We have elected to apply the fair value option for FLIAC's entire portfolio of fixed maturity and equity securities and mortgage and other loans. The impact of the election has resulted in the following changes:

•Elimination of the "available-for-sale" designation on all fixed maturity securities, resulting in a change in the recording of unrealized gains and losses through "Investment gains, net" in the consolidated statement of income rather than in "Accumulated other comprehensive income" ("AOCI") as a component of equity in the consolidated statements of financial position;

•Elimination of the required allowance for current expected credit losses on applicable financial assets under ASC 326 - Financial Instruments - Credit Losses, which include fixed maturity securities designated as "available-for-sale" and mortgage and other loans; and

•Elimination of a significant portion of the required disclosures for available-for-sale securities and mortgage and other loans. These disclosures primarily relate to the amortized cost and unrealized gains and losses on available-for-sale securities. Disclosures for historical periods under the Predecessor Company are retained at the end of this note under "Predecessor Company".

The following table sets forth the composition of “Other invested assets,” as of the dates indicated.


	March 31, 2023						December 31, 2022
	Retained Business		Ceded Business		Total		Retained Business		Ceded Business		Total
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	—	$	3	$	3	$	—	$	4	$	4
Real estate-related	—		5		5		—		5		5
Subtotal equity method	—		8		8		—		9		9
Fair value:
Private equity	352		1		353		344		1		345
Total LPs/LLCs	352		9		361		344		10		354
Derivative instruments	74		—		74		85		—		85
Policy loans	11		—		11		11		—		11
Total other invested assets	$	437	$	9	$	446	$	440	$	10	$	450

The following table sets forth the composition of “Accrued investment income,” as of the dates indicated:


	March 31, 2023						December 31, 2022
	Retained Business		Ceded Business		Total		Retained Business		Ceded Business		Total
	(in millions)
Fixed maturity securities	$	40	$	9	$	49	$	37	$	10	$	47
Mortgage and other loans	1		—		1		1		—		1
Short-term investments and cash equivalents	1		2		3		3		1		4
Total accrued investment income	$	42	$	11	$	53	$	41	$	11	$	52

There were no write-downs on accrued investment income for the three months ended March 31, 2023.

The following table sets forth “Net investment income” by investment type, for the periods indicated:


	Three Months Ended March 31, 2023
	Retained Business		Ceded Business		Total
	(in millions)
Fixed maturities securities	$	47	$	14	$	61
Equity securities	—		1		1
Mortgage and other loans	4		—		4
Other invested assets	12		1		13
Short-term investments and cash equivalents	2		6		8
Gross investment income	65		22		87
Less: investment expenses	(9)		(2)		(11)
Net investment income	$	56	$	20	$	76

The activity above includes interest income related to fair value option investments, where applicable.

The following table sets forth “Investment gains, net” by investment type, for the periods indicated:


	Three Months Ended March 31, 2023
	Retained Business						Ceded Business						Total Business
	Unrealized		Realized		Total		Unrealized		Realized		Total		Unrealized		Realized		Total
	(in millions)
Fixed maturity securities	$	156	$	(26)	$	130	$	21	$	—	$	21	$	177	$	(26)	$	151
Equity securities	—		—		—		7		—		7		7		—		7
Derivatives	—		(100)		(100)		—		107		107		—		7		7
Total	$	156	$	(126)	$	30	$	28	$	107	$	135	$	184	$	(19)	$	165

In the normal course of business, FLIAC sells securities under agreements to repurchase and enters into securities lending transactions. These balances are recorded within Other liabilities in the unaudited interim consolidated statements of financial position.

The following table sets forth, by type, the securities that we have agreed to repurchase, all of which are contained in the Retained Business. The below amounts represent the cash received under the outstanding repurchase agreements.


	March 31, 2023								December 31, 2022
	Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 days		30-90 days		Total		Overnight & Continuous		Up to 30 days		30-90 days		Total
	(in millions)
U.S. corporate public securities	$	—	$	200	$	101	$	301	$	—	$	111	$	200	$	311

The market value of the securities posted as collateral under the repurchase agreements was $318 million and $326 million as of March 31, 2023 and December 31, 2022, respectively.

The following table sets forth the remaining contractual maturities of the Successor Company's securities lending transactions by the security type that was loaned, all of which are contained in the Ceded Business. The amounts below represent the cash collateral received for the loaned securities.


	March 31, 2023								December 31, 2022
	Remaining Contractual Maturities of the Agreements
	Overnight & Continuous		Up to 30 days		30-90 days		Total		Overnight & Continuous		Up to 30 days		30-90 days		Total
	(in millions)
Equity securities	$	164	$	—	$	—	$	164	$	106	$	—	$	—	$	106

The market value of the securities loaned was $162 million and $103 million as of March 31, 2023 and December 31, 2022, respectively.

The following table sets forth the sources of proceeds and related investment losses for available-for-sale fixed maturity securities:


	Three months ended March 31
	2022
	(in millions)
Fixed maturities, available-for-sale:
Proceeds from sales(1)	$	294
Proceeds from maturities/prepayments	108
Gross investment losses on sales and maturities	(21)

(1)Excludes activity from non-cash related proceeds due to the timing of trade settlements of $20 million for three months ended March 31, 2022.

The activity in the allowance for credit losses for fixed maturity securities, available-for-sale, was de minimis for the three months ended March 31, 2022.

The allowance for credit losses for mortgage and other loans declined by $1 million for the three months ended March 31, 2022. The decrease related to the improving credit environment.

See Note 2 to the Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information about the Predecessor Company’s methodology for developing the allowance for credit losses.

The following table sets forth “Net investment income” by investment type, for the periods indicated:


	Three Months Ended
	March 31, 2022
	(in millions)
Fixed maturities securities (1)	$	61
Equity securities	1
Mortgage and other loans	11
Other invested assets	29
Short-term investments and cash equivalents	1
Gross investment income	103
Less: investment expenses	(4)
Net investment income	$	99

The following table sets forth “Investment gains, net” by investment type, for the periods indicated:


	Three Months Ended March 31, 2022
	(in millions)
Fixed maturity securities (1)	$	(21)
Derivatives	502
Total	$	481

(1)Includes fixed maturity securities classified as available-for-sale and excludes fixed maturity securities classified as trading.