Future Policy Benefits

6 Months Ended

Jun. 30, 2023

Insurance [Abstract]

Liability for Future Policy Benefits and Unpaid Claims Disclosure

FUTURE POLICY BENEFITS

Liability for Future Policy Benefits – Traditional Business

The Company reviews actual and anticipated experience compared to the assumptions used to establish policy benefits on a quarterly basis and will update those assumptions if evidence suggests that they should be revised. During the six months ended June 30, 2023, and 2022, there were no material changes to the Traditional business assumptions. The Company expects to complete its annual review and any necessary updates of cash flow assumptions used to calculate the liability for future policy benefits during the third quarter of each year. Updates may occur in other quarters if information becomes available during the quarter that indicates an assumption update is necessary.

The following tables provide the balances of and changes in the Company’s liability for future policy benefits for long-duration reinsurance contracts for its Traditional business, which primarily consists of individual life, group life and critical illness reinsurance for the six months ended June 30, 2023 and 2022 (dollars in millions):

Six months ended June 30, 2023:	U.S. and Latin America – Traditional			Canada – Traditional			Europe, Middle East and Africa – Traditional			Asia Pacific – Traditional
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	74,207		$	21,330		$	14,244		$	40,506
Effect of changes in cash flow assumptions	—			—			—			(8)
Effect of actual variances from expected experience	(83)			347			(51)			50
Adjusted balance, beginning of year	74,124			21,677			14,193			40,548
Issuances (1)	1,653			240			610			1,264
Interest accrual (2)	1,710			370			243			515
Net premiums collected (3)	(2,534)			(466)			(696)			(997)
Derecognition (4)	(35)			—			—			—
Foreign currency translation	3			498			445			(914)
Ending balance at original discount rate	74,921			22,319			14,795			40,416
Effect of changes in discount rate assumptions	(5,424)			(4,436)			(3,427)			(10,296)
Balance, end of period	$	69,497		$	17,883		$	11,368		$	30,120
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	85,285		$	24,655		$	15,454		$	44,785
Effect of changes in cash flow assumptions	—			—			—			(8)
Effect of actual variances from expected experience	(49)			347			(44)			27
Adjusted balance, beginning of year	85,236			25,002			15,410			44,804
Issuances (1)	1,653			240			610			1,264
Interest accrual (2)	1,972			474			259			588
Benefit payments (5)	(2,801)			(507)			(682)			(894)
Derecognition (4)	(54)			—			—			—
Foreign currency translation	4			580			488			(979)
Ending balance at original discount rate	86,010			25,789			16,085			44,783
Effect of changes in discount rate assumptions	(6,721)			(3,626)			(3,669)			(12,197)
Balance, end of period	$	79,289		$	22,163		$	12,416		$	32,586
Liability for future policy benefits	$	9,792		$	4,280		$	1,048		$	2,466
Less: reinsurance recoverable	(407)			(285)			(36)			(99)
Net liability for future policy benefits	$	9,385		$	3,995		$	1,012		$	2,367
Weighted-average duration of the liability (in years)	12			15			8			17
Weighted-average interest accretion rate	4.7		%	3.6		%	3.4		%	2.6		%
Weighted-average current discount rate	5.1		%	4.6		%	6.1		%	4.2		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

Six months ended June 30, 2022:	U.S. and Latin America – Traditional			Canada – Traditional			Europe, Middle East and Africa – Traditional			Asia Pacific – Traditional
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	73,447		$	21,989		$	14,440		$	37,943
Effect of changes in cash flow assumptions	—			—			—			58
Effect of actual variances from expected experience	(250)			(327)			215			(847)
Adjusted balance, beginning of year	73,197			21,662			14,655			37,154
Issuances (1)	1,567			400			515			2,145
Interest accrual (2)	1,695			379			250			479
Net premiums collected (3)	(2,488)			(485)			(679)			(967)
Derecognition (4)	—			—			—			—
Foreign currency translation	—			(404)			(1,299)			(1,892)
Ending balance at original discount rate	73,971			21,552			13,442			36,919
Effect of changes in discount rate assumptions	(1,668)			(4,736)			(1,574)			(9,770)
Balance, end of period	$	72,303		$	16,816		$	11,868		$	27,149
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	84,075		$	25,440		$	15,664		$	41,971
Effect of changes in cash flow assumptions	—			—			—			35
Effect of actual variances from expected experience	(153)			(310)			226			(798)
Adjusted balance, beginning of year	83,922			25,130			15,890			41,208
Issuances (1)	1,571			400			516			2,085
Interest accrual (2)	1,945			489			266			545
Benefit payments (5)	(2,798)			(571)			(669)			(917)
Derecognition (4)	—			—			—			—
Foreign currency translation	—			(465)			(1,404)			(2,035)
Ending balance at original discount rate	84,640			24,983			14,599			40,886
Effect of changes in discount rate assumptions	(2,193)			(4,050)			(1,651)			(11,532)
Balance, end of period	$	82,447		$	20,933		$	12,948		$	29,354
Liability for future policy benefits	$	10,144		$	4,117		$	1,080		$	2,205
Less: reinsurance recoverable	(482)			(279)			(30)			(98)
Net liability for future policy benefits	$	9,662		$	3,838		$	1,050		$	2,107
Weighted-average duration of the liability (in years)	12			15			9			16
Weighted-average interest accretion rate	4.7		%	3.7		%	3.6		%	2.6		%
Weighted-average current discount rate	4.7		%	4.8		%	4.8		%	4.4		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

Significant assumptions used to compute the liability for future policy benefits for the Traditional business include mortality, morbidity, lapse rates and discount rates (both accretion and current). The Company updated the underlying market data used to determine the current discount rate resulting in changes to the discount rate assumption used to measure the net liability for future policy benefits each period. The Company’s Traditional business actual-to-expected variances and the effects of changes in discount rate assumption for the six months ending June 30, 2023 and 2022, are summarized in the tables below:

Six months ended June 30, 2023:
Segment	Net liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI	Commentary
U.S. and Latin America – Traditional	$11.1 billion	None	$34 million	$307 million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	0.1% increase		0.3% increase	2.8% increase
Canada – Traditional	$3.5 billion	None	$—	$184 million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	4.4% increase		—%	5.5% increase
Europe, Middle East and Africa – Traditional	$1.3 billion	None	$7 million	$(73) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any material changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	6.6% increase		0.6% increase	6.0% decrease
Asia Pacific – Traditional	$4.4 billion	None	$(23) million	$30 million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any material changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	2.1% increase		0.5% decrease	0.7% increase

Six months ended June 30, 2022:
Segment	Net liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI	Commentary
U.S. and Latin America – Traditional	$10.7 billion	None	$97 million	$(3,939) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions. The actual-to-expected variance was predominately related to COVID-19.
	0.4% increase		0.9% increase	37.1% decrease
Canada – Traditional	$3.4 billion	None	$17 million	$(1,418) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	0.6% decrease		0.5% increase	41.1% decrease
Europe, Middle East and Africa – Traditional	$1.2 billion	None	$11 million	$(242) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	5.5% decrease		0.9% increase	19.8% decrease
Asia Pacific – Traditional	$4.0 billion	$(23) million	$49 million	$(745) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions. The Company did update future premium assumptions as a result of anticipated management actions that will be effective in future periods.
	1.5% decrease	0.6% decrease	1.2% increase	18.5% decrease

Liability for Future Policy Benefits – Financial Solutions Business

The Company reviews actual and anticipated experience compared to the assumptions used to establish policy benefits on a quarterly basis and will update those assumptions if evidence suggests that they should be revised. During the six months ended June 30, 2023, and 2022, there were no material changes to the Financial Solutions business assumptions. The Company expects to complete its annual review and any necessary updates of cash flow assumptions used to calculate the liability for future policy benefits during the third quarter of each year. Updates may occur in other quarters if information becomes available during the quarter that indicates an assumption update is necessary.

The following tables provide the balances of and changes in the Company’s liability for future policy benefits, including the deferred profit liability related to the longevity business, for its Financial Solutions business, which primarily consists of longevity reinsurance, asset-intensive products, primarily annuities and financial reinsurance for the six months ending June 30, 2023 and 2022 (dollars in millions):

Six months ended June 30, 2023:	U.S. and Latin America – Financial Solutions			Canada – Financial Solutions			Europe, Middle East and Africa – Financial Solutions			Asia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	1,671		$	3,394		$	38,782		$	1,605
Effect of changes in cash flow assumptions	—			—			1			—
Effect of actual variances from expected experience	(18)			(3)			200			(3)
Adjusted balance, beginning of year	1,653			3,391			38,983			1,602
Issuances (1)	146			—			4,929			2,163
Interest accrual (2)	26			54			428			12
Net premiums collected (3)	(225)			(168)			(2,186)			(1,528)
Derecognition (4)	—			—			—			—
Foreign currency translation	1			77			1,673			(164)
Ending balance at original discount rate	1,601			3,354			43,827			2,085
Effect of changes in discount rate assumptions	(255)			(356)			(10,656)			82
Balance, end of period	$	1,346		$	2,998		$	33,171		$	2,167
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	5,823		$	3,447		$	44,330		$	6,561
Effect of changes in cash flow assumptions	—			—			1			—
Effect of actual variances from expected experience	(23)			(10)			186			(4)
Adjusted balance, beginning of year	5,800			3,437			44,517			6,557
Issuances (1)	154			—			4,929			2,209
Interest accrual (2)	114			55			508			39
Benefit payments (5)	(270)			(166)			(1,782)			(132)
Derecognition (4)	—			—			—			—
Foreign currency translation	(16)			79			1,938			(686)
Ending balance at original discount rate	5,782			3,405			50,110			7,987
Effect of changes in discount rate assumptions	(551)			(354)			(11,829)			(209)
Balance, end of period	$	5,231		$	3,051		$	38,281		$	7,778
Liability for future policy benefits	$	3,885		$	53		$	5,110		$	5,611
Less: reinsurance recoverable	—			—			—			—
Net liability for future policy benefits	$	3,885		$	53		$	5,110		$	5,611
Weighted-average duration of the liability (in years)	8			7			9			16
Weighted-average interest accretion rate	3.6		%	3.2		%	2.1		%	1.2		%
Weighted-average current discount rate	5.2		%	4.8		%	5.5		%	1.6		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

Six months ended June 30, 2022:	U.S. and Latin America – Financial Solutions			Canada – Financial Solutions			Europe, Middle East and Africa – Financial Solutions			Asia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	228		$	3,329		$	31,973		$	1,051
Effect of changes in cash flow assumptions	—			—			—			—
Effect of actual variances from expected experience	(6)			(7)			366			98
Adjusted balance, beginning of year	222			3,322			32,339			1,149
Issuances (1)	—			581			10,932			1,326
Interest accrual (2)	1			56			358			13
Net premiums collected (3)	(14)			(181)			(1,542)			(681)
Derecognition (4)	—			—			—			—
Foreign currency translation	—			(68)			(3,861)			(260)
Ending balance at original discount rate	209			3,710			38,226			1,547
Effect of changes in discount rate assumptions	(82)			(419)			(6,867)			131
Balance, end of period	$	127		$	3,291		$	31,359		$	1,678
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	4,628		$	3,393		$	38,196		$	6,062
Effect of changes in cash flow assumptions	—			—			—			—
Effect of actual variances from expected experience	(27)			(14)			354			98
Adjusted balance, beginning of year	4,601			3,379			38,550			6,160
Issuances (1)	—			581			10,932			1,326
Interest accrual (2)	93			58			441			36
Benefit payments (5)	(215)			(180)			(1,734)			(111)
Derecognition (4)	—			—			—			—
Foreign currency translation	—			(70)			(4,469)			(1,060)
Ending balance at original discount rate	4,479			3,768			43,720			6,351
Effect of changes in discount rate assumptions	(246)			(415)			(7,448)			(97)
Balance, end of period	$	4,233		$	3,353		$	36,272		$	6,254
Liability for future policy benefits	$	4,106		$	62		$	4,913		$	4,576
Less: reinsurance recoverable	—			—			—			—
Net liability for future policy benefits	$	4,106		$	62		$	4,913		$	4,576
Weighted-average duration of the liability (in years)	9			7			9			16
Weighted-average interest accretion rate	2.5		%	3.3		%	2.1		%	1.6		%
Weighted-average current discount rate	4.7		%	4.8		%	3.9		%	1.5		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

Significant assumptions used to compute the liability for future policy benefits for the Financial Solutions business include mortality, morbidity, lapse rates and discount rates (both accretion and current). The Company updated the underlying market data used to determine the current discount rate resulting in changes to the discount rate assumption used to measure the net liability for future policy benefits. The Company’s Financial Solutions business actual-to-expected variances and the effects of changes in discount rate assumptions for the six months ended June 30, 2023 and 2022, are summarized in the tables below:

Six months ended June 30, 2023:
Segment	Net liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI	Commentary
U.S. and Latin America – Financial Solutions	$4.2 billion	None	$(5) million	$37 million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	0.7% increase		0.1% decrease	0.9% increase
Canada – Financial Solutions	$51 million	None	$(7) million	$1 million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	3.8% decrease		13.2% decrease	2% increase
Europe, Middle East and Africa – Financial Solutions	$6.3 billion	None	$(14) million	$(259) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	13.2% increase		0.3% decrease	4.63% decrease
Asia Pacific – Financial Solutions	$5.9 billion	None	$(1) million	$169 million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	19.1% increase		—%	2.7% increase

Six months ended June 30, 2022:
Segment	Net liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI	Commentary
U.S. and Latin America – Financial Solutions	$4.3 billion	None	$(21) million	$(711) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	3.0% decrease		0.5% decrease	16.2% decrease
Canada – Financial Solutions	$58 million	None	$(7) million	$(13) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	9.4% decrease		10.9% decrease	20.3% decrease
Europe, Middle East and Africa – Financial Solutions	$5.5 billion	None	$(12) million	$(1,087) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	11.7% decrease		0.2% decrease	17.5% decrease
Asia Pacific – Financial Solutions	$4.8 billion	None	$—	$(231) million	The Company reviewed the significant assumptions used to measure the liability for future policy benefits and did not make any changes to the segment’s mortality, morbidity, and lapse assumptions as actual experience was consistent with the underlying assumptions.
	4.1% decrease		—%	4.6% decrease

Reconciliation and Other Disclosures

The reconciliation of the rollforward of the liability for future policy benefits to the condensed consolidated balance sheets as of June 30, 2023 and 2022 is as follows (dollars in millions):

	June 30,
	2023		2022
Liability for future policy benefits included in the rollforwards:
Traditional:
U.S. and Latin America	$	9,792	$	10,144
Canada	4,280		4,117
Europe, Middle East and Africa	1,048		1,080
Asia Pacific	2,466		2,205
Financial Solutions:
U.S. and Latin America	3,885		4,106
Canada	53		62
Europe, Middle East and Africa	5,110		4,913
Asia Pacific	5,611		4,576
Other long-duration contracts	187		184
Claims liability and incurred but not reported claims	5,289		5,085
Unearned revenue liability	518		556
Total liability for future policy benefits	$	38,239	$	37,028

The amount of undiscounted and discounted expected future gross premiums and expected future benefit payments for the liability for future policy benefits included in the rollforwards as of June 30, 2023 and 2022 is as follows (dollars in millions):

	June 30,
	2023				2022
	Undiscounted		Discounted		Undiscounted		Discounted
Expected future gross premiums
Traditional:
U.S. and Latin America	$	172,520	$	81,058	$	172,995	$	84,638
Canada	55,059		22,193		53,583		20,908
Europe, Middle East and Africa	25,185		13,178		23,736		13,747
Asia Pacific	91,057		38,197		82,264		34,636
Financial Solutions:
U.S. and Latin America	3,062		1,912		956		628
Canada	4,749		3,141		5,255		3,428
Europe, Middle East and Africa	67,116		36,502		52,745		34,604
Asia Pacific	3,939		3,257		2,949		2,515
Expected future benefit payments
Traditional:
U.S. and Latin America	$	181,424	$	79,289	$	181,945	$	82,447
Canada	58,011		22,163		57,185		20,933
Europe, Middle East and Africa	24,714		12,416		23,198		12,948
Asia Pacific	87,425		32,586		80,108		29,354
Financial Solutions:
U.S. and Latin America	9,066		5,231		7,249		4,233
Canada	4,608		3,051		5,139		3,353
Europe, Middle East and Africa	70,992		38,281		55,398		36,272
Asia Pacific	10,844		7,778		8,317		6,254

The amount of gross premiums and interest expense recognized in the consolidated statements of income for the liability for future policy benefits included in the rollforwards for the six months ended June 30, 2023 and 2022 is as follows (dollars in millions):

	Gross Premiums				Interest Expense
	June 30,				June 30,
	2023		2022		2023		2022
Traditional:
U.S. and Latin America	$	2,935	$	2,879	$	262	$	250
Canada	535		552		104		110
Europe, Middle East and Africa	697		708		16		16
Asia Pacific	1,257		1,237		73		66
Financial Solutions:
U.S. and Latin America	166		15		88		92
Canada	46		48		1		2
Europe, Middle East and Africa	335		319		80		83
Asia Pacific	108		103		27		23
Total	$	6,079	$	5,861	$	651	$	642

There were no material charges incurred for the six months ended June 30, 2023 and 2022, resulting from net premiums exceeding gross premiums.