Future Policy Benefits

6 Months Ended

Jun. 30, 2024

Insurance [Abstract]

Liability for Future Policy Benefits and Unpaid Claims Disclosure

FUTURE POLICY BENEFITS

Liability for Future Policy Benefits – Traditional Business

The Company reviews actual and anticipated experience compared to the assumptions used to establish policy benefits on a quarterly basis and will update those assumptions if evidence suggests that they should be revised. The Company expects to complete its annual review and any necessary updates of cash flow assumptions used to calculate the liability for future policy benefits during the third quarter of each year. Updates may occur in other quarters if information becomes available during the quarter that indicates an assumption update is necessary.

The following tables provide the balances of and changes in the Company’s liability for future policy benefits for long-duration reinsurance contracts for its Traditional business, which primarily consists of individual life, group life and critical illness reinsurance for the six months ended June 30, 2024 and 2023 (dollars in millions):

For the six months ended June 30, 2024:	U.S. and Latin America – Traditional			Canada – Traditional			Europe, Middle East and Africa – Traditional			Asia Pacific – Traditional
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	76,943		$	22,689		$	15,328		$	42,741
Effect of changes in cash flow assumptions	—			—			—			—
Effect of actual variances from expected experience	(398)			112			254			173
Adjusted balance, beginning of year	76,545			22,801			15,582			42,914
Issuances (1)	1,599			267			521			1,959
Interest accrual (2)	1,730			376			256			548
Net premiums collected (3)	(2,621)			(494)			(732)			(1,086)
Derecognition (4)	(1,000)			—			—			—
Foreign currency translation	(4)			(728)			(114)			(1,598)
Ending balance at original discount rate	76,249			22,222			15,513			42,737
Effect of changes in discount rate assumptions	(7,979)			(4,753)			(2,923)			(12,596)
Balance, end of period	$	68,270		$	17,469		$	12,590		$	30,141
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	89,036		$	26,275		$	16,756		$	47,370
Effect of changes in cash flow assumptions	—			—			—			—
Effect of actual variances from expected experience	(501)			106			259			144
Adjusted balance, beginning of year	88,535			26,381			17,015			47,514
Issuances (1)	1,599			268			523			1,959
Interest accrual (2)	2,015			483			277			628
Benefit payments (5)	(2,973)			(523)			(757)			(979)
Derecognition (4)	(1,008)			—			—			—
Foreign currency translation	(4)			(853)			(136)			(1,683)
Ending balance at original discount rate	88,164			25,756			16,922			47,439
Effect of changes in discount rate assumptions	(9,988)			(4,125)			(3,208)			(14,728)
Balance, end of period	$	78,176		$	21,631		$	13,714		$	32,711
Liability for future policy benefits	$	9,906		$	4,162		$	1,124		$	2,570
Less: reinsurance recoverable	(741)			(280)			(33)			(108)
Net liability for future policy benefits	$	9,165		$	3,882		$	1,091		$	2,462
Weighted average duration of the liability (in years)	12			15			8			15
Weighted average interest accretion rate	4.6		%	3.6		%	3.3		%	2.6		%
Weighted average current discount rate	5.6		%	5.0		%	5.7		%	4.8		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

For the six months ended June 30, 2023:	U.S. and Latin America – Traditional			Canada – Traditional			Europe, Middle East and Africa – Traditional			Asia Pacific – Traditional
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	74,207		$	21,330		$	14,244		$	40,506
Effect of changes in cash flow assumptions	—			—			—			(8)
Effect of actual variances from expected experience	(83)			347			(51)			50
Adjusted balance, beginning of year	74,124			21,677			14,193			40,548
Issuances (1)	1,653			240			610			1,264
Interest accrual (2)	1,710			370			243			515
Net premiums collected (3)	(2,534)			(466)			(696)			(997)
Derecognition (4)	(35)			—			—			—
Foreign currency translation	3			498			445			(914)
Ending balance at original discount rate	74,921			22,319			14,795			40,416
Effect of changes in discount rate assumptions	(5,424)			(4,436)			(3,427)			(10,296)
Balance, end of period	$	69,497		$	17,883		$	11,368		$	30,120
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	85,285		$	24,655		$	15,454		$	44,785
Effect of changes in cash flow assumptions	—			—			—			(8)
Effect of actual variances from expected experience	(49)			347			(44)			27
Adjusted balance, beginning of year	85,236			25,002			15,410			44,804
Issuances (1)	1,653			240			610			1,264
Interest accrual (2)	1,972			474			259			588
Benefit payments (5)	(2,801)			(507)			(682)			(894)
Derecognition (4)	(54)			—			—			—
Foreign currency translation	4			580			488			(979)
Ending balance at original discount rate	86,010			25,789			16,085			44,783
Effect of changes in discount rate assumptions	(6,721)			(3,626)			(3,669)			(12,197)
Balance, end of period	$	79,289		$	22,163		$	12,416		$	32,586
Liability for future policy benefits	$	9,792		$	4,280		$	1,048		$	2,466
Less: reinsurance recoverable	(407)			(285)			(36)			(99)
Net liability for future policy benefits	$	9,385		$	3,995		$	1,012		$	2,367
Weighted average duration of the liability (in years)	12			15			8			17
Weighted average interest accretion rate	4.7		%	3.6		%	3.4		%	2.6		%
Weighted average current discount rate	5.1		%	4.6		%	6.1		%	4.2		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

Significant assumptions used to compute the liability for future policy benefits for the Traditional business include mortality, morbidity, lapse rates and discount rates (both accretion and current). The Company updates the underlying market data used to determine the current discount rate resulting in changes to the discount rate assumptions used to measure the liability for future policy benefits each period.

The Company’s Traditional business actual-to-expected variances and the effects of changes in cash flow and discount rate assumptions for the six months ended June 30, 2024 and 2023 are summarized in the tables below:

For the six months ended June 30, 2024:
Segment	Liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI
U.S. and Latin America – Traditional	$11.9 billion	None	$(103) million	$(863) million
			0.9% decrease	7.1% decrease
Canada – Traditional	$3.5 billion	None	$(6) million	$(243) million
			0.2% decrease	6.8% decrease
Europe, Middle East and Africa – Traditional	$1.4 billion	None	$5 million	$(66) million
			0.4% increase	4.6% decrease
Asia Pacific – Traditional	$4.7 billion	None	$(29) million	$(167) million
			0.6% decrease	3.6% decrease

For the six months ended June 30, 2023:
Segment	Liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI
U.S. and Latin America – Traditional	$11.1 billion	None	$34 million	$307 million
			0.3% increase	2.8% increase
Canada – Traditional	$3.5 billion	None	$—	$184 million
			None	5.5% increase
Europe, Middle East and Africa – Traditional	$1.3 billion	None	$7 million	$(73) million
			0.6% increase	6.0% decrease
Asia Pacific – Traditional	$4.4 billion	None	$(23) million	$30 million
			0.5% decrease	0.7% increase

Liability for Future Policy Benefits – Financial Solutions Business

The Company reviews actual and anticipated experience compared to the assumptions used to establish policy benefits on a quarterly basis and will update those assumptions if evidence suggests that they should be revised. The Company expects to complete its annual review and any necessary updates of cash flow assumptions used to calculate the liability for future policy benefits during the third quarter of each year. Updates may occur in other quarters if information becomes available during the quarter that indicates an assumption update is necessary.

The following tables provide the balances of and changes in the Company’s liability for future policy benefits, including the deferred profit liability related to the longevity business, for its Financial Solutions business, which primarily consists of longevity reinsurance, asset-intensive products, primarily annuities and financial reinsurance for the six months ended June 30, 2024 and 2023 (dollars in millions):

For the six months ended June 30, 2024:	U.S. and Latin America – Financial Solutions			Canada – Financial Solutions			Europe, Middle East and Africa – Financial Solutions			Asia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	1,455		$	3,184		$	54,832		$	2,057
Effect of changes in cash flow assumptions	—			—			—			—
Effect of actual variances from expected experience	(3)			(6)			897			(38)
Adjusted balance, beginning of year	1,452			3,178			55,729			2,019
Issuances (1)	2,175			4,975			8,901			5,497
Interest accrual (2)	22			61			864			12
Net premiums collected (3)	(2,246)			(4,182)			(2,839)			(5,755)
Derecognition (4)	—			—			—			—
Foreign currency translation	—			(100)			(736)			(249)
Ending balance at original discount rate	1,403			3,932			61,919			1,524
Effect of changes in discount rate assumptions	(262)			(311)			(9,325)			(150)
Balance, end of period	$	1,141		$	3,621		$	52,594		$	1,374
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	6,843		$	3,210		$	60,938		$	8,019
Effect of changes in cash flow assumptions	—			—			—			—
Effect of actual variances from expected experience	(6)			(6)			901			(39)
Adjusted balance, beginning of year	6,837			3,204			61,839			7,980
Issuances (1)	2,305			4,983			8,901			5,646
Interest accrual (2)	176			103			972			71
Benefit payments (5)	(322)			(195)			(2,350)			(193)
Derecognition (4)	—			—			—			—
Foreign currency translation	—			(92)			(787)			(1,304)
Ending balance at original discount rate	8,996			8,003			68,575			12,200
Effect of changes in discount rate assumptions	(616)			(231)			(10,267)			(1,029)
Balance, end of period	$	8,380		$	7,772		$	58,308		$	11,171
Cumulative amount of fair value hedging adjustments	$	(2)		$	—		$	—		$	—
Liability for future policy benefits	$	7,237		$	4,151		$	5,714		$	9,797
Less: reinsurance recoverable	(849)			—			—			—
Net liability for future policy benefits	$	6,388		$	4,151		$	5,714		$	9,797
Weighted average duration of the liability (in years)	8			13			10			15
Weighted average interest accretion rate	3.8		%	3.6		%	3.0		%	1.4		%
Weighted average current discount rate	5.5		%	4.9		%	5.2		%	2.4		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

For the six months ended June 30, 2023:	U.S. and Latin America – Financial Solutions			Canada – Financial Solutions			Europe, Middle East and Africa – Financial Solutions			Asia Pacific – Financial Solutions
Present Value of Expected Net Premiums
Beginning of year balance at original discount rate	$	1,671		$	3,394		$	38,782		$	1,605
Effect of changes in cash flow assumptions	—			—			1			—
Effect of actual variances from expected experience	(18)			(3)			200			(3)
Adjusted balance, beginning of year	1,653			3,391			38,983			1,602
Issuances (1)	146			—			4,929			2,163
Interest accrual (2)	26			54			428			12
Net premiums collected (3)	(225)			(168)			(2,186)			(1,528)
Derecognition (4)	—			—			—			—
Foreign currency translation	1			77			1,673			(164)
Ending balance at original discount rate	1,601			3,354			43,827			2,085
Effect of changes in discount rate assumptions	(255)			(356)			(10,656)			82
Balance, end of period	$	1,346		$	2,998		$	33,171		$	2,167
Present Value of Expected Future Policy Benefits
Beginning of year balance at original discount rate	$	5,823		$	3,447		$	44,330		$	6,561
Effect of changes in cash flow assumptions	—			—			1			—
Effect of actual variances from expected experience	(23)			(10)			186			(4)
Adjusted balance, beginning of year	5,800			3,437			44,517			6,557
Issuances (1)	154			—			4,929			2,209
Interest accrual (2)	114			55			508			39
Benefit payments (5)	(270)			(166)			(1,782)			(132)
Derecognition (4)	—			—			—			—
Foreign currency translation	(16)			79			1,938			(686)
Ending balance at original discount rate	5,782			3,405			50,110			7,987
Effect of changes in discount rate assumptions	(551)			(354)			(11,829)			(209)
Balance, end of period	$	5,231		$	3,051		$	38,281		$	7,778
Liability for future policy benefits	$	3,885		$	53		$	5,110		$	5,611
Less: reinsurance recoverable	—			—			—			—
Net liability for future policy benefits	$	3,885		$	53		$	5,110		$	5,611
Weighted average duration of the liability (in years)	8			7			9			16
Weighted average interest accretion rate	3.6		%	3.2		%	2.1		%	1.2		%
Weighted average current discount rate	5.2		%	4.8		%	5.5		%	1.6		%

(1)Issuances: The present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new reinsurance contracts that became effective during the current period and new policies assumed on existing contracts.

(2)Interest accrual: The interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(3)Net premiums collected: The portion of gross premiums collected from the ceding company that is used to fund expected benefit payments.

(4)Derecognition: Includes the effects of treaty recaptures and treaty amendments that resulted in the termination of an existing treaty and the issuance of a new treaty under the internal replacement model.

(5)Benefit payments: The release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal, and other benefit payments based on current assumptions.

Significant assumptions used to compute the liability for future policy benefits for the Financial Solutions business include mortality, morbidity, lapse rates and discount rates (both accretion and current). The Company updates the underlying market data used to determine the current discount rate resulting in changes to the discount rate assumptions used to measure the liability for future policy benefits.

The Company’s Financial Solutions business actual-to-expected variances (including the effects of model updates) and the effects of changes in cash flow and discount rate assumptions for the six months ended June 30, 2024 and 2023 are summarized

in the tables below:

For the six months ended June 30, 2024:
Segment	Liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI
U.S. and Latin America – Financial Solutions	$7.6 billion	None	$(3) million	$(194) million
			0.1% decrease	3.6% decrease
Canada – Financial Solutions	$4.1 billion	None	$—	$77 million
			None	296.2% increase (1)
Europe, Middle East and Africa – Financial Solutions	$6.7 billion	None	$4 million	$(289) million
			0.1% increase	4.7% decrease
Asia Pacific – Financial Solutions	$10.7 billion	None	$(1) million	$(107) million
			None	1.8% decrease

(1)Increase compared to prior year was related to a significant transaction executed during the three months ended June 30, 2024.

For the six months ended June 30, 2023:
Segment	Liability for future policy benefits at original discount rate	Changes in cash flow assumptions	Actual-to-expected variance	Impact of updating discount rate recognized in OCI
U.S. and Latin America – Financial Solutions	$4.2 billion	None	$(5) million	$37 million
			0.1% decrease	0.9% increase
Canada – Financial Solutions	$51 million	None	$(7) million	$1 million
			13.2% decrease	2% increase
Europe, Middle East and Africa – Financial Solutions	$6.3 billion	None	$(14) million	$(259) million
			0.3% decrease	4.63% decrease
Asia Pacific – Financial Solutions	$5.9 billion	None	$(1) million	$169 million
			None	2.7% increase

Reconciliation and Other Disclosures

The reconciliation of the rollforward of the liability for future policy benefits to the condensed consolidated balance sheets as of June 30, 2024 and 2023 is as follows (dollars in millions):

	June 30,
	2024		2023
Liability for future policy benefits included in the rollforwards:
Traditional:
U.S. and Latin America	$	9,906	$	9,792
Canada	4,162		4,280
Europe, Middle East and Africa	1,124		1,048
Asia Pacific	2,570		2,466
Financial Solutions:
U.S. and Latin America	7,237		3,885
Canada	4,151		53
Europe, Middle East and Africa	5,714		5,110
Asia Pacific	9,797		5,611
Other long-duration contracts	125		187
Claims liability and incurred but not reported claims	5,527		5,289
Unearned revenue liability	466		518
Total liability for future policy benefits	$	50,779	$	38,239

The amount of undiscounted and discounted expected future gross premiums and expected future benefit payments for the liability for future policy benefits included in the rollforwards as of June 30, 2024 and 2023 is as follows (dollars in millions):

	June 30,
	2024				2023
	Undiscounted		Discounted		Undiscounted		Discounted
Expected future gross premiums
Traditional:
U.S. and Latin America	$	177,026	$	80,236	$	172,520	$	81,058
Canada	54,822		21,578		55,059		22,193
Europe, Middle East and Africa	26,345		14,357		25,185		13,178
Asia Pacific	96,035		38,402		91,057		38,197
Financial Solutions:
U.S. and Latin America	2,865		1,774		3,062		1,912
Canada	6,341		4,002		4,749		3,141
Europe, Middle East and Africa	111,756		57,128		67,116		36,502
Asia Pacific	3,578		2,660		3,939		3,257
Expected future benefit payments
Traditional:
U.S. and Latin America	$	185,828	$	78,176	$	181,424	$	79,289
Canada	56,587		21,631		58,011		22,163
Europe, Middle East and Africa	26,138		13,714		24,714		12,416
Asia Pacific	92,090		32,711		87,425		32,586
Financial Solutions:
U.S. and Latin America	14,431		8,380		9,066		5,231
Canada	17,846		7,772		4,608		3,051
Europe, Middle East and Africa	114,188		58,308		70,992		38,281
Asia Pacific	17,653		11,171		10,844		7,778

The amount of gross premiums and interest expense recognized in the condensed consolidated statements of income for the liability for future policy benefits included in the rollforwards for the six months ended June 30, 2024 and 2023 is as follows (dollars in millions):

	Gross Premiums				Interest Expense
	June 30,				June 30,
	2024		2023		2024		2023
Traditional:
U.S. and Latin America	$	3,061	$	2,935	$	285	$	262
Canada	553		535		107		104
Europe, Middle East and Africa	732		697		21		16
Asia Pacific	1,381		1,257		80		73
Financial Solutions:
U.S. and Latin America	2,212		166		154		88
Canada	71		46		42		1
Europe, Middle East and Africa	429		335		108		80
Asia Pacific	96		108		59		27
Total	$	8,535	$	6,079	$	856	$	651

During the six months ended June 30, 2024 and 2023, no material charges were incurred resulting from net premiums exceeding gross premiums