10. Reinsurance

The effects of reinsurance on property-liability insurance premiums written and earned and life and annuity premiums and contract charges for the years ended December 31 are as follows:

($ in millions)	2014			2013			2012

Property-liability insurance premiums written
Direct	$	30,686		$	29,241		$	28,103
Assumed		48			52			35
Ceded		(1,120	)		(1,129	)		(1,111	)

Property-liability insurance premiums written, net of reinsurance	$	29,614		$	28,164		$	27,027



Property-liability insurance premiums earned
Direct	$	29,914		$	28,638		$	27,794
Assumed		45			49			33
Ceded		(1,030	)		(1,069	)		(1,090	)

Property-liability insurance premiums earned, net of reinsurance	$	28,929		$	27,618		$	26,737



Life and annuity premiums and contract charges
Direct	$	1,944		$	2,909		$	2,860
Assumed		629			82			55
Ceded		(416	)		(639	)		(674	)

Life and annuity premiums and contract charges, net of reinsurance	$	2,157		$	2,352		$	2,241

Property-Liability

The Company purchases reinsurance after evaluating the financial condition of the reinsurer, as well as the terms and price of coverage. Developments in the insurance and reinsurance industries have fostered a movement to segregate asbestos, environmental and other discontinued lines exposures into separate legal entities with dedicated capital. Regulatory bodies in certain cases have supported these actions. The Company is unable to determine the impact, if any, that these developments will have on the collectability of reinsurance recoverables in the future.

Property-Liability reinsurance recoverable

Total amounts recoverable from reinsurers as of December 31, 2014 and 2013 were $5.78 billion and $4.75 billion, respectively, including $89 million and $85 million, respectively, related to property-liability losses paid by the Company and billed to reinsurers, and $5.69 billion and $4.66 billion, respectively, estimated by the Company with respect to ceded unpaid losses (including IBNR), which are not billable until the losses are paid.

With the exception of the recoverable balances from the Michigan Catastrophic Claim Association ("MCCA"), Lloyd's of London, New Jersey Unsatisfied Claim and Judgment Fund ("NJUCJF") and other industry pools and facilities, the largest reinsurance recoverable balance the Company had outstanding was $65 million and $85 million from Westport Insurance Corporation (formerly Employers' Reinsurance Company) as of December 31, 2014 and 2013, respectively. No other amount due or estimated to be due from any single property-liability reinsurer was in excess of $34 million as of both December 31, 2014 and 2013.

The allowance for uncollectible reinsurance was $95 million and $92 million as of December 31, 2014 and 2013, respectively, and is primarily related to the Company's Discontinued Lines and Coverages segment.

Industry pools and facilities

Reinsurance recoverable on paid and unpaid claims including IBNR as of December 31, 2014 and 2013 includes $4.42 billion and $3.46 billion, respectively, from the MCCA. The MCCA is a mandatory insurance coverage and reinsurance indemnification mechanism for personal injury protection losses that provides indemnification for losses over a retention level that increases every other MCCA fiscal year. The retention level is $530 thousand per claim for the fiscal years ending June 30, 2015 and 2014. The MCCA operates similar to a reinsurance program and is funded by participating companies through a per vehicle annual assessment. This assessment is included in the premiums charged to the Company's customers and when collected, the Company remits the assessment to the MCCA. These assessments provide funds for the indemnification for losses described above. The MCCA is required to assess an amount each year sufficient to cover lifetime claims of all persons catastrophically injured in that year, its operating expenses, and adjustments for the amount for excesses or deficiencies in prior assessments. The MCCA prepares statutory-basis financial statements in conformity with accounting practices prescribed or permitted by the State of Michigan Department of Insurance and Financial Services ("MI DOI"). The MI DOI has granted the MCCA a statutory permitted practice that expires in 2016 to discount its liabilities for loss and loss adjustment expense. As of June 30, 2014, the date of its most recent annual financial report, the permitted practice reduced the MCCA's accumulated deficit by $51.24 billion to $411 million.

Allstate sells and administers policies as a participant in the National Flood Insurance Program ("NFIP"). The amounts recoverable as of December 31, 2014 and 2013 were $7 million and $32 million, respectively. Ceded premiums earned include $312 million, $316 million and $311 million in 2014, 2013 and 2012, respectively. Ceded losses incurred include $38 million, $289 million and $758 million in 2014, 2013 and 2012, respectively. Under the arrangement, the Federal Government pays all covered claims.

The NJUCJF provides compensation to qualified claimants for bodily injury or death caused by private passenger automobiles operated by uninsured or "hit and run" drivers. The fund also provides reimbursement to insurers for the medical benefits portion of personal injury protection coverage paid in excess of $75,000 with no limits for policies issued or renewed prior to January 1, 1991 and in excess of $75,000 and capped at $250,000 for policies issued or renewed from January 1, 1991 to December 31, 2004. The amounts recoverable as of December 31, 2014 and 2013 were $508 million and $378 million, respectively.

Ceded premiums earned under the Florida Hurricane Catastrophe Fund ("FHCF") agreement were $11 million, $16 million and $18 million in 2014, 2013 and 2012, respectively. There were no ceded losses incurred in 2014, 2013 or 2012. The Company has access to reimbursement provided by the FHCF for 90% of qualifying personal property losses that exceed its current retention of $69 million for the 2 largest hurricanes and $23 million for other hurricanes, up to a maximum total of $184 million effective from June 1, 2014 to May 31, 2015. There were no amounts recoverable from the FHCF as of December 31, 2014 or 2013.

Catastrophe reinsurance

The Company has the following catastrophe reinsurance agreements in effect as of December 31, 2014:

The Nationwide Per Occurrence Excess Catastrophe Reinsurance program (the "Nationwide program") comprising four agreements: The Per Occurrence Excess Catastrophe Reinsurance agreement, the 2013-1 Property Claim Services ("PCS") Excess Catastrophe Reinsurance agreement, the 2014-1 PCS Excess Catastrophe Reinsurance agreement, and the Buffer Layer Excess Catastrophe Reinsurance agreement.

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The Per Occurrence Excess Catastrophe Reinsurance agreement comprises seventeen contracts placed in six layers and incepting as of June 1, 2014. Coverage for each of the first through fifth layers comprises three contracts with one, two and three year terms expiring May 31, 2015, May 31, 2016 and May 31, 2017. Coverage for the sixth layer comprises two contracts with two and three year terms expiring May 31, 2016 and May 31, 2017. This agreement reinsures Allstate Protection for personal lines property and automobile excess catastrophe losses countrywide, in all states except Florida and New Jersey, caused by multiple perils. Each of the layers is 95% placed and subject to reinstatement. The agreement covers $2.95 billion in per occurrence losses subject to a $500 million retention.

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The 2013-1 PCS Excess Catastrophe Reinsurance agreement comprises two contracts: a Class B Excess Catastrophe Reinsurance contract that constitutes a portion of the seventh layer and provides $150 million in limits excess of a $2.95 billion retention, and a Class A Excess Catastrophe Reinsurance contract which constitutes a portion of the ninth layer of the Nationwide program and provides $200 million in limits excess of a $3.5 billion retention. The agreement reinsures Allstate Protection for personal lines property and automobile excess catastrophe losses caused by hurricanes in 28 states and the District of Columbia, and earthquakes, including fires following earthquakes, in California, New York and Washington. The contracts' risk period began May 4, 2013 and expires on May 3, 2017. The contracts do not include a reinstatement of limits.

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The 2014-1 PCS Excess Catastrophe Reinsurance agreement comprises three contracts: a Class D Excess Catastrophe Reinsurance contract that constitutes a portion of the seventh layer of the Nationwide program and provides $305 million in limits excess of a $2.95 billion attachment level, a Class C Excess Catastrophe Reinsurance contract which constitutes a portion of the ninth layer of the Nationwide program and provides $115 million in limits excess of a $3.50 billion attachment level, and a Class B Excess Catastrophe Reinsurance contract which constitutes the tenth layer of the Nationwide program and provides $330 million in limits excess of a $3.83 billion attachment level. The agreement reinsures Allstate Protection for personal lines property and automobile excess catastrophe losses caused by hurricanes in 29 states and the District of Columbia, and earthquakes, including fires following earthquakes, in California, New York, and Washington. The contracts were effective on May 22, 2014 with the risk period for the Class D Excess Catastrophe Reinsurance contract expiring on May 22, 2019, and the risk periods for the Class C Excess Catastrophe Reinsurance contract and the Class B Excess Catastrophe Reinsurance contract expiring on May 22, 2018. The contracts do not include a reinstatement of limits.

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The Buffer Layer Excess Catastrophe Reinsurance agreement comprises the eighth layer of the Nationwide program and includes one three-year term contract that provides an annual limit of $63 million of reinsurance limits excess of a $3.44 billion retention and is 95% placed. The contract reinsures Allstate Protection for personal lines property and automobile excess catastrophe losses caused by multiple perils in all states except Florida and New Jersey. Annually, the retention and limit of the agreement may be adjusted, within limits, to more closely align with the reset attachment and exhaustion levels of the 2013-1 PCS Excess Catastrophe Reinsurance agreement. The contract does not include a reinstatement of limits.

Losses recoverable under the Company's New Jersey, Kentucky and Pennsylvania reinsurance agreements, described below, are disregarded when determining coverage under the contracts included in the Nationwide program.

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The New Jersey Excess Catastrophe Reinsurance agreement comprises three contracts. One contract expires May 31, 2015 and provides coverage for Allstate Protection personal lines property excess catastrophe losses for multiple perils in New Jersey. The contract provides 32% of a $400 million limit excess of a $144 million retention. Two contracts, expiring May 31, 2016 and May 31, 2017, provide 32% of a $400 million limit excess of a $156 million retention and 32% of a $400 million limit excess of a $150 million retention, respectively. The contracts reinsure personal lines property and automobile excess catastrophe losses in New Jersey. All contracts contain one reinstatement of limits each year. The reinsurance premium and retention applicable to the agreement are subject to redetermination for exposure changes annually.

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The Kentucky Earthquake Excess Catastrophe Reinsurance agreement provides coverage for Allstate Protection personal lines property excess catastrophe losses in the state for earthquakes and fires following earthquakes effective June 1, 2014 to May 31, 2017. The agreement provides three limits of $25 million excess of a $5 million retention subject to two limits being available in any one contract year and is 95% placed.

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The Pennsylvania Excess Catastrophe Reinsurance agreement provides coverage for Allstate Protection personal lines property excess catastrophe losses in the state for multi-perils effective June 1, 2012 through May 31, 2015. The agreement provides three limits of $100 million excess of a $100 million retention subject to two limits being available in any one contract year and is 95% placed.

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The Florida Excess Catastrophe Reinsurance agreement comprises six contracts and includes our subsidiaries Castle Key Insurance Company ("CKIC") and Castle Key Indemnity Company's ("CKI", and together with CKIC, "Castle Key") participation in the mandatory Florida Hurricane Catastrophe Fund ("FHCF"). The agreement reinsures Castle Key for personal lines property excess catastrophe losses in Florida. All contracts constituting the agreement, except one, the Sanders Re 2014-2 contract, provide a one year term effective June 1, 2014 through May 31, 2015 with reinsurance premium subject to redetermination for exposure changes. The Sanders Re 2014-2 contract is a three-year term contract with a risk period effective June 1, 2014 through May 31, 2017. With the exception of the mandatory FHCF contracts and the Sanders Re 2014-2 contract, all contracts provide reinsurance for qualifying losses to personal lines property arising out of multiple perils in addition to hurricanes. The mandatory FHCF contracts reinsure qualifying personal lines property losses caused by storms the National Hurricane Center declares to be hurricanes, and the Sanders Re 2014-2 contract reinsures qualifying losses to personal lines property caused by a named storm event, a severe thunderstorm event, or an earthquake event. These events are defined in the Sanders Re 2014-2 contract as events declared by various reporting agencies, including PCS, and in the case of a severe thunderstorm event, should PCS cease to report on severe thunderstorms, then such event will be deemed a severe thunderstorm if Castle Key has assigned a catastrophe code to such severe thunderstorm. All contracts composing the Florida Excess Catastrophe Reinsurance agreement, including the mandatory FHCF contracts, provide an estimated provisional limit of $732 million excess of a provisional $15 million retention.

The Company ceded premiums earned of $437 million, $471 million and $531 million under catastrophe reinsurance agreements in 2014, 2013 and 2012, respectively.

Asbestos, environmental and other

Reinsurance recoverables include $202 million and $191 million from Lloyd's of London as of December 31, 2014 and 2013, respectively. Lloyd's of London, through the creation of Equitas Limited, implemented a restructuring to solidify its capital base and to segregate claims for years prior to 1993. In 2007, Berkshire Hathaway's subsidiary, National Indemnity Company, assumed responsibility for the Equitas claim liabilities through a loss portfolio transfer reinsurance agreement and continues to runoff the Equitas claims.

Allstate Financial

The Company's Allstate Financial segment reinsures certain of its risks to other insurers primarily under yearly renewable term, coinsurance, modified coinsurance and coinsurance with funds withheld agreements. These agreements result in a passing of the agreed-upon percentage of risk to the reinsurer in exchange for negotiated reinsurance premium payments. Modified coinsurance and coinsurance with funds withheld are similar to coinsurance, except that the cash and investments that support the liability for contract benefits are not transferred to the assuming company and settlements are made on a net basis between the companies.

For certain term life insurance policies issued prior to October 2009, Allstate Financial ceded up to 90% of the mortality risk depending on the year of policy issuance under coinsurance agreements to a pool of fourteen unaffiliated reinsurers. Effective October 2009, mortality risk on term business is ceded under yearly renewable term agreements under which Allstate Financial cedes mortality in excess of its retention, which is consistent with how Allstate Financial generally reinsures its permanent life insurance business. The following table summarizes those retention limits by period of policy issuance.

Period		Retention limits

April 2011 through current		Single life: $5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria Joint life: $8 million per life, and $10 million for contracts that meet specific criteria
July 2007 through March 2011		$5 million per life, $3 million age 70 and over, and $10 million for contracts that meet specific criteria
September 1998 through June 2007		$2 million per life, in 2006 the limit was increased to $5 million for instances when specific criteria were met
August 1998 and prior		Up to $1 million per life

In addition, Allstate Financial has used reinsurance to effect the disposition of certain blocks of business. Allstate Financial had reinsurance recoverables of $1.46 billion and $1.51 billion as of December 31, 2014 and 2013, respectively, due from Prudential related to the disposal of substantially all of its variable annuity business that was effected through reinsurance agreements. In 2014, life and annuity premiums and contract charges of $109 million, contract benefits of $36 million, interest credited to contractholder funds of $21 million, and operating costs and expenses of $20 million were ceded to Prudential. In 2013, life and annuity premiums and contract charges of $120 million, contract benefits of $139 million, interest credited to contractholder funds of $22 million, and operating costs and expenses of $23 million were ceded to Prudential. In 2012, life and annuity premiums and contract charges of $128 million, contract benefits of $91 million, interest credited to contractholder funds of $23 million, and operating costs and expenses of $25 million were ceded to Prudential. In addition, as of December 31, 2014 and 2013 Allstate Financial had reinsurance recoverables of $118 million and $156 million, respectively, due from subsidiaries of Citigroup (Triton Insurance and American Health and Life Insurance) and Scottish Re (U.S.) Inc. in connection with the disposition of substantially all of the direct response distribution business in 2003.

As of December 31, 2014, the gross life insurance in force was $426.19 billion of which $98.16 billion was ceded to the unaffiliated reinsurers.

Allstate Financial's reinsurance recoverables on paid and unpaid benefits as of December 31 are summarized in the following table.

($ in millions)	2014		2013

Annuities	$	1,594	$	1,648
Life insurance		916		1,029
Long-term care insurance		80		78
Other		117		117

Total Allstate Financial	$	2,707	$	2,872

As of December 31, 2014 and 2013, approximately 94% and 92%, respectively, of Allstate Financial's reinsurance recoverables are due from companies rated A- or better by S&P.