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Income Tax
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Tax INCOME TAX
Pre-tax income for the years ended December 31, 2024, 2023 and 2022 consists of the following (dollars in millions): 
202420232022
Pre-tax income – U.S.
$572 $898 $294 
Pre-tax income – foreign
408 262 424 
Total pre-tax income$980 $1,160 $718 
The provision for income tax expense for the years ended December 31, 2024, 2023 and 2022 consists of the following (dollars in millions):
 202420232022
Current income tax expense (benefit):
U.S.$150 $(18)$10 
Foreign167 58 120 
Total current317 40 130 
Deferred income tax expense (benefit):
U.S.(129)236 32 
Foreign68 (25)35 
Total deferred(61)211 67 
Total provision for income taxes$256 $251 $197 
The effective tax rate for 2024 was higher than the U.S. statutory rate of 21% primarily due to income earned in non-U.S. jurisdictions and the tax expense related to a legal entity restructuring which were partially offset by the release of valuation allowances in non-U.S. jurisdictions and benefits related to return to provision adjustments.
The effective tax rate for 2023 was higher than the U.S. statutory rate of 21% primarily as a result of income earned in jurisdictions with tax rates higher than the U.S. and changes to the valuation allowance which were partially offset with foreign tax credits.
The Organization for Economic Cooperation and Development (“OECD”) developed Model Global Anti-Base Erosion (“GloBE”) rules under Pillar II establishing a Global Minimum Tax to ensure multinational enterprises with consolidated revenue of more than EUR750 Million pay at least an effective tax rate of 15% on income arising in each jurisdiction in which they operate. As of December 31, 2024, many of the jurisdictions in which the Company operates enacted Pillar II legislation into domestic law with an effective date of January 1, 2024, while others enacted domestic law with an effective date of January 1, 2025. The Company recorded a tax expense of $5 million related to Pillar II.
The Inflation Reduction Act of 2022 (“the Act”) was enacted in 2022. For tax years ending after December 31, 2022, the Act imposes a 15% minimum tax on adjusted financial statement income for “applicable corporations” with average financial statement income over $1 billion for the previous 3-year period ending in 2022 or after. Based on the current guidance the Company is not an applicable corporation for 2024. The Act also imposes a 1% excise tax on stock buybacks of a publicly traded corporation. The Act is not expected to have a material impact to the Company’s tax expense.
Bermuda enacted the Corporate Income Tax Act of 2023 on December 27, 2023. The Bermuda regime establishes a statutory tax rate of 15%, applicable to companies with annual revenue of EUR750 million or more. The tax regime is effective for fiscal years beginning on or after January 1, 2025. The Company maintains deferred taxes and associated valuation allowances on the applicable subsidiaries’ financial statements.
The Company’s effective tax rate differed from the U.S. federal income tax statutory rate of 21% as a result of the following for the years ended December 31, 2024, 2023 and 2022 (dollars in millions):
 202420232022
Tax provision at U.S. statutory rate$206 $244 $150 
Increase (decrease) in income taxes resulting from:
Tax rate differences on income in other jurisdictions44 14 35 
Differences in tax basis in foreign jurisdictions(18)4 10 
Deferred tax valuation allowance(5)15 (4)
Amounts related to uncertain tax positions2 (2)3 
Compensation1 2 (2)
Corporate rate changes(4)— 7 
GILTI, net of credits14 — 21 
Subpart F for non-full inclusion companies26 28 60 
Foreign tax credits(5)(42)(72)
Return to provision and amended adjustments(17)(9)(13)
Pillar II5 — — 
Effects of tax law changes and restructuring9 — — 
Other, net(2)(3)2 
Total provision for income taxes$256 $251 $197 
Effective tax rate (1)
26.3 %21.8 %27.3 %
(1)    The Company rounds amounts in the financial statements to millions and calculates the effective tax rate from the underlying whole dollar amounts. Thus, certain amounts may not recalculate based on the numbers due to rounding.
Total income taxes for the years ended December 31, 2024, 2023 and 2022 were as follows (dollars in millions):
202420232022
Provision for income taxes$256 $251 $197 
Income tax from OCI and additional paid-in-capital:
Net unrealized investment gains (losses) recognized in OCI(176)449 (2,542)
Liability for future policyholder benefits586 (161)2,224 
Market risk benefits— (3)5 
Foreign currency translation32 22 35 
Unrealized pension and postretirement2 (2)7 
   Total income taxes provided$700 $556 $(74)
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities as of December 31, 2024 and 2023 are presented in the following tables (dollars in millions):
 20242023
Deferred income tax assets:
Nondeductible accruals$102 $96 
Net operating loss carryforward846 272 
Capital loss carryforwards92 15 
Tax credit carryforward220 108 
Invested assets1,407 1,092 
Anticipated future foreign tax credit442 267 
Subtotal3,109 1,850 
Valuation allowance(678)(567)
Total deferred income tax assets2,431 1,283 
Deferred income tax liabilities:
Deferred acquisition costs931 833 
Policy reserves and other reinsurance liabilities3,428 1,789 
Outside basis difference foreign subsidiaries— 152 
Foreign currency translation190 179 
Other3 80 
Total deferred income tax liabilities4,552 3,033 
Net deferred income tax liabilities$2,121 $1,750 
Balance sheet presentation of net deferred income tax liabilities:
Included in other assets$78 $112 
Included in deferred income taxes2,199 1,862 
Net deferred income tax liabilities$2,121 $1,750 
As of December 31, 2024, the valuation allowance against deferred tax assets was $678 million. The increase in the valuation allowance was primarily related to the deferred tax associated with mark to market losses included in AOCI. The Company reduced the deferred tax asset to the amount more likely than not to be realized. Other increases to the valuation allowance related to losses in foreign subsidiaries that do not have a history of income. These increases were partially offset by releases in certain jurisdictions where the deferred tax assets are more likely than not to be utilized.
As of December 31, 2023, the valuation allowance against deferred tax assets was $567 million. During 2023, the Company established a $303 million deferred tax asset and a corresponding valuation allowance related to the enactment of the Bermuda tax regime. Other increases to the valuation allowance were related to losses in foreign subsidiaries that do not have a history of income. These increases were partially offset by releases in certain jurisdictions where the deferred tax assets are more likely than not to be utilized.
The earnings of substantially all of the Company's foreign subsidiaries have been permanently reinvested in foreign operations. U.S. tax law generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, the Company does not expect to incur material income taxes if these funds were repatriated.
During 2024, 2023 and 2022, the Company received federal and foreign income tax refunds of approximately $12 million, $13 million and $3 million, respectively. The Company made cash income tax payments of approximately $90 million, $311 million and $131 million, in 2024, 2023 and 2022, respectively.
The following table presents consolidated net operating loss carryforwards (“NOL”) as of December 31, 2024 (dollars in millions):
2024
NOL with no expiration and with no valuation allowance$2,845 
NOL with a full valuation allowance591 
NOL with no expiration and a partial valuation allowance463 
NOL with expiration date of 2034 and no valuation allowance— 
Total net operating loss carryforwards$3,899 
These net operating losses, other than the net operating losses for which there is a valuation allowance, are expected to be utilized in the normal course of business during the period allowed for carryforwards and in any event, are not expected to be lost, due to the application of tax planning strategies that management would utilize.
As of December 31, 2024, the Company had foreign tax credit carryforwards of $220 million related to the U.S. and Ireland. The earliest year of expiration on the U.S. foreign tax credits is 2033. The U.S. credits are expected to be utilized in the
ordinary course of business to offset U.S. tax liabilities. The Ireland foreign tax credit of $23 million has a full valuation allowance.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. U.S. audit periods remain open for refund claims for 2018-2020 and for years beginning after 2020. The Company is also subject to audit by state and foreign jurisdictions for years 2019 and thereafter, with a few exceptions.
As of December 31, 2024, the Company’s total amount of unrecognized tax benefits is $33 million all of which would affect the effective tax rate, if recognized. Management believes it is reasonably possible that the unrecognized tax benefit could decrease by up to $6 million over the next 12 months if statues expire.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022 is as follows (dollars in millions):
  
Total Unrecognized Tax Benefits
 202420232022
Beginning balance, January 1$33 $36 $34 
Additions for tax positions of prior years2 9 3 
Reductions for tax positions of prior years(9)(15)(4)
Additions for tax positions of current year7 3 3 
Ending balance, December 31$33 $33 $36 
The Company recognized minimal interest expense (benefit) associated with uncertain tax positions in 2024, 2023 and 2022. As of December 31, 2024 and 2023, the Company had $3 million and $3 million of accrued interest related to unrecognized tax benefits. There are no penalties accrued as of December 31, 2024 or 2023.