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Reinsurance | 6 Months Ended
--- | ---
Jun. 30, 2024
Insurance [Abstract] |
Reinsurance | 12. Reinsurance The Company also reinsures its business through a diversified group of reinsurers. The Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements. The Company monitors trends in arbitration and any litigation outcomes with its reinsurers. Collectability of reinsurance balances is evaluated by monitoring ratings and the financial strength of its reinsurers. The effect of reinsurance on net premiums earned and claims incurred and policyholder benefits paid are as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (Dollars in millions)
Premiums earned: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 1,387 |  |  | $ | 1,344 |  |  | $ | 2,871 |  |  | $ | 2,411 |
Reinsurance ceded |  | (382) |  |  | (342) |  |  | (722) |  |  | (628) |
Net premiums earned |  | $ | 1,005 |  |  | $ | 1,002 |  |  | $ | 2,149 |  |  | $ | 1,783 |
Other policy revenue: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 203 |  |  | $ | 103 |  |  | $ | 315 |  |  | $ | 200 |
Reinsurance ceded |  | (19) |  |  | — |  |  | (19) |  |  | — |
Net other policy revenue |  | $ | 184 |  |  | $ | 103 |  |  | $ | 296 |  |  | $ | 200 |
Policyholder benefits paid and claims incurred: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 1,296 |  |  | $ | 1,171 |  |  | $ | 2,588 |  |  | $ | 2,029 |
Reinsurance ceded |  | (266) |  |  | (182) |  |  | (472) |  |  | (340) |
Net benefits paid and claims incurred |  | $ | 1,030 |  |  | $ | 989 |  |  | $ | 2,116 |  |  | $ | 1,689 |
Change in fair value of market risk benefits: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 148 |  |  | $ | (24) |  |  | $ | 186 |  |  | $ | (14) |
Reinsurance ceded |  | (9) |  |  | 12 |  |  | (28) |  |  | 7 |
Net change in fair value of market risk benefits |  | $ | 139 |  |  | $ | (12) |  |  | $ | 158 |  |  | $ | (7) |
Interest sensitive contract benefits: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 506 |  |  | $ | 175 |  |  | $ | 765 |  |  | $ | 365 |
Reinsurance ceded |  | (116) |  |  | (59) |  |  | (220) |  |  | (160) |
Net interest sensitive contract benefits |  | $ | 390 |  |  | $ | 116 |  |  | $ | 545 |  |  | $ | 205 |
Annuity The following summarizes our annuity reinsurance treaties and related recoverable (in millions):
|  | Reinsurance Recoverable |  | Agreement Type |  | Products Covered
|  | June 30, 2024 |  |  |  |  |  |
|  | (Dollars in millions) |  |  |  |  |  |
Principal Reinsurers: |  |  |  |  |  |  |  |
EquiTrust Life Insurance Company |  | $ | 245 |  |  |  |  | Coinsurance |  | Certain Fixed Index and Fixed Rate Annuities
Athene Life Re Ltd. |  | 2,044 |  |  |  |  | Coinsurance Funds Withheld, Modified Coinsurance |  | Certain Fixed Annuities and Multi-Year Guaranteed Annuities
North End Re (Cayman) SPC |  | 8,075 |  |  |  |  | Coinsurance Funds Withheld, Modified Coinsurance |  | Certain Fixed Annuities
AeBe ISA LTD |  | 4,397 |  |  |  |  | Coinsurance Funds Withheld, Coinsurance |  | Certain Fixed Index and Fixed Rate Annuities
|  | $ | 14,761 |  |  |  |  |  |  |
There were no significant changes to third party reinsurance agreements for the three and six months ended June 30, 2024. We calculate estimated losses on reinsurance recoverable balances by determining an expected loss ratio. The expected loss ratio is based on industry historical loss experience and expected recovery timing adjusted for certain current and forecasted environmental factors management believes to be relevant. Estimated losses related to our reinsurance recoverable balances was $0 million as of June 30, 2024. The company incurred risk charge fees of $3 million and $3 million during the three and six months ended June 30, 2024, in relation to reinsurance agreements. Intercompany Reinsurance Agreements The Company executes various intercompany reinsurance agreements between its subsidiaries, including off shore entities, for purposes of managing regulatory statutory capital and risk. All intercompany balances have been eliminated in the preparation of the accompanying financial statements. These intercompany transactions are executed with wholly owned reinsurance subsidiaries, AEL Re Vermont, AEL Re Vermont II, Freestone Re Ltd. (“Freestone”), and AEL Re Bermuda Ltd. The reinsurance agreements with AEL Re Vermont and AEL Re Vermont II involve reinsuring a portion of lifetime income benefit rider payments in excess of policy fund values. These entities then entered into third-party excess of loss agreements which are permitted to be an admitted asset on the statutory balance sheets. The reinsurance agreement with AEL Re Bermuda Ltd. Is a coinsurance agreement to reinsure a portion of fixed index annuities on a funds withheld basis. Property and Casualty There were no significant changes to third party reinsurance agreements for the three and six months ended June 30, 2024 and 2023.

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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/1943274/2147477548/944-605-55-12 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/1943274/2147477548/944-605-55-15 + Details
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