Reserve for Life-Contingent Contract Benefits and Contractholder Funds (Tables)

12 Months Ended

Dec. 31, 2014

Reserve for Life-Contingent Contract Benefits and Contractholder Funds

Reserve for life-contingent contract benefits

As of December 31, the reserve for life-contingent contract benefits consists of the following:



($ in millions)	2014		2013
Immediate fixed annuities:
Structured settlement annuities	$	6,682	$	6,645
Other immediate fixed annuities	2,246		2,279
Traditional life insurance	2,303		2,329
Accident and health insurance	238		236
Other	97		100
Total reserve for life-contingent contract benefits	$	11,566	$	11,589

Key assumptions generally used in calculating the reserve for life-contingent contract benefits

The following table highlights the key assumptions generally used in calculating the reserve for life-contingent contract benefits.



Product	Mortality	Interest rate	Estimation method
Structured settlement annuities	U.S. population with projected calendar year improvements; mortality rates adjusted for each impaired life based on reduction in life expectancy	Interest rate assumptions range from 2.7% to 9.0%	Present value of contractually specified future benefits

Other immediate fixed annuities	1983 group annuity mortality table with internal modifications; 1983 individual annuity mortality table; Annuity 2000 mortality table with internal modifications; Annuity 2000 mortality table; 1983 individual annuity mortality table with internal modifications	Interest rate assumptions range from 0% to 11.5%	Present value of expected future benefits based on historical experience

Traditional life insurance	Actual company experience plus loading	Interest rate assumptions range from 2.5% to 11.3%	Net level premium reserve method using the Company’s withdrawal experience rates; includes reserves for unpaid claims

Accident and health insurance	Actual company experience plus loading	Interest rate assumptions range from 3.0% to 6.0%	Unearned premium; additional contract reserves for mortality risk and unpaid claims

Other: Variable annuity guaranteed minimum death benefits ⁽¹⁾	Annuity 2012 mortality table with internal modifications	Interest rate assumptions range from 2.6% to 5.8%	Projected benefit ratio applied to cumulative assessments

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⁽¹⁾	In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with The Prudential Insurance Company of America, a subsidiary of Prudential Financial, Inc. (collectively “Prudential”)

Contractholder funds

As of December 31, contractholder funds consist of the following:



($ in millions)	2014		2013
Interest-sensitive life insurance	$	7,193	$	7,104
Investment contracts:
Fixed annuities	14,284		16,172
Funding agreements backing medium-term notes	85		89
Other investment contracts	254		239
Total contractholder funds	$	21,816	$	23,604

Key contract provisions relating to contractholder funds

The following table highlights the key contract provisions relating to contractholder funds.



Product	Interest rate	Withdrawal/surrender charges
Interest-sensitive life insurance	Interest rates credited range from 0% to 9.0% for equity-indexed life (whose returns are indexed to the S&P 500) and 1.0% to 6.0% for all other products	Either a percentage of account balance or dollar amount grading off generally over 20 years

Fixed annuities	Interest rates credited range from 0% to 9.8% for immediate annuities; (8.0)% to 13.5% for equity-indexed annuities (whose returns are indexed to the S&P 500); and 0.1% to 6.0% for all other products	Either a declining or a level percentage charge generally over ten years or less. Additionally, approximately 21.5% of fixed annuities are subject to market value adjustment for discretionary withdrawals

Funding agreements backing medium-term notes	Interest rate credited is 2.49%	Not applicable

Other investment contracts: Guaranteed minimum income, accumulation and withdrawal benefits on variable ⁽¹⁾ and fixed annuities and secondary guarantees on interest-sensitive life insurance and fixed annuities	Interest rates used in establishing reserves range from 1.7% to 10.3%	Withdrawal and surrender charges are based on the terms of the related interest-sensitive life insurance or fixed annuity contract

____________


⁽¹⁾	In 2006, the Company disposed of substantially all of its variable annuity business through reinsurance agreements with Prudential.

Contractholder funds activity

Contractholder funds activity for the years ended December 31 is as follows:



($ in millions)	2014			2013			2012
Balance, beginning of year	$	23,604		$	38,634		$	41,669
Classified as held for sale, beginning balance	10,945			—			—
Total, including those classified as held for sale	34,549			38,634			41,669

Deposits	1,227			2,338			2,180
Interest credited	892			1,268			1,296
Benefits	(1,178		)	(1,521		)	(1,454		)
Surrenders and partial withdrawals	(2,253		)	(3,279		)	(3,969		)
Maturities of and interest payments on institutional products	(2		)	(1,799		)	(138		)
Contract charges	(798		)	(1,032		)	(995		)
Net transfers from separate accounts	7			12			11
Other adjustments	34			(72		)	34
Sold in LBL disposition	(10,662		)	—			—
Classified as held for sale, ending balance	—			(10,945		)	—
Balance, end of year	$	21,816		$	23,604		$	38,634

Variable annuity contracts with guarantees



($ in millions)	December 31,
	2014		2013
In the event of death
Separate account value	$	4,288	$	5,951
Net amount at risk ⁽¹⁾	$	581	$	636
Average attained age of contractholders	69 years		68 years
At annuitization (includes income benefit guarantees)
Separate account value	$	1,142	$	1,463
Net amount at risk ⁽²⁾	$	238	$	252
Weighted average waiting period until annuitization options available	None		None
For cumulative periodic withdrawals
Separate account value	$	382	$	488
Net amount at risk ⁽³⁾	$	8	$	9
Accumulation at specified dates
Separate account value	$	480	$	732
Net amount at risk ⁽⁴⁾	$	24	$	27
Weighted average waiting period until guarantee date	4 years		5 years

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⁽¹⁾	Defined as the estimated current guaranteed minimum death benefit in excess of the current account balance as of the balance sheet date.


⁽²⁾	Defined as the estimated present value of the guaranteed minimum annuity payments in excess of the current account balance.


⁽³⁾	Defined as the estimated current guaranteed minimum withdrawal balance (initial deposit) in excess of the current account balance as of the balance sheet date.


⁽⁴⁾	Defined as the estimated present value of the guaranteed minimum accumulation balance in excess of the current account balance.

Liabilities for guarantees

The following table summarizes the liabilities for guarantees.



($ in millions)	Liability for guarantees related to death benefits and interest-sensitive life products			Liability for guarantees related to income benefits			Liability for guarantees related to accumulation and withdrawal benefits			Total
Balance, December 31, 2013 ⁽¹⁾	$	377		$	113		$	65		$	555
Less reinsurance recoverables	100			99			56			255
Net balance as of December 31, 2013	277			14			9			300
Incurred guarantee benefits	34			—			9			43
Paid guarantee benefits	—			—			—			—
Sold in LBL disposition	(214		)	(10		)	(3		)	(227		)
Net change	(180		)	(10		)	6			(184		)
Net balance as of December 31, 2014	97			4			15			116
Plus reinsurance recoverables	98			91			45			234
Balance, December 31, 2014 ⁽²⁾	$	195		$	95		$	60		$	350

Balance, December 31, 2012 ⁽³⁾	$	309		$	235		$	129		$	673
Less reinsurance recoverables	113			220			125			458
Net balance as of December 31, 2012	196			15			4			215
Incurred guarantee benefits	83			(1		)	5			87
Paid guarantee benefits	(2		)	—			—			(2		)
Net change	81			(1		)	5			85
Net balance as of December 31, 2013	277			14			9			300
Plus reinsurance recoverables	100			99			56			255
Balance, December 31, 2013 ⁽¹⁾	$	377		$	113		$	65		$	555

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⁽¹⁾	Included in the total liability balance as of December 31, 2013 are reserves for variable annuity death benefits of $98 million, variable annuity income benefits of $99 million, variable annuity accumulation benefits of $43 million, variable annuity withdrawal benefits of $13 million and other guarantees of $302 million.


⁽²⁾	Included in the total liability balance as of December 31, 2014 are reserves for variable annuity death benefits of $96 million, variable annuity income benefits of $92 million, variable annuity accumulation benefits of $32 million, variable annuity withdrawal benefits of $13 million and other guarantees of $117 million.


⁽³⁾	Included in the total liability balance as of December 31, 2012 are reserves for variable annuity death benefits of $112 million, variable annuity income benefits of $221 million, variable annuity accumulation benefits of $86 million, variable annuity withdrawal benefits of $39 million and other guarantees of $215 million.

- Definition

The entire disclosure for the present values of future benefits to be paid to or on behalf of policyholders and related expenses less the present value of future net premiums using assumptions such as estimates of expected investment yields, mortality, morbidity, terminations and expenses, applicable at the time the insurance contracts are made and unpaid claim costs relating to insurance contracts including estimates of costs relating to incurred but not reported claims based on the estimated ultimate cost of settling the claims (including effects of inflation and other societal and economic factors), using past experience adjusted for current trends and any other factors that would modify past experience by element such as business segment, country and interest rate range.

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