| 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 on crop derivatives as a component of underwriting income. For example, for the three months ended September 30, 2014, underwriting income in our Insurance – North American Agriculture segment was $81 million. This amount includes $45 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 September 30, 2014, Life underwriting income of $88 million includes Net investment income of $69 million and losses from fair value changes in separate account assets of $6 million.
The following tables present the Statement of Operations by segment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended September 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 | $ | 1,541 |
| | $ | 764 |
| | $ | 1,719 |
| | $ | 208 |
| | $ | 497 |
| | $ | — |
| | $ | 4,729 |
| Net premiums earned | 1,518 |
| | 766 |
| | 1,726 |
| | 255 |
| | 489 |
| | — |
| | 4,754 |
| Losses and loss expenses | 1,053 |
| | 686 |
| | 707 |
| | 92 |
| | 145 |
| | 1 |
| | 2,684 |
| Policy benefits | — |
| | — |
| | — |
| | — |
| | 125 |
| | — |
| | 125 |
| Policy acquisition costs | 169 |
| | 41 |
| | 418 |
| | 74 |
| | 123 |
| | — |
| | 825 |
| Administrative expenses | 165 |
| | 3 |
| | 258 |
| | 13 |
| | 71 |
| | 44 |
| | 554 |
| Underwriting income (loss) | 131 |
| | 36 |
| | 343 |
| | 76 |
| | 25 |
| | (45 | ) | | 566 |
| Net investment income | 277 |
| | 6 |
| | 130 |
| | 81 |
| | 69 |
| | 3 |
| | 566 |
| Net realized gains (losses) including OTTI | (5 | ) | | 45 |
| | (75 | ) | | 6 |
| | (89 | ) | | (2 | ) | | (120 | ) | Interest expense | 2 |
| | — |
| | 2 |
| | 1 |
| | 4 |
| | 61 |
| | 70 |
| Other (income) expense: | | | | | | | | | | | | | | (Gains) losses from fair value changes in separate account assets | — |
| | — |
| | — |
| | — |
| | 6 |
| | — |
| | 6 |
| Other | (31 | ) | | 7 |
| | 6 |
| | (10 | ) | | (3 | ) | | 6 |
| | (25 | ) | Income tax expense (benefit) | 73 |
| | 23 |
| | 97 |
| | 11 |
| | 12 |
| | (40 | ) | | 176 |
| Net income (loss) | $ | 359 |
| | $ | 57 |
| | $ | 293 |
| | $ | 161 |
| | $ | (14 | ) | | $ | (71 | ) | | $ | 785 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended September 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 | $ | 1,500 |
| | $ | 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 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Nine Months Ended September 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 | $ | 4,594 |
| | $ | 1,346 |
| | $ | 5,250 |
| | $ | 794 |
| | $ | 1,489 |
| | $ | — |
| | $ | 13,473 |
| Net premiums earned | 4,547 |
| | 1,199 |
| | 5,047 |
| | 800 |
| | 1,463 |
| | — |
| | 13,056 |
| Losses and loss expenses | 3,009 |
| | 1,099 |
| | 2,354 |
| | 327 |
| | 442 |
| | 2 |
| | 7,233 |
| Policy benefits | — |
| | — |
| | — |
| | — |
| | 383 |
| | — |
| | 383 |
| Policy acquisition costs | 480 |
| | 69 |
| | 1,206 |
| | 201 |
| | 355 |
| | — |
| | 2,311 |
| Administrative expenses | 501 |
| | 5 |
| | 764 |
| | 41 |
| | 212 |
| | 132 |
| | 1,655 |
| Underwriting income (loss) | 557 |
| | 26 |
| | 723 |
| | 231 |
| | 71 |
| | (134 | ) | | 1,474 |
| Net investment income | 812 |
| | 19 |
| | 398 |
| | 238 |
| | 199 |
| | 9 |
| | 1,675 |
| Net realized gains (losses) including OTTI | (25 | ) | | 51 |
| | (71 | ) | | (17 | ) | | (237 | ) | | 2 |
| | (297 | ) | Interest expense | 7 |
| | — |
| | 4 |
| | 4 |
| | 10 |
| | 188 |
| | 213 |
| Other (income) expense: | | | | | | | | | | | | | | (Gains) losses from fair value changes in separate account assets | — |
| | — |
| | — |
| | — |
| | (5 | ) | | — |
| | (5 | ) | Other | (75 | ) | | 24 |
| | 8 |
| | (39 | ) | | 8 |
| | 18 |
| | (56 | ) | Income tax expense (benefit) | 247 |
| | 21 |
| | 189 |
| | 31 |
| | 34 |
| | (120 | ) | | 402 |
| Net income (loss) | $ | 1,165 |
| | $ | 51 |
| | $ | 849 |
| | $ | 456 |
| | $ | (14 | ) | | $ | (209 | ) | | $ | 2,298 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Nine Months Ended September 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 | $ | 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 |
|
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 September 30, 2014 | | | | Insurance – North American P&C | $ | 420 |
| | $ | 993 |
| | $ | 105 |
| | $ | 1,518 |
| Insurance – North American Agriculture | 766 |
| | — |
| | — |
| | 766 |
| Insurance – Overseas General | 744 |
| | 394 |
| | 588 |
| | 1,726 |
| Global Reinsurance | 149 |
| | 106 |
| | — |
| | 255 |
| Life | — |
| | — |
| | 489 |
| | 489 |
| | $ | 2,079 |
| | $ | 1,493 |
| | $ | 1,182 |
| | $ | 4,754 |
| For the Three Months Ended September 30, 2013 | | | | | | | | 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 |
| | | | | | | | | (in millions of U.S. dollars) | Property &
All Other |
| | Casualty |
| | Life,
Accident &
Health |
| | ACE
Consolidated |
| For the Nine Months Ended September 30, 2014 | | | | Insurance – North American P&C | $ | 1,248 |
| | $ | 2,992 |
| | $ | 307 |
| | $ | 4,547 |
| Insurance – North American Agriculture | 1,199 |
| | — |
| | — |
| | 1,199 |
| Insurance – Overseas General | 2,164 |
| | 1,158 |
| | 1,725 |
| | 5,047 |
| Global Reinsurance | 435 |
| | 365 |
| | — |
| | 800 |
| Life | — |
| | — |
| | 1,463 |
| | 1,463 |
| | $ | 5,046 |
| | $ | 4,515 |
| | $ | 3,495 |
| | $ | 13,056 |
| For the Nine Months Ended September 30, 2013 | | | | | | | | 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 |
|
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