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Risk Factors Relating to Market Conditions
−Removed: If economic and credit market conditions continue to deteriorate, it could have a material adverse impact on our investment portfolio and could also cause our stock price to fluctuate significantly.
+Added: If economic and credit market conditions deteriorate, it could have a material adverse impact on our investment portfolio and could also cause our stock price to fluctuate significantly.
Our investment portfolio is exposed to economic and financial market risks, including changes in interest rates, credit markets and prices of marketable equity and fixed-income securities.
−Removed: Our investment policy in our title business is designed to maximize total return through investment income and capital appreciation consistent with moderate risk of principal, while providing adequate liquidity and complying with internal and regulatory guidelines.
+Added: Our investment policy in our title business is designed to maximize total return through investment income and capital appreciation consistent with moderate risk of principal, while
+Added: providing adequate liquidity and complying with internal and regulatory guidelines.
To achieve this objective, our marketable debt investments are primarily investment grade, liquid, fixed-income securities and money market instruments denominated in U.S.
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Equity market volatility could negatively impact our business.
−Removed: The estimated cost of providing GMWB associated with our annuity products incorporates various assumptions about the overall performance of equity markets over certain time periods.
−Removed: Periods of significant and sustained downturns in equity markets or increased equity volatility could result in an increase in the valuation of the future policy benefit or policyholder
−Removed: account balance liabilities associated with such products, resulting in a reduction in our revenues and net earnings (loss).
−Removed: The rate of amortization of our deferred acquisition costs ("DAC"), deferred sales inducements ("DSI") and value of business acquired ("VOBA") relating to FIA products could also increase if equity market performance is worse than assumed and have a materially adverse impact on our results of operations and financial condition.
+Added: The estimated cost of providing GMWB riders associated with our annuity products incorporates various assumptions about the overall performance of equity markets over certain time periods.
+Added: Periods of significant and sustained downturns in equity markets or increased equity volatility could result in an increase in the valuation of the Market Risk Benefit ("MRB") or contractholder funds balance liabilities associated with such products, resulting in a reduction in our revenues and net income.
Conditions in the economy generally could adversely affect our business, results of operations and financial condition.
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Even in the absence of a market downturn we are exposed to substantial risk of loss due to market volatility.
−Removed: Factors such as consumer spending, business investment, government spending, the volatility and strength of the capital markets, investor and consumer confidence, foreign currency exchange rates and inflation levels all affect the business and economic environment and, ultimately, the amount and profitability of our business.
+Added: Factors such as consumer spending, business investment, government spending, potential government shutdowns, the volatility and strength of the capital markets, investor and consumer confidence, foreign currency exchange rates, geopolitical uncertainties and inflation levels all affect the business and economic environment and, ultimately, the amount and profitability of our business.
In an economic downturn characterized by higher unemployment, lower family income, negative investor sentiment and lower consumer spending, the demand for our insurance products could be adversely affected.
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These risks could be heightened during periods of extreme volatility or disruption in financial and credit markets.
−Removed: A worsening business climate, such as the current recession, or changing trends could cause issuers of the fixed-income securities that we own to default on either principal or interest payments.
+Added: A worsening business climate or changing trends could cause issuers of the fixed-income securities that we own to default on either principal or interest payments.
Additionally, market price valuations may not accurately reflect the underlying expected cash flows of securities within our investment portfolio.
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Additionally, market price valuations may not accurately reflect the underlying expected cash flows of securities within our investment portfolio.
−Removed: Finally, market volatility could cause investment income fluctuations in regards to our alternative investments that may differ significantly from period to period.
+Added: Finally, market volatility could cause investment income fluctuations in regard to our alternative investments that may differ significantly from period to period.
The value of our mortgage-backed securities and our commercial and residential mortgage loan investments depends in part on the financial condition of the borrowers and tenants for the properties underlying those investments, as well as general and specific economic trends affecting the overall default rate.
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• when the United States economy is weak, including high unemployment levels.
−Removed: Declines in the level of real estate activity or the average price of real estate sales are likely to adversely affect our title insurance revenues.
−Removed: The Mortgage Bankers Association's ("MBA") Mortgage Finance Forecast as of February 21, 2023 calculates an approximately $2.2 trillion mortgage origination market for 2022, which would be a decrease from 2021 resulting primarily from decreases in both purchase and refinance activity.
−Removed: The MBA predicts overall mortgage originations in 2023 will also decrease when compared to 2022 as a result of decreases in both purchase and refinance activity.
+Added: Declines in the level of real estate activity or the average price of real estate sales are likel y to adversely affect our title insurance revenues.
+Added: The Mortgage Bankers Association's ("MBA") Mortgage Finance Forecast as of February 20, 2024, calculates an approximate $1.6 trillion mortgage origination market for 2023, which would be a decrease from 2022 resulting from decreases in both purchase and refinance activity.
+Added: The MBA predicts overall mortgage originations in 2024 will increase when compared to 2023 as a result of increases in both purchase and refinance activity.
Ou r revenues in future periods will continue to be subject to these and other factors that are beyond our control and, as a result, are likely to fluctuate.
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Interest rate fluctuations could adversely affect our business, financial condition, liquidity, results of operations and cash flows.
−Removed: Interest rate risk is a significant market risk as our F&G business involves issuing interest rate sensitive obligations backed primarily by investments in fixed income assets.
−Removed: For several years prior to 2022, interest rates remained at or near historically low levels.
+Added: Interest rate risk is a significant market risk for us, as our F&G business involves issuing interest rate sensitive obligations backed primarily by investments in fixed income assets.
+Added: F&G also maintains a portion of the assets in its investment portfolio in floating rate instruments and has executed variable interest rate credit agreements and floating rate funding agreements, which are subject to an element of market risk from changes in interest rates.
+Added: Prior to 2022, interest rates had been at or near historical low levels over the preceding several years.
A prolonged period of low rates exposes us to the risk of not achieving returns sufficient to meet our earnings targets and/or our contractual obligations.
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Lower interest rates may also result in decreased sales of certain insurance products, negatively impacting our profitability from new business.
−Removed: During periods of increasing interest rates, such as those observed in 2022, we may offer higher crediting rates on interest-sensitive products, such as universal life insurance and fixed annuities, and we may increase crediting rates on in-force products to keep these products competitive.
−Removed: We may be required to accept lower spread income (the difference between the returns we earn on our investments and the amounts we credit to contractholders) thus reducing our profitability, as returns on our portfolio of invested assets may not increase as quickly as current interest rates.
+Added: During periods of increasing interest rates, we may offer higher crediting rates on interest-sensitive products, such as universal life insurance and fixed rate annuities, and we may increase crediting rates on in-force products to keep these products competitive.
+Added: We may be required to accept lower spread income (the difference between the returns we earn on our investments and the amounts we credit to contract holders), thus reducing our profitability, as returns on our portfolio of invested assets may not increase as quickly as current interest rates.
Rapidly rising interest rates may also expose us to the risk of financial disintermediation, which is an increase in policy surrenders, withdrawals and requests for policy loans as customers seek to achieve higher returns elsewhere, requiring us to liquidate assets in an unrealized loss position.
If we experience unexpected withdrawal activity, we could exhaust our liquid assets and be forced to liquidate other less liquid assets such as limited partnership investments.
−Removed: We may have difficulty selling these investments in a timely manner and/or be forced to sell them for less than we otherwise would have been able to realize, which could have a material adverse effect on our business, financial condition and results of operations.
−Removed: We have developed and maintain asset liability management (“ALM”) programs and procedures designed to mitigate interest rate risk by matching asset cash flows to expected liability cash flows.
+Added: We may have difficulty selling these investments in a timely manner and/or be forced to sell them for less than we otherwise would have been able to realize, which could have a material adverse effect on our business, financial condition or operating results.
+Added: We have developed and maintain asset liability management programs and procedures that are, we believe, designed to mitigate interest rate risk by matching asset cash flows to expected liability cash flows.
In addition, we assess surrender charges on withdrawals in excess of allowable penalty-free amounts that occur during the surrender charge period.
−Removed: There can be no assurance actual withdrawals, contract benefits, and maturities will match our estimates.
+Added: There can be no assurance that actual withdrawals, contract benefits, and maturities will match our estimates.
Despite our efforts to reduce the impact of rising interest rates, we may be required to sell assets to raise the cash necessary to respond to an increase in surrenders, withdrawals and loans, thereby realizing capital losses on the assets sold.
−Removed: We may experience spread income compression, and a loss of anticipated earnings, if credited interest rates are increased on renewing contracts in an effort to decrease or manage withdrawal activity.
−Removed: Our expectation for future spread income is an important component in amortization of DAC, DSI, and VOBA under U.S.
−Removed: Significant reductions in spread income may cause us to accelerate DAC, DSI, and VOBA amortization.
+Added: Liabilities that are held on our balance sheet at fair value, including embedded derivatives on our FIA and IUL business and MRBs on our FIA and fixed rate annuity business, are sensitive to fluctuations in interest rates.
+Added: Decreases in interest rates generally would have the impact of increasing the value of these liabilities, which will result in a reduction in our net income.
+Added: Liabilities for future policyholder benefits are valued using locked-in discount rates, and any changes in interest rates since the inception of those contracts are reflected in OCI.
+Added: Decreases in interest rates would result in a reduction in our OCI.
In addition, certain statutory capital and reserve requirements are based on formulas or models that consider interest rates and a prolonged period of low interest rates may increase the statutory capital we are required to hold as well as the amount of assets we must maintain to support statutory reserves.
+Added: Economic conditions, including higher interest rates, could materially adversely affected our business, results of operations and financial condition.
+Added: However, we cannot predict if it will impact our business, results of operations or financial condition in the future for the forgoing reasons.
Risk Factors Relating to Our Business
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For the years ended December 31, 2023, 2022 and 2021, no goodwill impairment charge was recorded.
−Removed: However, if the current economic downturn continues or escalates into further deterioration, the carrying amount of our goodwill may no longer be recoverable, and we may be required to record an impairment charge, which would have a negative impact on our results of operations and financial condition.
+Added: However, if economic conditions deteriorate, the carrying amount of our goodwill may no longer be recoverable, and we may be required to record an impairment charge, which would have a negative impact on our results of operations and financial condition.
We will continue to monitor our market capitalization and the impact of the economy to determine if there is an impairment of goodwill in future periods.
Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under our indebtedness.
−Removed: As of December 31, 2022, our outstanding debt was $3,238 million.
+Added: As of December 31, 2023, our outstanding debt wa s $3,887 million.
Our high degree of leverage could have important consequences, including the following:
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(iii) we may be unable to adjust rapidly to changing market conditions;
−Removed: (iv) the debt service requirements of our other indebtedness could make it more difficult for us
−Removed: to satisfy our financial obligations;
+Added: (iv) the debt service requirements of our other indebtedness could make it more difficult for us to satisfy our financial obligations;
and (v) we may be vulnerable in a downturn in general economic conditions or in our business and we may be unable to carry out activities that are important to our growth.
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We from time to time may increase the amount of our indebtedness, modify the terms of our financing arrangements, issue dividends, make capital expenditures and take other actions that may substantially increase our leverage.
−Removed: The pattern of amortizing our DAC, DSI, and VOBA balances relies on assumptions and estimates made by management.
−Removed: Changes in these assumptions and estimates could impact our results of operations and financial condition.
−Removed: Amortization of our DAC, DSI and VOBA balances depends on the actual and expected profits generated by the respective lines of business that incurred the expenses.
−Removed: Expected profits are dependent on assumptions regarding a number of factors including investment returns, benefit payments, expenses, mortality, and policy lapse.
−Removed: Due to the uncertainty associated with establishing these assumptions, we cannot, with precision, determine the exact pattern of profit emergence.
−Removed: As a result, amortization of these balances will vary from period to period.
−Removed: Any difference in actual experience versus expected results could require us to, among other things, accelerate the amortization of DAC, DSI and VOBA that would reduce profitability for such lines of business in the current period.
−Removed: For additional informati on, see Item 7 of Part II of this Annual Report, under Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates.
−Removed: We may face losses if our actual experience differs significantly from our reserving assumptions.
+Added: We may face losses if our actual experience differs significantly from our reserve assumptions.
Our profitability depends significantly upon the extent to which our actual experience is consistent with the assumptions used in setting rates for our products and establishing liabilities for future life insurance, annuity, and PRT policy benefits and claims.
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To the extent that actual experience is less favorable than our underlying assumptions, we could be required to increase our liabilities, which may reduce our profitability and impact our financial strength.
−Removed: We have been issuing guaranteed minimum withdrawal benefit (“GMWB”) products since 2008.
+Added: We have been issuing GMWB products since 2008.
In our reserve calculations, we make assumptions for policyholder behavior as it relates to GMWB utilization.
If emerging experience deviates from our assumptions on GMWB utilization, it could have a significant effect on our reserve levels and related results of operations.
−Removed: Based on experience of GMWB utilization, which continues to emerge, we updated our GMWB utilization assumption during 2022, with a favorable impact on reserves.
We will continue to monitor the GMWB utilization assumption and update our best estimate as applicable.
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however, insurance regulators have the authority to prohibit the payment of ordinary dividends or other payments by our title insurers to us if they determine that such payment could be adverse to our policyholders.
−Removed: Our F&G subsidiaries are also subject to state laws with respect to the payment of dividends.
−Removed: The Iowa insurance law and the New York insurance law regulate the amount of dividends that may be paid in any year by FGL Insurance and FGL NY Insurance, respectively.
−Removed: Compliance with these state regulations will limit the amounts that FGL Insurance and FGL NY Insurance may dividend to us.
−Removed: Any dividends in excess of a threshold amount are subject to advance state notice or approval.
The maximum dividend permitted by law is not necessarily indicative of an insurer’s actual ability to pay dividends, which may be constrained by business and regulatory considerations, such as the impact of dividends on surplus, which could affect an insurer’s ratings or competitive position, the amount of premiums that can be written and the ability to pay future dividends.
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Such marketers and agents may promote products offered by other life insurance companies that offer a larger variety of products than we do.
−Removed: If we are unable to attract and retain a sufficient number of marketers and agents to sell our products, our ability to compete and our revenues would suffer.
+Added: we are unable to attract and retain a sufficient number of marketers and agents to sell our products, our ability to compete and our revenues would suffer.
Failure of our enterprise-wide risk management processes could result in unexpected monetary losses, damage to our reputation, additional costs or impairment of our ability to conduct business effectively.
−Removed: As a large insurance entity and a publicly traded company, we have always had risk management functions, policies and procedures throughout our operations and management.
−Removed: These functions include but are not limited to departments dedicated to enterprise risk management and information technology risk management, information security, business continuity, lender strategy and development, and vendor risk management.
−Removed: These policies and procedures have evolved over the years as we continually reassess our processes both internally and to comply with changes in the regulatory environment.
+Added: As a large insurance entity and a publicly traded company, we have risk management functions, policies and procedures throughout our operations and management.
+Added: These functions include but are not limited to departments dedicated to enterprise risk management and information technology risk management, information security, business continuity, lender strategy and contracts, and vendor risk management.
+Added: Our policies and procedures have evolved over the years as we continually reassess our processes both internally and to comply with changes in the regulatory environment.
Due to limitations inherent in any internal process, if our risk management processes prove unsuccessful at identifying and responding to risks, we could incur unexpected monetary losses, damage to our reputation, additional costs or impairment of our ability to conduct business effectively.
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Estimating future title loss payments is difficult because of the complex nature of title claims, the long periods of time over which claims are paid, significantly varying dollar amounts of individual claims and other factors.
−Removed: From time to time, we experience large losses or an overall worsening of
−Removed: our loss payment experience in regard to the frequency or severity of claims that require us to record additional charges to our claims loss reserve.
+Added: From time to time, we experience large losses or an overall worsening of our loss payment experience in regard to the frequency or severity of claims that require us to record additional charges to our claims loss reserve.
There are currently pending several large claims, which we believe can be defended successfully without material loss payments.
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If the recorded amount is not within a reasonable range of the actuary’s central estimate, we would record a charge or credit and reassess the provision rate on a go forward basis.
−Removed: If the rating agencies downgrade our insurance companies, our results of operations and competitive position in the title insurance industry may suffer.
+Added: If the rating agencies downgrade our insurance companies, our results of operations and financial condition may suffer.
Ratings have always been an important factor in establishing the competitive position of insurance companies.
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The F&G Distribution is subject to inherent risks and uncertainties, including, but not limited to:
−Removed: diversion of management’s attention and the potential impact of the F&G
−Removed: Distribution on relationships, including with employees, suppliers, customers and competitors;
+Added: diversion of management’s attention and the potential impact of the F&G Distribution on relationships, including with employees, suppliers, customers and competitors;
our ability to successfully realize the anticipated benefits of the F&G Distribution;
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Risk Factors Relating to the Geographic Concentrations of our Business Segments
−Removed: Because we are dependent upon California and Texas for approximately 12.0% and 15.0% and of our title insurance premiums, respectively, our Title segment may be adversely affected by regulatory conditions in California and/or Texas.
+Added: Because we are dependent upon California and Texas for approximately 13.0% and 14.3% of our title insurance premiums, respectively, our Title segment may be adversely affected by regulatory conditions in California and/or Texas.
Californi a and Texas are the two largest sources of revenue for our Title segment.
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A significant part of our revenues and profitability are therefore subject to our operations in California and Texas and to the prevailing regulatory conditions in these states.
−Removed: Adverse regulatory developments in California and Texas, which could include reductions in the maximum rates permitted to be charged, inadequate rate increases or more fundamental changes in the design or implementation of the California and Texas title insurance regulatory framework, could have a material adverse effect on our results of operations and financial condition.
+Added: Adverse regulatory developments in California and Texas, which could include reductions in the maximum rates permitted to be charged, inadequate rate
+Added: increases or more fundamental changes in the design or implementation of the California and Texas title insurance regulatory framework, could have a material adverse effect on our results of operations and financial condition.
Concentration in certain states for the distribution of our life insurance and annuity products in our F&G segment may subject us to losses attributable to economic downturns or catastrophes in those states.
−Removed: Our top five states for the distribution of our life insurance and annuity products in our F&G segment are Florida, California, Texas, Pennsylvania and New Jersey.
+Added: Our top five states for the distribution of our life insurance and annuity products in our F&G segment are Florida, California, Pennsylvania, Ohio and Texas.
Any adverse economic developments or catastrophes in these states could have an adverse impact on our F&G segment.
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Our business is subject to government regulation in each of the states in which we conduct business and is concerned primarily with the protection of policyholders and other customers rather than shareholders.
−Removed: Such regulation is vested in state
−Removed: agencies having broad administrative and discretionary authority, which may include, among other things, premium rates and increases thereto, underwriting practices, reserve requirements, marketing practices, advertising, privacy, policy forms, reinsurance reserve requirements, acquisitions, mergers and capital adequacy.
+Added: Such regulation is vested in state agencies having broad administrative and discretionary authority, which may include, among other things, premium rates and increases thereto, underwriting practices, reserve requirements, marketing practices, advertising, privacy, policy forms, reinsurance reserve requirements, acquisitions, mergers and capital adequacy.
At any given time, we and our insurance subsidiaries may be the subject of a number of ongoing financial or market conduct, audits or inquiries.
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Statutes, regulations and interpretations may be applied with retroactive impact, particularly in areas such as accounting and reserve requirements.
−Removed: The NAIC continues to work to reform state regulation in various areas, including comprehensive reforms relating to cyber security regulations, best interest standards, RBC and life insurance reserves.
+Added: The NAIC continues to work to reform state regulation in various areas, including comprehensive reforms relating to cybersecurity regulations, best interest standards, RBC and life insurance reserves.
Our insurance subsidiaries are subject to minimum capitalization requirements based on RBC formulas for life insurance companies that establish capital requirements relating to insurance, business, asset, interest rate and certain other risks.
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Meanwhile the DOL has publicly announced its intention to consider future rulemaking that would revoke or modify PTE 84-24.
+Added: On November 2, 2023, following previous attempts to expand fiduciary regulation for advisers, the DOL the New Fiduciary Rule to significantly broaden the definition of “fiduciary” under ERISA.
+Added: Among other requirements, if finalized in its proposed form, the New Fiduciary Rule provides that any person will be an investment advice fiduciary if they provide
+Added: investment advice or make an investment recommendation to a retirement investor ( i.e., a plan, plan fiduciary, plan participant or beneficiary, IRA, IRA owner or beneficiary, or IRA fiduciary) for a fee or other compensation, and the person provides the advice or makes the recommendation on a regular basis as part of their business and the recommendation is provided under circumstances indicating that the recommendation is based on the particular needs or individual investor circumstances of the retirement investor.
+Added: Unlike the current ERISA standard, the New Fiduciary Rule would subject non-discretionary investment advice to retirement plans and accounts to the prudent-person “best interest” standard that has historically been reserved for investment advisors with discretionary authority or control over ERISA plan assets.
+Added: If the New Fiduciary Rule is adopted in its present form, certain of the Company’s agents would likely be considered fiduciaries for purposes of ERISA and the Internal Revenue Code—subjecting the Company, and the insurance industry on the whole, to greater regulatory risk.
Management believes these current and emerging developments relating to market conduct standards for the financial services industry may over time materially affect the way in which our agents do business, the role of IMOs, sale of IRA products including IRA-to-IRA and employer plan rollovers, how the company supervises its distribution force, compensation practices, and liability exposure and costs.
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We are subject to the credit risk of our counterparties, including companies with whom we have reinsurance agreements or we have purchased call options.
−Removed: Our F&G insurance subsidiaries cede material amounts of insurance and transfer related assets and certain liabilities to other insurance companies through reinsurance.
+Added: We cede material amounts of insurance and transfers related assets and certain liabilities to other insurance companies through reinsurance.
Accordingly, we bear credit risk with respect to our reinsurers.
−Removed: The failure, insolvency, inability or unwillingness of any reinsurer to pay under the terms of reinsurance agreements with us could materially adversely affect our business, financial condition and results of operations.
+Added: The failure, insolvency, inability or unwillingness of any reinsurer to pay under the terms of reinsurance agreements with us could materially adversely affect our business, financial condition, liquidity and results of operations.
We regularly monitor the credit rating and performance of our reinsurance parties.
−Removed: Wilton Re represents our largest reinsurance counterparty exposure.
−Removed: We also utilize funds withheld reinsurance counterparty risk.
−Removed: Under funds withheld arrangements, each of our F&G insurance subsidiaries retains possession and legal title to assets backing ceded liabilities.
−Removed: Our F&G insurance subsidiaries are also exposed to credit loss in the event of non-performance by our counterparties on call options.
+Added: ASPIDA Life Re Ltd.
+Added: (“Aspida Re”), Wilton Reassurance Company (“Wilton Re”), Somerset Reinsurance Ltd.
+Added: (“Somerset”) and Everlake Life Insurance Company (“Everlake”) represent our largest third-party reinsurance counterparty exposure.
+Added: As of December 31, 2023, the net amount recoverable from Aspida Re, Wilton Re, Somerset and Everlake were $6,128 million, $1,092 million, $716 million, and $509 million, respectively.
+Added: The risk of non-performance is mitigated with various forms of collateral or collateral arrangements, including secured trusts, funds withheld accounts and irrevocable letters of credit.
+Added: We are also exposed to credit loss in the event of non-performance by our counterparties on options.
We seek to reduce the risk associated with such agreements by purchasing such options from large, well-established financial institutions, and by holding collateral.
There can be no assurance we will not suffer losses in the event of counterparty non-performance.
+Added: Several of our derivative counterparty International Swap and Derivative Association (“ISDA”) agreements contain additional termination event triggers based on a downgrade of FGL Insurance.
+Added: These triggers would give these counterparties the option to terminate our options, which could lead to losses if occurring at an inopportune time.
+Added: Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional details on credit risk and counterparty risk.
If financial institutions at which we hold escrow funds fail, it could have a material adverse impact on our company.
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Our business could be materially and adversely affected by the occurrence of a catastrophe, including natural disasters or those caused by humans.
−Removed: Any catastrophic event, such as pandemic diseases, terrorist attacks, floods, severe storms or hurricanes or computer cyber-terrorism, could have a material and adverse effect on our business in several respects:
+Added: Any catastrophic event, such as a pandemic, terrorist attacks, floods, severe storms or hurricanes or cyber-attacks, could have a material and adverse effect on our business in several respects:
• the outbreak of a pandemic disease, like COVID-19, could have a material adverse effect on our liquidity, financial condition and the operating results of our insurance business due to its impact on the economy and financial markets;
• the occurrence of any pandemic disease, natural disaster, terrorist attack or any other catastrophic event that results in our workforce being unable to be physically located at one of our facilities could result in lengthy interruptions in our service;
−Removed: • we could experience long-term interruptions in our service and the services provided by our significant vendors due to the effects of catastrophic events, including but not limited to government mandates to self-quarantine, work remotely and prolonged travel restrictions.
+Added: • we could experience long-term interruptions in our service and the services provided by our significant vendors due to the effects of catastrophic events, including but not limited to cyber-attacks.
Some of our operational systems are not fully redundant, and our disaster recovery and business continuity planning cannot account for all eventualities.
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Catastrophic events could adversely affect the cost and availability of that reinsurance;
−Removed: • the value of our investment portfolio may decrease if the securities in which we invest are negatively impacted by climate change, pandemic diseases, severe weather conditions and other catastrophic events.
−Removed: Natural catastrophes, pandemics (including COVID-19) and malicious and terrorist acts present risks that could adversely affect our results of operations.
−Removed: Claims arising from such events could have an adverse effect on our business, operations and financial condition, either directly or as a result of their effect on our reinsurers or other counterparties.
+Added: • the value of our investment portfolio may decrease if the securities in which we invest are negatively impacted by climate change, pandemics, severe weather conditions and other catastrophic events.
+Added: Natural catastrophes, pandemics, and malicious and terrorist acts present risks that could adversely affect our results of operations.
+Added: Claims arising from such events could have an adverse effect on our business, operations and financial condition,
+Added: either directly or as a result of their effect on our reinsurers or other counterparties.
Such events could also have an adverse effect on the rate and amount of lapses and surrenders of existing policies, as well as sales of new policies.
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General Risk Factors
−Removed: Failure of our information security systems or processes could result in a loss or disclosure of confidential information, damage to our reputation, monetary losses, additional costs and impairment of our ability to conduct business effectively.
+Added: Failure of our information security systems or unauthorized access to such systems could result in a loss or disclosure of confidential information, damage to our reputation, monetary losses, additional costs and impairment of our ability to conduct business effectively.
Our operations are highly dependent upon the effective operation of our computer systems.
−Removed: We use our computer systems to receive, process, store and transmit sensitive personal consumer data (such as names and addresses, social security numbers, driver's license numbers, credit cards and bank account information) and important business information of our customers.
+Added: We use our computer systems to receive, process, store and transmit sensitive personal consumer data (such as names and addresses, social security numbers, driver's license numbers, and bank account information) and important business information of our customers.
We also electronically manage substantial cash, investment assets and escrow account balances on behalf of ourselves and our customers, as well as financial information about our businesses generally.
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While, to date, we believe that we have not experienced a material breach of our computer systems, the occurrence or scope of such events is not always apparent.
−Removed: Examples of security threats that represent significant inherent risk with little to no warning are the SolarWinds supply chain compromise from 2020 and the Apache Software Foundation Log4j vulnerability in its product disclosed in December of 2021.
−Removed: With SolarWinds, we took all appropriate steps to evaluate any impact and we do not believe we were impacted by this incident.
−Removed: Similar supply chain incidents or breaches could occur to us directly or indirectly through our vendors with little or no warning.
−Removed: With Log 4j, we took all appropriate steps to mitigate exposure to our systems.
−Removed: We know that certain applications in our environment did utilize the affected versions of Log4j.
−Removed: Although we believe we identified and remediated the known Log4j vulnerabilities with no indication of compromise, the risk of additional vulnerabilities and potential attacks related to this issue may continue for several months given the complexity and widespread nature of the situation.
−Removed: We are also working closely with our supply chain partners to ensure they are addressing these vulnerabilities.
+Added: Examples of security threats that represent significant inherent risk with little to no warning include the MoveIT security incident affecting F&G, in which F&G activated its crisis management protocols to adequately manage the investigation, impact, and response to this incident.
+Added: In November 2023, we experienced a cybersecurity incident where an unauthorized third-party accessed certain of our systems, deployed a type of malware that is not self-propagating, and exfiltrated certain data.
+Added: We promptly commenced an investigation, retained leading experts to assist the Company, notified law enforcement authorities, regulatory authorities and other stakeholders and followed our incident response plans.
+Added: Although we believe we have remediated the significant exposures related to these incidents, there remains potential for future losses associated with litigation and damage to our reputation.
If additional information regarding an event previously considered immaterial is discovered, or a new event were to occur, it could potentially have a material adverse effect on our operations or financial condition.
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Such notifications can potentially result, among other things, in adverse publicity, diversion of management and other resources, the attention of regulatory authorities, the imposition of fines, and disruptions in business operations, the effects of which may be material.
−Removed: Any inability to prevent security or privacy breaches, or the perception that such breaches may occur, could inhibit our ability to retain or
−Removed: attract new clients and/or result in financial losses, litigation, increased costs, negative publicity, or other adverse consequences to our business.
+Added: Any inability to prevent security or privacy breaches, or the perception that such breaches may occur, could inhibit our ability to retain or attract new clients and/or result in financial losses, litigation, increased costs, negative publicity, or other adverse consequences to our business.
+Added: While we currently maintain cybersecurity insurance, such insurance may not be sufficient in type or amount to cover us against claims related to cybersecurity breaches or attacks, failures or other data security-related incidents, and we cannot be certain that cyber insurance will continue to be available to us on economically reasonable terms, or at all, or that an insurer will not deny coverage as to any future claim.
+Added: The successful assertion of one or more claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductibles, could materially and adversely affect our financial condition, results of operations and cash flows.
Further, our financial institution clients have obligations to safeguard their information technology systems and the confidentiality of customer information.
In certain of our businesses, we are bound contractually and/or by regulation to comply with the same requirements.
−Removed: If we fail to comply with these regulations and requirements, we could be exposed to suits for breach of contract, governmental proceedings or the imposition of fines.
+Added: If we fail to comply with these regulations and requirements, we could be exposed to lawsuits for breach of contract, governmental proceedings or the imposition of fines.
In addition, future adoption of more restrictive privacy laws, rules or industry security requirements by federal or state regulatory bodies or by a specific industry in which we do business could have an adverse impact on us through increased costs or restrictions on business processes.
+Added: The new and emerging types of Artificial Intelligence and their uses are very early stage in the industry and may be subject to many uncertain future developments and regulations.
+Added: Regulatory agencies are evaluating existing regulatory frameworks for insurance industry wide use of Artificial Intelligence.
+Added: New artificial intelligence algorithms and predictive models may be used by insurance companies in selling
+Added: insurance products to consumers.
+Added: However, the use of new artificial intelligence models may make insurance companies more susceptible to potential bias, discrimination, and data breaches.
+Added: These concerns could lead to development of new, or modifications to, laws and regulations pertaining to the use of Artificial Intelligence by insurance companies, or the broader financial services sector, which may prove to be onerous for companies to implement in a timely manner.
+Added: The use of artificial intelligence and machine learning technologies, including generative artificial intelligence, has increased rapidly with increasing complexity and changes in the nature of the technology.
+Added: Our potential uses of generative artificial intelligence may be subject to various risks including flaws or limitations in the large language models or training datasets that may result in biased or inaccurate results, ethical considerations, and the ability to safely deploy and implement governance and controls for such systems.
+Added: Laws and regulations related to artificial intelligence are evolving, and there is uncertainty as to potential adoption of new laws and regulations and the application of existing laws and regulations to use of artificial intelligence, which may restrict or impose burdensome and costly requirements on our ability to use artificial intelligence.
+Added: In addition, there has been considerable patent and other intellectual property development activity in the artificial intelligence industry, which has resulted in litigation based on allegations of infringement or other violations of intellectual property rights.
+Added: We may receive claims from third parties, including our competitors, alleging that our use of artificial intelligence technology infringes on or violates such third party's intellectual property rights.
+Added: Adverse consequences of these risks related to artificial intelligence could undermine the decisions, predictions or analysis such technologies produce and subject us to competitive harm, legal liability, heightened regulatory scrutiny and brand or reputational harm.
+Added: Our ability to adopt new technologies may be inhibited by the emergence of industry-wide standards, a changing legislative and regulatory environment, an inability to develop appropriate governance and controls, a lack of internal product and engineering expertise, resistance to change from consumers, or lack of appropriate change management processes or the complexity of our systems.
+Added: In addition, our adoption of new technologies and our introduction of new products and services may expose us to new or enhanced risks, particularly in areas where we have less experience or our existing governance and control systems may be insufficient, which could require us to make substantial expenditures or subject us to legal liability, heightened regulatory scrutiny and brand or reputational harm.
Damage to our reputation may adversely affect our revenues and profitability.
15 unchanged sentences
We may also be subject to claims by third parties for breach of copyright, trademark, trade secret or license usage rights.
−Removed: Any such claims and any resulting litigation could result in significant expense and liability for damages or we could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively, we could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition.
+Added: Any such claims and any resulting litigation could result in significant expense and liability for damages or we could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively, we could be required to enter into costly licensing
+Added: arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition.
We are the subject of various legal proceedings that could have a material adverse effect on our results of operations.
3 unchanged sentences
We operate in a highly competitive industry, which could limit our ability to gain or maintain our position in the industry and could materially adversely affect our business, financial condition and results of operations.
−Removed: Our F&G insurance subsidiaries operate in a highly competitive industry and encounter significant competition in all of our product lines from other insurance companies, many of which have greater financial resources and higher financial strength ratings than us and that may have a greater market share, offer a broader range of products, services or features, assume a
−Removed: greater level of risk, have lower operating or financing costs, or have different profitability expectations than us.
+Added: Our F&G insurance subsidiaries operate in a highly competitive industry and encounter significant competition in all of our product lines from other insurance companies, many of which have greater financial resources and higher financial strength ratings than us and that may have a greater market share, offer a broader range of products, services or features, assume a greater level of risk, have lower operating or financing costs, or have different profitability expectations than us.
Competition could result in, among other things, lower sales or higher lapses of existing products.
8 unchanged sentences
Although we have employment agreements with many of our officers, there can be no assurance that the entire term of the employment agreement will be served or that the employment agreement will be renewed upon expiration.
−Removed: Unresolved Staff Comments
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.