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Reinsurance (Tables)
 6 Months Ended
Jun. 30, 2020
Insurance [Abstract]  
Effects of Reinsurance on Statement of Operations
Effect of Reinsurance on Statement of Operations

 
Second Quarter
 
Six Months
 
2020
 
2019
 
2020
 
2019
 
 
Premiums Written:
 
 
 
 
 
 
 
Direct
$
148

 
$
50

 
$
212

 
$
89

Assumed
1

 
1

 
1

 
1

Ceded (1)
2

 
(2
)
 
2

 
13

Net
$
151

 
$
49

 
$
215

 
$
103

Premiums Earned:
 
 
 
 
 
 
 
Direct
$
113

 
$
99

 
$
207

 
$
204

Assumed
10

 
15

 
20

 
30

Ceded
(2
)
 
(2
)
 
(3
)
 
(4
)
Net
$
121

 
$
112

 
$
224

 
$
230

Loss and LAE:
 
 
 
 
 
 
 
Direct
$
38

 
$
—

 
$
46

 
$
54

Assumed
(1
)
 
1

 
11

 
2

Ceded
—

 
(2
)
 
—

 
(11
)
Net
$
37

 
$
(1
)
 
$
57

 
$
45

____________________
(1)
Positive ceded premiums written were due to commutations and changes in expected debt service schedules.
Exposure by Reinsurer
Ceded Reinsurance (1)

 
As of
June 30, 2020
 
As of
December 31, 2019
 
(in millions)
Ceded premium payable, net of commissions
$
17

 
$
20

Ceded expected loss to be recovered (paid)
(20
)
 
11

Financial guaranty ceded par outstanding (2)
886

 
1,349

Specialty ceded exposure (see Note 3)
303

 
303

____________________
(1)
The total collateral posted by all non-affiliated reinsurers required to post, or that had agreed to post, collateral as of June 30, 2020 and December 31, 2019 was approximately $18 million and $68 million, respectively. Such collateral is posted (i) in the case of certain reinsurers not authorized or "accredited" in the U.S., in order for the Company to receive credit for the liabilities ceded to such reinsurers in statutory financial statements, and (ii) in the case of certain reinsurers authorized in the U.S., on terms negotiated with the Company.

(2)
Of the total par ceded to BIG rated reinsurers, $79 million and $224 million is rated BIG as of June 30, 2020 and December 31, 2019, respectively.
Schedule of Commutations
In Second Quarter 2020, the Company reassumed a previously ceded portfolio of insured business from its largest remaining legacy third party financial guaranty reinsurer, which includes $118 million in net par of Puerto Rico exposures.

Commutations of Ceded Reinsurance Contracts

 
Second Quarter
 
Six Months
 
2020
 
2019
 
2020
 
2019
 
(in millions)
Increase in net unearned premium reserve
$
5

 
$
15

 
$
5

 
$
15

Increase in net par outstanding
336

 
1,069

 
336

 
1,069

Commutation gains (losses)
38

 
1

 
38

 
1