Adopted Accounting Updates |
The following table illustrates the effect of adopting ASU 2018-12 in the condensed consolidated balance sheets: | | | | | | | | | | | | | | | | | | (Dollars in millions) | June 30, 2023 | | December 31, 2022 | | | | As originally reported | As adjusted | Difference | Reinsurance recoverable | $ | 694 | | | $ | 640 | | $ | 665 | | $ | 25 | | Prepaid reinsurance premiums | 95 | | | 79 | | 51 | | (28) | | Deferred policy acquisition costs | 1,109 | | | 1,014 | | 1,013 | | (1) | | Total assets | 31,352 | | | 29,736 | | 29,732 | | (4) | | Life policy and investment contract reserves | 3,038 | | | 3,059 | | 3,015 | | (44) | | Deferred income tax | 1,158 | | | 1,045 | | 1,054 | | 9 | | Total liabilities | 20,322 | | | 19,205 | | 19,170 | | (35) | | Retained earnings | 12,235 | | | 11,702 | | 11,711 | | 9 | | Accumulated other comprehensive income | (626) | | | (636) | | (614) | | 22 | | Total shareholders' equity | 11,030 | | | 10,531 | | 10,562 | | 31 | | Total liabilities and shareholders' equity | 31,352 | | | 29,736 | | 29,732 | | (4) | | | | | | | |
The following table illustrates the effect of adopting ASU 2018-12 in the condensed consolidated statements of income and condensed consolidated statements of comprehensive income: | | | | | | | | | | | | | | | | | | | | | | (Dollars in millions, except per share data) | Three months ended June 30, | | 2023 | | 2022 | | | | | | As originally reported | As adjusted | Difference | | | | | Earned premiums | $ | 1,943 | | | $ | 1,773 | | $ | 1,773 | | $ | — | | | | | | | | | | | | | | | | Insurance losses and contract holders' benefits | 1,340 | | | 1,309 | | 1,322 | | 13 | | | | | | Underwriting, acquisition and insurance expenses | 579 | | | 534 | | 533 | | (1) | | | | | | | | | | | | | | | | Deferred income tax expense | 81 | | | (263) | | (265) | | (2) | | | | | | | | | | | | | | | | Net Income (Loss) | 534 | | | (808) | | (818) | | (10) | | | | | | Change in life policy reserves, reinsurance recoverable and other, net of tax | 23 | | | 1 | | 143 | | 142 | | | | | | Other comprehensive income (loss) | (99) | | | (482) | | (340) | | 142 | | | | | | Comprehensive Income (Loss) | 435 | | | (1,290) | | (1,158) | | 132 | | | | | | Net income (loss) per share: | | | | | | | | | | Basic | $ | 3.40 | | | $ | (5.06) | | $ | (5.12) | | $ | (0.06) | | | | | | Diluted | 3.38 | | | (5.06) | | (5.12) | | (0.06) | | | | | | | | | | | | | | | | (Dollars in millions, except per share data) | Six months ended June 30, | | 2023 | | 2022 | | | | | | As originally reported | As adjusted | Difference | | | | | Earned premiums | $ | 3,861 | | | $ | 3,463 | | $ | 3,466 | | $ | 3 | | | | | | | | | | | | | | | | Insurance losses and contract holders' benefits | 2,738 | | | 2,348 | | 2,354 | | 6 | | | | | | Underwriting, acquisition and insurance expenses | 1,135 | | | 1,053 | | 1,053 | | — | | | | | | | | | | | | | | | | Deferred income tax expense | 108 | | | (391) | | (391) | | — | | | | | | | | | | | | | | | | Net Income (Loss) | 759 | | | (1,081) | | (1,084) | | (3) | | | | | | Change in life policy reserves, reinsurance recoverable and other, net of tax | (13) | | | 1 | | 298 | | 297 | | | | | | Other comprehensive income (loss) | (12) | | | (1,071) | | (774) | | 297 | | | | | | Comprehensive Income (Loss) | 747 | | | (2,152) | | (1,858) | | 294 | | | | | | Net income (loss) per share: | | | | | | | | | | Basic | $ | 4.83 | | | $ | (6.76) | | $ | (6.77) | | $ | (0.01) | | | | | | Diluted | 4.80 | | | (6.76) | | (6.77) | | (0.01) | | | | | | | | | | | | | | | |
The table below shows the ASU 2018-12 adoption impacts to the life policy and investment contract reserves as of January 1, 2021 (transition date), pretax: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Dollars in millions) | | | | Term | | Whole life | | Deferred annuity | | Universal life | | | | Other | | Total | At January 1, 2021 | Balance, pre-adoption at December 31, 2020 | | | | $ | 901 | | | $ | 363 | | | $ | 761 | | | $ | 567 | | | | | $ | 323 | | | $ | 2,915 | | Removal of shadow adjustments | | | | — | | | — | | | — | | | — | | | | | 13 | | | 13 | | Net premiums in excess of gross premiums | | | | 14 | | | 1 | | | — | | | — | | | | | — | | | 15 | | Remeasurement at market value discount rates | | | | 372 | | | 245 | | | — | | | — | | | | | — | | | 617 | | Balance, post-adoption at January 1, 2021 | | | | $ | 1,287 | | | $ | 609 | | | $ | 761 | | | $ | 567 | | | | | $ | 336 | | | $ | 3,560 | | | | | | | | | | | | | | | | | | |
The table below shows the ASU 2018-12 adoption impacts to the life reinsurance recoverable asset as of January 1, 2021, pretax: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Dollars in millions) | | | | Term | | Whole life | | Deferred annuity | | Universal life | | Other | | Total | At January 1, 2021 | | | | | | | | Balance, pre-adoption at December 31, 2020 | | | | $ | 113 | | | $ | 26 | | | $ | — | | | $ | — | | | $ | 78 | | | $ | 217 | | Remeasurement at market value discount rates | | | | 29 | | | 18 | | | — | | | — | | | — | | | 47 | | Other adjustments | | | | 20 | | | 1 | | | — | | | 2 | | | — | | | 23 | | Balance, post-adoption at January 1, 2021 | | | | $ | 162 | | | $ | 45 | | | $ | — | | | $ | 2 | | | $ | 78 | | | $ | 287 | | | | | | | | | | | | | | | | |
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