REINSURANCE

12 Months Ended

Dec. 31, 2022

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,
		2022		2021		2020
		(in millions)
Direct premiums		$	764	$	762	$	764
Reinsurance assumed		180		181		195
Reinsurance ceded		(219)		(193)		(153)
Premiums		$	725	$	750	$	806

Direct charges and fee income		$	3,592	$	3,962	$	2,684
Reinsurance ceded		(651)		(571)		780
Policy charges and fee income		$	2,941	$	3,391	$	3,464

Direct policyholders’ benefits		$	3,868	$	3,553	$	5,233
Reinsurance assumed		210		243		218
Reinsurance ceded		(1,143)		(814)		(500)
Policyholders’ benefits		$	2,935	$	2,982	$	4,951

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.

On October 3, 2022, as part of the Global Atlantic Transaction, Equitable Financial ceded to First Allmerica Financial Life Insurance Company on a combined coinsurance and modified coinsurance basis, a 50% quota share of approximately 360,000 legacy Group EQUI-VEST deferred variable annuity contracts issued by Equitable Financial between 1980 and 2008.

As of December 31, 2022 and 2021, the Company had reinsured with non-affiliates in the aggregate approximately 41.7% and 47.6%, 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 59.8% 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 a portion of its group health, 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,
	2022		2021
	(in millions)
Ceded Reinsurance:
Estimated net fair values of ceded GMIB reinsurance contracts, considered derivatives (1)	$	1,306	$	2,068
Estimated net fair values of ceded GMIB NLG ceded reserves to Venerable (2)	4,114		$	5,813
Third-party reinsurance recoverables related to insurance contracts	15,016		12,459
Top reinsurers:
Venerable Insurance and Annuity Company (A- KBRA (IFRS) rating)	8,966		10,335
First Allmerica-GAF	4,005
Ceded group health reserves	14		40
Third-party reinsurance payables related to insurance contracts	275		127
Top reinsurers:
First Allmerica-GAF	147		—
Assumed Reinsurance:
Reinsurance assumed reserves	662		758

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(1)The estimated fair values increased ($762) million, ($791) million and $393 million for the years ended December 31, 2022, 2021 and 2020, 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.