SEGMENT INFORMATION

The accounting policies used to prepare the segment reporting data for the Company’s three reportable business segments are the same as those described in the Summary of Significant Accounting Policies in note 1.

Except as described below for certain legal entities, the Company allocates its invested assets and the related net investment income to its reportable business segments. Pre-tax net investment income is allocated based upon an investable funds concept, which takes into account liabilities (net of non-invested assets) and appropriate capital considerations for each segment. For investable funds, a benchmark investment yield is developed that reflects the estimated duration of the loss reserves’ future cash flows, the interest rate environment at the time the losses were incurred and A+ rated corporate debt instrument yields. For capital, a benchmark investment yield is developed that reflects the average yield on the total investment portfolio. The benchmark investment yields are applied to each segment’s investable funds and capital, respectively, to produce a total notional investment income by segment. The Company’s actual net investment income is allocated to each segment in proportion to the respective segment’s notional investment income to total notional investment income. There are certain legal entities within the Company that are dedicated to specific reportable business segments. The invested assets and related net investment income from these legal entities are reported in the applicable business segment and are not allocated among the other business segments.

The cost of the Company’s catastrophe treaty program is included in the Company’s ceded premiums and is allocated among reportable business segments based on an estimate of actual market reinsurance pricing using expected losses calculated by the Company’s catastrophe model, adjusted for any experience adjustments.

The following tables summarize the components of the Company’s revenues, income, net written premiums and total assets by reportable business segments.



(for the year ended December 31, in millions)	Business Insurance		Bond & Specialty Insurance		Personal Insurance			Total Reportable Segments
2018
Premiums	$	14,722	$	2,420	$	9,917		$	27,059
Net investment income	1,833		233		408			2,474
Fee income	412		—		20			432
Other revenues	112		23		66			201
Total segment revenues ⁽¹⁾	$	17,079	$	2,676	$	10,411		$	30,166
Amortization and depreciation	$	2,943	$	515	$	1,719		$	5,177
Income tax expense	259		198		42			499
Segment income ⁽¹⁾	1,638		793		297			2,728
2017
Premiums	$	14,146	$	2,307	$	9,230		$	25,683
Net investment income	1,786		228		383			2,397
Fee income	430		—		17			447
Other revenues	69		24		60			153
Total segment revenues ⁽¹⁾	$	16,431	$	2,559	$	9,690		$	28,680
Amortization and depreciation	$	2,852	$	493	$	1,627		$	4,972
Income tax expense (benefit)	448		208		(44		)	612
Segment income ⁽¹⁾	1,613		556		128			2,297
2016
Premiums	$	13,855	$	2,260	$	8,419		$	24,534
Net investment income	1,701		239		362			2,302
Fee income	442		—		16			458
Other revenues	168		21		63			252
Total segment revenues ⁽¹⁾	$	16,166	$	2,520	$	8,860		$	27,546
Amortization and depreciation	$	2,783	$	491	$	1,530		$	4,804
Income tax expense	656		309		192			1,157
Segment income ⁽¹⁾	1,982		712		517			3,211

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(1)	Segment revenues for reportable business segments exclude net realized investment gains. Segment income for reportable business segments equals net income excluding the after-tax impact of net realized investment gains and, in 2017, the impact of the Tax Cuts and Jobs Act of 2017 at enactment.

Net written premiums by market were as follows:



(for the year ended December 31, in millions)	2018		2017		2016
Business Insurance:
Domestic:
Select Accounts	$	2,828	$	2,800	$	2,729
Middle Market	8,214		7,756		7,379
National Accounts	1,025		1,010		1,058
National Property and Other	1,805		1,691		1,779
Total Domestic	13,872		13,257		12,945
International	1,084		1,013		955
Total Business Insurance	14,956		14,270		13,900
Bond & Specialty Insurance:
Domestic:
Management Liability	1,455		1,367		1,342
Surety	835		793		757
Total Domestic	2,290		2,160		2,099
International	238		199		172
Total Bond & Specialty Insurance	2,528		2,359		2,271
Personal Insurance:
Domestic:
Agency:
Automobile	4,972		4,646		4,103
Homeowners and Other	4,148		3,933		3,772
Total Agency	9,120		8,579		7,875
Direct-to-Consumer	396		361		309
Total Domestic	9,516		8,940		8,184
International	708		650		603
Total Personal Insurance	10,224		9,590		8,787
Total consolidated net written premiums	$	27,708	$	26,219	$	24,958

Business Segment Reconciliations



(for the year ended December 31, in millions)	2018			2017			2016
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	3,899		$	3,962		$	3,969
Commercial automobile	2,388			2,132			2,010
Commercial property	1,828			1,775			1,769
General liability	2,181			2,047			1,977
Commercial multi-peril	3,333			3,198			3,148
Other	28			29			31
Total Domestic	13,657			13,143			12,904
International	1,065			1,003			951
Total Business Insurance	14,722			14,146			13,855
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	1,017			977			962
General liability	1,004			962			946
Other	195			187			180
Total Domestic	2,216			2,126			2,088
International	204			181			172
Total Bond & Specialty Insurance	2,420			2,307			2,260
Personal Insurance:
Domestic
Automobile	5,097			4,655			4,013
Homeowners and Other	4,135			3,943			3,813
Total Domestic	9,232			8,598			7,826
International	685			632			593
Total Personal Insurance	9,917			9,230			8,419
Total earned premiums	27,059			25,683			24,534
Net investment income	2,474			2,397			2,302
Fee income	432			447			458
Other revenues	201			153			252
Total segment revenues	30,166			28,680			27,546
Other revenues	2			6			11
Net realized investment gains	114			216			68
Total revenues	$	30,282		$	28,902		$	27,625
Income reconciliation, net of tax
Total segment income	$	2,728		$	2,297		$	3,211
Interest Expense and Other ⁽¹⁾	(298		)	(254		)	(244		)
Core income	2,430			2,043			2,967
Net realized investment gains	93			142			47
Impact of Tax Cuts and Jobs Act of 2017 at enactment	—			(129		)	—
Net income	$	2,523		$	2,056		$	3,014

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(1)	The primary component of Interest Expense and Other was after-tax interest expense of $278 million, $240 million and $236 million in 2018, 2017 and 2016, respectively.



(at December 31, in millions)	2018		2017
Asset reconciliation:
Business Insurance	$	78,965	$	78,082
Bond & Specialty Insurance	8,693		8,776
Personal Insurance	15,943		15,949
Total assets for reportable segments	103,601		102,807
Other assets ⁽¹⁾	632		676
Total consolidated assets	$	104,233	$	103,483

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(1)	The primary components of other assets at December 31, 2018 were accrued over-funded benefit plan assets related to the Company's qualified domestic pension plan and other intangible assets. The primary components of other assets at December 31, 2017 were accrued over-funded benefit plan assets related to the Company's qualified domestic pension plan, other intangible assets and deferred taxes.

Enterprise-Wide Disclosures

The Company does not have revenue from transactions with a single customer amounting to 10 percent or more of its revenues.

The following table presents revenues of the Company’s operations based on location:



(for the year ended December 31, in millions)	2018		2017		2016
U.S.	$	28,418	$	27,253	$	25,904
Non-U.S.:
Canada	1,293		1,232		1,154
Other Non-U.S.	571		417		567
Total Non-U.S.	1,864		1,649		1,721
Total revenues	$	30,282	$	28,902	$	27,625