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.

The main components of our assumed reinsurance include involuntary as well as voluntary from our new assumed reinsurance operation. Primary components of our property casualty ceded reinsurance program include a property per risk treaty, property excess treaty, casualty per occurrence treaty, casualty excess treaty, property catastrophe treaty and catastrophe bonds and voluntary business from our new assumed reinsurance operation.

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



(Dollars in millions)	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Direct earned premiums	$	1,110		$	1,067		$	3,279		$	3,134
Assumed earned premiums	3			3			8			8
Ceded earned premiums	(37		)	(45		)	(111		)	(132		)
Earned premiums	$	1,076		$	1,025		$	3,176		$	3,010

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



(Dollars in millions)	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Direct incurred loss and loss expenses	$	618		$	633		$	1,984		$	2,026
Assumed incurred loss and loss expenses	2			1			2			5
Ceded incurred loss and loss expenses	(7		)	(12		)	(30		)	(26		)
Incurred loss and loss expenses	$	613		$	622		$	1,956		$	2,005

Our ceded incurred results generally vary with our catastrophe experience.

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:



(Dollars in millions)	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Direct earned premiums	$	67		$	61		$	200		$	191
Ceded earned premiums	(16		)	(15		)	(44		)	(44		)
Earned premiums	$	51		$	46		$	156		$	147

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



(Dollars in millions)	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Direct contract holders' benefits incurred	$	70		$	80		$	214		$	228
Ceded contract holders' benefits incurred	(13		)	(16		)	(39		)	(52		)
Contract holders' benefits incurred	$	57		$	64		$	175		$	176

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