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 April 1, 2016, the Predecessor Company reinsured the variable annuity base contracts, along with the living benefit guarantees, from Pruco Life, excluding the Pruco Life Insurance Company of New Jersey (“PLNJ”) business which was reinsured to 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.

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”.

Effective December 1, 2021, the Predecessor 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 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. The program does not have an impact on total equity or net income but has resulted in the reduction of certain activity/balances associated with these policies. During the year ended December 31, 2023, approximately $641 million of account value, which generally approximates fair values of insurance liabilities, was transferred out of the Company as a result of the novation program. As of December 31, 2023 approximately 72 percent of account value (since the acquisition of the Company on April 1, 2022) attributable to Ceded Business within the novation program had been novated to Pruco Life. The Company does not expect significant novation activity during 2024.


	Year Ended December 31, 2023		Nine Months Ended December 31, 2022
	(in millions)
Premiums:
Direct	$	31	$	22
Ceded	(4)		(3)
Net premiums	$	27	$	19
Policy charges and fee income:
Direct	$	495	$	398
Ceded	(39)		(33)
Net policy charges and fee income	$	456	$	365
Asset management and service fees
Direct	$	91	$	71
Ceded	—		—
Net asset management and service fees	$	91	$	71




Policyholders benefits and changes in fair value of insurance liabilities
Direct	$	343	$	247
Ceded	(58)		(62)
Net policyholders benefits	$	285	$	185
Changes in fair value of insurance liabilities	55		(1,195)
Net policyholders benefits and changes in fair value of insurance liabilities	$	340	$	(1,010)


	December 31, 2023
	Registered Index-linked Annuities		New York Variable Annuities		Fixed Annuities (1)		Single Premium Immediate Annuities		Total
	(in millions)
ASSETS
Total investments	$	1,140	$	59	$	—	$	—	$	1,199
Cash and cash equivalents	406		—		—		—		406
Accrued investment income	9		—		—		—		9
Reinsurance recoverables			176		—		30		206

Deposit asset	—		—		438		—		438

Separate account assets	29		2,041		—		—		2,070
TOTAL ASSETS	$	1,584	$	2,276	$	438	$	30	$	4,328

LIABILITIES
Insurance liabilities	$	1,468	$	232	$	438	$	30	$	2,168
Other liabilities	12		—		—		—		12
Net modified coinsurance payable	75		3		—		—		78
Separate account liabilities	29		2,041		—		—		2,070
TOTAL LIABILITIES	$	1,584	$	2,276	$	438	$	30	$	4,328


	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 and the New York variable annuities products is a modified coinsurance payable of $1,603 million and $1,745 million as of December 31, 2023 and 2022, respectively, which is equal to the assets held in the modified coinsurance portfolio and is included in the net modified coinsurance receivable/payable.


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

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


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.