Other Insurance Liabilities and Separate Accounts (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Changes in Liability for Future Policy Benefits

The following tables show the components of the change in the liability for future policy benefits, which is included in other insurance liabilities and other long-term insurance liabilities on the unaudited condensed consolidated balance sheets, during the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30, 2023
In millions	Large Case Pensions		Long-Term Care
Present value of expected net premiums (1)
Liability for future policy benefits, beginning of period - current discount rate			$	300

Beginning liability for future policy benefits at original (locked-in) discount rate			$	302
Effect of changes in cash flow assumptions			—
Effect of actual variances from expected experience			7
Adjusted beginning liability for future policy benefits - original (locked-in) discount rate			309

Interest accrual (using locked-in discount rate)			11
Net premiums (actual)			(29)

Ending liability for future policy benefits at original (locked-in) discount rate			291
Effect of changes in discount rate assumptions			(12)
Liability for future policy benefits, end of period - current discount rate			$	279

Present value of expected future policy benefits
Liability for future policy benefits, beginning of period - current discount rate	$	2,253	$	1,566

Beginning liability for future policy benefits at original (locked-in) discount rate	$	2,425	$	1,613
Effect of changes in cash flow assumptions	—		—
Effect of actual variances from expected experience	1		9
Adjusted beginning liability for future policy benefits - original (locked-in) discount rate	2,426		1,622
Issuances	8		—
Interest accrual (using locked-in discount rate)	74		61
Benefit payments (actual)	(210)		(53)


Ending liability for future policy benefits at original (locked-in) discount rate	2,298		1,630
Effect of changes in discount rate assumptions	(247)		(146)
Liability for future policy benefits, end of period - current discount rate	$	2,051	$	1,484

Net liability for future policy benefits	$	2,051	$	1,205
Less: Reinsurance recoverable	—		—
Net liability for future policy benefits, net of reinsurance recoverable	$	2,051	$	1,205

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(1)The present value of expected net premiums is equivalent to the present value of expected gross premiums for the long-term care insurance contracts as net premiums are set equal to gross premiums.


	Nine Months Ended September 30, 2022
In millions	Large Case Pensions		Long-Term Care
Present value of expected net premiums (1)
Liability for future policy benefits, beginning of the period - current discount rate			$	389

Beginning liability for future policy benefits at original (locked-in) discount rate			$	323
Effect of changes in cash flow assumptions			(14)
Effect of actual variances from expected experience			13
Adjusted beginning liability for future policy benefits - original (locked-in) discount rate			322

Interest accrual (using locked-in discount rate)			11
Net premiums (actual)			(30)

Ending liability for future policy benefits at original (locked-in) discount rate			303
Effect of changes in discount rate assumptions			(5)
Liability for future policy benefits, end of the period - current discount rate			$	298

Present value of expected future policy benefits
Liability for future policy benefits, beginning of the period - current discount rate	$	3,034	$	1,991

Beginning liability for future policy benefits at original (locked-in) discount rate	$	2,650	$	1,480
Effect of changes in cash flow assumptions	—		99
Effect of actual variances from expected experience	(26)		15
Adjusted beginning liability for future policy benefits - original (locked-in) discount rate	2,624		1,594
Issuances	4		—
Interest accrual (using locked-in discount rate)	80		60
Benefit payments (actual)	(220)		(48)


Ending liability for future policy benefits at original (locked-in) discount rate	2,488		1,606
Effect of changes in discount rate assumptions	(205)		(78)
Liability for future policy benefits, end of the period - current discount rate	$	2,283	$	1,528

Net liability for future policy benefits	$	2,283	$	1,230
Less: Reinsurance recoverable	—		—
Net liability for future policy benefits, net of reinsurance recoverable	$	2,283	$	1,230

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(1)The present value of expected net premiums is equivalent to the present value of expected gross premiums for the long-term care insurance contracts as net premiums are set equal to gross premiums.

The amount of undiscounted expected gross premiums and expected future benefit payments for long-duration insurance liabilities as of September 30, 2023 and 2022 were as follows:


In millions	September 30, 2023		September 30, 2022
Large case pensions
Expected future benefit payments	$	3,337	$	3,622
Expected gross premiums	—		—

Long-term care
Expected future benefit payments	$	3,237	$	3,269
Expected gross premiums	419		439

The weighted-average interest rate used in the measurement of the long-duration insurance liabilities as of September 30, 2023 and 2022 were as follows:


	September 30, 2023	September 30, 2022
Large case pensions
Interest accretion rate	4.20%	4.20%
Current discount rate	5.86%	5.42%

Long-term care
Interest accretion rate	5.11%	5.11%
Current discount rate	5.99%	5.65%

The weighted-average durations (in years) of the long-duration insurance liabilities as of September 30, 2023 and 2022 were as follows:


	September 30, 2023	September 30, 2022
Large case pensions	7.4	7.4
Long-term care	12.2	12.8

Roll Forward of Policyholders' Funds

The following table shows the components of the change in policyholders’ funds related to long-duration insurance contracts, which are included in policyholders’ funds and other long-term liabilities on the unaudited condensed consolidated balance sheets, during the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30,
In millions, except weighted average crediting rate	2023		2022
Policyholders’ funds, beginning of the period	$	345	$	522

Deposits received	1		10
Policy charges	(2)		(1)
Surrenders and withdrawals	(23)		(27)


Interest credited	9		10
Change in net unrealized losses	(4)		(163)
Other	(23)		(18)
Policyholders’ funds, end of the period	$	303	$	333

Weighted average crediting rate	4.40%		4.80%

Net amount at risk	$	—	$	—

Cash surrender value	$	324	$	337

Summary of Separate Account Assets

Separate Accounts financial assets as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023								December 31, 2022
In millions	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1	$	152	$	—	$	153	$	2	$	154	$	—	$	156
Debt securities	667		1,896		—		2,563		712		1,965		—		2,677

Common/collective trusts	—		443		—		443		—		480		—		480
Total (1)	$	668	$	2,491	$	—	$	3,159	$	714	$	2,599	$	—	$	3,313

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(1)Excludes $41 million of other receivables and $85 million of other payables at September 30, 2023 and December 31, 2022, respectively.

The following table shows the fair value of assets, by major investment category, supporting Separate Accounts as of September 30, 2023 and December 31, 2022:


In millions	September 30, 2023		December 31, 2022

Cash and cash equivalents	$	153	$	156
Debt securities:
U.S. government securities	671		717
States, municipalities and political subdivisions	26		27
U.S. corporate securities	1,610		1,667


Foreign securities	198		201
Residential mortgage-backed securities	37		41
Commercial mortgage-backed securities	6		6
Other asset-backed securities	15		18
Total debt securities	2,563		2,677

Common/collective trusts	443		480

Total (1)	$	3,159	$	3,313

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(1)Excludes $41 million of other receivables and $85 million of other payables at September 30, 2023 and December 31, 2022, respectively.

Roll Forward of Separate Accounts

The following table shows the components of the change in Separate Accounts liabilities during the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30,
In millions	2023		2022

Separate Accounts liability, beginning of the period	$	3,228	$	5,087
Premiums and deposits	657		636

Surrenders and withdrawals	(7)		(576)
Benefit payments	(714)		(711)
Investment (earnings) losses	42		(1,057)
Net transfers from general account	4		7
Other	(10)		(68)
Separate Accounts liability, end of the period	$	3,200	$	3,318

Cash surrender value, end of the period	$	2,136	$	2,153