Future Contract Benefits

12 Months Ended

Dec. 31, 2022

13. Future Contract Benefits

The following table reconciles future contract benefits (in millions) to the Consolidated Balance Sheets:



	As of December 31,
	2022		2021
Traditional Life ⁽¹⁾	$	3,509	$	4,150
Payout Annuities ⁽¹⁾		2,004		2,512
Group Protection⁽²⁾		5,462		5,936
UL and Other ⁽³⁾		14,818		12,556
Other Operations ⁽⁴⁾		9,782		12,746
Other ⁽⁵⁾		3,251		3,525
Total future contract benefits	$	38,826	$	41,425

⁽¹⁾See “LFPB” below for further information.

⁽²⁾See “Liability for Future Claims” below for further information.

⁽³⁾See “Additional Liabilities for Other Insurance Benefits” below for further information.

⁽⁴⁾Represents future contract benefits reported in Other Operations primarily attributable to the indemnity reinsurance agreements with Protective ($5.4 billion and $6.9 billion as of December 31, 2022, and December 31, 2021, respectively) and Swiss Re ($2.3 billion and $3.1 billion as of December 31, 2022, and December 31, 2021, respectively) that are excluded from the following tables.

⁽⁵⁾Represents other miscellaneous reserves outside the scope of ASU 2018-12 that are excluded from the following tables.

LFPB

The following table summarizes the balances of and changes in the present values of expected net premiums and LFPB (in millions, except years):



	As of or For the Year Ended						As of or For the Year Ended
	December 31, 2022						December 31, 2021
	Traditional			Payout			Traditional			Payout
	Life			Annuities			Life			Annuities
Present Value of Expected Net Premiums
Balance as of beginning-of-year	$	6,858		$	-		$	6,086		$	-
Beginning balance of original discount rate		5,975			-			4,849			-
Effect of changes in cash flow assumptions		(484	)		-			(89	)		-
Effect of actual variances from expected
experience		50			-			277			-
Adjusted balance as of beginning-of-year		5,541			-			5,037			-
Issuances		1,656			-			1,379			-
Interest accrual		222			-			228			-
Net premiums collected		(765	)		-			(647	)		-
Flooring impact of LFPB		(9	)		-			(22	)		-
Ending balance at original discount rate		6,645			-			5,975			-
Effect of cumulative changes in discount
rate assumptions		(582	)		-			883			-
Balance as of end-of-year	$	6,063		$	-		$	6,858		$	-

Present Value of Expected LFPB
Balance as of beginning-of-year	$	11,008		$	2,512		$	10,512		$	2,668
Beginning balance of original discount rate ⁽¹⁾		9,447			2,246			8,332			2,253
Effect of changes in cash flow assumptions		(415	)		-			(95	)		-
Effect of actual variances from expected
experience		69			3			295			(3	)
Adjusted balance as of beginning-of-year		9,101			2,249			8,532			2,250
Issuances		1,655			122			1,379			96
Interest accrual		356			84			362			84
Benefit payments		(755	)		(188	)		(826	)		(184	)
Ending balance at original discount rate ⁽¹⁾		10,357			2,267			9,447			2,246
Effect of cumulative changes in discount
rate assumptions		(785	)		(263	)		1,561			266
Balance as of end-of-year	$	9,572		$	2,004		$	11,008		$	2,512

Net balance as of end-of-year	$	3,509		$	2,004		$	4,150		$	2,512
Less: reinsurance recoverables		532			3			688			3
Net balance as of end-of-year, net of reinsurance	$	2,977		$	2,001		$	3,462		$	2,509

Weighted-average duration of future policyholder
benefit liability (years)		10			9			11			11

⁽¹⁾Includes DPL within Payout Annuities of $38 million, $22 million and $5 million as of December 31, 2022, December 31, 2021 and January 1, 2021, respectively.

For the year ended December 31, 2022, Traditional Life had updates to the mortality and lapse assumptions resulting in lower projected premiums and benefits, and a corresponding increase in reserves. Payout Annuities did not have any significant assumption updates.

For the year ended December 31, 2021, Traditional Life and Payout Annuities did not have any significant assumption updates or have any significantly different actual experience compared to expected.

The following table summarizes the discounted and undiscounted expected future gross premiums and expected future benefit payments (in millions):



	As of December 31, 2022				As of December 31, 2021
	Undiscounted		Discounted		Undiscounted		Discounted
Traditional Life
Expected future gross premiums	$	13,945	$	9,475	$	14,658	$	11,624
Expected future benefit payments		13,640		9,572		13,025		11,008
Payout Annuities
Expected future gross premiums		-		-		-		-
Expected future benefit payments		3,472		2,004		3,467		2,512

The following table summarizes the gross premiums and interest accretion (in millions) recognized in insurance premiums and benefits, respectively, on the Consolidated Statements of Comprehensive Income (Loss):



	For the Years Ended
	December 31,
	2022		2021
Traditional Life
Gross premiums	$	1,211	$	1,103
Interest accretion		134		134
Payout Annuities
Gross premiums		133		95
Interest accretion		84		84

The following table summarizes the weighted-average interest rates:



	For the Years Ended
	December 31,
	2022		2021
Traditional Life
Interest accretion rate		5.1%		5.3%
Current discount rate		5.1%		2.3%
Payout Annuities
Interest accretion rate		3.9%		3.8%
Current discount rate		5.3%		2.7%

Liability for Future Claims

The following table summarizes the balances of and changes in liability for future claims (in millions, except years):



	Group Protection
	As of or For the Year Ended
	December 31,
	2022			2021
Balance as of beginning-of-year	$	5,936		$	5,939
Beginning balance of original discount rate		5,674			5,422
Effect of changes in cash flow assumptions		15			(31	)
Effect of actual variances from expected
experience		(117	)		(133	)
Adjusted beginning-of-year balance		5,572			5,258
New incidence		1,777			1,597
Interest		141			145
Benefit payments		(1,431	)		(1,326	)
Ending balance at original discount rate		6,059			5,674
Effect of cumulative changes in discount
rate assumptions		(597	)		262
Balance as of end-of-year		5,462			5,936
Less: reinsurance recoverables		127			150
Balance as of end-of-year, net of reinsurance	$	5,335		$	5,786

Weighted-average duration of liability for future
claims (years)		4			5

For the year ended December 31, 2022, we had an unfavorable impact from updates to the long-term disability incidence and severity assumptions, partially offset by favorable impacts from updates to the life waiver termination rate assumptions.

For the year ended December 31, 2021, we had a favorable impact from updates to long-term disability termination rate assumptions.

For the years ended December 31, 2022 and 2021, we experienced more favorable claim terminations than assumed.

The following table summarizes the discounted and undiscounted expected future benefit payments (in millions):



	As of December 31, 2022				As of December 31, 2021
	Undiscounted		Discounted		Undiscounted		Discounted
Group Protection
Expected future benefit payments	$	7,063	$	6,059	$	6,663	$	5,674



	For the Years Ended
	December 31,
	2022		2021
Group Protection
Gross premiums	$	3,393	$	3,145
Interest accretion		141		145

The following table summarizes the weighted-average interest rates:



	For the Years Ended
	December 31,
	2022		2021
Group Protection
Interest accretion rate		2.8%		3.0%
Current discount rate		5.1%		2.2%

Additional Liabilities for Other Insurance Benefits

The following table summarizes the balances of and changes in additional liabilities for other insurance benefits (in millions, except years):



	UL and Other
	As of or For the Year Ended
	December 31,
	2022			2021
Balance as of beginning-of-year	$	12,556		$	12,308
Balance as of beginning-of-year, excluding
shadow balance in AOCI		11,443			10,375
Effect of changes in cash flow assumptions		3,108			(115	)
Effect of actual variances from expected
experience		195			107
Adjusted beginning-of-year balance		14,746			10,367
Issuances		7			2
Interest accrual		626			498
Net assessments collected		972			956
Benefit payments		(628	)		(380	)
Balance as of end-of-year, excluding
shadow balance in AOCI		15,723			11,443
Balance as of end-of-year		14,818			12,556
Less: reinsurance recoverables		856			368
Balance as of end-of-year, net of reinsurance	$	13,962		$	12,188

Weighted-average duration of additional liabilities
for other insurance benefits (years)		17			18

For the year ended December 31, 2022, we had an unfavorable impact primarily from updates to policyholder lapse behavior assumptions related to UL products with secondary guarantees in the amount of $1.9 billion, net of reinsurance, after-tax, and to a lesser extent mortality and morbidity assumptions. We had unfavorable actual mortality experience compared to expected due to ongoing effects of the COVID-19 pandemic.

For the year ended December 31, 2021, we had a favorable impact from updates to investment strategy. We had unfavorable actual experience compared to expected driven by the one-time indirect impact of the updated DFEL amortization pattern due to the adoption of ASU 2018-12.

The following table summarizes the gross assessments and interest accretion (in millions) recognized in insurance premiums and benefits, respectively, on the Consolidated Statements of Comprehensive Income (Loss):


	For the Years Ended
	December 31,
	2022		2021
UL and Other
Gross assessments	$	2,818	$	3,150
Interest accretion		626		498

The following table summarizes the weighted-average interest rates:

For the Years Ended

December 31,

UL and Other

Interest accretion rate