Related party transaction

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related party transactions

Related party transactions

Starr Technical Risks Agency, Inc. and its affiliates (Starr)

We have agency agreements with Starr, an indirect wholly-owned subsidiary of Starr International Company, Inc. whose chairman is related to a member of our senior management team. Our Board reviewed and approved our arrangements with Starr, and they also review and approve aggregate amounts paid to Starr on a regular basis. Under these agreements, we secure the ability to sell our insurance policies through Starr as one of our non-exclusive agents for writing policies, contracts, binders, or agreements of insurance or reinsurance. For the years ended December 31, 2015, 2014, and 2013 we generated $305 million, $314 million, and $307 million, respectively, in gross premiums written through these agreements. In addition, we ceded $78 million, $84 million, and $86 million to Starr as part of our reinsurance program on the underlying business for the years ended December 31, 2015, 2014, and 2013, respectively. We paid net commissions of $41 million, $43 million, and $42 million and incurred net Losses and loss expenses of $137 million, $91 million, and $70 million, respectively, for the years ended December 31, 2015, 2014, and 2013, under these agreements. 

The agency agreements also contains a profit-sharing arrangement based on loss ratios, triggered if Starr underwrites a minimum of $20 million of annual program business net written premiums on our behalf. No profit share commission has been payable yet.

Reinsurance recoverable on losses and loss expenses due from Starr was $112 million and $101 million, respectively, and the amount of ceded reinsurance premium payable included in Insurance and reinsurance balances payable in the consolidated balance sheet was $18 million and $21 million, respectively.

The ACE Foundation – Bermuda

The ACE Foundation is an unconsolidated not-for-profit organization whose primary purpose is to fund charitable causes in Bermuda. The Trustees are principally Chubb management. Chubb maintains a non-interest bearing demand note receivable from the ACE Foundation – Bermuda (Borrower), the balance of which was $24 million and $25 million, at December 31, 2015 and 2014, respectively. The receivable is included in Other assets in the consolidated balance sheets. The Borrower has used the related proceeds to finance investments in Bermuda real estate, some of which have been rented to Chubb employees at rates established by independent, professional real estate appraisers. The Borrower uses income from the investments to both repay the note and to fund charitable activities. Accordingly, we report the demand note at the lower of its principal value or the fair value of assets held by the Borrower to repay the loan, including the real estate properties.