Reinsurance (Tables)

6 Months Ended

Jun. 30, 2024

Reinsurance Recoverables by Range of External Credit Rating and Collateral Level

The Company's reinsurance recoverables as of June 30, 2024 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 (1)		No collateral		Total
Ongoing Operations
A- equivalent and higher current ratings (2)	$	—	$	8	$	80	$	88
BBB- to BBB+ equivalent current credit ratings (2)	—		—		61		61
Not rated	151		8		224		383
Total recoverables related to ongoing operations	151		16		365		532
Acquisition, disposition or run-off activities
BBB+ equivalent and higher current ratings (2)
Lincoln National Life and Lincoln Life & Annuity of New York	—		2,568		—		2,568
Empower Annuity Insurance Company	—		—		127		127
Prudential Insurance Company of America	335		—		—		335
Life Insurance Company of North America	—		318		—		318
Other	161		22		14		197

Not rated	—		6		4		10
Total recoverables related to acquisition, disposition or run-off activities	496		2,914		145		3,555
Total reinsurance recoverables before market risk benefits	$	647	$	2,930	$	510	$	4,087
Allowance for uncollectible reinsurance							(34)
Market risk benefits							927
Total reinsurance recoverables (3)							$	4,980

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

(2)Certified by an NRSRO.

(3)Includes $182 million of current reinsurance recoverables that are reported in Other current assets and $203 million of reinsurance recoverables classified as assets of businesses held for sale.

Reinsurance Recoverables for Variable Annuity Business

Market risk benefits activity was as follows:




	Six Months Ended June 30,
(Dollars in millions)	2024		2023
Balance, beginning of year	$	1,003	$	1,268
Balance, beginning of year, before the effect of nonperformance risk (own credit risk)	1,085		1,379
Changes due to expected run-off	(6)		(14)
Changes due to capital markets versus expected	(133)		(194)
Changes due to policyholder behavior versus expected	(17)		8
Assumption changes	—		(32)
Balance, end of period, before the effect of changes in nonperformance risk (own credit risk)	929		1,147
Nonperformance risk (own credit risk), end of period	(64)		(78)
Balance, end of period	$	865	$	1,069
Reinsured market risk benefit, end of period	$	927	$	1,143

Effective Exit of Variable Annuity Reinsurance Business

The Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance business via a reinsurance transaction in 2013. Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk benefits as discussed in Note 9 to the Consolidated Financial Statements. Berkshire reinsured 100% of the Company's future cash flows in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit with approximately $3.0 billion remaining at June 30, 2024. As a result of the reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit.


(In millions)
Reinsurer (1)	June 30, 2024		December 31, 2023		Collateral and Other Terms at June 30, 2024
Berkshire	$	762	$	873	90% were secured by assets in a trust.
Sun Life Assurance Company of Canada	75		92
Liberty Re (Bermuda) Ltd.	85		104		100% were secured by assets in a trust.
SCOR SE	27		31		75% were secured by a letter of credit.
Market risk benefits (2)	$	949	$	1,100

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

(2)Includes incurred but not reported ("IBNR") and outstanding claims of $22 million as of June 30, 2024 and $19 million as of December 31, 2023. These amounts are excluded from market risk benefits as of June 30, 2024 in Note 9 and Note 10A to the Consolidated Financial Statements.