The Company reinsures portions of its policy risks with other insurance companies. The use of indemnity reinsurance does not discharge an insurer from liability on the insurance ceded. The insurer is required to pay in full the amount of its insurance liability regardless of whether it is entitled to or able to receive payment from the reinsurer. The portion of risks exceeding the Company's retention limit is reinsured. The Company primarily seeks reinsurance coverage in order to manage loss exposures, to enhance our capital position, to diversify risks and earnings, and to manage new business volume. The Company follows reinsurance accounting when the treaty adequately transfers insurance risk and any acquisition cost reimbursements reduce policy acquisition costs deferred and maintenance expense reimbursements reduce direct expenses incurred. Otherwise, the Company follows deposit accounting if there is inadequate transfer of insurance risk or if the underlying policy for which risk is being transferred is an investment contract that does not contain insurance risk.

The effects of reinsurance on net premiums earned and net benefits incurred (benefits paid and reserve changes) for the three and nine months ended September 30, 2024 and 2023 were as follows:


	Three months ended September 30,								Nine months ended September 30,
	2024				2023				2024				2023
	(In millions)
	Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred
Direct	$	363	$	1,127	$	508	$	323	$	1,340	$	2,999	$	1,319	$	2,057

Ceded	(23)		(32)		(26)		(31)		(71)		(135)		(79)		(136)
Net	$	340	$	1,095	$	482	$	292	$	1,269	$	2,864	$	1,240	$	1,921

Amounts payable or recoverable for reinsurance on paid and unpaid claims are not subject to periodic or maximum limits. No policies issued by the Company have been reinsured with any foreign company, which is controlled, either directly or indirectly, by a party not primarily engaged in the business of insurance. The Company has not entered into any reinsurance agreements in which the reinsurer may unilaterally cancel any reinsurance for reasons other than non-payment of premiums or other similar credit issues.

Reinsurance Transactions

The following summarizes significant changes to a third-party reinsurance agreement for the period ended September 30, 2024:

Somerset: Effective July 1, 2024, F&G amended the existing flow reinsurance agreement with Somerset Reinsurance Ltd. (“Somerset”), a third-party reinsurer, to additionally cede the base contract benefits and GMWB riders attached under certain FIA policies on a coinsurance funds withheld quota share basis.

There have been no other significant changes to third party reinsurance agreements for the three and nine months ended September 30, 2024.

The following summarizes our reinsurance recoverable as of September 30, 2024 and December 31, 2023:

Parent Company/
Principal Reinsurers

Reinsurance Recoverable (a)

Agreement Type

Products
Covered

Accounting

September 30, 2024

December 31, 2023

(In millions)

Aspida Life Re Ltd

7,543

6,128

Coinsurance Funds Withheld

Certain MYGA (b)

Deposit

Somerset Reinsurance Ltd (c)

2,181

716

Coinsurance Funds Withheld

Certain MYGA (b) and deferred annuities

Deposit

Coinsurance Funds Withheld

Certain FIA

Reinsurance

Everlake Life Insurance Company

1,120

509

Coinsurance (d)

Certain MYGA (b) (d)

Deposit

Wilton Reassurance Company

1,073

1,092

Coinsurance

Block of traditional, IUL and UL (e)

Reinsurance

Other (f)

508

536

Reinsurance recoverable, gross of allowance for credit losses

12,425

8,981

Allowance for expected credit loss

(21)

Reinsurance recoverable, net of allowance for credit losses

12,404

8,960

(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.

(b) The combined quota share flow reinsurance amongst all reinsurers for 2024 was 90% through May 31, 2024, decreased to 30% in June and July 2024, and increased to 90% in August and September 2024. As of December 31, 2023, the combined quota share flow reinsurance amongst all reinsurers was 90%.

(d) Reinsurance recoverable is collateralized by assets placed in a statutory comfort trust by the reinsurer and maintained for our sole benefit.

(e) Also includes certain FGL Insurance life insurance policies that are subject to redundant reserves, reported on a statutory basis, under Regulation XXX and Guideline AXXX.

(f) Represents all other reinsurers, with no single reinsurer having a carrying value in excess of 5% of total reinsurance recoverable.

As of September 30, 2024, and December 31, 2023, F&G had a deposit asset of $10.5 billion and $7.5 billion, respectively, which is reported in the Reinsurance recoverable, net of allowance for credit losses on the unaudited Condensed Consolidated Balance Sheet.

The Company incurred risk charge fees of $10 million and $10 million during the three months ended September 30, 2024 and 2023, respectively, and $32 million and $30 million during the nine months ended September 30, 2024, and 2023, respectively, in relation to reinsurance agreements.

The Company estimates expected credit losses on reinsurance recoverables using a probability of default/loss given default model. Significant inputs to the model include the reinsurer's credit risk, expected timing of recovery, industry-wide historical default experience, senior unsecured bond recovery rates, and credit enhancement features.

The expected credit loss reserves were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
	(In millions)
Balance at beginning of period	$	(21)	$	(9)	$	(21)	$	(10)
Changes in the expected credit loss reserve	—		(1)		—		—
Balance at end of period	$	(21)	$	(10)	$	(21)	$	(10)

Concentration of Reinsurance Risk

As indicated above, F&G has a significant concentration of reinsurance risk with third party reinsurers, ASPIDA Life Re Ltd. (“Aspida Re”), Somerset, Everlake Life Insurance Company (“Everlake”), and Wilton Reinsurance (“Wilton Re”) that could have a material impact on our financial position in the event that any of these reinsurers fails to perform its obligations under the various reinsurance treaties. We monitor the financial condition and financial strength of individual reinsurers using public ratings (refer to table below) and ratings reports of individual reinsurers to attempt to reduce the risk of default by such reinsurers. In addition, the risk of non-performance is further mitigated with various forms of collateral or collateral

arrangements, including secured trusts, funds withheld accounts, and irrevocable letters of credit. We believe that all amounts due from Aspida Re, Somerset, Everlake, and Wilton Re for periodic treaty settlements, net of any applicable credit loss reserves, are collectible as of September 30, 2024. The following table presents financial strength ratings as of September 30, 2024:

Parent Company/Principal Reinsurers

Financial Strength Rating

AM Best

S&P

Fitch

Moody's

Aspida Re

A-

—

Somerset

A-

BBB+

—

Everlake

—

Wilton Re

A+

—