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Reinsurance
 9 Months Ended
Sep. 30, 2017
Reinsurance Disclosures [Abstract]  
Reinsurance
REINSURANCE

The Company uses reinsurance as part of its risk management and capital management strategies for certain of its living benefit guarantees and variable annuity base contracts. Through March 31, 2016 the Company reinsured its living benefit guarantees on certain variable annuity products to Pruco Re and Prudential Insurance, which are the legal entities in which the Company previously executed its living benefit hedging program. Effective April 1, 2016, the Company recaptured the risks related to its variable annuity living benefit guarantees that were previously reinsured to Pruco Re and Prudential Insurance, as discussed further in Note 1. In addition, the Company reinsured variable annuity base contracts, along with the living benefit guarantees, from Pruco Life, excluding the PLNJ business which was reinsured to Prudential Insurance. This reinsurance covers new and in force business and excludes business reinsured externally.

In the fourth quarter of 2015, the Company surrendered its New York License. The Company recaptured the New York living benefits previously ceded to Pruco Re, and reinsured the majority of its New York business, both the living benefit guarantees and base contracts, to Prudential Insurance. See Note 1 for additional information.
 
Realized investment gains and losses include the impact of reinsurance agreements, particularly reinsurance agreements involving living benefit guarantees. These reinsurance agreements are derivatives and have been accounted for in the same manner as embedded derivatives and the changes in the fair value of these derivatives are recognized through "Realized investment gains (losses), net". See Note 5 for additional information related to the accounting for embedded derivatives.

Reinsurance amounts included in the Company's Unaudited Interim Statements of Financial Position as of September 30, 2017 and December 31, 2016 were as follows:
 
September 30, 2017
 
December 31, 2016
 
(in thousands)
Reinsurance recoverables
$
534,694

 
$
588,608

Deferred policy acquisition costs
3,722,540

 
3,557,248

Deferred sales inducements
542,311

 
520,182

Value of business acquired
(2,732
)
 
(2,357
)
Other assets
104,074

 
112,802

Policyholders’ account balances
2,738,620

 
2,576,357

Future policy benefits
5,352,110

 
5,130,753

Reinsurance payables(1)
234,859

 
275,822

Other liabilities
332,821

 
335,713



(1)
"Reinsurance payables" includes $0.1 million of unaffiliated activity as of both September 30, 2017 and December 31, 2016.

The reinsurance recoverables by counterparty are broken out below:
 
September 30, 2017
 
December 31, 2016
 
(in thousands)
Prudential Insurance
$
299,828

 
$
306,191

Pruco Life
234,829

 
282,326

Unaffiliated
37

 
91

Total reinsurance recoverables
$
534,694

 
$
588,608



Reinsurance amounts, included in the Company’s Unaudited Interim Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(in thousands)
Premiums:
 
 
 
 
 
 
 
Direct
$
8,028

 
$
11,909

 
$
26,216

 
$
28,958

Assumed
5,849

 
(10,248
)
 
25,402

 
821,089

Ceded
(1,372
)
 
(2,256
)
 
(2,952
)
 
(2,554
)
Net premiums
12,505

 
(595
)
 
48,666

 
847,493

Policy charges and fee income:
 
 
 
 
 
 
 
Direct
153,835

 
163,547

 
469,128

 
487,837

Assumed
413,400

 
392,156

 
1,210,789

 
766,451

Ceded(1)
(11,328
)
 
(11,522
)
 
(33,607
)
 
(34,582
)
Net policy charges and fee income
555,907

 
544,181

 
1,646,310

 
1,219,706

Asset administration fees and other income:
 
 
 
 
 
 
 
Direct
30,573

 
29,814

 
97,972

 
97,246

Assumed
74,586

 
69,493

 
216,697

 
135,902

Ceded
(2,446
)
 
(2,502
)
 
(7,285
)
 
(7,316
)
Net asset administration fees and other income
102,713

 
96,805

 
307,384

 
225,832

Realized investment gains (losses), net:
 
 
 
 
 
 
 
Direct
(32,663
)
 
(409,674
)
 
(779,499
)
 
507,527

Assumed
1,237,967

 
394,419

 
470,545

 
(3,366,784
)
Ceded
(35,227
)
 
(20,470
)
 
(18,558
)
 
361,596

Realized investment gains (losses), net
1,170,077

 
(35,725
)
 
(327,512
)
 
(2,497,661
)
Policyholders' benefits (including change in reserves):
 
 
 
 
 
 
 
Direct
10,061

 
10,835

 
36,627

 
49,471

Assumed
6,114

 
(8,895
)
 
28,505

 
526,292

Ceded(2)
(2,119
)
 
(10,873
)
 
15,119

 
(21,417
)
Net policyholders' benefits (including change in reserves)
14,056

 
(8,933
)
 
80,251

 
554,346

Interest credited to policyholders’ account balances:
 
 
 
 
 
 
 
Direct
42,401

 
(64,111
)
 
(5,421
)
 
87,752

Assumed
52,559

 
(27,278
)
 
9,108

 
18,816

Ceded
(4,461
)
 
5,774

 
(3,120
)
 
(5,384
)
Net interest credited to policyholders’ account balances
90,499

 
(85,615
)
 
567

 
101,184

Reinsurance expense allowances and general and administrative expenses, net of capitalization and amortization
352,114

 
(14,625
)
 
524,961

 
504,820



(1)
"Policy charges and fee income ceded" includes $(0.6) million and $(0.3) million of unaffiliated activity for the three months ended September 30, 2017 and 2016, respectively, and $(2) million and $(1) million for the nine months ended September 30, 2017 and 2016, respectively.
(2)
"Policyholders' benefits (including change in reserves) ceded" includes $0 million and $0.0 million of unaffiliated activity for the three months ended September 30, 2017 and 2016, respectively, and $0 million and $(0.2) million for the nine months ended September 30, 2017 and 2016, respectively.