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Reinsurance
 12 Months Ended
Dec. 31, 2020
Reinsurance Disclosures [Abstract]  
Reinsurance REINSURANCE
In the ordinary course of business, the Company is involved in both the assumption and cession of reinsurance with non-affiliated companies. The following table provides details of the reinsurance recoverables balance as of the dates indicated:
December 31,
 20202019
Ceded future policyholder benefits and expenses$2,199.8 $2,192.1 
Ceded unearned premium14.4 18.3 
Ceded claims and benefits payable1,012.5 1,044.7 
Ceded paid losses0.8 5.0 
Total$3,227.5 $3,260.1 

A key credit quality indicator for reinsurance is the A.M. Best Company ("A.M. Best") financial strength ratings of the reinsurer. A.M. Best financial strength ratings are an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. The A.M. Best ratings for new reinsurance agreements where there is material credit exposure are reviewed at the time of execution. The A.M. Best ratings for existing reinsurance agreements are reviewed on a quarterly basis, or sooner based on developments. The following table provides the reinsurance recoverable as of December 31, 2020 grouped by A.M. Best financial strength ratings:
A. M. Best Rating of
 Reinsurer
Ceded future
 policyholder
 benefits and
 expense
Ceded unearned
 premiums
Ceded claims
 and benefits
 payable
Ceded paid
 losses
Total
A++ or A+$1,659.5 $13.9 $992.9 $2.1 $2,668.4 
A or A–59.4 0.5 2.7 — 62.6 
B++ or B+480.5 — 16.9 0.3 497.7 
Not rated0.4 — — — 0.4 
  Total2,199.8 14.4 1,012.5 2.4 3,229.1 
Less Allowance:— — — (1.6)(1.6)
Total Reinsurance recoverable$2,199.8 $14.4 $1,012.5 $0.8 $3,227.5 
The Company has used reinsurance to exit certain businesses, including the disposals of AEB, FFG and LTC. The reinsurance recoverables relating to these dispositions amounted to $3.16 billion as of December 31, 2020. The three reinsurers with the largest reinsurance recoverable balances relating to these dispositions were Sun Life, John Hancock, and Talcott Resolution (formerly owned by The Hartford). The A.M. Best financial strength ratings of these three insurers were A+, A+ and B++, respectively. A.M. Best currently maintains a stable outlook on the financial strength ratings of Sun Life, John Hancock, and Talcott Resolution. Most of the assets backing reserves relating to reinsurance recoverables from Sun Life, John Hancock, and Talcott Resolution are held in trust. If these reinsurers became insolvent, the Company would be exposed to the risk that the assets in the trusts and/or the separate accounts would be insufficient to support the liabilities that would revert back to the Company. In addition to the direct reinsurance transactions referenced above, in 2013, The Hartford (now Talcott Resolution) sold its Individual Life Operations to Prudential Financial, Inc. ("Prudential"). Included in this transaction were the individual life policies remaining in force that were originally transferred by the
Company as part of the sale of FFG. The assets backing the reserves coinsured from The Hartford to Prudential continue to be held in trusts or separate accounts, and the Company is subject to the risk that the trust and/or separate account assets may be insufficient to support the liabilities that would revert back to the Company.
The following table presents the reinsurance recoverable from John Hancock, Sun Life, Talcott Resolution and other reinsurers as of December 31, 2020 and 2019.
ReinsurerDecember 31, 2020December 31, 2019
John Hancock$2,169.7 $2,106.0 
Sun Life497.0 579.9 
Talcott Resolution497.7 509.1 
Other reinsurers63.1 65.1 
  Total$3,227.5 $3,260.1 
The largest risk is with John Hancock. As of December 31, 2020, there is $2.64 billion held in trust to support the coinsurance arrangement. If the value of the assets in this trust falls below the value of the associated statutory liabilities, John Hancock will be required to put more assets in the trust.
If necessary, an allowance for doubtful accounts related to reinsurance recoverables is recorded on the basis of periodic evaluations of balances due from reinsurers (net of collateral), reinsurer solvency, management's experience and current economic conditions. Refer to Note 2 for additional information on the methodology.

The effect of reinsurance on premiums earned and benefits incurred was as follows for the period indicated:
 Years Ended December 31,
 202020192018
 Long
Duration
Short
 Duration
TotalLong
Duration
Short
 Duration
TotalLong
Duration
Short
 Duration
Total
Direct earned premiums$141.2 $54.5 $195.7 $150.2 $213.6 $363.8 $182.2 $568.2 $750.4 
Premiums assumed3.0 — 3.0 2.6 1.3 3.9 3.2 1.4 4.6 
Premiums ceded(139.6)(54.5)(194.1)(148.4)(214.2)(362.6)(180.6)(569.6)(750.2)
Net earned premiums$4.6 $— $4.6 $4.4 $0.7 $5.1 $4.8 $— $4.8 
Direct policyholder benefits$459.0 $66.1 $525.1 $505.0 $144.0 $649.0 $399.6 $363.7 $763.3 
Policyholder benefits
 assumed
13.4 0.1 13.5 12.7 (0.1)12.6 14.4 — 14.4 
Policyholder benefits ceded(416.1)(66.1)(482.2)(461.3)(143.7)(605.0)(350.9)(363.7)(714.6)
Net policyholder
 benefits
$56.3 $0.1 $56.4 $56.4 $0.2 $56.6 $63.1 $— $63.1 
The Company had $345.3 million and $370.1 million, respectively, of invested assets held in trusts or by custodians as of December 31, 2020 and 2019, respectively, for the benefit of others related to certain reinsurance arrangements.
The Company utilizes ceded reinsurance for loss protection and capital management, business dispositions, client risk and profit sharing.
Business Divestitures
As referenced in Note 1, the Company has used reinsurance or coinsurance to sell certain businesses, such as for the disposals of AEB, FFG and LTC.
The reinsurance agreement associated with the FFG sale also stipulates that Talcott Resolution contributes funds to increase the value of the separate account assets relating to annuity business sold if such value declines below the value of the associated liabilities. If Talcott Resolution fails to fulfill these obligations, the Company will be obligated to make these payments.
In addition, the Company would be responsible for administering all of the reinsured or coinsured businesses in the event of reinsurer or coinsurer insolvency. The Company does not currently have the administrative systems and capabilities to process these businesses. Accordingly, the Company would need to obtain those capabilities in the event of an insolvency
of one or more of the reinsurers or coinsurers of these businesses. The Company might be forced to obtain such capabilities on unfavorable terms with a resulting material adverse effect on our results of operations and financial condition.
As of December 31, 2020, the Company was not aware of any regulatory actions taken with respect to the solvency of the insurance subsidiaries of John Hancock, Sun Life or Talcott Resolution that reinsure the AEB, FFG and LTC businesses, and the Company has not been obligated to fulfill any of such reinsurers’ obligations.
John Hancock, Sun Life and Talcott Resolution have paid their obligations when due and there have been no disputes.