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Reinsurance (Tables)
 12 Months Ended
Dec. 31, 2018
Insurance [Abstract]  
Effects of Reinsurance on Statement of Operations
 
 
Commutation
 
Assumption
 
Total
 
 
(in millions)
Cash
 
$
20

 
$
343

 
$
363

 
 
 
 
 
 
 
Premiums receivable/payable, net of commissions
 
$
16

 
$
45

 
$
61

Unearned premium reserve, net
 
(56
)
 
(319
)
 
(375
)
Credit derivative liability, net
 
—

 
(68
)
 
(68
)
Other
 
2

 
(1
)
 
1

Impact to net assets (liabilities), excluding cash
 
$
(38
)
 
$
(343
)
 
$
(381
)
 
 
 
 
 
 
 
Commutation loss
 
$
18

 
$
—

 
$
18

The following table presents the components of premiums and losses reported in the consolidated statements of operations and the contribution of the Company's Assumed and Ceded Businesses (both financial guaranty and non-financial guaranty).

Effect of Reinsurance on Statement of Operations

 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Premiums Written:
 
 
 
 
 
Direct
$
288

 
$
297

 
$
165

Assumed (1)
324

 
10

 
(11
)
Ceded (2)
14

 
18

 
(17
)
Net
$
626

 
$
325

 
$
137

Premiums Earned:
 
 
 
 
 
Direct
$
509

 
$
693

 
$
887

Assumed
51

 
27

 
27

Ceded
(12
)
 
(30
)
 
(50
)
Net
$
548

 
$
690

 
$
864

Loss and LAE:
 
 
 
 
 
Direct
$
68

 
$
404

 
$
327

Assumed
(1
)
 
11

 
—

Ceded
(3
)
 
(27
)
 
(32
)
Net
$
64

 
$
388

 
$
295

____________________
(1)
Negative assumed premiums written were due to changes in expected debt service schedules. Includes business assumed from SGI pursuant to the SGI Transaction.

(2)
Positive ceded premiums written were due to commutations and changes in expected debt service schedules.
Exposure by Reinsurer
Exposure to Reinsurers (1)

 
As of December 31,
 
2018
 
2017
 
(in millions)
Due (To) From:
 
 
 
Assumed premium, net of commissions
$
82

 
$
53

Ceded premium, net of commissions
(26
)
 
(42
)
Assumed expected loss to be paid
(49
)
 
(71
)
Ceded expected loss to be paid
14

 
29

Outstanding Exposure:
 
 
 
Financial guaranty
 
 
 
Assumed par outstanding
16,904

 
8,383

Ceded par outstanding (2)
2,389

 
4,434

Non-financial guaranty exposure (see Note 4)
 
 
 
Assumed
1,081

 
974

Ceded
239

 
159

____________________
(1)
The total collateral posted by all non-affiliated reinsurers required to post, or that had agreed to post, collateral as of December 31, 2018 and December 31, 2017 was approximately $80 million and $118 million, respectively. Such collateral is posted (i) in the case of certain reinsurers not authorized or "accredited" in the U.S., in order for the Company to receive credit for the liabilities ceded to such reinsurers, and (ii) in the case of certain reinsurers authorized in the U.S., on terms negotiated with the Company.
(2)
Of the total par ceded to unrated or BIG rated reinsurers, $236 million and $296 million is rated BIG as of December 31, 2018 and December 31, 2017, respectively.
Net Effect of Commutations and Cancellations of Assumed Reinsurance Contracts
Commutations of Ceded Reinsurance Contracts  

 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Increase in net unearned premium reserve
$
64

 
$
82

 
$
—

Increase in net par outstanding
1,457

 
5,107

 
28

Commutation gains (losses) (1)
(16
)
 
328

 
8