Segment Information

12 Months Ended

Dec. 31, 2019

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
2019
Premiums	$	15,300	$	2,565	$	10,407		$	28,272
Net investment income	1,816		233		419			2,468
Fee income	437		—		22			459
Other revenues	155		26		87			268
Total segment revenues ⁽¹⁾	$	17,708	$	2,824	$	10,935		$	31,467
Amortization and depreciation	$	3,037	$	533	$	1,787		$	5,357
Income tax expense	223		151		195			569
Segment income ⁽¹⁾	1,392		618		824			2,834
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

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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)	2019		2018		2017
Business Insurance:
Domestic:
Select Accounts	$	2,911	$	2,828	$	2,800
Middle Market	8,630		8,214		7,756
National Accounts	1,051		1,025		1,010
National Property and Other	1,965		1,805		1,691
Total Domestic	14,557		13,872		13,257
International	1,072		1,084		1,013
Total Business Insurance	15,629		14,956		14,270
Bond & Specialty Insurance:
Domestic:
Management Liability	1,605		1,455		1,367
Surety	866		835		793
Total Domestic	2,471		2,290		2,160
International	268		238		199
Total Bond & Specialty Insurance	2,739		2,528		2,359
Personal Insurance:
Domestic:
Agency:
Automobile	5,124		4,972		4,646
Homeowners and Other	4,540		4,148		3,933
Total Agency	9,664		9,120		8,579
Direct-to-Consumer	412		396		361
Total Domestic	10,076		9,516		8,940
International	707		708		650
Total Personal Insurance	10,783		10,224		9,590
Total consolidated net written premiums	$	29,151	$	27,708	$	26,219

Business Segment Reconciliations



(for the year ended December 31, in millions)	2019			2018			2017
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers’ compensation	$	3,829		$	3,899		$	3,962
Commercial automobile	2,632			2,388			2,132
Commercial property	1,937			1,828			1,775
General liability	2,342			2,181			2,047
Commercial multi-peril	3,453			3,333			3,198
Other	40			28			29
Total Domestic	14,233			13,657			13,143
International	1,067			1,065			1,003
Total Business Insurance	15,300			14,722			14,146
Bond & Specialty Insurance:
Domestic:
Fidelity and surety	1,036			1,017			977
General liability	1,082			1,004			962
Other	216			195			187
Total Domestic	2,334			2,216			2,126
International	231			204			181
Total Bond & Specialty Insurance	2,565			2,420			2,307
Personal Insurance:
Domestic
Automobile	5,311			5,097			4,655
Homeowners and Other	4,393			4,135			3,943
Total Domestic	9,704			9,232			8,598
International	703			685			632
Total Personal Insurance	10,407			9,917			9,230
Total earned premiums	28,272			27,059			25,683
Net investment income	2,468			2,474			2,397
Fee income	459			432			447
Other revenues	268			201			153
Total segment revenues	31,467			30,166			28,680
Other revenues	1			2			6
Net realized investment gains	113			114			216
Total revenues	$	31,581		$	30,282		$	28,902
Income reconciliation, net of tax
Total segment income	$	2,834		$	2,728		$	2,297
Interest Expense and Other ⁽¹⁾	(297		)	(298		)	(254		)
Core income	2,537			2,430			2,043
Net realized investment gains	85			93			142
Impact of Tax Cuts and Jobs Act of 2017 at enactment	—			—			(129		)
Net income	$	2,622		$	2,523		$	2,056

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(1)	The primary component of Interest Expense and Other was after-tax interest expense of $272 million, $278 million and $240 million in 2019, 2018 and 2017, respectively.



(at December 31, in millions)	2019		2018
Asset reconciliation:
Business Insurance	$	83,896	$	78,965
Bond & Specialty Insurance	8,599		8,693
Personal Insurance	17,015		15,943
Total assets for reportable segments	109,510		103,601
Other assets ⁽¹⁾	612		632
Total consolidated assets	$	110,122	$	104,233

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(1)	The primary components of other assets at both December 31, 2019 and 2018, were accrued over-funded benefit plan assets related to the Company's qualified domestic pension plan and other intangible assets.

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)	2019		2018		2017
U.S.	$	29,638	$	28,418	$	27,253
Non-U.S.:
Canada	1,371		1,293		1,232
Other Non-U.S.	572		571		417
Total Non-U.S.	1,943		1,864		1,649
Total revenues	$	31,581	$	30,282	$	28,902