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LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS
 12 Months Ended
Dec. 31, 2023
Insurance [Abstract]  
LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS
The following tables reconcile the net liability for future policy benefits and liability of death benefits to the liability for future policy benefits in the consolidated balance sheets:
December 31, 2023
(in millions)
Reconciliation
Payout - Legacy$340 
UL (1)344 
Other (2)365 
Subtotal1,049 
Other policy funds (3)
604 
Grand total$1,653 
______________
(1)Represents the SOP NLG Rider on UL contracts assumed from Equitable Financial.
(2)Primarily future policy benefits related to Protective Life & Annuity and Employee Benefits.
(3)Includes $415 million of URL of which $413 million is covered in Note 5 of the Notes to these Consolidated Financial Statements.
December 31, 2022
(in millions)
Reconciliation
Universal Life (1)$58 
Other (2)220 
Future policyholder benefits, total278 
Other policyholder liabilities391 
Total$669 
______________
(1)Represent the SOP LTC Rider on all Universal Life contracts inclusive of VL and UL sold by the Company. Subsequent to the Internal Reinsurance Transaction described further in Note 1 of the Notes to these Consolidated Financial Statements, these are no longer material and are not disclosed separately.
(2)Primarily future policy benefits related to Protective Life & Annuity and Employee Benefits.
The following tables summarize balances and changes in the liability for future policy benefits for nonparticipating traditional and limited pay contracts.
The payout annuities result from annuitization of current contracts. Inflows are the liquidation of the account values not premiums:
Year Ended December 31,
Payout-Legacy
20232022
(Dollars in millions)
Present Value of Expected Future Policy Benefits
Balance, beginning of period$— $— 
Beginning balance of original discount rate— — 
Effect of changes in cash flow assumptions— — 
Effect of actual variances from expected experience— — 
Adjusted beginning of period balance— — 
Issuances333 — 
Interest accrual— — 
Benefits payments— — 
Ending balance at original discount rate333 — 
Effect of changes in discount rate assumptions7 — 
Balance, end of period$340 $— 
Net liability for future policy benefits$340 $— 
Less: Reinsurance recoverable— — 
Net liability for future policy benefits, after reinsurance recoverable$340 $— 
Weighted-average duration of liability for future policyholder benefits (years)7.7— 
The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses related to nonparticipating traditional and limited payment contracts:
December 31,
20232022
(in millions)
Payout-Legacy
Expected future benefit payments and expenses (undiscounted)$508 $— 
Expected future gross premiums (undiscounted)— — 
Expected future benefit payments and expenses (discounted)340 — 
Expected future gross premiums (discounted)— — 
The following table provides the revenue, interest and weighted average interest rates, related to the additional insurance liabilities :
Year Ended December 31,
202320222021202320222021
Gross PremiumInterest Accretion
(in millions)
Revenue and Interest Accretion
Payout - Legacy (1)$85 $— $— $7 $— $— 
Total$85 $— $— $7 $— $— 
______________
(1)Gross premium reflected is the liquidation of Account Value at time of annuitization.
The following table provides the weighted average interest rates for the liability for future policy benefits:
December 31, 2023December 31, 2022
Weighted Average Interest Rate
Payout-Legacy
Interest accretion rate5.3 %— %
Current discount rate5.0 %— %
The following table provides the balance, changes in and the weighted average durations of the additional insurance liabilities:
Year Ended December 31,
20232022
UL (1)Universal Life (2)
(Dollars in millions)
Balance, beginning of year$— $57 
Beginning balance before AOCI adjustments— 55 
Effect of changes in interest rate and cash flow assumptions and model changes6 1 
Effect of actual variances from expected experience2 (3)
Adjusted beginning of period balance8 53 
Issuances (3)322 — 
Interest accrual7 3 
Net assessments collected12 10 
Benefit payments(5)— 
Ending balance before shadow reserve adjustments344 66 
Effect of shadow reserve adjustment— (8)
Balance, end of year$344 $58 
Net liability for additional liability$344 $58 
Effect of reserve adjustment recorded in AOCI— — 
Net liability for additional liability, after reinsurance recoverable$344 $58 
Weighted-average duration of additional liability - death benefit (years)17.728.4
______________
(1)The 2023 additional insurance liabilities represent the SOP NLG Rider on UL contracts assumed from Equitable Financial.
(2)The 2022 additional insurance liabilities represent the SOP LTC Rider on all Universal Life contracts inclusive of VL and UL sold by the Company. Subsequent to the Reinsurance Treaty described further in Note 1 of the Notes to these Consolidated Financial Statements, these are no longer material and are not disclosed separately.
(3)Issuances represent the UL SOP NLG business assumed from Equitable Financial on April 1, 2023.
The following tables provide the revenue, interest and weighted average interest rates, related to the additional insurance liabilities:
Year Ended December 31, 2023
AssessmentsInterest Accretion
(in millions)
Revenue and Interest Accretion
UL (1)$477 $11 
Total$477 $11 
_____________
(1)The 2023 additional insurance liabilities represent the SOP NLG Rider on UL contracts assumed from Equitable Financial.
Year Ended December 31, 2022Year Ended December 31, 2021
AssessmentsInterest AccretionAssessmentsInterest Accretion
(in millions)
Revenue and Interest Accretion
Universal Life$18 $3 $16 $2 
Total$18 $3 $16 $2 
______________
(1)The 2022 additional insurance liabilities represent the SOP LTC Rider on all Universal Life contracts inclusive of VL and UL sold by the Company. Subsequent to the Reinsurance Treaty described further in Note 1 of the Notes to these Consolidated Financial Statements, these are no longer material and are not disclosed separately.
Year Ended December 31,
202320222021
Universal Life
Weighted Average Interest Rate
 Interest accretion rate
4.5 %5.5 %5.5 %
INSURANCE STATUTORY FINANCIAL INFORMATION
For 2023, 2022 and 2021, respectively, the Company’s statutory net income (loss) totaled $812 million, $(21) million and $(44) million. Statutory surplus, Capital stock and AVR totaled $4.4 billion and $420 million as of December 31, 2023 and 2022, respectively. As of December 31, 2023, Equitable America, in accordance with various government and state regulations, had $8 million of securities on deposit with such government or state agencies.
Dividend Restrictions
As a domestic insurance subsidiary regulated by the insurance laws of Arizona, Equitable America is subject to restrictions as to the amounts the Company may pay as dividends and amounts the Company may repay of surplus notes to EFS.
Under Arizona Insurance Law, a domestic life insurer may without prior approval of the Superintendent, pay a dividend to its shareholders not exceeding an amount calculated based on a statutory formula. Based on this formula, the Company could pay an ordinary dividend of up to approximately $440 million during 2024.
On April 13, 2021, the Company was granted permission by the Arizona Department of Insurance and Financial Institutions to pay an extraordinary distribution of its 2.6 million AB units to its parent, EFS. On May 14, 2021, the Company recorded the transfer of the units as a return of capital at its carrying value of $61 million.
Intercompany Reinsurance
Equitable America reinsured the no lapse guarantee riders contained in certain variable and interest-sensitive life policies to EQ AZ Life Re. Equitable America receives statutory reserve credits for reinsurance treaties with EQ AZ Life Re to the extent EQ AZ Life Re held letters of credit of $45 million at both December 31, 2023 and 2022. These letters of credit were guaranteed by Holdings.
Prescribed and Permitted Accounting Practices
As of December 31, 2023, the following two prescribed and permitted practices resulted in surplus that is different from the statutory surplus that would have been reported had NAIC statutory accounting practices been applied.
During 2022, Equitable Life Financial Insurance Company of America received approval from the Arizona Department of Insurance and Financial Institutions pursuant to A.R.S. 20-515 for Separate Account No. 68A (“SA 68A”) for our Structured Capital Strategies product, Separate Account No. 69A (“SA 69A”) for our EQUI-VEST product Structured Investment Option and Separate Account No. 71A (“SA 71A”) for our Investment Edge Structured Investment Option, to permit us to use book value as the accounting basis of these three non-insulated Separate Accounts instead of fair value in accordance with the NAIC Accounting and Practices and Procedures Manual to align with how we manage and measure our overall general account asset portfolio. The impact of the application is a decrease of approximately $94 million in statutory surplus as of December 31, 2023.
The Arizona Department of Insurance and Financial Institutions granted to Equitable America a permitted practice to deviate from SSAP No. 108 by applying special accounting treatment for specific derivatives hedging variable annuity benefits subject to fluctuations as a result of interest rate sensitivities. The permitted practice expands on SSAP No. 108 hedge accounting to include equity risks for the full scope of Variable Annuity (VA) contracts (i.e., not just the rider guarantees but for the VA total contract). The permitted practice allows Equitable America to adopt SSAP 108 retroactively from October 1, 2023 and applies to both directly held VA hedges as well as VA hedges in the Equitable America funds withheld asset that resulted from the Reinsurance Treaty. In the calculation of the amount of excess VA equity and interest rate derivative hedging gains/losses to defer (including Net Investment Income on our Equity Total Return Swaps), the permitted practice allows us to compare our total equity and interest derivatives gains and losses to 100% of our target liability change. Any hedge gain or loss deferrals will follow SSAP No. 108 amortization rules (i.e. 10-year straight line).
The impact of applying this revised permitted practice relative to SSAP 108 was an increase of approximately $621 million in statutory special surplus funds as of December 31, 2023.
Differences between Statutory Accounting Principles and U.S. GAAP
Accounting practices used to prepare statutory financial statements for regulatory filings of stock life insurance companies differ in certain instances from U.S. GAAP. The differences between statutory surplus and capital stock determined in accordance with SAP and total equity under U.S. GAAP are primarily: (a) the inclusion in SAP of an AVR intended to stabilize surplus from fluctuations in the value of the investment portfolio; (b) future policy benefits and policyholders’ account balances under SAP differ from U.S. GAAP due to differences between actuarial assumptions and reserving methodologies; (c) certain policy acquisition costs are expensed under SAP but deferred under U.S. GAAP and amortized over future periods to achieve a matching of revenues and expenses; (d) under SAP, Federal income taxes are provided on the basis of amounts currently payable with limited recognition of deferred tax assets while under U.S. GAAP, deferred taxes are recorded for temporary differences between the financial statements and tax basis of assets and liabilities where the probability of realization is reasonably assured; (e) the valuation of assets under SAP and U.S. GAAP differ due to different investment valuation and depreciation methodologies, as well as the deferral of interest-related realized capital gains and losses on fixed income investments; (f) the valuation of the investment in AllianceBernstein L.P. (“AllianceBernstein”) under SAP reflects a portion of the market value change rather than the equity in the underlying net assets as required under U.S.GAAP; (g) certain assets, primarily prepaid assets, are not admissible under SAP but are admissible under U.S. GAAP; (h) the fair valuing of all acquired assets and liabilities including intangible assets required for U.S. GAAP purchase accounting is not recognized in SAP; (i) reserves and reinsurance recoverables on unpaid claims on reinsured business are netted in aggregate reserves and the liability for life policy claims, respectively, under SAP while under U.S. GAAP these reinsured amounts are reflected
as an asset; (j) under SAP, premiums, regardless of policy type, are recognized when due and include the change in the deferred premium asset while under U.S. GAAP revenue recognition varies by product type and does not include the change in deferred premiums; and (k) derivatives unrealized gains and losses recognized in surplus under SAP but in income under U.S. GAAP.