v3.26.3
Life Policy and Investment Contract Reserves
 9 Months Ended
Sep. 30, 2026
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)September 30, 2026December 31, 2025
Life policy reserves:
Term$1,035 $1,103 
Whole life389 426 
Other103 100 
Subtotal1,527 1,629 
Investment contract reserves:
Deferred annuities534 554 
Universal life583 589 
Structured settlements106 111 
Other111 109 
Subtotal1,334 1,363 
Total life policy and investment contract reserves$2,861 $2,992 
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 September 30,
20262025
TermWhole lifeTermWhole life
Present value of expected net premiums:
Balance, beginning of period$1,719 $216 $1,678 $220 
Beginning balance at original discount rate1,776 222 1,731 226 
Effect of changes in cash flow assumptions— 1 — — 
Effect of actual variances from expected experience(3)— (11)1 
Adjusted beginning of period balance1,773 223 1,720 227 
Issuances38 5 44 7 
Interest accrual19 2 19 2 
Net premiums collected(47)(8)(45)(8)
Ending balance at original discount rate1,783 222 1,738 228 
Effect of changes in discount rate assumptions(157)(18)(27)(3)
Balance, end of period1,626 204 1,711 225 
Present value of expected future policy benefits:
Balance, beginning of period2,823 641 2,720 634 
Beginning balance at original discount rate2,931 662 2,821 651 
Effect of changes in cash flow assumptions1 1 — (1)
Effect of actual variances from expected experience(4)(1)(16)1 
Adjusted beginning of period balance2,928 662 2,805 651 
Issuances39 5 44 7 
Interest accrual33 8 32 8 
Benefits paid(53)(7)(37)(9)
Ending balance at original discount rate2,947 668 2,844 657 
Effect of changes in discount rate assumptions(297)(75)(52)(3)
Balance, end of period2,650 593 2,792 654 
Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums1,024 389 1,081 429 
Impact of flooring at cohort level11 — 18 1 
Net life policy reserves1,035 389 1,099 430 
Less reinsurance recoverable at original discount rate(68)(24)(67)(25)
Less effect of discount rate assumption changes on reinsurance recoverable(2)(1)(8)(4)
Net life policy reserves, after reinsurance recoverable$965 $364 $1,024 $401 
Weighted-average duration of the net life policy reserves in years11141115
(Dollars in millions)Nine months ended September 30,
20262025
TermWhole lifeTermWhole life
Present value of expected net premiums:
Balance, beginning of period$1,709 $225 $1,638 $218 
Beginning balance at original discount rate1,743 228 1,719 228 
Effect of changes in cash flow assumptions21 (4)(4)— 
Effect of actual variances from expected experience(13)— (14)— 
Adjusted beginning of period balance1,751 224 1,701 228 
Issuances117 13 120 14 
Interest accrual58 7 57 7 
Net premiums collected(143)(22)(140)(21)
Ending balance at original discount rate1,783 222 1,738 228 
Effect of changes in discount rate assumptions(157)(18)(27)(3)
Balance, end of period1,626 204 1,711 225 
Present value of expected future policy benefits:
Balance, beginning of period2,794 650 2,668 623 
Beginning balance at original discount rate2,863 662 2,812 646 
Effect of changes in cash flow assumptions37 (7)(12)(1)
Effect of actual variances from expected experience(20)(1)(22)— 
Adjusted beginning of period balance2,880 654 2,778 645 
Issuances117 13 120 14 
Interest accrual99 25 96 25 
Benefits paid(149)(24)(150)(27)
Ending balance at original discount rate2,947 668 2,844 657 
Effect of changes in discount rate assumptions(297)(75)(52)(3)
Balance, end of period2,650 593 2,792 654 
Net liability for future policy benefits:
Present value of expected future policy benefits less expected net premiums1,024 389 1,081 429 
Impact of flooring at cohort level 11 — 18 1 
Net life policy reserves1,035 389 1,099 430 
Less reinsurance recoverable at original discount rate(68)(24)(67)(25)
Less effect of discount rate assumption changes on reinsurance recoverable(2)(1)(8)(4)
Net life policy reserves, after reinsurance recoverable$965 $364 $1,024 $401 
Weighted-average duration of the net life policy reserves in years11141115

The total impact of flooring at cohort level in the above tables includes the effect of discount rate assumption changes of $1 million and $2 million at September 30, 2026 and 2025, 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 September 30,
20262025
UndiscountedDiscountedUndiscountedDiscounted
Term
Expected future benefit payments$5,217 $2,650 $4,996 $2,792 
Expected future gross premiums4,806 2,633 4,675 2,764 
Whole life
Expected future benefit payments$1,780 $593 $1,729 $654 
Expected future gross premiums712 401 698 427 

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 September 30,Nine months ended September 30,
2026202520262025
Gross premiums
Term$79 $76 $236 $227 
Whole life14 14 42 41 
Total$93 $90 $278 $268 
Interest accretion
Term$14 $13 $41 $39 
Whole life6 6 18 18 
Total$20 $19 $59 $57 

Adverse development that resulted in an immediate charge to income due to net premiums exceeding gross premiums was immaterial for the nine months ended September 30, 2026, and 2025.

The following table shows the weighted-average interest rate for our term and whole life products:
At September 30,
20262025
Term
Interest accretion rate5.30 %5.22 %
Current discount rate6.16 4.78 
Whole life
Interest accretion rate5.84 %5.85 %
Current discount rate6.55 5.51 

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 September 30,Nine months ended September 30,
2026202520262025
Deferred annuityUniversal lifeDeferred annuityUniversal lifeDeferred annuityUniversal lifeDeferred annuityUniversal life
Balance, beginning of period$540 $447 $575 $454 $554 $451 $595 $456 
Premiums received5 8 7 8 19 26 19 27 
Policy charges— (10)— (10)— (30)— (30)
Surrenders and withdrawals(13)(2)(15)(3)(43)(11)(50)(9)
Benefit payments(3)(2)(7)(1)(11)(5)(15)(6)
Interest credited5 5 5 5 15 15 16 15 
Balance, end of period$534 $446 $565 $453 $534 $446 $565 $453 
Weighted average crediting rate3.94 %4.45 %3.71 %4.43 %3.94 %4.45 %3.71 %4.43 %
Net amount at risk$— $3,582 $— $3,719 $— $3,582 $— $3,719 
Cash surrender value527 422 559 426 527 422 559 426 

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 September 30, 2026
Deferred annuity
1.00-3.00%$184 $13 $48 $246 $491 
3.01-4.00%43 — — — 43 
Total$227 $13 $48 $246 $534 
Universal life
1.00-3.00%$— $— $108 $20 $128 
3.01-4.00%52 — 5 — 57 
Greater than 4.00%261 — — — 261 
Total$313 $— $113 $20 $446 
At September 30, 2025
Deferred annuity
1.00-3.00%$63 $205 $14 $237 $519 
3.01-4.00%46 — — — 46 
Total$109 $205 $14 $237 $565 
Universal life
1.00-3.00%$— $54 $57 $15 $126 
3.01-4.00%51 — 4 — 55 
Greater than 4.00%272 — — — 272 
Total$323 $54 $61 $15 $453 
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 September 30,Nine months ended September 30,
2026202520262025
Balance, beginning of period$139 $132 $138 $130 
Balance, beginning of period before shadow reserve adjustments140 133 138 131 
Effect of changes in cash flow assumptions— (1)(5)(1)
Effect of actual variances from expected experience— 1 1 3 
Adjusted beginning of period balance140 133 134 133 
Interest accrual1 1 4 3 
Excess death benefits(2)(2)(6)(11)
Attributed assessments3 3 9 9 
Effect of changes in interest rate assumptions(4)1 (3)2 
Balance, end of period before shadow reserve adjustments138 136 138 136 
Shadow reserve adjustments(1)(1)(1)(1)
Balance, end of period137 135 137 135 
Less reinsurance recoverable, end of period7 6 7 6 
Net other additional liability, after reinsurance recoverable$144 $141 $144 $141 
Weighted-average duration of the other additional liability in years24262426

The following table shows balances and changes in separate accounts liability balances during the period:
(Dollars in millions)Three months ended September 30,Nine months ended September 30,
2026202520262025
Balance, beginning of period$996 $991 $981 $952 
Interest credited before policy charges12 12 36 34 
Benefit payments(7)(1)(14)(9)
Other3 (31)1 (6)
Balance, end of period$1,004 $971 $1,004 $971 
Cash surrender value$992 $969 $992 $969