4 unchanged sentences
Our policy is to generally match assets, liabilities and required capital for each individual jurisdiction in local currency, which would include the use of derivatives.
−Removed: We do not hedge our net asset non-U.S.
−Removed: dollar capital positions.
We occasionally engage in hedging activity for planned cross border transactions.
4 unchanged sentences
Effective April 1, 2022, Turkey was designated as a highly inflationary economy and therefore we changed the functional currency for our Turkish operations from the Turkish lira to the U.S.
−Removed: Our net assets denominated in the Turkish lira represent less than 0.1% of consolidated shareholders’ equity.
+Added: Our net assets denominated in the Turkish lira represented less than 0.1% of consolidated shareholders’ equity.
Therefore, this change in the functional currency of our Turkish operations did not have a material impact on our financial condition or results of operations.
7 unchanged sentences
The FVL calculation is directly affected by market factors, including equity levels, interest rate levels, credit risk, and implied volatilities, as well as policyholder behaviors, such as annuitization and lapse rates, and policyholder mortality.
−Removed: The tables below are estimates of the sensitivities to instantaneous changes in economic inputs (e.g., equity shock, interest rate shock etc.) at June 30, 2022, of the FVL and of the fair value of specific derivative instruments held (hedge value) to partially offset the risk in the variable annuity guarantee reinsurance portfolio.
+Added: The tables below are estimates of the sensitivities to instantaneous changes in economic inputs (e.g., equity shock, interest rate shock etc.) at September 30, 2022, of the FVL and of the fair value of specific derivative instruments held (hedge value) to partially offset the risk in the variable annuity guarantee reinsurance portfolio.
The following assumptions should be considered when using the below tables:
13 unchanged sentences
AA-rated credit spreads are a proxy for both our own credit spreads and the credit spreads of the ceding insurers.
−Removed: • The hedge sensitivity is from June 30, 2022, market levels and only applicable to the equity and interest rate sensitivities table below.
+Added: • The hedge sensitivity is from September 30, 2022, market levels and only applicable to the equity and interest rate sensitivities table below.
• The sensitivities do not scale linearly and may be proportionally greater for larger movements in the market factors.
18 unchanged sentences
Increase/(decrease) in net income $ 53 $ (59) $ (1) $ 1 $ (14) $ 13
−Removed: All our variable annuity reinsurance treaties include annual or aggregate claim limits and many include an aggregate deductible which limit the net amount at risk under these programs.
−Removed: For an estimated impact on the variable annuity net amount at risk from changes in equity market levels, refer to Item 7A in our 2021 Form 10-K.
−Removed: This information will be updated and disclosed in interim filings if the sensitivities change materially from the tables disclosed in the 2021 Form 10-K.
+Added: Variable Annuity Net Amount at Risk
+Added: All our VA reinsurance treaties include annual or aggregate claim limits and many include an aggregate deductible which limit the net amount at risk under these programs.
+Added: The tables below present the net amount at risk at September 30, 2022, following an immediate change in equity market levels, assuming all global equity markets are impacted equally.
+Added: a) Reinsurance covering the GMDB risk only
+Added: (in millions of U.S.
+Added: dollars) +20 % Flat -20 % -40 % -60 % -80 %
+Added: GMDB net amount at risk $ 359 $ 610 $ 784 $ 829 $ 743 $ 618
+Added: Claims at 100% immediate mortality 159 162 153 142 129 117
+Added: The treaty claim limits function as a ceiling as equity markets fall.
+Added: As the shocks in the table above become incrementally more negative, the impact on the NAR and claims at 100 percent mortality begin to drop due to the specific nature of these claim limits, many of which are annual claim limits calculated as a percentage of the reinsured account value.
+Added: There is also some impact due to a small portion of the GMDB reinsurance under which claims are positively correlated to equity markets (claims decrease as equity markets fall).
+Added: b) Reinsurance covering the GLB risk only
+Added: (in millions of U.S.
+Added: dollars) +20 % Flat -20 % -40 % -60 % -80 %
+Added: GLB net amount at risk $ 1,186 $ 1,625 $ 2,272 $ 2,630 $ 2,980 $ 3,154
+Added: The treaty claim limits cause the net amount at risk to increase at a declining rate as equity markets fall.
+Added: c) Reinsurance covering both the GMDB and GLB risks on the same underlying policyholders
+Added: (in millions of U.S.
+Added: dollars) +20 % Flat -20 % -40 % -60 % -80 %
+Added: GMDB net amount at risk $ 56 $ 66 $ 76 $ 85 $ 92 $ 98
+Added: GLB net amount at risk 477 584 704 821 920 922
+Added: Claims at 100% immediate mortality 33 33 33 33 33 33
+Added: The treaty limits control the increase in the GMDB net amount at risk as equity markets fall.
+Added: The GMDB net amount at risk continues to increase as equity markets fall because most of these reinsurance treaties do not have annual claim limits calculated as a percentage of the underlying account value.
+Added: The treaty limits cause the GLB net amount at risk to increase at a declining rate as equity markets fall.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.