Segment information

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Segment information

. Segment information

ACE operates through the following business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. These segments distribute their products through various forms of brokers, agencies, and direct marketing programs. All business segments have established relationships with reinsurance intermediaries.

Effective first quarter 2013, the Insurance – North American segment is presented in two distinct reportable segments: Insurance – North American P&C and Insurance – North American Agriculture. Prior year amounts contained in this report have been adjusted to conform to the new segment presentation.

For segment reporting purposes, certain items have been presented in a different manner than in the consolidated financial statements. Management uses underwriting income as the main measure of segment performance. ACE calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. For the Life business, management also includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP as components of underwriting income. For example, for the three months ended March 31, 2013, Life underwriting income of $91 million includes Net investment income of $63 million and gains from fair value changes in separate account assets of $4 million.

The following tables present the operations by segment:

Statement of Operations by Segment

For the Three Months Ended March 31, 2013	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General			Global Reinsurance			Life			Corporate and Other			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	1,284		$	113	$	1,620		$	279		$	502		$	—		$	3,798
Net premiums earned	1,338			52		1,459			247			477			—			3,573
Losses and loss expenses	878			32		747			106			157			6			1,926
Policy benefits	—			—		—			—			131			—			131
Policy acquisition costs	143			4		339			48			80			—			614
Administrative expenses	125			5		236			12			85			51			514
Underwriting income (loss)	192			11		137			81			24			(57		)	388
Net investment income	251			6		132			72			63			7			531
Net realized gains (losses) including OTTI	26			—		34			20			127			(1		)	206
Interest (income) expense	(2		)	—		1			1			4			56			60
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—			—			(4		)	—			(4		)
Other	(15		)	8		(1		)	(8		)	—			10			(6		)
Income tax expense (benefit)	94			2		46			8			13			(41		)	122
Net income (loss)	$	392		$	7	$	257		$	172		$	201		$	(76	)	$	953

Statement of Operations by Segment

For the Three Months Ended March 31, 2012	Insurance – North American P&C			Insurance – North American Agriculture			Insurance – Overseas General		Global Reinsurance			Life			Corporate and Other			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	1,174		$	119		$	1,528	$	263		$	488		$	—		$	3,572
Net premiums earned	1,228			59			1,391		230			473			—			3,381
Losses and loss expenses	811			38			705		102			148			—			1,804
Policy benefits	—			—			—		—			147			—			147
Policy acquisition costs	137			(10		)	335		43			76			1			582
Administrative expenses	150			(3		)	229		12			78			44			510
Underwriting income (loss)	130			34			122		73			24			(45		)	338
Net investment income	267			7			131		71			61			7			544
Net realized gains (losses) including OTTI	(1		)	—			20		13			231			(3		)	260
Interest expense	3			—			1		1			3			54			62
Other (income) expense
(Gains) losses from fair value changes in separate account assets	—			—			—		—			(18		)	—			(18		)
Other	(9		)	8			—		(5		)	9			12			15
Income tax expense (benefit)	83			8			38		6			11			(36		)	110
Net income (loss)	$	319		$	25		$	234	$	155		$	311		$	(71	)	$	973

Underwriting assets are reviewed in total by management for purposes of decision-making. Other than goodwill, ACE does not allocate assets to its segments.

The following table presents net premiums earned for each segment by product:

For the Three Months Ended March 31, 2013	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
(in millions of U.S. dollars)
Insurance – North American P&C	$	347	$	902	$	89	$	1,338
Insurance – North American Agriculture	52		—		—		52
Insurance – Overseas General	585		339		535		1,459
Global Reinsurance	135		112		—		247
Life	—		—		477		477
	$	1,119	$	1,353	$	1,101	$	3,573
For the Three Months Ended March 31, 2012
Insurance – North American P&C	$	322	$	817	$	89	$	1,228
Insurance – North American Agriculture	59		—		—		59
Insurance – Overseas General	538		333		520		1,391
Global Reinsurance	110		120		—		230
Life	—		—		473		473
	$	1,029	$	1,270	$	1,082	$	3,381