Market Risk Benefits

6 Months Ended

Jun. 30, 2023

Insurance [Abstract]

Market Risk Benefits

Policyholder Account Balances, Future Policy Benefits and Claims

Policyholder account balances, future policy benefits and claims consisted of the following:

	June 30, 2023		December 31, 2022
	(in millions)
Policyholder account balances
Policyholder account balances	$	26,390	$	24,986
Future policy benefits
Reserve for future policy benefits	7,569		7,495
Deferred profit liability	70		62
Additional liabilities for insurance guarantees	1,241		1,186
Other insurance and annuity liabilities	211		177
Total future policy benefits	9,091		8,920
Policy claims and other policyholders’ funds	178		226
Total policyholder account balances, future policy benefits and claims	$	35,659	$	34,132

Variable Annuities

Purchasers of variable annuities can select from a variety of investment options and can elect to allocate a portion to a fixed account. A vast majority of the premiums received for variable annuity contracts are held in separate accounts where the assets are held for the exclusive benefit of those contractholders.

Most of the variable annuity contracts issued by the Company contain a GMDB. The Company previously offered contracts with GMAB, GMWB, and GMIB provisions. See Note 2 and Note 11 for additional information regarding the Company’s variable annuity guarantees. See Note 13 and Note 15 for additional information regarding the Company’s derivative instruments used to hedge risks related to these guarantees.

Structured Variable Annuities

Structured variable annuities provide contractholders the option to allocate a portion of their account value to an indexed account held in a non-insulated separate account with the contractholder’s rate of return, which may be positive or negative, tied to selected indices. The amount allocated by a contractholder to the indexed account creates an embedded derivative which is measured at fair value. The Company hedges the equity and interest rate risk related to the indexed account with freestanding derivative instruments.

Fixed Annuities

Fixed annuities include deferred, payout and fixed deferred indexed annuity contracts. In 2020, the Company discontinued sales of fixed deferred and fixed deferred indexed annuities.

Deferred contracts offer a guaranteed minimum rate of interest and security of the principal invested. Payout contracts guarantee a fixed income payment for life or the term of the contract. Liabilities for fixed annuities in a benefit or payout status are based on future estimated payments using established industry mortality tables and interest rates.

The Company’s fixed index annuity product is a fixed annuity that includes an indexed account. The rate of interest credited for funds allocated to the indexed account is linked to the performance of the specific index for the indexed account (subject to a cap). The amount allocated by a contractholder to the indexed account creates an embedded derivative which is measured at fair value.

See Note 15 for additional information regarding the Company’s derivative instruments used to hedge the risk related to indexed accounts.

Insurance Liabilities

Purchasers of UL accumulate cash value that increases by a fixed interest rate. Purchasers of VUL can select from a variety of investment options and can elect to allocate a portion of their account balance to a fixed account or a separate account. A vast majority of the premiums received for VUL policies are held in separate accounts where the assets are held for the exclusive benefit of those policyholders.

IUL is a UL policy that includes an indexed account. The rate of credited interest for funds allocated by a contractholder to the indexed account is linked to the performance of the specific index for the indexed account (subject to stated account parameters, which include a cap and floor, or a spread). The policyholder may allocate all or a portion of the policy value to a fixed or any available indexed account. The amount allocated by a contractholder to the indexed account creates an embedded derivative which is measured at fair value. The Company hedges the interest credited rate including equity and interest rate risk related to the indexed account with freestanding derivative instruments. See Note 15 for additional information regarding the Company’s derivative instruments used to hedge the risk related to IUL.

The Company also offers term life insurance as well as DI products. The Company no longer offers standalone LTC products and whole life insurance but has in force policies from prior years.

Insurance liabilities include accumulation values, incurred but not reported claims, obligations for anticipated future claims, unpaid reported claims and claim adjustment expenses.

The balances of and changes in policyholder account balances were as follows:

	Variable Annuities			Structured Variable Annuities			Fixed Annuities			Fixed Indexed Annuities			Non-Life Contingent Payout Annuities
	(in millions, except percentages)
Balance at January 1, 2023	$	4,752		$	6,410		$	6,799		$	312		$	471
Contract deposits	37			1,364			24			—			46
Policy charges	(4)			—			—			—			—
Surrenders and other benefits	(358)			(55)			(574)			(5)			(59)
Net transfer from (to) separate account liabilities	(9)			—			—			—			—
Other variable account adjustments	—			808			—			—			—
Interest credited	72			—			114			1			2
Balance at June 30, 2023	$	4,490		$	8,527		$	6,363		$	308		$	460
Weighted-average crediting rate	3.2		%	1.5		%	3.5		%	1.9		%	N/A
Cash surrender value (1)	$	4,461		$	8,014		$	6,353		$	276		N/A
	Universal Life Insurance			Variable Universal Life Insurance			Indexed Universal Life Insurance			Other Life Insurance			Total, All Products
	(in millions, except percentages)
Balance at January 1, 2023	$	1,544		$	1,520		$	2,654		$	524		$	24,986
Contract deposits	62			122			96			—			1,751
Policy charges	(89)			(47)			(60)			—			(200)
Surrenders and other benefits	(36)			(39)			(27)			(20)			(1,173)
Net transfer from (to) separate account liabilities	—			(46)			—			—			(55)
Other variable account adjustments	—			—			—			—			808
Interest credited	26			25			23			10			273
Balance at June 30, 2023	$	1,507		$	1,535		$	2,686		$	514		$	26,390
Weighted-average crediting rate	3.6		%	3.9		%	2.0		%	4.0		%
Net amount at risk	$	8,958		$	57,033		$	14,711		$	145
Cash surrender value (1)	$	1,356		$	1,057		$	2,190		$	338

	Variable Annuities			Structured Variable Annuities			Fixed Annuities			Fixed Indexed Annuities			Non-Life Contingent Payout Annuities
	(in millions, except percentages)
Balance at January 1, 2022	$	4,972		$	4,458		$	7,251		$	323		$	527
Contract deposits	146			2,784			55			—			53
Policy charges	(8)			—			—			—			—
Surrenders and other benefits	(450)			(41)			(744)			(17)			(124)
Net transfer from (to) separate account liabilities	(60)			—			—			—			—
Other variable account adjustments	—			(791)			—			—			—
Interest credited	152			—			237			6			15
Balance at December 31, 2022	$	4,752		$	6,410		$	6,799		$	312		$	471
Weighted-average crediting rate	3.2		%	1.1		%	3.5		%	1.9		%	N/A
Cash surrender value (1)	$	4,720		$	5,986		$	6,786		$	277		N/A
	Universal Life Insurance			Variable Universal Life Insurance			Indexed Universal Life Insurance			Other Life Insurance			Total, All Products
	(in millions, except percentages)
Balance at January 1, 2022	$	1,602		$	1,493		$	2,534		$	563		$	23,723
Contract deposits	134			233			218			(3)			3,620
Policy charges	(178)			(91)			(116)			—			(393)
Surrenders and other benefits	(67)			(70)			(50)			(56)			(1,619)
Net transfer from (to) separate account liabilities	—			(102)			—			—			(162)
Other variable account adjustments	—			—			—			—			(791)
Interest credited	53			57			68			20			608
Balance at December 31, 2022	$	1,544		$	1,520		$	2,654		$	524		$	24,986
Weighted-average crediting rate	3.6		%	3.9		%	2.0		%	4.0		%
Net amount at risk	$	9,187		$	57,354		$	15,043		$	149
Cash surrender value (1)	$	1,382		$	1,054		$	2,148		$	348

(1) Cash surrender value represents the amount of the contractholder's account balances distributable at the balance sheet date less certain surrender charges. For variable annuities and VUL, the cash surrender value shown is the proportion of the total cash surrender value related to their fixed account liabilities.

Refer to Note 11 for the net amount at risk for market risk benefits associated with variable and structured variable annuities. Fixed, fixed indexed, and non-life contingent payout annuities do not have net amount at risk in excess of account value. Net amount at risk for insurance products is calculated as the death benefit amount in excess of applicable account values, host, embedded derivative, and separate account liabilities.

The following tables present the account values of fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts by range of guaranteed minimum interest rates (“GMIRs”) and the range of the difference between rates credited to policyholders and contractholders as of June 30, 2023 and December 31, 2022 and the respective guaranteed minimums, as well as the percentage of account values subject to rate reset in the time period indicated. Rates are reset at management’s discretion, subject to guaranteed minimums.

June 30, 2023
					Account Values with Crediting Rates
	Range of Guaranteed Minimum Crediting Rates				At Guaranteed Minimum		1-49 bps above Guaranteed Minimum		50-99 bps above Guaranteed Minimum		100-150 bps above Guaranteed Minimum		Greater than 150 bps above Guaranteed Minimum		Total
					(in millions, except percentages)
Fixed accounts of variable annuities	1	%	–	1.99%	$	84	$	156	$	21	$	5	$	—	$	266
	2	%	–	2.99%	158		—		—		—		—		158
	3	%	–	3.99%	2,422		—		—		1		—		2,423
	4	%	–	5.00%	1,584		—		—		—		—		1,584
	Total				$	4,248	$	156	$	21	$	6	$	—	$	4,431
Fixed accounts of structured variable annuities	1	%	–	1.99%	$	3	$	18	$	3	$	1	$	5	$	30
	2	%	–	2.99%	—		—		—		—		—		—
	3	%	–	3.99%	—		—		—		—		—		—
	4	%	–	5.00%	—		—		—		—		—		—
	Total				$	3	$	18	$	3	$	1	$	5	$	30
Fixed annuities	1	%	–	1.99%	$	129	$	563	$	161	$	21	$	9	$	883
	2	%	–	2.99%	59		—		—		—		—		59
	3	%	–	3.99%	3,075		—		—		—		—		3,075
	4	%	–	5.00%	2,329		—		—		—		—		2,329
	Total				$	5,592	$	563	$	161	$	21	$	9	$	6,346
Non-indexed accounts of fixed indexed annuities	1	%	–	1.99%	$	—	$	3	$	7	$	14	$	—	$	24
	2	%	–	2.99%	—		—		—		—		—		—
	3	%	–	3.99%	—		—		—		—		—		—
	4	%	–	5.00%	—		—		—		—		—		—
	Total				$	—	$	3	$	7	$	14	$	—	$	24
Universal life insurance	1	%	–	1.99%	$	—	$	—	$	—	$	—	$	—	$	—
	2	%	–	2.99%	54		—		6		—		—		60
	3	%	–	3.99%	869		—		4		2		—		875
	4	%	–	5.00%	543		—		—		—		—		543
	Total				$	1,466	$	—	$	10	$	2	$	—	$	1,478

					Account Values with Crediting Rates
	Range of Guaranteed Minimum Crediting Rates				At Guaranteed Minimum			1-49 bps above Guaranteed Minimum			50-99 bps above Guaranteed Minimum			100-150 bps above Guaranteed Minimum			Greater than 150 bps above Guaranteed Minimum			Total
					(in millions, except percentages)
Fixed accounts of variable universal life insurance	1	%	–	1.99%	$	—		$	4		$	3		$	—		$	17		$	24
	2	%	–	2.99%	23			3			1			2			4			33
	3	%	–	3.99%	128			1			3			2			—			134
	4	%	–	5.00%	631			—			—			—			—			631
	Total				$	782		$	8		$	7		$	4		$	21		$	822
Non-indexed accounts of indexed universal life insurance	1	%	–	1.99%	$	—		$	—		$	2		$	—		$	—		$	2
	2	%	–	2.99%	128			—			—			—			—			128
	3	%	–	3.99%	—			—			—			—			—			—
	4	%	–	5.00%	—			—			—			—			—			—
	Total				$	128		$	—		$	2		$	—		$	—		$	130
Other life insurance	1	%	–	1.99%	$	—		$	—		$	—		$	—		$	—		$	—
	2	%	–	2.99%	—			—			—			—			—			—
	3	%	–	3.99%	32			—			—			—			—			32
	4	%	–	5.00%	305			—			—			—			—			305
	Total				$	337		$	—		$	—		$	—		$	—		$	337
Total	1	%	–	1.99%	$	216		$	744		$	197		$	41		$	31		$	1,229
	2	%	–	2.99%	422			3			7			2			4			438
	3	%	–	3.99%	6,526			1			7			5			—			6,539
	4	%	–	5.00%	5,392			—			—			—			—			5,392
	Total				$	12,556		$	748		$	211		$	48		$	35		$	13,598
Percentage of total account values that reset in:
Next 12 months					99.9		%	98.9		%	98.8		%	100.0		%	100.0		%	99.8		%
> 12 months to 24 months					—			1.1			1.2			—			—			0.1
> 24 months					0.1			—			—			—			—			0.1
Total					100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

December 31, 2022
					Account Values with Crediting Rates
	Range of Guaranteed Minimum Crediting Rates				At Guaranteed Minimum		1-49 bps above Guaranteed Minimum		50-99 bps above Guaranteed Minimum		100-150 bps above Guaranteed Minimum		Greater than 150 bps above Guaranteed Minimum		Total
					(in millions, except percentages)
Fixed accounts of variable annuities	1	%	–	1.99%	$	169	$	102	$	18	$	—	$	—	$	289
	2	%	–	2.99%	177		—		—		—		—		177
	3	%	–	3.99%	2,611		—		—		1		—		2,612
	4	%	–	5.00%	1,611		—		—		—		—		1,611
	Total				$	4,568	$	102	$	18	$	1	$	—	$	4,689

					Account Values with Crediting Rates
	Range of Guaranteed Minimum Crediting Rates				At Guaranteed Minimum		1-49 bps above Guaranteed Minimum		50-99 bps above Guaranteed Minimum		100-150 bps above Guaranteed Minimum		Greater than 150 bps above Guaranteed Minimum		Total
					(in millions, except percentages)
Fixed accounts of structured variable annuities	1	%	–	1.99%	$	12	$	7	$	3	$	1	$	—	$	23
	2	%	–	2.99%	—		—		—		—		—		—
	3	%	–	3.99%	—		—		—		—		—		—
	4	%	–	5.00%	—		—		—		—		—		—
	Total				$	12	$	7	$	3	$	1	$	—	$	23
Fixed annuities	1	%	–	1.99%	$	460	$	402	$	132	$	33	$	10	$	1,037
	2	%	–	2.99%	67		—		—		—		—		67
	3	%	–	3.99%	3,344		—		—		—		—		3,344
	4	%	–	5.00%	2,333		—		—		—		—		2,333
	Total				$	6,204	$	402	$	132	$	33	$	10	$	6,781
Non-indexed accounts of fixed indexed annuities	1	%	–	1.99%	$	1	$	3	$	7	$	14	$	—	$	25
	2	%	–	2.99%	—		—		—		—		—		—
	3	%	–	3.99%	—		—		—		—		—		—
	4	%	–	5.00%	—		—		—		—		—		—
	Total				$	1	$	3	$	7	$	14	$	—	$	25
Universal life insurance	1	%	–	1.99%	$	—	$	—	$	—	$	—	$	—	$	—
	2	%	–	2.99%	55		—		1		—		—		56
	3	%	–	3.99%	885		1		2		—		—		888
	4	%	–	5.00%	569		—		—		—		—		569
	Total				$	1,509	$	1	$	3	$	—	$	—	$	1,513
Fixed accounts of variable universal life insurance	1	%	–	1.99%	$	4	$	3	$	2	$	—	$	9	$	18
	2	%	–	2.99%	30		—		1		2		2		35
	3	%	–	3.99%	134		1		1		1		—		137
	4	%	–	5.00%	648		—		—		—		—		648
	Total				$	816	$	4	$	4	$	3	$	11	$	838
Non-indexed accounts of indexed universal life insurance	1	%	–	1.99%	$	—	$	—	$	3	$	—	$	—	$	3
	2	%	–	2.99%	126		—		—		—		—		126
	3	%	–	3.99%	—		—		—		—		—		—
	4	%	–	5.00%	—		—		—		—		—		—
	Total				$	126	$	—	$	3	$	—	$	—	$	129

					Account Values with Crediting Rates
	Range of Guaranteed Minimum Crediting Rates				At Guaranteed Minimum			1-49 bps above Guaranteed Minimum			50-99 bps above Guaranteed Minimum			100-150 bps above Guaranteed Minimum			Greater than 150 bps above Guaranteed Minimum			Total
					(in millions, except percentages)
Other life insurance	1	%	–	1.99%	$	—		$	—		$	—		$	—		$	—		$	—
	2	%	–	2.99%	—			—			—			—			—			—
	3	%	–	3.99%	32			—			—			—			—			32
	4	%	–	5.00%	314			—			—			—			—			314
	Total				$	346		$	—		$	—		$	—		$	—		$	346
Total	1	%	–	1.99%	$	646		$	517		$	165		$	48		$	19		$	1,395
	2	%	–	2.99%	455			—			2			2			2			461
	3	%	–	3.99%	7,006			2			3			2			—			7,013
	4	%	–	5.00%	5,475			—			—			—			—			5,475
	Total				$	13,582		$	519		$	170		$	52		$	21		$	14,344
Percentage of total account values that reset in:
Next 12 months					99.8		%	96.3		%	93.8		%	100.0		%	100.0		%	99.6		%
> 12 months to 24 months					0.1			3.0			5.8			—			—			0.3
> 24 months					0.1			0.7			0.4			—			—			0.1
Total					100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

The following tables summarize the balances of and changes in the liability for future policy benefits, including the January 1, 2021 adoption of ASU 2018-12:

	Life Contingent Payout Annuities		Term and Whole Life Insurance		Disability Insurance		Long Term Care Insurance		Total, All Products
	(in millions)
Pre-adoption balance at December 31, 2020	$	1,536	$	633	$	530	$	5,749	$	8,448
Effect of shadow reserve adjustments	(175)		—		—		(566)		(741)
Adjustments for loss contracts (with premiums in excess of gross premiums) under the modified retrospective approach	4		—		—		35		39
Effect of change in deferred profit liability	(43)		—		—		—		(43)
Effect of remeasurement of the liability at the current single A discount rate	215		265		238		1,965		2,683
Post-adoption balance at January 1, 2021	1,537		898		768		7,183		10,386
Less: reinsurance recoverable	—		601		24		3,623		4,248
Post-adoption balance at January 1, 2021, after reinsurance recoverable	$	1,537	$	297	$	744	$	3,560	$	6,138

	Life Contingent Payout Annuities			Term and Whole Life Insurance			Disability Insurance			Long Term Care Insurance			Total, All Products
	(in millions, except percentages)
Present Value of Expected Net Premiums:
Balance at January 1, 2021	$	—		$	702		$	238		$	1,831		$	2,771
Beginning balance at original discount rate	—			536			183			1,498			2,217
Effect of changes in cash flow assumptions	—			—			—			(6)			(6)
Effect of actual variances from expected experience	—			56			(35)			(61)			(40)
Adjusted beginning of year balance	$	—		$	592		$	148		$	1,431		$	2,171
Issuances	38			78			18			—			134
Interest accrual	—			29			9			73			111
Net premiums collected	(38)			(63)			(20)			(184)			(305)
Derecognition (lapses)	—			—			—			—			—
Ending balance at original discount rate	$	—		$	636		$	155		$	1,320		$	2,111
Effect of changes in discount rate assumptions	—			141			33			227			401
Balance at December 31, 2021	$	—		$	777		$	188		$	1,547		$	2,512
Present Value of Future Policy Benefits:
Balance at January 1, 2021	$	1,537		$	1,600		$	1,006		$	9,014		$	13,157
Beginning balance at original discount rate	1,321			1,169			714			6,716			9,920
Effect of changes in cash flow assumptions	—			—			—			(8)			(8)
Effect of actual variances from expected experience	(14)			58			(40)			(124)			(120)
Adjusted beginning of year balance	$	1,307		$	1,227		$	674		$	6,584		$	9,792
Issuances	39			78			18			—			135
Interest accrual	53			70			39			347			509
Benefit payments	(168)			(120)			(43)			(336)			(667)
Derecognition (lapses)	—			—			—			—			—
Ending balance at original discount rate	$	1,231		$	1,255		$	688		$	6,595		$	9,769
Effect of changes in discount rate assumptions	139			343			226			1,755			2,463
Balance at December 31, 2021	$	1,370		$	1,598		$	914		$	8,350		$	12,232
Adjustment due to reserve flooring	$	—		$	1		$	—		$	—		$	1
Net liability for future policy benefits	$	1,370		$	822		$	726		$	6,803		$	9,721
Less: reinsurance recoverable	1,265			558			25			3,443			5,291
Net liability for future policy benefits, after reinsurance recoverable	$	105		$	264		$	701		$	3,360		$	4,430
Discounted expected future gross premiums	$	—		$	2,005		$	1,158		$	1,623		$	4,786
Expected future gross premiums	$	—		$	2,815		$	1,395		$	1,905		$	6,115
Expected future benefit payments	$	1,707		$	2,159		$	1,217		$	11,568		$	16,651
Weighted average interest accretion rate	4.2		%	6.5		%	5.9		%	5.3		%
Weighted average discount rate	2.6		%	2.8		%	2.8		%	2.9		%
Weighted average duration of liability (in years)	7			8			9			10

	Life Contingent Payout Annuities			Term and Whole Life Insurance			Disability Insurance			Long Term Care Insurance			Total, All Products
	(in millions, except percentages)
Present Value of Expected Net Premiums:
Balance at January 1, 2022	$	—		$	777		$	188		$	1,547		$	2,512
Beginning balance at original discount rate	—			636			155			1,320			2,111
Effect of changes in cash flow assumptions	—			1			1			52			54
Effect of actual variances from expected experience	—			47			(22)			(48)			(23)
Adjusted beginning of year balance	$	—		$	684		$	134		$	1,324		$	2,142
Issuances	42			57			12			—			111
Interest accrual	—			34			7			65			106
Net premiums collected	(42)			(67)			(16)			(169)			(294)
Derecognition (lapses)	—			—			—			—			—
Ending balance at original discount rate	$	—		$	708		$	137		$	1,220		$	2,065
Effect of changes in discount rate assumptions	—			(22)			(3)			(13)			(38)
Balance at December 31, 2022	$	—		$	686		$	134		$	1,207		$	2,027
Present Value of Future Policy Benefits:
Balance at January 1, 2022	$	1,370		$	1,598		$	914		$	8,350		$	12,232
Beginning balance at original discount rate	1,231			1,255			688			6,595			9,769
Effect of changes in cash flow assumptions	—			(8)			1			42			35
Effect of actual variances from expected experience	(13)			52			(28)			(36)			(25)
Adjusted beginning of year balance	$	1,218		$	1,299		$	661		$	6,601		$	9,779
Issuances	42			57			12			—			111
Interest accrual	49			73			38			336			496
Benefit payments	(154)			(116)			(42)			(368)			(680)
Derecognition (lapses)	—			—			—			—			—
Ending balance at original discount rate	$	1,155		$	1,313		$	669		$	6,569		$	9,706
Effect of changes in discount rate assumptions	(90)			6			27			(130)			(187)
Balance at December 31, 2022	$	1,065		$	1,319		$	696		$	6,439		$	9,519
Adjustment due to reserve flooring	$	—		$	3		$	—		$	—		$	3
Net liability for future policy benefits	$	1,065		$	636		$	562		$	5,232		$	7,495
Less: reinsurance recoverable	949			443			19			2,649			4,060
Net liability for future policy benefits, after reinsurance recoverable	$	116		$	193		$	543		$	2,583		$	3,435
Discounted expected future gross premiums	$	—		$	1,855		$	926		$	1,381		$	4,162
Expected future gross premiums	$	—		$	3,183		$	1,331		$	1,908		$	6,422
Expected future benefit payments	$	1,595		$	2,234		$	1,169		$	11,229		$	16,227
Weighted average interest accretion rate	4.1		%	6.4		%	6.1		%	5.2		%
Weighted average discount rate	5.2		%	5.5		%	5.4		%	5.4		%
Weighted average duration of liability (in years)	6			7			8			9

	Life Contingent Payout Annuities			Term and Whole Life Insurance			Disability Insurance			Long Term Care Insurance			Total, All Products
	(in millions, except percentages)
Present Value of Expected Net Premiums:
Balance at January 1, 2023	$	—		$	686		$	134		$	1,207		$	2,027
Beginning balance at original discount rate	—			708			137			1,220			2,065
Effect of changes in cash flow assumptions	—			(3)			—			(1)			(4)
Effect of actual variances from expected experience	—			2			(10)			(14)			(22)
Adjusted beginning of year balance	$	—		$	707		$	127		$	1,205		$	2,039
Issuances	76			27			6			—			109
Interest accrual	—			18			3			30			51
Net premiums collected	(76)			(35)			(7)			(77)			(195)
Derecognition (lapses)	—			—			—			—			—
Ending balance at original discount rate	$	—		$	717		$	129		$	1,158		$	2,004
Effect of changes in discount rate assumptions	—			(18)			(3)			(11)			(32)
Balance at June 30, 2023	$	—		$	699		$	126		$	1,147		$	1,972
Present Value of Future Policy Benefits:
Balance at January 1, 2023	$	1,065		$	1,319		$	696		$	6,439		$	9,519
Beginning balance at original discount rate	1,155			1,313			669			6,569			9,706
Effect of changes in cash flow assumptions	—			(3)			—			(2)			(5)
Effect of actual variances from expected experience	(3)			2			(15)			(10)			(26)
Adjusted beginning of year balance	$	1,152		$	1,312		$	654		$	6,557		$	9,675
Issuances	76			27			6			—			109
Interest accrual	24			37			18			165			244
Benefit payments	(76)			(71)			(21)			(196)			(364)
Derecognition (lapses)	—			—			—			—			—
Ending balance at original discount rate	$	1,176		$	1,305		$	657		$	6,526		$	9,664
Effect of changes in discount rate assumptions	(84)			10			29			(83)			(128)
Balance at June 30, 2023	$	1,092		$	1,315		$	686		$	6,443		$	9,536
Adjustment due to reserve flooring	$	—		$	5		$	—		$	—		$	5
Net liability for future policy benefits	$	1,092		$	621		$	560		$	5,296		$	7,569
Less: reinsurance recoverable	906			434			21			2,679			4,040
Net liability for future policy benefits, after reinsurance recoverable	$	186		$	187		$	539		$	2,617		$	3,529
Discounted expected future gross premiums	$	—		$	1,833		$	908		$	1,319		$	4,060
Expected future gross premiums	$	—		$	3,110		$	1,300		$	1,808		$	6,218
Expected future benefit payments	$	1,638		$	2,193		$	1,141		$	11,019		$	15,991
Weighted average interest accretion rate	4.2		%	6.3		%	6.2		%	5.1		%
Weighted average discount rate	5.2		%	5.4		%	5.4		%	5.3		%
Weighted average duration of liability (in years)	6			7			8			9

The annual review of LTC future policy benefit reserves in the third quarter of 2022 resulted in assumption updates that decreased the net liability for future policy benefits by $10 million, partially offset by a $4 million decrease to reinsurance recoverable, primarily reflecting updates to morbidity, premium rate increase and benefit reduction assumptions.

Receivables included $4.2 billion of reinsurance recoverables as of both June 30, 2023 and December 31, 2022, including $2.7 billion related to LTC risk ceded to Genworth as of both June 30, 2023 and December 31, 2022.

The balances of and changes in additional liabilities related to insurance guarantees were as follows:

	Universal Life Insurance			Variable Universal Life Insurance			Other Life Insurance			Total, All Products
	(in millions, except percentages)
Balance at January 1, 2023	$	1,100		$	74		$	12		$	1,186
Interest accrual	17			3			—			20
Benefit accrual	66			4			1			71
Benefit payments	(20)			(7)			(1)			(28)
Effect of actual variances from expected experience	(12)			(1)			(2)			(15)
Impact of change in net unrealized (gains) losses on securities	5			—			2			7
Balance at June 30, 2023	$	1,156		$	73		$	12		$	1,241
Weighted average interest accretion rate	2.9		%	7.1		%	3.9		%
Weighted average discount rate	3.2		%	7.1		%	4.0		%
Weighted average duration of reserves (in years)	10			8			6

	Universal Life Insurance			Variable Universal Life Insurance			Other Life Insurance			Total, All Products
	(in millions, except percentages)
Balance at January 1, 2022	$	1,120		$	76		$	46		$	1,242
Interest accrual	32			5			1			38
Benefit accrual	108			8			—			116
Benefit payments	(43)			(14)			(4)			(61)
Effect of actual variances from expected experience	(19)			2			(2)			(19)
Impact of change in net unrealized (gains) losses on securities	(98)			(3)			(29)			(130)
Balance at December 31, 2022	$	1,100		$	74		$	12		$	1,186
Weighted average interest accretion rate	2.9		%	7.0		%	4.1		%
Weighted average discount rate	3.2		%	7.1		%	4.0		%
Weighted average duration of reserves (in years)	10			8			6

The amount of revenue and interest recognized in the Statement of Operations was as follows:

	Six Months Ended June 30,
	2023
	Gross Premiums		Interest Expense
	(in millions)
Life contingent payout annuities	$	83	$	24
Term and whole life insurance	84		19
Disability insurance	62		15
Long term care insurance	89		135
Total	$	318	$	193

	Years Ended December 31,
	2022				2021
	Gross Premiums		Interest Expense		Gross Premiums		Interest Expense
	(in millions)
Life contingent payout annuities	$	45	$	49	$	39	$	53
Term and whole life insurance	169		39		166		41
Disability insurance	127		31		131		30
Long term care insurance	189		271		192		274
Total	$	530	$	390	$	528	$	398

The following tables summarize the balances of and changes in unearned revenue, including the January 1, 2021 adoption of ASU 2018-12:

	Universal Life Insurance		Variable Universal Life Insurance		Indexed Universal Life Insurance		Total, All Products
	(in millions)
Pre-adoption balance at December 31, 2020	$	19	$	76	$	—	$	95
Effect of shadow reserve adjustments	5		10		153		168
Post-adoption balance at January 1, 2021	24		86		153		263
Deferral of revenue	3		34		55		92
Amortization	(1)		(8)		(13)		(22)
Balance at December 31, 2021	$	26	$	112	$	195	$	333
Balance at January 1, 2022	$	26	$	112	$	195	$	333
Deferral of revenue	2		48		54		104
Amortization	(1)		(10)		(16)		(27)
Balance at December 31, 2022	$	27	$	150	$	233	$	410
Balance at January 1, 2023	$	27	$	150	$	233	$	410
Deferral of revenue	1		28		26		55
Amortization	(1)		(6)		(9)		(16)
Balance at June 30, 2023	$	27	$	172	$	250	$	449

Market Risk Benefits

Market risk benefits are contracts or contract features that both provide protection to the contractholder from other-than-nominal capital market risk and expose the Company to other-than-nominal capital market risk. Most of the variable annuity contracts issued by the Company contain a GMDB provision. The Company previously offered contracts containing GMWB, GMAB, or GMIB provisions.

The GMDB provisions provide a specified minimum return upon death of the contractholder. The death benefit payable is the greater of (i) the contract value less any purchase payment credits subject to recapture less a pro-rata portion of any rider fees, or (ii) the GMDB provisions specified in the contract. The Company has the following primary GMDB provisions:

•Return of premium — provides purchase payments minus adjusted partial surrenders.

•Reset — provides that the value resets to the account value every sixth contract anniversary minus adjusted partial surrenders. This provision was often provided in combination with the return of premium provision and is no longer offered.

•Ratchet — provides that the value ratchets up to the maximum account value at specified anniversary intervals, plus subsequent purchase payments less adjusted partial surrenders.

The variable annuity contracts with GMWB riders typically have account values that are based on an underlying portfolio of mutual funds, the values of which fluctuate based on fund performance. At contract issue, the guaranteed amount is equal to the amount deposited but the guarantee may be increased annually to the account value (a “step-up”) in the case of favorable market performance or by a benefit credit if the contract includes this provision.

The Company has GMWB riders in force, which contain one or more of the following provisions:

•Withdrawals at a specified rate per year until the amount withdrawn is equal to the guaranteed amount.

•Withdrawals at a specified rate per year for the life of the contractholder (“GMWB for life”).

•Withdrawals at a specified rate per year for joint contractholders while either is alive.

•Withdrawals based on performance of the contract.

•Withdrawals based on the age withdrawals begin.

•Credits are applied annually for a specified number of years to increase the guaranteed amount as long as withdrawals have not been taken.

Variable annuity contractholders age 79 or younger at contract issue could obtain a principal-back guarantee by purchasing the optional GMAB rider for an additional charge. The GMAB rider guarantees that, regardless of market performance at the end of the 10-year waiting period, the contract value will be no less than the original investment or a specified percentage of the highest anniversary value, adjusted for withdrawals. If the contract value is less than the guarantee at the end of the 10-year period, a lump sum will be added to the contract value to make the contract value equal to the guarantee value.

Individual variable annuity contracts may have both a death benefit and a living benefit. Net amount at risk is quantified for each benefit and a composite net amount at risk is calculated using the greater of the death benefit or living benefit for each individual contract. The net amount at risk for GMDB and GMAB is defined as the current guaranteed benefit amount in excess of the current contract value. The net amount at risk for GMIB is defined as the greater of the present value of the minimum guaranteed annuity payments less the current contract value or zero. The net amount at risk for GMWB is defined as the greater of the present value of the minimum guaranteed withdrawal payments less the current contract value or zero.

The following tables summarize the balances of and changes in market risk benefits, including the January 1, 2021 adoption of ASU 2018-12:

	(in millions)
Pre-adoption balance at December 31, 2020	$	3,084
Effect of shadow reserve adjustments	(3)
Adjustments for the cumulative effect of the changes in instrument-specific credit risk on market risk benefits between the original contract issuance date and the transition date	670
Adjustments to the host contract for differences between previous carrying amount and fair value measurement for the market risk benefits under the option-based method of valuation	20
Adjustments for the remaining difference (exclusive of the instrument-specific credit risk change and host contract adjustments) between previous carrying amount and fair value measurements for the market risk benefits	1,058
Post-adoption balance at January 1, 2021	$	4,829

	Years Ended December 31,
	2022		2021
	(in millions, except age)
Balance at beginning of period	$	2,901	$	4,829
Issuances	27		45
Interest accrual and time decay	(237)		(294)
Reserve increase from attributed fees collected	810		819
Reserve release for benefit payments and derecognition	(29)		(8)
Effect of changes in interest rates and bond markets	(4,193)		(1,053)
Effect of changes in equity markets and subaccount performance	2,258		(1,558)
Effect of changes in equity index volatility	205		73
Actual policyholder behavior different from expected behavior	17		52
Effect of changes in other future expected assumptions	(139)		123
Effect of changes in the instrument-specific credit risk on market risk benefits	(517)		(127)
Balance at end of period	$	1,103	$	2,901
Reconciliation of the gross balances in an asset or liability position:
Asset position	$	1,015	$	539
Liability position	(2,118)		(3,440)
Net asset (liability) position	$	(1,103)	$	(2,901)
Guaranteed benefit amount in excess of current account balances (net amount at risk):
Death benefits	$	2,781	$	251
Living benefits	$	3,364	$	195
Composite (greater of)	$	5,830	$	441
Weighted average attained age of contractholders	68		68
Changes in unrealized (gains) losses in net income relating to liabilities held at end of period	$	(2,044)	$	(2,502)
Changes in unrealized (gains) losses in other comprehensive income relating to liabilities held at end of period	$	(505)	$	(102)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(in millions, except age)
Balance at beginning of period	$	1,133	$	1,841	$	1,103	$	2,901
Issuances	4		8		8		16
Interest accrual and time decay	5		(51)		(21)		(137)
Reserve increase from attributed fees collected	194		200		383		399
Reserve release for benefit payments and derecognition	(9)		(6)		(18)		(9)
Effect of changes in interest rates and bond markets	(588)		(1,348)		(84)		(2,802)
Effect of changes in equity markets and subaccount performance	(510)		1,714		(902)		2,300
Effect of changes in equity index volatility	(27)		21		(70)		76
Actual policyholder behavior different from expected behavior	(1)		12		6		32
Effect of changes in the instrument-specific credit risk on market risk benefits	159		(454)		(45)		(839)
Balance at end of period	$	360	$	1,937	$	360	$	1,937
Reconciliation of the gross balances in an asset or liability position:
Asset position	$	1,346	$	686	$	1,346	$	686
Liability position	(1,706)		(2,623)		(1,706)		(2,623)
Net asset (liability) position	$	(360)	$	(1,937)	$	(360)	$	(1,937)
Guaranteed benefit amount in excess of current account balances (net amount at risk):
Death benefits	$	1,415	$	2,626	$	1,415	$	2,626
Living benefits	$	2,725	$	2,284	$	2,725	$	2,284
Composite (greater of)	$	3,977	$	4,730	$	3,977	$	4,730
Weighted average attained age of contractholders	68		68		68		68
Changes in unrealized (gains) losses in net income relating to liabilities held at end of period	$	(1,112)	$	351	$	(1,049)	$	(509)
Changes in unrealized (gains) losses in other comprehensive income relating to liabilities held at end of period	$	158	$	(452)	$	(44)	$	(832)

The following tables provide a summary of the significant inputs and assumptions used in the fair value measurements developed by the Company or reasonably available to the Company of market risk benefits:

	June 30, 2023
	Fair Value		Valuation Technique	Significant Inputs and Assumptions	Range			Weighted  Average
	(in millions)
Market risk benefits	$	360	Discounted cash flow	Utilization of guaranteed withdrawals (1)	0.0%	–	48.0%	11.2%
				Surrender rate (2)	0.2%	–	55.7%	3.6%
				Market volatility (3)	0.0%	–	24.9%	10.5%
				Nonperformance risk (4)	100 bps			100 bps
				Mortality rate (5)	0.0%	–	41.6%	1.6%

	December 31, 2022
	Fair Value		Valuation Technique	Significant Inputs and Assumptions	Range			Weighted  Average
	(in millions)
Market risk benefits	$	1,103	Discounted cash flow	Utilization of guaranteed withdrawals (1)	0.0%	–	48.0%	11.0%
				Surrender rate (2)	0.2%	–	45.6%	3.6%
				Market volatility (3)	0.0%	–	26.6%	12.1%
				Nonperformance risk (4)	95 bps			95 bps
				Mortality rate (5)	0.0%	–	41.6%	1.5%

(1) The utilization of guaranteed withdrawals represents the percentage of contractholders that will begin withdrawing in any given year. The weighted average utilization rate represents the average assumption, weighted based on the benefit base. The calculation excludes policies that have already started taking withdrawals.

(2) The weighted average surrender rate represents the average assumption weighted based on the account value of each contract.

(3) Market volatility represents the implied volatility of each contractholder’s mix of funds. The weighted average market volatility represents the average volatility across all contracts, weighted by the size of the guaranteed benefit.

(4) The nonperformance risk is the spread added to the U.S. Treasury curve.

(5) The weighted average mortality rate represents the average assumption weighted based on the account value of each contract.

Changes to Significant Inputs and Assumptions:

During the year ended December 31, 2022, the Company updated inputs and assumptions based on management’s review of experience studies. These updates resulted in the following notable changes in the fair value estimates of market risk benefits calculations:

•Updates to utilization of guaranteed withdrawals assumptions resulted in a decrease to pre-tax income of $39 million.

•Updates to surrender rates resulted in a decrease to pre-tax income of $200 million.

•Updates to mortality rates resulted in a decrease to pre-tax income of $49 million.

Refer to the rollforward of market risk benefits for the impacts of changes to interest rate, equity market, volatility and nonperformance risk assumptions.

Uncertainty of Fair Value Measurements

Significant increases (decreases) in utilization and volatility used in the fair value measurement of market risk benefits in isolation would have resulted in a significantly higher (lower) liability value.

Significant increases (decreases) in nonperformance risk and surrender rates used in the fair value measurement of market risk benefits in isolation would have resulted in a significantly lower (higher) liability value.

Significant increases (decreases) in mortality rates used in the fair value measurement of the death benefit portion of market risk benefits in isolation would have resulted in a significantly higher (lower) liability value whereas significant increases (decreases) in mortality rates used in the fair values measurement of the life contingent portion of market risk benefits in isolation would have resulted in a significantly lower (higher) liability value.

Surrender rates, utilization rates and mortality rates vary with the type of base product, type of rider, duration of the policy, age of the contractholder, calendar year of the projection, previous withdrawal history, and the relationship between the value of the guaranteed benefit and the contract accumulation value.