Reinsurance (Tables)

3 Months Ended

Mar. 31, 2023

Reinsurance Recoverables by Range of External Credit Rating and Collateral Level

The Company's reinsurance recoverables as of March 31, 2023 are presented at amount due by range of external credit rating and collateral level in the following table, with reinsurance recoverables that are market risk benefits separately presented at fair value:


(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
A- equivalent and higher current ratings (1)	$	—	$	—	$	94	$	94
BBB- to BBB+ equivalent current credit ratings (1)	—		—		59		59
Not rated	142		5		63		210
Total recoverables related to ongoing operations (2)	142		5		216		363
Acquisition, disposition or run-off activities
BBB+ equivalent and higher current ratings (1)
Lincoln National Life and Lincoln Life & Annuity of New York	—		2,750		—		2,750

Empower Annuity Insurance Company	—		—		133		133
Prudential Insurance Company of America	380		—		—		380
Life Insurance Company of North America	—		386		—		386
Other	187		25		15		227

Not rated	—		9		3		12
Total recoverables related to acquisition, disposition or run-off activities	567		3,170		151		3,888
Total reinsurance recoverables before market risk benefits	$	709	$	3,175	$	367	$	4,251
Allowance for uncollectible reinsurance							(35)
Market risk benefits (4)							1,301
Total reinsurance recoverables (2)							$	5,517

(1)Certified by a Nationally Recognized Statistical Rating Organization ("NRSRO").

(2)Includes $231 million of current reinsurance recoverables that are reported in Other current assets.

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

(4)Total Berkshire and certain Other recoverables reflected under acquisition, disposition or run-off activities in the Company's 2022 Form 10-K that relate to the Company’s variable annuity reinsurance products discussed in section B below are now reported at fair market value as MRBs, as further discussed in Note 9 to the Consolidated Financial Statements. At December 31, 2022, we reported $711 million related to these recoverables related to the GMDB variable annuity reinsurance product. The restated December 31, 2022 variable annuity reinsurance recoverable balance is $1.4 billion, which also includes the GMIB variable annuity reinsurance product that was classified in Other assets prior to the adoption of LDTI.

Reinsurance Recoverables for Variable Annuity Business

Market risk benefits activity was as follows:


	Three Months Ended
(Dollars in millions)	March 31, 2023		March 31, 2022


Balance, beginning of year	$	1,268	$	1,824
Balance, beginning of year, before the effect of nonperformance risk (own credit risk)	1,379		1,949
Changes due to expected run-off	(6)		(19)
Changes due to capital markets versus expected	(41)		(271)
Changes due to policyholder behavior versus expected	6		(9)
Assumption changes	(33)		39
Balance, end of year, before the effect of changes in nonperformance risk (own credit risk)	1,305		1,689
Nonperformance risk (own credit risk), end of period	(85)		(131)
Balance, end of period	$	1,220	$	1,558
Reinsured market risk benefit, end of period	$	1,301	$	1,681


(In millions)
Reinsurer (1)	March 31, 2023		December 31, 2022		Collateral and Other Terms at March 31, 2023
Berkshire	$	1,043	$	1,116	90% were secured by assets in a trust.
Sun Life Assurance Company of Canada	117		115
Liberty Re (Bermuda) Ltd.	128		128		100% were secured by assets in a trust.
SCOR SE	35		39		70% were secured by a letter of credit.
Market risk benefits (2)	$	1,323	$	1,398

(1)All reinsurers are rated A- equivalent and higher by an NRSRO.

(2)Includes IBNR and outstanding claims of $25 million offset by premium due of $3 million. These amounts are excluded from market risk benefits at March 31, 2023 in Note 9 and Note 10A to the Consolidated Financial Statements. At December 31, 2022, IBNR and outstanding claims of $27 million offset by premium due of $3 million were excluded from the market risk benefits as restated due to the adoption of LDTI.