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Income Tax | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Tax | INCOME TAX The Inflation Reduction Act of 2022 (“the Act”) was enacted in 2022. 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. Based on the current guidance the Company is not an applicable corporation for 2023 and is currently evaluating the likelihood that it will be an applicable corporation in 2024. The Act also imposes a 1% excise tax on stock buybacks of a publicly traded corporation. The Act is not expected to have a material impact to the Company’s tax expense. Bermuda enacted the Corporate Income Tax Act of 2023 on December 27, 2023. The Bermuda regime establishes a statutory tax rate of 15%, applicable to companies with annual revenue of EUR 750 million or more. The Company established no net deferred taxes as a result of the enactment. The tax regime is effective for fiscal years beginning on or after January 1, 2025. The Company is still evaluating the impact of the newly enacted Bermuda corporate income tax regime on our financial position. The Organization for Economic Cooperation and Development developed Model Global Anti-Base Erosion (“GloBE”) rules under Pillar II establishing a Global Minimum Tax to ensure multinational enterprises with consolidated revenue of more than EUR 750 million pay at least an effective tax rate of 15% on income arising in each jurisdiction in which they operate. The GloBE model rules serve as a template to allow for each jurisdiction to modify and incorporate into domestic law. As of December 31, 2023, many of the jurisdictions in which RGA operates enacted Pillar II legislation into domestic law with an effective date of January 1, 2024. Guidance is expected to continue throughout 2024 and beyond. The Company continues to evaluate the expected impact of the new law. Pre-tax income for the years ended December 31, 2023, 2022 and 2021 consists of the following (dollars in millions):
|  | 2023 |  | 2022 |  | 2021
Pre-tax income – U.S. |  | $ | 898 |  |  | $ | 294 |  |  | $ | 1,112 |
Pre-tax income – foreign |  | 262 |  |  | 424 |  |  | 273 |
Total pre-tax income |  | $ | 1,160 |  |  | $ | 718 |  |  | $ | 1,385 |
The provision for income tax expense for the years ended December 31, 2023, 2022 and 2021 consists of the following (dollars in millions):
|  | 2023 |  | 2022 |  | 2021
Current income tax expense (benefit): |  |  |  |  |  |
U.S. |  | $ | (18) |  |  | $ | 10 |  |  | $ | 91 |
Foreign |  | 58 |  |  | 120 |  |  | 71 |
Total current |  | 40 |  |  | 130 |  |  | 162 |
Deferred income tax expense (benefit): |  |  |  |  |  |
U.S. |  | 236 |  |  | 32 |  |  | 19 |
Foreign |  | (25) |  |  | 35 |  |  | 34 |
Total deferred |  | 211 |  |  | 67 |  |  | 53 |
Total provision for income taxes |  | $ | 251 |  |  | $ | 197 |  |  | $ | 215 |
The effective tax rate for 2023 was slightly higher than the U.S. Statutory rate of 21% primarily as a result of income earned in jurisdictions with tax rates higher than the U.S. and changes to the valuation allowance which were partially offset with foreign tax credits. The effective tax rate for 2022 was higher than the U.S. Statutory rate of 21% primarily as a result of income in jurisdictions with tax rates differing from the U.S., Subpart F income and Global Intangible Low-Taxed income. These expenses were offset with benefits from foreign tax credits and return to provision adjustments. 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, 2023, 2022 and 2021 (dollars in millions):
|  | 2023 |  | 2022 |  | 2021
Tax provision at U.S. statutory rate |  | $ | 244 |  |  | $ | 150 |  |  | $ | 291 |
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |
Tax rate differences on income in other jurisdictions |  | 14 |  |  | 35 |  |  | 53 |
Differences in tax basis in foreign jurisdictions |  | 4 |  |  | 10 |  |  | (4) |
Deferred tax valuation allowance |  | 15 |  |  | (4) |  |  | 18 |
Amounts related to uncertain tax positions |  | (2) |  |  | 3 |  |  | (119) |
Equity based compensation |  | 2 |  |  | (2) |  |  | (1) |
Corporate rate changes |  | — |  |  | 7 |  |  | 2 |
GILTI, net of credits |  | — |  |  | 21 |  |  | 11 |
Subpart F for non-full inclusion companies |  | 28 |  |  | 60 |  |  | 2 |
Foreign tax credits |  | (42) |  |  | (72) |  |  | (24) |
Return to provision adjustments |  | (9) |  |  | (13) |  |  | (17) |
Other, net |  | (3) |  |  | 2 |  |  | 3 |
Total provision for income taxes |  | $ | 251 |  |  | $ | 197 |  |  | $ | 215 |
Effective tax rate (1) |  | 21.8 | % |  | 27.3 | % |  | 15.6 | %
(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. Total income taxes for the years ended December 31, 2023, 2022 and 2021 were as follows (dollars in millions):
|  | 2023 |  | 2022 |  | 2021
Provision for income taxes |  | $ | 251 |  |  | $ | 197 |  |  | $ | 215 |
Income tax from OCI and additional paid-in-capital: |  |  |  |  |  |
Net unrealized investment gains (losses) recognized in OCI |  | 449 |  |  | (2,542) |  |  | (530) |
Liability for future policyholder benefits |  | (161) |  |  | 2,224 |  |  | 580 |
Market risk benefits |  | (3) |  |  | 5 |  |  | (11) |
Foreign currency translation |  | 22 |  |  | 35 |  |  | 23 |
Unrealized pension and postretirement |  | (2) |  |  | 7 |  |  | 7 |
Total income taxes provided |  | $ | 556 |  |  | $ | (74) |  |  | $ | 284 |
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities at December 31, 2023 and 2022 are presented in the following tables (dollars in millions):
|  | 2023 |  | 2022
Deferred income tax assets: |  |  |  |
Nondeductible accruals |  | $ | 96 |  |  | $ | 90 |
Net operating loss carryforward |  | 272 |  |  | 295 |
Capital loss carryforwards |  | 15 |  |  | — |
Tax credit carryforward |  | 108 |  |  | 80 |
Invested assets |  | 1,092 |  |  | 1,334 |
Anticipated future foreign tax credit |  | 267 |  |  | — |
Other |  | — |  |  | 12 |
Subtotal |  | 1,850 |  |  | 1,811 |
Valuation allowance |  | (567) |  |  | (235) |
Total deferred income tax assets |  | 1,283 |  |  | 1,576 |
Deferred income tax liabilities: |  |  |  |
Deferred acquisition costs |  | 833 |  |  | 835 |
Policy reserves and other reinsurance liabilities |  | 1,789 |  |  | 1,653 |
Invested assets |  | — |  |  | — |
Outside basis difference foreign subsidiaries |  | 152 |  |  | 166 |
Foreign currency translation |  | 179 |  |  | 103 |
Anticipated future tax credit reduction |  | — |  |  | 86 |
Other |  | 80 |  |  | — |
Total deferred income tax liabilities |  | 3,033 |  |  | 2,843 |
Net deferred income tax liabilities |  | $ | 1,750 |  |  | $ | 1,267 |
Balance sheet presentation of net deferred income tax liabilities: |  |  |  |
Included in other assets |  | $ | 112 |  |  | $ | 116 |
Included in deferred income taxes |  | 1,862 |  |  | 1,383 |
Net deferred income tax liabilities |  | $ | 1,750 |  |  | $ | 1,267 |
As of December 31, 2023, the valuation allowance against deferred tax assets was $567 million. During 2023, the Company established a $303 million deferred tax asset and a corresponding valuation allowance related to the enactment of the Bermuda tax regime. Other increases to the valuation allowance were related to losses in foreign subsidiaries that do not have a history of income. These increases were partially offset by releases in certain jurisdictions where the deferred tax assets are more likely than not to be utilized. As of December 31, 2022, the valuation allowance against deferred tax assets was $235 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. 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, 2023 and 2022, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $1.7 billion and $1.5 billion, respectively. As U.S. tax law 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 2023, 2022 and 2021, the Company received federal and foreign income tax refunds of approximately $13 million, $3 million and $20 million, respectively. The Company made cash income tax payments of approximately $311 million, $131 million and $388 million, in 2023, 2022 and 2021, respectively. The following table presents consolidated net operating loss carryforwards (“NOL”) as of December 31, 2023 (dollars in millions):
| 2023
NOL with no expiration and with no valuation allowance | $ | 423 |
NOL with a full valuation allowance | 126 |
NOL with no expiration and a partial valuation allowance | 505 |
NOL with expiration date of 2034 and no valuation allowance | 12 |
Total net operating loss carryforwards | $ | 1,066 |
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, 2023, the Company had foreign tax credit carryforwards of $108 million related to the U.S. and Ireland. The earliest year of expiration on the U.S. foreign tax credits is 2029. The U.S. credits are expected to be utilized in the ordinary course of business to offset U.S. tax liabilities. The Ireland foreign tax credit of $23 million has a full valuation allowance. Furthermore, the Company established anticipatory future foreign tax credits to offset Bermuda deferred tax liabilities established upon enactment of the Bermuda Income Tax. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The income tax years under examination vary by jurisdiction, but tax years 2020, 2021 and 2022 are generally subject to examination by the tax authorities. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years prior to 2020, Canadian tax authorities for years prior to 2018 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 2019. As of December 31, 2023, the Company’s total amount of unrecognized tax benefits is $33 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 $3 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, 2023, 2022 and 2021 is as follows (dollars in millions):
|  | Total Unrecognized Tax Benefits
|  | 2023 |  | 2022 |  | 2021
Beginning balance, January 1 |  | $ | 36 |  |  | $ | 34 |  |  | $ | 342 |
Additions for tax positions of prior years |  | 9 |  |  | 3 |  |  | 2 |
Reductions for tax positions of prior years |  | (15) |  |  | (4) |  |  | (312) |
Additions for tax positions of current year |  | 3 |  |  | 3 |  |  | 2 |
Ending balance, December 31 |  | $ | 33 |  |  | $ | 36 |  |  | $ | 34 |
The Company recognized minimal interest expense (benefit) associated with uncertain tax positions in 2023 and 2022 and $(31) million in 2021. As of December 31, 2023 and 2022, 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, 2023 or 2022.

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