Segment Information

12 Months Ended

Dec. 31, 2014

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, net written premiums and total assets by reportable business segments. Financial data for prior years presented in the tables was reclassified to be consistent with the new segment structure implemented in 2014.

(for the year ended December 31, in millions)	Business and International Insurance		Bond & Specialty Insurance		Personal Insurance		Total Reportable Segments
2014
Premiums	$	14,512	$	2,076	$	7,125	$	23,713
Net investment income		2,156		252		379		2,787
Fee income		438		—		—		438
Other revenues		46		19		80		145
Total operating revenues(1)	$	17,152	$	2,347	$	7,584	$	27,083
Amortization and depreciation	$	2,909	$	482	$	1,347	$	4,738
Income tax expense		798		348		366		1,512
Operating income(1)		2,347		727		824		3,898
2013
Premiums	$	13,332	$	1,981	$	7,324	$	22,637
Net investment income		2,087		260		369		2,716
Fee income		395		—		—		395
Other revenues		160		20		103		283
Total operating revenues(1)	$	15,974	$	2,261	$	7,796	$	26,031
Amortization and depreciation	$	2,751	$	473	$	1,461	$	4,685
Income tax expense		758		227		366		1,351
Operating income(1)		2,404		573		838		3,815
2012
Premiums	$	12,779	$	1,957	$	7,621	$	22,357
Net investment income		2,205		280		404		2,889
Fee income		323		—		—		323
Other revenues		41		25		66		132
Total operating revenues(1)	$	15,348	$	2,262	$	8,091	$	25,701
Amortization and depreciation	$	2,654	$	470	$	1,602	$	4,726
Income tax expense		580		214		32		826
Operating income(1)		1,981		504		217		2,702

(1)

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

        Net written premiums by market were as follows:

(for the year ended December 31, in millions)	2014		2013		2012
Business and International Insurance:
Domestic:
Select Accounts	$	2,707	$	2,724	$	2,775
Middle Market		6,108		5,862		5,654
National Accounts		1,047		1,010		907
First Party		1,579		1,552		1,436
Specialized Distribution		1,074		1,085		1,100
Total Domestic		12,515		12,233		11,872
International		2,121		1,279		1,057
Total Business and International Insurance		14,636		13,512		12,929
Bond & Specialty Insurance		2,103		2,030		1,924
Personal Insurance:
Automobile		3,390		3,370		3,642
Homeowners and Other		3,775		3,855		3,952
Total Personal Insurance		7,165		7,225		7,594
Total consolidated net written premiums	$	23,904	$	22,767	$	22,447

Business Segment Reconciliations

(for the year ended December 31, in millions)	2014			2013			2012
Revenue reconciliation
Earned premiums
Business and International Insurance:
Domestic:
Workers' compensation	$	3,713		$	3,560		$	3,222
Commercial automobile		1,901			1,904			1,943
Commercial property		1,756			1,698			1,621
General liability		1,852			1,790			1,757
Commercial multi-peril		3,070			3,093			3,113
Other		42			39			35
Total Domestic		12,334			12,084			11,691
International		2,178			1,248			1,088
Total Business and International Insurance		14,512			13,332			12,779
Bond & Specialty Insurance:
Fidelity and surety		936			913			939
General liability		963			891			850
Other		177			177			168
Total Bond & Specialty Insurance		2,076			1,981			1,957
Personal Insurance:
Automobile		3,316			3,431			3,665
Homeowners and Other		3,809			3,893			3,956
Total Personal Insurance		7,125			7,324			7,621
Total earned premiums		23,713			22,637			22,357
Net investment income		2,787			2,716			2,889
Fee income		438			395			323
Other revenues		145			283			132
Total operating revenues for reportable segments		27,083			26,031			25,701
Other revenues		—			(6	)		(12	)
Net realized investment gains		79			166			51
Total consolidated revenues	$	27,162		$	26,191		$	25,740
Income reconciliation, net of tax
Total operating income for reportable segments	$	3,898		$	3,815		$	2,702
Interest Expense and Other(1)		(257	)		(248	)		(261	)
Total operating income		3,641			3,567			2,441
Net realized investment gains		51			106			32
Total consolidated net income	$	3,692		$	3,673		$	2,473

(1)

The primary component of Interest Expense and Other was after-tax interest expense of $240 million, $235 million and $246 million in 2014, 2013 and 2012, respectively.

(at December 31, in millions)	2014		2013
Asset reconciliation:
Business and International Insurance	$	82,309	$	82,789
Bond & Specialty Insurance		7,525		7,648
Personal Insurance		12,798		12,870
Total assets for reportable segments		102,632		103,307
Other assets(1)		446		505
Total consolidated assets	$	103,078	$	103,812

(1)

The primary component of other assets at December 31, 2014 was other intangible assets. The primary components of other assets at December 31, 2013 were other intangible assets and accrued over-funded benefit plan assets related to the Company's qualified domestic pension plan.

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)	2014		2013		2012
U.S.	$	25,091	$	25,138	$	24,827
Non-U.S.:
Canada		1,474		529		349
Other Non-U.S.		597		524		564
Total Non-U.S.		2,071		1,053		913
Total revenues	$	27,162	$	26,191	$	25,740