þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Switzerland
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98-0091805
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Page
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Part I.
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FINANCIAL INFORMATION
|
|
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Item 1.
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Note 1.
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Note 2.
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Note 3.
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Note 4.
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Note 5.
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Note 6.
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Note 7.
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Note 8.
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Note 9.
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Note 10.
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Note 11.
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Note 12.
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Item 2.
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Item 3.
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Item 4.
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Part II.
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OTHER INFORMATION
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Item 1.
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|||
Item 1A.
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Item 2.
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Item 6.
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September 30
|
|
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December 31
|
|
||
(in millions of U.S. dollars, except share and per share data)
|
2014
|
|
|
2013
|
|
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Assets
|
|
|
|
||||
Investments
|
|
|
|
||||
Fixed maturities available for sale, at fair value (amortized cost – $47,688 and $48,406)
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$
|
49,148
|
|
|
$
|
49,254
|
|
(includes hybrid financial instruments of $279 and $302)
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|||||||
Fixed maturities held to maturity, at amortized cost (fair value – $7,763 and $6,263)
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7,548
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6,098
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|
||
Equity securities, at fair value (cost – $480 and $841)
|
546
|
|
|
837
|
|
||
Short-term investments, at fair value and amortized cost
|
2,753
|
|
|
1,763
|
|
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Other investments (cost – $2,910 and $2,671)
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3,259
|
|
|
2,976
|
|
||
Total investments
|
63,254
|
|
|
60,928
|
|
||
Cash
|
806
|
|
|
579
|
|
||
Securities lending collateral
|
1,440
|
|
|
1,632
|
|
||
Accrued investment income
|
567
|
|
|
556
|
|
||
Insurance and reinsurance balances receivable
|
5,189
|
|
|
5,026
|
|
||
Reinsurance recoverable on losses and loss expenses
|
10,945
|
|
|
11,227
|
|
||
Reinsurance recoverable on policy benefits
|
228
|
|
|
218
|
|
||
Deferred policy acquisition costs
|
2,592
|
|
|
2,313
|
|
||
Value of business acquired
|
491
|
|
|
536
|
|
||
Goodwill and other intangible assets
|
5,425
|
|
|
5,404
|
|
||
Prepaid reinsurance premiums
|
1,711
|
|
|
1,675
|
|
||
Deferred tax assets
|
408
|
|
|
616
|
|
||
Investments in partially-owned insurance companies
|
495
|
|
|
470
|
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Other assets
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4,006
|
|
|
3,330
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||
Total assets
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$
|
97,557
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$
|
94,510
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Liabilities
|
|
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Unpaid losses and loss expenses
|
$
|
37,447
|
|
|
$
|
37,443
|
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Unearned premiums
|
8,020
|
|
|
7,539
|
|
||
Future policy benefits
|
4,782
|
|
|
4,615
|
|
||
Insurance and reinsurance balances payable
|
3,804
|
|
|
3,628
|
|
||
Securities lending payable
|
1,441
|
|
|
1,633
|
|
||
Accounts payable, accrued expenses, and other liabilities
|
5,829
|
|
|
4,810
|
|
||
Short-term debt
|
1,851
|
|
|
1,901
|
|
||
Long-term debt
|
4,057
|
|
|
3,807
|
|
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Trust preferred securities
|
309
|
|
|
309
|
|
||
Total liabilities
|
67,540
|
|
|
65,685
|
|
||
Commitments and contingencies
|
|
|
|
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Shareholders’ equity
|
|
|
|
||||
Common Shares (CHF 25.40 and CHF 27.04 par value; 342,832,412 shares issued; 332,111,557 and 339,793,935 shares outstanding)
|
8,278
|
|
|
8,899
|
|
||
Common Shares in treasury (10,720,855 and 3,038,477 shares)
|
(1,057
|
)
|
|
(255
|
)
|
||
Additional paid-in capital
|
5,099
|
|
|
5,238
|
|
||
Retained earnings
|
16,089
|
|
|
13,791
|
|
||
Accumulated other comprehensive income (AOCI)
|
1,608
|
|
|
1,152
|
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||
Total shareholders’ equity
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30,017
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|
|
28,825
|
|
||
Total liabilities and shareholders’ equity
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$
|
97,557
|
|
|
$
|
94,510
|
|
|
Three Months Ended
|
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Nine Months Ended
|
|
||||||||||
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September 30
|
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|
September 30
|
|
||||||||||
(in millions of U.S. dollars, except per share data)
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2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
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Revenues
|
|
|
|
|
|
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|
||||||||
Net premiums written
|
$
|
4,729
|
|
|
$
|
4,620
|
|
|
$
|
13,473
|
|
|
$
|
12,809
|
|
Decrease (increase) in unearned premiums
|
25
|
|
|
(10
|
)
|
|
(417
|
)
|
|
(559
|
)
|
||||
Net premiums earned
|
4,754
|
|
|
4,610
|
|
|
13,056
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|
|
12,250
|
|
||||
Net investment income
|
566
|
|
|
522
|
|
|
1,675
|
|
|
1,587
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|
||||
Net realized gains (losses):
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment (OTTI) losses gross
|
(5
|
)
|
|
(4
|
)
|
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(30
|
)
|
|
(14
|
)
|
||||
Portion of OTTI losses recognized in other comprehensive income (OCI)
|
1
|
|
|
—
|
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3
|
|
|
—
|
|
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Net OTTI losses recognized in income
|
(4
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)
|
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(4
|
)
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(27
|
)
|
|
(14
|
)
|
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Net realized gains (losses) excluding OTTI losses
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(116
|
)
|
|
44
|
|
|
(270
|
)
|
|
364
|
|
||||
Total net realized gains (losses) (includes $(38), $24, $(11), and $97 reclassified from AOCI)
|
(120
|
)
|
|
40
|
|
|
(297
|
)
|
|
350
|
|
||||
Total revenues
|
5,200
|
|
|
5,172
|
|
|
14,434
|
|
|
14,187
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
2,684
|
|
|
2,655
|
|
|
7,233
|
|
|
6,831
|
|
||||
Policy benefits
|
125
|
|
|
138
|
|
|
383
|
|
|
379
|
|
||||
Policy acquisition costs
|
825
|
|
|
678
|
|
|
2,311
|
|
|
1,957
|
|
||||
Administrative expenses
|
554
|
|
|
563
|
|
|
1,655
|
|
|
1,641
|
|
||||
Interest expense
|
70
|
|
|
72
|
|
|
213
|
|
|
205
|
|
||||
Other (income) expense
|
(19
|
)
|
|
(5
|
)
|
|
(61
|
)
|
|
22
|
|
||||
Total expenses
|
4,239
|
|
|
4,101
|
|
|
11,734
|
|
|
11,035
|
|
||||
Income before income tax
|
961
|
|
|
1,071
|
|
|
2,700
|
|
|
3,152
|
|
||||
Income tax expense (includes $5, $4, $7, and $16 on reclassified unrealized gains and losses)
|
176
|
|
|
155
|
|
|
402
|
|
|
392
|
|
||||
Net income
|
$
|
785
|
|
|
$
|
916
|
|
|
$
|
2,298
|
|
|
$
|
2,760
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Unrealized appreciation (depreciation)
|
$
|
(375
|
)
|
|
$
|
16
|
|
|
$
|
733
|
|
|
$
|
(1,570
|
)
|
Reclassification adjustment for net realized (gains) losses included in net income
|
38
|
|
|
(24
|
)
|
|
11
|
|
|
(97
|
)
|
||||
|
(337
|
)
|
|
(8
|
)
|
|
744
|
|
|
(1,667
|
)
|
||||
Change in:
|
|
|
|
|
|
|
|
||||||||
Cumulative translation adjustment
|
(251
|
)
|
|
149
|
|
|
(131
|
)
|
|
(237
|
)
|
||||
Pension liability
|
7
|
|
|
(2
|
)
|
|
(6
|
)
|
|
17
|
|
||||
Other comprehensive income (loss), before income tax
|
(581
|
)
|
|
139
|
|
|
607
|
|
|
(1,887
|
)
|
||||
Income tax (expense) benefit related to OCI items
|
94
|
|
|
(25
|
)
|
|
(151
|
)
|
|
374
|
|
||||
Other comprehensive income (loss)
|
(487
|
)
|
|
114
|
|
|
456
|
|
|
(1,513
|
)
|
||||
Comprehensive income
|
$
|
298
|
|
|
$
|
1,030
|
|
|
$
|
2,754
|
|
|
$
|
1,247
|
|
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
2.35
|
|
|
$
|
2.68
|
|
|
$
|
6.82
|
|
|
$
|
8.09
|
|
Diluted earnings per share
|
$
|
2.32
|
|
|
$
|
2.66
|
|
|
$
|
6.75
|
|
|
$
|
8.02
|
|
|
Nine Months Ended
|
|
|||||
|
September 30
|
|
|||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
||
Common Shares
|
|
|
|
||||
Balance – beginning of period
|
$
|
8,899
|
|
|
$
|
9,591
|
|
Dividends declared on Common Shares – par value reduction
|
(621
|
)
|
|
(518
|
)
|
||
Balance – end of period
|
8,278
|
|
|
9,073
|
|
||
Common Shares in treasury
|
|
|
|
||||
Balance – beginning of period
|
(255
|
)
|
|
(159
|
)
|
||
Common Shares repurchased
|
(1,019
|
)
|
|
(233
|
)
|
||
Net shares redeemed under employee share-based compensation plans
|
217
|
|
|
170
|
|
||
Balance – end of period
|
(1,057
|
)
|
|
(222
|
)
|
||
Additional paid-in capital
|
|
|
|
||||
Balance – beginning of period
|
5,238
|
|
|
5,179
|
|
||
Net shares redeemed under employee share-based compensation plans
|
(167
|
)
|
|
(129
|
)
|
||
Exercise of stock options
|
(44
|
)
|
|
(34
|
)
|
||
Share-based compensation expense and other
|
153
|
|
|
184
|
|
||
Funding of dividends declared to Retained earnings
|
(81
|
)
|
|
—
|
|
||
Balance – end of period
|
5,099
|
|
|
5,200
|
|
||
Retained earnings
|
|
|
|
||||
Balance – beginning of period
|
13,791
|
|
|
10,033
|
|
||
Net income
|
2,298
|
|
|
2,760
|
|
||
Funding of dividends declared from Additional paid-in capital
|
81
|
|
|
—
|
|
||
Dividends declared on Common Shares
|
(81
|
)
|
|
—
|
|
||
Balance – end of period
|
16,089
|
|
|
12,793
|
|
||
Accumulated other comprehensive income
|
|
|
|
||||
Net unrealized appreciation on investments
|
|
|
|
||||
Balance – beginning of period
|
1,174
|
|
|
2,633
|
|
||
Change in period, before reclassification from AOCI, net of income tax (expense) benefit of $(168) and $337
|
565
|
|
|
(1,233
|
)
|
||
Amounts reclassified from AOCI, net of income tax benefit of $7 and $16
|
18
|
|
|
(81
|
)
|
||
Change in period, net of income tax (expense) benefit of $(161) and $353
|
583
|
|
|
(1,314
|
)
|
||
Balance – end of period
|
1,757
|
|
|
1,319
|
|
||
Cumulative translation adjustment
|
|
|
|
||||
Balance – beginning of period
|
63
|
|
|
339
|
|
||
Change in period, net of income tax benefit of $7 and $27
|
(124
|
)
|
|
(210
|
)
|
||
Balance – end of period
|
(61
|
)
|
|
129
|
|
||
Pension liability adjustment
|
|
|
|
||||
Balance – beginning of period
|
(85
|
)
|
|
(85
|
)
|
||
Change in period, net of income tax (expense) benefit of $3 and $(6)
|
(3
|
)
|
|
11
|
|
||
Balance – end of period
|
(88
|
)
|
|
(74
|
)
|
||
Accumulated other comprehensive income
|
1,608
|
|
|
1,374
|
|
||
Total shareholders’ equity
|
$
|
30,017
|
|
|
$
|
28,218
|
|
|
Nine Months Ended
|
|
|||||
|
September 30
|
|
|||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
2,298
|
|
|
$
|
2,760
|
|
Adjustments to reconcile net income to net cash flows from operating activities
|
|
|
|
||||
Net realized (gains) losses
|
297
|
|
|
(350
|
)
|
||
Amortization of premiums/discounts on fixed maturities
|
159
|
|
|
207
|
|
||
Deferred income taxes
|
41
|
|
|
169
|
|
||
Unpaid losses and loss expenses
|
180
|
|
|
33
|
|
||
Unearned premiums
|
449
|
|
|
603
|
|
||
Future policy benefits
|
181
|
|
|
149
|
|
||
Insurance and reinsurance balances payable
|
181
|
|
|
163
|
|
||
Accounts payable, accrued expenses, and other liabilities
|
(130
|
)
|
|
(176
|
)
|
||
Income taxes payable
|
94
|
|
|
2
|
|
||
Insurance and reinsurance balances receivable
|
(191
|
)
|
|
(657
|
)
|
||
Reinsurance recoverable on losses and loss expenses
|
253
|
|
|
550
|
|
||
Reinsurance recoverable on policy benefits
|
(6
|
)
|
|
6
|
|
||
Deferred policy acquisition costs
|
(306
|
)
|
|
(391
|
)
|
||
Prepaid reinsurance premiums
|
(41
|
)
|
|
(69
|
)
|
||
Other
|
(237
|
)
|
|
(263
|
)
|
||
Net cash flows from operating activities
|
3,222
|
|
|
2,736
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of fixed maturities available for sale
|
(11,867
|
)
|
|
(16,360
|
)
|
||
Purchases of to be announced mortgage-backed securities
|
—
|
|
|
(54
|
)
|
||
Purchases of fixed maturities held to maturity
|
(185
|
)
|
|
(374
|
)
|
||
Purchases of equity securities
|
(222
|
)
|
|
(217
|
)
|
||
Sales of fixed maturities available for sale
|
6,306
|
|
|
7,982
|
|
||
Sales of to be announced mortgage-backed securities
|
—
|
|
|
30
|
|
||
Sales of equity securities
|
322
|
|
|
99
|
|
||
Maturities and redemptions of fixed maturities available for sale
|
4,814
|
|
|
5,538
|
|
||
Maturities and redemptions of fixed maturities held to maturity
|
617
|
|
|
1,233
|
|
||
Net change in short-term investments
|
(984
|
)
|
|
525
|
|
||
Net derivative instruments settlements
|
(170
|
)
|
|
(376
|
)
|
||
Acquisition of subsidiaries (net of cash acquired of $4 and $38)
|
(172
|
)
|
|
(977
|
)
|
||
Other
|
(147
|
)
|
|
(188
|
)
|
||
Net cash flows used for investing activities
|
(1,688
|
)
|
|
(3,139
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Dividends paid on Common Shares
|
(646
|
)
|
|
(343
|
)
|
||
Common Shares repurchased
|
(1,007
|
)
|
|
(233
|
)
|
||
Proceeds from issuance of long-term debt
|
699
|
|
|
947
|
|
||
Proceeds from issuance of short-term debt
|
1,827
|
|
|
1,721
|
|
||
Repayment of long-term debt
|
(501
|
)
|
|
—
|
|
||
Repayment of short-term debt
|
(1,827
|
)
|
|
(1,720
|
)
|
||
Proceeds from share-based compensation plans, including windfall tax benefits
|
94
|
|
|
112
|
|
||
Other
|
121
|
|
|
68
|
|
||
Net cash flows (used for) from financing activities
|
(1,240
|
)
|
|
552
|
|
||
Effect of foreign currency rate changes on cash and cash equivalents
|
(67
|
)
|
|
4
|
|
||
Net increase in cash
|
227
|
|
|
153
|
|
||
Cash – beginning of period
|
579
|
|
|
615
|
|
||
Cash – end of period
|
$
|
806
|
|
|
$
|
768
|
|
Supplemental cash flow information
|
|
|
|
||||
Taxes paid
|
$
|
250
|
|
|
$
|
150
|
|
Interest paid
|
$
|
186
|
|
|
$
|
169
|
|
September 30, 2014
|
Amortized
Cost
|
|
|
Gross
Unrealized
Appreciation
|
|
|
Gross
Unrealized
Depreciation
|
|
|
Fair
Value
|
|
|
OTTI Recognized
in AOCI
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Available for sale
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency
|
$
|
2,627
|
|
|
$
|
70
|
|
|
$
|
(19
|
)
|
|
$
|
2,678
|
|
|
$
|
—
|
|
Foreign
|
14,741
|
|
|
542
|
|
|
(52
|
)
|
|
15,231
|
|
|
(1
|
)
|
|||||
Corporate securities
|
16,715
|
|
|
716
|
|
|
(93
|
)
|
|
17,338
|
|
|
(2
|
)
|
|||||
Mortgage-backed securities
|
10,159
|
|
|
237
|
|
|
(72
|
)
|
|
10,324
|
|
|
(1
|
)
|
|||||
States, municipalities, and political subdivisions
|
3,446
|
|
|
138
|
|
|
(7
|
)
|
|
3,577
|
|
|
—
|
|
|||||
|
$
|
47,688
|
|
|
$
|
1,703
|
|
|
$
|
(243
|
)
|
|
$
|
49,148
|
|
|
$
|
(4
|
)
|
Held to maturity
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency
|
$
|
804
|
|
|
$
|
16
|
|
|
$
|
(3
|
)
|
|
$
|
817
|
|
|
$
|
—
|
|
Foreign
|
937
|
|
|
42
|
|
|
(1
|
)
|
|
978
|
|
|
—
|
|
|||||
Corporate securities
|
2,443
|
|
|
86
|
|
|
(4
|
)
|
|
2,525
|
|
|
—
|
|
|||||
Mortgage-backed securities
|
2,087
|
|
|
46
|
|
|
(3
|
)
|
|
2,130
|
|
|
—
|
|
|||||
States, municipalities, and political subdivisions
|
1,277
|
|
|
38
|
|
|
(2
|
)
|
|
1,313
|
|
|
—
|
|
|||||
|
$
|
7,548
|
|
|
$
|
228
|
|
|
$
|
(13
|
)
|
|
$
|
7,763
|
|
|
$
|
—
|
|
December 31, 2013
|
Amortized
Cost
|
|
|
Gross
Unrealized
Appreciation
|
|
|
Gross
Unrealized
Depreciation
|
|
|
Fair
Value
|
|
|
OTTI Recognized
in AOCI
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Available for sale
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency
|
$
|
2,946
|
|
|
$
|
62
|
|
|
$
|
(59
|
)
|
|
$
|
2,949
|
|
|
$
|
—
|
|
Foreign
|
14,336
|
|
|
377
|
|
|
(122
|
)
|
|
14,591
|
|
|
—
|
|
|||||
Corporate securities
|
16,825
|
|
|
777
|
|
|
(132
|
)
|
|
17,470
|
|
|
(6
|
)
|
|||||
Mortgage-backed securities
|
10,937
|
|
|
184
|
|
|
(227
|
)
|
|
10,894
|
|
|
(34
|
)
|
|||||
States, municipalities, and political subdivisions
|
3,362
|
|
|
65
|
|
|
(77
|
)
|
|
3,350
|
|
|
—
|
|
|||||
|
$
|
48,406
|
|
|
$
|
1,465
|
|
|
$
|
(617
|
)
|
|
$
|
49,254
|
|
|
$
|
(40
|
)
|
Held to maturity
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency
|
$
|
820
|
|
|
$
|
16
|
|
|
$
|
(4
|
)
|
|
$
|
832
|
|
|
$
|
—
|
|
Foreign
|
864
|
|
|
33
|
|
|
—
|
|
|
897
|
|
|
—
|
|
|||||
Corporate securities
|
1,922
|
|
|
83
|
|
|
—
|
|
|
2,005
|
|
|
—
|
|
|||||
Mortgage-backed securities
|
1,341
|
|
|
39
|
|
|
(1
|
)
|
|
1,379
|
|
|
—
|
|
|||||
States, municipalities, and political subdivisions
|
1,151
|
|
|
16
|
|
|
(17
|
)
|
|
1,150
|
|
|
—
|
|
|||||
|
$
|
6,098
|
|
|
$
|
187
|
|
|
$
|
(22
|
)
|
|
$
|
6,263
|
|
|
$
|
—
|
|
|
|
|
September 30
|
|
|
|
|
December 31
|
|
||||||
|
|
|
2014
|
|
|
|
|
2013
|
|
||||||
(in millions of U.S. dollars)
|
Amortized Cost
|
|
|
Fair Value
|
|
|
Amortized Cost
|
|
|
Fair Value
|
|
||||
Available for sale
|
|
|
|
|
|
|
|
||||||||
Due in 1 year or less
|
$
|
2,292
|
|
|
$
|
2,316
|
|
|
$
|
2,387
|
|
|
$
|
2,411
|
|
Due after 1 year through 5 years
|
14,833
|
|
|
15,310
|
|
|
14,139
|
|
|
14,602
|
|
||||
Due after 5 years through 10 years
|
15,872
|
|
|
16,323
|
|
|
16,200
|
|
|
16,535
|
|
||||
Due after 10 years
|
4,532
|
|
|
4,875
|
|
|
4,743
|
|
|
4,812
|
|
||||
|
37,529
|
|
|
38,824
|
|
|
37,469
|
|
|
38,360
|
|
||||
Mortgage-backed securities
|
10,159
|
|
|
10,324
|
|
|
10,937
|
|
|
10,894
|
|
||||
|
$
|
47,688
|
|
|
$
|
49,148
|
|
|
$
|
48,406
|
|
|
$
|
49,254
|
|
Held to maturity
|
|
|
|
|
|
|
|
||||||||
Due in 1 year or less
|
$
|
417
|
|
|
$
|
421
|
|
|
$
|
401
|
|
|
$
|
405
|
|
Due after 1 year through 5 years
|
2,670
|
|
|
2,763
|
|
|
2,284
|
|
|
2,363
|
|
||||
Due after 5 years through 10 years
|
1,401
|
|
|
1,443
|
|
|
1,686
|
|
|
1,723
|
|
||||
Due after 10 years
|
973
|
|
|
1,006
|
|
|
386
|
|
|
393
|
|
||||
|
5,461
|
|
|
5,633
|
|
|
4,757
|
|
|
4,884
|
|
||||
Mortgage-backed securities
|
2,087
|
|
|
2,130
|
|
|
1,341
|
|
|
1,379
|
|
||||
|
$
|
7,548
|
|
|
$
|
7,763
|
|
|
$
|
6,098
|
|
|
$
|
6,263
|
|
|
September 30
|
|
|
December 31
|
|
||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
||
Cost
|
$
|
480
|
|
|
$
|
841
|
|
Gross unrealized appreciation
|
71
|
|
|
63
|
|
||
Gross unrealized depreciation
|
(5
|
)
|
|
(67
|
)
|
||
Fair value
|
$
|
546
|
|
|
$
|
837
|
|
•
|
the amount of time a security has been in a loss position and the magnitude of the loss position;
|
•
|
the period in which cost is expected to be recovered, if at all, based on various criteria including economic conditions and other issuer-specific developments; and
|
•
|
ACE’s ability and intent to hold the security to the expected recovery period.
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
OTTI on fixed maturities, gross
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
|
$
|
(20
|
)
|
|
$
|
(11
|
)
|
OTTI on fixed maturities recognized in OCI (pre-tax)
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
OTTI on fixed maturities, net
|
(4
|
)
|
|
(4
|
)
|
|
(17
|
)
|
|
(11
|
)
|
||||
Gross realized gains excluding OTTI
|
73
|
|
|
37
|
|
|
163
|
|
|
163
|
|
||||
Gross realized losses excluding OTTI
|
(51
|
)
|
|
(16
|
)
|
|
(97
|
)
|
|
(68
|
)
|
||||
Total fixed maturities
|
18
|
|
|
17
|
|
|
49
|
|
|
84
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
OTTI on equity securities
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(1
|
)
|
||||
Gross realized gains excluding OTTI
|
4
|
|
|
8
|
|
|
8
|
|
|
18
|
|
||||
Gross realized losses excluding OTTI
|
(60
|
)
|
|
(1
|
)
|
|
(61
|
)
|
|
(4
|
)
|
||||
Total equity securities
|
(56
|
)
|
|
7
|
|
|
(60
|
)
|
|
13
|
|
||||
OTTI on other investments
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(2
|
)
|
||||
Foreign exchange gains (losses)
|
(19
|
)
|
|
(26
|
)
|
|
(42
|
)
|
|
45
|
|
||||
Investment and embedded derivative instruments
|
(13
|
)
|
|
4
|
|
|
(53
|
)
|
|
62
|
|
||||
Fair value adjustments on insurance derivative
|
(80
|
)
|
|
134
|
|
|
(126
|
)
|
|
563
|
|
||||
S&P put options and futures
|
(15
|
)
|
|
(95
|
)
|
|
(106
|
)
|
|
(413
|
)
|
||||
Other derivative instruments
|
45
|
|
|
(1
|
)
|
|
52
|
|
|
(2
|
)
|
||||
Other
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||
Net realized gains (losses)
|
$
|
(120
|
)
|
|
$
|
40
|
|
|
$
|
(297
|
)
|
|
$
|
350
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Balance of credit losses related to securities still held – beginning of period
|
$
|
24
|
|
|
$
|
40
|
|
|
$
|
37
|
|
|
$
|
43
|
|
Additions where no OTTI was previously recorded
|
2
|
|
|
1
|
|
|
9
|
|
|
5
|
|
||||
Additions where an OTTI was previously recorded
|
2
|
|
|
—
|
|
|
5
|
|
|
3
|
|
||||
Reductions for securities sold during the period
|
(11
|
)
|
|
(3
|
)
|
|
(34
|
)
|
|
(13
|
)
|
||||
Balance of credit losses related to securities still held – end of period
|
$
|
17
|
|
|
$
|
38
|
|
|
$
|
17
|
|
|
$
|
38
|
|
|
0 – 12 Months
|
|
|
Over 12 Months
|
|
|
Total
|
|
|||||||||||||||
September 30, 2014
|
Fair Value
|
|
|
Gross
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Loss
|
|
||||||
(in millions of U.S. dollars)
|
|
|
|
|
|
||||||||||||||||||
U.S. Treasury and agency
|
$
|
439
|
|
|
$
|
(2
|
)
|
|
$
|
943
|
|
|
$
|
(20
|
)
|
|
$
|
1,382
|
|
|
$
|
(22
|
)
|
Foreign
|
2,420
|
|
|
(34
|
)
|
|
916
|
|
|
(19
|
)
|
|
3,336
|
|
|
(53
|
)
|
||||||
Corporate securities
|
4,943
|
|
|
(72
|
)
|
|
854
|
|
|
(25
|
)
|
|
5,797
|
|
|
(97
|
)
|
||||||
Mortgage-backed securities
|
2,206
|
|
|
(11
|
)
|
|
2,050
|
|
|
(64
|
)
|
|
4,256
|
|
|
(75
|
)
|
||||||
States, municipalities, and political subdivisions
|
311
|
|
|
(1
|
)
|
|
673
|
|
|
(8
|
)
|
|
984
|
|
|
(9
|
)
|
||||||
Total fixed maturities
|
10,319
|
|
|
(120
|
)
|
|
5,436
|
|
|
(136
|
)
|
|
15,755
|
|
|
(256
|
)
|
||||||
Equity securities
|
67
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
67
|
|
|
(5
|
)
|
||||||
Other investments
|
78
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
78
|
|
|
(3
|
)
|
||||||
Total
|
$
|
10,464
|
|
|
$
|
(128
|
)
|
|
$
|
5,436
|
|
|
$
|
(136
|
)
|
|
$
|
15,900
|
|
|
$
|
(264
|
)
|
|
0 – 12 Months
|
|
|
Over 12 Months
|
|
|
Total
|
|
|||||||||||||||
December 31, 2013
|
Fair Value
|
|
|
Gross
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Gross
Unrealized
Loss
|
|
||||||
(in millions of U.S. dollars)
|
|
|
|
|
|
||||||||||||||||||
U.S. Treasury and agency
|
$
|
1,794
|
|
|
$
|
(57
|
)
|
|
$
|
31
|
|
|
$
|
(6
|
)
|
|
$
|
1,825
|
|
|
$
|
(63
|
)
|
Foreign
|
4,621
|
|
|
(114
|
)
|
|
201
|
|
|
(8
|
)
|
|
4,822
|
|
|
(122
|
)
|
||||||
Corporate securities
|
3,836
|
|
|
(118
|
)
|
|
194
|
|
|
(14
|
)
|
|
4,030
|
|
|
(132
|
)
|
||||||
Mortgage-backed securities
|
5,248
|
|
|
(197
|
)
|
|
384
|
|
|
(31
|
)
|
|
5,632
|
|
|
(228
|
)
|
||||||
States, municipalities, and political subdivisions
|
2,164
|
|
|
(90
|
)
|
|
84
|
|
|
(4
|
)
|
|
2,248
|
|
|
(94
|
)
|
||||||
Total fixed maturities
|
17,663
|
|
|
(576
|
)
|
|
894
|
|
|
(63
|
)
|
|
18,557
|
|
|
(639
|
)
|
||||||
Equity securities
|
498
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
498
|
|
|
(67
|
)
|
||||||
Other investments
|
67
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
67
|
|
|
(9
|
)
|
||||||
Total
|
$
|
18,228
|
|
|
$
|
(652
|
)
|
|
$
|
894
|
|
|
$
|
(63
|
)
|
|
$
|
19,122
|
|
|
$
|
(715
|
)
|
|
September 30
|
|
|
December 31
|
|
||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
||
Trust funds
|
$
|
10,497
|
|
|
$
|
11,315
|
|
Deposits with non-U.S. regulatory authorities
|
2,014
|
|
|
1,970
|
|
||
Assets pledged under repurchase agreements
|
1,454
|
|
|
1,435
|
|
||
Deposits with U.S. regulatory authorities
|
1,324
|
|
|
1,334
|
|
||
Other pledged assets
|
435
|
|
|
391
|
|
||
|
$
|
15,724
|
|
|
$
|
16,445
|
|
•
|
Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets;
|
•
|
Level 2 – Includes, among other items, inputs other than quoted prices that are observable for the asset or liability such as
|
•
|
Level 3 – Inputs that are unobservable and reflect management’s judgments about assumptions that market participants
|
September 30, 2014
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
(in millions of U.S. dollars)
|
|
|
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities available for sale
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency
|
$
|
1,490
|
|
|
$
|
1,188
|
|
|
$
|
—
|
|
|
$
|
2,678
|
|
Foreign
|
202
|
|
|
15,017
|
|
|
12
|
|
|
15,231
|
|
||||
Corporate securities
|
—
|
|
|
17,130
|
|
|
208
|
|
|
17,338
|
|
||||
Mortgage-backed securities
|
—
|
|
|
10,309
|
|
|
15
|
|
|
10,324
|
|
||||
States, municipalities, and political subdivisions
|
—
|
|
|
3,577
|
|
|
—
|
|
|
3,577
|
|
||||
|
1,692
|
|
|
47,221
|
|
|
235
|
|
|
49,148
|
|
||||
Equity securities
|
520
|
|
|
24
|
|
|
2
|
|
|
546
|
|
||||
Short-term investments
|
1,253
|
|
|
1,500
|
|
|
—
|
|
|
2,753
|
|
||||
Other investments
|
336
|
|
|
252
|
|
|
2,671
|
|
|
3,259
|
|
||||
Securities lending collateral
|
—
|
|
|
1,440
|
|
|
—
|
|
|
1,440
|
|
||||
Investment derivative instruments
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
Other derivative instruments
|
11
|
|
|
2
|
|
|
—
|
|
|
13
|
|
||||
Separate account assets
|
1,389
|
|
|
90
|
|
|
—
|
|
|
1,479
|
|
||||
Total assets measured at fair value
|
$
|
5,224
|
|
|
$
|
50,529
|
|
|
$
|
2,908
|
|
|
$
|
58,661
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Investment derivative instruments
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Other derivative instruments
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
GLB
(1)
|
—
|
|
|
—
|
|
|
317
|
|
|
317
|
|
||||
Total liabilities measured at fair value
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
317
|
|
|
$
|
324
|
|
(1)
|
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
|
December 31, 2013
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
(in millions of U.S. dollars)
|
|
|
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities available for sale
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury and agency
|
$
|
1,626
|
|
|
$
|
1,323
|
|
|
$
|
—
|
|
|
$
|
2,949
|
|
Foreign
|
223
|
|
|
14,324
|
|
|
44
|
|
|
14,591
|
|
||||
Corporate securities
|
—
|
|
|
17,304
|
|
|
166
|
|
|
17,470
|
|
||||
Mortgage-backed securities
|
—
|
|
|
10,886
|
|
|
8
|
|
|
10,894
|
|
||||
States, municipalities, and political subdivisions
|
—
|
|
|
3,350
|
|
|
—
|
|
|
3,350
|
|
||||
|
1,849
|
|
|
47,187
|
|
|
218
|
|
|
49,254
|
|
||||
Equity securities
|
373
|
|
|
460
|
|
|
4
|
|
|
837
|
|
||||
Short-term investments
|
953
|
|
|
803
|
|
|
7
|
|
|
1,763
|
|
||||
Other investments
|
305
|
|
|
231
|
|
|
2,440
|
|
|
2,976
|
|
||||
Securities lending collateral
|
—
|
|
|
1,632
|
|
|
—
|
|
|
1,632
|
|
||||
Investment derivative instruments
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||
Other derivative instruments
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Separate account assets
|
1,145
|
|
|
81
|
|
|
—
|
|
|
1,226
|
|
||||
Total assets measured at fair value
|
$
|
4,644
|
|
|
$
|
50,400
|
|
|
$
|
2,669
|
|
|
$
|
57,713
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Investment derivative instruments
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
Other derivative instruments
|
60
|
|
|
2
|
|
|
—
|
|
|
62
|
|
||||
GLB
(1)
|
—
|
|
|
—
|
|
|
193
|
|
|
193
|
|
||||
Total liabilities measured at fair value
|
$
|
66
|
|
|
$
|
2
|
|
|
$
|
193
|
|
|
$
|
261
|
|
(1)
|
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note
5
for additional information.
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Transfers from Level 1 to Level 2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Transfers from Level 2 to Level 1
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
September 30
|
|
|
|
|
December 31
|
|
||||||
|
Expected
Liquidation
Period of Underlying Assets
|
|
|
|
2014
|
|
|
|
|
2013
|
|
||||||
(in millions of U.S. dollars)
|
Fair
Value
|
|
|
Maximum
Future Funding
Commitments
|
|
|
Fair
Value
|
|
|
Maximum
Future Funding
Commitments
|
|
||||||
Financial
|
5 to 9 Years
|
|
$
|
266
|
|
|
$
|
127
|
|
|
$
|
256
|
|
|
$
|
129
|
|
Real estate
|
3 to 9 Years
|
|
304
|
|
|
43
|
|
|
322
|
|
|
92
|
|
||||
Distressed
|
6 to 9 Years
|
|
289
|
|
|
132
|
|
|
180
|
|
|
230
|
|
||||
Mezzanine
|
6 to 9 Years
|
|
300
|
|
|
213
|
|
|
276
|
|
|
252
|
|
||||
Traditional
|
3 to 8 Years
|
|
960
|
|
|
388
|
|
|
813
|
|
|
456
|
|
||||
Vintage
|
1 to 3 Years
|
|
10
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Investment funds
|
Not Applicable
|
|
384
|
|
|
—
|
|
|
428
|
|
|
—
|
|
||||
|
|
|
$
|
2,513
|
|
|
$
|
903
|
|
|
$
|
2,288
|
|
|
$
|
1,159
|
|
Investment Category
|
|
Consists of investments in private equity funds:
|
Financial
|
|
targeting financial services companies such as financial institutions and insurance services worldwide
|
Real estate
|
|
targeting global distress opportunities, value added U.S. properties, and global mezzanine debt securities in the commercial real estate market
|
Distressed
|
|
targeting distressed debt/credit and equity opportunities in the U.S.
|
Mezzanine
|
|
targeting private mezzanine debt of large-cap and mid-cap companies in the U.S. and worldwide
|
Traditional
|
|
employing traditional private equity investment strategies such as buyout and venture with different geographical focuses including Brazil, Asia, Europe, and the U.S.
|
Vintage
|
|
made before 2002 and where the funds’ commitment periods had already expired
|
(in millions of U.S. dollars, except for percentages)
|
Fair Value
|
|
Valuation
Technique
|
|
Significant
Unobservable Inputs
|
|
Ranges
|
||||||
September 30, 2014
|
|
|
December 31, 2013
|
|
|
|
|
||||||
GLB
(1)
|
$
|
317
|
|
|
$
|
193
|
|
|
Actuarial model
|
|
Lapse rate
|
|
1% – 30%
|
|
|
|
|
|
|
|
Annuitization rate
|
|
0% – 55%
|
(1)
|
Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living benefits.
|
|
Assets
|
|
|
Liabilities
|
|
||||||||||||||||||
Three Months Ended
|
Available-for-Sale Debt Securities
|
|
|
Equity
securities
|
|
|
Other
investments
|
|
|
GLB
(1)
|
|
||||||||||||
September 30, 2014
|
Foreign
|
|
|
Corporate
securities
|
|
|
MBS
|
|
|
|
|||||||||||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||||||
Balance–Beginning of Period
|
$
|
12
|
|
|
$
|
204
|
|
|
$
|
7
|
|
|
$
|
2
|
|
|
$
|
2,640
|
|
|
$
|
241
|
|
Transfers into Level 3
|
1
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Change in Net Unrealized Gains (Losses) included in OCI
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
||||||
Net Realized Gains/Losses
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||||
Purchases
|
—
|
|
|
20
|
|
|
8
|
|
|
—
|
|
|
170
|
|
|
—
|
|
||||||
Sales
|
(1
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||||
Settlements
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(128
|
)
|
|
—
|
|
||||||
Balance–End of Period
|
$
|
12
|
|
|
$
|
208
|
|
|
$
|
15
|
|
|
$
|
2
|
|
|
$
|
2,671
|
|
|
$
|
317
|
|
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
76
|
|
(1)
|
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note
5
for additional information.
|
|
Assets
|
|
|
Liabilities
|
|
||||||||||||||||||||||
Three Months Ended
|
Available-for-Sale Debt Securities
|
|
|
Equity
securities |
|
|
Short-term investments
|
|
|
Other
investments |
|
|
GLB
(1)
|
|
|||||||||||||
September 30, 2013
|
Foreign
|
|
|
Corporate
securities |
|
|
MBS
|
|
|
|
|
|
|||||||||||||||
(in millions of U.S. dollars)
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance–Beginning of Period
|
$
|
48
|
|
|
$
|
114
|
|
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
9
|
|
|
$
|
2,349
|
|
|
$
|
652
|
|
Transfers into Level 3
|
1
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||||
Transfers out of Level 3
|
(8
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||||||
Change in Net Unrealized Gains (Losses) included in OCI
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||||||
Net Realized Gains/Losses
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(138
|
)
|
|||||||
Purchases
|
12
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
138
|
|
|
—
|
|
|||||||
Sales
|
(13
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||||||
Settlements
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
|
—
|
|
|||||||
Balance–End of Period
|
$
|
42
|
|
|
$
|
121
|
|
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
2,389
|
|
|
$
|
514
|
|
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(138
|
)
|
(1)
|
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was
$746
million at
September 30, 2013
, and
$880
million at June 30, 2013, which includes a fair value derivative adjustment of
$514
million and
$652
million, respectively.
|
|
Assets
|
|
|
Liabilities
|
|
||||||||||||||||||||||
Nine Months Ended
|
Available-for-Sale Debt Securities
|
|
|
Equity
securities
|
|
|
Short-term investments
|
|
|
Other
investments
|
|
|
GLB
(1)
|
|
|||||||||||||
September 30, 2014
|
Foreign
|
|
|
Corporate
securities
|
|
|
MBS
|
|
|
|
|||||||||||||||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||||||||||
Balance–Beginning of Period
|
$
|
44
|
|
|
$
|
166
|
|
|
$
|
8
|
|
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
2,440
|
|
|
$
|
193
|
|
Transfers into Level 3
|
3
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Transfers out of Level 3
|
(34
|
)
|
|
(22
|
)
|
|
—
|
|
|
(2
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|||||||
Change in Net Unrealized Gains (Losses) included in OCI
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|||||||
Net Realized Gains/Losses
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
124
|
|
|||||||
Purchases
|
2
|
|
|
65
|
|
|
8
|
|
|
1
|
|
|
—
|
|
|
522
|
|
|
—
|
|
|||||||
Sales
|
(3
|
)
|
|
(17
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||||||
Settlements
|
—
|
|
|
(22
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(322
|
)
|
|
—
|
|
|||||||
Balance–End of Period
|
$
|
12
|
|
|
$
|
208
|
|
|
$
|
15
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2,671
|
|
|
$
|
317
|
|
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
124
|
|
(1)
|
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note
5
for additional information.
|
|
Assets
|
|
|
Liabilities
|
|
|||||||||||||||||||||
Nine Months Ended
|
Available-for-Sale Debt Securities
|
|
|
Equity
securities
|
|
|
Short-term investments
|
|
Other
investments
|
|
|
GLB
(1)
|
|
|||||||||||||
September 30, 2013
|
Foreign
|
|
|
Corporate
securities
|
|
|
MBS
|
|
|
|
|
|||||||||||||||
(in millions of U.S. dollars)
|
|
|
|
|
|
|||||||||||||||||||||
Balance–Beginning of Period
|
$
|
60
|
|
|
$
|
102
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
$
|
—
|
|
$
|
2,252
|
|
|
$
|
1,119
|
|
Transfers into Level 3
|
33
|
|
|
29
|
|
|
—
|
|
|
7
|
|
|
8
|
|
—
|
|
|
—
|
|
|||||||
Transfers out of Level 3
|
(49
|
)
|
|
(30
|
)
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
—
|
|
|
—
|
|
|||||||
Change in Net Unrealized Gains (Losses) included in OCI
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
34
|
|
|
—
|
|
|||||||
Net Realized Gains/Losses
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
4
|
|
|
—
|
|
(2
|
)
|
|
(605
|
)
|
|||||||
Purchases
|
15
|
|
|
39
|
|
|
—
|
|
|
1
|
|
|
2
|
|
387
|
|
|
—
|
|
|||||||
Sales
|
(15
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
(10
|
)
|
|
—
|
|
|||||||
Settlements
|
(1
|
)
|
|
(12
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
(272
|
)
|
|
—
|
|
|||||||
Balance–End of Period
|
$
|
42
|
|
|
$
|
121
|
|
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
8
|
|
$
|
2,389
|
|
|
$
|
514
|
|
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
(2
|
)
|
|
$
|
(605
|
)
|
(1)
|
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was
$746
million at
September 30, 2013
, and
$1.4 billion
at
December 31
,
2012
, which includes a fair value derivative adjustment of
$514
million and
$1.1 billion
, respectively.
|
September 30, 2014
|
Fair Value
|
|
|
Carrying Value
|
|
||||||||||||||
(in millions of U.S. dollars)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities held to maturity
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency
|
$
|
625
|
|
|
$
|
192
|
|
|
$
|
—
|
|
|
$
|
817
|
|
|
$
|
804
|
|
Foreign
|
—
|
|
|
978
|
|
|
—
|
|
|
978
|
|
|
937
|
|
|||||
Corporate securities
|
—
|
|
|
2,510
|
|
|
15
|
|
|
2,525
|
|
|
2,443
|
|
|||||
Mortgage-backed securities
|
—
|
|
|
2,130
|
|
|
—
|
|
|
2,130
|
|
|
2,087
|
|
|||||
States, municipalities, and political subdivisions
|
—
|
|
|
1,313
|
|
|
—
|
|
|
1,313
|
|
|
1,277
|
|
|||||
|
625
|
|
|
7,123
|
|
|
15
|
|
|
7,763
|
|
|
7,548
|
|
|||||
Partially-owned insurance companies
|
—
|
|
|
—
|
|
|
495
|
|
|
495
|
|
|
495
|
|
|||||
Total assets
|
$
|
625
|
|
|
$
|
7,123
|
|
|
$
|
510
|
|
|
$
|
8,258
|
|
|
$
|
8,043
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
1,864
|
|
|
$
|
—
|
|
|
$
|
1,864
|
|
|
$
|
1,851
|
|
Long-term debt
|
—
|
|
|
4,349
|
|
|
—
|
|
|
4,349
|
|
|
4,057
|
|
|||||
Trust preferred securities
|
—
|
|
|
459
|
|
|
—
|
|
|
459
|
|
|
309
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
6,672
|
|
|
$
|
—
|
|
|
$
|
6,672
|
|
|
$
|
6,217
|
|
December 31, 2013
|
Fair Value
|
|
|
Carrying Value
|
|
||||||||||||||
(in millions of U.S. dollars)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturities held to maturity
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury and agency
|
$
|
596
|
|
|
$
|
236
|
|
|
$
|
—
|
|
|
$
|
832
|
|
|
$
|
820
|
|
Foreign
|
—
|
|
|
897
|
|
|
—
|
|
|
897
|
|
|
864
|
|
|||||
Corporate securities
|
—
|
|
|
1,990
|
|
|
15
|
|
|
2,005
|
|
|
1,922
|
|
|||||
Mortgage-backed securities
|
—
|
|
|
1,379
|
|
|
—
|
|
|
1,379
|
|
|
1,341
|
|
|||||
States, municipalities, and political subdivisions
|
—
|
|
|
1,150
|
|
|
—
|
|
|
1,150
|
|
|
1,151
|
|
|||||
|
596
|
|
|
5,652
|
|
|
15
|
|
|
6,263
|
|
|
6,098
|
|
|||||
Partially-owned insurance companies
|
—
|
|
|
—
|
|
|
470
|
|
|
470
|
|
|
470
|
|
|||||
Total assets
|
$
|
596
|
|
|
$
|
5,652
|
|
|
$
|
485
|
|
|
$
|
6,733
|
|
|
$
|
6,568
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
1,913
|
|
|
$
|
—
|
|
|
$
|
1,913
|
|
|
$
|
1,901
|
|
Long-term debt
|
—
|
|
|
4,088
|
|
|
—
|
|
|
4,088
|
|
|
3,807
|
|
|||||
Trust preferred securities
|
—
|
|
|
438
|
|
|
—
|
|
|
438
|
|
|
309
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
6,439
|
|
|
$
|
—
|
|
|
$
|
6,439
|
|
|
$
|
6,017
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
GMDB
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
17
|
|
|
$
|
19
|
|
|
$
|
54
|
|
|
$
|
59
|
|
Policy benefits and other reserve adjustments
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
40
|
|
|
$
|
58
|
|
GLB
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
35
|
|
|
$
|
36
|
|
|
$
|
105
|
|
|
$
|
112
|
|
Policy benefits and other reserve adjustments
|
8
|
|
|
9
|
|
|
27
|
|
|
20
|
|
||||
Net realized gains (losses)
|
(76
|
)
|
|
138
|
|
|
(124
|
)
|
|
608
|
|
||||
Gain (loss) recognized in income
|
$
|
(49
|
)
|
|
$
|
165
|
|
|
$
|
(46
|
)
|
|
$
|
700
|
|
Net cash received
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
93
|
|
|
$
|
94
|
|
Net (increase) decrease in liability
|
$
|
(80
|
)
|
|
$
|
134
|
|
|
$
|
(139
|
)
|
|
$
|
606
|
|
•
|
policy account values and guaranteed values are fixed at the valuation date (
September 30, 2014
and
December 31, 2013
, respectively);
|
•
|
there are no lapses or withdrawals;
|
•
|
mortality according to
100
percent of the Annuity 2000 mortality table;
|
•
|
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between
2.0 percent
and
3.0 percent
; and
|
•
|
reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty.
|
•
|
policy account values and guaranteed values are fixed at the valuation date (
September 30, 2014
and
December 31, 2013
, respectively);
|
•
|
there are no deaths, lapses, or withdrawals;
|
•
|
policyholders annuitize at a frequency most disadvantageous to ACE (in other words, annuitization at a level that maximizes claims taking into account the treaty limits) under the terms of the reinsurance contracts;
|
•
|
for annuitizing policyholders, the GMIB claim is calculated using interest rates in line with those used in calculating the reserve;
|
•
|
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between
3.5
percent and
4.5
percent; and
|
•
|
reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty.
|
•
|
policy account values and guaranteed values are fixed at the valuation date (
September 30, 2014
and
December 31, 2013
, respectively);
|
•
|
there are no lapses or withdrawals;
|
•
|
mortality according to
100
percent of the Annuity 2000 mortality table;
|
•
|
policyholders annuitize at a frequency most disadvantageous to ACE (in other words, annuitization at a level that maximizes claims taking into account the treaty limits) under the terms of the reinsurance contracts;
|
•
|
for annuitizing policyholders, the GMIB claim is calculated using interest rates in line with those used in calculating the reserve;
|
•
|
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between
3.5
percent and
4.5
percent; and
|
•
|
reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty.
|
|
|
|
|
|
September 30, 2014
|
|
|
|
|
December 31, 2013
|
|
||||||||||||||
|
Consolidated
Balance Sheet
Location
|
|
Fair Value
|
|
|
Notional
Value/
Payment
Provision
|
|
|
Fair Value
|
|
|
Notional
Value/
Payment
Provision
|
|
||||||||||||
(in millions of U.S. dollars)
|
|
Derivative Asset
|
|
|
Derivative (Liability)
|
|
|
|
Derivative Asset
|
|
|
Derivative (Liability)
|
|
|
|||||||||||
Investment and embedded derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign currency forward contracts
|
OA / (AP)
|
|
$
|
14
|
|
|
$
|
(2
|
)
|
|
$
|
1,010
|
|
|
$
|
3
|
|
|
$
|
(4
|
)
|
|
$
|
1,202
|
|
Cross-currency swaps
|
OA / (AP)
|
|
—
|
|
|
—
|
|
|
95
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||||
Futures contracts on money market instruments
|
OA / (AP)
|
|
2
|
|
|
—
|
|
|
1,000
|
|
|
3
|
|
|
—
|
|
|
3,910
|
|
||||||
Options/Futures contracts on notes and bonds
|
OA / (AP)
|
|
7
|
|
|
(3
|
)
|
|
1,145
|
|
|
13
|
|
|
(2
|
)
|
|
871
|
|
||||||
Convertible securities
(1)
|
FM AFS / ES
|
|
303
|
|
|
—
|
|
|
268
|
|
|
302
|
|
|
—
|
|
|
254
|
|
||||||
|
|
|
$
|
326
|
|
|
$
|
(5
|
)
|
|
$
|
3,518
|
|
|
$
|
321
|
|
|
$
|
(6
|
)
|
|
$
|
6,287
|
|
Other derivative instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Futures contracts on equities
(2)
|
OA / (AP)
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
1,427
|
|
|
$
|
—
|
|
|
$
|
(60
|
)
|
|
$
|
1,692
|
|
Options on equity market indices
(2)
|
OA / (AP)
|
|
2
|
|
|
—
|
|
|
250
|
|
|
6
|
|
|
—
|
|
|
250
|
|
||||||
Other
|
OA / (AP)
|
|
—
|
|
|
(2
|
)
|
|
8
|
|
|
—
|
|
|
(2
|
)
|
|
8
|
|
||||||
|
|
|
$
|
13
|
|
|
$
|
(2
|
)
|
|
$
|
1,685
|
|
|
$
|
6
|
|
|
$
|
(62
|
)
|
|
$
|
1,950
|
|
GLB
(3)
|
(AP) / (FPB)
|
|
$
|
—
|
|
|
$
|
(566
|
)
|
|
$
|
409
|
|
|
$
|
—
|
|
|
$
|
(427
|
)
|
|
$
|
277
|
|
(1)
|
Includes fair value of embedded derivatives.
|
(2)
|
Related to GMDB and GLB blocks of business.
|
(3)
|
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note
5
for additional information. Note that the payment provision related to GLB is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Investment and embedded derivative instruments
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
19
|
|
|
$
|
(9
|
)
|
|
$
|
15
|
|
|
$
|
8
|
|
All other futures contracts and options
|
(15
|
)
|
|
6
|
|
|
(55
|
)
|
|
46
|
|
||||
Convertible securities
(1)
|
(17
|
)
|
|
6
|
|
|
(13
|
)
|
|
7
|
|
||||
TBAs
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total investment and embedded derivative instruments
|
$
|
(13
|
)
|
|
$
|
4
|
|
|
$
|
(53
|
)
|
|
$
|
62
|
|
GLB and other derivative instruments
|
|
|
|
|
|
|
|
||||||||
GLB
(2)
|
$
|
(80
|
)
|
|
$
|
134
|
|
|
$
|
(126
|
)
|
|
$
|
563
|
|
Futures contracts on equities
(3)
|
(15
|
)
|
|
(90
|
)
|
|
(103
|
)
|
|
(393
|
)
|
||||
Options on equity market indices
(3)
|
—
|
|
|
(5
|
)
|
|
(3
|
)
|
|
(20
|
)
|
||||
Other
|
45
|
|
|
(1
|
)
|
|
52
|
|
|
(2
|
)
|
||||
Total GLB and other derivative instruments
|
$
|
(50
|
)
|
|
$
|
38
|
|
|
$
|
(180
|
)
|
|
$
|
148
|
|
|
$
|
(63
|
)
|
|
$
|
42
|
|
|
$
|
(233
|
)
|
|
$
|
210
|
|
(1)
|
Includes embedded derivatives.
|
(2)
|
Excludes foreign exchange gains (losses) related to GLB.
|
(3)
|
Related to GMDB and GLB blocks of business.
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||||||||||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||||||||||
Dividends – par value reduction
|
CHF
|
0.61
|
|
|
$
|
0.65
|
|
|
CHF
|
0.46
|
|
|
$
|
0.51
|
|
|
CHF
|
1.64
|
|
|
$
|
1.81
|
|
|
CHF
|
1.40
|
|
|
$
|
1.51
|
|
Dividends
–
distributed from capital contribution reserves
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.20
|
|
|
0.24
|
|
|
—
|
|
|
—
|
|
||||||||
Total dividends per common share
|
CHF
|
0.61
|
|
|
$
|
0.65
|
|
|
CHF
|
0.46
|
|
|
$
|
0.51
|
|
|
CHF
|
1.84
|
|
|
$
|
2.05
|
|
|
CHF
|
1.40
|
|
|
$
|
1.51
|
|
(in millions of U.S. dollars, except share data)
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
October 1, 2014 through October 28, 2014
|
|
September 30, 2014
|
|
|
September 30, 2014
|
|
|
|||
Number of shares repurchased
|
4,349,302
|
|
|
10,143,184
|
|
|
699,965
|
|
Dollar value of shares repurchased
|
$450
|
|
$1,019
|
|
$74
|
|||
Repurchase authorization remaining at end of period
|
$924
|
|
$924
|
|
$850
|
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
|
|
(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
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars, except share and per share data)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
785
|
|
|
$
|
916
|
|
|
$
|
2,298
|
|
|
$
|
2,760
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding
|
334,472,324
|
|
|
340,888,648
|
|
|
337,083,498
|
|
|
340,905,322
|
|
||||
Denominator for diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Share-based compensation plans
|
3,201,656
|
|
|
2,929,089
|
|
|
3,298,569
|
|
|
3,146,728
|
|
||||
Weighted-average shares outstanding and assumed conversions
|
337,673,980
|
|
|
343,817,737
|
|
|
340,382,067
|
|
|
344,052,050
|
|
||||
Basic earnings per share
|
$
|
2.35
|
|
|
$
|
2.68
|
|
|
$
|
6.82
|
|
|
$
|
8.09
|
|
Diluted earnings per share
|
$
|
2.32
|
|
|
$
|
2.66
|
|
|
$
|
6.75
|
|
|
$
|
8.02
|
|
|
|
|
|
|
|
|
|
||||||||
Potential anti-dilutive share conversions
|
1,227,575
|
|
|
1,215,884
|
|
|
1,410,340
|
|
|
1,429,514
|
|
(in millions of U.S. dollars)
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited
Subsidiaries
|
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE Limited
Consolidated
|
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
$
|
31
|
|
|
$
|
25
|
|
|
$
|
63,198
|
|
|
$
|
—
|
|
|
$
|
63,254
|
|
Cash
(1)
|
8
|
|
|
12
|
|
|
1,391
|
|
|
(605
|
)
|
|
806
|
|
|||||
Insurance and reinsurance balances receivable
|
—
|
|
|
—
|
|
|
6,149
|
|
|
(960
|
)
|
|
5,189
|
|
|||||
Reinsurance recoverable on losses and loss expenses
|
—
|
|
|
—
|
|
|
19,948
|
|
|
(9,003
|
)
|
|
10,945
|
|
|||||
Reinsurance recoverable on policy benefits
|
—
|
|
|
—
|
|
|
1,236
|
|
|
(1,008
|
)
|
|
228
|
|
|||||
Value of business acquired
|
—
|
|
|
—
|
|
|
491
|
|
|
—
|
|
|
491
|
|
|||||
Goodwill and other intangible assets
|
—
|
|
|
—
|
|
|
5,425
|
|
|
—
|
|
|
5,425
|
|
|||||
Investments in subsidiaries
|
30,065
|
|
|
19,054
|
|
|
—
|
|
|
(49,119
|
)
|
|
—
|
|
|||||
Due from subsidiaries and affiliates, net
|
768
|
|
|
—
|
|
|
—
|
|
|
(768
|
)
|
|
—
|
|
|||||
Other assets
|
4
|
|
|
272
|
|
|
14,669
|
|
|
(3,726
|
)
|
|
11,219
|
|
|||||
Total assets
|
$
|
30,876
|
|
|
$
|
19,363
|
|
|
$
|
112,507
|
|
|
$
|
(65,189
|
)
|
|
$
|
97,557
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Unpaid losses and loss expenses
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46,003
|
|
|
$
|
(8,556
|
)
|
|
$
|
37,447
|
|
Unearned premiums
|
—
|
|
|
—
|
|
|
9,828
|
|
|
(1,808
|
)
|
|
8,020
|
|
|||||
Future policy benefits
|
—
|
|
|
—
|
|
|
5,790
|
|
|
(1,008
|
)
|
|
4,782
|
|
|||||
Due to (from) subsidiaries and affiliates, net
|
—
|
|
|
556
|
|
|
212
|
|
|
(768
|
)
|
|
—
|
|
|||||
Affiliated notional cash pooling programs
(1)
|
573
|
|
|
32
|
|
|
—
|
|
|
(605
|
)
|
|
—
|
|
|||||
Short-term debt
|
—
|
|
|
450
|
|
|
1,401
|
|
|
—
|
|
|
1,851
|
|
|||||
Long-term debt
|
—
|
|
|
4,045
|
|
|
12
|
|
|
—
|
|
|
4,057
|
|
|||||
Trust preferred securities
|
—
|
|
|
309
|
|
|
—
|
|
|
—
|
|
|
309
|
|
|||||
Other liabilities
|
286
|
|
|
1,432
|
|
|
12,681
|
|
|
(3,325
|
)
|
|
11,074
|
|
|||||
Total liabilities
|
859
|
|
|
6,824
|
|
|
75,927
|
|
|
(16,070
|
)
|
|
67,540
|
|
|||||
Total shareholders’ equity
|
30,017
|
|
|
12,539
|
|
|
36,580
|
|
|
(49,119
|
)
|
|
30,017
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
30,876
|
|
|
$
|
19,363
|
|
|
$
|
112,507
|
|
|
$
|
(65,189
|
)
|
|
$
|
97,557
|
|
(1)
|
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At
September 30, 2014
, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
|
|
|||||||||||||||||||
(in millions of U.S. dollars)
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited
Subsidiaries
|
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE Limited
Consolidated
|
|
|||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
$
|
32
|
|
|
$
|
10
|
|
|
$
|
60,886
|
|
|
$
|
—
|
|
|
$
|
60,928
|
|
Cash
(1)
|
—
|
|
|
16
|
|
|
748
|
|
|
(185
|
)
|
|
579
|
|
|||||
Insurance and reinsurance balances receivable
|
—
|
|
|
—
|
|
|
5,835
|
|
|
(809
|
)
|
|
5,026
|
|
|||||
Reinsurance recoverable on losses and loss expenses
|
—
|
|
|
—
|
|
|
20,057
|
|
|
(8,830
|
)
|
|
11,227
|
|
|||||
Reinsurance recoverable on policy benefits
|
—
|
|
|
—
|
|
|
1,215
|
|
|
(997
|
)
|
|
218
|
|
|||||
Value of business acquired
|
—
|
|
|
—
|
|
|
536
|
|
|
—
|
|
|
536
|
|
|||||
Goodwill and other intangible assets
|
—
|
|
|
—
|
|
|
5,404
|
|
|
—
|
|
|
5,404
|
|
|||||
Investments in subsidiaries
|
28,351
|
|
|
18,105
|
|
|
—
|
|
|
(46,456
|
)
|
|
—
|
|
|||||
Due from subsidiaries and affiliates, net
|
844
|
|
|
—
|
|
|
—
|
|
|
(844
|
)
|
|
—
|
|
|||||
Other assets
|
5
|
|
|
258
|
|
|
13,788
|
|
|
(3,459
|
)
|
|
10,592
|
|
|||||
Total assets
|
$
|
29,232
|
|
|
$
|
18,389
|
|
|
$
|
108,469
|
|
|
$
|
(61,580
|
)
|
|
$
|
94,510
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Unpaid losses and loss expenses
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45,714
|
|
|
$
|
(8,271
|
)
|
|
$
|
37,443
|
|
Unearned premiums
|
—
|
|
|
—
|
|
|
9,242
|
|
|
(1,703
|
)
|
|
7,539
|
|
|||||
Future policy benefits
|
—
|
|
|
—
|
|
|
5,612
|
|
|
(997
|
)
|
|
4,615
|
|
|||||
Due to (from) subsidiaries and affiliates, net
|
—
|
|
|
714
|
|
|
130
|
|
|
(844
|
)
|
|
—
|
|
|||||
Affiliated notional cash pooling programs
(1)
|
185
|
|
|
—
|
|
|
—
|
|
|
(185
|
)
|
|
—
|
|
|||||
Short-term debt
|
—
|
|
|
500
|
|
|
1,401
|
|
|
—
|
|
|
1,901
|
|
|||||
Long-term debt
|
—
|
|
|
3,795
|
|
|
12
|
|
|
—
|
|
|
3,807
|
|
|||||
Trust preferred securities
|
—
|
|
|
309
|
|
|
—
|
|
|
—
|
|
|
309
|
|
|||||
Other liabilities
|
222
|
|
|
1,318
|
|
|
11,655
|
|
|
(3,124
|
)
|
|
10,071
|
|
|||||
Total liabilities
|
407
|
|
|
6,636
|
|
|
73,766
|
|
|
(15,124
|
)
|
|
65,685
|
|
|||||
Total shareholders’ equity
|
28,825
|
|
|
11,753
|
|
|
34,703
|
|
|
(46,456
|
)
|
|
28,825
|
|
|||||
Total liabilities and shareholders’ equity
|
$
|
29,232
|
|
|
$
|
18,389
|
|
|
$
|
108,469
|
|
|
$
|
(61,580
|
)
|
|
$
|
94,510
|
|
(1)
|
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At
December 31, 2013
, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
|
For the Three Months Ended September 30, 2014
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited
Subsidiaries
|
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE
Limited
Consolidated
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Net premiums written
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,729
|
|
|
$
|
—
|
|
|
$
|
4,729
|
|
Net premiums earned
|
—
|
|
|
—
|
|
|
4,754
|
|
|
—
|
|
|
4,754
|
|
|||||
Net investment income
|
1
|
|
|
—
|
|
|
565
|
|
|
—
|
|
|
566
|
|
|||||
Equity in earnings of subsidiaries
|
745
|
|
|
258
|
|
|
—
|
|
|
(1,003
|
)
|
|
—
|
|
|||||
Net realized gains (losses) including OTTI
|
—
|
|
|
46
|
|
|
(166
|
)
|
|
—
|
|
|
(120
|
)
|
|||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
2,684
|
|
|
—
|
|
|
2,684
|
|
|||||
Policy benefits
|
—
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
125
|
|
|||||
Policy acquisition costs and administrative expenses
|
18
|
|
|
6
|
|
|
1,355
|
|
|
—
|
|
|
1,379
|
|
|||||
Interest (income) expense
|
(7
|
)
|
|
68
|
|
|
9
|
|
|
—
|
|
|
70
|
|
|||||
Other (income) expense
|
(54
|
)
|
|
2
|
|
|
33
|
|
|
—
|
|
|
(19
|
)
|
|||||
Income tax expense (benefit)
|
4
|
|
|
(11
|
)
|
|
183
|
|
|
—
|
|
|
176
|
|
|||||
Net income
|
$
|
785
|
|
|
$
|
239
|
|
|
$
|
764
|
|
|
$
|
(1,003
|
)
|
|
$
|
785
|
|
Comprehensive income
|
$
|
298
|
|
|
$
|
33
|
|
|
$
|
276
|
|
|
$
|
(309
|
)
|
|
$
|
298
|
|
For the Three Months Ended September 30, 2013
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited
Subsidiaries
|
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE
Limited
Consolidated
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Net premiums written
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,620
|
|
|
$
|
—
|
|
|
$
|
4,620
|
|
Net premiums earned
|
—
|
|
|
—
|
|
|
4,610
|
|
|
—
|
|
|
4,610
|
|
|||||
Net investment income
|
1
|
|
|
—
|
|
|
521
|
|
|
—
|
|
|
522
|
|
|||||
Equity in earnings of subsidiaries
|
863
|
|
|
322
|
|
|
—
|
|
|
(1,185
|
)
|
|
—
|
|
|||||
Net realized gains (losses) including OTTI
|
—
|
|
|
(2
|
)
|
|
42
|
|
|
—
|
|
|
40
|
|
|||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
2,655
|
|
|
—
|
|
|
2,655
|
|
|||||
Policy benefits
|
—
|
|
|
—
|
|
|
138
|
|
|
—
|
|
|
138
|
|
|||||
Policy acquisition costs and administrative expenses
|
13
|
|
|
4
|
|
|
1,224
|
|
|
—
|
|
|
1,241
|
|
|||||
Interest (income) expense
|
(8
|
)
|
|
69
|
|
|
11
|
|
|
—
|
|
|
72
|
|
|||||
Other (income) expense
|
(62
|
)
|
|
6
|
|
|
51
|
|
|
—
|
|
|
(5
|
)
|
|||||
Income tax expense (benefit)
|
5
|
|
|
(14
|
)
|
|
164
|
|
|
—
|
|
|
155
|
|
|||||
Net income
|
$
|
916
|
|
|
$
|
255
|
|
|
$
|
930
|
|
|
$
|
(1,185
|
)
|
|
$
|
916
|
|
Comprehensive income
|
$
|
1,030
|
|
|
$
|
339
|
|
|
$
|
1,043
|
|
|
$
|
(1,382
|
)
|
|
$
|
1,030
|
|
For the Nine Months Ended September 30, 2014
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited
Subsidiaries
|
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE
Limited
Consolidated
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Net premiums written
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,473
|
|
|
$
|
—
|
|
|
$
|
13,473
|
|
Net premiums earned
|
—
|
|
|
—
|
|
|
13,056
|
|
|
—
|
|
|
13,056
|
|
|||||
Net investment income
|
2
|
|
|
1
|
|
|
1,672
|
|
|
—
|
|
|
1,675
|
|
|||||
Equity in earnings of subsidiaries
|
2,192
|
|
|
669
|
|
|
—
|
|
|
(2,861
|
)
|
|
—
|
|
|||||
Net realized gains (losses) including OTTI
|
—
|
|
|
53
|
|
|
(350
|
)
|
|
—
|
|
|
(297
|
)
|
|||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
7,233
|
|
|
—
|
|
|
7,233
|
|
|||||
Policy benefits
|
—
|
|
|
—
|
|
|
383
|
|
|
—
|
|
|
383
|
|
|||||
Policy acquisition costs and administrative expenses
|
57
|
|
|
20
|
|
|
3,889
|
|
|
—
|
|
|
3,966
|
|
|||||
Interest (income) expense
|
(26
|
)
|
|
209
|
|
|
30
|
|
|
—
|
|
|
213
|
|
|||||
Other (income) expense
|
(146
|
)
|
|
22
|
|
|
63
|
|
|
—
|
|
|
(61
|
)
|
|||||
Income tax expense (benefit)
|
11
|
|
|
(66
|
)
|
|
457
|
|
|
—
|
|
|
402
|
|
|||||
Net income
|
$
|
2,298
|
|
|
$
|
538
|
|
|
$
|
2,323
|
|
|
$
|
(2,861
|
)
|
|
$
|
2,298
|
|
Comprehensive income
|
$
|
2,754
|
|
|
$
|
810
|
|
|
$
|
2,778
|
|
|
$
|
(3,588
|
)
|
|
$
|
2,754
|
|
For the Nine Months Ended September 30, 2013
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited
Subsidiaries
|
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE
Limited
Consolidated
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Net premiums written
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,809
|
|
|
$
|
—
|
|
|
$
|
12,809
|
|
Net premiums earned
|
—
|
|
|
—
|
|
|
12,250
|
|
|
—
|
|
|
12,250
|
|
|||||
Net investment income
|
2
|
|
|
2
|
|
|
1,583
|
|
|
—
|
|
|
1,587
|
|
|||||
Equity in earnings of subsidiaries
|
2,619
|
|
|
767
|
|
|
—
|
|
|
(3,386
|
)
|
|
—
|
|
|||||
Net realized gains (losses) including OTTI
|
12
|
|
|
(2
|
)
|
|
340
|
|
|
—
|
|
|
350
|
|
|||||
Losses and loss expenses
|
—
|
|
|
—
|
|
|
6,831
|
|
|
—
|
|
|
6,831
|
|
|||||
Policy benefits
|
—
|
|
|
—
|
|
|
379
|
|
|
—
|
|
|
379
|
|
|||||
Policy acquisition costs and administrative expenses
|
40
|
|
|
13
|
|
|
3,545
|
|
|
—
|
|
|
3,598
|
|
|||||
Interest (income) expense
|
(23
|
)
|
|
200
|
|
|
28
|
|
|
—
|
|
|
205
|
|
|||||
Other (income) expense
|
(157
|
)
|
|
21
|
|
|
158
|
|
|
—
|
|
|
22
|
|
|||||
Income tax expense (benefit)
|
13
|
|
|
(80
|
)
|
|
459
|
|
|
—
|
|
|
392
|
|
|||||
Net income
|
$
|
2,760
|
|
|
$
|
613
|
|
|
$
|
2,773
|
|
|
$
|
(3,386
|
)
|
|
$
|
2,760
|
|
Comprehensive income (loss)
|
$
|
1,247
|
|
|
$
|
(195
|
)
|
|
$
|
1,259
|
|
|
$
|
(1,064
|
)
|
|
$
|
1,247
|
|
For the Nine Months Ended September 30, 2014
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited Subsidiaries |
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE
Limited
Consolidated
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Net cash flows from operating activities
|
$
|
168
|
|
|
$
|
139
|
|
|
$
|
3,115
|
|
|
$
|
(200
|
)
|
|
$
|
3,222
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of fixed maturities available for sale
|
—
|
|
|
—
|
|
|
(11,870
|
)
|
|
3
|
|
|
(11,867
|
)
|
|||||
Purchases of fixed maturities held to maturity
|
—
|
|
|
—
|
|
|
(185
|
)
|
|
—
|
|
|
(185
|
)
|
|||||
Purchases of equity securities
|
—
|
|
|
—
|
|
|
(222
|
)
|
|
—
|
|
|
(222
|
)
|
|||||
Sales of fixed maturities available for
sale
|
—
|
|
|
—
|
|
|
6,309
|
|
|
(3
|
)
|
|
6,306
|
|
|||||
Sales of equity securities
|
—
|
|
|
—
|
|
|
322
|
|
|
—
|
|
|
322
|
|
|||||
Maturities and redemptions of fixed maturities available for sale
|
—
|
|
|
—
|
|
|
4,814
|
|
|
—
|
|
|
4,814
|
|
|||||
Maturities and redemptions of fixed maturities held to maturity
|
—
|
|
|
—
|
|
|
617
|
|
|
—
|
|
|
617
|
|
|||||
Net change in short-term investments
|
1
|
|
|
(16
|
)
|
|
(969
|
)
|
|
—
|
|
|
(984
|
)
|
|||||
Net derivative instruments settlements
|
—
|
|
|
53
|
|
|
(223
|
)
|
|
—
|
|
|
(170
|
)
|
|||||
Acquisition of subsidiaries (net of cash acquired of $4)
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
|||||
Capital contribution
|
—
|
|
|
(230
|
)
|
|
—
|
|
|
230
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
(9
|
)
|
|
(138
|
)
|
|
—
|
|
|
(147
|
)
|
|||||
Net cash flows from (used for) investing activities
|
1
|
|
|
(202
|
)
|
|
(1,717
|
)
|
|
230
|
|
|
(1,688
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid on Common Shares
|
(646
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(646
|
)
|
|||||
Common Shares repurchased
|
—
|
|
|
—
|
|
|
(1,007
|
)
|
|
—
|
|
|
(1,007
|
)
|
|||||
Proceeds from issuance of long-term debt
|
—
|
|
|
699
|
|
|
—
|
|
|
—
|
|
|
699
|
|
|||||
Repayment of long-term debt
|
—
|
|
|
(500
|
)
|
|
(1
|
)
|
|
—
|
|
|
(501
|
)
|
|||||
Proceeds from share-based compensation plans, including windfall tax benefits
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|||||
Dividend to parent company
|
—
|
|
|
—
|
|
|
(200
|
)
|
|
200
|
|
|
—
|
|
|||||
Advances (to) from affiliates
|
97
|
|
|
(166
|
)
|
|
69
|
|
|
—
|
|
|
—
|
|
|||||
Capital contribution
|
—
|
|
|
—
|
|
|
230
|
|
|
(230
|
)
|
|
—
|
|
|||||
Net proceeds from (payments to) affiliated notional cash pooling programs
(1)
|
388
|
|
|
32
|
|
|
—
|
|
|
(420
|
)
|
|
—
|
|
|||||
Other
|
—
|
|
|
(6
|
)
|
|
127
|
|
|
—
|
|
|
121
|
|
|||||
Net cash flows (used for) from financing activities
|
(161
|
)
|
|
59
|
|
|
(688
|
)
|
|
(450
|
)
|
|
(1,240
|
)
|
|||||
Effect of foreign currency rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
|||||
Net increase (decrease) in cash
|
8
|
|
|
(4
|
)
|
|
643
|
|
|
(420
|
)
|
|
227
|
|
|||||
Cash – beginning of period
(1)
|
—
|
|
|
16
|
|
|
748
|
|
|
(185
|
)
|
|
579
|
|
|||||
Cash – end of period
(1)
|
$
|
8
|
|
|
$
|
12
|
|
|
$
|
1,391
|
|
|
$
|
(605
|
)
|
|
$
|
806
|
|
(1)
|
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At
September 30, 2014
and December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
|
For the Nine Months Ended September 30, 2013
|
ACE
Limited
(Parent
Guarantor)
|
|
|
ACE INA
Holdings Inc.
(Subsidiary
Issuer)
|
|
|
Other ACE
Limited
Subsidiaries
|
|
|
Consolidating
Adjustments and Eliminations
|
|
|
ACE
Limited
Consolidated
|
|
|||||
(in millions of U.S. dollars)
|
|
|
|
|
|||||||||||||||
Net cash flows from operating activities
|
$
|
80
|
|
|
$
|
2
|
|
|
$
|
2,654
|
|
|
$
|
—
|
|
|
$
|
2,736
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of fixed maturities available for sale
|
—
|
|
|
—
|
|
|
(16,517
|
)
|
|
103
|
|
|
(16,414
|
)
|
|||||
Purchases of fixed maturities held to maturity
|
—
|
|
|
—
|
|
|
(374
|
)
|
|
—
|
|
|
(374
|
)
|
|||||
Purchases of equity securities
|
—
|
|
|
—
|
|
|
(217
|
)
|
|
—
|
|
|
(217
|
)
|
|||||
Sales of fixed maturities available for sale
|
—
|
|
|
—
|
|
|
8,115
|
|
|
(103
|
)
|
|
8,012
|
|
|||||
Sales of equity securities
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
99
|
|
|||||
Maturities and redemptions of fixed maturities available for sale
|
—
|
|
|
—
|
|
|
5,538
|
|
|
—
|
|
|
5,538
|
|
|||||
Maturities and redemptions of fixed maturities held to maturity
|
—
|
|
|
—
|
|
|
1,233
|
|
|
—
|
|
|
1,233
|
|
|||||
Net change in short-term investments
|
—
|
|
|
4
|
|
|
521
|
|
|
—
|
|
|
525
|
|
|||||
Net derivative instruments settlements
|
—
|
|
|
(1
|
)
|
|
(375
|
)
|
|
—
|
|
|
(376
|
)
|
|||||
Acquisition of subsidiaries (net of cash acquired of $38)
|
—
|
|
|
—
|
|
|
(977
|
)
|
|
—
|
|
|
(977
|
)
|
|||||
Capital contribution
|
(133
|
)
|
|
(1,010
|
)
|
|
—
|
|
|
1,143
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
(5
|
)
|
|
(183
|
)
|
|
—
|
|
|
(188
|
)
|
|||||
Net cash flows used for investing activities
|
(133
|
)
|
|
(1,012
|
)
|
|
(3,137
|
)
|
|
1,143
|
|
|
(3,139
|
)
|
|||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid on Common Shares
|
(343
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(343
|
)
|
|||||
Common Shares repurchased
|
—
|
|
|
—
|
|
|
(233
|
)
|
|
—
|
|
|
(233
|
)
|
|||||
Proceeds from issuance of long-term debt
|
—
|
|
|
947
|
|
|
—
|
|
|
—
|
|
|
947
|
|
|||||
Net proceeds from issuance of short-term debt
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Proceeds from share-based compensation plans, including windfall tax benefits
|
7
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
112
|
|
|||||
Advances (to) from affiliates
|
(575
|
)
|
|
575
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital contribution
|
—
|
|
|
—
|
|
|
1,143
|
|
|
(1,143
|
)
|
|
—
|
|
|||||
Net proceeds from (payments to) affiliated notional cash pooling programs
(1)
|
872
|
|
|
(349
|
)
|
|
—
|
|
|
(523
|
)
|
|
—
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
68
|
|
|||||
Net cash flows from (used for) financing activities
|
(39
|
)
|
|
1,173
|
|
|
1,084
|
|
|
(1,666
|
)
|
|
552
|
|
|||||
Effect of foreign currency rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Net (decrease) increase in cash
|
(92
|
)
|
|
163
|
|
|
605
|
|
|
(523
|
)
|
|
153
|
|
|||||
Cash – beginning of period
(1)
|
103
|
|
|
2
|
|
|
859
|
|
|
(349
|
)
|
|
615
|
|
|||||
Cash – end of period
(1)
|
$
|
11
|
|
|
$
|
165
|
|
|
$
|
1,464
|
|
|
$
|
(872
|
)
|
|
$
|
768
|
|
(1)
|
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At
September 30, 2013
and December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
|
MD&A Index
|
Page
|
•
|
losses arising out of natural or man-made catastrophes such as hurricanes, typhoons, earthquakes, floods, climate change (including effects on weather patterns; greenhouse gases; sea; land and air temperatures; sea levels; and rain and snow), nuclear accidents, or terrorism which could be affected by:
|
•
|
the number of insureds and ceding companies affected;
|
•
|
the amount and timing of losses actually incurred and reported by insureds;
|
•
|
the impact of these losses on our reinsurers and the amount and timing of reinsurance recoverable actually received;
|
•
|
the cost of building materials and labor to reconstruct properties or to perform environmental remediation following a catastrophic event; and
|
•
|
complex coverage and regulatory issues such as whether losses occurred from storm surge or flooding and related lawsuits;
|
•
|
actions that rating agencies may take from time to time, such as financial strength or credit ratings downgrades or placing these ratings on credit watch negative or the equivalent;
|
•
|
the ability to collect reinsurance recoverable, credit developments of reinsurers, and any delays with respect thereto and changes in the cost, quality, or availability of reinsurance;
|
•
|
actual loss experience from insured or reinsured events and the timing of claim payments;
|
•
|
the uncertainties of the loss-reserving and claims-settlement processes, including the difficulties associated with assessing environmental damage and asbestos-related latent injuries, the impact of aggregate-policy-coverage limits, the impact of bankruptcy protection sought by various asbestos producers and other related businesses, and the timing of loss payments;
|
•
|
changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available for sale fixed maturity investments before their anticipated recovery;
|
•
|
infection rates and severity of pandemics and their effects on our business operations and claims activity;
|
•
|
developments in global financial markets, including changes in interest rates, stock markets, and other financial markets, increased government involvement or intervention in the financial services industry, the cost and availability of financing, and foreign currency exchange rate fluctuations (which we refer to in this report as foreign exchange and foreign currency exchange), which could affect our statement of operations, investment portfolio, financial condition, and financing plans;
|
•
|
general economic and business conditions resulting from volatility in the stock and credit markets and the depth and duration of potential recession;
|
•
|
global political conditions, the occurrence of any terrorist attacks, including any nuclear, radiological, biological, or chemical events, or the outbreak and effects of war, and possible business disruption or economic contraction that may result from such events;
|
•
|
judicial decisions and rulings, new theories of liability, legal tactics, and settlement terms;
|
•
|
the effects of public company bankruptcies and/or accounting restatements, as well as disclosures by and investigations of public companies relating to possible accounting irregularities, and other corporate governance issues, including the effects of such events on:
|
•
|
the capital markets;
|
•
|
the markets for directors and officers (D&O) and errors and omissions (E&O) insurance; and
|
•
|
claims and litigation arising out of such disclosures or practices by other companies;
|
•
|
uncertainties relating to governmental, legislative and regulatory policies, developments, actions, investigations, and treaties, which, among other things, could subject us to insurance regulation or taxation in additional jurisdictions or affect our current operations;
|
•
|
the actual amount of new and renewal business, market acceptance of our products, and risks associated with the introduction of new products and services and entering new markets, including regulatory constraints on exit strategies;
|
•
|
the competitive environment in which we operate, including trends in pricing or in policy terms and conditions, which may differ from our projections and changes in market conditions that could render our business strategies ineffective or obsolete;
|
•
|
acquisitions made by us performing differently than expected, our failure to realize anticipated expense-related efficiencies or growth from acquisitions, the impact of acquisitions on our pre-existing organization, or announced acquisitions not closing;
|
•
|
risks associated with being a Swiss corporation, including reduced flexibility with respect to certain aspects of capital management and the potential for additional regulatory burdens;
|
•
|
the potential impact from government-mandated insurance coverage for acts of terrorism;
|
•
|
the availability of borrowings and letters of credit under our credit facilities;
|
•
|
the adequacy of collateral supporting funded high deductible programs;
|
•
|
changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers;
|
•
|
material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements;
|
•
|
the effects of investigations into market practices in the property and casualty (P&C) industry;
|
•
|
changing rates of inflation and other economic conditions, for example, recession;
|
•
|
the amount of dividends received from subsidiaries;
|
•
|
loss of the services of any of our executive officers without suitable replacements being recruited in a reasonable time frame;
|
•
|
the ability of our technology resources, including information systems and security, to perform as anticipated such as with respect to preventing material information technology failures or third-party infiltrations or hacking resulting in consequences adverse to ACE or its customers or partners; and
|
•
|
management’s response to these factors and actual events (including, but not limited to, those described above).
|
•
|
The Siam Commercial Samaggi Insurance PCL (Samaggi) (we and our local partner acquired 60.86 percent ownership on April 28, 2014, and subsequently acquired an additional
32.17 percent
ownership through a mandatory tender offer, which expired on June 17, 2014);
|
•
|
ABA Seguros (May 2, 2013); and
|
•
|
Fianzas Monterrey (April 1, 2013).
|
•
|
Net income was $785 million compared with $916 million in the prior year period.
|
•
|
Total company net premiums written increased 2.4 percent.
|
•
|
The P&C combined ratio was 86.3 percent compared with 86.5 percent in the prior year period. The GAAP combined ratio was 87.3 percent compared with 86.5 percent in the prior year period.
|
•
|
The current accident year P&C combined ratio excluding catastrophe losses was 89.8 percent, unchanged from the prior year period.
|
•
|
The P&C expense ratio was 27.8 percent compared with 25.8 percent in the prior year period. The current quarter ratio increased primarily due to purchase accounting adjustments which favorably impacted the prior year ratio.
|
•
|
Total pre-tax and after-tax catastrophe losses including reinstatement premiums were $86 million (2.1 percentage points of the combined ratio) and $76 million, respectively, compared with $78 million (1.8 percentage points of the combined ratio) and $70 million, respectively, in the prior year period.
|
•
|
Favorable prior period development pre-tax and after-tax were $232 million (5.6 percentage points of the combined ratio) and $172 million, respectively, compared with $210 million (5.1 percentage points of the combined ratio) and $162 million, respectively, in the prior year period.
|
•
|
Operating cash flow was $1.1 billion for the quarter.
|
•
|
Net investment income increased 8.5 percent to $566 million primarily due to an increase in the invested asset base, an increase in private equity distributions, and an increase in call activity in our corporate bond portfolio.
|
•
|
Share repurchases totaled $450 million, or approximately 4.3 million shares, during the quarter.
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13
|
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13
|
|
||||
Net premiums written
|
$
|
4,729
|
|
|
$
|
4,620
|
|
|
2.4
|
%
|
|
$
|
13,473
|
|
|
$
|
12,809
|
|
|
5.2
|
%
|
Net premiums earned
|
4,754
|
|
|
4,610
|
|
|
3.1
|
%
|
|
13,056
|
|
|
12,250
|
|
|
6.6
|
%
|
||||
Net investment income
|
566
|
|
|
522
|
|
|
8.5
|
%
|
|
1,675
|
|
|
1,587
|
|
|
5.6
|
%
|
||||
Net realized gains (losses)
|
(120
|
)
|
|
40
|
|
|
NM
|
|
|
(297
|
)
|
|
350
|
|
|
NM
|
|
||||
Total revenues
|
5,200
|
|
|
5,172
|
|
|
0.5
|
%
|
|
14,434
|
|
|
14,187
|
|
|
1.7
|
%
|
||||
Losses and loss expenses
|
2,684
|
|
|
2,655
|
|
|
1.1
|
%
|
|
7,233
|
|
|
6,831
|
|
|
5.9
|
%
|
||||
Policy benefits
|
125
|
|
|
138
|
|
|
(9.4
|
)%
|
|
383
|
|
|
379
|
|
|
1.1
|
%
|
||||
Policy acquisition costs
|
825
|
|
|
678
|
|
|
21.7
|
%
|
|
2,311
|
|
|
1,957
|
|
|
18.1
|
%
|
||||
Administrative expenses
|
554
|
|
|
563
|
|
|
(1.6
|
)%
|
|
1,655
|
|
|
1,641
|
|
|
0.9
|
%
|
||||
Interest expense
|
70
|
|
|
72
|
|
|
(2.8
|
)%
|
|
213
|
|
|
205
|
|
|
3.9
|
%
|
||||
Other (income) expense
|
(19
|
)
|
|
(5
|
)
|
|
NM
|
|
|
(61
|
)
|
|
22
|
|
|
NM
|
|
||||
Total expenses
|
4,239
|
|
|
4,101
|
|
|
3.4
|
%
|
|
11,734
|
|
|
11,035
|
|
|
6.3
|
%
|
||||
Income before income tax
|
961
|
|
|
1,071
|
|
|
(10.3
|
)%
|
|
2,700
|
|
|
3,152
|
|
|
(14.3
|
)%
|
||||
Income tax expense
|
176
|
|
|
155
|
|
|
13.5
|
%
|
|
402
|
|
|
392
|
|
|
2.6
|
%
|
||||
Net income
|
$
|
785
|
|
|
$
|
916
|
|
|
(14.2
|
)%
|
|
$
|
2,298
|
|
|
$
|
2,760
|
|
|
(16.7
|
)%
|
NM – not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
||||
Commercial P&C (retail and wholesale)
|
$
|
1,981
|
|
|
$
|
1,929
|
|
|
2.6
|
%
|
|
$
|
6,057
|
|
|
$
|
5,775
|
|
|
4.9
|
%
|
Personal and small commercial lines
|
591
|
|
|
509
|
|
|
16.1
|
%
|
|
1,715
|
|
|
1,400
|
|
|
22.5
|
%
|
||||
Reinsurance
|
208
|
|
|
265
|
|
|
(21.2
|
)%
|
|
794
|
|
|
836
|
|
|
(5.0
|
)%
|
||||
Property, casualty, and all other
|
2,780
|
|
|
2,703
|
|
|
2.8
|
%
|
|
8,566
|
|
|
8,011
|
|
|
6.9
|
%
|
||||
Agriculture
|
764
|
|
|
805
|
|
|
(5.2
|
)%
|
|
1,346
|
|
|
1,371
|
|
|
(1.8
|
)%
|
||||
Personal accident (A&H)
|
937
|
|
|
879
|
|
|
6.6
|
%
|
|
2,815
|
|
|
2,718
|
|
|
3.6
|
%
|
||||
Life
|
248
|
|
|
233
|
|
|
6.5
|
%
|
|
746
|
|
|
709
|
|
|
5.2
|
%
|
||||
Total consolidated
|
$
|
4,729
|
|
|
$
|
4,620
|
|
|
2.4
|
%
|
|
$
|
13,473
|
|
|
$
|
12,809
|
|
|
5.2
|
%
|
Total consolidated - constant dollars (C$)
(1)
|
|
|
$
|
4,636
|
|
|
2.0
|
%
|
|
|
|
$
|
12,733
|
|
|
5.8
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2014
% of Total |
|
|
2013
% of Total |
|
|
|
|
2014
% of Total |
|
|
2013
% of Total |
|
|
|
||||||
Commercial P&C (retail and wholesale)
|
42
|
%
|
|
42
|
%
|
|
|
|
45
|
%
|
|
45
|
%
|
|
|
||||||
Personal and small commercial lines
|
13
|
%
|
|
11
|
%
|
|
|
|
13
|
%
|
|
11
|
%
|
|
|
||||||
Reinsurance
|
4
|
%
|
|
6
|
%
|
|
|
|
5
|
%
|
|
6
|
%
|
|
|
||||||
Property, casualty, and all other
|
59
|
%
|
|
59
|
%
|
|
|
|
63
|
%
|
|
62
|
%
|
|
|
||||||
Agriculture
|
16
|
%
|
|
17
|
%
|
|
|
|
10
|
%
|
|
11
|
%
|
|
|
||||||
Personal accident (A&H)
|
20
|
%
|
|
19
|
%
|
|
|
|
21
|
%
|
|
21
|
%
|
|
|
||||||
Life
|
5
|
%
|
|
5
|
%
|
|
|
|
6
|
%
|
|
6
|
%
|
|
|
||||||
Total consolidated
|
100
|
%
|
|
100
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
|
(1)
|
On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||
|
September 30
|
|
|
September 30
|
|
||||||
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Loss and loss expense ratio
|
59.5
|
%
|
|
60.7
|
%
|
|
58.5
|
%
|
|
59.0
|
%
|
Policy acquisition cost ratio
|
16.5
|
%
|
|
14.3
|
%
|
|
16.9
|
%
|
|
15.7
|
%
|
Administrative expense ratio
|
11.3
|
%
|
|
11.5
|
%
|
|
12.5
|
%
|
|
12.8
|
%
|
GAAP combined ratio
|
87.3
|
%
|
|
86.5
|
%
|
|
87.9
|
%
|
|
87.5
|
%
|
Gains on crop derivatives
|
(1.0
|
)%
|
|
—
|
%
|
|
(0.4
|
)%
|
|
—
|
%
|
P&C combined ratio
|
86.3
|
%
|
|
86.5
|
%
|
|
87.5
|
%
|
|
87.5
|
%
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||
|
September 30
|
|
|
September 30
|
|
||||||
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Loss and loss expense ratio, including gains on crop derivatives
|
58.5
|
%
|
|
60.7
|
%
|
|
58.1
|
%
|
|
59.0
|
%
|
Catastrophe losses and related reinstatement premiums
|
(2.0
|
)%
|
|
(1.9
|
)%
|
|
(1.9
|
)%
|
|
(1.8
|
)%
|
Prior period development
|
5.7
|
%
|
|
5.3
|
%
|
|
3.7
|
%
|
|
3.9
|
%
|
Loss and loss expense ratio, adjusted
|
62.2
|
%
|
|
64.1
|
%
|
|
59.9
|
%
|
|
61.1
|
%
|
•
|
Net adverse development of
$25
million in long-tail business, primarily from:
|
•
|
Favorable development of $40 million in our medical risk operations, primarily impacting the 2009 and 2010 accident years. Paid and reported loss activity for these businesses has been less than previously expected. In addition, we have also increased our weighting towards experience-based methods for several accident years resulting in a reduction in our estimate of losses for those years;
|
•
|
Favorable development of $33 million in our financial solutions business, primarily in the 2010 and prior accident years. Net favorable development principally resulted from the recognition of lower than expected loss activity on two large excess liability transactions;
|
•
|
Net adverse development of $26 million in our workers’ compensation lines, with adverse development in the 2013 accident year and favorable development in accident years 2009 and 2010. Adverse development in the 2013 accident year is being driven by one large account which is experiencing higher than expected claims frequency and severity; and
|
•
|
Adverse development of $69 million in Brandywine, including adverse development of $61 million for environmental liabilities and adverse development of $8 million for other exposures including unallocated loss adjustment expenses for the run-off operations, impacting accident years 1996 and prior. Adverse development in environmental was largely a function of changes in individual account estimates for a small number of insureds experiencing higher costs to remediate as well as higher defense costs.
|
•
|
Net favorable development of
$14
million in short-tail business, driven by net favorable development of $20 million in our energy and technical risk property business, primarily impacting the 2012 and 2013 accident years. Across most lines, paid and reported loss activity was lower than expected.
|
•
|
Net favorable development of
$55
million in long-tail business, primarily from:
|
•
|
Favorable development of $67 million in our excess casualty and umbrella businesses. Resolution of a disputed matter on an individual claim led to a release of $42 million in the 2003 accident year, and lower than expected reported activity across a number of years drove the remaining improvement;
|
•
|
Favorable development of $40 million in our medical risk operations due to the same factors experienced for the three months ended September 30, 2014 as described above;
|
•
|
Favorable development of $33 million in our financial solutions business due to the same factors experienced for the three months ended September 30, 2014 as described above;
|
•
|
Favorable development of $26 million in our surety business, primarily from favorable claims emergence in the 2012 accident year;
|
•
|
Adverse development of $26 million in our workers’ compensation lines due to the same factors experienced for the three months ended September 30, 2014 as described above;
|
•
|
Net favorable development of $21 million in our auto liability excess lines primarily impacting the 2009 accident year. Reported activity on loss and allocated loss expenses was lower than expected based on estimates from our prior review and original pricing assumptions; and
|
•
|
Net adverse development of $105 million in our Brandywine environmental and run-off portfolios, primarily in general and products liability and workers’ compensation lines, including unallocated loss adjustment expenses, impacting the 1996 and prior accident years. Adverse development in environmental was largely a function of changes in individual account estimates for a small number of insureds experiencing higher costs to remediate as well as higher defense costs. Adverse development in individual accounts and specific claims emergence drove the increase in general liability and workers' compensation.
|
•
|
Net favorable development of
$41
million in short-tail business, driven by net favorable development of $20 million in our energy and technical risk property business, due to the same factors experienced for the three months ended September 30, 2014 as described above.
|
•
|
Net favorable development of
$21
million in long-tail business, primarily from:
|
•
|
Favorable development of $61 million in our medical risk operations, primarily impacting the 2007 to 2009 accident years. Paid and reported loss activity for this business in these accident years continues to be lower than expected and we have increased our weighting applied to experience-based methods;
|
•
|
Favorable development of $25 million in our foreign casualty Controlled Master Program and Cash Flow portfolios affecting the 2009 and prior accident years. Paid and reported loss activity for this business in these accident years continue to be lower than expected and we have increased our weighting applied to experience-based methods; and
|
•
|
Adverse development of $59 million in our Brandywine environmental liabilities and adverse development of $2 million for other exposures including unallocated loss adjustment expenses for the runoff operations, impacting accident years 1996 and prior. The increase was due to a number of factors including adverse court rulings, higher future cost estimates, and higher than expected payment activity.
|
•
|
Net favorable development of
$69
million in long-tail business, primarily from:
|
•
|
Favorable development of $61 million in our medical risk operations, primarily impacting the 2007 to 2009 accident years due to the same factors experienced for the three months ended September 30, 2013 as described above;
|
•
|
Favorable development of $50 million in our U.S. excess casualty and umbrella businesses primarily affecting the 2007 and prior accident years. Reported activity on loss and allocated loss expenses was lower than expected based on estimates from our prior review. In addition, increased weighting was applied to experience-based methods in the current review for these accident periods;
|
•
|
Net favorable development of $28 million in our national accounts portfolios which consist of commercial auto, general liability and workers' compensation lines of business. This favorable movement was the net impact of favorable and adverse movements, including:
|
•
|
Favorable development of $40 million related to our annual assessment of multi-claimant events including industrial accidents, impacting the 2012 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses;
|
•
|
Adverse development of $40 million predominantly in workers' compensation, primarily impacting the 2006 and prior accident years. The development was a function of higher than expected reported loss activity, higher allocated loss adjustment expenses, as well as an increase in weighting applied to experience-based methods; and
|
•
|
Net favorable development of $28 million across a number of lines and accident years, none of which was significant individually or in the aggregate.
|
•
|
Favorable development of $25 million in our foreign casualty Controlled Master Program and Cash Flow portfolios affecting the 2009 and prior accident years due to the same factors experienced for the three months ended September 30, 2013 as described above;
|
•
|
Favorable development of $22 million in our surety business primarily affecting the 2011 accident year. Reported claims to date in the 2011 accident year are lower than historical averages which in turn has generated lower than expected reported loss activity since our prior review;
|
•
|
Adverse development of $23 million in our construction business affecting the 2012 and prior accident years. The adverse development was realized in both our workers' compensation and general liability product lines where loss activity was higher than expected since our prior review; and
|
•
|
Net adverse development of $92 million in our Brandywine environmental and run-off portfolios of general liability and workers' compensation, including unallocated loss adjustment expenses due to the same factors experienced for the three months ended September 30, 2013 as described above.
|
•
|
Net favorable development of
$37
million in short-tail business primarily in our U.S. retail and wholesale property and inland marine portfolios. Retail property improved across all accident years, primarily in 2010 and 2011, mainly due to favorable case incurred emergence and favorable settlements of several large claims. Wholesale estimates for prior year improved, primarily in the 2011 and 2012 accident years as paid and reported loss activity were lower than expected.
|
•
|
Net favorable development of $185 million in long-tail business, primarily from:
|
•
|
Net favorable development of $104 million in casualty lines with favorable development of $149 million in accident years 2010 and prior due to favorable loss experience and adverse development of $45 million in accident years 2011 to 2013, predominantly due to large loss experience in U.K. primary and excess lines.
|
•
|
Favorable development of $52 million on an older liability case. This release follows discussions with defense counsel, a review of key legal briefing, and a coverage analysis, all of which was completed in the third quarter of 2014 and after which it was concluded that these reserves were no longer required.
|
•
|
Net favorable development of $28 million in financial lines with favorable development of $99 million in accident years 2010 and prior due to favorable loss experience and adverse development of $71 million in accident years 2011 to 2013. The adverse development was primarily due to large loss experience in D&O and financial institutions.
|
•
|
Favorable development of $34 million in short-tail business, primarily in aviation lines. Favorable loss experience was mainly in accident years 2008 to 2011 in the aviation products, airlines and airport liability lines.
|
•
|
Net favorable development of $181 million in long-tail business due primarily to the same factors experienced for the three months ended September 30, 2014 as described above.
|
•
|
Favorable development of $124 million in short-tail lines, primarily from:
|
•
|
Favorable development of $49 million in property lines with favorable development of $29 million in accident year 2013 due to favorable large loss experience, and favorable development of $20 million in accident years 2012 and prior due to favorable development on specific claims and an increase in weighting applied to experience-based methods;
|
•
|
Favorable development of $30 million in aviation lines due to the same factors experienced for the three months ended September 30, 2014 as described above; and
|
•
|
Favorable development of $35 million in marine and personal lines with favorable development of $25 million in accident years 2010 to 2013 due to an increase in weighting applied to experience-based methods and favorable development of $10 million in accident years 2009 and prior due to case specific claim reductions.
|
•
|
Net favorable development of
$121
million in long-tail business, primarily from:
|
•
|
Favorable development of $86 million in casualty (primary and excess). Actuarial reviews indicated favorable claim activity of $118 million in accident years 2009 and prior. These reviews reflected an increase in weighting applied to experience-based methods as these accident years continued to mature. Adverse development of $32 million in accident years 2010 to 2012 was primarily due to development on specific individual large claims and also on several accounts now exposed on an excess basis following adverse loss development of the underlying aggregate retention layer; and
|
•
|
Favorable development of $35 million in financial lines. Actuarial reviews indicated favorable claim activity of $63 million in accident years 2009 and prior. These reviews reflected an increase in weighting applied to experience-based methods as these accident years continued to mature. Adverse development of $28 million in accident year 2012 was incurred due to notifications on specific large claims.
|
•
|
Net favorable development of
$28
million in short-tail business primarily in aviation lines, mainly in accident years 2009 and prior. Case specific claim reductions since the last actuarial review was the predominant reason for the releases.
|
•
|
Net favorable development of
$120
million in long-tail business due to the same factors experienced for the three months ended September 30, 2013 as described above.
|
•
|
Net favorable development of
$103
million in short-tail business, primarily from:
|
•
|
Net favorable development of $47 million in property and marine lines. Favorable development of $34 million was in accident years 2009 to 2012 and was spread across most of the individual property and marine lines. There was no predominant source of this emergence which reflects generally favorable experience. Favorable development of $13 million in accident years 2007 and prior was due to developments on specific litigated claims;
|
•
|
Net favorable development of $34 million across all other short-tail lines. The favorable development was predominantly for A&H and personal lines businesses in accident years 2010 to 2012. Favorable case developments led to lower experience-based indications in these lines and accident years; and
|
•
|
Net favorable development of $22 million in aviation lines, mainly in accident years 2009 and prior. Case specific claim reductions since the last actuarial review was the predominant reason for the releases.
|
•
|
Net favorable development of
$28
million in long-tail business primarily in medical malpractice business principally in treaty years 2005 to 2010. Following reserve studies, we reflected an increase in weighting applied to experience-based methods. Since experience has tended to be generally favorable, compared with assumptions, the changes resulted in favorable development.
|
•
|
Net favorable development of
$57
million in long-tail business, primarily from:
|
•
|
Favorable development of $20 million in medical malpractice business principally in treaty years 2005 to 2010 due to the same factors experienced for the three months ended September 30, 2013 as described above; and
|
•
|
Favorable development of $43 million comprised of $18 million in the casualty line of business principally in treaty years 2007 and prior, and $25 million in the professional liability/D&O line of business principally in treaty years 2008 and prior. Following reserve studies, we reflected an increase in weighting applied to experience-based methods. Since experience has tended to be generally favorable compared with assumptions, the changes resulted in the favorable development referenced above.
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
||||
Net premiums written
|
$
|
1,541
|
|
|
$
|
1,500
|
|
|
2.7
|
%
|
|
$
|
4,594
|
|
|
$
|
4,313
|
|
|
6.5
|
%
|
Net premiums earned
|
1,518
|
|
|
1,444
|
|
|
5.1
|
%
|
|
4,547
|
|
|
4,210
|
|
|
8.0
|
%
|
||||
Losses and loss expenses
|
1,053
|
|
|
963
|
|
|
9.3
|
%
|
|
3,009
|
|
|
2,791
|
|
|
7.8
|
%
|
||||
Policy acquisition costs
|
169
|
|
|
159
|
|
|
6.3
|
%
|
|
480
|
|
|
444
|
|
|
8.1
|
%
|
||||
Administrative expenses
|
165
|
|
|
153
|
|
|
7.8
|
%
|
|
501
|
|
|
437
|
|
|
14.6
|
%
|
||||
Underwriting income
|
131
|
|
|
169
|
|
|
(22.5
|
)%
|
|
557
|
|
|
538
|
|
|
3.5
|
%
|
||||
Net investment income
|
277
|
|
|
254
|
|
|
9.1
|
%
|
|
812
|
|
|
755
|
|
|
7.5
|
%
|
||||
Net realized gains (losses)
|
(5
|
)
|
|
9
|
|
|
NM
|
|
|
(25
|
)
|
|
63
|
|
|
NM
|
|
||||
Interest expense
|
2
|
|
|
3
|
|
|
(33.3
|
)%
|
|
7
|
|
|
4
|
|
|
75.0
|
%
|
||||
Other (income) expense
|
(31
|
)
|
|
(13
|
)
|
|
138.5
|
%
|
|
(75
|
)
|
|
(38
|
)
|
|
97.4
|
%
|
||||
Income tax expense
|
73
|
|
|
79
|
|
|
(7.6
|
)%
|
|
247
|
|
|
264
|
|
|
(6.4
|
)%
|
||||
Net income
|
$
|
359
|
|
|
$
|
363
|
|
|
(1.1
|
)%
|
|
$
|
1,165
|
|
|
$
|
1,126
|
|
|
3.5
|
%
|
Loss and loss expense ratio
|
69.3
|
%
|
|
66.7
|
%
|
|
|
|
66.2
|
%
|
|
66.3
|
%
|
|
|
||||||
Policy acquisition cost ratio
|
11.1
|
%
|
|
11.1
|
%
|
|
|
|
10.5
|
%
|
|
10.6
|
%
|
|
|
||||||
Administrative expense ratio
|
11.0
|
%
|
|
10.5
|
%
|
|
|
|
11.1
|
%
|
|
10.3
|
%
|
|
|
||||||
Combined ratio
|
91.4
|
%
|
|
88.3
|
%
|
|
|
|
87.8
|
%
|
|
87.2
|
%
|
|
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
||||
Commercial P&C (retail and wholesale)
|
$
|
1,182
|
|
|
$
|
1,137
|
|
|
4.0
|
%
|
|
$
|
3,567
|
|
|
$
|
3,329
|
|
|
7.2
|
%
|
Personal and small commercial lines
|
231
|
|
|
208
|
|
|
10.8
|
%
|
|
673
|
|
|
600
|
|
|
12.1
|
%
|
||||
Personal accident (A&H)
|
105
|
|
|
99
|
|
|
6.0
|
%
|
|
307
|
|
|
281
|
|
|
8.7
|
%
|
||||
Net premiums earned
|
$
|
1,518
|
|
|
$
|
1,444
|
|
|
5.1
|
%
|
|
$
|
4,547
|
|
|
$
|
4,210
|
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2014
% of Total
|
|
|
2013
% of Total
|
|
|
|
|
|
2014
% of Total
|
|
|
2013
% of Total
|
|
|
|
|
||||
Commercial P&C (retail and wholesale)
|
78
|
%
|
|
79
|
%
|
|
|
|
78
|
%
|
|
79
|
%
|
|
|
||||||
Personal and small commercial lines
|
15
|
%
|
|
14
|
%
|
|
|
|
15
|
%
|
|
14
|
%
|
|
|
||||||
Personal accident (A&H)
|
7
|
%
|
|
7
|
%
|
|
|
|
7
|
%
|
|
7
|
%
|
|
|
||||||
Net premiums earned
|
100
|
%
|
|
100
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||
|
September 30
|
|
|
September 30
|
|
||||||
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Loss and loss expense ratio, as reported
|
69.3
|
%
|
|
66.7
|
%
|
|
66.2
|
%
|
|
66.3
|
%
|
Catastrophe losses and related reinstatement premiums
|
(2.3
|
)%
|
|
(1.5
|
)%
|
|
(2.3
|
)%
|
|
(2.0
|
)%
|
Prior period development
|
(0.1
|
)%
|
|
1.7
|
%
|
|
2.3
|
%
|
|
2.7
|
%
|
Loss and loss expense ratio, adjusted
|
66.9
|
%
|
|
66.9
|
%
|
|
66.2
|
%
|
|
67.0
|
%
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
||||
Net premiums written
|
$
|
764
|
|
|
$
|
805
|
|
|
(5.2
|
)%
|
|
$
|
1,346
|
|
|
$
|
1,371
|
|
|
(1.8
|
)%
|
Net premiums earned
|
766
|
|
|
849
|
|
|
(9.8
|
)%
|
|
1,199
|
|
|
1,252
|
|
|
(4.2
|
)%
|
||||
Losses and loss expenses
(1)
|
641
|
|
|
747
|
|
|
(14.2
|
)%
|
|
1,048
|
|
|
1,072
|
|
|
(2.2
|
)%
|
||||
Policy acquisition costs
|
41
|
|
|
32
|
|
|
28.1
|
%
|
|
69
|
|
|
56
|
|
|
23.2
|
%
|
||||
Administrative expenses
|
3
|
|
|
5
|
|
|
(40.0
|
)%
|
|
5
|
|
|
13
|
|
|
(61.5
|
)%
|
||||
Underwriting income
|
81
|
|
|
65
|
|
|
24.6
|
%
|
|
77
|
|
|
111
|
|
|
(30.6
|
)%
|
||||
Net investment income
|
6
|
|
|
6
|
|
|
—
|
%
|
|
19
|
|
|
19
|
|
|
—
|
%
|
||||
Net realized gains (losses) excluding gains (losses) on crop derivatives
(1)
|
—
|
|
|
1
|
|
|
NM
|
|
|
—
|
|
|
2
|
|
|
NM
|
|
||||
Other (income) expense
|
7
|
|
|
8
|
|
|
(12.5
|
)%
|
|
24
|
|
|
24
|
|
|
—
|
%
|
||||
Income tax expense
|
23
|
|
|
14
|
|
|
64.3
|
%
|
|
21
|
|
|
24
|
|
|
(12.5
|
)%
|
||||
Net income
|
$
|
57
|
|
|
$
|
50
|
|
|
14.0
|
%
|
|
$
|
51
|
|
|
$
|
84
|
|
|
(39.3
|
)%
|
Loss and loss expense ratio
|
83.7
|
%
|
|
88.0
|
%
|
|
|
|
87.4
|
%
|
|
85.6
|
%
|
|
|
||||||
Policy acquisition cost ratio
|
5.4
|
%
|
|
3.8
|
%
|
|
|
|
5.8
|
%
|
|
4.4
|
%
|
|
|
||||||
Administrative expense ratio
|
0.4
|
%
|
|
0.5
|
%
|
|
|
|
0.4
|
%
|
|
1.1
|
%
|
|
|
||||||
Combined ratio
|
89.5
|
%
|
|
92.3
|
%
|
|
|
|
93.6
|
%
|
|
91.1
|
%
|
|
|
(1)
|
(Gains) losses on crop derivatives are reclassified from Net realized gains (losses) to Losses and loss expenses for purposes of presenting Insurance - North American Agriculture underwriting income. Refer to Note 7 and Note 10 to the consolidated financial statements for more information on these derivatives.
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||
|
September 30
|
|
|
September 30
|
|
||||||
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Loss and loss expense ratio, as reported
|
83.7
|
%
|
|
88.0
|
%
|
|
87.4
|
%
|
|
85.6
|
%
|
Catastrophe losses and related reinstatement premiums
|
(0.3
|
)%
|
|
(0.3
|
)%
|
|
(1.0
|
)%
|
|
(0.4
|
)%
|
Prior period development
|
0.4
|
%
|
|
1.2
|
%
|
|
(3.5
|
)%
|
|
1.1
|
%
|
Loss and loss expense ratio, adjusted
|
83.8
|
%
|
|
88.9
|
%
|
|
82.9
|
%
|
|
86.3
|
%
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
|
||||
Net premiums written
|
$
|
1,719
|
|
|
$
|
1,571
|
|
|
9.4
|
%
|
(1)
|
$
|
5,250
|
|
|
$
|
4,821
|
|
|
8.9
|
%
|
(1)
|
Net premiums earned
|
1,726
|
|
|
1,611
|
|
|
7.2
|
%
|
|
5,047
|
|
|
4,633
|
|
|
9.0
|
%
|
|
||||
Losses and loss expenses
|
707
|
|
|
712
|
|
|
(0.7
|
)%
|
|
2,354
|
|
|
2,227
|
|
|
5.7
|
%
|
|
||||
Policy acquisition costs
|
418
|
|
|
349
|
|
|
19.8
|
%
|
|
1,206
|
|
|
1,048
|
|
|
15.1
|
%
|
|
||||
Administrative expenses
|
258
|
|
|
263
|
|
|
(1.9
|
)%
|
|
764
|
|
|
750
|
|
|
1.9
|
%
|
|
||||
Underwriting income
|
343
|
|
|
287
|
|
|
19.5
|
%
|
|
723
|
|
|
608
|
|
|
18.9
|
%
|
|
||||
Net investment income
|
130
|
|
|
128
|
|
|
1.6
|
%
|
|
398
|
|
|
396
|
|
|
0.5
|
%
|
|
||||
Net realized gains (losses)
|
(75
|
)
|
|
(8
|
)
|
|
NM
|
|
|
(71
|
)
|
|
34
|
|
|
NM
|
|
|
||||
Interest expense
|
2
|
|
|
1
|
|
|
100.0
|
%
|
|
4
|
|
|
4
|
|
|
—
|
%
|
|
||||
Other (income) expense
|
6
|
|
|
14
|
|
|
(57.1
|
)%
|
|
8
|
|
|
30
|
|
|
(73.3
|
)%
|
|
||||
Income tax expense
|
97
|
|
|
78
|
|
|
24.4
|
%
|
|
189
|
|
|
174
|
|
|
8.6
|
%
|
|
||||
Net income
|
$
|
293
|
|
|
$
|
314
|
|
|
(6.7
|
)%
|
|
$
|
849
|
|
|
$
|
830
|
|
|
2.3
|
%
|
|
Loss and loss expense ratio
|
40.9
|
%
|
|
44.2
|
%
|
|
|
|
46.6
|
%
|
|
48.1
|
%
|
|
|
|
||||||
Policy acquisition cost ratio
|
24.3
|
%
|
|
21.6
|
%
|
|
|
|
23.9
|
%
|
|
22.6
|
%
|
|
|
|
||||||
Administrative expense ratio
|
14.9
|
%
|
|
16.4
|
%
|
|
|
|
15.2
|
%
|
|
16.2
|
%
|
|
|
|
||||||
Combined ratio
|
80.1
|
%
|
|
82.2
|
%
|
|
|
|
85.7
|
%
|
|
86.9
|
%
|
|
|
|
|
Three Months Ended September 30
|
|
|
% Change
|
|
||||||||||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2014
% of Total
|
|
|
2013
|
|
|
2013
% of Total
|
|
|
C$
(1)
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
C$
(1)
Q-14 vs.
Q-13
|
|
|||
Line of Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial P&C (retail and wholesale)
|
$
|
797
|
|
|
46
|
%
|
|
$
|
770
|
|
|
48
|
%
|
|
$
|
784
|
|
|
3.5
|
%
|
|
1.7
|
%
|
Personal and small commercial lines
|
341
|
|
|
20
|
%
|
|
294
|
|
|
18
|
%
|
|
289
|
|
|
16.0
|
%
|
|
18.0
|
%
|
|||
Personal accident (A&H)
|
588
|
|
|
34
|
%
|
|
547
|
|
|
34
|
%
|
|
555
|
|
|
7.5
|
%
|
|
6.0
|
%
|
|||
Net premiums earned
|
$
|
1,726
|
|
|
100
|
%
|
|
$
|
1,611
|
|
|
100
|
%
|
|
$
|
1,628
|
|
|
7.2
|
%
|
|
6.0
|
%
|
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Europe / U.K.
|
$
|
778
|
|
|
45
|
%
|
|
$
|
765
|
|
|
48
|
%
|
|
$
|
812
|
|
|
1.7
|
%
|
|
(4.2
|
)%
|
Asia Pacific
|
420
|
|
|
24
|
%
|
|
338
|
|
|
21
|
%
|
|
319
|
|
|
24.3
|
%
|
|
31.7
|
%
|
|||
Far East
|
112
|
|
|
7
|
%
|
|
117
|
|
|
7
|
%
|
|
112
|
|
|
(4.3
|
)%
|
|
—
|
%
|
|||
Latin America
|
416
|
|
|
24
|
%
|
|
391
|
|
|
24
|
%
|
|
385
|
|
|
6.4
|
%
|
|
8.1
|
%
|
|||
Net premiums earned
|
$
|
1,726
|
|
|
100
|
%
|
|
$
|
1,611
|
|
|
100
|
%
|
|
$
|
1,628
|
|
|
7.2
|
%
|
|
6.0
|
%
|
|
Nine Months Ended September 30
|
|
|
% Change
|
|
||||||||||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2014
% of Total |
|
|
2013
|
|
|
2013
% of Total |
|
|
C$
(1)
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
|
C$
(1)
YTD-14 vs.
YTD-13 |
|
|||
Line of Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial P&C (retail and wholesale)
|
$
|
2,358
|
|
|
47
|
%
|
|
$
|
2,281
|
|
|
49
|
%
|
|
$
|
2,296
|
|
|
3.4
|
%
|
|
2.7
|
%
|
Personal and small commercial lines
|
964
|
|
|
19
|
%
|
|
739
|
|
|
16
|
%
|
|
703
|
|
|
30.4
|
%
|
|
37.1
|
%
|
|||
Personal accident (A&H)
|
1,725
|
|
|
34
|
%
|
|
1,613
|
|
|
35
|
%
|
|
1,593
|
|
|
7.0
|
%
|
|
8.3
|
%
|
|||
Net premiums earned
|
$
|
5,047
|
|
|
100
|
%
|
|
$
|
4,633
|
|
|
100
|
%
|
|
$
|
4,592
|
|
|
9.0
|
%
|
|
9.9
|
%
|
Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Europe / U.K.
|
$
|
2,331
|
|
|
46
|
%
|
|
$
|
2,231
|
|
|
48
|
%
|
|
$
|
2,385
|
|
|
4.5
|
%
|
|
(2.3
|
)%
|
Asia Pacific
|
1,158
|
|
|
23
|
%
|
|
1,030
|
|
|
22
|
%
|
|
919
|
|
|
12.4
|
%
|
|
26.0
|
%
|
|||
Far East
|
326
|
|
|
7
|
%
|
|
341
|
|
|
8
|
%
|
|
317
|
|
|
(4.4
|
)%
|
|
2.8
|
%
|
|||
Latin America
|
1,232
|
|
|
24
|
%
|
|
1,031
|
|
|
22
|
%
|
|
971
|
|
|
19.5
|
%
|
|
26.9
|
%
|
|||
Net premiums earned
|
$
|
5,047
|
|
|
100
|
%
|
|
$
|
4,633
|
|
|
100
|
%
|
|
$
|
4,592
|
|
|
9.0
|
%
|
|
9.9
|
%
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||
|
September 30
|
|
|
September 30
|
|
||||||
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Loss and loss expense ratio, as reported
|
40.9
|
%
|
|
44.2
|
%
|
|
46.6
|
%
|
|
48.1
|
%
|
Catastrophe losses and related reinstatement premiums
|
(2.3
|
)%
|
|
(2.0
|
)%
|
|
(1.6
|
)%
|
|
(1.6
|
)%
|
Prior period development
|
12.7
|
%
|
|
9.2
|
%
|
|
6.1
|
%
|
|
4.8
|
%
|
Loss and loss expense ratio, adjusted
|
51.3
|
%
|
|
51.4
|
%
|
|
51.1
|
%
|
|
51.3
|
%
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
||||
Net premiums written
|
$
|
208
|
|
|
$
|
265
|
|
|
(21.2
|
)%
|
|
$
|
794
|
|
|
$
|
836
|
|
|
(5.0
|
)%
|
Net premiums earned
|
255
|
|
|
239
|
|
|
6.3
|
%
|
|
800
|
|
|
731
|
|
|
9.3
|
%
|
||||
Losses and loss expenses
|
92
|
|
|
93
|
|
|
(1.1
|
)%
|
|
327
|
|
|
292
|
|
|
12.0
|
%
|
||||
Policy acquisition costs
|
74
|
|
|
52
|
|
|
42.3
|
%
|
|
201
|
|
|
148
|
|
|
35.8
|
%
|
||||
Administrative expenses
|
13
|
|
|
12
|
|
|
8.3
|
%
|
|
41
|
|
|
36
|
|
|
13.9
|
%
|
||||
Underwriting income
|
76
|
|
|
82
|
|
|
(7.3
|
)%
|
|
231
|
|
|
255
|
|
|
(9.4
|
)%
|
||||
Net investment income
|
81
|
|
|
66
|
|
|
22.7
|
%
|
|
238
|
|
|
209
|
|
|
13.9
|
%
|
||||
Net realized gains (losses)
|
6
|
|
|
(5
|
)
|
|
NM
|
|
|
(17
|
)
|
|
46
|
|
|
NM
|
|
||||
Interest expense
|
1
|
|
|
2
|
|
|
(50.0
|
)%
|
|
4
|
|
|
4
|
|
|
—
|
%
|
||||
Other (income) expense
|
(10
|
)
|
|
(7
|
)
|
|
42.9
|
%
|
|
(39
|
)
|
|
(13
|
)
|
|
200.0
|
%
|
||||
Income tax expense
|
11
|
|
|
16
|
|
|
(31.3
|
)%
|
|
31
|
|
|
31
|
|
|
—
|
%
|
||||
Net income
|
$
|
161
|
|
|
$
|
132
|
|
|
22.0
|
%
|
|
$
|
456
|
|
|
$
|
488
|
|
|
(6.6
|
)%
|
Loss and loss expense ratio
|
36.2
|
%
|
|
38.9
|
%
|
|
|
|
40.9
|
%
|
|
39.9
|
%
|
|
|
||||||
Policy acquisition cost ratio
|
28.8
|
%
|
|
21.7
|
%
|
|
|
|
25.0
|
%
|
|
20.2
|
%
|
|
|
||||||
Administrative expense ratio
|
5.2
|
%
|
|
5.2
|
%
|
|
|
|
5.2
|
%
|
|
5.0
|
%
|
|
|
||||||
Combined ratio
|
70.2
|
%
|
|
65.8
|
%
|
|
|
|
71.1
|
%
|
|
65.1
|
%
|
|
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD -14 vs.
YTD -13 |
|
||||
Property and all other
|
$
|
86
|
|
|
$
|
66
|
|
|
30.3
|
%
|
|
$
|
242
|
|
|
$
|
185
|
|
|
30.8
|
%
|
Casualty
|
106
|
|
|
98
|
|
|
8.2
|
%
|
|
365
|
|
|
323
|
|
|
13.0
|
%
|
||||
Property catastrophe
|
63
|
|
|
75
|
|
|
(16.0
|
)%
|
|
193
|
|
|
223
|
|
|
(13.5
|
)%
|
||||
Net premiums earned
|
$
|
255
|
|
|
$
|
239
|
|
|
6.3
|
%
|
|
$
|
800
|
|
|
$
|
731
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2014
% of Total
|
|
|
2013
% of Total
|
|
|
|
|
|
2014
% of Total
|
|
|
2013
% of Total
|
|
|
|
|
||||
Property and all other
|
34
|
%
|
|
28
|
%
|
|
|
|
30
|
%
|
|
25
|
%
|
|
|
||||||
Casualty
|
41
|
%
|
|
41
|
%
|
|
|
|
46
|
%
|
|
44
|
%
|
|
|
||||||
Property catastrophe
|
25
|
%
|
|
31
|
%
|
|
|
|
24
|
%
|
|
31
|
%
|
|
|
||||||
Net premiums earned
|
100
|
%
|
|
100
|
%
|
|
|
|
100
|
%
|
|
100
|
%
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||
|
September 30
|
|
|
September 30
|
|
||||||
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Loss and loss expense ratio, as reported
|
36.2
|
%
|
|
38.9
|
%
|
|
40.9
|
%
|
|
39.9
|
%
|
Catastrophe losses and related reinstatement premiums
|
(4.0
|
)%
|
|
(9.3
|
)%
|
|
(2.8
|
)%
|
|
(4.5
|
)%
|
Prior period development
|
10.6
|
%
|
|
15.0
|
%
|
|
7.4
|
%
|
|
9.5
|
%
|
Loss and loss expense ratio, adjusted
|
42.8
|
%
|
|
44.6
|
%
|
|
45.5
|
%
|
|
44.9
|
%
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
||||
Net premiums written
|
$
|
497
|
|
|
$
|
479
|
|
|
3.8
|
%
|
|
$
|
1,489
|
|
|
$
|
1,468
|
|
|
1.4
|
%
|
Net premiums earned
|
489
|
|
|
467
|
|
|
4.8
|
%
|
|
1,463
|
|
|
1,424
|
|
|
2.8
|
%
|
||||
Losses and loss expenses
|
145
|
|
|
141
|
|
|
2.8
|
%
|
|
442
|
|
|
443
|
|
|
(0.2
|
)%
|
||||
Policy benefits
|
125
|
|
|
138
|
|
|
(9.4
|
)%
|
|
383
|
|
|
379
|
|
|
1.1
|
%
|
||||
(Gains) losses from fair value changes in separate account assets
(1)
|
6
|
|
|
(14
|
)
|
|
NM
|
|
|
(5
|
)
|
|
(7
|
)
|
|
(28.6
|
)%
|
||||
Policy acquisition costs
|
123
|
|
|
86
|
|
|
43.0
|
%
|
|
355
|
|
|
261
|
|
|
36.0
|
%
|
||||
Administrative expenses
|
71
|
|
|
85
|
|
|
(16.5
|
)%
|
|
212
|
|
|
256
|
|
|
(17.2
|
)%
|
||||
Net investment income
|
69
|
|
|
61
|
|
|
13.1
|
%
|
|
199
|
|
|
187
|
|
|
6.4
|
%
|
||||
Life underwriting income
|
88
|
|
|
92
|
|
|
(4.3
|
)%
|
|
275
|
|
|
279
|
|
|
(1.4
|
)
|
||||
Net realized gains (losses)
|
(89
|
)
|
|
43
|
|
|
NM
|
|
|
(237
|
)
|
|
206
|
|
|
NM
|
|
||||
Interest expense
|
4
|
|
|
4
|
|
|
—
|
%
|
|
10
|
|
|
12
|
|
|
(16.7
|
)%
|
||||
Other (income) expense
(1)
|
(3
|
)
|
|
4
|
|
|
NM
|
|
|
8
|
|
|
7
|
|
|
14.3
|
%
|
||||
Income tax expense
|
12
|
|
|
10
|
|
|
20.0
|
%
|
|
34
|
|
|
33
|
|
|
3.0
|
%
|
||||
Net income (loss)
|
$
|
(14
|
)
|
|
$
|
117
|
|
|
NM
|
|
|
$
|
(14
|
)
|
|
$
|
433
|
|
|
NM
|
|
(1)
|
(Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP are reclassified from Other (income) expense for purposes of presenting Life underwriting income.
|
|
Three Months Ended
|
|
|
|
|
Nine Months Ended
|
|
|
|
||||||||||||
|
September 30
|
|
|
% Change
|
|
|
September 30
|
|
|
% Change
|
|
||||||||||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
|
Q-14 vs.
Q-13 |
|
|
2014
|
|
|
2013
|
|
|
YTD-14 vs.
YTD-13 |
|
||||
A&H
|
$
|
249
|
|
|
$
|
246
|
|
|
1.2
|
%
|
|
$
|
743
|
|
|
$
|
759
|
|
|
(2.1
|
)%
|
Life insurance
|
182
|
|
|
163
|
|
|
11.7
|
%
|
|
548
|
|
|
493
|
|
|
11.2
|
%
|
||||
Life reinsurance
|
66
|
|
|
70
|
|
|
(5.7
|
)%
|
|
198
|
|
|
216
|
|
|
(8.3
|
)%
|
||||
Net premiums written (excludes deposits below)
|
$
|
497
|
|
|
$
|
479
|
|
|
3.8
|
%
|
|
$
|
1,489
|
|
|
$
|
1,468
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits collected on universal life and investment contracts
|
$
|
246
|
|
|
$
|
183
|
|
|
34.4
|
%
|
|
$
|
730
|
|
|
$
|
607
|
|
|
20.3
|
%
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U. S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Amortization of intangible assets
|
$
|
27
|
|
|
$
|
30
|
|
|
$
|
78
|
|
|
$
|
68
|
|
Equity in net (income) loss of partially-owned entities
|
(67
|
)
|
|
(32
|
)
|
|
(166
|
)
|
|
(81
|
)
|
||||
(Gains) losses from fair value changes in separate account assets
|
6
|
|
|
(14
|
)
|
|
(5
|
)
|
|
(7
|
)
|
||||
Federal excise and capital taxes
|
6
|
|
|
7
|
|
|
15
|
|
|
18
|
|
||||
Acquisition-related costs
|
4
|
|
|
1
|
|
|
10
|
|
|
3
|
|
||||
Other
|
5
|
|
|
3
|
|
|
7
|
|
|
21
|
|
||||
Other (income) expense
|
$
|
(19
|
)
|
|
$
|
(5
|
)
|
|
$
|
(61
|
)
|
|
$
|
22
|
|
For the Year Ending December 31
|
Amortization of intangible assets
|
|
|
(in millions of U.S. dollars)
|
|||
Fourth quarter of 2014
|
$
|
26
|
|
2015
|
81
|
|
|
2016
|
68
|
|
|
2017
|
61
|
|
|
2018
|
57
|
|
|
2019
|
53
|
|
|
Total
|
$
|
346
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Fixed maturities
|
$
|
549
|
|
|
$
|
516
|
|
|
$
|
1,634
|
|
|
$
|
1,550
|
|
Short-term investments
|
11
|
|
|
7
|
|
|
29
|
|
|
20
|
|
||||
Equity securities
|
11
|
|
|
9
|
|
|
30
|
|
|
29
|
|
||||
Other investments
|
25
|
|
|
19
|
|
|
72
|
|
|
76
|
|
||||
Gross investment income
|
596
|
|
|
551
|
|
|
1,765
|
|
|
1,675
|
|
||||
Investment expenses
|
(30
|
)
|
|
(29
|
)
|
|
(90
|
)
|
|
(88
|
)
|
||||
Net investment income
|
$
|
566
|
|
|
$
|
522
|
|
|
$
|
1,675
|
|
|
$
|
1,587
|
|
|
Three Months Ended September 30, 2014
|
|
|
Three Months Ended September 30, 2013
|
|
||||||||||||||||||
(in millions of U.S. dollars)
|
Net
Realized
Gains
(Losses)
(1)
|
|
|
Net
Unrealized
Gains
(Losses)
|
|
|
Net
Impact
|
|
|
Net
Realized
Gains
(Losses)
(1)
|
|
|
Net
Unrealized
Gains
(Losses)
|
|
|
Net
Impact
|
|
||||||
Fixed maturities
|
$
|
18
|
|
|
$
|
(361
|
)
|
|
$
|
(343
|
)
|
|
$
|
17
|
|
|
$
|
(4
|
)
|
|
$
|
13
|
|
Fixed income derivatives
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total fixed maturities
|
5
|
|
|
(361
|
)
|
|
(356
|
)
|
|
21
|
|
|
(4
|
)
|
|
17
|
|
||||||
Public equity
|
(56
|
)
|
|
36
|
|
|
(20
|
)
|
|
7
|
|
|
2
|
|
|
9
|
|
||||||
Private equity
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
||||||
Other
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Subtotal
|
(51
|
)
|
|
(337
|
)
|
|
(388
|
)
|
|
28
|
|
|
(8
|
)
|
|
20
|
|
||||||
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value adjustment on insurance derivatives
|
(80
|
)
|
|
—
|
|
|
(80
|
)
|
|
134
|
|
|
—
|
|
|
134
|
|
||||||
S&P put option and futures
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|
(95
|
)
|
|
—
|
|
|
(95
|
)
|
||||||
Other derivatives
|
45
|
|
|
—
|
|
|
45
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Subtotal derivatives
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
|
38
|
|
|
—
|
|
|
38
|
|
||||||
Foreign exchange losses
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
||||||
Total gains (losses)
|
$
|
(120
|
)
|
|
$
|
(337
|
)
|
|
$
|
(457
|
)
|
|
$
|
40
|
|
|
$
|
(8
|
)
|
|
$
|
32
|
|
(1)
|
For the three months ended
September 30, 2014
, other-than-temporary impairments included
$4
million for fixed maturities. For the three months ended
September 30, 2013
, other-than-temporary impairments included
$4
million for fixed maturities.
|
|
Nine Months Ended September 30, 2014
|
|
|
Nine Months Ended September 30, 2013
|
|
||||||||||||||||||
(in millions of U.S. dollars)
|
Net
Realized
Gains
(Losses)
(1)
|
|
|
Net
Unrealized
Gains
(Losses)
|
|
|
Net
Impact
|
|
|
Net
Realized
Gains
(Losses)
(1)
|
|
|
Net
Unrealized
Gains
(Losses)
|
|
|
Net
Impact
|
|
||||||
Fixed maturities
|
$
|
49
|
|
|
$
|
638
|
|
|
$
|
687
|
|
|
$
|
84
|
|
|
$
|
(1,661
|
)
|
|
$
|
(1,577
|
)
|
Fixed income derivatives
|
(53
|
)
|
|
—
|
|
|
(53
|
)
|
|
62
|
|
|
—
|
|
|
62
|
|
||||||
Total fixed maturities
|
(4
|
)
|
|
638
|
|
|
634
|
|
|
146
|
|
|
(1,661
|
)
|
|
(1,515
|
)
|
||||||
Public equity
|
(60
|
)
|
|
70
|
|
|
10
|
|
|
13
|
|
|
(41
|
)
|
|
(28
|
)
|
||||||
Private equity
|
(3
|
)
|
|
43
|
|
|
40
|
|
|
(2
|
)
|
|
34
|
|
|
32
|
|
||||||
Other
|
(8
|
)
|
|
(7
|
)
|
|
(15
|
)
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Subtotal
|
(75
|
)
|
|
744
|
|
|
669
|
|
|
157
|
|
|
(1,667
|
)
|
|
(1,510
|
)
|
||||||
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value adjustment on insurance derivatives
|
(126
|
)
|
|
—
|
|
|
(126
|
)
|
|
563
|
|
|
—
|
|
|
563
|
|
||||||
S&P put option and futures
|
(106
|
)
|
|
—
|
|
|
(106
|
)
|
|
(413
|
)
|
|
—
|
|
|
(413
|
)
|
||||||
Other derivatives
|
52
|
|
|
—
|
|
|
52
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||
Subtotal derivatives
|
(180
|
)
|
|
—
|
|
|
(180
|
)
|
|
148
|
|
|
—
|
|
|
148
|
|
||||||
Foreign exchange gains (losses)
|
(42
|
)
|
|
—
|
|
|
(42
|
)
|
|
45
|
|
|
—
|
|
|
45
|
|
||||||
Total gains (losses)
|
$
|
(297
|
)
|
|
$
|
744
|
|
|
$
|
447
|
|
|
$
|
350
|
|
|
$
|
(1,667
|
)
|
|
$
|
(1,317
|
)
|
(1)
|
For the nine months ended
September 30, 2014
, other-than-temporary impairments included
$17
million for fixed maturities,
$3
million for private equity, and
$7
million for public equity. For the nine months ended
September 30, 2013
, other-than-temporary impairments included
$11
million for fixed maturities,
$2
million for private equity, and
$1
million for public equity.
|
|
September 30, 2014
|
|
|
December 31, 2013
|
|
||||||||||
(in millions of U.S. dollars)
|
Fair
Value
|
|
|
Cost/
Amortized
Cost
|
|
|
Fair
Value
|
|
|
Cost/
Amortized
Cost
|
|
||||
Fixed maturities available for sale
|
$
|
49,148
|
|
|
$
|
47,688
|
|
|
$
|
49,254
|
|
|
$
|
48,406
|
|
Fixed maturities held to maturity
|
7,763
|
|
|
7,548
|
|
|
6,263
|
|
|
6,098
|
|
||||
Short-term investments
|
2,753
|
|
|
2,753
|
|
|
1,763
|
|
|
1,763
|
|
||||
|
59,664
|
|
|
57,989
|
|
|
57,280
|
|
|
56,267
|
|
||||
Equity securities
|
546
|
|
|
480
|
|
|
837
|
|
|
841
|
|
||||
Other investments
|
3,259
|
|
|
2,910
|
|
|
2,976
|
|
|
2,671
|
|
||||
Total investments
|
$
|
63,469
|
|
|
$
|
61,379
|
|
|
$
|
61,093
|
|
|
$
|
59,779
|
|
|
September 30, 2014
|
|
|
December 31, 2013
|
|
||||||||
(in millions of U.S. dollars, except for percentages)
|
Market
Value
|
|
|
% of Total
|
|
|
Market
Value
|
|
|
% of Total
|
|
||
Treasury
|
$
|
2,223
|
|
|
4
|
%
|
|
$
|
2,327
|
|
|
4
|
%
|
Agency
|
1,272
|
|
|
2
|
%
|
|
1,454
|
|
|
3
|
%
|
||
Corporate and asset-backed securities
|
19,863
|
|
|
33
|
%
|
|
19,475
|
|
|
34
|
%
|
||
Mortgage-backed securities
|
12,454
|
|
|
21
|
%
|
|
12,273
|
|
|
21
|
%
|
||
Municipal
|
4,890
|
|
|
8
|
%
|
|
4,500
|
|
|
8
|
%
|
||
Non-U.S.
|
16,209
|
|
|
27
|
%
|
|
15,488
|
|
|
27
|
%
|
||
Short-term investments
|
2,753
|
|
|
5
|
%
|
|
1,763
|
|
|
3
|
%
|
||
Total
|
$
|
59,664
|
|
|
100
|
%
|
|
$
|
57,280
|
|
|
100
|
%
|
AAA
|
$
|
9,105
|
|
|
15
|
%
|
|
$
|
8,677
|
|
|
15
|
%
|
AA
|
21,783
|
|
|
37
|
%
|
|
21,520
|
|
|
38
|
%
|
||
A
|
11,640
|
|
|
19
|
%
|
|
11,168
|
|
|
19
|
%
|
||
BBB
|
8,397
|
|
|
14
|
%
|
|
7,193
|
|
|
12
|
%
|
||
BB
|
4,607
|
|
|
8
|
%
|
|
4,418
|
|
|
8
|
%
|
||
B
|
3,939
|
|
|
7
|
%
|
|
3,940
|
|
|
7
|
%
|
||
Other
|
193
|
|
|
—
|
%
|
|
364
|
|
|
1
|
%
|
||
Total
|
$
|
59,664
|
|
|
100
|
%
|
|
$
|
57,280
|
|
|
100
|
%
|
(in millions of U.S. dollars)
|
Market Value
|
|
|
JP Morgan Chase & Co
|
$
|
451
|
|
General Electric Co
|
420
|
|
|
Goldman Sachs Group Inc
|
353
|
|
|
Verizon Communications Inc
|
270
|
|
|
Wells Fargo & Co
|
264
|
|
|
HSBC Holdings Plc
|
258
|
|
|
Morgan Stanley
|
252
|
|
|
Bank of America Corp
|
233
|
|
|
AT&T Inc
|
218
|
|
|
Citigroup Inc
|
210
|
|
|
S&P Credit Rating
|
|
|
Market
Value
|
|
|
Amortized Cost
|
|
|||||||||||||||||||
September 30, 2014 (in millions of U.S. dollars)
|
AAA
|
|
|
AA
|
|
|
A
|
|
|
BBB
|
|
|
BB and
below
|
|
|
Total
|
|
|
Total
|
|
|||||||
Agency residential mortgage-backed (RMBS)
|
$
|
—
|
|
|
$
|
10,303
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,303
|
|
|
$
|
10,110
|
|
Non-agency RMBS
|
44
|
|
|
6
|
|
|
19
|
|
|
13
|
|
|
17
|
|
|
99
|
|
|
97
|
|
|||||||
Commercial mortgage-backed
|
2,023
|
|
|
14
|
|
|
12
|
|
|
3
|
|
|
—
|
|
|
2,052
|
|
|
2,039
|
|
|||||||
Total mortgage-backed securities
|
$
|
2,067
|
|
|
$
|
10,323
|
|
|
$
|
31
|
|
|
$
|
16
|
|
|
$
|
17
|
|
|
$
|
12,454
|
|
|
$
|
12,246
|
|
(in millions of U.S. dollars)
|
Market Value
|
|
|
Amortized Cost
|
|
||
United Kingdom
|
$
|
991
|
|
|
$
|
986
|
|
Republic of Korea
|
795
|
|
|
722
|
|
||
Canada
|
541
|
|
|
530
|
|
||
United Mexican States
|
517
|
|
|
513
|
|
||
Kingdom of Thailand
|
404
|
|
|
394
|
|
||
Province of Ontario
|
385
|
|
|
374
|
|
||
Federative Republic of Brazil
|
279
|
|
|
274
|
|
||
Province of Quebec
|
261
|
|
|
251
|
|
||
Japan
|
254
|
|
|
253
|
|
||
France
|
221
|
|
|
203
|
|
||
Other Non-U.S. Government Securities
(1)
|
2,837
|
|
|
2,747
|
|
||
Total
|
$
|
7,485
|
|
|
$
|
7,247
|
|
(1)
|
There are no investments in Portugal, Ireland, Italy, Greece or Spain.
|
(in millions of U.S. dollars)
|
Market Value
|
|
|
Amortized Cost
|
|
||
United Kingdom
|
$
|
1,584
|
|
|
$
|
1,511
|
|
Canada
|
1,107
|
|
|
1,061
|
|
||
Australia
|
637
|
|
|
617
|
|
||
United States
|
619
|
|
|
597
|
|
||
France
|
558
|
|
|
538
|
|
||
Netherlands
|
523
|
|
|
502
|
|
||
Germany
|
421
|
|
|
401
|
|
||
Switzerland
|
309
|
|
|
297
|
|
||
Euro Supranational
|
276
|
|
|
268
|
|
||
Brazil
|
260
|
|
|
260
|
|
||
Other Non-U.S. Corporate Securities
|
2,430
|
|
|
2,379
|
|
||
Total
|
$
|
8,724
|
|
|
$
|
8,431
|
|
|
September 30
|
|
|
December 31
|
|
||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
||
Reinsurance recoverable on unpaid losses and loss expenses
(1)
|
$
|
10,336
|
|
|
$
|
10,612
|
|
Reinsurance recoverable on paid losses and loss expenses
(1)
|
609
|
|
|
615
|
|
||
Net reinsurance recoverable on losses and loss expenses
|
$
|
10,945
|
|
|
$
|
11,227
|
|
Reinsurance recoverable on policy benefits
|
$
|
228
|
|
|
$
|
218
|
|
(1)
|
Net of provision for uncollectible reinsurance
|
(in millions of U.S. dollars)
|
Gross
Losses
|
|
|
Reinsurance
Recoverable
(1)
|
|
|
Net
Losses
|
|
|||
Balance at December 31, 2013
|
$
|
37,443
|
|
|
$
|
10,612
|
|
|
$
|
26,831
|
|
Losses and loss expenses incurred
|
9,306
|
|
|
2,073
|
|
|
7,233
|
|
|||
Losses and loss expenses paid
|
(9,102
|
)
|
|
(2,301
|
)
|
|
(6,801
|
)
|
|||
Other (including foreign exchange translation)
|
(200
|
)
|
|
(48
|
)
|
|
(152
|
)
|
|||
Balance at September 30, 2014
|
$
|
37,447
|
|
|
$
|
10,336
|
|
|
$
|
27,111
|
|
(1)
|
Net of provision for uncollectible reinsurance
|
|
September 30, 2014
|
|
|
December 31, 2013
|
|
||||||||||||||||||
(in millions of U.S. dollars)
|
Gross
|
|
|
Ceded
|
|
|
Net
|
|
|
Gross
|
|
|
Ceded
|
|
|
Net
|
|
||||||
Case reserves
|
$
|
16,281
|
|
|
$
|
4,638
|
|
|
$
|
11,643
|
|
|
$
|
16,558
|
|
|
$
|
4,790
|
|
|
$
|
11,768
|
|
IBNR reserves
|
21,166
|
|
|
5,698
|
|
|
15,468
|
|
|
20,885
|
|
|
5,822
|
|
|
15,063
|
|
||||||
Total
|
$
|
37,447
|
|
|
$
|
10,336
|
|
|
$
|
27,111
|
|
|
$
|
37,443
|
|
|
$
|
10,612
|
|
|
$
|
26,831
|
|
•
|
Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets.
|
•
|
Level 2 includes inputs other than quoted prices included within Level 1 that are observable for assets or liabilities either directly or indirectly. Level 2 inputs include, among other items, quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability such as interest rates and yield curves.
|
•
|
Level 3 inputs are unobservable and reflect our judgments about assumptions that market participants would use in pricing an asset or liability.
|
Year of first payment eligibility
|
Percent of living benefit
account values
|
|
September 30, 2014 and prior
|
43
|
%
|
Remainder of 2014
|
4
|
%
|
2015
|
6
|
%
|
2016
|
6
|
%
|
2017
|
20
|
%
|
2018
|
13
|
%
|
2019
|
3
|
%
|
2020
|
1
|
%
|
2021 and after
|
4
|
%
|
Total
|
100
|
%
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
September 30
|
|
|
September 30
|
|
||||||||||
(in millions of U.S. dollars)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
||||
Death Benefits (GMDB)
|
|
|
|
|
|
|
|
||||||||
Premium
|
$
|
17
|
|
|
$
|
19
|
|
|
$
|
54
|
|
|
$
|
59
|
|
Less paid claims
|
11
|
|
|
11
|
|
|
32
|
|
|
53
|
|
||||
Net
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
22
|
|
|
$
|
6
|
|
Living Benefits (Includes GMIB and GMAB)
|
|
|
|
|
|
|
|
||||||||
Premium
|
$
|
35
|
|
|
$
|
37
|
|
|
$
|
105
|
|
|
$
|
113
|
|
Less paid claims
|
4
|
|
|
6
|
|
|
12
|
|
|
19
|
|
||||
Net
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
93
|
|
|
$
|
94
|
|
Total VA Guaranteed Benefits
|
|
|
|
|
|
|
|
||||||||
Premium
|
$
|
52
|
|
|
$
|
56
|
|
|
$
|
159
|
|
|
$
|
172
|
|
Less paid claims
|
15
|
|
|
17
|
|
|
44
|
|
|
72
|
|
||||
Net
|
$
|
37
|
|
|
$
|
39
|
|
|
$
|
115
|
|
|
$
|
100
|
|
|
|
U.S. Hurricane
|
|
California Earthquake
|
||||||||||||||||||||||||
|
|
|
|
September 30
|
|
|
|
September 30
|
|
|
|
September 30
|
|
|
|
September 30
|
||||||||||||
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
||||||||||||
Modeled Annual Aggregate Net PML
|
|
ACE
|
|
% of Total
Shareholders’
Equity
|
|
% of
Industry
|
|
ACE
|
|
ACE
|
|
% of Total
Shareholders’
Equity
|
|
% of
Industry
|
|
ACE
|
||||||||||||
(in millions of U.S. dollars, except for percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
1-in-100
|
|
$
|
1,727
|
|
|
5.8
|
%
|
|
1.1
|
%
|
|
$
|
1,693
|
|
|
$
|
815
|
|
|
2.7
|
%
|
|
2.0
|
%
|
|
$
|
771
|
|
1-in-250
|
|
$
|
2,344
|
|
|
7.8
|
%
|
|
1.0
|
%
|
|
$
|
2,268
|
|
|
$
|
1,076
|
|
|
3.6
|
%
|
|
1.7
|
%
|
|
$
|
1,015
|
|
|
September 30
|
|
|
December 31
|
|
||
(in millions of U.S. dollars, except for percentages)
|
2014
|
|
|
2013
|
|
||
Short-term debt
|
$
|
1,851
|
|
|
$
|
1,901
|
|
Long-term debt
|
4,057
|
|
|
3,807
|
|
||
Total debt
|
5,908
|
|
|
5,708
|
|
||
Trust preferred securities
|
309
|
|
|
309
|
|
||
Total shareholders’ equity
|
30,017
|
|
|
28,825
|
|
||
Total capitalization
|
$
|
36,234
|
|
|
$
|
34,842
|
|
Ratio of debt to total capitalization
|
16.3
|
%
|
|
16.4
|
%
|
||
Ratio of debt plus trust preferred securities to total capitalization
|
17.2
|
%
|
|
17.3
|
%
|
|
|
Nine Months Ended
|
|
|
(in millions of U.S. dollars)
|
|
September 30, 2014
|
|
|
Balance – beginning of period
|
|
$
|
28,825
|
|
Net income
|
|
2,298
|
|
|
Net unrealized appreciation on investments, net of tax
|
|
583
|
|
|
Share-based compensation expense
|
|
116
|
|
|
Repurchase of shares
|
|
(1,019
|
)
|
|
Dividends on Common Shares
|
|
(702
|
)
|
|
Change in cumulative translation, net of tax
|
|
(124
|
)
|
|
Exercise of stock options
|
|
63
|
|
|
Other movements, net of tax
|
|
(23
|
)
|
|
Balance – end of period
|
|
$
|
30,017
|
|
Shareholders of record as of:
|
|
Dividends paid as of:
|
|
|
January 13, 2014
|
|
January 31, 2014
|
|
$0.63 (CHF 0.55)
|
March 28, 2014
|
|
April 17, 2014
|
|
$0.63 (CHF 0.55)
|
July 23, 2014
|
|
August 13, 2014
|
|
$0.65 (CHF 0.58)
|
September 30, 2014
|
|
October 21, 2014
|
|
$0.65 (CHF 0.61)
|
Interest Rate Shock
|
Worldwide Equity Shock
|
|||||||||||||||||||||||
(in millions of U.S. dollars)
|
+10%
|
|
Flat
|
|
-10%
|
|
-20%
|
|
-30%
|
|
-40%
|
|||||||||||||
+100 bps
|
(Increase)/decrease in Gross FVL
|
$
|
353
|
|
|
$
|
243
|
|
|
$
|
45
|
|
|
$
|
(239
|
)
|
|
$
|
(600
|
)
|
|
$
|
(1,057
|
)
|
|
Increase/(decrease) in hedge value
|
(134
|
)
|
|
2
|
|
|
139
|
|
|
279
|
|
|
422
|
|
|
573
|
|
||||||
|
Increase/(decrease) in net income
|
$
|
219
|
|
|
$
|
245
|
|
|
$
|
184
|
|
|
$
|
40
|
|
|
$
|
(178
|
)
|
|
$
|
(484
|
)
|
Flat
|
(Increase)/decrease in Gross FVL
|
$
|
207
|
|
|
$
|
—
|
|
|
$
|
(273
|
)
|
|
$
|
(621
|
)
|
|
$
|
(1,059
|
)
|
|
$
|
(1,579
|
)
|
|
Increase/(decrease) in hedge value
|
(134
|
)
|
|
2
|
|
|
140
|
|
|
280
|
|
|
424
|
|
|
575
|
|
||||||
|
Increase/(decrease) in net income
|
$
|
73
|
|
|
$
|
2
|
|
|
$
|
(133
|
)
|
|
$
|
(341
|
)
|
|
$
|
(635
|
)
|
|
$
|
(1,004
|
)
|
-100 bps
|
(Increase)/decrease in Gross FVL
|
$
|
(91
|
)
|
|
$
|
(357
|
)
|
|
$
|
(698
|
)
|
|
$
|
(1,122
|
)
|
|
$
|
(1,629
|
)
|
|
$
|
(2,209
|
)
|
|
Increase/(decrease) in hedge value
|
(134
|
)
|
|
2
|
|
|
140
|
|
|
280
|
|
|
424
|
|
|
577
|
|
||||||
|
Increase/(decrease) in net income
|
$
|
(225
|
)
|
|
$
|
(355
|
)
|
|
$
|
(558
|
)
|
|
$
|
(842
|
)
|
|
$
|
(1,205
|
)
|
|
$
|
(1,632
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sensitivities to Other Economic Variables
|
AA-rated Credit Spreads
|
|
Interest Rate Volatility
|
|
Equity Volatility
|
|||||||||||||||||||
(in millions of U.S. dollars)
|
+100
|
|
-100
|
|
+2%
|
|
-2%
|
|
+2%
|
|
-2%
|
|||||||||||||
(Increase)/decrease in Gross FVL
|
$
|
55
|
|
|
$
|
(61
|
)
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(22
|
)
|
|
$
|
20
|
|
|
Increase/(decrease) in hedge value
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
2
|
|
|||||||
Increase/(decrease) in net income
|
$
|
55
|
|
|
$
|
(61
|
)
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sensitivities to Actuarial Assumptions
|
|
|
|
|
Mortality
|
|||||||||||||||||||
(in millions of U.S. dollars)
|
|
|
|
|
+20%
|
|
+10%
|
|
-10%
|
|
-20%
|
|||||||||||||
(Increase)/decrease in Gross FVL
|
|
|
|
|
$
|
22
|
|
|
$
|
11
|
|
|
$
|
(12
|
)
|
|
$
|
(23
|
)
|
|||||
Increase/(decrease) in hedge value
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Increase/(decrease) in net income
|
|
|
|
|
$
|
22
|
|
|
$
|
11
|
|
|
$
|
(12
|
)
|
|
$
|
(23
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
Lapses
|
||||||||||||||||||
(in millions of U.S. dollars)
|
|
|
|
|
+50%
|
|
+25%
|
|
-25%
|
|
-50%
|
|||||||||||||
(Increase)/decrease in Gross FVL
|
|
|
|
|
$
|
192
|
|
|
$
|
106
|
|
|
$
|
(131
|
)
|
|
$
|
(274
|
)
|
|||||
Increase/(decrease) in hedge value
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Increase/(decrease) in net income
|
|
|
|
|
$
|
192
|
|
|
$
|
106
|
|
|
$
|
(131
|
)
|
|
$
|
(274
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
Annuitization
|
||||||||||||||||||
(in millions of U.S. dollars)
|
|
|
|
|
+50%
|
|
+25%
|
|
-25%
|
|
-50%
|
|||||||||||||
(Increase)/decrease in Gross FVL
|
|
|
|
|
$
|
(258
|
)
|
|
$
|
(143
|
)
|
|
$
|
163
|
|
|
$
|
295
|
|
|||||
Increase/(decrease) in hedge value
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Increase/(decrease) in net income
|
|
|
|
|
$
|
(258
|
)
|
|
$
|
(143
|
)
|
|
$
|
163
|
|
|
$
|
295
|
|
|
Equity Shock
|
||||||||||||||||||||||
(in millions of U.S. dollars, except percentages)
|
+20%
|
|
Flat
|
|
-20%
|
|
-40%
|
|
-60%
|
|
-80%
|
||||||||||||
GMDB net amount at risk
|
$
|
359
|
|
|
$
|
520
|
|
|
$
|
1,092
|
|
|
$
|
1,616
|
|
|
$
|
1,626
|
|
|
$
|
1,386
|
|
Claims at 100% immediate mortality
|
751
|
|
|
629
|
|
|
295
|
|
|
274
|
|
|
250
|
|
|
227
|
|
|
Equity Shock
|
||||||||||||||||||||||
(in millions of U.S. dollars, except percentages)
|
+20%
|
|
Flat
|
|
-20%
|
|
-40%
|
|
-60%
|
|
-80%
|
||||||||||||
GLB net amount at risk
|
$
|
82
|
|
|
$
|
241
|
|
|
$
|
829
|
|
|
$
|
1,786
|
|
|
$
|
2,567
|
|
|
$
|
2,879
|
|
|
Equity Shock
|
||||||||||||||||||||||
(in millions of U.S. dollars, except percentages)
|
+20%
|
|
Flat
|
|
-20%
|
|
-40%
|
|
-60%
|
|
-80%
|
||||||||||||
GMDB net amount at risk
|
$
|
51
|
|
|
$
|
75
|
|
|
$
|
111
|
|
|
$
|
146
|
|
|
$
|
175
|
|
|
$
|
199
|
|
GLB net amount at risk
|
65
|
|
|
168
|
|
|
498
|
|
|
1,100
|
|
|
1,690
|
|
|
2,199
|
|
||||||
Claims at 100% immediate mortality
|
19
|
|
|
39
|
|
|
354
|
|
|
546
|
|
|
729
|
|
|
911
|
|
Period
|
Total
Number of
Shares
Purchased
(1)
|
|
|
Average Price Paid per Share
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan
(2)
|
|
|
Approximate
Dollar Value of
Shares that May
Yet be Purchased
Under the Plan
(3)
|
|
||
July 1 through July 31
|
1,823,800
|
|
|
$
|
103.26
|
|
|
1,821,630
|
|
|
$
|
1,186
|
million
|
August 1 through August 31
|
1,484,981
|
|
|
$
|
102.17
|
|
|
1,477,672
|
|
|
$
|
1,035
|
million
|
September 1 through September 30
|
1,052,457
|
|
|
$
|
106.00
|
|
|
1,050,000
|
|
|
$
|
924
|
million
|
Total
|
4,361,238
|
|
|
|
|
4,349,302
|
|
|
|
(1)
|
This column primarily represents open market share repurchases. Other activity during the three months ended
September 30, 2014
is related to the surrender to ACE of Common Shares to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees and the exercising of options by employees.
|
(3)
|
Refer to Note
8
to the Consolidated Financial Statements for more information on the ACE Limited securities repurchase authorization. For the period October 1, 2014 through October 28, 2014, we repurchased
699,965
Common Shares for a total of
$74 million
in a series of open market transactions. At October 28, 2014,
$850 million
in share repurchase authorization remained through December 31, 2014.
|
|
ACE LIMITED
|
|
(Registrant)
|
|
|
October 29, 2014
|
/s/ Evan G. Greenberg
|
|
Evan G. Greenberg
|
|
Chairman, President, and Chief Executive Officer
|
|
|
October 29, 2014
|
/s/ Philip V. Bancroft
|
|
Philip V. Bancroft
|
|
Chief Financial Officer
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
Original
Number
|
|
Date Filed
|
|
Filed
Herewith
|
3.1
|
|
Articles of Association of the Company, as amended and restated
|
|
8-K
|
|
3
|
|
October 1, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Organizational Regulations of the Company, as amended and restated
|
|
8-K
|
|
3
|
|
August 18, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Articles of Association of the Company, as amended and restated
|
|
8-K
|
|
4
|
|
October 1, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
Organizational Regulations of the Company, as amended and restated
|
|
8-K
|
|
4
|
|
August 18, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
Form of 3.35 percent Senior Notes due 2024
|
|
8-K
|
|
4.1
|
|
May 27, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18.1
|
|
Preferability Letter of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
101.1
|
|
The following financial information from ACE Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 formatted in XBRL: (i) Consolidated Balance Sheets at September 30, 2014, and December 31, 2013; (ii) Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2014 and 2013; (iii) Consolidated Statements of Shareholders’ Equity for the nine months ended September 30, 2014 and 2013; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013; and (v) Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
|
X
|
1)
|
I have reviewed this quarterly report on Form 10-Q of ACE Limited;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
/s/ Evan G. Greenberg
|
Evan G. Greenberg
|
Chairman, President, and Chief
Executive Officer
|
1)
|
I have reviewed this quarterly report on Form 10-Q of ACE Limited;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
/s/ Philip V. Bancroft
|
Philip V. Bancroft
|
Chief Financial Officer
|
Dated: October 29, 2014
|
/s/ Evan G. Greenberg
|
|
Evan G. Greenberg
Chairman, President, and Chief Executive Officer
|
Dated: October 29, 2014
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/s/ Philip V. Bancroft
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Philip V. Bancroft
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Chief Financial Officer
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