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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax (benefit) expense on continuing operations consists of the following:
 Year Ended December 31,
 202220212020
 (In millions)
Current$331 $656 $379 
Deferred67 57 (57)
 $398 $713 $322 
Total income tax expense was allocated as follows:
Year Ended December 31,
 202220212020
(In millions)
Net earnings from continuing operations$398 $713 $322 
Other comprehensive (loss) earnings:  
Unrealized (loss) gain on investments and other financial instruments(947)(141)332 
Unrealized (loss) gain on foreign currency translation and cash flow hedging(4)— 1 
Other comprehensive earnings attributable to noncontrolling interest8 — — 
Minimum pension liability adjustment2 (2)4 
Total income tax (benefit) expense allocated to other comprehensive earnings(941)(143)337 
Total income taxes$(543)$570 $659 
A reconciliation of the federal statutory rate to our effective tax rate is as follows:
 Year Ended December 31,
 202220212020
Federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit2.2 1.6 2.5 
Stock compensation(0.1)(0.2)(0.3)
Tax credits(0.7)(0.2)(0.4)
Consolidated partnerships(0.2)(0.1)(0.3)
Tax gain on parent shares held(1.0)0.5 — 
Valuation allowance for deferred tax assets6.1 (0.3)(3.0)
Change in tax status benefit— — (2.0)
Benefit on Capital Loss Carryback(1.5)— — 
Non-deductible expenses and other, net0.1 0.8 0.5 
   Effective tax rate25.9 %23.1 %18.0 %
The significant components of deferred tax assets and liabilities consist of the following:
 December 31,
 20222021
 (In millions)
Deferred Tax Assets:  
Employee benefit accruals$103 $111 
Net operating loss carryforwards38 27 
Derivatives67 — 
Accrued liabilities5 1 
Allowance for uncollectible accounts receivable5 5 
Pension plan1 2 
Tax credits74 77 
State income taxes5 8 
Investment securities952 — 
Capital loss carryover8 41 
Life insurance and claim related adjustments669 854 
Funds held under reinsurance agreements37 52 
Other21 33 
Total gross deferred tax asset1,985 1,211 
Less: valuation allowance151 33 
Total deferred tax asset$1,834 $1,178 
Deferred Tax Liabilities:  
Title plant$(53)$(52)
Amortization of goodwill and intangible assets(117)(140)
Other(2)(2)
Investment securities— (401)
Depreciation(32)(29)
Partnerships(122)(182)
Value of business acquired(350)(249)
Derivatives— (68)
Deferred acquisition costs(243)(102)
Transition reserve on new reserve method(25)(34)
Funds held under reinsurance agreements(183)(74)
Title Insurance reserve discounting(31)(50)
Total deferred tax liability$(1,158)$(1,383)
Net deferred tax asset (liability)$676 $(205)
 
Our net deferred tax asset (liability) was $676 million and $(205) million as of December 31, 2022 and 2021, respectively. The significant changes in the deferred taxes are as follows: the deferred tax liability for investment securities decreased by $1,353 million primarily due to unrealized losses recorded on investment securities, of which $144 million was related to unrealized losses in our Title segment and $1,209 million was related to unrealized losses in our F&G segment's life insurance business. The deferred tax liability relating to partnerships decreased by $60 million, primarily due to increased tax basis in partnership investments by F&G and R&E expense capitalization at FNF’s partnerships. The F&G segment’s life insurance business’ deferred tax liability relating to the VOBA increased by $101 million due to unrealized losses on the VOBA assets. The deferred tax liability related to deferred acquisition costs increased by $141 million, which is consistent with the growth in sales in our F&G segment. The deferred tax liability relating to derivatives in our F&G segment decreased by $135 million due to unrealized losses for call options. The reinsurance receivable deferred tax asset decreased by $15 million, and the reinsurance receivable deferred tax liability increased by $109 million both due to unrealized losses in the funds withheld portfolios in the F&G segment. The deferred tax asset relating to the capital loss carryover decreased by $33 million which is primarily related to the effective settlement of a capital loss carryback tax benefit previously unrecognized. The deferred tax asset relating to life insurance receivables decreased by $185 million primarily due to tax reserves increasing more than GAAP reserves by F&G.
As of December 31, 2022, we have net operating losses ("NOLs") on a pretax basis of $181 million, of which $48 million relates to our Title segment and $133 million relates to our F&G segment's life insurance business, which are available to carryforward and offset future federal taxable income. The NOLs are U.S. federal NOLs arising from acquisitions made since 2012, including Buyers Protection Group, Inc., Digital Insurance Holdings, Inc., ServiceLink, THL Corporations and F&G. Most of the NOLs are subject to an annual Internal Revenue Code Section 382 limitation. These losses will begin to expire in 2034 and we fully anticipate utilizing these losses prior to expiration with the exception of $25 million of gross net operating losses that are offset by a $25 million valuation allowance in the Title segment. 
As of December 31, 2022 and 2021, we had $74 million and $77 million of tax credits, respectively, which expire between 2025 and 2042. The credits primarily consist of general business credits from historical acquisitions, including $30 million associated with our F&G segment's life insurance business. We anticipate that these credits will be utilized prior to expiration after a valuation allowance of $28 million, which primarily relates to the general business credits in our Title segment.
As of December 31, 2022, a valuation allowance on the net deferred tax asset for unrealized capital losses of $118 million was recorded, of which $88 million related to our Title segment and $30 million related to our F&G segment. Valuation allowance was recorded in 2022 because it is more likely than not that this amount of deferred tax assets will not be realized. We considered sources of income available as of December 31, 2022 and determined a valuation allowance was needed. No similar valuation allowance was necessary as of December 31, 2021 as there was a net deferred tax liability for unrealized capital gains.
 
As of December 31, 2022 and 2021, the balance of unrecognized tax benefits which would, if recognized, favorably affect our effective tax rate was $0 million and $24 million, respectively. Interest and penalties accrued on income tax uncertainties are recorded as a component of income tax expense and were $0 million and $1 million as of December 31, 2022, and 2021, respectively. Unrecognized tax benefits decreased in 2022 when the refund was examined to a sufficient extent without adjustment such that the tax position was effectively settled.
A reconciliation of the beginning and ending unrecognized tax benefits is as follows:
Year ended December 31,
20222021
(In millions)
Beginning balance$60 $64 
Additions based on positions taken in current year1 — 
Reductions related to statute of limitation lapses and audit payments(61)(4)
Ending balance$— $60 
F&G's life insurance subsidiaries, as well as certain F&G non-life subsidiaries file separate tax returns from the FNF consolidated group. Prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of December 31, 2022 includes $27 million of tax receivables and $747 million of deferred tax assets related to F&G subsidiaries who file separate tax returns. Prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of December 31, 2021 includes $52 million of tax receivables related to F&G subsidiaries who file separate tax returns.
The Internal Revenue Service (“IRS”) has selected us to participate in the CAP program that is a real-time audit. We are currently under audit by the IRS for the 2021 through 2022 tax years. We file income tax returns in various foreign and US state jurisdictions. Our state income tax returns for the 2018 through 2022 tax years remain subject to examination by state jurisdictions. The F&G life insurance group files a separate consolidated return with the IRS. F&G is not currently under examination by the IRS.