Future Contract Benefits

3 Months Ended

Mar. 31, 2023

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11. Future Contract Benefits

The following table reconciles future contract benefits (in millions) to the Consolidated Balance Sheets:



	As of		As of
	March 31,		December 31,
	2023		2022
Traditional Life ⁽¹⁾	$	3,681	$	3,509
Payout Annuities ⁽¹⁾		2,068		2,004
Group Protection⁽²⁾		5,492		5,462
UL and Other ⁽³⁾		15,384		14,818
Other Operations ⁽⁴⁾		9,883		9,782
Other ⁽⁵⁾		3,249		3,251
Total future contract benefits	$	39,757	$	38,826

⁽¹⁾See “LFPB” below for further information.

⁽²⁾See “Liability for Future Claims” below for further information.

⁽³⁾See “Additional Liabilities for Other Insurance Benefits” below for further information.

⁽⁴⁾Represents future contract benefits reported in Other Operations primarily attributable to the indemnity reinsurance agreements with Protective ($5.5 billion and $5.4 billion as of March 31, 2023, and December 31, 2022, respectively) and Swiss Re ($2.3 billion as of March 31, 2023, and December 31, 2022) that are excluded from the following tables.

⁽⁵⁾Represents other miscellaneous reserves outside the scope of ASU 2018-12 that are excluded from the following tables.

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LFPB

The following table summarizes the balances of and changes in the present values of expected net premiums and LFPB (in millions, except years):



	As of or For the						As of or For the
	Three Months Ended						Year Ended
	March 31, 2023						December 31, 2022
	Traditional			Payout			Traditional			Payout
	Life			Annuities			Life			Annuities
Present Value of Expected Net Premiums
Balance as of beginning-of-year	$	6,063		$	-		$	6,858		$	-
Beginning balance of original discount rate		6,645			-			5,975			-
Effect of changes in cash flow assumptions		-			-			(484	)		-
Effect of actual variances from expected
experience		(241	)		-			50			-
Adjusted balance as of beginning-of-year		6,404			-			5,541			-
Issuances		176			-			1,656			-
Interest accrual		60			-			222			-
Net premiums collected		(203	)		-			(765	)		-
Flooring impact of LFPB		2			-			(9	)		-
Ending balance at original discount rate		6,439			-			6,645			-
Effect of cumulative changes in discount
rate assumptions		(230	)		-			(582	)		-
Balance as of end-of-period	$	6,209		$	-		$	6,063		$	-

Present Value of Expected LFPB
Balance as of beginning-of-year	$	9,572		$	2,004		$	11,008		$	2,512
Beginning balance of original discount rate ⁽¹⁾		10,357			2,267			9,447			2,246
Effect of changes in cash flow assumptions		-			-			(415	)		-
Effect of actual variances from expected
experience		(251	)		(1	)		69			3
Adjusted balance as of beginning-of-year		10,106			2,266			9,101			2,249
Issuances		177			27			1,655			122
Interest accrual		95			21			356			84
Benefit payments		(186	)		(46	)		(755	)		(188	)
Ending balance at original discount rate ⁽¹⁾		10,192			2,268			10,357			2,267
Effect of cumulative changes in discount
rate assumptions		(302	)		(200	)		(785	)		(263	)
Balance as of end-of-period	$	9,890		$	2,068		$	9,572		$	2,004

Net balance as of end-of-period	$	3,681		$	2,068		$	3,509		$	2,004
Less: reinsurance recoverables		520			3			532			3
Net balance as of end-of-period, net of reinsurance	$	3,161		$	2,065		$	2,977		$	2,001

Weighted-average duration of future policyholder
benefit liability (years)		10			9			10			9

⁽¹⁾Includes DPL within Payout Annuities of $43 million, $38 million and $22 million as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively.

For the year ended December 31, 2022, Traditional Life had updates to the mortality and lapse assumptions resulting in lower projected premiums and benefits, and a corresponding increase in reserves. Payout Annuities did not have any significant assumption updates.

For the three months ended March 31, 2023, and for the year ended December 31, 2022, Traditional Life and Payout Annuities did not have any significantly different actual experience compared to expected.

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The following table summarizes the discounted and undiscounted expected future gross premiums and expected future benefit payments (in millions):



	As of March 31, 2023				As of December 31, 2022
	Undiscounted		Discounted		Undiscounted		Discounted
Traditional Life
Expected future gross premiums	$	14,005	$	9,750	$	13,945	$	9,475
Expected future benefit payments		13,758		9,890		13,640		9,572
Payout Annuities
Expected future gross premiums		-		-		-		-
Expected future benefit payments		3,461		2,068		3,472		2,004

The following table summarizes the gross premiums and interest accretion (in millions) recognized in insurance premiums and benefits, respectively, on the Consolidated Statements of Comprehensive Income (Loss):



	For the Three
	Months		For the Year
	Ended		Ended
	March 31,		December 31,
	2023		2022
Traditional Life
Gross premiums	$	313	$	1,211
Interest accretion		35		134
Payout Annuities
Gross premiums		28		133
Interest accretion		21		84

The following table summarizes the weighted-average interest rates:



	For the Three
	Months		For the Year
	Ended		Ended
	March 31,		December 31,
	2023		2022
Traditional Life
Interest accretion rate		5.1%		5.1%
Current discount rate		4.8%		5.1%
Payout Annuities
Interest accretion rate		3.9%		3.9%
Current discount rate		4.9%		5.3%

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Liability for Future Claims

The following table summarizes the balances of and changes in liability for future claims (in millions, except years):



	Group Protection
	As of or For
	the Three			As of or For
	Months			the Year
	Ended			Ended
	March 31,			December 31,
	2023			2022
Balance as of beginning-of-year	$	5,462		$	5,936
Beginning balance of original discount rate		6,059			5,674
Effect of changes in cash flow assumptions		-			15
Effect of actual variances from expected
experience		(100	)		(117	)
Adjusted beginning-of-year balance		5,959			5,572
New incidence		437			1,777
Interest		42			141
Benefit payments		(377	)		(1,431	)
Ending balance at original discount rate		6,061			6,059
Effect of cumulative changes in discount
rate assumptions		(569	)		(597	)
Balance as of end-of-period		5,492			5,462
Less: reinsurance recoverables		126			127
Balance as of end-of-period, net of reinsurance	$	5,366		$	5,335

Weighted-average duration of liability for future
claims (years)		4			4

For the year ended December 31, 2022, we had an unfavorable impact from updates to the long-term disability incidence and severity assumptions, partially offset by favorable impacts from updates to the life waiver termination rate assumptions. For the three months ended March 31, 2023, and for the year ended December 31, 2022, we experienced more favorable claim terminations than assumed.

The following table summarizes the discounted and undiscounted expected future benefit payments (in millions):



	As of March 31, 2023				As of December 31, 2022
	Undiscounted		Discounted		Undiscounted		Discounted
Group Protection
Expected future benefit payments	$	7,086	$	6,061	$	7,063	$	6,059



	For the Three
	Months		For the Year
	Ended		Ended
	March 31,		December 31,
	2023		2022
Group Protection
Gross premiums	$	885	$	3,393
Interest accretion		42		141

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The following table summarizes the weighted-average interest rates:

For the Three

Months

For the Year

Ended

March 31,

December 31,

2023

2022

Group Protection

Interest accretion rate

2.9%

2.8%

Current discount rate

4.8%

5.1%

Additional Liabilities for Other Insurance Benefits

The following table summarizes the balances of and changes in additional liabilities for other insurance benefits (in millions, except years):



	UL and Other
	As of or For
	the Three			As of or For
	Months			the Year
	Ended			Ended
	March 31,			December 31,
	2023			2022
Balance as of beginning-of-year	$	14,818		$	12,556
Balance as of beginning-of-year, excluding
shadow balance in AOCI		15,723			11,443
Effect of changes in cash flow assumptions		-			3,108
Effect of actual variances from expected
experience		(9	)		195
Adjusted beginning-of-year balance		15,714			14,746
Issuances		-			7
Interest accrual		186			626
Net assessments collected		336			972
Benefit payments		(183	)		(628	)
Balance as of end-of-period, excluding
shadow balance in AOCI		16,053			15,723
Balance as of end-of-period		15,384			14,818
Less: reinsurance recoverables		862			856
Balance as of end-of-period, net of reinsurance	$	14,522		$	13,962

Weighted-average duration of additional liabilities
for other insurance benefits (years)		17			17

For the year ended December 31, 2022, we had an unfavorable impact primarily from updates to policyholder lapse behavior assumptions related to UL products with secondary guarantees in the amount of $1.9 billion, net of reinsurance, after-tax, and to a lesser extent mortality and morbidity assumptions. We had unfavorable actual mortality experience compared to expected due to ongoing effects of the COVID-19 pandemic.

The following table summarizes the gross assessments and interest accretion (in millions) recognized in insurance premiums and benefits, respectively, on the Consolidated Statements of Comprehensive Income (Loss):


	For the Three
	Months		For the Year
	Ended		Ended
	March 31,		December 31,
	2023		2022
UL and Other
Gross assessments	$	915	$	2,818
Interest accretion		186		626

The following table summarizes the weighted-average interest rates:


	For the Three
	Months		For the Year
	Ended		Ended
	March 31,		December 31,
	2023		2022
UL and Other
Interest accretion rate		5%		5%