INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

A summary of the income tax (expense) benefit in the statements of income (loss) follows:

	Year Ended December 31,
	2021		2020		2019
	(in millions)
Income tax (expense) benefit:
Current (expense) benefit	$	—	$	40	$	(1)
Deferred (expense) benefit	5		(11)		14
Total	$	5	$	29	$	13

The Federal income taxes attributable to operations are different from the amounts determined by multiplying the earnings before income taxes and noncontrolling interest by the expected Federal income tax rate of 21% . The sources of the difference and their tax effects are as follows:

	Year Ended December 31,
	2021		2020		2019
	(in millions)
Expected income tax (expense) benefit	$	4	$	8	$	12
Non-taxable investment income	1		1		1
Tax settlements/uncertain tax position release	—		8
Change in tax law	—		12
Income tax (expense) benefit	$	5	$	29	$	13

On March 27 2020, in response to the COVID 19 pandemic, the Coronavirus AID, Relief, and Economic Security (CARES) Act was signed into law. Under the CARES Act, Net Operating Losses arising in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back five years. The impact on the Company’s financial statement was a tax benefit of $12 million.

During the fourth quarter of 2020, the Company agreed to the Internal Revenue Service’s Revenue Agent’s Report for its consolidated 2010 through 2013 Federal corporate income tax returns. The impact on the Company’s financial statements and unrecognized tax benefits was a tax benefit of $8 million.

The components of the net deferred income taxes are as follows:

	December 31,
	2021				2020
	Assets		Liabilities		Assets		Liabilities
	(in millions)
Net operating loss and credits	24		—		7		—
Reserves and reinsurance	193		—		189		—
DAC	—		66		—		43
Unrealized investment gains (losses)	—		27		—		52
Investments	—		131		—		128
Other	24		—		24		—
Total	$	241	$	224	$	220	$	223

The Company has Federal net operating loss carryforwards of $100 million and $23 million, for the years ending December 31, 2021 and 2020, respectively, which do not expire.

A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows:

	Year Ended December 31,
	2021		2020		2019
	(in millions)
Balance at January 1,	$	1	$	4	$	4
Additions for tax positions of prior years	—		—		—
Reductions for tax positions of prior years	—		(3)		—
Additions for tax positions of current year	—		—		—
Settlements with tax authorities	—		—		—
Balance at December 31,	$	1	$	1	$	4
Unrecognized tax benefits that, if recognized, would impact the effective rate	$	1	$	1	$	4

    

It is reasonably possible that the total amount of unrecognized tax benefits will change within the next 12 months due to the addition of new issues for open tax years. The possible change in the amount of unrecognized tax benefits cannot be estimated at this time.

As of December 31, 2021, tax years 2014 and subsequent remain subject to examination by the IRS.