N-VPFS/A 1 tm254189d17_nvpfsa.htm N-VPFS/A 2025 - EAICA S-1 Group - Final Filing Package
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Empower Annuity Insurance Company of America
Audited Annual Statutory Financial Statements


Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus as of December 31, 2024 and 2023 and Related Statutory Statements of Operations, Changes in Capital and Surplus and Cash Flows and Notes to the Financial Statements for Each of the Three Years in the Period Ended December 31, 2024 and Independent Auditor's Report















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Financial Statements and Supplementary Data
 
Index to Financial Statements, Notes, and Schedules
  Page
  Number
   
Independent Auditor's Report
Statutory Financial Statements at December 31, 2024 and 2023 and for the Years Ended December 31, 2024, 2023 and 2022
Statutory Statements of Cash Flows


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Deloitte & Touche LLP

1601 Wewatta Street

Suite 400

Denver, CO 80202-3492

USA

 

Tel: +1 303 292 5400

Fax: +1 303 312 4000

www.deloitte.com

 

INDEPENDENT AUDITOR'S REPORT

 

To the Board of Directors and Stockholder of
Empower Annuity Insurance Company of America
Greenwood Village, Colorado

 

Opinions

 

We have audited the statutory-basis financial statements of Empower Annuity Insurance Company of America (the "Company") (a wholly-owned subsidiary of Empower Holdings, LLC), which comprise the statutory-basis statements of admitted assets, liabilities, and capital and surplus as of December 31, 2024 and 2023, and the related statutory-basis statements of operations, changes in capital and surplus, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the statutory-basis financial statements (collectively referred to as the "statutory-basis financial statements").

 

Unmodified Opinion on Statutory-Basis of Accounting

 

In our opinion, the accompanying statutory-basis financial statements present fairly, in all material respects, the admitted assets, liabilities, and capital and surplus of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in accordance with the accounting practices prescribed or permitted by the Colorado Division of Insurance described in Note 1.

 

Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

 

In our opinion, because of the significance of the matter described in the Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America section of our report, the statutory-basis financial statements do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2024 and 2023, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2024.

 

Basis for Opinions

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Statutory-Basis Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

 

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Basis for Adverse Opinion on Accounting Principles Generally Accepted in the United States of America

 

As described in Note 1 to the statutory-basis financial statements, the statutory-basis financial statements are prepared by the Company using the accounting practices prescribed or permitted by the Colorado Division of Insurance, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the requirements of the Colorado Division of Insurance. The effects on the statutory-basis financial statements of the variances between the statutory-basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material and pervasive.

 

Emphasis of Matter

 

The Company engages in various related-party transactions with affiliates under common control as discussed in Note 3 to the statutory-basis financial statements. The accompanying statutory-basis financial statements are not necessarily indicative of the conditions that would have existed or the results of operations that would prevail if the Company had been operated as an unaffiliated company. Our opinion is not modified with respect to this matter.

 

Responsibilities of Management for the Statutory-Basis Financial Statements

 

Management is responsible for the preparation and fair presentation of the statutory-basis financial statements in accordance with the accounting practices prescribed or permitted by the Colorado Division of Insurance. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of statutory-basis financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the statutory-basis financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the statutory-basis financial statements are issued.

 

Auditor's Responsibilities for the Audit of the Statutory-Basis Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the statutory-basis financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the statutory-basis financial statements.

 

In performing an audit in accordance with GAAS, we:

 

●Exercise professional judgment and maintain professional skepticism throughout the audit.

 

●Identify and assess the risks of material misstatement of the statutory-basis financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.

 

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Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the statutory-basis financial statements.

 

●Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

 

●Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the statutory-basis financial statements.

 

●Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

 

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

 

Report on Supplemental Schedules

 

Our 2024 audit was conducted for the purpose of forming an opinion on the 2024 statutory-basis financial statements as a whole. The supplemental schedule of selected statutory financial data, the summary investment schedule, the supplemental investment risk interrogatories, and the supplemental schedule regarding reinsurance contracts with risk-limiting features as of and for the year ended December 31, 2024, are presented for purposes of additional analysis and are not a required part of the 2024 statutory-basis financial statements. These schedules are the responsibility of the Company's management and were derived from and relate directly to the underlying accounting and other records used to prepare the statutory-basis financial statements. Such schedules have been subjected to the auditing procedures applied in our audit of the 2024 statutory-basis financial statements and certain additional procedures, including comparing and reconciling such schedules directly to the underlying accounting and other records used to prepare the statutory-basis financial statements or to the statutory-basis financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, such schedules are fairly stated in all material respects in relation to the 2024 statutory-basis financial statements as a whole.

 

 

April 2, 2025

 

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus
December 31, 2024 and 2023
(In Thousands, Except Share Amounts)

December 31,
2024 2023
Admitted assets:
Cash and invested assets:
Bonds $ 24,973,698  $ 26,591,735 
Preferred and common stock 1,936,413  1,749,082 
Mortgage loans (net of allowances of $39,611 and $56,112)
 5,387,154  5,840,441 
Real estate occupied by the company 28,223  31,467 
Real estate held for the production of income 24,140  17,914 
Contract loans 3,536,463  3,711,737 
Cash, cash equivalents and short-term investments 1,150,880  1,648,651 
Securities lending collateral assets 134,685  317,362 
Other invested assets 2,801,792  1,238,844 
       Total cash and invested assets 39,973,448  41,147,233 
Investment income due and accrued 354,880  327,604 
Reinsurance recoverable 384,389  350,653 
Funds held or deposited with reinsured companies 5,199,528  5,781,961 
Deferred income taxes 112,067  152,180 
Due from parent, subsidiaries and affiliates 700,921  423,790 
Other assets 812,006  762,366 
Assets from separate accounts 22,594,303  23,147,893 
Total admitted assets $ 70,131,542  $ 72,093,680 

See notes to statutory financial statements.              Continued

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus
December 31, 2024 and 2023
(In Thousands, Except Share Amounts)

December 31,
2024 2023
Liabilities, capital and surplus:
Liabilities:
Reserves for life insurance and annuities and accident and health policies $ 28,278,401  $ 30,990,307 
Liability for deposit-type contracts 10,245,580  9,585,838 
Asset valuation reserve 305,795  299,764 
Due to parent, subsidiaries and affiliates 182,115  120,810 
Commercial paper 99,717  99,718 
Current federal income taxes payable 47,932  51,205 
Payable under securities lending agreements 134,685  317,362 
Other liabilities 3,507,635  3,698,777 
Liabilities from separate accounts 22,594,303  23,147,893 
Total liabilities
 65,396,163  68,311,674 
Commitments and contingencies (see Note 14)
Capital and surplus:
Preferred stock, $1 par value, 50,000,000 shares authorized; none issued and outstanding —  — 
Common stock, $1 par value; 50,000,000 shares authorized; 22,648,560 and 19,599,243 shares issued in 2024 and 2023, respectively 22,649  19,599 
Surplus notes 2,108,664  2,109,995 
Gross paid in and contributed surplus 6,497,277  4,643,237 
Unassigned deficit (3,893,211) (2,990,825)
Total capital and surplus
 4,735,379  3,782,006 
Total liabilities, capital and surplus $ 70,131,542  $ 72,093,680 
See notes to statutory financial statements.          Concluded

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Statutory Statements of Operations
Years Ended December 31, 2024, 2023 and 2022
(In Thousands)

Year Ended December 31,
2024 2023 2022
Income:
Premium income and annuity consideration $ 4,475,139  $ 5,567,710  $ 13,076,730 
Net investment income 1,470,865  1,969,201  1,518,554 
Amortization of interest maintenance reserve (14,169) 2,113  56,131 
Commission and expense allowances on reinsurance ceded 209,381  259,378  256,754 
Reserve adjustment on reinsurance ceded (922,697) (1,672,963) (5,202,723)
Other income 448,570  478,656  486,940 
Total income 5,667,089  6,604,095  10,192,386 
Expenses:
Death benefits 247,321  281,360  123,027 
Annuity benefits 321,867  323,701  249,200 
Surrender benefits 12,996,180  15,770,211  11,577,685 
(Decrease) increase in aggregate reserves for life and accident and health policies and contracts (2,711,402) (5,442,498) 2,630,025 
Other benefits 91,164  134,269  116,862 
Total benefits 10,945,130  11,067,043  14,696,799 
Commissions 43,909  50,225  298,348 
Other insurance expenses 494,938  561,610  396,033 
Net transfers from separate accounts (6,393,583) (6,165,670) (5,591,198)
Interest maintenance reserve reinsurance activity 23,330  2,883  (118,906)
Total benefit and expenses 5,113,724  5,516,091  9,681,076 
Net gain from operations before dividends to policyholders, federal income taxes and net realized capital (losses) gains 553,365  1,088,004  511,310 
Dividends to policyholders 3,455  4,432  5,108 
Net gain from operations after dividends to policyholders and before federal income taxes and net realized capital (losses) gains 549,910  1,083,572  506,202 
Federal income tax expense 683  34,274  20,399 
Net gain from operations before net realized capital (losses) gains 549,227  1,049,298  485,803 
Net realized capital (losses) gains, net of federal income tax benefit (expense) of $6,507, $6,203 and $(6,281), respectively and transfers to interest maintenance reserve (24,480) (23,336) 23,630 
Net income $ 524,747  $ 1,025,962  $ 509,433 

See notes to statutory financial statements.         

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Statutory Statements of Changes in Capital and Surplus
Years Ended December 31, 2024, 2023 and 2022
(In Thousands)

Year Ended December 31,
2024 2023 2022
Capital and surplus, beginning of year $ 3,782,006  $ 3,520,578  $ 2,919,366 
Net income (loss) 524,747  1,025,962  509,433 
Dividends to stockholders (900,000) (350,000) (231,000)
Change in net unrealized capital losses, net of income taxes (548,064) (587,858) (197,630)
Correction of prior period error —  35,418  — 
Change in asset valuation reserve (6,031) (37,202) (26,271)
Change in non-admitted assets 196,875  371,347  (416,925)
Surplus paid-in 1,854,040  46,953  810,055 
Change in surplus as a result of reinsurance (101,794) (142,606) 176,860 
Change in net deferred income taxes
 (69,580) 1,468  (13,785)
Change in goodwill —  (101,575) — 
Change in other capital and surplus
 3,180  (479) (9,525)
Net change in capital and surplus for the year 953,373  261,428  601,212 
Capital and surplus, end of year $ 4,735,379  $ 3,782,006  $ 3,520,578 


See notes to statutory financial statements.             












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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Statutory Statements of Cash Flows
Years Ended December 31, 2024, 2023 and 2022
(In Thousands)

Year Ended December 31,
2024 2023 2022
Operating activities:
Premium income, net of reinsurance $ 4,457,445  $ 5,486,499  $ 10,733,447 
Investment income received, net of investment expenses paid 1,435,065  1,952,880  1,420,420 
Other miscellaneous income received 1,076,320  1,232,932  639,538 
Benefit and loss related payments, net of reinsurance (14,420,907) (17,641,156) (16,948,045)
Net transfers from separate accounts 6,393,574  6,165,922  5,591,014 
Commissions, other expenses and taxes paid (540,230) (552,974) (821,008)
Dividends paid to policyholders (3,652) (5,181) (10,114)
Federal income taxes received, net 6,411  79,445  36,840 
Net cash (used in) provided by operating activities (1,595,974) (3,281,633) 642,092 
Investing activities:
Proceeds from investments sold, matured or repaid:
Bonds 3,789,963  4,599,292  4,571,491 
Stocks 88,843  153,830  71,442 
Mortgage loans 705,951  539,266  301,006 
Other invested assets 200,703  214,398  71,959 
Miscellaneous proceeds 207,287  (73) 909,430 
Cost of investments acquired:
Bonds (2,330,867) (1,440,075) (4,916,161)
Stocks (63,636) (88,643) (2,152,015)
Mortgage loans (292,876) (298,613) (1,021,075)
Other invested assets (489,215) (392,362) (374,267)
Miscellaneous applications (29,190) (11,559) (1,052,586)
Net cash provided by (used in) investing activities 1,786,963  3,275,461  (3,590,776)
Financing and miscellaneous activities:
Capital and paid in surplus 8,291  47,099  812,422 
Deposit-type contracts, net of withdrawals 568,574  1,400,174  723,946 
Dividends to stockholder (900,000) (350,000) (231,000)
Other (365,625) 182,377  (430,067)
Net cash (used in) provided by financing and miscellaneous activities (688,760) 1,279,650  875,301 
Net (decrease) increase in cash, cash equivalents, short-term investments and restricted cash (497,771) 1,273,478  (2,073,383)
Cash, cash equivalents and short-term investments:
Beginning of year 1,648,651  375,173  2,448,556 
End of year $ 1,150,880  $ 1,648,651  $ 375,173 
The Statutory Statement of Cash Flows excludes the following non-cash transactions;
Year Ended December 31,
2024 2023 2022
Share-based compensation expense $ —  $ —  $ 223 
Transfer of assets and liabilities under reinsurance agreements(1)
 $ —  $ —  $ 5,670,290 
Contribution of Putnam Acquisition Financing Inc. ("PAFI") entity $ 1,772,530  $ —  $ — 
Contribution of non-cash receivables $ 76,269  $ —  $ — 

(1) Above amount reflects reinsurance agreements entered into in 2022. See Note 8 for additional details.

See notes to statutory financial statements.
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)

1. Organization and Basis of Presentation

Organization

Empower Annuity Insurance Company of America, (the “Company” or “EAICA”) offers a wide range of retirement and investment products to individuals, businesses and other private and public organizations throughout the United States. The Company is an insurance company domiciled in the state of Colorado and is subject to regulation by the Colorado Division of Insurance (the “Division”). The Company is authorized to engage in the sale of life insurance, accident and health insurance and annuities. It is qualified to do business in all states in the United States ("U.S."), except New York, and in the District of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands. The Company is also a licensed reinsurer in New York.

Legal Entity Restructuring

The Company has historically been a direct wholly-owned subsidiary of Empower Holdings, Inc. ("EHI"). EHI was a direct wholly-owned subsidiary of Great-West Lifeco U.S. LLC (“Lifeco U.S.”) and an indirect wholly-owned subsidiary of Great-West Lifeco Inc. (“Lifeco”), a Canadian holding company.

Effective January 1, 2024, EHI merged with an affiliate company, Putnam Investments, LLC ("PILLC") and all of the outstanding shares of EHI were cancelled and additional shares in PILLC were issued to Great-West Lifeco U.S. LLC. Effective January 2, 2024, PILLC changed its name to Empower Holdings, LLC (“EHL”). As a result of the merger, the Company is now a direct wholly-owned subsidiary of EHL, which is a wholly owned subsidiary of Lifeco U.S. and an indirect wholly-owned subsidiary of Lifeco, as described in Note 12.

Basis of Presentation

The Company prepares its statutory financial statements in conformity with accounting practices prescribed or permitted by the Division. The Company and its affiliates have significant interdependencies and related party transactions, as described in Note 3. The statutory financial statements have been prepared from the separate records maintained by the Company and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Company had been operated as an unaffiliated company.

The Division requires that insurance companies domiciled in the state of Colorado prepare their statutory financial statements in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual (“NAIC SAP”), subject to any deviations prescribed or permitted by the state of Colorado Insurance Commissioner.

The only prescribed difference that impacts the Company allows the Company to account for certain separate account products at book value instead of fair value. The Division has not permitted the Company to adopt any accounting practices that have an impact on the Company’s statutory financial statements as compared to NAIC SAP or the Division’s prescribed accounting practices. There is no impact to either capital and surplus or net income as a result of the prescribed accounting practice.

Statutory accounting principles vary in some respects from accounting principles generally accepted in the United States of America (“GAAP”). The more significant of these differences are as follows:

•Bonds, including loan-backed and structured securities (collectively referred to as "bonds"), are carried at statutory adjusted carrying value in accordance with the National Association of Insurance Commissioners ("NAIC") designation of the security. Carrying value is amortized cost, unless the bond is either (a) designated as a six, in which case it is the lower of amortized cost or fair value or (b) required to be carried at fair value due to the structured securities ratings methodology, or (c) for perpetual bonds that do not possess an effective call option, is carried at fair value regardless of NAIC designation. Under GAAP, bonds are carried at amortized cost for securities classified as held-to-maturity and fair value for securities classified as available-for-sale and held-for-trading.
•Redeemable preferred stocks are carried at statutory carrying value in accordance with the NAIC designation of the security. Carrying value is amortized cost, unless the redeemable preferred stock is designated a four to six, in which case it is reported at the lower of amortized cost or fair value. Under GAAP, redeemable preferred stocks are carried at amortized cost for securities classified as held-to-maturity and fair value for securities classified as available-for-sale and held-for-trading.
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
•Short-term investments include all investments whose remaining maturities, at the time of acquisition, are three months to one year. Under GAAP, short-term investments include securities purchased with investment intent and with remaining maturities, at the time of acquisition, of one year or less.

•As prescribed by the NAIC, the asset valuation reserve (“AVR”) is computed in accordance with a prescribed formula and represents a provision for possible non-interest related fluctuations in the value of bonds, equity securities, mortgage loans, real estate and other invested assets. Changes to the AVR are charged or credited directly to unassigned surplus. This type of reserve is not necessary or required under GAAP.

•As prescribed by the NAIC, the interest maintenance reserve (“IMR”) consists of net accumulated unamortized realized capital gains and losses, net of income taxes, on sales or interest related impairments of bonds and derivative investments attributable to changes in the general level of interest rates. Such gains or losses are initially deferred and then amortized into income over the remaining period to maturity, based on groupings of individual securities sold in five-year bands. An IMR asset is designated as an admitted asset for net negative (disallowed) IMR up to 10% of adjusted capital and surplus, and is recorded as an increase to capital and surplus. An IMR asset is designated as a non-admitted asset for net negative (disallowed) IMR above this threshold and is recorded as a reduction to capital and surplus. Under GAAP, realized gains and losses are recognized in income in the period in which a security is sold.

•As prescribed by the NAIC, an other-than-temporary impairment (“OTTI”) is recorded (a) if it is probable that the Company will be unable to collect all amounts due according to the contractual terms in effect at the date of acquisition, (b) if the Company has the intent to sell the investment or (c) for non-interest related declines in value and where the Company does not have the intent and ability at the reporting date, to hold the bond until its recovery. Under GAAP, if either (a) management has the intent to sell a bond investment or (b) it is more likely than not the Company will be required to sell a bond investment before its anticipated recovery, a charge is recorded in net realized investment losses equal to the difference between the fair value and cost or amortized cost basis of the security. If management does not intend to sell the security and it is not more likely than not the Company will be required to sell the bond investment before recovery of its amortized cost basis, but the present value of the cash flows expected to be collected (discounted at the effective interest rate implicit in the bond investment prior to impairment) is less than the amortized cost basis of the bond investment (referred to as the credit loss portion), an OTTI is considered to have occurred.
Under GAAP, total OTTI is bifurcated into two components: the amount related to the credit loss, which is recognized in current period earnings through realized capital losses; and the amount attributed to other factors (referred to as the non-credit portion), which is recognized as a separate component in accumulated other comprehensive income (loss). As prescribed by the NAIC, non-interest related OTTI is only bifurcated on loan-backed and structured securities. Factors related to interest and other components do not have a financial statement impact and are disclosed in “Unrealized losses” in the notes to the statutory financial statements.

•Derivatives that qualify for hedge accounting are carried at the same valuation method as the underlying hedged asset, while derivatives that do not qualify for hedge accounting are carried at fair value. Under GAAP, all derivatives, regardless of hedge accounting treatment, are recorded on the balance sheet in other assets or other liabilities at fair value. As prescribed by the NAIC, for those derivatives which qualify for hedge accounting, the change in the carrying value or cash flow of the derivative is recorded consistently with how the changes in the carrying value or cash flow of the hedged asset, liability, firm commitment or forecasted transaction are recorded. Under GAAP, if the derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are recorded in accumulated other comprehensive income and are recognized in the income statements when the hedged item affects earnings. Changes in fair value resulting from foreign currency translations are recorded in either AOCI or net investment income, consistent with where they are recorded on the underlying hedged asset or liability. Changes in the fair value, including changes resulting from foreign currency translations, of derivatives not eligible for hedge accounting or where hedge accounting is not elected and the over effective portion of cash flow hedges are recognized in investment gains (losses) as a component of net income in the period of the change. Realized foreign currency transactional gains and losses on derivatives subject to hedge accounting are recorded in net investment income, whereas those on derivatives not subject to hedge accounting are recorded in investment gains (losses). As prescribed by the NAIC, upon termination of a derivative that qualifies for hedge accounting, the gain or loss is recognized in income in a manner that is consistent with the hedged item. Alternatively, if the item being hedged is subject to IMR, the gain or loss on the hedging derivative is realized and is subject to IMR upon termination. Under GAAP, gains or losses on terminated contracts that are effective hedges are
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
recorded in earnings in net investment income or other comprehensive income. The gains or losses on terminated contracts where hedge accounting is not elected, or contracts that are not eligible for hedge accounting, are recorded in investment gains (losses).

•Acquisition costs, such as commissions and other costs incurred in connection with acquiring new business, are charged to operations as incurred, rather than deferred and amortized over the lives of the related contracts as under GAAP.

•Deferred income taxes are recorded using the asset and liability method in which deferred tax assets and liabilities are recorded for expected future tax consequences of events that have been recognized in either the Company’s statutory financial statements or tax returns. Deferred income tax assets are subject to limitations prescribed by statutory accounting principles. The change in deferred income taxes is treated as a component of the change in unassigned deficit, whereas under GAAP deferred taxes are included in the determination of net income.

•Certain assets, including various receivables, furniture and equipment and prepaid assets, are designated as non-admitted assets and are recorded as a reduction to capital and surplus, whereas they are recorded as assets under GAAP. For statutory accounting purposes, capital and surplus represents the net admitted assets of the Company. Under GAAP, capital and surplus is the statutory equivalent of stockholders' equity.

•For statutory accounting, investments in subsidiaries and controlled and affiliated entities (SCAs) are reported using an equity method based on the reporting entity's shares of the audited statutory equity of the SCAs financial statements (for insurance SCA entities), audited GAAP equity, or audited GAAP equity with specified adjustments depending on the type of SCA entity. The change in the carrying value between reporting periods must be recorded as an unrealized gain/loss through surplus (rather than in income or equity as required under GAAP). Dividends received are recorded in net investment income. Under GAAP, entities under common control are consolidated for reporting.
.
•For statutory accounting, business combinations must either create a parent-subsidiary relationship (statutory purchase) or there must be an exchange of equity with one surviving entity (statutory merger). Under GAAP, an integrated set of activities and assets that are capable of being conducted and managed for the purpose of providing economic benefits to its investors can meet the definition of a business. As such, under GAAP, certain reinsurance agreements could be accounted for as a business acquisition. Statutory accounting also rejects GAAP guidance recognizing a seller's guarantee of the adequacy of liabilities for losses and loss adjustment expenses of the Company acquired in a business combination.

•For statutory purchases, the excess of the cost of acquiring an entity over the Company’s share of the book value of the acquired entity is recorded as goodwill which is admissible subject to limitations and is amortized over the period in which the Company benefits economically, not to exceed ten years. For statutory mergers, no acquisition is recognized because it is accomplished without exchanging resources. As such, the recorded assets, liabilities, and surplus of the acquired company (adjusted to conform to statutory accounting principles) will be carried forward into the combined company. Under GAAP in a business combination, the excess of the cost of acquiring an entity over the acquisition-date fair value of identifiable assets acquired and liabilities assumed is allocated between goodwill, indefinite-lived intangible assets and definite-lived intangible assets. Goodwill and indefinite-lived intangible assets are not amortized and definite-lived intangible assets are amortized over their estimated useful lives under GAAP.

•Surplus notes are reflected as a component of capital and surplus, whereas under GAAP they are reflected as a liability.

•Aggregate reserves for life policies and contracts are based on statutory mortality and interest requirements and without consideration of withdrawals, which differ from reserves established under GAAP that are based on assumptions using Company experience for mortality, interest, and withdrawals.

•Statutory accounting guidance does not distinguish long duration and short duration life insurance contracts, and classifies contracts that have any mortality or morbidity risk, regardless of significance, and contracts with a life contingent annuity purchase rate guarantee option as insurance contracts. Under GAAP, long duration insurance contracts without significant mortality or morbidity risks are classified as investment contracts and are accounted for using a deposit method.

•The policyholder’s share of net income on participating policies that has not been distributed to participating policyholders is included in capital and surplus in the statutory financial statements. For GAAP, these amounts are reported as a liability with a charge to net income.
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)

•Changes in separate account values from cash transactions are recorded as premium income and benefit expenses whereas they do not impact the statement of operations under GAAP and are presented only as increases or decreases to account balances.

•Benefit payments and the related decrease in policy reserves are recorded as expenses for all contracts subjecting the Company to any mortality risk. Under GAAP, such benefit payments for life and annuity contracts without significant mortality risks are recorded as direct reductions to the policy reserve liability.

•Premium receipts and the related increase in policy reserves are recorded as revenues and expenses, respectively, for all contracts subjecting the Company to any mortality risk. Under GAAP, such premium receipts for life and annuity contracts without significant mortality risks are recorded as direct credits to the policy reserve liability.

•Comprehensive income and its components are not presented in the statutory financial statements.

•The Statutory Statement of Cash Flows is presented based on a prescribed format for statutory reporting. For purposes of presenting statutory cash flows, cash includes cash equivalents and short-term investments. Under GAAP, the statement of cash flows is typically presented based on the indirect method and cash excludes short-term investments.

•For statutory accounting purposes, policy and contract liabilities ceded to reinsurers are reported as reductions of the related reserves. Losses generated in certain reinsurance transaction are recognized immediately in income, with gains reported as a separate component of surplus and amortized over the remaining life of the business. As prescribed by the Division, ceded reserves are limited to the amount of direct reserves. Under GAAP, ceded future policy benefits and contract owner liabilities are reported as reinsurance recoverables. Only those reinsurance recoverable balances deemed probable of recovery are reflected as assets on the balance sheet and are stated net of allowance for uncollectible reinsurance, which are charged to earnings. Costs of reinsurance (i.e., the net cash flows which include reinsurance premiums, ceding commissions, etc.) are deferred and amortized over the remaining life of the business.

•For statutory accounting purposes, restatements of prior periods in an Annual Statement are generally not required unless mandated by a state insurance regulator.

Use of estimates

The preparation of financial statements in conformity with statutory accounting principles requires the Company’s management to make a variety of estimates and assumptions. These estimates and assumptions affect, among other things, the reported amounts of admitted assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenues and expenses. Significant estimates are required to account for items and matters such as, but not limited to, the valuation of investments and derivatives in the absence of quoted market values, impairment of investments and derivatives, valuation of policy benefit liabilities and the valuation of deferred tax assets. Actual results could differ from those estimates.

Reclassification

Certain prior year amounts have been reclassified for comparative purposes.

2. Significant Accounting Policies

Investments

Investments are reported as follows:

•In accordance with the NAIC SAP, the adjusted carrying value amounts of certain assets are gross of non-admitted assets.

•Bonds are carried at statutory adjusted carrying value in accordance with the NAIC designation of the security. Carrying value is amortized cost, unless the bond is either (a) designated as a six, in which case it is the lower of amortized cost or fair value or (b) required to be carried at fair value due to the structured securities ratings methodology, or (c) for perpetual bonds that do not possess or no longer possess an effective call option, is carried at fair value regardless of NAIC designation. The Company recognizes the acquisition of its public bonds on a trade date basis and its private placement
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
investments on a funding date basis. Bonds containing call provisions, except make-whole call provisions, are amortized to the call or maturity value/date which produces the lowest asset value. Make-whole call provisions, which allow the bond to be called at any time, are not considered in determining the timeframe for amortizing the premium or discount unless the Company has information indicating the issuer is expected to invoke the make-whole call provision.

•Premiums and discounts are recognized as a component of net investment income using the effective interest method. Realized gains and losses not subject to IMR, including those from foreign currency translations, are included in net realized capital gains (losses).

•The recognition of income on certain investments (e.g., loan-backed securities, including mortgage-backed and asset-backed securities) is dependent upon market conditions, which may result in prepayments and changes in amounts to be earned. Prepayments on all mortgage-backed and asset-backed securities are monitored monthly, and amortization of the premium and/or the accretion of the discount associated with the purchase of such securities are adjusted by such prepayments. Prepayment assumptions are based on the average of recent historical prepayments and are obtained from broker/dealer survey values or internal estimates. These assumptions are consistent with the current interest rate and economic environment. Significant changes in estimated cash flows from the original purchase assumptions are accounted for using the retrospective method.

•Mortgage loans consist primarily of domestic commercial collateralized loans and are carried at their unpaid principal balances adjusted for any unamortized premiums or discounts, allowances for credit losses, and foreign currency translations. Interest income is accrued on the unpaid principal balance for all loans, except for loans on non-accrual status. Premiums and discounts are amortized to net investment income using the effective interest method. Nonrefundable prepayment penalty and origination fees are recognized in net investment income upon receipt.

The Company actively manages its mortgage loan portfolio by completing ongoing comprehensive analysis of factors such as debt service coverage ratios, loan-to-value ratios, payment status, default or legal status, annual collateral property evaluations and general market conditions. On a quarterly basis, the Company reviews the above primary credit quality indicators in its internal risk assessment of loan impairment and credit loss. Management’s risk assessment process is subjective and includes the categorization of all loans, based on the above mentioned credit quality indicators, into one of the following categories:

•Performing - generally indicates the loan has standard market risk and is within its original underwriting guidelines.
•Non-performing - generally indicates there is a potential for loss due to the deterioration of financial/monetary default indicators or potential foreclosure. Due to the potential for loss, these loans are evaluated for impairment.

The adequacy of the Company’s allowance for credit loss is reviewed quarterly. The determination of the calculation and the adequacy of the mortgage allowance for credit loss and mortgage impairments involve judgments that incorporate qualitative and quantitative Company and industry mortgage performance data. Management’s periodic evaluation and assessment of the adequacy of the mortgage allowance for credit loss and the need for mortgage impairments is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the fair value of the underlying collateral, composition of the loan portfolio, current economic conditions, loss experience and other relevant factors. Loans included in the non-performing category and other loans with certain substandard credit quality indicators are individually reviewed to determine if a specific impairment is required. Risk is mitigated primarily through first position collateralization, guarantees, loan covenants and borrower reporting requirements. Since the Company does not originate or hold uncollateralized mortgages, loans are generally not deemed fully uncollectible. Generally, unrecoverable amounts are written off during the final stage of the foreclosure process.

Loan balances are considered past due when payment has not been received based on contractually agreed upon terms. The accrual of interest is discontinued when concerns exist regarding the realization of loan principal or interest. The Company resumes interest accrual on loans when a loan returns to current status or under new terms when loans are restructured or modified.

On a quarterly basis, any loans with terms that were modified during that period are reviewed to determine if the loan modifications constitute a troubled debt restructuring (“TDR”). In evaluating whether a loan modification constitutes a
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
TDR, it must be determined that the modification is a significant concession and the debtor is experiencing financial difficulties.

•Real estate properties held for the production of income are valued at depreciated cost less encumbrances. Real estate is depreciated on a straight-line basis over the estimated life of the building or term of the lease for tenant improvements.

•Real estate properties occupied by the Company are carried at depreciated cost less encumbrances unless the carrying amount of the asset is deemed to be unrecoverable. The Company includes in both net investment income and other operating expenses an amount for rent relating to real estate properties occupied by the Company. Rent is derived from consideration of the repairs, expenses, taxes, interest and depreciation incurred. The reasonableness of the amount of rent recorded is verified by comparison to rent received from other like properties in the same area.
•Properties held for sale are carried at the lower of depreciated cost or fair value less encumbrances and estimated costs to sell the property.

•Limited partnership interests are included in other invested assets and are accounted for using net asset value per share ("NAV") as a practical expedient to fair value. The Company uses NAV as a practical expedient on partnership interests in investment companies where it has a minority equity interest and no significant influence over the entity’s operations.
•Residual tranches or interests in CLOs are included in other invested assets and are carried at the lower of amortized cost or fair value.
•Redeemable preferred stocks, other than shares in Empower CLOs, are carried at statutory carrying value in accordance with the NAIC designation of the security. Carrying value is amortized cost, unless the redeemable preferred stock is designated a four to six, in which case it is reported at the lower of amortized cost or fair value. Preferred shares of Empower CLOs are reported at cost.
•Common stocks, other than stocks of subsidiaries and stocks of the Federal Home Loan Bank (“FHLB”), are recorded at fair value based on the most recent closing price of the common stock as quoted on its exchange. Common stocks of the FHLB are reported at cost. Related party mutual funds, which are carried at fair value, are also included in common stocks. The net unrealized gain or loss on common stocks is reported as a component of surplus.
•Investments in domestic life subsidiaries and certain other subsidiaries are carried at their statutory equity value with unrealized changes in value recorded directly in surplus. Investments in majority owned subsidiaries are generally carried at their Statutory or US GAAP equity with dividends received being recorded in investment income.

•Contract loans are carried at their unpaid balance. Contract loans are fully collateralized by the cash surrender value of the associated insurance policy.

•Short-term investments include all investments whose remaining maturities, at the time of acquisition, are three months to one year. Cash equivalent investments include all investments whose remaining maturities, at the time of acquisition, are three months or less. Both short-term and cash equivalent investments, excluding money market mutual funds, are stated at amortized cost, which approximates fair value. Cash equivalent investments also include highly liquid money market funds that are traded in an active market and are carried at fair value.

•The Company participates in a securities lending program in which the Company lends securities that are held as part of its general account investment portfolio to third parties.  The Company does not enter into these types of transactions for liquidity purposes, but rather for yield enhancement on its investment portfolio.  The borrower can return and the Company can request the loaned securities be returned at any time.  The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest received on such securities during the loan term. Securities lending transactions are accounted for as secured borrowings.  The securities on loan are included within bonds and short-term investments in the accompanying Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus. The securities lending agent indemnifies the Company against borrower risk, meaning that the lending agent agrees contractually to replace securities not returned due to a borrower default.  The Company generally requires initial cash collateral in an amount greater than or equal to 102% of the fair value of domestic securities loaned, and 105% of foreign securities loaned.  Such collateral is used to replace the securities loaned in event of default by the borrower. Some cash collateral is reinvested in money market funds or short-term repurchase agreements which are also collateralized by U.S.
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Government or U.S. Government Agency securities. Reinvested cash collateral is reported in securities lending reinvested collateral assets, with a corresponding liability in payable for securities lending collateral. Collateral that cannot be sold or repledged is excluded from the Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus.

•Surplus notes, which are recorded in other invested assets, are carried at statutory carrying value in accordance with the NAIC designation of the security. Carrying value is amortized cost, unless the surplus note is unrated or has a NAIC designation of three to six, in which case it is reported at the lower of amortized cost or fair value.

•The Company’s OTTI accounting policy requires that a decline in the value of a bond below its cost or amortized cost basis be assessed to determine if the decline is other-than-temporary. An OTTI is recorded (a) if it is probable that the Company will be unable to collect all amounts due according to the contractual terms in effect at the date of acquisition, (b) if the Company has the intent to sell the investment or (c) for non-interest related declines in value and where the Company does not have the intent and ability at the reporting date, to hold the bond until its recovery. Management considers a wide range of factors, as described below, regarding the bond issuer and uses its best judgment in evaluating the cause of the decline in its estimated fair value and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the bond are assumptions and estimates about the operations and ability to generate future cash flows. While all available information is taken into account, it is difficult to predict the ultimate recoverable amount from a distressed or impaired bond.

Considerations used by the Company in the impairment evaluation process include, but are not limited to, the following:

•The extent to which estimated fair value is below cost;
•Whether the decline in fair value is attributable to specific adverse conditions affecting a particular instrument, its issuer, an industry or geographic area;
•The length of time for which the estimated fair value has been below cost;
•Downgrade of a bond investment by a credit rating agency;
•Deterioration of the financial condition of the issuer;
•The payment structure of the bond investment and the likelihood of the issuer being able to make payments in the future; and
•Whether dividends have been reduced or eliminated or scheduled interest payments have not been made.

For loan-backed and structured securities, if management does not intend to sell the bond and has the intent and ability to hold the bond until recovery of its amortized cost basis, but the present value of the cash flows expected to be collected (discounted at the effective interest rate implicit in the bond prior to impairment) is less than the amortized cost basis of the bond (referred to as the non-interest loss portion), an OTTI is considered to have occurred. In this instance, total OTTI is bifurcated into two components: the amount related to the non-interest loss is recognized in current period earnings through realized capital gains (losses); and the amount attributed to other factors does not have any financial impact and is disclosed only in the notes to the statutory financial statements. The calculation of expected cash flows utilized during the impairment evaluation process are determined using judgment and the best information available to the Company including default rates, credit ratings, collateral characteristics and current levels of subordination.

For bonds not backed by other loans or assets, if management does not intend to sell the bond and has the intent and ability to hold but does not expect to recover the entire cost basis, an OTTI is considered to have occurred. A charge is recorded in net realized capital gains (losses) equal to the difference between the fair value and cost or amortized cost basis of the bond. After the recognition of an OTTI, the bond is accounted for as if it had been purchased on the measurement date of the OTTI, with an amortized cost basis equal to the previous amortized cost basis less the OTTI recognized in net income. The difference between the new amortized cost basis and the expected future cash flows is accreted into net investment income. The Company continues to estimate the present value of cash flows expected to be collected over the life of the bond.

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Fair value

Certain assets and liabilities are recorded at fair value on the Company’s Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus. The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company categorizes its assets and liabilities measured at fair value into a three level hierarchy, based on the priority of the inputs to the respective valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Company’s assets and liabilities have been categorized based upon the following fair value hierarchy:

•Level 1 inputs which are utilized for general and separate account assets and liabilities, utilize observable, quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Financial assets utilizing Level 1 inputs include certain mutual funds.

•Level 2 inputs utilize other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs, which are utilized for general and separate account assets and liabilities, include quoted prices for similar assets and liabilities in active markets and inputs, other than quoted prices, that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The fair values for some Level 2 securities are obtained from pricing services. The inputs used by the pricing services are reviewed at least quarterly or when the pricing vendor issues updates to its pricing methodology. For general and separate account assets and liabilities, inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications. Additional inputs utilized for assets and liabilities classified as Level 2 are:

◦Derivative instruments - trading activity, swap curves, credit spreads, currency volatility, net present value of cash flows and news sources.
◦Separate account assets and liabilities - various index data and news sources, amortized cost (which approximates fair value), trading activity, swap curves, credit spreads, recovery rates, restructuring, net present value of cash flows and quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

•Level 3 inputs are unobservable and include situations where there is little, if any, market activity for the asset or liability. In general, the prices of Level 3 securities are obtained from single broker quotes and internal pricing models. If the broker’s inputs are largely unobservable, the valuation is classified as a Level 3. Broker quotes are validated through an internal analyst review process, which includes validation through known market conditions and other relevant data, as noted below. Internal models are usually cash flow based utilizing characteristics of the underlying collateral of the security such as default rate and other relevant data.

Foreign exchange rates are determined at a time that corresponds to the closing of the NYSE.
The fair value of certain investments in the separate accounts and limited partnerships are estimated using net asset value per share as a practical expedient and are excluded from the fair value hierarchy levels in Note 5. These net asset values are based on the fair value of the underlying investments, less liabilities.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Overall, transfers between levels are attributable to a change in the observability of inputs. Assets and liabilities are transferred to a lower level in the hierarchy when a significant input cannot be corroborated with market observable data. This may occur when market activity decreases and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred to a higher level
18

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
in the hierarchy when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity including recent trades, a specific event, or one or more significant input(s) becoming observable.

In some instances, securities are priced using external broker quotes. In most cases, when broker quotes are used as pricing inputs, more than one broker quote is obtained. External broker quotes are reviewed internally by comparing the quotes to similar securities in the public market and/or to vendor pricing, if available. Additionally, external broker quotes are compared to market reported trade activity to ascertain whether the price is reasonable, reflective of the current market prices, and takes into account the characteristics of the Company’s securities.

Derivative financial instruments

The Company enters into derivative transactions which include the use of interest rate swaps, interest rate swaptions, interest rate floor and equity options, cross-currency swaps, foreign currency forwards, U.S. government treasury futures contracts, futures on equity indices and interest rate swap futures. The Company uses these derivative instruments to manage various risks, including interest rate and foreign currency exchange rate risk associated with its invested assets and liabilities. Derivative instruments are not used for speculative reasons. Certain of the Company’s over-the-counter (“OTC”) derivatives are cleared and settled through a central clearing counterparty while others are bilateral contracts between the Company and a counterparty.

Derivatives are reported as other invested assets or other liabilities. Although some derivatives are executed under a master netting arrangement, the Company does not offset in the Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus the carrying value of those derivative instruments and the related cash collateral or net derivative receivables and payables executed with the same counterparty under the same master netting arrangement. Derivatives that qualify for hedge accounting treatment are valued using the valuation method (either amortized cost or fair value) consistent with the underlying hedged asset or liability. At inception of a derivative transaction, the hedge relationship and risk management objective is documented and the designation of the derivative is determined based on specific criteria of the transaction. Derivatives where hedge accounting is either not elected or that are not eligible for hedge accounting are stated at fair value with changes in fair value recognized in unassigned surplus in the period of change. Investment gains and losses generally result from the termination of derivative contracts prior to expiration and are generally recognized in net income and may be subject to IMR.
The Company uses derivative financial instruments for risk management purposes associated with certain invested assets and policy liabilities. Derivatives are used to (a) hedge the economic effects of interest rate and stock market movements on the Company’s guaranteed lifetime withdrawal benefit ("GLWB") liability, (b) hedge the economic effect of a large increase in interest rates on the Company’s general account life insurance, group pension liabilities and certain separate account life insurance liabilities, (c) hedge the economic risks of other transactions such as future asset acquisitions or dispositions, the timing of liability pricing, currency risks on non-U.S. dollar denominated assets, and (d) convert floating rate assets or debt obligations to fixed rate assets or debt obligations for asset/liability management purposes.

The Company controls the credit risk of its derivative contracts through credit approvals, limits, monitoring procedures and in many cases, requiring collateral. The Company’s exposure is limited to the portion of the fair value of derivative instruments that exceeds the value of the collateral held and not to the notional or contractual amounts of the derivatives.

Derivatives in a net asset position may have cash or securities pledged as collateral to the Company in accordance with the collateral support agreements with the counterparty. This collateral is held in a custodial account for the benefit of the Company. Unrestricted cash collateral is included in other assets and the obligation to return it is included in other liabilities. The cash collateral is reinvested in a money market fund. Securities pledged to the Company generally consist of U.S. government or U.S. government agency securities and are not recorded on the Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus.

Cash collateral pledged by the Company is included in other assets.

The Company may purchase a financial instrument that contains a derivative embedded in the financial instrument. Contracts that do not in their entirety meet the definition of a derivative instrument, may contain “embedded” derivative instruments implicit or explicit terms that affect some or all of the cash flows or the value of other exchanges required by the contract in a
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
manner similar to a derivative instrument. An embedded derivative instrument shall not be separated from the host contract and accounted for separately as a derivative instrument.

Funds held or deposited with reinsured companies

Funds held by reinsurers are receivables from ceding entities. Interest earned on the funds withheld receivable are included as a component of miscellaneous income.

Goodwill

Goodwill, resulting from acquisitions of subsidiaries that are reported in common stock and other invested assets, is amortized to unrealized capital gains/(losses) over the period in which the Company benefits economically, not to exceed ten years. Goodwill resulting from assumption reinsurance is reported in goodwill and is amortized to other insurance expenses over the period in which the Company benefits economically, not to exceed ten years. Admissible goodwill is limited in the aggregate to 10% of the Company’s adjusted capital and surplus. The Company tests goodwill for impairment annually or more frequently if events or circumstances indicate that there may be justification for conducting an interim test. If the carrying value of goodwill exceeds its fair value, the excess is recognized as impairment and recorded as a realized loss in the period in which the impairment is identified. There were no impairments of goodwill recognized during the years ended December 31, 2024, 2023 and 2022.

Reinsurance

Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Reserves are based on the terms of the reinsurance contracts and are consistent with the risks assumed. Life contract premiums and benefits ceded to other companies have been reported as a reduction of the premium revenue and benefit expense. Life contract premiums and benefits assumed from other companies have been reported as an increase in premium revenue and benefit expense. Invested assets and reserves ceded or assumed on deposit type contracts are accounted for using deposit accounting. The Company establishes a receivable for amounts due from reinsurers for claims paid and other amounts recoverable under the terms of the reinsurance contract.

Cash value of company owned life insurance

The Company is the owner and beneficiary of life insurance policies which are included in Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus at their cash surrender values. At December 31, 2024, the investments underlying variable life insurance policies utilize various fund structures, with underlying investment characteristics of 28% equity, 33% fixed income, 11% cash and short terms, and 27% other. At December 31, 2023, the investments underlying variable life insurance policies utilize various fund structures, with underlying investment characteristics of 26% equity, 36% fixed income, 17% cash and short terms, and 21% other.

Net investment income

Interest income from bonds is recognized when earned. Interest income on contract loans is recognized in net investment income at the contract interest rate when earned. All investment income due and accrued with amounts that are deemed uncollectible or that are over 90 days past due, including mortgage loans in default (“in process of foreclosure”), is not included in investment income. Amounts over 90 days past due are non-admitted assets and are recorded as a reduction to unassigned surplus. Real estate due and accrued income is excluded from net investment income if its collection is uncertain.

Due to/from parent and affiliates

Due to/from parent and affiliates represents non-interest bearing amounts which are due upon demand. Due to/from parent and affiliates include amounts receivable from or payable to Lifeco U.S. and subsidiaries of Lifeco U.S.

Net realized capital gains (losses)

Realized capital gains and losses are reported as a component of net income and are determined on a specific identification basis. Interest-related gains and losses are primarily subject to IMR, while non-interest related gains and losses are primarily
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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
subject to AVR. Realized capital gains and losses also result from the termination of derivative contracts prior to expiration and may be subject to IMR.

Policy reserves

Life insurance and annuity policy reserves with life contingencies are computed on the basis of statutory mortality and interest requirements and without consideration for withdrawals. Annuity contract reserves without life contingencies are computed on the basis of statutory interest requirements.

Policy reserves for life insurance are valued in accordance with the provision of applicable statutory regulations. Life insurance reserves are determined principally using the Commissioner’s Reserve Valuation Method, using the statutory mortality and interest requirements, without consideration for withdrawals. Some policies contain a surrender value in excess of the reserve as legally computed. This excess is calculated and recorded on a policy-by-policy basis.

Premium stabilization reserves are calculated for certain policies to reflect the Company’s estimate of experience refunds and interest accumulations on these policies. The reserves are invested by the Company. The income earned on these investments is accumulated in this reserve and is used to mitigate future premium rate increases for such policies.

Policy reserves ceded to other insurance companies are recorded as a reduction of the reserve liabilities. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies.

Policy and contract claims include provisions for reported life, accident and health claims in process of settlement, valued in accordance with the terms of the related policies and contracts, as well as provisions for claims incurred but not reported based primarily on prior experience of the Company. As such, amounts are estimates, and the ultimate liability may differ from the amount recorded. Any changes in estimates will be reflected in the results of operations when additional information becomes known.

The liabilities for health claim reserves are determined using historical run-out rates, expected loss ratios and statistical analysis.
The Company provides for significant claim volatility in areas where experience has fluctuated. The liabilities represent estimates of the ultimate net cost of all reported and unreported claims which are unpaid at year-end. Those estimates are subject to considerable variability in claim severity and frequency. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known; such adjustments are included in current operations.

Liability reserves for variable annuities with guarantees and universal life without secondary guarantees are valued in accordance with Principle-Based Reserving ("PBR") methods, outlined in NAIC Valuation Manual Sections 20 and 21. PBR utilizes stochastic models to calculate levels of reserves to cover future benefits that would occur during possible poor future economic conditions. Reserve estimates are determined using both company experience and prescribed assumptions, with the final liability reserve being the greatest of the two estimates and floored at the aggregate surrender value.

Premium, fee income and expenses

Life insurance premiums are recognized when due. Annuity considerations are recognized as revenue when received. Accident and health premiums are earned ratably over the terms of the related insurance and reinsurance contracts or policies. Life and accident and health insurance premiums received in advance are recorded as a liability and recognized as income when the premiums become earned. Fees from assets under management, assets under administration, shareholder servicing, mortality and expense risk charges, administration and record-keeping services and investment advisory services are recognized when earned in fee income or other income. Expenses incurred in connection with acquiring new insurance business, including acquisition costs such as sales commissions, are charged to operations as incurred.

Concentrations

No customer accounted for 10% or more of the Company’s revenues during the year ended December 31, 2024. In addition, the Company is not dependent upon a single customer or a few customers. The loss of business from any one, or a few, independent brokers or agents would not have a material adverse effect on the Company or any of its business agents.

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Income taxes

The Company is included in the consolidated federal income tax return of Lifeco U.S. The federal income tax expense reported in the Statutory Statements of Operations represent income taxes provided on income that is currently taxable, excluding tax on net realized capital gains and losses. A net deferred tax asset is included in the Statutory Statement of Admitted Assets, Liabilities, Capital and Surplus which is recorded using the asset and liability method in which deferred tax assets and liabilities are recorded for expected future tax consequences of events that have been recognized in either the Company’s statutory financial statements or tax returns. Deferred income tax assets are subject to limitations prescribed by statutory accounting principles. The change in deferred income taxes is treated as a component of the change in unassigned deficit.

Employee Benefits

During 2020, the Company adopted the Society of Actuaries Mortality Improvement Scale (MP-2020) which the Company elected to continue to use for 2024.

The Company offers unfunded, non-qualified deferred compensation plans to a select group of executives, management and highly compensated individuals. Participants defer a portion of their compensation and realize potential market gains / losses or interest on the amount deferred. The programs are not qualified under Section 401 of the Internal Revenue Code. Participant balances, which are included in Other liabilities in the accompanying statutory financial statements, are $54.9 million and $48.1 million at December 31, 2024 and 2023, respectively.

Recent accounting pronouncements

Accounting Standards Recently Adopted

In August 2022, the NAIC adopted a new concept under SSAP No. 86 Derivatives (“SSAP No. 86”). The revisions adopt elements from Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2017-12: Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”) for determining hedge effectiveness. The revisions also incorporate statutory-specific measurement methods for excluded components in hedging instruments. These revisions were adopted January 1, 2023 and did not have a material effect on the Company’s financial statements.

In December 2022, the NAIC adopted a new concept under SSAP No. 86. The revisions adopt with modification derivative guidance from ASU 2017-12, ASU 2022-01, Fair Value Hedging – Portfolio Layer to include guidance for the portfolio layer method and partial-term hedges. These revisions were adopted January 1, 2023 and did not have a material effect on the Company’s financial statements.

In August 2023, the NAIC adopted a new concept INT 23-01: Net Negative (Disallowed) Interest Maintenance Reserve. This interpretation provides optional, limited-time guidance, which allows the admittance of net negative (disallowed) interest maintenance reserve (IMR) up to 10% of adjusted capital and surplus. It will be effective until December 31, 2025, and automatically nullified on January 1, 2026, but the effective date can be adjusted (e.g., nullified earlier or extended). This guidance was adopted in August 2023 and the admitted net negative (disallowed) IMR, if any, is reflected within other assets on the Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus.

In August 2023, the NAIC adopted a new concept 2019-21 Bond Definition. This adoption revises SSAP No. 26- Bonds and SSAP No. 43- Loan-Backed and Structured Securities (“SSAP No. 43”) for the principles-based bond definition, the accounting for bonds (issuer credit obligations and asset-backed securities), as well as revisions to various SSAPs that have been updated to reflect the revised definition and/or SSAP references. In 2024, the NAIC modified this concept by adopting additional concepts: 1) 2019-21 - Principles-Based Bond Project & Residual Interests for debt securities that do not qualify to be reported as bonds and for residual tranches or interests/loss positions within SSAP No. 21—Other Admitted Assets and 2) 2024-21 Bond Definition – Debt Securities Issued by Funds that debt securities issued by non-SEC registered funds that reflect operating entities can qualify as issuer credit obligations. These concepts are effective January 1, 2025. This concept was adopted on January 1, 2025 and does not have a material effect on the Company’s financial statements or footnote disclosures.

In December 2023, the NAIC adopted a new concept 2023-17: Short-Term Investments under SSAP No. 2 - Cash, Cash Equivalents, Drafts, and Short-Term investments. This concept further restricts the investments that are permitted for cash equivalent and short-term investment reporting. The revisions also exclude all other invested assets and mortgage loans. This concept was adopted January1, 2025 and did not have a material effect on the Company’s financial statements.
22

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)

In March 2024, the National Association of Insurance Commissioners (“NAIC”) adopted a new concept 2022-14 - New Market Tax Credit Project. The revisions expand and amend guidance within SSAP No. 93 – Low-Income Housing Tax Credit Property Investments (“SSAP No. 93”) to include all tax credit investments regardless of structure and type of state or federal tax credit program. Revisions to SSAP No. 94 Transferable and Non-Transferable State Tax Credits (“SSAP No. 94”) expand and amend guidance to include both purchased state and federal tax credits. Revisions in SSAP No. 34 - Investment Income Due and Accrued and SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies include consistency revisions in response to the changes made to SSAP No. 93 and SSAP No. 94. This concept was adopted January1, 2025 and did not have a material effect on the Company’s financial statements or footnote disclosures.

3. Related Party Transactions

In the normal course of business the Company enters into agreements with related parties whereby it provides and/or receives record-keeping services, investment advisory services, and tax-related services, as well as corporate support services which include general and administrative services, information technology services, sales and service support and marketing services.

The Company’s separate accounts invest in shares of Empower Funds, Inc., which are affiliates of the Company and shares of other non-affiliated mutual funds and government and corporate bonds.  The Company’s separate accounts include mutual funds or other investment options that purchase guaranteed interest annuity contracts issued by the Company.  During the years ended December 31, 2024, 2023 and 2022, these purchases totaled $263.0 million, $334.8 million and $108.3 million respectively. As the general account investment contracts are also included in the separate account balances in the accompanying statutory statements of admitted assets, liabilities, capital and surplus, the Company has included the separate account assets and liabilities of $173.7 million and $173.1 million at December 31, 2024 and 2023, respectively, which is also included in the assets and liabilities of the general account at those dates.

The Company contributed $197.8 million and $200.3 million to partnership funds during the years ended December 31, 2024 and 2023, respectively. Of these amounts, $18.9 million and $22.1 million, respectively, were contributions to partnership funds controlled by Great-West Lifeco, Inc. ("Lifeco"). The total amount invested in Lifeco controlled partnerships as of December 31, 2024 and 2023 was $109.1 million and $94.5 million, respectively. As of December 31, 2024, the remaining commitments for Lifeco controlled partnership funds through subsequent years total $41.5 million (Refer to Note 18 for additional details).

The following table summarizes amounts due from parent and affiliates:
      December 31,
Indebtedness Due date 2024 2023
Empower Retirement, LLC(1)
On account On demand $ 568,471  $ 351,723 
Great-West South Carolina ("GWSC")(1)
On account On demand 22,251  25,881 
Empower Life & Annuity Insurance Company of New York ("ELAINY")(1)
On account On demand 50,110  — 
Canada Life Annuity Corporation(2)
On account On demand 30,298  19,723 
Other related party receivables On account On demand 29,791  26,463 
Total     $ 700,921  $ 423,790 
(1) A wholly-owned subsidiary of EAICA
(2) An indirect wholly-owned subsidiary of Lifeco
 
The following table summarizes amounts due to parent and affiliates:
      December 31,
Indebtedness Due date 2024 2023
Empower Annuity Insurance Company(1)
On account On demand $ 180,417  $ 105,294 
Other related party payables On account On demand 1,698  15,516 
Total     $ 182,115  $ 120,810 
(1) A wholly-owned subsidiary of EAICA

23

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The Company has a revolving credit facility agreement with EAIC, which allows for a maximum borrowing amount of $1.5 billion. The borrowing agreement allows the Company to draw advances in the form of individual loans payable to EAIC. The Company may terminate the borrowing agreement upon three business days written notice and repayment of all outstanding drawn amounts. There are no amounts outstanding as of December 31, 2024.

The Company also has a revolving credit facility agreement with EAIC, which allows EAIC to borrow a maximum amount of $1.5 billion. The lending agreement allows EAIC to draw advances in the form of individual loans payable to the Company. EAIC may terminate the lending agreement upon three business days written notice and repayment of all outstanding drawn amounts. There are no amounts outstanding as of December 31, 2024.

The Company also has a revolving credit facility agreement with Empower Capital Management, LLC ("ECM"), an indirect wholly-owned subsidiary of the Company, which allows ECM to borrow a maximum amount of $250.0 million. The lending agreement allows ECM to draw advances in the form of individual loans payable to the Company. ECM may terminate the lending agreement upon three business days written notice and repayment of all outstanding drawn amounts. As of December 31, 2024, there was an outstanding principal amount due from ECM of $20.2 million, which bears an interest rate of 6.086% per annum and matures on December 31, 2025.

Interest on future draws from any of the above agreements accrues based upon the type of draw requested, which can be either a U.S. Prime Rate Loan or a Secured Overnight Financing Rate Loan (“SOFR loan”). U.S. Prime Rate loans accrue interest based upon the U.S. Prime Rate in effect from time to time, plus a margin of 55 basis points (“bps”). SOFR Loans accrue interest based upon the SOFR rate applicable to the term selected, plus a margin of 70 bps.

Included in current federal income taxes owed at December 31, 2024 is $48.6 million of income tax payable to Lifeco U.S. related to the consolidated income tax return filed by Lifeco U.S. Included in prior federal income taxes recoverable at December 31, 2023 is $51.5 million of income tax receivable from Lifeco U.S. related to the consolidated income tax return filed by Lifeco U.S.

During the year ended December 31, 2024, the Company received dividends of $111.1 million from its subsidiaries, the largest being $47.0 million from ECM. During the year ended December 31, 2023, the Company received dividends of $529.4 million from its subsidiaries, the largest being $419.6 million from EAIC. During the year ended December 31, 2022, the Company received dividends of $222.6 million from its subsidiaries, the largest being $120.0 million from Empower.

During the years ended December 31, 2024 and 2023, the Company paid cash dividends to EHL in the amounts of $900.0 million and $350.0 million respectively.

The Company and ELAINY have an agreement whereby the Company has committed to provide ELAINY financial support related to the maintenance of adequate regulatory surplus and liquidity.

24

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
4. Summary of Invested Assets

Bonds

Investments in bonds consist of the following:
December 31, 2024
Book/adjusted carrying value Fair value greater than book/adjusted carrying value Fair value less than book/adjusted carrying value Fair value
U.S. government $ 513,127  $ 139  $ 12,459  $ 500,807 
All other governments 157,908  96  19,903  138,101 
U.S. states, territories and possessions 225,926  4,352  4,382  225,896 
Political subdivisions of states and territories 25,535  154  1,567  24,122 
Special revenue and special assessments 246,389  230  19,884  226,735 
Industrial and miscellaneous 18,728,280  18,130  2,071,010  16,675,400 
Parent, subsidiaries and affiliates 167  —  —  167 
Hybrid securities 63,514  —  9,495  54,019 
Loan-backed and structured securities 5,012,852  9,200  281,262  4,740,790 
Total bonds $ 24,973,698  $ 32,301  $ 2,419,962  $ 22,586,037 

December 31, 2023
Book/adjusted carrying value Fair value greater than book/adjusted carrying value Fair value less than book/adjusted carrying value Fair value
U.S. government $ 92,408  $ 1,282  $ 744  $ 92,946 
All other governments 164,811  795  15,723  149,883 
U.S. states, territories and possessions 272,743  7,085  3,051  276,777 
Political subdivisions of states and territories 28,471  114  1,638  26,947 
Special revenue and special assessments 363,841  1,058  24,641  340,258 
Industrial and miscellaneous 19,756,280  34,892  2,129,647  17,661,525 
Parent, subsidiaries and affiliates 558  —  —  558 
Hybrid securities 66,720  844  1,626  65,938 
Loan-backed and structured securities 5,845,903  6,293  402,867  5,449,329 
Total bonds $ 26,591,735  $ 52,363  $ 2,579,937  $ 24,064,161 

The book/adjusted carrying value and estimated fair value of bonds and assets receiving bond treatment, based on estimated cash flows, are shown in the table below. Actual maturities will likely differ from these projections because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
December 31, 2024
Book/adjusted
carrying value Fair value
Due in one year or less $ 1,712,646  $ 1,691,667 
Due after one year through five years 8,641,025  8,217,841 
Due after five years through ten years 6,263,414  5,431,146 
Due after ten years 3,359,260  2,520,092 
Loan-backed and structured securities 5,012,852  4,740,790 
Total bonds $ 24,989,197  $ 22,601,536 
25

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)

Loan-backed and structured securities include those issued by U.S. government and U.S. agencies.

The following table summarizes information regarding the sales of securities:
Years ended December 31,
2024 2023 2022
Consideration from sales $ 2,292,824  $ 3,556,834  $ 17,782,699 
Gross realized gains from sales 5,876  6,466  53,961 
Gross realized losses from sales 13,002  172,254  281,028 

Unrealized losses on bonds and preferred stock

The following tables summarize gross unrealized investment losses (amount by which amortized cost exceeds fair value and inclusive of foreign exchange related unrealized losses recorded to surplus) by class of investment:
December 31, 2024
Less than twelve months Twelve months or longer Total
Bonds: Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss
U.S. government $ 464,265  $ 11,436  $ 197  $ 5  $ 464,462  $ 11,441 
All other governments 21,374  801  145,506  20,121  166,880  20,922 
U.S. states, territories and possessions 56,730  594  71,840  3,789  128,570  4,383 
Political subdivisions of states and territories —  —  8,968  1,567  8,968  1,567 
Special revenue and special assessments
   		 24,843  337  179,562  19,547  204,405  19,884 
Industrial and miscellaneous 890,076  32,459  14,578,464  2,387,208  15,468,540  2,419,667 
Hybrid securities 28,008  8,862  26,010  2,976  54,018  11,838 
Loan-backed and structured securities 140,555  1,230  2,989,678  281,908  3,130,233  283,138 
  Total bonds $ 1,625,851  $ 55,719  $ 18,000,225  $ 2,717,121  $ 19,626,076  $ 2,772,840 
Preferred stock $ —  $ —  $ 47,476  $ 2,272  $ 47,476  $ 2,272 
Total number of securities in an
     unrealized loss position		 297  3,517  3,814 

26

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
December 31, 2023
Less than twelve months Twelve months or longer Total
Bonds: Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss
U.S. government $ —  $ —  $ 26,104  $ 744  $ 26,104  $ 744 
All other governments 795  37  133,685  15,686  134,480  15,723 
U.S. states, territories and possessions 13,016  48  106,245  3,003  119,261  3,051 
Political subdivisions of states and territories —  —  11,832  1,638  11,832  1,638 
Special revenue and special assessments
   		 3,829  445  258,556  23,822  262,385  24,267 
Industrial and miscellaneous 208,321  6,098  16,199,386  2,386,721  16,407,707  2,392,819 
Hybrid securities 12,568  95  24,438  4,908  37,006  5,003 
Loan-backed and structured securities 171,746  12,023  4,892,509  401,639  5,064,255  413,662 
  Total bonds $ 410,275  $ 18,746  $ 21,652,755  $ 2,838,161  $ 22,063,030  $ 2,856,907 
Preferred stock $ —  $ —  $ 74,751  $ 5,530  $ 74,751  $ 5,530 
Total number of securities in an
     unrealized loss position		 118  4,029  4,147 

Total unrealized losses decreased by $87.3 million, or 3%, from December 31, 2023 to December 31, 2024. The decrease in unrealized losses was across most asset classes and was primarily driven by higher valuations as a result of lower rates at December 31, 2024 compared to December 31, 2023.

Total unrealized losses greater than twelve months decreased by $124.3 million from December 31, 2023 to December 31, 2024. Industrial and miscellaneous account for 88%, or $2.4 billion of the unrealized losses greater than twelve months at December 31, 2024. The majority of these bonds continue to be designated as investment grade. Management does not have the intent to sell these assets; therefore, an OTTI was not recognized in net income.

Loan-backed and structured securities account for 10%, or $281.9 million, of the unrealized losses greater than twelve months at December 31, 2024. Of the $281.9 million of unrealized losses over twelve months on loan-backed and structured securities, 95% or $268.3 million are securities which continue to be designated as investment grade. The present value of cash flows expected to be collected is not less than amortized cost and management does not have the intent to sell these assets; therefore, an OTTI was not recognized in net income.

The Company had a concentration in loan-backed and structured securities of 13% and 14% of total invested assets at December 31, 2024 and 2023, respectively.

The Company had the following bond concentrations based on total invested assets:
Concentration by type
December 31,
2024 2023
Industrial and miscellaneous 58% 60%
Concentration by industry
December 31,
2024 2023
Financial services 15% 15%

27

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Mortgage loans

The following table summarizes the recorded investment of the commercial all other mortgage loan portfolio by risk assessment category:

December 31,
2024 2023
Performing:
   Non-Participation agreements $ 3,423,053  $ 3,461,108 
   Participation agreements 1,984,752  2,376,432 
Total Performing 5,407,805  5,837,540 
Non-Performing:
   Participation agreements 18,960  59,013 
Total Non-Performing 18,960  59,013 
Total recorded investment of commercial mortgage loans $ 5,426,765  $ 5,896,553 

All of the performing loans were current as of December 31, 2024 and 2023. In 2024, the non-performing loans are one loan with overdue interest, and three loans in the amount of $14.8 million in the process of foreclosure. In 2023, the non-performing loans were considered impaired, with one loan in the amount of $4.8 million in the process of foreclosure, and a corresponding specific provision of $17.8 million was recorded due to the estimated loss, which was recognized in 2024 when the loan was restructured.

The maximum lending rates for commercial mortgage loans originated during the years ended December 31, 2024 and 2023 were 6.3% and 8.0%, respectively. The minimum lending rates for commercial mortgage loans originated during the years ended December 31, 2024 and 2023 were 5.0% and 5.3%, respectively.

During 2024 and 2023, the maximum percentage of any one loan to the value of security at the time of the loan, exclusive of insured or guaranteed or purchase money mortgages, was 55% and 53%, respectively.

The following table summarizes activity in the commercial mortgage provision allowance for the years ended December 31, 2024 and 2023:

December 31,
2024 2023
Beginning balance $ 56,112  $ 646 
Additions charged to operations - general provision —  37,644 
Additions charged to operations - specific provision 2,170  17,822 
Direct write-downs charged against the allowances (18,671) — 
Ending balance $ 39,611  $ 56,112 

28

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The following tables present concentrations of the total commercial mortgage portfolio:
Concentration by type
December 31,
2024 2023
Industrial 37% 35%
Multi-family 34% 33%
Office 17% 16%
Retail 8% 10%
Other 4% 6%
100% 100%
Concentration by geographic area
December 31,
2024 2023
Pacific 31% 30%
Other 27% 26%
East North Central 18% 18%
South Atlantic 14% 16%
Middle Atlantic 10% 10%
100% 100%

Troubled Debt Restructuring

In June 2024, a mortgage loan classified as an office building was subject to a troubled debt restructuring under which the original mortgage loan with a recorded investment of $35.5 million, after impairment, was extinguished in exchange for a new mortgage loan in the amount of $35.5 million acquired in full satisfaction of the original loan. The maturity date of the restructured loan has been extended from October 5, 2024 to October 5, 2028 and maintains the original interest rate of 3.77%.

As a result of the troubled debt restructuring, a credit-related impairment of $18.7 million was recognized and is recorded within the 'Net realized capital gains (losses)' line on the Statutory Statements of Operations. As of December 31, 2024, there are no payment defaults related to the restructured mortgage loan.

In December 2024, a mortgage loan classified as multi-family was subject to a troubled debt restructuring under which a deed-in-lieu of foreclosure was enacted resulting in the original mortgage loan with a recorded investment of $14.2 million, after impairment, was extinguished in exchange for a limited partnership interest in the amount of $14.2 million, acquired in full satisfaction of the original loan.

As a result of the troubled debt restructuring, an impairment on the original mortgage loan of $14.7 million was recognized and is recorded within the 'Net realized capital gains (losses)' line on the Statutory Statements of Operations.

The Company accrues interest income on impaired loans to the extent it is deemed collectible (delinquent less than 90 days) and the loan continues to perform under its original or restructured contractual terms. Interest income on non-performing loans is generally recognized on a cash basis.

Derivative financial instruments

Derivative transactions are generally entered into pursuant to International Swaps and Derivatives Association ("ISDA") Master Agreements with approved counterparties that provide for a single net payment to be made by one party to the other on a daily basis, periodic payment dates, or at the due date, expiration, or termination of the agreement.

The ISDA Master Agreements contain provisions that would allow the counterparties to require immediate settlement of all derivative instruments in a net liability position if the Company were to default on any debt obligations over a certain threshold. The aggregate fair value of derivative instruments with credit-risk-related contingent features that were in a net liability position
29

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
was $3.0 million and $14.9 million as of December 31, 2024 and 2023, respectively. The Company had pledged collateral related to these derivatives of $0.03 million and $0.05 million as of December 31, 2024 and 2023, respectively, in the normal course of business. If the credit-risk-related contingent features were triggered on December 31, 2024 the fair value of assets that could be required to settle the derivatives in a net liability position was $3.0 million.

At December 31, 2024 and 2023, the Company had pledged $0.03 million and $0.05 million, respectively, of unrestricted cash collateral to counterparties in the normal course of business, while other counterparties had pledged $380.3 million and $307.0 million unrestricted cash and securities collateral to the Company to satisfy collateral netting arrangements, respectively.

At December 31, 2024 and 2023, the Company had pledged U.S. Treasury notes in the amount of $0.2 million and $0.3 million, respectively, with a broker as collateral for futures contracts.

Types of derivative instruments and derivative strategies

Interest rate contracts

Cash flow hedges

Interest rate swap agreements are used to convert the interest rate on certain debt securities and debt obligations from a floating rate to a fixed rate.

Not designated as hedging instruments

The Company enters into certain transactions in which derivatives are hedging an economic risk but hedge accounting is either not elected or the transactions are not eligible for hedge accounting. These derivative instruments include: OTC interest rate swaps, treasury interest rate futures, and interest rate floors. Certain of the Company’s OTC derivatives are cleared and settled through a central clearing counterparty while others are bilateral contracts between the Company and a counterparty.

The derivative instruments mentioned above are economic hedges and used to manage risk. These transactions are used to offset changes in liabilities including those in variable annuity products, hedge the economic effect of a large increase in interest rates, manage the potential variability in future interest payments due to a change in credited interest rates and the related change in cash flows due to increased surrenders, and manage interest rate risks of forecasted acquisitions of bonds and forecasted liability pricing.

Foreign currency contracts

Cross-currency swaps and foreign currency forwards are used to manage the foreign currency exchange rate risk associated with investments denominated in other than U.S. dollars. The Company uses cross-currency swaps to convert interest and principal payments on foreign denominated debt instruments into U.S. dollars. Cross-currency swaps may be designated as cash flow hedges; however, some are not eligible for hedge accounting. The Company uses foreign currency forwards to reduce the risk of foreign currency exchange rate changes on proceeds received on sales of foreign denominated debt instruments; however, hedge accounting is not elected.

Equity contracts

The Company uses futures and options on equity indices to offset changes in GLWB liabilities; however, they are not eligible for hedge accounting.

30

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The following tables summarize derivative financial instruments:

December 31, 2024
Notional amount
Net book/adjusted carrying value (1)
 Fair value
Derivatives designated as cash flow hedges:
Interest rate swaps $ 13,300  $ —  $ 391 
Cross-currency swaps 2,355,137  230,092  278,247 
Total cash flow hedges 2,368,437  230,092  278,638 
Derivatives not designated as hedges:
Interest rate swaps 42,215  682  682 
Cross-currency swaps 534,006  91,172  91,172 
Foreign currency forwards 125,705  4,392  4,392 
Total derivatives not designated as hedges 701,926  96,246  96,246 
Total cash flow hedges, and derivatives not designated as hedges $ 3,070,363  $ 326,338  $ 374,884 
(1) The book/adjusted carrying value excludes accrued income and expense. The book/adjusted carrying value of all derivatives in an asset position is reported within other invested assets and the book/adjusted carrying value of all derivatives in a liability position is reported within other liabilities in the Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus.

December 31, 2023
Notional amount
Net book/adjusted carrying value (1)
 Fair value
Derivatives designated as cash flow hedges:
Interest rate swaps $ 13,300  $ —  $ 774 
Cross-currency swaps 2,603,665  150,104  209,048 
Total cash flow hedges 2,616,965  150,104  209,822 
Derivatives not designated as hedges:
Interest rate swaps 50,980  335  335 
Futures on equity indices 857  308  5 
Cross-currency swaps 584,947  81,385  81,385 
Foreign currency forwards 88,620  (2,336) (2,336)
Total derivatives not designated as hedges 725,404  79,692  79,389 
Total cash flow hedges and derivatives not designated as hedges $ 3,342,369  $ 229,796  $ 289,211 
(1) The book/adjusted carrying value excludes accrued income and expense. The book/adjusted carrying value of all derivatives in an asset position is reported within other invested assets and the book/adjusted carrying value of all derivatives in a liability position is reported within other liabilities in the Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus.


31

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The following table presents net unrealized capital gains (losses) on derivatives not designated as hedging instruments as reported in the Statutory Statements of Changes in Capital and Surplus:
Net unrealized capital gains (losses) on derivatives
recognized in surplus
Year Ended December 31,
2024 2023 2022
Derivatives not designated as hedging instruments:
Interest rate swaps $ 890  $ 19,797  $ (21,543)
Interest rate swaptions —  —  38 
Futures on equity indices 35  (803) 1,055 
Interest rate futures —  (73) 73 
Cross-currency swaps 2,568  (26,913) 45,691 
Foreign currency forwards 5,315  (1,049) (797)
Total $ 8,808  $ (9,041) $ 24,517 

Securities lending

Securities with a cost or amortized cost of $158.7 million and $617.8 million, and estimated fair values of $143.0 million and $602.1 million were on loan under the program at December 31, 2024 and 2023, respectively.

The following table summarizes securities on loan by category:
December 31, December 31,
2024 2023
Book/adjusted carrying value Fair value Book/adjusted carrying value Fair value
Hybrid securities $ —  $ —  $ 4  $ 4 
Industrial and miscellaneous 115,864  100,785  149,222  133,182 
U.S. government 42,804  42,210  468,595  468,904 
$ 158,668  $ 142,995  $ 617,821  $ 602,090 

The Company’s securities lending agreements are open agreements meaning the borrower can return and the Company can recall the loaned securities at any time.

The Company received cash of $134.7 million and $317.4 million, and securities of $14.4 million and $299.7 million as collateral related to the securities lending program at December 31, 2024 and 2023, respectively. None of the securities are permitted to be sold or repledged and all of the cash was reinvested. This cash was reinvested into money market funds and short-term repurchase agreements which are collateralized by U.S. government or U.S. government agency securities and mature in under 30 days.

32

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)



The following tables summarize investments on deposit or trust accounts controlled by various state insurance departments in accordance with statutory requirements as well as other deposits and collateral pledged by the Company:
December 31, 2024
Gross (Admitted & Non-admitted) Restricted Percentage
Total General Account (G/A) G/A Supporting S/A Activity Total Separate Account (S/A) Restricted Assets S/A Assets Supporting G/A Activity Total Total From Prior Year Increase/(Decrease)
Total Non-admitted Restricted
 Total Admitted Restricted
Gross (Admitted & Non-admitted) Restricted to Total Assets
 Admitted Restricted to Total Admitted Assets
Collateral held under security lending arrangements $ 134,685  $ —  $ —  $ —  $ 134,685  $ 317,362  $ (182,677) $ —  $ 134,685  0.19  % 0.19  %
FHLB capital stock 579  —  —  —  579  551  28  —  579  0.00  % 0.00  %
On deposit with states 4,271  —  —  —  4,271  4,299  (28) —  4,271  0.01  % 0.01  %
On deposit with other regulatory bodies 525  —  —  —  525  535  (10) —  525  0.00  % 0.00  %
Pledged as collateral not captured in other categories:
Futures margin deposits 159  —  1,463  —  1,622  2,725  (1,103) —  1,622  0.00  % 0.00  %
Derivative cash collateral 31  —  377  —  408  449  (41) —  408  0.00  % 0.00  %
Other restricted assets 1,091  —  —  —  1,091  1,041  50  —  1,091  0.00  % 0.00  %
Total Restricted Assets $ 141,341  $ —  $ 1,840  $ —  $ 143,181  $ 326,962  $ (183,781) $ —  $ 143,181  0.20  % 0.20  %

33

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
December 31, 2023
Gross (Admitted & Non-admitted) Restricted Percentage
Total General Account (G/A) G/A Supporting S/A Activity Total Separate Account (S/A) Restricted Assets S/A Assets Supporting G/A Activity Total Total From Prior Year Increase/(Decrease)
Total Non-admitted Restricted
 Total Admitted Restricted
Gross (Admitted & Non-admitted) Restricted to Total Assets
 Admitted Restricted to Total Admitted Assets
Collateral held under security lending arrangements $ 317,362  $ —  $ —  $ —  $ 317,362  $ 107,068  $ 210,294  $ —  $ 317,362  0.43  % 0.44  %
FHLB Capital Stock 551  —  —  —  551  509  42  —  551  0.00  % 0.00  %
On deposit with states 4,299  —  —  —  4,299  4,213  86  —  4,299  0.01  % 0.01  %
On deposit with other regulatory bodies 535  —  —  —  535  503  32  —  535  0.00  % 0.00  %
Pledged as collateral not captured in other categories:
Futures margin deposits 308  —  2,417  —  2,725  4,960  (2,235) —  2,725  0.00  % 0.00  %
Derivative cash collateral 17  —  432  —  449  30,172  (29,723) —  449  0.00  % 0.00  %
Other restricted assets 1,041  —  —  —  1,041  1,088  (47) —  1,041  0.00  % 0.00  %
Total Restricted Assets $ 324,113  $ —  $ 2,849  $ —  $ 326,962  $ 148,513  $ 178,449  $ —  $ 326,962  0.45  % 0.45  %
34

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Net investment income

The following table summarizes net investment income:
Years Ended December 31,
2024 2023 2022
Bonds $ 936,188  $ 1,010,128  $ 928,803 
Preferred and common stocks 2,984  5,969  5,006 
Mortgage loans 202,986  204,415  186,997 
Real estate 32,991  32,253  29,693 
Contract loans 167,573  182,531  184,184 
Cash, cash equivalents and short-term investments 57,784  49,548  9,763 
Derivative instruments 36,311  41,131  39,585 
Other invested assets 152,008  567,873  247,053 
Miscellaneous 11,932  7,959  (1,564)
Gross investment income 1,600,757  2,101,807  1,629,520 
Expenses (129,892) (132,606) (110,966)
Net investment income $ 1,470,865  $ 1,969,201  $ 1,518,554 

The amount of interest incurred and charged to investment expense during the years ended December 31, 2024, 2023 and 2022 was $83.2 million, $78.5 million and $74.8 million, respectively.

The following table summarizes net realized capital losses (gains) on investments net of federal income tax and interest maintenance reserve transfer:

Year Ended December 31,
2024 2023 2022
Net realized capital losses, before federal income tax $ 48,959  $ 205,215  $ 200,418 
Less: Federal income tax benefit (10,281) (43,095) (42,088)
Net realized capital losses, before IMR transfer 38,678  162,120  158,330 
Net realized capital losses transferred to IMR, net
of federal income tax (benefit) of $(3,774), $(36,892) and $(48,369), respectively (14,198) (138,784) (181,960)
Net realized capital losses (gains), net of federal income
tax (benefit) expense of $(6,507), $(6,203) and $6,281, respectively, and IMR transfer $ 24,480  $ 23,336  $ (23,630)

35

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Net Negative (Disallowed) Interest Maintenance Reserve (IMR)

In 2024, the net IMR balance is a positive liability due to current year realized investment gains and losses. Therefore, no such net negative (disallowed) IMR tables are included for the current year.

(1) Net negative (disallowed) IMR
Year Total General Account Insulated Separate Account Non-Insulated Separate Account
2023 $ 18,992  $ 17,477  $ 1,515  $ — 

(2) Negative (disallowed) IMR admitted
Year Total General Account Insulated Separate Account Non-Insulated Separate Account
2023 $ 18,992  $ 17,477  $ 1,515  $ — 

(3) Calculated adjusted capital and surplus
Total
2023
a. Prior Period General Account Capital & Surplus From Prior Period SAP Financials
 $ 3,990,391 
b. Net Positive Goodwill (admitted) 346,745 
c. EDP Equipment & Operating System Software (admitted) — 
d. Net DTAs (admitted) 113,315 
e. Net Negative (disallowed) IMR (admitted) 12,986 
f. Adjusted Capital & Surplus (a-(b+c+d+e)) $ 3,517,345 

(4) Percentage of adjusted capital and surplus
Total
2023
Percentage of Total Net Negative (disallowed) IMR admitted in General Account or recognized in Separate Account to adjusted capital and surplus 0.5%

(5) Allocated gains/losses to IMR from derivatives - None


36

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
5. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities carried at fair value and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:
Fair Value Measurements at Reporting Date
December 31, 2024
Net Asset Value Total
Assets: (Level 1) (Level 2) (Level 3) (NAV) (All Levels)
Bonds
Industrial and miscellaneous $ —  $ 23,934  $ —  $ —  $ 23,934 
Hybrid securities —  12,940  —  —  12,940 
Common stock
Mutual funds 30  —  —  —  30 
Other invested assets
Limited partnerships —  —  —  912,415  912,415 
Residual tranche —  27,858  —  —  27,858 
Industrial and miscellaneous 2,964  24,581  27,545 
Derivatives
Interest rate swaps —  1,897  —  —  1,897 
Cross-currency swaps —  91,172  —  —  91,172 
Foreign currency forwards —  4,391  —  —  4,391 
Separate account assets (1)
 11,801,007  8,848,967  —  840,587  21,490,561 
Total assets at fair value/NAV $ 11,801,037  $ 9,014,123  $ —  $ 1,777,583  $ 22,592,743 
Liabilities:
Derivatives
Interest rate swaps $ —  $ 1,216  $ —  $ —  $ 1,216 
Separate account liabilities (1)
 6  825,486  —  —  825,492 
Total liabilities at fair value $ 6  $ 826,702  $ —  $ —  $ 826,708 


37

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Fair Value Measurements at Reporting Date
December 31, 2023
Net Asset Value Total
Assets: (Level 1) (Level 2) (Level 3) (NAV) (All Levels)
Bonds
Industrial and miscellaneous $ —  $ 2,348  $ —  $ —  $ 2,348 
Hybrid securities —  11,906  —  —  11,906 
Preferred stock
Redeemable preferred stock —  500  —  —  500 
Common stock
Mutual funds 26  —  —  —  26 
Other invested assets
Limited partnerships —  —  —  719,547  719,547 
Residual tranche —  40,829  —  —  40,829 
Derivatives
Interest rate swaps —  2,309  —  —  2,309 
Cross-currency swaps —  81,385  —  —  81,385 
Separate account assets (1)
 11,474,482  9,628,887  —  825,699  21,929,068 
Total assets at fair value/NAV $ 11,474,508  $ 9,768,164  $ —  $ 1,545,246  $ 22,787,918 
Liabilities:
Derivatives
Interest rate swaps $ —  $ 1,974  $ —  $ —  $ 1,974 
Foreign currency forwards —  2,336  —  —  2,336 
Separate account liabilities (1)
 47,658  950,338  —  —  997,996 
Total liabilities at fair value $ 47,658  $ 954,648  $ —  $ —  $ 1,002,306 
(1) Include only separate account investments which are carried at the fair value of the underlying invested assets or liabilities owned by the separate accounts.


38

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The following tables summarize the fair value hierarchy for all financial instruments and invested assets:
Fair Value Measurements at Reporting Date
December 31, 2024
Assets: Aggregate fair value Admitted assets and liabilities (Level 1) (Level 2) (Level 3) Net Asset Value (NAV) Total (All Levels)
Bonds $ 22,586,037  $ 24,973,698  $ —  $ 22,585,870  $ 167  $ —  $ 22,586,037 
Preferred stock 49,976  52,248  —  49,976  —  —  49,976 
Common stock (1)
 609  609  30  579  —  —  609 
Mortgage loans 5,038,010  5,387,154  —  5,038,010  —  —  5,038,010 
Real estate 240,405  52,363  —  —  240,405  —  240,405 
Cash, cash equivalents and
     short-term investments		 1,150,879  1,150,880  1,135,380  15,499  —  —  1,150,879 
Contract loans 3,536,463  3,536,463  —  —  3,536,463  —  3,536,463 
Other long-term invested assets 1,001,311  1,009,701  —  64,315  —  936,996  1,001,311 
Securities lending reinvested collateral assets 134,685  134,685  —  134,685  —  —  134,685 
Collateral under derivative
     counterparty collateral
     agreements		 379,601  379,601  379,601  —  —  —  379,601 
Receivable for securities 19,919  14,085  —  19,919  —  —  19,919 
Derivative instruments 377,892  330,062  —  377,892  —  —  377,892 
Separate account assets 22,505,227  22,594,303  11,928,030  9,736,610  —  840,587  22,505,227 
Total assets $ 57,021,014  $ 59,615,852  $ 13,443,041  $ 38,023,355  $ 3,777,035  $ 1,777,583  $ 57,021,014 
Liabilities:
Deposit-type contracts $ 8,909,882  $ 10,245,580  $ —  $ 8,909,882  $ —  $ —  $ 8,909,882 
Commercial paper 99,717  99,717  —  99,717  —  —  99,717 
Payable under securities lending agreements 134,685  134,685  —  134,685  —  —  134,685 
Collateral under derivative
     counterparty collateral
     agreements		 379,570  379,570  379,570  —  —  —  379,570 
Payable for securities 10,133  10,133  —  10,133  —  —  10,133 
Derivative instruments 3,009  3,725  —  3,009  —  —  3,009 
Separate account liabilities 825,492  825,492  6  825,486  —  —  825,492 
Total liabilities: $ 10,362,488  $ 11,698,902  $ 379,576  $ 9,982,912  $ —  $ —  $ 10,362,488 

39

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Fair Value Measurements at Reporting Date
December 31, 2023
Assets: Aggregate fair value Admitted assets and liabilities (Level 1) (Level 2) (Level 3) Net Asset Value (NAV) Total
(All Levels)
Bonds $ 24,064,161  $ 26,591,735  $ —  $ 24,063,603  $ 558  $ —  $ 24,064,161 
Preferred Stock 76,751  82,263  —  76,751  —  —  76,751 
Common Stock (1)
 577  577  26  551  —  —  577 
Mortgage loans 5,420,327  5,840,441  —  5,420,327  —  —  5,420,327 
Real estate 240,405  49,381  —  —  240,405  —  240,405 
Cash, cash equivalents and
     short-term investments		 1,648,896  1,648,651  1,013,992  634,904  —  —  1,648,896 
Contract loans 3,711,737  3,711,737  —  —  3,711,737  —  3,711,737 
Other long-term invested
     assets		 799,197  807,798  —  79,650  —  719,547  799,197 
Securities lending reinvested collateral assets 317,362  317,362  —  317,362  —  —  317,362 
Collateral under derivative
     counterparty collateral
     agreements		 185,543  185,543  185,543  —  —  —  185,543 
Receivable for securities 47,064  38,683  —  47,064  —  —  47,064 
Derivative instruments 304,119  248,542  5  304,114  —  —  304,119 
Separate account assets 23,068,195  23,147,893  11,510,611  10,731,885  —  825,699  23,068,195 
Total assets $ 59,884,334  $ 62,670,606  $ 12,710,177  $ 41,676,211  $ 3,952,700  $ 1,545,246  $ 59,884,334 
Liabilities:
Deposit-type contracts $ 8,310,113  $ 9,585,838  $ —  $ 8,310,113  $ —  $ —  $ 8,310,113 
Commercial paper 99,718  99,718  —  99,718  —  —  99,718 
Payable under securities
     lending agreements		 317,362  317,362  —  317,362  —  —  317,362 
Collateral under derivative
     counterparty collateral
     agreements		 185,526  185,526  185,526  —  —  —  185,526 
Payable for securities 21,771  21,771  —  21,771  —  —  21,771 
Derivative instruments 14,908  19,053  —  14,908  —  —  14,908 
Separate account liabilities 997,996  997,996  47,658  950,338  —  —  997,996 
Total liabilities $ 9,947,394  $ 11,227,264  $ 233,184  $ 9,714,210  $ —  $ —  $ 9,947,394 
(1) Per NAIC guidelines, investments accounted for under the equity method are excluded.

Bonds, preferred and common stock

The fair values for bonds, preferred and common stock are generally based upon evaluated prices from independent pricing services. In cases where these prices are not readily available, fair values are estimated by the Company. To determine estimated fair value for these instruments, the Company generally utilizes discounted cash flow models with market observable pricing inputs such as spreads, average life, and credit quality. Fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty.

Mortgage loans

Mortgage loan fair value estimates are generally based on discounted cash flows. A discount rate matrix is used where the discount rate valuing a specific mortgage generally corresponds to that mortgage’s remaining term and credit quality. Management believes the discount rate used is comparable to the credit, interest rate, term, servicing costs, and risks of loans similar to the portfolio loans that the Company would make today given its internal pricing strategy.

40

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Real estate

The estimated fair value for real estate is based on the unadjusted appraised value which includes factors such as comparable property sales, property income analysis, and capitalization rates.

Cash, cash equivalents, short-term investments, collateral receivable and payable under securities lending agreements, receivable and payable for securities, and commercial paper

The amortized cost of cash, cash equivalents, short-term investments, collateral receivable and payable under securities lending agreements, receivable and payable for securities, and commercial paper is a reasonable estimate of fair value due to their short-term nature and the high credit quality of the issuers, counterparties and obligor. Cash equivalent investments also include money market funds that are valued using unadjusted quoted prices in active markets.

Contract loans

Contract loans are funds provided to contract holders in return for a claim on the contract. The funds provided are limited to the cash surrender value of the underlying contract. The nature of contract loans is to have a negligible default risk as the loans are fully collateralized by the value of the contract. Contract loans do not have a stated maturity and the balances and accrued interest are repaid either by the contract holder or with proceeds from the contract.

Other long-term invested assets

The fair values of other long-term invested assets are based on the specific asset type. Other invested assets that are held as bonds, such as surplus notes, are primarily valued the same as bonds. The fair values for residual tranches are generally based upon evaluated prices from independent pricing services.

Limited partnership interests represent the Company’s minority ownership interests in pooled investment funds. These funds employ varying investment strategies that primarily make private equity investments across diverse industries and geographical focuses. The net asset value, determined using the partnership financial statement reported capital account adjusted for other relevant information, which may impact the exit value of the investments, is used as a practical expedient to estimate fair value. Distributions by these investments are generated from investment gains, from operating income generated by the underlying investments of the funds and from liquidation of the underlying assets of the funds, of which the timing is unknown. In the absence of permitted sales of its ownership interest, the Company will be redeemed out of the partnership interests through distributions.

Collateral under derivative counterparty collateral agreements

Included in other assets is cash collateral received from or pledged to counterparties and included in other liabilities is the obligation to return the cash collateral to the counterparties. The carrying value of the collateral is a reasonable estimate of fair value.

Derivative instruments

The estimated fair values of OTC derivatives, primarily consisting of cross-currency swaps, foreign currency forwards, interest rate swaps, interest rate swaptions, U.S. government treasury futures contracts, Eurodollar futures contracts, futures on equity indices, and interest rate swap futures are the estimated amount the Company would receive or pay to terminate the agreements at the end of each reporting period, taking into consideration current interest rates and other relevant factors.
Separate account assets and liabilities

Separate account assets and liabilities primarily include investments in mutual funds, unregistered funds, most of which are not subject to redemption restrictions, bonds, and short-term securities.  Mutual funds and unregistered funds are recorded at net asset value, which approximates fair value, on a daily basis. The bond and short-term investments are valued in the same manner, and using the same pricing sources and inputs as the bond and short-term investments of the Company.
41

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Deposit-type contracts

Fair values for liabilities under deposit-type insurance contracts are estimated using discounted liability calculations, adjusted to approximate the effect of current market interest rates for the assets supporting the liabilities.

6. Non-Admitted Assets

The following table summarizes the Company’s non-admitted assets:
December 31, 2024 December 31, 2023
Asset Non-admitted asset Admitted asset Asset Non-admitted asset Admitted asset
Other invested assets $ 3,244,310  $ 442,518  $ 2,801,792  $ 1,700,076  $ 461,232  $ 1,238,844 
Preferred and common stock
 1,986,003  49,590  1,936,413  1,848,986  182,167  1,666,819 
Deferred income taxes 343,058  230,991  112,067  425,592  273,412  152,180 
Due from parent, subsidiaries and affiliate 776,490  75,569  700,921  497,032  73,242  423,790 
Other assets 835,070  23,064  812,006  790,840  28,474  762,366 
Reinsurance recoverable 384,389  —  384,389  350,732  79  350,653 
Cash, cash equivalents and short-term investments 1,150,880  —  1,150,880  1,648,652  1  1,648,651 

The following table summarizes the Company’s aggregate Statement of Admitted Assets, Liabilities, Capital and Surplus values of all subsidiary, controlled and affiliated entities ("SCA"), except insurance SCA entities as follows:
December 31, 2024 December 31, 2023
Asset Non-admitted asset Admitted asset Asset Non-admitted asset Admitted asset
Preferred and common stock
 $ 15,671  $ —  $ 15,671  $ 14,114  $ —  $ 14,114 
Other invested assets 1,890,429  442,518  1,447,911  605,055  461,232  143,823 

7. Business Combination and Goodwill

Goodwill that arises as a result of the acquisition of subsidiary limited liability companies is included in other invested assets in the accompanying Statutory Statement of Admitted Assets, Liabilities and Capital.

On September 23, 2024, the Company completed the acquisition of all the Company Units in Plan Management, LLC, and subsequently renamed the entity to Empower Stock Plan Services, LLC (“ESPS”). This transaction was accounted for as a statutory acquisition. Non-admitted goodwill of $63.3 million was recorded which will be amortized over ten years. Goodwill amortization of $1.6 million was recorded for the year ended December 31, 2024.

On April 1, 2022, the Company completed the acquisition of all of the voting equity interests in Empower Annuity Insurance Company, as part of the acquisition of Prudential's full service retirement business. This transaction was accounted for as a statutory acquisition. Goodwill of $645.9 million was recorded in other invested assets, which is being amortized over ten years. At December 31, 2024 and 2023, the Company has $418.7 million and $351.7 million, respectively, of admitted goodwill related to this acquisition. Goodwill amortization of $64.6 million, $64.6 million, and $48.4 million respectively, was recorded for the years ended December 31, 2024, 2023, and 2022.

On August 17, 2020, the Company completed the acquisition of all of the voting equity interests in EPW, an industry-leading registered investment adviser and digital wealth manager. This transaction was accounted for as a statutory acquisition. Goodwill of $819.4 million was recorded in other invested assets, which is being amortized over 10 years. On April 1, 2023, Personal Capital Advisors Corporation, a subsidiary of EPW, merged with Empower Advisory Group, another wholly-owned subsidiary of the Company. In conjunction with that merger, the Company reduced goodwill by $101.6 million through a charge to surplus. At December 31, 2024 and 2023, the Company has $0.0 million and $0.0 million, respectively, of admitted
42

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
goodwill related to this acquisition. Goodwill amortization of $67.5 million, $71.1 million and $81.9 million, respectively, was recorded for the years ended December 31, 2024, 2023, and 2022.

On August 29, 2014, the Company completed the acquisition of all of the voting equity interests in the Empower Plan Services, large-market recordkeeping business. This transaction was accounted for as a statutory purchase. Goodwill of $51.1 million was recorded in other invested assets, which is being amortized over 10 years. At December 31, 2024 and 2023, the Company has $0.0 million and $0.0 million, respectively, of admitted goodwill related to this acquisition. Goodwill amortization of $3.4 million, $5.1 million and $5.1 million, respectively, was recorded for the years ended December 31, 2024, 2023, and 2022.
Acquired entity
 Acquisition date Cost of acquired entity Original amount of admitted goodwill
Admitted goodwill as of December 31, 2024
Amount of goodwill amortized for the year ended December 31, 2024
 Admitted goodwill as a % of SCA book/adjusted carrying value, gross of admitted goodwill
Empower Plan Services August 29, 2014 $ 64,169  $ 51,098  $ —  $ 3,407  —  %
Empower Personal Wealth August 17, 2020 854,190  819,403  —  67,487  —  %
Empower Annuity Insurance Company April 1, 2022 1,930,036  645,941  418,717  64,594  29  %
Plan Management, LLC September 23, 2024 63,180  63,265  —  1,582  —  %

8. Reinsurance

In the normal course of its business, the Company seeks to limit its exposure to loss on any single insured and to recover a portion of benefits paid by ceding risks to other insurance enterprises under excess coverage and coinsurance contracts.

Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies.

The Company did not have any write-offs for uncollectible reinsurance receivables during the years ended December 31, 2024, 2023 and 2022 for losses incurred, loss adjustment expenses incurred or premiums earned.

The Company does not have any uncollectible reinsurance, commutation of ceded reinsurance, or certified reinsurer downgraded of status subject to revocation.

43

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
On April 1, 2022 the Company completed the acquisition, via indemnity reinsurance, of the retirement services business of PICA. The PICA transaction impacted the following financial statement lines, excluding the non-admitted deferred tax asset:

April 1,
Statutory Statements of Admitted Assets, Liabilities, Capital and Surplus 2022
(In millions)
Admitted assets:
Cash and invested assets:
Bonds $ 4,158 
Mortgage loans 1,150 
Cash, cash equivalents, and short-term investments 60 
Total cash and invested assets 5,368 
Investment income due and accrued 32 
Reinsurance receivables 45 
Other assets 7 
Total admitted assets $ 5,452 
Liabilities, capital and surplus:
Liabilities:
Aggregate reserves for life policies and contracts $ 5,762 
Interest maintenance reserve (103)
Other liabilities (18)
Total liabilities 5,641 
Capital and surplus:
Unassigned deficit (189)
Total capital and surplus (189)
Total liabilities, capital and surplus $ 5,452 
Statutory Statements of Operations
Income:
Premium income and annuity consideration $ 5,694 
Total income 5,694 
Expenses:
Increase in aggregate reserves for life and accident and health policies and contracts 5,762 
Commissions and expense allowances on reinsurance assumed 224 
Interest maintenance reserve reinsurance activity (103)
Total benefit and expenses 5,883 
Net loss from operations before federal income taxes $ (189)

In March 2022, the Company received $810.0 million of capital contributions from EHL to finance the Prudential transaction. In consideration for the capital contribution, the Company issued $2.6 million of common stock, and recorded the remainder as gross paid in and contributed surplus, as discussed in Note 12.

The Company and an affiliate have engaged in a modified coinsurance (“ModCo”) reinsurance agreement since 2018. The affiliate, Canada Life International Reinsurance Corporation Limited ("CLIRC"), novated the contract to Canada Life International Reinsurance (Barbados) Corporation (“CLIRBC”) and upon transfer, on December 31, 2020, increased the ceding percentage for this block of group annuity insurance policies from 40% to 90%. The Company and CLIRBC amended this agreement on December 31, 2022, which increased the ceding percentage for this block of group annuity insurance policies from 90% to 100%, increased the expense allowance rate, and increased the risk charge rate. The Company has ceded ModCo
44

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
reserves of $10.8 billion and $11.1 billion as of December 31, 2024 and 2023, respectively. The reinsurance agreement is unlimited in duration. However, the Company may recapture the ceded reinsurance policies at any time by sending notice to the reinsurer at least 90 days prior to the intended termination date.

The Company and an affiliate have engaged in a ModCo reinsurance agreement since 2011. The affiliate, CLIRC, novated the contract to CLIRBC on December 31, 2020. Per the terms of the agreement, the Company cedes 90% of its closed in-force block of participating life insurance policies. The Company had ceded modified coinsurance reserves of $5.9 billion as of December 31, 2021. On July 1, 2022, the Company terminated its reinsurance agreement with CLIRBC. As a result of that termination, the Company recaptured $5.9 billion of ceded premium income and annuity consideration and reserve adjustment on reinsurance ceded.

The Company and Hannover have engaged in a coinsurance with funds withheld and yearly renewable term transactions on December 31, 2022 in which the Company cedes a portion of its closed in-force block of participating whole life insurance policies and established a funds withheld payable to Hannover. The Company received a ceding commission, will receive expense allowances and is eligible for experience refunds, and will pay risk charges over time. The Company has ceded reserves of $2.9 billion and $2.9 billion as of December 31, 2024 and 2023, respectively. The reinsurance agreement has an automatic experience refund termination date of January 1, 2035. The Company may recapture the ceded reinsurance policies at any time prior to the experience refund termination date, subject to certain fees payable to Hannover. The ceding commission is accounted for in the 'Commissions and expense allowances on reinsurance ceded' within the Statement of Operations.

9. Aggregate Reserves

Aggregate reserves are computed in accordance with the Commissioner’s Annuity Reserve Valuation Method (“CARVM”) and the Commissioner’s Reserve Valuation Method (“CRVM”), the standard statutory reserving methodologies.

The significant assumptions used to determine the liability for future insurance benefits are as follows:
Interest -Life Insurance 2.50% to 6.00%
-Annuity Funds 1.00% to 11.25%
-Disability 3.00% to 6.00%
Mortality -Life Insurance Various valuation tables, primarily including 1941, 1958, 1980, 2001, and 2017 Commissioners Standard Ordinary ("CSO") tables, and American Experience
-Annuity Funds Various annuity valuation tables, primarily including 71 and 83a Individual Annuitant Mortality (“IAM”); 1994 Group Annuity Reserve (“GAR”), 71 and 83 Group Annuity Mortality (“GAM”); Annuity 2000 and 2012 Individual Annuity Reserve (“IAR”) tables
Morbidity -Disability 1970 Intercompany DISA Group Disability Tables

The Company waives deduction of deferred fractional premiums upon the death of the insured. When surrender values exceed aggregate reserves, excess cash value reserves are held.

Policies issued at premium corresponding to ages higher than the true ages are valued at the rated-up ages. Policies providing for payment at death during certain periods of an amount less than the full amount of insurance, being policies subject to liens, are valued as if the full amount is payable without any deduction.

For policies issued with, or subsequently subject to, an extra premium payable annually, an extra reserve is held. The extra premium reserve is the unearned gross extra premium payable during the year if the policies are rated for reasons other than medical impairments. For medical impairments, the extra premium reserve is calculated as the excess of the reserve based on rated mortality over that based on standard mortality. All substandard annuities are valued at their true ages.

At December 31, 2024 and 2023, the Company had $3.4 billion and $3.5 billion, respectively of insurance in force for which the gross premiums are less than the net premiums according to the standard valuation set by the Division.

Tabular interest, tabular interest on funds not involving life contingencies and tabular cost have been determined from the basic data for the calculation of aggregate reserves. Tabular less actual reserves released has been determined from basic data for the calculation of aggregate reserves and the actual reserves released.
45

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The withdrawal characteristics of annuity reserves and deposit liabilities are as follows:

1. Individual Annuities
December 31, 2024
General Account Separate Account with Guarantees Separate Account Non-Guaranteed Total Percent of Total Gross
Subject to discretionary withdrawal:
With market value adjustment $ —  $ —  $ —  $ —  —  %
At book value less current surrender charges of 5% or more —  —  —  —  —  %
At fair value —  98,431  3,146,950  3,245,381  98.7  %
Total with adjustment or at market value —  98,431  3,146,950  3,245,381  98.7  %
At book value without adjustment (minimal or no charge adjustment) 26,211  —  —  26,211  0.8  %
Not subject to discretionary withdrawal 16,365  —  —  16,365  0.5  %
Total gross 42,576  98,431  3,146,950  3,287,957  100.0  %
Reinsurance ceded 42,096  —  —  42,096 
Total, net $ 480  $ 98,431  $ 3,146,950  $ 3,245,861 

December 31, 2023
General Account Separate Account with Guarantees Separate Account Non-Guaranteed Total Percent of Total Gross
Subject to discretionary withdrawal:
With market value adjustment $ —  $ —  $ —  $ —  —  %
At book value less current surrender charges of 5% or more —  —  —  —  —  %
At fair value —  131,751  3,221,331  3,353,082  98.6  %
Total with adjustment or at market value —  131,751  3,221,331  3,353,082  98.6  %
At book value without adjustment (minimal or no charge adjustment) 29,108  —  —  29,108  0.9  %
Not subject to discretionary withdrawal 18,697  —  —  18,697  0.5  %
Total gross 47,805  131,751  3,221,331  3,400,887  100.0  %
Reinsurance ceded 47,379  —  —  47,379 
Total, net $ 426  $ 131,751  $ 3,221,331  $ 3,353,508 

46

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
2. Group Annuities
December 31, 2024
General Account Separate Account with Guarantees Separate Account Non-Guaranteed Total Percent of Total Gross
Subject to discretionary withdrawal:
With market value adjustment $ 22,609,886  $ —  $ —  $ 22,609,886  63.1  %
At book value less current surrender charges of 5% or more —  —  —  —  —  %
At fair value —  5,824,587  5,045,715  10,870,302  30.3  %
Total with adjustment or at market value 22,609,886  5,824,587  5,045,715  33,480,188  93.4  %
At book value without adjustment (minimal or no charge adjustment) 1,868,928  —  —  1,868,928  5.2  %
Not subject to discretionary withdrawal 501,380  —  —  501,380  1.4  %
Total gross 24,980,194  5,824,587  5,045,715  35,850,496  100.0  %
Reinsurance ceded 780  —  —  780 
Total, net $ 24,979,414  $ 5,824,587  $ 5,045,715  $ 35,849,716 

December 31, 2023
General Account Separate Account with Guarantees Separate Account Non-Guaranteed Total Percent of Total Gross
Subject to discretionary withdrawal:
With market value adjustment $ 25,191,286  $ —  $ —  $ 25,191,286  64.5  %
At book value less current surrender charges of 5% or more —  —  —  —  —  %
At fair value —  6,220,950  5,243,087  11,464,037  29.3  %
Total with adjustment or at market value 25,191,286  6,220,950  5,243,087  36,655,323  93.8  %
At book value without adjustment (minimal or no charge adjustment) 1,880,373  —  —  1,880,373  4.8  %
Not subject to discretionary withdrawal 542,867  —  —  542,867  1.4  %
Total gross 27,614,526  6,220,950  5,243,087  39,078,563  100.0  %
Reinsurance ceded 1,123  —  —  1,123 
Total, net $ 27,613,403  $ 6,220,950  $ 5,243,087  $ 39,077,440 

47

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
3. Deposit-type Contracts
December 31, 2024
General Account Separate Account with Guarantees Separate Account Non-Guaranteed Total Percent of Total Gross
Subject to discretionary withdrawal:
With market value adjustment $ 10,024,608  $ —  $ —  $ 10,024,608  97.8  %
At book value less current surrender charges of 5% or more —  —  —  —  —  %
At fair value —  —  —  —  —  %
Total with adjustment or at market value 10,024,608  —  —  10,024,608  97.8  %
At book value without adjustment (minimal or no charge adjustment) 180,707  —  —  180,707  1.7  %
Not subject to discretionary withdrawal 46,708  —  —  46,708  0.5  %
Total gross 10,252,023  —  —  10,252,023  100.0  %
Reinsurance ceded 6,443  —  —  6,443 
Total, net $ 10,245,580  $ —  $ —  $ 10,245,580 

December 31, 2023
General Account Separate Account with Guarantees Separate Account Non-Guaranteed Total Percent of Total Gross
Subject to discretionary withdrawal:
With market value adjustment $ 9,375,307  $ —  $ —  $ 9,375,307  97.7  %
At book value less current surrender charges of 5% or more —  —  —  —  —  %
At fair value —  —  —  —  —  %
Total with adjustment or at market value 9,375,307  —  —  9,375,307  97.7  %
At book value without adjustment (minimal or no charge adjustment) 169,243  —  —  169,243  1.8  %
Not subject to discretionary withdrawal 48,612  —  —  48,612  0.5  %
Total gross 9,593,162  —  —  9,593,162  100.0  %
Reinsurance ceded 7,324  —  —  7,324 
Total, net $ 9,585,838  $ —  $ —  $ 9,585,838 

Annuity actuarial reserves, deposit-type contract funds and other liabilities without life or disability contingencies at December 31, were as follows:
2024 2023
General Account:
Annuities $ 24,979,346  $ 27,613,166 
Miscellaneous reserves 548  663 
Deposit-type contracts 10,245,580  9,585,838 
Subtotal 35,225,474  37,199,667 
Separate Account:
Annuities (excluding supplementary contracts) 14,115,683  14,817,119 
Total $ 49,341,157  $ 52,016,786 
48

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The withdrawal characteristics of life reserves are as follows:
December 31, 2024
General Account Separate Account - Guaranteed Separate Account - Nonguaranteed
Subject to discretionary withdrawal, surrender values, or policy loans: Account Value Cash Value Reserve Account Value Cash Value Reserve Account Value Cash Value Reserve
Universal life $ 5,873,039  $ 6,348,428  $ 6,379,168  $ 955,363  $ 955,363  $ 955,363  $ —  $ —  $ — 
Other permanent cash value life insurance —  6,200,051  6,454,335  —  —  —  —  —  — 
Variable universal life 571,611  609,241  609,308  —  —  —  6,631,796  6,631,796  6,631,796 
Not subject to discretionary withdrawal or no cash values:
Term policies with cash value N/A N/A 79,179  N/A N/A —  N/A N/A — 
Accidental death benefits N/A N/A 57  N/A N/A —  N/A N/A — 
Disability - active lives N/A N/A 317  N/A N/A —  N/A N/A — 
Disability - disabled lives N/A N/A 94,967  N/A N/A —  N/A N/A — 
Miscellaneous reserves N/A N/A 39,700  N/A N/A —  N/A N/A — 
Total, gross 6,444,650  13,157,720  13,657,031  955,363  955,363  955,363  6,631,796  6,631,796  6,631,796 
Reinsurance ceded 6,441,391  9,866,673  10,377,840  955,363  955,363  955,363  6,631,796  6,631,796  6,631,796 
Total, net of reinsurance ceded $ 3,259  $ 3,291,047  $ 3,279,191  $ —  $ —  $ —  $ —  $ —  $ — 







49

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
December 31, 2023
General Account Separate Account - Guaranteed Separate Account - Nonguaranteed
Subject to discretionary withdrawal, surrender values, or policy loans: Account Value Cash Value Reserve Account Value Cash Value Reserve Account Value Cash Value Reserve
Universal life $ 6,253,598  $ 6,687,875  $ 6,722,372  $ 1,056,016  $ 1,056,016  $ 1,056,016  $ —  $ —  $ — 
Other permanent cash value life insurance —  6,364,107  6,632,321  —  —  —  —  —  — 
Variable universal life 529,476  569,524  569,592  —  —  —  6,225,180  6,225,180  6,225,180 
Not subject to discretionary withdrawal or no cash values:
Term policies with cash value N/A N/A 85,376  N/A N/A —  N/A N/A — 
Accidental death benefits N/A N/A 58  N/A N/A —  N/A N/A — 
Disability - active lives N/A N/A 326  N/A N/A —  N/A N/A — 
Disability - disabled lives N/A N/A 99,723  N/A N/A —  N/A N/A — 
Miscellaneous reserves N/A N/A 40,269 N/A N/A —  N/A N/A — 
Total, gross 6,783,074  13,621,506  14,150,037  1,056,016  1,056,016  1,056,016  6,225,180  6,225,180  6,225,180 
Reinsurance ceded 6,782,069  10,251,661  10,793,379  1,056,016  1,056,016  1,056,016  6,225,180  6,225,180  6,225,180 
Total, net of reinsurance ceded $ 1,005  $ 3,369,845  $ 3,356,658  $ —  $ —  $ —  $ —  $ —  $ — 

50

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
Life actuarial reserves for the General Account at December 31, were as follows:
2024 2023
Life insurance $ 3,267,602  $ 3,345,069 
Accidental death benefits —  — 
Active lives —  — 
Disability - disabled lives —  — 
Miscellaneous reserves 11,589  11,589 
Total $ 3,279,191  $ 3,356,658 

10. Commercial Paper

The Company has a commercial paper program that is partially supported by a $50.0 million credit facility agreement. The commercial paper has been given a rating of A-1+ by Standard & Poor’s Ratings Services and a rating of P-1 by Moody’s Investors Service, each being the highest rating available. The Company's issuance of commercial paper is not used to fund daily operations and does not have a significant impact on the Company's liquidity.

The following table provides information regarding the Company’s commercial paper program:
December 31,
2024 2023
Face value $ 100,000  $ 100,000 
Carrying value $ 99,717  $ 99,718 
Interest expense paid $ 5,345  $ 4,844 
Effective interest rate 4.80% 5.57%
Maturity range (days) 22 19

11. Separate Accounts

The Company utilizes separate accounts to record and account for assets and liabilities for particular lines of business and/or transactions. The Company reported assets and liabilities from the following product lines into a separate account:

•Individual Annuity Product
•Group Annuity Product
•Variable Life Insurance Product
•Hybrid Ordinary Life Insurance Product
•Individual Indexed-Linked Annuity Product

In accordance with the domiciliary state procedures for approving items within the separate account, the separate account classification of the following items are supported by Colorado Insurance Code Section 10-7-402:

•Individual Annuity
•Group Annuity
•Variable Life Insurance Product

The following items are supported by direct approval by the Commissioner:

•Hybrid Ordinary Life Insurance Product
•Group Annuity - Custom Stable Value Asset Funds
•Variable Life Insurance Product
•Individual Indexed-Linked Annuity Product

The Company’s separate accounts invest in shares of Empower Funds, LLC, open-end management investment companies which are affiliates of the Company, and shares of other non-affiliated mutual funds and government and corporate bonds.
51

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)

Some assets within each of the Company’s separate accounts are considered legally insulated whereas others are not legally insulated from the general account. The legal insulation of the separate accounts prevents such assets from being generally available to satisfy claims resulting from the general account.

At December 31, 2024 and 2023, the Company’s separate account assets that are legally insulated from the general account claims are $22.5 billion and $23.1 billion.

Some separate account liabilities are guaranteed by the general account. In accordance with the guarantees provided, if the investment proceeds are insufficient to cover the rate of return guaranteed for the product, the policyholder proceeds will be remitted by the general account. To compensate the general account for the risk taken, the separate account has paid risk charges of $14.5 million, $16.6 million, $10.8 million, $10.7 million, and $11.3 million for the years ended December 31, 2024, 2023, 2022, 2021 and 2020, respectively. No separate account guarantees were paid by the general account for the years ending December 31, 2024, 2023, 2022, 2021 and 2020, respectively.

Separate accounts with guarantees

The Government Guaranteed Funds are separate accounts investing in fixed income securities backed by the credit of the U.S. Government, its agencies or its instrumentalities.

The Stable Asset Funds invest in investment-grade corporate bonds in addition to the above mentioned securities.

The Company also has separate accounts comprised of assets underlying variable universal life policies issued privately to accredited investors. The accounts invest in investment grade fixed income securities.

The Individual Indexed-Linked Annuity Product provides returns based on the performance of one or more indices and invests in fixed income securities. The returns from these securities are invested in derivative instruments which mimic the returns of select indices. There is also a return of premium death benefit guarantee to policyholders.

The Government Guaranteed Funds and Stable Asset Funds have a guaranteed minimum crediting rate of at least 0%. All of the above separate accounts provide a book value guarantee. Some of them also provide a death benefit of the greater of account balance or premium paid.

Distributions to a participant are based on the participant’s account balance and are permitted for the purpose of paying a benefit to a participant. Distributions for purposes other than paying a benefit to a participant may be restricted. Participants’ distributions are based on the amount of their account balance, whereas, distributions as a result of termination of the group annuity contract are based on net assets attributable to the contract and can be made to the group through (1) transfer of the underlying securities and any remaining cash balance, or (2) transfer of the cash balance after sale of the Fund’s securities.

Most guaranteed separate account assets and related liabilities are carried at fair value. Certain separate account assets are carried at book value based on the prescribed deviation from the Division.

Non-guaranteed separate accounts

The non-guaranteed separate accounts include unit investment trusts or series accounts that invest in diversified open-end management investment companies. These separate account assets and related liabilities are carried at fair value.

The investments in shares are valued at the closing net asset value as determined by the appropriate fund/portfolio at the end of each day. The net investment experience of the separate account is credited directly to the policyholder and can be positive or negative. Some of the separate accounts provide an incidental death benefit of the greater of the policyholder's account balance or premium paid and some provide an incidental annual withdrawal benefit for the life of the policyholder. Certain contracts contain provisions relating to a contingent deferred sales charge. In such contracts, charges will be made for total or partial surrender of a participant annuity account in excess of the “free amount” before the retirement date by a deduction from a participant’s account. The “free amount” is an amount equal to 10% of the participant account value at December 31 of the calendar year prior to the partial or total surrender.

52

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The following tables provide information regarding the Company's separate accounts:
Year Ended December 31, 2024
Non-indexed guaranteed less than/equal to 4% Non-guaranteed separate account Total
Premiums, considerations or deposits $ 262,746  $ 473,917  $ 736,663 
Reserves
For accounts with assets at:
Fair value 6,065,526  14,586,013  20,651,539 
Amortized cost 1,053,794  —  1,053,794 
Total reserves 7,119,320  14,586,013  21,705,333 
By withdrawal characteristics:
At fair value 6,065,526  14,586,013  20,651,539 
At book value without fair value adjustment and with current surrender charge less than 5% 1,053,794  —  1,053,794 
Total subject to discretionary withdrawals $ 7,119,320  $ 14,586,013  $ 21,705,333 

Year Ended December 31, 2023
Non-indexed guaranteed less than/equal to 4% Non-guaranteed separate account Total
Premiums, considerations or deposits $ 297,069  $ 505,552  $ 802,621 
Reserves
For accounts with assets at:
Fair value 6,469,505  14,445,834  20,915,339 
Amortized cost 1,185,200  —  1,185,200 
Total reserves 7,654,705  14,445,834  22,100,539 
By withdrawal characteristics:
At fair value 6,469,505  14,445,834  20,915,339 
At book value without fair value adjustment and with current surrender charge less than 5% 1,185,200  —  1,185,200 
Total subject to discretionary withdrawals $ 7,654,705  $ 14,445,834  $ 22,100,539 

53

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
A reconciliation of the amounts transferred to and from the separate accounts is presented below:
Year Ended December 31,
2024 2023 2022
Transfers as reported in the Summary of Operations of the separate account statement:
      Transfers to separate accounts $ 736,663  $ 802,621  $ 927,886 
      Transfers from separate accounts (2,737,160) (2,874,149) (2,367,236)
Net transfers from separate accounts (2,000,497) (2,071,528) (1,439,350)
Reconciling adjustments:
      Net transfer of reserves to separate accounts 377,471  524,666  308,625 
      Miscellaneous other 7,725  6,264  4,017 
      CARVM allowance reinsured (5,327) (16,418) (22,149)
      Reinsurance (4,772,955) (4,608,654) (4,442,341)
Net transfers as reported in the Statements of Operations $ (6,393,583) $ (6,165,670) $ (5,591,198)

12. Capital and Surplus, Dividend Restrictions, and Other Matters

The payment of principal and interest under all surplus notes can be made only with prior written approval of the Commissioner of Insurance of the State of Colorado. Such payments are payable only out of surplus funds of the Company and only if at the time of such payment, and after giving effect to the making thereof, the financial condition of the Company is such that its surplus would not fall below two and one-half times the authorized control level as required by the most recent risk-based capital calculations.

On December 29, 2017, the Company issued a surplus note in the face amount and carrying amount of $12 million to EHL. The proceeds were used for general corporate purposes. The surplus note bears an interest rate of 3.5% per annum. The note matures on December 29, 2027. Interest paid on the note during 2024, 2023 and 2022 amounted to $0.4 million, $0.4 million and $0.4 million, respectively, bringing total interest paid from inception to December 31, 2024 to $2.9 million. The amount of unapproved principal and interest was $0 at December 31, 2024.

On May 17, 2018, the Company issued a surplus note in the face amount and carrying amount of $346.2 million to EHL. The proceeds were used to redeem the $333.4 million surplus note issued in 2006 and for general corporate purposes. The surplus note bears an interest rate of 4.881% per annum. The note matures on May 17, 2048. Interest paid on the note during 2024, 2023, and 2022 amounted to $16.9 million, $16.9 million and $16.9 million, respectively, bringing total interest paid from inception to December 31, 2024 to $111.9 million. The amount of unapproved principal and interest was $0 at December 31, 2024.

In the first quarter of 2018, the Company realized a $39.9 million after tax gain on an interest rate swap that hedged the existing $333.4 million surplus note. The Company adjusted the basis of the hedged item, in this case the surplus note, for the amount of the after tax gain. Further, the Company accounted for the redemption of the $333.4 million surplus note and the issuance of the $346.2 million surplus note in the second quarter as debt modification instead of debt extinguishment. Therefore, the after tax swap gain will be amortized into income over the 30 year life of the new surplus note. Amortization of the gain during 2024, 2023, and 2022 amounted to $1.3 million, $1.3 million and $1.3 million, respectively bringing the total amortization from inception to December 31, 2024 to $9.0 million, leaving an unamortized balance of $30.9 million in surplus as part of the surplus note amounts.

On August 12, 2020, the Company issued a surplus note in the face amount and carrying amount of $527.5 million to EHL. The proceeds were used to finance the EPW transaction. The surplus note bears an interest rate of 1.260% per annum. The note matures on August 12, 2025. Interest paid on the note during 2024, 2023, and 2022 amounted to $6.6 million, $6.6 million and $6.6 million, respectively, bringing total interest paid from inception to December 31, 2024 to $26.6 million. The amount of unapproved principal and interest was $0 at December 31, 2024.

54

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
On August 26, 2021, the Company issued a surplus note in the face amount and carrying amount of $1.2 billion to EHL. The proceeds were used to partially fund the acquisition of certain businesses from Prudential. The note matures on December 31, 2051. The surplus note bears an interest rate of 4.2% per annum until December 31, 2026. Starting on December 31, 2026 and on every fifth anniversary of such date thereafter, the interest rate on the note is reset to the rate equal to the five-year U.S. Treasury Rate plus 3.4%. Interest paid on the note during 2024, 2023, and 2022 amounted to $50.1 million, $50.1 million and $50.1 million, respectively, bringing total interest paid at December 31, 2024 to $167.8 million. The amount of unapproved principal and interest was $0 at December 31, 2024.

The Company issued 2,591,253 additional common shares and received $810.0 million from EHL in March 2022 to fund the Prudential acquisition.

The Company issued 145,780 additional common shares and received $45.0 million from EHL in December 2023.

On January 2, 2024, Empower Services Holdings, LLC, a direct wholly-owned subsidiary of the Company, merged with Putnam Acquisition Financing Inc. ("PAFI"), a direct wholly-owned subsidiary of EHL, with PAFI surviving. All of the outstanding common shares and additional capital of PAFI, valued at $1.8 billion, were then contributed to the Company in exchange for 3,049,317 common shares.

As an insurance company domiciled in the State of Colorado, the Company is required to maintain a minimum of $2.0 million of capital and surplus. In addition, the maximum amount of dividends which can be paid to stockholders by insurance companies domiciled in the State of Colorado, without prior approval of the Insurance Commissioner, is subject to restrictions relating to statutory capital and surplus and statutory net gain from operations. Dividends are paid as determined by the Board of Directors, subject to certain statutory restrictions noted above. In addition, the Company may be required to provide notice to, or obtain approval from, the Company’s domiciliary regulator in connection with each dividend declared by the Board of Directors, depending on whether such dividend is deemed an “ordinary” or “extraordinary” dividend under applicable statutes and regulations. The determination of whether a given dividend is “ordinary” or “extraordinary” is based on a rolling twelve month look-back at prior dividends paid by the Company and is therefore subject to change throughout the year. Dividends are non-cumulative. During the years ended December 31, 2024, 2023, and 2022 the Company paid dividend to EHL totaling $900.0 million, $350.0 million, and $231.0 million, respectively.

The portion of unassigned deficit represented by each of the following items is:
December 31,
2024 2023
Unrealized losses $ (1,577,615) $ (1,031,703)
Non-admitted assets (821,732) (1,018,607)
Surplus as regards reinsurance 302,664  404,458 
Asset valuation reserve (305,795) (299,764)

Risk-based capital ("RBC") is a regulatory tool for measuring the minimum amount of capital appropriate for a life, accident and health organization to support its overall business operations in consideration of its size and risk profile. The Division requires the Company to maintain minimum capital and surplus equal to the company action level as calculated in the RBC model. The Company exceeds the required amount.

55

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
13. Federal Income Taxes
    
The following table presents the components of the net admitted deferred tax asset:
December 31, 2024 December 31, 2023 Change
Ordinary Capital Total Ordinary Capital Total Ordinary Capital Total
Gross deferred tax assets $ 398,383  $ 20,806  $ 419,189  $ 468,179  $ 14,904  $ 483,083  $ (69,796) $ 5,902  $ (63,894)
Valuation allowance adjustment —  (20,806) (20,806) —  (14,904) (14,904) —  (5,902) (5,902)
Adjusted gross deferred tax asset 398,383  —  398,383  468,179  —  468,179  (69,796) —  (69,796)
Deferred tax assets non-admitted (230,991) —  (230,991) (273,412) —  (273,412) 42,421  —  42,421 
Net admitted deferred tax asset 167,392  —  167,392  194,767  —  194,767  (27,375) —  (27,375)
Gross deferred tax liabilities (31,725) (23,600) (55,325) (29,324) (13,263) (42,587) (2,401) (10,337) (12,738)
Net admitted deferred tax asset $ 135,667  $ (23,600) $ 112,067  $ 165,443  $ (13,263) $ 152,180  $ (29,776) $ (10,337) $ (40,113)

The Company admits deferred tax assets pursuant to paragraphs 11.a, 11.b.i, 11.b.ii, and 11.c, in SSAP No. 101. The following table presents the amount of deferred tax asset admitted under each component of SSAP No. 101:
December 31, 2024 December 31, 2023 Change
Ordinary Capital Total Ordinary Capital Total Ordinary Capital Total
(a) Federal income taxes paid in prior years recoverable through loss carrybacks $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
(b) Adjusted gross deferred tax assets expected to be realized (excluding the amount of deferred tax assets from (a) above) after application of the threshold limitation (lesser of (i) and (ii) below) 112,067  —  112,067  152,180  —  152,180  (40,113) —  (40,113)
(i) Adjusted gross deferred tax assets expected to be realized following the balance sheet date 112,067  —  112,067  152,180  —  152,180  (40,113) —  (40,113)
(ii) Adjusted gross deferred tax assets expected allowed per limitation threshold —  —  693,497  —  —  544,474  —  —  149,023 
(c) Adjusted gross deferred tax assets (excluding the amount of deferred tax assets from (a) and (b) above) offset by gross deferred tax liabilities 55,325  —  55,325  42,587  —  42,587  12,738  —  12,738 
Total deferred tax assets admitted as a result of the application of SSAP No. 101 $ 167,392  $ —  $ 167,392  $ 194,767  $ —  $ 194,767  $ (27,375) $ —  $ (27,375)

The following table presents the threshold limitations utilized in the admissibility of deferred tax assets under paragraph 11.b of SSAP No. 101:
2024 2023
Ratio percentage used to determine recovery period and threshold limitation amount 963.77  % 969.43  %
Amount of adjusted capital and surplus used to determine recovery period and threshold limitation $ 4,623,312  $ 3,629,825 

56

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The following table presents the impact of tax planning strategies:
December 31, 2024 December 31, 2023 Change
Ordinary Capital Ordinary Capital Ordinary Capital
Adjusted gross deferred tax asset $ 398,383  $ —  $ 468,179  $ —  $ (69,796) $ — 
% of adjusted gross deferred tax asset by character attributable to tax planning strategies —  % —  % —  % —  % —  % —  %
Net admitted adjusted gross deferred tax assets $ 167,392  $ —  $ 194,767  $ —  $ (27,375) $ — 
% of net admitted adjusted gross deferred tax asset by character attributable to tax planning strategies —  % —  % —  % —  % —  % —  %

The Company’s tax planning strategies do not include the use of reinsurance.

There are no temporary differences for which deferred tax liabilities are not recognized.

The components of current income taxes incurred include the following:
Year Ended December 31,
2024 2023 Change
Current income tax $ 681  $ 36,238  $ (35,557)
Federal income tax on net capital gains (10,281) (43,095) 32,814 
Total $ (9,600) $ (6,857) $ (2,743)

Year Ended December 31,
2023 2022 Change
Current income tax $ 36,238  $ 20,399  $ 15,839 
Federal income tax on net capital gains (43,095) (42,088) (1,007)
Total $ (6,857) $ (21,689) $ 14,832 

57

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The tax effects of temporary differences, which give rise to the deferred income tax assets and liabilities are as follows:
December 31,
Deferred income tax assets: 2024 2023 Change
Ordinary:
Reserves $ 11,481  $ 11,777  $ (296)
Investments —  2,219  (2,219)
Deferred acquisition costs
5,913  —  5,913 
Fixed assets 3,372  4,133  (761)
Compensation and benefit accrual 24,027  22,623  1,404 
Receivables - non-admitted 16,847  17,905  (1,058)
Tax credit carryforward 38,049  88,372  (50,323)
Intangible 207,794  227,519  (19,725)
NOL 72,213  72,213  — 
Other 18,687  21,418  (2,731)
Total ordinary gross deferred tax assets 398,383  468,179  (69,796)
Valuation allowance adjustment —  —  — 
Total adjusted ordinary gross deferred tax assets 398,383  468,179  (69,796)
Non-admitted ordinary deferred tax assets (230,991) (273,412) 42,421 
Admitted ordinary deferred tax assets 167,392  194,767  (27,375)
Capital:
Investments —  —  — 
Net Capital Loss Carryforward 20,806  14,904  5,902 
Total capital gross deferred tax assets 20,806  14,904  5,902 
Valuation allowance adjustment (20,806) (14,904) (5,902)
Total adjusted gross capital deferred tax assets —  —  — 
Non-admitted capital deferred tax assets —  —  — 
Admitted capital deferred tax assets —  —  — 
Total admitted deferred tax assets $ 167,392  $ 194,767  $ (27,375)
Deferred income tax liabilities:
Ordinary:
Investments $ (27,084) $ (19,392) $ (7,692)
Premium receivable (106) (2,471) 2,365 
Policyholder reserves (2,106) (4,212) 2,106 
Experience refunds —  —  — 
Other (2,429) (3,249) 820 
Total ordinary deferred tax liabilities (31,725) (29,324) (2,401)
Capital
Investments (23,600) (13,263) (10,337)
Total capital deferred tax liabilities (23,600) (13,263) (10,337)
Total deferred tax liabilities $ (55,325) $ (42,587) $ (12,738)
Net admitted deferred income tax asset $ 112,067  $ 152,180  $ (40,113)

58

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The change in deferred income taxes reported in surplus before consideration of non-admitted assets is comprised of the following components:
December 31,
2024 2023 Change
Total deferred income tax assets $ 398,383  $ 468,179  $ (69,796)
Total deferred income tax liabilities (55,325) (42,587) (12,738)
Net deferred income tax asset $ 343,058  $ 425,592  (82,534)
Tax effect of unrealized capital gains
 11,858 
Tax-effect of change in minimum pension liability 86 
Other Surplus — 
Change in net deferred income tax $ (70,590)
December 31,
2023 2022 Change
Total deferred income tax assets $ 468,179  $ 462,234  $ 5,945 
Total deferred income tax liabilities (42,587) (42,699) 112 
Net deferred income tax asset $ 425,592  $ 419,535  6,057 
Tax effect of unrealized capital losses
 (4,427)
Other Surplus 5,888 
Change in net deferred income tax $ 7,356 































59

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The provision for federal income taxes and change in deferred income taxes differ from that which would be obtained by applying the statutory federal income tax rate of 21% to income before income taxes. The significant items causing this difference are as follows:
December 31,
2024 2023 2022
Income tax expense at statutory rate $ 115,481  $ 227,550  $ 106,303 
Earnings from subsidiaries (23,337) (111,166) (46,746)
Tax exempt investment income (4,881) (2,072) 262 
Ceding commission net of transaction expenses (21,469) (30,716) 37,141 
Change in statutory valuation allowance adjustment 5,902  14,904  — 
Dividend received deduction (4,445) (4,140) (4,220)
Tax adjustment for interest maintenance reserve 7,875  630  (37,223)
Prior year adjustment (765) 3,264  90 
Non-deductible Personal Capital contingent consideration —  —  (5,171)
Statutory purchase accounting adjustment —  —  (14,415)
Tax effect on non-admitted assets 1,870  1,722  1,587 
Tax credits (8,275) (840) (3,122)
Income tax on realized capital gain (loss) (10,281) (43,095) (42,088)
Tax contingency —  —  (448)
Net Operating Loss —  (72,213) — 
Other 3,315  1,959  146 
Total $ 60,990  $ (14,213) $ (7,904)
2024 2023 2022
Federal income taxes incurred $ (9,600) $ (6,857) $ (21,689)
Change in net deferred income taxes 70,590  (7,356) 13,785 
Total income taxes $ 60,990  $ (14,213) $ (7,904)

As of December 31, 2024, there is $343.9 million of net operating loss carryforwards available for tax purposes. The following table breaks down available net operating loss carryforward by year:

Tax Year Expiration Loss
2007 2026 $ 38 
2008 2027 1,505 
2009 2028 929 
2010 2029 2,530 
2011 2030 8,158 
2012 2031 12,474 
2013 2032 11,717 
2014 2033 16,336 
2015 2034 23,528 
2016 2035 31,688 
2017 2036 33,456 
2018 N/A 21,052 
2019 N/A 24,749 
2020 N/A 116,054 
2021 N/A — 
2022 N/A 39,651 

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
As of December 31, 2024, the Company has Guaranteed Federal Low Income Housing tax credit carryforwards of $38.0 million. These credits will begin to expire in 2031.

During the years ended December 31, 2024 and 2023, the Company recognized $28.1 million and $71.0 million of capital loss respectively. The total capital loss as of December 31, 2024 is $99.1 million and will start to expire in 2028.

The Company has no deposits admitted under Section 6603 of the Internal Revenue Code.

The Company’s federal income tax return is consolidated with the following entities (the “U.S. Consolidated Group”):

Great-West Lifeco US LLC
Empower Financial Services, Inc.
Empower Holdings, LLC
Great-West Life & Annuity Insurance Company of South Carolina
Empower Life & Annuity Insurance Company of New York
Putnam Investments LLC
Putnam Acquisition Financing, Inc.
Putnam Retail Management, LP
Putnam Retail Management GP, Inc.
Putnam Investors Services, Inc.
PanAgora Holdings, Inc.
PanAgora Asset Management, Inc.
Putnam Advisory Holdings, LLC
Putnam Advisory Holdings II, LLC
Empower Retirement, LLC
Empower Advisory Group, LLC
Empower Trust Company, LLC
Empower Capital Management, LLC
Personal Capital Services Corporation
TBG Insurance Services Corporation
Empower Stock Plan Services, LLC
Empower Services Holding US, LLC

The Company, Great-West life & Annuity Insurance Company of South Carolina and Empower Life & Annuity Insurance Company of New York ("EAICA Subgroup") are life insurance companies who form a life subgroup under the consolidated return regulations. These regulations determine whether taxable income or losses of this subgroup may offset or be offset with the taxable income or losses of other non-life entities.

The EAICA Subgroup accounts for income taxes on the modified separate return method on its separate company, statutory financial statements. Under this method, current and deferred tax expense or benefit is determined on a standalone basis; however the Company also considers taxable income or losses from other members of the EAICA Subgroup when determining its deferred tax assets and liabilities, and in evaluating the realizability of its deferred tax assets.

The method of settling income tax payables and receivables (“Tax Sharing Agreement”) among the US consolidated group is subject to a written agreement approved by the Board of Directors, whereby settlement is made on a separate return basis (i.e., the amount that would be due to or from a jurisdiction had an actual separate return been filed) except for the current utilization of any net operating losses and other tax attributes by members of the US Consolidated Group, which can lead to receiving a payment when none would be received from the jurisdiction had a real separate tax return been required. The EAICA Subgroup has a policy of settling intercompany balances as soon as practical after the filing of the federal consolidated return or receipt of the income tax refund from the Internal Revenue Service (“I.R.S.”).

The Company determines income tax contingencies in accordance with Statement of Statutory Accounting Principles No. 5R, Liabilities, Contingencies and Impairments of Assets (“SSAP No. 5R”) as modified by SSAP No. 101. As of December 31, 2024 the amount of tax contingencies computed in accordance with SSAP No. 5R is $0. The Company does not expect a significant increase in tax contingencies within the 12 month period following the balance sheet date.

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
The Company recognizes accrued interest and penalties related to tax contingencies in current income tax expense. During the years ended December 31, 2024 and 2023, the Company recognized approximately $0 and $0 of benefit and expense, respectively, from interest and penalties related to the uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years 2018 and prior. The Company does not expect significant increases or decreases to unrecognized tax benefits relating to federal, state or local audits.

The valuation allowance adjustment to gross deferred tax assets as of December 31, 2024 and 2023 was $20.8 million and $14.9 million, respectively. The valuation allowance adjustment relates to Management's uncertainty as to the Company's ability to use the Capital Loss carryforwards, therefore, a valuation allowance has been recognized with respect to the Company's Capital Loss carryforward DTA.

The reporting entity is an applicable reporting entity with respect to the Corporate Alternative Minimum Tax (“CAMT”). The reporting entity may be charged with a portion of the CAMT incurred by the consolidated group or credited with a portion of the consolidated group’s CAMT credit utilization. The reporting entity has made an accounting policy election to disregard CAMT when evaluating the need for a valuation allowance. There have been NO material modifications to the methodology used to project future regular tax liability as a result of the CAMT.

Gross AMT Credit Recognized as: Current year recoverable $ — 
Gross AMT Credit Recognized as: Deferred tax asset (DTA) — 
Beginning Balance of AMT Credit Carryforward 19,504 
Less: Amounts Recovered — 
Less: Adjustments 19,504 
Ending Balance of AMT Credit Carryforward — 
Less: Reduction for Sequestration — 
Less: Nonadmitted by Reporting Entity — 
Reporting Entity Ending Balance $ — 
The Company does not have any foreign operations as of the periods ended December 31, 2024 and December 31, 2023 and therefore is not subject to the tax on Global Intangible Low-Taxed Income.

14. Commitments and Contingencies

Future Contractual Obligations
The following table summarizes the Company’s estimated future contractual obligations:
Payment due by period
2025 2026 2027 2028 2029 Thereafter Total
Surplus notes - principal (1)
 $ 527,500  $ —  $ 12,000  $ —  $ —  $ 1,538,225  $ 2,077,725 
Surplus notes - interest (2)
 72,368  67,383  67,383  66,963  66,963  1,414,044  1,755,104 
Investment purchase obligations (3)
 600,008  —  —  —  —  5,000  605,008 
Other liabilities (4)
 27,048  —  —  —  —  —  27,048 
Total $ 1,226,924  $ 67,383  $ 79,383  $ 66,963  $ 66,963  $ 2,957,269  $ 4,464,885 

(1) Surplus notes principal - Represents contractual maturities of principal due to the Company’s parent, EHL, under the terms of four long-term surplus notes. The amounts shown in this table differ from the amounts included in the Company’s Statement of Admitted Assets, Liabilities, Capital and Surplus because of the $30.9 million of unamortized debt modification gain as discussed in Note 12.

62

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
(2) Surplus notes interest - All surplus notes bear interest at a fixed rate through maturity. The interest payments shown in this table are calculated based upon the contractual rates in effect on December 31, 2024.

(3) Investment purchase obligations - The Company makes commitments to fund partnership interests, mortgage loans, and other investments in the normal course of its business. As the timing of the fulfillment of the commitment to fund partnership interests cannot be predicted, such obligations are presented in the less than one year category. The timing of the funding of mortgage loans is based on the expiration date of the commitment. The amounts of these unfunded commitments at December 31, 2024 was $605.0 million, of which $585.5 million were related to limited partnership interests. Related party transactions comprise $41.5 million of the unfunded limited partnership interests at December 31, 2024. At December 31, 2024, $600.0 million was due within one year, and $5.0 million was due after five years.

(4) Other liabilities - Other liabilities include those other liabilities which represent contractual obligations not included elsewhere in the table above. If the timing of the payment of any other liabilities was sufficiently uncertain, the amounts were included in the less than one year category. Other liabilities presented in the table above include expected benefit payments for the Company's supplemental executive retirement plan through 2024.
The Company has a revolving credit facility agreement in the amount of $50.0 million for general corporate purposes effective November 1, 2023, and expires on November 1, 2028.  Interest accrues at a rate dependent on various conditions and terms of borrowings. The agreement requires, among other things, the Company to maintain a minimum adjusted net worth, of $2.7 billion, as defined in the credit facility agreement (compiled on the unconsolidated statutory accounting basis prescribed by the NAIC), at any time. The Company was in compliance with all covenants at December 31, 2024 and 2023. At December 31, 2024 and 2023, there were no outstanding amounts related to the current and prior credit facilities.

In October 2020, the Company became a member of the FHLB of Topeka. FHLB provides access to billions of low-cost funding dollars to banks, credit unions, insurance companies and community development financial institutions in the United States. At December 31, 2024, the Company had an estimated maximum borrowing capacity of approximately $932.0 million. All borrowings must be collateralized and the amount available to borrow is based on the type of assets pledged. No amounts were borrowed as of December 31, 2024 and 2023. Additionally, the Company was required to purchase FHLB of Topeka stock and, at December 31, 2024 and 2023, owns $0.5 million and $0.5 million, respectively, of Class A stock which are currently not eligible for redemption.

Contingencies
 
The liabilities transferred and ceding commission received at the closing of the MassMutual transaction were subject to future adjustments. The adjustments were finalized in 2022 and were not significant to the overall financial statements.

In 2019, the Company sold, via indemnity reinsurance, substantially all of its individual life insurance and annuity business to Protective Life Insurance Company (Protective Life). In connection with that transaction, the Company provided standard indemnities to the buyer. In 2022, Protective Life made claims under those indemnities. During 2023, the Company established a provision of $42.5 million in other liabilities for the aggregate potential liability for the claims using available information.

Commitments

The Company and ELAINY have an agreement whereby the Company has committed to provide financial support to ELAINY related to the maintenance of adequate regulatory surplus and liquidity. The Company is obligated to invest in shares of ELAINY in order for ELAINY to maintain the capital and surplus at the greater of 1) $6 million, 2) 200% of ELAINY RBC minimum capital requirements if ELAINY total assets are less than $3 billion or 3) 175% of ELAINY RBC minimum capital requirements if ELAINY total assets are $3 billion or more. There is no limitation on the maximum potential future payments under the guarantee. The Company has no liability at December 31, 2024 and 2023 for obligations under the guarantee.

Litigation

From time to time, the Company is subject to lawsuits, arbitrations, and administrative claims. Any such claims that are decided against the Company could harm the Company’s business. The Company is also subject to periodic regulatory audits and inspections which could result in fines or other disciplinary actions. The Company accrues a charge when management determines that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. When a loss
63

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Notes to Statutory Financial Statements
(In Thousands, Except Share Amounts)
is probable and reasonably estimable, the Company records an accrual based on the reasonably estimable loss or range of loss. The Company regularly evaluates current information available to it to determine whether an accrual should be established or adjusted. The ultimate outcome of legal proceedings involves judgments, estimates, and inherent uncertainties and cannot be predicted with certainty. Unfavorable outcomes in such matters may result in a material impact on the Company's financial position, results of operations, or cash flows.

The Company and certain of its subsidiaries are defendants in legal actions, including class actions, relating to the costs and features of their retirement and fund products and the conduct of their businesses. Management believes the claims are without merit and will continue to vigorously defend these actions. The Company is also involved in other various legal proceedings that arise in the ordinary course of its business.  In the opinion of management, after consultation with counsel, the likelihood of loss from the resolution of these proceedings is remote and/or the estimated loss is not expected to have a material effect on the Company’s financial position, results of its operations, or cash flows.

15. Reconciliation between Annual Statement and Audited Financial Statements

The following table summarizes the reconciling items between the Annual Statement filed with the Department and the audited statutory financial statements as of December 31, 2024.
Annual Statement Audited Statutory Financial Statements
Difference
Statutory Statement of Operations:
   Net income $ 497,863  $ 524,747  $ 26,884 
Statutory Statement of Cash Flows:
   Operating activities $ (1,635,818) $ (1,595,974) $ 39,844 
Investing activities
 $ (61,836) $ 1,786,963  $ 1,848,799 
   Financing and miscellaneous activities $ 1,199,883  $ (688,760) $ (1,888,643)

The audited financial statements have included an adjustment to remove a non-cash transfer from the investing activities and the financing activities related to a stock transfer on a contribution of an affiliate to the Company.

16. Subsequent Events

Management has evaluated subsequent events for potential recognition or disclosure in the Company’s statutory financial statements through April 2, 2025, the date on which they were issued.

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SUPPLEMENTAL SCHEDULES

(See Independent Auditors’ Report)

65

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Supplemental Schedule of Selected Statutory Financial Data
As of and for the Year Ended December 31, 2024


Investment income earned:
U.S. Government bonds $ 10,891 
Other bonds (unaffiliated) 925,122 
Bonds of affiliates 175 
Preferred stocks (unaffiliated) 881 
Preferred stocks of affiliates 2,072 
Common stocks (unaffiliated) 31 
Mortgage loans 202,986 
Real estate 32,991 
Contract loans 167,573 
Cash, cash equivalents and short-term investments 57,784 
Derivative instruments 36,311 
Other invested assets 152,008 
Aggregate write-ins for investment income 11,932 
Gross investment income $ 1,600,757 
Real estate owned - Book value less encumbrances: $ 52,363 
Mortgage loans - Book value:
Commercial mortgages $ 5,387,154 
Mortgage loans by standing - Book value:
Good standing $ 5,333,354 
Good standing with restructured terms
 36,161 
Interest overdue more than 90 days, not in foreclosure 4,163 
Foreclosure in process 13,476 
Other long-term invested assets - Statement value: $ 1,923,430 
Contract loans $ 3,536,463 
Bonds and stocks of parents, subsidiaries and affiliates - Book value:
Bonds $ 167 
Common stocks $ 1,933,146 
Bonds and short-term investments by maturity and NAIC designation:
Bonds by maturity - Statement value:
Due within one year or less $ 2,281,375 
Over 1 year through 5 years 11,538,150 
Over 5 years through 10 years 7,499,807 
Over 10 years through 20 years 2,244,565 
Over 20 years 1,425,300 
Total by maturity $ 24,989,197 
(Continued)

66

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Supplemental Schedule of Selected Statutory Financial Data
As of and for the Year Ended December 31, 2024


Bonds and short-term investments by NAIC designation - Statement value:
NAIC 1 $ 12,944,700 
NAIC 2 11,399,634 
NAIC 3 520,763 
NAIC 4 68,198 
NAIC 5 34,012 
NAIC 6 21,890 
Total by NAIC designation $ 24,989,197 
Total bonds publicly traded $ 13,513,467 
Total bonds privately placed $ 11,475,730 
Preferred stocks - Statement value $ 52,248 
Common stocks - Market value $ 1,933,756 
Short-term investments - Book value $ 15,373 
Collar, swap and forward agreements open - Statement value $ 326,337 
Futures contracts open - Current value $ 159 
Cash on deposit $ 149,304 
Life insurance in-force:
     Ordinary $ 5,254 
     Group life $ — 
Life insurance policies with disability provisions in-force:
     Ordinary $ 6 
     Group life $ 13 
Supplementary contracts in-force:
     Ordinary - not involving life contingencies:
         Amount on deposit $ — 
          Income payable $ — 
     Ordinary - involving life contingencies:
          Income payable $ — 
     Group - not involving life contingencies:
         Amount on deposit $ — 
          Income payable $ — 
     Group - involving life contingencies:
          Amount on deposit
 $ 548 
          Income payable $ 102 
Annuities:
     Ordinary:
         Immediate - amount of income payable $ 334 
          Deferred - fully paid account balance $ 137 
          Deferred - not fully paid - account balance $ — 
67

EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Supplemental Schedule of Selected Statutory Financial Data
As of and for the Year Ended December 31, 2024


(Continued)
     Group:
          Certificates - amount of income payable $ 63,593 
          Certificates - fully paid account balance $ 26 
          Certificates - not fully paid account balance $ 45,449,644 
Accident and health insurance - equivalent premiums in-force:
     Group $ — 
Deposit funds and dividend accumulations
Deposit funds - account balance $ 10,192,058 
Deposit accumulations - account balance $ 13,257 
Claim payments:
     Group accident and health:
2024 $ 1,876 
2023 $ — 
2022 $ — 
2021 $ 4,009 
2020 $ 9,856 
Prior $ 28,623 
(Concluded)

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EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA
Supplemental Schedule Regarding Reinsurance Contracts with Risk-Limiting Features
As of and for the Year Ended December 31, 2024
Supplemental Schedule of the Annual Audit Report
Supplemental Schedule Regarding Reinsurance Contracts with Risk-Limiting Features

Reinsurance contracts subject to Appendix A-791—Life and Health Reinsurance Agreements of the NAIC Accounting Practices and Procedures Manual:

The Company has not entered into, renewed or amended reinsurance contracts on or after January 1, 1996, which include risk-limiting features, as described in SSAP No. 61R—Life, Deposit-Type and Accident and Health Reinsurance (SSAP No. 61R). Deposit accounting, as described in SSAP No. 61R was not applied for reinsurance contracts, which include risk-limiting features since the Company does not have applicable contracts.

Reinsurance contracts NOT subject to Appendix A-791—Life and Health Reinsurance Agreements of the NAIC Accounting Practices and Procedures Manual:

The Company has not applied reinsurance accounting, as described in in SSAP No. 61R, to reinsurance contracts entered into, renewed or amended on or after January 1, 1996, which include risk-limiting features, as described in SSAP No. 61R since the Company does not have applicable contracts. As such, the reinsurance reserve credit, as described in SSAP No. 61R, was not reduced.

Payments to reinsurers (excluding reinsurance contracts with a federal or state facility):

The Company has not entered into, renewed or amended reinsurance contracts on or after January 1, 1996, which contain provisions that allow (1) the reporting of losses or settlements with the reinsurer to occur less frequently than quarterly or (2) payments due from the reinsurer to not be made in cash within ninety days of the settlement date unless there is no activity during the period.

The Company has not entered into, renewed or amended reinsurance contracts on or after January 1, 1996, which contain a payment schedule, accumulating retentions from multiple years or any features inherently designed to delay timing of the reimbursement to the ceding company.

Reinsurance contracts NOT subject to Appendix A-791—Life and Health Reinsurance Agreements of the NAIC Accounting Practices and Procedures Manual and NOT yearly-renewable term that meet the risk transfer requirements under SSAP No. 61R:

The Company has not reflected reinsurance reserve credit for any reinsurance contracts entered into, renewed or amended on or after January 1, 1996 for the following:

a.Assumption reinsurance
b.Non-proportional reinsurance that does not result in significant surplus relief

The Company does not prepare financial information under generally accepted accounting principles ("GAAP"). As such, the Company has not ceded any risk during the periods ended December 31, 2024 and 2023 under any reinsurance contracts entered into, renewed or amended on or after January 1, 1996, that applies reinsurance accounting, as described under SSAP No. 61R for statutory accounting principles (SAP) and applies deposit accounting under GAAP.



76