Statutory Financial Information

12 Months Ended

Dec. 31, 2013

Statutory Financial Information [Abstract]

Statutory financial information

Statutory financial information

Our subsidiaries file financial statements prepared in accordance with statutory accounting practices prescribed or permitted by insurance regulators. Statutory accounting differs from GAAP in the reporting of certain reinsurance contracts, investments, subsidiaries, acquisition expenses, fixed assets, deferred income taxes, and certain other items. Some jurisdictions impose complex regulatory requirements on insurance companies while other jurisdictions impose fewer requirements. In some jurisdictions, we must obtain licenses issued by governmental authorities to conduct local insurance business. These licenses may be subject to reserves and minimum capital and solvency tests. Jurisdictions may impose fines, censure, and/or criminal sanctions for violation of regulatory requirements. The 2013 amounts below are based on estimates.

ACE's insurance and reinsurance subsidiaries are subject to insurance laws and regulations in the jurisdictions in which they operate. These regulations include restrictions that limit the amount of dividends or other distributions, such as loans or cash advances, available to shareholders without prior approval of the local insurance regulatory authorities. The amount of dividends available to be paid in 2014 without prior approval totals $3.8 billion.

The statutory capital and surplus of our insurance subsidiaries met regulatory requirements for 2013, 2012, and 2011. The minimum amounts of statutory capital and surplus necessary to satisfy regulatory requirements were $14.5 billion and $14.3 billion for December 31, 2013 and 2012, respectively.

The combined statutory capital and surplus was $25.6 billion and $24.4 billion at December 31, 2013 and 2012, respectively. The combined statutory net income was $3.7 billion, $2.9 billion, and $1.9 billion for the years ended December 31, 2013, 2012, and 2011, respectively.

Several insurance subsidiaries follow accounting practices prescribed or permitted by the jurisdiction of domicile that differ from the applicable local statutory practice. The application of prescribed or permitted accounting practices does not have a material impact on ACE's statutory surplus and income. As prescribed by the Restructuring discussed previously in Note 7, certain of our U.S. subsidiaries discount certain A&E liabilities, which increased statutory capital and surplus by approximately $158 million and $161 million at December 31, 2013 and 2012, respectively.