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Income Taxes (Tables)

6 Months Ended

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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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-2

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

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