Life Policy And Investment Contract Reserves (Tables)

12 Months Ended

Dec. 31, 2023

Liability for Future Policy Benefit, before Reinsurance [Abstract]

Reserves for Loss and Loss Adjustment Expenses

The following table summarizes our life policy and investment contract reserves and provides a reconciliation of the balances described in the below tables to those in the consolidated balance sheets:

(Dollars in millions)	At December 31,
	2023		2022
Life policy reserves:
Term	$	1,066	$	961
Whole life	434		408
Other	97		94
Subtotal	1,597		1,463
Investment contract reserves:
Deferred annuities	656		734
Universal life	585		578
Structured settlements	123		129
Other	107		111
Subtotal	1,471		1,552
Total life policy and investment contract reserves	$	3,068	$	3,015

Adopted Accounting Updates

The following table illustrates the effect of adopting ASU 2018-12 in the consolidated balance sheets:

(Dollars in millions)	December 31, 2023		December 31, 2022
			As originally reported		As adjusted		Difference
Reinsurance recoverable	$	651	$	640	$	665	$	25
Prepaid reinsurance premiums	55		79		51		(28)
Deferred policy acquisition costs	1,093		1,014		1,013		(1)
Total assets	32,769		29,736		29,732		(4)
Life policy and investment contract reserves	3,068		3,059		3,015		(44)
Deferred income tax	1,324		1,045		1,054		9
Total liabilities	20,671		19,205		19,170		(35)
Retained earnings	13,084		11,702		11,711		9
Accumulated other comprehensive income	(435)		(636)		(614)		22
Total shareholders' equity	12,098		10,531		10,562		31
Total liabilities and shareholders' equity	32,769		29,736		29,732		(4)

The following table illustrates the effect of adopting ASU 2018-12 in the consolidated statements of income and consolidated statements of comprehensive income:

(Dollars in millions, except per share data)	Years ended December 31,
	2023		2022						2021
			As originally reported		As adjusted		Difference		As originally reported		As adjusted		Difference
Earned premiums	$	7,958	$	7,219	$	7,225	$	6	$	6,482	$	6,478	$	(4)
Insurance losses and contract holders' benefits	5,274		5,012		5,019		7		3,936		3,909		(27)
Underwriting, acquisition and insurance expenses	2,384		2,162		2,162		—		1,951		1,946		(5)
Deferred income tax expense	223		(355)		(355)		—		477		483		6
Net Income (Loss)	1,843		(486)		(487)		(1)		2,946		2,968		22
Change in life policy reserves, reinsurance recoverable and other, net of tax	(34)		1		374		373		9		92		83
Other comprehensive income (loss)	179		(1,284)		(911)		373		(121)		(38)		83
Comprehensive Income (Loss)	2,022		(1,770)		(1,398)		372		2,825		2,930		105
Net income (loss) per share:
Basic	$	11.74	$	(3.06)	$	(3.06)	$	—	$	18.29	$	18.43	$	0.14
Diluted	11.66		(3.06)		(3.06)		—		18.10		18.24		0.14

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), pre-tax:

(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, pre-tax:

(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

Liability for Future Policy Benefit, Activity

he balances and changes in the term and whole life policy reserves included in life policy and investment contract reserves is as follows:

(Dollars in millions)	Years ended December 31,
	2023				2022				2021
	Term		Whole life		Term		Whole life		Term		Whole life
Present value of expected net premiums:
Balance, beginning of period	$	1,643	$	208	$	1,801	$	241	$	1,935	$	234
Beginning balance at original discount rate	1,708		217		1,503		201		1,503		182
Effect of changes in cash flow assumptions	(7)		(7)		123		(5)		(177)		(3)
Effect of actual variances from expected experience	(20)		3		(1)		—		28		2
Adjusted beginning of period balance	1,681		213		1,625		196		1,354		181
Issuances	143		31		194		40		248		39
Interest accrual	72		9		65		8		62		8
Net premiums collected	(184)		(28)		(176)		(27)		(161)		(27)
Ending balance at original discount rate	1,712		225		1,708		217		1,503		201
Effect of changes in discount rate assumptions	(12)		(2)		(65)		(9)		298		40
Balance, end of period	1,700		223		1,643		208		1,801		241
Present value of expected future policy benefits:
Balance, beginning of period	2,584		614		2,993		826		3,222		843
Beginning balance at original discount rate	2,692		607		2,425		577		2,418		545
Effect of changes in cash flow assumptions	2		(10)		140		(7)		(181)		(4)
Effect of actual variances from expected experience	(24)		3		8		(1)		31		2
Adjusted beginning of period balance	2,670		600		2,573		569		2,268		543
Issuances	143		30		194		40		248		39
Interest accrual	121		31		112		29		109		29
Benefits paid	(169)		(33)		(187)		(31)		(200)		(34)
Ending balance at original discount rate	2,765		628		2,692		607		2,425		577
Effect of changes in discount rate assumptions	(14)		29		(108)		7		568		249
Balance, end of period	2,751		657		2,584		614		2,993		826
Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums	1,051		434		941		406		1,192		585
Impact of flooring at cohort level	15		—		20		2		14		—
Net life policy reserves	1,066		434		961		408		1,206		585
Less reinsurance recoverable at original discount rate	(97)		(23)		(99)		(25)		(107)		(27)
Less effect of discount rate assumption changes on reinsurance recoverable	(10)		(5)		(9)		(5)		(19)		(15)
Net life policy reserves, after reinsurance recoverable	$	959	$	406	$	853	$	378	$	1,080	$	543
Weighted-average duration of the net life policy reserves	11		16		11		16		12		18

The total impact of flooring at cohort level in the above table includes the effect of discount rate assumption changes of $2 million, $9 million and $6 million at December 31, 2023, 2022 and 2021, respectively.

The following table shows the amount of undiscounted and discounted expected future benefit payments and expected gross premiums for our term and whole life policies:

(Dollars in millions)	At December 31,
	2023				2022
	Undiscounted		Discounted		Undiscounted		Discounted
Term
Expected future benefit payments	$	4,791	$	2,751	$	4,655	$	2,584
Expected future gross premiums	4,374		2,652		4,436		2,582
Whole life
Expected future benefit payments	$	1,648	$	657	$	1,562	$	614
Expected future gross premiums	659		409		606		368

The following table shows the amount of revenue and interest recognized in the consolidated statements of income related to our term and whole life policies:

(Dollars in millions)	Years ended December 31,
	2023		2022		2021
Gross premiums
Term	$	289	$	280	$	270
Whole life	52		47		47
Total	$	341	$	327	$	317
Interest accretion
Term	$	49	$	47	$	47
Whole life	22		21		21
Total	$	71	$	68	$	68

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums was immaterial for the years ended December 31, 2023, 2022 and 2021, respectively.

The following table shows the weighted-average interest rate for our term and whole life products:

	At December 31,
	2023		2022
Term
Interest accretion rate	5.28	%	5.38	%
Current discount rate	4.81		5.24
Whole life
Interest accretion rate	5.90	%	5.96	%
Current discount rate	5.10		5.35

The discount rate assumption was developed by calculating forward rates from market yield curves of upper-medium grade fixed-income instruments.

Policyholder Account Balance

The following table shows the balances and changes in policyholders' account balances included in investment contract reserves:

(Dollars in millions)	Years ended December 31,
	2023						2022						2021
	Deferred annuity			Universal life			Deferred annuity			Universal life			Deferred annuity			Universal life
Balance, beginning of period	$	734		$	457		$	763		$	454		$	761		$	451
Premiums received	44			39			29			39			44			39
Policy charges	—			(39)			—			(39)			—			(38)
Surrenders and withdrawals	(130)			(13)			(62)			(11)			(47)			(10)
Benefit payments	(14)			(6)			(18)			(5)			(17)			(7)
Interest credited	22			19			22			19			22			19
Balance, end of period	$	656		$	457		$	734		$	457		$	763		$	454
Weighted average crediting rate	3.51		%	4.30		%	3.36		%	4.27		%	2.88		%	4.25		%
Net amount at risk	$	—		$	3,949		$	—		$	4,082		$	—		$	4,198
Cash surrender value	651			426			729			424			757			419

Policyholder Account Balance, Guaranteed Minimum Crediting Rate

The following table shows the balance of account values by range of guaranteed minimum crediting rates, in basis points, and the related range of the difference between rates being credited to policyholders and the respective guaranteed minimums for our deferred annuity and universal life contracts:

(Dollars in millions)	At guaranteed minimum		1 to 50 basis points above		51-150 basis points above		Greater than 150 basis points		Total
At December 31, 2023
Deferred annuity
1.00-3.00%	$	5	$	361	$	16	$	226	$	608
3.01-4.00%	48		—		—		—		48
Total	$	53	$	361	$	16	$	226	$	656
Universal life
1.00-3.00%	$	55	$	4	$	57	$	4	$	120
3.01-4.00%	49		5		—		—		54
Greater than 4.00%	283		—		—		—		283
Total	$	387	$	9	$	57	$	4	$	457
At December 31, 2022
Deferred annuity
1.00-3.00%	$	5	$	446	$	18	$	214	$	683
3.01-4.00%	51		—		—		—		51
Total	$	56	$	446	$	18	$	214	$	734
Universal life
1.00-3.00%	$	61	$	46	$	8	$	2	$	117
3.01-4.00%	52		—		—		—		52
Greater than 4.00%	288		—		—		—		288
Total	$	401	$	46	$	8	$	2	$	457

Additional Liability, Long-Duration Insurance

The following table shows the balances and changes in the other additional liability related to the no-lapse guarantees contained within our universal life contracts:

(Dollars in millions)	Years ended December 31,
	2023		2022		2021
Balance, beginning of period	$	121	$	133	$	116
Balance, beginning of period before shadow reserve adjustments	123		131		113
Effect of changes in cash flow assumptions	(6)		(1)		4
Effect of actual variances from expected experience	—		6		—
Adjusted beginning of period balance	117		136		117
Interest accrual	4		4		4
Excess death benefits	(6)		(18)		(4)
Attributed assessments	12		12		12
Effect of changes in interest rate assumptions	2		(11)		2
Balance, end of period before shadow reserve adjustments	129		123		131
Shadow reserve adjustments	(1)		(2)		2
Balance, end of period	128		121		133
Less reinsurance recoverable, end of period	6		5		3
Net other additional liability, after reinsurance recoverable	$	134	$	126	$	136
Weighted-average duration of the other additional liability	32		34		35

Separate Account, Liability

The following table shows balances and changes in separate account balances during the period:

(Dollars in millions)	Years ended December 31,
	2023		2022		2021
Balance, beginning of period	$	892	$	959	$	952
Interest credited before policy charges	42		38		37
Change in unrealized gains and losses impacting separate account liabilities	—		(85)		(22)
Benefit payments	(10)		(15)		(6)
Other	1		(5)		(2)
Balance, end of period	$	925	$	892	$	959
Cash surrender value	$	917	$	890	$	870