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Value of Business Acquired, Deferred Acquisition Costs and Deferred Sales Inducements

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Value of Business Acquired, Deferred Acquisition Costs and Deferred Sales Inducements

Value of Business Acquired, Deferred Acquisition Costs and Deferred Sales Inducements

A summary of the changes in the carrying amounts of our VOBA, DAC and DSI intangible assets are as follows (in millions):

			VOBA						DAC						DSI						Total
Balance at December 31, 2020			$	1,466					$	222					$	36					$	1,724
Deferrals			—						278						44						322
Amortization			(204)						(16)						(12)						(232)
Interest			15						5						—						20
Unlocking			16						—						1						17
Adjustment for net unrealized investment (gains) losses			(15)						(27)						(5)						(47)
Purchase price allocation adjustments			61
Balance at June 30, 2021			$	1,339					$	462					$	64					$	1,804
			VOBA						DAC						DSI						Total
Balance at December 31, 2019			$	—					$	—					$	—					$	—
F&G acquisition			1,890						—						—						1,890
Deferrals			—						28						6						34
Amortization			(3)						—						—						(3)
Interest			3						—						—						3
Adjustment for net unrealized investment (gains) losses			(101)						(8)						(2)						(111)
Balance at June 30, 2020			$	1,789					$	20					$	4					$	1,813

Amortization of VOBA, DAC, and DSI is based on the current and future expected gross margins or profits recognized, including investment gains and losses. The interest accrual rate utilized to calculate the accretion of interest on VOBA ranged from 0% to 4.71%. The adjustment for unrealized net investment losses (gains) represents the amount of VOBA, DAC, and DSI that would have been amortized if such unrealized gains and losses had been recognized. This is referred to as the “shadow adjustments” as the additional amortization is reflected in AOCI rather than the unaudited Condensed Consolidated Statements of Earnings. As of June 30, 2021 and June 30, 2020, the VOBA balances included cumulative adjustments for net unrealized investment gains of $298 million and $101 million, respectively, the DAC balances included cumulative adjustments for net unrealized investment gains of $53 million and $8 million, respectively, and the DSI balance included net unrealized investment gains of $10 million and $2 million, respectively.

For the inforce liabilities as of June 30, 2021, the estimated amortization expense for VOBA in future fiscal periods is as follows (in millions):

			Estimated Amortization Expense
Fiscal Year
2021			$	29
2022			166
2023			187
2024			178
2025			171
Thereafter			906

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- Definition

The entire disclosure for goodwill and intangible assets.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-URI http://asc.fasb.org/topic&trid=2144416

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