Segment information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment information

Segment information

ACE operates through the following business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. These segments distribute their products through various forms of brokers, agencies, and direct marketing programs. All business segments have established relationships with reinsurance intermediaries.

Effective first quarter 2013, the Insurance – North American segment is presented in two distinct reportable segments: Insurance – North American P&C and Insurance – North American Agriculture. Prior year amounts contained in this report have been adjusted to conform to the new segment presentation.

For segment reporting purposes, certain items have been presented in a different manner than in the consolidated financial statements below. Management uses underwriting income as the main measure of segment performance. ACE calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. For the Insurance – North American Agriculture segment, management includes gains and losses from fair value changes on crop derivatives as a component of underwriting income. For the three and nine months ended September 30, 2013, underwriting income in our Insurance - North American Agriculture segment was $65 million and $111 million, respectively. These amounts include $1 million of realized losses related to crop derivatives which are included in Net realized gains (losses) below. For the Life segment, management includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP as components of underwriting income. For example, for the three months ended September 30, 2013, Life underwriting income of $92 million includes Net investment income of $61 million and gains from fair value changes in separate account assets of $14 million.

The following tables present the operations by segment:

Statement of Operations by Segment

For the Three Months Ended September 30, 2013	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General			Global Reinsurance			Life			Corporate and Other			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	1,500		$	805	$	1,571		$	265		$	479		$	—		$	4,620
Net premiums earned	1,444			849		1,611			239			467			—			4,610
Losses and loss expenses	963			746		712			93			141			—			2,655
Policy benefits	—			—		—			—			138			—			138
Policy acquisition costs	159			32		349			52			86			—			678
Administrative expenses	153			5		263			12			85			45			563
Underwriting income (loss)	169			66		287			82			17			(45		)	576
Net investment income	254			6		128			66			61			7			522
Net realized gains (losses) including OTTI	9			—		(8		)	(5		)	43			1			40
Interest expense	3			—		1			2			4			62			72
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—			—			(14		)	—			(14		)
Other	(13		)	8		14			(7		)	4			3			9
Income tax expense (benefit)	79			14		78			16			10			(42		)	155
Net income (loss)	$	363		$	50	$	314		$	132		$	117		$	(60	)	$	916

Statement of Operations by Segment

For the Three Months Ended September 30, 2012	Insurance – North American P&C			Insurance – North American Agriculture			Insurance – Overseas General			Global Reinsurance			Life			Corporate and Other			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	1,373		$	1,164		$	1,384		$	307		$	488		$	—		$	4,716
Net premiums earned	1,306			1,166			1,432			281			480			—			4,665
Losses and loss expenses	819			1,291			622			151			164			—			3,047
Policy benefits	—			—			—			—			130			—			130
Policy acquisition costs	147			13			329			40			80			—			609
Administrative expenses	148			—			234			13			81			43			519
Underwriting income (loss)	192			(138		)	247			77			25			(43		)	360
Net investment income	257			6			127			72			63			8			533
Net realized gains (losses) including OTTI	(2		)	1			13			(2		)	(71		)	1			(60		)
Interest expense	3			—			2			1			3			54			63
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—			—			—			(14		)	—			(14		)
Other	(13		)	8			(3		)	(5		)	—			10			(3		)
Income tax expense (benefit)	129			(48		)	77			11			14			(36		)	147
Net income (loss)	$	328		$	(91	)	$	311		$	140		$	14		$	(62	)	$	640

Statement of Operations by Segment

For the Nine Months Ended September 30, 2013	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General		Global Reinsurance			Life			Corporate and Other			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	4,313		$	1,371	$	4,821	$	836		$	1,468		$	—		$	12,809
Net premiums earned	4,210			1,252		4,633		731			1,424			—			12,250
Losses and loss expenses	2,791			1,071		2,227		292			443			7			6,831
Policy benefits	—			—		—		—			379			—			379
Policy acquisition costs	444			56		1,048		148			261			—			1,957
Administrative expenses	437			13		750		36			256			149			1,641
Underwriting income (loss)	538			112		608		255			85			(156		)	1,442
Net investment income	755			19		396		209			187			21			1,587
Net realized gains (losses) including OTTI	63			1		34		46			206			—			350
Interest expense	4			—		4		4			12			181			205
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—		—			(7		)	—			(7		)
Other	(38		)	24		30		(13		)	7			19			29
Income tax expense (benefit)	264			24		174		31			33			(134		)	392
Net income (loss)	$	1,126		$	84	$	830	$	488		$	433		$	(201	)	$	2,760

Statement of Operations by Segment

For the Nine Months Ended September 30, 2012	Insurance – North American P&C			Insurance – North American Agriculture			Insurance – Overseas General		Global Reinsurance			Life			Corporate and Other			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	3,915		$	1,775		$	4,387	$	879		$	1,462		$	—		$	12,418
Net premiums earned	3,802			1,609			4,243		748			1,427			—			11,829
Losses and loss expenses	2,474			1,648			2,030		355			463			—			6,970
Policy benefits	—			—			—		—			379			—			379
Policy acquisition costs	419			25			996		125			244			1			1,810
Administrative expenses	451			(3		)	696		38			237			124			1,543
Underwriting income (loss)	458			(61		)	521		230			104			(125		)	1,127
Net investment income	789			19			386		213			186			21			1,614
Net realized gains (losses) including OTTI	15			1			59		(6		)	(261		)	(2		)	(194		)
Interest expense	9			—			4		3			9			162			187
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—			—		—			(18		)	—			(18		)
Other	(20		)	24			3		(7		)	14			18			32
Income tax expense (benefit)	308			(29		)	166		17			44			(101		)	405
Net income (loss)	$	965		$	(36	)	$	793	$	424		$	(20	)	$	(185	)	$	1,941

Underwriting assets are reviewed in total by management for purposes of decision-making. Other than goodwill and other intangible assets, ACE does not allocate assets to its segments.

The following table presents net premiums earned for each segment by product:

For the Three Months Ended September 30, 2013	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
(in millions of U.S. dollars)
Insurance – North American P&C	$	388	$	957	$	99	$	1,444
Insurance – North American Agriculture	849		—		—		849
Insurance – Overseas General	689		375		547		1,611
Global Reinsurance	141		98		—		239
Life	—		—		467		467
	$	2,067	$	1,430	$	1,113	$	4,610

For the Three Months Ended September 30, 2012	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
(in millions of U.S. dollars)
Insurance – North American P&C	$	353	$	860	$	93	$	1,306
Insurance – North American Agriculture	1,166		—		—		1,166
Insurance – Overseas General	547		356		529		1,432
Global Reinsurance	131		150		—		281
Life	—		—		480		480
	$	2,197	$	1,366	$	1,102	$	4,665

For the Nine Months Ended September 30, 2013	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
(in millions of U.S. dollars)
Insurance – North American P&C	$	1,103	$	2,826	$	281	$	4,210
Insurance – North American Agriculture	1,252		—		—		1,252
Insurance – Overseas General	1,932		1,088		1,613		4,633
Global Reinsurance	408		323		—		731
Life	—		—		1,424		1,424
	$	4,695	$	4,237	$	3,318	$	12,250

For the Nine Months Ended September 30, 2012	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
(in millions of U.S. dollars)
Insurance – North American P&C	$	1,022	$	2,505	$	275	$	3,802
Insurance – North American Agriculture	1,609		—		—		1,609
Insurance – Overseas General	1,637		1,027		1,579		4,243
Global Reinsurance	355		393		—		748
Life	—		—		1,427		1,427
	$	4,623	$	3,925	$	3,281	$	11,829