REINSURANCE

Effective March 31, 2015, we entered into a coinsurance reinsurance transaction whereby we ceded 30.0% of the sickness hospital benefit of one of Aflac Japan’s closed in-force blocks of business. We recorded the gain related to this transaction as a deferred profit liability on business sold through reinsurance on our consolidated balance sheets. The deferred profit liability of $600 million, as of March 31, 2015, included in future policy benefits in the consolidated balance sheet, is being amortized into income over the expected lives of the policies. The corresponding reinsurance recoverable is included in other assets in the consolidated balance sheet and totaled $600 million as of March 31, 2015. As of March 31, 2015, no ceded premiums or claims have been incurred or paid under the transaction.

Effective October 1, 2014 and September 30, 2013, we entered into coinsurance reinsurance transactions whereby we ceded 16.7% and 33.3%, respectively, of the hospital benefit of one of Aflac Japan’s closed medical in-force blocks of business. We recorded the gain related to these transactions as a deferred profit liability on business sold through reinsurance on our consolidated balance sheets. The deferred profit liability of $684 million, as of March 31, 2015, included in future policy benefits in the consolidated balance sheet, is being amortized into income over the expected lives of the policies. The corresponding reinsurance recoverable is included in other assets in the consolidated balance sheet and totaled $707 million as of March 31, 2015.

Effective December 31, 2014, we entered into a retrocession coinsurance reinsurance transaction whereby we assumed 8.35% of the reinsured hospital benefit of one of Aflac Japan’s closed medical in-force blocks of business through our subsidiary CAIC. The corresponding future policy benefit liability of $3 million, as of March 31, 2015, was included in future policy benefits in the consolidated balance sheet.

The following table reconciles direct premium income and direct benefits and claims to net amounts after the effect of reinsurance.



(In millions)	Three Months Ended March 31, 2015				Three Months Ended March 31, 2014
Direct premium income		$	4,514			$	4,933
Ceded to other companies:
Ceded Aflac Japan closed blocks		(90		)		(73		)
Other		(10		)		(9		)
Assumed from other companies:
Retrocession activities		15				0
Other		3				3
Net premium income		$	4,432			$	4,854

Direct benefits and claims		$	3,025			$	3,289
Ceded benefits and change in reserves for future benefits:
Ceded Aflac Japan closed blocks		(80		)		(64		)
Other		(7		)		(7		)
Assumed from other companies:
Retrocession activities		14				0
Other		0				2
Benefits and claims, net		$	2,952			$	3,220

Reinsurance does not relieve us from our obligations to policyholders. In the event that the reinsurer is unable to meet their obligations, we remain liable for the reinsured claims.