Insurance and Contractholder Liabilities (Tables)

9 Months Ended

Sep. 30, 2020

Summary of Insurance and Contractholder Liabilities, Activity in the Unpaid Claims Liability and Liability Details for Unpaid Claims and Claim Expenses

As of September 30, 2020, December 31, 2019 and September 30, 2019, the Company’s insurance and contractholder liabilities were comprised of the following:


	September 30, 2020						December 31, 2019						September 30, 2019
(In millions)	Current		Non-current		Total		Current		Non-current		Total		Total
Contractholder deposit funds	$	624	$	7,038	$	7,662	$	600	$	7,139	$	7,739	$	7,789
Future policy benefits	597		9,505		10,102		553		9,281		9,834		9,808
Unpaid claims and claim expenses
U.S. Medical	3,182		18		3,200		2,875		17		2,892		3,061
Other segments	2,521		3,714		6,235		2,529		3,474		6,003		5,857
Unearned premiums	449		379		828		453		360		813		755
Total	7,373		20,654		28,027		7,010		20,271		27,281		27,270
Insurance and contractholder liabilities classified as liabilities of business held for sale(1)	(2,150)		(4,441)		(6,591)		(2,089)		(4,219)		(6,308)
Total insurance and contractholder liabilities	$	5,223	$	16,213	$	21,436	$	4,921	$	16,052	$	20,973	$	27,270

(1) Amounts classified as Liabilities of business held for sale primarily include $5.2 billion of unpaid claims, $759 million of contractholder deposit funds and $646 million of future policy benefits as of September 30, 2020 and $4.9 billion of unpaid claims, $717 million of contractholder deposit funds and $653 million of future policy benefits as of December 31, 2019.

Activity, net of intercompany transactions, in the unpaid claims liability for the U.S. Medical segment for the nine months ended September 30 was as follows:


	Nine Months Ended
(In millions)	September 30, 2020		September 30, 2019
Beginning balance	$	2,892	$	2,697
Less: Reinsurance and other amounts recoverable	303		264
Beginning balance, net	2,589		2,433
Incurred costs related to:
Current year	18,935		18,169
Prior years	(126)		(159)
Total incurred	18,809		18,010
Paid costs related to:
Current year	16,061		15,555
Prior years	2,363		2,160
Total paid	18,424		17,715
Ending balance, net	2,974		2,728
Add: Reinsurance and other amounts recoverable	226		333
Ending balance	$	3,200	$	3,061

The liability details for unpaid claims and claim expenses are as follows:


(In millions)	September 30, 2020 (1)		September 30, 2019
Group Disability and Other
Group Disability and Life	$	5,206	$	4,887
Other Operations	162		189
Total Group Disability and Other	5,368		5,076
International Markets	867		781
Unpaid claims and claim expenses Group Disability and Other and International Markets	$	6,235	$	5,857

(1) Includes unpaid claim amounts classified as Liabilities of business held for sale.

Activity in the Company’s liabilities for unpaid claims and claim expenses, excluding Other Operations, are presented in the following table. Liabilities associated with Other Operations are excluded because they pertain to obligations for long-duration insurance contracts or, if short-duration, the liabilities have been fully reinsured.


	Nine Months Ended
(In millions)	September 30, 2020(1)		September 30, 2019
Beginning balance	$	5,816	$	5,432
Less: Reinsurance	184		156
Beginning balance, net	5,632		5,276
Incurred claims related to:
Current year	4,277		4,205
Prior years:
Interest accretion	118		117
All other incurred	(12)		(59)
Total incurred	4,383		4,263
Paid claims related to:
Current year	2,435		2,422
Prior years	1,702		1,594
Total paid	4,137		4,016
Foreign currency	5		(26)
Ending balance, net	5,883		5,497
Add: Reinsurance	190		171
Ending balance	$	6,073	$	5,668

(1) Includes unpaid claims amounts classified as Liabilities of business held for sale.

Variances in Incurred Costs Related to Prior Years' Unpaid Claims and Claims Expenses

Variances in incurred costs related to prior years’ unpaid claims and claims expenses that resulted from the differences between actual experience and the Company’s key assumptions for the nine months ended September 30 were as follows:


	Nine Months Ended
(Dollars in millions)	September 30, 2020				September 30, 2019
	$		%(1)		$		%(2)
Actual completion factors	$	47	0.2	%	$	87	0.4	%
Medical cost trend	79		0.3		72		0.3

Total favorable variance	$	126	0.5	%	$	159	0.7	%

(1)Percentage of current year incurred costs as reported for the year ended December 31, 2019.

(2)Percentage of current year incurred costs as reported for the year ended December 31, 2018.