Reinsurance (Tables)

6 Months Ended

Jun. 30, 2022

Reinsurance Disclosures [Abstract]

Summary of significant reinsurance amounts

(in thousands)	June 30, 2022		December 31, 2021
Assets:
Reinsurance recoverables	$	24,121	$	38,579
Liabilities:
Deposit-type contracts
Direct	$	1,283,660		1,075,439
Reinsurance ceded		(720,030)		(647,632)
Retained deposit-type contracts	$	563,630	$	427,807

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
(in thousands)
Premiums
Direct	$	74	$	53	$	134	$	101
Reinsurance ceded		(74)		(53)		(134)		(101)
Total Premiums	$	—	$	—	$	—	$	—
Future policy and other policy benefits
Direct	$	46	$	15	$	99	$	21
Reinsurance ceded		(46)		(15)		(99)		(21)
Total future policy and other policy benefits	$	—	$	—	$	—	$	—

Schedule of significant reinsurance balances

The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by third-party reinsurers as of June 30, 2022:

							Recoverable/				Total Amount
			Recoverable		Recoverable		(Payable) on Benefit		Ceded		Recoverable/
(in thousands)	AM Best		on Paid		on Unpaid		Reserves/Deposit-		Due		(Payable) to/from
Reinsurer	Rating		Losses		Losses		type Contracts		Premiums		Reinsurer
Ironbound Reinsurance Company Limited		NR	$	—	$	—	$	(2,884)	$	—	$	(2,884)
Optimum Re Insurance Company		A		—		—		594		—		594
Sagicor Life Insurance Company		A-		—		188		10,749		(309)		10,628
Ascendant Re		NR		—		—		(780)		—		(780)
Crestline SP1		NR		—		—		3,865		—		3,865
American Republic Insurance Company		A		—		—		7,375		—		7,375
Unified Life Insurance Company		NR		—		40		999		(17)		1,022
US Alliance Life and Security Company		NR		—		—		4,325		(24)		4,301
			$	—	$	228	$	24,243	$	(350)	$	24,121

The following table provides a summary of the significant reinsurance balances recoverable on paid and unpaid policy claims by reinsurer as of December 31, 2021:

							Recoverable on				Total Amount
			Recoverable		Recoverable		Benefit		Ceded		Recoverable
(in thousands)	AM Best		on Paid		on Unpaid		Reserves/Deposit-		Due		from
Reinsurer	Rating		Losses		Losses		type Contracts		Premiums		Reinsurer
Ironbound Reinsurance Company Limited		NR	$	—	$	—	$	(3,561)	$	—	$	(3,561)
Optimum Re Insurance Company		A		—		—		561		—		561
Sagicor Life Insurance Company		A-		—		157		10,901		303		10,755
Ascendant Re		NR		—		—		1,550		—		1,550
Crestline SP1		NR		—		—		18,288		—		18,288
American Republic Insurance Company		A		—		—		4,885		—		4,885
Unified Life Insurance Company		NR		—		45		1,013		21		1,037
US Alliance Life and Security Company		NR		—		—		5,090		26		5,064
			$	—	$	202	$	38,727	$	350	$	38,579

Schedule of ceding commissions from the reinsurers

	Three months ended June 30,
(in thousands)	2022								2021
Reinsurer	Gross Ceding Commission		Expense Allowance(1)		Interest on Ceding Commission		Earned Ceding Commission		Gross Ceding Commission		Expense Allowance		Interest on Ceding Commission		Earned Ceding Commission
Unified Life Insurance Company	$	—	$	—	$	—	$	6	$	—	$	—	$	—	$	—
Ironbound Reinsurance Company Limited		—		—		49		144		—		14		54		123
Ascendant Re		—		—		23		77		—		21		22		45
US Alliance Life and Security Company		—		—		14		76		—		17		15		54
Crestline Re SP 1		1,491		2,401		88		559		2,032		4,097		60		282
American Republic Insurance Company		1,026		1,774		30		197		2,223		4,379		12		69
	$	2,517	$	4,175	$	204	$	1,059	$	4,255	$	8,528	$	163	$	573

	Six months ended June 30,
(in thousands)	2022								2021
Reinsurer	Gross Ceding Commission		Expense Allowance(1)		Interest on Ceding Commission		Earned Ceding Commission		Gross Ceding Commission		Expense Allowance		Interest on Ceding Commission		Earned Ceding Commission
Unified Life Insurance Company	$	—	$	—	$	—	$	14	$	—	$	—	$	—	$	—
Ironbound Reinsurance Company Limited		—		—		98		258		—		30		108		245
Ascendant Re		—		—		47		163		—		45		44		91
US Alliance Life and Security Company		—		—		28		163		2		38		31		121
Crestline SP1		2,525		4,231		168		1,065		4,377		8,774		110		498
American Republic Insurance Company		1,827		3,227		52		349		2,223		4,379		12		68
	$	4,352	$	7,458	$	393	$	2,012	$	6,602	$	13,266	$	305	$	1,023

(1) Includes acquisition and administrative expenses, commission expense allowance and product development fees.

Schedule of ceding commissions deferred on each reinsurance transaction

(in thousands)	June 30, 2022		December 31, 2021
Reinsurer	Deferred Gain on Reinsurance Transactions		Deferred Gain on Reinsurance Transactions
US Alliance Life and Security Company(1)	$	157	$	162
Unified Life Insurance Company(1)		229		242
Ironbound Reinsurance Company Limited(2)		5,015		5,137
Ascendant Re		3,029		3,101
US Alliance Life and Security Company(2)		2,190		2,286
American Republic Insurance Company(2)		5,967		4,146
Crestline SP1(2)		15,616		13,515
	$	32,203	$	28,589

1) These reinsurance transactions on our legacy life insurance business received gross ceding commissions on the effective dates of the transaction. The difference between the statutory net adjusted reserves and the GAAP adjusted reserves plus the elimination of DAC and value of business acquired related to these businesses reduces the gross ceding commission with the remaining deferred and amortized over the lifetime of the blocks of business.

2) These reinsurance transactions include the ceding commissions and expense allowances which are accounted for as described in (1).

Schedule of retained and reinsurance balance sheets

	June 30, 2022						December 31, 2021
(in thousands)	Retained		Reinsured		Consolidated		Retained		Reinsured		Consolidated
Assets
Total investments	$	561,709	$	647,145	$	1,208,854	$	414,418	$	561,109	$	975,527
Cash and cash equivalents		79,021		49,943		128,964		95,406		46,607		142,013
Accrued investment income		6,632		11,665		18,297		3,853		9,770		13,623
Deferred acquisition costs, net		33,164		—		33,164		24,530		—		24,530
Reinsurance recoverables		13,230		10,891		24,121		—		38,579		38,579
Other assets		20,883		1,692		22,575		27,834		(2,189)		25,645
Total assets	$	714,639	$	721,336	$	1,435,975	$	566,041	$	653,876	$	1,219,917
Liabilities and Stockholders’ Equity
Liabilities:
Policyholder liabilities	$	567,007	$	732,765	$	1,299,772	$	427,807	$	660,811	$	1,088,618
Deferred gain on coinsurance transactions		32,203		—		32,203		28,589		—		28,589
Other liabilities		50,933		(11,429)		39,504		23,889		(6,935)		16,954
Total liabilities	$	650,143	$	721,336	$	1,371,479	$	480,285	$	653,876	$	1,134,161
Stockholders’ Equity:
Voting common stock		4		—		4		4		—		4
Additional paid-in capital		138,663		—		138,663		138,277		—		138,277
Accumulated deficit		(60,707)		—		(60,707)		(70,159)		—		(70,159)
Accumulated other comprehensive income (loss)		(25,877)		—		(25,877)		2,634		—		2,634
Total Midwest Holding Inc.'s stockholders' equity	$	52,083	$	—	$	52,083	$	70,756	$	—	$	70,756
Noncontrolling interest		12,413		—		12,413		15,000		—		15,000
Total stockholders' equity		64,496		—		64,496		85,756		—		85,756
Total liabilities and stockholders' equity	$	714,639	$	721,336	$	1,435,975	$	566,041	$	653,876	$	1,219,917