ACE LTD, 10-Q filed on 10/29/2014
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2014
Oct. 15, 2014
Entity Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q3 
 
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
 
331,737,541 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Investments [Abstract]
 
 
Fixed maturities available for sale, at fair value (amortized cost - $47,688 and $48,406) (includes hybrid financial instruments of $279 and $302)
$ 49,148 
$ 49,254 
Fixed maturities held to maturity, at amortized cost (fair value – $7,763 and $6,263)
7,548 
6,098 
Equity securities, at fair value (cost – $480 and $841)
546 
837 
Short-term investments, at fair value and amortized cost
2,753 
1,763 
Other investments (cost – $2,910 and $2,671)
3,259 
2,976 
Total investments
63,254 
60,928 
Cash
806 1 2
579 1 3
Securities lending collateral
1,440 
1,632 
Accrued investment income
567 
556 
Insurance and reinsurance balances receivable
5,189 
5,026 
Reinsurance recoverable on losses and loss expenses
10,945 
11,227 
Reinsurance recoverable on policy benefits
228 
218 
Deferred policy acquisition costs
2,592 
2,313 
Value of business acquired
491 
536 
Goodwill and other intangible assets
5,425 
5,404 
Prepaid reinsurance premiums
1,711 
1,675 
Deferred tax assets
408 
616 
Investments in partially-owned insurance companies
495 
470 
Other assets
4,006 
3,330 
Total assets
97,557 
94,510 
Liabilities
 
 
Unpaid losses and loss expenses
37,447 
37,443 
Unearned premiums
8,020 
7,539 
Future policy benefits
4,782 
4,615 
Insurance and reinsurance balances payable
3,804 
3,628 
Securities lending payable
1,441 
1,633 
Accounts payable, accrued expenses, and other liabilities
5,829 
4,810 
Short-term debt
1,851 
1,901 
Long-term debt
4,057 
3,807 
Trust preferred securities
309 
309 
Total liabilities
67,540 
65,685 
Commitments and contingencies
   
   
Shareholders’ equity
 
 
Common Shares (CHF 25.40 and CHF 27.04 par value; 342,832,412 shares issued; 332,111,557 and 339,793,935 shares outstanding)
8,278 
8,899 
Common Shares in treasury (10,720,855 and 3,038,477 shares)
(1,057)
(255)
Additional paid-in capital
5,099 
5,238 
Retained earnings
16,089 
13,791 
Accumulated other comprehensive income (AOCI)
1,608 
1,152 
Total shareholders’ equity
30,017 
28,825 
Total liabilities and shareholders’ equity
$ 97,557 
$ 94,510 
Consolidated Balance Sheets (Parenthetical)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2014
USD ($)
Sep. 30, 2014
CHF
Dec. 31, 2013
USD ($)
Dec. 31, 2013
CHF
Statement of Financial Position [Abstract]
 
 
 
 
Fixed maturities available for sale, at amortized cost
$ 47,688 
 
$ 48,406 
 
Fixed maturities available for sale, hybrid financial instruments
279 
 
302 
 
Fixed maturities held to maturity, at amortized cost
7,763 
 
6,263 
 
Equity securities, at cost
480 
 
841 
 
Other investments, cost
$ 2,910 
 
$ 2,671 
 
Common Shares, par value
 
 25.40 
 
 27.04 
Common Shares, shares issued
342,832,412 
342,832,412 
342,832,412 
342,832,412 
Common Shares, shares outstanding
332,111,557 
332,111,557 
339,793,935 
339,793,935 
Common Shares in treasury, shares
10,720,855 
10,720,855 
3,038,477 
3,038,477 
Consolidated Statements Of Operations and Comprehensive Income (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Revenues
 
 
 
 
Net premiums written
$ 4,729 
$ 4,620 
$ 13,473 
$ 12,809 
Decrease (increase) in unearned premiums
25 
(10)
(417)
(559)
Net premiums earned
4,754 
4,610 
13,056 
12,250 
Net investment income
566 
522 
1,675 
1,587 
Net realized gains (losses):
 
 
 
 
Other-than-temporary impairment (OTTI) losses gross
(5)
(4)
(30)
(14)
Portion of OTTI losses recognized in other comprehensive income (OCI)
Net OTTI losses recognized in income
(4)
(4)
(27)
(14)
Net realized gains (losses) excluding OTTI losses
(116)
44 
(270)
364 
Total net realized gains (losses)
(120)
40 
(297)
350 
Total revenues
5,200 
5,172 
14,434 
14,187 
Expenses
 
 
 
 
Losses and loss expenses
2,684 
2,655 
7,233 
6,831 
Policy benefits
125 
138 
383 
379 
Policy acquisition costs
825 
678 
2,311 
1,957 
Administrative expenses
554 
563 
1,655 
1,641 
Interest expense
70 
72 
213 
205 
Other (income) expense
(19)
(5)
(61)
22 
Total expenses
4,239 
4,101 
11,734 
11,035 
Income before income tax
961 
1,071 
2,700 
3,152 
Income tax expense (includes $5, $4, $7, and $16 on reclassified unrealized gains and losses)
176 
155 
402 
392 
Net income
785 
916 
2,298 
2,760 
Other comprehensive income (loss)
 
 
 
 
Unrealized appreciation (depreciation)
(375)
16 
733 
(1,570)
Reclassification adjustment for net realized (gains) losses included in net income
38 
(24)
11 
(97)
Unrealized appreciation (Depreciation) after reclassification adjustment
(337)
(8)
744 
(1,667)
Change in:
 
 
 
 
Cumulative translation adjustment
(251)
149 
(131)
(237)
Pension liability
(2)
(6)
17 
Other comprehensive income (loss), before income tax
(581)
139 
607 
(1,887)
Income tax (expense) benefit related to OCI items
94 
(25)
(151)
374 
Other comprehensive income (loss)
(487)
114 
456 
(1,513)
Comprehensive income
298 
1,030 
2,754 
1,247 
Earnings per share
 
 
 
 
Basic earnings per share
$ 2.35 
$ 2.68 
$ 6.82 
$ 8.09 
Diluted earnings per share
$ 2.32 
$ 2.66 
$ 6.75 
$ 8.02 
Reclassification out of Accumulated Other Comprehensive Income [Member] |
Accumulated Net Unrealized Investment Gain (Loss) [Member]
 
 
 
 
Net realized gains (losses):
 
 
 
 
Total net realized gains (losses)
(38)
24 
(11)
97 
Expenses
 
 
 
 
Income tax expense (includes $5, $4, $7, and $16 on reclassified unrealized gains and losses)
$ 5 
$ 4 
$ 7 
$ 16 
Consolidated Statements Of Operations and Comprehensive Income Consolidated Statements of Operations and Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Income tax expense (benefit)
$ 176 
$ 155 
$ 402 
$ 392 
Net realized gains (losses)
(120)
40 
(297)
350 
Reclassification out of Accumulated Other Comprehensive Income [Member] |
Accumulated Net Unrealized Investment Gain (Loss) [Member]
 
 
 
 
Income tax expense (benefit)
16 
Net realized gains (losses)
$ (38)
$ 24 
$ (11)
$ 97 
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, 2012
 
$ 9,591 
$ (159)
$ 5,179 
$ 10,033 
$ 2,633 
$ 339 
$ (85)
 
Dividends declared on Common Shares – par value reduction
 
(518)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(233)
 
 
 
 
 
 
Net shares redeemed under employee share-based compensation plans
 
 
170 
(129)
 
 
 
 
 
Exercise of stock options
 
 
 
(34)
 
 
 
 
 
Share-based compensation expense and other
 
 
 
184 
 
 
 
 
 
Funding of dividends declared to Retained earnings
 
 
 
 
 
 
 
 
Net income
2,760 
 
 
 
2,760 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
 
 
 
 
Change in period, before reclassification from AOCI, net of income tax (expense) benefit of $(168) and 337
 
 
 
 
 
(1,233)
 
 
 
Amounts reclassified from AOCI, net of income tax benefit of $7 and $16
 
 
 
 
 
(81)
 
 
 
Change in period, net of income tax (expense) benefit of $(161) and $353
 
 
 
 
 
(1,314)
 
 
 
Change in period, net of income tax benefit of $7 and $27
 
 
 
 
 
 
(210)
 
 
Change in period, net of income tax (expense) benefit of $3 and $(6)
 
 
 
 
 
 
 
11 
 
Balance - end of period at Sep. 30, 2013
28,218 
9,073 
(222)
5,200 
12,793 
1,319 
129 
(74)
1,374 
Balance - beginning of period at Dec. 31, 2013
28,825 
8,899 
(255)
5,238 
13,791 
1,174 
63 
(85)
 
Dividends declared on Common Shares – par value reduction
 
(621)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(1,019)
 
 
 
 
 
 
Net shares redeemed under employee share-based compensation plans
 
 
217 
(167)
 
 
 
 
 
Exercise of stock options
 
 
 
(44)
 
 
 
 
 
Share-based compensation expense and other
 
 
 
153 
 
 
 
 
 
Funding of dividends declared to Retained earnings
 
 
 
(81)
 
 
 
 
 
Net income
2,298 
 
 
 
2,298 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
 
81 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
(81)
 
 
 
 
Change in period, before reclassification from AOCI, net of income tax (expense) benefit of $(168) and 337
 
 
 
 
 
565 
 
 
 
Amounts reclassified from AOCI, net of income tax benefit of $7 and $16
 
 
 
 
 
18 
 
 
 
Change in period, net of income tax (expense) benefit of $(161) and $353
 
 
 
 
 
583 
 
 
 
Change in period, net of income tax benefit of $7 and $27
 
 
 
 
 
 
(124)
 
 
Change in period, net of income tax (expense) benefit of $3 and $(6)
 
 
 
 
 
 
 
(3)
 
Balance - end of period at Sep. 30, 2014
$ 30,017 
$ 8,278 
$ (1,057)
$ 5,099 
$ 16,089 
$ 1,757 
$ (61)
$ (88)
$ 1,608 
Consolidated Statements Of Shareholders' Equity (Parenthetical) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Net unrealized appreciation on investments, Change in period, income tax (expense) benefit
$ (161)
$ 353 
Cumulative translation adjustment, Change in period, income tax(expense) benefit
27 
Pension liability adjustment, Change in period, income tax (expense) benefit
(6)
Accumulated Net Unrealized Investment Gain (Loss) [Member]
 
 
Unrealized appreciation on investments, Change in period before reclassification to AOCI, income tax (expense) benefit
(18)
81 
Reclassification out of Accumulated Other Comprehensive Income [Member] |
Accumulated Net Unrealized Investment Gain (Loss) [Member]
 
 
Unrealized appreciation on investments, Change in period before reclassification to AOCI, income tax (expense) benefit
16 
Income tax expense from reclassification of unrealized gains
$ (168)
$ 337 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Cash flows from operating activities
 
 
Net income
$ 2,298 
$ 2,760 
Adjustments to reconcile net income to net cash flows from operating activities
 
 
Net realized (gains) losses
297 
(350)
Amortization of premiums/discounts on fixed maturities
159 
207 
Deferred income taxes
41 
169 
Unpaid losses and loss expenses
180 
33 
Unearned premiums
449 
603 
Future policy benefits
181 
149 
Insurance and reinsurance balances payable
181 
163 
Accounts payable, accrued expenses, and other liabilities
(130)
(176)
Income taxes payable
94 
Insurance and reinsurance balances receivable
(191)
(657)
Reinsurance recoverable on losses and loss expenses
253 
550 
Reinsurance recoverable on policy benefits
(6)
Deferred policy acquisition costs
(306)
(391)
Prepaid reinsurance premiums
(41)
(69)
Other
(237)
(263)
Net cash flows from operating activities
3,222 
2,736 
Cash flows from investing activities
 
 
Purchases of fixed maturities available for sale
(11,867)
(16,360)
Purchases of to be announced mortgage-backed securities
(54)
Purchases of fixed maturities held to maturity
(185)
(374)
Purchases of equity securities
(222)
(217)
Sales of fixed maturities available for sale
6,306 
7,982 
Sales of to be announced mortgage-backed securities
30 
Sales of equity securities
322 
99 
Maturities and redemptions of fixed maturities available for sale
4,814 
5,538 
Maturities and redemptions of fixed maturities held to maturity
617 
1,233 
Net change in short-term investments
(984)
525 
Net derivative instruments settlements
(170)
(376)
Acquisition of subsidiaries (net of cash acquired of $4 and $38)
(172)
(977)
Other
(147)
(188)
Net cash flows used for investing activities
(1,688)
(3,139)
Cash flows from financing activities
 
 
Dividends paid on Common Shares
(646)
(343)
Common Shares repurchased
(1,007)
(233)
Proceeds from issuance of long-term debt
699 
947 
Proceeds from issuance of short-term debt
1,827 
1,721 
Repayment of long-term debt
(501)
Repayment of short-term debt
(1,827)
(1,720)
Proceeds from share-based compensation plans, including windfall tax benefits
94 
112 
Other
121 
68 
Net cash flows (used for) from financing activities
(1,240)
552 
Effect of foreign currency rate changes on cash and cash equivalents
(67)
Net increase in cash
227 
153 
Cash – beginning of period
579 1 2
615 3
Cash – end of period
806 2 4
768 3
Supplemental cash flow information
 
 
Taxes paid
250 
150 
Interest paid
$ 186 
$ 169 
Consolidated Statements of Cash Flows (Parentheticals) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Consolidated Statements of Cash Flows (Parentheticals) [Abstract]
 
 
Cash Acquired from Acquisition
$ 4 
$ 38 
General
General
General

Basis of presentation
ACE Limited is a holding company incorporated in Zurich, Switzerland. ACE Limited, through its subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through five 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 2013 Form 10-K.

Goodwill and other intangible assets
During the third quarter of 2014, we changed our annual goodwill impairment testing date from December 31 to September 30 of each year. We believe this change is preferable as it more closely aligns the goodwill impairment testing date with the timing of our strategic business planning process. This change does not result in any delay, acceleration or avoidance of impairment. Based on our impairment testing for 2014, we determined no impairment was required and none of our reporting units were at risk for impairment.
Acquisitions
Acquisitions
Acquisitions

Large Corporate P&C Insurance Business of Itaú Seguros, S.A. (Itaú Seguros)
On July 4, 2014, we announced that we reached a definitive agreement to acquire the large corporate property and casualty (P&C) insurance business of Itaú Seguros, Brazil's leading carrier for that business, for approximately $630 million, at current exchange rates. This transaction, which has received all regulatory approvals needed for closing, is expected to close on October 31, 2014.

The Siam Commercial Samaggi Insurance PCL (Samaggi)
We and our local partner acquired 60.86 percent of Samaggi, a general insurance company in Thailand, from Siam Commercial Bank on April 28, 2014, and subsequently acquired an additional 32.17 percent ownership, through a mandatory tender offer, which expired on June 17, 2014. The purchase price for 93.03 percent of the company was $176 million in cash. This acquisition expands our presence in Thailand and Southeast Asia.

The acquisition generated $46 million of goodwill, attributable to expected growth and profitability, none of which is expected to be deductible for income tax purposes, and other intangible assets of $80 million based on ACE’s preliminary purchase price allocation.  The other intangible assets primarily relate to a bancassurance agreement.

ABA Seguros
On May 2, 2013, we acquired ABA Seguros, a property and casualty insurer in Mexico that provides automobile, homeowners, and small business coverages for approximately $690 million in cash.

The acquisition generated $285 million of goodwill, attributable to expected growth and profitability, none of which is expected to be deductible for income tax purposes, and other intangible assets of $140 million based on ACE’s purchase price allocation. The other intangible assets primarily relate to distribution channels.

Fianzas Monterrey
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 greatly expanded our global franchise in the surety business and enhanced our existing commercial lines and personal accident insurance business in Mexico.

The acquisition generated $137 million of goodwill, attributable to expected growth and profitability, none of which is expected to be deductible for income tax purposes, and other intangible assets of $73 million, based on ACE's purchase price allocation. The other intangible assets primarily relate to customer lists.

Goodwill and other intangible assets arising from the acquisitions of Samaggi, ABA Seguros, and Fianzas Monterrey are included in our Insurance – Overseas General segment.
Investments
Investments
Investments

a) Transfers of securities

During the third quarter of 2014, we decided to transfer securities, considered essential holdings in a diversified portfolio, with a total fair value of $2.0 billion from Fixed maturities available for sale to Fixed maturities held to maturity.  These securities, which we have the intent and ability to hold to maturity, were transferred given the growth in ACE’s investment portfolio over the last several years, as well as continued efforts to manage the diversification of our global portfolio. The net unrealized appreciation at the date of the transfer continues to be reported in the carrying value of the transferred investments and is being amortized through OCI over the remaining life of the securities using the effective interest method in a manner consistent with the amortization of any premium or discount. This transfer represents a non-cash transaction and does not impact the Consolidated Statements of Cash Flows.

b) Fixed maturities
 
September 30, 2014
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,627

 
$
70

 
$
(19
)
 
$
2,678

 
$

Foreign
14,741

 
542

 
(52
)
 
15,231

 
(1
)
Corporate securities
16,715

 
716

 
(93
)
 
17,338

 
(2
)
Mortgage-backed securities
10,159

 
237

 
(72
)
 
10,324

 
(1
)
States, municipalities, and political subdivisions
3,446

 
138

 
(7
)
 
3,577

 

 
$
47,688

 
$
1,703

 
$
(243
)
 
$
49,148

 
$
(4
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
804

 
$
16

 
$
(3
)
 
$
817

 
$

Foreign
937

 
42

 
(1
)
 
978

 

Corporate securities
2,443

 
86

 
(4
)
 
2,525

 

Mortgage-backed securities
2,087

 
46

 
(3
)
 
2,130

 

States, municipalities, and political subdivisions
1,277

 
38

 
(2
)
 
1,313

 

 
$
7,548

 
$
228

 
$
(13
)
 
$
7,763

 
$


December 31, 2013
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,946

 
$
62

 
$
(59
)
 
$
2,949

 
$

Foreign
14,336

 
377

 
(122
)
 
14,591

 

Corporate securities
16,825

 
777

 
(132
)
 
17,470

 
(6
)
Mortgage-backed securities
10,937

 
184

 
(227
)
 
10,894

 
(34
)
States, municipalities, and political subdivisions
3,362

 
65

 
(77
)
 
3,350

 

 
$
48,406

 
$
1,465

 
$
(617
)
 
$
49,254

 
$
(40
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
820

 
$
16

 
$
(4
)
 
$
832

 
$

Foreign
864

 
33

 

 
897

 

Corporate securities
1,922

 
83

 

 
2,005

 

Mortgage-backed securities
1,341

 
39

 
(1
)
 
1,379

 

States, municipalities, and political subdivisions
1,151

 
16

 
(17
)
 
1,150

 

 
$
6,098

 
$
187

 
$
(22
)
 
$
6,263

 
$


As discussed in Note 3 d), if a credit loss is incurred 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 and nine months ended September 30, 2014, $1 million and $6 million, respectively, of net unrealized appreciation related to such securities is included in OCI. For the three and nine months ended September 30, 2013, $1 million of net unrealized depreciation and $24 million of net unrealized appreciation, respectively, related to such securities is included in OCI. There was no non-credit OTTI recognized in AOCI at September 30, 2014. At December 31, 2013, AOCI included cumulative net unrealized depreciation of $4 million related to securities remaining in the investment portfolio 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 83 percent of the total mortgage-backed securities at September 30, 2014 and December 31, 2013 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:
 
 
 
September 30

 
 
 
December 31

 
 
 
2014

 
 
 
2013

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,292

 
$
2,316

 
$
2,387

 
$
2,411

Due after 1 year through 5 years
14,833

 
15,310

 
14,139

 
14,602

Due after 5 years through 10 years
15,872

 
16,323

 
16,200

 
16,535

Due after 10 years
4,532

 
4,875

 
4,743

 
4,812

 
37,529

 
38,824

 
37,469

 
38,360

Mortgage-backed securities
10,159

 
10,324

 
10,937

 
10,894

 
$
47,688

 
$
49,148

 
$
48,406

 
$
49,254

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
417

 
$
421

 
$
401

 
$
405

Due after 1 year through 5 years
2,670

 
2,763

 
2,284

 
2,363

Due after 5 years through 10 years
1,401

 
1,443

 
1,686

 
1,723

Due after 10 years
973

 
1,006

 
386

 
393

 
5,461

 
5,633

 
4,757

 
4,884

Mortgage-backed securities
2,087

 
2,130

 
1,341

 
1,379

 
$
7,548

 
$
7,763

 
$
6,098

 
$
6,263



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. 

c) Equity securities
 
September 30


December 31

(in millions of U.S. dollars)
2014


2013

Cost
$
480

 
$
841

Gross unrealized appreciation
71

 
63

Gross unrealized depreciation
(5
)
 
(67
)
Fair value
$
546

 
$
837



During the third quarter of 2014, we elected to exchange our interest in a strategic emerging debt portfolio, a mutual fund classified as an equity security investment, for direct ownership of certain of the underlying fixed maturities, and the remainder in cash. This transaction increased realized losses and decreased unrealized losses with no impact to shareholders' equity. The non-cash portion of the transaction was $219 million and does not impact the Consolidated Statements of Cash Flows.

d) 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 incurred, 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. For mutual funds included in equity securities in our consolidated balance sheet, we employ analysis similar to fixed maturities, when applicable.

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. ACE developed projected cash flows for corporate securities using market observable data, issuer-specific information, and credit ratings. We use 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. Consistent with management's approach, ACE assumed a 32 percent recovery rate (the par value of a defaulted security that will be recovered) across all rating categories rather than using Moody's historical mean recovery rate of 42 percent. We believe that use of a default assumption in excess of the historical mean is conservative in light of current market conditions.

For the three and nine months ended September 30, 2014, credit losses recognized in Net income for corporate securities were $4 million and $14 million, respectively. For the three and nine months ended September 30, 2013, credit losses recognized in Net income for corporate securities were $1 million and $8 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 and nine months ended September 30, 2014 and 2013, there were no credit losses recognized in Net income for mortgage-backed securities.
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
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Fixed maturities:
 
 
 
 
 
 
 
OTTI on fixed maturities, gross
$
(5
)
 
$
(4
)
 
$
(20
)
 
$
(11
)
OTTI on fixed maturities recognized in OCI (pre-tax)
1

 

 
3

 

OTTI on fixed maturities, net
(4
)
 
(4
)
 
(17
)
 
(11
)
Gross realized gains excluding OTTI
73

 
37

 
163

 
163

Gross realized losses excluding OTTI
(51
)
 
(16
)
 
(97
)
 
(68
)
Total fixed maturities
18

 
17

 
49

 
84

Equity securities:
 
 
 
 
 
 
 
OTTI on equity securities

 

 
(7
)
 
(1
)
Gross realized gains excluding OTTI
4

 
8

 
8

 
18

Gross realized losses excluding OTTI
(60
)
 
(1
)
 
(61
)
 
(4
)
Total equity securities
(56
)
 
7

 
(60
)
 
13

OTTI on other investments

 

 
(3
)
 
(2
)
Foreign exchange gains (losses)
(19
)
 
(26
)
 
(42
)
 
45

Investment and embedded derivative instruments
(13
)
 
4

 
(53
)
 
62

Fair value adjustments on insurance derivative
(80
)
 
134

 
(126
)
 
563

S&P put options and futures
(15
)
 
(95
)
 
(106
)
 
(413
)
Other derivative instruments
45

 
(1
)
 
52

 
(2
)
Other

 

 
(8
)
 

Net realized gains (losses)
$
(120
)
 
$
40

 
$
(297
)
 
$
350


 
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
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Balance of credit losses related to securities still held – beginning of period
$
24

 
$
40

 
$
37

 
$
43

Additions where no OTTI was previously recorded
2

 
1

 
9

 
5

Additions where an OTTI was previously recorded
2

 

 
5

 
3

Reductions for securities sold during the period
(11
)
 
(3
)
 
(34
)
 
(13
)
Balance of credit losses related to securities still held – end of period
$
17

 
$
38

 
$
17

 
$
38



e) Gross unrealized loss
At September 30, 2014, there were 5,799 fixed maturities out of a total of 25,735 fixed maturities in an unrealized loss position. The largest single unrealized loss in the fixed maturities was $3 million. There were 64 equity securities out of a total of 238 equity securities in an unrealized loss position. The largest single unrealized loss in the equity securities was $1 million. Fixed maturities in an unrealized loss position at September 30, 2014, 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
 
September 30, 2014
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
439

 
$
(2
)
 
$
943

 
$
(20
)
 
$
1,382

 
$
(22
)
Foreign
2,420

 
(34
)
 
916

 
(19
)
 
3,336

 
(53
)
Corporate securities
4,943

 
(72
)
 
854

 
(25
)
 
5,797

 
(97
)
Mortgage-backed securities
2,206

 
(11
)
 
2,050

 
(64
)
 
4,256

 
(75
)
States, municipalities, and political subdivisions
311

 
(1
)
 
673

 
(8
)
 
984

 
(9
)
Total fixed maturities
10,319

 
(120
)
 
5,436

 
(136
)
 
15,755

 
(256
)
Equity securities
67

 
(5
)
 

 

 
67

 
(5
)
Other investments
78

 
(3
)
 

 

 
78

 
(3
)
Total
$
10,464

 
$
(128
)
 
$
5,436

 
$
(136
)
 
$
15,900

 
$
(264
)
 
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
December 31, 2013
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
1,794

 
$
(57
)
 
$
31

 
$
(6
)
 
$
1,825

 
$
(63
)
Foreign
4,621

 
(114
)
 
201

 
(8
)
 
4,822

 
(122
)
Corporate securities
3,836

 
(118
)
 
194

 
(14
)
 
4,030

 
(132
)
Mortgage-backed securities
5,248

 
(197
)
 
384

 
(31
)
 
5,632

 
(228
)
States, municipalities, and political subdivisions
2,164

 
(90
)
 
84

 
(4
)
 
2,248

 
(94
)
Total fixed maturities
17,663

 
(576
)
 
894

 
(63
)
 
18,557

 
(639
)
Equity securities
498

 
(67
)
 

 

 
498

 
(67
)
Other investments
67

 
(9
)
 

 

 
67

 
(9
)
Total
$
18,228

 
$
(652
)
 
$
894

 
$
(63
)
 
$
19,122

 
$
(715
)


f) 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, which represent ACE's agreement to sell securities and repurchase them at a future date for a predetermined price. 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 LOC and derivative transactions. Included in restricted assets at September 30, 2014 and December 31, 2013, are investments, primarily fixed maturities, totaling $15.7 billion and $16.3 billion, respectively, and cash of $72 million and $162 million, respectively.
The following table presents the components of restricted assets:
 
September 30

 
December 31

(in millions of U.S. dollars)
2014

 
2013

Trust funds
$
10,497

 
$
11,315

Deposits with non-U.S. regulatory authorities
2,014

 
1,970

Assets pledged under repurchase agreements
1,454

 
1,435

Deposits with U.S. regulatory authorities
1,324

 
1,334

Other pledged assets
435

 
391

 
$
15,724

 
$
16,445

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 (an exit price) in an orderly transaction between market participants and establishes a three-level valuation hierarchy based on the reliability of the inputs. 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 pricing services to obtain fair value measurements for the majority of our investment securities. 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 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, fixed maturities valuation 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 an investment's estimated fair value 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. Short-term investments for which pricing is unobservable are classified within Level 3.

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 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 either Other assets or 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. Other derivative instruments are recorded in either Other assets or 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.

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.

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 regularly 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 and nine months ended September 30, 2014, no material changes were made to actuarial or behavioral assumptions. We made minor technical refinements to the model with an unfavorable net income impact of approximately nil and $2 million for the three and nine months ended September 30, 2014, respectively. For detailed information on our lapse and annuitization rate assumptions, refer to Note 4 to the Consolidated Financial Statements of our 2013 Form 10-K.

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:
September 30, 2014
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,490

 
$
1,188

 
$

 
$
2,678

Foreign
202

 
15,017

 
12

 
15,231

Corporate securities

 
17,130

 
208

 
17,338

Mortgage-backed securities

 
10,309

 
15

 
10,324

States, municipalities, and political subdivisions

 
3,577

 

 
3,577

 
1,692

 
47,221

 
235

 
49,148

Equity securities
520

 
24

 
2

 
546

Short-term investments
1,253

 
1,500

 

 
2,753

Other investments
336

 
252

 
2,671

 
3,259

Securities lending collateral

 
1,440

 

 
1,440

Investment derivative instruments
23

 

 

 
23

Other derivative instruments
11

 
2

 

 
13

Separate account assets
1,389

 
90

 

 
1,479

Total assets measured at fair value
$
5,224

 
$
50,529

 
$
2,908

 
$
58,661

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
5

 
$

 
$

 
$
5

Other derivative instruments

 
2

 

 
2

GLB(1)

 

 
317

 
317

Total liabilities measured at fair value
$
5

 
$
2

 
$
317

 
$
324

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
 
December 31, 2013
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,626

 
$
1,323

 
$

 
$
2,949

Foreign
223

 
14,324

 
44

 
14,591

Corporate securities

 
17,304

 
166

 
17,470

Mortgage-backed securities

 
10,886

 
8

 
10,894

States, municipalities, and political subdivisions

 
3,350

 

 
3,350

 
1,849

 
47,187

 
218

 
49,254

Equity securities
373

 
460

 
4

 
837

Short-term investments
953

 
803

 
7

 
1,763

Other investments
305

 
231

 
2,440

 
2,976

Securities lending collateral

 
1,632

 

 
1,632

Investment derivative instruments
19

 

 

 
19

Other derivative instruments

 
6

 

 
6

Separate account assets
1,145

 
81

 

 
1,226

Total assets measured at fair value
$
4,644

 
$
50,400

 
$
2,669

 
$
57,713

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
6

 
$

 
$

 
$
6

Other derivative instruments
60

 
2

 

 
62

GLB(1)

 

 
193

 
193

Total liabilities measured at fair value
$
66

 
$
2

 
$
193

 
$
261

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.

The following table presents transfers of financial instruments between Level 1 and Level 2:
 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Transfers from Level 1 to Level 2
$

 
$

 
$

 
$
19

Transfers from Level 2 to Level 1
$

 
$

 
$

 
$



Fair value of alternative investments
Included in Other investments in the fair value hierarchy are investment funds, limited partnerships, and partially-owned investment companies measured at fair value using NAV as a practical expedient. At September 30, 2014 and December 31, 2013, 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:
 
 
 
 
 
September 30

 
 
 
December 31

 
Expected
Liquidation
Period of Underlying Assets
 
 
 
2014

 
 
 
2013

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

 
Maximum
Future Funding
Commitments

 
Fair
Value

 
Maximum
Future Funding
Commitments

Financial
5 to 9 Years
 
$
266

 
$
127

 
$
256

 
$
129

Real estate
3 to 9 Years
 
304

 
43

 
322

 
92

Distressed
6 to 9 Years
 
289

 
132

 
180

 
230

Mezzanine
6 to 9 Years
 
300

 
213

 
276

 
252

Traditional
3 to 8 Years
 
960

 
388

 
813

 
456

Vintage
1 to 3 Years
 
10

 

 
13

 

Investment funds
Not Applicable
 
384

 

 
428

 

 
 
 
$
2,513

 
$
903

 
$
2,288

 
$
1,159



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. 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.
Investment Category
 
Consists of investments in private equity funds:
Financial
 
targeting financial services companies such as financial institutions and insurance services worldwide
Real estate
 
targeting global distress opportunities, value added U.S. properties, and global mezzanine debt securities in the commercial real estate market
Distressed
 
targeting distressed debt/credit and equity opportunities in the U.S.
Mezzanine
 
targeting private mezzanine debt of large-cap and mid-cap companies in the U.S. and worldwide
Traditional
 
employing traditional private equity investment strategies such as buyout and venture with different geographical focuses including Brazil, Asia, Europe, and the U.S.
Vintage
 
made before 2002 and where the funds’ commitment periods had already expired

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 values 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 determine the fair value of 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
 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
September 30, 2014

 
December 31, 2013

 
 
 
GLB(1)
$
317

 
$
193

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
 
 
Annuitization rate
 
0% – 55%
(1) 
Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living benefits.

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

Three Months Ended
Available-for-Sale Debt Securities

 
 
Equity
securities

 
Other
investments

 
GLB(1)

September 30, 2014
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance–Beginning of Period
$
12

 
$
204

 
$
7

 
$
2

 
$
2,640

 
$
241

Transfers into Level 3
1

 
5

 

 

 

 

Transfers out of Level 3

 

 

 

 

 

Change in Net Unrealized Gains (Losses) included in OCI

 
(1
)
 

 

 
(8
)
 

Net Realized Gains/Losses

 
2

 

 

 

 
76

Purchases

 
20

 
8

 

 
170

 

Sales
(1
)
 
(9
)
 

 

 
(3
)
 

Settlements

 
(13
)
 

 

 
(128
)
 

Balance–End of Period
$
12

 
$
208

 
$
15

 
$
2

 
$
2,671

 
$
317

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

 
$

 
$

 
$

 
$

 
$
76

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
  
Assets
 
 
Liabilities

Three Months Ended
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

September 30, 2013
Foreign

 
Corporate
securities

 
MBS

 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
Balance–Beginning of Period
$
48

 
$
114

 
$
9

 
$
4

 
$
9

 
$
2,349

 
$
652

Transfers into Level 3
1

 
12

 

 

 
1

 

 

Transfers out of Level 3
(8
)
 
(1
)
 

 

 
(2
)
 

 

Change in Net Unrealized Gains (Losses) included in OCI
2

 
(1
)
 

 

 

 
(1
)
 

Net Realized Gains/Losses

 
(1
)
 

 

 

 

 
(138
)
Purchases
12

 
6

 

 

 

 
138

 

Sales
(13
)
 
(4
)
 

 

 

 
(1
)
 

Settlements

 
(4
)
 

 

 

 
(96
)
 

Balance–End of Period
$
42

 
$
121

 
$
9

 
$
4

 
$
8

 
$
2,389

 
$
514

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

 
$

 
$

 
$

 
$

 
$

 
$
(138
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $746 million at September 30, 2013, and $880 million at June 30, 2013, which includes a fair value derivative adjustment of $514 million and $652 million, respectively.

 
Assets
 
 
Liabilities

Nine Months Ended
Available-for-Sale Debt Securities

 
 
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

September 30, 2014
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance–Beginning of Period
$
44

 
$
166

 
$
8

 
$
4

 
$
7

 
$
2,440

 
$
193

Transfers into Level 3
3

 
35

 

 

 

 

 

Transfers out of Level 3
(34
)
 
(22
)
 

 
(2
)
 
(7
)
 

 

Change in Net Unrealized Gains (Losses) included in OCI
(1
)
 
1

 

 
1

 

 
40

 

Net Realized Gains/Losses
1

 
2

 

 

 

 
(3
)
 
124

Purchases
2

 
65

 
8

 
1

 

 
522

 

Sales
(3
)
 
(17
)
 

 
(2
)
 

 
(6
)
 

Settlements

 
(22
)
 
(1
)
 

 

 
(322
)
 

Balance–End of Period
$
12

 
$
208

 
$
15

 
$
2

 
$

 
$
2,671

 
$
317

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

 
$

 
$

 
$

 
$

 
$
(3
)
 
$
124

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.

  
Assets
 
 
Liabilities

Nine Months Ended
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Short-term investments

Other
investments

 
GLB(1)

September 30, 2013
Foreign

 
Corporate
securities

 
MBS

 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
Balance–Beginning of Period
$
60

 
$
102

 
$
13

 
$
3

 
$

$
2,252

 
$
1,119

Transfers into Level 3
33

 
29

 

 
7

 
8


 

Transfers out of Level 3
(49
)
 
(30
)
 

 
(1
)
 
(2
)

 

Change in Net Unrealized Gains (Losses) included in OCI
(2
)
 
(1
)
 

 
(5
)
 

34

 

Net Realized Gains/Losses
1

 
(2
)
 

 
4

 

(2
)
 
(605
)
Purchases
15

 
39

 

 
1

 
2

387

 

Sales
(15
)
 
(4
)
 
(3
)
 
(5
)
 

(10
)
 

Settlements
(1
)
 
(12
)
 
(1
)
 

 

(272
)
 

Balance–End of Period
$
42

 
$
121

 
$
9

 
$
4

 
$
8

$
2,389

 
$
514

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

 
$

 
$

 
$

 
$

$
(2
)
 
$
(605
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $746 million at September 30, 2013, and $1.4 billion at December 31, 2012, which includes a fair value derivative adjustment of $514 million and $1.1 billion, respectively.

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:
September 30, 2014
Fair Value
 
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

 
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
625

 
$
192

 
$

 
$
817

 
$
804

Foreign

 
978

 

 
978

 
937

Corporate securities

 
2,510

 
15

 
2,525

 
2,443

Mortgage-backed securities

 
2,130

 

 
2,130

 
2,087

States, municipalities, and political subdivisions

 
1,313

 

 
1,313

 
1,277

 
625

 
7,123

 
15

 
7,763

 
7,548

Partially-owned insurance companies

 

 
495

 
495

 
495

Total assets
$
625

 
$
7,123

 
$
510

 
$
8,258

 
$
8,043

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,864

 
$

 
$
1,864

 
$
1,851

Long-term debt

 
4,349

 

 
4,349

 
4,057

Trust preferred securities

 
459

 

 
459

 
309

Total liabilities
$

 
$
6,672

 
$

 
$
6,672

 
$
6,217


December 31, 2013
Fair Value
 
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

 
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
596

 
$
236

 
$

 
$
832

 
$
820

Foreign

 
897

 

 
897

 
864

Corporate securities

 
1,990

 
15

 
2,005

 
1,922

Mortgage-backed securities

 
1,379

 

 
1,379

 
1,341

States, municipalities, and political subdivisions

 
1,150

 

 
1,150

 
1,151

 
596

 
5,652

 
15

 
6,263

 
6,098

Partially-owned insurance companies

 

 
470

 
470

 
470

Total assets
$
596

 
$
5,652

 
$
485

 
$
6,733

 
$
6,568

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,913

 
$

 
$
1,913

 
$
1,901

Long-term debt

 
4,088

 

 
4,088

 
3,807

Trust preferred securities

 
438

 

 
438

 
309

Total liabilities
$

 
$
6,439

 
$

 
$
6,439

 
$
6,017

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
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

GMDB
 
 
 
 
 
 
 
Net premiums earned
$
17

 
$
19

 
$
54

 
$
59

Policy benefits and other reserve adjustments
$
12

 
$
14

 
$
40

 
$
58

GLB
 
 
 
 
 
 
 
Net premiums earned
$
35

 
$
36

 
$
105

 
$
112

Policy benefits and other reserve adjustments
8

 
9

 
27

 
20

Net realized gains (losses)
(76
)
 
138

 
(124
)
 
608

Gain (loss) recognized in income
$
(49
)
 
$
165

 
$
(46
)
 
$
700

Net cash received
$
31

 
$
31

 
$
93

 
$
94

Net (increase) decrease in liability
$
(80
)
 
$
134

 
$
(139
)
 
$
606



Net realized gains (losses) in the table above include gains (losses) related to foreign exchange and fair value adjustments on insurance derivatives and exclude gains (losses) on S&P put options and futures held to partially offset the risk in the GLB reinsurance portfolio. Refer to Note 7 for additional information.

At September 30, 2014, reported liabilities for GMDB and GLB reinsurance were $108 million and $566 million, respectively, compared with $100 million and $427 million, respectively, at December 31, 2013. The reported liability for GLB reinsurance of $566 million at September 30, 2014, and $427 million at December 31, 2013, includes a fair value derivative adjustment of $317 million and $193 million, respectively. 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 September 30, 2014 and December 31, 2013, the net amount at risk from reinsurance programs covering the GMDB risk only was $520 million and $586 million, 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 (September 30, 2014 and December 31, 2013, respectively);
there are no lapses or withdrawals;
mortality according to 100 percent of the Annuity 2000 mortality table;
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between 2.0 percent and 3.0 percent; and
reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty.

The total claim amount payable on reinsurance programs covering the GMDB risk only, if all the cedants’ policyholders were to die immediately at September 30, 2014 was approximately $629 million. This takes into account all applicable reinsurance treaty claim limits.

(ii) Reinsurance covering the GLB risk only
At September 30, 2014 and December 31, 2013, the net amount at risk from reinsurance programs covering the GLB risk only was $241 million and $136 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 (September 30, 2014 and December 31, 2013, respectively);
there are no deaths, lapses, or withdrawals;
policyholders annuitize at a frequency most disadvantageous to ACE (in other words, annuitization at a level that maximizes claims taking into account the treaty limits) under the terms of the reinsurance contracts;
for annuitizing policyholders, the GMIB claim is calculated using interest rates in line with those used in calculating the reserve;
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between 3.5 percent and 4.5 percent; and
reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty. 

(iii) Reinsurance covering both the GMDB and GLB risks on the same underlying policyholders
At September 30, 2014 and December 31, 2013, the GMDB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $75 million and $73 million, respectively.

At September 30, 2014 and December 31, 2013, the GLB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $168 million and $141 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 (September 30, 2014 and December 31, 2013, respectively);
there are no lapses or withdrawals;
mortality according to 100 percent of the Annuity 2000 mortality table;
policyholders annuitize at a frequency most disadvantageous to ACE (in other words, annuitization at a level that maximizes claims taking into account the treaty limits) under the terms of the reinsurance contracts;
for annuitizing policyholders, the GMIB claim is calculated using interest rates in line with those used in calculating the reserve;
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between 3.5 percent and 4.5 percent; and
reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty.

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 September 30, 2014 was approximately $39 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 69 years.
Debt
Debt Disclosure [Text Block]
6. Debt

In May 2014, ACE INA Holdings Inc. issued $700 million of 3.35 percent senior notes due May 2024.  These 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 0.15 percent). 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.

In May 2014, we reclassified ACE INA Holdings Inc.'s $450 million of 5.6 percent senior notes, due to mature on May 15, 2015, from Long-term debt to Short-term debt in the consolidated balance sheet.

In June 2014, ACE INA Holdings Inc.'s $500 million of 5.875 percent senior notes matured and were fully paid.
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. ACE also maintains positions in convertible securities that contain embedded derivatives. Investment derivative instruments are recorded in either Other assets (OA) or Accounts payable, accrued expenses, and other liabilities (AP), convertible bonds are recorded in Fixed maturities available for sale (FM AFS) and convertible equity securities are recorded in Equity securities (ES) in the consolidated balance sheets. These are the most numerous and frequent derivative transactions.

In addition, ACE from time to time purchases to be announced mortgage-backed securities (TBAs) as part of its investing activities.

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 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 September 30, 2014, ACE had no in-force interest rate 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 of derivative instruments in an asset or (liability) position, and notional values/payment provisions of our derivative instruments:
 
 
 
 
 
September 30, 2014
 
 
 
 
December 31, 2013
 
 
Consolidated
Balance Sheet
Location
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
Fair Value
 
 
Notional
Value/
Payment
Provision

(in millions of U.S. dollars)
 
Derivative Asset

 
Derivative (Liability)

 
 
Derivative Asset

 
Derivative (Liability)

 
Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
OA / (AP)
 
$
14

 
$
(2
)
 
$
1,010

 
$
3

 
$
(4
)
 
$
1,202

Cross-currency swaps
OA / (AP)
 

 

 
95

 

 

 
50

Futures contracts on money market instruments
OA / (AP)
 
2

 

 
1,000

 
3

 

 
3,910

Options/Futures contracts on notes and bonds
OA / (AP)
 
7

 
(3
)
 
1,145

 
13

 
(2
)
 
871

Convertible securities(1)
FM AFS / ES
 
303

 

 
268

 
302

 

 
254

 
 
 
$
326

 
$
(5
)
 
$
3,518

 
$
321

 
$
(6
)
 
$
6,287

Other derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
Futures contracts on equities (2)
OA / (AP)
 
$
11

 
$

 
$
1,427

 
$

 
$
(60
)
 
$
1,692

Options on equity market indices (2)
OA / (AP)
 
2

 

 
250

 
6

 

 
250

Other
OA / (AP)
 

 
(2
)
 
8

 

 
(2
)
 
8

 
 
 
$
13

 
$
(2
)
 
$
1,685

 
$
6

 
$
(62
)
 
$
1,950

GLB(3)
(AP) / (FPB)
 
$

 
$
(566
)
 
$
409

 
$

 
$
(427
)
 
$
277


(1) 
Includes fair value of embedded derivatives.
(2) 
Related to GMDB and GLB blocks of business.
(3) 
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 for additional information. Note that the payment provision related to GLB is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.

At September 30, 2014 and December 31, 2013, derivative assets of $25 million and derivative liabilities of $41 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. 

ACE participates in a securities lending program operated by a third-party banking institution whereby certain assets are loaned to qualified borrowers and from which we earn an incremental return. At September 30, 2014 and December 31, 2013, our securities lending payable was $1,441 million and $1,633 million, respectively, and our securities lending collateral was $1,440 million and $1,632 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. At both September 30, 2014 and December 31, 2013, our repurchase agreement obligations of $1,401 million were fully collateralized. 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
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Investment and embedded derivative instruments
 
 
 
 
 
 
 
Foreign currency forward contracts
$
19

 
$
(9
)
 
$
15

 
$
8

All other futures contracts and options
(15
)
 
6

 
(55
)
 
46

Convertible securities(1)
(17
)
 
6

 
(13
)
 
7

TBAs

 
1

 

 
1

Total investment and embedded derivative instruments
$
(13
)
 
$
4

 
$
(53
)
 
$
62

GLB and other derivative instruments
 
 
 
 
 
 
 
GLB(2)
$
(80
)
 
$
134

 
$
(126
)
 
$
563

Futures contracts on equities(3)
(15
)
 
(90
)
 
(103
)
 
(393
)
Options on equity market indices(3)

 
(5
)
 
(3
)
 
(20
)
Other
45

 
(1
)
 
52

 
(2
)
Total GLB and other derivative instruments
$
(50
)
 
$
38

 
$
(180
)
 
$
148

 
$
(63
)
 
$
42

 
$
(233
)
 
$
210

(1) 
Includes embedded derivatives.
(2) 
Excludes foreign exchange gains (losses) related to GLB.
(3) 
Related to GMDB and GLB blocks of business.

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.

Other
Included within Other are derivatives intended to reduce potential losses which may arise from certain exposures in our insurance business.  The economic benefit provided by these derivatives is similar to purchased reinsurance.  For example, ACE may enter into crop derivative contracts to protect underwriting results in the event of a significant decline in commodity prices. Also included within Other are certain life insurance products that meet the definition of a derivative instrument for accounting purposes. 

(iii) Convertible security investments
A convertible security is a debt instrument or preferred stock that can be converted into a predetermined amount of the issuer’s equity. The convertible option is an embedded derivative within the host instruments which are classified in the investment portfolio as either available for sale or as an equity security. ACE purchases convertible securities 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 September 30, 2014, included in Other investments in the consolidated balance sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of $2.1 billion. In connection with these investments, we have commitments that may require funding of up to $903 million over the next several years. 

c) Taxation
At September 30, 2014, $28 million of unrecognized tax benefits remains outstanding. 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. With few exceptions, ACE is no longer subject to state and local or non-U.S. income tax examinations for years before 2005.

d) Letters of credit
We did not renew our $500 million bilateral letter of credit facility that expired in June 2014.  We elected instead to satisfy our collateral obligations primarily with insurance trusts supported by our investment portfolio. Refer to our 2013 Form 10-K for additional information on our credit facilities.

e) Legal proceedings
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 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 2013 annual general meeting, our shareholders approved an annual dividend for the following year of $2.04 per share, payable in four quarterly installments of $0.51 per share after the annual general meeting in the form of a distribution by way of a par value reduction. At the January 10, 2014 extraordinary general meeting, our shareholders approved a resolution to increase our quarterly dividend from $0.51 per share to $0.63 per share for the final two quarterly installments (made on January 31, 2014 and April 17, 2014) that had been earlier approved at our 2013 annual general meeting. The $0.12 per share increase for each installment was distributed from capital contribution reserves (Additional paid-in capital), a subaccount of legal reserves, and transferred to free reserves (Retained earnings) for payment, while the existing $0.51 per share was distributed by way of a par value reduction.

At our May 2014 annual general meeting, our shareholders approved an annual dividend for the following year of $2.60 per share, payable in four quarterly installments of $0.65 per share after the annual general meeting in the form of a distribution by way of a par value reduction.

The following table presents the dividends per Common Share for the three and nine months ended September 30, 2014, in Swiss francs (CHF) and U.S. dollars (USD).
 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
 
2014
 
2013
 
2014
 
2013
Dividends – par value reduction
CHF
0.61

 
$
0.65

 
CHF
0.46

 
$
0.51

 
CHF
1.64

 
$
1.81

 
CHF
1.40

 
$
1.51

Dividends  distributed from capital contribution reserves

 

 

 

 
0.20

 
0.24

 

 

Total dividends per common share
CHF
0.61

 
$
0.65

 
CHF
0.46

 
$
0.51

 
CHF
1.84

 
$
2.05

 
CHF
1.40

 
$
1.51



Par value reductions have 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 25.40 at September 30, 2014.

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 September 30, 2014, 10,720,855 Common Shares remain in treasury after net shares redeemed under employee share-based compensation plans.

ACE Limited securities repurchase authorization
The following table presents 2014 share repurchases of ACE's Common Shares conducted in a series of open market transactions under the November 2013 Board authorization of a share repurchase program of up to $2.0 billion through December 31, 2014:
(in millions of U.S. dollars, except share data)
Three Months Ended

 
Nine Months Ended

 
October 1, 2014 through October 28, 2014

September 30, 2014

 
September 30, 2014

 
Number of shares repurchased
4,349,302

 
10,143,184

 
699,965

Dollar value of shares repurchased
$450
 
$1,019
 
$74
Repurchase authorization remaining at end of period
$924
 
$924
 
$850
Share-based compensation
Share-based compensation
Share-based compensation

The ACE Limited 2004 Long-Term Incentive Plan (the 2004 LTIP) permits grants of both incentive and non-qualified stock options principally at an option price per share equal to the grant date fair value of ACE’s Common Shares. Stock options are generally granted with a 3-year vesting period and a 10-year term. Stock options typically vest in equal annual installments over the vesting period, which is also the requisite service period. On February 27, 2014, ACE granted 1,779,074 stock options with a weighted-average grant date fair value of $18.00 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 permits 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 grant date. On February 27, 2014, ACE granted 1,492,290 restricted stock awards and 276,992 restricted stock units to employees and officers with a grant date fair value of $96.76 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 five business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. These segments distribute their products through various forms of brokers, agencies, and direct marketing programs. All business segments have established relationships with reinsurance intermediaries.

For segment reporting purposes, certain items have been presented in a different manner below than in the consolidated financial statements. Management uses underwriting income as the main measure of segment performance. ACE calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. For the Insurance – North American Agriculture segment, management includes gains and losses on crop derivatives as a component of underwriting income. For example, for the three months ended September 30, 2014, underwriting income in our Insurance – North American Agriculture segment was $81 million. This amount includes $45 million of realized gains related to crop derivatives which are included in Net realized gains (losses) below. For the Life segment, management includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP as components of Life underwriting income. For example, for the three months ended September 30, 2014, Life underwriting income of $88 million includes Net investment income of $69 million and losses from fair value changes in separate account assets of $6 million.

The following tables present the Statement of Operations by segment:
For the Three Months Ended September 30, 2014
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
Net premiums written
$
1,541

 
$
764

 
$
1,719

 
$
208

 
$
497

 
$

 
$
4,729

Net premiums earned
1,518

 
766

 
1,726

 
255

 
489

 

 
4,754

Losses and loss expenses
1,053

 
686

 
707

 
92

 
145

 
1

 
2,684

Policy benefits

 

 

 

 
125

 

 
125

Policy acquisition costs
169

 
41

 
418

 
74

 
123

 

 
825

Administrative expenses
165

 
3

 
258

 
13

 
71

 
44

 
554

Underwriting income (loss)
131

 
36

 
343

 
76

 
25

 
(45
)
 
566

Net investment income
277

 
6

 
130

 
81

 
69

 
3

 
566

Net realized gains (losses) including OTTI
(5
)
 
45

 
(75
)
 
6

 
(89
)
 
(2
)
 
(120
)
Interest expense
2

 

 
2

 
1

 
4

 
61

 
70

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

 

 

 

 
6

 

 
6

Other
(31
)
 
7

 
6

 
(10
)
 
(3
)
 
6

 
(25
)
Income tax expense (benefit)
73

 
23

 
97

 
11

 
12

 
(40
)
 
176

Net income (loss)
$
359

 
$
57

 
$
293

 
$
161

 
$
(14
)
 
$
(71
)
 
$
785

For the Three Months Ended September 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
1,500

 
$
805

 
$
1,571

 
$
265

 
$
479

 
$

 
$
4,620

Net premiums earned
1,444

 
849

 
1,611

 
239

 
467

 

 
4,610

Losses and loss expenses
963

 
746

 
712

 
93

 
141

 

 
2,655

Policy benefits

 

 

 

 
138

 

 
138

Policy acquisition costs
159

 
32

 
349

 
52

 
86

 

 
678

Administrative expenses
153

 
5

 
263

 
12

 
85

 
45

 
563

Underwriting income (loss)
169

 
66

 
287

 
82

 
17

 
(45
)
 
576

Net investment income
254

 
6

 
128

 
66

 
61

 
7

 
522

Net realized gains (losses) including OTTI
9

 

 
(8
)
 
(5
)
 
43

 
1

 
40

Interest expense
3

 

 
1

 
2

 
4

 
62

 
72

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

 

 

 

 
(14
)
 

 
(14
)
Other
(13
)
 
8

 
14

 
(7
)
 
4

 
3

 
9

Income tax expense (benefit)
79

 
14

 
78

 
16

 
10

 
(42
)
 
155

Net income (loss)
$
363

 
$
50

 
$
314

 
$
132

 
$
117

 
$
(60
)
 
$
916


For the Nine Months Ended September 30, 2014
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
4,594

 
$
1,346

 
$
5,250

 
$
794

 
$
1,489

 
$

 
$
13,473

Net premiums earned
4,547

 
1,199

 
5,047

 
800

 
1,463

 

 
13,056

Losses and loss expenses
3,009

 
1,099

 
2,354

 
327

 
442

 
2

 
7,233

Policy benefits

 

 

 

 
383

 

 
383

Policy acquisition costs
480

 
69

 
1,206

 
201

 
355

 

 
2,311

Administrative expenses
501

 
5

 
764

 
41

 
212

 
132

 
1,655

Underwriting income (loss)
557

 
26

 
723

 
231

 
71

 
(134
)
 
1,474

Net investment income
812

 
19

 
398

 
238

 
199

 
9

 
1,675

Net realized gains (losses) including OTTI
(25
)
 
51

 
(71
)
 
(17
)
 
(237
)
 
2

 
(297
)
Interest expense
7

 

 
4

 
4

 
10

 
188

 
213

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

 

 

 

 
(5
)
 

 
(5
)
Other
(75
)
 
24

 
8

 
(39
)
 
8

 
18

 
(56
)
Income tax expense (benefit)
247

 
21

 
189

 
31

 
34

 
(120
)
 
402

Net income (loss)
$
1,165

 
$
51

 
$
849

 
$
456

 
$
(14
)
 
$
(209
)
 
$
2,298


For the Nine Months Ended September 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
4,313

 
$
1,371

 
$
4,821

 
$
836

 
$
1,468

 
$

 
$
12,809

Net premiums earned
4,210

 
1,252

 
4,633

 
731

 
1,424

 

 
12,250

Losses and loss expenses
2,791

 
1,071

 
2,227

 
292

 
443

 
7

 
6,831

Policy benefits

 

 

 

 
379

 

 
379

Policy acquisition costs
444

 
56

 
1,048

 
148

 
261

 

 
1,957

Administrative expenses
437

 
13

 
750

 
36

 
256

 
149

 
1,641

Underwriting income (loss)
538

 
112

 
608

 
255

 
85

 
(156
)
 
1,442

Net investment income
755

 
19

 
396

 
209

 
187

 
21

 
1,587

Net realized gains (losses) including OTTI
63

 
1

 
34

 
46

 
206

 

 
350

Interest expense
4

 

 
4

 
4

 
12

 
181

 
205

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

 

 

 

 
(7
)
 

 
(7
)
Other
(38
)
 
24

 
30

 
(13
)
 
7

 
19

 
29

Income tax expense (benefit)
264

 
24

 
174

 
31

 
33

 
(134
)
 
392

Net income (loss)
$
1,126

 
$
84

 
$
830

 
$
488

 
$
433

 
$
(201
)
 
$
2,760


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

The following table presents net premiums earned for each segment by product:
(in millions of U.S. dollars)
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

For the Three Months Ended September 30, 2014
 
 
 
Insurance – North American P&C
$
420

 
$
993

 
$
105

 
$
1,518

Insurance – North American Agriculture
766

 

 

 
766

Insurance – Overseas General
744

 
394

 
588

 
1,726

Global Reinsurance
149

 
106

 

 
255

Life

 

 
489

 
489

 
$
2,079

 
$
1,493

 
$
1,182

 
$
4,754

For the Three Months Ended September 30, 2013
 
 
 
 
 
 
 
Insurance – North American P&C
$
388

 
$
957

 
$
99

 
$
1,444

Insurance – North American Agriculture
849

 

 

 
849

Insurance – Overseas General
689

 
375

 
547

 
1,611

Global Reinsurance
141

 
98

 

 
239

Life

 

 
467

 
467

 
$
2,067

 
$
1,430

 
$
1,113

 
$
4,610

 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

For the Nine Months Ended September 30, 2014
 
 
 
Insurance – North American P&C
$
1,248

 
$
2,992

 
$
307

 
$
4,547

Insurance – North American Agriculture
1,199

 

 

 
1,199

Insurance – Overseas General
2,164

 
1,158

 
1,725

 
5,047

Global Reinsurance
435

 
365

 

 
800

Life

 

 
1,463

 
1,463

 
$
5,046

 
$
4,515

 
$
3,495

 
$
13,056

For the Nine Months Ended September 30, 2013
 
 
 
 
 
 
 
Insurance – North American P&C
$
1,103

 
$
2,826

 
$
281

 
$
4,210

Insurance – North American Agriculture
1,252

 

 

 
1,252

Insurance – Overseas General
1,932

 
1,088

 
1,613

 
4,633

Global Reinsurance
408

 
323

 

 
731

Life

 

 
1,424

 
1,424

 
$
4,695

 
$
4,237

 
$
3,318

 
$
12,250

Earnings per share
Earnings per share
Earnings per share

 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars, except share and per share data)
2014

 
2013

 
2014

 
2013

Numerator:
 
 
 
 
 
 
 
Net income
$
785

 
$
916

 
$
2,298

 
$
2,760

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
 
 
Weighted-average shares outstanding
334,472,324

 
340,888,648

 
337,083,498

 
340,905,322

Denominator for diluted earnings per share:
 
 
 
 

 

Share-based compensation plans
3,201,656

 
2,929,089

 
3,298,569

 
3,146,728

Weighted-average shares outstanding and assumed conversions
337,673,980

 
343,817,737

 
340,382,067

 
344,052,050

Basic earnings per share
$
2.35

 
$
2.68

 
$
6.82

 
$
8.09

Diluted earnings per share
$
2.32

 
$
2.66

 
$
6.75

 
$
8.02

 
 
 
 
 
 
 
 
Potential anti-dilutive share conversions
1,227,575

 
1,215,884

 
1,410,340

 
1,429,514



Excluded from 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 September 30, 2014 and December 31, 2013, and for the three and nine months ended September 30, 2014 and 2013 for ACE Limited (Parent Guarantor) and ACE INA Holdings Inc. (Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Parent Guarantor and Subsidiary Issuer are presented on the equity method of accounting. The revenues and expenses and cash flows of the subsidiaries of the Subsidiary Issuer are presented in the Other ACE Limited Subsidiaries column on a combined basis.

Condensed Consolidating Balance Sheet at September 30, 2014
(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
25

 
$
63,198

 
$

 
$
63,254

Cash(1)
8

 
12

 
1,391

 
(605
)
 
806

Insurance and reinsurance balances receivable

 

 
6,149

 
(960
)
 
5,189

Reinsurance recoverable on losses and loss expenses

 

 
19,948

 
(9,003
)
 
10,945

Reinsurance recoverable on policy benefits

 

 
1,236

 
(1,008
)
 
228

Value of business acquired

 

 
491

 

 
491

Goodwill and other intangible assets

 

 
5,425

 

 
5,425

Investments in subsidiaries
30,065

 
19,054

 

 
(49,119
)
 

Due from subsidiaries and affiliates, net
768

 

 

 
(768
)
 

Other assets
4

 
272

 
14,669

 
(3,726
)
 
11,219

Total assets
$
30,876

 
$
19,363

 
$
112,507

 
$
(65,189
)
 
$
97,557

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$

 
$
46,003

 
$
(8,556
)
 
$
37,447

Unearned premiums

 

 
9,828

 
(1,808
)
 
8,020

Future policy benefits

 

 
5,790

 
(1,008
)
 
4,782

Due to (from) subsidiaries and affiliates, net

 
556

 
212

 
(768
)
 

Affiliated notional cash pooling programs(1)
573

 
32

 

 
(605
)
 

Short-term debt

 
450

 
1,401

 

 
1,851

Long-term debt

 
4,045

 
12

 

 
4,057

Trust preferred securities

 
309

 

 

 
309

Other liabilities
286

 
1,432

 
12,681

 
(3,325
)
 
11,074

Total liabilities
859

 
6,824

 
75,927

 
(16,070
)
 
67,540

Total shareholders’ equity
30,017

 
12,539

 
36,580

 
(49,119
)
 
30,017

Total liabilities and shareholders’ equity
$
30,876

 
$
19,363

 
$
112,507

 
$
(65,189
)
 
$
97,557


(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2014, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
 




Condensed Consolidating Balance Sheet at December 31, 2013

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
32

 
$
10

 
$
60,886

 
$

 
$
60,928

Cash(1)

 
16

 
748

 
(185
)
 
579

Insurance and reinsurance balances receivable

 

 
5,835

 
(809
)
 
5,026

Reinsurance recoverable on losses and loss expenses

 

 
20,057

 
(8,830
)
 
11,227

Reinsurance recoverable on policy benefits

 

 
1,215

 
(997
)
 
218

Value of business acquired

 

 
536

 

 
536

Goodwill and other intangible assets

 

 
5,404

 

 
5,404

Investments in subsidiaries
28,351

 
18,105

 

 
(46,456
)
 

Due from subsidiaries and affiliates, net
844

 

 

 
(844
)
 

Other assets
5

 
258

 
13,788

 
(3,459
)
 
10,592

Total assets
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$

 
$
45,714

 
$
(8,271
)
 
$
37,443

Unearned premiums

 

 
9,242

 
(1,703
)
 
7,539

Future policy benefits

 

 
5,612

 
(997
)
 
4,615

Due to (from) subsidiaries and affiliates, net

 
714

 
130

 
(844
)
 

Affiliated notional cash pooling programs(1)
185

 

 

 
(185
)
 

Short-term debt

 
500

 
1,401

 

 
1,901

Long-term debt

 
3,795

 
12

 

 
3,807

Trust preferred securities

 
309

 

 

 
309

Other liabilities
222

 
1,318

 
11,655

 
(3,124
)
 
10,071

Total liabilities
407

 
6,636

 
73,766

 
(15,124
)
 
65,685

Total shareholders’ equity
28,825

 
11,753

 
34,703

 
(46,456
)
 
28,825

Total liabilities and shareholders’ equity
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statements of Operations and Comprehensive Income
For the Three Months Ended September 30, 2014
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
4,729

 
$

 
$
4,729

Net premiums earned

 

 
4,754

 

 
4,754

Net investment income
1

 

 
565

 

 
566

Equity in earnings of subsidiaries
745

 
258

 

 
(1,003
)
 

Net realized gains (losses) including OTTI

 
46

 
(166
)
 

 
(120
)
Losses and loss expenses

 

 
2,684

 

 
2,684

Policy benefits

 

 
125

 

 
125

Policy acquisition costs and administrative expenses
18

 
6

 
1,355

 

 
1,379

Interest (income) expense
(7
)
 
68

 
9

 

 
70

Other (income) expense
(54
)
 
2

 
33

 

 
(19
)
Income tax expense (benefit)
4

 
(11
)
 
183

 

 
176

Net income
$
785

 
$
239

 
$
764

 
$
(1,003
)
 
$
785

Comprehensive income
$
298

 
$
33

 
$
276

 
$
(309
)
 
$
298


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Three Months Ended September 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
4,620

 
$

 
$
4,620

Net premiums earned

 

 
4,610

 

 
4,610

Net investment income
1

 

 
521

 

 
522

Equity in earnings of subsidiaries
863

 
322

 

 
(1,185
)
 

Net realized gains (losses) including OTTI

 
(2
)
 
42

 

 
40

Losses and loss expenses

 

 
2,655

 

 
2,655

Policy benefits

 

 
138

 

 
138

Policy acquisition costs and administrative expenses
13

 
4

 
1,224

 

 
1,241

Interest (income) expense
(8
)
 
69

 
11

 

 
72

Other (income) expense
(62
)
 
6

 
51

 

 
(5
)
Income tax expense (benefit)
5

 
(14
)
 
164

 

 
155

Net income
$
916

 
$
255

 
$
930

 
$
(1,185
)
 
$
916

Comprehensive income
$
1,030

 
$
339

 
$
1,043

 
$
(1,382
)
 
$
1,030





Condensed Consolidating Statements of Operations and Comprehensive Income
For the Nine Months Ended September 30, 2014
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
13,473

 
$

 
$
13,473

Net premiums earned

 

 
13,056

 

 
13,056

Net investment income
2

 
1

 
1,672

 

 
1,675

Equity in earnings of subsidiaries
2,192

 
669

 

 
(2,861
)
 

Net realized gains (losses) including OTTI

 
53

 
(350
)
 

 
(297
)
Losses and loss expenses

 

 
7,233

 

 
7,233

Policy benefits

 

 
383

 

 
383

Policy acquisition costs and administrative expenses
57

 
20

 
3,889

 

 
3,966

Interest (income) expense
(26
)
 
209

 
30

 

 
213

Other (income) expense
(146
)
 
22

 
63

 

 
(61
)
Income tax expense (benefit)
11

 
(66
)
 
457

 

 
402

Net income
$
2,298

 
$
538

 
$
2,323

 
$
(2,861
)
 
$
2,298

Comprehensive income
$
2,754

 
$
810

 
$
2,778

 
$
(3,588
)
 
$
2,754


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Nine Months Ended September 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
12,809

 
$

 
$
12,809

Net premiums earned

 

 
12,250

 

 
12,250

Net investment income
2

 
2

 
1,583

 

 
1,587

Equity in earnings of subsidiaries
2,619

 
767

 

 
(3,386
)
 

Net realized gains (losses) including OTTI
12

 
(2
)
 
340

 

 
350

Losses and loss expenses

 

 
6,831

 

 
6,831

Policy benefits

 

 
379

 

 
379

Policy acquisition costs and administrative expenses
40

 
13

 
3,545

 

 
3,598

Interest (income) expense
(23
)
 
200

 
28

 

 
205

Other (income) expense
(157
)
 
21

 
158

 

 
22

Income tax expense (benefit)
13

 
(80
)
 
459

 

 
392

Net income
$
2,760

 
$
613

 
$
2,773

 
$
(3,386
)
 
$
2,760

Comprehensive income (loss)
$
1,247

 
$
(195
)
 
$
1,259

 
$
(1,064
)
 
$
1,247





Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2014
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
168

 
$
139

 
$
3,115

 
$
(200
)
 
$
3,222

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

 

 
(11,870
)
 
3

 
(11,867
)
Purchases of fixed maturities held to maturity

 

 
(185
)
 

 
(185
)
Purchases of equity securities

 

 
(222
)
 

 
(222
)
Sales of fixed maturities available for
sale

 

 
6,309

 
(3
)
 
6,306

Sales of equity securities

 

 
322

 

 
322

Maturities and redemptions of fixed maturities available for sale

 

 
4,814

 

 
4,814

Maturities and redemptions of fixed maturities held to maturity

 

 
617

 

 
617

Net change in short-term investments
1

 
(16
)
 
(969
)
 

 
(984
)
Net derivative instruments settlements

 
53

 
(223
)
 

 
(170
)
Acquisition of subsidiaries (net of cash acquired of $4)

 

 
(172
)
 

 
(172
)
Capital contribution

 
(230
)
 

 
230

 

Other

 
(9
)
 
(138
)
 

 
(147
)
Net cash flows from (used for) investing activities
1

 
(202
)
 
(1,717
)
 
230

 
(1,688
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(646
)
 

 

 

 
(646
)
Common Shares repurchased

 

 
(1,007
)
 

 
(1,007
)
Proceeds from issuance of long-term debt

 
699

 

 

 
699

Repayment of long-term debt

 
(500
)
 
(1
)
 

 
(501
)
Proceeds from share-based compensation plans, including windfall tax benefits

 

 
94

 

 
94

Dividend to parent company

 

 
(200
)
 
200

 

Advances (to) from affiliates
97

 
(166
)
 
69

 

 

Capital contribution

 

 
230

 
(230
)
 

Net proceeds from (payments to) affiliated notional cash pooling programs(1)
388

 
32

 

 
(420
)
 

Other

 
(6
)
 
127

 

 
121

Net cash flows (used for) from financing activities
(161
)
 
59

 
(688
)
 
(450
)
 
(1,240
)
Effect of foreign currency rate changes on cash and cash equivalents

 

 
(67
)
 

 
(67
)
Net increase (decrease) in cash
8

 
(4
)
 
643

 
(420
)
 
227

Cash – beginning of period(1)

 
16

 
748

 
(185
)
 
579

Cash – end of period(1)
$
8

 
$
12

 
$
1,391

 
$
(605
)
 
$
806

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2014 and December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
80

 
$
2

 
$
2,654

 
$

 
$
2,736

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

 

 
(16,517
)
 
103

 
(16,414
)
Purchases of fixed maturities held to maturity

 

 
(374
)
 

 
(374
)
Purchases of equity securities

 

 
(217
)
 

 
(217
)
Sales of fixed maturities available for sale

 

 
8,115

 
(103
)
 
8,012

Sales of equity securities

 

 
99

 

 
99

Maturities and redemptions of fixed maturities available for sale

 

 
5,538

 

 
5,538

Maturities and redemptions of fixed maturities held to maturity

 

 
1,233

 

 
1,233

Net change in short-term investments

 
4

 
521

 

 
525

Net derivative instruments settlements

 
(1
)
 
(375
)
 

 
(376
)
Acquisition of subsidiaries (net of cash acquired of $38)

 

 
(977
)
 

 
(977
)
Capital contribution
(133
)
 
(1,010
)
 

 
1,143

 

Other

 
(5
)
 
(183
)
 

 
(188
)
Net cash flows used for investing activities
(133
)
 
(1,012
)
 
(3,137
)
 
1,143

 
(3,139
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(343
)
 

 

 

 
(343
)
Common Shares repurchased

 

 
(233
)
 

 
(233
)
Proceeds from issuance of long-term debt

 
947

 

 

 
947

Net proceeds from issuance of short-term debt

 

 
1

 

 
1

Proceeds from share-based compensation plans, including windfall tax benefits
7

 

 
105

 

 
112

Advances (to) from affiliates
(575
)
 
575

 

 

 

Capital contribution

 

 
1,143

 
(1,143
)
 

Net proceeds from (payments to) affiliated notional cash pooling programs(1)
872

 
(349
)
 

 
(523
)
 

Other

 

 
68

 

 
68

Net cash flows from (used for) financing activities
(39
)
 
1,173

 
1,084

 
(1,666
)
 
552

Effect of foreign currency rate changes on cash and cash equivalents

 

 
4

 

 
4

Net (decrease) increase in cash
(92
)
 
163

 
605

 
(523
)
 
153

Cash – beginning of period(1)
103

 
2

 
859

 
(349
)
 
615

Cash – end of period(1)
$
11

 
$
165

 
$
1,464

 
$
(872
)
 
$
768


(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2013 and December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
General (Policies)
ACE Limited is a holding company incorporated in Zurich, Switzerland. ACE Limited, through its subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through five 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 2013 Form 10-K.
Goodwill and other intangible assets
During the third quarter of 2014, we changed our annual goodwill impairment testing date from December 31 to September 30 of each year. We believe this change is preferable as it more closely aligns the goodwill impairment testing date with the timing of our strategic business planning process. This change does not result in any delay, acceleration or avoidance of impairment. Based on our impairment testing for 2014, we determined no impairment was required and none of our reporting units were at risk for impairment.
Investments (Tables)
September 30, 2014
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,627

 
$
70

 
$
(19
)
 
$
2,678

 
$

Foreign
14,741

 
542

 
(52
)
 
15,231

 
(1
)
Corporate securities
16,715

 
716

 
(93
)
 
17,338

 
(2
)
Mortgage-backed securities
10,159

 
237

 
(72
)
 
10,324

 
(1
)
States, municipalities, and political subdivisions
3,446

 
138

 
(7
)
 
3,577

 

 
$
47,688

 
$
1,703

 
$
(243
)
 
$
49,148

 
$
(4
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
804

 
$
16

 
$
(3
)
 
$
817

 
$

Foreign
937

 
42

 
(1
)
 
978

 

Corporate securities
2,443

 
86

 
(4
)
 
2,525

 

Mortgage-backed securities
2,087

 
46

 
(3
)
 
2,130

 

States, municipalities, and political subdivisions
1,277

 
38

 
(2
)
 
1,313

 

 
$
7,548

 
$
228

 
$
(13
)
 
$
7,763

 
$


December 31, 2013
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,946

 
$
62

 
$
(59
)
 
$
2,949

 
$

Foreign
14,336

 
377

 
(122
)
 
14,591

 

Corporate securities
16,825

 
777

 
(132
)
 
17,470

 
(6
)
Mortgage-backed securities
10,937

 
184

 
(227
)
 
10,894

 
(34
)
States, municipalities, and political subdivisions
3,362

 
65

 
(77
)
 
3,350

 

 
$
48,406

 
$
1,465

 
$
(617
)
 
$
49,254

 
$
(40
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
820

 
$
16

 
$
(4
)
 
$
832

 
$

Foreign
864

 
33

 

 
897

 

Corporate securities
1,922

 
83

 

 
2,005

 

Mortgage-backed securities
1,341

 
39

 
(1
)
 
1,379

 

States, municipalities, and political subdivisions
1,151

 
16

 
(17
)
 
1,150

 

 
$
6,098

 
$
187

 
$
(22
)
 
$
6,263

 
$


 
 
 
September 30

 
 
 
December 31

 
 
 
2014

 
 
 
2013

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,292

 
$
2,316

 
$
2,387

 
$
2,411

Due after 1 year through 5 years
14,833

 
15,310

 
14,139

 
14,602

Due after 5 years through 10 years
15,872

 
16,323

 
16,200

 
16,535

Due after 10 years
4,532

 
4,875

 
4,743

 
4,812

 
37,529

 
38,824

 
37,469

 
38,360

Mortgage-backed securities
10,159

 
10,324

 
10,937

 
10,894

 
$
47,688

 
$
49,148

 
$
48,406

 
$
49,254

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
417

 
$
421

 
$
401

 
$
405

Due after 1 year through 5 years
2,670

 
2,763

 
2,284

 
2,363

Due after 5 years through 10 years
1,401

 
1,443

 
1,686

 
1,723

Due after 10 years
973

 
1,006

 
386

 
393

 
5,461

 
5,633

 
4,757

 
4,884

Mortgage-backed securities
2,087

 
2,130

 
1,341

 
1,379

 
$
7,548

 
$
7,763

 
$
6,098

 
$
6,263

 
September 30


December 31

(in millions of U.S. dollars)
2014


2013

Cost
$
480

 
$
841

Gross unrealized appreciation
71

 
63

Gross unrealized depreciation
(5
)
 
(67
)
Fair value
$
546

 
$
837

 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Fixed maturities:
 
 
 
 
 
 
 
OTTI on fixed maturities, gross
$
(5
)
 
$
(4
)
 
$
(20
)
 
$
(11
)
OTTI on fixed maturities recognized in OCI (pre-tax)
1

 

 
3

 

OTTI on fixed maturities, net
(4
)
 
(4
)
 
(17
)
 
(11
)
Gross realized gains excluding OTTI
73

 
37

 
163

 
163

Gross realized losses excluding OTTI
(51
)
 
(16
)
 
(97
)
 
(68
)
Total fixed maturities
18

 
17

 
49

 
84

Equity securities:
 
 
 
 
 
 
 
OTTI on equity securities

 

 
(7
)
 
(1
)
Gross realized gains excluding OTTI
4

 
8

 
8

 
18

Gross realized losses excluding OTTI
(60
)
 
(1
)
 
(61
)
 
(4
)
Total equity securities
(56
)
 
7

 
(60
)
 
13

OTTI on other investments

 

 
(3
)
 
(2
)
Foreign exchange gains (losses)
(19
)
 
(26
)
 
(42
)
 
45

Investment and embedded derivative instruments
(13
)
 
4

 
(53
)
 
62

Fair value adjustments on insurance derivative
(80
)
 
134

 
(126
)
 
563

S&P put options and futures
(15
)
 
(95
)
 
(106
)
 
(413
)
Other derivative instruments
45

 
(1
)
 
52

 
(2
)
Other

 

 
(8
)
 

Net realized gains (losses)
$
(120
)
 
$
40

 
$
(297
)
 
$
350

 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Balance of credit losses related to securities still held – beginning of period
$
24

 
$
40

 
$
37

 
$
43

Additions where no OTTI was previously recorded
2

 
1

 
9

 
5

Additions where an OTTI was previously recorded
2

 

 
5

 
3

Reductions for securities sold during the period
(11
)
 
(3
)
 
(34
)
 
(13
)
Balance of credit losses related to securities still held – end of period
$
17

 
$
38

 
$
17

 
$
38

 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
September 30, 2014
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
439

 
$
(2
)
 
$
943

 
$
(20
)
 
$
1,382

 
$
(22
)
Foreign
2,420

 
(34
)
 
916

 
(19
)
 
3,336

 
(53
)
Corporate securities
4,943

 
(72
)
 
854

 
(25
)
 
5,797

 
(97
)
Mortgage-backed securities
2,206

 
(11
)
 
2,050

 
(64
)
 
4,256

 
(75
)
States, municipalities, and political subdivisions
311

 
(1
)
 
673

 
(8
)
 
984

 
(9
)
Total fixed maturities
10,319

 
(120
)
 
5,436

 
(136
)
 
15,755

 
(256
)
Equity securities
67

 
(5
)
 

 

 
67

 
(5
)
Other investments
78

 
(3
)
 

 

 
78

 
(3
)
Total
$
10,464

 
$
(128
)
 
$
5,436

 
$
(136
)
 
$
15,900

 
$
(264
)
 
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
December 31, 2013
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
1,794

 
$
(57
)
 
$
31

 
$
(6
)
 
$
1,825

 
$
(63
)
Foreign
4,621

 
(114
)
 
201

 
(8
)
 
4,822

 
(122
)
Corporate securities
3,836

 
(118
)
 
194

 
(14
)
 
4,030

 
(132
)
Mortgage-backed securities
5,248

 
(197
)
 
384

 
(31
)
 
5,632

 
(228
)
States, municipalities, and political subdivisions
2,164

 
(90
)
 
84

 
(4
)
 
2,248

 
(94
)
Total fixed maturities
17,663

 
(576
)
 
894

 
(63
)
 
18,557

 
(639
)
Equity securities
498

 
(67
)
 

 

 
498

 
(67
)
Other investments
67

 
(9
)
 

 

 
67

 
(9
)
Total
$
18,228

 
$
(652
)
 
$
894

 
$
(63
)
 
$
19,122

 
$
(715
)
 
September 30

 
December 31

(in millions of U.S. dollars)
2014

 
2013

Trust funds
$
10,497

 
$
11,315

Deposits with non-U.S. regulatory authorities
2,014

 
1,970

Assets pledged under repurchase agreements
1,454

 
1,435

Deposits with U.S. regulatory authorities
1,324

 
1,334

Other pledged assets
435

 
391

 
$
15,724

 
$
16,445

Fair value measurements (Tables)
September 30, 2014
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,490

 
$
1,188

 
$

 
$
2,678

Foreign
202

 
15,017

 
12

 
15,231

Corporate securities

 
17,130

 
208

 
17,338

Mortgage-backed securities

 
10,309

 
15

 
10,324

States, municipalities, and political subdivisions

 
3,577

 

 
3,577

 
1,692

 
47,221

 
235

 
49,148

Equity securities
520

 
24

 
2

 
546

Short-term investments
1,253

 
1,500

 

 
2,753

Other investments
336

 
252

 
2,671

 
3,259

Securities lending collateral

 
1,440

 

 
1,440

Investment derivative instruments
23

 

 

 
23

Other derivative instruments
11

 
2

 

 
13

Separate account assets
1,389

 
90

 

 
1,479

Total assets measured at fair value
$
5,224

 
$
50,529

 
$
2,908

 
$
58,661

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
5

 
$

 
$

 
$
5

Other derivative instruments

 
2

 

 
2

GLB(1)

 

 
317

 
317

Total liabilities measured at fair value
$
5

 
$
2

 
$
317

 
$
324

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
 
December 31, 2013
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,626

 
$
1,323

 
$

 
$
2,949

Foreign
223

 
14,324

 
44

 
14,591

Corporate securities

 
17,304

 
166

 
17,470

Mortgage-backed securities

 
10,886

 
8

 
10,894

States, municipalities, and political subdivisions

 
3,350

 

 
3,350

 
1,849

 
47,187

 
218

 
49,254

Equity securities
373

 
460

 
4

 
837

Short-term investments
953

 
803

 
7

 
1,763

Other investments
305

 
231

 
2,440

 
2,976

Securities lending collateral

 
1,632

 

 
1,632

Investment derivative instruments
19

 

 

 
19

Other derivative instruments

 
6

 

 
6

Separate account assets
1,145

 
81

 

 
1,226

Total assets measured at fair value
$
4,644

 
$
50,400

 
$
2,669

 
$
57,713

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
6

 
$

 
$

 
$
6

Other derivative instruments
60

 
2

 

 
62

GLB(1)

 

 
193

 
193

Total liabilities measured at fair value
$
66

 
$
2

 
$
193

 
$
261

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Transfers from Level 1 to Level 2
$

 
$

 
$

 
$
19

Transfers from Level 2 to Level 1
$

 
$

 
$

 
$

 
 
 
 
 
September 30

 
 
 
December 31

 
Expected
Liquidation
Period of Underlying Assets
 
 
 
2014

 
 
 
2013

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

 
Maximum
Future Funding
Commitments

 
Fair
Value

 
Maximum
Future Funding
Commitments

Financial
5 to 9 Years
 
$
266

 
$
127

 
$
256

 
$
129

Real estate
3 to 9 Years
 
304

 
43

 
322

 
92

Distressed
6 to 9 Years
 
289

 
132

 
180

 
230

Mezzanine
6 to 9 Years
 
300

 
213

 
276

 
252

Traditional
3 to 8 Years
 
960

 
388

 
813

 
456

Vintage
1 to 3 Years
 
10

 

 
13

 

Investment funds
Not Applicable
 
384

 

 
428

 

 
 
 
$
2,513

 
$
903

 
$
2,288

 
$
1,159

(in millions of U.S. dollars, except for percentages)
Fair Value
 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
September 30, 2014

 
December 31, 2013

 
 
 
GLB(1)
$
317

 
$
193

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
 
 
Annuitization rate
 
0% – 55%
(1) 
Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living benefits.
 
Assets
 
 
Liabilities

Three Months Ended
Available-for-Sale Debt Securities

 
 
Equity
securities

 
Other
investments

 
GLB(1)

September 30, 2014
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance–Beginning of Period
$
12

 
$
204

 
$
7

 
$
2

 
$
2,640

 
$
241

Transfers into Level 3
1

 
5

 

 

 

 

Transfers out of Level 3

 

 

 

 

 

Change in Net Unrealized Gains (Losses) included in OCI

 
(1
)
 

 

 
(8
)
 

Net Realized Gains/Losses

 
2

 

 

 

 
76

Purchases

 
20

 
8

 

 
170

 

Sales
(1
)
 
(9
)
 

 

 
(3
)
 

Settlements

 
(13
)
 

 

 
(128
)
 

Balance–End of Period
$
12

 
$
208

 
$
15

 
$
2

 
$
2,671

 
$
317

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

 
$

 
$

 
$

 
$

 
$
76

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
  
Assets
 
 
Liabilities

Three Months Ended
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

September 30, 2013
Foreign

 
Corporate
securities

 
MBS

 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
Balance–Beginning of Period
$
48

 
$
114

 
$
9

 
$
4

 
$
9

 
$
2,349

 
$
652

Transfers into Level 3
1

 
12

 

 

 
1

 

 

Transfers out of Level 3
(8
)
 
(1
)
 

 

 
(2
)
 

 

Change in Net Unrealized Gains (Losses) included in OCI
2

 
(1
)
 

 

 

 
(1
)
 

Net Realized Gains/Losses

 
(1
)
 

 

 

 

 
(138
)
Purchases
12

 
6

 

 

 

 
138

 

Sales
(13
)
 
(4
)
 

 

 

 
(1
)
 

Settlements

 
(4
)
 

 

 

 
(96
)
 

Balance–End of Period
$
42

 
$
121

 
$
9

 
$
4

 
$
8

 
$
2,389

 
$
514

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

 
$

 
$

 
$

 
$

 
$

 
$
(138
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $746 million at September 30, 2013, and $880 million at June 30, 2013, which includes a fair value derivative adjustment of $514 million and $652 million, respectively.

 
Assets
 
 
Liabilities

Nine Months Ended
Available-for-Sale Debt Securities

 
 
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

September 30, 2014
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance–Beginning of Period
$
44

 
$
166

 
$
8

 
$
4

 
$
7

 
$
2,440

 
$
193

Transfers into Level 3
3

 
35

 

 

 

 

 

Transfers out of Level 3
(34
)
 
(22
)
 

 
(2
)
 
(7
)
 

 

Change in Net Unrealized Gains (Losses) included in OCI
(1
)
 
1

 

 
1

 

 
40

 

Net Realized Gains/Losses
1

 
2

 

 

 

 
(3
)
 
124

Purchases
2

 
65

 
8

 
1

 

 
522

 

Sales
(3
)
 
(17
)
 

 
(2
)
 

 
(6
)
 

Settlements

 
(22
)
 
(1
)
 

 

 
(322
)
 

Balance–End of Period
$
12

 
$
208

 
$
15

 
$
2

 
$

 
$
2,671

 
$
317

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

 
$

 
$

 
$

 
$

 
$
(3
)
 
$
124

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.

  
Assets
 
 
Liabilities

Nine Months Ended
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Short-term investments

Other
investments

 
GLB(1)

September 30, 2013
Foreign

 
Corporate
securities

 
MBS

 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
Balance–Beginning of Period
$
60

 
$
102

 
$
13

 
$
3

 
$

$
2,252

 
$
1,119

Transfers into Level 3
33

 
29

 

 
7

 
8


 

Transfers out of Level 3
(49
)
 
(30
)
 

 
(1
)
 
(2
)

 

Change in Net Unrealized Gains (Losses) included in OCI
(2
)
 
(1
)
 

 
(5
)
 

34

 

Net Realized Gains/Losses
1

 
(2
)
 

 
4

 

(2
)
 
(605
)
Purchases
15

 
39

 

 
1

 
2

387

 

Sales
(15
)
 
(4
)
 
(3
)
 
(5
)
 

(10
)
 

Settlements
(1
)
 
(12
)
 
(1
)
 

 

(272
)
 

Balance–End of Period
$
42

 
$
121

 
$
9

 
$
4

 
$
8

$
2,389

 
$
514

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

 
$

 
$

 
$

 
$

$
(2
)
 
$
(605
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $746 million at September 30, 2013, and $1.4 billion at December 31, 2012, which includes a fair value derivative adjustment of $514 million and $1.1 billion, respectively.

September 30, 2014
Fair Value
 
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

 
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
625

 
$
192

 
$

 
$
817

 
$
804

Foreign

 
978

 

 
978

 
937

Corporate securities

 
2,510

 
15

 
2,525

 
2,443

Mortgage-backed securities

 
2,130

 

 
2,130

 
2,087

States, municipalities, and political subdivisions

 
1,313

 

 
1,313

 
1,277

 
625

 
7,123

 
15

 
7,763

 
7,548

Partially-owned insurance companies

 

 
495

 
495

 
495

Total assets
$
625

 
$
7,123

 
$
510

 
$
8,258

 
$
8,043

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,864

 
$

 
$
1,864

 
$
1,851

Long-term debt

 
4,349

 

 
4,349

 
4,057

Trust preferred securities

 
459

 

 
459

 
309

Total liabilities
$

 
$
6,672

 
$

 
$
6,672

 
$
6,217


December 31, 2013
Fair Value
 
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

 
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
596

 
$
236

 
$

 
$
832

 
$
820

Foreign

 
897

 

 
897

 
864

Corporate securities

 
1,990

 
15

 
2,005

 
1,922

Mortgage-backed securities

 
1,379

 

 
1,379

 
1,341

States, municipalities, and political subdivisions

 
1,150

 

 
1,150

 
1,151

 
596

 
5,652

 
15

 
6,263

 
6,098

Partially-owned insurance companies

 

 
470

 
470

 
470

Total assets
$
596

 
$
5,652

 
$
485

 
$
6,733

 
$
6,568

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
1,913

 
$

 
$
1,913

 
$
1,901

Long-term debt

 
4,088

 

 
4,088

 
3,807

Trust preferred securities

 
438

 

 
438

 
309

Total liabilities
$

 
$
6,439

 
$

 
$
6,439

 
$
6,017

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
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

GMDB
 
 
 
 
 
 
 
Net premiums earned
$
17

 
$
19

 
$
54

 
$
59

Policy benefits and other reserve adjustments
$
12

 
$
14

 
$
40

 
$
58

GLB
 
 
 
 
 
 
 
Net premiums earned
$
35

 
$
36

 
$
105

 
$
112

Policy benefits and other reserve adjustments
8

 
9

 
27

 
20

Net realized gains (losses)
(76
)
 
138

 
(124
)
 
608

Gain (loss) recognized in income
$
(49
)
 
$
165

 
$
(46
)
 
$
700

Net cash received
$
31

 
$
31

 
$
93

 
$
94

Net (increase) decrease in liability
$
(80
)
 
$
134

 
$
(139
)
 
$
606

Commitments, contingencies, and guarantees (Tables)
 
 
 
 
 
September 30, 2014
 
 
 
 
December 31, 2013
 
 
Consolidated
Balance Sheet
Location
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
Fair Value
 
 
Notional
Value/
Payment
Provision

(in millions of U.S. dollars)
 
Derivative Asset

 
Derivative (Liability)

 
 
Derivative Asset

 
Derivative (Liability)

 
Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
OA / (AP)
 
$
14

 
$
(2
)
 
$
1,010

 
$
3

 
$
(4
)
 
$
1,202

Cross-currency swaps
OA / (AP)
 

 

 
95

 

 

 
50

Futures contracts on money market instruments
OA / (AP)
 
2

 

 
1,000

 
3

 

 
3,910

Options/Futures contracts on notes and bonds
OA / (AP)
 
7

 
(3
)
 
1,145

 
13

 
(2
)
 
871

Convertible securities(1)
FM AFS / ES
 
303

 

 
268

 
302

 

 
254

 
 
 
$
326

 
$
(5
)
 
$
3,518

 
$
321

 
$
(6
)
 
$
6,287

Other derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
Futures contracts on equities (2)
OA / (AP)
 
$
11

 
$

 
$
1,427

 
$

 
$
(60
)
 
$
1,692

Options on equity market indices (2)
OA / (AP)
 
2

 

 
250

 
6

 

 
250

Other
OA / (AP)
 

 
(2
)
 
8

 

 
(2
)
 
8

 
 
 
$
13

 
$
(2
)
 
$
1,685

 
$
6

 
$
(62
)
 
$
1,950

GLB(3)
(AP) / (FPB)
 
$

 
$
(566
)
 
$
409

 
$

 
$
(427
)
 
$
277


(1) 
Includes fair value of embedded derivatives.
(2) 
Related to GMDB and GLB blocks of business.
(3) 
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 for additional information. Note that the payment provision related to GLB is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.
 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars)
2014

 
2013

 
2014

 
2013

Investment and embedded derivative instruments
 
 
 
 
 
 
 
Foreign currency forward contracts
$
19

 
$
(9
)
 
$
15

 
$
8

All other futures contracts and options
(15
)
 
6

 
(55
)
 
46

Convertible securities(1)
(17
)
 
6

 
(13
)
 
7

TBAs

 
1

 

 
1

Total investment and embedded derivative instruments
$
(13
)
 
$
4

 
$
(53
)
 
$
62

GLB and other derivative instruments
 
 
 
 
 
 
 
GLB(2)
$
(80
)
 
$
134

 
$
(126
)
 
$
563

Futures contracts on equities(3)
(15
)
 
(90
)
 
(103
)
 
(393
)
Options on equity market indices(3)

 
(5
)
 
(3
)
 
(20
)
Other
45

 
(1
)
 
52

 
(2
)
Total GLB and other derivative instruments
$
(50
)
 
$
38

 
$
(180
)
 
$
148

 
$
(63
)
 
$
42

 
$
(233
)
 
$
210

(1) 
Includes embedded derivatives.
(2) 
Excludes foreign exchange gains (losses) related to GLB.
(3) 
Related to GMDB and GLB blocks of business.

Shareholders' equity Shareholders' Equity (Tables)
The following table presents the dividends per Common Share for the three and nine months ended September 30, 2014, in Swiss francs (CHF) and U.S. dollars (USD).
 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
 
2014
 
2013
 
2014
 
2013
Dividends – par value reduction
CHF
0.61

 
$
0.65

 
CHF
0.46

 
$
0.51

 
CHF
1.64

 
$
1.81

 
CHF
1.40

 
$
1.51

Dividends  distributed from capital contribution reserves

 

 

 

 
0.20

 
0.24

 

 

Total dividends per common share
CHF
0.61

 
$
0.65

 
CHF
0.46

 
$
0.51

 
CHF
1.84

 
$
2.05

 
CHF
1.40

 
$
1.51

The following table presents 2014 share repurchases of ACE's Common Shares conducted in a series of open market transactions under the November 2013 Board authorization of a share repurchase program of up to $2.0 billion through December 31, 2014:
(in millions of U.S. dollars, except share data)
Three Months Ended

 
Nine Months Ended

 
October 1, 2014 through October 28, 2014

September 30, 2014

 
September 30, 2014

 
Number of shares repurchased
4,349,302

 
10,143,184

 
699,965

Dollar value of shares repurchased
$450
 
$1,019
 
$74
Repurchase authorization remaining at end of period
$924
 
$924
 
$850
Segment information (Tables)
For the Three Months Ended September 30, 2014
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
Net premiums written
$
1,541

 
$
764

 
$
1,719

 
$
208

 
$
497

 
$

 
$
4,729

Net premiums earned
1,518

 
766

 
1,726

 
255

 
489

 

 
4,754

Losses and loss expenses
1,053

 
686

 
707

 
92

 
145

 
1

 
2,684

Policy benefits

 

 

 

 
125

 

 
125

Policy acquisition costs
169

 
41

 
418

 
74

 
123

 

 
825

Administrative expenses
165

 
3

 
258

 
13

 
71

 
44

 
554

Underwriting income (loss)
131

 
36

 
343

 
76

 
25

 
(45
)
 
566

Net investment income
277

 
6

 
130

 
81

 
69

 
3

 
566

Net realized gains (losses) including OTTI
(5
)
 
45

 
(75
)
 
6

 
(89
)
 
(2
)
 
(120
)
Interest expense
2

 

 
2

 
1

 
4

 
61

 
70

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

 

 

 

 
6

 

 
6

Other
(31
)
 
7

 
6

 
(10
)
 
(3
)
 
6

 
(25
)
Income tax expense (benefit)
73

 
23

 
97

 
11

 
12

 
(40
)
 
176

Net income (loss)
$
359

 
$
57

 
$
293

 
$
161

 
$
(14
)
 
$
(71
)
 
$
785

For the Three Months Ended September 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
1,500

 
$
805

 
$
1,571

 
$
265

 
$
479

 
$

 
$
4,620

Net premiums earned
1,444

 
849

 
1,611

 
239

 
467

 

 
4,610

Losses and loss expenses
963

 
746

 
712

 
93

 
141

 

 
2,655

Policy benefits

 

 

 

 
138

 

 
138

Policy acquisition costs
159

 
32

 
349

 
52

 
86

 

 
678

Administrative expenses
153

 
5

 
263

 
12

 
85

 
45

 
563

Underwriting income (loss)
169

 
66

 
287

 
82

 
17

 
(45
)
 
576

Net investment income
254

 
6

 
128

 
66

 
61

 
7

 
522

Net realized gains (losses) including OTTI
9

 

 
(8
)
 
(5
)
 
43

 
1

 
40

Interest expense
3

 

 
1

 
2

 
4

 
62

 
72

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

 

 

 

 
(14
)
 

 
(14
)
Other
(13
)
 
8

 
14

 
(7
)
 
4

 
3

 
9

Income tax expense (benefit)
79

 
14

 
78

 
16

 
10

 
(42
)
 
155

Net income (loss)
$
363

 
$
50

 
$
314

 
$
132

 
$
117

 
$
(60
)
 
$
916


For the Nine Months Ended September 30, 2014
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
4,594

 
$
1,346

 
$
5,250

 
$
794

 
$
1,489

 
$

 
$
13,473

Net premiums earned
4,547

 
1,199

 
5,047

 
800

 
1,463

 

 
13,056

Losses and loss expenses
3,009

 
1,099

 
2,354

 
327

 
442

 
2

 
7,233

Policy benefits

 

 

 

 
383

 

 
383

Policy acquisition costs
480

 
69

 
1,206

 
201

 
355

 

 
2,311

Administrative expenses
501

 
5

 
764

 
41

 
212

 
132

 
1,655

Underwriting income (loss)
557

 
26

 
723

 
231

 
71

 
(134
)
 
1,474

Net investment income
812

 
19

 
398

 
238

 
199

 
9

 
1,675

Net realized gains (losses) including OTTI
(25
)
 
51

 
(71
)
 
(17
)
 
(237
)
 
2

 
(297
)
Interest expense
7

 

 
4

 
4

 
10

 
188

 
213

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

 

 

 

 
(5
)
 

 
(5
)
Other
(75
)
 
24

 
8

 
(39
)
 
8

 
18

 
(56
)
Income tax expense (benefit)
247

 
21

 
189

 
31

 
34

 
(120
)
 
402

Net income (loss)
$
1,165

 
$
51

 
$
849

 
$
456

 
$
(14
)
 
$
(209
)
 
$
2,298


For the Nine Months Ended September 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
4,313

 
$
1,371

 
$
4,821

 
$
836

 
$
1,468

 
$

 
$
12,809

Net premiums earned
4,210

 
1,252

 
4,633

 
731

 
1,424

 

 
12,250

Losses and loss expenses
2,791

 
1,071

 
2,227

 
292

 
443

 
7

 
6,831

Policy benefits

 

 

 

 
379

 

 
379

Policy acquisition costs
444

 
56

 
1,048

 
148

 
261

 

 
1,957

Administrative expenses
437

 
13

 
750

 
36

 
256

 
149

 
1,641

Underwriting income (loss)
538

 
112

 
608

 
255

 
85

 
(156
)
 
1,442

Net investment income
755

 
19

 
396

 
209

 
187

 
21

 
1,587

Net realized gains (losses) including OTTI
63

 
1

 
34

 
46

 
206

 

 
350

Interest expense
4

 

 
4

 
4

 
12

 
181

 
205

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

 

 

 

 
(7
)
 

 
(7
)
Other
(38
)
 
24

 
30

 
(13
)
 
7

 
19

 
29

Income tax expense (benefit)
264

 
24

 
174

 
31

 
33

 
(134
)
 
392

Net income (loss)
$
1,126

 
$
84

 
$
830

 
$
488

 
$
433

 
$
(201
)
 
$
2,760


(in millions of U.S. dollars)
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

For the Three Months Ended September 30, 2014
 
 
 
Insurance – North American P&C
$
420

 
$
993

 
$
105

 
$
1,518

Insurance – North American Agriculture
766

 

 

 
766

Insurance – Overseas General
744

 
394

 
588

 
1,726

Global Reinsurance
149

 
106

 

 
255

Life

 

 
489

 
489

 
$
2,079

 
$
1,493

 
$
1,182

 
$
4,754

For the Three Months Ended September 30, 2013
 
 
 
 
 
 
 
Insurance – North American P&C
$
388

 
$
957

 
$
99

 
$
1,444

Insurance – North American Agriculture
849

 

 

 
849

Insurance – Overseas General
689

 
375

 
547

 
1,611

Global Reinsurance
141

 
98

 

 
239

Life

 

 
467

 
467

 
$
2,067

 
$
1,430

 
$
1,113

 
$
4,610

 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

For the Nine Months Ended September 30, 2014
 
 
 
Insurance – North American P&C
$
1,248

 
$
2,992

 
$
307

 
$
4,547

Insurance – North American Agriculture
1,199

 

 

 
1,199

Insurance – Overseas General
2,164

 
1,158

 
1,725

 
5,047

Global Reinsurance
435

 
365

 

 
800

Life

 

 
1,463

 
1,463

 
$
5,046

 
$
4,515

 
$
3,495

 
$
13,056

For the Nine Months Ended September 30, 2013
 
 
 
 
 
 
 
Insurance – North American P&C
$
1,103

 
$
2,826

 
$
281

 
$
4,210

Insurance – North American Agriculture
1,252

 

 

 
1,252

Insurance – Overseas General
1,932

 
1,088

 
1,613

 
4,633

Global Reinsurance
408

 
323

 

 
731

Life

 

 
1,424

 
1,424

 
$
4,695

 
$
4,237

 
$
3,318

 
$
12,250

Earnings per share (Tables)
Schedule Of Earnings Per Share, Basic And Diluted
 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30
 
 
September 30
 
(in millions of U.S. dollars, except share and per share data)
2014

 
2013

 
2014

 
2013

Numerator:
 
 
 
 
 
 
 
Net income
$
785

 
$
916

 
$
2,298

 
$
2,760

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
 
 
Weighted-average shares outstanding
334,472,324

 
340,888,648

 
337,083,498

 
340,905,322

Denominator for diluted earnings per share:
 
 
 
 

 

Share-based compensation plans
3,201,656

 
2,929,089

 
3,298,569

 
3,146,728

Weighted-average shares outstanding and assumed conversions
337,673,980

 
343,817,737

 
340,382,067

 
344,052,050

Basic earnings per share
$
2.35

 
$
2.68

 
$
6.82

 
$
8.09

Diluted earnings per share
$
2.32

 
$
2.66

 
$
6.75

 
$
8.02

 
 
 
 
 
 
 
 
Potential anti-dilutive share conversions
1,227,575

 
1,215,884

 
1,410,340

 
1,429,514

Information provided in connection with outstanding debt of subsidiaries (Tables)
Condensed Consolidating Balance Sheet at September 30, 2014
(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
25

 
$
63,198

 
$

 
$
63,254

Cash(1)
8

 
12

 
1,391

 
(605
)
 
806

Insurance and reinsurance balances receivable

 

 
6,149

 
(960
)
 
5,189

Reinsurance recoverable on losses and loss expenses

 

 
19,948

 
(9,003
)
 
10,945

Reinsurance recoverable on policy benefits

 

 
1,236

 
(1,008
)
 
228

Value of business acquired

 

 
491

 

 
491

Goodwill and other intangible assets

 

 
5,425

 

 
5,425

Investments in subsidiaries
30,065

 
19,054

 

 
(49,119
)
 

Due from subsidiaries and affiliates, net
768

 

 

 
(768
)
 

Other assets
4

 
272

 
14,669

 
(3,726
)
 
11,219

Total assets
$
30,876

 
$
19,363

 
$
112,507

 
$
(65,189
)
 
$
97,557

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$

 
$
46,003

 
$
(8,556
)
 
$
37,447

Unearned premiums

 

 
9,828

 
(1,808
)
 
8,020

Future policy benefits

 

 
5,790

 
(1,008
)
 
4,782

Due to (from) subsidiaries and affiliates, net

 
556

 
212

 
(768
)
 

Affiliated notional cash pooling programs(1)
573

 
32

 

 
(605
)
 

Short-term debt

 
450

 
1,401

 

 
1,851

Long-term debt

 
4,045

 
12

 

 
4,057

Trust preferred securities

 
309

 

 

 
309

Other liabilities
286

 
1,432

 
12,681

 
(3,325
)
 
11,074

Total liabilities
859

 
6,824

 
75,927

 
(16,070
)
 
67,540

Total shareholders’ equity
30,017

 
12,539

 
36,580

 
(49,119
)
 
30,017

Total liabilities and shareholders’ equity
$
30,876

 
$
19,363

 
$
112,507

 
$
(65,189
)
 
$
97,557


(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2014, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
 




Condensed Consolidating Balance Sheet at December 31, 2013

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
32

 
$
10

 
$
60,886

 
$

 
$
60,928

Cash(1)

 
16

 
748

 
(185
)
 
579

Insurance and reinsurance balances receivable

 

 
5,835

 
(809
)
 
5,026

Reinsurance recoverable on losses and loss expenses

 

 
20,057

 
(8,830
)
 
11,227

Reinsurance recoverable on policy benefits

 

 
1,215

 
(997
)
 
218

Value of business acquired

 

 
536

 

 
536

Goodwill and other intangible assets

 

 
5,404

 

 
5,404

Investments in subsidiaries
28,351

 
18,105

 

 
(46,456
)
 

Due from subsidiaries and affiliates, net
844

 

 

 
(844
)
 

Other assets
5

 
258

 
13,788

 
(3,459
)
 
10,592

Total assets
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$

 
$

 
$
45,714

 
$
(8,271
)
 
$
37,443

Unearned premiums

 

 
9,242

 
(1,703
)
 
7,539

Future policy benefits

 

 
5,612

 
(997
)
 
4,615

Due to (from) subsidiaries and affiliates, net

 
714

 
130

 
(844
)
 

Affiliated notional cash pooling programs(1)
185

 

 

 
(185
)
 

Short-term debt

 
500

 
1,401

 

 
1,901

Long-term debt

 
3,795

 
12

 

 
3,807

Trust preferred securities

 
309

 

 

 
309

Other liabilities
222

 
1,318

 
11,655

 
(3,124
)
 
10,071

Total liabilities
407

 
6,636

 
73,766

 
(15,124
)
 
65,685

Total shareholders’ equity
28,825

 
11,753

 
34,703

 
(46,456
)
 
28,825

Total liabilities and shareholders’ equity
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statements of Operations and Comprehensive Income
For the Three Months Ended September 30, 2014
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
4,729

 
$

 
$
4,729

Net premiums earned

 

 
4,754

 

 
4,754

Net investment income
1

 

 
565

 

 
566

Equity in earnings of subsidiaries
745

 
258

 

 
(1,003
)
 

Net realized gains (losses) including OTTI

 
46

 
(166
)
 

 
(120
)
Losses and loss expenses

 

 
2,684

 

 
2,684

Policy benefits

 

 
125

 

 
125

Policy acquisition costs and administrative expenses
18

 
6

 
1,355

 

 
1,379

Interest (income) expense
(7
)
 
68

 
9

 

 
70

Other (income) expense
(54
)
 
2

 
33

 

 
(19
)
Income tax expense (benefit)
4

 
(11
)
 
183

 

 
176

Net income
$
785

 
$
239

 
$
764

 
$
(1,003
)
 
$
785

Comprehensive income
$
298

 
$
33

 
$
276

 
$
(309
)
 
$
298


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Three Months Ended September 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
4,620

 
$

 
$
4,620

Net premiums earned

 

 
4,610

 

 
4,610

Net investment income
1

 

 
521

 

 
522

Equity in earnings of subsidiaries
863

 
322

 

 
(1,185
)
 

Net realized gains (losses) including OTTI

 
(2
)
 
42

 

 
40

Losses and loss expenses

 

 
2,655

 

 
2,655

Policy benefits

 

 
138

 

 
138

Policy acquisition costs and administrative expenses
13

 
4

 
1,224

 

 
1,241

Interest (income) expense
(8
)
 
69

 
11

 

 
72

Other (income) expense
(62
)
 
6

 
51

 

 
(5
)
Income tax expense (benefit)
5

 
(14
)
 
164

 

 
155

Net income
$
916

 
$
255

 
$
930

 
$
(1,185
)
 
$
916

Comprehensive income
$
1,030

 
$
339

 
$
1,043

 
$
(1,382
)
 
$
1,030





Condensed Consolidating Statements of Operations and Comprehensive Income
For the Nine Months Ended September 30, 2014
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
13,473

 
$

 
$
13,473

Net premiums earned

 

 
13,056

 

 
13,056

Net investment income
2

 
1

 
1,672

 

 
1,675

Equity in earnings of subsidiaries
2,192

 
669

 

 
(2,861
)
 

Net realized gains (losses) including OTTI

 
53

 
(350
)
 

 
(297
)
Losses and loss expenses

 

 
7,233

 

 
7,233

Policy benefits

 

 
383

 

 
383

Policy acquisition costs and administrative expenses
57

 
20

 
3,889

 

 
3,966

Interest (income) expense
(26
)
 
209

 
30

 

 
213

Other (income) expense
(146
)
 
22

 
63

 

 
(61
)
Income tax expense (benefit)
11

 
(66
)
 
457

 

 
402

Net income
$
2,298

 
$
538

 
$
2,323

 
$
(2,861
)
 
$
2,298

Comprehensive income
$
2,754

 
$
810

 
$
2,778

 
$
(3,588
)
 
$
2,754


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Nine Months Ended September 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

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

 
$

 
$
12,809

 
$

 
$
12,809

Net premiums earned

 

 
12,250

 

 
12,250

Net investment income
2

 
2

 
1,583

 

 
1,587

Equity in earnings of subsidiaries
2,619

 
767

 

 
(3,386
)
 

Net realized gains (losses) including OTTI
12

 
(2
)
 
340

 

 
350

Losses and loss expenses

 

 
6,831

 

 
6,831

Policy benefits

 

 
379

 

 
379

Policy acquisition costs and administrative expenses
40

 
13

 
3,545

 

 
3,598

Interest (income) expense
(23
)
 
200

 
28

 

 
205

Other (income) expense
(157
)
 
21

 
158

 

 
22

Income tax expense (benefit)
13

 
(80
)
 
459

 

 
392

Net income
$
2,760

 
$
613

 
$
2,773

 
$
(3,386
)
 
$
2,760

Comprehensive income (loss)
$
1,247

 
$
(195
)
 
$
1,259

 
$
(1,064
)
 
$
1,247





Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2014
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
168

 
$
139

 
$
3,115

 
$
(200
)
 
$
3,222

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

 

 
(11,870
)
 
3

 
(11,867
)
Purchases of fixed maturities held to maturity

 

 
(185
)
 

 
(185
)
Purchases of equity securities

 

 
(222
)
 

 
(222
)
Sales of fixed maturities available for
sale

 

 
6,309

 
(3
)
 
6,306

Sales of equity securities

 

 
322

 

 
322

Maturities and redemptions of fixed maturities available for sale

 

 
4,814

 

 
4,814

Maturities and redemptions of fixed maturities held to maturity

 

 
617

 

 
617

Net change in short-term investments
1

 
(16
)
 
(969
)
 

 
(984
)
Net derivative instruments settlements

 
53

 
(223
)
 

 
(170
)
Acquisition of subsidiaries (net of cash acquired of $4)

 

 
(172
)
 

 
(172
)
Capital contribution

 
(230
)
 

 
230

 

Other

 
(9
)
 
(138
)
 

 
(147
)
Net cash flows from (used for) investing activities
1

 
(202
)
 
(1,717
)
 
230

 
(1,688
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(646
)
 

 

 

 
(646
)
Common Shares repurchased

 

 
(1,007
)
 

 
(1,007
)
Proceeds from issuance of long-term debt

 
699

 

 

 
699

Repayment of long-term debt

 
(500
)
 
(1
)
 

 
(501
)
Proceeds from share-based compensation plans, including windfall tax benefits

 

 
94

 

 
94

Dividend to parent company

 

 
(200
)
 
200

 

Advances (to) from affiliates
97

 
(166
)
 
69

 

 

Capital contribution

 

 
230

 
(230
)
 

Net proceeds from (payments to) affiliated notional cash pooling programs(1)
388

 
32

 

 
(420
)
 

Other

 
(6
)
 
127

 

 
121

Net cash flows (used for) from financing activities
(161
)
 
59

 
(688
)
 
(450
)
 
(1,240
)
Effect of foreign currency rate changes on cash and cash equivalents

 

 
(67
)
 

 
(67
)
Net increase (decrease) in cash
8

 
(4
)
 
643

 
(420
)
 
227

Cash – beginning of period(1)

 
16

 
748

 
(185
)
 
579

Cash – end of period(1)
$
8

 
$
12

 
$
1,391

 
$
(605
)
 
$
806

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2014 and December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended September 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
80

 
$
2

 
$
2,654

 
$

 
$
2,736

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

 

 
(16,517
)
 
103

 
(16,414
)
Purchases of fixed maturities held to maturity

 

 
(374
)
 

 
(374
)
Purchases of equity securities

 

 
(217
)
 

 
(217
)
Sales of fixed maturities available for sale

 

 
8,115

 
(103
)
 
8,012

Sales of equity securities

 

 
99

 

 
99

Maturities and redemptions of fixed maturities available for sale

 

 
5,538

 

 
5,538

Maturities and redemptions of fixed maturities held to maturity

 

 
1,233

 

 
1,233

Net change in short-term investments

 
4

 
521

 

 
525

Net derivative instruments settlements

 
(1
)
 
(375
)
 

 
(376
)
Acquisition of subsidiaries (net of cash acquired of $38)

 

 
(977
)
 

 
(977
)
Capital contribution
(133
)
 
(1,010
)
 

 
1,143

 

Other

 
(5
)
 
(183
)
 

 
(188
)
Net cash flows used for investing activities
(133
)
 
(1,012
)
 
(3,137
)
 
1,143

 
(3,139
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(343
)
 

 

 

 
(343
)
Common Shares repurchased

 

 
(233
)
 

 
(233
)
Proceeds from issuance of long-term debt

 
947

 

 

 
947

Net proceeds from issuance of short-term debt

 

 
1

 

 
1

Proceeds from share-based compensation plans, including windfall tax benefits
7

 

 
105

 

 
112

Advances (to) from affiliates
(575
)
 
575

 

 

 

Capital contribution

 

 
1,143

 
(1,143
)
 

Net proceeds from (payments to) affiliated notional cash pooling programs(1)
872

 
(349
)
 

 
(523
)
 

Other

 

 
68

 

 
68

Net cash flows from (used for) financing activities
(39
)
 
1,173

 
1,084

 
(1,666
)
 
552

Effect of foreign currency rate changes on cash and cash equivalents

 

 
4

 

 
4

Net (decrease) increase in cash
(92
)
 
163

 
605

 
(523
)
 
153

Cash – beginning of period(1)
103

 
2

 
859

 
(349
)
 
615

Cash – end of period(1)
$
11

 
$
165

 
$
1,464

 
$
(872
)
 
$
768


(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2013 and December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Acquisitions (Detail) (USD $)
In Millions, unless otherwise specified
1 Months Ended 1 Months Ended
Apr. 30, 2013
Fianzas Monterrey [Member]
Apr. 2, 2013
Fianzas Monterrey [Member]
May 31, 2013
ABA Seguros [Member]
May 2, 2013
ABA Seguros [Member]
Jun. 17, 2014
The Siam Commercial Samaggi Insurance PCL [Member]
Apr. 28, 2014
The Siam Commercial Samaggi Insurance PCL [Member]
Oct. 31, 2014
Large Corporate P&C Business Of Itau Seguros [Member]
Subsequent Event [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
Acquisition purchase price
$ 293 
 
$ 690 
 
 
 
 
Business Acquisition, Percentage of Voting Interests Acquired
 
 
 
 
 
60.86% 
 
Business Combination, Step Acquisition, Equity Interest in Acquiree, Percentage
 
 
 
 
32.17% 
 
 
Business Acquisition, Purchase Price Allocation, Goodwill Amount
 
137 
 
285 
 
46 
 
Business Acquisition, Purchase Price Allocation, Intangible Assets Other than Goodwill
 
73 
 
140 
 
80 
 
Business Acquisition, Cost of Acquired Entity, Expected Cash Consideration
 
 
 
 
 
$ 176 
$ 630 
Business Combination Total Ownership Percentage
 
 
 
 
93.03% 
 
 
Investments (Narrative) (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2014
Security
Sep. 30, 2013
Sep. 30, 2014
Security
Sep. 30, 2013
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
 
 
 
Non-cash exchange of securities
$ 219,000,000 
 
 
 
 
Fair value of securities transferred from AFS to HTM
2,000,000,000 
 
2,000,000,000 
 
 
Net unrealized appreciation (depreciation) included in OCI
(1,000,000)
1,000,000 
(6,000,000)
(24,000,000)
 
Net unrealized depreciation included in AOCI
 
 
 
 
4,000,000 
Percentage of mortgage-backed securities represented by investments in US government agency bonds
83.00% 
 
83.00% 
 
83.00% 
Credit losses recognized in net income for corporate securities
4,000,000 
1,000,000 
14,000,000 
8,000,000 
 
Credit losses recognized in net income for mortgage-backed securities
 
Number of fixed maturities in an unrealized loss position
5,799 
 
5,799 
 
 
Total number of fixed maturities
25,735 
 
25,735 
 
 
Largest single unrealized loss in the fixed maturities
3,000,000 
 
3,000,000 
 
 
Number of equity securities in an unrealized loss position
64 
 
64 
 
 
Total number of equity securities
238 
 
238 
 
 
Largest single unrealized loss in the equity securities
1,000,000 
 
1,000,000 
 
 
Restricted assets in fixed maturities and short-term investments
15,700,000,000 
 
15,700,000,000 
 
16,300,000,000 
Restricted assets in cash
$ 72,000,000 
 
$ 72,000,000 
 
$ 162,000,000 
Moodys Historical Mean Recovery Rate
 
 
42.00% 
 
 
Company Assumed Recovery Rate
 
 
32.00% 
 
 
Investments (Schedule Of Fixed Maturities By Contractual Maturity) (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
Available for sale, Due in 1 year or less, Amortized Cost
$ 2,292 
$ 2,387 
Available for sale, Due after 1 year through 5 years, Amortized Cost
14,833 
14,139 
Available for sale, Due after 5 years though 10 years, Amortized Cost
15,872 
16,200 
Available for sale, Due after 10 years, Amortized Cost
4,532 
4,743 
Available for sale, Subtotal, Amortized Cost
37,529 
37,469 
Available for sale, Mortgage-backed securities, Amortized Cost
10,159 
10,937 
Available for sale, Amortized Cost
47,688 
48,406 
Available for sale, Fair Value
49,148 
49,254 
Held to maturity, Due in 1 year or less, Amortized Cost
417 
401 
Held to maturity, Due after 1 year through 5 years, Amortized Cost
2,670 
2,284 
Held to maturity, Due after 5 years through 10 years, Amortized Cost
1,401 
1,686 
Held to maturity, Due after 10 years, Amortized Cost
973 
386 
Held to maturity, Subtotal, Amortized Cost
5,461 
4,757 
Held to maturity, Mortgage backed securities, Amortized Cost
2,087 
1,341 
Available for sale, Due in 1 year or less, Fair Value
2,316 
2,411 
Available for sale, Due after 1 year through 5 years, Fair Value
15,310 
14,602 
Available for sale, Due after 5 years through 10 years, Fair Value
16,323 
16,535 
Available for sale, Due after 10 years, Fair Value
4,875 
4,812 
Available for sale, Subtotal, Fair Value
38,824 
38,360 
Available for sale, Mortgage backed securities, Fair Value
10,324 
10,894 
Held to maturity, Due in 1 year or less, Fair Value
421 
405 
Held to maturity, Due after 1 year through 5, Fair Value
2,763 
2,363 
Held to maturity, Due after 5 years through 10 years, Fair Value
1,443 
1,723 
Held to maturity, Due after 10 years, Fair Value
1,006 
393 
Held to maturity, Subtotal, Fair Value
5,633 
4,884 
Held to maturity, Mortgage backed securities, Fair Value
2,130 
1,379 
Held-to-maturity Securities
7,548 
6,098 
Held to maturity, Fair Value
$ 7,763 
$ 6,263 
Investments (Schedule Of Cost And Fair Value Of Equity Securities) (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
Cost
$ 480 
$ 841 
Gross unrealized appreciation
71 
63 
Gross unrealized depreciation
(5)
(67)
Fair value
$ 546 
$ 837 
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 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
 
 
OTTI on fixed maturities, gross
$ (5)
$ (4)
$ (20)
$ (11)
OTTI on fixed maturities recognized in OCI (pre-tax)
OTTI on fixed maturities, net
(4)
(4)
(17)
(11)
Fixed maturities, Gross realized gains excluding OTTI
73 
37 
163 
163 
Fixed maturities, Gross realized losses excluding OTTI
(51)
(16)
(97)
(68)
Total fixed maturities
18 
17 
49 
84 
OTTI on equity securities
(7)
(1)
Equity securities, Gross realized gains excluding OTTI
18 
Equity securities, Gross realized losses excluding OTTI
(60)
(1)
(61)
(4)
Total equity securities
(56)
(60)
13 
OTTI on other investments
(3)
(2)
Foreign exchange gains (losses)
(19)
(26)
(42)
45 
Investment and embedded derivative instruments
(13)
(53)
62 
Fair value adjustments on insurance derivative
(80)
134 
(126)
563 
S&P put options and futures
(15)
(95)
(106)
(413)
Other derivative instruments
45 
(1)
52 
(2)
Other
(8)
Total net realized gains (losses)
$ (120)
$ 40 
$ (297)
$ 350 
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
Sep. 30, 2014
Dec. 31, 2013
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
$ 10,464 
$ 18,228 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(128)
(652)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
5,436 
894 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(136)
(63)
Investment securities, Unrealized loss position, Total Fair Value
15,900 
19,122 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(264)
(715)
US Treasury and Government [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
439 
1,794 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(2)
(57)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
943 
31 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(20)
(6)
Investment securities, Unrealized loss position, Total Fair Value
1,382 
1,825 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(22)
(63)
Foreign Government Debt Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
2,420 
4,621 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(34)
(114)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
916 
201 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(19)
(8)
Investment securities, Unrealized loss position, Total Fair Value
3,336 
4,822 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(53)
(122)
Corporate Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
4,943 
3,836 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(72)
(118)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
854 
194 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(25)
(14)
Investment securities, Unrealized loss position, Total Fair Value
5,797 
4,030 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(97)
(132)
Collateralized Mortgage Backed Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
2,206 
5,248 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(11)
(197)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
2,050 
384 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(64)
(31)
Investment securities, Unrealized loss position, Total Fair Value
4,256 
5,632 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(75)
(228)
US States and Political Subdivisions Debt Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
311 
2,164 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(1)
(90)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
673 
84 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(8)
(4)
Investment securities, Unrealized loss position, Total Fair Value
984 
2,248 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(9)
(94)
Fixed Maturities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
10,319 
17,663 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(120)
(576)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
5,436 
894 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(136)
(63)
Investment securities, Unrealized loss position, Total Fair Value
15,755 
18,557 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(256)
(639)
Equity Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
67 
498 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(5)
(67)
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
67 
498 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(5)
(67)
Other Long-term Investments [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
78 
67 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(3)
(9)
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
78 
67 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
$ (3)
$ (9)
Investments (Schedule Of Components Of Restricted Assets) (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
Trust funds
$ 10,497 
$ 11,315 
Deposits with non-U.S. regulatory authorities
2,014 
1,970 
Assets pledged under repurchase agreements
1,454 
1,435 
Deposits with U.S. regulatory authorities
1,324 
1,334 
Other pledged assets
435 
391 
Total restricted assets
$ 15,724 
$ 16,445 
Fair Value Measurements (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
 
Level 1 to Level 2 Transfers
$ 0 
$ 0 
$ 0 
$ 19 
Level 2 to Level 1 Transfers
Guaranteed Living Benefits, Net Income Impact From Model Refinement
$ 0 
 
$ (2)
 
Redemption Notice Periods Lower Range [Member]
 
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
 
Notice period for redemption for alternative investments investment funds, days
 
 
5 days 
 
Redemption Notice Periods Upper Range [Member]
 
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
 
Notice period for redemption for alternative investments investment funds, days
 
 
120 days 
 
Fair Value Measurements (Financial Instruments Measured At Fair Value On Recurring Basis) (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
$ 49,148 
$ 49,254 
Equity securities, at fair value
546 
837 
Short-term investments
2,753 
1,763 
Other investments
3,259 
2,976 
Securities lending collateral
1,440 
1,632 
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
1,692 
1,849 
Equity securities, at fair value
520 
373 
Short-term investments
1,253 
953 
Other investments
336 
305 
Investment derivative instruments, assets
23 
19 
Other derivative instruments, assets
11 
Separate account assets
1,389 
1,145 
Total assets measured at fair value
5,224 
4,644 
Investment derivative instruments, liabilities
Other derivative instruments, liability
60 
GLB
1
1
Total liabilities measured at fair value
66 
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
1,490 
1,626 
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
202 
223 
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
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
47,221 
47,187 
Equity securities, at fair value
24 
460 
Short-term investments
1,500 
803 
Other investments
252 
231 
Securities lending collateral
1,440 
1,632 
Other derivative instruments, assets
Separate account assets
90 
81 
Total assets measured at fair value
50,529 
50,400 
Investment derivative instruments, liabilities
Other derivative instruments, liability
GLB
1
1
Total liabilities measured at fair value
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
1,188 
1,323 
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
15,017 
14,324 
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
17,130 
17,304 
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
10,309 
10,886 
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
3,577 
3,350 
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
235 
218 
Equity securities, at fair value
Short-term investments
Other investments
2,671 
2,440 
Other derivative instruments, assets
Total assets measured at fair value
2,908 
2,669 
Investment derivative instruments, liabilities
Other derivative instruments, liability
GLB
317 1
193 1
Total liabilities measured at fair value
317 
193 
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
12 
44 
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
208 
166 
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
15 
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
49,148 
49,254 
Equity securities, at fair value
546 
837 
Short-term investments
2,753 
1,763 
Other investments
3,259 
2,976 
Securities lending collateral
1,440 
1,632 
Investment derivative instruments, assets
23 
19 
Other derivative instruments, assets
13 
Separate account assets
1,479 
1,226 
Total assets measured at fair value
58,661 
57,713 
Investment derivative instruments, liabilities
Other derivative instruments, liability
62 
GLB
317 1
193 1
Total liabilities measured at fair value
324 
261 
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
2,678 
2,949 
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
15,231 
14,591 
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
17,338 
17,470 
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
10,324 
10,894 
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
$ 3,577 
$ 3,350 
Fair Value Measurements (Schedule Of Significant Unobservable Inputs Used In Level 3 Liability Valuations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2013
Dec. 31, 2012
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
 
 
 
 
 
Valuation Technique
 
 
Actuarial model 1
 
 
 
 
 
Minimum [Member]
 
 
 
 
 
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
 
 
 
 
 
Significant Unobservable Inputs Lapse rate
1.00% 1
 
1.00% 1
 
 
 
 
 
Significant Unobservable Inputs Annuitization rate
 
 
0.00% 1
 
 
 
 
 
Maximum [Member]
 
 
 
 
 
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
 
 
 
 
 
Significant Unobservable Inputs Lapse rate
30.00% 1
 
30.00% 1
 
 
 
 
 
Significant Unobservable Inputs Annuitization rate
 
 
55.00% 1
 
 
 
 
 
Guaranteed Minimum Income Benefit [Member]
 
 
 
 
 
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value
$ 317 2
$ 514 2
$ 317 2
$ 514 2
$ 241 2
$ 193 2
$ 652 2
$ 1,119 2
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings
76 2
(138)2
124 2
(605)2
 
 
 
 
Fair Value
317 1
 
317 1
 
 
193 1
 
 
Short-term Investments [Member]
 
 
 
 
 
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases
 
$ 0 
$ 0 
$ 2 
 
 
 
 
Fair Value Measurements (Financial Instruments Measured At Fair Value Using Significant Unobservable Inputs) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2013
Dec. 31, 2012
Equity Securities [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
$ 0 
$ 0 
$ 0 
$ 7 
 
 
 
 
Balance- Beginning of Period, Assets
 
 
 
 
Transfers out of Level 3, Assets
(2)
(1)
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(5)
 
 
 
 
Net Realized Gains/Losses, Assets
 
 
 
 
 
 
Purchases, Assets
 
 
 
 
Sales, Assets
(2)
(5)
 
 
 
 
Settlements, Assets
 
 
 
 
 
 
 
Balance-End of Period, Assets
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
 
 
 
 
 
 
Short-term Investments [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
 
 
 
 
 
Balance- Beginning of Period, Assets
 
 
 
 
 
Transfers out of Level 3, Assets
 
(2)
(7)
(2)
 
 
 
 
Purchases, Assets
 
 
 
 
 
Balance-End of Period, Assets
 
 
 
 
Other Long-term Investments [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
 
 
 
 
Balance- Beginning of Period, Assets
2,640 
2,349 
2,440 
2,252 
 
 
 
 
Transfers out of Level 3, Assets
 
 
 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(8)
(1)
40 
34 
 
 
 
 
Net Realized Gains/Losses, Assets
(3)
(2)
 
 
 
 
Purchases, Assets
170 
138 
522 
387 
 
 
 
 
Sales, Assets
(3)
(1)
(6)
(10)
 
 
 
 
Settlements, Assets
(128)
(96)
(322)
(272)
 
 
 
 
Balance-End of Period, Assets
2,671 
2,389 
2,671 
2,389 
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
(3)
(2)
 
 
 
 
Available-for-sale Securities [Member] |
Foreign [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
33 
 
 
 
 
Balance- Beginning of Period, Assets
12 
48 
44 
60 
 
 
 
 
Transfers out of Level 3, Assets
(8)
(34)
(49)
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(1)
(2)
 
 
 
 
Net Realized Gains/Losses, Assets
 
 
 
 
Purchases, Assets
12 
15 
 
 
 
 
Sales, Assets
(1)
(13)
(3)
(15)
 
 
 
 
Settlements, Assets
(1)
 
 
 
 
Balance-End of Period, Assets
12 
42 
12 
42 
 
 
 
 
Available-for-sale Securities [Member] |
Corporate Debt Securities [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
12 
35 
29 
 
 
 
 
Balance- Beginning of Period, Assets
204 
114 
166 
102 
 
 
 
 
Transfers out of Level 3, Assets
(1)
(22)
(30)
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(1)
(1)
(1)
 
 
 
 
Net Realized Gains/Losses, Assets
(1)
(2)
 
 
 
 
Purchases, Assets
20 
65 
39 
 
 
 
 
Sales, Assets
(9)
(4)
(17)
(4)
 
 
 
 
Settlements, Assets
(13)
(4)
(22)
(12)
 
 
 
 
Balance-End of Period, Assets
208 
121 
208 
121 
 
 
 
 
Available-for-sale Securities [Member] |
Mortgage Backed-Securities [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
 
 
 
 
Balance- Beginning of Period, Assets
13 
 
 
 
 
Transfers out of Level 3, Assets
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
 
 
 
 
 
 
Net Realized Gains/Losses, Assets
 
 
 
 
 
 
 
Purchases, Assets
 
 
 
 
Sales, Assets
(3)
 
 
 
 
Settlements, Assets
(1)
(1)
 
 
 
 
Balance-End of Period, Assets
15 
15 
 
 
 
 
Guaranteed Minimum Income Benefit [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value
317 1
514 1
317 1
514 1
241 1
193 1
652 1
1,119 1
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings
76 1
(138)1
124 1
(605)1
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Liabilities
76 
(138)
124 
(605)
 
 
 
 
Reported liabilities
$ 566 
$ 746 
$ 566 
$ 746 
 
$ 427 
$ 880 
$ 1,400 
Fair Value Measurements (Carrying Values And Fair Values Of Financial Instruments Not Measured At Fair Value) (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
$ 7,763 
$ 6,263 
Partially-owned insurance companies
495 
470 
Total assets
8,258 
6,733 
Short-term debt
1,864 
1,913 
Long-term debt
4,349 
4,088 
Trust preferred securities
459 
438 
Total liabilities
6,672 
6,439 
Financial Instruments Fair Value [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
817 
832 
Financial Instruments Fair Value [Member] |
Foreign [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
978 
897 
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
2,525 
2,005 
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
2,130 
1,379 
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
1,313 
1,150 
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
625 
596 
Total assets
625 
596 
Fair Value, Inputs, Level 1 [Member] |
Financial Instruments Fair Value [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
625 
596 
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
7,123 
5,652 
Total assets
7,123 
5,652 
Short-term debt
1,864 
1,913 
Long-term debt
4,349 
4,088 
Trust preferred securities
459 
438 
Total liabilities
6,672 
6,439 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
192 
236 
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
978 
897 
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
2,510 
1,990 
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
2,130 
1,379 
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
1,313 
1,150 
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
15 
15 
Partially-owned insurance companies
495 
470 
Total assets
510 
485 
Fair Value, Inputs, Level 3 [Member] |
Financial Instruments Fair Value [Member] |
U.S. Treasury And Agency [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
15 
15 
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
7,548 
6,098 
Partially-owned insurance companies
495 
470 
Total assets
8,043 
6,568 
Short-term debt
1,851 
1,901 
Long-term debt
4,057 
3,807 
Trust preferred securities
309 
309 
Total liabilities
6,217 
6,017 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
804 
820 
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
937 
864 
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
2,443 
1,922 
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
2,087 
1,341 
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
$ 1,277 
$ 1,151 
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 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
Net premiums earned
$ 4,754 
$ 4,610 
$ 13,056 
$ 12,250 
Policy benefits and other reserve adjustments
125 
138 
383 
379 
Net realized gains (losses)
(120)
40 
(297)
350 
Guaranteed Minimum Death Benefit [Member]
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
Net premiums earned
17 
19 
54 
59 
Policy benefits and other reserve adjustments
12 
14 
40 
58 
Guaranteed Minimum Income Benefit [Member]
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
Net premiums earned
35 
36 
105 
112 
Policy benefits and other reserve adjustments
27 
20 
Net realized gains (losses)
(76)
138 
(124)
608 
Gain (loss) recognized in income
(49)
165 
(46)
700 
Net cash received
31 
31 
93 
94 
Net (increase) decrease in liability
$ (80)
$ 134 
$ (139)
$ 606 
Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Sep. 30, 2014
Guaranteed Minimum Death Benefit [Member]
Dec. 31, 2013
Guaranteed Minimum Death Benefit [Member]
Sep. 30, 2014
Guaranteed Minimum Income Benefit [Member]
Dec. 31, 2013
Guaranteed Minimum Income Benefit [Member]
Sep. 30, 2013
Guaranteed Minimum Income Benefit [Member]
Jun. 30, 2013
Guaranteed Minimum Income Benefit [Member]
Dec. 31, 2012
Guaranteed Minimum Income Benefit [Member]
Sep. 30, 2014
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Dec. 31, 2013
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Sep. 30, 2014
Guaranteed Living Benefits [Member]
Dec. 31, 2013
Guaranteed Living Benefits [Member]
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Reported liabilities
 
$ 108 
$ 100 
$ 566 
$ 427 
$ 746 
$ 880 
$ 1,400 
 
 
 
 
Fair value derivative adjustment in liability
 
 
 
317 
193 
 
 
 
 
 
 
 
Net amount at risk
 
520 
586 
 
 
 
 
 
 
 
241 
136 
Mortality percentage according to Annuity 2000 mortality table
 
 
 
 
 
 
 
 
 
 
100.00% 
 
Discounting assumption used in the calculation of the benefit reserve averaging - lower range
 
2.00% 
 
 
 
 
 
 
3.50% 
 
3.50% 
 
Discounting assumption used in the calculation of the benefit reserve averaging - upper range
 
3.00% 
 
 
 
 
 
 
4.50% 
 
4.50% 
 
Total claim amount payable, if all of the Company's cedants' policyholders covered were to die immediately
 
629 
 
 
 
 
 
 
39 
 
 
 
GMBD net amount of risk
 
 
 
 
 
 
 
 
75 
73 
 
 
GLB net amount of risk
 
 
 
 
 
 
 
 
$ 168 
$ 141 
 
 
Average attained age of all policyholders under all benefits reinsured, years
69 years 
 
 
 
 
 
 
 
 
 
 
 
Debt (Details) (USD $)
In Millions, unless otherwise specified
May 1, 2014
ACE INA Senior Notes Due May 2015 [Member]
May 1, 2014
Senior Notes [Member]
ACE INA Senior Notes Due May 2024 [Member]
Jun. 1, 2014
ACE INA Senior Notes Due June 2014 [Member]
Debt Instrument [Line Items]
 
 
 
Debt Instrument, Face Amount
 
$ 700 
 
Debt Instrument, Interest Rate, Stated Percentage
5.60% 
3.35% 
5.875% 
Make Whole Premium Additional Percent
 
0.15% 
 
Long-term Debt, Current Maturities
$ 450 
 
$ 500 
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
Sep. 30, 2014
Dec. 31, 2013
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
$ 1,010 
$ 1,202 
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
95 
50 
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,000 
3,910 
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,145 
871 
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
268 1
254 1
Investment And Embedded Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
326 
321 
Notional Value/Payment Provision
3,518 
6,287 
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,427 2
1,692 2
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
250 2
250 2
Other Derivatives [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,685 
1,950 
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
409 3
277 3
Other Assets [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
14 
Other Assets [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
Other Assets [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
13 
Other Assets [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
11 2
2
Other Assets [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
2
2
Other Assets [Member] |
Other Derivatives [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
 
Other Assets [Member] |
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
13 
Other Assets [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
3
3
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
(2)
(4)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
(3)
(2)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
1
1
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Investment And Embedded Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
(5)
(6)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
2
(60)2
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
2
2
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Other Derivatives [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
(2)
(2)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
(2)
(62)
Fixed Maturities Available For Sale [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Asset
303 1
302 1
Accounts Payable Future Policy Benefits [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Fair Value, Liability
$ (566)3
$ (427)3
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 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
$ (63)
$ 42 
$ (233)
$ 210 
Foreign Exchange Future [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
19 
(9)
15 
All Other Futures Contracts And Options [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(15)
(55)
46 
Convertibles and Bonds with Warrants Attached [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(17)1
1
(13)1
1
TBAs [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
Investment And Embedded Derivative Instruments [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(13)
(53)
62 
Guaranteed Living Benefits [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(80)2
134 2
(126)2
563 2
Single-Stock Future [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(15)3
(90)3
(103)3
(393)3
Options On Equity Market Indices [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
3
(5)3
(3)3
(20)3
Guaranteed Living Benefit And Other Derivative Instruments [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(50)
38 
(180)
148 
Other Derivatives [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
$ 45 
$ (1)
$ 52 
$ (2)
Commitments, Contingencies, And Guarantees (Narrative) (Detail) (USD $)
3 Months Ended
Jun. 30, 2014
Sep. 30, 2014
Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Carrying value of limited partnerships and partially-owned investment companies included in other investments
 
$ 2,100,000,000 
 
Funding commitments relating to limited partnerships and partially-owned investment companies
 
903,000,000 
 
Repurchase obligations
 
1,401,000,000 
1,401,000,000 
Securities lending payable
 
1,441,000,000 
1,633,000,000 
Securities lending collateral
 
1,440,000,000 
1,632,000,000 
Unrecognized tax benefits
 
28,000,000 
 
Derivative liability subject to a master netting agreement
 
25,000,000 
41,000,000 
Amount of credit facility not renewed by the company
$ 500,000,000 
 
 
Shareholders' equity Shareholders' equity (Details)
3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 1 Months Ended
Sep. 30, 2014
USD ($)
Sep. 30, 2014
CHF
Sep. 30, 2013
USD ($)
Sep. 30, 2013
CHF
Sep. 30, 2014
USD ($)
Sep. 30, 2014
CHF
Sep. 30, 2013
USD ($)
Sep. 30, 2013
CHF
May 31, 2014
USD ($)
Dec. 31, 2013
CHF
May 31, 2013
USD ($)
Sep. 30, 2014
November 2013 Stock Repurchase Plan [Member]
USD ($)
Sep. 30, 2014
November 2013 Stock Repurchase Plan [Member]
USD ($)
Nov. 30, 2013
November 2013 Stock Repurchase Plan [Member]
USD ($)
Oct. 28, 2014
November 2013 Stock Repurchase Plan [Member]
Subsequent Event [Member]
USD ($)
Equity, Class of Treasury Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share repurchase amount
 
 
 
 
 
 
 
 
 
 
 
$ 450,000,000 
$ 1,019,000,000 
 
$ 74,000,000 
Repurchase of outstanding common shares, shares
 
 
 
 
 
 
 
 
 
 
 
4,349,302 
10,143,184 
 
699,965 
Share repurchase authorization remains
 
 
 
 
 
 
 
 
 
 
 
924,000,000 
924,000,000 
 
850,000,000 
Common Shares in treasury, shares
10,720,855 
10,720,855 
 
 
10,720,855 
10,720,855 
 
 
 
3,038,477 
 
 
 
 
 
Stock repurchase program, authorized amount
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2,000,000,000 
 
Annual dividend per share approved by shareholders
 
 
 
 
 
 
 
 
$ 2.60 
 
$ 2.04 
 
 
 
 
Dividends Declared From Additional Paid In Capital
 
 
 
 
$ 0.24 
 0.20 
 
 
 
 
 
 
 
 
 
Increase to dividend approved by shareholders in January
 
 
 
 
$ 0.12 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
 
 
 
$ 2.05 
 1.84 
 
 
 
 
 
 
 
 
 
Par Value Reduction
$ 0.65 
 0.61 
$ 0.51 
 0.46 
$ 1.81 
 1.64 
$ 1.51 
 1.40 
 
 
 
 
 
 
 
Common Shares, par value
 
 25.40 
 
 
 
 25.40 
 
 
 
 27.04 
 
 
 
 
 
Share-Based Compensation (Detail) (USD $)
9 Months Ended 0 Months Ended
Sep. 30, 2014
Feb. 27, 2014
Stock Options [Member]
Feb. 27, 2014
Restricted Stock [Member]
Feb. 27, 2014
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
 
1,779,074 
 
 
Weighted-average grant date fair value for stock options granted
 
$ 18.00 
 
 
Restricted stock award and units vesting period in years
4 years 
 
 
 
Restricted stock awards granted to employees and officers of the company
 
 
1,492,290 
 
Restricted stock units awarded to employees and officers of the company
 
 
 
276,992 
Grant date fair value of awards except for options granted to employees and officers of the company
 
 
$ 96.76 
$ 96.76 
Segment Information (Operations By Segment) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
$ 4,729 
$ 4,620 
$ 13,473 
$ 12,809 
Net premiums earned
4,754 
4,610 
13,056 
12,250 
Losses and loss expenses
2,684 
2,655 
7,233 
6,831 
Policy benefits
125 
138 
383 
379 
Policy acquisition costs
825 
678 
2,311 
1,957 
Administrative expenses
554 
563 
1,655 
1,641 
Underwriting income (loss)
566 
576 
1,474 
1,442 
Net investment income
566 
522 
1,675 
1,587 
Net realized gains (losses) including OTTI
(120)
40 
(297)
350 
Interest expense
70 
72 
213 
205 
(Gains) losses from fair value changes in separate account assets
(14)
(5)
(7)
Other
(25)
(56)
29 
Other (income) expense
(19)
(5)
(61)
22 
Income tax expense (benefit)
176 
155 
402 
392 
Net income (loss)
785 
916 
2,298 
2,760 
Insurance - North American P&C [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
1,541 
1,500 
4,594 
4,313 
Net premiums earned
1,518 
1,444 
4,547 
4,210 
Losses and loss expenses
1,053 
963 
3,009 
2,791 
Policy acquisition costs
169 
159 
480 
444 
Administrative expenses
165 
153 
501 
437 
Underwriting income (loss)
131 
169 
557 
538 
Net investment income
277 
254 
812 
755 
Net realized gains (losses) including OTTI
(5)
(25)
63 
Interest expense
Other
(31)
(13)
(75)
(38)
Income tax expense (benefit)
73 
79 
247 
264 
Net income (loss)
359 
363 
1,165 
1,126 
Insurance - North American Agriculture [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Underwriting Income Including Losses Related to Crop Derivatives
81 
 
 
 
Net premiums written
764 
805 
1,346 
1,371 
Net premiums earned
766 
849 
1,199 
1,252 
Losses and loss expenses
686 
746 
1,099 
1,071 
Policy acquisition costs
41 
32 
69 
56 
Administrative expenses
13 
Underwriting income (loss)
36 
66 
26 
112 
Net investment income
19 
19 
Net realized gains (losses) including OTTI
45 
51 
Interest expense
Other
24 
24 
Income tax expense (benefit)
23 
14 
21 
24 
Net income (loss)
57 
50 
51 
84 
Crop Derivative Gain or Loss
45 
 
 
 
Insurance - Overseas General [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
1,719 
1,571 
5,250 
4,821 
Net premiums earned
1,726 
1,611 
5,047 
4,633 
Losses and loss expenses
707 
712 
2,354 
2,227 
Policy acquisition costs
418 
349 
1,206 
1,048 
Administrative expenses
258 
263 
764 
750 
Underwriting income (loss)
343 
287 
723 
608 
Net investment income
130 
128 
398 
396 
Net realized gains (losses) including OTTI
(75)
(8)
(71)
34 
Interest expense
Other
14 
30 
Income tax expense (benefit)
97 
78 
189 
174 
Net income (loss)
293 
314 
849 
830 
Global Reinsurance [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
208 
265 
794 
836 
Net premiums earned
255 
239 
800 
731 
Losses and loss expenses
92 
93 
327 
292 
Policy acquisition costs
74 
52 
201 
148 
Administrative expenses
13 
12 
41 
36 
Underwriting income (loss)
76 
82 
231 
255 
Net investment income
81 
66 
238 
209 
Net realized gains (losses) including OTTI
(5)
(17)
46 
Interest expense
Other
(10)
(7)
(39)
(13)
Income tax expense (benefit)
11 
16 
31 
31 
Net income (loss)
161 
132 
456 
488 
Life [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Life underwriting income
88 
 
 
 
Net premiums written
497 
479 
1,489 
1,468 
Net premiums earned
489 
467 
1,463 
1,424 
Losses and loss expenses
145 
141 
442 
443 
Policy benefits
125 
138 
383 
379 
Policy acquisition costs
123 
86 
355 
261 
Administrative expenses
71 
85 
212 
256 
Underwriting income (loss)
25 
17 
71 
85 
Net investment income
69 
61 
199 
187 
Net realized gains (losses) including OTTI
(89)
43 
(237)
206 
Interest expense
10 
12 
(Gains) losses from fair value changes in separate account assets
(14)
(5)
(7)
Other
(3)
Income tax expense (benefit)
12 
10 
34 
33 
Net income (loss)
(14)
117 
(14)
433 
Corporate And Other [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Losses and loss expenses
Policy acquisition costs
 
 
Administrative expenses
44 
45 
132 
149 
Underwriting income (loss)
(45)
(45)
(134)
(156)
Net investment income
21 
Net realized gains (losses) including OTTI
(2)
Interest expense
61 
62 
188 
181 
Other
18 
19 
Income tax expense (benefit)
(40)
(42)
(120)
(134)
Net income (loss)
$ (71)
$ (60)
$ (209)
$ (201)
Segment Information (Net Premiums Earned For Segment By Product) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
$ 2,079 
$ 2,067 
$ 5,046 
$ 4,695 
Casualty
1,493 
1,430 
4,515 
4,237 
Life, Accident & Health
1,182 
1,113 
3,495 
3,318 
Net premiums earned
4,754 
4,610 
13,056 
12,250 
Insurance - North American P&C [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
420 
388 
1,248 
1,103 
Casualty
993 
957 
2,992 
2,826 
Life, Accident & Health
105 
99 
307 
281 
Net premiums earned
1,518 
1,444 
4,547 
4,210 
Insurance - North American Agriculture [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
766 
849 
1,199 
1,252 
Casualty
Life, Accident & Health
Net premiums earned
766 
849 
1,199 
1,252 
Insurance - Overseas General [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
744 
689 
2,164 
1,932 
Casualty
394 
375 
1,158 
1,088 
Life, Accident & Health
588 
547 
1,725 
1,613 
Net premiums earned
1,726 
1,611 
5,047 
4,633 
Global Reinsurance [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
149 
141 
435 
408 
Casualty
106 
98 
365 
323 
Net premiums earned
255 
239 
800 
731 
Life [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Life, Accident & Health
489 
467 
1,463 
1,424 
Net premiums earned
$ 489 
$ 467 
$ 1,463 
$ 1,424 
Earnings Per Share (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Earnings Per Share [Abstract]
 
 
 
 
Net income
$ 785 
$ 916 
$ 2,298 
$ 2,760 
Weighted-average shares outstanding
334,472,324 
340,888,648 
337,083,498 
340,905,322 
Share-based compensation plans
3,201,656 
2,929,089 
3,298,569 
3,146,728 
Weighted-average shares outstanding and assumed conversions
337,673,980 
343,817,737 
340,382,067 
344,052,050 
Basic earnings per share (US$ per share)
$ 2.35 
$ 2.68 
$ 6.82 
$ 8.09 
Diluted earnings per share (US$ per share)
$ 2.32 
$ 2.66 
$ 6.75 
$ 8.02 
Potential anti-dilutive share conversions
1,227,575 
1,215,884 
1,410,340 
1,429,514 
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Balance Sheet) (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Sep. 30, 2013
Dec. 31, 2012
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
$ 63,254 
$ 60,928 
 
 
Cash
806 1 2
579 1 3
768 4
615 4
Insurance and reinsurance balances receivable
5,189 
5,026 
 
 
Reinsurance recoverable on losses and loss expenses
10,945 
11,227 
 
 
Reinsurance recoverable on policy benefits
228 
218 
 
 
Value of business acquired
491 
536 
 
 
Goodwill and other intangible assets
5,425 
5,404 
 
 
Other assets
11,219 
10,592 
 
 
Total assets
97,557 
94,510 
 
 
Unpaid losses and loss expenses
37,447 
37,443 
 
 
Unearned premiums
8,020 
7,539 
 
 
Future policy benefits
4,782 
4,615 
 
 
Short-term debt
1,851 
1,901 
 
 
Long-term debt
4,057 
3,807 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
11,074 
10,071 
 
 
Total liabilities
67,540 
65,685 
 
 
Total shareholders' equity
30,017 
28,825 
28,218 
 
Total liabilities and shareholders’ equity
97,557 
94,510 
 
 
ACE Limited (Parent Guarantor)
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
31 
32 
 
 
Cash
1 2
1 3
11 4
103 4
Investments in subsidiaries
30,065 
28,351 
 
 
Due from subsidiaries and affiliates, net
768 
844 
 
 
Other assets
 
 
Total assets
30,876 
29,232 
 
 
Affiliated notional cash pooling programs
573 2
185 3
 
 
Trust preferred securities
 
 
 
Other liabilities
286 
222 
 
 
Total liabilities
859 
407 
 
 
Total shareholders' equity
30,017 
28,825 
 
 
Total liabilities and shareholders’ equity
30,876 
29,232 
 
 
ACE INA Holdings Inc (Subsidiary Issuer)
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
25 
10 
 
 
Cash
12 1 2
16 1 3
165 4
4
Insurance and reinsurance balances receivable
 
 
Reinsurance recoverable on losses and loss expenses
 
 
Reinsurance recoverable on policy benefits
 
 
Value of business acquired
 
 
Goodwill and other intangible assets
 
 
Investments in subsidiaries
19,054 
18,105 
 
 
Other assets
272 
258 
 
 
Total assets
19,363 
18,389 
 
 
Unpaid losses and loss expenses
 
 
Unearned premiums
 
 
Future policy benefits
 
 
Due to subsidiaries and affiliates, net
556 
714 
 
 
Short-term debt
450 
500 
 
 
Affiliated notional cash pooling programs
32 2
3
 
 
Long-term debt
4,045 
3,795 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
1,432 
1,318 
 
 
Total liabilities
6,824 
6,636 
 
 
Total shareholders' equity
12,539 
11,753 
 
 
Total liabilities and shareholders’ equity
19,363 
18,389 
 
 
Other ACE Limited Subsidiaries
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
63,198 
60,886 
 
 
Cash
1,391 1 2
748 1 3
1,464 4
859 4
Insurance and reinsurance balances receivable
6,149 
5,835 
 
 
Reinsurance recoverable on losses and loss expenses
19,948 
20,057 
 
 
Reinsurance recoverable on policy benefits
1,236 
1,215 
 
 
Value of business acquired
491 
536 
 
 
Goodwill and other intangible assets
5,425 
5,404 
 
 
Other assets
14,669 
13,788 
 
 
Total assets
112,507 
108,469 
 
 
Unpaid losses and loss expenses
46,003 
45,714 
 
 
Unearned premiums
9,828 
9,242 
 
 
Future policy benefits
5,790 
5,612 
 
 
Due to subsidiaries and affiliates, net
212 
130 
 
 
Short-term debt
1,401 
1,401 
 
 
Affiliated notional cash pooling programs
2
3
 
 
Long-term debt
12 
12 
 
 
Trust preferred securities
 
 
 
Other liabilities
12,681 
11,655 
 
 
Total liabilities
75,927 
73,766 
 
 
Total shareholders' equity
36,580 
34,703 
 
 
Total liabilities and shareholders’ equity
112,507 
108,469 
 
 
Consolidating Adjustments and Eliminations
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
 
 
Cash
(605)1 2
(185)1 3
(872)4
(349)4
Insurance and reinsurance balances receivable
(960)
(809)
 
 
Reinsurance recoverable on losses and loss expenses
(9,003)
(8,830)
 
 
Reinsurance recoverable on policy benefits
(1,008)
(997)
 
 
Value of business acquired
 
 
Goodwill and other intangible assets
 
 
Investments in subsidiaries
(49,119)
(46,456)
 
 
Due from subsidiaries and affiliates, net
(768)
(844)
 
 
Other assets
(3,726)
(3,459)
 
 
Total assets
(65,189)
(61,580)
 
 
Unpaid losses and loss expenses
(8,556)
(8,271)
 
 
Unearned premiums
(1,808)
(1,703)
 
 
Future policy benefits
(1,008)
(997)
 
 
Due to subsidiaries and affiliates, net
(768)
(844)
 
 
Short-term debt
 
 
Affiliated notional cash pooling programs
(605)2
(185)3
 
 
Long-term debt
 
 
 
Trust preferred securities
 
 
 
Other liabilities
(3,325)
(3,124)
 
 
Total liabilities
(16,070)
(15,124)
 
 
Total shareholders' equity
(49,119)
(46,456)
 
 
Total liabilities and shareholders’ equity
$ (65,189)
$ (61,580)
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Statement Of Operations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net premiums written
$ 4,729 
$ 4,620 
$ 13,473 
$ 12,809 
Net premiums earned
4,754 
4,610 
13,056 
12,250 
Net investment income
566 
522 
1,675 
1,587 
Net realized gains (losses) including OTTI
(120)
40 
(297)
350 
Losses and loss expenses
2,684 
2,655 
7,233 
6,831 
Policy benefits
125 
138 
383 
379 
Policy acquisition costs and administrative expenses
1,379 
1,241 
3,966 
3,598 
Interest (income) expense
70 
72 
213 
205 
Other (income) expense
(19)
(5)
(61)
22 
Income tax expense (benefit)
176 
155 
402 
392 
Net income (loss)
785 
916 
2,298 
2,760 
Comprehensive income (loss)
298 
1,030 
2,754 
1,247 
ACE Limited (Parent Guarantor)
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net investment income
Equity in earnings of subsidiaries
745 
863 
2,192 
2,619 
Net realized gains (losses) including OTTI
12 
Policy acquisition costs and administrative expenses
18 
13 
57 
40 
Interest (income) expense
(7)
(8)
(26)
(23)
Other (income) expense
(54)
(62)
(146)
(157)
Income tax expense (benefit)
11 
13 
Net income (loss)
785 
916 
2,298 
2,760 
Comprehensive income (loss)
298 
1,030 
2,754 
1,247 
ACE INA Holdings Inc (Subsidiary Issuer)
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net premiums written
Net premiums earned
Net investment income
Equity in earnings of subsidiaries
258 
322 
669 
767 
Net realized gains (losses) including OTTI
46 
(2)
53 
(2)
Losses and loss expenses
Policy benefits
Policy acquisition costs and administrative expenses
20 
13 
Interest (income) expense
68 
69 
209 
200 
Other (income) expense
22 
21 
Income tax expense (benefit)
(11)
(14)
(66)
(80)
Net income (loss)
239 
255 
538 
613 
Comprehensive income (loss)
33 
339 
810 
(195)
Other ACE Limited Subsidiaries
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net premiums written
4,729 
4,620 
13,473 
12,809 
Net premiums earned
4,754 
4,610 
13,056 
12,250 
Net investment income
565 
521 
1,672 
1,583 
Net realized gains (losses) including OTTI
(166)
42 
(350)
340 
Losses and loss expenses
2,684 
2,655 
7,233 
6,831 
Policy benefits
125 
138 
383 
379 
Policy acquisition costs and administrative expenses
1,355 
1,224 
3,889 
3,545 
Interest (income) expense
11 
30 
28 
Other (income) expense
33 
51 
63 
158 
Income tax expense (benefit)
183 
164 
457 
459 
Net income (loss)
764 
930 
2,323 
2,773 
Comprehensive income (loss)
276 
1,043 
2,778 
1,259 
Consolidating Adjustments and Eliminations
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Equity in earnings of subsidiaries
(1,003)
(1,185)
(2,861)
(3,386)
Net income (loss)
(1,003)
(1,185)
(2,861)
(3,386)
Comprehensive income (loss)
$ (309)
$ (1,382)
$ (3,588)
$ (1,064)
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Statement Of Cash Flows) (Detail) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
$ 3,222 
$ 2,736 
Purchases of fixed maturities available for sale
(11,867)
(16,414)
Purchases of fixed maturities held to maturity
(185)
(374)
Purchases of equity securities
(222)
(217)
Sales of fixed maturities available for sale
6,306 
8,012 
Sales of equity securities
322 
99 
Maturities and redemptions of fixed maturities available for sale
4,814 
5,538 
Maturities and redemptions of fixed maturities held to maturity
617 
1,233 
Net change in short-term investments
(984)
525 
Net derivative instruments settlements
(170)
(376)
Acquisition of subsidiaries
(172)
(977)
Cash Acquired from Acquisition
38 
Other
(147)
(188)
Net cash flows used for investing activities
(1,688)
(3,139)
Dividends paid on Common Shares
(646)
(343)
Common Shares repurchased
(1,007)
(233)
Proceeds from issuance of long-term debt
699 
947 
Proceeds from (Repayments of) short-term debt
 
Repayment of long-term debt
(501)
Proceeds from share-based compensation plans, including windfall tax benefits
94 
112 
Other
121 
68 
Net cash flows (used for) from financing activities
(1,240)
552 
Effect of foreign currency rate changes on cash and cash equivalents
(67)
Net increase in cash
227 
153 
Cash – beginning of period
579 1 2
615 3
Cash – end of period
806 1 4
768 3
ACE Limited (Parent Guarantor)
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
168 
80 
Sales of fixed maturities available for sale
 
Net change in short-term investments
 
Net derivative instruments settlements
Payment Of Contributions To Subsidiary
(133)
Net cash flows used for investing activities
(133)
Dividends paid on Common Shares
(646)
(343)
Proceeds from (Repayments of) short-term debt
 
Proceeds from share-based compensation plans, including windfall tax benefits
Advances To From Affiliates Financing Activities
97 
(575)
Net proceeds from (payments to) affiliated notional cash pooling program
388 1
872 3
Other
 
Net cash flows (used for) from financing activities
(161)
(39)
Net increase in cash
(92)
Cash – beginning of period
1 2
103 3
Cash – end of period
1 4
11 3
ACE INA Holdings Inc (Subsidiary Issuer)
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
139 
Purchases of fixed maturities available for sale
Purchases of fixed maturities held to maturity
Purchases of equity securities
Sales of fixed maturities available for sale
Sales of equity securities
Maturities and redemptions of fixed maturities available for sale
Maturities and redemptions of fixed maturities held to maturity
Net change in short-term investments
(16)
Net derivative instruments settlements
53 
(1)
Acquisition of subsidiaries
Payment Of Contributions To Subsidiary
(230)
(1,010)
Other
(9)
(5)
Net cash flows used for investing activities
(202)
(1,012)
Proceeds from issuance of long-term debt
699 
947 
Proceeds from (Repayments of) short-term debt
 
Repayment of long-term debt
(500)
 
Proceeds from share-based compensation plans, including windfall tax benefits
Advances To From Affiliates Financing Activities
(166)
575 
Capital contribution
 
Net proceeds from (payments to) affiliated notional cash pooling program
32 1
(349)3
Other
(6)
Net cash flows (used for) from financing activities
59 
1,173 
Effect of foreign currency rate changes on cash and cash equivalents
Net increase in cash
(4)
163 
Cash – beginning of period
16 1 2
3
Cash – end of period
12 1 4
165 3
Other ACE Limited Subsidiaries
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
3,115 
2,654 
Purchases of fixed maturities available for sale
(11,870)
(16,517)
Purchases of fixed maturities held to maturity
(185)
(374)
Purchases of equity securities
(222)
(217)
Sales of fixed maturities available for sale
6,309 
8,115 
Sales of equity securities
322 
99 
Maturities and redemptions of fixed maturities available for sale
4,814 
5,538 
Maturities and redemptions of fixed maturities held to maturity
617 
1,233 
Net change in short-term investments
(969)
521 
Net derivative instruments settlements
(223)
(375)
Acquisition of subsidiaries
(172)
(977)
Payment Of Contributions To Subsidiary
Other
(138)
(183)
Net cash flows used for investing activities
(1,717)
(3,137)
Dividends paid on Common Shares
 
Common Shares repurchased
(1,007)
(233)
Proceeds from (Repayments of) short-term debt
 
Repayment of long-term debt
(1)
 
Proceeds from share-based compensation plans, including windfall tax benefits
94 
105 
Cash Dividends Paid to Parent Company
(200)
 
Advances To From Affiliates Financing Activities
69 
 
Capital contribution
230 
1,143 
Net proceeds from (payments to) affiliated notional cash pooling program
1
3
Other
127 
68 
Net cash flows (used for) from financing activities
(688)
1,084 
Effect of foreign currency rate changes on cash and cash equivalents
(67)
Net increase in cash
643 
605 
Cash – beginning of period
748 1 2
859 3
Cash – end of period
1,391 1 4
1,464 3
Consolidating Adjustments and Eliminations
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
(200)
Purchases of fixed maturities available for sale
103 
Purchases of fixed maturities held to maturity
Purchases of equity securities
Sales of fixed maturities available for sale
(3)
(103)
Sales of equity securities
Maturities and redemptions of fixed maturities available for sale
Maturities and redemptions of fixed maturities held to maturity
Net change in short-term investments
 
Net derivative instruments settlements
Acquisition of subsidiaries
Payment Of Contributions To Subsidiary
230 
1,143 
Other
Net cash flows used for investing activities
230 
1,143 
Dividends paid on Common Shares
 
Common Shares repurchased
Proceeds from (Repayments of) short-term debt
 
Repayment of long-term debt
 
Proceeds from share-based compensation plans, including windfall tax benefits
Cash Dividends Paid to Parent Company by Consolidated Subsidiaries
200 
 
Advances To From Affiliates Financing Activities
Capital contribution
(230)
(1,143)
Net proceeds from (payments to) affiliated notional cash pooling program
(420)1
(523)3
Other
 
Net cash flows (used for) from financing activities
(450)
(1,666)
Effect of foreign currency rate changes on cash and cash equivalents
Net increase in cash
(420)
(523)
Cash – beginning of period
(185)1 2
(349)3
Cash – end of period
$ (605)1 4
$ (872)3