Reinsurance

9 Months Ended

Sep. 30, 2020

6. Reinsurance

Reinsurance transactions—On June 18, 2020, we entered into a funds withheld coinsurance agreement effective June 1, 2020 with Jackson National Life Insurance Company (Jackson) to reinsure a block of fixed and fixed indexed annuities. Additionally, as part of the transaction, we made a $500 million equity investment in an indirect parent of Jackson, which closed on July 17, 2020. The following summarizes the transaction:


(In millions)	Funds Withheld
Liabilities assumed	$	27,439
Less: Net consideration received	28,805
Unearned revenue reserve1	$	(1,366)

1 Included within interest sensitive contract liabilities on the condensed consolidated balance sheets.

Unearned revenue reserve balances are amortized over the life of the reinsurance agreements on a basis consistent with our DAC amortization policy.

Effective July 1, 2020, we restructured our reinsurance agreement with Mass Mutual Life Insurance Company (MassMutual). MassMutual recaptured the existing coinsurance agreement and we immediately entered into a new funds withheld coinsurance agreement with our ALRe subsidiary. As a result, we recorded a $5,021 million increase in funds withheld at interest and a corresponding decrease in assets, primarily consisting of investments and cash.

The following summarizes the effect of reinsurance on premiums and future policy and other policy benefits on the condensed consolidated statements of income:


	Three months ended September 30,				Nine months ended September 30,
(In millions)	2020		2019		2020		2019
Premiums
Direct	$	42	$	2,661	$	1,424	$	5,405
Reinsurance assumed	101		57		284		193
Reinsurance ceded	(31)		(30)		(101)		(123)
Total premiums	$	112	$	2,688	$	1,607	$	5,475

Future policy and other policy benefits
Direct	$	385	$	3,025	$	2,404	$	6,481
Reinsurance assumed	161		77		370		313
Reinsurance ceded	(107)		(147)		(305)		(399)
Total future policy and other policy benefits	$	439	$	2,955	$	2,469	$	6,395