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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income from operations before income taxes included income (loss) from domestic operations of $1.9 billion, $0.6 billion and $2.9 billion for the years ended December 31, 2024, 2023 and 2022, and income from foreign operations of $209 million, $105 million and $135 million for the years ended December 31, 2024, 2023 and 2022. Approximately $63 million, $37 million and $35 million of the Company’s income tax expense is attributed to foreign jurisdictions for the years ended December 31, 2024, 2023 and 2022. A summary of the income tax (expense) benefit in the consolidated statements of income (loss) follows:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Income tax (expense) benefit: |  |  |  |  |
Current (expense) benefit | $ | (142) |  |  | $ | (29) |  |  | $ | (5) |
Deferred (expense) benefit | (146) |  |  | 934 |  |  | (593) |
Total | $ | (288) |  |  | $ | 905 |  |  | $ | (598) |
The Federal income taxes attributable to consolidated operations are different from the amounts determined by multiplying the earnings before income taxes and noncontrolling interest by the expected Federal income tax rate of 21%. The sources of the difference and their tax effects were as follows:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Expected income tax (expense) benefit | $ | (443) |  |  | $ | (155) |  |  | $ | (630) |
Noncontrolling interest | 88 |  |  | 62 |  |  | 40 |
Non-taxable investment income | 121 |  |  | 64 |  |  | 53 |
Tax audit interest | (28) |  |  | (23) |  |  | (13) |
State income taxes | (40) |  |  | (42) |  |  | (63) |
Tax settlements/uncertain tax position release | (6) |  |  | (4) |  |  | — |
Tax credits | 29 |  |  | 15 |  |  | 22 |
Valuation allowance | — |  |  | 1,000 |  |  | — |
Other | (9) |  |  | (12) |  |  | (7) |
Income tax (expense) benefit | $ | (288) |  |  | $ | 905 |  |  | $ | (598) |
The components of the net deferred income taxes are as follows:
| December 31,
| 2024 |  | 2023
| Assets |  | Liabilities |  | Assets |  | Liabilities
| (in millions)
Compensation and related benefits | $ | 217 |  |  | $ | — |  |  | $ | 230 |  |  | $ | — |
Net operating loss and credits | 272 |  |  | — |  |  | 151 |  |  | — |
Reserves and reinsurance | 1,984 |  |  | — |  |  | 1,581 |  |  | — |
DAC | — |  |  | 1,141 |  |  | — |  |  | 1,078 |
Unrealized investment gains/losses | 1,683 |  |  | — |  |  | 1,472 |  |  | — |
Investments | — |  |  | 386 |  |  | — |  |  | 217 |
Other | — |  |  | 197 |  |  | 187 |  |  | — |
Valuation allowance | (217) |  |  | — |  |  | (234) |  |  | — |
Total | $ | 3,939 |  |  | $ | 1,724 |  |  | $ | 3,387 |  |  | $ | 1,295 |
During the fourth quarter of 2022, the Company established a valuation allowance against its deferred tax asset related to unrealized capital losses in the available for sale securities portfolio. During the year ended December 31, 2023, management took actions to increase its available liquidity so that the Company has the ability and intent to hold the majority of securities in its available for sale portfolio to recovery. For liquidity and other purposes, the Company maintains a smaller pool of securities that it does not intend to hold to recovery. The Company maintains a valuation allowance against the deferred tax asset on available for sale securities that will not be held to recovery. Adjustments to the valuation allowance due to changes in the portfolio’s unrealized capital loss are recorded in other comprehensive income. Adjustments to the valuation allowance due to new facts or evidence are recorded in net income. For the year ended December 31, 2024, the Company recorded a decrease to the valuation allowance of $17 million due to changes in the value of the available for sale portfolio that will not be held to recovery. This adjustment was recorded in other comprehensive income. For the year ended December 31, 2023, the Company recorded decreases to the valuation allowance of $336 million in other comprehensive income and $1.0 billion in net income. As of the years ended December 31, 2024 and 2023, a valuation allowance of $217 million and $234 million, respectively, remains against the portion of the deferred tax asset that is still not more-likely-than-not to be realized. 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. The Company has Federal net operating loss carryforwards of $510 million and $279 million, for the years ending December 31, 2024 and 2023, respectively, which do not expire. The Company provides income taxes on the unremitted earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are indefinitely reinvested outside the United States. As of December 31, 2024, $30 million of undistributed earnings of non-U.S. corporate subsidiaries were permanently invested outside the United States. At existing applicable income tax rates, additional taxes of approximately $8 million would need to be provided if such earnings are remitted. A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Balance, beginning of period | $ | 322 |  |  | $ | 314 |  |  | $ | 323 |
Additions for tax positions of prior years | 8 |  |  | 11 |  |  | (9) |
Reductions for tax positions of prior years | — |  |  | (3) |  |  | — |
Additions for tax positions of current year | — |  |  | — |  |  | — |
Settlements with tax authorities | — |  |  | — |  |  | — |
Balance, end of period | $ | 330 |  |  | $ | 322 |  |  | $ | 314 |
Unrecognized tax benefits that, if recognized, would impact the effective rate | $ | 74 |  |  | $ | 59 |  |  | $ | 58 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. Interest and penalties included in the amounts of unrecognized tax benefits as of December 31, 2024 and 2023 were $114 million and $86 million, respectively. For 2024, 2023 and 2022, respectively, there were $28 million, $23 million and $13 million in interest expense (benefit) related to unrecognized tax benefits. It is reasonably possible that the total amount of unrecognized tax benefits will change within the next 12 months due to the conclusion of IRS proceedings and the addition of new issues for open tax years. The possible change in the amount of unrecognized tax benefits cannot be estimated at this time. As of December 31, 2024, tax years 2014 through 2018 and 2020 through 2024 remain subject to examination by the IRS.

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