| NET INVESTMENT-RELATED GAINS (LOSSES) - INSURANCE |
NET INVESTMENT INCOME - INSURANCE Net investment income for Global Atlantic is comprised primarily of interest income, including amortization of premiums and accretion of discounts, based on yields that change due to expectations in projected cash flows, dividend income from common and preferred stock, earnings from investments accounted for under equity method accounting, and lease income on other investments. The components of net investment income were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | 2024 | | 2023 | | 2024 | | 2023 | | | | Fixed Maturity Securities – Interest and Other Income | $ | 1,428,699 | | | $ | 1,128,962 | | | $ | 4,173,336 | | | $ | 3,265,774 | | | | | Mortgage and Other Loan Receivables | 725,463 | | | 491,922 | | | 1,914,700 | | | 1,423,142 | | | | | Investments in Transportation and Other Leased Assets | 87,321 | | | 81,365 | | | 249,827 | | | 236,280 | | | | | Investments in Renewable Energy | 24,044 | | | 41,061 | | | 49,446 | | | 78,990 | | | | | Investments in Real Estate | 86,491 | | | 42,447 | | | 184,729 | | | 121,908 | | | | | Short-term and Other Investment Income | 170,157 | | | 52,072 | | | 462,408 | | | 184,366 | | | | | Income Assumed from Funds Withheld Receivable at Interest | 20,717 | | | 23,765 | | | 61,433 | | | 71,547 | | | | | Policy Loans | 20,180 | | | 9,588 | | | 64,260 | | | 28,289 | | | | | | | | | | | | | | | Income Ceded to Funds Withheld Payable at Interest | (640,254) | | | (331,691) | | | (1,746,618) | | | (950,174) | | | | | Gross Investment Income | 1,922,818 | | | 1,539,491 | | | 5,413,521 | | | 4,460,122 | | | | | Less Investment Expenses: | | | | | | | | | | | Investment Management and Administration | 146,693 | | | 83,424 | | | 379,015 | | | 248,902 | | | | | Transportation, Renewable Energy and Real-estate Asset Depreciation and Maintenance | 51,797 | | | 45,931 | | | 151,716 | | | 152,319 | | | | | Interest Expense on Derivative Collateral and Repurchase Agreements | 22,502 | | | (1,994) | | | 80,564 | | | 35,019 | | | | | Net Investment Income | $ | 1,701,826 | | | $ | 1,412,130 | | | $ | 4,802,226 | | | $ | 4,023,882 | | | |
Net investment-related losses from insurance operations primarily consists of (i) realized gains (losses) from the disposal of investments, (ii) unrealized gains (losses) from investments held for trading, equity securities, real estate investments accounted for under investment company accounting, and investments with fair value remeasurements recognized in earnings as a result of the election of a fair-value option, (iii) unrealized gains (losses) on funds withheld receivable and payable at interest, (iv) unrealized gains (losses) from derivatives (excluding certain derivatives designated as hedge accounting instruments), and (v) allowances for credit losses, and other impairments of investments. Net investment-related losses were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | 2024 | | 2023 | | 2024 | | 2023 | | | | Realized Losses on Available-for-sale Fixed Maturity Debt Securities | $ | (285,352) | | | $ | (15,156) | | | $ | (387,975) | | | $ | (67,195) | | | | | Credit Loss Allowances on Available-for-sale Securities | (59,195) | | | 24,916 | | | (50,455) | | | (82,024) | | | | | Credit Loss Allowances on Mortgage and Other Loan Receivables | (92,293) | | | (29,824) | | | (263,749) | | | (124,515) | | | | | Allowances on Unfunded Commitments | (1,663) | | | (5,100) | | | 25,598 | | | 26,494 | | | | | Impairment of Available-for-sale Fixed Maturity Debt Securities Due to Intent to Sell | — | | | — | | | — | | | (26,741) | | | | | Unrealized Gains (Losses) on Fixed Maturity Securities Classified as Trading | 1,056,483 | | | (594,218) | | | 471,647 | | | (284,555) | | | | | Unrealized Gains (Losses) on Investments Recognized under the Fair-value Option and Equity Investments | 20,589 | | | (6,750) | | | (56,579) | | | (65,963) | | | | | Unrealized Losses on Real Estate Investments Recognized at Fair Value Under Investment Company Accounting | (26,503) | | | (26,442) | | | (133,280) | | | (6,621) | | | | | Net (Losses) Gains on Derivative Instruments | (877,533) | | | 314,380 | | | (451,747) | | | 44,399 | | | | | Realized (Losses) Gains on Funds Withheld at Interest Payable Portfolio | (20,158) | | | 5,720 | | | 50,147 | | | 13,332 | | | | | Realized (Losses) Gains on Funds Withheld at Interest Receivable Portfolio | (24,194) | | | (4,821) | | | (47,242) | | | 892 | | | | | | | | | | | | | | | Other Realized Gains (Losses) | 73,848 | | | (935) | | | 63,558 | | | (7,116) | | | | | Net Investment-Related Losses | $ | (235,971) | | | $ | (338,230) | | | $ | (780,077) | | | $ | (579,613) | | | |
Allowance for credit losses Available-for-sale fixed maturity securities The table below presents a roll-forward of the allowance for credit losses recognized for fixed maturity securities held by Global Atlantic: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2024 | | Nine Months Ended September 30, 2024 | | Corporate | | Structured | | Total | | Corporate | | Structured | | Total | | Balance, as of Beginning of Period | $ | 64,610 | | | $ | 150,604 | | | $ | 215,214 | | | $ | 49,008 | | | $ | 219,704 | | | $ | 268,712 | | | Initial Credit Loss Allowance Recognized on Securities with No Previously Recognized Allowance | 19,132 | | | 292 | | | 19,424 | | | 41,475 | | | 1,552 | | | 43,027 | | | | | | | | | | | | | | | Accretion of Initial Credit Loss Allowance on PCD Securities | — | | | 125 | | | 125 | | | — | | | 440 | | | 440 | | | Reductions due to Sales (or Maturities, Pay Downs or Prepayments) During the Period of Securities with a Previously Recognized Credit Loss Allowance | (38) | | | (3,145) | | | (3,183) | | | (278) | | | (11,972) | | | (12,250) | | | | | | | | | | | | | | | Net Additions / Reductions for Securities with a Previously Recognized Credit Loss Allowance | 105 | | | 39,666 | | | 39,771 | | | 17,233 | | | (9,805) | | | 7,428 | | | Balances Charged Off | (22,840) | | | — | | | (22,840) | | | (46,469) | | | (12,377) | | | (58,846) | | | | | | | | | | | | | | | Balance, as of End of Period | $ | 60,969 | | | $ | 187,542 | | | $ | 248,511 | | | $ | 60,969 | | | $ | 187,542 | | | $ | 248,511 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2023 | | Nine Months Ended September 30, 2023 | | Corporate | | Structured | | Total | | Corporate | | Structured | | Total | | Balance, as of beginning of period | $ | 22,951 | | | $ | 206,347 | | | $ | 229,298 | | | $ | 1,298 | | | $ | 127,034 | | | $ | 128,332 | | | Initial Credit Loss Allowance Recognized on Securities with No Previously Recognized Allowance | 111 | | | 6,325 | | | 6,436 | | | 20,848 | | | 53,333 | | | 74,181 | | | | | | | | | | | | | | | Accretion of Initial Credit Loss Allowance on PCD Securities | — | | | 237 | | | 237 | | | — | | | 924 | | | 924 | | | Reductions due to Sales (or Maturities, Pay Downs or Prepayments) During the Period of Securities with a Previously Recognized Credit Loss Allowance | (584) | | | (3,836) | | | (4,420) | | | (584) | | | (10,497) | | | (11,081) | | | | | | | | | | | | | | | Net Additions / Reductions for Securities with a Previously Recognized Credit Loss Allowance | (4,038) | | | (27,314) | | | (31,352) | | | (3,122) | | | 10,965 | | | 7,843 | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance, as of End of Period | $ | 18,440 | | | $ | 181,759 | | | $ | 200,199 | | | $ | 18,440 | | | $ | 181,759 | | | $ | 200,199 | |
Mortgage and other loan receivables Changes in the allowance for credit losses on mortgage and other loan receivables held by Global Atlantic are summarized below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2024 | | Nine Months Ended September 30, 2024 | | Commercial Mortgage Loans | | Residential Mortgage Loans | | Consumer and Other Loan Receivables | | Total | | Commercial Mortgage Loans | | Residential Mortgage Loans | | Consumer and Other Loan Receivables | | Total | | Balance, as of Beginning of Period | $ | 308,367 | | | $ | 90,234 | | | $ | 202,655 | | | $ | 601,256 | | | $ | 319,631 | | | $ | 107,204 | | | $ | 175,608 | | | $ | 602,443 | | | Net Provision (Release) | 64,482 | | | 8,263 | | | 19,548 | | | 92,293 | | | 151,822 | | | (5,925) | | | 117,852 | | | 263,749 | | | | | | | | | | | | | | | | | | | Charge-offs | (44,487) | | | (2,334) | | | (34,932) | | | (81,753) | | | (143,091) | | | (5,116) | | | (117,496) | | | (265,703) | | | Recoveries of Amounts Previously Charged-off | 3,564 | | | — | | | 5,884 | | | 9,448 | | | 3,564 | | | — | | | 17,191 | | | 20,755 | | | Balance, as of End of Period | $ | 331,926 | | | $ | 96,163 | | | $ | 193,155 | | | $ | 621,244 | | | $ | 331,926 | | | $ | 96,163 | | | $ | 193,155 | | | $ | 621,244 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, 2023 | | Nine Months Ended September 30, 2023 | | Commercial Mortgage Loans | | Residential Mortgage Loans | | Consumer and Other Loan Receivables | | Total | | Commercial Mortgage Loans | | Residential Mortgage Loans | | Consumer and Other Loan Receivables | | Total | | Balance, as of Beginning of Period | $ | 239,866 | | | $ | 139,936 | | | $ | 198,247 | | | $ | 578,049 | | | $ | 227,315 | | | $ | 125,824 | | | $ | 207,089 | | | $ | 560,228 | | | Net Provision (Release) | 21,725 | | | (14,663) | | | 22,762 | | | 29,824 | | | 48,276 | | | 2,871 | | | 73,368 | | | 124,515 | | | | | | | | | | | | | | | | | | | Charge-offs | — | | | (2,648) | | | (41,520) | | | (44,168) | | | (14,000) | | | (6,070) | | | (111,468) | | | (131,538) | | | Recoveries of Amounts Previously Charged-off | — | | | — | | | 5,334 | | | 5,334 | | | — | | | — | | | 15,834 | | | 15,834 | | | Balance, as of End of Period | $ | 261,591 | | | $ | 122,625 | | | $ | 184,823 | | | $ | 569,039 | | | $ | 261,591 | | | $ | 122,625 | | | $ | 184,823 | | | $ | 569,039 | |
Proceeds and gross gains and losses from voluntary sales The proceeds from voluntary sales and the gross gains and losses on those sales of available-for-sale ("AFS") fixed maturity securities were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | | 2024 | | 2023 | | 2024 | | 2023 | | | | AFS Fixed Maturity Securities: | | | | | | | | | | | Proceeds from Voluntary Sales | $ | 6,975,389 | | | $ | 1,180,675 | | | $ | 15,934,858 | | | $ | 4,316,003 | | | | | Gross Gains | $ | 51,468 | | | $ | 15,152 | | | $ | 95,192 | | | $ | 45,717 | | | | | Gross Losses | $ | (334,092) | | | $ | (27,499) | | | $ | (453,105) | | | $ | (108,355) | | | |
The following reflects the reconciliation of the components of insurance intangibles to the total balance reported in the consolidated statements of financial condition as of September 30, 2024 and December 31, 2023: | | | | | | | | | | | | | September 30, | | December 31, | | 2024 | | 2023 | | Deferred Acquisition Costs, or "DAC" | $ | 1,577,789 | | | $ | 1,154,697 | | | Value of Business Acquired | 1,187,234 | | | 1,252,984 | | | Cost-of-reinsurance Intangibles | 2,327,885 | | | 2,043,143 | | | Total Insurance Intangibles | $ | 5,092,908 | | | $ | 4,450,824 | |
Deferred acquisition costs The following tables reflect the deferred acquisition costs roll-forward by product category for the nine months ended September 30, 2024 and 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2024 | | Fixed Rate Annuities | | Fixed Indexed Annuities | | Interest Sensitive Life | | Other | | Total | | Balance, as of the Beginning of the Period | $ | 373,863 | | | $ | 481,970 | | | $ | 132,079 | | | $ | 166,785 | | | $ | 1,154,697 | | | Capitalizations | 178,589 | | | 292,109 | | | 6,266 | | | 112,252 | | | 589,216 | | | Amortization Expense | (78,606) | | | (67,183) | | | (6,486) | | | (13,849) | | | (166,124) | | | Balance, as of the End of the Period | $ | 473,846 | | | $ | 706,896 | | | $ | 131,859 | | | $ | 265,188 | | | $ | 1,577,789 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2023 | | Fixed Rate Annuities | | Fixed Indexed Annuities | | Interest Sensitive Life | | Other | | Total | | Balance, as of the Beginning of the Period | $ | 221,679 | | | $ | 367,813 | | | $ | 116,021 | | | $ | 115,457 | | | $ | 820,970 | | | Capitalizations | 134,484 | | | 129,891 | | | 21,601 | | | 52,379 | | | 338,355 | | | Amortization Expense | (45,989) | | | (43,608) | | | (5,357) | | | (10,985) | | | (105,939) | | | Balance, as of the End of the Period | $ | 310,174 | | | $ | 454,096 | | | $ | 132,265 | | | $ | 156,851 | | | $ | 1,053,386 | |
Value of business acquired The following tables reflect the value of business acquired, or “VOBA” asset roll-forward by product category for the nine months ended September 30, 2024 and 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2024 | | Fixed Rate Annuities | | Fixed Indexed Annuities | | Interest Sensitive Life | | Variable Annuities | | Other | | Total | | Balance, as of the Beginning of the Period | $ | 44,922 | | | $ | 621,372 | | | $ | 262,942 | | | $ | 245,042 | | | $ | 78,706 | | | $ | 1,252,984 | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization Expense | (2,784) | | | (32,223) | | | (10,212) | | | (15,491) | | | (5,040) | | | (65,750) | | | | | | | | | | | | | | | Balance, as of the End of the Period | $ | 42,138 | | | $ | 589,149 | | | $ | 252,730 | | | $ | 229,551 | | | $ | 73,666 | | | $ | 1,187,234 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2023 | | Fixed Rate Annuities | | Fixed Indexed Annuities | | Interest Sensitive Life | | Variable Annuities | | Other | | Total | | Balance, as of the Beginning of the Period | $ | 48,762 | | | $ | 663,296 | | | $ | 276,795 | | | $ | 241,778 | | | $ | 85,898 | | | $ | 1,316,529 | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization Expense | (2,893) | | | (31,020) | | | (10,338) | | | (18,414) | | | (5,448) | | | (68,113) | | | Balance, as of the End of the Period | $ | 45,869 | | | $ | 632,276 | | | $ | 266,457 | | | $ | 223,364 | | | $ | 80,450 | | | $ | 1,248,416 | |
The following tables reflect the negative value of business acquired, or “negative VOBA” liability roll-forward by product category for the nine months ended September 30, 2024 and 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2024 | | Fixed Rate Annuities | | Fixed Indexed Annuities | | Interest Sensitive Life | | Variable Annuities | | Other | | Total | | Balance, as of the Beginning of the Period | $ | 65,966 | | | $ | 106,538 | | | $ | 421,213 | | | $ | 91,295 | | | $ | 182,920 | | | $ | 867,932 | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization Expense | (17,221) | | | (24,518) | | | (22,349) | | | (4,622) | | | (10,053) | | | (78,763) | | | Balance, as of the End of the Period | $ | 48,745 | | | $ | 82,020 | | | $ | 398,864 | | | $ | 86,673 | | | $ | 172,867 | | | $ | 789,169 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2023 | | Fixed Rate Annuities | | Fixed Indexed Annuities | | Interest Sensitive Life | | Variable Annuities | | Other | | Total | | Balance, as of the Beginning of the Period | $ | 98,342 | | | $ | 145,610 | | | $ | 461,592 | | | $ | 99,776 | | | $ | 198,804 | | | $ | 1,004,124 | | | | | | | | | | | | | | | | | | | | | | | | | | | Amortization Expense | (24,725) | | | (29,519) | | | (26,634) | | | (6,897) | | | (12,420) | | | (100,195) | | | Balance, as of the End of the Period | $ | 73,617 | | | $ | 116,091 | | | $ | 434,958 | | | $ | 92,879 | | | $ | 186,384 | | | $ | 903,929 | |
Unearned revenue reserves and unearned front-end loads | | | | | | | | | | | | | | | Nine Months Ended September 30, | | 2024 | | 2023 | | | | Preneed | | Balance, as of the Beginning of the Period | $ | 178,053 | | | $ | 118,186 | | | | | Deferral | 52,210 | | | 54,636 | | | | | Amortized to Income during the Period | (12,010) | | | (8,480) | | | | | | | | | | | Balance, as of the End of the Period | $ | 218,253 | | | $ | 164,342 | | | |
Significant inputs, judgments, assumptions for DAC and related amortization amounts Global Atlantic considers surrender rates, mortality rates, and other relevant policy decrements in determining the expected life of the contract. As a part of Global Atlantic's actual experience update for the nine months ended September 30, 2024, Global Atlantic concluded that there was no material change in relevant inputs, judgments, or assumptions requiring an update of the amortization rate for DAC and related amortization amounts. For the nine months ended September 30, 2023, Global Atlantic updated mortality and surrender rates. These updates reduced the amortization rate for DAC and related amortization amounts by $1.1 million per quarter.
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