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.

The Insurance – North American P&C segment comprises our operations in the U.S., Canada, and Bermuda. This segment includes our retail divisions: ACE USA (including ACE Canada), ACE Commercial Risk Services, and ACE Private Risk Services; our wholesale and specialty divisions: ACE Westchester and ACE Bermuda; and various run-off operations, including Brandywine. ACE USA is the North American retail operating division which provides a broad array of traditional and specialty P&C, A&H, and risk management products and services to a diverse group of North America commercial and non-commercial enterprises and consumers. ACE Commercial Risk Services addresses the insurance needs of small and mid-sized businesses in North America by delivering a broad array of specialty product solutions for targeted industries that lend themselves to technology-assisted underwriting. ACE Private Risk Services provides high-value personal lines coverages for high net worth individuals and families in North America. ACE Westchester focuses on the North American wholesale distribution of excess and surplus lines property, casualty, environmental, professional liability, inland marine products and product recall coverages. ACE Bermuda provides commercial insurance products on an excess basis mainly to a global client base targeting Fortune 1000 companies and covering exposures that are generally low in frequency and high in severity including excess liability, D&O, professional liability, property insurance, and political risk, the latter being written by Sovereign Risk Insurance Ltd., a wholly-owned managing agent. The run-off operations do not actively sell insurance products but are responsible for the management of certain existing policies and settlement of related claims.

The Insurance – North American Agriculture segment comprises our North American based businesses that provide a variety of coverages in the U.S. and Canada including crop insurance, primarily Multiple Peril Crop Insurance (MPCI) and crop-hail through Rain and Hail Insurance Services, Inc. as well as farm and ranch, and specialty P&C commercial insurance products and services through our ACE Agribusiness unit. The MPCI program is offered in conjunction with the U.S. Department of Agriculture.

The Insurance – Overseas General segment comprises ACE International. ACE Global Markets (AGM), and the international supplemental A&H business of Combined Insurance. ACE International comprises our retail commercial P&C, A&H, and personal lines businesses serving territories outside the U.S., Bermuda, and Canada. ACE International maintains a presence in every major insurance market in the world and is organized geographically along product lines that provide dedicated underwriting focus to customers. ACE International has five regions of operations: ACE Europe, ACE Asia Pacific, ACE Eurasia and Africa, ACE Far East, and ACE Latin America. During 2014, ACE International expanded its operations with the acquisitions of Samaggi in Thailand and Itaú Seguros in Brazil. Refer to Note 2 for additional information. ACE International writes a variety of insurance products including P&C, professional lines (directors and officers and errors and omissions), marine, energy, aviation, political risk, specialty consumer-oriented products, and A&H (principally accident and supplemental health). AGM, our London-based international specialty and excess and surplus lines business, includes Syndicate 2488, a wholly-owned ACE syndicate. AGM offers products through its parallel distribution network via ACE European Group Limited (AEGL) and Syndicate 2488. ACE provides funds at Lloyd's to support underwriting by Syndicate 2488, which is managed by ACE Underwriting Agencies Limited. AGM uses Syndicate 2488 to underwrite P&C business on a global basis through Lloyd's worldwide licenses. AGM uses AEGL to underwrite similar classes of business through its network of U.K. and European licenses, and in the U.S. where it is eligible to write excess and surplus lines business. The reinsurance operation of AGM is included in the Global Reinsurance segment. Combined Insurance distributes a wide range of supplemental A&H products.

The Global Reinsurance segment represents ACE's reinsurance operations comprising ACE Tempest Re Bermuda, ACE Tempest Re USA, ACE Tempest Re International, and ACE Tempest Re Canada. The Global Reinsurance segment also includes AGM's reinsurance operations. These divisions provide a broad range of traditional and specialty reinsurance products including property catastrophe, casualty, and property reinsurance coverages to a diverse array of primary P&C insurers.

The Life segment includes ACE's international life operations (ACE Life), ACE Tempest Life Re (ACE Life Re), and the North American supplemental A&H and life business of Combined Insurance. ACE Life provides a broad portfolio of protection and savings products including whole life, endowment plans, individual term life, group term life, group medical, personal accident, credit life, universal life and unit linked contracts through multiple distribution channels primarily in emerging markets including: Egypt, Hong Kong, Indonesia, South Korea, Taiwan, Thailand, and Vietnam; also throughout Latin America, selectively in Europe, and China through a non-consolidated joint venture insurance company. ACE Life Re helps clients (ceding companies) manage mortality, morbidity, and lapse risks embedded in their books of business. ACE Life Re's core business is a Bermuda-based operation which provides reinsurance to primary life insurers, focusing on guarantees included in certain fixed and variable annuity products and also on more traditional mortality reinsurance protection. ACE Life Re's U.S.-based traditional life reinsurance operation was discontinued for new business in January 2010. Since 2007, ACE Life Re has not quoted on new opportunities in the variable annuity reinsurance marketplace. Combined Insurance distributes specialty supplemental A&H and life insurance products targeted to middle income consumers and businesses in the U.S. and Canada.

Corporate includes ACE Limited, ACE Group Management and Holdings Ltd., ACE INA Holdings, Inc., and intercompany eliminations.

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 2014, underwriting income in our Insurance – North American Agriculture segment was $136 million. This amount includes $51 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 2014, Life underwriting income of $363 million includes Net investment income of $268 million and gains from fair value changes in separate account assets of $2 million.

The following tables present the Statement of Operations by segment:



For the Year Ended December 31, 2014 (in millions of U.S. dollars)	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General			Global Reinsurance			Life			Corporate			ACE Consolidated
Net premiums written	$	6,263		$	1,590	$	6,999		$	935		$	2,012		$	—		$	17,799
Net premiums earned	6,107			1,526		6,805			1,026			1,962			—			17,426
Losses and loss expenses	4,086			1,351		3,189			431			589			3			9,649
Policy benefits	—			—		—			—			517			—			517
Policy acquisition costs	634			81		1,625			257			478			—			3,075
Administrative expenses	678			9		1,026			54			285			193			2,245
Underwriting income (loss)	709			85		965			284			93			(196		)	1,940
Net investment income	1,085			26		545			316			268			12			2,252
Net realized gains (losses) including OTTI	(67		)	54		(78		)	(29		)	(383		)	(4		)	(507		)
Interest expense	9			—		6			4			11			250			280
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—			—			(2		)	—			(2		)
Other	(101		)	33		11			(54		)	2			29			(80		)
Income tax expense (benefit)	306			33		378			38			46			(167		)	634
Net income (loss)	$	1,513		$	99	$	1,037		$	583		$	(79	)	$	(300	)	$	2,853



For the Year Ended December 31, 2013 (in millions of U.S. dollars)	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General		Global Reinsurance			Life			Corporate			ACE Consolidated
Net premiums written	$	5,915		$	1,627	$	6,520	$	991		$	1,972		$	—		$	17,025
Net premiums earned	5,721			1,678		6,333		976			1,905			—			16,613
Losses and loss expenses	3,776			1,524		3,062		396			582			8			9,348
Policy benefits	—			—		—		—			515			—			515
Policy acquisition costs	597			53		1,453		197			358			1			2,659
Administrative expenses	601			11		1,008		50			343			198			2,211
Underwriting income (loss)	747			90		810		333			107			(207		)	1,880
Net investment income	1,021			26		539		280			251			27			2,144
Net realized gains (losses) including OTTI	72			1		18		53			360			—			504
Interest expense	5			1		5		5			15			244			275
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—		—			(16		)	—			(16		)
Other	(58		)	32		39		(19		)	13			24			31
Income tax expense (benefit)	347			20		222		36			34			(179		)	480
Net income (loss)	$	1,546		$	64	$	1,101	$	644		$	672		$	(269	)	$	3,758



For the Year Ended December 31, 2012 (in millions of U.S. dollars)	Insurance – North American P&C			Insurance – North American Agriculture			Insurance – Overseas General		Global Reinsurance			Life			Corporate			ACE Consolidated
Net premiums written	$	5,349		$	1,859		$	5,863	$	1,025		$	1,979		$	—		$	16,075
Net premiums earned	5,147			1,872			5,740		1,002			1,916			—			15,677
Losses and loss expenses	3,715			1,911			2,862		553			611			1			9,653
Policy benefits	—			—			—		—			521			—			521
Policy acquisition costs	558			28			1,353		172			334			1			2,446
Administrative expenses	608			(7		)	935		51			328			181			2,096
Underwriting income (loss)	266			(60		)	590		226			122			(183		)	961
Net investment income	1,066			25			521		290			251			28			2,181
Net realized gains (losses) including OTTI	41			1			103		6			(72		)	(1		)	78
Interest expense	12			—			5		4			12			217			250
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—			—		—			(29		)	—			(29		)
Other	(41		)	32			3		(15		)	25			19			23
Income tax expense (benefit)	229			(29		)	133		15			58			(136)			270
Net income (loss)	$	1,173		$	(37	)	$	1,073	$	518		$	235		$	(256	)	$	2,706

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 Year Ended December 31, 2014	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
Insurance – North American P&C	$	1,662	$	4,032	$	413	$	6,107
Insurance – North American Agriculture	1,526		—		—		1,526
Insurance – Overseas General	2,948		1,573		2,284		6,805
Global Reinsurance	551		475		—		1,026
Life	—		—		1,962		1,962
	$	6,687	$	6,080	$	4,659	$	17,426
For the Year Ended December 31, 2013
Insurance – North American P&C	$	1,489	$	3,847	$	385	$	5,721
Insurance – North American Agriculture	1,678		—		—		1,678
Insurance – Overseas General	2,672		1,479		2,182		6,333
Global Reinsurance	543		433		—		976
Life	—		—		1,905		1,905
	$	6,382	$	5,759	$	4,472	$	16,613
For the Year Ended December 31, 2012
Insurance – North American P&C	$	1,370	$	3,406	$	371	$	5,147
Insurance – North American Agriculture	1,872		—		—		1,872
Insurance – Overseas General	2,236		1,379		2,125		5,740
Global Reinsurance	495		507		—		1,002
Life	—		—		1,916		1,916
	$	5,973	$	5,292	$	4,412	$	15,677

The following table presents net premiums earned by geographic region. Allocations have been made on the basis of location of risk:



	North America				Asia Pacific/Far East		Latin America
Years Ended December 31	North America		Europe⁽¹⁾		Asia Pacific/Far East		Latin America
2014	58	%	16	%	16	%	10	%
2013	58	%	17	%	16	%	9	%
2012	60	%	17	%	16	%	7	%

⁽¹⁾Europe includes Eurasia and Africa region.