The Company cedes insurance to unaffiliated insurers to enable the Company to manage capital and risk exposure. Such arrangements do not relieve the Company of its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company regularly monitors the financial condition and ratings of its reinsurers and structures agreements to provide collateral funds where necessary.

Reinsurance Recoverables

Reinsurance recoverables include balances due from reinsurance companies and are presented net of an allowance for uncollectible reinsurance. Reinsurance recoverables include an estimate of the amount of policyholder benefits that may be ceded under the terms of the reinsurance agreements. Amounts recoverable from reinsurers are estimated in a manner consistent with assumptions used for the underlying policy benefits. Accordingly, the Company’s estimate of reinsurance recoverables is subject to similar risks and uncertainties as the estimate of the gross reserve for future policy benefits.



Reinsurance Recoverables
	Successor Company		Predecessor Company
	June 30, 2018		December 31, 2017
Reserve for future policy benefits and other policyholder funds and benefits payable
Sold businesses (MassMutual and Prudential)	$	19,319	$	19,448
Commonwealth	9,467		—
Other reinsurers	1,346		1,337
Gross reinsurance recoverables	$	30,132	$	20,785

As of June 30, 2018, the Company (Successor Company) has reinsurance recoverables from Commonwealth, MassMutual, and Prudential of approximately $9.5 billion, $8.2 billion and $11.2 billion, respectively. As of December 31, 2017, the Company (Predecessor Company) had reinsurance recoverables from MassMutual and Prudential of $8.3 billion and $11.1 billion, respectively. The Company's obligations to its direct policyholders that have been reinsured to Commonwealth, MassMutual and Prudential (Successor Company) and MassMutual and Prudential (Predecessor Company) are primarily secured by invested assets held in trust.

No allowance for uncollectible reinsurance is required as of June 30, 2018 (Successor Company) and December 31, 2017 (Predecessor Company). The allowance for uncollectible reinsurance reflects management’s best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers’ unwillingness or inability to pay. The Company analyzes the overall credit quality of the Company’s reinsurers. Based on this analysis, the Company may adjust the allowance for uncollectible reinsurance or charge off reinsurer balances that are determined to be uncollectible. Where its contracts permit, the Company secures future claim obligations with various forms of collateral, including irrevocable letters of credit, secured trusts, and funds held accounts. Although management has determined that no allowance is required at this time, the Company closely monitors the financial condition, ratings, and current market information of all of its counterparty reinsurers.

Insurance Revenues

The effect of reinsurance on earned premiums, fee income and other is as follows:



Insurance Revenues
	Successor Company			Predecessor Company
	June 1, 2018 to June 30, 2018			April 1, 2018 to May 31, 2018			For the three months ended June 30, 2017			January 1, 2018 to May 31, 2018			For the six months ended June 30, 2017
Gross earned premiums, fee income and other	$	201		$	419		$	594		$	1,059		$	1,235
Reinsurance assumed	10			19			28			48			59
Reinsurance ceded	(133		)	(273		)	(363		)	(684		)	(778		)
Net earned premiums, fee income and other	$	78		$	165		$	259		$	423		$	516

The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies. Insurance recoveries on ceded reinsurance agreements, which reduce death and other benefits, were $126 for the period of June 1, 2018 to June 30, 2018 (Successor Company), $194 for the period of April 1, 2018 to May 31, 2018 (Predecessor Company), $260 for the three months ended June 30, 2017 (Predecessor Company), $546 for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and $584 for the six months ended June 30, 2017 (Predecessor Company). In addition, the Company has reinsured a portion of the risk associated with U.S. variable annuities and the associated GMDB and GMWB riders.