Fidelity National Financial Inc

Previous wording

Average interest rates for a 30-year fixed rate mortgage increased to 6.8% for the three months ended March 31, 2024, as compared to 6.4% for the corresponding period of 2023. On May 1, 2024, the Federal Reserve held the benchmark interest rate steady at 5.25% to 5.50% .

Current wording

Average interest rates for a 30-year fixed rate mortgage increased to 7.0% and 6.9% for the three and six months ended June 30, 2024, respectively, as compared to 6.5% for the corresponding periods of 2023. On July 31, 2024, the Federal Reserve held the benchmark interest rate steady at 5.25% to 5.50%.

Previous wording

A shortage in the supply of homes for sale, increasing home prices, rising mortgage interest rates, disrupted labor markets and geopolitical uncertainties associated with international conflicts created some volatility in the residential real estate market in 2023, which has continued into 2024. Existing-home sales decreased 4% in March 2024 as compared to the corresponding period in 2023 while median existing-home sales prices increased to $393,500, or approximately 5%, from the corresponding period in 2023.

Current wording

A shortage in the supply of homes for sale, increasing home prices, rising mortgage interest rates, disrupted labor markets and geopolitical uncertainties associated with international conflicts created some volatility in the residential real estate market in 2023 and 2024. Existing-home sales decreased 5% in June 2024 as compared to the corresponding period in 2023 while median existing-home sales prices increased to $426,900, or approximately 4%, from the corresponding period in 2023.

Previous wording

Other economic indicators used to measure the health of the U.S. economy, including the unemployment rate, have remained strong. The unemployment rate was 3.8% and 3.5% in March 2024 and 2023, respectively.

Current wording

Other economic indicators used to measure the health of the U.S. economy, including the unemployment rate, have remained strong. The unemployment rate was 4.1% and 3.6% in June 2024 and 2023, respectively.

Previous wording

We issue commercial title insurance policies in sectors including office, industrial, energy, hospitality, retail and multi-family, among others. The demand for commercial title insurance varies based on a variety of factors such as investor appetite, financing availability, and supply and demand in a particular area. Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business. Factors including U.S. tax reform and a shift in U.S. monetary policy have had, or are expected to have, varying effects on availability of financing in the U.S. Lower corporate and individual tax rates and corporate tax-deductibility of capital expenditures have provided increased capacity and incentive for investments in commercial real estate. In recent years, we experienced fluctuating demand in commercial real estate markets. Commercial volumes and commercial fee-per-file were depressed in the three months ended March 31, 2024 and 2023 when compared to recent prior periods.

Current wording

We issue commercial title insurance policies in sectors including office, industrial, energy, hospitality, retail and multi-family, among others. The demand for commercial title insurance varies based on a variety of factors such as investor appetite, financing availability, and supply and demand in a particular area. Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business. Factors including U.S. tax reform and a shift in U.S. monetary policy have had, or are expected to have, varying effects on availability of financing in the U.S. Lower corporate and individual tax rates and corporate tax-deductibility of capital expenditures have provided increased capacity and incentive for investments in commercial real estate. In recent years, we experienced fluctuating demand in commercial real estate markets. Commercial volumes and commercial fee-per-file were depressed in the three and six months ended June 30, 2024 and 2023 when compared to recent prior periods.

Previous wording

Seasonality. Historically, real estate transactions have produced seasonal revenue fluctuations in the real estate industry. The first calendar quarter is typically the weakest quarter in terms of revenue due to the generally low volume of home sales during January and February. The second and third calendar quarters are typically the strongest quarters in terms of revenue, primarily due to a higher volume of residential transactions in the spring and summer months. The fourth quarter is typically strong due to the desire of commercial entities to complete transactions by year-end. We have noted short-term fluctuations through recent years in resale and refinance transactions as a result of changes in interest rates. The rapid rise in mortgage rates and resulting decline in housing affordability has resulted in deviations in seasonality from historical patterns in 2023, which has continued into 2024.

Current wording

Seasonality. Historically, real estate transactions have produced seasonal revenue fluctuations in the real estate industry. The first calendar quarter is typically the weakest quarter in terms of revenue due to the generally low volume of home sales during January and February. The second and third calendar quarters are typically the strongest quarters in terms of revenue, primarily due to a higher volume of residential transactions in the spring and summer months. The fourth quarter is typically strong due to the desire of commercial entities to complete transactions by year-end. We have noted short-term fluctuations through recent years in resale and refinance transactions as a result of changes in interest rates.

Previous wording

Net Earnings (loss). The following table presents certain financial data for the periods indicated:

Current wording

Net Earnings. The following table presents certain financial data for the periods indicated:

Previous wording

Total revenues increased by $825 million in the three months ended March 31, 2024 compared to the corresponding period in 2023.

Current wording

Total revenues increased by $90 million in the three months ended June 30, 2024 and increased by $915 million in the six months ended June 30, 2024 compared to the corresponding periods in 2023.

Previous wording

Net earnings increased by $357 million in the three months ended March 31, 2024 compared to the corresponding period in 2023.

Current wording

Net earnings increased by $100 million in the three months ended June 30, 2024 and increased by $457 million in the six months ended June 30, 2024 compared to the corresponding periods in 2023.

Previous wording

Income tax expense was $63 million and $14 million in the three months ended March 31, 2024 and 2023, respectively. Income tax expense as a percentage of earnings before income taxes was 19% and (19)% in the three months ended March 31, 2024 and 2023. The increase in income tax expense as a percentage of earnings (loss) before taxes in the three months ended March 31, 2024 as compared to the corresponding period in 2023 is primarily attributable to the 2023 period having income tax expense, due to a valuation allowance increase, despite there being a 2023 pre-tax loss.

Current wording

Income tax expense was $116 million and $90 million in the three months ended June 30, 2024 and 2023, respectively, and $179 million and $104 million in the six months ended June 30, 2024 and 2023, respectively. Income tax expense as a percentage of earnings before income taxes was 25% and 27% in the three months ended June 30, 2024 and 2023, respectively, and 23% and 40% in the six months ended June 30, 2024 and 2023, respectively. The decreases in income tax expense as a percentage of earnings before taxes in the three and six months ended June 30, 2024 as compared to the corresponding periods in 2023 are primarily attributable to the recording of valuation allowances in the 2023 periods.

Previous wording

The Organization for Economic Cooperation and Development (OECD) has developed guidance known as the Global Anti-Base Erosion Pillar Two minimum tax rules, or Pillar Two, which generally provide for a minimum effective tax rate of 15% and are intended to apply to tax years beginning in 2024. The Company does not expect these rules to have a material impact on our income tax provision in 2024.

Current wording

The Organization for Economic Cooperation and Development has developed guidance known as the Global Anti-Base Erosion Pillar Two minimum tax rules, or Pillar Two, which generally provide for a minimum effective tax rate of 15% and are intended to apply to tax years beginning in 2024. As of June 30, 2024, based on the countries in which we do business that have enacted legislation, the Company does not expect these rules to have a material impact on our income tax provision.

Previous wording

Total revenues for the Title segment increased by $111 million, or 7%, in the three months ended March 31, 2024 from the corresponding period in 2023.

Current wording

Total revenues for the Title segment increased by $67 million, or 4%, in the three months ended June 30, 2024 and increased by $178 million, or 5% in the six months ended June 30, 2024 from the corresponding periods in 2023.

Previous wording

Title premiums increased by $55 million, or 6% in the three months ended March 31, 2024 from the corresponding period in 2023. The increase was comprised of an increase in Title premiums from direct operations of $12 million, or 3%, and an increase in Title premiums from agency operations of $43 million, or 8%.

Current wording

Title premiums increased by $94 million, or 7% in the three months ended June 30, 2024 from the corresponding period in 2023. The increase was comprised of an increase in Title premiums from direct operations of $23 million, or 4%, and an increase in Title premiums from agency operations of $71 million, or 10%.

Previous wording

Title premiums from direct operations increased in the three months ended March 31, 2024 from the corresponding period in 2023. The increase was primarily attributable to an increase in the average fee per file, partially offset by decreased closed order volume.

Current wording

Title premiums from direct operations increased in the three months and six months ended June 30, 2024 from the corresponding period in 2023. The increase was primarily attributable to an increase in the average fee per file, partially offset by decreased closed order volume.

Previous wording

We experie nced a slight decrease in closed title insurance order volumes from both purchase and refinance transactions in the three months ended March 31, 2024 from the corresponding period in 2023. Total closed order volume was 186,000 in the three months ended March 31, 2024 compared to 188,000 in the three months ended March 31, 2023. This represented an overall decrease of 1% in the three months ended March 31, 2024 from the corresponding period in 2023. The decrease was primarily attributable to higher average mortgage interest rates in the three months ended March 31, 2024 when compared to the corresponding period in 2023.

Current wording

We experie nced a slight decrease in closed title insurance order volumes from both purchase and refinance transactions in the three months ended June 30, 2024 from the corresponding period in 2023. Total closed order volume was 229,000 in the three months ended June 30, 2024 compared to 233,000 in the three months ended June 30, 2023 and 415,000 in the six months ended June 30, 2024 compared to 421,000 in the six months ended June 30, 2023. This represented an overall decrease of 2% and 1% in the three and six months ended June 30, 2024, respectively, from the corresponding periods in 2023. The decreases were primarily attributable to higher average mortgage interest rates in the three and six months ended June 30, 2024 when compared to the corresponding periods in 2023.

Previous wording

The average fee per file in our direct operations was $3,555 in the three months ended March 31, 2024 compared to $3,446 in the three months ended March 31, 2023. The increase in average fee per file in the three months ended March 31, 2024 reflects home price appreciation and an increased proportion of purchase transactions relative to total closed orders compared to the corresponding period in 2023. The fee per file tends to change as the mix of refinance and purchase transactions changes, because purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher fees, whereas refinance transactions only require a lender’s policy, resulting in lower fees.

Current wording

The average fee per file in our direct operations was $3,759 and $3,668 in the three and six months ended June 30, 2024, respectively, compared to $3,598 and $3,530 in the three and six months ended June 30, 2023, respectively. The increase in average fee per file in the three and six months ended June 30, 2024 reflects home price appreciation and an increased proportion of purchase transactions relative to total closed orders compared to the corresponding periods in 2023. The fee per file tends to change as the mix of refinance and purchase transactions changes, because purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher fees, whereas refinance transactions only require a lender’s policy, resulting in lower fees.

Previous wording

Escrow, title-related and other fees increased by $13 million, or 3%, in the three months ended March 31, 2024 from the corresponding period in 2023. Escrow fees increased by $7 million, or 4%, in the three months ended March 31, 2024 from the corresponding period in 2023. The increase in the three month period ended March 31, 2024 as compared to the corresponding period in 2023 is relatively consistent with the increase in direct premiums. Other fees, excluding escrow fees, increased by $6 million, or 2%, in the three months ended March 31, 2024. The increase in Other fees was attributable to various immaterial items.

Current wording

Escrow, title-related and other fees decreased by $10 million, or 2%, in the three months ended June 30, 2024 and increased $3 million or 0% in the six months ended June 30, 2024 from the corresponding periods in 2023. Escrow and title-related fees increased by $5 million, or 2%, in the three months ended June 30, 2024 and $11 million, or 3% in the six months ended June 30, 2024 from the corresponding periods in 2023. The increases in escrow and title-related fees in the three and six month periods ended June 30, 2024 as compared to the corresponding periods in 2023 are relatively consistent with the increases in direct premiums. Other fees, excluding escrow and title-related fees, decreased by $15 million, or 4%, in the three months ended June 30, 2024 and decreased $8 million, or 1% in the six months ended June 30, 2024. The changes in Other fees, excluding escrow and title-related fees, in the three and six months ended June 30, 2024 as compared to the prior periods in 2023 were attributable to various immaterial items.

Previous wording

Interest and investment income levels are primarily a function of securities markets, interest rates and the amount of cash available for investment. Interest and investment income increased $2 million, or 2%, in the three months ended March 31, 2024 from the corresponding period in 2023. The increase was attributable to various immaterial items.

Current wording

Interest and investment income levels are primarily a function of securities markets, interest rates and the amount of cash available for investment. Interest and investment income increased $8 million, or 10%, in the three months ended June 30, 2024, and increased $10 million, or 6% in the six months ended June 30, 2024 from the corresponding periods in 2023. The increases were attributable to various immaterial items.

Previous wording

Net recognized gains were $63 million and $22 million in the three months ended March 31, 2024 and 2023, respectively. The increase in recognized gains and losses, net in the three months ended March 31, 2024 as compared to the corresponding period in 2023 is primarily attributable to fluctuations in non-cash valuation changes on our equity and preferred security holdings in addition to various other immaterial items.

Current wording

Net recognized losses were $75 million and $50 million in the three months ended June 30, 2024 and 2023, respectively. Net recognized losses were $12 million and $28 million in the six months ended June 30, 2024 and 2023, respectively. The changes in recognized gains and losses, net in the three and six months ended June 30, 2024 as compared to the corresponding periods in 2023 are primarily attributable to fluctuations in non-cash valuation changes on our equity and preferred security holdings in addition to various other immaterial items.

Previous wording

Personnel costs include base salaries, commissions, benefits, stock-based compensation and bonuses paid to employees, and are one of our most significant operating expenses. Personnel costs increased $20 million, or 3%, in the three months ended March 31, 2024 compared to the corresponding period in 2023. The increase is due to inflationary salary increases, partially offset by lower average head count. Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were 67% for the three months ended March 31, 2024 and 2023. Average employee count in the Title segment was 20,516 and 21,516 in the three months ended March 31, 2024 and 2023, respectively.

Current wording

Personnel costs include base salaries, commissions, benefits, stock-based compensation and bonuses paid to employees, and are one of our most significant operating expenses. Personnel costs increased $24 million, or 4%, in the three months ended June 30, 2024 and increased $44 million, or 4% in the six months ended June 30, 2024 compared to the corresponding periods in 2023. The increases are due to inflationary salary increases, partially offset by lower average head count. Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were 60% and 58% for the three months ended June 30, 2024 and 2023, respectively, and 63% and 62% for the six months ended June 30, 2024 and 2023, respectively. Average employee count in the Title segment was 21,166 and 21,527 in the three months ended June 30, 2024 and 2023, respectively, and 20,841 and 21,521 in the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Other operating expenses decreased by $11 million, or 4%, in the three months ended March 31, 2024, from the corresponding period in 2023. Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and recognized gains and losses were 31% and 33% in the three months ended March 31, 2024 and 2023, respectively.

Current wording

Other operating expenses decreased by $19 million, or 6%, in the three months ended June 30, 2024, and decreased by $30 million, or 5% in the six months ended June 30, 2024 from the corresponding periods in 2023. Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and recognized gains and losses were 27% and 29% in the three months ended June 30, 2024 and 2023, respectively, and 29% and 31% in the six months ended June 30, 2024 and 2023, respectively.

Previous wording

The claim loss provision for title insurance was $46 million and $44 million for the three months ended March 31, 2024 and 2023, respectively. The provision reflects an average provision rate of 4.5% of title premiums in all periods. We continually monitor and evaluate our loss provision level, actual claims paid, and the loss reserve position each quarter. This loss provision rate is set to provide for losses on current year policies, but due to development of prior years and our long claim duration, it periodically includes amounts of estimated adverse or positive development on prior years' policies.

Current wording

The claim loss provision for title insurance was $61 million and $56 million for the three months ended June 30, 2024 and 2023, respectively, and $107 million and $100 million for the six months ended June 30, 2024, and 2023, respectively. The provision reflects an average provision rate of 4.5% of title premiums in all periods. We continually monitor and evaluate our loss provision level, actual claims paid, and the loss reserve position each quarter. This loss provision rate is set to provide for losses on current year policies, but due to development of prior years and our long claim duration, it periodically includes amounts of estimated adverse or positive development on prior years' policies.

Previous wording

F&G hedges certain portions of its exposure to product related equity market risk by entering into derivative transactions. We purchase derivatives consisting predominantly of call options and, to a lesser degree, futures contracts (specifically for indexed annuity contracts) on the equity indices underlying the applicable policy. These derivatives are used to offset the reserve impact of the index credits due to policyholders under the indexed annuity and IUL contracts. The majority of all such call options are one-year options purchased to match the funding requirements underlying the indexed annuity/IUL contracts. We attempt to manage the cost of these purchases through the terms of our indexed annuity/IUL contracts, which permit us to change caps, spread, or participation rates on each policy's annual anniversary, subject to certain guaranteed minimums that must be maintained. The call options and futures contracts are marked to fair value with the change in fair value included as a component of net investment gains (losses). The change in fair value of the call options and futures contracts includes the gains and losses recognized at the expiration of the instruments’ terms or upon early termination and the changes in fair value of open positions. In addition, to reduce market risks from interest rate changes on our earnings associated with our floating rate investments, during 2023 we began to execute pay-float and receive-fixed interest rate swaps.

Current wording

F&G hedges certain portions of its exposure to product related equity market risk by entering into derivative transactions. We purchase derivatives consisting predominantly of equity options and, to a lesser degree, futures contracts (specifically for indexed annuity contracts) on the equity indices underlying the applicable policy. These derivatives are used to offset the reserve impact of the index credits due to policyholders under the indexed annuity and IUL contracts. The majority of all such equity options are one-year options purchased to match the funding requirements underlying the indexed annuity/IUL contracts. We attempt to manage the cost of these purchases through the terms of our indexed annuity/IUL contracts, which permit us to change caps, spread, or participation rates on each policy's annual anniversary, subject to certain guaranteed minimums that must be maintained. The equity options and futures contracts are marked to fair value with the change in fair value included as a component of net investment gains (losses). The change in fair value of the equity options and futures contracts includes the gains and losses recognized at the expiration of the instruments’ terms or upon early termination and the changes in fair value of open positions. In addition, to reduce market risks from interest rate changes on our earnings associated with our floating rate investments, during 2023 we began to execute pay-float and receive-fixed interest rate swaps.

Previous wording

Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed annuity/IUL policies. With respect to indexed annuities/IULs, which includes the expenses incurred to fund the index credits. Proceeds received upon expiration or early termination of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives and are largely offset by an expense for index credits earned on annuity contractholder fund balances.

Current wording

Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed annuity/IUL policies. With respect to indexed annuities/IULs, which includes the expenses incurred to fund the index credits. Proceeds received upon expiration or early termination of equity options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives and are largely offset by an expense for index credits earned on annuity contractholder fund balances.

Previous wording

The results of operations of our F&G segment for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

The results of operations of our F&G segment for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Life insurance premiums and other fees primarily reflect premiums on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on indexed annuity policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations). The following table summarizes the Life insurance premiums and other fees, on the unaudited Condensed Consolidated Statements of Operations (in millions), for the three months ended March 31, 2024 and March 31, 2023:

Current wording

Life insurance premiums and other fees primarily reflect premiums on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on indexed annuity policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations). The following table summarizes the Life insurance premiums and other fees, on the unaudited Condensed Consolidated Statements of Earnings, for the three and six months ended June 30, 2024 and June 30, 2023:

Previous wording

•Life-contingent pension risk transfer premiums increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, reflecting the higher PRT sales.

Current wording

•Life-contingent pension risk transfer premiums decreased for the three months ended June 30, 2024 and increased for the six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively, reflecting the timing of PRT transactions. As noted above, PRT premiums are subject to fluctuation period to period.

Previous wording

•Surrender charges increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily reflecting increases in withdrawals from policyholders with surrender charges and market value adjustments (MVAs), primarily on our indexed annuities policies.

Current wording

•Surrender charges increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily reflecting increases in withdrawals from policyholders with surrender charges and market value adjustments (“MVAs”), primarily on our indexed annuities policies.

Previous wording

•Policyholder fees and other income increased for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to increased GMWB rider fees and cost of insurance charges, net of changes in URL on IUL policies from growth in business. GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.

Current wording

•Policyholder fees and other income increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily due to increased guaranteed minimum withdrawal benefit (“GMWB”) rider fees and cost of insurance charges, net of changes in URL on IUL policies from growth in business. GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.

Previous wording

Below is a summary of interest and investment income for the three months ended March 31, 2024 and March 31, 2023:

Current wording

Below is a summary of interest and investment income for the three and six months ended June 30, 2024 and June 30, 2023:

Previous wording

Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $127 million and $58 million for the three months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements, which is passed along to the reinsurer in accordance with the terms of these agreements. Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $155 million and $282 million for the three and six months ended June 30, 2024, respectively, and $76 million and $134 million for the three and six months ended June 30, 2023, respectively.

Previous wording

Below is a summary of the major components included in recognized gains and losses, net for the three months ended March 31, 2024 and March 31, 2023:

Current wording

Below is a summary of the major components included in recognized gains and losses, net for the three and six months ended June 30, 2024 and June 30, 2023:

Previous wording

Recognized gains and losses, net is shown net of amounts attributable to certain funds withheld reinsurance agreements, which is passed along to the reinsurer in accordance with the terms of these agreements. Recognized losses attributable to these agreements, and thus excluded from the totals in the table above, was $19 million and $22 million for the three months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

Recognized gains and losses, net is shown net of amounts attributable to certain funds withheld reinsurance agreements, which is passed along to the reinsurer in accordance with the terms of these agreements. Recognized net gains (losses) attributable to these agreements, and thus excluded from the totals in the table above, was $10 million and $(9) million for the three and six months ended June 30, 2024, respectively, and $21 million and $(1) million for the three and six month periods ended June 30, 2023, respectively.

Previous wording

•For the three months ended March 31, 2024, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of unrealized fair value option (“FVO”) gains on owned distribution investments and preferred securities, partially offset by realized losses on fixed maturity available-for-sale securities and mark-to-market losses on our equity securities.

Current wording

•For the three months ended June 30, 2024, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized gains on fixed maturity available-for-sale securities, mark-to-market gains on our equity securities and unrealized fair value option (“FVO”) gains on owned distribution investments.

Previous wording

•For the three months ended March 31, 2023, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of mark-to-market losses on our equity securities and realized losses on fixed maturity available-for-sale securities.

Current wording

•For the three and six months ended June 30, 2023, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of mark-to-market losses on our equity securities and realized losses on fixed maturity available-for-sale securities.

Previous wording

•For all periods, net realized and unrealized gains (losses) on certain derivative instruments primarily relate to the net realized and unrealized gains (losses) on options and futures used to hedge indexed annuity and IUL products, including gains on option and futures expiration and changes in the fair value of interest rate swaps. See the table below for primary drivers of gains (losses) on certain derivatives.

Current wording

•For all periods, net realized and unrealized gains (losses) on certain derivative instruments primarily relate to the net realized and unrealized gains (losses) on equity options and futures used to hedge indexed annuity and IUL products, including gains on option and futures expiration and changes in the fair value of interest rate swaps. See the table below for primary drivers of gains (losses) on certain derivatives.

Previous wording

We utilize a combination of static (call options) and dynamic (long futures contracts) instruments in our product hedging strategy. A substantial portion of the call options and futures contracts are based upon the S&P 500 Index with the remainder based upon other equity, bond and gold market indices.

Current wording

We utilize a combination of static (equity options) and dynamic (long futures contracts) instruments in our product hedging strategy. A substantial portion of the equity options and futures contracts are based upon the S&P 500 Index with the remainder based upon other equity, bond and gold market indices.

Previous wording

The components of the realized and unrealized gains (losses) on certain derivative instruments hedging our indexed annuity, universal life products and floating rate investments are summarized in the table below for the three months ended March 31, 2024 and March 31, 2023:

Current wording

The components of the realized and unrealized gains (losses) on certain derivative instruments hedging our indexed annuity, universal life products and floating rate investments are summarized in the table below for the three and six months ended June 30, 2024 and June 30, 2023:

Previous wording

•Realized gains and (losses) on certain derivative instruments are directly correlated to the performance of the indices upon which the call options and futures contracts are based and the value of the derivatives at the time of expiration compared to the value at the time of purchase.

Current wording

•Realized gains (losses) on certain derivative instruments are directly correlated to the performance of the indices upon which the equity options and futures contracts are based and the value of the derivatives at the time of expiration compared to the value at the time of purchase.

Previous wording

•The changes in unrealized gains (losses) due to the net changes in fair value of call options and futures contracts are primarily driven by the underlying performance of the S&P 500 Index during each respective period relative to the S&P 500 Index on the policyholder buy dates.

Current wording

•The changes in unrealized gains (losses) due to the net changes in fair value of equity options and futures contracts are driven by the underlying performance of the indices (for example, the S&P 500 Index) upon which the equity options and futures contracts are based during each respective period relative to the respective indices on the policyholder buy dates.

Previous wording

•The indexed annuities/IUL market related liability movements during the three months ended March 31, 2024 and March 31, 2023, respectively, are mainly driven by changes in the equity markets, non-performance spreads, and risk free rates during the periods. The change in risk free rates and non-performance spreads (decreased) increased the indexed annuities market related liability by $(84) million and $65 million during the three months ended March 31, 2024 and March 31, 2023, respectively. The remaining changes in market value of the market related liability movements for all periods was driven by equity market impacts. See“Revenues — Recognized gains and (losses), net” above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

Current wording

•The indexed annuities/IUL market related liability movements during the three and six months ended June 30, 2024 and June 30, 2023, respectively, are mainly driven by changes in the equity markets, non-performance spreads, and risk free rates during the periods. The change in risk free rates and non-performance spreads (decreased) increased the indexed annuities market related liability by $(85) million and $(59) million during the three months ended June 30, 2024 and June 30, 2023. The change in risk free rates and non-performance spreads (decreased) increased the FIA market related liability by $(168) million and $6 million during the six months ended June 30, 2024 and June 30, 2023, respectively. The remaining changes in market value of the market related liability movements for all periods was driven by equity market impacts. See “Revenues—Recognized gains and losses, net”above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.