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Reinsurance | 9 Months Ended
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Sep. 30, 2024
Insurance [Abstract] |
Reinsurance | 12. Reinsurance The Company 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 September 30, |  | Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (Dollars in millions)
Premiums earned: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 1,253 |  |  | $ | 1,090 |  |  | $ | 4,124 |  |  | $ | 3,501 |
Reinsurance ceded |  | (365) |  |  | (306) |  |  | (1,087) |  |  | (934) |
Net premiums earned |  | $ | 888 |  |  | $ | 784 |  |  | $ | 3,037 |  |  | $ | 2,567 |
Other policy revenue: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 212 |  |  | $ | 106 |  |  | $ | 527 |  |  | $ | 306 |
Reinsurance ceded |  | (4) |  |  | — |  |  | (23) |  |  | — |
Net other policy revenue |  | $ | 208 |  |  | $ | 106 |  |  | $ | 504 |  |  | $ | 306 |
Policyholder benefits paid and claims incurred: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 1,183 |  |  | $ | 928 |  |  | $ | 3,771 |  |  | $ | 2,957 |
Reinsurance ceded |  | (337) |  |  | (211) |  |  | (809) |  |  | (551) |
Net benefits paid and claims incurred |  | $ | 846 |  |  | $ | 717 |  |  | $ | 2,962 |  |  | $ | 2,406 |
Change in fair value of market risk benefits: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 110 |  |  | $ | (27) |  |  | $ | 296 |  |  | $ | (41) |
Reinsurance ceded |  | 24 |  |  | 13 |  |  | (4) |  |  | 20 |
Net change in fair value of market risk benefits |  | $ | 134 |  |  | $ | (14) |  |  | $ | 292 |  |  | $ | (21) |
Interest sensitive contract benefits: |  |  |  |  |  |  |  |
Gross amounts |  | $ | 629 |  |  | $ | 238 |  |  | $ | 1,394 |  |  | $ | 603 |
Reinsurance ceded |  | (106) |  |  | (105) |  |  | (326) |  |  | (265) |
Net interest sensitive contract benefits |  | $ | 523 |  |  | $ | 133 |  |  | $ | 1,068 |  |  | $ | 338 |
The following summarizes our life and annuity reinsurance treaties and related recoverable (in millions):
|  | Reinsurance Recoverable |  | Agreement Type |  | Products Covered
|  | September 30, 2024 |  |  |  |  |  |
|  | (Dollars in millions) |  |  |  |  |  |
Principal Reinsurers: |  |  |  |  |  |  |  |
EquiTrust Life Insurance Company |  | $ | 237 |  |  |  |  | Coinsurance |  | Certain Fixed Index and Fixed Rate Annuities
Athene Life Re Ltd. |  | 1,924 |  |  |  |  | Coinsurance Funds Withheld, Modified Coinsurance |  | Certain Fixed Annuities and Multi-Year Guaranteed Annuities
North End Re (Cayman) SPC |  | 8,010 |  |  |  |  | Coinsurance Funds Withheld, Modified Coinsurance |  | Certain Fixed Annuities
AeBe ISA LTD |  | 4,333 |  |  |  |  | Coinsurance Funds Withheld, Coinsurance |  | Certain Fixed Index and Fixed Rate Annuities
Reinsurance Group of America Inc. (RGA) |  | 3,406 |  |  |  |  | Coinsurance |  | Certain Term, Whole, Indexed Universal, Universal, and Universal with Secondary Guarantee Life Insurance Policies
|  | $ | 17,910 |  |  |  |  |  |  |
Effective July 1, 2024, certain of American National’s subsidiaries entered into reinsurance agreements with certain subsidiaries of Reinsurance Group of America Inc. (“RGA”), a third party reinsurance group. In accordance with the terms of this agreement, such American National subsidiaries ceded to the reinsurer, on a coinsurance basis, mortality risk and approximately $3.4 billion of reserves associated with a diversified block of term life insurance, whole life insurance, indexed universal life insurance, universal life insurance and universal life insurance with secondary guarantee. Policies written by American National Life Insurance Company, American National Life Insurance Company of Texas and Garden State Life Insurance Company are ceded on a 100% quota share basis, while policies written by American National Life Insurance Company of New York are ceded on an 80% quota share basis. This reinsurance transaction represents approximately half of the Company’s in-force life business. As part of this reinsurance transaction, the Company recognized a deferred gain of $1.6 billion, which is recorded in Other liabilities in the Consolidated Statements of Financial Position as of September 30, 2024. This deferred gain represents the unamortized portion of the cost of reinsurance related to the in-force business which will be amortized over the life of the underlying reinsured policies. The deferred gain represents primarily the difference between liabilities ceded and assets transferred as part of the reinsurance agreement. The amortization of the deferred gain recognized in Other income in the Consolidated Statements of Operations for the three months ended September 30, 2024 was $9 million. There were no other significant changes to third party reinsurance agreements for the three and nine months ended September 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 September 30, 2024. The company incurred risk charge fees of $5 million and $8 million during the three and nine months ended September 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. The reinsurance agreements with Freestone involve reinsuring certain group annuity contracts issued under PRT transactions and certain single premium immediate annuities, fixed deferred annuities, fixed index annuities and multi-year guarantee annuities.

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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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