Segment information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment information

Segment information

ACE operates through five 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.

For segment reporting purposes, certain items have been presented in a different manner below 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 Insurance – North American Agriculture segment, management includes gains and losses from fair value changes on crop derivatives as a component of underwriting income. For the three months ended March 31, 2014, underwriting loss in our Insurance – North American Agriculture segment was $31 million. This amount includes $2 million of realized losses related to crop derivatives which are included in Net realized gains (losses) below. For the Life segment, management 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 Life underwriting income. For example, for the three months ended March 31, 2014, Life underwriting income of $98 million includes Net investment income of $64 million and losses from fair value changes in separate account assets of $6 million.

The following tables present the Statement of Operations by segment:

For the Three Months Ended March 31, 2014	Insurance – North American P&C			Insurance – North American Agriculture			Insurance – Overseas General			Global Reinsurance			Life			Corporate			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	1,418		$	194		$	1,771		$	308		$	494		$	—		$	4,185
Net premiums earned	1,487			103			1,612			284			484			—			3,970
Losses and loss expenses	940			126			817			126			151			1			2,161
Policy benefits	—			—			—			—			114			—			114
Policy acquisition costs	159			5			386			67			111			—			728
Administrative expenses	161			1			250			14			68			41			535
Underwriting income (loss)	227			(29		)	159			77			40			(42		)	432
Net investment income	270			7			132			77			64			3			553
Net realized gains (losses) including OTTI	(9		)	(2		)	(10		)	(8		)	(76		)	1			(104		)
Interest expense	3			—			1			1			3			63			71
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—			—			—			6			—			6
Other	(20		)	8			(6		)	(19		)	7			7			(23		)
Income tax expense (benefit)	83			(7		)	37			10			10			(40		)	93
Net income (loss)	$	422		$	(25	)	$	249		$	154		$	2		$	(68	)	$	734

For the Three Months Ended March 31, 2013	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General			Global Reinsurance			Life			Corporate			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

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:

(in millions of U.S. dollars)	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
For the Three Months Ended March 31, 2014
Insurance – North American P&C	$	405	$	981	$	101	$	1,487
Insurance – North American Agriculture	103		—		—		103
Insurance – Overseas General	693		369		550		1,612
Global Reinsurance	154		130		—		284
Life	—		—		484		484
	$	1,355	$	1,480	$	1,135	$	3,970
For the Three Months Ended March 31, 2013
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