Related-Party Transactions

9 Months Ended

Sep. 30, 2023

Related Party Transactions

Related-Party Transactions

Note 17. Related-Party Transactions

SCE has previously purchased wildfire liability insurance from EIS, a wholly-owned subsidiary of Edison International. In July 2022, SCE purchased wildfire liability insurance for premiums of $273 million, from EIS for the period to June 30, 2023. EIS fully reinsured the exposure for these policies through the commercial reinsurance market, with reinsurance limits and premiums equal to those of the insurance purchased by SCE, except for a contract for a premium of $93 million under which EIS provided insurance protection to SCE. SCE recorded the premium as insurance expense and recorded equal revenue due to customer funding through regulatory cost recovery mechanisms, therefore there was no earnings impact on SCE's consolidated statement of income. EIS recorded the premium as insurance revenue. On the Edison International consolidated statement of income, the EIS insurance revenue eliminated with SCE's insurance expense, therefore the SCE customer revenues increased the earnings of Edison International. SCE did not have insurance expense and corresponding revenue for the three months ended September 30, 2023, and the amount of insurance expense and corresponding revenue was $44 million for the nine months ended September 30, 2023.

The related-party transactions included in SCE's consolidated balance sheets for wildfire-related insurance purchased from EIS and related expected insurance recoveries were as follows:

	September 30,		December 31,
(in millions)	2023		2022
Prepaid insurance1	$	—	$	106
Long-term insurance receivable due from affiliate		431		334

¹ Reflected in "Prepaid expenses" on SCE's consolidated balance sheets.

The expense for wildfire-related insurance premiums paid to EIS was zero and $67 million for the three months ended September 30, 2023 and 2022, respectively, and $132 million and $146 million for the nine months ended September 30, 2023 and 2022, respectively.