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Reinsurance | 9 Months Ended
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Sep. 30, 2023
Reinsurance |
Reinsurance | 10. Reinsurance We reinsure a portion of the insurance risks associated with our individual disability, traditional life, universal life, medical and long-term care insurance as well as retail fixed annuity contracts with significant life insurance risk through reinsurance agreements with unaffiliated reinsurance companies, primarily on a quota share, excess loss, yearly renewable term or coinsurance basis. During the second quarter of 2022, we closed a coinsurance with funds withheld reinsurance transaction with Talcott Life & Annuity Re in which we ceded our in-force U.S. retail fixed annuity and ULSG blocks of business. The economics of the transaction were effective as of January 1, 2022. We use both the reinsurance and deposit methods of accounting for this transaction. For further information about this transaction, refer to Note 1, Nature of Operations and Significant Accounting Policies. We are contingently liable with respect to reinsurance ceded to other companies in the event the reinsurer is unable to meet the obligations it has assumed. As of September 30, 2023, and December 31, 2022, we had $13,698.9 million and $13,252.8 million of reinsurance recoverable assets, respectively, included in reinsurance recoverable and deposit receivable on the consolidated statements of financial position, which does not reflect potentially offsetting impacts of collateral. As of September 30, 2023, and December 31, 2022, we had $40.6 million and $39.4 million of reinsurance recoverable liabilities, respectively, included in future policy benefits and claims on the consolidated statements of financial condition. The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the three months ended September 30, | ​ | For the nine months ended September 30,
​ |  | 2023 |  | 2022 | ​ | 2023 | ​ | 2022
​ | ​ | (in millions)
Premiums and other considerations: | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ |  |  | ​ |
Direct | ​ | $ | 1,575.3 | ​ | $ | 1,591.6 | ​ | $ | 4,757.5 | ​ | $ | 4,068.8
Ceded | ​ |  | (117.4) | ​ |  | (105.1) | ​ |  | (358.3) | ​ |  | (328.7)
Net premiums and other considerations | ​ | $ | 1,457.9 | ​ | $ | 1,486.5 | ​ | $ | 4,399.2 | ​ | $ | 3,740.1
Benefits, claims and settlement expenses: | ​ |  |  | ​ |  | ​ | ​ |  |  | ​ |  |
Direct | ​ | $ | 2,143.0 | ​ | $ | 2,174.8 | ​ | $ | 6,504.9 | ​ | $ | 5,826.4
Ceded | ​ |  | (432.4) | ​ |  | (373.2) | ​ |  | (1,186.3) | ​ |  | (1,090.9)
Net benefits, claims and settlement expenses | ​ | $ | 1,710.6 | ​ | $ | 1,801.6 | ​ | $ | 5,318.6 | ​ | $ | 4,735.5
Liability for future policy benefits remeasurement gain: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Direct | ​ | $ | 697.4 | ​ | $ | (68.0) | ​ | $ | 721.7 | ​ | $ | (199.6)
Ceded | ​ | ​ | (739.7) | ​ | ​ | 0.4 | ​ | ​ | (768.9) | ​ | ​ | (68.4)
Net liability for future policy benefits remeasurement gain | ​ | $ | (42.3) | ​ | $ | (67.6) | ​ | $ | (47.2) | ​ | $ | (268.0)
​ As of September 30, 2023 and December 31, 2022, we had a $6,520.2 million and $7,901.0 reinsurance deposit receivable, respectively. Refer to Note 3, Investments, for information on our financing receivables valuation allowance related to the reinsurance recoverable and deposit receivable. Cost of Reinsurance A reinsurance asset or liability is established to spread the expected net reinsurance costs or profits over the expected term of the contracts. The cost of reinsurance asset and liability are reported in premiums due and other receivables and liability for future policy benefits and claims, respectively, on the consolidated statements of financial position. The cost of reinsurance asset and liability included on the consolidated statements of financial position were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2023 |  | December 31, 2022
​ | ​ | (in millions)
Cost of reinsurance asset | ​ | $ | 3,286.6 | ​ | $ | 3,339.1
​ | ​ | ​ | ​ | ​ | ​ | ​
Cost of reinsurance liability | ​ | $ | 150.2 | ​ | $ | 191.1
​ Cost of reinsurance amortization, including the impacts of remeasurement, of $(25.0) million and $7.6 million for the three months ended September 30, 2023 and 2022, and $8.2 million and $2.6 million for the nine months ended September 30, 2023 and 2022, respectively, was reported in benefits, claims and settlement expenses and liability for future policy benefits remeasurement (gain) loss on the consolidated statements of operations. Funds Withheld The following assets were held in support of our reserves associated with our coinsurance with funds withheld agreement and are reported in the line items shown on the consolidated statements of financial position. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | September 30, 2023 |  | December 31, 2022
​ | ​ | (in millions)
Fixed maturities, available-for-sale | ​ | $ | 14,779.3 | ​ | $ | 15,693.5
Fixed maturities, trading | ​ |  | 215.3 | ​ | ​ | 100.8
Equity securities | ​ |  | 0.3 | ​ | ​ | 11.0
Mortgage loans | ​ |  | 2,527.9 | ​ | ​ | 2,810.8
Other investments | ​ |  | 434.1 | ​ | ​ | 179.8
Cash and cash equivalents | ​ |  | 746.9 | ​ | ​ | 1,762.9
Accrued interest income | ​ |  | 203.7 | ​ | ​ | 178.7
Net other liabilities | ​ |  | (49.8) | ​ | ​ | (33.6)
Net assets | ​ | $ | 18,857.7 | ​ | $ | 20,703.9
​ Certain assets are reported at amortized cost while the fair value of those assets is reflected in the funds withheld payable. As of September 30, 2023 and December 31, 2022, we had a $18,557.7 million and $20,436.1 million funds withheld payable, which was net of a $4,045.7 million and $3,652.8 million embedded derivative asset, respectively. The change in fair value of the embedded derivative was a gain (loss) of $925.6 million and $1,237.7 million for the three months ended September 30, 2023 and 2022, respectively, and $392.9 million and $4,305.0 million for the nine months ended September 30, 2023 and 2022, respectively. While the economic benefits of the funds withheld assets flow to Talcott Life & Annuity Re, we retain legal ownership of the assets within the funds withheld account. Guidelines are in place to ensure the investment risk is appropriately managed. Net investment income and net realized capital gains (losses) related to the assets on the consolidated statements of operations is reported net of the amounts that flow to Talcott Life & Annuity Re. The realized gains and losses that do not flow to Talcott Life & Annuity Re are reported in net realized capital gains (losses) on funds withheld assets on the consolidated statements of operations. Following are the components of net realized capital gains (losses) on the funds withheld assets that were passed to Talcott Life & Annuity Re. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the three months ended | ​ | For the nine months ended
​ | ​ | September 30, | ​ | September 30,
​ |  | 2023 |  | 2022 |  | 2023 |  | 2022
​ | ​ | (in millions)
Fixed maturities, available-for-sale | ​ | $ | (22.7) | ​ | $ | (53.2) | ​ | $ | (146.3) | ​ | $ | 60.7
Fixed maturities, trading | ​ | ​ | — | ​ | ​ | (5.6) | ​ | ​ | (0.1) | ​ | ​ | (6.4)
Equity securities | ​ | ​ | — | ​ | ​ | 0.4 | ​ | ​ | (1.2) | ​ | ​ | (2.4)
Mortgage loans | ​ | ​ | — | ​ | ​ | (0.2) | ​ | ​ | (9.2) | ​ | ​ | (1.8)
Derivatives | ​ | ​ | (0.4) | ​ | ​ | (0.5) | ​ | ​ | 5.0 | ​ | ​ | (1.0)
Other | ​ | ​ | — | ​ | ​ | 11.8 | ​ | ​ | — | ​ | ​ | 5.4
Net realized capital gains (losses) | ​ | $ | (23.1) | ​ | $ | (47.3) | ​ | $ | (151.8) | ​ | $ | 54.5
​

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- Definition The entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479838/944-20-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479838/944-20-50-4 Reference 3: http://www.xbrl.org/2003/role/exampleRef -Topic 944 -SubTopic 605 -Name Accounting Standards Codification -Section 55 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479629/944-605-55-12 Reference 4: http://www.xbrl.org/2003/role/exampleRef -Topic 944 -SubTopic 605 -Name Accounting Standards Codification -Section 55 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147479629/944-605-55-15 + Details
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