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Market Risk Benefits | 3 Months Ended
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Mar. 31, 2024
Insurance [Abstract] |
Market Risk Benefits | Market Risk Benefits The following table presents the balances of and changes in MRBs associated with indexed annuities and fixed rate annuities for the three months ended March 31, 2024 and the year ended December 31, 2023:
| March 31, 2024 |  | December 31, 2023 |  |
| Indexed annuities |  | Fixed rate annuities |  | Indexed annuities |  | Fixed rate annuities |  |  |  |
| (In millions)
Balance, beginning of period, net liability | $ | 314 |  |  | $ | 1 |  |  | $ | 164 |  |  | $ | 1 |  |  |  |  |
Balance, beginning of period, before effect of changes in the instrument-specific credit risk | $ | 209 |  |  | $ | 1 |  |  | $ | 102 |  |  | $ | 1 |  |  |  |  |
Issuances and benefit payments | 12 |  |  | — |  |  | (10) |  |  | — |  |  |  |  |
Attributed fees collected and interest accrual | 36 |  |  | — |  |  | 131 |  |  | — |  |  |  |  |
Actual policyholder behavior different from expected | 8 |  |  | — |  |  | 27 |  |  | — |  |  |  |  |
Changes in assumptions and other | (2) |  |  | — |  |  | 29 |  |  | — |  |  |  |  |
Effects of market related movements | (37) |  |  | — |  |  | (70) |  |  | — |  |  |  |  |
Balance, end of period, before effect of changes in the instrument-specific credit risk | $ | 226 |  |  | $ | 1 |  |  | $ | 209 |  |  | $ | 1 |  |  |  |  |
Effect of changes in the instrument-specific credit risk | 103 |  |  | — |  |  | 105 |  |  | — |  |  |  |  |
Balance, end of period, net liability | $ | 329 |  |  | $ | 1 |  |  | $ | 314 |  |  | $ | 1 |  |  |  |  |
Weighted-average attained age of policyholders weighted by total AV (years) | 68.20 |  | 72.55 |  | 68.28 |  | 72.59 |  |  |  |
Net amount at risk | $ | 1,091 |  |  | $ | 2 |  |  | $ | 1,059 |  |  | $ | 2 |  |  |  |  |
The following table reconciles MRBs by amounts in an asset position and amounts in a liability position to the MRBs amounts in the accompanying unaudited Condensed Consolidated Balance Sheets:
| March 31, 2024 |  | December 31, 2023 |  |
| Asset |  | Liability |  | Net |  | Asset |  | Liability |  | Net |  |  |  |  |  |
| (In millions)
Fixed rate annuities | $ | — |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 1 |  |  | $ | 1 |  |  |  |  |  |  |
Indexed annuities | 95 |  |  | 424 |  |  | 329 |  |  | 88 |  |  | 402 |  |  | 314 |  |  |  |  |  |  |
Total | $ | 95 |  |  | $ | 425 |  |  | $ | 330 |  |  | $ | 88 |  |  | $ | 403 |  |  | $ | 315 |  |  |  |  |  |  |
The net MRB liability increased for the three months ended March 31, 2024, primarily as a result of collection of attributed fees and interest accrual as well as new MRB reserves for contracts issued within the period. These increases were partially offset by the effects of market related movements, including the impacts of higher risk-free rates and increases in the equity market related projections. For the three months ended March 31, 2024, notable changes made to the inputs to the fair value estimates of MRBs calculations included an increase in risk-free rates leading to a favorable change in the MRBs associated with indexed annuities and fixed rate annuities; increases in the equity market related projections resulted in a decrease in the net amount at risk associated with indexed annuities, leading to a favorable change in the value of the associated MRBs. In addition, the cash flow assumptions used to calculate MRBs reflect the Company’s best estimates for policyholder behavior. We review cash flow assumptions annually, generally in the third quarter. The net MRB liability increased for the year ended December 31, 2023, primarily as a result of collection of attributed fees and interest accrual as well actual policyholder behavior different than expected and changes in assumptions and other as discussed below. These increases were partially offset by the effects of market related movements, including the impacts of higher risk-free rates and increases in the equity market related projections. For the year ended December 31, 2023, notable changes made to the inputs to the fair value estimates of MRBs calculations included a significant increase in risk-free rates leading to a favorable change in the MRBs associated with indexed annuities and fixed rate annuities; increases in the equity market related projections resulted in a decrease in the net amount at risk associated with indexed annuities, leading to a favorable change in the value of the associated MRBs; and F&G’s credit spread decreased, lead to a corresponding unfavorable change in the MRBs associated with both indexed annuities and fixed rate annuities. In addition, the cash flow assumptions used to calculate MRBs reflect the Company’s best estimates for policyholder behavior. We review 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 (indexed annuities and fixed rate annuities) with MRBs including surrender rates, partial withdrawal rates, mortality improvement, and option budgets. All updates to these assumptions brought us more in line with our Company and overall industry experience since the prior assumption update. These updates, in total, led to an increase in the net MRB liability during the year ended December 31, 2023. Contractholder Funds The following tables summarize balances of and changes in contractholder funds’ account balances:
| March 31, 2024
| Indexed annuities |  | Fixed rate annuities |  | Universal Life |  | FABN (b) |  | FHLB (b)
| (Dollars in millions)
Balance, beginning of year | $ | 27,164 |  |  | $ | 13,443 |  |  | $ | 2,391 |  |  | $ | 2,613 |  |  | $ | 2,539 |
Issuances | 1,381 |  |  | 1,341 |  |  | 51 |  |  | — |  |  | 305 |
Premiums received | 28 |  |  | — |  |  | 114 |  |  | — |  |  | — |
Policy charges (a) | (46) |  |  | — |  |  | (74) |  |  | — |  |  | — |
Surrenders and withdrawals | (690) |  |  | (364) |  |  | (22) |  |  | — |  |  | — |
Benefit payments | (119) |  |  | (76) |  |  | (5) |  |  | (16) |  |  | (329) |
Interest credited | 139 |  |  | 142 |  |  | 33 |  |  | 14 |  |  | 24 |
Other | 5 |  |  | — |  |  | — |  |  | — |  |  | — |
Balance, end of year | $ | 27,862 |  |  | $ | 14,486 |  |  | $ | 2,488 |  |  | $ | 2,611 |  |  | $ | 2,539 |
Embedded derivative adjustment (c) | 468 |  |  | — |  |  | 107 |  |  | — |  |  | — |
Gross Liability, end of period | $ | 28,330 |  |  | $ | 14,486 |  |  | $ | 2,595 |  |  | $ | 2,611 |  |  | $ | 2,539 |
Less: Reinsurance | (13) |  |  | (8,612) |  |  | (894) |  |  | — |  |  | — |
Net Liability, after Reinsurance | $ | 28,317 |  |  | $ | 5,874 |  |  | $ | 1,701 |  |  | $ | 2,611 |  |  | $ | 2,539 |
Weighted-average crediting rate | 2.04 | % |  | 4.15 | % |  | 5.54 | % |  | N/A |  | N/A
Net amount at risk (d) | N/A |  | N/A |  | $ | 63,968 |  |  | N/A |  | N/A
Cash surrender value (e) | $ | 25,724 |  |  | $ | 13,502 |  |  | $ | 1,938 |  |  | N/A |  | N/A
(a) Contracts included in the contractholder funds are generally charged a premium and/or monthly assessments on the basis of the account balance. (b) FABN and FHLB are considered funding agreements that are investment contracts, which follow the interest method of accounting, and therefore are not subject to ASU 2018-12 disclosure requirements. However, the Company has elected to present the liability for these agreements within the disaggregated roll forward as we believe it will provide meaningful information for users of the financials. (c) The embedded derivative adjustment reconciles the account balance to the gross GAAP liability and represents the combination of the host contract and the fair value of the embedded derivatives. (d) For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. (e) These amounts are gross of reinsurance.
| December 31, 2023
| Indexed annuities |  | Fixed rate annuities |  | Universal Life |  | FABN (b) |  | FHLB (b)
| (Dollars in millions)
Balance, beginning of year | $ | 24,766 |  |  | $ | 9,358 |  |  | $ | 2,112 |  |  | $ | 2,613 |  |  | $ | 1,982 |
Issuances | 4,722 |  |  | 5,061 |  |  | 199 |  |  | — |  |  | 1,256 |
Premiums received | 103 |  |  | 1 |  |  | 382 |  |  | — |  |  | — |
Policy charges (a) | (182) |  |  | — |  |  | (261) |  |  | — |  |  | — |
Surrenders and withdrawals | (2,005) |  |  | (1,142) |  |  | (90) |  |  | — |  |  | — |
Benefit payments | (526) |  |  | (240) |  |  | (27) |  |  | (53) |  |  | (763) |
Interest credited | 270 |  |  | 405 |  |  | 76 |  |  | 54 |  |  | 64 |
Other | 16 |  |  | — |  |  | — |  |  | (1) |  |  | — |
Balance, end of year | 27,164 |  |  | 13,443 |  |  | 2,391 |  |  | 2,613 |  |  | 2,539 |
Embedded derivative adjustment (c) | 243 |  |  | — |  |  | 84 |  |  | — |  |  | — |
Gross Liability, end of period | 27,407 |  |  | 13,443 |  |  | 2,475 |  |  | 2,613 |  |  | 2,539 |
Less: Reinsurance | (17) |  |  | (7,520) |  |  | (894) |  |  | — |  |  | — |
Net Liability, after Reinsurance | $ | 27,390 |  |  | $ | 5,923 |  |  | $ | 1,581 |  |  | $ | 2,613 |  |  | $ | 2,539 |
Weighted-average crediting rate | 1.40 | % |  | 4.85 | % |  | 3.44 | % |  | N/A |  | N/A
Net amount at risk (d) | N/A |  | N/A |  | $ | 60,389 |  |  | N/A |  | N/A
Cash surrender value (e) | $ | 25,099 |  |  | $ | 12,505 |  |  | $ | 1,872 |  |  | N/A |  | N/A
(a) Contracts included in the contractholder funds are generally charged a premium and/or monthly assessments on the basis of the account balance. (b) FABN and FHLB are considered funding agreements that are investment contracts, which follow the interest method of accounting, and therefore are not subject to ASU 2018-12 disclosure requirements. However, the Company has elected to present the liability for these agreements within the disaggregated roll forward as we believe it will provide meaningful information for users of the financials. (c) The embedded derivative adjustment reconciles the account balance to the gross GAAP liability and represents the combination of the host contract and the fair value of the embedded derivatives. (d) For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. (e) These amounts are gross of reinsurance. The following table reconciles contractholder funds’ account balances to the contractholder funds liability in the accompanying unaudited Condensed Consolidated Balance Sheets:
| March 31, 2024 |  | December 31, 2023 |  |
| (In millions)
Indexed annuities | $ | 28,330 |  |  | $ | 27,407 |  |  |
Fixed rate annuities | 14,486 |  |  | 13,443 |  |  |
Immediate annuities | 304 |  |  | 311 |  |  |
Universal life | 2,595 |  |  | 2,475 |  |  |
Traditional life | 5 |  |  | 5 |  |  |
Funding Agreement-FABN | 2,611 |  |  | 2,613 |  |  |
FHLB | 2,539 |  |  | 2,539 |  |  |
PRT | 5 |  |  | 5 |  |  |
Total | $ | 50,875 |  |  | $ | 48,798 |  |  |
Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees. For the three months ended March 31, 2024, based on increases in interest rates and pricing changes, we updated certain indexed annuity assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and also aligned reserves to actual policyholder behavior. These changes resulted in an increase in total benefits and other changes in policy reserves of approximately $57 million for the three months ended March 31, 2024. The following tables present the account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums:
| March 31, 2024
Range of guaranteed minimum crediting rate | At Guaranteed Minimum |  | 1 Basis Point-50 Basis Points Above |  | 51 Basis Points-150 Basis Points Above |  | Greater Than 150 Basis Points Above |  | Total
Indexed Annuities | (In millions)
0.00%-1.50% | $ | 22,671 |  |  | $ | 1,391 |  |  | $ | 522 |  |  | $ | 1,931 |  |  | $ | 26,515 |
1.51%-2.50% | 331 |  |  | 1 |  |  | 93 |  |  | 568 |  |  | 993 |
Greater than 2.50% | 353 |  |  | 1 |  |  | — |  |  | — |  |  | 354 |
Total | $ | 23,355 |  |  | $ | 1,393 |  |  | $ | 615 |  |  | $ | 2,499 |  |  | $ | 27,862 |
Fixed Rate Annuities |  |  |  |  |  |  |  |  |
0.00%-1.50% | $ | 36 |  |  | $ | 24 |  |  | $ | 1,340 |  |  | $ | 11,259 |  |  | $ | 12,659 |
1.51%-2.50% | 4 |  |  | 7 |  |  | 21 |  |  | 456 |  |  | 488 |
Greater than 2.50% | 870 |  |  | 2 |  |  | 4 |  |  | 463 |  |  | 1,339 |
Total | $ | 910 |  |  | $ | 33 |  |  | $ | 1,365 |  |  | $ | 12,178 |  |  | $ | 14,486 |
Universal Life |  |  |  |  |  |  |  |  |
0.00%-1.50% | $ | 2,085 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 22 |  |  | $ | 2,113 |
1.51%-2.50% | — |  |  | — |  |  | — |  |  | — |  |  | — |
Greater than 2.50% | 369 |  |  | 5 |  |  | 1 |  |  | — |  |  | 375 |
Total | $ | 2,454 |  |  | $ | 11 |  |  | $ | 1 |  |  | $ | 22 |  |  | $ | 2,488 |
| December 31, 2023
Range of guaranteed minimum crediting rate | At Guaranteed Minimum |  | 1 Basis Point-50 Basis Points Above |  | 51 Basis Points-150 Basis Points Above |  | Greater Than 150 Basis Points Above |  | Total
Indexed Annuities | (In millions)
0.00%-1.50% | $ | 22,392 |  |  | $ | 1,444 |  |  | $ | 526 |  |  | $ | 1,953 |  |  | $ | 26,315 |
1.51%-2.50% | 196 |  |  | 1 |  |  | 24 |  |  | 250 |  |  | 471 |
Greater than 2.50% | 377 |  |  | 1 |  |  | — |  |  | — |  |  | 378 |
Total | $ | 22,965 |  |  | $ | 1,446 |  |  | $ | 550 |  |  | $ | 2,203 |  |  | $ | 27,164 |
Fixed Rate Annuities |  |  |  |  |  |  |  |  |
0.00%-1.50% | $ | 23 |  |  | $ | 25 |  |  | $ | 1,532 |  |  | $ | 10,271 |  |  | $ | 11,851 |
1.51%-2.50% | 5 |  |  | 8 |  |  | 23 |  |  | 453 |  |  | 489 |
Greater than 2.50% | 893 |  |  | 2 |  |  | 4 |  |  | 204 |  |  | 1,103 |
Total | $ | 921 |  |  | $ | 35 |  |  | $ | 1,559 |  |  | $ | 10,928 |  |  | $ | 13,443 |
Universal Life |  |  |  |  |  |  |  |  |
0.00%-1.50% | $ | 1,987 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 21 |  |  | $ | 2,013 |
1.51%-2.50% | — |  |  | — |  |  | — |  |  | — |  |  | — |
Greater than 2.50% | 361 |  |  | 16 |  |  | 1 |  |  | — |  |  | 378 |
Total | $ | 2,348 |  |  | $ | 21 |  |  | $ | 1 |  |  | $ | 21 |  |  | $ | 2,391 |

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- Definition The entire disclosure for long duration contracts. This may include the information pertinent to an understanding of the types of traditional and nontraditional insurance and investment contracts sold and serviced, including the nature and amount of estimated guaranteed obligations pertaining to such contracts and the assumptions underlying such estimated amounts, hedging strategies, and sales inducements offered. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Section 65 -Paragraph 2 -Subparagraph (u) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480016/944-40-65-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//944/tableOfContent + Details
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