Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2021

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)	September 30, 2021		December 31, 2020
Business Insurance	$	2,608	$	2,613
Bond & Specialty Insurance	550		550
Personal Insurance (1)	821		787
Other	26		26
Total	$	4,005	$	3,976

 _________________________________________________________

(1) Goodwill at September 30, 2021 included approximately $33 million associated with a business acquired in the first quarter of 2021, which is deductible for tax purposes.

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 September 30, 2021, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	104	$	39	$	65
Contract-based (1)	205		187		18
Total subject to amortization	309		226		83
Not subject to amortization	226		—		226
Total	$	535	$	226	$	309

 

(at December 31, 2020, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	101	$	31	$	70
Contract-based (1)	205		184		21
Total subject to amortization	306		215		91
Not subject to amortization	226		—		226
Total	$	532	$	215	$	317

 _________________________________________________________

(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 September 30, 2021, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	104	$	39	$	65
Contract-based (1)	205		187		18
Total subject to amortization	309		226		83
Not subject to amortization	226		—		226
Total	$	535	$	226	$	309

 

(at December 31, 2020, in millions)	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization
Customer-related	$	101	$	31	$	70
Contract-based (1)	205		184		21
Total subject to amortization	306		215		91
Not subject to amortization	226		—		226
Total	$	532	$	215	$	317

 _________________________________________________________

(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.