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FAIR VALUE OF ASSETS AND LIABILITIES

3 Months Ended

Mar. 31, 2023

Fair Value Measurement – Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 - Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities.

Level 2 - Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs.

Level 3 - Fair value is based on at least one significant unobservable input for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value.

For a discussion of the Company's valuation methodologies for assets and liabilities measured at fair value and the fair value hierarchy, see Note 6 to the Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Fair Value Option Election

We have elected to adopt the fair value option for several of our financial assets and liabilities. The following are the financial assets and liabilities for which we have elected the fair value option. See Notes 2 and 6 to the Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for further information.

•Fixed maturity securities

•Equity securities

•Mortgage and other loans

•Reinsurance recoverable

•Separate account assets and liabilities

•Net modified coinsurance receivable/payable

•Deposit asset

•Insurance liabilities

Assets and Liabilities by Hierarchy Level – The tables below present the balances of assets and liabilities reported at fair value on a recurring basis, as of the dates indicated.


	Successor Company
	March 31, 2023
	Level 1		Level 2		Level 3		Netting (1)		Total
	(in millions)
Total Business
Assets
Fixed maturity securities
U.S Treasury securities and obligations of U.S. government authorities and agencies	$	—	$	587	$	—	$	—	$	587
Obligations of U.S. states and their political subdivisions	—		175		—		—		175
Foreign government bonds	—		5		—		—		5
U.S. corporate public securities	—		2,903		—		—		2,903
U.S. corporate private securities	—		147		182		—		329
Foreign corporate public securities	—		217		—		—		217
Foreign corporate private securities	—		33		36		—		69
Asset-backed securities(2)	—		478		191		—		669
Commercial mortgage-backed securities	—		42		—		—		42
Residential mortgage-backed securities	—		243		—		—		243
Total fixed maturity securities	—		4,830		409		—		5,239
Equity securities	182		—		—		—		182
Mortgage and other loans (3)	—		—		206		—		206
Short-term investments	—		62		—		—		62
Cash and cash equivalents	845		—		—		—		845
Other invested assets(4)	—		272		—		(198)		74
Deposit asset	—		—		608		—		608
Reinsurance recoverables	—		—		247		—		247

Subtotal excluding separate account assets	1,027		5,164		1,470		(198)		7,463
Separate account assets	—		23,985		—		—		23,985
Total assets	$	1,027	$	29,149	$	1,470	$	(198)	$	31,448
Liabilities
Insurance liabilities	$	—	$	—	$	5,751	$	—	$	5,751
Other liabilities - derivatives	—		513		—		(459)		54
Net modified coinsurance payable	—		—		45		—		45
Separate account liabilities	—		23,985		—		—		23,985
Total liabilities	$	—	$	24,498	$	5,796	$	(459)	$	29,835

(1)“Netting” amounts represent offsetting considerations as disclosed in Note 5.

(2)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(3)As of March 31, 2023, the difference between the aggregate fair value and the aggregate unpaid principal of mortgage and other loans was de minimis. There were no mortgage and other loans that were 90 days or more past due or in non-accrual status.

(4)Other invested assets within the above chart are comprised of derivatives. Excluded from the above chart are private equity funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. At March 31, 2023 the fair values of such investments were $353 million. See Note 4 for further details.


	Successor Company
	March 31, 2023
	Level 1		Level 2		Level 3		Netting (1)		Total
	(in millions)
Retained Business
Assets
Fixed maturity securities
U.S Treasury securities and obligations of U.S. government authorities and agencies	$	—	$	513	$	—	$	—	$	513
Obligations of U.S. states and their political subdivisions	—		145		—		—		145

U.S. corporate public securities	—		2,090		—		—		2,090
U.S. corporate private securities	—		—		182		—		182
Foreign corporate public securities	—		127		—		—		127
Foreign corporate private securities	—		—		36		—		36
Asset-backed securities(2)	—		459		191		—		650
Commercial mortgage-backed securities	—		42		—		—		42
Residential mortgage-backed securities	—		29		—		—		29
Total fixed maturity securities	—		3,405		409		—		3,814
Mortgage and other loans	—		—		206		—		206
Short-term investments	—		—		—		—		—
Cash and cash equivalents	389		—		—		—		389
Other invested assets(3)	—		78		—		(4)		74
Subtotal excluding separate account assets	389		3,483		615		(4)		4,483
Separate account assets	—		21,909		—		—		21,909
Total assets	$	389	$	25,392	$	615	$	(4)	$	26,392
Liabilities
Insurance liabilities	$	—	$	—	$	3,056	$	—	$	3,056
Other liabilities - derivatives	—		265		—		(265)		—
Separate account liabilities	—		21,909		—		—		21,909
Total liabilities	$	—	$	22,174	$	3,056	$	(265)	$	24,965

(1)“Netting” amounts represent offsetting considerations as disclosed in Note 5.

(2)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(3)Other invested assets within the above chart are comprised of derivatives. Excluded from the above chart are private equity funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. At March 31, 2023 the fair values of such investments were $352 million. See Note 4 for further details.


	Successor Company
	March 31, 2023
	Level 1		Level 2		Level 3		Netting (1)		Total
	(in millions)
Ceded Business
Assets
Fixed maturity securities
U.S Treasury securities and obligations of U.S. government authorities and agencies	$	—	$	74	$	—	$	—	$	74
Obligations of U.S. states and their political subdivisions	—		30		—		—		30
Foreign government bonds	—		5		—		—		5
U.S. corporate public securities	—		813		—		—		813
U.S. corporate private securities	—		147		—		—		147
Foreign corporate public securities	—		90		—		—		90
Foreign corporate private securities	—		33		—		—		33
Asset-backed securities(2)	—		19		—		—		19

Residential mortgage-backed securities	—		214		—		—		214
Total fixed maturity securities	—		1,425		—		—		1,425
Equity securities	182		—		—		—		182
Short-term investments	—		62		—		—		62
Cash and cash equivalents	456		—		—		—		456
Other invested assets(3)	—		194		—		(194)		—
Deposit asset	—		—		608		—		608
Reinsurance recoverables	—		—		247		—		247

Subtotal excluding separate account assets	638		1,681		855		(194)		2,980
Separate account assets	—		2,076		—		—		2,076
Total assets	$	638	$	3,757	$	855	$	(194)	$	5,056
Liabilities
Insurance liabilities	$	—	$	—	$	2,695	$	—	$	2,695
Other liabilities - derivatives	—		248		—		(194)		54
Net modified coinsurance payable	—		—		45		—		45
Separate account liabilities	—		2,076		—		—		2,076
Total liabilities	$	—	$	2,324	$	2,740	$	(194)	$	4,870

(1)“Netting” amounts represent offsetting considerations as disclosed in Note 5.

(2)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.


	Successor Company
	December 31, 2022
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Total Business
Assets
Fixed Maturity Securities
U.S Treasury securities and obligations of U.S. government authorities and agencies	$	—	$	696	$	—	$	—	$	696
Obligations of U.S. states and their political subdivisions	—		166		—		—		166
Foreign government bonds	—		5		—		—		5
U.S. corporate public securities	—		2,796		—		—		2,796
U.S. corporate private securities	—		144		146		—		290
Foreign corporate public securities	—		211		—		—		211
Foreign corporate private securities	—		31		36		—		67
Asset-backed securities(2)	—		377		155		—		532
Commercial mortgage-backed securities	—		43		—		—		43
Residential mortgage-backed securities	—		218		—		—		218
Total Fixed Maturity Securities	—		4,687		337		—		5,024

Equity securities	175		—		—				175
Mortgage and other loans (3)	—		—		196		—		196
Short-term investments	—		42		—		—		42
Cash and cash equivalents	872		—		—		—		872
Other invested assets(4)	46		621		—		(582)		85
Deposit asset	—		—		607		—		607
Reinsurance recoverables	—		—		235		—		235
Net modified coinsurance receivable	—		—		18		—		18
Subtotal excluding separate account assets	1,093		5,350		1,393		(582)		7,254
Separate account assets	—		23,601		—		—		23,601
Total assets	$	1,093	$	28,951	$	1,393	$	(582)	$	30,855
Liabilities

Insurance liabilities	—		—		5,546		—		5,546
Other liabilities - derivatives	—		1,076		—		(875)		201
Separate account liabilities	—		23,601		—		—		23,601
Total liabilities	$	—	$	24,677	$	5,546	$	(875)	$	29,348

(1)“Netting” amounts represent offsetting considerations as disclosed in Note 5.

(2)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(3)As of December 31, 2022, the difference between the aggregate fair value and the aggregate unpaid principal of mortgage and other loans was de minimis. There were no mortgage and other loans that were 90 days or more past due or in non-accrual status.

(4)Other invested assets within the above chart are comprised of derivatives. Excluded from the above chart are private equity funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. At December 31, 2022 the fair values of such investments were $345 million, respectively. See Note 4 for further details.


	Successor Company
	December 31, 2022
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Retained Business
Assets
Fixed Maturity Securities
U.S Treasury securities and obligations of U.S. government authorities and agencies	$	—	$	582	$	—	$	—	$	582
Obligations of U.S. states and their political subdivisions	—		136		—		—		136

U.S. corporate public securities	—		2,018		—		—		2,018
U.S. corporate private securities	—		—		146		—		146
Foreign corporate public securities	—		122		—		—		122
Foreign corporate private securities	—		—		36		—		36
Asset-backed securities(2)	—		358		155		—		513
Commercial mortgage-backed securities	—		43		—		—		43
Residential mortgage-backed securities	—		20		—		—		20
Total Fixed Maturity Securities	$	—	$	3,279	$	337	$	—	$	3,616
Mortgage and other loans	—		—		196		—		196
Short-term investments	—		3		—		—		3
Cash and cash equivalents	433		—		—		—		433
Other invested assets(3)	46		386		—		(347)		85
Subtotal excluding separate account assets	479		3,668		533		(347)		4,333
Separate account assets	—		21,558		—		—		21,558
Total assets	$	479	$	25,226	$	533	$	(347)	$	25,891
Liabilities
Insurance liabilities	—		—		2,941		—		2,941
Other liabilities - derivatives	—		602		—		(602)		—
Separate account liabilities	—		21,558		—		—		21,558
Total liabilities	$	—	$	22,160	$	2,941	$	(602)	$	24,499

(1)“Netting” amounts represent offsetting considerations as disclosed in Note 5.

(2)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(3)Other invested assets within the above chart are comprised of derivatives. Excluded from the above chart are private equity funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. At December 31, 2022, the fair values of such investments were $344 million. See Note 4 for further details.


	Successor Company
	December 31, 2022
	Level 1		Level 2		Level 3		Netting(1)		Total
	(in millions)
Ceded Business
Assets
Fixed maturity securities
U.S Treasury securities and obligations of U.S. government authorities and agencies	$	—	$	114	$	—	$	—	$	114
Obligations of U.S. states and their political subdivisions	—		30		—		—		30
Foreign government bonds	—		5		—		—		5
U.S. corporate public securities	—		778		—		—		778
U.S. corporate private securities	—		144		—		—		144
Foreign corporate public securities	—		89		—		—		89
Foreign corporate private securities	—		31		—		—		31
Asset-backed securities(2)	—		19		—		—		19
Commercial mortgage-backed securities	—		—		—		—		—
Residential mortgage-backed securities	—		198		—		—		198
Total fixed maturity securities	$	—	$	1,408	$	—	$	—	$	1,408
Equity securities	175		—		—		—		175
Short-term investments	—		39		—		—		39
Cash and cash equivalents	439		—		—		—		439
Other invested assets(3)	—		235		—		(235)		—
Deposit asset	—		—		607		—		607
Reinsurance recoverables	—		—		235		—		235
Net modified coinsurance receivable	—		—		18		—		18
Subtotal excluding separate account assets	614		1,682		860		(235)		2,921
Separate account assets	—		2,043		—		—		2,043
Total assets	$	614	$	3,725	$	860	$	(235)	$	4,964
Liabilities
Insurance liabilities	—		—		2,605		—		2,605
Other liabilities - derivatives	—		473		—		(272)		201
Separate account liabilities	—		2,043		—				2,043
Total liabilities	$	—	$	2,516	$	2,605	$	(272)	$	4,849

(1)“Netting” amounts represent offsetting considerations as disclosed in Note 5.

(2)Includes credit-tranched securities collateralized by syndicated bank loans, sub-prime mortgages, auto loans, credit cards, education loans and other asset types.

(3)Other invested assets within the above chart are comprised of derivatives. Excluded from the above chart are private equity funds for which fair value is measured at net asset value (“NAV”) per share (or its equivalent) as a practical expedient. At December 31, 2022, the fair values of such investments were $1 million. See Note 4 for further details.

Quantitative Information Regarding Internally Priced Level 3 Assets and Liabilities – The tables below present quantitative information on significant internally-priced Level 3 assets and liabilities.


	Successor Company
	March 31, 2023
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum		Maximum		Weighted Average		Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Retained business
Fixed maturity securities
U.S. corporate private securities	$	154	Discounted cash flow	Discount rate	4.88	%	9.19	%	6.65	%	Decrease
	28		Trade price	Trade price	N/A		N/A		N/A		Increase
Total U.S. corporate private securities	182

Foreign corporate private securities	36		Discounted cash flow	Discount rate	4.34	%	6.42	%	5.38	%	Decrease

Asset-backed securities	79		Discounted cash flow	Discount rate	6.83	%	8.64	%	8.05	%	Decrease
	112		Trade price	Trade price	N/A		N/A		N/A		Increase
Total asset-backed securities	191

Mortgage and other loans
Residential mortgage loans	158		Level yield	Market yield	6.76	%	10.03	%	8.47	%	Decrease
Commercial mortgage loans	48		Trade price	Trade price	N/A		N/A		N/A		Increase
Total Mortgage and other loans	206

Ceded business
Deposit asset	608		Fair values are determined using the same unobservable inputs as insurance liabilities.
Reinsurance recoverables	247		Fair values are determined using the same unobservable inputs as insurance liabilities.


Liabilities:
Insurance liabilities
Retained business	$	3,056	Discounted cash flow	Equity volatility curve (2)	19.5	%	26	%			Increase
				Lapse rate(3)	1	%	20	%			Decrease
				Spread over risk free (4)	0.00	%	2.48	%			Decrease
				Utilization rate(5)	77	%	100	%			Increase
				Withdrawal rate (6)	See table footnote (6) below.
				Mortality rate(7)	0	%	16	%			Decrease

Ceded business	2,695		Discounted cash flow	Equity volatility curve (2)	19.5	%	26	%			Increase
				Lapse rate(3)	1	%	20	%			Decrease
				Spread over risk free (4)	0.00	%	2.07	%			Decrease
				Utilization rate(5)	77	%	100	%			Increase
				Withdrawal rate (6)	See table footnote (6) below.
				Mortality rate(7)	0	%	16	%			Decrease

Net modified coinsurance payable	45		Fair values are determined using the same unobservable inputs as insurance liabilities.


	Successor Company
	December 31, 2022
	Fair Value		Valuation Techniques	Unobservable Inputs	Minimum		Maximum		Weighted Average		Impact of Increase in Input on Fair Value(1)
	(in millions)
Assets:
Retained business
U.S. corporate private securities	$	146	Discounted cash flow	Discount rate	4.75	%	8.03	%	6.56	%	Decrease
Foreign corporate public securities	36		Discounted cash flow	Discount rate	4.33	%	6.38	%	5.36	%	Decrease
Asset-backed securities	155		Discounted cash flow	Discount rate	7.19	%	8.51	%	7.94	%	Decrease
Mortgage and other loans
Residential mortgage loans	161		Level yield	Market yield	5.75	%	9.97	%	8.40	%	Increase
Commercial mortgage loans	35		Trade price	Trade price	N/A		N/A		N/A		Increase
Total Mortgage and other loans	196
Ceded business
Deposit asset	607		Fair values are determined using the same unobservable inputs as insurance liabilities.
Reinsurance recoverables	235		Fair values are determined using the same unobservable inputs as insurance liabilities.
Net modified coinsurance receivable	18		Fair values are determined using the same unobservable inputs as insurance liabilities.
Liabilities:
Retained business
Insurance liabilities	$	2,941	Discounted cash flow	Equity volatility curve (2)	19.5	%	26	%			Increase
				Lapse rate(3)	1	%	20	%			Decrease
				Spread over risk free (4)	0.00	%	2.43	%			Decrease
				Utilization rate(5)	92.5	%	100	%			Increase
				Withdrawal rate (6)	See table footnote (6) below.
				Mortality rate(7)	0	%	16	%			Decrease
Ceded business
Insurance liabilities	$	2,605	Discounted cash flow	Equity volatility curve (2)	19.5	%	26	%			Increase
				Lapse rate(3)	1	%	20	%			Decrease
				Spread over risk free (4)	0.00	%	2.21	%			Decrease
				Utilization rate(5)	92.5	%	100	%			Increase
				Withdrawal rate (6)	See table footnote (6) below.
				Mortality rate(7)	0	%	16	%			Decrease

(1)Conversely, the impact of a decrease in input would have the opposite impact on fair value as that presented in the table.

(2) The equity volatility curve assumption is based on 1 year and 2 year index-specific at-the-money implied volatilities grading to 10 year total variance. Increased volatility increases the fair value of the liability.

(3) Lapse rates for contracts with living benefit guarantees are adjusted at the contract level based on the in-the-moneyness of the living benefit and reflect other factors, such as the applicability of any surrender charges. Lapse rates are reduced when contracts are more in-the-money. Lapse rates for contracts with index-linked crediting guarantees may be adjusted at the contract level based on the applicability of any surrender charges, product type, and market related factors such as interest rates. Lapse rates are also generally assumed to be lower for the period where surrender charges apply.

(4) The spread over the risk-free rate (SOFR and LIBOR) swap curve represents the premium added to the proxy for the risk-free rate to reflect the Company's estimates of rates that a market participant would use to value the living benefits in both the accumulation and payout phases and index-linked interest crediting guarantees. This spread includes an estimate of NPR, which is the risk that the obligation will not be fulfilled by the Company. NPR is primarily estimated by utilizing the credit spreads associated with issuing funding agreements, adjusted for any illiquidity risk premium. In order to reflect the financial strength ratings of the Company, credit spreads associated with funding agreements, as opposed to credit spread associated with debt, are utilized in developing this estimate because funding agreements, living benefit guarantees, and index-linked interest crediting guarantees are insurance liabilities and are therefore senior to debt.

(5) The utilization rate assumption estimates the percentage of contracts that will utilize the benefit during the contract duration and begin lifetime withdrawals at various time intervals from contract inception. Utilization assumptions may vary by product type, tax status and age. The impact of changes in these assumptions is highly dependent on the product type, the age of the contractholder at the time of the sale, and the timing of the first lifetime income withdrawal.

(6) The withdrawal rate assumption estimates the magnitude of annual contractholder withdrawals relative to the maximum allowable amount under the contract. These assumptions vary based on the age of the contractholder, the tax status of the contract and the duration since the contractholder began lifetime withdrawals. As of March 31, 2023 and December 31, 2022, the minimum withdrawal rate assumption is 77% and the maximum withdrawal rate assumption may be greater than 100%. The fair value of the liability will generally increase the closer the withdrawal rate is to 100% and decrease as the withdrawal rate moves further away from 100%.

(7) The range reflects the mortality rates for the vast majority of business with living benefits, with policyholders ranging from 45 to 90 years old. While the majority of living benefits have a minimum age requirement, certain other contracts do not have an age restriction. This results in contractholders with mortality rates approaching 0% for certain benefits.

Interrelationships Between Unobservable Inputs – In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another, or multiple, inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

Corporate Securities – The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors. During weaker economic cycles, as the expectations of default increases, credit spreads widen, which results in a decrease in fair value.

Insurance Liabilities, at fair value – The Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. To the extent that more efficient contractholder behavior results in greater in-the-moneyness at the contract level, lapse rates may decline for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, lapse rates may decline as contracts become more in-the-money.

Changes in Level 3 Assets and Liabilities – The following tables describe changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods. When a determination is made to classify assets and liabilities within Level 3, the determination is based on significance of the unobservable inputs in the overall fair value measurement. All transfers are based on changes in the observability of the valuation inputs, including the availability of pricing service information that the Company can validate. Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the availability of pricing service information for certain assets that the Company can validate.


	Successor Company
	Three Months Ended March 31, 2023
	Fair Value, beginning of period		Total realized and unrealized gains (losses)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Retained Business
Fixed maturity securities
U.S. corporate private securities	$	146	$	—	$	19	$	—	$	—	$	(1)	$	—	$	—	$	18	$	182	$	—
Foreign corporate private securities	36		—		—		—		—		—		—		—		—		36		1
Asset-backed securities	155		(2)		38		—		—		—		—		—		—		191		(2)
Mortgage and other loans
Residential mortgage loans	161		—		13		—		—		(16)		—		—		—		158		—
Commercial mortgage loans	35		—		13		—		—		—		—		—		—		48		—
Ceded Business
Deposit asset	607		1		—		—		—		—		—		—		—		608		—
Reinsurance recoverables	235		12		—		—		—		—		—		—		—		247		—
Net modified coinsurance receivable (payable)	18		(63)		—		—		—		—		—		—		—		(45)		—


	Successor Company
	Three Months Ended March 31, 2023
			Incurred losses
	Fair Value, beginning of period		Reduction in estimates of ultimate losses		Increase in estimates of ultimate losses		Change in fair value (discount rate)		Paid losses		Other		Fair Value, end of period
	(in millions)
Insurance Liabilities
Retained Business	$	2,941	$	(348)	$	132	$	235	$	100	$	(4)	$	3,056
Ceded Business	2,605		(66)		67		76		13		—		2,695

"Total realized and unrealized gains (losses)" related to our level 3 assets are included in earnings in Investment gains (losses). Activity related to our level 3 liabilities is primarily recognized in earnings within change in Policyholder benefits and changes in fair value of insurance liabilities with the exception of changes related to the Company's own-credit risk, which are included in "Change in fair value (discount rate)" above and recorded in other comprehensive income (loss).


	Predecessor Company
	Three Months Ended March 31, 2022
	Fair Value, beginning of period		Total realized and unrealized gains (losses)(1)		Purchases		Sales		Issuances		Settlements		Other		Transfers into Level 3		Transfers out of Level 3		Fair Value, end of period		Unrealized gains (losses) for assets still held(2)
	(in millions)
Fixed maturities, available-for-sale:
U.S. government	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Corporate securities(3)	190		(9)		5		(4)		—		(2)		—		—		—		180		(9)
Structured securities(4)	76		(4)		—		(10)		—		(2)		—		—		(13)		47		(4)
Other assets:

Equity securities	1		—		—		—		—		—		—		—		—		1		—

Short term investments	13		—		—		—		—		(13)		—		—		—		—		—
Cash equivalents	8		—		—		—		—		(8)		—		—		—		—		—
Other assets	400		(21)		13		—		—		(16)		—		—		—		376		(6)
Reinsurance recoverables	1,881		201		4		—		—		19		(239)		—		—		1,866		222

Liabilities:
Future policy benefits	(4,060)		715		—		—		(48)		—		—		—		—		(3,393)		686
Policyholders' account balances(5)	(2,041)		124		—		—		—		(17)		—		—		—		(1,934)		89


	Predecessor Company
	Three Months Ended March 31, 2022
	Total realized and unrealized gains (losses)								Unrealized gains (losses) for assets still held(2)
	Realized investment gains (losses), net(1)		Other income (loss)		Included in other comprehensive income (loss)		Net investment income		Realized investment gains (losses), net		Other income (loss)		Included in other comprehensive income (loss)
	(in millions)
Fixed maturities, available-for-sale	$	—	$	—	$	(12)	$	—	$	—	$	—	$	(12)
Other assets:



Other assets	(21)		—		—		—		(6)		—		—
Reinsurance recoverables	201		—		—		—		222		—		—

Liabilities:
Future policy benefits	715		—		—		—		686		—		—
Policyholders' account balances	124		—		—		—		89		—		—

(1)Realized investment gains (losses) on future policy benefits and reinsurance recoverables primarily represent the change in the fair value of the Company's living benefit guarantees on certain of its variable annuity contracts.

(2)Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(3)Includes U.S. corporate public, U.S. corporate private, foreign corporate public and foreign corporate private securities.

(4)Includes asset-backed and residential mortgage-backed securities.

(5)Issuances and settlements for Policyholders' account balances are presented net in the rollforward.

Change in Fair Value of Insurance Contracts

The components of the change in fair value of our insurance contracts are reported in several line items within Revenues and Benefits and expenses in our consolidated statements of income and comprehensive income (loss). The revenue items include Premiums, Policy charges and fee income, and Asset management and service fees. The Benefits and expenses items include Policyholders' benefits and changes in fair value of insurance liabilities and commission expense. Policyholder benefits and changes in fair value of insurance liabilities includes the following changes in fair value of the assets and liabilities for which we have elected the fair value option:


	Successor Company
	March 31, 2023						December 31, 2022
	Retained Business		Ceded Business		Total		Retained Business		Ceded Business		Total
	(in millions)
Assets:
Reinsurance recoverables	$	—	$	12	$	12	$	—	$	(15)	$	(15)
Modified coinsurance receivable	—		78		78		—		(5,640)		(5,640)
Deposit asset	—		1		1		—		(1,989)		(1,989)
Liabilities:
Insurance liabilities	$	115	$	90	$	205	$	(421)	$	(7,644)	$	(8,065)

Changes in insurance liabilities attributable to the Company's own-credit risk are recorded in other comprehensive income (loss). Changes in the modified coinsurance payable are reported in Policyholder benefits and changes in fair value of insurance liabilities, however, they are not included in the above chart as they relate to the investment portfolio within the modified coinsurance agreement.

Fair Value of Financial Instruments

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. The financial instruments presented below are reported at carrying value on the Company’s Consolidated Statements of Financial Position. In some cases the carrying amount equals or approximates fair value.


	Successor Company
	March 31, 2023
	Fair Value								Carrying Amount
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Accrued investment income	$	—	$	53	$	—	$	53	$	53
Other invested assets - Policy loans	—		—		11		11		11
Liabilities:
Repurchase agreements	$	—	$	301	$	—	$	301	$	301
Cash collateral for loaned securities	—		164		—		164		164


	Successor Company
	December 31, 2022
	Fair Value								Carrying Amount
	Level 1		Level 2		Level 3		Total		Total
	(in millions)
Assets:
Accrued investment income	$	—	$	52	$	—	$	52	$	52
Other invested assets - Policy loans	—		—		11		11		11
Liabilities:
Repurchase agreements	$	—	$	311	$	—	$	311	$	311
Cash collateral for loaned securities	—		106		—		106		106

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details