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Future Policy Benefits | 9 Months Ended
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Sep. 30, 2024
Insurance [Abstract] |
Future Policy Benefits | Future Policy Benefits The following table summarizes balances and changes in the present value of expected net premiums and the present value of the expected FPB for nonparticipating traditional contracts:
|  | Traditional Life |  |
|  | September 30, 2024 |  | December 31, 2023 |  |
Expected net premiums |  | (Dollars in millions)
Balance, beginning of year |  | $ | 722 |  |  | $ | 797 |  |  |
Beginning balance at original discount rate |  | 874 |  |  | 974 |  |  |
Effect of actual variances from expected experience |  | (4) |  |  | (1) |  |  |
Balance adjusted for variances from expectation |  | 870 |  |  | 973 |  |  |
Interest accrual |  | 13 |  |  | 19 |  |  |
Net premiums collected |  | (82) |  |  | (118) |  |  |
Ending Balance at original discount rate |  | 801 |  |  | 874 |  |  |
Effect of changes in discount rate assumptions |  | (128) |  |  | (152) |  |  |
Balance, end of period |  | $ | 673 |  |  | $ | 722 |  |  |
Expected FPB |  |  |  |  |  |
Balance, beginning of year |  | $ | 2,071 |  |  | $ | 2,151 |  |  |
Beginning balance at original discount rate |  | 2,492 |  |  | 2,665 |  |  |
Effect of actual variances from expected experience |  | 48 |  |  | (24) |  |  |
Balance adjusted for variances from expectation |  | 2,540 |  |  | 2,641 |  |  |
Interest accrual |  | 41 |  |  | 56 |  |  |
Benefits payments |  | (165) |  |  | (205) |  |  |
Ending Balance at original discount rate |  | 2,416 |  |  | 2,492 |  |  |
Effect of changes in discount rate assumptions |  | (358) |  |  | (421) |  |  |
Balance, end of period |  | $ | 2,058 |  |  | $ | 2,071 |  |  |
Net liability for future policy benefits |  | $ | 1,385 |  |  | $ | 1,349 |  |  |
Less: Reinsurance recoverable |  | 525 |  |  | 413 |  |  |
Net liability for future policy benefits, after reinsurance recoverable |  | $ | 860 |  |  | $ | 936 |  |  |
Weighted-average duration of liability for future policyholder benefits (years) |  | 6.87 |  | 7.36 |  |
The following tables summarize balances and changes in the present value of the expected FPB for limited-payment contracts:
|  | September 30, 2024
|  | Immediate annuities |  | PRT
|  | (Dollars in millions)
Balance, beginning of year |  | $ | 1,415 |  |  | $ | 4,189 |
Beginning balance at original discount rate |  | 1,788 |  |  | 4,351 |
Effect of changes in cash flow assumptions |  | — |  |  | 4 |
Effect of actual variances from expected experience |  | (26) |  |  | (20) |
Balance adjusted for variances from expectation |  | 1,762 |  |  | 4,335 |
Issuances |  | 27 |  |  | 1,300 |
Interest accrual |  | 46 |  |  | 168 |
Benefits payments |  | (88) |  |  | (346) |
Ending Balance at original discount rate |  | 1,747 |  |  | 5,457 |
Effect of changes in discount rate assumptions |  | (354) |  |  | (63) |
Balance, end of period |  | $ | 1,393 |  |  | $ | 5,394 |
Net liability for future policy benefits |  | $ | 1,393 |  |  | $ | 5,394 |
Less: Reinsurance recoverable |  | 115 |  |  | — |
Net liability for future policy benefits, after reinsurance recoverable |  | $ | 1,278 |  |  | $ | 5,394 |
Weighted-average duration of liability for future policyholder benefits (years) |  | 12.89 |  | 8.03
|  | December 31, 2023
|  | Immediate annuities |  | PRT
|  | (Dollars in millions)
Balance, beginning of year |  | $ | 1,429 |  |  | $ | 2,165 |
Beginning balance at original discount rate |  | 1,858 |  |  | 2,475 |
Effect of changes in cash flow assumptions |  | — |  |  | (9) |
Effect of actual variances from expected experience |  | (15) |  |  | (7) |
Balance adjusted for variances from expectation |  | $ | 1,843 |  |  | $ | 2,459 |
Issuances |  | 22 |  |  | 2,041 |
Interest accrual |  | 51 |  |  | 109 |
Benefits payments |  | (128) |  |  | (258) |
Ending Balance at original discount rate |  | $ | 1,788 |  |  | $ | 4,351 |
Effect of changes in discount rate assumptions |  | (373) |  |  | (162) |
Balance, end of period |  | $ | 1,415 |  |  | $ | 4,189 |
Net liability for future policy benefits |  | $ | 1,415 |  |  | $ | 4,189 |
Less: Reinsurance recoverable |  | 116 |  |  | — |
Net liability for future policy benefits, after reinsurance recoverable |  | $ | 1,299 |  |  | $ | 4,189 |
Weighted-average duration of liability for future policyholder benefits (years) |  | 12.47 |  | 8.23
The following tables summarize balances and changes in the liability for DPL for limited-payment contracts:
|  | September 30, 2024 |  | December 31, 2023 |  |
|  | Immediate annuities |  | PRT |  | Immediate annuities |  | PRT |  |  |  |
|  | (In millions) |  |
Balance, beginning of year |  | $ | 87 |  |  | $ | 10 |  |  | $ | 69 |  |  | $ | 4 |  |  |  |  |
Effect of modeling changes |  | — |  |  | — |  |  | 4 |  |  | — |  |  |  |  |
Effect of changes in cash flow assumptions |  | — |  |  | (7) |  |  | — |  |  | 1 |  |  |  |  |
Effect of actual variances from expected experience |  | 6 |  |  | — |  |  | 16 |  |  | 5 |  |  |  |  |
Balance adjusted for variances from expectation |  | 93 |  |  | 3 |  |  | 89 |  |  | 10 |  |  |  |  |
Issuances |  | 2 |  |  | — |  |  | 3 |  |  | — |  |  |  |  |
Interest accrual |  | 1 |  |  | 4 |  |  | 2 |  |  | 1 |  |  |  |  |
Amortization |  | (6) |  |  | (1) |  |  | (7) |  |  | (1) |  |  |  |  |
Balance, end of period |  | $ | 90 |  |  | $ | 6 |  |  | $ | 87 |  |  | $ | 10 |  |  |  |  |
The following table reconciles the net FPB to the FPB in the unaudited Condensed Consolidated Balance Sheets. The DPL for Immediate Annuities and PRT is presented together with the FPB in the unaudited Condensed Consolidated Balance Sheets and has been included as a reconciling item in the table below:
|  | September 30, 2024 |  | December 31, 2023 |  |
|  | (In millions)
Traditional Life |  | $ | 1,385 |  |  | $ | 1,349 |  |  |
Immediate annuities |  | 1,393 |  |  | 1,415 |  |  |
PRT |  | 5,394 |  |  | 4,189 |  |  |
Immediate annuities DPL |  | 90 |  |  | 87 |  |  |
PRT DPL |  | 6 |  |  | 10 |  |  |
Total |  | $ | 8,268 |  |  | $ | 7,050 |  |  |
The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts:
|  | Undiscounted |  | Discounted
|  | September 30, 2024 |  | September 30, 2023 |  | September 30, 2024 |  | September 30, 2023
Traditional Life |  | (In millions)
Expected future benefit payments |  | $ | 2,843 |  |  | $ | 2,996 |  |  | $ | 2,073 |  |  | $ | 1,984 |
Expected future gross premiums |  | 978 |  |  | 1,116 |  |  | 728 |  |  | 772 |
Immediate annuities |  |  |  |  |  |  |  |
Expected future benefit payments |  | $ | 3,212 |  |  | $ | 3,227 |  |  | $ | 1,392 |  |  | $ | 1,313 |
Expected future gross premiums |  | — |  |  | — |  |  | — |  |  | — |
PRT |  |  |  |  |  |  |  |
Expected future benefit payments |  | $ | 8,449 |  |  | $ | 5,445 |  |  | $ | 5,470 |  |  | $ | 3,605 |
Expected future gross premiums |  | — |  |  | — |  |  | — |  |  | — |
The following table summarizes the amount of revenue and interest related to nonparticipating traditional and limited-payment contracts recognized in the unaudited Condensed Consolidated Statements of Earnings:
|  | Gross Premiums (a) |  | Interest Expense (b)
|  | September 30, 2024 |  | September 30, 2023 |  | September 30, 2024 |  | September 30, 2023
|  | (In millions)
Traditional Life |  | $ | 84 |  |  | $ | 94 |  |  | $ | 28 |  |  | $ | 28 |
Immediate annuities |  | 16 |  |  | 18 |  |  | 46 |  |  | 42 |
PRT |  | 1,240 |  |  | 1,207 |  |  | 168 |  |  | 79 |
Total |  | $ | 1,340 |  |  | $ | 1,319 |  |  | $ | 242 |  |  | $ | 149 |
(a) Included in Life insurance premiums and other fees on the unaudited Condensed Consolidated Statements of Earnings. (b) Included in Benefits and other changes in policy reserves (remeasurement gains (losses) (a)) on the unaudited Condensed Consolidated Statements of Earnings. The following table presents the weighted-average interest rate:
|  | September 30, 2024 |  | December 31, 2023 |  |
Traditional Life |  |  |  |  |  |
Interest accretion rate |  | 2.34 | % |  | 2.33 | % |  |
Current discount rate |  | 4.95 |  |  | 5.03 |  |  |
Immediate annuities |  |  |  |  |  |
Interest accretion rate |  | 3.17 | % |  | 3.14 | % |  |
Current discount rate |  | 4.90 |  |  | 4.98 |  |  |
PRT |  |  |  |  |  |
Interest accretion rate |  | 4.70 | % |  | 4.61 | % |  |
Current discount rate |  | 4.85 |  |  | 5.03 |  |  |
The following tables summarize the actual experience and expected experience for mortality and lapses of the FPB:
|  | September 30, 2024
|  | Traditional Life |  | Immediate annuities |  | PRT
Mortality |  |  |  |  |  |
Actual experience |  | 1.4 | % |  | 2.7 | % |  | 3.0 | %
Expected experience |  | 1.5 |  |  | 1.9 |  |  | 2.5 |
Lapses |  |  |  |  |  |
Actual experience |  | 0.1 | % |  | — | % |  | — | %
Expected experience |  | 0.5 |  |  | — |  |  | — |
|  | December 31, 2023
|  | Traditional Life |  | Immediate annuities |  | PRT
Mortality |  |  |  |  |  |
Actual experience |  | 1.7 | % |  | 3.2 | % |  | 3.2 | %
Expected experience |  | 1.4 |  |  | 1.8 |  |  | 2.3 |
Lapses |  |  |  |  |  |
Actual experience |  | — | % |  | — | % |  | — | %
Expected experience |  | 0.3 |  |  | — |  |  | — |
The following table provides additional information for periods in which a cohort has an net premium ratio ("NPR") greater than 100% (and therefore capped at 100%) (dollars in millions):
| September 30, 2024 |  |
| Cohort X |  | Description |  |  |  |
NPR before capping | 109 | % |  | Term with return of premium Non-NY Cohort |  |  |  |
Reserves before NPR capping | $ | 1,219 |  |  | Term with return of premium Non-NY Cohort |  |  |  |
Reserves after NPR capping | 1,250 |  |  | Term with return of premium Non-NY Cohort |  |  |  |
Loss Expense | 31 |  |  | Term with return of premium Non-NY Cohort |  |  |  |
Premium deficiency testing F&G conducts annual premium deficiency testing for its long-duration contracts except for the FPB for nonparticipating traditional and limited-payment contracts. F&G also conducts annual premium deficiency testing for the VOBA of all long-duration contracts. Premium deficiency testing is performed by reviewing assumptions used to calculate the insurance liabilities and determining whether the sum of the existing contract liabilities and the present value of future gross premiums is sufficient to cover the present value of future benefits to be paid to or on behalf of policyholders and settlement costs and recover unamortized present value of future profits. Anticipated investment income, based on F&G’s experience, is considered when performing premium deficiency testing for long-duration contracts. During 2024, F&G was not required to establish any additional liabilities as a result of premium deficiency testing. F&G made changes to assumptions during the nine months ended September 30, 2024 and the year ended December 31, 2023. Significant assumption inputs used in the calculation of our FPB are described below. Refer to the tables above for further details on changes to our FPB. Traditional life Significant assumption inputs to the calculation of the FPB for traditional life include mortality, lapses (including lapses due to nonpayment of premium and surrenders for cash surrender value), and discount rates (both accretion and current). We review the cash flow assumptions annually, typically in the third quarter. In 2023, F&G undertook a review of all significant assumptions and revised the lapse assumption, resulting in a slight decrease to the FPB. In 2024, F&G made an adjustment to the calculation to reflect additional actuarial precision, unrelated to the assumptions, driving an increase to the FPB liability. There have been no other significant changes. Market data that underlies current discount rates was updated in 2024 from that utilized in 2023 resulting in decreased discount rates that drove a material increase to the FPB. Immediate annuities (life contingent) Significant assumption inputs to the calculation of the FPB for immediate annuities (life contingent) include mortality and discount rates (both accretion and current). We review the cash flow assumptions annually, typically in the third quarter. In 2024 and 2023, F&G undertook a review of the significant cash flow assumptions and did not make any changes to mortality. Market data that underlies current discount rates was updated in 2024 from that utilized in 2023, resulting in decreased discount rates that drove a material increase to the FPB. PRT (life contingent) Significant assumption inputs to the calculation of the FPB for PRT (life contingent) include mortality and discount rates (both accretion and current). We review the cash flow assumptions annually, typically in the third quarter. In 2024 and 2023, F&G undertook a review of the significant cash flow assumptions and did not make any changes to mortality. Market data that underlies current discount rates was updated in 2024 from 2023 resulting in decreased discount rates that drove a material increase to the FPB.

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