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LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS
 9 Months Ended
Sep. 30, 2023
Insurance [Abstract]  
LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS LIABILITIES FOR FUTURE POLICYHOLDER BENEFITS
The following table reconciles the net liability for future policy benefits and liability of death benefits to the liability for future policy benefits in the consolidated balance sheets:
September 30, 2023December 31, 2022
(in millions)
Reconciliation
Term$1,258 $1,359 
Payout - Non-Legacy789 828 
Payout - Legacy3,192 2,689 
Group Pension - Benefit Reserve & DPL475 523 
Health1,437 1,560 
UL1,172 1,119 
Subtotal8,323 8,078 
  Whole Life Closed Block and Open Block products5,524 5,687 
Other (1)622 608 
Future policyholder benefits total14,469 14,373 
  Other policyholder funds and dividends payable1,460 1,562 
Total$15,929 $15,935 
______________
(1)Primarily consists of future policy benefits related to Assumed Life and Disability, Group Life Run off, Variable Interest Sensitive Life rider and Major Medical products.
The following table summarizes balances and changes in the liability for future policy benefits for nonparticipating traditional and limited pay contracts:
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2022
TermPayout - Non-LegacyPayout-LegacyGroup PensionHealthTermPayout-Non-LegacyPayout-LegacyGroup PensionHealth
(in millions)
Present Value of Expected Net Premiums
Balance, beginning of period$2,090 $— $— $— $(6)$2,472 $— $— $— $22 
Beginning balance at original discount rate
2,069 — — — (6)1,854 — — — 19 
Effect of changes in cash flow assumptions32 — — — (8)204 — — — (10)
Effect of actual variances from expected experience(13)— — — (5)37 — — — (12)
Adjusted beginning of period balance2,088 — — — (19)2,095 — — — (3)
Issuances49 — — — — 63 — — — — 
Interest accrual75 — — — (1)72 — — — — 
Net premiums collected(147)— — — 2 (143)— — — 1 
Ending Balance at original discount rate2,065 — — — (18)2,087 — — — (2)
Effect of changes in discount rate assumptions(82)— — — 1 (6)— — — — 
Balance, end of period$1,983 $— $— $— $(17)$2,081 $— $— $— $(2)
Present Value of Expected Future Policy Benefits
Balance, beginning of period$3,449 $828 $2,689 $523 $1,554 $4,274 $1,114 $2,547 $683 $2,092 
Beginning balance of original discount rate3,376 845 3,024 583 1,795 3,225 883 2,400 632 1,915 
Effect of changes in cash flow assumptions40 — — — (12)222 (2)(2)— (5)
Effect of actual variances from expected experience(15)— 1 — (5)40 — (2)— (10)
Adjusted beginning of period balance3,401 845 3,025 583 1,778 3,487 881 2,396 632 1,900 
Issuances53 38 733 — — 67 19 556 — — 
Interest accrual126 29 65 15 43 124 30 47 16 46 
Benefits payments(253)(69)(199)(50)(111)(280)(74)(143)(54)(124)
Ending balance at original discount rate3,327 843 3,624 548 1,710 3,398 856 2,856 594 1,822 
Effect of changes in discount rate assumptions(85)(54)(432)(73)(290)36 (26)(373)(65)(264)
Balance, end of period$3,242 $789 $3,192 $475 $1,420 $3,434 $830 $2,483 $529 $1,558 
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2022
TermPayout - Non-LegacyPayout-LegacyGroup PensionHealthTermPayout-Non-LegacyPayout-LegacyGroup PensionHealth
(in millions)
Net liability for future policy benefits$1,258 $789 $3,192 $475 $1,437 $1,353 $830 $2,483 $529 $1,560 
Less: Reinsurance recoverable(193)(19)(999)— (1,145)(210)— (365)— (1,248)
Net liability for future policy benefits, after reinsurance recoverable$1,065 $770 $2,193 $475 $292 $1,143 $830 $2,118 $529 $312 
Weighted-average duration of liability for future policyholder benefits (years)7.19.37.77.18.77.19.58.27.28.8
The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses related to nonparticipating traditional and limited payment contracts:
September 30, 2023December 31, 2022
(in millions)
Term
Expected future benefit payments and expenses (undiscounted)$5,899 $6,002 
Expected future gross premiums (undiscounted)7,015 7,245 
Expected future benefit payments and expenses (discounted)3,242 3,449 
Expected future gross premiums (discounted)3,593 3,883 
Payout-Legacy
Expected future benefit payments and expenses (undiscounted)4,872 3,947 
Expected future gross premiums (undiscounted)— — 
Expected future benefit payments and expenses (discounted)3,105 2,607 
Expected future gross premiums (discounted)— — 
Payout-Non-Legacy
Expected future benefit payments and expenses (undiscounted)1,437 1,460 
Expected future gross premiums (undiscounted)— — 
Expected future benefit payments and expenses (discounted)759 801 
Expected future gross premiums (discounted)— — 
Group Pension
Expected future benefit payments and expenses (undiscounted)683 730 
Expected future gross premiums (undiscounted)— — 
Expected future benefit payments and expenses (discounted)456 563 
Expected future gross premiums (discounted)— — 
September 30, 2023December 31, 2022
(in millions)
Health
Expected future benefit payments and expenses (undiscounted)2,375 2,510 
Expected future gross premiums (undiscounted)90 99 
Expected future benefit payments and expenses (discounted)1,403 1,533 
Expected future gross premiums (discounted)$69 $78 
The table below summarizes the revenue and interest related to nonparticipating traditional and limited payment contracts:
Nine Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Gross PremiumInterest Accretion
(in millions)
Revenue and Interest Accretion
Term$173 $173 $50 $53 
Payout - Legacy39 76 74 47 
Payout - Non-Legacy16 17 29 30 
Group Pension— — 15 16 
Health6 7 44 46 
Total$234 $273 $212 $192 
The following table provides the weighted average interest rates for the liability for future policy benefits:
September 30, 2023December 31, 2022
Weighted Average Interest Rate
Term
Interest accretion rate5.6 %5.7 %
Current discount rate5.6 %5.1 %
Payout - Legacy
Interest accretion rate3.9 %3.4 %
Current discount rate5.7 %5.0 %
Payout - Non-Legacy
Interest accretion rate5.0 %4.9 %
Current discount rate5.8 %5.2 %
Group Pension
Interest accretion rate3.3 %3.4 %
Current discount rate5.7 %5.1 %
Health
Interest accretion rate3.4 %3.3 %
Current discount rate5.8 %5.2 %
The following table provides the balance, changes in and the weighted average durations of the additional insurance liabilities:
Nine Months Ended September 30,
20232022
UL
(Dollars in millions)
Balance, beginning of period $1,120 $1,082 
Beginning balance before AOCI adjustments 1,135 1,076 
Effect of changes in interest rate and cash flow assumptions and model changes(12)8 
Effect of actual variances from expected14 11 
Adjusted beginning of period balance1,137 1,095 
Interest accrual38 36 
Net assessments collected49 49 
Benefit payments(38)(45)
Ending balance before shadow reserve adjustments1,186 1,135 
Effect of reserve adjustment recorded in AOCI(14)(27)
Balance, end of period$1,172 $1,108 
Net liability for additional liability$1,172 $1,108 
Less: Reinsurance recoverable(927)(571)
Net liability for additional liability, after reinsurance recoverable$245 $537 
Weighted-average duration of additional liability - death benefit (years)19.222.0
The following tables provide the revenue, interest and weighted average interest rates, related to the additional insurance liabilities:
Nine Months Ended September 30,
2023202220232022
AssessmentsInterest Accretion
(in millions)
Revenue and Interest Accretion
UL$487 $473 $38 $36 
Total$487 $473 $38 $36 

Nine Months Ended September 30,
20232022
Weighted Average Interest Rate
UL4.5 %4.5 %
Interest accretion rate4.5 %4.5 %
INSURANCE STATUTORY FINANCIAL INFORMATION
Prescribed and Permitted Accounting Practices
As of September 30, 2023, the following three prescribed and permitted practices resulted in surplus that is different from the statutory surplus that would have been reported had NAIC statutory accounting practices been applied.
Equitable Financial was granted a permitted practice by the NYDFS to apply SSAP 108, Derivatives Hedging Variable Annuity Guarantees on a retroactive basis from January 1, 2021 through June 30, 2021, after reflecting the impacts of our reinsurance transaction with Venerable. The permitted practice was amended to also permit Equitable Financial to adopt SSAP 108 prospectively as of July 1, 2021 and to consider the impact of both the interest rate derivatives and the general account assets used to fully hedge the interest rate risk inherent in its variable annuity guarantees when determining the amount of the deferred asset or liability under SSAP 108. Application of the permitted practice partially mitigates the New York Insurance Regulation 213 (“Reg 213”) impact of the Venerable Transaction on Equitable Financial’s statutory capital and surplus and enables Equitable Financial to more effectively neutralize the impact of interest rates on its statutory surplus and to better align with our economic hedging program. The impact of applying this permitted practice relative to SSAP 108 as written was a decrease of approximately $15 million in statutory special surplus funds as of September 30, 2023. The Reinsurance Treaty reduced the amount of interest rate hedging needed going forward, affecting future deferrals, but leaves our historical SSAP 108 deferred amounts unchanged. The permitted practice also reset Equitable Financial’s unassigned surplus to zero as of June 30, 2021 to reflect the transformative nature of the Venerable Transaction.
The NAIC Accounting Practices and Procedures manual (“NAIC SAP”) has been adopted as a component of prescribed or permitted practices by the State of New York. However, Reg 213 adopted in May of 2019 and as amended in February 2020 and March 2021, differs from the NAIC variable annuity reserve and capital framework. Reg 213 requires Equitable Financial to carry statutory basis reserves for its variable annuity contract obligations equal to the greater of those required under (i) the NAIC standard or (ii) a revised version of the NYDFS requirement in effect prior to the adoption of the first amendment for contracts issued prior to January 1, 2020, and for policies issued after that date a new standard that in current market conditions imposes more conservative reserving requirements for variable annuity contracts than the NAIC standard.
The impact of the application of Reg 213 was a decrease of approximately $279 million in statutory surplus as of September 30, 2023 compared to statutory surplus under the NAIC variable annuity framework. Our hedging program is designed to hedge the economics of our insurance liabilities and largely offsets Reg 213 and NAIC framework
reserve movements due to interest rates and equities. The NYDFS allows domestic insurance companies a five year phase-in provision for Reg 213 reserves. As of September 30, 2022, Equitable Financial’s Reg 213 reserves were 100% phased-in. As of September 30, 2023, given the prevailing market conditions and business mix, there are $267 million Reg 213 redundant reserves over the US RBC CTE 98 total asset requirement (“TAR”).
During the fourth quarter 2020, Equitable Financial received approval from NYDFS for its proposed amended Plan of Operation for Separate Account No. 68 (“SA 68”) for our Structured Capital Strategies product and Separate Account No. 69 (“SA 69”) for our EQUI-VEST product Structured Investment Option, to change the accounting basis of these two non-insulated Separate Accounts from fair value to book value in accordance with Section 1414 of the Insurance Law to align with how we manage and measure our overall general account asset portfolio. In order to facilitate this change and comply with Section 4240(a)(10), the Company also sought approval to amend the Plans to remove the requirement to comply with Section 4240(a)(5)(iii) and substitute it with a commitment to comply with Section 4240(a)(5)(i). Similarly, the Company updated the reserves section of each Plan to reflect the fact that Regulation 128 would no longer be applicable upon the change in accounting basis. We applied this change effective January 1, 2021. The impact of the application is an increase of approximately $2.4 billion in statutory surplus as of September 30, 2023.