Fidelity National Financial Inc

Previous wording

As of July 19, 2024, the MBA expects residential purchase transactions, residential refinance transactions and overall mortgage originations to increase in 2024, 2025 and 2026.

Current wording

As of October 27, 2024, the MBA expects residential purchase transactions to remain relatively flat through 2024 before increasing in 2025 and 2026, and expects residential refinance transactions to increase in 2024 and 2025 but remain flat in 2026, and overall mortgage originations to increase in 2024, 2025, and 2026.

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 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.

Current wording

A shortage in the supply of homes for sale, increasing home prices, high 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 3.5% in September 2024 as compared to the corresponding period in 2023 while median existing-home sales prices increased to $404,500, or approximately 3%, 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 4.1% and 3.6% in June 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 3.8% in September 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 and six months ended June 30, 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 nine months ended September 30, 2024 and 2023 when compared to recent prior periods.

Previous wording

Some of our F&G products include guaranteed minimum crediting rates, most notably our fixed rate annuities. As of June 30, 2024 and December 31, 2023, our reserves, net of reinsurance, and average crediting rate on our fixed rate annuities were $6.0 billion and 4%. We are required to pay the guaranteed minimum crediting rates even if earnings on our investment portfolio decline, which would negatively impact earnings. In addition, we expect more policyholders to hold policies with comparatively high guaranteed rates for a longer period in a low interest rate environment. Conversely, a rise in average yield on our investment portfolio would increase earnings if the average interest rate we pay on our products does not rise correspondingly. Similarly, we expect that policyholders would be less likely to hold policies with existing guarantees as interest rates rise and the relative value of other new business offerings are increased, which would negatively impact our earnings and cash flows.

Current wording

Some of our F&G products include guaranteed minimum crediting rates, most notably our fixed rate annuities. As of September 30, 2024 and December 31, 2023, our reserves, net of reinsurance, and average crediting rate on our fixed rate annuities were $7.0 billion and 4%, respectively. We are required to pay the guaranteed minimum crediting rates even if earnings on our investment portfolio decline, which would negatively impact earnings. In addition, we expect more policyholders to hold policies with comparatively high guaranteed rates for a longer period in a low interest rate environment. Conversely, a rise in average yield on our investment portfolio would increase earnings if the average interest rate we pay on our products does not rise correspondingly. Similarly, we expect that policyholders would be less likely to hold policies with existing guarantees as interest rates rise and the relative value of other new business offerings are increased, which would negatively impact our earnings and cash flows.

Previous wording

We operate in the sector of the insurance industry that focuses on the needs of middle-income Americans. The underserved middle-income market represents a major growth opportunity for us. As a tool for addressing the unmet need for retirement planning, we believe that many middle-income Americans have grown to appreciate the financial certainty that we believe annuities such as our indexed annuity products afford. For example, the fixed index annuity market grew from nearly $12 billion of sales in 2002 to $97 billion of sales in 2023 and the registered index-linked annuities ("RILA") market grew from $11 billion of sales in 2018 to $44 billion of sales in 2023. Additionally, this market demand has positively impacted the IUL market as it has expanded from $100 million of annual premiums in 2002 to $3 billion of annual premiums in 2023.

Current wording

We operate in the sector of the insurance industry that focuses on the needs of middle-income Americans. The underserved middle-income market represents a major growth opportunity for us. As a tool for addressing the unmet need for retirement planning, we believe that many middle-income Americans have grown to appreciate the financial certainty that we believe annuities such as our indexed annuity products afford. For example, the fixed index annuity market grew from nearly $12 billion of sales in 2002 to $97 billion of sales in 2023 and the registered index-linked annuities market grew from $11 billion of sales in 2018 to $44 billion of sales in 2023. Additionally, this market demand has positively impacted the IUL market as it has expanded from $100 million of annual sales in 2002 to $3 billion of annual sales in 2023.

Previous 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.

Current wording

Total revenues increased by $825 million in the three months ended September 30, 2024 and increased by $1,740 million in the nine months ended September 30, 2024 compared to the corresponding periods in 2023.

Previous 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.

Current wording

Income tax expense was $44 million and $141 million in the three months ended September 30, 2024 and 2023, respectively, and $223 million and $245 million in the nine months ended September 30, 2024 and 2023, respectively. Income tax expense as a percentage of earnings before income taxes was 14% and 23% in the three months ended September 30, 2024 and 2023, respectively, and 20% and 28% in the nine months ended September 30, 2024 and 2023, respectively. The decreases in income tax expense as a percentage of earnings before taxes in the three and nine months ended September 30, 2024 as compared to the corresponding periods in 2023 are primarily attributable to more valuation allowance being released in the three months ended September 30, 2024 as compared to the corresponding period in 2023, and less valuation allowance being recorded in the nine months ended September 30, 2024 as compared to the corresponding period in 2023.

Previous 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.

Current wording

Total revenues for the Title segment increased by $221 million, or 12%, in the three months ended September 30, 2024 and increased by $399 million, or 8%, in the nine months ended September 30, 2024 from the corresponding periods in 2023.

Previous 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%.

Current wording

Title premiums increased by $108 million, or 9%, in the three months ended September 30, 2024 from the corresponding period in 2023. The increase was comprised of an increase in Title premiums from direct operations of $47 million, or 9%, and an increase in Title premiums from agency operations of $61 million, or 8%.

Previous wording

Title premiums increased by $149 million, or 7% in the six months ended June 30, 2024 as compared to the corresponding period in 2023. The increase was compromised of an increase in Title premiums from direct operations of $35 million, or 4%, and an increase in Title premiums from agency operations of $114 million or 9%.

Current wording

Title premiums increased by $257 million, or 7%, in the nine months ended September 30, 2024 from the corresponding period in 2023. The increase was compromised of an increase in Title premiums from direct operations of $82 million, or 5%, and an increase in Title premiums from agency operations of $175 million, or 9%.

Previous 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.

Current wording

Title premiums from direct operations increased in the three months and nine months ended September 30, 2024 from the corresponding period in 2023. The increase was attributable to an increase in the average fee per file and an increase in 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 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.

Current wording

We experie nced an increase in closed title insurance order volumes from both purchase and refinance transactions in the three and nine months ended September 30, 2024 from the corresponding periods in 2023. Total closed order volume was 232,000 in the three months ended September 30, 2024 compared to 224,000 in the three months ended September 30, 2023 and 647,000 in the nine months ended September 30, 2024 compared to 645,000 in the nine months ended September 30, 2023. This represented an overall increase of 4% and 0% in the three and nine months ended September 30, 2024, respectively, from the corresponding periods in 2023. The increases were primarily attributable to lower average mortgage interest rates in the three and nine months ended September 30, 2024 when compared to the corresponding periods in 2023.

Previous wording

Total opened title insurance order volumes were stable in the three and six months ended June 30, 2024 as compared to the corresponding periods in 2023.

Current wording

Total opened title insurance order volumes increased in the three and nine months ended September 30, 2024 as compared to the corresponding periods in 2023.

Previous 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.

Current wording

The average fee per file in our direct operations was $3,708 and $3,682 in the three and nine months ended September 30, 2024, respectively, compared to $3,618 and $3,561 in the three and nine months ended September 30, 2023, respectively. The increases in average fee per file in the three and nine months ended September 30, 2024 as compared to the corresponding periods in 2023 are primarily attributable to home price appreciation. 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

Title premiums from agency operations increased $71 million, or 10%, in the three months ended June 30, 2024 and increased $114 million, or 9% in the six months ended June 30, 2024 from the corresponding period in 2023.

Current wording

Title premiums from agency operations increased $61 million, or 8%, in the three months ended September 30, 2024 and increased $175 million, or 9%, in the nine months ended September 30, 2024 from the corresponding periods in 2023.

Previous 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.

Current wording

Escrow, title-related and other fees increased by $4 million, or 1%, in the three months ended September 30, 2024 and increased $7 million, or 0.4%, in the nine months ended September 30, 2024 from the corresponding periods in 2023. Escrow and title-related fees increased by $8 million, or 4%, in the three months ended September 30, 2024 and $19 million, or 3%, in the nine months ended September 30, 2024 from the corresponding periods in 2023. The increases in escrow and title-related fees in the three and nine month periods ended September 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 $4 million, or 1%, in the three months ended September 30, 2024 and decreased $12 million, or 1%, in the nine months ended September 30, 2024. The changes in Other fees, excluding escrow and title-related fees, in the three and nine months ended September 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 $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.

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 $10 million, or 4%, in the nine months ended September 30, 2024 from the corresponding periods in 2023.

Previous 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.

Current wording

Net recognized gains were $63 million and $51 million in the three and nine months ended September 30, 2024, respectively. Net recognized losses were $46 million and $74 million in the three and nine months ended September 30, 2023, respectively. The increases in recognized gains and losses, net in the three and nine months ended September 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 $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.

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 $34 million, or 5%, in the three months ended September 30, 2024 and increased $78 million, or 4%, in the nine months ended September 30, 2024 compared to the corresponding periods in 2023. The increases are due to inflationary salary and increased variable costs from a modest increase in revenue and earnings. Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were 60% and 59% for the three months ended September 30, 2024 and 2023, respectively, and 62% and 61% for the nine months ended September 30, 2024 and 2023, respectively. Average employee count in the Title segment was 21,493 and 21,486 in the three months ended September 30, 2024 and 2023, respectively, and 21,167 and 21,510 in the nine months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

Other operating expenses increased by $15 million, or 5%, in the three months ended September 30, 2024, and decreased by $15 million, or 2%, in the nine months ended September 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 28% and 28% in the three months ended September 30, 2024 and 2023, respectively, and 29% and 30% in the nine months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

The claim loss provision for title insurance was $61 million and $57 million for the three months ended September 30, 2024 and 2023, respectively, and $168 million and $157 million for the nine months ended September 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

Through our majority-owned F&G subsidiary, we have five distribution channels across retail and institutional markets. Our three retail channels include agent-based Independent Marketing Organizations ("IMOs"), banks and broker dealers. We have deep, long-tenured relationships with our network of leading IMOs and their agents to serve the needs of the middle-income market and develop competitive annuity and life products to align with their evolving needs. Upon FNF’s ownership and F&G’s subsequent rating upgrades in mid-2020, we launched into banks and broker dealers. Further, in 2021, we launched into two institutional markets to originate Funding Agreement Backed Notes ("FABN") and pension risk transfer ("PRT") transactions. The FABN Program offers funding agreements to institutional clients by means of capital markets transactions through investment banks. The funding agreements issued under the FABN Program are in addition to those issued to the Federal Home Loan Bank of Atlanta ("FHLB"). The PRT solutions business was launched by building an experienced team and then working with brokers and institutional consultants for distribution. These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone.

Current wording

Through our majority-owned F&G subsidiary, we have five distribution channels across retail and institutional markets. Our three retail channels include agent-based Independent Marketing Organizations ("IMOs"), banks, and broker dealers. We have deep, long-tenured relationships with our network of leading IMOs and their agents to serve the needs of the middle-income market and develop competitive annuity and life products to align with their evolving needs. Upon FNF’s ownership and F&G’s subsequent rating upgrades in mid-2020, we launched into banks and broker dealers. Further, in 2021, we launched into two institutional markets to originate Funding Agreement Backed Notes ("FABN") and pension risk transfer ("PRT") transactions. The FABN Program offers funding agreements to institutional clients by means of capital markets transactions through investment banks. The funding agreements issued under the FABN Program are in addition to those issued to the Federal Home Loan Bank of Atlanta ("FHLB"). The PRT solutions business was launched by building an experienced team and then working with brokers and institutional consultants for distribution. These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone ISG-I Advisors LLC (“Blackstone”).

Previous wording

Market Risk Benefits ("MRBs") are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk. MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors. The change in fair value of MRBs generally reflects impacts from actual policyholder behavior (including surrenders of the benefit), changes in interest rates, and changes in equity market returns. Generally higher interest rates and equity returns result in gains whereas lower interest rates and equity returns result in losses.

Current wording

Market Risk Benefits ("MRBs") are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk. MRBs (inclusive of reinsured MRBs) are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors. The change in fair value of MRBs generally reflects impacts from actual policyholder behavior (including surrenders of the benefit), changes in interest rates, and changes in equity market returns. Generally, higher interest rates and equity returns result in gains whereas lower interest rates and equity returns result in losses. Reinsured MRBs are valued using a methodology consistent with direct MRBs, with the exception of the non-performance spread, which reflects the credit of the reinsurer.

Previous 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:

Current wording

The results of operations of our F&G segment for the three and nine months ended September 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 Earnings, for the three and six months ended June 30, 2024 and June 30, 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 nine months ended September 30, 2024 and 2023:

Previous 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.

Current wording

•Life-contingent pension risk transfer premiums decreased for the three months ended September 30, 2024 and increased for the nine months ended September 30, 2024, compared to the three and nine months ended September 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 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.

Current wording

•Surrender charges increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily reflecting increases in withdrawals from policyholders with surrender charges and market value adjustments, primarily on our indexed annuities policies.

Previous 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.

Current wording

•Policyholder fees and other income increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily due to increased cost of insurance charges, net of changes in URL on IUL policies from growth in business and higher guaranteed minimum withdrawal benefit (“GMWB”) rider fees. 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 and six months ended June 30, 2024 and June 30, 2023:

Current wording

Below is a summary of interest and investment income for the three and nine months ended September 30, 2024 and 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 $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.

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 $181 million and $463 million for the three and nine months ended September 30, 2024, respectively, and $102 million and $236 million for the three and nine months ended September 30, 2023, respectively.

Previous 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:

Current wording

Below is a summary of the major components included in recognized gains and losses, net for the three and nine months ended September 30, 2024 and 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 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.

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 $(177) million and $(186) million for the three and nine months ended September 30, 2024, respectively, and $43 million and $42 million for the three and nine month periods ended September 30, 2023, respectively.

Previous wording

•For the six 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 unrealized FVO gains on owned distribution investments and preferred securities and mark-to-market gains on our equity securities.

Current wording

•For the nine months ended September 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 unrealized FVO gains on owned distribution investments and mark-to-market gains on our preferred and equity securities.

Previous 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.

Current wording

•For the three and nine months ended September 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 realized losses on fixed maturity available-for-sale securities, partially offset by mark-to-market gains on our equity securities and realized gains on other invested assets..

Previous wording

•The fair value of reinsurance related embedded derivative is based on the change in fair value of the underlying assets held in the funds withheld (“FWH”) portfolio.

Current wording

•The fair value of reinsurance related embedded derivative is based on the change in fair value of the underlying assets held in the funds withheld portfolio.

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 and six months ended June 30, 2024 and June 30, 2023:

Current wording

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

Previous 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.

Current wording

•Realized gains and (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

•PRT agreements 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. PRT transactions are subject to fluctuation period to period.

Current wording

•PRT agreements decreased for the three months ended September 30, 2024 and increased for the nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, respectively, reflecting the timing of PRT transactions. PRT transactions are subject to fluctuation period to period.

Previous 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.

Current wording

•The indexed annuities/IUL market related liability movements during the three and nine months ended September 30, 2024 and 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 increased (decreased) the indexed annuities market related liability by $255 million and $(196) million during the three months ended September 30, 2024 and 2023. The change in risk free rates and non-performance spreads increased (decreased) the FIA market related liability by $87 million and $(190) million during the nine months ended September 30, 2024 and 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.