Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information disclosure

Segment Information disclosure [Text Block]

2. 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. Pretax 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, operating income (loss) and total assets by reportable business segments:

(for the year ended December 31, in millions)	Business Insurance		Financial, Professional & International Insurance		Personal Insurance			Total Reportable Segments
2012
Premiums	$	11,691	$	3,045	$	7,621		$	22,357
Net investment income		2,090		395		404			2,889
Fee income		322		1		—			323
Other revenues		40		26		66			132
Total operating revenues(1)	$	14,143	$	3,467	$	8,091		$	25,701
Amortization and depreciation	$	2,393	$	731	$	1,602		$	4,726
Income tax expense		539		255		32			826
Operating income(1)		1,843		642		217			2,702
2011
Premiums	$	11,327	$	3,174	$	7,589		$	22,090
Net investment income		2,041		414		424			2,879
Fee income		295		1		—			296
Other revenues		31		26		70			127
Total operating revenues(1)	$	13,694	$	3,615	$	8,083		$	25,392
Amortization and depreciation	$	2,313	$	740	$	1,615		$	4,668
Income tax expense (benefit)		134		230		(293	)		71
Operating income (loss)(1)		1,354		647		(332	)		1,669
2010
Premiums	$	10,766	$	3,317	$	7,349		$	21,432
Net investment income		2,156		439		464			3,059
Fee income		285		2		—			287
Other revenues		28		27		75			130
Total operating revenues(1)	$	13,235	$	3,785	$	7,888		$	24,908
Amortization and depreciation	$	2,253	$	754	$	1,601		$	4,608
Income tax expense		777		245		134			1,156
Operating income(1)		2,301		620		440			3,361

(1)

Operating revenues for reportable business segments exclude net realized investment gains (losses). Operating income (loss) for reportable business segments equals net income (loss) excluding the after-tax impact of net realized investment gains (losses).

        Net written premiums by market were as follows:

(for the year ended December 31, in millions)	2012			2011		2010
Business Insurance:
Select Accounts	$	2,775		$	2,784	$	2,718
Commercial Accounts		3,101			2,890		2,576
National Accounts		907			782		806
Industry-Focused Underwriting		2,554			2,407		2,299
Target Risk Underwriting		1,666			1,587		1,573
Specialized Distribution		870			880		872
Total Business Insurance Core		11,873			11,330		10,844
Business Insurance Other		(1	)		10		13
Total Business Insurance		11,872			11,340		10,857
Financial, Professional & International Insurance:
Bond & Financial Products		1,924			1,953		1,981
International		1,057			1,149		1,230
Total Financial, Professional & International Insurance		2,981			3,102		3,211
Personal Insurance:
Automobile		3,642			3,788		3,772
Homeowners and Other		3,952			3,957		3,795
Total Personal Insurance		7,594			7,745		7,567
Total consolidated net written premiums	$	22,447		$	22,187	$	21,635

Business Segment Reconciliations

(for the year ended December 31, in millions)	2012			2011			2010
Revenue reconciliation
Earned premiums
Business Insurance:
Workers' compensation	$	3,222		$	2,899		$	2,489
Commercial automobile		1,943			1,940			1,912
Commercial property		1,621			1,607			1,669
General liability		1,757			1,738			1,739
Commercial multi-peril		3,113			3,126			2,958
Other		35			17			(1	)
Total Business Insurance		11,691			11,327			10,766
Financial, Professional & International Insurance:
Fidelity and surety		939			970			1,020
General liability		850			832			866
International		1,088			1,218			1,276
Other		168			154			155
Total Financial, Professional & International Insurance		3,045			3,174			3,317
Personal Insurance:
Automobile		3,665			3,720			3,693
Homeowners and Other		3,956			3,869			3,656
Total Personal Insurance		7,621			7,589			7,349
Total earned premiums		22,357			22,090			21,432
Net investment income		2,889			2,879			3,059
Fee income		323			296			287
Other revenues		132			127			130
Total operating revenues for reportable segments		25,701			25,392			24,908
Other revenues		(12	)		(1	)		(60	)
Net realized investment gains		51			55			264
Total consolidated revenues	$	25,740		$	25,446		$	25,112
Income reconciliation, net of tax
Total operating income for reportable segments	$	2,702		$	1,669		$	3,361
Interest Expense and Other(1)		(261	)		(279	)		(318	)
Total operating income		2,441			1,390			3,043
Net realized investment gains		32			36			173
Total consolidated net income	$	2,473		$	1,426		$	3,216

(1)

The primary component of Interest Expense and Other was after-tax interest expense of $246 million, $251 million and $252 million in 2012, 2011 and 2010, respectively. Interest Expense and Other in 2010 included $39 million of after-tax expenses related to the Company's purchase and retirement of a significant portion of its 6.25% fixed-to-floating rate junior subordinated debentures.

(at December 31, in millions)	2012		2011
Asset reconciliation:
Business Insurance	$	76,972	$	76,909
Financial, Professional & International Insurance		13,452		13,355
Personal Insurance		14,195		13,614
Total assets for reportable segments		104,619		103,878
Other assets(1)		319		697
Total consolidated assets	$	104,938	$	104,575

(1)

The primary component of other assets at December 31, 2012 was other intangible assets. The primary components of other assets at December 31, 2011 were deferred taxes and other intangible assets.

Enterprise-Wide Disclosures

        Revenues from internal customers for the years ended December 31, 2012, 2011 and 2010 were not material. Foreign assets at December 31, 2012 and 2011 also were not material. 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)	2012		2011		2010
U.S.	$	24,827	$	24,408	$	24,049
Non-U.S.		913		1,038		1,063
Total revenues	$	25,740	$	25,446	$	25,112