Reinsurance

12 Months Ended

Dec. 31, 2021

The Company utilizes reinsurance agreements primarily to: (a) reduce required capital and (b) facilitate the acquisition or disposition of certain insurance contracts. Ceded reinsurance agreements permit the Company to recover a portion of its losses from reinsurers, although they do not discharge the Company’s primary liability as the direct insurer of the risks reinsured.

On November 30, 2018, the Company completed the sale of Aetna’s standalone Medicare Part D prescription drug plans to a subsidiary of WellCare Health Plans, Inc. (“WellCare”), effective December 31, 2018. In connection with that sale, subsidiaries of WellCare and Aetna entered into reinsurance agreements under which WellCare ceded to Aetna 100% of the insurance risk related to the divested standalone Medicare Part D prescription drug plans for the 2019 PDP plan year.

In January 2022, the Company entered into two four-year reinsurance agreements with an unrelated reinsurer that allow it to reduce required capital and provide collateralized excess of loss reinsurance coverage on a portion of the Health Care Benefits segment’s group Commercial Insured business.

Reinsurance recoverables (recorded as other current assets or other assets on the consolidated balance sheets) at December 31, 2021 and 2020 were as follows:


In millions	2021		2020
Reinsurer
Hartford Life and Accident Insurance Company	$	1,887	$	2,364
Lincoln Life & Annuity Company of New York	395		406
VOYA Retirement Insurance and Annuity Company	167		170
All Other	100		115
Total	$	2,549	$	3,055

Direct, assumed and ceded premiums earned for the years ended December 31, 2021, 2020 and 2019 were as follows:


In millions	2021		2020		2019
Direct	$	76,320	$	69,711	$	62,968
Assumed	492		478		2,108
Ceded	(680)		(825)		(1,954)
Net premiums	$	76,132	$	69,364	$	63,122

The impact of reinsurance on benefit costs for the years ended December 31, 2021, 2020 and 2019 were as follows:


In millions	2021		2020		2019
Direct	$	64,414	$	56,077	$	52,592
Assumed	398		329		1,562
Ceded	(552)		(727)		(1,625)
Net benefit costs	$	64,260	$	55,679	$	52,529

There is not a material difference between premiums on a written basis versus an earned basis.

The Company also has various agreements with unrelated reinsurers that do not qualify for reinsurance accounting under GAAP, and consequently are accounted for using deposit accounting. The Company entered into these contracts to reduce the risk of catastrophic loss which in turn reduces the Company’s capital and surplus requirements. Total deposit assets and liabilities related to reinsurance agreements that do not qualify for reinsurance accounting under GAAP were not material as of December 31, 2021 or 2020.