Reinsurance

12 Months Ended

Dec. 31, 2022

The Company reinsures its business through a diversified group of reinsurers. However, the Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. The Company monitors trends in arbitration and any litigation outcomes with its reinsurers. Collectability of reinsurance balances are evaluated by monitoring ratings and evaluating the financial strength of its reinsurers. Large reinsurance recoverable balances with offshore or other non-accredited reinsurers are secured through various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit ("LOC").

Information regarding the effect of reinsurance on the Consolidated Balance Sheets is as follows as of the periods indicated:


	December 31, 2022
	Direct		Assumed		Ceded		Total, Net of Reinsurance
Assets
Premiums receivable	$	172	$	11	$	(212)	$	(29)
Reinsurance recoverable, net of allowance for credit losses	—		—		13,370		13,370
Total	$	172	$	11	$	13,158	$	13,341

Liabilities
Future policy benefits and contract owner account balances	$	51,529	$	1,044	$	—	$	52,573
Liability for funds withheld under reinsurance agreements	104		—		—		104
Total	$	51,633	$	1,044	$	—	$	52,677



	December 31, 2021
	Direct		Assumed		Ceded		Total, Net of Reinsurance
Assets
Premiums receivable	$	169	$	8	$	(213)	$	(36)
Reinsurance recoverable, net of allowance for credit losses	—		—		13,671		13,671
Total	$	169	$	8	$	13,458	$	13,635

Liabilities
Future policy benefits and contract owner account balances	$	51,648	$	1,110	$	—	$	52,758
Liability for funds withheld under reinsurance agreements	203		—		—		203
Total	$	51,851	$	1,110	$	—	$	52,961

Information regarding the effect of reinsurance on the Consolidated Statements of Operations is as follows for the periods indicated:


	Year ended December 31,
	2022		2021		2020
Premiums:
Direct premiums	$	3,259	$	3,041	$	2,897
Reinsurance assumed	25		26		31
Reinsurance ceded	(859)		(6,421)		(512)
Net premiums	$	2,425	$	(3,354)	$	2,416

Fee income:
Gross fee income	$	2,126	$	2,230	$	2,008
Reinsurance assumed	18		18		19
Reinsurance ceded	(413)		(421)		(1)
Net fee income	$	1,731	$	1,827	$	2,026

Interest credited and other benefits to contract owners / policyholders:
Direct interest credited and other benefits to contract owners / policyholders	$	4,463	$	5,317	$	4,610
Reinsurance assumed	50		77		67
Reinsurance ceded	(1,940)		(7,557)		(576)
Net interest credited and other benefits to contract owners / policyholders	$	2,573	$	(2,163)	$	4,101

In connection with the Individual Life transaction disclosed in the Business, Basis of Presentation and Significant Accounting Policies Note to these Consolidated Financial Statements, SLD was acquired by Resolution Life US and is, no longer a subsidiary of the Company. Concurrently, the Company's wholly owned subsidiaries Reliastar Life Insurance Company ("RLI"), ReliaStar Life Insurance Company of New York ("RLNY"), and Voya Retirement Insurance and Annuity Company ("VRIAC"), each of which is a direct or indirect wholly owned subsidiary of the Company entered into three reinsurance agreements with SLD. Pursuant to these agreements, RLI and VRIAC ceded to SLD a 100% quota share, and RLNY ceded to SLD a 75% quota share, of their respective individual life insurance and annuities businesses. RLI, RLNY, and VRIAC remain subsidiaries of the Company.

The reinsurance transaction does not extinguish the Company’s primary liability to its policyholders. As a result of the reinsurance transactions on January 4, 2021, the Company reinsured $11.4 billion of policyholder liabilities under indemnity coinsurance and modified coinsurance arrangements. As of January 4, 2021, reinsurance recoverable associated with these transactions was $10.4 billion. The Company ceded $5.6 billion in premiums and $5.5 billion in policyholder benefits. The Company transferred invested assets with a fair market value of $10.8 billion and cash of $427 as consideration for the reinsurance arrangements. As a result of the transfer of invested assets the Company recognized $1.9 billion in pre-tax realized gains. The Company also recognized non-cash assets of $345 and $1.7 billion relating to the pre-tax net cost of reinsurance asset and deposit asset on January 4, 2021, as a result of entering into the reinsurance agreements. The deposit asset is related to the portion of the reinsurance transaction that involve policies that do not meet risk transfer.

Furthermore, at the close of the Individual Life Transaction on January 4, 2021, the Company had $1.3 billion of pre-tax DAC, VOBA and URR balances as well as deferred Cost of reinsurance (“COR”) on businesses exited via reinsurance including the Individual Life Transaction. DAC, VOBA, URR and COR balances are amortized as a charge to earnings over the life of the underlying policies. The amortization of DAC/VOBA/URR/COR and the deposit asset has been classified as a component of Income (loss) related to businesses exited or to be exited via reinsurance which is an adjustment to Income (loss) from continuing operations before income taxes to calculate Adjusted operating earnings before income taxes and consequently are not included in the adjusted operating results of our segments.

The revenues and net results of the Individual Life and Annuities businesses that are disposed of via reinsurance are reported in businesses exited or to be exited through reinsurance or divestment which is an adjustment to the Company's U.S. GAAP revenues and earnings measures to calculate Adjusted operating revenues and Adjusted operating earnings before income taxes, respectively.

The Company has an indemnity reinsurance arrangement with a subsidiary of Lincoln National Corporation ("Lincoln") related to a block of its individual life insurance business. Under the agreement, Lincoln contractually assumed from the Company certain policyholder liabilities and obligations, although the Company remains obligated to contract owners. Reinsurance recoverable related to this reinsurance agreement was $1.0 billion and $1.1 billion as of December 31, 2022 and 2021, respectively, on the Consolidated Balance Sheets.