Insurance Liabilities

9 Months Ended

Sep. 30, 2023

Insurance [Abstract]

Insurance Liabilities

12. Insurance Liabilities

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (LOSS RESERVES)

Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve estimates. Any adjustments resulting from this review are reflected currently in pre-tax income, except to the extent such adjustment impacts a deferred gain under a retroactive reinsurance agreement, in which case the ceded portion would be amortized into pre-tax income in subsequent periods. Because these estimates are subject to the outcome of future events, changes in estimates are common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed. Reserve changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development or reserve releases.

Our gross loss reserves before reinsurance and discount are net of contractual deductible recoverable amounts due from policyholders of approximately $12.8 billion and $12.1 billion at September 30, 2023 and December 31, 2022, respectively. These recoverable amounts are related to certain policies with high deductibles (in excess of high dollar amounts retained by the insured through self-insured retentions, deductibles, retrospective programs, or captive arrangements, each referred to generically as “deductibles”), primarily for U.S. Commercial casualty business. With respect to the deductible portion of the claim, we manage and pay the entire claim on behalf of the insured and are reimbursed by the insured for the deductible portion of the claim. Thus, these recoverable amounts represent a credit exposure to us. At September 30, 2023 and December 31, 2022 we held collateral of approximately $8.8 billion and $8.6 billion, respectively, for these deductible recoverable amounts, consisting primarily of letters of credit and funded trust agreements. Allowance for credit losses for the unsecured portion of these recoverable amounts was $14 million at both September 30, 2023 and December 31, 2022.

The following table presents the rollforward of activity in loss reserves:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)		2023		2022		2023		2022
Liability for unpaid loss and loss adjustment expenses, beginning of period	$	70,284	$	76,739	$	75,167	$	79,026
Reinsurance recoverable		(30,226)		(33,583)		(32,102)		(35,213)
Net Liability for unpaid loss and loss adjustment expenses, beginning of period		40,058		43,156		43,065		43,813
Losses and loss adjustment expenses incurred:
Current year		3,922		4,373		11,651		12,020
Prior years, excluding discount and amortization of deferred gain		(246)		(112)		(380)		(537)
Prior years, discount charge (benefit)		52		36		200		78
Prior years, amortization of deferred gain on retroactive reinsurance(a)		27		(23)		(58)		(37)
Total losses and loss adjustment expenses incurred		3,755		4,274		11,413		11,524
Losses and loss adjustment expenses paid:
Current year		(1,190)		(1,132)		(2,360)		(2,289)
Prior years		(2,561)		(2,673)		(9,104)		(8,844)
Total losses and loss adjustment expenses paid		(3,751)		(3,805)		(11,464)		(11,133)
Other changes:
Foreign exchange effect		(583)		(1,031)		(211)		(1,827)
Losses and loss adjustment expenses recognized within gain on divestitures		316		—		316		—
Retroactive reinsurance adjustment (net of discount)(b)		121		101		180		318
Reclassified to held for sale, net of reinsurance recoverables		(159)		—		(3,542)		—
Total other changes		(305)		(930)		(3,257)		(1,509)
Liability for unpaid loss and loss adjustment expenses, end of period:
Net liability for unpaid losses and loss adjustment expenses		39,757		42,695		39,757		42,695
Reinsurance recoverable(c)		30,066		32,824		30,066		32,824
Total	$	69,823	$	75,519	$	69,823	$	75,519

(a)Includes $9 million and $5 million for the retroactive reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire), covering U.S. asbestos exposures for the three months ended September 30, 2023 and 2022, respectively, and $22 million and $15 million for the nine months ended September 30, 2023 and 2022, respectively.

(b)Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $24 million and $17 million for the three months ended September 30, 2023 and 2022 respectively, and $120 million and $74 million for the nine months ended September 30, 2023 and 2022, respectively.

(c)Excludes $1.5 billion of Reinsurance recoverable reclassified to Assets held for sale on the Condensed Consolidated Balance Sheets at September 30, 2023.

On January 20, 2017, we entered into an adverse development reinsurance agreement with NICO, under which we transferred to NICO 80 percent of the reserve risk on substantially all of our U.S. commercial long-tail exposures for accident years 2015 and prior. Under this agreement, we ceded to NICO 80 percent of the paid losses on subject business paid on or after January 1, 2016 in excess of $25 billion of net paid losses, up to an aggregate limit of $25 billion. At NICO’s 80 percent share, NICO’s limit of liability under the contract is $20 billion. We account for this transaction as retroactive reinsurance. We paid total consideration, including interest, of $10.2 billion. The consideration was placed into a collateral trust account as security for NICO’s claim payment obligations, and Berkshire has provided a parental guarantee to secure the obligations of NICO under the agreement.

Prior Year Development

During the three months ended September 30, 2023, we recognized favorable prior year loss reserve development of $246 million excluding discount and amortization of deferred gain. The development in this period was largely driven by favorable development on our U.S. Workers' Compensation business, International Financial Lines in all regions except UK, which was adverse, and Japan Personal Insurance partially offset by unfavorable development on UK/Europe Casualty. During the nine months ended September 30, 2023, we recognized favorable prior year loss reserve development of $380 million excluding discount and amortization of deferred gain. The development in this period was largely driven by favorable development on our U.S. Workers' Compensation business, U.S. Other Casualty and Other Product Lines, partially offset by unfavorable development on UK/Europe Casualty and UK Financial Lines.

During the three months ended September 30, 2022, we recognized favorable prior year loss reserve development of $112 million excluding discount and amortization of deferred gain. During the nine months ended September 30, 2022, we recognized favorable prior year loss reserve development of $537 million excluding discount and amortization of deferred gain. The development in these periods was primarily driven by favorable development on U.S. Workers' Compensation, U.S. Other Casualty, Global Specialty and International Personal Lines led by Japan, with unfavorable development in Financial Lines (U.S. and International) and International Casualty Lines.

Discounting of Loss Reserves

At September 30, 2023 and December 31, 2022, the loss reserves reflect a net loss reserve discount of $1.3 billion and $1.3 billion, respectively, including tabular and non-tabular calculations based upon the following assumptions:

•The non-tabular workers’ compensation discount is calculated separately for companies domiciled in New York, Pennsylvania and Delaware, and follows the statutory regulations (prescribed or permitted) for each state.

–For New York companies, the discount is based on a 5 percent interest rate and the companies’ own payout patterns.

–The Pennsylvania and Delaware regulators approved use of a consistent benchmark discount rate and spread (U.S. Treasury rate plus a liquidity premium) to all of our workers’ compensation reserves in our Pennsylvania domiciled and Delaware domiciled companies, as well as our use of updated payout patterns specific to our primary and excess workers compensation portfolios. In 2020, the regulators also approved that the discount rate will be updated on an annual basis.

•The tabular workers’ compensation discount is calculated based on the mortality rate used in the 2007 U.S. Life table and interest rates prescribed or permitted by each state (i.e. New York is based on 5 percent interest rate and Pennsylvania and Delaware are based on U.S. Treasury rate plus a liquidity premium). In the case that applying this tabular discount factor to our nominal reserves produces a tabular discount that is greater than the indemnity portion of our case reserves, the tabular discount is capped at our estimate of the indemnity portion of our cases reserves (45 percent).

The discount for asbestos reserves has been fully accreted.

At September 30, 2023 and December 31, 2022, the discount consists of $316 million and $314 million of tabular discount, respectively, and $997 million and $964 million of non-tabular discount for workers’ compensation, respectively. During the nine months ended September 30, 2023 and 2022, the benefit / (charge) from changes in discount of $(85) million and $(4) million, respectively, were recorded as part of Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income (Loss).

The following table presents the components of the loss reserve discount discussed above:

(in millions)		September 30, 2023		December 31, 2022
U.S. workers' compensation	$	2,447	$	2,532
Retroactive reinsurance		(1,134)		(1,254)
Total reserve discount(a)(b)	$	1,313	$	1,278

(a)Excludes $150 million and $135 million of discount related to certain long-tail liabilities in the UK at September 30, 2023 and December 31, 2022, respectively.

(b)Includes gross discount of $740 million and $763 million, which was 100 percent ceded to Fortitude Re at September 30, 2023 and December 31, 2022, respectively.

The following table presents the net loss reserve discount benefit (charge):

	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)		2023		2022		2023		2022
Current accident year	$	47	$	26	$	115	$	74
Accretion and other adjustments to prior year discount		(52)		(36)		(200)		(78)
Net reserve discount benefit (charge)		(5)		(10)		(85)		(4)
Change in discount on loss reserves ceded under retroactive reinsurance		24		17		120		74
Net change in total reserve discount*	$	19	$	7	$	35	$	70

*Excludes $7 million and $20 million discount related to certain long-tail liabilities in the UK for the three months ended September 30, 2023 and 2022, respectively, and excludes $15 million and $15 million discount related to certain long-tail liabilities in the UK for the nine months ended September 30, 2023 and 2022, respectively.

Amortization of Deferred Gain on Retroactive Reinsurance

Amortization of the deferred gain on retroactive reinsurance includes $(36) million and $18 million related to the adverse development reinsurance cover with NICO for the three months ended September 30, 2023 and 2022, respectively, and $36 million and $22 million related to the adverse development reinsurance cover with NICO for the nine months ended September 30, 2023 and 2022, respectively.

Amounts recognized reflect the amortization of the initial deferred gain at inception, as amended for subsequent changes in the deferred gain due to changes in subject reserves.

FUTURE POLICY BENEFITS

Future policy benefits primarily include reserves for traditional life and annuity payout contracts, which represent an estimate of the present value of future benefits less the present value of future net premiums. Included in Future policy benefits are liabilities for annuities issued in structured settlement arrangements whereby a claimant receives life contingent payments over their lifetime. Also included are pension risk transfer arrangements whereby an upfront premium is received in exchange for guaranteed retirement benefits. All payments under these arrangements are fixed and determinable with respect to their amounts and dates.

Prior to the adoption of the Targeted Improvements to the Accounting for Long-Duration Contracts Standard

Future policy benefits for traditional and limited pay contracts were reserved using actuarial assumptions locked-in at contract issuance. These assumptions were only updated when a loss recognition event occurred. Also included in Future policy benefits were reserves for contracts in loss recognition, including the adjustment to reflect the effect of unrealized gains on fixed maturity securities available for sale with related changes recognized through OCI.

Future policy benefits also included certain guaranteed benefits of annuity products that were not considered embedded derivatives.

Subsequent to the adoption of the Targeted Improvements to the Accounting for Long-Duration Contracts Standard

For traditional and limited pay long-duration products, benefit reserves are accrued and benefit expense is recognized using a NPR methodology for each annual cohort of business. This NPR method incorporates periodic retrospective revisions to the NPR to reflect updated actuarial assumptions and variances in actual versus expected experience. The Future policy benefit liability is accrued by multiplying the gross premium recognized in each period by the net premium ratio. The net premium is equal to the portion of the gross premium required to provide for all benefits and certain expenses and may not exceed 100 percent. Benefits in excess of premiums are expensed immediately through Policyholder benefits. In addition, periodic revisions to the NPR below 100 percent may result in reclassification between the benefit reserves and deferred profit liability for limited pay contracts.

Insurance contracts are aggregated into annual cohorts for the purposes of determining the liability for future policy benefits (LFPB), but are not aggregated across segments. These annual cohorts may be further segregated based on product characteristics, or to distinguish business reinsured from non-reinsured business or products issued in different functional currencies. The assumptions used to calculate the future policy benefits include discount rates, persistency and recognized morbidity and mortality tables modified to reflect the Company's experience.

The current discount rate assumption for the liability for future policy benefits is derived from market observable yields on upper-medium-grade fixed income instruments. The Company uses an external index as the source of the yields on these instruments for the first 30 years. For years 30 to 50, the yield is derived using market observable yields. Yields for years 50 to 100 are extrapolated using a flat forward approach, maintaining a constant forward spread through the period. The current discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change in the discount rate reflected in OCI.

The method for constructing and applying the locked-in discount rate assumptions on newly issued business is determined based on factors such as product characteristics and the expected timing of cash flows. This discount rate assumption is derived from market observable yields on upper-medium-grade fixed income instruments. Similar to the current discount rate assumption, the Company may employ conversion and interpolation methodologies when necessary. The applicable interest accretion is reflected in Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income (Loss).

The following table presents the transition rollforward of the liability for future policy benefits for nonparticipating contracts(a):

	Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Other(b)		Total
(in millions)
Pre-adoption December 31, 2020 liability for future policy benefits balance	$	1,309	$	282	$	11,129	$	11,029	$	22,206	$	45,955
Adjustments for the reclassification to the deferred profit liability	(65)		(8)		—		(766)		(859)		(1,698)
Change in cash flow assumptions and effect of net premiums exceeding gross premiums	(14)		2		15		4		55		62
Effect of the remeasurement of the liability at a current single A rate	156		63		2,977		1,655		7,611		12,462
Adjustment for the removal of loss recognition balances related to unrealized gain or loss on securities	(64)		(60)		4		(292)		—		(412)
Post-adoption January 1, 2021 liability for future policy benefits balance	$	1,322	$	279	$	14,125	$	11,630	$	29,013	$	56,369

(a)Excludes future policy benefits for participating contracts, DPL, additional liabilities, Accident and Health, Group Benefits and Other Operations representing $11.0 billion of liability for future policy benefits. See transition tables below for DPL and additional liabilities.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

Adjustments for the reclassification between the liability for future policy benefits and deferred profit liability represent changes in the net premium ratios that are less than 100 percent at transition for certain limited pay cohorts, resulting in a reclassification between the two liabilities, with no impact on Retained earnings.

Adjustments for Changes in cash flow assumptions represents revised net premium ratios in excess of 100 percent for certain cohorts at transition, with an offset to Retained earnings.

The effect of the remeasurement at the current single A rate is reported at the Transition Date and each subsequent balance sheet date, with an offset in AOCI.

Prior to adoption, loss recognition for traditional products was adjusted for the effect of unrealized gains on fixed maturity securities available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI.

The following tables present the balances and changes in the liability for future policy benefits and a reconciliation of the net liability for future policy benefits to the liability for future policy benefits in the Condensed Consolidated Balance Sheets:

Nine Months Ended September 30, 2023	General Insurance		Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Other(f)		Total
(in millions, except for liability durations)
Present value of expected net premiums
Balance, beginning of year	$	1,929	$	—	$	—	$	11,654	$	—	$	991	$	14,574
Effect of changes in discount rate assumptions (AOCI)	262		—		—		1,872		—		66		2,200
Beginning balance at original discount rate	2,191		—		—		13,526		—		1,057		16,774
Effect of changes in cash flow assumptions	—		—		—		34		—		21		55
Effect of actual variances from expected experience	(44)		—		—		36		—		16		8
Adjusted beginning of year balance	2,147		—		—		13,596		—		1,094		16,837
Issuances	100		—		—		986		—		—		1,086
Interest accrual	22		—		—		325		—		34		381
Net premium collected	(160)		—		—		(1,093)		—		(90)		(1,343)
Foreign exchange impact	(62)		—		—		44		—		—		(18)
Other	(63)		—		—		11		—		(3)		(55)
Ending balance at original discount rate	1,984		—		—		13,869		—		1,035		16,888
Effect of changes in discount rate assumptions (AOCI)	(354)		—		—		(2,199)		—		(95)		(2,648)
Reclassified to Liabilities held for sale	—		—		—		(3,784)		—		—		(3,784)
Balance, end of period	$	1,630	$	—	$	—	$	7,886	$	—	$	940	$	10,456
Present value of expected future policy benefits
Balance, beginning of year	$	2,380	$	1,223	$	211	$	21,179	$	12,464	$	20,429	$	57,886
Effect of changes in discount rate assumptions (AOCI)	362		167		2		3,424		2,634		1,083		7,672
Beginning balance at original discount rate	2,742		1,390		213		24,603		15,098		21,512		65,558
Effect of changes in cash flow assumptions(a)	—		—		—		62		—		76		138
Effect of actual variances from expected experience(a)	(43)		(1)		(1)		85		21		(10)		51
Adjusted beginning of year balance	2,699		1,389		212		24,750		15,119		21,578		65,747
Issuances	104		141		16		978		3,503		4		4,746
Interest accrual	27		38		8		679		478		770		2,000
Benefit payments	(153)		(95)		(20)		(1,461)		(810)		(1,121)		(3,660)
Foreign exchange impact	(93)		—		—		54		48		—		9
Other	(74)		—		—		8		—		(18)		(84)
Ending balance at original discount rate	2,510		1,473		216		25,008		18,338		21,213		68,758
Effect of changes in discount rate assumptions (AOCI)	(461)		(217)		(9)		(4,397)		(3,512)		(2,214)		(10,810)
Reclassified to Liabilities held for sale	—		—		—		(4,352)		—		—		(4,352)
Balance, end of period	$	2,049	$	1,256	$	207	$	16,259	$	14,826	$	18,999	$	53,596
Net liability for future policy benefits, end of period	$	419	$	1,256	$	207	$	8,373	$	14,826	$	18,059	$	43,140
Liability for future policy benefits for certain participating contracts													1,321
Liability for universal life policies with secondary guarantees and similar features(b)													3,278
Deferred profit liability													2,401
Other reconciling items(c)													1,526
Future policy benefits for life and accident and health insurance contracts													51,666
Less: Reinsurance recoverable													(21,833)
Net liability for future policy benefits after reinsurance recoverable													$	29,833
Weighted average liability duration of the liability for future policy benefits(d)(e)	9.5		7.4		6.6		11.9		10.9		10.8

Nine Months Ended September 30, 2022	Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Other(f)		Total
(in millions, except for liability durations)
Present value of expected net premiums
Balance, beginning of year	$	—	$	—	$	14,369	$	—	$	1,274	$	15,643
Effect of changes in discount rate assumptions (AOCI)	—		—		(706)		—		(150)		(856)
Beginning balance at original discount rate	—		—		13,663		—		1,124		14,787
Effect of changes in cash flow assumptions	—		—		123		—		—		123
Effect of actual variances from expected experience	—		—		(19)		—		5		(14)
Adjusted beginning of year balance	—		—		13,767		—		1,129		14,896
Issuances	—		—		1,050		—		—		1,050
Interest accrual	—		—		297		—		37		334
Net premium collected	—		—		(1,060)		—		(93)		(1,153)
Foreign exchange impact	—		—		(854)		—		—		(854)
Other	—		—		(1)		—		—		(1)
Ending balance at original discount rate	—		—		13,199		—		1,073		14,272
Effect of changes in discount rate assumptions (AOCI)	—		—		(2,111)		—		(80)		(2,191)
Balance, end of period	$	—	$	—	$	11,088	$	—	$	993	$	12,081
Present value of expected future policy benefits
Balance, beginning of year	$	1,373	$	264	$	27,442	$	13,890	$	27,674	$	70,643
Effect of changes in discount rate assumptions (AOCI)	(95)		(46)		(2,717)		(870)		(5,673)		(9,401)
Beginning balance at original discount rate	1,278		218		24,725		13,020		22,001		61,242
Effect of changes in cash flow assumptions(a)	—		—		140		(6)		—		134
Effect of actual variances from expected experience(a)	(16)		(2)		(24)		(11)		(24)		(77)
Adjusted beginning of year balance	1,262		216		24,841		13,003		21,977		61,299
Issuances	156		9		1,055		1,507		8		2,735
Interest accrual	31		7		657		333		787		1,815
Benefit payments	(86)		(18)		(1,317)		(602)		(1,118)		(3,141)
Foreign exchange impact	—		—		(1,093)		(555)		—		(1,648)
Other	—		—		(2)		—		(11)		(13)
Ending balance at original discount rate	1,363		214		24,141		13,686		21,643		61,047
Effect of changes in discount rate assumptions (AOCI)	(188)		(4)		(3,844)		(2,786)		(1,546)		(8,368)
Balance, end of period	$	1,175	$	210	$	20,297	$	10,900	$	20,097	$	52,679
Net liability for future policy benefits, end of period	$	1,175	$	210	$	9,209	$	10,900	$	19,104	$	40,598
Liability for future policy benefits for certain participating contracts											1,363
Liability for universal life policies with secondary guarantees and similar features(b)											3,232
Deferred profit liability											2,164
Other reconciling items(c)											1,980
Future policy benefits for life and accident and health insurance contracts											49,337
Less: Reinsurance recoverable											(24,307)
Net liability for future policy benefits after reinsurance recoverable											$	25,030
Weighted average liability duration of the liability for future policy benefits(d)	7.4		6.8		11.9		10.1		11.2

(a)Effect of changes in cash flow assumptions and variances from actual experience are partially offset by changes in the deferred profit liability.

(b)Additional details can be found in the table that presents the balances and changes in the liability for universal life policies with secondary guarantees and similar features.

(c)Other reconciling items primarily include the Accident and Health as well as Group Benefits (short-duration) contracts.

(d)The weighted average liability durations are calculated as the modified duration using projected future net liability cashflows that are aggregated at the segment level, utilizing the segment level weighted average interest rates and current discount rate, which can be found in the table below.

(e)Includes balances that were reclassified to Liabilities held for sale in the Condensed Consolidated Balance sheets. For additional information, see Note 4.

(f)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

For the nine months ended September 30, 2023 and 2022 in the traditional and term life insurance block, capping of net premium ratios at 100 percent caused a (credit)/charge to net income of $(1) million and $11 million, respectively. The discount rate was updated based on market observable information. Relative to the prior period, the increase in upper-medium-grade fixed income yields resulted in a decrease in the liability for future policy benefits.

The following table presents the amount of undiscounted expected future benefit payments and undiscounted and discounted expected gross premiums for future policy benefits for nonparticipating contracts:

Nine Months Ended September 30,
(in millions)		2023		2022
General Insurance	Undiscounted expected future benefits and expense	$	3,099	$	3,141
	Undiscounted expected future gross premiums	4,275		4,112
	Discounted expected future gross premiums (at current discount rate)	2,963		3,188
Individual Retirement	Undiscounted expected future benefits and expense	$	2,119	$	1,889
	Undiscounted expected future gross premiums	—		—
	Discounted expected future gross premiums (at current discount rate)	—		—
Group Retirement	Undiscounted expected future benefits and expense	$	315	$	324
	Undiscounted expected future gross premiums	—		—
	Discounted expected future gross premiums (at current discount rate)	—		—
Life Insurance(a)	Undiscounted expected future benefits and expense	$	39,763	$	38,238
	Undiscounted expected future gross premiums	29,789		28,584
	Discounted expected future gross premiums (at current discount rate)	18,596		17,965
Institutional Markets	Undiscounted expected future benefits and expense	$	33,025	$	21,866
	Undiscounted expected future gross premiums	—		—
	Discounted expected future gross premiums (at current discount rate)	—		—
Other(b)	Undiscounted expected future benefits and expense	$	43,250	$	44,919
	Undiscounted expected future gross premiums	2,141		2,305
	Discounted expected future gross premiums (at current discount rate)	1,372		1,481

(a)Includes balances reclassified to Liabilities held for sale at September 30, 2023.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the amount of revenue and interest recognized in the Condensed Consolidated Statements of Income (Loss) for future policy benefits for nonparticipating contracts:

Nine Months Ended September 30,	Gross Premiums				Interest Accretion
(in millions)	2023		2022		2023		2022
General Insurance	$	338	$	345	$	5	$	4
Individual Retirement	164		160		38		31
Group Retirement	16		16		8		7
Life Insurance	1,781		1,751		354		360
Institutional Markets	3,709		1,558		478		333
Other*	161		168		736		750
Total	$	6,169	$	3,998	$	1,619	$	1,485

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the weighted-average interest rate for future policy benefits for nonparticipating contracts:

Nine Months Ended September 30, 2023	General Insurance		Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Other(b)
Weighted-average interest rate, original discount rate(a)	1.84	%	3.75	%	5.15	%	4.14	%	3.97	%	4.87	%
Weighted-average interest rate, current discount rate(a)	3.92	%	5.92	%	5.90	%	5.92	%	5.87	%	5.94	%
Nine Months Ended September 30, 2022
Weighted-average interest rate, original discount rate	1.70	%	3.42	%	5.20	%	4.13	%	3.41	%	4.89	%
Weighted-average interest rate, current discount rate	2.85	%	5.52	%	5.50	%	5.56	%	5.56	%	5.57	%

(a)Weighted-average interest rates for Life Insurance include balances that have been reclassified to Liabilities held-for-sale at September 30, 2023.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The weighted average interest rates are calculated using projected future net liability cash flows that are aggregated to the segment level, and are represented as an annual rate.

Actuarial Assumption Updates for Liability for Future Policy Benefits

In 2023, the life insurance companies recognized an unfavorable impact to net income due to other refinements on Life products offset in part by mortality assumption updates. In 2022, the life insurance companies recognized a favorable impact to net income (mostly offset by corresponding DPL adjustment) due to updates to mortality and retirement assumptions on certain pension risk transfer products.

Deferred Profit Liability: The Company issues certain annuity and life insurance contracts where premiums are paid up-front or for a shorter period than benefits will be paid (i.e., limited pay contracts). A DPL is required to be established to avoid recognition of gains when these contracts are issued. DPLs are amortized over the life of the contracts to align the revenue recognized with the related benefit expenses. The DPL is amortized in a constant relationship to the amount of discounted insurance in force for life insurance or expected future benefit payments for annuity contracts over the term of the contract.

Prior to the adoption of the Targeted Improvements to the Accounting for Long-Duration Contracts Standard

Limited pay contracts were subject to a lock-in concept and assumptions derived at policy issue were not subsequently updated unless a loss recognition event occurred. The net premiums were recorded as revenue. The difference between the gross premium received and the net premium was deferred and recognized in premiums in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits. This unearned revenue (deferred profit) was recorded in the Condensed Consolidated Balance Sheets in Other policyholder funds.

Subsequent to the adoption of the Targeted Improvements to the Accounting for Long-Duration Contracts Standard

The difference between the gross premium received and recorded as revenue and the net premium is deferred and recognized in policyholder benefits in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits. This deferred profit liability accretes interest and is recorded in the Condensed Consolidated Balance Sheets in Future policy benefits. Cash flow assumptions included in the measurement of the DPL are the same as those utilized in the respective LFPBs and are reviewed at least annually. The cash flow estimates for DPLs are updated on a retrospective catch-up basis at the same time as the cash flow estimates for the related LFPBs. The updated LFPB cash flows are used to recalculate the DPL at the inception of the applicable related LFPB cohort. The difference between the recalculated DPL at the beginning of the current reporting period and the carrying amount of the DPL at the current reporting period is recognized as a gain or loss in Policyholder benefits and losses incurred in the Condensed Consolidated Statements of Income (Loss).

The following table presents the transition rollforward for deferred profit liability for long-duration contracts*:

	Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Other*		Total
(in millions)
Pre-adoption December 31, 2020 deferred profit liability balance	$	2	$	—	$	5	$	64	$	—	$	71
Adjustments for the reclassification from/(to) the liability for the future policy benefits	65		8		—		766		859		1,698
Post-adoption January 1, 2021 deferred profit liability balance	$	67	$	8	$	5	$	830	$	859	$	1,769

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

Adjustments for the reclassification between the liability for future policy benefits and deferred profit liability represent changes in the net premium ratios that are less than 100 percent at transition for certain limited pay cohorts, resulting in a reclassification between the two liabilities, with no impact on Retained earnings.

Additional Liabilities: For universal-life type products, insurance benefits in excess of the account balance are generally recognized as expenses in the period incurred unless the design of the product is such that future charges are insufficient to cover the benefits, in which case an “additional liability” is accrued over the life of the contract. These additional liabilities are included in Future policy benefits for life and accident and health insurance contracts in the Condensed Consolidated Balance Sheets. Prior to the adoption of the standard, our additional liabilities consisted primarily of guaranteed minimum death benefits (GMDBs) on annuities, as well as universal-life contracts with secondary guarantees. Subsequent to the adoption of this standard, the GMDBs have been reclassified and reported as MRBs, while the universal-life contracts with secondary guarantees continue to be reported as additional liabilities.

The following table presents the transition rollforward of the additional liabilities:

	Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Other(c)		Total
(in millions)
Pre-adoption December 31, 2020 additional liabilities	$	1,423	$	221	$	5,117	$	—	$	55	$	6,816
Adjustment for the reclassification of additional liabilities from Future policy benefits to Market risk benefits(a)	(907)		(132)		—		—		—		(1,039)
Adjustment for removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)(b)	(516)		(89)		—		—		—		(605)
Post-adoption January 1, 2021 additional liabilities	$	—	$	—	$	5,117	$	—	$	55	$	5,172

(a)Adjustments for the reclassification of additional liabilities from Future policy benefits to MRBs represent contract guarantees (e.g., GMDBs) that were previously classified as insurance liabilities within Future policy benefits, but have been reclassified as MRBs as of January 1, 2021. For additional information on the transition impacts associated with LDTI, see Note 14.

(b)Adjustments for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses) relate to the additional liabilities reclassified from Future policy benefits in the line above.

(c)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

Post-adoption, our additional liabilities primarily consist of universal life policies with secondary guarantees and these additional liabilities are recognized in addition to the Policyholder account balances. For universal life policies with secondary guarantees, as well as other universal life policies for which profits followed by losses are expected at contract inception, a liability is recognized based on a benefit ratio of (a) the present value of total expected payments, in excess of the account value, over the life of the contract, divided by (b) the present value of total expected assessments over the life of the contract. For universal life policies without secondary guarantees, for which profits followed by losses are first expected after contract inception, we establish a liability, in addition to policyholder account balances, so that expected future losses are recognized in proportion to the emergence of profits in the earlier (profitable) years. Universal life account balances are reported within Policyholder contract deposits, while these additional liabilities are reported within the liability for future policy benefits in the Condensed Consolidated Balance Sheets. These additional liabilities are also adjusted to reflect the effect of unrealized gains or losses on fixed maturity securities available for sale on accumulated assessments, with related changes recognized through OCI. The policyholder behavior assumptions for these liabilities include mortality, lapses and premium persistency. The capital market assumptions used for the liability for universal life secondary guarantees include discount rates and net earned rates.

The following table presents the balances and changes in the liability for universal life policies with secondary guarantees and similar features:

Nine Months Ended September 30,	2023						2022
(in millions, except duration of liability)	Life Insurance		Other(b)		Total		Life Insurance		Other(b)		Total
Balance, beginning of year	$	3,300	$	55	$	3,355	$	4,952	$	55	$	5,007
Effect of changes in assumptions	(41)		—		(41)		(24)		—		(24)
Effect of changes in experience	174		(3)		171		245		(3)		242
Adjusted beginning balance	3,433		52		3,485		5,173		52		5,225
Assessments	518		1		519		528		1		529
Excess benefits paid	(681)		—		(681)		(697)		—		(697)
Interest accrual	95		2		97		94		2		96
Other	20		—		20		(14)		—		(14)
Changes related to unrealized appreciation (depreciation) of investments	(162)		—		(162)		(1,907)		—		(1,907)
Balance, end of period	3,223		55		3,278		3,177		55		3,232
Less: Reinsurance recoverable	(162)		—		(162)		(214)		—		(214)
Balance, end of period net of Reinsurance recoverable	$	3,061	$	55	$	3,116	$	2,963	$	55	$	3,018
Weighted average duration of liability(a)	25.4		9.3				26.8		9.6

(a)The weighted average duration of liabilities is calculated as the modified duration using projected future net liability cashflows that are aggregated at the segment level, utilizing the segment level weighted average interest rates, which can be found in the table below.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the amount of revenue and interest recognized in the Condensed Consolidated Statements of Income (Loss) for the liability for universal life policies with secondary guarantees and similar features:

Nine Months Ended September 30,	Gross Assessments				Interest Accretion
(in millions)	2023		2022		2023		2022
Life Insurance	$	855	$	922	$	95	$	94
Other*	31		29		2		2
Total	$	886	$	951	$	97	$	96

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the calculation of weighted average interest rate for the liability for universal life policies with secondary guarantees and similar features:

Nine Months Ended September 30,	2023				2022
	Life Insurance		Other*		Life Insurance		Other*
Weighted-average interest rate	3.94	%	4.20	%	3.75	%	4.20	%

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The weighted average interest rates are calculated using projected future net liability cash flows that are aggregated to the segment level, and are represented as an annual rate.

The following table presents details concerning our universal life policies with secondary guarantees and similar features:

Nine Months Ended September 30,
(dollars in millions)		2023		2022
Account value	$	3,654	$	3,462
Net amount at risk	$	71,497	$	68,350
Average attained age of contract holders		53		53

Actuarial Assumption Updates for Liability for Universal Life Policies With Secondary Guarantees And Similar Features

In 2023, the life insurance companies recognized a favorable impact to net income due to updates to the portfolio yield assumption and refinements to the modeling for universal life with secondary guarantees and similar features, partially offset by updated premium assumptions. In 2022, the life insurance companies recognized a favorable impact to net income due to modeling refinements to reflect actual versus expected asset data related to calls and capital gains.

POLICYHOLDER CONTRACT DEPOSITS

The liability for Policyholder contract deposits is primarily recorded at accumulated value (deposits received and net transfers from separate accounts, plus accrued interest credited, less withdrawals and assessed fees). Deposits collected on investment-oriented products are not reflected as revenues. They are recorded directly to Policyholder contract deposits upon receipt. Amounts assessed against the contract holders for mortality, administrative, and other services are included as Policy fees in revenues.

In addition to liabilities for universal life, fixed annuities, fixed options within variable annuities, annuities without life contingencies, funding agreements and GICs, policyholder contract deposits also include our liability for (i) index features accounted for as embedded derivatives at fair value, (ii) annuities issued in a structured settlement arrangement with no life contingency and (iii) certain contracts we have elected to account for at fair value. Changes in the fair value of the embedded derivatives related to policy index features and the fair value of derivatives hedging these liabilities are recognized in realized gains and losses.

For additional information on index credits accounted for as embedded derivatives, see Note 5.

Under a funding agreement-backed notes issuance program, an unaffiliated, non-consolidated statutory trust issues medium-term notes to investors, which are secured by funding agreements issued to the trust by one of our Life and Retirement companies through our Institutional Markets business.

The following table presents the transition rollforward of Policyholder contract deposits account balances(a):

	Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Other(b)		Total
(in millions)
Pre-adoption December 31, 2020 Policyholder contract deposits	$	84,874	$	43,805	$	10,286	$	11,559	$	4,145	$	154,669
Adjustment for the reclassification of the embedded derivative liability to market risk benefits, net of the host adjustment(s)	(5,671)		(576)		—		—		—		(6,247)
Post-adoption January 1, 2021 Policyholder contract deposits	$	79,203	$	43,229	$	10,286	$	11,559	$	4,145	$	148,422

(a)Excludes Other Operations of $(199) million.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the balances and changes in Policyholder contract deposits account balances(a):

Nine Months Ended September 30, 2023	Individual Retirement			Group Retirement			Life Insurance			Institutional Markets			Other(d)			Total
(in millions, except for average crediting rate)
Policyholder contract deposits account balance, beginning of year	$	89,554		$	43,395		$	10,224		$	11,734		$	3,587		$	158,494
Deposits	12,885			3,943			1,211			3,707			34			21,780
Policy charges	(661)			(359)			(1,143)			(50)			(47)			(2,260)
Surrenders and withdrawals	(10,310)			(6,010)			(194)			(502)			(65)			(17,081)
Benefit payments	(2,984)			(1,801)			(222)			(1,355)			(233)			(6,595)
Net transfers from (to) separate account	2,577			1,896			1			565			—			5,039
Interest credited	1,482			843			297			353			127			3,102
Other	(7)			6			16			(9)			(11)			(5)
Policyholder contract deposits account balance, end of period	92,536			41,913			10,190			14,443			3,392			162,474
Other reconciling items(b)	(2,280)			(327)			11			(20)			(121)			(2,737)
Policyholder contract deposits	$	90,256		$	41,586		$	10,201		$	14,423		$	3,271		$	159,737
Weighted average crediting rate	2.65		%	2.88		%	4.37		%	3.66		%	4.99		%
Cash surrender value(c)	$	85,644		$	40,928		$	9,008		$	2,577		$	1,732		$	139,889

Nine Months Ended September 30, 2022	Individual Retirement			Group Retirement			Life Insurance			Institutional Markets			Other(d)			Total
(in millions, except for average crediting rate)
Policyholder contract deposits account balance, beginning of year	$	84,097		$	43,902		$	10,183		$	10,804		$	3,823		$	152,809
Deposits	11,359			3,599			1,252			1,296			36			17,542
Policy charges	(631)			(356)			(1,175)			(52)			(49)			(2,263)
Surrenders and withdrawals	(6,232)			(4,146)			(162)			(44)			(48)			(10,632)
Benefit payments	(2,872)			(1,634)			(164)			(593)			(273)			(5,536)
Net transfers from (to) separate account	1,606			1,659			(1)			26			—			3,290
Interest credited	1,242			825			286			207			134			2,694
Other	3			1			(10)			(48)			8			(46)
Policyholder contract deposits account balance, end of period	88,572			43,850			10,209			11,596			3,631			157,858
Other reconciling items(b)	(2,372)			(356)			(125)			(33)			(120)			(3,006)
Policyholder contract deposits	$	86,200		$	43,494		$	10,084		$	11,563		$	3,511		$	154,852
Weighted average crediting rate	2.40		%	2.74		%	4.28		%	2.49		%	4.91		%
Cash surrender value(c)	$	82,151		$	42,970		$	8,948		$	2,532		$	1,824		$	138,425

(a)Transactions between the general account and the separate account are presented in this table on a gross basis (e.g., a policyholder's funds are initially deposited into the general account and then simultaneously transferred to the separate account), thus, did not impact the ending balance of policyholder contract deposits.

(b)Includes MRBs that are bifurcated and reported separately, net of embedded derivatives recorded in Policyholder contract deposits. Other also includes amounts related to Other Operations of $(121) million and $(122) million at September 30, 2023 and 2022, respectively.

(c)Cash surrender value is related to the portion of policyholder contract deposits that have a defined cash surrender value (e.g. GICs, do not have a cash surrender value).

(d)Primarily represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

For information related to net amount at risk, refer to the table that presents the balances of and changes in MRBs in Note 13.

The following table presents Policyholder contract deposits account balance by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums:

September 30, 2023		At Guaranteed Minimum			1 Basis Point - 50 Basis Points Above			More than 50 Basis Points Above Minimum Guarantee			Total
(in millions, except percentage of total)
Individual Retirement	Range of Guaranteed Minimum Credited Rate
	<=1%	$	6,741		$	2,234		$	24,455		$	33,430
	> 1% - 2%	3,940			22			1,909			5,871
	> 2% - 3%	8,401			11			822			9,234
	> 3% - 4%	6,864			37			6			6,907
	> 4% - 5%	439			—			4			443
	> 5%	32			—			3			35
	Total	$	26,417		$	2,304		$	27,199		$	55,920
Group Retirement	Range of Guaranteed Minimum Credited Rate
	<=1%	$	2,197		$	2,467		$	6,304		$	10,968
	> 1% - 2%	3,874			1,347			667			5,888
	> 2% - 3%	12,700			159			93			12,952
	> 3% - 4%	641			—			—			641
	> 4% - 5%	6,773			—			—			6,773
	> 5%	150			—			—			150
	Total	$	26,335		$	3,973		$	7,064		$	37,372
Life Insurance	Range of Guaranteed Minimum Credited Rate
	<=1%	$	—		$	—		$	—		$	—
	> 1% - 2%	—			131			347			478
	> 2% - 3%	9			866			1,078			1,953
	> 3% - 4%	1,178			499			26			1,703
	> 4% - 5%	2,879			—			—			2,879
	> 5%	218			—			—			218
	Total	$	4,284		$	1,496		$	1,451		$	7,231
Total*		$	57,036		$	7,773		$	35,714		$	100,523
Percentage of total		56		%	8		%	36		%	100		%

September 30, 2022		At Guaranteed Minimum			1 Basis Point - 50 Basis Points Above			More than 50 Basis Points Above Minimum Guarantee			Total
(in millions, except percentage of total)
Individual Retirement	Range of Guaranteed Minimum Credited Rate
	<=1%	$	9,822		$	1,656		$	20,778		$	32,256
	> 1% - 2%	4,261			24			1,960			6,245
	> 2% - 3%	9,790			—			17			9,807
	> 3% - 4%	7,805			40			6			7,851
	> 4% - 5%	464			—			5			469
	> 5%	33			—			4			37
	Total	$	32,175		$	1,720		$	22,770		$	56,665
Group Retirement	Range of Guaranteed Minimum Credited Rate
	<=1%	$	3,726		$	1,614		$	5,178		$	10,518
	> 1% - 2%	6,024			437			23			6,484
	> 2% - 3%	14,448			—			—			14,448
	> 3% - 4%	690			—			—			690
	> 4% - 5%	6,943			—			—			6,943
	> 5%	159			—			—			159
	Total	$	31,990		$	2,051		$	5,201		$	39,242
Life Insurance	Range of Guaranteed Minimum Credited Rate
	<=1%	$	—		$	—		$	—		$	—
	> 1% - 2%	106			24			353			483
	> 2% - 3%	235			635			1,112			1,982
	> 3% - 4%	1,374			183			192			1,749
	> 4% - 5%	2,998			—			—			2,998
	> 5%	224			—			—			224
	Total	$	4,937		$	842		$	1,657		$	7,436
Total*		$	69,102		$	4,613		$	29,628		$	103,343
Percentage of total		67		%	4		%	29		%	100		%

*Excludes policyholder contract deposits account balances that are not subject to guaranteed minimum crediting rates.

OTHER POLICYHOLDER FUNDS

Other policyholder funds include URR, consisting of front-end loads on investment-oriented contracts, representing those policy loads that are non-level and typically higher in initial policy years than in later policy years. Amortization of URR is recorded in Policy fees.

Prior to the adoption of the Targeted Improvements to the Accounting for Long-Duration Contracts Standard

URR for investment-oriented contracts are generally deferred and amortized, with interest, in relation to the incidence of EGPs to be realized over the estimated lives of the contracts and are subject to the same adjustments due to changes in the assumptions underlying EGPs as DAC. Similar to unrealized appreciation (depreciation) of investments for DAC, URR related to investment-oriented products is also adjusted to reflect the effect of unrealized gains or losses on fixed maturity securities available for sale on EGPs, with related changes recognized through OCI.

Subsequent to the adoption of the Targeted Improvements to the Accounting for Long-Duration Contracts Standard

URR for investment-oriented contracts are generally deferred and amortized into income using the same assumptions and factors used to amortize DAC (i.e., on a constant level basis). Changes in future assumptions are applied by adjusting the amortization rate prospectively. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization of URR (i.e., policy fees) each period.

The following table presents the transition rollforward of URR:

	Life Insurance		Institutional Markets		Other*		Total
(in millions)
Pre-adoption December 31, 2020 URR balance	$	1,413	$	2	$	132	$	1,547
Adjustment for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)	248		—		—		248
Post-adoption January 1, 2021 URR balance	$	1,661	$	2	$	132	$	1,795

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Other policyholder funds, excluding URR, totaled $2.0 billion.

Prior to the adoption of LDTI, URR for investment-oriented products included the effect of unrealized gains or losses on fixed maturity securities classified as available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of related balances in AOCI originating from unrealized gains (losses) balances was reducing URR.

The following table presents a rollforward of URR:

Nine Months Ended September 30, 2023	Life Insurance		Institutional Markets		Other*		Total
(in millions)
Balance, beginning of year	$	1,727	$	2	$	105	$	1,834
Revenue deferred	114		—		—		114
Amortization	(83)		(1)		(8)		(92)
Balance, end of period	$	1,758	$	1	$	97	$	1,856

Nine Months Ended September 30, 2022	Life Insurance		Institutional Markets		Other*		Total
(in millions)
Balance, beginning of year	$	1,693	$	2	$	116	$	1,811
Revenue deferred	106		—		—		106
Amortization	(82)		—		(8)		(90)
Balance, end of period	$	1,717	$	2	$	108	$	1,827

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. At September 30, 2023 and 2022, Other policyholder funds, excluding URR, totaled $1.5 billion and $1.6 billion, respectively.