ACE LTD, 10-K filed on 2/27/2015
Annual Report
Document and Entity Information (USD $)
In Billions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Feb. 13, 2015
Jun. 29, 2014
Document Documentand Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2014 
 
 
Document Fiscal Year Focus
2014 
 
 
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
 
327,341,997 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 35 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Assets
 
 
Fixed maturities available for sale, at fair value (amortized cost - $47,826 and $48,406) (includes hybrid financial instruments of $274 and $302)
$ 49,395 
$ 49,254 
Fixed maturities held to maturity, at amortized cost (fair value – $7,589 and $6,263)
7,331 
6,098 
Equity securities, at fair value (cost – $440 and $841)
510 
837 
Short-term investments, at fair value and amortized cost
2,322 
1,763 
Other investments (cost – $2,999 and $2,671)
3,346 
2,976 
Total investments
62,904 
60,928 
Cash
655 1 2
579 1 3 4
Securities lending collateral
1,330 
1,632 
Accrued investment income
552 
556 
Insurance and reinsurance balances receivable
5,426 
5,026 
Reinsurance recoverable on losses and loss expenses
11,992 
11,227 
Reinsurance recoverable on policy benefits
217 
218 
Deferred policy acquisition costs
2,601 
2,313 
Value of business acquired
466 
536 
Goodwill and other intangible assets
5,724 
5,404 
Prepaid reinsurance premiums
2,026 
1,675 
Deferred tax assets
295 
616 
Investments in partially-owned insurance companies
504 
470 
Other assets
3,556 
3,330 
Total assets
98,248 
94,510 
Liabilities
 
 
Unpaid losses and loss expenses
38,315 
37,443 
Unearned premiums
8,222 
7,539 
Future policy benefits
4,754 
4,615 
Insurance and reinsurance balances payable
4,095 
3,628 
Securities lending payable
1,331 
1,633 
Accounts payable, accrued expenses, and other liabilities
5,726 
4,810 
Short-term debt
2,552 
1,901 
Long-term debt
3,357 
3,807 
Trust preferred securities
309 
309 
Total liabilities
68,661 
65,685 
Commitments and contingencies
   
   
Shareholders' equity
 
 
Common Shares (CHF 24.77 and CHF 27.04 par value; 342,832,412 shares issued; 328,659,686 and 339,793,935 shares outstanding)
8,055 
8,899 
Common Shares in treasury (14,172,726 and 3,038,477 shares)
(1,448)
(255)
Additional paid-in capital
5,145 
5,238 
Retained earnings
16,644 
13,791 
Accumulated other comprehensive income (AOCI)
1,191 
1,152 
Total shareholders’ equity
29,587 
28,825 
Total liabilities and shareholders’ equity
$ 98,248 
$ 94,510 
Consolidated Balance Sheets (Parenthetical)(USD ($))
In Millions, except Share data, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Statement of Financial Position [Abstract]
 
 
Fixed maturities available for sale, at amortized cost
$ 47,826 
$ 48,406 
Fixed maturities available for sale, hybrid financial instruments
274 
302 
Fixed maturities held to maturity, at fair value
7,589 
6,263 
Equity securities, at cost
440 
841 
Other investments, cost
$ 2,999 
$ 2,671 
Common Shares, shares issued
342,832,412 
342,832,412 
Common Shares, shares outstanding
328,659,686 
339,793,935 
Common Shares in treasury, shares
14,172,726 
3,038,477 
Consolidated Statements Of Operations and Comprehensive Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Revenues
 
 
 
Net premiums written
$ 17,799 
$ 17,025 
$ 16,075 
Increase in unearned premiums
(373)
(412)
(398)
Net premiums earned
17,426 
16,613 
15,677 
Net investment income
2,252 
2,144 
2,181 
Net realized gains (losses):
 
 
 
Other-than-temporary impairment (OTTI) losses gross
(75)
(22)
(38)
Portion of OTTI losses recognized in other comprehensive income (OCI)
7 
 
1 
Net OTTI losses recognized in income
(68)
(22)
(37)
Net realized gains (losses) excluding OTTI losses
(439)
526 
115 
Total net realized gains (losses)
(507)
504 
78 
Total revenues
19,171 
19,261 
17,936 
Expenses
 
 
 
Losses and loss expenses
9,649 
9,348 
9,653 
Policy benefits
517 
515 
521 
Policy acquisition costs
3,075 
2,659 
2,446 
Administrative expenses
2,245 
2,211 
2,096 
Interest expense
280 
275 
250 
Other (income) expense
(82)
15 
(6)
Total expenses
15,684 
15,023 
14,960 
Income before income tax
3,487 
4,238 
2,976 
Income tax expense
634 
480 
270 
Net income
2,853 
3,758 
2,706 
Other comprehensive income (loss)
 
 
 
Unrealized appreciation (depreciation)
820 
(1,762)
1,350 
Reclassification adjustment for net realized (gains) losses included in net income
24 
(105)
(234)
Other comprehensive income (loss)after reclassification for net realized gains included in net income
844 
(1,867)
1,116 
Change in:
 
 
 
Cumulative translation adjustment
(632)
(339)
116 
Pension liability
2 
 
(35)
Other comprehensive income (loss), before income tax
214 
(2,206)
1,197 
Income tax benefit (expense) related to OCI items
(175)
471 
(221)
Other comprehensive income (loss)
39 
(1,735)
976 
Comprehensive income
$ 2,892 
$ 2,023 
$ 3,682 
Earnings per share
 
 
 
Basic earnings per share
$ 8.50 
$ 11.02 
$ 7.96 
Diluted earnings per share
$ 8.42 
$ 10.92 
$ 7.89 
Consolidated Statements of Operations and Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Income tax expense (benefit)
$ 634 
$ 480 
Net realized gains (losses)
(507)
504 
Reclassification out of Accumulated Other Comprehensive Income [Member] |
Net unrealized appreciation on investments
 
 
Income tax expense (benefit)
9 
17 
Net realized gains (losses)
$ (24)
$ 105 
Consolidated Statements Of Shareholders' Equity (USD $)
In Millions
Total
Common Shares
Common Shares in Treasury
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income
Net unrealized appreciation on investments
Cumulative Translation Adjustment
Accumulated Defined Benefit Plans Adjustment [Member]
Balance – beginning of year at Dec. 31, 2011
 
$ 10,095 
$ (327)
$ 5,326 
$ 7,327 
 
$ 1,715 
$ 258 
$ (62)
Net shares redeemed under employee share-based compensation plans
 
 
 
(93)
 
 
 
 
 
Exercise of stock options
 
 
 
(7)
 
 
 
 
 
Dividends declared on Common Shares – par value reduction
 
(504)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(7)
 
 
 
 
 
 
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 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
(200)
200 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
(200)
 
 
 
 
Change in year, net of income tax benefit (expense) of $(167), $408, and $(198)
 
 
 
 
 
 
918 
 
 
Change in year, net of income tax benefit (expense) of $(12), $63, and $(35)
 
 
 
 
 
 
 
81 
 
Change in year, net of income tax benefit of $4, nil, and $12
 
 
 
 
 
 
 
 
(23)
Balance - end of year at Dec. 31, 2012
27,531 
9,591 
(159)
5,179 
10,033 
2,887 
2,633 
339 
(85)
Net shares redeemed under employee share-based compensation plans
 
 
 
(126)
 
 
 
 
 
Exercise of stock options
 
 
 
(42)
 
 
 
 
 
Dividends declared on Common Shares – par value reduction
 
(692)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(290)
 
 
 
 
 
 
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 
 
 
 
 
Change in year, before reclassification from AOCI, net of income tax benefit (expense) of $(176) and $391
 
 
 
 
 
 
(1,371)
 
 
Amounts reclassified from AOCI, net of income tax benefit of $9 and $17
 
 
 
 
 
 
(88)
 
 
Change in year, net of income tax benefit (expense) of $(167), $408, and $(198)
 
 
 
 
 
 
(1,459)
 
 
Change in year, net of income tax benefit (expense) of $(12), $63, and $(35)
 
 
 
 
 
 
 
(276)
 
Change in year, net of income tax benefit of $4, nil, and $12
 
 
 
 
 
 
 
 
0 
Balance - end of year at Dec. 31, 2013
28,825 
8,899 
(255)
5,238 
13,791 
1,152 
1,174 
63 
(85)
Net shares redeemed under employee share-based compensation plans
 
 
 
(167)
 
 
 
 
 
Exercise of stock options
 
 
 
(58)
 
 
 
 
 
Dividends declared on Common Shares – par value reduction
 
(844)
 
 
 
 
 
 
 
Common Shares repurchased
 
 
(1,449)
 
 
 
 
 
 
Net shares redeemed under employee share-based compensation plans
 
 
256 
 
 
 
 
 
 
Share-based compensation expense and other
 
 
 
185 
 
 
 
 
 
Tax benefit on share-based compensation expense
 
 
 
28 
 
 
 
 
 
Net income
2,853 
 
 
 
2,853 
 
 
 
 
Funding of dividends declared from Additional paid-in capital
 
 
 
(81)
81 
 
 
 
 
Dividends declared on Common Shares
 
 
 
 
(81)
 
 
 
 
Change in year, before reclassification from AOCI, net of income tax benefit (expense) of $(176) and $391
 
 
 
 
 
 
644 
 
 
Amounts reclassified from AOCI, net of income tax benefit of $9 and $17
 
 
 
 
 
 
33 
 
 
Change in year, net of income tax benefit (expense) of $(167), $408, and $(198)
 
 
 
 
 
 
677 
 
 
Change in year, net of income tax benefit (expense) of $(12), $63, and $(35)
 
 
 
 
 
 
 
(644)
 
Change in year, net of income tax benefit of $4, nil, and $12
 
 
 
 
 
 
 
 
6 
Balance - end of year at Dec. 31, 2014
$ 29,587 
$ 8,055 
$ (1,448)
$ 5,145 
$ 16,644 
$ 1,191 
$ 1,851 
$ (581)
$ (79)
Consolidated Statements Of Shareholders' Equity (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Net unrealized appreciation on investments, Change in year, income tax (expense) benefit
$ (167)
$ 408 
$ (198)
Cumulative translation adjustment, Change in year, income tax(expense) benefit
(12)
63 
(35)
Pension liability adjustment, Change in year, income tax (expense) benefit
4 
0 
12 
Net unrealized appreciation on investments
 
 
 
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax
33 
(88)
 
Reclassification out of Accumulated Other Comprehensive Income [Member] |
Net unrealized appreciation on investments
 
 
 
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Tax
(176)
391 
   
Reclassification from Accumulated Other Comprehensive Income, Current Period, Tax
$ 9 
$ 17 
 
Consolidated Statements Of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Cash flows from operating activities
 
 
 
Net income
$ 2,853 
$ 3,758 
$ 2,706 
Adjustments to reconcile net income to net cash flows from operating activities
 
 
 
Net realized (gains) losses
507 
(504)
(78)
Amortization of premiums/discounts on fixed maturities
188 
268 
220 
Deferred income taxes
145 
240 
(7)
Unpaid losses and loss expenses
317 
(365)
203 
Unearned premiums
441 
402 
522 
Future policy benefits
236 
191 
158 
Insurance and reinsurance balances payable
376 
176 
(151)
Accounts payable, accrued expenses, and other liabilities
13 
37 
(42)
Income taxes payable
103 
(45)
(167)
Insurance and reinsurance balances receivable
(469)
(624)
335 
Reinsurance recoverable on losses and loss expenses
119 
787 
372 
Reinsurance recoverable on policy benefits
4 
23 
52 
Deferred policy acquisition costs
(397)
(503)
(340)
Prepaid reinsurance premiums
(89)
(31)
(123)
Other
149 
212 
335 
Net cash flows from operating activities
4,496 
4,022 
3,995 
Cash flows from investing activities
 
 
 
Purchases of fixed maturities available for sale
(15,553)
(21,340)
(23,572)
Purchases of to be announced mortgage-backed securities
 
(58)
(389)
Purchases of fixed maturities held to maturity
(267)
(447)
(388)
Purchases of equity securities
(251)
(264)
(135)
Sales of fixed maturities available for sale
7,482 
10,355 
14,321 
Sales of to be announced mortgage-backed securities
 
58 
448 
Sales of equity securities
670 
142 
119 
Maturities and redemptions of fixed maturities available for sale
6,413 
6,941 
5,523 
Maturities and redemptions of fixed maturities held to maturity
875 
1,488 
1,451 
Net change in short-term investments
(603)
524 
117 
Net derivative instruments settlements
(230)
(471)
(281)
Acquisition of subsidiaries (net of cash acquired of $20, $38, and $8)
(766)
(977)
(98)
Other
(274)
(393)
(555)
Net cash flows used for investing activities
(2,504)
(4,442)
(3,439)
Cash flows from financing activities
 
 
 
Dividends paid on Common Shares
(862)
(517)
(815)
Common Shares repurchased
(1,429)
(287)
(11)
Proceeds from issuance of long-term debt
699 
947 
 
Proceeds from issuance of short-term debt
1,978 
2,572 
2,933 
Repayment of short-term debt
(1,977)
(2,572)
(2,783)
Repayments of Long-term Debt
(501)
 
 
Proceeds from share-based compensation plans, including windfall tax benefits
127 
135 
126 
Other
188 
113 
 
Net cash flows (used for) from financing activities
(1,777)
391 
(550)
Effect of foreign currency rate changes on cash and cash equivalents
(139)
(7)
(5)
Net increase (decrease) in cash
76 
(36)
1 
Cash – beginning of year
579 1 2 3
615 1 4
614 4
Cash – end of year
655 2 5
579 1 2 3
615 1 4
Supplemental cash flow information
 
 
 
Taxes paid
349 
218 
438 
Interest paid
$ 264 
$ 253 
$ 240 
Consolidated Statements Of Cash Flows (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Cash Flows [Abstract]
 
 
 
Acquisition of subsidiaries, cash acquired
$ 20 
$ 38 
$ 8 
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, including internal reinsurance 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 recorded 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 recorded 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 incurred 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 based upon the same assumptions used in estimating the liability for future policy benefits. 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 long-duration 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 as deferred policy acquisition costs. Deferred policy acquisition costs, including 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 based upon the same assumptions used in estimating the liability for future policy benefits. 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 $288 million and $307 million at December 31, 2014 and 2013, respectively. Amortization expense for deferred marketing costs was $99 million, $128 million, and $119 million for the years ended December 31, 2014, 2013, and 2012, respectively.

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 $26 million and $27 million at December 31, 2014 and 2013, 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.

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.

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

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 $49 million net of discount, held at December 31, 2014, representing certain structured settlements for which the timing and amount of future claim payments are reliably determinable and $62 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 $54 million for certain structured settlements and $52 million of certain reserves for unsettled claims at December 31, 2013. 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, 2014, the gross liability due to claimants was $606 million, net of discount, and reinsurance recoverables due from the life insurance companies was $557 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, 2014 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 at both December 31, 2014 and 2013. 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 variable annuity contracts
ACE reinsures various death and living benefit guarantees associated with variable annuities issued primarily in the United States and Japan. 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. Refer to Notes 5 c) and 10 a) 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. Deposit liabilities include reinsurance deposit liabilities and contract holder deposit funds. The reinsurance deposit liabilities arise from contracts sold for which there is not a significant transfer of risk. 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. Under deposit accounting, consideration received or paid 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 deposit assets, 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 $89 million and $100 million at December 31, 2014 and 2013, 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.

Deposit liabilities include reinsurance deposit liabilities of $120 million and $131 million and contract holder deposit funds of $908 million and $699 million at December 31, 2014 and 2013, respectively. Deposit liabilities are reflected in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets. 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.

The liability for contract holder deposit funds 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 $27 million, $25 million, and $23 million for the years ended December 31, 2014, 2013, and 2012, 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 2014 and 2013, 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 2014, 2013, or 2012.

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

Large Corporate Account P&C Insurance Business of Itaú Seguros, S.A. (Itaú Seguros)
On October 31, 2014, we expanded our presence in Brazil with the acquisition of the large corporate account property and casualty (P&C) insurance business of Itaú Seguros, Brazil's leading carrier for that business, for approximately $610 million in cash, subject to a working capital adjustment under the purchase agreement expected to be finalized in March 2015. This acquisition generated $449 million of goodwill, attributable to expected growth and profitability, none of which is currently deductible for income tax purposes. Goodwill may become deductible for income tax purposes under Brazilian tax law if this acquired entity is merged with certain ACE legal entities. Other intangible assets of $60 million were also generated based on ACE’s preliminary purchase price allocation. The other intangible assets primarily relate to renewal rights.

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

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

Prior year acquisitions

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

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

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

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

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.

Goodwill and other intangible assets arising from the acquisitions described above are included in our Insurance – Overseas General segment. The consolidated financial statements include results of acquired businesses from the acquisition dates.

To be acquired after 2014
On December 18, 2014, we announced that we have signed a definitive agreement to acquire the Fireman's Fund high net worth personal lines insurance business in the U.S. from Allianz for approximately $365 million. The acquisition is expected to expand ACE’s position as one of the largest high net worth personal lines insurers in the U.S. The transaction, which is subject to customary closing conditions, including insurance regulatory approval, is expected to be completed in the second quarter of 2015.
Investments
Investments
Investments

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

b) Fixed maturities
December 31, 2014
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,741

 
$
87

 
$
(8
)
 
$
2,820

 
$
—

Foreign
14,703

 
629

 
(90
)
 
15,242

 
—

Corporate securities
16,897

 
704

 
(170
)
 
17,431

 
(7
)
Mortgage-backed securities
10,011

 
304

 
(29
)
 
10,286

 
(1
)
States, municipalities, and political subdivisions
3,474

 
147

 
(5
)
 
3,616

 
—

 
$
47,826

 
$
1,871

 
$
(302
)
 
$
49,395

 
$
(8
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
832

 
$
20

 
$
(2
)
 
$
850

 
$
—

Foreign
916

 
47

 
—

 
963

 
—

Corporate securities
2,323

 
102

 
(2
)
 
2,423

 
—

Mortgage-backed securities
1,983

 
57

 
(1
)
 
2,039

 
—

States, municipalities, and political subdivisions
1,277

 
40

 
(3
)
 
1,314

 
—

 
$
7,331

 
$
266

 
$
(8
)
 
$
7,589

 
$
—



December 31, 2013
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

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

 
$
62

 
$
(59
)
 
$
2,949

 
$
—

Foreign
14,336

 
377

 
(122
)
 
14,591

 
—

Corporate securities
16,825

 
777

 
(132
)
 
17,470

 
(6
)
Mortgage-backed securities
10,937

 
184

 
(227
)
 
10,894

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

 
65

 
(77
)
 
3,350

 
—

 
$
48,406

 
$
1,465

 
$
(617
)
 
$
49,254

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

 
$
16

 
$
(4
)
 
$
832

 
$
—

Foreign
864

 
33

 
—

 
897

 
—

Corporate securities
1,922

 
83

 
—

 
2,005

 
—

Mortgage-backed securities
1,341

 
39

 
(1
)
 
1,379

 
—

States, municipalities, and political subdivisions
1,151

 
16

 
(17
)
 
1,150

 
—

 
$
6,098

 
$
187

 
$
(22
)
 
$
6,263

 
$
—



As discussed in Note 3 d), if a credit loss is incurred on an impaired fixed maturity, an OTTI is considered to have occurred and the portion of the impairment not related to credit losses (non-credit OTTI) is recognized in OCI. Included in the “OTTI Recognized in AOCI” columns above are the cumulative amounts of non-credit OTTI recognized in OCI adjusted for subsequent sales, maturities, and redemptions. OTTI recognized in AOCI does not include the impact of subsequent changes in fair value of the related securities. In periods subsequent to a recognition of OTTI in OCI, changes in the fair value of the related fixed maturities are reflected in Unrealized appreciation (depreciation) in the consolidated statement of shareholders' equity. For the years ended December 31, 2014 and 2013, $4 million and $25 million of net unrealized appreciation, respectively, related to such securities is included in OCI. At December 31, 2014 and 2013, AOCI included cumulative net unrealized depreciation of $3 million and $4 million, respectively, related to securities remaining in the investment portfolio for which ACE has recognized a non-credit OTTI.

Mortgage-backed securities (MBS) issued by U.S. government agencies are combined with all other to be announced mortgage derivatives held (refer to Note 10 a) (iv)) and are included in the category, “Mortgage-backed securities”. Approximately 83 percent of the total mortgage-backed securities at both December 31, 2014 and 2013 are represented by investments in U.S. government agency bonds. The remainder of the mortgage exposure consists of collateralized mortgage obligations and non-government mortgage-backed securities, the majority of which provide a planned structure for principal and interest payments and carry a rating of AAA by the major credit rating agencies.

The following table presents fixed maturities by contractual maturity:
 
December 31
 
 
December 31
 
 
 
 
2014

 
 
 
2013

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,187

 
$
2,206

 
$
2,387

 
$
2,411

Due after 1 year through 5 years
15,444

 
15,857

 
14,139

 
14,602

Due after 5 years through 10 years
15,663

 
16,089

 
16,200

 
16,535

Due after 10 years
4,521

 
4,957

 
4,743

 
4,812

 
37,815

 
39,109

 
37,469

 
38,360

Mortgage-backed securities
10,011

 
10,286

 
10,937

 
10,894

 
$
47,826

 
$
49,395

 
$
48,406

 
$
49,254

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
353

 
$
355

 
$
401

 
$
405

Due after 1 year through 5 years
2,603

 
2,693

 
2,284

 
2,363

Due after 5 years through 10 years
1,439

 
1,489

 
1,686

 
1,723

Due after 10 years
953

 
1,013

 
386

 
393

 
5,348

 
5,550

 
4,757

 
4,884

Mortgage-backed securities
1,983

 
2,039

 
1,341

 
1,379

 
$
7,331

 
$
7,589

 
$
6,098

 
$
6,263


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

c) Equity securities
 
December 31


December 31

(in millions of U.S. dollars)
2014


2013

Cost
$
440

 
$
841

Gross unrealized appreciation
83

 
63

Gross unrealized depreciation
(13
)
 
(67
)
Fair value
$
510

 
$
837



During the third quarter of 2014, we elected to exchange our interest in a strategic emerging debt portfolio, a mutual fund classified as an equity security investment, for direct ownership of certain of the underlying fixed maturities, and the remainder in cash. This transaction increased realized losses and decreased unrealized losses with no impact to shareholders' equity. The non-cash portion of the transaction was $219 million and does not impact the Consolidated Statements of Cash Flows.
d) Net realized gains (losses)
In accordance with guidance related to the recognition and presentation of OTTI, when an impairment related to a fixed maturity has occurred, OTTI is required to be recorded in Net income if management has the intent to sell the security or it is more likely than not that we will be required to sell the security before the recovery of its amortized cost. Further, in cases where we do not intend to sell the security and it is more likely than not that we will not be required to sell the security, ACE must evaluate the security to determine the portion of the impairment, if any, related to credit losses. If a credit loss is incurred, an OTTI is considered to have occurred and any portion of the OTTI related to credit losses must be reflected in Net income while the portion of OTTI related to all other factors is recognized in OCI. For fixed maturities held to maturity, OTTI recognized in OCI is accreted from AOCI to the amortized cost of the fixed maturity prospectively over the remaining term of the securities.

Each quarter, securities in an unrealized loss position (impaired securities), including fixed maturities, securities lending collateral, equity securities, and other investments, are reviewed to identify impaired securities to be specifically evaluated for a potential OTTI.
For all non-fixed maturities, OTTI is evaluated based on the following:
•
the amount of time a security has been in a loss position and the magnitude of the loss position;
•
the period in which cost is expected to be recovered, if at all, based on various criteria including economic conditions and other issuer-specific developments; and
•
ACE’s ability and intent to hold the security to the expected recovery period.
As a general rule, we also consider that equity securities in an unrealized loss position for twelve consecutive months are other than temporarily impaired. For mutual funds included in equity securities in our consolidated balance sheet, we employ analysis similar to fixed maturities, when applicable.

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 $60 million of gross unrealized loss at December 31, 2014. 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 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
0.0-1.3%

 
0.0-0.3%

Below Investment Grade:
 
 
 
Ba
4.9
%
 
1.1
%
B
12.7
%
 
3.4
%
Caa-C
50.5
%
 
13.1
%

Application of the methodology and assumptions described above resulted in credit losses recognized in Net income for corporate securities of $27 million, $11 million, and $14 million for the years ended December 31, 2014, 2013, and 2012, 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 nil, $1 million, and $6 million of credit losses recognized in Net income for mortgage-backed securities for the years ended December 31, 2014, 2013 and 2012, 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)
2014

 
2013

 
2012

Fixed maturities:
 
 
 
 
 
OTTI on fixed maturities, gross
$
(64
)
 
$
(18
)
 
$
(26
)
OTTI on fixed maturities recognized in OCI (pre-tax)
7

 
—

 
1

OTTI on fixed maturities, net
(57
)
 
(18
)
 
(25
)
Gross realized gains excluding OTTI
213

 
237

 
388

Gross realized losses excluding OTTI
(133
)
 
(129
)
 
(133
)
Total fixed maturities
23

 
90

 
230

Equity securities:
 
 
 
 
 
OTTI on equity securities
(8
)
 
(2
)
 
(5
)
Gross realized gains excluding OTTI
22

 
21

 
11

Gross realized losses excluding OTTI
(61
)
 
(4
)
 
(2
)
Total equity securities
(47
)
 
15

 
4

OTTI on other investments
(3
)
 
(2
)
 
(7
)
Foreign exchange gains (losses)
(40
)
 
29

 
(16
)
Investment and embedded derivative instruments
(107
)
 
78

 
(6
)
Fair value adjustments on insurance derivative
(217
)
 
878

 
171

S&P put options and futures
(168
)
 
(579
)
 
(297
)
Other derivative instruments
50

 
(2
)
 
(4
)
Other
2

 
(3
)
 
3

Net realized gains (losses)
(507
)
 
504

 
78

Change in net unrealized appreciation (depreciation) on investments:
 
 
 
 
 
Fixed maturities available for sale
734

 
(1,798
)
 
1,099

Fixed maturities held to maturity
(2
)
 
(82
)
 
(94
)
Equity securities
77

 
(41
)
 
61

Other
35

 
54

 
50

Income tax (expense) benefit
(167
)
 
408

 
(198
)
Change in net unrealized appreciation (depreciation) on investments
677

 
(1,459
)
 
918

Total net realized gains (losses) and change in net unrealized appreciation (depreciation) on investments
$
170

 
$
(955
)
 
$
996


 
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)
2014

 
2013

 
2012

Balance of credit losses related to securities still held – beginning of year
$
37

 
$
43

 
$
74

Additions where no OTTI was previously recorded
22

 
9

 
8

Additions where an OTTI was previously recorded
5

 
3

 
12

Reductions for securities sold during the period
(36
)
 
(18
)
 
(51
)
Balance of credit losses related to securities still held – end of year
$
28

 
$
37

 
$
43


e) Other investments
 
 
 
December 31

 
 
 
December 31

 
 
 
2014

 
 
 
2013

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

 
Cost

 
Fair Value

 
Cost

Investment funds
$
378

 
$
228

 
$
428

 
$
278

Limited partnerships
691

 
497

 
576

 
424

Partially-owned investment companies
1,492

 
1,492

 
1,284

 
1,284

Life insurance policies
205

 
205

 
180

 
180

Policy loans
187

 
187

 
179

 
179

Trading securities
290

 
287

 
276

 
273

Other
103

 
103

 
53

 
53

Total
$
3,346

 
$
2,999

 
$
2,976

 
$
2,671



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 $261 million of mutual funds supported by assets that do not qualify for separate account reporting under GAAP at December 31, 2014 compared with $246 million at December 31, 2013. Trading securities also includes assets held in rabbi trusts of $22 million of equity securities and $7 million of fixed maturities at December 31, 2014, compared with $23 million of equity securities and $7 million of fixed maturities at December 31, 2013.

f) Investments in partially-owned insurance companies
 
December 31
 
 
December 31
 
 
 
 
2014
 
 
2013
 
 
 
(in millions of U.S. dollars, except for percentages)
Carrying Value

 
Issued
 Share
Capital

 
Ownership Percentage

 
Carrying Value

 
Issued Share Capital

 
Ownership Percentage

 
Domicile
Huatai Group
$
397

 
$
638

 
20.0
%
 
$
365

 
$
631

 
20.0
%
 
China
Huatai Life Insurance Company
86

 
438

 
20.0
%
 
84

 
379

 
20.0
%
 
China
Freisenbruch-Meyer
9

 
5

 
40.0
%
 
9

 
5

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

 
27

 
30.0
%
 
10

 
27

 
30.0
%
 
Saudi Arabia
Russian Reinsurance Company
2

 
4

 
23.3
%
 
2

 
4

 
23.3
%
 
Russia
Total
$
504

 
$
1,112

 
 
 
$
470

 
$
1,046

 
 
 
 

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

g) Gross unrealized loss
At December 31, 2014, there were 5,485 fixed maturities out of a total of 26,258 fixed maturities in an unrealized loss position. The largest single unrealized loss in the fixed maturities was $3 million. There were 93 equity securities out of a total of 282 equity securities in an unrealized loss position. The largest single unrealized loss in the equity securities was $1 million. Fixed maturities in an unrealized loss position at December 31, 2014, comprised both investment grade and below investment grade securities for which fair value declined primarily due to widening credit spreads since the date of purchase.

The following tables present, for all securities in an unrealized loss position (including securities on loan), the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:
 
0 – 12 Months
 
 
Over 12 Months
 
 
Total
 
December 31, 2014
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
350

 
$
(1
)
 
$
666

 
$
(9
)
 
$
1,016

 
$
(10
)
Foreign
2,262

 
(75
)
 
375

 
(15
)
 
2,637

 
(90
)
Corporate securities
4,684

 
(150
)
 
738

 
(22
)
 
5,422

 
(172
)
Mortgage-backed securities
704

 
(2
)
 
1,663

 
(28
)
 
2,367

 
(30
)
States, municipalities, and political subdivisions
458

 
(3
)
 
490

 
(5
)
 
948

 
(8
)
Total fixed maturities
8,458

 
(231
)
 
3,932

 
(79
)
 
12,390

 
(310
)
Equity securities
101

 
(13
)
 
—

 
—

 
101

 
(13
)
Total
$
8,559

 
$
(244
)
 
$
3,932

 
$
(79
)
 
$
12,491

 
$
(323
)
 
 
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
)

h) Net investment income
 
Years Ended December 31
 
(in millions of U.S. dollars)
2014

 
2013

 
2012

Fixed maturities
$
2,199

 
$
2,093

 
$
2,134

Short-term investments
45

 
29

 
28

Equity securities
33

 
37

 
34

Other
94

 
105

 
104

Gross investment income
2,371

 
2,264

 
2,300

Investment expenses
(119
)
 
(120
)
 
(119
)
Net investment income
$
2,252

 
$
2,144

 
$
2,181


i) 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, 2014 and 2013, are investments, primarily fixed maturities, totaling $16.3 billion, and cash of $117 million and $162 million, respectively.
The following table presents the components of restricted assets: 
 
December 31

 
December 31

(in millions of U.S. dollars)
2014

 
2013

Trust funds
$
10,838

 
$
11,315

Deposits with non-U.S. regulatory authorities
2,305

 
1,970

Assets pledged under repurchase agreements
1,431

 
1,435

Deposits with U.S. regulatory authorities
1,345

 
1,334

Other pledged assets
457

 
391

 
$
16,376

 
$
16,445

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

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

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

Fixed maturities
We use pricing services to estimate fair value measurements for the majority of our fixed maturities. The pricing services use market quotations for fixed maturities that have quoted prices in active markets; such securities are classified within Level 1. For fixed maturities other than U.S. Treasury securities that generally do not trade on a daily basis, the pricing services prepare estimates of fair value measurements using their pricing applications, which include available relevant market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. Additional valuation factors that can be taken into account are nominal spreads, dollar basis, and liquidity adjustments. The pricing services evaluate each asset class based on relevant market and credit information, perceived market movements, and sector news. The market inputs used in the pricing evaluation, listed in the approximate order of priority include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, reference data, and industry and economic events. The extent of the use of each input is dependent on the asset class and the market conditions. Given the asset class, the priority of the use of inputs may change or some market inputs may not be relevant. Additionally, fixed maturities valuation is more subjective when markets are less liquid due to the lack of market based inputs (i.e., stale pricing), which may increase the potential that an investment's estimated fair value is not reflective of the price at which an actual transaction would occur. The overwhelming majority of fixed maturities are classified within Level 2 because the most significant inputs used in the pricing techniques are observable. For a small number of fixed maturities, we obtain a single broker quote (typically from 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, an increase in reserves for our guaranteed minimum death benefits (GMDB) and guaranteed living benefits (GLB) reinsurance business. Our position in exchange-traded equity futures contracts is classified within Level 1. The fair value of the majority of the remaining positions in other derivative instruments is based on significant observable inputs including equity security and interest rate indices. Accordingly, these are classified within Level 2. Other derivative instruments based on unobservable inputs are classified 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 within Level 1 in the valuation hierarchy on the same basis as other equity securities traded in active markets. 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 factors, including interest rates, equity markets, credit risk, current account value, market volatility, expected annuitization rates and other 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.

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 10 percent to 75 percent. Additional lapses due to partial withdrawals and older policyholders with tax-qualified contracts (due to required minimum distributions) are also included.

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.

The level of annuitization assumptions at December 31, 2014 are as follows:
% of total GMIB guaranteed value
Year of GMIB eligibility
 
Maximum annuitization rates (per year)
 
Maximum annuitization rates based on
38%
First year
 
7% - 12%
 
Actual Experience
Subsequent years
 
6% - 10%
 
35%
First year
 
14% - 55%
 
Actual Experience
Subsequent years
 
6%, 11%, 31%
 
Weighted average(1)
27%
First year
 
7%, 15%, 55%
 
Weighted average(1)
Subsequent years
 
6%, 11%, 31%
 
(1) Weighted average of three different annuitization rates (with heavier weighting on credible experience from other clients when own experience is less credible)

The effect of changes in key market factors on assumed lapse and annuitization rates reflect emerging trends using data available from cedants. For treaties with limited experience, rates are established in line with data received from other ceding companies adjusted, as appropriate, with industry estimates. The model and related assumptions are regularly re-evaluated by management and enhanced, as appropriate, based upon additional experience obtained related to policyholder behavior and availability of updated information such as market conditions, market participant assumptions, and demographics of in-force annuities. Because of the significant use of unobservable inputs including policyholder behavior, GLB reinsurance is classified within Level 3.

In the fourth quarter of 2014, we completed an updated in-depth review of actual policyholder lapse and annuitization behavior by treaty for our variable annuity reinsurance business.  As a result of our review, we made several refinements to our lapse assumption, the most significant of which was an increase in lapses for most large, in-the-money, GMIB policies beyond the surrender charge period. The change in lapse assumption decreased the fair value of GLB liabilities and generated a realized gain of $31 million. Because of a greater degree of credibility related to behavior in years subsequent to the first year of annuitization eligibility, we also made several adjustments to our annuitization assumption, which generally lowered the annuitization rate for most clients, while raising it for two clients. The change in annuitization assumption decreased the fair value of GLB liabilities and generated a realized gain of $39 million. We will continue to monitor actual policyholder behavior against our assumptions and make adjustments as appropriate. Also, during the fourth quarter of 2014, we increased the granularity of policy groupings used in our valuation model. This refinement increased the fair value of GLB liabilities and generated a realized loss of $78 million.
For the years ended December 31, 2014, 2013, and 2012, we made minor technical refinements to the internal valuation model with a favorable net income impact of approximately $2 million, $9 million, and $49 million, respectively.
Financial instruments measured at fair value on a recurring basis, by valuation hierarchy 
December 31, 2014
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,680

 
$
1,140

 
$
—

 
$
2,820

Foreign
—

 
15,220

 
22

 
15,242

Corporate securities
—

 
17,244

 
187

 
17,431

Mortgage-backed securities
—

 
10,271

 
15

 
10,286

States, municipalities, and political subdivisions
—

 
3,616

 
—

 
3,616

 
1,680

 
47,491

 
224

 
49,395

Equity securities
492

 
16

 
2

 
510

Short-term investments
1,183

 
1,139

 
—

 
2,322

Other investments
370

 
257

 
2,719

 
3,346

Securities lending collateral
—

 
1,330

 
—

 
1,330

Investment derivative instruments
18

 
—

 
—

 
18

Other derivative instruments
—

 
2

 
—

 
2

Separate account assets
1,400

 
90

 
—

 
1,490

Total assets measured at fair value
$
5,143

 
$
50,325

 
$
2,945

 
$
58,413

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
36

 
$
—

 
$
—

 
$
36

Other derivative instruments
21

 
—

 
4

 
25

GLB(1)
—

 
—

 
406

 
406

Total liabilities measured at fair value
$
57

 
$
—

 
$
410

 
$
467

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

 
December 31, 2013
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
1,323

 
$
—

 
$
2,949

Foreign
223

 
14,324

 
44

 
14,591

Corporate securities
—

 
17,304

 
166

 
17,470

Mortgage-backed securities
—

 
10,886

 
8

 
10,894

States, municipalities, and political subdivisions
—

 
3,350

 
—

 
3,350

 
1,849

 
47,187

 
218

 
49,254

Equity securities
373

 
460

 
4

 
837

Short-term investments
953

 
803

 
7

 
1,763

Other investments
305

 
231

 
2,440

 
2,976

Securities lending collateral
—

 
1,632

 
—

 
1,632

Investment derivative instruments
19

 
—

 
—

 
19

Other derivative instruments
—

 
6

 
—

 
6

Separate account assets
1,145

 
81

 
—

 
1,226

Total assets measured at fair value
$
4,644

 
$
50,400

 
$
2,669

 
$
57,713

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
6

 
$
—

 
$
—

 
$
6

Other derivative instruments
60

 
2

 
—

 
62

GLB(1)
—

 
—

 
193

 
193

Total liabilities measured at fair value
$
66

 
$
2

 
$
193

 
$
261

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

The following table presents transfers of financial instruments between Level 1 and Level 2:
 
 
 
 
 
Year Ended December 31
 
(in millions of U.S. dollars)
 
 
2014

 
2013
 
2012
Transfers from Level 1 to Level 2
 
 
$
189

 
$
19

 
$
40

Transfers from Level 2 to Level 1
 
 
$
—

 
$
—

 
$
15


The $189 million transfer from Level 1 to Level 2 for the year ended December 31, 2014 primarily related to a change in pricing methodology for Brazilian government bonds.

Fair value of alternative investments
Included in Other investments in the fair value hierarchy at December 31, 2014 and 2013 are investment funds, limited partnerships, and partially-owned investment companies measured at fair value using NAV as a practical expedient. At December 31, 2014, 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
 
 
 
 
2014
 
 
2013
 
(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
 
$
282

 
$
145

 
$
256

 
$
129

Real estate
3 to 7 Years
 
289

 
40

 
322

 
92

Distressed
5 to 9 Years
 
281

 
225

 
180

 
230

Mezzanine
3 to 7 Years
 
301

 
191

 
276

 
252

Traditional
3 to 9 Years
 
1,021

 
409

 
813

 
456

Vintage
1 to 2 Years
 
9

 
—

 
13

 
—

Investment funds
Not Applicable
 
378

 
—

 
428

 
—

 
 
 
$
2,561

 
$
1,010

 
$
2,288

 
$
1,159


Included in all categories in the above table except for Investment funds are investments for which ACE will never have the contractual option to redeem but receives distributions based on the liquidation of the underlying assets. Further, for all categories except for Investment funds, ACE does not have the ability to sell or transfer the investments without the consent from the general partner of individual funds.
Investment Category
 
Consists of investments in private equity funds:
Financial
 
targeting financial services companies such as financial institutions and insurance services worldwide
Real estate
 
targeting global distressed 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 growth equity globally
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, 2014

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
406

 
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

 
Other derivative instruments

GLB(1)

Year Ended December 31, 2014
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance, beginning of year
$
44

 
$
166

 
$
8

 
 
$
4

$
7

$
2,440

 
$
—

$
193

Transfers into Level 3
10

 
37

 
—

 
 
—

—

—

 
2

—

Transfers out of Level 3
(34
)
 
(23
)
 
—

 
 
(2
)
(7
)
—

 
—

—

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

 
 
—

—

39

 
—

—

Net Realized Gains/Losses
(3
)
 
(5
)
 
—

 
 
—

—

(3
)
 
2

213

Purchases
15

 
73

 
8

 
 
2

—

719

 
—

—

Sales
(4
)
 
(38
)
 
—

 
 
(2
)
—

(8
)
 
—

—

Settlements
(5
)
 
(22
)
 
(1
)
 
 
—

—

(468
)
 
—

—

Balance, end of year
$
22

 
$
187

 
$
15

 
 
$
2

$
—

$
2,719

 
$
4

$
406

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
$
(4
)
 
$
(5
)
 
$
—

 
 
$
—

$
—

$
(3
)
 
$
2

$
213

(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

 
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. The liability for GLB reinsurance was $427 million at December 31, 2013 and $1.4 billion at December 31, 2012, which includes a fair value derivative adjustment of $193 million and $1.1 billion, respectively. 

 
 
 
Assets
 
 
Liabilities

 
 
 
Available-for-Sale Debt Securities
 
 
 
 
 
 
 
 
GLB(1)

Year Ended December 31, 2012
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
$
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. 

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, 2014
Fair Value
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

Assets:
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
659

 
$
191

 
$
—

 
$
850

$
832

Foreign
—

 
963

 
—

 
963

916

Corporate securities
—

 
2,408

 
15

 
2,423

2,323

Mortgage-backed securities
—

 
2,039

 
—

 
2,039

1,983

States, municipalities, and political subdivisions
—

 
1,314

 
—

 
1,314

1,277

 
659

 
6,915

 
15

 
7,589

7,331

Partially-owned insurance companies
—

 
—

 
504

 
504

504

Total assets
$
659

 
$
6,915

 
$
519

 
$
8,093

$
7,835

Liabilities:
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
2,571

 
$
—

 
$
2,571

$
2,552

Long-term debt
—

 
3,690

 
—

 
3,690

3,357

Trust preferred securities
—

 
462

 
—

 
462

309

Total liabilities
$
—

 
$
6,723

 
$
—

 
$
6,723

$
6,218



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

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)
2014
 
 
2013
 
 
2012
 
Premiums written
 
 
 
 
 
 
Direct
$
20,069

 
$
19,212

 
$
18,144

Assumed
 
3,321

 
 
3,616

 
 
3,449

Ceded
 
(5,591
)
 
 
(5,803
)
 
 
(5,518
)
Net
$
17,799

 
$
17,025

 
$
16,075

Premiums earned
 
 
 
 

 
 

Direct
$
19,555

 
$
18,856

 
$
17,802

Assumed
 
3,336

 
 
3,479

 
 
3,302

Ceded
 
(5,465
)
 
 
(5,722
)
 
 
(5,427
)
Net
$
17,426

 
$
16,613

 
$
15,677



For both years ended December 31, 2014 and 2013, reinsurance recoveries on losses and loss expenses incurred were $3.1 billion compared with $4.3 billion for the year ended December 31, 2012.

b) Reinsurance recoverable on ceded reinsurance
 
 
December 31
 
 
December 31
 
(in millions of U.S. dollars)
2014
 
 
2013
 
Reinsurance recoverable on unpaid losses and loss expenses (1)
 
$
11,307

 
 
$
10,612

Reinsurance recoverable on paid losses and loss expenses (1)
 
685

 
 
615

Net reinsurance recoverable on losses and loss expenses
 
$
11,992

 
 
$
11,227


(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, 2014 and 2013, we recorded a provision for uncollectible reinsurance of $357 million and $390 million, respectively.

The following tables present a listing, at December 31, 2014, 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. Pools include amounts relating to both ACE’s voluntary pool participation, and ACE’s mandatory pool participation that is required by law in certain states. 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.

 
December 31
 
 
 
 
 
 
(in millions of U.S. dollars, except for percentages)
2014
 
 
Provision
 
 
% of Gross

Categories
 
Largest reinsurers
 
$
6,141

 
 
$
79

 
1.3
%
Other reinsurers balances rated A- or better
 
2,537

 
 
38

 
1.5
%
Other reinsurers balances with ratings lower than A- or not rated
 
501

 
 
94

 
18.8
%
Pools
 
324

 
 
11

 
3.4
%
Structured settlements
 
557

 
 
12

 
2.2
%
Captives
 
1,986

 
 
23

 
1.2
%
Other
 
303

 
 
100

 
33.0
%
Total
 
$
12,349

 
 
$
357

 
2.9
%


Largest Reinsurers
 
 
 
Alleghany Corp
IRB Brasil Resseguros S.A. Group
Swiss Re Group
Berkshire Hathaway Insurance Group
Lloyd's of London
XL Capital Group
Everest Re Group
Munich Re Group
 
HDI Group (Hanover Re)
Partner Re Group
 

c) Assumed life reinsurance programs involving minimum benefit guarantees under variable 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)
2014

 
2013

 
2012

GMDB
 
 
 
 
 
Net premiums earned
$
71

 
$
77

 
$
85

Policy benefits and other reserve adjustments
$
50

 
$
73

 
$
60

GLB
 
 
 
 
 
Net premiums earned
$
138

 
$
149

 
$
160

Policy benefits and other reserve adjustments
36

 
27

 
61

Net realized gains (losses)
(213
)
 
929

 
203

Gain (loss) recognized in Net income
$
(111
)
 
$
1,051

 
$
302

Net cash received
$
125

 
$
126

 
$
149

Net (increase) decrease in liability
$
(236
)
 
$
925

 
$
153



Net realized gains (losses) in the table above include gains (losses) related to foreign exchange and fair value adjustments on insurance derivatives and exclude gains (losses) on S&P put options and futures held to partially offset the risk in the GLB reinsurance portfolio. Refer to Note 10 for additional information.
At December 31, 2014 and 2013, the reported liability for GMDB reinsurance was $111 million and $100 million, respectively. At December 31, 2014 and 2013, the reported liability for GLB reinsurance was $663 million and $427 million, respectively, which includes a fair value derivative adjustment of $406 million and $193 million, respectively. Reported liabilities for both GMDB and GLB reinsurance are determined using internal valuation models. Such valuations require considerable judgment and are subject to significant uncertainty. The valuation of these products is subject to fluctuations arising from, among other factors, changes in interest rates, changes in equity markets, changes in credit markets, changes in the allocation of the investments underlying annuitants’ account values, and assumptions regarding future policyholder behavior. These models and the related assumptions are regularly reviewed by management and enhanced, as appropriate, based upon improvements in modeling assumptions and availability of updated information, such as market conditions and demographics of in-force annuities.
Variable Annuity Net Amount at Risk
The net amount at risk is defined as the present value of future claim payments assuming policy account values and guaranteed values are fixed at the valuation date (December 31, 2014 and 2013, respectively) and reinsurance coverage ends at the earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty. In addition, the following assumptions were used:
(in millions of U.S. dollars, except for percentages)

 
Net amount at risk
 
 
 


Reinsurance covering
 
2014

2013

2014
Future claims discount rate
Other assumptions
Total claims at
100% mortality at
December 31, 2014(1)

GMDB Risk Only
 
$
418

$
586

2.5% - 3.5%
No lapses or withdrawals
$
245

 
 
 
 
 
Mortality according to 100% of the Annuity 2000 mortality table
 
GLB Risk Only
 
$
440

$
136

3.5% - 4.5%
No deaths, lapses or withdrawals
N/A

 
 
 
 
 
Annuitization at a frequency most disadvantageous to ACE (2)
 
 
 
 
 
 
Claim calculated using interest rates in line with rates used to calculate reserve
 
Both Risks: (3)
GMDB
$
76

$
73

3.5% - 4.5%
No lapses or withdrawals
$
19

 
 
 
 
 
Mortality according to 100% of the Annuity 2000 mortality table
 
 
GLB
$
235

$
141

3.5% - 4.5%
Annuitization at a frequency most disadvantageous to ACE (2)
$
—

 
 
 
 
 
Claim calculated using interest rates in line with rates used to calculate reserve
 
(1) Takes into account all applicable reinsurance treaty claim limits.
(2) Annuitization at a level that maximizes claims taking into account the treaty limits.
(3) Covering both the GMDB and GLB risks on the same underlying policyholders.

The average attained age of all policyholders for all risk categories above, weighted by the guaranteed value of each reinsured policy, is approximately 69 years.
Intangible Assets
Intangible assets
Intangible assets

Included in Goodwill and other intangible assets in the consolidated balance sheets at December 31, 2014 and 2013, are goodwill of $4.9 billion and $4.6 billion, respectively, and other intangible assets of $820 million and $801 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, 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

Purchase price allocation adjustment
—

 
—

 
4

 
—

 
—

 
4

Acquisition of Samaggi
—

 
—

 
46

 
—

 
—

 
46

Acquisition of Itaú Seguros
—

 
—

 
449

 
—

 
—

 
449

Foreign exchange revaluation and other
(4
)
 
—

 
(187
)
 
—

 
(7
)
 
(198
)
Balance at December 31, 2014
$
1,211

 
$
134

 
$
2,366

 
$
365

 
$
828

 
$
4,904



Included in other intangible assets at December 31, 2014 and 2013, are intangible assets subject to amortization of $717 million and $695 million, respectively, and intangible assets not subject to amortization of $103 million and $106 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, Samaggi, ABA Seguros, Itaú Seguros, and Fianzas Monterrey. 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 $108 million, $95 million, and $51 million for the years ended December 31, 2014, 2013, and 2012, respectively.

The following table presents a roll-forward of VOBA:
(in millions of U.S. dollars)
2014

 
2013

 
2012

Balance, beginning of year
$
536

 
$
614

 
$
676

Amortization expense
(51
)
 
(64
)
 
(82
)
Foreign exchange revaluation
(19
)
 
(14
)
 
20

Balance, end of year
$
466

 
$
536

 
$
614



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)
 
2015
$
97

 
$
44

2016
75

 
41

2017
67

 
37

2018
61

 
33

2019
55

 
30

Total
$
355

 
$
185

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, 2014 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)
2014
 
 
2013
 
 
2012
 
Gross unpaid losses and loss expenses, beginning of year
 
$
37,443

 

$
37,946

 

$
37,477

Reinsurance recoverable on unpaid losses(1)
 
(10,612
)
 
 
(11,399
)
 
 
(11,602
)
Net unpaid losses and loss expenses, beginning of year
 
26,831

 
 
26,547

 
 
25,875

Acquisition of subsidiaries
 
320

 
 
86

 
 
14

Total
 
27,151

 
 
26,633

 
 
25,889

Net losses and loss expenses incurred in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
10,176

 
 
9,878

 
 
10,132

Prior years
 
(527
)
 
 
(530
)
 
 
(479
)
Total
 
9,649

 
 
9,348

 
 
9,653

Net losses and loss expenses paid in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
3,975

 
 
3,942

 
 
4,325

Prior years
 
5,260

 
 
5,035

 
 
4,894

Total
 
9,235

 
 
8,977

 
 
9,219

Foreign currency revaluation and other
 
(557
)
 
 
(173
)
 
 
224

Net unpaid losses and loss expenses, end of year
 
27,008

 
 
26,831

 
 
26,547

Reinsurance recoverable on unpaid losses(1)
 
11,307

 
 
10,612

 
 
11,399

Gross unpaid losses and loss expenses, end of year
 
$
38,315

 
 
$
37,443

 
 
$
37,946

(1) Net of provision for uncollectible reinsurance.
 
 
 
 
 
 
 
 


Net losses and loss expenses incurred includes $527 million, $530 million, and $479 million, of net favorable prior period development (PPD) in the years ended December 31, 2014, 2013, and 2012, 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 PPD of $354 million in 2014 which was the net result of several underlying favorable and adverse movements driven by the following principal changes:

•
Net favorable development of $298 million in long-tail business, primarily from:

•
Favorable development of $104 million in our D&O portfolios, primarily impacting the 2009 and prior accident years. Case incurred loss emergence that was lower than expected combined with an increase in weighting applied to experience-based methods led to a reduction in the estimates of ultimate loss for those years;

•
Favorable development of $55 million in our excess casualty and umbrella businesses. Resolution of a disputed matter on an individual claim led to a release of $42 million in the 2003 accident year, and lower than expected reported activity across a number of accident years drove the remaining improvement;

•
Favorable development of $48 million on an older claim following recent legal developments, after which it was determined that the reserves were no longer required;

•
Favorable development of $40 million in our medical risk operations, primarily impacting the 2009 and 2010 accident years. Paid and case incurred loss emergence that was lower than expected combined with an increase in weighting applied to experience-based methods led to a reduction in the estimate of ultimate loss for those years;

•
Favorable development of $35 million in our financial solutions business, primarily in the 2010 and prior accident years. Net favorable development principally resulted from the recognition of lower than expected loss activity on two large excess liability transactions;

•
Favorable development of $27 million in our surety business, primarily from favorable claims emergence in the 2012 accident year;

•
Net adverse development of $32 million in our workers’ compensation lines, with adverse development in the 2013 accident year and mainly favorable development in accident years 2009 and 2010. Adverse development in the 2013 accident year is being driven by one large account which is experiencing higher than expected claims frequency and severity; and

•
Net favorable development of $21 million in our auto liability excess lines primarily impacting the 2009 accident year. Reported activity on loss and allocated loss expenses was lower than expected based on estimates from our prior review and original pricing assumptions.

•
Favorable development of $56 million in short-tail business, primarily driven by net favorable development of $20 million in our energy and technical risk property business, primarily impacting the 2012 and 2013 accident years. Across most lines, paid and reported loss activity was lower than expected.

Insurance – North American P&C's run-off operations incurred adverse PPD of $247 million in our Westchester and Brandywine run-off operations during 2014, which was a net result of adverse movements impacting accident years 1996 and prior, driven by the following principal changes:

•
Adverse development of $215 million related to the completion of reserve reviews during 2014. The development primarily arose from case specific asbestos and environmental claims related to increased payment activity and the costs associated with certain case settlements in 2014. Further, we experienced higher than expected case incurred activity in our assumed reinsurance portfolio; and

•
Adverse development of $32 million on unallocated loss adjustment expenses due to run-off operating expenses paid and incurred during 2014.

Insurance – North American P&C's active operations experienced net favorable PPD 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, primarily from:

•
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;

•
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; and

•
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 PPD of $193 million in our Westchester and Brandywine run-off operations during 2013, which was a net result of adverse 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 active operations experienced net favorable PPD of $348 million in 2012, representing 2.2 percent of its beginning of period net unpaid loss and loss expense reserves. Insurance – North American P&C run-off operations incurred net adverse PPD of $168 million in 2012, representing 1.1 percent of its beginning of period net unpaid loss and loss expense reserves.

Insurance – North American Agriculture
Insurance – North American Agriculture experienced net adverse PPD of $34 million in 2014, compared to net favorable development of $13 million, and $12 million in 2013 and 2012, respectively. Actual claim development in 2014 for the 2013 crop year for Multiple Peril Crop Insurance (MPCI) was adverse relative to the long-term historical averages used to estimate our reserves at year-end 2013. Net favorable development in 2013 and 2012 was 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 PPD of $391 million in 2014, which was the net result of several underlying favorable and adverse movements, driven by the following principal changes:

•
Net favorable development of $181 million in long-tail business, primarily from:

•
Net favorable development of $102 million in casualty lines with favorable development of $148 million in accident years 2010 and prior, predominantly due to favorable loss experience in European primary and excess lines, and adverse development of $46 million in accident years 2011 to 2013, predominantly due to large loss experience in the U.K. primary and excess lines;

•
Favorable development of $52 million on an older liability case.  This release follows discussions with defense counsel, a review of key legal briefing, and a coverage analysis, all of which was completed in 2014 and after which it was concluded that the reserves were no longer required; and

•
Net favorable development of $27 million in financial lines with favorable development of $98 million in accident years 2010 and prior due to favorable loss experience and adverse development of $71 million in accident years 2011 to 2013. The adverse development was primarily due to large loss experience in D&O and financial institutions.

•
Favorable development of $210 million in short-tail business, primarily from:

•
Favorable development of $136 million across property, technical and marine lines with favorable development of $44 million in accident year 2013 due to favorable large loss experience, and favorable development of $92 million in accident years 2012 and prior due to favorable development on specific claims and an increase in weighting applied to experience-based methods;
 
•
Favorable development of $30 million in aviation lines primarily in accident years 2010 and prior in the aviation products, airlines and airport liability lines; and

•
Favorable development of $25 million in personal lines primarily in accident years 2011 to 2013 across all Latin America personal lines and Asia Pacific personal automobile lines.

Insurance – Overseas General experienced net favorable PPD 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, primarily from:

•
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 PPD of $226 million in 2012, representing 3.1 percent of the segment's beginning of period net unpaid loss and loss expense reserves.

Global Reinsurance
Global Reinsurance experienced net favorable PPD of $63 million in 2014, which was the net result of several underlying favorable and adverse movements, driven by the following principal change:

•
Net favorable development of $52 million in long-tail business, primarily from:

•
Favorable development of $34 million in professional liability lines, including medical malpractice business, primarily in treaty years 2009 and prior reflecting favorable paid and incurred loss trends and an increase in weighting applied to experience-based methods; and

•
Favorable development of $25 million in casualty lines, principally in treaty years 2009 and prior reflecting favorable paid and incurred loss trends and an increase in weighting applied to experience-based methods.

Global Reinsurance experienced net favorable PPD 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 from:

•
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, primarily 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 PPD of $61 million in 2012, representing 2.7 percent of the segment's beginning of period net unpaid loss and loss expense reserves.

Asbestos and environmental (A&E)

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. The following table presents a roll-forward of consolidated A&E loss reserves, 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, 2013
 
$
1,644

 
$
926

 
$
195

 
$
125

 
$
1,839

 
$
1,051

 
Incurred activity
 
187

 
113

 
113

 
97

 
300

 
210

(1) 
Paid activity
 
(331
)
 
(147
)
 
(109
)
 
(73
)
 
(440
)
 
(220
)
 
Balance at December 31, 2014
 
$
1,500

 
$
892

 
$
199

 
$
149

 
$
1,699

 
$
1,041

 
(1)
Excludes unallocated loss expenses and the net activity reflects third-party reinsurance other than the aggregate excess of loss reinsurance provided by National Indemnity Company (NICO) to Westchester Specialty (see Westchester Specialty section below).

The A&E net loss reserves including allocated loss expense reserves and provision for uncollectible reinsurance at December 31, 2014 and 2013, of $1.0 billion and $1.1 billion shown in the table above comprise $837 million and $816 million, respectively, of reserves held by Brandywine operations, $119 million and $146 million, respectively, of reserves held by Westchester Specialty, and $85 million and $89 million, respectively, of reserves held by other operations, mainly Insurance – Overseas General. For 2014 and 2013, the incurred activity of $210 million and $171 million, respectively, were primarily the result of our annual internal, ground-up review of A&E liabilities.

Brandywine Run-off entities – The Restructuring Plan and uncertainties relating to ACE's ultimate Brandywine exposure

In 1996, 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:

(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.

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. 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. During 2011 and 2010, $35 million and $15 million, respectively, were withheld from such dividends and deposited into the Dividend Retention Fund as a result of dividends paid up to the INA Corporation. Capital contributions from the Dividend Retention Fund to Century are not 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, 2014 was $25 million and approximately $298 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.

Certain active ACE companies are primarily liable for asbestos, environmental, and other exposures that they have reinsured to Century. Accordingly, if Century were to become insolvent and placed into rehabilitation or liquidation, some or all of the recoverables due to these active ACE companies from Century could become uncollectible. At December 31, 2014 and 2013, the aggregate reinsurance recoverables owed by Century to the active ACE companies were approximately $1.1 billion and $929 million, respectively. ACE believes the active company intercompany reinsurance recoverables, which relate to direct liabilities payable over many years, are not impaired. At December 31, 2014 and 2013, Century's carried gross reserves (including reserves assumed from the active ACE companies) were $2.1 billion and $2.3 billion, respectively. 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 the active ACE companies 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.

Westchester Specialty – impact of NICO contracts on ACE’s run-off entities

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, 2014, the remaining unused incurred limit under the Westchester NICO agreement was $472 million.
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 (U.K.) 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. Starting in tax year 2014, Combined Insurance and its life subsidiary will join the ACE Group Holdings consolidated return. For tax years prior to 2014, Combined Insurance and its life subsidiary filed a separate consolidated U.S. tax return. 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, 2014, 2013, and 2012 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)
2014

 
2013

 
2012

Current tax expense
$
481

 
$
231

 
$
305

Deferred tax expense (benefit)
153

 
249

 
(35
)
Provision for income taxes
$
634

 
$
480

 
$
270



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. 21.5 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)
2014

 
2013

 
2012

Expected tax provision at Swiss statutory tax rate
$
273

 
$
331

 
$
233

Permanent differences:
 
 
 
 
 
Taxes on earnings subject to rate other than Swiss statutory rate
224

 
124

 
129

Change to deferred taxes related to unrealized foreign exchange losses (1)
139

 
—

 
—

Tax-exempt interest and dividends received deduction, net of proration
(33
)
 
(27
)
 
(24
)
Net withholding taxes
33

 
27

 
23

Favorable resolution of prior years' tax matters and closing statutes of limitations
(1
)
 
(5
)
 
(124
)
Change in valuation allowance (1)
(20
)
 
4

 
4

Other
19

 
26

 
29

Total provision for income taxes
$
634

 
$
480

 
$
270



(1) Includes charge to deferred taxes related to non-recognition of foreign tax credits related to unrealized foreign exchange losses. Includes $71 million of net charges related to income taxes to correct prior periods. Such amounts are not material to any period presented.

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

 
December 31

(in millions of U.S. dollars)
2014

 
2013

Deferred tax assets:
 
 
 
Loss reserve discount
$
794

 
$
807

Unearned premiums reserve
99

 
93

Foreign tax credits
1,103

 
1,236

Investments
9

 
3

Provision for uncollectible balances
81

 
78

Loss carry-forwards
40

 
54

Compensation related amounts
185

 
177

Other
—

 
7

Total deferred tax assets
2,311

 
2,455

Deferred tax liabilities:
 
 
 
Deferred policy acquisition costs
213

 
138

VOBA and other intangible assets
321

 
351

Un-remitted foreign earnings
939

 
982

Unrealized appreciation on investments
406

 
210

Depreciation
77

 
66

Other
43

 
28

Total deferred tax liabilities
1,999

 
1,775

Valuation allowance
17

 
64

Net deferred tax assets
$
295

 
$
616



The valuation allowance of $17 million at December 31, 2014, and $64 million at December 31, 2013, 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, 2014, ACE has net operating loss carry-forwards, primarily from foreign jurisdictions, of $113 million which, if unused, will expire in the years 2015 through 2032, and a foreign tax credit carry-forward in the amount of $129 million which, if unused, will expire in the years 2015 through 2024.

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)
2014

 
2013

Balance, beginning of year
$
27

 
$
26

Additions based on tax provisions related to the current year
2

 
5

Reductions for the lapse of the applicable statutes of limitations
(6
)
 
(4
)
Balance, end of year
$
23

 
$
27



At December 31, 2014 and 2013, the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, were $6 million and $5 million, respectively. At December 31, 2014 and 2013, $17 million and $22 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, 2014 and 2013 were $(1) million in both years and $(8) million in 2012. At December 31, 2014 and 2013, ACE recorded $9 million and $11 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 and 2014, ACE reduced the amount of unrecognized tax benefits by $5 million and $1 million, respectively, resulting from the closing of applicable statutes of limitations. The IRS commenced its field examination of ACE’s federal tax returns for 2010, 2011 and 2012 during October 2014. 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)
2014

 
2013

 
Early Redemption Option
Short-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
450

 
—

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

 
—

 
Make-whole premium plus 0.20%
Repurchase agreements (weighted average interest rate of 0.3%)
1,402

 
1,401

 
None
Total short-term debt
$
2,552

 
$
1,901

 
 
Long-term debt
 
 
 
 
 
ACE INA senior notes:
 
 
 
 
 
$450 million 5.6% due May 2015
$
—

 
$
449

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

 
700

 
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
474

 
473

 
Make-whole premium plus 0.10%
$700 million 3.35% due May 2024
699

 
—

 
Make-whole premium plus 0.15%
$300 million 6.7% due May 2036
299

 
299

 
Make-whole premium plus 0.20%
$475 million 4.15% due March 2043
474

 
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)
11

 
12

 
None
Total long-term debt
$
3,357

 
$
3,807

 
 
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 May 2014, ACE INA issued $700 million of 3.35 percent senior notes due May 2024. In June 2014, ACE INA's $500 million of 5.875 percent senior notes matured and were fully paid.

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 securities that contain embedded derivatives. Investment derivative instruments are recorded in either Other assets (OA) or Accounts payable, accrued expenses, and other liabilities (AP), convertible bonds are recorded in Fixed maturities available for sale (FM AFS) and convertible equity securities are recorded in Equity securities (ES) in the consolidated balance sheets. These are the most numerous and frequent derivative transactions.

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

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

In relation to certain debt issuances, ACE from time to time enters into interest rate swap transactions for the purpose of either fixing or reducing borrowing costs. Although the use of these interest rate swaps has the economic effect of fixing or reducing borrowing costs on a net basis, gross interest expense on the related debt issuances is included in Interest expense while the settlements related to the interest rate swaps are reflected in Net realized gains (losses) in the consolidated statements of operations. At December 31, 2014, ACE had no in-force interest rate swaps.

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

The following table presents the balance sheet locations, fair values of derivative instruments in an asset or (liability) position, and notional values/payment provisions of our derivative instruments: 
 
 
 
December 31, 2014
 
 
 
December 31, 2013
 
 
Consolidated
Balance Sheet
Location
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
 
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)
 
$
12

 
$
(7
)
 
$
1,329

 
 
$
3

 
$
(4
)
 
$
1,202

Cross-currency swaps
OA / (AP)
 
—

 
—

 
95

 
 
—

 
—

 
50

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

 
—

 
2,467

 
 
3

 
—

 
3,910

Options/Futures contracts on notes and bonds
OA / (AP)
 
6

 
(29
)
 
1,636

 
 
13

 
(2
)
 
871

Convertible securities(1)
FM AFS/ES
 
291

 
—

 
267

 
 
302

 
—

 
254

 
 
 
$
309

 
$
(36
)
 
$
5,794

 
 
$
321

 
$
(6
)
 
$
6,287

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

 
$
(21
)
 
$
1,384

 
 
$
—

 
$
(60
)
 
$
1,692

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

 
—

 
250

 
 
6

 
—

 
250

Other
OA / (AP)
 
—

 
(4
)
 
10

 
 
—

 
(2
)
 
8

 
 
 
$
2

 
$
(25
)
 
$
1,644

 
 
$
6

 
$
(62
)
 
$
1,950

GLB(3)
(AP) / (FPB)
 
$
—

 
$
(663
)
 
$
675

 
 
$
—

 
$
(427
)
 
$
277

(1)
Includes fair value of embedded derivatives.
(2) 
Related to GMDB and GLB blocks of business.
(3) 
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 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.

At December 31, 2014 and 2013, derivative liabilities of $34 million and $41 million, respectively, included in the table above were subject to a master netting agreement. The remaining derivatives included in the table above were not subject to a master netting agreement. 

At December 31, 2014 and 2013, our repurchase obligations of $1,402 million and $1,401 million, respectively, were fully collateralized. At December 31, 2014 and 2013, our securities lending payable was $1,331 million and $1,633 million, respectively, and our securities lending collateral was $1,330 million and $1,632 million, respectively.  The securities lending collateral can only be accessed in the event that the institution borrowing the securities is in default under the lending agreement.  An indemnification agreement with the lending agent protects us in the event a borrower becomes insolvent or fails to return any of the securities on loan.  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)
2014

 
2013

 
2012

Investment and embedded derivative instruments
 
 
 
 
 
Foreign currency forward contracts
$
29

 
$
11

 
$
(9
)
All other futures contracts and options
(118
)
 
61

 
(22
)
Convertible securities(1)
(18
)
 
6

 
25

Total investment and embedded derivative instruments
$
(107
)
 
$
78

 
$
(6
)
GLB and other derivative instruments
 
 
 
 
 
GLB(2)
$
(217
)
 
$
878

 
$
171

Futures contracts on equities(3)
(164
)
 
(555
)
 
(273
)
Options on equity market indices(3)
(4
)
 
(24
)
 
(24
)
Other
50

 
(2
)
 
(4
)
Total GLB and other derivative instruments
$
(335
)
 
$
297

 
$
(130
)
 
$
(442
)
 
$
375

 
$
(136
)
(1) 
Includes embedded derivatives.
(2) 
Excludes foreign exchange gains (losses) related to GLB.
(3) 
Related to GMDB and GLB blocks of business. 

Derivative instrument objectives

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

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

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

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

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

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

(iii) Convertible security investments
A convertible security is a debt instrument or preferred stock that can be converted into a predetermined amount of the issuer’s equity. The convertible option is an embedded derivative within the host instruments which are classified in the investment portfolio as either available for sale or as an equity security. ACE purchases convertible securities for their total return and not specifically for the conversion feature.

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

(v) GLB
Under the GLB program, as the assuming entity, ACE is obligated to provide coverage until the expiration or maturity of the underlying deferred annuity contracts or the expiry of the reinsurance treaty. Premiums received under the reinsurance treaties are classified as premium. Expected losses allocated to premiums received are classified as Future policy benefits and valued similar to GMDB reinsurance. Other changes in fair value, principally arising from changes in expected losses allocated to expected future premiums, are classified as Net realized gains (losses). Fair value represents management’s estimate of an 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, 2014, were JP Morgan Chase & Co., General Electric Company, and Goldman Sachs Group Inc. Our largest exposure by industry at December 31, 2014 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. For the year ended December 31, 2014, and during both years ended December 31, 2013 and 2012, approximately 10 percent and 11 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, 2014. 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, 2014, 2013, and 2012.

c) Other investments
At December 31, 2014, included in Other investments in the consolidated balance sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of $2.2 billion. In connection with these investments, we have commitments that may require funding of up to $1 billion over the next several years. 
d) Letters of credit
We have a $1 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, 2014, outstanding LOCs issued under this facility were $479 million.

This facility requires 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, all of which have been met at December 31, 2014.

We did not renew our $500 million bilateral letter of credit facility that expired in June 2014. We also did not renew our $425 million series of four bilateral uncollateralized LOC facilities supporting AGM underwriting capacity for Lloyd's Syndicate 2488. We elected instead to satisfy our collateral obligations primarily by pledging additional fixed income securities from our investment portfolio into existing insurance trusts.

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 $127 million, $128 million, and $112 million for the years ended December 31, 2014, 2013, and 2012, 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)
2015
$
108

2016
94

2017
77

2018
58

2019
42

Thereafter
95

Total minimum future lease commitments
$
474

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.

Dividend approval
At our May 2012 and 2013 annual general meetings, our shareholders approved an annual dividend for the following year of $1.96 and $2.04 per share, respectively, payable in four quarterly installments of $0.49 and $0.51 per share, respectively, 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 April 17, 2014) that had been earlier approved at our 2013 annual general meeting. The $0.12 per share increase for each installment was distributed from capital contribution reserves (Additional paid-in capital), a subaccount of legal reserves, and transferred to free reserves (Retained earnings) for payment, while the existing $0.51 per share was distributed by way of a par value reduction.

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

Dividend distributions
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. We may also issue dividends without subjecting them to withholding tax by way of distributions from capital contribution reserves and payment out of free reserves. We employed this method of dividends during portions of 2012, and to effect our dividend increase that was approved by our shareholders on January 10, 2014.

The following table presents dividend distributions per Common Share in Swiss francs (CHF) and U.S. dollars (USD):
 
Years Ended December 31
 
 
 
2014

 
2013

 
2012

 
CHF

USD

CHF

USD

CHF

USD

Dividends - par value reduction
2.27

$
2.46

1.85

$
2.02

1.38

$
1.47

Dividends - distributed from capital contribution reserves
0.20

0.24

—

—

0.53

0.59

Total dividend distributions per common share
2.47

$
2.70

1.85

$
2.02

1.91

$
2.06



Par value reductions have been reflected as such through Common Shares in the consolidated statements of shareholders' equity and had the effect of reducing par value per Common Share to CHF 24.77 at December 31, 2014.

b) Shares issued, outstanding, authorized, and conditional
 
Years Ended December 31
 
 
2014

2013

2012

Shares issued, beginning and end of year
342,832,412

342,832,412

342,832,412

Common Shares in treasury, end of year (at cost)
(14,172,726
)
(3,038,477
)
(2,510,878
)
Shares issued and outstanding, end of year
328,659,686

339,793,935

340,321,534

Common Shares issued to employee trust
 
 
 
Balance, beginning and end of year
(9,467
)
(9,467
)
(9,467
)


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. Decreases in Common Shares in treasury are principally due to grants of restricted stock, exercises of stock options, and purchases under the Employee Stock Purchase Plan (ESPP).

Common Shares issued to employee trust are issued by ACE to a rabbi trust for deferred compensation obligations as discussed in Note 11 e) 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 until May 16, 2016, 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
ACE's share capital may be increased through the issuance of a maximum of 33,000,000 fully paid up Common Shares (with a par value of CHF 24.77 as of December 31, 2014) 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
ACE's share capital may be increased through the issuance of a maximum of 25,410,929 fully paid up Common Shares (with a par value of CHF 24.77 as of December 31, 2014) 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 repurchases
On November 21, 2013, the Board announced authorization of a share repurchase program of up to $2.0 billion of ACE's Common Shares through December 31, 2014.  This $2.0 billion authorization replaced the previous authorizations which expired on December 31, 2013.

On November 24, 2014, the Board announced authorization of a share repurchase program of $1.5 billion of ACE's Common Shares for the period January 1, 2015 through December 31, 2015 to replace the November 2013 authorization when it expired on December 31, 2014. At February 26, 2015, $1.3 billion in share repurchase authorization remained through December 31, 2015. 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.

The following table presents repurchases of ACE's Common Shares conducted in a series of open market transactions under the Board authorizations:
 
Years Ended December 31
 
January 1, 2015 through

(in millions of U.S. dollars, except share data)
2014

2013

2012

February 26, 2015

Number of shares repurchased
13,982,358

3,266,531

100,000

1,877,463

Dollar value of shares repurchased
$
1,449

$
290

$
7

$
211



ACE repurchased these Common Shares as part of an overall capital management strategy and to partially offset potential dilution from the exercise of stock options and the granting of restricted stock under share-based compensation plans.

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) 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. 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 grants made in 2014, 2013, and 2012) 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, which vest in equal annual installments over the respective vesting period. 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, 2014, a total of 7,811,839 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, 2014, a total of 1,131,685 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)
2014

 
2013

 
2012

Stock options and shares issued under ESPP:
 
 
 
 
 
Pre-tax
$
28

 
$
24

 
$
22

After-tax (1)
$
19

 
$
18

 
$
17

Restricted stock:
 
 
 
 
 
Pre-tax
$
128

 
$
153

 
$
109

After-tax
$
75

 
$
89

 
$
64


(1) 
Excludes windfall tax benefit for share-based compensation recognized as a direct adjustment to Additional paid-in capital of $28 million, $36 million and $18 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Unrecognized compensation expense related to the unvested portion of ACE's employee share-based awards was $149 million at December 31, 2014, 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 2014 share-based compensation expense includes a portion of the cost related to the 2011 through 2014 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
 
 
2014

2013

2012

Dividend yield
2.7
%
2.4
%
2.7
%
Expected volatility
25.2
%
27.8
%
29.8
%
Risk-free interest rate
1.7
%
1.0
%
1.1
%
Expected life
5.8 years

5.8 years

5.8 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, 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

 
 
 
 
Granted
1,782,903

 
$
96.77

 
$
18.00

 
 
Exercised
(1,511,948
)
 
$
54.84

 
 
 
$
73

Forfeited
(143,825
)
 
$
84.52

 
 
 
 
Options outstanding, December 31, 2014
9,623,986

 
$
69.06

 
 
 
$
441

Options exercisable, December 31, 2014
6,313,668

 
$
58.24

 
 
 
$
358



The weighted-average remaining contractual term was 6.0 years for stock options outstanding and 4.7 years for stock options exercisable at December 31, 2014. Cash received from the exercise of stock options for the year ended December 31, 2014 was $83 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 2014 share-based compensation expense includes a portion of the cost related to the restricted stock granted in the years 2010 through 2014.

The following table presents a roll-forward of our restricted stock awards. Included in the roll-forward below are 25,339 restricted stock awards, 20,969 restricted stock awards, and 25,669 restricted stock awards that were granted to non-management directors during the years ended December 31, 2014, 2013, and 2012, respectively:
 
Number of Restricted Stock

 
Weighted-Average Grant-Date Fair Value

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

Granted
1,669,936

 
$
97.32

Vested
(1,660,903
)
 
$
70.01

Forfeited
(145,012
)
 
$
81.73

Unvested restricted stock, December 31, 2014
3,572,208

 
$
83.72



During the years ended December 31, 2014, 2013, and 2012, ACE awarded 300,511 restricted stock units, 271,004 restricted stock units, and 262,549 restricted stock units, respectively, to employees and officers each with a weighted-average grant date fair value per share of $97.66, $85.44, and $73.41, respectively. At December 31, 2014, there were 643,579 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, 2014, there were 148,368 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, 2014, 2013, and 2012, employees paid $17 million, $14 million, and $13 million to purchase 181,901 shares, 175,437 shares, and 198,244 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 $119 million, $111 million, and $99 million for the years ended December 31, 2014, 2013, and 2012, 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. 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)
2014
 
2013
Fair value of plan assets
$
588

 
$
566

Projected benefit obligation
594

 
591

Accrued pension liability
$
6

 
$
25



The defined benefit pension plan contribution for 2015 is expected to be $4 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 $2 million.

Benefit payments were $24 million and $26 million for the years ended December 31, 2014 and 2013, respectively. Expected future payments are as follows:
For the year ending December 31
(in millions of U.S dollars)
2015
$
28

2016
21

2017
22

2018
25

2019
27

2020–2024
135

Other (income) expense
Other (income) expense
Other (income) expense
 
Years Ended December 31
 
(in millions of U.S. dollars)
2014

 
2013

 
2012

Amortization of intangible assets
$
108

 
$
95

 
$
51

Equity in net (income) loss of partially-owned entities
(231
)
 
(119
)
 
(80
)
(Gains) losses from fair value changes in separate account assets
(2
)
 
(16
)
 
(29
)
Federal excise and capital taxes
20

 
24

 
22

Acquisition-related costs
15

 
4

 
11

Other
8

 
27

 
19

Other (income) expense
$
(82
)
 
$
15

 
$
(6
)


Other (income) expense includes Amortization of intangible assets, which is higher in 2014 due primarily to the acquisitions of Samaggi (completed June 17, 2014) and Itaú Seguros (completed October 31, 2014) and higher in 2013 compared with 2012 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.

The Insurance – North American P&C segment comprises our operations in the U.S., Canada, and Bermuda. This segment includes our retail divisions: ACE USA (including ACE Canada), ACE Commercial Risk Services, and ACE Private Risk Services; our wholesale and specialty divisions: ACE Westchester and 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, inland marine products and product recall coverages. 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 including excess liability, D&O, professional liability, property insurance, and political risk, the latter being written by Sovereign Risk Insurance Ltd., a wholly-owned managing agent. 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. ACE Global Markets (AGM), and the international supplemental A&H business of Combined Insurance. ACE International comprises our retail commercial P&C, A&H, and personal lines businesses serving territories outside the U.S., Bermuda, and Canada. 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 five regions of operations: ACE Europe, ACE Asia Pacific, ACE Eurasia and Africa, ACE Far East, and ACE Latin America. During 2014, ACE International expanded its operations with the acquisitions of Samaggi in Thailand and Itaú Seguros in Brazil. Refer to Note 2 for additional information. ACE International writes 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). 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. Combined Insurance distributes a wide range of supplemental A&H products.

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.
For segment reporting purposes, certain items have been presented in a different manner below than in the consolidated financial statements. Management uses underwriting income as the main measure of segment performance. ACE calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. For the Insurance – North American Agriculture segment, management includes gains and losses on crop derivatives as a component of underwriting income. For 2014, underwriting income in our Insurance – North American Agriculture segment was $136 million. This amount includes $51 million of realized gains related to crop derivatives which are included in Net realized gains (losses) below. For the Life segment, management includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP as components of Life underwriting income. For example, for 2014, Life underwriting income of $363 million includes Net investment income of $268 million and gains from fair value changes in separate account assets of $2 million.
The following tables present the Statement of Operations by segment:
For the Year Ended December 31, 2014 (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
$
6,263

 
$
1,590

 
$
6,999

 
$
935

 
$
2,012

 
$
—

 
$
17,799

Net premiums earned
6,107

 
1,526

 
6,805

 
1,026

 
1,962

 
—

 
17,426

Losses and loss expenses
4,086

 
1,351

 
3,189

 
431

 
589

 
3

 
9,649

Policy benefits
—

 
—

 
—

 
—

 
517

 
—

 
517

Policy acquisition costs
634

 
81

 
1,625

 
257

 
478

 
—

 
3,075

Administrative expenses
678

 
9

 
1,026

 
54

 
285

 
193

 
2,245

Underwriting income (loss)
709

 
85

 
965

 
284

 
93

 
(196
)
 
1,940

Net investment income
1,085

 
26

 
545

 
316

 
268

 
12

 
2,252

Net realized gains (losses) including OTTI
(67
)
 
54

 
(78
)
 
(29
)
 
(383
)
 
(4
)
 
(507
)
Interest expense
9

 
—

 
6

 
4

 
11

 
250

 
280

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

 
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Other
(101
)
 
33

 
11

 
(54
)
 
2

 
29

 
(80
)
Income tax expense (benefit)
306

 
33

 
378

 
38

 
46

 
(167
)
 
634

Net income (loss)
$
1,513

 
$
99

 
$
1,037

 
$
583

 
$
(79
)
 
$
(300
)
 
$
2,853

 
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


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, 2014
 
 
 
Insurance – North American P&C
$
1,662

 
$
4,032

 
$
413

 
$
6,107

Insurance – North American Agriculture
1,526

 
—

 
—

 
1,526

Insurance – Overseas General
2,948

 
1,573

 
2,284

 
6,805

Global Reinsurance
551

 
475

 
—

 
1,026

Life
—

 
—

 
1,962

 
1,962

 
$
6,687

 
$
6,080

 
$
4,659

 
$
17,426

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



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 December 31
 
 
Europe(1)

 
 
2014
 
58
%
 
16
%
 
16
%
 
10
%
2013
 
58
%
 
17
%
 
16
%
 
9
%
2012
 
60
%
 
17
%
 
16
%
 
7
%

(1) Europe includes Eurasia and Africa region.
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)
2014

 
2013

 
2012

Numerator:
 
 
 
 
 
Net income
$
2,853

 
$
3,758

 
$
2,706

Denominator:
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
Weighted-average shares outstanding
335,609,899

 
340,906,490

 
339,843,438

Denominator for diluted earnings per share:
 
 
 
 
 
Share-based compensation plans
3,376,388

 
3,241,085

 
2,903,512

Weighted-average shares outstanding
      and assumed conversions
338,986,287

 
344,147,575

 
342,746,950

Basic earnings per share
$
8.50

 
$
11.02

 
$
7.96

Diluted earnings per share
$
8.42

 
$
10.92

 
$
7.89

Potential anti-dilutive share conversions
1,024,788

 
1,031,297

 
896,591



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 $25 million and $26 million, at December 31, 2014 and 2013, 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 2014 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 2015 without prior approval totals $3.8 billion.

The statutory capital and surplus of our insurance subsidiaries met regulatory requirements for 2014, 2013, and 2012. The minimum amounts of statutory capital and surplus necessary to satisfy regulatory requirements was $13.7 billion for both December 31, 2014 and 2013.

The following tables present the combined statutory capital and surplus and statutory net income (loss) of our Property and casualty and Life subsidiaries:
 
December 31
 
(in millions of U.S. dollars)
2014

 
2013

Statutory capital and surplus
 
 
 
Property and casualty
$
25,367

 
$
23,791

Life
$
1,455

 
$
1,693


 
Year Ended December 31
 
(in millions of U.S. dollars)
2014

2013

2012

Statutory net income (loss)
 
 
 
Property and casualty
$
3,368

$
3,333

$
2,683

Life
$
(248
)
$
409

$
199



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 at both December 31, 2014 and 2013.
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, 2014 and December 31, 2013, and for the years ended December 31, 2014, 2013, and 2012 for ACE Limited (Parent Guarantor) and ACE INA Holdings, Inc. (Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Parent Guarantor and Subsidiary Issuer are presented on the equity method of accounting. The revenues and expenses and cash flows of the subsidiaries of the Subsidiary Issuer are presented in the Other ACE Limited Subsidiaries column on a combined basis.

Condensed Consolidating Balance Sheet at December 31, 2014
(in millions of U.S. dollars)
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
30

 
$
225

 
$
62,649

 
$
—

 
$
62,904

Cash(1)
—

 
1

 
1,209

 
(555
)
 
655

Insurance and reinsurance balances receivable
—

 
—

 
6,178

 
(752
)
 
5,426

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,992

 
(9,000
)
 
11,992

Reinsurance recoverable on policy benefits
—

 
—

 
1,194

 
(977
)
 
217

Value of business acquired
—

 
—

 
466

 
—

 
466

Goodwill and other intangible assets
—

 
—

 
5,724

 
—

 
5,724

Investments in subsidiaries
29,497

 
18,762

 
—

 
(48,259
)
 
—

Due from subsidiaries and affiliates, net
583

 
—

 
—

 
(583
)
 
—

Other assets
4

 
295

 
14,196

 
(3,631
)
 
10,864

Total assets
$
30,114

 
$
19,283

 
$
112,608

 
$
(63,757
)
 
$
98,248

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
46,770

 
$
(8,455
)
 
$
38,315

Unearned premiums
—

 
—

 
9,958

 
(1,736
)
 
8,222

Future policy benefits
—

 
—

 
5,731

 
(977
)
 
4,754

Due to subsidiaries and affiliates, net
—

 
422

 
161

 
(583
)
 
—

Affiliated notional cash pooling programs(1)
246

 
309

 
—

 
(555
)
 
—

Short-term debt
—

 
1,150

 
1,402

 
—

 
2,552

Long-term debt
—

 
3,345

 
12

 
—

 
3,357

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
281

 
1,404

 
12,659

 
(3,192
)
 
11,152

Total liabilities
527

 
6,939

 
76,693

 
(15,498
)
 
68,661

Total shareholders’ equity
29,587

 
12,344

 
35,915

 
(48,259
)
 
29,587

Total liabilities and shareholders’ equity
$
30,114

 
$
19,283

 
$
112,608

 
$
(63,757
)
 
$
98,248

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2014, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
32

 
$
10

 
$
60,886

 
$
—

 
$
60,928

Cash(1)
—

 
16

 
748

 
(185
)
 
579

Insurance and reinsurance balances receivable
—

 
—

 
5,835

 
(809
)
 
5,026

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,057

 
(8,830
)
 
11,227

Reinsurance recoverable on policy benefits
—

 
—

 
1,215

 
(997
)
 
218

Value of business acquired
—

 
—

 
536

 
—

 
536

Goodwill and other intangible assets
—

 
—

 
5,404

 
—

 
5,404

Investments in subsidiaries
28,351

 
18,105

 
—

 
(46,456
)
 
—

Due from subsidiaries and affiliates, net
844

 
—

 
—

 
(844
)
 
—

Other assets
5

 
258

 
13,788

 
(3,459
)
 
10,592

Total assets
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
45,714

 
$
(8,271
)
 
$
37,443

Unearned premiums
—

 
—

 
9,242

 
(1,703
)
 
7,539

Future policy benefits
—

 
—

 
5,612

 
(997
)
 
4,615

Due to 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 1 f) 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 Statements of Operations and Comprehensive Income
For the Year Ended December 31, 2014
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
17,799

 
$
—

 
$
17,799

Net premiums earned
—

 
—

 
17,426

 
—

 
17,426

Net investment income
2

 
2

 
2,248

 
—

 
2,252

Equity in earnings of subsidiaries
2,707

 
791

 
—

 
(3,498
)
 
—

Net realized gains (losses) including OTTI
—

 
53

 
(560
)
 
—

 
(507
)
Losses and loss expenses
—

 
—

 
9,649

 
—

 
9,649

Policy benefits
—

 
—

 
517

 
—

 
517

Policy acquisition costs and administrative expenses
78

 
26

 
5,216

 
—

 
5,320

Interest (income) expense
(35
)
 
277

 
38

 
—

 
280

Other (income) expense
(201
)
 
27

 
92

 
—

 
(82
)
Income tax expense (benefit)
14

 
(94
)
 
714

 
—

 
634

Net income
$
2,853

 
$
610

 
$
2,888

 
$
(3,498
)
 
$
2,853

Comprehensive income
$
2,892

 
$
583

 
$
2,926

 
$
(3,509
)
 
$
2,892


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 (loss)
$
2,023

 
$
(230
)
 
$
2,051

 
$
(1,821
)
 
$
2,023






Condensed Consolidating Statements of Operations and Comprehensive Income
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 Statement of Cash Flows 
For the Year Ended December 31, 2014
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
541

 
$
210

 
$
4,419

 
$
(674
)
 
$
4,496

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

 
—

 
(15,816
)
 
263

 
(15,553
)
Purchases of fixed maturities held to maturity
—

 
—

 
(267
)
 
—

 
(267
)
Purchases of equity securities
—

 
—

 
(251
)
 
—

 
(251
)
Sales of fixed maturities available for sale
—

 
—

 
7,750

 
(268
)
 
7,482

Sales of equity securities
—

 
—

 
670

 
—

 
670

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
6,413

 
—

 
6,413

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
875

 
—

 
875

Net change in short-term investments
—

 
(216
)
 
(392
)
 
5

 
(603
)
Net derivative instruments settlements
—

 
53

 
(283
)
 
—

 
(230
)
Acquisition of subsidiaries (net of cash acquired of $20)
—

 
—

 
(766
)
 
—

 
(766
)
Capital contribution
—

 
(258
)
 
—

 
258

 
—

Other
—

 
(8
)
 
(266
)
 
—

 
(274
)
Net cash flows used for investing activities
—

 
(429
)
 
(2,333
)
 
258

 
(2,504
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(862
)
 
—

 
—

 
—

 
(862
)
Common Shares repurchased
—

 
—

 
(1,429
)
 
—

 
(1,429
)
Proceeds from issuance of long-term debt
—

 
699

 
—

 
—

 
699

Proceeds from issuance of short-term debt
—

 
—

 
1,978

 
—

 
1,978

Repayment of long-term debt
—

 
(500
)
 
(1
)
 
—

 
(501
)
Repayment of short-term debt
—

 
—

 
(1,977
)
 
—

 
(1,977
)
Proceeds from share-based compensation plans, including windfall tax benefits
—

 
—

 
127

 
—

 
127

Advances (to) from affiliates
260

 
(298
)
 
38

 
—

 
—

Dividends to parent company
—

 
—

 
(674
)
 
674

 
—

Capital contribution
—

 
—

 
258

 
(258
)
 
—

Net proceeds from affiliated notional cash pooling programs(1)
61

 
309

 
—

 
(370
)
 
—

Other
—

 
(6
)
 
194

 
—

 
188

Net cash flows (used for) from financing activities
(541
)
 
204

 
(1,486
)
 
46

 
(1,777
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
—

 
(139
)
 
—

 
(139
)
Net (decrease) increase in cash
—

 
(15
)
 
461

 
(370
)
 
76

Cash – beginning of year(1)
—

 
16

 
748

 
(185
)
 
579

Cash – end of year(1)
$
—

 
$
1

 
$
1,209

 
$
(555
)
 
$
655

(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, 2014 and 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statement of Cash Flows
For the 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
)
Proceeds from issuance of long-term debt
—

 
947

 
—

 
—

 
947

Proceeds from the issuance of short-term debt
—

 
—

 
2,572

 
—

 
2,572

Repayment of short-term debt
—

 
—

 
(2,572
)
 
—

 
(2,572
)
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 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the 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
)
Proceeds from issuance of short-term debt
130

 
—

 
2,803

 
—

 
2,933

Repayment of short-term debt
(130
)
 
—

 
(2,653
)
 
—

 
(2,783
)
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 2011, 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)
2014

 
2014

 
2014

 
2014

Net premiums earned
$
3,970

 
$
4,332

 
$
4,754

 
$
4,370

Net investment income
553

 
556

 
566

 
577

Net realized gains (losses) including OTTI
(104
)
 
(73
)
 
(120
)
 
(210
)
Total revenues
$
4,419

 
$
4,815

 
$
5,200

 
$
4,737

Losses and loss expenses
$
2,161

 
$
2,388

 
$
2,684

 
$
2,416

Policy benefits
$
114

 
$
144

 
$
125

 
$
134

Net income (1)
$
734

 
$
779

 
$
785

 
$
555

Basic earnings per share
$
2.16

 
$
2.30

 
$
2.35

 
$
1.68

Diluted earnings per share
$
2.14

 
$
2.28

 
$
2.32

 
$
1.66


(1) Net income for the three months ended December 31, 2014 includes $89 million of net charges related to income taxes to correct prior periods. Such amounts are not material to any period presented.

 
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

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

Schedule I
Schedule I: SUMMARY OF INVESTEMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
SUMMARY OF INVESTMENTS – OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 2014
(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
$
2,741

 
$
2,820

 
$
2,820

Foreign
14,703

 
15,242

 
15,242

Corporate securities
16,897

 
17,431

 
17,431

Mortgage-backed securities
10,011

 
10,286

 
10,286

States, municipalities, and political subdivisions
3,474

 
3,616

 
3,616

Total fixed maturities available for sale
47,826

 
49,395

 
49,395

Fixed maturities held to maturity
 
 
 
 
 
U.S. Treasury and agency
832

 
850

 
832

Foreign
916

 
963

 
916

Corporate securities
2,323

 
2,423

 
2,323

Mortgage-backed securities
1,983

 
2,039

 
1,983

States, municipalities, and political subdivisions
1,277

 
1,314

 
1,277

Total fixed maturities held to maturity
7,331

 
7,589

 
7,331

Equity securities
 
 
 
 
 
Industrial, miscellaneous, and all other
440

 
510

 
510

Short-term investments
2,322

 
2,322

 
2,322

Other investments
2,999

 
3,346

 
3,346

Total investments - other than investments in related parties
$
60,918

 
$
63,162

 
$
62,904

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)
2014

 
2013

Assets
 
 
 
Investments in subsidiaries and affiliates on equity basis
$
29,497

 
$
28,351

Short-term investments
1

 
2

Other investments, at cost
29

 
30

Total investments
29,527

 
28,383

Due from subsidiaries and affiliates, net
583

 
844

Other assets
4

 
5

Total assets
$
30,114

 
$
29,232

Liabilities
 
 
 
Affiliated notional cash pooling programs(1)
$
246

 
$
185

Accounts payable, accrued expenses, and other liabilities
281

 
222

Total liabilities
527

 
407

Shareholders' equity
 
 
 
Common Shares
8,055

 
8,899

Common Shares in treasury
(1,448
)
 
(255
)
Additional paid-in capital
5,145

 
5,238

Retained earnings
16,644

 
13,791

Accumulated other comprehensive income
1,191

 
1,152

Total shareholders' equity
29,587

 
28,825

Total liabilities and shareholders' equity
$
30,114

 
$
29,232

 
 
 
 
(1) ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2014 and 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)
2014

2013

2012

Revenues
 
 
 
Investment income, including interest income
$
37

$
34

$
34

Equity in net income of subsidiaries and affiliates
2,707

3,580

2,590

Net realized gains (losses)
—

—

17

 
2,744

3,614

2,641

Expenses
 
 
 
Administrative and other (income) expense
(123
)
(161
)
(75
)
Income tax expense
14

17

10

 
(109
)
(144
)
(65
)
Net income
$
2,853

$
3,758

$
2,706

Comprehensive income
$
2,892

$
2,023

$
3,682

 
 
 
 
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)
2014

 
2013

 
2012

Net cash flows from operating activities(1)
$
541

 
$
970

 
$
573

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

 
(1
)
 
—

Net derivative instruments settlements
—

 
—

 
(1)

Capital contribution
—

 
(133
)
 
—

Net cash flows used for investing activities
—

 
(134
)
 
(1
)
Cash flows from financing activities
 
 
 
 
 
Dividends paid on Common Shares
(862
)
 
(517
)
 
(815
)
Proceeds from issuance of short-term debt
—

 
—

 
130

Repayment of short-term debt
—

 
—

 
(130
)
Proceeds from share-based compensation plans
—

 
14

 
34

Advances (to) from affiliates
260

 
(621
)
 
206

Net proceeds from affiliated notional cash pooling programs(2)
61

 
185

 
—

Net cash flows used for financing activities
(541
)
 
(939
)
 
(575
)
Net decrease in cash
—

 
(103
)
 
(3
)
Cash – beginning of year
—

 
103

 
106

Cash – end of year
$
—

 
$
—

 
$
103

 
 
 
 
 
 
(1) Includes cash dividends received from subsidiaries of $300 million, $825 million, and $450 million in 2014, 2013, and 2012, respectively.
(2) ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2014 and 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, 2014, 2013, and 2012 (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

2014
 
 
 
 
 
 
 
 
 
 
Property and Casualty
 
$
14,784

 
$
4,940

 
$
2,923

 
$
12,767

 
23
%
Accident and Health
 
3,971

 
434

 
141

 
3,678

 
4
%
Life
 
800

 
91

 
272

 
981

 
28
%
Total
 
$
19,555

 
$
5,465

 
$
3,336

 
$
17,426

 
19
%
2013
 
 
 
 
 
 
 
 
 
 
Property and Casualty
 
$
14,286

 
$
5,160

 
$
3,015

 
$
12,141

 
25
%
Accident and Health
 
3,885

 
486

 
168

 
3,567

 
5
%
Life
 
685

 
76

 
296

 
905

 
33
%
Total
 
$
18,856

 
$
5,722

 
$
3,479

 
$
16,613

 
21
%
2012
 
 
 
 
 
 
 
 
 
 
Property and Casualty
 
$
13,395

 
$
4,918

 
$
2,788

 
$
11,265

 
25
%
Accident and Health
 
3,751

 
442

 
190

 
3,499

 
5
%
Life
 
656

 
67

 
324

 
913

 
35
%
Total
 
$
17,802

 
$
5,427

 
$
3,302

 
$
15,677

 
21
%
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, 2014, 2013, and 2012 (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

 
 
 
2014
 
$
2,057
 
 
$
27,008

 
$
8,222

 
$
16,445

 
$
2,071

 
$
10,176

 
$
(527
)
 
$
2,805

 
$
9,235

 
$
16,787

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

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, including internal reinsurance 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 recorded 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 recorded 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 incurred 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 based upon the same assumptions used in estimating the liability for future policy benefits. 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 long-duration 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 as deferred policy acquisition costs. Deferred policy acquisition costs, including 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 based upon the same assumptions used in estimating the liability for future policy benefits. 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 $288 million and $307 million at December 31, 2014 and 2013, respectively. Amortization expense for deferred marketing costs was $99 million, $128 million, and $119 million for the years ended December 31, 2014, 2013, and 2012, respectively.
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 $26 million and $27 million at December 31, 2014 and 2013, 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.

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.

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

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 $49 million net of discount, held at December 31, 2014, representing certain structured settlements for which the timing and amount of future claim payments are reliably determinable and $62 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 $54 million for certain structured settlements and $52 million of certain reserves for unsettled claims at December 31, 2013. 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, 2014, the gross liability due to claimants was $606 million, net of discount, and reinsurance recoverables due from the life insurance companies was $557 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, 2014 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 at both December 31, 2014 and 2013. 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 variable annuity contracts
ACE reinsures various death and living benefit guarantees associated with variable annuities issued primarily in the United States and Japan. 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
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. Deposit liabilities include reinsurance deposit liabilities and contract holder deposit funds. The reinsurance deposit liabilities arise from contracts sold for which there is not a significant transfer of risk. 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. Under deposit accounting, consideration received or paid 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 deposit assets, 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 $89 million and $100 million at December 31, 2014 and 2013, 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.

Deposit liabilities include reinsurance deposit liabilities of $120 million and $131 million and contract holder deposit funds of $908 million and $699 million at December 31, 2014 and 2013, respectively. Deposit liabilities are reflected in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets. 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.

The liability for contract holder deposit funds 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 $27 million, $25 million, and $23 million for the years ended December 31, 2014, 2013, and 2012, 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 2014 and 2013, 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 2014, 2013, or 2012.
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.
Investments (Tables)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
Schedule Of Amortized Cost And Fair Value Of Fixed Maturities And Related OTTI Recognized In AOCI
Text Block 
Text Block 
Schedule Of Fixed Maturities By Contractual Maturity
Text Block 
 
Schedule Of Cost And Fair Value Of Equity Securities
Text Block 
 
Schedule Of Default Assumptions By Moody's Rating Category
Text Block 
 
Schedule Of Net Realized Gains (Losses) And The Losses Included In Net Realized Gains (Losses) And OCI
Text Block 
 
Schedule Of Roll-Forward Of Pre-Tax Credit Losses Related To Fixed Maturities For Which A Portion Of OTTI Was Recognized In OCI
Text Block 
 
Schedule Of Other Investments
Text Block 
 
Schedule Of Partially Owned Insurance Companies
Text Block 
 
Schedule Of Aggregate Fair Value And Gross Unrealized Loss By Length Of Time The Security Has Continuously Been In An Unrealized Loss Position
Text Block 
 
Schedule Of Sources Of Net Investment Income
Text Block 
 
Schedule Of Components Of Restricted Assets
Text Block 
 
Schedule Of Amortized Cost And Fair Value Of Fixed Maturities And Related OTTI Recognized In AOCI 
December 31, 2014
Amortized
Cost

 
Gross
Unrealized
Appreciation

 
Gross
Unrealized
Depreciation

 
Fair
Value

 
OTTI Recognized
in AOCI

(in millions of U.S. dollars)
 
 
 
 
Available for sale
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
2,741

 
$
87

 
$
(8
)
 
$
2,820

 
$
—

Foreign
14,703

 
629

 
(90
)
 
15,242

 
—

Corporate securities
16,897

 
704

 
(170
)
 
17,431

 
(7
)
Mortgage-backed securities
10,011

 
304

 
(29
)
 
10,286

 
(1
)
States, municipalities, and political subdivisions
3,474

 
147

 
(5
)
 
3,616

 
—

 
$
47,826

 
$
1,871

 
$
(302
)
 
$
49,395

 
$
(8
)
Held to maturity
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
832

 
$
20

 
$
(2
)
 
$
850

 
$
—

Foreign
916

 
47

 
—

 
963

 
—

Corporate securities
2,323

 
102

 
(2
)
 
2,423

 
—

Mortgage-backed securities
1,983

 
57

 
(1
)
 
2,039

 
—

States, municipalities, and political subdivisions
1,277

 
40

 
(3
)
 
1,314

 
—

 
$
7,331

 
$
266

 
$
(8
)
 
$
7,589

 
$
—

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
 
 
 
 
2014

 
 
 
2013

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

 
Fair Value

 
Amortized Cost

 
Fair Value

Available for sale
 
 
 
 
 
 
 
Due in 1 year or less
$
2,187

 
$
2,206

 
$
2,387

 
$
2,411

Due after 1 year through 5 years
15,444

 
15,857

 
14,139

 
14,602

Due after 5 years through 10 years
15,663

 
16,089

 
16,200

 
16,535

Due after 10 years
4,521

 
4,957

 
4,743

 
4,812

 
37,815

 
39,109

 
37,469

 
38,360

Mortgage-backed securities
10,011

 
10,286

 
10,937

 
10,894

 
$
47,826

 
$
49,395

 
$
48,406

 
$
49,254

Held to maturity
 
 
 
 
 
 
 
Due in 1 year or less
$
353

 
$
355

 
$
401

 
$
405

Due after 1 year through 5 years
2,603

 
2,693

 
2,284

 
2,363

Due after 5 years through 10 years
1,439

 
1,489

 
1,686

 
1,723

Due after 10 years
953

 
1,013

 
386

 
393

 
5,348

 
5,550

 
4,757

 
4,884

Mortgage-backed securities
1,983

 
2,039

 
1,341

 
1,379

 
$
7,331

 
$
7,589

 
$
6,098

 
$
6,263

Schedule Of Cost And Fair Value Of Equity Securities 
 
December 31


December 31

(in millions of U.S. dollars)
2014


2013

Cost
$
440

 
$
841

Gross unrealized appreciation
83

 
63

Gross unrealized depreciation
(13
)
 
(67
)
Fair value
$
510

 
$
837

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
0.0-1.3%

 
0.0-0.3%

Below Investment Grade:
 
 
 
Ba
4.9
%
 
1.1
%
B
12.7
%
 
3.4
%
Caa-C
50.5
%
 
13.1
%
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)
2014

 
2013

 
2012

Fixed maturities:
 
 
 
 
 
OTTI on fixed maturities, gross
$
(64
)
 
$
(18
)
 
$
(26
)
OTTI on fixed maturities recognized in OCI (pre-tax)
7

 
—

 
1

OTTI on fixed maturities, net
(57
)
 
(18
)
 
(25
)
Gross realized gains excluding OTTI
213

 
237

 
388

Gross realized losses excluding OTTI
(133
)
 
(129
)
 
(133
)
Total fixed maturities
23

 
90

 
230

Equity securities:
 
 
 
 
 
OTTI on equity securities
(8
)
 
(2
)
 
(5
)
Gross realized gains excluding OTTI
22

 
21

 
11

Gross realized losses excluding OTTI
(61
)
 
(4
)
 
(2
)
Total equity securities
(47
)
 
15

 
4

OTTI on other investments
(3
)
 
(2
)
 
(7
)
Foreign exchange gains (losses)
(40
)
 
29

 
(16
)
Investment and embedded derivative instruments
(107
)
 
78

 
(6
)
Fair value adjustments on insurance derivative
(217
)
 
878

 
171

S&P put options and futures
(168
)
 
(579
)
 
(297
)
Other derivative instruments
50

 
(2
)
 
(4
)
Other
2

 
(3
)
 
3

Net realized gains (losses)
(507
)
 
504

 
78

Change in net unrealized appreciation (depreciation) on investments:
 
 
 
 
 
Fixed maturities available for sale
734

 
(1,798
)
 
1,099

Fixed maturities held to maturity
(2
)
 
(82
)
 
(94
)
Equity securities
77

 
(41
)
 
61

Other
35

 
54

 
50

Income tax (expense) benefit
(167
)
 
408

 
(198
)
Change in net unrealized appreciation (depreciation) on investments
677

 
(1,459
)
 
918

Total net realized gains (losses) and change in net unrealized appreciation (depreciation) on investments
$
170

 
$
(955
)
 
$
996

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)
2014

 
2013

 
2012

Balance of credit losses related to securities still held – beginning of year
$
37

 
$
43

 
$
74

Additions where no OTTI was previously recorded
22

 
9

 
8

Additions where an OTTI was previously recorded
5

 
3

 
12

Reductions for securities sold during the period
(36
)
 
(18
)
 
(51
)
Balance of credit losses related to securities still held – end of year
$
28

 
$
37

 
$
43

Schedule Of Other Investments 
 
 
 
December 31

 
 
 
December 31

 
 
 
2014

 
 
 
2013

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

 
Cost

 
Fair Value

 
Cost

Investment funds
$
378

 
$
228

 
$
428

 
$
278

Limited partnerships
691

 
497

 
576

 
424

Partially-owned investment companies
1,492

 
1,492

 
1,284

 
1,284

Life insurance policies
205

 
205

 
180

 
180

Policy loans
187

 
187

 
179

 
179

Trading securities
290

 
287

 
276

 
273

Other
103

 
103

 
53

 
53

Total
$
3,346

 
$
2,999

 
$
2,976

 
$
2,671

Schedule Of Partially Owned Insurance Companies 
 
December 31
 
 
December 31
 
 
 
 
2014
 
 
2013
 
 
 
(in millions of U.S. dollars, except for percentages)
Carrying Value

 
Issued
 Share
Capital

 
Ownership Percentage

 
Carrying Value

 
Issued Share Capital

 
Ownership Percentage

 
Domicile
Huatai Group
$
397

 
$
638

 
20.0
%
 
$
365

 
$
631

 
20.0
%
 
China
Huatai Life Insurance Company
86

 
438

 
20.0
%
 
84

 
379

 
20.0
%
 
China
Freisenbruch-Meyer
9

 
5

 
40.0
%
 
9

 
5

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

 
27

 
30.0
%
 
10

 
27

 
30.0
%
 
Saudi Arabia
Russian Reinsurance Company
2

 
4

 
23.3
%
 
2

 
4

 
23.3
%
 
Russia
Total
$
504

 
$
1,112

 
 
 
$
470

 
$
1,046

 
 
 
 
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, 2014
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

 
Fair Value

 
Gross
Unrealized Loss

(in millions of U.S. dollars)
 
 
 
 
 
U.S. Treasury and agency
$
350

 
$
(1
)
 
$
666

 
$
(9
)
 
$
1,016

 
$
(10
)
Foreign
2,262

 
(75
)
 
375

 
(15
)
 
2,637

 
(90
)
Corporate securities
4,684

 
(150
)
 
738

 
(22
)
 
5,422

 
(172
)
Mortgage-backed securities
704

 
(2
)
 
1,663

 
(28
)
 
2,367

 
(30
)
States, municipalities, and political subdivisions
458

 
(3
)
 
490

 
(5
)
 
948

 
(8
)
Total fixed maturities
8,458

 
(231
)
 
3,932

 
(79
)
 
12,390

 
(310
)
Equity securities
101

 
(13
)
 
—

 
—

 
101

 
(13
)
Total
$
8,559

 
$
(244
)
 
$
3,932

 
$
(79
)
 
$
12,491

 
$
(323
)
 
 
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
)
Schedule Of Sources Of Net Investment Income 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2014

 
2013

 
2012

Fixed maturities
$
2,199

 
$
2,093

 
$
2,134

Short-term investments
45

 
29

 
28

Equity securities
33

 
37

 
34

Other
94

 
105

 
104

Gross investment income
2,371

 
2,264

 
2,300

Investment expenses
(119
)
 
(120
)
 
(119
)
Net investment income
$
2,252

 
$
2,144

 
$
2,181

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)
2014

 
2013

Trust funds
$
10,838

 
$
11,315

Deposits with non-U.S. regulatory authorities
2,305

 
1,970

Assets pledged under repurchase agreements
1,431

 
1,435

Deposits with U.S. regulatory authorities
1,345

 
1,334

Other pledged assets
457

 
391

 
$
16,376

 
$
16,445

Fair value measurements (Tables)
GMIB Annuitization Experience [Table Text Block] 
% of total GMIB guaranteed value
Year of GMIB eligibility
 
Maximum annuitization rates (per year)
 
Maximum annuitization rates based on
38%
First year
 
7% - 12%
 
Actual Experience
Subsequent years
 
6% - 10%
 
35%
First year
 
14% - 55%
 
Actual Experience
Subsequent years
 
6%, 11%, 31%
 
Weighted average(1)
27%
First year
 
7%, 15%, 55%
 
Weighted average(1)
Subsequent years
 
6%, 11%, 31%
 
(1) Weighted average of three different annuitization rates (with heavier weighting on credible experience from other clients when own experience is less credible)
Financial Instruments Measured At Fair Value On A Recurring Basis 
Financial instruments measured at fair value on a recurring basis, by valuation hierarchy 
December 31, 2014
Level 1

 
Level 2

 
Level 3

 
Total

(in millions of U.S. dollars)
 
 
 
Assets:
 
 
 
 
 
 
 
Fixed maturities available for sale
 
 
 
 
 
 
 
U.S. Treasury and agency
$
1,680

 
$
1,140

 
$
—

 
$
2,820

Foreign
—

 
15,220

 
22

 
15,242

Corporate securities
—

 
17,244

 
187

 
17,431

Mortgage-backed securities
—

 
10,271

 
15

 
10,286

States, municipalities, and political subdivisions
—

 
3,616

 
—

 
3,616

 
1,680

 
47,491

 
224

 
49,395

Equity securities
492

 
16

 
2

 
510

Short-term investments
1,183

 
1,139

 
—

 
2,322

Other investments
370

 
257

 
2,719

 
3,346

Securities lending collateral
—

 
1,330

 
—

 
1,330

Investment derivative instruments
18

 
—

 
—

 
18

Other derivative instruments
—

 
2

 
—

 
2

Separate account assets
1,400

 
90

 
—

 
1,490

Total assets measured at fair value
$
5,143

 
$
50,325

 
$
2,945

 
$
58,413

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
36

 
$
—

 
$
—

 
$
36

Other derivative instruments
21

 
—

 
4

 
25

GLB(1)
—

 
—

 
406

 
406

Total liabilities measured at fair value
$
57

 
$
—

 
$
410

 
$
467

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

 
December 31, 2013
Level 1

 
Level 2

 
Level 3

 
Total

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

 
$
1,323

 
$
—

 
$
2,949

Foreign
223

 
14,324

 
44

 
14,591

Corporate securities
—

 
17,304

 
166

 
17,470

Mortgage-backed securities
—

 
10,886

 
8

 
10,894

States, municipalities, and political subdivisions
—

 
3,350

 
—

 
3,350

 
1,849

 
47,187

 
218

 
49,254

Equity securities
373

 
460

 
4

 
837

Short-term investments
953

 
803

 
7

 
1,763

Other investments
305

 
231

 
2,440

 
2,976

Securities lending collateral
—

 
1,632

 
—

 
1,632

Investment derivative instruments
19

 
—

 
—

 
19

Other derivative instruments
—

 
6

 
—

 
6

Separate account assets
1,145

 
81

 
—

 
1,226

Total assets measured at fair value
$
4,644

 
$
50,400

 
$
2,669

 
$
57,713

Liabilities:
 
 
 
 
 
 
 
Investment derivative instruments
$
6

 
$
—

 
$
—

 
$
6

Other derivative instruments
60

 
2

 
—

 
62

GLB(1)
—

 
—

 
193

 
193

Total liabilities measured at fair value
$
66

 
$
2

 
$
193

 
$
261

(1) 
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the consolidated balance sheets. Refer to Note 5 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
 
 
 
 
2014
 
 
2013
 
(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
 
$
282

 
$
145

 
$
256

 
$
129

Real estate
3 to 7 Years
 
289

 
40

 
322

 
92

Distressed
5 to 9 Years
 
281

 
225

 
180

 
230

Mezzanine
3 to 7 Years
 
301

 
191

 
276

 
252

Traditional
3 to 9 Years
 
1,021

 
409

 
813

 
456

Vintage
1 to 2 Years
 
9

 
—

 
13

 
—

Investment funds
Not Applicable
 
378

 
—

 
428

 
—

 
 
 
$
2,561

 
$
1,010

 
$
2,288

 
$
1,159

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, 2014

 
Valuation
Technique
 
Significant
Unobservable Inputs
 
Ranges
GLB(1)
$
406

 
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

 
Other derivative instruments

GLB(1)

Year Ended December 31, 2014
Foreign

 
Corporate
securities

 
MBS

 
 
(in millions of U.S. dollars)
 
 
 
 
Balance, beginning of year
$
44

 
$
166

 
$
8

 
 
$
4

$
7

$
2,440

 
$
—

$
193

Transfers into Level 3
10

 
37

 
—

 
 
—

—

—

 
2

—

Transfers out of Level 3
(34
)
 
(23
)
 
—

 
 
(2
)
(7
)
—

 
—

—

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

 
 
—

—

39

 
—

—

Net Realized Gains/Losses
(3
)
 
(5
)
 
—

 
 
—

—

(3
)
 
2

213

Purchases
15

 
73

 
8

 
 
2

—

719

 
—

—

Sales
(4
)
 
(38
)
 
—

 
 
(2
)
—

(8
)
 
—

—

Settlements
(5
)
 
(22
)
 
(1
)
 
 
—

—

(468
)
 
—

—

Balance, end of year
$
22

 
$
187

 
$
15

 
 
$
2

$
—

$
2,719

 
$
4

$
406

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date
$
(4
)
 
$
(5
)
 
$
—

 
 
$
—

$
—

$
(3
)
 
$
2

$
213

(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

 
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. The liability for GLB reinsurance was $427 million at December 31, 2013 and $1.4 billion at December 31, 2012, which includes a fair value derivative adjustment of $193 million and $1.1 billion, respectively. 

 
 
 
Assets
 
 
Liabilities

 
 
 
Available-for-Sale Debt Securities
 
 
 
 
 
 
 
 
GLB(1)

Year Ended December 31, 2012
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
$
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. 
Carrying Values And Fair Values Of Financial Instruments Not Measured At Fair Value 
December 31, 2014
Fair Value
 
Carrying Value

(in millions of U.S. dollars)
Level 1

 
Level 2

 
Level 3

 
Total

Assets:
 
 
 
 
 
 
 
 
Fixed maturities held to maturity
 
 
 
 
 
 
 
 
U.S. Treasury and agency
$
659

 
$
191

 
$
—

 
$
850

$
832

Foreign
—

 
963

 
—

 
963

916

Corporate securities
—

 
2,408

 
15

 
2,423

2,323

Mortgage-backed securities
—

 
2,039

 
—

 
2,039

1,983

States, municipalities, and political subdivisions
—

 
1,314

 
—

 
1,314

1,277

 
659

 
6,915

 
15

 
7,589

7,331

Partially-owned insurance companies
—

 
—

 
504

 
504

504

Total assets
$
659

 
$
6,915

 
$
519

 
$
8,093

$
7,835

Liabilities:
 
 
 
 
 
 
 
 
Short-term debt
$
—

 
$
2,571

 
$
—

 
$
2,571

$
2,552

Long-term debt
—

 
3,690

 
—

 
3,690

3,357

Trust preferred securities
—

 
462

 
—

 
462

309

Total liabilities
$
—

 
$
6,723

 
$
—

 
$
6,723

$
6,218



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

Schedule Of Fair Value Transfers Between Level 1 and Level 2 [Table Text Block] 
 
 
 
 
 
Year Ended December 31
 
(in millions of U.S. dollars)
 
 
2014

 
2013
 
2012
Transfers from Level 1 to Level 2
 
 
$
189

 
$
19

 
$
40

Transfers from Level 2 to Level 1
 
 
$
—

 
$
—

 
$
15

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)
2014
 
 
2013
 
 
2012
 
Premiums written
 
 
 
 
 
 
Direct
$
20,069

 
$
19,212

 
$
18,144

Assumed
 
3,321

 
 
3,616

 
 
3,449

Ceded
 
(5,591
)
 
 
(5,803
)
 
 
(5,518
)
Net
$
17,799

 
$
17,025

 
$
16,075

Premiums earned
 
 
 
 

 
 

Direct
$
19,555

 
$
18,856

 
$
17,802

Assumed
 
3,336

 
 
3,479

 
 
3,302

Ceded
 
(5,465
)
 
 
(5,722
)
 
 
(5,427
)
Net
$
17,426

 
$
16,613

 
$
15,677

Schedule of reinsurance recoverable on losses and loss expenses 
 
 
December 31
 
 
December 31
 
(in millions of U.S. dollars)
2014
 
 
2013
 
Reinsurance recoverable on unpaid losses and loss expenses (1)
 
$
11,307

 
 
$
10,612

Reinsurance recoverable on paid losses and loss expenses (1)
 
685

 
 
615

Net reinsurance recoverable on losses and loss expenses
 
$
11,992

 
 
$
11,227

Schedule of reinsurance recoverable and provision by category of reinsurer 

 
December 31
 
 
 
 
 
 
(in millions of U.S. dollars, except for percentages)
2014
 
 
Provision
 
 
% of Gross

Categories
 
Largest reinsurers
 
$
6,141

 
 
$
79

 
1.3
%
Other reinsurers balances rated A- or better
 
2,537

 
 
38

 
1.5
%
Other reinsurers balances with ratings lower than A- or not rated
 
501

 
 
94

 
18.8
%
Pools
 
324

 
 
11

 
3.4
%
Structured settlements
 
557

 
 
12

 
2.2
%
Captives
 
1,986

 
 
23

 
1.2
%
Other
 
303

 
 
100

 
33.0
%
Total
 
$
12,349

 
 
$
357

 
2.9
%
Schedule of income and expenses relating to GMDB and GLB reinsurance 
 
Years Ended December 31
 
(in millions of U.S. dollars)
2014

 
2013

 
2012

GMDB
 
 
 
 
 
Net premiums earned
$
71

 
$
77

 
$
85

Policy benefits and other reserve adjustments
$
50

 
$
73

 
$
60

GLB
 
 
 
 
 
Net premiums earned
$
138

 
$
149

 
$
160

Policy benefits and other reserve adjustments
36

 
27

 
61

Net realized gains (losses)
(213
)
 
929

 
203

Gain (loss) recognized in Net income
$
(111
)
 
$
1,051

 
$
302

Net cash received
$
125

 
$
126

 
$
149

Net (increase) decrease in liability
$
(236
)
 
$
925

 
$
153

Schedule of Net Amount of Risk and 100 Percent Mortality [Table Text Block] 
(in millions of U.S. dollars, except for percentages)

 
Net amount at risk
 
 
 


Reinsurance covering
 
2014

2013

2014
Future claims discount rate
Other assumptions
Total claims at
100% mortality at
December 31, 2014(1)

GMDB Risk Only
 
$
418

$
586

2.5% - 3.5%
No lapses or withdrawals
$
245

 
 
 
 
 
Mortality according to 100% of the Annuity 2000 mortality table
 
GLB Risk Only
 
$
440

$
136

3.5% - 4.5%
No deaths, lapses or withdrawals
N/A

 
 
 
 
 
Annuitization at a frequency most disadvantageous to ACE (2)
 
 
 
 
 
 
Claim calculated using interest rates in line with rates used to calculate reserve
 
Both Risks: (3)
GMDB
$
76

$
73

3.5% - 4.5%
No lapses or withdrawals
$
19

 
 
 
 
 
Mortality according to 100% of the Annuity 2000 mortality table
 
 
GLB
$
235

$
141

3.5% - 4.5%
Annuitization at a frequency most disadvantageous to ACE (2)
$
—

 
 
 
 
 
Claim calculated using interest rates in line with rates used to calculate reserve
 
(1) Takes into account all applicable reinsurance treaty claim limits.
(2) Annuitization at a level that maximizes claims taking into account the treaty limits.
(3) Covering both the GMDB and GLB risks on the same underlying policyholders.
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, 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

Purchase price allocation adjustment
—

 
—

 
4

 
—

 
—

 
4

Acquisition of Samaggi
—

 
—

 
46

 
—

 
—

 
46

Acquisition of Itaú Seguros
—

 
—

 
449

 
—

 
—

 
449

Foreign exchange revaluation and other
(4
)
 
—

 
(187
)
 
—

 
(7
)
 
(198
)
Balance at December 31, 2014
$
1,211

 
$
134

 
$
2,366

 
$
365

 
$
828

 
$
4,904

Schedule of VOBA roll-foward 
The following table presents a roll-forward of VOBA:
(in millions of U.S. dollars)
2014

 
2013

 
2012

Balance, beginning of year
$
536

 
$
614

 
$
676

Amortization expense
(51
)
 
(64
)
 
(82
)
Foreign exchange revaluation
(19
)
 
(14
)
 
20

Balance, end of year
$
466

 
$
536

 
$
614

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)
 
2015
$
97

 
$
44

2016
75

 
41

2017
67

 
37

2018
61

 
33

2019
55

 
30

Total
$
355

 
$
185

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)
2014
 
 
2013
 
 
2012
 
Gross unpaid losses and loss expenses, beginning of year
 
$
37,443

 

$
37,946

 

$
37,477

Reinsurance recoverable on unpaid losses(1)
 
(10,612
)
 
 
(11,399
)
 
 
(11,602
)
Net unpaid losses and loss expenses, beginning of year
 
26,831

 
 
26,547

 
 
25,875

Acquisition of subsidiaries
 
320

 
 
86

 
 
14

Total
 
27,151

 
 
26,633

 
 
25,889

Net losses and loss expenses incurred in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
10,176

 
 
9,878

 
 
10,132

Prior years
 
(527
)
 
 
(530
)
 
 
(479
)
Total
 
9,649

 
 
9,348

 
 
9,653

Net losses and loss expenses paid in respect of losses occurring in:
 
 
 
 
 
 
 
 
Current year
 
3,975

 
 
3,942

 
 
4,325

Prior years
 
5,260

 
 
5,035

 
 
4,894

Total
 
9,235

 
 
8,977

 
 
9,219

Foreign currency revaluation and other
 
(557
)
 
 
(173
)
 
 
224

Net unpaid losses and loss expenses, end of year
 
27,008

 
 
26,831

 
 
26,547

Reinsurance recoverable on unpaid losses(1)
 
11,307

 
 
10,612

 
 
11,399

Gross unpaid losses and loss expenses, end of year
 
$
38,315

 
 
$
37,443

 
 
$
37,946

(1) Net of provision for uncollectible reinsurance.
 
 
 
 
 
 
 
 
Schedule Of Asbestos Environmental Loss Roll Forward 
 
 
Asbestos
 
Environmental
 
Total
 
(in millions of U.S. dollars)
 
Gross
 
Net
 
Gross

Net
 
Gross
 
Net
 
Balance at December 31, 2013
 
$
1,644

 
$
926

 
$
195

 
$
125

 
$
1,839

 
$
1,051

 
Incurred activity
 
187

 
113

 
113

 
97

 
300

 
210

(1) 
Paid activity
 
(331
)
 
(147
)
 
(109
)
 
(73
)
 
(440
)
 
(220
)
 
Balance at December 31, 2014
 
$
1,500

 
$
892

 
$
199

 
$
149

 
$
1,699

 
$
1,041

 
(1)
Excludes unallocated loss expenses and the net activity reflects third-party reinsurance other than the aggregate excess of loss reinsurance provided by National Indemnity Company (NICO) to Westchester Specialty (see Westchester Specialty section below).
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)
2014

 
2013

 
2012

Current tax expense
$
481

 
$
231

 
$
305

Deferred tax expense (benefit)
153

 
249

 
(35
)
Provision for income taxes
$
634

 
$
480

 
$
270

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)
2014

 
2013

 
2012

Expected tax provision at Swiss statutory tax rate
$
273

 
$
331

 
$
233

Permanent differences:
 
 
 
 
 
Taxes on earnings subject to rate other than Swiss statutory rate
224

 
124

 
129

Change to deferred taxes related to unrealized foreign exchange losses (1)
139

 
—

 
—

Tax-exempt interest and dividends received deduction, net of proration
(33
)
 
(27
)
 
(24
)
Net withholding taxes
33

 
27

 
23

Favorable resolution of prior years' tax matters and closing statutes of limitations
(1
)
 
(5
)
 
(124
)
Change in valuation allowance (1)
(20
)
 
4

 
4

Other
19

 
26

 
29

Total provision for income taxes
$
634

 
$
480

 
$
270



(1) Includes charge to deferred taxes related to non-recognition of foreign tax credits related to unrealized foreign exchange losses. Includes $71 million of net charges related to income taxes to correct prior periods. Such amounts are not material to any period presented.
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)
2014

 
2013

Deferred tax assets:
 
 
 
Loss reserve discount
$
794

 
$
807

Unearned premiums reserve
99

 
93

Foreign tax credits
1,103

 
1,236

Investments
9

 
3

Provision for uncollectible balances
81

 
78

Loss carry-forwards
40

 
54

Compensation related amounts
185

 
177

Other
—

 
7

Total deferred tax assets
2,311

 
2,455

Deferred tax liabilities:
 
 
 
Deferred policy acquisition costs
213

 
138

VOBA and other intangible assets
321

 
351

Un-remitted foreign earnings
939

 
982

Unrealized appreciation on investments
406

 
210

Depreciation
77

 
66

Other
43

 
28

Total deferred tax liabilities
1,999

 
1,775

Valuation allowance
17

 
64

Net deferred tax assets
$
295

 
$
616

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)
2014

 
2013

Balance, beginning of year
$
27

 
$
26

Additions based on tax provisions related to the current year
2

 
5

Reductions for the lapse of the applicable statutes of limitations
(6
)
 
(4
)
Balance, end of year
$
23

 
$
27

Debt (Tables)
Schedule of debt outstanding
 
December 31

 
December 31

 
 
(in millions of U.S. dollars)
2014

 
2013

 
Early Redemption Option
Short-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
450

 
—

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

 
—

 
Make-whole premium plus 0.20%
Repurchase agreements (weighted average interest rate of 0.3%)
1,402

 
1,401

 
None
Total short-term debt
$
2,552

 
$
1,901

 
 
Long-term debt
 
 
 
 
 
ACE INA senior notes:
 
 
 
 
 
$450 million 5.6% due May 2015
$
—

 
$
449

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

 
700

 
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
474

 
473

 
Make-whole premium plus 0.10%
$700 million 3.35% due May 2024
699

 
—

 
Make-whole premium plus 0.15%
$300 million 6.7% due May 2036
299

 
299

 
Make-whole premium plus 0.20%
$475 million 4.15% due March 2043
474

 
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)
11

 
12

 
None
Total long-term debt
$
3,357

 
$
3,807

 
 
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.
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, 2014
 
 
 
December 31, 2013
 
 
Consolidated
Balance Sheet
Location
 
Fair Value
 
 
Notional
Value/
Payment
Provision

 
 
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)
 
$
12

 
$
(7
)
 
$
1,329

 
 
$
3

 
$
(4
)
 
$
1,202

Cross-currency swaps
OA / (AP)
 
—

 
—

 
95

 
 
—

 
—

 
50

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

 
—

 
2,467

 
 
3

 
—

 
3,910

Options/Futures contracts on notes and bonds
OA / (AP)
 
6

 
(29
)
 
1,636

 
 
13

 
(2
)
 
871

Convertible securities(1)
FM AFS/ES
 
291

 
—

 
267

 
 
302

 
—

 
254

 
 
 
$
309

 
$
(36
)
 
$
5,794

 
 
$
321

 
$
(6
)
 
$
6,287

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

 
$
(21
)
 
$
1,384

 
 
$
—

 
$
(60
)
 
$
1,692

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

 
—

 
250

 
 
6

 
—

 
250

Other
OA / (AP)
 
—

 
(4
)
 
10

 
 
—

 
(2
)
 
8

 
 
 
$
2

 
$
(25
)
 
$
1,644

 
 
$
6

 
$
(62
)
 
$
1,950

GLB(3)
(AP) / (FPB)
 
$
—

 
$
(663
)
 
$
675

 
 
$
—

 
$
(427
)
 
$
277

(1)
Includes fair value of embedded derivatives.
(2) 
Related to GMDB and GLB blocks of business.
(3) 
Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 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)
2014

 
2013

 
2012

Investment and embedded derivative instruments
 
 
 
 
 
Foreign currency forward contracts
$
29

 
$
11

 
$
(9
)
All other futures contracts and options
(118
)
 
61

 
(22
)
Convertible securities(1)
(18
)
 
6

 
25

Total investment and embedded derivative instruments
$
(107
)
 
$
78

 
$
(6
)
GLB and other derivative instruments
 
 
 
 
 
GLB(2)
$
(217
)
 
$
878

 
$
171

Futures contracts on equities(3)
(164
)
 
(555
)
 
(273
)
Options on equity market indices(3)
(4
)
 
(24
)
 
(24
)
Other
50

 
(2
)
 
(4
)
Total GLB and other derivative instruments
$
(335
)
 
$
297

 
$
(130
)
 
$
(442
)
 
$
375

 
$
(136
)
(1) 
Includes embedded derivatives.
(2) 
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)
2015
$
108

2016
94

2017
77

2018
58

2019
42

Thereafter
95

Total minimum future lease commitments
$
474

Shareholders' equity (Tables)
Share Repurchase Program [Table Text Block] 
The following table presents repurchases of ACE's Common Shares conducted in a series of open market transactions under the Board authorizations:
 
Years Ended December 31
 
January 1, 2015 through

(in millions of U.S. dollars, except share data)
2014

2013

2012

February 26, 2015

Number of shares repurchased
13,982,358

3,266,531

100,000

1,877,463

Dollar value of shares repurchased
$
1,449

$
290

$
7

$
211

Dividends Declared [Table Text Block] 
The following table presents dividend distributions per Common Share in Swiss francs (CHF) and U.S. dollars (USD):
 
Years Ended December 31
 
 
 
2014

 
2013

 
2012

 
CHF

USD

CHF

USD

CHF

USD

Dividends - par value reduction
2.27

$
2.46

1.85

$
2.02

1.38

$
1.47

Dividends - distributed from capital contribution reserves
0.20

0.24

—

—

0.53

0.59

Total dividend distributions per common share
2.47

$
2.70

1.85

$
2.02

1.91

$
2.06

Schedule of changes in Common Shares issued and outstanding 
 
Years Ended December 31
 
 
2014

2013

2012

Shares issued, beginning and end of year
342,832,412

342,832,412

342,832,412

Common Shares in treasury, end of year (at cost)
(14,172,726
)
(3,038,477
)
(2,510,878
)
Shares issued and outstanding, end of year
328,659,686

339,793,935

340,321,534

Common Shares issued to employee trust
 
 
 
Balance, beginning and 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)
2014

 
2013

 
2012

Stock options and shares issued under ESPP:
 
 
 
 
 
Pre-tax
$
28

 
$
24

 
$
22

After-tax (1)
$
19

 
$
18

 
$
17

Restricted stock:
 
 
 
 
 
Pre-tax
$
128

 
$
153

 
$
109

After-tax
$
75

 
$
89

 
$
64


(1) 
Excludes windfall tax benefit for share-based compensation recognized as a direct adjustment to Additional paid-in capital of $28 million, $36 million and $18 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Schedule of the weighted-average model valuation assumptions 
 
Years Ended December 31
 
 
2014

2013

2012

Dividend yield
2.7
%
2.4
%
2.7
%
Expected volatility
25.2
%
27.8
%
29.8
%
Risk-free interest rate
1.7
%
1.0
%
1.1
%
Expected life
5.8 years

5.8 years

5.8 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, 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

 
 
 
 
Granted
1,782,903

 
$
96.77

 
$
18.00

 
 
Exercised
(1,511,948
)
 
$
54.84

 
 
 
$
73

Forfeited
(143,825
)
 
$
84.52

 
 
 
 
Options outstanding, December 31, 2014
9,623,986

 
$
69.06

 
 
 
$
441

Options exercisable, December 31, 2014
6,313,668

 
$
58.24

 
 
 
$
358

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 25,339 restricted stock awards, 20,969 restricted stock awards, and 25,669 restricted stock awards that were granted to non-management directors during the years ended December 31, 2014, 2013, and 2012, respectively:
 
Number of Restricted Stock

 
Weighted-Average Grant-Date Fair Value

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

Granted
1,669,936

 
$
97.32

Vested
(1,660,903
)
 
$
70.01

Forfeited
(145,012
)
 
$
81.73

Unvested restricted stock, December 31, 2014
3,572,208

 
$
83.72

Pension plans (Tables)
Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan [Table Text Block] 
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)
2014
 
2013
Fair value of plan assets
$
588

 
$
566

Projected benefit obligation
594

 
591

Accrued pension liability
$
6

 
$
25

Schedule of expected future benefit payments 
Expected future payments are as follows:
For the year ending December 31
(in millions of U.S dollars)
2015
$
28

2016
21

2017
22

2018
25

2019
27

2020–2024
135

Other (income) expense (Tables)
Schedule of the components of Other (income) expense
 
Years Ended December 31
 
(in millions of U.S. dollars)
2014

 
2013

 
2012

Amortization of intangible assets
$
108

 
$
95

 
$
51

Equity in net (income) loss of partially-owned entities
(231
)
 
(119
)
 
(80
)
(Gains) losses from fair value changes in separate account assets
(2
)
 
(16
)
 
(29
)
Federal excise and capital taxes
20

 
24

 
22

Acquisition-related costs
15

 
4

 
11

Other
8

 
27

 
19

Other (income) expense
$
(82
)
 
$
15

 
$
(6
)
Segment information (Tables)
Operations By Segment 
For the Year Ended December 31, 2014 (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
$
6,263

 
$
1,590

 
$
6,999

 
$
935

 
$
2,012

 
$
—

 
$
17,799

Net premiums earned
6,107

 
1,526

 
6,805

 
1,026

 
1,962

 
—

 
17,426

Losses and loss expenses
4,086

 
1,351

 
3,189

 
431

 
589

 
3

 
9,649

Policy benefits
—

 
—

 
—

 
—

 
517

 
—

 
517

Policy acquisition costs
634

 
81

 
1,625

 
257

 
478

 
—

 
3,075

Administrative expenses
678

 
9

 
1,026

 
54

 
285

 
193

 
2,245

Underwriting income (loss)
709

 
85

 
965

 
284

 
93

 
(196
)
 
1,940

Net investment income
1,085

 
26

 
545

 
316

 
268

 
12

 
2,252

Net realized gains (losses) including OTTI
(67
)
 
54

 
(78
)
 
(29
)
 
(383
)
 
(4
)
 
(507
)
Interest expense
9

 
—

 
6

 
4

 
11

 
250

 
280

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

 
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Other
(101
)
 
33

 
11

 
(54
)
 
2

 
29

 
(80
)
Income tax expense (benefit)
306

 
33

 
378

 
38

 
46

 
(167
)
 
634

Net income (loss)
$
1,513

 
$
99

 
$
1,037

 
$
583

 
$
(79
)
 
$
(300
)
 
$
2,853

 
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

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, 2014
 
 
 
Insurance – North American P&C
$
1,662

 
$
4,032

 
$
413

 
$
6,107

Insurance – North American Agriculture
1,526

 
—

 
—

 
1,526

Insurance – Overseas General
2,948

 
1,573

 
2,284

 
6,805

Global Reinsurance
551

 
475

 
—

 
1,026

Life
—

 
—

 
1,962

 
1,962

 
$
6,687

 
$
6,080

 
$
4,659

 
$
17,426

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

Net Premiums Earned by Geographic Region 
 
 
North America

 
 
 
Asia
 Pacific/Far East

 
Latin America

Years Ended December 31
 
 
Europe(1)

 
 
2014
 
58
%
 
16
%
 
16
%
 
10
%
2013
 
58
%
 
17
%
 
16
%
 
9
%
2012
 
60
%
 
17
%
 
16
%
 
7
%
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)
2014

 
2013

 
2012

Numerator:
 
 
 
 
 
Net income
$
2,853

 
$
3,758

 
$
2,706

Denominator:
 
 
 
 
 
Denominator for basic earnings per share:
 
 
 
 
 
Weighted-average shares outstanding
335,609,899

 
340,906,490

 
339,843,438

Denominator for diluted earnings per share:
 
 
 
 
 
Share-based compensation plans
3,376,388

 
3,241,085

 
2,903,512

Weighted-average shares outstanding
      and assumed conversions
338,986,287

 
344,147,575

 
342,746,950

Basic earnings per share
$
8.50

 
$
11.02

 
$
7.96

Diluted earnings per share
$
8.42

 
$
10.92

 
$
7.89

Potential anti-dilutive share conversions
1,024,788

 
1,031,297

 
896,591

Statutory Financial Information (Tables)
Schedule of combined statutory capital and surplus and statutory net income (loss)
 
December 31
 
(in millions of U.S. dollars)
2014

 
2013

Statutory capital and surplus
 
 
 
Property and casualty
$
25,367

 
$
23,791

Life
$
1,455

 
$
1,693


 
Year Ended December 31
 
(in millions of U.S. dollars)
2014

2013

2012

Statutory net income (loss)
 
 
 
Property and casualty
$
3,368

$
3,333

$
2,683

Life
$
(248
)
$
409

$
199

Information provided in connection with outstanding debt of subsidiaries (Tables)
Condensed Consolidating Balance Sheet 
ondensed Consolidating Balance Sheet at December 31, 2014
(in millions of U.S. dollars)
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
30

 
$
225

 
$
62,649

 
$
—

 
$
62,904

Cash(1)
—

 
1

 
1,209

 
(555
)
 
655

Insurance and reinsurance balances receivable
—

 
—

 
6,178

 
(752
)
 
5,426

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,992

 
(9,000
)
 
11,992

Reinsurance recoverable on policy benefits
—

 
—

 
1,194

 
(977
)
 
217

Value of business acquired
—

 
—

 
466

 
—

 
466

Goodwill and other intangible assets
—

 
—

 
5,724

 
—

 
5,724

Investments in subsidiaries
29,497

 
18,762

 
—

 
(48,259
)
 
—

Due from subsidiaries and affiliates, net
583

 
—

 
—

 
(583
)
 
—

Other assets
4

 
295

 
14,196

 
(3,631
)
 
10,864

Total assets
$
30,114

 
$
19,283

 
$
112,608

 
$
(63,757
)
 
$
98,248

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
46,770

 
$
(8,455
)
 
$
38,315

Unearned premiums
—

 
—

 
9,958

 
(1,736
)
 
8,222

Future policy benefits
—

 
—

 
5,731

 
(977
)
 
4,754

Due to subsidiaries and affiliates, net
—

 
422

 
161

 
(583
)
 
—

Affiliated notional cash pooling programs(1)
246

 
309

 
—

 
(555
)
 
—

Short-term debt
—

 
1,150

 
1,402

 
—

 
2,552

Long-term debt
—

 
3,345

 
12

 
—

 
3,357

Trust preferred securities
—

 
309

 
—

 
—

 
309

Other liabilities
281

 
1,404

 
12,659

 
(3,192
)
 
11,152

Total liabilities
527

 
6,939

 
76,693

 
(15,498
)
 
68,661

Total shareholders’ equity
29,587

 
12,344

 
35,915

 
(48,259
)
 
29,587

Total liabilities and shareholders’ equity
$
30,114

 
$
19,283

 
$
112,608

 
$
(63,757
)
 
$
98,248

(1) 
ACE maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1 f) for additional information. At December 31, 2014, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

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

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

Assets
 
 
 
 
 
 
 
 
 
Investments
$
32

 
$
10

 
$
60,886

 
$
—

 
$
60,928

Cash(1)
—

 
16

 
748

 
(185
)
 
579

Insurance and reinsurance balances receivable
—

 
—

 
5,835

 
(809
)
 
5,026

Reinsurance recoverable on losses and loss expenses
—

 
—

 
20,057

 
(8,830
)
 
11,227

Reinsurance recoverable on policy benefits
—

 
—

 
1,215

 
(997
)
 
218

Value of business acquired
—

 
—

 
536

 
—

 
536

Goodwill and other intangible assets
—

 
—

 
5,404

 
—

 
5,404

Investments in subsidiaries
28,351

 
18,105

 
—

 
(46,456
)
 
—

Due from subsidiaries and affiliates, net
844

 
—

 
—

 
(844
)
 
—

Other assets
5

 
258

 
13,788

 
(3,459
)
 
10,592

Total assets
$
29,232

 
$
18,389

 
$
108,469

 
$
(61,580
)
 
$
94,510

Liabilities
 
 
 
 
 
 
 
 
 
Unpaid losses and loss expenses
$
—

 
$
—

 
$
45,714

 
$
(8,271
)
 
$
37,443

Unearned premiums
—

 
—

 
9,242

 
(1,703
)
 
7,539

Future policy benefits
—

 
—

 
5,612

 
(997
)
 
4,615

Due to 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 1 f) 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 Statement Of Operations and Comprehensive Income 
Condensed Consolidating Statements of Operations and Comprehensive Income
For the Year Ended December 31, 2014
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

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

 
$
—

 
$
17,799

 
$
—

 
$
17,799

Net premiums earned
—

 
—

 
17,426

 
—

 
17,426

Net investment income
2

 
2

 
2,248

 
—

 
2,252

Equity in earnings of subsidiaries
2,707

 
791

 
—

 
(3,498
)
 
—

Net realized gains (losses) including OTTI
—

 
53

 
(560
)
 
—

 
(507
)
Losses and loss expenses
—

 
—

 
9,649

 
—

 
9,649

Policy benefits
—

 
—

 
517

 
—

 
517

Policy acquisition costs and administrative expenses
78

 
26

 
5,216

 
—

 
5,320

Interest (income) expense
(35
)
 
277

 
38

 
—

 
280

Other (income) expense
(201
)
 
27

 
92

 
—

 
(82
)
Income tax expense (benefit)
14

 
(94
)
 
714

 
—

 
634

Net income
$
2,853

 
$
610

 
$
2,888

 
$
(3,498
)
 
$
2,853

Comprehensive income
$
2,892

 
$
583

 
$
2,926

 
$
(3,509
)
 
$
2,892


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 (loss)
$
2,023

 
$
(230
)
 
$
2,051

 
$
(1,821
)
 
$
2,023






Condensed Consolidating Statements of Operations and Comprehensive Income
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 Statement of Cash Flows 
Condensed Consolidating Statement of Cash Flows 
For the Year Ended December 31, 2014
ACE Limited
(Parent
Guarantor)

 
ACE INA
Holdings Inc.
(Subsidiary
Issuer)

 
Other ACE
Limited
Subsidiaries

 
Consolidating
Adjustments and Eliminations

 
ACE Limited
Consolidated

(in millions of U.S. dollars)
 
 
 
 
Net cash flows from operating activities
$
541

 
$
210

 
$
4,419

 
$
(674
)
 
$
4,496

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

 
—

 
(15,816
)
 
263

 
(15,553
)
Purchases of fixed maturities held to maturity
—

 
—

 
(267
)
 
—

 
(267
)
Purchases of equity securities
—

 
—

 
(251
)
 
—

 
(251
)
Sales of fixed maturities available for sale
—

 
—

 
7,750

 
(268
)
 
7,482

Sales of equity securities
—

 
—

 
670

 
—

 
670

Maturities and redemptions of fixed maturities available for sale
—

 
—

 
6,413

 
—

 
6,413

Maturities and redemptions of fixed maturities held to maturity
—

 
—

 
875

 
—

 
875

Net change in short-term investments
—

 
(216
)
 
(392
)
 
5

 
(603
)
Net derivative instruments settlements
—

 
53

 
(283
)
 
—

 
(230
)
Acquisition of subsidiaries (net of cash acquired of $20)
—

 
—

 
(766
)
 
—

 
(766
)
Capital contribution
—

 
(258
)
 
—

 
258

 
—

Other
—

 
(8
)
 
(266
)
 
—

 
(274
)
Net cash flows used for investing activities
—

 
(429
)
 
(2,333
)
 
258

 
(2,504
)
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Dividends paid on Common Shares
(862
)
 
—

 
—

 
—

 
(862
)
Common Shares repurchased
—

 
—

 
(1,429
)
 
—

 
(1,429
)
Proceeds from issuance of long-term debt
—

 
699

 
—

 
—

 
699

Proceeds from issuance of short-term debt
—

 
—

 
1,978

 
—

 
1,978

Repayment of long-term debt
—

 
(500
)
 
(1
)
 
—

 
(501
)
Repayment of short-term debt
—

 
—

 
(1,977
)
 
—

 
(1,977
)
Proceeds from share-based compensation plans, including windfall tax benefits
—

 
—

 
127

 
—

 
127

Advances (to) from affiliates
260

 
(298
)
 
38

 
—

 
—

Dividends to parent company
—

 
—

 
(674
)
 
674

 
—

Capital contribution
—

 
—

 
258

 
(258
)
 
—

Net proceeds from affiliated notional cash pooling programs(1)
61

 
309

 
—

 
(370
)
 
—

Other
—

 
(6
)
 
194

 
—

 
188

Net cash flows (used for) from financing activities
(541
)
 
204

 
(1,486
)
 
46

 
(1,777
)
Effect of foreign currency rate changes on cash and cash equivalents
—

 
—

 
(139
)
 
—

 
(139
)
Net (decrease) increase in cash
—

 
(15
)
 
461

 
(370
)
 
76

Cash – beginning of year(1)
—

 
16

 
748

 
(185
)
 
579

Cash – end of year(1)
$
—

 
$
1

 
$
1,209

 
$
(555
)
 
$
655

(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, 2014 and 2013, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
Condensed Consolidating Statement of Cash Flows
For the 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
)
Proceeds from issuance of long-term debt
—

 
947

 
—

 
—

 
947

Proceeds from the issuance of short-term debt
—

 
—

 
2,572

 
—

 
2,572

Repayment of short-term debt
—

 
—

 
(2,572
)
 
—

 
(2,572
)
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 2012, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

Condensed Consolidating Statement of Cash Flows
For the 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
)
Proceeds from issuance of short-term debt
130

 
—

 
2,803

 
—

 
2,933

Repayment of short-term debt
(130
)
 
—

 
(2,653
)
 
—

 
(2,783
)
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 2011, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.
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)
2014

 
2014

 
2014

 
2014

Net premiums earned
$
3,970

 
$
4,332

 
$
4,754

 
$
4,370

Net investment income
553

 
556

 
566

 
577

Net realized gains (losses) including OTTI
(104
)
 
(73
)
 
(120
)
 
(210
)
Total revenues
$
4,419

 
$
4,815

 
$
5,200

 
$
4,737

Losses and loss expenses
$
2,161

 
$
2,388

 
$
2,684

 
$
2,416

Policy benefits
$
114

 
$
144

 
$
125

 
$
134

Net income (1)
$
734

 
$
779

 
$
785

 
$
555

Basic earnings per share
$
2.16

 
$
2.30

 
$
2.35

 
$
1.68

Diluted earnings per share
$
2.14

 
$
2.28

 
$
2.32

 
$
1.66


(1) Net income for the three months ended December 31, 2014 includes $89 million of net charges related to income taxes to correct prior periods. Such amounts are not material to any period presented.

 
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

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

Summary of significant accounting policies (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
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
$ 288 
$ 307 
 
 
Amortization expense for deferred marketing costs
99 
128 
119 
 
Recoverable from unrated reinsurers, ceded reserve, default factor (percent)
34.00% 
 
 
 
Reinsurance business assumed
26 
27 
 
 
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% 
 
 
 
Unpaid losses and loss expenses
38,315 
37,443 
37,946 
37,477 
Supplemental Information for Property, Casualty Insurance Underwriters, Reserves for Unpaid Claims and Claims Adjustment Expense
27,008 
26,831 
26,547 
 
Gross liability for the amounts due to claimants
606 
 
 
 
Reinsurance recoverables for amounts due from life insurance companies
557 
 
 
 
Deposit assets reflected in Other assets
89 
100 
 
 
Reinsurance deposit liabilities included in Deposit liabilities
120 
131 
 
 
Contract holder deposit funds included in Deposit liabilities
908 
699 
 
 
Net operating results of ESIS included within Administrative expenses
27 
25 
23 
 
Structured settlements
 
 
 
 
Summary of significant accounting policies [Line Items]
 
 
 
 
Unpaid losses and loss expenses
49 
54 
 
 
Discounted Unsettled Claims [Member]
 
 
 
 
Summary of significant accounting policies [Line Items]
 
 
 
 
Unpaid losses and loss expenses
$ 62 
$ 52 
 
 
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% 
 
 
 
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% 
 
 
 
Reinsurance Premiums, Amortization Period
3 years 
 
 
 
Acquisitions (Detail) (USD $)
In Millions, unless otherwise specified
0 Months Ended 1 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Sep. 18, 2012
PT Asuransi Jaya Proteksi (JaPro)
Jan. 3, 2013
PT Asuransi Jaya Proteksi (JaPro)
Apr. 30, 2013
Fianzas Monterrey
Apr. 2, 2013
Fianzas Monterrey
May 2, 2013
ABA Seguros
May 2, 2013
ABA Seguros
Oct. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Oct. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Jun. 17, 2014
The Siam Commercial Sammagi Insurance PCL (Samaggi)
Jun. 17, 2014
The Siam Commercial Sammagi Insurance PCL (Samaggi)
Apr. 28, 2014
The Siam Commercial Sammagi Insurance PCL (Samaggi)
Jun. 30, 2015
Subsequent Event [Member]
Fireman's Fund high net worth personal lines [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of business acquired
 
 
 
80.00% 
 
 
 
 
 
 
 
 
 
60.86% 
 
Business Combination, Consideration Transferred
 
 
 
$ 107 
 
 
 
 
 
 
 
 
 
 
 
Expected cash consideration for acquisition
 
 
 
 
 
 
 
 
 
 
 
 
 
 
365 
Payments to Acquire Businesses, Gross
 
 
 
 
 
293 
 
690 
 
610 
 
176 
 
 
 
Goodwill generated in acquisitions
4,904 
4,603 
4,319 
 
 
 
137 
 
285 
 
449 
 
 
46 
 
Other intangible assets generated in acquisition
 
 
 
 
 
 
73 
 
140 
 
60 
 
 
80 
 
Total ownership percentage acquired
 
 
 
 
20.00% 
 
 
 
 
 
 
 
93.03% 
 
 
Additional investment percentage to be acquired after tender offer
 
 
 
 
 
 
 
 
 
 
 
 
32.17% 
 
 
Business Acquisition, Goodwill, Expected Tax Deductible Amount
 
 
 
 
 
 
$ 0 
 
$ 0 
 
 
 
 
 
 
Investments (Narrative) (Detail) (USD $)
12 Months Ended
Dec. 31, 2014
partnerships
Security
Dec. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
 
Fair value of securities transferred from AFS to HTM
$ 2,000,000,000 
 
 
Transfer to Investments
219,000,000 
 
 
Net unrealized appreciation (depreciation) included in OCI
4,000,000 
25,000,000 
 
Net unrealized depreciation included in AOCI
3,000,000 
4,000,000 
 
Portion of gross unrealized loss represented by the United States Treasury and Agency obligations
60,000,000 
 
 
Company assumed recovery rate
32.00% 
 
 
Moodys historical mean recovery rate
42.00% 
 
 
Credit losses recognized in net income for corporate securities
27,000,000 
11,000,000 
14,000,000 
Credit losses recognized in net income for mortgage-backed securities
0 
1,000,000 
6,000,000 
Limited partnerships number
62 
 
 
Trading securities - mutual funds
261,000,000 
246,000,000 
 
Trading securities - equity securities
22,000,000 
23,000,000 
 
Trading securities - fixed maturities
7,000,000 
7,000,000 
 
Number of fixed maturities in an unrealized loss position
5,485 
 
 
Total number of fixed maturities
26,258 
 
 
Largest single unrealized loss in the fixed maturities
(3,000,000)
 
 
Number of equity securities in an unrealized loss position
93 
 
 
Total number of equity securities
282 
 
 
Largest single unrealized loss in the equity securities
(1,000,000)
 
 
Restricted assets in fixed maturities and short-term investments
16,300,000,000 
 
 
Restricted assets in cash
$ 117,000,000 
$ 162,000,000 
 
Investments (Schedule Of Fixed Maturities By Contractual Maturity) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
Available for sale, Due in 1 year or less, Amortized Cost
$ 2,187 
$ 2,387 
Available for sale, Due after 1 year through 5 years, Amortized Cost
15,444 
14,139 
Available for sale, Due after 5 years though 10 years, Amortized Cost
15,663 
16,200 
Available for sale, Due after 10 years, Amortized Cost
4,521 
4,743 
Available for sale, Subtotal, Amortized Cost
37,815 
37,469 
Available for sale, Mortgage-backed securities, Amortized Cost
10,011 
10,937 
Available for sale, Amortized Cost
47,826 
48,406 
Available for sale, Due in 1 year or less, Fair Value
2,206 
2,411 
Available for sale, Due after 1 year through 5 years, Fair Value
15,857 
14,602 
Available for sale, Due after 5 years through 10 years, Fair Value
16,089 
16,535 
Available for sale, Due after 10 years, Fair Value
4,957 
4,812 
Available for sale, Subtotal, Fair Value
39,109 
38,360 
Available for sale, Mortgage backed securities, Fair Value
10,286 
10,894 
Available for sale, Fair Value
49,395 
49,254 
Held to maturity, Due in 1 year or less, Amortized Cost
353 
401 
Held to maturity, Due after 1 year through 5 years, Amortized Cost
2,603 
2,284 
Held to maturity, Due after 5 years through 10 years, Amortized Cost
1,439 
1,686 
Held to maturity, Due after 10 years, Amortized Cost
953 
386 
Held to maturity, Subtotal, Amortized Cost
5,348 
4,757 
Held to maturity, Mortgage backed securities, Amortized Cost
1,983 
1,341 
Held-to-maturity Securities
7,331 
6,098 
Held to maturity, Due in 1 year or less, Fair Value
355 
405 
Held to maturity, Due after 1 year through 5, Fair Value
2,693 
2,363 
Held to maturity, Due after 5 years through 10 years, Fair Value
1,489 
1,723 
Held to maturity, Due after 10 years, Fair Value
1,013 
393 
Held to maturity, Subtotal, Fair Value
5,550 
4,884 
Held to maturity, Mortgage backed securities, Fair Value
2,039 
1,379 
Held to maturity, Fair Value
$ 7,589 
$ 6,263 
Investments (Schedule Of Cost And Fair Value Of Equity Securities) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
Cost
$ 440 
$ 841 
Gross unrealized appreciation
83 
63 
Gross unrealized depreciation
(13)
(67)
Fair value
$ 510 
$ 837 
Investments (Schedule Of Default Assumptions By Moody's Rating Categories) (Details)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2014
Investment Grade
Aaa - Bbb
Minimum
Dec. 31, 2014
Investment Grade
Aaa - Bbb
Maximum
Dec. 31, 2014
Below Investment Grade
Ba
Dec. 31, 2014
Below Investment Grade
B
Dec. 31, 2014
Below Investment Grade
Caa - C
Financing Receivable, Recorded Investment [Line Items]
 
 
 
 
 
 
 
1-in-100 Year Default Rate
 
 
0.00% 
1.30% 
4.90% 
12.70% 
50.50% 
Historical Mean Default Rate
 
 
0.00% 
0.30% 
1.10% 
3.40% 
13.10% 
Percentage of mortgage-backed securities represented by investments in US government agency bonds
83.00% 
83.00% 
 
 
 
 
 
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, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
 
 
 
 
 
 
 
 
 
 
 
OTTI on fixed maturities, gross
 
 
 
 
 
 
 
 
$ (64)
$ (18)
$ (26)
OTTI on fixed maturities recognized in OCI (pre-tax)
 
 
 
 
 
 
 
 
7 
0 
1 
OTTI on fixed maturities, net
 
 
 
 
 
 
 
 
(57)
(18)
(25)
Fixed maturities, Gross realized gains excluding OTTI
 
 
 
 
 
 
 
 
213 
237 
388 
Fixed maturities, Gross realized losses excluding OTTI
 
 
 
 
 
 
 
 
(133)
(129)
(133)
Total fixed maturities
 
 
 
 
 
 
 
 
23 
90 
230 
OTTI on equity securities
 
 
 
 
 
 
 
 
(8)
(2)
(5)
Equity securities, Gross realized gains excluding OTTI
 
 
 
 
 
 
 
 
22 
21 
11 
Equity securities, Gross realized losses excluding OTTI
 
 
 
 
 
 
 
 
(61)
(4)
(2)
Total equity securities
 
 
 
 
 
 
 
 
(47)
15 
4 
OTTI on other investments
 
 
 
 
 
 
 
 
(3)
(2)
(7)
Foreign exchange losses
 
 
 
 
 
 
 
 
(40)
29 
(16)
Investment and embedded derivative instruments
 
 
 
 
 
 
 
 
(107)
78 
(6)
Fair value adjustments on insurance derivative
 
 
 
 
 
 
 
 
(217)
878 
171 
S&P put options and futures
 
 
 
 
 
 
 
 
(168)
(579)
(297)
Other derivative instruments
 
 
 
 
 
 
 
 
50 
(2)
(4)
Other
 
 
 
 
 
 
 
 
2 
(3)
3 
Total net realized gains (losses)
(210)
(120)
(73)
(104)
154 
40 
104 
206 
(507)
504 
78 
Change in net unrealized appreciation (depreciation) on investments, Fixed maturities available for sale
 
 
 
 
 
 
 
 
734 
(1,798)
1,099 
Change in net unrealized appreciation (depreciation) on investments, Fixed maturities held to maturity
 
 
 
 
 
 
 
 
(2)
(82)
(94)
Change in net unrealized appreciation (depreciation) on investments, Equity securities
 
 
 
 
 
 
 
 
77 
(41)
61 
Change in net unrealized appreciation (depreciation) on investments, Other
 
 
 
 
 
 
 
 
35 
54 
50 
Change in net unrealized appreciation (depreciation) on investments, Income tax expense
 
 
 
 
 
 
 
 
(167)
408 
(198)
Change in net unrealized appreciation on investments,
 
 
 
 
 
 
 
 
677 
(1,459)
918 
Total net realized gains (losses) and change in net unrealized appreciation (depreciation) on investments
 
 
 
 
 
 
 
 
$ 170 
$ (955)
$ 996 
Investments (Schedule Of Other Investments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Schedule of Cost-method Investments [Line Items]
 
 
Other investments - Total at Fair Value
$ 3,346 
$ 2,976 
Other investments - Total at Cost
2,999 
2,671 
Fair Value
 
 
Schedule of Cost-method Investments [Line Items]
 
 
Investment funds
378 
428 
Limited partnerships
691 
576 
Partially owned investment companies
1,492 
1,284 
Life insurance policies
205 
180 
Policy loans
187 
179 
Trading securities
290 
276 
Other
103 
53 
Other investments - Total at Fair Value
3,346 
2,976 
Cost
 
 
Schedule of Cost-method Investments [Line Items]
 
 
Investment funds
228 
278 
Limited partnerships
497 
424 
Partially owned investment companies
1,492 
1,284 
Life insurance policies
205 
180 
Policy loans
187 
179 
Trading securities
287 
273 
Other
103 
53 
Other investments - Total at Cost
$ 2,999 
$ 2,671 
Investments (Schedule Of Investments In Partially-Owned Insurance Companies) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Investment [Line Items]
 
 
Carrying Value
$ 504 
$ 470 
Issued Share Capital
1,112 
1,046 
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 
10 
Issued Share Capital
27 
27 
Ownership Percentage
30.00% 
30.00% 
Huatai Group |
China
 
 
Investment [Line Items]
 
 
Carrying Value
397 
365 
Issued Share Capital
638 
631 
Ownership Percentage
20.00% 
20.00% 
Huatai Life Insurance Company |
China
 
 
Investment [Line Items]
 
 
Carrying Value
86 
84 
Issued Share Capital
438 
379 
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, 2014
Dec. 31, 2013
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
$ 8,559 
$ 18,228 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(244)
(652)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
3,932 
894 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(79)
(63)
Investment securities, Unrealized loss position, Total Fair Value
12,491 
19,122 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(323)
(715)
U.S. Treasury and agency
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
350 
1,794 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(1)
(57)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
666 
31 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(9)
(6)
Investment securities, Unrealized loss position, Total Fair Value
1,016 
1,825 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(10)
(63)
Foreign
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
2,262 
4,621 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(75)
(114)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
375 
201 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(15)
(8)
Investment securities, Unrealized loss position, Total Fair Value
2,637 
4,822 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(90)
(122)
Corporate securities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
4,684 
3,836 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(150)
(118)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
738 
194 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(22)
(14)
Investment securities, Unrealized loss position, Total Fair Value
5,422 
4,030 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(172)
(132)
Mortgage backed-securities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
704 
5,248 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(2)
(197)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
1,663 
384 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(28)
(31)
Investment securities, Unrealized loss position, Total Fair Value
2,367 
5,632 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(30)
(228)
States, municipalities, and political subdivisions
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
458 
2,164 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(3)
(90)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
490 
84 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(5)
(4)
Investment securities, Unrealized loss position, Total Fair Value
948 
2,248 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(8)
(94)
Total fixed maturities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
8,458 
17,663 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(231)
(576)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
3,932 
894 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
(79)
(63)
Investment securities, Unrealized loss position, Total Fair Value
12,390 
18,557 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(310)
(639)
Equity securities
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
101 
498 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
(13)
(67)
Investment securities, Unrealized loss position, Over 12 Months, Fair Value
0 
 
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
0 
0 
Investment securities, Unrealized loss position, Total Fair Value
101 
498 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
(13)
(67)
Other investments
 
 
Investment [Line Items]
 
 
Investment securities, Unrealized loss position, 0-12 Months, Fair Value
 
67 
Investment securities, Unrealized loss position, 0-12 Months, Gross Unrealized Loss
 
(9)
Investment securities, Unrealized loss position, Over 12 Months, Gross Unrealized Loss
 
0 
Investment securities, Unrealized loss position, Total Fair Value
 
67 
Investment securities, Unrealized loss position, Total Gross Unrealized Loss
 
$ (9)
Investments (Schedule Of Sources Of Net Investment Income) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Net Investment Income [Line Items]
 
 
 
Gross investment income
$ 2,371 
$ 2,264 
$ 2,300 
Investment expenses
(119)
(120)
(119)
Net investment income
2,252 
2,144 
2,181 
Fixed Maturities [Member]
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
2,199 
2,093 
2,134 
Short-term investments
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
45 
29 
28 
Equity securities
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
33 
37 
34 
Other Investments [Member]
 
 
 
Net Investment Income [Line Items]
 
 
 
Gross investment income
$ 94 
$ 105 
$ 104 
Investments (Schedule Of Components Of Restricted Assets) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
 
 
Trust funds
$ 10,838 
$ 11,315 
Deposits with non-U.S. regulatory authorities
2,305 
1,970 
Assets pledged under reverse repurchase agreements
1,431 
1,435 
Deposits with U.S. regulatory authorities
1,345 
1,334 
Other pledged assets
457 
391 
Total restricted assets
$ 16,376 
$ 16,445 
Fair Value Measurements (Narrative) (Detail) (USD $)
12 Months Ended
Dec. 31, 2014
Year
Dec. 31, 2013
Dec. 31, 2012
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
10.00% 
 
 
GLB - Adjustment factor for valuable guarantees - upper
75.00% 
 
 
Guaranteed Living Benefits, Net Income Impact From Model Refinement
$ 2,000,000 
$ 9,000,000 
$ 49,000,000 
Level 1 To Level 2 Transfers
189,000,000 
19,000,000 
40,000,000 
Level 2 To Level 1 Transfers
0 
0 
15,000,000 
Realized Gain Losses As A Result of Annuitization Changes (GLB)
39,000,000 
 
 
Realized Gain Losses As A Result of Change in Lapse Assumption (GLB)
31,000,000 
 
 
Realized Gain Losses As A Result of Valuation Model Refinement (GLB)
$ (78,000,000)
 
 
Redemption Notice Periods Lower Range [Member]
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
Notice period for redemption for alternative investments investment funds, days
5 days 
 
 
Redemption Notice Periods Upper Range [Member]
 
 
 
Fair Value Measurements Of Financial Instruments [Line Items]
 
 
 
Notice period for redemption for alternative investments investment funds, days
120 days 
 
 
Fair value measurements Fair Value Measurements (Annuitization Experience for GMIB Policies) (Details)
12 Months Ended
Dec. 31, 2014
One Year Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Percent of GMIB guaranteed value that are represented by clients with several years of annuitization experience
38.00% 
Several Years Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Percent of GMIB guaranteed value that are represented by clients with several years of annuitization experience
35.00% 
No Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Percent of GMIB guaranteed value that are represented by clients with several years of annuitization experience
27.00% 
First Year [Member] |
No Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
15.00% 
Subsequent years [Member] |
Several Years Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
11.00% 
Subsequent years [Member] |
No Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
11.00% 
Maximum
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
55.00% 1
Maximum |
First Year [Member] |
One Year Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
12.00% 
Maximum |
First Year [Member] |
Several Years Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
55.00% 
Maximum |
First Year [Member] |
No Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
55.00% 
Maximum |
Subsequent years [Member] |
One Year Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
10.00% 
Maximum |
Subsequent years [Member] |
Several Years Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
31.00% 
Maximum |
Subsequent years [Member] |
No Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
31.00% 
Minimum
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
0.00% 1
Minimum |
First Year [Member] |
One Year Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
7.00% 
Minimum |
First Year [Member] |
Several Years Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
14.00% 
Minimum |
First Year [Member] |
No Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
7.00% 
Minimum |
Subsequent years [Member] |
One Year Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
6.00% 
Minimum |
Subsequent years [Member] |
Several Years Of Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
6.00% 
Minimum |
Subsequent years [Member] |
No Credible Experience [Member]
 
Annuitization Experience For GMIB Policies [Line Items]
 
Annuitization rate
6.00% 
Fair Value Measurements (Financial Instruments Measured At Fair Value On Recurring Basis) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
$ 49,395 
$ 49,254 
Equity securities
510 
837 
Short-term investments
2,322 
1,763 
Other investments
3,346 
2,976 
Securities lending collateral
1,330 
1,632 
Level 1
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
1,680 
1,849 
Equity securities
492 
373 
Short-term investments
1,183 
953 
Other investments
370 
305 
Investment derivative instruments, assets
18 
19 
Separate account assets
1,400 
1,145 
Total assets measured at fair value
5,143 
4,644 
Investment derivative instruments, liability
36 
6 
Other derivative instruments, liability
21 
60 
GLB
 
0 1
Total liabilities measured at fair value
57 
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
1,680 
1,626 
Level 1 |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
 
223 
Level 2
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
47,491 
47,187 
Equity securities
16 
460 
Short-term investments
1,139 
803 
Other investments
257 
231 
Securities lending collateral
1,330 
1,632 
Other derivative instruments, assets
2 
6 
Separate account assets
90 
81 
Total assets measured at fair value
50,325 
50,400 
Other derivative instruments, liability
 
2 
GLB
 
0 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
1,140 
1,323 
Level 2 |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
15,220 
14,324 
Level 2 |
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
17,244 
17,304 
Level 2 |
Mortgage backed-securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
10,271 
10,886 
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
3,616 
3,350 
Level 3
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
224 
218 
Equity securities
2 
4 
Short-term investments
 
7 
Other investments
2,719 
2,440 
Total assets measured at fair value
2,945 
2,669 
Other derivative instruments, liability
4 
 
GLB
406 1
193 1
Total liabilities measured at fair value
410 
193 
Level 3 |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
22 
44 
Level 3 |
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
187 
166 
Level 3 |
Mortgage backed-securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
15 
8 
Total
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
49,395 
49,254 
Equity securities
510 
837 
Short-term investments
2,322 
1,763 
Other investments
3,346 
2,976 
Securities lending collateral
1,330 
1,632 
Investment derivative instruments, assets
18 
19 
Other derivative instruments, assets
2 
6 
Separate account assets
1,490 
1,226 
Total assets measured at fair value
58,413 
57,713 
Investment derivative instruments, liability
36 
6 
Other derivative instruments, liability
25 
62 
GLB
406 1
193 1
Total liabilities measured at fair value
467 
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
2,820 
2,949 
Total |
Foreign
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
15,242 
14,591 
Total |
Corporate securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
17,431 
17,470 
Total |
Mortgage backed-securities
 
 
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
 
 
Fixed maturities available for sale at fair value
10,286 
10,894 
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
$ 3,616 
$ 3,350 
Fair Value Measurements (Schedule Of Significant Unobservable Inputs Used In Level 3 Liability Valuations) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2014
Dec. 31, 2014
Minimum
Dec. 31, 2014
Maximum
Dec. 31, 2014
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, 2014
Guaranteed Minimum Death Benefit
Dec. 31, 2013
Guaranteed Minimum Death Benefit
Dec. 31, 2014
Guaranteed Minimum Income Benefit
Dec. 31, 2013
Guaranteed Minimum Income Benefit
Dec. 31, 2012
Guaranteed Minimum Income Benefit
Dec. 31, 2014
Equity securities
Dec. 31, 2013
Equity securities
Dec. 31, 2012
Equity securities
Dec. 31, 2014
Short-term investments
Dec. 31, 2013
Short-term investments
Dec. 31, 2014
Other Long-term Investments [Member]
Dec. 31, 2013
Other Long-term Investments [Member]
Dec. 31, 2012
Other Long-term Investments [Member]
Dec. 31, 2014
Other Derivative Instruments
Dec. 31, 2012
Other Derivative Instruments
Dec. 31, 2012
Fixed maturities available for sale
U.S. Treasury and agency
Dec. 31, 2014
Fixed maturities available for sale
Foreign Government Debt Securities [Member]
Dec. 31, 2013
Fixed maturities available for sale
Foreign Government Debt Securities [Member]
Dec. 31, 2012
Fixed maturities available for sale
Foreign Government Debt Securities [Member]
Dec. 31, 2014
Fixed maturities available for sale
Corporate securities
Dec. 31, 2013
Fixed maturities available for sale
Corporate securities
Dec. 31, 2012
Fixed maturities available for sale
Corporate securities
Dec. 31, 2014
Fixed maturities available for sale
Mortgage backed-securities
Dec. 31, 2013
Fixed maturities available for sale
Mortgage backed-securities
Dec. 31, 2012
Fixed maturities available for sale
Mortgage backed-securities
Dec. 31, 2012
Fixed maturities available for sale
States, municipalities, and political subdivisions
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GLB liability
 
 
 
$ 663 
$ 427 
$ 1,400 
$ 1,500 
$ 111 
$ 100 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value
 
 
 
 
 
 
 
 
 
406 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Valuation Technique
Actuarial model 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year, assets
 
 
 
 
 
 
 
 
 
 
 
 
4 
3 
13 
7 
 
2,440 
2,252 
1,877 
 
3 
5 
44 
60 
33 
166 
102 
134 
8 
13 
28 
1 
Balance - beginning of year, liabilities
 
 
 
 
 
 
 
 
 
193 2 3
1,119 3 4
1,319 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant Unobservable Inputs Lapse rate
 
1.00% 1
30.00% 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annuitization rate
 
0.00% 1
55.00% 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transfers into Level 3, assets
 
 
 
 
 
 
 
 
 
 
 
 
 
8 
2 
 
8 
 
 
53 
 
0 
 
10 
36 
49 
37 
47 
37 
 
 
22 
1 
Transfers Into Level 3, liabilities
 
 
 
 
 
 
 
 
 
 
0 3
0 4
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
Transfers out of Level 3, assets
 
 
 
 
 
 
 
 
 
 
 
 
(2)
(1)
(11)
(7)
(2)
 
 
 
 
 
(4)
(34)
(54)
(13)
(23)
(31)
(46)
 
 
(35)
(1)
Transfers out of Level 3, liabilities
 
 
 
 
 
 
 
 
 
 
0 3
0 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
(6)
 
 
 
39 
(45)
55 
 
 
 
(1)
 
(1)
(1)
 
6 
 
 
 
 
Change in Net Unrealized Gains (Losses) included in OCI, Liabilities
 
 
 
 
 
 
 
 
 
 
0 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Realized Gains/Losses, Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
 
(3)
(2)
(7)
 
(4)
 
(3)
1 
0 
(5)
(2)
(1)
 
 
 
 
Net Realized Gains/Losses, Liabilities
 
 
 
 
 
 
 
 
 
213 2
(926)3
(200)4
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
Purchased, assets
 
 
 
 
 
 
 
 
 
 
 
 
2 
2 
4 
 
3 
719 
551 
520 
 
3 
 
15 
24 
46 
73 
75 
24 
8 
 
9 
0 
Purchased, liabilities
 
 
 
 
 
 
 
 
 
 
0 3
0 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales, assets
 
 
 
 
 
 
 
 
 
 
 
 
(2)
(6)
(5)
 
(1)
(8)
(10)
(9)
 
 
 
(4)
(21)
(53)
(38)
(7)
(19)
 
(3)
(7)
 
Sales, liabilities
 
 
 
 
 
 
 
 
 
 
0 3
0 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Settlements, assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
(468)
(396)
(237)
 
(2)
(1)
(5)
(2)
(1)
(22)
(18)
(33)
(1)
(2)
(4)
(1)
Settlements, liabilities
 
 
 
 
 
 
 
 
 
 
0 3
0 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, end of year, assets
 
 
 
 
 
 
 
 
 
 
 
 
2 
4 
3 
 
7 
2,719 
2,440 
2,252 
 
 
 
22 
44 
60 
187 
166 
102 
15 
8 
13 
 
Balance - end of year, liabilities
 
 
 
 
 
 
 
 
 
406 2
193 2 3
1,119 3 4
 
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
 
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3)
(2)
(7)
 
 
 
(4)
 
0 
(5)
(2)
0 
 
 
 
 
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date, Liabilities
 
 
 
 
 
 
 
 
 
$ 213 2
$ (926)3
$ (200)4
 
 
 
 
 
 
 
 
$ 2 
 
 
 
 
 
 
 
 
 
 
 
 
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, 2014
Dec. 31, 2013
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
$ 7,589 
$ 6,263 
Partially-owned insurance companies
504 
470 
Total assets
8,093 
6,733 
Short-term debt
2,571 
1,913 
Long-term debt
3,690 
4,088 
Trust preferred securities
462 
438 
Total liabilities
6,723 
6,439 
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
850 
832 
Financial Instruments Fair Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
963 
897 
Financial Instruments Fair Value [Member] |
Corporate Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,423 
2,005 
Financial Instruments Fair Value [Member] |
Collateralized Mortgage Backed Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
2,039 
1,379 
Financial Instruments Fair Value [Member] |
US States and Political Subdivisions Debt Securities [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
1,314 
1,150 
Level 2 |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
6,915 
5,652 
Total assets
6,915 
5,652 
Short-term debt
2,571 
1,913 
Long-term debt
3,690 
4,088 
Trust preferred securities
462 
438 
Total liabilities
6,723 
6,439 
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
191 
236 
Level 2 |
Financial Instruments Fair Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
963 
897 
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
2,408 
1,990 
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
2,039 
1,379 
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
1,314 
1,150 
Level 3 |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
15 
15 
Partially-owned insurance companies
504 
470 
Total assets
519 
485 
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 
15 
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
7,331 
6,098 
Partially-owned insurance companies
504 
470 
Total assets
7,835 
6,568 
Short-term debt
2,552 
1,901 
Long-term debt
3,357 
3,807 
Trust preferred securities
309 
309 
Total liabilities
6,218 
6,017 
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
832 
820 
Cost |
Financial Instruments Carrying Value [Member] |
Foreign
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
916 
864 
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
2,323 
1,922 
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
1,983 
1,341 
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
1,277 
1,151 
Level 1 |
Financial Instruments Fair Value [Member]
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total Fixed maturities held to maturity
659 
596 
Total assets
659 
596 
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
659 
596 
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, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Premiums written [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Direct
 
 
 
 
 
 
 
 
$ 20,069 
$ 19,212 
$ 18,144 
Assumed
 
 
 
 
 
 
 
 
3,321 
3,616 
3,449 
Ceded
 
 
 
 
 
 
 
 
(5,591)
(5,803)
(5,518)
Net
 
 
 
 
 
 
 
 
17,799 
17,025 
16,075 
Premiums earned [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Direct
 
 
 
 
 
 
 
 
19,555 
18,856 
17,802 
Assumed
 
 
 
 
 
 
 
 
3,336 
3,479 
3,302 
Ceded
 
 
 
 
 
 
 
 
(5,465)
(5,722)
(5,427)
Net premiums earned
$ 4,370 
$ 4,754 
$ 4,332 
$ 3,970 
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 17,426 
$ 16,613 
$ 15,677 
Reinsurance (Reinsurance Recoverable on Ceded Reinsurance) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Reinsurance Disclosures [Abstract]
 
 
 
 
Reinsurance recoverable on unpaid losses and loss expenses
$ 11,307 1
$ 10,612 1
$ 11,399 
$ 11,602 
Reinsurance recoverable on paid losses and loss expenses
685 1
615 1
 
 
Net reinsurance recoverable on losses and loss expenses
$ 11,992 
$ 11,227 
 
 
Reinsurance (Reinsurance Recoverable by Category and Listing of Largest Reinsurers) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
$ 12,349 
 
Provision
357 
390 
% of Gross
2.90% 
 
Largest reinsurers
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
6,141 
 
Provision
79 
 
% of Gross
1.30% 
 
Other reinsurers balances rated A- or better
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
2,537 
 
Provision
38 
 
% of Gross
1.50% 
 
Other reinsurers balances with ratings lower than A- or not rated
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
501 
 
Provision
94 
 
% of Gross
18.80% 
 
Other pools and government agencies
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
324 
 
Provision
11 
 
% of Gross
3.40% 
 
Structured settlements
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
557 
 
Provision
12 
 
% of Gross
2.20% 
 
Other captives
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
1,986 
 
Provision
23 
 
% of Gross
1.20% 
 
Other
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
2014
303 
 
Provision
$ 100 
 
% of Gross
33.00% 
 
Reinsurance Reinsurance (Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts - Schedule Of Guaranteed Minimum Benefits Income And Expense) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
$ 4,370 
$ 4,754 
$ 4,332 
$ 3,970 
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 17,426 
$ 16,613 
$ 15,677 
Policy benefits and other reserve adjustments
134 
125 
144 
114 
136 
138 
110 
131 
517 
515 
521 
Net realized gains (losses) including OTTI
(210)
(120)
(73)
(104)
154 
40 
104 
206 
(507)
504 
78 
GMDB
 
 
 
 
 
 
 
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
71 
77 
85 
Policy benefits and other reserve adjustments
 
 
 
 
 
 
 
 
50 
73 
60 
GLB
 
 
 
 
 
 
 
 
 
 
 
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
138 
149 
160 
Policy benefits and other reserve adjustments
 
 
 
 
 
 
 
 
36 
27 
61 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(213)
929 
203 
Gain (loss) recognized in income
 
 
 
 
 
 
 
 
(111)
1,051 
302 
Net cash received
 
 
 
 
 
 
 
 
125 
126 
149 
Net (increase) decrease in liability
 
 
 
 
 
 
 
 
$ (236)
$ 925 
$ 153 
Reinsurance (Assumed Life Reinsurance Programs Involving Minimum Benefit Guarantees Under Annuity Contracts - Narrative) (Detail) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Guaranteed Minimum Death Benefit
Dec. 31, 2013
Guaranteed Minimum Death Benefit
Dec. 31, 2014
Guaranteed Minimum Deaths Benefits And Guaranteed Living Benefits [Member]
Dec. 31, 2014
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]
Guaranteed Minimum Benefits [Line Items]
 
 
 
 
 
 
 
 
 
 
Reinsurance recoveries on losses and loss expenses incurred
$ 3,100,000,000 
$ 3,100,000,000 
$ 4,300,000,000 
 
 
 
 
 
 
 
Provision for uncollectible reinsurance
357,000,000 
390,000,000 
 
 
 
 
 
 
 
 
Reported liabilities
 
 
 
111,000,000 
100,000,000 
 
663,000,000 
427,000,000 
1,400,000,000 
1,500,000,000 
Fair value derivative adjustment in liability
 
 
 
 
 
 
$ 406,000,000 
$ 193,000,000 
 
 
Mortality percentage according to Annuity 2000 mortality table
 
 
 
 
 
100.00% 
 
 
 
 
Discount rate - lower range
 
 
 
2.50% 
 
3.50% 
3.50% 
 
 
 
Discount rate - upper range
 
 
 
3.50% 
 
4.50% 
4.50% 
 
 
 
Average attained age of all policyholders under all benefits reinsured, years
69 years 
 
 
 
 
 
 
 
 
 
Reinsurance Reinsurance (Net Amount at Risk and 100 Percent Mortality) (Details)
Dec. 31, 2014
GMDB
 
Guaranteed Minimum Benefits [Line Items]
 
Discount rate - lower range
2.50% 
Discount rate - upper range
3.50% 
GMDB and GLB
 
Guaranteed Minimum Benefits [Line Items]
 
Discount rate - lower range
3.50% 
Discount rate - upper range
4.50% 
intangible Assets (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Goodwill
$ 4,904 
$ 4,603 
$ 4,319 
Other intangible assets
820 
801 
 
Intangible assets subject to amortization
717 
695 
 
Intangible assets not subject to amortization
103 
106 
 
Amortization expense related to other intangible assets
$ 108 
$ 95 
$ 51 
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, 2014
Dec. 31, 2013
Dec. 31, 2014
Insurance - North American P&C
Dec. 31, 2013
Insurance - North American P&C
Dec. 31, 2014
Insurance - North American Agriculture
Dec. 31, 2013
Insurance - North American Agriculture
Dec. 31, 2014
Insurance - Overseas General
Dec. 31, 2013
Insurance - Overseas General
Dec. 31, 2014
Global Reinsurance
Dec. 31, 2013
Global Reinsurance
Dec. 31, 2014
Life
Dec. 31, 2013
Life
Dec. 31, 2013
Fianzas Monterrey
Apr. 2, 2013
Fianzas Monterrey
Dec. 31, 2013
Fianzas Monterrey
Insurance - North American P&C
Dec. 31, 2013
Fianzas Monterrey
Insurance - North American Agriculture
Dec. 31, 2013
Fianzas Monterrey
Insurance - Overseas General
Dec. 31, 2013
Fianzas Monterrey
Global Reinsurance
Dec. 31, 2013
Fianzas Monterrey
Life
Dec. 31, 2013
ABA Seguros
May 2, 2013
ABA Seguros
Dec. 31, 2013
ABA Seguros
Insurance - North American P&C
Dec. 31, 2013
ABA Seguros
Insurance - North American Agriculture
Dec. 31, 2013
ABA Seguros
Insurance - Overseas General
Dec. 31, 2013
ABA Seguros
Global Reinsurance
Dec. 31, 2013
ABA Seguros
Life
Dec. 31, 2014
The Siam Commercial Samaggi Insurance PCL [Member]
Dec. 31, 2014
The Siam Commercial Samaggi Insurance PCL [Member]
Insurance - North American P&C
Dec. 31, 2014
The Siam Commercial Samaggi Insurance PCL [Member]
Insurance - North American Agriculture
Dec. 31, 2014
The Siam Commercial Samaggi Insurance PCL [Member]
Insurance - Overseas General
Dec. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Oct. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Dec. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Insurance - North American P&C
Dec. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Insurance - Overseas General
Dec. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Global Reinsurance
Dec. 31, 2014
Large Corporate Property And Casualty Business Of Itau Seguros [Member]
Life
Goodwill [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
$ 4,603 
$ 4,319 
$ 1,215 
$ 1,219 
$ 134 
$ 134 
$ 2,054 
$ 1,764 
$ 365 
$ 365 
$ 835 
$ 837 
 
$ 137 
 
 
 
 
 
 
$ 285 
 
 
 
 
 
 
 
 
 
 
$ 449 
 
 
 
 
Purchase price allocation adjustment
4 
 
0 
 
0 
 
4 
 
0 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition
 
 
 
 
 
 
 
 
 
 
 
 
135 
 
0 
0 
135 
0 
0 
283 
 
0 
0 
283 
0 
0 
46 
0 
0 
46 
449 
 
0 
449 
0 
0 
Foreign exchange revaluation and other
(198)
(134)
(4)
(4)
0 
0 
(187)
(128)
0 
0 
(7)
(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at end of period
$ 4,904 
$ 4,603 
$ 1,211 
$ 1,215 
$ 134 
$ 134 
$ 2,366 
$ 2,054 
$ 365 
$ 365 
$ 828 
$ 835 
 
$ 137 
 
 
 
 
 
 
$ 285 
 
 
 
 
 
 
 
 
 
 
$ 449 
 
 
 
 
Intangible Assets (Value Of Business Acquired (VOBA) Roll-forward) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Movement in Intangible Assets Arising from Insurance Contracts Acquired in Business Combination [Roll Forward]
 
 
 
Balance, beginning of year
$ 536 
$ 614 
$ 676 
Amortization expense
(51)
(64)
(82)
Foreign exchange revaluation
(19)
(14)
20 
Balance, end of year
$ 466 
$ 536 
$ 614 
Unpaid losses and loss expenses (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2004
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
$ 527,000,000 
$ 530,000,000 
$ 479,000,000 
 
 
 
Unallocated loss adjustment expenses due to operating expenses paid and reserved
(10,176,000,000)
(9,878,000,000)
(10,132,000,000)
 
 
 
A & E - loss reserves, net - closing
1,041,000,000 
1,051,000,000 
 
 
 
 
A & E - incurred activity, net
210,000,000 1
171,000,000 
 
 
 
 
NICO reinsurance protection on losses and loss expenses
472,000,000 
 
 
 
 
 
Incurred activity
9,649,000,000 
9,348,000,000 
9,653,000,000 
 
 
 
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 pro-rata share of reinsurance protection (percent)
75.00% 
 
 
 
 
 
Dividend retention fund established by INA Financial Corporation
50,000,000 
 
 
 
 
 
Required minimum balance under the dividend retention fund
50,000,000 
 
 
 
 
 
Contributions to the dividend retention fund
 
 
 
35,000,000 
15,000,000 
 
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
298,000,000 
 
 
 
 
 
INA Holdings contibutions to Century in exchange for a surplus note
 
 
 
 
 
100,000,000 
Aggregate reinsurance balances ceded by active ACE companies to Century
1,100,000,000 
929,000,000 
 
 
 
 
Century's carried gross reserves (including reserves ceded by active ACE companies)
2,100,000,000 
2,300,000,000 
 
 
 
 
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
391,000,000 
299,000,000 
226,000,000 
 
 
 
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
63,000,000 
84,000,000 
61,000,000 
 
 
 
Long tail |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
181,000,000 
127,000,000 
 
 
 
 
Long tail |
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
52,000,000 
53,000,000 
 
 
 
 
Long tail |
Excess casualty business |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
92,000,000 
 
 
 
 
Long tail |
Excess casualty business |
2010 to 2012 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
(43,000,000)
 
 
 
 
Long tail |
Excess casualty business |
2009 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
135,000,000 
 
 
 
 
Long tail |
Casualty |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
102,000,000 
 
 
 
 
 
Long tail |
Casualty |
2011 to 2013 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
(46,000,000)
 
 
 
 
 
Long tail |
Casualty |
2010 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
148,000,000 
 
 
 
 
 
Long tail |
Casualty |
2009 and prior |
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
25,000,000 
 
 
 
 
 
Long tail |
Medical risk operations |
2009 and prior |
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
20,000,000 
 
 
 
 
Long tail |
Financial solutions business |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
27,000,000 
35,000,000 
 
 
 
 
Long tail |
Financial solutions business |
2011 to 2013 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
(71,000,000)
 
 
 
 
 
Long tail |
Financial solutions business |
2010 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
98,000,000 
 
 
 
 
 
Long tail |
Financial solutions business |
2009 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
63,000,000 
 
 
 
 
Long tail |
Financial solutions business |
2012 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
(28,000,000)
 
 
 
 
Long tail |
Other lines |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
52,000,000 
 
 
 
 
 
Long tail |
Professional liability, including medical malpractice |
2009 and prior |
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
34,000,000 
 
 
 
 
 
Long tail |
Non Medical Professional Liability [Member] |
2008 and prior |
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
25,000,000 
 
 
 
 
Short tail |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
210,000,000 
172,000,000 
 
 
 
 
Short tail |
Other lines |
Insurance - North American Agriculture
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
(34,000,000)
13,000,000 
12,000,000 
 
 
 
Short tail |
Property portfolios |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
104,000,000 
 
 
 
 
Short tail |
Property portfolios |
2007 to 2012 |
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
31,000,000 
 
 
 
 
Short tail |
Property portfolios |
2010 to 2012 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
69,000,000 
 
 
 
 
Short tail |
Property portfolios |
2009 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
35,000,000 
 
 
 
 
Short tail |
Accident & Health and Personal Lines |
2010 to 2012 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
39,000,000 
 
 
 
 
Short tail |
Personal Lines |
2011 to 2013 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
25,000,000 
 
 
 
 
 
Short tail |
Property and inland marine lines |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
136,000,000 
 
 
 
 
 
Short tail |
Property and inland marine lines |
2012 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
92,000,000 
 
 
 
 
 
Short tail |
Property and inland marine lines |
2013 |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
44,000,000 
 
 
 
 
 
Short tail |
Aviation lines [Domain] |
2010 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
30,000,000 
 
 
 
 
 
Short tail |
Aviation lines [Domain] |
2009 and prior |
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
29,000,000 
 
 
 
 
Insurance - Overseas General
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Prior period net unpaid reserves represented by prior period development (percent)
 
 
(3.10%)
 
 
 
Global Reinsurance
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Prior period net unpaid reserves represented by prior period development (percent)
 
 
(2.70%)
 
 
 
Brandywine
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
A & E - loss reserves, net - closing
837,000,000 
816,000,000 
 
 
 
 
Westchester Specialty
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
A & E - loss reserves, net - closing
119,000,000 
146,000,000 
 
 
 
 
Ace Bermuda [Member]
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
A & E - loss reserves, net - closing
85,000,000 
89,000,000 
 
 
 
 
Run Off [Member] |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
(247,000,000)
(193,000,000)
(168,000,000)
 
 
 
Run Off [Member] |
Completion of reserve review |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
(215,000,000)
(161,000,000)
 
 
 
 
Run Off [Member] |
unallocated LAE - run-off |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
(32,000,000)
(27,000,000)
 
 
 
 
Run Off [Member] |
Insurance - North American
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Prior period net unpaid reserves represented by prior period development (percent)
 
 
(1.10%)
 
 
 
Active [Member] |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
354,000,000 
327,000,000 
348,000,000 
 
 
 
Active [Member] |
Long tail |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
298,000,000 
221,000,000 
 
 
 
 
Active [Member] |
Long tail |
Directors and Officers (D&O) Portfolio |
2009 and prior |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
104,000,000 
 
 
 
 
 
Active [Member] |
Long tail |
Directors and Officers (D&O) Portfolio |
2008 and prior |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
72,000,000 
 
 
 
 
Active [Member] |
Long tail |
Excess casualty business |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
55,000,000 
 
 
 
 
 
Active [Member] |
Long tail |
Excess casualty business |
2007 and prior |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
50,000,000 
 
 
 
 
Active [Member] |
Long tail |
Excess casualty business |
2003 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
42,000,000 
 
 
 
 
 
Active [Member] |
Long tail |
Medical risk operations |
2007 to 2009 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
63,000,000 
 
 
 
 
Active [Member] |
Long tail |
Medical risk operations |
2009 to 2010 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
40,000,000 
 
 
 
 
 
Active [Member] |
Long tail |
National accounts portfolio |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
28,000,000 
 
 
 
 
Active [Member] |
Long tail |
National accounts portfolio |
2012 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
40,000,000 
 
 
 
 
Active [Member] |
Long tail |
Financial solutions business |
2010 and prior |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
35,000,000 
 
 
 
 
 
Active [Member] |
Long tail |
Foreign casualty Products |
2009 and prior |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
25,000,000 
 
 
 
 
Active [Member] |
Long tail |
Surety business |
2012 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
27,000,000 
 
 
 
 
 
Active [Member] |
Long tail |
Other lines |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
48,000,000 
28,000,000 
 
 
 
 
Active [Member] |
Long tail |
Auto Liability Excess Lines |
2009 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
21,000,000 
 
 
 
 
 
Active [Member] |
Long tail |
Workers Compensation [Domain] |
2006 and prior |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
(40,000,000)
 
 
 
 
Active [Member] |
Long tail |
Workers Compensation [Domain] |
2013 and prior |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
(32,000,000)
 
 
 
 
 
Active [Member] |
Short tail |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
56,000,000 
106,000,000 
 
 
 
 
Active [Member] |
Short tail |
Energy and Technical Risk Property |
2012 to 2013 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
20,000,000 
 
 
 
 
 
Active [Member] |
Short tail |
Property and inland marine lines |
2010 to 2012 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
45,000,000 
 
 
 
 
Active [Member] |
Short tail |
Political risk lines [Domain] |
2009 to 2010 |
Insurance - North American P&C
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Net losses and loss expenses incurred in prior years
 
$ 29,000,000 
 
 
 
 
Active [Member] |
Insurance - North American
 
 
 
 
 
 
Unpaid Losses and Loss Expenses [Line Items]
 
 
 
 
 
 
Prior period net unpaid reserves represented by prior period development (percent)
 
 
(2.20%)
 
 
 
Unpaid losses and loss expenses (Unpaid Losses and Loss Expenses Rollforward) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Gross unpaid losses and loss expenses, beginning of year
$ 37,443 
$ 37,946 
$ 37,477 
Reinsurance recoverable on unpaid losses
(10,612)1
(11,399)
(11,602)
Balance at beginning of year
26,831 
26,547 
25,875 
Acquistion of subsidiaries
320 
86 
14 
Total
27,151 
26,633 
25,889 
Net losses and loss expenses incurred in respect of losses incurring in Current Year
10,176 
9,878 
10,132 
Net losses and loss expenses incurred in respect of losses incurring in Prior Year
(527)
(530)
(479)
Total
9,649 
9,348 
9,653 
Net losses and loss expenses incurred in respect of losses paid in Current Year
3,975 
3,942 
4,325 
Net losses and loss expenses incurred in respect of losses paid in Prior Year
5,260 
5,035 
4,894 
Total
9,235 
8,977 
9,219 
Foreign currency revaluation and other
(557)
(173)
224 
Balance at end of year
27,008 
26,831 
26,547 
Reinsurance recoverable on unpaid losses
(11,307)1
(10,612)1
(11,399)
Gross unpaid losses and loss expenses, end of year
$ 38,315 
$ 37,443 
$ 37,946 
Unpaid losses and loss expenses (A&E Loss Roll-forward) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
Balance (gross) at December 31, 2013
$ 1,839 
 
Balance (net) at December 31, 2013
1,051 
 
Incurred activity, gross
300 
 
Incurred activity, net
210 1
171 
Paid activity, gross
(440)
 
Paid activity, net
(220)
 
Balance (gross) at December 31, 2014
1,699 
1,839 
Balance (net) at December 31, 2014
1,041 
1,051 
Asbestos
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
Balance (gross) at December 31, 2013
1,644 
 
Balance (net) at December 31, 2013
926 
 
Incurred activity, gross
187 
 
Incurred activity, net
113 
 
Paid activity, gross
(331)
 
Paid activity, net
(147)
 
Balance (gross) at December 31, 2014
1,500 
 
Balance (net) at December 31, 2014
892 
 
Environmental
 
 
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
Balance (gross) at December 31, 2013
195 
 
Balance (net) at December 31, 2013
125 
 
Incurred activity, gross
113 
 
Incurred activity, net
97 
 
Paid activity, gross
(109)
 
Paid activity, net
(73)
 
Balance (gross) at December 31, 2014
199 
 
Balance (net) at December 31, 2014
$ 149 
 
Unpaid losses and loss expenses (Brandywine Incurred Loss Activity) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
$ 26,831 
$ 26,547 
$ 25,875 
Incurred activity
9,649 
9,348 
9,653 
Paid activity
9,235 
8,977 
9,219 
Balance at end of year
$ 27,008 
$ 26,831 
$ 26,547 
Unpaid losses and loss expenses (Westchester Incurred Loss Activity) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Unpaid Losses and Loss Expenses [Roll Forward]
 
 
 
Balance at beginning of year
$ 26,831 
$ 26,547 
$ 25,875 
Incurred activity
9,649 
9,348 
9,653 
Paid activity
9,235 
8,977 
9,219 
Balance at end of year
$ 27,008 
$ 26,831 
$ 26,547 
Taxation (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Examination [Line Items]
 
 
 
 
Valuation allowance
$ 17 
$ 17 
$ 64 
 
Unrecognized tax benefits that would not affect the effective tax rate
17 
17 
22 
 
Unrecognized tax benefits that would affect the effective tax rate
6 
6 
5 
 
Tax-related interest and penalties reported in the consolidated statements of operations
 
(1)
(1)
(8)
Liabilities recorded for tax-related interest and penalties
9 
9 
11 
 
Income Tax Reconciliation, Change To Deferred Taxes Related to Unrealized Foreign Exchange Net
89 
71 
 
 
Domestic Tax Authority [Member]
 
 
 
 
Income Tax Examination [Line Items]
 
 
 
 
Net operating loss carry-forwards
113 
113 
 
 
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
$ 129 
$ 129 
 
 
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
 
21.50% 
 
 
Taxation (Provision For Income Taxes) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
 
Current tax expense
$ 481 
$ 231 
$ 305 
Deferred tax expense
153 
249 
(35)
Provision for income taxes
$ 634 
$ 480 
$ 270 
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
3 Months Ended 12 Months Ended
Dec. 31, 2014
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
 
 
 
 
Expected tax provision at Swiss statutory rate
 
$ 273 
$ 331 
$ 233 
Taxes on earnings subject to rates other that Swiss statutory rate
 
224 
124 
129 
Income Tax Reconciliation, Change To Deferred Taxes Related To Unrealized Foreign Exchange
 
139 1
0 1
0 1
Tax exempt interest and dividends received deduction, net of proration
 
(33)
(27)
(24)
Net witholding taxes
 
33 
27 
23 
Favorable resolution of prior years' tax matters and closing of statutes of limitations
 
(1)
(5)
(124)
Change in valuation allowance
 
(20)
4 
4 
Other
 
19 
26 
29 
Provision for income taxes
 
634 
480 
270 
Income Tax Reconciliation, Change To Deferred Taxes Related to Unrealized Foreign Exchange Net
$ 89 
$ 71 
 
 
Taxation (Components Of Net Deferred Tax Assets) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Deferred Tax Assets, Gross [Abstract]
 
 
Loss reserve discount
$ 794 
$ 807 
Unearned premium reserve
99 
93 
Foreign tax credits
1,103 
1,236 
Investments
9 
3 
Provision for uncollectible balances
81 
78 
Loss carry-forwards
40 
54 
Compensation related amounts
185 
177 
Other
0 
7 
Total deferred tax assets
2,311 
2,455 
Deferred Tax Liabilities, Gross [Abstract]
 
 
Deferred policy acquisition costs
213 
138 
VOBA and other intangible assets
321 
351 
Un-remitted foreign earnings
939 
982 
Unrealized appreciation on investments
406 
210 
Depreciation
77 
66 
Deferred Tax Liabilities, Other
43 
28 
Total deferred tax liabilities
1,999 
1,775 
Valuation allowance
17 
64 
Net deferred tax assets
$ 295 
$ 616 
Taxation (Reconciliation of Unrecognized Tax Benefits) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
Unrecognized Tax Benefits, beginning of year
$ 27 
$ 26 
Additions based on tax provisions related to the current year
2 
5 
Reductions for the lapse of the applicable statutes of limitations
(6)
(4)
Unrecognized Tax Benefits, end of year
$ 23 
$ 27 
Debt (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2014
Trust Preferred Securities
ACE INA capital securities due 2030
Mar. 31, 2000
Trust Preferred Securities
ACE INA capital securities due 2030
Dec. 31, 2014
Repurchase agreements
Dec. 31, 2013
Repurchase agreements
Debt Instrument [Line Items]
 
 
 
 
 
 
Short-term debt
$ 2,552 
$ 1,901 
 
 
$ 1,402 
$ 1,401 
Long-term debt stated interest rate
 
 
9.70% 
9.70% 
 
 
Debt issued
 
 
309 
300 
 
 
Current amount of long-term debt outstanding
3,357 
3,807 
 
 
 
 
ACE Capital Trust II common securities purchased
 
 
 
$ 9.2 
 
 
Debt (Schedule of Debt Outstanding) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2014
Senior Notes
Dec. 31, 2013
Senior Notes
Dec. 31, 2014
Senior Notes
ACE INA Senior Notes Due June 2014
Jun. 1, 2014
Senior Notes
ACE INA Senior Notes Due June 2014
Dec. 31, 2013
Senior Notes
ACE INA Senior Notes Due June 2014
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2015
May 1, 2014
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2015
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2017
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2017
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2018
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2018
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2019
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2019
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2023
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2023
Dec. 31, 2014
Senior Notes
ACE INA Senior Notes Due May 2024
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2036
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2036
Dec. 31, 2014
Senior Notes
ACE INA senior notes due 2043
Dec. 31, 2013
Senior Notes
ACE INA senior notes due 2043
Dec. 31, 2014
Senior Notes
Other
Dec. 31, 2013
Senior Notes
Other
Dec. 31, 2014
Senior secured debentures
ACE INA debentures due 2029
Dec. 31, 2013
Senior secured debentures
ACE INA debentures due 2029
Dec. 31, 2014
Trust Preferred Securities
ACE INA capital securities due 2030
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, 2014
Repurchase agreements
Dec. 31, 2013
Repurchase agreements
Dec. 31, 2014
Minimum
Senior Notes
Other
Dec. 31, 2014
Maximum
Senior Notes
Other
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term debt
$ 2,552 
$ 1,901 
 
 
$ 0 
 
$ 500 
$ 450 
$ 0 
$ 700 
 
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 1,402 
$ 1,401 
 
 
Long-term debt
3,357 
3,807 
3,357 
3,807 
 
 
 
0 
449 
0 
700 
700 
500 
500 
300 
300 
500 
500 
474 
473 
699 
299 
299 
474 
474 
11 
12 
100 
100 
 
 
 
 
 
 
 
Trust preferred securities
309 
309 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
309 
309 
 
 
 
 
 
Long-term debt stated interest rate
 
 
 
 
5.875% 
5.875% 
 
5.60% 
 
2.60% 
3.35% 
 
5.70% 
 
5.80% 
 
5.90% 
 
2.70% 
 
3.35% 
6.70% 
 
4.15% 
 
 
 
8.875% 
 
9.70% 
 
9.70% 
 
 
2.75% 
7.10% 
Weighted average interest rate on short-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.30% 
 
 
 
Additional percentage on 'make-whole' premium
 
 
 
 
0.20% 
 
 
0.35% 
 
0.20% 
 
 
0.20% 
 
0.35% 
 
0.40% 
 
0.10% 
 
0.15% 
0.20% 
 
0.15% 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term Debt, Current Maturities
 
 
 
 
 
$ 500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitments, contingencies, and guarantees (Narrative) (Detail) (USD $)
3 Months Ended 12 Months Ended
Jun. 30, 2014
Dec. 31, 2014
derivative
Dec. 31, 2013
Dec. 31, 2012
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Derivative Liability, Fair Value, Amount Offset Against Collateral
 
$ (34,000,000)
$ (41,000,000)
 
Securities Sold under Agreements to Repurchase
 
1,402,000,000 
1,401,000,000 
 
Obligation to Return Securities Received as Collateral
 
1,331,000,000 
1,633,000,000 
 
Securities Held as Collateral, at Fair Value
 
1,330,000,000 
1,632,000,000 
 
Number of in-force interest rate swaps
 
0 
 
 
Approximate percentage of gross premiums written that were generated from or placed by Marsh
 
10.00% 
11.00% 
11.00% 
Carrying value of limited partnerships and partially-owned investment companies included in other investments
 
2,200,000,000 
 
 
Funding commitments relating to limited partnerships and partially-owned investment companies
 
1,000,000,000 
 
 
Amount of credit facility not renewed by the company
500,000,000 
425,000,000 
 
 
Total rental expense related to operating leases
 
127,000,000 
128,000,000 
112,000,000 
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
 
479,000,000 
 
 
November 2013 Stock Repurchase Plan [Member]
 
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
 
Repurchase of outstanding common shares, shares
 
13,982,358 
3,266,531 
100,000 
Cost of shares acquired
 
$ 1,449,000,000 
$ 290,000,000 
$ 7,000,000 
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, 2014
Dec. 31, 2013
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
$ 5,794 
$ 6,287 
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,329 
1,202 
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
95 
50 
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
2,467 
3,910 
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,636 
871 
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
267 1
254 1
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,384 2
1,692 2
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
250 2
250 2
Other
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
10 
8 
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
1,644 
1,950 
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Notional Value/Payment Provision
675 3
277 3
Other Assets [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
309 
321 
Other Assets [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
12 
3 
Other Assets [Member] |
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
0 
0 
Other Assets [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
0 
3 
Other Assets [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
6 
13 
Other Assets [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
0 2
0 2
Other Assets [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
2 2
6 2
Other Assets [Member] |
Other
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
0 
0 
Other Assets [Member] |
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
2 
6 
Other Assets [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
0 3
0 3
Accounts Payable, Accrued Expenses, And Other Liabilities [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
(36)
(6)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Foreign Exchange Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
(7)
(4)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Cross Currency Swap [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures Contracts On Money Market Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
0 
0 
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Futures contracts on notes and bonds [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
(29)
(2)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
0 1
0 1
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Single-Stock Future [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
(21)2
(60)2
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Options On Equity Market Indices [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
0 2
0 2
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Other
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
(4)
(2)
Accounts Payable, Accrued Expenses, And Other Liabilities [Member] |
Other Derivative Instruments [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
(25)
(62)
Fixed Maturities Available For Sale [Member] |
Convertibles and Bonds with Warrants Attached [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Asset
291 1
302 1
Accounts Payable Future Policy Benefits [Member] |
Guaranteed Living Benefits [Member]
 
 
Derivatives, Fair Value [Line Items]
 
 
Derivative Liability
$ (663)3
$ (427)3
Commitments, contingencies, and guarantees (Net Realized Gains (Losses) Of Derivative Instrument Activity In Consolidated Statement Of Operations) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
$ (442)
$ 375 
$ (136)
Foreign Exchange Future [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
29 
11 
(9)
All Other Futures Contracts And Options [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(118)
61 
(22)
Convertibles and Bonds with Warrants Attached [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(18)1
6 1
25 1
Investment And Embedded Derivative Instruments [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(107)
78 
(6)
Guaranteed Living Benefits [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(217)2
878 2
171 2
Single-Stock Future [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(164)3
(555)3
(273)3
Options On Equity Market Indices [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
(4)3
(24)3
(24)3
Credit Default Swap [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
50 
(2)
(4)
Guaranteed Living Benefit And Other Derivative Instruments [Member]
 
 
 
Commitments Contingencies And Guarantees [Line Items]
 
 
 
Net realized gains (losses)
$ (335)
$ 297 
$ (130)
Commitments, contingencies, and guarantees (Future Minimum Lease Payments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
 
2015
$ 108 
2016
94 
2017
77 
2018
58 
2019
42 
Thereafter
95 
Total minimum future lease commitments
$ 474 
Shareholders' equity (Detail)
12 Months Ended 12 Months Ended 2 Months Ended
Dec. 31, 2014
USD ($)
Dec. 31, 2014
CHF
Dec. 31, 2013
USD ($)
Dec. 31, 2013
CHF
Dec. 31, 2012
USD ($)
Dec. 31, 2012
CHF
May 31, 2014
USD ($)
May 31, 2013
USD ($)
May 31, 2012
USD ($)
Dec. 31, 2014
General Purpose
Dec. 31, 2014
Issuance of Debt
Dec. 31, 2014
Employee Benefit Plans
Dec. 31, 2014
November 2013 Stock Repurchase Plan [Member]
USD ($)
Dec. 31, 2013
November 2013 Stock Repurchase Plan [Member]
USD ($)
Dec. 31, 2012
November 2013 Stock Repurchase Plan [Member]
USD ($)
Nov. 30, 2013
November 2013 Stock Repurchase Plan [Member]
USD ($)
Jan. 1, 2015
2015 Stock Repurchase Plan [Member]
USD ($)
Feb. 26, 2015
Subsequent Event [Member]
2015 Stock Repurchase Plan [Member]
USD ($)
Stockholders' Equity Note [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend installments
$ 0.65 
 
$ 0.51 
 
$ 0.49 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase to dividend approved by shareholders in January
$ 0.12 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares in treasury, shares
14,172,726 
14,172,726 
3,038,477 
3,038,477 
2,510,878 
2,510,878 
 
 
 
 
 
 
 
 
 
 
 
 
Conditional Share Issuance, by Scenario [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Shares, par value
 
 24.77 
 
 27.04 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Par Value Reduction
$ 2.46 
 2.27 
$ 2.02 
 1.85 
$ 1.47 
 1.38 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of outstanding common shares, shares
 
 
 
 
 
 
 
 
 
 
 
 
13,982,358 
3,266,531 
100,000 
 
 
1,877,463 
Cost of shares acquired
 
 
 
 
 
 
 
 
 
 
 
 
$ 1,449,000,000 
$ 290,000,000 
$ 7,000,000 
 
 
$ 211,000,000 
Authorized share capital for general purposes
 
 
 
 
 
 
 
 
 
140,000,000 
33,000,000 
25,410,929 
 
 
 
 
 
 
Stock repurchase program authorized amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,000,000,000 
1,500,000,000 
 
Share repurchase authorization remaining
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 1,300,000,000 
Dividends Declared From Additional Paid In Capital
$ 0.24 
 0.20 
$ 0 
 0 
$ 0.59 
 0.53 
 
 
 
 
 
 
 
 
 
 
 
 
Annual dividend per share approved by shareholders
 
 
 
 
 
 
$ 2.60 
$ 2.04 
$ 1.96 
 
 
 
 
 
 
 
 
 
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% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
$ 2.70 
 2.47 
$ 2.02 
 1.85 
$ 2.06 
 1.91 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' equity (Rollforward Of Changes In Common Stock Shares Issued And Outstanding) (Details)
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Changes In Common Stock Shares Issues And Outstanding [Roll Forward]
 
 
 
Shares issued, beginning of year
342,832,412 
342,832,412 
342,832,412 
Shares issued, end of year
342,832,412 
342,832,412 
342,832,412 
Common Shares in treasury, end of year
(14,172,726)
(3,038,477)
(2,510,878)
Shares issued and outstanding, end of year
328,659,686 
339,793,935 
340,321,534 
Balance, beginning of year
(9,467)
(9,467)
(9,467)
Balance, end of year
(9,467)
(9,467)
(9,467)
Share-based compensation (Narrative) (Detail) (USD $)
12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Stock options
Dec. 31, 2014
Restricted stock
Dec. 31, 2013
Restricted stock
Dec. 31, 2012
Restricted stock
Dec. 31, 2011
Restricted stock
Dec. 31, 2014
Restricted Stock Units (RSUs)
Dec. 31, 2013
Restricted Stock Units (RSUs)
Dec. 31, 2012
Restricted Stock Units (RSUs)
Dec. 31, 2014
ACE Limited 2004 Long-Term Incentive Plan
Restricted stock
Dec. 31, 2014
ESPP
Dec. 31, 2014
Common shares
ACE Limited 2004 Long-Term Incentive Plan
Dec. 31, 2004
Common shares
ACE Limited 2004 Long-Term Incentive Plan
Dec. 31, 2014
Common shares
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares authorized for issuance under plan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38,600,000 
4,500,000 
Vesting period of award
 
 
 
3 years 
 
 
 
 
 
 
 
4 years 
 
 
 
 
Common shares remaining as available for issuance under the ESPP
 
 
 
 
 
 
 
 
 
 
 
 
 
7,811,838.83 
 
1,131,685 
Unrecognized compensation expense related to the unvested share-based awards
$ 149,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average remaining contractual term for stock options exercisable
4 years 8 months 20 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash received from exercise of stock options
83,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock awards granted to non-management directors
25,339 
20,969 
25,669 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock units awarded to employees and officers of ACE and subsidiaries during period
 
 
 
 
1,669,936 
1,544,485 
1,589,178 
 
300,511 
271,004 
262,549 
 
 
 
 
 
Weighted average grant-day fair value of restricted stock units granted to employees and officers of the company (US$ per share)
 
 
 
 
$ 97.32 
$ 86.07 
$ 73.46 
 
$ 97.66 
$ 85.44 
$ 73.41 
 
 
 
 
 
Number of unvested restricted stock units outstanding
 
 
 
 
3,572,208 
3,708,187 
4,254,847 
4,851,490 
643,579 
 
 
 
 
 
 
 
Number of deferred restricted stock units
 
 
 
 
 
 
 
 
148,368 
 
 
 
 
 
 
 
Amounts paid during period by employees for the purchase of shares under the ESPP
17,000,000 
14,000,000 
13,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares purchased during period by employees pursuant to the provisions of the ESPP
181,901 
175,437 
198,244 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Stock Purchase Plan Authorized Amount
 
 
 
 
 
 
 
 
 
 
 
 
$ 25,000 
 
 
 
Discounted purchase price from market price
85.00% 
 
 
 
 
 
 
 
 
 
 
 
85.00% 
 
 
 
Increase to authorized shares approved by shareholders
 
 
 
 
 
 
 
 
 
 
 
 
 
8,000,000 
 
1,500,000 
Share-based compensation (Pre-tax and After-tax Share-based Compensation Expense) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Restricted stock
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Share-based compensation expense, pre-tax
$ 128 
$ 153 
$ 109 
Share-based compensation expense, after-tax
75 
89 
64 
Stock options
 
 
 
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
 
 
 
Share-based compensation expense, pre-tax
28 
24 
22 
Share-based compensation expense, after-tax
19 1
18 1
17 1
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
$ 28 
$ 36 
$ 18 
Share-based compensation (Weighted Average Assumptions for Option Grants) (Details) (Options)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Options
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Dividend yield
2.70% 
2.40% 
2.70% 
Expected volatility
25.20% 
27.80% 
29.80% 
Risk-free interest rate
1.70% 
1.00% 
1.10% 
Expected life
5 years 9 months 18 days 
5 years 9 months 18 days 
5 years 9 months 18 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, 2014
Dec. 31, 2013
Dec. 31, 2012
Number of Options [Roll Forward]
 
 
 
Number of option outstanding, beginning of period
9,496,856 
9,449,659 
10,579,507 
Number of options granted
1,782,903 
1,821,063 
1,462,103 
Number of options exercised
(1,511,948)
(1,658,671)
(2,401,869)
Number of options forfeited
(143,825)
(115,195)
(190,082)
Number of option outstanding, end of period
9,623,986 
9,496,856 
9,449,659 
Number of options exercisable, December 31, 2014
6,313,668 
 
 
Weighted-Average Exercise Price [Roll Forward]
 
 
 
Weighted-average exercise price of options outstanding, beginning of period (US$ oer share)
$ 61.84 
$ 55.03 
$ 49.78 
Weighted-average exercise price of options granted (US$ per share)
$ 96.77 
$ 85.41 
$ 73.36 
Weighted-average exercise price of options exercised (US$ per share)
$ 54.84 
$ 48.17 
$ 42.50 
Weighted average exercise price of options forfeited (US$ per share)
$ 84.52 
$ 72.50 
$ 61.87 
Weighted-average exercise price of options outstanding, end of period (US$ oer share
$ 69.06 
$ 61.84 
$ 55.03 
Weighted average exercise price of options exercisable, December 31, 2014 (US$ per share)
$ 58.24 
 
 
Options, Weighted-Average Fair Value and Total Intrinsic Value [Abstract]
 
 
 
Weighted-average fair value of stock options granted (US$ per share)
$ 18.00 
$ 17.29 
$ 15.58 
Total intrinsic value of options exercised
$ 73 
$ 70 
$ 78 
Total intrinsic value of options outstanding
441 
 
 
Total intrinsic value of options exercisable, December 31, 2014
$ 358 
 
 
Share-based compensation (Rollforward Of Company's Restricted Stock) (Details) (Restricted stock, USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Restricted stock
 
 
 
Number of Restricted Stock [Roll Forward]
 
 
 
Number of unvested restricted stock, beginning of period
3,708,187 
4,254,847 
4,851,490 
Number of restricted stock, granted
1,669,936 
1,544,485 
1,589,178 
Number of restricted stock, vested and issued
(1,660,903)
(1,951,494)
(1,923,385)
Number of restricted stock, forfeited
(145,012)
(139,651)
(262,436)
Number of unvested restricted stock, end of period
3,572,208 
3,708,187 
4,254,847 
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)
$ 71.38 
$ 59.53 
$ 52.20 
Weighted average grant-day fair value of restricted stock, granted (US$ per share)
$ 97.32 
$ 86.07 
$ 73.46 
Weighted average grant-day fair value of restricted stock, vested and issued (US$ per share)
$ 70.01 
$ 57.44 
$ 52.71 
Weighted average grant-day fair value of restricted stock, forfeited (US$ per share)
$ 81.73 
$ 67.72 
$ 58.40 
Weighted average grant-day fair value of unvested restricted stock outstanding, end of period (US$ per share)
$ 83.72 
$ 71.38 
$ 59.53 
Pension plans (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]
 
 
 
Expenses recognized during period under the defined contributions plans
$ 119 
$ 111 
$ 99 
Fair value of plan assets
588 
566 
 
Projected benefit obligation
594 
591 
 
Accrued pension liability
6 
25 
 
Defined pension plan contribution expected for 2014
4 
 
 
Estimated net actuarial loss expected to be amortized from AOCI
2 
 
 
Benefit payments made during period
$ 24 
$ 26 
 
Pension plans (Schedule of Expected Future Benefit Payments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
 
2015
$ 28 
2016
21 
2017
22 
2018
25 
2019
27 
2020-2024
$ 135 
Other (income) expense (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Other Income and Expenses [Abstract]
 
 
 
Amortization of Intangible Assets
$ 108 
$ 95 
$ 51 
Equity in net (income) loss of partially-owned entities
(231)
(119)
(80)
(Gains) losses from fair value changes in separate account assets
(2)
(16)
(29)
Federal excise and capital taxes
20 
24 
22 
Acquisition-related costs
15 
4 
11 
Other
8 
27 
19 
Other (income) expense
$ (82)
$ 15 
$ (6)
Segment Information (Operations By Segment) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
$ 17,799 
$ 17,025 
$ 16,075 
Net premiums earned
4,370 
4,754 
4,332 
3,970 
4,363 
4,610 
4,067 
3,573 
17,426 
16,613 
15,677 
Losses and loss expenses
2,416 
2,684 
2,388 
2,161 
2,517 
2,655 
2,250 
1,926 
9,649 
9,348 
9,653 
Policy benefits
134 
125 
144 
114 
136 
138 
110 
131 
517 
515 
521 
Policy acquisition costs
 
 
 
 
 
 
 
 
3,075 
2,659 
2,446 
Administrative expenses
 
 
 
 
 
 
 
 
2,245 
2,211 
2,096 
Underwriting income (loss)
 
 
 
 
 
 
 
 
1,940 
1,880 
961 
Net investment income
577 
566 
556 
553 
557 
522 
534 
531 
2,252 
2,144 
2,181 
Net realized gains (losses) including OTTI
(210)
(120)
(73)
(104)
154 
40 
104 
206 
(507)
504 
78 
Interest expense
 
 
 
 
 
 
 
 
280 
275 
250 
Other (income) expense
 
 
 
 
 
 
 
 
(82)
15 
(6)
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
(2)
(16)
(29)
Other
 
 
 
 
 
 
 
 
(80)
31 
23 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
634 
480 
270 
Net income (loss)
555 
785 
779 
734 1
998 
916 
891 
953 
2,853 
3,758 
2,706 
Insurance - North American Agriculture
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Underwriting Income Including Gains Related to Crop Derivatives
 
 
 
 
 
 
 
 
136 
 
 
Crop Derivative Gain or Loss
 
 
 
 
 
 
 
 
51 
 
 
Net premiums written
 
 
 
 
 
 
 
 
1,590 
1,627 
1,859 
Net premiums earned
 
 
 
 
 
 
 
 
1,526 
1,678 
1,872 
Losses and loss expenses
 
 
 
 
 
 
 
 
1,351 
1,524 
1,911 
Policy benefits
 
 
 
 
 
 
 
 
0 
0 
 
Policy acquisition costs
 
 
 
 
 
 
 
 
81 
53 
28 
Administrative expenses
 
 
 
 
 
 
 
 
9 
11 
(7)
Underwriting income (loss)
 
 
 
 
 
 
 
 
85 
90 
(60)
Net investment income
 
 
 
 
 
 
 
 
26 
26 
25 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
54 
1 
1 
Interest expense
 
 
 
 
 
 
 
 
0 
1 
0 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
0 
0 
0 
Other
 
 
 
 
 
 
 
 
33 
32 
32 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
33 
20 
(29)
Net income (loss)
 
 
 
 
 
 
 
 
99 
64 
(37)
Insurance - Overseas General
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
6,999 
6,520 
5,863 
Net premiums earned
 
 
 
 
 
 
 
 
6,805 
6,333 
5,740 
Losses and loss expenses
 
 
 
 
 
 
 
 
3,189 
3,062 
2,862 
Policy acquisition costs
 
 
 
 
 
 
 
 
1,625 
1,453 
1,353 
Administrative expenses
 
 
 
 
 
 
 
 
1,026 
1,008 
935 
Underwriting income (loss)
 
 
 
 
 
 
 
 
965 
810 
590 
Net investment income
 
 
 
 
 
 
 
 
545 
539 
521 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(78)
18 
103 
Interest expense
 
 
 
 
 
 
 
 
6 
5 
5 
Other
 
 
 
 
 
 
 
 
11 
39 
3 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
378 
222 
133 
Net income (loss)
 
 
 
 
 
 
 
 
1,037 
1,101 
1,073 
Global Reinsurance
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
935 
991 
1,025 
Net premiums earned
 
 
 
 
 
 
 
 
1,026 
976 
1,002 
Losses and loss expenses
 
 
 
 
 
 
 
 
431 
396 
553 
Policy acquisition costs
 
 
 
 
 
 
 
 
257 
197 
172 
Administrative expenses
 
 
 
 
 
 
 
 
54 
50 
51 
Underwriting income (loss)
 
 
 
 
 
 
 
 
284 
333 
226 
Net investment income
 
 
 
 
 
 
 
 
316 
280 
290 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(29)
53 
6 
Interest expense
 
 
 
 
 
 
 
 
4 
5 
4 
Other
 
 
 
 
 
 
 
 
(54)
(19)
(15)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
38 
36 
15 
Net income (loss)
 
 
 
 
 
 
 
 
583 
644 
518 
Life
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Management underwriting income loss Insurance
 
 
 
 
 
 
 
 
363 
 
 
Net premiums written
 
 
 
 
 
 
 
 
2,012 
1,972 
1,979 
Net premiums earned
 
 
 
 
 
 
 
 
1,962 
1,905 
1,916 
Losses and loss expenses
 
 
 
 
 
 
 
 
589 
582 
611 
Policy benefits
 
 
 
 
 
 
 
 
517 
515 
521 
Policy acquisition costs
 
 
 
 
 
 
 
 
478 
358 
334 
Administrative expenses
 
 
 
 
 
 
 
 
285 
343 
328 
Underwriting income (loss)
 
 
 
 
 
 
 
 
93 
107 
122 
Net investment income
 
 
 
 
 
 
 
 
268 
251 
251 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(383)
360 
(72)
Interest expense
 
 
 
 
 
 
 
 
11 
15 
12 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
(2)
(16)
(29)
Other
 
 
 
 
 
 
 
 
2 
13 
25 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
46 
34 
58 
Net income (loss)
 
 
 
 
 
 
 
 
(79)
672 
235 
Corporate and Other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Losses and loss expenses
 
 
 
 
 
 
 
 
3 
8 
1 
Policy acquisition costs
 
 
 
 
 
 
 
 
0 
1 
1 
Administrative expenses
 
 
 
 
 
 
 
 
193 
198 
181 
Underwriting income (loss)
 
 
 
 
 
 
 
 
(196)
(207)
(183)
Net investment income
 
 
 
 
 
 
 
 
12 
27 
28 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(4)
 
(1)
Interest expense
 
 
 
 
 
 
 
 
250 
244 
217 
Other
 
 
 
 
 
 
 
 
29 
24 
19 
Income tax expense (benefit)
 
 
 
 
 
 
 
 
(167)
(179)
(136)
Net income (loss)
 
 
 
 
 
 
 
 
(300)
(269)
(256)
Insurance - North American P&C
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
6,263 
5,915 
5,349 
Net premiums earned
 
 
 
 
 
 
 
 
6,107 
5,721 
5,147 
Losses and loss expenses
 
 
 
 
 
 
 
 
4,086 
3,776 
3,715 
Policy benefits
 
 
 
 
 
 
 
 
0 
0 
 
Policy acquisition costs
 
 
 
 
 
 
 
 
634 
597 
558 
Administrative expenses
 
 
 
 
 
 
 
 
678 
601 
608 
Underwriting income (loss)
 
 
 
 
 
 
 
 
709 
747 
266 
Net investment income
 
 
 
 
 
 
 
 
1,085 
1,021 
1,066 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(67)
72 
41 
Interest expense
 
 
 
 
 
 
 
 
9 
5 
12 
(Gains) losses from fair value changes in separate account assets
 
 
 
 
 
 
 
 
0 
0 
0 
Other
 
 
 
 
 
 
 
 
(101)
(58)
(41)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
306 
347 
229 
Net income (loss)
 
 
 
 
 
 
 
 
$ 1,513 
$ 1,546 
$ 1,173 
Segment Information (Net Premiums Earned For Segment By Product) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
$ 4,370 
$ 4,754 
$ 4,332 
$ 3,970 
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 17,426 
$ 16,613 
$ 15,677 
Property and all other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
6,687 
6,382 
5,973 
Casualty Insurance Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
6,080 
5,759 
5,292 
Life Accident And Health Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
4,659 
4,472 
4,412 
Insurance - North American P&C
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
6,107 
5,721 
5,147 
Insurance - North American P&C |
Property and all other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
1,662 
1,489 
1,370 
Insurance - North American P&C |
Casualty Insurance Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
4,032 
3,847 
3,406 
Insurance - North American P&C |
Life Accident And Health Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
413 
385 
371 
Insurance - North American Agriculture
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
1,526 
1,678 
1,872 
Insurance - North American Agriculture |
Property and all other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
1,526 
1,678 
1,872 
Insurance - Overseas General
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
6,805 
6,333 
5,740 
Insurance - Overseas General |
Property and all other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
2,948 
2,672 
2,236 
Insurance - Overseas General |
Casualty Insurance Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
1,573 
1,479 
1,379 
Insurance - Overseas General |
Life Accident And Health Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
2,284 
2,182 
2,125 
Global Reinsurance
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
1,026 
976 
1,002 
Global Reinsurance |
Property and all other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
551 
543 
495 
Global Reinsurance |
Casualty Insurance Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
475 
433 
507 
Life
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
1,962 
1,905 
1,916 
Life |
Property and all other
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
0 
0 
0 
Life |
Casualty Insurance Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
0 
0 
0 
Life |
Life Accident And Health Product Line [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
 
 
 
 
 
 
 
 
$ 1,962 
$ 1,905 
$ 1,916 
Segment Information (Net Premiums Earned By Geographic Region) (Details)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Segment Reporting Information [Line Items]
 
 
 
Net Premiums Earned by Geographic Region
Text Block 
 
 
North America [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
58.00% 
58.00% 
60.00% 
Europe [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
16.00% 1
17.00% 1
17.00% 1
Asia Pacific and Far East [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
16.00% 
16.00% 
16.00% 
Latin America [Member]
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Percentage of net premiums earned by geographic region
10.00% 
9.00% 
7.00% 
Net Premiums Earned by Geographic Region 
 
 
North America

 
 
 
Asia
 Pacific/Far East

 
Latin America

Years Ended December 31
 
 
Europe(1)

 
 
2014
 
58
%
 
16
%
 
16
%
 
10
%
2013
 
58
%
 
17
%
 
16
%
 
9
%
2012
 
60
%
 
17
%
 
16
%
 
7
%
Earnings Per Share (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Earnings Per Share [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net income
$ 555 
$ 785 
$ 779 
$ 734 1
$ 998 
$ 916 
$ 891 
$ 953 
$ 2,853 
$ 3,758 
$ 2,706 
Weighted-average shares outstanding
 
 
 
 
 
 
 
 
335,609,899 
340,906,490 
339,843,438 
Share-based compensation plans
 
 
 
 
 
 
 
 
3,376,388 
3,241,085 
2,903,512 
Adjusted weighted-average shares outstanding and assumed conversions
 
 
 
 
 
 
 
 
338,986,287 
344,147,575 
342,746,950 
Basic earnings per share
$ 1.68 
$ 2.35 
$ 2.30 
$ 2.16 
$ 2.93 
$ 2.68 
$ 2.61 
$ 2.80 
$ 8.50 
$ 11.02 
$ 7.96 
Diluted earnings per share
$ 1.66 
$ 2.32 
$ 2.28 
$ 2.14 
$ 2.90 
$ 2.66 
$ 2.59 
$ 2.77 
$ 8.42 
$ 10.92 
$ 7.89 
Potential anti-dilutive share conversions
 
 
 
 
 
 
 
 
1,024,788 
1,031,297 
896,591 
Related party transaction (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Related Party Transactions [Abstract]
 
 
ACE Foundation - Bermuda-Loan
$ 25 
$ 26 
Statutory Financial Information (Details) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statutory Accounting Practices [Line Items]
 
 
 
Dividends available to be paid
$ 3,800,000,000 
 
 
Approximate increase in statutory capital and surplus resulting from discount of certain A&E liabilities
158,000,000 
 
 
Statutory Accounting Practices, Statutory Capital and Surplus Required
 
13,700,000,000 
 
PropertyAndCasualtySubsidiaries [Member]
 
 
 
Statutory Accounting Practices [Line Items]
 
 
 
Statutory capital and surplus
25,367,000,000 
23,791,000,000 
 
Statutory net income
3,368,000,000 
3,333,000,000 
2,683,000,000 
LifeSubsidiaries [Member] [Member]
 
 
 
Statutory Accounting Practices [Line Items]
 
 
 
Statutory capital and surplus
1,455,000,000 
1,693,000,000 
 
Statutory net income
$ (248,000,000)
$ 409,000,000 
$ 199,000,000 
Information provided in connection with outstanding debt of subsidiaries (Condensed Consolidating Balance Sheet) (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
$ 62,904 
$ 60,928 
 
 
Cash
655 1 2
579 1 3 4
615 4 5
614 5
Insurance and reinsurance balances receivable
5,426 
5,026 
 
 
Reinsurance recoverable on losses and loss expenses
11,992 
11,227 
 
 
Reinsurance recoverable on policy benefits
217 
218 
 
 
Value of business acquired
466 
536 
 
 
Goodwill and other intangible assets
5,724 
5,404 
 
 
Other assets
10,864 
10,592 
 
 
Total assets
98,248 
94,510 
 
 
Unpaid losses and loss expenses
38,315 
37,443 
37,946 
37,477 
Unearned premiums
8,222 
7,539 
 
 
Future policy benefits
4,754 
4,615 
 
 
Bank Overdrafts
 
0 3
 
 
Short-term debt
2,552 
1,901 
 
 
Long-term debt
3,357 
3,807 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
11,152 
10,071 
 
 
Total liabilities
68,661 
65,685 
 
 
Total shareholders' equity
29,587 
28,825 
27,531 
 
Total liabilities and shareholders’ equity
98,248 
94,510 
 
 
ACE limited (Parent Gurantor)
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
30 
32 
 
 
Cash
0 1 2
0 
103 4 5
106 5
Investments in subsidiaries
29,497 
28,351 
 
 
Due from subsidiaries and affiliates, net
583 
844 
 
 
Other assets
4 
5 
 
 
Total assets
30,114 
29,232 
 
 
Bank Overdrafts
246 2
185 3
 
 
Other liabilities
281 
222 
 
 
Total liabilities
527 
407 
 
 
Total shareholders' equity
29,587 
28,825 
 
 
Total liabilities and shareholders’ equity
30,114 
29,232 
 
 
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
225 
10 
 
 
Cash
1 1 2
16 1 3 4
2 4 5
5 5
Investments in subsidiaries
18,762 
18,105 
 
 
Other assets
295 
258 
 
 
Total assets
19,283 
18,389 
 
 
Due to subsidiaries and affiliates, net
422 
714 
 
 
Bank Overdrafts
309 2
 
 
 
Short-term debt
1,150 
500 
 
 
Long-term debt
3,345 
3,795 
 
 
Trust preferred securities
309 
309 
 
 
Other liabilities
1,404 
1,318 
 
 
Total liabilities
6,939 
6,636 
 
 
Total shareholders' equity
12,344 
11,753 
 
 
Total liabilities and shareholders’ equity
19,283 
18,389 
 
 
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Investments
62,649 
60,886 
 
 
Cash
1,209 1 2
748 1 3 4
859 4 5
651 5
Insurance and reinsurance balances receivable
6,178 
5,835 
 
 
Reinsurance recoverable on losses and loss expenses
20,992 
20,057 
 
 
Reinsurance recoverable on policy benefits
1,194 
1,215 
 
 
Value of business acquired
466 
536 
 
 
Goodwill and other intangible assets
5,724 
5,404 
 
 
Other assets
14,196 
13,788 
 
 
Total assets
112,608 
108,469 
 
 
Unpaid losses and loss expenses
46,770 
45,714 
 
 
Unearned premiums
9,958 
9,242 
 
 
Future policy benefits
5,731 
5,612 
 
 
Due to subsidiaries and affiliates, net
161 
130 
 
 
Short-term debt
1,402 
1,401 
 
 
Long-term debt
12 
12 
 
 
Other liabilities
12,659 
11,655 
 
 
Total liabilities
76,693 
73,766 
 
 
Total shareholders' equity
35,915 
34,703 
 
 
Total liabilities and shareholders’ equity
112,608 
108,469 
 
 
Consolidating Adjustments
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Cash
(555)1 2
(185)1 3 4
(349)4 5
(148)5
Insurance and reinsurance balances receivable
(752)
(809)
 
 
Reinsurance recoverable on losses and loss expenses
(9,000)
(8,830)
 
 
Reinsurance recoverable on policy benefits
(977)
(997)
 
 
Investments in subsidiaries
(48,259)
(46,456)
 
 
Due from subsidiaries and affiliates, net
(583)
(844)
 
 
Other assets
(3,631)
(3,459)
 
 
Total assets
(63,757)
(61,580)
 
 
Unpaid losses and loss expenses
(8,455)
(8,271)
 
 
Unearned premiums
(1,736)
(1,703)
 
 
Future policy benefits
(977)
(997)
 
 
Due to subsidiaries and affiliates, net
(583)
(844)
 
 
Bank Overdrafts
(555)2
(185)3
 
 
Other liabilities
(3,192)
(3,124)
 
 
Total liabilities
(15,498)
(15,124)
 
 
Total shareholders' equity
(48,259)
(46,456)
 
 
Total liabilities and shareholders’ equity
$ (63,757)
$ (61,580)
 
 
Information provided in connection with outstanding debt of subsidiaries (Condensed Consolidating Statement Of Operations and Comprehensive Income) (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
$ 17,799 
$ 17,025 
$ 16,075 
Net premiums earned
4,370 
4,754 
4,332 
3,970 
4,363 
4,610 
4,067 
3,573 
17,426 
16,613 
15,677 
Net investment income
577 
566 
556 
553 
557 
522 
534 
531 
2,252 
2,144 
2,181 
Net realized gains (losses) including OTTI
(210)
(120)
(73)
(104)
154 
40 
104 
206 
(507)
504 
78 
Losses and loss expenses
2,416 
2,684 
2,388 
2,161 
2,517 
2,655 
2,250 
1,926 
9,649 
9,348 
9,653 
Policy benefits
134 
125 
144 
114 
136 
138 
110 
131 
517 
515 
521 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
5,320 
4,870 
4,542 
Interest (income) expense
 
 
 
 
 
 
 
 
280 
275 
250 
Other (income) expense
 
 
 
 
 
 
 
 
(82)
15 
(6)
Income tax expense
 
 
 
 
 
 
 
 
634 
480 
270 
Net income (loss)
555 
785 
779 
734 1
998 
916 
891 
953 
2,853 
3,758 
2,706 
Comprehensive income
 
 
 
 
 
 
 
 
2,892 
2,023 
3,682 
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 
2 
1 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
2,707 
3,580 
2,590 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
0 
0 
17 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
 
0 
Policy benefits
 
 
 
 
 
 
 
 
 
 
0 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
78 
60 
62 
Interest (income) expense
 
 
 
 
 
 
 
 
(35)
(32)
(33)
Other (income) expense
 
 
 
 
 
 
 
 
(201)
(221)
(137)
Income tax expense
 
 
 
 
 
 
 
 
14 
17 
10 
Net income (loss)
 
 
 
 
 
 
 
 
2,853 
3,758 
2,706 
Comprehensive income
 
 
 
 
 
 
 
 
2,892 
2,023 
3,682 
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
 
 
 
 
 
 
 
 
 
 
3 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
 
911 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
 
0 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
 
0 
Policy benefits
 
 
 
 
 
 
 
 
 
 
0 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
 
28 
Interest (income) expense
 
 
 
 
 
 
 
 
 
 
235 
Other (income) expense
 
 
 
 
 
 
 
 
 
 
9 
Income tax expense
 
 
 
 
 
 
 
 
 
 
(110)
Net income (loss)
 
 
 
 
 
 
 
 
 
 
752 
Comprehensive income
 
 
 
 
 
 
 
 
 
 
1,209 
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
 
 
16,075 
Net premiums earned
 
 
 
 
 
 
 
 
 
 
15,677 
Net investment income
 
 
 
 
 
 
 
 
 
 
2,177 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
 
 
0 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
 
 
61 
Losses and loss expenses
 
 
 
 
 
 
 
 
 
 
9,653 
Policy benefits
 
 
 
 
 
 
 
 
 
 
521 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
 
 
4,452 
Interest (income) expense
 
 
 
 
 
 
 
 
 
 
48 
Other (income) expense
 
 
 
 
 
 
 
 
 
 
122 
Income tax expense
 
 
 
 
 
 
 
 
 
 
370 
Net income (loss)
 
 
 
 
 
 
 
 
 
 
2,749 
Comprehensive income
 
 
 
 
 
 
 
 
 
 
3,724 
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
 
 
 
 
 
 
 
 
(3,498)
(4,522)
(3,501)
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)
 
 
 
 
 
 
 
 
(3,498)
(4,522)
(3,501)
Comprehensive income
 
 
 
 
 
 
 
 
(3,509)
(1,821)
(4,933)
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net investment income
 
 
 
 
 
 
 
 
2 
3 
 
Equity in earnings of subsidiaries
 
 
 
 
 
 
 
 
791 
942 
 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
53 
(2)
 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
26 
19 
 
Interest (income) expense
 
 
 
 
 
 
 
 
277 
270 
 
Other (income) expense
 
 
 
 
 
 
 
 
27 
27 
 
Income tax expense
 
 
 
 
 
 
 
 
(94)
(108)
 
Net income (loss)
 
 
 
 
 
 
 
 
610 
735 
 
Comprehensive income
 
 
 
 
 
 
 
 
583 
(230)
 
Other ACE Limited Subsidiaries and Eliminations
 
 
 
 
 
 
 
 
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
 
 
 
 
 
 
17,799 
17,025 
 
Net premiums earned
 
 
 
 
 
 
 
 
17,426 
16,613 
 
Net investment income
 
 
 
 
 
 
 
 
2,248 
2,139 
 
Net realized gains (losses) including OTTI
 
 
 
 
 
 
 
 
(560)
506 
 
Losses and loss expenses
 
 
 
 
 
 
 
 
9,649 
9,348 
 
Policy benefits
 
 
 
 
 
 
 
 
517 
515 
 
Policy acquisition costs and administrative expenses
 
 
 
 
 
 
 
 
5,216 
4,791 
 
Interest (income) expense
 
 
 
 
 
 
 
 
38 
37 
 
Other (income) expense
 
 
 
 
 
 
 
 
92 
209 
 
Income tax expense
 
 
 
 
 
 
 
 
714 
571 
 
Net income (loss)
 
 
 
 
 
 
 
 
2,888 
3,787 
 
Comprehensive income
 
 
 
 
 
 
 
 
$ 2,926 
$ 2,051 
 
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, 2014
Dec. 31, 2013
Dec. 31, 2012
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
$ 4,496 
$ 4,022 
$ 3,995 
Purchases of fixed maturities available for sale
(15,553)
(21,398)
(23,961)
Purchases of fixed maturities held to maturity
(267)
(447)
(388)
Purchases of equity securities
(251)
(264)
(135)
Sales of fixed maturities available for sale
7,482 
10,413 
14,769 
Sales of equity securities
670 
142 
119 
Maturities and redemptions of fixed maturities available for sale
6,413 
6,941 
5,523 
Maturities and redemptions of fixed maturities held to maturity
875 
1,488 
1,451 
Net change in short-term investments
(603)
524 
117 
Net derivative instruments settlements
(230)
(471)
(281)
Acquisition of subsidiaries (net of cash acquired)
(766)
(977)
(98)
Capital contribution to subsidiary
 
0 
0 
Other
(274)
(393)
(555)
Net cash flows used for investing activities
(2,504)
(4,442)
(3,439)
Dividends paid on Common Shares
(862)
(517)
(815)
Common Shares repurchased
(1,429)
(287)
(11)
Proceeds from issuance of long-term debt
699 
947 
 
Proceeds from issuance of short-term debt
1,978 
2,572 
2,933 
Repayments of Long-term Debt
(501)
 
 
Repayments of Short-term Debt
(1,977)
(2,572)
(2,783)
Proceeds from share-based compensation plans
127 
135 
126 
Advances from (to) affiliates
 
 
0 
Capital contribution from subsidiary
 
0 
0 
Net proceeds from (payments to) affiliated notional cash pooling programs
 
 
0 1
Dividends to parent company
 
 
0 
Other
188 
113 
 
Net cash flows (used for) from financing activities
(1,777)
391 
(550)
Effect of foreign currency rate changes on cash and cash equivalents
(139)
(7)
(5)
Net increase (decrease) in cash
76 
(36)
1 
Cash – beginning of year
579 2 3 4
615 1 2
614 1
Cash – end of year
655 3 5
579 2 3 4
615 1 2
ACE limited (Parent Gurantor)
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
541 
970 
573 
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
0 
(1)
0 
Net derivative instruments settlements
0 
0 
(1)
Advances from (to) affiliates
260 
(621)
206 
Acquisition of subsidiaries (net of cash acquired)
 
 
0 
Capital contribution to subsidiary
 
(133)
0 
Other
 
 
0 
Net cash flows used for investing activities
0 
(134)
(1)
Dividends paid on Common Shares
(862)
(517)
(815)
Common Shares repurchased
 
 
0 
Proceeds from issuance of long-term debt
0 
 
 
Proceeds from issuance of short-term debt
 
 
130 
Repayments of Short-term Debt
 
 
(130)
Net proceeds from (repayments) issuance of short-term debt
 
0 
 
Proceeds from share-based compensation plans
0 
14 
34 
Advances from (to) affiliates
260 
(621)
206 
Capital contribution from subsidiary
 
0 
0 
Net proceeds from (payments to) affiliated notional cash pooling programs
61 3
185 2
0 
Dividends to parent company
 
0 
0 
Net cash flows (used for) from financing activities
(541)
(939)
(575)
Effect of foreign currency rate changes on cash and cash equivalents
 
 
0 
Net increase (decrease) in cash
0 
(103)
(3)
Cash – beginning of year
0 
103 1 2
106 1
Cash – end of year
0 3 5
0 
103 1 2
ACE INA Holdings Inc. (Subsidiary Issuer)
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
210 
(107)
296 
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
(216)
4 
(4)
Net derivative instruments settlements
53 
(1)
0 
Acquisition of subsidiaries (net of cash acquired)
 
 
0 
Capital contribution to subsidiary
(258)
(1,097)
(352)
Other
(8)
(4)
(33)
Net cash flows used for investing activities
(429)
(1,098)
(389)
Dividends paid on Common Shares
 
 
0 
Common Shares repurchased
 
 
0 
Proceeds from issuance of long-term debt
699 
947 
 
Proceeds from issuance of short-term debt
 
 
0 
Repayments of Long-term Debt
(500)
 
 
Proceeds from share-based compensation plans
0 
 
0 
Advances from (to) affiliates
(298)
621 
(201)
Capital contribution from subsidiary
 
0 
90 
Net proceeds from (payments to) affiliated notional cash pooling programs
309 3
(349)2
201 1
Dividends to parent company
 
0 
0 
Other
(6)
 
 
Net cash flows (used for) from financing activities
204 
1,219 
90 
Effect of foreign currency rate changes on cash and cash equivalents
 
 
0 
Net increase (decrease) in cash
(15)
14 
(3)
Cash – beginning of year
16 2 3 4
2 1 2
5 1
Cash – end of year
1 3 5
16 2 3 4
2 1 2
Other ACE Limited Subsidiaries and Eliminations
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
4,419 
3,984 
3,876 
Purchases of fixed maturities available for sale
(15,816)
(21,504)
(24,076)
Purchases of fixed maturities held to maturity
(267)
(447)
(388)
Purchases of equity securities
(251)
(264)
(135)
Sales of fixed maturities available for sale
7,750 
10,519 
14,884 
Sales of equity securities
670 
142 
119 
Maturities and redemptions of fixed maturities available for sale
6,413 
6,941 
5,523 
Maturities and redemptions of fixed maturities held to maturity
875 
1,488 
1,451 
Net change in short-term investments
(392)
521 
121 
Net derivative instruments settlements
(283)
(470)
(280)
Acquisition of subsidiaries (net of cash acquired)
(766)
(977)
(98)
Capital contribution to subsidiary
 
 
(90)
Other
(266)
(389)
(522)
Net cash flows used for investing activities
(2,333)
(4,440)
(3,491)
Dividends paid on Common Shares
 
 
0 
Common Shares repurchased
(1,429)
(287)
(11)
Proceeds from issuance of long-term debt
0 
 
 
Proceeds from issuance of short-term debt
1,978 
2,572 
2,803 
Repayments of Long-term Debt
(1)
 
 
Repayments of Short-term Debt
(1,977)
(2,572)
(2,653)
Net proceeds from (repayments) issuance of short-term debt
 
0 
 
Proceeds from share-based compensation plans
127 
121 
92 
Advances from (to) affiliates
38 
 
(5)
Capital contribution from subsidiary
258 
1,230 
352 
Net proceeds from (payments to) affiliated notional cash pooling programs
 
0 2
0 1
Dividends to parent company
(674)
(825)
(750)
Other
194 
113 
 
Net cash flows (used for) from financing activities
(1,486)
352 
(172)
Effect of foreign currency rate changes on cash and cash equivalents
(139)
(7)
(5)
Net increase (decrease) in cash
461 
(111)
208 
Cash – beginning of year
748 2 3 4
859 1 2
651 1
Cash – end of year
1,209 3 5
748 2 3 4
859 1 2
Consolidating Adjustments
 
 
 
Information Provided In Connection With Outstanding Debt Of Subsidiaries [Line Items]
 
 
 
Net cash flows from operating activities
(674)
(825)
(750)
Purchases of fixed maturities available for sale
263 
106 
115 
Purchases of fixed maturities held to maturity
 
 
0 
Purchases of equity securities
 
 
0 
Sales of fixed maturities available for sale
(268)
(106)
(115)
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
5 
0 
0 
Net derivative instruments settlements
 
 
0 
Acquisition of subsidiaries (net of cash acquired)
 
 
0 
Capital contribution to subsidiary
258 
1,230 
442 
Other
 
 
0 
Net cash flows used for investing activities
258 
1,230 
442 
Dividends paid on Common Shares
 
 
0 
Common Shares repurchased
 
 
0 
Proceeds from issuance of short-term debt
 
 
0 
Net proceeds from (repayments) issuance of short-term debt
 
0 
 
Net proceeds from issuances of long-term debt
0 
 
 
Proceeds from share-based compensation plans
 
 
0 
Advances from (to) affiliates
0 
 
0 
Capital contribution from subsidiary
(258)
(1,230)
(442)
Net proceeds from (payments to) affiliated notional cash pooling programs
(370)3
164 2
(201)1
Dividends to parent company
674 
825 
750 
Net cash flows (used for) from financing activities
46 
(241)
107 
Effect of foreign currency rate changes on cash and cash equivalents
 
 
0 
Net increase (decrease) in cash
(370)
164 
(201)
Cash – beginning of year
(185)2 3 4
(349)1 2
(148)1
Cash – end of year
$ (555)3 5
$ (185)2 3 4
$ (349)1 2
Condensed Unaudited Quarterly Financial Data (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net premiums earned
$ 4,370 
$ 4,754 
$ 4,332 
$ 3,970 
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 17,426 
$ 16,613 
$ 15,677 
Net investment income
577 
566 
556 
553 
557 
522 
534 
531 
2,252 
2,144 
2,181 
Net realized gains (losses) including OTTI
(210)
(120)
(73)
(104)
154 
40 
104 
206 
(507)
504 
78 
Total revenues
4,737 
5,200 
4,815 
4,419 
5,074 
5,172 
4,705 
4,310 
19,171 
19,261 
17,936 
Losses and loss expenses
2,416 
2,684 
2,388 
2,161 
2,517 
2,655 
2,250 
1,926 
9,649 
9,348 
9,653 
Policy benefits
134 
125 
144 
114 
136 
138 
110 
131 
517 
515 
521 
Net income
555 
785 
779 
734 1
998 
916 
891 
953 
2,853 
3,758 
2,706 
Basic earnings per share
$ 1.68 
$ 2.35 
$ 2.30 
$ 2.16 
$ 2.93 
$ 2.68 
$ 2.61 
$ 2.80 
$ 8.50 
$ 11.02 
$ 7.96 
Diluted earnings per share
$ 1.66 
$ 2.32 
$ 2.28 
$ 2.14 
$ 2.90 
$ 2.66 
$ 2.59 
$ 2.77 
$ 8.42 
$ 10.92 
$ 7.89 
Income Tax Reconciliation, Change To Deferred Taxes Related to Unrealized Foreign Exchange Net
$ 89 
 
 
 
 
 
 
 
$ 71 
 
 
Schedule I (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
$ 60,918 
Fair Value
63,162 
Amount at Which Shown in the Balance Sheet
62,904 
Fixed maturities available for sale
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
47,826 
Fair Value
49,395 
Amount at Which Shown in the Balance Sheet
49,395 
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
2,741 
Fair Value
2,820 
Amount at Which Shown in the Balance Sheet
2,820 
Fixed maturities available for sale |
Foreign
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
14,703 
Fair Value
15,242 
Amount at Which Shown in the Balance Sheet
15,242 
Fixed maturities available for sale |
Corporate securities
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
16,897 
Fair Value
17,431 
Amount at Which Shown in the Balance Sheet
17,431 
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
10,011 
Fair Value
10,286 
Amount at Which Shown in the Balance Sheet
10,286 
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
3,474 
Fair Value
3,616 
Amount at Which Shown in the Balance Sheet
3,616 
Fixed maturities held to maturity
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
7,331 
Fair Value
7,589 
Amount at Which Shown in the Balance Sheet
7,331 
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
832 
Fair Value
850 
Amount at Which Shown in the Balance Sheet
832 
Fixed maturities held to maturity |
Foreign
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
916 
Fair Value
963 
Amount at Which Shown in the Balance Sheet
916 
Fixed maturities held to maturity |
Corporate securities
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
2,323 
Fair Value
2,423 
Amount at Which Shown in the Balance Sheet
2,323 
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
1,983 
Fair Value
2,039 
Amount at Which Shown in the Balance Sheet
1,983 
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
1,277 
Fair Value
1,314 
Amount at Which Shown in the Balance Sheet
1,277 
Industrial, miscellaneous, and all others
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
440 
Fair Value
510 
Amount at Which Shown in the Balance Sheet
510 
Short-term investments
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
2,322 
Fair Value
2,322 
Amount at Which Shown in the Balance Sheet
2,322 
Other investments
 
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
 
Cost or Amortized Cost
2,999 
Fair Value
3,346 
Amount at Which Shown in the Balance Sheet
$ 3,346 
Schedule II (BALANCE SHEETS - Parent Company Only) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Assets
 
 
 
 
Short-term investments
$ 2,322 
$ 1,763 
 
 
Other investments
3,346 
2,976 
 
 
Cash
655 1 2
579 1 3 4
615 4 5
614 5
Other assets
3,556 
3,330 
 
 
Total assets
98,248 
94,510 
 
 
Liabilities
 
 
 
 
Accounts payable, accrued expenses, and other liabilities
5,726 
4,810 
 
 
Bank Overdrafts
 
0 3
 
 
Short-term debt
2,552 
1,901 
 
 
Total liabilities
68,661 
65,685 
 
 
Stockholders' Equity Attributable to Parent [Abstract]
 
 
 
 
Common Shares
8,055 
8,899 
 
 
Common Shares in treasury
(1,448)
(255)
 
 
Additional paid-in capital
5,145 
5,238 
 
 
Retained earnings
16,644 
13,791 
 
 
Accumulated other comprehensive income
1,191 
1,152 
 
 
Total liabilities and shareholders’ equity
98,248 
94,510 
 
 
Parent Company Only
 
 
 
 
Assets
 
 
 
 
Investments in subsidiaries and affiliates on equity basis
29,497 
28,351 
 
 
Short-term investments
1 
2 
 
 
Other investments
29 
30 
 
 
Total investments
29,527 
28,383 
 
 
Cash
0 1 2
0 
103 4 5
106 5
Due from subsidiaries and affiliates, net
583 
844 
 
 
Other assets
4 
5 
 
 
Total assets
30,114 
29,232 
 
 
Liabilities
 
 
 
 
Accounts payable, accrued expenses, and other liabilities
281 
222 
 
 
Bank Overdrafts
246 2
185 3
 
 
Total liabilities
527 
407 
 
 
Stockholders' Equity Attributable to Parent [Abstract]
 
 
 
 
Common Shares
8,055 
8,899 
 
 
Common Shares in treasury
(1,448)
(255)
 
 
Additional paid-in capital
5,145 
5,238 
 
 
Retained earnings
16,644 
13,791 
 
 
Accumulated other comprehensive income
1,191 
1,152 
 
 
Total shareholders' equity
29,587 
28,825 
 
 
Total liabilities and shareholders’ equity
$ 30,114 
$ 29,232 
 
 
Schedule II Schedule II (STATEMENTS OF OPERATIONS - Parent Company Only) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Equity in net income of subsidiaries and affiliates
 
 
 
 
 
 
 
 
$ 231 
$ 119 
$ 80 
Net realized gains (losses)
(210)
(120)
(73)
(104)
154 
40 
104 
206 
(507)
504 
78 
Total revenues
4,737 
5,200 
4,815 
4,419 
5,074 
5,172 
4,705 
4,310 
19,171 
19,261 
17,936 
Administrative and other (income) expense
 
 
 
 
 
 
 
 
(2,245)
(2,211)
(2,096)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
634 
480 
270 
Total expenses
 
 
 
 
 
 
 
 
(15,684)
(15,023)
(14,960)
Net income
555 
785 
779 
734 1
998 
916 
891 
953 
2,853 
3,758 
2,706 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
 
2,892 
2,023 
3,682 
Parent Company Only
 
 
 
 
 
 
 
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Investment income, including intercompany interest income
 
 
 
 
 
 
 
 
37 
34 
34 
Equity in net income of subsidiaries and affiliates
 
 
 
 
 
 
 
 
2,707 
3,580 
2,590 
Net realized gains (losses)
 
 
 
 
 
 
 
 
0 
0 
17 
Total revenues
 
 
 
 
 
 
 
 
2,744 
3,614 
2,641 
Administrative and other (income) expense
 
 
 
 
 
 
 
 
(123)
(161)
(75)
Income tax expense (benefit)
 
 
 
 
 
 
 
 
14 
17 
10 
Total expenses
 
 
 
 
 
 
 
 
(109)
(144)
(65)
Net income
 
 
 
 
 
 
 
 
2,853 
3,758 
2,706 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
 
 
 
 
 
 
 
 
$ 2,892 
$ 2,023 
$ 3,682 
Schedule II (STATEMENTS OF CASH FLOWS - Parent Company Only) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net cash flows from operating activities
$ 4,496 
$ 4,022 
$ 3,995 
Purchases of fixed maturities available for sale
(15,553)
(21,340)
(23,572)
Sales of fixed maturities available for sale
7,482 
10,355 
14,321 
Net change in short-term investments
(603)
524 
117 
Net derivative instruments settlements
(230)
(471)
(281)
Other
274 
393 
555 
Net cash flows used for investing activities
(2,504)
(4,442)
(3,439)
Dividends paid on Common Shares
(862)
(517)
(815)
Proceeds from issuance of short-term debt
1,978 
2,572 
2,933 
Repayments of Short-term Debt
1,977 
2,572 
2,783 
Net proceeds from (payments to) affiliated notional cash pooling programs
 
 
0 1
Proceeds from share-based compensation plans
127 
135 
126 
Net cash flows (used for) from financing activities
(1,777)
391 
(550)
Net increase (decrease) in cash
76 
(36)
1 
Cash – beginning of year
579 2 3 4
615 1 2
614 1
Cash – end of year
655 3 5
579 2 3 4
615 1 2
Parent Company Only
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
Net cash flows from operating activities
541 
970 
573 
Net change in short-term investments
0 
(1)
0 
Net derivative instruments settlements
0 
0 
(1)
Capital contributions to subsidiaries
0 
(133)
0 
Net cash flows used for investing activities
0 
(134)
(1)
Dividends paid on Common Shares
(862)
(517)
(815)
Proceeds from issuance of short-term debt
 
 
130 
Repayments of Short-term Debt
 
 
130 
Advances (to) from affiliates
260 
(621)
206 
Net proceeds from (payments to) affiliated notional cash pooling programs
61 3
185 2
0 
Proceeds from share-based compensation plans
0 
14 
34 
Net cash flows (used for) from financing activities
(541)
(939)
(575)
Net increase (decrease) in cash
0 
(103)
(3)
Cash – beginning of year
0 
103 1 2
106 1
Cash – end of year
$ 0 3 5
$ 0 
$ 103 1 2
Schedule IV (SUPPLEMENTAL INFORMATION CONCERNING REINSURANCE) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percentage of Amount Assumed to Net
 
 
 
 
 
 
 
 
19.00% 
21.00% 
21.00% 
Net Amount
$ 4,370 
$ 4,754 
$ 4,332 
$ 3,970 
$ 4,363 
$ 4,610 
$ 4,067 
$ 3,573 
$ 17,426 
$ 16,613 
$ 15,677 
Assumed From Other Companies
 
 
 
 
 
 
 
 
3,336 
3,479 
3,302 
Ceded To Other Companies
 
 
 
 
 
 
 
 
5,465 
5,722 
5,427 
Direct Amount
 
 
 
 
 
 
 
 
19,555 
18,856 
17,802 
Property and Casualty [Member]
 
 
 
 
 
 
 
 
 
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percentage of Amount Assumed to Net
 
 
 
 
 
 
 
 
23.00% 
25.00% 
25.00% 
Net Amount
 
 
 
 
 
 
 
 
12,767 
12,141 
11,265 
Assumed From Other Companies
 
 
 
 
 
 
 
 
2,923 
3,015 
2,788 
Ceded To Other Companies
 
 
 
 
 
 
 
 
4,940 
5,160 
4,918 
Direct Amount
 
 
 
 
 
 
 
 
14,784 
14,286 
13,395 
Accident and Health [Member]
 
 
 
 
 
 
 
 
 
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percentage of Amount Assumed to Net
 
 
 
 
 
 
 
 
4.00% 
5.00% 
5.00% 
Net Amount
 
 
 
 
 
 
 
 
3,678 
3,567 
3,499 
Assumed From Other Companies
 
 
 
 
 
 
 
 
141 
168 
190 
Ceded To Other Companies
 
 
 
 
 
 
 
 
434 
486 
442 
Direct Amount
 
 
 
 
 
 
 
 
3,971 
3,885 
3,751 
Life [Member]
 
 
 
 
 
 
 
 
 
 
 
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Percentage of Amount Assumed to Net
 
 
 
 
 
 
 
 
28.00% 
33.00% 
35.00% 
Net Amount
 
 
 
 
 
 
 
 
981 
905 
913 
Assumed From Other Companies
 
 
 
 
 
 
 
 
272 
296 
324 
Ceded To Other Companies
 
 
 
 
 
 
 
 
91 
76 
67 
Direct Amount
 
 
 
 
 
 
 
 
$ 800 
$ 685 
$ 656 
Schedule VI (SUPPLEMENTARY INFORMATION CONCERNING PROPERTY AND CASUALTY OPERATIONS) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Supplemental Information for Property, Casualty Insurance Underwriters [Abstract]
 
 
 
Deferred Policy Acquisition Costs
$ 2,057 
$ 1,865 
$ 1,757 
Net Reserves for Unpaid Losses
27,008 
26,831 
26,547 
Unearned Premiums
8,222 
7,539 
6,864 
Net Premiums Earned
16,445 
15,708 
14,764 
Net Investment Income
2,071 
1,977 
2,018 
Net Losses and Loss Expenses Incurred Related to Current Year
10,176 
9,878 
10,132 
Net Losses and Loss Expenses Incurred Related to Prior Year
(527)
(530)
(479)
Amortization of Deferred Policy Acquisition Costs
2,805 
2,447 
2,254 
Net Paid Losses and Loss Expenses
9,235 
8,977 
9,219 
Net Premiums Written
$ 16,787 
$ 16,069 
$ 15,107