REINSURANCE

The Company reinsures certain of its risks with (cedes), and assumes risks from, other insurers under yearly renewable term, coinsurance, and modified coinsurance agreements. Under yearly renewable term agreements, the Company reinsures only the mortality risk, while under coinsurance the Company reinsures a proportionate share of all risks arising under the reinsured policy. Under coinsurance, the reinsurer receives a proportionate share of the premiums less commissions and is liable for a corresponding share of all benefit payments. Modified coinsurance is accounted for in a manner similar to coinsurance except that the liability for future policy benefits is held by the ceding company, and settlements are made on a net basis between the companies.

Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to us under the terms of the reinsurance agreements. The Company monitors the concentration of credit risk the Company has with any reinsurer, as well as the financial condition of its reinsurers. As of December 31, 2018, the Company had reinsured approximately 34% of the face value of its life insurance in-force. The Company has reinsured approximately 15% of the face value of its life insurance in-force with the following three reinsurers:


•	Security Life of Denver Insurance Co. (currently administered by Hannover Re)


•	Swiss Re Life & Health America Inc.


•	The Lincoln National Life Insurance Co. (currently administered by Swiss Re Life & Health America Inc.)

The Company has not experienced any credit losses for the years ended December 31, 2018, 2017, or 2016 related to these reinsurers. The Company has set limits on the amount of insurance retained on the life of any one person. The amount of insurance retained by the Company on any one life on traditional life insurance was $500,000 in years prior to mid-2005. In 2005, this retention amount was increased to $1,000,000 for certain policies, and during 2008, it was increased to $2,000,000 for certain policies. During 2016, the retention amount was increased to $5,000,000.

Reinsurance premiums, commissions, expense reimbursements, benefits, and reserves related to reinsured long-duration contracts are accounted for over the life of the underlying reinsured contracts using assumptions consistent with those used to account for the underlying contracts. The cost of reinsurance related to short-duration contracts is accounted for over the reinsurance contract period. Amounts recoverable from reinsurers, for both short- and long-duration reinsurance arrangements, are estimated in a manner consistent with the claim liabilities and policy benefits associated with reinsured policies.

The following table presents the net life insurance in-force:



	As of December 31,
	2018			2017
	(Dollars In Thousands)
Direct life insurance in-force	$	765,986,223		$	751,512,468
Amounts assumed from other companies	135,407,408			110,205,190
Amounts ceded to other companies	(302,149,614		)	(328,377,398		)
Net life insurance in-force	$	599,244,017		$	533,340,260

Percentage of amount assumed to net	23		%	21		%

The following table reflects the effect of reinsurance on life, accident/health, and property and liability insurance premiums written and earned:



	Gross Amount		Ceded to Other Companies			Assumed from Other Companies		Net Amount
	(Dollars In Thousands)
For The Year Ended December 31, 2018
Premiums and policy fees:										-1
Life insurance	$	2,681,191	$	(1,249,906	)	$	626,283	$	2,057,568	(1)
Accident/health insurance	47,028		(30,126		)	12,826		29,728
Property and liability insurance	284,323		(103,478		)	4,857		185,702
Total	$	3,012,542	$	(1,383,510	)	$	643,966	$	2,272,998
For The Year Ended December 31, 2017
Premiums and policy fees:
Life insurance	$	2,655,846	$	(1,230,258	)	$	435,113	$	1,860,701	(1)
Accident/health insurance	51,991		(33,052		)	14,946		33,885
Property and liability insurance	288,809		(103,786		)	9,657		194,680
Total	$	2,996,646	$	(1,367,096	)	$	459,716	$	2,089,266
For The Year Ended December 31, 2016
Premiums and policy fees:
Life insurance	$	2,610,682	$	(1,207,159	)	$	454,999	$	1,858,522	(1)
Accident/health insurance	58,076		(36,935		)	17,439		38,580
Property and liability insurance	242,517		(86,629		)	5,706		161,594
Total	$	2,911,275	$	(1,330,723	)	$	478,144	$	2,058,696


(1)	Includes annuity policy fees of $177.1 million, $173.5 million, and $80.1 million, for the years ended December 31, 2018, 2017, and 2016, respectively.

As of December 31, 2018 and 2017, policy and claim reserves relating to insurance ceded of $4.5 billion and $4.8 billion, respectively, are included in reinsurance receivables. Should any of the reinsurers be unable to meet its obligation at the time of the claim, the Company would be obligated to pay such claims. As of December 31, 2018 and 2017, the Company had paid $116.1 million and $96.6 million, respectively, of ceded benefits which are recoverable from reinsurers. In addition, as of December 31, 2018 and 2017, the Company had receivables of $64.8 million and $65.1 million, respectively, related to insurance assumed.

The Company’s third party reinsurance receivables amounted to $4.5 billion and $4.8 billion as of December 31, 2018 and 2017, respectively. These amounts include ceded reserve balances and ceded benefit payments. The ceded benefit payments are recoverable from reinsurers. The following table sets forth the receivables attributable to our more significant reinsurance partners:



	As of December 31,
	2018			2017
	Reinsurance Receivable		A.M. Best Rating	Reinsurance Receivable		A.M. Best Rating
	(Dollars In Millions)
Security Life of Denver Insurance Company	$	722.2	A	$	740.8	A
Swiss Re Life & Health America, Inc.	603.8		A+	614.8		A+
Lincoln National Life Insurance Co.	461.1		A+	489.1		A+
SCOR Global Life ⁽¹⁾	317.2		A+	331.8		A+
Transamerica Life Insurance Co.	301.0		A+	335.6		A+
RGA Reinsurance Company	260.5		A+	278.3		A+
American United Life Insurance Company	242.8		A+	266.7		A+
Centre Reinsurance (Bermuda) Ltd	197.4		NR	212.2		NR
The Canada Life Assurance Company	188.2		A+	186.1		A+
Employers Reassurance Corporation	178.4		B+	193.9		A-


(1)	Includes SCOR Global Life Americas Reinsurance Company, SCOR Global Life USA Reinsurance Co, and SCOR Global Life Reinsurance Co of Delaware

The Company’s reinsurance contracts typically do not have a fixed term. In general, the reinsurers’ ability to terminate coverage for existing cessions is limited to such circumstances as material breach of contract or non-payment of premiums by the ceding company. The reinsurance contracts generally contain provisions intended to provide the ceding company with the ability to cede future business on a basis consistent with historical terms. However, either party may terminate any of the contracts with respect to future business upon appropriate notice to the other party.

Generally, the reinsurance contracts do not limit the overall amount of the loss that can be incurred by the reinsurer. The amount of liabilities ceded under contracts that provide for the payment of experience refunds is immaterial.