XML 117 R16.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Reinsurance
 12 Months Ended
Dec. 31, 2019
Insurance [Abstract]  
Reinsurance Reinsurance

The Company reinsures its business through a diversified group of reinsurers. However, the Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. The Company monitors trends in arbitration and any litigation outcomes with its reinsurers. Collectability of reinsurance balances are evaluated by monitoring ratings and evaluating the financial strength of its reinsurers. Large reinsurance recoverable balances with offshore or other non-accredited reinsurers are secured through various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit ("LOC").

Information regarding the effect of reinsurance on the Consolidated Balance Sheets is as follows as of the periods indicated:
 
December 31, 2019
 
Direct
 
Assumed
 
Ceded
 
Total,
Net of
Reinsurance
Assets
 
 
 
 
 
 
 
Premiums receivable
$
125

 
$
12

 
$
(87
)
 
$
50

Reinsurance recoverable
—

 
—

 
3,682

 
3,682

Total
$
125

 
$
12

 
$
3,595

 
$
3,732

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Future policy benefits and contract owner account balances
$
49,757

 
$
1,111

 
$
(3,682
)
 
$
47,186

Liability for funds withheld under reinsurance agreements
88

 
—

 
—

 
88

Total
$
49,845

 
$
1,111

 
$
(3,682
)
 
$
47,274

 
 
 
 
 
 
 
 
 
December 31, 2018
 
Direct
 
Assumed
 
Ceded
 
Total,
Net of
Reinsurance
Assets
 
 
 
 
 
 
 
Premiums receivable
$
121

 
$
11

 
$
(85
)
 
$
47

Reinsurance recoverable
—

 
—

 
3,796

 
3,796

Total
$
121

 
$
11

 
$
3,711

 
$
3,843

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Future policy benefits and contract owner account balances
$
49,568

 
$
1,202

 
$
(3,796
)
 
$
46,974

Liability for funds withheld under reinsurance agreements
(5
)
 
—

 
—

 
(5
)
Total
$
49,563

 
$
1,202

 
$
(3,796
)
 
$
46,969


Information regarding the effect of reinsurance on the Consolidated Statement of Operations is as follows for the periods indicated:
 
Year ended December 31,


2019
 
2018
 
2017
Premiums:
 
 
 
 
 
Direct premiums
$
2,759

 
$
2,602

 
$
2,597

Reinsurance assumed
827

 
956

 
1,152

Reinsurance ceded
(1,313
)
 
(1,426
)
 
(1,652
)
Net premiums
$
2,273

 
$
2,132

 
$
2,097

 
 
 
 
 
 
Fee income:
 
 
 
 
 
Gross fee income
$
1,970

 
$
1,983

 
$
1,890

Reinsurance ceded
(1
)
 
(1
)
 
(1
)
Net fee income
$
1,969

 
$
1,982

 
$
1,889

 
 
 
 
 
 
Interest credited and other benefits to contract owners / policyholders:
 
 
 
 
 
Direct interest credited and other benefits to contract owners / policyholders
$
4,186

 
$
3,912

 
$
4,090

Reinsurance assumed
9

 
554

 
23

Reinsurance ceded(1)
(445
)
 
(940
)
 
(455
)
Net interest credited and other benefits to contract owners / policyholders
$
3,750

 
$
3,526

 
$
3,658


(1) Includes $232, $216 and $219 for amounts paid to reinsurers in connection with the Company's UL contracts for the years ended December 31, 2019, 2018 and 2017, respectively.

Effective October 1, 1998, the Company disposed of a block of its individual life insurance business under an indemnity reinsurance arrangement with a subsidiary of Lincoln National Corporation ("Lincoln") for $1.0 billion. Under the agreement, Lincoln contractually assumed from the Company certain policyholder liabilities and obligations, although the Company remains obligated to contract owners. The Lincoln subsidiary established a trust to secure its obligations to the Company under the reinsurance transaction. Of the Premium receivable and reinsurance recoverable on the Consolidated Balance Sheets, $1.3 billion and $1.4 billion as of December 31, 2019 and 2018, respectively, is related to the reinsurance recoverable from the subsidiary of Lincoln under this reinsurance agreement.

Pursuant to the terms of the 2018 MTA disclosed in the Business, Basis of Presentation and Significant Accounting Policies Note to the accompanying Consolidated Financial Statements and prior to the closing of the Transaction, the Company entered into the following reinsurance transactions:

•
VIAC recaptured from the Company the CBVA business previously assumed by Roaring River II, Inc., a subsidiary of the Company.
•
The Company, through one of its subsidiaries ceded, under modified coinsurance agreements, as amended, fixed and fixed indexed annuity reserves of $451 to Athene Life Re, Ltd. ("ALRe"). Under the terms of the agreements, ALRe contractually assumed from the Company the policyholder liabilities and obligations related to the policies, although the Company remains obligated to the policyholders. Upon the consummation of the agreements, the Company recognized no gain or loss in the Consolidated Statements of Operations.
•
The Company, through one of its subsidiaries, assumed, under coinsurance and modified coinsurance agreements, certain individual life and deferred annuity policies from VIAC. Upon the consummation of the agreements, the Company recognized no gain or loss in the Consolidated Statements of Operations. As of December 31, 2019 and 2018, assumed reserves related to these agreements were $782 and $837, respectively.