Segment Information

12 Months Ended

Dec. 31, 2013

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), net written premiums and total assets by reportable business segments:

(for the year ended December 31, in millions)	Business and International Insurance		Bond & Specialty Insurance		Personal Insurance			Total Reportable Segments
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
2011
Premiums	$	12,545	$	1,956	$	7,589		$	22,090
Net investment income	2,173		282		424			2,879
Fee income	296		—		—			296
Other revenues	31		26		70			127
Total operating revenues (1)	$	15,045	$	2,264	$	8,083		$	25,392
Amortization and depreciation	$	2,593	$	460	$	1,615		$	4,668
Income tax expense (benefit)	161		203		(293		)	71
Operating income (loss) (1)	1,456		545		(332		)	1,669

(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)	2013		2012		2011
Business and International Insurance:
Domestic:
Select Accounts	$	2,724	$	2,775	$	2,784
Middle Market	5,862		5,654		5,303
National Accounts	1,010		907		782
First Party	1,552		1,436		1,362
Specialized Distribution	1,085		1,100		1,109
Total Domestic	12,233		11,872		11,340
International	1,279		1,057		1,149
Total Business and International Insurance	13,512		12,929		12,489
Bond & Specialty Insurance	2,030		1,924		1,953
Personal Insurance:
Automobile	3,370		3,642		3,788
Homeowners and Other	3,855		3,952		3,957
Total Personal Insurance	7,225		7,594		7,745
Total consolidated net written premiums	$	22,767	$	22,447	$	22,187

Business Segment Reconciliations

(for the year ended December 31, in millions)	2013			2012			2011
Revenue reconciliation
Earned premiums
Business and International Insurance:
Domestic:
Workers’ compensation	$	3,560		$	3,222		$	2,899
Commercial automobile	1,904			1,943			1,940
Commercial property	1,698			1,621			1,607
General liability	1,790			1,757			1,738
Commercial multi-peril	3,093			3,113			3,126
Other	39			35			17
Total Domestic	12,084			11,691			11,327
International	1,248			1,088			1,218
Total Business and International Insurance	13,332			12,779			12,545
Bond & Specialty Insurance:
Fidelity and surety	913			939			970
General liability	891			850			832
Other	177			168			154
Total Bond & Specialty Insurance	1,981			1,957			1,956
Personal Insurance:
Automobile	3,431			3,665			3,720
Homeowners and Other	3,893			3,956			3,869
Total Personal Insurance	7,324			7,621			7,589
Total earned premiums	22,637			22,357			22,090
Net investment income	2,716			2,889			2,879
Fee income	395			323			296
Other revenues	283			132			127
Total operating revenues for reportable segments	26,031			25,701			25,392
Other revenues	(6		)	(12		)	(1		)
Net realized investment gains	166			51			55
Total consolidated revenues	$	26,191		$	25,740		$	25,446
Income reconciliation, net of tax
Total operating income for reportable segments	$	3,815		$	2,702		$	1,669
Interest Expense and Other (1)	(248		)	(261		)	(279		)
Total operating income	3,567			2,441			1,390
Net realized investment gains	106			32			36
Total consolidated net income	$	3,673		$	2,473		$	1,426

(1) The primary component of Interest Expense and Other was after-tax interest expense of $235 million, $246 million and $251 million in 2013, 2012 and 2011, respectively.

(at December 31, in millions)	2013		2012
Asset reconciliation:
Business and International Insurance	$	82,789	$	82,191
Bond & Specialty Insurance	7,648		8,233
Personal Insurance	12,870		14,195
Total assets for reportable segments	103,307		104,619
Other assets(1)	505		319
Total consolidated assets	$	103,812	$	104,938

(1) 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. The primary component of other assets at December 31, 2012 was 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)	2013		2012		2011
U.S.	$	25,138	$	24,827	$	24,408
Non-U.S.	1,053		913		1,038
Total revenues	$	26,191	$	25,740	$	25,446