Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill by segment [Table Text Block]

The following table presents the carrying amount of the Company’s goodwill by segment.  Each reportable segment includes goodwill associated with the Company’s international business which is subject to the impact of changes in foreign currency exchange rates.

(in millions)	March 31, 2020		December 31, 2019
Business Insurance	$	2,570	$	2,601
Bond & Specialty Insurance	550		550
Personal Insurance	769		784
Other	26		26
Total	$	3,915	$	3,961

Other intangible assets subject to amortization [Table Text Block]

The following tables present a summary of the Company’s other intangible assets by major asset class.

(at March 31, 2020, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	94	$	22	$	72
Contract-based (1)	204		180		24
Total subject to amortization	298		202		96
Not subject to amortization	226		—		226
Total	$	524	$	202	$	322

(at December 31, 2019, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	99	$	21	$	78
Contract-based (1)	205		179		26
Total subject to amortization	304		200		104
Not subject to amortization	226		—		226
Total	$	530	$	200	$	330

 _________________________________________________________

(1)

Contract-based intangible assets subject to amortization are comprised of fair value adjustments on claims and claim adjustment expense reserves, reinsurance recoverables and other contract-related intangible assets. Fair value adjustments recorded in connection with insurance acquisitions were based on management’s estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables. The method used calculated a risk adjustment to a risk-free discounted reserve that would, if reserves ran off as expected, produce results that yielded the assumed cost-of-capital on the capital supporting the loss reserves.  The fair value adjustments are reported as other intangible assets on the consolidated balance sheet, and the amounts measured in accordance with the acquirer’s accounting policies for insurance contracts have been reported as part of the claims and claim adjustment expense reserves and reinsurance recoverables. The intangible assets are being recognized into income over the expected payment pattern. Because the time value of money and the risk adjustment (cost of capital) components of the intangible assets run off at different rates, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.

Other intangible assets not subject to amortization [Table Text Block]

The following tables present a summary of the Company’s other intangible assets by major asset class.

(at March 31, 2020, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	94	$	22	$	72
Contract-based (1)	204		180		24
Total subject to amortization	298		202		96
Not subject to amortization	226		—		226
Total	$	524	$	202	$	322

(at December 31, 2019, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	99	$	21	$	78
Contract-based (1)	205		179		26
Total subject to amortization	304		200		104
Not subject to amortization	226		—		226
Total	$	530	$	200	$	330

 _________________________________________________________

(1)

Contract-based intangible assets subject to amortization are comprised of fair value adjustments on claims and claim adjustment expense reserves, reinsurance recoverables and other contract-related intangible assets. Fair value adjustments recorded in connection with insurance acquisitions were based on management’s estimate of nominal claims and claim adjustment expense reserves and reinsurance recoverables. The method used calculated a risk adjustment to a risk-free discounted reserve that would, if reserves ran off as expected, produce results that yielded the assumed cost-of-capital on the capital supporting the loss reserves.  The fair value adjustments are reported as other intangible assets on the consolidated balance sheet, and the amounts measured in accordance with the acquirer’s accounting policies for insurance contracts have been reported as part of the claims and claim adjustment expense reserves and reinsurance recoverables. The intangible assets are being recognized into income over the expected payment pattern. Because the time value of money and the risk adjustment (cost of capital) components of the intangible assets run off at different rates, the amount recognized in income may be a net benefit in some periods and a net expense in other periods.