| Investments | 5. Investments Fixed Maturity Securities Available-for-Sale Fixed Maturity Securities Available-for-Sale by Sector The following table presents fixed maturity securities available-for-sale (“AFS”) by sector. U.S. corporate and foreign corporate sectors include redeemable preferred stock. Residential mortgage-backed securities (“RMBS”) includes agency, prime, alternative and sub-prime mortgage-backed securities. Asset-backed securities and collateralized loan obligations (“ABS & CLO”), previously disclosed as ABS in the 2021 Annual Report, includes securities collateralized by consumer loans, corporate loans and broadly syndicated bank loans. Municipals includes taxable and tax-exempt revenue bonds and, to a much lesser extent, general obligations of states, municipalities and political subdivisions. Commercial mortgage-backed securities (“CMBS”) primarily includes securities collateralized by multiple commercial mortgage loans. RMBS, ABS & CLO and CMBS are, collectively, “Structured Products.” June 30, 2022 December 31, 2021 Amortized Gross Unrealized Estimated Amortized Gross Unrealized Estimated Sector Allowance for Gains Losses Allowance for Gains Losses (In millions) U.S. corporate $ 52,289 $ (27) $ 1,174 $ 3,389 $ 50,047 $ 51,328 $ (30) $ 7,257 $ 153 $ 58,402 U.S. government and agency 22,219 — 1,295 1,175 22,339 26,782 — 4,568 128 31,222 Foreign corporate 27,944 (7) 282 3,653 24,566 27,475 (10) 2,651 431 29,685 RMBS 21,279 — 321 1,453 20,147 22,082 — 1,198 135 23,145 ABS & CLO 12,429 — 10 629 11,810 12,787 — 127 35 12,879 Municipals 7,157 — 526 383 7,300 6,884 — 1,849 5 8,728 CMBS 6,485 (13) 4 382 6,094 6,686 (13) 237 32 6,878 Foreign government 4,010 (77) 203 332 3,804 4,330 — 698 82 4,946 Total fixed maturity securities AFS $ 153,812 $ (124) $ 3,815 $ 11,396 $ 146,107 $ 158,354 $ (53) $ 18,585 $ 1,001 $ 175,885 The Company held non-income producing fixed maturity securities AFS with an estimated fair value of $105 million and $19 million at June 30, 2022 and December 31, 2021, respectively, with unrealized gains (losses) of ($13) million and $10 million at June 30, 2022 and December 31, 2021, respectively. Maturities of Fixed Maturity Securities AFS The amortized cost, net of allowance for credit loss (“ACL”), and estimated fair value of fixed maturity securities AFS, by contractual maturity date, were as follows at June 30, 2022: Due in One Due After Due After Due After Structured Total Fixed (In millions) Amortized cost, net of ACL $ 2,828 $ 25,685 $ 27,523 $ 57,472 $ 40,180 $ 153,688 Estimated fair value $ 2,674 $ 24,756 $ 26,154 $ 54,472 $ 38,051 $ 146,107 Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities AFS not due at a single maturity date have been presented in the year of final contractual maturity. Structured Products are shown separately, as they are not due at a single maturity. Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position without an ACL by sector and aggregated by length of time that the securities have been in a continuous unrealized loss position. June 30, 2022 December 31, 2021 Less than 12 Months Equal to or Greater Less than 12 Months Equal to or Greater Sector & Credit Quality Estimated Gross Estimated Gross Estimated Gross Estimated Gross (Dollars in millions) U.S. corporate $ 31,816 $ 3,130 $ 1,350 $ 258 $ 4,503 $ 83 $ 784 $ 70 U.S. government and agency 11,211 1,019 464 156 10,063 78 523 49 Foreign corporate 19,028 3,215 1,575 438 4,079 199 1,348 232 RMBS 14,320 1,219 1,352 234 7,481 111 314 24 ABS & CLO 10,213 564 921 65 5,643 25 593 10 Municipals 2,696 378 13 5 154 4 17 1 CMBS 5,260 331 507 51 1,613 20 355 12 Foreign government 1,778 271 145 57 497 37 148 45 Total fixed maturity securities AFS $ 96,322 $ 10,127 $ 6,327 $ 1,264 $ 34,033 $ 557 $ 4,082 $ 443 Investment grade $ 89,669 $ 9,247 $ 5,325 $ 1,060 $ 31,419 $ 454 $ 3,273 $ 353 Below investment grade 6,653 880 1,002 204 2,614 103 809 90 Total fixed maturity securities AFS $ 96,322 $ 10,127 $ 6,327 $ 1,264 $ 34,033 $ 557 $ 4,082 $ 443 Total number of securities in an 9,492 727 2,549 427 Evaluation of Fixed Maturity Securities AFS for Credit Loss Evaluation and Measurement Methodologies Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the credit loss evaluation process include, but are not limited to: (i) the extent to which the estimated fair value has been below amortized cost, (ii) adverse conditions specifically related to a security, an industry sector or sub-sector, or an economically depressed geographic area, adverse change in the financial condition of the issuer of the security, changes in technology, discontinuance of a segment of the business that may affect future earnings, and changes in the quality of credit enhancement, (iii) payment structure of the security and likelihood of the issuer being able to make payments, (iv) failure of the issuer to make scheduled interest and principal payments, (v) whether the issuer, or series of issuers or an industry has suffered a catastrophic loss or has exhausted natural resources, (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers, (vii) with respect to Structured Products, changes in forecasted cash flows after considering the changes in the financial condition of the underlying loan obligors and quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security, (viii) changes in the rating of the security by a rating agency, and (ix) other subjective factors, including concentrations and information obtained from regulators. The methodology and significant inputs used to determine the amount of credit loss are as follows: • The Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows. The discount rate is generally the effective interest rate of the security at the time of purchase for fixed-rate securities and the spot rate at the date of evaluation of credit loss for floating-rate securities. • When determining collectability and the period over which value is expected to recover, the Company applies considerations utilized in its overall credit loss evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management’s single best estimate, the most likely outcome in a range of possible outcomes, after giving consideration to a variety of variables that include, but are not limited to: payment terms of the security; the likelihood that the issuer can service the interest and principal payments; the quality and amount of any credit enhancements; the security’s position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; any private and public sector programs to restructure foreign government securities and municipals; and changes to the rating of the security or the issuer by rating agencies. • Additional considerations are made when assessing the unique features that apply to certain Structured Products including, but not limited to: the quality of underlying collateral, historical performance of the underlying loan obligors, historical rent and vacancy levels, changes in the financial condition of the underlying loan obligors, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying loans or assets backing a particular security, changes in the quality of credit enhancement and the payment priority within the tranche structure of the security. With respect to securities that have attributes of debt and equity (“perpetual hybrid securities”), consideration is given in the credit loss analysis as to whether there has been any deterioration in the credit of the issuer and the likelihood of recovery in value of the securities that are in a severe unrealized loss position. Consideration is also given as to whether any perpetual hybrid securities with an unrealized loss, regardless of credit rating, have deferred any dividend payments. In periods subsequent to the recognition of an initial ACL on a security, the Company reassesses credit loss quarterly. Subsequent increases or decreases in the expected cash flow from the security result in corresponding decreases or increases in the ACL which are recognized in earnings and reported within net investment gains (losses); however, the previously recorded ACL is not reduced to an amount below zero. Full or partial write-offs are deducted from the ACL in the period the security, or a portion thereof, is considered uncollectible. Recoveries of amounts previously written off are recorded to the ACL in the period received. When the Company has the intent-to-sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, any ACL is written off and the amortized cost is written down to estimated fair value through a charge within net investment gains (losses), which becomes the new amortized cost of the security. Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position Gross unrealized losses on securities without an ACL increased $10.4 billion for the six months ended June 30, 2022 to $11.4 billion primarily due to increases in interest rates, widening credit spreads, and the impact of weakening foreign currencies on certain non-functional currency denominated fixed maturity securities. Gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater were $1.3 billion at June 30, 2022, or 11% of the total gross unrealized losses on securities without an ACL. Investment Grade Fixed Maturity Securities AFS Of the $1.3 billion of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater, $1.1 billion, or 85%, were related to 586 investment grade securities. Unrealized losses on investment grade securities are principally related to widening credit spreads since purchase and, with respect to fixed-rate securities, rising interest rates since purchase. Below Investment Grade Fixed Maturity Securities AFS Of the $1.3 billion of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater, $204 million, or 15%, were related to 141 below investment grade securities. Unrealized losses on below investment grade securities are principally related to foreign corporate and U.S. corporate securities (primarily industrial and consumer) and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty, as well as with respect to fixed-rate securities, rising interest rates since purchase. Management evaluates U.S. corporate and foreign corporate securities based on several factors such as expected cash flows, financial condition and near-term and long-term prospects of the issuers. Current Period Evaluation At June 30, 2022, with respect to securities in an unrealized loss position without an ACL, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the remaining amortized cost. Based on the Company’s current evaluation of its securities in an unrealized loss position without an ACL, the Company concluded that these securities had not incurred a credit loss and should not have an ACL at June 30, 2022. Future provisions for credit loss will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings and collateral valuation. Rollforward of Allowance for Credit Loss for Fixed Maturity Securities AFS by Sector The rollforward of ACL for fixed maturity securities AFS by sector is as follows: U.S. Foreign Corporate CMBS Foreign Total Three Months Ended June 30, 2022 (In millions) Balance, at beginning of period $ 13 $ 25 $ 13 $ 104 $ 155 Additions: ACL not previously recorded — — — — — Changes for securities with previously recorded ACL 14 (1) — (7) 6 Reductions: Securities sold or exchanged — (17) — (20) (37) Write-offs — — — — — Balance, at end of period $ 27 $ 7 $ 13 $ 77 $ 124 Three Months Ended June 30, 2021 Balance, at beginning of period $ 43 $ 17 $ 6 $ — $ 66 Additions: ACL not previously recorded — — 3 — 3 Changes for securities with previously recorded ACL 3 — (3) — — Reductions: Securities sold or exchanged (7) (3) — — (10) Write-offs — — — — — Balance, at end of period $ 39 $ 14 $ 6 $ — $ 59 U.S. Foreign Corporate CMBS Foreign Total Six Months Ended June 30, 2022 (In millions) Balance, at beginning of period $ 30 $ 10 $ 13 $ — $ 53 Additions: ACL not previously recorded 13 11 — 104 128 Changes for securities with previously recorded ACL 14 3 — (7) 10 Reductions: Securities sold or exchanged (8) (17) — (20) (45) Write-offs (22) — — — (22) Balance, at end of period $ 27 $ 7 $ 13 $ 77 $ 124 Six Months Ended June 30, 2021 Balance, at beginning of period $ 43 $ 8 $ — $ — $ 51 Additions: ACL not previously recorded — 12 9 — 21 Reductions: Changes for securities with previously recorded ACL 3 (3) (3) — (3) Securities sold or exchanged (7) (3) — — (10) Write-offs — — — — — Balance, at end of period $ 39 $ 14 $ 6 $ — $ 59 Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at: June 30, 2022 December 31, 2021 Portfolio Segment Carrying % of Carrying % of (Dollars in millions) Commercial $ 36,918 60.2 % $ 35,772 59.4 % Agricultural 15,431 25.1 15,450 25.7 Residential 9,326 15.2 9,406 15.6 Total amortized cost 61,675 100.5 60,628 100.7 Allowance for credit loss (416) (0.7) (536) (0.9) Subtotal mortgage loans, net 61,259 99.8 60,092 99.8 Residential — FVO 109 0.2 127 0.2 Total mortgage loans held-for-investment, net 61,368 100.0 60,219 100.0 Mortgage loans held-for-sale 24 — — — Total mortgage loans, net $ 61,392 100.0 % $ 60,219 100.0 % The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis, with changes in estimated fair value included in net investment income. See Note 7 for further information. The amount of net (discounts) premiums and deferred (fees) expenses, included within total amortized cost, primarily attributable to residential mortgage loans was ($678) million and ($736) million at June 30, 2022 and December 31, 2021, respectively. The accrued interest income excluded from total amortized cost for commercial, agricultural and residential mortgage loans at June 30, 2022 was $149 million, $128 million and $69 million, respectively. The accrued interest income excluded from total amortized cost for commercial, agricultural and residential mortgage loans at December 31, 2021 was $140 million, $136 million and $77 million, respectively. Purchases of mortgage loans, consisting primarily of residential mortgage loans, were $596 million and $1.1 billion for the three months and six months ended June 30, 2022, respectively, and $461 million and $838 million for the three months and six months ended June 30, 2021, respectively. See “— Related Party Investment Transactions” for information regarding transfers of mortgage loans from affiliates. Rollforward of Allowance for Credit Loss for Mortgage Loans by Portfolio Segment The rollforward of ACL for mortgage loans, by portfolio segment, is as follows: Six Months Ended June 30, 2022 2021 Commercial Agricultural Residential Total Commercial Agricultural Residential Total (In millions) Balance, beginning of period $ 260 $ 79 $ 197 $ 536 $ 199 $ 97 $ 221 $ 517 Provision (release) (13) 36 (38) (15) 17 (7) (20) (10) Initial credit losses on PCD loans (1) — — — — — — 2 2 Charge-offs, net of recoveries (82) (22) (1) (105) — (13) (1) (14) Balance, end of period $ 165 $ 93 $ 158 $ 416 $ 216 $ 77 $ 202 $ 495 ________________ (1) Represents the initial credit losses on purchased mortgage loans accounted for as purchased financial assets with credit deterioration (“PCD”). Allowance for Credit Loss Methodology The Company records an allowance for expected lifetime credit loss in earnings within net investment gains (losses) in an amount that represents the portion of the amortized cost basis of mortgage loans that the Company does not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected. In determining the Company’s ACL, management applies significant judgment to estimate expected lifetime credit loss, including: (i) pooling mortgage loans that share similar risk characteristics, (ii) considering expected lifetime credit loss over the contractual term of its mortgage loans adjusted for expected prepayments and any extensions, and (iii) considering past events and current and forecasted economic conditions. Each of the Company’s commercial, agricultural and residential mortgage loan portfolio segments are evaluated separately. The ACL is calculated for each mortgage loan portfolio segment based on inputs unique to each loan portfolio segment. On a quarterly basis, mortgage loans within a portfolio segment that share similar risk characteristics, such as internal risk ratings or consumer credit scores, are pooled for calculation of ACL. On an ongoing basis, mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is reasonably possible or probable) and reasonably expected TDRs (i.e., the Company grants concessions to borrower that is experiencing financial difficulties) are evaluated individually for credit loss. The ACL for loans evaluated individually are established using the same methodologies for all three portfolio segments. For example, the ACL for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in the ACL which is recorded on a quarterly basis as a charge or credit to earnings in net investment gains (losses). Commercial and Agricultural Mortgage Loan Portfolio Segments Commercial and agricultural mortgage loan ACL are calculated in a similar manner. Within each loan portfolio segment, commercial and agricultural, loans are pooled by internal risk rating. Estimated lifetime loss rates, which vary by internal risk rating, are applied to the amortized cost of each loan, excluding accrued investment income, on a quarterly basis to develop the ACL. Internal risk ratings are based on an assessment of the loan’s credit quality, which can change over time. The estimated lifetime loss rates are based on several loan portfolio segment-specific factors, including (i) the Company’s experience with defaults and loss severity, (ii) expected default and loss severity over the forecast period, (iii) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, (iv) loan specific characteristics including loan-to-value (“LTV”) ratios, and (v) internal risk ratings. These evaluations are revised as conditions change and new information becomes available. The Company uses its several decades of historical default and loss severity experience which capture multiple economic cycles. The Company uses a forecast of economic assumptions for a two-year period for most of its commercial and agricultural mortgage loans, while a one-year period is used for loans originated in certain markets. After the applicable forecast period, the Company reverts to its historical loss experience using a straight-line basis over two years. For evaluations of commercial mortgage loans, in addition to historical experience, management considers factors that include the impact of a rapid change to the economy, which may not be reflected in the loan portfolio, recent loss and recovery trend experience as compared to historical loss and recovery experience, and loan specific characteristics including debt service coverage ratios (“DSCR”). In estimating expected lifetime credit loss over the term of its commercial mortgage loans, the Company adjusts for expected prepayment and extension experience during the forecast period using historical prepayment and extension experience considering the expected position in the economic cycle and the loan profile (i.e., floating rate, shorter-term fixed rate and longer-term fixed rate) and after the forecast period using long-term historical prepayment experience. For evaluations of agricultural mortgage loans, in addition to historical experience, management considers factors that include increased stress in certain sectors, which may be evidenced by higher delinquency rates, or a change in the number of higher risk loans. In estimating expected lifetime credit loss over the term of its agricultural mortgage loans, the Company’s experience is much less sensitive to the position in the economic cycle and by loan profile; accordingly, historical prepayment experience is used, while extension terms are not prevalent with the Company’s agricultural mortgage loans. Commercial mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios, DSCR and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher LTV ratios and lower DSCR. Agricultural mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios and borrower creditworthiness, as well as reviews on a geographic and property-type basis. The monitoring process for agricultural mortgage loans also focuses on higher risk loans. For commercial mortgage loans, the primary credit quality indicator is the DSCR, which compares a property’s net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the DSCR, the higher the risk of experiencing a credit loss. The Company also reviews the LTV ratio of its commercial mortgage loan portfolio. LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR and the values utilized in calculating the ratio are updated routinely. In addition, the LTV ratio is routinely updated for all but the lowest risk loans as part of the Company’s ongoing review of its commercial mortgage loan portfolio. For agricultural mortgage loans, the Company’s primary credit quality indicator is the LTV ratio. The values utilized in calculating this ratio are developed in connection with the ongoing review of the agricultural mortgage loan portfolio and are routinely updated. Commitments to lend: After loans are approved, the Company makes commitments to lend and, typically, borrowers draw down on some or all of the commitments. The timing of mortgage loan funding is based on the commitment expiration dates. A liability for credit loss for unfunded commercial and agricultural mortgage loan commitments that are not unconditionally cancellable is recognized in earnings and is reported within net investment gains (losses). The liability is based on estimated lifetime loss rates as described above and the amount of the outstanding commitments, which for lines of credit, considers estimated utilization rates. When the commitment is funded or expires, the liability is adjusted accordingly. Residential Mortgage Loan Portfolio Segment The Company’s residential mortgage loan portfolio is comprised primarily of purchased closed end, amortizing residential mortgage loans, including both performing loans purchased within 12 months of origination and reperforming loans purchased after they have been performing for at least 12 months post-modification. Residential mortgage loans are pooled by loan type (i.e., new origination and reperforming) and pooled by similar risk profiles (including consumer credit score and LTV ratios). Estimated lifetime loss rates, which vary by loan type and risk profile, are applied to the amortized cost of each loan excluding accrued investment income on a quarterly basis to develop the ACL. The estimated lifetime loss rates are based on several factors, including (i) industry historical experience and expected results over the forecast period for defaults, (ii) loss severity, (iii) prepayment rates, (iv) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, and (v) loan pool specific characteristics including consumer credit scores, LTV ratios, payment history and home prices. These evaluations are revised as conditions change and new information becomes available. The Company uses industry historical experience which captures multiple economic cycles as the Company has purchased most of its residential mortgage loans in the last five years. The Company uses a forecast of economic assumptions for a two-year period for most of its residential mortgage loans. After the applicable forecast period, the Company immediately reverts to industry historical loss experience. For residential mortgage loans, the Company’s primary credit quality indicator is whether the loan is performing or nonperforming. The Company generally defines nonperforming residential mortgage loans as those that are 60 or more days past due and/or in nonaccrual status which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss. Credit Quality of Mortgage Loans by Portfolio Segment The amortized cost of commercial mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2022: Credit Quality Indicator 2022 2021 2020 2019 2018 Prior Revolving Total % of (Dollars in millions) LTV ratios: Less than 65% $ 2,585 $ 3,222 $ 2,368 $ 3,109 $ 3,559 $ 11,422 $ 2,597 $ 28,862 78.2 % 65% to 75% 705 1,124 631 1,661 917 1,306 — 6,344 17.2 76% to 80% — — 18 138 199 248 — 603 1.6 Greater than 80% 43 — — — 48 1,018 — 1,109 3.0 Total $ 3,333 $ 4,346 $ 3,017 $ 4,908 $ 4,723 $ 13,994 $ 2,597 $ 36,918 100.0 % DSCR: > 1.20x $ 3,295 $ 3,949 $ 2,844 $ 4,718 $ 4,303 $ 12,084 $ 2,242 $ 33,435 90.6 % 1.00x - 1.20x 32 156 18 — 125 324 — 655 1.8 <1.00x 6 241 155 190 295 1,586 355 2,828 7.6 Total $ 3,333 $ 4,346 $ 3,017 $ 4,908 $ 4,723 $ 13,994 $ 2,597 $ 36,918 100.0 % The amortized cost of agricultural mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2022: Credit Quality Indicator 2022 2021 2020 2019 2018 Prior Revolving Total % of (Dollars in millions) LTV ratios: Less than 65% $ 1,350 $ 1,447 $ 1,913 $ 1,534 $ 2,115 $ 4,450 $ 1,021 $ 13,830 89.6 % 65% to 75% 129 229 309 181 51 499 51 1,449 9.4 76% to 80% — — — — — 11 — 11 0.1 Greater than 80% — — 15 76 — 44 6 141 0.9 Total $ 1,479 $ 1,676 $ 2,237 $ 1,791 $ 2,166 $ 5,004 $ 1,078 $ 15,431 100.0 % The amortized cost of residential mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2022: Credit Quality Indicator 2022 2021 2020 2019 2018 Prior Revolving Total % of (Dollars in millions) Performance indicators: Performing $ 489 $ 714 $ 164 $ 648 $ 363 $ 6,512 $ — $ 8,890 95.3 % Nonperforming (1) — 3 5 39 11 378 — 436 4.7 Total $ 489 $ 717 $ 169 $ 687 $ 374 $ 6,890 $ — $ 9,326 100.0 % __________________ (1) Includes residential mortgage loans in process of foreclosure of $133 million and $69 million at June 30, 2022 and December 31, 2021, respectively. LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. The amortized cost of commercial and agricultural mortgage loans with an LTV ratio in excess of 100% was $474 million, or 1% of total commercial and agricultural mortgage loans, at June 30, 2022. Past Due and Nonaccrual Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both June 30, 2022 and December 31, 2021. The Company defines delinquency consistent with industry practice, when mortgage loans are past due more than two or more months, as applicable, by portfolio segment. The past due and nonaccrual mortgage loans at amortized cost, prior to ACL, by portfolio segment, were as follows: Past Due Greater than 90 Days Past Due Nonaccrual Portfolio Segment June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 (In millions) Commercial $ — $ — $ — $ — $ 171 $ 146 Agricultural 93 124 30 16 178 225 Residential 436 418 — — 437 418 Total $ 529 $ 542 $ 30 $ 16 $ 786 $ 789 The amortized cost for nonaccrual commercial, agricultural and residential mortgage loans at beginning of year 2021 was $293 million, $261 million and $503 million, respectively. The amortized cost for nonaccrual agricultural mortgage loans with no ACL was $86 million and $134 million at June 30, 2022 and December 31, 2021, respectively. There were no nonaccrual commercial or residential mortgage loans without an ACL at either June 30, 2022 or December 31, 2021. Real Estate and Real Estate Joint Ventures The Company’s real estate investment portfolio is diversified by property type, geography and income stream, including income from operating leases, operating income and equity in earnings from equity method real estate joint ventures. Real estate investments, by income type, as well as income earned, were as follows at and for the periods indicated: June 30, 2022 December 31, 2021 Three Months Six Months 2022 2021 2022 2021 Income Type Carrying Value Income (In millions) Wholly-owned real estate: Leased real estate $ 1,763 $ 1,934 $ 50 $ 53 $ 104 $ 107 Other real estate 477 473 66 46 96 80 Real estate joint ventures 5,810 5,466 122 31 232 37 Total real estate and real estate joint ventures $ 8,050 $ 7,873 $ 238 $ 130 $ 432 $ 224 The carrying value of wholly-owned real estate acquired through foreclosure was $180 million at both June 30, 2022 and December 31, 2021. Depreciation expense on real estate investments was $22 million and $42 million for the three months and six months ended June 30, 2022, respectively, and $22 million and $43 million for the three months and six months ended June 30, 2021, respectively. Real estate investments were net of accumulated depreciation of $613 million and $581 million at June 30, 2022 and December 31, 2021, respectively. Leases Leased Real Estate Investments - Operating Leases The Company, as lessor, leases investment real estate, principally commercial real estate for office and retail use, through a variety of operating lease arrangements, which typically include tenant reimbursement for property operating costs and options to renew or extend the lease. In some circumstances, leases may include an |
