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REINSURANCE | 12 Months Ended
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Dec. 31, 2023
Reinsurance Disclosures [Abstract] |
REINSURANCE | REINSURANCE The Company periodically enters into fixed quota-share coinsurance agreements in the normal course of business. For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Reinsurance premiums and benefits paid or provided are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums and benefits are reported net of insurance ceded. In December 2023, the Company entered into a novation agreement under which Aflac Re assumed the duties, obligations and liabilities through reinsurance of business ALIJ previously ceded to an external reinsurer and recorded a pretax loss of $151 million. In October 2023, ALIJ entered into a coinsurance transaction whereby it ceded 30% of the liabilities associated with certain cancer insurance policies and riders to Aflac Re. This transaction transferred approximately $1.9 billion of reserves associated with these policies. Approximately $1.7 billion of assets were transferred from ALIJ to Aflac Re as consideration for assuming the reinsurance risk. This internal reinsurance transaction with Aflac Re has no financial statement impact on a consolidated basis, except for the effect of foreign currency accounting. In January 2023, ALIJ entered into a coinsurance transaction whereby it ceded 28% of the liabilities associated with certain cancer insurance policies and riders to Aflac Re. This transaction transferred approximately $2.1 billion of reserves associated with these policies. Approximately $1.9 billion of assets were transferred from ALIJ to Aflac Re as consideration for assuming the reinsurance risk. This internal reinsurance transaction with Aflac Re has no financial statement impact on a consolidated basis, except for the effect of foreign currency accounting. In January 2023, ALIJ also entered into an external coinsurance transaction to cede 1.5% of the liabilities associated with the same cancer insurance policies and riders, in connection with which ALIJ transferred cash consideration to the reinsurer. The following table reconciles direct premiums and direct benefits and claims to net amounts after the effect of reinsurance which also includes the elimination of inter-segment amounts associated with affiliated reinsurance for the years ended December 31.
(In millions) | 2023 | 2022 | 2021
Direct earned premiums |  | $ | 14,318 |  |  |  | $ | 15,025 |  |  |  | $ | 17,305 |  |
Ceded to other companies: |  |  |  |  |  |  |  |  |
Ceded Aflac Japan closed blocks |  | (313) |  |  |  | (343) |  |  |  | (431) |  |
Other |  | (91) |  |  |  | (76) |  |  |  | (73) |  |
Assumed from other companies: |  |  |  |  |  |  |  |  |
Retrocession activities |  | 126 |  |  |  | 144 |  |  |  | 180 |  |
Other |  | 83 |  |  |  | 151 |  |  |  | 114 |  |
Net earned premiums |  | $ | 14,123 |  |  |  | $ | 14,901 |  |  |  | $ | 17,095 |  |
Direct benefits and claims, excluding reserve remeasurement |  | $ | 8,599 |  |  |  | $ | 9,171 |  |  |  | $ | 10,778 |  |
Reserve remeasurement (gains) losses |  | (394) |  |  |  | (196) |  |  |  | (149) |  |
Total direct benefits and claims |  | 8,205 |  |  |  | 8,975 |  |  |  | 10,629 |  |
Ceded benefits and change in reserves for future benefits: |  |  |  |  |  |  |  |  |
Ceded Aflac Japan closed blocks |  | (283) |  |  |  | (308) |  |  |  | (381) |  |
Reserve remeasurement (gains) losses |  | 11 |  |  |  | (19) |  |  |  | 2 |  |
Eliminations |  | 200 |  |  |  | 18 |  |  |  | 27 |  |
Other |  | (64) |  |  |  | (32) |  |  |  | (44) |  |
Assumed from other companies: |  |  |  |  |  |  |  |  |
Retrocession activities |  | 118 |  |  |  | 146 |  |  |  | 165 |  |
Eliminations |  | (196) |  |  |  | (24) |  |  |  | (31) |  |
Other |  | 220 |  |  |  | 131 |  |  |  | 109 |  |
Total benefits and claims, net |  | $ | 8,211 |  |  |  | $ | 8,887 |  |  |  | $ | 10,476 |  |
Prior-year amounts have been adjusted for the adoption of accounting guidance on January 1, 2023 related to accounting for long-duration insurance contracts. The Company has recorded a deferred reinsurance gain liability related to reinsurance transactions which represents ceded reserves in excess of consideration paid, or consideration received in excess of assumed reserves. The remaining consolidated deferred reinsurance gain liability of $175 million and $692 million as of December 31, 2023 and 2022, respectively, is included in future policy benefits in the consolidated balance sheets and is being amortized into income over the expected lives of the policies. The Company has also recorded a reinsurance recoverable for reinsurance transactions. The reinsurance recoverable, which is included in other assets in the consolidated balance sheets, is reported net of allowance for credit losses and had a remaining balance of $183 million and $912 million as of December 31, 2023 and 2022, respectively. The allowance for credit losses related to the Company's reinsurance recoverable balance was $10 million and $8 million as of December 31, 2023 and 2022, respectively. The credit allowance for the reinsurance recoverable balance is estimated using a PD / LGD method and the key credit quality indicator is the credit rating of the Company’s reinsurance counterparty. The Company uses external credit ratings focused on the reinsurer’s financial strength and credit worthiness. As of December 31, 2023, the Company's reinsurance counterparties were rated A+. The Company monitors the credit ratings periodically, but not less frequently than quarterly. The decrease in the deferred reinsurance gain liability and reinsurance recoverable balances as of December 31, 2023 is due to the novation transaction described above. As a part of its capital contingency plan, the Company entered into a committed reinsurance facility agreement on December 1, 2015, with reserves of approximately ¥120 billion. The Company elected not to renew the agreement beyond 2023, and it expired on December 31, 2023. These reinsurance transactions are indemnity reinsurance that do not relieve the Company from its obligations to policyholders. In the event that the reinsurer is unable to meet their obligations, the Company remains liable for the reinsured claims.

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