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Insurance Contract Liabilities and Reinsurance Assets (Tables)
 12 Months Ended
Dec. 31, 2022
Statement [LineItems]  
Summary of Insurance Contract Liabilities and Reinsurance Assets The components of gross and net insurance contract liabilities are shown below.
 
As at December 31,
  
2022
     2021  
     
Insurance contract liabilities
  
$
352,153
 
   $ 374,890  
     
Benefits payable and provision for unreported claims
  
 
5,610
 
     5,251  
     
Policyholder amounts on deposit
  
 
13,642
 
     12,134  
     
Gross insurance contract liabilities
  
 
371,405
 
     392,275  
     
Reinsurance assets
(1)
  
 
(47,674
) 
     (44,531 ) 
     
Net insurance contract liabilities
  
$
  323,731
 
   $   347,744  
 
(1)
Reinsurance assets of $38 (2021 – $48) are related to investment contract liabilities, refer to note 8(b).
Summary of Composition of Insurance Contract Liabilities and Reinsurance Assets by Line of Business and Reporting Segment
The composition of insurance contract liabilities and reinsurance assets by the line of business and reporting segment is as follows.
Gross insurance contract liabilities

 
 
Individual insurance
 
 
Annuities
and pensions
 
 
Other
insurance
contract
liabilities
(1)
 
 
Total, net of
reinsurance
ceded
 
 
Total
reinsurance
ceded
 
 
Total,
gross of
reinsurance
ceded
 
As at December 31, 2022
 
Participating
 
 
Non-

participating
 
Asia
  
$
66,294
 
  
$
34,684
 
  
$
6,221
 
  
$
4,142
 
  
$
111,341
 
  
$
2,727
 
  
$
114,068
 
               
Canada
  
 
12,637
 
  
 
38,325
 
  
 
13,593
 
  
 
14,095
 
  
 
78,650
 
  
 
1,676
 
  
 
80,326
 
               
U.S.
  
 
7,867
 
  
 
67,789
 
  
 
11,273
 
  
 
46,849
 
  
 
133,778
 
  
 
43,137
 
  
 
176,915
 
               
Corporate and Other
  
 
–
 
  
 
(640
) 
  
 
24
 
  
 
578
 
  
 
(38
) 
  
 
134
 
  
 
96
 
               
Total, net of reinsurance ceded
    
86,798
 
    
140,158
 
    
31,111
 
    
65,664
 
    
323,731
 
    
47,674
 
    
371,405
 
               
Total reinsurance ceded
  
 
8,552
 
  
 
22,434
 
  
 
15,793
 
  
 
895
 
  
 
47,674
 
  
 
 
 
  
 
 
 
               
Total, gross of reinsurance ceded
  
$
95,350
 
  
$
162,592
 
  
$
46,904
 
  
$
66,559
 
  
$
371,405
 
  
 
 
 
  
 
 
 
             
    Individual insurance    
Annuities
and pensions
     Other
insurance
contract
liabilities
(1)
    
Total, net of
reinsurance
ceded
    
Total
reinsurance
ceded
     Total,
gross of
reinsurance
ceded		  
As at December 31, 2021   Participating    
Non-

participating		  
               
Asia
   $ 64,586     $ 36,387     $ 6,869     $ 3,590     $ 111,432     $ 2,749     $ 114,181  
               
Canada
     13,518       44,320       16,554       14,981       89,373       430       89,803  
               
U.S.
     8,591       71,077       14,007       53,555       147,230       41,150       188,380  
               
Corporate and Other
     –       (676 )      22       363       (291 )      202       (89 ) 
               
Total, net of reinsurance ceded
     86,695       151,108       37,452       72,489       347,744         44,531         392,275  
               
Total reinsurance ceded
     8,144       20,767       14,681       939       44,531    
 
 
 
  
 
 
 
               
Total, gross of reinsurance ceded
   $   94,839     $   171,875     $   52,133     $   73,428     $   392,275    
 
 
 
  
 
 
 
 
(1)
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance.
Summary of Carrying Value of Assets Backing Net Insurance Contract Liabilities, Other Liabilities and Capital
The following table presents the carrying value of assets backing net insurance contract liabilities, other liabilities and capital.
 
    Individual insurance    
Annuities
and pensions
     Other
insurance
contract
liabilities
(1)
    
Other
liabilities
(2)
    
Capital
(3)
    
Total
  
As at December 31, 2022
   Participating    
Non-

participating		  
               
Assets
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
               
Debt securities
  
$
42,279
 
  
$
72,706
 
  
$
15,686
 
  
$
31,998
 
  
$
9,739
 
  
$
31,496
 
  
$
203,904
 
               
Public equities
  
 
12,253
 
  
 
6,792
 
  
 
336
 
  
 
562
 
  
 
675
 
  
 
2,901
 
  
 
23,519
 
               
Mortgages
  
 
4,378
 
  
 
14,101
 
  
 
4,350
 
  
 
8,766
 
  
 
22,997
 
  
 
46
 
  
 
54,638
 
               
Private placements
  
 
6,810
 
  
 
19,498
 
  
 
8,038
 
  
 
10,497
 
  
 
2,003
 
  
 
211
 
  
 
47,057
 
               
Real estate
  
 
3,346
 
  
 
7,030
 
  
 
913
 
  
 
1,875
 
  
 
(66
) 
  
 
174
 
  
 
13,272
 
               
Other
  
 
17,732
 
  
 
20,031
 
  
 
1,788
 
  
 
11,966
 
  
 
427,369
 
  
 
27,665
 
  
 
506,551
 
               
Total
  
$
86,798
 
  
$
140,158
 
  
$
31,111
 
  
$
65,664
 
  
$
462,717
 
  
$
62,493
 
  
$
848,941
 
             
    Individual insurance     Annuities
and pensions		     Other
insurance
contract
liabilities
(1)
    
Other
liabilities
(2)
    
Capital
(3)
    
Total
  
As at December 31, 2021   Participating    
Non-

participating		  
               
Assets
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
               
Debt securities
   $ 43,278     $ 82,050     $ 19,575     $ 36,207     $ 10,723     $ 32,306     $ 224,139  
               
Public equities
     14,667       8,112       453       374       626       3,835       28,067  
               
Mortgages
     3,799       13,295       4,572       8,526       21,802       20       52,014  
               
Private placements
     6,005       17,741       7,370       9,775       1,723       228       42,842  
               
Real estate
     3,467       6,814       987       1,782       6       177       13,233  
               
Other
     15,479       23,096       4,495       15,825       469,014       29,439       557,348  
               
Total
   $   86,695     $   151,108     $   37,452     $   72,489     $   503,894     $   66,005     $   917,643  
 
(1)
Other insurance contract liabilities include group insurance and individual and group health including long-term care insurance.
(2)
Other liabilities are
non-insurance
contract liabilities which include segregated funds, bank deposits, long-term debt, deferred tax liabilities, derivatives, investment contracts, embedded derivatives and other miscellaneous liabilities.
(3)
 
Capital is defined in note 13.
Summary of Potential Impact on Net Income Attributed to Shareholders Arising From Changes to Non-economic Assumptions
Potential impact on net income attributed to shareholders arising from changes to
non-economic
assumptions
(1)
 
   
Decrease in after-tax net

income attributed
to shareholders		  
As at December 31,
  
2022
     2021  
Policy related assumptions
                
2% adverse change in future mortality rates
(2),(4)
                
Products where an increase in rates increases insurance contract liabilities
  
$
(500
) 
   $ (500 ) 
Products where a decrease in rates increases insurance contract liabilities
  
 
(500
) 
     (500 ) 
5% adverse change in future morbidity rates (incidence and termination)
(3),(4),(5)
  
 
  (4,500
) 
       (5,500 ) 
10% adverse change in future policy termination rates
(4)
  
 
(2,200
) 
     (2,400 ) 
5% increase in future expense levels
  
 
(600
) 
     (600 ) 
 
(1)
The participating policy funds are largely self-supporting and generate no material impact on net income attributed to shareholders as a result of changes in
non-economic
assumptions. Experience gains or losses would generally result in changes to future dividends, with no direct impact to shareholders.
(2)
An increase in mortality rates will generally increase policy liabilities for life insurance contracts whereas a decrease in mortality rates will generally increase policy liabilities for policies with longevity risk such as payout annuities.
(3)
No amounts related to morbidity risk are included for policies where the policy liability provides only for claims costs expected over a short period, generally less than one year, such as Group Life and Health.
(4)
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities.
(5)
5% deterioration in incidence rates and 5% deterioration in claim termination rates.
Summary of Actuarial Methods and Assumptions
The completion of the 2022 annual review of actuarial methods and assumptions resulted in a decrease in insurance contract liabilities, net of reinsurance, of $80, and a net gain to net income attributed to shareholders of $36
post-tax.
 
    Change in insurance contract liabilities,
net of reinsurance		        
For the year ended December 31, 2022
   Total     Attributed to
participating
policyholders’
account
(1)
     Attributed to
shareholders’
account		     Change in net
income attributed
to shareholders
(post-tax)
  
Long-term care triennial review
  
$
19
 
  
$
–
 
  
$
19
 
  
$
(15
) 
Mortality and morbidity updates
  
 
157
 
  
 
(5
) 
  
 
162
 
  
 
(126
) 
Lapses and policyholder behaviour updates
  
 
   317
 
  
 
74
 
  
 
   243
 
  
 
(192
) 
Investment related updates
  
 
(210
) 
  
 
(1
) 
  
 
(209
) 
  
 
157
 
Other updates
  
 
(363
) 
  
 
    (145
) 
  
 
(218
) 
  
 
212
 
Net impact
  
$
(80
) 
  
$
(77
) 
  
$
(3
) 
  
$
36
 
 
(1)
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was primarily driven by an increase in expected long-term interest rates within the valuation models to reflect the higher interest rate environment, partially offset by the lapse assumption update in Canada.
 
The completion of the 2021 annual review of actuarial methods and assumptions resulted in an increase in insurance contract liabilities of $287, net of reinsurance, and a decrease in net income attributed to shareholders of $41
post-tax.
 
    Change in insurance contract liabilities,
net of reinsurance		        
For the year ended December 31, 2021   Total     Attributed to
participating
policyholders’
account
(1)
     Attributed to
shareholders’
account		     Change in net
income attributed
to shareholders
(post-tax)
  
U.S. variable annuity product review
   $ 51     $ –     $ 51     $ (40 ) 
Mortality and morbidity updates
     350       –       350       (257 ) 
Lapses and policyholder behaviour updates
     686       18       668       (534 ) 
Expense updates
     (653 )      (25 )      (628 )      503  
Investment related updates
     (257 )      (2 )      (255 )      168  
Other updates
     110       231       (121 )      119  
Net impact
   $    287     $     222     $     65     $ (41 ) 
 
(1)
The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was primarily driven by a reduction in the expected long-term interest rates within the valuation models to reflect the low interest rate environment.
Summary of Insurance Contract Liabilities, Payments Due by Period
Insurance contracts give rise to obligations fixed by agreement. As at December 31, 2022, the Company’s contractual obligations and commitments relating to insurance contracts are as follows.
 
Payments due by period
    Less than
1 year		     
1 to 3
years
     
3 to 5
years
      Over 5 years      Total  
Insurance contract liabilities
(1)
   
$
  11,498
 
   
$
  12,365
 
   
$
  18,496
 
   
$
  1,012,611
 
   
$
  1,054,970
 
 
(1)
Insurance contract liability cash flows include estimates related to the timing and payment of death and disability claims, policy surrenders, policy maturities, annuity payments, minimum guarantees on segregated fund products, policyholder dividends, commissions and premium taxes offset by contractual future premiums on
in-force
contracts. These estimated cash flows are based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted and reflect recoveries from reinsurance agreements. Due to the use of assumptions, actual cash flows may differ from these estimates. Cash flows include embedded derivatives measured separately at fair value.
Summary of Gross Claims and Benefits
The following table presents a breakdown of gross claims and benefits.
 
For the years ended December 31,
  
2022
     2021  
Death, disability and other claims
  
$
  19,404
 
   $ 18,583  
Maturity and surrender benefits
  
 
10,662
 
     8,728  
Annuity payments
  
 
3,242
 
     3,276  
Policyholder dividends and experience rating refunds
  
 
1,279
 
     1,255  
Net transfers from segregated funds
  
 
(1,267
) 
     (732 ) 
Total
  
$
  33,320
 
   $   31,110  
Long term care [member]  
Statement [LineItems]  
Summary of Potential Impact on Net Income Attributed to Shareholders Arising From Changes to Non-economic Assumptions
Potential impact on net income attributed to shareholders arising from changes to
non-economic
assumptions for Long-Term Care included in the above table
(1),(2)
 
    
Decrease in after-tax net

income attributed
to shareholders		  
As at December 31,
   
2022
      2021  
Policy related assumptions
                  
2% adverse change in future mortality rates
   
$
(300
) 
    $ (300 ) 
5% adverse change in future morbidity incidence rates
   
 
  (1,700
) 
        (2,000 ) 
5% adverse change in future morbidity claims termination rates
   
 
(2,400
) 
      (3,100 ) 
10% adverse change in future policy termination rates
   
 
(300
) 
      (400 ) 
5% increase in future expense levels
   
 
(100
) 
      (100 ) 
 
(1)
The impacts of the adverse sensitivities on LTC for morbidity, mortality and lapse do not assume any partial offsets from the Company’s ability to contractually raise premium rates in such events, subject to state regulatory approval. In practice, the Company would plan to file for rate increases equal to the amount of deterioration resulting from the sensitivities.
(2)
The impact of favourable changes to all the sensitivities is relatively symmetrical.
Life insurance contracts [Member]  
Statement [LineItems]  
Summary of Change in Insurance Contract Liabilities
The change in insurance contract liabilities was a result of the following business activities and changes in actuarial estimates.
 
For the year ended December 31, 2022
   Net actuarial
liabilities		     Other
insurance
contract
liabilities
(1)
     Net
insurance
contract
liabilities		     Reinsurance
assets		     Gross
insurance
contract
liabilities		  
Balance, January 1
  
$
332,272
 
  
$
15,472
 
  
$
347,744
 
  
$
44,531
 
  
$
392,275
 
New policies
(2)
  
 
5,365
 
  
 
–
 
  
 
5,365
 
  
 
116
 
  
 
5,481
 
Normal
in-force
movement
(2)
  
 
(39,174
) 
  
 
1,216
 
  
 
(37,958
) 
  
 
(1,042
) 
  
 
(39,000
) 
Changes in methods and assumptions
(2)
  
 
112
 
  
 
(192
) 
  
 
(80
) 
  
 
349
 
  
 
269
 
Reinsurance transactions
(2)
,
(3)
  
 
(2,419
) 
  
 
–
 
  
 
(2,419
) 
  
 
950
 
  
 
(1,469
) 
Impact of changes in foreign exchange rates
  
 
10,439
 
  
 
640
 
  
 
11,079
 
  
 
2,770
 
  
 
13,849
 
Balance, December 31
  
$
306,595
 
  
$
17,136
 
  
$
323,731
 
  
$
47,674
 
  
$
371,405
 
           
For the year ended December 31, 2021   Net actuarial
liabilities		     Other
insurance
contract
liabilities
(1)
     Net
insurance
contract
liabilities		     Reinsurance
assets		     Gross
insurance
contract
liabilities		  
Balance, January 1
   $ 325,408     $ 14,377     $ 339,785     $ 45,769     $ 385,554  
New policies
(4)
     5,947       –       5,947       276       6,223  
Normal
in-force
movement
(4)
     4,689       1,283       5,972       (1,812 )      4,160  
Changes in methods and assumptions
(4)
     287       –       287       455       742  
Reinsurance transactions
     –       –       –       –       –  
Impact of changes in foreign exchange rates
     (4,059 )      (188 )      (4,247 )      (157 )      (4,404 ) 
Balance, December 31
   $   332,272     $   15,472     $   347,744     $   44,531     $   392,275  
 
(1)
Other insurance contract liabilities are comprised of benefits payable and provisions for unreported claims and policyholder amounts on deposit.
(2)
 
In 2022, the $34,971 decrease reported as the change in insurance contract liabilities on the 2022 Consolidated Statements of Income primarily consists of changes due to normal in-force movement, new policies, changes in methods and assumptions, and reinsurance transactions. These four items in the gross insurance contract liabilities were netted off by a decrease of $34,719, of which $35,830 is included in the Consolidated Statements of Income as a decrease in insurance contract liabilities and $1,111 increase is included in gross claims and benefits. The Consolidated Statements of Income change in insurance contract liabilities also includes the change in embedded derivatives associated with insurance contracts, however these embedded derivatives are included in other liabilities on the Consolidated Statements of Financial Position.
(3)
 
In 2022, we completed two transactions to reinsure blocks of legacy U.S. variable annuity (“VA”) policies. Under the terms of the transactions, the Company will retain responsibility for the maintenance of the policies with no intended impact to VA policyholders. The transactions were structured as coinsurance for the general fund liabilities and modified coinsurance for the segregated fund liabilities. 
(4)
In 2021, the $10,719 increase reported as the change in insurance contract liabilities on the Consolidated Statements of Income primarily consists of changes due to normal
in-force
movement, new policies and changes in methods and assumptions. These three items in the gross insurance contract liabilities were netted off by an increase of $11,125, of which $9,868 is included in the Consolidated Statements of Income increase in insurance contract liabilities and $1,257 is included in gross claims and benefits. The Consolidated Statements of Income change in insurance contract liabilities also includes the change in embedded derivatives associated with insurance contracts.