REINSURANCE

Reinsurance mitigates the risk of highly uncertain exposures and reduces the maximum net loss that can arise from large risks or risks concentrated in areas of exposure. Management's decisions about the appropriate level of risk retention are affected by various factors, including changes in our underwriting practices, capacity to retain risks and reinsurance market conditions.

Primary components of our property casualty reinsurance program include a property per risk treaty, property excess treaty, casualty per occurrence treaty, casualty excess treaty, property catastrophe treaty and catastrophe bonds.

Our condensed consolidated statements of income include earned consolidated property casualty insurance premiums on assumed and ceded business:



(In millions)	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Direct earned premiums	$	1,067		$	1,002		$	3,134		$	2,895
Assumed earned premiums	3			3			8			8
Ceded earned premiums	(45		)	(51		)	(132		)	(150		)
Net earned premiums	$	1,025		$	954		$	3,010		$	2,753

Our condensed consolidated statements of income include incurred consolidated property casualty insurance loss and loss expenses on assumed and ceded business:



(In millions)	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Direct incurred loss and loss expenses	$	633		$	597		$	2,026		$	1,725
Assumed incurred loss and loss expenses	1			1			5			8
Ceded incurred loss and loss expenses	(12		)	(5		)	(26		)	(33		)
Net incurred loss and loss expenses	$	622		$	593		$	2,005		$	1,700

Our life insurance company purchases reinsurance for protection of a portion of the risk that is written. Primary components of our life reinsurance program include individual mortality coverage and aggregate catastrophe and accidental death coverage in excess of certain deductibles.

Our condensed consolidated statements of income include earned life insurance premiums on ceded business:



(In millions)	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Direct earned premiums	$	61		$	52		$	191		$	166
Ceded earned premiums	(15		)	(14		)	(44		)	(42		)
Net earned premiums	$	46		$	38		$	147		$	124

Our condensed consolidated statements of income include life insurance contract holders' benefits incurred on ceded business:



(In millions)	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Direct contract holders' benefits incurred	$	80		$	64		$	228		$	190
Ceded contract holders' benefits incurred	(16		)	(15		)	(52		)	(49		)
Net contract holders' benefits incurred	$	64		$	49		$	176		$	141

The ceded benefits incurred can vary depending on the type of life insurance policy held and the year the policy was sold.