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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): 
202220212020
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):
 202220212020
Current income tax expense (benefit):
U.S.$9 $91 $75 
Foreign120 72 79 
Total current129 163 154 
Deferred income tax expense (benefit):
U.S.68 (127)(60)
Foreign7 38 44 
Total deferred75 (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):
 202220212020
Tax provision at U.S. statutory rate$175 $145 $116 
Increase (decrease) in income taxes resulting from:
Tax rate differences on income in other jurisdictions21 51 21 
Differences in tax basis in foreign jurisdictions10 (4)(32)
Deferred tax valuation allowance(6)(18)10 
Amounts related to uncertain tax positions3 (119)10 
Equity based compensation(2)(1)(1)
Corporate rate changes2 29 13 
GILTI, net of credits21 11 13 
Subpart F for non-full inclusion companies60 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):
202220212020
Provision for income taxes$204 $74 $138 
Income tax from OCI and additional paid-in-capital:
Net unrealized holding gain (loss) on debt and equity securities recognized for financial reporting purposes(2,495)(520)611 
Foreign currency translation21 23 (9)
Unrealized pension and post retirement7 7 (1)
   Total income taxes provided$(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):
 20222021
Deferred income tax assets:
Nondeductible accruals$90 $85 
Net operating loss carryforward295 251 
Tax Credit Carryforward80 50 
Invested assets1,309 — 
Other11 3 
Subtotal1,785 389 
Valuation allowance(221)(218)
Total deferred income tax assets1,564 171 
Deferred income tax liabilities:
Deferred acquisition costs756 754 
Policy reserves and other reinsurance liabilities820 1,085 
Invested assets— 793 
Outside basis difference foreign subsidiaries268 260 
Foreign currency translation90 66 
Anticipated future tax credit reduction85 58 
Total deferred income tax liabilities2,019 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 taxes736 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 allowance161 
NOL with no expiration and a partial valuation allowance527 
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
 202220212020
Beginning balance, January 1$34 $342 $333 
Additions for tax positions of prior years2 2 281 
Reductions for tax positions of prior years(4)(312)(278)
Additions for tax positions of current year3 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.