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Future Policy Benefit Reserves
 12 Months Ended
Dec. 31, 2023
Insurance [Abstract]  
Future Policy Benefit Reserves Future Policy Benefits Reserves
Future policy benefits reserves are associated with the Company's run-off long-term care business, which is included in the Life & Group segment, and relate to policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported, as well as policyholders that are not yet receiving benefits.
The determination of Future policy benefits reserves requires management to make estimates and assumptions about expected policyholder experience over the remaining life of the policy. Since policies may be in force for several decades, these assumptions are subject to significant estimation risk. As a result of this variability, the Company’s future policy benefits reserves may be subject to material increases if actual experience develops adversely to the Company’s expectations.
The LFPB is computed using the net level premium method, which incorporates cash flow assumptions and discount rate assumptions. As a result of the modified retrospective adoption of ASU 2018-12, the Company’s NPR calculation incorporates the original locked in discount rate and the reserve balance as of the transition date of January 1, 2021. The key cash flow assumptions used to estimate the LFPB are morbidity, persistency (inclusive of mortality), anticipated future premium rate increases and expenses. The carried LFPB discount rate is determined using the upper-medium grade fixed income instrument yield curve.
The Company has elected to update the NPR and the LFPB for actual experience on a quarterly basis. A quarterly assessment is also made as to whether evidence suggests that cash flow assumptions should be updated. Annually in the third quarter, actuarial analysis is performed on policyholder morbidity, persistency, premium rate increases and expense experience, which, combined with judgment, informs the setting of updated cash flow assumptions used to estimate the LFPB.
The cash flow assumption updates completed in the third quarter of 2023 resulted in an $8 million pretax increase in the LFPB. Persistency updates were unfavorable due to revisions to lapse rates. Morbidity updates were favorable driven by claim severity assumption updates, and there was a favorable impact from outperformance on premium rate assumptions. Adjusted to reflect the application of the LDTI accounting standard, the cash flow assumption updates completed in the third quarter of 2022 resulted in a $186 million pretax increase to the LFPB, primarily driven by the unfavorable impact of increased cost of care inflation offset by favorable premium rate assumptions.
The following table summarizes balances and changes in the LFPB.
(In millions)
202320222021
Present value of future net premiums
Balance, January 1$3,991 $4,735 $5,086 
     Effect of changes in discount rate(74)(880)(1,140)
Balance, January 1, at original locked in discount rate3,917 3,855 3,946 
     Effect of changes in cash flow assumptions (1)
28 352 173 
     Effect of actual variances from expected experience (1)
(126)(49)(24)
Adjusted balance, January 13,819 4,158 4,095 
Interest accrual202 216 219 
     Net premiums: earned during period(436)(457)(459)
Balance, end of period at original locked in discount rate3,585 3,917 3,855 
     Effect of changes in discount rate125 74 880 
Balance, December 31$3,710 $3,991 $4,735 
Present value of future benefits & expenses
Balance, January 1$17,471 $22,745 $23,955 
     Effect of changes in discount rate(125)(5,942)(7,395)
Balance, January 1, at original locked in discount rate17,346 16,803 16,560 
     Effect of changes in cash flow assumptions (1)
36 538 176 
     Effect of actual variances from expected experience (1)
(46)(21)(19)
Adjusted balance, January 117,336 17,320 16,717 
Interest accrual962 979 973 
     Benefit & expense payments(1,207)(953)(887)
Balance, end of period at original locked in discount rate17,091 17,346 16,803 
     Effect of changes in discount rate578 125 5,942 
Balance, December 31$17,669 $17,471 $22,745 
Net LFPB$13,959 $13,480 $18,010 
(1) As of December 31, 2023, 2022 and 2021 the re-measurement gain (loss) of $(88) million, $(214) million and $(8) million presented parenthetically on the Consolidated Statement of Operations is comprised of the effect of changes in cash flow assumptions and the effect of actual variances from expected experience.
The following table presents earned premiums and interest expense associated with the Company’s long-term care business recognized on the Consolidated Statement of Operations.
Years ended December 31
(In millions)
202320222021
Earned premiums$451 $473 $491 
Interest expense760 763 754 
The following table presents undiscounted expected future benefit and expense payments, and undiscounted expected future gross premiums.
As of December 31
(In millions)
20232022
  Expected future benefit and expense payments$32,851 $34,261 
  Expected future gross premiums5,414 5,910 
Discounted expected future gross premiums at the upper-medium grade fixed income instrument yield discount rate were $3,824 million and $4,070 million as of December 31, 2023 and 2022.
The weighted average effective duration of the LFPB calculated using the original locked in discount rate was 11 years and 12 years as of December 31, 2023 and 2022.
The weighted average interest rates in the table below are calculated based on the rate used to discount all future cash flows.
As of December 31
20232022
   Original locked in discount rate5.22 %5.27 %
Upper-medium grade fixed income instrument discount rate4.94 5.23 
For the years ended December 31, 2023 and 2022, immediate charges to net income resulting from adverse development that caused the NPR to exceed 100% for certain cohorts were $164 million and $178 million. For the years ended December 31, 2023 and 2022, the portion of losses recognized in a prior period due to NPR exceeding 100% for certain cohorts which, due to favorable development, was reversed through net income was $42 million and $12 million.