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Reinsurance
 6 Months Ended
Jun. 30, 2019
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. Effective April, 1, 2016, the Company recaptured the risks related to its variable annuity living benefit guarantees that were previously reinsured to affiliates. 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.

Effective December 31, 2015, the Company surrendered its New York license 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. Reinsurance ceded arrangements do not discharge the Company as the primary insurer. Ceded balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to the Company under the terms of the reinsurance agreements. The Company believes a material reinsurance liability resulting from such inability of reinsurers to meet their obligations is unlikely.
 
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 4 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 June 30, 2019 and December 31, 2018 were as follows:

 
June 30, 2019
 
December 31, 2018
 
(in thousands)
Reinsurance recoverables(1)
$
646,139

 
$
572,102

Deferred policy acquisition costs
3,778,155

 
3,703,166

Deferred sales inducements
473,085

 
476,608

Value of business acquired
(2,399
)
 
(2,431
)
Other assets
90,297

 
79,992

Policyholders’ account balances
3,185,754

 
3,098,537

Future policy benefits
8,247,032

 
5,680,939

Reinsurance payables(2)
251,804

 
232,937

Other liabilities
291,469

 
290,330



(1)
"Reinsurance recoverables" includes $0.1 million and $0 million of unaffiliated activity as of June 30, 2019 and December 31, 2018, respectively.
(2)
"Reinsurance payables" includes $0.1 million of unaffiliated activity as of both June 30, 2019 and December 31, 2018.

The reinsurance recoverables by counterparty are broken out below:
 
June 30, 2019
 
December 31, 2018
 
(in thousands)
Prudential Insurance
$
390,634

 
$
335,349

Pruco Life
255,366

 
236,716

Unaffiliated
139

 
37

Total reinsurance recoverables
$
646,139

 
$
572,102


Reinsurance amounts, included in the Company’s Unaudited Interim Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Premiums:
 
 
 
 
 
 
 
Direct
$
8,381

 
$
7,824

 
$
16,435

 
$
19,937

Assumed
10,398

 
5,965

 
19,493

 
16,146

Ceded
(308
)
 
(494
)
 
(192
)
 
(1,754
)
Net premiums
18,471

 
13,295

 
35,736

 
34,329

Policy charges and fee income:
 
 
 
 
 
 
 
Direct
122,420

 
139,738

 
244,031

 
285,451

Assumed
411,058

 
417,636

 
806,146

 
837,662

Ceded(1)
(8,690
)
 
(10,031
)
 
(17,455
)
 
(20,480
)
Net policy charges and fee income
524,788

 
547,343

 
1,032,722

 
1,102,633

Asset administration fees and other income:
 
 
 
 
 
 
 
Direct
41,226

 
25,660

 
79,971

 
51,693

Assumed
76,079

 
75,255

 
148,774

 
151,147

Ceded
(2,100
)
 
(2,312
)
 
(4,152
)
 
(4,700
)
Net asset administration fees and other income
115,205

 
98,603

 
224,593

 
198,140

Realized investment gains (losses), net:
 
 
 
 
 
 
 
Direct
593,738

 
(457,927
)
 
(240,470
)
 
(1,206,252
)
Assumed
(1,530,524
)
 
483,344

 
(2,046,233
)
 
1,832,448

Ceded
42,571

 
(15,558
)
 
50,269

 
(57,647
)
Realized investment gains (losses), net
(894,215
)
 
9,859

 
(2,236,434
)
 
568,549

Policyholders' benefits (including change in reserves):
 
 
 
 
 
 
 
Direct
17,616

 
12,353

 
24,719

 
30,517

Assumed
31,619

 
16,766

 
33,976

 
34,658

Ceded(2)
(1,345
)
 
(452
)
 
(2,855
)
 
(1,482
)
Net policyholders' benefits (including change in reserves)
47,890

 
28,667

 
55,840

 
63,693

Interest credited to policyholders’ account balances:
 
 
 
 
 
 
 
Direct
15,335

 
35,185

 
21,345

 
71,573

Assumed
19,283

 
29,757

 
24,094

 
65,548

Ceded
(1,263
)
 
(2,922
)
 
(1,657
)
 
(5,531
)
Net interest credited to policyholders’ account balances
33,355

 
62,020

 
43,782

 
131,590

Reinsurance expense allowances and general and administrative expenses, net of capitalization and amortization
240,225

 
295,556

 
439,480

 
591,753



(1)
"Policy charges and fee income ceded" includes $(1) million and $(0.4) million of unaffiliated activity for the three months ended June 30, 2019 and 2018, respectively, and $(1) million and $(0.6) million for the six months ended June 30, 2019 and 2018, respectively.
(2)
"Policyholders' benefits (including change in reserves) ceded" includes $(0.1) million and $0 million of unaffiliated activity for the three months ended June 30, 2019 and 2018, respectively, and $(0.1) million and $(0.2) million for the six months ended June 30, 2019 and 2018, respectively.