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Value of Business Acquired, Deferred Acquisition Costs and Deferred Sales Inducements | 9 Months Ended
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Sep. 30, 2023
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 The following table reconciles to Other intangible assets, net, on the unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022.
|  | September 30, 2023 |  | December 31, 2022
|  | (In millions)
Customer relationships and contracts |  | $ | 190 |  |  | $ | 202 |
VOBA |  | 1,487 |  |  | 1,615 |
DAC |  | 2,012 |  |  | 1,411 |
DSI |  | 297 |  |  | 200 |
Value of distribution asset |  | 90 |  |  | 100 |
Computer software |  | 272 |  |  | 196 |
Definite lived trademarks, tradenames, and other |  | 30 |  |  | 27 |
Indefinite lived tradenames and other |  | 61 |  |  | 60 |
Total Other intangible assets, net |  | $ | 4,439 |  |  | $ | 3,811 |
The following tables roll forward VOBA by product for the nine months ended September 30, 2023 and September 30, 2022.
| FIA |  | Fixed Rate Annuities |  | Immediate Annuities |  | Universal Life |  | Traditional Life |  |  |  |  |  |  | Total
| (In millions)
Balance at January 1, 2023 | $ | 1,166 |  |  | $ | 32 |  |  | $ | 201 |  |  | $ | 143 |  |  | $ | 73 |  |  |  |  |  |  |  | $ | 1,615 |
Amortization | (106) |  |  | (4) |  |  | (8) |  |  | (7) |  |  | (3) |  |  |  |  |  |  |  | (128) |
Balance at September 30, 2023 | $ | 1,060 |  |  | $ | 28 |  |  | $ | 193 |  |  | $ | 136 |  |  | $ | 70 |  |  |  |  |  |  |  | $ | 1,487 |
| FIA |  | Fixed Rate Annuities |  | Immediate Annuities |  | Universal Life |  | Traditional Life |  |  |  |  |  |  | Total
| (In millions)
Balance at January 1, 2022 | $ | 1,314 |  |  | $ | 39 |  |  | $ | 212 |  |  | $ | 153 |  |  | $ | 25 |  |  |  |  |  |  |  | $ | 1,743 |
Amortization | (113) |  |  | (5) |  |  | (9) |  |  | (7) |  |  | (2) |  |  |  |  |  |  |  | (136) |
Shadow Premium Deficiency Testing (“PDT”) | — |  |  | — |  |  | — |  |  | — |  |  | 52 |  |  |  |  |  |  |  | 52 |
Balance at September 30, 2022 | $ | 1,201 |  |  | $ | 34 |  |  | $ | 203 |  |  | $ | 146 |  |  | $ | 75 |  |  |  |  |  |  |  | $ | 1,659 |
VOBA amortization expense of $128 million and $136 million was recorded in Depreciation and amortization on the unaudited Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2023 and September 30, 2022, respectively. The following table presents a reconciliation of VOBA to the table above, which is included in Other intangible assets, net in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022:
|  | September 30, 2023 |  | December 31, 2022
|  | (In millions)
FIA |  | $ | 1,060 |  |  | $ | 1,166 |
Fixed Rate Annuities |  | 28 |  |  | 32 |
Immediate Annuities |  | 193 |  |  | 201 |
Universal Life |  | 136 |  |  | 143 |
Traditional Life |  | 70 |  |  | 73 |
Total |  | $ | 1,487 |  |  | $ | 1,615 |
The following tables roll forward DAC by product for the nine months ended September 30, 2023 and September 30, 2022.
| FIA |  | Fixed Rate Annuities |  | Universal Life |  | Total (a)
| (In millions)
Balance at January 1, 2023 | $ | 971 |  |  | $ | 83 |  |  | $ | 348 |  |  | $ | 1,402 |
Capitalization | 371 |  |  | 119 |  |  | 167 |  |  | 657 |
Amortization | (75) |  |  | (35) |  |  | (25) |  |  | (135) |
Reinsurance related adjustments | — |  |  | 79 |  |  | — |  |  | 79 |
Balance at September 30, 2023 | $ | 1,267 |  |  | $ | 246 |  |  | $ | 490 |  |  | $ | 2,003 |
| FIA |  | Fixed Rate Annuities |  | Universal Life |  | Total (a)
| (In millions)
Balance at January 1, 2022 | $ | 564 |  |  | $ | 38 |  |  | $ | 173 |  |  | $ | 775 |
Capitalization | 331 |  |  | 41 |  |  | 141 |  |  | 513 |
Amortization | (47) |  |  | (7) |  |  | (15) |  |  | (69) |
Balance at September 30, 2022 | $ | 848 |  |  | $ | 72 |  |  | $ | 299 |  |  | $ | 1,219 |
(a) Excludes insignificant amounts of DAC related to Funding Agreement Backed Note (“FABN”) DAC amortization expense of $135 million and $69 million was recorded in Depreciation and amortization on the unaudited Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2023 and September 30, 2022, respectively. The following table presents a reconciliation of DAC to the table above, which is included in Other intangible assets, net in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022:
|  | September 30, 2023 |  | December 31, 2022
|  | (In millions)
FIA |  | $ | 1,267 |  |  | $ | 971 |
Fixed Rate Annuities |  | 246 |  |  | 83 |
Universal Life |  | 490 |  |  | 348 |
Funding Agreements |  | 9 |  |  | 9 |
Total |  | $ | 2,012 |  |  | $ | 1,411 |
The following tables roll forward DSI for the nine months ended September 30, 2023 and September 30, 2022:
| FIA |  | Total
| (In millions)
Balance at January 1, 2023 | $ | 200 |  |  | $ | 200 |
Capitalization | 112 |  |  | 112 |
Amortization | (15) |  |  | (15) |
Balance at September 30, 2023 | $ | 297 |  |  | $ | 297 |
| FIA |  | Total
| (In millions)
Balance at January 1, 2022 | $ | 127 |  |  | $ | 127 |
Capitalization | 60 |  |  | 60 |
Amortization | (10) |  |  | (10) |
Balance at September 30, 2022 | $ | 177 |  |  | $ | 177 |
DSI amortization expense of $15 million and $10 million was recorded in Depreciation and amortization on the unaudited Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2023 and September 30, 2022, respectively. The following table presents a reconciliation of DSI to the table above, which is included in Other intangible assets, net in the unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022:
|  | September 30, 2023 |  | December 31, 2022
|  | (In millions)
FIA |  | $ | 297 |  |  | $ | 200 |
Total |  | $ | 297 |  |  | $ | 200 |
The cash flow assumptions used to amortize VOBA and DAC were consistent with the assumptions used to estimate the FPB for life contingent immediate annuity and PRT contracts, and will be reviewed and unlocked, if applicable, in the same period as those balances. For nonparticipating traditional life contracts, the VOBA amortization is straight-line, without the use of cash flow assumptions. For FIA contracts, the cash flow assumptions used to amortize VOBA, DAC, and DSI were consistent with the assumptions used to estimate the value of the embedded derivative and MRBs, and will be reviewed and unlocked, if applicable, in the same period as those balances. For fixed rate annuities and IUL the cash flow assumptions used to amortize VOBA, DAC and DSI reflect the company’s best estimates for policyholder behavior, consistent with the development of assumptions for FIA, immediate annuity, and PRT. F&G reviews cash flow assumptions annually, generally in the third quarter. In 2023, F&G undertook a review of all significant assumptions and revised several assumptions relating to our deferred annuities (FIA and fixed rate annuities) including surrender rates, partial withdrawal rates, mortality improvement, and option budgets. All updates to these assumptions brought F&G more in line with Company and overall industry experience since the prior assumption update. For the in-force liabilities as of September 30, 2023, the estimated amortization expense for VOBA in future fiscal periods is as follows:
| Estimated Amortization Expense
Fiscal Year | (In millions)
2023 | $ | 40 |
2024 | 152 |
2025 | 140 |
2026 | 128 |
2027 | 116 |
Thereafter | 911 |

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