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Adoption of Long-Duration Targeted Improvements
 12 Months Ended
Dec. 31, 2023
Accounting Changes and Error Corrections [Abstract]  
Adoption of Long-Duration Targeted Improvements Adoption of Long-Duration Targeted Improvements
The FASB issued ASU 2018-12 Targeted Improvements to the Accounting for Long-Duration Contracts (“LDTI”) in August 2018, which impacted the recognition, measurement, presentation, and disclosure requirements for certain long-duration contracts issued by an insurance company. The guidance is intended to improve the timeliness of recognizing changes in the LFPB, by requiring annual or more frequent updates of insurance assumptions and modifying rates used to discount future cash flows. Further, the guidance amends the accounting for certain market-based options or guarantees associated with account balance contracts, simplify the amortization of DAC and other balances amortized on a basis consistent with DAC, and improve the effectiveness of the required disclosures.
The Company adopted the update effective as of January 1, 2023 and applied the retrospective method as of July 1, 2021, the date of the Sixth Street Acquisition. At the acquisition date, VOBA and negative VOBA balances were established for the difference between the fair value of the insurance contract assets and liabilities. Upon adoption, the LFPB and contractual features that meet the criteria for MRBs were adjusted to conform to LDTI, with an offsetting adjustment made to VOBA or negative VOBA. No adjustments were recorded to AOCI or retained earnings upon the initial adoption. As such, the Company retrospectively adjusted prior period amounts shown in the annual financial statements to reflect the new guidance.
The following table presents the Successor Company rollforward of life-contingent payout annuities from the acquired balance measured before adoption, to the opening balance as of the adoption date:
Balance as of July 1, 2021
$14,613 
Change in discount rate assumptions(2,280)
Change in cash flow assumptions and other activity(554)
Adjusted balance as of July 1, 2021
$11,779 
Less: reinsurance recoverables(2,938)
Adjusted balance as of July 1, 2021, net of reinsurance
$8,841 
The previously reported and adjusted gross reserve balances in the table above exclude certain fully reinsured life-contingent payout annuities, traditional life insurance reserves, and other reserves of $0.9 billion and $1.1 billion, respectively.
The following table presents a rollforward of MRB liabilities associated with VA, from the acquired balance measured before adoption, to the opening balance as of the adoption date:
Balance as of July 1, 2021$— 
Addition of existing balances [1]
261 
Fair value adjustments399 
Adjusted balance as of July 1, 2021$660 
Less: ceded market risk benefits [2]
(776)
Adjusted balance as of July 1, 2021, net of reinsurance$(116)
[1]Associated reserves were previously recorded within reserve for future policy benefits and other policyholder funds and benefits payable on the balance sheets.
[2]Included within reinsurance recoverables on the balance sheets.
The following table presents a rollforward of VOBA associated with VA and negative VOBA associated with life-contingent payout annuities, from the acquired balance measured before adoption, to the opening balance as of the adoption date:
Value of Business Acquired
Negative
VOBA [1]
Balance, as of July 1, 2021$565 $17 
Establishment of market risk benefits(200)
Change in discount rate assumptions for the liability for future policy benefits [2]
2,280 
Change in cash flow assumptions and other activity for the liability for future policy benefits554 
Adjusted balance, as of July 1, 2021$365 $2,851 
[1]Included within other policyholder funds and benefits payable on the balance sheets.
[2]Relates to the change from a risk-free discount rate to a upper-medium grade (or low credit risk), fixed-income instrument yield.
The following table summarizes the effects of adoption on the applicable financial statement line items on the balance sheet as of December 31, 2022 (Successor Company):
Reported
AdoptionAdjusted
Assets
Reinsurance recoverables$40,400 $(1,177)$39,223 
Market risk benefits— 325 325 
Value of business acquired and deferred acquisition costs518 (22)496 
Deferred income taxes1,120 (241)879 
Other assets453 (12)441 
Total assets$152,866 $(1,127)$151,739 
Liabilities and Stockholder's Equity
Liabilities
Reserve for future policy benefits$21,432 $(2,694)$18,738 
Other policyholder funds and benefits payable31,320 507 31,827 
Market risk benefits— 1,204 1,204 
Funds withheld liability10,485 (11)10,474 
Other liabilities2,018 (1,037)981 
Total liabilities152,510 (2,031)150,479 
Stockholder's Equity
Accumulated other comprehensive loss(2,166)507 (1,659)
Retained earnings639 397 1,036 
Total stockholder's equity356 904 1,260 
Total liabilities and stockholder's equity$152,866 $(1,127)$151,739 
The following table summarizes the effects of adoption on the applicable financial statement line items in the statement of operations for the year ended December 31, 2022 (Successor Company):
Reported
AdoptionAdjusted
Revenues
Premiums$109 $(10)$99 
Policy charges and fee income
506 3 509 
Investment and derivative related losses, net
(10)(66)(76)
Total revenues1,383 (73)1,310 
Benefits, Losses, and Expenses
Benefits and losses606 (85)521 
Change in market risk benefits— (295)(295)
Amortization value of business acquired and deferred acquisition costs79 (18)61 
Total benefits, losses, and expenses986 (398)588 
Income before income taxes
397 325 722 
Income tax expense
38 69 107 
Net income$359 $256 $615 

The following table summarizes the effects of adoption on the applicable financial statement line items in the statement of operations for the period of July 1, 2021 to December 31, 2021 (Successor Company):
Reported
AdoptionAdjusted
Revenues
Premiums$31 $(5)$26 
Policy charges and fee income
410 24 434 
Investment and derivative related losses, net
(20)(30)(50)
Total revenues919 (11)908 
Benefits, Losses, and Expenses
Benefits and losses285 (124)161 
Change in market risk benefits— 2 2 
Amortization value of business acquired and deferred acquisition costs90 (66)24 
Insurance operating costs and other expenses
213 (1)212 
Total benefits, losses, and expenses588 (189)399 
Income before income taxes
331 178 509 
Income tax expense
51 37 88 
Net income$280 $141 $421 
The following table summarizes the effects of adoption on the applicable financial statement line items in the statement of comprehensive loss for the year ended December 31, 2022 (Successor Company):
ReportedAdoptionAdjusted
Net income$359$256$615
Other comprehensive loss
Unrealized loss on available-for-sale securities(2,129)(477)(2,606)
Gain related to discount rate for reserve for future policy benefits— 873 873 
Gain related to credit risk for market risk benefits— 96 96 
Other comprehensive loss(2,156)492 (1,664)
Comprehensive loss$(1,797)$748 $(1,049)
The following table summarizes the effects of adoption on the applicable financial statement line items in the statement of comprehensive loss for the period of July 1, 2021 to December 31, 2021 (Successor Company):
ReportedAdoptionAdjusted
Net income$280$141$421
Other comprehensive income
Unrealized loss on available-for-sale securities(10)(6)(16)
Gain related to discount rate for reserve for future policy benefits— (14)(14)
Gain related to credit risk for market risk benefits— 35 35 
Other comprehensive income (loss)
(10)15 5 
Comprehensive income
$270 $156 $426 
The following table summarizes the effects of adoption on the applicable financial statement line items in the statement of cash flows for the year ended December 31, 2022 (Successor Company):
ReportedAdoptionAdjusted
Net income
$359$256 $615
Adjustments to reconcile net income to net cash provided by operating activities
Investment and derivative related losses, net
10 66 76 
Amortization of value of business acquired and deferred acquisition costs
79 (18)61 
Amortization of unearned revenue reserve
(33)(35)(68)
Deferred income tax expense
56 68 124 
Interest credited on investment and universal life-type contracts
534 (53)481 
Change in market risk benefits
— (295)(295)
Other operating activities, net
(38)(2)(40)
Change in operating assets and liabilities
Reinsurance recoverables
(758)17 (741)
Reserve for future policy benefits
230 (2)228 
Other assets and liabilities
93 (2)91 
Net cash provided by operating activities
$880 $— $880 
The following table summarizes the effects of adoption on the applicable financial statement line items in the statement of cash flows for the period of July 1, 2021 to December 31, 2021 (Successor Company):
ReportedAdoptionAdjusted
Net income$280$141 $421
Adjustments to reconcile net income to net cash used for operating activities
Investment and derivative related losses, net
20 30 50 
Amortization of value of business acquired and deferred acquisition costs
90 (66)24 
Amortization of unearned revenue reserve
— — — 
Deferred income tax expense
138 36 174 
Change in market risk benefits
— 2 2 
Other operating activities, net
(208)(65)(273)
Change in operating assets and liabilities
Reinsurance recoverables
(63)34 (29)
Reserve for future policy benefits
(40)(113)(153)
Other assets and liabilities
(132)1 (131)
Net cash used for operating activities
$(376)$— $(376)