Reserve for Future Policy Benefits and Contractholder Funds (Tables)

3 Months Ended

Mar. 31, 2023

Reserve for Future Policy Benefits and Contractholder Funds [Abstract]

Schedule of balances of and changes in liability for future policy benefits, and Revenue and interest recognized

The following tables summarize the balance of and changes in the reserve for future policy benefits and DAC on January 1, 2021 upon the adoption of the guidance.

Impact of adoption for reserve for future policy benefits
( $ in millions)	Accident and health		Traditional life		Total
Pre-adoption 12/31/2020 balance (1)	$	728	$	311	$	1,039
Adjustments:
Effect of the remeasurement of the reserve at upper-medium grade fixed income-based rate (2)	232		153		385
Adjustments for contracts with net premiums in excess of gross premiums (3)	77		—		77
Total adjustments	309		153		462
Post-adoption 1/1/2021 balance	1,037		464		1,501
Less: reinsurance recoverables (4)	159		3		162
Post-adoption 1/1/2021 balance, after reinsurance recoverables	$	878	$	461	$	1,339

(1)Traditional life includes $11 million in reserves related to riders of traditional life insurance products reclassified from contractholder funds.

(2)Adjustment reflected with a corresponding decrease to AOCI.

(3)Adjustment reflected with a corresponding decrease to retained income.

(4)Represents post-adoption January 1, 2021 balance of reinsurance recoverables. Adjustments to reinsurance recoverables for accident and health products increased January 1, 2021 AOCI by $33 million due to the remeasurement of the reserve at upper-medium grade fixed income based rate and increased January 1, 2021 retained income by $51 million due to adjustments for contracts with net premiums in excess of gross premiums.

Rollforward of reserve for future policy benefits (1)
	Three months ended March 31,
	Accident and health				Traditional life				Total
($ in millions)	2023		2022		2023		2022		2023		2022
Present value of expected net premiums
Beginning balance	$	1,464	$	1,785	$	238	$	254	$	1,702	$	2,039
Beginning balance at original discount rate	1,549		1,604		246		215		1,795		1,819
Effect of changes in cash flow assumptions	—		—		—		—		—		—
Effect of actual variances from expected experience	(42)		(49)		5		20		(37)		(29)
Adjusted beginning balance	1,507		1,555		251		235		1,758		1,790
Issuances	199		173		17		4		216		177
Interest accrual	12		12		3		2		15		14
Net premiums collected	(95)		(103)		(12)		(11)		(107)		(114)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	1,623		1,637		259		230		1,882		1,867
Effect of changes in discount rate assumptions	(62)		65		(5)		20		(67)		85
Ending balance	1,561		1,702		254		250		1,815		1,952
Present value of expected future policy benefits
Beginning balance	2,229		2,796		524		673		2,753		3,469
Beginning balance at original discount rate	2,316		2,426		534		511		2,850		2,937
Effect of changes in cash flow assumptions	—		—		—		—		—		—
Effect of actual variances from expected experience	(47)		(53)		4		19		(43)		(34)
Adjusted beginning balance	2,269		2,373		538		530		2,807		2,903
Issuances	199		172		16		4		215		176
Interest accrual	19		19		6		5		25		24
Benefit payments	(99)		(110)		(12)		(8)		(111)		(118)
Lapses and withdrawals	—		—		—		—		—		—
Ending balance at original discount rate	2,388		2,454		548		531		2,936		2,985
Effect of changes in discount rate assumptions	(53)		175		(1)		94		(54)		269
Ending balance	$	2,335	$	2,629	$	547	$	625	$	2,882	$	3,254
Net reserve for future policy benefits (1)	$	774	$	927	$	293	$	375	$	1,067	$	1,302
Less: reinsurance recoverables	76		139		2		2		78		141
Net reserve for future policy benefits, after reinsurance recoverables	$	698	$	788	$	291	$	373	$	989	$	1,161

(1)Excludes $271 million and $264 million of reserves related to short-duration and other contracts as of March 31, 2023 and 2022, respectively.

Revenue and interest recognized in the condensed consolidated statements of operations
($ in millions)	Three months ended March 31,
	2023		2022
Revenues (1)
Accident and health	$	225	$	253
Traditional life	25		22
Total	$	250	$	275
Interest expense (2)
Accident and health	$	7	$	7
Traditional life	3		3
Total	$	10	$	10

(1) Total revenues reflects gross premiums used in the calculation for reserve for future policy benefits. Revenues included in Accident and health insurance premiums and contract charges on the Condensed Consolidated Statements of Operations reflect premium revenue recognized for traditional life insurance and long-duration and short-duration accident and health insurance contracts.

(2) Total interest expense presented as part of Accident, health and other policy benefits on the Condensed Consolidated Statements of Operations.

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for nonparticipating traditional and limited-payment contracts.

	As of March 31,
	2023				2022
($ in millions)	Undiscounted		Discounted		Undiscounted		Discounted
Accident and health
Expected future gross premiums	$	5,068	$	3,671	$	5,219	$	4,137
Expected future benefits and expenses	3,351		2,335		3,453		2,629
Traditional life
Expected future gross premiums	721		500		652		500
Expected future benefits and expenses	1,008		547		972		625

Key assumptions used in calculating the reserve for future policy benefits
	As of March 31,
	Accident and health				Traditional life
	2023		2022		2023		2022
Weighted-average duration (in years)	4.1		4.2		14.1		13.9
Weighted-average interest rates
Interest accretion rate (discount rate at contract issuance)	5.09	%	6.69	%	5.50	%	5.70	%
Current discount rate (upper-medium grade fixed income yield)	4.58		2.76		5.03		3.54

Schedule of actual and expected experience for mortality, morbidity and lapses

The following table summarizes the ratio of actual to expected lapses used in the determination of the reserve for future policy benefits.

	As of March 31,
	Accident and health				Traditional life
	2023		2022		2023		2022
Lapses	90	%	111	%	92	%	95	%

Schedule of contract holder funds activity

Contractholder funds activity
	Three months ended March 31,
($ in millions)	2023			2022
Balance, beginning of year	$	879		$	890
Deposits	33			35
Interest credited	8			8
Benefits	(4)			(3)
Surrenders and partial withdrawals	(5)			(5)
Contract charges	(30)			(28)
Other adjustments	(3)			(6)
Balance, end of period	$	878		$	891
Components of contractholder funds
Interest-sensitive life insurance	$	830		$	837
Fixed annuities	48			54
Total	$	878		$	891
Weighted-average crediting rate	4.27		%	4.29		%
Net amount at risk (1)	$	11,780		$	12,101
Cash surrender value	$	722		$	728

(1)Guaranteed benefit amounts in excess of the current account balances.

Schedule of account values by comparison of current crediting rate to guaranteed minimum crediting rate

Account values: comparison of current crediting rate to guaranteed minimum crediting rate (1)
($ in millions)                                                                                                                                                           Range of guaranteed minimum crediting rates	At guaranteed minimum		1-50 basis points above		Total
March 31, 2023
Less than 3%	$	—	$	—	$	—
3.00% - 3.49%	—		20		20
3.50% - 3.99%	11		—		11
4.00% - 4.49%	431		—		431
4.50% - 4.99%	266		—		266
5% or greater	69		—		69
Non-account balances (2)					81
Total	$	777	$	20	$	878
March 31, 2022
Less than 3%	$	—	$	—	$	—
3.00% - 3.49%	—		6		6
3.50% - 3.99%	12		—		12
4.00% - 4.49%	438		—		438
4.50% - 4.99%	272		—		272
5% or greater	71		—		71
Non-account balances (2)					92
Total	$	793	$	6	$	891

(1)Difference, in basis points, between rates being credited to contractholders and the respective guaranteed minimum crediting rates.

(2)Non-account balances include unearned revenue and amounts related to policies where a claim is either in the course of settlement or incurred but not reported. A claim on a life insurance policy results in the accrual of interest at a rate and over a period of time that is specified by state insurance regulations.