REINSURANCE

12 Months Ended

Dec. 31, 2021

The Company assumes and cedes reinsurance with other insurance companies. The Company evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. Ceded reinsurance does not relieve the originating insurer of liability.

The following table summarizes the effect of reinsurance. The impact of the reinsurance transaction described above results in an increase in reinsurance ceded.


	Year Ended December 31,
		2021		2020		2019
		(in millions)
Direct premiums		$	762	$	764	$	868
Reinsurance assumed		181		195		194
Reinsurance ceded		(193)		(153)		(126)
Premiums		$	750	$	806	$	936

Direct charges and fee income		$	3,962	$	2,684	$	2,721
Reinsurance ceded		(571)		780		766
Policy charges and fee income		$	3,391	$	3,464	$	3,487

Direct policyholders’ benefits		$	3,553	$	5,233	$	4,298
Reinsurance assumed		243		218		217
Reinsurance ceded		(814)		(500)		(427)
Policyholders’ benefits		$	2,982	$	4,951	$	4,088

Ceded Reinsurance

The Company reinsures most of its new variable life, UL and term life policies on an excess of retention basis. The Company generally retains on a per life basis up to $25 million for single lives and $30 million for joint lives with the excess 100% reinsured. The Company also reinsures risk on certain substandard underwriting risks and in certain other cases.

On June 1, 2021, Holdings completed the sale of CSLRC to VIAC. Immediately following the closing of the Transaction, CSLRC and Equitable Financial entered into the Reinsurance Agreement, pursuant to which Equitable Financial ceded to CSLRC, on a combined coinsurance and modified coinsurance basis, legacy variable annuity policies sold by Equitable Financial between 2006-2008. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable Transaction.

As of December 31, 2021 and December 31, 2020, the Company had reinsured with non-affiliates in the aggregate approximately 47.6% and 2.6%, respectively, of its current exposure to the GMDB obligation on annuity contracts in-force and, subject to certain maximum amounts or caps in any one period, approximately 59.8% and 13.4% of its

current liability exposure, respectively, resulting from the GMIB feature. For additional information, see Note 8 of the Notes to these Consolidated Financial Statements.

In addition to the above, the Company cedes substantially all of its group health business to a third-party insurer, cedes a portion of its extended term insurance and paid-up life insurance and substantially all of its individual disability income business through various coinsurance agreements.

Assumed Reinsurance

In addition to the sale of insurance products, the Company currently acts as a professional retrocessionaire by

assuming risk from professional reinsurers. The Company assumes accident, life, health, aviation, special risk and

space risks by participating in or reinsuring various reinsurance pools and arrangements.

The following table summarizes the ceded reinsurance GMIB reinsurance contracts, third-party recoverables, amount due to reinsurance and assumed reserves..


	December 31,
	2021		2020
	(in millions)
Ceded Reinsurance:
Estimated net fair values of ceded GMIB reinsurance contracts, considered derivatives (1)	$	2,068	$	2,859
Estimated net fair values of ceded GMIB NLG ceded reserves to Venerable (2)	5,813		—
Third-party reinsurance recoverables related to insurance contracts	12,459		2,245
Top reinsurers:
Venerable Insurance and Annuity Company (A- KBRA (IFRS) rating)	10,335		N/A
Zurich Life Insurance Company, Ltd. (AA- SAP rating)	1,318		1,421
Ceded group health reserves	40		48
Third-party reinsurance payables related to insurance contracts	127		113
Top reinsurers:
Venerable Insurance and Annuity Company	27		N/A
Assumed Reinsurance:
Reinsurance assumed reserves	758		721

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(1)The estimated fair values increased $(791) million $393 million and $475 million for the years ended December 31, 2021, 2020 and 2019, respectively.

(2)Reported in amounts due from reinsurers. See Note 1 of the Notes to these Consolidated Financial Statements for details of the Venerable transaction.