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Future Policy Benefit Reserves
 12 Months Ended
Dec. 31, 2024
Insurance [Abstract]  
Future Policy Benefit Reserves Future Policy Benefits Reserves
Future policy benefits reserves are associated with the Company's run-off long-term care business, which is included in the Life & Group segment, and relate to policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported, as well as policyholders that are not yet receiving benefits. Future policy benefits reserves are comprised of the LFPB which is reflected as Insurance reserves: Future policy benefits on the Consolidated Balance Sheets.
The determination of Future policy benefits reserves requires management to make estimates and assumptions about expected policyholder experience over the remaining life of the policy. Since policies may be in force for several decades, these assumptions are subject to significant estimation risk. As a result of this variability, the Company’s future policy benefits reserves may be subject to material increases if actual experience develops adversely to the Company’s expectations.
Annually in the third quarter, actuarial analysis is performed on policyholder morbidity, persistency, premium rate increase and expense experience. This analysis, combined with judgement, informs the setting of updated cash flow assumptions used to estimate the LFPB. Actuarial analysis includes predictive modeling, actual to expected experience comparisons and trend analysis. Applicable industry research is also considered.
The cash flow assumption updates completed in the third quarter of 2024 resulted in a $15 million pretax increase in the LFPB. Included in the assumption updates was a favorable impact from outperformance on premium rate assumptions and unfavorable impact from higher cost of care inflation.
The cash flow assumption updates completed in the third quarter of 2023 resulted in an $8 million pretax increase in the LFPB. Persistency updates were unfavorable due to revisions to lapse rates. Morbidity updates were favorable driven by claim severity assumption updates, and there was a favorable impact from outperformance on premium rate assumptions.
The following table summarizes balances and changes in the LFPB.
(In millions)
202420232022
Present value of future net premiums
Balance, January 1$3,710 $3,991 $4,735 
     Effect of changes in discount rate(125)(74)(880)
Balance, January 1, at original locked in discount rate3,585 3,917 3,855 
     Effect of changes in cash flow assumptions (1)
111 28 352 
     Effect of actual variances from expected experience (1)
(41)(126)(49)
Adjusted balance, January 13,655 3,819 4,158 
Interest accrual183 202 216 
     Net premiums: earned during period(420)(436)(457)
Balance, end of period at original locked in discount rate3,418 3,585 3,917 
     Effect of changes in discount rate7 125 74 
Balance, December 31$3,425 $3,710 $3,991 
Present value of future benefits & expenses
Balance, January 1$17,669 $17,471 $22,745 
     Effect of changes in discount rate(578)(125)(5,942)
Balance, January 1, at original locked in discount rate17,091 17,346 16,803 
     Effect of changes in cash flow assumptions (1)
126 36 538 
     Effect of actual variances from expected experience (1)
69 (46)(21)
Adjusted balance, January 117,286 17,336 17,320 
Interest accrual924 962 979 
     Benefit & expense payments(1,187)(1,207)(953)
Balance, end of period at original locked in discount rate17,023 17,091 17,346 
     Effect of changes in discount rate(440)578 125 
Balance, December 31$16,583 $17,669 $17,471 
Net LFPB$13,158 $13,959 $13,480 
(1) As of December 31, 2024, 2023 and 2022 the re-measurement gain (loss) of $(125) million, $(88) million and $(214) million presented parenthetically on the Consolidated Statement of Operations is comprised of the effect of changes in cash flow assumptions and the effect of actual variances from expected experience.
The following table presents earned premiums and interest expense associated with the Company’s long-term care business recognized on the Consolidated Statement of Operations.
Years ended December 31
(In millions)
202420232022
Earned premiums$437 $451 $473 
Interest expense741 760 763 
The following table presents undiscounted expected future benefit and expense payments, and undiscounted expected future gross premiums.
As of December 31
(In millions)
20242023
Expected future benefit and expense payments$31,712 $32,851 
Expected future gross premiums5,183 5,414 
Discounted expected future gross premiums at the upper-medium grade fixed income instrument yield discount rate were $3,573 million and $3,824 million as of December 31, 2024 and 2023.
The weighted average effective duration of the LFPB calculated using the original locked in discount rate was 11 years as of December 31, 2024 and 2023.
The weighted average interest rates in the table below are calculated based on the rate used to discount all future cash flows.
As of December 31
20242023
Original locked in discount rate5.20 %5.22 %
Upper-medium grade fixed income instrument discount rate5.51 4.94 
For the years ended December 31, 2024 and 2023, immediate charges to net income resulting from adverse development in certain cohorts where the NPR exceeded 100% were $159 million and $164 million. For the years ended December 31, 2024 and 2023, the portion of losses recognized in a prior period due to NPR exceeding 100% for certain cohorts which, due to favorable development, was reversed through net income was $29 million and $42 million.