v3.25.2
Life Policy and Investment Contract Reserves
 6 Months Ended
Jun. 30, 2025
Policyholder Account Balance [Abstract]  
Life Policy and Investment Contract Reserves Life Policy and Investment Contract Reserves
We establish the reserves for traditional life policies including term, whole life and other products based on the present value of future benefits and claim expenses less the present value of future net premiums. Net premium is the portion of gross premium required to provide for all benefits and claim expenses. We estimate future benefits and claim expenses and net premium using certain cash flow assumptions including mortality, morbidity and lapse rates as well as a discount rate assumption. The cash flow assumptions are established based on our current expectations and are reviewed annually, typically in the second quarter, to determine any necessary updates. These assumptions are also updated on an interim basis if evidence suggests that they should be revised. We use both our own experience and industry experience, adjusted for historical trends, in arriving at our cash flow assumptions. The discount rate assumption is based on upper-medium grade fixed-income instrument yields (market value discount rates) and is updated quarterly. Changes in the inputs, judgments and assumptions during the period and the related measurement impact on the liability are reflected in the below tables.
 
We establish reserves for our universal life, deferred annuity and other investment contracts equal to the cumulative account balances, which include premium deposits plus credited interest less charges and withdrawals. Some of our universal life policies contain no-lapse guarantee provisions. For these policies, we establish a reserve in addition to the account balance, based on expected no-lapse guarantee benefits and expected policy assessments.

The following table summarizes our life policy and investment contract reserves and provides a reconciliation of the balances described in the below tables to those in the condensed consolidated balance sheets:
(Dollars in millions)June 30, 2025December 31, 2024
Life policy reserves:
Term$1,061 $1,051 
Whole life414 405 
Other100 98 
Subtotal1,575 1,554 
Investment contract reserves:
Deferred annuities575 595 
Universal life586 586 
Structured settlements114 116 
Other109 109 
Subtotal1,384 1,406 
Total life policy and investment contract reserves$2,959 $2,960 

The balances and changes in the term and whole life policy reserves included in life policy and investment contract reserves are as follows:
(Dollars in millions)Three months ended June 30,
20252024
TermWhole lifeTermWhole life
Present value of expected net premiums:
Balance, beginning of period$1,659 $220 $1,660 $219 
Beginning balance at original discount rate1,719 227 1,710 225 
Effect of changes in cash flow assumptions(4)— (12)1 
Effect of actual variances from expected experience5 (1)(10)(3)
Adjusted beginning of period balance1,720 226 1,688 223 
Issuances41 4 41 6 
Interest accrual19 2 18 3 
Net premiums collected(49)(6)(46)(7)
Ending balance at original discount rate1,731 226 1,701 225 
Effect of changes in discount rate assumptions(53)(6)(81)(10)
Balance, end of period1,678 220 1,620 215 
Present value of expected future policy benefits:
Balance, beginning of period2,703 631 2,698 637 
Beginning balance at original discount rate2,812 648 2,780 633 
Effect of changes in cash flow assumptions(12)— (29)2 
Effect of actual variances from expected experience8 (1)(14)(4)
Adjusted beginning of period balance2,808 647 2,737 631 
Issuances40 4 41 7 
Interest accrual32 8 31 8 
Benefits paid(59)(8)(37)(10)
Ending balance at original discount rate2,821 651 2,772 636 
Effect of changes in discount rate assumptions(101)(17)(138)(17)
Balance, end of period2,720 634 2,634 619 
Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums1,042 414 1,014 404 
Impact of flooring at cohort level19 — 21 — 
Net life policy reserves1,061 414 1,035 404 
Less reinsurance recoverable at original discount rate(68)(25)(95)(24)
Less effect of discount rate assumption changes on reinsurance recoverable(7)(3)(7)(4)
Net life policy reserves, after reinsurance recoverable$986 $386 $933 $376 
Weighted-average duration of the net life policy reserves in years11151115
(Dollars in millions)Six months ended June 30,
20252024
TermWhole lifeTermWhole life
Present value of expected net premiums:
Balance, beginning of period$1,638 $218 $1,700 $223 
Beginning balance at original discount rate1,719 228 1,712 225 
Effect of changes in cash flow assumptions(4)— (12)1 
Effect of actual variances from expected experience(3)(1)(19)(3)
Adjusted beginning of period balance1,712 227 1,681 223 
Issuances76 7 76 11 
Interest accrual38 5 36 5 
Net premiums collected(95)(13)(92)(14)
Ending balance at original discount rate1,731 226 1,701 225 
Effect of changes in discount rate assumptions(53)(6)(81)(10)
Balance, end of period1,678 220 1,620 215 
Present value of expected future policy benefits:
Balance, beginning of period2,668 623 2,751 657 
Beginning balance at original discount rate2,812 646 2,765 628 
Effect of changes in cash flow assumptions(12)— (29)2 
Effect of actual variances from expected experience(6)(1)(28)(4)
Adjusted beginning of period balance2,794 645 2,708 626 
Issuances76 7 76 12 
Interest accrual64 17 62 16 
Benefits paid(113)(18)(74)(18)
Ending balance at original discount rate2,821 651 2,772 636 
Effect of changes in discount rate assumptions(101)(17)(138)(17)
Balance, end of period2,720 634 2,634 619 
Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums1,042 414 1,014 404 
Impact of flooring at cohort level 19 — 21 — 
Net life policy reserves1,061 414 1,035 404 
Less reinsurance recoverable at original discount rate(68)(25)(95)(24)
Less effect of discount rate assumption changes on reinsurance recoverable(7)(3)(7)(4)
Net life policy reserves, after reinsurance recoverable$986 $386 $933 $376 
Weighted-average duration of the net life policy reserves in years11151115

The total impact of flooring at cohort level in the above tables includes the effect of discount rate assumption changes of $2 million and $3 million at June 30, 2025 and 2024, respectively.
The following table shows the amount of undiscounted and discounted expected future benefit payments and expected gross premiums for our term and whole life policies:
(Dollars in millions)At June 30,
20252024
UndiscountedDiscountedUndiscountedDiscounted
Term
Expected future benefit payments$4,947 $2,720 $4,819 $2,634 
Expected future gross premiums4,632 2,697 4,513 2,597 
Whole life
Expected future benefit payments$1,709 $634 $1,680 $619 
Expected future gross premiums688 415 675 401 

The following table shows the amount of revenue and interest recognized in the condensed consolidated statements of income related to our term and whole life policies:

(Dollars in millions)Three months ended June 30,Six months ended June 30,
2025202420252024
Gross premiums
Term$77 $75 $151 $149 
Whole life14 13 27 26 
Total$91 $88 $178 $175 
Interest accretion
Term$13 $13 $26 $26 
Whole life6 5 12 11 
Total$19 $18 $38 $37 

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums was immaterial for the six months ended June 30, 2025, and 2024.

The following table shows the weighted-average interest rate for our term and whole life products:
At June 30,
20252024
Term
Interest accretion rate5.22 %5.22 %
Current discount rate4.93 5.24 
Whole life
Interest accretion rate5.86 %5.90 %
Current discount rate5.68 5.67 

The discount rate assumption was developed by calculating forward rates from market yield curves of upper-medium grade fixed-income instruments.
The following table shows the balances and changes in policyholders' account balances included in investment contract reserves:
(Dollars in millions)Three months ended June 30,Six months ended June 30,
2025202420252024
Deferred annuityUniversal lifeDeferred annuityUniversal lifeDeferred annuityUniversal lifeDeferred annuityUniversal life
Balance, beginning of period$582 $457 $631 $456 $595 $456 $656 $457 
Premiums received8 9 10 9 12 19 19 19 
Policy charges— (10)— (10)— (20)— (20)
Surrenders and withdrawals(18)(3)(26)(3)(35)(6)(63)(7)
Benefit payments(3)(4)(2)(1)(8)(5)(5)(3)
Interest credited6 5 5 5 11 10 11 10 
Balance, end of period$575 $454 $618 $456 $575 $454 $618 $456 
Weighted average crediting rate3.71 %4.43 %3.59 %4.33 %3.71 %4.43 %3.59 %4.33 %
Net amount at risk$— $3,746 $— $3,892 $— $3,746 $— $3,892 
Cash surrender value568 426 612 425 568 426 612 425 

The net amount at risk above represents the guaranteed benefit amount in excess of the current account balances.

The following table shows the balance of account values by range of guaranteed minimum crediting rates, in basis points, and the related range of the difference between rates being credited to policyholders and the respective guaranteed minimums for our deferred annuity and universal life contracts:
(Dollars in millions)At guaranteed minimum1 to 50 basis points above51-150 basis points aboveGreater than 150 basis pointsTotal
At June 30, 2025
Deferred annuity
1.00-3.00%$9 $269 $14 $237 $529 
3.01-4.00%46 — — — 46 
Total$55 $269 $14 $237 $575 
Universal life
1.00-3.00%$— $55 $56 $15 $126 
3.01-4.00%51 — 4 — 55 
Greater than 4.00%273 — — — 273 
Total$324 $55 $60 $15 $454 
At June 30, 2024
Deferred annuity
1.00-3.00%$4 $324 $14 $228 $570 
3.01-4.00%48 — — — 48 
Total$52 $324 $14 $228 $618 
Universal life
1.00-3.00%$— $60 $59 $4 $123 
3.01-4.00%49 5 — — 54 
Greater than 4.00%279 — — — 279 
Total$328 $65 $59 $4 $456 
The following table shows the balances and changes in the other additional liability related to the no-lapse guarantees contained within our universal life contracts:
(Dollars in millions)Three months ended June 30,Six months ended June 30,
2025202420252024
Balance, beginning of period$130 $129 $130 $128 
Balance, beginning of period before shadow reserve adjustments131 130 131 129 
Effect of changes in cash flow assumptions— (2)— (2)
Effect of actual variances from expected experience— — 2 — 
Adjusted beginning of period balance131 128 133 127 
Interest accrual1 1 2 2 
Excess death benefits(2)(1)(9)(3)
Attributed assessments3 3 6 6 
Effect of changes in interest rate assumptions— (1)1 (2)
Balance, end of period before shadow reserve adjustments133 130 133 130 
Shadow reserve adjustments(1)(2)(1)(2)
Balance, end of period132 128 132 128 
Less reinsurance recoverable, end of period6 6 6 6 
Net other additional liability, after reinsurance recoverable$138 $134 $138 $134 
Weighted-average duration of the other additional liability in years26292629

The following table shows balances and changes in separate accounts balances during the period:
(Dollars in millions)Three months ended June 30,Six months ended June 30,
2025202420252024
Balance, beginning of period$959 $927 $952 $925 
Interest credited before policy charges11 11 22 21 
Benefit payments— (3)(8)(3)
Other21 13 25 5 
Balance, end of period$991 $948 $991 $948 
Cash surrender value$959 $932 $959 $932