ACE LTD, 10-Q filed on 7/31/2013
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2013
Jul. 23, 2013
Entity Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
ACE 
 
Entity Registrant Name
ACE Ltd 
 
Entity Central Index Key
0000896159 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
340,118,546 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Assets
 
 
Fixed maturities available for sale, at fair value (amortized cost - $45,988 and $44,666) (includes hybrid financial instruments of $276 and $309)
$ 47,016 
$ 47,306 
Fixed maturities held to maturity, at amortized cost (fair value - $6,762 and $7,633)
6,576 
7,270 
Equity securities, at fair value (cost - $843 and $707)
837 
744 
Short-term investments, at fair value and amortized cost
2,425 
2,228 
Other investments (cost - $2,543 and $2,465)
2,836 
2,716 
Total investments
59,690 
60,264 
Cash
679 1
615 2
Securities lending collateral
1,662 
1,791 
Accrued investment income
536 
552 
Insurance and reinsurance balances receivable
5,022 
4,147 
Reinsurance recoverable on losses and loss expenses
11,442 
12,078 
Reinsurance recoverable on policy benefits
240 
241 
Deferred policy acquisition costs
2,077 
1,873 
Value of business acquired
560 
614 
Goodwill and other intangible assets
5,395 
4,975 
Prepaid reinsurance premiums
1,819 
1,617 
Deferred tax assets
753 
453 
Investments in partially-owned insurance companies (cost - $449 and $451)
452 
454 
Other assets
3,361 
2,871 
Total assets
93,688 
92,545 
Liabilities
 
 
Unpaid losses and loss expenses
37,343 
37,946 
Unearned premiums
7,851 
6,864 
Future policy benefits
4,502 
4,470 
Insurance and reinsurance balances payable
3,624 
3,472 
Securities lending payable
1,665 
1,795 
Accounts payable, accrued expenses, and other liabilities
5,361 
5,377 
Income taxes payable
30 
20 
Short-term debt
1,901 
1,401 
Long-term debt
3,807 
3,360 
Trust preferred securities
309 
309 
Total liabilities
66,393 
65,014 
Commitments and contingencies
   
   
Shareholders' equity
 
 
Common Shares (CHF 27.95 and CHF 28.89 par value; 342,832,412 shares issued; 340,086,269 and 340,321,534 shares outstanding)
9,249 
9,591 
Common Shares in treasury (2,746,143 and 2,510,878 shares)
(219)
(159)
Additional paid-in capital
5,128 
5,179 
Retained earnings
11,877 
10,033 
Accumulated other comprehensive income (AOCI)
1,260 
2,887 
Total shareholders' equity
27,295 
27,531 
Total liabilities and shareholders' equity
$ 93,688 
$ 92,545 
Consolidated Balance Sheets (Parenthetical)
In Millions, except Share data, unless otherwise specified
Jun. 30, 2013
USD ($)
Jun. 30, 2013
CHF
Dec. 31, 2012
USD ($)
Dec. 31, 2012
CHF
Statement of Financial Position [Abstract]
 
 
 
 
Fixed maturities available for sale, at amortized cost
$ 45,988 
 
$ 44,666 
 
Fixed maturities available for sale, hybrid financial instruments
276 
 
309 
 
Fixed maturities held to maturity, at amortized cost
6,762 
 
7,633 
 
Equity securities, at cost
843 
 
707 
 
Other investments, cost
2,543 
 
2,465 
 
Investments in partially-owned insurance companies, cost
$ 449 
 
$ 451 
 
Common Shares, par value
 
 27.95 
 
 28.89 
Common Shares, shares issued
342,832,412 
342,832,412 
342,832,412 
342,832,412 
Common Shares, shares outstanding
340,086,269 
340,086,269 
340,321,534 
340,321,534 
Common Shares in treasury, shares
2,746,143 
2,746,143 
2,510,878 
2,510,878 
Consolidated Statements Of Operations and Comprehensive Income (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Revenues
 
 
 
 
Net premiums written
$ 4,391 
$ 4,130 
$ 8,189 
$ 7,702 
Change in unearned premiums
(324)
(347)
(549)
(538)
Net premiums earned
4,067 
3,783 
7,640 
7,164 
Net investment income
534 
537 
1,065 
1,081 
Net realized gains (losses):
 
 
 
 
Other-than-temporary impairment (OTTI) losses gross
(7)
(10)
(10)
(20)
Portion of OTTI losses recognized in other comprehensive income (OCI)
0 
0 
0 
0 
Net OTTI losses recognized in income
(7)
(10)
(10)
(20)
Net realized gains (losses) excluding OTTI losses
111 
(384)
320 
(114)
Total net realized gains (losses)
104 
(394)
310 
(134)
Total revenues
4,705 
3,926 
9,015 
8,111 
Expenses
 
 
 
 
Losses and loss expenses
2,250 
2,119 
4,176 
3,923 
Policy benefits
110 
102 
241 
249 
Policy acquisition costs
665 
619 
1,279 
1,201 
Administrative expenses
564 
514 
1,078 
1,024 
Interest expense
73 
62 
133 
124 
Other (income) expense
37 
34 
27 
31 
Total expenses
3,699 
3,450 
6,934 
6,552 
Income before income tax
1,006 
476 
2,081 
1,559 
Income tax expense (includes $7 and $12 Income tax expense from reclassification of unrealized gains in the three and six months ended June 30, 2013, respectively)
115 
148 
237 
258 
Net income
891 
328 
1,844 
1,301 
Other comprehensive income (loss)
 
 
 
 
Unrealized (depreciation) appreciation
(1,470)
313 
(1,586)
638 
Reclassification adjustment for net realized gains included in net income
(38)
(58)
(73)
(91)
Other comprehensive income
(1,508)
255 
(1,659)
547 
Change in:
 
 
 
 
Cumulative translation adjustment
(175)
(116)
(386)
(28)
Pension liability
(3)
1 
19 
(1)
Other comprehensive income (loss), before income tax
(1,686)
140 
(2,026)
518 
Income tax benefit (expense) related to OCI items
296 
(11)
399 
(91)
Other comprehensive income (loss)
(1,390)
129 
(1,627)
427 
Comprehensive income (loss)
$ (499)
$ 457 
$ 217 
$ 1,728 
Earnings per share
 
 
 
 
Basic earnings per share (US$ per share)
$ 2.61 
$ 0.96 
$ 5.41 
$ 3.83 
Diluted earnings per share (US$ per share)
$ 2.59 
$ 0.96 
$ 5.36 
$ 3.80 
Consolidated Statements Of Operations and Comprehensive Income Consolidated Statements of Operations and Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Statement Consolidated Statements Of Operations And Comprehensive Income [Abstract]
 
 
 
 
Income tax expense
$ 7 
 
$ 12 
 
Reclassification Adjustment for Sale of Securities Included in Net Income, before Tax
$ 38 
$ 58 
$ 73 
$ 91 
Consolidated Statements Of Shareholders' Equity (USD $)
In Millions
Total
Common Stock [Member]
Treasury Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Accumulated Translation Adjustment [Member]
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Balance - beginning of period at Dec. 31, 2011
 
$ 10,095 
$ (327)
$ 5,326 
$ 7,327 
$ 1,715 
$ 258 
$ (62)
 
Dividends declared on Common Shares-par value reduction
 
(168)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(7)
 
 
 
 
 
 
Net shares redeemed under employee share-based compensation plans
 
 
128 
(100)
 
 
 
 
 
Exercise of stock options
 
 
 
(12)
 
 
 
 
 
Share-based compensation expense and other
 
 
 
61 
 
 
 
 
 
FundingDividendsDeclaredToRetainedEarnings
 
 
 
(200)
 
 
 
 
 
Net income
1,301 
 
 
 
1,301 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
 
200 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
(200)
 
 
 
 
Change in period, net of income tax benefit (expense) of $344 and $(96)
 
 
 
 
 
451 
 
 
 
Change in period, net of income tax benefit of $62 and $5
 
 
 
 
 
 
(23)
 
 
Change in period, net of income tax (expense) of $(7) and nil
 
 
 
 
 
 
 
(1)
 
Balance - end of period at Jun. 30, 2012
25,762 
9,927 
(206)
5,075 
8,628 
2,166 
235 
(63)
2,338 
Balance - beginning of period at Dec. 31, 2012
27,531 
9,591 
(159)
5,179 
10,033 
2,633 
339 
(85)
 
Dividends declared on Common Shares-par value reduction
 
(342)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(212)
 
 
 
 
 
 
Net shares redeemed under employee share-based compensation plans
 
 
152 
(128)
 
 
 
 
 
Exercise of stock options
 
 
 
(28)
 
 
 
 
 
Share-based compensation expense and other
 
 
 
105 
 
 
 
 
 
FundingDividendsDeclaredToRetainedEarnings
 
 
 
0 
 
 
 
 
 
Net income
1,844 
 
 
 
1,844 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
 
0 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
0 
 
 
 
 
Change in period, before reclassification from AOCI, net of income tax benefit of $332
 
 
 
 
 
(1,254)
 
 
 
Amounts reclassified from AOCI, net of income tax benefit of $12
 
 
 
 
 
(61)
 
 
 
Change in period, net of income tax benefit (expense) of $344 and $(96)
 
 
 
 
 
(1,315)
 
 
 
Change in period, net of income tax benefit of $62 and $5
 
 
 
 
 
 
(324)
 
 
Change in period, net of income tax (expense) of $(7) and nil
 
 
 
 
 
 
 
12 
 
Balance - end of period at Jun. 30, 2013
$ 27,295 
$ 9,249 
$ (219)
$ 5,128 
$ 11,877 
$ 1,318 
$ 15 
$ (73)
$ 1,260 
Consolidated Statements Of Shareholders' Equity (Parenthetical) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Statement Consolidated Statements Of Shareholders Equity [Abstract]
 
 
Income tax expense from reclassification of unrealized gains
$ 12 
 
Unrealized appreciation on investments, Change in period before reclassification to AOCI, income tax (expense) benefit
332 
 
Net unrealized appreciation on investments, Change in period, income tax (expense) benefit
344 
(96)
Cumulative translation adjustment, Change in period, income tax(expense) benefit
62 
5 
Pension liability adjustment, Change in period, income tax (expense) benefit
$ (7)
$ 0 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities
 
 
Net income
$ 1,844 
$ 1,301 
Adjustments to reconcile net income to net cash flows from operating activities
 
 
Net realized (gains) losses
(310)
134 
Amortization of premiums/discounts on fixed maturities
134 
103 
Deferred income taxes
98 
1 
Unpaid losses and loss expenses
(304)
(644)
Unearned premiums
693 
780 
Future policy benefits
117 
54 
Insurance and reinsurance balances payable
182 
(60)
Accounts payable, accrued expenses, and other liabilities
230 
(9)
Income taxes payable
20 
0 
Insurance and reinsurance balances receivable
(611)
(551)
Reinsurance recoverable on losses and loss expenses
538 
626 
Reinsurance recoverable on policy benefits
2 
48 
Deferred policy acquisition costs
(268)
(159)
Prepaid reinsurance premiums
(179)
(283)
Other
(378)
42 
Net cash flows from operating activities
1,808 
1,383 
Cash flows from investing activities
 
 
Purchases of fixed maturities available for sale
(10,915)
(11,522)
Purchases of to be announced mortgage-backed securities
(26)
(165)
Purchases of fixed maturities held to maturity
(299)
(136)
Purchases of equity securities
(194)
(93)
Sales of fixed maturities available for sale
5,370 
7,840 
Sales of to be announced mortgage-backed securities
26 
192 
Sales of equity securities
62 
33 
Maturities and redemptions of fixed maturities available for sale
4,112 
2,280 
Maturities and redemptions of fixed maturities held to maturity
908 
739 
Net derivative instruments settlements
(317)
(133)
Acquisition of subsidiaries (net of cash acquired of $38 in 2013)
(977)
(30)
Other
(126)
(255)
Net cash flows used for investing activities
(2,376)
(1,250)
Cash flows from financing activities
 
 
Dividends paid on Common Shares
(169)
(318)
Common Shares repurchased
(212)
(11)
Proceeds from issuance of long-term debt
947 
0 
Proceeds from issuance of short-term debt
1,570 
1,532 
Repayment of short-term debt
(1,570)
(1,381)
Proceeds from share-based compensation plans, including windfall tax benefits
62 
55 
Other
30 
0 
Net cash flows from financing activities
658 
(123)
Effect of foreign currency rate changes on cash and cash equivalents
(26)
(7)
Net increase (decrease) in cash
64 
3 
Cash - beginning of period
615 1
614 
Cash - end of period
679 2
617 
Supplemental cash flow information
 
 
Taxes paid
88 
259 
Interest paid
$ 117 
$ 119 
Consolidated Statements of Cash Flows (Parentheticals) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Statement of Cash Flows (Parentheticals) [Abstract]
 
 
Net cash acquired
$ 38 
$ 0 
General
General
General

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

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

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

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

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 expands our global franchise in the surety business and enhances our existing commercial lines and personal accident insurance business in Mexico.

The acquisition generated $117 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 preliminary purchase price allocation. The other intangible assets primarily relate to customer lists. Amortization of other intangible assets is included in Other (income) expense in the consolidated statements of operations. Goodwill and other intangible assets arising from this acquisition are included in the Insurance – Overseas General segment.

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 $235 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 $142 million based on ACE’s preliminary purchase price allocation. The other intangible assets primarily relate to distribution channels. Amortization of other intangible assets is included in Other (income) expense in the consolidated statements of operations. Goodwill and other intangible assets arising from this acquisition are included in the Insurance – Overseas General segment.
Investments
Investments
3. Investments

a) Fixed maturities
The following tables present the amortized cost and fair value of fixed maturities and related OTTI recognized in AOCI:
 
June 30, 2013
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
3,238

 
$
89

 
$
(39
)
 
$
3,288

 
$
—

Foreign
13,552

 
401

 
(112
)
 
13,841

 
—

Corporate securities
16,263

 
751

 
(150
)
 
16,864

 
(6
)
Mortgage-backed securities
9,719

 
225

 
(166
)
 
9,778

 
(37
)
States, municipalities, and political subdivisions
3,216

 
85

 
(56
)
 
3,245

 
—

 
$
45,988

 
$
1,551

 
$
(523
)
 
$
47,016

 
$
(43
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
858

 
$
22

 
$
(4
)
 
$
876

 
$
—

Foreign
873

 
32

 
—

 
905

 
—

Corporate securities
2,030

 
78

 
—

 
2,108

 
—

Mortgage-backed securities
1,615

 
52

 
—

 
1,667

 
—

States, municipalities, and political subdivisions
1,200

 
22

 
(16
)
 
1,206

 
—

 
$
6,576

 
$
206

 
$
(20
)
 
$
6,762

 
$
—

 
 
 
 
 
 
 
 
 
 
December 31, 2012
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
3,553

 
$
183

 
$
(1
)
 
$
3,735

 
$
—

Foreign
13,016

 
711

 
(14
)
 
13,713

 
—

Corporate securities
15,529

 
1,210

 
(31
)
 
16,708

 
(7
)
Mortgage-backed securities
10,051

 
458

 
(36
)
 
10,473

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

 
163

 
(3
)
 
2,677

 
—

 
$
44,666

 
$
2,725

 
$
(85
)
 
$
47,306

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

 
$
39

 
$
—

 
$
1,083

 
$
—

Foreign
910

 
54

 
—

 
964

 
—

Corporate securities
2,133

 
142

 
—

 
2,275

 
—

Mortgage-backed securities
2,028

 
88

 
—

 
2,116

 
—

States, municipalities, and political subdivisions
1,155

 
44

 
(4
)
 
1,195

 
—

 
$
7,270

 
$
367

 
$
(4
)
 
$
7,633

 
$
—


As discussed in Note 3 c), if a credit loss is indicated on an impaired fixed maturity, an OTTI is considered to have occurred and the portion of the impairment not related to credit losses (non-credit OTTI) is recognized in OCI. Included in the “OTTI Recognized in AOCI” columns above are the cumulative amounts of non-credit OTTI recognized in OCI adjusted for subsequent sales, maturities, and redemptions. OTTI recognized in AOCI does not include the impact of subsequent changes in fair value of the related securities. In periods subsequent to a recognition of OTTI in OCI, changes in the fair value of the related fixed maturities are reflected in Unrealized appreciation (depreciation) in the consolidated statement of shareholders’ equity. For the three and six months ended June 30, 2013, $1 million and $25 million of net unrealized appreciation related to such securities is included in OCI. For the three and six months ended June 30, 2012, $16 million and $84 million of net unrealized appreciation related to such securities is included in OCI. At June 30, 2013 and December 31, 2012, AOCI includes net unrealized depreciation of $2 million and $25 million, respectively, related to securities remaining in the investment portfolio at those dates for which ACE has recognized a non-credit OTTI.

Mortgage-backed securities (MBS) issued by U.S. government agencies are combined with all other to be announced mortgage derivatives held (refer to Note 7 a) (iv)) and are included in the category, “Mortgage-backed securities”. Approximately 85 percent of the total mortgage-backed securities at June 30, 2013 and December 31, 2012 are represented by investments in U.S. government agency bonds. The remainder of the mortgage exposure consists of collateralized mortgage obligations and non-government mortgage-backed securities, the majority of which provide a planned structure for principal and interest payments and carry a rating of AAA by the major credit rating agencies.

The following table presents fixed maturities by contractual maturity:
 
 
 
June 30

 
 
 
December 31

 
 
 
2013

 
 
 
2012

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,102

 
$
2,121

 
$
1,887

 
$
1,906

Due after 1 year through 5 years
14,042

 
14,493

 
13,411

 
14,010

Due after 5 years through 10 years
15,833

 
16,179

 
15,032

 
16,153

Due after 10 years
4,292

 
4,445

 
4,285

 
4,764

 
36,269

 
37,238

 
34,615

 
36,833

Mortgage-backed securities
9,719

 
9,778

 
10,051

 
10,473

 
$
45,988

 
$
47,016

 
$
44,666

 
$
47,306

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
447

 
$
451

 
$
656

 
$
659

Due after 1 year through 5 years
2,218

 
2,288

 
1,870

 
1,950

Due after 5 years through 10 years
1,833

 
1,878

 
2,119

 
2,267

Due after 10 years
463

 
478

 
597

 
641

 
4,961

 
5,095

 
5,242

 
5,517

Mortgage-backed securities
1,615

 
1,667

 
2,028

 
2,116

 
$
6,576

 
$
6,762

 
$
7,270

 
$
7,633



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

b) Equity securities
The following table presents the cost and fair value of equity securities: 
 
June 30


December 31

(in millions of U.S. dollars)
2013


2012

Cost
$
843

 
$
707

Gross unrealized appreciation
45

 
41

Gross unrealized depreciation
(51
)
 
(4
)
Fair value
$
837

 
$
744



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

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

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

•
the amount of time a security has been in a loss position and the magnitude of the loss position;

•
the period in which cost is expected to be recovered, if at all, based on various criteria including economic conditions and other issuer-specific developments; and

•
ACE’s ability and intent to hold the security to the expected recovery period.

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

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

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

For the three and six months ended June 30, 2013, credit losses recognized in Net income for corporate securities were $6 million and $7 million, respectively. For the three and six months ended June 30, 2012, credit losses recognized in Net income for corporate securities were $1 million and $4 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 six months ended June 30, 2013, there were no credit losses recognized in Net income for mortgage-backed securities. For the three and six months ended June 30, 2012, credit losses recognized in Net income for mortgage-backed securities were nil and $3 million, respectively.
The following table presents the Net realized gains (losses) and the losses included in Net realized gains (losses) and OCI as a result of conditions which caused us to conclude the decline in fair value of certain investments was “other-than-temporary”: 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013

 
2012

 
2013

 
2012

Fixed maturities:
 
 
 
 
 
 
 
OTTI on fixed maturities, gross
$
(6
)
 
$
(1
)
 
$
(7
)
 
$
(8
)
OTTI on fixed maturities recognized in OCI (pre-tax)
—

 
—

 
—

 
—

OTTI on fixed maturities, net
(6
)
 
(1
)
 
(7
)
 
(8
)
Gross realized gains excluding OTTI
64

 
104

 
126

 
216

Gross realized losses excluding OTTI
(27
)
 
(35
)
 
(52
)
 
(106
)
Total fixed maturities
31

 
68

 
67

 
102

Equity securities:
 
 
 
 
 
 
 
OTTI on equity securities
—

 
(4
)
 
(1
)
 
(5
)
Gross realized gains excluding OTTI
8

 
—

 
10

 
2

Gross realized losses excluding OTTI
(1
)
 
(1
)
 
(3
)
 
(1
)
Total equity securities
7

 
(5
)
 
6

 
(4
)
OTTI on other investments
(1
)
 
(5
)
 
(2
)
 
(7
)
Foreign exchange gains (losses)
(5
)
 
(9
)
 
71

 
(14
)
Investment and embedded derivative instruments
40

 
(49
)
 
58

 
(7
)
Fair value adjustments on insurance derivative
101

 
(467
)
 
429

 
(39
)
S&P put options and futures
(68
)
 
70

 
(318
)
 
(161
)
Other derivative instruments
(1
)
 
1

 
(1
)
 
(4
)
Other
—

 
2

 
—

 
—

Net realized gains (losses)
$
104

 
$
(394
)
 
$
310

 
$
(134
)

 

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
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013

 
2012

 
2013

 
2012

Balance of credit losses related to securities still held – beginning of period
$
35

 
$
55

 
$
43

 
$
74

Additions where no OTTI was previously recorded
4

 
1

 
4

 
2

Additions where an OTTI was previously recorded
2

 
—

 
3

 
5

Reductions for securities sold during the period
(1
)
 
(9
)
 
(10
)
 
(34
)
Balance of credit losses related to securities still held – end of period
$
40

 
$
47

 
$
40

 
$
47



d) Gross unrealized loss
At June 30, 2013, there were 6,267 fixed maturities out of a total of 23,938 fixed maturities in an unrealized loss position. The largest single unrealized loss in the fixed maturities was $5 million. There were 74 equity securities out of a total of 188 equity securities in an unrealized loss position. The largest single unrealized loss in the equity securities was $40 million. Fixed maturities in an unrealized loss position at June 30, 2013 comprised both investment grade and below investment grade securities for which fair value declined primarily due to widening credit spreads since the date of purchase. Equity securities in an unrealized loss position at June 30, 2013 included foreign fixed income securities held in a commingled fund structure 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
 
June 30, 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
$
1,670

 
$
(43
)
 
$
—

 
$
—

 
$
1,670

 
$
(43
)
Foreign
4,278

 
(108
)
 
76

 
(4
)
 
4,354

 
(112
)
Corporate securities
4,535

 
(140
)
 
77

 
(10
)
 
4,612

 
(150
)
Mortgage-backed securities
4,190

 
(153
)
 
125

 
(13
)
 
4,315

 
(166
)
States, municipalities, and political subdivisions
2,057

 
(72
)
 
2

 
—

 
2,059

 
(72
)
Total fixed maturities
16,730

 
(516
)
 
280

 
(27
)
 
17,010

 
(543
)
Equity securities
522

 
(51
)
 
—

 
—

 
522

 
(51
)
Other investments
37

 
(5
)
 
—

 
—

 
37

 
(5
)
Total
$
17,289

 
$
(572
)
 
$
280

 
$
(27
)
 
$
17,569

 
$
(599
)
 
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
December 31, 2012
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
440

 
$
(1
)
 
$
—

 
$
—

 
$
440

 
$
(1
)
Foreign
1,234

 
(8
)
 
88

 
(6
)
 
1,322

 
(14
)
Corporate securities
1,026

 
(23
)
 
85

 
(8
)
 
1,111

 
(31
)
Mortgage-backed securities
855

 
(4
)
 
356

 
(32
)
 
1,211

 
(36
)
States, municipalities, and political subdivisions
316

 
(3
)
 
48

 
(4
)
 
364

 
(7
)
Total fixed maturities
3,871

 
(39
)
 
577

 
(50
)
 
4,448

 
(89
)
Equity securities
29

 
(4
)
 
—

 
—

 
29

 
(4
)
Other investments
68

 
(5
)
 
—

 
—

 
68

 
(5
)
Total
$
3,968

 
$
(48
)
 
$
577

 
$
(50
)
 
$
4,545

 
$
(98
)


e) Restricted assets
ACE is required to maintain assets on deposit with various regulatory authorities to support its insurance and reinsurance operations. These requirements are generally promulgated in the statutory regulations of the individual jurisdictions. The assets on deposit are available to settle insurance and reinsurance liabilities. ACE is also required to restrict assets pledged under repurchase agreements. We also use trust funds in certain large reinsurance transactions where the trust funds are set up for the benefit of the ceding companies and generally take the place of letter of credit (LOC) requirements. We also have investments in segregated portfolios primarily to provide collateral or guarantees for LOCs and derivative transactions. Included in restricted assets at June 30, 2013 and December 31, 2012, are fixed maturities and short-term investments totaling $16.0 billion and $16.6 billion, respectively, and cash of $71 million and $139 million, respectively.

The following table presents the components of restricted assets:
 
June 30

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Trust funds
$
10,909

 
$
11,389

Deposits with non-U.S. regulatory authorities
1,989

 
2,133

Assets pledged under repurchase agreements
1,458

 
1,401

Deposits with U.S. regulatory authorities
1,335

 
1,338

Other pledged assets
395

 
456

 
$
16,086

 
$
16,717

Fair value measurements
Fair value measurements
Fair value measurements

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

•
Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets;

•
Level 2 – Includes, among other items, inputs other than quoted prices that are observable for the asset or liability such as interest rates and yield curves, quoted prices for similar assets and liabilities in active markets, and quoted prices for identical or similar assets and liabilities in markets that are not active; and

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

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

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

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

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

Short-term investments
Short-term investments, which comprise securities due to mature within one year of the date of purchase that are traded in active markets, are classified within Level 1 as fair values are based on quoted market prices. Securities such as commercial paper and discount notes are classified within Level 2 because these securities are typically not actively traded due to their approaching maturity and, as such, their cost approximates fair value. 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 exchange-traded forward contracts are classified within Level 1 as fair values are based on quoted market prices. The fair value of cross-currency swaps are based on market valuations and are classified within Level 2. Investment derivative instruments are recorded in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets.

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

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

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

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

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

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

The effect of changes in key market factors on assumed lapse and annuitization rates reflect emerging trends using data available from cedants. For treaties with limited experience, rates are established in line with data received from other ceding companies adjusted, as appropriate, with industry estimates. The model and related assumptions are continuously re-evaluated by management and enhanced, as appropriate, based upon additional experience obtained related to policyholder behavior and availability of more information, such as market conditions, market participant assumptions, and demographics of in-force annuities. During the three and six months ended June 30, 2013, no material changes were made to actuarial or behavioral assumptions.

We view the variable annuity reinsurance business as having a similar risk profile to that of catastrophe reinsurance, with the probability of a cumulative long-term economic net loss relatively small at the time of pricing. However, adverse changes in market factors and policyholder behavior will have an adverse impact on net income, which may be material. Because of the significant use of unobservable inputs including policyholder behavior, GLB reinsurance is classified within Level 3.
The following tables present, by valuation hierarchy, the financial instruments measured at fair value on a recurring basis:
June 30, 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
$
1,846

 
$
1,442

 
$
—

 
$
3,288

Foreign
182

 
13,611

 
48

 
13,841

Corporate securities
19

 
16,731

 
114

 
16,864

Mortgage-backed securities
—

 
9,769

 
9

 
9,778

States, municipalities, and political subdivisions
—

 
3,245

 
—

 
3,245

 
2,047

 
44,798

 
171

 
47,016

Equity securities
379

 
454

 
4

 
837

Short-term investments
1,442

 
974

 
9

 
2,425

Other investments
271

 
216

 
2,349

 
2,836

Securities lending collateral
—

 
1,662

 
—

 
1,662

Investment derivative instruments
25

 
—

 
—

 
25

Other derivative instruments
15

 
24

 
—

 
39

Separate account assets
961

 
72

 
—

 
1,033

Total assets measured at fair value
$
5,140

 
$
48,200

 
$
2,533

 
$
55,873

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$
—

 
$
—

 
$
652

 
$
652

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

 
December 31, 2012
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
1,685

 
$
—

 
$
3,735

Foreign
222

 
13,431

 
60

 
13,713

Corporate securities
20

 
16,586

 
102

 
16,708

Mortgage-backed securities
—

 
10,460

 
13

 
10,473

States, municipalities, and political subdivisions
—

 
2,677

 
—

 
2,677

 
2,292

 
44,839

 
175

 
47,306

Equity securities
253

 
488

 
3

 
744

Short-term investments
1,503

 
725

 
—

 
2,228

Other investments
268

 
196

 
2,252

 
2,716

Securities lending collateral
—

 
1,791

 
—

 
1,791

Investment derivative instruments
11

 
—

 
—

 
11

Other derivative instruments
(6
)
 
30

 
—

 
24

Separate account assets
872

 
71

 
—

 
943

Total assets measured at fair value
$
5,193

 
$
48,140

 
$
2,430

 
$
55,763

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$
—

 
$
—

 
$
1,119

 
$
1,119

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

The transfers from Level 1 to Level 2 were $6 million and $19 million during the three and six months ended June 30, 2013, respectively. The transfers from Level 1 to Level 2 were $1 million and $6 million during the three and six months ended June 30, 2012, respectively. There were no transfers from Level 2 to Level 1 during the three and six months ended June 30, 2013 and 2012.

Fair value of alternative investments
Included in Other investments in the fair value hierarchy at June 30, 2013 and December 31, 2012 are investment funds, limited partnerships, and partially-owned investment companies measured at fair value using NAV as a practical expedient. At June 30, 2013 and December 31, 2012, there were no probable or pending sales related to any of the investments measured at fair value using NAV. 

The following table presents, by investment category, the expected liquidation period, fair value, and maximum future funding commitments of alternative investments:
 
 
 
 
 
June 30

 
 
 
December 31

 
Expected
Liquidation
Period
 
 
 
2013

 
 
 
2012

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

 
Maximum
Future Funding
Commitments

 
Fair
Value

 
Maximum
Future Funding
Commitments

Financial
5 to 9 Years
 
$
246

 
$
94

 
$
225

 
$
111

Real estate
3 to 9 Years
 
347

 
67

 
292

 
62

Distressed
6 to 9 Years
 
180

 
130

 
192

 
152

Mezzanine
6 to 9 Years
 
261

 
285

 
284

 
279

Traditional
3 to 8 Years
 
750

 
568

 
711

 
587

Vintage
1 to 3 Years
 
12

 
—

 
14

 
—

Investment funds
Not Applicable
 
414

 
—

 
395

 
—

 
 
 
$
2,210

 
$
1,144

 
$
2,113

 
$
1,191



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

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

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

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

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

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

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

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

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

The following table presents the significant unobservable inputs used in the Level 3 liability valuations. Excluded from the table below are inputs used to fair value Level 3 assets which are based on single broker quotes or net asset value and contain no quantitative unobservable inputs developed by management. 
(in millions of U.S. dollars, except for percentages)
Fair Value at
June 30, 2013

 
Fair Value at
December 31, 2012

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
652

 
$
1,119

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
 
 
Annuitization rate
 
0% – 50%
(1) 
Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living benefits.

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

 
Available-for-Sale Debt Securities
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

Three Months Ended
Foreign

 
Corporate
securities

 
MBS

 
 
June 30, 2013
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
Balance–Beginning of Period
$
35

 
$
118

 
$
13

 
$
2

 
$
—

 
$
2,328

 
$
753

Transfers into Level 3
29

 
5

 
—

 
7

 
7

 
—

 
—

Transfers out of Level 3
(14
)
 
(27
)
 
—

 
—

 
—

 
—

 
—

Change in Net Unrealized Gains (Losses) included in OCI
(4
)
 
(1
)
 
—

 
(5
)
 
—

 
13

 
—

Net Realized Gains/Losses
—

 
(1
)
 
—

 
4

 
—

 
(1
)
 
(101
)
Purchases
3

 
23

 
—

 
1

 
2

 
113

 
—

Sales
(1
)
 
—

 
(3
)
 
(5
)
 
—

 
—

 
—

Settlements
—

 
(3
)
 
(1
)
 
—

 
—

 
(104
)
 
—

Balance–End of Period
$
48

 
$
114

 
$
9

 
$
4

 
$
9

 
$
2,349

 
$
652

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(1
)
 
$
(101
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
  
Assets
 
 
Liabilities
 
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Other
investments

 
Other
derivative
instruments

 
GLB(1)

Three Months Ended
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
 
 
 
June 30, 2012
 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance–Beginning of Period
$
—

 
$
49

 
$
117

 
$
19

 
$
1

 
$
10

 
$
1,954

 
$
(1
)
 
$
863

Transfers into Level 3
5

 
1

 
28

 
12

 
1

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
—

 
(2
)
 
(3
)
 
—

 
—

 
—

 
—

 
—

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

 
—

 
1

 
—

 
—

 
—

 
16

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(1
)
 
—

 
—

 
—

 
(5
)
 
(1
)
 
491

Purchases
—

 
6

 
5

 
—

 
—

 
2

 
132

 
3

 
—

Sales
—

 
(35
)
 
(7
)
 
—

 
—

 
—

 
—

 
—

 
—

Settlements
(1
)
 
(1
)
 
(4
)
 
(1
)
 
(1
)
 
—

 
(50
)
 
—

 
—

Balance–End of Period
$
4

 
$
20

 
$
137

 
$
27

 
$
1

 
$
12

 
$
2,047

 
$
1

 
$
1,354

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(5
)
 
$
—

 
$
491

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $1.6 billion at June 30, 2012, and $1.05 billion at March 31, 2012, which includes a fair value derivative adjustment of $1.4 billion and $863 million, respectively.

 
Assets
Liabilities

 
Available-for-Sale Debt Securities
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

Six Months Ended
Foreign

 
Corporate
securities

 
MBS

 
 
 
June 30, 2013
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
Balance–Beginning of Period
$
60

 
$
102

 
$
13

 
$
3

 
$
—

 
$
2,252

 
$
1,119

Transfers into Level 3
32

 
17

 
—

 
7

 
7

 
—

 
—

Transfers out of Level 3
(41
)
 
(29
)
 
—

 
(1
)
 
—

 
—

 
—

Change in Net Unrealized Gains (Losses) included in OCI
(4
)
 
—

 
—

 
(5
)
 
—

 
35

 
—

Net Realized Gains/Losses
1

 
(1
)
 
—

 
4

 
—

 
(2
)
 
(467
)
Purchases
3

 
33

 
—

 
1

 
2

 
249

 
—

Sales
(2
)
 
—

 
(3
)
 
(5
)
 
—

 
(9
)
 
—

Settlements
(1
)
 
(8
)
 
(1
)
 
—

 
—

 
(176
)
 
—

Balance–End of Period
$
48

 
$
114

 
$
9

 
$
4

 
$
9

 
$
2,349

 
$
652

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(2
)
 
$
(467
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.

  
Assets
 
 
Liabilities
 
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Other
investments

 
Other
derivative
instruments

 
GLB(1)

Six Months Ended
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
 
 
 
June 30, 2012
 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance–Beginning of Period
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

Transfers into Level 3
—

 
1

 
28

 
12

 
1

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
(1
)
 
(9
)
 
(15
)
 
—

 
—

 
—

 
—

 
—

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

 
—

 
3

 
—

 
—

 
1

 
24

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(1
)
 
—

 
—

 
—

 
(7
)
 
(4
)
 
35

Purchases
—

 
40

 
8

 
4

 
—

 
3

 
245

 
3

 
—

Sales
—

 
(52
)
 
(15
)
 
—

 
—

 
(5
)
 
(1
)
 
—

 
—

Settlements
(1
)
 
(1
)
 
(11
)
 
(2
)
 
(1
)
 
—

 
(91
)
 
(1
)
 
—

Balance–End of Period
$
4

 
$
20

 
$
137

 
$
27

 
$
1

 
$
12

 
$
2,047

 
$
1

 
$
1,354

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(7
)
 
$
(1
)
 
$
35

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $1.6 billion at June 30, 2012, and $1.5 billion at December 31, 2011, which includes a fair value derivative adjustment of $1.4 billion and $1.3 billion, respectively.

b) Financial instruments disclosed, but not measured, at fair value
ACE uses various financial instruments in the normal course of its business. Our insurance contracts are excluded from fair value of financial instruments accounting guidance, and therefore, are not included in the amounts discussed below.

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

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

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

 
The following tables present fair value, by valuation hierarchy, and carrying value of the financial instruments not measured at fair value:
June 30, 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

 
$
280

 
$
—

 
$
876

 
$
858

Foreign
—

 
905

 
—

 
905

 
873

Corporate securities
—

 
2,091

 
17

 
2,108

 
2,030

Mortgage-backed securities
—

 
1,667

 
—

 
1,667

 
1,615

States, municipalities, and political subdivisions
—

 
1,206

 
—

 
1,206

 
1,200

 
596

 
6,149

 
17

 
6,762

 
6,576

Partially-owned insurance companies
—

 
—

 
452

 
452

 
452

Total assets
$
596

 
$
6,149

 
$
469

 
$
7,214

 
$
7,028

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
1,925

 
$
—

 
$
1,925

 
$
1,901

Long-term debt
—

 
4,148

 
—

 
4,148

 
3,807

Trust preferred securities
—

 
425

 
—

 
425

 
309

Total liabilities
$
—

 
$
6,498

 
$
—

 
$
6,498

 
$
6,017


December 31, 2012
Fair Value
 
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

 
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
619

 
$
464

 
$
—

 
$
1,083

 
$
1,044

Foreign
—

 
964

 
—

 
964

 
910

Corporate securities
—

 
2,257

 
18

 
2,275

 
2,133

Mortgage-backed securities
—

 
2,116

 
—

 
2,116

 
2,028

States, municipalities, and political subdivisions
—

 
1,195

 
—

 
1,195

 
1,155

 
619

 
6,996

 
18

 
7,633

 
7,270

Partially-owned insurance companies
—

 
—

 
454

 
454

 
454

Total assets
$
619

 
$
6,996

 
$
472

 
$
8,087

 
$
7,724

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
1,401

 
$
—

 
$
1,401

 
$
1,401

Long-term debt
—

 
3,916

 
—

 
3,916

 
3,360

Trust preferred securities
—

 
446

 
—

 
446

 
309

Total liabilities
$
—

 
$
5,763

 
$
—

 
$
5,763

 
$
5,070

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

The following table presents income and expenses relating to GMDB and GLB reinsurance. GLBs include GMIBs as well as some GMABs originating in Japan.
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013

 
2012

 
2013

 
2012

GMDB
 
 
 
 
 
 
 
Net premiums earned
$
20

 
$
21

 
$
40

 
$
44

Policy benefits and other reserve adjustments
$
25

 
$
12

 
$
44

 
$
39

GLB
 
 
 
 
 
 
 
Net premiums earned
$
37

 
$
40

 
$
76

 
$
81

Policy benefits and other reserve adjustments
2

 
16

 
11

 
23

Net realized gains (losses)
101

 
(494
)
 
470

 
(34
)
Gain (loss) recognized in income
$
136

 
$
(470
)
 
$
535

 
$
24

Net cash received
$
31

 
$
38

 
$
63

 
$
79

Net decrease (increase) in liability
$
105

 
$
(508
)
 
$
472

 
$
(55
)


At June 30, 2013, reported liabilities for GMDB and GLB reinsurance were $92 million and $880 million, respectively, compared with $90 million and $1.4 billion, respectively, at December 31, 2012. The reported liability of $880 million for GLB reinsurance at June 30, 2013 and $1.4 billion at December 31, 2012 includes a fair value derivative adjustment of $652 million and $1.1 billion, respectively. Included in Net realized gains (losses) in the table above are gains (losses) related to foreign exchange and other fair value derivative adjustments. Reported liabilities for both GMDB and GLB reinsurance are determined using internal valuation models. Such valuations require considerable judgment and are subject to significant uncertainty. The valuation of these products is subject to fluctuations arising from, among other factors, changes in interest rates, changes in equity markets, changes in credit markets, changes in the allocation of the investments underlying annuitants’ account values, and assumptions regarding future policyholder behavior. These models and the related assumptions are continually reviewed by management and enhanced, as appropriate, based upon improvements in modeling assumptions and availability of more information, such as market conditions and demographics of in-force annuities.

Variable Annuity Net Amount at Risk
(i) Reinsurance covering the GMDB risk only
At June 30, 2013 and December 31, 2012, the net amount at risk from reinsurance programs covering the GMDB risk only was $884 million and $1.3 billion, respectively.

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

•
policy account values and guaranteed values are fixed at the valuation date (June 30, 2013 and December 31, 2012, respectively);

•
there are no lapses or withdrawals;

•
mortality according to 100 percent of the Annuity 2000 mortality table;

•
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between 1.0 percent and 2.0 percent; and

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

The total claim amount payable on reinsurance programs covering the GMDB risk only, if all the cedants’ policyholders were to die immediately at June 30, 2013 was approximately $563 million. This takes into account all applicable reinsurance treaty claim limits.

(ii) Reinsurance covering the GLB risk only
At June 30, 2013 and December 31, 2012, the net amount at risk from reinsurance programs covering the GLB risk only was $302 million and $445 million, respectively.

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

•
policy account values and guaranteed values are fixed at the valuation date (June 30, 2013 and December 31, 2012, respectively);

•
there are no deaths, lapses, or withdrawals;

•
policyholders annuitize at a frequency most disadvantageous to ACE (in other words, annuitization at a level that maximizes claims taking into account the treaty limits) under the terms of the reinsurance contracts;

•
for annuitizing policyholders, the GMIB claim is calculated using interest rates in line with those used in calculating the reserve;

•
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between 3.5 percent and 4.5 percent; and

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

(iii) Reinsurance covering both the GMDB and GLB risks on the same underlying policyholders
At June 30, 2013 and December 31, 2012, the GMDB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $95 million and $116 million, respectively.

At June 30, 2013 and December 31, 2012, the GLB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $341 million and $655 million, respectively.

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

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

•
policy account values and guaranteed values are fixed at the valuation date (June 30, 2013 and December 31, 2012, respectively);

•
there are no lapses, or withdrawals;

•
mortality according to 100 percent of the Annuity 2000 mortality table;

•
policyholders annuitize at a frequency most disadvantageous to ACE (in other words, annuitization at a level that maximizes claims taking into account the treaty limits) under the terms of the reinsurance contracts;

•
for annuitizing policyholders, the GMIB claim is calculated using interest rates in line with those used in calculating the reserve;

•
future claims are discounted in line with the discounting assumption used in the calculation of the benefit reserve averaging between 2.0 percent and 3.0 percent; and

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

The total claim amount payable on reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders, if all of the cedants’ policyholders were to die immediately at June 30, 2013 was approximately $300 million. This takes into account all applicable reinsurance treaty claim limits. Although there would be an increase in death claims resulting from 100 percent immediate mortality of all policyholders, the GLB claims would be zero.

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

In March 2013, ACE INA Holdings, Inc. issued $475 million of 2.70 percent senior notes due March 2023 and $475 million of 4.15 percent senior notes due March 2043.  The 2.70 percent senior notes and 4.15 percent senior notes are redeemable at any time at ACE INA Holdings, Inc.'s option subject to a “make-whole” premium (the present value of the remaining principal and interest discounted at the applicable U.S. Treasury rate plus 0.10 percent and 0.15 percent, respectively). The notes are also redeemable at par plus accrued and unpaid interest in the event of certain changes in tax law. These notes do not have the benefit of any sinking fund.  These senior unsecured notes are guaranteed on a senior basis by ACE Limited and they rank equally with all of ACE's other senior obligations.  They also contain customary limitations on lien provisions as well as customary events of default provisions which, if breached, could result in the accelerated maturity of such senior debt.

In June 2013, we reclassified $500 million of 5.875 percent senior notes, due to mature on June 15, 2014, from Long-term debt to Short-term debt in the consolidated balance sheet.
Commitments, contingencies, and guarantees
Commitments, contingencies, and guarantees
Commitments, contingencies, and guarantees

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

ACE maintains positions in convertible bond investments that contain embedded derivatives. In addition, ACE, from time to time, purchases TBAs as part of its investing activities. These securities are included within the fixed maturities available for sale (FM AFS) portfolio. At June 30, 2013, ACE had no positions in TBAs.

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

In relation to certain debt issuances, ACE, from time to time, enters into interest rate swap transactions for the purpose of either fixing or reducing borrowing costs. Although the use of these interest rate swaps has the economic effect of fixing or reducing borrowing costs on a net basis, gross interest expense on the related debt issuances is included in Interest expense while the settlements related to the interest rate swaps are reflected in Net realized gains (losses) in the consolidated statements of operations. At June 30, 2013, ACE had no in-force interest rate swaps.

ACE, from time to time, buys credit default swaps to mitigate global credit risk exposure, primarily related to reinsurance recoverables. At June 30, 2013, ACE had no in-force credit default swaps.

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

The following table presents the balance sheet locations, fair values in an asset or (liability) position, and notional values/payment provisions of our derivative instruments:
 
 
 
June 30
 
 
December 31
 
 
 
 
2013
 
 
2012
 
(in millions of U.S. dollars)
Consolidated
Balance Sheet
Location
 
Fair
Value

 
Notional
Value/
Payment
Provision

 
Fair
Value

 
Notional
Value/
Payment
Provision

Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
AP
 
$
6

 
$
1,019

 
$
—

 
$
620

Cross-currency swaps
AP
 
—

 
50

 
—

 
50

Futures contracts on money market instruments
AP
 
(1
)
 
2,910

 
1

 
2,710

Futures contracts on notes and bonds
AP
 
20

 
946

 
10

 
915

Convertible bonds
FM AFS
 
276

 
233

 
309

 
279

 
 
 
$
301

 
$
5,158

 
$
320

 
$
4,574

Other derivative instruments
 
 
 
 
 
 
 
 
 
Futures contracts on equities(1)
AP
 
$
24

 
$
1,901

 
$
(6
)
 
$
2,308

Options on equity market indices(1)
AP
 
15

 
250

 
30

 
250

 
 
 
$
39

 
$
2,151

 
$
24

 
$
2,558

GLB(2)
AP/FPB
 
$
(880
)
 
$
643

 
$
(1,352
)
 
$
1,100

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

On January 1, 2013, we adopted new guidance that requires disclosure of financial instruments subject to a master netting agreement.  At June 30, 2013 and December 31, 2012, derivative assets of $63 million and $35 million, respectively, included in the table above were subject to a master netting agreement.  The remaining derivatives included in the table above were not subject to a master netting agreement. 

At June 30, 2013 and December 31, 2012, our repurchase obligations of $1,401 million were fully collateralized.  At June 30, 2013 and December 31, 2012, our securities lending payable was $1,665 million and $1,795 million, respectively, and our securities lending collateral was $1,662 million and $1,791 million, respectively.  The securities lending collateral can only be accessed in the event that the institution borrowing the securities is in default under the lending agreement.  An indemnification agreement with the lending agent protects us in the event a borrower becomes insolvent or fails to return any of the securities on loan.  In contrast to securities lending programs, the use of cash received is not restricted for the repurchase obligations.




The following table presents Net realized gains (losses) related to derivative instrument activity in the consolidated statements of operations:
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013
 
2012
 
2013
 
2012
Investment and embedded derivative instruments
 
 
 
 
 
 
 
Foreign currency forward contracts
$
12

 
$
8

 
$
17

 
$
1

All other futures contracts and options
33

 
(45
)
 
40

 
(20
)
Convertible bonds
(5
)
 
(12
)
 
1

 
12

Total investment and embedded derivative instruments
$
40

 
$
(49
)
 
$
58

 
$
(7
)
GLB and other derivative instruments
 
 
 
 
 
 
 
GLB(1)
$
101

 
$
(467
)
 
$
429

 
$
(39
)
Futures contracts on equities(2)
(66
)
 
65

 
(303
)
 
(148
)
Options on equity market indices(2)
(2
)
 
5

 
(15
)
 
(13
)
Credit default swaps and other
(1
)
 
1

 
(1
)
 
(4
)
Total GLB and other derivative instruments
$
32

 
$
(396
)
 
$
110

 
$
(204
)
 
$
72

 
$
(445
)
 
$
168

 
$
(211
)
(1) 
Excludes foreign exchange gains (losses) related to GLB.
(2) 
Related to GMDB and GLB blocks of business. 

Derivative instrument objectives

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

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

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

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

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

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

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

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

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

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

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

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

b) Other investments
At June 30, 2013, included in Other investments in the consolidated balance sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of $1,796 million. In connection with these investments, we have commitments that may require funding of up to $1,144 million over the next several years. 

c) Taxation
In April 2012, ACE reached final settlement with the Internal Revenue Service (IRS) Appeals Division regarding several issues raised by the IRS Examination Division in its federal tax returns for 2005, 2006 and 2007. The settlement of these issues had no net impact on our results of operations. In addition, the IRS completed its field examination of ACE’s federal tax returns for 2008 and 2009 during June 2012. No material adjustments resulted from this examination. During the three and six months ended June 30, 2013, ACE reduced the amount of unrecognized tax benefits by $5 million resulting from the closing of applicable statutes of limitations. As of June 30, 2013, $22 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) Legal proceedings
Claims and other litigation
Our insurance subsidiaries are subject to claims litigation involving disputed interpretations of policy coverages and, in some jurisdictions, direct actions by allegedly-injured persons seeking damages from policyholders. These lawsuits, involving claims on policies issued by our subsidiaries which are typical to the insurance industry in general and in the normal course of business, are considered in our loss and loss expense reserves. In addition to claims litigation, we are subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly relate to claims on insurance policies. This category of business litigation typically involves, among other things, allegations of underwriting errors or misconduct, employment claims, regulatory activity, or disputes arising from our business ventures. In the opinion of management, our ultimate liability for these matters could be, but we believe is not likely to be, material to our consolidated financial condition and results of operations.
Shareholders' equity
Shareholders' equity
Shareholders’ equity

All of ACE’s Common Shares are authorized under Swiss corporate law. Though the par value of Common Shares is stated in Swiss francs, ACE continues to use U.S. dollars as its reporting currency for preparing the consolidated financial statements. Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value reduction) or from legal reserves, must be stated in Swiss francs though dividend payments are made by ACE in U.S. dollars. At our May 2011 annual general meeting, our shareholders approved a dividend for the following year, payable in four quarterly installments after the May 2011 annual general meeting from our capital contribution reserves (Additional paid-in capital), a subaccount of legal reserves. At our May 2012 and May 2013 annual general meetings, our shareholders approved a dividend for the following year, respectively, payable in four quarterly installments after the annual general meetings in the form of a distribution by way of a par value reduction. We have determined this procedure is more appropriate for us at this time due to current Swiss law. For the three and six months ended June 30, 2013, dividends per Common Share amounted to CHF 0.48 ($0.51) and CHF 0.94 ($1.00). 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 27.95 at June 30, 2013.

For the three and six months ended June 30, 2012, dividends per Common Share amounted to CHF 0.48 ($0.49) and CHF 1.01 ($1.08), which included a $0.12 per Common Share increase (approved by our shareholders at the January 9, 2012 extraordinary general meeting) to the third and fourth installments of the dividend approved at the May 2011 annual general meeting. For the six months ended June 30, 2012, dividends per Common Share included a par value reduction of CHF 0.48 per Common Share.

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 June 30, 2013, 2,746,143 Common Shares remain in treasury after net shares redeemed under employee share-based compensation plans.

ACE Limited securities repurchase authorization
In August 2011, the Board of Directors (Board) authorized the repurchase of up to $303 million of ACE’s Common Shares through December 31, 2012. The amount authorized in August 2011 was in addition to the $197 million balance remaining under a $600 million share repurchase program approved in November 2010. In November 2012, the Board authorized an extension of our then-remaining repurchase capacity through December 31, 2013. These authorizations were granted to allow ACE to repurchase Common Shares to partially offset potential dilution from the exercise of stock options and the granting of restricted stock under share-based compensation plans. Such repurchases may be made in the open market, in privately negotiated transactions, block trades, accelerated repurchases and/or through option or other forward transactions. For the three and six months ended June 30, 2013, ACE repurchased 654,776 Common Shares for a cost of $58 million and 2,463,076 Common Shares for a cost of $212 million, respectively, in a series of open market transactions. At June 30, 2013, $249 million in share repurchase authorization remained through December 31, 2013 pursuant to the November 2010, August 2011, and November 2012 Board authorizations.
Share-based compensation
Share-based compensation
Share-based compensation

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

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

In May 2013, our shareholders approved an increase of 8 million shares authorized to be issued under the 2004 LTIP, bringing the total shares authorized to 38,600,000 common shares. At June 30, 2013, a total of 11,120,629 shares remain available for future issuance under the 2004 LTIP.
Segment information
Segment information
Segment information

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

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

For segment reporting purposes, certain items have been presented in a different manner than in the consolidated financial statements. Management uses underwriting income as the main measure of segment performance. ACE calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. For the Life business, management also includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP as components of underwriting income. For example, for the three months ended June 30, 2013, Life underwriting income of $96 million includes Net investment income of $63 million and losses from fair value changes in separate account assets of $11 million.

The following tables present the operations by segment:

Statement of Operations by Segment
For the Three Months Ended June 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
Net premiums written
$
1,529

 
$
453

 
$
1,630

 
$
292

 
$
487

 
$
—

 
$
4,391

Net premiums earned
1,428

 
351

 
1,563

 
245

 
480

 
—

 
4,067

Losses and loss expenses
950

 
293

 
768

 
93

 
145

 
1

 
2,250

Policy benefits
—

 
—

 
—

 
—

 
110

 
—

 
110

Policy acquisition costs
142

 
20

 
360

 
48

 
95

 
—

 
665

Administrative expenses
159

 
3

 
251

 
12

 
86

 
53

 
564

Underwriting income (loss)
177

 
35

 
184

 
92

 
44

 
(54
)
 
478

Net investment income
250

 
7

 
136

 
71

 
63

 
7

 
534

Net realized gains (losses) including OTTI
28

 
1

 
8

 
31

 
36

 
—

 
104

Interest expense
3

 
—

 
2

 
1

 
4

 
63

 
73

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

 
—

 
—

 
—

 
11

 
—

 
11

Other
(10
)
 
8

 
17

 
2

 
3

 
6

 
26

Income tax expense (benefit)
91

 
8

 
50

 
7

 
10

 
(51
)
 
115

Net income (loss)
$
371

 
$
27

 
$
259

 
$
184

 
$
115

 
$
(65
)
 
$
891


Statement of Operations by Segment
For the Three Months Ended June 30, 2012
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
1,368

 
$
492

 
$
1,475

 
$
309

 
$
486

 
$
—

 
$
4,130

Net premiums earned
1,268

 
384

 
1,420

 
237

 
474

 
—

 
3,783

Losses and loss expenses
844

 
319

 
703

 
102

 
151

 
—

 
2,119

Policy benefits
—

 
—

 
—

 
—

 
102

 
—

 
102

Policy acquisition costs
135

 
22

 
332

 
42

 
88

 
—

 
619

Administrative expenses
153

 
—

 
233

 
13

 
78

 
37

 
514

Underwriting income (loss)
136

 
43

 
152

 
80

 
55

 
(37
)
 
429

Net investment income
265

 
6

 
128

 
70

 
62

 
6

 
537

Net realized gains (losses) including OTTI
18

 
—

 
26

 
(17
)
 
(421
)
 
—

 
(394
)
Interest expense
3

 
—

 
1

 
1

 
3

 
54

 
62

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

 
—

 
—

 
—

 
14

 
—

 
14

Other
2

 
8

 
6

 
3

 
5

 
(4
)
 
20

Income tax expense (benefit)
96

 
11

 
51

 
—

 
19

 
(29
)
 
148

Net income (loss)
$
318

 
$
30

 
$
248

 
$
129

 
$
(345
)
 
$
(52
)
 
$
328


Statement of Operations by Segment
For the Six Months Ended June 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
2,813

 
$
566

 
$
3,250

 
$
571

 
$
989

 
$
—

 
$
8,189

Net premiums earned
2,766

 
403

 
3,022

 
492

 
957

 
—

 
7,640

Losses and loss expenses
1,828

 
325

 
1,515

 
199

 
302

 
7

 
4,176

Policy benefits
—

 
—

 
—

 
—

 
241

 
—

 
241

Policy acquisition costs
285

 
24

 
699

 
96

 
175

 
—

 
1,279

Administrative expenses
284

 
8

 
487

 
24

 
171

 
104

 
1,078

Underwriting income (loss)
369

 
46

 
321

 
173

 
68

 
(111
)
 
866

Net investment income
501

 
13

 
268

 
143

 
126

 
14

 
1,065

Net realized gains (losses) including OTTI
54

 
1

 
42

 
51

 
163

 
(1
)
 
310

Interest expense
1

 
—

 
3

 
2

 
8

 
119

 
133

Other (income) expense


 


 


 


 


 


 
 
(Gains) losses from fair value changes in separate account assets
—

 
—

 
—

 
—

 
7

 
—

 
7

Other
(25
)
 
16

 
16

 
(6
)
 
3

 
16

 
20

Income tax expense (benefit)
185

 
10

 
96

 
15

 
23

 
(92
)
 
237

Net income (loss)
$
763

 
$
34

 
$
516

 
$
356

 
$
316

 
$
(141
)
 
$
1,844


Statement of Operations by Segment
For the Six Months Ended June 30, 2012
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
2,542

 
$
611

 
$
3,003

 
$
572

 
$
974

 
$
—

 
$
7,702

Net premiums earned
2,496

 
443

 
2,811

 
467

 
947

 
—

 
7,164

Losses and loss expenses
1,655

 
357

 
1,408

 
204

 
299

 
—

 
3,923

Policy benefits
—

 
—

 
—

 
—

 
249

 
—

 
249

Policy acquisition costs
272

 
12

 
667

 
85

 
164

 
1

 
1,201

Administrative expenses
303

 
(3
)
 
462

 
25

 
156

 
81

 
1,024

Underwriting income (loss)
266

 
77

 
274

 
153

 
79

 
(82
)
 
767

Net investment income
532

 
13

 
259

 
141

 
123

 
13

 
1,081

Net realized gains (losses) including OTTI
17

 
—

 
46

 
(4
)
 
(190
)
 
(3
)
 
(134
)
Interest expense
6

 
—

 
2

 
2

 
6

 
108

 
124

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

 
—

 
—

 
—

 
(4
)
 
—

 
(4
)
Other
(7
)
 
16

 
6

 
(2
)
 
14

 
8

 
35

Income tax expense (benefit)
179

 
19

 
89

 
6

 
30

 
(65
)
 
258

Net income (loss)
$
637

 
$
55

 
$
482

 
$
284

 
$
(34
)
 
$
(123
)
 
$
1,301



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:
For the Three Months Ended June 30, 2013
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
Insurance – North American P&C
$
368

 
$
967

 
$
93

 
$
1,428

Insurance – North American Agriculture
351

 
—

 
—

 
351

Insurance – Overseas General
658

 
374

 
531

 
1,563

Global Reinsurance
132

 
113

 
—

 
245

Life
—

 
—

 
480

 
480

 
$
1,509

 
$
1,454

 
$
1,104

 
$
4,067

For the Three Months Ended June 30, 2012
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
Insurance – North American P&C
$
347

 
$
828

 
$
93

 
$
1,268

Insurance – North American Agriculture
384

 
—

 
—

 
384

Insurance – Overseas General
552

 
338

 
530

 
1,420

Global Reinsurance
114

 
123

 
—

 
237

Life
—

 
—

 
474

 
474

 
$
1,397

 
$
1,289

 
$
1,097

 
$
3,783


For the Six Months Ended June 30, 2013
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
Insurance – North American P&C
$
715

 
$
1,869

 
$
182

 
$
2,766

Insurance – North American Agriculture
403

 
—

 
—

 
403

Insurance – Overseas General
1,243

 
713

 
1,066

 
3,022

Global Reinsurance
267

 
225

 
—

 
492

Life
—

 
—

 
957

 
957

 
$
2,628

 
$
2,807

 
$
2,205

 
$
7,640

For the Six Months Ended June 30, 2012
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
Insurance – North American P&C
$
669

 
$
1,645

 
$
182

 
$
2,496

Insurance – North American Agriculture
443

 
—

 
—

 
443

Insurance – Overseas General
1,090

 
671

 
1,050

 
2,811

Global Reinsurance
224

 
243

 
—

 
467

Life
—

 
—

 
947

 
947

 
$
2,426

 
$
2,559

 
$
2,179

 
$
7,164

Earnings per share
Earnings per share
Earnings per share

The following table presents the computation of basic and diluted earnings per share: 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars, except share and per share data)
2013

 
2012

 
2013

 
2012

Numerator:
 
 
 
 
 
 
 
Net income
$
891

 
$
328

 
$
1,844

 
$
1,301

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
 
 
Weighted-average shares outstanding
341,047,290

 
339,766,067

 
340,913,450

 
339,164,449

Denominator for diluted earnings per share:
 
 
 
 

 

Share-based compensation plans
3,053,975

 
2,907,971

 
3,120,263

 
3,006,950

Adjusted weighted-average shares outstanding and assumed conversions
344,101,265

 
342,674,038

 
344,033,713

 
342,171,399

Basic earnings per share
$
2.61

 
$
0.96

 
$
5.41

 
$
3.83

Diluted earnings per share
$
2.59

 
$
0.96

 
$
5.36

 
$
3.80

 
 
 
 
 
 
 
 
Potential anti-dilutive share conversions
1,811,030

 
1,471,035

 
1,231,105

 
1,051,182



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

The following tables present condensed consolidating financial information at June 30, 2013 and December 31, 2012, and for the three and six months ended June 30, 2013 and 2012, for ACE Limited (the Parent Guarantor) and ACE INA Holdings Inc. (the Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. Investments in subsidiaries are accounted for by the Parent Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are reflected in the Parent Guarantor’s investment accounts and earnings. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Subsidiary Issuer is presented on a consolidated basis and consists principally of the net assets, results of operations, and cash flows of operating insurance company subsidiaries.

Condensed Consolidating Balance Sheet at June 30, 2013
(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
29

 
$
31,387

 
$
28,274

 
$
—

 
$
59,690

Cash(3)
(513
)
 
583

 
609

 
—

 
679

Insurance and reinsurance balances receivable
—

 
4,371

 
651

 
—

 
5,022

Reinsurance recoverable on losses and loss expenses
—

 
16,277

 
(4,835
)
 
—

 
11,442

Reinsurance recoverable on policy benefits
—

 
1,181

 
(941
)
 
—

 
240

Value of business acquired
—

 
557

 
3

 
—

 
560

Goodwill and other intangible assets
—

 
4,843

 
552

 
—

 
5,395

Investments in subsidiaries
27,409

 
—

 
—

 
(27,409
)
 
—

Due from subsidiaries and affiliates, net
591

 
—

 
—

 
(591
)
 
—

Other assets
6

 
8,507

 
2,147

 
—

 
10,660

Total assets
$
27,522

 
$
67,706

 
$
26,460

 
$
(28,000
)
 
$
93,688

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
30,894

 
$
6,449

 
$
—

 
$
37,343

Unearned premiums
—

 
6,644

 
1,207

 
—

 
7,851

Future policy benefits
—

 
3,915

 
587

 
—

 
4,502

Due to (from) subsidiaries and affiliates, net
—

 
859

 
(268
)
 
(591
)
 
—

Short-term debt
—

 
1,351

 
550

 
—

 
1,901

Long-term debt
—

 
3,807

 
—

 
—

 
3,807

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
227

 
8,557

 
1,896

 
—

 
10,680

Total liabilities
227

 
56,336

 
10,421

 
(591
)
 
66,393

Total shareholders’ equity
27,295

 
11,370

 
16,039

 
(27,409
)
 
27,295

Total liabilities and shareholders’ equity
$
27,522

 
$
67,706

 
$
26,460

 
$
(28,000
)
 
$
93,688

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations, primarily intercompany reinsurance transactions.
(2) 
Includes ACE Limited parent company eliminations.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At June 30, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
 




Condensed Consolidating Balance Sheet at December 31, 2012

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
31,074

 
$
29,159

 
$
—

 
$
60,264

Cash(3)
103

 
515

 
(3
)
 
—

 
615

Insurance and reinsurance balances receivable
—

 
3,654

 
493

 
—

 
4,147

Reinsurance recoverable on losses and loss expenses
—

 
17,232

 
(5,154
)
 
—

 
12,078

Reinsurance recoverable on policy benefits
—

 
1,187

 
(946
)
 
—

 
241

Value of business acquired
—

 
610

 
4

 
—

 
614

Goodwill and other intangible assets
—

 
4,419

 
556

 
—

 
4,975

Investments in subsidiaries
27,251

 
—

 
—

 
(27,251
)
 
—

Due from subsidiaries and affiliates, net
204

 
—

 
—

 
(204
)
 
—

Other assets
13

 
7,563

 
2,035

 
—

 
9,611

Total assets
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
31,356

 
$
6,590

 
$
—

 
$
37,946

Unearned premiums
—

 
5,872

 
992

 
—

 
6,864

Future policy benefits
—

 
3,876

 
594

 
—

 
4,470

Due to (from) subsidiaries and affiliates, net
—

 
384

 
(180
)
 
(204
)
 
—

Short-term debt
—

 
851

 
550

 
—

 
1,401

Long-term debt
—

 
3,360

 
—

 
—

 
3,360

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
71

 
8,272

 
2,321

 
—

 
10,664

Total liabilities
71

 
54,280

 
10,867

 
(204
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
15,277

 
(27,251
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations, primarily intercompany reinsurance transactions.
(2) 
Includes ACE Limited parent company eliminations.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
2,502

 
$
1,889

 
$
—

 
$
4,391

Net premiums earned
—

 
2,331

 
1,736

 
—

 
4,067

Net investment income
1

 
254

 
279

 
—

 
534

Equity in earnings of subsidiaries
842

 
—

 
—

 
(842
)
 
—

Net realized gains (losses) including OTTI
—

 
28

 
76

 
—

 
104

Losses and loss expenses
—

 
1,434

 
816

 
—

 
2,250

Policy benefits
—

 
63

 
47

 
—

 
110

Policy acquisition costs and administrative expenses
12

 
674

 
543

 
—

 
1,229

Interest (income) expense
(8
)
 
74

 
7

 
—

 
73

Other (income) expense
(57
)
 
65

 
29

 
—

 
37

Income tax expense
5

 
92

 
18

 
—

 
115

Net income
$
891

 
$
211

 
$
631

 
$
(842
)
 
$
891

Comprehensive income (loss)
$
(499
)
 
$
(533
)
 
$
1,375

 
$
(842
)
 
$
(499
)

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the Three Months Ended June 30, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
2,327

 
$
1,803

 
$
—

 
$
4,130

Net premiums earned
—

 
2,196

 
1,587

 
—

 
3,783

Net investment income
1

 
257

 
279

 
—

 
537

Equity in earnings of subsidiaries
301

 
—

 
—

 
(301
)
 
—

Net realized gains (losses) including OTTI
2

 
34

 
(430
)
 
—

 
(394
)
Losses and loss expenses
—

 
1,325

 
794

 
—

 
2,119

Policy benefits
—

 
54

 
48

 
—

 
102

Policy acquisition costs and administrative expenses
14

 
656

 
463

 
—

 
1,133

Interest (income) expense
(8
)
 
58

 
12

 
—

 
62

Other (income) expense
(33
)
 
9

 
58

 
—

 
34

Income tax expense
3

 
119

 
26

 
—

 
148

Net income
$
328

 
$
266

 
$
35

 
$
(301
)
 
$
328

Comprehensive income (loss)
$
457

 
$
323

 
$
(22
)
 
$
(301
)
 
$
457

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

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
4,584

 
$
3,605

 
$
—

 
$
8,189

Net premiums earned
—

 
4,337

 
3,303

 
—

 
7,640

Net investment income
1

 
502

 
562

 
—

 
1,065

Equity in earnings of subsidiaries
1,756

 
—

 
—

 
(1,756
)
 
—

Net realized gains (losses) including OTTI
12

 
38

 
260

 
—

 
310

Losses and loss expenses
—

 
2,687

 
1,489

 
—

 
4,176

Policy benefits
—

 
144

 
97

 
—

 
241

Policy acquisition costs and administrative expenses
27

 
1,300

 
1,030

 
—

 
2,357

Interest (income) expense
(15
)
 
141

 
7

 
—

 
133

Other (income) expense
(95
)
 
99

 
23

 
—

 
27

Income tax expense
8

 
148

 
81

 
—

 
237

Net income
$
1,844

 
$
358

 
$
1,398

 
$
(1,756
)
 
$
1,844

Comprehensive income (loss)
$
217

 
$
(534
)
 
$
2,290

 
$
(1,756
)
 
$
217


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Six Months Ended June 30, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
4,425

 
$
3,277

 
$
—

 
$
7,702

Net premiums earned
—

 
4,148

 
3,016

 
—

 
7,164

Net investment income
1

 
522

 
558

 
—

 
1,081

Equity in earnings of subsidiaries
1,229

 
—

 
—

 
(1,229
)
 
—

Net realized gains (losses) including OTTI
22

 
60

 
(216
)
 
—

 
(134
)
Losses and loss expenses
—

 
2,507

 
1,416

 
—

 
3,923

Policy benefits
—

 
140

 
109

 
—

 
249

Policy acquisition costs and administrative expenses
26

 
1,296

 
903

 
—

 
2,225

Interest (income) expense
(17
)
 
124

 
17

 
—

 
124

Other (income) expense
(63
)
 
34

 
60

 
—

 
31

Income tax expense
5

 
204

 
49

 
—

 
258

Net income
$
1,301

 
$
425

 
$
804

 
$
(1,229
)
 
$
1,301

Comprehensive income
$
1,728

 
$
610

 
$
619

 
$
(1,229
)
 
$
1,728

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

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
95

 
$
876

 
$
837

 
$
—

 
$
1,808

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

 
(6,604
)
 
(4,337
)
 
—

 
(10,941
)
Purchases of fixed maturities held to maturity
—

 
(284
)
 
(15
)
 
—

 
(299
)
Purchases of equity securities
—

 
(161
)
 
(33
)
 
—

 
(194
)
Sales of fixed maturities available for
sale
—

 
3,571

 
1,825

 
—

 
5,396

Sales of equity securities
—

 
51

 
11

 
—

 
62

Maturities and redemptions of fixed maturities available for sale
—

 
1,839

 
2,273

 
—

 
4,112

Maturities and redemptions of fixed maturities held to maturity
—

 
613

 
295

 
—

 
908

Net derivative instruments settlements
—

 
10

 
(327
)
 
—

 
(317
)
Advances to affiliates
(429
)
 
—

 
—

 
429

 
—

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

 
(977
)
 
—

 
—

 
(977
)
Capital contribution
(119
)
 
—

 
—

 
119

 
—

Other
—

 
(154
)
 
28

 
—

 
(126
)
Net cash flows used for investing activities
(548
)
 
(2,096
)
 
(280
)
 
548

 
(2,376
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(169
)
 
—

 
—

 
—

 
(169
)
Common Shares repurchased
—

 
—

 
(212
)
 
—

 
(212
)
Proceeds from issuance of long-term debt
—

 
947

 
—

 
—

 
947

Proceeds from share-based compensation plans, including windfall tax benefits
6

 
(4
)
 
60

 
—

 
62

Advances from affiliates
—

 
352

 
77

 
(429
)
 
—

Capital contribution
—

 
—

 
119

 
(119
)
 
—

Other
—

 
30

 
—

 
—

 
30

Net cash flows from (used for) financing activities
(163
)
 
1,325

 
44

 
(548
)
 
658

Effect of foreign currency rate changes on cash and cash equivalents
—

 
(37
)
 
11

 
—

 
(26
)
Net increase (decrease) in cash
(616
)
 
68

 
612

 
—

 
64

Cash – beginning of period(3)
103

 
515

 
(3
)
 
—

 
615

Cash – end of period(3)
$
(513
)
 
$
583

 
$
609

 
$
—

 
$
679

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At June 30, 2013 and December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
49

 
$
540

 
$
794

 
$
—

 
$
1,383

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

 
(5,614
)
 
(6,073
)
 
—

 
(11,687
)
Purchases of fixed maturities held to maturity
—

 
(134
)
 
(2
)
 
—

 
(136
)
Purchases of equity securities
—

 
(57
)
 
(36
)
 
—

 
(93
)
Sales of fixed maturities available for sale
—

 
3,750

 
4,282

 
—

 
8,032

Sales of equity securities
—

 
28

 
5

 
—

 
33

Maturities and redemptions of fixed maturities available for sale
—

 
1,158

 
1,122

 
—

 
2,280

Maturities and redemptions of fixed maturities held to maturity
—

 
527

 
212

 
—

 
739

Net derivative instruments settlements
(1
)
 
(6
)
 
(126
)
 
—

 
(133
)
Advances from affiliates
131

 
—

 
—

 
(131
)
 
—

Acquisition of subsidiaries
—

 
(30
)
 
—

 
—

 
(30
)
Capital contribution
—

 
—

 
(90
)
 
90

 
—

Other
—

 
(140
)
 
(115
)
 
—

 
(255
)
Net cash flows from (used for) investing activities
130

 
(518
)
 
(821
)
 
(41
)
 
(1,250
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(318
)
 
—

 
—

 
—

 
(318
)
Common Shares repurchased
—

 
—

 
(11
)
 
—

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

 
—

 
151

 
—

 
151

Proceeds from share-based compensation plans
3

 
—

 
52

 
—

 
55

Advances from (to) affiliates
—

 
23

 
(154
)
 
131

 
—

Capital contribution
—

 
90

 
—

 
(90
)
 
—

Net cash flows from (used for) financing activities
(315
)
 
113

 
38

 
41

 
(123
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
(9
)
 
2

 
—

 
(7
)
Net increase (decrease) in cash
(136
)
 
126

 
13

 
—

 
3

Cash – beginning of period
106

 
382

 
126

 
—

 
614

Cash – end of period(3)
$
(30
)
 
$
508

 
$
139

 
$
—

 
$
617

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At June 30, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
General (Policies)
Basis of presentation
ACE Limited is a holding company incorporated in Zurich, Switzerland. ACE Limited, through its various subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through the following business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. Refer to Note 10 for additional information.

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

The results of operations and cash flows for any interim period are not necessarily indicative of the results for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our 2012 Form 10-K.
Investments (Tables)
Schedule Of Amortized Cost And Fair Value Of Fixed Maturities And Related OTTI Recognized In AOCI 
June 30, 2013
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
3,238

 
$
89

 
$
(39
)
 
$
3,288

 
$
—

Foreign
13,552

 
401

 
(112
)
 
13,841

 
—

Corporate securities
16,263

 
751

 
(150
)
 
16,864

 
(6
)
Mortgage-backed securities
9,719

 
225

 
(166
)
 
9,778

 
(37
)
States, municipalities, and political subdivisions
3,216

 
85

 
(56
)
 
3,245

 
—

 
$
45,988

 
$
1,551

 
$
(523
)
 
$
47,016

 
$
(43
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
858

 
$
22

 
$
(4
)
 
$
876

 
$
—

Foreign
873

 
32

 
—

 
905

 
—

Corporate securities
2,030

 
78

 
—

 
2,108

 
—

Mortgage-backed securities
1,615

 
52

 
—

 
1,667

 
—

States, municipalities, and political subdivisions
1,200

 
22

 
(16
)
 
1,206

 
—

 
$
6,576

 
$
206

 
$
(20
)
 
$
6,762

 
$
—

 
 
 
 
 
 
 
 
 
 
December 31, 2012
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
3,553

 
$
183

 
$
(1
)
 
$
3,735

 
$
—

Foreign
13,016

 
711

 
(14
)
 
13,713

 
—

Corporate securities
15,529

 
1,210

 
(31
)
 
16,708

 
(7
)
Mortgage-backed securities
10,051

 
458

 
(36
)
 
10,473

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

 
163

 
(3
)
 
2,677

 
—

 
$
44,666

 
$
2,725

 
$
(85
)
 
$
47,306

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

 
$
39

 
$
—

 
$
1,083

 
$
—

Foreign
910

 
54

 
—

 
964

 
—

Corporate securities
2,133

 
142

 
—

 
2,275

 
—

Mortgage-backed securities
2,028

 
88

 
—

 
2,116

 
—

States, municipalities, and political subdivisions
1,155

 
44

 
(4
)
 
1,195

 
—

 
$
7,270

 
$
367

 
$
(4
)
 
$
7,633

 
$
—


Schedule Of Fixed Maturities By Contractual Maturity 
 
 
 
June 30

 
 
 
December 31

 
 
 
2013

 
 
 
2012

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,102

 
$
2,121

 
$
1,887

 
$
1,906

Due after 1 year through 5 years
14,042

 
14,493

 
13,411

 
14,010

Due after 5 years through 10 years
15,833

 
16,179

 
15,032

 
16,153

Due after 10 years
4,292

 
4,445

 
4,285

 
4,764

 
36,269

 
37,238

 
34,615

 
36,833

Mortgage-backed securities
9,719

 
9,778

 
10,051

 
10,473

 
$
45,988

 
$
47,016

 
$
44,666

 
$
47,306

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
447

 
$
451

 
$
656

 
$
659

Due after 1 year through 5 years
2,218

 
2,288

 
1,870

 
1,950

Due after 5 years through 10 years
1,833

 
1,878

 
2,119

 
2,267

Due after 10 years
463

 
478

 
597

 
641

 
4,961

 
5,095

 
5,242

 
5,517

Mortgage-backed securities
1,615

 
1,667

 
2,028

 
2,116

 
$
6,576

 
$
6,762

 
$
7,270

 
$
7,633

Schedule Of Cost And Fair Value Of Equity Securities 
 
June 30


December 31

(in millions of U.S. dollars)
2013


2012

Cost
$
843

 
$
707

Gross unrealized appreciation
45

 
41

Gross unrealized depreciation
(51
)
 
(4
)
Fair value
$
837

 
$
744

Schedule Of Net Realized Gains (Losses) And The Losses Included In Net Realized Gains (Losses) And OCI 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013

 
2012

 
2013

 
2012

Fixed maturities:
 
 
 
 
 
 
 
OTTI on fixed maturities, gross
$
(6
)
 
$
(1
)
 
$
(7
)
 
$
(8
)
OTTI on fixed maturities recognized in OCI (pre-tax)
—

 
—

 
—

 
—

OTTI on fixed maturities, net
(6
)
 
(1
)
 
(7
)
 
(8
)
Gross realized gains excluding OTTI
64

 
104

 
126

 
216

Gross realized losses excluding OTTI
(27
)
 
(35
)
 
(52
)
 
(106
)
Total fixed maturities
31

 
68

 
67

 
102

Equity securities:
 
 
 
 
 
 
 
OTTI on equity securities
—

 
(4
)
 
(1
)
 
(5
)
Gross realized gains excluding OTTI
8

 
—

 
10

 
2

Gross realized losses excluding OTTI
(1
)
 
(1
)
 
(3
)
 
(1
)
Total equity securities
7

 
(5
)
 
6

 
(4
)
OTTI on other investments
(1
)
 
(5
)
 
(2
)
 
(7
)
Foreign exchange gains (losses)
(5
)
 
(9
)
 
71

 
(14
)
Investment and embedded derivative instruments
40

 
(49
)
 
58

 
(7
)
Fair value adjustments on insurance derivative
101

 
(467
)
 
429

 
(39
)
S&P put options and futures
(68
)
 
70

 
(318
)
 
(161
)
Other derivative instruments
(1
)
 
1

 
(1
)
 
(4
)
Other
—

 
2

 
—

 
—

Net realized gains (losses)
$
104

 
$
(394
)
 
$
310

 
$
(134
)
Schedule Of Roll-Forward Of Pre-Tax Credit Losses Related To Fixed Maturities For Which A Portion Of OTTI Was Recognized In OCI 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013

 
2012

 
2013

 
2012

Balance of credit losses related to securities still held – beginning of period
$
35

 
$
55

 
$
43

 
$
74

Additions where no OTTI was previously recorded
4

 
1

 
4

 
2

Additions where an OTTI was previously recorded
2

 
—

 
3

 
5

Reductions for securities sold during the period
(1
)
 
(9
)
 
(10
)
 
(34
)
Balance of credit losses related to securities still held – end of period
$
40

 
$
47

 
$
40

 
$
47

Schedule Of 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
 
June 30, 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
$
1,670

 
$
(43
)
 
$
—

 
$
—

 
$
1,670

 
$
(43
)
Foreign
4,278

 
(108
)
 
76

 
(4
)
 
4,354

 
(112
)
Corporate securities
4,535

 
(140
)
 
77

 
(10
)
 
4,612

 
(150
)
Mortgage-backed securities
4,190

 
(153
)
 
125

 
(13
)
 
4,315

 
(166
)
States, municipalities, and political subdivisions
2,057

 
(72
)
 
2

 
—

 
2,059

 
(72
)
Total fixed maturities
16,730

 
(516
)
 
280

 
(27
)
 
17,010

 
(543
)
Equity securities
522

 
(51
)
 
—

 
—

 
522

 
(51
)
Other investments
37

 
(5
)
 
—

 
—

 
37

 
(5
)
Total
$
17,289

 
$
(572
)
 
$
280

 
$
(27
)
 
$
17,569

 
$
(599
)
 
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
December 31, 2012
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

 
Fair Value

 
Gross
Unrealized
Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
440

 
$
(1
)
 
$
—

 
$
—

 
$
440

 
$
(1
)
Foreign
1,234

 
(8
)
 
88

 
(6
)
 
1,322

 
(14
)
Corporate securities
1,026

 
(23
)
 
85

 
(8
)
 
1,111

 
(31
)
Mortgage-backed securities
855

 
(4
)
 
356

 
(32
)
 
1,211

 
(36
)
States, municipalities, and political subdivisions
316

 
(3
)
 
48

 
(4
)
 
364

 
(7
)
Total fixed maturities
3,871

 
(39
)
 
577

 
(50
)
 
4,448

 
(89
)
Equity securities
29

 
(4
)
 
—

 
—

 
29

 
(4
)
Other investments
68

 
(5
)
 
—

 
—

 
68

 
(5
)
Total
$
3,968

 
$
(48
)
 
$
577

 
$
(50
)
 
$
4,545

 
$
(98
)
Schedule Of Components Of Restricted Assets 
 
June 30

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Trust funds
$
10,909

 
$
11,389

Deposits with non-U.S. regulatory authorities
1,989

 
2,133

Assets pledged under repurchase agreements
1,458

 
1,401

Deposits with U.S. regulatory authorities
1,335

 
1,338

Other pledged assets
395

 
456

 
$
16,086

 
$
16,717

Fair value measurements (Tables)
Financial Instruments Measured At Fair Value On A Recurring Basis 
June 30, 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
$
1,846

 
$
1,442

 
$
—

 
$
3,288

Foreign
182

 
13,611

 
48

 
13,841

Corporate securities
19

 
16,731

 
114

 
16,864

Mortgage-backed securities
—

 
9,769

 
9

 
9,778

States, municipalities, and political subdivisions
—

 
3,245

 
—

 
3,245

 
2,047

 
44,798

 
171

 
47,016

Equity securities
379

 
454

 
4

 
837

Short-term investments
1,442

 
974

 
9

 
2,425

Other investments
271

 
216

 
2,349

 
2,836

Securities lending collateral
—

 
1,662

 
—

 
1,662

Investment derivative instruments
25

 
—

 
—

 
25

Other derivative instruments
15

 
24

 
—

 
39

Separate account assets
961

 
72

 
—

 
1,033

Total assets measured at fair value
$
5,140

 
$
48,200

 
$
2,533

 
$
55,873

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$
—

 
$
—

 
$
652

 
$
652

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

 
December 31, 2012
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
1,685

 
$
—

 
$
3,735

Foreign
222

 
13,431

 
60

 
13,713

Corporate securities
20

 
16,586

 
102

 
16,708

Mortgage-backed securities
—

 
10,460

 
13

 
10,473

States, municipalities, and political subdivisions
—

 
2,677

 
—

 
2,677

 
2,292

 
44,839

 
175

 
47,306

Equity securities
253

 
488

 
3

 
744

Short-term investments
1,503

 
725

 
—

 
2,228

Other investments
268

 
196

 
2,252

 
2,716

Securities lending collateral
—

 
1,791

 
—

 
1,791

Investment derivative instruments
11

 
—

 
—

 
11

Other derivative instruments
(6
)
 
30

 
—

 
24

Separate account assets
872

 
71

 
—

 
943

Total assets measured at fair value
$
5,193

 
$
48,140

 
$
2,430

 
$
55,763

Liabilities:
 
 
 
 
 
 
 
GLB(1)
$
—

 
$
—

 
$
1,119

 
$
1,119

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
Fair Value And Maximum Future Funding Commitments Related To Investments 
 
 
 
 
 
June 30

 
 
 
December 31

 
Expected
Liquidation
Period
 
 
 
2013

 
 
 
2012

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

 
Maximum
Future Funding
Commitments

 
Fair
Value

 
Maximum
Future Funding
Commitments

Financial
5 to 9 Years
 
$
246

 
$
94

 
$
225

 
$
111

Real estate
3 to 9 Years
 
347

 
67

 
292

 
62

Distressed
6 to 9 Years
 
180

 
130

 
192

 
152

Mezzanine
6 to 9 Years
 
261

 
285

 
284

 
279

Traditional
3 to 8 Years
 
750

 
568

 
711

 
587

Vintage
1 to 3 Years
 
12

 
—

 
14

 
—

Investment funds
Not Applicable
 
414

 
—

 
395

 
—

 
 
 
$
2,210

 
$
1,144

 
$
2,113

 
$
1,191

Schedule Of Significant Unobservable Inputs Used In Level 3 Liability Valuations 
(in millions of U.S. dollars, except for percentages)
Fair Value at
June 30, 2013

 
Fair Value at
December 31, 2012

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
652

 
$
1,119

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
 
 
Annuitization rate
 
0% – 50%
(1) 
Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living benefits.
Financial Instruments Measured At Fair Value Using Significant Unobservable Inputs 
 
Assets
Liabilities

 
Available-for-Sale Debt Securities
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

Three Months Ended
Foreign

 
Corporate
securities

 
MBS

 
 
June 30, 2013
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
Balance–Beginning of Period
$
35

 
$
118

 
$
13

 
$
2

 
$
—

 
$
2,328

 
$
753

Transfers into Level 3
29

 
5

 
—

 
7

 
7

 
—

 
—

Transfers out of Level 3
(14
)
 
(27
)
 
—

 
—

 
—

 
—

 
—

Change in Net Unrealized Gains (Losses) included in OCI
(4
)
 
(1
)
 
—

 
(5
)
 
—

 
13

 
—

Net Realized Gains/Losses
—

 
(1
)
 
—

 
4

 
—

 
(1
)
 
(101
)
Purchases
3

 
23

 
—

 
1

 
2

 
113

 
—

Sales
(1
)
 
—

 
(3
)
 
(5
)
 
—

 
—

 
—

Settlements
—

 
(3
)
 
(1
)
 
—

 
—

 
(104
)
 
—

Balance–End of Period
$
48

 
$
114

 
$
9

 
$
4

 
$
9

 
$
2,349

 
$
652

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(1
)
 
$
(101
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.
  
Assets
 
 
Liabilities
 
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Other
investments

 
Other
derivative
instruments

 
GLB(1)

Three Months Ended
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
 
 
 
June 30, 2012
 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance–Beginning of Period
$
—

 
$
49

 
$
117

 
$
19

 
$
1

 
$
10

 
$
1,954

 
$
(1
)
 
$
863

Transfers into Level 3
5

 
1

 
28

 
12

 
1

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
—

 
(2
)
 
(3
)
 
—

 
—

 
—

 
—

 
—

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

 
—

 
1

 
—

 
—

 
—

 
16

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(1
)
 
—

 
—

 
—

 
(5
)
 
(1
)
 
491

Purchases
—

 
6

 
5

 
—

 
—

 
2

 
132

 
3

 
—

Sales
—

 
(35
)
 
(7
)
 
—

 
—

 
—

 
—

 
—

 
—

Settlements
(1
)
 
(1
)
 
(4
)
 
(1
)
 
(1
)
 
—

 
(50
)
 
—

 
—

Balance–End of Period
$
4

 
$
20

 
$
137

 
$
27

 
$
1

 
$
12

 
$
2,047

 
$
1

 
$
1,354

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(5
)
 
$
—

 
$
491

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $1.6 billion at June 30, 2012, and $1.05 billion at March 31, 2012, which includes a fair value derivative adjustment of $1.4 billion and $863 million, respectively.

 
Assets
Liabilities

 
Available-for-Sale Debt Securities
Equity
securities

 
Short-term investments

 
Other
investments

 
GLB(1)

Six Months Ended
Foreign

 
Corporate
securities

 
MBS

 
 
 
June 30, 2013
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
Balance–Beginning of Period
$
60

 
$
102

 
$
13

 
$
3

 
$
—

 
$
2,252

 
$
1,119

Transfers into Level 3
32

 
17

 
—

 
7

 
7

 
—

 
—

Transfers out of Level 3
(41
)
 
(29
)
 
—

 
(1
)
 
—

 
—

 
—

Change in Net Unrealized Gains (Losses) included in OCI
(4
)
 
—

 
—

 
(5
)
 
—

 
35

 
—

Net Realized Gains/Losses
1

 
(1
)
 
—

 
4

 
—

 
(2
)
 
(467
)
Purchases
3

 
33

 
—

 
1

 
2

 
249

 
—

Sales
(2
)
 
—

 
(3
)
 
(5
)
 
—

 
(9
)
 
—

Settlements
(1
)
 
(8
)
 
(1
)
 
—

 
—

 
(176
)
 
—

Balance–End of Period
$
48

 
$
114

 
$
9

 
$
4

 
$
9

 
$
2,349

 
$
652

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(2
)
 
$
(467
)
(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 for additional information.

  
Assets
 
 
Liabilities
 
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Other
investments

 
Other
derivative
instruments

 
GLB(1)

Six Months Ended
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
 
 
 
June 30, 2012
 
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance–Beginning of Period
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

Transfers into Level 3
—

 
1

 
28

 
12

 
1

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
(1
)
 
(9
)
 
(15
)
 
—

 
—

 
—

 
—

 
—

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

 
—

 
3

 
—

 
—

 
1

 
24

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(1
)
 
—

 
—

 
—

 
(7
)
 
(4
)
 
35

Purchases
—

 
40

 
8

 
4

 
—

 
3

 
245

 
3

 
—

Sales
—

 
(52
)
 
(15
)
 
—

 
—

 
(5
)
 
(1
)
 
—

 
—

Settlements
(1
)
 
(1
)
 
(11
)
 
(2
)
 
(1
)
 
—

 
(91
)
 
(1
)
 
—

Balance–End of Period
$
4

 
$
20

 
$
137

 
$
27

 
$
1

 
$
12

 
$
2,047

 
$
1

 
$
1,354

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(7
)
 
$
(1
)
 
$
35

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. The liability for GLB reinsurance was $1.6 billion at June 30, 2012, and $1.5 billion at December 31, 2011, which includes a fair value derivative adjustment of $1.4 billion and $1.3 billion, respectively.
Carrying Values And Fair Values Of Financial Instruments Not Measured At Fair Value 
.

 
The following tables present fair value, by valuation hierarchy, and carrying value of the financial instruments not measured at fair value:
June 30, 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

 
$
280

 
$
—

 
$
876

 
$
858

Foreign
—

 
905

 
—

 
905

 
873

Corporate securities
—

 
2,091

 
17

 
2,108

 
2,030

Mortgage-backed securities
—

 
1,667

 
—

 
1,667

 
1,615

States, municipalities, and political subdivisions
—

 
1,206

 
—

 
1,206

 
1,200

 
596

 
6,149

 
17

 
6,762

 
6,576

Partially-owned insurance companies
—

 
—

 
452

 
452

 
452

Total assets
$
596

 
$
6,149

 
$
469

 
$
7,214

 
$
7,028

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
1,925

 
$
—

 
$
1,925

 
$
1,901

Long-term debt
—

 
4,148

 
—

 
4,148

 
3,807

Trust preferred securities
—

 
425

 
—

 
425

 
309

Total liabilities
$
—

 
$
6,498

 
$
—

 
$
6,498

 
$
6,017


December 31, 2012
Fair Value
 
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

 
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
619

 
$
464

 
$
—

 
$
1,083

 
$
1,044

Foreign
—

 
964

 
—

 
964

 
910

Corporate securities
—

 
2,257

 
18

 
2,275

 
2,133

Mortgage-backed securities
—

 
2,116

 
—

 
2,116

 
2,028

States, municipalities, and political subdivisions
—

 
1,195

 
—

 
1,195

 
1,155

 
619

 
6,996

 
18

 
7,633

 
7,270

Partially-owned insurance companies
—

 
—

 
454

 
454

 
454

Total assets
$
619

 
$
6,996

 
$
472

 
$
8,087

 
$
7,724

Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
1,401

 
$
—

 
$
1,401

 
$
1,401

Long-term debt
—

 
3,916

 
—

 
3,916

 
3,360

Trust preferred securities
—

 
446

 
—

 
446

 
309

Total liabilities
$
—

 
$
5,763

 
$
—

 
$
5,763

 
$
5,070

Assumed life reinsurance programs involving minimum benefit guarantees under annuity contracts (Tables)
Schedule Of Guaranteed Minimum Death Benefits And Guaranteed Minimum Income Benefits Income And Expense
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013

 
2012

 
2013

 
2012

GMDB
 
 
 
 
 
 
 
Net premiums earned
$
20

 
$
21

 
$
40

 
$
44

Policy benefits and other reserve adjustments
$
25

 
$
12

 
$
44

 
$
39

GLB
 
 
 
 
 
 
 
Net premiums earned
$
37

 
$
40

 
$
76

 
$
81

Policy benefits and other reserve adjustments
2

 
16

 
11

 
23

Net realized gains (losses)
101

 
(494
)
 
470

 
(34
)
Gain (loss) recognized in income
$
136

 
$
(470
)
 
$
535

 
$
24

Net cash received
$
31

 
$
38

 
$
63

 
$
79

Net decrease (increase) in liability
$
105

 
$
(508
)
 
$
472

 
$
(55
)
Commitments, contingencies, and guarantees (Tables)
Balance Sheet Locations, Fair Values In An Asset Or (Liability) Position, And Notional Values/Payment Provisions Of Derivative Instruments 
 
 
 
June 30
 
 
December 31
 
 
 
 
2013
 
 
2012
 
(in millions of U.S. dollars)
Consolidated
Balance Sheet
Location
 
Fair
Value

 
Notional
Value/
Payment
Provision

 
Fair
Value

 
Notional
Value/
Payment
Provision

Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
AP
 
$
6

 
$
1,019

 
$
—

 
$
620

Cross-currency swaps
AP
 
—

 
50

 
—

 
50

Futures contracts on money market instruments
AP
 
(1
)
 
2,910

 
1

 
2,710

Futures contracts on notes and bonds
AP
 
20

 
946

 
10

 
915

Convertible bonds
FM AFS
 
276

 
233

 
309

 
279

 
 
 
$
301

 
$
5,158

 
$
320

 
$
4,574

Other derivative instruments
 
 
 
 
 
 
 
 
 
Futures contracts on equities(1)
AP
 
$
24

 
$
1,901

 
$
(6
)
 
$
2,308

Options on equity market indices(1)
AP
 
15

 
250

 
30

 
250

 
 
 
$
39

 
$
2,151

 
$
24

 
$
2,558

GLB(2)
AP/FPB
 
$
(880
)
 
$
643

 
$
(1,352
)
 
$
1,100

(1) 
Related to GMDB and GLB blocks of business.
(2) 
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 for additional information. Note that the payment provision related to GLB is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.
Net Realized Gains (Losses) Of Derivative Instrument Activity In Consolidated Statement Of Operations 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars)
2013
 
2012
 
2013
 
2012
Investment and embedded derivative instruments
 
 
 
 
 
 
 
Foreign currency forward contracts
$
12

 
$
8

 
$
17

 
$
1

All other futures contracts and options
33

 
(45
)
 
40

 
(20
)
Convertible bonds
(5
)
 
(12
)
 
1

 
12

Total investment and embedded derivative instruments
$
40

 
$
(49
)
 
$
58

 
$
(7
)
GLB and other derivative instruments
 
 
 
 
 
 
 
GLB(1)
$
101

 
$
(467
)
 
$
429

 
$
(39
)
Futures contracts on equities(2)
(66
)
 
65

 
(303
)
 
(148
)
Options on equity market indices(2)
(2
)
 
5

 
(15
)
 
(13
)
Credit default swaps and other
(1
)
 
1

 
(1
)
 
(4
)
Total GLB and other derivative instruments
$
32

 
$
(396
)
 
$
110

 
$
(204
)
 
$
72

 
$
(445
)
 
$
168

 
$
(211
)
(1) 
Excludes foreign exchange gains (losses) related to GLB.
(2) 
Related to GMDB and GLB blocks of business. 
Segment information (Tables)
Operations By Segment 
Statement of Operations by Segment
For the Three Months Ended June 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
Net premiums written
$
1,529

 
$
453

 
$
1,630

 
$
292

 
$
487

 
$
—

 
$
4,391

Net premiums earned
1,428

 
351

 
1,563

 
245

 
480

 
—

 
4,067

Losses and loss expenses
950

 
293

 
768

 
93

 
145

 
1

 
2,250

Policy benefits
—

 
—

 
—

 
—

 
110

 
—

 
110

Policy acquisition costs
142

 
20

 
360

 
48

 
95

 
—

 
665

Administrative expenses
159

 
3

 
251

 
12

 
86

 
53

 
564

Underwriting income (loss)
177

 
35

 
184

 
92

 
44

 
(54
)
 
478

Net investment income
250

 
7

 
136

 
71

 
63

 
7

 
534

Net realized gains (losses) including OTTI
28

 
1

 
8

 
31

 
36

 
—

 
104

Interest expense
3

 
—

 
2

 
1

 
4

 
63

 
73

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

 
—

 
—

 
—

 
11

 
—

 
11

Other
(10
)
 
8

 
17

 
2

 
3

 
6

 
26

Income tax expense (benefit)
91

 
8

 
50

 
7

 
10

 
(51
)
 
115

Net income (loss)
$
371

 
$
27

 
$
259

 
$
184

 
$
115

 
$
(65
)
 
$
891


Statement of Operations by Segment
For the Three Months Ended June 30, 2012
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
1,368

 
$
492

 
$
1,475

 
$
309

 
$
486

 
$
—

 
$
4,130

Net premiums earned
1,268

 
384

 
1,420

 
237

 
474

 
—

 
3,783

Losses and loss expenses
844

 
319

 
703

 
102

 
151

 
—

 
2,119

Policy benefits
—

 
—

 
—

 
—

 
102

 
—

 
102

Policy acquisition costs
135

 
22

 
332

 
42

 
88

 
—

 
619

Administrative expenses
153

 
—

 
233

 
13

 
78

 
37

 
514

Underwriting income (loss)
136

 
43

 
152

 
80

 
55

 
(37
)
 
429

Net investment income
265

 
6

 
128

 
70

 
62

 
6

 
537

Net realized gains (losses) including OTTI
18

 
—

 
26

 
(17
)
 
(421
)
 
—

 
(394
)
Interest expense
3

 
—

 
1

 
1

 
3

 
54

 
62

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

 
—

 
—

 
—

 
14

 
—

 
14

Other
2

 
8

 
6

 
3

 
5

 
(4
)
 
20

Income tax expense (benefit)
96

 
11

 
51

 
—

 
19

 
(29
)
 
148

Net income (loss)
$
318

 
$
30

 
$
248

 
$
129

 
$
(345
)
 
$
(52
)
 
$
328


Statement of Operations by Segment
For the Six Months Ended June 30, 2013
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
2,813

 
$
566

 
$
3,250

 
$
571

 
$
989

 
$
—

 
$
8,189

Net premiums earned
2,766

 
403

 
3,022

 
492

 
957

 
—

 
7,640

Losses and loss expenses
1,828

 
325

 
1,515

 
199

 
302

 
7

 
4,176

Policy benefits
—

 
—

 
—

 
—

 
241

 
—

 
241

Policy acquisition costs
285

 
24

 
699

 
96

 
175

 
—

 
1,279

Administrative expenses
284

 
8

 
487

 
24

 
171

 
104

 
1,078

Underwriting income (loss)
369

 
46

 
321

 
173

 
68

 
(111
)
 
866

Net investment income
501

 
13

 
268

 
143

 
126

 
14

 
1,065

Net realized gains (losses) including OTTI
54

 
1

 
42

 
51

 
163

 
(1
)
 
310

Interest expense
1

 
—

 
3

 
2

 
8

 
119

 
133

Other (income) expense


 


 


 


 


 


 
 
(Gains) losses from fair value changes in separate account assets
—

 
—

 
—

 
—

 
7

 
—

 
7

Other
(25
)
 
16

 
16

 
(6
)
 
3

 
16

 
20

Income tax expense (benefit)
185

 
10

 
96

 
15

 
23

 
(92
)
 
237

Net income (loss)
$
763

 
$
34

 
$
516

 
$
356

 
$
316

 
$
(141
)
 
$
1,844


Statement of Operations by Segment
For the Six Months Ended June 30, 2012
Insurance – North American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate
and Other

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
 
 
 
Net premiums written
$
2,542

 
$
611

 
$
3,003

 
$
572

 
$
974

 
$
—

 
$
7,702

Net premiums earned
2,496

 
443

 
2,811

 
467

 
947

 
—

 
7,164

Losses and loss expenses
1,655

 
357

 
1,408

 
204

 
299

 
—

 
3,923

Policy benefits
—

 
—

 
—

 
—

 
249

 
—

 
249

Policy acquisition costs
272

 
12

 
667

 
85

 
164

 
1

 
1,201

Administrative expenses
303

 
(3
)
 
462

 
25

 
156

 
81

 
1,024

Underwriting income (loss)
266

 
77

 
274

 
153

 
79

 
(82
)
 
767

Net investment income
532

 
13

 
259

 
141

 
123

 
13

 
1,081

Net realized gains (losses) including OTTI
17

 
—

 
46

 
(4
)
 
(190
)
 
(3
)
 
(134
)
Interest expense
6

 
—

 
2

 
2

 
6

 
108

 
124

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

 
—

 
—

 
—

 
(4
)
 
—

 
(4
)
Other
(7
)
 
16

 
6

 
(2
)
 
14

 
8

 
35

Income tax expense (benefit)
179

 
19

 
89

 
6

 
30

 
(65
)
 
258

Net income (loss)
$
637

 
$
55

 
$
482

 
$
284

 
$
(34
)
 
$
(123
)
 
$
1,301

Net Premiums Earned For Segment By Product 
For the Three Months Ended June 30, 2013
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
Insurance – North American P&C
$
368

 
$
967

 
$
93

 
$
1,428

Insurance – North American Agriculture
351

 
—

 
—

 
351

Insurance – Overseas General
658

 
374

 
531

 
1,563

Global Reinsurance
132

 
113

 
—

 
245

Life
—

 
—

 
480

 
480

 
$
1,509

 
$
1,454

 
$
1,104

 
$
4,067

For the Three Months Ended June 30, 2012
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
Insurance – North American P&C
$
347

 
$
828

 
$
93

 
$
1,268

Insurance – North American Agriculture
384

 
—

 
—

 
384

Insurance – Overseas General
552

 
338

 
530

 
1,420

Global Reinsurance
114

 
123

 
—

 
237

Life
—

 
—

 
474

 
474

 
$
1,397

 
$
1,289

 
$
1,097

 
$
3,783


For the Six Months Ended June 30, 2013
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

(in millions of U.S. dollars)
 
 
 
Insurance – North American P&C
$
715

 
$
1,869

 
$
182

 
$
2,766

Insurance – North American Agriculture
403

 
—

 
—

 
403

Insurance – Overseas General
1,243

 
713

 
1,066

 
3,022

Global Reinsurance
267

 
225

 
—

 
492

Life
—

 
—

 
957

 
957

 
$
2,628

 
$
2,807

 
$
2,205

 
$
7,640

For the Six Months Ended June 30, 2012
 
 
 
 
 
 
 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
Insurance – North American P&C
$
669

 
$
1,645

 
$
182

 
$
2,496

Insurance – North American Agriculture
443

 
—

 
—

 
443

Insurance – Overseas General
1,090

 
671

 
1,050

 
2,811

Global Reinsurance
224

 
243

 
—

 
467

Life
—

 
—

 
947

 
947

 
$
2,426

 
$
2,559

 
$
2,179

 
$
7,164

Earnings per share (Tables)
Schedule Of Earnings Per Share, Basic And Diluted
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30
 
 
June 30
 
(in millions of U.S. dollars, except share and per share data)
2013

 
2012

 
2013

 
2012

Numerator:
 
 
 
 
 
 
 
Net income
$
891

 
$
328

 
$
1,844

 
$
1,301

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
 
 
Weighted-average shares outstanding
341,047,290

 
339,766,067

 
340,913,450

 
339,164,449

Denominator for diluted earnings per share:
 
 
 
 

 

Share-based compensation plans
3,053,975

 
2,907,971

 
3,120,263

 
3,006,950

Adjusted weighted-average shares outstanding and assumed conversions
344,101,265

 
342,674,038

 
344,033,713

 
342,171,399

Basic earnings per share
$
2.61

 
$
0.96

 
$
5.41

 
$
3.83

Diluted earnings per share
$
2.59

 
$
0.96

 
$
5.36

 
$
3.80

 
 
 
 
 
 
 
 
Potential anti-dilutive share conversions
1,811,030

 
1,471,035

 
1,231,105

 
1,051,182

Information provided in connection with outstanding debt of subsidiaries (Tables)
Condensed Consolidating Balance Sheet 

Condensed Consolidating Balance Sheet at June 30, 2013
(in millions of U.S. dollars)
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
29

 
$
31,387

 
$
28,274

 
$
—

 
$
59,690

Cash(3)
(513
)
 
583

 
609

 
—

 
679

Insurance and reinsurance balances receivable
—

 
4,371

 
651

 
—

 
5,022

Reinsurance recoverable on losses and loss expenses
—

 
16,277

 
(4,835
)
 
—

 
11,442

Reinsurance recoverable on policy benefits
—

 
1,181

 
(941
)
 
—

 
240

Value of business acquired
—

 
557

 
3

 
—

 
560

Goodwill and other intangible assets
—

 
4,843

 
552

 
—

 
5,395

Investments in subsidiaries
27,409

 
—

 
—

 
(27,409
)
 
—

Due from subsidiaries and affiliates, net
591

 
—

 
—

 
(591
)
 
—

Other assets
6

 
8,507

 
2,147

 
—

 
10,660

Total assets
$
27,522

 
$
67,706

 
$
26,460

 
$
(28,000
)
 
$
93,688

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
30,894

 
$
6,449

 
$
—

 
$
37,343

Unearned premiums
—

 
6,644

 
1,207

 
—

 
7,851

Future policy benefits
—

 
3,915

 
587

 
—

 
4,502

Due to (from) subsidiaries and affiliates, net
—

 
859

 
(268
)
 
(591
)
 
—

Short-term debt
—

 
1,351

 
550

 
—

 
1,901

Long-term debt
—

 
3,807

 
—

 
—

 
3,807

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
227

 
8,557

 
1,896

 
—

 
10,680

Total liabilities
227

 
56,336

 
10,421

 
(591
)
 
66,393

Total shareholders’ equity
27,295

 
11,370

 
16,039

 
(27,409
)
 
27,295

Total liabilities and shareholders’ equity
$
27,522

 
$
67,706

 
$
26,460

 
$
(28,000
)
 
$
93,688

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations, primarily intercompany reinsurance transactions.
(2) 
Includes ACE Limited parent company eliminations.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At June 30, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
 




Condensed Consolidating Balance Sheet at December 31, 2012

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
31,074

 
$
29,159

 
$
—

 
$
60,264

Cash(3)
103

 
515

 
(3
)
 
—

 
615

Insurance and reinsurance balances receivable
—

 
3,654

 
493

 
—

 
4,147

Reinsurance recoverable on losses and loss expenses
—

 
17,232

 
(5,154
)
 
—

 
12,078

Reinsurance recoverable on policy benefits
—

 
1,187

 
(946
)
 
—

 
241

Value of business acquired
—

 
610

 
4

 
—

 
614

Goodwill and other intangible assets
—

 
4,419

 
556

 
—

 
4,975

Investments in subsidiaries
27,251

 
—

 
—

 
(27,251
)
 
—

Due from subsidiaries and affiliates, net
204

 
—

 
—

 
(204
)
 
—

Other assets
13

 
7,563

 
2,035

 
—

 
9,611

Total assets
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
31,356

 
$
6,590

 
$
—

 
$
37,946

Unearned premiums
—

 
5,872

 
992

 
—

 
6,864

Future policy benefits
—

 
3,876

 
594

 
—

 
4,470

Due to (from) subsidiaries and affiliates, net
—

 
384

 
(180
)
 
(204
)
 
—

Short-term debt
—

 
851

 
550

 
—

 
1,401

Long-term debt
—

 
3,360

 
—

 
—

 
3,360

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
71

 
8,272

 
2,321

 
—

 
10,664

Total liabilities
71

 
54,280

 
10,867

 
(204
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
15,277

 
(27,251
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations, primarily intercompany reinsurance transactions.
(2) 
Includes ACE Limited parent company eliminations.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statement Of Operations and Comprehensive Income 
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the Three Months Ended June 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
2,502

 
$
1,889

 
$
—

 
$
4,391

Net premiums earned
—

 
2,331

 
1,736

 
—

 
4,067

Net investment income
1

 
254

 
279

 
—

 
534

Equity in earnings of subsidiaries
842

 
—

 
—

 
(842
)
 
—

Net realized gains (losses) including OTTI
—

 
28

 
76

 
—

 
104

Losses and loss expenses
—

 
1,434

 
816

 
—

 
2,250

Policy benefits
—

 
63

 
47

 
—

 
110

Policy acquisition costs and administrative expenses
12

 
674

 
543

 
—

 
1,229

Interest (income) expense
(8
)
 
74

 
7

 
—

 
73

Other (income) expense
(57
)
 
65

 
29

 
—

 
37

Income tax expense
5

 
92

 
18

 
—

 
115

Net income
$
891

 
$
211

 
$
631

 
$
(842
)
 
$
891

Comprehensive income (loss)
$
(499
)
 
$
(533
)
 
$
1,375

 
$
(842
)
 
$
(499
)

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the Three Months Ended June 30, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
2,327

 
$
1,803

 
$
—

 
$
4,130

Net premiums earned
—

 
2,196

 
1,587

 
—

 
3,783

Net investment income
1

 
257

 
279

 
—

 
537

Equity in earnings of subsidiaries
301

 
—

 
—

 
(301
)
 
—

Net realized gains (losses) including OTTI
2

 
34

 
(430
)
 
—

 
(394
)
Losses and loss expenses
—

 
1,325

 
794

 
—

 
2,119

Policy benefits
—

 
54

 
48

 
—

 
102

Policy acquisition costs and administrative expenses
14

 
656

 
463

 
—

 
1,133

Interest (income) expense
(8
)
 
58

 
12

 
—

 
62

Other (income) expense
(33
)
 
9

 
58

 
—

 
34

Income tax expense
3

 
119

 
26

 
—

 
148

Net income
$
328

 
$
266

 
$
35

 
$
(301
)
 
$
328

Comprehensive income (loss)
$
457

 
$
323

 
$
(22
)
 
$
(301
)
 
$
457

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

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
4,584

 
$
3,605

 
$
—

 
$
8,189

Net premiums earned
—

 
4,337

 
3,303

 
—

 
7,640

Net investment income
1

 
502

 
562

 
—

 
1,065

Equity in earnings of subsidiaries
1,756

 
—

 
—

 
(1,756
)
 
—

Net realized gains (losses) including OTTI
12

 
38

 
260

 
—

 
310

Losses and loss expenses
—

 
2,687

 
1,489

 
—

 
4,176

Policy benefits
—

 
144

 
97

 
—

 
241

Policy acquisition costs and administrative expenses
27

 
1,300

 
1,030

 
—

 
2,357

Interest (income) expense
(15
)
 
141

 
7

 
—

 
133

Other (income) expense
(95
)
 
99

 
23

 
—

 
27

Income tax expense
8

 
148

 
81

 
—

 
237

Net income
$
1,844

 
$
358

 
$
1,398

 
$
(1,756
)
 
$
1,844

Comprehensive income (loss)
$
217

 
$
(534
)
 
$
2,290

 
$
(1,756
)
 
$
217


Condensed Consolidating Statements of Operations and Comprehensive Income
For the Six Months Ended June 30, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE
Limited
Consolidated

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

 
$
4,425

 
$
3,277

 
$
—

 
$
7,702

Net premiums earned
—

 
4,148

 
3,016

 
—

 
7,164

Net investment income
1

 
522

 
558

 
—

 
1,081

Equity in earnings of subsidiaries
1,229

 
—

 
—

 
(1,229
)
 
—

Net realized gains (losses) including OTTI
22

 
60

 
(216
)
 
—

 
(134
)
Losses and loss expenses
—

 
2,507

 
1,416

 
—

 
3,923

Policy benefits
—

 
140

 
109

 
—

 
249

Policy acquisition costs and administrative expenses
26

 
1,296

 
903

 
—

 
2,225

Interest (income) expense
(17
)
 
124

 
17

 
—

 
124

Other (income) expense
(63
)
 
34

 
60

 
—

 
31

Income tax expense
5

 
204

 
49

 
—

 
258

Net income
$
1,301

 
$
425

 
$
804

 
$
(1,229
)
 
$
1,301

Comprehensive income
$
1,728

 
$
610

 
$
619

 
$
(1,229
)
 
$
1,728

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations.
Condensed Consolidating Statement of Cash Flows 
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2013
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
95

 
$
876

 
$
837

 
$
—

 
$
1,808

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

 
(6,604
)
 
(4,337
)
 
—

 
(10,941
)
Purchases of fixed maturities held to maturity
—

 
(284
)
 
(15
)
 
—

 
(299
)
Purchases of equity securities
—

 
(161
)
 
(33
)
 
—

 
(194
)
Sales of fixed maturities available for
sale
—

 
3,571

 
1,825

 
—

 
5,396

Sales of equity securities
—

 
51

 
11

 
—

 
62

Maturities and redemptions of fixed maturities available for sale
—

 
1,839

 
2,273

 
—

 
4,112

Maturities and redemptions of fixed maturities held to maturity
—

 
613

 
295

 
—

 
908

Net derivative instruments settlements
—

 
10

 
(327
)
 
—

 
(317
)
Advances to affiliates
(429
)
 
—

 
—

 
429

 
—

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

 
(977
)
 
—

 
—

 
(977
)
Capital contribution
(119
)
 
—

 
—

 
119

 
—

Other
—

 
(154
)
 
28

 
—

 
(126
)
Net cash flows used for investing activities
(548
)
 
(2,096
)
 
(280
)
 
548

 
(2,376
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(169
)
 
—

 
—

 
—

 
(169
)
Common Shares repurchased
—

 
—

 
(212
)
 
—

 
(212
)
Proceeds from issuance of long-term debt
—

 
947

 
—

 
—

 
947

Proceeds from share-based compensation plans, including windfall tax benefits
6

 
(4
)
 
60

 
—

 
62

Advances from affiliates
—

 
352

 
77

 
(429
)
 
—

Capital contribution
—

 
—

 
119

 
(119
)
 
—

Other
—

 
30

 
—

 
—

 
30

Net cash flows from (used for) financing activities
(163
)
 
1,325

 
44

 
(548
)
 
658

Effect of foreign currency rate changes on cash and cash equivalents
—

 
(37
)
 
11

 
—

 
(26
)
Net increase (decrease) in cash
(616
)
 
68

 
612

 
—

 
64

Cash – beginning of period(3)
103

 
515

 
(3
)
 
—

 
615

Cash – end of period(3)
$
(513
)
 
$
583

 
$
609

 
$
—

 
$
679

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At June 30, 2013 and December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2012
ACE
Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE
Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
49

 
$
540

 
$
794

 
$
—

 
$
1,383

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

 
(5,614
)
 
(6,073
)
 
—

 
(11,687
)
Purchases of fixed maturities held to maturity
—

 
(134
)
 
(2
)
 
—

 
(136
)
Purchases of equity securities
—

 
(57
)
 
(36
)
 
—

 
(93
)
Sales of fixed maturities available for sale
—

 
3,750

 
4,282

 
—

 
8,032

Sales of equity securities
—

 
28

 
5

 
—

 
33

Maturities and redemptions of fixed maturities available for sale
—

 
1,158

 
1,122

 
—

 
2,280

Maturities and redemptions of fixed maturities held to maturity
—

 
527

 
212

 
—

 
739

Net derivative instruments settlements
(1
)
 
(6
)
 
(126
)
 
—

 
(133
)
Advances from affiliates
131

 
—

 
—

 
(131
)
 
—

Acquisition of subsidiaries
—

 
(30
)
 
—

 
—

 
(30
)
Capital contribution
—

 
—

 
(90
)
 
90

 
—

Other
—

 
(140
)
 
(115
)
 
—

 
(255
)
Net cash flows from (used for) investing activities
130

 
(518
)
 
(821
)
 
(41
)
 
(1,250
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(318
)
 
—

 
—

 
—

 
(318
)
Common Shares repurchased
—

 
—

 
(11
)
 
—

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

 
—

 
151

 
—

 
151

Proceeds from share-based compensation plans
3

 
—

 
52

 
—

 
55

Advances from (to) affiliates
—

 
23

 
(154
)
 
131

 
—

Capital contribution
—

 
90

 
—

 
(90
)
 
—

Net cash flows from (used for) financing activities
(315
)
 
113

 
38

 
41

 
(123
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
(9
)
 
2

 
—

 
(7
)
Net increase (decrease) in cash
(136
)
 
126

 
13

 
—

 
3

Cash – beginning of period
106

 
382

 
126

 
—

 
614

Cash – end of period(3)
$
(30
)
 
$
508

 
$
139

 
$
—

 
$
617

(1) 
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2) 
Includes ACE Limited parent company eliminations and certain consolidating adjustments.
(3) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various ACE entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual ACE accounts are translated daily into a single currency and pooled on a notional basis. Individual ACE entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At June 30, 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
Apr. 2, 2013
Fianzas Monterrey [Member]
May 2, 2013
ABA Seguros [Member]
Jan. 3, 2013
PT Asuransi Jaya Proteksi (JaPro) [Member]
Sep. 18, 2012
PT Asuransi Jaya Proteksi (JaPro) [Member]
Business Acquisition [Line Items]
 
 
 
 
Acquisition purchase price
$ 293 
$ 690 
$ 107 
 
Business Acquisition, Percentage of Voting Interests Acquired
 
 
20.00% 
80.00% 
Business Acquisition, Purchase Price Allocation, Goodwill Amount
117 
235 
 
 
Business Acquisition, Purchase Price Allocation, Intangible Assets Other than Goodwill
$ 73 
$ 142 
 
 
Investments (Narrative) (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2013
Security
Jun. 30, 2012
Jun. 30, 2013
Security
Jun. 30, 2012
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
 
 
 
Net unrealized appreciation (depreciation) included in OCI
$ 1,000,000 
$ 16,000,000 
$ 25,000,000 
$ 84,000,000 
 
Net unrealized depreciation included in AOCI
2,000,000 
 
2,000,000 
 
25,000,000 
Percentage of mortgage-backed securities represented by investments in US government agency bonds
85.00% 
 
85.00% 
 
85.00% 
Credit losses recognized in net income for corporate securities
6,000,000 
1,000,000 
7,000,000 
4,000,000 
 
Credit losses recognized in net income for mortgage-backed securities
0 
0 
0 
3,000,000 
 
Number of fixed maturities in an unrealized loss position
6,267 
 
6,267 
 
 
Total number of fixed maturities
23,938 
 
23,938 
 
 
Largest single unrealized loss in the fixed maturities
5,000,000 
 
5,000,000 
 
 
Number of equity securities in an unrealized loss position
74 
 
74 
 
 
Total number of equity securities
188 
 
188 
 
 
Largest single unrealized loss in the equity securities
40,000,000 
 
40,000,000 
 
 
Restricted assets in fixed maturities and short-term investments
16,000,000,000 
 
16,000,000,000 
 
16,600,000,000 
Restricted assets in cash
$ 71,000,000 
 
$ 71,000,000 
 
$ 139,000,000 
Investments (Schedule Of Fixed Maturities By Contractual Maturity) (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Available for sale, Due in 1 year or less, Amortized Cost
$ 2,102 
$ 1,887 
Available for sale, Due after 1 year through 5 years, Amortized Cost
14,042 
13,411 
Available for sale, Due after 5 years though 10 years, Amortized Cost
15,833 
15,032 
Available for sale, Due after 10 years, Amortized Cost
4,292 
4,285 
Available for sale, Subtotal, Amortized Cost
36,269 
34,615 
Available for sale, Mortgage-backed securities, Amortized Cost
9,719 
10,051 
Available for sale, Amortized Cost
45,988 
44,666 
Available for sale, Fair Value
47,016 
47,306 
Held to maturity, Due in 1 year or less, Amortized Cost
447 
656 
Held to maturity, Due after 1 year through 5 years, Amortized Cost
2,218 
1,870 
Held to maturity, Due after 5 years through 10 years, Amortized Cost
1,833 
2,119 
Held to maturity, Due after 10 years, Amortized Cost
463 
597 
Held to maturity, Subtotal, Amortized Cost
4,961 
5,242 
Held to maturity, Mortgage backed securities, Amortized Cost
1,615 
2,028 
Available for sale, Due in 1 year or less, Fair Value
2,121 
1,906 
Available for sale, Due after 1 year through 5 years, Fair Value
14,493 
14,010 
Available for sale, Due after 5 years through 10 years, Fair Value
16,179 
16,153 
Available for sale, Due after 10 years, Fair Value
4,445 
4,764 
Available for sale, Subtotal, Fair Value
37,238 
36,833 
Available for sale, Mortgage backed securities, Fair Value
9,778 
10,473 
Held to maturity, Due in 1 year or less, Fair Value
451 
659 
Held to maturity, Due after 1 year through 5, Fair Value
2,288 
1,950 
Held to maturity, Due after 5 years through 10 years, Fair Value
1,878 
2,267 
Held to maturity, Due after 10 years, Fair Value
478 
641 
Held to maturity, Subtotal, Fair Value
5,095 
5,517 
Held to maturity, Mortgage backed securities, Fair Value
1,667 
2,116 
Held-to-maturity Securities
6,576 
7,270 
Held to maturity, Fair Value
$ 6,762 
$ 7,633 
Investments (Schedule Of Cost And Fair Value Of Equity Securities) (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Cost
$ 843 
$ 707 
Gross unrealized appreciation
45 
41 
Gross unrealized depreciation
(51)
(4)
Fair value
$ 837 
$ 744 
Investments (Net Realized Gains (Losses) And Losses Included In Net Realized Gains (Losses) And Other Comprehensive Income) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
 
 
OTTI on fixed maturities, gross
$ (6)
$ (1)
$ (7)
$ (8)
OTTI on fixed maturities recognized in OCI (pre-tax)
0 
0 
0 
0 
OTTI on fixed maturities, net
(6)
(1)
(7)
(8)
Fixed maturities, Gross realized gains excluding OTTI
64 
104 
126 
216 
Fixed maturities, Gross realized losses excluding OTTI
(27)
(35)
(52)
(106)
Total fixed maturities
31 
68 
67 
102 
OTTI on equity securities
0 
(4)
(1)
(5)
Equity securities, Gross realized gains excluding OTTI
8 
0 
10 
2 
Equity securities, Gross realized losses excluding OTTI
(1)
(1)
(3)
(1)
Total equity securities
7 
(5)
6 
(4)
OTTI on other investments
(1)
(5)
(2)
(7)
Foreign exchange gains (losses)
(5)
(9)
71 
(14)
Investment and embedded derivative instruments
40 
(49)
58 
(7)
Fair value adjustments on insurance derivative
101 
(467)
429 
(39)
S&P put options and futures
(68)
70 
(318)
(161)
Other derivative instruments
(1)
1 
(1)
(4)
Other
0 
2 
0 
0 
Total net realized gains (losses)
$ 104 
$ (394)
$ 310 
$ (134)
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
Jun. 30, 2013
Dec. 31, 2012
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
$ 17,289 
$ 3,968 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(572)
(48)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
280 
577 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(27)
(50)
Investment securities, Unrealized loss position, Total Fair Value
17,569 
4,545 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(599)
(98)
US Treasury and Government [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
1,670 
440 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(43)
(1)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
0 
0 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
0 
0 
Investment securities, Unrealized loss position, Total Fair Value
1,670 
440 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(43)
(1)
Foreign Government Debt Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
4,278 
1,234 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(108)
(8)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
76 
88 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(4)
(6)
Investment securities, Unrealized loss position, Total Fair Value
4,354 
1,322 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(112)
(14)
Corporate Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
4,535 
1,026 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(140)
(23)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
77 
85 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(10)
(8)
Investment securities, Unrealized loss position, Total Fair Value
4,612 
1,111 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(150)
(31)
Collateralized Mortgage Backed Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
4,190 
855 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(153)
(4)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
125 
356 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(13)
(32)
Investment securities, Unrealized loss position, Total Fair Value
4,315 
1,211 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(166)
(36)
US States and Political Subdivisions Debt Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
2,057 
316 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(72)
(3)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
2 
48 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
0 
(4)
Investment securities, Unrealized loss position, Total Fair Value
2,059 
364 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(72)
(7)
Fixed Maturities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
16,730 
3,871 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(516)
(39)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
280 
577 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(27)
(50)
Investment securities, Unrealized loss position, Total Fair Value
17,010 
4,448 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(543)
(89)
Equity Securities [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
522 
29 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(51)
(4)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
0 
0 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
0 
0 
Investment securities, Unrealized loss position, Total Fair Value
522 
29 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(51)
(4)
Other Long-term Investments [Member]
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
37 
68 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(5)
(5)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
0 
0 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
0 
0 
Investment securities, Unrealized loss position, Total Fair Value
37 
68 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
$ (5)
$ (5)
Investments (Schedule Of Components Of Restricted Assets) (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Trust funds
$ 10,909 
$ 11,389 
Deposits with non-U.S. regulatory authorities
1,989 
2,133 
Assets pledged under repurchase agreements
1,458 
1,401 
Deposits with U.S. regulatory authorities
1,335 
1,338 
Other pledged assets
395 
456 
Total restricted assets
$ 16,086 
$ 16,717 
Fair Value Measurements (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Year
Jun. 30, 2012
Jun. 30, 2013
Year
Jun. 30, 2012
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
 
GLB - Lapse rate - lower range
1.00% 
 
1.00% 
 
GLB - Lapse rate - upper range
6.00% 
 
6.00% 
 
GLB - Spike lapse rate - lower range
10.00% 
 
10.00% 
 
GLB - Spike lapse rate - upper range
30.00% 
 
30.00% 
 
GLB - Ultimate lapse rate
10.00% 
 
10.00% 
 
GLB - Length of ultimate lapse rate period, years
2 
 
2 
 
GLB - Adjustment factor for valuable guarantees - lower
15.00% 
 
15.00% 
 
GLB - Adjustment factor for valuable guarantees - upper
75.00% 
 
75.00% 
 
Percent of GMIB guaranteed value that are represented by clients with several years of annuitization experience
37.00% 
 
37.00% 
 
GLB - Maximum annuitization rate
8.00% 
 
8.00% 
 
GLB - First year maximum annuitization rate
13.00% 
 
13.00% 
 
GLB - Weighted average maximum annuitization rate - rate 1
8.00% 
 
8.00% 
 
GLB - Weighted average maximum annuitization rate - rate 2
12.00% 
 
12.00% 
 
GLB - Weighted average maximum annuitization rate - rate 3
30.00% 
 
30.00% 
 
Level 1 to Level 2 Transfers
$ 6 
$ 1 
$ 19 
$ 6 
Level 2 to Level 1 Transfers
$ 0 
$ 0 
$ 0 
$ 0 
Guaranteed Living Benefits Number Of Annuitization Functions
3 
 
3 
 
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
Jun. 30, 2013
Dec. 31, 2012
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
$ 47,016 
$ 47,306 
Equity securities, at fair value
837 
744 
Short-term investments
2,425 
2,228 
Other investments
2,836 
2,716 
Securities lending collateral
1,662 
1,791 
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
2,047 
2,292 
Equity securities, at fair value
379 
253 
Short-term investments
1,442 
1,503 
Other investments
271 
268 
Investment derivative instruments
25 
11 
Other derivative instruments
15 
(6)
Separate account assets
961 
872 
Total assets measured at fair value
5,140 
5,193 
Fair Value, Inputs, Level 1 [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,846 
2,050 
Fair Value, Inputs, Level 1 [Member] |
Foreign [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
182 
222 
Fair Value, Inputs, Level 1 [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
19 
20 
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
44,798 
44,839 
Equity securities, at fair value
454 
488 
Short-term investments
974 
725 
Other investments
216 
196 
Securities lending collateral
1,662 
1,791 
Other derivative instruments
24 
30 
Separate account assets
72 
71 
Total assets measured at fair value
48,200 
48,140 
Fair Value, Inputs, Level 2 [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,442 
1,685 
Fair Value, Inputs, Level 2 [Member] |
Foreign [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
13,611 
13,431 
Fair Value, Inputs, Level 2 [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
16,731 
16,586 
Fair Value, Inputs, Level 2 [Member] |
Mortgage Backed-Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
9,769 
10,460 
Fair Value, Inputs, Level 2 [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
3,245 
2,677 
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
171 
175 
Equity securities, at fair value
4 
3 
Short-term investments
9 
 
Other investments
2,349 
2,252 
Other derivative instruments
0 
0 
Total assets measured at fair value
2,533 
2,430 
GLB
652 1
1,119 1
Fair Value, Inputs, Level 3 [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
0 
0 
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
48 
60 
Fair Value, Inputs, Level 3 [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
114 
102 
Fair Value, Inputs, Level 3 [Member] |
Mortgage Backed-Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
9 
13 
Fair Value, Inputs, Level 3 [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
0 
0 
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
47,016 
47,306 
Equity securities, at fair value
837 
744 
Short-term investments
2,425 
2,228 
Other investments
2,836 
2,716 
Securities lending collateral
1,662 
1,791 
Investment derivative instruments
25 
11 
Other derivative instruments
39 
24 
Separate account assets
1,033 
943 
Total assets measured at fair value
55,873 
55,763 
GLB
652 1
1,119 1
Estimate of Fair Value, Fair Value Disclosure [Member] |
U.S. Treasury And Agency [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
3,288 
3,735 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Foreign [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
13,841 
13,713 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Corporate Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
16,864 
16,708 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Mortgage Backed-Securities [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
9,778 
10,473 
Estimate of Fair Value, Fair Value Disclosure [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
$ 3,245 
$ 2,677 
Fair Value Measurements (Schedule Of Significant Unobservable Inputs Used In Level 3 Liability Valuations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Mar. 31, 2013
Dec. 31, 2012
Mar. 31, 2012
Dec. 31, 2011
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
 
 
50.00% 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
$ 652 2
$ 1,354 2
$ 652 2
$ 1,354 2
$ 753 2
$ 1,119 2
$ 863 2
$ 1,319 2
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings
(101)2
491 2
(467)2
35 2
 
 
 
 
Fair Value
652 1
 
652 1
 
 
1,119 
 
 
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
9 
 
9 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases
$ 2 
 
$ 2 
 
 
 
 
 
Fair Value Measurements (Financial Instruments Measured At Fair Value Using Significant Unobservable Inputs) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Mar. 31, 2013
Dec. 31, 2012
Mar. 31, 2012
Dec. 31, 2011
Equity Securities [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
$ 7 
$ 0 
$ 7 
$ 0 
 
 
 
 
Balance- Beginning of Period, Assets
2 
10 
3 
13 
 
 
 
 
Transfers out of Level 3, Assets
0 
0 
(1)
0 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(5)
0 
(5)
1 
 
 
 
 
Net Realized Gains/Losses, Assets
 
0 
 
0 
 
 
 
 
Purchases, Assets
1 
2 
1 
3 
 
 
 
 
Sales, Assets
(5)
0 
(5)
(5)
 
 
 
 
Settlements, Assets
 
0 
 
0 
 
 
 
 
Balance-End of Period, Assets
4 
12 
4 
12 
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
0 
 
0 
 
 
 
 
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
7 
 
7 
 
 
 
 
 
Purchases, Assets
2 
 
2 
 
 
 
 
 
Balance-End of Period, Assets
9 
 
9 
 
 
 
 
 
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
0 
0 
0 
0 
 
 
 
 
Balance- Beginning of Period, Assets
2,328 
1,954 
2,252 
1,877 
 
 
 
 
Transfers out of Level 3, Assets
 
0 
 
0 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
13 
16 
35 
24 
 
 
 
 
Net Realized Gains/Losses, Assets
(1)
(5)
(2)
(7)
 
 
 
 
Purchases, Assets
113 
132 
249 
245 
 
 
 
 
Sales, Assets
0 
0 
(9)
(1)
 
 
 
 
Settlements, Assets
(104)
(50)
(176)
(91)
 
 
 
 
Balance-End of Period, Assets
2,349 
2,047 
2,349 
2,047 
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
(1)
(5)
(2)
(7)
 
 
 
 
Other Derivative Instruments [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
 
0 
 
0 
 
 
 
 
Balance- Beginning of Period, Assets
 
(1)
 
3 
 
 
 
 
Transfers out of Level 3, Assets
 
0 
 
0 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
0 
 
0 
 
 
 
 
Net Realized Gains/Losses, Assets
 
(1)
 
(4)
 
 
 
 
Purchases, Assets
 
3 
 
3 
 
 
 
 
Sales, Assets
 
0 
 
0 
 
 
 
 
Settlements, Assets
 
0 
 
(1)
 
 
 
 
Balance-End of Period, Assets
 
1 
 
1 
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
0 
 
(1)
 
 
 
 
Available-for-sale Securities [Member] |
US Treasury and Government [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
 
5 
 
0 
 
 
 
 
Balance- Beginning of Period, Assets
 
0 
 
5 
 
 
 
 
Transfers out of Level 3, Assets
 
0 
 
0 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
0 
 
0 
 
 
 
 
Net Realized Gains/Losses, Assets
 
0 
 
0 
 
 
 
 
Purchases, Assets
 
0 
 
0 
 
 
 
 
Sales, Assets
 
0 
 
0 
 
 
 
 
Settlements, Assets
 
(1)
 
(1)
 
 
 
 
Balance-End of Period, Assets
 
4 
 
4 
 
 
 
 
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
29 
1 
32 
1 
 
 
 
 
Balance- Beginning of Period, Assets
35 
49 
60 
33 
 
 
 
 
Transfers out of Level 3, Assets
(14)
0 
(41)
(1)
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(4)
0 
(4)
0 
 
 
 
 
Net Realized Gains/Losses, Assets
0 
0 
1 
0 
 
 
 
 
Purchases, Assets
3 
6 
3 
40 
 
 
 
 
Sales, Assets
(1)
(35)
(2)
(52)
 
 
 
 
Settlements, Assets
0 
(1)
(1)
(1)
 
 
 
 
Balance-End of Period, Assets
48 
20 
48 
20 
 
 
 
 
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
5 
28 
17 
28 
 
 
 
 
Balance- Beginning of Period, Assets
118 
117 
102 
134 
 
 
 
 
Transfers out of Level 3, Assets
(27)
(2)
(29)
(9)
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(1)
1 
0 
3 
 
 
 
 
Net Realized Gains/Losses, Assets
(1)
(1)
(1)
(1)
 
 
 
 
Purchases, Assets
23 
5 
33 
8 
 
 
 
 
Sales, Assets
0 
(7)
0 
(15)
 
 
 
 
Settlements, Assets
(3)
(4)
(8)
(11)
 
 
 
 
Balance-End of Period, Assets
114 
137 
114 
137 
 
 
 
 
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
0 
12 
0 
12 
 
 
 
 
Balance- Beginning of Period, Assets
13 
19 
13 
28 
 
 
 
 
Transfers out of Level 3, Assets
0 
(3)
0 
(15)
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
0 
 
0 
 
 
 
 
Net Realized Gains/Losses, Assets
 
0 
 
0 
 
 
 
 
Purchases, Assets
0 
0 
0 
4 
 
 
 
 
Sales, Assets
(3)
0 
(3)
0 
 
 
 
 
Settlements, Assets
(1)
(1)
(1)
(2)
 
 
 
 
Balance-End of Period, Assets
9 
27 
9 
27 
 
 
 
 
Available-for-sale Securities [Member] |
States, Municipalities, And Political Subdivisions [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3
 
1 
 
1 
 
 
 
 
Balance- Beginning of Period, Assets
 
1 
 
1 
 
 
 
 
Transfers out of Level 3, Assets
 
0 
 
0 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
0 
 
0 
 
 
 
 
Net Realized Gains/Losses, Assets
 
0 
 
0 
 
 
 
 
Purchases, Assets
 
0 
 
0 
 
 
 
 
Sales, Assets
 
0 
 
0 
 
 
 
 
Settlements, Assets
 
(1)
 
(1)
 
 
 
 
Balance-End of Period, Assets
 
1 
 
1 
 
 
 
 
Guaranteed Minimum Income Benefit [Member]
 
 
 
 
 
 
 
 
Schedule Of Fair Value Measurements [Line Items]
 
 
 
 
 
 
 
 
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value
652 1
1,354 1
652 1
1,354 1
753 1
1,119 1
863 1
1,319 1
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings
(101)1
491 1
(467)1
35 1
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Liabilities
(101)
491 
(467)
35 
 
 
 
 
Reported liabilities
$ 880 
$ 1,600 
$ 880 
$ 1,600 
 
$ 1,400 
$ 1,050 
$ 1,500 
Fair Value Measurements (Carrying Values And Fair Values Of Financial Instruments Not Measured At Fair Value) (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
$ 6,762 
$ 7,633 
Partially-owned insurance companies
452 
454 
Total assets
7,214 
8,087 
Short-term debt
1,925 
1,401 
Long-term debt
4,148 
3,916 
Trust preferred securities
425 
446 
Total liabilities
6,498 
5,763 
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
876 
1,083 
Financial Instruments Fair Value [Member] |
Foreign [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
905 
964 
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,108 
2,275 
Financial Instruments Fair Value [Member] |
Collateralized Mortgage Backed Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,667 
2,116 
Financial Instruments Fair Value [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,206 
1,195 
Fair Value, Inputs, Level 1 [Member] |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
596 
619 
Total assets
596 
619 
Fair Value, Inputs, Level 1 [Member] |
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
596 
619 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
6,149 
6,996 
Total assets
6,149 
6,996 
Short-term debt
1,925 
1,401 
Long-term debt
4,148 
3,916 
Trust preferred securities
425 
446 
Total liabilities
6,498 
5,763 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
280 
464 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
Foreign [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
905 
964 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,091 
2,257 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
Collateralized Mortgage Backed Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,667 
2,116 
Fair Value, Inputs, Level 2 [Member] |
Financial Instruments Fair Value [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,206 
1,195 
Fair Value, Inputs, Level 3 [Member] |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
17 
18 
Partially-owned insurance companies
452 
454 
Total assets
469 
472 
Fair Value, Inputs, Level 3 [Member] |
Financial Instruments Fair Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
0 
0 
Fair Value, Inputs, Level 3 [Member] |
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
17 
18 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
6,576 
7,270 
Partially-owned insurance companies
452 
454 
Total assets
7,028 
7,724 
Short-term debt
1,901 
1,401 
Long-term debt
3,807 
3,360 
Trust preferred securities
309 
309 
Total liabilities
6,017 
5,070 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
858 
1,044 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
Foreign [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
873 
910 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,030 
2,133 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
Collateralized Mortgage Backed Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,615 
2,028 
Carrying (Reported) Amount, Fair Value Disclosure [Member] |
Financial Instruments Carrying Value [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
$ 1,200 
$ 1,155 
Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts (Schedule Of Guaranteed Minimum Benefits Income And Expense) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
Net premiums earned
$ 4,067 
$ 3,783 
$ 7,640 
$ 7,164 
Policy benefits and other reserve adjustments
110 
102 
241 
249 
Net realized gains (losses)
104 
(394)
310 
(134)
Guaranteed Minimum Death Benefit [Member]
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
Net premiums earned
20 
21 
40 
44 
Policy benefits and other reserve adjustments
25 
12 
44 
39 
Guaranteed Minimum Income Benefit [Member]
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
Net premiums earned
37 
40 
76 
81 
Policy benefits and other reserve adjustments
2 
16 
11 
23 
Net realized gains (losses)
101 
(494)
470 
(34)
(Loss) gain recognized in income
136 
(470)
535 
24 
Net cash received
31 
38 
63 
79 
Net (increase) decrease in liability
$ 105 
$ (508)
$ 472 
$ (55)
Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts (Narrative) (Detail) (USD $)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2013
Guaranteed Minimum Death Benefit [Member]
Dec. 31, 2012
Guaranteed Minimum Death Benefit [Member]
Jun. 30, 2013
Guaranteed Minimum Income Benefit [Member]
Dec. 31, 2012
Guaranteed Minimum Income Benefit [Member]
Jun. 30, 2012
Guaranteed Minimum Income Benefit [Member]
Mar. 31, 2012
Guaranteed Minimum Income Benefit [Member]
Dec. 31, 2011
Guaranteed Minimum Income Benefit [Member]
Jun. 30, 2013
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Dec. 31, 2012
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Jun. 30, 2013
Guaranteed Living Benefits [Member]
Dec. 31, 2012
Guaranteed Living Benefits [Member]
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Reported liabilities
 
$ 92,000,000 
$ 90,000,000 
$ 880,000,000 
$ 1,400,000,000 
$ 1,600,000,000 
$ 1,050,000,000 
$ 1,500,000,000 
 
 
 
 
Fair value derivative adjustment in liability
 
 
 
652,000,000 
1,100,000,000 
 
 
 
 
 
 
 
Net amount at risk
 
884,000,000 
1,300,000,000 
 
 
 
 
 
 
 
302,000,000 
445,000,000 
Mortality percentage according to Annuity 2000 mortality table
 
 
 
 
 
 
 
 
 
 
100.00% 
 
Discounting assumption used in the calculation of the benefit reserve averaging - lower range
 
1.00% 
 
 
 
 
 
 
2.00% 
 
3.50% 
 
Discounting assumption used in the calculation of the benefit reserve averaging - upper range
 
2.00% 
 
 
 
 
 
 
3.00% 
 
4.50% 
 
Total claim amount payable, if all of the Company's cedants' policyholders covered were to die immediately
 
563,000,000 
 
 
 
 
 
 
300,000,000 
 
 
 
GMBD net amount of risk
 
 
 
 
 
 
 
 
95,000,000 
116,000,000 
 
 
GLB net amount of risk
 
 
 
 
 
 
 
 
$ 341,000,000 
$ 655,000,000 
 
 
Average attained age of all policyholders under all benefits reinsured, years
68 years 
 
 
 
 
 
 
 
 
 
 
 
Debt (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Senior Notes Due June 15, 2014 [Member]
 
Debt Instrument [Line Items]
 
Debt Instrument, Interest Rate, Stated Percentage
5.875% 
Long-term Debt, Current Maturities
$ 500 
Senior Notes [Member] |
ACE INA Senior Notes Due March 2023 [Member]
 
Debt Instrument [Line Items]
 
Debt Instrument, Face Amount
475 
Debt Instrument, Interest Rate, Stated Percentage
2.70% 
Make Whole Premium Additional Percent
0.10% 
Senior Notes [Member] |
ACE INA Senior Notes Due March 2043 [Member]
 
Debt Instrument [Line Items]
 
Debt Instrument, Face Amount
$ 475 
Debt Instrument, Interest Rate, Stated Percentage
4.15% 
Make Whole Premium Additional Percent
0.15% 
Commitments, Contingencies, And Guarantees (Balance Sheet Locations, Fair Values In Asset Or (Liability) Position, And Notional Values/Payment Provisions Of Derivative Instruments) (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Investment And Embedded Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
$ 301 
$ 320 
Notional Value/Payment Provision
5,158 
4,574 
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
39 
24 
Notional Value/Payment Provision
2,151 
2,558 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
6 
0 
Notional Value/Payment Provision
1,019 
620 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
50 
50 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(1)
1 
Notional Value/Payment Provision
2,910 
2,710 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
20 
10 
Notional Value/Payment Provision
946 
915 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Options On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
24 1
(6)1
Notional Value/Payment Provision
1,901 1
2,308 1
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
15 1
30 1
Notional Value/Payment Provision
250 1
250 1
Fixed Maturities Available For Sale [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
276 
309 
Notional Value/Payment Provision
233 
279 
Accounts Payable Future Policy Benefits [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(880)2
(1,352)2
Notional Value/Payment Provision
$ 643 2
$ 1,100 2
Commitments, Contingencies, And Guarantees (Net Realized Gains (Losses) Of Derivative Instrument Activity In Consolidated Statement Of Operations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
$ 72 
$ (445)
$ 168 
$ (211)
Foreign Exchange Future [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
12 
8 
17 
1 
All Other Futures Contracts And Options [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
33 
(45)
40 
(20)
Convertibles and Bonds with Warrants Attached [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(5)
(12)
1 
12 
Investment And Embedded Derivative Instruments [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
40 
(49)
58 
(7)
Guaranteed Living Benefits [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
101 1
(467)1
429 1
(39)1
Single-Stock Future [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(66)2
65 2
(303)2
(148)2
Options On Equity Market Indices [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(2)2
5 2
(15)2
(13)2
Credit Default Swap [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
(1)
1 
(1)
(4)
Guaranteed Living Benefit And Other Derivative Instruments [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Net realized gains (losses)
$ 32 
$ (396)
$ 110 
$ (204)
Commitments, Contingencies, And Guarantees (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2013
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Carrying value of limited partnerships and partially-owned investment companies included in other investments
$ 1,796 
$ 1,796 
 
Funding commitments relating to limited partnerships and partially-owned investment companies
1,144 
1,144 
 
Derivative asset subject to a master netting agreement
63 
63 
35 
Repurchase obligations
1,401 
1,401 
1,401 
Securities lending payable
1,665 
1,665 
1,795 
Securities lending collateral
1,662 
1,662 
1,791 
Reductions to the amount of unrecognized tax benefits
5 
5 
 
Unrecognized tax benefits
$ 22 
$ 22 
 
Shareholders' Equity (Detail)
In Millions, except Share data, unless otherwise specified
1 Months Ended 3 Months Ended 6 Months Ended
Aug. 31, 2011
USD ($)
Nov. 30, 2010
USD ($)
Jun. 30, 2013
USD ($)
Jun. 30, 2013
CHF
Jun. 30, 2012
USD ($)
Jun. 30, 2012
CHF
Jun. 30, 2013
USD ($)
Jun. 30, 2013
CHF
Jun. 30, 2012
USD ($)
Jun. 30, 2012
CHF
Dec. 31, 2012
CHF
Stockholders' Equity Note [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
 
$ 0.51 
 0.48 
$ 0.49 
 0.48 
$ 1.00 
 0.94 
$ 1.08 
 1.01 
 
Common Shares, par value
 
 
 
 27.95 
 
 
 
 27.95 
 
 
 28.89 
Common Shares in treasury, shares
 
 
2,746,143 
2,746,143 
 
 
2,746,143 
2,746,143 
 
 
2,510,878 
Stock repurchase program, authorized amount
$ 303 
$ 600 
 
 
 
 
 
 
 
 
 
Share repurchase authorization remains
197 
 
 
 
 
 
249 
 
 
 
 
Repurchase of outstanding common shares, shares
 
 
654,776 
654,776 
 
 
2,463,076 
2,463,076 
 
 
 
Share repurchase amount
 
 
$ 58 
 
 
 
$ 212 
 
 
 
 
Increase to dividend approved by shareholders in January
 
 
 
 
 
 
 
 
$ 0.12 
 
 
Share-Based Compensation (Detail) (USD $)
1 Months Ended 6 Months Ended 0 Months Ended
May 31, 2013
Jun. 30, 2013
Feb. 28, 2013
Stock Options [Member]
Feb. 28, 2013
Restricted Stock [Member]
Feb. 28, 2013
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
Stock option vesting period in years
 
3 years 
 
 
 
Stock option term in years
 
10 years 
 
 
 
Stock options granted
 
 
1,815,896 
 
 
Weighted-average grant date fair value for stock options granted
 
 
$ 17.29 
 
 
Restricted stock award and units vesting period in years
 
4 years 
 
 
 
Restricted stock awards granted to employees and officers of the company
 
 
 
1,345,850 
 
Restricted stock units awarded to employees and officers of the company
 
 
 
 
266,065 
Grant date fair value of awards except for options granted to employees and officers of the company
 
 
 
$ 85.39 
 
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized
8,000,000 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized
 
38,600,000 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant
 
11,120,629 
 
 
 
Segment Information (Operations By Segment) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
$ 4,391 
$ 4,130 
$ 8,189 
$ 7,702 
Net premiums earned
4,067 
3,783 
7,640 
7,164 
Losses and loss expenses
2,250 
2,119 
4,176 
3,923 
Policy benefits
110 
102 
241 
249 
Policy acquisition costs
665 
619 
1,279 
1,201 
Administrative expenses
564 
514 
1,078 
1,024 
Underwriting income (loss)
478 
429 
866 
767 
Net investment income
534 
537 
1,065 
1,081 
Net realized gains (losses) including OTTI
104 
(394)
310 
(134)
Interest (income) expense
73 
62 
133 
124 
(Gains) losses from fair value changes in separate account assets
11 
14 
7 
(4)
Other
26 
20 
20 
35 
Other (income) expense
37 
34 
27 
31 
Income tax expense (benefit)
115 
148 
237 
258 
Net income (loss)
891 
328 
1,844 
1,301 
Insurance - North American P&C [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
1,529 
1,368 
2,813 
2,542 
Net premiums earned
1,428 
1,268 
2,766 
2,496 
Losses and loss expenses
950 
844 
1,828 
1,655 
Policy acquisition costs
142 
135 
285 
272 
Administrative expenses
159 
153 
284 
303 
Underwriting income (loss)
177 
136 
369 
266 
Net investment income
250 
265 
501 
532 
Net realized gains (losses) including OTTI
28 
18 
54 
17 
Interest (income) expense
3 
3 
1 
6 
Other
(10)
2 
(25)
(7)
Income tax expense (benefit)
91 
96 
185 
179 
Net income (loss)
371 
318 
763 
637 
Insurance - North American Agriculture [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
453 
492 
566 
611 
Net premiums earned
351 
384 
403 
443 
Losses and loss expenses
293 
319 
325 
357 
Policy acquisition costs
20 
22 
24 
12 
Administrative expenses
3 
0 
8 
(3)
Underwriting income (loss)
35 
43 
46 
77 
Net investment income
7 
6 
13 
13 
Net realized gains (losses) including OTTI
1 
0 
1 
0 
Interest (income) expense
0 
0 
0 
0 
Other
8 
8 
16 
16 
Income tax expense (benefit)
8 
11 
10 
19 
Net income (loss)
27 
30 
34 
55 
Insurance - Overseas General [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
1,630 
1,475 
3,250 
3,003 
Net premiums earned
1,563 
1,420 
3,022 
2,811 
Losses and loss expenses
768 
703 
1,515 
1,408 
Policy acquisition costs
360 
332 
699 
667 
Administrative expenses
251 
233 
487 
462 
Underwriting income (loss)
184 
152 
321 
274 
Net investment income
136 
128 
268 
259 
Net realized gains (losses) including OTTI
8 
26 
42 
46 
Interest (income) expense
2 
1 
3 
2 
Other
17 
6 
16 
6 
Income tax expense (benefit)
50 
51 
96 
89 
Net income (loss)
259 
248 
516 
482 
Global Reinsurance [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net premiums written
292 
309 
571 
572 
Net premiums earned
245 
237 
492 
467 
Losses and loss expenses
93 
102 
199 
204 
Policy acquisition costs
48 
42 
96 
85 
Administrative expenses
12 
13 
24 
25 
Underwriting income (loss)
92 
80 
173 
153 
Net investment income
71 
70 
143 
141 
Net realized gains (losses) including OTTI
31 
(17)
51 
(4)
Interest (income) expense
1 
1 
2 
2 
Other
2 
3 
(6)
(2)
Income tax expense (benefit)
7 
0 
15 
6 
Net income (loss)
184 
129 
356 
284 
Life [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Life underwriting income
96 
 
 
 
Net premiums written
487 
486 
989 
974 
Net premiums earned
480 
474 
957 
947 
Losses and loss expenses
145 
151 
302 
299 
Policy benefits
110 
102 
241 
249 
Policy acquisition costs
95 
88 
175 
164 
Administrative expenses
86 
78 
171 
156 
Underwriting income (loss)
44 
55 
68 
79 
Net investment income
63 
62 
126 
123 
Net realized gains (losses) including OTTI
36 
(421)
163 
(190)
Interest (income) expense
4 
3 
8 
6 
(Gains) losses from fair value changes in separate account assets
11 
14 
7 
(4)
Other
3 
5 
3 
14 
Income tax expense (benefit)
10 
19 
23 
30 
Net income (loss)
115 
(345)
316 
(34)
Corporate And Other [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Losses and loss expenses
1 
0 
7 
0 
Policy acquisition costs
 
0 
 
1 
Administrative expenses
53 
37 
104 
81 
Underwriting income (loss)
(54)
(37)
(111)
(82)
Net investment income
7 
6 
14 
13 
Net realized gains (losses) including OTTI
0 
0 
(1)
(3)
Interest (income) expense
63 
54 
119 
108 
Other
6 
(4)
16 
8 
Income tax expense (benefit)
(51)
(29)
(92)
(65)
Net income (loss)
$ (65)
$ (52)
$ (141)
$ (123)
Segment Information (Net Premiums Earned For Segment By Product) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
$ 1,509 
$ 1,397 
$ 2,628 
$ 2,426 
Casualty
1,454 
1,289 
2,807 
2,559 
Life, Accident & Health
1,104 
1,097 
2,205 
2,179 
Net premiums earned
4,067 
3,783 
7,640 
7,164 
Insurance - North American P&C [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
368 
347 
715 
669 
Casualty
967 
828 
1,869 
1,645 
Life, Accident & Health
93 
93 
182 
182 
Net premiums earned
1,428 
1,268 
2,766 
2,496 
Insurance - North American Agriculture [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
351 
384 
403 
443 
Casualty
0 
0 
0 
0 
Life, Accident & Health
0 
0 
0 
0 
Net premiums earned
351 
384 
403 
443 
Insurance - Overseas General [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
658 
552 
1,243 
1,090 
Casualty
374 
338 
713 
671 
Life, Accident & Health
531 
530 
1,066 
1,050 
Net premiums earned
1,563 
1,420 
3,022 
2,811 
Global Reinsurance [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Property & All Other
132 
114 
267 
224 
Casualty
113 
123 
225 
243 
Net premiums earned
245 
237 
492 
467 
Life [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Life, Accident & Health
480 
474 
957 
947 
Net premiums earned
$ 480 
$ 474 
$ 957 
$ 947 
Earnings Per Share (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Earnings Per Share [Abstract]
 
 
 
 
Net income (loss)
$ 891 
$ 328 
$ 1,844 
$ 1,301 
Weighted-average shares outstanding
341,047,290 
339,766,067 
340,913,450 
339,164,449 
Share-based compensation plans
3,053,975 
2,907,971 
3,120,263 
3,006,950 
Adjusted weighted-average shares outstanding and assumed conversions
344,101,265 
342,674,038 
344,033,713 
342,171,399 
Basic earnings per share (US$ per share)
$ 2.61 
$ 0.96 
$ 5.41 
$ 3.83 
Diluted earnings per share (US$ per share)
$ 2.59 
$ 0.96 
$ 5.36 
$ 3.80 
Potential anti-dilutive share conversions
1,811,030 
1,471,035 
1,231,105 
1,051,182 
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Balance Sheet) (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Jun. 30, 2012
Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
$ 59,690 
$ 60,264 
 
 
Cash
679 1
615 2
617 
614 
Insurance and reinsurance balances receivable
5,022 
4,147 
 
 
Reinsurance recoverable on losses and loss expenses
11,442 
12,078 
 
 
Reinsurance recoverable on policy benefits
240 
241 
 
 
Value of business acquired
560 
614 
 
 
Goodwill and other intangible assets
5,395 
4,975 
 
 
Other assets
10,660 
9,611 
 
 
Total assets
93,688 
92,545 
 
 
Unpaid losses and loss expenses
37,343 
37,946 
 
 
Unearned premiums
7,851 
6,864 
 
 
Future policy benefits
4,502 
4,470 
 
 
Short-term debt
1,901 
1,401 
 
 
Long-term debt
3,807 
3,360 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
10,680 
10,664 
 
 
Total liabilities
66,393 
65,014 
 
 
Total shareholders' equity
27,295 
27,531 
25,762 
 
Total liabilities and shareholders' equity
93,688 
92,545 
 
 
Parent Company [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
29 
31 
 
 
Cash
(513)1
103 2
(30)
106 
Investments in subsidiaries
27,409 
27,251 
 
 
Due from subsidiaries and affiliates, net
591 
204 
 
 
Other assets
6 
13 
 
 
Total assets
27,522 
27,602 
 
 
Other liabilities
227 
71 
 
 
Total liabilities
227 
71 
 
 
Total shareholders' equity
27,295 
27,531 
 
 
Total liabilities and shareholders' equity
27,522 
27,602 
 
 
Guarantor Subsidiaries [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
31,387 
31,074 
 
 
Cash
583 1
515 2
508 
382 
Insurance and reinsurance balances receivable
4,371 
3,654 
 
 
Reinsurance recoverable on losses and loss expenses
16,277 
17,232 
 
 
Reinsurance recoverable on policy benefits
1,181 
1,187 
 
 
Value of business acquired
557 
610 
 
 
Goodwill and other intangible assets
4,843 
4,419 
 
 
Other assets
8,507 
7,563 
 
 
Total assets
67,706 
66,254 
 
 
Unpaid losses and loss expenses
30,894 
31,356 
 
 
Unearned premiums
6,644 
5,872 
 
 
Future policy benefits
3,915 
3,876 
 
 
Due to subsidiaries and affiliates, net
859 
384 
 
 
Short-term debt
1,351 
851 
 
 
Long-term debt
3,807 
3,360 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
8,557 
8,272 
 
 
Total liabilities
56,336 
54,280 
 
 
Total shareholders' equity
11,370 
11,974 
 
 
Total liabilities and shareholders' equity
67,706 
66,254 
 
 
Other Ace Limited Subsidiaries And Eliminations [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
28,274 3
29,159 3
 
 
Cash
609 1 3 4
(3)2 3 4
139 4
126 4
Insurance and reinsurance balances receivable
651 3
493 3
 
 
Reinsurance recoverable on losses and loss expenses
(4,835)3
(5,154)3
 
 
Reinsurance recoverable on policy benefits
(941)3
(946)3
 
 
Value of business acquired
3 3
4 3
 
 
Goodwill and other intangible assets
552 3
556 3
 
 
Other assets
2,147 3
2,035 3
 
 
Total assets
26,460 3
26,144 3
 
 
Unpaid losses and loss expenses
6,449 3
6,590 3
 
 
Unearned premiums
1,207 3
992 3
 
 
Future policy benefits
587 3
594 3
 
 
Due to subsidiaries and affiliates, net
(268)3
(180)3
 
 
Short-term debt
550 3
550 3
 
 
Other liabilities
1,896 3
2,321 3
 
 
Total liabilities
10,421 3
10,867 3
 
 
Total shareholders' equity
16,039 3
15,277 3
 
 
Total liabilities and shareholders' equity
26,460 3
26,144 3
 
 
Consolidation, Eliminations [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments in subsidiaries
(27,409)5
(27,251)5
 
 
Due from subsidiaries and affiliates, net
(591)5
(204)5
 
 
Total assets
(28,000)5
(27,455)5
 
 
Due to subsidiaries and affiliates, net
(591)5
(204)5
 
 
Total liabilities
(591)5
(204)5
 
 
Total shareholders' equity
(27,409)5
(27,251)5
 
 
Total liabilities and shareholders' equity
$ (28,000)5
$ (27,455)5
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Statement Of Operations) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net premiums written
$ 4,391 
$ 4,130 
$ 8,189 
$ 7,702 
Net premiums earned
4,067 
3,783 
7,640 
7,164 
Net investment income
534 
537 
1,065 
1,081 
Net realized gains (losses) including OTTI
104 
(394)
310 
(134)
Losses and loss expenses
2,250 
2,119 
4,176 
3,923 
Policy benefits
110 
102 
241 
249 
Policy acquisition costs and administrative expenses
1,229 
1,133 
2,357 
2,225 
Interest (income) expense
73 
62 
133 
124 
Other (income) expense
37 
34 
27 
31 
Income tax expense (benefit)
115 
148 
237 
258 
Net income (loss)
891 
328 
1,844 
1,301 
Comprehensive income (loss)
(499)
457 
217 
1,728 
Parent Company [Member]
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net investment income
1 
1 
1 
1 
Equity in earnings of subsidiaries
842 
301 
1,756 
1,229 
Net realized gains (losses) including OTTI
0 
2 
12 
22 
Policy acquisition costs and administrative expenses
12 
14 
27 
26 
Interest (income) expense
(8)
(8)
(15)
(17)
Other (income) expense
(57)
(33)
(95)
(63)
Income tax expense (benefit)
5 
3 
8 
5 
Net income (loss)
891 
328 
1,844 
1,301 
Comprehensive income (loss)
(499)
457 
217 
1,728 
Guarantor Subsidiaries [Member]
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net premiums written
2,502 
2,327 
4,584 
4,425 
Net premiums earned
2,331 
2,196 
4,337 
4,148 
Net investment income
254 
257 
502 
522 
Net realized gains (losses) including OTTI
28 
34 
38 
60 
Losses and loss expenses
1,434 
1,325 
2,687 
2,507 
Policy benefits
63 
54 
144 
140 
Policy acquisition costs and administrative expenses
674 
656 
1,300 
1,296 
Interest (income) expense
74 
58 
141 
124 
Other (income) expense
65 
9 
99 
34 
Income tax expense (benefit)
92 
119 
148 
204 
Net income (loss)
211 
266 
358 
425 
Comprehensive income (loss)
(533)
323 
(534)
610 
Other Ace Limited Subsidiaries And Eliminations [Member]
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Net premiums written
1,889 1
1,803 1
3,605 1
3,277 1
Net premiums earned
1,736 1
1,587 1
3,303 1
3,016 1
Net investment income
279 1
279 1
562 1
558 1
Net realized gains (losses) including OTTI
76 1
(430)1
260 1
(216)1
Losses and loss expenses
816 1
794 1
1,489 1
1,416 1
Policy benefits
47 1
48 1
97 1
109 1
Policy acquisition costs and administrative expenses
543 1
463 1
1,030 1
903 1
Interest (income) expense
7 1
12 1
7 1
17 1
Other (income) expense
29 1
58 1
23 1
60 1
Income tax expense (benefit)
18 1
26 1
81 1
49 1
Net income (loss)
631 1
35 1
1,398 1
804 1
Comprehensive income (loss)
1,375 1
(22)1
2,290 1
619 1
Consolidation, Eliminations [Member]
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
Equity in earnings of subsidiaries
(842)2
(301)2
(1,756)2
(1,229)2
Net income (loss)
(842)2
(301)2
(1,756)2
(1,229)2
Comprehensive income (loss)
$ (842)2
$ (301)2
$ (1,756)2
$ (1,229)2
Information Provided In Connection With Outstanding Debt Of Subsidiaries (Condensed Consolidating Statement Of Cash Flows) (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
$ 1,808 
$ 1,383 
Purchases of fixed maturities available for sale
(10,941)
(11,687)
Purchases of fixed maturities held to maturity
(299)
(136)
Purchases of equity securities
(194)
(93)
Sales of fixed maturities available for sale
5,396 
8,032 
Sales of equity securities
62 
33 
Maturities and redemptions of fixed maturities available for sale
4,112 
2,280 
Maturities and redemptions of fixed maturities held to maturity
908 
739 
Net derivative instruments settlements
(317)
(133)
Acquisition of subsidiaries
(977)
(30)
Other
(126)
(255)
Net cash flows used for investing activities
(2,376)
(1,250)
Dividends paid on Common Shares
(169)
(318)
Common Shares repurchased
(212)
(11)
Proceeds from issuance of long-term debt
947 
0 
Net proceeds from (repayments) issuance of short-term debt
 
151 
Proceeds from share-based compensation plans, including windfall tax benefits
62 
55 
Other
30 
0 
Net cash flows from financing activities
658 
(123)
Effect of foreign currency rate changes on cash and cash equivalents
(26)
(7)
Net increase (decrease) in cash
64 
3 
Cash - beginning of period
615 1
614 
Cash - end of period
679 2
617 
Parent Company [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
95 
49 
Sales of fixed maturities available for sale
 
0 
Net derivative instruments settlements
0 
(1)
Advances from (to) affiliates
(429)
131 
Payment Of Contributions To Subsidiary
(119)
 
Net cash flows used for investing activities
(548)
130 
Dividends paid on Common Shares
(169)
(318)
Net proceeds from (repayments) issuance of short-term debt
 
0 
Proceeds from share-based compensation plans, including windfall tax benefits
6 
3 
Net cash flows from financing activities
(163)
(315)
Net increase (decrease) in cash
(616)
(136)
Cash - beginning of period
103 1
106 
Cash - end of period
(513)2
(30)
Guarantor Subsidiaries [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
876 
540 
Purchases of fixed maturities available for sale
(6,604)
(5,614)
Purchases of fixed maturities held to maturity
(284)
(134)
Purchases of equity securities
(161)
(57)
Sales of fixed maturities available for sale
3,571 
3,750 
Sales of equity securities
51 
28 
Maturities and redemptions of fixed maturities available for sale
1,839 
1,158 
Maturities and redemptions of fixed maturities held to maturity
613 
527 
Net derivative instruments settlements
10 
(6)
Acquisition of subsidiaries
(977)
(30)
Other
(154)
(140)
Net cash flows used for investing activities
(2,096)
(518)
Proceeds from issuance of long-term debt
947 
 
Net proceeds from (repayments) issuance of short-term debt
 
0 
Proceeds from share-based compensation plans, including windfall tax benefits
(4)3
 
Advances (to) from affiliates
352 
23 
Capital contribution
0 
90 
Other
30 
 
Net cash flows from financing activities
1,325 
113 
Effect of foreign currency rate changes on cash and cash equivalents
(37)
(9)
Net increase (decrease) in cash
68 
126 
Cash - beginning of period
515 1
382 
Cash - end of period
583 2
508 
Other Ace Limited Subsidiaries And Eliminations [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Net cash flows from operating activities
837 3
794 3
Purchases of fixed maturities available for sale
(4,337)3
(6,073)3
Purchases of fixed maturities held to maturity
(15)3
(2)3
Purchases of equity securities
(33)3
(36)3
Sales of fixed maturities available for sale
1,825 3
4,282 3
Sales of equity securities
11 3
5 3
Maturities and redemptions of fixed maturities available for sale
2,273 3
1,122 3
Maturities and redemptions of fixed maturities held to maturity
295 3
212 3
Net derivative instruments settlements
(327)3
(126)3
Acquisition of subsidiaries
0 3
0 3
Payment Of Contributions To Subsidiary
0 3
(90)3
Other
28 3
(115)3
Net cash flows used for investing activities
(280)3
(821)3
Dividends paid on Common Shares
0 3
 
Common Shares repurchased
(212)3
(11)3
Net proceeds from (repayments) issuance of short-term debt
 
151 3
Proceeds from share-based compensation plans, including windfall tax benefits
60 3
52 3
Advances (to) from affiliates
77 3
(154)3
Capital contribution
119 3
 
Net cash flows from financing activities
44 3
38 3
Effect of foreign currency rate changes on cash and cash equivalents
11 3
2 3
Net increase (decrease) in cash
612 3
13 3
Cash - beginning of period
(3)1 3 4
126 3
Cash - end of period
609 2 3 4
139 3
Consolidation, Eliminations [Member]
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
Advances from (to) affiliates
429 5
(131)5
Payment Of Contributions To Subsidiary
119 5
90 5
Net cash flows used for investing activities
548 5
(41)5
Advances (to) from affiliates
(429)5
131 5
Capital contribution
(119)5
(90)5
Net cash flows from financing activities
$ (548)5
$ 41 5