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Available-For-Sale Fixed Maturity Securities

12 Months Ended

Dec. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Available-For-Sale Fixed Maturity Securities

3. Available-For-Sale Fixed Maturity Securities

The total amortized cost, fair value, allowance for credit losses, gross unrealized gains and losses of available-for-sale fixed maturity securities are shown below:

			Amortized Cost						Gross Unrealized Gains						Gross Unrealized Losses						Allowance for Credit Losses						Fair Value
			(Dollars in millions)
December 31, 2024
U.S. treasury and government			$	87					$	—					$	(1)					$	—					$	86
U.S. states and political subdivisions			3,200						37						(30)						—						3,207
Foreign governments			1,568						6						(33)						—						1,541
Corporate debt securities			32,770						454						(350)						(26)						32,848
Residential mortgage-backed securities			1,086						25						(4)						(1)						1,106
Commercial mortgage-backed securities			2,755						65						(24)						—						2,796
Collateralized debt securities			5,661						77						(30)						—						5,708
Total fixed maturity securities			$	47,127					$	664					$	(472)					$	(27)					$	47,292
December 31, 2023
U.S. treasury and government			$	63					$	—					$	(1)					$	—					$	62
U.S. states and political subdivisions			594						1						(17)						—						578
Foreign governments			9						—						—						—						9
Corporate debt securities			11,144						79						(420)						(19)						10,784
Residential mortgage-backed securities			131						—						(4)						(1)						126
Commercial mortgage-backed securities			—						—						—						—						—
Collateralized debt securities			1,340						9						(27)						(4)						1,318
Total fixed maturity securities			$	13,281					$	89					$	(469)					$	(24)					$	12,877

The amortized cost and fair value of available-for-sale fixed maturity securities at December 31, 2024, by contractual maturity are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and collateralized debt securities provide for periodic payments throughout their lives and are shown below as separate lines.

			Available-For-Sale
			Amortized Cost						Fair Value
			(Dollars in millions)
Due in one year or less			$	1,354					$	1,356
Due after one year through five years			14,770						14,801
Due after five years through ten years			6,666						6,657
Due after ten years			14,835						14,868
			37,625						37,682
Residential mortgage-backed securities			1,086						1,106
Commercial mortgage-backed securities			2,755						2,796
Collateralized debt securities			5,661						5,708
			$	47,127					$	47,292

Proceeds from sales of available-for-sale fixed maturity securities, with the related gross realized gains and losses, are shown below:

			Successor																					Predecessor
			Year Ended December 31,												Period From May 25 to December 31,									Period From January 1 to May 24,
			2024						2023						2022									2022
			(Dollars in millions)
Proceeds from sales and maturities of investments - Fixed maturity, available-for-sale			$	5,683					$	3,558					$	5,486								$	979
Gross realized gains			17						3						10									—
Gross realized (losses)			(182)						(68)						(40)									—

The Company has pledged bonds in connection with certain agreements and transactions, such as financing and reinsurance agreements. The carrying value of bonds pledged was $8.8 billion and $39 million as of December 31, 2024 and December 31, 2023, respectively.

In accordance with various regulations, the Company has securities on deposit with regulating authorities with a carrying value of $65 million and $54 million as of December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024 and December 31, 2023, amounts loaned under reverse repurchase agreements were $400 million and $0 million, respectively, and the fair value of the collateral, comprised of equity securities, was $783 million and $0 million, respectively.

The gross unrealized losses and fair value of available-for-sale fixed maturity securities, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position due to market factors are shown below:

			Less than 12 months																		12 months or more																		Total
			Number of Issues						Gross Unrealized Losses (1)						Fair Value						Number of Issues						Gross Unrealized Losses (1)						Fair Value						Number of Issues						Gross Unrealized Losses (1)						Fair Value
			(Dollars in millions)
December 31, 2024
U.S. treasury and government			3						$	—					$	29					1						$	(1)					$	36					4						$	(1)					$	65
U.S. states and political subdivisions			174						(20)						851						190						(10)						280						364						(30)						1,131
Foreign governments			8						(33)						1,206						—						—						—						8						(33)						1,206
Corporate debt securities			1,514						(165)						6,615						384						(185)						4,015						1,898						(350)						10,630
Residential mortgage-backed securities			47						(3)						178						16						(1)						61						63						(4)						239
Commercial mortgage-backed securities			104						(24)						667						—						—						—						104						(24)						667
Collateralized debt securities			178						(29)						1,182						5						(1)						22						183						(30)						1,204
Total			2,028						$	(274)					$	10,728					596						$	(198)					$	4,414					2,624						$	(472)					$	15,142
December 31, 2023
U.S. treasury and government			17						$	(1)					$	27					35						$	—					$	25					52						$	(1)					$	52
U.S. states and political subdivisions			214						(3)						219						142						(14)						285						356						(17)						504
Foreign governments			—						—						—						2						—						9						2						—						9
Corporate debt securities			1,343						(141)						2,941						1,906						(279)						6,475						3,249						(420)						9,416
Residential mortgage-backed securities			6						(1)						39						39						(3)						64						45						(4)						103
Commercial mortgage-backed securities			—						—						—						—						—						—						—						—						—
Collateralized debt securities			102						(4)						258						201						(23)						782						303						(27)						1,040
Total			1,682						$	(150)					$	3,484					2,325						$	(319)					$	7,640					4,007						$	(469)					$	11,124

(1)Unrealized losses have been reduced to reflect the allowance for credit losses of $27 million and $24 million as of December 31, 2024 and 2023, respectively.

The unrealized losses at December 31, 2024 are principally related to the timing of the purchases of certain securities, which carry less yield than those available at December 31, 2024. Approximately 89% and 87% of the unrealized losses on fixed maturity securities shown in the above table for December 31, 2024 and 2023, respectively, are on securities that are rated investment grade, defined as being the highest two NAIC designations.

We expect to recover our amortized cost on all securities except for those securities on which we recognized an allowance for credit loss. In addition, because we did not have the intent to sell fixed maturity securities with unrealized losses and it was not more likely than not that we would be required to sell these securities prior to recovery of the amortized cost, which may be maturity, we did not write down these investments to fair value through the Consolidated Statements of Operations.

Allowance for Credit Losses

Several assumptions and underlying estimates are made in the evaluation of allowance for credit loss. Examples include financial condition, near-term and long-term prospects of the issue or issuer, including relevant industry conditions and trends and implications of rating agency actions and offering prices.

The rollforward of the allowance for credit losses for available-for-sale fixed maturity securities is shown below:

Predecessor						Corporate Securities						Residential Mortgage Backed Securities						Commercial Mortgage Backed Securities						Collateralized Debt Securities						Total
						(Dollars in millions)
Balance at December 31, 2021						$	(7)					$	—					$	—					$	(3)					$	(10)
Credit losses recognized on securities for which credit losses were not previously recorded						(26)						—						—						—						(26)
Reductions for securities sold during the period						—						—						—						—						—
Allowance on securities that had an allowance recorded in a previous period						5						—						—						(1)						4
Balance at May 24, 2022						$	(28)					$	—					$	—					$	(4)					$	(32)
Successor						Corporate Securities						Residential Mortgage Backed Securities						Commercial Mortgage Backed Securities						Collateralized Debt Securities						Total
						(Dollars in millions)
Balance at May 25, 2022						$	—					$	—					$	—					$	—					$	—
Credit losses recognized on securities for which credit losses were not previously recorded						(23)						—						—						(4)						(27)
Reductions for securities sold during the period						—						—						—						—						—
Allowance on securities that had an allowance recorded in a previous period						(1)						—						—						(1)						(2)
Balance at December 31, 2022						(24)						—						—						(5)						(29)
Credit losses recognized on securities for which credit losses were not previously recorded						(39)						(1)						—						(8)						(48)
Reductions for securities sold during the period						5						—						—						1						6
Allowance on securities that had an allowance recorded in a previous period						39						—						—						8						47
Balance at December 31, 2023						(19)						(1)						—						(4)						(24)
Credit losses recognized on securities for which credit losses were not previously recorded						(46)						—						—						—						(46)
Reductions for securities sold during the period						5						—						—						1						6
Allowance on securities that had an allowance recorded in a previous period						34						—						—						3						37
Balance at December 31, 2024						$	(26)					$	(1)					$	—					$	—					$	(27)

4. Equity Securities

The net gains (losses) on equity securities recognized in “Investment related losses” on the Consolidated Statements of Operations are shown below:

			Successor																					Predecessor
			Year Ended December 31,												Period From May 25 to December 31,									Period From January 1 to May 24,
			2024						2023						2022									2022
			(Dollars in millions)
Unrealized gains (losses) on equity securities			$	(56)					$	85					$	49								$	(7)
Net gains (losses) on equity securities sold			8						12						—									(6)
Net gains (losses) on equity securities			$	(48)					$	97					$	49								$	(13)

Equity securities by market sector distribution are shown below, based on carrying value:

			December 31,
			2024						2023
Consumer goods			5		%				—		%
Education			20		%				—		%
Energy and utilities			10		%				30		%
Finance			48		%				24		%
Healthcare			2		%				9		%
Industrials			12		%				3		%
Information technology			—		%				18		%
Other			3		%				16		%
Total			100		%				100		%

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- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

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-Topic 940
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-Name Accounting Standards Codification
-Publisher FASB
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-Name Regulation S-K (SK)
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-Section 1403
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