9. Segment Information

The Company monitors the performance of its operations in three segments, Non-life, Life and Health and Corporate and Other as described in Note 21 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Non-life segment is further divided into four sub-segments: North America, Global (Non-U.S.) P&C, Global Specialty and Catastrophe.

The North America sub-segment includes agriculture, casualty, credit/surety, motor, multiline, property and other risks generally originating in the United States. The Global (Non-U.S.) P&C sub-segment includes casualty, motor and property business generally originating outside of the United States. The Global Specialty sub-segment is comprised of business that is generally considered to be specialized due to the sophisticated technical underwriting required to analyze risks, and is global in nature. This sub-segment consists of several lines of business for which the Company believes it has developed specialized knowledge and underwriting capabilities. These lines of business include agriculture, aviation/space, credit/surety, energy, engineering, marine, specialty casualty, specialty property and other lines. The Catastrophe sub-segment is comprised of the Company’s catastrophe line of business. The Life and Health segment includes mortality, longevity and accident and health lines of business. Corporate and Other is comprised of the capital markets and investment related activities of the Company, including principal finance transactions, insurance-linked securities and strategic investments, and its corporate activities, including other expenses.

Since the Company does not manage its assets by segment, net investment income is not allocated to the Non-life segment. However, because of the interest-sensitive nature of some of the Company’s Life and Health products, net investment income is considered in Management’s assessment of the profitability of the Life and Health segment. The following items are not considered in evaluating the results of the Non-life and Life and Health segments: net realized and unrealized investment gains and losses, interest expense, amortization of intangible assets, net foreign exchange gains and losses, income tax expense or benefit and interest in earnings and losses of equity method investments. Segment results are shown before consideration of intercompany transactions.

Management measures results for the Non-life segment on the basis of the loss ratio, acquisition ratio, technical ratio, other expense ratio and combined ratio (all defined below). Management measures results for the Non-life sub-segments on the basis of the loss ratio, acquisition ratio and technical ratio. Management measures results for the Life and Health segment on the basis of the allocated underwriting result, which includes revenues from net premiums earned, other income or loss and allocated net investment income for Life and Health, and expenses from life policy benefits, acquisition costs and other expenses.

The segment results for the three months and six months ended June 30, 2015 and 2014, were as follows (in millions of U.S. dollars, except ratios):

Segment Information

For the three months ended June 30, 2015



	North America			Global (Non-U.S.) P&C			Global Specialty			Catastrophe			Total Non-life segment			Life and Health segment			Corporate and Other			Total
Gross premiums written	$	427		$	143		$	406		$	122		$	1,098		$	334		$	—		$	1,432
Net premiums written	$	401		$	137		$	400		$	71		$	1,009		$	313		$	—		$	1,322
Decrease (increase) in unearned premiums	34			22			(26		)	(27		)	3			3			—			6
Net premiums earned	$	435		$	159		$	374		$	44		$	1,012		$	316		$	—		$	1,328
Losses and loss expenses and life policy benefits	(296		)	(121		)	(198		)	10			(605		)	(260		)	—			(865		)
Acquisition costs	(111		)	(36		)	(102		)	(4		)	(253		)	(30		)	—			(283		)
Technical result	$	28		$	2		$	74		$	50		$	154		$	26		$	—		$	180
Other income													—			—			—			—
Other expenses													(55		)	(16		)	(59		)	(130		)
Underwriting result													$	99		$	10		n/a			$	50
Net investment income																16			104			120
Allocated underwriting result ⁽¹⁾																$	26		n/a			n/a
Net realized and unrealized investment losses																			(256		)	(256		)
Interest expense																			(12		)	(12		)
Amortization of intangible assets																			(7		)	(7		)
Net foreign exchange losses																			(6		)	(6		)
Income tax benefit																			14			14
Interest in earnings of equity method investments																			8			8
Net loss																			n/a			$	(89	)
Loss ratio ⁽²⁾	68.1		%	75.9		%	53.0		%	(21.5		)%	59.8		%
Acquisition ratio ⁽³⁾	25.4			23.2			27.2			8.2			25.0
Technical ratio ⁽⁴⁾	93.5		%	99.1		%	80.2		%	(13.3		)%	84.8		%
Other expense ratio ⁽⁵⁾													5.5
Combined ratio ⁽⁶⁾													90.3		%


(1)	Allocated underwriting result is defined as net premiums earned, other income or loss and allocated net investment income less life policy benefits, acquisition costs and other expenses.


(2)	Loss ratio is obtained by dividing losses and loss expenses by net premiums earned.


(3)	Acquisition ratio is obtained by dividing acquisition costs by net premiums earned.


(4)	Technical ratio is defined as the sum of the loss ratio and the acquisition ratio.


(5)	Other expense ratio is obtained by dividing other expenses by net premiums earned.


(6)	Combined ratio is defined as the sum of the technical ratio and the other expense ratio.

n/a Not applicable

Segment Information

For the three months ended June 30, 2014



	North America			Global (Non-U.S.) P&C			Global Specialty			Catastrophe			Total Non-life segment			Life and Health segment			Corporate and Other			Total
Gross premiums written	$	400		$	155		$	438		$	143		$	1,136		$	326		$	—		$	1,462
Net premiums written	$	392		$	148		$	432		$	136		$	1,108		$	311		$	—		$	1,419
(Increase) decrease in unearned premiums	(2		)	39			(26		)	(77		)	(66		)	—			—			(66		)
Net premiums earned	$	390		$	187		$	406		$	59		$	1,042		$	311		$	—		$	1,353
Losses and loss expenses and life policy benefits	(240		)	(103		)	(270		)	(19		)	(632		)	(252		)	—			(884		)
Acquisition costs	(102		)	(52		)	(98		)	(8		)	(260		)	(43		)	—			(303		)
Technical result	$	48		$	32		$	38		$	32		$	150		$	16		$	—		$	166
Other income													1			3			5			9
Other expenses													(61		)	(16		)	(30		)	(107		)
Underwriting result													$	90		$	3		n/a			$	68
Net investment income																15			115			130
Allocated underwriting result																$	18		n/a			n/a
Net realized and unrealized investment gains																			166			166
Interest expense																			(12		)	(12		)
Amortization of intangible assets																			(7		)	(7		)
Net foreign exchange gains																			2			2
Income tax expense																			(78		)	(78		)
Interest in earnings of equity method investments																			5			5
Net income																			n/a			$	274
Loss ratio	61.5		%	54.6		%	66.5		%	33.4		%	60.6		%
Acquisition ratio	26.1			27.9			24.2			13.0			25.0
Technical ratio	87.6		%	82.5		%	90.7		%	46.4		%	85.6		%
Other expense ratio													5.9
Combined ratio													91.5		%

Segment Information

For the six months ended June 30, 2015



	North America			Global (Non-U.S.) P&C			Global Specialty			Catastrophe			Total Non-life segment			Life and Health segment			Corporate and Other			Total
Gross premiums written	$	900		$	477		$	833		$	312		$	2,522		$	659		$	—		$	3,181
Net premiums written	$	872		$	468		$	762		$	247		$	2,349		$	626		$	—		$	2,975
Increase in unearned premiums	(98		)	(135		)	(23		)	(145		)	(401		)	(12		)	—			(413		)
Net premiums earned	$	774		$	333		$	739		$	102		$	1,948		$	614		$	—		$	2,562
Losses and loss expenses and life policy benefits	(468		)	(240		)	(369		)	(10		)	(1,087		)	(499		)	—			(1,586		)
Acquisition costs	(204		)	(89		)	(194		)	(8		)	(495		)	(64		)	—			(559		)
Technical result	$	102		$	4		$	176		$	84		$	366		$	51		$	—		$	417
Other income													—			1			3			4
Other expenses													(107		)	(31		)	(116		)	(254		)
Underwriting result													$	259		$	21		n/a			$	167
Net investment income																30			195			225
Allocated underwriting result																$	51		n/a			n/a
Net realized and unrealized investment losses																			(140		)	(140		)
Interest expense																			(25		)	(25		)
Amortization of intangible assets																			(14		)	(14		)
Net foreign exchange gains																			7			7
Income tax expense																			(65		)	(65		)
Interest in earnings of equity method investments																			5			5
Net income																			n/a			$	160
Loss ratio	60.4		%	72.0		%	49.9		%	9.9		%	55.8		%
Acquisition ratio	26.4			26.8			26.3			7.6			25.4
Technical ratio	86.8		%	98.8		%	76.2		%	17.5		%	81.2		%
Other expense ratio													5.5
Combined ratio													86.7		%

Segment Information

For the six months ended June 30, 2014



	North America			Global (Non-U.S.) P&C			Global Specialty			Catastrophe			Total Non-life segment			Life and Health segment			Corporate and Other			Total
Gross premiums written	$	930		$	519		$	917		$	353		$	2,719		$	615		$	—		$	3,334
Net premiums written	$	919		$	508		$	822		$	315		$	2,564		$	593		$	—		$	3,157
Increase in unearned premiums	(151		)	(141		)	(61		)	(177		)	(530		)	(20		)	—			(550		)
Net premiums earned	$	768		$	367		$	761		$	138		$	2,034		$	573		$	—		$	2,607
Losses and loss expenses and life policy benefits	(499		)	(196		)	(471		)	1			(1,165		)	(468		)	—			(1,633		)
Acquisition costs	(194		)	(107		)	(178		)	(15		)	(494		)	(73		)	—			(567		)
Technical result	$	75		$	64		$	112		$	124		$	375		$	32		$	—		$	407
Other income													2			4			4			10
Other expenses													(126		)	(34		)	(59		)	(219		)
Underwriting result													$	251		$	2		n/a			$	198
Net investment income																30			217			247
Allocated underwriting result																$	32		n/a			n/a
Net realized and unrealized investment gains																			308			308
Interest expense																			(25		)	(25		)
Amortization of intangible assets																			(14		)	(14		)
Net foreign exchange gains																			3			3
Income tax expense																			(141		)	(141		)
Interest in earnings of equity method investments																			11			11
Net income																			n/a			$	587
Loss ratio	65.0		%	53.5		%	61.9		%	(0.9		)%	57.3		%
Acquisition ratio	25.2			29.0			23.4			11.4			24.3
Technical ratio	90.2		%	82.5		%	85.3		%	10.5		%	81.6		%
Other expense ratio													6.2
Combined ratio													87.8		%