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Liability For Unpaid Claims And Claim Adjustment Expenses | 9 Months Ended
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Sep. 30, 2024
Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract] |
Liability For Unpaid Claims And Claim Adjustment Expenses | 17. Future Policy Benefits The reconciliation of the balances described in the table below to the “Future policy benefits” in the Consolidated Statements of Financial Position is as follows.
|  | September 30, 2024 |  | December 31, 2023
|  | (Dollars in millions)
Future policy benefits: |  |  |  |
Annuity |  | $ | 3,829 |  |  | $ | 2,213 |
Life |  | 1,567 |  |  | 1,895 |
Deferred profit liability: |  |  |  |
Annuity |  | 92 |  |  | 64 |
Life |  | 73 |  |  | 66 |
Other contracts and VOBA liability |  | 1,618 |  |  | 1,870 |
Total future policy benefits |  | $ | 7,179 |  |  | $ | 6,108 |
Future Policy Benefits The balances and changes in the liability for future policy benefits are as follows:
| Nine Months Ended September 30, 2024 |  | Year Ended December 31, 2023
| Annuity |  | Life |  | Total |  | Annuity |  | Life |  | Total
| (Dollars in millions)
Present Value of Expected Net Premiums: |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period | $ | — |  |  | $ | 3,145 |  |  | $ | 3,145 |  |  | $ | — |  |  | $ | 3,520 |  |  | $ | 3,520 |
Beginning balance at original discount rate | — |  |  | 3,254 |  |  | 3,254 |  |  | — |  |  | 3,826 |  |  | 3,826 |
Effect of changes in cash flow assumptions (1) | — |  |  | 195 |  |  | 195 |  |  | — |  |  | (353) |  |  | (353) |
Effect of actual variances from expected experience | 11 |  |  | (325) |  |  | (314) |  |  | 2 |  |  | (59) |  |  | (57) |
Adjusted beginning of period balance | 11 |  |  | 3,124 |  |  | 3,135 |  |  | 2 |  |  | 3,414 |  |  | 3,416 |
Acquisition from business combination | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuances | 1,287 |  |  | 38 |  |  | 1,325 |  |  | 984 |  |  | 90 |  |  | 1,074 |
Interest accrual | 10 |  |  | 87 |  |  | 97 |  |  | 8 |  |  | 121 |  |  | 129 |
Net premiums collected | (1,306) |  |  | (244) |  |  | (1,550) |  |  | (995) |  |  | (373) |  |  | (1,368) |
Derecognitions (lapses and withdrawals) | — |  |  | 1 |  |  | 1 |  |  | 1 |  |  | 2 |  |  | 3 |
Ending balance at original discount rate | 2 |  |  | 3,006 |  |  | 3,008 |  |  | — |  |  | 3,254 |  |  | 3,254 |
Effect of changes in discount rate assumptions | — |  |  | (39) |  |  | (39) |  |  | — |  |  | (109) |  |  | (109) |
Balance, end of period | $ | 2 |  |  | $ | 2,967 |  |  | $ | 2,969 |  |  | $ | — |  |  | $ | 3,145 |  |  | $ | 3,145 |
Present Value of Expected Future Policy Benefits: |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period | $ | 2,213 |  |  | $ | 5,040 |  |  | $ | 7,253 |  |  | $ | 1,288 |  |  | $ | 5,330 |  |  | $ | 6,618 |
Beginning balance at original discount rate | 2,217 |  |  | 5,277 |  |  | 7,494 |  |  | 1,368 |  |  | 5,875 |  |  | 7,243 |
Effect of changes in cash flow assumptions | — |  |  | (185) |  |  | (185) |  |  | (1) |  |  | (362) |  |  | (363) |
Effect of actual variances from expected experience | 11 |  |  | (357) |  |  | (346) |  |  | (25) |  |  | (59) |  |  | (84) |
Adjusted beginning of period balance | 2,228 |  |  | 4,735 |  |  | 6,963 |  |  | 1,342 |  |  | 5,454 |  |  | 6,796 |
Acquisition of business combination | 311 |  |  | — |  |  | 311 |  |  | — |  |  | — |  |  | — |
Issuances | 1,300 |  |  | 44 |  |  | 1,344 |  |  | 988 |  |  | 89 |  |  | 1,077 |
Interest accrual | 105 |  |  | 145 |  |  | 250 |  |  | 73 |  |  | 188 |  |  | 261 |
Benefit payments | (199) |  |  | (223) |  |  | (422) |  |  | (189) |  |  | (456) |  |  | (645) |
Derecognitions (lapses and withdrawals) | 3 |  |  | 1 |  |  | 4 |  |  | 3 |  |  | 2 |  |  | 5 |
Ending balance at original discount rate | 3,748 |  |  | 4,702 |  |  | 8,450 |  |  | 2,217 |  |  | 5,277 |  |  | 7,494 |
Effect of changes in discount rate assumptions | 83 |  |  | (168) |  |  | (85) |  |  | (4) |  |  | (237) |  |  | (241) |
Balance, end of period | $ | 3,831 |  |  | $ | 4,534 |  |  | $ | 8,365 |  |  | $ | 2,213 |  |  | $ | 5,040 |  |  | $ | 7,253 |
Liability for future policy benefits | $ | 3,829 |  |  | $ | 1,567 |  |  | $ | 5,396 |  |  | $ | 2,213 |  |  | $ | 1,895 |  |  | $ | 4,108 |
Less: Reinsurance recoverables | (3) |  |  | (1,288) |  |  | (1,291) |  |  | — |  |  | (45) |  |  | (45) |
Net liability for future policy benefits, after reinsurance recoverable | $ | 3,826 |  |  | $ | 279 |  |  | $ | 4,105 |  |  | $ | 2,213 |  |  | $ | 1,850 |  |  | $ | 4,063 |
Weighted-average liability duration of future policy benefits (years) | 8 |  | 15 |  |  |  | 8 |  | 16 |  |
Weighted average interest accretion rate | 5.12 | % |  | 4.63 | % |  |  |  | 4.94 | % |  | 4.60 | % |  |
Weighted average current discount rate | 4.85 | % |  | 5.05 | % |  |  |  | 4.88 | % |  | 5.03 | % |  |
For the three and nine months ended September 30, 2024, the Company recognized liability remeasurement impacts of $15 million, which were included in “Policyholder benefits and claims incurred” in the consolidated statements of operations. The notable changes to cash flow assumptions in the third quarter of 2024 resulted in (i) a decrease in the liability for future policy benefits related to annuity products driven by favorable mortality. The change in mortality resulted in an offsetting increase to the deferred profit liability; (ii) a decrease in the liability for future policy benefits for term life products primarily driven by favorable mortality and favorable updates to policyholder lapse behavior assumptions; and (iii) an increase in the future policy benefits liability for universal life products driven by unfavorable updates in policyholder lapse assumptions and unfavorable mortality. The amounts of undiscounted and discounted expected gross premiums and future benefit payments follow:
|  | September 30, 2024 |  | December 31, 2023
|  | Undiscounted |  | Discounted |  | Undiscounted |  | Discounted
|  | (Dollars in millions)
Annuity |  |  |  |  |  |  |  |
Expected future benefit payments |  | $ | 6,011 |  |  | $ | 3,831 |  |  | $ | 3,466 |  |  | $ | 2,213 |
Expected future gross premiums |  | — |  |  | — |  |  | — |  |  | — |
Life |  |  |  |  |  |  |  |
Expected future benefit payments |  | 9,051 |  |  | 4,534 |  |  | 10,353 |  |  | 5,040 |
Expected future gross premiums |  | 5,858 |  |  | 3,681 |  |  | 7,541 |  |  | 4,328 |
Total |  |  |  |  |  |  |  |
Expected future benefit payments |  | 15,062 |  |  | 8,365 |  |  | 13,819 |  |  | 7,253 |
Expected future gross premiums |  | 5,858 |  |  | 3,681 |  |  | 7,541 |  |  | 4,328 |
The amount of revenue and interest recognized in the Consolidated Statements of Operations follows:
|  | Nine Months Ended September 30, 2024 |  | Year Ended December 31, 2023
|  | Gross Premiums or Assessments |  | Interest Expense |  | Gross Premiums or Assessments |  | Interest Expense
|  | (Dollars in millions)
Annuity |  | $ | 2,903 |  |  | $ | 176 |  |  | $ | 1,027 |  |  | $ | 83 |
Life |  | 721 |  |  | 130 |  |  | 452 |  |  | 95 |
20. Liability For Unpaid Claims and Claim Adjustment Expenses The liability for unpaid claims and claim adjustment expenses (“unpaid claims”) for property and casualty insurance is included in “Policy and contract claims” in the Consolidated S tatements of Financial Position and is the amount estimated for incurred but not reported (“IBNR”) claims and claims that have been reported but not settled (“case reserves”), as well as associated claim adjustment expenses. Information regarding the liability for unpaid claims is shown below:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
| (Dollars in millions)
Policy and contract claims, beginning | $ | 1,880 |  |  | $ | 1,867 |  |  | $ | 1,870 |  |  | $ | 1,786 |
Less: Unpaid claims balance, beginning – long-duration | 213 |  |  | 210 |  |  | 213 |  |  | 231 |
Gross unpaid claims balance, beginning – short-duration | 1,667 |  |  | 1,657 |  |  | 1,657 |  |  | 1,555 |
Less: Reinsurance recoverables, beginning | 271 |  |  | 303 |  |  | 302 |  |  | 305 |
Less: Foreign currency translation and other | — |  |  | — |  |  | — |  |  | — |
Net unpaid claims balance, beginning – short-duration | 1,396 |  |  | 1,354 |  |  | 1,355 |  |  | 1,250 |
Acquisition from business combination, net of reinsurance | — |  |  | — |  |  | 1 |  |  | — |
Add: incurred related to: |  |  |  |  |  |  |
Current accident year | 354 |  |  | 411 |  |  | 1,104 |  |  | 1,227 |
Prior accident years | (7) |  |  | (3) |  |  | (39) |  |  | (25) |
Total incurred claims | 347 |  |  | 408 |  |  | 1,065 |  |  | 1,202 |
Less: paid claims related to: |  |  |  |  |  |  |
Current accident year | 232 |  |  | 313 |  |  | 541 |  |  | 655 |
Prior accident years | 109 |  |  | 84 |  |  | 478 |  |  | 432 |
Total paid claims | 341 |  |  | 397 |  |  | 1,019 |  |  | 1,087 |
Net unpaid claims balance, ending – short-duration | 1,402 |  |  | 1,365 |  |  | 1,402 |  |  | 1,365 |
Add: Foreign currency translation and other | — |  |  | — |  |  | — |  |  | — |
Add: Reinsurance recoverables, ending | 300 |  |  | 317 |  |  | 300 |  |  | 317 |
Gross unpaid claims balance, ending – short-duration | 1,702 |  |  | 1,682 |  |  | 1,702 |  |  | 1,682 |
Add: Unpaid claims balance, ending – long duration | 201 |  |  | 212 |  |  | 201 |  |  | 212 |
Policy and contract claims, ending | $ | 1,903 |  |  | $ | 1,894 |  |  | $ | 1,903 |  |  | $ | 1,894 |
The estimates for ultimate incurred claims attributable to insured events of prior years decreased by approximately $7 million and $39 million, respectively, for the three and nine months ended September 30, 2024 and decreased $3 million and $25 million, respectively, for the three and nine months ended September 30, 2023. The favorable development in 2024 was a reflection of lower-than-anticipated losses arising from commercial other, business owners, workers’ compensation, and homeowners lines of business. The favorable development in 2023 was a reflection of lower-than-anticipated losses arising from agribusiness, business owners, commercial auto, and commercial other lines of business. For short-duration health insurance claims, the total of IBNR plus expected development on reported claims included in the liability for unpaid claims as of September 30, 2024 and December 31, 2023 were $8 million and $4 million, respectively.

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- Definition The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480081/944-40-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 40 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/944-40/tableOfContent + Details
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