Liability For Unpaid Claims And Claim Adjustment Expenses

9 Months Ended

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 Statements 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.