Interest rate swaps and futures are used by the Company to reduce risks from changes in interest rates, manage interest rate exposures arising from mismatches between assets and liabilities and to hedge against changes in their values it owns or anticipates acquiring or selling.

Swaps may be attributed to specific assets or liabilities or to a portfolio of assets or liabilities. Under interest rate swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed upon notional principal amount.

In standardized exchange-traded interest rate futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values of underlying referenced investments. The Company enters into exchange-traded futures with regulated futures commission merchants who are members of a trading exchange.

Equity index options are contracts which will settle in cash based on differentials in the underlying indices at the time of exercise and the strike price. The Company uses combinations of purchases and sales of equity index options to hedge the effects of adverse changes in equity indices within a predetermined range.

Total return swaps are contracts whereby the Company agrees with counterparties to exchange, at specified intervals, the difference between the return on an asset (or market index) and Secured Overnight Financing Rate (“SOFR”) plus an associated funding spread based on a notional amount. The Company generally uses total return swaps to hedge the effect of adverse changes in equity indices.

In standardized exchange-traded equity futures transactions, the Company purchases or sells a specified number of contracts, the values of which are determined by the daily market values underlying referenced equity indices. The Company enters into exchange-traded futures with regulated futures commission merchants who are members of a trading exchange.

Currency derivatives, including currency swaps and forwards, are used by the Company to reduce risks from changes in currency exchange rates with respect to investments denominated in foreign currencies that the Company either holds or intends to acquire or sell.

Under currency forwards, the Company agrees with counterparties to deliver a specified amount of an identified currency at a specified future date. Typically, the price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The Company executes forward sales of the hedged currency in exchange for U.S. dollars at a specified exchange rate. The maturities of these forwards correspond with the future periods in which the non-U.S. dollar-denominated earnings are expected to be generated.

Under currency swaps, the Company agrees with counterparties to exchange, at specified intervals, the difference between one currency and another at an exchange rate and calculated by reference to an agreed principal amount. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party.

The Company purchases credit protection using credit derivatives in order to hedge specific credit exposures in the Company’s investment portfolio. The Company sells credit protection using credit derivatives in order to generate a credit spread for the benefit of the Company’s investment portfolio.

The table below provides a summary, by operating segment, of the gross notional amount and fair value of derivative contracts by the primary underlying risks, excluding embedded derivatives and associated reinsurance recoverables. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements and cash collateral.

As part of our application of push-down accounting in connection with the acquisition of the Company, we have de-designated the Predecessor Company's hedging relationships for all of our derivative instruments and accordingly any related accumulated unrealized gains and losses that were previously recorded in AOCI were reset to zero at the acquisition date. Historical information has not been restated under the updated segmentation and is not comparable following the change in ownership on April 1, 2022. See Notes 1 and 2 for further information regarding the acquisition of the Company and Note 3 for further information regarding the Company's operating segments.


	Successor Company
	December 31, 2022
Primary Underlying Risk/Instrument Type	Gross Notional Values/Units		Fair Value
			Assets		Liabilities
	(in millions)
Retained Business
Interest Rate
Interest Rate Swaps	$	12,131	$	228	$	(553)
Currency/Interest Rate
Foreign Currency Swaps	100		11		—
Credit
Credit Default Swaps	520		5		—
Equity
Equity Futures	(1,737)		46		—
Total Return Swaps	—		24		(49)
Equity Options	3,286		118		—
Total Derivatives, Retained Business	14,300		432		(602)

Ceded Business
Interest Rate
Interest Rate Swaps	2,517		48		(117)
Currency/Interest Rate
Foreign Currency Swaps	48		6		—
Credit
Credit Default Swaps	71		1		—
Equity
Total Return Swaps	—		—		—
Equity Options	7,139		180		(356)
Total Derivatives, Ceded Business	9,775		235		(473)

Total Derivatives (1)	$	24,075	$	667	$	(1,075)

The following table presents recognized derivative instruments, that are offset in the Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Consolidated Statements of Financial Position.


	December 31, 2022
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statement of Financial Position		Net Amounts Presented in the Statement of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives
Retained Business	$	183	$	(98)	$	85	$	(85)	$	—
Ceded Business	235		(235)		—		—		—
Total	$	418	$	(333)	$	85	$	(85)	$	—
Offsetting of Financial Liabilities:
Derivatives
Retained Business	$	353	$	(353)	$	—	$	—	$	—
Ceded Business	473		(272)		201		—		201
Repurchase agreements	311		—		311		(311)		—
Securities lending transactions	106		—		106		(103)		3
Total	$	1,243	$	(625)	$	618	$	(414)	$	204

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above see “Credit Risk” below and Note 11. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset.


	Successor Company
	Nine Months Ended December 31,2022
	Investment gains (losses), net		Other income		Total
	(in millions)
Retained Business
Interest Rate	$	(739)	$	—	$	(739)
Currency/Interest Rate	—		9		9
Credit	5		—		5
Equity	513		—		513
Total, Retained Business	(221)		9		(212)
Ceded Business
Interest Rate	(58)		—		(58)
Currency	—		2		2
Currency/Interest Rate	(22)		90		68
Credit	—		—		—
Equity	(611)		—		(611)
Total, Ceded Business	(691)		92		(599)
Total	$	(912)	$	101	$	(811)

The Company is exposed to credit-related losses in the event of non-performance by counterparties to financial derivative transactions with a positive fair value. FLIAC manages credit risk by (i) entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties governed by master netting agreements, as applicable; (ii) trading through central clearing and OTC parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single-party credit exposures which are subject to periodic management review.

The table below provides a summary of the gross notional amount and fair value of derivative contracts by the primary underlying risks, excluding embedded derivatives and associated reinsurance recoverables. Many derivative instruments contain multiple underlying risks. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements and cash collateral.


	Predecessor Company
	December 31, 2021
Primary Underlying Risk/Instrument Type	Gross Notional		Fair Value
			Assets		Liabilities
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Currency/Interest Rate
Foreign Currency Swaps	$	637	$	29	$	(1)

Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate
Interest Rate Futures	$	55	$	—	$	—
Interest Rate Swaps	10,520		339		(255)
Foreign Currency
Foreign Currency Forwards	50		—		(1)
Currency/Interest Rate
Foreign Currency Swaps	208		10		(1)
Credit
Credit Default Swaps	1,746		48		—
Equity
Equity Futures	855		1		(1)
Total Return Swaps	4,803		88		(81)
Equity Options	20,582		963		(1,028)
Total Derivatives Not Qualifying as Hedge Accounting Instruments	$	38,819	$	1,449	$	(1,367)
Total Derivatives(1)(2)	$	39,456	$	1,478	$	(1,368)

(1)Excludes embedded derivatives and associated reinsurance recoverables which contain multiple underlying risks. The fair value of these embedded derivatives was a net liability of $4,060 million as of December 31, 2021 included in “Future policy benefits” and $2,041 million as of December 31, 2021 included in “Policyholders’ account balances”. Other assets included $400 million as of December 31, 2021. The fair value of the related reinsurance, included in “Reinsurance recoverables” and/or “Reinsurance payables” was an asset of $1,881 million as of December 31, 2021.

The following table presents recognized derivative instruments (excluding embedded derivatives and associated reinsurance recoverables), that are offset in the Statements of Financial Position, and/or are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in the Consolidated Statements of Financial Position.


	December 31, 2021
	Gross Amounts of Recognized Financial Instruments		Gross Amounts Offset in the Statement of Financial Position		Net Amounts Presented in the Statement of Financial Position		Financial Instruments/ Collateral(1)		Net Amount
	(in millions)
Offsetting of Financial Assets:
Derivatives	$	1,478	$	(1,475)	$	3	$	—	$	3
Offsetting of Financial Liabilities:
Derivatives	$	1,368	$	(1,154)	$	215	$	(215)	$	—

For information regarding the rights of offset associated with the derivative assets and liabilities in the table above see “Credit Risk” below and Note 24. For securities purchased under agreements to resell and securities sold under agreements to repurchase, the Company monitors the value of the securities and maintains collateral, as appropriate, to protect against credit exposure. Where the Company has entered into repurchase and resale agreements with the same counterparty, in the event of default, the Company would generally be permitted to exercise rights of offset.


	Predecessor Company
	Three Months Ended March 31, 2022
	Realized Investment Gains (Losses)		Net Investment Income		Other Income (loss)		Change in AOCI
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Currency/Interest Rate	$	1	$	1	$	2	$	4
Total cash flow hedges	1		1		2		4
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(527)		—		—		—
Currency	—		—		—		—
Currency/Interest Rate	(6)		—		—		—
Credit	(12)		—		—		—
Equity	59		—		—		—
Embedded Derivatives	986		—		—		—
Total Derivatives Not Qualifying as Hedge Accounting Instruments	500		—		—		—
Total	$	501	$	1	$	2	$	4

	Predecessor Company
	Year Ended December 31, 2021
	Realized Investment Gains (Losses)		Net Investment Income		Other Income (loss)		Change in AOCI
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Currency/Interest Rate	$	7	$	13	$	14	$	68
Total cash flow hedges	7		13		14		68
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	(1,749)		—		—		—
Currency	2		—		—		—
Currency/Interest Rate	12		—		—		—
Credit	17		—		—		—
Equity	(1,465)		—		—		—
Embedded Derivatives (1)	9,300		—		—		—
Total Derivatives Not Qualifying as Hedge Accounting Instruments	6,117		—		—		—
Total	$	6,124	$	13	$	14	$	68


	Predecessor Company
	Year Ended December 31, 2020
	Realized Investment Gains (Losses)		Net Investment Income		Other Income (loss)		Change in AOCI
	(in millions)
Derivatives Designated as Hedge Accounting Instruments:
Cash flow hedges
Currency/Interest Rate	$	2	$	18	$	(25)	$	(43)
Total cash flow hedges	2		18		(25)		(43)
Derivatives Not Qualifying as Hedge Accounting Instruments:
Interest Rate	4,453		—		—		—
Currency	(1)		—		—		—
Currency/Interest Rate	(15)		—		—		—
Credit	—		—		—		—
Equity	(5,290)		—		—		—
Embedded Derivatives	(4,411)		—		—		—
Total Derivatives Not Qualifying as Hedge Accounting Instruments	(5,264)		—		—		—
Total	$	(5,262)	$	18	$	(25)	$	(43)


	(in millions)
Balance, December 31,2019 (Predecessor company)	$	—
Amount recorded in AOCI


Currency/Interest Rate	(48)
Amount reclassified from AOCI to income
Currency/Interest Rate	5
Balance, December 31,2020 (Predecessor Company)	$	(43)
Amount recorded in AOCI


Currency/Interest Rate	102
Amount reclassified from AOCI to income


Currency/Interest Rate	(34)
Balance, December 31, 2021 (Predecessor Company)	$	25
Amount recorded in AOCI


Currency/Interest Rate	9
Amount reclassified from AOCI to income


Currency/Interest Rate	(5)
Balance, March 31, 2022 (Predecessor Company)	$	29

The changes in fair value of cash flow hedges are deferred in AOCI and are included in “Net unrealized investment gains (losses)” in the Statements of Operations and Comprehensive Income (Loss); these amounts are then reclassified to earnings when the hedged item affects earnings.

There were no material amounts reclassified from AOCI into earnings relating to instances in which the Company discontinued cash flow hedge accounting because the forecasted transaction did not occur by the anticipated date or within the additional time period permitted by the authoritative guidance for the accounting for derivatives and hedging.

The Company is exposed to credit-related losses in the event of non-performance by counterparties to financial derivative transactions with a positive fair value. FLIAC manages credit risk by (i) entering into derivative transactions with highly rated major international financial institutions and other creditworthy counterparties governed by master netting agreement, as applicable; (ii) trading through central clearing and OTC parties; (iii) obtaining collateral, such as cash and securities, when appropriate; and (iv) setting limits on single-party credit exposures which are subject to periodic management review.