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Future Policy Benefits (Tables)

9 Months Ended

Sep. 30, 2024

Liability for Future Policy Benefit, after Reinsurance [Abstract]

Summary of Components of Liability for Future Policy Benefits

The following table sets forth our liability for future policy benefits as of the dates indicated:


(Amounts in millions)	September 30, 2024		December 31, 2023
Long-term care insurance	$	43,998	$	43,929
Life insurance		1,604		1,698
Fixed annuities		11,513		11,829

Total long-duration insurance contracts		57,115		57,456

Deferred profit liability		132		128
Cost of reinsurance		56		71

Total future policy benefits	$	57,303	$	57,655

Summary of Liability for Future Policy Benefit Activity

The following tables present the balances of and changes in the liability for future policy benefits as of and for the periods indicated:


	September 30, 2024
(Dollar amounts in millions)	Long- term care insurance			Life insurance			Fixed annuities
Present value of expected net premiums:
Beginning balance as of January 1	$	18,650		$	4,180		$	—
Beginning balance, at original discount rate	$	18,346		$	3,918		$	—
Effect of changes in cash flow assumptions		7			—			—
Effect of actual variances from expected experience		(182	)		(35	)		—

Adjusted beginning balance		18,171			3,883			—
Issuances		1			—			32
Interest accretion		690			161			—
Net premiums collected (1)		(1,384	)		(334	)		(32	)
Derecognition (lapses and withdrawals)		—			—			—
Other		—			2			—

Ending balance, at original discount rate		17,478			3,712			—
Effect of changes in discount rate assumptions		445			257			—

Ending balance as of September 30	$	17,923		$	3,969		$	—

Present value of expected future policy benefits:
Beginning balance as of January 1	$	62,579		$	5,412		$	11,829
Beginning balance, at original discount rate	$	60,513		$	5,146		$	9,920
Effect of changes in cash flow assumptions		(144	)		—			—
Effect of actual variances from expected experience		(22	)		(22	)		(46	)

Adjusted beginning balance		60,347			5,124			9,874
Issuances		1			—			26
Interest accretion		2,458			202			481
Benefit payments		(2,930	)		(585	)		(734	)
Derecognition (lapses and withdrawals)		—			—			—
Other		—			1			8

Ending balance, at original discount rate		59,876			4,742			9,655
Effect of changes in discount rate assumptions		2,045			276			1,858

Ending balance as of September 30	$	61,921		$	5,018		$	11,513

Net liability for future policy benefits, before flooring adjustments	$	43,998		$	1,049		$	11,513
Flooring adjustments (2)		—			555			—

Net liability for future policy benefits		43,998			1,604			11,513
Less: reinsurance recoverable		7,467			810			8,820

Net liability for future policy benefits, net of reinsurance recoverable	$	36,531		$	794		$	2,693

Weighted-average liability duration (years)		13.2			5.9			10.7

(1)	Represents the portion of gross premiums collected from policyholders that is used to fund expected benefit payments.

(2)

Flooring adjustments are necessary when a cohort’s present value of future net premiums exceeds the present value of future benefits. The flooring adjustment ensures that the liability for future policy benefits for each cohort is not less than zero. This adjustment is most prevalent in our term life insurance products due to their product design of a level premium period

followed

by annual premium rate increases.


	December 31, 2023
(Dollar amounts in millions)	Long- term care insurance			Life insurance			Fixed annuities
Present value of expected net premiums:
Beginning balance as of January 1	$	19,895		$	4,083		$	—
Beginning balance, at original discount rate	$	19,959		$	3,922		$	—
Effect of changes in cash flow assumptions		(276	)		180			—
Effect of actual variances from expected experience		(365	)		38			—

Adjusted beginning balance		19,318			4,140			—
Issuances		2			—			42
Interest accretion		994			217			—
Net premiums collected (1)		(1,968	)		(439	)		(42	)
Derecognition (lapses and withdrawals)		—			—			—
Other		—			—			—

Ending balance, at original discount rate		18,346			3,918			—
Effect of changes in discount rate assumptions		304			262			—

Ending balance as of December 31	$	18,650		$	4,180		$	—

Present value of expected future policy benefits:
Beginning balance as of January 1	$	61,352		$	5,556		$	11,923
Beginning balance, at original discount rate	$	61,148		$	5,374		$	10,300
Effect of changes in cash flow assumptions		(292	)		261			(33	)
Effect of actual variances from expected experience		(50	)		61			(30	)

Adjusted beginning balance		60,806			5,696			10,237
Issuances		2			—			35
Interest accretion		3,327			281			663
Benefit payments		(3,621	)		(823	)		(1,016	)
Derecognition (lapses and withdrawals)		—			—			—
Other		(1	)		(8	)		1

Ending balance, at original discount rate		60,513			5,146			9,920
Effect of changes in discount rate assumptions		2,066			266			1,909

Ending balance as of December 31	$	62,579		$	5,412		$	11,829

Net liability for future policy benefits, before flooring adjustments	$	43,929		$	1,232		$	11,829
Flooring adjustments (2)		—			466			—

Net liability for future policy benefits		43,929			1,698			11,829
Less: reinsurance recoverable		7,572			852			9,008

Net liability for future policy benefits, net of reinsurance recoverable	$	36,357		$	846		$	2,821

Weighted-average liability duration (years)		13.7			5.9			11.1

(1)	Represents the portion of gross premiums collected from policyholders that is used to fund expected benefit payments.

(2)

Summary of Weighted Average Interest and Discount Rates

The following table provides the weighted-average interest rates for the liability for future policy benefits as of the dates indicated:


	September 30, 2024			December 31, 2023
Long-term care insurance
Interest accretion (locked-in) rate		5.7	%		5.8	%
Current discount rate		5.0	%		5.1	%
Life insurance
Interest accretion (locked-in) rate		5.8	%		5.8	%
Current discount rate		4.7	%		4.8	%
Fixed annuities
Interest accretion (locked-in) rate		6.8	%		6.7	%
Current discount rate		5.0	%		5.0	%

Summary of Undiscounted and Discounted Expected Future Gross Premiums and Expected Future Benefit Payments

The following table sets forth the amount of undiscounted and discounted expected future gross premiums and expected future benefit payments as of the dates indicated:


	September 30, 2024				December 31, 2023
(Amounts in millions)	Undiscounted		Discounted		Undiscounted		Discounted
Long-term care insurance
Expected future gross premiums	$	35,915	$	25,227	$	38,279	$	26,341
Expected future benefit payments	$	121,227	$	61,921	$	124,594	$	62,579
Life insurance
Expected future gross premiums	$	10,088	$	5,957	$	10,693	$	6,278
Expected future benefit payments	$	6,907	$	5,018	$	7,524	$	5,412
Fixed annuities
Expected future gross premiums	$	—	$	—	$	—	$	—
Expected future benefit payments	$	23,152	$	11,513	$	23,903	$	11,829

Summary of Revenue and Interest Expense in Respect of Future Policy Benefits

The following table sets forth the amount of revenue and interest accretion (expense) recognized in net income related to our liability for future policy benefits for the periods indicated:


	Three months ended September 30,								Nine months ended September 30,								Year ended
	2024				2023				2024				2023				December 31, 2023
(Amounts in millions)	Gross premiums		Interest accretion (1)		Gross premiums		Interest accretion (1)		Gross premiums		Interest accretion (1)		Gross premiums		Interest accretion (1)		Gross premiums		Interest accretion (1)
Long-term care insurance	$	633	$	590	$	685	$	584	$	1,876	$	1,768	$	2,031	$	1,744	$	2,713	$	2,333
Life insurance		158		12		168		15		492		41		521		48		688		64
Fixed annuities		—		159		—		166		—		481		—		500		—		663

Total	$	791	$	761	$	853	$	765	$	2,368	$	2,290	$	2,552	$	2,292	$	3,401	$	3,060

(1)	Amounts for interest accretion are included in benefits and other changes in policy reserves in the condensed consolidated statements of income.