REINSURANCE

12 Months Ended

Dec. 31, 2024

Insurance [Abstract]

REINSURANCE

REINSURANCE

Certain blocks of insurance assumed in acquisitions, primarily life and annuities in run-off status are subject to reinsurance where some or all of the underwriting risk related to these policies has been ceded to a third-party. In addition, a large portion of our reinsurance takes the form of 100% coinsurance agreements where, in addition to all of the underwriting risk, all administrative responsibilities, including premium collections and claim payment, have also been ceded to a third-party. We acquired these policies and related reinsurance agreements with the purchase of stock of companies in which the policies were originally written. We acquired these companies for business reasons unrelated to these particular policies, including the companies’ other products and licenses necessary to fulfill strategic plans.

A reinsurance agreement between two entities transfers the underwriting risk of policyholder liabilities to a reinsurer while the primary insurer retains the contractual relationship with the ultimate insured. As such, these reinsurance agreements do not completely relieve us of our potential liability to the ultimate insured. However, given the transfer of underwriting risk, our potential liability is limited to the credit exposure which exists should the reinsurer be unable to meet its obligations assumed under these reinsurance agreements.

Reinsurance recoverables represent the portion of future policy benefits payable and benefits payable that are covered by reinsurance. Reinsurance recoverables, included in other long-term assets, were $167 million at December 31, 2024 and $173 million at December 31, 2023. The amount of these reinsurance recoverables resulting from 100% coinsurance agreements was approximately $167 million at December 31, 2024 and approximately $173 million at December 31, 2023. Premiums ceded were $5 million in 2024, $1 million in 2023 and $5 million in 2022. Benefits ceded were $4 million in 2024, $3 million in 2023, and $2 million in 2022.

We evaluate the financial condition of our reinsurers on a regular basis. Protective Life Insurance Company, with $154 million in reinsurance recoverables, is well-known and well-established with a AM Best rating of A+ at December 31, 2024. The remaining reinsurance recoverables of $13 million are divided between 7 other reinsurers, with none subject to funds withheld accounts or other financial guarantees supporting the repayment of these amounts.