Under the terms of the reinsurance agreements, the reinsurer agrees to reimburse the Company for the ceded amount in the event a claim is paid. Cessions under reinsurance agreements do not discharge the Company’s obligation as the primary insurer. In the event that reinsurers do not meet their obligations under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible.

Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed in Note 8.

The Company reinsures an 80% quota share of its Group Term Life business for capital management purposes. The majority of the Company’s other reinsurance activity within this business relates to client agreements for employer sponsored captive programs, risk-sharing agreements and multinational pooling. The risks ceded under these agreements are generally quota shares of group life and disability policies. The cessions vary and the Company may cede up to 100% of all the risks of the policies.

The Company’s RIS business has engaged in reinsurance activities on an opportunistic basis. In 2020, a U.S. life insurance subsidiary of the Company began reinsuring longevity risks for certain pension products issued by unaffiliated providers located in the United Kingdom (“U.K.”).

For selected large corporate clients, the Company reinsures group employee benefits or credit insurance business with various client-affiliated reinsurance companies, covering policies issued to the employees or customers of the clients. Additionally, the Company cedes and assumes risk with other insurance companies when either company requires a business partner with the appropriate local licensing to issue certain types of policies in certain jurisdictions. In these cases, the assuming company typically underwrites the risks, develops the products and assumes most or all of the risk. The Company also has reinsurance agreements in-force that reinsure a portion of the living and death benefit guarantees issued in connection with variable annuity products. Under these agreements, the Company pays reinsurance fees associated with the guarantees collected from policyholders, and receives reimbursement for benefits paid or accrued in excess of account values, subject to certain limitations. The Company may also reinsure certain risks with external reinsurers depending upon the nature of the risk and local regulatory requirements.

For its life products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis or on a quota share basis. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as well as specific coverages. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specified characteristics. The Company also assumes portions of the risk associated with certain whole life policies issued by a former affiliate and reinsures certain term life policies and universal life policies with secondary death benefit guarantees to such former affiliate.

For its other products, the Company has a reinsurance agreement in-force to reinsure the living and death benefit guarantees issued in connection with certain variable annuity guarantees from the Company’s former operating joint venture in Japan. Under this agreement, the Company receives reinsurance fees associated with the guarantees collected from policyholders, and provides reimbursement for benefits paid or accrued in excess of account values, subject to certain limitations.

The Company has exposure to catastrophes which could contribute to significant fluctuations in the Company’s results of operations. For the U.S. and EMEA, the Company purchases catastrophe coverage to reinsure risks issued within territories that the Company believes are subject to the greatest catastrophic risks. For its other segments, the Company uses excess of retention and quota share reinsurance agreements to provide greater diversification of risk and minimize exposure to larger risks. Excess of retention reinsurance agreements provide for a portion of a risk to remain with the direct writing company and quota share reinsurance agreements provide for the direct writing company to transfer a fixed percentage of all risks of a class of policies.

The Company reinsures its business through a diversified group of well-capitalized reinsurers. The Company analyzes recent trends in arbitration and litigation outcomes in disputes, if any, with its reinsurers. The Company monitors ratings and evaluates the financial strength of its reinsurers by analyzing their financial statements. In addition, the reinsurance recoverable balance due from each reinsurer is evaluated as part of the overall monitoring process. Recoverability of reinsurance recoverable balances is evaluated based on these analyses. The Company generally secures large reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance, which at December 31, 2022 and 2021, were not significant. A U.S. life insurance subsidiary of the Company also secured collateral from its counterparties to mitigate counterparty default risk related to its longevity reinsurance agreements.

The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. The Company had $3.9 billion and $3.6 billion of unsecured reinsurance recoverable balances at December 31, 2022 and 2021, respectively.

At December 31, 2022, the Company had $6.1 billion of net ceded reinsurance recoverables. Of this total, $4.2 billion, or 69%, were with the Company’s five largest ceded reinsurers, including $2.4 billion of net ceded reinsurance recoverables which were unsecured. At December 31, 2021, the Company had $6.3 billion of net ceded reinsurance recoverables. Of this total, $4.1 billion, or 65%, were with the Company’s five largest ceded reinsurers, including $1.9 billion of net ceded reinsurance recoverables which were unsecured.

The Company has reinsured with an unaffiliated third-party reinsurer, 59.25% of the closed block through a modified coinsurance agreement. The Company accounts for this agreement under the deposit method of accounting. The Company, having the right of offset, has offset the modified coinsurance deposit with the deposit recoverable.


	Years Ended December 31,
	2022		2021		2020
	(In millions)
Premiums
Direct premiums	$	48,503	$	41,259	$	42,201
Reinsurance assumed	3,037		2,907		2,032
Reinsurance ceded	(2,143)		(2,157)		(2,199)
Net premiums	$	49,397	$	42,009	$	42,034
Universal life and investment-type product policy fees
Direct universal life and investment-type product policy fees	$	6,004	$	6,271	$	6,122
Reinsurance assumed	76		45		50
Reinsurance ceded	(495)		(560)		(569)
Net universal life and investment-type product policy fees	$	5,585	$	5,756	$	5,603
Policyholder benefits and claims
Direct policyholder benefits and claims	$	50,436	$	44,035	$	42,221
Reinsurance assumed	2,612		2,570		1,745
Reinsurance ceded	(2,436)		(2,651)		(2,505)
Net policyholder benefits and claims	$	50,612	$	43,954	$	41,461
Other expenses
Direct other expenses	$	12,013	$	12,450	$	13,013
Reinsurance assumed	285		375		371
Reinsurance ceded	(264)		(239)		(234)
Net other expenses	$	12,034	$	12,586	$	13,150


	December 31,
	2022								2021
	Direct		Assumed		Ceded		Total Balance Sheet		Direct		Assumed		Ceded		Total Balance Sheet
	(In millions)
Assets
Premiums, reinsurance and other receivables	$	5,481	$	1,505	$	10,475	$	17,461	$	4,929	$	1,789	$	10,431	$	17,149
Deferred policy acquisition costs and value of business acquired	22,889		370		(276)		22,983		16,151		227		(317)		16,061
Total assets	$	28,370	$	1,875	$	10,199	$	40,444	$	21,080	$	2,016	$	10,114	$	33,210
Liabilities
Future policy benefits	$	200,355	$	3,873	$	—	$	204,228	$	195,915	$	3,806	$	—	$	199,721
Policyholder account balances	203,013		69		—		203,082		203,391		82		—		203,473
Other policy-related balances	18,472		1,183		(4)		19,651		16,380		1,368		3		17,751
Other liabilities	18,700		2,007		5,273		25,980		15,519		2,139		4,880		22,538
Total liabilities	$	440,540	$	7,132	$	5,269	$	452,941	$	431,205	$	7,395	$	4,883	$	443,483