Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information [Abstract]

Segment Information

9. Segment information

ACE operates through the following business segments, certain of which represent the aggregation of distinct operating segments: Insurance – North American, 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 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 Life business, management also includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting as components of underwriting income. For the three months ended March 31, 2012, Life underwriting income of $103 million includes net investment income of $61 million and (Gains) losses from fair value changes in separate account assets of $(18) million.

Effective January 1, 2012, we reclassified prior period segment operating results in order to conform to certain organizational realignments. These realignments resulted in a transfer of operating revenue and underwriting results of our international direct-marketed and credit life businesses from the Insurance – Overseas General segment to the Life segment. These realignments have no impact on consolidated operating results; however, previously reported amounts contained in these consolidated financial statements have been adjusted to conform to the current period presentation.

The following tables present the operations by segment:

Statement of Operations by Segment

For the Three Months Ended March 31, 2012

(in millions of U.S. dollars)

	Insurance – North American			Insurance – Overseas General		Global Reinsurance			Life			Corporate and Other			ACE Consolidated
Net premiums written	$	1,293		$	1,528	$	263		$	488		$	—		$	3,572
Net premiums earned		1,287			1,391		230			473			—			3,381
Losses and loss expenses		849			705		102			148			—			1,804
Policy benefits		—			—		—			147			—			147
Policy acquisition costs		127			335		43			76			1			582
Administrative expenses		147			229		12			78			44			510
Underwriting income (loss)		164			122		73			24			(45	)		338
Net investment income		274			131		71			61			7			544
Net realized gains (losses) including OTTI		(1	)		20		13			231			(3	)		260
Interest expense		3			1		1			3			54			62
Other (income) expense:
(Gains) losses from fair value changes in separate account assets		—			—		—			(18	)		—			(18	)
Other		(1	)		—		(5	)		9			12			15
Income tax expense (benefit)		91			38		6			11			(36	)		110
Net income (loss)	$	344		$	234	$	155		$	311		$	(71	)	$	973

Statement of Operations by Segment

For the Three Months Ended March 31, 2011

(in millions of U.S. dollars)

	Insurance – North American			Insurance – Overseas General			Global Reinsurance			Life			Corporate and Other			ACE Consolidated
Net premiums written	$	1,285		$	1,410		$	315		$	436		$	—		$	3,446
Net premiums earned		1,346			1,278			260			425			—			3,309
Losses and loss expenses		994			852			279			138			—			2,263
Policy benefits		—			—			—			91			—			91
Policy acquisition costs		136			301			46			76			—			559
Administrative expenses		148			223			12			74			42			499
Underwriting income (loss)		68			(98	)		(77	)		46			(42	)		(103	)
Net investment income		295			131			72			46			—			544
Net realized gains (losses) including OTTI		(11	)		(9	)		(13	)		(13	)		1			(45	)
Interest expense		4			1			—			3			55			63
Other (income) expense:		(16	)		(2	)		(6	)		6			5			(13	)
Income tax expense (benefit)		89			17			10			14			(34	)		96
Net income (loss)	$	275		$	8		$	(22	)	$	56		$	(67	)	$	250

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

The following table presents the net premiums earned for each segment by product:

	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
	(in millions of U.S. dollars)
For the Three Months Ended March 31, 2012
Insurance – North American	$	381	$	817	$	89	$	1,287
Insurance – Overseas General		538		333		520		1,391
Global Reinsurance		110		120		—		230
Life		—		—		473		473
	$	1,029	$	1,270	$	1,082	$	3,381
For the Three Months Ended March 31, 2011
Insurance – North American	$	370	$	890	$	86	$	1,346
Insurance – Overseas General		431		342		505		1,278
Global Reinsurance		112		148		—		260
Life		—		—		425		425
	$	913	$	1,380	$	1,016	$	3,309