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Income Taxes (Tables) | 6 Months Ended
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Jun. 30, 2024
Income Tax Disclosure [Abstract] |
Schedule of Components of Income Tax Expense | Our income tax expense as presented in the consolidated financial statements is summarized as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (Dollars in millions)
Consolidated Statements of Operations: |  |  |  |  |  |  |  |
Current income tax |  | $ | 43 |  |  | $ | 8 |  |  | $ | 45 |  |  | $ | 14 |
Deferred income tax |  | (332) |  |  | 13 |  |  | (305) |  |  | 5 |
Total income tax expense included in Consolidated Statements of Operations |  | (289) |  |  | 21 |  |  | (260) |  |  | 19 |
Stockholders’ equity: |  |  |  |  |  |  |  |
Expense (benefit) relating to: |  |  |  |  |  |  |  |
Changes in other comprehensive income |  | 137 |  |  | (43) |  |  | 147 |  |  | (101) |
Total income tax expense included in consolidated financial statements |  | $ | (152) |  |  | $ | (22) |  |  | $ | (113) |  |  | $ | (82) |
Schedule of Reconciliation of Effective Income Tax Rate | Income tax expense in the Consolidated Statements of Operations differed from the amount computed at the applicable statutory federal income tax rates of 21% for the three and six months ended June 30, 2024 and 2023 as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (Dollars in millions)
Net income (loss) before income taxes |  | $ | (42) |  |  | $ | 119 |  |  | $ | 101 |  |  | $ | 130 |
Total expected income tax expense at the statutory rate |  | $ | (9) |  |  | $ | 25 |  |  | $ | 21 |  |  | $ | 27 |
Tax effect of: |  |  |  |  |  |  |  |
Impact of Bermuda corporate income tax |  | (292) |  |  | — |  |  | (292) |  |  | — |
Tax exempt net investment income |  | — |  |  | (1) |  |  | (1) |  |  | (2) |
Non-deductible compensation |  | 16 |  |  | 1 |  |  | 17 |  |  | 1 |
Other |  | (4) |  |  | (4) |  |  | (5) |  |  | (7) |
Total income tax expense (recovery) |  | $ | (289) |  |  | $ | 21 |  |  | $ | (260) |  |  | $ | 19 |
The following table presents a reconciliation of income tax rate from statutory rate to effective rate:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (reduction) in rate resulting from: |  |  |  |  |  |  |  |
Impact of Bermuda corporate income tax |  | 702.2 | % |  | — | % |  | (287.9) | % |  | — | %
Tax exempt net investment income |  | 1.2 | % |  | (0.7) | % |  | (1.0) | % |  | (1.2) | %
Non-deductible compensation |  | (39.6) | % |  | 0.5 | % |  | 16.7 | % |  | 1.0 | %
Other |  | 10.4 | % |  | (3.3) | % |  | (5.4) | % |  | (6.6) | %
Effective income tax rate |  | 695.2 | % |  | 17.5 | % |  | (256.6) | % |  | 14.2 | %
Schedule of Deferred Tax Assets | The gross movement on the deferred tax asset is as follows:
|  | June 30, 2024 |  | December 31, 2023
|  | (Dollars in millions)
Deferred tax asset, beginning of year |  | $ | 291 |  |  | $ | 439 |
Recognized in net (income) loss |  | 305 |  |  | (56) |
Acquisition from business combination |  | (212) |  |  | — |
Recognized in equity |  | (147) |  |  | (90) |
Other |  | (4) |  |  | (2) |
Deferred tax asset, end of period |  | $ | 233 |  |  | $ | 291 |
The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at June 30, 2024 and December 31, 2023 are as follows:
|  | June 30, 2024 |  | December 31, 2023
|  | (Dollars in millions)
Deferred income tax assets: |  |  |  |
Investments |  | $ | 1,452 |  |  | $ | 260 |
Amounts due reinsurer |  | 1,113 |  |  | — |
Policy benefit reserves |  | — |  |  | 138 |
Net operating loss carryforwards |  | 309 |  |  | 31 |
Bermuda tax asset |  | 377 |  |  | 35 |
Other |  | 29 |  |  | — |
Gross deferred tax assets before valuation allowance |  | 3,280 |  |  | 464 |
Valuation allowance |  | (5) |  |  | (5) |
Gross deferred tax assets after valuation allowance |  | 3,275 |  |  | 459 |
Deferred income tax liabilities: |  |  |  |
VOBA/Intangibles |  | 1,810 |  |  | — |
Deferred policy acquisition costs |  | 89 |  |  | 81 |
Policy benefit reserves |  | 1,086 |  |  | — |
Pension and liability for retirement benefits |  | 57 |  |  | 49 |
Other |  | — |  |  | 38 |
Gross deferred tax liabilities |  | 3,042 |  |  | 168 |
Net deferred income tax asset |  | $ | 233 |  |  | $ | 291 |

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