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Segments Information
12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
Segments Information

(13)  Segments Information

 

The principal business of the Corporation is the sale of property and casualty insurance. The profitability of the property and casualty insurance business depends on the results of both underwriting operations and investments, which are viewed as two distinct operations. The underwriting operations are managed and evaluated separately from the investment function.

The P&C Group underwrites most lines of property and casualty insurance. Underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. The personal segment targets the personal insurance market. The personal classes include automobile, homeowners and other personal coverages. The commercial segment includes those classes of business that are generally available in broad markets and are of a more commodity nature. Commercial classes include multiple peril, casualty, workers’ compensation and property and marine. The specialty segment includes those classes of business that are available in more limited markets since they require specialized underwriting and claim settlement. Specialty classes include professional liability coverages and surety. The reinsurance assumed business has been in runoff since the transfer of the ongoing reinsurance assumed business to a reinsurance company in 2005.

Corporate and other includes investment income earned on corporate invested assets, corporate expenses and the results of the Corporation’s non-insurance subsidiaries.

Performance of the property and casualty underwriting segments is measured based on statutory underwriting results. Statutory underwriting profit is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred. Under statutory accounting principles applicable to property and casualty insurance companies, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned.

Management uses underwriting results determined in accordance with GAAP to assess the overall performance of the underwriting operations. Underwriting income determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred. To convert statutory underwriting results to a GAAP basis, certain policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned.

Investment income performance is measured based on investment income net of investment expenses, excluding realized investment gains and losses.

Distinct investment portfolios are not maintained for each underwriting segment. Property and casualty invested assets are available for payment of losses and expenses for all classes of business. Therefore, such assets and the related investment income are not allocated to underwriting segments.

 

Revenues, income before income tax and assets of each operating segment were as follows:

 

     Years Ended December 31  
     2014     2013     2012  
     (in millions)  

Revenues

      

Property and casualty insurance

      

Premiums earned

      

Personal insurance

   $ 4,418      $ 4,214      $ 4,024   

Commercial insurance

     5,281        5,237        5,144   

Specialty insurance

     2,628        2,618        2,666   
  

 

 

   

 

 

   

 

 

 

Total insurance

     12,327        12,069        11,834   

Reinsurance assumed

     1        (3     4   
  

 

 

   

 

 

   

 

 

 
     12,328        12,066        11,838   

Investment income

     1,368        1,436        1,518   
  

 

 

   

 

 

   

 

 

 

Total property and casualty insurance

     13,696        13,502        13,356   

Corporate and other

     33        43        46   

Realized investment gains, net

     369        402        193   
  

 

 

   

 

 

   

 

 

 

Total revenues

   $ 14,098      $ 13,947      $ 13,595   
  

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

      

Property and casualty insurance

      

Underwriting

      

Personal insurance

   $ 370      $ 509      $ 192   

Commercial insurance

     492        692        44   

Specialty insurance

     495        406        262   
  

 

 

   

 

 

   

 

 

 

Total insurance

     1,357        1,607        498   

Reinsurance assumed

            9        47   
  

 

 

   

 

 

   

 

 

 
     1,357        1,616        545   

Increase in deferred policy acquisition costs

     45        59        3   
  

 

 

   

 

 

   

 

 

 

Underwriting income

     1,402        1,675        548   

Investment income

     1,329        1,391        1,482   

Other income (charges)

     (4     6        10   
  

 

 

   

 

 

   

 

 

 

Total property and casualty insurance

     2,727        3,072        2,040   

Corporate and other

     (235     (237     (237

Realized investment gains, net

     369        402        193   
  

 

 

   

 

 

   

 

 

 

Total income before income tax

   $ 2,861      $ 3,237      $ 1,996   
  

 

 

   

 

 

   

 

 

 

 

     December 31  
     2014     2013     2012  
     (in millions)  

Assets

      

Property and casualty insurance

   $ 49,297      $ 48,278      $ 49,441   

Corporate and other

     2,078        2,248        2,830   

Adjustments and eliminations

     (89     (93     (87
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 51,286      $ 50,433      $ 52,184   
  

 

 

   

 

 

   

 

 

 

 

The international business of the property and casualty insurance segments is conducted primarily through subsidiaries that operate solely outside of the United States. Their assets and liabilities are located principally in the countries where the insurance risks are written. International business is also written by branch offices of a U.S. subsidiary.

Revenues of the P&C Group by geographic area were as follows:

 

     Years Ended December 31  
     2014        2013        2012  
     (in millions)  

Revenues

            

United States

   $ 10,448         $ 10,205         $ 9,996   

International

     3,248        

 

 

 

3,297

 

  

    

 

 

 

 

 

3,360

 

 

  

  

 

 

      

 

 

      

 

 

 

Total

   $ 13,696         $ 13,502         $ 13,356