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RELATED PARTY TRANSACTIONS
 12 Months Ended
Dec. 31, 2023
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS RELATED PARTY TRANSACTIONS
SUCCESSOR COMPANY
The Successor Company has transactions and relationships with affiliates. Although we seek to ensure that these transactions and relationships are fair and reasonable, it is possible that the terms of these transactions are not the same as those that would result from transactions among unrelated parties.

Expense Charges and Allocations

A portion of the Successor Company’s expenses are allocations or charges from FGH. These expenses primarily relate to general and administrative expenses which include accounting, actuarial, risk management, and data processing services. FGH also provides the Company with personnel and certain other services. The allocation of costs for other services are based on estimated level of usage, transactions or time incurred in providing the respective services. During the year ended December 31, 2023 and nine months ended December 31, 2022 FLIAC was allocated $30 million and $23 million, respectively, of costs for these services.
Intercompany Liquidity Agreement

FLIAC entered into an intercompany liquidity agreement with FGH and its affiliates that allows the Successor Company to borrow or loan funds of up to $300 million to meet the short-term liquidity and other capital needs of itself and FGH and its affiliates. During the year ended December 31, 2023, the Successor Company borrowed a cumulative total of $434 million, over a series of transactions, from FGH under the agreement, all of which was repaid in full during the year, plus interest.

In November 2023, the Successor Company loaned $150 million of funds to FGH under the agreement, which was repaid in full, plus interest, in December 2023.

During the nine months ended December 31, 2022, the Company borrowed against the agreement on two separate transactions, each of which was for $75 million. Both transactions were repaid in full, plus interest.

Affiliated Investment and Advisory Activities

As of April 1, 2022, FLIAC became affiliated with The Carlyle Group Inc. (“Carlyle”), whereby Carlyle, through an affiliated investment fund, has a equity investment in its parent, FGH. As of December 31, 2023, Carlyle’s investment percentage in FGH was 38.53%. In addition, FLIAC entered into an investment management and consulting services agreement with an affiliate of Carlyle. During 2022, FLIAC incurred $10 million of costs from this Carlyle affiliate for services provided to the Successor Company in connection with FGH's purchase of the Company from Prudential Financial.

Certain of Carlyle's affiliates also provide investment management services for FLIAC pursuant to investment management agreements. Investment management fees are charged based on a percentage of assets under management and were $5 million and de minimis for the year ended December 31, 2023 and the nine months ended December 31, 2022, respectively. These fees are recorded within net investment income in the consolidated statements of operations.

As of December 31, 2023 and 2022, assets under management had a market value of $529 million and $732 million, respectively, and were comprised primarily of private credit fixed income assets and limited partnership interests or investments in limited partnerships. FLIAC recognized $29 million and $9 million of investment income related to these assets under management during the year ended December 31, 2023 and the nine months ended December 31, 2022, respectively.

In connection with the investment management agreements, as of December 31, 2023 FLIAC has unfunded commitments of $135 million to fund private investments where one or more Carlyle entities serves as general partner to the fund.

Affiliated Asset Transfers

The Successor Company may participate in affiliated asset transfers with its parent and affiliates. Book and market value differences for trades with its parent and affiliates are recognized within Investment gains (losses), net. The table below shows affiliated asset trades for the year ended December 31, 2023 and the nine months ended December 31, 2022.
AffiliateDateTransactionSecurity TypeFair ValueBook ValueInvestment Gains (Losses), net
(in millions)
Fortitude Reinsurance Company Ltd.December 2023SaleLimited Partnership$26 $26 $— 
Fortitude Reinsurance Company Ltd.December 2023SaleLimited Partnership47 47 $— 
Fortitude Reinsurance Company Ltd.December 2023SaleLimited Partnership24 14 $10 
Fortitude Reinsurance Company Ltd.November 2023SaleLimited Partnership135 135 $— 
Fortitude Reinsurance Company Ltd.November 2023SaleLimited Partnership56 56 — 
Fortitude Reinsurance Company Ltd.November 2023SaleLimited Partnership37 33 4 
Fortitude Re Investments, LLCMay 2023SaleLimited Partnership12 12 — 
Fortitude Re Investments, LLCMay 2023SaleLimited Partnership7 7 — 
Fortitude Reinsurance Company, Ltd.July 2022PurchaseLimited Partnership37 37 — 
Fortitude Reinsurance Company, Ltd.July 2022PurchaseLimited Partnership15 15 — 
Fortitude Reinsurance Company, Ltd.July 2022PurchaseLimited Partnership9 9 — 
Fortitude Re Investments, LLCAugust 2022PurchaseLimited Partnership42 42 — 
Fortitude Re Investments, LLCAugust 2022PurchaseLimited Partnership23 23 — 
Fortitude Re Investments, LLCAugust 2022PurchaseLimited Partnership15 15 — 

PREDECESSOR COMPANY

The Predecessor Company had extensive transactions and relationships with Prudential Insurance and other former affiliates. Although the Predecessor Company sought to ensure that these transactions and relationships were fair and reasonable, it is possible that the terms of these transactions were not the same as those that would result from transactions among unrelated parties.

Expense Charges and Allocations

The Predecessor Company’s expenses were allocations or charges from Prudential Insurance or other affiliates. These expenses were grouped into general and administrative expenses and agency distribution expenses.

The Predecessor Company’s general and administrative expenses were charged using allocation methodologies based on business production processes. The Predecessor Company operated under service and lease agreements whereby services of officers and employees, supplies, use of equipment and office space were provided by Prudential Insurance. The Predecessor Company reviewed its allocation methodology periodically and made adjustments accordingly. General and administrative expenses included allocations of stock compensation expenses related to a stock-based awards program and a deferred compensation program issued by Prudential Financial. The expense charged to the Predecessor Company for the stock-based awards program was de minimis for the years ended December 31, 2021. There was no expense charged to the Predecessor Company for the stock-based awards program for the three months ended March 31, 2022. The expense charged to the Predecessor Company for the deferred compensation program was $2 million for the year ended December 31, 2021. There was no expense charged to the Predecessor Company for the deferred compensation program for the three months ended March 31, 2022.

The Predecessor Company was charged for its share of employee benefit expenses. These expenses included costs for funded and non-funded, non-contributory defined benefit pension plans. Some of these benefits were based on final earnings and length of service while others were based on an account balance, which took into consideration age, service and earnings during a career. The Predecessor Company’s share of net expense for the pension plans was $7 million for the year ended December 31, 2021. The Predecessor Company had no share of net expense for the pension plans for the three months ended March 31, 2022.

The Predecessor Company was also charged for its share of the costs associated with welfare plans issued by Prudential Insurance. These expenses included costs related to medical, dental, life insurance and disability. The Predecessor Company's share of net expense for the welfare plans was $3 million for the year ended December 31, 2021. The Predecessor Company had no share of net expense for the welfare plans for three months ended March 31, 2022.
Prudential Insurance sponsors voluntary savings plans for its employee 401(k) plans. The plans provided for salary reduction contributions by employees and matching contributions by the Predecessor Company of up to 4 percent of annual salary. The Predecessor Company's expense for its share of the voluntary savings plan was $3 million for the year ended December 31, 2021. The Predecessor Company had no expense for its share of the voluntary savings plan for the three months ended March 31, 2022.

The Predecessor Company paid commissions and certain other fees to Prudential Annuities Distributors, Inc ("PAD"), an affiliate of the Predecessor Company, in consideration for PAD’s marketing and underwriting of the Predecessor Company’s products. Commissions and fees were paid by PAD to broker-dealers who sold the Predecessor Company’s products. Commissions and fees paid by the Predecessor Company to PAD were $29 million for the three months ended March 31, 2022 and $467 million for the year ended December 31, 2021.

The Predecessor Company was charged for its share of corporate expenses incurred by Prudential Financial to benefit its businesses, such as advertising, executive oversight, external affairs and philanthropic activity. The Predecessor Company’s share of corporate expenses was $9 million for the three months ended March 31, 2022 and $35 million for the year ended December 31, 2021.

Affiliated Investment Management Expenses

The Predecessor Company paid investments management expenses in accordance with an agreement with PGIM, Inc. (“PGIM”), an affiliate of the Predecessor Company and investment manager to certain Predecessor Company general account and separate account assets. Investment management expenses paid to PGIM related to this agreement were $4 million for the three months ended March 31, 2022 and $23 million for the year ended December 31, 2021. These expenses were recorded as net investment income in the consolidated statements of operations.

Derivative Trades

In its ordinary course of business, the Predecessor Company entered into OTC derivative contracts with an affiliate, Prudential Global Funding, LLC (“PGF”). For these OTC derivative contracts, PGF had a substantially equal and offsetting position with an external counterparty. See Note 6 for additional information.

Joint Ventures

The Predecessor Company previously made investments in joint ventures with certain subsidiaries of Prudential Financial. Net investment income related to these ventures includes no gain or loss for the three months ended March 31, 2022 and gains of $18 million for the year ended December 31, 2021.

Affiliated Asset Management and Service Fees

The Predecessor Company had a revenue sharing agreement with AST Investment Services, Inc. (“ASTISI”) and PGIM Investments LLC (“PGIM Investments”) whereby the Predecessor Company received fee income based on policyholders' separate account balances invested in the Advanced Series Trust and The Prudential Series Fund. Income received from ASTISI and PGIM Investments related to this agreement was $22 million for the three months ended March 31, 2022 and $96 million and for the year ended December 31, 2021. These revenues were recorded as Asset management and service fees in the consolidated statements of operations.

Affiliated Notes Receivable

There were no outstanding affiliated notes receivable related to the Predecessor Company as of December 31, 2021. During the year ended December 31, 2021, the Predecessor Company recognized revenues of $1 million, on affiliated notes receivables which were recorded in other income on the consolidated statements of operations.

Affiliated Commercial Mortgage Loans

There were no outstanding affiliated commercial mortgage loans related to the Predecessor Company as of December 31, 2021. Effective July 2021, the Company transferred all affiliated commercial mortgage loans to Pruco Life as part of the 2021 Variable Annuities Recapture.
Revenues were $2 million for the year ended December 31, 2021, and were included in net investment income in the consolidated statements of operations.

Affiliated Asset Transfers

The Predecessor Company participated in affiliated asset trades with former parent and sister companies. Book and market value differences for trades with a parent and sister were recognized within Realized investment gains (losses), net. The table below shows affiliated asset trades for the three months ended March 31, 2022 and for the year ended December 31, 2021.
AffiliateDateTransaction  Security Type  Fair Value  Book Value  Realized
Investment
Gain/
(Loss)
    (in millions)
Prudential InsuranceApril 2021PurchaseFixed Maturities$201 $201 $— 
Prudential InsuranceApril 2021PurchaseCommercial Mortgage Loan177 177 — 
Vantage Casualty Insurance Co.June 2021PurchaseFixed Maturities15 15 — 
Prudential InsuranceJune 2021SaleEquities3 3 — 
Pruco LifeJune 2021SaleEquities40 38 2 
Passaic Fund LLCJune 2021Transfer OutOther Invested Assets12 12 — 
Passaic Fund LLCJuly 2021Transfer OutOther Invested Assets196 196 — 
Prudential InsuranceSeptember 2021PurchaseFixed Maturities2 2 — 
Prudential InsuranceSeptember 2021SaleFixed Maturities12 11 1 
Prudential Retirement Insurance and Annuity CompanySeptember 2021SaleFixed Maturities26 24 2 
Prudential Retirement Insurance and Annuity CompanySeptember 2021PurchaseFixed Maturities35 35 — 
Prudential InsuranceSeptember 2021PurchaseDerivatives— — — 
Prudential Retirement Insurance and Annuity CompanySeptember 2021PurchaseDerivatives(1)(1)— 
Prudential FinancialOctober 2021SaleEquities10 10 — 
Pruco LifeNovember 2021SaleDerivatives1 — 1 
Prudential Arizona Reinsurance November 2021PurchaseFixed Maturities55 55 — 
Pruco LifeDecember 2021Transfer OutFixed Maturities2,038 1,934 104 
Pruco LifeDecember 2021SaleFixed Maturities57 57 — 
Prudential FinancialDecember 2021DividendFixed Maturities167 167 — 
Prudential FinancialDecember 2021SaleFixed Maturities144 138 6 
Prudential FinancialDecember 2021PurchaseCommercial Mortgage Loan185 185 — 
Pruco LifeDecember 2021Transfer OutCommercial Mortgage Loan538 517 21 
Pruco LifeDecember 2021SaleDerivatives8 2 6 
Pruco LifeJanuary 2022SaleFixed Maturities4 5 (1)
Prudential FinancialJanuary 2022SaleCommercial Mortgage Loan29 30 (1)
Pruco LifeJanuary 2022SaleDerivatives— — — 
Pruco LifeFebruary 2022SaleFixed Maturities129 138 (9)
Prudential FinancialMarch 2022SaleFixed Maturities33 33 — 
Debt Agreements
The Predecessor Company was authorized to borrow funds up to $9 billion from Prudential Financial and its affiliates to meet its capital and other funding needs. As of March 31, 2022 and December 31, 2021, there was no short or long-term debt to affiliates outstanding. Effective August 2021, $300 million in long-term debt was transferred from the Predecessor Company to Pruco Life based on the market value of the loans plus accrued interest, which totaled $326 million. The Predecessor Company recognized a loss of $24 million on the transfer. The $300 million debt was legally extinguished.

The total interest expense incurred by the Predecessor Company related to affiliated loans and cash collateral with PGF was $9 million for the year ended December 31, 2021. There was no total interest expense incurred by the Predecessor Company related to affiliated loans and cash collateral with PGF for the three months ended March 31, 2022.

Contributed Capital and Dividends

Through March 31, 2022 and December 31, 2021, the Predecessor Company did not receive any capital contributions.

In March 2022, the Predecessor Company had a return of capital in the amount of $306 million to PAI. In July 2021, in connection with the 2021 Variable Annuities Recapture, there was a $3,813 million return of capital to PAI. See Note 8 for additional information.
In March, June, and December of 2021, the Predecessor Company paid a dividend of $192 million, $188 million, and $451 million, respectively to PAI.