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Insurance and Reinsurance Contract Assets and Liabilities | 12 Months Ended
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Dec. 31, 2023
Text block [abstract] |
Insurance and Reinsurance Contract Assets and Liabilities | Note 7  Insurance and Reinsurance Contract Assets and Liabilities (a) Composition Portfolio of insurance contracts that are assets and those that are liabilities, and portfolios of reinsurance contracts that are assets and those that are liabilities, are presented separately in the Consolidated Statements of Financial Position. The components of net insurance and reinsurance contract liabilities are shown below. The composition of insurance contract assets and liabilities, and reinsurance contract held assets and liabilities by the reporting segment is as follows. Insurance contract asset and liabilities
As at December 31, |  | 2023 |  |  |  |  |  | 2022 |
| Insurance contract assets |  |  | Insurance contract liabilities |  |  | Insurance contract liabilities for account of segregated fund holders |  |  | Net insurance contract liabilities |  |  |  |  |  | Insurance contract assets |  |  | Insurance contract liabilities |  |  | Insurance contract liabilities for account of segregated fund holders |  |  | Net insurance contract liabilities |
Asia |  | $ | (108 | ) |  | $ | 131,729 |  |  | $ | 22,696 |  |  | $ | 154,317 |  |  |  |  |  |  | $ | (527 | ) |  | $ | 121,105 |  |  | $ | 21,005 |  |  | $ | 141,583 |
Canada |  |  | (33 | ) |  |  | 80,169 |  |  |  | 36,085 |  |  |  | 116,221 |  |  |  |  |  |  |  | (81 | ) |  |  | 74,876 |  |  |  | 35,695 |  |  |  | 110,490 |
U.S. |  |  | – |  |  |  | 157,699 |  |  |  | 55,362 |  |  |  | 213,061 |  |  |  |  |  |  |  | (56 | ) |  |  | 159,501 |  |  |  | 53,516 |  |  |  | 212,961 |
Corporate and Other |  |  | (4 | ) |  |  | (781 | ) |  |  | – |  |  |  | (785 | ) |  |  |  |  |  |  | – |  |  |  | 163 |  |  |  | – |  |  |  | 163 |
Insurance contract balances |  |  | (145 | ) |  |  | 368,816 |  |  |  | 114,143 |  |  |  | 482,814 |  |  |  |  |  |  |  | (664 | ) |  |  | 355,645 |  |  |  | 110,216 |  |  |  | 465,197 |
Assets for insurance acquisition cash flows |  |  | – |  |  |  | (820 | ) |  |  | – |  |  |  | (820 | ) |  |  |  |  |  |  | (9 | ) |  |  | (796 | ) |  |  | – |  |  |  | (805 | )
Total |  | $ | (145 | ) |  | $ | 367,996 |  |  | $ | 114,143 |  |  | $ | 481,994 |  |  |  |  |  |  | $ | (673 | ) |  | $ | 354,849 |  |  | $ | 110,216 |  |  | $ | 464,392 |
Reinsurance contract held asset and liabilities
|  | 2023 |  |  |  |  |  | 2022 |
As at December 31, |  | Assets |  |  | Liabilities |  |  | Net reinsurance contract held assets |  |  |  |  |  | Assets |  |  | Liabilities |  |  | Net reinsurance contract held assets |
Asia |  | $ | 3,540 |  |  | $ | (1,909 | ) |  | $ | 1,631 |  |  |  |  |  |  | $ | 3,306 |  |  | $ | (1,462 | ) |  | $ | 1,844 |
Canada |  |  | 1,922 |  |  |  | (913 | ) |  |  | 1,009 |  |  |  |  |  |  |  | 1,756 |  |  |  | (911 | ) |  |  | 845 |
U.S. |  |  | 37,437 |  |  |  | (14 | ) |  |  | 37,423 |  |  |  |  |  |  |  | 40,384 |  |  |  | (18 | ) |  |  | 40,366 |
Corporate and Other |  |  | (248 | ) |  |  | 5 |  |  |  | (243 | ) |  |  |  |  |  |  | 425 |  |  |  | – |  |  |  | 425 |
Total |  | $ | 42,651 |  |  | $ | (2,831 | ) |  | $ | 39,820 |  |  |  |  |  |  | $ | 45,871 |  |  | $ | (2,391 | ) |  | $ | 43,480 |
As at December 31, |  | 2023 |  |  | 2022 |
Net insurance contract held liabilities |  | $ | 481,994 |  |  | $ | 464,392 |
Net reinsurance contract held assets |  |  | (39,820 | ) |  |  | (43,480 | )
Net insurance and reinsurance contract held liabilities |  | $ | 442,174 |  |  | $ | 420,912 |
(b) Movements in carrying amounts of insurance and reinsurance contracts The following tables present the movement in the net carrying amounts of insurance contracts issued and reinsurance contracts held during the year for the Company and for each reporting segment. The changes include amounts that are recognized in income and OCI, and movements due to cash flows. There are two types of tables presented:
| • |  | Tables which analyze movements in the net assets or liabilities for remaining coverage and for incurred claims separately and reconcile them to the relevant Consolidated Statements of Income and Consolidated Statements of Comprehensive Income line items.
| • |  | Tables which analyze movements of contracts by measurement components including estimates of the present value of future cash flows, risk adjustment and CSM for portfolios.
(I) Total Insurance contracts – Analysis by remaining coverage and incurred claims The following tables present the movement in the net assets or liabilities for insurance contracts issued, showing the amounts for remaining coverage and the amounts for incurred claims for the years ended December 31, 2023 and December 31, 2022.
|  | Liabilities for remaining coverage |  |  |  |  |  | Liabilities for incurred claims |  |  |  |  |  |  |
|  | Excluding loss component |  |  | Loss component |  |  |  |  |  | Products not under PAA |  |  | PAA Estimates of PV of future cash flows |  |  | PAA Risk adjustment for non-financial risk |  |  | Assets for insurance acquisition cash flows |  |  | Total |
Opening insurance contract assets |  | $ | (659 | ) |  | $ | – |  |  |  |  |  |  | $ | 7 |  |  | $ | (12 | ) |  | $ | – |  |  | $ | (9 | ) |  | $ | (673 | )
Opening insurance contract liabilities |  |  | 336,981 |  |  |  | 1,328 |  |  |  |  |  |  |  | 5,857 |  |  |  | 10,877 |  |  |  | 602 |  |  |  | (796 | ) |  |  | 354,849 |
Opening insurance contract liabilities for account of segregated fund holders |  |  | 110,216 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 110,216 |
Net opening balance, January 1, 2023 |  |  | 446,538 |  |  |  | 1,328 |  |  |  |  |  |  |  | 5,864 |  |  |  | 10,865 |  |  |  | 602 |  |  |  | (805 | ) |  |  | 464,392 |
Insurance revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected incurred claims and other insurance service result |  |  | (13,165 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (13,165 | )
Change in risk adjustment for non-financial risk expired |  |  | (1,497 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1,497 | )
CSM recognized for services provided |  |  | (2,162 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (2,162 | )
Recovery of insurance acquisition cash flows |  |  | (853 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (853 | )
Contracts under PAA |  |  | (6,295 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (6,295 | )
|  |  | (23,972 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (23,972 | )
Insurance service expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Incurred claims and other insurance service expenses |  |  | – |  |  |  | (320 | ) |  |  |  |  |  |  | 13,446 |  |  |  | 6,136 |  |  |  | 254 |  |  |  | – |  |  |  | 19,516 |
Losses and reversal of losses on onerous contracts (future service) |  |  | – |  |  |  | 90 |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 90 |
Changes to liabilities for incurred claims (past service) |  |  | – |  |  |  | – |  |  |  |  |  |  |  | (31 | ) |  |  | (1,605 | ) |  |  | (242 | ) |  |  | – |  |  |  | (1,878 | )
Amortization of insurance acquisition cash flows |  |  | 1,654 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 1,654 |
Net impairment of assets for insurance acquisition cash flows |  |  | – |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
|  |  | 1,654 |  |  |  | (230 | ) |  |  |  |  |  |  | 13,415 |  |  |  | 4,531 |  |  |  | 12 |  |  |  | – |  |  |  | 19,382 |
Investment components and premium refunds |  |  | (19,080 | ) |  |  | – |  |  |  |  |  |  |  | 17,148 |  |  |  | 1,932 |  |  |  | – |  |  |  | – |  |  |  | – |
Insurance service result |  |  | (41,398 | ) |  |  | (230 | ) |  |  |  |  |  |  | 30,563 |  |  |  | 6,463 |  |  |  | 12 |  |  |  | – |  |  |  | (4,590 | )
Insurance finance (income) expenses |  |  | 24,268 |  |  |  | 32 |  |  |  |  |  |  |  | 15 |  |  |  | 848 |  |  |  | 11 |  |  |  | – |  |  |  | 25,174 |
Effects of movements in foreign exchange rates |  |  | (9,657 | ) |  |  | (38 | ) |  |  |  |  |  |  | (71 | ) |  |  | (12 | ) |  |  | – |  |  |  | 7 |  |  |  | (9,771 | )
Total changes in income and OCI |  |  | (26,787 | ) |  |  | (236 | ) |  |  |  |  |  |  | 30,507 |  |  |  | 7,299 |  |  |  | 23 |  |  |  | 7 |  |  |  | 10,813 |
Cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premiums and premium tax received |  |  | 48,381 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 48,381 |
Claims and other insurance service expenses paid, including investment components |  |  | – |  |  |  | – |  |  |  |  |  |  |  | (30,706 | ) |  |  | (7,719 | ) |  |  | – |  |  |  | – |  |  |  | (38,425 | )
Insurance acquisition cash flows |  |  | (6,920 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (6,920 | )
Total cash flows |  |  | 41,461 |  |  |  | – |  |  |  |  |  |  |  | (30,706 | ) |  |  | (7,719 | ) |  |  | – |  |  |  | – |  |  |  | 3,036 |
Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |  |  | (152 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 152 |  |  |  | – |
Acquisition cash flows incurred in the year |  |  | – |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (174 | ) |  |  | (174 | )
Movements related to insurance contract liabilities for account of segregated fund holders |  |  | 3,927 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 3,927 |
Net closing balance |  |  | 464,987 |  |  |  | 1,092 |  |  |  |  |  |  |  | 5,665 |  |  |  | 10,445 |  |  |  | 625 |  |  |  | (820 | ) |  |  | 481,994 |
Closing insurance contract assets |  |  | (201 | ) |  |  | – |  |  |  |  |  |  |  | 56 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (145 | )
Closing insurance contract liabilities |  |  | 351,045 |  |  |  | 1,092 |  |  |  |  |  |  |  | 5,609 |  |  |  | 10,445 |  |  |  | 625 |  |  |  | (820 | ) |  |  | 367,996 |
Closing insurance contract liabilities for account of segregated fund holders |  |  | 114,143 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 114,143 |
Net closing balance, December 31, 2023 |  | $ | 464,987 |  |  | $ | 1,092 |  |  |  |  |  |  | $ | 5,665 |  |  | $ | 10,445 |  |  | $ | 625 |  |  | $ | (820 | ) |  | $ | 481,994 |
Insurance finance (income) expenses (“IFIE”) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance finance (income) expenses, per disclosure above |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 25,174 |
Reclassification of derivative OCI to IFIE – cash flow hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3 |
Reclassification of derivative (income) loss changes to IFIE – fair value hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (185 | )
Insurance finance (income) expenses, per disclosure in note 7 (f) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 24,992 |
|  | Liabilities for remaining coverage |  |  |  |  |  | Liabilities for incurred claims |  |  |  |  |  |  |
|  | Excluding loss component |  |  | Loss component |  |  |  |  |  | Products not under PAA |  |  | PAA Estimates of PV of future cash flows |  |  | PAA Risk adjustment for non-financial risk |  |  | Assets for insurance acquisition cash flows |  |  | Total |
Opening insurance contract assets |  | $ | (842 | ) |  | $ | – |  |  |  |  |  |  | $ | 60 |  |  | $ | 27 |  |  | $ | – |  |  | $ | (217 | ) |  | $ | (972 | )
Opening insurance contract liabilities |  |  | 388,585 |  |  |  | 303 |  |  |  |  |  |  |  | 4,342 |  |  |  | 12,230 |  |  |  | 689 |  |  |  | (528 | ) |  |  | 405,621 |
Opening insurance contract liabilities for account of segregated fund holders |  |  | 130,836 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 130,836 |
Net opening balance, January 1, 2022 |  |  | 518,579 |  |  |  | 303 |  |  |  |  |  |  |  | 4,402 |  |  |  | 12,257 |  |  |  | 689 |  |  |  | (745 | ) |  |  | 535,485 |
Insurance revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expected incurred claims and other insurance service result |  |  | (13,019 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (13,019 | )
Change in risk adjustment for non-financial risk expired |  |  | (1,665 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1,665 | )
CSM recognized for service provided |  |  | (2,298 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (2,298 | )
Recovery of insurance acquisition cash flows |  |  | (534 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (534 | )
Contracts under PAA |  |  | (5,602 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (5,602 | )
|  |  | (23,118 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (23,118 | )
Insurance service expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Incurred claims and other insurance service expenses |  |  | – |  |  |  | 233 |  |  |  |  |  |  |  | 12,775 |  |  |  | 5,982 |  |  |  | 266 |  |  |  | – |  |  |  | 19,256 |
Losses and reversal of losses on onerous contracts (future service) |  |  | – |  |  |  | 742 |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 742 |
Changes to liabilities for incurred claims (past service) |  |  | – |  |  |  | – |  |  |  |  |  |  |  | (41 | ) |  |  | (1,554 | ) |  |  | (353 | ) |  |  | – |  |  |  | (1,948 | )
Amortization of insurance acquisition cash flows |  |  | 1,285 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 1,285 |
Net impairment of assets for insurance acquisition cash flows |  |  | – |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
|  |  | 1,285 |  |  |  | 975 |  |  |  |  |  |  |  | 12,734 |  |  |  | 4,428 |  |  |  | (87 | ) |  |  | – |  |  |  | 19,335 |
Investment components and premium refunds |  |  | (18,222 | ) |  |  | – |  |  |  |  |  |  |  | 16,514 |  |  |  | 1,708 |  |  |  | – |  |  |  | – |  |  |  | – |
Insurance service result |  |  | (40,055 | ) |  |  | 975 |  |  |  |  |  |  |  | 29,248 |  |  |  | 6,136 |  |  |  | (87 | ) |  |  | – |  |  |  | (3,783 | )
Insurance finance (income) expenses |  |  | (68,366 | ) |  |  | 9 |  |  |  |  |  |  |  | 753 |  |  |  | (1,229 | ) |  |  | – |  |  |  | – |  |  |  | (68,833 | )
Effects of movements in foreign exchange rates |  |  | 15,886 |  |  |  | 41 |  |  |  |  |  |  |  | 136 |  |  |  | 12 |  |  |  | – |  |  |  | (14 | ) |  |  | 16,061 |
Total changes in income and OCI |  |  | (92,535 | ) |  |  | 1,025 |  |  |  |  |  |  |  | 30,137 |  |  |  | 4,919 |  |  |  | (87 | ) |  |  | (14 | ) |  |  | (56,555 | )
Cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premiums and premium tax received |  |  | 47,526 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 47,526 |
Claims and other insurance service expenses paid, including investment components |  |  | – |  |  |  | – |  |  |  |  |  |  |  | (28,675 | ) |  |  | (6,311 | ) |  |  | – |  |  |  | – |  |  |  | (34,986 | )
Insurance acquisition cash flows |  |  | (6,266 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (6,266 | )
Total cash flows |  |  | 41,260 |  |  |  | – |  |  |  |  |  |  |  | (28,675 | ) |  |  | (6,311 | ) |  |  | – |  |  |  | – |  |  |  | 6,274 |
Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |  |  | (146 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 146 |  |  |  | – |
Acquisition cash flows incurred in the year |  |  | – |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (192 | ) |  |  | (192 | )
Movements related to insurance contract liabilities for account of segregated fund holders |  |  | (20,620 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (20,620 | )
Net closing balance |  |  | 446,538 |  |  |  | 1,328 |  |  |  |  |  |  |  | 5,864 |  |  |  | 10,865 |  |  |  | 602 |  |  |  | (805 | ) |  |  | 464,392 |
Closing insurance contract assets |  |  | (659 | ) |  |  | – |  |  |  |  |  |  |  | 7 |  |  |  | (12 | ) |  |  | – |  |  |  | (9 | ) |  |  | (673 | )
Closing insurance contract liabilities |  |  | 336,981 |  |  |  | 1,328 |  |  |  |  |  |  |  | 5,857 |  |  |  | 10,877 |  |  |  | 602 |  |  |  | (796 | ) |  |  | 354,849 |
Closing insurance contract liabilities for account of segregated fund holders |  |  | 110,216 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 110,216 |
Net closing balance, December 31, 2022 |  | $ | 446,538 |  |  | $ | 1,328 |  |  |  |  |  |  | $ | 5,864 |  |  | $ | 10,865 |  |  | $ | 602 |  |  | $ | (805 | ) |  | $ | 464,392 |
Insurance finance (income) expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance finance (income) expenses, per disclosure above |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (68,833 | )
Reclassification of derivative OCI to IFIE – cash flow hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | – |
Reclassification of derivative (income) loss changes to IFIE – fair value hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | – |
Insurance finance (income) expenses, per disclosure in note 7 (f) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (68,833 | )
Insurance contracts – Analysis by measurement components The following tables present the movement in the net assets or liabilities for insurance contracts issued, showing estimates of the present value of future cash flows, risk adjustment and CSM for the years ended December 31, 2023 and December 31, 2022.
|  |  |  |  |  |  |  | CSM |  |  |  |  |  |  |
|  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Assets for insurance acquisition cash flows |  |  | Total |
Opening GMM and VFA insurance contract assets |  | $ | (1,827 | ) |  | $ | 512 |  |  | $ | 100 |  |  | $ | 557 |  |  | $ | – |  |  | $ | (658 | )
Opening GMM and VFA insurance contract liabilities |  |  | 297,967 |  |  |  | 25,750 |  |  |  | 17,105 |  |  |  | 2,087 |  |  |  | (56 | ) |  |  | 342,853 |
Opening PAA insurance contract net liabilities |  |  | 12,125 |  |  |  | 605 |  |  |  | – |  |  |  | – |  |  |  | (749 | ) |  |  | 11,981 |
Opening insurance contract liabilities for account of segregated fund holders |  |  | 110,216 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 110,216 |
Net opening balance, January 1, 2023 |  |  | 418,481 |  |  |  | 26,867 |  |  |  | 17,205 |  |  |  | 2,644 |  |  |  | (805 | ) |  |  | 464,392 |
CSM recognized for services provided |  |  | – |  |  |  | – |  |  |  | (1,812 | ) |  |  | (350 | ) |  |  | – |  |  |  | (2,162 | )
Change in risk adjustment for non-financial risk for risk expired |  |  | – |  |  |  | (1,620 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1,620 | )
Experience adjustments |  |  | 152 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 152 |
Changes that relate to current services |  |  | 152 |  |  |  | (1,620 | ) |  |  | (1,812 | ) |  |  | (350 | ) |  |  | – |  |  |  | (3,630 | )
Contracts initially recognized during the year |  |  | (3,295 | ) |  |  | 1,180 |  |  |  | – |  |  |  | 2,368 |  |  |  | – |  |  |  | 253 |
Changes in estimates that adjust the CSM |  |  | 1,585 |  |  |  | (3,859 | ) |  |  | 2,214 |  |  |  | 60 |  |  |  | – |  |  |  | – |
Changes in estimates that relate to losses and reversal of losses on onerous contracts |  |  | (174 | ) |  |  | 12 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (162 | )
Changes that relate to future services |  |  | (1,884 | ) |  |  | (2,667 | ) |  |  | 2,214 |  |  |  | 2,428 |  |  |  | – |  |  |  | 91 |
Adjustments to liabilities for incurred claims |  |  | (28 | ) |  |  | (4 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (32 | )
Changes that relate to past services |  |  | (28 | ) |  |  | (4 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (32 | )
Insurance service result |  |  | (1,760 | ) |  |  | (4,291 | ) |  |  | 402 |  |  |  | 2,078 |  |  |  | – |  |  |  | (3,571 | )
Insurance finance (income) expenses |  |  | 22,340 |  |  |  | 1,646 |  |  |  | 244 |  |  |  | 76 |  |  |  | – |  |  |  | 24,306 |
Effects of movements in foreign exchange rates |  |  | (8,405 | ) |  |  | (779 | ) |  |  | (438 | ) |  |  | (107 | ) |  |  | – |  |  |  | (9,729 | )
Total changes in income and OCI |  |  | 12,175 |  |  |  | (3,424 | ) |  |  | 208 |  |  |  | 2,047 |  |  |  | – |  |  |  | 11,006 |
Total cash flows |  |  | 2,081 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 2,081 |
Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |  |  | (5 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 5 |  |  |  | – |
Acquisition cash flows incurred in the year |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (8 | ) |  |  | (8 | )
Change in PAA balance |  |  | 587 |  |  |  | 21 |  |  |  | – |  |  |  | – |  |  |  | (12 | ) |  |  | 596 |
Movements related to insurance contract liabilities for account of segregated fund holders |  |  | 3,927 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 3,927 |
Net closing balance |  |  | 437,246 |  |  |  | 23,464 |  |  |  | 17,413 |  |  |  | 4,691 |  |  |  | (820 | ) |  |  | 481,994 |
Closing GMM and VFA insurance contract assets |  |  | (416 | ) |  |  | 141 |  |  |  | 32 |  |  |  | 99 |  |  |  | – |  |  |  | (144 | )
Closing GMM and VFA insurance contract liabilities |  |  | 310,807 |  |  |  | 22,697 |  |  |  | 17,381 |  |  |  | 4,592 |  |  |  | (59 | ) |  |  | 355,418 |
Closing PAA insurance contract net liabilities |  |  | 12,712 |  |  |  | 626 |  |  |  | – |  |  |  | – |  |  |  | (761 | ) |  |  | 12,577 |
Closing insurance contract liabilities for account of segregated fund insurance holders |  |  | 114,143 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 114,143 |
Net closing balance, December 31, 2023 |  | $ | 437,246 |  |  | $ | 23,464 |  |  | $ | 17,413 |  |  | $ | 4,691 |  |  | $ | (820 | ) |  | $ | 481,994 |
Insurance finance (income) expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance finance (income) expenses, per disclosure above |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 24,306 |
Reclassification of derivative OCI to IFIE – cash flow hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3 |
Reclassification of derivative (income) loss changes to IFIE – fair value hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (120 | )
PAA items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PAA IFIE per disclosure |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 868 |
PAA Reclassification of derivative OCI to IFIE – cash flow hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | – |
PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (65 | )
Insurance finance (income) expenses, per disclosure in note 7 (f) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 24,992 |
|  |  |  |  |  |  |  | CSM |  |  |  |  |  |  |
|  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Assets for insurance acquisition cash flows |  |  | Total |
Opening GMM and VFA insurance contract assets |  | $ | (1,955 | ) |  | $ | 365 |  |  | $ | 179 |  |  | $ | 453 |  |  | $ | – |  |  | $ | (958 | )
Opening GMM and VFA insurance contract liabilities |  |  | 341,125 |  |  |  | 30,780 |  |  |  | 19,842 |  |  |  | 992 |  |  |  | (54 | ) |  |  | 392,685 |
Opening PAA insurance contract net liabilities |  |  | 12,919 |  |  |  | 694 |  |  |  | – |  |  |  | – |  |  |  | (691 | ) |  |  | 12,922 |
Opening insurance contract liabilities for account of segregated fund holders |  |  | 130,836 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 130,836 |
Net opening balance, January 1, 2022 |  |  | 482,925 |  |  |  | 31,839 |  |  |  | 20,021 |  |  |  | 1,445 |  |  |  | (745 | ) |  |  | 535,485 |
CSM recognized for services provided |  |  | – |  |  |  | – |  |  |  | (2,064 | ) |  |  | (234 | ) |  |  | – |  |  |  | (2,298 | )
Change in risk adjustment for non-financial risk for risk expired |  |  | – |  |  |  | (1,582 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1,582 | )
Experience adjustments |  |  | 6 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 6 |
Changes that relate to current services |  |  | 6 |  |  |  | (1,582 | ) |  |  | (2,064 | ) |  |  | (234 | ) |  |  | – |  |  |  | (3,874 | )
Contracts initially recognized during the year |  |  | (2,880 | ) |  |  | 1,396 |  |  |  | 35 |  |  |  | 1,963 |  |  |  | – |  |  |  | 514 |
Changes in estimates that adjust the CSM |  |  | 3,377 |  |  |  | (994 | ) |  |  | (1,737 | ) |  |  | (646 | ) |  |  | – |  |  |  | – |
Changes in estimates that relate to losses and reversal of losses on onerous contracts |  |  | 229 |  |  |  | (2 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 227 |
Changes that relate to future services |  |  | 726 |  |  |  | 400 |  |  |  | (1,702 | ) |  |  | 1,317 |  |  |  | – |  |  |  | 741 |
Adjustments to liabilities for incurred claims |  |  | (33 | ) |  |  | (7 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (40 | )
Changes that relate to past services |  |  | (33 | ) |  |  | (7 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (40 | )
Insurance service result |  |  | 699 |  |  |  | (1,189 | ) |  |  | (3,766 | ) |  |  | 1,083 |  |  |  | – |  |  |  | (3,173 | )
Insurance finance (income) expenses |  |  | (62,812 | ) |  |  | (5,105 | ) |  |  | 311 |  |  |  | 31 |  |  |  | – |  |  |  | (67,575 | )
Effects of movements in foreign exchange rates |  |  | 13,898 |  |  |  | 1,411 |  |  |  | 639 |  |  |  | 85 |  |  |  | – |  |  |  | 16,033 |
Total changes in income and OCI |  |  | (48,215 | ) |  |  | (4,883 | ) |  |  | (2,816 | ) |  |  | 1,199 |  |  |  | – |  |  |  | (54,715 | )
Total cash flows |  |  | 5,190 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 5,190 |
Allocation from assets for insurance acquisition cash flows to groups of insurance contracts |  |  | (5 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 5 |  |  |  | – |
Acquisition cash flows incurred in the year |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (7 | ) |  |  | (7 | )
Change in PAA balance |  |  | (794 | ) |  |  | (89 | ) |  |  | – |  |  |  | – |  |  |  | (58 | ) |  |  | (941 | )
Movements related to insurance contract liabilities for account of segregated fund holders |  |  | (20,620 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (20,620 | )
Net closing balance |  |  | 418,481 |  |  |  | 26,867 |  |  |  | 17,205 |  |  |  | 2,644 |  |  |  | (805 | ) |  |  | 464,392 |
Closing GMM and VFA insurance contract assets |  |  | (1,827 | ) |  |  | 512 |  |  |  | 100 |  |  |  | 557 |  |  |  | – |  |  |  | (658 | )
Closing GMM and VFA insurance contract liabilities |  |  | 297,967 |  |  |  | 25,750 |  |  |  | 17,105 |  |  |  | 2,087 |  |  |  | (56 | ) |  |  | 342,853 |
Closing PAA insurance contract net liabilities |  |  | 12,125 |  |  |  | 605 |  |  |  | – |  |  |  | – |  |  |  | (749 | ) |  |  | 11,981 |
Closing insurance contract liabilities for account of segregated fund insurance holders |  |  | 110,216 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 110,216 |
Net closing balance, December 31, 2022 |  | $ | 418,481 |  |  | $ | 26,867 |  |  | $ | 17,205 |  |  | $ | 2,644 |  |  | $ | (805 | ) |  | $ | 464,392 |
Insurance finance (income) expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance finance (income) expenses, per disclosure above |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (67,575 | )
Reclassification of derivative OCI to IFIE – cash flow hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | – |
Reclassification of derivative (income) loss changes to IFIE – fair value hedge |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | – |
PAA items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
PAA IFIE per disclosure |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1,258 | )
PAA Reclassification of derivative OCI to IFIE – cash flow hedges |  |  |  |  |  |  |  |  |  |  |  | – |
PAA Reclassification of derivative (income) loss changes to IFIE – fair value hedge |  |  |  |  |  |  |  |  |  |  |  | – |
Insurance finance (income) expenses, per disclosure in note 7 (f) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (68,833 | )
Reinsurance contracts held – Analysis by remaining coverage and incurred claims The following tables present the movement in the net assets or liabilities for reinsurance contracts held, showing assets for remaining coverage and amounts recoverable on incurred claims arising from business ceded to reinsurers for the years ended December 31, 2023 and December 31, 2022.
|  | Assets (liabilities) for remaining coverage |  |  |  |  |  | Assets (liabilities) for incurred claims |  |  |  |
|  | Excluding loss recovery component |  |  | Loss recovery component |  |  |  |  |  | Products not under PAA |  |  | PAA Estimates of PV of future cash flows |  |  | PAA Risk adjustment for non-financial risk |  |  | Total |
Opening reinsurance contract held assets |  | $ | 37,853 |  |  | $ | 209 |  |  |  |  |  |  | $ | 7,521 |  |  | $ | 280 |  |  | $ | 8 |  |  | $ | 45,871 |
Opening reinsurance contract held liabilities |  |  | (2,196 | ) |  |  | 4 |  |  |  |  |  |  |  | (137 | ) |  |  | (62 | ) |  |  | – |  |  |  | (2,391 | )
Net opening balance, January 1, 2023 |  |  | 35,657 |  |  |  | 213 |  |  |  |  |  |  |  | 7,384 |  |  |  | 218 |  |  |  | 8 |  |  |  | 43,480 |
Changes in income and OCI |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allocation of reinsurance premium paid |  |  | (6,430 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (6,430 | )
Amounts recoverable from reinsurers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoveries of incurred claims and other insurance service expenses |  |  | – |  |  |  | (45 | ) |  |  |  |  |  |  | 5,228 |  |  |  | 568 |  |  |  | – |  |  |  | 5,751 |
Recoveries and reversals of recoveries of losses on onerous underlying contracts |  |  | – |  |  |  | 77 |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 77 |
Adjustments to assets for incurred claims |  |  | – |  |  |  | – |  |  |  |  |  |  |  | 5 |  |  |  | (24 | ) |  |  | 8 |  |  |  | (11 | )
Insurance service result |  |  | (6,430 | ) |  |  | 32 |  |  |  |  |  |  |  | 5,233 |  |  |  | 544 |  |  |  | 8 |  |  |  | (613 | )
Investment components and premium refunds |  |  | (1,519 | ) |  |  | – |  |  |  |  |  |  |  | 1,519 |  |  |  | – |  |  |  | – |  |  |  | – |
Net expenses from reinsurance contracts |  |  | (7,949 | ) |  |  | 32 |  |  |  |  |  |  |  | 6,752 |  |  |  | 544 |  |  |  | 8 |  |  |  | (613 | )
Net finance (income) expenses from reinsurance contracts |  |  | 719 |  |  |  | 8 |  |  |  |  |  |  |  | (97 | ) |  |  | 9 |  |  |  | – |  |  |  | 639 |
Effect of changes in non-performance risk of reinsurers |  |  | (14 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (14 | )
Effects of movements in foreign exchange rates |  |  | (924 | ) |  |  | (5 | ) |  |  |  |  |  |  | (169 | ) |  |  | – |  |  |  | – |  |  |  | (1,098 | )
Contracts measured under PAA |  |  | – |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Total changes in income and OCI |  |  | (8,168 | ) |  |  | 35 |  |  |  |  |  |  |  | 6,486 |  |  |  | 553 |  |  |  | 8 |  |  |  | (1,086 | )
Cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premiums paid |  |  | 4,956 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 4,956 |
Amounts received |  |  | – |  |  |  | – |  |  |  |  |  |  |  | (6,971 | ) |  |  | (559 | ) |  |  | – |  |  |  | (7,530 | )
Total cash flows |  |  | 4,956 |  |  |  | – |  |  |  |  |  |  |  | (6,971 | ) |  |  | (559 | ) |  |  | – |  |  |  | (2,574 | )
Net closing balance |  |  | 32,445 |  |  |  | 248 |  |  |  |  |  |  |  | 6,899 |  |  |  | 212 |  |  |  | 16 |  |  |  | 39,820 |
Closing reinsurance contract held assets |  |  | 35,079 |  |  |  | 246 |  |  |  |  |  |  |  | 7,035 |  |  |  | 275 |  |  |  | 16 |  |  |  | 42,651 |
Closing reinsurance contract held liabilities |  |  | (2,634 | ) |  |  | 2 |  |  |  |  |  |  |  | (136 | ) |  |  | (63 | ) |  |  | – |  |  |  | (2,831 | )
Net closing balance, December 31, 2023 |  | $ | 32,445 |  |  | $ | 248 |  |  |  |  |  |  | $ | 6,899 |  |  | $ | 212 |  |  | $ | 16 |  |  | $ | 39,820 |
Reinsurance contracts held – Analysis by remaining coverage and incurred claims (continued)
|  | Assets (liabilities) for remaining coverage |  |  |  |  |  | Assets (liabilities) for incurred claims |  |  |  |
|  | Excluding loss recovery component |  |  | Loss recovery component |  |  |  |  |  | Products not under PAA |  |  | PAA Estimates of PV of future cash flows |  |  | PAA Risk adjustment for non-financial risk |  |  | Total |
Opening reinsurance contract held assets |  | $ | 45,699 |  |  | $ | 79 |  |  |  |  |  |  | $ | 6,740 |  |  | $ | 303 |  |  | $ | 8 |  |  | $ | 52,829 |
Opening reinsurance contract held liabilities |  |  | (2,030 | ) |  |  | 19 |  |  |  |  |  |  |  | (27 | ) |  |  | (41 | ) |  |  | – |  |  |  | (2,079 | )
Net opening balance, January 1, 2022 |  |  | 43,669 |  |  |  | 98 |  |  |  |  |  |  |  | 6,713 |  |  |  | 262 |  |  |  | 8 |  |  |  | 50,750 |
Changes in income and OCI |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allocation of reinsurance premium paid |  |  | (6,024 | ) |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (6,024 | )
Amounts recoverable from reinsurers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recoveries of incurred claims and other insurance service expenses |  |  | – |  |  |  | (30 | ) |  |  |  |  |  |  | 4,925 |  |  |  | 417 |  |  |  | (4 | ) |  |  | 5,308 |
Recoveries and reversals of recoveries of losses on onerous underlying contracts |  |  | – |  |  |  | 132 |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 132 |
Adjustments to assets for incurred claims |  |  | – |  |  |  | – |  |  |  |  |  |  |  | 3 |  |  |  | (33 | ) |  |  | (9 | ) |  |  | (39 | )
Insurance service result |  |  | (6,024 | ) |  |  | 102 |  |  |  |  |  |  |  | 4,928 |  |  |  | 384 |  |  |  | (13 | ) |  |  | (623 | )
Investment components and premium refunds |  |  | (1,341 | ) |  |  | – |  |  |  |  |  |  |  | 1,341 |  |  |  | – |  |  |  | – |  |  |  | – |
Net expenses from reinsurance contracts |  |  | (7,365 | ) |  |  | 102 |  |  |  |  |  |  |  | 6,269 |  |  |  | 384 |  |  |  | (13 | ) |  |  | (623 | )
Net finance (income) expenses from reinsurance contracts |  |  | (9,586 | ) |  |  | 5 |  |  |  |  |  |  |  | 446 |  |  |  | (14 | ) |  |  | 13 |  |  |  | (9,136 | )
Effect of changes in non-performance risk of reinsurers |  |  | 97 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 97 |
Effects of movements in foreign exchange rates |  |  | 2,683 |  |  |  | 8 |  |  |  |  |  |  |  | 455 |  |  |  | – |  |  |  | – |  |  |  | 3,146 |
Contracts measured under PAA |  |  | – |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Total changes in income and OCI |  |  | (14,171 | ) |  |  | 115 |  |  |  |  |  |  |  | 7,170 |  |  |  | 370 |  |  |  | – |  |  |  | (6,516 | )
Cash flows |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premiums paid |  |  | 6,159 |  |  |  | – |  |  |  |  |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 6,159 |
Amounts received |  |  | – |  |  |  | – |  |  |  |  |  |  |  | (6,499 | ) |  |  | (414 | ) |  |  | – |  |  |  | (6,913 | )
Total cash flows |  |  | 6,159 |  |  |  | – |  |  |  |  |  |  |  | (6,499 | ) |  |  | (414 | ) |  |  | – |  |  |  | (754 | )
Net closing balance |  |  | 35,657 |  |  |  | 213 |  |  |  |  |  |  |  | 7,384 |  |  |  | 218 |  |  |  | 8 |  |  |  | 43,480 |
Closing reinsurance contract held assets |  |  | 37,853 |  |  |  | 209 |  |  |  |  |  |  |  | 7,521 |  |  |  | 280 |  |  |  | 8 |  |  |  | 45,871 |
Closing reinsurance contract held liabilities |  |  | (2,196 | ) |  |  | 4 |  |  |  |  |  |  |  | (137 | ) |  |  | (62 | ) |  |  | – |  |  |  | (2,391 | )
Net closing balance, December 31, 2022 |  | $ | 35,657 |  |  | $ | 213 |  |  |  |  |  |  | $ | 7,384 |  |  | $ | 218 |  |  | $ | 8 |  |  | $ | 43,480 |
Reinsurance contracts held – Analysis by measurement components The following tables present the movement in the net assets or liabilities for reinsurance contracts held, showing estimates of the present value of future cash flows, risk adjustment and CSM for the years ended December 31, 2023 and December 31, 2022.
|  |  |  |  |  |  |  | CSM |  |  |  |
|  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Total |
Opening reinsurance contract held assets |  | $ | 39,656 |  |  | $ | 4,049 |  |  | $ | 1,774 |  |  | $ | 99 |  |  | $ | 45,578 |
Opening reinsurance contract held liabilities |  |  | (3,919 | ) |  |  | 1,574 |  |  |  | (39 | ) |  |  | 38 |  |  |  | (2,346 | )
Opening PAA reinsurance contract net assets |  |  | 240 |  |  |  | 8 |  |  |  | – |  |  |  | – |  |  |  | 248 |
Net opening balance, January 1, 2023 |  |  | 35,977 |  |  |  | 5,631 |  |  |  | 1,735 |  |  |  | 137 |  |  |  | 43,480 |
CSM recognized for services received |  |  | – |  |  |  | – |  |  |  | (217 | ) |  |  | 53 |  |  |  | (164 | )
Change in risk adjustment for non-financial risk for risk expired |  |  | – |  |  |  | (478 | ) |  |  | – |  |  |  | – |  |  |  | (478 | )
Experience adjustments |  |  | (19 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (19 | )
Changes that relate to current services |  |  | (19 | ) |  |  | (478 | ) |  |  | (217 | ) |  |  | 53 |  |  |  | (661 | )
Contracts initially recognized during the year |  |  | (64 | ) |  |  | 399 |  |  |  | – |  |  |  | (263 | ) |  |  | 72 |
Changes in recoveries of losses on onerous underlying contracts that adjust the CSM |  |  | – |  |  |  | – |  |  |  | (36 | ) |  |  | 17 |  |  |  | (19 | )
Changes in estimates that adjust the CSM |  |  | 1,433 |  |  |  | (821 | ) |  |  | (821 | ) |  |  | 209 |  |  |  | – |
Changes in estimates that relate to losses and reversal of losses on onerous contracts |  |  | 43 |  |  |  | (20 | ) |  |  | – |  |  |  | – |  |  |  | 23 |
Changes that relate to future services |  |  | 1,412 |  |  |  | (442 | ) |  |  | (857 | ) |  |  | (37 | ) |  |  | 76 |
Adjustments to liabilities for incurred claims |  |  | 5 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 5 |
Changes that relate to past services |  |  | 5 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 5 |
Insurance service result |  |  | 1,398 |  |  |  | (920 | ) |  |  | (1,074 | ) |  |  | 16 |  |  |  | (580 | )
Insurance finance (income) expenses from reinsurance contracts |  |  | 173 |  |  |  | 447 |  |  |  | 41 |  |  |  | (31 | ) |  |  | 630 |
Effects of changes in non-performance risk of reinsurers |  |  | (14 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (14 | )
Effects of movements in foreign exchange rates |  |  | (916 | ) |  |  | (160 | ) |  |  | (21 | ) |  |  | – |  |  |  | (1,097 | )
Total changes in income and OCI |  |  | 641 |  |  |  | (633 | ) |  |  | (1,054 | ) |  |  | (15 | ) |  |  | (1,061 | )
Total cash flows |  |  | (2,606 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (2,606 | )
Change in PAA balance |  |  | (1 | ) |  |  | 8 |  |  |  | – |  |  |  | – |  |  |  | 7 |
Net closing balance |  |  | 34,011 |  |  |  | 5,006 |  |  |  | 681 |  |  |  | 122 |  |  |  | 39,820 |
Closing reinsurance contract held assets |  |  | 38,156 |  |  |  | 3,685 |  |  |  | 565 |  |  |  | (51 | ) |  |  | 42,355 |
Closing reinsurance contract held liabilities |  |  | (4,384 | ) |  |  | 1,305 |  |  |  | 116 |  |  |  | 173 |  |  |  | (2,790 | )
Closing PAA reinsurance contract net assets |  |  | 239 |  |  |  | 16 |  |  |  | – |  |  |  | – |  |  |  | 255 |
Net closing balance, December 31, 2023 |  | $ | 34,011 |  |  | $ | 5,006 |  |  | $ | 681 |  |  | $ | 122 |  |  | $ | 39,820 |
|  |  |  |  |  |  |  | CSM |  |  |  |
|  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Total |
Opening reinsurance contract held assets |  | $ | 46,025 |  |  | $ | 4,977 |  |  | $ | 2,012 |  |  | $ | (501 | ) |  | $ | 52,513 |
Opening reinsurance contract held liabilities |  |  | (5,138 | ) |  |  | 1,719 |  |  |  | 1,262 |  |  |  | 105 |  |  |  | (2,052 | )
Opening PAA reinsurance contract net assets |  |  | 281 |  |  |  | 8 |  |  |  | – |  |  |  | – |  |  |  | 289 |
Net opening balance, January 1, 2022 |  |  | 41,168 |  |  |  | 6,704 |  |  |  | 3,274 |  |  |  | (396 | ) |  |  | 50,750 |
CSM recognized for services received |  |  | – |  |  |  | – |  |  |  | (231 | ) |  |  | (74 | ) |  |  | (305 | )
Change in risk adjustment for non-financial risk for risk expired |  |  | – |  |  |  | (424 | ) |  |  | – |  |  |  | – |  |  |  | (424 | )
Experience adjustments |  |  | 9 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 9 |
Changes that relate to current services |  |  | 9 |  |  |  | (424 | ) |  |  | (231 | ) |  |  | (74 | ) |  |  | (720 | )
Contracts initially recognized during the year |  |  | (1,276 | ) |  |  | 717 |  |  |  | (7 | ) |  |  | 717 |  |  |  | 151 |
Changes in recoveries of losses on onerous underlying contracts that adjust the CSM |  |  | – |  |  |  | – |  |  |  | (15 | ) |  |  | (50 | ) |  |  | (65 | )
Changes in estimates that adjust the CSM |  |  | 1,337 |  |  |  | 173 |  |  |  | (1,440 | ) |  |  | (70 | ) |  |  | – |
Changes in estimates that relate to losses and reversal of losses on onerous contracts |  |  | 106 |  |  |  | (60 | ) |  |  | – |  |  |  | – |  |  |  | 46 |
Changes that relate to future services |  |  | 167 |  |  |  | 830 |  |  |  | (1,462 | ) |  |  | 597 |  |  |  | 132 |
Adjustments to liabilities for incurred claims |  |  | 3 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 3 |
Changes that relate to past services |  |  | 3 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 3 |
Insurance service result |  |  | 179 |  |  |  | 406 |  |  |  | (1,693 | ) |  |  | 523 |  |  |  | (585 | )
Insurance finance (income) expenses from reinsurance contracts |  |  | (7,463 | ) |  |  | (1,715 | ) |  |  | 56 |  |  |  | (14 | ) |  |  | (9,136 | )
Effects of changes in non-performance risk of reinsurers |  |  | 97 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 97 |
Effects of movements in foreign exchange rates |  |  | 2,787 |  |  |  | 236 |  |  |  | 98 |  |  |  | 24 |  |  |  | 3,145 |
Total changes in income and OCI |  |  | (4,400 | ) |  |  | (1,073 | ) |  |  | (1,539 | ) |  |  | 533 |  |  |  | (6,479 | )
Total cash flows |  |  | (750 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (750 | )
Change in PAA balance |  |  | (41 | ) |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (41 | )
Net closing balance |  |  | 35,977 |  |  |  | 5,631 |  |  |  | 1,735 |  |  |  | 137 |  |  |  | 43,480 |
Closing reinsurance contract held assets |  |  | 39,656 |  |  |  | 4,049 |  |  |  | 1,774 |  |  |  | 99 |  |  |  | 45,578 |
Closing reinsurance contract held liabilities |  |  | (3,919 | ) |  |  | 1,574 |  |  |  | (39 | ) |  |  | 38 |  |  |  | (2,346 | )
Closing PAA reinsurance contract net assets |  |  | 240 |  |  |  | 8 |  |  |  | – |  |  |  | – |  |  |  | 248 |
Net closing balance, December 31, 2022 |  | $ | 35,977 |  |  | $ | 5,631 |  |  | $ | 1,735 |  |  | $ | 137 |  |  | $ | 43,480 |
(II) Segment Carrying balance by measurement components The following tables present the carrying balances of net assets or liabilities for insurance contracts issued and reinsurance contracts held by measurement components, by reporting segment for the years ended December 31, 2023 and December 31, 2022. Insurance contracts issued
|  | Excluding contracts applying the PAA |  |  | Contracts applying the PAA |  |  | CSM |  |  |  |  |  |  |
As at December 31, 2023 |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Assets for insurance acquisition cash flows |  |  | Total insurance contract liabilities (assets) |
Asia |  | $ | 132,135 |  |  | $ | 6,764 |  |  | $ | 1,242 |  |  | $ | 5 |  |  | $ | 10,431 |  |  | $ | 3,740 |  |  | $ | (271 | ) |  | $ | 154,046 |
Canada |  |  | 96,455 |  |  |  | 3,649 |  |  |  | 11,153 |  |  |  | 621 |  |  |  | 3,851 |  |  |  | 492 |  |  |  | (549 | ) |  |  | 115,672 |
U.S. |  |  | 196,921 |  |  |  | 12,438 |  |  |  | – |  |  |  | – |  |  |  | 3,243 |  |  |  | 459 |  |  |  | – |  |  |  | 213,061 |
Corporate and Other |  |  | (977 | ) |  |  | (13 | ) |  |  | 317 |  |  |  | – |  |  |  | (112 | ) |  |  | – |  |  |  | – |  |  |  | (785 | )
|  | $ | 424,534 |  |  | $ | 22,838 |  |  | $ | 12,712 |  |  | $ | 626 |  |  | $ | 17,413 |  |  | $ | 4,691 |  |  | $ | (820 | ) |  | $ | 481,994 |
|  | Excluding contracts applying the PAA |  |  | Contracts applying the PAA |  |  | CSM |  |  |  |  |  |  |
As at December 31, 2022 |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Assets for insurance acquisition cash flows |  |  | Total insurance contract liabilities (assets) |
Asia |  | $ | 120,180 |  |  | $ | 10,017 |  |  | $ | 1,136 |  |  | $ | 2 |  |  | $ | 8,067 |  |  | $ | 2,181 |  |  | $ | (283 | ) |  | $ | 141,300 |
Canada |  |  | 91,599 |  |  |  | 3,764 |  |  |  | 10,532 |  |  |  | 603 |  |  |  | 3,811 |  |  |  | 181 |  |  |  | (522 | ) |  |  | 109,968 |
U.S. |  |  | 194,766 |  |  |  | 12,494 |  |  |  | – |  |  |  | – |  |  |  | 5,419 |  |  |  | 282 |  |  |  | – |  |  |  | 212,961 |
Corporate and Other |  |  | (189 | ) |  |  | (13 | ) |  |  | 457 |  |  |  | – |  |  |  | (92 | ) |  |  | – |  |  |  | – |  |  |  | 163 |
|  | $ | 406,356 |  |  | $ | 26,262 |  |  | $ | 12,125 |  |  | $ | 605 |  |  | $ | 17,205 |  |  | $ | 2,644 |  |  | $ | (805 | ) |  | $ | 464,392 |
Reinsurance contracts held
|  | Excluding contracts applying the PAA |  |  | Contracts applying the PAA |  |  | CSM |  |  |  |
As at December 31, 2023 |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Total reinsurance contract liabilities (assets) |
Asia |  | $ | (351 | ) |  | $ | 1,326 |  |  | $ | (37 | ) |  | $ | – |  |  | $ | 623 |  |  | $ | 70 |  |  | $ | 1,631 |
Canada |  |  | (1,238 | ) |  |  | 1,674 |  |  |  | 275 |  |  |  | 16 |  |  |  | 338 |  |  |  | (56 | ) |  |  | 1,009 |
U.S. |  |  | 35,461 |  |  |  | 1,997 |  |  |  | – |  |  |  | – |  |  |  | (143 | ) |  |  | 108 |  |  |  | 37,423 |
Corporate and Other |  |  | (100 | ) |  |  | (7 | ) |  |  | 1 |  |  |  | – |  |  |  | (137 | ) |  |  | – |  |  |  | (243 | )
|  | $ | 33,772 |  |  | $ | 4,990 |  |  | $ | 239 |  |  | $ | 16 |  |  | $ | 681 |  |  | $ | 122 |  |  | $ | 39,820 |
|  | Excluding contracts applying the PAA |  |  | Contracts applying the PAA |  |  | CSM |  |  |  |
As at December 31, 2022 |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Estimates of PV of future cash flows |  |  | Risk adjustment for non-financial risk |  |  | Fair value |  |  | Other |  |  | Total reinsurance contract liabilities (assets) |
Asia |  | $ | (147 | ) |  | $ | 1,895 |  |  | $ | (39 | ) |  | $ | – |  |  | $ | 203 |  |  | $ | (68 | ) |  | $ | 1,844 |
Canada |  |  | (1,427 | ) |  |  | 1,672 |  |  |  | 277 |  |  |  | 8 |  |  |  | 374 |  |  |  | (59 | ) |  |  | 845 |
U.S. |  |  | 36,735 |  |  |  | 2,065 |  |  |  | – |  |  |  | – |  |  |  | 1,302 |  |  |  | 264 |  |  |  | 40,366 |
Corporate and Other |  |  | 576 |  |  |  | (9 | ) |  |  | 2 |  |  |  | – |  |  |  | (144 | ) |  |  | – |  |  |  | 425 |
|  | $ | 35,737 |  |  | $ | 5,623 |  |  | $ | 240 |  |  | $ | 8 |  |  | $ | 1,735 |  |  | $ | 137 |  |  | $ | 43,480 |
(c) Insurance revenue by transition method The following table provides information as a supplement to the insurance revenue disclosures in note 7 (b).
For the year ended December 31, 2023 |  | Asia |  |  | Canada |  |  | U.S. |  |  | Other |  |  | Total |
Contracts under the fair value method |  | $ | 2,499 |  |  | $ | 3,288 |  |  | $ | 10,123 |  |  | $ | (18 | ) |  | $ | 15,892 |
Contracts under the full retrospective method |  |  | 531 |  |  |  | 48 |  |  |  | 152 |  |  |  | – |  |  |  | 731 |
Other contracts |  |  | 2,026 |  |  |  | 5,283 |  |  |  | (81 | ) |  |  | 121 |  |  |  | 7,349 |
Total |  | $ | 5,056 |  |  | $ | 8,619 |  |  | $ | 10,194 |  |  | $ | 103 |  |  | $ | 23,972 |
For the year ended December 31, 2022 |  | Asia |  |  | Canada |  |  | U.S. |  |  | Other |  |  | Total |
Contracts under the fair value method |  | $ | 2,656 |  |  | $ | 3,370 |  |  | $ | 9,901 |  |  | $ | (96 | ) |  | $ | 15,831 |
Contracts under the full retrospective method |  |  | 666 |  |  |  | 122 |  |  |  | 76 |  |  |  | – |  |  |  | 864 |
Other contracts |  |  | 1,412 |  |  |  | 4,625 |  |  |  | 268 |  |  |  | 118 |  |  |  | 6,423 |
Total |  | $ | 4,734 |  |  | $ | 8,117 |  |  | $ | 10,245 |  |  | $ | 22 |  |  | $ | 23,118 |
(d) Effect of new business recognized in the year The following tables present components of new business for insurance contracts issued for the years presented.
|  | Asia |  |  | Canada |  |  | U.S. |  |  | Total |
As at December 31, 2023 |  | Non-Onerous |  |  | Onerous |  |  | Non-Onerous |  |  | Onerous |  |  | Non-Onerous |  |  | Onerous |  |  | Non-Onerous |  |  | Onerous |
New business insurance contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Estimates of present value of cash outflows |  | $ | 16,209 |  |  | $ | 2,399 |  |  | $ | 3,478 |  |  | $ | 271 |  |  | $ | 2,524 |  |  | $ | 1,126 |  |  | $ | 22,211 |  |  | $ | 3,796 |
Insurance acquisition cash flows |  |  | 3,011 |  |  |  | 322 |  |  |  | 608 |  |  |  | 68 |  |  |  | 676 |  |  |  | 233 |  |  |  | 4,295 |  |  |  | 623 |
Claims and other insurance service expenses payable |  |  | 13,198 |  |  |  | 2,077 |  |  |  | 2,870 |  |  |  | 203 |  |  |  | 1,848 |  |  |  | 893 |  |  |  | 17,916 |  |  |  | 3,173 |
Estimates of present value of cash inflows |  |  | (18,765 | ) |  |  | (2,330 | ) |  |  | (3,823 | ) |  |  | (286 | ) |  |  | (2,953 | ) |  |  | (1,145 | ) |  |  | (25,541 | ) |  |  | (3,761 | )
Risk adjustment for non-financial risk |  |  | 679 |  |  |  | 89 |  |  |  | 115 |  |  |  | 41 |  |  |  | 168 |  |  |  | 88 |  |  |  | 962 |  |  |  | 218 |
Contractual service margin |  |  | 1,877 |  |  |  | – |  |  |  | 230 |  |  |  | – |  |  |  | 261 |  |  |  | – |  |  |  | 2,368 |  |  |  | – |
Amount included in insurance contract liabilities for the year |  | $ | – |  |  | $ | 158 |  |  | $ | – |  |  | $ | 26 |  |  | $ | – |  |  | $ | 69 |  |  | $ | – |  |  | $ | 253 |
|  | Asia |  |  | Canada |  |  | U.S. |  |  | Total |
As at December 31, 2022 |  | Non-Onerous |  |  | Onerous |  |  | Non-Onerous |  |  | Onerous |  |  | Non-Onerous |  |  | Onerous |  |  | Non-Onerous |  |  | Onerous |
New business insurance contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Estimates of present value of cash outflows |  | $ | 8,470 |  |  | $ | 3,953 |  |  | $ | 3,604 |  |  | $ | 390 |  |  | $ | 1,845 |  |  | $ | 1,237 |  |  | $ | 13,919 |  |  | $ | 5,580 |
Insurance acquisition cash flows |  |  | 2,244 |  |  |  | 499 |  |  |  | 600 |  |  |  | 119 |  |  |  | 568 |  |  |  | 228 |  |  |  | 3,412 |  |  |  | 846 |
Claims and other insurance service expenses payable |  |  | 6,226 |  |  |  | 3,454 |  |  |  | 3,004 |  |  |  | 271 |  |  |  | 1,277 |  |  |  | 1,009 |  |  |  | 10,507 |  |  |  | 4,734 |
Estimates of present value of cash inflows |  |  | (10,759 | ) |  |  | (3,772 | ) |  |  | (3,901 | ) |  |  | (431 | ) |  |  | (2,289 | ) |  |  | (1,227 | ) |  |  | (16,949 | ) |  |  | (5,430 | )
Risk adjustment for non-financial risk |  |  | 704 |  |  |  | 153 |  |  |  | 107 |  |  |  | 92 |  |  |  | 221 |  |  |  | 119 |  |  |  | 1,032 |  |  |  | 364 |
Contractual service margin |  |  | 1,585 |  |  |  | – |  |  |  | 190 |  |  |  | – |  |  |  | 223 |  |  |  | – |  |  |  | 1,998 |  |  |  | – |
Amount included in insurance contract liabilities for the year |  | $ | – |  |  | $ | 334 |  |  | $ | – |  |  | $ | 51 |  |  | $ | – |  |  | $ | 129 |  |  | $ | – |  |  | $ | 514 |
The following tables present components of new business for reinsurance contracts held portfolios for the years presented.
As at December 31, 2023 |  | Asia |  |  | Canada |  |  | U.S. |  |  | Total |
New business reinsurance contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Estimates of present value of cash outflows |  | $ | (916 | ) |  | $ | (331 | ) |  | $ | (750 | ) |  | $ | (1,997 | )
Estimates of present value of cash inflows |  |  | 815 |  |  |  | 319 |  |  |  | 799 |  |  |  | 1,933 |
Risk adjustment for non-financial risk |  |  | 170 |  |  |  | 76 |  |  |  | 153 |  |  |  | 399 |
Contractual service margin |  |  | (57 | ) |  |  | (51 | ) |  |  | (155 | ) |  |  | (263 | )
Amount included in reinsurance assets for the year |  | $ | 12 |  |  | $ | 13 |  |  | $ | 47 |  |  | $ | 72 |
As at December 31, 2022 |  | Asia |  |  | Canada |  |  | U.S. |  |  | Total |
New business reinsurance contracts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Estimates of present value of cash outflows |  | $ | (519 | ) |  | $ | (291 | ) |  | $ | (7,084 | ) |  | $ | (7,894 | )
Estimates of present value of cash inflows |  |  | 453 |  |  |  | 261 |  |  |  | 5,904 |  |  |  | 6,618 |
Risk adjustment for non-financial risk |  |  | 125 |  |  |  | 77 |  |  |  | 515 |  |  |  | 717 |
Contractual service margin |  |  | (22 | ) |  |  | (15 | ) |  |  | 747 |  |  |  | 710 |
Amount included in reinsurance assets for the year |  | $ | 37 |  |  | $ | 32 |  |  | $ | 82 |  |  | $ | 151 |
(e) Expected recognition of contractual service margin The following tables present expectations for the timing of recognition of CSM in income in future years.
As at December 31, 2023 |  | Less than 1 year |  |  | 1 to 5 years |  |  | 5 to 10 years |  |  | 10 to 20 years |  |  | More than 20 years |  |  | Total |
Canada |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  | $ | 379 |  |  | $ | 1,213 |  |  | $ | 1,016 |  |  | $ | 1,084 |  |  | $ | 651 |  |  | $ | 4,343 |
Reinsurance contracts held |  |  | (36 | ) |  |  | (83 | ) |  |  | (52 | ) |  |  | (46 | ) |  |  | (65 | ) |  |  | (282 | )
|  |  | 343 |  |  |  | 1,130 |  |  |  | 964 |  |  |  | 1,038 |  |  |  | 586 |  |  |  | 4,061 |
U.S. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  |  | 388 |  |  |  | 1,235 |  |  |  | 968 |  |  |  | 823 |  |  |  | 288 |  |  |  | 3,702 |
Reinsurance contracts held |  |  | (50 | ) |  |  | (139 | ) |  |  | (35 | ) |  |  | 90 |  |  |  | 169 |  |  |  | 35 |
|  |  | 338 |  |  |  | 1,096 |  |  |  | 933 |  |  |  | 913 |  |  |  | 457 |  |  |  | 3,737 |
Asia |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  |  | 1,273 |  |  |  | 4,066 |  |  |  | 3,320 |  |  |  | 3,308 |  |  |  | 2,204 |  |  |  | 14,171 |
Reinsurance contracts held |  |  | (44 | ) |  |  | (202 | ) |  |  | (173 | ) |  |  | (105 | ) |  |  | (169 | ) |  |  | (693 | )
|  |  | 1,229 |  |  |  | 3,864 |  |  |  | 3,147 |  |  |  | 3,203 |  |  |  | 2,035 |  |  |  | 13,478 |
Corporate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  |  | (8 | ) |  |  | (28 | ) |  |  | (28 | ) |  |  | (34 | ) |  |  | (14 | ) |  |  | (112 | )
Reinsurance contracts held |  |  | 10 |  |  |  | 51 |  |  |  | 53 |  |  |  | 19 |  |  |  | 4 |  |  |  | 137 |
|  |  | 2 |  |  |  | 23 |  |  |  | 25 |  |  |  | (15 | ) |  |  | (10 | ) |  |  | 25 |
Total |  | $ | 1,912 |  |  | $ | 6,113 |  |  | $ | 5,069 |  |  | $ | 5,139 |  |  | $ | 3,068 |  |  | $ | 21,301 |
As at December 31, 2022 |  | Less than 1 year |  |  | 1 to 5 years |  |  | 5 to 10 years |  |  | 10 to 20 years |  |  | More than 20 years |  |  | Total |
Canada |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  | $ | 333 |  |  | $ | 1,088 |  |  | $ | 936 |  |  | $ | 1,015 |  |  | $ | 620 |  |  | $ | 3,992 |
Reinsurance contracts held |  |  | (36 | ) |  |  | (100 | ) |  |  | (69 | ) |  |  | (62 | ) |  |  | (48 | ) |  |  | (315 | )
|  |  | 297 |  |  |  | 988 |  |  |  | 867 |  |  |  | 953 |  |  |  | 572 |  |  |  | 3,677 |
U.S. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  |  | 541 |  |  |  | 1,770 |  |  |  | 1,468 |  |  |  | 1,375 |  |  |  | 547 |  |  |  | 5,701 |
Reinsurance contracts held |  |  | (189 | ) |  |  | (586 | ) |  |  | (433 | ) |  |  | (296 | ) |  |  | (62 | ) |  |  | (1,566 | )
|  |  | 352 |  |  |  | 1,184 |  |  |  | 1,035 |  |  |  | 1,079 |  |  |  | 485 |  |  |  | 4,135 |
Asia |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  |  | 922 |  |  |  | 2,933 |  |  |  | 2,442 |  |  |  | 2,435 |  |  |  | 1,516 |  |  |  | 10,248 |
Reinsurance contracts held |  |  | (17 | ) |  |  | (79 | ) |  |  | (55 | ) |  |  | 5 |  |  |  | 11 |  |  |  | (135 | )
|  |  | 905 |  |  |  | 2,854 |  |  |  | 2,387 |  |  |  | 2,440 |  |  |  | 1,527 |  |  |  | 10,113 |
Corporate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Insurance contracts issued |  |  | (8 | ) |  |  | (27 | ) |  |  | (23 | ) |  |  | (24 | ) |  |  | (10 | ) |  |  | (92 | )
Reinsurance contracts held |  |  | 12 |  |  |  | 40 |  |  |  | 35 |  |  |  | 38 |  |  |  | 19 |  |  |  | 144 |
|  |  | 4 |  |  |  | 13 |  |  |  | 12 |  |  |  | 14 |  |  |  | 9 |  |  |  | 52 |
Total |  | $ | 1,558 |  |  | $ | 5,039 |  |  | $ | 4,301 |  |  | $ | 4,486 |  |  | $ | 2,593 |  |  | $ | 17,977 |
(f) Investment income and insurance finance income and expenses
For the year ended December 31, 202 3 |  | Insurance contracts |  |  | Non-insurance (1) |  |  | Total |
Investment return |  |  |  |  |  |  |  |  |  |  |  |
Investment related income |  | $ | 13,036 |  |  | $ | 3,079 |  |  | $ | 16,115 |
Net gains (losses) on financial assets at FVTPL |  |  | 2,176 |  |  |  | 506 |  |  |  | 2,682 |
Unrealized gains (losses) on FVOCI assets |  |  | 11,212 |  |  |  | 1,018 |  |  |  | 12,230 |
Impairment loss on financial assets |  |  | (247 | ) |  |  | (57 | ) |  |  | (304 | )
Investment expenses |  |  | (540 | ) |  |  | (757 | ) |  |  | (1,297 | )
Interest on required surplus |  |  | 521 |  |  |  | (521 | ) |  |  | – |
Total investment return |  |  | 26,158 |  |  |  | 3,268 |  |  |  | 29,426 |
Portion recognized in income (expenses) |  |  | 15,830 |  |  |  | 2,191 |  |  |  | 18,021 |
Portion recognized in OCI |  |  | 10,328 |  |  |  | 1,077 |  |  |  | 11,405 |
Insurance finance income (expenses) from insurance contracts issued and effect of movement in exchange rates |  |  |  |  |  |  |  |  |  |  |  |
Interest accreted to insurance contracts using locked-in rate |  |  | (8,214 | ) |  |  | 28 |  |  |  | (8,186 | )
Due to changes in interest rates and other financial assumptions |  |  | (11,008 | ) |  |  | 21 |  |  |  | (10,987 | )
Changes in fair value of underlying items of direct participation contracts |  |  | (7,384 | ) |  |  | – |  |  |  | (7,384 | )
Effects of risk mitigation option |  |  | 1,267 |  |  |  | – |  |  |  | 1,267 |
Net foreign exchange income (expenses) |  |  | (80 | ) |  |  | – |  |  |  | (80 | )
Hedge accounting offset from insurance contracts issued |  |  | (41 | ) |  |  | – |  |  |  | (41 | )
Reclassification of derivative OCI to IFIE – cash flow hedges |  |  | (3 | ) |  |  | – |  |  |  | (3 | )
Reclassification of derivative income (loss) changes to IFIE – fair value hedge |  |  | 185 |  |  |  | – |  |  |  | 185 |
Other |  |  | 237 |  |  |  | – |  |  |  | 237 |
Total insurance finance income (expenses) from insurance contracts issued |  |  | (25,041 | ) |  |  | 49 |  |  |  | (24,992 | )
Effect of movements in foreign exchange rates |  |  | (952 | ) |  |  | – |  |  |  | (952 | )
Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |  |  | (25,993 | ) |  |  | 49 |  |  |  | (25,944 | )
Portion recognized in income (expenses), including effects of exchange rates |  |  | (13,930 | ) |  |  | 36 |  |  |  | (13,894 | )
Portion recognized in OCI, including effects of exchange rates |  |  | (12,063 | ) |  |  | 13 |  |  |  | (12,050 | )
Reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |  |  |  |  |  |  |  |  |  |  |  |
Interest accreted to insurance contracts using locked-in rate |  |  | 241 |  |  |  | (12 | ) |  |  | 229 |
Due to changes in interest rates and other financial assumptions |  |  | 598 |  |  |  | (28 | ) |  |  | 570 |
Changes in risk of non-performance of reinsurer |  |  | (15 | ) |  |  | – |  |  |  | (15 | )
Other |  |  | (159 | ) |  |  | – |  |  |  | (159 | )
Total reinsurance finance income (expenses) from reinsurance contracts held |  |  | 665 |  |  |  | (40 | ) |  |  | 625 |
Effect of movements in foreign exchange rates |  |  | (120 | ) |  |  | – |  |  |  | (120 | )
Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |  |  | 545 |  |  |  | (40 | ) |  |  | 505 |
Portion recognized in income (expenses), including effects of foreign exchange rates |  |  | (719 | ) |  |  | (15 | ) |  |  | (734 | )
Portion recognized in OCI, including effects of exchange rates |  |  | 1,264 |  |  |  | (25 | ) |  |  | 1,239 |
Decrease (increase) in investment contract liabilities |  |  | (17 | ) |  |  | (418 | ) |  |  | (435 | )
Total net investment income (loss), insurance finance income (expenses) and reinsurance finance income (expenses) |  |  | 693 |  |  |  | 2,859 |  |  |  | 3,552 |
Amounts recognized in income (expenses) |  |  | 1,164 |  |  |  | 1,794 |  |  |  | 2,958 |
Amounts recognized in OCI |  |  | (471 | ) |  |  | 1,065 |  |  |  | 594 |
(1) | Non-insurance includes consolidations and eliminations of transactions between operating segments.
For the year ended December 31, 2022 |  | Insurance contracts |  |  | Non-insurance (1) |  |  | Total |
Investment return |  |  |  |  |  |  |  |  |  |  |  |
Investment related income |  | $ | 13,991 |  |  | $ | 1,973 |  |  | $ | 15,964 |
Net gains (losses) on financial assets at FVTPL |  |  | (14,017 | ) |  |  | (246 | ) |  |  | (14,263 | )
Unrealized gains (losses) on FVOCI assets |  |  | (46,900 | ) |  |  | (8,428 | ) |  |  | (55,328 | )
Impairment loss on financial assets |  |  | (59 | ) |  |  | (18 | ) |  |  | (77 | )
Investment expenses |  |  | (464 | ) |  |  | (757 | ) |  |  | (1,221 | )
Interest on required surplus |  |  | 515 |  |  |  | (515 | ) |  |  | – |
Total investment return |  |  | (46,934 | ) |  |  | (7,991 | ) |  |  | (54,925 | )
Portion recognized in income (expenses) |  |  | 358 |  |  |  | (21 | ) |  |  | 337 |
Portion recognized in OCI |  |  | (47,292 | ) |  |  | (7,970 | ) |  |  | (55,262 | )
Insurance finance income (expenses) from insurance contracts issued and effect of movement in exchange rates |  |  |  |  |  |  |  |  |  |  |  |
Interest accreted to insurance contracts using locked-in rate |  |  | (6,448 | ) |  |  | 14 |  |  |  | (6,434 | )
Due to changes in interest rates and other financial assumptions |  |  | 63,174 |  |  |  | (272 | ) |  |  | 62,902 |
Changes in fair value of underlying items of direct participation contracts |  |  | 9,417 |  |  |  | – |  |  |  | 9,417 |
Effects of risk mitigation option |  |  | 2,827 |  |  |  | – |  |  |  | 2,827 |
Net foreign exchange income (expenses) |  |  | (95 | ) |  |  | – |  |  |  | (95 | )
Hedge accounting offset from insurance contracts issued |  |  | – |  |  |  | – |  |  |  | – |
Reclassification of derivative OCI to IFIE – cash flow hedges |  |  | – |  |  |  | – |  |  |  | – |
Reclassification of derivative income (loss) changes to IFIE – fair value hedge |  |  | – |  |  |  | – |  |  |  | – |
Other |  |  | 218 |  |  |  | (2 | ) |  |  | 216 |
Total insurance finance income (expenses) from insurance contracts issued |  |  | 69,093 |  |  |  | (260 | ) |  |  | 68,833 |
Effect of movements in foreign exchange rates |  |  | (1,665 | ) |  |  | (9 | ) |  |  | (1,674 | )
Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |  |  | 67,428 |  |  |  | (269 | ) |  |  | 67,159 |
Portion recognized in income (expenses), including effects of exchange rates |  |  | (6,582 | ) |  |  | (34 | ) |  |  | (6,616 | )
Portion recognized in OCI, including effects of exchange rates |  |  | 74,010 |  |  |  | (235 | ) |  |  | 73,775 |
Reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |  |  |  |  |  |  |  |  |  |  |  |
Interest accreted to insurance contracts using locked-in rate |  |  | 832 |  |  |  | (8 | ) |  |  | 824 |
Due to changes in interest rates and other financial assumptions |  |  | (10,218 | ) |  |  | 67 |  |  |  | (10,151 | )
Changes in risk of non-performance of reinsurer |  |  | 96 |  |  |  | – |  |  |  | 96 |
Other |  |  | 191 |  |  |  | – |  |  |  | 191 |
Total reinsurance finance income (expenses) from reinsurance contracts held |  |  | (9,099 | ) |  |  | 59 |  |  |  | (9,040 | )
Effect of movements in foreign exchange rates |  |  | (16 | ) |  |  | – |  |  |  | (16 | )
Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |  |  | (9,115 | ) |  |  | 59 |  |  |  | (9,056 | )
Portion recognized in income (expenses), including effects of foreign exchange rates |  |  | 322 |  |  |  | (13 | ) |  |  | 309 |
Portion recognized in OCI, including effects of exchange rates |  |  | (9,437 | ) |  |  | 72 |  |  |  | (9,365 | )
Decrease (increase) in investment contract liabilities |  |  | (56 | ) |  |  | (343 | ) |  |  | (399 | )
Total net investment income (loss), insurance finance income (expenses) and reinsurance finance income (expenses) |  |  | 11,323 |  |  |  | (8,544 | ) |  |  | 2,779 |
Amounts recognized in income (expenses) |  |  | (5,958 | ) |  |  | (411 | ) |  |  | (6,369 | )
Amounts recognized in OCI |  |  | 17,281 |  |  |  | (8,133 | ) |  |  | 9,148 |
(1) | Non-insurance includes consolidations and eliminations of transactions between operating segments.
The following tables present Investment income and insurance finance income and expenses recognized in income or expenses or other comprehensive income, by reporting segments for the years ended December 31, 2023 and December 31, 2022.
|  | Insurance and reinsurance contracts |  |  |  |  |  |  |
For the year ended December 31, 2023 |  | Asia |  |  | Canada |  |  | U.S. |  |  | Corporate |  |  | Non-insurance (1) |  |  | Total |
Total investment return |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Portion recognized in income (expenses) |  | $ | 7,095 |  |  | $ | 3,514 |  |  | $ | 5,193 |  |  | $ | 28 |  |  | $ | 2,191 |  |  | $ | 18,021 |
Portion recognized in OCI |  |  | 4,675 |  |  |  | 2,454 |  |  |  | 3,197 |  |  |  | 2 |  |  |  | 1,077 |  |  |  | 11,405 |
|  |  | 11,770 |  |  |  | 5,968 |  |  |  | 8,390 |  |  |  | 30 |  |  |  | 3,268 |  |  |  | 29,426 |
Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Portion recognized in income (expenses), including effects of exchange rates |  |  | (6,436 | ) |  |  | (3,315 | ) |  |  | (4,868 | ) |  |  | 689 |  |  |  | 36 |  |  |  | (13,894 | )
Portion recognized in OCI, including effects of exchange rates |  |  | (4,601 | ) |  |  | (2,394 | ) |  |  | (5,068 | ) |  |  | – |  |  |  | 13 |  |  |  | (12,050 | )
|  |  | (11,037 | ) |  |  | (5,709 | ) |  |  | (9,936 | ) |  |  | 689 |  |  |  | 49 |  |  |  | (25,944 | )
Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Portion recognized in income (expenses), including effects of foreign exchange rates |  |  | (105 | ) |  |  | 57 |  |  |  | 11 |  |  |  | (682 | ) |  |  | (15 | ) |  |  | (734 | )
Portion recognized in OCI, including effects of exchange rates |  |  | 117 |  |  |  | 33 |  |  |  | 1,114 |  |  |  | – |  |  |  | (25 | ) |  |  | 1,239 |
|  |  | 12 |  |  |  | 90 |  |  |  | 1,125 |  |  |  | (682 | ) |  |  | (40 | ) |  |  | 505 |
(1) Non-insurance includes consolidations and eliminations of transactions between operating segments. |
|  | Insurance and reinsurance contracts |  |  |  |  |  |  |
For the year ended December 31, 2022 |  | Asia |  |  | Canada |  |  | U.S. |  |  | Corporate |  |  | Non-insurance (1) |  |  | Total |
Total investment return |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Portion recognized in income (expenses) |  | $ | 1,422 |  |  | $ | (1,967 | ) |  | $ | 894 |  |  | $ | 9 |  |  |  | $   (21 | ) |  | $ | 337 |
Portion recognized in OCI |  |  | (14,200 | ) |  |  | (11,332 | ) |  |  | (21,741 | ) |  |  | (19 | ) |  |  | (7,970 | ) |  |  | (55,262 | )
|  |  | (12,778 | ) |  |  | (13,299 | ) |  |  | (20,847 | ) |  |  | (10 | ) |  |  | (7,991 | ) |  |  | (54,925 | )
Total insurance finance income (expenses) from insurance contracts issued and effect of movement in foreign exchange rates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Portion recognized in income (expenses), including effects of exchange rates |  |  | (1,654 | ) |  |  | (219 | ) |  |  | (4,867 | ) |  |  | 158 |  |  |  | (34 | ) |  |  | (6,616 | )
Portion recognized in OCI, including effects of exchange rates |  |  | 14,532 |  |  |  | 14,731 |  |  |  | 44,748 |  |  |  | (1 | ) |  |  | (235 | ) |  |  | 73,775 |
|  |  | 12,878 |  |  |  | 14,512 |  |  |  | 39,881 |  |  |  | 157 |  |  |  | (269 | ) |  |  | 67,159 |
Total reinsurance finance income (expenses) from reinsurance contracts held and effect of movement in foreign exchange rates |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Portion recognized in income (expenses), including effects of foreign exchange rates |  |  | (63 | ) |  |  | (102 | ) |  |  | 641 |  |  |  | (154 | ) |  |  | (13 | ) |  |  | 309 |
Portion recognized in OCI, including effects of exchange rates |  |  | (126 | ) |  |  | (150 | ) |  |  | (9,161 | ) |  |  | - |  |  |  | 72 |  |  |  | (9,365 | )
|  |  | (189 | ) |  |  | (252 | ) |  |  | (8,520 | ) |  |  | (154 | ) |  |  | 59 |  |  |  | (9,056 | )
(1) | Non-insurance includes consolidations and eliminations of transactions between operating segments.
(g) Significant judgements and estimates (I) Fulfilment cash flows Fulfilment cash flows have three major components:
| • |  | Estimate of future cash flows
| • |  | An adjustment to reflect the time value of money and the financial risk related to future cash flows if not included in the estimate of future cash flows
| • |  | A risk adjustment for non-financial risk
The determination of insurance fulfilment cash flows involves the use of estimates and assumptions. A comprehensive review of valuation assumptions and methods is performed annually. The review reduces the Company’s exposure to uncertainty by ensuring assumptions for liability risks remain appropriate. This is accomplished by monitoring experience and updating assumptions which represent a best estimate of expected future experience, and margins that are appropriate for the risks assumed. While the assumptions selected represent the Company’s current best estimates and assessment of risk, the ongoing monitoring of experience and the changes in economic environment are likely to result in future changes to the actuarial assumptions, which could materially impact the insurance contract liabilities. Method used to measure insurance & reinsurance contract fulfilment cash flows The Company primarily uses deterministic projections using best estimate assumptions to determine the present value of future cash flows. For product features such as universal life minimum crediting rates guarantees, participating life zero dividend floor implicit guarantees and variable annuities guarantees, the Company developed a stochastic approach to capture the asymmetry of the risk. Determination of assumptions used For the deterministic projections, assumptions are made with respect to mortality, morbidity, rates of policy termination, operating expenses and certain taxes. Actual experience is monitored to ensure that assumptions remain appropriate and assumptions are changed as warranted. Assumptions are discussed in more detail in the following table.
Nature of factors and assumption methodology |  | Risk management
Mortality |  | Mortality relates to the occurrence of death. Mortality is a key assumption for life insurance and certain forms of annuities. Mortality assumptions are based on the Company’s internal experience as well as past and emerging industry experience. Assumptions are differentiated by sex, underwriting class, policy type and geographic market. Assumptions are made for future mortality improvements. |  | The Company maintains underwriting standards to determine the insurability of applicants. Claim trends are monitored on an ongoing basis. Exposure to large claims is managed by establishing policy retention limits, which vary by market and geographic location. Policies in excess of the limits are reinsured with other companies. Mortality is monitored monthly and the overall 2023 experience was favourable (2022 – unfavourable) when compared to the Company’s assumptions.
Morbidity |  | Morbidity relates to the occurrence of accidents and sickness for insured risks. Morbidity is a key assumption for long-term care insurance, disability insurance, critical illness and other forms of individual and group health benefits. Morbidity assumptions are based on the Company’s internal experience as well as past and emerging industry experience and are established for each type of morbidity risk and geographic market. Assumptions are made for future morbidity improvements. |  | The Company maintains underwriting standards to determine the insurability of applicants. Claim trends are monitored on an ongoing basis. Exposure to large claims is managed by establishing policy retention limits, which vary by market and geographic location. Policies in excess of the limits are reinsured with other companies. Morbidity is also monitored monthly and the overall 2023 experience was favourable (2022 – favourable) when compared to the Company’s assumptions.
Policy termination and premium persistency |  | Policies are terminated through lapses and surrenders, where lapses represent the termination of policies due to non-payment of premiums and surrenders represent the voluntary termination of policies by policyholders. Premium persistency represents the level of ongoing deposits on contracts where there is policyholder discretion as to the amount and timing of deposits. Policy termination and premium persistency assumptions are primarily based on the Company’s recent experience adjusted for expected future conditions. Assumptions reflect differences by type of contract within each geographic market. |  | The Company seeks to design products that minimize financial exposure to lapse, surrender and premium persistency risk. The Company monitors lapse, surrender and persistency experience. In aggregate, 2023 policyholder termination and premium persistency experience was unfavourable (2022 – unfavourable) when compared to the Company’s assumptions used in the computation of actuarial liabilities.
Directly attributable expenses |  | Directly attributable operating expense assumptions reflect the projected costs of maintaining and servicing in-force policies, including associated directly attributable overhead expenses. The directly attributable expenses are derived from internal cost studies projected into the future with an allowance for inflation. For some developing businesses, there is an expectation that unit costs will decline as these businesses grow. Directly attributable acquisitions expenses are derived from internal cost studies. |  | The Company prices its products to cover the expected costs of servicing and maintaining them. In addition, the Company monitors expenses monthly, including comparisons of actual expenses to expense levels allowed for in pricing and valuation. Maintenance expenses for 2023 were unfavourable (2022 – unfavourable) when compared to the Company’s assumptions used in the computation of actuarial liabilities.
Tax |  | Taxes reflect assumptions for future premium taxes and other non-income related taxes. |  | The Company prices its products to cover the expected cost of taxes.
Policyholder dividends, experience rating refunds, and other adjustable policy elements |  | The best estimate projections for policyholder dividends and experience rating refunds, and other adjustable elements of policy benefits are determined to be consistent with management’s expectation of how these elements will be managed should experience emerge consistently with the best estimate assumptions. |  | The Company monitors policy experience and adjusts policy benefits and other adjustable elements to reflect this experience. Policyholder dividends are reviewed annually for all businesses under a framework of Board-approved policyholder dividend policies.
The Company reviews actuarial methods and assumptions on an annual basis. If changes are made to non-economic assumptions, the impact based on locked-in economic assumptions would adjust the contractual service margin for general model and VFA contracts if there is any remaining contractual service margin for the group of policies where the change was made. This amount would then be recognized in income over the period of service provided. Changes could also impact net income and other comprehensive income to the extent that the contractual service margin has been depleted, or discount rates are different than the locked-in rates used to quantify changes to the contractual service margin. (II) Determination of discretionary changes The terms of some contracts measured under the GMM give the Company discretion over the cash flows to be paid to the policyholders, either in timing or amount. Changes in discretionary cash flows are regarded as relating to future service and accordingly adjust the CSM. The Company determines how to identify a change in discretionary cash flows by specifying the basis on which it expects to determine its commitment under the contract; for example, based on a fixed interest rate, or on returns that vary based on specified asset returns. This determination is specified at the inception of the contract. (III) Discount rates Insurance contract cash flows for non-participating business are discounted using risk-free yield curves adjusted by an illiquidity premium to reflect the liquidity characteristics of the liabilities. Cash flows that vary based on returns of underlying items are adjusted to reflect their variability under these adjusted yield curves. Each yield curve is interpolated between the spot rate at the last observable market data point and an ultimate spot rate which reflects the long-term real interest rate plus inflation expectations. For participating business, insurance contract cash flows that vary based on the return of underlying items are discounted at rates reflecting that variability. For insurance contracts with cash flows that vary with the return of underlying items and where the present value is measured by stochastic modelling, cash flows are both projected and discounted at scenario specific rates, calibrated on average to be the risk-free yield curves adjusted for liquidity. The spot rates used for discounting liability cash flows are presented in the following table and include illiquidity premiums determined with reference to net asset spreads indicative of the liquidity characteristics of the liabilities by geography.
|  |  |  |  |  |  |  |  |  |  |  |  | December 31, 2023 |
|  | Currency |  | Liquidity category |  | Observable years |  |  |  | Ultimate year |  |  | 1 year |  |  | 5 years |  |  | 10 years |  |  | 20 years |  |  | 30 years |  |  | Ultimate |
Canada |  | CAD |  | Illiquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.17 % |  |  |  | 4.33 % |  |  |  | 4.92% |  |  |  | 4.86% |  |  |  | 4.80% |  |  |  | 4.40% |
|  |  |  | More liquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.14% |  |  |  | 4.22% |  |  |  | 4.69% |  |  |  | 4.72% |  |  |  | 4.69% |  |  |  | 4.40% |
U.S. |  | USD |  | Illiquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.38% |  |  |  | 4.54% |  |  |  | 5.37% |  |  |  | 5.65% |  |  |  | 5.27% |  |  |  | 5.00% |
|  |  |  | More liquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.32% |  |  |  | 4.57% |  |  |  | 5.25% |  |  |  | 5.56% |  |  |  | 5.18% |  |  |  | 4.88% |
Japan |  | JPY |  | Mixed |  |  | 30 |  |  |  |  | 70 |  |  |  | 0.53% |  |  |  | 0.77% |  |  |  | 1.08% |  |  |  | 1.75% |  |  |  | 2.24% |  |  |  | 1.60% |
Hong Kong |  | HKD |  | Illiquid |  |  | 15 |  |  |  |  | 55 |  |  |  | 4.20% |  |  |  | 4.01% |  |  |  | 4.98% |  |  |  | 4.61% |  |  |  | 4.19% |  |  |  | 3.80% |
|  |  |  |  |  |  |  |  |  |  |  |  | December 31, 2022 |
|  | Currency |  | Liquidity category |  | Observable years |  |  |  | Ultimate year |  |  | 1 year |  |  | 5 years |  |  | 10 years |  |  | 20 years |  |  | 30 years |  |  | Ultimate |
Canada |  | CAD |  | Illiquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.29% |  |  |  | 4.81% |  |  |  | 5.35% |  |  |  | 5.35% |  |  |  | 5.03% |  |  |  | 4.40% |
|  |  |  | More liquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.21% |  |  |  | 4.63% |  |  |  | 4.97% |  |  |  | 5.02% |  |  |  | 4.91% |  |  |  | 4.40% |
U.S. |  | USD |  | Illiquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.28% |  |  |  | 4.87% |  |  |  | 5.74% |  |  |  | 5.86% |  |  |  | 5.34% |  |  |  | 5.00% |
|  |  |  | More liquid |  |  | 30 |  |  |  |  | 70 |  |  |  | 5.23% |  |  |  | 4.88% |  |  |  | 5.61% |  |  |  | 5.76% |  |  |  | 5.23% |  |  |  | 4.88% |
Japan |  | JPY |  | Mixed |  |  | 30 |  |  |  |  | 70 |  |  |  | 0.72% |  |  |  | 0.98% |  |  |  | 0.91% |  |  |  | 1.70% |  |  |  | 2.22% |  |  |  | 1.60% |
Hong Kong |  | HKD |  | Illiquid |  |  | 15 |  |  |  |  | 55 |  |  |  | 4.69% |  |  |  | 4.95% |  |  |  | 5.60% |  |  |  | 4.99% |  |  |  | 4.36% |  |  |  | 3.80% |
Amounts presented in income for policies where changes in assumptions that relate to financial risk do not have a substantial impact on amounts paid to policyholders reflect discount rates locked in beginning with the adoption of IFRS 17 or locked in at issue for later insurance contracts. These policies include term insurance, guaranteed whole life insurance, and health products including critical illness and long-term care. For policies where changes in assumptions to financial risk have a substantial impact on amounts paid to policyholders, discount rates are updated as future cash flows change due to changes in financial risk, so that the amount presented in income from future changes in financial variables is $nil. These policies include adjustable universal life contracts. Impacts from differences between current period rates and discount rates used to determine income are presented in other comprehensive income. (IV) Risk adjustment and confidence level used to determine risk adjustment Risk adjustment for non-financial risk represents the compensation the Company requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk as the Company fulfils insurance contracts. The risk adjustment process considers insurance, lapse and expense risks, includes both favourable and unfavourable outcomes, and reflects diversification benefits from the insurance contracts issued. The Company estimates the risk adjustment using a margin approach. This approach applies a margin for adverse deviation, typically in terms of a percentage of best estimate assumptions, where future cash flows are uncertain. The resulting cash flows are discounted at rates consistent with the best estimate cash flows to arrive at the total risk adjustment. The ranges for these margins are set by the Company and reviewed periodically. The risk adjustment for non-financial risk for insurance contracts correspond to a 90 – 95% confidence level for all segments.
(V) Investment component, Investment-return service and Investment-related service The Company identifies the investment component, investment-return service (contract without direct participation features) and investment-related service (contract with direct participation features) of a contract as part of the product governance process. Investment components are amounts that are to be paid to the policyholder under all circumstances. Investment components are excluded from insurance revenue and insurance service expenses. Investment-return services and investment-related services are investment services rendered as part of an insurance contract and are part of the insurance contract services provided to the policyholder. (VI) Relative weighting of the benefit provided by insurance coverage, investment-return service and investment-related service The contractual service margin is released into income, when insurance contract services are provided, by using coverage units. Coverage units represent the quantity of service (insurance coverage, investment-return and investment-related services) provided and are determined by considering the benefit provided under the contract and its expected coverage duration. When the relative size of the investment-related service coverage or the investment-return service coverage unit is disproportionate compared to the insurance service coverage unit, or vice-versa, the Company must determine a relative weighting of the services to reflect the delivery of each of those services. The Company identifies the coverage units as part of the product governance process and did not identify contracts where such weighting was required. (h) Composition of underlying items The following table sets out the composition and fair value of the underlying items supporting the Company’s liabilities for direct participation contracts as at the dates presented.
|  | 2023 |  |  |  |  |  | 2022 |
As at December 31, |  | Participating |  |  | Variable annuity |  |  | Unit linked |  |  |  |  |  | Participating |  |  | Variable annuity |  |  | Unit linked |
Underlying assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  | $ | 44,682 |  |  | $ | – |  |  | $ | – |  |  |  |  |  |  | $ | 39,894 |  |  | $ | – |  |  | $ | – |
Public equities |  |  | 14,442 |  |  |  | – |  |  |  | – |  |  |  |  |  |  |  | 12,119 |  |  |  | – |  |  |  | – |
Mortgages |  |  | 4,449 |  |  |  | – |  |  |  | – |  |  |  |  |  |  |  | 3,813 |  |  |  | – |  |  |  | – |
Private placements |  |  | 6,720 |  |  |  | – |  |  |  | – |  |  |  |  |  |  |  | 5,666 |  |  |  | – |  |  |  | – |
Real estate |  |  | 3,907 |  |  |  | – |  |  |  | – |  |  |  |  |  |  |  | 3,190 |  |  |  | – |  |  |  | – |
Other |  |  | 27,017 |  |  |  | 68,749 |  |  |  | 15,539 |  |  |  |  |  |  |  | 26,009 |  |  |  | 69,033 |  |  |  | 13,476 |
Total |  | $ | 101,217 |  |  | $ | 68,749 |  |  | $ | 15,539 |  |  |  |  |  |  | $ | 90,691 |  |  | $ | 69,033 |  |  | $ | 13,476 |
(i) Asset for insurance acquisition cash flow The following table presents the expected future derecognition of asset for insurance acquisition cash flow as at the dates presented.
|  | 2023 |  |  |  |  |  | 2022 |
As at December 31, |  | Less than 1 year |  |  | 1-5 years |  |  | More than 5 years |  |  | Total |  |  |  |  |  | Less than 1 year |  |  | 1-5 years |  |  | More than 5 years |  |  | Total |
Asia |  | $ | 59 |  |  | $ | 150 |  |  | $ | 62 |  |  | $ | 271 |  |  |  |  |  |  | $ | 58 |  |  | $ | 150 |  |  | $ | 75 |  |  | $ | 283 |
Canada |  |  | 72 |  |  |  | 205 |  |  |  | 272 |  |  |  | 549 |  |  |  |  |  |  |  | 73 |  |  |  | 200 |  |  |  | 249 |  |  |  | 522 |
Total |  | $ | 131 |  |  | $ | 355 |  |  | $ | 334 |  |  | $ | 820 |  |  |  |  |  |  | $ | 131 |  |  | $ | 350 |  |  | $ | 324 |  |  | $ | 805 |
(j) Insurance and reinsurance contracts contractual obligations – maturity analysis and amounts payable on demand The table below represents the maturities of the insurance contract and reinsurance contract held liabilities as at the dates presented.
As at December 31, 2023 |
Payments due by period |  | Less than 1 year |  |  | 1 to 2 years |  |  | 2 to 3 years |  |  | 3 to 4 years |  |  | 4 to 5 years |  |  | Over 5 years |  |  | Total |
Insurance contract liabilities (1) |  | $ | 3,400 |  |  | $ | 5,546 |  |  | $ | 6,766 |  |  | $ | 8,849 |  |  | $ | 11,320 |  |  | $ | 1,074,764 |  |  | $ | 1,110,645 |
Reinsurance contract held liabilities (1) |  |  | 332 |  |  |  | 460 |  |  |  | 492 |  |  |  | 592 |  |  |  | 475 |  |  |  | 6,097 |  |  |  | 8,448 |
As at December 31, 2022
Payments due by period |  | Less than 1 year |  |  | 1 to 2 years |  |  | 2 to 3 years |  |  | 3 to 4 years |  |  | 4 to 5 years |  |  | Over 5 years |  |  | Total |
Insurance contract liabilities (1) |  | $ | 3,091 |  |  | $ | 4,976 |  |  | $ | 7,224 |  |  | $ | 9,212 |  |  | $ | 11,223 |  |  | $ | 996,460 |  |  | $ | 1,032,186 |
Reinsurance contract held liabilities (1) |  |  | 235 |  |  |  | 237 |  |  |  | 250 |  |  |  | 243 |  |  |  | 337 |  |  |  | 5,320 |  |  |  | 6,622 |
(1) | Insurance contract liabilities 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 and exclude amounts from insurance contract liabilities for account of segregated fund holders. These estimated cash flows are based on the best estimate assumptions used in the determination of insurance contract liabilities. These amounts are undiscounted. Reinsurance contract held liabilities cash flows include estimates related to the timing and payment of future reinsurance premiums offset by recoveries on in-force 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.
The amounts from insurance contract liabilities that are payable on demand are set out below as at the dates presented.
|  | 2023 |  |  |  |  |  | 2022 |
As at December 31, |  | Amounts payable on demand |  |  | Carrying amount |  |  |  |  |  | Amounts payable on demand |  |  | Carrying amount |
Asia |  | $ | 100,060 |  |  | $ | 129,117 |  |  |  |  |  |  | $ | 95,777 |  |  | $ | 117,737 |
Canada |  |  | 28,264 |  |  |  | 56,887 |  |  |  |  |  |  |  | 25,745 |  |  |  | 52,300 |
U.S. |  |  | 44,360 |  |  |  | 63,092 |  |  |  |  |  |  |  | 45,394 |  |  |  | 63,374 |
Total |  | $ | 172,684 |  |  | $ | 249,096 |  |  |  |  |  |  | $ | 166,916 |  |  | $ | 233,411 |
The amounts payable on demand represent the policyholders’ cash and/or account values less applicable surrender fees as at the time of the reporting date. Segregated fund insurance liabilities for account of segregated fund holders are excluded from the amounts payable on demand and the carrying amount. (k) Actuarial methods and assumptions The Company performs a comprehensive review of actuarial methods and assumptions annually. The review is designed to reduce the Company’s exposure to uncertainty by ensuring assumptions for liability risks remain appropriate. This is accomplished by monitoring experience and updating assumptions that represent a best estimate of expected future experience, and margins that are appropriate for the risks assumed. While the assumptions selected represent the Company’s best estimates and assessment of risk, the ongoing monitoring of experience and changes in the economic environment are likely to result in future changes to the actuarial assumptions, which could materially impact the insurance contract liabilities. The changes implemented from the review are generally implemented in the third quarter of each year, though updates may be made outside the third quarter in certain circumstances. 2023 Review of Actuarial Methods and Assumptions On a full year basis, the 2023 review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash flows of $3,197. These changes resulted in an increase in pre-tax net income attributed to shareholders of $171 ($105 post-tax), an increase in pre-tax net income attributed to participating policyholders of $173 ($165 post-tax), an increase in CSM of $2,754, and an increase in pre-tax other comprehensive income of $99 ($73 post-tax). In the third quarter of 2023, the completion of the 2023 annual review of actuarial methods and assumptions resulted in a decrease in pre-tax fulfilment cash flows of $347 . These changes resulted in an increase in pre-tax net income attributed to shareholders of $27 (a decrease of $14 post-tax), an increase in pre-tax net income attributed to participating policyholders of $58 ($74 post-tax), an increase in CSM of $116, and an increase in pre-tax other comprehensive income of $146 ($110 post-tax). In the fourth quarter of 2023, the Company also updated the actuarial methods and assumptions which decreased the overall level of the risk adjustment for non-financial risk. This change moves the risk adjustment to approximately the middle of the Company’s existing 90 – 95% confidence level range. The risk adjustment would have exceeded the 95% confidence level in the fourth quarter without making the change. This change led to a decrease in pre-tax fulfilment cash flows of $2,850, an increase in pre-tax net income attributed to shareholders of $144 ($119 post-tax), an increase in pre-tax net income attributed to participating policyholders of $115 ($91 post-tax), an increase in CSM of $2,638, and a decrease in pre-tax other comprehensive income of $47 ($37 post-tax). Since the beginning of 2020, some lines of business have seen impacts to mortality and policyholder behaviour driven by the COVID-19 pandemic. Given the long-term nature of the Company’s assumptions, the Company’s 2023 experience studies have excluded experience that was materially impacted by COVID-19 as this is not seen to be indicative of the levels of actual future claims or lapses. Impact of changes in actuarial methods and assumptions on pre-tax fulfilment cash flows (1)
|  | For the three and nine months ended September 30, 2023 |  |  | For the three months ended December 31, 2023 |  |  | For the year ended December 31, 2023 |
Canada variable annuity product review |  | $ | (133 | ) |  | $ | – |  |  | $ | (133 | )
Mortality and morbidity updates |  |  | 265 |  |  |  | – |  |  |  | 265 |
Lapse and policyholder behaviour updates |  |  | 98 |  |  |  | – |  |  |  | 98 |
Methodology and other updates |  |  | (577 | ) |  |  | (2,850 | ) |  |  | (3,427 | )
Impact of changes in actuarial methods and assumptions, pre-tax |  | $ | (347 | ) |  | $ | (2,850 | ) |  | $ | (3,197 | )
(1) | Excludes the portion related to non-controlling interests of $103 for the three and nine months ended September 30, 2023, and $97 for the three months ended December 31, 2023, respectively.
Impact of changes in actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net income attributed to participating policyholders, OCI and CSM (1)
|  | For the three and nine months ended September 30, 2023 |  |  | For the three months ended December 31, 2023 |  |  | For the year ended December 31, 2023 |
Portion recognized in net income (loss) attributed to: |  |  |  |  |  |  |  |  |  |  |  |
Participating policyholders |  | $ | 58 |  |  | $ | 115 |  |  | $ | 173 |
Shareholders and other equity holders |  |  | 27 |  |  |  | 144 |  |  |  | 171 |
|  |  | 85 |  |  |  | 259 |  |  |  | 344 |
Portion recognized in OCI attributed to: |  |  |  |  |  |  |  |  |  |  |  |
Participating policyholders |  |  | – |  |  |  | (21 | ) |  |  | (21 | )
Shareholders and other equity holders |  |  | 146 |  |  |  | (26 | ) |  |  | 120 |
|  |  | 146 |  |  |  | (47 | ) |  |  | 99 |
Portion recognized in CSM |  |  | 116 |  |  |  | 2,638 |  |  |  | 2,754 |
Impact of changes in actuarial methods and assumptions, pre-tax |  | $ | 347 |  |  | $ | 2,850 |  |  | $ | 3,197 |
(1) | Excludes the portion related to non-controlling interests, of which $72 is related to CSM for the three and nine months ended September 30, 2023, and $87 is related to CSM for the three months ended December 31, 2023.
Canada variable annuity product review The review of the Company’s variable annuity products in Canada resulted in a decrease in pre-tax fulfilment cash flows of $133. The decrease was driven by a reduction in investment management fees, partially offset by updates to product assumptions, including surrenders, incidence and utilization, to reflect emerging experience. Mortality and morbidity updates Mortality and morbidity updates resulted in an increase in pre-tax fulfilment cash flows of $265. The increase was driven by a strengthening of incidence rates for certain products in Vietnam to align with emerging experience and updates to mortality assumptions in the Company’s U.S. life insurance business to reflect industry trends, as well as emerging experience. This was partially offset by updates to morbidity assumptions for certain products in Japan to reflect actual experience. Lapse and policyholder behaviour updates Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of $98. The increase was primarily driven by a detailed review of lapse assumptions for the Company’s universal life level cost of insurance products in Canada, which resulted in a reduction to the lapse rates to align with emerging trends. Methodology and other updates Methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $3,427. In the third quarter of 2023, methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $577. The decrease was driven by the impact of cost-of-guarantees for participating policyholders across all segments from annual updates related to parameters, dividend recalibration, and market movements during the year, as well as modelling refinements for certain products in Asia. This was partially offset by a modelling methodology update to project future premiums on the Company’s U.S. life insurance business. In the fourth quarter of 2023, methodology and other updates resulted in a decrease in pre-tax fulfilment cash flows of $2,850. The decrease was driven by a decrease in the overall level of the risk adjustment for non-financial risk. This change moves the risk adjustment to approximately the middle of the Company’s existing 90 – 95 % confidence level range . Impact of changes in actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to shareholders, CSM and OCI by segment For the three and nine months ended September 30, 2023 The impact of changes in actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of $159. The decrease was driven by updates to the Company’s variable annuity product assumptions, as well as by updates to its valuation models for participating products, driven by the annual dividend recalibration, partially offset by a reduction in lapse rates on the Company’s universal life level cost of insurance products to reflect emerging trends. These changes resulted in an increase in pre-tax net income attributed to shareholders of $52 ($37 post-tax), an increase in CSM of $142, and an increase in pre-tax other comprehensive income of $2 ($1 post-tax). The impact of changes in actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows of $270. The increase was related to the Company’s life insurance business and primarily driven by a modelling methodology update to project future premiums, as well as updates to mortality assumptions. These changes resulted in an increase in pre-tax net income attributed to shareholders of $134 ($106 post-tax), a decrease in CSM of $600, and an increase in pre-tax other comprehensive income of $196 ($155 post-tax ). The impact of changes in actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of $457. The decrease largely relates to participating products, primarily driven by model refinements, dividend recalibration updates, as well as annual updates to reflect market movements during the year. This, and the updates to morbidity assumptions on certain products in Japan, were partially offset by updates to incidence rates on certain products in Vietnam. These changes resulted in a decrease in pre-tax net income attributed to shareholders of $159 ($157 post-tax), an increase in CSM of $574, and a decrease in pre-tax other comprehensive income of $53 ($47 post-tax). The impact of changes in actuarial methods and assumptions in Corporate and Other (which includes the Company’s Reinsurance businesses) resulted in a decrease in pre-tax fulfilment cash flows of $1. These changes resulted in no impacts to pre-tax net income attributable to shareholders or CSM, and an increase in pre-tax other comprehensive income of $1 ($1 post-tax). For the three months ended December 31, 2023 The reduction in the risk adjustment level resulted in the following impacts by segment: The impact of changes in actuarial methods and assumptions in Canada resulted in a decrease in pre-tax fulfilment cash flows of $246. These changes resulted in an increase in pre-tax net income attributed to shareholders of $4 ($3 post-tax), an increase in pre-tax net income attributed to policyholder of $40 ($29 post-tax), an increase in CSM of $213, and a decrease in pre-tax other comprehensive income of $11 ($8 post-tax). The impact of changes in actuarial methods and assumptions in the U.S. resulted in a decrease in pre-tax fulfilment cash flows of $91. These changes resulted in an increase in pre-tax net income attributed to shareholders of $33 ($26 post-tax), an increase in CSM of $78, and a decrease in pre-tax other comprehensive income of $20 ($15 post-tax). The impact of changes in actuarial methods and assumptions in Asia resulted in a decrease in pre-tax fulfilment cash flows of $2,513. These changes resulted in an increase in pre-tax net income attributed to shareholders of $107 ($90 post-tax), an increase in pre-tax net income attributed to policyholders of $75 ($62 post-tax), an increase in CSM of $2,348, and a decrease in pre-tax other comprehensive income of $17 ($14 post-tax). 2022 Review of Actuarial Methods and Assumptions The completion of the 2022 annual review of actuarial methods and assumptions resulted in an increase in pre-tax fulfilment cash flows of $192. These changes resulted in an increase in pre-tax net income attributed to shareholders of $23 ($26 post-tax), a decrease in pre-tax net income attributed to participating policyholders of $26 ($18 post-tax), a decrease in CSM of $279, and an increase in pre-tax other comprehensive income of $90 ($73 post-tax). Since the beginning of 2020, some lines of business have seen impacts to mortality and policyholder behaviour driven by the COVID-19 pandemic. Given the long-term nature of the Company’s assumptions, the Company’s 2022 experience studies have excluded experience that was materially impacted by COVID-19 as this is not seen to be indicative of the levels of actual future claims or lapses. Impact of changes in actuarial methods and assumptions on pre-tax fulfilment cash flows (1)
For the year ended December 31, 2022 |  | Total |
Long-term care triennial review |  | $ | 118 |
Mortality and morbidity updates |  |  | 83 |
Lapse and policyholder behaviour updates |  |  | 234 |
Methodology and other updates |  |  | (243 | )
Impact of changes in actuarial methods and assumptions, pre-tax |  | $ | 192 |
(1) | Excludes the portion related to non-controlling interests of $8.
Impact of changes in actuarial methods and assumptions on pre-tax net income attributed to shareholders, pre-tax net income attributed to participating policyholders, OCI and CSM (1)
For the year ended December 31, 2022 |  | Total |
Portion recognized in net income (loss) attributed to: |  |  |  |
Participating policyholders |  | $ | (26 | )
Shareholders and other equity holders |  |  | 23 |
|  |  | (3 | )
Portion recognized in OCI attributed to: |  |  |  |
Participating policyholders |  |  | – |
Shareholders and other equity holders |  |  | 90 |
|  |  | 90 |
Portion recognized in CSM |  |  | (279 | )
Impact of changes in actuarial methods and assumptions, pre-tax |  | $ | (192 | )
(1) | Excludes the portion related to non-controlling interests, of which $nil is related to CSM.
Long-term care triennial review U.S. Insurance completed a comprehensive long-term care (“LTC”) experience study. The review included all aspects of claim assumptions, as well as the progress on future premium rate increases. The impact of the LTC review was an increase in pre-tax fulfilment cash flows of $118. The experience study showed that claim costs established in the Company’s last triennial review remain appropriate in aggregate for the Company’s older blocks of business 1 supported by robust claims data on this mature block. Pre-tax fulfilment cash flows were increased for claim costs on the Company’s newer block of business 2 . This was driven by lower active life mortality 3 supported by Company experience and a recent industry study, as well as higher utilization of benefits, which included the impact of reflecting higher inflation in the cost-of-care up to 2022. The Company also reviewed and updated incidence and claim termination assumptions which, on a net basis, provided a partial offset to the increase in pre-tax fulfilment cash flows on active life mortality and utilization. In addition, some policyholders are electing to reduce their benefits in lieu of paying increased premiums which resulted in a reduction in pre-tax fulfilment cash flows. Experience continues to support the assumptions of both future morbidity and mortality improvement, resulting in no changes to these assumptions. As of September 30, 2022, the Company had received actual premium increase approvals of $2.5 billion pre-tax (US$1.9 billion pre-tax) on a present value basis since the last triennial review in 2019. This aligns with the full amount assumed in the Company’s pre-tax fulfilment cash flows at that time and demonstrates the Company’s continued strong track record of securing premium rate increases 4 . In 2022, the review of future premium increases assumed in fulfilment cash flows resulted in a net $2.5 billion (US$1.9 billion) decrease in pre-tax fulfilment cash flows. This reflects expected future premium increases that are due to the Company’s 2022 review of morbidity, mortality, and lapse assumptions, as well as outstanding amounts from prior state filings. Premium increases averaging approximately 30% will be sought on about one-half of the business, excluding the carryover of 2019 amounts requested. The Company’s assumptions reflect the estimated timing and amount of state approved premium increases. Mortality and morbidity updates Mortality and morbidity updates resulted in an increase in pre-tax fulfilment cash flows of $83, driven by updates to morbidity assumptions in Vietnam to align with experience, partially offset by a detailed review of the mortality assumptions for the Company’s Canada insurance business. Lapse and policyholder behaviour updates Updates to lapses and policyholder behaviour assumptions resulted in an increase in pre-tax fulfilment cash flows of $234. The Company completed a detailed review of lapse assumptions for Singapore, and increased lapse rates to align with experience on the Company’s index-linked products, which reduced projected future fee income to be received on these products. The Company also increased lapse rates on Canada’s term insurance products for policies approaching their renewal date, reflecting emerging experience in the Company’s study. Methodology and other updates Other updates resulted in a decrease in pre-tax fulfilment cash flows of $243 , which included updates to discount rates and policyholder dividends on participating products, as well as various other modelling and projection updates. Impact of changes in actuarial methods and assumptions on pre-tax fulfilment cash flows, net income attributed to shareholders, CSM and OCI by segment The impact of changes in actuarial methods and assumptions in Canada resulted in an increase in pre-tax fulfilment cash flows of $22. The increase was driven by updates to the lapse assumptions for certain term insurance products, largely offset by updates to discount rates and policyholder dividends on participating products, as well as updates to mortality assumptions for the Company’s insurance business. These changes resulted in an increase in pre-tax net income attributed to shareholders of $64 ($47 post-tax), an increase in CSM of $43, and a decrease in pre-tax other comprehensive income of $96 ($71 post-tax). The impact of changes in actuarial methods and assumptions in the U.S. resulted in an increase in pre-tax fulfilment cash flows of $108, driven by the triennial review of long-term care. These changes resulted in a decrease in pre-tax net income attributed to shareholders of $16 ($12 post-tax), a decrease in CSM of $202, and an increase in pre-tax other comprehensive income of $110 ($86 post-tax). The impact of changes in actuarial methods and assumptions in Asia resulted in an increase in pre-tax fulfilment cash flows of $62. The increase was driven by updates to lapse assumptions in Singapore and morbidity updates in Vietnam, partially offset by various other modelling and projection updates. These changes resulted in a decrease in pre-tax net income attributed to shareholders of $25 ($9 post-tax), a decrease in CSM of $120, and an increase in pre-tax other comprehensive income of $76 ($58 post-tax).
1 | First generation policies issued prior to 2002.
2 | Second generation policies with an average issue date of 2007 and Group policies with an average issue date of 2003.
3 | The mortality rate of LTC policyholders who are currently not on claim.
4 | Actual experience obtaining premium increases could be materially different than what the Company has assumed, resulting in further increases or decreases in insurance contract liabilities, which could be material. See “Caution regarding forward-looking statements” above.
(l) Reinsurance transactions Agreement with Global Atlantic Financial Group On December 11, 2023, the Company announced it entered into an agreement with Global Atlantic Financial Group to reinsure policies from the U.S. LTC, U.S. structured settlements, and Japan whole life legacy blocks. Under the terms of the transaction, the Company will retain responsibility for the administration of the policies with no intended impact to policyholders. The transaction will be structured as coinsurance of an 80 % quota share for the LTC block and 100 % quota shares for the other blocks. The transaction represents a combined $ 13 billion of insurance and investment contract net liabilities as at September 30, 2023 and is expected to close by the end of February 2024. Agreements with Venerable Holdings, Inc. On November 15, 2021 and October 3, 2022, the Company, through its subsidiary John Hancock Life Insurance Company (U.S.A) (“JHUSA”), entered into reinsurance agreements with Venerable Holdings, Inc. to reinsure a block of legacy U.S. variable annuity (“VA”) policies. Under the terms of the transaction, the Company will retain responsibility for the maintenance of the policies with no intended impact to VA policyholders. The transaction was structured as coinsurance for the general fund liabilities and modified coinsurance for the segregated fund liabilities. The transaction closed on February 1, 2022 and October 3, 2022, respectively, resulting in a cumulative pre-tax decrease to the contractual service margin of $905, recognized in 2022.

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