4. Reinsurance (Tables)

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Reinsurance activity

Direct Business and Reinsurance:	Years Ended December 31,
($ in millions)	2012			2011			2010
				As restated			As restated
				and amended			and amended
Direct premiums	$	79.2		$	77.1		$	82.8
Premiums ceded to non-affiliate reinsurers(1)		(70.7	)		(74.8	)		(79.0	)
Premiums	$	8.5		$	2.3		$	3.8
Direct policy benefits incurred	$	281.4		$	161.4		$	236.0
Policy benefits assumed from non-affiliate reinsureds		1.0			3.8			3.8
Policy benefits ceded to:
Affiliate reinsurers		(13.7	)		(5.3	)		(14.1	)
Non-affiliate reinsurers		(114.7	)		(86.0	)		(144.1	)
Policy benefits ceded to reinsurers		(128.4	)		(91.3	)		(158.2	)
Premiums paid to:
Affiliate reinsurers		20.1			19.7			11.5
Non-affiliate reinsurers		60.8			58.7			48.4
Premiums paid to reinsurers(2)		80.9			78.4			59.9
Policy benefits(3)	$	234.9		$	152.3		$	141.5
Direct life insurance in-force	$	62,701.8		$	68,205.1		$	73,616.8
Life insurance in-force assumed from reinsureds		78.5			66.1			71.6
Life insurance in-force ceded to:
Affiliate reinsurers		(1,859.3	)		(2,520.7	)		(3,009.5	)
Non-affiliate reinsurers		(46,950.4	)		(49,800.1	)		(53,239.4	)
Life insurance in-force ceded to reinsurers		(48,809.7	)		(52,320.8	)		(56,248.9	)
Life insurance in-force	$	13,970.6		$	15,950.4		$	17,439.5
Percentage of amount assumed to net insurance in-force		0.6	%		0.4	%		0.4	%

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(1)	Primarily represents premiums ceded to reinsurers related to traditional life and term insurance policies.
(2)	For universal life and variable universal life contracts, premiums paid to reinsurers are reflected within policy benefits. See Note 3 to these financial statements for additional information regarding significant accounting policies.

(3) Policy benefit amounts above exclude changes in reserves, interest credited to policyholders and withdrawals, which total $161.9 million, $150.3 million and $129.9 million, net of reinsurance, for the years ended December 31, 2012, 2011 and 2010, respectively.

We remain liable to the extent that reinsuring companies may not be able to meet their obligations under reinsurance agreements in effect. Failure of the reinsurers to honor their obligations could result in losses to the Company. Since we bear the risk of nonpayment, on a quarterly basis we evaluate the financial condition of our reinsurers and monitor concentrations of credit risk. Based on our review of their financial statements, reputation in the reinsurance marketplace and other relevant information, we believe that we have no material exposure to uncollectible life reinsurance. At December 31, 2012, five major reinsurance companies account for approximately 73% of the reinsurance recoverable.