4. Reinsurance

9 Months Ended

Sep. 30, 2012

Insurance [Abstract]

Note 4 - Reinsurance

Reinsurance recoverable includes balances due from reinsurers for paid and unpaid losses and is presented net of an allowance for uncollectable reinsurance. The reinsurance recoverable balance is $595.0 million and $564.3 million as of September 30, 2012 and December 31, 2011, respectively, and is recorded within receivables in the consolidated balance sheets. Other reinsurance activity is shown below.

Direct Business and Reinsurance	Three Months Ended						Nine Months Ended
in Continuing Operations:	September 30,						September 30,
($ in millions)	2012			2011			2012			2011
				As restated and amended						As restated and amended
Direct premiums	$	133.4		$	151.8		$	411.6		$	463.6
Premiums assumed from reinsureds		1.9			2.8			6.1			7.8
Premiums ceded to reinsurers(1)		(40.5	)		(42.7	)		(127.1	)		(147.8	)
Premiums	$	94.8		$	111.9		$	290.6		$	323.6
Percentage of amount assumed to net premiums		2.0	%		2.6	%		2.1	%		2.4	%
Direct policy benefits incurred	$	191.9		$	183.0		$	574.1		$	587.3
Policy benefits assumed from reinsureds		30.0			2.0			67.9			7.8
Policy benefits ceded to reinsurers		(49.3	)		(58.8	)		(200.1	)		(194.0	)
Premiums paid to reinsurers(2)		28.1			28.5			69.5			75.4
Policy benefits(3)	$	200.7		$	154.7		$	511.4		$	476.5

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(1)	Primarily represents premiums ceded to reinsurers related to traditional life and term insurance policies.
(2)	For universal life and variable universal life contracts, premiums paid to reinsurers are reflected within policy benefits. See Note 3 to these financial statements for additional information regarding significant accounting policies.

(3)   Policy benefit amounts above exclude changes in reserves, interest credited to policyholders, and other items, which total $151.8 million and $138.4 million, net of reinsurance, for the three months ended September 30, 2012 and 2011, respectively and $377.5 million and $372.1 million, net of reinsurance, for the nine months ended September 30, 2012 and 2011, respectively.

We remain liable to the extent that reinsuring companies may not be able to meet their obligations under reinsurance agreements in effect. Failure of the reinsurers to honor their obligations could result in losses to the Company. Since we bear the risk of nonpayment, on a quarterly basis we evaluate the financial condition of our reinsurers and monitor concentrations of credit risk. Based on our review of their financial statements, reputation in the reinsurance marketplace and other relevant information, we believe that we have no material exposure to uncollectible life reinsurance. At September 30, 2012, five major reinsurance companies account for approximately 65% of the reinsurance recoverable.