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Reserve for Future Policy Benefits and Contractholder Funds (Tables) | 9 Months Ended
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Sep. 30, 2023
Reserve for Future Policy Benefits and Contractholder Funds [Abstract] |
Schedule of Reserve for Future Policy Benefits, and Revenue and Interest Recognized and Key Assumptions | The following tables summarize the balance of and changes in the reserve for future policy benefits and DAC on January 1, 2021 upon the adoption of the guidance.
Impact of adoption for reserve for future policy benefits
($ in millions) |  | Accident and health |  | Traditional life |  | Total
Pre-adoption 12/31/2020 balance (1) |  | $ | 728 |  |  | $ | 311 |  |  | $ | 1,039 |
Adjustments: |  |  |  |  |  |
Effect of the remeasurement of the reserve at upper-medium grade fixed income-based rate (2) |  | 232 |  |  | 153 |  |  | 385 |
Adjustments for contracts with net premiums in excess of gross premiums (3) |  | 77 |  |  | — |  |  | 77 |
Total adjustments |  | 309 |  |  | 153 |  |  | 462 |
Post-adoption 1/1/2021 balance |  | 1,037 |  |  | 464 |  |  | 1,501 |
Less: reinsurance recoverables (4) |  | 159 |  |  | 3 |  |  | 162 |
Post-adoption 1/1/2021 balance, after reinsurance recoverables |  | $ | 878 |  |  | $ | 461 |  |  | $ | 1,339 |
(1)Traditional life includes $11 million in reserves related to riders of traditional life insurance products reclassified from contractholder funds. (2)Adjustment reflected with a corresponding decrease to AOCI. (3)Adjustment reflected with a corresponding decrease to retained income. (4)Represents post-adoption January 1, 2021 balance of reinsurance recoverables. Adjustments to reinsurance recoverables for accident and health products increased January 1, 2021 AOCI by $33 million due to the remeasurement of the reserve at upper-medium grade fixed income based rate and increased January 1, 2021 retained income by $51 million due to adjustments for contracts with net premiums in excess of gross premiums.
Rollforward of reserve for future policy benefits (1)
|  | Nine months ended September 30,
|  | Accident and health |  | Traditional life |  | Total
($ in millions) |  | 2023 |  | 2022 |  | 2023 |  | 2022 |  | 2023 |  | 2022
Present value of expected net premiums |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 1,464 |  |  | $ | 1,785 |  |  | $ | 238 |  |  | $ | 254 |  |  | $ | 1,702 |  |  | $ | 2,039 |
Beginning balance at original discount rate |  | 1,549 |  |  | 1,604 |  |  | 246 |  |  | 215 |  |  | 1,795 |  |  | 1,819 |
Effect of changes in cash flow assumptions |  | (12) |  |  | — |  |  | 34 |  |  | — |  |  | 22 |  |  | — |
Effect of actual variances from expected experience |  | (4) |  |  | (138) |  |  | 4 |  |  | 35 |  |  | — |  |  | (103) |
Adjusted beginning balance |  | 1,533 |  |  | 1,466 |  |  | 284 |  |  | 250 |  |  | 1,817 |  |  | 1,716 |
Issuances |  | 378 |  |  | 301 |  |  | 53 |  |  | 7 |  |  | 431 |  |  | 308 |
Interest accrual |  | 48 |  |  | 36 |  |  | 8 |  |  | 5 |  |  | 56 |  |  | 41 |
Net premiums collected |  | (260) |  |  | (254) |  |  | (37) |  |  | (34) |  |  | (297) |  |  | (288) |
Ending balance at original discount rate |  | 1,699 |  |  | 1,549 |  |  | 308 |  |  | 228 |  |  | 2,007 |  |  | 1,777 |
Effect of changes in discount rate assumptions |  | (113) |  |  | (96) |  |  | (19) |  |  | (8) |  |  | (132) |  |  | (104) |
Ending balance |  | 1,586 |  |  | 1,453 |  |  | 289 |  |  | 220 |  |  | 1,875 |  |  | 1,673 |
Present value of expected future policy benefits |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | 2,229 |  |  | 2,796 |  |  | 524 |  |  | 673 |  |  | 2,753 |  |  | 3,469 |
Beginning balance at original discount rate |  | 2,316 |  |  | 2,426 |  |  | 534 |  |  | 511 |  |  | 2,850 |  |  | 2,937 |
Effect of changes in cash flow assumptions |  | 21 |  |  | (44) |  |  | 30 |  |  | — |  |  | 51 |  |  | (44) |
Effect of actual variances from expected experience |  | (24) |  |  | (120) |  |  | 3 |  |  | 26 |  |  | (21) |  |  | (94) |
Adjusted beginning balance |  | 2,313 |  |  | 2,262 |  |  | 567 |  |  | 537 |  |  | 2,880 |  |  | 2,799 |
Issuances |  | 368 |  |  | 293 |  |  | 68 |  |  | 8 |  |  | 436 |  |  | 301 |
Interest accrual |  | 75 |  |  | 62 |  |  | 18 |  |  | 15 |  |  | 93 |  |  | 77 |
Benefit payments |  | (297) |  |  | (294) |  |  | (30) |  |  | (53) |  |  | (327) |  |  | (347) |
Ending balance at original discount rate |  | 2,459 |  |  | 2,323 |  |  | 623 |  |  | 507 |  |  | 3,082 |  |  | 2,830 |
Effect of changes in discount rate assumptions |  | (126) |  |  | (105) |  |  | (38) |  |  | (11) |  |  | (164) |  |  | (116) |
Ending balance |  | $ | 2,333 |  |  | $ | 2,218 |  |  | $ | 585 |  |  | $ | 496 |  |  | $ | 2,918 |  |  | $ | 2,714 |
Net reserve for future policy benefits (1) |  | $ | 747 |  |  | $ | 765 |  |  | $ | 296 |  |  | $ | 276 |  |  | $ | 1,043 |  |  | $ | 1,041 |
Less: reinsurance recoverables |  | 82 |  |  | 75 |  |  | 2 |  |  | 2 |  |  | 84 |  |  | 77 |
Net reserve for future policy benefits, after reinsurance recoverables |  | $ | 665 |  |  | $ | 690 |  |  | $ | 294 |  |  | $ | 274 |  |  | $ | 959 |  |  | $ | 964 |
(1)Excludes $266 million and $277 million of reserves related to short-duration and other contracts as of September 30, 2023 and 2022, respectively.
Revenue and interest recognized in the condensed consolidated statements of operations
($ in millions) |  |  |  | Nine months ended September 30,
|  |  |  |  | 2023 |  | 2022
Revenues (1) |  |  |  |  |  |  |  |
Accident and health |  |  |  |  |  | $ | 600 |  |  | $ | 629 |
Traditional life |  |  |  |  |  | 77 |  |  | 72 |
Total |  |  |  |  |  | $ | 677 |  |  | $ | 701 |
Interest expense (2) |  |  |  |  |  |  |  |
Accident and health |  |  |  |  |  | $ | 27 |  |  | $ | 26 |
Traditional life |  |  |  |  |  | 10 |  |  | 10 |
Total |  |  |  |  |  | $ | 37 |  |  | $ | 36 |
(1) Total revenues reflects gross premiums used in the calculation for reserve for future policy benefits. Revenues included in Accident and health insurance premiums and contract charges on the Condensed Consolidated Statements of Operations reflect premium revenue recognized for traditional life insurance and long-duration and short-duration accident and health insurance contracts. (2) Total interest expense presented as part of Accident, health and other policy benefits on the Condensed Consolidated Statements of Operations. The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts.
|  | As of September 30, |  |  |  |
|  | 2023 |  | 2022 |  |
($ in millions) |  | Undiscounted |  | Discounted |  | Undiscounted |  | Discounted |  |  |  |
Accident and health |  |  |  |  |  |  |  |  |  |  |  |
Expected future gross premiums |  | $ | 5,263 |  |  | $ | 3,600 |  |  | $ | 4,963 |  |  | $ | 3,533 |  |  |  |  |
Expected future benefits and expenses |  | 3,503 |  |  | 2,333 |  |  | 3,253 |  |  | 2,218 |  |  |  |  |
Traditional life |  |  |  |  |  |  |  |  |  |  |  |
Expected future gross premiums |  | 813 |  |  | 553 |  |  | 624 |  |  | 422 |  |  |  |  |
Expected future benefits and expenses |  | 1,153 |  |  | 585 |  |  | 932 |  |  | 496 |  |  |  |  |
Key assumptions used in calculating the reserve for future policy benefits
|  | As of September 30,
|  | Accident and health |  | Traditional life
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Weighted-average duration (in years) |  | 4.3 |  | 3.7 |  | 14.8 |  | 13.4
Weighted-average interest rates |  |  |  |  |  |  |  |
Interest accretion rate (discount rate at contract issuance) |  | 4.73 | % |  | 4.69 | % |  | 5.43 | % |  | 5.60 | %
Current discount rate (upper-medium grade fixed income yield) |  | 5.28 |  |  | 4.73 |  |  | 5.56 |  |  | 5.38 |
Schedule of Ratio of Actual to Expected Lapses used in the Determination of the Reserve for Future Policy Benefits | The following table summarizes the ratio of actual to expected experience used in the determination of the reserve for future policy benefits.
|  | As of September 30,
|  | Accident and health |  | Traditional life
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Actual to expected experience |  |  |  |  |  |  |  |
Mortality |  | n/a |  | n/a |  | 95 | % |  | 238 | %
Morbidity |  | 92 | % |  | 94 | % |  | n/a |  | n/a
Lapses |  | 116 | % |  | 123 | % |  | 89 | % |  | 75 | %
Schedule of Contractholder Funds Activity |
Contractholder funds activity
|  | Nine months ended September 30,
($ in millions) |  | 2023 |  | 2022
Beginning balance |  | $ | 879 |  |  | $ | 890 |
Deposits |  | 99 |  |  | 102 |
Interest credited |  | 25 |  |  | 25 |
Benefits |  | (8) |  |  | (15) |
Surrenders and partial withdrawals |  | (15) |  |  | (16) |
Contract charges |  | (90) |  |  | (88) |
Other adjustments |  | (6) |  |  | (5) |
Ending balance |  | $ | 884 |  |  | $ | 893 |
Components of contractholder funds |  |  |  |
Interest-sensitive life insurance |  | $ | 837 |  |  | $ | 841 |
Fixed annuities |  | 47 |  |  | 52 |
Total |  | $ | 884 |  |  | $ | 893 |
Weighted-average crediting rate |  | 4.26 | % |  | 4.28 | %
Net amount at risk (1) |  | $ | 11,550 |  |  | $ | 11,796 |
Cash surrender value |  | 728 |  |  | 728 |
(1)Guaranteed benefit amounts in excess of the current account balances.
Schedule of Account Values by Comparison of Current Crediting Rate to Guaranteed Minimum Crediting Rate |
Account values: comparison of current crediting rate to guaranteed minimum crediting rate (1)
($ in millions) Range of guaranteed minimum crediting rates |  | At guaranteed minimum |  | 1-50 basis points above |  |  |  |  |  |  |  | Total
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Less than 3.00% |  | $ | — |  |  | $ | — |  |  |  |  |  |  |  |  | $ | — |
3.00% - 3.49% |  | — |  |  | 27 |  |  |  |  |  |  |  |  | 27 |
3.50% - 3.99% |  | 11 |  |  | — |  |  |  |  |  |  |  |  | 11 |
4.00% - 4.49% |  | 437 |  |  | — |  |  |  |  |  |  |  |  | 437 |
4.50% - 4.99% |  | 263 |  |  | — |  |  |  |  |  |  |  |  | 263 |
5.00% or greater |  | 68 |  |  | — |  |  |  |  |  |  |  |  | 68 |
Non-account balances (2) |  |  |  |  |  |  |  |  |  |  |  | 78 |
Total |  | $ | 779 |  |  | $ | 27 |  |  |  |  |  |  |  |  | $ | 884 |
September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Less than 3.00% |  | $ | — |  |  | $ | — |  |  |  |  |  |  |  |  | $ | — |
3.00% - 3.49% |  | — |  |  | 13 |  |  |  |  |  |  |  |  | 13 |
3.50% - 3.99% |  | 12 |  |  | — |  |  |  |  |  |  |  |  | 12 |
4.00% - 4.49% |  | 438 |  |  | — |  |  |  |  |  |  |  |  | 438 |
4.50% - 4.99% |  | 269 |  |  | — |  |  |  |  |  |  |  |  | 269 |
5.00% or greater |  | 70 |  |  | — |  |  |  |  |  |  |  |  | 70 |
Non-account balances (2) |  |  |  |  |  |  |  |  |  |  |  | 91 |
Total |  | $ | 789 |  |  | $ | 13 |  |  |  |  |  |  |  |  | $ | 893 |
(1)Difference, in basis points, between rates being credited to contractholders and the respective guaranteed minimum crediting rates. (2)Non-account balances include unearned revenue and amounts related to policies where a claim is either in the course of settlement or incurred but not reported. A claim on a life insurance policy results in the accrual of interest at a rate and over a period of time that is specified by state insurance regulations.

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- Definition Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (bbb) -SubTopic 10 -Topic 820 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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