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Reinsurance
 9 Months Ended
Sep. 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 September 30, 2019 and December 31, 2018 were as follows:

 
September 30, 2019
 
December 31, 2018
 
(in thousands)
Reinsurance recoverables(1)
$
710,596

 
$
572,102

Deferred policy acquisition costs
3,719,370

 
3,703,166

Deferred sales inducements
448,274

 
476,608

Value of business acquired
(2,306
)
 
(2,431
)
Other assets
72,061

 
79,992

Policyholders’ account balances
3,238,585

 
3,098,537

Future policy benefits
10,787,006

 
5,680,939

Reinsurance payables(2)
227,948

 
232,937

Other liabilities
284,581

 
290,330



(1)
Includes $0.1 million and $0.0 million of unaffiliated activity as of September 30, 2019 and December 31, 2018, respectively.
(2)
Includes $0.1 million of unaffiliated activity as of both September 30, 2019 and December 31, 2018.

The reinsurance recoverables by counterparty are broken out below:
 
September 30, 2019
 
December 31, 2018
 
(in thousands)
Prudential Insurance
$
457,305

 
$
335,349

Pruco Life
253,207

 
236,716

Unaffiliated
84

 
37

Total reinsurance recoverables
$
710,596

 
$
572,102


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,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Premiums:
 
 
 
 
 
 
 
Direct
$
6,522

 
$
7,582

 
$
22,957

 
$
27,519

Assumed
6,355

 
6,568

 
25,848

 
22,714

Ceded
(371
)
 
(471
)
 
(563
)
 
(2,225
)
Net premiums
12,506

 
13,679

 
48,242

 
48,008

Policy charges and fee income:
 
 
 
 
 
 
 
Direct
119,509

 
137,719

 
363,540

 
423,170

Assumed
416,389

 
422,888

 
1,222,535

 
1,260,550

Ceded(1)
(8,746
)
 
(10,015
)
 
(26,201
)
 
(30,495
)
Net policy charges and fee income
527,152

 
550,592

 
1,559,874

 
1,653,225

Asset administration fees and other income:
 
 
 
 
 
 
 
Direct
44,616

 
18,360

 
124,587

 
70,053

Assumed
78,408

 
77,276

 
227,182

 
228,423

Ceded
(2,097
)
 
(2,316
)
 
(6,249
)
 
(7,016
)
Net asset administration fees and other income
120,927

 
93,320

 
345,520

 
291,460

Realized investment gains (losses), net:
 
 
 
 
 
 
 
Direct
1,644,998

 
(1,033,002
)
 
1,404,528

 
(2,239,254
)
Assumed
(2,243,942
)
 
1,133,110

 
(4,290,175
)
 
2,965,558

Ceded
61,677

 
(34,835
)
 
111,946

 
(92,482
)
Realized investment gains (losses), net
(537,267
)
 
65,273

 
(2,773,701
)
 
633,822

Policyholders' benefits (including change in reserves):
 
 
 
 
 
 
 
Direct
22,680

 
20,847

 
47,399

 
51,364

Assumed
48,154

 
29,743

 
82,130

 
64,401

Ceded(2)
(1,001
)
 
(659
)
 
(3,856
)
 
(2,141
)
Net policyholders' benefits (including change in reserves)
69,833

 
49,931

 
125,673

 
113,624

Interest credited to policyholders’ account balances:
 
 
 
 
 
 
 
Direct
27,944

 
41,949

 
49,289

 
113,522

Assumed
30,959

 
43,662

 
55,053

 
109,210

Ceded
(1,956
)
 
(3,298
)
 
(3,613
)
 
(8,829
)
Net interest credited to policyholders’ account balances
56,947

 
82,313

 
100,729

 
213,903

Reinsurance expense allowances and general and administrative expenses, net of capitalization and amortization
298,565

 
283,512

 
738,045

 
875,265



(1)
Includes $(1) million and $(0.4) million of unaffiliated activity for the three months ended September 30, 2019 and 2018, respectively, and $(1) million for both the nine months ended September 30, 2019 and 2018.
(2)
Includes $0.0 million of unaffiliated activity for both the three months ended September 30, 2019 and 2018 and $0.0 million and $(0.2) million for the nine months ended September 30, 2019 and 2018, respectively.