F&G Reinsurance

12 Months Ended

Dec. 31, 2024

The company reinsures portions of its policy risks with other insurance companies. The use of indemnity reinsurance does not discharge an insurer from liability on the insurance ceded. The insurer is required to pay in full the amount of its insurance liability regardless of whether it is entitled to or able to receive payment from the reinsurer. The portion of risks exceeding the company's retention limit is reinsured. The company primarily seeks reinsurance coverage in order to manage loss exposures, to enhance our capital position, to diversify risks and earnings, and to manage new business volume. The company follows reinsurance accounting when the treaty adequately transfers insurance risk and any acquisition cost reimbursements reduce policy acquisition costs deferred and maintenance expense reimbursements reduce direct expenses incurred. Otherwise, the company follows deposit accounting if there is inadequate transfer of insurance risk or if the underlying policy for which risk is being transferred is an investment contract that does not contain insurance risk. Refer to Note A Business and Summary of Significant Accounting Policies for more information over our accounting policy for reinsurance agreements. As of December 31, 2024, we had an immaterial amount of COR included in Prepaid expenses and other assets on the Consolidated Balance Sheets compared to none as of December 31, 2023.

The effects of reinsurance on net premiums earned and net benefits incurred (benefits paid and reserve changes) for the years ended December 31, 2024, 2023 and 2022 respectively, were as follows:


	Year Ended
	December 31, 2024				December 31, 2023				December 31, 2022
	Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred		Net Premiums Earned		Net Benefits Incurred
	(In millions)
Direct	$	2,346	$	3,987	$	2,112	$	3,728	$	1,522	$	3,640

Ceded	(94)		(196)		(105)		(175)		(128)		(2,514)
Net	$	2,252	$	3,791	$	2,007	$	3,553	$	1,394	$	1,126

Amounts payable or recoverable for reinsurance on paid and unpaid claims are not subject to periodic or maximum limits. No policies issued by the company have been reinsured with any foreign company, which is controlled, either directly or indirectly, by a party not primarily engaged in the business of insurance. The company has not entered into any reinsurance agreements in which the reinsurer may unilaterally cancel any reinsurance for reasons other than non-payment of premiums or other similar credit issues.

Reinsurance Transactions

The following summarizes significant changes to third-party reinsurance agreements for the years ended December 31, 2024 and 2023:

Somerset: Effective July 1, 2024, F&G amended the existing flow reinsurance agreement with Somerset Reinsurance Ltd. (“Somerset”), a third-party reinsurer, to additionally cede the base contract benefits and GMWB riders attached under certain FIA policies on a coinsurance funds withheld quota share basis.

Kubera: F&G has a reinsurance agreement with Kubera Insurance (SAC) Ltd. (“Kubera”), an unaffiliated reinsurer, to cede certain FIA statutory reserves on a coinsurance funds withheld quota share basis, net of applicable existing reinsurance. This agreement has been amended several times to include additional FIA policies, with the latest amendment effective December 1, 2024.

Everlake and Somerset: F&G executed flow reinsurance agreements with Everlake Life Insurance Company (“Everlake”) and Somerset, third-party reinsurers, to cede certain MYGA business written effective September 1, 2023, and December 1, 2023, respectively, on a coinsurance quota share basis.

Canada Life: Effective May 1, 2020, F&G entered into an indemnity reinsurance agreement with Canada Life Assurance Company (“Canada Life”) United States Branch, a third-party reinsurer, to reinsure FIA policies with GMWB riders. In accordance with the terms of this agreement, F&G cedes a quota share percentage of the net retention of guaranteed payments in excess of account value for GMWB. Effective December 31, 2023, we entered a Recapture and Termination Agreement with Canada Life whereby 100% of the liabilities and obligations were recaptured.

The following summarizes significant changes to third-party reinsurance agreements subsequent to the year ended December 31, 2024:

Everlake Reinsurance Amendment

Effective January 1, 2025, F&G amended the existing flow reinsurance agreement with Everlake to cede future additional MYGA business for agreed upon periods to Everlake pursuant to an offer and acceptance process, rather than on a flow basis. The amendment included a cession of an inforce block of certain MYGA policies on a coinsurance quota share basis.

The following summarizes our reinsurance recoverable (in millions) as of December 31, 2024 and 2023:

Parent Company/
Principal Reinsurers

Reinsurance Recoverable (a)

Agreement Type

Products
Covered

Accounting

December 31, 2024

December 31, 2023

Aspida Life Re Ltd

7,844

6,128

Coinsurance Funds Withheld

Certain MYGA (b)

Deposit

Somerset (c)

2,822

716

Coinsurance Funds Withheld

Certain MYGA (b) and deferred annuities

Deposit

Coinsurance Funds Withheld

Certain FIA

Reinsurance

Everlake

1,168

509

Coinsurance

Certain MYGA (b) (d)

Deposit

Wilton Reassurance Company

1,066

1,092

Coinsurance

Block of traditional, IUL, and UL (e)

Reinsurance

Other (f)

489

536

Reinsurance recoverable, gross of allowance for credit losses

13,389

8,981

Allowance for expected credit loss

(20)

(21)

Reinsurance recoverable, net of allowance for credit losses

13,369

8,960

(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.

(b) The combined quota share flow reinsurance amongst all reinsurers for 2024 varied between 30% and 90%. As of December 31, 2024, the combined quota share flow reinsurance amongst all reinsurers was 90%.

(d) Reinsurance recoverable is collateralized by assets placed in a statutory comfort trust by the reinsurer and maintained for our sole benefit.

(e) Also includes certain FGL Insurance life insurance policies that are subject to redundant reserves, reported on a statutory basis, under Regulation XXX and Guideline AXXX.

(f) Represents all other reinsurers, with no single reinsurer having a carrying value in excess of 5% of total reinsurance recoverable

As of December 31, 2024, and 2023, the company had a deposit asset of $11,039 million and $7,481 million, respectively, which is reported in the Reinsurance recoverable, net of allowance for credit losses on the Consolidated Balance Sheet.

The company incurred risk charge fees of $42 million, $39 million, and $36 million during the years ended December 31, 2024, 2023, and 2022, respectively, in relation to reinsurance agreements.

Credit Losses

The company estimates expected credit losses on reinsurance recoverables using a probability of default/loss given default model. Significant inputs to the model include the reinsurer's credit risk, expected timing of recovery, industry-wide historical default experience, senior unsecured bond recovery rates, and credit enhancement features.

The expected credit loss reserves were as follows:


	Years Ended
	December 31, 2024		December 31, 2023
	(In millions)
Balance at Beginning of Period	$	(21)	$	(10)
Changes in the expected credit loss reserve	1		(11)
Balance at End of Period	$	(20)	$	(21)

Concentration of Reinsurance Risk

As indicated above, F&G has a significant concentration of reinsurance risk with third party reinsurers, Aspida Life Re Ltd. (“Aspida Re”), Wilton Reassurance (“Wilton Re”), Somerset, and Everlake that could have a material impact on our financial position in the event that any of these reinsurers fails to perform its obligations under the various reinsurance treaties. We monitor the financial condition and financial strength of individual reinsurers using public ratings (refer to table below) and ratings reports of individual reinsurers to attempt to reduce the risk of default by such reinsurers. In addition, the risk of non-performance is further mitigated with various forms of collateral or collateral arrangements, including secured trusts, funds withheld accounts and irrevocable letters of credit. We believe that all amounts due from Aspida Re, Wilton Re, Somerset, and Everlake for periodic treaty settlements, net of any applicable credit loss reserves, are collectible as of December 31, 2024. The following table presents financial strength ratings as of December 31, 2024:

Parent Company/Principal Reinsurers

Financial Strength Rating

AM Best

S&P

Fitch

Moody's

Aspida Re

A-

—

Somerset

A-

BBB+

—

Everlake

—

Wilton Re

A+

—

A-

—

“—” indicates not rated

Intercompany Reinsurance Agreements

The Company executes various intercompany reinsurance agreements between its insurance subsidiaries, including off shore entities, for purposes of managing regulatory statutory capital and risk. Since these agreements are intercompany, the financial impacts are eliminated in the preparation of the Consolidated Financial Statements included within this Annual Report on Form 10-K.

Some of these intercompany transactions are executed with wholly owned reinsurance subsidiaries, Corbeau Re, Inc. (“Corbeau Re”), Raven Reinsurance Company (“Raven Re”) and F&G Cayman Re (“Cayman Re”), to finance the portion of statutory reserves considered to be non-economic. The financing arrangements involve Fidelity & Guaranty Life Insurance Company reinsuring certain annuity products and their related rider benefits to the captives and the captives executing third-party financing facilities that are classified as capital for statutory purposes.

The transactions with Raven Re and Cayman Re included the execution of letter of credits with Nomura Bank International plc (“NBI”) and Deutsche Bank AG, respectively, that are undrawn and have maximum borrowing capacities of $175 million and $400 million, respectively, as of December 31, 2024. The transaction with Corbeau Re included the execution of an excess of loss agreement (“XOL”) with Canada Life Barbados Branch that matures on December 31, 2043, and provides for coverage on losses up to $1,500 million as of December 31, 2024. With Corbeau Re, non-economic reserves were financed through the maturity date of the XOL and statutory reserves are recorded for all risks expected to be incurred after the maturity date of the XOL. The XOL is not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP; therefore, deposit accounting is applied.