Future Policy Benefits and Claims (Tables)

9 Months Ended

Sep. 30, 2023

Future Policy Benefits and Claims

Disaggregated Future Policy Benefits and Claims amounts and reconciliation (Table)

	September 30, 2023		December 31, 2022
	(in millions)
Liability for future policy benefits by segment (1):
Retirement and Income Solutions:
Pension risk transfer	$	21,355.2	$	21,211.4
Individual fixed income annuities		4,661.9		5,019.4
Total Retirement and Income Solutions		26,017.1		26,230.8
Principal Asset Management – Principal International:
Latin America:
Individual fixed income annuities		4,225.1		5,042.3
Benefits and Protection:
Specialty Benefits:
Individual disability		1,604.5		1,698.8
Life Insurance:
Term life		949.7		909.0
Total Benefits and Protection		2,554.2		2,607.8
Corporate:
Long-term care insurance		153.0		183.5
Total liability for future policy benefits		32,949.4		34,064.4
Additional liability for certain benefit features by segment (2):
Benefits and Protection – Life Insurance:
Universal life		5,176.7		4,095.2
Total additional liability for certain benefit features		5,176.7		4,095.2
Reconciling items:
Participating contracts		3,089.8		3,207.2
Short-duration contracts		1,272.5		1,295.6
Cost of reinsurance liability		150.2		191.1
Reinsurance recoverable liability		40.6		39.4
Other (3)		6.7		132.4
Future policy benefits and claims per consolidated statements of financial position	$	42,685.9	$	43,025.3

(1) Amounts include the deferred profit liability.

(2) Includes reserves on certain long-duration contracts where benefit features result in gains in early years followed by losses in later years.

(3) Includes other miscellaneous reserves and the impact of unrealized gains (losses) on the additional liability for certain benefit features.

Summary of balances and the changes in the present value for expected net premiums and expected future policy benefits expected future policy benefits (Table)

Retirement and Income Solutions and Principal Asset Management – Principal International

	For the year ended December 31, 2021
					Principal
					Asset
					Management –
	Retirement and Income				Principal
	Solutions				International
					Latin America
	Pension		Individual		Individual
	risk		fixed income		fixed income
	transfer		annuities		annuities
	(in millions)
Present value of expected future policy benefit payments
Balance at beginning of period	$	25,863.7	$	7,145.8	$	6,561.5
Effect of changes in discount rate assumptions at beginning of period		(4,827.9)		(1,213.5)		(2,096.0)
Balance at beginning of period at original discount rate		21,035.8		5,932.3		4,465.5
Effect of actual variances from expected experience		(2.4)		(1.3)		(4.9)
Adjusted beginning of period balance at original discount rate		21,033.4		5,931.0		4,460.6
Interest accrual		916.7		240.5		444.3
Benefit payments		(1,772.5)		(532.0)		(436.0)
Issuances		1,801.7		82.9		141.3
Foreign currency translation adjustment		—		—		(751.9)
Balance at end of period at original discount rate		21,979.3		5,722.4		3,858.3
Effect of changes in discount rate assumptions at end of period		3,386.5		812.6		478.5
Future policy benefits	$	25,365.8	$	6,535.0	$	4,336.8

Benefits and Protection and Corporate

	For the year ended December 31, 2021
	Benefits and Protection				Corporate
	Specialty		Life
	Benefits		Insurance
	Individual				Long-term
	disability		Term life		care insurance
	(in millions)
Present value of expected net premiums
Balance at beginning of period	$	3,148.3	$	3,799.0	$	66.7
Effect of changes in discount rate assumptions at beginning of period		(340.7)		(861.1)		(17.6)
Balance at beginning of period at original discount rate		2,807.6		2,937.9		49.1
Effect of changes in cash flow assumptions		—		—		2.8
Effect of actual variances from expected experience		122.0		211.4		(0.8)
Adjusted beginning of period balance at original discount rate		2,929.6		3,149.3		51.1
Interest accrual		95.4		151.1		2.9
Net premiums collected		(280.4)		(315.0)		(5.2)
Issuances		206.4		518.2		—
Balance at end of period at original discount rate		2,951.0		3,503.6		48.8
Effect of changes in discount rate assumptions at end of period		198.9		690.1		14.0
Balance at end of period	$	3,149.9	$	4,193.7	$	62.8
Present value of expected future policy benefit payments
Balance at beginning of period	$	5,649.2	$	4,959.3	$	324.3
Effect of changes in discount rate assumptions at beginning of period		(834.1)		(1,179.9)		(111.1)
Balance at beginning of period at original discount rate		4,815.1		3,779.4		213.2
Effect of changes in cash flow assumptions		—		—		0.5
Effect of actual variances from expected experience		118.8		216.0		(4.6)
Adjusted beginning of period balance at original discount rate		4,933.9		3,995.4		209.1
Interest accrual		181.0		194.3		12.4
Benefit payments		(179.7)		(335.7)		(13.5)
Issuances		212.1		543.4		—
Balance at end of period at original discount rate		5,147.3		4,397.4		208.0
Effect of changes in discount rate assumptions at end of period		501.0		913.9		89.5
Balance at end of period	$	5,648.3	$	5,311.3	$	297.5
Future policy benefits (1)	$	2,498.4	$	1,117.6	$	234.7
Reinsurance impact		(549.9)		(0.1)		(234.7)
Future policy benefits after reinsurance	$	1,948.5	$	1,117.5	$	—

(1) Represents the present value of expected future policy benefit payments less the present value of expected net premiums.

Schedule of Liability for Unpaid Claims (Table)

	For the nine months ended September 30,
	2023		2022
	(in millions)
Balance at beginning of period	$	1,395.0	$	1,370.9
Less: reinsurance recoverable		68.6		68.7
Net balance at beginning of period		1,326.4		1,302.2
Incurred:
Current year		1,233.1		1,176.6
Prior years		(92.1)		(11.2)
Total incurred		1,141.0		1,165.4
Payments:
Current year		856.6		825.8
Prior years		295.4		318.8
Total payments		1,152.0		1,144.6
Net balance at end of period		1,315.4		1,323.0
Plus: reinsurance recoverable		66.5		71.0
Balance at end of period	$	1,381.9	$	1,394.0

Summary of gross premiums or assessments and interest accretion recognized by segment (Table)

	Gross premiums or assessments (1)
	For the three months ended				For the nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
	(in millions)
Retirement and Income Solutions:
Pension risk transfer	$	553.9	$	603.4	$	1,741.8	$	1,186.2
Individual fixed income annuities		11.6		6.3		31.6		20.6
Total Retirement and Income Solutions		565.5		609.7		1,773.4		1,206.8
Principal Asset Management – Principal International:
Latin America:
Individual fixed income annuities		2.4		34.2		17.6		75.2
Benefits and Protection:
Specialty Benefits:
Individual disability		161.9		155.5		467.2		448.4
Life Insurance:
Universal life		170.7		168.3		512.8		429.0
Term life		162.3		158.6		485.2		473.0
Total Benefits and Protection		494.9		482.4		1,465.2		1,350.4
Corporate:
Long-term care insurance		1.2		1.3		3.9		4.0
Total per consolidated statements of operations	$	1,064.0	$	1,127.6	$	3,260.1	$	2,636.4

(1) Gross premiums are included within premiums and other considerations on the consolidated statements of operations. Assessments, which are only applicable to the Life Insurance - Universal life level of aggregation, are included within fees and other revenues on the consolidated statements of operations.

	Interest accretion (1)
	For the three months ended				For the nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
	(in millions)
Retirement and Income Solutions:
Pension risk transfer	$	254.4	$	233.7	$	749.5	$	697.6
Individual fixed income annuities		54.5		57.1		165.3		173.4
Total Retirement and Income Solutions		308.9		290.8		914.8		871.0
Principal Asset Management – Principal International:
Latin America:
Individual fixed income annuities (2)		56.7		172.7		276.4		523.2
Benefits and Protection:
Specialty Benefits:
Individual disability		23.8		22.5		70.5		67.5
Life Insurance:
Universal life		56.7		42.8		150.6		127.1
Term life		12.3		11.0		35.4		32.5
Total Benefits and Protection		92.8		76.3		256.5		227.1
Corporate:
Long-term care insurance		2.3		2.5		7.4		7.3
Total per consolidated statements of operations	$	460.7	$	542.3	$	1,455.1	$	1,628.6

(1) Interest accretion is included within benefits, claims and settlement expenses on the consolidated statements of operations.

(2) Includes inflation adjustments included within the liability for future policy benefits rollforward for interest accretion.

Summary of balances and the changes in the additional liability for certain benefits features (Table)

Additional Liability for Certain Benefit Features

Benefits and Protection

The balances and changes in the additional liability for certain benefits features for 2021 for Life Insurance - Universal life were as follows:

	For the year ended,
	December 31, 2021
	(in millions)
Balance at beginning of period	$	3,463.9
Effect of changes in cash flow assumptions		(11.1)
Effect of actual variances from expected experience		18.1
Interest accrual		158.3
Net assessments collected		324.7
Benefit payments		(83.1)
Other (1)		(56.6)
Balance at end of period	$	3,814.2

(1)Reflects model refinements accounted for as a change in accounting estimate.

Summary of amounts of expected undiscounted future benefit payments, expected undiscounted future gross premiums and expected discounted future gross premiums (Table)

	September 30, 2023		December 31, 2022
	(in millions)
Retirement and Income Solutions:
Pension risk transfer
Expected undiscounted future benefit payments	$	34,656.4	$	33,691.4
Individual fixed income annuities
Expected undiscounted future benefit payments	$	7,393.6	$	7,716.6
Principal Asset Management – Principal International:
Latin America:
Individual fixed income annuities
Expected undiscounted future benefit payments	$	6,118.5	$	6,449.9
Benefits and Protection – Specialty Benefits:
Individual disability
Expected discounted future gross premiums	$	5,082.4	$	5,140.9
Expected undiscounted future gross premiums	$	8,213.6	$	7,978.7
Expected undiscounted future benefit payments	$	8,899.8	$	8,473.9
Benefits and Protection – Life Insurance:
Term life
Expected discounted future gross premiums	$	5,911.1	$	6,104.6
Expected undiscounted future gross premiums	$	10,229.4	$	10,146.3
Expected undiscounted future benefit payments	$	7,736.1	$	7,202.5
Corporate:
Long-term care insurance
Expected discounted future gross premiums	$	40.8	$	64.6
Expected undiscounted future gross premiums	$	60.9	$	96.5
Expected undiscounted future benefit payments	$	373.7	$	483.4

Summary of weighted-average rates of interest accretion and current discount (Table)

	Interest accretion rate				Current discount rate
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Retirement and Income Solutions:
Pension risk transfer	4.45	%	4.38	%	5.90	%	5.31	%
Individual fixed income annuities	4.22	%	4.22	%	5.89	%	5.30	%
Principal Asset Management – Principal International (1):
Latin America:
Individual fixed income annuities	4.23	%	4.24	%	3.82	%	2.43	%
Benefits and Protection:
Specialty Benefits:
Individual disability	3.97	%	4.03	%	5.95	%	5.36	%
Life Insurance:
Universal life	4.76	%	4.73	%	See note (2)		See note (2)
Term life	4.84	%	4.89	%	5.86	%	5.22	%
Corporate:
Long-term care insurance	6.16	%	6.16	%	5.91	%	5.34	%

(1) The interest accretion rate and current discount rate are Chilean real rates, excluding inflation, in the local currency.

(2) The additional liability for certain benefit features for Life Insurance – Universal life is measured using the discount rate at contract inception. Therefore, the current discount rate is not applicable for this product.

Retirement and Income Solutions

Future Policy Benefits and Claims

Summary of balances and the changes in the present value for expected net premiums and expected future policy benefits expected future policy benefits (Table)

	For the nine months ended				For the year ended
	September 30, 2023				December 31, 2022
	Pension		Individual		Pension		Individual
	risk		fixed income		risk		fixed income
	transfer		annuities		transfer		annuities
	($ in millions)
Present value of expected future policy benefit payments
Balance at beginning of period	$	21,211.4	$	5,019.4	$	25,365.8	$	6,535.0
Effect of changes in discount rate assumptions at beginning of period		1,799.6		439.0		(3,386.5)		(812.6)
Balance at beginning of period at original discount rate		23,011.0		5,458.4		21,979.3		5,722.4
Effect of changes in cash flow assumptions		(53.4)		(1.3)		(7.9)		(3.0)
Effect of actual variances from expected experience		(9.8)		(0.7)		(3.2)		—
Adjusted beginning of period balance at original discount rate		22,947.8		5,456.4		21,968.2		5,719.4
Interest accrual		749.5		165.3		935.7		229.7
Benefit payments		(1,471.6)		(378.5)		(1,841.7)		(520.4)
Issuances		1,747.7		31.2		1,948.8		29.7
Balance at end of period at original discount rate		23,973.4		5,274.4		23,011.0		5,458.4
Effect of changes in discount rate assumptions at end of period		(2,618.2)		(612.5)		(1,799.6)		(439.0)
Future policy benefits		21,355.2		4,661.9		21,211.4		5,019.4
Reinsurance impact		—		(4,344.7)		—		(4,714.0)
Future policy benefits after reinsurance	$	21,355.2	$	317.2	$	21,211.4	$	305.4
Weighted-average duration for future policy benefits (years) (1)		8.0		7.6		8.5		7.9

(1) Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort.

Benefits and Protection

Future Policy Benefits and Claims

Summary of balances and the changes in the present value for expected net premiums and expected future policy benefits expected future policy benefits (Table)

	For the nine months ended				For the year ended
	September 30, 2023				December 31, 2022
	Specialty		Life		Specialty		Life
	Benefits		Insurance		Benefits		Insurance
	Individual				Individual
	disability		Term life		disability		Term life
	($ in millions)
Present value of expected net premiums
Balance at beginning of period	$	2,341.8	$	3,423.2	$	3,149.9	$	4,193.7
Effect of changes in discount rate assumptions at beginning of period		395.2		196.0		(198.9)		(690.1)
Balance at beginning of period at original discount rate		2,737.0		3,619.2		2,951.0		3,503.6
Effect of changes in cash flow assumptions		(37.6)		143.5		(413.1)		—
Effect of actual variances from expected experience		204.1		92.7		235.9		128.6
Adjusted beginning of period balance at original discount rate		2,903.5		3,855.4		2,773.8		3,632.2
Interest accrual		71.3		127.5		95.2		162.9
Net premiums collected		(204.7)		(266.4)		(276.5)		(346.6)
Issuances		81.1		158.1		144.5		170.7
Balance at end of period at original discount rate		2,851.2		3,874.6		2,737.0		3,619.2
Effect of changes in discount rate assumptions at end of period		(485.4)		(362.4)		(395.2)		(196.0)
Balance at end of period	$	2,365.8	$	3,512.2	$	2,341.8	$	3,423.2
Present value of expected future policy benefit payments
Balance at beginning of period	$	4,040.6	$	4,332.2	$	5,648.3	$	5,311.3
Effect of changes in discount rate assumptions at beginning of period		1,021.4		251.6		(501.0)		(913.9)
Balance at beginning of period at original discount rate		5,062.0		4,583.8		5,147.3		4,397.4
Effect of changes in cash flow assumptions		(51.5)		181.8		(476.3)		—
Effect of actual variances from expected experience		218.7		106.9		240.0		139.0
Adjusted beginning of period balance at original discount rate		5,229.2		4,872.5		4,911.0		4,536.4
Interest accrual		141.8		162.9		185.4		206.8
Benefit payments		(149.6)		(268.2)		(183.7)		(340.6)
Issuances		83.6		170.0		149.3		181.2
Balance at end of period at original discount rate		5,305.0		4,937.2		5,062.0		4,583.8
Effect of changes in discount rate assumptions at end of period		(1,334.7)		(475.3)		(1,021.4)		(251.6)
Balance at end of period	$	3,970.3	$	4,461.9	$	4,040.6	$	4,332.2
Future policy benefits (1)	$	1,604.5	$	949.7	$	1,698.8	$	909.0
Reinsurance impact		(365.9)		40.7		(386.8)		25.6
Future policy benefits after reinsurance	$	1,238.6	$	990.4	$	1,312.0	$	934.6
Weighted-average duration for future policy benefits (years) (2)		18.3		9.5		18.5		9.6

(1) Represents the present value of expected future policy benefit payments less the present value of expected net premiums.

(2) Represents the average of the cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort.

Summary of balances and the changes in the additional liability for certain benefits features (Table)

	For the nine months ended		For the year ended
	September 30, 2023		December 31, 2022
	($ in millions)
Balance at beginning of period	$	4,095.2	$	3,814.2
Effect of changes in cash flow assumptions		725.4		(6.0)
Effect of actual variances from expected experience		27.7		54.9
Interest accrual		150.6		171.2
Net assessments collected		277.1		320.3
Benefit payments		(99.3)		(91.9)
Other (1)		—		(167.5)
Balance at end of period		5,176.7		4,095.2
Reinsurance impact		(5,158.8)		(4,091.4)
Balance at end of period after reinsurance	$	17.9	$	3.8
Weighted-average duration for additional liability (years) (2)		27.0		27.6

(1) Reflects the impact of re-cohorting in 2022 as a result of our decision to manage the ULSG business separately from our other UL business following the Strategic Review.

(2) Represents the average of the cohort-level duration of the benefits less the net assessment cash flows weighted by the reserve balance for each cohort.

Principal Asset Management | Principal International

Future Policy Benefits and Claims

Summary of balances and the changes in the present value for expected net premiums and expected future policy benefits expected future policy benefits (Table)

	For the nine months ended		For the year ended
	September 30, 2023		December 31, 2022
	($ in millions)
Present value of expected future policy benefit payments
Balance at beginning of period	$	5,042.3	$	4,336.8
Effect of changes in discount rate assumptions at beginning of period		(754.6)		(478.5)
Balance at beginning of period at original discount rate		4,287.7		3,858.3
Effect of actual variances from expected experience		(0.1)		(4.7)
Adjusted beginning of period balance at original discount rate		4,287.6		3,853.6
Interest accrual (1)		276.4		662.0
Benefit payments		(271.0)		(325.8)
Issuances		18.8		86.4
Foreign currency translation adjustment		(201.9)		11.5
Balance at end of period at original discount rate		4,109.9		4,287.7
Effect of changes in discount rate assumptions at end of period		115.2		754.6
Future policy benefits	$	4,225.1	$	5,042.3
Weighted-average duration for future policy benefits (years) (2)		9.7		10.9

(1) Includes inflation adjustments.

(2) Represents the average of the cohort-level duration of the benefit cash flows weighted by the reserve balance for each cohort.

Corporate

Future Policy Benefits and Claims

Summary of balances and the changes in the present value for expected net premiums and expected future policy benefits expected future policy benefits (Table)

	For the nine months ended		For the year ended
	September 30, 2023		December 31, 2022
	($ in millions)
Present value of expected net premiums
Balance at beginning of period	$	64.6	$	62.8
Effect of changes in discount rate assumptions at beginning of period		(3.6)		(14.0)
Balance at beginning of period at original discount rate		61.0		48.8
Effect of changes in cash flow assumptions		(13.3)		10.0
Effect of actual variances from expected experience		(5.9)		4.1
Adjusted beginning of period balance at original discount rate		41.8		62.9
Interest accrual		2.2		3.3
Net premiums collected		(4.0)		(5.2)
Balance at end of period at original discount rate		40.0		61.0
Effect of changes in discount rate assumptions at end of period		0.8		3.6
Balance at end of period	$	40.8	$	64.6
Present value of expected future policy benefit payments
Balance at beginning of period	$	248.1	$	297.5
Effect of changes in discount rate assumptions at beginning of period		(18.9)		(89.5)
Balance at beginning of period at original discount rate		229.2		208.0
Effect of changes in cash flow assumptions		(40.5)		17.2
Effect of actual variances from expected experience		2.0		3.7
Adjusted beginning of period balance at original discount rate		190.7		228.9
Interest accrual		9.6		13.1
Benefit payments		(10.4)		(12.8)
Balance at end of period at original discount rate		189.9		229.2
Effect of changes in discount rate assumptions at end of period		3.9		18.9
Balance at end of period	$	193.8	$	248.1
Future policy benefits (1)	$	153.0	$	183.5
Reinsurance impact		(153.0)		(183.5)
Future policy benefits after reinsurance	$	—	$	—
Weighted-average duration for future policy benefits (years) (2)		10.0		11.8

(1) Represents the present value of expected future policy benefit payments less the present value of expected net premiums.

(2) Represents the average of cohort-level duration of the benefits less the net premium cash flows weighted by the reserve balance for each cohort.