v3.24.1.u1
Insurance and Contractholder Liabilities
 3 Months Ended
Mar. 31, 2024
Insurance Loss Reserves [Abstract]  
Insurance and Contractholder Liabilities Insurance and Contractholder Liabilities
A.Account Balances – Insurance and Contractholder Liabilities
The Company's insurance and contractholder liabilities were comprised of the following:
March 31, 2024December 31, 2023March 31, 2023
(In millions)CurrentNon-currentTotalCurrentNon-currentTotalTotal
Unpaid claims and claim expenses
Cigna Healthcare
$5,786 $77 $5,863 $5,017 $75 $5,092 $4,959 
Other Operations99 161 260 99 154 253 272 
Future policy benefits
Cigna Healthcare
92 515 607 97 518 615 601 
Other Operations163 3,297 3,460 163 3,375 3,538 3,631 
Contractholder deposit funds
Cigna Healthcare
11 130 141 12 133 145 163 
Other Operations365 6,087 6,452 362 6,178 6,540 6,670 
Market risk benefits26 865 891 37 966 1,003 1,220 
Unearned premiums815 21 836 846 22 868 1,440 
Total7,357 11,153 18,510 6,633 11,421 18,054 
Insurance and contractholder liabilities classified as liabilities of businesses held for sale (1)
(1,569)(512)(2,081)(1,119)(517)(1,636)
Total insurance and contractholder liabilities$5,788 $10,641 $16,429 $5,514 $10,904 $16,418 $18,956 
(1) Amounts classified as liabilities of businesses held for sale include $1,378 million of Unpaid claims, $427 million of Future policy benefits, $161 million of Unearned premiums and $115 million of Contractholder deposit funds as of March 31, 2024 and $823 million of Unpaid claims, $429 million of Future policy benefits, $261 million of Unearned premiums and $123 million of Contractholder deposit funds as of December 31, 2023.

Insurance and contractholder liabilities expected to be paid within one year are classified as current.
Unpaid Claims and Claim Expenses – Cigna Healthcare
This liability reflects estimates of the ultimate cost of claims that have been incurred but not reported, expected development on reported claims, claims that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities.
The total of incurred but not reported liabilities plus expected development on reported claims and reported claims in process was $5.4 billion at March 31, 2024 and $4.6 billion at March 31, 2023. This increase was primarily due to claim submission and payment process disruptions related to a third-party cyber incident.
Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment was as follows:
Three Months Ended March 31,
(In millions)
2024 (1)
2023
Beginning balance$5,092 $4,176 
Less: Reinsurance and other amounts recoverable236 221 
Beginning balance, net4,856 3,955 
Incurred costs related to:
Current year9,452 9,041 
Prior years(226)(144)
Total incurred9,226 8,897 
Paid costs related to:
Current year5,072 5,316 
Prior years3,352 2,795 
Total paid8,424 8,111 
Ending balance, net5,658 4,741 
Add: Reinsurance and other amounts recoverable205 218 
Ending balance$5,863 $4,959 
(1) Includes unpaid claims amounts classified as liabilities of businesses held for sale. As of March 31, 2024 and December 31, 2023, $1,378 million and $823 million classified as liabilities of businesses held for sale, respectively.
Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims of certain business for which the Company administers the plan benefits without any right of offset. See Note 10 to the Consolidated Financial Statements for additional information on reinsurance.
Variances in incurred costs related to prior years' unpaid claims and claim expenses that resulted from the differences between actual experience and the Company's key assumptions were as follows:
Three Months Ended March 31,
20242023
(Dollars in millions)$
% (1)
$
% (2)
Actual completion factors$76 0.2 %$1 — %
Medical cost trend150 0.4 143 0.5 
Total favorable variance$226 0.6 %$144 0.5 %
(1)Percentage of current year incurred costs as reported for the year ended December 31, 2023.
(2)Percentage of current year incurred costs as reported for the year ended December 31, 2022.

Favorable prior year development in both years reflects lower than expected utilization of medical services as compared to our assumptions.
Future Policy Benefits
Cigna Healthcare

The weighted average interest rates applied and duration for future policy benefits in the Cigna Healthcare segment, consisting primarily of supplemental health products including individual Medicare supplement, limited benefit health products and individual private medical insurance, were as follows:
As of
March 31, 2024March 31, 2023
Interest accretion rate 2.56 %2.59 %
Current discount rate 5.11 %5.29 %
Weighted average duration 7.8 years8.1 years
The net liability for future policy benefits for the segment's supplemental health products represents the present value of benefits expected to be paid to policyholders, net of the present value of expected net premiums, which is the portion of expected future gross premium expected to be collected from policyholders that is required to provide for all expected future benefits and expenses. The present values of expected net premiums and expected future policy benefits for the Cigna Healthcare segment were as follows:
Three Months Ended March 31,
(In millions)
2024 (1)
2023
Present value of expected net premiums
Beginning balance$9,233 $8,557 
Reversal of effect of beginning of period discount rate assumptions1,154 1,537 
Issuances and lapses 446 306 
Net premiums collected(350)(326)
Interest and other (2)
73 56 
Ending balance at original discount rate10,556 10,130 
Effect of end of period discount rate assumptions(1,309)(1,312)
Ending balance (3)
$9,247 $8,818 
Present value of expected policy benefits
Beginning balance$9,633 $8,945 
Reversal of effect of discount rate assumptions1,220 1,611 
Issuances and lapses 457 307 
Benefit payments(362)(326)
Interest and other (2)
71 58 
Ending balance at original discount rate11,019 10,595 
Effect of discount rate assumptions(1,381)(1,378)
Ending balance (4)
$9,638 $9,217 
Liability for future policy benefits $391 $399 
Other (5)
216 202 
Total liability for future policy benefits (6)(7)
$607 $601 
(1)Includes future policy benefits amounts classified as liabilities of businesses held for sale.
(2)Includes the foreign exchange rate impact of translating from transactional and functional currency to United States dollar and the impact of flooring the liability at zero. The flooring impact is calculated at the cohort level after discounting the reserves at the current discount rate.
(3)As of March 31, 2024 and March 31, 2023 undiscounted expected future gross premiums were $19.0 billion and $17.6 billion, respectively. As of March 31, 2024 and March 31, 2023 discounted expected future gross premiums were $13.3 billion and $12.5 billion, respectively.
(4)As of March 31, 2024 and March 31, 2023, undiscounted expected future policy benefits were $13.6 billion and $12.8 billion, respectively.
(5)The liability for future policyholder benefits includes immaterial businesses shown as reconciling items above, most of which are in run-off.
(6)$72 million and $154 million reported in Reinsurance recoverables in the Consolidated Balance Sheets as of March 31, 2024 and March 31, 2023, respectively, relate to the liability for future policy benefits. Additionally, $81 million of reinsurance recoverables are reported in assets of businesses held for sale in the Consolidated Balance Sheets as of March 31, 2024.
(7)Includes $427 million of future policy benefits classified as liabilities of businesses held for sale in the Consolidated Balance Sheets as of March 31, 2024.
Other Operations
The weighted average interest rates applied and duration for future policy benefits in Other Operations, consisting of annuity and life insurance products, were as follows:
As of
March 31, 2024March 31, 2023
Interest accretion rate 5.64 %5.64 %
Current discount rate 5.16 %4.95 %
Weighted average duration 11.3 years11.7 years

Obligations for annuities represent discounted periodic benefits to be paid to an individual or groups of individuals over their remaining lives. Other Operations' traditional insurance contracts, which are in run-off, have no premium remaining to be collected; therefore, future policy benefit reserves represent the present value of expected future policy benefits, discounted using the current discount rate, and the remaining amortizable deferred profit liability.
Future policy benefits for Other Operations includes deferred profit liability of $379 million as of March 31, 2024 and $392 million as of March 31, 2023. Future policy benefits excluding deferred profit liability were $3.1 billion as of March 31, 2024 and $3.2 billion as
of each of December 31, 2023, March 31, 2023, and December 31, 2022. The change in future policy benefits reserves year-to-date was primarily driven by benefit payments, as well as changes in the current discount rate. Undiscounted expected future policy benefits were $4.4 billion as of March 31, 2024 and $4.6 billion as of March 31, 2023. As of both March 31, 2024 and March 31, 2023, $1.0 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.
Contractholder Deposit Funds
Contractholder deposit fund liabilities within Other Operations were $6.5 billion as of March 31, 2024 and December 31, 2023 and $6.7 billion as of March 31, 2023 and December 31, 2022. Approximately 38% of the balance is reinsured externally. Activity in these liabilities is presented net of reinsurance in the Consolidated Statements of Cash Flows. The net year-to-date decrease in contractholder deposit fund liabilities generally relates to withdrawals and benefit payments from contractholder deposit funds, partially offset by deposits and interest credited to contractholder deposit funds.
As of March 31, 2024, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not effectively exited through reinsurance were 3.33%, $3.0 billion and $2.8 billion, respectively. The comparative amounts as of March 31, 2023 were 3.25%, $3.2 billion and $2.8 billion, respectively. More than 99% of the $4.0 billion liability as of March 31, 2024 and the $4.1 billion liability as of March 31, 2023 not reinsured externally is for contracts with guaranteed interest rates of 3% - 4%, and approximately $1.2 billion represented contracts with policies at the guarantee. At both of these same period ends, $1.2 billion was 50-150 basis points ("bps") above the guarantee and the remaining $1.6 billion as of March 31, 2024 and $1.7 billion as of March 31, 2023 represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value. More than 90% of these contracts have actual cash values of at least 110% of the guaranteed cash value.
Market Risk Benefits
Liabilities for market risk benefits consist of variable annuity reinsurance contracts in Other Operations. These liabilities arise under annuities and riders to annuities written by ceding companies that guarantee the benefit received at death and, for a subset of policies, also provide contractholders the option, within 30 days of a policy anniversary after the appropriate waiting period, to elect minimum income payments. The Company's capital market risk exposure on variable annuity reinsurance contracts arises when the reinsured guaranteed minimum benefit exceeds the contractholder's account value in the related underlying mutual funds at the time the insurance benefit is payable under the respective contract. The Company receives and pays premium periodically based on the terms of the reinsurance agreements.
Market risk benefits activity was as follows:
Three Months Ended March 31,
(Dollars in millions)20242023
Balance, beginning of year$1,003 $1,268 
Balance, beginning of year, before the effect of nonperformance risk (own credit risk)1,085 1,379 
Changes due to expected run-off(3)(6)
Changes due to capital markets versus expected(113)(41)
Changes due to policyholder behavior versus expected(14)6 
Assumption changes— (33)
Balance, end of period, before the effect of changes in nonperformance risk (own credit risk)955 1,305 
Nonperformance risk (own credit risk), end of period(64)(85)
Balance, end of period$891 $1,220 
Reinsured market risk benefit, end of period$951 $1,301 
The following table presents the net amount at risk and the average attained age of contractholders (weighted by exposure) for contracts assumed by the Company. The net amount at risk is the amount the Company would have to pay to contractholders if all deaths or annuitizations occurred as of the earliest possible date in accordance with the insurance contract. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded, as discussed further in Note 10 to the Consolidated Financial Statements.
(Dollars in millions, excludes impact of reinsurance ceded)March 31, 2024March 31, 2023
Net amount at risk$1,441 $2,183 
Average attained age of contractholders (weighted by exposure)77.7 years75.4 years