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INSURANCE LIABILITIES AND ANNUITY BENEFITS
 12 Months Ended
Dec. 31, 2023
Insurance [Abstract]  
INSURANCE LIABILITIES AND ANNUITY BENEFITS
NOTE 12. INSURANCE LIABILITIES AND ANNUITY BENEFITS. On January 1, 2023, we adopted Accounting Standards Update No. 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The new guidance for measuring the liability for future policy benefits and related reinsurance recoverable asset was adopted on a modified retrospective basis such that those balances were adjusted to conform to the new guidance at the January 1, 2021 transition date. Refer to the revised portions of our 2022 Form 10-K filed as Exhibit 99(a) with the Form 8-K on April 25, 2023 for more information.

Insurance liabilities and annuity benefits comprise substantially all obligations to annuitants and insureds in our run-off insurance operations. Our insurance operations (net of eliminations) generated revenues of $3,389 million, $2,957 million and $3,101 million, profit was $332 million, $205 million and $798 million and net earnings was $260 million, $159 million and $627 million for the years ended December 31, 2023, 2022 and 2021, respectively. These operations were primarily supported by investment securities of $37,592 million and $35,503 million, limited partnerships of $3,300 million and $2,506 million, and a diversified commercial mortgage loan portfolio substantially all collateralized by first liens on U.S. commercial real estate properties of $1,947 million and $1,975 million (net of allowance for credit losses of $48 million and $27 million), at December 31, 2023 and 2022, respectively. As of December 31, 2023, the commercial mortgage loan portfolio had one delinquent loan, no non-accrual loans and about one-third of the portfolio was held in the office sector which had a weighted average loan-to-value ratio of 68%, debt service coverage of 1.6, and no scheduled maturities through 2025. A summary of our insurance liabilities and annuity benefits is presented below:
December 31, 2023
Long-term careStructured settlement annuitiesLifeOther contractsTotal
Future policy benefit reserves
$26,832 $9,357 $1,117 $382 $37,689 
Investment contracts
— 793 — 742 1,535 
Other
— — 116285 400 
Total
$26,832 $10,150 $1,233 $1,409 $39,624 
December 31, 2022
Future policy benefit reserves
$24,256 $8,860 $1,040 $437 $34,593 
Investment contracts
— 860 — 848 1,708 
Other
— — 178 365 544 
Total
$24,256 $9,720 $1,218 $1,651 $36,845 
The following tables summarize balances of and changes in future policy benefits reserves.

20232022
Present value of expected net premiumsLong-term careStructured settlement annuitiesLifeLong-term careStructured settlement annuitiesLife
Balance, beginning of year$4,059 $— $4,828 $5,652 $— $6,622 
Beginning balance at locked-in discount rate3,958 — 5,210 4,451 — 5,443 
Effect of changes in cash flow assumptions(4)— (77)(9)— 91 
Effect of actual variances from expected experience(22)— (300)(289)— 6 
Adjusted beginning of year balance3,932 — 4,833 4,152 — 5,540 
Interest accrual 207 — 192 223 — 203 
Net premiums collected(394)— (315)(417)— (357)
Effect of foreign currency— — 64 — — (176)
Ending balance at locked-in discount rate3,745 — 4,773 3,958 — 5,210 
Effect of changes in discount rate assumptions318 — 30 101 — (381)
Balance, end of period$4,063 $— $4,803 $4,059 $— $4,828 
Present value of expected future policy benefits
Balance, beginning of year$28,316 $8,860 $5,868 $40,296 $12,328 $7,923 
Beginning balance at locked-in discount rate27,026 8,790 6,247 27,465 9,024 6,560 
Effect of changes in cash flow assumptions(45)(16)49 (413)(23)120 
Effect of actual variances from expected experience(13)19 (241)(320)(10)40 
Adjusted beginning of year balance26,968 8,793 6,055 26,732 8,990 6,720 
Interest accrual1,454 454 232 1,446 471 243 
Benefit payments(1,278)(687)(508)(1,152)(671)(531)
Effect of foreign currency— — 67 — — (185)
Ending balance at locked-in discount rate27,144 8,561 5,847 27,026 8,790 6,247 
Effect of changes in discount rate assumptions3,752 797 74 1,290 70 (380)
Balance, end of period$30,895 $9,357 $5,921 $28,316 $8,860 $5,868 
Net future policy benefit reserves$26,832 $9,357 $1,117 $24,256 $8,860 $1,040 
Less: Reinsurance recoverables, net of allowance for credit losses(166)— (33)(171)— (67)
Net future policy benefit reserves, after reinsurance recoverables$26,666 $9,357 $1,084 $24,085 $8,860 $973 

The Statement of Earnings (Loss) for the years ended December 31, 2023 and 2022 included gross premiums or assessments of $869 million and $935 million and interest accretion of $1,741 million and $1,735 million, respectively. For the years ended December 31, 2023 and 2022, gross premiums or assessments were substantially all related to long-term care of $496 million and $490 million and life of $363 million and $415 million, while interest accretion was substantially all related to long-term care of $1,247 million and $1,224 million and structured settlement annuities of $454 million and $471 million, respectively.

The following table provides the amount of undiscounted and discounted expected future gross premiums and expected future benefits and expenses for nonparticipating traditional contracts.
20232022
Undiscounted
Discounted(a)
UndiscountedDiscounted(a)
Long-term care:
Gross premiums
$7,379 $4,895 $7,985 $4,918 
Benefit payments63,126 30,895 65,217 28,316 
Structured settlement annuities:Benefit payments19,291 9,357 19,936 8,860 
Life: Gross premiums12,388 5,800 13,754 5,916 
Benefit payments11,202 5,921 12,020 5,868 
(a) Determined using the current discount rate as of December 31, 2023 and 2022.

The following table provides the weighted-average durations of and weighted-average interest rates for the liability for future policy benefits.
20232022
Long-term careStructured settlement annuitiesLifeLong-term careStructured settlement annuitiesLife
Duration (years)(a)
12.811.35.313.010.75.0
Interest accretion rate5.5%5.4%5.0%5.5%5.4%4.9%
Current discount rate4.9%4.8%4.7%5.6%5.5%5.4%
(a) Determined using the current discount rate as of December 31, 2023 and 2022.

Our 2023 annual review of future policy benefit reserves cash flow assumptions resulted in an immaterial charge to net earnings, indicating claims experience continues to develop consistently with our models. Our 2022 annual review resulted in changes to our assumptions principally related to higher near-term mortality related to COVID-19.

Included in Insurance losses, annuity benefits and other costs in our Statement of Earnings (Loss) for the years ended December 31, 2023 and 2022 are unfavorable and favorable pre-tax adjustments of $(155) million and $404 million, respectively, from updating the net premium ratio (i.e., the percentage of projected gross premiums required to cover expected policy benefits and related expenses) after updating for actual historical experience each quarter and updating of future cash flow assumptions. Included in these amounts for the years ended December 31, 2023 and 2022, are unfavorable adjustments of $335 million and $190 million, respectively, due to insufficient gross premiums (i.e., net premium ratio exceeded 100%), related to certain cohorts in our long-term care and life insurance portfolios. These adjustments are primarily attributable to increases in the net premium ratio as a result of updating future cash flow assumptions on cohorts where the beginning of the period net premium ratio exceeded 100%.

At December 31, 2023 and 2022, policyholders account balances totaled $1,725 million and $1,964 million, respectively. As our insurance operations are in run-off, changes in policyholder account balances for the years ended December 31, 2023 and 2022 are primarily attributed to surrenders, withdrawals, and benefit payments of $489 million and $441 million, partially offset by net additions from separate accounts and interest credited of $245 million and $271 million, respectively. Interest on policyholder account balances is generally credited at minimum guaranteed rates, primarily between 3.0% and 6.0% at both December 31, 2023 and 2022.

Reinsurance recoveries are recorded as a reduction of Insurance losses, annuity benefits and other costs in our Statement of Earnings (Loss) and amounted to $108 million, $321 million and $351 million for the years ended December 31, 2023, 2022 and 2021, respectively. Reinsurance recoverables, net of allowances of insignificant amounts, are included in non-current All other assets in our Statement of Financial Position, and amounted to $213 million and $255 million at December 31, 2023 and 2022, respectively.

Statutory accounting practices, not GAAP, determine the required statutory capital levels of our insurance legal entities. Statutory accounting practices are set forth by the National Association of Insurance Commissioners (NAIC) as well as state laws, regulation and general administrative rules and differ in certain respects from GAAP. We annually perform statutory asset adequacy testing, the results of which may affect the amount or timing of capital contributions from GE to the insurance legal entities.

Following approval of a statutory permitted accounting practice in 2018 by our primary regulator, the Kansas Insurance Department (KID), we provided a total of $13,215 million of capital contributions to our run-off insurance subsidiaries, including $1,815 million in the first quarter of 2023. In accordance with the terms of the 2018 statutory permitted accounting practice, we expect to provide the final capital contribution of up to $1,820 million in the first quarter of 2024, pending completion of our December 31, 2023 statutory reporting process, which includes asset adequacy testing, subject to ongoing monitoring by KID. GE is a party to capital maintenance agreements with its run-off insurance subsidiaries under which GE is required to maintain their statutory capital levels at 300% of their year-end Authorized Control Level risk-based capital requirements as defined from time to time by the NAIC.

See Notes 1, 3 and 9 for further information related to our run-off insurance operations.