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".


	September 30, 2023						December 31, 2022
	Retained Business		Ceded Business		Total		Retained Business		Ceded Business		Total
	(in millions)
LPs/LLCs:
Equity method:
Private equity	$	—	$	4	$	4	$	—	$	4	$	4
Real estate-related	—		5		5		—		5		5
Subtotal equity method	—		9		9		—		9		9
Fair value:
Private equity	346		—		346		344		1		345
Total LPs/LLCs	346		9		355		344		10		354
Derivative instruments	180		71		251		85		—		85
Policy loans	11		—		11		11		—		11
Total other invested assets	$	537	$	80	$	617	$	440	$	10	$	450


	September 30, 2023						December 31, 2022
	Retained Business		Ceded Business		Total		Retained Business		Ceded Business		Total
	(in millions)
Fixed maturity securities	$	42	$	6	$	48	$	37	$	10	$	47
Mortgage and other loans	3		—		3		1		—		1
Short-term investments and cash equivalents	5		1		6		3		1		4
Total accrued investment income	$	50	$	7	$	57	$	41	$	11	$	52

As of September 30, 2023, the aggregate fair value of mortgage and other loans that were 90 days or more past due and in non-accrual status was $2 million. The aggregate unpaid principal balance for these loans approximated fair value as of September 30, 2023. As of December 31, 2022, there were no mortgage and other loans that were 90 days or more past due or in non-accrual status.


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
	Retained Business		Ceded Business		Total		Retained Business		Ceded Business		Total
	(in millions)
Fixed maturities securities	$	58	$	13	$	71	$	156	$	40	$	196
Equity securities	—		—		—		—		2		2
Mortgage and other loans	6		—		6		14		—		14
Other invested assets	14		1		15		33		2		35
Short-term investments and cash equivalents	1		4		5		6		16		22
Gross investment income	79		18		97		209		60		269
Less: investment expenses	(23)		(1)		(24)		(39)		(3)		(42)
Net investment income	$	56	$	17	$	73	$	170	$	57	$	227


	Three Months Ended September 30, 2022						Six Months Ended September 30 2022
	Retained Business		Ceded Business		Total		Retained Business		Ceded Business		Total
	(in millions)
Fixed maturities securities	$	42	$	34	$	76	$	78	$	78	$	156
Equity securities	—		1		1		—		2		2
Secured receivable	—		7		7		—		18		18
Other invested assets	9		1		10		9		5		14
Short-term investments and cash equivalents	—		3		3		—		5		5
Gross investment income	51		46		97		87		108		195
Less: investment expenses	(4)		(1)		(5)		(5)		(1)		(6)
Net investment income	$	47	$	45	$	92	$	82	$	107	$	189

The following tables set forth “Investment gains (losses), net” by investment type, for the periods indicated:


	Three Months Ended September 30, 2023
	Retained Business						Ceded Business						Total Business
	Unrealized		Realized		Total		Unrealized		Realized		Total		Unrealized		Realized		Total
	(in millions)
Fixed maturity securities	$	(252)	$	(4)	$	(256)	$	(6)	$	(14)	$	(20)	$	(258)	$	(18)	$	(276)


Derivatives	—		(177)		(177)		—		(29)		(29)		—		(206)		(206)
Total	$	(252)	$	(181)	$	(433)	$	(6)	$	(43)	$	(49)	$	(258)	$	(224)	$	(482)


	Nine Months Ended September 30, 2023
	Retained Business						Ceded Business						Total Business
	Unrealized		Realized		Total		Unrealized		Realized		Total		Unrealized		Realized		Total
	(in millions)
Fixed maturity securities	$	(158)	$	(32)	$	(190)	$	3	$	(21)	$	(18)	$	(155)	$	(53)	$	(208)
Equity securities	—		—		—		5		—		5		5		—		5

Derivatives	—		(616)		(616)		—		215		215		—		(401)		(401)
Total	$	(158)	$	(648)	$	(806)	$	8	$	194	$	202	$	(150)	$	(454)	$	(604)


	Three Months Ended September 30, 2022
	Retained Business						Ceded Business						Total Business
	Unrealized		Realized		Total		Unrealized		Realized		Total		Unrealized		Realized		Total
	(in millions)
Fixed maturity securities	$	(312)	$	(26)	$	(338)	$	40	$	(160)	$	(120)	$	(272)	$	(186)	$	(458)
Secured receivable	—		—		—		—		(8)		(8)		—		(8)		(8)
Equity securities	—		—		—		(13)		—		(13)		(13)		—		(13)
Derivatives	—		(125)		(125)		—		149		149		—		24		24
Total	$	(312)	$	(151)	$	(463)	$	27	$	(19)	$	8	$	(285)	$	(170)	$	(455)


	Six Months Ended September 30, 2022
	Retained Business						Ceded Business						Total Business
	Unrealized		Realized		Total		Unrealized		Realized		Total		Unrealized		Realized		Total
	(in millions)
Fixed maturity securities	$	(607)	$	(97)	$	(704)	$	100	$	(498)	$	(398)	$	(507)	$	(595)	$	(1,102)
Secured receivable	—		—		—		—		(59)		(59)		—		(59)		(59)
Equity securities	—		—		—		(32)		—		(32)		(32)		—		(32)
Derivatives	—		133		133		—		(693)		(693)		—		(560)		(560)
Total	$	(607)	$	36	$	(571)	$	68	$	(1,250)	$	(1,182)	$	(539)	$	(1,214)	$	(1,753)

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.


	September 30, 2023								December 31, 2022
	Remaining Contractual Maturities of the Agreements
	Up to 30 days		30-90 days		1-5 Years		Total		Up to 30 days		30-90 days		Total
	(in millions)
U.S. corporate public securities	$	101	$	414	$	494	$	1,009	$	111	$	200	$	311

The market value of the securities posted as collateral under the repurchase agreements was $1,015 million and $326 million as of September 30, 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.


	September 30, 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	$	—	$	—	$	—	$	—		$	106	$	—	$	—	$	106

There were no outstanding securities lending agreements at September 30, 2023. The market value of the securities loaned at December 31, 2022 was $103 million.

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.


	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


	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.