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LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS
 3 Months Ended
Mar. 31, 2024
Insurance [Abstract]  
LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS
The following table reconciles the net liability for future policy benefits and liability of death benefits to the liability for future policy benefits in the consolidated balance sheets:
March 31, 2024December 31, 2023
(in millions)
Reconciliation
Term$1,310 $1,341 
Payout - Non-Legacy820 844 
Payout - Legacy3,767 3,620 
Group Pension - Benefit Reserve & DPL473 490 
Health1,451 1,505 
UL1,228 1,220 
Subtotal9,049 9,020 
  Whole Life Closed Block and Open Block products5,403 5,463 
Other (1)625 657 
Future policyholder benefits total15,077 15,140 
  Other policyholder funds and dividends payable1,430 1,433 
Total$16,507 $16,573 
______________
(1)Primarily consists of future policy benefits related to Assumed Life and Disability, Group Life Run off, Variable Interest Sensitive Life rider and Major Medical products.
The following table summarizes balances and changes in the liability for future policy benefits for nonparticipating traditional and limited pay contracts:
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
TermPayout - Non-LegacyPayout-LegacyGroup PensionHealthTermPayout-Non-LegacyPayout-LegacyGroup PensionHealth
(in millions)
Present Value of Expected Net Premiums
Balance, beginning of period$2,125 $— $— $— $(21)$2,090 $— $— $— $(6)
Beginning balance at original discount rate
2,051 — — — (22)2,068 — — — (6)
Effect of changes in cash flow assumptions(18)— — — — 8 — — — — 
Effect of actual variances from expected experience(19)— — — 1 4 — — — (6)
Adjusted beginning of period balance2,014 — — — (21)2,080 — — — (12)
Issuances11 — — — — 15 — — — — 
Interest accrual25 — — — — 25 — — — — 
Net premiums collected(49)— — — 1 (51)— — — 1 
Ending Balance at original discount rate2,001 — — — (20)2,069 — — — (11)
Effect of changes in discount rate assumptions17 — — — 1 81 — — — — 
Balance, end of period$2,018 $— $— $— $(19)$2,150 $— $— $— $(11)
Present Value of Expected Future Policy Benefits
Balance, beginning of period$3,466 $844 $3,620 $490 $1,484 $3,449 $828 $2,689 $523 $1,554 
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
TermPayout - Non-LegacyPayout-LegacyGroup PensionHealthTermPayout-Non-LegacyPayout-LegacyGroup PensionHealth
(in millions)
Beginning balance of original discount rate3,317 840 3,840 536 1,672 3,376 845 3,024 583 1,795 
Effect of changes in cash flow assumptions(20)(1)— — — 9 — — — — 
Effect of actual variances from expected experience(23)(1)(2)1 1 5 — 1 (1)(7)
Adjusted beginning of period balance3,274 838 3,838 537 1,673 3,390 845 3,025 582 1,788 
Issuances12 11 269 — — 16 14 222 — — 
Interest accrual41 10 35 5 14 42 10 21 5 15 
Benefits payments(63)(23)(89)(16)(41)(95)(23)(65)(17)(33)
Ending balance at original discount rate3,264 836 4,053 526 1,646 3,353 846 3,203 570 1,770 
Effect of changes in discount rate assumptions64 (16)(286)(53)(215)162 6 (257)(48)(198)
Balance, end of period$3,328 $820 $3,767 $473 $1,431 $3,515 $852 $2,946 $522 $1,572 
Net liability for future policy benefits$1,310 $820 $3,767 $473 $1,451 $1,365 $853 $2,945 $522 $1,584 
Less: Reinsurance recoverable(207)(36)(1,516)— (1,147)(206)— (589)— (1,258)
Net liability for future policy benefits, after reinsurance recoverable$1,103 $784 $2,251 $473 $304 $1,159 $853 $2,356 $522 $326 
Weighted-average duration of liability for future policyholder benefits (years)6.99.37.67.08.67.19.47.97.18.7
The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses related to nonparticipating traditional and limited payment contracts:
March 31, 2024December 31, 2023
(in millions)
Term
Expected future benefit payments and expenses (undiscounted)$5,750 $5,860 
Expected future gross premiums (undiscounted)6,877 6,956 
Expected future benefit payments and expenses (discounted)3,328 3,466 
Expected future gross premiums (discounted)3,721 3,862 
March 31, 2024December 31, 2023
(in millions)
Payout-Legacy
Expected future benefit payments and expenses (undiscounted)5,530 5,204 
Expected future gross premiums (undiscounted)— — 
Expected future benefit payments and expenses (discounted)3,682 3,538 
Expected future gross premiums (discounted)— — 
Payout-Non-Legacy
Expected future benefit payments and expenses (undiscounted)1,414 1,426 
Expected future gross premiums (undiscounted)— — 
Expected future benefit payments and expenses (discounted)786 812 
Expected future gross premiums (discounted)— — 
Group Pension
Expected future benefit payments and expenses (undiscounted)654 668 
Expected future gross premiums (undiscounted)— — 
Expected future benefit payments and expenses (discounted)454 471 
Expected future gross premiums (discounted)— — 
Health
Expected future benefit payments and expenses (undiscounted)2,278 2,318 
Expected future gross premiums (undiscounted)82 85 
Expected future benefit payments and expenses (discounted)1,415 1,468 
Expected future gross premiums (discounted)$64 $68 
The table below summarizes the revenue and interest related to nonparticipating traditional and limited payment contracts:
Three Months Ended March 31,Three Months Ended March 31,
2024202320242023
Gross PremiumInterest Accretion
(in millions)
Revenue and Interest Accretion
Term$87 $60 $16 $17 
Payout - Legacy59 27 39 21 
Payout - Non-Legacy9 15 10 10 
Group Pension— — 5 5 
Health3 2 14 15 
Total$158 $104 $84 $68 
The following table provides the weighted average interest rates for the liability for future policy benefits:
March 31, 2024December 31, 2023
Weighted Average Interest Rate
Term
Interest accretion rate5.6 %5.6 %
Current discount rate5.1 %4.8 %
Payout - Legacy
Interest accretion rate4.1 %4.0 %
Current discount rate5.1 %4.9 %
Payout - Non-Legacy
Interest accretion rate5.0 %5.0 %
Current discount rate5.2 %4.9 %
Group Pension
Interest accretion rate3.3 %3.3 %
Current discount rate5.1 %4.8 %
Health
Interest accretion rate3.4 %3.4 %
Current discount rate5.2 %4.9 %
The following table provides the balance, changes in and the weighted average durations of the additional insurance liabilities:
Three Months Ended March 31,
20242023
UL
(Dollars in millions)
Balance, beginning of period $1,220 $1,120 
Beginning balance before AOCI adjustments 1,230 1,135 
Effect of changes in interest rate and cash flow assumptions and model changes— — 
Effect of actual variances from expected1 6 
Adjusted beginning of period balance1,231 1,141 
Interest accrual14 13 
Net assessments collected17 18 
Benefit payments(21)(18)
Ending balance before shadow reserve adjustments1,241 1,154 
Effect of reserve adjustment recorded in AOCI(13)(12)
Balance, end of period$1,228 $1,142 
Net liability for additional liability$1,228 $1,142 
Less: Reinsurance recoverable(953)(573)
Net liability for additional liability, after reinsurance recoverable$275 $569 
Weighted-average duration of additional liability - death benefit (years)19.721.6
The following tables provide the revenue, interest and weighted average interest rates, related to the additional insurance liabilities:
Three Months Ended March 31,
2024202320242023
AssessmentsInterest Accretion
(in millions)
Revenue and Interest Accretion
UL$164 $172 $14 $13 
Total$164 $172 $14 $13 

Three Months Ended March 31,
20242023
Weighted Average Interest Rate
UL4.5 %4.5 %
Interest accretion rate4.5 %4.5 %
INSURANCE STATUTORY FINANCIAL INFORMATION
Prescribed and Permitted Accounting Practices
As of March 31, 2024, the following three prescribed and permitted practices resulted in surplus that is different from the statutory surplus that would have been reported had NAIC statutory accounting practices been applied.
Equitable Financial was granted a permitted practice by the NYDFS to apply SSAP 108, Derivatives Hedging Variable Annuity Guarantees on a retroactive basis from January 1, 2021 through June 30, 2021, after reflecting the impacts of our reinsurance transaction with Venerable. The permitted practice was amended to also permit Equitable Financial to adopt SSAP 108 prospectively as of July 1, 2021 and to consider the impact of both the interest rate derivatives and the general account assets used to fully hedge the interest rate risk inherent in its variable annuity guarantees when determining the amount of the deferred asset or liability under SSAP 108. Application of the permitted practice partially mitigates the New York Insurance Regulation 213 (“Reg 213”) impact of the Venerable Transaction on Equitable Financial’s statutory capital and surplus and enables Equitable Financial to more effectively neutralize the impact of interest rates on its statutory surplus and to better align with our economic hedging program. The impact of applying this permitted practice relative to SSAP 108 as written was a decrease of approximately $32 million in statutory special surplus funds as of March 31, 2024. The Reinsurance Treaty reduced the amount of interest rate hedging needed going forward, affecting future deferrals, but leaves our historical SSAP 108 deferred amounts unchanged. The permitted practice also reset Equitable Financial’s unassigned surplus to zero as of June 30, 2021 to reflect the transformative nature of the Venerable Transaction.
The NAIC Accounting Practices and Procedures manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of New York. However, Reg 213 adopted in May of 2019 and as amended in February 2020 and March 2021, differs from the NAIC variable annuity reserve and capital framework. Reg 213 requires Equitable Financial to carry statutory basis reserves for its variable annuity contract obligations equal to the greater of those required under (i) the NAIC standard or (ii) a revised version of the NYDFS requirement in effect prior to the adoption of the first amendment for contracts issued prior to January 1, 2020, and for policies issued after that date a new standard that in current market conditions imposes more conservative reserving requirements for variable annuity contracts than the NAIC standard.
The impact of the application of Reg 213 was a decrease of approximately $182 million in statutory surplus as of March 31, 2024 compared to statutory surplus under the NAIC variable annuity framework. Our hedging program is designed to hedge the economics of our insurance liabilities and largely offsets Reg 213 and NAIC framework reserve movements due to interest rates and equities. The NYDFS allows domestic insurance companies a five year phase-in
provision for Reg 213 reserves. As of September 30, 2022, Equitable Financial’s Reg 213 reserves were 100% phased-in. As of March 31, 2024, given the prevailing market conditions and business mix, there are $173 million Reg 213 redundant reserves over the US RBC CTE 98 total asset requirement (“TAR”).
During the fourth quarter 2020, Equitable Financial received approval from NYDFS for its proposed amended Plan of Operation for Separate Account No. 68 (“SA 68”) for our Structured Capital Strategies product and Separate Account No. 69 (“SA 69”) for our EQUI-VEST product Structured Investment Option, to change the accounting basis of these two non-insulated Separate Accounts from fair value to book value in accordance with Section 1414 of the Insurance Law to align with how we manage and measure our overall general account asset portfolio. In order to facilitate this change and comply with Section 4240(a)(10), the Company also sought approval to amend the Plans to remove the requirement to comply with Section 4240(a)(5)(iii) and substitute it with a commitment to comply with Section 4240(a)(5)(i). Similarly, the Company updated the reserves section of each Plan to reflect the fact that Regulation 128 would no longer be applicable upon the change in accounting basis. We applied this change effective January 1, 2021. The impact of the application is an increase of approximately $1.8 billion in statutory surplus as of March 31, 2024.