Policy Claims and Benefits

12 Months Ended

Dec. 31, 2021

Insurance [Abstract]

Short-Duration Insurance and Deposit Contracts [Text Block]

Liabilities for Unpaid Claims and Claim Expense

The Company uses several actuarial methods to compute incurred-but-not reported liabilities. These methods use historical claim reporting patterns to develop a triangle of reported claim amounts. The claim triangle is then used to develop the ultimate claims amount and the incurred-but-not reported liabilities. Expected claim methods use exposure data such as premiums to develop the ultimate claim amount. The final method blends the estimates from the development and the expected claim methods. There were no significant changes in methodologies during 2021.

The following tables provide information on incurred and paid claims development, net of retrocession, for short-duration reinsurance contracts for the Company’s U.S. and Latin America and Asia Pacific Traditional segments, which primarily relate to group life and health (including disability) business. The short-duration business for the Company’s other segments is immaterial. Liabilities for claims and claims adjustment expenses, net of reinsurance equals total incurred claims less cumulative paid claims plus outstanding liabilities prior to 2012.

The Company provides reinsurance on large quota share transactions. It is common industry practice for cedants to provide loss information on a bulk basis without comprehensive claim details.  Additionally, a claim under aggregate stop loss coverage may be the result of thousands of claims, but the Company only pays the excess amount. Therefore, it is impractical to provide meaningful claim count detail by accident year in the tables shown below.

U.S. and Latin America																					As of
(dollars in millions)																					December 31, 2021
Incurred Claims and Allocated Claim Adjustments, Net of Reinsurance (1)																					Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims
Accident Year	For the Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	323	$	309	$	297	$	298	$	299	$	298	$	297	$	297	$	296	$	297	$	—
2013			349		333		339		337		336		336		337		335		336		—
2014					408		411		396		397		396		399		399		401		—
2015							460		461		465		462		462		463		463		—
2016									501		500		501		497		497		498		—
2017											485		514		509		504		503		—
2018													538		538		524		517		1
2019															491		473		456		4
2020																	469		426		25
2021																			509		211
																	Total		$	4,406

Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance (1)
Accident Year	For the Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	109	$	222	$	244	$	252	$	258	$	264	$	268	$	272	$	275	$	279
2013			114		249		277		286		292		297		302		305		309
2014					129		305		337		349		356		364		368		374
2015							146		361		407		422		431		437		441
2016									185		393		437		451		460		467
2017											190		403		448		462		468
2018													183		415		465		479
2019															180		372		418
2020																	159		356
2021																			177
													Total						$	3,768
					All outstanding claims prior to 2012, net of reinsurance														110
			Liabilities for claims and claim adjustment expense, net of reinsurance																$	748

(1)2012 – 2020 unaudited.

Asia Pacific																					As of
(dollars in millions)																					December 31, 2021
Incurred Claims and Allocated Claim Adjustments, Net of Reinsurance (1)																					Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims
Accident Year	For the Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	214	$	287	$	292	$	295	$	303	$	313	$	319	$	323	$	325	$	328	$	3
2013			302		323		313		310		324		338		340		339		340		4
2014					285		309		273		279		293		295		295		294		5
2015							287		265		258		275		275		276		275		8
2016									235		212		219		227		226		223		7
2017											219		221		221		224		211		7
2018													261		279		273		261		22
2019															261		270		277		44
2020																	154		151		40
2021																			72		37
																	Total		$	2,432

Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance (1)
Accident Year	For the Years Ended December 31,
	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	51	$	139	$	191	$	230	$	251	$	268	$	283	$	293	$	301	$	307
2013			51		149		216		243		269		292		304		313		320
2014					36		140		183		212		236		250		260		267
2015							50		122		172		208		229		241		251
2016									39		101		137		157		172		183
2017											37		90		119		141		157
2018													33		110		151		182
2019															39		105		145
2020																	23		56
2021																			8
															Total				$	1,876
					All outstanding claims prior to 2012, net of reinsurance														75
					Liabilities for claims and claim adjustment expense, net of reinsurance														$	631

(1)2012 – 2020 unaudited.

The following is unaudited supplementary information about average historical claims duration as of December 31, 2021:

Average Annual Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
U.S. and Latin America	35.6	%	42.8	%	9.0	%	2.8	%	1.8	%	1.6	%	1.2	%	1.3	%	1.1	%	1.1	%
Asia Pacific	15.0	%	27.2	%	16.1	%	10.6	%	7.3	%	5.2	%	3.9	%	2.6	%	2.2	%	2.0	%

Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claims Adjustment Expenses

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expense in the consolidated balance sheet as of December 31, 2021, is as follows (dollars in millions):

	2021
Liabilities for claims and claim adjustment expense, net of reinsurance:
U.S. and Latin America	$	748
Asia Pacific	631
Liabilities for claims and claim adjustment expense, net of reinsurance	1,379
Adjustments to reconcile to total policy claims and future policy benefits:
Reinsurance recoverable	13
Effect of discounting	(105)
Unallocated claims adjustment expense	7
Total adjustments	(85)
Other short-duration contracts:
Canada	276
Europe, Middle East and Africa	636
Other	272
Liability for unpaid claims and claim adjustment expense – short-duration	2,478
Liability for unpaid claims and claim adjustment expense – long-duration	5,575
Total liability for unpaid claims and claim adjustment expense (included in future policy benefits and other policy-related balances)	$	8,053

Rollforward of Claims and Claim Adjustment Expenses

The liability for unpaid claims is reported in future policy benefits and other policy-related balances within the Company’s consolidated balance sheets. Activity associated with unpaid claims is summarized below (dollars in millions):

	2021		2020		2019
Balance, beginning of period	$	7,556	$	6,786	$	6,585
Less: reinsurance recoverable	(641)		(564)		(433)
Net balance, beginning of period	6,915		6,222		6,152
Incurred:
Current year	13,181		11,195		10,307
Prior years	(377)		123		154
Total incurred	12,804		11,318		10,461
Payments:
Current year	(6,284)		(5,617)		(5,140)
Prior years	(5,810)		(5,204)		(5,305)
Total payments	(12,094)		(10,821)		(10,445)
Other changes:
Interest accretion	31		36		33
Foreign exchange adjustments	(159)		160		21
Total other changes	(128)		196		54
Net balance, end of period	7,497		6,915		6,222
Plus: reinsurance recoverable	556		641		564
Balance, end of period	$	8,053	$	7,556	$	6,786

Incurred claims associated with prior periods are primarily due to events, related to long-duration business, which were incurred in prior periods but were reported in the current period, and to a lesser extent, the development of short-duration business claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims.