32 added · 35 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
Certain events including, but not limited to, a significant adverse change in legal factors or the business environment, an adverse action by a regulator or rating agency, or unanticipated competition may cause us to review goodwill for impairment more frequently than annually. 22 T able of Contents Long-lived assets, including assets such as real estate, right-of-use assets, and internal-use software, also may require impairment testing to determine whether changes in circumstances indicate that we may be unable to recover the carrying amount.
To the extent pandemics or other public health issues adversely affect our business, financial position, results of operations, liquidity and capital resources, and overall business operations, it may also have the effect of heightening many of the other risks disclosed herein in this Item 1A "Risk Factors". 26 T able of Contents Operational Risk Factors A cyber attack or other security breach could disrupt our operations, result in compromised data, the unauthorized disclosure or loss of confidential data, damage our reputation or relationships, and expose us to significant financial and legal liability, which may adversely affect our business, results of operations, or financial condition.
Although we have insurance against some cyber risks and attacks, we may be subject to litigation and financial losses that exceed our policy limits, are subject to deductibles or are not covered under any of our current insurance policies. 27 T able of Contents The failure of our business recovery and incident management processes to resume our business operations in the event of a natural catastrophe, cyber attack, or other event could adversely affect our profitability, results of operations, or financial condition.
Further, such an event may result in the impairment of certain assets, including premiums receivable, goodwill, VOBA and other intangibles, property and equipment, right-of-use assets, and deferred tax assets.
At the same time, our failure to adopt AI technology quickly enough could put us at a competitive disadvantage.
In accordance with accounting guidance, we test for impairment at the reporting unit level.
Guaranteed renewable contracts that are not noncancelable can be repriced to reflect adverse experience, but rate changes cannot be implemented as quickly as in the group disability market. 21 T able of Contents Group Life Insurance Group life insurance may be affected by the characteristics of the employees insured, the amount of insurance employees may elect voluntarily, our risk selection process, our ability to retain employer groups with favorable risk characteristics, the geographical concentration of employees, and mortality rates.
Public health issues, such as pandemics or disease outbreaks, may also impair borrowers’ ability to meet obligations on debt securities or mortgage loans we hold, which may also result in lower net investment income and increased credit losses.
There is no guarantee that processes we have developed in order to adapt to previous public health issues or pandemics would succeed in allowing us to adapt to any future pandemic or other public health issue, which may have materially different characteristics than previous pandemics or public health issues.
We also process payments to claimants under our insurance policies, including by physical and electronic means, which could subject us or our customers to attacks from threat actors, including attempted theft of credentials from our customers or other social engineering attacks directed at our customers.
While our funding agreements with the FHLB are currently used for the purpose of investing in either short-term investments, matched fixed maturity securities, or matched commercial mortgage loans, we maintain the option to utilize these agreements for liquidity purposes.
Through proactive workforce planning and investment in employee development, we work to minimize potential impacts on execution and ensure continuity in the capabilities needed to support 28 T able of Contents our strategy.
No longer disclosed
In addition, certain events including, but not limited to, a significant adverse change in legal factors or the business environment, an adverse action by a regulator or rating agency, or unanticipated competition would cause us to review goodwill for impairment more frequently than annually.
Long-lived assets, including assets such as real estate, right-of-use assets, and information technology software, also may require impairment testing to determine whether changes in circumstances indicate that we may be unable to recover the carrying amount.
In addition, these unfavorable developments may result in the impairment or write-off of certain assets such as premiums receivable, goodwill, property and equipment, VOBA, and right-of-use assets, or the establishment of a valuation allowance regarding the realization of our deferred tax assets.
Operational Risks A cyber attack or other security breach could disrupt our operations, result in compromised data, the unauthorized disclosure or loss of confidential data, damage our reputation or relationships, and expose us to significant financial and legal liability, which may adversely affect our business, results of operations, or financial condition.
The failure of our business recovery and incident management processes to resume our business operations in the event of a natural catastrophe, cyber attack, or other event could adversely affect our profitability, results of operations, or financial condition.
At the same time, our failure to adopt AI technology quickly enough could put us at a competitive disadvantage. 32 Table of Contents We may be unable to hire and retain qualified employees which may adversely affect our business, results of operations, or financial condition.
Although we have insurance against some cyber risks and attacks, we may be subject to litigation and financial losses that exceed our policy limits, are subject to deductibles or are not covered under any of our current insurance policies.
While this process led to favorable impacts on the solvency position of our U.K. business in earlier reporting periods, the completion of the review at December 31, 2024 did not have any further material impacts on the U.K. business solvency position.
In accordance with accounting guidance, we test for impairment at either the operating segment level or one level below.
Group Life Insurance Group life insurance may be affected by the characteristics of the employees insured, the amount of insurance employees may elect voluntarily, our risk selection process, our ability to retain employer groups with favorable risk characteristics, the geographical concentration of employees, and mortality rates.
Unfavorable economic or market conditions may result in lower sales, lower premium growth and persistency, higher claims incidence, unfavorable mortality, longer claims duration, and higher expenses which may adversely affect our results of operations or financial condition.
If economic conditions worsen as a result of a pandemic or other public health issue, that may adversely affect the financial condition of current or potential customers, which may result in lower sales or other negative impacts to customer purchasing patterns.