REINSURANCE

We enter into fixed quota-share coinsurance agreements with other companies in the normal course of business. For each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Reinsurance premiums and benefits paid or provided are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums and benefits are reported net of insurance ceded.

We have recorded a deferred profit liability related to reinsurance transactions. The remaining deferred profit liability of $856 million, as of March 31, 2016, included in future policy benefits in the consolidated balance sheet, is being amortized into income over the expected lives of the policies. We also have recorded a reinsurance recoverable for reinsurance transactions, which is included in other assets in the consolidated balance sheet and had a remaining balance of $869 million as of March 31, 2016.

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



	Three Months Ended March 31,
(In millions)	2016				2015
Direct premium income		$	4,690			$	4,514
Ceded to other companies:
Ceded Aflac Japan closed blocks		(134		)		(90		)
Other		(12		)		(10		)
Assumed from other companies:
Retrocession activities		56				15
Other		2				3
Net premium income		$	4,602			$	4,432

Direct benefits and claims		$	3,103			$	3,025
Ceded benefits and change in reserves for future benefits:
Ceded Aflac Japan closed blocks		(121		)		(80		)
Other		4				(7		)
Assumed from other companies:
Retrocession activities		53				14
Other		(14		)		0
Benefits and claims, net		$	3,025			$	2,952

These reinsurance transactions are indemnity reinsurance that do 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.

As a part of our capital contingency plan, we entered into a committed reinsurance facility agreement on December 1, 2015 in the amount of approximately 110 billion yen. This reinsurance facility agreement is effective from December 1, 2015 until December 31, 2016. There are also additional commitment periods of a one-year duration each which are automatically extended unless notification is received from the reinsurer within 60 days prior to the expiration. The reinsurer can withdraw from the committed facility if Aflac‘s Standard and Poor's (S&P) rating drops below BBB-. As of March 31, 2016, we have not executed a reinsurance treaty under this committed reinsurance facility.