The Company cedes insurance risk to reinsurers to enable the Company to manage capital and risk exposure. Such arrangements do not relieve the Company of its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company's procedures include carefully selecting its reinsurers, structuring agreements to provide collateral funds where necessary, and regularly monitoring the financial condition and ratings of its reinsurers.

The Company has two adverse development cover (“ADC”) reinsurance agreements in place, both of which are accounted for as retroactive reinsurance. One agreement covers substantially all asbestos and environmental ("A&E") reserve development for 2016 and prior accident years ("A&E ADC") and the other covers substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (the Navigators ADC). For more information on ADC agreements, see Note 1 -Basis of Presentation and Significant Accounting Policies, and Note 12 -Reserve for Unpaid Losses and Loss Adjustment Expenses.

Property and Casualty ceded losses, which reduce losses and loss adjustment expenses incurred, were $1,156, $826 and $661 for the years ended December 31, 2020, 2019 and 2018, respectively.

Group Benefits ceded losses, which reduce losses and loss adjustment expenses incurred, were $63, $73 and $116 for the years ended December 31, 2020, 2019 and 2018, respectively.

Reinsurance Recoverables

Reinsurance recoverables include balances due from reinsurance companies and are presented net of an allowance for uncollectible reinsurance. Reinsurance recoverables include an estimate of the amount of gross losses and loss adjustment expense reserves that may be ceded under the terms of the reinsurance agreements, including incurred but not reported unpaid losses. The Company’s estimate of losses and loss adjustment expense reserves ceded to reinsurers is based on assumptions that are consistent with those used in establishing the gross reserves for amounts the Company owes to its claimants. The Company estimates its ceded reinsurance recoverables based on the terms of any applicable facultative and treaty reinsurance, including an estimate of how incurred but not reported losses will ultimately be ceded under reinsurance agreements. Accordingly, the Company’s estimate of reinsurance recoverables is subject to similar risks and uncertainties as the estimate of the gross reserve for unpaid losses and loss adjustment expenses.


Reinsurance Recoverables by Credit Quality Indicator as of December 31, 2020
	Property and Casualty		Group Benefits		Corporate		Total

AM Best Financial Strength Rating
A++	$	1,598	$	—	$	—	$	1,598
A+	1,788		230		305		2,323
A	638		—		—		638
A-	37		9		—		46
B++	666		—		3		669
Below B++	21		1		—		22
Total Rated by AM Best	4,748		240		308		5,296
Mandatory (Assigned) and Voluntary Risk Pools	259		—		—		259
Captives	305		—		—		305
Other not rated companies	254		5		—		259
Gross Reinsurance Recoverables	5,566		245		308		6,119
Allowance for uncollectible reinsurance	(105)		(1)		(2)		(108)
Net Reinsurance Recoverables	$	5,461	$	244	$	306	$	6,011

Balances are considered past due when amounts that have been billed are not collected within contractually stipulated time periods, generally 30, 60 or 90 days. There were no write-offs for the period ended December 31, 2020.

To manage reinsurer credit risk, a reinsurance security review committee evaluates the credit standing, financial performance, management and operational quality of each potential reinsurer. In placing reinsurance, the Company considers the nature of the risk reinsured, including the expected liability payout duration, and establishes limits tiered by reinsurer credit rating.

Where its contracts permit, the Company secures future claim obligations with various forms of collateral or other credit enhancement, including irrevocable letters of credit, secured trusts, funds held accounts and group wide offsets. As part of its reinsurance recoverable review, the Company analyzes recent developments in commutation activity between reinsurers and cedants, recent trends in arbitration and litigation outcomes in disputes between cedants and reinsurers and the overall credit quality of the Company’s reinsurers.

Due to the inherent uncertainties as to collection and the length of time before reinsurance recoverables become due, it is possible that future adjustments to the Company’s reinsurance recoverables, net of the allowance, could be required, which could have a material adverse effect on the Company’s consolidated results of operations or cash flows in a particular quarter or annual period.

The allowance for uncollectible reinsurance comprises an ACL and an allowance for disputed balances. The ACL is estimated as the amount of reinsurance recoverables exposed to loss multiplied by estimated factors for the probability of default and the amount of loss given a default. The probability of default is assigned based on each reinsurer's credit rating, or a rating is estimated if no external rating is available. Credit ratings are reviewed on a quarterly basis and any significant changes are reflected in an updated estimate. The probability of default factors are historical insurer and reinsurer defaults for liabilities

with similar durations to the reinsured liabilities as estimated through multiple economic cycles. Credit ratings are forward-looking and consider a variety of economic outcomes. The loss given default factors are based on a study of historical recovery rates for general creditors of corporations through multiple economic cycles or, in the case of purchased annuities funding structured settlements accounted for as reinsurance, historical recovery rates for annuity contract holders.

As shown in the table above, a portion of the total gross reinsurance recoverable balance relates to the Company’s participation in various mandatory (assigned) and voluntary risk pools. Reinsurance recoverables due from pools are backed by the financial position of all insurance companies participating in the pools and the credit backing the reinsurance recoverable is not limited to the financial strength of each pool. The mandatory pools generally are funded through policy assessments or surcharges and if any participant in the pool defaults, remaining liabilities are apportioned among the other members.

The Company's evaluation of the required ACL for reinsurance recoverables considers the current economic environment as well as macroeconomic scenarios similar to the approach used to estimate the ACL for mortgage loans. See Note 6 - Investments. Insurance companies, including reinsurers, are regulated and hold risk-based capital to mitigate the risk of loss due to economic factors and other risks. Non-U.S. reinsurers are either subject to a capital regime substantively equivalent to domestic insurers or we hold collateral to support collection of reinsurance recoverables. As a result, there is limited history of losses from insurer defaults. In response to significant economic stress experienced as a result of the COVID-19 pandemic during 2020, the Company increased the weight of both a moderate and severe recession in our estimate of the ACL for reinsurance recoverables. The Company expects the impact of the COVID-19 pandemic to reinsurers to be somewhat mitigated by their regulated capital and liquidity positions.


Allowance for Uncollectible Reinsurance
	For the year ended December 31, 2020
	Property and Casualty		Group Benefits		Corporate		Total
Beginning allowance for uncollectible reinsurance	$	114	$	—	$	—	$	114
Beginning allowance for disputed amounts	66		—		—		66
Beginning ACL	48		—		—		48
Cumulative effect of accounting change [1]	—		1		1		2
Adjusted beginning ACL	48		1		1		50
Current period provision (release)	3		—		1		4


Current period gross recoveries	1		—		—		1
Ending ACL	52		1		2		55
Ending allowance for disputed amounts	53		—		—		53
Ending allowance for uncollectible reinsurance	$	105	$	1	$	2	$	108

[1] Represents the adjustment to the ACL recorded on adoption of accounting guidance for credit losses on January 1, 2020. For further information refer to Note 1 - Basis of Presentation and Significant Accounting Policies

Insurance Revenues

Property and Casualty Insurance Revenue


	For the years ended December 31,
Premiums Written	2020		2019		2018
Direct	$	12,537	$	12,190	$	10,784
Assumed	577		371		217
Ceded	(1,209)		(978)		(593)
Net	$	11,905	$	11,583	$	10,408
Premiums Earned
Direct	$	12,551	$	12,010	$	10,824
Assumed	540		416		221
Ceded	(1,173)		(936)		(599)
Net	$	11,918	$	11,490	$	10,446

Group Benefits Revenue


	For the years ended December 31,
	2020		2019		2018
Gross earned premiums, fees and other considerations	$	5,245	$	4,122	$	3,615
Reinsurance assumed	387		1,572		2,044
Reinsurance ceded	(96)		(91)		(61)
Net earned premiums, fees and other considerations	$	5,536	$	5,603	$	5,598

For its group benefits products, the Company reinsures certain of its risks to other reinsurers under yearly renewable term and coinsurance arrangements and variations thereto. Yearly renewable term and coinsurance arrangements result in passing a portion of the risk to the reinsurer. Generally, the reinsurer receives a proportionate amount of the premiums less an allowance for commissions and expenses and is liable for a corresponding proportionate amount of all benefit payments.