Note G. 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 presents the amounts receivable from reinsurers.



December 31
(In millions)	2015			2014
Reinsurance receivables related to insurance reserves:
Ceded claim and claim adjustment expenses	$	4,087		$	4,344
Ceded future policy benefits	207			185
Reinsurance receivables related to paid losses	197			213
Reinsurance receivables	4,491			4,742
Allowance for uncollectible reinsurance	(38		)	(48		)
Reinsurance receivables, net of allowance for uncollectible reinsurance	$	4,453		$	4,694

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 by 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 $3.2 billion and $3.4 billion as of December 31, 2015 and 2014.

The Company's largest recoverables from a single reinsurer including ceded unearned premium reserves, as of December 31, 2015, were approximately $2,357 million from subsidiaries of Berkshire Hathaway Group, $284 million from the Gateway Rivers Insurance Company and $207 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 E to the Consolidated Financial Statements.

The effects of reinsurance on earned premiums and written premiums are presented in the following tables.



(In millions)	Direct		Assumed		Ceded		Net		Assumed/ Net %
2015 Earned Premiums
Property and casualty	$	9,853	$	274	$	3,754	$	6,373	4.3	%
Accident and health	498		50		—		548		9.1	%
Total earned premiums	$	10,351	$	324	$	3,754	$	6,921	4.7	%

2014 Earned Premiums
Property and casualty	$	9,452	$	277	$	3,073	$	6,656	4.2	%
Accident and health	508		48		—		556		8.6	%
Total earned premiums	$	9,960	$	325	$	3,073	$	7,212	4.5	%

2013 Earned Premiums
Property and casualty	$	9,063	$	258	$	2,609	$	6,712	3.8	%
Accident and health	511		48		—		559		8.6	%
Total earned premiums	$	9,574	$	306	$	2,609	$	7,271	4.2	%



(In millions)	Direct		Assumed		Ceded		Net		Assumed/ Net %
2015 Written Premiums
Property and casualty	$	9,852	$	270	$	3,702	$	6,420	4.2	%
Accident and health	493		49		—		542		9.0	%
Total written premiums	$	10,345	$	319	$	3,702	$	6,962	4.6	%

2014 Written Premiums
Property and casualty	$	9,283	$	276	$	3,024	$	6,535	4.2	%
Accident and health	504		49		—		553		8.9	%
Total written premiums	$	9,787	$	325	$	3,024	$	7,088	4.6	%

2013 Written Premiums
Property and casualty	$	9,103	$	249	$	2,556	$	6,796	3.7	%
Accident and health	505		47		—		552		8.5	%
Total written premiums	$	9,608	$	296	$	2,556	$	7,348	4.0	%

Included in the direct and ceded earned premiums for the years ended December 31, 2015, 2014 and 2013 are $3,344 million, $2,643 million and $2,156 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.

Accident and health premiums are from long duration contracts; property and casualty premiums are from short duration contracts.

Insurance claims and policyholders' benefits reported on the Consolidated Statements of Operations are net of reinsurance recoveries of $2,601 million, $1,379 million and $1,450 million for the years ended December 31, 2015, 2014 and 2013, including $2,282 million, $1,458 million and $712 million, respectively, related to the significant third-party captive program discussed above. Reinsurance recoveries in 2014 were unfavorably affected by the commutation of a workers’ compensation reinsurance pool.