NOTE 8 – REINSURANCE

Reinsurance mitigates the risk of highly uncertain exposures and limits the maximum net loss that can arise from large risks or risks concentrated in areas of exposure. Primary components of our property and casualty reinsurance program include a property risk treaty, casualty per occurrence treaty and property catastrophe treaty.

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

	Three months ended September 30,						Nine months ended September 30,
(In millions)	2012			2011			2012			2011
Direct earned premiums	$	898		$	817		$	2,605		$	2,404
Assumed earned premiums		1			3			7			10
Ceded earned premiums		(48	)		(51	)		(137	)		(170	)
Net earned premiums	$	851		$	769		$	2,475		$	2,244

The decrease in ceded earned premiums for 2012 compared with 2011 is related to earned reinstatement premiums as a result of higher in catastrophe losses in the second quarter of 2011.

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

	Three months ended September 30,						Nine months ended September 30,
(In millions)	2012			2011			2012			2011
Direct incurred loss and loss expenses	$	562		$	649		$	1,745		$	2,157
Assumed incurred loss and loss expenses		(3	)		8			3			28
Ceded incurred loss and loss expenses		(34	)		(50	)		(44	)		(291	)
Net incurred loss and loss expenses	$	525		$	607		$	1,704		$	1,894

The decrease in ceded loss and loss expenses for 2012 compared with 2011 is related to the higher catastrophe losses in the second and third quarters of 2011.

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 comprehensive operations include earned life insurance premiums on ceded business:

	Three months ended September 30,						Nine months ended September 30,
(In millions)	2012			2011			2012			2011
Direct earned premiums	$	52		$	57		$	170		$	162
Assumed earned premiums		-			-			-			-
Ceded earned premiums		(14	)		(14	)		(40	)		(39	)
Net earned premiums	$	38		$	43		$	130		$	123

Our condensed consolidated statements of comprehensive operations include life insurance contract holders’ benefits incurred on ceded business:

	Three months ended September 30,						Nine months ended September 30,
(In millions)	2012			2011			2012			2011
Direct contract holders' benefits incurred	$	62		$	58		$	172		$	167
Assumed contract holders' benefits incurred		-			-			-			-
Ceded contract holders' benefits incurred		(16	)		(9	)		(36	)		(29	)
Net incurred loss and loss expenses	$	46		$	49		$	136		$	138