Reinsurance is used as part of the Company's risk management and capital management strategies. Under ceded reinsurance, we remain liable to the underlying policyholder if a third-party reinsurer is unable to meet its obligations. We evaluate the financial condition of reinsurers, monitor the concentration of counterparty risk and maintain collateral, as appropriate, to mitigate this exposure.

Effective December 31, 2015, the Company surrendered its New York license and reinsured the majority of its New York business, both the living benefit guarantees and base contracts, to Prudential Insurance. Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to the Company under the terms of the reinsurance agreements. The Company believes a material reinsurance liability resulting from such inability of reinsurers to meet their obligations is unlikely.

Effective April 1, 2016, the Predecessor Company reinsured the variable annuity base contracts, along with the living benefit guarantees, from Pruco Life Insurance Company (“Pruco Life”), excluding the Pruco Life Insurance Company of New Jersey (“PLNJ”) business which was reinsured to The Prudential Insurance Company of America (“Prudential Insurance”), in each case under a coinsurance and modified coinsurance agreement. This reinsurance agreement covers new and in force business and excludes business reinsured externally. As of December 31, 2020, Pruco Life discontinued the sales of traditional variable annuities with guaranteed living benefit riders. The discontinuation has no impact on the reinsurance agreement between Pruco Life and the Company.

Effective July 1, 2021, Pruco Life recaptured the risks related to its business, as discussed above, that had previously been reinsured to the Company from April 1, 2016 through June 30, 2021. The product risks related to the previously reinsured business that were being managed in the Predecessor Company, were transferred to Pruco Life. In addition, the living benefit hedging program related to the previously reinsured living benefit riders will be managed within Pruco Life after the recapture. This transaction is referred to as the “2021 Variable Annuities Recapture”. See further below for the specific impacts of this transaction.

Effective December 1, 2021, the Company entered into a reinsurance agreement with Pruco Life under which the Company reinsured certain of its variable and fixed indexed annuities and fixed annuities with a guaranteed lifetime withdrawal income feature to Pruco Life. The reinsurance of the variable indexed annuities transfers all significant risks, including mortality risk, embedded in the reinsured contracts to Pruco Life.

In the second quarter of 2022, in accordance with applicable state law, a program was instituted to novate a significant portion of the Ceded Business policies from FLIAC to Pruco Life Insurance Company (“Pruco Life”). The program does not have an impact on net equity or net income but has resulted in the reduction of certain activity/balances associated with these policies. During the nine months ended December 31, 2022, approximately $6.7 billion of account value, which generally approximates fair values of insurance liabilities, was transferred out of the Company as a result of the novation program, which represents approximately 66 percent of Ceded Business account value since the acquisition of the Company on April 1, 2022.


	Nine Months Ended December 31, 2022
		Total Business
	(in millions)
Premiums:
Direct		$	22
Ceded		(3)
Net premiums		19
Policy charges and fee income:
Direct		398
Ceded		(33)
Net policy charges and fee income		365
Asset management and service fees
Direct		71
Ceded		—
Net asset management and service fees		71




Policyholders benefits and changes in fair value of insurance liabilities
Direct		247
Ceded		(62)
Net policyholders benefits		185
Changes in fair value of insurance liabilities		(1,195)
Net policyholders benefits and changes in fair value of insurance liabilities		(1,010)


	December 31, 2022
	Registered Index-linked Annuities			New York Variable Annuities		Fixed Annuities (1)		Single Premium Immediate Annuities		Total
	(in millions)
ASSETS
Total investments	$	1,566		$	64	$	—	$	—	$	1,630
Cash and cash equivalents	439			—		—		—		439
Accrued investment income	11			—		—		—		11
Reinsurance recoverables	—			210		—		25		235
Net modified coinsurance receivable	18			—		—		—		18
Deposit asset	—			—		607		—		607
Other assets	14			—		—		—		14
Separate account assets	32			2,011		—		—		2,043
TOTAL ASSETS	$	2,080		$	2,285	$	607	$	25	$	4,997

LIABILITIES
Insurance liabilities	$	1,699		$	274	$	607	$	25	$	2,605
Other liabilities	349			—		—		—		349
Separate account liabilities	32		`	2,011		—		—		2,043
TOTAL LIABILITIES	$	2,080		$	2,285	$	607	$	25	$	4,997

Included in the registered index-linked annuities product is a modified coinsurance payable of $1,745 million equal to assets held in the modified coinsurance portfolio, which is included in the net modified coinsurance receivable.


	December 31, 2021
	(in millions)
Reinsurance recoverables	$	8,108
Deferred policy acquisition costs	(530)
Deferred sales inducements	(26)
Value of business acquired	(2)
Other assets	54


Reinsurance payables	7,183
Other liabilities	824


	Three Months Ended March 31		Twelve Months Ended December 31		Twelve Months Ended December 31
	2022		2021		2020
	(in millions)
Premiums:
Direct	$	9	$	24	$	26
Assumed	—		16		38
Ceded	(1)		(3)		(3)
Net premiums	8		37		61
Policy charges and fee income:
Direct	102		439		409
Assumed	—		819		1,566
Ceded(1)	(5)		(26)		(31)
Net policy charges and fee income	97		1,232		1,944
Asset management and service fees:
Direct	22		98		91
Assumed	—		165		308
Ceded	(2)		(8)		(8)
Net asset management and service fees	20		255		391
Realized investment gains (losses), net:
Direct	312		(4,689)		(2,208)
Assumed	—		12,351		(3,131)
Ceded	169		(173)		78
Realized investment gains (losses), net	481		7,489		(5,261)
Policyholders' benefits (including change in reserves):
Direct	31		49		72
Assumed	—		(253)		157
Ceded(2)	(5)		(16)		(6)
Net policyholders' benefits (including change in reserves)	26		(220)		223
Interest credited to policyholders’ account balances:
Direct	91		175		85
Assumed	—		477		98
Ceded	(6)		(12)		(3)
Net interest credited to policyholders’ account balances	85		640		180
Reinsurance expense allowances and general and administrative expenses, net of capitalization and amortization	(41)		1,694		1,036

(2)Includes $0.0 million, $(13.8) million and $0.1 million, of unaffiliated activity for (with respect to the Predecessor Company) for three months ended March 31, 2022, twelve months ended December 31, 2021 and 2020 respectively. There was no unaffiliated activity for the three months ended March 31, 2022


Day 1 Impact of 2021 Variable Annuities Recapture	Impacts of Recapture
	(in millions)
ASSETS
Total investments(1)(2)	$	(8,327)
Cash and cash equivalents	(409)
Deferred policy acquisition costs	(3,286)
Accrued investment income	(42)
Reinsurance recoverables	(181)
Income tax receivable	(787)
Value of business acquired	—
Deferred sales inducements	(388)
Receivables from parent and affiliates	(41)
Other assets	—
Separate account assets	—
TOTAL ASSETS	$	(13,461)
LIABILITIES AND EQUITY
LIABILITIES
Future policy benefits	$	(9,048)
Policyholders’ account balances	(3,199)
Payables to parent and affiliates	—
Long-term debt	—
Reinsurance payable	(115)
Other liabilities	(245)
Separate account liabilities	—
Total liabilities	(12,607)
EQUITY
Common stock	—
Additional paid-in capital(3)	(3,786)
Retained earnings	3,026
Accumulated other comprehensive income	(94)
Total equity	(854)
TOTAL LIABILITIES AND EQUITY	$	(13,461)


Day 1 Impact of 2021 Variable Annuities Recapture	Impacts of Recapture
	(in millions)
REVENUES
Other income (loss)	$	1
Realized investment gains (losses), net	5,142
TOTAL REVENUES	5,143
BENEFITS AND EXPENSES
Policyholders’ benefits	(257)
Interest credited to policyholders’ account balances	399
Commission expense	1,362
General, administrative and other expenses	(191)
TOTAL BENEFITS AND EXPENSES	1,313
INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES	3,830
Income tax expense (benefit)	804
NET INCOME (LOSS)	$	3,026


Affiliate	Period	Transaction	Security Type	Fair Value		Book Value		APIC Increase/(Decrease)		Realized Investment Gain/(Loss), Net		Derivative Gain/(Loss)
				(in millions)
Pruco Life	July 1, 2021	Sale	Derivatives, Fixed Maturities, Equity Securities, Commercial Mortgages and JV/LP Investments	$	4,908	$	4,720	$	0	$	173	$	15
PAI	July 1, 2021	Return of Capital	Fixed Maturities	$	3,420	$	3,420	$	(3,420)	$	0	$	0

As part of the recapture transaction, the Predecessor Company sent invested assets of $6.8 billion, net of $2.0 billion ceding commissions as consideration to Pruco Life, which is equivalent to the amount of statutory reserve credit taken as of June 30, 2021. The company released living benefit liabilities of $8.3 billion as well as variable annuity base contracts of $3.0 billion and benefit and payout reserves of $0.9 billion.

Also, the Predecessor Company derecognized its assumed Deferred Policy Acquisition Costs (“DAC”) and Deferred Sales Inducements (“DSI”) balances as of June 30, 2021. The Predecessor Company also recognized a deferred reinsurance gain from the original transaction of $0.2 billion. As a result of the recapture transaction, the Predecessor Company recognized a pre-tax gain of $3.8 billion immediately.