Segment information

6 Months Ended

Jun. 30, 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 June 30, 2013, Life underwriting income of $96 million includes Net investment income of $63 million and losses from fair value changes in separate account assets of $11 million.

The following tables present the operations by segment:

Statement of Operations by Segment

For the Three Months Ended June 30, 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	$	1,529		$	453	$	1,630	$	292	$	487	$	—		$	4,391
Net premiums earned	1,428			351		1,563		245		480		—			4,067
Losses and loss expenses	950			293		768		93		145		1			2,250
Policy benefits	—			—		—		—		110		—			110
Policy acquisition costs	142			20		360		48		95		—			665
Administrative expenses	159			3		251		12		86		53			564
Underwriting income (loss)	177			35		184		92		44		(54		)	478
Net investment income	250			7		136		71		63		7			534
Net realized gains (losses) including OTTI	28			1		8		31		36		—			104
Interest expense	3			—		2		1		4		63			73
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—		—		11		—			11
Other	(10		)	8		17		2		3		6			26
Income tax expense (benefit)	91			8		50		7		10		(51		)	115
Net income (loss)	$	371		$	27	$	259	$	184	$	115	$	(65	)	$	891

Statement of Operations by Segment

For the Three Months Ended June 30, 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	$	1,368	$	492	$	1,475	$	309		$	486		$	—		$	4,130
Net premiums earned	1,268		384		1,420		237			474			—			3,783
Losses and loss expenses	844		319		703		102			151			—			2,119
Policy benefits	—		—		—		—			102			—			102
Policy acquisition costs	135		22		332		42			88			—			619
Administrative expenses	153		—		233		13			78			37			514
Underwriting income (loss)	136		43		152		80			55			(37		)	429
Net investment income	265		6		128		70			62			6			537
Net realized gains (losses) including OTTI	18		—		26		(17		)	(421		)	—			(394		)
Interest expense	3		—		1		1			3			54			62
Other (income) expense
(Gains) losses from fair value changes in separate account assets	—		—		—		—			14			—			14
Other	2		8		6		3			5			(4		)	20
Income tax expense (benefit)	96		11		51		—			19			(29		)	148
Net income (loss)	$	318	$	30	$	248	$	129		$	(345	)	$	(52	)	$	328

Statement of Operations by Segment

For the Six Months Ended June 30, 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	$	2,813		$	566	$	3,250	$	571		$	989	$	—		$	8,189
Net premiums earned	2,766			403		3,022		492			957		—			7,640
Losses and loss expenses	1,828			325		1,515		199			302		7			4,176
Policy benefits	—			—		—		—			241		—			241
Policy acquisition costs	285			24		699		96			175		—			1,279
Administrative expenses	284			8		487		24			171		104			1,078
Underwriting income (loss)	369			46		321		173			68		(111		)	866
Net investment income	501			13		268		143			126		14			1,065
Net realized gains (losses) including OTTI	54			1		42		51			163		(1		)	310
Interest expense	1			—		3		2			8		119			133
Other (income) expense
(Gains) losses from fair value changes in separate account assets	—			—		—		—			7		—			7
Other	(25		)	16		16		(6		)	3		16			20
Income tax expense (benefit)	185			10		96		15			23		(92		)	237
Net income (loss)	$	763		$	34	$	516	$	356		$	316	$	(141	)	$	1,844

Statement of Operations by Segment

For the Six Months Ended June 30, 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	$	2,542		$	611		$	3,003	$	572		$	974		$	—		$	7,702
Net premiums earned	2,496			443			2,811		467			947			—			7,164
Losses and loss expenses	1,655			357			1,408		204			299			—			3,923
Policy benefits	—			—			—		—			249			—			249
Policy acquisition costs	272			12			667		85			164			1			1,201
Administrative expenses	303			(3		)	462		25			156			81			1,024
Underwriting income (loss)	266			77			274		153			79			(82		)	767
Net investment income	532			13			259		141			123			13			1,081
Net realized gains (losses) including OTTI	17			—			46		(4		)	(190		)	(3		)	(134		)
Interest expense	6			—			2		2			6			108			124
Other (income) expense
(Gains) losses from fair value changes in separate account assets	—			—			—		—			(4		)	—			(4		)
Other	(7		)	16			6		(2		)	14			8			35
Income tax expense (benefit)	179			19			89		6			30			(65		)	258
Net income (loss)	$	637		$	55		$	482	$	284		$	(34	)	$	(123	)	$	1,301

Underwriting assets are reviewed in total by management for purposes of decision-making. Other than goodwill and other intangible assets, 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 June 30, 2013	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
(in millions of U.S. dollars)
Insurance – North American P&C	$	368	$	967	$	93	$	1,428
Insurance – North American Agriculture	351		—		—		351
Insurance – Overseas General	658		374		531		1,563
Global Reinsurance	132		113		—		245
Life	—		—		480		480
	$	1,509	$	1,454	$	1,104	$	4,067
For the Three Months Ended June 30, 2012
(in millions of U.S. dollars)
Insurance – North American P&C	$	347	$	828	$	93	$	1,268
Insurance – North American Agriculture	384		—		—		384
Insurance – Overseas General	552		338		530		1,420
Global Reinsurance	114		123		—		237
Life	—		—		474		474
	$	1,397	$	1,289	$	1,097	$	3,783

For the Six Months Ended June 30, 2013	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
(in millions of U.S. dollars)
Insurance – North American P&C	$	715	$	1,869	$	182	$	2,766
Insurance – North American Agriculture	403		—		—		403
Insurance – Overseas General	1,243		713		1,066		3,022
Global Reinsurance	267		225		—		492
Life	—		—		957		957
	$	2,628	$	2,807	$	2,205	$	7,640
For the Six Months Ended June 30, 2012
(in millions of U.S. dollars)
Insurance – North American P&C	$	669	$	1,645	$	182	$	2,496
Insurance – North American Agriculture	443		—		—		443
Insurance – Overseas General	1,090		671		1,050		2,811
Global Reinsurance	224		243		—		467
Life	—		—		947		947
	$	2,426	$	2,559	$	2,179	$	7,164