What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-02-27 · 350 added, 377 removed, 791 unchanged (48% of the section changed)

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mortgage originations forecast $ 2.4 $ 2.3 $ 2.0 $ 1.6 $ 2.3

As of February 21, 2023, the MBA expects residential purchase transactions to decrease in 2022 and 2023 followed by increases in 2024 and 2025.

Additionally, the MBA expects residential refinance transactions to dramatically decrease in 2022, followed by a slight decrease in 2023 before slightly increasing in 2024 and 2025.

The MBA expects overall mortgage originations to decrease in 2022 and 2023 before increasing in 2024 and 2025.

In recent years, total originations have been reflective of a strong residential real estate market driven by increasing home prices and low mortgage interest rates.

Interest rate cuts in the second half of 2019 resulted in a significant increase in refinance transactions and a slight increase in purchase transactions.

In the beginning of 2020, refinance and purchase transactions remained strong until the outbreak of COVID-19.

On March 15, 2020, the Federal Reserve took emergency action and reduced its benchmark interest rate by a full percentage point to nearly zero.

Following this emergency action, average interest rates for a 30-year fixed rate mortgages fell throughout the remainder of 2020.

The outbreak of COVID-19 resulted in significant uncertainty in the economic outlook in the second quarter of 2020, and as a result real estate activity decreased significantly as consumers moved to the sidelines to assess the ongoing impact of COVID-19.

However, real estate activity began to rebound in June 2020, with increases in purchase activity and a surge in refinance transactions as a result of historically low interest rates.

Residential purchase and refinance activity remained strong in 2021.

However, with the surge in residential refinance transactions in 2020, residential refinance transactions began to slow in 2021 as the population of eligible refinance candidates declined.

As of February 20, 2024, the MBA expected residential purchase transactions and residential refinance transactions to decrease in 2023 followed by increases in 2024 through 2026.

Following the Federal Reserve's reduction of its benchmark rate to nearly zero in response to COVID-19, residential purchase and refinance activity were on strong footing resulting in record revenues in 2021.

However, residential refinance transactions began to slow in 2021 as the population of eligible refinance candidates declined.

The Federal Reserve raised the benchmark interest rate from near zero as of March 2022 to a range between 5.25% and 5.50% as of December 2023 in an effort to combat inflation.

Interest rates on a 30-year, fixed rate mortgage averaged 5.2% in 2022, up from 3.2% in 2021.

On February 2, 2023, the Federal Reserve raised the benchmark interest rate an additional 25 basis points.

A shortage in the supply of homes for sale, increasing home prices, rising mortgage interest rates, inflation and disrupted labor markets created some volatility in the residential real estate market in 2021 and 2022, which has continued into 2023.

Additionally, geopolitical uncertainties associated with the war in Ukraine have created additional volatility in the global economy beginning in 2022.

Existing-home sales decreased 34% in December 2022 as compared to the corresponding month in

2021 while median existing-home sales prices rose to $366,900 in December 2022, a 2% increase over the corresponding month in 2021.

Other economic indicators used to measure the health of the U.S.

economy, including the unemployment rate, indicated that the United States was on strong footing prior to the outbreak of COVID-19.

Interest rates on a 30-year, fixed rate mortgage averaged 6.8%, up from 5.2% and 3.2% in 2022 and 2021, respectively.

Additionally, geopolitical uncertainties associated with the wars in Ukraine and Gaza have created additional volatility in the global economy in 2022 and 2023.

Existing-home sales decreased 6% in December 2023 as compared to the corresponding month in 2022 while median existing-home sales prices rose to $382,600 in December 2023, a 4% increase over the corresponding month in 2022.

According to the U.S.

Department of Labor's Bureau of Labor, the unemployment rate was at a historically low 3.5% in February 2020 but subsequently fluctuated dramatically before reaching 6.7% in December 2020.

In 2021, the unemployment rate fell dramatically and remained near record lows throughout 2022.

Department of Labor's Bureau of Labor, the unemployment rate was 6.7% in December 2020.

In 2021, the unemployment rate fell dramatically and remained near record lows throughout 2022 and 2023.

The unemployment rate was 3.7% and 3.5% in December of 2023 and 2022, respectively.

Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space and occupancy rates in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business.

Commercial real estate transaction volume is also often linked to the availability of financing.

We issue commercial title insurance policies in sectors including office, industrial, energy, hospitality, retail and multi-family, among others.

The demand for commercial title insurance varies based on a variety of factors such as investor appetite, financing availability, and supply and demand in a particular area.

Because commercial real estate transactions tend to be generally driven by supply and demand for commercial space in a particular area rather than by interest rate fluctuations, we believe that our commercial real estate title insurance business is less dependent on the industry cycles discussed above than our residential real estate title business.

Factors including U.S.

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Lower corporate and individual tax rates and corporate tax-deductibility of capital expenditures have provided increased capacity and incentive for investments in commercial real estate.

In recent years prior to the COVID-19 pandemic, we experienced strong demand in commercial real estate markets.

In 2020, we experienced decreases in commercial volumes and commercial fee-per-file as a result of the outbreak of COVID-19.

Commercial volumes and commercial fee-per-file recovered in the second half of 2020 and remained stable throughout 2021 and the first three quarters of 2022.

Commercial volumes and commercial fee-per-file declined in the fourth quarter of 2022.

In recent years, we experienced fluctuating demand in commercial real estate markets.

Commercial volumes and

commercial fee-per-file recovered in the second half of 2020 and remained stable throughout 2021 and the first three quarters of 2022.

Commercial volumes and commercial fee-per-file declined in the fourth quarter of 2022 and remained depressed throughout 2023 when compared to recent years.

We continually monitor mortgage origination trends and believe that, based on our ability to produce industry leading operating margins through all economic cycles, we are well positioned to adjust our operations for adverse changes in real estate activity and to take advantage of increased volume when demand increases.

See Item 1A of Part I of this Annual Report for further discussion of risk factors related to COVID-19.

H istorically, real estate transactions have produced seasonal revenue fluctuations in the real estate industry.

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Florida 490 10.7 722 10.6 799 9.3

Pennsylvania 356 5.2 439 5.1 303 4.8

Illinois 275 6.0 360 5.3 436 5.1

Pennsylvania 227 4.9 356 5.2 439 5.1

All others 2,351 51.1 3,550 51.9 4,516 52.9

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The following factors represent some of the key trends and uncertainties that have influenced the development of our F&G segment and its historical financial performance, and we believe these key trends and uncertainties will continue to influence the business and financial performance of our F&G segment in the future.

COVID-19 Pandemic

The health, economic and business conditions precipitated by the worldwide COVID-19 pandemic that emerged in 2020 increased our mortality experience in 2021 and 2020 in both our single premium immediate annuity (“SPIA”) and IUL business which largely offset each other.

As of December 31, 2022, we have not seen a sustained elevated level of adverse policyholder experience from the impact of COVID-19 on the overall business.

Market Conditions

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Conversely, a rise in average yield on our investment portfolio would increase earnings if the average interest rate we pay on our products does not rise correspondingly.

Similarly, we expect that policyholders would be less likely to hold policies with existing guarantees as interest rates rise and the relative value of other new business offerings are increased, which would negatively impact our earnings and cash flows.

Similarly, we expect that policyholders would be less likely to hold policies with existing guarantees as

interest rates rise and the relative value of other new business offerings are increased, which would negatively impact our earnings and cash flows.

See “Item 7A.

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As a tool for addressing the unmet need for retirement planning, we believe that many middle-income Americans have grown to appreciate the financial certainty that we believe annuities such as our FIA products afford.

Accordingly, the FIA market grew from nearly $12 billion of sales in 2002 to $66 billion of sales in 2021.

For example, the FIA market grew from nearly $12 billion of sales in 2002 to $79 billion of sales in 2022.

Additionally, this market demand has positively impacted the IUL market as it has expanded from $100 million of annual premiums in 2002 to $3 billion of annual premiums in 2022.

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Total provision 4.5 % 4.5 % 4.5 %

Actual claims payments consist of loss payments and claims management expenses offset by recoupments and were as follows (in millions):

Actual claims payments consist of loss payments and claims management expenses offset by recoupments and were as follows:

Loss Payments Claims Management Expenses Recoupments Net Loss Payments

(In millions)

Year ended December 31, 2023 $ 169 $ 128 $ (35) $ 262

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As of December 31, 2023, and 2022, our recorded reserves were $1,770 million and $1,810 million, respectively, which we determined were reasonable and represented our best estimate and these recorded amounts were within a reasonable range of the central estimates provided by our actuaries.

Our recorded reserves were $90 million above the mid-point of the provided range of $1.5 billion to $2.0 billion of our actuarial estimates as of December 31, 2022.

Our recorded reserves were $70 million above the mid-point of the provided

range of $1.5 billion to $1.9 billion of our actuarial estimates as of December 31, 2023.

Our recorded reserves were $90 million above the mid-point of the provided range of our actuarial estimates of $1.5 billion to $2.0 billion as of December 31, 2022.

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While we still see claims opened on these policy years, the proportion of our claims inventory represented by these policy years has continued to decrease.

Additionally, we continued to see positive development relating to the 2011 through 2022 policy years, which we believe is indicative of more stringent underwriting standards by us and the lending industry.

Also, any residential lender's policy claim paid relating to a property that is in foreclosure negates any potential loss under an owner's policy previously issued on the property as the owner has no equity in the property.

Our ending open claim inventory decreased from approximately 9,600 claims at December 31, 2021 to approximately 9,100 claims at December 31, 2022.

Additionally, we continued to see stable development relating to the 2012 through 2023 policy years, which we believe is indicative of more stringent underwriting standards by us and the lending industry.

Our ending open claim inventory increased from approximately 9,100 claims at December 31, 2022, to approximately 9,200 claims at December 31, 2023.

If actual claims loss development varies from what is currently expected and is not offset by other factors, it is possible that our recorded reserves may fall outside a reasonable range of our actuaries' central estimate, which may require additional reserve adjustments in future periods.

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Reserves for Future Policy Benefits and Product Guarantees

The determination of future policy benefit reserves is dependent on actuarial assumptions.

The principal assumptions used to establish liabilities for future policy benefits are based on our experience.

These assumptions are established at issue of the contract and include mortality, morbidity, contract full and partial surrenders, investment returns, annuitization rates and expenses.

The determination of FPB reserves is dependent on actuarial assumptions.

The principal assumptions used to establish liabilities for FPBs are established at issue of the contract and include discount rates, mortality and cash surrender or policy lapse for our traditional life insurance products.

The assumptions used require considerable judgment.

We review overall policyholder experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available.

For traditional life and immediate annuity products, assumptions used in the reserve calculation can only be changed if the reserve is deemed to be insufficient.

For all other insurance products, changes in assumptions will be used to calculate reserves.

These changes in assumptions will also incorporate changes in risk free rates and option market values.

Changes in, or deviations from, the assumptions previously used can significantly affect our reserve levels and related results of operations.

Mortality is the incidence of death amongst policyholders triggering the payment of underlying insurance coverage by the insurer.

In addition, mortality also refers to the ceasing of payments on life-contingent annuities due to the death of the annuitant.

We utilize a combination of actual and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder.

A lapse rate is the percentage of account value canceled by us due to nonpayment of premiums.

We make estimates of expected full and partial surrenders of our fixed annuity products.

Our surrender rate experience in the years ended December 31, 2022 and 2021 , and the seven month period ended December 31, 2020 on the fixed annuity products averaged 7%, 7% and 4%, respectively, which is within our assumed ranges.

Management’s best estimate of surrender behavior incorporates actual experience over the entire period, as we believe that, over the duration of the policies, we will experience the full range of policyholder behavior and market conditions.

If actual surrender rates are significantly different from those assumed, such differences could have a significant effect on our reserve levels and related results of operations.

The assumptions used to establish the liabilities for our product guarantees require considerable judgment and are established as management’s best estimate of future outcomes.

We periodically review these assumptions and, if necessary, update them based on additional information that becomes available.

Changes in or deviations from the assumptions used can significantly affect our reserve levels and related results of operations.

At issue, and at each subsequent valuation, we determine the present value of the cost of the Guaranteed Minimum Withdrawal Benefit ("GMWB") rider benefits and certain Guaranteed Minimum Death Benefit ("GMDB") riders in excess of benefits that are funded by the account value.

We also calculate the present value of total expected policy assessments, including investment margins, if applicable.

We accumulate a reserve equal to the portion of these assessments that would be required to fund the future benefits less benefits paid to date.

In making these projections, a number of assumptions are made and we update these assumptions as experience emerges, and determined necessary.

We began issuing our GMWB products in 2008, and future experience could lead to significant changes in our assumptions.

If emerging experience deviates from our assumptions on GMWB utilizations, such deviations could have a significant effect on our reserve levels and related results of operations.

Our aggregate reserves for contractholder funds, future policy benefits and product guarantees on a direct and net basis as of December 31, 2022 and December 31, 2021 are summarized as follows:

(Dollars in millions) Direct Reinsurance Recoverable Net

Fixed indexed annuities $ 24,812 $ — $ 24,812

We review policyholder behavior experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available.

Discount rate assumptions are updated at each reporting period and also incorporate changes in risk free rates and option market values.

Changes in, or deviations from, the assumptions previously used can significantly affect our reserve levels and related results of operations in a positive or negative direction.

Mortality refers to the incidence of death on covered lives, which triggers contractual death benefit provisions.

On our deferred annuities and life insurance products, these provisions may allow for lump sum payments, payments over a period of time, or spousal continuation of the contract.

On our life-contingent immediate annuities (which includes life-contingent pension risk transfer (“PRT”) annuities), the death of a named annuitant or certificate holder may trigger the cessation or reduction of future life-contingent payments due, depending on the presence of a joint annuitant/certificate holder and any remaining guaranteed non-life contingent payment periods.

We utilize a combination of internal and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder in exchange for receipt of a cash surrender value.

A lapse rate is the percentage of account value canceled by us due to nonpayment of premiums required to maintain coverage on our life insurance products.

We make estimates of expected full and partial surrenders of our deferred annuity products based on a combination of internal and industry experience.

Management’s best estimate of surrender behavior generally represents a medium-to-long term perspective, as we expect to experience a range of policyholder behavior and market conditions period to period.

If actual surrender rates are significantly different from those estimated, such differences could have a significant effect on our reserve levels and related results of operations.

Discount rates refer to the interest rates used to discount future cash flows to the current period to determine a present value.

For liability for FPB reserves the discount rate used is based on the yield curve for A-rated corporate bonds as of the valuation date.

Changes in the discount rates from the at-issue or at-purchase discount rates flow through other comprehensive income (“OCI”).

Our aggregate reserves for contractholder funds, FPBs and MRBs on a direct and net basis as of December 31, 2023, and December 31, 2022, are summarized as follows:

As of December 31, 2023

Direct Deposit Asset/

Reinsurance Recoverable Net

(In millions)

Fixed indexed annuities ("FIA") $ 27,809 $ (17) $ 27,792

Fixed rate annuities 13,445 (7,521) 5,924

Immediate annuities 4,007 (135) 3,872

Universal life 2,127 (947) 1180

Traditional life 1,777 (786) 991

Funding agreement backed notes ("FABN") 2,613 — 2,613

Pension risk transfer ("PRT") 2,461 — 2,461

Single premium immediate annuities ("SPIA") and other 1,814 (115) 1,699

IUL and other life 3,828 (1,307) 2,521

Funding agreements 5,152 — 5,152

PRT 4,203 — 4,203

Total $ 56,251 $ (8,960) $ 47,291

As of December 31, 2022

(Dollars in millions) Direct Reinsurance Recoverable Net

Fixed indexed annuities $ 23,370 $ — $ 23,370

Direct Deposit Asset/

Reinsurance Recoverable Net

(In millions)

FIA $ 24,704 $ (16) $ 24,688

Fixed rate annuities 9,360 (3,723) 5,637

Immediate annuities 3,657 (133) 3,524

Universal life 1,981 (983) 998

Traditional life 1,823 (805) 1,018

Funding agreement backed notes 1,904 — 1,904

Pension risk transfer 1,153 — 1,153

SPIA and other 1,829 (118) 1,711

IUL and other life 3,486 (1,560) 1,926

Funding agreements 4,595 — 4,595

PRT 2,172 — 2,172

Total $ 46,146 $ (5,417) $ 40,729

Fixed indexed annuities ("FIA") and indexed universal life ("IUL") products contain an embedded derivative;

FIA and IUL products contain an embedded derivative;

a feature that permits the holder to elect an interest rate return or an equity-index linked component, where interest credited to the contract is linked to the performance of various equity indices.

The FIA/IUL embedded derivatives are valued at fair value and included in the liability for Contractholder funds in our Consolidated Balance Sheets with changes in fair value included as a component of Benefits and other changes in policy reserves in our Consolidated Statements of Earnings.

For life-contingent immediate annuity policies, gross premiums received in excess of net premiums are deferred at initial recognition as a deferred profit liability (“DPL”).

Gross premiums are measured using assumptions consistent with those used in the measurement of the related liability for FPBs.

Valuation of Fixed Maturity, Preferred and Equity Securities, and Derivatives and Reinsurance Recoverable

Our fixed maturity securities have been designated as available-for-sale and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included in accumulated other comprehensive income (loss) ("AOCI"), net of associated adjustments for deferred acquisition costs ("DAC"), value of business acquired ("VOBA"), deferred sales inducements ("DSI"), unearned revenue ("UREV"), SOP 03-1 reserves, and deferred income taxes.

Our investments in fixed maturity securities have been designated as available-for-sale (“AFS”) and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included within accumulated other comprehensive earnings (loss) (“AOCI”), net of deferred income taxes.

Our equity securities are carried at fair value with unrealized gains and losses included in net income (loss).

Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold and are credited or charged to income on a trade date basis.

Realized gains and losses on the sale of investments are determined on the basis of first-in first-out cost basis and are credited or charged to income on a trade date basis.

Management’s assessment of all available data when determining fair value of the AFS securities is necessary to appropriately apply fair value accounting.

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We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, comparisons to valuations from other independent pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list.

See Note D Fair Value of Financial Instruments and Note E Investments to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.

The fair value of derivative assets and liabilities is based upon valuation pricing models and represents what we would expect to receive or pay at the balance sheet date if we canceled the options, entered into offsetting positions, or exercised the options.

Fair values for these instruments are determined internally using a conventional model and market observable inputs, including interest rates, yield curve volatilities and other factors.

See Note D - Fair Value of Financial Instruments and Note E - Investments to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K.

The fair value of derivative assets and liabilities is based upon valuation pricing models or independent broker quotes and represents what we would expect to receive or pay at the balance sheet date if we canceled or exercised the derivative or entered into offsetting positions.

Fair values for instruments utilizing valuation pricing models are determined internally using a conventional model and market observable inputs, including interest rates, yield curve volatilities and other factors.

Credit risk related to the counterparty is considered when estimating the fair values of these derivatives.

However, we are largely protected by collateral arrangements with counterparties when individual counterparty exposures exceed certain thresholds.

The fair value of futures contracts at the balance sheet date represents the cumulative unsettled variation margin (open trade equity net of cash settlements).

The fair values of the embedded derivatives in our FIA and IUL contracts are derived using market value of options, use of current and budgeted option cost, swap rates, mortality rates, surrender rates, partial withdrawals, and non-performance spread and are classified as Level 3.

The fair value of futures contracts (specifically for FIA contracts) at the balance sheet date represents the cumulative unsettled variation margin (open trade equity net of cash settlements).

The fair value of an interest rate swap represents the change in projected interest rates between the reporting date and the date the interest rate swap was executed.

The discount rate used to determine the fair value of our FIA/IUL embedded derivative liabilities includes an adjustment to reflect the risk that these obligations will not be fulfilled (“non-performance risk”).

For the years ended December 31, 2023, and December 31, 2022, our non-performance risk adjustment was based on the expected loss due to default in debt obligations for similarly rated financial companies.

See Note D Fair Value of Financial Instruments and Note F Derivative Financial Instruments to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.

As discussed in Note O F&G Reinsurance of our Consolidated Financial Statements included in Item 8 of Part II of this Report, F&G entered into a reinsurance agreement with Kubera Insurance (SAC) Ltd.

("Kubera") effective December 31, 2018, to cede certain multi-year guaranteed annuities ("MYGA") and deferred annuity GAAP and statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

Effective October 31, 2021, this agreement was novated from Kubera to Somerset.

Additionally, F&G entered into a reinsurance agreement with Aspida Re effective January 1, 2021, to cede a quota share of certain deferred annuity business on a funds withheld basis.

Fair value movements in the funds withheld balances associated with these arrangements create an obligation for F&G to pay Somerset and Aspida Re at a later date, which results in embedded derivatives.

These embedded derivatives are considered total return swaps with contractual returns that are attributable to the assets and liabilities associated with the reinsurance arrangements.

The fair value of the total return swaps are based on the change in fair value of the underlying assets held in the funds withheld portfolio.

Investment results for the assets that support the coinsurance with funds withheld reinsurance arrangement, including gains and losses from sales, are passed directly to the reinsurer pursuant to contractual terms of the reinsurance arrangement.

The reinsurance related embedded derivatives are reported in Accounts payable and accrued liabilities on the Consolidated Balance Sheets and the related gains or losses are reported in Recognized gains and losses, net on the Consolidated Statements of Earnings.

See Note D Fair Value of Financial Instruments and Note F Derivative Financial Instruments to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K.

F&G cedes certain business on a coinsurance funds withheld basis.

Investment results for the assets that support the coinsurance that are segregated within the funds withheld account are passed directly to the reinsurer pursuant to the contractual terms of the reinsurance arrangement, which creates embedded derivatives considered to be total return swaps.

These total return swaps are not clearly and closely related to the underlying insurance contract and thus require bifurcation.

The fair value of the total return swaps is based on the change in fair value of the underlying assets held in the funds withheld account.

These embedded derivatives are reported in Prepaid expenses and other assets if in a net gain position, or Accounts payable and accrued liabilities, if in a net loss position on the Consolidated Balance Sheets.

The related gains or losses are reported in Recognized gains and (losses), net on the Consolidated Statements of Earnings.

See Note O F&G Reinsurance to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K.

We categorize our fixed maturity securities, preferred securities, equity securities and derivatives into a three-level hierarchy based on the priority of the inputs to the valuation technique.

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If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

The following table presents the fair value of fixed maturity securities and equity securities by pricing source, hierarchy level and net asset value ("NAV") as of December 31, 2022 and December 31, 2021.

The following table presents the fair value of fixed maturity securities and equity securities by pricing source, hierarchy level and net asset value (“NAV”) as of December 31, 2023, and 2022.

As of December 31, 2023

(Dollars in millions)

Quoted Prices in

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Fixed maturity securities available-for-sale and equity securities:

(Dollars in millions)

Prices via third-party pricing services $ 1,012 $ 32,714 $ 895 $ — $ 34,621

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As of December 31, 2022

(Dollars in millions)

Quoted Prices in

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Fixed maturity securities available-for-sale and equity securities:

(Dollars in millions)

Prices via third-party pricing services $ 1,333 $ 25,197 $ 1,234 $ — $ 27,764

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For the years ended December 31, 2023, 2022 and 2021, we determined there were no events or circumstances that indicated that the carrying value exceeded the fair value.

VOBA, DAC and DSI

Our intangible assets include an intangible asset reflecting the value of insurance and reinsurance contracts acquired (hereafter referred to as VOBA, DAC and DSI).

VOBA is an intangible asset that reflects the amount recorded as insurance contract liabilities less the estimated fair value of in-force contracts (“VIF”) in a life insurance company acquisition.

It represents the portion of the purchase price that is allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date.

VOBA is a function of the VIF, current GAAP reserves, GAAP assets, and deferred tax liability.

The VIF is determined by the present value of statutory distributable earnings less opening required capital, and is sensitive to assumptions including the discount rate, surrender rates, partial withdrawals, utilization rates, projected investment spreads, mortality, and expenses.

DAC consists principally of commissions.

Additionally, acquisition costs that are incremental, direct costs of successful contract acquisition are capitalized as DAC.

Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred.

DSI consists of contract enhancements such as premium and interest bonuses credited to policyholder account balances.

DAC, DSI, and VOBA are subject to loss recognition testing on a quarterly basis or when an event occurs that may warrant loss recognition.

For annuity and IUL products, DAC, DSI and VOBA are generally being amortized in proportion to estimated gross profits from net investment spread margins, surrender charges and other product fees, policy benefits, maintenance expenses, mortality, and recognized gains and losses on investments.

Current and future period gross profits for FIA contracts also include the impact of amounts recorded for the change in fair value of derivatives and the change in fair value of embedded derivatives.

At each valuation date, the most recent quarter’s estimated gross profits are updated with actual gross profits and the assumptions underlying future estimated gross profits are evaluated for continued reasonableness.

If the update of assumptions causes estimated gross profits to increase, DAC, DSI and VOBA amortization will decrease, resulting in lower amortization expense in the period.

The opposite result occurs when the assumption update causes estimated gross profits to decrease.

Current period amortization is adjusted retrospectively through an unlocking process when estimates of current or future gross profits (including the impact of recognized investment gains and losses) to be realized from a group of products are revised.

Our estimates of future gross profits are based on actuarial assumptions related to the underlying policies’ terms, lives of the policies, duration of contract, yield on investments supporting the liabilities, cost to fund policy obligations, and level of expenses necessary to maintain the polices over their entire lives.

Changes in assumptions can have a significant impact on DAC, DSI and VOBA, amortization rates and results of operations.

Assumptions are management’s best estimate of future outcomes, and require considerable judgment.

We periodically review assumptions against actual experience, and update our assumptions based on historical results and our best estimates of future experience when additional information becomes available.

Estimated future gross profits are sensitive to changes in interest rates, which are the most significant component of gross profits.

Assumptions related to interest rate spreads and credit losses also impact estimated gross profits for products with credited rates.

These assumptions are based on the current investment portfolio yields and credit quality, estimated future crediting rates, capital markets, and estimates of future interest rates and defaults.

Significant assumptions also include policyholder behavior assumptions, such as surrender, lapse, and annuitization rates.

We use a combination of actual and industry experience when setting and updating our policyholder behavior assumptions.

We perform sensitivity analyses to assess the impact that certain assumptions have on DAC, DSI, VOBA.

The following table presents the estimated instantaneous net impact to income before income taxes of various assumption changes on our DAC, DSI, and VOBA.

The effects, increase or (decrease), presented are not representative of the aggregate impacts that could result if a combination of such changes to interest rates and other assumptions occurred.

(Dollars in millions) As of December 31, 2022 As of December 31, 2021

A change to the long-term interest rate assumption of -50 basis points $ (113) $ (91)

A change to the long-term interest rate assumption of +50 basis points 93 75

An assumed 10% increase in surrender rate (6) (4)

Assumptions regarding shifts in market factors may be overly simplistic and not indicative of actual market behavior in stress scenarios.

Lower assumed interest rates or higher assumed annuity surrender rates tend to decrease the balances of DAC, DSI and VOBA, thus decreasing income before income taxes.

Higher assumed interest rates or lower assumed annuity surrender rates tend to increase the balances of DAC, DSI and VOBA, thus increasing income before income taxes.

Market Risk Benefits

MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk.

MRBs include certain contract features primarily on FIA contracts that provide minimum guarantees to policyholders, such as GMDB and GMWB riders.

MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors.

The principal policyholder behavior assumptions used to calculate MRBs are established at issue of the contract and include mortality, contract full and partial surrenders, and utilization of the GMWB rider benefits.

The assumptions used reflect a combination of internal experience, industry experience, and judgment.

We review overall policyholder behavior experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available.

Changes in, or deviations from, the assumptions previously used can significantly affect our MRBs and related results of operations in a positive or negative direction.

Mortality refers to the incidence of death amongst policyholders on covered lives, which triggers contractual death benefit provisions.

These provisions may allow for lump sum payments, payments over a period of time, or spousal continuation of the contract.

We utilize a combination of actual internal and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder in exchange for receipt of a cash surrender value.

We make estimates of expected full and partial surrenders of our deferred annuity products based on a combination of internal and industry experience.

Management’s best estimate of surrender generally represents a medium-to-long term perspective, as we expect to experience a range of policyholder behavior and market conditions period to period.

If actual surrender rates are significantly different from those estimated, such differences could have a significant effect on our MRBs and related results of operations.

We have been issuing GMWB products since 2008.

We make assumptions for policyholder behavior as it relates to GMWB utilization using a higher degree of industry experience and judgment than our other behavioral assumptions because internal experience, which we review annually, is still emerging.

If emerging experience deviates from our assumptions on GMWB utilization, it could have a significant effect on MRBs and related results of operations.

Accounting for Income Taxes

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The outcome of these final determinations could have a material effect on our income tax provision, net income or cash flows in the period that determination is made.

For the year ended December 31, 2022, changes in market conditions, including rising interest rates, resulted in deferred tax assets related to the net unrealized capital losses in the Company’s investment portfolio.

For the year ended December 31, 2023, changes in market conditions, including changing interest rates, resulted in deferred tax assets related to the net unrealized capital losses in the Company’s investment portfolio.

GAAP requires the evaluation of the recoverability of deferred tax assets and the establishment of a valuation allowance, if necessary, to reduce the deferred tax asset to an amount that is more likely than not to be realized.

When assessing the need for valuation allowance on the unrealized capital loss deferred tax assets, we assert a tax planning strategy to hold the vast majority of underlying securities to recovery or maturity.

When assessing the need for valuation allowance on the unrealized capital loss deferred tax assets, we assert a tax planning strategy to hold certain underlying securities to recovery or maturity.

Our ability to assert such a tax planning strategy is dependent upon factors such as the Company’s asset/liability matching process, overall investment strategy, projected future annuity product sales, and expected liquidity needs.

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Benefits and other changes in policy reserves 3,553 1,126 1,932

Market risk benefit (gains) losses 95 (182) (44)

Depreciation and amortization 593 491 432

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Net earnings from continuing operations $ 518 $ 1,306 $ 2,809

Total revenues increased by $187 million in 2023 compared to 2022, primarily attributable to increases in escrow title-related and other fees, increases in interest and investment income and decreases in net recognized investments losses, partially offset by decreases in both direct and agency premiums.

Total revenues decreased by $4,090 million in 2022 compared to 2021, primarily attributable to decreases in both direct and agency premiums, decreases in escrow title-related and other fees, decreases in interest and investment income and net recognized losses on our investment holdings in 2022 as compared to net recognized gains on our investment holdings in 2021.

Total revenues increased by $4,865 million in 2021 compared to 2020, primarily attributable to increases in both direct and agency premiums, increases in escrow title-related and other fees and increases in interest and investment income, partially offset by a decrease in recognized gains on our investment holdings.

See Note L Revenue Recognition to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for a breakout of our consolidated revenues.

Total net earnings from continuing operations decreased by $1,282 million in 2022 compared to 2021, and increased by $957 million in 2021 compared to 2020.

Total net earnings from continuing operations decreased by $788 million in 2023 compared to 2022, and decreased by $1,503 million in 2022 compared to 2021.

The change in revenue and net earnings from our reportable segments is discussed in further detail at the segment level below.

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Interest and investment income was $2,607 million, $1,891 million, and $1,961 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The increase in 2021 as compared to 2020 is primarily attributable to a full year of activity in our F&G segment.

Recognized gains and losses, net totaled $(164) million, $(1,493) million, and $334 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Recognized gains and losses, net for the year ended December 31, 2022 are primarily

attributable to realized losses on derivatives of $515 million, losses on sales of fixed maturity securities of $282 million, losses on sales of mortgages and other assets of $80 million, losses on sales of equity and preferred securities of $31 million and non-cash valuation losses on equity and preferred security holdings of $584 million.

Recognized gains and losses, net for the year ended December 31, 2023 are primarily attributable to losses on sales of fixed maturity securities of $166 million, losses on sales of equity and preferred securities of $104 million and losses on sales of mortgages and other assets of $75 million, partially offset by non-cash valuation gains on equity and preferred security holdings and other invested assets of $181 million.

Recognized gains and losses, net for the year ended December 31, 2022 are primarily attributable to realized losses on derivatives of $515 million, losses on sales of fixed maturity securities of $282 million, losses on sales of mortgages and other assets of $80 million, losses on sales of equity and preferred securities of $31 million and non-cash valuation losses on equity and preferred security holdings of $584 million.

Recognized gains and losses, net for the year ended December 31, 2021 are primarily attributable to realized gains on derivatives of $655 million, gains on sales of fixed maturity securities of $114 million and gains on sales of mortgages and other assets of $13 million, partially offset by losses on sales of equity and preferred securities of $19 million and non-cash net valuation losses on equity and preferred securities of $429 million.

Recognized gains and losses, net for the year ended December 31, 2020 are primarily attributable to non-cash valuation gains on equity and preferred security holdings of $208 million, realized gains on derivatives of $192 million, gains on sales of fixed maturity, preferred and equity securities of $148 million, losses on other assets of $25 million and losses on mortgage loans of $32 million.

See Note E Investments to our Consolidated Financial Statements included in Item 8 of Part II of this Annual Report for a breakout of our consolidated interest and investment income and realized gains and losses.

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Income tax expense as a percentage of earnings before income taxes was 27.7%, 25.4%, and 22.8% in the years ended December 31, 2023, 2022, and 2021 respectively.

The increase in income tax expense as a percentage of earnings before taxes in 2022 as compared to 2021 is primarily attributable to the recording of a valuation allowance in 2022 for tax benefits associated with deferred tax assets related to unrealized losses on equity securities for which it is not more likely than not that we will not be able to realize the benefit for tax purposes, partially offset by the tax benefit of realized capital losses carried back to 2017.

The increase in income tax expense as a percentage of earnings before taxes in 2021 when compared to 2020 is primarily attributable to valuation allowance releases and the tax status change recorded by F&G in 2020.

The increase in income tax expense as a percentage of earnings before taxes in 2023 as compared to 2022 is primarily attributable the non-recurring tax benefit in 2022 of realized capital losses carried back to 2017.

The increase in income tax expense as a percentage of earnings before taxes in 2022 as compared to 2021 is primarily attributable to the recording of a valuation allowance in 2022, partially offset by the non-recurring tax benefit in 2022 of realized capital losses carried back to 2017.

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This includes a further significant decline in value of assets incorporated into our tax planning strategies, which could lead to an increase of our valuation allowance on deferred tax assets having an adverse effect on current and future results.

The Organization for Economic Cooperation and Development (OECD) has developed guidance known as the Global Anti-Base Erosion Pillar Two minimum tax rules, or Pillar Two, which generally provide for a minimum effective tax rate of 15% and are intended to apply to tax years beginning in 2024.

The Company does not expect these rules to have a material impact on our income tax provision in 2024.

The following table presents the results of operations of our Title segment for the years indicated:

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Total revenues for the Title segment decreased by $2,068 million, or 23%, in the year ended December 31, 2023, when compared to 2022.

Total revenues for the Title segment increased by $2,123 million, or 23%, in the year ended December 31, 2021 when compared to 2020.

Total revenues for the Title segment decreased by $2,391 million, or 21%, in the year ended December 31, 2022, when compared to 2021.

The decrease in the year ended December 31, 2023, as compared to 2022 is primarily attributable to decreases in both our direct and agency premiums, decreases in escrow, title-related and other fees, partially offset by an increase in interest and investment income and a decrease in non-cash valuation losses on our equity and preferred investment holdings.

The decrease in the year ended December 31, 2022, as compared to 2021 is primarily attributable to decreases in both our direct and agency premiums, decreases in escrow, title-related and other fees and an increase in non-cash valuation losses on our equity and preferred investment holdings, partially offset by an increase in interest and investment income.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily attributable to increases in both our direct and agency premiums, and increases in escrow, title-related and other fees, partially offset by a decrease in interest and investment income, and an increase in non-cash valuation losses on our equity and preferred investment holdings.

The following table presents the percentages of title insurance premiums generated by our direct and agency operations:

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The decrease is primarily attributable to a decrease in Title premiums from direct operations of $876 million, or 31%, and a decrease in Title premiums from agency operations of $1,366 million, or 34%.

Title premiums increased by 36% in the year ended December 31, 2021 as compared to 2020.

The increase is primarily attributable to an increase in Title premiums from direct operations of $872 million, or 32%, and an increase in Title premiums from agency operations of $1,383 million, or 38%.

Title premiums decreased by 20% in the year ended December 31, 2022, as compared to 2021.

The decrease is primarily attributable to a decrease in Title premiums from direct operations of $713 million, or 20%, and a decrease in Title premiums from agency operations of $1,006 million, or 20%.

The following table presents the percentages of opened and closed title insurance orders generated by purchase and refinance transactions by our direct operations:

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(1) Percentages exclude consideration of an immaterial number of non-purchase and non-refinance orders.

Title premiums from direct operations decreased in the year ended December 31, 2022 as compared to 2021.

The decrease is primarily attributable to a decrease in total closed order volume, partially offset by an increase in fee per file.

Ti tle premiums from direct operations increased in 2021 as compared to 2020, primarily due to an increase in total closed order volume, driven by an increase in purchase order volume and an increase in fee per file, partially offset by a decline in refinance volume.

Title premiums from direct operations decreased in the years ended December 31, 2023, and 2022 as compared to 2022 and 2021, respectively.

The decreases are primarily attributable to decreases in total closed order volume, partially offset by increases in fee per file.

The decreases in closed our volume are primarily attributable to closed orders from refinance transactions.

The residential refinance market has considerably lower fees per closed order than commercial or residential purchase transactions.

We experienced a decrease in closed title insurance order volumes from both purchase and refinance transactions in the year ended December 31, 2023, as compared to 2022.

Total closed order volumes were 837,000 in the year ended December 31, 2023, as compared to 1,222,000 in the year ended December 31, 2022, an overall decrease of 32%.

Total closed order volumes from refinance transactions, which have a lower fee per file than purchase transactions, were 156,000 in the year ended December 31, 2023, compared to 369,000 in the year ended December 31, 2022, an overall decrease of 57%.

Total closed order volumes were 1,222,000 in the year ended December 31, 2022, compared to 2,169,000 in the year ended December 31, 2021, an overall decrease of 44%.

Total closed order volumes from refinance transactions, which have a lower fee per file than purchase transactions, were 369,000 in the year ended December 31, 2022, compared to 1,172,000 in the year ended December 31, 2021, an overall decrease of 69%.

The decrease in 2022 is primarily attributable to higher average mortgage interest rates in 2022 as compared to 2021.

Total closed order volumes were 2,169,000 in the year ended December 31, 2021 compared to 2,052,000 in the year ended December 31, 2020, an overall increase of 5.7%.The decrease in refinance transactions in 2021 is primarily attributable to the surge in residential refinance transactions in 2020 and the first half of 2021, resulting in a decline in the population of eligible refinance candidates in the second half of 2021.

Total open ed title insurance order volume s decreased i n the year ended December 31, 2022, as compared to 2021.

The decrease in 2022 was attributable to decreases in both opened title orders from purchase transactions and refinance transactions.

Total opened title insurance order volumes decreased in the year ended December 31, 2021, as compared to 2020.

The decrease in 2021 was attributable to decreased opened title orders from refinance transactions, partially offset by an increase in purchase transactions.

The decreases in both purchase and refinance transactions in 2023 and 2022 are primarily attributable to higher average mortgage interest rates in 2023 and 2022 as compared to 2022 and 2021, respectively.

Total open ed title insurance order volume s decreased i n the years ended December 31, 2023, and 2022, as compared to 2022 and 2021, respectively.

The decreases in 2023 and 2022 were attributable to decreases in both opened title orders from purchase transactions and refinance transactions as compared to 2022 and 2021, respectively.

The average fee per file in our direct operations was $3,617 in the year ended December 31, 2023, compared to $3,381 in the year ended December 31, 2022.

The increase in average fee per file in 2022 as compared to 2021 reflects an increased proportion of purchase transactions relative to total closed orders and a stable commercial market.

The average fee per file in our direct operations was $3,381 in the year ended December 31, 2022, compared to $2,467 in the year ended December 31, 2021.

The increase in average fee per file in 2021 as compared to 2020 reflects an increased proportion of purchase transactions

relative to total closed orders and a stronger commercial market compared to 2020.

The fee per file tends to change as the mix of refinance and purchase transactions changes, because purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher fees, whereas refinance transactions only require a lender’s policy, resulting in lower fees.

Title premiums from agency operations decreased $1,006 million, or 20%, in the year ended December 31, 2022 as compared to 2021, and increased $1,383 million, or 38%, in the year ended December 31, 2021 as compared to 2020.

The increase in average fee per file in 2023 and 2022 as compared to 2022 and 2021, respectively, reflects an increased proportion of purchase transactions relative to total closed orders and a stable commercial market.

The fee per file tends to change as the mix of refinance and purchase transactions

changes, because purchase transactions involve the issuance of both a lender’s policy and an owner’s policy, resulting in higher fees, whereas refinance transactions only require a lender’s policy, resulting in lower fees.

Title premiums from agency operations decreased $1,366 million, or 34%, in the year ended December 31, 2023, as compared to 2022, and decreased $1,006 million, or 20%, in the year ended December 31, 2022 as compared to 2021.

The current trends in the agency business reflect a softening residential purchase environment in many markets throughout the country and a dramatic decline in residential refinance transactions, consistent with trends in the direct business.

In addition in 2021 and 2020, lower mortgage rates during those years resulted in a surge in refinance business with agents, which was further impacted by changes in underlying real estate activity in the geographic regions in which the independent agents operate.

Escrow, title-related and other fees decreased by $726 million, or 22%, in the year ended December 31, 2022 as compared to 2021, and increased by $446 million, or 16%, in the year ended December 31, 2021 as compared to 2020.

Escrow fees, which are more closely related to our direct operations, decreased by $414 million, or 30%, in the year ended December 31, 2022, as compared to 2021, and increased $225 million, or 19%, in the year ended December 31, 2021 as compared to 2020.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily due to the decrease in closed order volume including the decline in residential refinance volume, which have relatively higher escrow fees than residential purchase and commercial transactions.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily due to the increase in closed order volume.

Othe r fees in the Title segment, excluding escrow fees, decreased b y $311 million, or 17%, in the year ended December 31, 2022 as compared to 2021, and increased $221 million, or 14%, in the year ended December 31, 2021 as compared to 2020.

The decrease in Other fees in the year ended December 31, 2022 as compared to 2021 was primarily driven by a decrease in revenues related to our ServiceLink business in addition to decreases in various individually immaterial items.

The increase in Other fees in the year ended December 31, 2021 as compared to 2020 was primarily driven by an increase in revenues related to our ServiceLink business in addition to increases in various individually immaterial items.

In addition, in 2021, lower mortgage rates during those years resulted in a surge in refinance business with agents, which was further impacted by changes in underlying real estate activity in the geographic regions in which the independent agents operate.

Escrow, title-related and other fees decreased by $385 million, or 15%, in the year ended December 31, 2023, as compared to 2022, and decreased by $726 million, or 22%, in the year ended December 31, 2022, as compared to 2021.

Escrow fees, which are more closely related to our direct operations, decreased by $214 million, or 22%, in the year ended December 31, 2023, as compared to 2022, and decreased $414 million, or 30%, in the year ended December 31, 2022, as compared to 2021.

The decreases in the years ended December 31, 2023, and 2022 as compared to 2022 and 2021, respectively, are primarily due to the decreases in closed order volume including declines in residential refinance volume, which have relatively higher escrow fees than residential purchase and commercial transactions.

Othe r fees in the Title segment, excluding escrow fees, decreased b y $172 million, or 11%, in the year ended December 31, 2023, as compared to 2022, and decreased $311 million, or 17%, in the year ended December 31, 2022, as compared to 2021.

The decrease in Other fees in the year ended December 31, 2023, as compared to 2022 was primarily driven by decreases in revenues related to our ServiceLink and home warranty businesses and various other immaterial items.

The decrease in Other fees in the year ended December 31, 2022, as compared to 2021 was primarily driven by a decrease in revenues related to our ServiceLink business and decreases in various other immaterial items.

T he change in both escrow fees and other fees is directionally consistent with the change in title premiums from direct operations in 2023 and 2022.

Interest and investment income levels are primarily a function of securities markets, interest rates and the amount of cash available for investment.

Interest and investment income increased $104 million, or 95%, in the year ended December 31, 2022, as compared to 2021, and decreased $42 million, or 28%, in the year ended December 31, 2021 as compared to 2020.

The increase in the year ended December 31, 2022 as compared to 2021 was primarily attributable to increased income from our tax-deferred property exchange business and higher yields on our short-term investments when compared to 2021.

The decrease in the year ended December 31, 2021 as compared to 2020 was primarily attributable to decreased average fixed maturity portfolio balances, decreased dividends on preferred and common stocks and a decline in interest on cash and short-term investments.

Recognized net losses were $443 million and $393 million in the years ended December 31, 2022 and 2021, respectively.

Recognized net gains were $143 million in the year ended December 31, 2020.

Interest and investment income increased $125 million, or 59%, in the year ended December 31, 2023, as compared to 2022, and increased $104 million, or 95%, in the year ended December 31, 2022, as compared to 2021.

The increases in the years ended December 31, 2023, and 2022 as compared to 2022 and 2021, respectively, was primarily attributable to increased income from our tax-deferred property exchange business and higher yields on our short-term investments.

Recognized net losses were $9 million, $443 million, and $393 million in the years ended December 31, 2023, 2022, and 2021, respectively.

The variability in recognized gains and losses, net is primarily attributable to fluctuations in non-cash valuation changes on our equity and preferred security holdings in addition to various other individually immaterial items .

Personnel costs include base salaries, commissions, benefits, stock-based compensation and bonuses paid to employees, and are one of our most significant operating expenses.

Personnel costs decreased $305 million, or 9%, in the year ended December 31, 2022, as compared to 2021, and increased $514 million, or 19% in the year ended December 31, 2021 as compared to 2020.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily attributable to lower average head count in 2022 in response to the significant decline in refinance orders and the recent declines in purchase and commercial orders, partially offset by an increase in the 401(k) match in 2022.

T he increase in the year ended December 31, 2021 as compared to 2020 is primarily attrib utable to increased commissions driven by the increases in year-over-year closed title order volumes.

Personnel costs decreased $443 million, or 15%, in the year ended December 31, 2023, as compared to 2022, and decreased $305 million, or 9% in the year ended December 31, 2022, as compared to 2021.

The decrease in the year ended December 31, 2023, as compared to 2022 is primarily attributable to the decrease in average headcount in 2023 associated with the decline in closed order volume and decreases in bonuses and commissions associated with the declines in revenue and profitability.

The decrease in the year ended December 31, 2022, as compared to 2021 is primarily attributable to lower average head count in 2022 in response to the significant decline in refinance orders and declines in purchase and commercial orders in the second half of 2022, partially offset by an increase in the 401(k) match in 2022 .

Personnel costs as a percentage of total revenues from direct title premiums and escrow, title-related and other fees were 62%, 56% and 48% for the years ended December 31, 2023, 2022 and 2021, respectively.

Average employee count in the Title segment was 21,398, 25,157, and 27,297 in the years ended December 31, 2023, 2022 and 2021, respectively.

Other operating expenses decreased by $210 million, or 12%, in the year ended December 31, 2022 as compared to 2021, and increased $189 million, or 12%, in the year ended December 31, 2021 compared to 2020.

Other operating expenses decreased by $273 million, or 18%, in the year ended December 31, 2023, as compared to 2022, and decreased $210 million, or 12%, in the year ended December 31, 2022 compared to 2021.

Other operating expenses as a percentage of total revenue excluding agency premiums, interest and investment income, and recognized gains and losses were 30%, 28% and 25% in the years ended December 31, 2023, 2022 and 2021, respectively.

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Our customers range across a variety of age groups and are concentrated in the middle-income market.

Our Fixed Indexed Annuity ("FIA") products provide for pre-retirement wealth accumulation and post-retirement income management.

Our Indexed Universal Life Insurance ("IUL") products provide wealth protection and transfer opportunities.

Life and annuity products are primarily distributed through Independent Marketing Organizations ("IMOs") and independent insurance agents, and beginning in 2020, independent broker dealers and banks.

Additionally, we provide funding agreements and pension risk transfer ("PRT") solutions to various institutions through consultants and brokers.

Our FIA products provide for pre-retirement wealth accumulation and post-retirement income management.

Our IUL products provide wealth protection and transfer opportunities.

Life and annuity products are primarily distributed through IMOs and independent insurance agents, and beginning in 2020, independent broker dealers and banks.

Additionally, we provide funding agreements and PRT solutions to various institutions through consultants and brokers.

In setting the features and pricing of our flagship FIA products relative to our targeted net margin, we take into account our expectations regarding (1) the difference between the net investment income we earn and the sum of the interest credited to policyholders and the cost of hedging our risk on the policies;

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Key Components of Our Historical Results of Operations

Through our insurance subsidiaries, we issue a broad portfolio of deferred annuities (fixed indexed and fixed rate annuities), indexed universal life insurance, immediate annuities, funding agreements and pension risk transfer solutions.

Through our insurance subsidiaries, we issue a broad portfolio of deferred annuities (FIA and fixed rate annuities), IUL insurance, immediate annuities, funding agreements and PRT solutions.

A deferred annuity is a type of contract that accumulates value on a tax deferred basis and typically begins making specified periodic or lump sum payments a certain number of years after the contract has been issued.

Indexed universal life insurance is a complementary type of contract that accumulates value in a cash value account and provides a payment to designated beneficiaries upon the policyholder’s death.

IUL insurance is a complementary type of contract that accumulates value in a cash value account and provides a payment to designated beneficiaries upon the policyholder’s death.

An immediate annuity is a type of contract that begins making specified payments within one annuity period (e.g., one month or one year) and typically makes payments of principal and interest earnings over a period of time.

GAAP, premium collections for fixed indexed annuities, fixed rate annuities, immediate annuities and PRT without life contingency, and deposits received for funding agreements are reported in the financial statements as deposit liabilities (i.e., contractholder funds) instead of as sales or revenues.

As defined by the Iowa Insurance Division, a funding agreement is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies of the person to whom the funding agreement is issued.

In essence, funding agreement providers issue fixed maturity contracts with fixed or floating interest rates in exchange for a single upfront premium.

Our PRT products are comparable to income annuities, as we generally receive a single, upfront premium in exchange for paying a guaranteed stream of future income payments, which are typically fixed in nature, but may vary in duration based on participant mortality experience.

Under GAAP, premium collections for deferred annuities (FIAs and fixed rate annuities), immediate annuities and PRT without life contingency, and deposits received for funding agreements are reported in the financial statements as deposit liabilities (i.e., contractholder funds) instead of as sales or revenues.

Similarly, cash payments to customers are reported as decreases in the liability for contractholder funds and not as expenses.

Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender, cost of insurance and other charges deducted from contractholder funds, and net realized gains (losses) on investments.

Components of expenses for products accounted for as deposit liabilities are interest-sensitive and index product benefits (primarily interest credited to account balances or the hedging cost of providing index credits to the policyholder), amortization of VOBA, DAC, and DSI, other operating costs and expenses, and income taxes.

We hedge certain portions of our exposure to product related equity market risk by entering into derivative transactions.

Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender charges, cost of insurance and other charges deducted from contractholder funds (i.e., amortization of the Unearned Revenue Liability ("URL")), and net realized gains (losses) on investments.

Components of expenses for products accounted for as deposit liabilities are interest-sensitive and index product

benefits (primarily interest credited to account balances or the hedging cost of providing index credits to the policyholder), amortization of VOBA, DAC and DSI, and other operating costs and expenses.

F&G hedges certain portions of its exposure to product related equity market risk by entering into derivative transactions.

We purchase derivatives consisting predominantly of call options and, to a lesser degree, futures contracts (specifically for FIA contracts) on the equity indices underlying the applicable policy.

These derivatives are used to offset the reserve impact of the index credits due to policyholders under the FIA and IUL contracts.

The majority of all such call options are one-year options

purchased to match the funding requirements underlying the FIA/IUL contracts.

The majority of all such call options are one-year options purchased to match the funding requirements underlying the FIA/IUL contracts.

We attempt to manage the cost of these purchases through the terms of our FIA/IUL contracts, which permit us to change caps, spread, or participation rates on each policy's annual anniversary, subject to certain guaranteed minimums that must be maintained.

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The change in fair value of the call options and futures contracts includes the gains and losses recognized at the expiration of the instruments’ terms or upon early termination and the changes in fair value of open positions.

In addition, to reduce market risks from interest rate changes on our earnings associated with our floating rate investments, during the year ended December 31, 2023, we have executed pay-float and receive-fixed interest rate swaps.

As noted above, MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk.

MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors.

The change in fair value of MRBs generally reflects impacts from actual policyholder behavior (including surrenders of the benefit), changes in interest rates, and changes in equity market returns.

Generally higher interest rates and equity returns result in gains whereas lower interest rates and equity returns result in losses.

Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on FIA/IUL policies.

With respect to FIAs/IULs, the cost of hedging our risk includes the expenses incurred to fund the index credits.

With respect to FIAs/IULs, which includes the expenses incurred to fund the index credits.

Proceeds received upon expiration or early termination of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives and are largely offset by an expense for index credits earned on annuity contractholder fund balances.

In June 2021, we established a funding agreement-backed notes program (the “FABN Program”), pursuant to which FGL Insurance may issue funding agreements to a special purpose statutory trust (the “Trust”) for spread lending purposes.

The maximum aggregate principal amount permitted to be outstanding at any one time under the FABN Program is currently $5.0 billion.

We also issue funding agreements through the Federal Home Loan Bank of Atlanta ("FHLB").

In July 2021, we entered the PRT market, pursuant to which FGL Insurance and FGL NY Insurance may issue group annuity contracts to discharge pension plan liabilities from a pension plan sponsor.

Life contingent pension risk transfer premiums are included in life insurance premiums and other fees below.

F&G Results of Operations

The results of operations of our F&G segment for the years ended December 31, 2022 and December 31, 2021 and seven months ended December 31, 2020, were as follows:

Year ended Seven months ended

The results of operations of our F&G segment for the years ended December 31, 2023, 2022 and 2021, were as follows:

December 31, 2023 December 31, 2022 December 31, 2021

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Benefits and other changes in policy reserves 3,553 1,126 1,932

Market risk benefit (gains) losses 95 (182) (44)

Depreciation and amortization 412 324 271

Personnel costs 232 157 129

Other operating expenses 146 102 105

Depreciation and amortization 329 484 123

Interest expense 97 29 29

Total benefits and expenses 4,535 1,556 2,422

Pre-tax earnings (loss) 598 1,077 86

Income tax expense (benefit) 117 220 75

Net earnings (loss) from continuing operations $ 481 $ 857 $ 161

Earnings (loss) before income taxes (35) 793 1,552

Income tax expense 23 158 320

Earnings (loss) from continuing operations $ (58) $ 635 $ 1,232

Earnings from discontinued operations, net of tax — — 8

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Life insurance premiums and other fees

Life insurance premiums and other fees primarily reflect premiums on life-contingent pension risk transfers and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on FIA policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations).

Life insurance premiums and other fees primarily reflect premiums on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on FIA policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations).

The following table summarizes the Life insurance premiums and other fees, on the Consolidated Statements of Earnings for the respective periods:

Year ended Seven months ended

December 31, 2023 December 31, 2022 December 31, 2021

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Life insurance premiums and other fees $ 2,413 $ 1,704 $ 1,407

• Life contingent pension risk transfer premiums for the year ended December 31, 2022 increased compared to the year ended December 31, 2021, due to increased PRT premiums, reflecting our first full year in the PRT market.

As noted above, PRT premiums are subject to fluctuation period to period.

• Surrender charges increased for the years ended December 31, 2022 and December 31, 2021, primarily reflecting an increase in market value adjustments (“MVA”) assessed on certain surrendered FIA policies.

A market value adjustment (“MVA”) will apply in most states to any withdrawal that incurs a surrender charge, subject to certain exceptions.

The MVA is based on a formula that takes into account changes in interest rates since contract issuance.

Generally, if interest rates have risen, the MVA will decrease surrender value, whereas if rates have fallen, it will increase surrender value.

In addition, surrender charges increases as a result of increased amounts assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts primarily on our FIA policies.

• Policyholder fees and other income increased for the years ended December 31, 2022 and December 31, 2021, primarily due to increased GMWB rider fees, cost of insurance charges on IUL policies and IUL premium loads.

• Life-contingent pension risk transfer premiums increased for the years ended December 31, 2023 and December 31, 2022, reflecting higher PRT sales.

• Surrender charges increased for the years ended December 31, 2023, and December 31, 2022, primarily reflecting increases in withdrawals from policyholders with surrender changes and market value adjustments (MVAs), primarily on our FIA policies.

• Policyholder fees and other income increased for the years ended December 31, 2023, and December 31, 2022, primarily due to increased GMWB rider fees and cost of insurance charges, net of changes in URL on IUL policies from growth in business.

GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.

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Below is a summary of interest and investment income:

Year ended Seven months ended

December 31, 2023 December 31, 2022 December 31, 2021

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Investment expense (254) (191) (163)

Net investment income $ 1,655 $ 1,852 $ 743

Interest and investment income $ 2,211 $ 1,655 $ 1,852

Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements, which is passed along to the reinsurer in accordance with the terms of these agreements.

Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $109 million, $53 million and $21 million, for the years ended December 31, 2022 and December 31, 2021, and the seven months ended December 31, 2020, respectively.

Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $339 million, $109 million and $53 million, for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively.

Recognized gains and (losses), net

Below is a summary of the major components included in recognized gains and losses, net:

Year ended Seven months ended

December 31, 2023 December 31, 2022 December 31, 2021

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Recognized gains and losses are shown net of amounts attributable to certain funds withheld reinsurance agreements, which is passed along to the reinsurer in accordance with the terms of these agreements.

Recognized gains and (losses) attributable to these agreements, and thus excluded from the totals in the table above, was $381 million, $15 million and $(58) million for the year ended December 31, 2022, the year ended December 31, 2021, the seven months ended December 31, 2020, respectively.

• For the year ended December 31, 2022, recognized gains and (losses), net include $241 million of realized losses on fixed maturity available-for-sale securities and $207 million of unrealized losses on equity securities (as a result of mark-to-market losses).

For the year ended December 31, 2021, recognized gains and (losses), net include $102 million of realized gains on fixed maturity available-for-sale securities and $51 million unrealized losses on equity securities (as a result of mark-to-market losses).

• For the period from June 1, 2020 to December 31, 2020, recognized gains and (losses), net include $95 million of realized gains on fixed maturity available-for-sale securities and $84 million of unrealized losses on equity securities (as a result of mark-to-market losses).

• For all periods, the change in allowance for expected credit losses primarily relates to available for sale securities.

• For all periods, net realized and unrealized gains (losses) on certain derivative instruments primarily relate to the net realized and unrealized gains (losses) on options and futures used to hedge FIA and IUL products, including gains on option and futures expiration.

Recognized gains and losses attributable to these agreements, and thus excluded from the totals in the table above, was $(123) million, $381 million and $15 million for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively.

• For the year ended December 31, 2023, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized losses on fixed maturity available-for-sale securities, partially offset by mark-to-market gains on our equity securities and realized gains on other invested assets.

• For the year ended December 31, 2022, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized losses on fixed maturity available-for-sale securities and mark-to-market losses on our equity securities.

• For the year ended December 31, 2021, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized gains on fixed maturity available-for-sale securities, partially offset by mark-to-market losses on our equity securities.

See the table below for primary drivers of gains (losses) on certain derivatives.

• The fair value of reinsurance related embedded derivative is based on the change in fair value of the underlying assets held in the funds withheld (“FWH”) portfolio.

We utilize a combination of static (call options) and dynamic (long futures contracts) instruments in our hedging strategy.

• The fair value of reinsurance related embedded derivative is based on the change in fair value of the underlying assets held in the funds withheld portfolio.

We utilize a combination of static (call options) and dynamic (long futures contracts) instruments in our product hedging strategy.

A substantial portion of the call options and futures contracts are based upon the S&P 500 Index with the remainder based upon other equity, bond and gold market indices.

The components of the realized and unrealized gains (losses) on certain derivative instruments hedging our indexed annuity and universal life products are summarized in the table below:

Year ended Seven months ended

During the year ended December 31, 2023, we began to utilize interest rate swaps to reduce market risks from interest rate changes on our earnings associated with our floating rate investments.

The components of the realized and unrealized gains (losses) on certain derivative instruments hedging our indexed annuity, universal life products and floating rate investments are summarized in the table below (dollars in millions):

December 31, 2023 December 31, 2022 December 31, 2021

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Change in unrealized gains (losses) 2 (1) (1)

Interest rate swaps 48 — —

Foreign currency forward:

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Total net change in fair value $ 147 $ (858) $ 615

Year-to-Date Point-to-Point Change in S&P 500 Index during the periods (19) % 27 % 23 %

Annual Point-to-Point Change in S&P 500 Index during the periods 24 % (19) % 27 %

Secured Overnight Financing Rates 5.38 % 4.30 % 0.05 %

• Realized gains and losses on certain derivative instruments are directly correlated to the performance of the indices upon which the call options and futures contracts are based and the value of the derivatives at the time of expiration compared to the value at the time of purchase.

2 unchanged sentences

• The net change in fair value of the call options and futures contracts was primarily driven by movements in the S&P 500 Index relative to the policyholder buy dates.

• The net change in fair value of the interest rate swaps was primarily driven by fluctuations in the interest rate index underlying the swap contracts.

The average index credits to policyholders are as follows:

Year ended Seven months ended

December 31, 2023 December 31, 2022 December 31, 2021

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Below is a summary of the major components included in Benefits and other changes in policy reserves:

Year ended Seven months ended

December 31, 2023 December 31, 2022 December 31, 2021

3 unchanged sentences

Index credits, interest credited & bonuses 831 593 1,019

Annuity payments and other 160 343 230

Other changes in policy reserves 118 144 129

Total benefits and other changes in policy reserves $ 3,553 $ 1,126 $ 1,932

• PRT agreements for the years ended December 31, 2022 and December 31, 2021 reflect our entrance into the PRT market in the second half of 2021.

PRT agreements are subject to fluctuation period to period.

• The FIA/IUL market related liability movements for all periods are mainly driven by changes in the equity markets, non-performance spreads, and risk-free rates during the respective periods.

Additionally, 2021 includes the system implementation and assumption review process impacts discussed below.

The change in risk free rates and non-performance spreads (decreased)/ increased the FIA market related liability by $(656) million, $(74) million, $268 million and $141 million during the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 and the Predecessor period from January 1, 2020 to May 31, 2020, respectively.

• PRT agreements increased for the years ended December 31, 2023, and December 31, 2022, reflecting higher pension risk transfer group annuity obligations.

• The FIA/IUL market related liability movements for all periods presented are mainly driven by changes in the equity markets, non-performance spreads, and risk-free rates during the respective periods.

The change in risk free rates and non-performance spreads (decreased) increased the FIA market related liability by $106 million, $(656) million and $(74) million during the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively.

The remaining change in market value of the market related liability movements was driven by equity market impacts.

See “Recognized gains and (losses)” above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

See “ Revenues - Recognized gains and (losses), net ” above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

• Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees.

During the fourth quarter of 2022, based on increases in interest rates and pricing changes during 2022, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and certain assumptions used to calculate SOP 03-1 liabilities and intangible balances.

These changes, taken together, resulted in an increase in contractholder funds and future policy benefits of $97 million.

• During the third quarter and for the year ended December 31, 2023, based on increases in interest rates and pricing changes, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and also aligned reserves to actual policyholder behavior.

These changes, taken together, resulted in an increase in total benefits and other changes in policy reserves of approximately $73 million.

• During the fourth quarter of 2022, based on increases in interest rates and pricing changes during 2022, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and the fair value of market risk benefits.

These changes, taken together, resulted in an increase in contractholder funds and market risk benefits of approximately $99 million.

• During the third quarter of 2021, we implemented a new actuarial valuation system, and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

The system implementation and assumption review process included refinements in the calculation of the fair value of the embedded derivative component of our fixed indexed annuities.

These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of $397 million.

• Index credits, interest credited & bonuses for the year ended December 31, 2022 were lower compared to the year ended December 31, 2021 and primarily reflected lower index credits on FIA policies as a result of market movement during the respective periods.

Index credits, interest credited & bonuses for the year ended December 31, 2021 were higher compared with the combined periods from June 1, 2020 to December 31, 2020 and the Predecessor period from January 1, 2020 to May 31, 2020, and primarily reflected higher index credits on FIA policies as a result of market movement during the respective periods.

These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of approximately $435 million.

• Index credits, interest credited & bonuses for the year ended December 31, 2023, were higher compared to the year ended December 31, 2022, primarily reflecting higher index credits and interest credited on FIA and other policies as a result of market movement during the respective periods and higher interest credited associated with the growth in PRT agreements.

Index credits, interest credited & bonuses for the year ended December 31, 2022, were lower compared with the year ended December 31, 2021, primarily reflecting lower index credits on FIA policies as a result of market movement during the respective periods.

Refer to average policyholder index discussion above for details on drivers.

Amortization of intangibles

Market risk benefit (gains) losses

Below is a summary of market risk benefit (gains) losses (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Market risk benefit (gains) losses $ 95 $ (182) $ (44)

• Market risk benefits (gains) losses is primarily driven by attributed fees collected, effects of market related movements (including changes in equity markets and risk-free rates), actual policyholder behavior as compared with expected and changes in assumptions during the periods.

▪ Changes in market risk benefit (gains) losses for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily reflect less favorable market related movements, a favorable GMWB utilization assumption change in 2022 (that did not recur in 2023) and higher attributed fees.

These changes were partially offset by actual policyholder behavior for the year ended December 31, 2023, being more in line with expected, as compared to the year ended December 31, 2022, resulting in a favorable change to the market risk benefit (gains) losses.

▪ Market risk benefit gains increased for the year ended December 31, 2022, compared with the year ended December 31, 2021, primarily reflecting favorable market related movements, primarily higher increases in risk free rates.

In addition, the favorable impact of a GMWB utilization assumption change in 2022 was mostly offset by unfavorable impacts of actual policyholder behavior differing from expected when comparing the year ended December 31, 2022, with the year ended December 31, 2021.

Depreciation and amortization

Below is a summary of the major components included in depreciation and amortization:

Year ended Seven months ended

December 31, 2023 December 31, 2022 December 31, 2021

(In millions)

Amortization of DAC, VOBA and DSI $ 353 $ 517 $ 131

Interest (57) (44) (22)

Unlocking 4 (12) (2)

Amortization of VOBA, DAC and DSI $ 382 $ 300 $ 255

Amortization of other intangible assets and other depreciation 30 24 16

Total depreciation and amortization $ 412 $ 324 $ 271

• Amortization of VOBA, DAC and DSI is based on current and future expected gross margins (pre-tax operating income before amortization) and includes the impacts of the assumption changes and system implementation discussed below.

The amortization for the each period presented is the result of AGPs in the respective periods.

• Annually, typically in the third quarter, we review assumptions associated with the amortization of intangibles.

These changes, taken together, resulted in an increase to intangible assets of $47 million.

During the third quarter of 2021, we implemented a new actuarial valuation system and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

The changes, taken together, increased amortization of intangibles by $136 million.

• DAC, VOBA and DSI are amortized on a constant level basis for the grouped contracts over the expected term of the related contracts to approximate straight-line amortization.

Depreciation and amortization increased for the years ended December 31, 2023, and December 31, 2022, primarily reflecting increased DAC and DSI associated with the growth of the business.

The increase for the year ended December 31, 2023, also reflects a slightly increased

amortization rate on some DAC and DSI balances due to updates to the surrender and mortality assumptions for the FIA and fixed-rate annuity blocks.

Personnel costs and other operating expenses

Below is a summary of personnel costs and other operating expenses (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Personnel costs $ 232 $ 157 $ 129

Other operating expenses 146 102 105

Total personnel costs and other operating costs $ 378 $ 259 $ 234

• Personnel costs and other operating expenses increased for the years ended December 31, 2023, and December 31, 2022, primarily reflecting headcount growth to support higher sales and assets volumes and strategic growth capabilities.

Interest expense

Below is a summary of interest expense (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Interest expense $ 97 $ 29 $ 29

Total interest expense 97 29 29

• Interest expense increased for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily reflecting a full year of interest on the F&G revolving credit facility and the issuance of the 7.40% F&G Notes in January of 2023.

Other items affecting net earnings

1 unchanged sentence

Below is a summary of the major components included in income tax expense (benefit):

Year ended Seven months ended

December 31, 2023 December 31, 2022 December 31, 2021

(Dollars in millions)

Earnings from continuing operations before taxes $ 598 $ 1,077 $ 86

Earnings (loss) before taxes $ (35) $ 793 $ 1,552

Income tax expense (benefit) before valuation allowance (12) 131 338

Change in valuation allowance 35 27 (18)

Federal income tax expense (benefit) $ 117 $ 220 $ (75)

Income tax expense $ 23 $ 158 $ 320

Effective rate (66) % 20 % 21 %

• The income tax expense for the year ended December 31, 2022 was $117 million compared to the income tax expense of $220 million for the year ended December 31, 2021.

The effective tax rate was 20% for both years, which differs from the statutory rate of 21% primarily due to favorable permanent tax adjustments.

• Income tax benefit for the seven months ended December 31, 2020 was $75 million.

The income tax benefit was primarily driven by the change in tax status benefit recorded at December 31, 2020 and valuation allowance releases on the current period activity in Front Street Re Cayman Ltd.

(“FSRC”) included in continuing operations and the US non-life companies.

• The income tax expense for the year ended December 31, 2023, was $23 million compared to income tax expense of $158 million for the year ended December 31, 2022.

The effective tax rate was (66)% and 20%, respectively, for the years ended December 31, 2023, and December 31, 2022.

The effective tax rate for the year ended December 31, 2023, differs from the statutory rate of 21% primarily due to a tax valuation allowance expense recorded on unrealized losses and capital loss carryforwards.

The effective tax rate for the year ended December 31, 2022, differs from the statutory rate of 21% primarily due to favorable permanent tax adjustments.

• The income tax expense for the year ended December 31, 2021, was $320 million.

The effective tax rate was 21% for the year ended December 31, 2021.

• See Note T Income Taxes to the Consolidated Financial Statements for further information.

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(iii) preserve capital and (iv) provide liquidity to meet policyholder and other corporate obligations.

Our investment portfolio is designed to contribute stable earnings, excluding the effects of short-term mark-to-market effects, and balance risk across diverse asset classes and is primarily invested in high quality fixed income securities.

Our investment portfolio is designed to contribute stable earnings, excluding short-term mark-to-market effects, and balance risk across diverse asset classes and is primarily invested in high quality fixed income securities.

As of December 31, 2023, and December 31, 2022, the fair value of our investment portfolio was approximately $52 billion and $41 billion, respectively, and was divided among the following asset classes and sectors:

18 unchanged sentences

Collateral loan obligations ("CLO")

5,405 10 % 4,222 10 %

Total fixed maturity available for sale securities $ 40,419 79 % $ 31,218 76 %

12 unchanged sentences

Insurance statutes regulate the type of investments that our life insurance subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment.

In light of these statutes and regulations, and our business and investment strategy, we generally seek to invest in (i) corporate securities rated investment grade by established nationally recognized statistical rating organizations (each, an “NRSRO”), (ii) U.S.

Government and government-sponsored agency securities, or (iii) securities of comparable investment quality, if not rated.

As of December 31, 2022 and December 31, 2021, our fixed maturity available-for-sale ("AFS") securities portfolio was approximately $31 billion and $30 billion, respectively.

The following table summarizes the credit quality, by NRSRO rating, of our fixed income portfolio:

December 31, 2022 December 31, 2021

Fair Value Percent Fair Value Percent

Rating (Dollars in millions)

AAA $ 1,358 4 % $ 660 2 %

AA 2,297 7 % 2,181 7 %

A 8,076 26 % 7,667 26 %

BBB 8,158 26 % 10,462 35 %

Not rated (a) 9,529 31 % 6,642 22 %

Total investment grade 29,418 94 % 27,612 92 %

BB 986 3 % 1,372 5 %

B and below (b) 236 1 % 432 1 %

Not rated (a) 578 2 % 546 2 %

Total below investment grade 1,800 6 % 2,350 8 %

Total $ 31,218 100 % $ 29,962 100 %

(a) Securities denoted as not-rated by an NRSRO were classified as investment or non-investment grade according to the securities' respective NAIC designation

(b) Includes $46 million and $68 million at December 31, 2022 and December 31, 2021, respectively, of non-agency RMBS (as defined below) that carry a NAIC 1 designation.

In light of these statutes and regulations, and our business and investment strategy, we generally seek to invest in primarily high-grade fixed-income assets across a wide range of sectors, including Corporate securities, U.S.

Government and government-sponsored agency securities, and Structured securities, among others.

The NAIC’s Securities Valuation Office (“SVO”) is responsible for the day-to-day credit quality assessment and valuation of securities owned by state regulated insurance companies.

1 unchanged sentence

The SVO conducts credit analysis on these securities for the purpose of assigning an NAIC designation or unit price.

Typically, if a security has been rated by an NRSRO, the SVO utilizes that rating and assigns an NAIC designation based upon the following system:

NAIC Designation NRSRO Equivalent Rating

5 CCC and lower

6 In or near default

The NAIC uses designation methodologies for non-agency RMBS, including RMBS backed by subprime mortgage loans and for CMBS.

The NAIC’s objective with the designation methodologies for these structured securities is to increase accuracy in assessing expected losses and to use the improved assessment to determine a more appropriate capital requirement for such structured securities.

The NAIC assigns a NAIC designation based on the loss expectation for each security.

Several of our RMBS securities carry a NAIC 1 designation while the NRSRO rating indicates below investment grade.

The revised methodologies reduce regulatory reliance on rating agencies and allow for greater regulatory input into the assumptions used to estimate expected losses from such structured securities.

Typically, if a security has been rated by a nationally recognized statistical rating organization (“NRSRO”), the SVO utilizes that rating and assigns an NAIC designation based upon the NAIC published comparison of NRSRO ratings to NAIC designations.

The NAIC determines ratings for non-agency Residential Mortgage-backed Securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”) using modeling that estimates security level expected losses under a variety of economic scenarios.

For such assets issued prior to January 1, 2013, an insurer’s amortized cost basis in applicable assets can impact the assigned rating.

In the tables below, we present the rating of structured securities based on ratings from the NAIC rating methodologies described above (which in some cases do not correspond to rating agency designations).

All NAIC designations (e.g., NAIC 1-6) are based on the NAIC methodologies.

The tables below present our fixed maturity securities by NAIC designation as of December 31, 2022 and December 31, 2021:

(Dollars in millions) December 31, 2022

NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value

1 $ 21,917 $ 19,234 62 %

2 11,889 10,250 33 %

3 1,571 1,419 4 %

4 240 220 1 %

Total $ 35,723 $ 31,218 100 %

(Dollars in millions) December 31, 2021

NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value

1 $ 15,636 $ 15,848 54 %

2 10,779 11,441 38 %

3 1,603 1,850 6 %

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our fixed income portfolio (dollars in millions) at December 31, 2023, and 2022:

December 31, 2023 December 31, 2022

NRSRO Rating NAIC Designation Amortized Cost Fair Value Fair Value Percent Amortized Cost Fair Value Fair Value Percent

AAA/AA/A 1 $ 28,052 $ 26,170 65 % $ 21,294 $ 18,681 60 %

BBB 2 13,421 12,302 30 % 12,422 10,737 34 %

BB 3 1,633 1,554 4 % 1,588 1,425 5 %

B 4 268 215 1 % 259 236 1 %

CCC 5 103 72 — % 87 67 — %

CC and lower 6 124 106 — % 73 72 — %

$ 43,601 $ 40,419 100 % $ 35,723 $ 31,218 100 %

Total $ 28,724 $ 29,962 100 %

Investment Industry Concentration

The tables below present the top ten industry categories of our fixed maturity and equity securities and FHLB common stock, including the fair value and percent of total fixed maturity and equity securities and FHLB common stock fair value as of December 31, 2022 and December 31, 2021 (dollars in millions):

Investment Concentrations

The tables below present the top ten structured security and industry categories of our fixed maturity and equity securities including the fair value and percent of total fixed maturity and equity securities fair value as of December 31, 2023, and 2022 (dollars in millions).

Effective January 1, 2023, we updated our industry classifications as a result of a change in our investment accounting software and related service providers.

Our investment strategy has remained consistent and our portfolio mix has not materially changed.

The December 31, 2022, table was updated to reflect a consistent presentation with the December 31, 2023, classifications:

December 31, 2023

Top 10 Industry Concentration Fair Value Percent of Total Fair Value

Top 10 Concentrations Fair Value (In millions) Percent of Total Fair Value

ABS Other $ 8,929 22 %

CLO securities 5,405 13 %

Whole loan collateralized mortgage obligation (“CMO”)

Commercial mortgage-backed securities 4,410 11 %

Diversified financial services 3,272 8 %

Banking 2,048 5 %

Whole loan collateralized mortgage obligation 2,043 5 %

Municipal 1,600 4 %

Insurance 1,567 4 %

Electric 1,086 3 %

Life insurance 1,376 4 %

Technology 855 3 %

Healthcare 659 2 %

Commercial MBS 571 2 %

Telecommunications 696 2 %

Total $ 31,056 77 %

December 31, 2022

Top 10 Industry Concentration Fair Value Percent of Total Fair Value

Top 10 Concentrations Fair Value (In millions) Percent of Total Fair Value

ABS Other $ 7,359 23 %

CLO securities 3,856 12 %

Commercial mortgage-backed securities 3,399 11 %

Diversified financial services 2,620 8 %

Banking 1,850 6 %

Whole loan collateralized mortgage obligation (“CMO”) 2,622 8 %

Life insurance 1,795 6 %

Electric 1,701 6 %

Insurance 1,545 5 %

Municipal 1,428 4 %

Healthcare 947 3 %

Technology 932 3 %

Other Financial Institutions 760 2 %

Whole loan collateralized mortgage obligations 1,278 4 %

Electric 1,014 3 %

Telecommunications 547 2 %

Total $ 24,896 78 %

14 unchanged sentences

Commercial mortgage-backed securities 4,732 4,410 3,309 3,036

Structured hybrids — — 5 5

Residential mortgage-backed securities 2,501 2,424 1,631 1,521

3 unchanged sentences

Our investment in non-agency RMBS securities is predicated on the conservative and adequate cushion between purchase price and NAIC 1 rating, general lack of sensitivity to interest rates, positive convexity to prepayment rates and correlation between the price of the securities and the unfolding recovery of the housing market.

The fair value of our investments in subprime and Alt-A RMBS securities was $40 million and $54 million as of December 31, 2022, respectively, and $52 million and $75 million as of December 31, 2021, respectively.

As of December 31, 2022 and December 31, 2021, approximately 91% and 94%, respectively, of the subprime and Alt-A RMBS exposures were rated NAIC 2 or higher.

The fair value of our investments in subprime securities and Alt-A RMBS securities were $33 million and $49 million as of December 31, 2023, respectively, and $40 million and $54 million as of December 31, 2022, respectively.

As of December 31, 2023, and 2022, approximately 95% and 91%, respectively, of the subprime and Alt-A RMBS exposures were rated NAIC 2 or higher.

ABS and CLO Exposures

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Our CLO exposures are generally senior tranches of CLOs which have leveraged loans as their underlying collateral.

As of December 31, 2023, the CLO and ABS positions were trading at a net unrealized gain position of $65 million and a net unrealized loss of $344 million, respectively.

As of December 31, 2022, the CLO and ABS positions were trading at a net unrealized loss position of $236 million and $499 million, respectively.

As of December 31, 2021, the CLO and ABS positions were trading at a net unrealized gain position of $145 million and $37 million, respectively.

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our AFS ABS portfolio (dollars in millions) at December 31, 2023, and 2022.

December 31, 2023 December 31, 2022

Fair Value Percent Fair Value Percent

NRSRO Rating NAIC Designation

AAA/AA/A 1 $ 7,023 79% $ 5,570 77%

BBB 2 1,375 15% 1,232 17%

BB 3 418 5% 344 5%

B 4 59 1% 72 1%

CCC 5 13 —% 9 —%

CC and lower 6 41 —% 18 —%

Total $ 8,929 100% $ 7,245 100%

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our AFS CLO portfolio (dollars in millions) at December 31, 2023, and 2022.

December 31, 2023 December 31, 2022

Fair Value Percent Fair Value Percent

NRSRO Rating NAIC Designation

AAA/AA/A 1 $ 3,288 61% $ 2,678 64%

BBB 2 1,582 29% 1,225 29%

BB 3 480 9% 256 6%

B 4 17 —% 19 —%

CCC 5 — —% 9 —%

CC and lower 6 38 1% 35 1%

Total $ 5,405 100% $ 4,222 100%

Municipal Bond Exposure

Our municipal bond exposure is a combination of general obligation bonds (fair value of $188 million and $258 million and an amortized cost of $231 million and $247 million as of December 31, 2022 and December 31, 2021, respectively) and special revenue bonds (fair value of $1,017 million and $1,183 and an amortized cost of $1,248 million and $1,138 as of December 31, 2022 and December 31, 2021, respectively).

Across all municipal bonds, the largest issuer represented 6% and 7% of the category as of December 31, 2022 and December 31, 2021, respectively, less than 1% of the entire portfolio and is rated NAIC 1.

Our focus within municipal bonds is on NAIC 1 rated instruments, and 96% of our municipal bond exposure is rated NAIC 1 as of December 31, 2022.

Our municipal bond exposure is a combination of general obligation bonds (fair value of $231 million and $188 million and an amortized cost of $268 million and $231 million as of December 31, 2023, and December 31, 2022, respectively) and special revenue bonds (fair value of $1,334 million and $1,017 million and an amortized cost of $1,506 million and $1,248 million as of December 31, 2023, and December 31, 2022, respectively).

Across all municipal bonds, the largest issuer represented 5% and 6% of the category as of December 31, 2023, and December 31, 2022, respectively, with less than 1% of the entire portfolio and is rated NAIC 1.

Our focus within municipal bonds is on NAIC 1 rated instruments, with 98% and 96% of our municipal bond exposure rated NAIC 1 as of December 31, 2023, and December 31, 2022, respectively.

Mortgage Loans

Commercial Mortgage Loans

We diversify our commercial mortgage loans ("CMLs") portfolio by geographic region and property type to attempt to reduce concentration risk.

We diversify our CMLs portfolio by geographic region and property type to attempt to reduce concentration risk.

We continuously evaluate CMLs based on relevant current information to ensure properties are performing at a level to secure the related debt.

LTV and DSC ratios are utilized to assess the risk and quality of CMLs.

Loan-to-value ("LTV") and debt-service coverage ("DSC") ratios are utilized to assess the risk and quality of CMLs.

As of December 31, 2023, and December 31, 2022, our mortgage loans on real estate portfolio had a weighted average DSC ratio of 2.3 times and 2.3 times, respectively, and a weighted average LTV ratio of 55% and 57%, respectively.

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For mortgage loans that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.

At December 31, 2022 we had one CML that was delinquent in principal or interest payments and none in the process of foreclosure.

At December 31, 2021 we had no CMLs that were delinquent in principal or interest payments or in process of foreclosure.

See Note E Investments to the Consolidated Financial Statements included in this report for additional information on our CMLs, including our distribution by property type, geographic region and LTV and DSC ratios.

At December 31, 2023, and 2022, we had no CMLs that were delinquent in principal or interest payments and none in the process of foreclosure.

Residential Mortgage Loans

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Unrealized Losses

The amortized cost and fair value of the fixed maturity securities and the equity securities that were in an unrealized loss position as of December 31, 2022 and December 31, 2021, were as follows (in millions):

The amortized cost and fair value of the fixed maturity securities and the equity securities that were in an unrealized loss position as of December 31, 2023, and December 31, 2022, were as follows:

December 31, 2023

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Fixed maturity securities, available for sale:

(In millions)

United States Government full faith and credit 8 $ 15 $ — $ (1) $ 14

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Fixed maturity securities, available for sale:

(In millions)

United States Government full faith and credit 6 $ 34 $ — $ (2) $ 32

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In the aggregate, finance, insurance and real estate represented 19% of the total unrealized loss position as of December 31, 2023.

The average market value/book value of the investment category with the largest unrealized loss position was 96% for utilities, energy and related sectors as of December 31, 2021.

In the aggregate, utilities, energy and related sectors represented 18% of the total unrealized loss position as of December 31, 2021.

The amortized cost and fair value of fixed maturity available for sale securities under watch list analysis and the number of months in a loss position with investment grade securities (NRSRO rating of BBB/Baa or higher) as of December 31, 2022 and December 31, 2021, were as follows (in millions):

The average market value/book value of the investment category with the largest unrealized loss position was 84% for finance, insurance and real estate as of December 31, 2022.

In aggregate, finance, insurance and real estate represented 18% of the total unrealized loss position as of December 31, 2022.

December 31, 2023

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Investment grade:

(In millions)

Less than six months 1 $ 15 $ 14 $ — $ (1)

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Investment grade:

(In millions)

Less than six months 6 $ 5 $ 3 $ — $ (2)

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Detailed analysis is performed for each security on the watch list to further assess the presence of credit impairment loss indicators and, where present, calculate an allowance for expected credit loss or direct write-down of a security’s amortized cost.

At December 31, 2023, our watch list included 52 securities in an unrealized loss position with an amortized cost of $722 million, no allowance for expected credit losses, unrealized losses of $205 million and a fair value of $517 million.

At December 31, 2022, our watch list included 146 securities in an unrealized loss position with an amortized cost of $1,435 million, allowance for expected credit losses of $15 million, unrealized losses of $472 million and a fair value of $948 million.

At December 31, 2021, our watch list included seven securities in an unrealized loss position with an amortized cost of $132 million, allowance for expected credit losses of $0 million, unrealized losses of $7 million and a fair value of $125 million.

The watch list excludes structured securities because we have separate processes to evaluate the credit quality on the structured securities.

The watch list excludes structured securities as we have separate processes to evaluate the credit quality on the structured securities.

There were 101 and 64 structured securities with a fair value of $316 million and $162 million, respectively, to which we had potential credit exposure as of December 31, 2023, and December 31, 2022, respectively.

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of Part II of this Annual Report.

We are exposed to credit loss in the event of nonperformance by our counterparties on call options.

We attempt to reduce this credit risk by purchasing such options from large, well-established financial institutions.

We also hold cash and cash equivalents received from counterparties for call option collateral, as well as U.S.

Government securities pledged as call option collateral, if our counterparty’s net exposures exceed pre-determined thresholds.

We are exposed to credit loss in the event of nonperformance by our counterparties on derivative instruments.

We attempt to reduce this credit risk by purchasing such derivative instruments from large, well-established financial institutions.

We also hold cash and cash equivalents received from counterparties for derivative instrument collateral, as well as U.S.

Government securities pledged as derivative instrument collateral, if our counterparty’s net exposures exceed pre-determined thresholds.

We are required to pay counterparties the effective federal funds rate each day for cash collateral posted to F&G for daily mark to market margin changes.

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The revenue in the Corporate and Other segment for all years represents revenue generated by our non-title real estate technology and brokerage subsidiaries as well as mark-to-market valuation changes on certain corporate deferred compensation plans.

Total revenues in the Corporate and Other segment decreased $74 million, or 40% in the year ended December 31, 2022 as compared to 2021, and increased $13 million, or 8%, in the year ended December 31, 2021 as compared to 2020.

The decrease in the year ended December 31, 2022 as compared to 2021 is primarily attributable to a $59 million decrease in valuations associated with our deferred compensation plan assets, which decreased both revenue and personnel costs and a $41 million impairment of cost method investments in 2022, partially offset by other immaterial items.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily attributable to increased Recognized gains and losses, net, of approximately $19 million, partially offset by decreased interest and investment income of $6 million associated with a year-over-year reduction in fixed-income investment holdings.

Personnel costs in the Corporate and Other segment decreased $59 million, or 55% in the year ended December 31, 2022 as compared to 2021, and decreased $1 million, or 1%, in the year ended December 31, 2021 as compared to 2020.

Total revenues in the Corporate and Other segment increased $104 million, or 95% in the year ended December 31, 2023, as compared to 2022, and decreased $74 million, or 40%, in the year ended December 31, 2022, as compared to 2021.

The increase in the year ended December 31, 2023, as compared to 2022 is primarily attributable to a $71 million increase in valuations associated with our deferred compensation plan assets, which increased both revenue and personnel costs, a $35 million increase in interest and investment income related to cash and short-term investments, and a $33 million impairment of cost method investments in 2023 as compared to a $41 million impairment of cost method investments in 2022, partially offset by various other immaterial items.

The decrease in the year ended December 31, 2022, as compared to 2021 is primarily attributable to a $59 million decrease in valuations associated with our deferred compensation plan assets, which decreased both revenue and personnel costs and a $41 million impairment of cost method investments in 2022, partially offset by various other immaterial items.

Personnel costs in the Corporate and Other segment increased $84 million, or 175% in the year ended December 31, 2023, as compared to 2022, and decreased $59 million, or 55%, in the year ended December 31, 2022, as compared to 2021.

The increase in the year ended December 31, 2023, as compared to 2022 is primarily attributable to the aforementioned increase in the valuation of deferred compensation plan assets in 2023.

The decrease in the year ended December 31, 2022, as compared to 2021 is primarily attributable to the aforementioned decrease in the valuation of deferred compensation plan assets in 2022.

Other operating expenses in the Corporate and Other segment increased $5 million, or 5%, in the year ended December 31, 2022 as compared to 2021, and decreased $49 million, or 33% in the year ended December 31, 2021 as compared to 2020.

The decrease in 2021 as compared to 2020 is primarily attributable to F&G transaction costs of approximately $38 million in 2020 that were not incurred in 2021 and reduced real estate brokerage expenses of $24 million in 2021 related to previous divestitures, partially offset by growth in our real estate technology businesses.

Interest expense increased $1 million, or 1%, in the year ended December 31, 2022 as compared to 2021, and increased $14 million, or 20%, in the year ended December 31, 2021 as compared to 2020.

The increase in the year ended December 31, 2021 as compared to 2020 is primarily attributable to increased average debt outstanding in 2021 associated with issuance of our 3.20% Notes in September 2021 as well as having a full year outstanding of our 3.40% Notes and our 2.45% Notes issued in 2020.

Other operating expenses in the Corporate and Other segment increased $29 million, or 28%, in the year ended December 31, 2023, as compared to 2022, and increased $5 million, or 5% in the year ended December 31, 2022, as compared to 2021.

The increase in 2023 as compared to 2022 is attributable to various immaterial items.

Interest expense decreased $9 million, or 10%, in the year ended December 31, 2023, as compared to 2022, and increased $1 million, or 1%, in the year ended December 31, 2022, as compared to 2021.

The decrease in the year ended December 31, 2023, as compared to 2022 is primarily attributable to decreased average debt outstanding in 2023 associated with repayment of the $400 million in outstanding principal of our 5.50% Senior Notes in September of 2022.

Liquidity and Capital Resources

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The declaration of any future dividends is at the discretion of our Board of Directors.

As of December 31, 2022, we had cash and cash equivalents of $2,286 million, short term investments of $2,590 million and available capacity under our Revolving Credit Facility of $800 million.

Subsequent to December 31, 2022, F&G completed the issuance and sale on January 13, 2023 of $500 million aggregate principal amount of 7.40% Senior Notes due 2028 (the “7.40% F&G Notes”) pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.

F&G intends to use the net proceeds from the offering of the 7.40% F&G Notes for general corporate purposes, including to support the growth of assets under management and for our future liquidity requirements.

On November 22, 2022, F&G entered into a Credit Agreement (the "F&G Credit Agreement") with certain lenders (the "Lenders") and Bank of America, N.A.

as administrative agent (the "Administrative Agent"), swing line lender and an issuing bank, pursuant to which F&G has an available unsecured revolving credit facility (the "F&G Credit Facility") in an aggregate principal amount of $550 million to be used for working capital and general corporate purposes.

A net partial paydown of $35 million was made on January 6, 2023 and, on February 21, 2023, F&G entered into an amendment (the "First Amendment") to the F&G Credit Agreement (the "Amended F&G Credit Agreement").

The First Amendment increased the aggregate principal amount of commitments under the F&G Credit Facility by $115 million to $665 million.

For further information related to the 7.40% F&G Notes and F&G Credit Facility, refer to Note G Notes Payable to the Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.

As of December 31, 2023, we had cash and cash equivalents of $2,767 million, short term investments of $2,119 million and available capacity under our Revolving Credit Facility of $800 million and available capacity under the Amended F&G Credit Agreement of $303 million.

Subsequent to December 31, 2023, F&G acquired a 70% majority ownership stake in the equity of Roar Joint Venture, LLC ("Roar"), on January 2, 2024.

Roar wholesales life insurance and annuity products to banks and broker dealers through a network of agents.

Total initial consideration was approximately $311 million, comprised of cash of approximately $269 million and contingent consideration with an estimated fair value of $45 million.

Under the terms of the purchase agreement, F&G has agreed to make cash payments of up to approximately $90 million over a three year period upon the achievement of certain earnings before interest, taxes, depreciation and amortization milestones of Roar.

On February 16, 2024, we entered into a Sixth Amended and Restated Credit Agreement for our $800 million revolving credit facility with Bank of America, N.A., as administrative agent and other agents party thereto (the "Sixth Restated Credit Agreement").

Among other changes, the Sixth Amended and Restated Credit Agreement amends the Revolving Credit Facility to extend the maturity date from October 29, 2025, to February 16, 2029.

On February 16, 2024, we entered into a Second Amended and Restated F&G Credit Agreement of our $665 million credit agreement, with the guarantors party thereto, the financial institutions party thereto as lenders, and Bank of America, N.A., as administrative agent, swing line lender and an issuing bank (the "Second Amended and Restated F&G Credit Agreement").

Among other changes, the Second Amended and Restated F&G Credit Agreement amends the Amended F&G Credit Agreement to extend the maturity date and increase the aggregate principal amount of commitments under the revolving credit facility to $750 million.

On December 6, 2023, F&G completed the public offering of $345 million aggregate principal amount of its 7.95% Senior Notes due 2053 (the "7.95% F&G Notes").

F&G used the net proceeds from the sale of the notes to repay borrowings under its revolving credit facility and for general corporate purposes, including the support of organic growth opportunities.

On January 13, 2023, F&G completed its issuance and sale of $500 million aggregate amount of its 7.40% Senior Notes due 2028 (the "7.40% F&G Notes"), pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended.

F&G intends to use the net proceeds from the offering of the 7.40% F&G Notes for general corporate purposes, including to support the growth of assets under management and for F&G's future liquidity requirements.

For further information related to the 7.95% F&G Notes and 7.40% F&G Notes, refer to Note G Notes Payable to the Consolidated Financial Statements included in Item 8 of Part II of this Annual Report.

We continually assess our capital allocation strategy, including decisions relating to the amount of our dividend, reducing debt, repurchasing our stock, investing in growth of our subsidiaries, making acquisitions and/or conserving cash.

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Our cash flows provided by operations for the years ended December 31, 2023, 2022, 2021 were $6,478 million, $4,355 million, and $4,090 million, respectively.

The increase in cash provided by operating activities of $265

million in 2022 as compared to 2021 is primarily attributable to increased cash inflows associated with the change in funds withheld from reinsurers of $1,206 million, increased cash inflows associated with the change in future policy benefits of $557 million, increased cash inflows from the net decrease in trade receivables of $298 million, increased cash inflows associated with the change in reinsurance recoverable of $145 million and the increase in cash inflows associated with the change in income taxes of $43 million, partially offset by the decrease in pre-tax earnings in 2022 of $1,290 million, increased cash outflows associated with the decrease in the reserve for title claims losses of $333 million and the timing of receipts and payments of prepaid assets, payables, receivables and income taxes.

The increase in cash provided by operating activities of $2,512 million in 2021 as compared to 2020 is primarily attributable to the increase in pre-tax earnings in 2021, non-cash valuation changes in equity, preferred and derivative securities of $821 million, increased cash inflows associated with the change in future policy benefits of $726 million, increased cash inflows associated with the change in funds withheld from reinsurers of $865 million, partially offset by gains on sales of investments and other assets of $668 million, increased cash outflows associated with increased deferred policy acquisition costs and deferred sales inducements of $409 million and the timing of receipts and payments of prepaid assets, payables, receivables and income taxes.

The primary driver of the increased cash flows associated with the change in future policy benefits in 2021 as compared to 2020 was cash received for PRT transactions associated with our F&G segment.

The increase in cash provided by operating activities of $2,123 million in 2023 as compared to 2022 is primarily attributable to increased cash inflows associated with the change in funds withheld from reinsurers of $1,330 million, increased cash inflows associated with the change in future policy benefits of $254 million and net cash inflows associated with the timing of receipts and payments of prepaid assets, payables, and receivables of $384 million in 2023 as compared to net cash outflows of $783 million in 2022, partially offset by decreased net cash inflows from the change in reinsurance recoverable of $198 million, decreased net cash inflows from the change in trade receivables of $141 million and net cash outflows associated with the change in income taxes of $50 million in 2023 as compared to net cash inflows of $66 million in 2022.

The increase in cash provided by operating activities of $265 million in 2022 as compared to 2021 is primarily attributable to increased cash inflows associated with the change in funds withheld from reinsurers of $1,206 million, increased cash inflows associated with the change in future policy benefits of $444 million, net cash inflows from the change in trade receivables of $178 million in 2023 as compared to net cash outflows of $120 million in 2021 and increased cash inflows associated with the change in reinsurance recoverable of $217 million, partially offset by net cash outflows associated with the change in the reserve for title claims losses of $73 million in 2022 as compared to net cash inflows of $260 million in 2021, and net cash outflows associated with the timing of receipts and payments of prepaid assets, payables and receivables of $783 million in 2022 as compared to net cash inflows of $199 million in 2021.

Investing Cash Flows.

Our cash used in investing activities for the years ended December 31, 2023, 2022, and 2021 were $9,090 million, $10,524 million, and $7,449 million, respectively.

The increase in cash used in investing activities in 2022 as compared to 2021 of $3,075 million is primarily associated with decreased cash inflows from proceeds from sales, calls and maturities of investment securities of $3,456 million, net purchases of short-term investment securities of $2,571 million in 2022 as compared to proceeds from sales and maturities of short-term investment securities of $266 million in 2021, partially offset by decreased cash outflows for additional investments in unconsolidated affiliates of $669 million and decreased cash outflows for purchases of investment securities of $2,866 million.

The increase in cash used in investing activities of $5,118 million in 2021 as compared to 2020 is primarily associated with increased purchases of investment securities of $11,055 million, increased investment in unconsolidated affiliates of $1,419 million, partially offset by increased proceeds from sales, calls and maturities of investment securities of $6,204 million, increased distributions from unconsolidated affiliates of $250 million and reduced cash outflows associated with acquisitions of $818 million.

The decrease in cash used in investing activities in 2023 as compared to 2022 of $1,434 million is primarily associated with increased cash inflows from net proceeds from sales and maturities of short-term investment securities of $340 million in 2023 as compared to net purchases of short-term investment securities of $2,571 million in 2022, partially offset by increased cash outflows for additional investments in unconsolidated affiliates of $219 million, increased cash outflows for purchases of investment securities of $837 million, decreased cash inflows from proceeds from sales, calls and maturities of investment securities of $465 million and increased cash outflows associated with acquisitions of $119 million.

The increase in cash used in investing activities in 2022 as compared to 2021 of $3,075 million is primarily associated with net purchases of short-term investment securities of $2,571 million in 2022 as compared to proceeds from sales and maturities of short-term investment securities of $266 million in 2021, partially offset by decreased cash outflows for additional investments in unconsolidated affiliates of $669 million and decreased cash outflows for purchases of investment securities of $2,866 million.

Capital Expenditures.

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Our cash flows provided by financing activities for the year ended December 31, 2023, 2022, and 2021 were $3,093 million, $4,095 million, and $5,000 million, respectively.

The decrease in cash provided by financing activities of $905 million in 2022 as compared to 2021 is primarily associated with increased cash outflows for debt service payments, including the repayment of $400 million for our 5.50% Notes that were due in September 2022, increased cash outflows from contractholder withdrawals of $519 million, and net cash outflows associated with the change in secured trust deposits of $72 million in 2022 as compared to net cash inflows of $224 million in 2021, partially offset by increased cash inflows from contractholder deposits of $365 million.

The increase in cash provided by financing activities of $2,904 million in 2021 as compared to 2020 is primarily associated with increased cash inflows associated with the change in contractholder accounts of $3,595 million, increased cash inflows associated with the change in secured trust deposits of $304 million and reduced debt service payments of $1,000 million, partially offset by reduced debt offerings and borrowings of $1,797 million and increased purchases of treasury stock of $227 million.

The decrease in cash provided by financing activities of $1,002 million in 2023 as compared to 2022 is primarily associated with increased cash outflows from contractholder withdrawals of $1,175 million, decreased cash inflows from contractholder deposits of $743 million and net F&G Credit Agreement repayments of $185 million, partially offset by the issuance of our 7.95% F&G Notes of $345 million in December of 2023 and the issuance of our 7.40% F&G Notes of $500 million in January of 2023 as compared to the issuance of borrowings of $550 million in 2022, decreased purchases of treasury stock of $547 million and the repayment of $400 million for our 5.50% Notes in September 2022.

Financing Arrangements.

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We repurchased 100,0000 shares of FNF common stock during the year ended December 31, 2023, for approximately $4 million, or an average of $38.45 per share.

Subsequent to December 31, 2022 and through market close on February 23, 2023, we repurchased a total of 100,000 shares for approximately $4 million in the aggregate, or an average of $38.45 per share under the 2021 Repurchase Program.

Since the original commencement of the 2021 Repurchase Program, we have repurchased a total of 16,449,565 FNF common shares for an aggregate amount of $701 million, or an average of $42.60 per share.

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Currently prevailing accounting standards require us to record the change in fair value of equity and preferred security investments held as of any given period end within earnings.

Our results of operations in future periods is anticipated to be subject to such volatility.

Our results of operations in future periods are anticipated to be subject to such volatility.

Off-Balance Sheet Arrangements.

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Certain of these amounts are maintained in segregated bank accounts and have not been included in the accompanying Consolidated Balance Sheets, consistent with Generally Accepted Accounting Principles and industry practice.

These balances amounted to $18.9 billion and $30.5 billion at December 31, 2022 and 2021 , respectively.

As a result of holding these customers’ assets in

escrow, we have ongoing programs for realizing economic benefits during the year through favorable borrowing and vendor arrangements with various banks.

These balances amounted to

$13.5 billion and $18.9 billion at December 31, 2023, and 2022 , respectively.

As a result of holding these customers’ assets in escrow, we have ongoing programs for realizing economic benefits during the year through favorable borrowing and vendor arrangements with various banks.

We have unfunded investment commitments as of December 31, 2023, based upon the timing of when investments are executed compared to when the actual investments are funded, as some investments require that funding occur over a period of months or years.

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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.

What changed 10-K

Item 7. Management’s Discussion and Analysis