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Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Adopted Accounting Updates
Adopted Accounting Updates
ASU 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. ASU 2018-12 requires changes to the measurement and disclosure of long-duration insurance contracts. In November 2020, the FASB issued an ASU that delayed the effective date of ASU 2018-12 to interim and annual reporting periods beginning after December 15, 2022.

Related to the company's term and whole life products included in life policy and investment contract reserves, the new guidance requires that cash flow assumptions be reviewed at least annually to determine any necessary updates. Additionally, the discount rate assumption is required to be updated quarterly based on upper-medium grade fixed-income instrument yields (market value discount rates). The life policy and investment contract reserves balance is adjusted through insurance losses and contract holders' benefits for cash flow assumption updates and through accumulated other comprehensive income (AOCI) for discount rate updates.

These ASUs also amend the previous guidance related to life deferred policy acquisition costs by requiring amortization of those costs on a constant level basis for a group of contracts that approximates straight-line and the removal of shadow deferred policy acquisition costs for universal life and deferred annuity products. These ASUs also require entities to provide additional disclosures including disaggregated rollforwards of the life policy and investment contract reserves, separate account liabilities and life deferred policy acquisition costs.

We adopted these ASUs on a modified retrospective basis on January 1, 2023, resulting in an after-tax increase to shareholders' equity of $31 million.
The following table illustrates the effect of adopting ASU 2018-12 in the condensed consolidated balance sheets:
(Dollars in millions)September 30, 2023December 31, 2022
As originally reportedAs adjustedDifference
Reinsurance recoverable$699 $640 $665 $25 
Prepaid reinsurance premiums69 79 51 (28)
Deferred policy acquisition costs1,101 1,014 1,013 (1)
Total assets30,915 29,736 29,732 (4)
Life policy and investment contract reserves2,920 3,059 3,015 (44)
Deferred income tax997 1,045 1,054 
Total liabilities20,291 19,205 19,170 (35)
Retained earnings12,018 11,702 11,711 
Accumulated other comprehensive income(827)(636)(614)22 
Total shareholders' equity10,624 10,531 10,562 31 
Total liabilities and shareholders' equity30,915 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 September 30,
20232022
As originally reportedAs adjustedDifference
Earned premiums$2,033 $1,882 $1,884 $
Insurance losses and contract holders' benefits1,332 1,418 1,418 — 
Underwriting, acquisition and insurance expenses609 551 551 — 
Deferred income tax expense(106)(180)(180)— 
Net Income (Loss)(99)(418)(416)
Change in life policy reserves, reinsurance recoverable and other, net of tax89 — 95 95 
Other comprehensive income (loss)(201)(405)(310)95 
Comprehensive Income (Loss)(300)(823)(726)97 
Net income (loss) per share:
Basic$(0.63)$(2.64)$(2.63)$0.01 
Diluted(0.63)(2.64)(2.63)0.01 
(Dollars in millions, except per share data)Nine months ended September 30,
20232022
As originally reportedAs adjustedDifference
Earned premiums$5,894 $5,345 $5,350 $
Insurance losses and contract holders' benefits4,070 3,766 3,772 
Underwriting, acquisition and insurance expenses1,744 1,604 1,604 — 
Deferred income tax expense2 (571)(571)— 
Net Income (Loss)660 (1,499)(1,500)(1)
Change in life policy reserves, reinsurance recoverable and other, net of tax76 393 392 
Other comprehensive income (loss)(213)(1,476)(1,084)392 
Comprehensive Income (Loss)447 (2,975)(2,584)391 
Net income (loss) per share:
Basic$4.20 $(9.41)$(9.42)$(0.01)
Diluted4.17 (9.41)(9.42)(0.01)

The adoption of ASU 2018-12 did not have a material impact on the company's condensed consolidated cash flows.
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)TermWhole lifeDeferred annuityUniversal lifeOtherTotal
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 premiums14 1    15 
Remeasurement at market value discount rates372 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)TermWhole lifeDeferred annuityUniversal lifeOtherTotal
At January 1, 2021
Balance, pre-adoption at December 31, 2020$113 $26 $ $ $78 $217 
Remeasurement at market value discount rates29 18    47 
Other adjustments20 1  2  23 
Balance, post-adoption at January 1, 2021$162 $45 $ $2 $78 $287