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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense (benefit) on continuing operations consists of the following (in millions):
Year Ended December 31,
202320222021
Current$27 $(31)$27 
Deferred(4)189 293 
Total$23 $158 $320 
Total income tax expense (benefit) was allocated as follows:
Year Ended December 31,
202320222021
Taxes on net earnings (loss) from continuing operations$23 $158 $320 
Other comprehensive (loss) earnings:
Changes in current discount rate - future policy benefits(50)203 33 
Changes in instrument-specific credit risk-market benefits(9)18 3 
Unrealized (loss) gain on investments and other financial instruments275 (1,186)(141)
Unrealized gain on foreign currency translation and cash flow hedging1 (1)(1)
Total income tax (benefit) expense allocated to other comprehensive earnings217 (966)(106)
Total income taxes$240 $(808)$214 
A reconciliation of the federal statutory rate to our effective tax rate is as follows:
Year Ended December 31,
202320222021
Federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit(12.7)0.1 0.3 
Benefit for Capital Loss Carryback— (3.0)— 
Stock compensation(8.5)0.3 (0.1)
Tax credits16.2 (1.1)(0.3)
Dividends received deduction7.9 (0.4)(0.2)
Valuation allowance for deferred tax assets(100.1)3.4 (1.2)
Adjustment of DTAs on sale of subsidiary— — 1.2 
COLI13.2 (0.4)(0.2)
Non-deductible expenses and other, net(3.2)— 0.1 
Effective tax rate(66.2)%19.9 %20.6 %
For the year ended December 31, 2023, the Company’s effective tax rate was (66.2)%. The effective tax rate was negatively impacted by the valuation allowance expense recorded on unrealized losses and capital loss carryforwards.
For the year ended December 31, 2022, the Company’s effective tax rate was 19.9%. The effective tax rate was positively impacted by favorable permanent adjustments, including low income housing tax credits (“LIHTC”), the dividends received deduction (“DRD”), and COLI. The effective tax rate was also impacted by the benefit of the capital loss carryback. This benefit is offset by the valuation allowance expense recorded on unrealized losses and capital loss carryforwards.
For the year ended December 31, 2021, the Company’s effective tax rate was 20.6%. The effective tax rate was positively impacted by favorable permanent adjustments, including LIHTC, DRD, and COLI.
The significant components of deferred tax assets and liabilities consist of the following:
December 31,
20232022
(In millions)
Deferred Tax Assets:
Employee benefit accruals$25 $21 
Net operating loss carryforwards75 28 
Accrued liabilities— 1 
General Business Tax credits43 30 
CAMT Credit Carryforwards36 — 
Bermuda CIT NOL Carryforward24 — 
Investment securities597 853 
Capital loss carryover38 8 
Market Risk Benefit61 32 
Derivatives— 67 
Life insurance and claim related adjustments547 433 
Funds held under reinsurance agreements500 37 
Other5 19 
Total gross deferred tax asset1,951 1,529 
Less: valuation allowance85 30 
Total deferred tax asset$1,866 $1,499 
Deferred Tax Liabilities:
Amortization of goodwill and intangible assets(25)(29)
Other(5)(2)
Depreciation(15)(14)
Partnerships(127)(93)
Value of business acquired(304)(339)
Derivatives(3)— 
Deferred acquisition costs(361)(210)
Transition reserve on new reserve method(17)(25)
Funds held under reinsurance agreements(621)(187)
Total deferred tax liability$(1,478)$(899)
Net deferred tax asset (liability)$388 $600 
Our net deferred tax asset (liability) was $388 million as of December 31, 2023 and a net deferred tax asset (liability) of $600 million as of December 31, 2022. The significant changes in the deferred taxes are as follows: the deferred tax asset for investment securities decreased by $256 million primarily due to unrealized capital gains on fixed maturities. The deferred tax liability related to deferred acquisition costs increased by $151 million, which is consistent with the growth in sales in our U.S. life group. The deferred tax relating to derivatives decreased by $70 million due to unrealized gains on call options, interest rate swaps, and embedded derivatives. The life insurance reserves and claim related adjustments deferred tax asset increased by $114 million primarily due to the GAAP reserves for the year increasing by more than the tax reserves. The reinsurance receivable deferred tax asset increased by $463 million, and the reinsurance receivable deferred tax liability increased by $434 million, both due to the Modco reinsurance treatment of GAAP and tax reserves.
As of December 31, 2023, we have net operating losses (“NOLs”) on a pretax basis of $355 million, which are available to carryforward and offset future federal taxable income subject to the 80% taxable income limitation. The life losses are U.S. federal net operating losses and consist of $68 million of Internal Revenue Code Section 382 limited net operating losses, and $287 million of Internal Revenue Code Section 382 non-limited net operating losses. These losses do not expire.
As of December 31, 2023 and 2022, we had $43 million and $30 million of general business tax credits, respectively, which expire between 2040 and 2043. The tax credits consist of $43 million of tax credits with no IRC
Section 382 limitation. We also had $36 million of corporate alternative minimum tax (“CAMT”) credits. The CAMT credits are not limited by IRC Section 382, and have no expiration date.
As of December 31, 2023, the valuation allowance of $85 million consisted of a full valuation allowance of $4 million on the unrealized capital loss deferred tax assets for F&G Life Re, F&G Cayman Re, and the US Non-life Companies, a full valuation allowance of $24 million on the foreign deferred tax assets of F&G Life Re, a full valuation allowance of $4 million on the remaining capital loss carryforwards for the US Non-life Companies, and a partial valuation allowance of $53 million on the US Life Companies’ capital loss deferred tax assets.

The U.S. Life insurance group is subject to a Tax Sharing Agreement within the members of the life insurance tax return group. The agreement provides for an allocation based on separate return calculations and allows for reimbursement of company tax benefits absorbed by other members of the group. The U.S. non-life group is subject to a Tax Sharing Agreement with its parent, FNF, with which it files a consolidated federal income tax return. The Company’s non-life group Tax Sharing Agreement allows for reimbursement of company tax benefits absorbed by FNF. If, during the year ended December 31, 2023, the Company had computed taxes using the separate return method, the pro-forma provision for income taxes would remain unchanged.
The U.S. Federal income tax returns of the Company for years prior to 2018 are no longer subject to examination by the taxing authorities. The Company does not have any unrecognized tax benefits (“UTBs”) at December 31, 2023 or December 31, 2022. In the event the Company has UTBs, interest and penalties related to uncertain tax positions would be recorded as part of income tax expense in the financial statements. The Company regularly assesses the likelihood of additional tax assessments by jurisdiction and, if necessary, adjusts its tax reserves based on new information or developments.
The Inflation Reduction Act of 2022 (the “Inflation Reduction Act”)was signed into law on August 16, 2022. Among other changes, the Inflation Reduction Act introduced a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income and a 1% excise tax on treasury stock repurchases. These provisions were effective January 1, 2023. For purposes of calculating the adjusted financial statement income, the Company is included in the controlled group of FNF, its parent company. Though the Company is subject to the minimum tax, the Company does not expect to be in a perpetual CAMT position. The life companies will join the consolidated tax return group with FNF and file a life/non-life consolidated return once the five-year waiting period has completed in 2026, which should strengthen that position as FNF is not anticipating owing CAMT on its future returns. The Company has elected to consider the effects of CAMT separately in evaluating the need for a valuation allowance. For the year ended December 31, 2023, due to the reasons above, no valuation allowance is needed. For the year ended December 31, 2023, the Company was subject to CAMT, but there is no impact to total tax. A CAMT credit carryforward was created and is expected to be able to be utilized in future years.
The CIT Act of 2023 was passed in Bermuda on December 27, 2023. The CIT will commence on January 1, 2025 and will apply a statutory rate of 15% to the taxable income or loss of Bermuda tax resident entities and permanent establishments. F&G Life Re, a 953(d) company with no or minimal US permanent tax differences, is not expected to owe any Bermuda CIT due to the foreign tax credit. The deferred tax asset recorded for the year ended December 31, 2023 of $24 million has a full valuation allowance. Since the CIT did not have any material impact to the financial statements, the deferred tax asset and offsetting valuation allowance were netted together in the rate reconciliation above.
As a result of the adoption of ASU 2018-12, the changes required resulted in changes to deferred tax for the prior periods. The decrease in the deferred tax asset as of December 31, 2022 due to ASU 2018-12 was $163 million. See Note A - Business and Summary of Significant Accounting Policies for details on the changes required for the new accounting standard.