Reinsurance (Tables)

9 Months Ended

Sep. 30, 2024

Reinsurance Recoverables by Range of External Credit Rating and Collateral Level

The Company's reinsurance recoverables as of September 30, 2024 are presented at amount due by range of external credit rating and collateral level in the following table, with reinsurance recoverables that are market risk benefits separately presented at fair value:


(In millions)	Fair value of collateral contractually required to meet or exceed carrying value of recoverable		Collateral provisions exist that may mitigate risk of credit loss (1)		No collateral		Total
Ongoing Operations
A- equivalent and higher current ratings (2)	$	—	$	7	$	235	$	242
BBB- to BBB+ equivalent current credit ratings (2)	—		—		62		62
Not rated	143		11		3		157
Total recoverables related to ongoing operations	143		18		300		461
Acquisition, disposition or run-off activities
BBB+ equivalent and higher current ratings (2)
Lincoln National Life and Lincoln Life & Annuity of New York	—		2,548		—		2,548
Empower Annuity Insurance Company	—		—		123		123
Prudential Insurance Company of America	320		—		—		320
Life Insurance Company of North America	—		311		—		311
Other	155		19		14		188

Not rated	—		6		4		10
Total recoverables related to acquisition, disposition or run-off activities	475		2,884		141		3,500
Total reinsurance recoverables before market risk benefits	$	618	$	2,902	$	441	$	3,961
Allowance for uncollectible reinsurance							(30)
Market risk benefits							1,008
Total reinsurance recoverables (3)							$	4,939

(1)Includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its external credit rating is downgraded to a specified level.

(2)Certified by an NRSRO.

(3)Includes $188 million of current reinsurance recoverables that are reported in Other current assets and $194 million of reinsurance recoverables classified as assets of businesses held for sale.

Reinsurance Recoverables for Variable Annuity Business

Market risk benefits activity was as follows:




	Nine Months Ended September 30,
(Dollars in millions)	2024		2023
Balance, beginning of year	$	1,003	$	1,268
Balance, beginning of year, before the effect of nonperformance risk (own credit risk)	1,085		1,379
Changes due to expected run-off	(7)		(15)
Changes due to capital markets versus expected	(78)		(352)
Changes due to policyholder behavior versus expected	(26)		(1)
Assumption changes	37		(16)
Balance, end of period, before the effect of changes in nonperformance risk (own credit risk)	1,011		995
Nonperformance risk (own credit risk), end of period	(67)		(61)
Balance, end of period	$	944	$	934
Reinsured market risk benefit, end of period	$	1,008	$	993

Effective Exit of Variable Annuity Reinsurance Business

The Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance business via a reinsurance transaction in 2013. Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk benefits as discussed in Note 9 to the Consolidated Financial Statements. Berkshire reinsured 100% of the Company's future cash flows in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit with approximately $3.0 billion remaining at September 30, 2024. As a result of the reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit.


(In millions)
Reinsurer (1)	September 30, 2024		December 31, 2023		Collateral and Other Terms at September 30, 2024
Berkshire	$	836	$	873	80% were secured by assets in a trust.
Sun Life Assurance Company of Canada	75		92
Liberty Re (Bermuda) Ltd.	87		104		100% were secured by assets in a trust.
SCOR SE	29		31		65% were secured by a letter of credit.
Market risk benefits (2)	$	1,027	$	1,100

(1)All reinsurers are rated A- equivalent and higher by an NRSRO.

(2)Includes incurred but not reported ("IBNR") and outstanding claims of $19 million as of September 30, 2024 and $19 million as of December 31, 2023. These amounts are excluded from market risk benefits as of September 30, 2024 in Note 9 and Note 10A to the Consolidated Financial Statements.