Note H. Reinsurance

The Company cedes insurance to reinsurers to limit its maximum loss, provide greater diversification of risk, minimize exposures on larger risks and to exit certain lines of business. The ceding of insurance does not discharge the primary liability of the Company. A credit exposure exists with respect to property and casualty and life reinsurance ceded to the extent that any reinsurer is unable to meet its obligations or to the extent that the reinsurer disputes the liabilities assumed under reinsurance agreements. Property and casualty reinsurance coverages are tailored to the specific risk characteristics of each product line and the Company's retained amount varies by type of coverage. Reinsurance contracts are purchased to protect specific lines of business such as property and workers' compensation. Corporate catastrophe reinsurance is also purchased for property and workers' compensation exposure. Currently, most reinsurance contracts are purchased on an excess of loss basis. The Company also utilizes facultative reinsurance in certain lines. In addition, the Company assumes reinsurance, primarily through Hardy and as a member of various reinsurance pools and associations.

The following table summarizes the amounts receivable from reinsurers at December 31, 2013 and 2012.

Components of Reinsurance Receivables



December 31
(In millions)	2013			2012
Reinsurance receivables related to insurance reserves:
Ceded claim and claim adjustment expenses	$	4,972		$	5,126
Ceded future policy benefits	733			759
Ceded policyholders' funds	35			35
Reinsurance receivables related to paid losses	348			311
Reinsurance receivables	6,088			6,231
Allowance for uncollectible reinsurance	(71		)	(73		)
Reinsurance receivables, net of allowance for uncollectible reinsurance	$	6,017		$	6,158

The Company has established an allowance for uncollectible reinsurance receivables. The Company reviews the allowance quarterly and adjusts the allowance as necessary to reflect changes in estimates of uncollectible balances. The allowance may also be reduced related to write-offs of reinsurance receivable balances.

The Company attempts to mitigate its credit risk related to reinsurance by entering into reinsurance arrangements with reinsurers that have credit ratings above certain levels, and by obtaining collateral. On a limited basis, the Company may enter into reinsurance agreements with reinsurers that are not rated, primarily captive reinsurers. The primary methods of obtaining collateral are through reinsurance trusts, letters of credit and funds withheld balances. Such collateral was approximately $3.9 billion and $3.7 billion at December 31, 2013 and 2012.

The Company's largest recoverables from a single reinsurer at December 31, 2013, including prepaid reinsurance premiums, were approximately $2.9 billion from subsidiaries of Berkshire Hathaway Group, $850 million from subsidiaries of Swiss Re Group, and $350 million from subsidiaries of the Hartford Insurance Group. The recoverable from the Berkshire Hathaway Group includes amounts related to third-party reinsurance for which NICO has assumed the credit risk under the terms of the Loss Portfolio Transfer as discussed in Note F.

The effects of reinsurance on earned premiums and written premiums for the years ended December 31, 2013, 2012 and 2011 are shown in the following tables.

Components of Earned Premiums



(In millions)	Direct		Assumed		Ceded		Net		Assumed/ Net %
2013 Earned Premiums
Property and casualty	$	9,063	$	258	$	2,609	$	6,712	3.8	%
Accident and health	512		48		1		559		8.6	%
Life	49		—		49		—		—
Total earned premiums	$	9,624	$	306	$	2,659	$	7,271	4.2	%

2012 Earned Premiums
Property and casualty	$	8,354	$	197	$	2,229	$	6,322	3.1	%
Accident and health	514		47		1		560		8.4	%
Life	51		—		51		—		—
Total earned premiums	$	8,919	$	244	$	2,281	$	6,882	3.5	%

2011 Earned Premiums
Property and casualty	$	7,858	$	95	$	1,919	$	6,034	1.6	%
Accident and health	521		50		2		569		8.8	%
Life	55		—		55		—		—
Total earned premiums	$	8,434	$	145	$	1,976	$	6,603	2.2	%

Components of Written Premiums



(In millions)	Direct		Assumed		Ceded		Net		Assumed/ Net %
2013 Written Premiums
Property and casualty	$	9,103	$	249	$	2,556	$	6,796	3.7	%
Accident and health	506		47		1		552		8.5	%
Life	49		—		49		—		—
Total written premiums	$	9,658	$	296	$	2,606	$	7,348	4.0	%

2012 Written Premiums
Property and casualty	$	8,467	$	169	$	2,225	$	6,411	2.6	%
Accident and health	507		47		1		553		8.5	%
Life	51		—		51		—		—
Total written premiums	$	9,025	$	216	$	2,277	$	6,964	3.1	%

2011 Written Premiums
Property and casualty	$	7,976	$	102	$	1,857	$	6,221	1.6	%
Accident and health	529		50		2		577		8.7	%
Life	55		—		55		—		—
Total written premiums	$	8,560	$	152	$	1,914	$	6,798	2.2	%

Included in the direct and ceded earned premiums for the years ended December 31, 2013, 2012 and 2011 are $2,156 million, $1,794 million and $1,500 million related to property business that is 100% reinsured under a significant third-party captive program. The third-party captives that participate in this program are affiliated with the non-insurance company policyholders, therefore this program provides a means for the policyholders to self-insure this property risk. The Company receives and retains a ceding commission.

Life and accident and health premiums are primarily from long duration contracts; property and casualty premiums are primarily from short duration contracts.

Insurance claims and policyholders' benefits reported on the Consolidated Statements of Operations are net of reinsurance recoveries of $1,527 million, $1,514 million and $1,285 million for the years ended December 31, 2013, 2012 and 2011, including $712 million, $814 million and $790 million related to the significant third-party captive program discussed above.

The impact of reinsurance on life insurance inforce at December 31, 2013, 2012 and 2011 is shown in the following table.

Components of Life Insurance Inforce



(In millions)	Direct		Assumed		Ceded		Net
2013	$	5,127	$	—	$	5,118	$	9
2012	5,713		—		5,702		11
2011	6,528		—		6,515		13

As of December 31, 2013 and 2012, the Company has ceded $1,066 million and $1,131 million of claim and claim adjustment expense reserves, future policy benefits and policyholders' funds as a result of business operations sold in prior years. Subject to certain exceptions, the purchasers assumed the third-party reinsurance credit risk of the sold business.