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Derivatives (Tables)

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The table below provides a summary of the gross notional amount and fair value of derivative contracts by the primary underlying risks they are utilized to manage. The fair value amounts below represent the value of derivative contracts prior to taking into account the netting effects of master netting agreements, accrued interest, and cash collateral.


	Notional Amount		Fair Value
			Net		Assets		Liabilities
As of December 31, 2023
Designated and qualifying as hedges
Cash flow hedges
Interest rate swaps	$	250	$	(29)	$	—	$	29

Not designated as hedges
Embedded derivatives
Funds withheld on modified coinsurance [2] [3]	—		302		—		(302)
Fixed indexed annuities [2] [3]	—		(135)		406		541
Other [2] [3]	—		—		(5)		(5)
Total embedded derivatives	—		167		401		234

Freestanding derivatives [1]
Variable annuities macro hedge program	10,340		5		151		146
Foreign currency swaps and forwards	202		12		12		—
Interest rate swaps, swaptions, and futures	1,087		(188)		—		188


	Notional Amount		Fair Value
			Net		Assets		Liabilities
Credit derivatives	500		10		10		—
Total freestanding derivatives	12,129		(161)		173		334

Total not designated as hedges	12,129		6		574		568

Total derivatives	$	12,379	$	(23)	$	574	$	597

As of December 31, 2022
Designated and qualifying as hedges
Cash flow hedges [1]
Interest rate swaps	$	250	$	—	$	—	$	—

Not designated as hedges
Embedded derivatives
Funds withheld on modified coinsurance [2] [3]	—		726		129		(597)
Fixed indexed annuities [2] [3]	—		(81)		243		324
Other [2] [3]	—		—		(29)		(29)
Total embedded derivatives	—		645		343		(302)

Freestanding derivatives [1]
Variable annuities macro hedge program	22,823		211		506		295
Foreign currency swaps and forwards	161		15		16		1
Interest rate swaps, swaptions, and futures	1,363		(1)		3		4
Credit derivatives	500		4		4		—
Total freestanding derivatives	24,847		229		529		300

Total not designated as hedges	24,847		874		872		(2)

Total derivatives	$	25,097	$	874	$	872	$	(2)

[1]Represents the gross fair value of freestanding derivatives excluding collateral and accrued income which are recorded in other investments and other liabilities on the balance sheets.

[2]For certain assumed and ceded reinsurance agreements the notional value is not indicative of the volume of activity. Refer to Note 6 - Reinsurance for additional information regarding the activity which generated the value of the embedded derivative.

[3]These derivatives are not held for risk management purposes. Assets are recorded in reinsurance recoverables and liabilities in other policyholder funds and benefits payable.

Offsetting Assets

The following presents the effect or potential effect of rights of set-off associated with recognized derivative assets and liabilities:


	As of December 31, 2023				As of December 31, 2022
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Gross amounts recognized [1]	$	202	$	(386)	$	529	$	(300)
Gross amounts offset [2]	(167)		329		(446)		195
Net amount presented [3]	35		(57)		83		(105)

Gross amounts not offset:
Cash collateral [2]	(30)		30		—		—
Net amount	5		(27)		83		(105)

Off-balance sheet securities collateral [4]	(1)		58		(68)		103
Net amount	$	4	$	31	$	15	$	(2)

[1]Represents the fair value of freestanding derivatives inclusive of accrued income.

[2]Excludes collateral associated with exchange-traded derivative instruments included in other assets.

[3]Derivative assets and liabilities, including cash collateral and accrued interest, are presented on the Company's balance sheets in other investments and other liabilities, respectively.

[4]Non-cash collateral received excludes initial margin and is not recognized on our balance sheets unless the obligor (transferor) has defaulted under the terms of the secured contract and is no longer entitled to redeem the pledged asset.

Refer to Note 3 - Investments for the effect of rights of set-off associated with repurchase agreements.

Offsetting Liabilities

As noted above, the Company’s current positions do not permit net presentation, however, the following presents the potential effect of rights of setoff associated with repurchase agreements:


	Successor Company
	As of December 31,
	2023		2022
Gross amounts recognized	$	(421)	$	(564)
Gross amounts not offset:
Financial instruments [1]	439		577
Net amount	$	18	$	13

[1]Included within fixed maturities and short-term investments on the Company's balance sheets.

The following presents the effect or potential effect of rights of set-off associated with recognized derivative assets and liabilities:


	As of December 31, 2023				As of December 31, 2022
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Gross amounts recognized [1]	$	202	$	(386)	$	529	$	(300)
Gross amounts offset [2]	(167)		329		(446)		195
Net amount presented [3]	35		(57)		83		(105)

Gross amounts not offset:
Cash collateral [2]	(30)		30		—		—
Net amount	5		(27)		83		(105)

Off-balance sheet securities collateral [4]	(1)		58		(68)		103
Net amount	$	4	$	31	$	15	$	(2)

[1]Represents the fair value of freestanding derivatives inclusive of accrued income.

[2]Excludes collateral associated with exchange-traded derivative instruments included in other assets.

[3]Derivative assets and liabilities, including cash collateral and accrued interest, are presented on the Company's balance sheets in other investments and other liabilities, respectively.

Refer to Note 3 - Investments for the effect of rights of set-off associated with repurchase agreements.

Derivative Instruments, Gain (Loss)

Non-Qualifying Derivatives

For non-qualifying, including embedded derivatives that are required to be bifurcated from their host contracts, the gain or loss on the derivative is recognized within investment and derivative related losses, net as follows:


	Successor Company						Predecessor Company
	For the Years Ended December 31,				For the Period of July 1, 2021 to December 31, 2021		For the Six Months Ended June 30, 2021
	2023		2022
Embedded derivatives
Modified coinsurance	$	247	$	809	$	15	$	22
Fixed indexed annuities	(54)		200		—		—
GMWB reinsurance contracts	—		—		—		(24)
GMWB and other products	5		5		—		82
Total embedded derivatives	198		1,014		15		80

Freestanding derivatives
Variable annuities macro hedge program	(897)		(1)		(100)		(301)
Foreign currency swaps and forwards	(1)		7		5		(2)
Interest rate swaps, swaptions, and futures	(40)		(306)		21		(76)
Credit derivatives	12		3		1		—
Total freestanding derivatives	(926)		(297)		(73)		(379)

Total	$	(728)	$	717	$	(58)	$	(299)

Disclosure of Credit Derivatives


	Notional Amount [2]		Fair Value		Weighted Average Years to Maturity	Underlying Referenced Credit Obligation [1]		Offsetting Notional Amount		Offsetting Fair Value
	Notional Amount [2]		Fair Value		Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount		Offsetting Fair Value
Basket credit default swaps [3] with investment grade risk exposure:
As of December 31, 2023	$	500	$	10	5 years	Corporate Credit	BBB+	$	—	$	—
As of December 31, 2022	$	500	$	4	5 years	Corporate Credit	BBB+	$	—	$	—

[1]The average credit ratings are based on availability and are generally the midpoint of the available ratings among Moody’s, S&P, and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.

[2]Notional amount is equal to the maximum potential future loss amount. These derivatives are governed by agreements and applicable law which include collateral posting requirements. There is no additional specific collateral related to these contracts or recourse provisions included in the contracts to offset losses.

[3]Comprised of swaps of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.

- Definition

Tabular disclosure of credit derivatives which includes information by sellers of credit derivatives, about each credit derivative, or each group of similar credit derivatives, including (a) the nature of the credit derivative - its term, how it arose, the events or circumstances that would require the seller to perform under the credit derivative, and the current status of the payment/performance risk of the credit derivative; (b) the maximum potential amount of future payments (undiscounted) the seller could be required to make under the credit derivative; (c) the current fair value of the credit derivative; and (d) the nature of any recourse provisions under the credit derivative, and any assets held either as collateral or by third parties. A credit derivative is a derivative instrument (1) in which one or more of its underlyings are related to the credit risk of a specified entity (or a group of entities) or an index based on the credit risk of a group of entities and (2) that exposes the seller to potential loss from credit-risk-related events specified in the contract. Examples of credit derivatives within the scope of this paragraph include, but are not limited to, credit default swaps, credit spread options, and credit index products; also includes a hybrid instrument that has an embedded credit derivative (for example, but not limited to, a credit-linked note).

+ References + Details