Reinsurance

9 Months Ended

Sep. 30, 2025

Note 10 – Reinsurance

The Company's insurance subsidiaries enter into agreements with other insurance companies to limit losses from large exposures and to permit recovery of a portion of incurred losses. Reinsurance is ceded primarily in acquisition and disposition transactions when the underwriting company is not being acquired. Reinsurance does not relieve the originating insurer of liability. Therefore, reinsured liabilities must continue to be reported along with the related reinsurance recoverables. The Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of its credit risk.

The majority of the Company's reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not acquired. The Company bears the risk of loss if its reinsurers and retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company. The Company reviews its reinsurance arrangements and establishes reserves against the recoverables primarily for expected credit losses.

The Company's reinsurance recoverables as of September 30, 2025 are presented at amount due by range of external credit rating and collateral level in the following table, with reinsurance recoverables that are market risk benefits separately presented at fair value:


(In millions)	Fair Value of Collateral Contractually Required to Meet or Exceed Carrying Value of Recoverable		Collateral Provisions Exist That May Mitigate Risk of Credit Loss (1)		No Collateral		Total
Ongoing operations
A- equivalent and higher current ratings (2)	$	—	$	6	$	227	$	233
BBB- to BBB+ equivalent current credit ratings (2)	—		—		64		64
Not rated	85		7		3		95
Acquisition, disposition or run-off activities
BBB+ equivalent and higher current ratings (2)(3)	293		2,847		74		3,214

Not rated	—		6		1		7
Total reinsurance recoverables before market risk benefits	$	378	$	2,866	$	369	$	3,613
Allowance for uncollectible reinsurance							(23)
Market risk benefits							756
Total reinsurance recoverables (4)							$	4,346

(1)Includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its external credit rating is downgraded to a specified level.

(2)Certified by a nationally recognized statistical ratings organization ("NRSRO").

(3)Comprised of six reinsurers, of which 75% is held by two reinsurers, Lincoln National Life Insurance Company and Lincoln Life and Annuity Company of New York.

(4)Includes $139 million of current reinsurance recoverables that are reported in Other current assets.

The Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance business via a reinsurance transaction in 2013. Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk benefits as discussed in Note 9 to the Consolidated Financial Statements. Berkshire reinsured 100% of the Company's future cash flows in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit, with approximately $3.0 billion remaining as of September 30, 2025. As a result of the reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit. As of both September 30, 2025 and 2024, market risk benefits (shown in the table net of nonperformance risk as of September 30, 2025) were predominantly reinsured by Berkshire, which is rated AA+ by an NRSRO. As of September 30, 2025, approximately 100% of the Berkshire recoverable is secured by assets in a trust.