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INVESTMENTS

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Fixed Maturities AFS

The components of fair value and amortized cost for fixed maturities classified as AFS on the consolidated balance sheets excludes accrued interest receivable because the Company elected to present accrued interest receivable within other assets. Accrued interest receivable on AFS fixed maturities as of December 31, 2023 and 2022 was $78 million and $23 million, respectively. There was no accrued interest written off for AFS fixed maturities for the years ended December 31, 2023, 2022 and 2021.

The following tables provide information relating to the Company’s fixed maturities classified as AFS:

AFS Fixed Maturities by Classification


	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in millions)
December 31, 2023:
Fixed Maturities:
Corporate (1)	$	5,842	$	—	$	96	$	276	$	5,662
U.S. Treasury, government and agency	15		—		—		—		15
States and political subdivisions	50		—		—		7		43
Foreign governments	31		—		1		1		31
Residential mortgage-backed	961		—		15		4		972
Asset-backed (2)	2,956		—		32		2		2,986
Commercial mortgage-backed	195		—		1		14		182

Total at December 31, 2023	$	10,050	$	—	$	145	$	304	$	9,891

December 31, 2022:
Fixed Maturities:
Corporate (1)	$	2,417	$	—	$	—	$	359	$	2,058
U.S. Treasury, government and agency	14		—		—		—		14
States and political subdivisions	43		—		—		9		34

Residential mortgage-backed	8		—		—		2		6
Asset-backed (2)	43		—		—		2		41
Commercial mortgage-backed	81		—		—		16		65

Total at December 31, 2022	$	2,606	$	—	$	—	$	388	$	2,218

______________

(1)Corporate fixed maturities include both public and private issues.

(2)Includes credit-tranched securities collateralized by sub-prime mortgages, credit risk transfer securities and other asset types.

The contractual maturities of AFS fixed maturities as of December 31, 2023 are shown in the table below. Bonds not due at a single maturity date have been included in the table in the final year of maturity. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Contractual Maturities of AFS Fixed Maturities


	Amortized Cost (Less Allowance for Credit Losses)		Fair Value
	(in millions)
December 31, 2023:
Contractual maturities:
Due in one year or less	$	148	$	147
Due in years two through five	1,385		1,387
Due in years six through ten	3,133		3,115
Due after ten years	1,272		1,102
Subtotal	5,938		5,751
Residential mortgage-backed	961		972
Asset-backed	2,956		2,986
Commercial mortgage-backed	195		182

Total at December 31, 2023	$	10,050	$	9,891

The following table shows proceeds from sales, gross gains (losses) from sales and allowance for credit losses for AFS fixed maturities:

Proceeds from Sales, Gross Gains (Losses) from Sales and Allowance for Credit and Intent to Sell Losses for AFS Fixed Maturities


	Year Ended December 31,
		2023		2022		2021
		(in millions)
Proceeds from sales		$	280	$	184	$	302
Gross gains on sales		$	—	$	—	$	8
Gross losses on sales		$	(5)	$	(8)	$	(4)

The following table sets forth the amount of credit loss impairments on AFS fixed maturities held by the Company at the dates indicated and the corresponding changes in such amounts:

AFS Fixed Maturities - Credit and Intent to Sell Loss Impairments


	Year Ended December 31,
		2023		2022		2021
		(in millions)
Balance, beginning of year		$	—	$	2	$	2
Previously recognized impairments on securities that matured, paid, prepaid or sold		—		(2)		—





Balance, end of year		$	—	$	—	$	2

______________

(1)Represents circumstances where the Company determined in the current period that it intends to sell the security, or it is more likely than not that it will be required to sell the security before recovery of the security’s amortized cost.

The tables below present a roll-forward of net unrealized investment gains (losses) recognized in AOCI:

Net Unrealized Gains (Losses) on AFS Fixed Maturities


	Year Ended December 31, 2023
	Net Unrealized Gains (Losses) on Investments		DAC		Policyholders’ Liabilities		Deferred Income Tax Asset (Liability)		AOCI Gain (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
Balance, beginning of year	$	(388)	$	—	$	8	$	161	$	(219)
Net investment gains (losses) arising during the period	224		—		—		—		224
Reclassification adjustment:
Included in net income (loss)	5		—		—		—		5


Impact of net unrealized investment gains (losses)	—		—		—		(48)		(48)
Net unrealized investment gains (losses) excluding credit losses	(159)		—		8		113		(38)

Balance, end of year	$	(159)	$	—	$	8	$	113	$	(38)


	Year Ended December 31, 2023
	Net Unrealized Gains (Losses) on Investments		DAC		Policyholders’ Liabilities		Deferred Income Tax Asset (Liability)		AOCI Gain (Loss) Related to Net Unrealized Investment Gains (Losses)
	(in millions)
	Year Ended December 31, 2022
Balance, beginning of year	$	128	$	—	$	(3)	$	(26)	$	99
Net investment gains (losses) arising during the period	(524)		—		—		—		(524)
Reclassification adjustment:
Included in net income (loss)	8		—		—		—		8

Other (1)	—		—		—		81		81
Impact of net unrealized investment gains (losses)	—		—		11		106		117
Net unrealized investment gains (losses) excluding credit losses	(388)		—		8		161		(219)

Balance, end of year	$	(388)	$	—	$	8	$	161	$	(219)

	Year Ended December 31, 2021
Balance, beginning of year	$	248	$	(111)	$	37	$	(36)	$	138
Transition adjustment (2)	—		111		(37)		—		74
Net investment gains (losses) arising during the period	(114)		—		—		—		(114)
Reclassification adjustment:
Included in net income (loss)	(4)		—		—		—		(4)
Other	(2)		—		—		—		(2)

Impact of net unrealized investment gains (losses)	—		—		(3)		10		7
Net unrealized investment gains (losses) excluding credit losses	128		—		(3)		(26)		99

Balance, end of year	$	128	$	—	$	(3)	$	(26)	$	99

______________

(1) Reflects $81 million of a Deferred Tax Asset valuation allowance recorded during the fourth quarter of 2022. See Note 13 of the Notes to these Financial Statements for additional details.

(2) Reflects the transition adjustment for shadow DAC and policyholder liabilities related to the adoption of ASU 2018-12 effective January 1, 2021.

The following tables disclose the fair values and gross unrealized losses of the 891 issues as of December 31, 2023 and the 845 issues as of December 31, 2022 that are not deemed to have credit losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for the specified periods at the dates indicated:

AFS Fixed Maturities in an Unrealized Loss Position for Which No Allowance Is Recorded


	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
December 31, 2023:
Fixed Maturities:
Corporate	$	505	$	7	$	1,900	$	269	$	2,405	$	276


	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in millions)
U.S. Treasury, government and agency	—		—		8		—		8		—
States and political subdivisions	—		—		33		7		33		7
Foreign governments	7		1		4		—		11		1
Residential mortgage-backed	103		—		9		4		112		4
Asset-backed	290		1		23		1		313		2
Commercial mortgage-backed	29		—		61		14		90		14

Total at December 31, 2023	$	934	$	9	$	2,038	$	295	$	2,972	$	304

December 31, 2022:
Fixed Maturities:
Corporate	$	1,446	$	159	$	590	$	200	$	2,036	$	359

States and political subdivisions	19		4		13		5		32		9

Residential mortgage-backed	2		—		4		2		6		2
Asset-backed	35		1		6		1		41		2
Commercial mortgage-backed	5		1		60		15		65		16

Total at December 31, 2022	$	1,507	$	165	$	673	$	223	$	2,180	$	388

The Company maintains a diversified portfolio of corporate securities across industries and issuers and does not have exposure to any single issuer in excess of 1.5% of total corporate securities. The largest exposures to a single issuer of corporate securities held as of December 31, 2023 and 2022 were $82 million and $24 million, respectively, representing 3.8% and 10.3% of the consolidated equity of the Company.

Corporate high yield securities, consisting primarily of public high yield bonds, are classified as other than investment grade by the various rating agencies, i.e., a rating below Baa3/BBB- or the NAIC designation of 3 (medium investment grade), 4 or 5 (below investment grade) or 6 (in or near default). As of December 31, 2023 and 2022, respectively, approximately $92 million and $4 million, or 0.9% and 0.2%, of the $10.1 billion and $2.6 billion aggregate amortized cost of fixed maturities held by the Company were considered to be other than investment grade. These securities had gross unrealized losses of $0 million and $0 million as of December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, respectively, the $295 million and $223 million of gross unrealized losses of twelve months or more were concentrated in corporate securities. In accordance with the policy described in Note 2 of the Notes to these Consolidated Financial Statements, the Company concluded that an allowance for credit losses for these securities was not warranted at either December 31, 2023 or December 31, 2022. As of December 31, 2023 and 2022, the Company did not intend to sell the securities nor will it likely be required to dispose of the securities before the anticipated recovery of their remaining amortized cost basis.

Based on the Company’s evaluation both qualitatively and quantitatively of the drivers of the decline in fair value of fixed maturity securities as of December 31, 2023, the Company determined that the unrealized loss was primarily due to increases in interest rates and credit spreads.

Securities Lending

Beginning in 2023, the Company has entered into securities lending agreements with an agent bank whereby blocks of securities are loaned to third parties, primarily major brokerage firms. As of December 31, 2023, the estimated fair value of loaned securities was $23 million. The agreements require a minimum of 102% of the fair value of the loaned securities to be held as cash collateral, calculated daily. To further minimize the credit risks related to these programs, the financial condition of counterparties is monitored on a regular basis. As of December 31, 2023, cash collateral received in the amount of $23 million was invested by the agent bank. A securities lending payable for the overnight and continuous loans is included in other liabilities in the amount of cash collateral received. Securities lending transactions are used to generate income. Income and expenses associated with these transactions are reported as net investment income and were not material for the year ended December 31, 2023.

Mortgage Loans on Real Estate

The Company held eight commercial mortgage loans with a carrying value of $294 million at December 31, 2023 and two commercial mortgage loans with a carrying value of $17 million at December 31, 2022. The loans were issued for apartment complex properties located in the South-Atlantic, East North Central and Mid-Atlantic regions. The loans were current as of December 31, 2023 and 2022 with LTV ratios between 0%-70% and DSC ratios of 1.0x or greater.

Accrued interest receivable was $1 million and $0 million as of December 31, 2023 and 2022 and no accrued interest was written off for the years ended December 31, 2023, 2022 and 2021. The allowance for credit losses was $2 million and $0 million as of December 31, 2023 and 2022, with a change of $2 million for the year ended December 31, 2023 and a change of $0 million for the years ended December 31, 2022 and 2021.

As of December 31, 2023 and 2022, the Company had no loans for which foreclosure was probable included within the individually assessed mortgage loans, and accordingly had no associated allowance for credit losses.

Equity Securities

The breakdown of unrealized and realized gains and (losses) on equity securities was as follows:

Unrealized and Realized Gains (Losses) from Equity Securities


	Year Ended December 31,
		2023		2022		2021
		(in millions)
Net investment gains (losses) recognized during the period on securities held at the end of the period		$	—	$	(3)	$	2

Unrealized and realized gains (losses) on equity securities		$	—	$	(3)	$	2

Trading Securities

As of December 31, 2023 and 2022, respectively, the fair value of the Company’s trading securities was $0 million and $1 million. As of December 31, 2023 and 2022, respectively, trading securities included the General Account’s investment in Separate Accounts had carrying values of $1 million and $1 million.

The breakdown of net investment income (loss) from trading securities was as follows:

Net Investment Income (Loss) from Trading Securities


	Year Ended December 31,
		2023		2022		2021
		(in millions)
Net investment gains (losses) recognized during the period on securities held at the end of the period		$	(1)	$	—	$	—

Unrealized and realized gains (losses) on trading securities		(1)		—		—

Net investment income (loss) from trading securities		$	(1)	$	—	$	—

Net Investment Income

The following tables provide the components of net investment income by investment type:


	Year Ended December 31,
		2023	2022	2021

					(in millions)
Fixed maturities					$	283	$	88	$	83
Mortgage loans on real estate					3		1		1
Policy loans					5		4		3
Other equity investments					1		(2)		1
Equity in income (loss) from AB					—		—		3
Trading securities					(1)		—		—
Other investment income					26		1		—
Gross investment income (loss)					317		92		91
Investment expenses					(5)		(5)		(3)
Net investment income (loss)					$	312	$	87	$	88

Investment Gains (Losses), Net

Investment gains (losses), net, including changes in the valuation allowances and credit losses were as follows:


	Year Ended December 31,
		2023	2022	2021
					(in millions)
Fixed maturities					$	(5)	$	(8)	$	4
Mortgage loans on real estate					(2)		—		—


Investment gains (losses), net					$	(7)	$	(8)	$	4

_____________

(1) Investment gains (losses), net of Other equity investments includes Real Estate Held for production.