal(2)(1)(3)(2)Total(1)(1)
Provision for income taxesProvision for income taxes— — Provision for income taxes— — 
Amortization of defined benefit plans, net of taxAmortization of defined benefit plans, net of tax$(1)$(1)$(2)$(2)Amortization of defined benefit plans, net of tax$(1)$(1)
Total reclassifications for the periodTotal reclassifications for the period$31 $111 $119 $(4)Total reclassifications for the period$(110)$88 
(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 20202021 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.
10

Table of Contents

Equity Based Compensation
Equity compensation expense was $24$4 million and $(5)$5 million infor the first sixthree months ofended March 31, 2022 and 2021, and 2020, respectively. In the first quarter of 2021,2022, the Company granted 200,239258,327 stock appreciation rights at $129.01$106.53 weighted average exercise price per share, 167,88378,687 performance contingent awardsshares and 327,813215,601 restricted stock units to employees. Performance contingent awards include both performance contingent shares and performance share units. Additionally, non-employee directors were granted a total of 8,154 shares of common stock. As of June 30, 2021, 1,633,693March 31, 2022, 1,736,018 share awards at a weighted average strike price per share of $96.87$105.02 were vested and exercisable with a remaining weighted average exercise period of 4.44.5 years. As of June 30, 2021,March 31, 2022, the total compensation cost of non-vested awards not yet recognized in the condensed consolidated financial statements was $56$50 million. It is estimated that these costs will vest over a weighted average period of 1.0 year.0.9 years.
10

Table of Contents

4.    Investments
Fixed Maturity 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”), residential mortgage-backed securities (“RMBS”), asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), 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”). RMBS, ABS and CMBS are collectively “structured securities.”
The following tables provide information relating to investments in fixed maturity securities by type as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
June 30, 2021:Amortized
Cost
Allowance for Credit LossesUnrealized GainsUnrealized LossesEstimated
Fair Value
% of Total
March 31, 2022:March 31, 2022:AmortizedAllowance forUnrealizedUnrealizedEstimated Fair% of
CostCredit LossesGainsLossesValueTotal
Available-for-sale:Available-for-sale:Available-for-sale:
CorporateCorporate$33,687 $11 $3,465 $137 $37,004 63.4 %Corporate$36,813 $33 $954 $1,354 $36,380 62.8 %
Canadian governmentCanadian government3,303 1,602 4,903 8.4 Canadian government3,381 — 1,038 12 4,407 7.6 
RMBSRMBS1,323 60 1,377 2.4 RMBS983 — 11 28 966 1.7 
ABSABS3,467 36 21 3,482 6.0 ABS3,915 169 3,746 6.5 
CMBSCMBS1,774 102 1,869 3.2 CMBS1,829 48 1,786 3.1 
U.S. governmentU.S. government1,295 47 24 1,318 2.3 U.S. government1,587 — 69 1,525 2.6 
State and political subdivisionsState and political subdivisions1,206 144 1,344 2.3 State and political subdivisions1,206 — 50 47 1,209 2.1 
Other foreign governmentOther foreign government6,742 317 65 6,990 12.0 Other foreign government8,135 110 339 7,903 13.6 
Total fixed maturity securitiesTotal fixed maturity securities$52,797 $16 $5,773 $267 $58,287 100.0 %Total fixed maturity securities$57,849 $42 $2,181 $2,066 $57,922 100.0 %
December 31, 2020:Amortized CostAllowance for Credit LossesUnrealized GainsUnrealized LossesEstimated Fair Value% of Total
December 31, 2021:December 31, 2021:AmortizedAllowance forUnrealizedUnrealizedEstimated Fair% of
CostCredit LossesGainsLossesValueTotal
Available-for-sale:Available-for-sale:Available-for-sale:
CorporateCorporate$31,963 $17 $4,356 $94 $36,208 63.9 %Corporate$35,239 $26 $3,084 $194 $38,103 62.8 %
Canadian governmentCanadian government3,145 1,995 5,140 9.1 Canadian government3,339 — 1,606 4,944 8.1 
RMBSRMBS1,735 84 1,817 3.2 RMBS1,020 — 37 1,050 1.7 
ABSABS3,099 35 42 3,092 5.4 ABS4,024 — 22 41 4,005 6.6 
CMBSCMBS1,790 102 21 1,868 3.3 CMBS1,790 66 1,849 3.0 
U.S. governmentU.S. government1,242 196 1,437 2.5 U.S. government2,082 — 31 2,105 3.5 
State and political subdivisionsState and political subdivisions1,237 157 1,390 2.4 State and political subdivisions1,191 — 137 1,323 2.2 
Other foreign governmentOther foreign government5,337 479 33 5,783 10.2 Other foreign government7,188 273 87 7,370 12.1 
Total fixed maturity securitiesTotal fixed maturity securities$49,548 $20 $7,404 $197 $56,735 100.0 %Total fixed maturity securities$55,873 $31 $5,256 $349 $60,749 100.0 %
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 June 30, 2021March 31, 2022 and December 31, 2020,2021, 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 June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
June 30, 2021December 31, 2020
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Fixed maturity securities pledged as collateral$125 $135 $148 $162 
Fixed maturity securities received as collateraln/a1,881 n/a1,784 
Assets in trust held to satisfy collateral requirements27,929 30,749 27,675 31,179 
11

Table of Contents

March 31, 2022December 31, 2021
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Fixed maturity securities pledged as collateral$181 $173 $100 $103 
Fixed maturity securities received as collateraln/a1,743 n/a1,922 
Assets in trust held to satisfy collateral requirements29,136 29,077 28,671 31,173 
The Company monitors its concentrations of financial instruments on an ongoing basis and mitigates credit risk by maintaining a diversified investment portfolio that 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 the securities disclosed below, as of
11

Table of Contents

June 30, 2021. 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, as well as the securities disclosed below, as of March 31, 2022 and December 31, 20202021 (dollars in millions).
June 30, 2021December 31, 2020March 31, 2022December 31, 2021
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Fixed maturity securities guaranteed or issued by:Fixed maturity securities guaranteed or issued by:Fixed maturity securities guaranteed or issued by:
Government of JapanGovernment of Japan$2,890 $2,879 $1,493 $1,491 Government of Japan$3,887 $3,742 $3,080 $3,063 
Canadian province of QuebecCanadian province of Quebec1,372 2,315 1,303 2,474 Canadian province of Quebec1,409 2,062 1,377 2,347 
Canadian province of OntarioCanadian province of Ontario1,097 1,477 1,054 1,528 Canadian province of Ontario1,063 1,288 1,092 1,451 
The amortized cost and estimated fair value of fixed maturity securities classified as available-for-sale as of June 30, 2021,March 31, 2022, are shown by contractual maturity in the table below (dollars in 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. Structured securities are shown separately in the table below, as they are not due at a single maturity date.
Amortized CostEstimated Fair ValueAmortized CostEstimated Fair Value
Available-for-sale:Available-for-sale:Available-for-sale:
Due in one year or lessDue in one year or less$1,143 $1,150 Due in one year or less$1,511 $1,517 
Due after one year through five yearsDue after one year through five years8,350 8,887 Due after one year through five years10,009 10,112 
Due after five years through ten yearsDue after five years through ten years10,565 11,518 Due after five years through ten years11,862 11,776 
Due after ten yearsDue after ten years26,175 30,004 Due after ten years27,740 28,019 
Structured securitiesStructured securities6,564 6,728 Structured securities6,727 6,498 
TotalTotal$52,797 $58,287 Total$57,849 $57,922 
Corporate Fixed Maturity Securities
The tables below show the major sectors of the Company’s corporate fixed maturity holdings as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions): 
June 30, 2021: Estimated 
March 31, 2022:March 31, 2022: Estimated 
Amortized CostFair Value% of Total            Amortized Cost    Fair Value% of Total           
FinanceFinance$12,479 $13,627 36.8 %Finance$13,839 $13,599 37.4 %
IndustrialIndustrial17,032 18,749 50.7 Industrial18,496 18,382 50.5 
UtilityUtility4,176 4,628 12.5 Utility4,478 4,399 12.1 
TotalTotal$33,687 $37,004 100.0 %Total$36,813 $36,380 100.0 %
December 31, 2020: Estimated 
December 31, 2021:December 31, 2021: Estimated 
Amortized CostFair Value% of Total Amortized CostFair Value% of Total
FinanceFinance$11,785 $13,236 36.6 %Finance$13,101 $14,045 36.9 %
IndustrialIndustrial16,274 18,435 50.9 Industrial17,857 19,375 50.8 
UtilityUtility3,904 4,537 12.5 Utility4,281 4,683 12.3 
TotalTotal$31,963 $36,208 100.0 %Total$35,239 $38,103 100.0 %
12

Table of Contents

Allowance for Credit Losses and Impairments Fixed Maturity Securities Available-for-Sale
As discussed in Note 2 – “Significant Accounting Policies and Pronouncements” of the Company’s 20202021 Annual Report, allowances for credit losses on fixed maturity securities are recognized in investment related gains (losses), net on the condensed consolidated statements of income. For these securities, the netnet. The amount recognized 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 fixed maturity security prior to the allowance for credit losses. Any remaining difference between the fair value and amortized cost is recognized in AOCI.OCI.
The following table presentstables present the rollforward of the allowance for credit losses in fixed maturity securities by type for the sixthree months ended June 30, 2021 and 2020March 31, 2022 (dollarsand 2021 (dollars in millions):
Six months ended June 30, 2021
For the three months ended March 31, 2022:For the three months ended March 31, 2022:
CorporateCMBSOther Foreign GovernmentTotal CorporateABSCMBSOther Foreign GovernmentTotal
Balance, beginning of periodBalance, beginning of period$17 $$$20 Balance, beginning of period$26 $— $$$31 
Credit losses recognized on securities for which credit losses were not previously recordedCredit losses recognized on securities for which credit losses were not previously recordedCredit losses recognized on securities for which credit losses were not previously recorded— — 11 
Reductions for securities sold during the periodReductions for securities sold during the period(8)(2)(10)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 periodAdditional increases or decreases for credit losses on securities that had an allowance recorded in a previous period(1)(1)Additional increases or decreases for credit losses on securities that had an allowance recorded in a previous period— — — 
Balance, end of periodBalance, end of period$11 $$$16 Balance, end of period$33 $$$$42 
Six months ended June 30, 2020
For the three months ended March 31, 2021:For the three months ended March 31, 2021:
CorporateCMBSOther Foreign GovernmentTotal CorporateABSCMBSOther Foreign GovernmentTotal
Balance, beginning of periodBalance, beginning of period$$$$Balance, beginning of period$17 $— $$— $20 
Credit losses recognized on securities for which credit losses were not previously recordedCredit losses recognized on securities for which credit losses were not previously recorded40 42 Credit losses recognized on securities for which credit losses were not previously recorded— — 
Reductions for securities sold during the periodReductions for securities sold during the period(8)(1)(9)Reductions for securities sold during the period(1)— (2)— (3)
Additional increases or decreases for credit losses on securities that had an allowance recorded in a previous periodAdditional increases or decreases for credit losses on securities that had an allowance recorded in a previous period— — (1)— (1)
Balance, end of periodBalance, end of period$32 $$$33 Balance, end of period$16 $— $$$22 
Unrealized Losses for Fixed Maturity Securities Available-for-Sale
The following table presents the total gross unrealized losses for the 1,223 and 877 fixed maturity securities as of June 30, 2021 and December 31, 2020, where the estimated fair value had declined and remained below amortized cost by the indicated amount (dollars in millions):
 June 30, 2021December 31, 2020
 Gross
Unrealized
Losses
% of Total    Gross
Unrealized
Losses
% of Total    
Less than 20%$213 79.8 %$133 67.5 %
20% or more for less than six months0.7 42 21.3 
20% or more for six months or greater52 19.5 22 11.2 
Total$267 100.0 %$197 100.0 %
The Company’s determination of whether a decline in value necessitates the recording of an allowance for credit losses includes an 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.
13

Table of Contents

The following tables present the estimated fair valuesvalue and gross unrealized losses for the 4,136 and 1,862 fixed maturity securities that have estimated fair values below amortized costfor which an allowance for credit loss has not been recorded as of June 30, 2021March 31, 2022 and December 31, 20202021, and the estimated fair value had declined and remained below amortized cost (dollars in 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.
 Less than 12 months12 months or greaterTotal
  Gross Gross Gross
June 30, 2021:EstimatedUnrealizedEstimatedUnrealizedEstimatedUnrealized
 Fair ValueLossesFair ValueLossesFair ValueLosses
Investment grade securities:
Corporate$2,596 $79 $168 $$2,764 $85 
Canadian government24 — — 24 
RMBS261 21 282 
ABS800 754 1,554 
CMBS24 24 
U.S. government364 24 364 24 
State and political subdivisions95 29 124 
Other foreign government1,630 37 561 23 2,191 60 
Total investment grade securities5,770 153 1,557 40 7,327 193 
 
Below investment grade securities:
Corporate258 42 168 10 426 52 
ABS24 15 11 39 12 
CMBS43 43 
Other foreign government66 16 82 
Total below investment grade securities348 46 242 28 590 74 
Total fixed maturity securities$6,118 $199 $1,799 $68 $7,917 $267 

13

Table of Contents

Less than 12 months12 months or greaterTotal Less than 12 months12 months or greaterTotal
 Gross Gross Gross  Gross Gross Gross
December 31, 2020:EstimatedUnrealizedEstimatedUnrealizedEstimatedUnrealized
March 31, 2022:March 31, 2022:EstimatedUnrealizedEstimatedUnrealizedEstimatedUnrealized
Fair ValueLossesFair ValueLossesFair ValueLosses Fair ValueLossesFair ValueLossesFair ValueLosses
Investment grade securities:Investment grade securities:Investment grade securities:
CorporateCorporate$930 $29 $70 $$1,000 $34 Corporate$15,156 $1,082 $1,161 $186 $16,317 $1,268 
Canadian governmentCanadian government— — — — — — Canadian government127 15 142 12 
RMBSRMBS294 294 RMBS400 15 137 13 537 28 
ABSABS1,096 17 570 11 1,666 28 ABS2,632 139 604 18 3,236 157 
CMBSCMBS160 160 CMBS1,178 40 34 1,212 43 
U.S. governmentU.S. government27 27 U.S. government1,148 64 27 1,175 69 
State and political subdivisionsState and political subdivisions66 16 82 State and political subdivisions460 42 30 490 47 
Other foreign governmentOther foreign government973 27 973 27 Other foreign government4,287 218 727 83 5,014 301 
Total investment grade securitiesTotal investment grade securities3,546 83 656 19 4,202 102 Total investment grade securities25,388 1,608 2,735 317 28,123 1,925 
Below investment grade securities:Below investment grade securities:
Below investment grade securities:
CorporateCorporate375 49 81 11 456 60 Corporate878 50 108 33 986 $83 
ABSABS20 13 24 14 ABS22 31 
CMBSCMBS91 15 91 15 CMBS28 37 
Other foreign governmentOther foreign government36 28 64 Other foreign government172 15 102 23 274 38 
Total below investment grade securitiesTotal below investment grade securities522 80 113 15 635 95 Total below investment grade securities1,100 69 228 59 1,328 128 
Total fixed maturity securitiesTotal fixed maturity securities$4,068 $163 $769 $34 $4,837 $197 Total fixed maturity securities$26,488 $1,677 $2,963 $376 $29,451 $2,053 
 Less than 12 months12 months or greaterTotal
  Gross Gross Gross
December 31, 2021:EstimatedUnrealizedEstimatedUnrealizedEstimatedUnrealized
 Fair ValueLossesFair ValueLossesFair ValueLosses
Investment grade securities:
Corporate$4,135 $86 $946 $51 $5,081 $137 
Canadian government20 — — 20 
RMBS132 102 234 
ABS1,747 22 589 2,336 28 
CMBS152 35 187 
U.S. government1,513 31 1,544 
State and political subdivisions109 28 137 
Other foreign government2,237 33 724 37 2,961 70 
Total investment grade securities10,045 156 2,455 104 12,500 260 
Below investment grade securities:
Corporate463 13 97 44 560 57 
ABS— — 13 13 13 13 
CMBS— — — — — — 
Other foreign government136 75 10 211 17 
Total below investment grade securities599 20 185 67 784 87 
Total fixed maturity securities$10,644 $176 $2,640 $171 $13,284 $347 
The Company has no intention to sell, nor does it expect to be required to sell, the securities outlined in the tables above, as of the dates indicated. However, unforeseen facts and circumstances may cause the Company to sell fixed maturity securities in the ordinary course of managing its portfolio to meet certain diversification, credit quality and liquidity guidelines. Changes in unrealized losses are primarily driven by changes in interest rates.

14

Table of Contents

Net Investment Income and Investment Related Gains (Loss), Net Accounting Correction
During the first quarter of 2021, the Company reclassified approximately $92 million of pre-tax unrealized gains from AOCI to investment income, net of related expenses associated with investments in limited partnerships and private equity funds for which it utilizes the equity method of accounting. The unrealized gains should have been recognized directly in investment income in the same prior periods they were reported by the investees. In addition, the Company recorded approximately $70 million of pre-tax gains in investment related gains (losses), net, associated with investments in limited partnerships considered to be investment companies in order to adjust the carrying value from cost less impairments to a fair value approach, using the net asset value (“NAV”) per share or its equivalent. Had the adjustments been recorded in the years they were reported by the investees, the Company estimates it would have recognized approximately $102 million, $(2) million, $1 million and $10 million of pre-tax income (loss) in the years ended December 31, 2020, 2019, 2018 and 2017, respectively.
Investment Income, Net of Related Expenses
Major categories of net investment income net of related expenses, consist of the following (dollars in millions):
Three months ended June 30,Six months ended June 30, Three months ended March 31,
2021202020212020 20222021
Fixed maturity securities available-for-saleFixed maturity securities available-for-sale$516 $474 $1,011 $954 Fixed maturity securities available-for-sale$533 $495 
Equity securitiesEquity securitiesEquity securities
Mortgage loans on real estateMortgage loans on real estate73 66 139 133 Mortgage loans on real estate73 66 
Policy loansPolicy loans13 14 27 29 Policy loans13 14 
Funds withheld at interestFunds withheld at interest95 69 179 122 Funds withheld at interest51 84 
Short-term investments and cash and cash equivalentsShort-term investments and cash and cash equivalentsShort-term investments and cash and cash equivalents
Other invested assets87 41 261 36 
Other invested assets – limited partnerships and real estate joint venturesOther invested assets – limited partnerships and real estate joint ventures161 161 
Other invested assets – all otherOther invested assets – all other13 
Investment incomeInvestment income785 667 1,621 1,283 Investment income837 836 
Investment expenseInvestment expense(26)(22)(50)(44)Investment expense(27)(24)
Investment income, net of related expenses$759 $645 $1,571 $1,239 
Net investment incomeNet investment income$810 $812 
Investment Related Gains (Losses), Net
Investment related gains (losses), net consist of the following (dollars in millions): 
 Three months ended June 30,Six months ended June 30,
 2021202020212020
Fixed maturity securities available-for-sale:
Impairments and change in allowance for credit losses$$$$(34)
Gain on investment activity53 46 220 73 
Loss on investment activity(30)(46)(43)(54)
Net gains (losses) on equity securities20 23 (15)
Other impairment losses and change in mortgage loan allowance for credit losses(22)21 (35)
Change in fair value of certain limited partnership investments and other, net32 143 17 
Net gains (losses) on derivatives29 87 47 (156)
Total investment related gains (losses), net$112 $81 $414 $(204)

 Three months ended March 31,
 20222021
Fixed maturity securities available-for-sale:
Change in allowance for credit losses and impairments$(12)$(2)
Realized gains on investment activity11 167 
Realized losses on investment activity(36)(13)
Net gains (losses) on equity securities(8)
Other impairment losses and change in mortgage loan allowance for credit losses(2)18 
Change in fair value of certain limited partnership investments and other, net26 111 
Net gains (losses) on derivatives(105)18 
Total investment related gains (losses), net$(126)$302 
15

Table of Contents

Securities Borrowing, Lending and Repurchase/Reverse Repurchase Agreements
The following table includes the amount of borrowedprovides information relating to securities loaned securities and securities received as collateral as part of the securities lending program and repurchased/reverse repurchased securities pledged, securities received and cash received as of June 30, 2021 and December 31, 2020 (dollars in millions).
June 30, 2021December 31, 2020
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Borrowed securities$318 $360 $118 $161 
Securities lending:
Securities loaned94 103 94 105 
Securities receivedn/a102 n/a102 
Repurchase program/reverse repurchase program:
Securities pledged877 919 653 711 
Securities receivedn/a670 n/a669 
Cash receivedn/a207 n/a
No cash or securities have been pledged by the Company for its securities borrowing, and lending programs as of June 30, 2021 and December 31, 2020.
The following tables present information on the Company’s securities lending and repurchase/reverse repurchase transactionsagreements as of June 30, 2021March 31, 2022 and December 31, 2020, respectively2021 (dollars in millions).:
March 31, 2022December 31, 2021
Amortized
Cost
Estimated
Fair Value
Amortized
Cost
Estimated
Fair Value
Securities borrowing agreements:
Securities borrowed (1)
n/a$561 n/a$420 
Securities pledged as collateral (2)
460 437 279 290 
Securities lending agreements:
Securities loaned (2)
82 84 94 102 
Securities received as collateral (3)
n/a94 n/a102 
Repurchase/reverse repurchase agreements:
Securities pledged (2)
730 715 704 736 
Cash (4)
— — 10 10 
Securities received (3)
n/a690 n/a728 
Cash received (5)
42 42 — — 
(1)Securities borrowed are not reflected on the condensed consolidated balance sheets. Collateral associated with certain borrowed securities is not included within the tables,this table as the collateral pledged to eachthe counterparty is the right to reinsurance treaty cash flows.
June 30, 2021
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30 – 90 DaysGreater than 90 DaysTotal
Securities lending transactions:
Corporate$$$$103 $103 
Total103 103 
Repurchase/reverse repurchase transactions:
Corporate411 411 
Other foreign government220 288 508 
Total220 699 919 
Total transactions$$$220 $802 $1,022 
Gross amount of recognized liabilities for securities lending and repurchase/reverse repurchase transactions in preceding table$979 
Amounts related to agreements not included in offsetting disclosure$43 
December 31, 2020
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30 – 90 DaysGreater than 90 DaysTotal
Securities lending transactions:
Corporate$$$$105 $105 
Total105 105 
Repurchase/reverse repurchase transactions:
Corporate417 417 
Other foreign government294 294 
Total711 711 
Total transactions$$$$816 $816 
Gross amount of recognized liabilities for securities lending and repurchase/reverse repurchase transactions in preceding table$771 
Amounts related to agreements not included in offsetting disclosure$45 

(2)
Securities loaned and pledged to counterparties are included within fixed maturity securities.
(3)Securities received as collateral from counterparties are not reflected on the condensed consolidated financial statements.
(4)A receivable for the cash held by counterparties is included within other assets.
(5)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 the Company’s securities lending and repurchase agreements as of March 31, 2022 and December 31, 2021 (dollars in millions):
March 31, 2022
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30 – 90 DaysGreater than 90 DaysTotal
Securities lending agreements:
Corporate$— $— $— $71 $71 
State and political subdivisions— — — 
Other foreign government— — — 10 10 
Total— — — 84 84 
Repurchase agreements:
Corporate— — — 361 361 
Other foreign government— 106 — 248 354 
Total— 106 — 609 715 
Total agreements$— $106 $— $693 $799 
December 31, 2021
Remaining Contractual Maturity of the Agreements
Overnight and ContinuousUp to 30 Days30 – 90 DaysGreater than 90 DaysTotal
Securities lending agreements:
Corporate$— $— $— $94 $94 
State and political subdivisions— — — 
Other foreign government— — — 
Total— — — 102 102 
Repurchase agreements:
Corporate— — — 366 366 
Other foreign government— — — 370 370 
Total— — — 736 736 
Total agreements$— $— $— $838 $838 
16

Table of Contents

The Company has elected to offset amounts recognized as receivables and payables resulting from the repurchase/reverse repurchase programs excluding any cash received or paid. After the effect of offsetting, there was no liability presented on the consolidated balance sheet as of June 30, 2021 and December 31, 2020. As of June 30, 2021, the Company recognized payables resulting from cash received as collateral associated with a repurchase/reverse repurchase agreement. As of December 31, 2020, the Company did not have payables resulting from cash received as collateral associated with repurchase/reverse repurchase agreements. Amounts owed to and due from the counterparties may be settled in cash or offset, in accordance with the agreements.
Mortgage Loans on Real Estate
As of June 30, 2021,March 31, 2022, mortgage loans were geographically dispersed throughout the U.S. with the largest concentrations in Texas (13.5%California (12.7%), California (13.4%Texas (12.4%) and Washington (8.1%(7.5%), in addition to loans secured by properties in Canada (3.2%) and United Kingdom (1.8%(2.5%). The recorded investment in mortgage loans on real estate presented below is gross of unamortized deferred loan origination fees and expenses and allowance for credit losses.
The following table presents the distribution of the Company’s recorded investment in mortgage loans by property type as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
June 30, 2021December 31, 2020 March 31, 2022December 31, 2021
Property type: Property type:Carrying Value% of TotalCarrying Value% of Total Property type:Carrying Value% of TotalCarrying Value% of Total
OfficeOffice$1,733 26.5 %$1,702 29.0 %Office$1,699 25.9 %$1,683 26.6 %
RetailRetail2,036 31.2 1,711 29.3 Retail2,227 33.8 2,090 33.0 
IndustrialIndustrial1,388 21.2 1,210 20.6 Industrial1,451 22.0 1,249 19.7 
ApartmentApartment897 13.7 808 13.8 Apartment859 13.0 801 12.7 
Other commercialOther commercial483 7.4 430 7.3 Other commercial347 5.3 506 8.0 
Recorded investmentRecorded investment6,537 100.0 %5,861 100.0 %Recorded investment$6,583 100.0 %6,329 100.0 %
Unamortized balance of loan origination fees and expensesUnamortized balance of loan origination fees and expenses(11)(10)Unamortized balance of loan origination fees and expenses(11)(11)
Allowance for credit lossesAllowance for credit losses(45)(64)Allowance for credit losses(37)(35)
Total mortgage loans on real estateTotal mortgage loans on real estate$6,481 $5,787 Total mortgage loans on real estate$6,535 $6,283 
The following table presents the maturities of the Company’s recorded investment in mortgage loans as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
June 30, 2021December 31, 2020March 31, 2022December 31, 2021
Recorded
Investment
% of TotalRecorded
Investment
% of TotalRecorded
Investment
% of TotalRecorded
Investment
% of Total
Due within five yearsDue within five years$2,585 39.6 %$2,276 38.8 %Due within five years$2,724 41.4 %$2,660 42.0 %
Due after five years through ten yearsDue after five years through ten years2,845 43.5 2,768 47.3 Due after five years through ten years2,738 41.6 2,593 41.0 
Due after ten yearsDue after ten years1,107 16.9 817 13.9 Due after ten years1,121 17.0 1,076 17.0 
TotalTotal$6,537 100.0 %$5,861 100.0 %Total$6,583 100.0 %$6,329 100.0 %
The following tables set forth certain key credit quality indicators of the Company’s recorded investment in mortgage loans as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
Recorded InvestmentRecorded Investment
Debt Service RatiosConstruction LoansDebt Service RatiosConstruction loans
>1.20x1.00x – 1.20x<1.00xTotal% of Total>1.20x1.00x – 1.20x<1.00xTotal% of Total
June 30, 2021:
March 31, 2022:March 31, 2022:
Loan-to-Value RatioLoan-to-Value RatioLoan-to-Value Ratio
0% – 59.99%0% – 59.99%$3,053 $274 $65 $24 $3,416 52.2 %0% – 59.99%$3,257 $240 $33 $$3,539 53.8 %
60% – 69.99%60% – 69.99%2,110 200 42 2,352 36.0 60% – 69.99%1,995 199 53 — 2,247 34.1 
70% – 79.99%70% – 79.99%503 36 16 555 8.5 70% – 79.99%482 40 53 — 575 8.7 
80% or greater80% or greater193 21 214 3.3 80% or greater99 119 — 222 3.4 
TotalTotal$5,859 $510 $144 $24 $6,537 100.0 %Total$5,833 $483 $258 $$6,583 100.0 %
Recorded Investment
Debt Service RatiosConstruction loans
>1.20x1.00x – 1.20x<1.00xTotal% of Total
December 31, 2021:
Loan-to-Value Ratio
0% – 59.99%$3,111 $238 $51 $$3,406 53.8 %
60% – 69.99%1,906 190 46 — 2,142 33.8 
70% – 79.99%520 41 12 — 573 9.1 
80% or greater148 — 60 — 208 3.3 
Total$5,685 $469 $169 $$6,329 100.0 %
17

Table of Contents

Recorded Investment
Debt Service RatiosConstruction
Loans
>1.20x1.00x – 1.20x<1.00xTotal% of Total
December 31, 2020:
Loan-to-Value Ratio
0% – 59.99%$2,774 $106 $17 $12 $2,909 49.6 %
60% – 69.99%2,013 62 33 2,108 36.0 
70% – 79.99%555 49 13 617 10.5 
80% or greater189 21 17 227 3.9 
Total$5,531 $238 $80 $12 $5,861 100.0 %
The following table sets forth credit quality grades by year of origination of the Company’s recorded investment in mortgage loans as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
Recorded InvestmentRecorded Investment
Year of OriginationYear of Origination
20212020201920182017PriorTotal20222021202020192018PriorTotal
June 30, 2021:
March 31, 2022:March 31, 2022:
Internal credit quality grade:Internal credit quality grade:Internal credit quality grade:
High investment gradeHigh investment grade$491 $406 $569 $468 $304 $1,686 $3,924 High investment grade$196 $725 $375 $629 $435 $1,779 $4,139 
Investment gradeInvestment grade263 366 474 371 399 580 2,453 Investment grade236 366 298 333 300 723 2,256 
AverageAverage39 18 57 120 Average— — 27 49 66 148 
Watch listWatch listWatch list— — — — — 
In or near defaultIn or near default36 36 In or near default— $— — — — 36 36 
TotalTotal$760 $772 $1,043 $878 $721 $2,363 $6,537 Total$432 $1,097 $673 $989 $784 $2,608 $6,583 
Recorded InvestmentRecorded Investment
Year of OriginationYear of Origination
20202019201820172016PriorTotal20212020201920182017PriorTotal
December 31, 2020:
December 31, 2021:December 31, 2021:
Internal credit quality grade:Internal credit quality grade:Internal credit quality grade:
High investment gradeHigh investment grade$411 $616 $493 $336 $574 $1,008 $3,438 High investment grade$725 $402 $645 $461 $344 $1,534 $4,111 
Investment gradeInvestment grade352 496 399 407 249 368 2,271 Investment grade367 272 331 301 296 502 2,069 
AverageAverage19 37 55 111 Average— 27 39 32 109 
Watch listWatch listWatch list— — — — — 
In or near defaultIn or near default37 37 In or near default— — — — — 36 36 
TotalTotal$763 $1,112 $892 $762 $860 $1,472 $5,861 Total$1,098 $674 $1,003 $801 $645 $2,108 $6,329 
The following table presents the current and past due composition of the Company’s recorded investment in mortgage loans as of June 30, 2021March 31, 2022 and December 31, 2020 (dollars in millions):2021.
June 30, 2021December 31, 2020
Current$6,522 $5,846 
31 – 60 days past due15 15 
Total$6,537 $5,861 
18

Table of Contents

The following table presents the recorded investment in mortgage loans, by method of measuring impairment, and the related allowance for credit losses as of June 30, 2021 and December 31, 2020 (dollars in millions):
 June 30, 2021December 31, 2020
Mortgage loans:
Individually measured for impairment$36 $37 
Collectively measured for impairment6,501 5,824 
Recorded investment$6,537 $5,861 
Allowance for credit losses:
Individually measured for impairment$$
Collectively measured for impairment45 64 
Total allowance for credit losses$45 $64 
 March 31, 2022December 31, 2021
Current$6,564 $6,329 
31 – 60 days past due— — 
61 – 90 days past due19 — 
Total$6,583 $6,329 
The following table presents information regarding the Company’s allowance for credit losses for mortgage loans for the three months ended March 31, 2022 and 2021 (dollars in millions):
Six months ended June 30, Three months ended March 31,
20212020 20222021
Balance, beginning of periodBalance, beginning of period$64 $12 Balance, beginning of period$35 $64 
Adoption of new accounting standard, see Note 1414 
Change in allowance for credit lossesChange in allowance for credit losses(19)30 Change in allowance for credit losses(17)
Balance, end of periodBalance, end of period$45 $56 Balance, end of period$37 $47 
For the three months ended March 31, 2022, the Company restructured three mortgage loans to interest only payments as a result of lower occupancy levels. The following table presents information regardingtotal recorded investment before allowance for credit losses for mortgage loans, which were modified and met the portioncriteria of Troubled Debt Restructuring (“TDR”), is $77 million as of March 31, 2022. For the Company’s mortgagethree months ended March 31, 2021, the Company did not have any significant loans that were impaired asmodified and met the criteria of June 30, 2021 and December 31, 2020 (dollars in millions):
Unpaid
Principal
Balance
Recorded
Investment
Related
Allowance
Carrying
Value
June 30, 2021:
Impaired mortgage loans with no allowance for credit losses recorded$36 $36 $$36 
Impaired mortgage loans with allowance for credit losses recorded
Total impaired mortgage loans$36 $36 $$36 
December 31, 2020:
Impaired mortgage loans with no allowance for credit losses recorded$37 $37 $$37 
Impaired mortgage loans with allowance for credit losses recorded
Total impaired mortgage loans$37 $37 $$37 
The Company’s average investment balance of impaired mortgage loans and the related interest income are reflected in the table below for the periods indicated (dollars in millions):
 Three months ended June 30,
 20212020
 
Average
Recorded
Investment
(1)
Interest
Income
Average
Recorded
  Investment(1)
Interest
Income
Impaired mortgage loans with no allowance for credit losses recorded$36 $$17 $
Total impaired mortgage loans$36 $$17 $
 Six months ended June 30,
 20212020
 
Average
Recorded
Investment
(1)
Interest
Income
Average
Recorded
Investment
(1)
Interest
Income
Impaired mortgage loans with no allowance for credit losses recorded$36 $$17 $
Total impaired mortgage loans$36 $$17 $
(1)Average recorded investment represents the average loan balances as of the beginning of period and all subsequent quarterly end of period balances.
19

Table of Contents

The Company did not acquire any impaired mortgage loans during the six months ended June 30, 2021 and 2020.a TDR. The Company had no mortgage loans that were on a nonaccrual status as of June 30, 2021March 31, 2022 and December 31, 2020. During the six2021. The Company did not acquire any impaired mortgage loans during three months ended June 30, 2021, the Company modified the payment terms of one commercial mortgage loan, with a carrying value of approximately $10 million in response to COVID-19. During the year ended DecemberMarch 31, 2020, the Company modified the payment terms of 52 commercial mortgage loans, with a carrying value of approximately $660 million in response to COVID-19. These loans met the criteria established in the Coronavirus Aid, Relief,2022 and Economic Security Act (the “CARES Act”) and were not considered a troubled debt restructuring.  In accordance with the CARES Act criteria, these loans were not more than 30 days past due at December 31, 2019, and the modifications included deferral or delayed payments of principal or interest on the loan.2021.
Policy Loans
The majority of policy loans are associated with one client. These policy loans present no credit risk as 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.
18

Table of Contents

Funds Withheld at Interest
As of June 30, 2021, $4.7March 31, 2022, $4.4 billion of the funds withheld at interest balance is primarily associated with two clients. For reinsurance agreements written on a modco 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. 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.
Other Invested Assets
Other invested assets include 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 includeincludes FHLB common stock and unit-linked investments, which isare included in Other in the table below. TheAs of March 31, 2022 and December 31, 2021, the allowance for credit losses for lifetime mortgages was not material. The carrying values of other invested assets as of June 30, 2021March 31, 2022 and December 31, 2020, was $1 million and $2 million, respectively. Carrying values of these assets as of June 30, 2021 and December 31, 2020 are as follows (dollars in millions):
June 30, 2021December 31, 2020March 31, 2022December 31, 2021
Limited partnership interests and real estate joint venturesLimited partnership interests and real estate joint ventures$1,611 $1,367 Limited partnership interests and real estate joint ventures$1,943 $1,996 
Lifetime mortgagesLifetime mortgages958 935 Lifetime mortgages823 758 
DerivativesDerivatives146 140 Derivatives134 175 
FVO contractholder-directed unit-linked investments54 289 
OtherOther155 98 Other133 141 
Total other invested assetsTotal other invested assets$2,924 $2,829 Total other invested assets$3,033 $3,070 

5.    Derivative Instruments
Accounting for Derivative Instruments and Hedging Activities
See Note 2 – “Significant Accounting Policies and Pronouncements” of the Company’s 20202021 Annual Report for a detailed discussion of the accounting treatment for derivative instruments, including embedded derivatives. See Note 6 – “Fair Value of Assets and Liabilities” for additional disclosures related to the fair value hierarchy for derivative instruments, including embedded derivatives.
Types of Derivatives Used by the Company
Commonly used derivative instruments include, but are not necessarily limited to: credit default swaps, financial futures, equity options, foreign currency swaps, foreign currency forwards, interest rate 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 5 – “Derivative Instruments” of the Company’s 20202021 Annual Report.

20
19

Table of Contents

Summary of Derivative Positions
Derivatives, except for embedded derivatives, are included in other invested assets or other liabilities, at fair value. Embedded derivative assets and liabilities on modco 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 June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
 June 30, 2021December 31, 2020
 Primary Underlying RiskNotionalCarrying Value/Fair ValueNotionalCarrying Value/Fair Value
 AmountAssetsLiabilitiesAmountAssetsLiabilities
Derivatives not designated as hedging instruments:
Interest rate swapsInterest rate$1,089 $74 $$1,084 $93 $
Financial futuresEquity254 258 
Foreign currency swapsForeign currency150 150 18 
Foreign currency forwardsForeign currency459 347 
CPI swapsCPI607 19 11 612 11 19 
Credit default swapsCredit1,893 36 1,517 13 
Equity optionsEquity479 23 395 29 
Synthetic GICsInterest rate16,489 16,644 
Embedded derivatives in:
Modco or funds withheld arrangements124 58 
Indexed annuity products726 752 
Variable annuity products154 155 
Total non-hedging derivatives21,420 277 903 21,007 208 947 
Derivatives designated as hedging instruments:
Interest rate swapsForeign currency/Interest rate920 27 802 24 
Foreign currency swapsForeign currency193 234 
Foreign currency forwardsForeign currency1,327 24 1,255 10 15 
Forward bond purchase commitmentsInterest rate369 
Total hedging derivatives2,809 24 52 2,291 21 40 
Total derivatives$24,229 $301 $955 $23,298 $229 $987 

21

Table of Contents

 March 31, 2022December 31, 2021
 Primary Underlying RiskNotionalCarrying Value/Fair ValueNotionalCarrying Value/Fair Value
 AmountAssetsLiabilitiesAmountAssetsLiabilities
Derivatives not designated as hedging instruments:
Interest rate swapsInterest rate$1,182 $43 $$1,273 $66 $
Financial futuresEquity228 — — 240 — — 
Foreign currency swapsForeign currency150 — 150 — 
Foreign currency forwardsForeign currency724 21 395 
CPI swapsCPI548 56 563 34 
Credit default swapsCredit1,816 34 1,321 29 
Equity optionsEquity472 29 — 472 29 — 
Synthetic GICsInterest rate16,694 — — 16,143 — — 
Embedded derivatives in:
Modco or funds withheld arrangements— 280 148 — 227 62 
Indexed annuity products— — 645 — — 693 
Variable annuity products— — 148 — — 162 
Total non-hedging derivatives21,814 420 1,005 20,557 388 930 
Derivatives designated as hedging instruments:
Interest rate swapsForeign currency/Interest rate935 28 941 33 
Foreign currency swapsForeign currency133 153 — 
Foreign currency forwardsForeign currency1,683 25 1,320 14 11 
Forward bond purchase commitmentsInterest rate545 43 545 14 
Total hedging derivatives3,296 20 97 2,959 33 45 
Total derivatives$25,110 $440 $1,102 $23,516 $421 $975 
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 June 30,March 31, 2022 and 2021 and 2020 were (dollars in millions):
Type of Fair Value HedgeType of Fair Value HedgeHedged ItemGains (Losses) Recognized for DerivativesGains (Losses) Recognized for Hedged ItemsType of Fair Value HedgeHedged ItemGains (Losses) Recognized for DerivativesGains (Losses) Recognized for Hedged Items
Investment Related Gains (Losses)Investment Related Gains (Losses), Net
For the three months ended June 30, 2021:
For the three months ended March 31, 2022:For the three months ended March 31, 2022:
Foreign currency swapsForeign currency swapsForeign-denominated fixed maturity securities$(2)$Foreign currency swapsForeign-denominated fixed maturity securities$$(3)
For the three months ended June 30, 2020:
For the three months ended March 31, 2021:For the three months ended March 31, 2021:
Foreign currency swapsForeign currency swapsForeign-denominated fixed maturity securities$15 $(13)Foreign currency swapsForeign-denominated fixed maturity securities$— $
For the six months ended June 30, 2021:
Foreign currency swapsForeign-denominated fixed maturity securities$(2)$
For the six months ended June 30, 2020:
Foreign currency swapsForeign-denominated fixed maturity securities$(8)$
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. The Company designates and accounts for the following as cash 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
20

Table of Contents

interest rate swaps, in which the cash flows of assets are denominated in different currencies, commonly referred to as cross-currency swaps; and (iii) forward bond purchase commitments.
The following tables presenttable 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 six months ended June 30,March 31, 2022 and 2021 and 2020 (dollars in millions):
Three months ended June 30, Three months ended March 31,
20212020 20222021
Balance, beginning of periodBalance, beginning of period$(71)$(87)Balance, beginning of period$(22)$(49)
Gains deferred in other comprehensive income (loss)29 12 
Gains (losses), net deferred in other comprehensive income (loss)Gains (losses), net deferred in other comprehensive income (loss)(60)(24)
Amounts reclassified to investment incomeAmounts reclassified to investment incomeAmounts reclassified to investment income— — 
Amounts reclassified to interest expenseAmounts reclassified to interest expenseAmounts reclassified to interest expense
Balance, end of periodBalance, end of period$(40)$(74)Balance, end of period$(81)$(71)
Six months ended June 30,
20212020
Balance, beginning of period$(49)$(26)
Gains (losses) deferred in other comprehensive income (loss)(49)
Amounts reclassified to investment income
Amounts reclassified to interest expense
Balance, end of period$(40)$(74)
As of June 30, 2021,March 31, 2022, approximately $6$1 million of before-tax deferred net losses on derivative instruments recorded in AOCI are expected to be reclassified to interest expense during the next twelve months. For the same time period, there was an immaterial amount$1 million of before-tax deferred net gains recorded in AOCI are expected to be reclassified to investment income during the next twelve months.
22

Table of Contents

The following table presents the effect 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 six months ended June 30,March 31, 2022 and 2021 and 2020 (dollars in millions):
Derivative TypeDerivative TypeGain (Loss) Deferred in AOCIGain (Loss) Reclassified into Income from AOCIDerivative TypeGains (Losses) Deferred in OCIGains (Losses) Reclassified into Income from AOCI
Investment IncomeInterest ExpenseInvestment IncomeInterest Expense
For the three months ended June 30, 2021:
For the three months ended March 31, 2022:For the three months ended March 31, 2022:
Interest rateInterest rate$29 $$(2)Interest rate$(64)$— $(1)
Foreign currency/interest rateForeign currency/interest rateForeign currency/interest rate— — 
TotalTotal$29 $$(2)Total$(60)$— $(1)
For the three months ended June 30, 2020:
For the three months ended March 31, 2021:For the three months ended March 31, 2021:
Interest rateInterest rate$(1)$$(1)Interest rate$(23)$— $(2)
Foreign currency/interest rateForeign currency/interest rate13 Foreign currency/interest rate(1)— — 
TotalTotal$12 $$(1)Total$(24)$— $(2)
For the six months ended June 30, 2021:
Interest rate$$$(4)
Foreign currency/interest rate(1)
Total$$$(4)
For the six months ended June 30, 2020:
Interest rate$(36)$$(1)
Foreign currency/interest rate(13)
Total$(49)$$(1)
For the three and six months ended June 30,March 31, 2022 and 2021, and 2020, 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 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 AOCIOCI for the three and six months ended June 30,March 31, 2022 and 2021 and 2020 (dollars in millions):
Derivative Gains (Losses) Deferred in AOCI      Derivative Gains (Losses) Deferred in OCI   
Three months ended June 30,Six months ended June 30, For the three months ended March 31,
Type of NIFO HedgeType of NIFO Hedge2021202020212020Type of NIFO Hedge20222021
Foreign currency swapsForeign currency swaps$(2)$(6)$(3)$Foreign currency swaps$— $(1)
Foreign currency forwardsForeign currency forwards(10)(34)(24)46 Foreign currency forwards(16)(14)
TotalTotal$(12)$(40)$(27)$55 Total$(16)$(15)
The cumulative foreign currency translation gain recorded in AOCI related to these hedges was $112$121 million and $139$137 million at June 30, 2021as of March 31, 2022 and December 31, 2020,2021, respectively. 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. 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)AOCI into investment income during the periods presented.
21

Table of Contents

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.
23

Table of Contents

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 six months ended June 30,March 31, 2022 and 2021 and 2020 is as follows (dollars in millions):
  Three months ended June 30,
Type of Non-hedging DerivativeIncome Statement Location of Gain (Loss)20212020
Interest rate swapsInvestment related gains (losses), net$33 $
Financial futuresInvestment related gains (losses), net(9)(48)
Foreign currency swapsInvestment related gains (losses), net
Foreign currency forwardsInvestment related gains (losses), net(1)
CPI swapsInvestment related gains (losses), net26 
Credit default swapsInvestment related gains (losses), net12 17 
Equity optionsInvestment related gains (losses), net(11)(25)
Subtotal30 (23)
Embedded derivatives in:
Modco or funds withheld arrangementsInvestment related gains (losses), net16 
Indexed annuity productsInterest credited(13)(7)
Variable annuity productsInvestment related gains (losses), net(17)107 
Total non-hedging derivatives$16 $78 
  Six months ended June 30,
Type of Non-hedging DerivativeIncome Statement Location of Gain (Loss)20212020
Interest rate swapsInvestment related gains (losses), net$(37)$109 
Financial futuresInvestment related gains (losses), net(19)(4)
Foreign currency swapsInvestment related gains (losses), net12 (10)
Foreign currency forwardsInvestment related gains (losses), net(9)(2)
CPI swapsInvestment related gains (losses), net21 (14)
Credit default swapsInvestment related gains (losses), net32 (7)
Equity optionsInvestment related gains (losses), net(21)28 
Subtotal(21)100 
Embedded derivatives in:
Modco or funds withheld arrangementsInvestment related gains (losses), net66 (229)
Indexed annuity productsInterest credited(1)
Variable annuity productsInvestment related gains (losses), net(21)
Total non-hedging derivatives$47 $(151)

24

Table of Contents

  Gains (Losses) for the three months ended     
March 31,
Type of Non-hedging DerivativeIncome Statement Location of Gains (Losses)20222021
Interest rate swapsInvestment related gains (losses), net$(52)$(70)
Financial futuresInvestment related gains (losses), net(10)
Foreign currency swapsInvestment related gains (losses), net
Foreign currency forwardsInvestment related gains (losses), net(23)(8)
CPI swapsInvestment related gains (losses), net29 18 
Credit default swapsInvestment related gains (losses), net(58)20 
Equity optionsInvestment related gains (losses), net— (10)
Subtotal(90)(51)
Embedded derivatives in:
Modco or funds withheld arrangementsInvestment related gains (losses), net(33)50 
Indexed annuity productsInterest credited36 14 
Variable annuity productsInvestment related gains (losses), net14 19 
Total non-hedging derivatives$(73)$32 
Credit Derivatives
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 June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
 June 30, 2021December 31, 2020
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$34 $715 12.4$11 $287 15.0
Subtotal34 715 12.411 287 15.0
BBB+/BBB/BBB-
Single name credit default swaps181 2.0232 1.6
Credit default swaps referencing indices988 3.4988 3.9
Subtotal1,169 3.21,220 3.5
BB+/BB/BB-
Single name credit default swaps0.510 0.7
Subtotal0.510 0.7
Total$35 $1,893 6.7$13 $1,517 5.6
 March 31, 2022December 31, 2021
Rating Agency Designation of Referenced Credit Obligations(1)
Estimated Fair
Value of Credit 
Default Swaps
Maximum
Amount of Future
Payments under
Credit Default
Swaps(2)
Weighted
Average
Years to
Maturity(3)
Estimated Fair
Value of Credit 
Default Swaps
Maximum
Amount of Future
Payments under
Credit Default
Swaps(2)
Weighted
Average
Years to
Maturity(3)  
AAA/AA+/AA/AA-/A+/A/A-
Single name credit default swaps$(31)$600 14.0$28 $600 14.2
Subtotal(31)600 14.028 600 14.2
BBB+/BBB/BBB-
Single name credit default swaps181 2.7141 2.4
Credit default swaps referencing indices— 1,015 6.1— 565 5.1
Subtotal1,196 5.6706 4.6
BB+/BB/BB-
Single name credit default swaps(1)20 3.6(1)15 3.5
Subtotal(1)20 3.6(1)15 3.5
Total$(31)$1,816 8.4$28 $1,321 9.0
(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)The weighted average years to maturity of the 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 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.
The Company has elected to include all derivatives, except embedded derivatives, in the table 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 and repurchase/reverse repurchase programs.agreements.
22

Table of Contents

The following table provides information relating to the netting of the Company’s derivative instruments as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
   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/Collateral (1)    
Net Amount   
Gross Amounts   RecognizedGross Amounts
Offset in the
Balance Sheet
Net Amounts
Presented in the
Balance Sheet
Financial Instruments (1)
Cash Collateral   Pledged/
Received
Net Amount
June 30, 2021:
March 31, 2022:March 31, 2022:
Derivative assetsDerivative assets$177 $(31)$146 $(36)$(100)$10 Derivative assets$160 $(26)$134 $(127)$
Derivative liabilitiesDerivative liabilities75 (31)44 (121)(48)(125)Derivative liabilities161 (26)135 (135)— 
December 31, 2020:
December 31, 2021:December 31, 2021:
Derivative assetsDerivative assets$171 $(31)$140 $(30)$(98)$12 Derivative assets$194 $(19)$175 $(175)$— 
Derivative liabilitiesDerivative liabilities80 (31)49 (146)(47)(144)Derivative liabilities58 (19)39 (39)— 
(1)Includes initial margin posted to a central clearing partner.partner for financial instruments and excludes the excess of collateral received/pledged from/to the counterparty.
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. As of June 30, 2021,March 31, 2022, the Company had credit exposure of $18$16 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 OTC derivatives are cleared and settled through central clearing counterparties (“OTC cleared”) and others are bilateral contracts between two counterparties. The Company manages its credit risk related to 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 Company is only exposed to the default of the central clearing counterparties for OTC
25

Table of Contents

cleared derivatives, and these transactions require initial and daily variation margin collateral postings. 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.
6.    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 that 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, the Company’s embedded derivatives, all of which are associated with reinsurance treaties, are classified in Level 3 since their values include significant unobservable inputs.
For a discussion of the Company’s valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 6 “Fair Value of Assets and Liabilities” in the Notes to Consolidated Financial Statements included in the Company’s 20202021 Annual Report.

2623

Table of Contents

Assets and Liabilities by Hierarchy Level
Assets and liabilities measured at fair value on a recurring basis as of June 30, 2021March 31, 2022 and December 31, 20202021 are summarized below (dollars in millions):
June 30, 2021: Fair Value Measurements Using:
March 31, 2022:March 31, 2022: Fair Value Measurements Using:
Total    Level 1        Level 2    Level 3     Total    Level 1        Level 2    Level 3    
Assets:Assets:Assets:
Fixed maturity securities – available-for-sale:Fixed maturity securities – available-for-sale:Fixed maturity securities – available-for-sale:
CorporateCorporate$37,004 $$33,796 $3,208 Corporate$36,380 $— $32,334 $4,046 
Canadian governmentCanadian government4,903 4,903 Canadian government4,407 — 4,407 — 
RMBSRMBS1,377 1,375 RMBS966 — 959 
ABSABS3,482 2,896 586 ABS3,746 — 2,710 1,036 
CMBSCMBS1,869 1,804 65 CMBS1,786 — 1,708 78 
U.S. governmentU.S. government1,318 1,198 107 13 U.S. government1,525 1,415 100 10 
State and political subdivisionsState and political subdivisions1,344 1,336 State and political subdivisions1,209 — 1,175 34 
Other foreign governmentOther foreign government6,990 6,949 41 Other foreign government7,903 — 7,874 29 
Total fixed maturity securities – available-for-saleTotal fixed maturity securities – available-for-sale58,287 1,198 53,166 3,923 Total fixed maturity securities – available-for-sale57,922 1,415 51,267 5,240 
Equity securitiesEquity securities147 84 63 Equity securities139 91 — 48 
Funds withheld at interest – embedded derivatives and other206 206 
Funds withheld at interest – embedded derivativesFunds withheld at interest – embedded derivatives(16)— — (16)
Funds withheld at interestFunds withheld at interest75 — — 75 
Cash equivalentsCash equivalents1,167 1,152 15 Cash equivalents974 974 — — 
Short-term investmentsShort-term investments166 165 Short-term investments268 177 43 48 
Other invested assets:Other invested assets:Other invested assets:
DerivativesDerivatives146 146 Derivatives134 — 134 — 
FVO contractholder-directed unit-linked investments54 54 
OtherOther53 53 Other58 — 58 — 
Total other invested assets (1)
Total other invested assets (1)
253 253 
Total other invested assets (1)
192 — 192 — 
TotalTotal$60,226 $2,435 $53,599 $4,192 Total$59,554 $2,657 $51,502 $5,395 
Liabilities:Liabilities:Liabilities:
Interest-sensitive contract liabilities – embedded derivativesInterest-sensitive contract liabilities – embedded derivatives$880 $$$880 Interest-sensitive contract liabilities – embedded derivatives$793 $— $— $793 
Other liabilities:Other liabilities:Other liabilities:
Funds withheld at interest – embedded derivativesFunds withheld at interest – embedded derivatives(147)— — (147)
DerivativesDerivatives44 44 Derivatives135 — 135 — 
TotalTotal$781 $— $135 $646 
Total$924 $$44 $880 
(1)Other invested assets included in the fair value hierarchy exclude limited partnership interests that are measured at estimated fair value using the net asset value (“NAV”) per share (or its equivalent) as a practical expedient. As of June 30, 2021,March 31, 2022, the fair value of such investments was $493$609 million.


2724

Table of Contents

December 31, 2020: Fair Value Measurements Using:
December 31, 2021:December 31, 2021: Fair Value Measurements Using:
TotalLevel 1Level 2Level 3 TotalLevel 1Level 2Level 3
Assets:Assets:Assets:
Fixed maturity securities – available-for-sale:Fixed maturity securities – available-for-sale:Fixed maturity securities – available-for-sale:
CorporateCorporate$36,208 $$33,179 $3,029 Corporate$38,103 $— $34,215 $3,888 
Canadian governmentCanadian government5,140 5,140 Canadian government4,944 — 4,944 — 
RMBSRMBS1,817 1,814 RMBS1,050 — 1,049 
ABSABS3,092 2,896 196 ABS4,005 — 2,908 1,097 
CMBSCMBS1,868 1,813 55 CMBS1,849 — 1,768 81 
U.S. governmentU.S. government1,437 1,312 111 14 U.S. government2,105 1,993 100 12 
State and political subdivisionsState and political subdivisions1,390 1,381 State and political subdivisions1,323 — 1,290 33 
Other foreign governmentOther foreign government5,783 5,766 17 Other foreign government7,370 — 7,337 33 
Total fixed maturity securities – available-for-saleTotal fixed maturity securities – available-for-sale56,735 1,312 52,100 3,323 Total fixed maturity securities – available-for-sale60,749 1,993 53,611 5,145 
Equity securitiesEquity securities132 79 53 Equity securities151 101 — 50 
Funds withheld at interest – embedded derivatives and other114 114 
Funds withheld at interest – embedded derivativesFunds withheld at interest – embedded derivatives104 — — 104 
Funds withheld at interestFunds withheld at interest83 — — 83 
Cash equivalentsCash equivalents1,478 1,478 Cash equivalents1,138 1,138 — — 
Short-term investmentsShort-term investments197 32 150 15 Short-term investments64 — 36 28 
Other invested assets:Other invested assets:Other invested assets:
DerivativesDerivatives140 140 Derivatives175 — 175 — 
OtherOther52 — 52 — 
FVO contractholder-directed unit-linked investments289 224 65 
Total other invested assets429 224 205 
Total other invested assets (1)
Total other invested assets (1)
227 — 227 — 
TotalTotal$59,085 $3,125 $52,455 $3,505 Total$62,516 $3,232 $53,874 $5,410 
Liabilities:Liabilities:Liabilities:
Interest-sensitive contract liabilities – embedded derivativesInterest-sensitive contract liabilities – embedded derivatives$907 $$$907 Interest-sensitive contract liabilities – embedded derivatives$855 $— $— $855 
Other liabilities:Other liabilities:Other liabilities:
Funds withheld at interest – embedded derivativesFunds withheld at interest – embedded derivatives(61)— — (61)
DerivativesDerivatives49 49 Derivatives39 — 39 — 
TotalTotal$956 $$49 $907 Total$833 $— $39 $794 
(1)Other invested assets included in the fair value hierarchy exclude limited partnership interests that are measured at estimated fair value using the NAV per share (or its equivalent) as a practical expedient. As of December 31, 2021, the fair value of such investments was $581 million.
2825

Table of Contents

Quantitative Information Regarding Internally Priced Assets and Liabilities
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 June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions):
Estimated Fair Value      Valuation TechniqueUnobservable InputsRange (Weighted Average) Estimated Fair Value      Valuation TechniqueUnobservable InputsRange (Weighted Average) 
June 30, 2021December 31, 2020June 30, 2021December 31, 2020March 31, 2022December 31, 2021March 31, 2022December 31, 2021
Assets:Assets:Assets:
CorporateCorporate$45 $37 Market comparable securitiesLiquidity premium1%0-1% (1%)Corporate$42 $49 Market comparable securitiesLiquidity premium1%0-1% (1%)
EBITDA Multiple5.0x-7.0x (5.9x)5.2x-11.2x (7.1x)EBITDA Multiple6.7x-7.0x (6.8x)5.2x-7.0x (6.4x)
ABSABS78 87 Market comparable securitiesLiquidity premium1-18% (5%)1-18% (1%)ABS183 205 Market comparable securitiesLiquidity premium2-18% (4%)2-18% (4%)
U.S. governmentU.S. government13 14 Market comparable securitiesLiquidity premium0-1% (1%)0-1% (1%)U.S. government10 12 Market comparable securitiesLiquidity premium0-1% (1%)0-1% (1%)
Equity securitiesEquity securities10 10 Market comparable securitiesEBITDA Multiple6.3x-10.6x (7.9x)6.9x-10.6x (7.9x)Equity securitiesMarket comparable securitiesEBITDA Multiple6.9x-10.6x (8.3x)6.9x-10.6x (8.0x)
Funds withheld at interest – embedded derivativesFunds withheld at interest – embedded derivatives124 58 Total return swapMortality0-100% (3%)0-100%  (3%)Funds withheld at interest – embedded derivatives134 182 Total return swapMortality0-100%  (3%)0-100%  (3%)
Lapse0-35% (16%)0-35%  (13%)Lapse0-35%  (12%)0-35%  (18%)
Withdrawal0-5% (3%)0-5%  (3%)Withdrawal0-5%  (4%)0-5%  (4%)
CVA0-5% (0%)0-5%  (1%)CVA0-5%  (—%)0-5%  (—%)
Crediting rate1-4% (2%)2-4%  (2%)Crediting rate1-4%  (2%)1-4%  (2%)
Liabilities:Liabilities:Liabilities:
Interest-sensitive contract liabilities – embedded derivatives – indexed annuitiesInterest-sensitive contract liabilities – embedded derivatives – indexed annuities726 752 Discounted cash flowMortality0-100% (3%)0-100% (3%)Interest-sensitive contract liabilities – embedded derivatives – indexed annuities645 693 Discounted cash flowMortality0-100%  (3%)0-100% (2%)
Lapse0-35% (16%)0-35% (13%)Lapse0-35%  (11%)0-35% (16%)
Withdrawal0-5% (3%)0-5% (3%)Withdrawal0-5%  (3%)0-5% (3%)
Option budget projection1-4% (2%)2-4% (2%)Option budget projection1-4%  (2%)1-4% (2%)
Interest-sensitive contract liabilities – embedded derivatives – variable annuitiesInterest-sensitive contract liabilities – embedded derivatives – variable annuities154 155 Discounted cash flowMortality0-100% (2%)0-100% (2%)Interest-sensitive contract liabilities – embedded derivatives – variable annuities148 162 Discounted cash 
flow
Mortality0-100% (2%)0-100% (2%)
Lapse0-25% (4%)0-25% (4%)Lapse0-25%(4%)0-25% (4%)
Withdrawal0-7% (5%)0-7% (5%)Withdrawal0-7% (5%)0-7% (5%)
CVA0-5% (1%)0-5% (1%)CVA0-5% (1%)0-5% (1%)
Long-term volatility0-27% (14%)0-27% (13%)Long-term volatility0-27% (14%)0-27% (14%)

2926

Table of Contents

Changes in Level 3 Assets and Liabilities
Assets and liabilities transferred into Level 3 are due to a lack of observable market transactions and price information. Transfers out of Level 3 are 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.
For further information on the Company’s valuation processes, see Note 6 “Fair“Fair Value of Assets and Liabilities” in the Notes to Consolidated Financial Statements included in the Company’s 20202021 Annual Report.
The reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows (dollars in millions):
For the three months ended June 30, 2021:Fixed maturity securities – available-for-saleFunds 
withheld at interest – embedded derivatives & other
Interest-sensitive contract 
liabilities – embedded derivatives
For the three months ended March 31, 2022: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 securitiesShort-term investmentsFunds 
withheld at interest – embedded derivatives & other
Interest-sensitive contract 
liabilities – embedded derivatives
CorporateForeign govtStructured securitiesU.S. and local govtEquity securitiesShort-term investments
Funds 
withheld at interest –embedded derivatives, net(1)
Funds 
withheld at interest
Interest-sensitive contract 
liabilities embedded derivatives
Fair value, beginning of periodFair value, beginning of period$3,101 $16 $388 $22 $54 $11 $(857)Fair value, beginning of period$3,888 $33 $1,179 $45 $50 $28 $165 $83 $(855)
Total gains/losses (realized/unrealized)Total gains/losses (realized/unrealized)Total gains/losses (realized/unrealized)
Included in earnings, net:Included in earnings, net:Included in earnings, net:
Investment income, net of related expenses(1)
Net investment incomeNet investment income— — — — — — (5)— 
Investment related gains (losses), netInvestment related gains (losses), net10 16 (17)Investment related gains (losses), net— — (5)— (1)— (33)— 14 
Interest creditedInterest credited(13)Interest credited— — — — — — — — 36 
Included in other comprehensive income49 
Other revenues
Included in other comprehensive income (loss)Included in other comprehensive income (loss)(144)(4)(72)(1)— — — (2)— 
Purchases(1)(2)
Purchases(1)(2)
317 25 262 16 (13)
Purchases(1)(2)
365 — 95 — — 20 — (6)
Sales(1)(2)
Sales(1)(2)
(19)(2)(1)
Sales(1)(2)
(16)— (51)— (1)— — — — 
Settlements(1)(2)
Settlements(1)(2)
(269)(24)(1)(10)(1)20 
Settlements(1)(2)
(26)— (38)(2)— — — (2)18 
Transfers into Level 3Transfers into Level 325 24 Transfers into Level 3— — 13 — — — — — 
Transfers out of Level 3Transfers out of Level 3(1)Transfers out of Level 3(22)— — (4)— — — — — 
Fair value, end of periodFair value, end of period$3,208 $41 $653 $21 $63 $$206 $(880)Fair value, end of period$4,046 $29 $1,121 $44 $48 $48 $132 $75 $(793)
Total gains/losses (realized/unrealized) recorded for the period relating to those Level 3 assets and liabilities that were still held at the end of the periodTotal gains/losses (realized/unrealized) recorded for the period relating to those Level 3 assets and liabilities that were still held at the end of the periodTotal gains/losses (realized/unrealized) recorded for the period relating to those Level 3 assets and liabilities that were still held at the end of the period
Included in earnings, net:Included in earnings, net:Included in earnings, net:
Investment income, net of related expenses$$$$$$$(1)$
Net investment incomeNet investment income$$— $— $— $— $— $— $(5)$— 
Investment related gains (losses), netInvestment related gains (losses), net16 (19)Investment related gains (losses), net— — (5)— (1)— (33)— 12 
Other revenues
Claims and other policy benefitsClaims and other policy benefits— — — — — — — — — 
Interest creditedInterest credited(33)Interest credited— — — — — — — — 18 
Included in other comprehensive income51 
Included in other comprehensive income (loss)Included in other comprehensive income (loss)(144)(4)(71)(1)— — — (2)— 
(1)Funds withheld at interest embedded derivative 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 no issuances during the period.
3027

Table of Contents

For the six months ended June 30, 2021:Fixed maturity securities – available-for-saleFunds 
withheld at interest – embedded derivatives & other
Interest-sensitive contract 
liabilities – embedded derivatives
 CorporateForeign govtStructured securitiesU.S. and local govtEquity securitiesShort-term investments
Fair value, beginning of period$3,029 $17 $254 $23 $53 $15 $114 $(907)
Total gains/losses (realized/unrealized)
Included in earnings, net:
Investment income, net of related expenses(6)
Investment related gains (losses), net11 66 
Interest credited
Included in other comprehensive income(33)(1)
Other revenues
Purchases(1)
540 25 428 32 (17)
Sales(1)
(20)(2)(1)
Settlements(1)
(341)(85)(2)(10)(1)42 
Transfers into Level 329 54 
Transfers out of Level 3(5)
Fair value, end of period$3,208 $41 $653 $21 $63 $$206 $(880)
Total gains/losses (realized/unrealized) recorded for the period relating to those Level 3 assets and liabilities that were still held at the end of the period
Included in earnings, net:
Investment income, net of related expenses$$$$$$$(6)$
Investment related gains (losses), net(1)10 66 (3)
Other revenues
Interest credited(41)
Included in other comprehensive income(31)(1)
For the three months ended June 30, 2020:Fixed maturity securities – available-for-saleFunds 
withheld at interest – embedded derivatives
Interest-sensitive contract 
liabilities – embedded derivatives
 CorporateForeign govtStructured securitiesU.S. and local govtEquity securitiesShort-term investments
Fair value, beginning of period$2,197 $15 $144 $25 $56 $$(109)$(1,042)
Total gains/losses (realized/unrealized)
Included in earnings, net:
Investment income, net of related expenses
Investment related gains (losses), net(14)106 
Interest credited(7)
Included in other comprehensive income112 17 
Other revenues
Purchases(1)
79 15 (8)
Sales(1)
(18)(3)
Settlements(1)
(44)(18)(1)(1)21 
Transfers into Level 3
Transfers out of Level 3(4)(2)
Fair value, end of period$2,308 $17 $153 $24 $62 $$(108)$(930)
Total gains/losses (realized/unrealized) recorded for the period relating to those Level 3 assets and liabilities that were still held at the end of the period
Included in earnings, net:
Investment income, net of related expenses$$$$$$$$
Investment related gains (losses), net(15)103 
Other revenues
Interest credited(27)
Included in other comprehensive income111 16 
31

Table of Contents

For the six months ended June 30, 2020:Fixed maturity securities – available-for-saleFunds 
withheld at interest – embedded derivatives
Interest-sensitive contract 
liabilities – embedded derivatives
For the three months ended March 31, 2021:For the three months ended March 31, 2021:Fixed maturity securities – available-for-saleFunds 
withheld at interest –embedded derivatives
Funds 
withheld at interest
Interest-sensitive contract 
liabilities embedded derivatives
CorporateForeign govtStructured securitiesU.S. and local govtEquity securitiesShort-term investmentsFunds 
withheld at interest – embedded derivatives
Interest-sensitive contract 
liabilities – embedded derivatives
CorporateForeign govtStructured securitiesU.S. and local govtEquity securitiesShort-term investmentsFunds 
withheld at interest –embedded derivatives
Funds 
withheld at interest
Interest-sensitive contract 
liabilities embedded derivatives
Fair value, beginning of periodFair value, beginning of period$2,186 $720 $208 $25 $77 $$(930)Fair value, beginning of period$3,029 $17 $254 $23 $53 $15 $114 $56 $(907)
Total gains/losses (realized/unrealized)Total gains/losses (realized/unrealized)Total gains/losses (realized/unrealized)
Included in earnings, net:Included in earnings, net:Included in earnings, net:
Investment income, net of related expenses
Net investment incomeNet investment income— — — — — (5)(5)— 
Investment related gains (losses), netInvestment related gains (losses), net(25)(4)(229)(22)Investment related gains (losses), net(1)— — — — 50 — 19 
Interest creditedInterest credited(1)Interest credited— — — — — — — — 13 
Included in other comprehensive income(3)(10)
Other revenues
Included in other comprehensive income (loss)Included in other comprehensive income (loss)(82)(1)(1)— — — — — 
Purchases(1)
Purchases(1)
310 24 (19)
Purchases(1)
223 — 166 — — — 16 16 (3)
Sales(1)
Sales(1)
(62)(4)
Sales(1)
(1)— — — — — — — — 
Settlements(1)
Settlements(1)
(96)(31)(2)(1)42 
Settlements(1)
(72)— (61)(1)— — — — 22 
Transfers into Level 3Transfers into Level 321 Transfers into Level 3— 30 — — — — — — 
Transfers out of Level 3Transfers out of Level 3(4)(704)(55)(14)(1)Transfers out of Level 3— — — — — (4)— — — 
Fair value, end of periodFair value, end of period$2,308 $17 $153 $24 $62 $$(108)$(930)Fair value, end of period$3,101 $16 $388 $22 $54 $11 $176 $67 $(856)
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 periodTotal 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 periodTotal 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:Included in earnings, net:Included in earnings, net:
Investment income, net of related expenses$$$$$$$$
Net investment incomeNet investment income$$— $— $— $— $— $(5)$(5)$— 
Investment related gains (losses), netInvestment related gains (losses), net(26)(4)(229)(27)Investment related gains (losses), net(1)— — — — 50 — 16 
Other revenues
Interest credited(43)
Included in other comprehensive income(29)(11)
Claims & other policy benefitsClaims & other policy benefits— — — — — — — — (8)
Included in other comprehensive income (loss)Included in other comprehensive income (loss)(82)(1)(1)— — — — — — 
(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.
Nonrecurring Fair Value Measurements
The Company has certain assets subject to measurement at fair value on a nonrecurring basis, in periods subsequent to their initial recognition if they are determined to be impaired. During the sixthree months ended June 30, March 31, 2022 and2021, and 2020, the Company did not have any material assets that were measured at fair value due to impairment.
Fair Value of Financial Instruments
The following table presents the carrying values and estimated fair values of the Company’s financial instruments, which were not measured at fair value on a recurring basis, as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in 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 20202021 Annual Report. This table excludes any payables or receivables for collateral under repurchase or 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.
3228

Table of Contents

June 30, 2021:
Carrying Value (1)    
Estimated 
Fair Value
Fair Value Measurement Using:
Level 1Level 2Level 3NAV
March 31, 2022:March 31, 2022:
Carrying Value (1)
Estimated 
Fair Value
Fair Value Measurement Using:
Level 1Level 2Level 3
Assets:Assets:Assets:
Mortgage loans on real estateMortgage loans on real estate$6,481 $6,744 $$$6,744 $Mortgage loans on real estate$6,535 $6,382 $— $— $6,382 
Policy loansPolicy loans1,254 1,254 1,254 Policy loans1,221 1,221 — 1,221 — 
Funds withheld at interestFunds withheld at interest6,825 7,169 7,169 Funds withheld at interest6,672 6,795 — — 6,795 
Cash and cash equivalentsCash and cash equivalents2,087 2,087 2,087 Cash and cash equivalents1,735 1,735 1,735 — — 
Short-term investmentsShort-term investments18 18 18 Short-term investments47 47 47 — — 
Other invested assetsOther invested assets1,133 1,141 84 1,051 Other invested assets954 900 58 837 
Accrued investment incomeAccrued investment income525 525 525 Accrued investment income578 578 — 578 — 
Liabilities:Liabilities:Liabilities:
Interest-sensitive contract liabilitiesInterest-sensitive contract liabilities$21,274 $22,983 $$$22,983 $Interest-sensitive contract liabilities$20,834 $21,046 $— $— $21,046 
Other liabilities – funds withheld at interestOther liabilities – funds withheld at interest1,646 1,556 — — 1,556 
Long-term debtLong-term debt3,173 3,455 3,455 Long-term debt3,667 3,614 — — 3,614 
Collateral finance and securitization notesCollateral finance and securitization notes323 292 292 Collateral finance and securitization notes166 141 — — 141 
December 31, 2020:
Carrying Value (1)    
Estimated
Fair Value
Fair Value Measurement Using:
Level 1Level 2Level 3NAV
December 31, 2021:December 31, 2021:
Assets:Assets:Assets:
Mortgage loans on real estateMortgage loans on real estate$5,787 $6,167 $$$6,167 $Mortgage loans on real estate$6,283 $6,580 $— $— $6,580 
Policy loansPolicy loans1,258 1,258 1,258 Policy loans1,234 1,234 — 1,234 — 
Funds withheld at interestFunds withheld at interest5,292 5,676 5,676 Funds withheld at interest6,747 7,075 — — 7,075 
Cash and cash equivalentsCash and cash equivalents1,930 1,930 1,930 Cash and cash equivalents1,810 1,810 1,810 — — 
Short-term investmentsShort-term investments30 30 30 Short-term investments23 23 23 — — 
Other invested assetsOther invested assets1,482 1,601 89 1,018 489 Other invested assets910 907 70 831 
Accrued investment incomeAccrued investment income511 511 511 Accrued investment income533 533 — 533 — 
Liabilities:Liabilities:Liabilities:
Interest-sensitive contract liabilitiesInterest-sensitive contract liabilities$18,106 $19,683 $$$19,683 $Interest-sensitive contract liabilities$18,625 $19,540 $— $— $19,540 
Other liabilities – funds withheld at interestOther liabilities – funds withheld at interest1,658 1,657 — — 1,657 
Long-term debtLong-term debt3,573 3,901 3,901 Long-term debt3,667 3,886 — — 3,886 
Collateral finance and securitization notesCollateral finance and securitization notes388 351 351 Collateral finance and securitization notes180 153 — — 153 
(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.

7.    Segment Information
The accounting policies of the segments are the same as those described in Note 2 Significant“Significant Accounting Policies and Pronouncements” in the Notes to Consolidated Financial Statements included in the Company’s 20202021 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.
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 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 result of 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 costs and other insurance expenses.
3329

Table of Contents

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 below (dollars in millions).:
Three months ended June 30,Six months ended June 30, Three months ended March 31,
Revenues:Revenues:2021202020212020Revenues:20222021
U.S. and Latin America:U.S. and Latin America:U.S. and Latin America:
TraditionalTraditional$1,816 $1,642 $3,453 $3,175 Traditional$1,867 $1,637 
Financial SolutionsFinancial Solutions433 323 751 462 Financial Solutions252 318 
TotalTotal2,249 1,965 4,204 3,637 Total2,119 1,955 
Canada:Canada:Canada:
TraditionalTraditional366 311 709 607 Traditional362 343 
Financial SolutionsFinancial Solutions26 22 52 46 Financial Solutions25 26 
TotalTotal392 333 761 653 Total387 369 
Europe, Middle East and Africa:Europe, Middle East and Africa:Europe, Middle East and Africa:
TraditionalTraditional459 371 916 778 Traditional476 457 
Financial SolutionsFinancial Solutions139 136 285 214 Financial Solutions182 146 
TotalTotal598 507 1,201 992 Total658 603 
Asia Pacific:Asia Pacific:Asia Pacific:
TraditionalTraditional653 636 1,300 1,303 Traditional688 647 
Financial SolutionsFinancial Solutions104 75 208 143 Financial Solutions21 104 
TotalTotal757 711 1,508 1,446 Total709 751 
Corporate and OtherCorporate and Other141 90 582 82 Corporate and Other57 441 
TotalTotal$4,137 $3,606 $8,256 $6,810 Total$3,930 $4,119 
Three months ended June 30,Six months ended June 30, Three months ended March 31,
Income (loss) before income taxes:Income (loss) before income taxes:2021202020212020Income (loss) before income taxes:20222021
U.S. and Latin America:U.S. and Latin America:U.S. and Latin America:
TraditionalTraditional$135 $(158)$(203)$(220)Traditional$(166)$(338)
Financial SolutionsFinancial Solutions186 117 269 102 Financial Solutions44 83 
TotalTotal321 (41)66 (118)Total(122)(255)
Canada:Canada:Canada:
TraditionalTraditional32 44 56 67 Traditional24 
Financial SolutionsFinancial Solutions10 Financial Solutions13 
TotalTotal36 48 66 74 Total19 30 
Europe, Middle East and Africa:Europe, Middle East and Africa:Europe, Middle East and Africa:
TraditionalTraditional(12)16 (80)33 Traditional(6)(68)
Financial SolutionsFinancial Solutions83 98 143 128 Financial Solutions85 60 
TotalTotal71 114 63 161 Total79 (8)
Asia Pacific:Asia Pacific:Asia Pacific:
TraditionalTraditional(12)47 29 71 Traditional51 41 
Financial SolutionsFinancial Solutions31 26 59 Financial Solutions(56)28 
TotalTotal19 73 88 72 Total(5)69 
Corporate and OtherCorporate and Other35 385 (90)Corporate and Other(31)350 
TotalTotal$482 $195 $668 $99 Total$(60)$186 
3430

Table of Contents

Assets:June 30, 2021December 31, 2020
U.S. and Latin America:
Traditional$20,760 $20,071 
Financial Solutions29,272 25,433 
Total50,032 45,504 
Canada:
Traditional5,017 4,682 
Financial Solutions13 
Total5,025 4,695 
Europe, Middle East and Africa:
Traditional5,058 4,763 
Financial Solutions6,419 7,292 
Total11,477 12,055 
Asia Pacific:
Traditional8,664 8,197 
Financial Solutions6,814 4,299 
Total15,478 12,496 
Corporate and Other6,932 9,906 
Total$88,944 $84,656 

Assets:March 31, 2022December 31, 2021
U.S. and Latin America:
Traditional$20,960 $20,572 
Financial Solutions27,229 29,028 
Total48,189 49,600 
Canada:
Traditional5,144 5,091 
Financial Solutions43 18 
Total5,187 5,109 
Europe, Middle East and Africa:
Traditional4,655 4,670 
Financial Solutions6,506 7,165 
Total11,161 11,835 
Asia Pacific:
Traditional10,769 10,048 
Financial Solutions8,808 7,678 
Total19,577 17,726 
Corporate and Other5,647 7,905 
Total$89,761 $92,175 
8.    Commitments, Contingencies and Guarantees
Commitments
Funding of Investments
The Company’s commitments to fund investments as of June 30, 2021March 31, 2022 and December 31, 20202021, are presented in the following table (dollars in millions):
June 30, 2021December 31, 2020March 31, 2022December 31, 2021
Limited partnership interests and joint venturesLimited partnership interests and joint ventures$867 $678 Limited partnership interests and joint ventures$978 $1,031 
Mortgage loans on real estateMortgage loans on real estate175 199 Mortgage loans on real estate57 152 
Bank loans and private placementsBank loans and private placements541 194 Bank loans and private placements914 768 
Lifetime mortgagesLifetime mortgages46 43 Lifetime mortgages90 41 
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. Bank loans and private placements are included in fixed maturity securities available-for-sale.
The Company has aan immaterial liability, included in other liabilities, for expected credit losses associated with unfunded commitments of approximately $1 million and $2 million as of June 30, 2021March 31, 2022 and December 31, 2020, which2021.
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, 2022 and December 31, 2021, the Company had $1.1 billion and $1.4 billion, respectively, 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 March 31, 2022 and December 31, 2021, the Company had $900 million and $500 million, respectively, of FABN agreements outstanding and are included in other liabilities on the Company’s condensed consolidated balance sheets.within interest-sensitive contract liabilities.
Contingencies
Litigation
The Company is subject to litigation in the normal course of its business. Thebusiness, however, the Company currently has no material litigation. A legal reserve is established when the Company is notified of an arbitration demand or litigation or is notified that
31

Table of Contents

an arbitration demand or litigation 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.
35

Table of Contents

Guarantees
Statutory Reserve Support
Certain RGA subsidiaries have 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). In addition, certain subsidiaries have also committed to provide capital support to a third-party,third party, in exchange for a fee, by agreeing to assume real estate leases in the event of a severe and prolonged decline in the commercial lease market. Upon assumption of a lease, the Company would recognize a right to use asset and lease obligation. As of June 30, 2021,March 31, 2022, 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 June 30, 2021March 31, 2022 (dollars in millions):
Commitment Period:Maximum Potential Obligation
Commitment PeriodCommitment PeriodMaximum Potential Obligation
20342034$1,243 2034$1,243 
203520352,444 20352,678 
203620363,599 20363,599 
203720372,850 20376,850 
203820382,300 20382,300 
2039203911,350 20397,350 
204620463,000 20463,000 
Other Guarantees
RGA has issued guarantees to third parties on behalf of its subsidiaries for the payment of amounts due under certain securities borrowing 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, particularly 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 of 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 June 30, 2021March 31, 2022 and December 31, 20202021, are reflected in the following table (dollars in millions):
June 30, 2021December 31, 2020
Treaty guarantees$2,104 $1,934 
Treaty guarantees, net of assets in trust1,133 961 
Securities borrowing and repurchase arrangements136 133 

March 31, 2022December 31, 2021
Treaty guarantees$2,152 $2,208 
Treaty guarantees, net of assets in trust1,253 1,281 
Securities borrowing and repurchase arrangements177 134 
9.    Income Tax
For the three and six months ended June 30, 2021,March 31, 2022, the Company recorded income tax expense of $3 million on a pre-tax loss of $60 million, or an effective tax rate of 3.7%. Tax expense was recorded on the pre-tax incomeloss was 28.5% and 27.6%, respectively. The Company’s effective tax rate for the three and six months ended June 30, 2021 differed from the U.S. statutory rateresult of 21% primarily due to income earned in jurisdictions with tax rates higher than the U.S., state income taxes,basis adjustments in foreign jurisdictions and adjustments to the effect of the enacted UK corporate tax rate increase on the remeasurement of deferred taxes.
valuation allowance. For the three and six months ended June 30, 2020,March 31, 2021, the Company recorded income tax expense of $47 million on pre-tax income of $186 million, or an effective tax rate on pre-tax income was 18.9% and 28.6%, respectively.of 25.3%. The Company’s effective tax rate for both tax periods differed fromwas higher than the U.S. statutory income tax rate of 21% primarily as a result of benefits from differencesincome earned in bases in foreign jurisdictions increases towith tax rates higher than the valuation allowance, return to provision adjustmentsU.S., global intangible low-taxed income (“GILTI”) and accruals related to uncertain tax positions.

Subpart F income.
3632

Table of Contents

10.    Employee Benefit Plans
The components of net periodic benefit cost, included in other operating expenses on the Company’s condensed consolidated statements of income, for the three and six months ended June 30,March 31, 2022 and 2021 and 2020 were as follows (dollars in millions):
 Pension BenefitsOther Benefits
 Three months ended June 30,Three months ended June 30,
 2021202020212020
Service cost$$$$
Interest cost
Expected return on plan assets(3)(3)
Amortization of prior service cost (credit)(1)(1)
Amortization of prior actuarial losses
Net periodic benefit cost$$$$
Pension BenefitsOther Benefits Pension BenefitsOther Benefits
Six months ended June 30,Six months ended June 30, Three months ended March 31,Three months ended March 31,
2021202020212020 2022202120222021
Service costService cost$$$$Service cost$$$$
Interest costInterest costInterest cost— — 
Expected return on plan assetsExpected return on plan assets(5)(5)Expected return on plan assets(3)(2)— — 
Amortization of prior service cost (credit)Amortization of prior service cost (credit)(1)(1)Amortization of prior service cost (credit)— — — — 
Amortization of prior actuarial lossesAmortization of prior actuarial lossesAmortization of prior actuarial losses— — 
Net periodic benefit costNet periodic benefit cost$$$$Net periodic benefit cost$$$$
11.    Reinsurance
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. At June 30, 2021March 31, 2022 and December 31, 2020,2021, no allowances were deemed necessary. The Company regularly evaluates the financial condition of the insurance companies from which it assumes 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 June 30, 2021 and DecemberMarch 31, 2020,2022, 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 has been posted. In addition, the Company performs annual financial reviews of its retrocessionaires to evaluate financial stability and performance.
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 June 30, 2021March 31, 2022 or December 31, 20202021 (dollars in millions):
June 30, 2021December 31, 2020March 31, 2022December 31, 2021
ReinsurerReinsurerA.M. Best RatingAmount% of TotalAmount% of TotalReinsurerA.M. Best RatingAmount% of TotalAmount% of Total
Reinsurer AReinsurer AA+$476 43.5 %$420 42.7 %Reinsurer AA-$1,617 62.3 %$1,626 63.0 %
Reinsurer BReinsurer BA+225 20.6 216 22.0 Reinsurer BA+441 17.0 423 16.4 
Reinsurer CReinsurer CA67 6.1 64 6.5 Reinsurer CA+216 8.3 212 8.2 
Reinsurer DReinsurer DA++66 6.0 55 5.6 Reinsurer DA59 2.3 59 2.3 
Reinsurer EReinsurer EA+50 4.6 46 4.7 Reinsurer EA+44 1.7 44 1.7 
Reinsurer FReinsurer FA++42 1.6 42 1.6 
Other reinsurersOther reinsurers209 19.2 182 18.5 Other reinsurers176 6.8 174 6.8 
TotalTotal$1,093 100.0 %$983 100.0 %Total$2,595 100.0 %$2,580 100.0 %
Included in the total reinsurance ceded receivables balance were $254$196 million and $278$203 million of claims recoverable, of which $15$9 million and $10 million were in excess of 90 days past due, as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively. Also included in the total reinsurance ceded receivable and other is a deposit asset on reinsurance of $1,617 million and $1,626 million as of March 31, 2022 and December 31, 2021, respectively.
3733

Table of Contents

12.    Policy Claims and Benefits
Rollforward of Claims and Claim Adjustment Expenses
The liability for unpaid claims is reported in future policy benefits and other policy claims and benefits on the Company’s condensed consolidated balance sheets. Activity associated with unpaid claims is summarized below (dollars in millions):
Six Months Ended June 30,Three months ended March 31,
2021202020222021
Balance, beginning of period$7,556 $6,786 
Balance at beginning of yearBalance at beginning of year$8,053 $7,556 
Less: reinsurance recoverableLess: reinsurance recoverable(641)(564)Less: reinsurance recoverable(556)(641)
Net balance, beginning of period6,915 6,222 
Net balance at beginning of yearNet balance at beginning of year7,497 6,915 
Incurred:Incurred:Incurred:
Current yearCurrent year7,631 5,740 Current year3,438 4,097 
Prior yearsPrior years(122)59 Prior years(82)(59)
Total incurredTotal incurred7,509 5,799 Total incurred3,356 4,038 
Payments:Payments:Payments:
Current yearCurrent year(2,747)(1,332)Current year(161)(164)
Prior yearsPrior years(4,358)(3,903)Prior years(3,051)(3,196)
Total paymentsTotal payments(7,105)(5,235)Total payments(3,212)(3,360)
Other changes:Other changes:Other changes:
Interest accretionInterest accretion20 18 Interest accretion10 
Foreign exchange adjustmentsForeign exchange adjustments(38)(142)Foreign exchange adjustments17 (51)
Total other changesTotal other changes(18)(124)Total other changes25 (41)
Net balance, end of period7,302 6,662 
Net balance at end of periodNet balance at end of period7,666 7,552 
Plus: reinsurance recoverablePlus: reinsurance recoverable674 633 Plus: reinsurance recoverable567 732 
Balance, end of period$7,976 $7,295 
Balance at end of periodBalance at end of period$8,233 $8,284 
Incurred claims associated with prior periods are primarily due to events, related to long-duration business, which were incurred in prior periods but were reported in the current period, and to a lesser extent, 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.
34
13.    Financing Activities

On June 9, 2020, RGA issued 3.15% Senior Notes due June 15, 2030, with a face amount
Table of $600 million. This security has been registered with the Securities and Exchange Commission. The net proceeds were approximately $593 million and were used in part to repay the Company’s $400 million 5.000% Senior Notes that matured in June 2021, and the remainder was used for general corporate purposes. Capitalized issue costs were approximately $5 million.Contents

14.13.    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™. Accounting standards updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s condensed consolidated financial statements.
38

Table of Contents

DescriptionDate of AdoptionEffect on the Consolidated Financial Statements
Standards adopted:
Financial Instruments – Credit Losses
This guidance 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 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 through an allowance for credit losses and adjusted each period for changes in credit risks. Early adoption is permitted.


January 1, 2020

For asset classes within the scope of the CECL model, this guidance was adopted through a cumulative-effect adjustment to retained earnings (that is, a modified-retrospective approach). For available-for-sale debt securities, this guidance was applied prospectively. The allowance for credit losses increased when this guidance was adopted to include expected losses over the lifetime of commercial mortgages and other loans, including reasonable and supportable forecasts and expected changes in future economic conditions. The overall impact was an approximate $15 million pre-tax increase in the allowance for credit losses. This increase was reflected as a decrease to opening retained earnings, net of income taxes, as of January 1, 2020.
Fair Value Measurement
This guidance is part of the FASB’s disclosure framework project and eliminates certain disclosure requirements for fair value measurement, requires entities to disclose new information and modifies existing disclosure requirements. Early adoption is permitted.

January 1, 2020

Certain disclosure changes in the new guidance were applied prospectively in the year of adoption. The remaining changes in the new guidance were applied retrospectively to all periods presented in the year of adoption.

As of December 31, 2019, the Company early adopted the guidance that removed the requirements relating to transfers between fair value hierarchy levels and certain disclosures about valuation processes for Level 3 fair value measurements. The Company adopted the remainder of the guidance on January 1, 2020. The adoption of the new guidance was not material to the Company’s financial position.
Reference Rate Reform
This guidance eases the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. which includes the transition away from the London Interbank Offered Rate (“LIBOR”). The ASU provides optional expedients and exceptions for applying GAAP modification to contracts and hedge accounting relationships affected by reference rate reform on financial reporting. Under the new guidance, a change in the reference rate for a contract that meets certain criteria will be accounted for as a continuation of that contract rather than the creation of a new contract. The new guidance applies to debt, insurance contracts, leases, derivative contracts and other arrangements.

January 1, 2020

The reference rate reform is not expected to have material accounting consequences. The Company has established a team that is currently assessing the effects of the discontinuation of LIBOR on existing contracts that extend beyond 2021 (that is, the date when the Financial Conduct Authority intends to stop persuading or compelling banks to submit LIBOR), by analyzing contractual fallback provisions, evaluating alternative rate ramifications and assessing the effects on current hedging strategies, systems and operations.
39

Table of Contents

DescriptionAnticipated Date of AdoptionEffect on the Consolidated Financial Statements
Standards not yet adopted:
Financial Services Insurance
This guidance significantly changes how insurers account for long-duration insurance contracts. The new guidance also significantly expands the disclosure requirements of long-duration insurance contracts. The new guidance is effective for annual and interim reporting periods beginning January 1, 2023. Below are the most significant areas of change:

January 1, 2023

See each significant area of change below for the method of adoption and expected impact to the Company’s results of operations and financial position.
Cash flow assumptions for measuring liability for future policy benefits The new guidance requires insurers to review, and if necessary, update the cash flow assumptions used to measure liabilities for future policy benefits periodically. The change in the liability estimate as a result of updating cash flow assumptions will be recognized in net income.
Cash flow assumptions for measuring liability for future policy benefits The Company will likely adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to retained earnings as a result of capping the net premium ratio at 100% and eliminating negative reserves on certain issue year cohorts. The Company is currently evaluating this impact but anticipates it will likely result in a material decrease to retained earnings. The Company is currently evaluating the impact of this amendmentthe cash flow assumptions amendments on its results of operations and financial position but anticipates the updated guidancethey will likely have a material impact.be material.
Discount rate assumption for measuring liability for future policy benefits The new guidance requires insurers to update the discount rate assumption used to measure liabilities for future policy benefits at each reporting period, and the discount rate utilized must be based on an upper-medium grade fixed income instrument yield. The change in the liability estimate as a result of updating the discount rate assumption will be recognized in other comprehensive income.income (loss).
Discount rate assumption for measuring liability for future policy benefits The Company will likely adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, there will be an adjustment to accumulated other comprehensive income (loss) as a result of remeasuring in force contract liabilities using current upper-medium grade fixed income instrument yields. The adjustment will largely reflect the difference between discount rates locked-in at contract inception versus current discount rates at transition. The Company is currently evaluating the impact of this amendment on its results of operations and financial positionadjustment but anticipates the updated guidanceit will likely have a material impact.be material.
Market risk benefits The new guidance created a new category of benefit features called market risk benefits that will be measured at fair value with changes in fair value attributable to a change in the instrument-specific credit risk recognized in other comprehensive income.income (loss).
Market risk benefits The Company willis required to adopt this guidance on a retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an impact to (1) accumulated other comprehensive income (loss) for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date and (2) retained earnings for the difference between fair value and carrying value at the transition date, excluding the changes in the instrument-specific credit risk. The Company is currently evaluating the impact of this amendment on its results of operations and financial positionthese adjustments but anticipates the updated guidancethey will likely have a material impact.be material.
Amortization of deferred acquisition costs (“DAC”) and other balancesThe new guidance requires DAC and other balances to be amortized on a constant level basis over the expected term of the related contracts.
Amortization of deferred acquisition costs (“DAC”) and other balances The Company will likely adopt this guidance on a modified retrospective basis as of the earliest period presented in the year of adoption. Upon adoption, the Company expects an adjustment to accumulated other comprehensive income (loss) for the removal of cumulative adjustments to DAC associated with unrealized gains and losses previously recorded in accumulated other comprehensive income (loss). The Company is currently evaluating the impact of this amendmentadjustment but anticipates it will likely result in a material increase to accumulated other comprehensive income (loss). The Company is currently evaluating the impact of the other amortization of DAC and other balances amendments on its results of operations and financial position but anticipates the updated guidancethey will likely have a material impact.not be material.


4035

Table of Contents

ITEM 2.        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, among others, statements relating to projections of the future operations, strategies, earnings, revenues, income or loss, ratios, financial performance and growth potential of the Company. Forward-looking statements often contain words and phrases such as “intend,” “expect,” “project,” “estimate,” “predict,” “anticipate,” “should,” “believe” and other similar expressions. Forward-looking statements are based 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.
The effects of the COVID-19 pandemic and the response thereto on economic conditions, the financial markets and insurance risks, and the resulting effects on the Company’s financial results, liquidity, capital resources, financial metrics, investment portfolio and stock price, could cause actual results and events to differ materially from those expressed or implied by forward-looking statements. Additionally, numerous other important factors (whether related to, resulting from or exacerbated by the COVID-19 pandemic or otherwise) could also cause results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: (1) adverse changes in mortality, 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, (4) 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 market value of assets subject to the Company’s collateral arrangements, (7) action 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 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, (10) the impairment of other financial institutions and its effect on the Company’s business, (11) fluctuations in U.S. or foreign currency exchange rates, interest rates, or securities and 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, (13) market or economic conditions that adversely affect the Company’s ability to make timely sales of investment securities, (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, (15) the fact that the determination of allowances and 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) 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, (18) financial performance of the Company’s clients, (19) the threat of natural disasters, catastrophes, terrorist attacks, epidemics or pandemics anywhere in the world where the Company or its clients do business, (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 stored on such systems, (25) adverse litigation or arbitration results, (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 or its business, (28) the effects of the Tax Cutsincluding Long Duration Targeted Improvement accounting changes, and Jobs Act of 2017 may be different than expected and (29)(28) other risks and uncertainties described in this document and in the Company’s other filings with the 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 obligation 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 20202021 Annual Report, as may be supplemented by Item 1A “Risk Factors” in the Company’s subsequent Quarterly Reports on Form 10-Q.
41

Table of Contents

Overview
The Company is among the leading global providers of life reinsurance and financial solutions, with $3.5 trillion of life reinsurance in force and assets of $88.9$89.8 billion as of June 30, 2021.March 31, 2022. Traditional reinsurance includes individual and group life
36

Table of Contents

and health, disability, and critical illness reinsurance. Financial solutions includes longevity reinsurance, asset-intensive reinsurance, capital solutions, including financial reinsurance and 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 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 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 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 life 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.
Segment Presentation
The Company has geographic-based and business-based operational segments. Geographic-based operations are further segmented into traditional and financial 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 revenue 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.

4237

Table of Contents

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 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
    Income taxes.
A discussion of each of the critical accounting policies may be found in the Company’s 20202021 Annual Report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies.”
Consolidated Results of Operations
Impacts of the COVID-19 Pandemic
TheAlthough global COVID-19 related deaths have begun to decline, the Company continues to experience increased claim costs as a result of the COVID-19 global pandemic continues to cause increases in the Company’s claims costs, primarily relating to its mortality business.pandemic. However, the Company cannot reliably predict the future impact of the ongoing pandemic will have on its business, results of operations and financial condition as the impact will largely depend on, among other factors, the impactseverity of new variants of the virus, successful rollout of the vaccination programs globally,effectiveness, country-specific circumstances, measures by public and private institutions, and COVID-19’s indirect impact on all other causes of death. In addition, the Company’s clients’ ability to write new business in this environment may result in a slowdown in new business temporarily; however, much of the Company’s premiumsmortality and other revenues are contractually recurring for many years to come.morbidity.
The ultimate amount and timing of claims the Company will experience as a result of the COVID-19 pandemic will be dependentdepend on many variables and uncertainties. These variables and uncertainties include those discussed above, in addition to age, gender, comorbidities, other insured versus general population characteristics, geography-specific institutional and individual mitigating actions, medical capacity, and other factors. To date, general population COVID-19 deaths have been heavily concentrated in individuals aged 70 and older and with pre-existing comorbidities.comorbidities; however, many populations have seen an increase in younger age deaths, particularly in areas where healthcare facilities were unable to provide adequate care. The Company’s insured population has lower exposure to older ages than the general population and covers a generally healthier population due to underwriting and socioeconomic factors of those purchasing insurance. In addition, the Company’s longevity business may act as a modest offset to excess life insurance claims.claims at older ages.
The Company’s COVID-19 projection and financial impact models continue to be updated and refined based on updatedlatest external data and the Company’s claim experience to date and are subject to the many variables and uncertainties noted above. The U.S. iscontinues to be the key driver of mortality claim costs followed by Canada and the UK, India, South Africa and Canada.UK. For the six month periodthree months ended June 30, 2021,March 31, 2022, the Company estimates it has incurred approximately $595$315 million of COVID-19 related life and health claim costs, including amounts incurred but not reported, with approximately $352$272 million of that amount being associated with the U.S. and Latin America Traditional segment. The Company has updatedmaintained the range of COVID-19 mortality claim cost estimates relative to the level of general population deaths. The U.S. range was lowered reflecting developing data and go forward expectations. The rangesdeaths for the U.S., UK and Canada were widened, reflectivealthough short-term experience may be at the higher end of our experience as well asthose ranges, reflecting mortality that is still driven in part by new variants of the expectation that a lower number of COVID-19 general population deaths will result in more variability in the relationship to claims costs.virus. The Company estimates that every additional 10,000 population deaths in the U.S., UK or Canada as a result of COVID-19 would result in the following corresponding excess mortality claims of approximately:approximately
$10 million to $20 million in the U.S.;
$4 million to $8 million in the UK; and
$10 million to $20 million in Canada.
While the global financial markets have stabilized since the beginning of the pandemic, they continue to be in a state of uncertainty due to COVID-19 mandated economic shutdowns and historically large and rapid central bank and fiscal policies meant to offset the economic impact of the pandemic. The economic weakness and uncertainty caused by these events may also adversely affect the Company’s financial performance. All investments held by the Company, directly or in a funds withheld at
43

Table of Contents

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. The current market environment may result in certain investments being downgraded which can affect conformance with these limits. The level of potential impairments will depend on broad economic conditions and the pace at which global economies recover from the effects of COVID-19 and the response thereto. See “Investments” for more information.
The safety and well-being of the Company’s employees and clients continues to be a priority. The Company’s business continuity plans remain activated and the actions taken during 2020 to protect both employees and clients, such as working from home, restricting travel, conducting meetings remotely, and reinforcing the importance of face coverings, good hygiene and social distancing, also continue. The Company’s offices worldwide are at a minimum adhering to local government mandates and guidelines regarding occupancy levels; however, in certain situations the Company’s guidelines are more restrictive than those of local governments.
The Company has not experienced any significant disruptions to its daily operations, despite most of its workforce working remotely. However, COVID-19 heightened operational risks and related impacts, which may include a reduction in new business volumes from slower sales, impacts to the Company’s workforce productivity due to travel restrictions, temporary office closures and increased remote working situations, and potential client delays in paying premiums and reporting claims. Similar to other reinsurers, the Company is heavily reliant on timely reporting from its clients and other third parties. The Company continues to emphasize awareness and training regarding operational risks, including privacy and cybersecurity risks, as such risks are heightened during remote working situations. In addition, the Company continues to monitor its programs, processes and procedures designed to manage these risks.
RGA’s operating subsidiaries continue to be well capitalized, and the Company continues to monitor its solvency position under multiple capital regimes on a regular basis while considering both its developing experience and economic conditions. In addition, the Company utilizes its internal capital model to assess its ability to meet its long-term obligations under a range of stress scenarios on a consolidated basis. This internal capital model is also used as the capital basis for RGA’sthe Company’s consolidated Own Risk and Solvency Assessment.
38

Table of Contents

Results from Operations 20212022 compared to 20202021
The following table summarizes net income for the periods presented.
 Three months ended June 30,Six months ended June 30,
 202120202021 vs 2020202120202021 vs 2020
Revenues:(Dollars in millions, except per share data)
Net premiums$3,098 $2,790 $308 $6,012 $5,609 $403 
Investment income, net of related expenses759 645 114 1,571 1,239 332 
Investment related gains (losses), net112 81 31 414 (204)618 
Other revenues168 90 78 259 166 93 
Total revenues4,137 3,606 531 8,256 6,810 1,446 
Benefits and Expenses:
Claims and other policy benefits2,813 2,700 113 6,005 5,364 641 
Interest credited218 187 31 364 333 31 
Policy acquisition costs and other insurance expenses339 290 49 672 538 134 
Other operating expenses240 188 52 454 383 71 
Interest expense43 42 88 83 
Collateral finance and securitization expense(2)10 (5)
Total benefits and expenses3,655 3,411 244 7,588 6,711 877 
 Income before income taxes
482 195 287 668 99 569 
Provision for income taxes138 37 101 185 29 156 
Net income$344 $158 $186 $483 $70 $413 
Earnings per share:
Basic earnings per share$5.06 $2.49 $2.57 $7.11 $1.12 $5.99 
Diluted earnings per share$5.02 $2.48 $2.54 $7.06 $1.11 $5.95 
Three months ended June 30, 2021 compared to three months ended June 30, 2020
For the three months ended March 31,
(Dollars in millions, except per share data)202220212022 vs 2021
Revenues:
Net premiums$3,155 $2,914 $241 
Net investment income810 812 (2)
Investment related gains (losses), net(126)302 (428)
Other revenues91 91 — 
Total revenues3,930 4,119 (189)
Benefits and Expenses:
Claims and other policy benefits3,225 3,192 33 
Interest credited141 146 (5)
Policy acquisition costs and other insurance expenses355 333 22 
Other operating expenses226 214 12 
Interest expense42 45 (3)
Collateral finance and securitization expense(2)
Total benefits and expenses3,990 3,933 57 
 Income (loss) before income taxes
(60)186 (246)
Provision for income taxes47 (44)
Net income (loss)$(63)$139 $(202)
Earnings per share:
Basic earnings per share$(0.93)$2.04 $(2.97)
Diluted earnings per share$(0.93)$2.03 $(2.96)
The increasedecrease in income for the three months ended June 30, 2021,March 31, 2022, was primarily the result of:
An increase in investment income and investment related gains (losses), net primarily due to an increase in variable investment income.
44

Table of Contents

An increase in income before taxes generated by the Company’s Financial Solutions business in the U.S. and UK.
Improved mortality experience in the U.S. and Latin America Traditional segment.
The increase in income before taxes was partially offset by unfavorable mortality claims in the EMEA, Canada and Asia Pacific segments.
Six months ended June 30, 2021 compared to six months ended June 30, 2020
The increase in income for the six months ended June 30, 2021, was primarily the result of:
A one-time adjustment of $162 million, pretax, associated with prior periods that includes $92 million, pretax, to correct the accounting for equity method limited partnerships to reflect unrealized gains in investment income, net of related expenses that were previously included in accumulated other comprehensive income, and a $70 million, pretax, correction reflected in other investment related gains (losses), net to adjust the carrying value of certain limited partnerships from cost less impairments to a fair value approach, using the net asset value (“NAV”) per share or its equivalent.
$177 million, pretax, of capital gains included in other investment related gains (losses), net associated with portfolio repositioning.
Changes in fair value of embedded derivatives, associated with modco/funds withheld treaties, increased investment related gains by $66 million for the six month period ended June 30, 2021, compared to a decrease of $229 million for the six month period ended June 30, 2020.
The increases in investment income and investment related gains (losses), net were partially offset by unfavorable claims, primarily in the EMEA and U.S. and Latin America segments.
As discussed in the “Impacts of the COVID-19 Pandemic” above, the Company estimates it has incurred approximately $595$315 million, pretax,pre-tax, of COVID-19 related life and health claim costs, including amounts incurred but not reported, with approximately $352$272 million, pretax,pre-tax, in the U.S. and Latin America segment.
Changes in the fair value of embedded derivatives, associated with modco/funds withheld treaties, decreased investment related gains by $33 million for the three month period ended March 31 2022, compared to an increase of $50 million for the three month period ended March 31, 2021.
$25 million, pre-tax, of net realized losses, included in investment related gains (losses), net associated with portfolio repositioning compared to $154 million of net realized gains recognized in the prior year.
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency exchange fluctuation increased income before taxes for the three and six month periodsmonths ended June 30, 2021,March 31, 2022 by $14$6 million and $18 million, respectively, primarily due to the strengtheninga weakening of the Great British Pound and Canadian DollarJapanese Yen compared to the U.S. Dollar.dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Premiums and business growth
The increase in premiums during the three and six month period ended June 30, 2021, is primarily due to growthan increase in new business production, measured by the face amount of life reinsurance in force.force, of $119.4 billion and $77.9 billion during the three months ended March 31, 2022 and 2021, respectively. Consolidated assumed life insurancereinsurance in force increased to $3,471.7$3,495.1 billion as of June 30, 2021,March 31, 2022, from $3,457.8$3,428.6 billion as of June 30, 2020,March 31, 2021, due to new business production and in force transactions offset by an increase in lapses and mortality claims in the current period, primarily attributable to the increased claims as a result of the ongoing COVID-19 pandemic. The Company added new business production, measured by face amount of insurance in force, of $220.9 billion, and $210.9 billion during the six months ended June 30, 2021 and 2020, respectively.claims.
InvestmentNet investment income net of related expenses and investment related gains (losses), net
The increase inNet investment income net of related expenses is primarily attributable toconsistent with the aforementioned accounting correction associated with equity method limited partnerships recordedcomparable period in the first quarter of 2021 in addition toas an increase in the average invested asset base andwas offset by a decrease in yield:
The average invested assets at amortized cost, excluding spread related business, totaled $33.3$35.3 billion for the six months ended June 30,and $33.4 billion in 2022 and 2021, compared to $30.0 billion for the six months ended June 30, 2020.respectively.
The average yield earned on investments, excluding spread related business, was 4.64%5.29% and 4.07%5.67% for the three month periodthree-month periods ended June 30,March 31, 2022 and 2021, and 2020, respectively, and 5.15% and 4.07%respectively.
Investment income, net for the six monthsthree-months ended June 30,March 31, 2021, and 2020, respectively.benefited from a one-time adjustment of approximately $92 million, pre-tax, to correct the accounting for unrealized gains on certain limited partnerships, for
A continued low interest rate environment,
39

Table of Contents

which the Company uses the equity method of accounting, from AOCI to net investment income. The unrealized gains should have been recognized directly in addition to higher cash and cash equivalents balances heldnet investment income in the same prior periods they were reported as earnings by the Company during the COVID-19 pandemic, is expected to put downward pressure on this yield in future reporting periods. investees.

The average yield will vary from yearperiod to yearperiod depending on several variables, including the prevailing risk-feerisk-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 including unrealized gains and losses on certain limited partnerships, will also vary from yearperiod to yearperiod and can beis highly variable baseddependent on equity-market performance and 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.

45

Table of Contents

The increasedecrease in investment related gains (losses), net is primarily attributable to the following:
During the three and six months ended June 30, 2021,March 31, 2022, the Company repositioned its portfolioselect investment portfolios generating capitalnet realized losses of $25 million compared to net realized gains of $23 million and $177 million, respectively.
There were no material impairments or changes in allowance for credit losses on fixed maturities during the three months ended June 30, 2021 or June 30, 2020. During the six months ended June 30, 2021, the Company recognized a reduction of $3 million of impairments and change in allowance for credit losses on fixed maturities compared to an increase of $34$154 million during the first sixthree months of 2020.2021.
Changes in the fair value of embedded derivatives, associated with modco/funds withheld treaties, increaseddecreased investment related gains (losses), net by $16 million and $66$33 million for the three and six month period ended June 30, 2021, respectively,March 31 2022, compared to an increase (decrease) of $1 million and $(229)$50 million for the three and six month period ended June 30, 2020.March 31, 2021.
Unrealized gains of $48 millionThe Company uses various derivative instruments such as interest rate swaps, credit default swaps and $155 million, including the previously mentioned correction recordedforeign 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, 2022, the fair value of these instruments decreased by $90 million, compared to a decrease of $51 million during the first quarterthree months of 2021. See Note 5 – “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for additional information.
During the three months ended March 31, 2022, the Company incurred $12 million of impairments and change in allowance for credit losses on fixed maturity securities compared to $2 million during the first three months of 2021.
Investment related gains (losses), net, for the first three months of 2021 included an adjustment to investments in limited partnerships considered to be investment companies, which should have been recognized in prior periods, of $70 million duepre-tax to adjust the carrying value from cost less impairments to the change in fair value of certain cost method limited partnerships were recognized duringapproach, using the three and six month periods ended June 30, of 2021.net asset value (“NAV”) per share or its equivalent.
The effective tax rate on a consolidated basis was 28.5% and 18.9%3.7% tax rate expense on a pre-tax loss for the three months ended June 30, 2021March 31, 2022, and 2020, respectively, and 27.6% and 28.6%25.3% tax rate expense on pre-tax income for the sixthree months ended June 30,March 31, 2021, and 2020, respectively. See Note 9 – “Income Tax” in the Notes to Condensed Consolidated Financial Statements for additional information on the Company’s consolidated effective tax rates.rate.
Impact of certain derivatives
The Company recognizes in consolidated income, any changes in the fair value of embedded derivatives on modco or funds withheld treaties, equity index annuities (“EIAs”) and variable annuities with guaranteed minimum benefit riders. The Company utilizes freestanding derivatives to minimize the income statement volatility due to changes in the fair value of embedded derivatives associated with guaranteed minimum benefit riders. The following table presents the effect of embedded derivatives and related freestanding derivatives on income before income taxes for the periods indicated (dollars in millions):
Three Months Ended June 30,Six Months Ended June 30,
202120202021 vs 2020202120202021 vs 2020
Modco/Funds withheld:
Unrealized gains (losses)$16 $$15 $66 $(229)$295 
Deferred acquisition costs/retrocession(7)(9)(23)115 (138)
Net effect43 (114)157 
EIAs:
Unrealized gains (losses)(7)10 33 (19)52 
Deferred acquisition costs/retrocession(1)(3)(17)10 (27)
Net effect(5)16 (9)25 
Guaranteed minimum benefit riders:
Unrealized gains (losses)(16)107 (123)(21)22 
Related freestanding derivatives, net of deferred acquisition costs/retrocession20 (70)90 (33)94 (127)
Net effect37 (33)(32)73 (105)
Total net effect after freestanding derivatives$15 $35 $(20)$27 $(50)$77 

Three months ended March 31,
202220212022 vs. 2021
Modco/Funds withheld:
Unrealized gains (losses)$(33)$50 $(83)
Deferred acquisition costs/retrocession19 (17)36 
Net effect(14)33 (47)
EIAs:
Unrealized gains (losses)17 29 (12)
Deferred acquisition costs/retrocession(7)(15)
Net effect10 14 (4)
Guaranteed minimum benefit riders:
Unrealized gains (losses)14 19 (5)
Related freestanding derivatives, net of deferred acquisition costs costs/retrocession(29)(54)25 
Net effect(15)(35)20 
Total net effect after freestanding derivatives$(19)$12 $(31)
4640

Table of Contents

Results of Operations by Segment
U.S. and Latin America Operations
The U.S. and Latin America operations include business generated by the Company’s offices in the U.S., Mexico and Brazil. The offices in Mexico and Brazil provide services to clients in other Latin American countries. The 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,mortality-risk, health and long-term care and to a lesser extent, group reinsurance. The Financial Solutions segment consists of Asset-Intensive and Capital Solutions. Asset-Intensive within the Financial Solutions segment includes coinsurance of annuities and corporate-owned life insurance policies and to a lesser extent, fee-based synthetic guaranteed investment contracts, which include investment-only, stable value contracts. Capital 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, therefore only the related net fees are reflected in other revenues on the condensed consolidated statements of income.income.
The following table summarizes income before income taxes for the Company’s U.S. and Latin America operations for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$1,593 $1,469 $124 $3,025 $2,854 $171 Net premiums$1,556 $1,432 $124 
Investment income, net of related expenses509 420 89 974 815 159 
Net investment incomeNet investment income567 465 102 
Investment related gains (losses), netInvestment related gains (losses), net31 22 31 (145)176 Investment related gains (losses), net(65)— (65)
Other revenuesOther revenues116 54 62 174 113 61 Other revenues61 58 
Total revenuesTotal revenues2,249 1,965 284 4,204 3,637 567 Total revenues2,119 1,955 164 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits1,439 1,607 (168)3,239 3,027 212 Claims and other policy benefits1,813 1,800 13 
Interest creditedInterest credited200 157 43 331 305 26 Interest credited124 131 (7)
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses238 204 34 469 341 128 Policy acquisition costs and other insurance expenses249 231 18 
Other operating expensesOther operating expenses51 38 13 99 82 17 Other operating expenses55 48 
Total benefits and expensesTotal benefits and expenses1,928 2,006 (78)4,138 3,755 383 Total benefits and expenses2,241 2,210 31 
Income before income taxes$321 $(41)$362 $66 $(118)$184 
Income (loss) before income taxesIncome (loss) before income taxes$(122)$(255)$133 
The increasedecrease in incomeloss before income taxes in the second quarter of 2021 was the result of a nine percent decreaseincreases in claimsnet premiums and other policy benefitsnet investment income in the U.S. Traditional segment, strong performance from Financial Solutionssegment. The decrease in losses was partially offset by a decrease in investment related to both experience gains an increase in transaction and other fees, as well as higher variable investment income from real estate joint ventures and unrealized gains from investments in limited partnerships. The increase in income before income taxes for the first six months of 2021 is also attributable to the impact of embedded derivatives in U.S. Financial Solutions. Partially offsetting the six month increase were realized capital losses compared to realized capital gains in 2020 and significantly higher claims in U.S. Mortality Markets. The significant increase in claims in the U.S. Mortality Markets during the first six months compared to the same period in 2020 was primarily related to an increase in large and non-large claim frequency within the individual mortality business in the first three months of 2021 as compared to the same period in 2020. While the cause of death is not yet available for all claims, the Company believes the excess claim costs are primarily attributable to COVID-19.(losses), net.

4741

Table of Contents

Traditional Reinsurance
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$1,578 $1,454 $124 $2,997 $2,827 $170 Net premiums$1,541 $1,419 $122 
Investment income, net of related expenses233 177 56 440 338 102 
Net investment incomeNet investment income304 207 97 
Investment related gains (losses), netInvestment related gains (losses), net(6)— Investment related gains (losses), net15 
Other revenuesOther revenues— 10 (1)Other revenues
Total revenuesTotal revenues1,816 1,642 174 3,453 3,175 278 Total revenues1,867 1,637 230 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits1,418 1,558 (140)3,158 2,925 233 Claims and other policy benefits1,765 1,740 25 
Interest creditedInterest credited18 18 — 35 37 (2)Interest credited17 17 — 
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses206 195 11 388 370 18 Policy acquisition costs and other insurance expenses208 182 26 
Other operating expensesOther operating expenses39 29 10 75 63 12 Other operating expenses43 36 
Total benefits and expensesTotal benefits and expenses1,681 1,800 (119)3,656 3,395 261 Total benefits and expenses2,033 1,975 58 
Income (loss) before income taxesIncome (loss) before income taxes$135 $(158)$293 $(203)$(220)$17 Income (loss) before income taxes$(166)$(338)$172 
Key metrics:Key metrics:Key metrics:
Life insurance in force$1,619.4 billion$1,620.5 billion
Life reinsurance in forceLife reinsurance in force$1,645.1 billion$1,610.2 billion
Claims and other policy benefits as a percentage of net premiums (“loss ratios”)Claims and other policy benefits as a percentage of net premiums (“loss ratios”)89.9 %107.2 %105.4 %103.5 %Claims and other policy benefits as a percentage of net premiums (“loss ratios”)114.5 %122.6 %
Policy acquisition costs and other insurance expenses as a percentage of net premiumsPolicy acquisition costs and other insurance expenses as a percentage of net premiums13.1 %13.4 %12.9 %13.1 %Policy acquisition costs and other insurance expenses as a percentage of net premiums13.5 %12.8 %
Other operating expenses as a percentage of net premiumsOther operating expenses as a percentage of net premiums2.5 %2.0 %2.5 %2.2 %Other operating expenses as a percentage of net premiums2.8 %2.5 %
The increasedecrease in incomeloss before income taxes in the second quarter for the U.S. and Latin America Traditional segment was primarily the result of a nine percent decrease in claims in the U.S. Mortality Market primarily due to lowerimproved claims attributable to COVID-19 or COVID-19 related factors and an increase inexperience of $70 million within the Individual Mortality line of business, as well as higher net investment income. The decrease in the loss before income taxes for six months ended June 30, 2021, as compared the same period in 2020 is primarily attributable an increase in investment income partially offset by an increase in claims attributable to COVID-19 or COVID-19 related factors.
Revenues
The increase in net premiums for the three and six month periods ended June 30, 2021, was primarily due to organic growth as well as $46 million of new sales.business, $45 million related to the restructuring of a transaction that was previously recognized as a low risk transaction or deposit accounting in Latin America and $31 million related to the partial recapture of a large reinsurance transaction, which had been retroceded to another reinsurer, in the second quarter of 2021. The segment added new life business production, measured by face amount of insurancelife reinsurance in force, of $35.7$39.5 billion and $25.3$28.5 billion during the second quarter ofthree months ended March 31, 2022 and 2021, and 2020, respectively, and $64.2 and $59.3 billion during the first six months of 2021 and 2020, respectively. Also contributing to the premium growth was the restructure and extension of an existing transaction and the partial recapture of a retroceded block of individual life business.
The increase in net investment income for the three and six month periods ended June 30, 2021, was primarily due to higheran increase in variable investment income associated with investments in real estate joint ventures and an increase in realized gains associated with investments in limited partnerships and private equity funds primarily generated from unrealized gains in the underlying investments and higher variable investment income from real estate joint ventures.funds.
Benefits and expenses
The decrease in the loss ratio for the three months ended June 30, 2021,March 31, 2022, as compared to the same period in 2020,2021, was primarily due to favorable claimsnon-COVID-19 experience, inmainly within the individual mortalityIndividual Mortality line of business, attributed primarily to fewer claims from COVID-19 orbusiness. Although global COVID-19 related factors than in 2020. The increase indeaths have begun to decline, the loss ratio forU.S. and Latin America segment continued to experience increased claim costs as result of COVID-19 during the six months ended June 30, 2021, as compared to the same period in 2020, was primarily due to unfavorable large and non-large claims experience in the individual mortality line of business, attributed to the COVID-19 pandemic. As explained above, whileperiod. While the cause of death is not yet available for all claims, the Company estimates that approximately $352$272 million of excess claims for the sixthree months ended June 30, 2021,March 31, 2022, were attributable to COVID-19.
The increase in policy acquisition costs and other operatinginsurance expenses foras a percentage of net premiums is primarily attributable to the three and six months ended June 30, 2021, was primarily due to an increaserestructure of a transaction in incentive compensation expense.Latin America.

4842

Table of Contents

Financial Solutions
For the three months ended June 30,202120202021 vs 2020
Asset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotal
(dollars in millions)
Revenues:
Net premiums$15 $— $15 $15 $— $15 $— $— $— 
Investment income, net of related expenses276 — 276 241 243 35 (2)33 
Investment related gains (losses), net30 — 30 15 — 15 15 — 15 
Other revenues85 27 112 24 26 50 61 62 
Total revenues406 27 433 295 28 323 111 (1)110 
Benefits and expenses:
Claims and other policy benefits21 — 21 49 — 49 (28)— (28)
Interest credited182 — 182 139 — 139 43 — 43 
Policy acquisition costs and other insurance expenses32 — 32 25 (2)23 
Other operating expenses12 
Total benefits and expenses243 247 202 206 41 — 41 
Income before income taxes$163 $23 $186 $93 $24 $117 $70 $(1)$69 
For the six months ended June 30,202120202021 vs 2020
For the three months ended March 31,For the three months ended March 31,202220212022 vs 2021
Asset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotalAsset-IntensiveCapital SolutionsTotal
(dollars in millions)(dollars in millions)(dollars in millions)
Revenues:Revenues:Revenues:
Net premiumsNet premiums$28 $— $28 $27 $— $27 $$— $Net premiums$15 $— $15 $13 $— $13 $$— $
Investment income, net of related expenses533 534 474 477 59 (2)57 
Net investment incomeNet investment income262 263 257 258 — 
Investment related gains (losses), netInvestment related gains (losses), net24 — 24 (145)— (145)169 — 169 Investment related gains (losses), net(80)— (80)(6)— (6)(74)— (74)
Other revenuesOther revenues111 54 165 52 51 103 59 62 Other revenues27 27 54 26 27 53 — 
Total revenuesTotal revenues696 55 751 408 54 462 288 289 Total revenues224 28 252 290 28 318 (66)— (66)
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits81 — 81 102 — 102 (21)— (21)Claims and other policy benefits48 — 48 60 — 60 (12)— (12)
Interest creditedInterest credited296 — 296 268 — 268 28 — 28 Interest credited107 — 107 114 — 114 (7)— (7)
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses79 81 (31)(29)110 — 110 Policy acquisition costs and other insurance expenses40 41 47 49 (7)(1)(8)
Other operating expensesOther operating expenses17 24 14 19 Other operating expenses12 12 — — — 
Total benefits and expensesTotal benefits and expenses473 482 353 360 120 122 Total benefits and expenses204 208 230 235 (26)(1)(27)
Income before income taxesIncome before income taxes$223 $46 $269 $55 $47 $102 $168 $(1)$167 Income before income taxes$20 $24 $44 $60 $23 $83 $(40)$$(39)
Asset-Intensive Reinsurance
The increasedecrease in income before income taxes for the U.S. and Latin America Financial Solutions’ Asset-intensiveSolutions Asset-Intensive segment for the three months ended June 30, 2021 was primarily due to an increase in transaction and other fees, favorable policyholder experience including impacts from COVID-19 and higher investment related gains (losses),losses, net in coinsurance portfolios and funds withheld portfolios. The increase for the six months ended June 30, 2021, was also due to the net increasedecrease in fair value of the embedded derivatives.derivatives related to modco/funds withheld treaties.
The invested asset base supporting this segment increased to $26.7$23.7 billion as of June 30, 2021,March 31, 2022, from $23.5$23.2 billion as of June 30, 2020.March 31, 2021.
The increase in the asset base was primarily due to growth from$3.2 billion of new transactions.transactions, partially offset by $1.6 billion of retrocessions competed in the second half of 2021, and $1.1 billion of net run off in existing inforce blocks.
As of June 30,March 31, 2022 and 2021, and 2020, $4.8$4.4 billion and $3.1$3.2 billion, respectively, of the invested assets were funds withheld at interest, of which greater than 90% was associated with two clients.

49

Table of Contents

Impact of certain derivatives
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 annuities 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 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 profitability of the underlying treaties, namely investment income, fee income (included in other revenues), 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.
The following table summarizes the asset-intensive results and quantifies the impact of these embedded derivatives 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.
(dollars in millions)Three months ended June 30,Six months ended June 30,
 2021202020212020
Revenues:
Total revenues$406 $295 $696 $408 
Less:
Embedded derivatives – modco/funds withheld treaties14 (7)59 (230)
Guaranteed minimum benefit riders and related free standing derivatives— 39 (65)113 
Revenues before certain derivatives392 263 702 525 
Benefits and expenses:
Total benefits and expenses243 202 473 353 
Less:
Embedded derivatives – modco/funds withheld treaties(2)23 (115)
Guaranteed minimum benefit riders and related free standing derivatives(4)(33)40 
Equity-indexed annuities(2)(16)
Benefits and expenses before certain derivatives243 197 499 419 
Income before income taxes:
Income before income taxes163 93 223 55 
Less:
Embedded derivatives – modco/funds withheld treaties(5)36 (115)
Guaranteed minimum benefit riders and related free standing derivatives37 (32)73 
Equity-indexed annuities(5)16 (9)
Income before income taxes and certain derivatives$149 $66 $203 $106 
43

Table of Contents

(dollars in millions)Three months ended March 31,
 20222021
Revenues:
Total revenues$224 $290 
Less:
Embedded derivatives – modco/funds withheld treaties(49)44 
Guaranteed minimum benefit riders and related free standing derivatives(22)(64)
Revenues before certain derivatives295 310 
Benefits and expenses:
Total benefits and expenses204 230 
Less:
Embedded derivatives – modco/funds withheld treaties(20)17 
Guaranteed minimum benefit riders and related free standing derivatives(7)(29)
Equity-indexed annuities(10)(14)
Benefits and expenses before certain derivatives241 256 
Income before income taxes:
Income (loss) before income taxes20 60 
Less:
Embedded derivatives – modco/funds withheld treaties(29)27 
Guaranteed minimum benefit riders and related free standing derivatives(15)(35)
Equity-indexed annuities10 14 
Income before income taxes and certain derivatives$54 $54 
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 these embedded derivatives 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 sixthree months ended June 30, 2021March 31, 2022 and 2020.2021.
The change in fair value of the embedded derivatives related to modco/funds withheld treaties, net of deferred acquisition costs increased (decreased) income before income taxes by $8$(29) million and $(5)$27 million for the second quarterthree months ended March 31, 2022 and $362021, respectively. The decrease in revenue for the three months ended March 31, 2022, was due to higher interest rates of $(31) million and $(115)$(26) million forof widening credit spreads during the sixthree months ended June 30, 2021 and 2020, respectively. The increase in income forMarch 31, 2022, compared to the second quarter was primarily due to amortization of the underlying investments within the funds withheld. The increase in income for the six months ended June 30, 2021, was primarily due to tightening credit spreads, partially offset by higher risk free interest rates.
50

Table of Contents

prior period.
Guaranteed Minimum Benefit Riders Represents the impact related to guaranteed minimum benefits associated with the Company’s reinsurance of variable annuities. The fair value changes of the guaranteed minimum 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. ChangesThe change in fair valuesvalue of the embedded derivatives on guaranteed minimum benefits are net of an increase (decrease)a decrease in investment related gains (losses), net of $(8)$13 million and $29$55 million for the second quarter and $(63) million and $127 million for the sixthree months ended June 30,March 31, 2022 and 2021, and 2020, respectively, associated with the Company’s utilization of a credit valuation adjustment.
The change in fair value of the guaranteed minimum benefits, after allowing for changes in the associated free standing derivatives, increased (decreased)decreased income before income taxes by $4$15 million and $37$35 million for the second quarter and $(32) million and $73 million for the sixthree months ended June 30,March 31, 2022 and 2021, and 2020, respectively. The increasedecrease in income for the three months ended June 30, 2021,March 31, 2022, was primarily due to favorable hedging impacts. The decrease in income for the six months ended June 30, 2021, was primarily due to a decrease$13 million reduction in the credit valuation adjustment which has the impact of increasing the fair value of the guaranteed minimum benefit liability, net of related impact on deferred acquisition expenses.liability.
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. The change in fair value of embedded derivative liabilities associated with equity-indexed annuities increased (decreased) income before income taxes by $2$10 million and $(5)$14 million for the second quarter and $16 million and $(9) million for the sixthree months ended June 30,March 31, 2022 and 2021, and 2020, respectively. The increase in income for the sixthree months of 2021ended March 31, 2022, was primarily due to an increase in risk free interest rates which has the impact of lowering the fair value of the liability.

44

Table of Contents

The changes in derivatives 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 the primary factors that drive profitability of the underlying treaties, namely investment income, fee income (included in other revenues) and interest credited.
Discussion and analysis before certain derivatives:derivatives
Income before income taxes and certain derivatives increased by $83 million and $97 millionwas consistent for the three and six months ended June 30, 2021,March 31, 2022, as compared to the same periodsperiod in 2020. The increases were primarily due to an increase in transaction and other fees, favorable policyholder experience including impacts from COVID-19 and higher investment related gains (losses), net in coinsurance and funds withheld portfolios.2021.
Revenue before certain derivatives increaseddecreased by $129 million and by $177$15 million for the three and six months ended June 30, 2021, respectively,March 31, 2022, as compared to the same periodsperiod in 2020.2021. The increases weredecrease in the first quarter of 2022 was primarily due to the revenue associated with recently executed transactions, increases$(33) million change in fair value of equity options associated with the reinsurance of EIAs, and higher investment related gains (losses), netpartially offset by a $10 million increase in coinsurance portfolios. The effect on investment income relatedassociated with a funds withheld transaction which is retroceded to equity options isa third party. Both of these items are substantially offset by a corresponding change in interest credited.credited and other insurance expenses, respectively.
Benefits and expenses before certain derivatives increaseddecreased by $46 million and $80$15 million for the three and six months ended June 30, 2021,March 31, 2022, as compared to the same period in 2020.2021. The increasesdecrease in the secondcurrent quarter and first six months werewas primarily due to $(29) million higher interest credited associated with the reinsurance of EIAs, due to improved equity market performance and benefits associated with recently executed transactions. The effect on interest creditedpartially offset by $10 million increase in other insurance expenses related to equity optionsa funds withheld transaction which is substantially offset byretroceded to a corresponding increase in investment income.third party.
Capital Solutions
Income before income taxes for the U.S. and Latin America Capital Solutions’ business decreased $1 million, or 4.2%, and $1 million, or 2.1%, for the three and six months ended June 30, 2021, asMarch 31, 2022, increased slightly compared to the same periods in 2020. The decreases were primarily due to the termination of transactions, partially offset by growth from new transactions and organic growth on existing transactions.three months ended March 31, 2021. 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.
At June 30,As of March 31, 2022 and 2021, and 2020, the amount of reinsurance assumed from client companies, as measured by pre-tax statutory surplus, risk based capital and other financial structures was $22.3$23.3 billion and $19.4$22.0 billion, respectively.

51

Table of Contents

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, and 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 capital solutions.
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$324 $274 $50 $627 $555 $72 Net premiums$327 $303 $24 
Investment income, net of related expenses63 50 13 123 100 23 
Net investment incomeNet investment income56 60 (4)
Investment related gains (losses), netInvestment related gains (losses), net— (6)(6)Investment related gains (losses), net(1)
Other revenuesOther revenuesOther revenues(1)
Total revenuesTotal revenues392 333 59 761 653 108 Total revenues387 369 18 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits298 233 65 582 473 109 Claims and other policy benefits311 284 27 
Interest creditedInterest credited— — — — — — Interest credited— — — 
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses47 43 92 88 Policy acquisition costs and other insurance expenses47 45 
Other operating expensesOther operating expenses11 21 18 Other operating expenses10 10 — 
Total benefits and expensesTotal benefits and expenses356 285 71 695 579 116 Total benefits and expenses368 339 29 
Income before income taxes$36 $48 $(12)$66 $74 $(8)
Income (loss) before income taxesIncome (loss) before income taxes$19 $30 $(11)
The decrease in income before income taxes for the three and six months ended June 30, 2021,March 31, 2022, as compared to the same periodsperiod in 2020,2021, is primarily due to increasedunfavorable claims experience in the individual mortality line of business and other policy benefits associated with the COVID-19 pandemic. These increases arelower investment income, partially offset by an increase in net premiumsfavorable claims experience in the Canada Traditional segmentgroup life and investment income.health line of business and favorable longevity experience.
45

Table of Contents

ForeignWhile foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulteditems, fluctuation in the Canadian dollar did not result in a $4 million increasematerial change in income before income taxes for both the three and six months ended June 30, 2021.March 31, 2022. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Traditional Reinsurance
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$301 $254 $47 $581 $514 $67 Net premiums$304 $280 $24 
Investment income, net of related expenses63 50 13 123 99 24 
Net investment incomeNet investment income55 60 (5)
Investment related gains (losses), netInvestment related gains (losses), net— (6)(6)Investment related gains (losses), net(1)
Other revenuesOther revenues— Other revenues
Total revenuesTotal revenues366 311 55 709 607 102 Total revenues362 343 19 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits277 216 61 543 436 107 Claims and other policy benefits300 266 34 
Interest creditedInterest credited— — — — — — Interest credited— — — 
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses46 42 91 87 Policy acquisition costs and other insurance expenses46 45 
Other operating expensesOther operating expenses11 19 17 Other operating expenses10 
Total benefits and expensesTotal benefits and expenses334 267 67 653 540 113 Total benefits and expenses356 319 37 
Income (loss) before income taxesIncome (loss) before income taxes$32 $44 $(12)$56 $67 $(11)Income (loss) before income taxes$$24 $(18)
Key metrics:Key metrics:Key metrics:
Life insurance in force$468.3 billion$409.2 billion
Life reinsurance in forceLife reinsurance in force$484.5 billion$460.1 billion
Claims and other policy benefits as a percentage of net premiums (“loss ratios”)Claims and other policy benefits as a percentage of net premiums (“loss ratios”)92.0 %85.0 %93.5 %84.8 %Claims and other policy benefits as a percentage of net premiums (“loss ratios”)98.7 %95.0 %
Policy acquisition costs and other insurance expenses as a percentage of net premiumsPolicy acquisition costs and other insurance expenses as a percentage of net premiums15.3 %16.5 %15.7 %16.9 %Policy acquisition costs and other insurance expenses as a percentage of net premiums15.1 %16.1 %
Other operating expenses as a percentage of net premiumsOther operating expenses as a percentage of net premiums3.7 %3.5 %3.3 %3.3 %Other operating expenses as a percentage of net premiums3.3 %2.9 %
The decrease in income before income taxes for the three and six months ended June 30, 2021,March 31, 2022, is primarily due to unfavorable claims experience in the individual life mortality experience compared to the same period in 2020,line of business and lower investment income, partially offset by an increasefavorable claims experience in investment income.

52

Tablethe group life and health line of Contents

business.
Revenues
The segment added new life business production, measured by face amount of insurancelife reinsurance in force, of $8.5$12.7 billion, and $9.1 billion for the second quarter of 2021 and 2020, respectively, and $22.7 billion, and $21.3$14.2 billion during the first sixthree months of 20212022 and 2020,2021, respectively.
The increasedecrease in net investment income for the three and six months ended June 30, 2021, was primarily due to increaseddecreased variable investment income, andpartially offset by an increase in the invested asset base due to growth in the underlying business volume partially offset by a decline in interest rates.
The decrease in investment related gains (losses), net in the second quarter of 2021 is primarily attributable to an increase in the fair value of credit default derivatives in the second quarter of 2020 due to a significant tightening in credit spreads, compared to an immaterial change in credit spreads during the second quarter of 2021. The increase for the six months ended June 30, 2021, is due to a modest increase in the fair value of credit default derivatives during the first six months of 2021, compared to a decrease in the fair value of credit default derivatives during the first six months of 2020 due to the significant widening of credit spreads in the first quarter of 2020.

base.
Benefits and expenses
The increase in the loss ratio for the three and six months ended June 30, 2021,March 31, 2022, as compared to the same periodsperiod in 2020,2021, was primarily due to unfavorable claims experience in the individual mortality line of business, attributed primarily to the COVID-19 pandemic.business. While the cause of death is not yet available for all claims, the Company estimates that approximately $49$20 million of excess claims for the sixthree months ended June 30, 2021,March 31, 2022, were attributable to COVID-19 or COVID-19 related factors.
Financial Solutions Reinsurance
Three Months Ended June 30,Six Months Ended June 30,
(dollars in millions)202120202021 vs 2020202120202021 vs 2020
Revenues:
Net premiums$23 $20 $$46 $41 $
Investment income, net of related expenses— — — — (1)
Investment related gains (losses), net— — — — — — 
Other revenues
Total revenues26 22 52 46 
Benefits and expenses:
Claims and other policy benefits21 17 39 37 
Interest credited— — — — — — 
Policy acquisition costs and other insurance expenses— — 
Other operating expenses— — — 
Total benefits and expenses22 18 42 39 
Income (loss) before income taxes$$$— $10 $$
Income before income taxes was flat for the second quarter of 2021 compared to the same period in 2020. The increase in income before income taxes for the first six months of 2021 is primarily the result of favorable mortality experience on longevity business.

For the three months ended March 31,
(dollars in millions)202220212022 vs 2021
Revenues:
Net premiums$23 $23 $— 
Net investment income— 
Investment related gains (losses), net— — — 
Other revenues(2)
Total revenues25 26 (1)
Benefits and expenses:
Claims and other policy benefits11 18 (7)
Interest credited— — — 
Policy acquisition costs and other insurance expenses— 
Other operating expenses— (2)
Total benefits and expenses12 20 (8)
Income (loss) before income taxes$13 $$
5346

Table of Contents

The increase in income before income taxes was primarily a result of more favorable mortality experience on longevity business for the three months ended March 31, 2022, as compared to the same period in 2021.
Europe, Middle East and Africa Operations
The Europe, Middle East and Africa (“EMEA”) operations include business primarily generated by offices in France, Germany, Ireland, Italy, the Middle East, the Netherlands, Poland, South Africa, Spain and the United Kingdom (“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.
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$517 $409 $108 $1,034 $852 $182 Net premiums$579 $517 $62 
Investment income, net of related expenses74 79 (5)142 126 16 
Net investment incomeNet investment income57 68 (11)
Investment related gains (losses), netInvestment related gains (losses), net16 (14)18 10 Investment related gains (losses), net16 16 — 
Other revenuesOther revenuesOther revenues
Total revenuesTotal revenues598 507 91 1,201 992 209 Total revenues658 603 55 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits456 314 142 1,000 701 299 Claims and other policy benefits518 544 (26)
Interest creditedInterest credited16 (14)(1)Interest credited(9)(1)(8)
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses28 33 (5)59 64 (5)Policy acquisition costs and other insurance expenses26 31 (5)
Other operating expensesOther operating expenses41 30 11 78 67 11 Other operating expenses44 37 
Total benefits and expensesTotal benefits and expenses527 393 134 1,138 831 307 Total benefits and expenses579 611 (32)
Income before income taxes$71 $114 $(43)$63 $161 $(98)
Income (loss) before income taxesIncome (loss) before income taxes$79 $(8)$87 
The decreasesincrease in income before income taxes for the three and six months ended June 30, 2021,March 31, 2022, as compared to the same periodsperiod in 2020, were2021, was primarily due to unfavorableincreased net premiums, as well as improved mortality experience mainly fromcompared to the impact of COVID-19. These decreases were partially offset by increases in net premiums.prior-year quarter.
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency exchange fluctuations resulted in an increasea $2 million decrease in income before income taxes of $6 million for the three and six months ended June 30, 2021, as compared to the same periods in 2020.March 31, 2022. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
Traditional Reinsurance
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$433 $352 $81 $871 $742 $129 Net premiums$451 $438 $13 
Investment income, net of related expenses24 18 44 37 
Net investment incomeNet investment income22 20 
Investment related gains (losses), netInvestment related gains (losses), net— — — — — — Investment related gains (losses), net— — — 
Other revenuesOther revenues(1)Other revenues(1)
Total revenuesTotal revenues459 371 88 916 778 138 Total revenues476 457 19 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits414 301 113 883 635 248 Claims and other policy benefits427 469 (42)
Interest creditedInterest credited— — — — — — Interest credited— — — 
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses27 32 (5)56 62 (6)Policy acquisition costs and other insurance expenses25 29 (4)
Other operating expensesOther operating expenses30 22 57 48 Other operating expenses30 27 
Total benefits and expensesTotal benefits and expenses471 355 116 996 745 251 Total benefits and expenses482 525 (43)
Income (loss) before income taxesIncome (loss) before income taxes$(12)$16 $(28)$(80)$33 $(113)Income (loss) before income taxes$(6)$(68)$62 
Key metrics:Key metrics:Key metrics:
Life insurance in force$861.4 billion$772.8 billion
Life reinsurance in forceLife reinsurance in force$850.7 billion$830.8 billion
Claims and other policy benefits as a percentage of net premiums (“loss ratios”)Claims and other policy benefits as a percentage of net premiums (“loss ratios”)95.6 %85.5 %101.4 %85.6 %Claims and other policy benefits as a percentage of net premiums (“loss ratios”)94.7 %107.1 %
Policy acquisition costs and other insurance expenses as a percentage of net premiumsPolicy acquisition costs and other insurance expenses as a percentage of net premiums6.2 %9.1 %6.4 %8.4 %Policy acquisition costs and other insurance expenses as a percentage of net premiums5.5 %6.6 %
Other operating expenses as a percentage of net premiumsOther operating expenses as a percentage of net premiums6.9 %6.3 %6.5 %6.5 %Other operating expenses as a percentage of net premiums6.7 %6.2 %
The decrease in loss before income taxes for the three months ended March 31, 2022, as compared to the same period in 2021, was primarily due to an improvement in individual life mortality experience and increased net premiums.

5447

Table of Contents

Income before income taxes decreased for the three and six months ended June 30, 2021, as compared to the same periods in 2020. The decreases were the result of poor mortality experience, primarily due to the impact of COVID-19. The decreases in both periods were partially offset by increases in net premiums.
Revenues
The increase in net premiums for the three and six months ended June 30, 2021, as compared to the same periods in 2020, was due to an in increase in business volume on new and existing treaties.
The segment added new life business production, measured by face amount of insurancelife reinsurance in force, of $87.8$50.5 billion and $65.1$27.6 billion during the second quarter of 2021 and 2020, respectively, and $115.4 billion, and $98.0 billion during the sixthree months ended June 30, 2021,March 31, 2022, and the same period in 2020,2021, respectively.
Benefits and expenses
The increasedecrease in the loss ratio for the second quarter and first sixthree months of 20212022 is due to unfavorableimproved mortality experience primarily attributable to COVID-19.experience. While the cause of death is not available for all claims, the Company estimates that approximately $130$10 million of excess claims for the sixthree months ended June 30, 2021,March 31, 2022, were attributable to COVID-19 or COVID-19 related factors.
The decrease in the ratio of policy acquisition costs and other insurance expense to net premium in the second quarter and first six months of 2021 is due to an overall increase in premiums and transactions with lower or no acquisition costs.
The increase in other operating expenses for the three and six months ended June 30, 2021, was primarily due to an increase in incentive compensation expense.
Financial Solutions
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$84 $57 $27 $163 $110 $53 Net premiums$128 $79 $49 
Investment income, net of related expenses50 61 (11)98 89 
Net investment incomeNet investment income35 48 (13)
Investment related gains (losses), netInvestment related gains (losses), net16 (14)18 10 Investment related gains (losses), net16 16 — 
Other revenuesOther revenuesOther revenues— 
Total revenuesTotal revenues139 136 285 214 71 Total revenues182 146 36 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits42 13 29 117 66 51 Claims and other policy benefits91 75 16 
Interest creditedInterest credited16 (14)(1)Interest credited(9)(1)(8)
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses— Policy acquisition costs and other insurance expenses(1)
Other operating expensesOther operating expenses11 21 19 Other operating expenses14 10 
Total benefits and expensesTotal benefits and expenses56 38 18 142 86 56 Total benefits and expenses97 86 11 
Income (loss) before income taxesIncome (loss) before income taxes$83 $98 $(15)$143 $128 $15 Income (loss) before income taxes$85 $60 $25 
The decrease in income before income taxes for the second quarter of 2021 compared to the same period in 2020 is primarily due to decreases in investment income, net of related expenses and investment related gains (losses), net. The increase in income before income taxes for the first sixthree months of 2021 was primarily due to new business activitygrowth and investment related gains on the investments supporting the segment’s payout annuity business.favorable longevity experience.
Revenues
The increase in net premiums for the three and six months ended June 30, 2021, as compared to the same periods in 2020 was primarily due to increased volumes of closed block longevity block business.transactions.
The decrease in net investment income for the three months ended and increase for six month ended June 30, 2021, as compared to the same periods in 2020 was primarily related to decreases and increases inlower income associated with unit-linked policies which fluctuate with market performance and is offset by a decrease in interest credited.
The decrease and increase in investment related gains (losses), net for the three and six month periods, respectively, was primarily due to fluctuations in the fair market value of CPI swap derivatives due to changes in future inflation expectations.
Benefits and expenses
The increase in claims and other policy benefits wasis the result of increased volumes of closedproduction and continued growth in the segment’s longevity block business.
55

Table of Contents

The increase in benefits and expenses was partially offset by a decrease in interest credited primarily attributable to the sale of Leidsche, the Company’s subsidiary located in the Netherlands that issued unit-linked products. Interest credited in this segment relates to amounts credited to the contract holders of unit-linked products. This amount will fluctuate according to contract holder 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.
The increase in operating expenses is due to an increase in transaction related costs.
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.
Three Months Ended June 30,Six Months Ended June 30,
(dollars in millions)202120202021 vs 2020202120202021 vs 2020
Revenues:
Net premiums$664 $638 $26 $1,326 $1,348 $(22)
Investment income, net of related expenses65 48 17 126 92 34 
Investment related gains (losses), net15 15 — 26 (18)44 
Other revenues13 10 30 24 
Total revenues757 711 46 1,508 1,446 62 
Benefits and expenses:
Claims and other policy benefits620 546 74 1,184 1,163 21 
Interest credited15 11 30 24 
Policy acquisition costs and other insurance expenses52 39 13 106 102 
Other operating expenses51 42 100 85 15 
Total benefits and expenses738 638 100 1,420 1,374 46 
Income before income taxes$19 $73 $(54)$88 $72 $16 
48

Table of Contents

For the three months ended March 31,
(dollars in millions)202220212022 vs 2021
Revenues:
Net premiums$693 $662 $31 
Net investment income77 61 16 
Investment related gains (losses), net(81)11 (92)
Other revenues20 17 
Total revenues709 751 (42)
Benefits and expenses:
Claims and other policy benefits583 564 19 
Interest credited20 15 
Policy acquisition costs and other insurance expenses59 54 
Other operating expenses52 49 
Total benefits and expenses714 682 32 
Income (loss) before income taxes$(5)$69 $(74)
The decrease in income before income taxes foras compared to the three months ended June 30,same period in 2021 iswas primarily due to unfavorable fluctuations in the fair value of derivatives within the Financial Solutions business, partially offset by favorable claims experience in Asia compared to the prior period, partially offset by continued growth of Financial Solutions Reinsurance in Asia. The increase in income before income taxes for the first six months is primarily attributable to increases in investment income, net and investment related gains (losses), net partially offset by unfavorable claims experience in Asia compared to the prior period.Australia.
Foreign currency fluctuations can result in variances in the financial statement line items. Foreign currency fluctuations resulted in an $8 million increase (decrease) in income before income taxes of $(1) million and $1 million forduring the three and six months ended June 30, 2021, as compared to the same periods in 2020.March 31, 2022. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations.
56

Table of Contents

Traditional Reinsurance
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$616 $607 $$1,225 $1,243 $(18)Net premiums$650 $609 $41 
Investment income, net of related expenses34 27 67 54 13 
Net investment incomeNet investment income33 33 — 
Investment related gains (losses), netInvestment related gains (losses), net— — — (1)— (1)Investment related gains (losses), net— (1)
Other revenuesOther revenuesOther revenues(1)
Total revenuesTotal revenues653 636 17 1,300 1,303 (3)Total revenues688 647 41 
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits578 514 64 1,096 1,069 27 Claims and other policy benefits542 518 24 
Interest creditedInterest credited— — — — — — Interest credited— — — 
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses41 34 84 83 Policy acquisition costs and other insurance expenses47 43 
Other operating expensesOther operating expenses46 41 91 80 11 Other operating expenses48 45 
Total benefits and expensesTotal benefits and expenses665 589 76 1,271 1,232 39 Total benefits and expenses637 606 31 
Income (loss) before income taxesIncome (loss) before income taxes$(12)$47 $(59)$29 $71 $(42)Income (loss) before income taxes$51 $41 $10 
Key metrics:Key metrics:Key metrics:
Life insurance in force$516.1 billion$649.5 billion
Life reinsurance in forceLife reinsurance in force$508.4 billion$521.0 billion
Claims and other policy benefits as a percentage of net premiums (“loss ratios”)Claims and other policy benefits as a percentage of net premiums (“loss ratios”)93.8 %84.7 %89.5 %86.0 %Claims and other policy benefits as a percentage of net premiums (“loss ratios”)83.4 %85.1 %
Policy acquisition costs and other insurance expenses as a percentage of net premiumsPolicy acquisition costs and other insurance expenses as a percentage of net premiums6.7 %5.6 %6.9 %6.7 %Policy acquisition costs and other insurance expenses as a percentage of net premiums7.2 %7.1 %
Other operating expenses as a percentage of net premiumsOther operating expenses as a percentage of net premiums7.5 %6.8 %7.4 %6.4 %Other operating expenses as a percentage of net premiums7.4 %7.4 %
The decreaseincrease in income before income taxes is primarily the result of net unfavorable claims experience in Asia, primarily in India. The decrease for the first six months is also the result of year to date decreasesan increase in net premiums, partially offset by increases in Australia.

57

Table of Contents

benefits and expenses across the segment.
Revenues
The increase in net premiums for the three months ended June 30, 2021 as compared to the same period in 2020 is primarily the due to new business production partially offset by a reduction in premiums in Australia. Premiums for the first six months of 2021 was primarily due to premium reductionscontinued business growth in Australia group business as a result of the non-renewal of two large group treaties effective June 30, 2020.segment.
The segment added new life business production, measured by face amount of insurancelife reinsurance in force, of $10.9$16.6 billion and $16.6$7.6 billion during the second quarter of 2021 and 2020, respectively, and $18.5 billion, and $32.3 billion during the sixthree months ended June 30,March 31, 2022 and 2021, and 2020, respectively, due to new business production and in force transactions offset by lapses, recaptures and non-renewalproduction.



49

Table of two large group treaties in Australia.Contents

Benefits and expenses
The increasesdecrease in the loss ratio for the three and six months ended June 30, 2021,March 31, 2022, as compared to the same periodsperiod in 2020, were2021 was primarily due to increases in net premiums in excess of unfavorable claims experience in Asia.across the segment. While the cause of death is not yet available for all claims, the Company estimates that approximately $63$14 million of claims of which approximately $57 million were incurred in India, for the sixthree months ended June 30, 2021,March 31, 2022, were attributable to COVID-19 or COVID-19 related factors.
Financial Solutions
Three Months Ended June 30,Six Months Ended June 30,
For the three months ended March 31,For the three months ended March 31,
(dollars in millions)(dollars in millions)202120202021 vs 2020202120202021 vs 2020(dollars in millions)202220212022 vs 2021
Revenues:Revenues:Revenues:
Net premiumsNet premiums$48 $31 $17 $101 $105 $(4)Net premiums$43 $53 $(10)
Investment income, net of related expenses31 21 10 59 38 21 
Net investment income Net investment income44 28 16 
Investment related gains (losses), netInvestment related gains (losses), net15 15 — 27 (18)45 Investment related gains (losses), net(81)12 (93)
Other revenuesOther revenues10 21 18 Other revenues15 11 
Total revenuesTotal revenues104 75 29 208 143 65 Total revenues21 104 (83)
Benefits and expenses:Benefits and expenses:Benefits and expenses:
Claims and other policy benefitsClaims and other policy benefits42 32 10 88 94 (6)Claims and other policy benefits41 46 (5)
Interest creditedInterest credited15 11 30 24 Interest credited20 15 
Policy acquisition costs and other insurance expensesPolicy acquisition costs and other insurance expenses11 22 19 Policy acquisition costs and other insurance expenses12 11 
Other operating expensesOther operating expensesOther operating expenses— 
Total benefits and expensesTotal benefits and expenses73 49 24 149 142 Total benefits and expenses77 76 
Income (loss) before income taxesIncome (loss) before income taxes$31 $26 $$59 $$58 Income (loss) before income taxes$(56)$28 $(84)
The increasedecrease in income before income taxes for the second quarter wasis primarily due to continued growth in the business. The increase in income before income taxes for the first six months of 2021 was due to favorableunfavorable fluctuations in the fair value of derivativesderivatives. The invested asset base supporting asset-intensive transactions increased to $10.3 billion as of March 31, 2022 from $6.6 billion as of March 31, 2021. The increase in the asset base compared to March 31, 2021, was primarily due to $3.3 billion from recently executed transactions and continuednet organic growth and favorable experience onof $0.4 billion from existing asset-intensive business in Asia.inforce blocks. The amount of reinsurance assumed from client companies, as measured by pre-tax statutory surplus, risk based capital and other financial reinsurance structures was $1.6$1.3 billion and $3.2$1.6 billion for the sixthree months ended June 30,March 31, 2022 and 2021, and 2020, respectively. Fees earned from this business can vary significantly depending on the size, complexity and timing of the transactions and, therefore, can fluctuate from period to period.
Revenues
The increasedecrease in net premiums for the second quarter is attributable to a higherlower contribution from single premium asset-intensive transactions inof $8 million for the three months ended June 30, 2021,March 31, 2022, as compared to the same period in 2020.2021.
The increase in net investment income is due to the increase in the asset base.
The decrease in investment related gains (losses), net for the six month period ended June 30, 2021, is primarily due to favorableunfavorable fluctuations in the fair value of credit default and CPI swap derivatives of $(78) million due to tighteningwidening credit spreads and higher future inflation expectations.spreads.
Benefits and expenses
The increase in claims and other policy benefits in the second quarter is the result of an increase in reserves from single premium asset-intensive transactions in the three months ended June 30, 2021, as compared to the same period in 2020.
Corporate and Other
Corporate and Other revenues primarily include investment income from unallocated invested assets, investment related gains and 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,
58

Table of Contents

interest expense related to debt, and the investment income and expense associated with the Company’s collateral finance and securitization 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 and reinsurance industries. The Company has increased its investment and expenditurescontinues 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.
(dollars in millions)Three months ended June 30,Six months ended June 30,
 202120202021 vs 2020202120202021 vs 2020
Revenues:
Net premiums$— $— $— $— $— $— 
Investment income, net of related expenses48 48 — 206 106 100 
Investment related gains (losses), net64 22 42 337 (45)382 
Other revenues29 20 39 21 18 
Total revenues141 90 51 582 82 500 
Benefits and expenses:
Claims and other policy benefits— — — — — — 
Interest credited(2)(3)
Policy acquisition costs and other insurance income(26)(29)(54)(57)
Other operating expenses86 69 17 156 131 25 
Interest expense43 42 88 83 
Collateral finance and securitization expense(2)10 (5)
Total benefits and expenses106 89 17 197 172 25 
Income (loss) before income taxes$35 $$34 $385 $(90)$475 
50

Table of Contents

For the three months ended March 31,
(dollars in millions)202220212022 vs 2021
Revenues:
Net premiums$— $— $— 
Net investment income53 158 (105)
Investment related gains (losses), net273 (270)
Other revenues10 (9)
Total revenues57 441 (384)
Benefits and expenses:
Claims and other policy benefits— — — 
Interest credited
Policy acquisition costs and other insurance income(26)(28)
Other operating expenses65 70 (5)
Interest expense42 45 (3)
Collateral finance and securitization expense(2)
Total benefits and expenses88 91 (3)
Loss before income taxes$(31)$350 $(381)
The increasedecrease in income before income taxes for the three and six month periods ended June 30, 2021, is primarily due to an increasea decrease in total revenues and partially offset by an increase in other operating expenses.attributable to the following:
The increasedecrease in net investment income foris primarily due to a one-time adjustment recorded in the first six monthsprior period of 2021 includes a reclassification of approximately $92 million of pre-tax unrealized gains on certain limited partnerships, for which the Company uses the equity method of accounting, from AOCI to net investment income. The unrealized gains should have been recognized directly in net investment income in the same prior periods they were reported as earnings by the investees. The remaining decrease is attributable to lower investment income on Corporate invested assets primarily due to a lower yield.
The increasedecrease in investment related gains (losses), net is attributable to losses on sales of fixed maturity securities in the first three months of 2022 of $18 million compared to gains of $144 million for the prior year, lower unrealized gains on limited partnerships and changes in allowances and impairments on mortgage loans and available for sale securities. In addition, investment related gains (losses), net, for the first three and six months ended June 30,of 2021 includes $27 million and $131 million, respectively, of changes in the carrying value ofan adjustment to investments in limited partnerships considered to be investment companies.companies, which should have been recognized in prior periods, of $70 million of the changes in the carrying value recognized in the first quarter relates to an adjustment toadjust the carrying value from cost less impairments to athe fair value approach, using the net asset value (“NAV”) per share or its equivalent, which should have been recognized in prior periods. The remaining increase for the three and six months ended June 30, 2021, is attributable to gains on sales of fixed maturity securities, a decrease in the allowance for credit losses on mortgage loans as a result of assumption updates due to the improving view of the impact of the COVID-19 pandemic, and changes in the fair value of derivatives and equity securities.equivalent.
The increase in other operating expenses for the three and six months ended June 30, 2021, was primarily due to an increase in incentive compensation expense.
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 the Company under various scenarios that include the potential risk of early recapture of reinsurance treaties, market events and higher than expected claims associated with the pandemic. Given the uncertainty associated with the COVID-19 pandemic and the related volatility in the financial markets, theCOVID-19. The Company continues to maintain ais currently holding higher cash and cash equivalent balance than its historical balances.equivalents levels in response to COVID-19. 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
59

Table of Contents

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, 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 Company’s average investment yield, excluding spread related business, for the sixthree months ended June 30, 2021,March 31, 2022, was 5.15%5.29%, 10838 basis points higher compared tobelow the same period in 2020. The increase in average yield is primarily attributable2021 due to the aforementioned accounting correction associated with equity method limited partnerships and an increase in the average invested asset base and overall yield, primarily attributable to an increase inlower variable investment income in the current year. However, the current interest rate environment continues to put downward pressure on the Company’s investment yield.income. The Company’s insurance liabilities, in particular its annuity products, are sensitive to changing market factors. Gross unrealized gains on fixed maturity securities available-for-sale decreased from $7.4$5.3 billion at December 31, 2020,2021, to $5.8$2.2 billion at June 30, 2021. Similarly,March 31, 2022, due to tightening credit spreads. Additionally, gross unrealized losses increased from $197 million$0.3 billion at December 31, 2020,2021, to $267 million$2.1 billion at June 30, 2021.March 31, 2022.
51

Table of Contents

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 fixed maturity securities of $5.8 billion remain well in excess of gross unrealized losses of $267 million as of June 30, 2021. 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”), Reinsurance Company of Missouri, Incorporated (“RCM”) and Rockwood ReReinsurance Company (“Rockwood Re”) and dividends from operating subsidiaries. As the Company continues its growth efforts, RGA will continue to be dependent upon these sources of liquidity. The following tables provide comparative information for RGA (dollars in millions):
Three months ended June 30,Six months ended June 30,Three months ended March 31,
2021202020212020 20222021
Interest and dividend income$32 $183 $64 $408 
Interest expenseInterest expense51 50 103 100 Interest expense$41 $52 
Capital contributions to subsidiariesCapital contributions to subsidiaries18 33 Capital contributions to subsidiaries
Issuance of unaffiliated debt— 598 — 598 
Dividends to shareholdersDividends to shareholders47 43 95 87 Dividends to shareholders49 48 
Issuance of common stock, net of expenses— 481 — 481 
Purchase of treasury stock— 153 
Purchase of common stockPurchase of common stock25 — 
Interest and dividend incomeInterest and dividend income108 32 
 June 30, 2021December 31, 2020
Cash and invested assets$611 $1,308 
 March 31, 2022December 31, 2021
Cash and invested assets$511 $621 
See Item 15, Schedule II “Condensed Financial Information of the Registrant” in the 20202021 Annual Report for additional financial information related to RGA.
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 “Income Tax” in the Notes to Consolidated Financial Statements in the 20202021 Annual Report. As U.S. Tax Reform generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, the Company does not expect to incur material income 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, it has in recent years repurchased shares of RGA common stock and paid dividends to RGA shareholders, as authorized by the board of directors.
On January 24, 2019, RGA’s currentboard of directors authorized a share repurchase program which was approved by the board of directors in January 2019, authorizes the repurchase offor up to $400 million of RGA’s outstanding common stock. During the three months ended March 31, 2022, RGA repurchased 219,116 shares of common stock under this program for $25 million.
On August 3, 2021,February 25, 2022, RGA’s board of directors authorized a share repurchase program for up to $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 Company announcedboard of directors terminated the liftingstock repurchase authority granted in 2019. During the three months ended March 31, 2022, RGA did not repurchase any shares of the existing suspension on share repurchases. common stock under this program.
The pace of repurchase activity depends on
60

Table of Contents

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.

52

Table of Contents

Details underlying dividend and share repurchase program activity were as follows (in millions, except share data):
Six months ended June 30,Three months ended March 31,
2021202020222021
Dividends to shareholdersDividends to shareholders$95 $87 Dividends to shareholders$49 $48 
Purchase of treasury stock (1)
— 153 
Purchase of common stock (1)
Purchase of common stock (1)
25 — 
Total amount paid to shareholdersTotal amount paid to shareholders$95 $240 Total amount paid to shareholders$74 $48 
Number of treasury shares purchased (1)
— 1,074,413 
Number of common shares purchased (1)
Number of common shares purchased (1)
219,116 — 
Average price per shareAverage price per share$— $142.05 Average price per share$114.09 $— 
(1)Excludes shares utilized to execute and settle certain stock incentive awards.
On June 5, 2020, the Company completed a public offering of 6,172,840 shares of common stock, $0.01 par value per share, at a public offering price of $81.00 per share.  The Company received net proceeds of approximately $481 million. The Company granted the underwriters an option to purchase from the Company, within 30 days after the underwriting Agreement dated June 2, 2020, up to an additional 925,926 shares of common stock at the offering price of $81.00 per share. The underwriters’ option was not exercised and expired on July 2, 2020. The Company utilized the net proceeds of the offering for general corporate purposes.
In July 2021,April 2022, RGA’s board of directors declared a quarterly dividend of $0.73 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 – “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 is required to maintain a minimum consolidated net worth, as defined in the debt agreements, of $5.3 billion, calculated as of the last day of each fiscal quarter. 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-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 the amounts set forth in those agreements, bankruptcy proceedings, or any other event that results in the acceleration of the maturity of indebtedness.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had $3.2$3.7 billion, and $3.6 billion, respectively, in outstanding borrowings under its debt agreements and was in compliance with all covenants under those agreements. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the average net interest rate on long-term debt outstanding was 4.48% and 4.54%, respectively.4.42%. 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.
On June 9, 2020, RGA issued 3.15% Senior Notes due June 15, 2030, with a face amount of $600 million. This security has been registered with the Securities and Exchange Commission. The net proceeds were approximately $593 million and were used in part to repay the Company’s $400 million 5.000% senior notes due in the second quarter of 2021, and the remainder was used for general corporate purposes. Capitalized issue costs were approximately $5 million.
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 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 million in cash and obtain letters of credit in multiple currencies on its revolving credit facility that matures in August 2023. As of June 30, 2021,March 31, 2022, the Company had no cash borrowings outstanding and $21 million in issued, but undrawn, letters of credit under this facility.
61

TableOn December 13, 2021, RGA Reinsurance issued 4.00% Surplus Notes due in 2051, with a face amount of Contents

$500 million. The net proceeds were approximately $494 million and will be used for general corporate purposes.
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 twelve12 months.
Credit and Committed Facilities
At June 30, 2021,March 31, 2022, the Company maintained an $850 million syndicated revolving credit facility and certainin addition to committed letter of credit facilities aggregating to $1.1 billion.$929 million. See Note 13 “Debt” in the Notes to Consolidated Financial Statements in the 20202021 Annual Report for further information about these facilities.
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 June 30, 2021,March 31, 2022, there were approximately $23$53 million
53

Table of Contents

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 June 30, 2021, $1.5March 31, 2022, $1.7 billion 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 concerns 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 also includes drawing funds under a revolving credit facility, under which the Company had availability of $829 million as of June 30, 2021.March 31, 2022. The Company also has $419$742 million of funds available through collateralized borrowings from the FHLB as of June 30, 2021.March 31, 2022. As of June 30, 2021,March 31, 2022, 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 “Significant Accounting Policies and Pronouncements” in the Notes to Consolidated Financial Statements in the 20202021 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 twelve12 months, despite the uncertainty associated with the pandemic.
62

Table of Contents

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:
For the six months ended June 30,For the three months ended March 31,
2021202020222021
(Dollars in millions)(Dollars in millions)
Sources:Sources:Sources:
Net cash provided by operating activities$2,330 $2,579 Net cash provided by operating activities$163 $2,366 
Proceeds from issuance of common stock, net— 481 
Proceeds from long-term debt issuance— 598 
Exercise of stock options, net— 
Change in cash collateral for derivative positions and other arrangements184 93 
Cash provided by changes in universal life and otherNet deposits to investment-type policies and contracts1,864 — 
investment type policies and contracts79 575 Issuance of preferred interests by subsidiary90 — 
Total sources2,593 4,327 Total sources2,117 2,366 
Uses:Uses:Uses:
Net cash used in investing activities2,173 1,024 Net cash used in investing activities2,235 2,492 
Dividends to stockholders95 87 Dividends to stockholders49 48 
Repayment of collateral finance and securitization notes65 160 Repayment of collateral finance and securitization notes14 42 
Debt issuance costs— Principal payments of long-term debt
Principal payments of long-term debt401 Purchases of treasury stock27 
Change in cash collateral for derivative positions and other arrangements25 
Purchases of treasury stock162 Change in deposit asset on reinsurance— 
Net withdrawals from investment-type policies and contracts— 26 
Effect of exchange rate changes on cash21 17 
Total uses2,356 2,652 
Effect of exchange rate changes on cash11 24 
Total uses2,747 1,463 
Net change in cash and cash equivalentsNet change in cash and cash equivalents$(154)$2,864 Net change in cash and cash equivalents$(239)$(286)
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
54

Table of Contents

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, 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 other material changes in the Company’s contractual obligations from those reported in the 20202021 Annual Report, except for the following:

The Company’s contractual obligations associated with interest sensitive liabilities increased from $37.1 billion at December 2020 to $41.7 billion as of June 30, 2021, primarily due to a large asset-intensive transaction completed in the second quarter. The majority of the payments due under these commitments are expected to occur beyond five years.

63

Table of Contents

The Company’s contractual obligations associated with limited partnerships and other investment related commitments increased from $1.1 billion at December 2020 to $1.8 billion as of June 30, 2021, primarily due to an increase in new investment opportunities in the current period. The majority of the payments due under these commitments are expected to occur within the next twelve months.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 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.
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 $3.4 billion and $3.6$3.0 billion at June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively. Given the uncertainty associated with the COVID-19 pandemic and the related volatility in the financial markets, the Company has increased its liquidity position. 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” in Note 4 “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 $84$58 million of FHLB common stock, which is included in other invested assets on the Company’s condensed consolidated balance sheets.
The Company has 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
55

Table of Contents

outstanding funding agreements. The amount of the Company’s liability for the funding agreements with the FHLB under guaranteed investment contracts was $1.8$1.1 billion and $1.4 billion at June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, 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.
64

Table of Contents

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.
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 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements for additional information regarding the Company’s investments.
Effects of COVID-19
Credit markets continued to recover during the first six months of 2021 following the disruption in the global financial markets caused by the COVID-19 pandemic. The Company has exposure to some of the asset classes and industries most affected by the COVID-19 pandemic such as commercial mortgage loans, emerging market debt, energy, and airlines; however, the Company’s primary exposure in these asset classes is of high quality assets. The Company continues to monitor and evaluate the impact of the COVID-19 pandemic on its investment portfolio and is working closely with its borrowers to evaluate any short-term cash flow issues.
Portfolio Composition
The Company had total cash and invested assets of $79.6$78.6 billion and $75.8$81.5 billion as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, as illustrated below (dollars in millions):
June 30, 2021% of TotalDecember 31, 2020% of TotalMarch 31, 2022% of TotalDecember 31, 2021% of Total
Fixed maturity securities, available-for-saleFixed maturity securities, available-for-sale$58,287 73.2 %$56,735 74.8 %Fixed maturity securities, available-for-sale$57,922 73.6 %$60,749 74.6 %
Equity securitiesEquity securities147 0.2 132 0.2 Equity securities139 0.2 151 0.2 
Mortgage loans on real estateMortgage loans on real estate6,481 8.1 5,787 7.6 Mortgage loans on real estate6,535 8.3 6,283 7.7 
Policy loansPolicy loans1,254 1.6 1,258 1.7 Policy loans1,221 1.6 1,234 1.5 
Funds withheld at interestFunds withheld at interest7,049 8.9 5,432 7.2 Funds withheld at interest6,737 8.6 6,954 8.5 
Short-term investmentsShort-term investments184 0.2 227 0.3 Short-term investments315 0.4 87 0.1 
Other invested assetsOther invested assets2,924 3.7 2,829 3.7 Other invested assets3,033 3.9 3,070 3.8 
Cash and cash equivalentsCash and cash equivalents3,254 4.1 3,408 4.5 Cash and cash equivalents2,709 3.4 2,948 3.6 
Total cash and invested assetsTotal cash and invested assets$79,580 100.0 %$75,808 100.0 %Total cash and invested assets$78,611 100.0 %$81,476 100.0 %
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.
 Three months ended June 30,Six months ended June 30,
 20212020  Increase/  
  (Decrease)
20212020  Increase/  
  (Decrease)
Average invested assets at amortized cost$33,587 $30,420 $3,167 $33,266 $29,923 $3,343 
Net investment income$383 $305 $78 $846 $604 $242 
Annualized investment yield (ratio of net investment income to average invested assets at amortized cost)4.64 %4.07 %57 bps5.15 %4.07 %108 bps
VII (included in net investment income)$78 $16 $62 $240 $19 $221 
Annualized investment yield excluding VII (ratio of net investment income, excluding VII, to average invested assets, excluding assets with only VII, at amortized cost)3.84 %3.99 %(15) bps3.82 %4.09 %(27) bps
65

Table of Contents

 Three months ended March 31,
 20222021  Increase/  
  (Decrease)
Average invested assets at amortized cost$35,271 $33,367 $1,904 
Net investment income$457 $463 $(6)
Annualized investment yield (ratio of net investment income to average invested assets at amortized cost)5.29 %5.67 %(38) bps
VII (included in net investment income)$141 $162 $(21)
Annualized investment yield excluding VII (ratio of net investment income, excluding VII, to average invested assets, excluding assets with only VII, at amortized cost)3.80 %3.79 %1 bp
Investment yield increaseddecreased for the three and six months ended June 30, 2021,March 31, 2022, in comparison to the same periodsperiod in the prior year, primarily due to increaseddecreased variable income from limited partnerships andpartially offset by increased variable income from real estate joint ventures, which are included in other invested assets on the condensed consolidated balance sheets. Investment yield excluding variable investment income decreased for the three and six months ended June 30, 2021, in comparison to the same periods in the prior year, primarily due to the continued low interest rate environment.
56

Table of Contents

Fixed Maturity Securities Available-for-Sale
See “Fixed Maturity Securities Available-for-Sale” in Note 4 – “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 these securities by type as of June 30, 2021March 31, 2022 and December 31, 2020.2021.
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”), residential mortgage-backed securities (“RMBS”), asset-backed securities (“ABS”), commercial mortgage-backed securities (“CMBS”), 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”). RMBS, ABS, and CMBS are collectively “structured securities.” As of June 30, 2021March 31, 2022 and December 31, 2020,2021, approximately 93.9%93.8% and 94.0%, 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 5.2%6.3% and 5.6%5.3% of the total fixed maturity securities as of June 30, 2021March 31, 2022 and December 31, 2020,2021, 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 63.4% and 63.9%62.8% of total fixed maturity securities as of June 30, 2021March 31, 2022 and December 31, 2020, respectively.2021. See “Corporate Fixed Maturity Securities” in Note 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements for tables showing the major sector types, which comprise the corporate fixed maturity holdings as of June 30, 2021March 31, 2022 and December 31, 2020.2021.
As of June 30,March 31, 2022 and December 31, 2021, the Company’s investments in Canadian government securities represented 8.4%7.6% and 8.1%, respectively, of the fair value of total fixed maturity securities compared to 9.1% of the fair value of total fixed maturities as of December 31, 2020.securities. These assets are primarily high quality, long duration provincial 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.
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 Moody’s, S&P and Fitch. Structured 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 securities portfolio, as of June 30, 2021March 31, 2022 and December 31, 20202021 was as follows (dollars in millions):
 June 30, 2021December 31, 2020  March 31, 2022December 31, 2021
NAIC
Designation
NAIC
Designation
Rating Agency
Designation
Amortized Cost Estimated
Fair Value
% of Total     Amortized Cost Estimated
Fair Value
% of Total     NAIC
Designation
Rating Agency
Designation
Amortized Cost Estimated
Fair Value
% of Total     Amortized Cost Estimated
Fair Value
% of Total     
11AAA/AA/A$31,394 $34,862 59.8 %$29,770 $34,589 60.9 %1AAA/AA/A$34,434 $34,741 60.0 %$33,540 $36,725 60.5 %
22BBB17,948 19,896 34.1 16,440 18,751 33.1 2BBB19,691 19,574 33.8 18,684 20,379 33.5 
33BB2,575 2,683 4.6 2,480 2,588 4.6 3BB2,821 2,769 4.8 2,620 2,668 4.4 
44B686 678 1.2 713 697 1.2 4B730 720 1.2 876 863 1.4 
55CCC and lower179 159 0.3 131 102 0.2 5CCC and lower127 92 0.2 96 79 0.1 
66In or near default15 — 14 — 6In or near default46 26 — 57 35 0.1 
Total$52,797 $58,287 100.0 %$49,548 $56,735 100.0 %Total$57,849 $57,922 100.0 %$55,873 $60,749 100.0 %

6657

Table of Contents


The Company’s fixed maturity portfolio includes structured securities. The following table shows the types of structured securities the Company held as of June 30, 2021March 31, 2022 and December 31, 20202021 (dollars in millions): 
June 30, 2021December 31, 2020 March 31, 2022December 31, 2021
Amortized CostEstimated
Fair Value
% of TotalAmortized  CostEstimated
Fair Value
% of TotalAmortized CostEstimated
Fair Value
% of TotalAmortized CostEstimated
Fair Value
% of Total
RMBS:RMBS:RMBS:
AgencyAgency$623 $667 9.9 %$686 $744 11.0 %Agency$538 $537 8.3 %$551 $582 8.4 %
Non-agencyNon-agency700 710 10.5 1,049 1,073 15.8 Non-agency445 429 6.6 469 468 6.8 
Total RMBSTotal RMBS1,323 1,377 20.4 1,735 1,817 26.8 Total RMBS983 966 14.9 1,020 1,050 15.2 
ABS:ABS:ABS:
Collateralized loan obligations (“CLOs”)Collateralized loan obligations (“CLOs”)1,722 1,720 25.6 1,707 1,689 24.9 Collateralized loan obligations (“CLOs”)1,659 1,630 25.1 1,761 1,752 25.4 
ABS, excluding CLOsABS, excluding CLOs1,745 1,762 26.2 1,392 1,403 20.7 ABS, excluding CLOs2,256 2,116 32.5 2,263 2,253 32.6 
Total ABSTotal ABS3,467 3,482 51.8 3,099 3,092 45.6 Total ABS3,915 3,746 57.6 4,024 4,005 58.0 
CMBSCMBS1,774 1,869 27.8 1,790 1,868 27.6 CMBS1,829 1,786 27.5 1,790 1,849 26.8 
TotalTotal$6,564 $6,728 100.0 %$6,624 $6,777 100.0 %Total$6,727 $6,498 100.0 %$6,834 $6,904 100.0 %
The Company’s RMBS portfolio includes agency-issued pass-through securities and collateralized mortgage obligations. Agency-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 RMBS 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 RMBS 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.
The Company’s ABS portfolio primarily consists of CLOs, single-family rentals, container leasing, railcar leasing, aircraft, and student loans.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.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had $267$2,066 million and $197$349 million, respectively, of gross unrealized losses related to its fixed maturity securities. The Company monitors its fixed maturity securities to determine impairments in value and evaluates factors such as financial condition of the issuer, payment performance, 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, securities determined to have expected credit losses will record an allowance for credit losses in the amount that the fair value is less than the amortized cost.
67

Table of Contents

cost is recorded for securities determined to have expected credit losses.
Mortgage Loans on Real Estate
The Company’s mortgage loan portfolio consists of U.S., Canada and UK based investments primarily in commercial 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 on Real Estate” in Note 4 – “Investments” in the Notes to 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 June 30, 2021,March 31, 2022, totaling approximately $9 million. For the six months ended June 30, 2021, the Company decreased its allowance for credit losses on its commercial mortgage loan portfolio by approximately $19 million to reflect the updated outlook from the COVID-19 pandemic. 
The Company continues to monitor and evaluate the impact
58

Table of the COVID-19 pandemic on its investment portfolio and is working closely with its borrowers to evaluate any short-term cash flow issues. For the six months ended June 30, 2021, the Company modified the payment terms of one commercial mortgage loan, with a carrying value of approximately $10 million in response to COVID-19. For the year ended December 31, 2020, the Company modified the payments terms of approximately 52 commercial mortgage loans, with a carrying value of approximately $660 million in response to COVID-19. These loans met the criteria established in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and were not considered a troubled debt restructuring. In accordance with the CARES Act criteria, these loans were not more than 30 days past due at December 31, 2019, and the modifications included deferral or delayed payments of principal or interest on the loan. Contents

As of June 30, 2021March 31, 2022 and December 31, 2020,2021, 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):
June 30, 2021December 31, 2020 March 31, 2022December 31, 2021
Recorded
Investment
% of TotalRecorded
Investment
% of TotalRecorded
Investment
% of TotalRecorded
Investment
% of Total
U.S. Region:U.S. Region:U.S. Region:
WestWest$2,361 36.1 %$2,253 38.5 %West$2,302 35.1 %$2,270 36.0 %
SouthSouth2,235 34.2 2,040 34.8 South2,238 34.0 2,135 33.7 
MidwestMidwest1,204 18.4 1,027 17.5 Midwest1,187 18.0 1,166 18.4 
NortheastNortheast410 6.3 277 4.7 Northeast475 7.2 419 6.6 
Subtotal - U.S.Subtotal - U.S.6,210 95.0 5,597 95.5 Subtotal - U.S.6,202 94.3 5,990 94.7 
CanadaCanada208 3.2 188 3.2 Canada213 3.2 193 3.0 
United KingdomUnited Kingdom117 1.8 76 1.3 United Kingdom167 2.5 144 2.3 
OtherOther— — — Other— — 
TotalTotal$6,537 100.0 %$5,861 100.0 %Total$6,583 100.0 %$6,329 100.0 %
See “Allowance for Credit Losses and Impairments” in Note 2 – “Significant Accounting Policies and Pronouncements” of the Company’s 20202021 Annual Report and “Mortgage Loans on Real Estate” in Note 4 – ��Investments” in the Notes to Condensed Consolidated Financial Statements for information regarding the Company’s policy for allowance for credit losses and impairments on mortgage loans.
See “Mortgage Loans on Real Estate” in Note 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements for information regarding allowance for credit losses and impairments.
Impairments and Allowance for Credit Losses and Impairments
The Company’s determination of whether a decline in value necessitates the recording of an allowance for credit losses includes an 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. See “Allowance for Credit Losses and Impairments” in Note 2 – “Significant Accounting Policies and Pronouncements” of the Company’s 20202021 Annual Report for additional information. The table below summarizes investment related (gains)gains (losses), net related to allowances for credit losses net,and impairments for impairmentsthe three months ended March 31, 2022 and changes2021 (dollars in millions).
Three months ended March 31,
20222021
Change in allowance for credit losses on fixed maturity securities$11 $
Impairments on fixed maturity securities— 
Other impairment losses and changes in provision— (1)
Change in mortgage loan allowance for credit losses(17)
Total$14 $(16)
The change in allowance for credit losses and impairments on fixed maturity securities other impairment losses and changes in the mortgage loan allowance for credit losses for the three and six months ended June 30,March 31, 2022 and 2021, and 2020 (dollars in millions).
Three months ended June 30,Six months ended June 30,
2021202020212020
Impairments and change in allowance for credit losses on fixed maturity securities$(5)$— $(3)$34 
Other impairment losses and changes in provision(1)(2)
Change in mortgage loan allowance for credit losses(2)17 (19)30 
Total$(8)$22 $(24)$69 
68

Table of Contents

was primarily related to high-yield securities. The decrease in mortgage loan allowance for credit losses for the sixthree months ended, June 30,March 31, 2021 was primarily due toreflects the updatedimproved outlook from the COVID-19 pandemic. The impairments and change in allowance for credit losses on fixed maturity securities for the six months ended June 30, 2020, were primarily related to high-yield securities as a result of the uncertainty in the global markets due to the COVID-19 pandemic. In addition, the increase in mortgage loan allowance for credit losses for the six months ended June 30, 2020, was primarily due to the estimated impact from the COVID-19 pandemic.
See “Unrealized Losses for Fixed Maturity Securities Available-for-Sale” in Note 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements for tables that present the estimated fair value and gross unrealized losses for securities that have estimated fair values below amortized cost by class and grade, as well as the length of time the related estimated fair value has remained below amortized cost as of June 30, 2021March 31, 2022 and December 31, 2020.2021.
As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company classified approximately 6.7%9.0% and 5.9%8.5%, respectively, of its fixed maturity securities in the Level 3 category (refer to Note 6 – “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, and Canadian provincial strip bonds with inactive trading markets.asset-backed securities.
See “Securities Borrowing, Lending and Repurchase Agreements” in Note 4 – “Investments” in the Notes to Condensed Consolidated Financial Statements for information related to the Company’s securities borrowing, lending and repurchase/reverse repurchase programs.
Policy Loans
The majority
59

Table of policy loans are associated with one client. These policy loans present no credit risk because 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.Contents

Funds Withheld at Interest
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. The 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” as of June 30, 2021March 31, 2022 and December 31, 2020.2021. Certain ceding companies maintain segregated portfolios for the benefit of the Company.
Other Invested Assets
Other invested assets include limited partnership interests, joint ventures (other than operating joint ventures), lifetime mortgages, derivative contracts, fair value option (“FVO”) contractholder-directed unit-linked investments and FHLB common stock.stock and unit-linked investments. See “Other Invested Assets” in Note 4 – “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 June 30, 2021March 31, 2022 and December 31, 2020.2021.
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 exchange-traded, centrally cleared, and customized over-the-counter derivative financial instruments.
See Note 5 – “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 as of June 30, 2021March 31, 2022 and December 31, 2020.2021.
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. As of June 30, 2021,March 31, 2022, the Company had credit exposure of $18$16 million.
69

Table of Contents

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. 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. See Note 5 – “Derivative Instruments” in the Notes to Condensed Consolidated Financial Statements for more information regarding the Company’s derivative instruments.
The Company holds $958$823 million and $935$758 million of beneficial interest in lifetime mortgages in the UK, net of allowance for credit losses, as of June 30, 2021March 31, 2022 and December 31, 2020, respectively, in beneficial interests in lifetime mortgages in the UK.2021, respectively. Investment income includes $13$10 million and $10$13 million in interest income earned on lifetime mortgages for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $26 million and $20 million in interest income earned on lifetime mortgages for the six months ended June 30, 2021 and 2020, respectively. 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 home equity loan by allowing the borrower to utilize the equity in their home as collateral. The amount of the loan is dependent on the appraised value of the home at the time of origination, the borrower's age and interest rate. Unlike a home equity loan, no payment of principal or interest is required until the death of the borrower or sale of the 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 risks, including market, credit, interest rate, liquidity, operational, reputational and legal risks.
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.
Financial Services – Insurance
In August 2018, the FASB issued amendments that will significantly change the recognition and measurement of long-duration insurance contracts and expand disclosure requirements. The guidance is effective for the Company on January 1, 2023. The
60

Table of Contents

Company established a team to support the implementation of the updated guidance, which requires significant changes to policies, reporting and processes. The Company’s achievements as of the balance sheet date include, but are not limited to, the following:
Established preliminary key accounting policies;
Updated chart of accounts to support enhanced financial statement presentation and disclosures;
Implemented a data management system and process for grouping treaties into cohorts;
Established valuation analytics and reporting foundation;
Established an assumption governance process for assumption review, changes and approvals; and
Conducted dry runs and end to end system testing.
The Company continues to make progress on the following items (includes, but not limited to):
Evaluating and finalizing key accounting policies;
Evaluating the impact to the consolidated financial statements at transition;
Determining and documenting key risks and appropriate internal controls; and
Conducting parallel valuation runs.
See Note 1413 – “New Accounting Standards” in the Notes to Condensed Consolidated Financial Statements.
Statements for additional information on new accounting pronouncements and their impact, if any, on the Company’s results of operations and financial position.

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk
Market 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 June 30, 2021,March 31, 2022, there have been no material changes in the Company’s economic exposure to market risk or the Company’s Enterprise Risk Management function from December 31, 2020,2021, a description of which may be found in its Annual Report on Form 10-K, for the year ended December 31, 2020,2021, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” filed with the Securities and Exchange Commission.
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 June 30, 2021,March 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. As a result of the COVID-19 pandemic, the majority of our workforce began working remotely in March 2020. These changes to the working environment did not have a material effect on our internal controls over financial reporting during the most recent quarter.  The Company continues to monitor and assess the COVID-19 situation on its internal controls to minimize the impact on their design and operating effectiveness.

7061

Table of Contents

PART II - OTHER INFORMATION
ITEM 1.  Legal Proceedings
The Company is subject to litigation in the normal course of its business. The Company currently has no material litigation. A legal reserve is established when the Company is notified of an arbitration demand or litigation or is notified that an arbitration demand or litigation 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 have been no material changes from the risk factors previously disclosed in the Company’s 20202021 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 June 30, 2021:March 31, 2022:
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
April 1, 2021 –
April 30, 2021
— $— — $167,573,148 
May 1, 2021 –
May 31, 2021
845 $126.86 — $167,573,148 
June 1, 2021 –
June 30, 2021
124 $115.80 — $167,573,148 
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, 2022 –
January 31, 2022
10,998 $115.70 — $71,573,495 
February 1, 2022 –
February 28, 2022
225,234 $114.11 219,116 $46,573,506 
March 1, 2022 –
March 31, 2022
212 $111.56 — $400,000,000 
(1)RGA had no repurchasesrepurchased 0, 219,116, and 0 shares of common stock under its share 2019 repurchase program for April, Mayduring January, February and June 2021.March 2022. The Company net settled issuing 2,41430,189, 23,150, and 2,095628 shares from treasury and repurchasedrepurchasing from recipients 84510,998, 6,118 and 124212 shares in MayJanuary, February and June 2021,March 2022, respectively, in settlement of income tax withholding requirements incurred by the recipients of equity incentive awards.
On January 24, 2019, RGA’s board of directors authorized a share repurchase program for up to $400 million of RGA’s outstanding common stock. During the three months ended March 31, 2022, RGA repurchased 219,116 shares of common stock under this program for $25 million.
On February 25, 2022, RGA’s board of directors authorized a share repurchase program for up to $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 2017. On August 3, 2021,2019. During the Company announced the liftingthree months ended March 31, 2022, RGA did not repurchase any shares of the existing suspension on share repurchases. common stock under this program.
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..price.
ITEM 6.  Exhibits
See index to exhibits.
7162

Table of Contents

INDEX TO EXHIBITS
 
Exhibit
Number
Description
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
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101).

* Represents a management contract or compensatory plan or arrangement
72
63

Table of Contents

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: August 5, 2021May 6, 2022 By: /s/ Anna Manning
 Anna Manning
 President & Chief Executive Officer
 
(Principal Executive Officer)
 
 
 
 
Date: August 5, 2021May 6, 2022 By:/s/ Todd C. Larson
 Todd C. Larson
 Senior Executive Vice President & Chief Financial Officer
 (Principal Financial and Accounting Officer)

7364