Insurance and Contractholder Liabilities

3 Months Ended

Mar. 31, 2022

Insurance and Contractholder Liabilities

Note 9 – Insurance and Contractholder Liabilities

A.Account Balances – Insurance and Contractholder Liabilities

The Company's insurance and contractholder liabilities were comprised of the following:


	March 31, 2022						December 31, 2021						March 31, 2021
(In millions)	Current		Non-current		Total		Current		Non-current		Total		Total
Contractholder deposit funds	$	368	$	6,641	$	7,009	$	352	$	6,702	$	7,054	$	7,161
Future policy benefits	237		8,896		9,133		312		9,194		9,506		9,306
Unearned premiums	619		416		1,035		558		418		976		950
Unpaid claims and claim expenses
Cigna Healthcare	4,459		32		4,491		4,159		102		4,261		4,027
Other Operations	503		231		734		548		180		728		723
Total	6,186		16,216		22,402		5,929		16,596		22,525
Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1)	(513)		(4,049)		(4,562)		(611)		(4,033)		(4,644)
Total insurance and contractholder liabilities	$	5,673	$	12,167	$	17,840	$	5,318	$	12,563	$	17,881	$	22,167

(1) Amounts classified as Liabilities of businesses held for sale primarily include $3.7 billion of Future policy benefits, $0.4 billion of Unpaid claims and $0.4 billion of Unearned premiums as of March 31, 2022 and $3.8 billion of Future policy benefits, $0.4 billion of Unpaid claims and $0.4 billion of Unearned premiums as of December 31, 2021.

Insurance and contractholder liabilities expected to be paid within one year are classified as current.

Unpaid Claims and Claim Expenses – Cigna HealthcareThis liability reflects estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities. This liability includes amounts from the International Health businesses now reported in Cigna Healthcare following our change in segment reporting in 2021. The prior year roll forward has been updated to reflect this segment change. The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $4.2 billion at March 31, 2022 and $3.7 billion at March 31, 2021.

Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment for the three months ended March 31 was as follows:


	Three Months Ended
(In millions)	March 31, 2022		March 31, 2021
Beginning balance	$	4,261	$	3,695
Less: Reinsurance and other amounts recoverable	261		237
Beginning balance, net	4,000		3,458

Incurred costs related to:
Current year	8,024		7,755
Prior years	(276)		(233)
Total incurred	7,748		7,522
Paid costs related to:
Current year	4,634		4,640
Prior years	2,822		2,555
Total paid	7,456		7,195

Ending balance, net	4,292		3,785
Add: Reinsurance and other amounts recoverable	199		242
Ending balance	$	4,491	$	4,027

Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims of certain business for which the Company administers the plan benefits without any right of offset. See Note 10 for additional information on reinsurance.

Variances in incurred costs related to prior years' unpaid claims and claim expenses that resulted from the differences between actual experience and the Company's key assumptions for the three months ended March 31 were as follows:


	Three Months Ended
(Dollars in millions)	March 31, 2022				March 31, 2021
	$		% (1)		$		% (2)
Actual completion factors	$	99	0.3	%	$	107	0.4	%
Medical cost trend	177		0.6		126		0.4

Total favorable variance	$	276	0.9	%	$	233	0.8	%

(1) Percentage of current year incurred costs as reported for the year ended December 31, 2021.

(2) Percentage of current year incurred costs as reported for the year ended December 31, 2020.

Favorable prior year development in both years reflects lower than expected utilization of medical services as compared to our assumptions.

Unpaid Claims and Claim Expenses – Other Operations

Liability balance details. The liability details for unpaid claims and claim expenses are as follows. The liability balance no longer includes the International Health businesses now reported in Cigna Healthcare following our change in segment reporting. The prior year roll forward has been updated to reflect the segment change.


(In millions)	March 31, 2022		March 31, 2021
Other Operations
International businesses to be sold and our interest in a joint venture in Turkey	$	436	$	442
Other Operations	298		281
Unpaid claims and claim expenses Other Operations	$	734	$	723

Activity in the unpaid claims and claim expenses for international businesses held for sale and our interest in a joint venture in Turkey is 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 largely reinsured.


	Three Months Ended
(In millions)	March 31, 2022 (1)		March 31, 2021

Beginning balance	$	447	$	452
Less: Reinsurance	46		45
Beginning balance, net	401		407
Incurred claims related to:
Current year	259		254
Prior years	(7)		—


Total incurred	252		254
Paid claims related to:
Current year	116		115
Prior years	135		134
Total paid	251		249

Foreign currency	(6)		(15)

Ending balance, net	396		397
Add: Reinsurance	40		45
Ending balance	$	436	$	442

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

Reinsurance in the table above reflects amounts due from reinsurers related to unpaid claims liabilities. See Note 10 for additional information on reinsurance.