v3.26.3
Income Taxes
 9 Months Ended
Sep. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The effective tax rate for the three and nine months ended September 30, 2026 was 21%. The effective tax rate on pre-tax income for the three and nine months ended September 30, 2025 was 8% and 13%. The effective tax rate on pre-tax income for the three months ended September 30, 2026 was in line with the U.S. Federal statutory rate of 21%. The impact of the valuation allowance expense recorded on unrealized losses and capital loss carryforwards was offset by favorable permanent adjustments, including low income housing tax credits (“LIHTC”), the dividends received deduction (“DRD”), company owned life insurance (“COLI”) and foreign tax credits. The effective tax rate on pre-tax income for the nine months ended September 30, 2026 was in line with the U.S. Federal statutory rate of 21%. Due to certain outside basis differences not requiring recognition of a deferred tax liability, the tax gain on the sale of F&G Life Re exceeded the book gain resulting in higher tax expense for the period. The effective tax rate was also impacted by the valuation allowance expense recorded on unrealized losses and capital loss carryforwards as well as state income tax expense, offset by favorable permanent adjustments, including LIHTC, DRD, COLI, and foreign tax credits. The effective tax rate on pre-tax income for the three and nine months ended September 30, 2025 differs from the U.S. Federal statutory rate of 21% primarily due to a partial release of the valuation allowance recorded on capital deferred tax assets for U.S. Life companies, as well as favorable permanent adjustments, including LIHTC, DRD, and COLI.

As of September 30, 2026, the Company had a partial valuation allowance of $67 million against its net deferred tax assets of $191 million. As of December 31, 2025, the Company had a partial valuation allowance of $38 million against its net deferred tax assets of $120 million. There was a $29 million increase in the valuation allowance for the nine months ended September 30, 2026, related to changes in capital losses. The valuation allowance consisted of a full valuation allowance on the unrealized capital loss deferred tax assets for the U.S. Non-life companies and F&G Cayman Re, a full valuation allowance on the deferred capital loss carryforwards for the U.S. Non-life companies and F&G Cayman Re, and a partial valuation allowance on the capital loss deferred tax assets on the U.S. life insurance companies.

The valuation allowance is reviewed quarterly and will be maintained until there is sufficient positive evidence, if any, to support a release. At each reporting date, management considers new evidence, both positive and negative, that could impact the future realization of deferred tax assets. Management will consider a release of the valuation allowance once there is sufficient positive evidence that it is more likely than not that the deferred tax assets will be realized.

All other deferred tax assets are more likely than not to be realized based on expectations as to our future taxable income and considering all other available evidence, both positive and negative.

The Company makes certain investments in limited partnerships, which invest in affordable housing projects that qualify for the LIHTC. The Company’s investment in the funds is amortized through income tax expense on the unaudited Condensed Consolidated Statements of Operations using the proportional amortization method.

The tax credits and other benefits recognized are included in the net change in income taxes on the unaudited Condensed Consolidated Statements of Cash Flows. The following table presents the impacts of the LIHTC investments included in income tax expense on the unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025 (in millions):
Three months ended September 30,Nine months ended September 30,
2026202520262025
Tax credits and other benefits recognized$(13)$(14)$(31)$(31)
Tax credit amortization expense 8 10 22 24 
Total $(5)$(4)$(9)$(7)

At September 30, 2026 and December 31, 2025, LIHTC investments included in Prepaid expenses and other assets on the unaudited Condensed Consolidated Balance Sheets totaled $147 million and $165 million, respectively.
The Inflation Reduction Act of 2022 (the “IRA”) was signed into law on August 16, 2022. Among other changes, the IRA introduced a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income and a 1% excise tax on treasury stock repurchases. These provisions were effective January 1, 2023. For purposes of calculating adjusted financial statement income, the Company is included in the controlled group of FNF, its parent company. Though the Company is subject to the minimum tax, the Company does not expect to be in a perpetual CAMT position. As a result, the Company has assessed that there is no material impact of CAMT to tax for the nine months ended September 30, 2026.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes a broad range of tax reform provisions that may affect the Company’s financial results. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently evaluating the impact of these provisions which could affect the Company’s income tax expense and deferred tax assets; however, it is not expected to have a material impact to our unaudited Condensed Consolidated Financial Statements.