Closed Block

12 Months Ended

Dec. 31, 2022

Insurance [Abstract]

Closed Block

9. Closed Block

We pay guaranteed benefits under all policies included in the Closed Blocks. In the event the performance of the Closed Blocks’ assets is insufficient to maintain dividend scales and interest credits, we may reduce the policyholder dividend scales. In the event dividends have been reduced to zero and the Closed Blocks’ assets remain insufficient to fund the Closed Blocks’ guaranteed benefits, we would use assets supporting open block policies or surplus to meet the contractual benefits of the Closed Blocks’ policyholders. The ILICO Closed Block has been ceded to Global Atlantic. Therefore, Global Atlantic would be required to provide funding for any asset insufficiency related to the ILICO Closed Block. Additionally, the AmerUs Closed Block has a letter of credit and tail risk reinsurance agreement in place that limits our exposure to potential asset insufficiency.

We elected the fair value option for the AmerUs Closed Block. The fair value of liabilities of the AmerUs Closed Block was derived at election as the sum of the fair value of the AmerUs Closed Block assets plus our cost of capital in the AmerUs Closed Block. The cost of capital was then determined to be the present value of the projected release of required capital and future after tax earnings on required capital supporting the AmerUs Closed Block, discounted at a rate which represents a market participant’s required rate of return, less the initial required capital. At each reporting period, we record the fair value of the AmerUs Closed Block by adjusting the change in liabilities, exclusive of the cost of capital, to equal the change in assets. We do not record additional policyholder dividend obligations, as there are no future US GAAP earnings available to the policyholders.

The excess of the fair value of the liabilities over the fair value of the assets represents our cost of capital in the AmerUs Closed Block. The maximum amount of future earnings from the assets and liabilities of the AmerUs Closed Block is represented by the reduction in the cost of capital in future years based on the operations of the AmerUs Closed Block and recalculation of the cost of capital each reporting period.

Summarized financial information of the AmerUs Closed Block is presented below.

	Successor		Predecessor
(In millions)	December 31, 2022		December 31, 2021
Liabilities
Future policy benefits	$	1,164	$	1,520
Other policy claims and benefits	16		16
Dividends payable to policyholders	73		75
Other liabilities	9		—
Total liabilities	1,262		1,611
Assets
Trading securities	1,016		1,321
Mortgage loans	14		17
Policy loans	134		108
Total investments	1,164		1,446
Cash and cash equivalents	42		63
Accrued investment income	14		46
Reinsurance recoverable	13		14
Other assets	2		10
Total assets	1,235		1,579
Maximum future earnings to be recognized from AmerUs Closed Block	$	27	$	32

The following represents the contribution from AmerUs Closed Block.

	Successor		Predecessor
(In millions)	Year Ended December 31, 2022		Year Ended December 31, 2021		Year Ended December 31, 2020
Revenues
Premiums	$	29	$	42	$	48
Net investment income	67		68		71
Investment related gains (losses)	(310)		(61)		99
Total revenues	(214)		49		218
Benefits and Expenses
Future policy and other policy benefits	(242)		24		177
Dividends to policyholders	22		27		38
Total benefits and expenses	(220)		51		215
Contribution from (to) AmerUs Closed Block before income taxes	6		(2)		3
Income tax expense	1		2		1
Contribution from (to) AmerUs Closed Block, net of income taxes	$	5	$	(4)	$	2