XML 37 R20.htm IDEA: XBRL DOCUMENT
v3.22.4

Income Tax | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Tax | INCOME TAX On August 16, 2022, the Inflation Reduction Act of 2022 (“the Act”) was enacted in the U.S. The Act includes law changes relating to tax, climate change, energy and health care. In particular, for tax years ending after December 31, 2022, the Act imposes a 15% minimum tax on adjusted financial statement income for applicable corporations with average financial statement income over $1 billion for the previous 3-year period ending in 2022 or after. The Act also imposes a 1% excise tax on stock buybacks of a publicly traded corporation. The tax provisions are not expected to have a material impact on the Company’s tax expense. Pre-tax income for the years ended December 31, 2022, 2021 and 2020 consists of the following (dollars in millions):
|  | 2022 |  | 2021 |  | 2020
Pre-tax income – U.S. |  | $ | 399 |  |  | $ | 327 |  |  | $ | 79 |
Pre-tax income – foreign |  | 432 |  |  | 364 |  |  | 474 |
Total pre-tax income |  | $ | 831 |  |  | $ | 691 |  |  | $ | 553 |
The provision for income tax expense for the years ended December 31, 2022, 2021 and 2020 consists of the following (dollars in millions):
|  | 2022 |  | 2021 |  | 2020
Current income tax expense (benefit): |  |  |  |  |  |
U.S. |  | $ | 9 |  |  | $ | 91 |  |  | $ | 75 |
Foreign |  | 120 |  |  | 72 |  |  | 79 |
Total current |  | 129 |  |  | 163 |  |  | 154 |
Deferred income tax expense (benefit): |  |  |  |  |  |
U.S. |  | 68 |  |  | (127) |  |  | (60) |
Foreign |  | 7 |  |  | 38 |  |  | 44 |
Total deferred |  | 75 |  |  | (89) |  |  | (16) |
Total provision for income taxes |  | $ | 204 |  |  | $ | 74 |  |  | $ | 138 |
The Company’s effective tax rate differed from the U.S. federal income tax statutory rate of 21% as a result of the following for the years ended December 31, 2022, 2021 and 2020 (dollars in millions):
|  | 2022 |  | 2021 |  | 2020
Tax provision at U.S. statutory rate |  | $ | 175 |  |  | $ | 145 |  |  | $ | 116 |
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |
Tax rate differences on income in other jurisdictions |  | 21 |  |  | 51 |  |  | 21 |
Differences in tax basis in foreign jurisdictions |  | 10 |  |  | (4) |  |  | (32) |
Deferred tax valuation allowance |  | (6) |  |  | (18) |  |  | 10 |
Amounts related to uncertain tax positions |  | 3 |  |  | (119) |  |  | 10 |
Equity based compensation |  | (2) |  |  | (1) |  |  | (1) |
Corporate rate changes |  | 2 |  |  | 29 |  |  | 13 |
GILTI, net of credits |  | 21 |  |  | 11 |  |  | 13 |
Subpart F for non-full inclusion companies |  | 60 |  |  | 2 |  |  | — |
Foreign tax credits |  | (67) |  |  | (10) |  |  | (7) |
Return to provision adjustments |  | (13) |  |  | (17) |  |  | (4) |
Other, net |  | — |  |  | 5 |  |  | (1) |
Total provision for income taxes |  | $ | 204 |  |  | $ | 74 |  |  | $ | 138 |
Effective tax rate (1) |  | 24.6 | % |  | 10.6 | % |  | 24.9 | %
(1) The Company rounds amounts in the financial statements to millions and calculates the effective tax rate from the underlying whole-dollar amounts. Thus certain amounts may not recalculate based on the numbers due to rounding. The effective tax rate for 2022 was higher than the U.S. Statutory rate of 21.0% primarily as a result of income in jurisdictions with tax rates differing from the U.S., Subpart F income, generated primarily in RGA Canada, and GILTI generated in Australia, Ireland, Hodge Life Assurance Company Limited, and Omnilife Insurance Company Limited. These expenses were offset with benefits from foreign tax credits and return to provision adjustments. The effective tax rate for 2021 was lower than the U.S. Statutory rate of 21.0% primarily as a result of the release of uncertain tax positions due to the expiration of the statute of limitations, and the release of valuation allowances primarily due to income earned in RGA Australia. This benefit was partially offset by income earned in jurisdictions with tax rates higher than the U.S. and GILTI, primarily Canada and Australia. Furthermore, the UK enacted an increase to the statutory tax rate resulting in a tax expense from the remeasurement of the deferred tax liabilities. Total income taxes for the years ended December 31, 2022, 2021 and 2020 were as follows (dollars in millions):
|  | 2022 |  | 2021 |  | 2020
Provision for income taxes |  | $ | 204 |  |  | $ | 74 |  |  | $ | 138 |
Income tax from OCI and additional paid-in-capital: |  |  |  |  |  |
Net unrealized holding gain (loss) on debt and equity securities recognized for financial reporting purposes |  | (2,495) |  |  | (520) |  |  | 611 |
Foreign currency translation |  | 21 |  |  | 23 |  |  | (9) |
Unrealized pension and post retirement |  | 7 |  |  | 7 |  |  | (1) |
Total income taxes provided |  | $ | (2,263) |  |  | $ | (416) |  |  | $ | 739 |
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities at December 31, 2022 and 2021, are presented in the following tables (dollars in millions):
|  | 2022 |  | 2021
Deferred income tax assets: |  |  |  |
Nondeductible accruals |  | $ | 90 |  |  | $ | 85 |
Net operating loss carryforward |  | 295 |  |  | 251 |
Tax Credit Carryforward |  | 80 |  |  | 50 |
Invested assets |  | 1,309 |  |  | — |
Other |  | 11 |  |  | 3 |
Subtotal |  | 1,785 |  |  | 389 |
Valuation allowance |  | (221) |  |  | (218) |
Total deferred income tax assets |  | 1,564 |  |  | 171 |
Deferred income tax liabilities: |  |  |  |
Deferred acquisition costs |  | 756 |  |  | 754 |
Policy reserves and other reinsurance liabilities |  | 820 |  |  | 1,085 |
Invested assets |  | — |  |  | 793 |
Outside basis difference foreign subsidiaries |  | 268 |  |  | 260 |
Foreign currency translation |  | 90 |  |  | 66 |
Anticipated future tax credit reduction |  | 85 |  |  | 58 |
Total deferred income tax liabilities |  | 2,019 |  |  | 3,016 |
Net deferred income tax liabilities |  | $ | 455 |  |  | $ | 2,845 |
Balance sheet presentation of net deferred income tax liabilities: |  |  |  |
Included in other assets |  | $ | 281 |  |  | $ | 41 |
Included in deferred income taxes |  | 736 |  |  | 2,886 |
Net deferred income tax liabilities |  | $ | 455 |  |  | $ | 2,845 |
As of December 31, 2022, the valuation allowance against deferred tax assets was $221 million. During 2022, the Company established a $25 million valuation allowance on certain unrealized losses in the Company’s fixed maturity portfolio due to limitations on the utilization of the deferred tax asset. Additionally, there were increases to the valuation allowance related to losses in foreign subsidiaries that do not have a history of income. These increases were partially offset by pretax earnings in certain subsidiaries with valuation allowances and foreign currency translation. As of December 31, 2021, the valuation allowance against deferred tax assets was $218 million. During 2021 there were decreases to the valuation allowance due to pretax earnings in certain subsidiaries with valuation allowances. These decreases were partially offset by increases in the valuation allowance due to losses in subsidiaries that do not have a history of income. The valuation allowance was further impacted by changes in foreign currency translation during the year. The earnings of substantially all of the Company's foreign subsidiaries have been permanently reinvested in foreign operations. The Company has provided a deferred tax liability for the future expected tax on foreign subsidiaries where the Company cannot assert permanent reinvestment. At December 31, 2022 and 2021, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $1.6 billion and $1.8 billion, respectively. As U.S. Tax Reform generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, the Company does not expect to incur material income taxes if these funds were repatriated. During 2022, 2021, and 2020, the Company received federal and foreign income tax refunds of approximately $3 million, $20 million, and $59 million, respectively. The Company made cash income tax payments of approximately $131 million, $388 million, and $167 million, in 2022, 2021, and 2020, respectively. The following table presents consolidated net operating losses (“NOL”) as of December 31, 2022 (dollars in millions):
| 2022
NOL with no expiration and with no valuation allowance | $ | 472 |
NOL with a full valuation allowance | 161 |
NOL with no expiration and a partial valuation allowance | 527 |
Total net operating loss carryforwards | $ | 1,160 |
These net operating losses, other than the net operating losses for which there is a valuation allowance, are expected to be utilized in the normal course of business during the period allowed for carryforwards and in any event, are not expected to be lost, due to the application of tax planning strategies that management would utilize. As of December 31, 2022, the Company had foreign tax credit carryforwards of $56 million related to the U.S. and Ireland. The Ireland foreign tax credit of $24 million has a full valuation allowance. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is under continuous examination by the Internal Revenue Service and is subject to audit by taxing authorities in other foreign jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years prior to 2019, Canadian tax authorities for years prior to 2017 and with a few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years prior to 2018. As of December 31, 2022, the Company’s total amount of unrecognized tax benefits is $35 million all of which would affect the effective tax rate, if recognized. Management believes it is reasonably possible that the unrecognized tax benefit could decrease by up to $14 million over the next 12 months if statutes expire. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2022, 2021 and 2020, is as follows (dollars in millions):
|  | Total Unrecognized Tax Benefits
|  | 2022 |  | 2021 |  | 2020
Beginning balance, January 1 |  | $ | 34 |  |  | $ | 342 |  |  | $ | 333 |
Additions for tax positions of prior years |  | 2 |  |  | 2 |  |  | 281 |
Reductions for tax positions of prior years |  | (4) |  |  | (312) |  |  | (278) |
Additions for tax positions of current year |  | 3 |  |  | 2 |  |  | 6 |
Ending balance, December 31 |  | $ | 35 |  |  | $ | 34 |  |  | $ | 342 |
The Company recognized minimal interest expense (benefit) associated with uncertain tax positions in 2022, $(31) million in 2021 and $11 million in 2020. As of December 31, 2022 and 2021 the Company had $3 million and $3 million of accrued interest related to unrecognized tax benefits. There are no penalties accrued as of December 31, 2022 or December 31, 2021.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration