Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The following schedule discloses significant components of income tax expense (benefit) for each year presented:

	Years Ended December 31,
	2025		2024		2023
	(in thousands)
Current tax expense (benefit):
U.S. federal	$	292,713	$	151,544	$	698,170
State and local	4,088		5,763		14,550
Total	296,801		157,307		712,720
Deferred tax expense (benefit):
U.S. federal	123,717		(22,612)		(686,252)
State and local	65		454		0
Total	123,782		(22,158)		(686,252)
Total income tax expense (benefit) on income (loss) before equity in earnings of operating joint ventures	420,583		135,149		26,468
Income tax expense (benefit) on equity in earnings of operating joint ventures	(70)		24		(109)
Income tax expense (benefit) reported in equity related to:
Other comprehensive income (loss)	162,925		(151,234)		(5,638)
Total income tax expense (benefit)	$	583,438	$	(16,061)	$	20,721

Reconciliation of Expected Tax at Statutory Rates to Reported Income Tax Expense (Benefit)

The differences between income taxes expected at the U.S. federal statutory income tax rate of 21% applicable for 2025 and the reported income tax expense (benefit) are summarized as follows:

	Year Ended December 31, 2025
	($ in thousands)
Expected federal income tax expense/(benefit)	$	475,966	21.0	%
State taxes (net of federal benefit)	3,281		0.2	%
Tax credits	(23,245)		(1.0)	%
Nontaxable or nondeductible items	(36,341)		(1.6)	%
Other reconciling items	2,876		0.1	%
Foreign tax effects	(1,954)		(0.1)	%
Total	$	420,583	18.6	%

The differences between income taxes expected at the U.S. federal statutory income tax rate of 21% applicable for 2024 and 2023, and the reported income tax expense (benefit) are summarized as follows:

	Years Ended December 31,
	2024			2023
	($ in thousands)
Expected federal income tax expense (benefit)	$	204,342		$	100,305
Non-taxable investment income	(42,621)			(42,730)
Tax credits	(29,001)			(42,578)
State taxes (net of federal benefit)	4,911			11,495
Other	(2,482)			(24)
Reported income tax expense (benefit)	$	135,149		$	26,468
Effective tax rate	13.9		%	5.5		%

The following is a description of items that had a significant impact on the difference between the Company’s statutory U.S. federal income tax rate of 21% applicable for 2025, 2024, and 2023, and the Company’s effective tax rate during the periods presented:

Non-Taxable Investment Income. The U.S. Dividends Received Deduction (“DRD”) reduces the amount of dividend income subject to U.S. tax and is included in the non-taxable investment income shown in the table above. More specifically, the U.S. DRD constitutes $35 million of the total $37 million of 2025 non-taxable investment income, $41 million of the total $43 million of 2024 non-taxable investment income, and $40 million of the total $43 million of 2023 non-taxable investment income. The DRD for the current period was estimated using information from 2024, current year investment results, and current year’s equity market performance. The actual current year DRD can vary based on factors such as, but not limited to, changes in the amount of dividends received that are eligible for the DRD, changes in the amount of distributions received from fund investments, changes in the account balances of variable life and annuity contracts, and the Company’s taxable income before the DRD.

Tax Credits. These amounts primarily represent tax credits relating to foreign taxes withheld on the Company’s separate account investments.

State and Local Income Taxes. State income tax in Illinois represents the majority of the State and local income tax category. Note that in most jurisdictions, the Company’s insurance operations are subject to state premium taxes in lieu of state income taxes. Premium taxes are recorded as a general expense.

Other. This line item represents reconciling items that are individually less than 5% of the computed expected federal income tax expense (benefit) and have therefore been aggregated for purposes of this reconciliation in accordance with relevant disclosure guidance.

Schedule of Deferred Tax Assets and Deferred Tax Liabilities

	December 31,
	2025		2024
	(in thousands)
Deferred tax assets:
Insurance reserves	$	2,012,833	$	1,749,792
Investments	846,847		1,033,856
Net unrealized loss on securities	122,067		410,718
Other	0		5,647
Deferred tax assets	2,981,747		3,200,013
Deferred tax liabilities:
Deferred policy acquisition cost	1,298,694		1,227,858
Deferred sales inducements	61,449		66,686
Other	12,305		0
Deferred tax liabilities	1,372,448		1,294,544
Net deferred tax asset (liability)	$	1,609,299	$	1,905,469

The application of U.S. GAAP requires the Company to evaluate the recoverability of deferred tax assets and establish a valuation allowance if necessary to reduce the deferred tax asset to an amount that is more likely than not expected to be realized. Considerable judgment is required in determining whether a valuation allowance is necessary, and if so, the amount of such valuation allowance. In evaluating the need for a valuation allowance, the Company considers many factors, including: (1) the nature of the deferred tax assets and liabilities; (2) whether they are ordinary or capital; (3) in which tax jurisdictions they were generated and the timing of their reversal; (4) taxable income in prior carryback years as well as projected taxable earnings exclusive of reversing temporary differences and carryforwards; (5) the length of time that carryovers can be utilized in the various taxing jurisdictions; (6) any unique tax rules that would impact the utilization of the deferred tax assets; and (7) any tax planning strategies that the Company would employ to avoid a tax benefit from expiring unused. Although realization is not assured, management believes it is more likely than not that the deferred tax assets, net of valuation allowances, will be realized.

Changes in market conditions, including the significant rise in interest rates since the beginning of 2022, resulted in the recording of deferred tax assets related to net unrealized tax capital losses in the Company. When assessing recoverability of these deferred tax assets, the Company considers its ability and intent to hold the underlying securities to recovery in value, if necessary, as well as other factors as noted above. As of December 31, 2025, based on all available evidence, including capital loss carryback capacity, the Company concluded that the deferred tax assets related to the unrealized tax capital losses on the available-for-sale securities portfolios are, more likely than not, expected to be realized.

The Company had no valuation allowance as of December 31, 2025, and 2024. Adjustments to the valuation allowance will be made if there is a change in management’s assessment of the amount of deferred tax asset that is realizable.

The Company’s “Income (loss) from operations before income taxes and equity in earnings of operating joint venture” includes income from domestic operations of $2,267 million, $973 million and $478 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Income Taxes Paid

Income taxes paid during the year are disclosed in the table below and include tax installments made for the current year as well as tax payments and refunds related to prior periods.

	December 31,
	2025
	(in thousands)
Federal	$	194,863
State	170
Foreign	3,658
Total	$	198,691

Tax Audit and Unrecognized Tax Benefits

The Company’s liability for income taxes includes the liability for unrecognized tax benefits and interest that relate to tax years still subject to review by the IRS or other taxing authorities. The completion of review or the expiration of the Federal statute of limitations for a given audit period could result in an adjustment to the liability for income taxes.

The Company had no unrecognized tax benefits as of December 31, 2025, 2024, and 2023.

The Company classifies all interest and penalties related to tax uncertainties as income tax expense (benefit). The Company did not recognize tax related interest and penalties.

At December 31, 2025, the Company remains subject to examination in the U.S. for tax years 2014 through 2025.

The Company participates in the IRS’s Compliance Assurance Program. Under this program, the IRS assigns an examination team to review completed transactions as they occur in order to reach agreement with the Company on how they should be reported in the relevant tax returns. If disagreements arise, accelerated resolutions programs are available to resolve the disagreements in a timely manner.