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INCOME TAXES
 3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income tax expense for the three months ended March 31, 2023 and 2022 was computed using an estimated annual effective tax rate (“ETR”), with discrete items recognized in the period in which they occur. The estimated ETR is revised, as necessary, at the end of successive interim reporting periods.
During the fourth quarter of 2022, the Company established a valuation allowance of $1.6 billion against its deferred tax asset related to unrealized capital losses in the available for sale securities portfolio. For the three months ended March 31, 2023, the Company recorded a decrease to the valuation allowance of $341 million due to a decrease in the portfolio’s unrealized capital loss. This adjustment was recorded in other comprehensive income.
As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. During the three months ended March 31, 2023 the Company has taken steps to increase its available future liquidity by increasing borrowing capacity and amending certain counterparty agreements. While management has several actions that are pending, the Company now has the ability and intent to hold the underlying securities in its available for sale portfolio to recovery to the extent that half of the deferred tax asset would be realized. Based on all available evidence, as of March 31, 2023, the Company concluded that half of the deferred tax asset related to unrealized tax capital losses is more-likely-than-not to be realized and a full valuation allowance is not necessary. A valuation allowance of $614 million remains against the portion of the deferred tax asset that is still not more-likely-than-not to be realized. The partial release of the valuation allowance of $614 million was recorded in net income.
The Company uses the aggregate portfolio approach related to the stranded or disproportionate income tax effects in accumulated other comprehensive income related to available for sale securities. Under this approach, the disproportionate tax effect remains intact as long as the investment portfolio remains.