Transactions with Affiliates

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Transactions with Affiliates

Transactions with Affiliates

The following summarizes transactions with affiliates (in millions) and the associated line item on the Consolidated Balance Sheets:

	As of December 31,
	2023		2022
Assets with affiliates:
Inter-company notes	$	1,063	$	1,216	Fixed maturity AFS securities
Assumed reinsurance contracts	1		–		Policy Loans
					Deferred acquisition costs, value of business
Assumed/ceded reinsurance contracts	(131)		(138)		acquired and deferred sales inducements
Accrued inter-company interest receivable	16		13		Accrued investment income
					Reinsurance recoverables, net of allowance
Ceded reinsurance contracts	15,563		2,187		for credit losses
Ceded reinsurance contracts	642		899		Other assets
Cash management agreement	857		124		Other assets
Service agreement receivable	41		6		Other assets
Liabilities with affiliates:
Assumed reinsurance contracts	18		17		Future contract benefits
Assumed reinsurance contracts	352		361		Policyholder account balances
Inter-company short-term debt	840		562		Short-term debt
Inter-company long-term debt	2,195		2,269		Long-term debt
Ceded reinsurance contracts	5,862		2,517		Funds withheld reinsurance liabilities
Ceded reinsurance contracts	897		(31)		Other liabilities
Accrued inter-company interest payable	18		15		Other liabilities
Service agreement payable	37		41		Other liabilities
Assumed/ceded reinsurance contracts	4,387		158		Other liabilities
Equity with affiliates:
Accumulated other comprehensive income –	774		55		Accumulated other comprehensive
assumed/ceded					income (loss)

The following summarizes transactions with affiliates (in millions) and the associated line item on the Consolidated Statements of Comprehensive Income (Loss):

	For the Years Ended December 31,
	2023		2022		2021
Revenues with affiliates:
Premiums received on assumed (paid on ceded)
reinsurance contracts	$	(498)	$	(421)	$	(468)	Insurance premiums
Fees for management of general account	(156)		(140)		(138)		Net investment income
Net investment income on ceded funds
withheld treaties	(238)		(161)		(113)		Net investment income
Net investment income on inter-company notes	65		40		29		Net investment income
Realized gains (losses) on ceded reinsurance
contracts:
Other gains (losses)	(9)		631		94		Realized gain (loss)
Reinsurance-related settlements	1,717		(1,068)		1,626		Realized gain (loss)
Amortization of deferred gain (loss) on reinsurance							Amortization of deferred gain
contracts	17		3		3		(loss) on business sold
							through reinsurance
Other revenues	(171)		–		–		Other revenues
Benefits and expenses with affiliates:
Reinsurance (recoveries) benefits on ceded
reinsurance	(507)		(247)		(430)		Benefits
Interest credited on assumed reinsurance contracts	12		47		48		Interest credited
Market risk benefit (gain) loss
on ceded reinsurance contracts	1,129		3,543		2,199		Market risk benefit (gain) loss
Policyholder liability remeasurement (gain) loss							Policyholder liability remeasurement
on ceded reinsurance contracts	–		(321)		64		(gain) loss
Ceded reinsurance contracts	(13)		(26)		(7)		Commissions and other expenses
Service agreement payments (receipts)	(17)		(53)		(29)		Commissions and other expenses
Interest expense on inter-company debt	148		120		107		Interest and debt expense

Inter-Company Notes

LNC issues inter-company notes to us for a predetermined face value to be repaid by LNC at a predetermined maturity with a specified interest rate.

Cash Management Agreement

In order to manage our capital more efficiently, we participate in an inter-company cash management program where LNC can lend to or borrow from us to meet short-term borrowing needs. The cash management program is essentially a series of demand loans, which are permitted under applicable insurance laws, among LNC and its affiliates that reduces overall borrowing costs by allowing LNC and its subsidiaries to access internal resources instead of incurring third-party transaction costs. The borrowing and lending limit is currently 3% of our admitted assets as of December 31, 2023.

Service Agreements

In accordance with service agreements with LNC and other subsidiaries of LNC for personnel and facilities usage, general management services and investment management services, we receive services from and provide services to affiliated companies and receive an allocation of corporate overhead. Corporate overhead expenses are allocated based on specific methodologies for each function. The majority of the expenses are allocated based on the following methodologies: headcount, capital, investments by product, account values, weighted policies in force and sales.

Ceded Reinsurance Contracts

As discussed in Note 8, we cede insurance contracts to LNBAR. We cede certain guaranteed benefit risks (including certain GDB and GLB benefits) to LNBAR.

Substantially all reinsurance ceded to affiliated companies is with unauthorized companies. To take reserve credit for such reinsurance: the reinsurer holds assets in trust for our potential benefit; we hold assets from the reinsurer, including funds withheld under reinsurance treaties; and/or we are the beneficiary of LOCs that are obtained by the affiliate reinsurer and issued by banks. As of December 31, 2023 and 2022, the LOCs of which we are the beneficiary aggregated to $111 million and $1.5 billion, respectively.