Goodwill and other intangible assets Goodwill and other intangible assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets [Text Block]

Goodwill and Other intangible assets

At June 30, 2016 and December 31, 2015, Goodwill was $15.5 billion and $4.8 billion, respectively, and Other intangible assets were $7.4 billion and $887 million, respectively. The increases in Goodwill and Other intangible assets reflect the goodwill and intangible assets recorded in connection with the Chubb Corp acquisition.

The following table presents a roll-forward of Goodwill by segment for the six months ended June 30, 2016:



(in millions of U.S. dollars)	North America Commercial P&C Insurance		North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance		Global Reinsurance		Life Insurance		Chubb Consolidated
Balance at December 31, 2015	$	1,203	$	196	$	134	$	2,078	$	365	$	820	$	4,796
Acquisition of Chubb Corp	5,712		2,025		—		2,789		—		—		10,526
Foreign exchange revaluation	58		18		—		126		—		1		203
Balance at June 30, 2016	$	6,973	$	2,239	$	134	$	4,993	$	365	$	821	$	15,525

The preliminary purchase price allocation to intangible assets recorded in connection with the Chubb Corp acquisition and their related useful lives are as follows:



(in millions of U.S. dollars)	Preliminary purchase price allocation		Estimated useful life
Definite life
Unearned premium reserves (UPR) intangible asset	$	1,550	1 year
Agency distribution relationships and renewal rights	3,150		24 years
Internally developed technology	95		3 years
Indefinite life
Trademarks	2,800		Indefinite
Licenses	50		Indefinite
Syndicate capacity	10		Indefinite
Total identified intangible assets	$	7,655

Additionally, in connection with the Chubb Corp acquisition, we recorded an increase to Unpaid losses and loss expenses acquired as part of Chubb Corp of $715 million to adjust the carrying value of Chubb Corp's historical unpaid losses and loss expenses to fair value as of the acquisition date. The estimated fair value consists of the present value of the expected net unpaid loss and loss adjustment expenses payments adjusted for an estimated risk margin. The expected cash flows are discounted at a risk free rate. The estimated risk margin varies based on the inherent risks associated with each type of reserve. This fair value adjustment was recorded within Unpaid losses and loss expenses on the Consolidated balance sheets and will amortize through Amortization of purchased intangibles on the Consolidated statements of operations over a range of 5 to 17 years, based on the estimated payout patterns of unpaid loss and loss expenses as of the acquisition date.

The following table presents, as of June 30, 2016, the expected estimated pre-tax amortization expense (benefit), at current foreign currency exchange rates, for the third and fourth quarters of 2016 and the next five years, related to purchased intangibles as well as the fair value adjustment to Unpaid losses and loss expenses described above:



	Associated with the Chubb Corp Acquisition
For the Year Ending December 31 (in millions of U.S. dollars)	Agency distribution relationships and renewal rights		Internally developed technology		Fair value adjustment to Unpaid losses and loss expense			Total			Other intangible assets		Total Amortization of purchased intangibles
Third quarter of 2016	$	33	$	8	$	(61	)	$	(20	)	$	23	$	3
Fourth quarter of 2016	33		8		(61		)	(20		)	23		3
2017	296		32		(160		)	168			85		253
2018	324		32		(101		)	255			74		329
2019	281		—		(62		)	219			66		285
2020	240		—		(35		)	205			59		264
2021	217		—		(20		)	197			53		250
Total	$	1,424	$	80	$	(500	)	$	1,004		$	383	$	1,387

The following table presents the expected amortization, at current foreign currency exchange rates, for the remainder of the UPR intangible asset which amortizes through Policy acquisition costs on the Consolidated statements of operations.



	Associated with the Chubb Corp Acquisition
For the Year Ending December 31, 2016 (in millions of U.S. dollars)	Amortization of UPR intangible asset
Third quarter of 2016	$	320
Fourth quarter of 2016	144
Total	$	464

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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