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REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2022

Accounting Changes and Error Corrections [Abstract]

REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

During the quarter ended June 30, 2022, the Company identified an error in its statement of cash flows for the years ended December 31, 2021 and 2020, respectively. Specifically, the Company incorrectly classified certain deposits and withdrawals of policyholders’ account balances as operating net cash inflows rather than financing net cash inflows. In connection with the Company’s evaluation of this cash flow error during the quarter ended June 30, 2022, management, in accordance SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”, determined to revise previously issued financial statements to correctly present cash flows associated with deposits and withdrawals of policyholders’ account balances.

In addition, during the quarter ended September 30, 2022, the Company identified additional errors primarily related to the calculation of the deferred cost of reinsurance amortization. Specifically, the deferred cost of reinsurance as reflected on the balance sheet was overstated and operating expenses (deferred cost amortization) was understated commencing in the quarter ended December 31, 2019 with a cumulative impact of $14 million pre-tax. In accordance SAB No. 108, management evaluated the impact of this error and concluded that previously issued financial statements were not materially misstated; however, the cumulative impact would be material to the quarter ended September 30, 2022 and annual period ending December 31, 2022 and accordingly, determined to revise previously reported financial statements for years ended December 31, 2021, 2020 and 2019 and for the three-month periods ended March 31, 2022 and 2021 and June 30, 2022 and 2021 and for the the six-months periods ended June 30, 2022 and June 2021. As a result of the determination to revise previously issued financial statements for the amortization matter discussed above, management also has corrected other previously identified but uncorrected errors and errors recorded in incorrect periods including, (a) balance sheet gross up errors resulting from incorrectly calculating reserves relating to business which has been 100% ceded to reinsurers resulting in corrections to Future policy benefits and other policyholders’ liabilities and Amounts due from reinsurers; (b) the classification of a preferred stock investment of $25M from available for sale debt securities to equity securities and present previously recorded unrealized losses as net investment income (loss) rather than as a component of other comprehensive income in the amount of $2M; and, (c) other immaterial errors.

The following tables present line items for prior period impacted financial statements that have been affected by the errors discussed above:


	December 31, 2021	December 31, 2020
	As Previously Reported	Impact of Revisions	As Revised	As Previously Reported	Impact of Revisions	As Revised
	(in millions)	(in millions)
Balance Sheets:
Fixed maturities available for sale, at fair value	2,572	—	2,572	2,445	(25)	2,420



Other equity investments	23	—	23	—	25	25









Amounts due from reinsurers	1,136	(13)	1,123	1,186	(17)	1,169


Current and deferred income taxes	15	2	17	27	1	28
Other assets	57	(11)	46	81	(6)	75


Total Assets	8,235	(22)	8,213	7,306	(22)	7,284

Future policy benefits and other policyholders’ liabilities	470	(13)	457	415	(17)	398










Total Liabilities	7,527	(13)	7,514	6,520	(17)	6,503





Additional paid-in capital	679	1	680	692	—	692

Accumulated deficit	(60)	(10)	(70)	(47)	(3)	(50)
Accumulated other comprehensive income (loss)	86	—	86	138	(2)	136


Total Equity	708	(9)	699	786	(5)	781
Total Liabilities and Equity	8,235	(22)	8,213	7,306	(22)	7,284


	March 31, 2022	June 30, 2022
	As Previously Reported	Impact of Revisions	As Revised	As Previously Reported	Impact of Revisions	As Revised
	(in millions)	(in millions)
Balance Sheets:














Amounts due from reinsurers	1,117	3	1,120	1,101	3	1,104


Current and deferred income taxes	58	2	60	94	1	95
Other assets	67	(12)	55	55	(13)	42


Total Assets	8,145	(7)	8,138	7,706	(9)	7,697

Future policy benefits and other policyholders’ liabilities	527	3	530	592	3	595










Total Liabilities	7,605	3	7,608	7,315	3	7,318




Common Stock	3	—	3	3	—	3
Additional paid-in capital	680	1	681	681	1	682
Treasury shares, at cost	—	—	—	—	—	—
Accumulated deficit	(79)	(11)	(90)	(92)	(13)	(105)



Total Equity	540	(10)	530	391	(12)	379
Total Liabilities and Equity	8,145	(7)	8,138	7,706	(9)	7,697


	Year Ended December 31, 2020		Year Ended December 31, 2019
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Income (Loss)



Net investment income (loss)	83		3		86		71		—		71






Total revenues	443		3		446		396		—		396

BENEFITS AND OTHER DEDUCTIONS
Policyholders' benefits	184		—		184		107		(1)		106




Amortization of deferred policy acquisition costs	31		—		31		92		(1)		91
Other operating costs and expenses	83		4		87		99		2		101
Total benefits and deductions	481		4		485		454		—		454
Income (loss) from continuing operations, before income taxes	(38)		(1)		(39)		(58)		—		(58)
Income tax (expense) benefit from continuing operations	29		—		29		13		—		13
Net income (loss) from continuing operations	(9)		(1)		(10)		(45)		—		(45)

Net income (loss)	$	(9)	$	(1)	$	(10)	$	(45)	$	—	$	(45)


	Year Ended December 31, 2021
	As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Income (Loss)



Net investment income (loss)	90		(2)		88






Total revenues	535		(2)		533

BENEFITS AND OTHER DEDUCTIONS


Compensation and benefits	35		1		36



Other operating costs and expenses	96		6		102
Total benefits and deductions	553		7		560
Income (loss) from continuing operations, before income taxes	(18)		(9)		(27)
Income tax (expense) benefit from continuing operations	5		2		7
Net income (loss) from continuing operations	(13)		(7)		(20)

Net income (loss)	$	(13)	$	(7)	$	(20)


	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Income (Loss)



Net investment income (loss)	20		—		20		24		(2)		22






Total revenues	139		—		139		130		(2)		128

BENEFITS AND OTHER DEDUCTIONS






Other operating costs and expenses	21		1		22		20		1		21
Total benefits and deductions	161		1		162		129		1		130
Income (loss) from continuing operations, before income taxes	(22)		(1)		(23)		1		(3)		(2)
Income tax (expense) benefit from continuing operations	3		—		3		—		—		—
Net income (loss) from continuing operations	(19)		(1)		(20)		1		(3)		(2)

Net income (loss)	$	(19)	$	(1)	$	(20)	$	1	$	(3)	$	(2)


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Income (Loss)



Net investment income (loss)	20		—		$	20	44		(2)		$	42






Total revenues	139		—		139		269		(2)		267

BENEFITS AND OTHER DEDUCTIONS






Other operating costs and expenses	22		1		23		42		2		44
Total benefits and deductions	157		1		158		286		2		288
Income (loss) from continuing operations, before income taxes	(18)		(1)		(19)		(17)		(4)		(21)
Income tax (expense) benefit from continuing operations	4		—		4		4		—		4
Net income (loss) from continuing operations	(14)		(1)		(15)		(13)		(4)		(17)

Net income (loss)	$	(14)	$	(1)	$	(15)	$	(13)	$	(4)	$	(17)


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)













BENEFITS AND OTHER DEDUCTIONS






Other operating costs and expenses	22		1		23		43		2		45
Total benefits and deductions	177		1		178		338		2		340
Income (loss) from continuing operations, before income taxes	(12)		(1)		(13)		(34)		(2)		(36)
Income tax (expense) benefit from continuing operations	(1)		(1)		(2)		2		(1)		1
Net income (loss) from continuing operations	(13)		(2)		(15)		(32)		(3)		(35)

Net income (loss)	$	(13)	$	(2)	$	(15)	$	(32)	$	(3)	$	(35)


	Year Ended December 31,
	2021		2020
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Comprehensive Income (Loss)
Net income (loss)	$	(13)	$	(7)	$	(20)	$	(9)	$	(1)	$	(10)
Change in unrealized gains (losses), net of reclassification adjustment	(52)		2		(50)		90		(2)		88


Other comprehensive income	(52)		2		(50)		90		(2)		88


Comprehensive income (loss)	$	(65)	$	(5)	$	(70)	$	81	$	(3)	$	78


	Three Months Ended March 31,
	2022		2021
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Comprehensive Income (Loss)
Net income (loss)	$	(19)	$	(1)	$	(20)	$	1	$	(3)	$	(2)
Change in unrealized gains (losses), net of reclassification adjustment	(150)		—		(150)		(73)		2		(71)


Other comprehensive income	(150)		—		(150)		(73)		2		(71)


Comprehensive income (loss)	$	(169)	$	(1)	$	(170)	$	(72)	$	(1)	$	(73)


	Three Months Ended June 30,		Six Months Ended June 30,
	2022		2022
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Comprehensive Income (Loss)
Net income (loss)	$	(13)	$	(2)	$	(15)	$	(32)	$	(3)	$	(35)






Comprehensive income (loss)	$	(150)	$	(2)	$	(152)	$	(319)	$	(3)	$	(322)


	Three Months Ended June 30,		Six Months Ended June 30,
	2021		2021
	As Previously Reported		Impact of Revisions		As Revised		As Previously Reported		Impact of Revisions		As Revised
	(in millions)
Statements of Comprehensive Income (Loss)
Net income (loss)	$	(14)	$	(1)	$	(15)	$	(13)	$	(4)	$	(17)
Change in unrealized gains (losses), net of reclassification adjustment	37		—		37		(36)		2		(34)


Other comprehensive income	37		—		37		(36)		2		(34)


Comprehensive income (loss)	$	23	$	(1)	$	22	$	(49)	$	(2)	$	(51)


	Twelve Months Ended December 31,
	2019
Statements of Equity:	As Previously Reported		Impact of Revision		As Revised
	(in millions)














Accumulated Deficit, beginning of year	7		(2)		5






Accumulated Deficit, end of year	(38)		(2)		(40)












































Total equity, end of year	$	416	$	(2)	$	414


	Year Ended December 31,		Year Ended December 31,
	2021		2020
Statements of Equity:	As Previously Reported		Impact of Revision			As Revised			As Previously Reported			Impact of Revision			As Revised
	(in millions)






Other	(2)		1			(1)			4			—			4





Additional paid-in capital, end of year	679		1			680		—	692		—	—		—	692

Accumulated Deficit, beginning of year	(47)		(3)			(50)			(38)			(2)			(40)



Net income (loss)	(13)		(7)			(20)			(9)			(1)			(10)


Accumulated Deficit, end of year	(60)		(10)		—	(70)		—	(47)		—	(3)			(50)

Accumulated other comprehensive income (loss), beginning of year	138		(2)			136			48			—			48

Other comprehensive income (loss)	(52)		2			(50)			90			(2)			88


Accumulated other comprehensive income (loss), end of year	86		—			86			138			(2)			136




































Total equity, end of year	$	708	$	(9)		$	699		$	786		$	(5)		$	781


	Three Months Ended March 31,		Three Months Ended March 31,
	2022		2021
Statements of Equity:	As Previously Reported		Impact of Revision			As Revised			As Previously Reported			Impact of Revision			As Revised
	(in millions)


Additional paid-in capital, beginning of year	679		1			680			692			—			692









Additional paid-in capital, end of period	680		1			681		—	693		—	—		—	693

Accumulated Deficit, beginning of year	(60)		(10)			(70)			(47)			(3)			(50)



Net income (loss)	(19)		(1)			(20)			1			(3)			(2)


Accumulated Deficit, end of period	(79)		(11)		—	(90)		—	(46)		—	(6)			(52)

Accumulated other comprehensive income (loss), beginning of year	86		—			86			138			(2)			136

Other comprehensive income (loss)	(150)		—			(150)			(73)			2			(71)


Accumulated other comprehensive income (loss), end of period	(64)		—			(64)			65			—			65
			—




































Total equity, end of period	$	540	$	(10)		$	530		$	715		$	(6)		$	709


	Three Months Ended June 30,		Three Months Ended June 30,
	2022		2021
Statements of Equity:	As Previously Reported		Impact of Revision		As Revised		As Previously Reported		Impact of Revision			As Revised
	(in millions)


Additional paid-in capital, beginning of year	680		1		681		693		—			693









Additional paid-in capital, end of period	681		1		682		628		—			628

Accumulated Deficit, beginning of year	(79)		(11)		(90)		(46)		(6)			(52)



Net income (loss)	(13)		(2)		(15)		(14)		(1)			(15)


Accumulated Deficit, end of period	(92)		(13)		(105)		(60)		(6)		-66228709	(66)












































Total equity, end of period	$	391	$	(12)	$	379	$	673	$	(6)	-60	$	667


	Six Months Ended June 30,		Six Months Ended June 30,
	2022		2021
Statements of Equity:	As Previously Reported		Impact of Revision			As Revised		As Previously Reported		Impact of Revision		As Revised
	(in millions)


Additional paid-in capital, beginning of year	679		1			680		692		—		692









Additional paid-in capital, end of year	681		1			682		628		—		628

Accumulated Deficit, beginning of year	(60)		(10)			(70)		(47)		(3)		(50)



Net income (loss)	(32)		(3)			(35)		(13)		(4)		(17)


Accumulated Deficit, end of year	(92)		(13)		(92)	(105)		(60)		(6)		(66)

Accumulated other comprehensive income (loss), beginning of year	86		—			86		138		(2)		136

Other comprehensive income (loss)	(287)		—			(287)		(36)		2		(34)








































Total equity, end of year	$	391	$	(12)		$	379	$	673	$	(6)	$	667


	Year End Dec 31, 2019
	As Reported		Impact of Revision		As Revised
	(in millions)
Statement of Cash Flows:
Cash flow from operating activities:














Amortization and depreciation	99		(1)		98










Future policy benefits	(20)		(1)		(21)





Other, net	$	5	$	2	7
Net cash provided by (used in) operating activities	$	(341)	$	—	$	(341)


	Year End Dec 31, 2021						Year End Dec. 31, 2020
	As Reported		Impact of Revision		As Revised		As Reported		Impact of Revision		As Revised
	(in millions)
Statements of Cash Flows:
Cash flow from operating activities:
Net income (loss)	(13)		(7)		(20)		(9)		(1)		(10)
























Future policy benefits	20		4		24		34		(17)		17
Reinsurance recoverable	19		(139)		(120)		19		(127)		(108)
Current and deferred income taxes	25		(1)		24		(28)		—		(28)



Other, net	$	(13)	$	9	(4)		$	(10)	$	1	(9)
Net cash provided by (used in) operating activities	$	(250)	$	(135)	$	(385)	$	(204)	$	(144)	$	(348)


























Cash flows from financing activities:

Deposits	776		(140)		636		712		(134)		578
Withdrawals	(364)		275		(89)		(357)		279		(78)
























Net cash provided by (used in) financing activities	$	415	$	135	$	550	$	667	$	144	$	811


	Three Months March 31, 2022						Three Months March 31, 2021
	As Reported		Impact of Revision		As Revised		As Reported		Impact of Revision		As Revised
	(in millions)
Statement of Cash Flows:
Cash flow from operating activities:
Net income (loss)	(19)		(1)		$	(20)	1		(3)		$	(2)


























Current and deferred income taxes	(3)		—		$	(3)	30		—		30



Other, net	73		1		$	74	8		3		11
Net cash provided by (used in) operating activities	$	9	$	—	$	9	$	(11)	$	—	$	(11)


	Six Months June 30, 2022						Six Months June 30, 2021
	As Reported		Impact of Revision		As Revised		As Reported		Impact of Revision		As Revised
	(in millions)
Statement of Cash Flows:
Cash flow from operating activities:
Net income (loss)	(32)		(3)		(35)		(13)		(4)		(17)
























Future policy benefits	4		13		17		12		17		29
Reinsurance recoverable	1		(13)		(12)		(58)		(17)		(75)
Current and deferred income taxes	(2)		1		(1)		26		—		26



Other, net	$	104	$	2	106		$	(2)	$	4	2
Net cash provided by (used in) operating activities	$	(39)	$	—	$	(39)	$	(144)	$	—	$	(144)