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LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES | 6 Months Ended
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Jun. 30, 2024
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] |
LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES | FUTURE POLICY BENEFITS The reconciliation of the balances described in the table below to the “Future policy benefits” in the statements of financial position is as follows.
AS OF US$ MILLIONS |  | June 30, 2024 |  | December 31, 2023
Future policy benefits: |  |  |  |
Annuity |  | $ | 6,904 |  |  | $ | 5,731 |
Life |  | 1,864 |  |  | 1,895 |
Deferred profit liability: |  |  |  |
Annuity |  | 246 |  |  | 259 |
Life |  | 83 |  |  | 66 |
Other contracts and VOBA liability |  | 1,823 |  |  | 1,862 |
Total future policy benefits |  | $ | 10,920 |  |  | $ | 9,813 |
The balances and changes in the liability for future policy benefits are as follows:
AS OF AND FOR THE SIX MONTHS ENDED JUN. 30, 2024 US$ MILLIONS, EXCEPT FOR YEARS AND PERCENTAGES |  | Annuity |  |  |  | Life |  | Total
Present value of expected net premiums: |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | — |  |  |  |  | $ | 3,145 |  |  | $ | 3,145 |
Beginning balance at original discount rate |  | — |  |  |  |  | 3,253 |  |  | 3,253 |
Effect of changes in cash flow assumptions 1 |  | — |  |  |  |  | (62) |  |  | (62) |
Effect of actual variances from expected experience |  | 6 |  |  |  |  | (34) |  |  | (28) |
Adjusted beginning of period balance |  | 6 |  |  |  |  | 3,157 |  |  | 3,163 |
Issuances |  | 1,280 |  |  |  |  | 32 |  |  | 1,312 |
Interest accrual |  | 9 |  |  |  |  | 62 |  |  | 71 |
Net premiums collected |  | (1,295) |  |  |  |  | (162) |  |  | (1,457) |
Derecognitions (lapses and withdrawals) |  | — |  |  |  |  | 1 |  |  | 1 |
Ending balance at original discount rate |  | — |  |  |  |  | 3,090 |  |  | 3,090 |
Effect of changes in discount rate assumptions |  | — |  |  |  |  | (235) |  |  | (235) |
Balance, end of period |  | $ | — |  |  |  |  | $ | 2,855 |  |  | $ | 2,855 |
Present value of expected future policy benefits: |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | 5,731 |  |  |  |  | $ | 5,040 |  |  | $ | 10,771 |
Beginning balance at original discount rate |  | 5,909 |  |  |  |  | 5,277 |  |  | 11,186 |
Effect of changes in cash flow assumptions 1 |  | 12 |  |  |  |  | 74 |  |  | 86 |
Effect of actual variances from expected experience |  | 19 |  |  |  |  | (33) |  |  | (14) |
Adjusted beginning of period balance |  | 5,940 |  |  |  |  | 5,318 |  |  | 11,258 |
Acquisition from business combination |  | 311 |  |  |  |  | — |  |  | 311 |
Issuances |  | 1,287 |  |  |  |  | 32 |  |  | 1,319 |
Interest accrual |  | 144 |  |  |  |  | 101 |  |  | 245 |
Benefit payments |  | (312) |  |  |  |  | (228) |  |  | (540) |
Derecognitions (lapses and withdrawals) |  | 1 |  |  |  |  | 1 |  |  | 2 |
Foreign currency translation |  | (114) |  |  |  |  | — |  |  | (114) |
Ending balance at original discount rate |  | 7,257 |  |  |  |  | 5,224 |  |  | 12,481 |
Effect of changes in discount rate assumptions |  | (353) |  |  |  |  | (505) |  |  | (858) |
Balance, end of period |  | $ | 6,904 |  |  |  |  | $ | 4,719 |  |  | $ | 11,623 |
Net liability for future policy benefits |  | 6,904 |  |  |  |  | 1,864 |  |  | 8,768 |
Less: Reinsurance recoverables |  | (35) |  |  |  |  | (46) |  |  | (81) |
Net liability for future policy benefits, after reinsurance recoverable |  | $ | 6,869 |  |  |  |  | $ | 1,818 |  |  | $ | 8,687 |
Weighted-average liability duration of future policy benefits (years) |  | 8 |  | 16
Weighted average interest accretion rate |  | 5 | % |  | 5 | %
Weighted average current discount rate |  | 5 | % |  | 6 | %
1.For the six months ended June 30, 2024, the Company recognized liability remeasurement losses of $60 million from the net effect of the changes in cash flow assumptions, which were included in “Policyholder benefits and claims incurred” in the statements of operations.
AS OF AND FOR THE SIX MONTHS ENDED JUN. 30, 2023 US$ MILLIONS, EXCEPT FOR YEARS AND PERCENTAGES |  | Annuity |  | Life |  | Total
Present value of expected net premiums: |  |  |  |  |  |
Balance, beginning of period |  | $ | — |  |  | $ | 3,520 |  |  | $ | 3,520 |
Beginning balance at original discount rate |  | — |  |  | 3,825 |  |  | 3,825 |
Effect of changes in cash flow assumptions 1 |  | — |  |  | 1 |  |  | 1 |
Effect of actual variances from expected experience |  | 1 |  |  | (26) |  |  | (25) |
Adjusted beginning of period balance |  | 1 |  |  | 3,800 |  |  | 3,801 |
Issuances |  | 664 |  |  | 58 |  |  | 722 |
Interest accrual |  | 6 |  |  | 57 |  |  | 63 |
Net premiums collected |  | (671) |  |  | (176) |  |  | (847) |
Derecognitions (lapses and withdrawals) |  | — |  |  | 1 |  |  | 1 |
Ending balance at original discount rate |  | — |  |  | 3,740 |  |  | 3,740 |
Effect of changes in discount rate assumptions |  | — |  |  | (238) |  |  | (238) |
Balance, end of period |  | $ | — |  |  | $ | 3,502 |  |  | $ | 3,502 |
Present value of expected future policy benefits: |  |  |  |  |  |
Balance, beginning of period |  | $ | 4,252 |  |  | $ | 5,330 |  |  | $ | 9,582 |
Beginning balance at original discount rate |  | 4,673 |  |  | 5,875 |  |  | 10,548 |
Effect of changes in cash flow assumptions 1 |  | (12) |  |  | 1 |  |  | (11) |
Effect of actual variances from expected experience |  | (16) |  |  | (27) |  |  | (43) |
Adjusted beginning of period balance |  | 4,645 |  |  | 5,849 |  |  | 10,494 |
Issuances |  | 667 |  |  | 58 |  |  | 725 |
Interest accrual |  | 92 |  |  | 88 |  |  | 180 |
Benefit payments |  | (214) |  |  | (147) |  |  | (361) |
Derecognitions (lapses and withdrawals) |  | — |  |  | 1 |  |  | 1 |
Foreign currency translation |  | 75 |  |  | — |  |  | 75 |
Ending balance at original discount rate |  | 5,265 |  |  | 5,849 |  |  | 11,114 |
Effect of changes in discount rate assumptions |  | (331) |  |  | (412) |  |  | (743) |
Effect of foreign currency translation on the effect of changes in discount rate assumptions |  | (6) |  |  | — |  |  | (6) |
Balance, end of period |  | $ | 4,928 |  |  | $ | 5,437 |  |  | $ | 10,365 |
Net liability for future policy benefits |  | 4,928 |  |  | 1,935 |  |  | 6,863 |
Less: Reinsurance recoverables |  | (54) |  |  | (48) |  |  | (102) |
Net liability for future policy benefits, after reinsurance recoverable |  | $ | 4,874 |  |  | $ | 1,887 |  |  | $ | 6,761 |
Weighted-average liability duration of future policy benefits (years) |  | 9 |  | 16
Weighted average interest accretion rate |  | 4 | % |  | 5 | %
Weighted average current discount rate |  | 6 | % |  | 5 | %
1.For the six months ended June 30, 2023, the Company recognized liability remeasurement gains of $1 million from the net effect of the changes in cash flow assumptions, which were included in “Policyholder benefits and claims incurred” in the statements of operations. The amounts of undiscounted and discounted expected gross premiums and future benefit payments follow:
AS OF JUN. 30 US$ MILLIONS |  | 2024 |  | 2023
| Undiscounted |  | Discounted |  | Undiscounted |  | Discounted
Annuity: |  |  |  |  |  |  |  |
Expected future benefit payments |  | $ | 11,414 |  |  | $ | 6,877 |  |  | $ | 7,991 |  |  | $ | 4,929 |
Expected future gross premiums |  | — |  |  | — |  |  | 509 |  |  | — |
Life: |  |  |  |  |  |
Expected future benefit payments |  | $ | 10,375 |  |  | $ | 4,799 |  |  | $ | 12,052 |  |  | $ | 5,436 |
Expected future gross premiums |  | 14,649 |  |  | 8,507 |  |  | 9,007 |  |  | 3,509 |
Total: |  |  |  |  |  |  |  |
Expected future benefit payments |  | $ | 21,789 |  |  | $ | 11,676 |  |  | $ | 20,043 |  |  | $ | 10,365 |
Expected future gross premiums |  | 14,649 |  |  | 8,507 |  |  | 9,516 |  |  | 3,509 |
The amount of revenue and interest recognized in the statements of operations follows:
FOR THE PERIODS ENDED JUN. 30 US$ MILLIONS |  | Three Months Ended |  |  |  | Six Months Ended
| Gross Premiums or Assessments |  | Interest Expense |  |  |  | Gross Premiums or Assessments |  | Interest Expense
| 2024 |  | 2023 |  |  |  | 2024 |  | 2023 |  |  |  | 2024 |  | 2023 |  | 2024 |  | 2023
Annuity: |  | $ | 1,313 |  |  | $ | 502 |  |  |  |  | $ | 137 |  |  | $ | 41 |  |  |  |  | $ | 2,005 |  |  | $ | 694 |  |  | $ | 203 |  |  | $ | 51 |
Life: |  | 222 |  |  | 114 |  |  |  |  | 39 |  |  | 30 |  |  |  |  | 335 |  |  | 230 |  |  | 59 |  |  | 43 |
LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES The liability for unpaid claims and claim adjustment expenses (“unpaid claims”) for property and casualty insurance is included in “Policy and contract claims” in the s tatements of financial position and is the amount estimated for incurred but not reported (“IBNR”) claims and claims that have been reported but not settled (“case reserves”), as well as associated claim adjustment expenses. Information regarding the liability for unpaid claims is shown below:
AS OF AND FOR THE SIX MONTHS ENDED JUN. 30 US$ MILLIONS |  | 2024 |  | 2023
Policy and contract claims, beginning |  | $ | 7,288 |  |  | $ | 1,786 |
Less: Unpaid claims balance, beginning – long-duration |  | 198 |  |  | 217 |
Gross unpaid claims balance, beginning – short-duration |  | 7,090 |  |  | 1,569 |
Less: Reinsurance recoverables, beginning |  | 3,045 |  |  | 306 |
Foreign currency translation |  | 4 |  |  | — |
Net unpaid claims balance, beginning – short-duration |  | 4,041 |  |  | 1,263 |
Add: incurred related to |  |  |  |
Current accident year |  | 1,177 |  |  | 816 |
Prior accident years |  | 34 |  |  | (22) |
Total incurred claims |  | 1,211 |  |  | 794 |
Less: paid claims related to |  |  |  |
Current accident year |  | 306 |  |  | 342 |
Prior accident years |  | 776 |  |  | 348 |
Total paid claims |  | 1,082 |  |  | 690 |
Net unpaid claims balance, ending – short-duration |  | 4,170 |  |  | 1,367 |
Foreign currency translation |  | 2 |  |  | — |
Add: Reinsurance recoverables, ending |  | 3,026 |  |  | 303 |
Gross unpaid claims balance, ending – short-duration |  | 7,198 |  |  | 1,670 |
Add: Unpaid claims balance, ending – long duration |  | 199 |  |  | 198 |
Policy and contract claims, ending |  | $ | 7,397 |  |  | $ | 1,868 |
The estimates for ultimate incurred claims attributable to insured events of prior years increased by approximately $34 million and decreased by approximately $22 million, respectively, for the six months ended June 30, 2024 and 2023. The unfavorable development in the first and second quarters of 2024 was primarily related to movements on large individual surety claims within the specialty line of business, which were partially offset by lower-than-anticipated losses arising from the liability line of business, such as business owners, commercial automotive and other commercial businesses. The favorable development in the first six months of 2023 was a reflection of lower-than-anticipated losses arising from the liability line of business, including agribusiness, business owners, commercial automotive, and other commercial businesses. For short-duration health insurance claims, the total of IBNR plus expected development on reported claims included in the liability for unpaid claims as of June 30, 2024 and December 31, 2023 were $8 million and $4 million, respectively.

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480081/944-40-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/944-40/tableOfContent + Details
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