Life Policy and Investment Contract Reserves

6 Months Ended

Jun. 30, 2016

Liability for Future Policy Benefits [Abstract]

Life Policy And Investment Contract Reserves

Life Policy and Investment Contract Reserves

We establish the reserves for traditional life insurance policies based on expected expenses, mortality, morbidity, withdrawal rates, timing of claim presentation and investment yields, including a provision for uncertainty. Once these assumptions are established, they generally are maintained throughout the lives of the contracts. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our assumptions for expected mortality, morbidity and withdrawal rates as well as for expected expenses. We base our assumptions for expected investment income on our own experience adjusted for current economic conditions.

We establish reserves for the company’s universal life, deferred annuity and structured settlement policies equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance, based on expected no-lapse guarantee benefits and expected policy assessments.

This table summarizes our life policy and investment contract reserves:

(Dollars in millions)	June 30, 2016		December 31, 2015
Life policy reserves:
Ordinary/traditional life	$	975	$	943
Other	44		44
Subtotal	1,019		987
Investment contract reserves:
Deferred annuities	863		860
Universal life	563		558
Structured settlements	173		174
Other	6		4
Subtotal	1,605		1,596
Total life policy and investment contract reserves	$	2,624	$	2,583