ACE LTD, 10-K filed on 2/28/2014
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Feb. 14, 2014
Jun. 28, 2013
Document Documentand Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
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
 
336,657,376 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 30 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Assets
 
 
Fixed maturities available for sale, at fair value (amortized cost - $48,406 and $44,666) (includes hybrid financial instruments of $302 and $309)
$ 49,254 
$ 47,306 
Fixed maturities held to maturity, at amortized cost (fair value – $6,263 and $7,633)
6,098 
7,270 
Equity securities, at fair value (cost – $841 and $707)
837 
744 
Short-term investments, at fair value and amortized cost
1,763 
2,228 
Other investments (cost – $2,671 and $2,465)
2,976 
2,716 
Total investments
60,928 
60,264 
Cash
579 
615 
Securities lending collateral
1,632 
1,791 
Accrued investment income
556 
552 
Insurance and reinsurance balances receivable
5,026 
4,147 
Reinsurance recoverable on losses and loss expenses
11,227 
12,078 
Reinsurance recoverable on policy benefits
218 
241 
Deferred policy acquisition costs
2,313 
1,873 
Value of business acquired
536 
614 
Goodwill and other intangible assets
5,404 
4,975 
Prepaid reinsurance premiums
1,675 
1,617 
Deferred tax assets
616 
453 
Investments in partially-owned insurance companies (cost – $467 and $451)
470 
454 
Other assets
3,330 
2,871 
Total assets
94,510 
92,545 
Liabilities
 
 
Unpaid losses and loss expenses
37,443 
37,946 
Unearned premiums
7,539 
6,864 
Future policy benefits
4,615 
4,470 
Insurance and reinsurance balances payable
3,628 
3,472 
Securities lending payable
1,633 
1,795 
Accounts payable, accrued expenses, and other liabilities
4,810 
5,397 
Short-term debt
1,901 
1,401 
Long-term debt
3,807 
3,360 
Trust preferred securities
309 
309 
Total liabilities
65,685 
65,014 
Shareholders' equity
 
 
Common Shares (CHF 27.04 and CHF 28.89 par value; 342,832,412 shares issued; 339,793,935 and 340,321,534 shares outstanding)
8,899 
9,591 
Common Shares in treasury (3,038,477 and 2,510,878 shares)
(255)
(159)
Additional paid-in capital
5,238 
5,179 
Retained earnings
13,791 
10,033 
Accumulated other comprehensive income (AOCI)
1,152 
2,887 
Total shareholders’ equity
28,825 
27,531 
Total liabilities and shareholders’ equity
$ 94,510 
$ 92,545 
Consolidated Balance Sheets (Parenthetical)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2013
USD ($)
Dec. 31, 2013
CHF
Dec. 31, 2012
USD ($)
Dec. 31, 2012
CHF
Statement of Financial Position [Abstract]
 
 
 
 
Fixed maturities available for sale, at amortized cost
$ 48,406 
 
$ 44,666 
 
Fixed maturities available for sale, hybrid financial instruments
302 
 
309 
 
Fixed maturities held to maturity, at fair value
6,263 
 
7,633 
 
Equity securities, at cost
841 
 
707 
 
Other investments, cost
2,671 
 
2,465 
 
Investments in partially-owned insurance companies, cost
$ 467 
 
$ 451 
 
Common Shares, par value
 
 27.04 
 
 28.89 
Common Shares, shares issued
342,832,412 
342,832,412 
342,832,412 
342,832,412 
Common Shares, shares outstanding
339,793,935 
339,793,935 
340,321,534 
340,321,534 
Common Shares in treasury, shares
3,038,477 
3,038,477 
2,510,878 
2,510,878 
Consolidated Statements Of Operations and Comprehensive Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Revenues
 
 
 
Net premiums written
$ 17,025 
$ 16,075 
$ 15,372 
(Increase) decrease in unearned premiums
(412)
(398)
15 
Net premiums earned
16,613 
15,677 
15,387 
Net investment income
2,144 
2,181 
2,242 
Net realized gains (losses):
 
 
 
Other-than-temporary impairment (OTTI) losses gross
(22)
(38)
(65)
Portion of OTTI losses recognized in other comprehensive income (OCI)
0 
1 
15 
Net OTTI losses recognized in income
(22)
(37)
(50)
Net realized gains (losses) excluding OTTI losses
526 
115 
(745)
Total net realized gains (losses)
504 
78 
(795)
Total revenues
19,261 
17,936 
16,834 
Expenses
 
 
 
Losses and loss expenses
9,348 
9,653 
9,520 
Policy benefits
515 
521 
401 
Policy acquisition costs
2,659 
2,446 
2,472 
Administrative expenses
2,211 
2,096 
2,068 
Interest expense
275 
250 
250 
Other (income) expense
15 
(6)
81 
Total expenses
15,023 
14,960 
14,792 
Income before income tax
4,238 
2,976 
2,042 
Income tax expense
480 
270 
502 
Net income
3,758 
2,706 
1,540 
Other comprehensive income (loss)
 
 
 
Unrealized appreciation (depreciation)
(1,762)
1,350 
646 
Reclassification adjustment for net realized gains included in net income
(105)
(234)
(173)
Other comprehensive income (loss)after reclassification for net realized gains included in net income
(1,867)
1,116 
473 
Change in:
 
 
 
Cumulative translation adjustment
(339)
116 
(5)
Pension liability
0 
(35)
8 
Other comprehensive income (loss), before income tax
(2,206)
1,197 
476 
Income tax benefit (expense) related to OCI items
471 
(221)
(159)
Other comprehensive income (loss)
(1,735)
976 
317 
Comprehensive income
$ 2,023 
$ 3,682 
$ 1,857 
Earnings per share
 
 
 
Basic earnings per share
$ 11.02 
$ 7.96 
$ 4.55 
Diluted earnings per share
$ 10.92 
$ 7.89 
$ 4.52 
Consolidated Statements of Operations and Comprehensive Income (Parenthetical) (USD $)
12 Months Ended
Dec. 31, 2013
Income tax expense (benefit)
$ 480,000,000 
Net realized gains (losses)
504,000,000 
Reclassification out of Accumulated Other Comprehensive Income [Member] |
Net unrealized appreciation on investments
 
Income tax expense (benefit)
17,000,000 
Net realized gains (losses)
$ 105,000,000 
Consolidated Statements Of Shareholders' Equity (USD $)
In Millions
Total
Common Shares
Common Shares in Treasury
Additional Paid-in Capital
Retained Earnings
Deferred Compensation Obligation
Accumulated Other Comprehensive Income
Net unrealized appreciation on investments
Cumulative Translation Adjustment
Accumulated Defined Benefit Plans Adjustment [Member]
Common Shares Issued To Employee Trust
Balance – beginning of year at Dec. 31, 2010
 
$ 10,161 
$ (330)
$ 5,623 
$ 5,787 
$ 2 
 
$ 1,399 
$ 262 
$ (67)
$ (2)
Net shares redeemed under employee share-based compensation plans
 
 
 
(104)
 
 
 
 
 
 
 
Exercise of stock options
 
47 
 
16 
 
 
 
 
 
 
 
Dividends declared on Common Shares-par value reduction
 
(113)
 
 
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(132)
 
 
 
 
 
 
 
 
Common Shares issued in treasury, net of net shares redeemed under employee share-based compensation plans
 
 
135 
 
 
 
 
 
 
 
 
Share-based compensation expense and other
 
 
 
139 
 
 
 
 
 
 
 
Tax benefit on share-based compensation expense
 
 
 
6 
 
 
 
 
 
 
 
Net income
1,540 
 
 
 
1,540 
 
 
 
 
 
 
Net income at Jan. 01, 2011 (Scenario, Previously Reported)
1,540 
 
 
 
 
 
 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
354 
(354)
 
 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
(354)
 
 
 
 
 
 
Decrease to obligation
 
 
 
 
 
(2)
 
 
 
 
 
Change in year, net of income tax benefit (expense) of $408, $(198), and $(157)
 
 
 
 
 
 
 
316 
 
 
 
Change in year, net of income tax benefit (expense) of $63, $(35) and $1
 
 
 
 
 
 
 
 
(4)
 
 
Movement In Common Shares Issued To Employee Trust
 
 
 
 
 
 
 
 
 
 
2 
Balance - end of year at Dec. 31, 2011
24,332 
10,095 
(327)
5,326 
7,327 
0 
1,911 
1,715 
258 
(62)
0 
Net shares redeemed under employee share-based compensation plans
 
 
 
(93)
 
 
 
 
 
 
 
Exercise of stock options
 
0 
 
(7)
 
 
 
 
 
 
 
Dividends declared on Common Shares-par value reduction
 
(504)
 
 
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(7)
 
 
 
 
 
 
 
 
Common Shares issued in treasury, net of net shares redeemed under employee share-based compensation plans
 
 
175 
 
 
 
 
 
 
 
 
Share-based compensation expense and other
 
 
 
135 
 
 
 
 
 
 
 
Tax benefit on share-based compensation expense
 
 
 
18 
 
 
 
 
 
 
 
Net income
2,706 
 
 
 
2,706 
 
 
 
 
 
 
Net income at Jan. 01, 2012 (Scenario, Previously Reported)
2,706 
 
 
 
 
 
 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
(200)
200 
 
 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
(200)
 
 
 
 
 
 
Decrease to obligation
 
 
 
 
 
0 
 
 
 
 
 
Change in year, net of income tax benefit (expense) of $408, $(198), and $(157)
 
 
 
 
 
 
 
918 
 
 
 
Change in year, net of income tax benefit (expense) of $63, $(35) and $1
 
 
 
 
 
 
 
 
81 
 
 
Movement In Common Shares Issued To Employee Trust
 
 
 
 
 
 
 
 
 
 
0 
Balance - end of year at Dec. 31, 2012 (Scenario, Previously Reported)
27,531 
 
 
 
 
 
 
 
 
 
 
Balance - end of year at Dec. 31, 2012
27,531 
9,591 
(159)
5,179 
10,033 
0 
2,887 
2,633 
339 
(85)
0 
Net shares redeemed under employee share-based compensation plans
 
 
 
(126)
 
 
 
 
 
 
 
Exercise of stock options
 
0 
 
(42)
 
 
 
 
 
 
 
Dividends declared on Common Shares-par value reduction
 
(692)
 
 
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(290)
 
 
 
 
 
 
 
 
Common Shares issued in treasury, net of net shares redeemed under employee share-based compensation plans
 
 
194 
 
 
 
 
 
 
 
 
Share-based compensation expense and other
 
 
 
191 
 
 
 
 
 
 
 
Tax benefit on share-based compensation expense
 
 
 
36 
 
 
 
 
 
 
 
Net income
3,758 
 
 
 
3,758 
 
 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
0 
   
 
 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
   
 
 
 
 
 
 
Decrease to obligation
 
 
 
 
 
0 
 
 
 
 
 
Change in year, before reclassification from AOCI, net of income tax benefit of $391
 
 
 
 
 
 
 
(1,371)
 
 
 
Amounts reclassified from AOCI, net of income tax benefit of $17
 
 
 
 
 
 
 
(88)
 
 
 
Change in year, net of income tax benefit (expense) of $408, $(198), and $(157)
 
 
 
 
 
 
 
(1,459)
(276)
 
 
Change in year, net of income tax benefit (expense) of $63, $(35) and $1
 
 
 
 
 
 
 
 
 
0 
 
Movement In Common Shares Issued To Employee Trust
 
 
 
 
 
 
 
 
 
 
0 
Balance - end of year at Dec. 31, 2013
$ 28,825 
$ 8,899 
$ (255)
$ 5,238 
$ 13,791 
$ 0 
$ 1,152 
$ 1,174 
$ 63 
$ (85)
$ 0 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Cash flows from operating activities
 
 
 
Net income
$ 3,758 
$ 2,706 
$ 1,540 
Adjustments to reconcile net income to net cash flows from operating activities
 
 
 
Net realized (gains) losses
(504)
(78)
795 
Amortization of premiums/discounts on fixed maturities
268 
220 
152 
Deferred income taxes
240 
(7)
15 
Unpaid losses and loss expenses
(365)
203 
43 
Unearned premiums
402 
522 
9 
Future policy benefits
191 
158 
78 
Insurance and reinsurance balances payable
176 
(151)
216 
Accounts payable, accrued expenses, and other liabilities
37 
(42)
39 
Income taxes payable
(45)
(167)
39 
Insurance and reinsurance balances receivable
(624)
335 
(217)
Reinsurance recoverable on losses and loss expenses
787 
372 
531 
Reinsurance recoverable on policy benefits
23 
52 
25 
Deferred policy acquisition costs
(503)
(340)
(122)
Prepaid reinsurance premiums
(31)
(123)
(34)
Other
212 
335 
361 
Net cash flows from operating activities
4,022 
3,995 
3,470 
Cash flows from investing activities
 
 
 
Purchases of fixed maturities available for sale
(21,340)
(23,572)
(23,523)
Purchases of to be announced mortgage-backed securities
(58)
(389)
(755)
Purchases of fixed maturities held to maturity
(447)
(388)
(340)
Purchases of equity securities
(264)
(135)
(309)
Sales of fixed maturities available for sale
10,355 
14,321 
17,176 
Sales of to be announced mortgage-backed securities
58 
448 
795 
Sales of equity securities
142 
119 
376 
Maturities and redemptions of fixed maturities available for sale
6,941 
5,523 
3,720 
Maturities and redemptions of fixed maturities held to maturity
1,488 
1,451 
1,279 
Net change in short-term investments
524 
117 
(300)
Net derivative instruments settlements
(471)
(281)
(67)
Acquisition of subsidiaries (net of cash acquired of $38, $8, and $91)
(977)
(98)
(606)
Other
(393)
(555)
(482)
Net cash flows used for investing activities
(4,442)
(3,439)
(3,036)
Cash flows from financing activities
 
 
 
Dividends paid on Common Shares
(517)
(815)
(459)
Common Shares repurchased
(287)
(11)
(195)
Proceeds from issuance of long-term debt
947 
   
   
Proceeds from issuance of short-term debt
2,572 
2,933 
5,238 
Repayment of short-term debt
(2,572)
(2,783)
(5,288)
Proceeds from share-based compensation plans, including windfall tax benefits
135 
126 
139 
Other
113 
 
 
Net cash flows from (used for) financing activities
391 
(550)
(565)
Effect of foreign currency rate changes on cash and cash equivalents
(7)
(5)
(27)
Net increase (decrease) in cash
(36)
1 
(158)
Cash – beginning of year
615 
614 1
772 
Cash – end of year
579 
615 
614 1
Supplemental cash flow information
 
 
 
Taxes paid
218 
438 
460 
Interest paid
$ 253 
$ 240 
$ 234 
Consolidated Statements Of Cash Flows (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2010
Statement of Cash Flows [Abstract]
 
 
 
Acquisition of subsidiaries, cash acquired
$ 38 
$ 8 
$ 91 
Summary of significant accounting policies
Summary of significant accounting policies
Summary of significant accounting policies

a) Basis of presentation
ACE Limited is a holding company incorporated in Zurich, Switzerland. ACE Limited, through its subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through five business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. Refer to Note 15 for additional information.

The accompanying 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 preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Amounts included in the consolidated financial statements reflect our best estimates and assumptions; actual amounts could differ materially from these estimates. ACE's principal estimates include:
•
unpaid loss and loss expense reserves, including long-tail asbestos and environmental (A&E) reserves;
•
future policy benefits reserves;
•
the valuation of value of business acquired (VOBA) and amortization of deferred policy acquisition costs and VOBA;
•
reinsurance recoverable, including a provision for uncollectible reinsurance;
•
the assessment of risk transfer for certain structured insurance and reinsurance contracts;
•
the valuation of the investment portfolio and assessment of OTTI;
•
the valuation of deferred tax assets;
•
the valuation of derivative instruments related to guaranteed living benefits (GLB); and
•
the valuation of goodwill.

b) Premiums
Premiums are generally recognized as written upon inception of the policy. For multi-year policies for which premiums written are payable in annual installments, only the current annual premium is included as written at policy inception due to the ability of the insured/reinsured to commute or cancel coverage within the policy term. The remaining annual premiums are included as written at each successive anniversary date within the multi-year term.

For property and casualty (P&C) insurance and reinsurance products, premiums written are primarily earned on a pro-rata basis over the policy terms to which they relate. Unearned premiums represent the portion of premiums written applicable to the unexpired portion of the policies in force. For retrospectively-rated policies, written premiums are adjusted to reflect expected ultimate premiums consistent with changes to reported losses, or other measures of exposure as stated in the policy, and earned over the policy coverage period. For retrospectively-rated multi-year policies, premiums recognized in the current period are computed, using a with-and-without method, as the difference between the ceding enterprise's total contract costs before and after the experience under the contract at the reporting date. Accordingly, for retrospectively-rated multi-year policies, additional premiums are generally written and earned when losses are incurred.

Mandatory reinstatement premiums assessed on reinsurance policies are earned in the period of the loss event that gave rise to the reinstatement premiums.  All remaining unearned premiums are recognized over the remaining coverage period. 

Premiums from long-duration contracts such as certain traditional term life, whole life, endowment, and long-duration personal accident and health (A&H) policies are generally recognized as revenue when due from policyholders. Traditional life policies include those contracts with fixed and guaranteed premiums and benefits. Benefits and expenses are matched with income to result in the recognition of profit over the life of the contracts.

Retroactive loss portfolio transfer (LPT) contracts in which the insured loss events occurred prior to contract inception are evaluated to determine whether they meet criteria for reinsurance accounting. If reinsurance accounting is appropriate, written premiums are fully earned and corresponding losses and loss expenses recognized at contract inception. These contracts can cause significant variances in gross premiums written, net premiums written, net premiums earned, and net incurred losses in the years in which they are written. Reinsurance contracts sold not meeting criteria for reinsurance accounting are recorded using the deposit method as described below in Note 1 k).

Reinsurance premiums assumed are based on information provided by ceding companies supplemented by our own estimates of premium when we have not received ceding company reports. Estimates are reviewed and adjustments are recorded in the period in which they are determined. Premiums are earned over the coverage terms of the related reinsurance contracts and range from one to three years.

c) Deferred policy acquisition costs and value of business acquired
Policy acquisition costs consist of commissions (direct and ceded), premium taxes, and certain underwriting costs related directly to the successful acquisition of new or renewal insurance contracts. A VOBA intangible asset is established upon the acquisition of blocks of long-duration contracts in a business combination and represents the present value of estimated net cash flows for the contracts in force at the acquisition date. Acquisition costs and VOBA, collectively policy acquisition costs, are deferred and amortized. Amortization is recorded in Policy acquisition costs in the consolidated statements of operations. Policy acquisition costs on P&C contracts are generally amortized ratably over the period in which premiums are earned. Policy acquisition costs on traditional long-duration contracts are amortized over the estimated life of the contracts, generally in proportion to premium revenue recognized. For non-traditional long-duration contracts, we amortize policy acquisition costs over the expected life of the contracts in proportion to expected gross profits.  The effect of changes in estimates of expected gross profits is reflected in the period the estimates are revised. Policy acquisition costs are reviewed to determine if they are recoverable from future income, including investment income. Unrecoverable policy acquisition costs are expensed in the period identified.

Advertising costs are expensed as incurred except for direct-response campaigns that qualify for cost deferral, principally related to A&H business produced by the Insurance – Overseas General segment, which are deferred and recognized as a component of policy acquisition costs. For individual direct-response marketing campaigns that we can demonstrate have specifically resulted in incremental sales to customers and such sales have probable future economic benefits, incremental costs directly related to the marketing campaigns are capitalized. Deferred marketing costs are reviewed regularly for recoverability from future income, including investment income, and amortized in proportion to premium revenue recognized, primarily over a ten-year period, the expected economic future benefit period. The expected future benefit period is evaluated periodically based on historical results and adjusted prospectively. The amount of deferred marketing costs reported in Deferred policy acquisition costs in the consolidated balance sheets was $307 million and $274 million at December 31, 2013 and 2012, respectively. Amortization expense for deferred marketing costs was $128 million, $119 million, and $128 million for the years ended December 31, 2013, 2012, and 2011, respectively (2012 disclosure amount adjusted to present deferred marketing amortization costs in a manner consistent with the 2013 amount).

d) Reinsurance
ACE assumes and cedes reinsurance with other insurance companies to provide greater diversification of business and minimize the net loss potential arising from large risks. Ceded reinsurance contracts do not relieve ACE of its primary obligation to policyholders.

For both ceded and assumed reinsurance, risk transfer requirements must be met in order to account for a contract as reinsurance, principally resulting in the recognition of cash flows under the contract as premiums and losses. To meet risk transfer requirements, a reinsurance contract must include insurance risk, consisting of both underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity. To assess risk transfer for certain contracts, ACE generally develops expected discounted cash flow analyses at contract inception. Deposit accounting is used for contracts that do not meet risk transfer requirements. Deposit accounting requires that consideration received or paid be recorded in the balance sheet as opposed to recording premiums written or losses incurred in the statement of operations. Non-refundable fees on deposit contracts are earned based on the terms of the contract described below in Note 1 k).

Reinsurance recoverable includes balances due from reinsurance companies for paid and unpaid losses and loss expenses and policy benefits that will be recovered from reinsurers, based on contracts in force. The method for determining the reinsurance recoverable on unpaid losses and loss expenses incurred but not reported (IBNR) involves actuarial estimates consistent with those used to establish the associated liability for unpaid losses and loss expenses as well as a determination of ACE's ability to cede unpaid losses and loss expenses under the terms of the reinsurance agreement.

Reinsurance recoverable is presented net of a provision for uncollectible reinsurance determined based upon a review of the financial condition of reinsurers and other factors. The provision for uncollectible reinsurance is based on an estimate of the reinsurance recoverable balance that will ultimately be unrecoverable due to reinsurer insolvency, a contractual dispute, or any other reason. The valuation of this provision includes several judgments including certain aspects of the allocation of reinsurance recoverable on IBNR claims by reinsurer and a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are reinsurance recoverable balances by reinsurer, net of collateral, and default factors used to determine the portion of a reinsurer's balance deemed uncollectible. The definition of collateral for this purpose requires some judgment and is generally limited to assets held in an ACE-only beneficiary trust, letters of credit, and liabilities held with the same legal entity for which ACE believes there is a contractual right of offset. The determination of the default factor is principally based on the financial strength rating of the reinsurer. Default factors require considerable judgment and are determined using the current financial strength rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions. The more significant considerations include, but are not necessarily limited to, the following:
•
For reinsurers that maintain a financial strength rating from a major rating agency, and for which recoverable balances are considered representative of the larger population (i.e., default probabilities are consistent with similarly rated reinsurers and payment durations conform to averages), the financial rating is based on a published source and the default factor is based on published default statistics of a major rating agency applicable to the reinsurer's particular rating class. When a recoverable is expected to be paid in a brief period of time by a highly rated reinsurer, such as certain property catastrophe claims, a default factor may not be applied;
•
For balances recoverable from reinsurers that are both unrated by a major rating agency and for which management is unable to determine a credible rating equivalent based on a parent, affiliate, or peer company, we determine a rating equivalent based on an analysis of the reinsurer that considers an assessment of the creditworthiness of the particular entity, industry benchmarks, or other factors as considered appropriate. We then apply the applicable default factor for that rating class. For balances recoverable from unrated reinsurers for which the ceded reserve is below a certain threshold, we generally apply a default factor of 34 percent, consistent with published statistics of a major rating agency;
•
For balances recoverable from reinsurers that are either insolvent or under regulatory supervision, we establish a default factor and resulting provision for uncollectible reinsurance based on reinsurer-specific facts and circumstances. Upon initial notification of an insolvency, we generally recognize an expense for a substantial portion of all balances outstanding, net of collateral, through a combination of write-offs of recoverable balances and increases to the provision for uncollectible reinsurance. When regulatory action is taken on a reinsurer, we generally recognize a default factor by estimating an expected recovery on all balances outstanding, net of collateral. When sufficient credible information becomes available, we adjust the provision for uncollectible reinsurance by establishing a default factor pursuant to information received; and
•
For other recoverables, management determines the provision for uncollectible reinsurance based on the specific facts and circumstances.

The methods used to determine the reinsurance recoverable balance and related provision for uncollectible reinsurance are regularly reviewed and updated, and any resulting adjustments are reflected in earnings in the period identified.

Prepaid reinsurance premiums represent the portion of premiums ceded to reinsurers applicable to the unexpired coverage terms of the reinsurance contracts in force.

The value of reinsurance business assumed of $27 million and $32 million at December 31, 2013 and 2012, respectively, included in Other assets in the accompanying consolidated balance sheets, represents the excess of estimated ultimate value of the liabilities assumed under retroactive reinsurance contracts over consideration received. The value of reinsurance business assumed is amortized and recorded to losses and loss expenses based on the payment pattern of the losses assumed and ranges between 9 and 40 years. The unamortized value is reviewed regularly to determine if it is recoverable based upon the terms of the contract, estimated losses and loss expenses, and anticipated investment income. Unrecoverable amounts are expensed in the period identified.

e) Investments
Fixed maturities are classified as either available for sale or held to maturity. The available for sale portfolio is reported at fair value. The held to maturity portfolio includes securities for which we have the ability and intent to hold to maturity or redemption and is reported at amortized cost. Equity securities are classified as available for sale and are recorded at fair value. Short-term investments comprise securities due to mature within one year of the date of purchase and are recorded at fair value which typically approximates cost. Short-term investments include certain cash and cash equivalents, which are part of investment portfolios under the management of external investment managers.

Other investments principally comprise life insurance policies, policy loans, trading securities, other direct equity investments, investment funds, and limited partnerships.
•
Life insurance policies are carried at policy cash surrender value.
•
Policy loans are carried at outstanding balance.
•
Trading securities are recorded on a trade date basis and carried at fair value. Unrealized gains and losses on trading securities are reflected in Net income.
•
Other investments over which ACE can exercise significant influence are accounted for using the equity method.
•
All other investments over which ACE cannot exercise significant influence are carried at fair value with changes in fair value recognized through OCI. For these investments, investment income and realized gains are recognized as related distributions are received.
•
Partially-owned investment companies comprise entities in which we hold an ownership interest in excess of three percent. These investments as well as ACE's investments in investment funds where our ownership interest is in excess of three percent are accounted for under the equity method because ACE exerts significant influence. These investments apply investment company accounting to determine operating results, and ACE retains the investment company accounting in applying the equity method. This means that investment income, realized gains or losses, and unrealized gains or losses are included in the portion of equity earnings reflected in Other (income) expense.

Investments in partially-owned insurance companies primarily represent direct investments in which ACE has significant influence and, as such, meet the requirements for equity accounting. We report our share of the net income or loss of the partially-owned insurance companies in Other (income) expense. Investments in partially-owned insurance companies over which ACE does not exert significant influence are carried at fair value with changes in fair value recognized through OCI.

Realized gains or losses on sales of investments are determined on a first-in, first-out basis. Unrealized appreciation (depreciation) on investments is included as a separate component of AOCI in Shareholders' equity. We regularly review our investments for OTTI. Refer to Note 3 for additional information.

With respect to securities where the decline in value is determined to be temporary and the security's value is not written down, a subsequent decision may be made to sell that security and realize a loss. Subsequent decisions on security sales are the result of changing or unforeseen facts and circumstances (i.e., arising from a large insured loss such as a catastrophe), deterioration of the creditworthiness of the issuer or its industry, or changes in regulatory requirements. We believe that subsequent decisions to sell such securities are consistent with the classification of the majority of the portfolio as available for sale.

We use derivative instruments including futures, options, swaps, and foreign currency forward contracts for the purpose of managing certain investment portfolio risks and exposures. Refer to Note 10 for additional information. Derivatives are reported at fair value and are recorded in the accompanying consolidated balance sheets in either Accounts payable, accrued expenses, and other liabilities or Other assets with changes in fair value included in Net realized gains (losses) in the consolidated statements of operations. Collateral held by brokers equal to a percentage of the total value of open futures contracts is included in the investment portfolio.

Net investment income includes interest and dividend income and amortization of fixed maturity market premiums and discounts and is net of investment management and custody fees. For mortgage-backed securities, and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the resultant change in effective yields and maturities are recognized prospectively. Prepayment fees or call premiums that are only payable when a security is called prior to its maturity are earned when received and reflected in Net investment income. 

ACE participates in a securities lending program operated by a third-party banking institution whereby certain assets are loaned to qualified borrowers and from which we earn an incremental return. Borrowers provide collateral, in the form of either cash or approved securities, of 102 percent of the fair value of the loaned securities.  Each security loan is deemed to be an overnight transaction.  Cash collateral is invested in a collateral pool which is managed by the banking institution.  The collateral pool is subject to written investment guidelines with key objectives which include the safeguard of principal and adequate liquidity to meet anticipated redemptions. The fair value of the loaned securities is monitored on a daily basis, with additional collateral obtained or refunded as the fair value of the loaned securities changes. The collateral is held by the third-party banking institution, and the collateral can only be accessed in the event that the institution borrowing the securities is in default under the lending agreement. As a result of these restrictions, we consider our securities lending activities to be non-cash investing and financing activities. 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. The fair value of the securities on loan is included in fixed maturities and equity securities. The securities lending collateral is reported as a separate line in total assets with a related liability reflecting our obligation to return the collateral plus interest.

Similar to securities lending arrangements, securities sold under repurchase agreements, whereby ACE sells securities and repurchases them at a future date for a predetermined price, are accounted for as collateralized investments and borrowings and are recorded at the contractual repurchase amounts plus accrued interest. Assets to be repurchased are the same, or substantially the same, as the assets transferred and the transferor, through right of substitution, maintains the right and ability to redeem the collateral on short notice. The fair value of the underlying securities is included in fixed maturities and equity securities. In contrast to securities lending programs, the use of cash received is not restricted. We report the obligation to return the cash as Short-term debt in the consolidated balance sheets.

Refer to Note 4 for a discussion on the determination of fair value for ACE's various investment securities.

f) Cash
Cash includes cash on hand and deposits with an original maturity of three months or less at time of purchase. Cash held by external money managers is included in Short-term investments.

We have agreements with a third-party bank provider which implemented two international multi-currency notional cash pooling programs. In each program, participating ACE entities establish deposit accounts in different currencies with the bank provider and each day the credit or debit balances in every account are notionally translated into a single currency (U.S. dollars) and then notionally pooled. The bank extends overdraft credit to any participating ACE entity as needed, provided that the overall notionally-pooled balance of all accounts in each pool at the end of each day is at least zero. Actual cash balances are not physically converted and are not commingled between legal entities. Any overdraft balances incurred under this program by an ACE entity would be guaranteed by ACE Limited (up to $300 million in the aggregate). Our syndicated letter of credit facility allows for same day drawings to fund a net pool overdraft should participating ACE entities overdraw contributed funds from the pool.

g) Goodwill and other intangible assets
Goodwill represents the excess of the cost of acquisitions over the fair value of net assets acquired and is not amortized. Goodwill is assigned at acquisition to the applicable reporting unit of the acquired entities giving rise to the goodwill. Goodwill impairment tests are performed annually or more frequently if circumstances indicate a possible impairment.  For goodwill impairment testing, we use a qualitative assessment to determine whether it is more likely than not (i.e., more than a 50 percent probability) that the fair value of a reporting unit is greater than its carrying amount. If our assessment indicates less than a 50 percent probability that fair value exceeds carrying value, we quantitatively estimate a reporting unit's fair value. Goodwill recorded in connection with investments in partially-owned insurance companies is recorded in Investments in partially-owned insurance companies and is also measured for impairment annually.

Indefinite lived intangible assets are not subject to amortization. Finite lived intangible assets are amortized over their useful lives, generally ranging from 1 to 20 years. The amortization of finite lived intangible assets is reported in Other (income) expense in the consolidated statements of operations. Intangible assets are regularly reviewed for indicators of impairment. Impairment is recognized if the carrying amount is not recoverable from its undiscounted cash flows and is measured as the difference between the carrying amount and fair value.

h) Unpaid losses and loss expenses
A liability is established for the estimated unpaid losses and loss expenses under the terms of, and with respect to, ACE's policies and agreements. Similar to premiums that are recognized as revenues over the coverage period of the policy, a liability for unpaid losses and loss expenses is recognized as expense when insured events occur over the coverage period of the policy. This liability includes a provision for both reported claims (case reserves) and incurred but not reported claims (IBNR reserves). IBNR reserve estimates are generally calculated by first projecting the ultimate cost of all losses that have occurred (expected losses), and then subtracting paid losses, case reserves, and loss expenses. The methods of determining such estimates and establishing the resulting liability are reviewed regularly and any adjustments are reflected in operations in the period in which they become known. Future developments may result in losses and loss expenses materially greater or less than recorded amounts.

Except for net loss and loss expense reserves of $54 million net of discount, held at December 31, 2013, representing certain structured settlements for which the timing and amount of future claim payments are reliably determinable and $52 million, net of discount, of certain reserves for unsettled claims that are discounted in statutory filings, ACE does not discount its P&C loss reserves. This compares with reserves of $58 million for certain structured settlements and $47 million of certain reserves for unsettled claims at December 31, 2012. Structured settlements represent contracts purchased from life insurance companies primarily to settle workers' compensation claims, where payments to the claimant by the life insurance company are expected to be made in the form of an annuity. ACE retains the liability to the claimant in the event that the life insurance company fails to pay. At December 31, 2013, the gross liability due to claimants was $631 million, net of discount, and reinsurance recoverables due from the life insurance companies was $577 million, net of discount. For structured settlement contracts where payments are guaranteed regardless of claimant life expectancy, the amounts recoverable from the life insurance companies at December 31, 2013 are included in Other assets in the consolidated balance sheets, as they do not meet the requirements for reinsurance accounting.

Included in unpaid losses and loss expenses are liabilities for asbestos and environmental (A&E) claims and expenses. These unpaid losses and loss expenses are principally related to claims arising from remediation costs associated with hazardous waste sites and bodily-injury claims related to asbestos products and environmental hazards. The estimation of these liabilities is particularly sensitive to changes in the legal environment including specific settlements that may be used as precedents to settle future claims. However, ACE does not anticipate future changes in laws and regulations in setting its A&E reserve levels.

Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves first reported in previous calendar years and excludes the effect of losses from the development of earned premiums from previous accident years.

For purposes of analysis and disclosure, management views prior period development to be changes in the nominal value of loss estimates from period to period, net of premium and profit commission adjustments on loss sensitive contracts. Prior period development generally excludes changes in loss estimates that do not arise from the emergence of claims, such as those related to uncollectible reinsurance, interest, unallocated loss adjustment expenses, or foreign currency. Accordingly, specific items excluded from prior period development include the following: gains/losses related to foreign currency remeasurement; losses recognized from the early termination or commutation of reinsurance agreements that principally relate to the time value of money; changes in the value of reinsurance business assumed reflected in losses incurred but principally related to the time value of money; and losses that arise from changes in estimates of earned premiums from prior accident years. Except for foreign currency remeasurement, which is included in Net realized gains (losses), these items are included in current year losses.

i) Future policy benefits
The valuation of long-duration contract reserves requires management to make estimates and assumptions regarding expenses, mortality, persistency, and investment yields. Estimates are primarily based on historical experience and information provided by ceding companies and include a margin for adverse deviation. Interest rates used in calculating reserves range from less than 1.0 percent to 6.5 percent and less than 1.0 percent to 4.5 percent at December 31, 2013 and 2012, respectively. Actual results could differ materially from these estimates. Management monitors actual experience and where circumstances warrant, will revise assumptions and the related reserve estimates. Revisions are recorded in the period they are determined.

Certain of our long-duration contracts are supported by assets that do not qualify for separate account reporting under GAAP. These assets are classified as trading securities and reported in Other investments and the offsetting liabilities are reported in Future policy benefits in the consolidated balance sheets. Changes in the fair value of separate account assets that do not qualify for separate account reporting under GAAP are reported in Other income (expense) and the offsetting movements in the liabilities are included in Policy benefits in the consolidated statements of operations.

j) Assumed reinsurance programs involving minimum benefit guarantees under annuity contracts
ACE reinsures various death and living benefit guarantees associated with variable annuities issued primarily in the United States and Japan. Each reinsurance treaty covers variable annuities written during a limited period, typically not exceeding two years. We generally receive a monthly premium during the accumulation phase of the covered annuities (in-force) based on a percentage of either the underlying accumulated account values or the underlying accumulated guaranteed values. Depending on an annuitant's age, the accumulation phase can last many years. To limit our exposure under these programs, all reinsurance treaties include annual or aggregate claim limits and many include an aggregate deductible.

The guarantees which are payable on death, referred to as guaranteed minimum death benefits (GMDB), principally cover shortfalls between accumulated account value at the time of an annuitant's death and either i) an annuitant's total deposits; ii) an annuitant's total deposits plus a minimum annual return; or iii) the highest accumulated account value attained at any policy anniversary date. In addition, a death benefit may be based on a formula specified in the variable annuity contract that uses a percentage of the growth of the underlying contract value. Liabilities for GMDBs are based on cumulative assessments or premiums to date multiplied by a benefit ratio that is determined by estimating the present value of benefit payments and related adjustment expenses divided by the present value of cumulative assessment or expected premiums during the contract period.  

Under reinsurance programs covering GLBs, we assume the risk of guaranteed minimum income benefits (GMIB) and guaranteed minimum accumulation benefits (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. Our GLB reinsurance product meets the definition of a derivative for accounting purposes and is carried at fair value with changes in fair value recognized in income and classified as described below. As the assuming entity, we are obligated to provide coverage until the earlier of the expiration of the underlying guaranteed benefit or the treaty expiration date. Premiums received under the reinsurance treaties are classified as premium. Expected losses allocated to premiums received are classified as 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 (i.e., declining interest rates and/or declining equity markets) and changes in policyholder behavior (i.e., 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. Refer to Note 5 c) for additional information.

k) Deposit assets and liabilities
Deposit assets arise from ceded reinsurance contracts purchased that do not transfer significant underwriting or timing risk. Under deposit accounting, consideration received or paid, excluding non-refundable fees, is recorded as a deposit asset or liability in the balance sheet as opposed to recording premiums and losses in the statement of operations. Interest income on deposits, representing the consideration received or to be received in excess of cash payments related to the deposit contract, is earned based on an effective yield calculation. The calculation of the effective yield is based on the amount and timing of actual cash flows at the balance sheet date and the estimated amount and timing of future cash flows. The effective yield is recalculated periodically to reflect revised estimates of cash flows. When a change in the actual or estimated cash flows occurs, the resulting change to the carrying amount of the deposit asset is reported as income or expense. Deposit assets of $100 million and $138 million at December 31, 2013 and 2012, respectively, are reflected in Other assets in the consolidated balance sheets and the accretion of deposit assets related to interest pursuant to the effective yield calculation is reflected in Net investment income in the consolidated statements of operations.

Non-refundable fees are earned based on contract terms. Non-refundable fees paid but unearned are reflected in Other assets in the consolidated balance sheets and earned fees are reflected in Other (income) expense in the consolidated statements of operations.

Deposit liabilities include reinsurance deposit liabilities of $131 million and $283 million and contract holder deposit funds of $699 million and $548 million at December 31, 2013 and 2012, respectively. Deposit liabilities are reflected in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets. The reinsurance deposit liabilities arise from contracts sold for which there is not a significant transfer of risk. At contract inception, the deposit liability equals net cash received. An accretion rate is established based on actuarial estimates whereby the deposit liability is increased to the estimated amount payable over the contract term. The deposit accretion rate is the rate of return required to fund expected future payment obligations. We periodically reassess the estimated ultimate liability and related expected rate of return. Changes to the deposit liability are generally reflected through Interest expense to reflect the cumulative effect of the period the contract has been in force, and by an adjustment to the future accretion rate of the liability over the remaining estimated contract term.

Contract holder deposit funds represent a liability for investment contracts sold that do not meet the definition of an insurance contract, and certain of these contracts are sold with a guaranteed rate of return. The liability equals accumulated policy account values, which consist of the deposit payments plus credited interest less withdrawals and amounts assessed through the end of the period.

l) Foreign currency remeasurement and translation
The functional currency for each of our foreign operations is generally the currency of the local operating environment. Transactions in currencies other than a foreign operation's functional currency are remeasured into the functional currency and the resulting foreign exchange gains and losses are reflected in Net realized gains (losses) in the consolidated statements of operations. Functional currency assets and liabilities are translated into the reporting currency, U.S. dollars, using period end exchange rates and the related translation adjustments are recorded as a separate component of AOCI. Functional statement of operations amounts expressed in functional currencies are translated using average exchange rates.

m) Administrative expenses
Administrative expenses generally include all operating costs other than policy acquisition costs. The Insurance – North American P&C segment manages and uses an in-house third-party claims administrator, ESIS Inc. (ESIS).  ESIS performs claims management and risk control services for domestic and international organizations that self-insure P&C exposures as well as internal P&C exposures.  The net operating results of ESIS are included within Administrative expenses in the consolidated statements of operations and were $25 million, $23 million, and $21 million for the years ended December 31, 2013, 2012, and 2011, respectively.

n) Income taxes
Income taxes have been recorded related to those operations subject to income taxes. Deferred tax assets and liabilities result from temporary differences between the amounts recorded in the consolidated financial statements and the tax basis of our assets and liabilities. Refer to Note 8 for additional information. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance against deferred tax assets is recorded if it is more likely than not that all, or some portion, of the benefits related to deferred tax assets will not be realized. The valuation allowance assessment considers tax planning strategies, where applicable.

We recognize uncertain tax positions deemed more likely than not of being sustained upon examination.  Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

o) Earnings per share
Basic earnings per share is calculated using the weighted-average shares outstanding including participating securities with non-forfeitable rights to dividends such as unvested restricted stock. All potentially dilutive securities including stock options are excluded from the basic earnings per share calculation. In calculating diluted earnings per share, the weighted-average shares outstanding is increased to include all potentially dilutive securities. Basic and diluted earnings per share are calculated by dividing Net income by the applicable weighted-average number of shares outstanding during the year.

p) Cash flow information
Premiums received and losses paid associated with the GLB reinsurance products, which as discussed previously meet the definition of a derivative instrument for accounting purposes, are included within Cash flows from operating activities.  Cash flows, such as settlements and collateral requirements, associated with GLB and all other derivative instruments are included on a net basis within Cash flows from investing activities. Purchases, sales, and maturities of short-term investments are recorded on a net basis within Cash flows from investing activities.

q) Derivatives
ACE recognizes all derivatives at fair value in the consolidated balance sheets and participates in derivative instruments in two principal ways:

(i) To sell protection to customers as an insurance or reinsurance contract that meets the definition of a derivative for accounting purposes. For 2013 and 2012, the reinsurance of GLBs was our primary product falling into this category; and
(ii) To mitigate financial risks, principally arising from investment holdings, products sold, or assets and liabilities held in foreign currencies. For these instruments, changes in assets or liabilities measured at fair value are recorded as realized gains or losses in the consolidated statement of operations.

We did not designate any derivatives as accounting hedges during 2013, 2012, or 2011.

r) Share-based compensation
ACE measures and records compensation cost for all share-based payment awards at grant-date fair value. Compensation costs are recognized for share-based payment awards with only service conditions that have graded vesting schedules on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. Refer to Note 12 for additional information.
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 offering personal lines and commercial coverages. This acquisition diversifies our existing business in Indonesia. 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 $135 million of goodwill, attributable to expected growth and profitability, none of which is expected to be deductible for income tax purposes, and other intangible assets of $73 million, based on ACE's purchase price allocation. The other intangible assets primarily relate to customer lists. 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 $283 million of goodwill, attributable to expected growth and profitability, none of which is expected to be deductible for income tax purposes, and other intangible assets of $140 million based on ACE’s purchase price allocation. The other intangible assets primarily relate to distribution channels. 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.

To be acquired after 2013
On January 12, 2014, we announced that we and our local partner have reached a conditional agreement to purchase a 60.9 percent ownership in The Siam Commercial Samaggi Insurance PCL (Samaggi), a general insurance company in Thailand, from Siam Commercial Bank.  This transaction, which is subject to approvals and other customary closing conditions, including Siam Commercial Bank shareholder approval, is expected to be completed in the second quarter of 2014.  On the closing of this transaction, in compliance with Thai regulations, we and our local partner will make a mandatory tender offer for the remaining 39.1 percent ownership of Samaggi on the same terms.  The implied purchase price for 100 percent of the company is approximately $185 million in cash.

Prior year acquisitions
We acquired New York Life’s Korea operations on February 1, 2011 and New York Life’s Hong Kong operations on April 1, 2011 for approximately $450 million in cash. These acquired businesses operate in our Life segment, expand our presence in the North Asia market, and complement our life insurance business established in that region. The acquisition generated $91 million of goodwill, none of which is expected to be deductible for income tax purposes, and $163 million of intangible assets. The most significant intangible asset is VOBA.

We acquired Penn Millers Holding Corporation (PMHC) on November 30, 2011 for approximately $107 million in cash. PMHC’s primary insurance subsidiary, Penn Millers Insurance Company (Penn Millers), is a well-established underwriter in the agribusiness market since 1887. PMHC operates in our Insurance – North American Agriculture segment.

We acquired Rio Guayas Compania de Seguros y Reaseguros (Rio Guayas), a general insurance company in Ecuador on December 28, 2011 for approximately $65 million in cash. Rio Guayas sells a range of insurance products, including automobile, life, property, and A&H. The acquisition of Rio Guayas helped expand our Latin America capabilities in terms of geography, products, and distribution. Rio Guayas operates in our Insurance – Overseas General segment.

The consolidated financial statements include results of acquired businesses from the acquisition dates.
Investments
Investments
Investments

a) Fixed maturities
December 31, 2013
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

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

 
$
62

 
$
(59
)
 
$
2,949

 
$
—

Foreign
14,336

 
377

 
(122
)
 
14,591

 
—

Corporate securities
16,825

 
777

 
(132
)
 
17,470

 
(6
)
Mortgage-backed securities
10,937

 
184

 
(227
)
 
10,894

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

 
65

 
(77
)
 
3,350

 
—

 
$
48,406

 
$
1,465

 
$
(617
)
 
$
49,254

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

 
$
16

 
$
(4
)
 
$
832

 
$
—

Foreign
864

 
33

 
—

 
897

 
—

Corporate securities
1,922

 
83

 
—

 
2,005

 
—

Mortgage-backed securities
1,341

 
39

 
(1
)
 
1,379

 
—

States, municipalities, and political subdivisions
1,151

 
16

 
(17
)
 
1,150

 
—

 
$
6,098

 
$
187

 
$
(22
)
 
$
6,263

 
$
—



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 years ended December 31, 2013 and 2012, $25 million and $137 million of net unrealized appreciation, respectively, related to such securities is included in OCI. At December 31, 2013 and 2012, AOCI includes cumulative net unrealized depreciation of $4 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 10 a) (iv)) and are included in the category, “Mortgage-backed securities”. Approximately 83 percent and 85 percent, of the total mortgage-backed securities at December 31, 2013 and 2012, respectively, 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:
 
December 31
 
 
December 31
 
 
 
 
2013

 
 
 
2012

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,387

 
$
2,411

 
$
1,887

 
$
1,906

Due after 1 year through 5 years
14,139

 
14,602

 
13,411

 
14,010

Due after 5 years through 10 years
16,200

 
16,535

 
15,032

 
16,153

Due after 10 years
4,743

 
4,812

 
4,285

 
4,764

 
37,469

 
38,360

 
34,615

 
36,833

Mortgage-backed securities
10,937

 
10,894

 
10,051

 
10,473

 
$
48,406

 
$
49,254

 
$
44,666

 
$
47,306

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
401

 
$
405

 
$
656

 
$
659

Due after 1 year through 5 years
2,284

 
2,363

 
1,870

 
1,950

Due after 5 years through 10 years
1,686

 
1,723

 
2,119

 
2,267

Due after 10 years
386

 
393

 
597

 
641

 
4,757

 
4,884

 
5,242

 
5,517

Mortgage-backed securities
1,341

 
1,379

 
2,028

 
2,116

 
$
6,098

 
$
6,263

 
$
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
 
December 31


December 31

(in millions of U.S. dollars)
2013


2012

Cost
$
841

 
$
707

Gross unrealized appreciation
63

 
41

Gross unrealized depreciation
(67
)
 
(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.

Evaluation of potential credit losses related to fixed maturities
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.

U.S. Treasury and agency obligations (including agency mortgage-backed securities), foreign government obligations, and states, municipalities, and political subdivisions obligations
U.S. Treasury and agency obligations (including agency mortgage-backed securities), foreign government obligations, and states, municipalities, and political subdivisions obligations represent less than $425 million of gross unrealized loss at December 31, 2013. These securities were evaluated for credit loss primarily using qualitative assessments of the likelihood of credit loss considering credit rating of the issuers and level of credit enhancement, if any. ACE concluded that the high level of creditworthiness of the issuers coupled with credit enhancement, where applicable, supports recognizing no credit loss in net income.

Corporate securities
Projected cash flows for corporate securities (principally senior unsecured bonds) are driven primarily by assumptions regarding probability of default and also the timing and amount of recoveries associated with defaults. ACE developed projected cash flows for corporate securities (principally senior unsecured bonds) using market observable data, issuer-specific information, and credit ratings. We use historical default data by Moody’s Investors Service (Moody’s) rating category to calculate a 1-in-100 year probability of default, which results in a default assumption in excess of the historical mean default rate. Consistent with management's approach, ACE assumed a 32 percent recovery rate (the par value of a defaulted security that will be recovered) across all rating categories rather than using Moody's historical mean recovery rate of 42 percent. We believe that use of a default assumption in excess of the historical mean is conservative in light of current market conditions.

The following table presents default assumptions by Moody's rating category (historical mean default rate provided for comparison):
Moody's Rating Category
1-in-100 Year Default Rate

 
Historical Mean Default Rate

Investment Grade:
 
 
 
Aaa-Baa
0.0-1.4%

 
0.0-0.3%

Below Investment Grade:
 
 
 
Ba
4.9
%
 
1.1
%
B
12.8
%
 
3.4
%
Caa-C
53.2
%
 
13.8
%

Application of the methodology and assumptions described above resulted in credit losses recognized in Net income for corporate securities of $11 million, $14 million, and $9 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Mortgage-backed securities
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.

ACE develops specific assumptions using market data, where available, and includes internal estimates as well as estimates published by rating agencies and other third-party sources. ACE projects default rates by mortgage sector considering current underlying mortgage loan performance, generally assuming lower loss severity for Prime sector bonds versus ALT-A and Sub-prime bonds.

These estimates are extrapolated along a default timing curve to estimate the total lifetime pool default rate. Other assumptions used contemplate the actual collateral attributes, including geographic concentrations, rating agency loss projections, rating actions, and current market prices. If cash flow projections indicate that losses will exceed the credit enhancement for a given tranche, then we do not expect to recover our amortized cost basis and we recognize an estimated credit loss in Net income.

Application of the methodology and assumptions described above resulted in credit losses recognized in Net income for mortgage-backed securities of $1 million, $6 million, and $11 million for the years ended December 31, 2013, 2012, and 2011, 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” and the change in net unrealized appreciation (depreciation) of investments: 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Fixed maturities:
 
 
 
 
 
OTTI on fixed maturities, gross
$
(18
)
 
$
(26
)
 
$
(61
)
OTTI on fixed maturities recognized in OCI (pre-tax)
—

 
1

 
15

OTTI on fixed maturities, net
(18
)
 
(25
)
 
(46
)
Gross realized gains excluding OTTI
237

 
388

 
410

Gross realized losses excluding OTTI
(129
)
 
(133
)
 
(200
)
Total fixed maturities
90

 
230

 
164

Equity securities:
 
 
 
 
 
OTTI on equity securities
(2
)
 
(5
)
 
(1
)
Gross realized gains excluding OTTI
21

 
11

 
15

Gross realized losses excluding OTTI
(4
)
 
(2
)
 
(5
)
Total equity securities
15

 
4

 
9

OTTI on other investments
(2
)
 
(7
)
 
(3
)
Foreign exchange gains (losses)
29

 
(16
)
 
(13
)
Investment and embedded derivative instruments
78

 
(6
)
 
(143
)
Fair value adjustments on insurance derivative
878

 
171

 
(779
)
S&P put options and futures
(579
)
 
(297
)
 
(4
)
Other derivative instruments
(2
)
 
(4
)
 
(4
)
Other
(3
)
 
3

 
(22
)
Net realized gains (losses)
504

 
78

 
(795
)
Change in net unrealized appreciation (depreciation) on investments:
 
 
 
 
 
Fixed maturities available for sale
(1,798
)
 
1,099

 
569

Fixed maturities held to maturity
(82
)
 
(94
)
 
(89
)
Equity securities
(41
)
 
61

 
(47
)
Other
54

 
50

 
40

Income tax (expense) benefit
408

 
(198
)
 
(157
)
Change in net unrealized appreciation (depreciation) on investments
(1,459
)
 
918

 
316

Total net realized gains (losses) and change in net unrealized appreciation (depreciation) on investments
$
(955
)
 
$
996

 
$
(479
)

 
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: 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

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

 
$
74

 
$
137

Additions where no OTTI was previously recorded
9

 
8

 
12

Additions where an OTTI was previously recorded
3

 
12

 
8

Reductions for securities sold during the period
(18
)
 
(51
)
 
(83
)
Balance of credit losses related to securities still held – end of year
$
37

 
$
43

 
$
74


d) Other investments
 
 
 
December 31

 
 
 
December 31

 
 
 
2013

 
 
 
2012

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

 
Cost

 
Fair Value

 
Cost

Investment funds
$
428

 
$
278

 
$
395

 
$
278

Limited partnerships
576

 
424

 
531

 
398

Partially-owned investment companies
1,284

 
1,284

 
1,186

 
1,187

Life insurance policies
180

 
180

 
148

 
148

Policy loans
179

 
179

 
164

 
164

Trading securities
276

 
273

 
243

 
242

Other
53

 
53

 
49

 
48

Total
$
2,976

 
$
2,671

 
$
2,716

 
$
2,465



Investment funds include one highly diversified fund investment as well as several direct funds that employ a variety of investment styles such as long/short equity and arbitrage/distressed. Included in limited partnerships and partially-owned investment companies are 62 individual limited partnerships covering a broad range of investment strategies including large cap buyouts, specialist buyouts, growth capital, distressed, mezzanine, real estate, and co-investments. The underlying portfolio consists of various public and private debt and equity securities of publicly traded and privately held companies and real estate assets.  The underlying investments across various partnerships, geographies, industries, asset types, and investment strategies provide risk diversification within the limited partnership portfolio and the overall investment portfolio.  Trading securities comprise $246 million of mutual funds supported by assets that do not qualify for separate account reporting under GAAP at December 31, 2013 compared with $212 million at December 31, 2012. Trading securities also includes assets held in rabbi trusts of $23 million of equity securities and $7 million of fixed maturities at December 31, 2013, compared with $23 million of equity securities and $8 million of fixed maturities at December 31, 2012.

e) Investments in partially-owned insurance companies
 
December 31
 
 
December 31
 
 
 
 
2013
 
 
2012
 
 
 
(in millions of U.S. dollars, except percentages)
Carrying Value

 
Issued
 Share
Capital

 
Ownership Percentage

 
Carrying Value

 
Issued Share Capital

 
Ownership Percentage

 
Domicile
Huatai Group
$
365

 
$
631

 
20.0
%
 
$
350

 
$
474

 
20.0
%
 
China
Huatai Life Insurance Company
84

 
379

 
20.0
%
 
84

 
205

 
20.0
%
 
China
Freisenbruch-Meyer
9

 
5

 
40.0
%
 
9

 
5

 
40.0
%
 
Bermuda
ACE Cooperative Insurance Co. – Saudi Arabia
10

 
27

 
30.0
%
 
9

 
27

 
30.0
%
 
Saudi Arabia
Russian Reinsurance Company
2

 
4

 
23.3
%
 
2

 
4

 
23.3
%
 
Russia
Total
$
470

 
$
1,046

 
 
 
$
454

 
$
715

 
 
 
 

Huatai Group and Huatai Life Insurance Company provide a range of P&C, life, and investment products.

f) Gross unrealized loss
At December 31, 2013, there were 6,161 fixed maturities out of a total of 25,062 fixed maturities in an unrealized loss position. The largest single unrealized loss in the fixed maturities was $6 million. There were 71 equity securities out of a total of 185 equity securities in an unrealized loss position. The largest single unrealized loss in the equity securities was $58 million. Fixed maturities in an unrealized loss position at December 31, 2013, comprised both investment grade and below investment grade securities for which fair value declined primarily due to widening credit spreads since the date of purchase. Equity securities in an unrealized loss position at December 31, 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
 
December 31, 2013
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

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

 
$
(57
)
 
$
31

 
$
(6
)
 
$
1,825

 
$
(63
)
Foreign
4,621

 
(114
)
 
201

 
(8
)
 
4,822

 
(122
)
Corporate securities
3,836

 
(118
)
 
194

 
(14
)
 
4,030

 
(132
)
Mortgage-backed securities
5,248

 
(197
)
 
384

 
(31
)
 
5,632

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

 
(90
)
 
84

 
(4
)
 
2,248

 
(94
)
Total fixed maturities
17,663

 
(576
)
 
894

 
(63
)
 
18,557

 
(639
)
Equity securities
498

 
(67
)
 
—

 
—

 
498

 
(67
)
Other investments
67

 
(9
)
 
—

 
—

 
67

 
(9
)
Total
$
18,228

 
$
(652
)
 
$
894

 
$
(63
)
 
$
19,122

 
$
(715
)
 
 
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
)

g) Net investment income
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Fixed maturities
$
2,093

 
$
2,134

 
$
2,196

Short-term investments
29

 
28

 
43

Equity securities
37

 
34

 
36

Other
105

 
104

 
62

Gross investment income
2,264

 
2,300

 
2,337

Investment expenses
(120
)
 
(119
)
 
(95
)
Net investment income
$
2,144

 
$
2,181

 
$
2,242


h) 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 LOC and derivative transactions. Included in restricted assets at December 31, 2013 and 2012, are investments, primarily fixed maturities, totaling $16.3 billion and $16.6 billion, respectively, and cash of $162 million and $139 million, respectively.
The following table presents the components of restricted assets: 
 
December 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Trust funds
$
11,315

 
$
11,389

Deposits with non-U.S. regulatory authorities
1,970

 
2,133

Assets pledged under repurchase agreements
1,435

 
1,401

Deposits with U.S. regulatory authorities
1,334

 
1,338

Other pledged assets
391

 
456

 
$
16,445

 
$
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 (an exit price) in an orderly transaction between market participants and establishes a three-level valuation hierarchy based on the reliability of the inputs. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data.
 
The three levels of the hierarchy are as follows:
•
Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets;
•
Level 2 – Includes, among other items, inputs other than quoted prices that are observable for the asset or liability such as interest rates and yield curves, quoted prices for similar assets and liabilities in active markets, and quoted prices for identical or similar assets and liabilities in markets that are not active; and
•
Level 3 – Inputs that are unobservable and reflect management’s judgments about assumptions that market participants would use in pricing an asset or liability.
We categorize financial instruments within the valuation hierarchy at the balance sheet date based upon the lowest level of inputs that are significant to the fair value measurement. Accordingly, transfers between levels within the valuation hierarchy occur when there are significant changes to the inputs, such as increases or decreases in market activity, changes to the availability of current prices, changes to the transparency to underlying inputs, and whether there are significant variances in quoted prices. Transfers in and/or out of any level are assumed to occur at the end of the period.

We use pricing services to obtain fair value measurements for the majority of our investment securities. Based on management’s understanding of the methodologies used, these pricing services only produce an estimate of fair value if there is observable market information that would allow them to make a fair value estimate. Based on our understanding of the market inputs used by the pricing services, all applicable investments have been valued in accordance with GAAP. We do not 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, fixed maturities valuation is more subjective when markets are less liquid due to the lack of market based inputs (i.e., stale pricing), which may increase the potential that an investment's estimated fair value is not reflective of the price at which an actual transaction would occur. The overwhelming majority of fixed maturities are classified within Level 2 because the most significant inputs used in the pricing techniques are observable. For a small number of fixed maturities, we obtain a quote from a broker (typically a market maker). Due to the disclaimers on the quotes that indicate that the price is indicative only, we include these fair value estimates in Level 3. 

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


Short-term investments
Short-term investments, which comprise securities due to mature within one year of the date of purchase that are traded in active markets, are classified within Level 1 as fair values are based on quoted market prices. Securities such as commercial paper and discount notes are classified within Level 2 because these securities are typically not actively traded due to their approaching maturity and, as such, their cost approximates fair value. Short-term investments for which pricing is unobservable are classified within Level 3.

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

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

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

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

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

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

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

A lapse rate is the percentage of in-force policies surrendered in a given calendar year. All else equal, as lapse rates increase, ultimate claim payments will decrease. 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 8 percent to 68 percent. Additional lapses due to partial withdrawals and older policyholders with tax-qualified contracts (due to required minimum distributions) are also included.

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. All GMIB reinsurance treaties include claim limits to protect ACE in the event that actual annuitization behavior is significantly higher than expected. 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 fully credible annuitization experience for all clients.

•
For clients representing about 37 percent of the total GMIB guaranteed value, we have credible annuitization experience for both the first year and also subsequent years of GMIB eligibility.  The annuitization function reflects the actual experience: the maximum annuitization rates for the first year of GMIB eligibility vary from 7 percent to 12 percent per annum; the maximum annuitization rates for subsequent years of GMIB eligibility vary from 7 percent to 10 percent per annum.
•
For clients representing about 37 percent of the total GMIB guaranteed value, we have credible annuitization experience only for the first year of GMIB eligibility.  The annuitization function reflects the actual experience for the first year only: the maximum annuitization rates for the first year of GMIB eligibility vary from 14 percent to 55 percent per annum.  The annuitization function for subsequent years of GMIB eligibility is a weighted average (with a heavier weighting on credible experience from other clients) of three different annuitization functions with maximum per annum annuitization rates of 7 percent, 15 percent, and 30 percent.
•
For clients representing about 26 percent of the total GMIB guaranteed value, we do not have any credible annuitization experience.  The annuitization function for the first year of GMIB eligibility is a weighted average (with a heavier weighting on credible observed experience from other clients) of three different annuitization functions with maximum per annum annuitization rates of 7 percent, 15 percent, and 55 percent.  For subsequent years of GMIB eligibility, these three functions have maximum per annum annuitization rates of 7 percent, 12 percent, and 30 percent.

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 fourth quarter of 2013, we completed an in-depth review of actual policyholder lapse and annuitization behavior by treaty for our variable annuity reinsurance business. As a greater percentage of our clients’ policyholders have reached the ultimate lapse rate period and have become eligible to annuitize in the past year, we determined that experience was now credible enough to warrant a more robust evaluation of our assumptions compared to actual experience. As a result of our review, we made several adjustments to our lapse assumptions, the most significant of which was a reduction in lapses for most large, in-the-money, GMIB policies. The change in lapse assumptions increased the fair value of GLB liabilities and generated a realized loss of $104 million. We also made several adjustments to our annuitization assumptions, which generally lowered the utilization rates for most clients, while raising it for one client. The change in annuitization assumptions decreased the fair value of GLB liabilities and generated a realized gain of $64 million. We will continue to monitor actual policyholder behavior against our assumptions and make adjustments as appropriate. Also, during the fourth quarter of 2013, we realized a gain of $92 million related to an out-of-period adjustment for an error in a market valuation model. We evaluated the quantitative and qualitative aspects of this correction and concluded that the impact of recognizing this adjustment is not material to the consolidated financial statements and all prior period consolidated financial statements.
For the years ended December 31, 2013, 2012, and 2011, we made minor technical refinements to the model with a favorable net income impact of approximately $9 million, $49 million, and $14 million, respectively.
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: 
December 31, 2013
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
1,323

 
$
—

 
$
2,949

Foreign
223

 
14,324

 
44

 
14,591

Corporate securities
—

 
17,304

 
166

 
17,470

Mortgage-backed securities
—

 
10,886

 
8

 
10,894

States, municipalities, and political subdivisions
—

 
3,350

 
—

 
3,350

 
1,849

 
47,187

 
218

 
49,254

Equity securities
373

 
460

 
4

 
837

Short-term investments
953

 
803

 
7

 
1,763

Other investments
305

 
231

 
2,440

 
2,976

Securities lending collateral
—

 
1,632

 
—

 
1,632

Investment derivative instruments
19

 
—

 
—

 
19

Other derivative instruments
—

 
6

 
—

 
6

Separate account assets
1,145

 
81

 
—

 
1,226

Total assets measured at fair value
$
4,644

 
$
50,400

 
$
2,669

 
$
57,713

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
6

 
$
—

 
$
—

 
$
6

Other derivative instruments
60

 
2

 
—

 
62

GLB(1)
—

 
—

 
193

 
193

Total liabilities measured at fair value
$
66

 
$
2

 
$
193

 
$
261

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 c) 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 c) for additional information.
The transfers from Level 1 to Level 2 were $19 million and there were no transfers from Level 2 to Level 1 during the year ended December 31, 2013. The transfers from Level 1 to Level 2 were $40 million and the transfers from Level 2 to Level 1 were $15 million during the year ended December 31, 2012. The transfers between Level 1 and Level 2 during the year ended December 31, 2011 were not material.

Fair value of alternative investments
Included in Other investments in the fair value hierarchy at December 31, 2013 and 2012 are investment funds, limited partnerships, and partially-owned investment companies measured at fair value using NAV as a practical expedient. At December 31, 2013, there were no probable or pending sales related to any of the investments measured at fair value using NAV. 
The following table presents, by investment category, the expected liquidation period, fair value, and maximum future funding commitments of alternative investments: 
 
 
 
December 31
 
 
December 31
 
 
 
 
2013
 
 
2012
 
(in millions of U.S. dollars)
Expected
Liquidation
Period of Underlying Assets
 
Fair Value

 
Maximum
Future Funding
Commitments

 
Fair Value

 
Maximum
Future Funding
Commitments

Financial
5 to 9 Years
 
$
256

 
$
129

 
$
225

 
$
111

Real estate
3 to 9 Years
 
322

 
92

 
292

 
62

Distressed
6 to 9 Years
 
180

 
230

 
192

 
152

Mezzanine
6 to 9 Years
 
276

 
252

 
284

 
279

Traditional
3 to 8 Years
 
813

 
456

 
711

 
587

Vintage
1 to 3 Years
 
13

 
—

 
14

 
—

Investment funds
Not Applicable
 
428

 
—

 
395

 
—

 
 
 
$
2,288

 
$
1,159

 
$
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. Further, for all categories except for Investment funds, ACE does not have the ability to sell or transfer the investments without the consent from the general partner of individual funds.
Investment Category
 
Consists of investments in private equity funds:
Financial
 
targeting financial services companies such as financial institutions and insurance services worldwide
Real estate
 
targeting global distress opportunities, value added U.S. properties, and global mezzanine debt securities in the commercial real estate market
Distressed
 
targeting distressed debt/credit and equity opportunities in the U.S
Mezzanine
 
targeting private mezzanine debt of large-cap and mid-cap companies in the U.S. and worldwide
Traditional
 
employing traditional private equity investment strategies such as buyout and venture with different geographical focuses including Brazil, Asia, Europe, and the U.S.
Vintage
 
made before 2002 and where the funds’ commitment periods had already expired

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

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

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

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
193

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
Annuitization rate
 
0% – 55%
(1) 
Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living benefits.
The following tables present a reconciliation of the beginning and ending balances of financial instruments measured at fair value using significant unobservable inputs (Level 3): 
 
Assets
 
Liabilities

 
Available-for-Sale Debt Securities
 
Equity
securities

 
Short-term investments

Other
investments

 
 
GLB(1)

Year Ended December 31, 2013
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance, beginning of year
$
60

 
$
102

 
$
13

 
 
$
3

 
$
—

$
2,252

 
 
$
1,119

Transfers into Level 3
36

 
47

 
—

 
 
8

 
8

—

 
 
—

Transfers out of Level 3
(54
)
 
(31
)
 
—

 
 
(1
)
 
(2
)
—

 
 
—

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

 
—

 
—

 
 
(6
)
 
—

45

 
 
—

Net Realized Gains/Losses
1

 
(2
)
 
—

 
 
4

 
—

(2
)
 
 
(926
)
Purchases
24

 
75

 
—

 
 
2

 
3

551

 
 
—

Sales
(21
)
 
(7
)
 
(3
)
 
 
(6
)
 
(1
)
(10
)
 
 
—

Settlements
(2
)
 
(18
)
 
(2
)
 
 
—

 
(1
)
(396
)
 
 
—

Balance, end of year
$
44

 
$
166

 
$
8

 
 
$
4

 
$
7

$
2,440

 
 
$
193

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

 
$
(2
)
 
$
—

 
 
$
—

 
$
—

$
(2
)
 
 
$
(926
)
(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 c) for additional information.
 
Assets
 
 
Liabilities

 
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Other
investments

 
Other
derivative
instruments

 
GLB(1)

Year Ended December 31, 2012
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance, beginning of year
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

Transfers into Level 3
—

 
49

 
37

 
22

 
1

 
2

 
53

 
—

 
—

Transfers out of Level 3
(4
)
 
(13
)
 
(46
)
 
(35
)
 
(1
)
 
(11
)
 
—

 
—

 
—

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

 
(1
)
 
6

 
—

 
—

 
—

 
55

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(1
)
 
—

 
—

 
—

 
(7
)
 
(4
)
 
(200
)
Purchases
—

 
46

 
24

 
9

 
—

 
4

 
520

 
3

 
—

Sales
—

 
(53
)
 
(19
)
 
(7
)
 
—

 
(5
)
 
(9
)
 
—

 
—

Settlements
(1
)
 
(1
)
 
(33
)
 
(4
)
 
(1
)
 
—

 
(237
)
 
(2
)
 
—

Balance, end of year
$
—

 
$
60

 
$
102

 
$
13

 
$
—

 
$
3

 
$
2,252

 
$
—

 
$
1,119

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(7
)
 
$
—

 
$
(200
)
(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 $1.4 billion at December 31, 2012 and $1.5 billion at December 31, 2011, which includes a fair value derivative adjustment of $1.1 billion and $1.3 billion, respectively. 

 
 
 
Assets
 
 
Liabilities

 
 
 
Available-for-Sale Debt Securities
 
 
 
 
 
 
 
 
GLB(1)

Year Ended December 31, 2011
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
Equity
securities

Other
investments

Other
derivative
instruments

(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance, beginning of year
$
—

 
$
26

 
$
115

 
$
39

 
$
2

 
$
13

 
$
1,432

 
$
4

 
$
507

Transfers into Level 3
—

 
9

 
42

 
4

 
—

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
(18
)
 
(4
)
 
(48
)
 
—

 
—

 
—

 
—

 
—

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

 
(1
)
 
(2
)
 
—

 
—

 
(1
)
 
93

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(3
)
 
—

 
—

 
4

 
(3
)
 
2

 
812

Purchased
5

 
23

 
32

 
59

 
—

 
5

 
602

 
—

 
—

Sales
—

 
(3
)
 
(27
)
 
(17
)
 
—

 
(8
)
 
(55
)
 
—

 
—

Settlements
—

 
(3
)
 
(19
)
 
(9
)
 
(1
)
 
—

 
(192
)
 
(3
)
 
—

Balance, end of year
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(3
)
 
$
(1
)
 
$
812

(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 $1.5 billion at December 31, 2011 and $648 million at December 31, 2010, which includes a fair value derivative adjustment of $1.3 billion and $507 million, 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:
December 31, 2013
Fair Value
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
236

 
$
—

 
$
832

$
820

Foreign
—

 
897

 
—

 
897

864

Corporate securities
—

 
1,990

 
15

 
2,005

1,922

Mortgage-backed securities
—

 
1,379

 
—

 
1,379

1,341

States, municipalities, and political subdivisions
—

 
1,150

 
—

 
1,150

1,151

 
596

 
5,652

 
15

 
6,263

6,098

Partially-owned insurance companies
—

 
—

 
470

 
470

470

Total assets
$
596

 
$
5,652

 
$
485

 
$
6,733

$
6,568

Liabilities:
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
1,913

 
$
—

 
$
1,913

$
1,901

Long-term debt
—

 
4,088

 
—

 
4,088

3,807

Trust preferred securities
—

 
438

 
—

 
438

309

Total liabilities
$
—

 
$
6,439

 
$
—

 
$
6,439

$
6,017



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

Reinsurance
Reinsurance
Reinsurance

a) Consolidated reinsurance
ACE purchases reinsurance to manage various exposures including catastrophe risks. Although reinsurance agreements contractually obligate ACE's reinsurers to reimburse it for the agreed-upon portion of its gross paid losses, they do not discharge ACE's primary liability. The amounts for net premiums written and net premiums earned in the consolidated statements of operations are net of reinsurance. The following table presents direct, assumed, and ceded premiums:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013
 
 
2012
 
 
2011
 
Premiums written
 
 
 
 
 
 
Direct
$
19,212

 
$
18,144

 
$
17,626

Assumed
 
3,616

 
 
3,449

 
 
3,205

Ceded
 
(5,803
)
 
 
(5,518
)
 
 
(5,459
)
Net
$
17,025

 
$
16,075

 
$
15,372

Premiums earned
 
 
 
 

 
 

Direct
$
18,856

 
$
17,802

 
$
17,534

Assumed
 
3,479

 
 
3,302

 
 
3,349

Ceded
 
(5,722
)
 
 
(5,427
)
 
 
(5,496
)
Net
$
16,613

 
$
15,677

 
$
15,387



For the years ended December 31, 2013, 2012, and 2011, reinsurance recoveries on losses and loss expenses incurred were $3.1 billion, $4.3 billion, and $3.3 billion, respectively.

b) Reinsurance recoverable on ceded reinsurance
 
 
December 31
 
 
December 31
 
(in millions of U.S. dollars)
2013
 
 
2012
 
Reinsurance recoverable on unpaid losses and loss expenses (1)
 
$
10,612

 
 
$
11,399

Reinsurance recoverable on paid losses and loss expenses (1)
 
615

 
 
679

Net reinsurance recoverable on losses and loss expenses
 
$
11,227

 
 
$
12,078


(1) 
Net of a provision for uncollectible reinsurance.

We evaluate the financial condition of our reinsurers and potential reinsurers on a regular basis and also monitor concentrations of credit risk with reinsurers. The provision for uncollectible reinsurance is required principally due to the potential failure of reinsurers to indemnify ACE, primarily because of disputes under reinsurance contracts and insolvencies. We have established provisions for amounts estimated to be uncollectible. At December 31, 2013 and 2012, we recorded a provision for uncollectible reinsurance of $390 million and $439 million, respectively.

The following tables present a listing, at December 31, 2013, of the categories of ACE's reinsurers. The first category, largest reinsurers, represents all groups of reinsurers where the gross recoverable exceeds one percent of ACE's total shareholders' equity. The provision for uncollectible reinsurance for the largest reinsurers, other reinsurers rated A- or better, and other reinsurers with ratings lower than A- is principally based on an analysis of the credit quality of the reinsurer and collateral balances. Other pools and government agencies include amounts backed by certain state and federal agencies. In certain states, insurance companies are required by law to participate in these pools. Structured settlements include annuities purchased from life insurance companies to settle claims. Since we retain the ultimate liability in the event that the life company fails to pay, we reflect the amount as a liability and a recoverable/receivable for GAAP purposes. Captives include companies established and owned by our insurance clients to assume a significant portion of their direct insurance risk from ACE (they are structured to allow clients to self-insure a portion of their insurance risk). It is generally our policy to obtain collateral equal to expected losses. Where appropriate, exceptions are granted but only with review and approval at a senior officer level. The final category, Other, includes amounts recoverable that are in dispute or are from companies that are in supervision, rehabilitation, or liquidation. We establish the provision for uncollectible reinsurance in this category based on a case-by-case analysis of individual situations including the merits of the underlying matter, credit and collateral analysis, and consideration of our collection experience in similar situations.

(in millions of U.S. dollars, except percentages)
2013
 
 
Provision
 
 
% of Gross

Categories
 
Largest reinsurers
 
$
5,117

 
 
$
78

 
1.5
%
Other reinsurers balances rated A- or better
 
2,901

 
 
36

 
1.2
%
Other reinsurers balances with ratings lower than A- or not rated
 
587

 
 
103

 
17.5
%
Other pools and government agencies
 
338

 
 
21

 
6.2
%
Structured settlements
 
577

 
 
12

 
2.1
%
Captives
 
1,762

 
 
14

 
0.8
%
Other
 
335

 
 
126

 
37.6
%
Total
 
$
11,617

 
 
$
390

 
3.4
%


Largest Reinsurers
 
 
 
Alleghany Corp (Transatlantic)
Lloyd's of London
Swiss Re Group
Berkshire Hathaway Insurance Group
Munich Re Group
XL Capital Group
HDI Group (Hanover Re)
Partner Re Group
 
 
 
 

c) 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.
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

GMDB
 
 
 
 
 
Net premiums earned
$
77

 
$
85

 
$
98

Policy benefits and other reserve adjustments
$
73

 
$
60

 
$
59

GLB
 
 
 
 
 
Net premiums earned
$
149

 
$
160

 
$
163

Policy benefits and other reserve adjustments
27

 
61

 
47

Net realized gains (losses)
929

 
203

 
(812
)
Gain (loss) recognized in income
$
1,051

 
$
302

 
$
(696
)
Net cash received
$
126

 
$
149

 
$
161

Net (increase) decrease in liability
$
925

 
$
153

 
$
(857
)

At December 31, 2013, reported liabilities for GMDB and GLB reinsurance were $100 million and $427 million, respectively, compared with $90 million and $1.4 billion, respectively, at December 31, 2012. The reported liability for GLB reinsurance of $427 million at December 31, 2013, and $1.4 billion at December 31, 2012, includes a fair value derivative adjustment of$193 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 December 31, 2013 and 2012, the net amount at risk from reinsurance programs covering the GMDB risk only was $586 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 (December 31, 2013 and 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 2.0 percent and 3.0 percent; and
•
reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty.
The total claim amount payable on reinsurance programs covering the GMDB risk only, if all the cedants’ policyholders were to die immediately at December 31, 2013 was approximately $668 million. This takes into account all applicable reinsurance treaty claim limits.

(ii) Reinsurance covering the GLB risk only
At December 31, 2013 and 2012, the net amount at risk from reinsurance programs covering the GLB risk only was $136 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 (December 31, 2013 and 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 December 31, 2013 and 2012, the GMDB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $73 million and $116 million, respectively.

At December 31, 2013 and 2012, the GLB net amount at risk from reinsurance programs covering both the GMDB and GLB risks on the same underlying policyholders was $141 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 (December 31, 2013 and 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 3.0 percent and 4.0 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 December 31, 2013 was approximately $84 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.
Intangible Assets
Intangible assets
Intangible assets

Included in Goodwill and other intangible assets in the consolidated balance sheets at December 31, 2013 and 2012, are goodwill of $4.6 billion and $4.3 billion, respectively, and other intangible assets of $801 million and $656 million, respectively.

The following table presents a roll-forward of Goodwill by segment:
(in millions of U.S. dollars)
Insurance – North American
P&C

 
Insurance – North American Agriculture

 
Insurance – Overseas General

 
Global Reinsurance

 
Life

 
ACE Consolidated

Balance at December 31, 2011
$
1,216

 
$
134

 
$
1,603

 
$
365

 
$
830

 
$
4,148

Purchase price allocation adjustment
—

 
—

 
—

 
—

 
4

 
4

Acquisition of JaPro
—

 
—

 
123

 
—

 
—

 
123

Foreign exchange revaluation and other
3

 
—

 
38

 
—

 
3

 
44

Balance at December 31, 2012
$
1,219

 
$
134


$
1,764

 
$
365

 
$
837

 
$
4,319

Acquisition of Fianzas Monterrey
—

 
—

 
135

 
—

 
—

 
135

Acquisition of ABA Seguros
—

 
—

 
283

 
—

 
—

 
283

Foreign exchange revaluation and other
(4
)
 
—

 
(128
)
 
—

 
(2
)
 
(134
)
Balance at December 31, 2013
$
1,215

 
$
134

 
$
2,054

 
$
365

 
$
835

 
$
4,603



Included in other intangible assets at December 31, 2013 and 2012, are intangible assets subject to amortization of $695 million and $554 million, respectively, and intangible assets not subject to amortization of $106 million and $102 million, respectively. Intangible assets subject to amortization include agency relationships, software, client lists, renewal rights, and trademarks, primarily attributable to the acquisitions of Rain and Hail, Fianzas Monterrey, and ABA Seguros. The majority of the balance of intangible assets not subject to amortization relates to Lloyd's of London (Lloyd's) Syndicate 2488 (Syndicate 2488) capacity. Amortization expense related to other intangible assets amounted to $95 million, $51 million, and $29 million for the years ended December 31, 2013, 2012, and 2011, respectively.

The following table presents a roll-forward of VOBA:
(in millions of U.S. dollars)
2013

 
2012

 
2011

Balance, beginning of year
$
614

 
$
676

 
$
634

Acquisition of New York Life's Korea operations and Hong Kong operations
—

 
—

 
151

Amortization expense
(64
)
 
(82
)
 
(108
)
Foreign exchange revaluation
(14
)
 
20

 
(1
)
Balance, end of year
$
536

 
$
614

 
$
676



The following table presents estimated amortization expense related to other intangible assets and VOBA for the next five years:
For the Year Ending December 31
Other intangible assets

 
VOBA

(in millions of U.S. dollars)
 
2014
$
81

 
$
55

2015
62

 
50

2016
55

 
45

2017
52

 
40

2018
49

 
35

Total
$
299

 
$
225

Unpaid losses and loss expenses
Unpaid Losses and Loss Expenses
Unpaid losses and loss expenses

ACE establishes reserves for the estimated unpaid ultimate liability for losses and loss expenses under the terms of its policies and agreements. Reserves include estimates for both claims that have been reported and for IBNR, and include estimates of expenses associated with processing and settling these claims. Reserves are recorded in Unpaid losses and loss expenses in the consolidated balance sheets. The process of establishing loss and loss expense reserves for P&C claims can be complex and is subject to considerable uncertainty as it requires the use of informed estimates and judgments. Our estimates and judgments may be revised as additional experience and other data become available and are reviewed, as new or improved methodologies are developed, or as laws change. We continually evaluate our estimate of reserves in light of developing information and in light of discussions and negotiations with our insureds. While we believe that our reserves for unpaid losses and loss expenses at December 31, 2013 are adequate, new information or trends may lead to future developments in ultimate losses and loss expenses significantly greater or less than the reserves provided. Any such revisions could result in future changes in estimates of losses or reinsurance recoverable and would be reflected in our results of operations in the period in which the estimates are changed.

The following table presents a reconciliation of unpaid losses and loss expenses:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013
 
 
2012
 
 
2011
 
Gross unpaid losses and loss expenses, beginning of year
 
$
37,946

 

$
37,477

 

$
37,391

Reinsurance recoverable on unpaid losses(1)
 
(11,399
)
 
 
(11,602
)
 
 
(12,149
)
Net unpaid losses and loss expenses, beginning of year
 
26,547

 
 
25,875

 
 
25,242

Acquisition of subsidiaries
 
86

 
 
14

 
 
92

Total
 
26,633

 
 
25,889

 
 
25,334

Net losses and loss expenses incurred in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
9,878

 
 
10,132

 
 
10,076

Prior years
 
(530
)
 
 
(479
)
 
 
(556
)
Total
 
9,348

 
 
9,653

 
 
9,520

Net losses and loss expenses paid in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
3,942

 
 
4,325

 
 
4,209

Prior years
 
5,035

 
 
4,894

 
 
4,657

Total
 
8,977

 
 
9,219

 
 
8,866

Foreign currency revaluation and other
 
(173
)
 
 
224

 
 
(113
)
Net unpaid losses and loss expenses, end of year
 
26,831

 
 
26,547

 
 
25,875

Reinsurance recoverable on unpaid losses(1)
 
10,612

 
 
11,399

 
 
11,602

Gross unpaid losses and loss expenses, end of year
 
$
37,443

 
 
$
37,946

 
 
$
37,477

(1) Net of provision for uncollectible reinsurance.
 
 
 
 
 
 
 
 


Net losses and loss expenses incurred includes $530 million, $479 million, and $556 million, of net favorable prior period development in the years ended December 31, 2013, 2012, and 2011, respectively. Long-tail lines include lines such as workers’ compensation, general liability, and professional liability; while short-tail lines include lines such as most property lines, energy, personal accident, aviation, marine (including associated liability-related exposures) and agriculture. Significant prior period movements by segment, principally driven by reserve reviews completed during each respective period, are discussed in more detail below. The remaining net development for long-tail and short-tail business for each segment comprises numerous favorable and adverse movements across a number of lines and accident years, none of which is significant individually or in the aggregate.

Insurance – North American P&C
Insurance – North American P&C's active operations experienced net favorable prior period development of $327 million in 2013 which was the net result of several underlying favorable and adverse movements driven by the following principal changes:

•
Net favorable development of $221 million in long-tail business, including:

•
Favorable development of $72 million in our retail D&O portfolios, primarily impacting the 2008 and prior accident years. Favorable settlements on several large claims drove the favorable development in 2004 and prior accident years, while favorable action in 2008 is primarily due to an increase in weighting applied to experience-based and simulation methods;

•
Favorable development of $63 million in our medical risk operations, primarily impacting the 2007 to 2009 accident years. Paid and reported loss activity for this business in these accident years continued to be lower than expected and we have increased our weighting applied to experience-based methods; and

•
Favorable development of $50 million in our U.S. excess casualty and umbrella businesses primarily affecting the 2007 and prior accident years. Reported activity on loss and allocated loss adjustment expenses was lower than expected based on estimates from our prior review. In addition, increased weighting was applied to experience-based methods in the current review for these accident periods;

•
Net favorable development of $28 million in our national accounts portfolios which consist of commercial auto, general liability and workers' compensation lines of business. This favorable movement was the net impact of favorable and adverse movements, including:

•
Favorable development of $40 million related to our annual assessment of multi-claimant events including industrial accidents, impacting the 2012 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses;

•
Adverse development of $40 million predominantly in workers' compensation, primarily impacting the 2006 and prior accident years. The development was a function of higher than expected reported loss activity, higher allocated loss adjustment expenses, as well as an increase in weighting applied to experience-based methods; and

•
Net favorable development of $28 million across a number of lines and accident years, none of which was significant individually or in the aggregate.

•
Favorable development of $25 million in our foreign casualty Controlled Master Program and Cash Flow portfolios affecting the 2009 and prior accident years. Paid and reported loss activity for this business in these accident years continued to be lower than expected and we have increased our weighting applied to experience-based methods;

•
Favorable development of $106 million in short-tail business, primarily from:

•
Net favorable development of $45 million in our wholesale property and inland marine portfolios, primarily in accident years 2010 to 2012, due to favorable case incurred emergence and favorable settlements of several large claims; and

•
Favorable development of $29 million in our political risk business in the 2009 and 2010 accident years primarily due to favorable settlements of a few large claims;

Insurance – North American P&C's run-off operations incurred adverse prior period development of $193 million in our Westchester and Brandywine run-off operations during 2013, which was the net result of adverse and favorable movements impacting accident years 1996 and prior, driven by the following principal changes:

•
Adverse development of $161 million related to the completion of the reserve reviews during 2013. The development primarily arose from case specific asbestos and environmental claims related to increased loss and defense cost payment activity and the costs associated with certain case settlements in 2013. Further, we experienced higher than expected paid loss and case reserve activity in our assumed reinsurance portfolio; and

•
Adverse development of $27 million on unallocated loss adjustment expenses due to run-off operating expenses paid and incurred during 2013.

Insurance – North American P&C's active operations experienced net favorable prior period development of $348 million in 2012 which was the net result of several underlying favorable and adverse movements driven by the following principal changes:

•
Net favorable development of $245 million in long-tail business, including:

•
Favorable development of $73 million in a collection of portfolios of umbrella and excess casualty business, primarily affecting the 2007 and prior accident years. The favorable development was the function of both the continuation of the lower than expected reported loss activity in the period since our last review and an increase in weighting applied to experience-based methods, particularly for the 2006 accident year, as these accident periods matured;

•
Favorable development of $67 million in our D&O portfolios primarily affecting the 2007 and prior accident years. Case loss activity was lower than expected during the 2012 calendar year, including reductions in our internal estimates of exposure on several potentially large claims. These reductions were a function of changes in account specific circumstances since our prior review;

•
Favorable development of $57 million in our medical risk operations, primarily in the 2007 and prior accident years. Reported and paid loss activity for these accident years were lower than expected since our prior review; and

•
Net favorable development of $39 million in our national accounts portfolios which consists of commercial auto liability, general liability, and workers' compensation lines of business. This favorable development was the net impact of favorable and adverse movements, including:

•
Favorable development of $41 million in the 2011 accident year related to our annual assessment of multi-claimant events including industrial accidents. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses;

•
Favorable development of $34 million in the 2007 accident year, primarily in workers' compensation. The favorable development was the combined effect of lower than expected incurred loss activity and an increase in weighting applied to experience-based methods; and

•
Adverse development of $36 million affecting the 2006 and prior accident years largely in workers' compensation. The causes for this adverse movement were various and included adverse development on several specific large claims, higher than expected loss activity in certain accident years, an increase in weighting applied to experience-based methods, and a refinement of our treatment of ceded reinsurance recoveries on a few select treaties due to information which became known since our prior review.

•
Favorable development of $103 million in short-tail business, primarily from:

•
Favorable development of $88 million in our property, inland marine and commercial marine businesses primarily arising in the 2009 through 2011 accident years. Reported loss activity during the 2012 calendar was lower than expected, particularly in our high excess property portfolio; and

•
Favorable development of $27 million in our aviation product lines, primarily general aviation hull and liability, affecting the 2009 and prior accident years. Actual paid and incurred loss activity were lower than expected based on long-term historical averages leading to a reduction in our estimate of ultimate losses.

Insurance – North American P&C's run-off operations incurred net adverse prior period development of $168 million in our Westchester and Brandywine run-off operations during 2012, which was the net result of adverse and favorable movements impacting accident years 1996 and prior, driven by the following principal changes:

•
Adverse development of $150 million related to the completion of the reserve review during 2012. The development primarily arose from case specific asbestos and environmental claims related to increased loss and defense cost payment activity and the costs associated with certain case settlements made in 2012. Further, we experienced higher than expected paid loss and case reserve activity in our assumed reinsurance portfolio; and

•
Adverse development of $18 million on unallocated loss adjustment expenses due to run-off operating expenses paid during 2012.

Insurance – North American P&C active operations experienced net favorable prior period development of $289 million in 2011, representing 1.8 percent of its beginning of period net unpaid loss and loss expense reserves. Insurance – North American P&C run-off operations incurred net adverse prior period development of $102 million in 2011, representing 0.6 percent of its beginning of period net unpaid loss and loss expense reserves.

Insurance – North American Agriculture
Insurance – North American Agriculture experienced net favorable prior period development of $13 million, $12 million, and $8 million in 2013, 2012, and 2011, respectively, in short-tail business across a number of accident years, none of which was significant individually or in the aggregate.

Insurance – Overseas General
Insurance – Overseas General experienced net favorable prior period development of $299 million in 2013, which was the net result of several underlying favorable and adverse movements, driven by the following principal changes:

•
Net favorable development of $127 million in long-tail business, including:

•
Favorable development of $92 million in casualty (primary and excess). Reserve reviews indicated favorable claim activity of $135 million in accident years 2009 and prior. These reviews reflected an increase in weighting applied to experience-based methods as these accident years continued to mature. Adverse development of $43 million in accident years 2010 to 2012 was primarily due to development in specific individual large claims and also in several accounts now exposed on an excess basis following adverse loss development of the underlying aggregate retention layer; and

•
Net favorable development of $35 million in financial lines. Reserve reviews indicated favorable claim activity of $63 million in accident years 2009 and prior. These reviews reflected an increase in weighting applied to experience-based methods as these accident years continued to mature. Adverse development of $28 million in accident year 2012 was incurred due to notifications on specific large claims.

•
Favorable development of $172 million in short-tail business, primarily from:

•
Favorable development of $104 million across property, technical lines and marine. Favorable development of $69 million in accident years 2010 to 2012 reflected lower than expected loss emergence. In addition, favorable development of $35 million in the property and marine liability lines in accident years 2009 and prior was primarily due to case specific developments;
  
•
Favorable development of $39 million across accident and health and personal lines primarily reflected lower than expected loss emergence, primarily in accident years 2010 to 2012; and

•
Favorable development of $29 million predominantly in the wholesale aviation business, primarily in accident years 2009 and prior, due to case specific developments.

Insurance – Overseas General experienced net favorable prior period development of $226 million in 2012, which was the net result of several underlying favorable and adverse movements, driven by the following principal changes:

•
Net favorable development of $121 million in long-tail business, including:

•
Favorable development of $150 million in casualty (primary and excess) and financial lines for accident years 2008 and prior. We recognized the impact of favorable loss emergence since the prior study and increased the weighting applied to experience-based methods; and

•
Adverse development of $29 million in casualty (mainly primary) and financial lines for accident years 2009 to 2011 in response to claims emergence primarily in 2011. The adverse development was driven by changes in case specific circumstances on several specific larger claims and, to a lesser extent, increased frequency trends in primary European casualty impacting accident year 2011.

•
Favorable development of $105 million in short-tail business, including property, marine, A&H, and personal lines across multiple geographical regions, and in both retail and wholesale operations, principally as a result of lower than expected loss emergence, mostly in accident years 2009 and 2010.
Insurance – Overseas General experienced net favorable prior period development of $290 million in 2011, representing 4.2 percent of the segment's beginning of period net unpaid loss and loss expense reserves.

Global Reinsurance
Global Reinsurance experienced net favorable prior period development of $84 million in 2013, which was the net result of several underlying favorable and adverse movements, driven by the following principal changes:

•
Net favorable development of $53 million in long-tail business, primarily including:

•
Favorable development of $25 million in professional liability lines, primarily in treaty years 2008 and prior, reflected favorable paid and incurred loss trends and an increase in weighting applied to experience-based methods; and

•
Favorable development of $20 million in medical malpractice business, principally in treaty years 2009 and prior, reflected favorable paid and incurred loss trends and an increase in weighting applied to experience-based methods.

•
Net favorable development of $31 million in short-tail business, primarily in treaty years 2007 to 2012 across property lines (including property catastrophe), trade credit, marine, and surety principally as a result of lower than expected loss emergence.

Global Reinsurance experienced net favorable prior period development of $61 million in 2012, which was the net result of several underlying favorable and adverse movements, driven by the following principal changes:

•
Favorable prior period development of $54 million in long-tail business primarily in treaty years 2008 and prior in casualty and medical malpractice lines. The lower loss estimates arose from a combination of favorable paid and incurred loss trends and increased weighting applied to experience-based methods; and

•
Net favorable development of $29 million in short-tail business, primarily in treaty years 2010 and prior across property lines (including property catastrophe), trade credit, marine, and surety principally as a result of lower than expected loss emergence.
Global Reinsurance experienced net favorable prior period development of $71 million in 2011, representing 3.1 percent of the segment's beginning of period net unpaid loss and loss expense reserves.
Asbestos and environmental (A&E) and other run-off liabilities
a) A&E liabilities
Included in liabilities for losses and loss expenses are amounts for A&E (A&E liabilities). The A&E liabilities principally relate to claims arising from bodily-injury claims related to asbestos products and remediation costs associated with hazardous waste sites. The estimation of A&E liabilities is particularly sensitive to future changes in the legal, social, and economic environments and legislative reforms. ACE has not assumed any such future changes in setting the value of its A&E reserves, which include provisions for both reported and IBNR claims. ACE's A&E reserves are not discounted for GAAP reporting.

The following table presents a roll-forward of consolidated A&E loss reserves (excluding other run-off liabilities), allocated loss expense reserves for A&E exposures, and the provision for uncollectible paid and unpaid reinsurance recoverables:
 
Asbestos
 
Environmental
 
Total
 
(in millions of U.S. dollars)
Gross
 
 
Net
 
 
Gross
 
 
Net
 
 
Gross
 
 
Net
 
 
Balance at December 31, 2012 (1)
 
$
1,886

 
 
$
970

 
 
$
194

 
 
$
136

 
 
$
2,080

 
 
$
1,106

 
Incurred activity
 
125

 
 
96

 
 
119

 
 
75

 
 
244

 
 
171

(2) 
Paid activity
 
(367
)
 
 
(140
)
 
 
(118
)
 
 
(86
)
 
 
(485
)
 
 
(226
)
 
Balance at December 31, 2013
 
$
1,644

 
 
$
926

 
 
$
195

 
 
$
125

 
 
$
1,839

 
 
$
1,051

 
(1)
Balances at December 31, 2012 have been adjusted to present claims in a manner consistent with balances disclosed at December 31, 2013.
(2) 
Excludes unallocated loss expenses.

The A&E net loss reserves including allocated loss expense reserves and provision for uncollectible reinsurance at December 31, 2013, of $1.1 billion shown in the table above comprise $816 million in reserves in respect of Brandywine operations (see Brandywine run-off section below), $146 million of reserves held by Westchester Specialty (see Westchester Specialty section below), $79 million of reserves held by Insurance – Overseas General, $7 million of reserves held by ACE Bermuda, and $3 million of reserves held by Penn Millers. The incurred activity of $171 million is primarily the result of adverse activity in Brandywine and Westchester of $158 million and $14 million, respectively.

b) A&E and other run-off liabilities
The net figures in the above table (under A&E liabilities section) reflect third-party reinsurance other than reinsurance provided by National Indemnity Company (NICO) under two aggregate excess of loss contracts described below (collectively, the NICO contracts).  ACE excludes the NICO contracts as they cover non-A&E liabilities as well as A&E liabilities.  The split of coverage provided under the NICO contracts for A&E liabilities as compared to non-A&E liabilities is entirely dependent on the timing of the payment of the related claims. ACE's ability to make an estimate of this split is not practicable. ACE believes, instead, that the A&E discussion is best provided excluding the NICO contracts, while separately discussing the NICO contracts in relation to the total subject business, both A&E and other liabilities, covered by those contracts.  With certain exceptions, the NICO contracts provide coverage for the net incurred losses and allocated loss expenses within the limits of coverage and above ACE's retention levels.  These exceptions include losses arising from certain operations of Insurance – Overseas General and participation by ACE Bermuda as a co-reinsurer or retrocessionaire in the NICO contracts.

ACE's exposure to A&E claims principally arises out of liabilities acquired when it purchased Westchester Specialty in 1998 and CIGNA's P&C business in 1999, with the larger exposure contained within the liabilities acquired in the CIGNA transaction. In 1996, prior to ACE's acquisition of CIGNA's P&C business, the Pennsylvania Insurance Commissioner approved a plan to restructure INA Financial Corporation and its subsidiaries (the Restructuring) which included the division of Insurance Company of North America (INA) into two separate corporations that ACE acquired as part of the CIGNA P&C business:

(1) An active insurance company that retained the INA name and continued to write P&C business; and
(2) An inactive run-off company, now called Century Indemnity Company (Century).

As a result of the division, predominantly all A&E and certain other liabilities of INA were ascribed to Century and extinguished, as a matter of Pennsylvania law, as liabilities of INA.

As part of the Restructuring, most A&E liabilities of various U.S. affiliates of INA were reinsured to Century. Century and certain other run-off companies having A&E and other liabilities were contributed to Brandywine Holdings. ACE acquired Brandywine Holdings and its various subsidiaries as part of the 1999 acquisition of CIGNA's P&C business. For additional information, refer to “Brandywine Run-Off Entities” below.

During 2013, we conducted our annual internal, ground-up review of our consolidated A&E liabilities as of December 31, 2012. As a result of the internal review, we increased our gross unpaid losses and loss expenses in 2013 for the Brandywine operations, including A&E, by $277 million, while the net unpaid losses and loss expenses increased by $166 million. In addition, we increased gross unpaid losses and loss expenses for Westchester Specialty's A&E and other liabilities by $3 million, while the net unpaid losses and loss expenses increased by $5 million.

An internal review was also conducted during 2012 of consolidated A&E liabilities as of December 31, 2011. As a result of that internal review, we increased gross unpaid losses and loss expenses in 2012 for the Brandywine operations, including A&E, by $275 million while the net unpaid losses and loss expenses increased by $146 million. In addition, we increased gross unpaid losses and loss expenses for Westchester Specialty's A&E and other liabilities by $17 million, while the net unpaid losses and loss expenses increased by $4 million.

In 2012, in addition to our annual internal review, a team of external actuaries performed an evaluation as to the adequacy of Century's reserves. This external review was conducted in accordance with the Brandywine Restructuring Order, which requires that an independent actuarial review of Century's reserves be completed every two years. Management takes full responsibility for the estimation of its A&E liabilities.

Brandywine run-off – impact of NICO contracts on ACE's run-off liabilities
As part of the acquisition of CIGNA's P&C business, NICO provided $2.5 billion of reinsurance protection to Century on all Brandywine loss and allocated loss adjustment expense reserves and on the A&E reserves of various ACE INA insurance subsidiaries reinsured by Century (in each case, including uncollectible reinsurance). The benefits of this NICO contract (the Brandywine NICO Agreement) flowed to the other Brandywine companies and to the ACE INA insurance subsidiaries through agreements between those companies and Century. The Brandywine NICO Agreement was exhausted on an incurred basis in 2002 and on a paid basis in 2013.

The following table presents a roll-forward of net loss reserves, allocated loss expense reserves, and provision for uncollectible paid and unpaid reinsurance recoverables in respect of Brandywine operations only, including the impact of the Brandywine NICO Agreement:
 
Brandywine
 
NICO Coverage
 
 
Net of NICO Coverage

 
(in millions of U.S. dollars)
A&E
 
 
Other
 
(1) 
Total
 
 
 
 
Balance at December 31, 2012
 
$
852

 
 
$
421

 
 
$
1,273

 
 
$
18

 
$
1,255

 
Incurred activity
 
158

 
 
9

 
 
167

 
 
—

 
167

(2) 
Paid activity
 
(194
)
 
 
(63
)
 
 
(257
)
 
 
(18
)
 
(239
)
 
Balance at December 31, 2013
 
$
816

 
 
$
367

 
 
$
1,183

 
 
$
—

 
$
1,183

 
(1) 
Other consists primarily of workers' compensation, non-A&E general liability losses, and provision for uncollectible reinsurance on non-A&E business.
(2) 
Excludes $(1) million of unallocated loss expenses (benefits).

The incurred activity of $167 million primarily relates to the internal reviews of consolidated A&E loss reserves.

Westchester Specialty – impact of NICO contracts on ACE's run-off liabilities
As part of the Westchester Specialty acquisition in 1998, NICO provided a 75 percent pro-rata share of $1 billion of reinsurance protection on losses and loss adjustment expenses incurred on or before December 31, 1996, in excess of a retention of $721 million. At December 31, 2013, the remaining unused incurred limit under the NICO Agreement was $490 million, which is only available for losses and loss adjustment expenses.

The following table presents a roll-forward of net loss reserves, allocated loss expense reserves, and provision for uncollectible paid and unpaid reinsurance recoverables in respect of 1996 and prior Westchester Specialty operations only, including the impact of the Westchester NICO Agreement:
 
Westchester Specialty
 
NICO Coverage
 
 
Net of NICO Coverage
 
 
(in millions of U.S. dollars)
A&E
 
 
Other
 
 
Total
 
 
 
 
Balance at December 31, 2012
 
$
151

 
 
$
44

 
 
$
195

 
 
$
158

 
 
$
37

 
Incurred activity
 
14

 
 
(11
)
 
 
3

 
 
2

 
 
1

(1) 
Paid activity
 
(19)

 
 
—

 
 
(19)

 
 
(19)

 
 
—

 
Balance at December 31, 2013
 
$
146

 
 
$
33

 
 
$
179

 
 
$
141

 
 
$
38

 
(1)
Excludes $4 million of unallocated loss expenses.

The incurred activity of $1 million primarily relates to the internal reviews of consolidated A&E loss reserves.

Brandywine run-off entities
In addition to housing a significant portion of ACE's A&E exposure, the Brandywine operations include run-off liabilities related to various insurance and reinsurance businesses. ACE's Brandywine insurance companies are Century (a Pennsylvania insurer) and Century International Reinsurance Company Ltd., a Bermuda insurer (CIRC).  The Brandywine companies are direct or indirect subsidiaries of Brandywine Holdings.

The U.S.-based ACE INA companies assumed two contractual obligations in respect of the Brandywine operations in connection with the Restructuring: a dividend retention fund obligation and a surplus maintenance obligation in the form of the excess of loss (XOL) agreement.

INA Financial Corporation established and funded a dividend retention fund (the Dividend Retention Fund) consisting of $50 million plus investment earnings. Pursuant to an interpretation of the Brandywine Restructuring Order, the full balance of the Dividend Retention Fund was contributed to Century as of December 31, 2002. Under the Restructuring Order, while any obligation to maintain the Dividend Retention Fund is in effect, to the extent dividends are paid by INA Holdings Corporation to its parent, INA Financial Corporation, and to the extent INA Financial Corporation then pays such dividends to INA Corporation, a portion of those dividends must be withheld to replenish the principal of the Dividend Retention Fund to $50 million. Effective January 28, 2011, the Pennsylvania Insurance Department clarified the scope of the Dividend Retention Fund that capital contributions from the Dividend Retention Fund to Century shall not be required until the XOL Agreement has less than $200 million of capacity remaining on an incurred basis for statutory reporting purposes. The amount of the capital contribution shall be the lesser of the amount necessary to restore the XOL Agreement remaining capacity to $200 million or the Dividend Retention Fund balance. The Dividend Retention Fund may not be terminated without prior written approval from the Pennsylvania Insurance Commissioner.

In addition, an ACE INA insurance subsidiary provided reinsurance coverage to Century in the amount of $800 million under an XOL, triggered if the statutory capital and surplus of Century falls below $25 million or if Century lacks liquid assets with which to pay claims as they become due.

Effective December 31, 2004, ACE INA Holdings contributed $100 million to Century in exchange for a surplus note. After giving effect to the contribution and issuance of the surplus note, the statutory surplus of Century at December 31, 2013 was $25 million and approximately $232 million in statutory-basis losses have been ceded to the XOL on an inception-to-date basis. Century reports the amount ceded under the XOL in accordance with statutory accounting principles, which differ from GAAP by, among other things, allowing Century to discount its liabilities, including certain asbestos related and environmental pollution liabilities and Century's reinsurance payable to active companies. For GAAP reporting purposes, intercompany reinsurance recoverables related to the XOL are eliminated upon consolidation.

While ACE believes it has no legal obligation to fund losses above the XOL limit of coverage, ACE's consolidated results would nevertheless continue to include any losses above the limit of coverage for so long as the Brandywine companies remain consolidated subsidiaries of ACE.

Uncertainties relating to ACE's ultimate Brandywine exposure
In addition to the Dividend Retention Fund and XOL commitments described above, certain ACE entities are primarily liable for asbestos, environmental, and other exposures that they have reinsured to Century. Accordingly, if Century were to become insolvent and ACE were to lose control of Century, some or all of the recoverables due to these ACE companies from Century could become uncollectible, yet those ACE entities would continue to be responsible to pay claims to their insureds or reinsureds. At December 31, 2013 and 2012, the aggregate reinsurance balances ceded by the active ACE companies to Century were approximately $929 million and $958 million, respectively. At December 31, 2013 and 2012, Century's carried gross reserves (including reserves ceded by the active ACE companies to Century) were $2.3 billion and $2.1 billion, respectively. ACE believes the intercompany reinsurance recoverables, which relate to liabilities payable over many years, are not impaired. Should Century's loss reserves experience adverse development in the future and should Century be placed into rehabilitation or liquidation, the reinsurance recoverables due from Century to its affiliates would be payable only after the payment in full of certain expenses and liabilities, including administrative expenses and direct policy liabilities. Thus, the intercompany reinsurance recoverables would be at risk to the extent of the shortage of assets remaining to pay these recoverables.
Taxation
Taxation
Taxation

Under Swiss law, a resident company is subject to income tax at the federal, cantonal, and communal levels that is levied on net worldwide income. Income attributable to permanent establishments or real estate located abroad is excluded from the Swiss tax base. ACE Limited is a holding company and, therefore, is exempt from cantonal and communal income tax. As a result, ACE Limited is subject to Swiss income tax only at the federal level. Furthermore, participation relief (i.e., tax relief) is granted to ACE Limited at the federal level for qualifying dividend income and capital gains related to the sale of qualifying participations (i.e., subsidiaries). It is expected that the participation relief will result in a full exemption of participation income from federal income tax. ACE Limited is resident in the Canton and City of Zurich and, as such, is subject to an annual cantonal and communal capital tax on the taxable equity of ACE Limited in Switzerland.

ACE has two Swiss operating subsidiaries resident in the Canton and City of Zurich, an insurance company, ACE Insurance (Switzerland) Limited, which, in turn, owns a reinsurance company, ACE Reinsurance (Switzerland) Limited. Both are subject to federal, cantonal, and communal income tax and to annual cantonal and communal capital tax.

Under current Bermuda law, ACE Limited and its Bermuda subsidiaries are not required to pay any taxes on income or capital gains. If a Bermuda law were enacted that would impose taxes on income or capital gains, ACE Limited and the Bermuda subsidiaries have received an undertaking from the Minister of Finance in Bermuda that would exempt such companies from Bermudian taxation until March 2035.

Income from ACE's operations at Lloyd's is subject to United Kingdom corporation taxes. Lloyd's is required to pay U.S. income tax on U.S. connected income (U.S. income) written by Lloyd's syndicates. Lloyd's has a closing agreement with the Internal Revenue Service (IRS) whereby the amount of tax due on this business is calculated by Lloyd's and remitted directly to the IRS. These amounts are then charged to the accounts of the Names/Corporate Members in proportion to their participation in the relevant syndicates. ACE's Corporate Members are subject to this arrangement but, as U.K. domiciled companies, will receive U.K. corporation tax credits for any U.S. income tax incurred up to the value of the equivalent U.K. corporation income tax charge on the U.S. income.

ACE Group Holdings and its respective subsidiaries are subject to income taxes imposed by U.S. authorities and file a consolidated U.S. tax return. Combined Insurance and its life subsidiary will file a separate consolidated U.S. tax return for tax years prior to 2014. Should ACE Group Holdings pay a dividend to ACE, withholding taxes would apply. Currently, however, no withholding taxes are accrued with respect to such un-remitted earnings as management has no intention of remitting these earnings. Similarly, no taxes have been provided on the un-remitted earnings of certain foreign subsidiaries as management has no intention of remitting these earnings. The cumulative amount that would be subject to withholding tax, if distributed, as well as the determination of the associated tax liability are not practicable to compute; however, such amount would be material to ACE. Certain international operations of ACE are also subject to income taxes imposed by the jurisdictions in which they operate.

ACE is not subject to income taxation other than as stated above.  There can be no assurance that there will not be changes in applicable laws, regulations, or treaties which might require ACE to change the way it operates or becomes subject to taxation.

ACE's domestic operations are in Switzerland, the jurisdiction where we are legally organized, incorporated, and registered. Domestic operations for the years ended December 31, 2013, 2012, and 2011 are not considered significant to the consolidated income before income taxes for the respective periods.

The following table presents the provision for income taxes:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Current tax expense
$
231

 
$
305

 
$
485

Deferred tax expense (benefit)
249

 
(35
)
 
17

Provision for income taxes
$
480

 
$
270

 
$
502



The most significant jurisdictions contributing to the overall taxation of ACE are calculated using the following rates: Switzerland 7.83 percent, Bermuda 0.0 percent, U.S. 35.0 percent, and U.K. 23.25 percent. The following table presents a reconciliation of the difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Expected tax provision at Swiss statutory tax rate
$
331

 
$
233

 
$
160

Permanent differences:
 
 
 
 
 
Taxes on earnings subject to rate other than Swiss statutory rate
124

 
129

 
323

Tax-exempt interest and dividends received deduction, net of proration
(27
)
 
(24
)
 
(21
)
Net withholding taxes
27

 
23

 
19

Favorable resolution of prior years' tax matters and closing statutes of limitations
(5
)
 
(124
)
 
—

Change in valuation allowance
4

 
4

 
(2
)
Other
26

 
29

 
23

Total provision for income taxes
$
480

 
$
270

 
$
502



The following table presents the components of the net deferred tax assets:
 
December 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Deferred tax assets:
 
 
 
Loss reserve discount
$
807

 
$
849

Unearned premiums reserve
93

 
98

Foreign tax credits
1,236

 
1,131

Investments
3

 
43

Provision for uncollectible balances
78

 
110

Loss carry-forwards
54

 
55

Other
184

 
110

Total deferred tax assets
2,455

 
2,396

Deferred tax liabilities:
 
 
 
Deferred policy acquisition costs
138

 
68

VOBA and other intangible assets
351

 
379

Un-remitted foreign earnings
982

 
795

Unrealized appreciation on investments
210

 
586

Other
94

 
59

Total deferred tax liabilities
1,775

 
1,887

Valuation allowance
64

 
56

Net deferred tax assets
$
616

 
$
453



The valuation allowance of $64 million at December 31, 2013, and $56 million at December 31, 2012, reflects management's assessment, based on available information, that it is more likely than not that a portion of the deferred tax assets will not be realized due to the inability of certain foreign subsidiaries to generate sufficient taxable income and the inability of ACE Group Holdings and its subsidiaries to use foreign tax credits. Adjustments to the valuation allowance are made when there is a change in management's assessment of the amount of deferred tax assets that are realizable.

At December 31, 2013, ACE has net operating loss carry-forwards of $154 million which, if unused, will expire in the years 2014 through 2033, and a foreign tax credit carry-forward in the amount of $131 million which, if unused, will expire in the years 2015 through 2023.

The following table presents a reconciliation of the beginning and ending amount of gross unrecognized tax benefits:
 
December 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Balance, beginning of year
$
26

 
$
134

Additions based on tax provisions related to the current year
5

 
19

Reductions for settlements with tax authorities
—

 
(16
)
Reductions for the lapse of the applicable statutes of limitations
(4
)
 
(111
)
Balance, end of year
$
27

 
$
26



At December 31, 2013 and 2012, the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, is $5 million and $8 million, respectively. At December 31, 2013 and 2012, $22 million and $18 million, respectively, of unrecognized tax benefits would not affect the effective tax rate, if recognized, as the ultimate deductibility is highly certain but there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, an unfavorable resolution of these temporary items would not affect the effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

ACE recognizes accruals for interest and penalties, if any, related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. Tax-related interest expense (income) and penalties reported in the consolidated statements of operations for the years ended December 31, 2013, 2012, and 2011 were $(1) million, $(8) million, and $3 million, respectively. At December 31, 2013 and 2012, ACE recorded $11 million and $12 million, respectively, in liabilities for tax-related interest and penalties in our consolidated balance sheets.

In April 2012, ACE reached final settlement with the 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 2012, ACE recognized a $124 million benefit resulting from the favorable resolution of various prior years' tax matters and the closing of statutes of limitations. During 2013, ACE reduced the amount of unrecognized tax benefits by $5 million resulting from the closing of applicable statutes of limitations. It is reasonably possible that over the next twelve months, the amount of unrecognized tax benefits may change resulting from the re-evaluation of unrecognized tax benefits arising from examinations of taxing authorities and the closing of tax statutes of limitations. With few exceptions, ACE is no longer subject to state and local or non-U.S. income tax examinations for years before 2005.
Debt
Debt
Debt
 
December 31

 
December 31

 
 
(in millions of U.S. dollars)
2013

 
2012

 
Early Redemption Option
Short-term debt
 
 
 
 
 
ACE INA $500 million 5.875% senior notes due June 2014

$
500

 
$
—

 
Make-whole premium plus 0.20%
Repurchase agreements (weighted average interest rate of 0.3% and 0.4%)
1,401

 
1,401

 
None
Total short-term debt
$
1,901

 
$
1,401

 
 
Long-term debt
 
 
 
 
 
ACE INA senior notes:
 
 
 
 
 
$500 million 5.875% due June 2014

$
—

 
$
500

 
Make-whole premium plus 0.20%
$450 million 5.6% due May 2015

449

 
449

 
Make-whole premium plus 0.35%
$700 million 2.6% due November 2015

700

 
699

 
Make-whole premium plus 0.20%
$500 million 5.7% due February 2017

500

 
500

 
Make-whole premium plus 0.20%
$300 million 5.8% due March 2018

300

 
300

 
Make-whole premium plus 0.35%
$500 million 5.9% due June 2019

500

 
500

 
Make-whole premium plus 0.40%
$475 million 2.7% due March 2023

473

 
—

 
Make-whole premium plus 0.10%
$300 million 6.7% due May 2036

299

 
299

 
Make-whole premium plus 0.20%
$475 million 4.15% due March 2043

474

 
—

 
Make-whole premium plus 0.15%
ACE INA $100 million 8.875% debentures due August 2029
100

 
100

 
None
Other long-term debt (2.75% to 7.1% due December 2019 to September 2020)
12

 
13

 
None
Total long-term debt
$
3,807

 
$
3,360

 
 
Trust preferred securities
 
 
 
 
 
ACE INA capital securities due April 2030
$
309

 
$
309

 
Redemption price(1)

(1) 
Redemption price is equal to accrued and unpaid interest to the redemption date plus the greater of (i) 100 percent of the principal amount thereof, or (ii) sum of present value of scheduled payments of principal and interest on the debentures from the redemption date to April 1, 2030.

a) Short-term debt
ACE has executed repurchase agreements with certain counterparties under which ACE agreed to sell securities and repurchase them at a future date for a predetermined price.

b) Long-term debt
In March 2013, ACE INA issued $475 million of 2.7 percent senior notes due March 2023 and $475 million of 4.15 percent senior notes due March 2043.

All of ACE INA’s senior notes are redeemable at any time at ACE INA's option subject to the provisions described above. A “make-whole premium” is the present value of the remaining principal and interest discounted at the applicable U.S. Treasury rate. The senior notes are also redeemable at par plus accrued and unpaid interest in the event of certain changes in tax law. The debentures, subject to certain exceptions, are not redeemable before maturity.

The senior notes and debentures do not have the benefit of any sinking fund. These senior unsecured notes and debentures 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.

c) ACE INA capital securities
In March 2000, ACE Capital Trust II, a Delaware statutory business trust, publicly issued $300 million of 9.7 percent Capital Securities (the Capital Securities) due to mature in April 2030. At the same time, ACE INA purchased $9.2 million of common securities of ACE Capital Trust II. The sole assets of ACE Capital Trust II consist of $309 million principal amount of 9.7 percent Junior Subordinated Deferrable Interest Debentures (the Subordinated Debentures) issued by ACE INA due to mature in April 2030.

Distributions on the Capital Securities are payable semi-annually and may be deferred for up to ten consecutive semi-annual periods (but no later than April 1, 2030). Any deferred payments would accrue interest compounded semi-annually if ACE INA defers interest on the Subordinated Debentures. Interest on the Subordinated Debentures is payable semi-annually. ACE INA may defer such interest payments (but no later than April 1, 2030), with such deferred payments accruing interest compounded semi-annually. The Capital Securities and the ACE Capital Trust II Common Securities will be redeemed upon repayment of the Subordinated Debentures.

ACE Limited has guaranteed, on a subordinated basis, ACE INA's obligations under the Subordinated Debentures, and distributions and other payments due on the Capital Securities. These guarantees, when taken together with ACE's obligations under expense agreements entered into with ACE Capital Trust II, provide a full and unconditional guarantee of amounts due on the Capital Securities.
Commitments, contingencies, and guarantees
Commitments, contingencies, and guarantees
Commitments, contingencies, and guarantees

a) Derivative instruments
Derivative instruments employed
ACE maintains positions in derivative instruments such as futures, options, swaps, and foreign currency forward contracts for which the primary purposes are to manage duration and foreign currency exposure, yield enhancement, or to obtain an exposure to a particular financial market. ACE also maintains positions in convertible bond investments that contain embedded derivatives. These are the most numerous and frequent derivative transactions.

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

Under reinsurance programs covering GLBs, ACE assumes the risk of GLBs, including GMIB and GMAB, associated with variable annuity contracts. The GMIB risk is triggered if, at the time the contract holder elects to convert the accumulated account value to a periodic payment stream (annuitize), the accumulated account value is not sufficient to provide a guaranteed minimum level of monthly income. The GMAB risk is triggered if, at contract maturity, the contract holder’s account value is less than a guaranteed minimum value. The GLB reinsurance product meets the definition of a derivative instrument. Benefit reserves in respect of GLBs are classified as Future policy benefits (FPB) while the fair value derivative adjustment is classified within 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 December 31, 2013, ACE had no in-force interest rate swaps.
ACE from time to time buys credit default swaps to mitigate global credit risk exposure, primarily related to reinsurance recoverables. At December 31, 2013, ACE had no in-force credit default swaps.
All derivative instruments are carried at fair value with changes in fair value recorded in Net realized gains (losses) in the consolidated statements of operations. None of the derivative instruments are designated as hedges for accounting purposes.

The following table presents the balance sheet locations, fair values of derivative instruments in an asset or (liability) position, and notional values/payment provisions of our derivative instruments: 
 
December 31, 2013
 
 
 
 
December 31, 2012
 
 
Consolidated
Balance Sheet
Location(1)
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
Consolidated
Balance Sheet
Location
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
 
Derivative Asset

 
Derivative (Liability)

 
 
 
Derivative Asset

 
Derivative (Liability)

 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
OA / (AP)
 
$
3

 
$
(4
)
 
$
1,202

 
AP
 
$
—

 
$
—

 
$
620

Cross-currency swaps
OA / (AP)
 
—

 
—

 
50

 
AP
 
—

 
—

 
50

Futures contracts on money market instruments
OA / (AP)
 
3

 
—

 
3,910

 
AP
 
1

 
—

 
2,710

Futures contracts on notes and bonds
OA / (AP)
 
13

 
(2
)
 
871

 
AP
 
10

 
—

 
915

Convertible bonds
FM AFS
 
302

 
—

 
254

 
FM AFS
 
309

 
—

 
279

 
 
 
$
321

 
$
(6
)
 
$
6,287

 
 
 
$
320

 
$
—

 
$
4,574

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

 
$
(60
)
 
$
1,692

 
AP
 
$
—

 
$
(6
)
 
$
2,308

Options on equity market indices(2)
OA / (AP)
 
6

 
—

 
250

 
AP
 
30

 
—

 
250

Other
OA / (AP)
 
—

 
(2
)
 
8

 
AP
 
—

 
—

 
—

 
 
 
$
6

 
$
(62
)
 
$
1,950

 
 
 
$
30

 
$
(6
)
 
$
2,558

GLB(3)
(AP) / (FPB)
 
$
—

 
$
(427
)
 
$
277

 
AP / FPB
 
$
—

 
$
(1,352
)
 
$
1,100

(1)
Other assets (OA), Fixed maturities available for sale (FM AFS)
(2) 
Related to GMDB and GLB blocks of business.
(3) 
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 c) 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 accounting guidance that requires disclosure of financial instruments subject to a master netting agreement.  At December 31, 2013 and December 31, 2012, derivative liabilities of $41 million and derivative assets of $35 million, respectively, included in the table above were subject to a master netting agreement.  The remaining derivatives included in the table above were not subject to a master netting agreement. 

At both December 31, 2013 and 2012, our repurchase obligations of $1,401 million were fully collateralized.  At December 31, 2013 and 2012, our securities lending payable was $1,633 million and $1,795 million, respectively, and our securities lending collateral was $1,632 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:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Investment and embedded derivative instruments
 
 
 
 
 
Foreign currency forward contracts
$
11

 
$
(9
)
 
$
6

All other futures contracts and options
61

 
(22
)
 
(98
)
Convertible bonds
6

 
25

 
(50
)
TBAs
—

 
—

 
(1
)
Total investment and embedded derivative instruments
$
78

 
$
(6
)
 
$
(143
)
GLB and other derivative instruments
 
 
 
 
 
GLB(1)
$
878

 
$
171

 
$
(779
)
Futures contracts on equities(2)
(555
)
 
(273
)
 
(12
)
Options on equity market indices(2)
(24
)
 
(24
)
 
8

Other
(2
)
 
(4
)
 
(4
)
Total GLB and other derivative instruments
$
297

 
$
(130
)
 
$
(787
)
 
$
375

 
$
(136
)
 
$
(930
)
(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.

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

(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) Concentrations of credit risk
Our investment portfolio is managed following prudent standards of diversification. Specific provisions limit the allowable holdings of a single issue and issuer. We believe that there are no significant concentrations of credit risk associated with our investments. Our three largest exposures by issuer at December 31, 2013, were JP Morgan Chase & Co., Goldman Sachs Group Inc., and General Electric Company. Our largest exposure by industry at December 31, 2013 was financial services.

We market our insurance and reinsurance worldwide primarily through insurance and reinsurance brokers. We assume a degree of credit risk associated with brokers with whom we transact business. During both years ended December 31, 2013 and 2012, and in the year ended December 31, 2011, approximately 11 percent and 12 percent, respectively, of our gross premiums written were generated from or placed by Marsh, Inc. This entity is a large, well established company and there are no indications that it is financially troubled at December 31, 2013. In addition, during the year ended December 31, 2011, approximately 10 percent of our gross premiums written were generated from or placed by Aon Corporation and its affiliates. No other broker and no one insured or reinsured accounted for more than 10 percent of gross premiums written in the years ended December 31, 2013, 2012, and 2011.

c) Other investments
At December 31, 2013, included in Other investments in the consolidated balance sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of $1.9 billion. In connection with these investments, we have commitments that may require funding of up to $1.2 billion over the next several years. 

d) Letters of credit
We have a $1.0 billion unsecured operational LOC facility (adjustable to $1.5 billion upon consent of the issuers) expiring in November 2017. We are allowed to use up to $300 million of this LOC facility as an unsecured revolving credit facility. At December 31, 2013, outstanding LOCs issued under this facility were $376 million. We also have a $500 million unsecured operational LOC facility expiring in June 2014. At December 31, 2013, this facility was fully utilized.

To satisfy funding requirements of ACE's Lloyd's Syndicate 2488 through 2014, we have a series of four bilateral uncollateralized LOC facilities totaling $425 million. LOCs issued under these facilities will expire no earlier than December 2017. Usage of this facility at December 31, 2013 was $352 million.

These facilities require that ACE Limited and/or certain of its subsidiaries continue to maintain certain covenants. ACE Limited is also required to maintain a minimum consolidated net worth covenant and a maximum leverage covenant, which have been met at December 31, 2013.

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

f) Lease commitments
We lease office space and equipment under operating leases which expire at various dates through 2033. Rent expense was $128 million, $112 million, and $114 million for the years ended December 31, 2013, 2012, and 2011, respectively. Future minimum lease payments under the leases are expected to be as follows:
For the year ending December 31
(in millions of U.S. dollars)
2014
$
106

2015
99

2016
86

2017
70

2018
49

Thereafter
124

Total minimum future lease commitments
$
534

Shareholders' equity
Shareholders' equity
Shareholders’ equity

a) Common Shares
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, we are generally prohibited from issuing Common Shares below their par value. If there were a need to raise common equity at a time when the trading price of ACE's Common Shares is below par value, we would need in advance to obtain shareholder approval to decrease the par value of the Common Shares.

At our May 2012 and 2013 Annual General Meetings, our shareholders approved a dividend for the following years, respectively, payable in four quarterly installments after the annual general meetings in the form of a distribution by way of a par value reduction. At the January 10, 2014 Extraordinary General Meeting, our shareholders approved a resolution to increase our quarterly dividend from $0.51 per share to $0.63 per share for the final two quarterly installments (made on January 31, 2014 and the payment to be made by the end of April 2014) that had been earlier approved at our 2013 annual general meeting. The $0.12 per share increase for each installment will be distributed from capital contribution reserves while the existing $0.51 per share will be distributed by way of a par value reduction.

Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value reduction), must be stated in Swiss francs though dividend payments are made by ACE in U.S. dollars. Dividend distributions following ACE's redomestication to Switzerland have generally been made by way of par value reduction (under the methods approved by our shareholders at our Annual General Meetings) and had the effect of reducing par value per Common Share each time a dividend was distributed. In light of a January 1, 2011 Swiss tax law change, we may also issue dividends without subjecting them to withholding tax by way of distributions from capital contribution reserves (Additional paid-in capital), a subaccount of legal reserves, and paid out of free reserves (Retained earnings). We employed this method of dividends during portions of 2011 and 2012, and to effect our dividend increase that was approved by shareholders on January 10, 2014.

b) Shares issued, outstanding, authorized, and conditional
 
Years Ended December 31
 
 
2013

2012

2011

Shares issued, beginning of year
342,832,412

342,832,412

341,094,559

Exercise of stock options
—

—

1,737,853

Shares issued, end of year
342,832,412

342,832,412

342,832,412

Common Shares in treasury, end of year (at cost)
(3,038,477
)
(2,510,878
)
(5,905,136
)
Shares issued and outstanding, end of year
339,793,935

340,321,534

336,927,276

Common Shares issued to employee trust
 
 
 
Balance, beginning of year
(9,467
)
(9,467
)
(101,481
)
Shares redeemed
—

—

92,014

Balance, end of year
(9,467
)
(9,467
)
(9,467
)


Prior to August 2011, exercises of stock options were satisfied through newly issued shares. From August 2011 onward, exercises of stock options were satisfied through Common Shares in treasury. Other decreases in Common Shares in treasury are principally due to grants of restricted stock, and purchases under the Employee Stock Purchase Plan (ESPP). Increases in Common Shares in treasury are due to open market repurchases of Common Shares and the surrender of Common Shares to satisfy tax withholding obligations in connection with the vesting of restricted stock and the forfeiture of unvested restricted stock.

For the years ended December 31, 2013, 2012, and 2011, ACE repurchased 3,266,531 Common Shares, 100,000 Common Shares, and 2,058,860 Common Shares in a series of open market transactions, respectively. The cost of these shares, which were placed in treasury, totaled $290 million, $7 million, and $132 million for the years ended December 31, 2013, 2012, and 2011, respectively. ACE repurchased these Common Shares to partially offset potential dilution from the exercise of stock options and the granting of restricted stock under share-based compensation plans as well as part of an overall capital management strategy.

Common Shares issued to employee trust are issued by ACE to a rabbi trust for deferred compensation obligations as discussed in Note 11 f) below.

Authorized share capital for general purposes
The ACE Limited Board of Directors (Board) has shareholder-approved authority as set forth in the Articles of Association to increase for general purposes ACE's share capital from time to time through May 16, 2014, by the issuance of up to 140,000,000 fully paid up Common Shares, with a par value equal to the par value of ACE's Common Shares as set forth in the Articles of Association at the time of any such issuance.

Conditional share capital for bonds and similar debt instruments
The share capital of ACE may be increased through the issuance of a maximum of 33,000,000 fully paid up Common Shares (with a par value of CHF 27.04 as of December 31, 2013) through the exercise of conversion and/or option or warrant rights granted in connection with bonds, notes, or similar instruments, issued or to be issued by ACE, including convertible debt instruments.

Conditional share capital for employee benefit plans
The share capital of ACE may be increased through the issuance of a maximum of 25,410,929 fully paid up Common Shares (with a par value of CHF 27.04 as of December 31, 2013) in connection with the exercise of option rights granted to any employee of ACE, and any consultant, director, or other person providing services to ACE.

c) ACE Limited securities repurchase authorization
On November 21, 2013, the Board announced authorization of a share repurchase program of up to $2 billion of ACE's Common Shares through December 31, 2014.  This $2 billion authorization replaces the previous authorizations which had a remaining balance of $228 million and expired on December 31, 2013. 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. At December 31, 2013, $1.94 billion in share repurchase authorization remained through December 31, 2014 pursuant to the Board authorization. For the period January 1, 2014 through February 27, 2014, ACE repurchased 3,437,082 Common Shares for a total of $326 million in a series of open market transactions. At February 27, 2014, $1.62 billion in share repurchase authorization remained through December 31, 2014.

d) General restrictions
The holders of the Common Shares are entitled to receive dividends as approved by the shareholders. Holders of Common Shares are allowed one vote per share provided that, if the controlled shares of any shareholder constitute ten percent or more of the outstanding Common Shares of ACE, only a fraction of the vote will be allowed so as not to exceed ten percent in aggregate. Entry of acquirers of Common Shares as shareholders with voting rights in the share register may be refused if it would confer voting rights with respect to ten percent or more of the registered share capital recorded in the commercial register.

e) Dividends
Refer to section a) above for a discussion on the methods of dividend payments. Dividend distributions on Common Shares amounted to CHF 1.85 ($2.02) per Common Share (paid through par value reductions), CHF 1.91 ($2.06) per Common Share (including par value reductions of CHF 1.38 per Common Share), and CHF 1.22 ($1.38) per Common Share (including a par value reduction of CHF 0.30 per Common Share) for the years ended December 31, 2013, 2012, and 2011, respectively. Par value reductions have been reflected as such through Common Shares in the consolidated statements of shareholders' equity. The par value per Common Share at December 31, 2013, was CHF 27.04.

f) Deferred compensation obligation
ACE maintains rabbi trusts for deferred compensation plans principally for employees and former directors. The shares issued by ACE to the rabbi trusts in connection with deferrals of share compensation are classified in shareholders' equity and accounted for at historical cost in a manner similar to Common Shares in treasury. These shares are recorded in Common Shares issued to employee trust and the obligations are recorded in Deferred compensation obligation in the consolidated balance sheets. Changes in the fair value of the shares underlying the obligations are recorded in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets and the related expense or income is recorded in Administrative expenses in the consolidated statements of operations.

The rabbi trusts also hold other assets, such as fixed maturities, equity securities, and life insurance policies. The assets of the rabbi trusts are consolidated with ACE's assets in the consolidated balance sheets. Assets held by the trust and the associated obligations are reported at fair value in Other investments and Accounts payable, accrued expenses, and other liabilities, respectively, in the consolidated balance sheets, with changes in fair value reflected as a corresponding increase or decrease to Other (income) expense in the consolidated statements of operations. However, life insurance policies assets and obligations are reported at cash surrender value.
Share-based compensation
Share-based compensation
Share-based compensation

ACE has share-based compensation plans which currently provide the Board the ability to grant awards of stock options, restricted stock, and restricted stock units to its employees, consultants, and members of the Board.

ACE principally issues restricted stock grants and stock options on a graded vesting schedule. ACE recognizes compensation cost for restricted stock and stock option grants with only service conditions that have a graded vesting schedule on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. We incorporate an estimate of future forfeitures (6.5 percent assumption used for 2013, 2012, and 2011) into the determination of compensation cost for both grants of restricted stock and stock options.

During 2004, we established the ACE Limited 2004 Long-Term Incentive Plan (the 2004 LTIP), which replaced our prior incentive plans except for outstanding awards. The 2004 LTIP will continue in effect until terminated by the Board. Under the 2004 LTIP, Common Shares of ACE are authorized to be issued pursuant to awards made as stock options, stock appreciation rights, performance shares, performance units, 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. 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 eight million shares authorized to be issued under the 2004 LTIP, bringing the total shares authorized (i.e., for grant since its inception) to the sum of: (i) 38,600,000 common shares; and (ii) any shares that are represented by awards granted under the prior plans that are forfeited, expired, or are canceled after the effective date of the 2004 LTIP, without delivery of shares or which result in the forfeiture of the shares back to ACE to the extent that such shares would have been added back to the reserve under the terms of the applicable prior plan. At December 31, 2013, a total of 11,231,423 shares remain available for future issuance under the 2004 LTIP.

In May 2012, our shareholders approved an increase of 1,500,000 shares authorized to be issued under the ESPP bringing the total shares authorized to 4,500,000 shares.  At December 31, 2013, a total of 1,313,586 shares remain available for issuance under the ESPP.

ACE generally issues Common Shares for the exercise of stock options, restricted stock, and purchases under the ESPP from un-issued reserved shares (conditional share capital) and Common Shares in treasury.

The following table presents pre-tax and after-tax share-based compensation expense:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Stock options and shares issued under ESPP:
 
 
 
 
 
Pre-tax
$
24

 
$
22

 
$
23

After-tax (1)
$
18

 
$
17

 
$
17

Restricted stock:
 
 
 
 
 
Pre-tax
$
153

 
$
109

 
$
108

After-tax
$
89

 
$
64

 
$
70


(1) 
Excludes windfall tax benefit for share-based compensation recognized as a direct adjustment to Additional paid-in capital of $36 million, $18 million and $6 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Unrecognized compensation expense related to the unvested portion of ACE's employee share-based awards was $107 million at December 31, 2013, and is expected to be recognized over a weighted-average period of approximately 1 year.

Stock options
ACE's 2004 LTIP permits grants of both incentive and non-qualified stock options principally at an option price per share equal to the grant date fair value of ACE's Common Shares. Stock options are generally granted with a 3-year vesting period and a 10-year term. Stock options vest in equal annual installments over the respective vesting period, which is also the requisite service period.

ACE's 2013 share-based compensation expense includes a portion of the cost related to the 2010 through 2013 stock option grants. Stock option fair value was estimated on the grant date using the Black-Scholes option-pricing model that uses the weighted-average assumptions noted below:
 
Years Ended December 31
 
 
2013

2012

2011

Dividend yield
2.4
%
2.7
%
2.2
%
Expected volatility
27.8
%
29.8
%
28.8
%
Risk-free interest rate
1.0
%
1.1
%
2.3
%
Expected life
5.8 years

5.8 years

5.4 years



The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time from grant to exercise date) was estimated using the historical exercise behavior of employees. Expected volatility was calculated as a blend of (a) historical volatility based on daily closing prices over a period equal to the expected life assumption, (b) long-term historical volatility based on daily closing prices over the period from ACE's initial public trading date through the most recent quarter, and (c) implied volatility derived from ACE's publicly traded options.

The following table presents a roll-forward of ACE's stock options:
(Intrinsic Value in millions of U.S. dollars)
Number of Options

 
Weighted-Average Exercise Price

 
Weighted-Average Fair Value

 
Total Intrinsic Value

Options outstanding, December 31, 2010
11,942,893

 
$
46.80

 
 
 
 
Granted
1,649,824

 
$
62.68

 
$
14.67

 
 
Exercised
(2,741,238
)
 
$
44.45

 
 
 
$
63

Forfeited
(271,972
)
 
$
51.33

 
 
 
 
Options outstanding, December 31, 2011
10,579,507

 
$
49.78

 
 
 
 
Granted
1,462,103

 
$
73.36

 
$
15.58

 
 
Exercised
(2,401,869
)
 
$
42.50

 
 
 
$
78

Forfeited
(190,082
)
 
$
61.87

 
 
 
 
Options outstanding, December 31, 2012
9,449,659

 
$
55.03

 
 
 
 
Granted
1,821,063

 
$
85.41

 
$
17.29

 
 
Exercised
(1,658,671
)
 
$
48.17

 
 
 
$
70

Forfeited
(115,195
)
 
$
72.50

 
 
 
 
Options outstanding, December 31, 2013
9,496,856

 
$
61.84

 
 
 
$
396

Options exercisable, December 31, 2013
6,330,456

 
$
53.52

 
 
 
$
317



The weighted-average remaining contractual term was 6.5 years for stock options outstanding and 4.8 years for stock options exercisable at December 31, 2013. Cash received from the exercise of stock options for the year ended December 31, 2013 was $85 million.

Restricted stock and restricted stock units
Grants of restricted stock and restricted stock units granted under the 2004 LTIP typically have a 4-year vesting period, based on a graded vesting schedule. ACE also grants restricted stock awards to non-management directors which vest at the following year's annual general meeting. The restricted stock is granted at market close price on the grant date. Each restricted stock unit represents our obligation to deliver to the holder one Common Share upon vesting. ACE's 2013 share-based compensation expense includes a portion of the cost related to the restricted stock granted in the years 2009 through 2013.

The following table presents a roll-forward of our restricted stock awards. Included in the roll-forward below are 20,969 restricted stock awards, 25,669 restricted stock awards, and 32,660 restricted stock awards that were granted to non-management directors during the years ended December 31, 2013, 2012, and 2011 respectively:
 
Number of Restricted Stock

 
Weighted-Average Grant-Date Fair Value

Unvested restricted stock, December 31, 2010
5,305,732

 
$
48.74

Granted
1,808,745

 
$
60.01

Vested
(1,929,189
)
 
$
50.82

Forfeited
(333,798
)
 
$
47.46

Unvested restricted stock, December 31, 2011
4,851,490

 
$
52.20

Granted
1,589,178

 
$
73.46

Vested
(1,923,385
)
 
$
52.71

Forfeited
(262,436
)
 
$
58.40

Unvested restricted stock, December 31, 2012
4,254,847

 
$
59.53

Granted
1,544,485

 
$
86.07

Vested
(1,951,494
)
 
$
57.44

Forfeited
(139,651
)
 
$
67.72

Unvested restricted stock, December 31, 2013
3,708,187

 
$
71.38



During the years ended December 31, 2013, 2012, and 2011, ACE awarded 271,004 restricted stock units, 262,549 restricted stock units, and 261,214 restricted stock units, respectively, to employees and officers each with a weighted-average grant date fair value per share of $85.44, $73.41, and $62.85, respectively. At December 31, 2013, there were 617,893 unvested restricted stock units.

Prior to 2009, ACE granted restricted stock units with a 1-year vesting period to non-management directors. Delivery of Common Shares on account of these restricted stock units to non-management directors is deferred until after the date of the non-management directors' termination from the Board. At December 31, 2013, there were 196,622 deferred restricted stock units.

ESPP
The ESPP gives participating employees the right to purchase Common Shares through payroll deductions during consecutive subscription periods at a purchase price of 85 percent of the fair value of a Common Share on the exercise date (Purchase Price). Annual purchases by participants are limited to the number of whole shares that can be purchased by an amount equal to ten percent of the participant's compensation or $25,000, whichever is less. The ESPP has two six-month subscription periods each year, the first of which runs between January 1 and June 30 and the second of which runs between July 1 and December 31. The amounts collected from participants during a subscription period are used on the exercise date to purchase full shares of Common Shares. An exercise date is generally the last trading day of a subscription period. The number of shares purchased is equal to the total amount, at the exercise date, collected from the participants through payroll deductions for that subscription period, divided by the Purchase Price, rounded down to the next full share. Participants may withdraw from an offering before the exercise date and obtain a refund of amounts withheld through payroll deductions. Pursuant to the provisions of the ESPP, during the years ended December 31, 2013, 2012, and 2011, employees paid $14 million, $13 million, and $12 million to purchase 175,437 shares, 198,244 shares, and 205,812 shares, respectively.
Pension plans
Pension plans
Pension plans

ACE provides pension benefits to eligible employees and their dependents through various defined contribution plans and defined benefit plans sponsored by ACE. The defined contribution plans include a capital accumulation plan (401(k)) in the U.S. The defined benefit plans consist of various plans offered in certain jurisdictions primarily outside of the U.S. and Bermuda.

Defined contribution plans (including 401(k))
Under these plans, employees' contributions may be supplemented by ACE matching contributions based on the level of employee contribution. These contributions are invested at the election of each employee in one or more of several investment portfolios offered by a third-party investment advisor. Expenses for these plans totaled $111 million, $99 million, and $96 million for the years ended December 31, 2013, 2012, and 2011, respectively.

Defined benefit plans
We maintain non-contributory defined benefit plans that cover certain employees, principally located in Europe, Asia, and Mexico. We also provide a defined benefit plan to certain U.S.-based employees as a result of our acquisition of Penn Millers in November 2011. We account for pension benefits using the accrual method. Benefits under these plans are based on employees' years of service and compensation during final years of service. All underlying defined benefit plans are subject to periodic actuarial valuation by qualified local actuarial firms using actuarial models in calculating the pension expense and liability for each plan. We use December 31 as the measurement date for our defined benefit pension plans.

Components of accrued pension liability (included in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets):
 
December 31

December 31

(in millions of U.S dollars)
2013
2012
Fair value of plan assets
$
566

$
487

Projected benefit obligation
591

531

Accrued pension liability
$
25

$
44


The defined benefit pension plan contribution for 2014 is expected to be $3 million. The estimated net actuarial loss for the defined benefit pension plans that will be amortized from AOCI into net benefit costs over the next year is $3 million.

Benefit payments were $26 million and $37 million for the years ended December 31, 2013 and 2012, respectively. Benefit payments for the year ended December 31, 2012 included $12 million related to the full settlement of a defined benefit plan. Expected future payments are as follows:
For the year ending December 31
(in millions of U.S dollars)
2014
$
19

2015
22

2016
23

2017
22

2018
23

2019-2023
129

Other (income) expense
Other (income) expense
Other (income) expense
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Amortization of intangible assets
$
95

 
$
51

 
$
29

Equity in net (income) loss of partially-owned entities
(119
)
 
(80
)
 
(32
)
(Gains) losses from fair value changes in separate account assets
(16
)
 
(29
)
 
36

Federal excise and capital taxes
24

 
22

 
20

Acquisition-related costs
4

 
11

 
5

Other
27

 
19

 
23

Other (income) expense
$
15

 
$
(6
)
 
$
81



Other (income) expense includes Amortization of intangible assets, which is higher in 2013 due primarily to the acquisitions of Fianzas Monterrey (completed April 1, 2013) and ABA Seguros (completed May 2, 2013). Equity in net (income) loss of partially-owned entities includes our share of net (income) loss related to investment funds, limited partnerships, partially-owned investment companies, and partially-owned insurance companies. Also included in Other (income) expense are (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP. The offsetting movement in the separate account liabilities is included in Policy benefits in the consolidated statements of operations. Certain federal excise and capital taxes incurred as a result of capital management initiatives are included in Other (income) expense as these are considered capital transactions and are excluded from underwriting results.
Segment information
Segment information
Segment information

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

Effective January 1, 2013, the former 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.

The Insurance – North American P&C segment comprises our operations in the U.S., Canada, and Bermuda. This segment includes the operations of ACE USA (including ACE Canada), ACE Commercial Risk Services, ACE Private Risk Services, ACE Westchester, ACE Bermuda, and various run-off operations, including Brandywine. ACE USA is the North American retail operating division which provides a broad array of traditional and specialty P&C, A&H, and risk management products and services to a diverse group of North America commercial and non-commercial enterprises and consumers. ACE Commercial Risk Services addresses the insurance needs of small and mid-sized businesses in North America by delivering a broad array of specialty product solutions for targeted industries that lend themselves to technology-assisted underwriting. ACE Private Risk Services provides high-value personal lines coverages for high net worth individuals and families in North America. ACE Westchester focuses on the North American wholesale distribution of excess and surplus lines property, casualty, environmental, professional liability and inland marine products. ACE Bermuda provides commercial insurance products on an excess basis mainly to a global client base targeting Fortune 1000 companies and covering exposures that are generally low in frequency and high in severity. The run-off operations do not actively sell insurance products but are responsible for the management of certain existing policies and settlement of related claims.

The Insurance – North American Agriculture segment comprises our North American based businesses that provide a variety of coverages in the U.S. and Canada including crop insurance, primarily Multiple Peril Crop Insurance (MPCI) and crop-hail through Rain and Hail Insurance Services, Inc. as well as farm and ranch, and specialty P&C commercial insurance products and services through our ACE Agribusiness unit. The MPCI program is offered in conjunction with the U.S. Department of Agriculture.

The Insurance – Overseas General segment comprises ACE International and ACE Global Markets (AGM). ACE International comprises our retail commercial P&C, A&H, and personal lines businesses serving territories outside the U.S., Bermuda, and Canada, and the international supplemental A&H business of Combined Insurance. ACE International maintains a presence in every major insurance market in the world and is organized geographically along product lines that provide dedicated underwriting focus to customers. ACE International has four regions of operations: ACE Europe, ACE Asia Pacific, ACE Far East, and ACE Latin America. During 2013, ACE International expanded its operations with the acquisitions of ABA Seguros and Fianzas Monterrey in Mexico. Refer to Note 2 for additional information. Companies within the Insurance – Overseas General segment write a variety of insurance products including P&C, professional lines (directors and officers and errors and omissions), marine, energy, aviation, political risk, specialty consumer-oriented products, and A&H (principally accident and supplemental health). Combined Insurance distributes a wide range of supplemental A&H products. AGM, our London-based international specialty and excess and surplus lines business, includes Syndicate 2488, a wholly-owned ACE syndicate. AGM offers products through its parallel distribution network via ACE European Group Limited (AEGL) and Syndicate 2488. ACE provides funds at Lloyd's to support underwriting by Syndicate 2488, which is managed by ACE Underwriting Agencies Limited. AGM uses Syndicate 2488 to underwrite P&C business on a global basis through Lloyd's worldwide licenses. AGM uses AEGL to underwrite similar classes of business through its network of U.K. and European licenses, and in the U.S. where it is eligible to write excess and surplus lines business. The reinsurance operation of AGM is included in the Global Reinsurance segment.

The Global Reinsurance segment represents ACE's reinsurance operations comprising ACE Tempest Re Bermuda, ACE Tempest Re USA, ACE Tempest Re International, and ACE Tempest Re Canada. The Global Reinsurance segment also includes AGM's reinsurance operations. These divisions provide a broad range of traditional and specialty reinsurance products including property catastrophe, casualty, and property reinsurance coverages to a diverse array of primary P&C insurers.

The Life segment includes ACE's international life operations (ACE Life), ACE Tempest Life Re (ACE Life Re), and the North American supplemental A&H and life business of Combined Insurance. ACE Life provides a broad portfolio of protection and savings products including whole life, endowment plans, individual term life, group term life, group medical, personal accident, credit life, universal life and unit linked contracts through multiple distribution channels primarily in emerging markets including: Egypt, Hong Kong, Indonesia, South Korea, Taiwan, Thailand, and Vietnam; also throughout Latin America, selectively in Europe, and China through a non-consolidated joint venture insurance company. ACE Life Re helps clients (ceding companies) manage mortality, morbidity, and lapse risks embedded in their books of business. ACE Life Re's core business is a Bermuda-based operation which provides reinsurance to primary life insurers, focusing on guarantees included in certain fixed and variable annuity products and also on more traditional mortality reinsurance protection. ACE Life Re's U.S.-based traditional life reinsurance operation was discontinued for new business in January 2010. Since 2007, ACE Life Re has not quoted on new opportunities in the variable annuity reinsurance marketplace. Combined Insurance distributes specialty supplemental A&H and life insurance products targeted to middle income consumers and businesses in the U.S. and Canada.

Corporate includes ACE Limited, ACE Group Management and Holdings Ltd., ACE INA Holdings, Inc., and intercompany eliminations. Due to our initiatives to reduce reinsurance recoverable balances, losses recognized in connection with the commutation of ceded reinsurance contracts are generally not considered when assessing segment performance and, accordingly, are directly allocated to Corporate. Losses and loss expenses arise in connection with the commutation of ceded reinsurance contracts that result from a differential between the consideration received from reinsurers and the related reduction of reinsurance recoverable, principally related to the time value of money.
For segment reporting purposes, certain items have been presented in a different manner below than in the consolidated financial statements. Management uses underwriting income as the main measure of segment performance. ACE calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. For the Insurance – North American Agriculture segment, management includes gains and losses from fair value changes on crop derivatives as a component of underwriting income. For 2013, underwriting income in our Insurance – North American Agriculture segment was $89 million. This amount includes $1 million of realized losses related to crop derivatives which are included in Net realized gains (losses) below. For the Life segment, management includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP as components of Life underwriting income. For example, for 2013, Life underwriting income of $374 million includes Net investment income of $251 million and gains from fair value changes in separate account assets of $16 million.
The following tables present the Statement of Operations by segment:
For the Year Ended December 31, 2013 (in millions of U.S. dollars)
Insurance –
North
American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

Net premiums written
$
5,915

 
$
1,627

 
$
6,520

 
$
991

 
$
1,972

 
$
—

 
$
17,025

Net premiums earned
5,721

 
1,678

 
6,333

 
976

 
1,905

 
—

 
16,613

Losses and loss expenses
3,776

 
1,524

 
3,062

 
396

 
582

 
8

 
9,348

Policy benefits
—

 
—

 
—

 
—

 
515

 
—

 
515

Policy acquisition costs
597

 
53

 
1,453

 
197

 
358

 
1

 
2,659

Administrative expenses
601

 
11

 
1,008

 
50

 
343

 
198

 
2,211

Underwriting income (loss)
747

 
90

 
810

 
333

 
107

 
(207
)
 
1,880

Net investment income
1,021

 
26

 
539

 
280

 
251

 
27

 
2,144

Net realized gains (losses) including OTTI
72

 
1

 
18

 
53

 
360

 
—

 
504

Interest expense
5

 
1

 
5

 
5

 
15

 
244

 
275

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

 
—

 
—

 
—

 
(16
)
 
—

 
(16
)
Other
(58
)
 
32

 
39

 
(19
)
 
13

 
24

 
31

Income tax expense (benefit)
347

 
20

 
222

 
36

 
34

 
(179
)
 
480

Net income (loss)
$
1,546

 
$
64

 
$
1,101

 
$
644

 
$
672

 
$
(269
)
 
$
3,758



 
For the Year Ended December 31, 2012
(in millions of U.S. dollars)
Insurance –
North
American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

Net premiums written
$
5,349

 
$
1,859

 
$
5,863

 
$
1,025

 
$
1,979

 
$
—

 
$
16,075

Net premiums earned
5,147

 
1,872

 
5,740

 
1,002

 
1,916

 
—

 
15,677

Losses and loss expenses
3,715

 
1,911

 
2,862

 
553

 
611

 
1

 
9,653

Policy benefits
—

 
—

 
—

 
—

 
521

 
—

 
521

Policy acquisition costs
558

 
28

 
1,353

 
172

 
334

 
1

 
2,446

Administrative expenses
608

 
(7
)
 
935

 
51

 
328

 
181

 
2,096

Underwriting income (loss)
266

 
(60
)
 
590

 
226

 
122

 
(183
)
 
961

Net investment income
1,066

 
25

 
521

 
290

 
251

 
28

 
2,181

Net realized gains (losses) including OTTI
41

 
1

 
103

 
6

 
(72
)
 
(1
)
 
78

Interest expense
12

 
—

 
5

 
4

 
12

 
217

 
250

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

 
—

 
—

 
—

 
(29
)
 
—

 
(29
)
Other
(41
)
 
32

 
3

 
(15
)
 
25

 
19

 
23

Income tax expense (benefit)
229

 
(29
)
 
133

 
15

 
58

 
(136
)
 
270

Net income (loss)
$
1,173

 
$
(37
)
 
$
1,073

 
$
518

 
$
235

 
$
(256
)
 
$
2,706


For the Year Ended December 31, 2011
(in millions of U.S. dollars)
Insurance –
North
American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

Net premiums written
$
4,900

 
$
1,951

 
$
5,629

 
$
979

 
$
1,913

 
$
—

 
$
15,372

Net premiums earned
4,969

 
1,942

 
5,614

 
1,003

 
1,859

 
—

 
15,387

Losses and loss expenses
3,577

 
1,699

 
3,029

 
621

 
593

 
1

 
9,520

Policy benefits
—

 
—

 
—

 
—

 
401

 
—

 
401

Policy acquisition costs
532

 
80

 
1,335

 
185

 
339

 
1

 
2,472

Administrative expenses
598

 
(6
)
 
939

 
52

 
317

 
168

 
2,068

Underwriting income (loss)
262

 
169

 
311

 
145

 
209

 
(170
)
 
926

Net investment income
1,148

 
22

 
546

 
287

 
226

 
13

 
2,242

Net realized gains (losses) including OTTI
28

 
6

 
33

 
(50
)
 
(806
)
 
(6
)
 
(795
)
Interest expense
13

 
2

 
5

 
2

 
11

 
217

 
250

Other (income) expense:
 
 
 
 
 
 
 
 
 
 
 
 


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

 
—

 
—

 
—

 
36

 
—

 
36

Other
(13
)
 
18

 
—

 
(1
)
 
26

 
15

 
45

Income tax expense (benefit)
344

 
51

 
164

 
30

 
50

 
(137)

 
502

Net income (loss)
$
1,094

 
$
126

 
$
721

 
$
351

 
$
(494
)
 
$
(258
)
 
$
1,540


Underwriting assets are reviewed in total by management for purposes of decision-making. Other than goodwill and other intangible assets, ACE does not allocate assets to its segments.
The following table presents net premiums earned for each segment by product:
(in millions of U.S. dollars)
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

For the Year Ended December 31, 2013
 
 
 
Insurance – North American P&C
$
1,489

 
$
3,847

 
$
385

 
$
5,721

Insurance – North American Agriculture
1,678

 
—

 
—

 
1,678

Insurance – Overseas General
2,672

 
1,479

 
2,182

 
6,333

Global Reinsurance
543

 
433

 
—

 
976

Life
—

 
—

 
1,905

 
1,905

 
$
6,382

 
$
5,759

 
$
4,472

 
$
16,613

For the Year Ended December 31, 2012
 
 
 
 
 
 
 
Insurance – North American P&C
$
1,370

 
$
3,406

 
$
371

 
$
5,147

Insurance – North American Agriculture
1,872

 
—

 
—

 
1,872

Insurance – Overseas General
2,236

 
1,379

 
2,125

 
5,740

Global Reinsurance
495

 
507

 
—

 
1,002

Life
—

 
—

 
1,916

 
1,916

 
$
5,973

 
$
5,292

 
$
4,412

 
$
15,677

For the Year Ended December 31, 2011
 
 
 
 
 
 
 
Insurance – North American P&C
$
1,232

 
$
3,380

 
$
357

 
$
4,969

Insurance – North American Agriculture
1,942

 
—

 
—

 
1,942

Insurance – Overseas General
2,080

 
1,415

 
2,119

 
5,614

Global Reinsurance
458

 
545

 
—

 
1,003

Life
—

 
—

 
1,859

 
1,859

 
$
5,712

 
$
5,340

 
$
4,335

 
$
15,387



The following table presents net premiums earned by geographic region. Allocations have been made on the basis of location of risk:
 
 
North America

 
 
 
Asia
 Pacific/Far East

 
Latin America

Years Ended
 
 
Europe

 
 
2013
 
58
%
 
17
%
 
16
%
 
9
%
2012
 
60
%
 
17
%
 
16
%
 
7
%
2011
 
61
%
 
18
%
 
14
%
 
7
%
Earnings per share
Earnings per share
Earnings per share
 
Years Ended December 31
 
 (in millions of U.S. dollars, except share and per share data)
2013

 
2012

 
2011

Numerator:
 
 
 
 
 
Net income
$
3,758

 
$
2,706

 
$
1,540

Denominator:
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
Weighted-average shares outstanding
340,906,490

 
339,843,438

 
338,159,409

Denominator for diluted earnings per share:
 
 
 
 
 
Share-based compensation plans
3,241,085

 
2,903,512

 
2,620,815

Weighted-average shares outstanding
      and assumed conversions
344,147,575

 
342,746,950

 
340,780,224

Basic earnings per share
$
11.02

 
$
7.96

 
$
4.55

Diluted earnings per share
$
10.92

 
$
7.89

 
$
4.52

Potential anti-dilutive share conversions
1,031,297

 
896,591

 
111,326



Excluded from weighted-average shares outstanding and assumed conversions is the impact of securities that would have been anti-dilutive during the respective years.
Related party transaction
Related party transactions
Related party transactions

The ACE Foundation – Bermuda is an unconsolidated not-for-profit organization whose primary purpose is to fund charitable causes in Bermuda. The Trustees are principally ACE management. ACE maintains a non-interest bearing demand note receivable from the ACE Foundation – Bermuda (Borrower), the balance of which was $26 million and $27 million, at December 31, 2013 and 2012, respectively. The receivable is included in Other assets in the consolidated balance sheets. The Borrower has used the related proceeds to finance investments in Bermuda real estate, some of which have been rented to ACE employees at rates established by independent, professional real estate appraisers. The Borrower uses income from the investments to both repay the note and to fund charitable activities. Accordingly, we report the demand note at the lower of its principal value or the fair value of assets held by the Borrower to repay the loan, including the real estate properties.
Statutory Financial Information
Statutory financial information
Statutory financial information

Our subsidiaries file financial statements prepared in accordance with statutory accounting practices prescribed or permitted by insurance regulators. Statutory accounting differs from GAAP in the reporting of certain reinsurance contracts, investments, subsidiaries, acquisition expenses, fixed assets, deferred income taxes, and certain other items. Some jurisdictions impose complex regulatory requirements on insurance companies while other jurisdictions impose fewer requirements. In some jurisdictions, we must obtain licenses issued by governmental authorities to conduct local insurance business. These licenses may be subject to reserves and minimum capital and solvency tests. Jurisdictions may impose fines, censure, and/or criminal sanctions for violation of regulatory requirements. The 2013 amounts below are based on estimates.

ACE's insurance and reinsurance subsidiaries are subject to insurance laws and regulations in the jurisdictions in which they operate. These regulations include restrictions that limit the amount of dividends or other distributions, such as loans or cash advances, available to shareholders without prior approval of the local insurance regulatory authorities. The amount of dividends available to be paid in 2014 without prior approval totals $3.8 billion.

The statutory capital and surplus of our insurance subsidiaries met regulatory requirements for 2013, 2012, and 2011. The minimum amounts of statutory capital and surplus necessary to satisfy regulatory requirements were $14.5 billion and $14.3 billion for December 31, 2013 and 2012, respectively.

The combined statutory capital and surplus was $25.6 billion and $24.4 billion at December 31, 2013 and 2012, respectively. The combined statutory net income was $3.7 billion, $2.9 billion, and $1.9 billion for the years ended December 31, 2013, 2012, and 2011, respectively.

Several insurance subsidiaries follow accounting practices prescribed or permitted by the jurisdiction of domicile that differ from the applicable local statutory practice. The application of prescribed or permitted accounting practices does not have a material impact on ACE's statutory surplus and income. As prescribed by the Restructuring discussed previously in Note 7, certain of our U.S. subsidiaries discount certain A&E liabilities, which increased statutory capital and surplus by approximately $158 million and $161 million at December 31, 2013 and 2012, respectively.
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 December 31, 2013 and December 31, 2012, and for the years ended December 31, 2013, 2012, and 2011 for ACE Limited (Parent Guarantor) and ACE INA Holdings, Inc. (Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer.

During the third quarter of 2013, we determined that the Subsidiary Issuer columns presented in the previously issued condensed consolidating financial information should be presented on the equity method of accounting rather than on a consolidated basis. Accordingly, we have revised the disclosure to correct the Condensed Consolidating Balance Sheet as of December 31, 2012, the Condensed Consolidating Statements of Operations and Comprehensive Income for the years ended December 31, 2012 and 2011, and the Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2012 and 2011. As a result of this revision to the Subsidiary Issuer condensed consolidating financial information, the assets and liabilities, revenues and expenses, and cash flows of the subsidiaries of ACE INA Holdings, Inc. (Subsidiary Issuer) are now presented in the Other ACE Limited Subsidiaries column on a combined basis. In addition, we revised the Consolidating Adjustments and Eliminations column to correctly include all intercompany eliminations. Previously, this column reflected only ACE Limited parent company intercompany eliminations. We also revised the Condensed Consolidating Balance Sheet as of December 31, 2012 and Condensed Consolidating Statement of Cash Flows for the years ended December 31, 2012 and 2011 to correct the presentation of negative cash associated with our affiliated notional cash pooling programs (Pools). In addition, certain items in the Condensed Consolidating Statement of Cash Flows for the years ended December 31, 2012 and 2011 have been reclassified to conform to current period presentation. Also, the operating cash flows have been corrected to properly reflect certain intercompany transactions previously recorded in investing and financing cash flows for the years ended December 31, 2012 and 2011.

Total shareholders' equity and net income of the Subsidiary Issuer and Parent Guarantor were not impacted as a result of these revisions. The impact of the revisions was not material to the prior period consolidated financial statements taken as a whole. There was no impact on the consolidated amounts previously reported. The prior period condensed consolidating financial statements will be similarly revised as the information is presented in the first and second quarter Form 10-Q filings for 2014.
  

Condensed Consolidating Balance Sheet at December 31, 2013

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
32

 
$
10

 
$
60,886

 
$
—

 
$
60,928

Cash(1)
—

 
16

 
748

 
(185
)
 
579

Insurance and reinsurance balances receivable
—

 
—

 
5,835

 
(809
)
 
5,026

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,057

 
(8,830
)
 
11,227

Reinsurance recoverable on policy benefits
—

 
—

 
1,215

 
(997
)
 
218

Value of business acquired
—

 
—

 
536

 
—

 
536

Goodwill and other intangible assets
—

 
—

 
5,404

 
—

 
5,404

Investments in subsidiaries
28,351

 
18,105

 
—

 
(46,456
)
 
—

Due from subsidiaries and affiliates, net
844

 
—

 
—

 
(844
)
 
—

Other assets
5

 
258

 
13,788

 
(3,459
)
 
10,592

Total assets
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
45,714

 
$
(8,271
)
 
$
37,443

Unearned premiums
—

 
—

 
9,242

 
(1,703
)
 
7,539

Future policy benefits
—

 
—

 
5,612

 
(997
)
 
4,615

Due to (from) subsidiaries and affiliates, net
—

 
714

 
130

 
(844
)
 
—

Affiliated notional cash pooling programs(1)
185

 
—

 
—

 
(185
)
 
—

Short-term debt
—

 
500

 
1,401

 
—

 
1,901

Long-term debt
—

 
3,795

 
12

 
—

 
3,807

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
222

 
1,318

 
11,655

 
(3,124
)
 
10,071

Total liabilities
407

 
6,636

 
73,766

 
(15,124
)
 
65,685

Total shareholders’ equity
28,825

 
11,753

 
34,703

 
(46,456
)
 
28,825

Total liabilities and shareholders’ equity
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. At December 31, 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 (Revised)

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
14

 
$
60,219

 
$
—

 
$
60,264

Cash(1)
103

 
2

 
859

 
(349
)
 
615

Insurance and reinsurance balances receivable
—

 
—

 
4,742

 
(595
)
 
4,147

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,935

 
(8,857
)
 
12,078

Reinsurance recoverable on policy benefits
—

 
—

 
1,229

 
(988
)
 
241

Value of business acquired
—

 
—

 
614

 
—

 
614

Goodwill and other intangible assets
—

 
—

 
4,975

 
—

 
4,975

Investments in subsidiaries
27,251

 
17,016

 
—

 
(44,267
)
 
—

Due from subsidiaries and affiliates, net
204

 
—

 
—

 
(204
)
 
—

Other assets
13

 
210

 
11,304

 
(1,916
)
 
9,611

Total assets
$
27,602

 
$
17,242

 
$
104,877

 
$
(57,176
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
46,109

 
$
(8,163
)
 
$
37,946

Unearned premiums
—

 
—

 
8,248

 
(1,384
)
 
6,864

Future policy benefits
—

 
—

 
5,458

 
(988
)
 
4,470

Due to subsidiaries and affiliates, net
—

 
68

 
136

 
(204
)
 
—

Affiliated notional cash pooling programs(1)
—

 
349

 
—

 
(349
)
 
—

Short-term debt
—

 
—

 
1,401

 
—

 
1,401

Long-term debt
—

 
3,347

 
13

 
—

 
3,360

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
71

 
1,195

 
11,219

 
(1,821
)
 
10,664

Total liabilities
71

 
5,268

 
72,584

 
(12,909
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
32,293

 
(44,267
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
17,242

 
$
104,877

 
$
(57,176
)
 
$
92,545

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. At December 31, 2012, 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 (As previously reported)

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
31,074

 
$
29,159

 
$
—

 
$
60,264

Cash(3)
103

 
515

 
(3
)
 
—

 
615

Insurance and reinsurance balances receivable
—

 
3,654

 
493

 
—

 
4,147

Reinsurance recoverable on losses and loss expenses
—

 
17,232

 
(5,154
)
 
—

 
12,078

Reinsurance recoverable on policy benefits
—

 
1,187

 
(946
)
 
—

 
241

Value of business acquired
—

 
610

 
4

 
—

 
614

Goodwill and other intangible assets
—

 
4,419

 
556

 
—

 
4,975

Investments in subsidiaries
27,251

 
—

 
—

 
(27,251
)
 
—

Due from subsidiaries and affiliates, net
204

 
—

 
—

 
(204
)
 
—

Other assets
13

 
7,563

 
2,035

 
—

 
9,611

Total assets
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
31,356

 
$
6,590

 
$
—

 
$
37,946

Unearned premiums
—

 
5,872

 
992

 
—

 
6,864

Future policy benefits
—

 
3,876

 
594

 
—

 
4,470

Due to (from) subsidiaries and affiliates, net
—

 
384

 
(180
)
 
(204
)
 
—

Short-term debt
—

 
851

 
550

 
—

 
1,401

Long-term debt
—

 
3,360

 
—

 
—

 
3,360

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
71

 
8,272

 
2,321

 
—

 
10,664

Total liabilities
71

 
54,280

 
10,867

 
(204
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
15,277

 
(27,251
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

(1)
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2)
Includes ACE Limited parent company eliminations.
(3)
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. 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

For the Year Ended December 31, 2013
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
17,025

 
$
—

 
$
17,025

Net premiums earned
—

 
—

 
16,613

 
—

 
16,613

Net investment income
2

 
3

 
2,139

 
—

 
2,144

Equity in earnings of subsidiaries
3,580

 
942

 
—

 
(4,522
)
 
—

Net realized gains (losses) including OTTI
—

 
(2
)
 
506

 
—

 
504

Losses and loss expenses
—

 
—

 
9,348

 
—

 
9,348

Policy benefits
—

 
—

 
515

 
—

 
515

Policy acquisition costs and administrative expenses
60

 
19

 
4,791

 
—

 
4,870

Interest (income) expense
(32
)
 
270

 
37

 
—

 
275

Other (income) expense
(221
)
 
27

 
209

 
—

 
15

Income tax expense (benefit)
17

 
(108
)
 
571

 
—

 
480

Net income
$
3,758

 
$
735

 
$
3,787

 
$
(4,522
)
 
$
3,758

Comprehensive income
$
2,023

 
$
(230
)
 
$
2,051

 
$
(1,821
)
 
$
2,023


Condensed Consolidating Statements of Operations and Comprehensive Income (Revised)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
16,075

 
$
—

 
$
16,075

Net premiums earned
—

 
—

 
15,677

 
—

 
15,677

Net investment income
1

 
3

 
2,177

 
—

 
2,181

Equity in earnings of subsidiaries
2,590

 
911

 
—

 
(3,501
)
 
—

Net realized gains (losses) including OTTI
17

 
—

 
61

 
—

 
78

Losses and loss expenses
—

 
—

 
9,653

 
—

 
9,653

Policy benefits
—

 
—

 
521

 
—

 
521

Policy acquisition costs and administrative expenses
62

 
28

 
4,452

 
—

 
4,542

Interest (income) expense
(33
)
 
235

 
48

 
—

 
250

Other (income) expense
(137
)
 
9

 
122

 
—

 
(6
)
Income tax expense (benefit)
10

 
(110
)
 
370

 
—

 
270

Net income
$
2,706

 
$
752

 
$
2,749

 
$
(3,501
)
 
$
2,706

Comprehensive income
$
3,682

 
$
1,209

 
$
3,724

 
$
(4,933
)
 
$
3,682




Condensed Consolidating Statements of Operations and Comprehensive Income (As previously reported)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE Limited
Consolidated

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

 
$
9,466

 
$
6,609

 
$
—

 
$
16,075

Net premiums earned
—

 
9,194

 
6,483

 
—

 
15,677

Net investment income
1

 
1,048

 
1,132

 
—

 
2,181

Equity in earnings of subsidiaries
2,590

 
—

 
—

 
(2,590
)
 
—

Net realized gains (losses) including OTTI
17

 
121

 
(60
)
 
—

 
78

Losses and loss expenses
—

 
6,211

 
3,442

 
—

 
9,653

Policy benefits
—

 
309

 
212

 
—

 
521

Policy acquisition costs and administrative expenses
62

 
2,564

 
1,916

 
—

 
4,542

Interest (income) expense
(33
)
 
257

 
26

 
—

 
250

Other (income) expense
(137
)
 
77

 
54

 
—

 
(6
)
Income tax expense
10

 
193

 
67

 
—

 
270

Net income
$
2,706

 
$
752

 
$
1,838

 
$
(2,590
)
 
$
2,706

Comprehensive income
$
3,682

 
$
1,209

 
$
1,381

 
$
(2,590
)
 
$
3,682

(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 (Revised)

For the Year Ended December 31, 2011
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
15,372

 
$
—

 
$
15,372

Net premiums earned
—

 
—

 
15,387

 
—

 
15,387

Net investment income
2

 
2

 
2,238

 
—

 
2,242

Equity in earnings of subsidiaries
1,459

 
989

 
—

 
(2,448
)
 
—

Net realized gains (losses) including OTTI
(4
)
 
—

 
(791
)
 
—

 
(795
)
Losses and loss expenses
—

 
—

 
9,520

 
—

 
9,520

Policy benefits
—

 
—

 
401

 
—

 
401

Policy acquisition costs and administrative expenses
69

 
37

 
4,434

 
—

 
4,540

Interest (income) expense
(37
)
 
266

 
21

 
—

 
250

Other (income) expense
(125
)
 
21

 
185

 
—

 
81

Income tax expense (benefit)
10

 
(103
)
 
595

 
—

 
502

Net income
$
1,540

 
$
770

 
$
1,678

 
$
(2,448
)
 
$
1,540

Comprehensive income
$
1,857

 
$
1,077

 
$
1,994

 
$
(3,071
)
 
$
1,857



Condensed Consolidating Statements of Operations and Comprehensive Income (As previously reported)

For the Year Ended December 31, 2011
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
$
—

 
$
9,081

 
$
6,291

 
$
—

 
$
15,372

Net premiums earned
—

 
9,082

 
6,305

 
—

 
15,387

Net investment income
2

 
1,096

 
1,144

 
—

 
2,242

Equity in earnings of subsidiaries
1,459

 
—

 
—

 
(1,459
)
 
—

Net realized gains (losses) including OTTI
(4
)
 
62

 
(853
)
 
—

 
(795
)
Losses and loss expenses
—

 
5,889

 
3,631

 
—

 
9,520

Policy benefits
—

 
192

 
209

 
—

 
401

Policy acquisition costs and administrative expenses
69

 
2,561

 
1,910

 
—

 
4,540

Interest (income) expense
(37
)
 
267

 
20

 
—

 
250

Other (income) expense
(125
)
 
143

 
63

 
—

 
81

Income tax expense
10

 
418

 
74

 
—

 
502

Net income
$
1,540

 
$
770

 
$
689

 
$
(1,459
)
 
$
1,540

Comprehensive income
$
1,857

 
$
1,077

 
$
382

 
$
(1,459
)
 
$
1,857

(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 Year Ended December 31, 2013
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from (used for) operating activities
$
970

 
$
(107
)
 
$
3,984

 
$
(825
)
 
$
4,022

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

 
—

 
(21,504
)
 
106

 
(21,398
)
Purchases of fixed maturities held to maturity
—

 
—

 
(447
)
 
—

 
(447
)
Purchases of equity securities
—

 
—

 
(264
)
 
—

 
(264
)
Sales of fixed maturities available for sale
—

 
—

 
10,519

 
(106
)
 
10,413

Sales of equity securities
—

 
—

 
142

 
—

 
142

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
6,941

 
—

 
6,941

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
1,488

 
—

 
1,488

Net change in short-term investments
(1
)
 
4

 
521

 
—

 
524

Net derivative instruments settlements
—

 
(1
)
 
(470
)
 
—

 
(471
)
Acquisition of subsidiaries (net of cash acquired of $38)
—

 
—

 
(977
)
 
—

 
(977
)
Capital contribution
(133
)
 
(1,097
)
 
—

 
1,230

 
—

Other
—

 
(4
)
 
(389
)
 
—

 
(393
)
Net cash flows used for investing activities
(134
)
 
(1,098
)
 
(4,440
)
 
1,230

 
(4,442
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(517
)
 
—

 
—

 
—

 
(517
)
Common Shares repurchased
—

 
—

 
(287
)
 
—

 
(287
)
Net proceeds from issuance of long-term debt
—

 
947

 
—

 
—

 
947

Proceeds from share-based compensation plans, including windfall tax benefits
14

 
—

 
121

 
—

 
135

Advances (to) from affiliates
(621
)
 
621

 
—

 
—

 
—

Dividends to parent company
—

 
—

 
(825
)
 
825

 
—

Capital contribution
—

 
—

 
1,230

 
(1,230
)
 
—

Net proceeds from (payments to) affiliated notional cash pooling programs(1)
185

 
(349
)
 
—

 
164

 
—

Other
—

 
—

 
113

 
—

 
113

Net cash flows (used for) from financing activities
(939
)
 
1,219

 
352

 
(241
)
 
391

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

 
—

 
(7
)
 
—

 
(7
)
Net (decrease) increase in cash
(103
)
 
14

 
(111
)
 
164

 
(36
)
Cash – beginning of year(1)
103

 
2

 
859

 
(349
)
 
615

Cash – end of year(1)
$
—

 
$
16

 
$
748

 
$
(185
)
 
$
579

(1) 
ACE maintains two notional multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 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 (Revised)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
573

 
$
296

 
$
3,876

 
$
(750
)
 
$
3,995

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

 
—

 
(24,076
)
 
115

 
(23,961
)
Purchases of fixed maturities held to maturity
—

 
—

 
(388
)
 
—

 
(388
)
Purchases of equity securities
—

 
—

 
(135
)
 
—

 
(135
)
Sales of fixed maturities available for sale
—

 
—

 
14,884

 
(115
)
 
14,769

Sales of equity securities
—

 
—

 
119

 
—

 
119

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
5,523

 
—

 
5,523

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
1,451

 
—

 
1,451

Net change in short-term investments
—

 
(4
)
 
121

 
—

 
117

Net derivative instruments settlements
(1
)
 
—

 
(280
)
 
—

 
(281
)
Capital contribution
—

 
(352
)
 
(90
)
 
442

 
—

Acquisition of subsidiaries (net of cash acquired of $8)
—

 
—

 
(98
)
 
—

 
(98
)
Other
—

 
(33
)
 
(522
)
 
—

 
(555
)
Net cash flows used for investing activities
(1
)
 
(389
)
 
(3,491
)
 
442

 
(3,439
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(815
)
 
—

 
—

 
—

 
(815
)
Common Shares repurchased
—

 
—

 
(11
)
 
—

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

 
—

 
150

 
—

 
150

Proceeds from share-based compensation plans, including windfall tax benefits
34

 
—

 
92

 
—

 
126

Advances from (to) affiliates
206

 
(201
)
 
(5
)
 
—

 
—

Dividends to parent company
—

 
—

 
(750
)
 
750

 
—

Capital contribution
—

 
90

 
352

 
(442
)
 
—

Net proceeds from affiliated notional cash pooling programs(1)
—

 
201

 
—

 
(201
)
 
—

Net cash flows (used for) from financing activities
(575
)
 
90

 
(172
)
 
107

 
(550
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
—

 
(5
)
 
—

 
(5
)
Net increase (decrease) in cash
(3
)
 
(3
)
 
208

 
(201
)
 
1

Cash – beginning of year(1)
106

 
5

 
651

 
(148
)
 
614

Cash – end of year(1)
$
103

 
$
2

 
$
859

 
$
(349
)
 
$
615

(1)
ACE maintains two notional multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2012 and December 31, 2011, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statement of Cash Flows (As previously reported)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
781

 
$
1,744

 
$
1,920

 
$
(450
)
 
$
3,995

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

 
(11,843
)
 
(12,001
)
 
—

 
(23,844
)
Purchases of fixed maturities held to maturity
—

 
(384
)
 
(4
)
 
—

 
(388
)
Purchases of equity securities
—

 
(70
)
 
(65
)
 
—

 
(135
)
Sales of fixed maturities available for sale
—

 
7,347

 
7,422

 
—

 
14,769

Sales of equity securities
—

 
59

 
60

 
—

 
119

Maturities and redemptions of fixed maturities available for sale
—

 
2,759

 
2,764

 
—

 
5,523

Maturities and redemptions of fixed maturities held to maturity
—

 
1,045

 
406

 
—

 
1,451

Net derivative instruments settlements
(1
)
 
(6
)
 
(274
)
 
—

 
(281
)
Capital contribution
—

 
—

 
(90
)
 
90

 
—

Advances from (to) affiliates
(2
)
 
—

 
—

 
2

 
—

Acquisition of subsidiaries (net of cash acquired of $8)
—

 
(111
)
 
13

 
—

 
(98
)
Other
—

 
(395
)
 
(160
)
 
—

 
(555
)
Net cash flows used for investing activities
(3
)
 
(1,599
)
 
(1,929
)
 
92

 
(3,439
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(815
)
 
—

 
—

 
—

 
(815
)
Common Shares repurchased
—

 
—

 
(11
)
 
—

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

 
1

 
149

 
—

 
150

Proceeds from share-based compensation plans, including windfall tax benefits
34

 
13

 
79

 
—

 
126

Advances (to) from affiliates
—

 
(105
)
 
107

 
(2
)
 
—

Dividends to parent company
—

 
—

 
(450
)
 
450

 
—

Capital contribution
—

 
90

 
—

 
(90
)
 
—

Net cash flows used for financing activities
(781
)
 
(1
)
 
(126
)
 
358

 
(550
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
(11
)
 
6

 
—

 
(5
)
Net increase (decrease) in cash
(3
)
 
133

 
(129
)
 
—

 
1

Cash – beginning of year
106

 
382

 
126

 
—

 
614

Cash – end of year(3)
$
103

 
$
515

 
$
(3
)
 
$
—

 
$
615

(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 multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statement of Cash Flows (Revised)

For the Year Ended December 31, 2011
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
831

 
$
1,221

 
$
3,455

 
$
(2,037
)
 
$
3,470

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

 
—

 
(24,601
)
 
323

 
(24,278
)
Purchases of fixed maturities held to maturity
—

 
—

 
(340
)
 
—

 
(340
)
Purchases of equity securities
—

 
—

 
(309
)
 
—

 
(309
)
Sales of fixed maturities available for sale
—

 
—

 
18,294

 
(323
)
 
17,971

Sales of equity securities
—

 
—

 
376

 
—

 
376

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
3,720

 
—

 
3,720

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
1,279

 
—

 
1,279

Net change in short-term investments
9

 
—

 
(309
)
 
—

 
(300
)
Net derivative instruments settlements
(3
)
 
—

 
(64
)
 
—

 
(67
)
Capital contribution
(385
)
 
(581
)
 
—

 
966

 
—

Acquisition of subsidiaries (net of cash acquired of $91)
—

 
(76
)
 
(530
)
 
—

 
(606
)
Other
—

 
(19
)
 
(463
)
 
—

 
(482
)
Net cash flows used for investing activities
(379
)
 
(676
)
 
(2,947
)
 
966

 
(3,036
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(459
)
 
—

 
—

 
—

 
(459
)
Common Shares repurchased
—

 
—

 
(195
)
 
—

 
(195
)
Net proceeds from issuance (repayments) of short-term debt
(300
)
 
—

 
250

 
—

 
(50
)
Proceeds from share-based compensation plans, including windfall tax benefits
133

 
—

 
6

 
—

 
139

Advances from (to) affiliates
(28
)
 
(721
)
 
749

 
—

 
—

Dividends to parent company
—

 
—

 
(2,037
)
 
2,037

 
—

Capital contribution
—

 
—

 
966

 
(966
)
 
—

Net proceeds from affiliated notional cash pooling programs(1)
—

 
148

 
—

 
(148
)
 
—

Net cash flows used for financing activities
(654
)
 
(573
)
 
(261
)
 
923

 
(565
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
—

 
(27
)
 
—

 
(27
)
Net increase (decrease) in cash
(202
)
 
(28
)
 
220

 
(148
)
 
(158
)
Cash – beginning of year(1)
308

 
33

 
431

 
—

 
772

Cash – end of year(1)
$
106

 
$
5

 
$
651

 
$
(148
)
 
$
614


(1)
ACE maintains two notional multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2011 and December 31, 2010, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows (As previously reported)

For the Year Ended December 31, 2011
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
$
762

 
$
1,053

 
$
2,395

 
$
(740
)
 
$
3,470

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

 
(12,203
)
 
(12,375
)
 
—

 
(24,578
)
Purchases of fixed maturities held to maturity
—

 
(338
)
 
(2
)
 
—

 
(340
)
Purchases of equity securities
—

 
(157
)
 
(152
)
 
—

 
(309
)
Sales of fixed maturities available for sale
9

 
9,718

 
8,244

 
—

 
17,971

Sales of equity securities
—

 
354

 
22

 
—

 
376

Maturities and redemptions of fixed maturities available for sale
—

 
1,784

 
1,936

 
—

 
3,720

Maturities and redemptions of fixed maturities held to maturity
—

 
933

 
346

 
—

 
1,279

Net derivative instruments settlements
(3
)
 
(24
)
 
(40
)
 
—

 
(67
)
Capital contribution
(385
)
 
—

 
—

 
385

 
—

Advances from (to) affiliates
41

 
—

 
—

 
(41
)
 
—

Acquisition of subsidiaries (net of cash acquired of $91)
—

 
(569
)
 
(37
)
 
—

 
(606
)
Other
—

 
(420
)
 
(62
)
 
—

 
(482
)
Net cash flows used for investing activities
(338
)
 
(922
)
 
(2,120
)
 
344

 
(3,036
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(459
)
 
—

 
—

 
—

 
(459
)
Common Shares repurchased
—

 
—

 
(195
)
 
—

 
(195
)
Net proceeds from (repayments) issuance of short-term debt
(300
)
 
(150
)
 
400

 
—

 
(50
)
Net proceeds from share-based compensation plans, including windfall tax benefits
133

 
3

 
3

 
—

 
139

Advances from (to) affiliates
—

 
(149
)
 
108

 
41

 
—

Dividends to parent company
—

 
—

 
(740
)
 
740

 
—

Capital contribution
—

 
—

 
385

 
(385
)
 
—

Net cash flows used for financing activities
(626
)
 
(296
)
 
(39
)
 
396

 
(565
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
(26
)
 
(1
)
 
—

 
(27
)
Net increase (decrease) in cash
(202
)
 
(191
)
 
235

 
—

 
(158
)
Cash – beginning of year(3)
308

 
573

 
(109
)
 
—

 
772

Cash – end of year
$
106

 
$
382

 
$
126

 
$
—

 
$
614

(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 multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2010, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Unaudited Quarterly Financial Data
Condensed unaudited quarterly financial data
Condensed unaudited quarterly financial data
 
Three Months Ended
 
 
 
March 31

 
June 30

 
September 30

 
December 31

 
(in millions of U.S. dollars, except per share data)
2013

 
2013

 
2013

 
2013

 
Net premiums earned
$
3,573

 
$
4,067

 
$
4,610

 
$
4,363

 
Net investment income
531

 
534

 
522

 
557

 
Net realized gains (losses) including OTTI
206

 
104

 
40

 
154

(1) 
Total revenues
$
4,310

 
$
4,705

 
$
5,172

 
$
5,074

 
Losses and loss expenses
$
1,926

 
$
2,250

 
$
2,655

 
$
2,517

 
Policy benefits
$
131

 
$
110

 
$
138

 
$
136

 
Net income
$
953

 
$
891

 
$
916

 
$
998

 
Basic earnings per share
$
2.80

 
$
2.61

 
$
2.68

 
$
2.93

 
Diluted earnings per share
$
2.77

 
$
2.59

 
$
2.66

 
$
2.90

 
(1) 
Includes a realized gain of $92 million for an out-of-period adjustment related to guaranteed living benefits. Refer to Note 4 a) for additional information.

 
Three Months Ended
 
 
March 31

 
June 30

 
September 30

 
December 31

(in millions of U.S. dollars, except per share data)
2012

 
2012

 
2012

 
2012

Net premiums earned
$
3,381

 
$
3,783

 
$
4,665

 
$
3,848

Net investment income
544

 
537

 
533

 
567

Net realized gains (losses) including OTTI
260

 
(394
)
 
(60
)
 
272

Total revenues
$
4,185

 
$
3,926

 
$
5,138

 
$
4,687

Losses and loss expenses
$
1,804

 
$
2,119

 
$
3,047

 
$
2,683

Policy benefits
$
147

 
$
102

 
$
130

 
$
142

Net income
$
973

 
$
328

 
$
640

 
$
765

Basic earnings per share
$
2.87

 
$
0.96

 
$
1.88

 
$
2.24

Diluted earnings per share
$
2.84

 
$
0.96

 
$
1.86

 
$
2.22

Schedule I
Schedule I: SUMMARY OF INVESTEMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
SUMMARY OF INVESTMENTS – OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 2013
(in millions of U.S. dollars)
Cost or
Amortized Cost

 
Fair Value

 
Amount at Which Shown in the Balance Sheet

Fixed maturities available for sale
 
 
 
 
 
U.S. Treasury and agency
$
2,946

 
$
2,949

 
$
2,949

Foreign
14,336

 
14,591

 
14,591

Corporate securities
16,825

 
17,470

 
17,470

Mortgage-backed securities
10,937

 
10,894

 
10,894

States, municipalities, and political subdivisions
3,362

 
3,350

 
3,350

Total fixed maturities available for sale
48,406

 
49,254

 
49,254

Fixed maturities held to maturity
 
 
 
 
 
U.S. Treasury and agency
820

 
832

 
820

Foreign
864

 
897

 
864

Corporate securities
1,922

 
2,005

 
1,922

Mortgage-backed securities
1,341

 
1,379

 
1,341

States, municipalities, and political subdivisions
1,151

 
1,150

 
1,151

Total fixed maturities held to maturity
6,098

 
6,263

 
6,098

Equity securities
 
 
 
 
 
Industrial, miscellaneous, and all other
841

 
837

 
837

Short-term investments
1,763

 
1,763

 
1,763

Other investments
2,671

 
2,976

 
2,976

 
4,434

 
4,739

 
4,739

Total investments - other than investments in related parties
$
59,779

 
$
61,093

 
$
60,928

Schedule II
Schedule II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEETS (Parent Company Only)
 
December 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Assets
 
 
 
Investments in subsidiaries and affiliates on equity basis
$
28,351

 
$
27,251

Short-term investments
2

 
1

Other investments, at cost
30

 
30

Total investments
28,383

 
27,282

Cash
—

 
103

Due from subsidiaries and affiliates, net
844

 
204

Other assets
5

 
13

Total assets
$
29,232

 
$
27,602

Liabilities
 
 
 
Affiliated notional cash pooling programs(1)
$
185

 
$
—

Accounts payable, accrued expenses, and other liabilities
222

 
71

Total liabilities
407

 
71

Shareholders' equity
 
 
 
Common Shares
8,899

 
9,591

Common Shares in treasury
(255
)
 
(159
)
Additional paid-in capital
5,238

 
5,179

Retained earnings
13,791

 
10,033

Accumulated other comprehensive income
1,152

 
2,887

Total shareholders' equity
28,825

 
27,531

Total liabilities and shareholders' equity
$
29,232

 
$
27,602

 
 
 
 
(1) ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. At December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF OPERATIONS (Parent Company Only)
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

2012

2011

Revenues
 
 
 
Investment income, including interest income
$
34

$
34

$
39

Equity in net income of subsidiaries and affiliates
3,580

2,590

1,459

Net realized gains (losses)
—

17

(4
)
 
3,614

2,641

1,494

Expenses
 
 
 
Administrative and other (income) expense
(161
)
(75
)
(56
)
Income tax expense
17

10

10

 
(144
)
(65
)
(46
)
Net income
$
3,758

$
2,706

$
1,540

Comprehensive income
$
2,023

$
3,682

$
1,857

 
 
 
 
The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF CASH FLOWS (Parent Company Only)
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012(1)

 
2011(1)

Net cash flows from operating activities(2)
$
970

 
$
573

 
$
831

Cash flows from investing activities
 
 
 
 
 
Net change in short-term investments
(1
)
 
—

 
9

Net derivative instruments settlements
—

 
(1
)
 
(3)

Capital contribution
(133
)
 
—

 
(385
)
Net cash flows used for investing activities
(134
)
 
(1
)
 
(379
)
Cash flows from financing activities
 
 
 
 
 
Dividends paid on Common Shares
(517
)
 
(815
)
 
(459
)
Net repayments of short-term debt
—

 
—

 
(300
)
Proceeds from share-based compensation plans
14

 
34

 
133

Advances (to) from affiliates
(621
)
 
206

 
(28
)
Net proceeds from affiliated notional cash pooling programs(3)
185

 
—

 
—

Net cash flows used for financing activities
(939
)
 
(575
)
 
(654
)
Net decrease in cash
(103
)
 
(3
)
 
(202
)
Cash – beginning of year
103

 
106

 
308

Cash – end of year
$
—

 
$
103

 
$
106

 
 
 
 
 
 
(1) Certain items in the Condensed Statements of Cash Flows for the years ended December 31, 2012 and 2011 have been revised. Refer to Note 19 to the Consolidated Financial Statements for additional information.
(2) Includes cash dividends received from subsidiaries of $825 million, $450 million, and $740 million in 2013, 2012, and 2011, respectively.
(3) ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. At December 31, 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
 
The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.
Schedule IV
SUPPLEMENTAL INFORMATION CONCERNING REINSURANCE
SUPPLEMENTAL INFORMATION CONCERNING REINSURANCE
Premiums Earned
 
 
 
 
 
 
 
For the years ended December 31, 2013, 2012, and 2011 (in millions of U.S. dollars, except for percentages)
 
Direct Amount

 
Ceded To Other Companies

 
Assumed From Other Companies

 
Net Amount

 
Percentage of Amount Assumed to Net

2013
 
$
18,856

 
$
5,722

 
$
3,479

 
$
16,613

 
21
%
2012
 
$
17,802

 
$
5,427

 
$
3,302

 
$
15,677

 
21
%
2011
 
$
17,534

 
$
5,496

 
$
3,349

 
$
15,387

 
22
%
Schedule VI
SUPPLEMENTARY INFORMATION CONCERNING PROPERTY AND CASUALTY OPERATIONS
SUPPLEMENTARY INFORMATION CONCERNING PROPERTY AND CASUALTY OPERATIONS
As of and for the years ended December 31, 2013, 2012, and 2011 (in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Deferred Policy Acquisition Costs
 
 
Net Reserves for Unpaid Losses and Loss Expenses

 
Unearned Premiums

 
Net Premiums Earned

 
Net Investment Income

Net Losses and Loss Expenses Incurred Related to
 
 
Amortization of Deferred Policy Acquisition Costs

 
Net Paid Losses and Loss Expenses

 
Net Premiums Written

 
 
 
 
 
 
 
Current Year

 
Prior Year

 
 
 
2013
 
$
1,865
 
 
$
26,831

 
$
7,539

 
$
15,708

 
$
1,977

 
$
9,878

 
$
(530
)
 
$
2,447

 
$
8,977

 
$
16,069

2012
 
$
1,757
 
 
$
26,547

 
$
6,864

 
$
14,764

 
$
2,018

 
$
10,132

 
$
(479
)
 
$
2,254

 
$
9,219

 
$
15,107

2011
 
$
1,512
 
 
$
25,875

 
$
6,334

 
$
14,523

 
$
2,107

 
$
10,076

 
$
(556
)
 
$
2,291

 
$
8,866

 
$
14,455

Summary of significant accounting policies (Policies)
Basis of presentation 
Basis of presentation
ACE Limited is a holding company incorporated in Zurich, Switzerland. ACE Limited, through its subsidiaries, provides a broad range of insurance and reinsurance products to insureds worldwide. ACE operates through five business segments: Insurance – North American P&C, Insurance – North American Agriculture, Insurance – Overseas General, Global Reinsurance, and Life. Refer to Note 15 for additional information.

The accompanying 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 preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Amounts included in the consolidated financial statements reflect our best estimates and assumptions; actual amounts could differ materially from these estimates. ACE's principal estimates include:
•
unpaid loss and loss expense reserves, including long-tail asbestos and environmental (A&E) reserves;
•
future policy benefits reserves;
•
the valuation of value of business acquired (VOBA) and amortization of deferred policy acquisition costs and VOBA;
•
reinsurance recoverable, including a provision for uncollectible reinsurance;
•
the assessment of risk transfer for certain structured insurance and reinsurance contracts;
•
the valuation of the investment portfolio and assessment of OTTI;
•
the valuation of deferred tax assets;
•
the valuation of derivative instruments related to guaranteed living benefits (GLB); and
•
the valuation of goodwill.
Premiums 
Premiums
Premiums are generally recognized as written upon inception of the policy. For multi-year policies for which premiums written are payable in annual installments, only the current annual premium is included as written at policy inception due to the ability of the insured/reinsured to commute or cancel coverage within the policy term. The remaining annual premiums are included as written at each successive anniversary date within the multi-year term.

For property and casualty (P&C) insurance and reinsurance products, premiums written are primarily earned on a pro-rata basis over the policy terms to which they relate. Unearned premiums represent the portion of premiums written applicable to the unexpired portion of the policies in force. For retrospectively-rated policies, written premiums are adjusted to reflect expected ultimate premiums consistent with changes to reported losses, or other measures of exposure as stated in the policy, and earned over the policy coverage period. For retrospectively-rated multi-year policies, premiums recognized in the current period are computed, using a with-and-without method, as the difference between the ceding enterprise's total contract costs before and after the experience under the contract at the reporting date. Accordingly, for retrospectively-rated multi-year policies, additional premiums are generally written and earned when losses are incurred.

Mandatory reinstatement premiums assessed on reinsurance policies are earned in the period of the loss event that gave rise to the reinstatement premiums.  All remaining unearned premiums are recognized over the remaining coverage period. 

Premiums from long-duration contracts such as certain traditional term life, whole life, endowment, and long-duration personal accident and health (A&H) policies are generally recognized as revenue when due from policyholders. Traditional life policies include those contracts with fixed and guaranteed premiums and benefits. Benefits and expenses are matched with income to result in the recognition of profit over the life of the contracts.

Retroactive loss portfolio transfer (LPT) contracts in which the insured loss events occurred prior to contract inception are evaluated to determine whether they meet criteria for reinsurance accounting. If reinsurance accounting is appropriate, written premiums are fully earned and corresponding losses and loss expenses recognized at contract inception. These contracts can cause significant variances in gross premiums written, net premiums written, net premiums earned, and net incurred losses in the years in which they are written. Reinsurance contracts sold not meeting criteria for reinsurance accounting are recorded using the deposit method as described below in Note 1 k).

Reinsurance premiums assumed are based on information provided by ceding companies supplemented by our own estimates of premium when we have not received ceding company reports. Estimates are reviewed and adjustments are recorded in the period in which they are determined. Premiums are earned over the coverage terms of the related reinsurance contracts and range from one to three years.
Deferred policy acquisition costs and value of business acquired 
Deferred policy acquisition costs and value of business acquired
Policy acquisition costs consist of commissions (direct and ceded), premium taxes, and certain underwriting costs related directly to the successful acquisition of new or renewal insurance contracts. A VOBA intangible asset is established upon the acquisition of blocks of long-duration contracts in a business combination and represents the present value of estimated net cash flows for the contracts in force at the acquisition date. Acquisition costs and VOBA, collectively policy acquisition costs, are deferred and amortized. Amortization is recorded in Policy acquisition costs in the consolidated statements of operations. Policy acquisition costs on P&C contracts are generally amortized ratably over the period in which premiums are earned. Policy acquisition costs on traditional long-duration contracts are amortized over the estimated life of the contracts, generally in proportion to premium revenue recognized. For non-traditional long-duration contracts, we amortize policy acquisition costs over the expected life of the contracts in proportion to expected gross profits.  The effect of changes in estimates of expected gross profits is reflected in the period the estimates are revised. Policy acquisition costs are reviewed to determine if they are recoverable from future income, including investment income. Unrecoverable policy acquisition costs are expensed in the period identified.

Advertising costs are expensed as incurred except for direct-response campaigns that qualify for cost deferral, principally related to A&H business produced by the Insurance – Overseas General segment, which are deferred and recognized as a component of policy acquisition costs. For individual direct-response marketing campaigns that we can demonstrate have specifically resulted in incremental sales to customers and such sales have probable future economic benefits, incremental costs directly related to the marketing campaigns are capitalized. Deferred marketing costs are reviewed regularly for recoverability from future income, including investment income, and amortized in proportion to premium revenue recognized, primarily over a ten-year period, the expected economic future benefit period. The expected future benefit period is evaluated periodically based on historical results and adjusted prospectively. The amount of deferred marketing costs reported in Deferred policy acquisition costs in the consolidated balance sheets was $307 million and $274 million at December 31, 2013 and 2012, respectively. Amortization expense for deferred marketing costs was $128 million, $119 million, and $128 million for the years ended December 31, 2013, 2012, and 2011, respectively (2012 disclosure amount adjusted to present deferred marketing amortization costs in a manner consistent with the 2013 amount).
Reinsurance 
Reinsurance
ACE assumes and cedes reinsurance with other insurance companies to provide greater diversification of business and minimize the net loss potential arising from large risks. Ceded reinsurance contracts do not relieve ACE of its primary obligation to policyholders.

For both ceded and assumed reinsurance, risk transfer requirements must be met in order to account for a contract as reinsurance, principally resulting in the recognition of cash flows under the contract as premiums and losses. To meet risk transfer requirements, a reinsurance contract must include insurance risk, consisting of both underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity. To assess risk transfer for certain contracts, ACE generally develops expected discounted cash flow analyses at contract inception. Deposit accounting is used for contracts that do not meet risk transfer requirements. Deposit accounting requires that consideration received or paid be recorded in the balance sheet as opposed to recording premiums written or losses incurred in the statement of operations. Non-refundable fees on deposit contracts are earned based on the terms of the contract described below in Note 1 k).

Reinsurance recoverable includes balances due from reinsurance companies for paid and unpaid losses and loss expenses and policy benefits that will be recovered from reinsurers, based on contracts in force. The method for determining the reinsurance recoverable on unpaid losses and loss expenses incurred but not reported (IBNR) involves actuarial estimates consistent with those used to establish the associated liability for unpaid losses and loss expenses as well as a determination of ACE's ability to cede unpaid losses and loss expenses under the terms of the reinsurance agreement.

Reinsurance recoverable is presented net of a provision for uncollectible reinsurance determined based upon a review of the financial condition of reinsurers and other factors. The provision for uncollectible reinsurance is based on an estimate of the reinsurance recoverable balance that will ultimately be unrecoverable due to reinsurer insolvency, a contractual dispute, or any other reason. The valuation of this provision includes several judgments including certain aspects of the allocation of reinsurance recoverable on IBNR claims by reinsurer and a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are reinsurance recoverable balances by reinsurer, net of collateral, and default factors used to determine the portion of a reinsurer's balance deemed uncollectible. The definition of collateral for this purpose requires some judgment and is generally limited to assets held in an ACE-only beneficiary trust, letters of credit, and liabilities held with the same legal entity for which ACE believes there is a contractual right of offset. The determination of the default factor is principally based on the financial strength rating of the reinsurer. Default factors require considerable judgment and are determined using the current financial strength rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions. The more significant considerations include, but are not necessarily limited to, the following:
•
For reinsurers that maintain a financial strength rating from a major rating agency, and for which recoverable balances are considered representative of the larger population (i.e., default probabilities are consistent with similarly rated reinsurers and payment durations conform to averages), the financial rating is based on a published source and the default factor is based on published default statistics of a major rating agency applicable to the reinsurer's particular rating class. When a recoverable is expected to be paid in a brief period of time by a highly rated reinsurer, such as certain property catastrophe claims, a default factor may not be applied;
•
For balances recoverable from reinsurers that are both unrated by a major rating agency and for which management is unable to determine a credible rating equivalent based on a parent, affiliate, or peer company, we determine a rating equivalent based on an analysis of the reinsurer that considers an assessment of the creditworthiness of the particular entity, industry benchmarks, or other factors as considered appropriate. We then apply the applicable default factor for that rating class. For balances recoverable from unrated reinsurers for which the ceded reserve is below a certain threshold, we generally apply a default factor of 34 percent, consistent with published statistics of a major rating agency;
•
For balances recoverable from reinsurers that are either insolvent or under regulatory supervision, we establish a default factor and resulting provision for uncollectible reinsurance based on reinsurer-specific facts and circumstances. Upon initial notification of an insolvency, we generally recognize an expense for a substantial portion of all balances outstanding, net of collateral, through a combination of write-offs of recoverable balances and increases to the provision for uncollectible reinsurance. When regulatory action is taken on a reinsurer, we generally recognize a default factor by estimating an expected recovery on all balances outstanding, net of collateral. When sufficient credible information becomes available, we adjust the provision for uncollectible reinsurance by establishing a default factor pursuant to information received; and
•
For other recoverables, management determines the provision for uncollectible reinsurance based on the specific facts and circumstances.

The methods used to determine the reinsurance recoverable balance and related provision for uncollectible reinsurance are regularly reviewed and updated, and any resulting adjustments are reflected in earnings in the period identified.

Prepaid reinsurance premiums represent the portion of premiums ceded to reinsurers applicable to the unexpired coverage terms of the reinsurance contracts in force.

The value of reinsurance business assumed of $27 million and $32 million at December 31, 2013 and 2012, respectively, included in Other assets in the accompanying consolidated balance sheets, represents the excess of estimated ultimate value of the liabilities assumed under retroactive reinsurance contracts over consideration received. The value of reinsurance business assumed is amortized and recorded to losses and loss expenses based on the payment pattern of the losses assumed and ranges between 9 and 40 years. The unamortized value is reviewed regularly to determine if it is recoverable based upon the terms of the contract, estimated losses and loss expenses, and anticipated investment income. Unrecoverable amounts are expensed in the period identified.
Investments 
Investments
Fixed maturities are classified as either available for sale or held to maturity. The available for sale portfolio is reported at fair value. The held to maturity portfolio includes securities for which we have the ability and intent to hold to maturity or redemption and is reported at amortized cost. Equity securities are classified as available for sale and are recorded at fair value. Short-term investments comprise securities due to mature within one year of the date of purchase and are recorded at fair value which typically approximates cost. Short-term investments include certain cash and cash equivalents, which are part of investment portfolios under the management of external investment managers.

Other investments principally comprise life insurance policies, policy loans, trading securities, other direct equity investments, investment funds, and limited partnerships.
•
Life insurance policies are carried at policy cash surrender value.
•
Policy loans are carried at outstanding balance.
•
Trading securities are recorded on a trade date basis and carried at fair value. Unrealized gains and losses on trading securities are reflected in Net income.
•
Other investments over which ACE can exercise significant influence are accounted for using the equity method.
•
All other investments over which ACE cannot exercise significant influence are carried at fair value with changes in fair value recognized through OCI. For these investments, investment income and realized gains are recognized as related distributions are received.
•
Partially-owned investment companies comprise entities in which we hold an ownership interest in excess of three percent. These investments as well as ACE's investments in investment funds where our ownership interest is in excess of three percent are accounted for under the equity method because ACE exerts significant influence. These investments apply investment company accounting to determine operating results, and ACE retains the investment company accounting in applying the equity method. This means that investment income, realized gains or losses, and unrealized gains or losses are included in the portion of equity earnings reflected in Other (income) expense.

Investments in partially-owned insurance companies primarily represent direct investments in which ACE has significant influence and, as such, meet the requirements for equity accounting. We report our share of the net income or loss of the partially-owned insurance companies in Other (income) expense. Investments in partially-owned insurance companies over which ACE does not exert significant influence are carried at fair value with changes in fair value recognized through OCI.

Realized gains or losses on sales of investments are determined on a first-in, first-out basis. Unrealized appreciation (depreciation) on investments is included as a separate component of AOCI in Shareholders' equity. We regularly review our investments for OTTI. Refer to Note 3 for additional information.

With respect to securities where the decline in value is determined to be temporary and the security's value is not written down, a subsequent decision may be made to sell that security and realize a loss. Subsequent decisions on security sales are the result of changing or unforeseen facts and circumstances (i.e., arising from a large insured loss such as a catastrophe), deterioration of the creditworthiness of the issuer or its industry, or changes in regulatory requirements. We believe that subsequent decisions to sell such securities are consistent with the classification of the majority of the portfolio as available for sale.

We use derivative instruments including futures, options, swaps, and foreign currency forward contracts for the purpose of managing certain investment portfolio risks and exposures. Refer to Note 10 for additional information. Derivatives are reported at fair value and are recorded in the accompanying consolidated balance sheets in either Accounts payable, accrued expenses, and other liabilities or Other assets with changes in fair value included in Net realized gains (losses) in the consolidated statements of operations. Collateral held by brokers equal to a percentage of the total value of open futures contracts is included in the investment portfolio.

Net investment income includes interest and dividend income and amortization of fixed maturity market premiums and discounts and is net of investment management and custody fees. For mortgage-backed securities, and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the resultant change in effective yields and maturities are recognized prospectively. Prepayment fees or call premiums that are only payable when a security is called prior to its maturity are earned when received and reflected in Net investment income. 

ACE participates in a securities lending program operated by a third-party banking institution whereby certain assets are loaned to qualified borrowers and from which we earn an incremental return. Borrowers provide collateral, in the form of either cash or approved securities, of 102 percent of the fair value of the loaned securities.  Each security loan is deemed to be an overnight transaction.  Cash collateral is invested in a collateral pool which is managed by the banking institution.  The collateral pool is subject to written investment guidelines with key objectives which include the safeguard of principal and adequate liquidity to meet anticipated redemptions. The fair value of the loaned securities is monitored on a daily basis, with additional collateral obtained or refunded as the fair value of the loaned securities changes. The collateral is held by the third-party banking institution, and the collateral can only be accessed in the event that the institution borrowing the securities is in default under the lending agreement. As a result of these restrictions, we consider our securities lending activities to be non-cash investing and financing activities. 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. The fair value of the securities on loan is included in fixed maturities and equity securities. The securities lending collateral is reported as a separate line in total assets with a related liability reflecting our obligation to return the collateral plus interest.

Similar to securities lending arrangements, securities sold under repurchase agreements, whereby ACE sells securities and repurchases them at a future date for a predetermined price, are accounted for as collateralized investments and borrowings and are recorded at the contractual repurchase amounts plus accrued interest. Assets to be repurchased are the same, or substantially the same, as the assets transferred and the transferor, through right of substitution, maintains the right and ability to redeem the collateral on short notice. The fair value of the underlying securities is included in fixed maturities and equity securities. In contrast to securities lending programs, the use of cash received is not restricted. We report the obligation to return the cash as Short-term debt in the consolidated balance sheets.

Refer to Note 4 for a discussion on the determination of fair value for ACE's various investment securities.
Cash 
Cash
Cash includes cash on hand and deposits with an original maturity of three months or less at time of purchase. Cash held by external money managers is included in Short-term investments.

We have agreements with a third-party bank provider which implemented two international multi-currency notional cash pooling programs. In each program, participating ACE entities establish deposit accounts in different currencies with the bank provider and each day the credit or debit balances in every account are notionally translated into a single currency (U.S. dollars) and then notionally pooled. The bank extends overdraft credit to any participating ACE entity as needed, provided that the overall notionally-pooled balance of all accounts in each pool at the end of each day is at least zero. Actual cash balances are not physically converted and are not commingled between legal entities. Any overdraft balances incurred under this program by an ACE entity would be guaranteed by ACE Limited (up to $300 million in the aggregate). Our syndicated letter of credit facility allows for same day drawings to fund a net pool overdraft should participating ACE entities overdraw contributed funds from the pool.
Goodwill and other intangible assets 
Goodwill and other intangible assets
Goodwill represents the excess of the cost of acquisitions over the fair value of net assets acquired and is not amortized. Goodwill is assigned at acquisition to the applicable reporting unit of the acquired entities giving rise to the goodwill. Goodwill impairment tests are performed annually or more frequently if circumstances indicate a possible impairment.  For goodwill impairment testing, we use a qualitative assessment to determine whether it is more likely than not (i.e., more than a 50 percent probability) that the fair value of a reporting unit is greater than its carrying amount. If our assessment indicates less than a 50 percent probability that fair value exceeds carrying value, we quantitatively estimate a reporting unit's fair value. Goodwill recorded in connection with investments in partially-owned insurance companies is recorded in Investments in partially-owned insurance companies and is also measured for impairment annually.

Indefinite lived intangible assets are not subject to amortization. Finite lived intangible assets are amortized over their useful lives, generally ranging from 1 to 20 years. The amortization of finite lived intangible assets is reported in Other (income) expense in the consolidated statements of operations. Intangible assets are regularly reviewed for indicators of impairment. Impairment is recognized if the carrying amount is not recoverable from its undiscounted cash flows and is measured as the difference between the carrying amount and fair value.
Unpaid losses and loss expenses 
Unpaid losses and loss expenses
A liability is established for the estimated unpaid losses and loss expenses under the terms of, and with respect to, ACE's policies and agreements. Similar to premiums that are recognized as revenues over the coverage period of the policy, a liability for unpaid losses and loss expenses is recognized as expense when insured events occur over the coverage period of the policy. This liability includes a provision for both reported claims (case reserves) and incurred but not reported claims (IBNR reserves). IBNR reserve estimates are generally calculated by first projecting the ultimate cost of all losses that have occurred (expected losses), and then subtracting paid losses, case reserves, and loss expenses. The methods of determining such estimates and establishing the resulting liability are reviewed regularly and any adjustments are reflected in operations in the period in which they become known. Future developments may result in losses and loss expenses materially greater or less than recorded amounts.

Except for net loss and loss expense reserves of $54 million net of discount, held at December 31, 2013, representing certain structured settlements for which the timing and amount of future claim payments are reliably determinable and $52 million, net of discount, of certain reserves for unsettled claims that are discounted in statutory filings, ACE does not discount its P&C loss reserves. This compares with reserves of $58 million for certain structured settlements and $47 million of certain reserves for unsettled claims at December 31, 2012. Structured settlements represent contracts purchased from life insurance companies primarily to settle workers' compensation claims, where payments to the claimant by the life insurance company are expected to be made in the form of an annuity. ACE retains the liability to the claimant in the event that the life insurance company fails to pay. At December 31, 2013, the gross liability due to claimants was $631 million, net of discount, and reinsurance recoverables due from the life insurance companies was $577 million, net of discount. For structured settlement contracts where payments are guaranteed regardless of claimant life expectancy, the amounts recoverable from the life insurance companies at December 31, 2013 are included in Other assets in the consolidated balance sheets, as they do not meet the requirements for reinsurance accounting.

Included in unpaid losses and loss expenses are liabilities for asbestos and environmental (A&E) claims and expenses. These unpaid losses and loss expenses are principally related to claims arising from remediation costs associated with hazardous waste sites and bodily-injury claims related to asbestos products and environmental hazards. The estimation of these liabilities is particularly sensitive to changes in the legal environment including specific settlements that may be used as precedents to settle future claims. However, ACE does not anticipate future changes in laws and regulations in setting its A&E reserve levels.

Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves first reported in previous calendar years and excludes the effect of losses from the development of earned premiums from previous accident years.

For purposes of analysis and disclosure, management views prior period development to be changes in the nominal value of loss estimates from period to period, net of premium and profit commission adjustments on loss sensitive contracts. Prior period development generally excludes changes in loss estimates that do not arise from the emergence of claims, such as those related to uncollectible reinsurance, interest, unallocated loss adjustment expenses, or foreign currency. Accordingly, specific items excluded from prior period development include the following: gains/losses related to foreign currency remeasurement; losses recognized from the early termination or commutation of reinsurance agreements that principally relate to the time value of money; changes in the value of reinsurance business assumed reflected in losses incurred but principally related to the time value of money; and losses that arise from changes in estimates of earned premiums from prior accident years. Except for foreign currency remeasurement, which is included in Net realized gains (losses), these items are included in current year losses.
Future policy benefits 
Future policy benefits
The valuation of long-duration contract reserves requires management to make estimates and assumptions regarding expenses, mortality, persistency, and investment yields. Estimates are primarily based on historical experience and information provided by ceding companies and include a margin for adverse deviation. Interest rates used in calculating reserves range from less than 1.0 percent to 6.5 percent and less than 1.0 percent to 4.5 percent at December 31, 2013 and 2012, respectively. Actual results could differ materially from these estimates. Management monitors actual experience and where circumstances warrant, will revise assumptions and the related reserve estimates. Revisions are recorded in the period they are determined.

Certain of our long-duration contracts are supported by assets that do not qualify for separate account reporting under GAAP. These assets are classified as trading securities and reported in Other investments and the offsetting liabilities are reported in Future policy benefits in the consolidated balance sheets. Changes in the fair value of separate account assets that do not qualify for separate account reporting under GAAP are reported in Other income (expense) and the offsetting movements in the liabilities are included in Policy benefits in the consolidated statements of operations.
Assumed reinsurance programs involving minimum benefit guarantees under annuity contracts 
Assumed reinsurance programs involving minimum benefit guarantees under annuity contracts
ACE reinsures various death and living benefit guarantees associated with variable annuities issued primarily in the United States and Japan. Each reinsurance treaty covers variable annuities written during a limited period, typically not exceeding two years. We generally receive a monthly premium during the accumulation phase of the covered annuities (in-force) based on a percentage of either the underlying accumulated account values or the underlying accumulated guaranteed values. Depending on an annuitant's age, the accumulation phase can last many years. To limit our exposure under these programs, all reinsurance treaties include annual or aggregate claim limits and many include an aggregate deductible.

The guarantees which are payable on death, referred to as guaranteed minimum death benefits (GMDB), principally cover shortfalls between accumulated account value at the time of an annuitant's death and either i) an annuitant's total deposits; ii) an annuitant's total deposits plus a minimum annual return; or iii) the highest accumulated account value attained at any policy anniversary date. In addition, a death benefit may be based on a formula specified in the variable annuity contract that uses a percentage of the growth of the underlying contract value. Liabilities for GMDBs are based on cumulative assessments or premiums to date multiplied by a benefit ratio that is determined by estimating the present value of benefit payments and related adjustment expenses divided by the present value of cumulative assessment or expected premiums during the contract period.  

Under reinsurance programs covering GLBs, we assume the risk of guaranteed minimum income benefits (GMIB) and guaranteed minimum accumulation benefits (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. Our GLB reinsurance product meets the definition of a derivative for accounting purposes and is carried at fair value with changes in fair value recognized in income and classified as described below. As the assuming entity, we are obligated to provide coverage until the earlier of the expiration of the underlying guaranteed benefit or the treaty expiration date. Premiums received under the reinsurance treaties are classified as premium. Expected losses allocated to premiums received are classified as 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 (i.e., declining interest rates and/or declining equity markets) and changes in policyholder behavior (i.e., 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.
Deposit assets and liabilities 
Deposit assets and liabilities
Deposit assets arise from ceded reinsurance contracts purchased that do not transfer significant underwriting or timing risk. Under deposit accounting, consideration received or paid, excluding non-refundable fees, is recorded as a deposit asset or liability in the balance sheet as opposed to recording premiums and losses in the statement of operations. Interest income on deposits, representing the consideration received or to be received in excess of cash payments related to the deposit contract, is earned based on an effective yield calculation. The calculation of the effective yield is based on the amount and timing of actual cash flows at the balance sheet date and the estimated amount and timing of future cash flows. The effective yield is recalculated periodically to reflect revised estimates of cash flows. When a change in the actual or estimated cash flows occurs, the resulting change to the carrying amount of the deposit asset is reported as income or expense. Deposit assets of $100 million and $138 million at December 31, 2013 and 2012, respectively, are reflected in Other assets in the consolidated balance sheets and the accretion of deposit assets related to interest pursuant to the effective yield calculation is reflected in Net investment income in the consolidated statements of operations.

Non-refundable fees are earned based on contract terms. Non-refundable fees paid but unearned are reflected in Other assets in the consolidated balance sheets and earned fees are reflected in Other (income) expense in the consolidated statements of operations.

Deposit liabilities include reinsurance deposit liabilities of $131 million and $283 million and contract holder deposit funds of $699 million and $548 million at December 31, 2013 and 2012, respectively. Deposit liabilities are reflected in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets. The reinsurance deposit liabilities arise from contracts sold for which there is not a significant transfer of risk. At contract inception, the deposit liability equals net cash received. An accretion rate is established based on actuarial estimates whereby the deposit liability is increased to the estimated amount payable over the contract term. The deposit accretion rate is the rate of return required to fund expected future payment obligations. We periodically reassess the estimated ultimate liability and related expected rate of return. Changes to the deposit liability are generally reflected through Interest expense to reflect the cumulative effect of the period the contract has been in force, and by an adjustment to the future accretion rate of the liability over the remaining estimated contract term.

Contract holder deposit funds represent a liability for investment contracts sold that do not meet the definition of an insurance contract, and certain of these contracts are sold with a guaranteed rate of return. The liability equals accumulated policy account values, which consist of the deposit payments plus credited interest less withdrawals and amounts assessed through the end of the period.
Foreign currency remeasurement and translation 
Foreign currency remeasurement and translation
The functional currency for each of our foreign operations is generally the currency of the local operating environment. Transactions in currencies other than a foreign operation's functional currency are remeasured into the functional currency and the resulting foreign exchange gains and losses are reflected in Net realized gains (losses) in the consolidated statements of operations. Functional currency assets and liabilities are translated into the reporting currency, U.S. dollars, using period end exchange rates and the related translation adjustments are recorded as a separate component of AOCI. Functional statement of operations amounts expressed in functional currencies are translated using average exchange rates.
Administrative expenses 
Administrative expenses
Administrative expenses generally include all operating costs other than policy acquisition costs. The Insurance – North American P&C segment manages and uses an in-house third-party claims administrator, ESIS Inc. (ESIS).  ESIS performs claims management and risk control services for domestic and international organizations that self-insure P&C exposures as well as internal P&C exposures.  The net operating results of ESIS are included within Administrative expenses in the consolidated statements of operations and were $25 million, $23 million, and $21 million for the years ended December 31, 2013, 2012, and 2011, respectively.
Income taxes 
Income taxes
Income taxes have been recorded related to those operations subject to income taxes. Deferred tax assets and liabilities result from temporary differences between the amounts recorded in the consolidated financial statements and the tax basis of our assets and liabilities. Refer to Note 8 for additional information. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance against deferred tax assets is recorded if it is more likely than not that all, or some portion, of the benefits related to deferred tax assets will not be realized. The valuation allowance assessment considers tax planning strategies, where applicable.

We recognize uncertain tax positions deemed more likely than not of being sustained upon examination.  Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
Earnings per share 
Earnings per share
Basic earnings per share is calculated using the weighted-average shares outstanding including participating securities with non-forfeitable rights to dividends such as unvested restricted stock. All potentially dilutive securities including stock options are excluded from the basic earnings per share calculation. In calculating diluted earnings per share, the weighted-average shares outstanding is increased to include all potentially dilutive securities. Basic and diluted earnings per share are calculated by dividing Net income by the applicable weighted-average number of shares outstanding during the year.
Cash flow information 
Cash flow information
Premiums received and losses paid associated with the GLB reinsurance products, which as discussed previously meet the definition of a derivative instrument for accounting purposes, are included within Cash flows from operating activities.  Cash flows, such as settlements and collateral requirements, associated with GLB and all other derivative instruments are included on a net basis within Cash flows from investing activities. Purchases, sales, and maturities of short-term investments are recorded on a net basis within Cash flows from investing activities.

Derivatives 
Derivatives
ACE recognizes all derivatives at fair value in the consolidated balance sheets and participates in derivative instruments in two principal ways:

(i) To sell protection to customers as an insurance or reinsurance contract that meets the definition of a derivative for accounting purposes. For 2013 and 2012, the reinsurance of GLBs was our primary product falling into this category; and
(ii) To mitigate financial risks, principally arising from investment holdings, products sold, or assets and liabilities held in foreign currencies. For these instruments, changes in assets or liabilities measured at fair value are recorded as realized gains or losses in the consolidated statement of operations.

We did not designate any derivatives as accounting hedges during 2013, 2012, or 2011.
Share-based compensation 
Share-based compensation
ACE measures and records compensation cost for all share-based payment awards at grant-date fair value. Compensation costs are recognized for share-based payment awards with only service conditions that have graded vesting schedules on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. Refer to Note 12 for additional information.
New accounting pronouncements 

Investments (Tables)
Schedule Of Amortized Cost And Fair Value Of Fixed Maturities And Related OTTI Recognized In AOCI 
December 31, 2013
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

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

 
$
62

 
$
(59
)
 
$
2,949

 
$
—

Foreign
14,336

 
377

 
(122
)
 
14,591

 
—

Corporate securities
16,825

 
777

 
(132
)
 
17,470

 
(6
)
Mortgage-backed securities
10,937

 
184

 
(227
)
 
10,894

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

 
65

 
(77
)
 
3,350

 
—

 
$
48,406

 
$
1,465

 
$
(617
)
 
$
49,254

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

 
$
16

 
$
(4
)
 
$
832

 
$
—

Foreign
864

 
33

 
—

 
897

 
—

Corporate securities
1,922

 
83

 
—

 
2,005

 
—

Mortgage-backed securities
1,341

 
39

 
(1
)
 
1,379

 
—

States, municipalities, and political subdivisions
1,151

 
16

 
(17
)
 
1,150

 
—

 
$
6,098

 
$
187

 
$
(22
)
 
$
6,263

 
$
—

Schedule Of Fixed Maturities By Contractual Maturity 
The following table presents fixed maturities by contractual maturity:
 
December 31
 
 
December 31
 
 
 
 
2013

 
 
 
2012

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,387

 
$
2,411

 
$
1,887

 
$
1,906

Due after 1 year through 5 years
14,139

 
14,602

 
13,411

 
14,010

Due after 5 years through 10 years
16,200

 
16,535

 
15,032

 
16,153

Due after 10 years
4,743

 
4,812

 
4,285

 
4,764

 
37,469

 
38,360

 
34,615

 
36,833

Mortgage-backed securities
10,937

 
10,894

 
10,051

 
10,473

 
$
48,406

 
$
49,254

 
$
44,666

 
$
47,306

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
401

 
$
405

 
$
656

 
$
659

Due after 1 year through 5 years
2,284

 
2,363

 
1,870

 
1,950

Due after 5 years through 10 years
1,686

 
1,723

 
2,119

 
2,267

Due after 10 years
386

 
393

 
597

 
641

 
4,757

 
4,884

 
5,242

 
5,517

Mortgage-backed securities
1,341

 
1,379

 
2,028

 
2,116

 
$
6,098

 
$
6,263

 
$
7,270

 
$
7,633

Schedule Of Cost And Fair Value Of Equity Securities 
 
December 31


December 31

(in millions of U.S. dollars)
2013


2012

Cost
$
841

 
$
707

Gross unrealized appreciation
63

 
41

Gross unrealized depreciation
(67
)
 
(4
)
Fair value
$
837

 
$
744

Schedule Of Default Assumptions By Moody's Rating Category 
The following table presents default assumptions by Moody's rating category (historical mean default rate provided for comparison):
Moody's Rating Category
1-in-100 Year Default Rate

 
Historical Mean Default Rate

Investment Grade:
 
 
 
Aaa-Baa
0.0-1.4%

 
0.0-0.3%

Below Investment Grade:
 
 
 
Ba
4.9
%
 
1.1
%
B
12.8
%
 
3.4
%
Caa-C
53.2
%
 
13.8
%
Schedule Of Significant Assumptions For Future Cash Flows For Mortgage Backed Securities 

Schedule Of Net Realized Gains (Losses) And The Losses Included In Net Realized Gains (Losses) And OCI 
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” and the change in net unrealized appreciation (depreciation) of investments: 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Fixed maturities:
 
 
 
 
 
OTTI on fixed maturities, gross
$
(18
)
 
$
(26
)
 
$
(61
)
OTTI on fixed maturities recognized in OCI (pre-tax)
—

 
1

 
15

OTTI on fixed maturities, net
(18
)
 
(25
)
 
(46
)
Gross realized gains excluding OTTI
237

 
388

 
410

Gross realized losses excluding OTTI
(129
)
 
(133
)
 
(200
)
Total fixed maturities
90

 
230

 
164

Equity securities:
 
 
 
 
 
OTTI on equity securities
(2
)
 
(5
)
 
(1
)
Gross realized gains excluding OTTI
21

 
11

 
15

Gross realized losses excluding OTTI
(4
)
 
(2
)
 
(5
)
Total equity securities
15

 
4

 
9

OTTI on other investments
(2
)
 
(7
)
 
(3
)
Foreign exchange gains (losses)
29

 
(16
)
 
(13
)
Investment and embedded derivative instruments
78

 
(6
)
 
(143
)
Fair value adjustments on insurance derivative
878

 
171

 
(779
)
S&P put options and futures
(579
)
 
(297
)
 
(4
)
Other derivative instruments
(2
)
 
(4
)
 
(4
)
Other
(3
)
 
3

 
(22
)
Net realized gains (losses)
504

 
78

 
(795
)
Change in net unrealized appreciation (depreciation) on investments:
 
 
 
 
 
Fixed maturities available for sale
(1,798
)
 
1,099

 
569

Fixed maturities held to maturity
(82
)
 
(94
)
 
(89
)
Equity securities
(41
)
 
61

 
(47
)
Other
54

 
50

 
40

Income tax (expense) benefit
408

 
(198
)
 
(157
)
Change in net unrealized appreciation (depreciation) on investments
(1,459
)
 
918

 
316

Total net realized gains (losses) and change in net unrealized appreciation (depreciation) on investments
$
(955
)
 
$
996

 
$
(479
)
Schedule Of Roll-Forward Of Pre-Tax Credit Losses Related To Fixed Maturities For Which A Portion Of OTTI Was Recognized In OCI 
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: 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

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

 
$
74

 
$
137

Additions where no OTTI was previously recorded
9

 
8

 
12

Additions where an OTTI was previously recorded
3

 
12

 
8

Reductions for securities sold during the period
(18
)
 
(51
)
 
(83
)
Balance of credit losses related to securities still held – end of year
$
37

 
$
43

 
$
74

Schedule Of Other Investments 
 
 
 
December 31

 
 
 
December 31

 
 
 
2013

 
 
 
2012

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

 
Cost

 
Fair Value

 
Cost

Investment funds
$
428

 
$
278

 
$
395

 
$
278

Limited partnerships
576

 
424

 
531

 
398

Partially-owned investment companies
1,284

 
1,284

 
1,186

 
1,187

Life insurance policies
180

 
180

 
148

 
148

Policy loans
179

 
179

 
164

 
164

Trading securities
276

 
273

 
243

 
242

Other
53

 
53

 
49

 
48

Total
$
2,976

 
$
2,671

 
$
2,716

 
$
2,465

Schedule Of Partially Owned Insurance Companies 
 
December 31
 
 
December 31
 
 
 
 
2013
 
 
2012
 
 
 
(in millions of U.S. dollars, except percentages)
Carrying Value

 
Issued
 Share
Capital

 
Ownership Percentage

 
Carrying Value

 
Issued Share Capital

 
Ownership Percentage

 
Domicile
Huatai Group
$
365

 
$
631

 
20.0
%
 
$
350

 
$
474

 
20.0
%
 
China
Huatai Life Insurance Company
84

 
379

 
20.0
%
 
84

 
205

 
20.0
%
 
China
Freisenbruch-Meyer
9

 
5

 
40.0
%
 
9

 
5

 
40.0
%
 
Bermuda
ACE Cooperative Insurance Co. – Saudi Arabia
10

 
27

 
30.0
%
 
9

 
27

 
30.0
%
 
Saudi Arabia
Russian Reinsurance Company
2

 
4

 
23.3
%
 
2

 
4

 
23.3
%
 
Russia
Total
$
470

 
$
1,046

 
 
 
$
454

 
$
715

 
 
 
 
Schedule Of Aggregate Fair Value And Gross Unrealized Loss By Length Of Time The Security Has Continuously Been In An Unrealized Loss Position 
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
 
December 31, 2013
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

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

 
$
(57
)
 
$
31

 
$
(6
)
 
$
1,825

 
$
(63
)
Foreign
4,621

 
(114
)
 
201

 
(8
)
 
4,822

 
(122
)
Corporate securities
3,836

 
(118
)
 
194

 
(14
)
 
4,030

 
(132
)
Mortgage-backed securities
5,248

 
(197
)
 
384

 
(31
)
 
5,632

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

 
(90
)
 
84

 
(4
)
 
2,248

 
(94
)
Total fixed maturities
17,663

 
(576
)
 
894

 
(63
)
 
18,557

 
(639
)
Equity securities
498

 
(67
)
 
—

 
—

 
498

 
(67
)
Other investments
67

 
(9
)
 
—

 
—

 
67

 
(9
)
Total
$
18,228

 
$
(652
)
 
$
894

 
$
(63
)
 
$
19,122

 
$
(715
)
 
 
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 Sources Of Net Investment Income 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Fixed maturities
$
2,093

 
$
2,134

 
$
2,196

Short-term investments
29

 
28

 
43

Equity securities
37

 
34

 
36

Other
105

 
104

 
62

Gross investment income
2,264

 
2,300

 
2,337

Investment expenses
(120
)
 
(119
)
 
(95
)
Net investment income
$
2,144

 
$
2,181

 
$
2,242

Schedule Of Components Of Restricted Assets 
The following table presents the components of restricted assets: 
 
December 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Trust funds
$
11,315

 
$
11,389

Deposits with non-U.S. regulatory authorities
1,970

 
2,133

Assets pledged under repurchase agreements
1,435

 
1,401

Deposits with U.S. regulatory authorities
1,334

 
1,338

Other pledged assets
391

 
456

 
$
16,445

 
$
16,717

Fair value measurements (Tables)
Financial Instruments Measured At Fair Value On A Recurring Basis 
The following tables present, by valuation hierarchy, the financial instruments measured at fair value on a recurring basis: 
December 31, 2013
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
1,323

 
$
—

 
$
2,949

Foreign
223

 
14,324

 
44

 
14,591

Corporate securities
—

 
17,304

 
166

 
17,470

Mortgage-backed securities
—

 
10,886

 
8

 
10,894

States, municipalities, and political subdivisions
—

 
3,350

 
—

 
3,350

 
1,849

 
47,187

 
218

 
49,254

Equity securities
373

 
460

 
4

 
837

Short-term investments
953

 
803

 
7

 
1,763

Other investments
305

 
231

 
2,440

 
2,976

Securities lending collateral
—

 
1,632

 
—

 
1,632

Investment derivative instruments
19

 
—

 
—

 
19

Other derivative instruments
—

 
6

 
—

 
6

Separate account assets
1,145

 
81

 
—

 
1,226

Total assets measured at fair value
$
4,644

 
$
50,400

 
$
2,669

 
$
57,713

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
6

 
$
—

 
$
—

 
$
6

Other derivative instruments
60

 
2

 
—

 
62

GLB(1)
—

 
—

 
193

 
193

Total liabilities measured at fair value
$
66

 
$
2

 
$
193

 
$
261

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 c) 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 c) for additional information.
Fair Value And Maximum Future Funding Commitments Related To Investments 
The following table presents, by investment category, the expected liquidation period, fair value, and maximum future funding commitments of alternative investments: 
 
 
 
December 31
 
 
December 31
 
 
 
 
2013
 
 
2012
 
(in millions of U.S. dollars)
Expected
Liquidation
Period of Underlying Assets
 
Fair Value

 
Maximum
Future Funding
Commitments

 
Fair Value

 
Maximum
Future Funding
Commitments

Financial
5 to 9 Years
 
$
256

 
$
129

 
$
225

 
$
111

Real estate
3 to 9 Years
 
322

 
92

 
292

 
62

Distressed
6 to 9 Years
 
180

 
230

 
192

 
152

Mezzanine
6 to 9 Years
 
276

 
252

 
284

 
279

Traditional
3 to 8 Years
 
813

 
456

 
711

 
587

Vintage
1 to 3 Years
 
13

 
—

 
14

 
—

Investment funds
Not Applicable
 
428

 
—

 
395

 
—

 
 
 
$
2,288

 
$
1,159

 
$
2,113

 
$
1,191

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

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
193

 
Actuarial model
 
Lapse rate
 
1% – 30%
 
 
 
 
 
Annuitization rate
 
0% – 55%
(1) 
Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living benefits.
Financial Instruments Measured At Fair Value Using Significant Unobservable Inputs 
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)

Year Ended December 31, 2013
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance, beginning of year
$
60

 
$
102

 
$
13

 
 
$
3

 
$
—

$
2,252

 
 
$
1,119

Transfers into Level 3
36

 
47

 
—

 
 
8

 
8

—

 
 
—

Transfers out of Level 3
(54
)
 
(31
)
 
—

 
 
(1
)
 
(2
)
—

 
 
—

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

 
—

 
—

 
 
(6
)
 
—

45

 
 
—

Net Realized Gains/Losses
1

 
(2
)
 
—

 
 
4

 
—

(2
)
 
 
(926
)
Purchases
24

 
75

 
—

 
 
2

 
3

551

 
 
—

Sales
(21
)
 
(7
)
 
(3
)
 
 
(6
)
 
(1
)
(10
)
 
 
—

Settlements
(2
)
 
(18
)
 
(2
)
 
 
—

 
(1
)
(396
)
 
 
—

Balance, end of year
$
44

 
$
166

 
$
8

 
 
$
4

 
$
7

$
2,440

 
 
$
193

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

 
$
(2
)
 
$
—

 
 
$
—

 
$
—

$
(2
)
 
 
$
(926
)
(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 c) for additional information.
 
Assets
 
 
Liabilities

 
Available-for-Sale Debt Securities
 
 
Equity
securities

 
Other
investments

 
Other
derivative
instruments

 
GLB(1)

Year Ended December 31, 2012
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance, beginning of year
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

Transfers into Level 3
—

 
49

 
37

 
22

 
1

 
2

 
53

 
—

 
—

Transfers out of Level 3
(4
)
 
(13
)
 
(46
)
 
(35
)
 
(1
)
 
(11
)
 
—

 
—

 
—

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

 
(1
)
 
6

 
—

 
—

 
—

 
55

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(1
)
 
—

 
—

 
—

 
(7
)
 
(4
)
 
(200
)
Purchases
—

 
46

 
24

 
9

 
—

 
4

 
520

 
3

 
—

Sales
—

 
(53
)
 
(19
)
 
(7
)
 
—

 
(5
)
 
(9
)
 
—

 
—

Settlements
(1
)
 
(1
)
 
(33
)
 
(4
)
 
(1
)
 
—

 
(237
)
 
(2
)
 
—

Balance, end of year
$
—

 
$
60

 
$
102

 
$
13

 
$
—

 
$
3

 
$
2,252

 
$
—

 
$
1,119

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(7
)
 
$
—

 
$
(200
)
(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 $1.4 billion at December 31, 2012 and $1.5 billion at December 31, 2011, which includes a fair value derivative adjustment of $1.1 billion and $1.3 billion, respectively. 

 
 
 
Assets
 
 
Liabilities

 
 
 
Available-for-Sale Debt Securities
 
 
 
 
 
 
 
 
GLB(1)

Year Ended December 31, 2011
U.S.
Treasury
and
Agency

 
Foreign

 
Corporate
securities

 
MBS

 
States,
municipalities,
and political
subdivisions

 
Equity
securities

Other
investments

Other
derivative
instruments

(in millions of U.S. dollars)
 
 
 
 
 
 
 
 
Balance, beginning of year
$
—

 
$
26

 
$
115

 
$
39

 
$
2

 
$
13

 
$
1,432

 
$
4

 
$
507

Transfers into Level 3
—

 
9

 
42

 
4

 
—

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
(18
)
 
(4
)
 
(48
)
 
—

 
—

 
—

 
—

 
—

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

 
(1
)
 
(2
)
 
—

 
—

 
(1
)
 
93

 
—

 
—

Net Realized Gains/Losses
—

 
—

 
(3
)
 
—

 
—

 
4

 
(3
)
 
2

 
812

Purchased
5

 
23

 
32

 
59

 
—

 
5

 
602

 
—

 
—

Sales
—

 
(3
)
 
(27
)
 
(17
)
 
—

 
(8
)
 
(55
)
 
—

 
—

Settlements
—

 
(3
)
 
(19
)
 
(9
)
 
(1
)
 
—

 
(192
)
 
(3
)
 
—

Balance, end of year
$
5

 
$
33

 
$
134

 
$
28

 
$
1

 
$
13

 
$
1,877

 
$
3

 
$
1,319

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

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(3
)
 
$
(1
)
 
$
812

(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 $1.5 billion at December 31, 2011 and $648 million at December 31, 2010, which includes a fair value derivative adjustment of $1.3 billion and $507 million, respectively. 
Carrying Values And Fair Values Of Financial Instruments Not Measured At Fair Value 
December 31, 2013
Fair Value
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
236

 
$
—

 
$
832

$
820

Foreign
—

 
897

 
—

 
897

864

Corporate securities
—

 
1,990

 
15

 
2,005

1,922

Mortgage-backed securities
—

 
1,379

 
—

 
1,379

1,341

States, municipalities, and political subdivisions
—

 
1,150

 
—

 
1,150

1,151

 
596

 
5,652

 
15

 
6,263

6,098

Partially-owned insurance companies
—

 
—

 
470

 
470

470

Total assets
$
596

 
$
5,652

 
$
485

 
$
6,733

$
6,568

Liabilities:
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
1,913

 
$
—

 
$
1,913

$
1,901

Long-term debt
—

 
4,088

 
—

 
4,088

3,807

Trust preferred securities
—

 
438

 
—

 
438

309

Total liabilities
$
—

 
$
6,439

 
$
—

 
$
6,439

$
6,017



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

Reinsurance (Tables)
Schedule of direct, assumed and ceded premiums 
The following table presents direct, assumed, and ceded premiums:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013
 
 
2012
 
 
2011
 
Premiums written
 
 
 
 
 
 
Direct
$
19,212

 
$
18,144

 
$
17,626

Assumed
 
3,616

 
 
3,449

 
 
3,205

Ceded
 
(5,803
)
 
 
(5,518
)
 
 
(5,459
)
Net
$
17,025

 
$
16,075

 
$
15,372

Premiums earned
 
 
 
 

 
 

Direct
$
18,856

 
$
17,802

 
$
17,534

Assumed
 
3,479

 
 
3,302

 
 
3,349

Ceded
 
(5,722
)
 
 
(5,427
)
 
 
(5,496
)
Net
$
16,613

 
$
15,677

 
$
15,387

Schedule of reinsurance recoverable on losses and loss expenses 
 
 
December 31
 
 
December 31
 
(in millions of U.S. dollars)
2013
 
 
2012
 
Reinsurance recoverable on unpaid losses and loss expenses (1)
 
$
10,612

 
 
$
11,399

Reinsurance recoverable on paid losses and loss expenses (1)
 
615

 
 
679

Net reinsurance recoverable on losses and loss expenses
 
$
11,227

 
 
$
12,078

Schedule of reinsurance recoverable and provision by category of reinsurer 

(in millions of U.S. dollars, except percentages)
2013
 
 
Provision
 
 
% of Gross

Categories
 
Largest reinsurers
 
$
5,117

 
 
$
78

 
1.5
%
Other reinsurers balances rated A- or better
 
2,901

 
 
36

 
1.2
%
Other reinsurers balances with ratings lower than A- or not rated
 
587

 
 
103

 
17.5
%
Other pools and government agencies
 
338

 
 
21

 
6.2
%
Structured settlements
 
577

 
 
12

 
2.1
%
Captives
 
1,762

 
 
14

 
0.8
%
Other
 
335

 
 
126

 
37.6
%
Total
 
$
11,617

 
 
$
390

 
3.4
%
Schedule of income and expenses relating to GMDB and GLB reinsurance 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

GMDB
 
 
 
 
 
Net premiums earned
$
77

 
$
85

 
$
98

Policy benefits and other reserve adjustments
$
73

 
$
60

 
$
59

GLB
 
 
 
 
 
Net premiums earned
$
149

 
$
160

 
$
163

Policy benefits and other reserve adjustments
27

 
61

 
47

Net realized gains (losses)
929

 
203

 
(812
)
Gain (loss) recognized in income
$
1,051

 
$
302

 
$
(696
)
Net cash received
$
126

 
$
149

 
$
161

Net (increase) decrease in liability
$
925

 
$
153

 
$
(857
)
Intangible Assets (Tables)
Goodwill roll-forward by business segment 
The following table presents a roll-forward of Goodwill by segment:
(in millions of U.S. dollars)
Insurance – North American
P&C

 
Insurance – North American Agriculture

 
Insurance – Overseas General

 
Global Reinsurance

 
Life

 
ACE Consolidated

Balance at December 31, 2011
$
1,216

 
$
134

 
$
1,603

 
$
365

 
$
830

 
$
4,148

Purchase price allocation adjustment
—

 
—

 
—

 
—

 
4

 
4

Acquisition of JaPro
—

 
—

 
123

 
—

 
—

 
123

Foreign exchange revaluation and other
3

 
—

 
38

 
—

 
3

 
44

Balance at December 31, 2012
$
1,219

 
$
134


$
1,764

 
$
365

 
$
837

 
$
4,319

Acquisition of Fianzas Monterrey
—

 
—

 
135

 
—

 
—

 
135

Acquisition of ABA Seguros
—

 
—

 
283

 
—

 
—

 
283

Foreign exchange revaluation and other
(4
)
 
—

 
(128
)
 
—

 
(2
)
 
(134
)
Balance at December 31, 2013
$
1,215

 
$
134

 
$
2,054

 
$
365

 
$
835

 
$
4,603

Schedule of VOBA roll-foward 
The following table presents a roll-forward of VOBA:
(in millions of U.S. dollars)
2013

 
2012

 
2011

Balance, beginning of year
$
614

 
$
676

 
$
634

Acquisition of New York Life's Korea operations and Hong Kong operations
—

 
—

 
151

Amortization expense
(64
)
 
(82
)
 
(108
)
Foreign exchange revaluation
(14
)
 
20

 
(1
)
Balance, end of year
$
536

 
$
614

 
$
676

Schedule of estimated amortization expense related to VOBA 
The following table presents estimated amortization expense related to other intangible assets and VOBA for the next five years:
For the Year Ending December 31
Other intangible assets

 
VOBA

(in millions of U.S. dollars)
 
2014
$
81

 
$
55

2015
62

 
50

2016
55

 
45

2017
52

 
40

2018
49

 
35

Total
$
299

 
$
225

Unpaid losses and loss expenses (Tables)
Schedule Of Unpaid Losses And Loss Expenses Roll Forward 
The following table presents a reconciliation of unpaid losses and loss expenses:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013
 
 
2012
 
 
2011
 
Gross unpaid losses and loss expenses, beginning of year
 
$
37,946

 

$
37,477

 

$
37,391

Reinsurance recoverable on unpaid losses(1)
 
(11,399
)
 
 
(11,602
)
 
 
(12,149
)
Net unpaid losses and loss expenses, beginning of year
 
26,547

 
 
25,875

 
 
25,242

Acquisition of subsidiaries
 
86

 
 
14

 
 
92

Total
 
26,633

 
 
25,889

 
 
25,334

Net losses and loss expenses incurred in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
9,878

 
 
10,132

 
 
10,076

Prior years
 
(530
)
 
 
(479
)
 
 
(556
)
Total
 
9,348

 
 
9,653

 
 
9,520

Net losses and loss expenses paid in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
3,942

 
 
4,325

 
 
4,209

Prior years
 
5,035

 
 
4,894

 
 
4,657

Total
 
8,977

 
 
9,219

 
 
8,866

Foreign currency revaluation and other
 
(173
)
 
 
224

 
 
(113
)
Net unpaid losses and loss expenses, end of year
 
26,831

 
 
26,547

 
 
25,875

Reinsurance recoverable on unpaid losses(1)
 
10,612

 
 
11,399

 
 
11,602

Gross unpaid losses and loss expenses, end of year
 
$
37,443

 
 
$
37,946

 
 
$
37,477

(1) Net of provision for uncollectible reinsurance.
 
 
 
 
 
 
 
 
Schedule Of Asbestos Environmental Loss Roll Forward 
expense reserves for A&E exposures, and the provision for uncollectible paid and unpaid reinsurance recoverables:
 
Asbestos
 
Environmental
 
Total
 
(in millions of U.S. dollars)
Gross
 
 
Net
 
 
Gross
 
 
Net
 
 
Gross
 
 
Net
 
 
Balance at December 31, 2012 (1)
 
$
1,886

 
 
$
970

 
 
$
194

 
 
$
136

 
 
$
2,080

 
 
$
1,106

 
Incurred activity
 
125

 
 
96

 
 
119

 
 
75

 
 
244

 
 
171

(2) 
Paid activity
 
(367
)
 
 
(140
)
 
 
(118
)
 
 
(86
)
 
 
(485
)
 
 
(226
)
 
Balance at December 31, 2013
 
$
1,644

 
 
$
926

 
 
$
195

 
 
$
125

 
 
$
1,839

 
 
$
1,051

 
(1)
Balances at December 31, 2012 have been adjusted to present claims in a manner consistent with balances disclosed at December 31, 2013.
(2) 
Excludes unallocated loss expenses.
Schedule Of Brandywine Asbestos Environmental Loss Roll Forward 

The following table presents a roll-forward of net loss reserves, allocated loss expense reserves, and provision for uncollectible paid and unpaid reinsurance recoverables in respect of Brandywine operations only, including the impact of the Brandywine NICO Agreement:
 
Brandywine
 
NICO Coverage
 
 
Net of NICO Coverage

 
(in millions of U.S. dollars)
A&E
 
 
Other
 
(1) 
Total
 
 
 
 
Balance at December 31, 2012
 
$
852

 
 
$
421

 
 
$
1,273

 
 
$
18

 
$
1,255

 
Incurred activity
 
158

 
 
9

 
 
167

 
 
—

 
167

(2) 
Paid activity
 
(194
)
 
 
(63
)
 
 
(257
)
 
 
(18
)
 
(239
)
 
Balance at December 31, 2013
 
$
816

 
 
$
367

 
 
$
1,183

 
 
$
—

 
$
1,183

 
(1) 
Other consists primarily of workers' compensation, non-A&E general liability losses, and provision for uncollectible reinsurance on non-A&E business.
(2) 
Excludes $(1) million of unallocated loss expenses (benefits).

The
Schedule Of Westchester Specialty Asbestos Environmental Loss Roll Forward 
following table presents a roll-forward of net loss reserves, allocated loss expense reserves, and provision for uncollectible paid and unpaid reinsurance recoverables in respect of 1996 and prior Westchester Specialty operations only, including the impact of the Westchester NICO Agreement:
 
Westchester Specialty
 
NICO Coverage
 
 
Net of NICO Coverage
 
 
(in millions of U.S. dollars)
A&E
 
 
Other
 
 
Total
 
 
 
 
Balance at December 31, 2012
 
$
151

 
 
$
44

 
 
$
195

 
 
$
158

 
 
$
37

 
Incurred activity
 
14

 
 
(11
)
 
 
3

 
 
2

 
 
1

(1) 
Paid activity
 
(19)

 
 
—

 
 
(19)

 
 
(19)

 
 
—

 
Balance at December 31, 2013
 
$
146

 
 
$
33

 
 
$
179

 
 
$
141

 
 
$
38

 
(1)
Excludes $4 million of unallocated loss expenses.

Th
Taxation (Tables)
Schedule of components of income tax provision 
The following table presents the provision for income taxes:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Current tax expense
$
231

 
$
305

 
$
485

Deferred tax expense (benefit)
249

 
(35
)
 
17

Provision for income taxes
$
480

 
$
270

 
$
502

Reconciliation schedule of the difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate 
The following table presents a reconciliation of the difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Expected tax provision at Swiss statutory tax rate
$
331

 
$
233

 
$
160

Permanent differences:
 
 
 
 
 
Taxes on earnings subject to rate other than Swiss statutory rate
124

 
129

 
323

Tax-exempt interest and dividends received deduction, net of proration
(27
)
 
(24
)
 
(21
)
Net withholding taxes
27

 
23

 
19

Favorable resolution of prior years' tax matters and closing statutes of limitations
(5
)
 
(124
)
 
—

Change in valuation allowance
4

 
4

 
(2
)
Other
26

 
29

 
23

Total provision for income taxes
$
480

 
$
270

 
$
502

Schedule of the components of net deferred tax assets 
The following table presents the components of the net deferred tax assets:
 
December 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Deferred tax assets:
 
 
 
Loss reserve discount
$
807

 
$
849

Unearned premiums reserve
93

 
98

Foreign tax credits
1,236

 
1,131

Investments
3

 
43

Provision for uncollectible balances
78

 
110

Loss carry-forwards
54

 
55

Other
184

 
110

Total deferred tax assets
2,455

 
2,396

Deferred tax liabilities:
 
 
 
Deferred policy acquisition costs
138

 
68

VOBA and other intangible assets
351

 
379

Un-remitted foreign earnings
982

 
795

Unrealized appreciation on investments
210

 
586

Other
94

 
59

Total deferred tax liabilities
1,775

 
1,887

Valuation allowance
64

 
56

Net deferred tax assets
$
616

 
$
453

Reconciliation schedule of unrecognized tax benefits 
The following table presents a reconciliation of the beginning and ending amount of gross unrecognized tax benefits:
 
December 31

 
December 31

(in millions of U.S. dollars)
2013

 
2012

Balance, beginning of year
$
26

 
$
134

Additions based on tax provisions related to the current year
5

 
19

Reductions for settlements with tax authorities
—

 
(16
)
Reductions for the lapse of the applicable statutes of limitations
(4
)
 
(111
)
Balance, end of year
$
27

 
$
26

Debt (Tables)
Schedule of debt outstanding
 
December 31

 
December 31

 
 
(in millions of U.S. dollars)
2013

 
2012

 
Early Redemption Option
Short-term debt
 
 
 
 
 
ACE INA $500 million 5.875% senior notes due June 2014

$
500

 
$
—

 
Make-whole premium plus 0.20%
Repurchase agreements (weighted average interest rate of 0.3% and 0.4%)
1,401

 
1,401

 
None
Total short-term debt
$
1,901

 
$
1,401

 
 
Long-term debt
 
 
 
 
 
ACE INA senior notes:
 
 
 
 
 
$500 million 5.875% due June 2014

$
—

 
$
500

 
Make-whole premium plus 0.20%
$450 million 5.6% due May 2015

449

 
449

 
Make-whole premium plus 0.35%
$700 million 2.6% due November 2015

700

 
699

 
Make-whole premium plus 0.20%
$500 million 5.7% due February 2017

500

 
500

 
Make-whole premium plus 0.20%
$300 million 5.8% due March 2018

300

 
300

 
Make-whole premium plus 0.35%
$500 million 5.9% due June 2019

500

 
500

 
Make-whole premium plus 0.40%
$475 million 2.7% due March 2023

473

 
—

 
Make-whole premium plus 0.10%
$300 million 6.7% due May 2036

299

 
299

 
Make-whole premium plus 0.20%
$475 million 4.15% due March 2043

474

 
—

 
Make-whole premium plus 0.15%
ACE INA $100 million 8.875% debentures due August 2029
100

 
100

 
None
Other long-term debt (2.75% to 7.1% due December 2019 to September 2020)
12

 
13

 
None
Total long-term debt
$
3,807

 
$
3,360

 
 
Trust preferred securities
 
 
 
 
 
ACE INA capital securities due April 2030
$
309

 
$
309

 
Redemption price(1)
Commitments, contingencies, and guarantees (Tables)
Balance Sheet Locations, Fair Values In An Asset Or (Liability) Position, And Notional Values/Payment Provisions Of Derivative Instruments 
and notional values/payment provisions of our derivative instruments: 
 
December 31, 2013
 
 
 
 
December 31, 2012
 
 
Consolidated
Balance Sheet
Location(1)
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
Consolidated
Balance Sheet
Location
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
 
Derivative Asset

 
Derivative (Liability)

 
 
 
Derivative Asset

 
Derivative (Liability)

 
(in millions of U.S. dollars)
 
 
 
 
 
 
 
Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
OA / (AP)
 
$
3

 
$
(4
)
 
$
1,202

 
AP
 
$
—

 
$
—

 
$
620

Cross-currency swaps
OA / (AP)
 
—

 
—

 
50

 
AP
 
—

 
—

 
50

Futures contracts on money market instruments
OA / (AP)
 
3

 
—

 
3,910

 
AP
 
1

 
—

 
2,710

Futures contracts on notes and bonds
OA / (AP)
 
13

 
(2
)
 
871

 
AP
 
10

 
—

 
915

Convertible bonds
FM AFS
 
302

 
—

 
254

 
FM AFS
 
309

 
—

 
279

 
 
 
$
321

 
$
(6
)
 
$
6,287

 
 
 
$
320

 
$
—

 
$
4,574

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

 
$
(60
)
 
$
1,692

 
AP
 
$
—

 
$
(6
)
 
$
2,308

Options on equity market indices(2)
OA / (AP)
 
6

 
—

 
250

 
AP
 
30

 
—

 
250

Other
OA / (AP)
 
—

 
(2
)
 
8

 
AP
 
—

 
—

 
—

 
 
 
$
6

 
$
(62
)
 
$
1,950

 
 
 
$
30

 
$
(6
)
 
$
2,558

GLB(3)
(AP) / (FPB)
 
$
—

 
$
(427
)
 
$
277

 
AP / FPB
 
$
—

 
$
(1,352
)
 
$
1,100

(1)
Other assets (OA), Fixed maturities available for sale (FM AFS)
(2) 
Related to GMDB and GLB blocks of business.
(3) 
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 c) 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 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Investment and embedded derivative instruments
 
 
 
 
 
Foreign currency forward contracts
$
11

 
$
(9
)
 
$
6

All other futures contracts and options
61

 
(22
)
 
(98
)
Convertible bonds
6

 
25

 
(50
)
TBAs
—

 
—

 
(1
)
Total investment and embedded derivative instruments
$
78

 
$
(6
)
 
$
(143
)
GLB and other derivative instruments
 
 
 
 
 
GLB(1)
$
878

 
$
171

 
$
(779
)
Futures contracts on equities(2)
(555
)
 
(273
)
 
(12
)
Options on equity market indices(2)
(24
)
 
(24
)
 
8

Other
(2
)
 
(4
)
 
(4
)
Total GLB and other derivative instruments
$
297

 
$
(130
)
 
$
(787
)
 
$
375

 
$
(136
)
 
$
(930
)
(1) 
Excludes foreign exchange gains (losses) related to GLB.
(2) 
Related to GMDB and GLB blocks of business. 
Schedule of Future Minimum Rental Payments for Operating Leases 
Future minimum lease payments under the leases are expected to be as follows:
For the year ending December 31
(in millions of U.S. dollars)
2014
$
106

2015
99

2016
86

2017
70

2018
49

Thereafter
124

Total minimum future lease commitments
$
534

Shareholders' equity (Tables)
Schedule of changes in Common Shares issued and outstanding
 
Years Ended December 31
 
 
2013

2012

2011

Shares issued, beginning of year
342,832,412

342,832,412

341,094,559

Exercise of stock options
—

—

1,737,853

Shares issued, end of year
342,832,412

342,832,412

342,832,412

Common Shares in treasury, end of year (at cost)
(3,038,477
)
(2,510,878
)
(5,905,136
)
Shares issued and outstanding, end of year
339,793,935

340,321,534

336,927,276

Common Shares issued to employee trust
 
 
 
Balance, beginning of year
(9,467
)
(9,467
)
(101,481
)
Shares redeemed
—

—

92,014

Balance, end of year
(9,467
)
(9,467
)
(9,467
)
Share-based compensation (Tables)
Schedule of pre-tax and after-tax share-based compensation expense 
The following table presents pre-tax and after-tax share-based compensation expense:
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Stock options and shares issued under ESPP:
 
 
 
 
 
Pre-tax
$
24

 
$
22

 
$
23

After-tax (1)
$
18

 
$
17

 
$
17

Restricted stock:
 
 
 
 
 
Pre-tax
$
153

 
$
109

 
$
108

After-tax
$
89

 
$
64

 
$
70

Schedule of the weighted-average model valuation assumptions 
 
Years Ended December 31
 
 
2013

2012

2011

Dividend yield
2.4
%
2.7
%
2.2
%
Expected volatility
27.8
%
29.8
%
28.8
%
Risk-free interest rate
1.0
%
1.1
%
2.3
%
Expected life
5.8 years

5.8 years

5.4 years

Rollforward of the company's stock options 
The following table presents a roll-forward of ACE's stock options:
(Intrinsic Value in millions of U.S. dollars)
Number of Options

 
Weighted-Average Exercise Price

 
Weighted-Average Fair Value

 
Total Intrinsic Value

Options outstanding, December 31, 2010
11,942,893

 
$
46.80

 
 
 
 
Granted
1,649,824

 
$
62.68

 
$
14.67

 
 
Exercised
(2,741,238
)
 
$
44.45

 
 
 
$
63

Forfeited
(271,972
)
 
$
51.33

 
 
 
 
Options outstanding, December 31, 2011
10,579,507

 
$
49.78

 
 
 
 
Granted
1,462,103

 
$
73.36

 
$
15.58

 
 
Exercised
(2,401,869
)
 
$
42.50

 
 
 
$
78

Forfeited
(190,082
)
 
$
61.87

 
 
 
 
Options outstanding, December 31, 2012
9,449,659

 
$
55.03

 
 
 
 
Granted
1,821,063

 
$
85.41

 
$
17.29

 
 
Exercised
(1,658,671
)
 
$
48.17

 
 
 
$
70

Forfeited
(115,195
)
 
$
72.50

 
 
 
 
Options outstanding, December 31, 2013
9,496,856

 
$
61.84

 
 
 
$
396

Options exercisable, December 31, 2013
6,330,456

 
$
53.52

 
 
 
$
317

Rollforward of the company's restricted stock 
The following table presents a roll-forward of our restricted stock awards. Included in the roll-forward below are 20,969 restricted stock awards, 25,669 restricted stock awards, and 32,660 restricted stock awards that were granted to non-management directors during the years ended December 31, 2013, 2012, and 2011 respectively:
 
Number of Restricted Stock

 
Weighted-Average Grant-Date Fair Value

Unvested restricted stock, December 31, 2010
5,305,732

 
$
48.74

Granted
1,808,745

 
$
60.01

Vested
(1,929,189
)
 
$
50.82

Forfeited
(333,798
)
 
$
47.46

Unvested restricted stock, December 31, 2011
4,851,490

 
$
52.20

Granted
1,589,178

 
$
73.46

Vested
(1,923,385
)
 
$
52.71

Forfeited
(262,436
)
 
$
58.40

Unvested restricted stock, December 31, 2012
4,254,847

 
$
59.53

Granted
1,544,485

 
$
86.07

Vested
(1,951,494
)
 
$
57.44

Forfeited
(139,651
)
 
$
67.72

Unvested restricted stock, December 31, 2013
3,708,187

 
$
71.38

Pension plans (Tables)
Schedule of expected future benefit payments
Expected future payments are as follows:
For the year ending December 31
(in millions of U.S dollars)
2014
$
19

2015
22

2016
23

2017
22

2018
23

2019-2023
129

Other (income) expense (Tables)
Schedule of the components of Other (income) expense
 
Years Ended December 31
 
(in millions of U.S. dollars)
2013

 
2012

 
2011

Amortization of intangible assets
$
95

 
$
51

 
$
29

Equity in net (income) loss of partially-owned entities
(119
)
 
(80
)
 
(32
)
(Gains) losses from fair value changes in separate account assets
(16
)
 
(29
)
 
36

Federal excise and capital taxes
24

 
22

 
20

Acquisition-related costs
4

 
11

 
5

Other
27

 
19

 
23

Other (income) expense
$
15

 
$
(6
)
 
$
81

Segment information (Tables)
12 Months Ended
Dec. 31, 2013
Segment Reporting [Abstract]
 
Operations By Segment
Text Block 
Net Premiums Earned For Segment By Product
Text Block 
Net Premiums Earned by Geographic Region
Years Ended 
Operations By Segment 
For the Year Ended December 31, 2013 (in millions of U.S. dollars)
Insurance –
North
American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

Net premiums written
$
5,915

 
$
1,627

 
$
6,520

 
$
991

 
$
1,972

 
$
—

 
$
17,025

Net premiums earned
5,721

 
1,678

 
6,333

 
976

 
1,905

 
—

 
16,613

Losses and loss expenses
3,776

 
1,524

 
3,062

 
396

 
582

 
8

 
9,348

Policy benefits
—

 
—

 
—

 
—

 
515

 
—

 
515

Policy acquisition costs
597

 
53

 
1,453

 
197

 
358

 
1

 
2,659

Administrative expenses
601

 
11

 
1,008

 
50

 
343

 
198

 
2,211

Underwriting income (loss)
747

 
90

 
810

 
333

 
107

 
(207
)
 
1,880

Net investment income
1,021

 
26

 
539

 
280

 
251

 
27

 
2,144

Net realized gains (losses) including OTTI
72

 
1

 
18

 
53

 
360

 
—

 
504

Interest expense
5

 
1

 
5

 
5

 
15

 
244

 
275

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

 
—

 
—

 
—

 
(16
)
 
—

 
(16
)
Other
(58
)
 
32

 
39

 
(19
)
 
13

 
24

 
31

Income tax expense (benefit)
347

 
20

 
222

 
36

 
34

 
(179
)
 
480

Net income (loss)
$
1,546

 
$
64

 
$
1,101

 
$
644

 
$
672

 
$
(269
)
 
$
3,758



 
For the Year Ended December 31, 2012
(in millions of U.S. dollars)
Insurance –
North
American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

Net premiums written
$
5,349

 
$
1,859

 
$
5,863

 
$
1,025

 
$
1,979

 
$
—

 
$
16,075

Net premiums earned
5,147

 
1,872

 
5,740

 
1,002

 
1,916

 
—

 
15,677

Losses and loss expenses
3,715

 
1,911

 
2,862

 
553

 
611

 
1

 
9,653

Policy benefits
—

 
—

 
—

 
—

 
521

 
—

 
521

Policy acquisition costs
558

 
28

 
1,353

 
172

 
334

 
1

 
2,446

Administrative expenses
608

 
(7
)
 
935

 
51

 
328

 
181

 
2,096

Underwriting income (loss)
266

 
(60
)
 
590

 
226

 
122

 
(183
)
 
961

Net investment income
1,066

 
25

 
521

 
290

 
251

 
28

 
2,181

Net realized gains (losses) including OTTI
41

 
1

 
103

 
6

 
(72
)
 
(1
)
 
78

Interest expense
12

 
—

 
5

 
4

 
12

 
217

 
250

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

 
—

 
—

 
—

 
(29
)
 
—

 
(29
)
Other
(41
)
 
32

 
3

 
(15
)
 
25

 
19

 
23

Income tax expense (benefit)
229

 
(29
)
 
133

 
15

 
58

 
(136
)
 
270

Net income (loss)
$
1,173

 
$
(37
)
 
$
1,073

 
$
518

 
$
235

 
$
(256
)
 
$
2,706


For the Year Ended December 31, 2011
(in millions of U.S. dollars)
Insurance –
North
American P&C

 
Insurance – North American Agriculture

 
Insurance –
Overseas
General

 
Global
Reinsurance

 
Life

 
Corporate

 
ACE
Consolidated

Net premiums written
$
4,900

 
$
1,951

 
$
5,629

 
$
979

 
$
1,913

 
$
—

 
$
15,372

Net premiums earned
4,969

 
1,942

 
5,614

 
1,003

 
1,859

 
—

 
15,387

Losses and loss expenses
3,577

 
1,699

 
3,029

 
621

 
593

 
1

 
9,520

Policy benefits
—

 
—

 
—

 
—

 
401

 
—

 
401

Policy acquisition costs
532

 
80

 
1,335

 
185

 
339

 
1

 
2,472

Administrative expenses
598

 
(6
)
 
939

 
52

 
317

 
168

 
2,068

Underwriting income (loss)
262

 
169

 
311

 
145

 
209

 
(170
)
 
926

Net investment income
1,148

 
22

 
546

 
287

 
226

 
13

 
2,242

Net realized gains (losses) including OTTI
28

 
6

 
33

 
(50
)
 
(806
)
 
(6
)
 
(795
)
Interest expense
13

 
2

 
5

 
2

 
11

 
217

 
250

Other (income) expense:
 
 
 
 
 
 
 
 
 
 
 
 


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

 
—

 
—

 
—

 
36

 
—

 
36

Other
(13
)
 
18

 
—

 
(1
)
 
26

 
15

 
45

Income tax expense (benefit)
344

 
51

 
164

 
30

 
50

 
(137)

 
502

Net income (loss)
$
1,094

 
$
126

 
$
721

 
$
351

 
$
(494
)
 
$
(258
)
 
$
1,540

Net Premiums Earned For Segment By Product 
(in millions of U.S. dollars)
Property &
All Other

 
Casualty

 
Life,
Accident &
Health

 
ACE
Consolidated

For the Year Ended December 31, 2013
 
 
 
Insurance – North American P&C
$
1,489

 
$
3,847

 
$
385

 
$
5,721

Insurance – North American Agriculture
1,678

 
—

 
—

 
1,678

Insurance – Overseas General
2,672

 
1,479

 
2,182

 
6,333

Global Reinsurance
543

 
433

 
—

 
976

Life
—

 
—

 
1,905

 
1,905

 
$
6,382

 
$
5,759

 
$
4,472

 
$
16,613

For the Year Ended December 31, 2012
 
 
 
 
 
 
 
Insurance – North American P&C
$
1,370

 
$
3,406

 
$
371

 
$
5,147

Insurance – North American Agriculture
1,872

 
—

 
—

 
1,872

Insurance – Overseas General
2,236

 
1,379

 
2,125

 
5,740

Global Reinsurance
495

 
507

 
—

 
1,002

Life
—

 
—

 
1,916

 
1,916

 
$
5,973

 
$
5,292

 
$
4,412

 
$
15,677

For the Year Ended December 31, 2011
 
 
 
 
 
 
 
Insurance – North American P&C
$
1,232

 
$
3,380

 
$
357

 
$
4,969

Insurance – North American Agriculture
1,942

 
—

 
—

 
1,942

Insurance – Overseas General
2,080

 
1,415

 
2,119

 
5,614

Global Reinsurance
458

 
545

 
—

 
1,003

Life
—

 
—

 
1,859

 
1,859

 
$
5,712

 
$
5,340

 
$
4,335

 
$
15,387

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

 
2012

 
2011

Numerator:
 
 
 
 
 
Net income
$
3,758

 
$
2,706

 
$
1,540

Denominator:
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
Weighted-average shares outstanding
340,906,490

 
339,843,438

 
338,159,409

Denominator for diluted earnings per share:
 
 
 
 
 
Share-based compensation plans
3,241,085

 
2,903,512

 
2,620,815

Weighted-average shares outstanding
      and assumed conversions
344,147,575

 
342,746,950

 
340,780,224

Basic earnings per share
$
11.02

 
$
7.96

 
$
4.55

Diluted earnings per share
$
10.92

 
$
7.89

 
$
4.52

Potential anti-dilutive share conversions
1,031,297

 
896,591

 
111,326

Statutory Financial Information (Tables)
Schedule of combined statutory capital and surplus and statutory net income (loss)
he combined statutory capital and surplus was $25.6 billion and $24.4 billion at December 31, 2013 and 2012, respectively. The combined statutory net income was $3.7 billion, $2.9 billion, and $1.9 billion for the years ended December 31, 2013, 2012, and 2011, respectively.

Information provided in connection with outstanding debt of subsidiaries (Tables)
Condensed Consolidating Balance Sheet 
Condensed Consolidating Balance Sheet at December 31, 2013

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
32

 
$
10

 
$
60,886

 
$
—

 
$
60,928

Cash(1)
—

 
16

 
748

 
(185
)
 
579

Insurance and reinsurance balances receivable
—

 
—

 
5,835

 
(809
)
 
5,026

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,057

 
(8,830
)
 
11,227

Reinsurance recoverable on policy benefits
—

 
—

 
1,215

 
(997
)
 
218

Value of business acquired
—

 
—

 
536

 
—

 
536

Goodwill and other intangible assets
—

 
—

 
5,404

 
—

 
5,404

Investments in subsidiaries
28,351

 
18,105

 
—

 
(46,456
)
 
—

Due from subsidiaries and affiliates, net
844

 
—

 
—

 
(844
)
 
—

Other assets
5

 
258

 
13,788

 
(3,459
)
 
10,592

Total assets
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
45,714

 
$
(8,271
)
 
$
37,443

Unearned premiums
—

 
—

 
9,242

 
(1,703
)
 
7,539

Future policy benefits
—

 
—

 
5,612

 
(997
)
 
4,615

Due to (from) subsidiaries and affiliates, net
—

 
714

 
130

 
(844
)
 
—

Affiliated notional cash pooling programs(1)
185

 
—

 
—

 
(185
)
 
—

Short-term debt
—

 
500

 
1,401

 
—

 
1,901

Long-term debt
—

 
3,795

 
12

 
—

 
3,807

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
222

 
1,318

 
11,655

 
(3,124
)
 
10,071

Total liabilities
407

 
6,636

 
73,766

 
(15,124
)
 
65,685

Total shareholders’ equity
28,825

 
11,753

 
34,703

 
(46,456
)
 
28,825

Total liabilities and shareholders’ equity
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. At December 31, 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 (Revised)

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
14

 
$
60,219

 
$
—

 
$
60,264

Cash(1)
103

 
2

 
859

 
(349
)
 
615

Insurance and reinsurance balances receivable
—

 
—

 
4,742

 
(595
)
 
4,147

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,935

 
(8,857
)
 
12,078

Reinsurance recoverable on policy benefits
—

 
—

 
1,229

 
(988
)
 
241

Value of business acquired
—

 
—

 
614

 
—

 
614

Goodwill and other intangible assets
—

 
—

 
4,975

 
—

 
4,975

Investments in subsidiaries
27,251

 
17,016

 
—

 
(44,267
)
 
—

Due from subsidiaries and affiliates, net
204

 
—

 
—

 
(204
)
 
—

Other assets
13

 
210

 
11,304

 
(1,916
)
 
9,611

Total assets
$
27,602

 
$
17,242

 
$
104,877

 
$
(57,176
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
46,109

 
$
(8,163
)
 
$
37,946

Unearned premiums
—

 
—

 
8,248

 
(1,384
)
 
6,864

Future policy benefits
—

 
—

 
5,458

 
(988
)
 
4,470

Due to subsidiaries and affiliates, net
—

 
68

 
136

 
(204
)
 
—

Affiliated notional cash pooling programs(1)
—

 
349

 
—

 
(349
)
 
—

Short-term debt
—

 
—

 
1,401

 
—

 
1,401

Long-term debt
—

 
3,347

 
13

 
—

 
3,360

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
71

 
1,195

 
11,219

 
(1,821
)
 
10,664

Total liabilities
71

 
5,268

 
72,584

 
(12,909
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
32,293

 
(44,267
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
17,242

 
$
104,877

 
$
(57,176
)
 
$
92,545

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. At December 31, 2012, 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 (As previously reported)

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments(2)

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
31

 
$
31,074

 
$
29,159

 
$
—

 
$
60,264

Cash(3)
103

 
515

 
(3
)
 
—

 
615

Insurance and reinsurance balances receivable
—

 
3,654

 
493

 
—

 
4,147

Reinsurance recoverable on losses and loss expenses
—

 
17,232

 
(5,154
)
 
—

 
12,078

Reinsurance recoverable on policy benefits
—

 
1,187

 
(946
)
 
—

 
241

Value of business acquired
—

 
610

 
4

 
—

 
614

Goodwill and other intangible assets
—

 
4,419

 
556

 
—

 
4,975

Investments in subsidiaries
27,251

 
—

 
—

 
(27,251
)
 
—

Due from subsidiaries and affiliates, net
204

 
—

 
—

 
(204
)
 
—

Other assets
13

 
7,563

 
2,035

 
—

 
9,611

Total assets
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
31,356

 
$
6,590

 
$
—

 
$
37,946

Unearned premiums
—

 
5,872

 
992

 
—

 
6,864

Future policy benefits
—

 
3,876

 
594

 
—

 
4,470

Due to (from) subsidiaries and affiliates, net
—

 
384

 
(180
)
 
(204
)
 
—

Short-term debt
—

 
851

 
550

 
—

 
1,401

Long-term debt
—

 
3,360

 
—

 
—

 
3,360

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
71

 
8,272

 
2,321

 
—

 
10,664

Total liabilities
71

 
54,280

 
10,867

 
(204
)
 
65,014

Total shareholders’ equity
27,531

 
11,974

 
15,277

 
(27,251
)
 
27,531

Total liabilities and shareholders’ equity
$
27,602

 
$
66,254

 
$
26,144

 
$
(27,455
)
 
$
92,545

(1)
Includes all other subsidiaries of ACE Limited and intercompany eliminations.
(2)
Includes ACE Limited parent company eliminations.
(3)
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1f) for additional information. At December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.














Condens
Condensed Consolidating Statement Of Operations and Comprehensive Income 
Condensed Consolidating Statements of Operations and Comprehensive Income

For the Year Ended December 31, 2013
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
17,025

 
$
—

 
$
17,025

Net premiums earned
—

 
—

 
16,613

 
—

 
16,613

Net investment income
2

 
3

 
2,139

 
—

 
2,144

Equity in earnings of subsidiaries
3,580

 
942

 
—

 
(4,522
)
 
—

Net realized gains (losses) including OTTI
—

 
(2
)
 
506

 
—

 
504

Losses and loss expenses
—

 
—

 
9,348

 
—

 
9,348

Policy benefits
—

 
—

 
515

 
—

 
515

Policy acquisition costs and administrative expenses
60

 
19

 
4,791

 
—

 
4,870

Interest (income) expense
(32
)
 
270

 
37

 
—

 
275

Other (income) expense
(221
)
 
27

 
209

 
—

 
15

Income tax expense (benefit)
17

 
(108
)
 
571

 
—

 
480

Net income
$
3,758

 
$
735

 
$
3,787

 
$
(4,522
)
 
$
3,758

Comprehensive income
$
2,023

 
$
(230
)
 
$
2,051

 
$
(1,821
)
 
$
2,023


Condensed Consolidating Statements of Operations and Comprehensive Income (Revised)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
16,075

 
$
—

 
$
16,075

Net premiums earned
—

 
—

 
15,677

 
—

 
15,677

Net investment income
1

 
3

 
2,177

 
—

 
2,181

Equity in earnings of subsidiaries
2,590

 
911

 
—

 
(3,501
)
 
—

Net realized gains (losses) including OTTI
17

 
—

 
61

 
—

 
78

Losses and loss expenses
—

 
—

 
9,653

 
—

 
9,653

Policy benefits
—

 
—

 
521

 
—

 
521

Policy acquisition costs and administrative expenses
62

 
28

 
4,452

 
—

 
4,542

Interest (income) expense
(33
)
 
235

 
48

 
—

 
250

Other (income) expense
(137
)
 
9

 
122

 
—

 
(6
)
Income tax expense (benefit)
10

 
(110
)
 
370

 
—

 
270

Net income
$
2,706

 
$
752

 
$
2,749

 
$
(3,501
)
 
$
2,706

Comprehensive income
$
3,682

 
$
1,209

 
$
3,724

 
$
(4,933
)
 
$
3,682




Condensed Consolidating Statements of Operations and Comprehensive Income (As previously reported)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE Limited
Consolidated

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

 
$
9,466

 
$
6,609

 
$
—

 
$
16,075

Net premiums earned
—

 
9,194

 
6,483

 
—

 
15,677

Net investment income
1

 
1,048

 
1,132

 
—

 
2,181

Equity in earnings of subsidiaries
2,590

 
—

 
—

 
(2,590
)
 
—

Net realized gains (losses) including OTTI
17

 
121

 
(60
)
 
—

 
78

Losses and loss expenses
—

 
6,211

 
3,442

 
—

 
9,653

Policy benefits
—

 
309

 
212

 
—

 
521

Policy acquisition costs and administrative expenses
62

 
2,564

 
1,916

 
—

 
4,542

Interest (income) expense
(33
)
 
257

 
26

 
—

 
250

Other (income) expense
(137
)
 
77

 
54

 
—

 
(6
)
Income tax expense
10

 
193

 
67

 
—

 
270

Net income
$
2,706

 
$
752

 
$
1,838

 
$
(2,590
)
 
$
2,706

Comprehensive income
$
3,682

 
$
1,209

 
$
1,381

 
$
(2,590
)
 
$
3,682

(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 (Revised)

For the Year Ended December 31, 2011
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
15,372

 
$
—

 
$
15,372

Net premiums earned
—

 
—

 
15,387

 
—

 
15,387

Net investment income
2

 
2

 
2,238

 
—

 
2,242

Equity in earnings of subsidiaries
1,459

 
989

 
—

 
(2,448
)
 
—

Net realized gains (losses) including OTTI
(4
)
 
—

 
(791
)
 
—

 
(795
)
Losses and loss expenses
—

 
—

 
9,520

 
—

 
9,520

Policy benefits
—

 
—

 
401

 
—

 
401

Policy acquisition costs and administrative expenses
69

 
37

 
4,434

 
—

 
4,540

Interest (income) expense
(37
)
 
266

 
21

 
—

 
250

Other (income) expense
(125
)
 
21

 
185

 
—

 
81

Income tax expense (benefit)
10

 
(103
)
 
595

 
—

 
502

Net income
$
1,540

 
$
770

 
$
1,678

 
$
(2,448
)
 
$
1,540

Comprehensive income
$
1,857

 
$
1,077

 
$
1,994

 
$
(3,071
)
 
$
1,857



Condensed Consolidating Statements of Operations and Comprehensive Income (As previously reported)

For the Year Ended December 31, 2011
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
$
—

 
$
9,081

 
$
6,291

 
$
—

 
$
15,372

Net premiums earned
—

 
9,082

 
6,305

 
—

 
15,387

Net investment income
2

 
1,096

 
1,144

 
—

 
2,242

Equity in earnings of subsidiaries
1,459

 
—

 
—

 
(1,459
)
 
—

Net realized gains (losses) including OTTI
(4
)
 
62

 
(853
)
 
—

 
(795
)
Losses and loss expenses
—

 
5,889

 
3,631

 
—

 
9,520

Policy benefits
—

 
192

 
209

 
—

 
401

Policy acquisition costs and administrative expenses
69

 
2,561

 
1,910

 
—

 
4,540

Interest (income) expense
(37
)
 
267

 
20

 
—

 
250

Other (income) expense
(125
)
 
143

 
63

 
—

 
81

Income tax expense
10

 
418

 
74

 
—

 
502

Net income
$
1,540

 
$
770

 
$
689

 
$
(1,459
)
 
$
1,540

Comprehensive income
$
1,857

 
$
1,077

 
$
382

 
$
(1,459
)
 
$
1,857

(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 Year Ended December 31, 2013
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from (used for) operating activities
$
970

 
$
(107
)
 
$
3,984

 
$
(825
)
 
$
4,022

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

 
—

 
(21,504
)
 
106

 
(21,398
)
Purchases of fixed maturities held to maturity
—

 
—

 
(447
)
 
—

 
(447
)
Purchases of equity securities
—

 
—

 
(264
)
 
—

 
(264
)
Sales of fixed maturities available for sale
—

 
—

 
10,519

 
(106
)
 
10,413

Sales of equity securities
—

 
—

 
142

 
—

 
142

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
6,941

 
—

 
6,941

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
1,488

 
—

 
1,488

Net change in short-term investments
(1
)
 
4

 
521

 
—

 
524

Net derivative instruments settlements
—

 
(1
)
 
(470
)
 
—

 
(471
)
Acquisition of subsidiaries (net of cash acquired of $38)
—

 
—

 
(977
)
 
—

 
(977
)
Capital contribution
(133
)
 
(1,097
)
 
—

 
1,230

 
—

Other
—

 
(4
)
 
(389
)
 
—

 
(393
)
Net cash flows used for investing activities
(134
)
 
(1,098
)
 
(4,440
)
 
1,230

 
(4,442
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(517
)
 
—

 
—

 
—

 
(517
)
Common Shares repurchased
—

 
—

 
(287
)
 
—

 
(287
)
Net proceeds from issuance of long-term debt
—

 
947

 
—

 
—

 
947

Proceeds from share-based compensation plans, including windfall tax benefits
14

 
—

 
121

 
—

 
135

Advances (to) from affiliates
(621
)
 
621

 
—

 
—

 
—

Dividends to parent company
—

 
—

 
(825
)
 
825

 
—

Capital contribution
—

 
—

 
1,230

 
(1,230
)
 
—

Net proceeds from (payments to) affiliated notional cash pooling programs(1)
185

 
(349
)
 
—

 
164

 
—

Other
—

 
—

 
113

 
—

 
113

Net cash flows (used for) from financing activities
(939
)
 
1,219

 
352

 
(241
)
 
391

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

 
—

 
(7
)
 
—

 
(7
)
Net (decrease) increase in cash
(103
)
 
14

 
(111
)
 
164

 
(36
)
Cash – beginning of year(1)
103

 
2

 
859

 
(349
)
 
615

Cash – end of year(1)
$
—

 
$
16

 
$
748

 
$
(185
)
 
$
579

(1) 
ACE maintains two notional multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 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 (Revised)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
573

 
$
296

 
$
3,876

 
$
(750
)
 
$
3,995

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

 
—

 
(24,076
)
 
115

 
(23,961
)
Purchases of fixed maturities held to maturity
—

 
—

 
(388
)
 
—

 
(388
)
Purchases of equity securities
—

 
—

 
(135
)
 
—

 
(135
)
Sales of fixed maturities available for sale
—

 
—

 
14,884

 
(115
)
 
14,769

Sales of equity securities
—

 
—

 
119

 
—

 
119

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
5,523

 
—

 
5,523

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
1,451

 
—

 
1,451

Net change in short-term investments
—

 
(4
)
 
121

 
—

 
117

Net derivative instruments settlements
(1
)
 
—

 
(280
)
 
—

 
(281
)
Capital contribution
—

 
(352
)
 
(90
)
 
442

 
—

Acquisition of subsidiaries (net of cash acquired of $8)
—

 
—

 
(98
)
 
—

 
(98
)
Other
—

 
(33
)
 
(522
)
 
—

 
(555
)
Net cash flows used for investing activities
(1
)
 
(389
)
 
(3,491
)
 
442

 
(3,439
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(815
)
 
—

 
—

 
—

 
(815
)
Common Shares repurchased
—

 
—

 
(11
)
 
—

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

 
—

 
150

 
—

 
150

Proceeds from share-based compensation plans, including windfall tax benefits
34

 
—

 
92

 
—

 
126

Advances from (to) affiliates
206

 
(201
)
 
(5
)
 
—

 
—

Dividends to parent company
—

 
—

 
(750
)
 
750

 
—

Capital contribution
—

 
90

 
352

 
(442
)
 
—

Net proceeds from affiliated notional cash pooling programs(1)
—

 
201

 
—

 
(201
)
 
—

Net cash flows (used for) from financing activities
(575
)
 
90

 
(172
)
 
107

 
(550
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
—

 
(5
)
 
—

 
(5
)
Net increase (decrease) in cash
(3
)
 
(3
)
 
208

 
(201
)
 
1

Cash – beginning of year(1)
106

 
5

 
651

 
(148
)
 
614

Cash – end of year(1)
$
103

 
$
2

 
$
859

 
$
(349
)
 
$
615

(1)
ACE maintains two notional multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2012 and December 31, 2011, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statement of Cash Flows (As previously reported)

For the Year Ended December 31, 2012
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries and
Eliminations(1)

 
Consolidating
Adjustments (2)

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
781

 
$
1,744

 
$
1,920

 
$
(450
)
 
$
3,995

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

 
(11,843
)
 
(12,001
)
 
—

 
(23,844
)
Purchases of fixed maturities held to maturity
—

 
(384
)
 
(4
)
 
—

 
(388
)
Purchases of equity securities
—

 
(70
)
 
(65
)
 
—

 
(135
)
Sales of fixed maturities available for sale
—

 
7,347

 
7,422

 
—

 
14,769

Sales of equity securities
—

 
59

 
60

 
—

 
119

Maturities and redemptions of fixed maturities available for sale
—

 
2,759

 
2,764

 
—

 
5,523

Maturities and redemptions of fixed maturities held to maturity
—

 
1,045

 
406

 
—

 
1,451

Net derivative instruments settlements
(1
)
 
(6
)
 
(274
)
 
—

 
(281
)
Capital contribution
—

 
—

 
(90
)
 
90

 
—

Advances from (to) affiliates
(2
)
 
—

 
—

 
2

 
—

Acquisition of subsidiaries (net of cash acquired of $8)
—

 
(111
)
 
13

 
—

 
(98
)
Other
—

 
(395
)
 
(160
)
 
—

 
(555
)
Net cash flows used for investing activities
(3
)
 
(1,599
)
 
(1,929
)
 
92

 
(3,439
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(815
)
 
—

 
—

 
—

 
(815
)
Common Shares repurchased
—

 
—

 
(11
)
 
—

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

 
1

 
149

 
—

 
150

Proceeds from share-based compensation plans, including windfall tax benefits
34

 
13

 
79

 
—

 
126

Advances (to) from affiliates
—

 
(105
)
 
107

 
(2
)
 
—

Dividends to parent company
—

 
—

 
(450
)
 
450

 
—

Capital contribution
—

 
90

 
—

 
(90
)
 
—

Net cash flows used for financing activities
(781
)
 
(1
)
 
(126
)
 
358

 
(550
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
(11
)
 
6

 
—

 
(5
)
Net increase (decrease) in cash
(3
)
 
133

 
(129
)
 
—

 
1

Cash – beginning of year
106

 
382

 
126

 
—

 
614

Cash – end of year(3)
$
103

 
$
515

 
$
(3
)
 
$
—

 
$
615

(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 multi-currency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statement of Cash Flows (Revised)

For the Year Ended December 31, 2011
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
831

 
$
1,221

 
$
3,455

 
$
(2,037
)
 
$
3,470

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

 
—

 
(24,601
)
 
323

 
(24,278
)
Purchases of fixed maturities held to maturity
—

 
—

 
(340
)
 
—

 
(340
)
Purchases of equity securities
—

 
—

 
(309
)
 
—

 
(309
)
Sales of fixed maturities available for sale
—

 
—

 
18,294

 
(323
)
 
17,971

Sales of equity securities
—

 
—

 
376

 
—

 
376

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
3,720

 
—

 
3,720

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
1,279

 
—

 
1,279

Net change in short-term investments
9

 
—

 
(309
)
 
—

 
(300
)
Net derivative instruments settlements
(3
)
 
—

 
(64
)
 
—

 
(67
)
Capital contribution
(385
)
 
(581
)
 
—

 
966

 
—

Acquisition of subsidiaries (net of cash acquired of $91)
—

 
(76
)
 
(530
)
 
—

 
(606
)
Other
—

 
(19
)
 
(463
)
 
—

 
(482
)
Net cash flows used for investing activities
(379
)
 
(676
)
 
(2,947
)
 
966

 
(3,036
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(459
)
 
—

 
—

 
—

 
(459
)
Common Shares repurchased
—

 
—

 
(195
)
 
—

 
(195
)
Net proceeds from issuance (repayments) of short-term debt
(300
)
 
—

 
250

 
—

 
(50
)
Proceeds from share-based compensation plans, including windfall tax benefits
133

 
—

 
6

 
—

 
139

Advances from (to) affiliates
(28
)
 
(721
)
 
749

 
—

 
—

Dividends to parent company
—

 
—

 
(2,037
)
 
2,037

 
—

Capital contribution
—

 
—

 
966

 
(966
)
 
—

Net proceeds from affiliated notional cash pooling programs(1)
—

 
148

 
—

 
(148
)
 
—

Net cash flows used for financing activities
(654
)
 
(573
)
 
(261
)
 
923

 
(565
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
—

 
(27
)
 
—

 
(27
)
Net increase (decrease) in cash
(202
)
 
(28
)
 
220

 
(148
)
 
(158
)
Cash – beginning of year(1)
308

 
33

 
431

 
—

 
772

Cash – end of year(1)
$
106

 
$
5

 
$
651

 
$
(148
)
 
$
614


Condensed Unaudited Quarterly Financial Data (Tables)
Schedule of quarterly financial information
 
Three Months Ended
 
 
 
March 31

 
June 30

 
September 30

 
December 31

 
(in millions of U.S. dollars, except per share data)
2013

 
2013

 
2013

 
2013

 
Net premiums earned
$
3,573

 
$
4,067

 
$
4,610

 
$
4,363

 
Net investment income
531

 
534

 
522

 
557

 
Net realized gains (losses) including OTTI
206

 
104

 
40

 
154

(1) 
Total revenues
$
4,310

 
$
4,705

 
$
5,172

 
$
5,074

 
Losses and loss expenses
$
1,926

 
$
2,250

 
$
2,655

 
$
2,517

 
Policy benefits
$
131

 
$
110

 
$
138

 
$
136

 
Net income
$
953

 
$
891

 
$
916

 
$
998

 
Basic earnings per share
$
2.80

 
$
2.61

 
$
2.68

 
$
2.93

 
Diluted earnings per share
$
2.77

 
$
2.59

 
$
2.66

 
$
2.90

 
(1) 
Includes a realized gain of $92 million for an out-of-period adjustment related to guaranteed living benefits. Refer to Note 4 a) for additional information.

 
Three Months Ended
 
 
March 31

 
June 30

 
September 30

 
December 31

(in millions of U.S. dollars, except per share data)
2012

 
2012

 
2012

 
2012

Net premiums earned
$
3,381

 
$
3,783

 
$
4,665

 
$
3,848

Net investment income
544

 
537

 
533

 
567

Net realized gains (losses) including OTTI
260

 
(394
)
 
(60
)
 
272

Total revenues
$
4,185

 
$
3,926

 
$
5,138

 
$
4,687

Losses and loss expenses
$
1,804

 
$
2,119

 
$
3,047

 
$
2,683

Policy benefits
$
147

 
$
102

 
$
130

 
$
142

Net income
$
973

 
$
328

 
$
640

 
$
765

Basic earnings per share
$
2.87

 
$
0.96

 
$
1.88

 
$
2.24

Diluted earnings per share
$
2.84

 
$
0.96

 
$
1.86

 
$
2.22

Summary of significant accounting policies (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Summary of significant accounting policies [Line Items]
 
 
 
Deferred Marketing Costs, Amortization Period
10 years 
 
 
Deferred marketing costs reported in Deferred policy acquisition costs
$ 307 
$ 274 
 
Amortization expense for deferred marketing costs
128 
119 
128 
Recoverable from unrated reinsurers, ceded reserve, default factor (percent)
34.00% 
 
 
Reinsurance business assumed
27 
32 
 
Percentage of fair value of loaned securities
102.00% 
 
 
Maximum overdraft balance guaranteed by ACE Ltd
300 
 
 
Quality assessment threshold used in goodwill impairment testing
50.00% 
 
 
Supplemental Information for Property, Casualty Insurance Underwriters, Reserves for Unpaid Claims and Claims Adjustment Expense
26,831 
26,547 
25,875 
Gross liability for the amounts due to claimants
631 
 
 
Reinsurance recoverables for amounts due from life insurance companies
577 
 
 
Deposit assets reflected in Other assets
100 
138 
 
Reinsurance deposit liabilities included in Deposit liabilities
131 
283 
 
Contract holder deposit funds included in Deposit liabilities
699 
548 
 
Net operating results of ESIS included within Administrative expenses
25 
23 
21 
Structured settlements
 
 
 
Summary of significant accounting policies [Line Items]
 
 
 
Loss and loss expenses reserves, net of discount
$ 54 
$ 58 
 
Minimum
 
 
 
Summary of significant accounting policies [Line Items]
 
 
 
Amortization period for value of reinsurance business assumed
9 years 
 
 
Finite-lived intangible asset useful life
1 year 
 
 
Interest rates used in calculating reserves
1.00% 
1.00% 
 
Reinsurance Premiums, Amortization Period
1 year 
 
 
Maximum
 
 
 
Summary of significant accounting policies [Line Items]
 
 
 
Amortization period for value of reinsurance business assumed
40 years 
 
 
Finite-lived intangible asset useful life
20 years 
 
 
Interest rates used in calculating reserves
6.50% 
4.50% 
 
Reinsurance Premiums, Amortization Period
3 years 
 
 
Acquisitions (Detail) (USD $)
In Millions, unless otherwise specified
0 Months Ended 0 Months Ended 2 Months Ended 0 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Sep. 18, 2012
PT Asuransi Jaya Proteksi (JaPro)
Apr. 2, 2013
Fianzas Monterrey
May 8, 2013
ABA Seguros
May 2, 2013
ABA Seguros
Apr. 1, 2011
New York Life's Korea and Hong Kong
Feb. 2, 2011
New York Life's Korea and Hong Kong
Nov. 30, 2011
Penn Millers Holding Corporation
Dec. 28, 2011
Rio Guayas
Jan. 12, 2014
The Siam Commercial Sammagi Insurance PCL (Samaggi)
Jan. 3, 2013
Subsequent Event [Member]
PT Asuransi Jaya Proteksi (JaPro)
Jan. 12, 2014
Subsequent Event [Member]
The Siam Commercial Sammagi Insurance PCL (Samaggi)
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of business acquired
 
 
 
80.00% 
 
 
 
 
 
 
 
60.90% 
20.00% 
 
Expected cash consideration for acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 185 
Business Combination, Consideration Transferred
 
 
 
107 
 
690 
 
450 
 
107 
65 
 
 
 
Goodwill generated in acquisitions
4,603 
4,319 
4,148 
 
135 
 
283 
 
91 
 
 
 
 
 
Other intangible assets generated in acquisition
 
 
 
 
73 
 
140 
 
163 
 
 
 
 
 
Additional investment percentage to be acquired after tender offer
 
 
 
 
 
 
 
 
 
 
 
 
 
39.10% 
Business Acquisition, Goodwill, Expected Tax Deductible Amount
 
 
 
 
$ 0 
 
$ 0 
 
$ 0 
 
 
 
 
 
Investments (Narrative) (Detail) (USD $)
12 Months Ended
Dec. 31, 2013
partnerships
Security
Dec. 31, 2012
Dec. 31, 2011
Investments, Debt and Equity Securities [Abstract]
 
 
 
Net unrealized appreciation (depreciation) included in OCI
$ 25,000,000 
$ 137,000,000 
 
Net unrealized depreciation included in AOCI
(4,000,000)
(25,000,000)
 
Percentage of mortgage-backed securities represented by investments in US government agency bonds
83.00% 
85.00% 
 
Portion of gross unrealized loss represented by the United States Treasury and Agency obligations
425,000,000 
 
 
Company assumed recovery rate
32.00% 
 
 
Moodys historical mean recovery rate
42.00% 
 
 
Credit losses recognized in net income for corporate securities
11,000,000 
14,000,000 
9,000,000 
Credit losses recognized in net income for mortgage-backed securities
1,000,000 
6,000,000 
11,000,000 
Limited partnerships number
62 
 
 
Trading securities - mutual funds
246,000,000 
212,000,000 
 
Trading securities - equity securities
23,000,000 
23,000,000 
 
Trading securities - fixed maturities
7,000,000 
8,000,000 
 
Number of fixed maturities in an unrealized loss position
6,161 
 
 
Total number of fixed maturities
25,062 
 
 
Largest single unrealized loss in the fixed maturities
(6,000,000)
 
 
Number of equity securities in an unrealized loss position
71 
 
 
Total number of equity securities
185 
 
 
Largest single unrealized loss in the equity securities
(58,000,000)
 
 
Restricted assets in fixed maturities and short-term investments
16,300,000,000 
16,600,000,000 
 
Restricted assets in cash
$ 162,000,000 
$ 139,000,000 
 
Investments (Schedule Of Fixed Maturities By Contractual Maturity) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Available for sale, Due in 1 year or less, Amortized Cost
$ 2,387 
$ 1,887 
Available for sale, Due after 1 year through 5 years, Amortized Cost
14,139 
13,411 
Available for sale, Due after 5 years though 10 years, Amortized Cost
16,200 
15,032 
Available for sale, Due after 10 years, Amortized Cost
4,743 
4,285 
Available for sale, Subtotal, Amortized Cost
37,469 
34,615 
Available for sale, Mortgage-backed securities, Amortized Cost
10,937 
10,051 
Available for sale, Amortized Cost
48,406 
44,666 
Available for sale, Due in 1 year or less, Fair Value
2,411 
1,906 
Available for sale, Due after 1 year through 5 years, Fair Value
14,602 
14,010 
Available for sale, Due after 5 years through 10 years, Fair Value
16,535 
16,153 
Available for sale, Due after 10 years, Fair Value
4,812 
4,764 
Available for sale, Subtotal, Fair Value
38,360 
36,833 
Available for sale, Mortgage backed securities, Fair Value
10,894 
10,473 
Available for sale, Fair Value
49,254 
47,306 
Held to maturity, Due in 1 year or less, Amortized Cost
401 
656 
Held to maturity, Due after 1 year through 5 years, Amortized Cost
2,284 
1,870 
Held to maturity, Due after 5 years through 10 years, Amortized Cost
1,686 
2,119 
Held to maturity, Due after 10 years, Amortized Cost
386 
597 
Held to maturity, Subtotal, Amortized Cost
4,757 
5,242 
Held to maturity, Mortgage backed securities, Amortized Cost
1,341 
2,028 
Held-to-maturity Securities
6,098 
7,270 
Held to maturity, Due in 1 year or less, Fair Value
405 
659 
Held to maturity, Due after 1 year through 5, Fair Value
2,363 
1,950 
Held to maturity, Due after 5 years through 10 years, Fair Value
1,723 
2,267 
Held to maturity, Due after 10 years, Fair Value
393 
641 
Held to maturity, Subtotal, Fair Value
4,884 
5,517 
Held to maturity, Mortgage backed securities, Fair Value
1,379 
2,116 
Held to maturity, Fair Value
$ 6,263 
$ 7,633 
Investments (Schedule Of Cost And Fair Value Of Equity Securities) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Cost
$ 841 
$ 707 
Gross unrealized appreciation
63 
41 
Gross unrealized depreciation
(67)
(4)
Fair value
$ 837 
$ 744 
Investments (Schedule Of Default Assumptions By Moody's Rating Categories) (Details)
12 Months Ended
Dec. 31, 2013
Investment Grade |
Aaa - Bbb |
Minimum
 
Financing Receivable, Recorded Investment [Line Items]
 
1-in-100 Year Default Rate
0.00% 
Historical Mean Default Rate
0.00% 
Investment Grade |
Aaa - Bbb |
Maximum
 
Financing Receivable, Recorded Investment [Line Items]
 
1-in-100 Year Default Rate
1.40% 
Historical Mean Default Rate
0.30% 
Below Investment Grade |
Ba
 
Financing Receivable, Recorded Investment [Line Items]
 
1-in-100 Year Default Rate
4.90% 
Historical Mean Default Rate
1.10% 
Below Investment Grade |
B
 
Financing Receivable, Recorded Investment [Line Items]
 
1-in-100 Year Default Rate
12.80% 
Historical Mean Default Rate
3.40% 
Below Investment Grade |
Caa - C
 
Financing Receivable, Recorded Investment [Line Items]
 
1-in-100 Year Default Rate
53.20% 
Historical Mean Default Rate
13.80% 
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 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Investments, Debt and Equity Securities [Abstract]
 
 
 
 
 
 
 
 
 
 
 
OTTI on fixed maturities, gross
 
 
 
 
 
 
 
 
$ (18)
$ (26)
$ (61)
OTTI on fixed maturities recognized in OCI (pre-tax)
 
 
 
 
 
 
 
 
0 
1 
15 
OTTI on fixed maturities, net
 
 
 
 
 
 
 
 
(18)
(25)
(46)
Fixed maturities, Gross realized gains excluding OTTI
 
 
 
 
 
 
 
 
237 
388 
410 
Fixed maturities, Gross realized losses excluding OTTI
 
 
 
 
 
 
 
 
(129)
(133)
(200)
Total fixed maturities
 
 
 
 
 
 
 
 
90 
230 
164 
OTTI on equity securities
 
 
 
 
 
 
 
 
(2)
(5)
(1)
Equity securities, Gross realized gains excluding OTTI
 
 
 
 
 
 
 
 
21 
11 
15 
Equity securities, Gross realized losses excluding OTTI
 
 
 
 
 
 
 
 
(4)
(2)
(5)
Total equity securities
 
 
 
 
 
 
 
 
15 
4 
9 
OTTI on other investments
 
 
 
 
 
 
 
 
(2)
(7)
(3)
Foreign exchange losses
 
 
 
 
 
 
 
 
29 
(16)
(13)
Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
78 
(6)
(143)
Fair value adjustments on insurance derivative
 
 
 
 
 
 
 
 
878 
171 
(779)
S&P put options and futures
 
 
 
 
 
 
 
 
(579)
(297)
(4)
Other derivative instruments
 
 
 
 
 
 
 
 
(2)
(4)
(4)
Other
 
 
 
 
 
 
 
 
(3)
3 
(22)
Total net realized gains (losses)
154 
40 
104 
206 
272 
(60)
(394)
260 
504 
78 
(795)
Change in net unrealized appreciation (depreciation) on investments, Fixed maturities available for sale
 
 
 
 
 
 
 
 
(1,798)
1,099 
569 
Change in net unrealized appreciation (depreciation) on investments, Fixed maturities held to maturity
 
 
 
 
 
 
 
 
(82)
(94)
(89)
Change in net unrealized appreciation (depreciation) on investments, Equity securities
 
 
 
 
 
 
 
 
(41)
61 
(47)
Change in net unrealized appreciation (depreciation) on investments, Other
 
 
 
 
 
 
 
 
54 
50 
40 
Change in net unrealized appreciation (depreciation) on investments, Income tax expense
 
 
 
 
 
 
 
 
408 
(198)
(157)
Change in net unrealized appreciation on investments,
 
 
 
 
 
 
 
 
(1,459)
918 
316 
Total net realized gains (losses) and change in net unrealized appreciation (depreciation) on investments
 
 
 
 
 
 
 
 
$ (955)
$ 996 
$ (479)
Investments (Schedule Of Other Investments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Schedule of Cost-method Investments [Line Items]
 
 
Other investments - Total at Fair Value
$ 2,976 
$ 2,716 
Other investments - Total at Cost
2,671 
2,465 
Fair Value
 
 
Schedule of Cost-method Investments [Line Items]
 
 
Investment funds
428 
395 
Limited partnerships
576 
531 
Partially owned investment companies
1,284 
1,186 
Life insurance policies
180 
148 
Policy loans
179 
164 
Trading securities
276 
243 
Other
53 
49 
Other investments - Total at Fair Value
2,976 
2,716 
Cost
 
 
Schedule of Cost-method Investments [Line Items]
 
 
Investment funds
278 
278 
Limited partnerships
424 
398 
Partially owned investment companies
1,284 
1,187 
Life insurance policies
180 
148 
Policy loans
179 
164 
Trading securities
273 
242 
Other
53 
48 
Other investments - Total at Cost
$ 2,671 
$ 2,465 
Investments (Schedule Of Investments In Partially-Owned Insurance Companies) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Investment [Line Items]
 
 
Carrying Value
$ 470 
$ 454 
Issued Share Capital
1,046 
715 
Freisenbruch-Meyer |
Bermuda
 
 
Investment [Line Items]
 
 
Carrying Value
9 
9 
Issued Share Capital
5 
5 
Ownership Percentage
40.00% 
40.00% 
ACE Cooperative Ins. Co. - Saudi Arabia |
Saudi Arabia
 
 
Investment [Line Items]
 
 
Carrying Value
10 
9 
Issued Share Capital
27 
27 
Ownership Percentage
30.00% 
30.00% 
Huatai Group |
China
 
 
Investment [Line Items]
 
 
Carrying Value
365 
350 
Issued Share Capital
631 
474 
Ownership Percentage
20.00% 
20.00% 
Huatai Life Insurance Company |
China
 
 
Investment [Line Items]
 
 
Carrying Value
84 
84 
Issued Share Capital
379 
205 
Ownership Percentage
20.00% 
20.00% 
Russian Reinsurance Company |
Russia
 
 
Investment [Line Items]
 
 
Carrying Value
2 
2 
Issued Share Capital
$ 4 
$ 4 
Ownership Percentage
23.30% 
23.30% 
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
Dec. 31, 2013
Dec. 31, 2012
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
$ 18,228 
$ 3,968 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(652.0)
(48.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
894 
577 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(63.0)
(50.0)
Investment securities, Unrealized loss position, Total Fair Value
19,122 
4,545 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(715.0)
(98.0)
U.S. Treasury and agency
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
1,794 
440 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(57.0)
(1.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
31 
0 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(6.0)
0 
Investment securities, Unrealized loss position, Total Fair Value
1,825 
440 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(63.0)
(1.0)
Foreign
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
4,621 
1,234 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(114.0)
(8.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
201 
88 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(8.0)
(6.0)
Investment securities, Unrealized loss position, Total Fair Value
4,822 
1,322 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(122.0)
(14.0)
Corporate securities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
3,836 
1,026 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(118.0)
(23.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
194 
85 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(14.0)
(8.0)
Investment securities, Unrealized loss position, Total Fair Value
4,030 
1,111 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(132.0)
(31.0)
Mortgage backed-securities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
5,248 
855 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(197.0)
(4.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
384 
356 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(31.0)
(32.0)
Investment securities, Unrealized loss position, Total Fair Value
5,632 
1,211 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(228.0)
(36.0)
States, municipalities, and political subdivisions
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
2,164 
316 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(90.0)
(3.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
84 
48 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(4.0)
(4.0)
Investment securities, Unrealized loss position, Total Fair Value
2,248 
364 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(94.0)
(7.0)
Total fixed maturities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
17,663 
3,871 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(576.0)
(39.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
894 
577 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(63.0)
(50.0)
Investment securities, Unrealized loss position, Total Fair Value
18,557 
4,448 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(639.0)
(89.0)
Equity securities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
498 
29 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(67.0)
(4.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
0 
   
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
0 
   
Investment securities, Unrealized loss position, Total Fair Value
498 
29 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(67.0)
(4.0)
Other investments
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
67 
68 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(9.0)
(5.0)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
0 
   
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
0 
   
Investment securities, Unrealized loss position, Total Fair Value
67 
68 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
$ (9.0)
$ (5.0)
Investments (Schedule Of Sources Of Net Investment Income) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Net Investment Income [Line Items]
 
 
 
Gross investment income
$ 2,264 
$ 2,300 
$ 2,337 
Investment expenses
(120)
(119)
(95)
Net investment income
2,144 
2,181 
2,242 
Fixed Maturities [Member]
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
2,093 
2,134 
2,196 
Short-term investments
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
29 
28 
43 
Equity securities
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
37 
34 
36 
Other Investments [Member]
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
$ 105 
$ 104 
$ 62 
Investments (Schedule Of Components Of Restricted Assets) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
Trust funds
$ 11,315 
$ 11,389 
Deposits with non-U.S. regulatory authorities
1,970 
2,133 
Assets pledged under reverse repurchase agreements
1,435 
1,401 
Deposits with U.S. regulatory authorities
1,334 
1,338 
Other pledged assets
391 
456 
Total restricted assets
$ 16,445 
$ 16,717 
Fair Value Measurements (Narrative) (Detail) (USD $)
12 Months Ended
Dec. 31, 2013
Year
Dec. 31, 2012
Dec. 31, 2011
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
GLB - Lapse rate - lower range
1.00% 
 
 
GLB - Lapse rate - upper range
6.00% 
 
 
GLB - Spike lapse rate - lower range
10.00% 
 
 
GLB - Spike lapse rate - upper range
30.00% 
 
 
GLB - Ultimate lapse rate
10.00% 
 
 
GLB - Length of ultimate lapse rate period, years
2 
 
 
GLB - Adjustment factor for valuable guarantees - lower
8.00% 
 
 
GLB - Adjustment factor for valuable guarantees - upper
68.00% 
 
 
Percent of GMIB guaranteed value that are represented by clients with several years of annuitization experience
37.00% 
 
 
Guaranteed Living Benefits, Net Income Impact From Model Refinement
$ 9,000,000 
$ 49,000,000 
$ 14,000,000 
Level 1 To Level 2 Transfers
19,000,000 
40,000,000 
 
Level 2 To Level 1 Transfers
 
$ 15,000,000 
 
First year only [Domain]
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
GLB - Lapse rate - lower range
7.00% 
 
 
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 
 
 
Minimum |
First year only [Domain]
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
GLB - First year maximum annuitization rate
7.00% 
 
 
Minimum |
First year and subsequent years [Domain]
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
GLB - First year maximum annuitization rate
14.00% 
 
 
Maximum |
First year only [Domain]
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
GLB - First year maximum annuitization rate
12.00% 
 
 
Maximum |
First year and subsequent years [Domain]
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
GLB - First year maximum annuitization rate
55.00% 
 
 
GLB - Weighted average maximum annuitization rate - rate 1
7.00% 
 
 
GLB - Weighted average maximum annuitization rate - rate 2
15.00% 
 
 
GLB - Weighted average maximum annuitization rate - rate 3
30.00% 
 
 
Fair Value Measurements (Financial Instruments Measured At Fair Value On Recurring Basis) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
$ 49,254 
$ 47,306 
Equity securities
837 
744 
Short-term investments
1,763 
2,228 
Other investments
2,976 
2,716 
Securities lending collateral
1,632 
1,791 
Level 1
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,849 
2,292 
Equity securities
373 
253 
Short-term investments
953 
1,503 
Other investments
305 
268 
Securities lending collateral
   
   
Investment derivative instruments, assets
19 
11 
Other derivative instruments, assets
   
(6)
Separate account assets
1,145 
872 
Total assets measured at fair value
4,644 
5,193 
Investment derivative instruments, liability
6 
 
Other derivative instruments, liability
60 
 
GLB
   1
   1
Total liabilities measured at fair value
66 
 
Level 1 |
U.S. Treasury and agency
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,626 
2,050 
Level 1 |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
223 
222 
Level 1 |
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
   
20 
Level 1 |
Mortgage backed-securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
   
   
Level 1 |
States, municipalities, and political subdivisions
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
   
   
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
47,187 
44,839 
Equity securities
460 
488 
Short-term investments
803 
725 
Other investments
231 
196 
Securities lending collateral
1,632 
1,791 
Investment derivative instruments, assets
   
   
Other derivative instruments, assets
6 
30 
Separate account assets
81 
71 
Total assets measured at fair value
50,400 
48,140 
Investment derivative instruments, liability
   
 
Other derivative instruments, liability
2 
 
GLB
   1
   1
Total liabilities measured at fair value
2 
 
Level 2 |
U.S. Treasury and agency
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,323 
1,685 
Level 2 |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
14,324 
13,431 
Level 2 |
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
17,304 
16,586 
Level 2 |
Mortgage backed-securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
10,886 
10,460 
Level 2 |
States, municipalities, and political subdivisions
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
3,350 
2,677 
Level 3
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
218 
175 
Equity securities
4 
3 
Short-term investments
7 
   
Other investments
2,440 
2,252 
Securities lending collateral
   
   
Investment derivative instruments, assets
   
   
Other derivative instruments, assets
   
   
Separate account assets
   
   
Total assets measured at fair value
2,669 
2,430 
Investment derivative instruments, liability
   
 
Other derivative instruments, liability
   
 
GLB
193 1
1,119 1
Total liabilities measured at fair value
193 
 
Level 3 |
U.S. Treasury and agency
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
   
   
Level 3 |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
44 
60 
Level 3 |
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
166 
102 
Level 3 |
Mortgage backed-securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
8 
13 
Level 3 |
States, municipalities, and political subdivisions
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
   
   
Total
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
49,254 
47,306 
Equity securities
837 
744 
Short-term investments
1,763 
2,228 
Other investments
2,976 
2,716 
Securities lending collateral
1,632 
1,791 
Investment derivative instruments, assets
19 
11 
Other derivative instruments, assets
6 
24 
Separate account assets
1,226 
943 
Total assets measured at fair value
57,713 
55,763 
Investment derivative instruments, liability
6 
 
Other derivative instruments, liability
62 
 
GLB
193 1
1,119 1
Total liabilities measured at fair value
261 
 
Total |
U.S. Treasury and agency
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
2,949 
3,735 
Total |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
14,591 
13,713 
Total |
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
17,470 
16,708 
Total |
Mortgage backed-securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
10,894 
10,473 
Total |
States, municipalities, and political subdivisions
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
$ 3,350 
$ 2,677 
Fair Value Measurements (Schedule Of Significant Unobservable Inputs Used In Level 3 Liability Valuations) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Valuation Technique
Actuarial model 1
 
 
Minimum
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Significant Unobservable Inputs Lapse rate
1.00% 1
 
 
Significant Unobservable Inputs Annuitization rate
0.00% 1
 
 
Maximum
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Significant Unobservable Inputs Lapse rate
30.00% 1
 
 
Significant Unobservable Inputs Annuitization rate
55.00% 1
 
 
Guaranteed Minimum Income Benefit
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Fair Value
$ 193 1
 
 
Balance - beginning of year, liabilities
1,119 2 3
1,319 4
507 
Transfers Into Level 3, liabilities
   2
0 
0 
Transfers out of Level 3, liabilities
   2
0 
0 
Change in Net Unrealized Gains (Losses) included in OCI, Liabilities
   2
0 
   
Net Realized Gains/Losses, Liabilities
(926)2
(200)
(812)
Purchased, liabilities
   2
0 
0 
Sales, liabilities
   2
0 
0 
Settlements, liabilities
   2
0 
0 
Balance - end of year, liabilities
193 2
1,119 2 3
1,319 4
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Liabilities
(926)2
(200)
812 
Equity securities
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
3 
13 
13 
Transfers into Level 3, assets
8 
2 
   
Transfers out of Level 3, assets
(1)
(11)
   
Change in Net Unrealized Gains (Losses) included in OCI, Assets
(6)
   
1 
Net Realized Gains/Losses, Assets
(4)
   
(4)
Purchased, assets
2 
4 
5 
Sales, assets
(6)
(5)
(8)
Settlements, assets
   
   
   
Balance, end of year, assets
4 
3 
13 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
   
   
   
Short-term investments
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
   
 
 
Transfers into Level 3, assets
8 
 
 
Transfers out of Level 3, assets
(2)
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
   
 
 
Net Realized Gains/Losses, Assets
   
 
 
Purchased, assets
3 
 
 
Sales, assets
(1)
 
 
Settlements, assets
(1)
 
 
Balance, end of year, assets
7 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
   
 
 
Other Long-term Investments [Member]
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
2,252 
1,877 
1,432 
Transfers into Level 3, assets
   
53 
   
Transfers out of Level 3, assets
   
   
   
Change in Net Unrealized Gains (Losses) included in OCI, Assets
45 
(55)
(93)
Net Realized Gains/Losses, Assets
2 
7 
(3)
Purchased, assets
551 
520 
602 
Sales, assets
(10)
(9)
(55)
Settlements, assets
(396)
(237)
(192)
Balance, end of year, assets
2,440 
2,252 
1,877 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
2 
7 
3 
Other Derivative Instruments Fair Value [Member]
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
 
3 
4 
Transfers into Level 3, assets
 
0 
0 
Transfers out of Level 3, assets
 
0 
   
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
0 
   
Net Realized Gains/Losses, Assets
 
4 
(2)
Purchased, assets
 
3 
0 
Sales, assets
 
0 
   
Settlements, assets
 
(2)
(3)
Balance, end of year, assets
 
   
3 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
0 
1 
Fixed maturities available for sale |
U.S. Treasury and agency
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
 
5 
   
Transfers into Level 3, assets
 
   
   
Transfers out of Level 3, assets
 
(4)
   
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
   
   
Net Realized Gains/Losses, Assets
 
   
   
Purchased, assets
 
   
5 
Sales, assets
 
   
   
Settlements, assets
 
(1)
   
Balance, end of year, assets
 
   
5 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
   
   
Fixed maturities available for sale |
Foreign Government Debt Securities [Member]
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
60 
33 
26 
Transfers into Level 3, assets
36 
49 
9 
Transfers out of Level 3, assets
(54)
(13)
(18)
Change in Net Unrealized Gains (Losses) included in OCI, Assets
   
1 
1 
Net Realized Gains/Losses, Assets
(1)
   
0 
Purchased, assets
24 
46 
23 
Sales, assets
(21)
(53)
(3)
Settlements, assets
(2)
(1)
(3)
Balance, end of year, assets
44 
60 
33 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
   
   
0 
Fixed maturities available for sale |
Corporate securities
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
102 
134 
115 
Transfers into Level 3, assets
47 
37 
42 
Transfers out of Level 3, assets
(31)
(46)
(4)
Change in Net Unrealized Gains (Losses) included in OCI, Assets
   
(6)
2 
Net Realized Gains/Losses, Assets
2 
1 
(3)
Purchased, assets
75 
24 
32 
Sales, assets
(7)
(19)
(27)
Settlements, assets
(18)
(33)
(19)
Balance, end of year, assets
166 
102 
134 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
2 
   
0 
Fixed maturities available for sale |
Mortgage backed-securities
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
13 
28 
39 
Transfers into Level 3, assets
   
22 
4 
Transfers out of Level 3, assets
   
(35)
(48)
Change in Net Unrealized Gains (Losses) included in OCI, Assets
   
   
   
Net Realized Gains/Losses, Assets
   
   
   
Purchased, assets
   
9 
59 
Sales, assets
(3)
(7)
(17)
Settlements, assets
(2)
(4)
(9)
Balance, end of year, assets
8 
13 
28 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
   
 
   
Fixed maturities available for sale |
States, municipalities, and political subdivisions
 
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
Balance, beginning of year, assets
 
1 
2 
Transfers into Level 3, assets
 
1 
   
Transfers out of Level 3, assets
 
(1)
   
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
   
   
Net Realized Gains/Losses, Assets
 
   
   
Purchased, assets
 
   
0 
Sales, assets
 
   
   
Settlements, assets
 
(1)
(1)
Balance, end of year, assets
 
   
1 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
   
   
Fair Value Measurements (Carrying Values And Fair Values Of Financial Instruments Not Measured At Fair Value) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
$ 6,263 
$ 7,633 
Partially-owned insurance companies
470 
454 
Total assets
6,733 
8,087 
Short-term debt
1,913 
1,401 
Long-term debt
4,088 
3,916 
Trust preferred securities
438 
446 
Total liabilities
6,439 
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
832 
1,083 
Financial Instruments Fair Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
897 
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
2,005 
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
1,379 
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
1,150 
1,195 
Level 2 |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
5,652 
6,996 
Total assets
5,652 
6,996 
Short-term debt
1,913 
1,401 
Long-term debt
4,088 
3,916 
Trust preferred securities
438 
446 
Total liabilities
6,439 
5,763 
Level 2 |
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
236 
464 
Level 2 |
Financial Instruments Fair Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
897 
964 
Level 2 |
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
1,990 
2,257 
Level 2 |
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
1,379 
2,116 
Level 2 |
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
1,150 
1,195 
Level 3 |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
15 
18 
Partially-owned insurance companies
470 
454 
Total assets
485 
472 
Short-term debt
 
0 
Long-term debt
 
0 
Trust preferred securities
 
0 
Total liabilities
 
0 
Level 3 |
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 
Level 3 |
Financial Instruments Fair Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
   
0 
Level 3 |
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
15 
18 
Level 3 |
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
 
0 
Level 3 |
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
 
0 
Cost |
Financial Instruments Carrying Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
6,098 
7,270 
Partially-owned insurance companies
470 
454 
Total assets
6,568 
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 
Cost |
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
820 
1,044 
Cost |
Financial Instruments Carrying Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
864 
910 
Cost |
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
1,922 
2,133 
Cost |
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
1,341 
2,028 
Cost |
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
1,151 
1,155 
Level 1 |
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 
Short-term debt
 
0 
Long-term debt
 
0 
Trust preferred securities
 
0 
Total liabilities
 
0 
Level 1 |
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 
Level 1 |
Financial Instruments Fair Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
 
0 
Level 1 |
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
 
0 
Level 1 |
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
 
0 
Level 1 |
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
 
$ 0 
Reinsurance (Consolidated Reinsurance) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Premiums written [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Direct
 
 
 
 
 
 
 
 
$ 19,212 
$ 18,144 
$ 17,626 
Assumed
 
 
 
 
 
 
 
 
3,616 
3,449 
3,205 
Ceded
 
 
 
 
 
 
 
 
(5,803)
(5,518)
(5,459)
Net
 
 
 
 
 
 
 
 
17,025 
16,075 
15,372 
Premiums earned [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Direct
 
 
 
 
 
 
 
 
18,856 
17,802 
17,534 
Assumed
 
 
 
 
 
 
 
 
3,479 
3,302 
3,349 
Ceded
 
 
 
 
 
 
 
 
(5,722)
(5,427)
(5,496)
Net premiums earned
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 3,848 
$ 4,665 
$ 3,783 
$ 3,381 
$ 16,613 
$ 15,677 
$ 15,387 
Reinsurance (Reinsurance Recoverable on Ceded Reinsurance) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Reinsurance Disclosures [Abstract]
 
 
 
 
Reinsurance recoverable on unpaid losses and loss expenses
$ 10,612 
$ 11,399 
$ 11,602 
$ 12,149 
Reinsurance recoverable on paid losses and loss expenses
615 
679 
 
 
Net reinsurance recoverable on losses and loss expenses
$ 11,227 
$ 12,078 
 
 
Reinsurance (Reinsurance Recoverable by Category and Listing of Largest Reinsurers) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
$ 11,617 
 
Provision
390 
439 
% of Gross
3.40% 
 
Largest reinsurers
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
5,117 
 
Provision
78 
 
% of Gross
1.50% 
 
Other reinsurers balances rated A- or better
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
2,901 
 
Provision
36 
 
% of Gross
1.20% 
 
Other reinsurers balances with ratings lower than A- or not rated
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
587 
 
Provision
103 
 
% of Gross
17.50% 
 
Other pools and government agencies
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
338 
 
Provision
21 
 
% of Gross
6.20% 
 
Structured settlements
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
577 
 
Provision
12 
 
% of Gross
2.10% 
 
Other captives
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
1,762 
 
Provision
14 
 
% of Gross
0.80% 
 
Other
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2012
335 
 
Provision
$ 126 
 
% of Gross
37.60% 
 
Reinsurance Reinsurance (Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts - Schedule Of Guaranteed Minimum Benefits Income And Expense) (Detail) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
$ 4,363,000,000 
$ 4,610,000,000 
$ 4,067,000,000 
$ 3,573,000,000 
$ 3,848,000,000 
$ 4,665,000,000 
$ 3,783,000,000 
$ 3,381,000,000 
$ 16,613,000,000 
$ 15,677,000,000 
$ 15,387,000,000 
Policy benefits and other reserve adjustments
136,000,000 
138,000,000 
110,000,000 
131,000,000 
142,000,000 
130,000,000 
102,000,000 
147,000,000 
515,000,000 
521,000,000 
401,000,000 
Net realized gains (losses) including OTTI
154,000,000 
40,000,000 
104,000,000 
206,000,000 
272,000,000 
(60,000,000)
(394,000,000)
260,000,000 
504,000,000 
78,000,000 
(795,000,000)
GMDB
 
 
 
 
 
 
 
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
77,000,000 
85,000,000 
98,000,000 
Policy benefits and other reserve adjustments
 
 
 
 
 
 
 
 
73,000,000 
60,000,000 
59,000,000 
GLB
 
 
 
 
 
 
 
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
149,000,000 
160,000,000 
163,000,000 
Policy benefits and other reserve adjustments
 
 
 
 
 
 
 
 
27,000,000 
61,000,000 
47,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
929,000,000 
203,000,000 
(812,000,000)
Gain (loss) recognized in income
 
 
 
 
 
 
 
 
1,051,000,000 
302,000,000 
(696,000,000)
Net cash received
 
 
 
 
 
 
 
 
126,000,000 
149,000,000 
161,000,000 
Net (increase) decrease in liability
 
 
 
 
 
 
 
 
$ 925,000,000 
$ 153,000,000 
$ (857,000,000)
Reinsurance (Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts - Narrative) (Detail) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Guaranteed Minimum Death Benefit
Dec. 31, 2012
Guaranteed Minimum Death Benefit
Dec. 31, 2013
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Dec. 31, 2012
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Dec. 31, 2013
Guaranteed Living Benefits [Member]
Dec. 31, 2012
Guaranteed Living Benefits [Member]
Dec. 31, 2011
Guaranteed Living Benefits [Member]
Dec. 31, 2010
Guaranteed Living Benefits [Member]
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Reinsurance recoveries on losses and loss expenses incurred
$ 3,100,000,000 
$ 4,300,000,000 
$ 3,300,000,000 
 
 
 
 
 
 
 
 
Provision for uncollectible reinsurance
390,000,000 
439,000,000 
 
 
 
 
 
 
 
 
 
Reported liabilities
 
 
 
100,000,000 
90,000,000 
 
 
427,000,000,000 
1,400,000,000 
1,500,000,000 
648,000,000 
Fair value derivative adjustment in liability
 
 
 
 
 
 
 
0 
1,100,000,000 
 
 
Net amount at risk
 
 
 
586,000,000,000 
1,300,000,000 
 
 
136,000,000 
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
 
 
 
2.00% 
 
3.00% 
 
3.50% 
 
 
 
Discounting assumption used in the calculation of the benefit reserve averaging - upper range
 
 
 
3.00% 
 
4.00% 
 
4.50% 
 
 
 
Total claim amount payable, if all of the Company's cedants' policyholders covered were to die immediately
 
 
 
668,000,000 
 
84,000,000 
 
 
 
 
 
GMBD net amount of risk
 
 
 
 
 
73,000,000 
116,000,000 
 
 
 
 
GLB net amount of risk
 
 
 
 
 
$ 141,000,000 
$ 655,000,000 
 
 
 
 
Average attained age of all policyholders under all benefits reinsured, years
68 years 
 
 
 
 
 
 
 
 
 
 
intangible Assets (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Goodwill
$ 4,603 
$ 4,319 
$ 4,148 
Other intangible assets
801 
656 
 
Intangible assets subject to amortization
695 
554 
 
Intangible assets not subject to amortization
106 
102 
 
Amortization expense related to other intangible assets
$ 95 
$ 51 
$ 29 
Intangible Assets (Roll-forward of Goodwill, by Business Segment) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2013
Insurance - North American P&C
Dec. 31, 2012
Insurance - North American P&C
Dec. 31, 2013
Insurance - North American Agriculture
Dec. 31, 2012
Insurance - North American Agriculture
Dec. 31, 2013
Insurance - Overseas General
Dec. 31, 2012
Insurance - Overseas General
Dec. 31, 2013
Global Reinsurance
Dec. 31, 2012
Global Reinsurance
Dec. 31, 2013
Life
Dec. 31, 2012
Life
Feb. 2, 2011
New York Life's Korea and Hong Kong
Dec. 31, 2013
Fianzas Monterrey
Apr. 2, 2013
Fianzas Monterrey
Dec. 31, 2012
Fianzas Monterrey
Insurance - North American P&C
Dec. 31, 2013
Fianzas Monterrey
Insurance - Overseas General
Dec. 31, 2013
Fianzas Monterrey
Global Reinsurance
Dec. 31, 2013
Fianzas Monterrey
Life
Dec. 31, 2012
JaPro
Dec. 31, 2012
JaPro
Insurance - North American P&C
Dec. 31, 2012
JaPro
Insurance - North American Agriculture
Dec. 31, 2012
JaPro
Insurance - Overseas General
Dec. 31, 2012
JaPro
Global Reinsurance
Dec. 31, 2012
JaPro
Life
Dec. 31, 2013
ABA Seguros
May 2, 2013
ABA Seguros
Dec. 31, 2012
ABA Seguros
Insurance - North American P&C
Dec. 31, 2013
ABA Seguros
Insurance - Overseas General
Dec. 31, 2013
ABA Seguros
Global Reinsurance
Dec. 31, 2013
ABA Seguros
Life
Goodwill [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$ 4,319 
$ 4,148 
$ 1,219 
$ 1,216 
$ 134 
$ 134 
$ 1,764 
$ 1,603 
$ 365 
$ 365 
$ 837 
$ 830 
$ 91 
 
$ 135 
 
 
 
 
 
 
 
 
 
 
 
$ 283 
 
 
 
 
Purchase price allocation adjustment
 
4 
 
0 
0 
0 
 
0 
 
0 
 
4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
135 
 
0 
135 
0 
0 
123 
0 
0 
123 
0 
0 
283 
 
0 
283 
0 
0 
Foreign exchange revaluation and other
(134)
44 
(4)
3 
0 
0 
(128)
38 
0 
0 
(2)
3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at end of period
$ 4,603 
$ 4,319 
$ 1,215 
$ 1,219 
$ 134 
$ 134 
$ 2,054 
$ 1,764 
$ 365 
$ 365 
$ 835 
$ 837 
$ 91 
 
$ 135 
 
 
 
 
 
 
 
 
 
 
 
$ 283 
 
 
 
 
Intangible Assets (Value Of Business Acquired (VOBA) Roll-forward) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Movement in Intangible Assets Arising from Insurance Contracts Acquired in Business Combination [Roll Forward]
 
 
 
Balance, beginning of year
$ 614 
$ 676 
$ 634 
Acquisition of New York Life's Korea operations and Hong Kong operations
0 
0 
151 
Amortization expense
(64)
(82)
(108)
Foreign exchange revaluation
(14)
20 
(1)
Balance, end of year
$ 536 
$ 614 
$ 676 
Unpaid losses and loss expenses (Narrative) (Details) (USD $)
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2004
Dec. 31, 2013
Insurance - Overseas General
Dec. 31, 2012
Insurance - Overseas General
Dec. 31, 2011
Insurance - Overseas General
Dec. 31, 2013
Global Reinsurance
Dec. 31, 2012
Global Reinsurance
Dec. 31, 2011
Global Reinsurance
Dec. 31, 2013
Long tail
Insurance - Overseas General
Dec. 31, 2012
Long tail
Insurance - Overseas General
Dec. 31, 2013
Long tail
Global Reinsurance
Dec. 31, 2013
Long tail
Excess casualty business
Insurance - Overseas General
Dec. 31, 2013
Long tail
Excess casualty business
2009 and prior
Insurance - Overseas General
Dec. 31, 2012
Long tail
Excess casualty business
2009 and prior
Insurance - Overseas General
Dec. 31, 2013
Long tail
Excess casualty business
2008 and prior
Insurance - Overseas General
Dec. 31, 2012
Long tail
Excess casualty business
2008 and prior
Insurance - Overseas General
Dec. 31, 2013
Long tail
Medical risk operations
2009 and prior
Global Reinsurance
Dec. 31, 2012
Long tail
Medical risk operations
2008 and prior
Global Reinsurance
Dec. 31, 2013
Long tail
Financial solutions business
Insurance - Overseas General
Dec. 31, 2013
Long tail
Financial solutions business
2009 and prior
Insurance - Overseas General
Dec. 31, 2013
Long tail
Financial solutions business
2012
Insurance - Overseas General
Dec. 31, 2013
Long tail
Non Medical Professional Liability [Member]
2008 and prior
Global Reinsurance
Dec. 31, 2013
Short tail
Insurance - Overseas General
Dec. 31, 2013
Short tail
Other lines
Insurance - North American Agriculture
Dec. 31, 2012
Short tail
Other lines
Insurance - North American Agriculture
Dec. 31, 2011
Short tail
Other lines
Insurance - North American Agriculture
Dec. 31, 2013
Short tail
Property portfolios
Insurance - Overseas General
Dec. 31, 2012
Short tail
Property portfolios
2009 to 2010
Insurance - Overseas General
Dec. 31, 2013
Short tail
Property portfolios
2008 to 2009
Insurance - Overseas General
Dec. 31, 2013
Short tail
Property portfolios
2009 and prior
Global Reinsurance
Dec. 31, 2012
Short tail
Property portfolios
2009 and prior
Global Reinsurance
Dec. 31, 2013
Short tail
Property portfolios
2008 and prior
Insurance - Overseas General
Dec. 31, 2013
Short tail
Aviation lines [Domain]
2009 and prior
Insurance - Overseas General
Dec. 31, 2013
Insurance - Overseas General
Dec. 31, 2011
Insurance - Overseas General
Dec. 31, 2011
Global Reinsurance
Dec. 31, 2013
Penn Millers
Dec. 31, 2013
Brandywine
Dec. 31, 2012
Brandywine
Dec. 31, 2013
Westchester Specialty
Dec. 31, 2012
Westchester Specialty
Dec. 31, 1998
Westchester Specialty
Dec. 31, 2013
Ace Bermuda [Member]
Dec. 31, 2013
Net of NICO Coverage
Brandywine
Dec. 31, 2013
Net of NICO Coverage
Westchester Specialty
Dec. 31, 2013
Run Off [Member]
Insurance - North American P&C
Dec. 31, 2012
Run Off [Member]
Insurance - North American P&C
Dec. 31, 2011
Run Off [Member]
Insurance - North American P&C
Dec. 31, 2013
Run Off [Member]
Completion of reserve review
Insurance - North American P&C
Dec. 31, 2012
Run Off [Member]
Completion of reserve review
Insurance - North American P&C
Dec. 31, 2011
Run Off [Member]
Insurance - North American
Dec. 31, 2013
Active [Member]
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Insurance - North American P&C
Dec. 31, 2011
Active [Member]
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
Directors and Officers (D&O) Portfolio
2007 and prior
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
Directors and Officers (D&O) Portfolio
2008 and prior
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
Excess casualty business
2007 and prior
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
Excess casualty business
2007 and prior
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
Medical risk operations
2007 and prior
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
Medical risk operations
2007 to 2009
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
National accounts portfolio
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
National accounts portfolio
2007 and prior
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
National accounts portfolio
2012
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
Foreign casualty Products
2009 and prior
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
Other lines
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
Completion of reserve review
2012
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Long tail
Workers Compensation [Domain]
2006 and prior
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
Workers Compensation [Domain]
2006 and prior
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Long tail
Workers Compensation [Domain]
2007 and prior
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Short tail
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Short tail
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Short tail
Property and inland marine lines
2008 to 2010
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Short tail
Property and inland marine lines
2009 and prior
Insurance - North American P&C
Dec. 31, 2013
Active [Member]
Short tail
Political risk lines [Domain]
2009 to 2010
Insurance - North American P&C
Dec. 31, 2012
Active [Member]
Short tail
Aviation lines [Domain]
2009 and prior
Insurance - North American P&C
Dec. 31, 2011
Active [Member]
Insurance - North American
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
$ 530,000,000 
$ 479,000,000 
$ 556,000,000 
 
$ 299,000,000 
$ 226,000,000 
$ 290,000,000 
$ 84,000,000 
$ 61,000,000 
$ 71,000,000 
$ 127,000,000 
$ 121,000,000 
$ 53,000,000 
$ 92,000,000 
$ 135,000,000 
$ (29,000,000)
$ (43,000,000)
$ 150,000,000 
$ 20,000,000 
$ 54,000,000 
$ 35,000,000 
$ 63,000,000 
$ (28,000,000)
$ 25,000,000 
$ 172,000,000 
$ 13,000,000 
$ 12,000,000 
$ 8,000,000 
$ 104,000,000 
$ 105,000,000 
$ 69,000,000 
$ 31,000,000 
$ 29,000,000 
$ 35,000,000 
$ 29,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
$ (193,000,000)
$ (168,000,000)
$ (102,000,000)
$ (161,000,000)
$ (150,000,000)
 
$ 327,000,000 
$ 348,000,000 
$ (289,000,000)
$ 221,000,000 
$ 245,000,000 
$ 67,000,000 
$ 72,000,000 
$ 50,000,000 
$ 73,000,000 
$ 57,000,000 
$ 63,000,000 
$ 28,000,000 
$ 39,000,000 
$ 40,000,000 
$ 25,000,000 
$ 28,000,000 
$ 41,000,000 
$ (40,000,000)
$ (36,000,000)
$ 34,000,000 
$ 106,000,000 
$ 103,000,000 
$ 88,000,000 
$ 45,000,000 
$ 29,000,000 
$ 27,000,000 
 
Prior period net unpaid reserves represented by prior period development (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4.20%)
(3.10%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(0.60%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1.80%)
Unallocated loss adjustment expenses due to operating expenses paid and reserved
(9,878,000,000)
(10,132,000,000)
(10,076,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A & E - change in net loss reserves
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
166,000,000 
146,000,000 
5,000,000 
4,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A & E - change in gross loss reserves
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
277,000,000 
275,000,000 
3,000,000 
(17,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A & E - loss reserves, net - closing
1,051,000,000 
1,106,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
79,000,000 
 
 
3,000,000 
816,000,000 
 
146,000,000 
 
 
7,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A & E - incurred activity, net
171,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
158,000,000 
 
14,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NICO reinsurance protection on losses and loss expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,500,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incurred activity
9,348,000,000 
9,653,000,000 
9,520,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
167,000,000 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NICO pro-rata share of reinsurance protection (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NICO reinsurance protection on losses and loss expenses incurred on or before 12/31/1996, net of retenion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NICO retention for losses and loss expenses incurred on or before 12/31/1996
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
721,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NICO remaining unused limit under the 1998 agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
490,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend retention fund established by INA Financial Corporation
50,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Required minimum balance under the dividend retention fund
50,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum contribution from the dividend retention fund to Century not required for XOL agreement
200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reinsurance coverage to Century provided by ACE INA under XOL
800,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statutory surplus of century
25,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Century Statutory Basis Losses Cede To X O L
232,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INA Holdings contibutions to Century in exchange for a surplus note
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate reinsurance balances ceded by active ACE companies to Century
929,000,000 
958,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Century's carried gross reserves (including reserves ceded by active ACE companies)
$ 2,300,000,000 
$ 2,100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses (Unpaid Losses and Loss Expenses Rollforward) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Gross unpaid losses and loss expenses, beginning of year
$ 37,946 
$ 37,477 
$ 37,391 
Reinsurance recoverable on unpaid losses
11,399 
11,602 
12,149 
Balance at beginning of year
26,547 
25,875 
25,242 
Acquistion of subsidiaries
86 
14 
92 
Total
26,633 
25,889 
25,334 
Net losses and loss expenses incurred in respect of losses incurring in Current Year
9,878 
10,132 
10,076 
Net losses and loss expenses incurred in respect of losses incurring in Prior Year
(530)
(479)
(556)
Total
9,348 
9,653 
9,520 
Net losses and loss expenses incurred in respect of losses paid in Current Year
3,942 
4,325 
4,209 
Net losses and loss expenses incurred in respect of losses paid in Prior Year
5,035 
4,894 
4,657 
Total
8,977 
9,219 
8,866 
Foreign currency revaluation and other
(173)
224 
(113)
Balance at end of year
26,831 
26,547 
25,875 
Reinsurance recoverable on unpaid losses
10,612 
11,399 
11,602 
Gross unpaid losses and loss expenses, end of year
$ 37,443 
$ 37,946 
$ 37,477 
Unpaid losses and loss expenses (A&E Loss Roll-forward) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Unpaid Losses and Loss Expenses [Roll Forward]
 
Balance (gross) at December 31, 2012
$ 2,080 
Balance (net) at December 31, 2012
1,106 
Incurred activity, gross
244 
Incurred activity, net
171 
Paid activity, gross
(485)
Paid activity, net
(226)
Balance (gross) at December 31, 2013
1,839 
Balance (net) at December 31, 2013
1,051 
Asbestos
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
Balance (gross) at December 31, 2012
1,886 
Balance (net) at December 31, 2012
970 
Incurred activity, gross
125 
Incurred activity, net
96 
Paid activity, gross
(367)
Paid activity, net
(140)
Balance (gross) at December 31, 2013
1,644 
Balance (net) at December 31, 2013
926 
Environmental
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
Balance (gross) at December 31, 2012
194 
Balance (net) at December 31, 2012
136 
Incurred activity, gross
119 
Incurred activity, net
75 
Paid activity, gross
(118)
Paid activity, net
(86)
Balance (gross) at December 31, 2013
195 
Balance (net) at December 31, 2013
$ 125 
Unpaid losses and loss expenses (Brandywine Incurred Loss Activity) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
$ 26,547 
$ 25,875 
$ 25,242 
Incurred activity
9,348 
9,653 
9,520 
Paid activity
8,977 
9,219 
8,866 
Balance at end of year
26,831 
26,547 
25,875 
Brandywine |
A&E
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
852 
 
 
Incurred activity
158 
 
 
Paid activity
(194)
 
 
Balance at end of year
816 
 
 
Brandywine |
Other
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
421 1
 
 
Incurred activity
9 1
 
 
Paid activity
(63)1
 
 
Balance at end of year
367 1
 
 
Brandywine |
Total
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
1,273 
 
 
Incurred activity
167 
 
 
Paid activity
(257)
 
 
Balance at end of year
1,183 
 
 
Brandywine |
NICO Coverage
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
18 
 
 
Incurred activity
0 
 
 
Paid activity
(18)
 
 
Balance at end of year
0 
 
 
Brandywine |
Net of NICO Coverage
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
1,255 
 
 
Incurred activity
167 
 
 
Paid activity
(239)
 
 
Balance at end of year
$ 1,183 
 
 
Unpaid losses and loss expenses (Westchester Incurred Loss Activity) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
$ 26,547 
$ 25,875 
$ 25,242 
Incurred activity
9,348 
9,653 
9,520 
Paid activity
8,977 
9,219 
8,866 
Balance at end of year
26,831 
26,547 
25,875 
Westchester Specialty |
A&E
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
151 
 
 
Incurred activity
14 
 
 
Paid activity
(19)
 
 
Balance at end of year
146 
 
 
Westchester Specialty |
Other
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
44 1
 
 
Incurred activity
(11)1
 
 
Paid activity
0 1
 
 
Balance at end of year
33 1
 
 
Westchester Specialty |
Total
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
195 
 
 
Incurred activity
3 
 
 
Paid activity
(19)
 
 
Balance at end of year
179 
 
 
Westchester Specialty |
NICO Coverage
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
158 
 
 
Incurred activity
2 
 
 
Paid activity
(19)
 
 
Balance at end of year
141 
 
 
Westchester Specialty |
Net of NICO Coverage
 
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
37 
 
 
Incurred activity
1 
 
 
Paid activity
0 
 
 
Balance at end of year
$ 38 
 
 
Taxation (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Examination [Line Items]
 
 
 
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit
$ 22 
$ 18 
 
Valuation allowance
64 
56 
 
Unrecognized tax benefits that would affect the effective tax rate
5 
 
 
Tax-related interest and penalties reported in the consolidated statements of operations
(1)
(8)
3 
Liabilities recorded for tax-related interest and penalties
11 
12 
 
Domestic Tax Authority [Member]
 
 
 
Income Tax Examination [Line Items]
 
 
 
Net operating loss carry-forwards
154 
 
 
Switzerland
 
 
 
Income Tax Examination [Line Items]
 
 
 
Applicable income tax rates
7.83% 
 
 
Foreign Tax Authority [Member]
 
 
 
Income Tax Examination [Line Items]
 
 
 
Foreign tax credit carry-forward
$ 131 
 
 
Bermuda
 
 
 
Income Tax Examination [Line Items]
 
 
 
Applicable income tax rates
0.00% 
 
 
U.S.
 
 
 
Income Tax Examination [Line Items]
 
 
 
Applicable income tax rates
35.00% 
 
 
U.K.
 
 
 
Income Tax Examination [Line Items]
 
 
 
Applicable income tax rates
23.25% 
 
 
Taxation (Provision For Income Taxes) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
 
 
 
Current tax expense
$ 231 
$ 305 
$ 485 
Deferred tax expense
249 
(35)
17 
Provision for income taxes
$ 480 
$ 270 
$ 502 
Taxation (Reconciliation Of The Difference Between The Provision for Income Taxes and the Expected Tax Provision at Swiss Statutory Income Tax Rate) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Disclosure [Abstract]
 
 
 
Expected tax provision at Swiss statutory rate
$ 331 
$ 233 
$ 160 
Taxes on earnings subject to rates other that Swiss statutory rate
124 
129 
323 
Tax exempt interest and dividends received deduction, net of proration
(27)
(24)
(21)
Net witholding taxes
27 
23 
19 
Favorable resolution of prior years' tax matters and closing of statutes of limitations
(5)
(124)
0 
Change in valuation allowance
4 
4 
(2)
Other
26 
29 
23 
Provision for income taxes
$ 480 
$ 270 
$ 502 
Taxation (Components Of Net Deferred Tax Assets) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Deferred Tax Assets, Gross [Abstract]
 
 
Loss reserve discount
$ 807 
$ 849 
Unearned premium reserve
93 
98 
Foreign tax credits
1,236 
1,131 
Investments
3 
43 
Provision for uncollectible balances
78 
110 
Loss carry-forwards
54 
55 
Other, net
184 
110 
Total deferred tax assets
2,455 
2,396 
Deferred Tax Liabilities, Gross [Abstract]
 
 
Deferred policy acquisition costs
138 
68 
VOBA and other intangible assets
351 
379 
Un-remitted foreign earnings
982 
795 
Unrealized appreciation on investments
210 
586 
Deferred Tax Liabilities, Unrealized Currency Transaction Gains
94 
59 
Total deferred tax liabilities
1,775 
1,887 
Valuation allowance
64 
56 
Net deferred tax assets
$ 616 
$ 453 
Taxation (Reconciliation of Unrecognized Tax Benefits) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
Unrecognized Tax Benefits, beginning of year
$ 26 
$ 134 
Additions based on tax provisions related to the current year
5 
19 
Reductions for settlements with tax authorities
0 
(16)
Reductions for the lapse of the applicable statutes of limitations
(4)
(111)
Unrecognized Tax Benefits, end of year
$ 27 
$ 26 
Debt (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2013
Senior Notes
Dec. 31, 2012
Senior Notes
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2014
Dec. 31, 2012
Senior Notes
ACE INA senior notes due 2014
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2012
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2012
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2017
Dec. 31, 2012
Senior Notes
ACE INA senior notes due 2017
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2018
Dec. 31, 2012
Senior Notes
ACE INA senior notes due 2018
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2019
Dec. 31, 2012
Senior Notes
ACE INA senior notes due 2019
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2036
Dec. 31, 2012
Senior Notes
ACE INA senior notes due 2036
Dec. 31, 2013
Senior secured debentures
ACE INA debentures due 2029
Dec. 31, 2012
Senior secured debentures
ACE INA debentures due 2029
Dec. 31, 2013
Trust Preferred Securities
ACE INA capital securities due 2030
Mar. 31, 2000
Trust Preferred Securities
ACE INA capital securities due 2030
Dec. 31, 2013
Reverse repurchase agreements
Dec. 31, 2012
Reverse repurchase agreements
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term debt
$ 1,901 
$ 1,401 
 
 
$ 500 
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 1,401 
$ 1,401 
Debt issued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
309 
300 
 
 
Long-term debt stated interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.70% 
9.70% 
 
 
Current amount of long-term debt outstanding
3,807 
3,360 
3,807 
3,360 
0 
500 
449 
449 
700 
699 
500 
500 
300 
300 
500 
500 
299 
299 
100 
100 
 
 
 
 
ACE Capital Trust II common securities purchased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 9.2 
 
 
Debt (Schedule of Debt Outstanding) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Debt Instrument [Line Items]
 
 
Short-term debt
$ 1,901 
$ 1,401 
Long-term debt
3,807 
3,360 
Trust preferred securities
309 
309 
Senior Notes
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
3,807 
3,360 
Senior Notes |
ACE INA senior notes due 2014
 
 
Debt Instrument [Line Items]
 
 
Short-term debt
500 
0 
Long-term debt
0 
500 
Senior Notes |
ACE INA senior notes due 2015
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
449 
449 
Senior Notes |
ACE INA senior notes due 2015
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
700 
699 
Senior Notes |
ACE INA senior notes due 2017
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
500 
500 
Senior Notes |
ACE INA senior notes due 2018
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
300 
300 
Senior Notes |
ACE INA senior notes due 2019
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
500 
500 
Senior Notes |
ACE INA senior notes due 2023
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
473 
0 
Senior Notes |
ACE INA senior notes due 2036
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
299 
299 
Senior Notes |
ACE INA senior notes due 2043
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
474 
0 
Senior Notes |
Other
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
12 
13 
Senior secured debentures |
ACE INA debentures due 2029
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
100 
100 
Trust Preferred Securities |
ACE INA capital securities due 2030
 
 
Debt Instrument [Line Items]
 
 
Trust preferred securities
309 
309 
Reverse repurchase agreements
 
 
Debt Instrument [Line Items]
 
 
Short-term debt
$ 1,401 
$ 1,401 
Commitments, contingencies, and guarantees (Narrative) (Detail) (USD $)
2 Months Ended 12 Months Ended
Feb. 27, 2014
Dec. 31, 2013
derivative
Dec. 31, 2012
Dec. 31, 2011
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Derivative Asset, Fair Value, Amount Offset Against Collateral
 
$ (41,000,000)
 
 
Derivative Liability, Fair Value, Amount Offset Against Collateral
 
 
35,000,000 
 
Securities Sold under Agreements to Repurchase
 
1,401,000,000 
1,401,000,000 
 
Obligation to Return Securities Received as Collateral
 
1,633,000,000 
1,795,000,000 
 
Securities Held as Collateral, at Fair Value
 
1,632,000,000 
1,791,000,000 
 
Repurchase of outstanding common shares, shares
3,437,082 
3,266,531 
100,000 
2,058,860 
Number of in-force interest rate swaps
 
0 
 
 
Number of in-force credit default swaps
 
0 
 
 
Approximate percentage of gross premiums written that were generated from or placed by Marsh
 
11.00% 
11.00% 
12.00% 
Approximate percentage of gross premiums written that were generated from or placed by Aon
 
 
 
10.00% 
Carrying value of limited partnerships and partially-owned investment companies included in other investments
 
1,900,000,000 
 
 
Funding commitments relating to limited partnerships and partially-owned investment companies
 
1,200,000,000 
 
 
Total rental expense related to operating leases
 
128,000,000 
112,000,000 
114,000,000 
Cost of shares acquired
326,000,000 
290,000,000 
7,000,000 
132,000,000 
Letter of Credit [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Line of Credit Facility, Current Borrowing Capacity
 
1,000,000,000 
 
 
Letter Of Credit Unsecured Expiring November 2017 |
Letter of Credit [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Borrowing capacity on unsecured revolving line of credit
 
1,500,000,000 
 
 
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases
 
300,000,000 
 
 
Line of Credit Facility, Amount Outstanding
 
376,000,000 
 
 
Letter Of Credit Unsecured Expiring September 2014 |
Letter of Credit [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Borrowing capacity on unsecured revolving line of credit
 
500,000,000 
 
 
Letter Of Credit Bilateral Uncollateralized Expiring December 2017 |
Letter of Credit [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Borrowing capacity on unsecured revolving line of credit
 
425,000,000 
 
 
Line of Credit Facility, Amount Outstanding
 
352,000,000 
 
 
November 2013 Stock Repurchase Plan [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Share repurchase authorization remaining
$ 1,620,000,000 
$ 1,940,000,000 
 
 
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
Dec. 31, 2013
Dec. 31, 2012
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
$ 6,287 
$ 0 
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,202 
0 
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
50 
0 
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
3,910 
0 
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
871 
0 
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
254 
0 
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,692 
0 
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
250 
0 
Other
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
8 
0 
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,950 
0 
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
277 
0 
Other Assets [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
321 
0 
Other Assets [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
3 
0 
Other Assets [Member] |
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Other Assets [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
3 
0 
Other Assets [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
13 
0 
Other Assets [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Other Assets [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
6 
0 
Other Assets [Member] |
Other
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Other Assets [Member] |
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
6 
0 
Other Assets [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(6)
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(4)
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(2)
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(60)
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Other
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(2)
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
(62)
0 
Fixed Maturities Available For Sale [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
302 
0 
Accounts Payable Future Policy Benefits [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair Value
$ (427)
$ 0 
Commitments, contingencies, and guarantees (Net Realized Gains (Losses) Of Derivative Instrument Activity In Consolidated Statement Of Operations) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
$ 375 
$ (136)
$ (930)
Foreign Exchange Future [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
11 
(9)
6 
All Other Futures Contracts And Options [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
61 
(22)
(98)
Convertibles and Bonds with Warrants Attached [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
6 
25 
(50)
Dollar Rolls [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
0 
0 
(1)
Investment And Embedded Derivative Instruments [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
78 
(6)
(143)
Guaranteed Living Benefits [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
878 1
171 1
(779)1
Single-Stock Future [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(555)2
(273)2
(12)2
Options On Equity Market Indices [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(24)2
(24)2
8 2
Credit Default Swap [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(2)
(4)
(4)
Guaranteed Living Benefit And Other Derivative Instruments [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
$ 297 
$ (130)
$ (787)
Commitments, contingencies, and guarantees (Future Minimum Lease Payments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
 
2014
$ 106 
2015
99 
2016
86 
2017
70 
2018
49 
Thereafter
124 
Total minimum future lease commitments
$ 534 
Shareholders' equity (Detail)
2 Months Ended 12 Months Ended 0 Months Ended 2 Months Ended 12 Months Ended
Feb. 27, 2014
USD ($)
Dec. 31, 2013
USD ($)
Dec. 31, 2013
CHF
Dec. 31, 2012
USD ($)
Dec. 31, 2012
CHF
Dec. 31, 2011
USD ($)
Dec. 31, 2011
CHF
Dec. 31, 2013
General Purpose
Dec. 31, 2013
Issuance of Debt
Dec. 31, 2013
Employee Benefit Plans
Nov. 21, 2013
November 2013 Stock Repurchase Plan [Member]
USD ($)
Feb. 27, 2014
November 2013 Stock Repurchase Plan [Member]
USD ($)
Dec. 31, 2013
November 2013 Stock Repurchase Plan [Member]
USD ($)
Stockholders' Equity Note [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend installments
 
$ 0.51 
 
 
 
 
 
 
 
 
 
 
 
Common shares in treasury, shares
 
3,038,477 
3,038,477 
2,510,878 
2,510,878 
5,905,136 
5,905,136 
 
 
 
 
 
 
Conditional Share Issuance, by Scenario [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of outstanding common shares, shares
3,437,082 
3,266,531 
3,266,531 
100,000 
100,000 
2,058,860 
2,058,860 
 
 
 
 
 
 
Cost of shares acquired
$ 326,000,000 
$ 290,000,000 
 
$ 7,000,000 
 
$ 132,000,000 
 
 
 
 
 
 
 
Authorized share capital for general purposes
 
 
 
 
 
 
 
140,000,000 
33,000,000 
25,410,929 
 
 
 
Stock repurchase program authorized amount
 
 
 
 
 
 
 
 
 
 
2,000,000,000 
 
 
Share repurchase authorization remaining
 
 
 
 
 
 
 
 
 
 
 
$ 1,620,000,000 
$ 1,940,000,000 
The number of votes associated with one Common Share
 
1 
1 
 
 
 
 
 
 
 
 
 
 
The maximum ownership percentage for voting allowed for any one shareholder
 
10.00% 
10.00% 
 
 
 
 
 
 
 
 
 
 
Par value reduction per common share
 
 
 
 
 1.38 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$ 2.02 
 1.85 
$ 2.06 
 1.91 
$ 1.38 
 1.22 
 
 
 
 
 
 
Shareholders' equity (Rollforward Of Changes In Common Stock Shares Issued And Outstanding) (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Changes In Common Stock Shares Issues And Outstanding [Roll Forward]
 
 
 
Shares issued, beginning of year
342,832,412 
342,832,412 
341,094,559 
Exercise of stock options
0 
0 
1,737,853 
Shares issued, end of year
342,832,412 
342,832,412 
342,832,412 
Common Shares in treasury, end of year
(3,038,477)
(2,510,878)
(5,905,136)
Shares issued and outstanding, end of year
339,793,935 
340,321,534 
336,927,276 
Balance, beginning of year
(9,467)
(9,467)
(101,481)
Shares redeemed
0 
0 
92,014 
Balance, end of year
(9,467)
(9,467)
(9,467)
Share-based compensation (Narrative) (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Stock options
Dec. 31, 2013
Restricted stock
Dec. 31, 2012
Restricted stock
Dec. 31, 2011
Restricted stock
Dec. 31, 2010
Restricted stock
Dec. 31, 2013
Restricted Stock Units (RSUs)
Dec. 31, 2012
Restricted Stock Units (RSUs)
Dec. 31, 2011
Restricted Stock Units (RSUs)
Dec. 31, 2013
ACE Limited 2004 Long-Term Incentive Plan
Restricted stock
Dec. 31, 2013
Common shares
ACE Limited 2004 Long-Term Incentive Plan
Dec. 31, 2004
Common shares
ACE Limited 2004 Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares authorized for issuance under plan
 
 
 
 
 
 
 
 
 
 
 
 
 
38,600,000 
Vesting period of award
 
 
 
3 years 
 
 
 
 
 
 
 
4 years 
 
 
Common shares remaining as available for issuance under the ESPP
 
 
 
 
 
 
 
 
 
 
 
 
11,231,423 
 
Unrecognized compensation expense related to the unvested share-based awards
$ 107 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average expected recognition period for the unrecognized compensation expense
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock option term in years
 
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
Weighted average remaining contractual term for stock options outstanding
6 years 6 months 6 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average remaining contractual term for stock options exercisable
4 years 9 months 12 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash received from exercise of stock options
85 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock awards granted to non-management directors
20,969 
25,669 
32,660 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock units awarded to employees and officers of ACE and subsidiaries during period
 
 
 
 
1,544,485 
1,589,178 
1,808,745 
 
271,004 
262,549 
261,214 
 
 
 
Weighted average grant-day fair value of restricted stock units granted to employees and officers of the company (US$ per share)
 
 
 
 
$ 86.07 
$ 73.46 
$ 60.01 
 
$ 85.44 
$ 73.41 
$ 62.85 
 
 
 
Number of unvested restricted stock units outstanding
 
 
 
 
3,708,187 
4,254,847 
4,851,490 
5,305,732 
617,893 
 
 
 
 
 
Number of deferred restricted stock units
 
 
 
 
 
 
 
 
196,622 
 
 
 
 
 
Amounts paid during period by employees for the purchase of shares under the ESPP
$ 14 
$ 13 
$ 12 
 
 
 
 
 
 
 
 
 
 
 
Number of shares purchased during period by employees pursuant to the provisions of the ESPP
175,437 
198,244 
205,812 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation (Pre-tax and After-tax Share-based Compensation Expense) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Restricted stock
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Share-based compensation expense, pre-tax
$ 153 
$ 109 
$ 108 
Share-based compensation expense, after-tax
89 
64 
70 
Stock options
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Share-based compensation expense, pre-tax
24 
22 
23 
Share-based compensation expense, after-tax
18 
17 
17 
Additional Paid-in Capital
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Excess Tax Benefit (Tax Deficiency) from Share-based Compensation, Financing Activities
$ 36 
$ 18 
$ 6 
Share-based compensation (Weighted Average Assumptions for Option Grants) (Details) (Options)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Dividend yield
2.40% 
2.70% 
2.20% 
Expected volatility
27.80% 
29.80% 
28.80% 
Risk-free interest rate
1.00% 
1.10% 
2.30% 
Expected life
5 years 9 months 18 days 
5 years 9 months 18 days 
5 years 4 months 24 days 
Share-based compensation (Rollforward Of Company's Stock Options) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Number of Options [Roll Forward]
 
 
 
Number of option outstanding, beginning of period
9,449,659 
10,579,507 
11,942,893 
Number of options granted
1,821,063 
1,462,103 
1,649,824 
Number of options exercised
(1,658,671)
(2,401,869)
(2,741,238)
Number of options forfeited
(115,195)
(190,082)
(271,972)
Number of option outstanding, end of period
9,496,856 
9,449,659 
10,579,507 
Number of options exercisable, December 31, 2012
6,330,456 
 
 
Weighted-Average Exercise Price [Roll Forward]
 
 
 
Weighted-average exercise price of options outstanding, beginning of period (US$ oer share)
$ 55.03 
$ 49.78 
$ 46.80 
Weighted-average exercise price of options granted (US$ per share)
$ 85.41 
$ 73.36 
$ 62.68 
Weighted-average exercise price of options exercised (US$ per share)
$ 48.17 
$ 42.50 
$ 44.45 
Weighted average exercise price of options forfeited (US$ per share)
$ 72.50 
$ 61.87 
$ 51.33 
Weighted-average exercise price of options outstanding, end of period (US$ oer share
$ 61.84 
$ 55.03 
$ 49.78 
Weighted average exercise price of options exercisable, December 31, 2012 (US$ per share)
$ 53.52 
 
 
Options, Weighted-Average Fair Value and Total Intrinsic Value [Abstract]
 
 
 
Weighted-average fair value of stock options granted (US$ per share)
$ 17.29 
$ 15.58 
$ 14.67 
Total intrinsic value of options exercised
$ 70 
$ 78 
$ 63 
Total intrinsic value of options outstanding
396 
 
 
Total intrinsic value of options exercisable, December 31, 2012
$ 317 
 
 
Share-based compensation (Rollforward Of Company's Restricted Stock) (Details) (Restricted stock, USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Restricted stock
 
 
 
Number of Restricted Stock [Roll Forward]
 
 
 
Number of unvested restricted stock, beginning of period
4,254,847 
4,851,490 
5,305,732 
Number of restricted stock, granted
1,544,485 
1,589,178 
1,808,745 
Number of restricted stock, vested and issued
(1,951,494)
(1,923,385)
(1,929,189)
Number of restricted stock, forfeited
(139,651)
(262,436)
(333,798)
Number of unvested restricted stock, end of period
3,708,187 
4,254,847 
4,851,490 
Weighted-Average Grant-Day Fair Value [Roll Forward]
 
 
 
Weighted average grant-day fair value of unvested restricted stock outstanding, beginning of period (US$ per share)
$ 59.53 
$ 52.20 
$ 48.74 
Weighted average grant-day fair value of restricted stock, granted (US$ per share)
$ 86.07 
$ 73.46 
$ 60.01 
Weighted average grant-day fair value of restricted stock, vested and issued (US$ per share)
$ 57.44 
$ 52.71 
$ 50.82 
Weighted average grant-day fair value of restricted stock, forfeited (US$ per share)
$ 67.72 
$ 58.40 
$ 47.46 
Weighted average grant-day fair value of unvested restricted stock outstanding, end of period (US$ per share)
$ 71.38 
$ 59.53 
$ 52.20 
Pension plans (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]
 
 
 
Expenses recognized during period under the defined contributions plans
$ 111 
$ 99 
$ 96 
Fair value of plan assets
566 
487 
 
Projected benefit obligation
591 
531 
 
Accrued pension liability
25 
44 
 
Defined pension plan contribution expected for 2014
3 
 
 
Estimated net actuarial loss expected to be amortized from AOCI
3 
 
 
Benefit payments made during period
26 
37 
 
Benefit payments for settlement of a defined benefit plan
 
$ 12 
 
Pension plans (Schedule of Expected Future Benefit Payments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]
 
2014
$ 19 
2015
22 
2016
23 
2017
22 
2018
23 
2019-2023
$ 129 
Other (income) expense (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Other Income and Expenses [Abstract]
 
 
 
Amortization of Intangible Assets
$ 95 
$ 51 
$ 29 
Equity in net (income) loss of partially-owned entities
(119)
(80)
(32)
(Gains) losses from fair value changes in separate account assets
(16)
(29)
36 
Federal excise and capital taxes
24 
22 
20 
Acquisition-related costs
4 
11 
5 
Other
27 
19 
23 
Other (income) expense
$ 15 
$ (6)
$ 81 
Segment Information (Operations By Segment) (Detail) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
$ 17,025,000,000 
$ 16,075,000,000 
$ 15,372,000,000 
Net premiums earned
4,363,000,000 
4,610,000,000 
4,067,000,000 
3,573,000,000 
3,848,000,000 
4,665,000,000 
3,783,000,000 
3,381,000,000 
16,613,000,000 
15,677,000,000 
15,387,000,000 
Losses and loss expenses
2,517,000,000 
2,655,000,000 
2,250,000,000 
1,926,000,000 
2,683,000,000 
3,047,000,000 
2,119,000,000 
1,804,000,000 
9,348,000,000 
9,653,000,000 
9,520,000,000 
Policy benefits
136,000,000 
138,000,000 
110,000,000 
131,000,000 
142,000,000 
130,000,000 
102,000,000 
147,000,000 
515,000,000 
521,000,000 
401,000,000 
Policy acquisition costs
 
 
 
 
 
 
 
 
2,659,000,000 
2,446,000,000 
2,472,000,000 
Administrative expenses
 
 
 
 
 
 
 
 
2,211,000,000 
2,096,000,000 
2,068,000,000 
Underwriting income (loss)
 
 
 
 
 
 
 
 
1,880,000,000 
961,000,000 
926,000,000 
Net investment income
557,000,000 
522,000,000 
534,000,000 
531,000,000 
567,000,000 
533,000,000 
537,000,000 
544,000,000 
2,144,000,000 
2,181,000,000 
2,242,000,000 
Net realized gains (losses) including OTTI
154,000,000 
40,000,000 
104,000,000 
206,000,000 
272,000,000 
(60,000,000)
(394,000,000)
260,000,000 
504,000,000 
78,000,000 
(795,000,000)
Interest expense
 
 
 
 
 
 
 
 
275,000,000 
250,000,000 
250,000,000 
Other (income) expense
 
 
 
 
 
 
 
 
15,000,000 
(6,000,000)
81,000,000 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
(16,000,000)
(29,000,000)
36,000,000 
Other
 
 
 
 
 
 
 
 
31,000,000 
23,000,000 
45,000,000 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
480,000,000 
270,000,000 
502,000,000 
Net income (loss)
998,000,000 
916,000,000 
891,000,000 
953,000,000 
765,000,000 
640,000,000 
328,000,000 
973,000,000 
3,758,000,000 
2,706,000,000 
1,540,000,000 
Insurance - North American Agriculture
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
1,627,000,000 
1,859,000,000 
1,951,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
1,678,000,000 
1,872,000,000 
1,942,000,000 
Losses and loss expenses
 
 
 
 
 
 
 
 
1,524,000,000 
1,911,000,000 
1,699,000,000 
Policy benefits
 
 
 
 
 
 
 
 
0 
0 
 
Policy acquisition costs
 
 
 
 
 
 
 
 
53,000,000 
28,000,000 
80,000,000 
Administrative expenses
 
 
 
 
 
 
 
 
11,000,000 
(7,000,000)
(6,000,000)
Underwriting income (loss)
 
 
 
 
 
 
 
 
90,000,000 
(60,000,000)
169,000,000 
Net investment income
 
 
 
 
 
 
 
 
26,000,000 
25,000,000 
22,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
1,000,000 
1,000,000 
6,000,000 
Interest expense
 
 
 
 
 
 
 
 
1,000,000 
0 
2,000,000 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
0 
0 
0 
Other
 
 
 
 
 
 
 
 
32,000,000 
32,000,000 
18,000,000 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
20,000,000 
(29,000,000)
51,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
64,000,000 
(37,000,000)
126,000,000 
Insurance - Overseas General
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
6,520,000,000 
5,863,000,000 
5,629,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
6,333,000,000 
5,740,000,000 
5,614,000,000 
Losses and loss expenses
 
 
 
 
 
 
 
 
3,062,000,000 
2,862,000,000 
3,029,000,000 
Policy benefits
 
 
 
 
 
 
 
 
   
   
   
Policy acquisition costs
 
 
 
 
 
 
 
 
1,453,000,000 
1,353,000,000 
1,335,000,000 
Administrative expenses
 
 
 
 
 
 
 
 
1,008,000,000 
935,000,000 
939,000,000 
Underwriting income (loss)
 
 
 
 
 
 
 
 
810,000,000 
590,000,000 
311,000,000 
Net investment income
 
 
 
 
 
 
 
 
539,000,000 
521,000,000 
546,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
18,000,000 
103,000,000 
(33,000,000)
Interest expense
 
 
 
 
 
 
 
 
5,000,000 
5,000,000 
5,000,000 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
   
   
   
Other
 
 
 
 
 
 
 
 
39,000,000 
3,000,000 
0 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
222,000,000 
133,000,000 
164,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
1,101,000,000 
1,073,000,000 
721,000,000 
Global Reinsurance
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
991,000,000 
1,025,000,000 
979,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
976,000,000 
1,002,000,000 
1,003,000,000 
Losses and loss expenses
 
 
 
 
 
 
 
 
396,000,000 
553,000,000 
621,000,000 
Policy benefits
 
 
 
 
 
 
 
 
   
   
   
Policy acquisition costs
 
 
 
 
 
 
 
 
 
 
185,000,000 
Administrative expenses
 
 
 
 
 
 
 
 
50,000,000 
51,000,000 
52,000,000 
Underwriting income (loss)
 
 
 
 
 
 
 
 
333,000,000 
226,000,000 
145,000,000 
Net investment income
 
 
 
 
 
 
 
 
280,000,000 
290,000,000 
287,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
53,000,000 
6,000,000 
(50,000,000)
Interest expense
 
 
 
 
 
 
 
 
5,000,000 
4,000,000 
2,000,000 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
   
   
   
Other
 
 
 
 
 
 
 
 
(19,000,000)
(15,000,000)
(1,000,000)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
36,000,000 
15,000,000 
30,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
644,000,000 
518,000,000 
351,000,000 
Life
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
1,972,000,000 
1,979,000,000 
1,913,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
1,905,000,000 
1,916,000,000 
1,859,000,000 
Losses and loss expenses
 
 
 
 
 
 
 
 
582,000,000 
611,000,000 
593,000,000 
Policy benefits
 
 
 
 
 
 
 
 
515,000,000 
521,000,000 
401,000,000 
Policy acquisition costs
 
 
 
 
 
 
 
 
358,000,000 
334,000,000 
339,000,000 
Administrative expenses
 
 
 
 
 
 
 
 
343,000,000 
328,000,000 
317,000,000 
Underwriting income (loss)
 
 
 
 
 
 
 
 
107,000,000 
122,000,000 
209,000,000 
Net investment income
 
 
 
 
 
 
 
 
251,000,000 
251,000,000 
226,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
360,000,000 
(72,000,000)
806,000,000 
Interest expense
 
 
 
 
 
 
 
 
15,000,000 
12,000,000 
11,000,000 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
16,000,000 
29,000,000 
(36,000,000)
Other
 
 
 
 
 
 
 
 
13,000,000 
25,000,000 
26,000,000 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
34,000,000 
58,000,000 
50,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
672,000,000 
235,000,000 
(494,000,000)
Corporate and Other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
   
   
   
Net premiums earned
 
 
 
 
 
 
 
 
   
   
   
Losses and loss expenses
 
 
 
 
 
 
 
 
8,000,000 
1,000,000 
1,000,000 
Policy benefits
 
 
 
 
 
 
 
 
   
   
   
Policy acquisition costs
 
 
 
 
 
 
 
 
1,000,000 
1,000,000 
1,000,000 
Administrative expenses
 
 
 
 
 
 
 
 
198,000,000 
181,000,000 
168,000,000 
Underwriting income (loss)
 
 
 
 
 
 
 
 
(207,000,000)
(183,000,000)
(170,000,000)
Net investment income
 
 
 
 
 
 
 
 
27,000,000 
28,000,000 
13,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
0 
(1,000,000)
6,000,000 
Interest expense
 
 
 
 
 
 
 
 
244,000,000 
217,000,000 
217,000,000 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
   
   
   
Other
 
 
 
 
 
 
 
 
24,000,000 
19,000,000 
15,000,000 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
(179,000,000)
(136,000,000)
(137,000,000)
Net income (loss)
 
 
 
 
 
 
 
 
(269,000,000)
(256,000,000)
(258,000,000)
Insurance - North American P&C
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
5,915,000,000 
5,349,000,000 
4,900,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
5,721,000,000 
5,147,000,000 
4,969,000,000 
Losses and loss expenses
 
 
 
 
 
 
 
 
3,776,000,000 
3,715,000,000 
3,577,000,000 
Policy benefits
 
 
 
 
 
 
 
 
0 
0 
 
Policy acquisition costs
 
 
 
 
 
 
 
 
597,000,000 
558,000,000 
532,000,000 
Administrative expenses
 
 
 
 
 
 
 
 
601,000,000 
608,000,000 
598,000,000 
Underwriting income (loss)
 
 
 
 
 
 
 
 
747,000,000 
266,000,000 
262,000,000 
Net investment income
 
 
 
 
 
 
 
 
1,021,000,000 
1,066,000,000 
1,148,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
72,000,000 
41,000,000 
28,000,000 
Interest expense
 
 
 
 
 
 
 
 
5,000,000 
12,000,000 
13,000,000 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
0 
0 
0 
Other
 
 
 
 
 
 
 
 
(58,000,000)
(41,000,000)
(13,000,000)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
347,000,000 
229,000,000 
344,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
$ 1,546,000,000 
$ 1,173,000,000 
$ 1,094,000,000 
Segment Information (Net Premiums Earned For Segment By Product) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property & All Other
 
 
 
 
 
 
 
 
$ 6,382 
$ 5,973 
$ 5,712 
Casualty
 
 
 
 
 
 
 
 
5,759 
5,292 
5,340 
Life, Accident & Health
 
 
 
 
 
 
 
 
4,472 
4,412 
4,335 
Net premiums earned
4,363 
4,610 
4,067 
3,573 
3,848 
4,665 
3,783 
3,381 
16,613 
15,677 
15,387 
Insurance - North American P&C
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property & All Other
 
 
 
 
 
 
 
 
1,489 
1,370 
1,232 
Casualty
 
 
 
 
 
 
 
 
3,847 
3,406 
3,380 
Life, Accident & Health
 
 
 
 
 
 
 
 
385 
371 
357 
Net premiums earned
 
 
 
 
 
 
 
 
5,721 
5,147 
4,969 
Insurance - North American Agriculture
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property & All Other
 
 
 
 
 
 
 
 
1,678 
1,872 
1,942 
Casualty
 
 
 
 
 
 
 
 
   
   
0 
Life, Accident & Health
 
 
 
 
 
 
 
 
   
   
0 
Net premiums earned
 
 
 
 
 
 
 
 
1,678 
1,872 
1,942 
Insurance - Overseas General
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property & All Other
 
 
 
 
 
 
 
 
2,672 
2,236 
2,080 
Casualty
 
 
 
 
 
 
 
 
1,479 
1,379 
1,415 
Life, Accident & Health
 
 
 
 
 
 
 
 
2,182 
2,125 
2,119 
Net premiums earned
 
 
 
 
 
 
 
 
6,333 
5,740 
5,614 
Global Reinsurance
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property & All Other
 
 
 
 
 
 
 
 
543 
495 
458 
Casualty
 
 
 
 
 
 
 
 
433 
507 
545 
Life, Accident & Health
 
 
 
 
 
 
 
 
   
   
0 
Net premiums earned
 
 
 
 
 
 
 
 
976 
1,002 
1,003 
Life
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Property & All Other
 
 
 
 
 
 
 
 
 
 
0 
Casualty
 
 
 
 
 
 
 
 
 
 
0 
Life, Accident & Health
 
 
 
 
 
 
 
 
1,905 
1,916 
1,859 
Net premiums earned
 
 
 
 
 
 
 
 
$ 1,905 
$ 1,916 
$ 1,859 
Segment Information (Net Premiums Earned By Geographic Region) (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Segment Reporting Information [Line Items]
 
 
 
Net Premiums Earned by Geographic Region
Years Ended 
 
 
North America
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
58.00% 
60.00% 
61.00% 
Europe
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
17.00% 
17.00% 
18.00% 
Asia Pacific / Far East
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
16.00% 
16.00% 
14.00% 
Latin America
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
9.00% 
7.00% 
7.00% 
Earnings Per Share (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Earnings Per Share [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net income
$ 998 
$ 916 
$ 891 
$ 953 
$ 765 
$ 640 
$ 328 
$ 973 
$ 3,758 
$ 2,706 
$ 1,540 
Weighted-average shares outstanding
 
 
 
 
 
 
 
 
340,906,490 
339,843,438 
338,159,409 
Share-based compensation plans
 
 
 
 
 
 
 
 
3,241,085 
2,903,512 
2,620,815 
Adjusted weighted-average shares outstanding and assumed conversions
 
 
 
 
 
 
 
 
344,147,575 
342,746,950 
340,780,224 
Basic earnings per share
$ 2.93 
$ 2.68 
$ 2.61 
$ 2.80 
$ 2.24 
$ 1.88 
$ 0.96 
$ 2.87 
$ 11.02 
$ 7.96 
$ 4.55 
Diluted earnings per share
$ 2.90 
$ 2.66 
$ 2.59 
$ 2.77 
$ 2.22 
$ 1.86 
$ 0.96 
$ 2.84 
$ 10.92 
$ 7.89 
$ 4.52 
Potential anti-dilutive share conversions
 
 
 
 
 
 
 
 
1,031,297 
896,591 
111,326 
Related party transaction (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Related Party Transactions [Abstract]
 
 
ACE Foundation - Bermuda-Loan
$ 26 
$ 27 
Statutory Financial Information (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Statutory Accounting Practices [Line Items]
 
 
 
Dividends available to be paid
$ 3,800,000,000 
 
 
Statutory capital and surplus
25,600,000,000 
24,400,000,000 
 
Statutory net income
3,700,000,000 
2,900,000,000 
1,900,000,000 
Approximate increase in statutory capital and surplus resulting from discount of certain A&E liabilities
158,000,000 
161,000,000 
 
Statutory Accounting Practices, Statutory Capital and Surplus Required
$ 14,500,000,000 
$ 14,300,000,000 
 
Information provided in connection with outstanding debt of subsidiaries (Condensed Consolidating Balance Sheet) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
$ 60,928 
$ 60,264 
 
 
Cash
579 
615 
614 1
772 
Insurance and reinsurance balances receivable
5,026 
4,147 
 
 
Reinsurance recoverable on losses and loss expenses
11,227 
12,078 
 
 
Reinsurance recoverable on policy benefits
218 
241 
 
 
Value of business acquired
536 
614 
 
 
Goodwill and other intangible assets
5,404 
4,975 
 
 
Investments in subsidiaries
   
   
 
 
Due from subsidiaries and affiliates, net
   
   
 
 
Other assets
10,592 
9,611 
 
 
Total assets
94,510 
92,545 
 
 
Unpaid losses and loss expenses
37,443 
37,946 
37,477 
37,391 
Unearned premiums
7,539 
6,864 
 
 
Future policy benefits
4,615 
4,470 
 
 
Due to subsidiaries and affiliates, net
   
   
 
 
Bank Overdrafts
   
0 
 
 
Short-term debt
1,901 
1,401 
 
 
Long-term debt
3,807 
3,360 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
10,071 
10,664 
 
 
Total liabilities
65,685 
65,014 
 
 
Total shareholders' equity
28,825 
27,531 
24,332 
 
Total liabilities and shareholders’ equity
94,510 
92,545 
 
 
Scenario, Previously Reported
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
 
60,264 
 
 
Cash
 
615 
614 1 2
772 2
Insurance and reinsurance balances receivable
 
4,147 
 
 
Reinsurance recoverable on losses and loss expenses
 
12,078 
 
 
Reinsurance recoverable on policy benefits
 
241 
 
 
Value of business acquired
 
614 
 
 
Goodwill and other intangible assets
 
4,975 
 
 
Investments in subsidiaries
 
   
 
 
Due from subsidiaries and affiliates, net
 
   
 
 
Other assets
 
9,611 
 
 
Total assets
 
92,545 
 
 
Unpaid losses and loss expenses
 
37,946 
 
 
Unearned premiums
 
6,864 
 
 
Future policy benefits
 
4,470 
 
 
Due to subsidiaries and affiliates, net
 
   
 
 
Short-term debt
 
1,401 
 
 
Long-term debt
 
3,360 
 
 
Trust preferred securities
 
309 
 
 
Other liabilities
 
10,664 
 
 
Total liabilities
 
65,014 
 
 
Total shareholders' equity
 
27,531 
 
 
Total liabilities and shareholders’ equity
 
92,545 
 
 
ACE limited (Parent Gurantor)
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
32 
31 
 
 
Cash
0 
103 
106 
308 
Insurance and reinsurance balances receivable
   
   
 
 
Reinsurance recoverable on losses and loss expenses
   
   
 
 
Reinsurance recoverable on policy benefits
   
   
 
 
Value of business acquired
   
   
 
 
Goodwill and other intangible assets
   
   
 
 
Investments in subsidiaries
28,351 
27,251 
 
 
Due from subsidiaries and affiliates, net
844 
204 
 
 
Other assets
5 
13 
 
 
Total assets
29,232 
27,602 
 
 
Unpaid losses and loss expenses
   
   
 
 
Unearned premiums
   
   
 
 
Future policy benefits
   
   
 
 
Due to subsidiaries and affiliates, net
   
   
 
 
Bank Overdrafts
185 
   
 
 
Short-term debt
   
   
 
 
Long-term debt
   
   
 
 
Trust preferred securities
   
   
 
 
Other liabilities
222 
71 
 
 
Total liabilities
407 
71 
 
 
Total shareholders' equity
28,825 
27,531 
 
 
Total liabilities and shareholders’ equity
29,232 
27,602 
 
 
ACE limited (Parent Gurantor) |
Scenario, Previously Reported
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
 
31 
 
 
Cash
 
103 
106 
308 
Insurance and reinsurance balances receivable
 
   
 
 
Reinsurance recoverable on losses and loss expenses
 
   
 
 
Reinsurance recoverable on policy benefits
 
   
 
 
Value of business acquired
 
   
 
 
Goodwill and other intangible assets
 
   
 
 
Investments in subsidiaries
 
27,251 
 
 
Due from subsidiaries and affiliates, net
 
204 
 
 
Other assets
 
13 
 
 
Total assets
 
27,602 
 
 
Unpaid losses and loss expenses
 
   
 
 
Unearned premiums
 
   
 
 
Future policy benefits
 
   
 
 
Due to subsidiaries and affiliates, net
 
   
 
 
Short-term debt
 
   
 
 
Long-term debt
 
   
 
 
Trust preferred securities
 
   
 
 
Other liabilities
 
71 
 
 
Total liabilities
 
71 
 
 
Total shareholders' equity
 
27,531 
 
 
Total liabilities and shareholders’ equity
 
27,602 
 
 
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
10 
14 
 
 
Cash
16 
2 
5 
33 
Insurance and reinsurance balances receivable
   
   
 
 
Reinsurance recoverable on losses and loss expenses
   
   
 
 
Reinsurance recoverable on policy benefits
   
   
 
 
Value of business acquired
   
   
 
 
Goodwill and other intangible assets
   
   
 
 
Investments in subsidiaries
18,105 
17,016 
 
 
Due from subsidiaries and affiliates, net
   
   
 
 
Other assets
258 
210 
 
 
Total assets
18,389 
17,242 
 
 
Unpaid losses and loss expenses
   
   
 
 
Unearned premiums
   
   
 
 
Future policy benefits
   
   
 
 
Due to subsidiaries and affiliates, net
714 
68 
 
 
Bank Overdrafts
   
349 
 
 
Short-term debt
500 
   
 
 
Long-term debt
3,795 
3,347 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
1,318 
1,195 
 
 
Total liabilities
6,636 
5,268 
 
 
Total shareholders' equity
11,753 
11,974 
 
 
Total liabilities and shareholders’ equity
18,389 
17,242 
 
 
ACE INA Holdings Inc. (Subsidiary Issuer) |
Scenario, Previously Reported
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
 
31,074 
 
 
Cash
 
515 
382 
573 
Insurance and reinsurance balances receivable
 
3,654 
 
 
Reinsurance recoverable on losses and loss expenses
 
17,232 
 
 
Reinsurance recoverable on policy benefits
 
1,187 
 
 
Value of business acquired
 
610 
 
 
Goodwill and other intangible assets
 
4,419 
 
 
Investments in subsidiaries
 
   
 
 
Due from subsidiaries and affiliates, net
 
   
 
 
Other assets
 
7,563 
 
 
Total assets
 
66,254 
 
 
Unpaid losses and loss expenses
 
31,356 
 
 
Unearned premiums
 
5,872 
 
 
Future policy benefits
 
3,876 
 
 
Due to subsidiaries and affiliates, net
 
384 
 
 
Short-term debt
 
851 
 
 
Long-term debt
 
3,360 
 
 
Trust preferred securities
 
309 
 
 
Other liabilities
 
8,272 
 
 
Total liabilities
 
54,280 
 
 
Total shareholders' equity
 
11,974 
 
 
Total liabilities and shareholders’ equity
 
66,254 
 
 
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
60,886 
60,219 
 
 
Cash
748 3
859 3 4
651 4
431 
Insurance and reinsurance balances receivable
5,835 
4,742 
 
 
Reinsurance recoverable on losses and loss expenses
20,057 
20,935 
 
 
Reinsurance recoverable on policy benefits
1,215 
1,229 
 
 
Value of business acquired
536 
614 
 
 
Goodwill and other intangible assets
5,404 
4,975 
 
 
Investments in subsidiaries
   
   
 
 
Due from subsidiaries and affiliates, net
   
   
 
 
Other assets
13,788 
11,304 
 
 
Total assets
108,469 
104,877 
 
 
Unpaid losses and loss expenses
45,714 
46,109 
 
 
Unearned premiums
9,242 
8,248 
 
 
Future policy benefits
5,612 
5,458 
 
 
Due to subsidiaries and affiliates, net
130 
136 
 
 
Bank Overdrafts
   
   
 
 
Short-term debt
1,401 
1,401 
 
 
Long-term debt
12 
13 
 
 
Trust preferred securities
   
   
 
 
Other liabilities
11,655 
11,219 
 
 
Total liabilities
73,766 
72,584 
 
 
Total shareholders' equity
34,703 
32,293 
 
 
Total liabilities and shareholders’ equity
108,469 
104,877 
 
 
Other ACE Limited Subsidiaries and Eliminations |
Scenario, Previously Reported
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
 
29,159 
 
 
Cash
 
(3)4
126 
(109)
Insurance and reinsurance balances receivable
 
493 
 
 
Reinsurance recoverable on losses and loss expenses
 
(5,154)
 
 
Reinsurance recoverable on policy benefits
 
(946)
 
 
Value of business acquired
 
4 
 
 
Goodwill and other intangible assets
 
556 
 
 
Investments in subsidiaries
 
   
 
 
Due from subsidiaries and affiliates, net
 
   
 
 
Other assets
 
2,035 
 
 
Total assets
 
26,144 
 
 
Unpaid losses and loss expenses
 
6,590 
 
 
Unearned premiums
 
992 
 
 
Future policy benefits
 
594 
 
 
Due to subsidiaries and affiliates, net
 
(180)
 
 
Short-term debt
 
550 
 
 
Long-term debt
 
   
 
 
Trust preferred securities
 
   
 
 
Other liabilities
 
2,321 
 
 
Total liabilities
 
10,867 
 
 
Total shareholders' equity
 
15,277 
 
 
Total liabilities and shareholders’ equity
 
26,144 
 
 
Consolidating Adjustments
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
   
   
 
 
Cash
(185)
(349)5
(148)5
0 
Insurance and reinsurance balances receivable
(809)
(595)
 
 
Reinsurance recoverable on losses and loss expenses
(8,830)
(8,857)
 
 
Reinsurance recoverable on policy benefits
(997)
(988)
 
 
Value of business acquired
   
   
 
 
Goodwill and other intangible assets
   
   
 
 
Investments in subsidiaries
(46,456)
(44,267)
 
 
Due from subsidiaries and affiliates, net
(844)
(204)
 
 
Other assets
(3,459)
(1,916)
 
 
Total assets
(61,580)
(57,176)
 
 
Unpaid losses and loss expenses
(8,271)
(8,163)
 
 
Unearned premiums
(1,703)
(1,384)
 
 
Future policy benefits
(997)
(988)
 
 
Due to subsidiaries and affiliates, net
(844)
(204)
 
 
Bank Overdrafts
(185)
(349)
 
 
Short-term debt
   
   
 
 
Long-term debt
   
   
 
 
Trust preferred securities
   
   
 
 
Other liabilities
(3,124)
(1,821)
 
 
Total liabilities
(15,124)
(12,909)
 
 
Total shareholders' equity
(46,456)
(44,267)
 
 
Total liabilities and shareholders’ equity
(61,580)
(57,176)
 
 
Consolidating Adjustments |
Scenario, Previously Reported
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
 
   
 
 
Cash
 
   5
0 
0 
Insurance and reinsurance balances receivable
 
   
 
 
Reinsurance recoverable on losses and loss expenses
 
   
 
 
Reinsurance recoverable on policy benefits
 
   
 
 
Value of business acquired
 
   
 
 
Goodwill and other intangible assets
 
   
 
 
Investments in subsidiaries
 
(27,251)
 
 
Due from subsidiaries and affiliates, net
 
(204)
 
 
Other assets
 
   
 
 
Total assets
 
(27,455)
 
 
Unpaid losses and loss expenses
 
   
 
 
Unearned premiums
 
   
 
 
Future policy benefits
 
   
 
 
Due to subsidiaries and affiliates, net
 
(204)
 
 
Short-term debt
 
   
 
 
Long-term debt
 
   
 
 
Trust preferred securities
 
   
 
 
Other liabilities
 
   
 
 
Total liabilities
 
(204)
 
 
Total shareholders' equity
 
(27,251)
 
 
Total liabilities and shareholders’ equity
 
$ (27,455)
 
 
Information provided in connection with outstanding debt of subsidiaries (Condensed Consolidating Statement Of Operations and Comprehensive Income) (Detail) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
$ 17,025,000,000 
$ 16,075,000,000 
$ 15,372,000,000 
Net premiums earned
4,363,000,000 
4,610,000,000 
4,067,000,000 
3,573,000,000 
3,848,000,000 
4,665,000,000 
3,783,000,000 
3,381,000,000 
16,613,000,000 
15,677,000,000 
15,387,000,000 
Net investment income
557,000,000 
522,000,000 
534,000,000 
531,000,000 
567,000,000 
533,000,000 
537,000,000 
544,000,000 
2,144,000,000 
2,181,000,000 
2,242,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
   
   
   
Net realized gains (losses) including OTTI
154,000,000 
40,000,000 
104,000,000 
206,000,000 
272,000,000 
(60,000,000)
(394,000,000)
260,000,000 
504,000,000 
78,000,000 
(795,000,000)
Losses and loss expenses
2,517,000,000 
2,655,000,000 
2,250,000,000 
1,926,000,000 
2,683,000,000 
3,047,000,000 
2,119,000,000 
1,804,000,000 
9,348,000,000 
9,653,000,000 
9,520,000,000 
Policy benefits
136,000,000 
138,000,000 
110,000,000 
131,000,000 
142,000,000 
130,000,000 
102,000,000 
147,000,000 
515,000,000 
521,000,000 
401,000,000 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
4,870,000,000 
4,542,000,000 
4,540,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
275,000,000 
250,000,000 
250,000,000 
Other (income) expense
 
 
 
 
 
 
 
 
15,000,000 
(6,000,000)
81,000,000 
Income tax expense
 
 
 
 
 
 
 
 
480,000,000 
270,000,000 
502,000,000 
Net income (loss)
998,000,000 
916,000,000 
891,000,000 
953,000,000 
765,000,000 
640,000,000 
328,000,000 
973,000,000 
3,758,000,000 
2,706,000,000 
1,540,000,000 
Comprehensive income
 
 
 
 
 
 
 
 
2,023,000,000 
3,682,000,000 
1,857,000,000 
ACE limited (Parent Gurantor)
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
   
   
0 
Net premiums earned
 
 
 
 
 
 
 
 
   
   
0 
Net investment income
 
 
 
 
 
 
 
 
2,000,000 
1,000,000 
2,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
3,580,000,000 
2,590,000,000 
1,459,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
0 
17,000,000 
(4,000,000)
Losses and loss expenses
 
 
 
 
 
 
 
 
   
   
0 
Policy benefits
 
 
 
 
 
 
 
 
   
   
0 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
60,000,000 
62,000,000 
69,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
(32,000,000)
(33,000,000)
37,000,000 
Other (income) expense
 
 
 
 
 
 
 
 
(221,000,000)
(137,000,000)
125,000,000 
Income tax expense
 
 
 
 
 
 
 
 
17,000,000 
10,000,000 
10,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
3,758,000,000 
2,706,000,000 
1,540,000,000 
Comprehensive income
 
 
 
 
 
 
 
 
2,023,000,000 
3,682,000,000 
1,857,000,000 
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
 
0 
Net premiums earned
 
 
 
 
 
 
 
 
 
 
0 
Net investment income
 
 
 
 
 
 
 
 
 
 
2,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
 
989,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
 
0 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
 
0 
Policy benefits
 
 
 
 
 
 
 
 
 
 
0 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
 
37,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
 
 
(266,000,000)
Other (income) expense
 
 
 
 
 
 
 
 
 
 
(21,000,000)
Income tax expense
 
 
 
 
 
 
 
 
 
 
(103,000,000)
Net income (loss)
 
 
 
 
 
 
 
 
 
 
770,000,000 
Comprehensive income
 
 
 
 
 
 
 
 
 
 
1,077,000,000 
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
 
15,372,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
 
 
15,387,000,000 
Net investment income
 
 
 
 
 
 
 
 
 
 
2,238,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
 
0 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
 
(791,000,000)
Losses and loss expenses
 
 
 
 
 
 
 
 
 
 
9,520,000,000 
Policy benefits
 
 
 
 
 
 
 
 
 
 
401,000,000 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
 
4,434,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
 
 
(21,000,000)
Other (income) expense
 
 
 
 
 
 
 
 
 
 
(185,000,000)
Income tax expense
 
 
 
 
 
 
 
 
 
 
595,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
1,678,000,000 1
Comprehensive income
 
 
 
 
 
 
 
 
 
 
1,994,000,000 
Consolidating Adjustments
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
   
   
0 
Net premiums earned
 
 
 
 
 
 
 
 
   
   
0 
Net investment income
 
 
 
 
 
 
 
 
   
   
0 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
(4,522,000,000)
(3,501,000,000)
(2,448,000,000)
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
   
   
0 
Losses and loss expenses
 
 
 
 
 
 
 
 
   
   
0 
Policy benefits
 
 
 
 
 
 
 
 
   
   
0 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
   
   
0 
Interest (income) expense
 
 
 
 
 
 
 
 
   
   
0 
Other (income) expense
 
 
 
 
 
 
 
 
   
   
0 
Income tax expense
 
 
 
 
 
 
 
 
   
   
0 
Net income (loss)
 
 
 
 
 
 
 
 
(4,522,000,000)
(3,501,000,000)
(2,448,000,000)2
Comprehensive income
 
 
 
 
 
 
 
 
(1,821,000,000)
(4,933,000,000)
(3,071,000,000)
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
   
   
 
Net premiums earned
 
 
 
 
 
 
 
 
   
   
 
Net investment income
 
 
 
 
 
 
 
 
3,000,000 
3,000,000 
 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
942,000,000 
911,000,000 
 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(2,000,000)
   
 
Losses and loss expenses
 
 
 
 
 
 
 
 
   
   
 
Policy benefits
 
 
 
 
 
 
 
 
   
   
 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
19,000,000 
28,000,000 
 
Interest (income) expense
 
 
 
 
 
 
 
 
270,000,000 
235,000,000 
 
Other (income) expense
 
 
 
 
 
 
 
 
27,000,000 
9,000,000 
 
Income tax expense
 
 
 
 
 
 
 
 
(108,000,000)
(110,000,000)
 
Net income (loss)
 
 
 
 
 
 
 
 
735,000,000 
752,000,000 
 
Comprehensive income
 
 
 
 
 
 
 
 
(230,000,000)
1,209,000,000 
 
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
17,025,000,000 
16,075,000,000 
 
Net premiums earned
 
 
 
 
 
 
 
 
16,613,000,000 
15,677,000,000 
 
Net investment income
 
 
 
 
 
 
 
 
2,139,000,000 
2,177,000,000 
 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
   
   
 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
506,000,000 
61,000,000 
 
Losses and loss expenses
 
 
 
 
 
 
 
 
9,348,000,000 
9,653,000,000 
 
Policy benefits
 
 
 
 
 
 
 
 
515,000,000 
521,000,000 
 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
4,791,000,000 
4,452,000,000 
 
Interest (income) expense
 
 
 
 
 
 
 
 
37,000,000 
48,000,000 
 
Other (income) expense
 
 
 
 
 
 
 
 
209,000,000 
122,000,000 
 
Income tax expense
 
 
 
 
 
 
 
 
571,000,000 
370,000,000 
 
Net income (loss)
 
 
 
 
 
 
 
 
3,787,000,000 
2,749,000,000 
 
Comprehensive income
 
 
 
 
 
 
 
 
2,051,000,000 
3,724,000,000 
 
Scenario, Previously Reported
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
16,075,000,000 
15,372,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
 
15,677,000,000 
15,387,000,000 
Net investment income
 
 
 
 
 
 
 
 
 
2,181,000,000 
2,242,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
   
   
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
78,000,000 
(795,000,000)
Losses and loss expenses
 
 
 
 
 
 
 
 
 
9,653,000,000 
9,520,000,000 
Policy benefits
 
 
 
 
 
 
 
 
 
521,000,000 
401,000,000 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
4,542,000,000 
4,540,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
 
250,000,000 
250,000,000 
Other (income) expense
 
 
 
 
 
 
 
 
 
(6,000,000)
81,000,000 
Income tax expense
 
 
 
 
 
 
 
 
 
270,000,000 
502,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
 
2,706,000,000 
1,540,000,000 
Comprehensive income
 
 
 
 
 
 
 
 
 
3,682,000,000 
 
Scenario, Previously Reported |
ACE limited (Parent Gurantor)
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
   
0 
Net premiums earned
 
 
 
 
 
 
 
 
 
   
0 
Net investment income
 
 
 
 
 
 
 
 
 
1,000,000 
2,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
2,590,000,000 
1,459,000,000 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
17,000,000 
(4,000,000)
Losses and loss expenses
 
 
 
 
 
 
 
 
 
   
0 
Policy benefits
 
 
 
 
 
 
 
 
 
   
0 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
62,000,000 
69,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
 
(33,000,000)
37,000,000 
Other (income) expense
 
 
 
 
 
 
 
 
 
(137,000,000)
125,000,000 
Income tax expense
 
 
 
 
 
 
 
 
 
10,000,000 
10,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
 
2,706,000,000 
1,540,000,000 
Comprehensive income
 
 
 
 
 
 
 
 
 
3,682,000,000 
1,857,000,000 
Scenario, Previously Reported |
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
 
9,081,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
 
 
9,082,000,000 
Net investment income
 
 
 
 
 
 
 
 
 
 
1,096,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
 
0 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
 
62,000,000 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
 
5,889,000,000 
Policy benefits
 
 
 
 
 
 
 
 
 
 
192,000,000 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
 
2,561,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
 
 
(267,000,000)
Other (income) expense
 
 
 
 
 
 
 
 
 
 
(143,000,000)
Income tax expense
 
 
 
 
 
 
 
 
 
 
418,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
770,000,000 
Comprehensive income
 
 
 
 
 
 
 
 
 
 
1,077,000,000 
Scenario, Previously Reported |
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
 
6,291,000,000 
Net premiums earned
 
 
 
 
 
 
 
 
 
 
6,305,000,000 
Net investment income
 
 
 
 
 
 
 
 
 
 
1,144,000,000 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
 
0 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
 
(853,000,000)
Losses and loss expenses
 
 
 
 
 
 
 
 
 
 
3,631,000,000 
Policy benefits
 
 
 
 
 
 
 
 
 
 
209,000,000 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
 
1,910,000,000 
Interest (income) expense
 
 
 
 
 
 
 
 
 
 
(20,000,000)
Other (income) expense
 
 
 
 
 
 
 
 
 
 
(63,000,000)
Income tax expense
 
 
 
 
 
 
 
 
 
 
74,000,000 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
689,000,000 1
Comprehensive income
 
 
 
 
 
 
 
 
 
 
382,000,000 
Scenario, Previously Reported |
Consolidating Adjustments
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
   
0 
Net premiums earned
 
 
 
 
 
 
 
 
 
   
0 
Net investment income
 
 
 
 
 
 
 
 
 
   
0 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
(2,590,000,000)
(1,459,000,000)
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
   
0 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
   
0 
Policy benefits
 
 
 
 
 
 
 
 
 
   
0 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
   
0 
Interest (income) expense
 
 
 
 
 
 
 
 
 
   
0 
Other (income) expense
 
 
 
 
 
 
 
 
 
   
0 
Income tax expense
 
 
 
 
 
 
 
 
 
   
0 
Net income (loss)
 
 
 
 
 
 
 
 
 
(2,590,000,000)
(1,459,000,000)2
Comprehensive income
 
 
 
 
 
 
 
 
 
(2,590,000,000)
(1,459,000,000)
Scenario, Previously Reported |
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
9,466,000,000 
 
Net premiums earned
 
 
 
 
 
 
 
 
 
9,194,000,000 
 
Net investment income
 
 
 
 
 
 
 
 
 
1,048,000,000 
 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
   
 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
121,000,000 
 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
6,211,000,000 
 
Policy benefits
 
 
 
 
 
 
 
 
 
309,000,000 
 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
2,564,000,000 
 
Interest (income) expense
 
 
 
 
 
 
 
 
 
257,000,000 
 
Other (income) expense
 
 
 
 
 
 
 
 
 
77,000,000 
 
Income tax expense
 
 
 
 
 
 
 
 
 
193,000,000 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
752,000,000 
 
Comprehensive income
 
 
 
 
 
 
 
 
 
1,209,000,000 
 
Scenario, Previously Reported |
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
6,609,000,000 
 
Net premiums earned
 
 
 
 
 
 
 
 
 
6,483,000,000 
 
Net investment income
 
 
 
 
 
 
 
 
 
1,132,000,000 
 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
   
 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
(60,000,000)
 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
3,442,000,000 
 
Policy benefits
 
 
 
 
 
 
 
 
 
212,000,000 
 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
1,916,000,000 
 
Interest (income) expense
 
 
 
 
 
 
 
 
 
26,000,000 
 
Other (income) expense
 
 
 
 
 
 
 
 
 
54,000,000 
 
Income tax expense
 
 
 
 
 
 
 
 
 
67,000,000 
 
Net income (loss)
 
 
 
 
 
 
 
 
 
1,838,000,000 
 
Comprehensive income
 
 
 
 
 
 
 
 
 
$ 1,381,000,000 
 
Information provided in connection with outstanding debt of subsidiaries (Condensed Consolidating Statement Of Cash Flows) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
$ 4,022 
$ 3,995 
$ 3,470 
Purchases of fixed maturities available for sale
(21,398)
(23,961)
(24,278)
Purchases of fixed maturities held to maturity
(447)
(388)
(340)
Purchases of equity securities
(264)
(135)
(309)
Sales of fixed maturities available for sale
10,413 
14,769 
17,971 
Sales of equity securities
142 
119 
376 
Maturities and redemptions of fixed maturities available for sale
6,941 
5,523 
3,720 
Maturities and redemptions of fixed maturities held to maturity
1,488 
1,451 
1,279 
Net change in short-term investments
524 
117 
(300)
Net derivative instruments settlements
(471)
(281)
(67)
Advances from (to) affiliates
 
(206)
28 
Acquisition of subsidiaries (net of cash acquired)
(977)
(98)
(606)
Capital contribution to subsidiary
   
0 
0 
Other
(393)
(555)
(482)
Net cash flows used for investing activities
(4,442)
(3,439)
(3,036)
Dividends paid on Common Shares
(517)
(815)
(459)
Common Shares repurchased
(287)
(11)
(195)
Net proceeds from (repayments) issuance of short-term debt
 
150 
(50)
Net proceeds from issuances of long-term debt
(947)
 
 
Proceeds from share-based compensation plans
135 
126 
139 
Advances from (to) affiliates
   
   
0 
Capital contribution from subsidiary
   
0 
0 
Net proceeds from (payments to) affiliated notional cash pooling programs
   
   
0 
Dividends to parent company
   
   
0 
Other
113 
 
 
Net cash flows from (used for) financing activities
391 
(550)
(565)
Effect of foreign currency rate changes on cash and cash equivalents
(7)
(5)
(27)
Net increase (decrease) in cash
(36)
1 
(158)
Cash – beginning of year
615 
614 1
772 
Cash – end of year
579 
615 
614 1
Scenario, Previously Reported
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
 
3,995 
3,470 
Purchases of fixed maturities available for sale
 
(23,844)
(24,578)
Purchases of fixed maturities held to maturity
 
(388)
(340)
Purchases of equity securities
 
(135)
(309)
Sales of fixed maturities available for sale
 
14,769 
17,971 
Sales of equity securities
 
119 
376 
Maturities and redemptions of fixed maturities available for sale
 
5,523 
3,720 
Maturities and redemptions of fixed maturities held to maturity
 
1,451 
1,279 
Net derivative instruments settlements
 
(281)
(67)
Advances from (to) affiliates
 
   
   
Acquisition of subsidiaries (net of cash acquired)
 
(98)
(606)
Capital contribution to subsidiary
 
   
   
Other
 
(555)
482 
Net cash flows used for investing activities
 
(3,439)
(3,036)
Dividends paid on Common Shares
 
(815)
(459)
Common Shares repurchased
 
(11)
195 
Net proceeds from (repayments) issuance of short-term debt
 
150 
(50)
Proceeds from share-based compensation plans
 
126 
139 
Advances from (to) affiliates
 
   
   
Capital contribution from subsidiary
 
0 
0 
Dividends to parent company
 
   
   
Net cash flows from (used for) financing activities
 
(550)
(565)
Effect of foreign currency rate changes on cash and cash equivalents
 
(5)
(27)
Net increase (decrease) in cash
 
1 
(158)
Cash – beginning of year
 
614 1 2
772 2
Cash – end of year
 
615 
614 1 2
ACE limited (Parent Gurantor)
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
970 
573 
831 
Purchases of fixed maturities available for sale
   
   
0 
Purchases of fixed maturities held to maturity
   
   
0 
Purchases of equity securities
   
   
0 
Sales of fixed maturities available for sale
   
   
0 
Sales of equity securities
   
   
0 
Maturities and redemptions of fixed maturities available for sale
   
   
0 
Maturities and redemptions of fixed maturities held to maturity
   
   
0 
Net change in short-term investments
(1)
0 
9 
Net derivative instruments settlements
0 
(1)
(3)
Advances from (to) affiliates
621 
 
 
Acquisition of subsidiaries (net of cash acquired)
   
   
0 
Capital contribution to subsidiary
133 
   
385 
Other
   
   
0 
Net cash flows used for investing activities
(134)
(1)
(379)
Dividends paid on Common Shares
(517)
(815)
(459)
Common Shares repurchased
   
   
0 
Net proceeds from (repayments) issuance of short-term debt
 
0 
(300)
Net proceeds from issuances of long-term debt
   
 
 
Proceeds from share-based compensation plans
14 
34 
133 
Advances from (to) affiliates
621 
206 
(28)
Capital contribution from subsidiary
   
   
0 
Net proceeds from (payments to) affiliated notional cash pooling programs
185 
0 
0 
Dividends to parent company
   
0 
0 
Other
   
 
 
Net cash flows from (used for) financing activities
(939)
(575)
(654)
Effect of foreign currency rate changes on cash and cash equivalents
   
   
0 
Net increase (decrease) in cash
(103)
(3)
(202)
Cash – beginning of year
103 
106 
308 
Cash – end of year
0 
103 
106 
ACE limited (Parent Gurantor) |
Scenario, Previously Reported
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
 
781 
762 
Purchases of fixed maturities available for sale
 
   
0 
Purchases of fixed maturities held to maturity
 
   
0 
Purchases of equity securities
 
   
0 
Sales of fixed maturities available for sale
 
 
9 
Sales of equity securities
 
   
0 
Maturities and redemptions of fixed maturities available for sale
 
   
0 
Maturities and redemptions of fixed maturities held to maturity
 
   
0 
Net derivative instruments settlements
 
(1)
(3)
Advances from (to) affiliates
 
(2)
41 
Acquisition of subsidiaries (net of cash acquired)
 
   
0 
Capital contribution to subsidiary
 
 
(385)
Other
 
   
0 
Net cash flows used for investing activities
 
(3)
(338)
Dividends paid on Common Shares
 
(815)
459 
Common Shares repurchased
 
   
0 
Net proceeds from (repayments) issuance of short-term debt
 
 
(300)
Proceeds from share-based compensation plans
 
34 
133 
Advances from (to) affiliates
 
 
0 
Capital contribution from subsidiary
 
   
0 
Dividends to parent company
 
 
0 
Net cash flows from (used for) financing activities
 
(781)
(626)
Effect of foreign currency rate changes on cash and cash equivalents
 
0 
0 
Net increase (decrease) in cash
 
(3)
(202)
Cash – beginning of year
 
106 
308 
Cash – end of year
 
103 
106 
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
(107)
296 
1,221 
Purchases of fixed maturities available for sale
   
   
0 
Purchases of fixed maturities held to maturity
   
   
0 
Purchases of equity securities
   
   
0 
Sales of fixed maturities available for sale
   
   
0 
Sales of equity securities
   
   
0 
Maturities and redemptions of fixed maturities available for sale
   
   
0 
Maturities and redemptions of fixed maturities held to maturity
   
   
0 
Net change in short-term investments
(4)
(4)
0 
Net derivative instruments settlements
(1)
   
0 
Acquisition of subsidiaries (net of cash acquired)
   
   
76 
Capital contribution to subsidiary
(1,097)
(352)
581 
Other
(4)
(33)
(19)
Net cash flows used for investing activities
(1,098)
(389)
(676)
Dividends paid on Common Shares
   
   
0 
Common Shares repurchased
   
   
0 
Net proceeds from (repayments) issuance of short-term debt
 
0 
0 
Net proceeds from issuances of long-term debt
947 
 
 
Proceeds from share-based compensation plans
   
0 
0 
Advances from (to) affiliates
621 
(201)
(721)
Capital contribution from subsidiary
   
90 
0 
Net proceeds from (payments to) affiliated notional cash pooling programs
349 
201 
148 
Dividends to parent company
0 
0 
0 
Other
   
 
 
Net cash flows from (used for) financing activities
1,219 
90 
(573)
Effect of foreign currency rate changes on cash and cash equivalents
   
   
0 
Net increase (decrease) in cash
14 
(3)
(28)
Cash – beginning of year
2 
5 
33 
Cash – end of year
16 
2 
5 
ACE INA Holdings Inc. (Subsidiary Issuer) |
Scenario, Previously Reported
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
 
1,744 
1,053 
Purchases of fixed maturities available for sale
 
(11,843)
(12,203)
Purchases of fixed maturities held to maturity
 
(384)
(338)
Purchases of equity securities
 
(70)
(157)
Sales of fixed maturities available for sale
 
7,347 
9,718 
Sales of equity securities
 
59 
354 
Maturities and redemptions of fixed maturities available for sale
 
2,759 
1,784 
Maturities and redemptions of fixed maturities held to maturity
 
1,045 
933 
Net derivative instruments settlements
 
(6)
(24)
Advances from (to) affiliates
 
 
0 
Acquisition of subsidiaries (net of cash acquired)
 
111 
(569)
Capital contribution to subsidiary
 
   
0 
Other
 
(395)
420 
Net cash flows used for investing activities
 
(1,599)
(922)
Dividends paid on Common Shares
 
   
0 
Common Shares repurchased
 
   
0 
Net proceeds from (repayments) issuance of short-term debt
 
1 
(150)
Proceeds from share-based compensation plans
 
13 
3 
Advances from (to) affiliates
 
(105)
(149)
Capital contribution from subsidiary
 
90 
0 
Dividends to parent company
 
0 
0 
Net cash flows from (used for) financing activities
 
(1)
(296)
Effect of foreign currency rate changes on cash and cash equivalents
 
(11)
(26)
Net increase (decrease) in cash
 
133 
(191)
Cash – beginning of year
 
382 
573 
Cash – end of year
 
515 
382 
Other ACE Limited Subsidiaries and Eliminations
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
3,984 3
3,876 3
3,455 
Purchases of fixed maturities available for sale
(21,504)3
(24,076)3
(24,601)
Purchases of fixed maturities held to maturity
(447)3
(388)3
(340)
Purchases of equity securities
(264)3
(135)3
(309)
Sales of fixed maturities available for sale
10,519 3
14,884 3
18,294 
Sales of equity securities
142 3
119 3
376 
Maturities and redemptions of fixed maturities available for sale
6,941 3
5,523 3
3,720 
Maturities and redemptions of fixed maturities held to maturity
1,488 3
1,451 3
1,279 
Net change in short-term investments
(521)3
121 3
(309)
Net derivative instruments settlements
(470)3
(280)3
(64)
Acquisition of subsidiaries (net of cash acquired)
(977)3
(98)3
530 
Capital contribution to subsidiary
   3
(90)3
0 
Other
(389)3
(522)3
(463)
Net cash flows used for investing activities
(4,440)3
(3,491)3
(2,947)
Dividends paid on Common Shares
   3
   4
0 
Common Shares repurchased
(287)3
(11)4
(195)
Net proceeds from (repayments) issuance of short-term debt
 
150 
250 
Net proceeds from issuances of long-term debt
   3
 
 
Proceeds from share-based compensation plans
121 3
92 
6 
Advances from (to) affiliates
   3
(5)4
749 
Capital contribution from subsidiary
1,230 3
352 
966 
Net proceeds from (payments to) affiliated notional cash pooling programs
   3
   4
0 
Dividends to parent company
(825)4
(750)4
(2,037)
Other
113 3
 
 
Net cash flows from (used for) financing activities
352 3
(172)
(261)
Effect of foreign currency rate changes on cash and cash equivalents
(7)3
(5)4
(27)
Net increase (decrease) in cash
(111)3
208 4
220 
Cash – beginning of year
859 3 4
651 4
431 
Cash – end of year
748 3
859 3 4
651 4
Other ACE Limited Subsidiaries and Eliminations |
Scenario, Previously Reported
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
 
1,920 4
2,395 
Purchases of fixed maturities available for sale
 
(12,001)4
(12,375)
Purchases of fixed maturities held to maturity
 
(4)4
(2)
Purchases of equity securities
 
(65)4
(152)
Sales of fixed maturities available for sale
 
7,422 4
8,244 
Sales of equity securities
 
60 4
22 
Maturities and redemptions of fixed maturities available for sale
 
2,764 4
1,936 
Maturities and redemptions of fixed maturities held to maturity
 
406 4
346 
Net derivative instruments settlements
 
(274)4
(40)
Advances from (to) affiliates
 
 
0 
Acquisition of subsidiaries (net of cash acquired)
 
(13)
(37)
Capital contribution to subsidiary
 
(90)4
0 
Other
 
(160)4
62 
Net cash flows used for investing activities
 
(1,929)4
(2,120)
Dividends paid on Common Shares
 
   4
0 
Common Shares repurchased
 
(11)4
195 
Net proceeds from (repayments) issuance of short-term debt
 
149 
400 
Proceeds from share-based compensation plans
 
79 
3 
Advances from (to) affiliates
 
107 4
108 
Capital contribution from subsidiary
 
0 
385 
Dividends to parent company
 
(450)4
(740)
Net cash flows from (used for) financing activities
 
(126)4
(39)
Effect of foreign currency rate changes on cash and cash equivalents
 
6 
(1)
Net increase (decrease) in cash
 
(129)4
235 
Cash – beginning of year
 
126 
(109)
Cash – end of year
 
(3)4
126 
Consolidating Adjustments
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
(825)
(750)
(2,037)
Purchases of fixed maturities available for sale
(106)
(115)
323 
Purchases of fixed maturities held to maturity
   
   
0 
Purchases of equity securities
   
   
0 
Sales of fixed maturities available for sale
(106)
(115)
(323)
Sales of equity securities
   
   
0 
Maturities and redemptions of fixed maturities available for sale
   
   
0 
Maturities and redemptions of fixed maturities held to maturity
   
   
0 
Net change in short-term investments
   
   
0 
Net derivative instruments settlements
   
   
0 
Acquisition of subsidiaries (net of cash acquired)
   
   
0 
Capital contribution to subsidiary
1,230 
442 
(966)
Other
   
   
0 
Net cash flows used for investing activities
1,230 
442 
966 
Dividends paid on Common Shares
   
   5
0 
Common Shares repurchased
   
   5
0 
Net proceeds from (repayments) issuance of short-term debt
 
   5
0 
Net proceeds from issuances of long-term debt
   
 
 
Proceeds from share-based compensation plans
   
0 
0 
Advances from (to) affiliates
   
   5
0 
Capital contribution from subsidiary
(1,230)
(442)
(966)
Net proceeds from (payments to) affiliated notional cash pooling programs
(164)
(201)5
(148)
Dividends to parent company
825 5
750 5
2,037 
Other
   
 
 
Net cash flows from (used for) financing activities
(241)
107 
923 
Effect of foreign currency rate changes on cash and cash equivalents
   
   5
0 
Net increase (decrease) in cash
164 
(201)5
(148)
Cash – beginning of year
(349)5
(148)5
0 
Cash – end of year
(185)
(349)5
(148)5
Consolidating Adjustments |
Scenario, Previously Reported
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
 
(450)
(740)
Purchases of fixed maturities available for sale
 
   5
0 
Purchases of fixed maturities held to maturity
 
   5
0 
Purchases of equity securities
 
   5
0 
Sales of fixed maturities available for sale
 
   5
0 
Sales of equity securities
 
   5
0 
Maturities and redemptions of fixed maturities available for sale
 
   5
0 
Maturities and redemptions of fixed maturities held to maturity
 
   5
0 
Net derivative instruments settlements
 
   5
0 
Advances from (to) affiliates
 
2 5
(41)
Acquisition of subsidiaries (net of cash acquired)
 
   5
0 
Capital contribution to subsidiary
 
90 
385 
Other
 
   5
0 
Net cash flows used for investing activities
 
92 5
344 
Dividends paid on Common Shares
 
   5
0 
Common Shares repurchased
 
   5
0 
Net proceeds from (repayments) issuance of short-term debt
 
   5
0 
Proceeds from share-based compensation plans
 
0 
0 
Advances from (to) affiliates
 
(2)5
41 
Capital contribution from subsidiary
 
(90)
(385)
Dividends to parent company
 
450 5
740 
Net cash flows from (used for) financing activities
 
358 5
396 
Effect of foreign currency rate changes on cash and cash equivalents
 
0 
0 
Net increase (decrease) in cash
 
   5
0 
Cash – beginning of year
 
0 
0 
Cash – end of year
 
    5
$ 0 
Condensed Unaudited Quarterly Financial Data (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 3,848 
$ 4,665 
$ 3,783 
$ 3,381 
$ 16,613 
$ 15,677 
$ 15,387 
Net investment income
557 
522 
534 
531 
567 
533 
537 
544 
2,144 
2,181 
2,242 
Net realized gains (losses) including OTTI
154 
40 
104 
206 
272 
(60)
(394)
260 
504 
78 
(795)
Total revenues
5,074 
5,172 
4,705 
4,310 
4,687 
5,138 
3,926 
4,185 
19,261 
17,936 
16,834 
Losses and loss expenses
2,517 
2,655 
2,250 
1,926 
2,683 
3,047 
2,119 
1,804 
9,348 
9,653 
9,520 
Policy benefits
136 
138 
110 
131 
142 
130 
102 
147 
515 
521 
401 
Net income
$ 998 
$ 916 
$ 891 
$ 953 
$ 765 
$ 640 
$ 328 
$ 973 
$ 3,758 
$ 2,706 
$ 1,540 
Basic earnings per share
$ 2.93 
$ 2.68 
$ 2.61 
$ 2.80 
$ 2.24 
$ 1.88 
$ 0.96 
$ 2.87 
$ 11.02 
$ 7.96 
$ 4.55 
Diluted earnings per share
$ 2.90 
$ 2.66 
$ 2.59 
$ 2.77 
$ 2.22 
$ 1.86 
$ 0.96 
$ 2.84 
$ 10.92 
$ 7.89 
$ 4.52 
Schedule I (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
$ 59,779 
Fair Value
61,093 
Amount at Which Shown in the Balance Sheet
60,928 
Fixed maturities available for sale
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
48,406 
Fair Value
49,254 
Amount at Which Shown in the Balance Sheet
49,254 
Fixed maturities available for sale |
U.S. Treasury and agency
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
2,946 
Fair Value
2,949 
Amount at Which Shown in the Balance Sheet
2,949 
Fixed maturities available for sale |
Foreign
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
14,336 
Fair Value
14,591 
Amount at Which Shown in the Balance Sheet
14,591 
Fixed maturities available for sale |
Corporate securities
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
16,825 
Fair Value
17,470 
Amount at Which Shown in the Balance Sheet
17,470 
Fixed maturities available for sale |
Mortgage backed-securities
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
10,937 
Fair Value
10,894 
Amount at Which Shown in the Balance Sheet
10,894 
Fixed maturities available for sale |
States, municipalities, and political subdivisions
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
3,362 
Fair Value
3,350 
Amount at Which Shown in the Balance Sheet
3,350 
Fixed maturities held to maturity
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
6,098 
Fair Value
6,263 
Amount at Which Shown in the Balance Sheet
6,098 
Fixed maturities held to maturity |
U.S. Treasury and agency
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
820 
Fair Value
832 
Amount at Which Shown in the Balance Sheet
820 
Fixed maturities held to maturity |
Foreign
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
864 
Fair Value
897 
Amount at Which Shown in the Balance Sheet
864 
Fixed maturities held to maturity |
Corporate securities
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
1,922 
Fair Value
2,005 
Amount at Which Shown in the Balance Sheet
1,922 
Fixed maturities held to maturity |
Mortgage backed-securities
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
1,341 
Fair Value
1,379 
Amount at Which Shown in the Balance Sheet
1,341 
Fixed maturities held to maturity |
States, municipalities, and political subdivisions
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
1,151 
Fair Value
1,150 
Amount at Which Shown in the Balance Sheet
1,151 
Industrial, miscellaneous, and all others
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
841 
Fair Value
837 
Amount at Which Shown in the Balance Sheet
837 
Short-term investments
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
1,763 
Fair Value
1,763 
Amount at Which Shown in the Balance Sheet
1,763 
Other investments
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
2,671 
Fair Value
2,976 
Amount at Which Shown in the Balance Sheet
2,976 
Short-term investments and Other investments, total
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
4,434 
Fair Value
4,739 
Amount at Which Shown in the Balance Sheet
$ 4,739 
Schedule II (BALANCE SHEETS - Parent Company Only) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Assets
 
 
 
 
Investments in subsidiaries and affiliates on equity basis
   
   
 
 
Short-term investments
1,763 
2,228 
 
 
Other investments
2,976 
2,716 
 
 
Cash
579 
615 
614 1
772 
Due from subsidiaries and affiliates, net
   
   
 
 
Other assets
3,330 
2,871 
 
 
Total assets
94,510 
92,545 
 
 
Liabilities
 
 
 
 
Accounts payable, accrued expenses, and other liabilities
4,810 
5,397 
 
 
Bank Overdrafts
   
0 
 
 
Short-term debt
1,901 
1,401 
 
 
Total liabilities
65,685 
65,014 
 
 
Stockholders' Equity Attributable to Parent [Abstract]
 
 
 
 
Common Shares
8,899 
9,591 
 
 
Common Shares in treasury
(255)
(159)
 
 
Additional paid-in capital
5,238 
5,179 
 
 
Retained earnings
13,791 
10,033 
 
 
Accumulated other comprehensive income
1,152 
2,887 
 
 
Total liabilities and shareholders’ equity
94,510 
92,545 
 
 
Parent Company Only
 
 
 
 
Assets
 
 
 
 
Investments in subsidiaries and affiliates on equity basis
28,351 
27,251 
 
 
Short-term investments
2 
1 
 
 
Other investments
30 
30 
 
 
Total investments
28,383 
27,282 
 
 
Cash
0 
103 
106 
308 
Due from subsidiaries and affiliates, net
844 
204 
 
 
Other assets
5 
13 
 
 
Total assets
29,232 
27,602 
 
 
Liabilities
 
 
 
 
Accounts payable, accrued expenses, and other liabilities
222 
71 
 
 
Bank Overdrafts
185 
   
 
 
Short-term debt
   
   
 
 
Total liabilities
407 
71 
 
 
Stockholders' Equity Attributable to Parent [Abstract]
 
 
 
 
Common Shares
8,899 
9,591 
 
 
Common Shares in treasury
(255)
(159)
 
 
Additional paid-in capital
5,238 
5,179 
 
 
Retained earnings
13,791 
10,033 
 
 
Accumulated other comprehensive income
1,152 
2,887 
 
 
Total shareholders' equity
28,825 
27,531 
 
 
Total liabilities and shareholders’ equity
$ 29,232 
$ 27,602 
 
 
Schedule II Schedule II (STATEMENTS OF OPERATIONS - Parent Company Only) (Details) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Equity in net income of subsidiaries and affiliates
 
 
 
 
 
 
 
 
$ 119,000,000 
$ 80,000,000 
$ 32,000,000 
Net realized gains (losses)
154,000,000 
40,000,000 
104,000,000 
206,000,000 
272,000,000 
(60,000,000)
(394,000,000)
260,000,000 
504,000,000 
78,000,000 
(795,000,000)
Total revenues
5,074,000,000 
5,172,000,000 
4,705,000,000 
4,310,000,000 
4,687,000,000 
5,138,000,000 
3,926,000,000 
4,185,000,000 
19,261,000,000 
17,936,000,000 
16,834,000,000 
Administrative and other (income) expense
 
 
 
 
 
 
 
 
(2,211,000,000)
(2,096,000,000)
(2,068,000,000)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
480,000,000 
270,000,000 
502,000,000 
Total expenses
 
 
 
 
 
 
 
 
(15,023,000,000)
(14,960,000,000)
(14,792,000,000)
Net income
998,000,000 
916,000,000 
891,000,000 
953,000,000 
765,000,000 
640,000,000 
328,000,000 
973,000,000 
3,758,000,000 
2,706,000,000 
1,540,000,000 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
 
2,023,000,000 
3,682,000,000 
1,857,000,000 
Parent Company Only
 
 
 
 
 
 
 
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Investment income, including intercompany interest income
 
 
 
 
 
 
 
 
34,000,000 
34,000,000 
39,000,000 
Equity in net income of subsidiaries and affiliates
 
 
 
 
 
 
 
 
3,580,000,000 
2,590,000,000 
1,459,000,000 
Net realized gains (losses)
 
 
 
 
 
 
 
 
0 
17,000,000 
(4,000,000)
Total revenues
 
 
 
 
 
 
 
 
3,614,000,000 
2,641,000,000 
1,494,000,000 
Administrative and other (income) expense
 
 
 
 
 
 
 
 
(161,000,000)
(75,000,000)
(56,000,000)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
17,000,000 
10,000,000 
10,000,000 
Total expenses
 
 
 
 
 
 
 
 
(144,000,000)
(65,000,000)
(46,000,000)
Net income
 
 
 
 
 
 
 
 
3,758,000,000 
2,706,000,000 
1,540,000,000 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
 
$ 2,023,000,000 
$ 3,682,000,000 
$ 1,857,000,000 
Schedule II (STATEMENTS OF CASH FLOWS - Parent Company Only) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net cash flows from operating activities
$ 4,022 
$ 3,995 
$ 3,470 
Purchases of fixed maturities available for sale
(21,340)
(23,572)
(23,523)
Sales of fixed maturities available for sale
10,355 
14,321 
17,176 
Net change in short-term investments
524 
117 
(300)
Net derivative instruments settlements
(471)
(281)
(67)
Other
393 
555 
482 
Net cash flows used for investing activities
(4,442)
(3,439)
(3,036)
Dividends paid on Common Shares
(517)
(815)
(459)
Advances (to) from affiliates
 
(206)
28 
Net proceeds from (payments to) affiliated notional cash pooling programs
   
   
0 
Proceeds from share-based compensation plans
135 
126 
139 
Net cash flows from (used for) financing activities
391 
(550)
(565)
Net increase (decrease) in cash
(36)
1 
(158)
Cash – beginning of year
615 
614 1
772 
Cash – end of year
579 
615 
614 1
Parent Company Only
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net cash flows from operating activities
970 
573 
831 
Net change in short-term investments
(1)
0 
9 
Net derivative instruments settlements
0 
(1)
(3)
Capital contributions to subsidiaries
(133)
0 
(385)
Net cash flows used for investing activities
(134)
(1)
(379)
Dividends paid on Common Shares
(517)
(815)
(459)
Net proceeds from issuance (repayment) of short-term debt
0 
0 
(300)
Advances (to) from affiliates
621 
 
 
Net proceeds from (payments to) affiliated notional cash pooling programs
185 
0 
0 
Proceeds from share-based compensation plans
14 
34 
133 
Net cash flows from (used for) financing activities
(939)
(575)
(654)
Net increase (decrease) in cash
(103)
(3)
(202)
Cash – beginning of year
103 
106 
308 
Cash – end of year
$ 0 
$ 103 
$ 106 
Schedule IV (SUPPLEMENTAL INFORMATION CONCERNING REINSURANCE) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Direct Amount
 
 
 
 
 
 
 
 
$ 18,856 
$ 17,802 
$ 17,534 
Ceded To Other Companies
 
 
 
 
 
 
 
 
5,722 
5,427 
5,496 
Assumed From Other Companies
 
 
 
 
 
 
 
 
3,479 
3,302 
3,349 
Net Amount
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 3,848 
$ 4,665 
$ 3,783 
$ 3,381 
$ 16,613 
$ 15,677 
$ 15,387 
Percentage of Amount Assumed to Net
 
 
 
 
 
 
 
 
21.00% 
21.00% 
22.00% 
Schedule VI (SUPPLEMENTARY INFORMATION CONCERNING PROPERTY AND CASUALTY OPERATIONS) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Supplemental Information for Property, Casualty Insurance Underwriters [Abstract]
 
 
 
Deferred Policy Acquisition Costs
$ 1,865 
$ 1,757 
$ 1,512 
Net Reserves for Unpaid Losses
26,831 
26,547 
25,875 
Unearned Premiums
7,539 
6,864 
6,334 
Net Premiums Earned
15,708 
14,764 
14,523 
Net Investment Income
1,977 
2,018 
2,107 
Net Losses and Loss Expenses Incurred Related to Current Year
9,878 
10,132 
10,076 
Net Losses and Loss Expenses Incurred Related to Prior Year
(530)
(479)
(556)
Amortization of Deferred Policy Acquisition Costs
2,447 
2,254 
2,291 
Net Paid Losses and Loss Expenses
8,977 
9,219 
8,866 
Net Premiums Written
$ 16,069 
$ 15,107 
$ 14,455