ACE LTD, 10-Q filed on 5/1/2013
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2013
Apr. 17, 2013
Entity Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q1 
 
Trading Symbol
ACE 
 
Entity Registrant Name
ACE Ltd 
 
Entity Central Index Key
0000896159 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
340,173,118 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Assets
 
 
Fixed maturities available for sale, at fair value (amortized cost - $45,470 and $44,666) (includes hybrid financial instruments of $274 and $309)
$ 47,947 
$ 47,306 
Fixed maturities held to maturity, at amortized cost (fair value - $7,213 and $7,633)
6,867 
7,270 
Equity securities, at fair value (cost - $781 and $707)
832 
744 
Short-term investments, at fair value and amortized cost
2,893 
2,228 
Other investments (cost - $2,544 and $2,465)
2,820 
2,716 
Total investments
61,359 
60,264 
Cash
855 
615 1
Securities lending collateral
1,786 
1,791 
Accrued investment income
545 
552 
Insurance and reinsurance balances receivable
4,154 
4,147 
Reinsurance recoverable on losses and loss expenses
11,530 
12,078 
Reinsurance recoverable on policy benefits
231 
241 
Deferred policy acquisition costs
1,966 
1,873 
Value of business acquired
583 
614 
Goodwill and other intangible assets
4,909 
4,975 
Prepaid reinsurance premiums
1,653 
1,617 
Deferred tax assets
505 
453 
Investments in partially-owned insurance companies (cost - $446 and $451)
449 
454 
Other assets
2,936 
2,871 
Total assets
93,461 
92,545 
Liabilities
 
 
Unpaid losses and loss expenses
37,082 
37,946 
Unearned premiums
7,019 
6,864 
Future policy benefits
4,465 
4,470 
Insurance and reinsurance balances payable
3,402 
3,472 
Securities lending payable
1,789 
1,795 
Accounts payable, accrued expenses, and other liabilities
5,701 
5,377 
Income taxes payable
43 
20 
Short-term debt
1,402 
1,401 
Long-term debt
4,307 
3,360 
Trust preferred securities
309 
309 
Total liabilities
65,519 
65,014 
Commitments and contingencies
   
   
Shareholders' equity
 
 
Common Shares (CHF 28.43 and CHF 28.89 par value; 342,832,412 shares issued; 340,045,256 and 340,321,534 shares outstanding)
9,423 
9,591 
Common Shares in treasury (2,787,156 and 2,510,878 shares)
(212)
(159)
Additional paid-in capital
5,095 
5,179 
Retained earnings
10,986 
10,033 
Accumulated other comprehensive income (AOCI)
2,650 
2,887 
Total shareholders' equity
27,942 
27,531 
Total liabilities and shareholders' equity
$ 93,461 
$ 92,545 
Consolidated Balance Sheets (Parenthetical)
In Millions, except Share data, unless otherwise specified
Mar. 31, 2013
USD ($)
Mar. 31, 2013
CHF
Dec. 31, 2012
USD ($)
Dec. 31, 2012
CHF
Statement of Financial Position [Abstract]
 
 
 
 
Fixed maturities available for sale, at amortized cost
$ 45,470 
 
$ 44,666 
 
Fixed maturities available for sale, hybrid financial instruments
274 
 
309 
 
Fixed maturities held to maturity, at amortized cost
7,213 
 
7,633 
 
Equity securities, at cost
781 
 
707 
 
Other investments, cost
2,544 
 
2,465 
 
Investments in partially-owned insurance companies, cost
$ 446 
 
$ 451 
 
Common Shares, par value
 
 28.43 
 
 28.89 
Common Shares, shares issued
342,832,412 
342,832,412 
342,832,412 
342,832,412 
Common Shares, shares outstanding
340,045,256 
340,045,256 
340,321,534 
340,321,534 
Common Shares in treasury, shares
2,787,156 
2,787,156 
2,510,878 
2,510,878 
Consolidated Statements Of Operations and Comprehensive Income (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Document Fiscal Year Focus
2013 
 
Revenues
 
 
Net premiums written
$ 3,798 
$ 3,572 
Change in unearned premiums
(225)
(191)
Net premiums earned
3,573 
3,381 
Net investment income
531 
544 
Net realized gains (losses):
 
 
Other-than-temporary impairment (OTTI) losses gross
(3)
(10)
Portion of OTTI losses recognized in other comprehensive income (OCI)
Net OTTI losses recognized in income
(3)
(10)
Net realized gains (losses) excluding OTTI losses
209 
270 
Total net realized gains (losses)
206 
260 
Total revenues
4,310 
4,185 
Expenses
 
 
Losses and loss expenses
1,926 
1,804 
Policy benefits
131 
147 
Policy acquisition costs
614 
582 
Administrative expenses
514 
510 
Interest expense
60 
62 
Other (income) expense
(10)
(3)
Total expenses
3,235 
3,102 
Income before income tax
1,075 
1,083 
Income tax expense (includes $5 Income tax expesne from reclassification of unrealized gains in 2013)
122 
110 
Net income
953 
973 
Other comprehensive income (loss)
 
 
Unrealized appreciation
(116)
325 
Reclassification adjustment for net realized gains (losses) included in net income
(35)
(33)
Other comprehensive income
(151)
292 
Change in:
 
 
Cumulative translation adjustment
(211)
88 
Pension liability
22 
(2)
Other comprehensive income, before income tax
(340)
378 
Income tax expense related to OCI items
103 
(80)
Other comprehensive income
(237)
298 
Comprehensive income
$ 716 
$ 1,271 
Earnings per share
 
 
Basic earnings per share (US$ per share)
$ 2.80 
$ 2.87 
Diluted earnings per share (US$ per share)
$ 2.77 
$ 2.84 
Consolidated Statements Of Operations and Comprehensive Income Consolidated Statements of Operations and Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Statement Consolidated Statements Of Operations And Comprehensive Income [Abstract]
 
 
Income tax expense
$ 5 
 
Reclassification Adjustment for Sale of Securities Included in Net Income, before Tax
$ 35 
$ 33 
Consolidated Statements Of Shareholders' Equity (USD $)
In Millions
Total
Common Stock [Member]
Treasury Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Accumulated Translation Adjustment [Member]
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Balance - beginning of period at Dec. 31, 2011
 
$ 10,095 
$ (327)
$ 5,326 
$ 7,327 
$ 1,715 
$ 258 
$ (62)
 
Dividends declared on Common Shares-par value reduction
 
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(7)
 
 
 
 
 
 
Common Shares issued in treasury, net of net shares redeemed under employee share-based compensation plans
 
 
107 
 
 
 
 
 
 
Net shares redeemed under employee share-based compensation plans
 
 
 
(95)
 
 
 
 
 
Exercise of stock options
 
 
 
(10)
 
 
 
 
 
Share-based compensation expense and other
 
 
 
33 
 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
200 
(200)
 
 
 
 
Net income
973 
 
 
 
973 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
(200)
 
 
 
 
Change in period, net of income tax benefit (expense) of $56 and $(49)
 
 
 
 
 
243 
 
 
 
Change in period, net of income tax benefit (expense) of $55 and $(32)
 
 
 
 
 
 
56 
 
 
Change in period, net of income tax benefit (expense) of $(8) and $1
 
 
 
 
 
 
 
(1)
 
Balance - end of period at Mar. 31, 2012
25,431 
10,095 
(227)
5,054 
8,300 
1,958 
314 
(63)
2,209 
Balance - beginning of period at Dec. 31, 2012
27,531 
9,591 
(159)
5,179 
10,033 
2,633 
339 
(85)
 
Dividends declared on Common Shares-par value reduction
 
(168)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(154)
 
 
 
 
 
 
Common Shares issued in treasury, net of net shares redeemed under employee share-based compensation plans
 
 
101 
 
 
 
 
 
 
Net shares redeemed under employee share-based compensation plans
 
 
 
(114)
 
 
 
 
 
Exercise of stock options
 
 
 
(12)
 
 
 
 
 
Share-based compensation expense and other
 
 
 
42 
 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
 
 
 
 
Net income
953 
 
 
 
953 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
 
 
 
 
Change in period, before reclassification from AOCI, net of income tax benefit of $51
 
 
 
 
 
(65)
 
 
 
Amounts reclassified from AOCI, net of income tax expense of $5
 
 
 
 
 
(30)
 
 
 
Change in period, net of income tax benefit (expense) of $56 and $(49)
 
 
 
 
 
(95)
 
 
 
Change in period, net of income tax benefit (expense) of $55 and $(32)
 
 
 
 
 
 
(156)
 
 
Change in period, net of income tax benefit (expense) of $(8) and $1
 
 
 
 
 
 
 
14 
 
Balance - end of period at Mar. 31, 2013
$ 27,942 
$ 9,423 
$ (212)
$ 5,095 
$ 10,986 
$ 2,538 
$ 183 
$ (71)
$ 2,650 
Consolidated Statements Of Shareholders' Equity (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Statement Consolidated Statements Of Shareholders Equity [Abstract]
 
 
Income tax expense from reclassification of unrealized gains
$ 5 
 
Unrealized appreciation on investments, Change in period before reclassification to AOCI, income tax (expense) benefit
51 
 
Net unrealized appreciation on investments, Change in period, income tax (expense) benefit
56 
(49)
Cumulative translation adjustment, Change in period, income tax(expense) benefit
55 
(32)
Pension liability adjustment, Change in period, income tax (expense) benefit
$ (8)
$ 1 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Cash flows from operating activities
 
 
Net income
$ 953 
$ 973 
Adjustments to reconcile net income to net cash flows from operating activities
 
 
Net realized (gains) losses
(206)
(260)
Amortization of premiums/discounts on fixed maturities
66 
45 
Deferred income taxes
35 
(1)
Unpaid losses and loss expenses
(505)
(492)
Unearned premiums
267 
265 
Future policy benefits
44 
27 
Insurance and reinsurance balances payable
(41)
(126)
Accounts payable, accrued expenses, and other liabilities
144 
(65)
Income taxes payable
29 
41 
Insurance and reinsurance balances receivable
(45)
(58)
Reinsurance recoverable on losses and loss expenses
435 
422 
Reinsurance recoverable on policy benefits
10 
11 
Deferred policy acquisition costs
(121)
(72)
Prepaid reinsurance premiums
(58)
(83)
Other
(94)
(55)
Net cash flows from operating activities
913 
572 
Cash flows from investing activities
 
 
Purchases of fixed maturities available for sale
(6,133)
(5,429)
Purchases of to be announced mortgage-backed securities
(19)
(54)
Purchases of fixed maturities held to maturity
(142)
(32)
Purchases of equity securities
(107)
(19)
Sales of fixed maturities available for sale
2,745 
3,736 
Sales of to be announced mortgage-backed securities
19 
59 
Sales of equity securities
31 
26 
Maturities and redemptions of fixed maturities available for sale
2,016 
1,076 
Maturities and redemptions of fixed maturities held to maturity
491 
345 
Net derivative instruments settlements
(279)
(195)
Acquisition of subsidiaries
(33)
(25)
Other
(55)
(103)
Net cash flows used for investing activities
(1,466)
(615)
Cash flows from financing activities
 
 
Dividends paid on Common Shares
(2)
(159)
Common Shares repurchased
(154)
(11)
Proceeds from issuance of long-term debt
947 
Proceeds from issuance of short-term debt
659 
681 
Repayment of short-term debt
(658)
(400)
Proceeds from share-based compensation plans, including windfall tax benefits
21 
28 
Net cash flows from financing activities
813 
139 
Effect of foreign currency rate changes on cash and cash equivalents
(20)
Net increase (decrease) in cash
240 
101 
Cash - beginning of period
615 1
614 
Cash - end of period
855 
715 
Supplemental cash flow information
 
 
Taxes paid
43 
72 
Interest paid
$ 31 
$ 37 
General
General
General

Basis of presentation
ACE Limited is a holding company incorporated in Zurich, Switzerland. ACE Limited, through its various subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through the following business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. Refer to Note 10 for additional information.

The interim unaudited consolidated financial statements, which include the accounts of ACE Limited and its subsidiaries (collectively, ACE, we, us, or our), have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and, in the opinion of management, reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of the results and financial position for such periods. All significant intercompany accounts and transactions have been eliminated.

The results of operations and cash flows for any interim period are not necessarily indicative of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2012 Form 10-K.
Acquisitions
Acquisitions
Acquisitions

We acquired 80 percent of PT Asuransi Jaya Proteksi (JaPro) on September 18, 2012 and our local partner acquired the remaining 20 percent on January 3, 2013. Japro is one of Indonesia's leading general insurers. The total purchase price for 100 percent of the company was approximately $107 million in cash. JaPro operates in our Insurance – Overseas General segment.

On April 1, 2013, we acquired Fianzas Monterrey, a leading surety lines company in Mexico offering administrative performance bonds primarily to clients in the construction and industrial sectors, for approximately $293 million in cash. This acquisition expands our gobal franchise in the surety business and enhances our existing commercial lines and personal accident insurance business in Mexico.

On October 18, 2012, we announced that we reached a definitive agreement to acquire ABA Seguros, a property and casualty insurer in Mexico that provides automobile, homeowners, and small business coverages. We expect to pay approximately $865 million in cash for this transaction, subject to adjustment for dividends paid between signing and closing. This transaction, which is subject to regulatory approvals and other customary closing conditions, is expected to be completed during the second quarter of 2013.
Investments
Investments
Investments

a) Fixed maturities
The following tables present the amortized cost and fair value of fixed maturities and related OTTI recognized in AOCI:
 
March 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
$
3,690

 
$
158

 
$
(5
)
 
$
3,843

 
$

Foreign
13,007

 
673

 
(16
)
 
13,664

 

Corporate securities
15,769

 
1,180

 
(28
)
 
16,921

 
(6
)
Mortgage-backed securities
9,813

 
384

 
(26
)
 
10,171

 
(39
)
States, municipalities, and political subdivisions
3,191

 
162

 
(5
)
 
3,348

 

 
$
45,470

 
$
2,557

 
$
(80
)
 
$
47,947

 
$
(45
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
962

 
$
35

 
$

 
$
997

 
$

Foreign
882

 
55

 

 
937

 

Corporate securities
2,064

 
138

 

 
2,202

 

Mortgage-backed securities
1,812

 
81

 

 
1,893

 

States, municipalities, and political subdivisions
1,147

 
41

 
(4
)
 
1,184

 

 
$
6,867

 
$
350

 
$
(4
)
 
$
7,213

 
$


December 31, 2012
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
$
3,553

 
$
183

 
$
(1
)
 
$
3,735

 
$

Foreign
13,016

 
711

 
(14
)
 
13,713

 

Corporate securities
15,529

 
1,210

 
(31
)
 
16,708

 
(7
)
Mortgage-backed securities
10,051

 
458

 
(36
)
 
10,473

 
(84
)
States, municipalities, and political subdivisions
2,517

 
163

 
(3
)
 
2,677

 

 
$
44,666

 
$
2,725

 
$
(85
)
 
$
47,306

 
$
(91
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,044

 
$
39

 
$

 
$
1,083

 
$

Foreign
910

 
54

 

 
964

 

Corporate securities
2,133

 
142

 

 
2,275

 

Mortgage-backed securities
2,028

 
88

 

 
2,116

 

States, municipalities, and political subdivisions
1,155

 
44

 
(4
)
 
1,195

 

 
$
7,270

 
$
367

 
$
(4
)
 
$
7,633

 
$



As discussed in Note 3 c), if a credit loss is indicated on an impaired fixed maturity, an OTTI is considered to have occurred and the portion of the impairment not related to credit losses (non-credit OTTI) is recognized in OCI. Included in the “OTTI Recognized in AOCI” columns above are the cumulative amounts of non-credit OTTI recognized in OCI adjusted for subsequent sales, maturities, and redemptions. OTTI recognized in AOCI does not include the impact of subsequent changes in fair value of the related securities. In periods subsequent to a recognition of OTTI in OCI, changes in the fair value of the related fixed maturities are reflected in Unrealized appreciation (depreciation) in the consolidated statement of shareholders’ equity. For the three months ended March 31, 2013 and 2012, $24 million and $68 million of net unrealized appreciation related to such securities is included in OCI. At March 31, 2013 and December 31, 2012, AOCI includes net unrealized depreciation of nil and $25 million, respectively, related to securities remaining in the investment portfolio at those dates for which ACE has recognized a non-credit OTTI.

Mortgage-backed securities (MBS) issued by U.S. government agencies are combined with all other to be announced mortgage derivatives held (refer to Note 7 a) (iv)) and are included in the category, “Mortgage-backed securities”. Approximately 85 percent of the total mortgage-backed securities at both March 31, 2013 and December 31, 2012, are represented by investments in U.S. government agency bonds. The remainder of the mortgage exposure consists of collateralized mortgage obligations and non-government mortgage-backed securities, the majority of which provide a planned structure for principal and interest payments and carry a rating of AAA by the major credit rating agencies.

The following table presents fixed maturities by contractual maturity:
 
 
 
March 31

 
 
 
December 31

 
 
 
2013

 
 
 
2012

(in millions of U.S. dollars)
Amortized Cost

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,063

 
$
2,084

 
$
1,887

 
$
1,906

Due after 1 year through 5 years
13,790

 
14,417

 
13,411

 
14,010

Due after 5 years through 10 years
15,488

 
16,539

 
15,032

 
16,153

Due after 10 years
4,316

 
4,736

 
4,285

 
4,764

 
35,657

 
37,776

 
34,615

 
36,833

Mortgage-backed securities
9,813

 
10,171

 
10,051

 
10,473

 
$
45,470

 
$
47,947

 
$
44,666

 
$
47,306

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
496

 
$
499

 
$
656

 
$
659

Due after 1 year through 5 years
1,953

 
2,040

 
1,870

 
1,950

Due after 5 years through 10 years
2,079

 
2,220

 
2,119

 
2,267

Due after 10 years
527

 
561

 
597

 
641

 
5,055

 
5,320

 
5,242

 
5,517

Mortgage-backed securities
1,812

 
1,893

 
2,028

 
2,116

 
$
6,867

 
$
7,213

 
$
7,270

 
$
7,633



Expected maturities could differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties. 

b) Equity securities
The following table presents the cost and fair value of equity securities: 
 
March 31


December 31

(in millions of U.S. dollars)
2013


2012

Cost
$
781

 
$
707

Gross unrealized appreciation
55

 
41

Gross unrealized depreciation
(4
)
 
(4
)
Fair value
$
832

 
$
744



c) Net realized gains (losses)
In accordance with guidance related to the recognition and presentation of OTTI, when an impairment related to a fixed maturity has occurred, OTTI is required to be recorded in net income if management has the intent to sell the security or it is more likely than not that we will be required to sell the security before the recovery of its amortized cost. Further, in cases where we do not intend to sell the security and it is more likely than not that we will not be required to sell the security, ACE must evaluate the security to determine the portion of the impairment, if any, related to credit losses. If a credit loss is indicated, an OTTI is considered to have occurred and any portion of the OTTI related to credit losses must be reflected in net income while the portion of OTTI related to all other factors is recognized in OCI. For fixed maturities held to maturity, OTTI recognized in OCI is accreted from AOCI to the amortized cost of the fixed maturity prospectively over the remaining term of the securities.

Each quarter, securities in an unrealized loss position (impaired securities), including fixed maturities, securities lending collateral, equity securities, and other investments, are reviewed to identify impaired securities to be specifically evaluated for a potential OTTI.

For all non-fixed maturities, OTTI is evaluated based on the following:

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.

As a general rule, we also consider that equity securities in an unrealized loss position for twelve consecutive months are other than temporarily impaired.

We review each fixed maturity in an unrealized loss position to assess whether the security is a candidate for credit loss. Specifically, we consider credit rating, market price, and issuer-specific financial information, among other factors, to assess the likelihood of collection of all principal and interest as contractually due. Securities for which we determine that credit loss is likely are subjected to further analysis to estimate the credit loss recognized in net income, if any. In general, credit loss recognized in net income equals the difference between the security’s amortized cost and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security. All significant assumptions used in determining credit losses are subject to change as market conditions evolve.

Projected cash flows for corporate securities (principally senior unsecured bonds) are driven primarily by assumptions regarding probability of default and also the timing and amount of recoveries associated with defaults. We develop these estimates using information based on market observable data, issuer-specific information, and credit ratings. ACE developed its default assumption by using historical default data by Moody’s Investors Service (Moody’s) rating category to calculate a 1-in-100 year probability of default, which results in a default assumption in excess of the historical mean default rate. We believe that use of a default assumption in excess of the historical mean is reasonable in light of current market conditions.

For the three months ended March 31, 2013 and 2012, credit losses recognized in net income for corporate securities were $1 million and $3 million, respectively.

For mortgage-backed securities, credit impairment is assessed using a cash flow model that estimates the cash flows on the underlying mortgages, using the security-specific collateral and transaction structure. The model estimates cash flows from the underlying mortgage loans and distributes those cash flows to various tranches of securities, considering the transaction structure and any subordination and credit enhancements that exist in that structure. The cash flow model incorporates actual cash flows on the mortgage-backed securities through the current period and then projects the remaining cash flows using a number of assumptions, including default rates, prepayment rates, and loss severity rates (the par value of a defaulted security that will not be recovered) on foreclosed properties.

For the three months ended March 31, 2013 and 2012, credit losses recognized in net income for mortgage-backed securities were nil and $3 million, respectively.
The following table presents the Net realized gains (losses) and the losses included in Net realized gains (losses) and OCI as a result of conditions which caused us to conclude the decline in fair value of certain investments was “other-than-temporary”: 
 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars)
2013

 
2012

Fixed maturities:
 
 
 
OTTI on fixed maturities, gross
$
(1
)
 
$
(7
)
OTTI on fixed maturities recognized in OCI (pre-tax)

 

OTTI on fixed maturities, net
(1
)
 
(7
)
Gross realized gains excluding OTTI
62

 
112

Gross realized losses excluding OTTI
(25
)
 
(71
)
Total fixed maturities
36

 
34

Equity securities:
 
 
 
OTTI on equity securities
(1
)
 
(1
)
Gross realized gains excluding OTTI
2

 
2

Gross realized losses excluding OTTI
(2
)
 

Total equity securities
(1
)
 
1

OTTI on other investments
(1
)
 
(2
)
Foreign exchange gains (losses)
76

 
(5
)
Investment and embedded derivative instruments
18

 
42

Fair value adjustments on insurance derivative
328

 
428

S&P put options and futures
(250
)
 
(231
)
Other derivative instruments

 
(5
)
Other

 
(2
)
Net realized gains (losses)
$
206

 
$
260


 

The following table presents a roll-forward of pre-tax credit losses related to fixed maturities for which a portion of OTTI was recognized in OCI: 
 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars)
2013

 
2012

Balance of credit losses related to securities still held – beginning of period
$
43

 
$
74

Additions where no OTTI was previously recorded

 
1

Additions where an OTTI was previously recorded
1

 
5

Reductions for securities sold during the period
(9
)
 
(25
)
Balance of credit losses related to securities still held – end of period
$
35

 
$
55



d) Gross unrealized loss
At March 31, 2013, there were 2,073 fixed maturities out of a total of 23,742 fixed maturities in an unrealized loss position. The largest single unrealized loss in the fixed maturities was $2 million. There were 57 equity securities out of a total of 189 equity securities in an unrealized loss position. The largest single unrealized loss in the equity securities was less than $1 million. Fixed maturities in an unrealized loss position at March 31, 2013 comprised both investment grade and below investment grade securities for which fair value declined primarily due to widening credit spreads since the date of purchase.

The following tables present, for all securities in an unrealized loss position (including securities on loan), the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
March 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
$
576

 
$
(5
)
 
$

 
$

 
$
576

 
$
(5
)
Foreign
723

 
(11
)
 
69

 
(5
)
 
792

 
(16
)
Corporate securities
1,163

 
(21
)
 
78

 
(7
)
 
1,241

 
(28
)
Mortgage-backed securities
1,943

 
(15
)
 
140

 
(11
)
 
2,083

 
(26
)
States, municipalities, and political subdivisions
742

 
(6
)
 
37

 
(3
)
 
779

 
(9
)
Total fixed maturities
5,147

 
(58
)
 
324

 
(26
)
 
5,471

 
(84
)
Equity securities
47

 
(4
)
 

 

 
47

 
(4
)
Other investments
4

 
(3
)
 

 

 
4

 
(3
)
Total
$
5,198

 
$
(65
)
 
$
324

 
$
(26
)
 
$
5,522

 
$
(91
)
 
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
December 31, 2012
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
$
440

 
$
(1
)
 
$

 
$

 
$
440

 
$
(1
)
Foreign
1,234

 
(8
)
 
88

 
(6
)
 
1,322

 
(14
)
Corporate securities
1,026

 
(23
)
 
85

 
(8
)
 
1,111

 
(31
)
Mortgage-backed securities
855

 
(4
)
 
356

 
(32
)
 
1,211

 
(36
)
States, municipalities, and political subdivisions
316

 
(3
)
 
48

 
(4
)
 
364

 
(7
)
Total fixed maturities
3,871

 
(39
)
 
577

 
(50
)
 
4,448

 
(89
)
Equity securities
29

 
(4
)
 

 

 
29

 
(4
)
Other investments
68

 
(5
)
 

 

 
68

 
(5
)
Total
$
3,968

 
$
(48
)
 
$
577

 
$
(50
)
 
$
4,545

 
$
(98
)


e) Restricted assets
ACE is required to maintain assets on deposit with various regulatory authorities to support its insurance and reinsurance operations. These requirements are generally promulgated in the statutory regulations of the individual jurisdictions. The assets on deposit are available to settle insurance and reinsurance liabilities. ACE is also required to restrict assets pledged under repurchase agreements. We also use trust funds in certain large reinsurance transactions where the trust funds are set up for the benefit of the ceding companies and generally take the place of letter of credit (LOC) requirements. We also have investments in segregated portfolios primarily to provide collateral or guarantees for LOCs and derivative transactions. Included in restricted assets at March 31, 2013 and December 31, 2012, are fixed maturities and short-term investments totaling $16.5 billion and $16.6 billion, respectively, and cash of $153 million and $139 million, respectively.

The following table presents the components of restricted assets:
 
March 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Trust funds
$
11,421

 
$
11,389

Deposits with non-U.S. regulatory authorities
2,100

 
2,133

Assets pledged under repurchase agreements
1,402

 
1,401

Deposits with U.S. regulatory authorities
1,322

 
1,338

Other pledged assets
426

 
456

 
$
16,671

 
$
16,717

Fair value measurements
Fair value measurements
Fair value measurements

a) Fair value hierarchy
Fair value of financial assets and financial liabilities is estimated based on the framework established in the fair value accounting guidance. The guidance defines fair value as the price to sell an asset or transfer a liability in an orderly transaction between market participants and establishes a three-level valuation hierarchy in which inputs into valuation techniques used to measure fair value are classified. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data.
 
The three levels of the hierarchy are as follows:

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 interest rates and yield curves, quoted prices for similar assets and liabilities in active markets, and quoted prices for identical or similar assets and liabilities in markets that are not active; and

Level 3 – Inputs that are unobservable and reflect management’s judgments about assumptions that market participants would use in pricing an asset or liability.

We categorize financial instruments within the valuation hierarchy at the balance sheet date based upon the lowest level of inputs that are significant to the fair value measurement. Accordingly, transfers between levels within the valuation hierarchy occur when there are significant changes to the inputs, such as increases or decreases in market activity, changes to the availability of current prices, changes to the transparency to underlying inputs, and whether there are significant variances in quoted prices. Transfers in and/or out of any level are assumed to occur at the end of the period.

We use one or more pricing services to obtain fair value measurements for the majority of the investment securities we hold. Based on management’s understanding of the methodologies used, these pricing services only produce an estimate of fair value if there is observable market information that would allow them to make a fair value estimate. Based on our understanding of the market inputs used by the pricing services, all applicable investments have been valued in accordance with GAAP. We do not typically adjust prices obtained from pricing services. The following is a description of the valuation techniques and inputs used to determine fair values for financial instruments carried at fair value, as well as the general classification of such financial instruments pursuant to the valuation hierarchy.

Fixed maturities
We use pricing services to estimate fair value measurements for the majority of our fixed maturities. The pricing services use market quotations for fixed maturities that have quoted prices in active markets; such securities are classified within Level 1. For fixed maturities other than U.S. Treasury securities that generally do not trade on a daily basis, the pricing services prepare estimates of fair value measurements using their pricing applications, which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. Additional valuation factors that can be taken into account are nominal spreads, dollar basis, and liquidity adjustments. The pricing services evaluate each asset class based on relevant market and credit information, perceived market movements, and sector news. The market inputs used in the pricing evaluation, listed in the approximate order of priority include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events. The extent of the use of each input is dependent on the asset class and the market conditions. Given the asset class, the priority of the use of inputs may change or some market inputs may not be relevant. Additionally, the valuation of fixed maturities is more subjective when markets are less liquid due to the lack of market based inputs (i.e., stale pricing), which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction would occur. The overwhelming majority of fixed maturities are classified within Level 2 because the most significant inputs used in the pricing techniques are observable. For a small number of fixed maturities, we obtain a quote from a broker (typically a market maker). Due to the disclaimers on the quotes that indicate that the price is indicative only, we include these fair value estimates in Level 3. 

Equity securities
Equity securities with active markets are classified within Level 1 as fair values are based on quoted market prices. For equity securities in markets which are less active, fair values are based on market valuations and are classified within Level 2. Equity securities for which pricing is unobservable are classified within Level 3.

Short-term investments
Short-term investments, which comprise securities due to mature within one year of the date of purchase that are traded in active markets, are classified within Level 1 as fair values are based on quoted market prices. Securities such as commercial paper and discount notes are classified within Level 2 because these securities are typically not actively traded due to their approaching maturity and, as such, their cost approximates fair value.

Other investments
Fair values for the majority of Other investments including investments in partially-owned investment companies, investment funds, and limited partnerships are based on their respective net asset values or equivalent (NAV). The majority of these investments, for which NAV was used as a practical expedient to measure fair value, are classified within Level 3 because either ACE will never have the contractual option to redeem the investments or will not have the contractual option to redeem the investments in the near term. The remainder of such investments is classified within Level 2. Certain of our long duration contracts are supported by assets that do not qualify for separate account reporting under GAAP. These assets comprise mutual funds classified within Level 1 in the valuation hierarchy on the same basis as other equity securities traded in active markets. Other investments also includes equity securities and fixed maturities held in rabbi trusts maintained by ACE for deferred compensation plans, which are classified within the valuation hierarchy on the same basis as other equity securities and fixed maturities.

Securities lending collateral
The underlying assets included in Securities lending collateral in the consolidated balance sheets are fixed maturities which are classified in the valuation hierarchy on the same basis as other fixed maturities. Excluded from the valuation hierarchy is the corresponding liability related to ACE’s obligation to return the collateral plus interest as it is reported at contract value and not fair value in the consolidated balance sheets.

Investment derivative instruments
Actively traded investment derivative instruments, including futures, options, and exchange-traded forward contracts are classified within Level 1 as fair values are based on quoted market prices. The fair value of cross-currency swaps are based on market valuations and are classified within Level 2. Investment derivative instruments are recorded in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets.

Other derivative instruments
We maintain positions in other derivative instruments including exchange-traded equity futures contracts and option contracts designed to limit exposure to a severe equity market decline, which would cause an increase in expected claims and, therefore, reserves for our guaranteed minimum death benefits (GMDB) and guaranteed living benefits (GLB) reinsurance business. Our position in exchange-traded equity futures contracts is classified within Level 1. The fair value of the majority of the remaining positions in other derivative instruments is based on significant observable inputs including equity security and interest rate indices. Accordingly, these are classified within Level 2. Our position in credit default swaps is typically included within Level 3. Other derivative instruments are recorded in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets.

Separate account assets
Separate account assets represent segregated funds where investment risks are borne by the customers, except to the extent of certain guarantees made by ACE. Separate account assets comprise mutual funds classified in the valuation hierarchy on the same basis as other equity securities traded in active markets and are classified within Level 1. Separate account assets also include fixed maturities classified within Level 2 because the most significant inputs used in the pricing techniques are observable. Excluded from the valuation hierarchy are the corresponding liabilities as they are reported at contract value and not fair value in the consolidated balance sheets. Separate account assets are recorded in Other assets in the consolidated balance sheets.

Guaranteed living benefits
The GLB arises from life reinsurance programs covering living benefit guarantees whereby we assume the risk of guaranteed minimum income benefits (GMIB) and guaranteed minimum accumulation benefits (GMAB) associated with variable annuity contracts. GLB’s are recorded in Accounts payable, accrued expenses, and other liabilities and Future policy benefits in the consolidated balance sheets. For GLB reinsurance, ACE estimates fair value using an internal valuation model which includes current market information and estimates of policyholder behavior. All of the treaties contain claim limits, which are factored into the valuation model. The fair value depends on a number of inputs, including changes in interest rates, changes in equity markets, credit risk, current account value, changes in market volatility, expected annuitization rates, changes in policyholder behavior, and changes in policyholder mortality.

The most significant policyholder behavior assumptions include lapse rates and the GMIB annuitization rates. Assumptions regarding lapse rates and GMIB annuitization rates differ by treaty but the underlying methodologies to determine rates applied to each treaty are comparable. The assumptions regarding lapse and GMIB annuitization rates determined for each treaty are based on a dynamic calculation that uses several underlying factors.

A lapse rate is the percentage of in-force policies surrendered in a given calendar year. All else equal, as lapse rates increase, ultimate claim payments will decrease. In general, the base lapse function assumes low lapse rates (ranging from about 1 percent to 6 percent per annum) during the surrender charge period of the GMIB contract, followed by a “spike” lapse rate (ranging from about 10 percent to 30 percent per annum) in the year immediately following the surrender charge period, and then reverting to an ultimate lapse rate (generally around 10 percent per annum), typically over a 2-year period. This base rate is adjusted downward for policies with more valuable guarantees (policies with guaranteed values far in excess of their account values) by multiplying the base lapse rate by a factor ranging from 15 percent to 75 percent. Additional lapses due to partial withdrawals and older policyholders with tax-qualified contracts (due to required minimum distributions) are also included.

The GMIB annuitization rate is the percentage of policies for which the policyholder will elect to annuitize using the guaranteed benefit provided under the GMIB. All else equal, as GMIB annuitization rates increase, ultimate claim payments will increase, subject to treaty claim limits. In general ACE assumes that GMIB annuitization rates will be higher for policies with more valuable guarantees (policies with guaranteed values far in excess of their account values). In addition, we also assume that GMIB annuitization rates are higher in the first year immediately following the waiting period (the first year the policies are eligible to annuitize using the GMIB) in comparison to all subsequent years. We do not yet have a robust set of annuitization experience because most of our clients’ policyholders are not yet eligible to annuitize using the GMIB. However, for certain clients representing approximately 37 percent of the total GMIB guaranteed value there are several years of annuitization experience. For these clients the annuitization function reflects the actual experience and has a maximum annuitization rate per annum of 8 percent (a higher maximum applies in the first year a policy is eligible to annuitize using the GMIB—it is over 13 percent). For most clients, there is not a credible amount of observable relevant behavior data and so we use a weighted-average (with a heavier weighting on the observed experience noted previously) of three different annuitization functions with maximum annuitization rates per annum of 8 percent, 12 percent, and 30 percent, respectively (with significantly higher rates in the first year a policy is eligible to annuitize using the GMIB). The GMIB reinsurance treaties include claim limits to protect ACE in the event that actual annuitization behavior is significantly higher than expected.

The effect of changes in key market factors on assumed lapse and annuitization rates reflect emerging trends using data available from cedants. For treaties with limited experience, rates are established in line with data received from other ceding companies adjusted, as appropriate, with industry estimates. The model and related assumptions are continuously re-evaluated by management and enhanced, as appropriate, based upon additional experience obtained related to policyholder behavior and availability of more information, such as market conditions, market participant assumptions, and demographics of in-force annuities. During the three months ended March 31, 2013, no material changes were made to actuarial or behavioral assumptions.

We view the variable annuity reinsurance business as having a similar risk profile to that of catastrophe reinsurance, with the probability of a cumulative long-term economic net loss relatively small at the time of pricing. However, adverse changes in market factors and policyholder behavior will have an adverse impact on net income, which may be material. Because of the significant use of unobservable inputs including policyholder behavior, GLB reinsurance is classified within Level 3.
The following tables present, by valuation hierarchy, the financial instruments measured at fair value on a recurring basis:
March 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
$
1,986

 
$
1,857

 
$

 
$
3,843

Foreign
223

 
13,406

 
35

 
13,664

Corporate securities
19

 
16,784

 
118

 
16,921

Mortgage-backed securities

 
10,158

 
13

 
10,171

States, municipalities, and political subdivisions

 
3,348

 

 
3,348

 
2,228

 
45,553

 
166

 
47,947

Equity securities
337

 
493

 
2

 
832

Short-term investments
2,130

 
763

 

 
2,893

Other investments
277

 
215

 
2,328

 
2,820

Securities lending collateral

 
1,786

 

 
1,786

Investment derivative instruments
(51
)
 

 

 
(51
)
Other derivative instruments
(37
)
 
17

 

 
(20
)
Separate account assets
947

 
69

 

 
1,016

Total assets measured at fair value
$
5,831

 
$
48,896

 
$
2,496

 
$
57,223

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$

 
$

 
$
753

 
$
753

(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, 2012
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,050

 
$
1,685

 
$

 
$
3,735

Foreign
222

 
13,431

 
60

 
13,713

Corporate securities
20

 
16,586

 
102

 
16,708

Mortgage-backed securities

 
10,460

 
13

 
10,473

States, municipalities, and political subdivisions

 
2,677

 

 
2,677

 
2,292

 
44,839

 
175

 
47,306

Equity securities
253

 
488

 
3

 
744

Short-term investments
1,503

 
725

 

 
2,228

Other investments
268

 
196

 
2,252

 
2,716

Securities lending collateral

 
1,791

 

 
1,791

Investment derivative instruments
11

 

 

 
11

Other derivative instruments
(6
)
 
30

 

 
24

Separate account assets
872

 
71

 

 
943

Total assets measured at fair value
$
5,193

 
$
48,140

 
$
2,430

 
$
55,763

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$

 
$

 
$
1,119

 
$
1,119

(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.

The transfers from Level 1 to Level 2 were $13 million and $5 million during the three months ended March 31, 2013 and 2012, respectively. There were no transfers from Level 2 to Level 1 during the three months ended March 31, 2013 and 2012.

Fair value of alternative investments
Included in Other investments in the fair value hierarchy at March 31, 2013 and December 31, 2012 are investment funds, limited partnerships, and partially-owned investment companies measured at fair value using NAV as a practical expedient. At March 31, 2013 and December 31, 2012, there were no probable or pending sales related to any of the investments measured at fair value using NAV. 

The following table presents, by investment category, the expected liquidation period, fair value, and maximum future funding commitments of alternative investments:
 
 
 
 
 
March 31

 
 
 
December 31

 
Expected
Liquidation
Period
 
 
 
2013

 
 
 
2012

(in millions of U.S. dollars)
Fair
Value

 
Maximum
Future
Funding
Commitments

 
Fair
Value

 
Maximum
Future
Funding
Commitments

Financial
5 to 9 Years
 
$
237

 
$
106

 
$
225

 
$
111

Real estate
3 to 9 Years
 
342

 
67

 
292

 
62

Distressed
6 to 9 Years
 
182

 
147

 
192

 
152

Mezzanine
6 to 9 Years
 
274

 
282

 
284

 
279

Traditional
3 to 8 Years
 
737

 
575

 
711

 
587

Vintage
1 to 3 Years
 
14

 

 
14

 

Investment funds
Not Applicable
 
404

 

 
395

 

 
 
 
$
2,190

 
$
1,177

 
$
2,113

 
$
1,191



Included in all categories in the above table except for Investment funds are investments for which ACE will never have the contractual option to redeem but receives distributions based on the liquidation of the underlying assets. Included in the “Expected Liquidation Period” column above is the range in years over which ACE expects the majority of underlying assets in the respective categories to be liquidated. Further, for all categories except for Investment funds, ACE does not have the ability to sell or transfer the investments without the consent from the general partner of individual funds.

Financial
Financial consists of investments in private equity funds targeting financial services companies such as financial institutions and insurance services around the world.

Real estate
Real estate consists of investments in private equity funds targeting global distress opportunities, value added U.S. properties, and global mezzanine debt securities in the commercial real estate market.

Distressed
Distressed consists of investments in private equity funds targeting distressed debt/credit and equity opportunities in the U.S.

Mezzanine
Mezzanine consists of investments in private equity funds targeting private mezzanine debt of large-cap and mid-cap companies in the U.S. and worldwide.

Traditional
Traditional consists of investments in private equity funds employing traditional private equity investment strategies such as buyout and venture with different geographical focuses including Brazil, Asia, Europe, and the U.S.

Vintage
Vintage consists of investments in private equity funds made before 2002 and where the funds’ commitment periods had already expired.

Investment funds
ACE’s investment funds employ various investment strategies such as long/short equity and arbitrage/distressed. Included in this category are investments for which ACE has the option to redeem at agreed upon value as described in each investment fund’s subscription agreement. Depending on the terms of the various subscription agreements, investment fund investments may be redeemed monthly, quarterly, semi-annually, or annually. If ACE wishes to redeem an investment fund investment, it must first determine if the investment fund is still in a lock-up period (a time when ACE cannot redeem its investment so that the investment fund manager has time to build the portfolio). If the investment fund is no longer in its lock-up period, ACE must then notify the investment fund manager of its intention to redeem by the notification date prescribed by the subscription agreement. Subsequent to notification, the investment fund can redeem ACE’s investment within several months of the notification. Notice periods for redemption of the investment funds range between 5 and 120 days. ACE can redeem its investment funds without consent from the investment fund managers.

Level 3 financial instruments
The fair value of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) consist of various inputs and assumptions that management makes when determining fair value. Management analyzes changes in fair value measurements classified within Level 3 by comparing pricing and returns of our investments to benchmarks, including month-over-month movements, investment credit spreads, interest rate movements, and credit quality of securities.

The following table presents the significant unobservable inputs used in the Level 3 liability valuations. Excluded from the table below are inputs used to fair value Level 3 assets which are based on single broker quotes or net asset value and contain no quantitative unobservable inputs developed by management. 
(in millions of U.S. dollars, except for percentages)
Fair Value at
March 31, 2013

 
Fair Value at
December 31, 2012

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
753

 
$
1,119

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
 
 
Annuitization rate
 
0% – 50%
(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.

The following tables present a reconciliation of the beginning and ending balances of financial instruments measured at fair value using significant unobservable inputs (Level 3): 
 
Assets
Liabilities

 
Available-for-Sale Debt Securities
Equity
securities

 
Other
investments

 
GLB(1)

Three Months Ended
Foreign

 
Corporate
securities

 
MBS

 
 
 
March 31, 2013
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
Balance–Beginning of Period
$
60

 
$
102

 
$
13

 
$
3

 
$
2,252

 
$
1,119

Transfers into Level 3
3

 
12

 

 

 

 

Transfers out of Level 3
(27
)
 
(2
)
 

 
(1
)
 

 

Change in Net Unrealized Gains (Losses) included in OCI

 
1

 

 

 
22

 

Net Realized Gains/Losses
1

 

 

 

 
(1
)
 
(366
)
Purchases

 
10

 

 

 
136

 

Sales
(1
)
 

 

 

 
(9
)
 

Settlements
(1
)
 
(5
)
 

 

 
(72
)
 

Balance–End of Period
$
35

 
$
118

 
$
13

 
$
2

 
$
2,328

 
$
753

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
$

 
$

 
$

 
$

 
$
(1
)
 
$
(366
)
(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
 
Available-for-Sale Debt Securities
 
Equity
securities
 
Other
investments
 
Other
derivative
instruments
 
GLB(1)
Three Months Ended
U.S.
Treasury
and
Agency
 
Foreign
 
Corporate
securities
 
MBS
 
States,
municipalities,
and political
subdivisions
 
 
 
 
March 31, 2012
 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance–Beginning of Period
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

Transfers out of Level 3
(5
)
 
(1
)
 
(7
)
 
(12
)
 

 

 

 

 

Change in Net Unrealized Gains (Losses) included in OCI

 

 
2

 

 

 
1

 
9

 

 

Net Realized Gains/Losses

 

 

 

 

 

 
(2
)
 
(3
)
 
(456
)
Purchases

 
34

 
3

 
4

 

 
1

 
113

 

 

Sales

 
(17
)
 
(8
)
 

 

 
(5
)
 
(2
)
 

 

Settlements

 

 
(7
)
 
(1
)
 

 

 
(41
)
 
(1
)
 

Balance–End of Period
$

 
$
49

 
$
117

 
$
19

 
$
1

 
$
10

 
$
1,954

 
$
(1
)
 
$
863

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
$

 
$

 
$

 
$

 
$

 
$

 
$
(2
)
 
$
(3
)
 
$
(456
)
(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 $1.05 billion at March 31, 2012, and $1.5 billion at December 31, 2011, which includes a fair value derivative adjustment of $863 million and $1.3 billion, respectively.
 
b) Financial instruments disclosed, but not measured, at fair value
ACE uses various financial instruments in the normal course of its business. Our insurance contracts are excluded from fair value of financial instruments accounting guidance, and therefore, are not included in the amounts discussed below.

The carrying values of cash, other assets, other liabilities, and other financial instruments not included below approximated their fair values.

Investments in partially-owned insurance companies
Fair values for investments in partially-owned insurance companies are based on ACE’s share of the net assets based on the financial statements provided by those companies.

Short- and long-term debt and trust preferred securities
Where practical, fair values for short-term debt, long-term debt, and trust preferred securities are estimated using discounted cash flow calculations based principally on observable inputs including incremental borrowing rates, which reflect ACE’s credit rating, for similar types of borrowings with maturities consistent with those remaining for the debt being valued.

 
The following tables present fair value, by valuation hierarchy, and carrying value of the financial instruments not measured at fair value:
March 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
$
641

 
$
356

 
$

 
$
997

 
$
962

Foreign

 
937

 

 
937

 
882

Corporate securities

 
2,185

 
17

 
2,202

 
2,064

Mortgage-backed securities

 
1,893

 

 
1,893

 
1,812

States, municipalities, and political subdivisions

 
1,184

 

 
1,184

 
1,147

 
641

 
6,555

 
17

 
7,213

 
6,867

Partially-owned insurance companies

 

 
449

 
449

 
449

Total assets
$
641

 
$
6,555

 
$
466

 
$
7,662

 
$
7,316

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,402

 
$

 
$
1,402

 
$
1,402

Long-term debt

 
4,861

 

 
4,861

 
4,307

Trust preferred securities

 
449

 

 
449

 
309

Total liabilities
$

 
$
6,712

 
$

 
$
6,712

 
$
6,018


December 31, 2012
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
$
619

 
$
464

 
$

 
$
1,083

 
$
1,044

Foreign

 
964

 

 
964

 
910

Corporate securities

 
2,257

 
18

 
2,275

 
2,133

Mortgage-backed securities

 
2,116

 

 
2,116

 
2,028

States, municipalities, and political subdivisions

 
1,195

 

 
1,195

 
1,155

 
619

 
6,996

 
18

 
7,633

 
7,270

Partially-owned insurance companies

 

 
454

 
454

 
454

Total assets
$
619

 
$
6,996

 
$
472

 
$
8,087

 
$
7,724

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,401

 
$

 
$
1,401

 
$
1,401

Long-term debt

 
3,916

 

 
3,916

 
3,360

Trust preferred securities

 
446

 

 
446

 
309

Total liabilities
$

 
$
5,763

 
$

 
$
5,763

 
$
5,070

Assumed life reinsurance programs involving minimum benefit guarantees under annuity contracts
Assumed life reinsurance programs involving minimum benefit guarantees under annuity contracts
Assumed life reinsurance programs involving minimum benefit guarantees under annuity contracts

The following table presents income and expenses relating to GMDB and GLB reinsurance. GLBs include GMIBs as well as some GMABs originating in Japan.
 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars)
2013

 
2012

GMDB
 
 
 
Net premiums earned
$
20

 
$
23

Policy benefits and other reserve adjustments
$
19

 
$
27

GLB
 
 
 
Net premiums earned
$
39

 
$
41

Policy benefits and other reserve adjustments
9

 
4

Net realized gains
369

 
458

Gain recognized in income
$
399

 
$
495

Net cash received
$
32

 
$
39

Net decrease in liability
$
367

 
$
456



At March 31, 2013, reported liabilities for GMDB and GLB reinsurance were $89 million and $1.0 billion, respectively, compared with $90 million and $1.4 billion, respectively, at December 31, 2012. The reported liability of $1.0 billion for GLB reinsurance at March 31, 2013 and $1.4 billion at December 31, 2012 includes a fair value derivative adjustment of $753 million and $1.1 billion, respectively. Included in Net realized gains (losses) in the table above are gains (losses) related to foreign exchange and other fair value derivative adjustments. Reported liabilities for both GMDB and GLB reinsurance are determined using internal valuation models. Such valuations require considerable judgment and are subject to significant uncertainty. The valuation of these products is subject to fluctuations arising from, among other factors, changes in interest rates, changes in equity markets, changes in credit markets, changes in the allocation of the investments underlying annuitants’ account values, and assumptions regarding future policyholder behavior. These models and the related assumptions are continually reviewed by management and enhanced, as appropriate, based upon improvements in modeling assumptions and availability of more information, such as market conditions and demographics of in-force annuities.

Variable Annuity Net Amount at Risk
(i) Reinsurance covering the GMDB risk only
At March 31, 2013 and December 31, 2012, the net amount at risk from reinsurance programs covering the GMDB risk only was $1.0 billion and $1.3 billion, respectively.

For reinsurance programs covering the GMDB risk only, the net amount at risk is defined as the present value of future claim payments under the following assumptions:

policy account values and guaranteed values are fixed at the valuation date (March 31, 2013 and December 31, 2012, 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 1.0 percent and 2.0 percent ; and

reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty.

The total claim amount payable on reinsurance programs covering the GMDB risk only, if all the cedants’ policyholders were to die immediately at March 31, 2013 was approximately $574 million. This takes into account all applicable reinsurance treaty claim limits.

(ii) Reinsurance covering the GLB risk only
At March 31, 2013 and December 31, 2012, the net amount at risk from reinsurance programs covering the GLB risk only was $345 million and $445 million, respectively.

For reinsurance programs covering the GLB risk only, the net amount at risk is defined as the present value of future claim payments under the following assumptions:

policy account values and guaranteed values are fixed at the valuation date (March 31, 2013 and December 31, 2012, 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. 

(iii) Reinsurance covering both the GMDB and GLB risks on the same underlying policyholders
At March 31, 2013 and December 31, 2012, the GMDB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $93 million and $116 million, respectively.

At March 31, 2013 and December 31, 2012, the GLB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $376 million and $655 million, respectively.

These net amounts at risk reflect the interaction between the two types of benefits on any single policyholder (eliminating double-counting), and therefore the net amounts at risk should be considered additive.

For reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders, the net amount at risk is defined as the present value of future claim payments under the following assumptions:

policy account values and guaranteed values are fixed at the valuation date (March 31, 2013 and December 31, 2012, 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 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.

The total claim amount payable on reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders, if all of the cedants’ policyholders were to die immediately at March 31, 2013 was approximately $334 million. This takes into account all applicable reinsurance treaty claim limits. Although there would be an increase in death claims resulting from 100 percent immediate mortality of all policyholders, the GLB claims would be zero.

The average attained age of all policyholders under sections i), ii), and iii) above, weighted by the guaranteed value of each reinsured policy, is approximately 68 years.
Debt Debt
Debt
6. Debt

In March 2013, ACE INA Holdings, Inc. issued $475 million of 2.7 percent senior notes due March 2023 and $475 million of 4.15 percent senior notes due March 2043.  The 2.7 percent senior notes and 4.15 percent senior notes are redeemable at any time at ACE INA Holdings, Inc.'s option subject to a “make-whole” premium (the present value of the remaining principal and interest discounted at the applicable U.S. Treasury rate plus 0.10 percent and 0.15 percent, respectively). The notes are also redeemable at par plus accrued and unpaid interest in the event of certain changes in tax law. These notes do not have the benefit of any sinking fund.  These senior unsecured notes are guaranteed on a senior basis by ACE Limited and they rank equally with all of ACE's other senior obligations.  They also contain customary limitations on lien provisions as well as customary events of default provisions which, if breached, could result in the accelerated maturity of such senior debt.
Commitments, contingencies, and guarantees
Commitments, contingencies, and guarantees
Commitments, contingencies, and guarantees

a) Derivative instruments
Derivative instruments employed
ACE maintains positions in derivative instruments such as futures, options, swaps, and foreign currency forward contracts for which the primary purposes are to manage duration and foreign currency exposure, yield enhancement, or to obtain an exposure to a particular financial market. Along with convertible bonds and to be announced mortgage-backed securities (TBA), discussed below, these are the most numerous and frequent derivative transactions.

ACE maintains positions in convertible bond investments that contain embedded derivatives. In addition, ACE, from time to time, purchases TBAs as part of its investing activities. These securities are included within the fixed maturities available for sale (FM AFS) portfolio. At March 31, 2013, ACE had no positions in TBAs.

Under reinsurance programs covering GLBs, ACE assumes the risk of GLBs, including GMIB and GMAB, associated with variable annuity contracts. The GMIB risk is triggered if, at the time the contract holder elects to convert the accumulated account value to a periodic payment stream (annuitize), the accumulated account value is not sufficient to provide a guaranteed minimum level of monthly income. The GMAB risk is triggered if, at contract maturity, the contract holder’s account value is less than a guaranteed minimum value. The GLB reinsurance product meets the definition of a derivative instrument. Benefit reserves in respect of GLBs are classified as Future policy benefits (FPB) while the fair value derivative adjustment is classified within Accounts payable, accrued expenses, and other liabilities (AP). ACE also maintains positions in exchange-traded equity futures contracts and options on equity market indices to limit equity exposure in the GMDB and GLB blocks of business.

In relation to certain debt issuances, ACE, from time to time, enters into interest rate swap transactions for the purpose of either fixing or reducing borrowing costs. Although the use of these interest rate swaps has the economic effect of fixing or reducing borrowing costs on a net basis, gross interest expense on the related debt issuances is included in Interest expense while the settlements related to the interest rate swaps are reflected in Net realized gains (losses) in the consolidated statements of operations. At March 31, 2013, ACE had no in-force interest rate swaps.

ACE, from time to time, buys credit default swaps to mitigate global credit risk exposure, primarily related to reinsurance recoverables. At March 31, 2013, ACE had no in-force credit default swaps.

All derivative instruments are carried at fair value with changes in fair value recorded in Net realized gains (losses) in the consolidated statements of operations. None of the derivative instruments are designated as hedges for accounting purposes.

The following table presents the balance sheet locations, fair values in an asset or (liability) position, and notional values/payment provisions of our derivative instruments:
 
 
 
March 31
 
 
December 31
 
 
 
 
2013
 
 
2012
 
(in millions of U.S. dollars)
Consolidated
Balance Sheet
Location
 
Fair
Value

 
Notional
Value/
Payment
Provision

 
Fair
Value

 
Notional
Value/
Payment
Provision

Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
AP
 
$
(48
)
 
$
534

 
$

 
$
620

Cross-currency swaps
AP
 

 
50

 

 
50

Futures contracts on money market instruments
AP
 
1

 
2,169

 
1

 
2,710

Futures contracts on notes and bonds
AP
 
(4
)
 
1,079

 
10

 
915

Options on money market instruments
AP
 

 
3,335

 

 

Convertible bonds
FM AFS
 
274

 
231

 
309

 
279

 
 
 
$
223

 
$
7,398

 
$
320

 
$
4,574

Other derivative instruments
 
 
 
 
 
 
 
 
 
Futures contracts on equities(1)
AP
 
$
(37
)
 
$
2,255

 
$
(6
)
 
$
2,308

Options on equity market indices(1)
AP
 
17

 
250

 
30

 
250

 
 
 
$
(20
)
 
$
2,505

 
$
24

 
$
2,558

GLB(2)
AP/FPB
 
$
(985
)
 
$
721

 
$
(1,352
)
 
$
1,100

(1) 
Related to GMDB and GLB blocks of business.
(2) 
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.

On January 1, 2013, we adopted new guidance that requires disclosure of financial instruments subject to a master netting agreement.  At March 31, 2013 and December 31, 2012, derivative liabilities of $25 million and derivative assets of $35 million, respectively, included in the table above were subject to a master netting agreement.  The remaining derivatives included in the table above were not subject to a master netting agreement. 

At March 31, 2013 and December 31, 2012, our repurchase obligations of $1,402 million and $1,401 million, respectively, were fully collateralized.  At March 31, 2013 and December 31, 2012, our securities lending payable was $1,789 million and $1,795 million, respectively, and our securities lending collateral was $1,786 million and $1,791 million, respectively.  The securities lending collateral can only be accessed in the event that the institution borrowing the securities is in default under the lending agreement.  An indemnification agreement with the lending agent protects us in the event a borrower becomes insolvent or fails to return any of the securities on loan.  In contrast to securities lending programs, the use of cash received is not restricted for the repurchase obligations.




The following table presents net realized gains (losses) related to derivative instrument activity in the consolidated statements of operations:
 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars)
2013
 
2012
Investment and embedded derivative instruments
 
 
 
Foreign currency forward contracts
$
5

 
$
(8
)
All other futures contracts and options
7

 
26

Convertible bonds
6

 
24

Total investment and embedded derivative instruments
$
18

 
$
42

GLB and other derivative instruments
 
 
 
GLB(1)
$
328

 
$
428

Futures contracts on equities(2)
(237
)
 
(213
)
Options on equity market indices(2)
(13
)
 
(18
)
Credit default swaps

 
(5
)
Total GLB and other derivative instruments
$
78

 
$
192

 
$
96

 
$
234

(1) 
Excludes foreign exchange gains (losses) related to GLB.
(2) 
Related to GMDB and GLB blocks of business. 

Derivative instrument objectives

(i) Foreign currency exposure management
A foreign currency forward contract (forward) is an agreement between participants to exchange specific foreign currencies at a future date. ACE uses forwards to minimize the effect of fluctuating foreign currencies.

(ii) Duration management and market exposure
Futures
Futures contracts give the holder the right and obligation to participate in market movements, determined by the index or underlying security on which the futures contract is based. Settlement is made daily in cash by an amount equal to the change in value of the futures contract times a multiplier that scales the size of the contract. Exchange-traded futures contracts on money market instruments, notes and bonds are used in fixed maturity portfolios to more efficiently manage duration, as substitutes for ownership of the money market instruments, bonds and notes without significantly increasing the risk in the portfolio. Investments in futures contracts may be made only to the extent that there are assets under management not otherwise committed.

Exchange-traded equity futures contracts are used to limit exposure to a severe equity market decline, which would cause an increase in expected claims and therefore, reserves for GMDB and GLB reinsurance business.

Options
An option contract conveys to the holder the right, but not the obligation, to purchase or sell a specified amount or value of an underlying security at a fixed price. Option contracts are used in the investment portfolio as protection against unexpected shifts in interest rates, which would affect the duration of the fixed maturity portfolio. By using options in the portfolio, the overall interest rate sensitivity of the portfolio can be reduced. Option contracts may also be used as an alternative to futures contracts in the synthetic strategy as described above.

Another use for option contracts is to limit exposure to a severe equity market decline, which would cause an increase in expected claims and therefore, reserves for GMDB and GLB reinsurance business.

The price of an option is influenced by the underlying security, expected volatility, time to expiration, and supply and demand.

The credit risk associated with the above derivative financial instruments relates to the potential for non-performance by counterparties. Although non-performance is not anticipated, in order to minimize the risk of loss, management monitors the creditworthiness of its counterparties and obtains collateral. The performance of exchange-traded instruments is guaranteed by the exchange on which they trade. For non-exchange-traded instruments, the counterparties are principally banks which must meet certain criteria according to our investment guidelines.

Cross-currency swaps
Cross currency swaps are agreements under which two counterparties exchange interest payments and principal denominated in different currencies at a future date.  We use cross-currency swaps to reduce the foreign currency and interest rate risk by converting cash flows back into local currency.  We invest in foreign currency denominated investments to improve credit diversification and also to obtain better duration matching to our liabilities that is limited in the local currency market.

Credit default swaps
A credit default swap is a bilateral contract under which two counterparties agree to isolate and separately trade the credit risk of at least one third-party reference entity. Under a credit default swap agreement, ACE as a protection buyer pays a periodic fee to a protection seller in exchange for a contingent payment by the seller upon a credit event (such as a default or failure to pay) related to the reference entity. When a credit event is triggered, the protection seller pays the protection buyer the difference between the fair value of assets and the principal amount.

(iii) Convertible security investments
A convertible bond is a debt instrument that can be converted into a predetermined amount of the issuer’s equity at certain times prior to the bond’s maturity. The convertible option is an embedded derivative within the fixed maturity host instruments which are classified in the investment portfolio as available for sale. ACE purchases convertible bonds for their total return and not specifically for the conversion feature.

(iv) TBA
By acquiring TBAs, we make a commitment to purchase a future issuance of mortgage-backed securities. For the period between purchase of the TBAs and issuance of the underlying security, we account for our position as a derivative in the consolidated financial statements. ACE purchases TBAs both for their total return and for the flexibility they provide related to our mortgage-backed security strategy.

(v) GLB
Under the GLB program, as the assuming entity, ACE is obligated to provide coverage until the expiration or maturity of the underlying deferred annuity contracts or the expiry of the reinsurance treaty. Premiums received under the reinsurance treaties are classified as premium. Expected losses allocated to premiums received are classified as Future policy benefits and valued similar to GMDB reinsurance. Other changes in fair value, principally arising from changes in expected losses allocated to expected future premiums, are classified as Net realized gains (losses). Fair value represents management’s estimate of exit price and thus, includes a risk margin. We may recognize a realized loss for other changes in fair value due to adverse changes in the capital markets (e.g., declining interest rates and/or declining equity markets) and changes in actual or estimated future policyholder behavior (e.g., increased annuitization or decreased lapse rates) although we expect the business to be profitable. We believe this presentation provides the most meaningful disclosure of changes in the underlying risk within the GLB reinsurance programs for a given reporting period.

b) Other investments
At March 31, 2013, included in Other investments in the consolidated balance sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of $1,786 million. In connection with these investments, we have commitments that may require funding of up to $1,177 million over the next several years. 

c) Taxation
In April 2012, ACE reached final settlement with the Internal Revenue Service (IRS) Appeals Division regarding several issues raised by the IRS Examination Division in its federal tax returns for 2005, 2006 and 2007. The settlement of these issues had no net impact on our results of operations. In addition, the IRS completed its field examination of ACE’s federal tax returns for 2008 and 2009 during June 2012. No material adjustments resulted from this examination. It is reasonably possible that over the next twelve months, the amount of unrecognized tax benefits may change resulting from the re-evaluation of unrecognized tax benefits arising from examinations of taxing authorities and the closing of tax statutes of limitations. With few exceptions, ACE is no longer subject to state and local or non-U.S. income tax examinations for years before 2005.

d) Legal proceedings
Claims and other litigation
Our insurance subsidiaries are subject to claims litigation involving disputed interpretations of policy coverages and, in some jurisdictions, direct actions by allegedly-injured persons seeking damages from policyholders. These lawsuits, involving claims on policies issued by our subsidiaries which are typical to the insurance industry in general and in the normal course of business, are considered in our loss and loss expense reserves. In addition to claims litigation, we are subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly relate to claims on insurance policies. This category of business litigation typically involves, among other things, allegations of underwriting errors or misconduct, employment claims, regulatory activity, or disputes arising from our business ventures. In the opinion of management, our ultimate liability for these matters could be, but we believe is not likely to be, material to our consolidated financial condition and results of operations.
Shareholders' equity
Shareholders' equity
Shareholders’ equity

All of ACE’s Common Shares are authorized under Swiss corporate law. Though the par value of Common Shares is stated in Swiss francs, ACE continues to use U.S. dollars as its reporting currency for preparing the consolidated financial statements. Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value reduction) or from legal reserves, must be stated in Swiss francs though dividend payments are made by ACE in U.S. dollars. At our May 2011 annual general meeting, our shareholders approved a dividend for the following year, payable in four quarterly installments after the May 2011 annual general meeting from our capital contribution reserves (Additional paid-in capital), a subaccount of legal reserves. At our May 2012 annual general meeting, our shareholders approved a dividend for the following year, payable in four quarterly installments after the May 2012 annual general meeting in the form of a distribution by way of a par value reduction. We have determined this procedure is more appropriate for us at this time due to current Swiss law. For the three months ended March 31, 2013, dividends per Common Share amounted to CHF 0.46 ($0.49). Par value reductions had been reflected as such through Common Shares in the consolidated statements of shareholders' equity and had the effect of reducing par value per Common Share to CHF 28.43 at March 31, 2013.

For the three months ended March 31, 2012, dividends per Common Share amounted to CHF 0.53 ($0.59), which included a $0.12 per Common Share increase (approved by our shareholders at the January 9, 2012 extraordinary general meeting) to the third and fourth installments of the dividend approved at the May 2011 annual general meeting.

Common Shares in treasury are used principally for issuance upon the exercise of employee stock options, grants of restricted stock, and purchases under the Employee Stock Purchase Plan (ESPP). At March 31, 2013, 2,787,156 Common Shares remain in treasury after net shares redeemed under employee share-based compensation plans.

ACE Limited securities repurchase authorization
In August 2011, the Board of Directors (Board) authorized the repurchase of up to $303 million of ACE’s Common Shares through December 31, 2012. The amount authorized in August 2011 was in addition to the $197 million balance remaining under a $600 million share repurchase program approved in November 2010. In November 2012, the Board authorized an extension of our then-remaining repurchase capacity through December 31, 2013. These authorizations were granted to allow ACE to repurchase Common Shares to partially offset potential dilution from the exercise of stock options and the granting of restricted stock under share-based compensation plans. Such repurchases may be made in the open market, in privately negotiated transactions, block trades, accelerated repurchases and/or through option or other forward transactions. For the three months ended March 31, 2013, ACE repurchased 1,808,300 Common Shares for a cost of $154 million in a series of open market transactions. At March 31, 2013, $307 million in share repurchase authorization remained through December 31, 2013 pursuant to the November 2010, August 2011, and November 2012 Board authorizations.
Share-based compensation
Share-based compensation
Share-based compensation

The ACE Limited 2004 Long-Term Incentive Plan (the 2004 LTIP) provides for grants of both incentive and non-qualified stock options principally at an option price per share equal to the fair value of ACE’s Common Shares on the date of grant. Stock options are generally granted with a 3-year vesting period and a 10-year term. The stock options vest in equal annual installments over the respective vesting period, which is also the requisite service period. On February 28, 2013, ACE granted 1,815,896 stock options with a weighted-average grant date fair value of $17.29 each. The fair value of the options issued is estimated on the date of grant using the Black-Scholes option pricing model.

The 2004 LTIP also provides for grants of restricted stock and restricted stock units. ACE generally grants restricted stock and restricted stock units with a 4-year vesting period, based on a graded vesting schedule. The restricted stock is granted at market close price on the day of grant. On February 28, 2013, ACE granted 1,345,850 restricted stock awards and 266,065 restricted stock units to employees and officers of ACE and its subsidiaries with a grant date fair value of $85.39 each. Each restricted stock unit represents our obligation to deliver to the holder one Common Share upon vesting.
Segment information
Segment information
. Segment information

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

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

For segment reporting purposes, certain items have been presented in a different manner than in the consolidated financial statements. Management uses underwriting income as the main measure of segment performance. ACE calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. For the Life business, management also includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP as components of underwriting income. For example, for the three months ended March 31, 2013, Life underwriting income of $91 million includes Net investment income of $63 million and gains from fair value changes in separate account assets of $4 million.

The following tables present the operations by segment:

Statement of Operations by Segment
For the Three Months Ended March 31, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
Net premiums written
$
1,284

 
$
113

 
$
1,620

 
$
279

 
$
502

 
$

 
$
3,798

Net premiums earned
1,338

 
52

 
1,459

 
247

 
477

 

 
3,573

Losses and loss expenses
878

 
32

 
747

 
106

 
157

 
6

 
1,926

Policy benefits

 

 

 

 
131

 

 
131

Policy acquisition costs
143

 
4

 
339

 
48

 
80

 

 
614

Administrative expenses
125

 
5

 
236

 
12

 
85

 
51

 
514

Underwriting income (loss)
192

 
11

 
137

 
81

 
24

 
(57
)
 
388

Net investment income
251

 
6

 
132

 
72

 
63

 
7

 
531

Net realized gains (losses) including OTTI
26

 

 
34

 
20

 
127

 
(1
)
 
206

Interest (income) expense
(2
)
 

 
1

 
1

 
4

 
56

 
60

Other (income) expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
(Gains) losses from fair value changes in separate account assets

 

 

 

 
(4
)
 

 
(4
)
Other
(15
)
 
8

 
(1
)
 
(8
)
 

 
10

 
(6
)
Income tax expense (benefit)
94

 
2

 
46

 
8

 
13

 
(41
)
 
122

Net income (loss)
$
392

 
$
7

 
$
257

 
$
172

 
$
201

 
$
(76
)
 
$
953


Statement of Operations by Segment
For the Three Months Ended March 31, 2012
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
1,174

 
$
119

 
$
1,528

 
$
263

 
$
488

 
$

 
$
3,572

Net premiums earned
1,228

 
59

 
1,391

 
230

 
473

 

 
3,381

Losses and loss expenses
811

 
38

 
705

 
102

 
148

 

 
1,804

Policy benefits

 

 

 

 
147

 

 
147

Policy acquisition costs
137

 
(10
)
 
335

 
43

 
76

 
1

 
582

Administrative expenses
150

 
(3
)
 
229

 
12

 
78

 
44

 
510

Underwriting income (loss)
130

 
34

 
122

 
73

 
24

 
(45
)
 
338

Net investment income
267

 
7

 
131

 
71

 
61

 
7

 
544

Net realized gains (losses) including OTTI
(1
)
 

 
20

 
13

 
231

 
(3
)
 
260

Interest expense
3

 

 
1

 
1

 
3

 
54

 
62

Other (income) expense
 
 
 
 
 
 
 
 
 
 
 
 
 
(Gains) losses from fair value changes in separate account assets

 

 

 

 
(18
)
 

 
(18
)
Other
(9
)
 
8

 

 
(5
)
 
9

 
12

 
15

Income tax expense (benefit)
83

 
8

 
38

 
6

 
11

 
(36
)
 
110

Net income (loss)
$
319

 
$
25

 
$
234

 
$
155

 
$
311

 
$
(71
)
 
$
973



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

The following table presents net premiums earned for each segment by product:
For the Three Months Ended March 31, 2013
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
Insurance – North American P&C
$
347

 
$
902

 
$
89

 
$
1,338

Insurance – North American Agriculture
52

 

 

 
52

Insurance – Overseas General
585

 
339

 
535

 
1,459

Global Reinsurance
135

 
112

 

 
247

Life

 

 
477

 
477

 
$
1,119

 
$
1,353

 
$
1,101

 
$
3,573

For the Three Months Ended March 31, 2012
 
 
 
 
 
 
 
Insurance – North American P&C
$
322

 
$
817

 
$
89

 
$
1,228

Insurance – North American Agriculture
59

 

 

 
59

Insurance – Overseas General
538

 
333

 
520

 
1,391

Global Reinsurance
110

 
120

 

 
230

Life

 

 
473

 
473

 
$
1,029

 
$
1,270

 
$
1,082

 
$
3,381

Earnings per share
Earnings per share
Earnings per share

The following table presents the computation of basic and diluted earnings per share: 
 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars, except share and per share data)
2013

 
2012

Numerator:
 
 
 
Net income
$
953

 
$
973

Denominator:
 
 
 
Denominator for basic earnings per share:
 
 
 
Weighted-average shares outstanding
340,778,142

 
338,567,341

Denominator for diluted earnings per share:
 
 
 
Share-based compensation plans
3,128,226

 
3,123,641

Adjusted weighted-average shares outstanding and assumed conversions
343,906,368

 
341,690,982

Basic earnings per share
$
2.80

 
$
2.87

Diluted earnings per share
$
2.77

 
$
2.84

 
 
 
 
Potential anti-dilutive share conversions
634,385

 
468,048



Excluded from adjusted weighted-average shares outstanding and assumed conversions is the impact of securities that would have been anti-dilutive during the respective periods.
Information provided in connection with outstanding debt of subsidiaries
Information provided in connection with outstanding debt of subsidiaries
Information provided in connection with outstanding debt of subsidiaries

The following tables present condensed consolidating financial information at March 31, 2013 and December 31, 2012, and for the three months ended March 31, 2013 and 2012, for ACE Limited (the Parent Guarantor) and ACE INA Holdings Inc. (the Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. Investments in subsidiaries are accounted for by the Parent Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are reflected in the Parent Guarantor’s investment accounts and earnings. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Subsidiary Issuer is presented on a consolidated basis and consists principally of the net assets, results of operations, and cash flows of operating insurance company subsidiaries.

Condensed Consolidating Balance Sheet at March 31, 2013
(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
28

 
$
32,593

 
$
28,738

 
$

 
$
61,359

Cash
197

 
560

 
98

 

 
855

Insurance and reinsurance balances receivable

 
3,658

 
496

 

 
4,154

Reinsurance recoverable on losses and loss expenses

 
16,432

 
(4,902
)
 

 
11,530

Reinsurance recoverable on policy benefits

 
1,162

 
(931
)
 

 
231

Value of business acquired

 
579

 
4

 

 
583

Goodwill and other intangible assets

 
4,359

 
550

 

 
4,909

Investments in subsidiaries
27,836

 

 

 
(27,836
)
 

Due from subsidiaries and affiliates, net
114

 

 

 
(114
)
 

Other assets
9

 
7,830

 
2,001

 

 
9,840

Total assets
$
28,184

 
$
67,173

 
$
26,054

 
$
(27,950
)
 
$
93,461

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$
30,593

 
$
6,489

 
$

 
$
37,082

Unearned premiums

 
6,000

 
1,019

 

 
7,019

Future policy benefits

 
3,877

 
588

 

 
4,465

Due to (from) subsidiaries and affiliates, net

 
358

 
(244
)
 
(114
)
 

Short-term debt

 
851

 
551

 

 
1,402

Long-term debt

 
4,307

 

 

 
4,307

Trust preferred securities

 
309

 

 

 
309

Other liabilities
242

 
8,985

 
1,708

 

 
10,935

Total liabilities
242

 
55,280

 
10,111

 
(114
)
 
65,519

Total shareholders’ equity
27,942

 
11,893

 
15,943

 
(27,836
)
 
27,942

Total liabilities and shareholders’ equity
$
28,184

 
$
67,173

 
$
26,054

 
$
(27,950
)
 
$
93,461

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations.
 




Condensed Consolidating Balance Sheet at December 31, 2012

(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
31,074

 
$
29,159

 
$

 
$
60,264

Cash(3)
103

 
515

 
(3
)
 

 
615

Insurance and reinsurance balances receivable

 
3,654

 
493

 

 
4,147

Reinsurance recoverable on losses and loss expenses

 
17,232

 
(5,154
)
 

 
12,078

Reinsurance recoverable on policy benefits

 
1,187

 
(946
)
 

 
241

Value of business acquired

 
610

 
4

 

 
614

Goodwill and other intangible assets

 
4,419

 
556

 

 
4,975

Investments in subsidiaries
27,251

 

 

 
(27,251
)
 

Due from subsidiaries and affiliates, net
204

 

 

 
(204
)
 

Other assets
13

 
7,563

 
2,035

 

 
9,611

Total assets
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$
31,356

 
$
6,590

 
$

 
$
37,946

Unearned premiums

 
5,872

 
992

 

 
6,864

Future policy benefits

 
3,876

 
594

 

 
4,470

Due to (from) subsidiaries and affiliates, net

 
384

 
(180
)
 
(204
)
 

Short-term debt

 
851

 
550

 

 
1,401

Long-term debt

 
3,360

 

 

 
3,360

Trust preferred securities

 
309

 

 

 
309

Other liabilities
71

 
8,272

 
2,321

 

 
10,664

Total liabilities
71

 
54,280

 
10,867

 
(204
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
15,277

 
(27,251
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations.
(3) 
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, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the Three Months Ended March 31, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net premiums written
$

 
$
2,082

 
$
1,716

 
$

 
$
3,798

Net premiums earned

 
2,006

 
1,567

 

 
3,573

Net investment income

 
248

 
283

 

 
531

Equity in earnings of subsidiaries
914

 

 

 
(914
)
 

Net realized gains (losses) including OTTI
12

 
10

 
184

 

 
206

Losses and loss expenses

 
1,253

 
673

 

 
1,926

Policy benefits

 
81

 
50

 

 
131

Policy acquisition costs and administrative expenses
15

 
626

 
487

 

 
1,128

Interest (income) expense
(7
)
 
67

 

 

 
60

Other (income) expense
(38
)
 
34

 
(6
)
 

 
(10
)
Income tax expense
3

 
56

 
63

 

 
122

Net income
$
953

 
$
147

 
$
767

 
$
(914
)
 
$
953

Comprehensive income (loss)
$
716

 
$
(1
)
 
$
915

 
$
(914
)
 
$
716


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net premiums written
$

 
$
2,098

 
$
1,474

 
$

 
$
3,572

Net premiums earned

 
1,952

 
1,429

 

 
3,381

Net investment income

 
265

 
279

 

 
544

Equity in earnings of subsidiaries
928

 

 

 
(928
)
 

Net realized gains (losses) including OTTI
20

 
26

 
214

 

 
260

Losses and loss expenses

 
1,182

 
622

 

 
1,804

Policy benefits

 
86

 
61

 

 
147

Policy acquisition costs and administrative expenses
12

 
640

 
440

 

 
1,092

Interest (income) expense
(9
)
 
66

 
5

 

 
62

Other (income) expense
(30
)
 
25

 
2

 

 
(3
)
Income tax expense
2

 
85

 
23

 

 
110

Net income
$
973

 
$
159

 
$
769

 
$
(928
)
 
$
973

Comprehensive income
$
1,271

 
$
287

 
$
641

 
$
(928
)
 
$
1,271

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations.

Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
53

 
$
644

 
$
216

 
$

 
$
913

Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Purchases of fixed maturities available for sale

 
(3,825
)
 
(2,327
)
 

 
(6,152
)
Purchases of fixed maturities held to maturity

 
(137
)
 
(5
)
 

 
(142
)
Purchases of equity securities

 
(89
)
 
(18
)
 

 
(107
)
Sales of fixed maturities available for
sale

 
1,473

 
1,291

 

 
2,764

Sales of equity securities

 
25

 
6

 

 
31

Maturities and redemptions of fixed maturities available for sale

 
879

 
1,137

 

 
2,016

Maturities and redemptions of fixed maturities held to maturity

 
351

 
140

 

 
491

Net derivative instruments settlements

 
4

 
(283
)
 

 
(279
)
Advances from (to) affiliates
43

 

 

 
(43
)
 

Acquisition of subsidiaries

 
(33
)
 

 

 
(33
)
Other

 
(86
)
 
31

 

 
(55
)
Net cash flows from (used for) investing activities
43

 
(1,438
)
 
(28
)
 
(43
)
 
(1,466
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(2
)
 

 

 

 
(2
)
Common Shares repurchased

 

 
(154
)
 

 
(154
)
Net 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

 
(8
)
 
29

 

 
21

Advances (to) from affiliates

 
(71
)
 
28

 
43

 

Net cash flows from (used for) financing activities
(2
)
 
868

 
(96
)
 
43

 
813

Effect of foreign currency rate changes on cash and cash equivalents

 
(29
)
 
9

 

 
(20
)
Net increase in cash
94

 
45

 
101

 

 
240

Cash – beginning of period(3)
103

 
515

 
(3
)
 

 
615

Cash – end of period
$
197

 
$
560

 
$
98

 
$

 
$
855

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
(3) 
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, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
19

 
$
66

 
$
487

 
$

 
$
572

Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Purchases of fixed maturities available for sale

 
(2,650
)
 
(2,833
)
 

 
(5,483
)
Purchases of fixed maturities held to maturity

 
(31
)
 
(1
)
 

 
(32
)
Purchases of equity securities

 
(10
)
 
(9
)
 

 
(19
)
Sales of fixed maturities available for sale

 
1,935

 
1,860

 

 
3,795

Sales of equity securities

 
24

 
2

 

 
26

Maturities and redemptions of fixed maturities available for sale

 
497

 
579

 

 
1,076

Maturities and redemptions of fixed maturities held to maturity

 
267

 
78

 

 
345

Net derivative instruments settlements
(1
)
 
(1
)
 
(193
)
 

 
(195
)
Advances from (to) affiliates
66

 

 

 
(66
)
 

Acquisition of subsidiaries

 
(25
)
 

 

 
(25
)
Other

 
90

 
(193
)
 

 
(103
)
Net cash flows from (used for) investing activities
65

 
96

 
(710
)
 
(66
)
 
(615
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(159
)
 

 

 

 
(159
)
Common Shares repurchased

 

 
(11
)
 

 
(11
)
Net proceeds from issuance (repayments) of short-term debt
130

 
1

 
150

 

 
281

Proceeds from share-based compensation plans
1

 

 
27

 

 
28

Advances from (to) affiliates

 
(48
)
 
(18
)
 
66

 

Net cash flows (used for) from financing activities
(28
)
 
(47
)
 
148

 
66

 
139

Effect of foreign currency rate changes on cash and cash equivalents

 
(1
)
 
6

 

 
5

Net increase (decrease) in cash
56

 
114

 
(69
)
 

 
101

Cash – beginning of period
106

 
382

 
126

 

 
614

Cash – end of period
$
162

 
$
496

 
$
57

 
$

 
$
715

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
General (Policies)
Basis of presentation
ACE Limited is a holding company incorporated in Zurich, Switzerland. ACE Limited, through its various subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through the following business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. Refer to Note 10 for additional information.

The interim unaudited consolidated financial statements, which include the accounts of ACE Limited and its subsidiaries (collectively, ACE, we, us, or our), have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and, in the opinion of management, reflect all adjustments (consisting of normally recurring accruals) necessary for a fair statement of the results and financial position for such periods. All significant intercompany accounts and transactions have been eliminated.

The results of operations and cash flows for any interim period are not necessarily indicative of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2012 Form 10-K.
Investments (Tables)
March 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
$
3,690

 
$
158

 
$
(5
)
 
$
3,843

 
$

Foreign
13,007

 
673

 
(16
)
 
13,664

 

Corporate securities
15,769

 
1,180

 
(28
)
 
16,921

 
(6
)
Mortgage-backed securities
9,813

 
384

 
(26
)
 
10,171

 
(39
)
States, municipalities, and political subdivisions
3,191

 
162

 
(5
)
 
3,348

 

 
$
45,470

 
$
2,557

 
$
(80
)
 
$
47,947

 
$
(45
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
962

 
$
35

 
$

 
$
997

 
$

Foreign
882

 
55

 

 
937

 

Corporate securities
2,064

 
138

 

 
2,202

 

Mortgage-backed securities
1,812

 
81

 

 
1,893

 

States, municipalities, and political subdivisions
1,147

 
41

 
(4
)
 
1,184

 

 
$
6,867

 
$
350

 
$
(4
)
 
$
7,213

 
$


December 31, 2012
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
$
3,553

 
$
183

 
$
(1
)
 
$
3,735

 
$

Foreign
13,016

 
711

 
(14
)
 
13,713

 

Corporate securities
15,529

 
1,210

 
(31
)
 
16,708

 
(7
)
Mortgage-backed securities
10,051

 
458

 
(36
)
 
10,473

 
(84
)
States, municipalities, and political subdivisions
2,517

 
163

 
(3
)
 
2,677

 

 
$
44,666

 
$
2,725

 
$
(85
)
 
$
47,306

 
$
(91
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,044

 
$
39

 
$

 
$
1,083

 
$

Foreign
910

 
54

 

 
964

 

Corporate securities
2,133

 
142

 

 
2,275

 

Mortgage-backed securities
2,028

 
88

 

 
2,116

 

States, municipalities, and political subdivisions
1,155

 
44

 
(4
)
 
1,195

 

 
$
7,270

 
$
367

 
$
(4
)
 
$
7,633

 
$

 
 
 
March 31

 
 
 
December 31

 
 
 
2013

 
 
 
2012

(in millions of U.S. dollars)
Amortized Cost

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,063

 
$
2,084

 
$
1,887

 
$
1,906

Due after 1 year through 5 years
13,790

 
14,417

 
13,411

 
14,010

Due after 5 years through 10 years
15,488

 
16,539

 
15,032

 
16,153

Due after 10 years
4,316

 
4,736

 
4,285

 
4,764

 
35,657

 
37,776

 
34,615

 
36,833

Mortgage-backed securities
9,813

 
10,171

 
10,051

 
10,473

 
$
45,470

 
$
47,947

 
$
44,666

 
$
47,306

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
496

 
$
499

 
$
656

 
$
659

Due after 1 year through 5 years
1,953

 
2,040

 
1,870

 
1,950

Due after 5 years through 10 years
2,079

 
2,220

 
2,119

 
2,267

Due after 10 years
527

 
561

 
597

 
641

 
5,055

 
5,320

 
5,242

 
5,517

Mortgage-backed securities
1,812

 
1,893

 
2,028

 
2,116

 
$
6,867

 
$
7,213

 
$
7,270

 
$
7,633

 
March 31


December 31

(in millions of U.S. dollars)
2013


2012

Cost
$
781

 
$
707

Gross unrealized appreciation
55

 
41

Gross unrealized depreciation
(4
)
 
(4
)
Fair value
$
832

 
$
744

 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars)
2013

 
2012

Fixed maturities:
 
 
 
OTTI on fixed maturities, gross
$
(1
)
 
$
(7
)
OTTI on fixed maturities recognized in OCI (pre-tax)

 

OTTI on fixed maturities, net
(1
)
 
(7
)
Gross realized gains excluding OTTI
62

 
112

Gross realized losses excluding OTTI
(25
)
 
(71
)
Total fixed maturities
36

 
34

Equity securities:
 
 
 
OTTI on equity securities
(1
)
 
(1
)
Gross realized gains excluding OTTI
2

 
2

Gross realized losses excluding OTTI
(2
)
 

Total equity securities
(1
)
 
1

OTTI on other investments
(1
)
 
(2
)
Foreign exchange gains (losses)
76

 
(5
)
Investment and embedded derivative instruments
18

 
42

Fair value adjustments on insurance derivative
328

 
428

S&P put options and futures
(250
)
 
(231
)
Other derivative instruments

 
(5
)
Other

 
(2
)
Net realized gains (losses)
$
206

 
$
260

 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars)
2013

 
2012

Balance of credit losses related to securities still held – beginning of period
$
43

 
$
74

Additions where no OTTI was previously recorded

 
1

Additions where an OTTI was previously recorded
1

 
5

Reductions for securities sold during the period
(9
)
 
(25
)
Balance of credit losses related to securities still held – end of period
$
35

 
$
55

 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
March 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
$
576

 
$
(5
)
 
$

 
$

 
$
576

 
$
(5
)
Foreign
723

 
(11
)
 
69

 
(5
)
 
792

 
(16
)
Corporate securities
1,163

 
(21
)
 
78

 
(7
)
 
1,241

 
(28
)
Mortgage-backed securities
1,943

 
(15
)
 
140

 
(11
)
 
2,083

 
(26
)
States, municipalities, and political subdivisions
742

 
(6
)
 
37

 
(3
)
 
779

 
(9
)
Total fixed maturities
5,147

 
(58
)
 
324

 
(26
)
 
5,471

 
(84
)
Equity securities
47

 
(4
)
 

 

 
47

 
(4
)
Other investments
4

 
(3
)
 

 

 
4

 
(3
)
Total
$
5,198

 
$
(65
)
 
$
324

 
$
(26
)
 
$
5,522

 
$
(91
)
 
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
December 31, 2012
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
$
440

 
$
(1
)
 
$

 
$

 
$
440

 
$
(1
)
Foreign
1,234

 
(8
)
 
88

 
(6
)
 
1,322

 
(14
)
Corporate securities
1,026

 
(23
)
 
85

 
(8
)
 
1,111

 
(31
)
Mortgage-backed securities
855

 
(4
)
 
356

 
(32
)
 
1,211

 
(36
)
States, municipalities, and political subdivisions
316

 
(3
)
 
48

 
(4
)
 
364

 
(7
)
Total fixed maturities
3,871

 
(39
)
 
577

 
(50
)
 
4,448

 
(89
)
Equity securities
29

 
(4
)
 

 

 
29

 
(4
)
Other investments
68

 
(5
)
 

 

 
68

 
(5
)
Total
$
3,968

 
$
(48
)
 
$
577

 
$
(50
)
 
$
4,545

 
$
(98
)
 
March 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Trust funds
$
11,421

 
$
11,389

Deposits with non-U.S. regulatory authorities
2,100

 
2,133

Assets pledged under repurchase agreements
1,402

 
1,401

Deposits with U.S. regulatory authorities
1,322

 
1,338

Other pledged assets
426

 
456

 
$
16,671

 
$
16,717

Fair value measurements (Tables)
March 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
$
1,986

 
$
1,857

 
$

 
$
3,843

Foreign
223

 
13,406

 
35

 
13,664

Corporate securities
19

 
16,784

 
118

 
16,921

Mortgage-backed securities

 
10,158

 
13

 
10,171

States, municipalities, and political subdivisions

 
3,348

 

 
3,348

 
2,228

 
45,553

 
166

 
47,947

Equity securities
337

 
493

 
2

 
832

Short-term investments
2,130

 
763

 

 
2,893

Other investments
277

 
215

 
2,328

 
2,820

Securities lending collateral

 
1,786

 

 
1,786

Investment derivative instruments
(51
)
 

 

 
(51
)
Other derivative instruments
(37
)
 
17

 

 
(20
)
Separate account assets
947

 
69

 

 
1,016

Total assets measured at fair value
$
5,831

 
$
48,896

 
$
2,496

 
$
57,223

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$

 
$

 
$
753

 
$
753

(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, 2012
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,050

 
$
1,685

 
$

 
$
3,735

Foreign
222

 
13,431

 
60

 
13,713

Corporate securities
20

 
16,586

 
102

 
16,708

Mortgage-backed securities

 
10,460

 
13

 
10,473

States, municipalities, and political subdivisions

 
2,677

 

 
2,677

 
2,292

 
44,839

 
175

 
47,306

Equity securities
253

 
488

 
3

 
744

Short-term investments
1,503

 
725

 

 
2,228

Other investments
268

 
196

 
2,252

 
2,716

Securities lending collateral

 
1,791

 

 
1,791

Investment derivative instruments
11

 

 

 
11

Other derivative instruments
(6
)
 
30

 

 
24

Separate account assets
872

 
71

 

 
943

Total assets measured at fair value
$
5,193

 
$
48,140

 
$
2,430

 
$
55,763

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$

 
$

 
$
1,119

 
$
1,119

(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.
 
 
 
 
 
March 31

 
 
 
December 31

 
Expected
Liquidation
Period
 
 
 
2013

 
 
 
2012

(in millions of U.S. dollars)
Fair
Value

 
Maximum
Future
Funding
Commitments

 
Fair
Value

 
Maximum
Future
Funding
Commitments

Financial
5 to 9 Years
 
$
237

 
$
106

 
$
225

 
$
111

Real estate
3 to 9 Years
 
342

 
67

 
292

 
62

Distressed
6 to 9 Years
 
182

 
147

 
192

 
152

Mezzanine
6 to 9 Years
 
274

 
282

 
284

 
279

Traditional
3 to 8 Years
 
737

 
575

 
711

 
587

Vintage
1 to 3 Years
 
14

 

 
14

 

Investment funds
Not Applicable
 
404

 

 
395

 

 
 
 
$
2,190

 
$
1,177

 
$
2,113

 
$
1,191

(in millions of U.S. dollars, except for percentages)
Fair Value at
March 31, 2013

 
Fair Value at
December 31, 2012

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
753

 
$
1,119

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
 
 
Annuitization rate
 
0% – 50%
(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

 
Available-for-Sale Debt Securities
Equity
securities

 
Other
investments

 
GLB(1)

Three Months Ended
Foreign

 
Corporate
securities

 
MBS

 
 
 
March 31, 2013
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
Balance–Beginning of Period
$
60

 
$
102

 
$
13

 
$
3

 
$
2,252

 
$
1,119

Transfers into Level 3
3

 
12

 

 

 

 

Transfers out of Level 3
(27
)
 
(2
)
 

 
(1
)
 

 

Change in Net Unrealized Gains (Losses) included in OCI

 
1

 

 

 
22

 

Net Realized Gains/Losses
1

 

 

 

 
(1
)
 
(366
)
Purchases

 
10

 

 

 
136

 

Sales
(1
)
 

 

 

 
(9
)
 

Settlements
(1
)
 
(5
)
 

 

 
(72
)
 

Balance–End of Period
$
35

 
$
118

 
$
13

 
$
2

 
$
2,328

 
$
753

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
$

 
$

 
$

 
$

 
$
(1
)
 
$
(366
)
(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
 
Available-for-Sale Debt Securities
 
Equity
securities
 
Other
investments
 
Other
derivative
instruments
 
GLB(1)
Three Months Ended
U.S.
Treasury
and
Agency
 
Foreign
 
Corporate
securities
 
MBS
 
States,
municipalities,
and political
subdivisions
 
 
 
 
March 31, 2012
 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance–Beginning of Period
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

Transfers out of Level 3
(5
)
 
(1
)
 
(7
)
 
(12
)
 

 

 

 

 

Change in Net Unrealized Gains (Losses) included in OCI

 

 
2

 

 

 
1

 
9

 

 

Net Realized Gains/Losses

 

 

 

 

 

 
(2
)
 
(3
)
 
(456
)
Purchases

 
34

 
3

 
4

 

 
1

 
113

 

 

Sales

 
(17
)
 
(8
)
 

 

 
(5
)
 
(2
)
 

 

Settlements

 

 
(7
)
 
(1
)
 

 

 
(41
)
 
(1
)
 

Balance–End of Period
$

 
$
49

 
$
117

 
$
19

 
$
1

 
$
10

 
$
1,954

 
$
(1
)
 
$
863

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
$

 
$

 
$

 
$

 
$

 
$

 
$
(2
)
 
$
(3
)
 
$
(456
)
(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 $1.05 billion at March 31, 2012, and $1.5 billion at December 31, 2011, which includes a fair value derivative adjustment of $863 million and $1.3 billion, respectively.
 
.

 
The following tables present fair value, by valuation hierarchy, and carrying value of the financial instruments not measured at fair value:
March 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
$
641

 
$
356

 
$

 
$
997

 
$
962

Foreign

 
937

 

 
937

 
882

Corporate securities

 
2,185

 
17

 
2,202

 
2,064

Mortgage-backed securities

 
1,893

 

 
1,893

 
1,812

States, municipalities, and political subdivisions

 
1,184

 

 
1,184

 
1,147

 
641

 
6,555

 
17

 
7,213

 
6,867

Partially-owned insurance companies

 

 
449

 
449

 
449

Total assets
$
641

 
$
6,555

 
$
466

 
$
7,662

 
$
7,316

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,402

 
$

 
$
1,402

 
$
1,402

Long-term debt

 
4,861

 

 
4,861

 
4,307

Trust preferred securities

 
449

 

 
449

 
309

Total liabilities
$

 
$
6,712

 
$

 
$
6,712

 
$
6,018


December 31, 2012
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
$
619

 
$
464

 
$

 
$
1,083

 
$
1,044

Foreign

 
964

 

 
964

 
910

Corporate securities

 
2,257

 
18

 
2,275

 
2,133

Mortgage-backed securities

 
2,116

 

 
2,116

 
2,028

States, municipalities, and political subdivisions

 
1,195

 

 
1,195

 
1,155

 
619

 
6,996

 
18

 
7,633

 
7,270

Partially-owned insurance companies

 

 
454

 
454

 
454

Total assets
$
619

 
$
6,996

 
$
472

 
$
8,087

 
$
7,724

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,401

 
$

 
$
1,401

 
$
1,401

Long-term debt

 
3,916

 

 
3,916

 
3,360

Trust preferred securities

 
446

 

 
446

 
309

Total liabilities
$

 
$
5,763

 
$

 
$
5,763

 
$
5,070

Assumed life reinsurance programs involving minimum benefit guarantees under annuity contracts (Tables)
Schedule Of Guaranteed Minimum Death Benefits And Guaranteed Minimum Income Benefits Income And Expense
 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars)
2013

 
2012

GMDB
 
 
 
Net premiums earned
$
20

 
$
23

Policy benefits and other reserve adjustments
$
19

 
$
27

GLB
 
 
 
Net premiums earned
$
39

 
$
41

Policy benefits and other reserve adjustments
9

 
4

Net realized gains
369

 
458

Gain recognized in income
$
399

 
$
495

Net cash received
$
32

 
$
39

Net decrease in liability
$
367

 
$
456

Commitments, contingencies, and guarantees (Tables)
 
 
 
March 31
 
 
December 31
 
 
 
 
2013
 
 
2012
 
(in millions of U.S. dollars)
Consolidated
Balance Sheet
Location
 
Fair
Value

 
Notional
Value/
Payment
Provision

 
Fair
Value

 
Notional
Value/
Payment
Provision

Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
AP
 
$
(48
)
 
$
534

 
$

 
$
620

Cross-currency swaps
AP
 

 
50

 

 
50

Futures contracts on money market instruments
AP
 
1

 
2,169

 
1

 
2,710

Futures contracts on notes and bonds
AP
 
(4
)
 
1,079

 
10

 
915

Options on money market instruments
AP
 

 
3,335

 

 

Convertible bonds
FM AFS
 
274

 
231

 
309

 
279

 
 
 
$
223

 
$
7,398

 
$
320

 
$
4,574

Other derivative instruments
 
 
 
 
 
 
 
 
 
Futures contracts on equities(1)
AP
 
$
(37
)
 
$
2,255

 
$
(6
)
 
$
2,308

Options on equity market indices(1)
AP
 
17

 
250

 
30

 
250

 
 
 
$
(20
)
 
$
2,505

 
$
24

 
$
2,558

GLB(2)
AP/FPB
 
$
(985
)
 
$
721

 
$
(1,352
)
 
$
1,100

(1) 
Related to GMDB and GLB blocks of business.
(2) 
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
 
 
March 31
 
(in millions of U.S. dollars)
2013
 
2012
Investment and embedded derivative instruments
 
 
 
Foreign currency forward contracts
$
5

 
$
(8
)
All other futures contracts and options
7

 
26

Convertible bonds
6

 
24

Total investment and embedded derivative instruments
$
18

 
$
42

GLB and other derivative instruments
 
 
 
GLB(1)
$
328

 
$
428

Futures contracts on equities(2)
(237
)
 
(213
)
Options on equity market indices(2)
(13
)
 
(18
)
Credit default swaps

 
(5
)
Total GLB and other derivative instruments
$
78

 
$
192

 
$
96

 
$
234

(1) 
Excludes foreign exchange gains (losses) related to GLB.
(2) 
Related to GMDB and GLB blocks of business. 
Segment information (Tables)
Statement of Operations by Segment
For the Three Months Ended March 31, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
Net premiums written
$
1,284

 
$
113

 
$
1,620

 
$
279

 
$
502

 
$

 
$
3,798

Net premiums earned
1,338

 
52

 
1,459

 
247

 
477

 

 
3,573

Losses and loss expenses
878

 
32

 
747

 
106

 
157

 
6

 
1,926

Policy benefits

 

 

 

 
131

 

 
131

Policy acquisition costs
143

 
4

 
339

 
48

 
80

 

 
614

Administrative expenses
125

 
5

 
236

 
12

 
85

 
51

 
514

Underwriting income (loss)
192

 
11

 
137

 
81

 
24

 
(57
)
 
388

Net investment income
251

 
6

 
132

 
72

 
63

 
7

 
531

Net realized gains (losses) including OTTI
26

 

 
34

 
20

 
127

 
(1
)
 
206

Interest (income) expense
(2
)
 

 
1

 
1

 
4

 
56

 
60

Other (income) expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
(Gains) losses from fair value changes in separate account assets

 

 

 

 
(4
)
 

 
(4
)
Other
(15
)
 
8

 
(1
)
 
(8
)
 

 
10

 
(6
)
Income tax expense (benefit)
94

 
2

 
46

 
8

 
13

 
(41
)
 
122

Net income (loss)
$
392

 
$
7

 
$
257

 
$
172

 
$
201

 
$
(76
)
 
$
953


Statement of Operations by Segment
For the Three Months Ended March 31, 2012
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
1,174

 
$
119

 
$
1,528

 
$
263

 
$
488

 
$

 
$
3,572

Net premiums earned
1,228

 
59

 
1,391

 
230

 
473

 

 
3,381

Losses and loss expenses
811

 
38

 
705

 
102

 
148

 

 
1,804

Policy benefits

 

 

 

 
147

 

 
147

Policy acquisition costs
137

 
(10
)
 
335

 
43

 
76

 
1

 
582

Administrative expenses
150

 
(3
)
 
229

 
12

 
78

 
44

 
510

Underwriting income (loss)
130

 
34

 
122

 
73

 
24

 
(45
)
 
338

Net investment income
267

 
7

 
131

 
71

 
61

 
7

 
544

Net realized gains (losses) including OTTI
(1
)
 

 
20

 
13

 
231

 
(3
)
 
260

Interest expense
3

 

 
1

 
1

 
3

 
54

 
62

Other (income) expense
 
 
 
 
 
 
 
 
 
 
 
 
 
(Gains) losses from fair value changes in separate account assets

 

 

 

 
(18
)
 

 
(18
)
Other
(9
)
 
8

 

 
(5
)
 
9

 
12

 
15

Income tax expense (benefit)
83

 
8

 
38

 
6

 
11

 
(36
)
 
110

Net income (loss)
$
319

 
$
25

 
$
234

 
$
155

 
$
311

 
$
(71
)
 
$
973

For the Three Months Ended March 31, 2013
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
Insurance – North American P&C
$
347

 
$
902

 
$
89

 
$
1,338

Insurance – North American Agriculture
52

 

 

 
52

Insurance – Overseas General
585

 
339

 
535

 
1,459

Global Reinsurance
135

 
112

 

 
247

Life

 

 
477

 
477

 
$
1,119

 
$
1,353

 
$
1,101

 
$
3,573

For the Three Months Ended March 31, 2012
 
 
 
 
 
 
 
Insurance – North American P&C
$
322

 
$
817

 
$
89

 
$
1,228

Insurance – North American Agriculture
59

 

 

 
59

Insurance – Overseas General
538

 
333

 
520

 
1,391

Global Reinsurance
110

 
120

 

 
230

Life

 

 
473

 
473

 
$
1,029

 
$
1,270

 
$
1,082

 
$
3,381

Earnings per share (Tables)
Schedule Of Earnings Per Share, Basic And Diluted
 
Three Months Ended
 
 
March 31
 
(in millions of U.S. dollars, except share and per share data)
2013

 
2012

Numerator:
 
 
 
Net income
$
953

 
$
973

Denominator:
 
 
 
Denominator for basic earnings per share:
 
 
 
Weighted-average shares outstanding
340,778,142

 
338,567,341

Denominator for diluted earnings per share:
 
 
 
Share-based compensation plans
3,128,226

 
3,123,641

Adjusted weighted-average shares outstanding and assumed conversions
343,906,368

 
341,690,982

Basic earnings per share
$
2.80

 
$
2.87

Diluted earnings per share
$
2.77

 
$
2.84

 
 
 
 
Potential anti-dilutive share conversions
634,385

 
468,048

Information provided in connection with outstanding debt of subsidiaries (Tables)

Condensed Consolidating Balance Sheet at March 31, 2013
(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
28

 
$
32,593

 
$
28,738

 
$

 
$
61,359

Cash
197

 
560

 
98

 

 
855

Insurance and reinsurance balances receivable

 
3,658

 
496

 

 
4,154

Reinsurance recoverable on losses and loss expenses

 
16,432

 
(4,902
)
 

 
11,530

Reinsurance recoverable on policy benefits

 
1,162

 
(931
)
 

 
231

Value of business acquired

 
579

 
4

 

 
583

Goodwill and other intangible assets

 
4,359

 
550

 

 
4,909

Investments in subsidiaries
27,836

 

 

 
(27,836
)
 

Due from subsidiaries and affiliates, net
114

 

 

 
(114
)
 

Other assets
9

 
7,830

 
2,001

 

 
9,840

Total assets
$
28,184

 
$
67,173

 
$
26,054

 
$
(27,950
)
 
$
93,461

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$
30,593

 
$
6,489

 
$

 
$
37,082

Unearned premiums

 
6,000

 
1,019

 

 
7,019

Future policy benefits

 
3,877

 
588

 

 
4,465

Due to (from) subsidiaries and affiliates, net

 
358

 
(244
)
 
(114
)
 

Short-term debt

 
851

 
551

 

 
1,402

Long-term debt

 
4,307

 

 

 
4,307

Trust preferred securities

 
309

 

 

 
309

Other liabilities
242

 
8,985

 
1,708

 

 
10,935

Total liabilities
242

 
55,280

 
10,111

 
(114
)
 
65,519

Total shareholders’ equity
27,942

 
11,893

 
15,943

 
(27,836
)
 
27,942

Total liabilities and shareholders’ equity
$
28,184

 
$
67,173

 
$
26,054

 
$
(27,950
)
 
$
93,461

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations.
 




Condensed Consolidating Balance Sheet at December 31, 2012

(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
31,074

 
$
29,159

 
$

 
$
60,264

Cash(3)
103

 
515

 
(3
)
 

 
615

Insurance and reinsurance balances receivable

 
3,654

 
493

 

 
4,147

Reinsurance recoverable on losses and loss expenses

 
17,232

 
(5,154
)
 

 
12,078

Reinsurance recoverable on policy benefits

 
1,187

 
(946
)
 

 
241

Value of business acquired

 
610

 
4

 

 
614

Goodwill and other intangible assets

 
4,419

 
556

 

 
4,975

Investments in subsidiaries
27,251

 

 

 
(27,251
)
 

Due from subsidiaries and affiliates, net
204

 

 

 
(204
)
 

Other assets
13

 
7,563

 
2,035

 

 
9,611

Total assets
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$
31,356

 
$
6,590

 
$

 
$
37,946

Unearned premiums

 
5,872

 
992

 

 
6,864

Future policy benefits

 
3,876

 
594

 

 
4,470

Due to (from) subsidiaries and affiliates, net

 
384

 
(180
)
 
(204
)
 

Short-term debt

 
851

 
550

 

 
1,401

Long-term debt

 
3,360

 

 

 
3,360

Trust preferred securities

 
309

 

 

 
309

Other liabilities
71

 
8,272

 
2,321

 

 
10,664

Total liabilities
71

 
54,280

 
10,867

 
(204
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
15,277

 
(27,251
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations.
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the Three Months Ended March 31, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net premiums written
$

 
$
2,082

 
$
1,716

 
$

 
$
3,798

Net premiums earned

 
2,006

 
1,567

 

 
3,573

Net investment income

 
248

 
283

 

 
531

Equity in earnings of subsidiaries
914

 

 

 
(914
)
 

Net realized gains (losses) including OTTI
12

 
10

 
184

 

 
206

Losses and loss expenses

 
1,253

 
673

 

 
1,926

Policy benefits

 
81

 
50

 

 
131

Policy acquisition costs and administrative expenses
15

 
626

 
487

 

 
1,128

Interest (income) expense
(7
)
 
67

 

 

 
60

Other (income) expense
(38
)
 
34

 
(6
)
 

 
(10
)
Income tax expense
3

 
56

 
63

 

 
122

Net income
$
953

 
$
147

 
$
767

 
$
(914
)
 
$
953

Comprehensive income (loss)
$
716

 
$
(1
)
 
$
915

 
$
(914
)
 
$
716


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Three Months Ended March 31, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net premiums written
$

 
$
2,098

 
$
1,474

 
$

 
$
3,572

Net premiums earned

 
1,952

 
1,429

 

 
3,381

Net investment income

 
265

 
279

 

 
544

Equity in earnings of subsidiaries
928

 

 

 
(928
)
 

Net realized gains (losses) including OTTI
20

 
26

 
214

 

 
260

Losses and loss expenses

 
1,182

 
622

 

 
1,804

Policy benefits

 
86

 
61

 

 
147

Policy acquisition costs and administrative expenses
12

 
640

 
440

 

 
1,092

Interest (income) expense
(9
)
 
66

 
5

 

 
62

Other (income) expense
(30
)
 
25

 
2

 

 
(3
)
Income tax expense
2

 
85

 
23

 

 
110

Net income
$
973

 
$
159

 
$
769

 
$
(928
)
 
$
973

Comprehensive income
$
1,271

 
$
287

 
$
641

 
$
(928
)
 
$
1,271

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations.
Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
53

 
$
644

 
$
216

 
$

 
$
913

Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Purchases of fixed maturities available for sale

 
(3,825
)
 
(2,327
)
 

 
(6,152
)
Purchases of fixed maturities held to maturity

 
(137
)
 
(5
)
 

 
(142
)
Purchases of equity securities

 
(89
)
 
(18
)
 

 
(107
)
Sales of fixed maturities available for
sale

 
1,473

 
1,291

 

 
2,764

Sales of equity securities

 
25

 
6

 

 
31

Maturities and redemptions of fixed maturities available for sale

 
879

 
1,137

 

 
2,016

Maturities and redemptions of fixed maturities held to maturity

 
351

 
140

 

 
491

Net derivative instruments settlements

 
4

 
(283
)
 

 
(279
)
Advances from (to) affiliates
43

 

 

 
(43
)
 

Acquisition of subsidiaries

 
(33
)
 

 

 
(33
)
Other

 
(86
)
 
31

 

 
(55
)
Net cash flows from (used for) investing activities
43

 
(1,438
)
 
(28
)
 
(43
)
 
(1,466
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(2
)
 

 

 

 
(2
)
Common Shares repurchased

 

 
(154
)
 

 
(154
)
Net 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

 
(8
)
 
29

 

 
21

Advances (to) from affiliates

 
(71
)
 
28

 
43

 

Net cash flows from (used for) financing activities
(2
)
 
868

 
(96
)
 
43

 
813

Effect of foreign currency rate changes on cash and cash equivalents

 
(29
)
 
9

 

 
(20
)
Net increase in cash
94

 
45

 
101

 

 
240

Cash – beginning of period(3)
103

 
515

 
(3
)
 

 
615

Cash – end of period
$
197

 
$
560

 
$
98

 
$

 
$
855

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
(3) 
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, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
19

 
$
66

 
$
487

 
$

 
$
572

Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Purchases of fixed maturities available for sale

 
(2,650
)
 
(2,833
)
 

 
(5,483
)
Purchases of fixed maturities held to maturity

 
(31
)
 
(1
)
 

 
(32
)
Purchases of equity securities

 
(10
)
 
(9
)
 

 
(19
)
Sales of fixed maturities available for sale

 
1,935

 
1,860

 

 
3,795

Sales of equity securities

 
24

 
2

 

 
26

Maturities and redemptions of fixed maturities available for sale

 
497

 
579

 

 
1,076

Maturities and redemptions of fixed maturities held to maturity

 
267

 
78

 

 
345

Net derivative instruments settlements
(1
)
 
(1
)
 
(193
)
 

 
(195
)
Advances from (to) affiliates
66

 

 

 
(66
)
 

Acquisition of subsidiaries

 
(25
)
 

 

 
(25
)
Other

 
90

 
(193
)
 

 
(103
)
Net cash flows from (used for) investing activities
65

 
96

 
(710
)
 
(66
)
 
(615
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(159
)
 

 

 

 
(159
)
Common Shares repurchased

 

 
(11
)
 

 
(11
)
Net proceeds from issuance (repayments) of short-term debt
130

 
1

 
150

 

 
281

Proceeds from share-based compensation plans
1

 

 
27

 

 
28

Advances from (to) affiliates

 
(48
)
 
(18
)
 
66

 

Net cash flows (used for) from financing activities
(28
)
 
(47
)
 
148

 
66

 
139

Effect of foreign currency rate changes on cash and cash equivalents

 
(1
)
 
6

 

 
5

Net increase (decrease) in cash
56

 
114

 
(69
)
 

 
101

Cash – beginning of period
106

 
382

 
126

 

 
614

Cash – end of period
$
162

 
$
496

 
$
57

 
$

 
$
715

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
Acquisitions (Detail) (USD $)
In Millions, unless otherwise specified
Oct. 18, 2012
ABA Seguros [Member]
Jan. 3, 2013
PT Asuransi Jaya Proteksi (JaPro) [Member]
Sep. 18, 2012
PT Asuransi Jaya Proteksi (JaPro) [Member]
Apr. 1, 2013
Subsequent Event [Member]
Fianzas Monterrey [Member]
Business Acquisition [Line Items]
 
 
 
 
Acquisition purchase price
$ 865 
$ 107 
 
$ 293 
Business Acquisition, Percentage of Voting Interests Acquired
 
20.00% 
80.00% 
 
Investments (Narrative) (Detail) (USD $)
3 Months Ended
Mar. 31, 2013
Security
Mar. 31, 2012
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
 
Net unrealized appreciation (depreciation) included in OCI
$ 24,000,000 
$ 68,000,000 
 
Net unrealized depreciation included in AOCI
 
(25,000,000)
Percentage of mortgage-backed securities represented by investments in US government agency bonds
85.00% 
 
85.00% 
Credit losses recognized in net income for corporate securities
1,000,000 
3,000,000 
 
Credit losses recognized in net income for mortgage-backed securities
3,000,000 
 
Number of fixed maturities in an unrealized loss position
2,073 
 
 
Total number of fixed maturities
23,742 
 
 
Largest single unrealized loss in the fixed maturities
(2,000,000)
 
 
Number of equity securities in an unrealized loss position
57 
 
 
Total number of equity securities
189 
 
 
Largest single unrealized loss in the equity securities
(1,000,000)
 
 
Restricted assets in fixed maturities and short-term investments
16,500,000,000 
 
16,600,000,000 
Restricted assets in cash
$ 153,000,000 
 
$ 139,000,000 
Investments (Schedule Of Fixed Maturities By Contractual Maturity) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Available for sale, Due in 1 year or less, Amortized Cost
$ 2,063 
$ 1,887 
Available for sale, Due after 1 year through 5 years, Amortized Cost
13,790 
13,411 
Available for sale, Due after 5 years though 10 years, Amortized Cost
15,488 
15,032 
Available for sale, Due after 10 years, Amortized Cost
4,316 
4,285 
Available for sale, Subtotal, Amortized Cost
35,657 
34,615 
Available for sale, Mortgage-backed securities, Amortized Cost
9,813 
10,051 
Available for sale, Amortized Cost
45,470 
44,666 
Available for sale, Fair Value
47,947 
47,306 
Held to maturity, Due in 1 year or less, Amortized Cost
496 
656 
Held to maturity, Due after 1 year through 5 years, Amortized Cost
1,953 
1,870 
Held to maturity, Due after 5 years through 10 years, Amortized Cost
2,079 
2,119 
Held to maturity, Due after 10 years, Amortized Cost
527 
597 
Held to maturity, Subtotal, Amortized Cost
5,055 
5,242 
Held to maturity, Mortgage backed securities, Amortized Cost
1,812 
2,028 
Available for sale, Due in 1 year or less, Fair Value
2,084 
1,906 
Available for sale, Due after 1 year through 5 years, Fair Value
14,417 
14,010 
Available for sale, Due after 5 years through 10 years, Fair Value
16,539 
16,153 
Available for sale, Due after 10 years, Fair Value
4,736 
4,764 
Available for sale, Subtotal, Fair Value
37,776 
36,833 
Available for sale, Mortgage backed securities, Fair Value
10,171 
10,473 
Held to maturity, Due in 1 year or less, Fair Value
499 
659 
Held to maturity, Due after 1 year through 5, Fair Value
2,040 
1,950 
Held to maturity, Due after 5 years through 10 years, Fair Value
2,220 
2,267 
Held to maturity, Due after 10 years, Fair Value
561 
641 
Held to maturity, Subtotal, Fair Value
5,320 
5,517 
Held to maturity, Mortgage backed securities, Fair Value
1,893 
2,116 
Held-to-maturity Securities
6,867 
7,270 
Held to maturity, Fair Value
$ 7,213 
$ 7,633 
Investments (Schedule Of Cost And Fair Value Of Equity Securities) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Cost
$ 781 
$ 707 
Gross unrealized appreciation
55 
41 
Gross unrealized depreciation
(4)
(4)
Fair value
$ 832 
$ 744 
Investments (Net Realized Gains (Losses) And Losses Included In Net Realized Gains (Losses) And Other Comprehensive Income) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
OTTI on fixed maturities, gross
$ (1)
$ (7)
OTTI on fixed maturities recognized in OCI (pre-tax)
OTTI on fixed maturities, net
(1)
(7)
Fixed maturities, Gross realized gains excluding OTTI
62 
112 
Fixed maturities, Gross realized losses excluding OTTI
(25)
(71)
Total fixed maturities
36 
34 
OTTI on equity securities
(1)
(1)
Equity securities, Gross realized gains excluding OTTI
Equity securities, Gross realized losses excluding OTTI
(2)
Total equity securities
(1)
OTTI on other investments
(1)
(2)
Foreign exchange losses
76 
(5)
Investment and embedded derivative instruments
18 
42 
Fair value adjustments on insurance derivative
328 
428 
S&P put options and futures
(250)
(231)
Other derivative instruments
(5)
Other
(2)
Total net realized gains (losses)
$ 206 
$ 260 
Investments (Aggregate Fair Value And Gross Unrealized Loss By Length Of Time Security Has Continuously Been In Unrealized Loss Position) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
$ 5,198 
$ 3,968 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(65)
(48)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
324 
577 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(26)
(50)
Investment securities, Unrealized loss position, Total Fair Value
5,522 
4,545 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(91)
(98)
US Treasury and Government [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
576 
440 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(5)
(1)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
Investment securities, Unrealized loss position, Total Fair Value
576 
440 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(5)
(1)
Foreign Government Debt Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
723 
1,234 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(11)
(8)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
69 
88 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(5)
(6)
Investment securities, Unrealized loss position, Total Fair Value
792 
1,322 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(16)
(14)
Corporate Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
1,163 
1,026 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(21)
(23)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
78 
85 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(7)
(8)
Investment securities, Unrealized loss position, Total Fair Value
1,241 
1,111 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(28)
(31)
Collateralized Mortgage Backed Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
1,943 
855 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(15)
(4)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
140 
356 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(11)
(32)
Investment securities, Unrealized loss position, Total Fair Value
2,083 
1,211 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(26)
(36)
US States and Political Subdivisions Debt Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
742 
316 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(6)
(3)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
37 
48 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(3)
(4)
Investment securities, Unrealized loss position, Total Fair Value
779 
364 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(9)
(7)
Fixed Maturities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
5,147 
3,871 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(58)
(39)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
324 
577 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(26)
(50)
Investment securities, Unrealized loss position, Total Fair Value
5,471 
4,448 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(84)
(89)
Equity Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
47 
29 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(4)
(4)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
Investment securities, Unrealized loss position, Total Fair Value
47 
29 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(4)
(4)
Other Long-term Investments [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
68 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(3)
(5)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
Investment securities, Unrealized loss position, Total Fair Value
68 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
$ (3)
$ (5)
Investments (Schedule Of Components Of Restricted Assets) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Trust funds
$ 11,421 
$ 11,389 
Deposits with non-U.S. regulatory authorities
2,100 
2,133 
Assets pledged under repurchase agreements
1,402 
1,401 
Deposits with U.S. regulatory authorities
1,322 
1,338 
Other pledged assets
426 
456 
Total restricted assets
$ 16,671 
$ 16,717 
Fair Value Measurements (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Year
Mar. 31, 2012
Mar. 31, 2013
Redemption Notice Periods Lower Range [Member]
Mar. 31, 2013
Redemption Notice Periods Upper Range [Member]
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
 
GLB - Lapse rate - lower range
1.00% 
 
 
 
GLB - Lapse rate - upper range
6.00% 
 
 
 
GLB - Spike lapse rate - lower range
10.00% 
 
 
 
GLB - Spike lapse rate - upper range
30.00% 
 
 
 
GLB - Ultimate lapse rate
10.00% 
 
 
 
GLB - Length of ultimate lapse rate period, years
 
 
 
GLB - Adjustment factor for valuable guarantees - lower
15.00% 
 
 
 
GLB - Adjustment factor for valuable guarantees - upper
75.00% 
 
 
 
Percent of GMIB guaranteed value that are represented by clients with several years of annuitization experience
37.00% 
 
 
 
GLB - Maximum annuitization rate
8.00% 
 
 
 
GLB - First year maximum annuitization rate
13.00% 
 
 
 
GLB - Weighted average maximum annuitization rate - rate 1
8.00% 
 
 
 
GLB - Weighted average maximum annuitization rate - rate 2
12.00% 
 
 
 
GLB - Weighted average maximum annuitization rate - rate 3
30.00% 
 
 
 
Notice period for redemption for alternative investments investment funds, days
 
 
5 days 
120 days 
Level 1 to Level 2 Transfers
$ 13 
$ 5 
 
 
Level 2 to Level 1 Transfers
$ 0 
 
 
 
Guaranteed Living Benefits Number Of Annuitization Functions
 
 
 
Fair Value Measurements (Financial Instruments Measured At Fair Value On Recurring Basis) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Document Period End Date
Mar. 31, 2013 
 
Fixed maturities available for sale at fair value
$ 47,947 
$ 47,306 
Equity securities, at fair value
832 
744 
Short-term investments
2,893 
2,228 
Other investments
2,820 
2,716 
Securities lending collateral
1,786 
1,791 
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
2,228 
2,292 
Equity securities, at fair value
337 
253 
Short-term investments
2,130 
1,503 
Other investments
277 
268 
Investment derivative instruments
(51)
11 
Other derivative instruments
(37)
(6)
Separate account assets
947 
872 
Total assets measured at fair value
5,831 
5,193 
Fair Value, Inputs, Level 1 [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,986 
2,050 
Fair Value, Inputs, Level 1 [Member] |
Foreign [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
223 
222 
Fair Value, Inputs, Level 1 [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
19 
20 
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
45,553 
44,839 
Equity securities, at fair value
493 
488 
Short-term investments
763 
725 
Other investments
215 
196 
Securities lending collateral
1,786 
1,791 
Other derivative instruments
17 
30 
Separate account assets
69 
71 
Total assets measured at fair value
48,896 
48,140 
Fair Value, Inputs, Level 2 [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,857 
1,685 
Fair Value, Inputs, Level 2 [Member] |
Foreign [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
13,406 
13,431 
Fair Value, Inputs, Level 2 [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
16,784 
16,586 
Fair Value, Inputs, Level 2 [Member] |
Mortgage Backed-Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
10,158 
10,460 
Fair Value, Inputs, Level 2 [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
3,348 
2,677 
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
166 
175 
Equity securities, at fair value
Other investments
2,328 
2,252 
Other derivative instruments
Total assets measured at fair value
2,496 
2,430 
GLB
753 1
1,119 1
Fair Value, Inputs, Level 3 [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
Fair Value, Inputs, Level 3 [Member] |
Foreign [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
35 
60 
Fair Value, Inputs, Level 3 [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
118 
102 
Fair Value, Inputs, Level 3 [Member] |
Mortgage Backed-Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
13 
13 
Fair Value, Inputs, Level 3 [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
47,947 
47,306 
Equity securities, at fair value
832 
744 
Short-term investments
2,893 
2,228 
Other investments
2,820 
2,716 
Securities lending collateral
1,786 
1,791 
Investment derivative instruments
(51)
11 
Other derivative instruments
(20)
24 
Separate account assets
1,016 
943 
Total assets measured at fair value
57,223 
55,763 
GLB
753 1
1,119 1
Estimate of Fair Value, Fair Value Disclosure [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
3,843 
3,735 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Foreign [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
13,664 
13,713 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
16,921 
16,708 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Mortgage Backed-Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
10,171 
10,473 
Estimate of Fair Value, Fair Value Disclosure [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
$ 3,348 
$ 2,677 
Fair Value Measurements (Schedule Of Significant Unobservable Inputs Used In Level 3 Liability Valuations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2013
Minimum [Member]
Mar. 31, 2013
Maximum [Member]
Mar. 31, 2013
Guaranteed Minimum Income Benefit [Member]
Dec. 31, 2012
Guaranteed Minimum Income Benefit [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
 
 
Fair Value
 
 
 
$ 753 1
$ 1,119 
Valuation Technique
Actuarial model 1
 
 
 
 
Significant Unobservable Inputs Lapse rate
 
1.00% 1
30.00% 1
 
 
Significant Unobservable Inputs Annuitization rate
 
0.00% 1
50.00% 1
 
 
Fair Value Measurements (Financial Instruments Measured At Fair Value Using Significant Unobservable Inputs) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Dec. 31, 2012
Dec. 31, 2011
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Document Period End Date
Mar. 31, 2013 
 
 
 
Equity Securities [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
$ 3 
$ 13 
 
 
Transfers into Level 3, Assets
 
 
 
Transfers out of Level 3, Assets
(1)
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
 
Net Realized Gains/Losses, Assets
 
 
 
Purchases, Assets
 
 
Sales, Assets
(5)
 
 
Settlements, Assets
 
 
 
Balance-End of Period, Assets
10 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
 
 
Other Long-term Investments [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
2,252 
1,877 
 
 
Transfers into Level 3, Assets
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
22 
 
 
Net Realized Gains/Losses, Assets
(1)
(2)
 
 
Purchases, Assets
136 
113 
 
 
Sales, Assets
(9)
(2)
 
 
Settlements, Assets
(72)
(41)
 
 
Balance-End of Period, Assets
2,328 
1,954 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
(1)
(2)
 
 
Other Derivative Instruments [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
 
 
 
Net Realized Gains/Losses, Assets
 
(3)
 
 
Settlements, Assets
 
(1)
 
 
Balance-End of Period, Assets
 
(1)1
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
(3)
 
 
Available-for-sale Securities [Member] |
US Treasury and Government [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
 
 
 
Transfers out of Level 3, Assets
 
(5)
 
 
Net Realized Gains/Losses, Assets
 
 
 
Purchases, Assets
 
 
 
Balance-End of Period, Assets
 
 
 
Available-for-sale Securities [Member] |
Foreign [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
60 
33 
 
 
Transfers into Level 3, Assets
 
 
 
Transfers out of Level 3, Assets
(27)
(1)
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
 
Net Realized Gains/Losses, Assets
 
 
 
Purchases, Assets
34 
 
 
Sales, Assets
(1)
(17)
 
 
Settlements, Assets
(1)
 
 
Balance-End of Period, Assets
35 
49 
 
 
Available-for-sale Securities [Member] |
Corporate Debt Securities [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
102 
134 
 
 
Transfers into Level 3, Assets
12 
 
 
 
Transfers out of Level 3, Assets
(2)
(7)
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
 
Net Realized Gains/Losses, Assets
 
 
 
Purchases, Assets
10 
 
 
Sales, Assets
(8)
 
 
Settlements, Assets
(5)
(7)
 
 
Balance-End of Period, Assets
118 
117 
 
 
Available-for-sale Securities [Member] |
Mortgage Backed-Securities [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
13 
28 
 
 
Transfers into Level 3, Assets
 
 
 
Transfers out of Level 3, Assets
(12)
 
 
Purchases, Assets
 
 
Sales, Assets
 
 
 
Settlements, Assets
(1)
 
 
Balance-End of Period, Assets
13 
19 
 
 
Available-for-sale Securities [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Assets
 
 
 
Balance-End of Period, Assets
 
 
Guaranteed Minimum Income Benefit [Member]
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
Balance- Beginning of Period, Liabilities
1,119 2
1,319 
 
 
Net Realized Gains/Losses, Liabilities
(366)2
(456)
 
 
Balance- End of Period, Liabilities
753 2
863 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Liabilities
(366)
(456)
 
 
Reported liabilities
$ 1,000 
$ 1,050 
$ 1,400 
$ 1,500 
Fair Value Measurements (Carrying Values And Fair Values Of Financial Instruments Not Measured At Fair Value) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
$ 7,213 
$ 7,633 
Partially-owned insurance companies
449 
454 
Total assets
7,662 
8,087 
Short-term debt
1,402 
1,401 
Long-term debt
4,861 
3,916 
Trust preferred securities
449 
446 
Total liabilities
6,712 
5,763 
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
997 
1,083 
Financial Instruments Fair Value [Member] |
Foreign [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
937 
964 
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,202 
2,275 
Financial Instruments Fair Value [Member] |
Collateralized Mortgage Backed Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,893 
2,116 
Financial Instruments Fair Value [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,184 
1,195 
Fair Value, Inputs, Level 1 [Member] |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
641 
619 
Total assets
641 
619 
Fair Value, Inputs, Level 1 [Member] |
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
641 
619 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
6,555 
6,996 
Total assets
6,555 
6,996 
Short-term debt
1,402 
1,401 
Long-term debt
4,861 
3,916 
Trust preferred securities
449 
446 
Total liabilities
6,712 
5,763 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
356 
464 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
Foreign [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
937 
964 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,185 
2,257 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
Collateralized Mortgage Backed Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,893 
2,116 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,184 
1,195 
Fair Value, Inputs, Level 3 [Member] |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
17 
18 
Partially-owned insurance companies
449 
454 
Total assets
466 
472 
Fair Value, Inputs, Level 3 [Member] |
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
Fair Value, Inputs, Level 3 [Member] |
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
17 
18 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
6,867 
7,270 
Partially-owned insurance companies
449 
454 
Total assets
7,316 
7,724 
Short-term debt
1,402 
1,401 
Long-term debt
4,307 
3,360 
Trust preferred securities
309 
309 
Total liabilities
6,018 
5,070 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
962 
1,044 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
Foreign [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
882 
910 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,064 
2,133 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
Collateralized Mortgage Backed Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,812 
2,028 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
$ 1,147 
$ 1,155 
Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts (Schedule Of Guaranteed Minimum Benefits Income And Expense) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Guaranteed Minimum Benefits [Line Items]
 
 
Net premiums earned
$ 3,573 
$ 3,381 
Policy benefits and other reserve adjustments
131 
147 
Net realized gains (losses)
206 
260 
Guaranteed Minimum Death Benefit [Member]
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
Net premiums earned
20 
23 
Policy benefits and other reserve adjustments
19 
27 
Guaranteed Minimum Income Benefit [Member]
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
Net premiums earned
39 
41 
Policy benefits and other reserve adjustments
Net realized gains (losses)
369 
458 
(Loss) gain recognized in income
399 
495 
Net cash received
32 
39 
Net (increase) decrease in liability
$ 367 
$ 456 
Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts (Narrative) (Detail) (USD $)
3 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Mar. 31, 2013
Guaranteed Minimum Death Benefit [Member]
Dec. 31, 2012
Guaranteed Minimum Death Benefit [Member]
Mar. 31, 2013
Guaranteed Minimum Income Benefit [Member]
Dec. 31, 2012
Guaranteed Minimum Income Benefit [Member]
Mar. 31, 2012
Guaranteed Minimum Income Benefit [Member]
Dec. 31, 2011
Guaranteed Minimum Income Benefit [Member]
Mar. 31, 2013
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Dec. 31, 2012
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Mar. 31, 2013
Guaranteed Living Benefits [Member]
Dec. 31, 2012
Guaranteed Living Benefits [Member]
Mar. 31, 2013
Minimum [Member]
Guaranteed Minimum Death Benefit [Member]
Mar. 31, 2013
Maximum [Member]
Guaranteed Minimum Death Benefit [Member]
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Document Period End Date
Mar. 31, 2013 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reported liabilities
 
 
$ 89,000,000 
$ 90,000,000 
$ 1,000,000,000 
$ 1,400,000,000 
$ 1,050,000,000 
$ 1,500,000,000 
 
 
 
 
 
 
Fair value derivative adjustment in liability
753 
1,100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Net amount at risk
 
 
1,000,000,000 
1,300,000,000 
 
 
 
 
 
 
345,000,000 
445,000,000 
 
 
Mortality percentage according to Annuity 2000 mortality table
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
Percent of Annuity 2000 mortality table used for mortality assumption
 
 
 
 
 
 
 
 
 
 
 
 
1.00% 
2.00% 
Discounting assumption used in the calculation of the benefit reserve averaging - lower range
 
 
 
 
 
 
 
 
2.00% 
 
3.50% 
 
 
 
Discounting assumption used in the calculation of the benefit reserve averaging - upper range
 
 
 
 
 
 
 
 
3.00% 
 
4.50% 
 
 
 
Total claim amount payable, if all of the Company's cedants' policyholders covered were to die immediately
 
 
574,000,000 
 
 
 
 
 
334,000,000 
 
 
 
 
 
GMBD net amount of risk
 
 
 
 
 
 
 
 
93,000,000 
116,000,000 
 
 
 
 
GLB net amount of risk
 
 
 
 
 
 
 
 
$ 376,000,000 
$ 655,000,000 
 
 
 
 
Average attained age of all policyholders under all benefits reinsured, years
68 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Debt (Details) (Senior Notes [Member], USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
ACE INA Senior Notes Due March 2023 [Member]
 
Debt Instrument [Line Items]
 
Debt Instrument, Face Amount
$ 475 
Debt Instrument, Interest Rate, Stated Percentage
2.70% 
Make Whole Premium Additional Percent
0.10% 
ACE INA Senior Notes Due March 2043 [Member]
 
Debt Instrument [Line Items]
 
Debt Instrument, Face Amount
$ 475 
Debt Instrument, Interest Rate, Stated Percentage
4.15% 
Make Whole Premium Additional Percent
0.15% 
Commitments, Contingencies, And Guarantees (Balance Sheet Locations, Fair Values In Asset Or (Liability) Position, And Notional Values/Payment Provisions Of Derivative Instruments) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Investment And Embedded Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
$ 223 
$ 320 
Notional Value/Payment Provision
7,398 
4,574 
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(20)
24 
Notional Value/Payment Provision
2,505 
2,558 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(48)
Notional Value/Payment Provision
534 
620 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
50 
50 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
Notional Value/Payment Provision
2,169 
2,710 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(4)
10 
Notional Value/Payment Provision
1,079 
915 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Options On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
3,335 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(37)1
(6)1
Notional Value/Payment Provision
2,255 1
2,308 1
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
17 1
30 1
Notional Value/Payment Provision
250 1
250 1
Fixed Maturities Available For Sale [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
274 
309 
Notional Value/Payment Provision
231 
279 
Accounts Payable Future Policy Benefits [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(985)2
(1,352)2
Notional Value/Payment Provision
$ 721 2
$ 1,100 2
Commitments, Contingencies, And Guarantees (Net Realized Gains (Losses) Of Derivative Instrument Activity In Consolidated Statement Of Operations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
$ 96 
$ 234 
Foreign Exchange Future [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
(8)
All Other Futures Contracts And Options [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
26 
Convertibles and Bonds with Warrants Attached [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
24 
Investment And Embedded Derivative Instruments [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
18 
42 
Guaranteed Living Benefits [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
328 1
428 1
Single-Stock Future [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
(237)2
(213)2
Options On Equity Market Indices [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
(13)2
(18)2
Credit Default Swap [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
(5)
Guaranteed Living Benefit And Other Derivative Instruments [Member]
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
Net realized gains (losses)
$ 78 
$ 192 
Commitments, Contingencies, And Guarantees (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
 
 
Carrying value of limited partnerships and partially-owned investment companies included in other investments
$ 1,786 
 
Funding commitments relating to limited partnerships and partially-owned investment companies
1,177 
 
Derivative liability subject to a master netting agreement
(25)
 
Derivative asset subject to a master netting agreement
 
35 
Repurchase obligations
1,402 
1,401 
Securities lending payable
1,789 
1,795 
Securities lending collateral
$ 1,786 
$ 1,791 
Shareholders' Equity (Detail)
In Millions, except Share data, unless otherwise specified
1 Months Ended 3 Months Ended
Aug. 31, 2011
USD ($)
Nov. 30, 2010
USD ($)
Mar. 31, 2013
USD ($)
Mar. 31, 2013
CHF
Mar. 31, 2012
USD ($)
Mar. 31, 2012
CHF
Dec. 31, 2012
CHF
Stockholders' Equity Note [Abstract]
 
 
 
 
 
 
 
Dividends declared per common share
 
 
$ 0.49 
 0.46 
$ 0.59 
 0.53 
 
Common Shares, par value
 
 
 
 28.43 
 
 
 28.89 
Common Shares in treasury, shares
 
 
2,787,156 
2,787,156 
 
 
2,510,878 
Stock repurchase program, authorized amount
$ 303 
$ 600 
 
 
 
 
 
Share repurchase authorization remains
197 
 
307 
 
 
 
 
Repurchase of outstanding common shares, shares
 
 
1,808,300 
1,808,300 
 
 
 
Share repurchase amount
 
 
$ 154 
 
 
 
 
Increase to dividend approved by shareholders in January
 
 
 
 
$ 0.12 
 
 
Share-Based Compensation (Detail) (USD $)
3 Months Ended 0 Months Ended
Mar. 31, 2013
Feb. 28, 2013
Stock Options [Member]
Feb. 28, 2013
Restricted Stock [Member]
Feb. 28, 2013
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Stock option vesting period in years
3 years 
 
 
 
Stock option term in years
10 years 
 
 
 
Stock options granted
 
1,815,896 
 
 
Weighted-average grant date fair value for stock options granted
 
$ 17.29 
 
 
Restricted stock award and units vesting period in years
4 years 
 
 
 
Restricted stock awards granted to employees and officers of the company
 
 
1,345,850 
 
Restricted stock units awarded to employees and officers of the company
 
 
 
266,065 
Grant date fair value of awards except for options granted to employees and officers of the company
 
 
$ 85.39 
 
Segment Information (Operations By Segment) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Segment Reporting Information [Line Items]
 
 
Net investment income
$ 531 
$ 544 
(Gains) losses from fair value changes in separate account assets
(4)
(18)
Net premiums written
3,798 
3,572 
Net premiums earned
3,573 
3,381 
Losses and loss expenses
1,926 
1,804 
Policy benefits
131 
147 
Policy acquisition costs
614 
582 
Administrative expenses
514 
510 
Underwriting income (loss)
388 
338 
Net realized gains (losses) including OTTI
206 
260 
Interest (income) expense
60 
62 
Other
(6)
15 
Income tax expense (benefit)
122 
110 
Net income (loss)
953 
973 
Other (income) expense
(10)
(3)
Insurance - North American P&C [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net investment income
251 
267 
Net premiums written
1,284 
1,174 
Net premiums earned
1,338 
1,228 
Losses and loss expenses
878 
811 
Policy acquisition costs
143 
137 
Administrative expenses
125 
150 
Underwriting income (loss)
192 
130 
Net realized gains (losses) including OTTI
26 
(1)
Interest (income) expense
(2)
Other
(15)
(9)
Income tax expense (benefit)
94 
83 
Net income (loss)
392 
319 
Insurance - North American Agriculture [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net investment income
Net premiums written
113 
119 
Net premiums earned
52 
59 
Losses and loss expenses
32 
38 
Policy acquisition costs
(10)
Administrative expenses
(3)
Underwriting income (loss)
11 
34 
Net realized gains (losses) including OTTI
Interest (income) expense
Other
Income tax expense (benefit)
Net income (loss)
25 
Insurance - Overseas General [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net investment income
132 
131 
Net premiums written
1,620 
1,528 
Net premiums earned
1,459 
1,391 
Losses and loss expenses
747 
705 
Policy acquisition costs
339 
335 
Administrative expenses
236 
229 
Underwriting income (loss)
137 
122 
Net realized gains (losses) including OTTI
34 
20 
Interest (income) expense
Other
(1)
Income tax expense (benefit)
46 
38 
Net income (loss)
257 
234 
Global Reinsurance [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net investment income
72 
71 
Net premiums written
279 
263 
Net premiums earned
247 
230 
Losses and loss expenses
106 
102 
Policy acquisition costs
48 
43 
Administrative expenses
12 
12 
Underwriting income (loss)
81 
73 
Net realized gains (losses) including OTTI
20 
13 
Interest (income) expense
Other
(8)
(5)
Income tax expense (benefit)
Net income (loss)
172 
155 
Life [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Management underwriting income loss Insurance
91 
 
Net investment income
63 
61 
(Gains) losses from fair value changes in separate account assets
(4)
(18)
Net premiums written
502 
488 
Net premiums earned
477 
473 
Losses and loss expenses
157 
148 
Policy benefits
131 
147 
Policy acquisition costs
80 
76 
Administrative expenses
85 
78 
Underwriting income (loss)
24 
24 
Net realized gains (losses) including OTTI
127 
231 
Interest (income) expense
Other
Income tax expense (benefit)
13 
11 
Net income (loss)
201 
311 
Corporate And Other [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net investment income
Losses and loss expenses
Policy acquisition costs
 
Administrative expenses
51 
44 
Underwriting income (loss)
(57)
(45)
Net realized gains (losses) including OTTI
(1)
(3)
Interest (income) expense
56 
54 
Other
10 
12 
Income tax expense (benefit)
(41)
(36)
Net income (loss)
$ (76)
$ (71)
Segment Information (Net Premiums Earned For Segment By Product) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Segment Reporting Information [Line Items]
 
 
Property & All Other
$ 1,119 
$ 1,029 
Casualty
1,353 
1,270 
Life, Accident & Health
1,101 
1,082 
Net premiums earned
3,573 
3,381 
Insurance - North American P&C [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Property & All Other
347 
322 
Casualty
902 
817 
Life, Accident & Health
89 
89 
Net premiums earned
1,338 
1,228 
Insurance - North American Agriculture [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Property & All Other
52 
59 
Casualty
Life, Accident & Health
Net premiums earned
52 
59 
Insurance - Overseas General [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Property & All Other
585 
538 
Casualty
339 
333 
Life, Accident & Health
535 
520 
Net premiums earned
1,459 
1,391 
Global Reinsurance [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Property & All Other
135 
110 
Casualty
112 
120 
Net premiums earned
247 
230 
Life [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Life, Accident & Health
477 
473 
Net premiums earned
$ 477 
$ 473 
Earnings Per Share (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Earnings Per Share [Abstract]
 
 
Net income (loss)
$ 953 
$ 973 
Weighted-average shares outstanding
340,778,142 
338,567,341 
Share-based compensation plans
3,128,226 
3,123,641 
Adjusted weighted-average shares outstanding and assumed conversions
343,906,368 
341,690,982 
Basic earnings per share (US$ per share)
$ 2.80 
$ 2.87 
Diluted earnings per share (US$ per share)
$ 2.77 
$ 2.84 
Potential anti-dilutive share conversions
634,385 
468,048 
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Balance Sheet) (Detail) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Mar. 31, 2012
Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
$ 61,359 
$ 60,264 
 
 
Cash
855 
615 1
715 
614 
Insurance and reinsurance balances receivable
4,154 
4,147 
 
 
Reinsurance recoverable on losses and loss expenses
11,530 
12,078 
 
 
Reinsurance recoverable on policy benefits
231 
241 
 
 
Value of business acquired
583 
614 
 
 
Goodwill and other intangible assets
4,909 
4,975 
 
 
Other assets
9,840 
9,611 
 
 
Total assets
93,461 
92,545 
 
 
Unpaid losses and loss expenses
37,082 
37,946 
 
 
Unearned premiums
7,019 
6,864 
 
 
Future policy benefits
4,465 
4,470 
 
 
Short-term debt
1,402 
1,401 
 
 
Long-term debt
4,307 
3,360 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
10,935 
10,664 
 
 
Total liabilities
65,519 
65,014 
 
 
Commitments and contingencies
   
   
 
 
Total shareholders' equity
27,942 
27,531 
25,431 
 
Total liabilities and shareholders' equity
93,461 
92,545 
 
 
Parent Company [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
28 
31 
 
 
Cash
197 
103 1
162 
106 
Investments in subsidiaries
27,836 
27,251 
 
 
Due from subsidiaries and affiliates, net
114 
204 
 
 
Other assets
13 
 
 
Total assets
28,184 
27,602 
 
 
Other liabilities
242 
71 
 
 
Total liabilities
242 
71 
 
 
Total shareholders' equity
27,942 
27,531 
 
 
Total liabilities and shareholders' equity
28,184 
27,602 
 
 
Guarantor Subsidiaries [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
32,593 
31,074 
 
 
Cash
560 
515 1
496 
382 
Insurance and reinsurance balances receivable
3,658 
3,654 
 
 
Reinsurance recoverable on losses and loss expenses
16,432 
17,232 
 
 
Reinsurance recoverable on policy benefits
1,162 
1,187 
 
 
Value of business acquired
579 
610 
 
 
Goodwill and other intangible assets
4,359 
4,419 
 
 
Other assets
7,830 
7,563 
 
 
Total assets
67,173 
66,254 
 
 
Unpaid losses and loss expenses
30,593 
31,356 
 
 
Unearned premiums
6,000 
5,872 
 
 
Future policy benefits
3,877 
3,876 
 
 
Due to subsidiaries and affiliates, net
358 
384 
 
 
Short-term debt
851 
851 
 
 
Long-term debt
4,307 
3,360 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
8,985 
8,272 
 
 
Total liabilities
55,280 
54,280 
 
 
Total shareholders' equity
11,893 
11,974 
 
 
Total liabilities and shareholders' equity
67,173 
66,254 
 
 
Other ACE Limited Subsidiaries And Eliminations [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
28,738 2
29,159 2
 
 
Cash
98 2
(3)1 2
57 2
126 2
Insurance and reinsurance balances receivable
496 2
493 2
 
 
Reinsurance recoverable on losses and loss expenses
(4,902)2
(5,154)2
 
 
Reinsurance recoverable on policy benefits
(931)2
(946)2
 
 
Value of business acquired
2
2
 
 
Goodwill and other intangible assets
550 2
556 2
 
 
Other assets
2,001 2
2,035 2
 
 
Total assets
26,054 2
26,144 2
 
 
Unpaid losses and loss expenses
6,489 2
6,590 2
 
 
Unearned premiums
1,019 2
992 2
 
 
Future policy benefits
588 2
594 2
 
 
Due to subsidiaries and affiliates, net
(244)2
(180)2
 
 
Short-term debt
551 2
550 2
 
 
Other liabilities
1,708 2
2,321 2
 
 
Total liabilities
10,111 2
10,867 2
 
 
Total shareholders' equity
15,943 2
15,277 2
 
 
Total liabilities and shareholders' equity
26,054 2
26,144 2
 
 
Consolidation, Eliminations [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments in subsidiaries
(27,836)3
(27,251)3
 
 
Due from subsidiaries and affiliates, net
(114)3
(204)3
 
 
Total assets
(27,950)3
(27,455)3
 
 
Due to subsidiaries and affiliates, net
(114)3
(204)3
 
 
Total liabilities
(114)3
(204)3
 
 
Total shareholders' equity
(27,836)3
(27,251)3
 
 
Total liabilities and shareholders' equity
$ (27,950)3
$ (27,455)3
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Statement Of Operations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net premiums written
$ 3,798 
$ 3,572 
Net premiums earned
3,573 
3,381 
Net investment income
531 
544 
Net realized gains (losses) including OTTI
206 
260 
Losses and loss expenses
1,926 
1,804 
Policy benefits
131 
147 
Policy acquisition costs and administrative expenses
1,128 
1,092 
Interest (income) expense
60 
62 
Other (income) expense
(10)
(3)
Income tax expense (benefit)
122 
110 
Net income (loss)
953 
973 
Comprehensive income
716 
1,271 
Parent Company [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net investment income
 
Equity in earnings of subsidiaries
914 
928 
Net realized gains (losses) including OTTI
12 
20 
Policy acquisition costs and administrative expenses
15 
12 
Interest (income) expense
(7)
(9)
Other (income) expense
(38)
(30)
Income tax expense (benefit)
Net income (loss)
953 
973 
Comprehensive income
716 
1,271 
Guarantor Subsidiaries [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net premiums written
2,082 
2,098 
Net premiums earned
2,006 
1,952 
Net investment income
248 
265 
Net realized gains (losses) including OTTI
10 
26 
Losses and loss expenses
1,253 
1,182 
Policy benefits
81 
86 
Policy acquisition costs and administrative expenses
626 
640 
Interest (income) expense
67 
66 
Other (income) expense
34 
25 
Income tax expense (benefit)
56 
85 
Net income (loss)
147 
159 
Comprehensive income
(1)
287 
Other ACE Limited Subsidiaries And Eliminations [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net premiums written
1,716 1
1,474 1
Net premiums earned
1,567 1
1,429 1
Net investment income
283 1
279 1
Net realized gains (losses) including OTTI
184 1
214 1
Losses and loss expenses
673 1
622 1
Policy benefits
50 1
61 1
Policy acquisition costs and administrative expenses
487 1
440 1
Interest (income) expense
1
1
Other (income) expense
(6)1
1
Income tax expense (benefit)
63 1
23 1
Net income (loss)
767 1
769 1
Comprehensive income
915 1
641 1
Consolidation, Eliminations [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Equity in earnings of subsidiaries
(914)2
(928)2
Net income (loss)
(914)2
(928)2
Comprehensive income
$ (914)2
$ (928)2
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Statement Of Cash Flows) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
$ 913 
$ 572 
Purchases of fixed maturities available for sale
(6,152)
(5,483)
Purchases of fixed maturities held to maturity
(142)
(32)
Purchases of equity securities
(107)
(19)
Sales of fixed maturities available for sale
2,764 
3,795 
Sales of equity securities
31 
26 
Maturities and redemptions of fixed maturities available for sale
2,016 
1,076 
Maturities and redemptions of fixed maturities held to maturity
491 
345 
Net derivative instruments settlements
(279)
(195)
Acquisition of subsidiaries
(33)
(25)
Other
(55)
(103)
Net cash flows used for investing activities
(1,466)
(615)
Dividends paid on Common Shares
(2)
(159)
Common Shares repurchased
(154)
(11)
Proceeds from issuance of long-term debt
947 
Net proceeds from (repayments) issuance of short-term debt
281 
Proceeds from share-based compensation plans, including windfall tax benefits
21 
28 
Net cash flows from financing activities
813 
139 
Effect of foreign currency rate changes on cash and cash equivalents
(20)
Net increase (decrease) in cash
240 
101 
Cash - beginning of period
615 1
614 
Cash - end of period
855 
715 
Parent Company [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
53 
19 
Sales of fixed maturities available for sale
 
Net derivative instruments settlements
(1)
Advances from (to) affiliates
43 
66 
Net cash flows used for investing activities
43 
65 
Dividends paid on Common Shares
(2)
(159)
Net proceeds from (repayments) issuance of short-term debt
 
130 
Proceeds from share-based compensation plans, including windfall tax benefits
Net cash flows from financing activities
(2)
(28)
Net increase (decrease) in cash
94 
56 
Cash - beginning of period
103 1
106 
Cash - end of period
197 
162 
Guarantor Subsidiaries [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
644 
66 
Purchases of fixed maturities available for sale
(3,825)
(2,650)
Purchases of fixed maturities held to maturity
(137)
(31)
Purchases of equity securities
(89)
(10)
Sales of fixed maturities available for sale
1,473 
1,935 
Sales of equity securities
25 
24 
Maturities and redemptions of fixed maturities available for sale
879 
497 
Maturities and redemptions of fixed maturities held to maturity
351 
267 
Net derivative instruments settlements
(1)
Acquisition of subsidiaries
(33)
(25)
Other
(86)
90 
Net cash flows used for investing activities
(1,438)
96 
Proceeds from issuance of long-term debt
947 
 
Net proceeds from (repayments) issuance of short-term debt
Proceeds from share-based compensation plans, including windfall tax benefits
(8)2
 
Advances (to) from affiliates
(71)
(48)
Net cash flows from financing activities
868 
(47)
Effect of foreign currency rate changes on cash and cash equivalents
(29)
(1)
Net increase (decrease) in cash
45 
114 
Cash - beginning of period
515 1
382 
Cash - end of period
560 
496 
Other ACE Limited Subsidiaries And Eliminations [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
216 2
487 2
Purchases of fixed maturities available for sale
(2,327)2
(2,833)2
Purchases of fixed maturities held to maturity
(5)2
(1)2
Purchases of equity securities
(18)2
(9)2
Sales of fixed maturities available for sale
1,291 2
1,860 2
Sales of equity securities
2
2
Maturities and redemptions of fixed maturities available for sale
1,137 2
579 2
Maturities and redemptions of fixed maturities held to maturity
140 2
78 2
Net derivative instruments settlements
(283)2
(193)2
Acquisition of subsidiaries
2
2
Other
31 2
(193)2
Net cash flows used for investing activities
(28)2
(710)2
Dividends paid on Common Shares
2
 
Common Shares repurchased
(154)2
(11)2
Net proceeds from (repayments) issuance of short-term debt
2
150 2
Proceeds from share-based compensation plans, including windfall tax benefits
29 2
27 2
Advances (to) from affiliates
28 2
(18)2
Net cash flows from financing activities
(96)2
148 2
Effect of foreign currency rate changes on cash and cash equivalents
2
2
Net increase (decrease) in cash
101 2
(69)2
Cash - beginning of period
(3)1 2
126 2
Cash - end of period
98 2
57 2
Consolidation, Eliminations [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
 
3
Advances from (to) affiliates
(43)3
(66)3
Net cash flows used for investing activities
(43)3
(66)3
Advances (to) from affiliates
43 3
66 3
Net cash flows from financing activities
$ 43 3
$ 66 3