v3.24.3
Insurance and Contractholder Liabilities (Tables)
 9 Months Ended
Sep. 30, 2024
Insurance Loss Reserves [Abstract]  
Summary of Insurance and Contractholder Liabilities, Activity in the Unpaid Claims Liability and Liability Details for Unpaid Claims and Claim Expenses
The Company's insurance and contractholder liabilities were comprised of the following:
September 30, 2024December 31, 2023September 30, 2023
(In millions)CurrentNon-currentTotalCurrentNon-currentTotalTotal
Unpaid claims and claim expenses
Cigna Healthcare
$5,006 $82 $5,088 $5,017 $75 $5,092 $5,317 
Other Operations162 150 312 99 154 253 274 
Future policy benefits
Cigna Healthcare
89 510 599 97 518 615 590 
Other Operations157 3,301 3,458 163 3,375 3,538 3,380 
Contractholder deposit funds
Cigna Healthcare
10 120 130 12 133 145 151 
Other Operations364 5,982 6,346 362 6,178 6,540 6,607 
Market risk benefits30 914 944 37 966 1,003 934 
Unearned premiums710 31 741 846 22 868 1,385 
Total6,528 11,090 17,618 6,633 11,421 18,054 
Insurance and contractholder liabilities classified as liabilities of businesses held for sale (1)
(1,051)(517)(1,568)(1,119)(517)(1,636)
Total insurance and contractholder liabilities$5,477 $10,573 $16,050 $5,514 $10,904 $16,418 $18,638 
(1) Amounts classified as liabilities of businesses held for sale include $937 million of Unpaid claims, $422 million of Future policy benefits, $98 million of Unearned premiums and $111 million of Contractholder deposit funds as of September 30, 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.
Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment was as follows:
Nine Months Ended September 30,
(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 year28,314 26,788 
Prior years(422)(237)
Total incurred27,892 26,551 
Paid costs related to:
Current year23,761 22,053 
Prior years4,059 3,362 
Total paid27,820 25,415 
Ending balance, net4,928 5,091 
Add: Reinsurance and other amounts recoverable160 226 
Ending balance$5,088 $5,317 
(1) Includes unpaid claims amounts classified as liabilities of businesses held for sale. As of September 30, 2024 and December 31, 2023, $937 million and $823 million classified as liabilities of businesses held for sale, respectively.
Variances in Incurred Costs Related to Prior Years' Unpaid Claims and Claims Expenses
Variances in incurred costs related to prior years' unpaid claims and claim expenses that resulted from the differences between actual experience and the Company's key assumptions were as follows:
Nine Months Ended September 30,
20242023
(Dollars in millions)$
% (1)
$
% (2)
Actual completion factors and other$212 0.6 %$45 0.2 %
Medical cost trend210 0.6 192 0.6 
Total favorable variance$422 1.2 %$237 0.8 %
(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.
Future Policy Benefit Activity
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
September 30, 2024September 30, 2023
Interest accretion rate 2.83 %2.85 %
Current discount rate 4.50 %6.03 %
Weighted average duration 9.0 years7.0 years
The present values of expected net premiums and expected future policy benefits for the Cigna Healthcare segment were as follows:
Nine Months Ended September 30,
(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 
Effect of assumption changes and actual variances from expected experience (2)
3 314 
Issuances and lapses 1,392 822 
Net premiums collected(1,065)(1,019)
Interest and other (3)
680 58 
Ending balance at original discount rate11,397 10,269 
Effect of end of period discount rate assumptions(865)(1,681)
Ending balance (4)
$10,532 $8,588 
Present value of expected policy benefits
Beginning balance$9,633 $8,945 
Reversal of effect of discount rate assumptions1,220 1,611 
Effect of assumption changes and actual variances from expected experience (2)
203 112 
Issuances and lapses 1,316 902 
Benefit payments(1,096)(1,017)
Interest and other (3)
580 184 
Ending balance at original discount rate11,856 10,737 
Effect of discount rate assumptions(926)(1,765)
Ending balance (5)
$10,930 $8,972 
Liability for future policy benefits $398 $384 
Other (6)
201 206 
Total liability for future policy benefits (1)(7)
$599 $590 
(1)Includes $422 million and $429 million of future policy benefits classified as liabilities of businesses held for sale in the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, respectively.
(2)Includes the effect of actual variances from expectations, which decreased the total liability for future policy benefits by $(43) million and $(12) million, respectively, for the nine months ended September 30, 2024 and September 30, 2023.
(3)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.
(4)As of September 30, 2024 and September 30, 2023, undiscounted expected future gross premiums were $20.7 billion and $18.5 billion, respectively. As of September 30, 2024 and September 30, 2023, discounted expected future gross premiums were $14.4 billion and $12.5 billion, respectively.
(5)As of September 30, 2024 and September 30, 2023, undiscounted expected future policy benefits were $15.6 billion and $13.1 billion, respectively.
(6)The liability for future policyholder benefits includes immaterial businesses shown as reconciling items above, most of which are in run-off.
(7)$73 million and $154 million reported in Reinsurance recoverables in the Consolidated Balance Sheets as of September 30, 2024 and September 30, 2023, respectively, relate to the liability for future policy benefits. Additionally, $78 million of reinsurance recoverables are reported in assets of businesses held for sale in the Consolidated Balance Sheets as of September 30, 2024.
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
September 30, 2024September 30, 2023
Interest accretion rate 5.64 %5.64 %
Current discount rate 4.81 %5.73 %
Weighted average duration 11.3 years10.9 years
Summary of Market Risk Benefit
Market risk benefits activity was as follows:
Nine Months Ended September 30,
(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(7)(15)
Changes due to capital markets versus expected(78)(352)
Changes due to policyholder behavior versus expected(26)(1)
Assumption changes37 (16)
Balance, end of period, before the effect of changes in nonperformance risk (own credit risk)1,011 995 
Nonperformance risk (own credit risk), end of period(67)(61)
Balance, end of period$944 $934 
Reinsured market risk benefit, end of period$1,008 $993 
Effective Exit of Variable Annuity Reinsurance Business
The Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance business via a reinsurance transaction in 2013. Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk benefits as discussed in Note 9 to the Consolidated Financial Statements. Berkshire reinsured 100% of the Company's future cash flows in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit with approximately $3.0 billion remaining at September 30, 2024. As a result of the reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit.
(In millions)
Reinsurer (1)
September 30, 2024December 31, 2023
Collateral and Other Terms
at September 30, 2024
Berkshire$836 $873 
80% were secured by assets in a trust.
Sun Life Assurance Company of Canada75 92 
Liberty Re (Bermuda) Ltd.87 104 
100% were secured by assets in a trust.
SCOR SE29 31 
65% were secured by a letter of credit.
Market risk benefits (2)
$1,027 $1,100 
(1)All reinsurers are rated A- equivalent and higher by an NRSRO.
(2)Includes incurred but not reported ("IBNR") and outstanding claims of $19 million as of September 30, 2024 and $19 million as of December 31, 2023. These amounts are excluded from market risk benefits as of September 30, 2024 in Note 9 and Note 10A to the Consolidated Financial Statements.
Account Value, Net Amount at Risk and the Number of Contractholders for Guarantees Assumed in the Event of Death
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)September 30, 2024September 30, 2023
Net amount at risk$1,361 $1,986 
Average attained age of contractholders (weighted by exposure)77.6 years75.9 years