Brookfield Reinsurance .(BNRE) - 2023 Q3 - Quarterly Report

Impairment and Asset Valuation - As of December 31, 2022, the company recorded a $28.5 million impairment charge related to Syndicate 1200, consisting of$17.3 million of indefinite-lived intangible assets and $11.2 million of goodwill[7]. - The impairment recorded from the sale of Argo Underwriting Agency Limited amounted to$28.5 million, consisting of $17.3 million of indefinite lived intangible assets and$11.2 million of goodwill[32]. - The sale of Argo Seguros Brasil S.A. resulted in a loss of $33.8 million, which included$27.3 million from historical foreign currency translation[37][38]. - The fair value of total fixed maturities was $2,675.5 million as of December 31, 2022, with gross unrealized losses of$340.2 million[46]. - As of December 31, 2022, total fixed maturities amounted to $3,016.4 million in amortized cost and$2,675.5 million in fair value, reflecting a decrease in fair value of approximately 11.3%[48]. - The carrying value of other investments as of December 31, 2022, was $323.2 million, down from$387.2 million in 2021, primarily due to changes in hedge funds and private equity investments[50]. - The total fair value of fixed maturities was $2,675.5 million as of December 31, 2022, compared to$4,223.3 million on December 31, 2021, reflecting a decline of 36.6%[81]. - The fair value of corporate bonds was reported at $1,234.1 million in 2022, a decrease from$1,983.3 million in 2021, representing a decline of 37.7%[83]. Financial Performance - Total interest paid for the year ended December 31, 2022, was $24.1 million, an increase from$21.8 million in 2021[29]. - Income taxes paid for the year ended December 31, 2022, were $26.2 million, down from$43.0 million in 2021[29]. - The company reported net investment and other losses of $105.3 million in 2022, a significant decline from net gains of$26.4 million in 2021[63]. - Realized gains on fixed maturities decreased to $20.5 million in 2022 from$30.6 million in 2021[63]. - Total unrealized losses on fixed maturities as of December 31, 2022, were $340.2 million, with corporate bonds contributing$160.0 million to this total[51]. - The company reported a total of 22,317 claims for the accident year 2013, with incurred losses of $334.3 million[137]. - The incurred losses for the year 2022 were$439.5 million, reflecting an increase from previous years[137]. - The company did not incur net losses attributed to the COVID-19 pandemic for the year ended December 31, 2022, contrasting with $12.4 million in losses for 2021[107]. Reserves and Liabilities - The company’s reserves for losses and loss adjustment expenses include estimates of IBNR claims and are recognized as liabilities on the balance sheet[14]. - Net reserves at the end of 2022 were$2,213.1 million, down from $3,123.2 million in 2021, representing a decrease of 29.0$5,051.6 million, a decrease of 9.7% from $5,595.0 million in 2021[105]. - The total outstanding liabilities for unpaid losses and ALAE, net of reinsurance, amount to$1,219.8 million[138]. - The total gross liability for unpaid losses and ALAE was $5,051.6 million[158]. - The total liabilities related to the held-for-sale business were reported at$1,914.5 million as of December 31, 2022[35]. Reinsurance and Recoverables - The company’s reinsurance recoverables are estimated based on the associated claim liability and are net of an allowance for estimated uncollectible reinsurance[2]. - Reinsurance recoverables increased from $2,966.4 million as of December 31, 2021, to$3,029.1 million as of December 31, 2022[92]. - The collateral held for reinsurance recoverables was $1,299.3 million as of December 31, 2022, compared to$1,085.5 million in 2021[99]. - Reinsurance recoverables on unpaid losses and LAE at the end of 2022 were $2,838.5 million, up from$2,471.8 million in 2021, reflecting a 14.8% increase[105]. Investment Portfolio - The company held 1,593 fixed maturity securities as of December 31, 2022, with 1,060 in an unrealized loss position for less than one year[55]. - The allowance for credit losses on available-for-sale fixed maturities was evaluated quarterly, with a focus on credit-related factors impacting fair value[57]. - The company’s commercial mortgage loan investments totaled $159.9 million as of December 31, 2022, with apartments making up 54.5$149.3 million in cash and securities on deposit for regulatory purposes as of December 31, 2022, down from $195.6 million in 2021[69]. - The total fair value of foreign currency exchange forward contracts was$5.2 million as of December 31, 2022, up from $(0.6) million in 2021[68]. Claims and Loss Development - The cumulative number of reported claims as of December 31, 2022, is 11,011, with incurred losses of$439.5 million for that year[137]. - The expected development on reported claims for 2022 is $354.3 million, indicating ongoing claims processing[137]. - The company uses various actuarial methods to project loss reserves, which may vary by product line and coverage[132]. - Adjustments to previously estimated reserves are reflected in the results of operations in the year they are made[132]. - The company reported cumulative paid losses and ALAE, net of reinsurance, totaling$2,449.7 million[137]. Underwriting and Operational Changes - The company has discontinued active underwriting of certain lines of business, focusing on claims management and administrative functions[163]. - Underwriting losses for Run-off Lines in 2022 were reported at $3.6 million, a significant decrease from$44.7 million in 2021[167]. - The company entered into a loss portfolio transfer agreement on August 8, 2022, covering U.S. casualty insurance reserves for accident years 2011 to 2019[131]. Debt and Interest Rates - The principal amount of senior unsecured fixed rate notes is $143.8 million, with a carrying value of$140.5 million after accounting for unamortized debt issuance costs as of December 31, 2022[170]. - The interest rate for the acquired junior subordinated debentures was 7.92% as of December 31, 2022, compared to 3.35% in the previous year[178]. - The interest rate structure for the junior subordinated debentures is based on 3-month LIBOR plus a margin, with the margin being 3.15% for the acquired debt[178].