Income Tax

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Tax

12. Income Tax

The provision for income tax was as follows:

	Years Ended December 31,
	2021		2020		2019
	(In millions)
Current:
Federal	$	5	$	—	$	(35)
Deferred:
Federal	(76)		(433)		(303)
Provision for income tax expense (benefit)	$	(71)	$	(433)	$	(338)

The reconciliation of the income tax provision at the statutory tax rate to the provision for income tax as reported was as follows:

	Years Ended December 31,
	2021			2020			2019
	(Dollars in millions)
Tax provision at statutory rate	$	(1)		$	(365)		$	(241)
Tax effect of:
Dividends received deduction	(34)			(38)			(38)
Tax credits	(15)			(24)			(29)
Change in valuation allowance	18			—			—
Return to provision	12			2			(5)
Adjustments to deferred tax	(48)			(6)			(22)
Other, net	(3)			(2)			(3)
Provision for income tax expense (benefit)	$	(71)		$	(433)		$	(338)
Effective tax rate	1,654		%	25		%	30		%

Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at:

	December 31,
	2021		2020
	(In millions)
Deferred income tax assets:
Net operating loss carryforwards	$	1,253	$	1,485
Tax credit carryforwards	150		133
Employee benefits	4		4
Intangibles	45		62
Other	5		—
Total deferred income tax assets	1,457		1,684
Less: Valuation allowance	18		—
Total net deferred income tax assets	1,439		1,684
Deferred income tax liabilities:
Net unrealized investment gains	1,039		1,443
Policyholder liabilities and receivables	429		894
DAC	688		604
Investments, including derivatives	264		200
Other	—		4
Total deferred income tax liabilities	2,420		3,145
Net deferred income tax asset (liability)	$	(981)	$	(1,461)

The following table sets forth the net operating loss carryforwards for tax purposes at December 31, 2021.

	Net Operating Loss Carryforwards
	(In millions)
Expiration
2032-2037	$	2,049
Indefinite	3,918
	$	5,967

The following table sets forth the general business credits and foreign tax credits available for carryforward for tax purposes at December 31, 2021.

	Tax Credit Carryforwards
	General Business Credits		Foreign Tax Credits
	(In millions)
Expiration
2022-2025	$	—	$	18
2026-2030	—		96
2031-2035	—		19
2036-2040	17		—
Indefinite	—		—
	$	17	$	133

The Company believes that it is more likely than not that the benefit from certain tax credit carryforwards will not be realized. Accordingly, a valuation allowance of $18 million has been established on the deferred tax assets related to the tax credit carryforwards at December 31, 2021.

The Company’s liability for unrecognized tax benefits may increase or decrease in the next 12 months. A reasonable estimate of the increase or decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of the pending issues will not result in a material change to its consolidated financial statements, although the resolution of income tax matters could impact the Company’s effective tax rate in the future.

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:

	Years Ended December 31,
	2021		2020		2019
	(In millions)
Balance at January 1,	$	34	$	34	$	34
Additions for tax positions of prior years	—		—		—
Reductions for tax positions of prior years	—		—		—
Additions for tax positions of current year	—		—		—
Reductions for tax positions of current year	—		—		—
Settlements with tax authorities	—		—		—
Balance at December 31,	$	34	$	34	$	34
Unrecognized tax benefits that, if recognized would impact the effective rate	$	34	$	34	$	34

The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses, while penalties are included in income tax expense. Interest related to unrecognized tax benefits was not significant. The Company had no penalties for each of the years ended December 31, 2021, 2020 and 2019.

The Company is subject to examination by the Internal Revenue Service and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction and subsidiary. The Company is no longer subject to federal, state or local income tax examinations for years prior to 2010. Management believes it has established adequate tax liabilities, and final resolution of the audit for the years 2010 and forward is not expected to have a material impact on the Company’s consolidated financial statements.

Tax Sharing Agreements

For the periods prior to the Separation, the Company filed a consolidated federal life and non-life income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended. Current taxes (and the benefits of tax attributes such as losses) are allocated to the Company, and its includable subsidiaries, under the consolidated tax return regulations and a tax sharing agreement with MetLife. This tax sharing agreement states that federal taxes will be computed on a modified separate return basis with benefits for losses.

For periods after the Separation, the Company and any directly owned life insurance and reinsurance subsidiaries (including BHNY and BRCD) entered in a tax sharing agreement to join a life consolidated federal income tax return. The non-life subsidiaries of the Company will file their own federal income tax returns. The tax sharing agreements state that federal taxes are computed on a modified separate return basis with benefit for losses.

Income Tax Transactions with Former Parent

The Company entered into a tax separation agreement with MetLife. Among other things, the tax separation agreement governs the allocation between MetLife and the Company of the responsibility for the taxes of the MetLife group. The tax separation agreement also allocates rights, obligations and responsibilities in connection with certain administrative matters relating to the preparation of tax returns and control of tax audits and other proceedings relating to taxes. For the years ended December 31, 2021, 2020 and 2019, the Company paid MetLife $73 million, $0 and $2 million, respectively, under the tax separation agreement. At December 31, 2021 and 2020, the current income tax payable included $68 million and $121 million, respectively, payable to MetLife related to this agreement.