Reserve for Future Policy Benefits and Contractholder Funds (Tables)

6 Months Ended

Jun. 30, 2023

Reserve for Future Policy Benefits and Contractholder Funds [Abstract]

Schedule of balances of and changes in liability for future policy benefits, and Revenue and interest recognized

The following tables summarize the balance of and changes in the reserve for future policy benefits and DAC on January 1, 2021 upon the adoption of the guidance.

Impact of adoption for reserve for future policy benefits
( $ in millions)	Accident and health		Traditional life		Total
Pre-adoption 12/31/2020 balance (1)	$	728	$	311	$	1,039
Adjustments:
Effect of the remeasurement of the reserve at upper-medium grade fixed income-based rate (2)	232		153		385
Adjustments for contracts with net premiums in excess of gross premiums (3)	77		—		77
Total adjustments	309		153		462
Post-adoption 1/1/2021 balance	1,037		464		1,501
Less: reinsurance recoverables (4)	159		3		162
Post-adoption 1/1/2021 balance, after reinsurance recoverables	$	878	$	461	$	1,339

(1)Traditional life includes $11 million in reserves related to riders of traditional life insurance products reclassified from contractholder funds.

(2)Adjustment reflected with a corresponding decrease to AOCI.

(3)Adjustment reflected with a corresponding decrease to retained income.

(4)Represents post-adoption January 1, 2021 balance of reinsurance recoverables. Adjustments to reinsurance recoverables for accident and health products increased January 1, 2021 AOCI by $33 million due to the remeasurement of the reserve at upper-medium grade fixed income based rate and increased January 1, 2021 retained income by $51 million due to adjustments for contracts with net premiums in excess of gross premiums.

Rollforward of reserve for future policy benefits (1)
	Six months ended June 30,
	Accident and health				Traditional life				Total
($ in millions)	2023		2022		2023		2022		2023		2022
Present value of expected net premiums
Beginning balance	$	1,464	$	1,785	$	238	$	254	$	1,702	$	2,039
Beginning balance at original discount rate	1,549		1,604		246		215		1,795		1,819
Effect of changes in cash flow assumptions	—		—		(12)		—		(12)		—
Effect of actual variances from expected experience	(26)		(61)		19		20		(7)		(41)
Adjusted beginning balance	1,523		1,543		253		235		1,776		1,778
Issuances	259		243		18		5		277		248
Interest accrual	25		24		5		4		30		28
Net premiums collected	(186)		(199)		(25)		(21)		(211)		(220)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	1,621		1,611		251		223		1,872		1,834
Effect of changes in discount rate assumptions	(68)		(29)		(7)		4		(75)		(25)
Ending balance	1,553		1,582		244		227		1,797		1,809
Present value of expected future policy benefits
Beginning balance	2,229		2,796		524		673		2,753		3,469
Beginning balance at original discount rate	2,316		2,426		534		511		2,850		2,937
Effect of changes in cash flow assumptions	—		—		(12)		—		(12)		—
Effect of actual variances from expected experience	(30)		(63)		20		(7)		(10)		(70)
Adjusted beginning balance	2,286		2,363		542		504		2,828		2,867
Issuances	256		242		18		5		274		247
Interest accrual	47		37		12		11		59		48
Benefit payments	(199)		(218)		(26)		11		(225)		(207)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	2,390		2,424		546		531		2,936		2,955
Effect of changes in discount rate assumptions	(64)		9		(7)		30		(71)		39
Ending balance	$	2,326	$	2,433	$	539	$	561	$	2,865	$	2,994
Net reserve for future policy benefits (1)	$	773	$	851	$	295	$	334	$	1,068	$	1,185
Less: reinsurance recoverables	84		127		2		2		86		129
Net reserve for future policy benefits, after reinsurance recoverables	$	689	$	724	$	293	$	332	$	982	$	1,056

(1)Excludes $271 million and $281 million of reserves related to short-duration and other contracts as of June 30, 2023 and 2022, respectively.

Revenue and interest recognized in the condensed consolidated statements of operations
($ in millions)	Six months ended June 30,
	2023		2022
Revenues (1)
Accident and health	$	446	$	494
Traditional life	50		44
Total	$	496	$	538
Interest expense (2)
Accident and health	$	22	$	13
Traditional life	7		7
Total	$	29	$	20

(1) Total revenues reflects gross premiums used in the calculation for reserve for future policy benefits. Revenues included in Accident and health insurance premiums and contract charges on the Condensed Consolidated Statements of Operations reflect premium revenue recognized for traditional life insurance and long-duration and short-duration accident and health insurance contracts.

(2) Total interest expense presented as part of Accident, health and other policy benefits on the Condensed Consolidated Statements of Operations.

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts.

	As of June 30,
	2023				2022
($ in millions)	Undiscounted		Discounted		Undiscounted		Discounted
Accident and health
Expected future gross premiums	$	5,020	$	3,602	$	5,133	$	3,833
Expected future benefits and expenses	3,350		2,326		3,416		2,433
Traditional life
Expected future gross premiums	696		489		636		457
Expected future benefits and expenses	1,008		539		956		561

Key assumptions used in calculating the reserve for future policy benefits
	As of June 30,
	Accident and health				Traditional life
	2023		2022		2023		2022
Weighted-average duration (in years)	3.9		4.0		14.0		13.0
Weighted-average interest rates
Interest accretion rate (discount rate at contract issuance)	5.08	%	5.46	%	5.46	%	5.67	%
Current discount rate (upper-medium grade fixed income yield)	4.79		3.66		5.14		4.55

Schedule of actual and expected experience for mortality, morbidity and lapses

The following table summarizes the ratio of actual to expected lapses used in the determination of the reserve for future policy benefits.

	As of June 30,
	Accident and health				Traditional life
	2023		2022		2023		2022
Actual to expected lapses	102	%	104	%	93	%	91	%

Schedule of contract holder funds activity

Contractholder funds activity
	Six months ended June 30,
($ in millions)	2023			2022
Beginning balance	$	879		$	890
Deposits	66			69
Interest credited	17			17
Benefits	(6)			(11)
Surrenders and partial withdrawals	(10)			(11)
Contract charges	(60)			(58)
Other adjustments	(5)			(4)
Ending balance	$	881		$	892
Components of contractholder funds
Interest-sensitive life insurance	$	833		$	839
Fixed annuities	48			53
Total	$	881		$	892
Weighted-average crediting rate	4.27		%	4.28		%
Net amount at risk (1)	$	11,640		$	11,934
Cash surrender value	$	725		$	727

(1)Guaranteed benefit amounts in excess of the current account balances.

Schedule of account values by comparison of current crediting rate to guaranteed minimum crediting rate

Account values: comparison of current crediting rate to guaranteed minimum crediting rate (1)
($ in millions) Range of guaranteed minimum crediting rates	At guaranteed minimum		1-50 basis points above		Total
June 30, 2023
Less than 3.00%	$	—	$	—	$	—
3.00% - 3.49%	—		23		23
3.50% - 3.99%	11		—		11
4.00% - 4.49%	433		—		433
4.50% - 4.99%	265		—		265
5.00% or greater	69		—		69
Non-account balances (2)					80
Total	$	778	$	23	$	881
June 30, 2022
Less than 3.00%	$	—	$	—	$	—
3.00% - 3.49%	—		10		10
3.50% - 3.99%	12		—		12
4.00% - 4.49%	437		—		437
4.50% - 4.99%	270		—		270
5.00% or greater	71		—		71
Non-account balances (2)					92
Total	$	790	$	10	$	892

(1)Difference, in basis points, between rates being credited to contractholders and the respective guaranteed minimum crediting rates.

(2)Non-account balances include unearned revenue and amounts related to policies where a claim is either in the course of settlement or incurred but not reported. A claim on a life insurance policy results in the accrual of interest at a rate and over a period of time that is specified by state insurance regulations.