Reinsurance (Tables)

12 Months Ended

Dec. 31, 2020

Reinsurance Recoverables by Range of External Credit Rating and Collateral Level

The Company’s reinsurance recoverables are presented in the following table by range of external credit rating and collateral level.


(Dollars in millions)	Fair value of collateral contractually required to meet or exceed carrying value of recoverable		Collateral provisions exist that may mitigate risk of credit loss(3)		No collateral		Total
Ongoing Operations
Upper-medium grade and higher (1)	$	—	$	—	$	173	$	173
Lower-medium grade (2)	—		—		64		64
Not rated	92		—		29		121
Total recoverables related to ongoing operations	92		—		266		358
Acquisition, disposition or runoff activities
Upper-medium grade and higher (1)
Lincoln National Life and Lincoln Life & Annuity of New York	—		3,033		—		3,033
Berkshire	309		409		—		718
Prudential Retirement Insurance and Annuity	625		—		—		625
Life Insurance Company of North America	—		424		—		424
Other	232		18		20		270

Not rated	—		17		4		21
Total recoverables related to acquisition, disposition or runoff activities	1,166		3,901		24		5,091
Total	$	1,258	$	3,901	$	290	$	5,449
Allowance for uncollectible reinsurance							(32)
Total reinsurance recoverables							$	5,417

(1)Includes A- equivalent and higher current ratings certified by a nationally recognized statistical rating organization ("NRSRO")

(2)Includes BBB- to BBB+ equivalent current credit ratings certified by an NRSRO

(3)Includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its external credit rating is downgraded to a specified level

Effects of Reinsurance

The following table presents direct, assumed and ceded premiums for both short-duration and long-duration insurance contracts. It also presents reinsurance recoveries that have been netted against benefit expenses in the Company’s Consolidated Statements of Income.


(In millions)	2020		2019		2018
Premiums
Short-duration contracts
Direct	$	38,425	$	35,690	$	32,148
Assumed	85		64		77
Ceded	(230)		(203)		(182)
Total short-duration contract premiums	38,280		35,551		32,043
Long-duration contracts
Direct	4,517		4,352		4,268
Assumed	99		105		116
Ceded
Individual life insurance and annuity business sold	(119)		(126)		(133)
Other	(150)		(168)		(181)
Total long-duration contract premiums	4,347		4,163		4,070
Total premiums	$	42,627	$	39,714	$	36,113
Reinsurance recoveries
Individual life insurance and annuity business sold	$	240	$	238	$	249
Other	191		157		203
Total reinsurance recoveries	$	431	$	395	$	452

Account Value, Net Amount at Risk and the Number of Contractholders for Guarantees Assumed in the Event of Death

The following table presents the account value, net amount at risk and the number of contractholders for guarantees assumed by the Company in the event of death. The net amount at risk is the amount that the Company would have to pay if all contractholders died as of the specified date. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded.


(Dollars in millions, excludes impact of reinsurance ceded)	December 31, 2020		December 31, 2019
Account value	$	9,523	$	9,110
Net amount at risk	$	1,570	$	1,764
Average attained age of contractholders (weighted by exposure)	77		76
Number of contractholders (estimated)	185,000		200,000

Schedule of Derivative Assets at Fair Value

There were three reinsurers covering 100% of the GMIB exposures as of December 31, 2020 and December 31, 2019 as follows:


(In millions)
Line of Business	Reinsurer	December 31, 2020		December 31, 2019		Collateral and Other Terms at December 31, 2020
GMIB	Berkshire	$	353	$	332	100% were secured by assets in a trust.
	Sun Life Assurance Company of Canada	215		202
	Liberty Re (Bermuda) Ltd.	190		179		100% were secured by assets in a trust.
Total GMIB recoverables reported in Other current assets and Other assets		$	758	$	713

All reinsurers are rated A- equivalent and higher by an NRSRO