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Insurance and Contractholder Liabilities
 3 Months Ended
Mar. 31, 2023
Insurance Loss Reserves [Abstract]  
Insurance and Contractholder Liabilities 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, 2023December 31, 2022March 31, 2022
(In millions)CurrentNon-currentTotalCurrentNon-currentTotalTotal
Unpaid claims and claim expenses
Cigna Healthcare
$4,880 $79 $4,959 $4,117 $59 $4,176 $4,491 
Other Operations97 175 272 107 177 284 744 
Future policy benefits
Cigna Healthcare
59 542 601 43 544 587 681 
Other Operations290 3,341 3,631 150 3,442 3,592 7,981 
Contractholder deposit funds
Cigna Healthcare
12 151 163 14 157 171 181 
Other Operations361 6,309 6,670 351 6,358 6,709 6,843 
Market risk benefits48 1,172 1,220 51 1,217 1,268 1,558 
Unearned premiums1,419 21 1,440 576 22 598 1,030 
Total23,509
Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1)
(4,562)
Total insurance and contractholder liabilities$7,166 $11,790 $18,956 $5,409 $11,976 $17,385 $18,947 
(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.
Insurance and contractholder liabilities expected to be paid within one year are classified as current. The Company adopted amended accounting guidance for long-duration insurance contracts on January 1, 2023, discussed further in Note 2 to the Consolidated Financial Statements, which resulted in restatement of prior period amounts. Additionally, see below updated accounting policies and incremental disclosures associated with future policy benefits (Note 9C), contractholder deposit funds (Note 9D), and market risk benefits (Note 9E).
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. The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $4.6 billion at March 31, 2023 and $4.2 billion at March 31, 2022.
Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment was as follows:
 Three Months Ended
(In millions)March 31, 2023March 31, 2022
Beginning balance$4,176 $4,261 
Less: Reinsurance and other amounts recoverable221 261 
Beginning balance, net3,955 4,000 
Incurred costs related to:
Current year9,041 8,024 
Prior years(144)(276)
Total incurred8,897 7,748 
Paid costs related to:
Current year5,316 4,634 
Prior years2,795 2,822 
Total paid8,111 7,456 
Ending balance, net4,741 4,292 
Add: Reinsurance and other amounts recoverable218 199 
Ending balance$4,959 $4,491 
Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims of certain business for which the Company administers the plan benefits without any right of offset. See Note 10 to the Consolidated Financial Statements for additional information on reinsurance.
Variances in incurred costs related to prior years' unpaid claims and claim expenses that resulted from the differences between actual experience and the Company's key assumptions were as follows:
Three Months Ended
March 31, 2023March 31, 2022
(Dollars in millions)$
% (1)
$
% (2)
Actual completion factors$1 — %$99 0.3 %
Medical cost trend143 0.5 177 0.6 
Total favorable variance$144 0.5 %$276 0.9 %
(1)Percentage of current year incurred costs as reported for the year ended December 31, 2022.
(2)Percentage of current year incurred costs as reported for the year ended December 31, 2021.

Favorable prior year development in both years reflects lower than expected utilization of medical services as compared to our assumptions.
Future Policy Benefits
Accounting Policy. Future policy benefits represent the present value of estimated future obligations, estimated using actuarial methods, for long-term insurance policies and annuity products currently in force, consisting primarily of reserves for annuity contracts, life insurance benefits, and certain supplemental health products that are guaranteed renewable beyond one year.
Contracts are grouped at a level no higher than issue year, based on the original contract issue date, and at lower levels of disaggregation within each issue year for certain businesses to reflect factors including product type, plan type and currency. Management estimates these obligations based on assumptions for premiums, interest rates, mortality or morbidity, future claim adjudication expenses and surrenders. Mortality, morbidity and surrender assumptions are based on the Company's own experience and published actuarial tables, and are updated at least annually, to the extent changes in circumstances require. Interest rate assumptions are based on market-level yields for low credit risk fixed income instruments ("upper-medium grade fixed-income instrument"). For interest accretion purposes, interest rates are fixed at the year of the cohort's inception, however for purposes of liability measurement, are updated to the current rate quarterly, with all changes in the interest rate from inception to current period reported through Accumulated other comprehensive loss. For contracts issued domestically, we use observable inputs from a published spot rate curve for terms up to 30 years and extrapolate for longer terms using a constant forward rate approach. For contracts issued by foreign operating entities with functional currencies other than the U.S. dollar, we use observable inputs to approximate a risk free rate and add a credit spread adjustment to align with a low credit risk fixed income instrument. For terms beyond the last observable risk free rates, which vary by international market, we extrapolate to the ultimate forward rate assuming a constant credit spread.
For the annuity business, the premium paying period is shorter than the benefit coverage period, and a deferred profit liability ("DPL") is reported in future policy benefits representing gross premium received in excess of net premiums. DPL is amortized based on expected future benefit payments.
Cigna Healthcare

The weighted average interest rates applied and duration for future policy benefits in the Cigna Healthcare segment, consisting primarily of supplemental health products including individual Medicare supplement, limited benefit health products and individual private medical insurance, were as follows:
As of
March 31, 2023March 31, 2022
Interest accretion rate 2.59 %2.64 %
Current discount rate 5.29 %4.90 %
Weighted average duration 8.05 years7.45 years

The net liability for future policy benefits for the segment's supplemental health products represents the present value of benefits expected to be paid to policyholders, net of the present value of expected net premiums, which is the portion of expected future gross premium expected to be collected from policyholders that is required to provide for all expected future benefits and expenses. The present values of expected net premiums and expected future policy benefits for the Cigna Healthcare segment are as follows:
Three Months Ended
(In millions)March 31, 2023March 31, 2022
Present value of expected net premiums
Beginning balance$8,557 $9,314 
Reversal of effect of beginning of period discount rate assumptions1,537 (367)
Effect of assumption changes and actual variances from expected experience— — 
Issuances and lapses 306 143 
Net premiums collected(326)(310)
Interest and other (1)
56 46 
Ending balance at original discount rate10,130 8,826 
Effect of end of period discount rate assumptions(1,312)(376)
Ending balance (2)
$8,818 $8,450 
Present value of expected policy benefits
Beginning balance$8,945 $9,794 
Reversal of effect of discount rate assumptions1,611 (379)
Effect of assumption changes and actual variances from expected experience— — 
Issuances and lapses 307 215 
Benefit payments(326)(385)
Interest and other (1)
58 52 
Ending balance at original discount rate10,595 9,297 
Effect of discount rate assumptions(1,378)(392)
Ending balance (3)
$9,217 $8,905 
Liability for future policy benefits $399 $455 
Other (4)
202 226 
Total liability for future policy benefits (5)
$601 $681 
(1)Includes the foreign exchange rate impact of translating from transactional and functional currency to United States dollar and the impact of flooring the liability at zero. The flooring impact is calculated at the cohort level after discounting the reserves at the current discount rate.
(2)As of March 31, 2023 and March 31, 2022, respectively, undiscounted expected future gross premiums were $17.6 billion and $13.5 billion. As of March 31, 2023 and March 31, 2022, respectively, discounted expected future gross premiums were $12.5 billion and $10.7 billion.
(3)As of March 31, 2023 and March 31, 2022, respectively, undiscounted expected future policy benefits were $12.8 billion and $11.2 billion.
(4)The liability for future policyholder benefits includes immaterial businesses shown as reconciling items above, most of which are in run-off.
(5)$154 million and $171 million of reinsurance recoverable asset reported in the Consolidated Balance Sheets as of March 31, 2023 and March 31, 2022, respectively, relate to the liability for future policy benefits.
Other Operations
The weighted average interest rates applied and duration for future policy benefits in Other Operations, consisting of annuity and life insurance products, were as follows:
As of
March 31, 2023March 31, 2022
Interest accretion rate 5.64 %5.64 %
Current discount rate 4.95 %3.59 %
Weighted average duration 11.7 years13.9 years

Obligations for annuities represent discounted periodic benefits to be paid to an individual or groups of individuals over their remaining lives. Other Operations' traditional insurance contracts, which are in run-off, have no premium remaining to be collected; therefore, future policy benefit reserves represent the present value of expected future policy benefits, discounted using the current discount rate and the remaining amortizable DPL.
Future policy benefits for Other Operations includes DPL of $392 million as of March 31, 2023 and $384 million as of March 31, 2022. Future policy benefits excluding DPL, were $3.2 billion as of both March 31, 2023 and December 31, 2022 and $3.9 billion and $4.3 billion as of March 31, 2022 and December 31, 2021, respectively. These balances exclude amounts classified as Liabilities of businesses held for sale of $3.7 billion as of March 31, 2022 and $3.8 billion as of December 31, 2021. The change in future policy benefits reserves year-to-date was primarily driven by changes in the current discount rate.
Undiscounted expected future policy benefits were $4.6 billion as of March 31, 2023 and $4.7 billion as of March 31, 2022. As of March 31, 2023 and March 31, 2022, $1.0 billion and $1.2 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.
Contractholder Deposit FundsAccounting Policy. Liabilities for contractholder deposit funds primarily include deposits received from customers for investment-related and universal life products and investment earnings on their fund balances in Other Operations. These liabilities are adjusted to reflect administrative charges and, for universal life fund balances, mortality charges. Interest credited on these funds is accrued ratably over the contract period. Contractholder deposit fund liabilities within Other Operations were $6.7 billion as of both March 31, 2023 and December 31, 2022 and $6.8 billion and $6.9 billion as of March 31, 2022 and December 31, 2021, respectively. Approximately 39% of the balance is reinsured externally. Activity in these liabilities is presented net of reinsurance in the Consolidated Statements of Cash Flows. The net year-to-date decrease in contractholder deposit fund liabilities generally relates to withdrawals and benefit payments from contractholder deposit funds, partially offset by deposits and interest credited to contractholder deposit funds.As of March 31, 2023, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not externally reinsured were 3.25%, $3.2 billion and $2.8 billion, respectively. The comparative amounts as of March 31, 2022 were 3.18%, $3.5 billion and $2.9 billion, respectively. As of both March 31, 2023 and March 31, 2022, more than 99% of the $4.1 billion liability not reinsured externally is for contracts with guaranteed interest rates of 3% - 4%, and approximately $1.2 billion represented contracts with policies at the guarantee. At both of these same period ends, $1.2 billion was 50-150 bps above the guarantee and the remaining $1.7 billion represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value. More than 90% of these contracts have actual cash values of at least 110% of the guaranteed cash value.Market Risk BenefitsLiabilities for market risk benefits consist of variable annuity reinsurance contracts (also referred to as GMDB and GMIB contracts) in Other Operations. These liabilities arise under annuities and riders to annuities written by ceding companies that guarantee the benefit received at death and, for a subset of policies, also provide contractholders the option, within 30 days of a policy anniversary after the appropriate waiting period, to elect minimum income payments. The Company's capital market risk exposure on variable annuity reinsurance contracts arises when the reinsured guaranteed minimum benefit exceeds the contractholder's account value in the related underlying mutual funds at the time the insurance benefit is payable under the respective contract. The Company receives and pays premium periodically based on the terms of the reinsurance agreements.Accounting Policy. Variable annuity reinsurance liabilities are measured as MRBs at fair value, net of nonperformance risk, with fluctuations in value gross of reinsurer nonperformance risk reported in benefits expense while fluctuations in the Company's own nonperformance risk (own credit risk) are reported in Accumulated other comprehensive loss. Nonperformance risk reflects risk that a party might default and therefore not fulfill its obligations (i.e. nonpayment risk). The nonperformance risk adjustment reflects a market participant's view of nonpayment risk by adding an additional spread to the discount rate in the calculation of both (a) the variable annuity reinsurance liabilities to be paid by the Company and (b) the variable annuity reinsurance assets to be paid by the reinsurers, after considering collateral. The Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy described in Note 12 to the Consolidated Financial Statements because assumptions related to future annuitant behavior are largely unobservable. As discussed further in Note 10 to the Consolidated Financial Statements, due to the reinsurance agreements covering these liabilities, the liabilities do not generally impact net income except for the change in nonperformance risk on the reinsurance recoverable, which is reported in benefits expense and does not offset the nonperformance risk valuation on the liability. Variable annuity liabilities are established using capital market assumptions and assumptions related to future annuitant behavior (including mortality, lapse and annuity election rates). Market risk benefits activity was as follows:
Three Months Ended
(Dollars in millions)March 31, 2023March 31, 2022
Balance, beginning of year$1,268 $1,824 
Balance, beginning of year, before the effect of nonperformance risk (own credit risk)1,379 1,949 
Changes due to expected run-off(6)(19)
Changes due to capital markets versus expected(41)(271)
Changes due to policyholder behavior versus expected6 (9)
Assumption changes(33)39 
Balance, end of year, before the effect of changes in nonperformance risk (own credit risk)1,305 1,689 
Nonperformance risk (own credit risk), end of period(85)(131)
Balance, end of period$1,220 $1,558 
Reinsured market risk benefit, end of period$1,301 $1,681 
The following table presents the net amount at risk and the average attained age of contractholders (weighted by exposure) for contracts assumed by the Company. The net amount at risk is the amount the Company would have to pay to contractholders if all deaths or annuitizations occurred as of the earliest possible date in accordance with the insurance contract. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded, as discussed further in Note 10 to the Consolidated Financial Statements.
(Dollars in millions, excludes impact of reinsurance ceded)March 31, 2023March 31, 2022
Net amount at risk$2,183 $1,892 
Average attained age of contractholders (weighted by exposure)75.4 years76.4 years