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Insurance and Reinsurance Contract Assets and Liabilities
 12 Months Ended
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.