Segment information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment information

Segment information

ACE operates through five 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.

For segment reporting purposes, certain items have been presented in a different manner below than in the consolidated financial statements. 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 example, for the three months ended June 30, 2014, underwriting income in our Insurance – North American Agriculture segment was $27 million. This amount includes $8 million of realized gains 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 Life underwriting income. For example, for the three months ended June 30, 2014, Life underwriting income of $89 million includes Net investment income of $66 million and gains from fair value changes in separate account assets of $17 million.

The following tables present the Statement of Operations by segment:

For the Three Months Ended June 30, 2014	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General		Global Reinsurance			Life			Corporate			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	1,635		$	388	$	1,760	$	278		$	498		$	—		$	4,559
Net premiums earned	1,542			330		1,709		261			490			—			4,332
Losses and loss expenses	1,016			287		830		109			146			—			2,388
Policy benefits	—			—		—		—			144			—			144
Policy acquisition costs	152			23		402		60			121			—			758
Administrative expenses	175			1		256		14			73			47			566
Underwriting income (loss)	199			19		221		78			6			(47		)	476
Net investment income	265			6		136		80			66			3			556
Net realized gains (losses) including OTTI	(11		)	8		14		(15		)	(72		)	3			(73		)
Interest expense	2			—		1		2			3			64			72
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—		—			(17		)	—			(17		)
Other	(24		)	9		8		(10		)	4			5			(8		)
Income tax expense (benefit)	91			5		55		10			12			(40		)	133
Net income (loss)	$	384		$	19	$	307	$	141		$	(2	)	$	(70	)	$	779

For the Three Months Ended June 30, 2013	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General		Global Reinsurance		Life		Corporate			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	1,529		$	453	$	1,630	$	292	$	487	$	—		$	4,391
Net premiums earned	1,428			351		1,563		245		480		—			4,067
Losses and loss expenses	950			293		768		93		145		1			2,250
Policy benefits	—			—		—		—		110		—			110
Policy acquisition costs	142			20		360		48		95		—			665
Administrative expenses	159			3		251		12		86		53			564
Underwriting income (loss)	177			35		184		92		44		(54		)	478
Net investment income	250			7		136		71		63		7			534
Net realized gains (losses) including OTTI	28			1		8		31		36		—			104
Interest expense	3			—		2		1		4		63			73
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—		—		11		—			11
Other	(10		)	8		17		2		3		6			26
Income tax expense (benefit)	91			8		50		7		10		(51		)	115
Net income (loss)	$	371		$	27	$	259	$	184	$	115	$	(65	)	$	891

For the Six Months Ended June 30, 2014	Insurance – North American P&C			Insurance – North American Agriculture			Insurance – Overseas General		Global Reinsurance			Life			Corporate			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	3,053		$	582		$	3,531	$	586		$	992		$	—		$	8,744
Net premiums earned	3,029			433			3,321		545			974			—			8,302
Losses and loss expenses	1,956			413			1,647		235			297			1			4,549
Policy benefits	—			—			—		—			258			—			258
Policy acquisition costs	311			28			788		127			232			—			1,486
Administrative expenses	336			2			506		28			141			88			1,101
Underwriting income (loss)	426			(10		)	380		155			46			(89		)	908
Net investment income	535			13			268		157			130			6			1,109
Net realized gains (losses) including OTTI	(20		)	6			4		(23		)	(148		)	4			(177		)
Interest expense	5			—			2		3			6			127			143
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—			—		—			(11		)	—			(11		)
Other	(44		)	17			2		(29		)	11			12			(31		)
Income tax expense (benefit)	174			(2		)	92		20			22			(80		)	226
Net income (loss)	$	806		$	(6	)	$	556	$	295		$	—		$	(138	)	$	1,513

For the Six Months Ended June 30, 2013	Insurance – North American P&C			Insurance – North American Agriculture		Insurance – Overseas General		Global Reinsurance			Life		Corporate			ACE Consolidated
(in millions of U.S. dollars)
Net premiums written	$	2,813		$	566	$	3,250	$	571		$	989	$	—		$	8,189
Net premiums earned	2,766			403		3,022		492			957		—			7,640
Losses and loss expenses	1,828			325		1,515		199			302		7			4,176
Policy benefits	—			—		—		—			241		—			241
Policy acquisition costs	285			24		699		96			175		—			1,279
Administrative expenses	284			8		487		24			171		104			1,078
Underwriting income (loss)	369			46		321		173			68		(111		)	866
Net investment income	501			13		268		143			126		14			1,065
Net realized gains (losses) including OTTI	54			1		42		51			163		(1		)	310
Interest expense	1			—		3		2			8		119			133
Other (income) expense:
(Gains) losses from fair value changes in separate account assets	—			—		—		—			7		—			7
Other	(25		)	16		16		(6		)	3		16			20
Income tax expense (benefit)	185			10		96		15			23		(92		)	237
Net income (loss)	$	763		$	34	$	516	$	356		$	316	$	(141	)	$	1,844

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:

(in millions of U.S. dollars)	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
For the Three Months Ended June 30, 2014
Insurance – North American P&C	$	423	$	1,018	$	101	$	1,542
Insurance – North American Agriculture	330		—		—		330
Insurance – Overseas General	727		395		587		1,709
Global Reinsurance	132		129		—		261
Life	—		—		490		490
	$	1,612	$	1,542	$	1,178	$	4,332
For the Three Months Ended June 30, 2013
Insurance – North American P&C	$	368	$	967	$	93	$	1,428
Insurance – North American Agriculture	351		—		—		351
Insurance – Overseas General	658		374		531		1,563
Global Reinsurance	132		113		—		245
Life	—		—		480		480
	$	1,509	$	1,454	$	1,104	$	4,067
(in millions of U.S. dollars)	Property & All Other		Casualty		Life, Accident & Health		ACE Consolidated
For the Six Months Ended June 30, 2014
Insurance – North American P&C	$	828	$	1,999	$	202	$	3,029
Insurance – North American Agriculture	433		—		—		433
Insurance – Overseas General	1,420		764		1,137		3,321
Global Reinsurance	286		259		—		545
Life	—		—		974		974
	$	2,967	$	3,022	$	2,313	$	8,302
For the Six Months Ended June 30, 2013
Insurance – North American P&C	$	715	$	1,869	$	182	$	2,766
Insurance – North American Agriculture	403		—		—		403
Insurance – Overseas General	1,243		713		1,066		3,022
Global Reinsurance	267		225		—		492
Life	—		—		957		957
	$	2,628	$	2,807	$	2,205	$	7,640