Segment information

Effective the first quarter of 2016, we are reporting our financial results within the following business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. We have also redefined Corporate to include all run-off asbestos and environmental (A&E) exposures, the results of run-off Brandywine business, the results of Westchester specialty operations for 1996 and prior years and certain other run-off exposures. All legacy ACE prior period amounts (i.e., legacy Chubb Corp prior period results are not included in the prior period amounts in the tables below) have been adjusted to conform to the new segment presentation.

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The North America Commercial P&C Insurance segment includes the business written by Chubb divisions that provide property and casualty (P&C) insurance and services to large, middle market and small commercial businesses in the U.S., Bermuda and Canada. These divisions write a variety of coverages, including traditional commercial property, marine, general casualty, workers’ compensation, package policies, and risk management; specialty categories such as professional lines, marine and construction risk, environmental and cyber risk, excess casualty, as well as group accident and health (A&H) insurance. This segment includes our North American Major Accounts and Specialty Insurance (principally large corporate accounts and wholesale business), and the Commercial Insurance divisions (principally middle market and small commercial accounts).

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The North America Personal P&C Insurance segment includes the business written by Chubb’s North America Personal Risk Services division, which comprises Chubb high net worth personal lines business and ACE Private Risk Services, with operations in U.S. and Canada. This segment provides affluent and high net worth individuals and families with homeowners, automobile, valuables, umbrella and recreational marine insurance and services.


•	The North America Agricultural Insurance segment includes the business written by Rain and Hail Insurance Service, Inc. which provides comprehensive multiple peril crop and crop-hail insurance, and Chubb Agribusiness, which offers farm and ranch property as well as specialty P&C coverages, including commercial agriculture products.

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The Overseas General Insurance segment includes the business written by two Chubb divisions that provide P&C insurance and services in the 51 countries outside of North America where the company operates. Chubb International provides commercial P&C traditional and specialty lines serving large corporations, middle market and small customers, A&H and traditional and specialty personal lines through retail brokers, agents and other channels locally around the world. Chubb Global Markets provides commercial P&C excess and surplus lines and A&H through wholesale brokers in the London market and through Lloyd’s. These divisions write a variety of coverages, including traditional commercial property and casualty, specialty categories such as financial lines, marine, energy, aviation, political risk and construction risk, as well as group A&H and traditional and specialty personal lines.


•	The Global Reinsurance segment primarily includes the reinsurance business written by Chubb Tempest Re as well as the legacy Chubb U.K. Assumed Reinsurance business, which is active, and the legacy Chubb Corp run-off Reinsurance business.


•	The Life Insurance segment includes the business written by Chubb Life, Chubb Tempest Life Re and Combined Insurance’s North America operations.

Corporate primarily includes loss and loss expenses of asbestos and environmental (A&E) run-off liabilities, and the results of our non-insurance companies including Chubb Limited, Chubb Group Management and Holdings Ltd, and Chubb INA Holdings, Inc. Our exposure to A&E claims principally arises out of liabilities acquired when we purchased Westchester Specialty in 1998, CIGNA’s P&C business in 1999, legacy Chubb Corp run-off business in 2016, and certain other run-off exposures.

In addition, revenue and expenses managed at the corporate level, including realized gains and losses, interest expense, the non-operating income of our partially-owned entities, and income taxes are reported within Corporate. Chubb integration expenses and other merger-related expenses (both included in Chubb integration expenses in the consolidated statements of operations) are also reported within Corporate. Chubb integration expenses are one-time costs that are directly attributable to the achievement of the annualized savings, including employee severance, third-party consulting fees, and systems integration expenses. Other merger-related expenses are one-time costs directly attributable to the merger, including rebranding, employee retention costs and other professional and legal fees related to the Chubb Corp acquisition. These items will not be allocated to the segment level as they are one-time in nature and are not related to the ongoing business activities of the segment. The Chief Executive Officer does not manage segment results or allocate resources to segments when considering these costs and they are therefore excluded from our definition of segment income. Therefore, the segment income statement will only include underwriting income, net investment income, and other operating income and expense items such as each segment's share of the operating income (loss) related to partially-owned entities and miscellaneous income and expense items for which the segments are held accountable. Beginning with the third quarter of 2016, segment income also included amortization of purchased intangibles related to business combination intangible assets acquired by the segment and other purchase accounting related intangible assets, including agency relationships, renewal rights, and client lists. These costs were previously included in Corporate. The amortization of intangible assets purchased as part of the Chubb Corp acquisition is considered a Corporate cost as these are incurred by the overall company. We determined that this definition of segment income is appropriate and aligns with how the business is managed. The prior periods have been adjusted to conform to the new segment presentation. As we progress through the integration and refine our processes, we may continue to further refine our segments and segment income measures.

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. Chubb calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. To calculate segment income, include net investment income, the operating portion of other (income) expense, and amortization of purchased intangibles. For the North America Agricultural Insurance segment, management includes gains and losses on crop derivatives as a component of underwriting income. For example, for the three months ended September 30, 2016, underwriting income in our North America Agricultural Insurance segment was $90 million. This amount includes $3 million of realized gains related to crop derivatives which are reported in Net realized gains (losses) in the Corporate column below.

For the Life Insurance 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 Insurance underwriting income. For example, for the three months ended September 30, 2016, Life underwriting income of $72 million includes Net investment income of $71 million and gains from fair value changes in separate account assets of $22 million. The gains from fair value changes in separate account assets are reported in other (income) expense in the table below.

The following tables present the Statement of Operations by segment:



	North America Commercial P&C Insurance		North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance			Global Reinsurance		Life Insurance			Corporate			Chubb Consolidated
For the Three Months Ended
September 30, 2016
(in millions of U.S. dollars)
Net premiums written	$	3,110	$	1,011	$	849	$	1,940		$	131	$	532		$	—		$	7,573
Net premiums earned	3,086		1,081		819		2,034			156		512			—			7,688
Losses and loss expenses	1,863		594		683		843			49		174			63			4,269
Policy benefits	—		—		—		—			—		155			—			155
Policy acquisition costs	522		229		48		546			42		127			—			1,514
Administrative expenses	275		89		1		261			12		77			57			772
Underwriting income (loss)	426		169		87		384			53		(21		)	(120		)	978
Net investment income (loss)	477		53		5		152			67		71			(86		)	739
Other (income) expense	3		2		—		(6		)	—		(20		)	(70		)	(91		)
Amortization expense (benefit) of purchased intangibles	—		4		7		12			—		1			(20		)	4
Segment income (loss)	900		216		85		530			120		69			(116		)	1,804
Net realized gains including OTTI															100			100
Interest expense															152			152
Chubb integration expenses															115			115
Income tax expense															277			277
Net income (loss)															$	(560	)	$	1,360



	North America Commercial P&C Insurance			North America Personal P&C Insurance		North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Life Insurance		Corporate			Chubb Consolidated
For the Three Months Ended
September 30, 2015
(in millions of U.S. dollars)
Net premiums written	$	1,433		$	278	$	737		$	1,584		$	185		$	492	$	—		$	4,709
Net premiums earned	1,410			272		739			1,615			203			480		—			4,719
Losses and loss expenses	913			179		620			674			20			153		84			2,643
Policy benefits	—			—		—			—			—			89		—			89
Policy acquisition costs	142			13		42			405			52			117		—			771
Administrative expenses	154			36		—			246			12			74		46			568
Underwriting income (loss)	201			44		77			290			119			47		(130		)	648
Net investment income	260			7		5			132			76			66		3			549
Other (income) expense	(3		)	1		(1		)	(6		)	(4		)	48		(23		)	12
Amortization of purchased intangibles	—			31		8			12			—			—		—			51
Segment income (loss)	464			19		75			416			199			65		(104		)	1,134
Net realized gains (losses) including OTTI																	(397		)	(397		)
Interest expense																	68			68
Chubb integration expenses																	9			9
Income tax expense																	132			132
Net income (loss)																	$	(710	)	$	528



	North America Commercial P&C Insurance			North America Personal P&C Insurance		North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Life Insurance			Corporate			Chubb Consolidated
For the Nine Months Ended
September 30, 2016
(in millions of U.S. dollars)
Net premiums written	$	8,657		$	3,113	$	1,288		$	6,012		$	562		$	1,575		$	—		$	21,207
Net premiums earned	9,130			3,245		1,169			6,082			543			1,521			—			21,690
Losses and loss expenses	5,581			1,916		937			2,953			225			498			87			12,197
Policy benefits	—			—		—			—			—			427			—			427
Policy acquisition costs	1,549			747		77			1,586			142			386			—			4,487
Administrative expenses	840			275		(1		)	801			40			226			192			2,373
Underwriting income (loss)	1,160			307		156			742			136			(16		)	(279		)	2,206
Net investment income (loss)	1,371			155		15			445			199			207			(271		)	2,121
Other (income) expense	(6		)	6		—			(16		)	(3		)	(14		)	(59		)	(92		)
Amortization expense (benefit) of purchased intangibles	—			16		22			36			—			2			(60		)	16
Segment income (loss)	2,537			440		149			1,167			338			203			(431		)	4,403
Net realized gains (losses) including OTTI																		(510		)	(510		)
Interest expense																		451			451
Chubb integration expenses																		361			361
Income tax expense																		556			556
Net income (loss)																		$	(2,309	)	$	2,525



	North America Commercial P&C Insurance			North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance			Global Reinsurance			Life Insurance		Corporate			Chubb Consolidated
For the Nine Months Ended
September 30, 2015
(in millions of U.S. dollars)
Net premiums written	$	4,158		$	958	$	1,204	$	5,047		$	719		$	1,483	$	—		$	13,569
Net premiums earned	4,209			687		1,124		4,896			649			1,441		—			13,006
Losses and loss expenses	2,744			446		913		2,304			191			442		142			7,182
Policy benefits	—			—		—		—			—			384		—			384
Policy acquisition costs	403			43		61		1,190			166			342		—			2,205
Administrative expenses	459			89		3		756			37			221		135			1,700
Underwriting income (loss)	603			109		147		646			255			52		(277		)	1,535
Net investment income	780			19		17		409			230			198		9			1,662
Other (income) expense	(5		)	1		1		(12		)	(5		)	32		(73		)	(61		)
Amortization of purchased intangibles	—			63		22		50			—			1		—			136
Segment income (loss)	1,388			64		141		1,017			490			217		(195		)	3,122
Net realized gains (losses) including OTTI																(360		)	(360		)
Interest expense																207			207
Chubb integration expenses																9			9
Income tax expense																395			395
Net income (loss)																$	(1,166	)	$	2,151

Underwriting assets are reviewed in total by management for purposes of decision-making. Other than goodwill and other intangible assets, Chubb does not allocate assets to its segments.