Insurance Liabilities

9 Months Ended

Sep. 30, 2024

3. Insurance Liabilities

Liability for Future Policy Benefits

Information regarding liability for future policy benefits (“LFPB”) for non-participating traditional and limited-payment contracts was as follows:


	Nine Months Ended September 30,
	2024									2023
	Term and Whole Life Insurance			Income Annuities			Structured Settlement and Pension Risk Transfer Annuities			Term and Whole Life Insurance			Income Annuities			Structured Settlement and Pension Risk Transfer Annuities
	(Dollars in millions)
Present value of expected net premiums:
Balance, beginning of period	$	2,899		$	—		$	—		$	2,804		$	—		$	—
Beginning balance at original discount rate	3,162			—			—			3,146			—			—
Effect of model refinements	4			—			—			—			—			—
Effect of changes in cash flow assumptions	146			—			—			206			—			—
Effect of actual variances from expected experience	9			—			—			(36)			—			—
Adjusted beginning of period balance	3,321			—			—			3,316			—			—
Issuances	52			—			—			71			—			—
Interest accrual	83			—			—			80			—			—
Net premiums collected	(279)			—			—			(275)			—			—
Ending balance at original discount rate	3,177			—			—			3,192			—			—
Effect of changes in discount rate assumptions	(242)			—			—			(428)			—			—
Balance, end of period	$	2,935		$	—		$	—		$	2,764		$	—		$	—
Present value of expected future policy benefits:
Balance, beginning of period	$	5,385		$	3,719		$	6,697		$	5,172		$	3,469		$	6,793
Beginning balance at original discount rate	5,905			3,993			7,085			5,816			3,848			7,410
Effect of model refinements	10			—			—			—			—			—
Effect of changes in cash flow assumptions	235			(23)			81			296			—			—
Effect of actual variances from expected experience	11			(2)			(11)			(39)			18			(49)
Adjusted beginning of period balance	6,161			3,968			7,155			6,073			3,866			7,361
Issuances	56			302			—			74			277			—
Interest accrual	161			112			230			157			106			236
Benefit payments	(415)			(296)			(438)			(369)			(292)			(449)
Ending balance at original discount rate	5,963			4,086			6,947			5,935			3,957			7,148
Effect of changes in discount rate assumptions	(435)			(226)			(361)			(864)			(508)			(956)
Balance, end of period	$	5,528		$	3,860		$	6,586		$	5,071		$	3,449		$	6,192
Net liability for future policy benefits, end of period	$	2,593		$	3,860		$	6,586		$	2,307		$	3,449		$	6,192
Less: Reinsurance recoverable, end of period	19			32			63			26			30			—
Net liability for future policy benefits, after reinsurance recoverable	$	2,574		$	3,828		$	6,523		$	2,281		$	3,419		$	6,192
Weighted-average duration of liability	7.8 years			8.0 years			11.5 years			8.9 years			8.3 years			11.6 years
Weighted-average interest accretion rate	3.92		%	4.03		%	4.46		%	3.92		%	3.96		%	4.45		%
Current discount rate	4.75		%	4.82		%	5.00		%	5.87		%	5.87		%	5.91		%
Gross premiums or assessments recognized during period	$	414		$	377		$	—		$	439		$	339		$	—
Expected future gross premiums, undiscounted	$	5,787		$	—		$	—		$	6,079		$	—		$	—
Expected future gross premiums, discounted	$	4,299		$	—		$	—		$	4,598		$	—		$	—
Expected future benefit payments, undiscounted	$	8,115		$	5,716		$	13,465		$	8,194		$	5,570		$	13,909
Expected future benefit payments, discounted	$	5,963		$	4,086		$	6,947		$	5,935		$	3,957		$	7,148

The measurement of LFPBs can be significantly impacted by changes in assumptions for policyholder behavior. As part of the 2024 and 2023 annual actuarial reviews (“AAR”), the Company updated assumptions regarding mortality and lapses for term and non-participating whole life insurance. The impact from changes in assumptions is presented in effect of changes in cash flow assumptions in the table above.

Information regarding the additional insurance liabilities for universal life-type contracts with secondary guarantees was as follows:


	Nine Months Ended September 30,
	2024			2023
	(Dollars in millions)
Balance, beginning of period	$	7,607		$	6,935
Beginning balance before the effect of unrealized gains and losses	7,784			7,175
Effect of changes in cash flow assumptions	895			52
Effect of actual variances from expected experience	102			75
Adjusted beginning of period balance	8,781			7,302
Interest accrual	295			265
Net assessments collected	328			309
Benefit payments	(280)			(289)

Ending balance before the effect of unrealized gains and losses	9,124			7,587
Effect of unrealized gains and losses	(158)			(347)
Balance, end of period	8,966			7,240
Less: Reinsurance recoverable, end of period	1,521			1,409
Net additional liability, after reinsurance recoverable	$	7,445		$	5,831
Weighted-average duration of liability	6.6 years			6.7 years
Weighted-average interest accretion rate	4.94		%	4.92		%
Gross assessments recognized during period	$	812		$	798

The measurement of liabilities for secondary guarantees can be significantly impacted by changes in assumptions for policyholder behavior, as well as the expected general account rate of return, which is driven by the Company’s assumption for long-term treasury yields. The Company’s practice of projecting treasury yields uses a mean reversion approach that assumes that long-term interest rates are less influenced by short-term fluctuations and are only changed when sustained interim deviations are expected. As part of the 2024 and 2023 AAR, the Company updated assumptions regarding policyholder behavior, including mortality, premium persistency, lapses and withdrawals. In 2024, the Company also increased the long-term general account earned rate, driven by an increase in the mean reversion rate, from 3.75% to 4.00%. The impact from changes in assumptions, excluding the effects on the ULSG liability for profits followed by losses, is presented in effect of changes in cash flow assumptions in the table above.

A reconciliation of the net LFPBs for non-participating traditional and limited-payment contracts and the additional insurance liabilities for universal life-type contracts with secondary guarantees reported in the preceding rollforward tables to LFPBs on the consolidated balance sheets was as follows at:


	September 30,
	2024		2023
	(In millions)
Liabilities reported in the preceding rollforward tables	$	22,005	$	19,188
Long-term care insurance (1)	5,514		5,276
ULSG liabilities, including liability for profits followed by losses	1,202		1,966
Participating whole life insurance (2)	2,923		2,802
Deferred profit liabilities	431		455
Other	312		237
Total liability for future policy benefits	$	32,387	$	29,924

_______________

(1)Includes liabilities related to fully reinsured individual long-term care insurance. See Note 2.

(2)Participating whole life insurance uses an interest assumption based on the non-forfeiture interest rate, ranging from 3.5% to 4.0%, and mortality rates guaranteed in calculating the cash surrender values described in such contracts, and also includes a liability for terminal dividends. Participating whole life insurance represented 3% of the Company’s life insurance in-force at both September 30, 2024 and 2023, and 39% and 40% of gross traditional life insurance premiums for the nine months ended September 30, 2024 and 2023, respectively.

Policyholder Account Balances

Information regarding policyholder account balances was as follows:


	Universal Life Insurance			Variable Annuities (1)			Index-linked Annuities			Fixed Rate Annuities			ULSG			Company-Owned Life Insurance (1)
	(Dollars in millions)
Nine Months Ended September 30, 2024
Balance, beginning of period	$	1,980		$	4,111		$	41,627		$	14,672		$	5,052		$	653
Premiums and deposits	166			56			6,272			1,027			486			—
Surrenders and withdrawals	(44)			(468)			(3,935)			(982)			(15)			—
Benefit payments	(36)			(68)			(243)			(258)			(53)			(7)
Net transfers from (to) separate account	27			78			—			—			—			5
Interest credited	61			80			438			424			123			22
Policy charges	(143)			(16)			(14)			—			(745)			(6)
Changes related to embedded derivatives	—			—			3,669			—			—			—

Balance, end of period	$	2,011		$	3,773		$	47,814		$	14,883		$	4,848		$	667
Weighted-average crediting rate (2)	3.06		%	2.03		%	1.31		%	2.86		%	2.48		%	3.10		%
Nine Months Ended September 30, 2023
Balance, beginning of period	$	2,100		$	4,664		$	33,897		$	14,274		$	5,307		$	641
Premiums and deposits	154			63			5,314			1,983			501			—
Surrenders and withdrawals	(114)			(455)			(2,588)			(1,518)			(17)			—
Benefit payments	(48)			(79)			(177)			(285)			(67)			(6)
Net transfers from (to) separate account	13			6			—			—			—			—
Interest credited	17			94			299			357			165			22
Policy charges	(150)			(18)			(6)			—			(764)			(7)
Changes related to embedded derivatives	—			—			1,880			—			—			—

Balance, end of period	$	1,972		$	4,275		$	38,619		$	14,811		$	5,125		$	650
Weighted-average crediting rate (2)	0.84		%	2.10		%	1.02		%	2.43		%	3.17		%	3.41		%

_______________

(1)Includes liabilities related to separate account products where the contract holder elected a general account investment option.

(2)Excludes the effects of embedded derivatives related to index-linked crediting rates.

A reconciliation of policyholder account balances reported in the preceding rollforward table to the liability for policyholder account balances on the consolidated balance sheets was as follows at:


	September 30,
	2024		2023
	(In millions)
Policyholder account balances reported in the preceding rollforward table	$	73,996	$	65,452
Funding agreements classified as investment contracts	11,561		11,052
Institutional group annuities	363		—
Other investment contract liabilities	916		970
Total policyholder account balances	$	86,836	$	77,474

The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums was as follows at:


Range of Guaranteed Minimum Crediting Rate	At Guaranteed Minimum		1 to 50 Basis Points Above		51 to 150 Basis Points Above		Greater than 150 Basis Points Above		Total
	(In millions)
September 30, 2024
Annuities (1):
Less than 2.00%	$	548	$	117	$	237	$	8,676	$	9,578
2.00% to 3.99%	7,165		359		176		429		8,129
Greater than 3.99%	801		—		—		—		801
Total	$	8,514	$	476	$	413	$	9,105	$	18,508
Life insurance (2) (3):
Less than 2.00%	$	—	$	—	$	—	$	288	$	288
2.00% to 3.99%	—		466		42		130		638
Greater than 3.99%	1,035		—		—		—		1,035
Total	$	1,035	$	466	$	42	$	418	$	1,961
ULSG (3):
Less than 2.00%	$	—	$	—	$	—	$	—	$	—
2.00% to 3.99%	1,071		1,408		1,616		242		4,337
Greater than 3.99%	493		—		—		—		493
Total	$	1,564	$	1,408	$	1,616	$	242	$	4,830
December 31, 2023
Annuities (1):
Less than 2.00%	$	645	$	204	$	301	$	7,632	$	8,782
2.00% to 3.99%	8,125		233		201		307		8,866
Greater than 3.99%	872		—		—		—		872
Total	$	9,642	$	437	$	502	$	7,939	$	18,520
Life insurance (2) (3):
Less than 2.00%	$	—	$	—	$	—	$	236	$	236
2.00% to 3.99%	—		441		49		132		622
Greater than 3.99%	1,077		—		—		—		1,077
Total	$	1,077	$	441	$	49	$	368	$	1,935
ULSG (3):
Less than 2.00%	$	—	$	—	$	—	$	—	$	—
2.00% to 3.99%	1,134		1,485		1,663		254		4,536
Greater than 3.99%	506		—		—		—		506
Total	$	1,640	$	1,485	$	1,663	$	254	$	5,042

_______________

(1)Includes policyholder account balances for fixed rate annuities and the fixed account portion of variable annuities.

(2)Includes policyholder account balances for retained asset accounts, universal life policies and the fixed account portion of universal variable life insurance policies.

(3)Amounts are gross of policy loans.

See Note 5 for information regarding net amount at risk and cash surrender values.