We use reinsurance extensively, which has a significant effect on our results of operations. Reinsurance arrangements do not relieve us of our primary obligation to the policyholder. Our reinsurance contracts typically do not have a fixed term. In general, the reinsurers’ ability to terminate coverage for existing cessions is limited to such circumstances as material breach of contract or nonpayment of premiums by the ceding company. Our reinsurance contracts generally contain provisions intended to provide the ceding company with the ability to cede future business on a basis consistent with historical terms. However, either party may terminate any of the contracts with respect to the future business upon appropriate notice to the other party. Generally, the reinsurance contracts do not limit the overall amount of the loss that can be incurred by the reinsurer.

Our policy is to limit the amount of life insurance retained on the life of any one person to $1 million. To limit our exposure with any one reinsurer, we monitor the concentration of credit risk we have with our reinsurance counterparties, as well as their financial condition.

Reinsurance recoverables represents ceded policy reserve balances and ceded claim liabilities. The amounts of ceded claim liabilities included in reinsurance recoverables that we paid and which are recoverable from those reinsurers were $7.5 million and $26.0 million as of December 31, 2022 and 2021, respectively. Benefits and claims ceded to reinsurers for 2022, 2021, and 2020 were $1,570.8 million, $2,017.0 million, and $1,653.6 million, respectively.

In connection with our corporate reorganization that included an initial public offering (“IPO”) of our common stock by Citigroup, Inc. (“Citigroup”), Primerica Life, Primerica Life Canada and NBLIC entered into significant coinsurance transactions (the “IPO coinsurance agreements”) on March 30, 2010 with three insurance companies then affiliated with Citigroup (collectively, the “IPO coinsurers”). Under the IPO coinsurance agreements, we ceded between 80% and 90% of the risks and rewards of our term life insurance policies in force at year-end 2009. Because these agreements were part of a business reorganization among entities under common control, they did not generate any deferred gain or loss upon their execution. Concurrent with signing these agreements, we transferred the corresponding account balances in respect of the coinsured policies along with the assets to support the statutory liabilities assumed by the IPO coinsurers. Each of the account balances transferred were at book value with no gain or loss recorded in net income. Beginning in 2017, policies reaching the end of their initial term period are no longer ceded under the IPO coinsurance transactions, but the existing YRT reinsurance already in place prior to the IPO will continue.

Three of the IPO coinsurance agreements satisfy U.S. GAAP risk transfer rules. Under these agreements, we ceded between 80% and 90% of our term life future policy benefit reserves, and we transferred a corresponding amount of assets to the IPO coinsurers. These transactions did not impact our future policy benefit reserves. As such, we have recorded an asset for the same amount of risk transferred in reinsurance recoverables. We also reduced DAC by a corresponding amount, which reduces future amortization expenses. In addition, we are transferring between 80% and 90% of all future premiums and benefits and claims associated with these policies to the corresponding reinsurance entities. We receive ongoing ceding allowances, which are reflected as a reduction to insurance expenses, to cover policy and claims administration expenses as well as certain corporate overhead charges under each of these reinsurance contracts.

In the 10% Coinsurance Agreement, we ceded to Prime Reinsurance Company (“Prime Re”), an affiliate of Citigroup, 10% of our U.S. (except New York) term life insurance business in force at year-end 2009 subject to an experience refund provision. As the 10% Coinsurance Agreement includes an experience refund provision, it does not satisfy U.S. GAAP risk transfer rules. As a result, we have accounted for this contract using deposit method accounting and have recognized a deposit asset in other assets on our consolidated balance sheets for assets backing the economic reserves. The deposit asset held in support of this agreement was $224.4 million and $231.4 million at December 31, 2022 and 2021, respectively. We make contributions to the deposit asset during the life of the agreement to fulfill our responsibility of funding the economic reserve. The market return on the deposit asset is reflected in net

investment income during the life of the agreement. Prime Re is responsible for ensuring that there are sufficient assets to meet all statutory requirements. The finance charge on the statutory reserves in excess of economic reserves funded by Prime Re in support of the 10% Coinsurance Agreement is 0.5% per annum and is reflected in interest expense in our consolidated statements of income.

The following table represents the Company’s in-force life insurance as of December 31, 2022 and 2021:


	December 31, 2022			December 31, 2021
	(Dollars in thousands)
Direct life insurance in-force	$	919,081,738		$	905,819,671
Amounts ceded to other companies		(787,907,229	)		(777,826,233	)
Net life insurance in-force	$	131,174,509		$	127,993,438
Percentage of reinsured life insurance in-force		86	%		86	%

Reinsurance recoverables include ceded reserve balances and ceded claim liabilities. Reinsurance recoverables and financial strength ratings by reinsurer were as follows:


	December 31, 2022					December 31, 2021
	Reinsurance recoverables			A.M. Best rating		Reinsurance recoverables			A.M. Best rating
	(In thousands)
Swiss Re Life and Health America, Inc. (Novated from Pecan Re Inc.) (1)(2)	$	2,440,274		A+		$	-			-
Pecan Re Inc. (1) (2)		-			-		2,567,602		NR
SCOR Global Life Reinsurance Companies (3)		394,171		A+			426,634		A+
Munich Re of Malta (2) (5)		251,078		NR			278,591		NR
Swiss Re Life & Health America Inc. (4)		244,056		A+			259,239		A+
American Health and Life Insurance Company (2)		146,779		B++			157,837		B++
Munich American Reassurance Company		134,570		A+			142,705		A+
Korean Reinsurance Company		123,026		A			134,048		A
RGA Reinsurance Company		128,443		A+			140,953		A+
Hannover Life Reassurance Company		47,870		A+			49,749		A+
TOA Reinsurance Company		35,762		A			38,909		A
All other reinsurers		72,816		-			75,094		-
Allowance for credit losses		(2,936	)				(2,942	)
Reinsurance recoverables	$	4,015,909				$	4,268,419

NR – not rated

(1) Effective April 1, 2022, the coinsurance agreement with Pecan Re Inc. was novated and replaced by an agreement with Swiss Re Life and Health America, Inc.

(2) Reinsurance recoverables include balances ceded under coinsurance transactions of term life insurance policies that were in force as of December 31, 2009.

Amounts shown are net of their share of the reinsurance receivable from other reinsurers. Arrangements with these reinsurers include collateral trust agreements

held in support of reinsurance recoverables.

(3) Includes amounts ceded to Transamerica Reinsurance Companies and fully retroceded to SCOR Global Life Reinsurance Companies.

(4) Includes amounts ceded to Lincoln National Life Insurance and fully retroceded to Swiss Re Life & Health America Inc.

(5) Entity is rated AA- by S&P.

Certain reinsurers with which we do business receive group ratings. Individually, those reinsurers are SCOR Global Life Americas Reinsurance Company, SCOR Global Life U.S.A. Reinsurance Company, SCOR Global Life Re Insurance Company of Delaware, and SCOR Global Life of Canada.

The IPO coinsurance agreements include provisions to ensure that Primerica Life, Primerica Life Canada and NBLIC receive full regulatory credit for the reinsurance treaties. Under these agreements, the ceded business can be recaptured with no fee in the event the IPO coinsurers do not comply with the various safeguard provisions in their respective IPO coinsurance agreements. Pecan Re Inc. also has entered into a capital maintenance agreement requiring Swiss Re Life and Health America, Inc. to provide additional funding, if needed, at any point during the term of the agreement up to the maximum as described in the capital maintenance agreement.

The rollforward of the allowance for credit losses (“ACL”) on reinsurance recoverables for the years ended December 31, 2022, 2021, and 2020 were as follows:


	Year ended December 31,
	2022			2021			2020
	(In thousands)
Balance, beginning of period	$	2,942		$	7,144		$	3,917
Current period provision for expected credit losses		164			502			3,235
Less: Writeoffs charged against the ACL, if any		-			(4,651	)		-
Less: Recoveries of expected credit losses previously recorded		(170	)		(53	)		(8	)
Balance, at the end of period	$	2,936		$	2,942		$	7,144