REINSURANCE

3 Months Ended

Mar. 31, 2024

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 below results in an increase in reinsurance ceded:


	Three Months Ended March 31,
		2024		2023
		(in millions)
Direct charges and fee income		$	690	$	697
Reinsurance assumed		—		—
Reinsurance ceded - Equitable America		(327)		—
Reinsurance ceded - third party		(156)		(173)
Policy charges and fee income		$	207	$	524

Direct premiums		$	202	$	205
Reinsurance assumed		39		52
Reinsurance ceded - Equitable America		(45)		—
Reinsurance ceded - third party		(63)		(60)
Premiums		$	133	$	197

Direct policyholders’ benefits		$	676	$	708
Reinsurance assumed		39		37
Reinsurance ceded - Equitable America		(188)		—
Reinsurance ceded - third party		(160)		(127)
Policyholders’ benefits		$	367	$	618

Direct Interest credited to policyholders’ account balances		$	478	$	464
Reinsurance assumed		—		—
Reinsurance ceded - Equitable America		(154)		—
Reinsurance ceded - third party		(26)		(29)
Interest credited to policyholders’ account balances		$	298	$	435

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 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.

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.

Internal Reinsurance Treaty

On May 17, 2023, Equitable Financial entered into a reinsurance agreement with Equitable America, effective April 1, 2023. Pursuant to the Reinsurance Treaty, virtually all of Equitable Financial’s net retained General Account liabilities, including all of its net retained liabilities relating to the living benefit and death riders related to (i) its variable annuity contracts issued outside the State of New York prior to October 1, 2022 (and with respect to its EQUI-VEST variable annuity contracts, issued outside the State of New York prior to February 1, 2023) and (ii) certain universal life insurance policies issued outside the State of New York prior to October 1, 2022, were reinsured to Equitable America on a coinsurance funds withheld basis. In addition, all of the Separate Accounts liabilities relating to such variable annuity contracts were reinsured to Equitable America on a modified coinsurance basis. Equitable America’s obligations under the Reinsurance Treaty are secured through Equitable Financial’s retention of certain assets supporting the reinsured liabilities.

There is a diverse pool of assets supporting the funds withheld and NI modco arrangement with Equitable America. The following table summarizes the composition of the pool of assets:



	March 31, 2024
	Carrying Value		Fair Value
	(in millions)
Fixed maturities	$	23,765	$	23,765
Mortgage loans on real estate	8,291		7,270
Policy loans	253		254
Other equity investments	231		231
Other invested assets	9,811		9,811
Total assets supporting funds withheld	$	42,351	$	41,331

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(1)Other invested assets includes derivatives and cash and cash equivalents.

The impact of the funds withheld and NI modco arrangement with Equitable America was as follows:


	Three Months Ended March 31, 2024
	(in millions)
Net derivative gains (losses):
Freestanding derivatives	$	899
Embedded derivatives	(955)
Net derivative gains (losses)	(56)
Net investment income (loss)	345
Investment gains (losses), net	(36)
Income (loss) from continuing operations, before income taxes	253
Income tax (expense) benefit	(53)
Net income (loss)	200

Change in unrealized gains (losses), net of income taxes	(174)
Comprehensive income (loss)	$	26

Various assets supporting the Equitable America funds withheld and NI modco arrangement are reported at amortized cost, and as such, changes in fair value of these assets are not reflected in the consolidated financial statements. However, changes in the fair value of these assets are included in the embedded derivative in the Equitable America funds withheld arrangement and the appreciation of the assets is the primary driver of the comprehensive income (loss) reflected above.

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 purchased market risk benefits, internal reinsurance recoverable and third-party recoverables including amount due to reinsurance and assumed reserves:



	March 31, 2024		December 31, 2023
	(in millions)
Ceded Reinsurance:
Estimated net fair values of purchased market risk benefits	$	14,689	$	16,729
Reinsurance recoverables related to insurance contracts	20,655		20,636
Related party - Equitable America (1)	13,464		13,492
Third parties	7,191		7,144
Top reinsurers:
First Allmerica-GAF	3,494		3,605
Venerable Insurance and Annuity Company (A- KBRA (IFRS) rating)	1,137		1,057
Ceded group health reserves	12		14
Amount due to reinsurers	157		216
Top reinsurers:
First Allmerica-GAF	72		73

Assumed Reinsurance:
Reinsurance assumed reserves	718		731

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(1)Includes ceded PAB on NI Modco portion of the Reinsurance Treaty of $34.4 billion offset by $(31.3) billion of modco payable for the same portion of the Reinsurance Treaty.