Segment information

9 Months Ended

Sep. 30, 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 on crop derivatives as a component of underwriting income. For example, for the three months ended September 30, 2014, underwriting income in our Insurance – North American Agriculture segment was $81 million. This amount includes $45 million of realized gains 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 September 30, 2014, Life underwriting income of $88 million includes Net investment income of $69 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 September 30, 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	$	1,541		$	764	$	1,719		$	208		$	497		$	—		$	4,729
Net premiums earned	1,518			766		1,726			255			489			—			4,754
Losses and loss expenses	1,053			686		707			92			145			1			2,684
Policy benefits	—			—		—			—			125			—			125
Policy acquisition costs	169			41		418			74			123			—			825
Administrative expenses	165			3		258			13			71			44			554
Underwriting income (loss)	131			36		343			76			25			(45		)	566
Net investment income	277			6		130			81			69			3			566
Net realized gains (losses) including OTTI	(5		)	45		(75		)	6			(89		)	(2		)	(120		)
Interest expense	2			—		2			1			4			61			70
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—			—			6			—			6
Other	(31		)	7		6			(10		)	(3		)	6			(25		)
Income tax expense (benefit)	73			23		97			11			12			(40		)	176
Net income (loss)	$	359		$	57	$	293		$	161		$	(14	)	$	(71	)	$	785

For the Three Months Ended September 30, 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	$	1,500		$	805	$	1,571		$	265		$	479		$	—		$	4,620
Net premiums earned	1,444			849		1,611			239			467			—			4,610
Losses and loss expenses	963			746		712			93			141			—			2,655
Policy benefits	—			—		—			—			138			—			138
Policy acquisition costs	159			32		349			52			86			—			678
Administrative expenses	153			5		263			12			85			45			563
Underwriting income (loss)	169			66		287			82			17			(45		)	576
Net investment income	254			6		128			66			61			7			522
Net realized gains (losses) including OTTI	9			—		(8		)	(5		)	43			1			40
Interest expense	3			—		1			2			4			62			72
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—			—			(14		)	—			(14		)
Other	(13		)	8		14			(7		)	4			3			9
Income tax expense (benefit)	79			14		78			16			10			(42		)	155
Net income (loss)	$	363		$	50	$	314		$	132		$	117		$	(60	)	$	916

For the Nine Months Ended September 30, 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	$	4,594		$	1,346	$	5,250		$	794		$	1,489		$	—		$	13,473
Net premiums earned	4,547			1,199		5,047			800			1,463			—			13,056
Losses and loss expenses	3,009			1,099		2,354			327			442			2			7,233
Policy benefits	—			—		—			—			383			—			383
Policy acquisition costs	480			69		1,206			201			355			—			2,311
Administrative expenses	501			5		764			41			212			132			1,655
Underwriting income (loss)	557			26		723			231			71			(134		)	1,474
Net investment income	812			19		398			238			199			9			1,675
Net realized gains (losses) including OTTI	(25		)	51		(71		)	(17		)	(237		)	2			(297		)
Interest expense	7			—		4			4			10			188			213
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—			—			(5		)	—			(5		)
Other	(75		)	24		8			(39		)	8			18			(56		)
Income tax expense (benefit)	247			21		189			31			34			(120		)	402
Net income (loss)	$	1,165		$	51	$	849		$	456		$	(14	)	$	(209	)	$	2,298

For the Nine Months Ended September 30, 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	$	4,313		$	1,371	$	4,821	$	836		$	1,468		$	—		$	12,809
Net premiums earned	4,210			1,252		4,633		731			1,424			—			12,250
Losses and loss expenses	2,791			1,071		2,227		292			443			7			6,831
Policy benefits	—			—		—		—			379			—			379
Policy acquisition costs	444			56		1,048		148			261			—			1,957
Administrative expenses	437			13		750		36			256			149			1,641
Underwriting income (loss)	538			112		608		255			85			(156		)	1,442
Net investment income	755			19		396		209			187			21			1,587
Net realized gains (losses) including OTTI	63			1		34		46			206			—			350
Interest expense	4			—		4		4			12			181			205
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—		—			(7		)	—			(7		)
Other	(38		)	24		30		(13		)	7			19			29
Income tax expense (benefit)	264			24		174		31			33			(134		)	392
Net income (loss)	$	1,126		$	84	$	830	$	488		$	433		$	(201	)	$	2,760

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 September 30, 2014
Insurance – North American P&C	$	420	$	993	$	105	$	1,518
Insurance – North American Agriculture	766		—		—		766
Insurance – Overseas General	744		394		588		1,726
Global Reinsurance	149		106		—		255
Life	—		—		489		489
	$	2,079	$	1,493	$	1,182	$	4,754
For the Three Months Ended September 30, 2013
Insurance – North American P&C	$	388	$	957	$	99	$	1,444
Insurance – North American Agriculture	849		—		—		849
Insurance – Overseas General	689		375		547		1,611
Global Reinsurance	141		98		—		239
Life	—		—		467		467
	$	2,067	$	1,430	$	1,113	$	4,610
(in millions of U.S. dollars)	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
For the Nine Months Ended September 30, 2014
Insurance – North American P&C	$	1,248	$	2,992	$	307	$	4,547
Insurance – North American Agriculture	1,199		—		—		1,199
Insurance – Overseas General	2,164		1,158		1,725		5,047
Global Reinsurance	435		365		—		800
Life	—		—		1,463		1,463
	$	5,046	$	4,515	$	3,495	$	13,056
For the Nine Months Ended September 30, 2013
Insurance – North American P&C	$	1,103	$	2,826	$	281	$	4,210
Insurance – North American Agriculture	1,252		—		—		1,252
Insurance – Overseas General	1,932		1,088		1,613		4,633
Global Reinsurance	408		323		—		731
Life	—		—		1,424		1,424
	$	4,695	$	4,237	$	3,318	$	12,250