Future Contract Benefits

6 Months Ended

Jun. 30, 2023

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12. Future Contract Benefits

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



	As of		As of
	June 30,		December 31,
	2023		2022
Traditional Life ⁽¹⁾	$	3,372	$	3,190
Payout Annuities ⁽¹⁾		2,047		2,003
Group Protection⁽²⁾		5,493		5,462
UL and Other ⁽³⁾		14,126		14,777
Other Operations ⁽⁴⁾		9,578		9,651
Other ⁽⁵⁾		3,239		3,219
Total future contract benefits	$	37,855	$	38,302

⁽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 ($5.5 billion and $5.4 billion as of June 30, 2023, and December 31, 2022, respectively) and Swiss Re ($2.1 billion and $2.2 billion as of June 30, 2023, and December 31, 2022, 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.

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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						As of or For the
	Six Months Ended						Year Ended
	June 30, 2023						December 31, 2022
	Traditional			Payout			Traditional			Payout
	Life			Annuities			Life			Annuities
Present Value of Expected Net Premiums
Balance as of beginning-of-year	$	5,896		$	-		$	6,610		$	-
Less: Effect of cumulative changes in discount
rate assumptions		(584	)		-			843			-
Beginning balance at original discount rate		6,480			-			5,767			-
Effect of changes in cash flow assumptions		-			-			(382	)		-
Effect of actual variances from expected
experience		(257	)		-			(21	)		-
Adjusted balance as of beginning-of-year		6,223			-			5,364			-
Issuances		330			-			1,655			-
Interest accrual		116			-			209			-
Net premiums collected		(395	)		-			(742	)		-
Flooring impact of LFPB		3			-			(6	)		-
Ending balance at original discount rate		6,277			-			6,480			-
Effect of cumulative changes in discount
rate assumptions		(329	)		-			(584	)		-
Balance as of end-of-period	$	5,948		$	-		$	5,896		$	-

Present Value of Expected LFPB
Balance as of beginning-of-year	$	9,086		$	2,003		$	10,353		$	2,511
Less: Effect of cumulative changes in discount
rate assumptions		(793	)		(263	)		1,460			266
Beginning balance at original discount rate ⁽¹⁾		9,879			2,266			8,893			2,245
Effect of changes in cash flow assumptions		-			-			(321	)		-
Effect of actual variances from expected
experience		(280	)		(2	)		(5	)		3
Adjusted balance as of beginning-of-year		9,599			2,264			8,567			2,248
Issuances		330			69			1,655			122
Interest accrual		179			43			326			84
Benefit payments		(309	)		(93	)		(669	)		(188	)
Ending balance at original discount rate ⁽¹⁾		9,799			2,283			9,879			2,266
Effect of cumulative changes in discount
rate assumptions		(479	)		(236	)		(793	)		(263	)
Balance as of end-of-period	$	9,320		$	2,047		$	9,086		$	2,003

Net balance as of end-of-period	$	3,372		$	2,047		$	3,190		$	2,003
Less: reinsurance recoverables		263			10			270			10
Net balance as of end-of-period, net of reinsurance	$	3,109		$	2,037		$	2,920		$	1,993

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

⁽¹⁾Includes DPL within Payout Annuities of $53 million, $38 million and $22 million as of June 30, 2023, December 31, 2022 and December 31, 2021, respectively.

For the six months ended June 30, 2023, Traditional Life and Payout Annuities did not have any significantly different actual experience compared to expected.

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, 2022, Traditional Life and Payout Annuities did not 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 June 30, 2023				As of December 31, 2022
	Undiscounted		Discounted		Undiscounted		Discounted
Traditional Life
Expected future gross premiums	$	13,309	$	9,050	$	13,166	$	8,887
Expected future benefit payments		13,280		9,320		13,026		9,086
Payout Annuities
Expected future gross premiums		-		-		-		-
Expected future benefit payments		3,500		2,047		3,471		2,003

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 Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Traditional Life
Gross premiums	$	297	$	283	$	592	$	556
Interest accretion		32		29		63		57
Payout Annuities
Gross premiums		44		21		71		43
Interest accretion		21		21		43		42

The following table summarizes the weighted-average interest rates:



	For the Six
	Months		For the Year
	Ended		Ended
	June 30,		December 31,
	2023		2022
Traditional Life
Interest accretion rate		5.0%		5.0%
Current discount rate		5.1%		5.1%
Payout Annuities
Interest accretion rate		3.9%		3.9%
Current discount rate		5.2%		5.3%

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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 Six			As of or For
	Months			the Year
	Ended			Ended
	June 30,			December 31,
	2023			2022
Balance as of beginning-of-year	$	5,462		$	5,936
Less: Effect of cumulative changes in discount
rate assumptions		(597	)		262
Beginning balance at original discount rate		6,059			5,674
Effect of changes in cash flow assumptions		-			15
Effect of actual variances from expected
experience		(220	)		(117	)
Adjusted beginning-of-year balance		5,839			5,572
New incidence		882			1,777
Interest		83			141
Benefit payments		(734	)		(1,431	)
Ending balance at original discount rate		6,070			6,059
Effect of cumulative changes in discount
rate assumptions		(577	)		(597	)
Balance as of end-of-period		5,493			5,462
Less: reinsurance recoverables		121			127
Balance as of end-of-period, net of reinsurance	$	5,372		$	5,335

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

For the six months ended June 30, 2023, we experienced more favorable reported incidence and claim terminations than assumed.

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, 2022, we experienced more favorable claim terminations than assumed.

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



	As of June 30, 2023				As of December 31, 2022
	Undiscounted		Discounted		Undiscounted		Discounted
Group Protection
Expected future benefit payments	$	7,111	$	6,070	$	7,063	$	6,059



	For the Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Group Protection
Gross premiums	$	885	$	841	$	1,770	$	1,671
Interest accretion		41		36		83		78

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The following table summarizes the weighted-average interest rates:

For the Six

Months

For the Year

Ended

June 30,

December 31,

2023

2022

Group Protection

Interest accretion rate

2.9%

2.8%

Current discount rate

5.1%

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 Six			As of or For
	Months			the Year
	Ended			Ended
	June 30,			December 31,
	2023			2022
Balance as of beginning-of-year	$	14,777		$	12,513
Less: Effect of cumulative changes in shadow
balance in AOCI		(905	)		1,113
Balance as of beginning-of-year, excluding
shadow balance in AOCI		15,682			11,400
Effect of changes in cash flow assumptions		-			3,108
Effect of actual variances from expected
experience		6			195
Adjusted beginning-of-year balance		15,688			14,703
Issuances		-			7
Interest accrual		377			626
Net assessments collected		190			974
Benefit payments		(360	)		(628	)
Balance as of end-of-period, excluding
shadow balance in AOCI		15,895			15,682
Effect of cumulative changes in shadow
balance in AOCI		(1,769	)		(905	)
Balance as of end-of-period		14,126			14,777
Less: reinsurance recoverables		2,041			1,975
Balance as of end-of-period, net of reinsurance	$	12,085		$	12,802

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

For the six months ended June 30, 2023, we did not have any significantly different actual experience compared to expected.

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 $1.7 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.

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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 Three				For the Six
	Months Ended				Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
UL and Other
Gross assessments	$	542	$	680	$	1,457	$	1,407
Interest accretion		190		137		377		270

The following table summarizes the weighted-average interest rates:


	For the Six
	Months		For the Year
	Ended		Ended
	June 30,		December 31,
	2023		2022
UL and Other
Interest accretion rate		4.9%		5.0%