Future Contract Benefits

9 Months Ended

Sep. 30, 2023

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13. Future Contract Benefits

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



	As of		As of
	September 30,		December 31,
	2023		2022
Payout Annuities ⁽¹⁾	$	1,943	$	2,004
Traditional Life ⁽¹⁾		3,538		3,509
Group Protection⁽²⁾		5,373		5,462
UL and Other ⁽³⁾		15,965		14,818
Other Operations ⁽⁴⁾		9,277		9,782
Other ⁽⁵⁾		3,266		3,251
Total future contract benefits	$	39,362	$	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 ($5.3 billion and $5.4 billion as of September 30, 2023, and December 31, 2022, respectively) and Swiss Re ($2.1 billion and $2.3 billion as of September 30, 2023, and December 31, 2022, respectively) 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
	Nine Months Ended						Year Ended
	September 30, 2023						December 31, 2022
	Payout			Traditional			Payout			Traditional
	Annuities			Life			Annuities			Life
Present Value of Expected Net Premiums
Balance as of beginning-of-year	$	-		$	6,063		$	-		$	6,858
Less: Effect of cumulative changes in discount
rate assumptions		-			(582	)		-			883
Beginning balance at original discount rate		-			6,645			-			5,975
Effect of changes in cash flow assumptions		-			(12	)		-			(484	)
Effect of actual variances from expected
experience		-			(280	)		-			50
Adjusted balance as of beginning-of-year		-			6,353			-			5,541
Issuances		-			460			-			1,656
Interest accrual		-			182			-			222
Net premiums collected		-			(604	)		-			(765	)
Flooring impact of LFPB		-			(3	)		-			(9	)
Ending balance at original discount rate		-			6,388			-			6,645
Effect of cumulative changes in discount
rate assumptions		-			(527	)		-			(582	)
Balance as of end-of-period	$	-		$	5,861		$	-		$	6,063

Present Value of Expected LFPB
Balance as of beginning-of-year	$	2,004		$	9,572		$	2,512		$	11,008
Less: Effect of cumulative changes in discount
rate assumptions		(263	)		(785	)		266			1,561
Beginning balance at original discount rate ⁽¹⁾		2,267			10,357			2,246			9,447
Effect of changes in cash flow assumptions		17			(29	)		-			(415	)
Effect of actual variances from expected
experience		(1	)		(309	)		3			69
Adjusted balance as of beginning-of-year		2,283			10,019			2,249			9,101
Issuances		83			461			122			1,655
Interest accrual		64			288			84			356
Benefit payments		(143	)		(537	)		(188	)		(755	)
Ending balance at original discount rate ⁽¹⁾		2,287			10,231			2,267			10,357
Effect of cumulative changes in discount
rate assumptions		(344	)		(832	)		(263	)		(785	)
Balance as of end-of-period	$	1,943		$	9,399		$	2,004		$	9,572

Net balance as of end-of-period	$	1,943		$	3,538		$	2,004		$	3,509
Less: reinsurance recoverables		3			450			3			532
Net balance as of end-of-period, net of reinsurance	$	1,940		$	3,088		$	2,001		$	2,977

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

⁽¹⁾Includes DPL within Payout Annuities of $38 million, $38 million and $22 million as of September 30, 2023, December 31, 2022 and December 31, 2021, respectively.

For the nine months ended September 30, 2023, Payout Annuities had an unfavorable cash flow assumption impact to net income (loss) attributable to the annual assumption review from updates to mortality assumptions, and Traditional Life had a favorable cash flow assumption impact from updates to mortality assumptions, partially offset by an unfavorable impact from updates to policyholder lapse

behavior assumptions. For the nine months ended September 30, 2023, Payout Annuities and Traditional Life did not have any significantly different actual experience compared to expected.

For the year ended December 31, 2022, Payout Annuities did not have any significant assumption updates. Traditional Life had an unfavorable cash flow assumption impact to net income (loss) attributable to the annual assumption review from updates to mortality and lapse assumptions resulting in lower projected premiums and benefits, and a corresponding increase in reserves. For the year ended December 31, 2022, Payout Annuities and Traditional Life did not have any significantly different actual experience compared to expected.

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



	As of September 30, 2023				As of December 31, 2022
	Undiscounted		Discounted		Undiscounted		Discounted
Payout Annuities
Expected future gross premiums	$	-	$	-	$	-	$	-
Expected future benefit payments		3,553		1,943		3,472		2,004
Traditional Life
Expected future gross premiums		14,070		9,294		13,945		9,475
Expected future benefit payments		13,891		9,399		13,640		9,572

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				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Payout Annuities
Gross premiums	$	16	$	49	$	88	$	92
Interest accretion		21		21		64		63
Traditional Life
Gross premiums		310		303		937		897
Interest accretion		35		34		106		100

The following table summarizes the weighted-average interest rates:



	For the Nine
	Months		For the Year
	Ended		Ended
	September 30,		December 31,
	2023		2022
Payout Annuities
Interest accretion rate		3.9%		3.9%
Current discount rate		5.8%		5.3%
Traditional Life
Interest accretion rate		5.0%		5.1%
Current discount rate		5.6%		5.1%

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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 Nine			As of or For
	Months			the Year
	Ended			Ended
	September 30,			December 31,
	2023			2022
Balance as of beginning-of-year	$	5,462		$	5,936
Less: Effect of cumulative changes in discount
rate assumptions		(597	)		262
Beginning balance at original discount rate		6,059			5,674
Effect of changes in cash flow assumptions		(27	)		15
Effect of actual variances from expected
experience		(233	)		(117	)
Adjusted beginning-of-year balance		5,799			5,572
New incidence		1,267			1,777
Interest		122			141
Benefit payments		(1,095	)		(1,431	)
Ending balance at original discount rate		6,093			6,059
Effect of cumulative changes in discount
rate assumptions		(720	)		(597	)
Balance as of end-of-period		5,373			5,462
Less: reinsurance recoverables		117			127
Balance as of end-of-period, net of reinsurance	$	5,256		$	5,335

Weighted-average duration of liability for future
claims (years)		5			4

For the nine months ended September 30, 2023, we had a favorable cash flow assumption impact to net income (loss) attributable to the annual assumption review from updates to long-term disability and life waiver claim termination rate assumptions, partially offset by unfavorable impacts from updates to long-term disability social security offset assumptions. For the nine months ended September 30, 2023, we experienced more favorable reported incidence and claim terminations than assumed.

For the year ended December 31, 2022, we had an unfavorable cash flow assumption impact to net income (loss) attributable to the annual assumption review 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 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 September 30, 2023				As of December 31, 2022
	Undiscounted		Discounted		Undiscounted		Discounted
Group Protection
Expected future benefit payments	$	7,148	$	6,093	$	7,063	$	6,059



	For the Three				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Group Protection
Gross premiums	$	874	$	852	$	2,645	$	2,523
Interest accretion		39		33		122		111

The following table summarizes the weighted-average interest rates:

For the Nine

Months

For the Year

Ended

September 30,

December 31,

2023

2022

Group Protection

Interest accretion rate

3.0%

2.8%

Current discount rate

5.7%

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 Nine			As of or For
	Months			the Year
	Ended			Ended
	September 30,			December 31,
	2023			2022
Balance as of beginning-of-year	$	14,818		$	12,556
Less: Effect of cumulative changes in shadow
balance in AOCI		(905	)		1,113
Balance as of beginning-of-year, excluding
shadow balance in AOCI		15,723			11,443
Effect of changes in cash flow assumptions		173			3,108
Effect of actual variances from expected
experience		(28	)		195
Adjusted beginning-of-year balance		15,868			14,746
Issuances		-			7
Interest accrual		573			626
Net assessments collected		895			972
Benefit payments		(473	)		(628	)
Balance as of end-of-period, excluding
shadow balance in AOCI		16,863			15,723
Effect of cumulative changes in shadow
balance in AOCI		(897	)		(905	)
Balance as of end-of-period		15,965			14,818
Less: reinsurance recoverables		654			856
Balance as of end-of-period, net of reinsurance	$	15,311		$	13,962

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

For the nine months ended September 30, 2023, we had an unfavorable cash flow assumption impact to net income (loss) attributable to the annual assumption review from updates to policyholder lapse behavior assumptions, partially offset by a favorable impact from updates to interest rate assumptions. For the nine months ended September 30, 2023, we did not have any significantly different actual experience compared to expected.

For the year ended December 31, 2022, we had an unfavorable cash flow assumption impact to net income (loss) attributable to the annual assumption review 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				For the Nine
	Months Ended				Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
UL and Other
Gross assessments	$	337	$	690	$	1,794	$	2,097
Interest accretion		197		175		573		446

The following table summarizes the weighted-average interest rates:


	For the Nine
	Months		For the Year
	Ended		Ended
	September 30,		December 31,
	2023		2022
UL and Other
Interest accretion rate		5.1%		5.0%