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Insurance
12 Months Ended
Dec. 31, 2022
Insurance [Abstract]  
Insurance 4. Insurance
Insurance Liabilities
Insurance liabilities are comprised of future policy benefits, policyholder account balances and other policy-related balances. Information regarding insurance liabilities by segment, as well as Corporate & Other, was as follows at:
December 31,
20222021
(In millions)
U.S.
$171,693 $162,999 
Asia
125,523 125,839 
Latin America
17,674 15,564 
EMEA
10,635 13,031 
MetLife Holdings
100,407 102,291 
Corporate & Other
1,029 1,221 
Total
$426,961 $420,945 
Future policy benefits are measured as follows:
Product Type:Measurement Assumptions:
Participating life
Aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the non-forfeiture interest rate, ranging from 3% to 7% for U.S. businesses and less than 1% to 10% for non-U.S. businesses and mortality rates guaranteed in calculating the cash surrender values described in such contracts); and (ii) the liability for terminal dividends for U.S. businesses.
Nonparticipating life
Aggregate of the present value of future expected benefit payments and related expenses less the present value of future expected net premiums. Assumptions as to mortality and persistency are based upon the Company’s experience when the basis of the liability is established. Interest rate assumptions for the aggregate future policy benefit liabilities range from 2% to 11% for U.S. businesses and less than 1% to 10% for non-U.S. businesses.
Individual and group
traditional fixed annuities
after annuitization
Present value of future expected payments. Interest rate assumptions used in establishing such liabilities range from 1% to 11% for U.S. businesses and less than 1% to 9% for non-U.S. businesses.
Non-medical health
insurance
The net level premium method and assumptions as to future morbidity, withdrawals and interest, which provide a margin for adverse deviation. Interest rate assumptions used in establishing such liabilities range from 1% to 7% (primarily related to U.S. businesses).
Disabled lives
Present value of benefits method and experience assumptions as to claim terminations, expenses and interest. Interest rate assumptions used in establishing such liabilities range from 2% to 8% for U.S. businesses and less than 1% to 9% for non-U.S. businesses.
Participating business represented 2% and 3% of the Company’s life insurance in-force at December 31, 2022 and 2021, respectively. Participating policies represented 11%, 12% and 14% of gross traditional life insurance premiums for the years ended December 31, 2022, 2021 and 2020, respectively.
Policyholder account balances are equal to: (i) policy account values, which consist of an accumulation of gross premium payments and investment performance; (ii) credited interest, ranging from less than 1% to 8% for U.S. businesses and less than 1% to 12% for non-U.S. businesses, less expenses, mortality charges and withdrawals; and (iii) fair value adjustments relating to business combinations.
Guarantees
The Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum benefits. GMABs, the non-life contingent portion of GMWBs and certain non-life contingent portions of GMIBs are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 9. Guarantees accounted for as insurance liabilities include:
Guarantee:
Measurement Assumptions:
GMDBs
A return of purchase payment upon death even if the account value is reduced to zero.
Present value of expected death benefits in excess of the projected account balance recognizing the excess ratably over the accumulation period based on the present value of total expected assessments.
An enhanced death benefit may be available for an additional fee.
Assumptions are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk.
Investment performance and volatility assumptions are consistent with the historical experience of the appropriate underlying equity index, such as the S&P 500 Index.
Benefit assumptions are based on the average benefits payable over a range of scenarios.
GMIBs
After a specified period of time determined at the time of issuance of the variable annuity contract, a minimum accumulation of purchase payments, even if the account value is reduced to zero, that can be annuitized to receive a monthly income stream that is not less than a specified amount.
Present value of expected income benefits in excess of the projected account balance at any future date of annuitization and recognizing the excess ratably over the accumulation period based on present value of total expected assessments.
Certain contracts also provide for a guaranteed lump sum return of purchase premium in lieu of the annuitization benefit.
Assumptions are consistent with those used for estimating GMDB liabilities.
Calculation incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contractholder.
GMWBs
A return of purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that cumulative withdrawals in a contract year do not exceed a certain limit.
Expected value of the life contingent payments and expected assessments using assumptions consistent with those used for estimating the GMDB liabilities.
Certain contracts include guaranteed withdrawals that are life contingent.
The Company also issues other annuity contracts that apply a lower rate on funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize. These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Certain other annuity contracts contain guaranteed annuitization benefits that may be above what would be provided by the current account value of the contract. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit.
Information regarding the liabilities for guarantees (excluding base policy liabilities and embedded derivatives) relating to annuity and universal and variable life contracts was as follows:
Annuity Contracts
Universal and Variable
Life Contracts
GMDBs and
GMWBs
GMIBs
Secondary
Guarantees
Paid-Up
Guarantees
Total
(In millions)
Direct and Assumed:
Balance at January 1, 2020$465 $894 $3,762 $427 $5,548 
Incurred guaranteed benefits (1)195 240 602 26 1,063 
Paid guaranteed benefits(21)(5)(99)(45)(170)
Balance at December 31, 2020639 1,129 4,265 408 6,441 
Incurred guaranteed benefits (1)133 87 (37)43 226 
Paid guaranteed benefits(29)(7)(102)(47)(185)
Reclassified to liabilities held-for-sale (2)— (32)— — (32)
Balance at December 31, 2021743 1,177 4,126 404 6,450 
Incurred guaranteed benefits (1)247 (269)(261)104 (179)
Paid guaranteed benefits(39)(14)(120)(44)(217)
Balance at December 31, 2022$951 $894 $3,745 $464 $6,054 
Ceded:
Balance at January 1, 2020$— $10 $349 $281 $640 
Incurred guaranteed benefits(11)(3)96 43 125 
Paid guaranteed benefits— (18)(32)(41)
Balance at December 31, 2020(2)427 292 724 
Incurred guaranteed benefits(6)57 30 83 
Paid guaranteed benefits— (33)(34)(59)
Reclassified to liabilities held-for-sale (2)— — — — — 
Balance at December 31, 2021— 451 288 748 
Incurred guaranteed benefits(8)(1)29 33 53 
Paid guaranteed benefits— (24)(32)(48)
Balance at December 31, 2022$— $$456 $289 $753 
Net:
Balance at January 1, 2020$465 $884 $3,413 $146 $4,908 
Incurred guaranteed benefits206 243 506 (17)938 
Paid guaranteed benefits(30)(5)(81)(13)(129)
Balance at December 31, 2020641 1,122 3,838 116 5,717 
Incurred guaranteed benefits139 85 (94)13 143 
Paid guaranteed benefits(37)(7)(69)(13)(126)
Reclassified to liabilities held-for-sale (2)— (32)— — (32)
Balance at December 31, 2021743 1,168 3,675 116 5,702 
Incurred guaranteed benefits255 (268)(290)71 (232)
Paid guaranteed benefits(47)(14)(96)(12)(169)
Balance at December 31, 2022$951 $886 $3,289 $175 $5,301 
__________________
(1)Secondary guarantees include the effects of foreign currency translation of ($268) million, ($260) million and $125 million at December 31, 2022, 2021 and 2020, respectively.
(2)See Note 3 for information on the Company’s business dispositions.
Information regarding the Company’s guarantee exposure, which includes direct and assumed business, but excludes offsets from hedging or ceded reinsurance, if any, was as follows at:
December 31,
20222021
In the
Event of Death
At
Annuitization
In the
Event of Death
At
Annuitization
(Dollars in millions)
Annuity Contracts:
Variable Annuity Guarantees:
Total account value (1), (2), (3)
$46,345 $16,953 $62,281 $23,121 
Separate account value (1)
$30,066 $15,584 $42,043 $21,508 
Net amount at risk (2)
$5,338 (4)$433 (5)$1,490 (4)$500 (5)
Average attained age of contractholders68 years68 years68 years66 years
Other Annuity Guarantees:
Total account value (1), (3)
N/A$4,101 N/A$5,002 
Net amount at risk
N/A$188 (6)N/A$196 (6)
Average attained age of contractholdersN/A57 yearsN/A56 years
December 31,
20222021
Secondary
Guarantees
Paid-Up
Guarantees
Secondary
Guarantees
Paid-Up
Guarantees
(Dollars in millions)
Universal and Variable Life Contracts:
Total account value (1), (3)
$11,948 $2,570 $13,678 $2,694 
Net amount at risk (7)
$80,623 $11,824 $78,762 $12,657 
Average attained age of policyholders55 years67 years55 years66 years
__________________
(1)The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.
(2)Includes amounts, which are not reported on the consolidated balance sheets, from assumed variable annuity guarantees from the Company’s former operating joint venture in Japan.
(3)Includes the contractholders’ investments in the general account and separate account, if applicable.
(4)Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.
(5)Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contractholders have achieved.
(6)Defined as either the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date or the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. These amounts represent the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date.
(7)Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.
Guarantees — Separate Accounts
Account balances of contracts with guarantees were invested in separate account asset classes as follows at:
December 31,
20222021
(In millions)
Fund Groupings:
Equity
$20,875 $29,346 
Balanced
12,657 17,393 
Bond
4,036 5,041 
Money Market
305 218 
Total
$37,873 $51,998 
Obligations Under Funding Agreements
The Company issues fixed and floating rate funding agreements, which are denominated in either U.S. dollars or foreign currencies, to certain unconsolidated special purpose entities that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. For the years ended December 31, 2022, 2021 and 2020, the Company issued $48.5 billion, $40.8 billion and $40.4 billion, respectively, and repaid $47.4 billion, $41.2 billion and $36.7 billion, respectively, of such funding agreements. At December 31, 2022 and 2021, liabilities for funding agreements outstanding, which are included in policyholder account balances, were $40.7 billion and $39.5 billion, respectively.
Certain of the Company’s subsidiaries are members of FHLBNY. Holdings of common stock of FHLBNY, included in other invested assets, were $729 million and $769 million at December 31, 2022 and 2021, respectively.
Certain subsidiaries have also entered into funding agreements with FHLBNY and a subsidiary of the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the U.S. (“Farmer Mac”). The liability for such funding agreements is included in policyholder account balances. Information related to such funding agreements was as follows at:
LiabilityCollateral
December 31,
2022202120222021
(In millions)
FHLBNY (1)$14,940 $15,750 $17,857 (2)$17,981 (2)
Farmer Mac (3)$2,050 $2,050 $2,148 $2,159 
__________________
(1)Represents funding agreements issued to FHLBNY in exchange for cash and for which it has been granted a lien on certain assets, some of which are in the custody of FHLBNY, including residential mortgage-backed securities (“RMBS”), to collateralize obligations under such funding agreements. The applicable subsidiary of the Company is permitted to withdraw any portion of the collateral in the custody of FHLBNY as long as there is no event of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by such subsidiary, FHLBNY’s recovery on the collateral is limited to the amount of such subsidiary’s liability to FHLBNY.
(2)Advances are collateralized primarily by mortgage-backed securities presented at estimated fair value. The remaining collateral is mortgage loans presented at carrying value.
(3)Represents funding agreements issued to a subsidiary of Farmer Mac. The obligations under these funding agreements are secured by a pledge of certain eligible agricultural mortgage loans and may, under certain circumstances, be secured by other qualified collateral. The amount of collateral presented is at carrying value.
Liabilities for Unpaid Claims and Claim Expenses The following is information about incurred and paid claims development by segment at December 31, 2022. Such amounts are presented net of reinsurance, and are not discounted. The tables present claims development and cumulative claim payments by incurral year. The development tables are only presented for significant short-duration product liabilities within each segment. In order to eliminate potential fluctuations related to foreign exchange rates, liabilities and payments denominated in a foreign currency have been translated using the 2022 year end spot rates for all periods presented. The information about incurred and paid claims development prior to 2022 is presented as supplementary information.
U.S.
Group Life - Term
Incurred Claims and Allocated Claim Adjustment Expense, Net of ReinsuranceAt December 31, 2022
Years Ended December 31,Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(Dollars in millions)
2013$6,637 $6,713 $6,719 $6,720 $6,730 $6,720 $6,723 $6,724 $6,726 $6,726 $213,283 
20146,986 6,919 6,913 6,910 6,914 6,919 6,920 6,918 6,920 216,148 
20157,040 7,015 7,014 7,021 7,024 7,025 7,026 7,026 218,782 
20167,125 7,085 7,095 7,104 7,105 7,104 7,107 220,671 
20177,432 7,418 7,425 7,427 7,428 7,428 263,546 
20187,757 7,655 7,646 7,650 7,651 251,446 
20197,935 7,900 7,907 7,917 11 252,015 
20208,913 9,367 9,389 23 297,022 
202110,555 10,795 64 327,725 
20229,640 1,129 276,784 
Total80,599 
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance(77,480)
All outstanding liabilities for incurral years prior to 2013, net of reinsurance22 
Total unpaid claims and claim adjustment expenses, net of reinsurance$3,141 
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(In millions)
2013$5,216$6,614$6,664$6,678$6,711 $6,715 $6,720 $6,721 $6,723 $6,724 
20145,4286,8096,8586,869 6,902 6,912 6,915 6,916 6,917 
20155,5246,9136,958 6,974 7,008 7,018 7,022 7,024 
20165,5826,980 7,034 7,053 7,086 7,096 7,100 
20175,761 7,292 7,355 7,374 7,400 7,414 
20186,008 7,521 7,578 7,595 7,629 
20196,178 7,756 7,820 7,853 
20206,862 9,103 9,242 
20218,008 10,476 
20227,101 
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance$77,480 
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2022:
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years12345678910
Group Life - Term76.8%20.8%0.8%0.3%0.5%0.1%0.1%—%—%—%
Group Long-Term Disability
Incurred Claims and Allocated Claim Adjustment Expense, Net of ReinsuranceAt December 31, 2022
Years Ended December 31,Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(Dollars in millions)
2013$1,008 $1,027 $1,032 $1,049 $1,070 $1,069 $1,044 $1,032 $1,025 $1,027 $— 21,139 
20141,076 1,077 1,079 1,101 1,109 1,098 1,097 1,081 1,078 — 22,853 
20151,082 1,105 1,093 1,100 1,087 1,081 1,067 1,086 — 21,216 
20161,131 1,139 1,159 1,162 1,139 1,124 1,123 — 17,973 
20171,244 1,202 1,203 1,195 1,165 1,181 — 16,328 
20181,240 1,175 1,163 1,147 1,170 — 15,214 
20191,277 1,212 1,169 1,177 — 15,392 
20201,253 1,223 1,155 15,719 
20211,552 1,608 43 19,189 
20221,695 760 9,970 
Total12,300 
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance
(6,251)
All outstanding liabilities for incurral years prior to 2013, net of reinsurance1,496 
Total unpaid claims and claim adjustment expenses, net of reinsurance
$7,545 
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(In millions)
2013$43 $234 $382 $475 $551 $622 $676 $722 $764 $798 
201451 266 428 526 609 677 732 778 818 
201550 264 427 524 601 665 718 764 
201649 267 433 548 628 696 750 
201756 290 476 579 655 719 
201854 314 497 594 666 
201957 342 522 620 
202059 355 535 
202195 505 
202276 
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance$6,251 
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2022:
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years12345678910
Group Long-Term Disability4.8%21.7%15.2%9.0%7.0%6.1%5.0%4.3%3.9%3.3%
Significant Methodologies and Assumptions
Group Life - Term and Group Long-Term Disability incurred but not paid (“IBNP”) liabilities are developed using a combination of loss ratio and development methods. Claims in the course of settlement are then subtracted from the IBNP liabilities, resulting in the IBNR liabilities. The loss ratio method is used in the period in which the claims are neither sufficient nor credible. In developing the loss ratios, any material rate increases that could change the underlying premium without affecting the estimated incurred losses are taken into account. For periods where sufficient and credible claim data exists, the development method is used based on the claim triangles which categorize claims according to both the period in which they were incurred and the period in which they were paid, adjudicated or reported. The end result is a triangle of known data that is used to develop known completion ratios and factors. Claims paid are then subtracted from the estimated ultimate incurred claims to calculate the IBNP liability.
An expense liability is held for the future expenses associated with the payment of incurred but not yet paid claims (IBNR and pending). This is expressed as a percentage of the underlying claims liability and is based on past experience and the anticipated future expense structure.
For Group Life - Term, first year incurred claims and allocated loss adjustment expenses decreased in 2022 compared to the 2021 incurral year due to the decline in COVID-19 claims. For Group Long-Term Disability, first year incurred claims and allocated loss adjustment expenses increased in 2022 compared to 2021 incurral year due to the growth in the size of the business.
The assumptions used in calculating the unpaid claims and claim adjustment expenses for Group Life - Term and Group Long-Term Disability are updated annually to reflect emerging trends in claim experience.
Certain of our Group Life - Term customers have experience-rated contracts, whereby the group sponsor participates in the favorable and/or adverse claim experience, including favorable and/or adverse prior year development. Claim experience adjustments on these contracts are not reflected in the foregoing incurred and paid claim development tables, but are instead reflected as an increase (adverse experience) or decrease (favorable experience) to premiums on the consolidated statements of operations.
Liabilities for Group Life - Term unpaid claims and claim adjustment expenses are not discounted.
The liabilities for Group Long-Term Disability unpaid claims and claim adjustment expenses were $6.5 billion and $6.2 billion at December 31, 2022 and 2021, respectively. Using interest rates ranging from 3% to 8%, based on the incurral year, the total discount applied to these liabilities was $1.2 billion and $1.1 billion at December 31, 2022 and 2021, respectively. The amount of interest accretion recognized was $461 million, $518 million and $452 million for the years ended December 31, 2022, 2021 and 2020, respectively. These amounts were reflected in policyholder benefits and claims.
For Group Life - Term, claims were based upon individual death claims. For Group Long-Term Disability, claim frequency was determined by the number of reported claims as identified by a unique claim number assigned to individual claimants. Claim counts initially include claims that do not ultimately result in a liability. These claims are omitted from the claim counts once it is determined that there is no liability.
The incurred and paid claims disclosed for the Group Life - Term product includes activity related to the product’s continued protection feature; however, the associated actuarial reserve for future benefit obligations under this feature is excluded from the liability for unpaid claims.
The Group Long-Term Disability IBNR, included in the development tables above, was developed using discounted cash flows, and is presented on a discounted basis.
Asia
Group Disability & Group Life
Incurred Claims and Allocated Claim Adjustment Expense, Net of ReinsuranceAt December 31, 2022
Years Ended December 31,Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(Dollars in millions)
2013$129 $130 $151 $146 $145 $153 $153 $156 $157 $155 $6,597 
2014257 241 222 222 233 229 230 230 224 6,865 
2015243 232 235 229 239 241 245 241 13 6,792 
2016203 206 195 208 210 215 216 19 4,707 
2017263 244 252 270 277 272 30 5,619 
2018321 293 305 315 309 56 5,982 
2019347 324 339 335 79 5,966 
2020385 359 331 127 5,030 
2021367 382 211 5,659 
2022487 399 3,461 
Total2,952 
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance(2,006)
All outstanding liabilities for incurral years prior to 2013, net of reinsurance11 
Total unpaid claims and claim adjustment expenses, net of reinsurance$957 
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(In millions)
2013$38 $86 $105 $118 $129 $142 $138 $146 $149 $150 
201460 125 156 175 197 198 208 213 216 
201571 134 167 180 204 218 225 229 
201657 117 134 167 181 190 197 
201777 138 183 224 240 242 
201884 155 209 243 252 
201993 170 221 257 
202085 153 203 
202177 171 
202289 
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance$2,006 
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2022:
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years
12345678910
Group Disability & Group Life
25.4%25.3%14.0%10.6%7.0%3.9%2.0%3.0%1.6%0.6%
Significant Methodologies and Assumptions
This business line consists of employer sponsored and industry sponsored Group Life and Group Disability risks.
For Group Life, the IBNR liability is determined by using the Bornhuetter-Ferguson Method, with factors derived by examining the experience of historical claims. A pending liability is also calculated for claims that have been reported but have not been paid. A claim eligibility ratio based on past experience is applied to the face amount of individual claims.
For Group Disability, the IBNR liability is calculated by applying a percentage to premiums in-force based on the expected delay as evidenced by the experience in the portfolio. The IBNR liability is then allocated back into different incurral years based on historical run-off patterns. As the benefit for this class of business is a regular series of payments, an additional reserve is required for the liability for ongoing benefit payments - claims in course of payment (“CICP”). The assumptions employed in the calculation of the CICP are adjusted for the Company’s own experience.
An expense liability is held for the future expenses associated with the payment of incurred but not yet paid claims. This is expressed as a percentage of the underlying claims liability and is based on past experience and the future expense structure.
The assumptions used in calculating the unpaid claims and claim adjustment expenses for Group Disability and Group Life are updated annually to reflect emerging trends in claim experience.
No additional premiums or return premiums have been accrued as a result of the prior year development.
The liabilities for unpaid claims and claim adjustment expenses were $1.3 billion and $1.2 billion at December 31, 2022 and 2021, respectively. These amounts were discounted using interest rates ranging from 1% to 7%, based on the incurral year. The total discount applied to these liabilities was $118 million and $73 million at December 31, 2022 and 2021, respectively. The amount of interest accretion recognized was $22 million for both the years ended December 31, 2022 and 2021, and $24 million for the year ended December 31, 2020. These amounts were reflected in policyholder benefits and claims.
The Company tracks claim frequency by the number of reported claims as identified by a unique claim number assigned to individual claimants. Claim counts include claims that do not ultimately result in a liability. A liability is only established for those claims that are expected to result in a liability, based on historical factors.
Latin America
Protection Life
Incurred Claims and Allocated Claim Adjustment Expense, Net of ReinsuranceAt December 31, 2022
Years Ended December 31,Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(Dollars in millions)
2013$152 $215 $221 $222 $221 $223 $224 $224 $224 $216 $— 30,204 
2014229 350 360 328 332 332 333 333 324 — 38,375 
2015300 431 401 406 406 407 401 391 — 44,496 
2016318 416 427 434 435 436 426 — 38,800 
2017327 319 319 318 318 308 — 30,819 
2018305 295 293 294 292 29,563 
2019329 301 304 301 32,017 
2020497 498 502 10 42,318 
2021632 550 34 51,077 
2022436 163 30,066 
Total3,746 
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance(3,347)
All outstanding liabilities for incurral years prior to 2013, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance
$405 
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(In millions)
2013$149 $208 $212 $213 $212 $214 $216 $217 $218 $210 
2014204 306 311 314 318 320 321 323 314 
2015244 345 366 373 379 382 383 373 
2016225 402 421 429 431 434 427 
2017194 291 307 310 314 305 
2018153 261 272 277 274 
2019171 260 280 278 
2020216 431 442 
2021326 456 
2022268 
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance$3,347 
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2022:
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years12345678910
Protection Life58.3%32.3%4.0%1.0%0.5%—%—%(0.5)%(1.1)%(4.0)%
Protection Health
Incurred Claims and Allocated Claim Adjustment Expense, Net of ReinsuranceAt December 31, 2022
Years Ended December 31,Total IBNR
Liabilities Plus
Expected
Development on
Reported Claims
Cumulative
Number of
Reported
Claims
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(Dollars in millions)
2013$227 $256 $258 $259 $256 $256 $256 $256 $256 $257 $— 104,402 
2014236 262 264 262 261 261 262 262 263 — 98,132 
2015203 230 232 231 230 231 231 231 — 87,596 
2016266 306 303 303 303 303 304 — 106,665 
2017385 358 359 358 358 358 — 121,591 
2018412 433 410 409 409 — 144,503 
2019137 179 173 172 132,150 
2020497 488 486 149,147 
2021638 641 13 167,881 
2022696 67 140,625 
Total3,817 
Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance(3,679)
All outstanding liabilities for incurral years prior to 2013, net of reinsurance
Total unpaid claims and claim adjustment expenses, net of reinsurance
$139 
Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance
Years Ended December 31,
(Unaudited)
Incurral Year2013201420152016201720182019202020212022
(In millions)
2013$227 $256 $258 $259 $256 $256 $256 $256 $256 $257 
2014234 260 263 259 259 259 259 259 260 
2015203 230 229 230 230 230 231 231 
2016250 299 302 302 303 303 304 
2017314 354 356 356 357 358 
2018352 401 404 405 407 
2019115 163 166 169 
2020420 475 480 
2021564 624 
2022589 
Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance$3,679 
Average Annual Percentage Payout
The following is supplementary information about average historical claims duration at December 31, 2022:
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years
12345678910
Protection Health
84.7%13.4%0.8%0.2%—%0.1%0.1%0.1%0.2%0.2%
Significant Methodologies and Assumptions
The Latin America segment establishes liabilities for unpaid losses, which are equal to the accumulation of unpaid reported claims, plus an estimate for claims IBNR.
In general terms, for both the Protection Life and Protection Health products, the methodology for IBNR is the Bornhuetter-Ferguson Method, with factors derived by examining the experience of historical claims. In the more recent incurral months, the credibility is higher on expected loss ratios and lower on claims calculated using the experience-derived factors. The credibility grows for the factors as incurral months become older.
For Protection Health products, claim duration can be very long due to the multiple incidences that may occur over time for a single claim. Depending on the characteristics of the product, the number of claims reported per year may or may not be based on the original claim occurrence date for each individual claim. For Protection Life products, claims are based upon individual death claims.
The assumptions used in calculating the unpaid claims and claim adjustment expenses for Protection Life and Protection Health are updated annually to reflect emerging trends in claim experience.
Certain of our Protection Life customers have experience-rated contracts, whereby the group sponsor participates in the favorable and/or adverse claim experience, including favorable and/or adverse prior year development. Claim experience adjustments on these contracts are not reflected in the foregoing incurred and paid claim development tables, but are instead reflected as an increase (adverse experience) or decrease (favorable experience) to premiums on the consolidated statements of operations.
Liabilities for unpaid claims and claim adjustment expenses were not discounted.
For Protection Life and Protection Health products, claim counts initially include claims that do not ultimately result in a liability. These claims are omitted from the claim counts once it is determined that there is no liability.
Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses
The reconciliation of the net incurred and paid claims development tables to the liability for unpaid claims and claims adjustment expenses on the consolidated balance sheet was as follows at:
December 31, 2022
(In millions)
Short-Duration:
Unpaid claims and allocated claims adjustment expenses, net of reinsurance:
U.S.:
Group Life - Term$3,141 
Group Long-Term Disability7,545 
Total$10,686 
Asia - Group Disability & Group Life957 
Latin America:
Protection Life405 
Protection Health139 
Total544 
Other insurance lines - all segments combined1,938 
Total unpaid claims and allocated claims adjustment expenses, net of reinsurance14,125 
Reinsurance recoverables on unpaid claims:
U.S.:
Group Life - Term
Group Long-Term Disability205 
Total213 
Asia - Group Disability & Group Life427 
Latin America:
Protection Life11 
Protection Health18 
Total29 
Other insurance lines - all segments combined 289 
Total reinsurance recoverable on unpaid claims958 
Total unpaid claims and allocated claims adjustment expense15,083 
Unallocated claims adjustment expenses
Discounting(1,326)
Liability for unpaid claims and claim adjustment liabilities - short-duration13,760 
Liability for unpaid claims and claim adjustment liabilities - all long-duration lines6,653 
Total liability for unpaid claims and claim adjustment expense (included in future policy benefits and other policy-related balances)
$20,413 
Rollforward of Claims and Claim Adjustment Expenses
Information regarding the liabilities for unpaid claims and claim adjustment expenses was as follows:
Years Ended December 31,
202220212020
(In millions)
Balance at January 1,$20,013 $18,591 $19,216 
Less: Reinsurance recoverables
3,121 2,417 2,377 
Net balance at January 1,16,892 16,174 16,839 
Incurred related to:
Current year
27,285 28,270 27,272 
Prior years (1)
766 934 192 
Total incurred
28,051 29,204 27,464 
Paid related to:
Current year
(20,051)(21,111)(20,230)
Prior years
(7,395)(7,256)(6,241)
Total paid
(27,446)(28,367)(26,471)
Reclassified to liabilities held-for-sale (2)— (55)(1,658)
Dispositions (2)— (64)— 
Net balance at December 31,17,497 16,892 16,174 
Add: Reinsurance recoverables
2,916 3,121 2,417 
Balance at December 31,$20,413 $20,013 $18,591 
__________________
(1)For the years ended December 31, 2022, 2021 and 2020, incurred claim activity and claim adjustment expenses associated with prior years increased due to events incurred in prior years but reported in the current year. The increases in both 2022 and 2021 incurred claim activity and claim adjustment expenses associated with prior years is primarily due to the impacts related to the COVID-19 pandemic, partially offset by additional premiums recorded for experience-rated contracts that are not reflected in the table above.
(2)See Note 3 for information on the Company’s business dispositions.
Separate AccountsSeparate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $108.9 billion and $134.4 billion at December 31, 2022 and 2021, respectively, for which the policyholder assumes all investment risk, and separate accounts for which the Company contractually guarantees either a minimum return or account value to the policyholder which totaled $37.1 billion and $45.5 billion at December 31, 2022 and 2021, respectively. The latter category consisted primarily of guaranteed interest contracts (“GICs”). The average interest rate credited on these contracts was 2.49% and 2.18% at December 31, 2022 and 2021, respectively.