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Future Policy Benefit Reserves
 9 Months Ended
Sep. 30, 2025
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 liability for future policyholder benefits (LFPB) which is reflected as Insurance reserves: Future policy benefits on the Condensed 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 actions and expense experience. This analysis, combined with judgment, 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 for the third quarter of 2025 resulted in a $7 million pretax increase in the LFPB. Included in the assumption updates were unfavorable incidence, claim closure and cost of care inflation impacts offset by favorable premium rate actions.
The cash flow assumption updates for the third quarter 2024 resulted in a $15 million pretax increase to the LFPB. Included in the assumption updates was a favorable impact from outperformance on premium rate assumptions and an unfavorable impact from higher cost of care inflation.
See Note A to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2024 for further information on the long-term care reserving process.
The following table summarizes balances and changes in the LFPB.
(In millions)
20252024
Present value of future net premiums
Balance, January 1$3,425 $3,710 
     Effect of changes in discount rate(7)(125)
Balance, January 1, at original locked in discount rate3,418 3,585 
     Effect of changes in cash flow assumptions (1)
114 111 
     Effect of actual variances from expected experience (1)
(2)(40)
Adjusted balance, January 13,530 3,656 
Interest accrual133 139 
     Net premiums: earned during period(306)(317)
Balance, end of period at original locked in discount rate3,357 3,478 
     Effect of changes in discount rate83 147 
Balance, September 30
$3,440 $3,625 
Present value of future benefits & expenses
Balance, January 1$16,583 $17,669 
     Effect of changes in discount rate440 (578)
Balance, January 1, at original locked in discount rate17,023 17,091 
     Effect of changes in cash flow assumptions (1)
121 126 
     Effect of actual variances from expected experience (1)
50 33 
Adjusted balance, January 117,194 17,250 
Interest accrual688 693 
     Benefit & expense payments(870)(883)
Balance, end of period at original locked in discount rate17,012 17,060 
     Effect of changes in discount rate(26)612 
Balance, September 30
$16,986 $17,672 
Net LFPB$13,546 $14,047 
(1) As of September 30, 2025 and 2024 the re-measurement gain (loss) of $(59) million and $(88) million presented parenthetically on the Condensed 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 accretion associated with the Company’s long-term care business recognized on the Condensed Consolidated Statement of Operations.
Periods ended September 30Three MonthsNine Months
(In millions)
2025202420252024
Earned premiums$106 $110 $318 $329 
Interest accretion185 185 555 554 
The following table presents undiscounted expected future benefit and expense payments, and undiscounted expected future gross premiums.
As of September 30
(In millions)
20252024
Expected future benefit and expense payments$31,582 $32,009 
Expected future gross premiums5,048 5,305 
Discounted expected future gross premiums at the upper-medium grade fixed income instrument yield discount rate were $3,580 million and $3,792 million as of September 30, 2025 and 2024.
The weighted average effective duration of the LFPB calculated using the original locked in discount rate was 11 years as of September 30, 2025 and 2024.
The weighted average interest rates in the table below are calculated based on the rate used to discount all future cash flows.
As of September 30
As of December 31
202520242024
Original locked in discount rate5.16 %5.20 %5.20 %
Upper-medium grade fixed income instrument discount rate5.24 4.90 5.51 
For the three and nine months ended September 30, 2025, immediate charges to net income resulting from adverse development in certain cohorts where the Net Premium Ratio (NPR) exceeded 100% were $65 million and $93 million. For the three and nine months ended September 30, 2024, immediate charges to net income resulting from adverse development in certain cohorts where the NPR exceeded 100% were $84 million and $128 million.
For the three and nine months ended September 30, 2025, 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 were $43 million and $54 million. For the three and nine months ended September 30, 2024, 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 were $20 million and $28 million.