0001193125-20-278490
8-K
0001193125-20-278490;, ;, 8-K
EDGAR Online, a division of Donnelley Financial Solutions
005fce0b-d54f-4f0f-9d49-9663cab3d2aa UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant To Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - October 27, 2020
Chubb Limited
(Exact name of registrant as specified in its charter)
Switzerland
(State or other jurisdiction of Incorporation)
1-11778
(Commission File Number)
98-0091805
(I.R.S. Employer Identification No.)
Baerengasse 32 CH-8001 Zurich, Switzerland
(Address of principal executive offices)
Registrant's telephone number, including area code: +41 (0)43 456 76 00
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Shares, par value CHF 24.15 per share Guarantee of Chubb INA Holdings Inc. 0.30% Senior Notes due 2024 Guarantee of Chubb INA Holdings Inc. 0.875% Senior Notes due 2027 Guarantee of Chubb INA Holdings Inc. 1.55% Senior Notes due 2028 Guarantee of Chubb INA Holdings Inc. 0.875% Senior Notes due 2029 Guarantee of Chubb INA Holdings Inc. 1.40% Senior Notes due 2031 Guarantee of Chubb INA Holdings Inc. 2.50% Senior Notes due 2038
Trading Symbol(s) CB CB/24A CB/27 CB/28 CB/29A CB/31 CB/38A
Name of each exchange on which registered
New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02. Results of Operations and Financial Condition
On October 27, 2020, Chubb Limited issued a Press Release reporting its third quarter 2020 results and the availability of its third quarter 2020 Financial Supplement. The Press Release and the Financial Supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are hereby incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
Item 9.01. Financial Statements and Exhibits (d) Exhibits
Exhibit Number
99.1
99.2
104
Description
Press Release, Dated October 27, 2020, Reporting Third Quarter 2020 Results Third Quarter 2020 Financial Supplement Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Chubb Limited
By: /s/ Philip V. Bancroft Philip V. Bancroft Executive Vice President and Chief Financial Officer
DATE: October 27, 2020
Chubb Limited Bärengasse 32 CH-8001 Zurich Switzerland
www.chubb.com @Chubb
Exhibit 99.1
News Release
Chubb Reports Third Quarter Per Share Net Income and Core Operating Income of $2.63 and $2.00, Respectively; Net Catastrophe Losses Per Share Were $1.76 Versus $0.41 Prior Year; Consolidated Net Premiums Written of $9.1 Billion, Up 5.3%, or 6.0% in Constant Dollars; Commercial P&C Net Premiums Written Globally Up 10.8%
· Net income was $1,194 million versus $1,091 million prior year, and core operating income was $907 million versus $1,236 million prior year.
· Catastrophe losses, net of reinsurance and including reinstatement premiums, were $925 million pre-tax, or $797 million after tax, compared with $232 million pre-tax, or $191 million after tax, prior year. The current quarter pre-tax catastrophe losses are primarily attributable to severe weatherrelated events globally of $696 million and wildfires of $110 million. There were no changes to the previously reported aggregate COVID-19 losses from June 30, 2020.
· The P&C combined ratio was 95.2% compared with 90.2% prior year. The P&C current accident year combined ratio excluding catastrophe losses was 85.7% compared with 89.5% prior year. The 3.8 percentage points of margin improvement were comprised of 2.7 percentage points in the loss ratio and 1.1 percentage points in the expense ratio.
· P&C net premiums written were $8.5 billion, up 6.4% in constant dollars, including 10.8% positive growth in commercial P&C lines and 3.3% negative growth in consumer lines, primarily from consumer lines outside North America.
· The company continued to experience strong and improving commercial P&C underwriting conditions in most regions of the world, with rate increases averaging 15% in North America and 16% in Overseas General Insurance.
· Pre-tax net investment income was $840 million and adjusted net investment income was $900 million.
· Book and tangible book value per share were up 3.0% and 4.7%, respectively, for the quarter.
ZURICH October 27, 2020 Chubb Limited (NYSE: CB) today reported net income for the quarter ended September 30, 2020 of $1,194 million, or $2.63 per share, compared with $1,091 million, or $2.38 per share, for the same quarter last year. Core operating income was $907 million, or $2.00 per share, compared with $1,236 million, or $2.70 per share, for the same quarter last year. Book and tangible book value per share increased 3.0% and 4.7%, respectively, from June 30, 2020 and now stand at $124.98 and $81.11, respectively. Book value was favorably impacted by total after-tax net realized and unrealized gains of $1.1 billion in the
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
1
Chubb Limited News Release
investment portfolio, principally due to lower interest rates and mark-to-market gains on private equities. Annualized ROE and core operating ROE were 8.6% and 7.0%, respectively. Annualized core operating return on tangible equity was 11.3%.
Chubb Limited Third Quarter Summary (in millions of U.S. dollars, except per share amounts) (Unaudited)
Net income Amortization of fair value adjustment of acquired invested
assets and long-term debt, and other, net of tax Adjusted net realized (gains) losses, net of tax Core operating income, net of tax
2020 $1,194
19 (306) $907
2019 $1,091
26 119 $1,236
Change 9.4%
(26.9)% NM
(26.6)%
(Per Share)
2020
2019
$2.63
$2.38
Change 10.5%
0.04 (0.67) $2.00
0.06 0.26 $2.70
(33.3)% NM
(25.9)%
For the three months ended September 30, 2020 and 2019, the tax expenses (benefits) related to the table above were $(4) million and $(8) million, respectively, for amortization of fair value adjustment of acquired invested assets and long-term debt, and other; $(26) million and $19 million, respectively, for adjusted net realized gains and losses; and $172 million and $219 million, respectively, for core operating income.
For the nine months ended September 30, 2020, net income was $1,115 million, or $2.46 per share, compared with $3,281 million, or $7.13 per share, for 2019. Core operating income was $1,873 million, or $4.13 per share, compared with $3,601 million, or $7.83 per share, for 2019. The P&C combined ratio was 98.9% compared to 89.9% prior year, and the current accident year P&C combined ratio excluding catastrophe losses was 86.8% compared to 89.0% prior year. Book and tangible book value per share increased 2.1% and 3.8%, respectively, from December 31, 2019. Book value was favorably impacted by total after-tax net realized and unrealized gains of $539 million, including $1.5 billion in the investment portfolio, principally due to lower interest rates, partially offset by $437 million of unfavorable foreign exchange and a loss of $456 million in the company's variable annuity reinsurance portfolio.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
2
Chubb Limited News Release
Chubb Limited Nine Months Ended Summary (in millions of U.S. dollars, except per share amounts) (Unaudited)
Net income Amortization of fair value adjustment of acquired invested
assets and long-term debt, and other, net of tax Adjusted net realized (gains) losses, net of tax Core operating income, net of tax
2020 $1,115
60 698 $1,873
2019 $3,281
96 224 $3,601
Change (66.0)%
(37.5)% NM
(48.0)%
2020
(Per Share) 2019
$2.46
$7.13
Change (65.5)%
0.13 1.54 $4.13
0.21 0.49 $7.83
(38.1)% NM
(47.3)%
For the nine months ended September 30, 2020 and 2019, the tax expenses (benefits) related to the table above were $(14) million and $(24) million, respectively, for amortization of fair value adjustment of acquired invested assets and long-term debt, and other; $(54) million and $13 million, respectively, for adjusted net realized gains and losses; and $363 million and $637 million, respectively, for core operating income.
Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Limited, commented: "In the third quarter, Chubb performed well despite a challenging environment that included the continued struggle by many nations to address the impact, both health and economic, of the COVID-19 pandemic, as well as a record number of natural catastrophes for the insurance industry globally. We experienced our share of the CATs with $925 million in net pre-tax losses. Yet, we still published a 95% combined ratio, supported by significant underlying underwriting margin improvement. The P&C current accident year combined ratio excluding catastrophes was 85.7% versus 89.5% prior year, with underwriting income up 44% in constant dollars. Of the 3.8 percentage points of increased margin, 2.7 points were from an improvement in the loss ratio.
"With strong and continuously improving underwriting conditions in most all regions of the world, we grew P&C net premiums written 6.5% in the quarter in constant dollars, comprised of 10.8% growth in our commercial P&C business and a 3.3% decline in consumer lines. Commercial P&C revenue grew 11% in North America and 12% in our international business. New business growth was up briskly, and we retained our renewal business at very high levels. The global pandemic continues to depress consumer activity and, as a result, premiums declined in our global A&H and international personal lines divisions. We expect both to begin to recover sometime in 2021. On the other hand, our North America high net worth personal lines business is benefiting from a flight to quality and grew about 3% in the quarter.
"The current commercial P&C market, as we have observed, is a natural response to prolonged industry underpricing of risk and the loss cost and interest rate environment. I believe the favorable trend will endure. Where we can get paid adequately to assume the risk and volatility, we are growing our exposures across the portfolio while achieving rates that exceed loss costs, and that means margin improvement. We have the people, the capabilities, the execution-oriented culture, and the command and control structure to continue capitalizing on this underwriting environment, and we expect to grow our EPS through both revenue growth and improved margins."
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
3
Chubb Limited News Release
Operating highlights for the quarter ended September 30, 2020 were as follows:
Chubb Limited (in millions of U.S. dollars except for percentages) P&C Net premiums written (increase of 6.4% in constant dollars) Underwriting income Combined ratio Current accident year underwriting income excluding catastrophe losses Current accident year combined ratio excluding catastrophe losses
Global P&C (excludes Agriculture) Net premiums written (increase of 6.6% in constant dollars) Underwriting income Combined ratio Current accident year underwriting income excluding catastrophe losses Current accident year combined ratio excluding catastrophe losses
North America Agricultural Insurance Net premiums written Underwriting income Combined ratio Current accident year underwriting income excluding catastrophe losses Current accident year combined ratio excluding catastrophe losses
Q3 2020
$ 8,468 $ 392
95.2% $ 1,171
85.7%
Q3 2019
$ 8,010 $ 754
90.2% $ 819
89.5%
Change
5.7% (48.0)%
43.0%
$ 7,482 $ 327
95.5% $ 1,078
85.0%
$ 7,072 $ 753
88.9% $ 797
88.3%
5.8% (56.6)%
35.3%
$ 986
$
65
93.3%
$
93
90.4%
$ 938
$
1
99.9%
$
22
97.7%
5.0% NM
NM
· Consolidated net premiums earned increased 5.3%, or 5.9% in constant dollars. P&C net premiums earned increased 5.7%, or 6.3% in constant dollars, including positive growth of 8.8% in commercial P&C lines and 0.8% in consumer lines.
· Total pre-tax and after-tax catastrophe losses were $925 million (11.3 percentage points of the combined ratio) and $797 million, respectively, compared with $232 million (3.0 percentage points of the combined ratio) and $191 million, respectively, last year.
· Total pre-tax and after-tax favorable prior period development were $146 million (1.8 percentage points of the combined ratio) and $126 million, respectively, compared with $167 million (2.3 percentage points of the combined ratio) and $112 million, respectively, last year.
· Global P&C current accident year combined ratio excluding catastrophe losses decreased 3.3 percentage points. Over two percentage points of the margin improvement were loss ratio-related, and the balance was expense ratio-related.
· Pre-tax net investment income was $840 million and adjusted net investment income was $900 million, which was above the guidance range principally due to increased call activity in the company's corporate bond portfolio and the reclassification of private equity partnership income from other income to investment income.
· Operating cash flow was $3.5 billion.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
4
Chubb Limited News Release
Details of financial results by business segment are available in the Chubb Limited Financial Supplement. Key segment items for the quarter ended September 30, 2020 are presented below:
Chubb Limited (in millions of U.S. dollars except for percentages) Total North America P&C Insurance Net premiums written
Commercial P&C Consumer P&C Combined ratio Current accident year combined ratio excluding catastrophe losses
Q3 2020
$ 6,049 $ 4,595 $ 1,454
94.7% 83.6%
Q3 2019
$ 5,641 $ 4,185 $ 1,456
88.3% 88.0%
Change
7.2% 9.8% (0.1)%
North America Commercial P&C Insurance Net premiums written commercial P&C Net premiums written accident and health (A&H) Net premiums written
Major accounts retail and excess and surplus (E&S) wholesale Middle market and small commercial Combined ratio Current accident year combined ratio excluding catastrophe losses
$ 3,609
$
169
$ 3,778
$ 2,294
$ 1,484
91.9%
84.9%
$ 3,247
$
205
$ 3,452
$ 2,043
$ 1,409
86.9%
87.6%
11.2% (18.1)%
9.4% 12.2%
5.4%
North America Personal P&C Insurance Net premiums written Combined ratio Current accident year combined ratio excluding catastrophe losses
$ 1,285 103.5% 74.8%
$ 1,251 83.1% 81.3%
2.8%
North America Agricultural Insurance Net premiums written Combined ratio Current accident year combined ratio excluding catastrophe losses
$
986
93.3%
90.4%
$
938
99.9%
97.7%
5.0%
Overseas General Insurance Net premiums written (increase of 2.8% in constant dollars)
Commercial P&C (increase of 12.2% in constant dollars) Consumer P&C (decrease of 8.1% in constant dollars) Combined ratio Current accident year combined ratio excluding catastrophe losses
$ 2,238
$ 1,315
$
923
89.4%
87.9%
$ 2,228 $ 1,191 $ 1,037
90.5% 90.0%
0.5% 10.4% (10.9)%
· North America Commercial P&C Insurance: The current accident year combined ratio excluding catastrophe losses decreased 2.7 percentage points, including a 1.7 percentage point decrease in the loss ratio and a 1.0 percentage point decrease in the expense ratio.
· North America Personal P&C Insurance: The current accident year combined ratio excluding catastrophe losses decreased 6.5 percentage points, including a 5.9 percentage point decrease in the loss ratio and a 0.6 percentage point decrease in the expense ratio.
· North America Agricultural Insurance: The current accident year combined ratio excluding catastrophe losses decreased 7.3 percentage points, reflecting a decrease in the loss ratio of 7.1 percentage points.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
5
Chubb Limited News Release
· Overseas General Insurance: The current accident year combined ratio excluding catastrophe losses decreased 2.1 percentage points, including a 1.2 percentage point decrease in the loss ratio and a 0.9 percentage point decrease in the expense ratio.
· Global Reinsurance: Net premiums written were $181 million, up 28.4%, or 27.2% in constant dollars. The combined ratio was 118.3% compared with 81.1% prior year. The current accident year combined ratio excluding catastrophe losses was 80.8% compared with 82.1% prior year.
· Life Insurance: Net premiums written were $610 million, down 0.4%, or up 0.2% in constant dollars. Segment income was $104 million, up $9 million, or 10.6% in constant dollars. International life insurance segment income was $52 million, up $12 million, or 28.1% in constant dollars.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
6
Chubb Limited News Release
All comparisons are with the same period last year unless otherwise specifically stated. Please refer to the Chubb Limited Financial Supplement, dated September 30, 2020, which is posted on the company's investor relations website, investors.chubb.com, in the Financials section for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio, and debt and capital.
Chubb Limited will hold its third quarter earnings conference call on Wednesday, October 28, 2020 beginning at 8:30 a.m. Eastern. The earnings conference call will be available via live webcast at investors.chubb.com or by dialing 800-458-4148 (within the United States) or 323-794-2597 (international), passcode 2361321. Please refer to the Chubb website under Events and Presentations for details. A replay of the call will be available until Wednesday, November 11, 2020 and the archived webcast will be available on our website for approximately one month. To listen to the replay, please click here to register and receive dial-in numbers.
About Chubb
Chubb is the world's largest publicly traded property and casualty insurance company. With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. As an underwriting company, we assess, assume and manage risk with insight and discipline. We service and pay our claims fairly and promptly. The company is also defined by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London, Paris and other locations, and employs approximately 33,000 people worldwide. Additional information can be found at: www.chubb.com.
Investor Contact Karen Beyer: (212) 827-4445; karen.beyer@chubb.com
Media Contact Jeffrey Zack: (212) 827-4444; jeffrey.zack@chubb.com
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
7
Chubb Limited News Release
Regulation G - Non-GAAP Financial Measures In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP).
Throughout this document there are various measures presented on a constant-dollar basis (i.e., excludes the impact of foreign exchange). We believe it is useful to evaluate the trends in our results exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period.
Adjusted net investment income is net investment income excluding the amortization of the fair value adjustment on acquired invested assets from the acquisition of The Chubb Corporation (Chubb Corp) of $28 million in Q3 2020 and $90 million for the nine months ended September 30, 2020 and including investment income of $32 million in Q3 2020 from partially-owned investment companies (private equity partnerships) where our ownership interest is in excess of three percent that are accounted for under the equity method. The mark-to-market movement on these private equity partnerships are included in adjusted net realized gains (losses) as described below. We believe this measure is meaningful as it highlights the underlying performance of our invested assets and portfolio management in support of our lines of business.
Adjusted net realized gains (losses), net of tax, includes net realized gains (losses) and net realized gains (losses) recorded in other income (expense) related to unconsolidated subsidiaries, and excludes realized gains and losses on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing impacts underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations, and therefore realized gains (losses) from these derivatives are reclassified to adjusted losses and loss expenses.
P&C underwriting income is calculated by subtracting adjusted losses and loss expenses, policy acquisition costs and administrative expenses from net premiums earned by our P&C operations. We use P&C underwriting income and operating ratios to monitor the results of our operations without the impact of certain factors, including net investment income, other income (expense), interest expense, amortization expense of purchased intangibles, Chubb integration expenses, income tax expense and adjusted net realized gains (losses).
Current accident year underwriting income excluding catastrophe losses is underwriting income adjusted to exclude catastrophe losses and prior period development (PPD). We believe it is useful to exclude catastrophe losses, as they are not predictable as to timing and amount, and PPD as these unexpected loss developments on historical reserves are not indicative of our current underwriting performance. We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.
Core operating income, net of tax, excludes from net income the after-tax impact of adjusted net realized gains (losses), Chubb integration expenses, and the amortization of fair value adjustment of acquired invested assets and long-term debt related to the Chubb Corp acquisition. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude adjusted net realized gains (losses) because the amount of these gains (losses) are heavily influenced by, and fluctuate in part according to, the availability of market opportunities. We exclude the amortization of the fair value adjustments related to purchased
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
8
Chubb Limited News Release
invested assets and long-term debt and Chubb integration expenses due to the size and complexity of this acquisition. These integration expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration expenses facilitates the comparison of our financial results to our historical operating results. References to core operating income measures mean net of tax, whether or not noted.
P&C combined ratio is the sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding the life business and including the realized gains and losses on the crop derivatives, as noted above.
Current accident year combined ratio excluding catastrophe losses excludes the impact of catastrophe losses and PPD from the combined ratio. We believe this measure provides a better evaluation of our underwriting performance and enhances the understanding of the trends in our property and casualty business that may be obscured by these items.
Global P&C performance metrics comprise consolidated operating results (including corporate) and exclude the operating results of the company's Life Insurance and North America Agricultural Insurance segments. The agriculture insurance business is a different business in that it is a public sector and private sector partnership in which insurance rates, premium growth, and risk-sharing is not market-driven like the remainder of the company's P&C insurance business. We believe that these measures are useful and meaningful to investors as they are used by management to assess the company's global P&C operations which are the most economically similar. We exclude the North America Agricultural Insurance and Life Insurance segments because the results of these businesses do not always correlate with the results of our global P&C operations.
Tangible book value per common share is shareholders' equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. We believe that goodwill and other intangible assets are not indicative of our underlying insurance results or trends and make book value comparisons to less acquisitive peer companies less meaningful.
See the reconciliation of Non-GAAP Financial Measures on pages 30-36 in the Financial Supplement. These measures should not be viewed as a substitute for measures determined in accordance with GAAP, including premium, net income, return on equity, and net investment income.
NM - not meaningful comparison
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
9
Chubb Limited News Release
Cautionary Statement Regarding Forward-Looking Statements:
Forward-looking statements made in this press release, such as those related to company performance, including 2020 performance and the impact of the COVID-19 pandemic, pricing, economic and market conditions, and our expectations and intentions and other statements that are not historical facts, reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the following: competition, pricing and policy term trends, the levels of new and renewal business achieved, the frequency and severity of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, integration activities and performance of acquired companies, loss of key employees or disruptions to our operations, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance recoverable, credit developments among reinsurers, rating agency action, infection rates and severity of pandemics, including COVID-19, and their effects on our business operations and claims activity, possible terrorism or the outbreak and effects of war, economic, political, regulatory, insurance and reinsurance business conditions, potential strategic opportunities including acquisitions and our ability to achieve and integrate them, as well as management's response to these factors, and other factors identified in our filings with the Securities and Exchange Commission (SEC).
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
10
Chubb Limited News Release
Chubb Limited Summary Consolidated Balance Sheets (in millions of U.S. dollars, except per share data) (Unaudited)
Assets Investments Cash Insurance and reinsurance balances receivable Reinsurance recoverable on losses and loss expenses Goodwill and other intangible assets Other assets
Total assets
September 30 2020
$ 116,047 1,707
10,588 15,670 21,103 22,671 $ 187,786
December 31 2019
$ 109,234 1,537 10,357 15,181 21,359 19,275
$ 176,943
Liabilities Unpaid losses and loss expenses Unearned premiums Other liabilities
Total liabilities
Shareholders' equity Total shareholders' equity Total liabilities and shareholders' equity
$ 67,905 17,502 45,966
$ 131,373
56,413 $ 187,786
$ 62,690 16,771 42,151
$ 121,612
55,331 $ 176,943
Book value per common share Tangible book value per common share Book value per common share excluding cumulative translation losses (1) Tangible book value per common share excluding cumulative translation losses (1)
$ 124.98 $ 81.11 $ 129.59 $ 84.28
$ 122.42 $ 78.14 $ 126.71 $ 81.16
(1) Cumulative translation losses were $2.1 billion in 2020 ($1.4 billion on tangible and $0.7 billion on intangible net assets) and $1.9 billion in 2019 ($1.3 billion on tangible and $0.6 billion on intangible net assets).
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
11
Chubb Limited News Release
Chubb Limited Summary Consolidated Financial Data (in millions of U.S. dollars, except share, per share data, and ratios) (Unaudited)
Gross premiums written Net premiums written Net premiums earned Losses and loss expenses Policy benefits Policy acquisition costs Administrative expenses Net investment income Net realized gains (losses) Interest expense Other income (expense):
Gains (losses) from separate account assets Other Amortization of purchased intangibles Chubb integration expenses Income tax expense Net income
Diluted earnings per share: Net income Core operating income
Weighted average diluted shares outstanding
P&C combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio P&C combined ratio
P&C underwriting income
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb.
Three Months Ended
September 30
2020
2019
$ 11,220 $ 10,724
9,078
8,622
8,765
8,327
5,835
5,052
198
158
1,645
1,603
733
752
840
873
(141)
(155)
130
138
Nine Months Ended
September 30
2020
2019
$31,012 $ 30,190
25,410
24,278
24,687
23,355
16,897
13,865
550
515
4,853
4,611
2,201
2,220
2,528
2,568
(1,069)
(475)
390
418
24 461 72 -- 142
$ 1,194
(7) 64 76
2 230
$ 1,091
8 364 217 -- 295
$ 1,115
20 306 229
9 626
$ 3,281
$ 2.63 $ 2.00
453.3
$ 2.38 $ 2.70
458.2
$ 2.46 $ 4.13
453.6
$ 7.13 $ 7.83
459.9
69.2% 18.0% 8.0% 95.2%
$ 392
63.1% 18.4% 8.7% 90.2%
$ 754
71.5% 18.8% 8.6% 98.9%
$ 241
61.5% 19.2%
9.2% 89.9%
$ 2,193
12
Exhibit 99.2
Chubb Limited Financial Supplement for the Quarter Ended September 30, 2020
Investor Contact Karen Beyer: (212) 827-4445 email: investorrelations@chubb.com
This report is for informational purposes only. It should be read in conjunction with documents filed by Chubb Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Cautionary Statement Regarding Forward-Looking Statements Any forward-looking statements made in this financial supplement reflect Chubb Limited's current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from such statements. For example, forward-looking statements related to financial performance, including exposures, reserves and recoverables, could be affected by the frequency and severity of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, currency exchange fluctuations, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable and credit developments among reinsurers.
Our forward-looking statements could also be affected by, among other things, competition, pricing and policy term trends, market acceptance, changes in demand, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war, and such other factors identified in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Chubb Limited
Financial Supplement Table of Contents
I. Financial Highlights - Consolidated Financial Highlights
II. Consolidated Results - Consolidated Statement of Operations - P&C Results--Consecutive Quarters - Global P&C Results--Consecutive Quarters - Catastrophe Losses - Summary Consolidated Balance Sheets - Line of Business - Consolidated Results by Segment
III. Segment Results - North America Commercial P&C Insurance - North America Personal P&C Insurance - North America Agricultural Insurance - Overseas General Insurance - Global Reinsurance - Life Insurance - Corporate
IV. Balance Sheet Details - Loss Reserve Rollforward - Reinsurance Recoverable Analysis - Investment Portfolio - Net Realized and Unrealized Gains (Losses) - Debt and Capital - Computation of Basic and Diluted Earnings Per Share - Book Value and Book Value per Common Share
V. Other Disclosures - Non-GAAP Financial Measures - Glossary
Page
1
2 3 4 5 6 7 8 - 11
12 13 14 15 16 17 18
19 20 21 - 24 25 - 26 27 28 29
30 - 36 37
Chubb Limited Consolidated Financial Highlights (in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
Note: All dollar amounts in the Financial Supplement are rounded. However, percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ.
Gross premiums written
Net premiums written
Three months ended September 30
2020
2019
$
11,220 $ 10,724
$
9,078 $ 8,622
% Change
Constant $ Constant $ Nine months ended September 30
2019
% Change
2020
2019
4.6% $ 10,656
5.3% $ 31,012 $ 30,190
5.3% $ 8,566
6.0% $ 25,410 $ 24,278
Constant $ Constant $
% Change
2019 % Change
2.7% $ 29,930
3.6%
4.7% $ 24,054
5.6%
P&C net
premiums
written
$
8,468 $ 8,010
5.7% $ 7,958
6.4% $ 23,536 $ 22,508
4.6% $ 22,295
5.6%
P&C net
premiums
written
adjusted for
COVID-19
exposures (1)
Net premiums
earned
$
8,765 $ 8,327
5.3% $ 8,277
5.9% $ 24,687 $ 23,355
5.4% 5.7% $ 23,145
6.4% 6.7%
Net investment
income
$
840 $ 873
-3.8% $
871
-3.5% $ 2,528 $ 2,568
-1.6% $ 2,557
-1.1%
Adjusted net
investment
income (2)
$
900 $ 931
-3.4% $
929
-3.1% $ 2,682 $ 2,756
-2.7% $ 2,745
-2.3%
P&C
underwriting
income
$
P&C CAY
underwriting
income ex Cats $
392 $ 754 1,171 $ 819
-48.0% $
747 -47.5% $
241 $ 2,193
43.0% $
812
44.2% $ 3,015 $ 2,391
-89.0% $ 2,171 -88.9%
26.1% $ 2,369
27.3%
Agriculture CAY
underwriting
income ex Cats $
93 $
22
NM $
22
NM $
138 $
76
84.0% $ 76
84.0%
Core operating
income
$
907 $ 1,236
-26.6% $ 1,228 -26.1% $ 1,873 $ 3,601
-48.0% $ 3,575 -47.6%
Net income
$
Operating cash
flow
$
P&C combined
ratio
Loss and loss
1,194 $ 1,091 3,544 $ 2,205
9.4%
$ 1,115 $ $ 7,241 $
3,281 4,913
-66.0%
expense ratio
69.2%
63.1%
71.5%
61.5%
Policy acquisition
cost and
administrative
expense ratio
26.0%
27.1%
27.4%
28.4%
Combined
ratio
95.2%
90.2%
98.9%
89.9%
P&C Current
Accident Year
(CAY) combined ratio ex Catastrophe losses (Cats) CAY loss and
loss expense
ratio ex Cats
59.7%
62.4%
59.4%
60.6%
CAY policy
acquisition cost
and
administrative expense ratio ex Cats
26.0%
27.1%
27.4%
28.4%
CAY combined
ratio ex Cats
85.7%
89.5%
86.8%
89.0%
Global P&C
CAY
combined
ratio ex Cats
CAY loss and
loss expense
ratio ex Cats
56.4%
58.5%
CAY policy
acquisition cost
and
administrative
expense ratio
ex Cats
28.6%
29.8%
CAY combined
ratio ex Cats
85.0%
88.3%
ROE
8.6%
8.1%
Core operating
return on
equity (ROE)
7.0%
9.5%
Core operating
return on
tangible equity
(ROTE)
11.3%
15.6%
Effective tax rate
10.7%
17.4%
Core operating
effective tax
rate
16.0%
15.1%
Earnings per
share
Net income
$
2.63 $ 2.38
10.5%
$
Core operating
income
$
2.00 $ 2.70
-25.9%
$
Weighted average
basic common
shares
outstanding
451.8
455.0
Weighted average
diluted
common shares
outstanding
453.3
458.2
September 30 2020
Book value per
common share $
124.98
Tangible book
value per
common share $
81.11
June 30 2020
% Change 3Q-20 vs.
2Q-20
% Change
December 31 3Q-20 vs.
2019
4Q-19
$ 121.32
3.0% $ 122.42
2.1%
$ 77.49
4.7% $ 78.14
3.8%
57.9%
28.7% 86.6% 2.7% 4.7%
7.6% 20.9% 16.2% 2.46 $ 4.13 $
451.7
453.6
58.8%
29.8% 88.6%
8.3% 9.3%
15.3% 16.0% 15.0% 7.13 7.83
457.0
459.9
-65.5% -47.3%
(1) YTD 2020 net premiums written were adversely impacted by COVID-19 including $184 million recorded in Q2 2020 of exposure adjustments on in-force policies.
(2) Effective Q3 2020, Adjusted net investment income includes income from private equity partnerships where we hold more than three percent ownership. Previously, this income was included within Other income (expense)--operating. There is no impact to Net income and Core operating income. Prior year amounts have been reclassified to conform to the new presentation.
Financial Highlights
Page 1
Chubb Limited Statement of Operations--Consecutive Quarters
(in millions of U.S. dollars) (Unaudited)
Consolidated Statements of Operations
Gross premiums written
3Q-20
$11,220
Net premiums written
9,078
Net premiums earned Adjusted losses and loss expenses (1)
8,765 5,834
Realized (gains) losses on crop derivatives
(1)
Losses and loss expenses Adjusted policy benefits (2)
5,835 174
Gains (losses) from fair value changes in separate account
liabilities
(24)
Policy benefits
198
Policy acquisition costs
1,645
Administrative expenses
733
Adjusted net investment income (3)
900
Other (income) expense from private equity partnerships
(32)
Amortization expense of fair value adjustment on acquired
invested assets
(28)
Net investment income Adjusted realized gains (losses) (4)
840 (142)
Realized gains (losses) on crop derivatives
1
Net realized gains (losses) Adjusted interest expense (5)
(141) 135
Amortization benefit of fair value adjustment on acquired long
term debt
(5)
Interest expense
130
Gains (losses) from fair value changes in separate account
assets
24
Net realized gains (losses) related to unconsolidated entities
422
Other income (expense) from private equity partnerships
32
Other income (expense) - operating
7
Other income (expense)
485
Amortization expense of purchased intangibles
72
Chubb integration expenses
--
Income tax expense (benefit)
142
Net income (loss)
$ 1,194
2Q-20
$10,040 8,355 8,128 6,578 1 6,577 183
(40) 223 1,593 727 865
(8)
(30) 827
31 (1) 30 134
(6) 128
40 (100)
8 (6) (58) 72 -- (62) $ (331)
1Q-20
$ 9,752 7,977 7,794 4,487 2 4,485 185
56 129 1,615 741 917 (24)
(32) 861 (956)
(2) (958) 137
(5) 132
(56) (7) 24
(16) (55) 73 -- 215 $ 252
4Q-19
$ 9,934 7,997 7,935 4,865 -- 4,865 201
(24) 225 1,542 810 917 (24)
(35) 858 (55) -- (55) 140
(6) 134
24 227 24
(5) 270 76 14 169 $ 1,173
3Q-19
$10,724 8,622 8,327 5,066 14 5,052 165
7 158 1,603 752 931 (21)
(37) 873 (141) (14) (155) 143
(5) 138
(7) 41 21
2 57 76
2 230 $ 1,091
YTD 2020
$31,012 25,410 24,687 16,899 2 16,897 542
(8) 550 4,853 2,201 2,682 (64)
(90) 2,528 (1,067)
(2) (1,069)
406
(16) 390
8 315 64 (15) 372 217 -- 295 $ 1,115
YTD 2019
$30,190 24,278 23,355 13,873 8 13,865 495
(20) 515 4,611 2,220 2,756 (62)
(126) 2,568 (467)
(8) (475) 433
(15) 418
20 256
62 (12) 326 229
9 626 $ 3,281
Full Year 2019
$ 40,124 32,275 31,290 18,738 8 18,730 696
(44) 740 6,153 3,030 3,673 (86)
(161) 3,426 (522)
(8) (530) 573
(21) 552
44 483
86 (17) 596 305 23 795 $ 4,454
(1) Adjusted losses and loss expenses used throughout this report includes realized gains and losses on crop derivatives. (2) Adjusted policy benefits used throughout this report excludes gains and losses from fair value changes in separate account liabilities. (3) Adjusted net investment income used throughout this report excludes Amortization expense of fair value adjustment on acquired invested assets and
includes income from private equity partnerships where we hold more than three percent ownership. (4) Adjusted realized gains (losses) used throughout this report excludes realized gains and losses on crop derivatives. (5) Adjusted interest expense used throughout this report excludes Amortization benefit of fair value adjustment on acquired long term debt.
Statement of Operations
Page 2
Chubb Limited P&C Underwriting Results--Consecutive Quarters
(in millions of U.S. dollars, except ratios) (Unaudited)
Chubb Limited P&C Underwriting Results
P&C underwriting income (loss) (Including Corporate and excluding Life Insurance) Gross premiums written Net premiums written Net premiums earned Adjusted losses and loss expenses Policy acquisition costs Administrative expenses
P&C underwriting income (loss)
P&C CAY underwriting income ex Cats % Change versus prior year period Net premiums written Net premiums written adjusted for COVID-19 exposures
(1)
Net premiums earned Net premiums written constant $ Net premiums written adjusted for COVID-19 exposures
(1)
Net premiums earned constant $ P&C combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio
Combined ratio
CAY P&C combined ratio ex Cats CAY loss and loss expense ratio ex Cats CAY policy acquisition cost and administrative expense
ratio ex Cats
CAY combined ratio ex Cats
Other ratios Net premiums written/gross premiums written Expense ratio Expense ratio excluding A&H Catastrophe reinstatement premiums (expensed)
collected--pre-tax Catastrophe losses--pre-tax Unfavorable (favorable) prior period development
(PPD)--pre-tax Impact of catastrophe losses on P&C combined ratio--
Unfavorable Impact of PPD on P&C combined ratio--Unfavorable
(favorable) Impact of Cats and PPD on P&C combined ratio--
Unfavorable
3Q-20
2Q-20
1Q-20
4Q-19
3Q-19
YTD 2020
YTD 2019
Full Year 2019
$10,575 8,468 8,166 5,651 1,470 653
$ 392
$ 1,171
$ 9,387 7,736 7,520 6,407 1,397 645
$ (929)
$ 947
$ 9,069 7,332 7,163 4,285 1,435 665
$ 778
$ 897
$ 9,282 7,375 7,322 4,689 1,376 724
$ 533
$ 730
$10,082 8,010 7,729 4,876 1,427 672
$ 754
$ 819
$29,031 23,536 22,849 16,343 4,302 1,963
$ 241
$ 3,015
$28,325 22,508 21,625 13,292 4,157 1,983
$ 2,193
$ 2,391
$ 37,607 29,883 28,947 17,981 5,533 2,707
$ 2,726
$ 3,121
5.7%
5.7% 6.4%
6.3%
-0.4%
2.1% 2.7% 1.4%
3.9% 4.6%
8.9%
8.9% 9.3%
9.3%
9.0%
6.3% 9.8%
7.1%
6.2%
5.0% 7.2%
6.1%
4.6%
5.4% 5.7% 5.6%
6.4% 6.6%
4.5%
3.2% 6.2%
4.9%
5.6%
4.0% 7.0%
5.4%
69.2% 18.0% 8.0%
95.2%
85.2% 18.5% 8.6%
112.3%
59.8% 20.0% 9.3%
89.1%
64.0% 18.8% 9.9%
92.7%
63.1% 18.4% 8.7%
90.2%
71.5% 18.8%
8.6%
98.9%
61.5% 19.2%
9.2%
89.9%
62.1% 19.1% 9.4%
90.6%
59.7%
26.0% 85.7%
60.4%
27.0% 87.4%
58.2%
29.3% 87.5%
61.3%
28.7% 90.0%
62.4%
27.1% 89.5%
59.4%
27.4% 86.8%
60.6%
28.4% 89.0%
60.8%
28.4% 89.2%
80% 26.0% 24.0%
82% 27.1% 25.2%
81% 29.3% 27.5%
79% 28.7% 26.6%
79% 27.1% 25.1%
81% 27.4% 25.5%
79% 28.4% 26.4%
79% 28.5% 26.4%
$ 7 $ (20) $ -- $ (14) $ 2 $ (13) $ 2 $ (12) $ 932 $1,781 $ 237 $ 416 $ 234 $ 2,950 $ 759 $ 1,175
$ (146) $ 75 $ (118) $ (233) $ (167) $ (189) $ (559) $ (792)
11.3% 23.9% 3.3% 5.9%
3.0% 13.0%
3.5%
4.1%
-1.8% 1.0% -1.7% -3.2%
-2.3%
-0.9%
-2.6%
-2.7%
9.5% 24.9% 1.6% 2.7%
0.7% 12.1%
0.9%
1.4%
(1) YTD 2020 net premiums written were adversely impacted by COVID-19 including $184 million recorded in Q2 2020 of exposure adjustments on in-force policies.
P&C Results
Page 3
Chubb Limited Global P&C Underwriting Results--Consecutive Quarters
(in millions of U.S. dollars, except ratios) (Unaudited)
Global P&C includes the company's North America Commercial P&C Insurance segment (refer to page 12), North America Personal P&C Insurance segment (refer to page 13), Overseas General Insurance segment (refer to page 15), Global Reinsurance segment (refer to page 16), and Corporate (refer to page 18). Global P&C excludes the North America Agricultural Insurance and Life Insurance segments.
Global P&C (Including Corporate and excluding Agriculture)
Global P&C underwriting income (loss) Gross premiums written Net premiums written Net premiums earned Adjusted losses and loss expenses Policy acquisition costs Administrative expenses
3Q-20
2Q-20
1Q-20
4Q-19
3Q-19
YTD 2020
YTD 2019
Full Year 2019
$ 9,243 7,482 7,195 4,806 1,414 648
$ 8,735 7,275 7,144 6,094 1,368 642
$ 8,849 7,175 7,069 4,220 1,424 661
$ 9,000 7,099 6,901 4,236 1,382 727
$ 8,810 7,072 6,788 3,996 1,371 668
$26,827 21,932 21,408 15,120 4,206 1,951
$26,192 20,974 20,251 12,129 4,067 1,974
$ 35,192 28,073 27,152 16,365 5,449 2,701
Global P&C underwriting income (loss)
$ 327 $ (960) $ 764 $ 556 $ 753 $ 131 $ 2,081 $ 2,637
Global P&C CAY underwriting income ex Cats % Change versus prior year period Net premiums written Net premiums written adjusted for COVID-19 exposures (1) Net premiums earned Net premiums written constant $ Net premiums written adjusted for COVID-19 exposures (1) Net premiums earned constant $ Combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio
$1,078 $ 910 $ 889 $ 789 $ 797 $ 2,877 $ 2,315 $ 3,104
5.8%
6.0% 6.6%
6.7%
-0.3% 2.3% 2.9% 1.6% 4.2% 4.9%
8.6%
8.4% 9.1%
8.8%
8.0%
5.0% 8.9%
5.8%
6.2%
4.4% 7.3%
5.6%
4.6% 5.5% 5.7% 5.6% 6.6% 6.8%
4.0%
2.8% 5.8%
4.6%
5.0%
3.3% 6.6%
4.9%
66.8% 19.7% 9.0%
85.3% 19.1% 9.0%
59.7% 20.2% 9.3%
61.4% 20.0% 10.5%
58.9% 20.2% 9.8%
70.6% 19.7%
9.1%
59.9% 20.1%
9.7%
60.3% 20.1% 9.9%
Combined ratio
95.5% 113.4% 89.2% 91.9% 88.9% 99.4% 89.7% 90.3%
CAY combined ratio ex Cats CAY loss and loss expense ratio ex Cats CAY policy acquisition cost and administrative expense ratio
ex Cats
56.4% 28.6%
59.3% 28.0%
57.9% 29.5%
58.1% 30.5%
58.5% 29.8%
57.9% 28.7%
58.8% 29.8%
58.6% 30.0%
CAY combined ratio ex Cats
85.0% 87.3% 87.4% 88.6% 88.3% 86.6% 88.6% 88.6%
Other ratios Net premiums written/gross premiums written Expense ratio Expense ratio excluding A&H Catastrophe reinstatement premiums (expensed)
collected--pre-tax Catastrophe losses--pre-tax Unfavorable (favorable) prior period development
(PPD)--pre-tax
81% 28.7% 26.7%
83% 28.1% 26.2%
81% 29.5% 27.7%
79% 30.5% 28.6%
80% 30.0% 28.0%
82% 28.8% 26.9%
80% 29.8% 27.9%
80% 30.0% 28.0%
$ 7 $ (20) $ -- $ (14) $ 2 $ (13) $ 2 $ (12) $ 922 $1,775 $ 229 $ 415 $ 231 $ 2,926 $ 752 $ 1,167
$ (164) $ 75 $ (104) $ (196) $ (185) $ (193) $ (516) $ (712)
(1) YTD 2020 net premiums written were adversely impacted by COVID-19 including $184 million recorded in Q2 2020 of exposure adjustments on in-force policies.
Global P&C
Page 4
Chubb Limited Segments Results--Catastrophe Loss Charges
(in millions of U.S. dollars) (Unaudited)
Chubb Limited Catastrophe Loss Charges--Q3 2020
Catastrophe Loss Charges by Event--Net
U.S. Hurricanes/Tropical storms
U.S. wildfires Midwest derecho International weather-related
events Other events IBNR Q1 & Q2 Development
Total
Reinstatement premiums collected
Total before income tax
Income tax benefit
Total after income tax
North America Commercial P&C Insurance
$
318
30
53
1
14 35 (4)
$
447
--
$
447
North America Personal P&C Insurance
$
117
80
34
3
23 32 16
$
305
--
$
305
North America Agricultural Insurance
$
1
--
8
--
1 -- --
$
10
--
$
10
Overseas General Insurance
$ 51 -- --
28 2
-- 14
$ 95
-- $ 95
Global Reinsurance
$
47
--
1
--
-- -- 27
$
75
7
$
68
Total Consolidated
excluding Reinstatement
premiums
$
534
110
96
32
40 67 53
$
932
Reinstatement premiums collected
$
4
--
--
-- -- --
3
$
7
Total Consolidated
including Reinstatement
premiums
$
530
110
96
32 40 67 50
$
925
128
$
797
Note: There were no changes to the previously reported aggregate COVID-19 losses from June 30, 2020. The above table represents catastrophe loss estimates for events that occurred in the current calendar year only (i.e., loss events occurring during the third quarter of 2020 and changes to catastrophe loss estimates that occurred in the previous quarters of 2020). Changes in catastrophe loss estimates in the current calendar year that relate to loss events that occurred in previous calendar years are considered prior period development and are excluded from the table above.
Catastrophe Losses
Page 5
Chubb Limited Summary Consolidated Balance Sheets (in millions of U.S. dollars, except per share data)
(Unaudited)
Assets Fixed maturities available for sale, at fair value Fixed maturities held to maturity, at amortized cost Equity securities, at fair value Short-term investments, at fair value Other investments
Cash Securities lending collateral Insurance and reinsurance balances receivable Reinsurance recoverable on losses and loss expenses Deferred policy acquisition costs Value of business acquired Prepaid reinsurance premiums Goodwill and other intangible assets Investments in partially-owned insurance companies Other assets
Total assets
Liabilities Unpaid losses and loss expenses Unearned premiums Future policy benefits Insurance and reinsurance balances payable Securities lending payable Accounts payable, accrued expenses, and other liabilities Deferred tax liabilities Short-term and long-term debt Trust preferred securities
Total liabilities Shareholders' equity Total shareholders' equity, excl. AOCI Accumulated other comprehensive income (loss) (AOCI)
Total shareholders' equity Total liabilities and shareholders' equity
Book value per common share % change over prior quarter Tangible book value per common share % change over prior quarter
Consol Bal Sheet
September 30 2020
$ 89,852 11,651 3,088 4,660 6,796
116,047 1,707 1,851 10,588 15,670 5,275 286 2,760 21,103 2,534 9,965
$ 187,786
June 30 2020
$ 86,712 11,845 2,394 4,003 5,923
110,877 1,557 1,832 10,853 15,207 5,243 290 2,725 21,093 1,364 10,433
$ 181,474
March 31 2020
$ 81,523 12,022 2,068 3,586 6,075 105,274 1,512 1,342 10,058 14,898 5,162 289 2,570 20,873 1,346 9,793
$ 173,117
December 31 2019
$ 85,488 12,581 812 4,291 6,062
109,234 1,537 994
10,357 15,181
5,242 306
2,647 21,359
1,332 8,754 $ 176,943
$ 67,905 17,502 5,955 6,420 1,851 14,487 815 16,130 308
131,373
$ 65,699 17,081 5,895 6,249 1,832 13,998 696 14,956 308
126,714
$ 62,214 16,459 5,776 6,084 1,342 13,463 473 14,810 308
120,929
$ 62,690 16,771 5,814 6,184 994 13,189 804 14,858 308
121,612
54,557 1,856
53,662 1,098
54,281 (2,093)
54,712 619
56,413
54,760
52,188
55,331
$ 187,786 $181,474 $173,117 $ 176,943
$ 124.98 $ 121.32 $ 115.62 $ 122.42
3.0%
4.9%
-5.6%
1.7%
$ 81.11 $ 77.49 $ 72.27 $ 78.14
4.7%
7.2%
-7.5%
2.5%
Page 6
Chubb Limited Consolidated Net Premiums Written by Line of Business
(in millions of U.S. dollars) (Unaudited)
Net premiums written Commercial multiple peril (2) Commercial casualty Workers' compensation Professional liability Surety Property and other short-tail lines
Total Commercial P&C Agriculture Personal automobile Personal homeowners Personal other
Total Personal lines Total Property and Casualty lines
Global A&H lines (3) Reinsurance lines Life
Total consolidated
3Q-20
3Q-19 % Change
Constant $ % Change
YTD 2020
YTD 2019
% Change
Constant $ % Change
C$ adjusted for COVID-19
exposures % Change (1)
$ 270 1,722 432 1,103 127
$ 252 1,508 462 981 168
7.0% 14.2% -6.4% 12.5% -24.0%
7.0% 14.3% -6.4% 12.5% -21.4%
$ 778 4,541 1,485 3,012 394
$ 725 4,180 1,537 2,676 476
7.3% 8.6% -3.4% 12.6% -17.2%
7.3% 9.0% -3.4% 13.3% -14.7%
8.1% 10.4% 4.5% 13.3% -14.7%
1,270
4,924 986 380 955 417
1,752 7,662
913 181 322
$ 9,078
1,067
4,438 938 444 935 372
1,751 7,127 1,052
141 302
$ 8,622
19.0%
11.0% 5.0% -14.5% 2.1% 12.2%
0.1% 7.5% -13.2% 28.4% 6.6%
5.3%
20.3%
11.5% 5.0% -9.9% 2.6% 11.8%
1.5% 8.2% -12.4% 27.2% 7.5%
6.0%
3,948
14,158 1,604 1,174 2,708 1,237
5,119 20,881 2,931
606 992
$25,410
3,410
13,004 1,534 1,338 2,646 1,123
5,107 19,645 3,255
540 838
$24,278
15.8%
8.9% 4.5% -12.2% 2.3% 10.2%
0.2% 6.3% -10.0% 12.2% 18.4%
4.7%
17.5%
9.7% 4.5% -8.9% 2.7% 11.5%
1.6% 7.2% -8.6% 11.9% 19.6%
5.6%
17.5%
11.1% 4.5% -8.0% 2.7% 11.5%
1.9% 8.2% -8.6% 11.9% 19.6%
6.5%
(1) YTD 2020 net premiums written were adversely impacted by COVID-19 including $184 million recorded in Q2 2020 of exposure adjustments on in-force policies.
(2) Commercial multiple peril represents retail package business (property and general liability). (3) For purposes of this schedule only, A&H results from our Combined North America and International businesses, normally included in the Life
Insurance and Overseas General Insurance segments, respectively, as well as the A&H results of our North America Commercial P&C segment, are included in Global A&H lines above.
Line of Business
Page 7
Chubb Limited Consolidated Results--Three months ended September 30, 2020
(in millions of U.S. dollars, except ratios) (Unaudited)
Q3 2020
Net premiums written Net premiums earned Adjusted losses and loss
expenses Adjusted policy benefits Policy acquisition costs Administrative expenses
North
America
Commercial P&C
Insurance
$
3,778
3,456
North America Personal P&C Insurance
$ 1,285
1,231
North America Agricultural Insurance
$ 986
971
Overseas General Insurance
$ 2,238
2,337
Global Reinsurance
$ 181
171
Corporate
$-- --
Total P&C
$ 8,468
8,166
Life Insurance
$ 610
599
Total Consolidated
$ 9,078
8,765
2,444 -- 489 243
961
845
1,192
154
55 5,651
183
5,834
--
--
--
--
--
--
174
174
248
56
637
40
-- 1,470
175
1,645
65
5
260
9
71 653
80
733
Underwriting income (loss)
Adjusted net investment income
Other income (expense)-- operating
Amortization expense of purchased intangibles
280
(43)
65
248
(32)
(126) 392
(13)
379
510
64
7
130
85
9 805
95
900
(7)
(1)
--
(1)
--
(7) (16)
23
7
--
(2)
(7)
(10)
--
(52) (71)
(1)
(72)
Segment income (loss)
$
783 $
18 $
65 $ 367 $
53 $ (176) $1,110 $ 104 $ 1,214
Adjusted interest expense Income tax expense
(135) (172)
(135) (172)
Core operating income (loss) Amortization of fair value adjustment of acquired invested assets and long-term debt, net of $4 million tax benefit Adjusted net realized gains (losses), net of $26 million tax benefit (1)
(483)
907
(19)
(19)
306
306
Net income (loss)
$ (196)
$ 1,194
Combined ratio CAY combined ratio ex Cats
91.9% 84.9%
103.5% 74.8%
93.3% 90.4%
89.4% 87.9%
118.3% 80.8%
95.2% 85.7%
(1) Includes Net realized gains (losses) related to unconsolidated entities. Consol Results--QTD 2020
Page 8
Chubb Limited Consolidated Results--Nine months ended September 30, 2020
(in millions of U.S. dollars, except ratios) (Unaudited)
YTD 2020
Net premiums written Net premiums earned Adjusted losses and loss
expenses Adjusted policy benefits Policy acquisition costs Administrative expenses
North
America
Commercial P&C
Insurance
$
10,750
10,427
North America Personal P&C Insurance
$ 3,719
3,623
North America Agricultural Insurance
$ 1,604
1,441
Overseas General Insurance
$ 6,857
6,838
Global Reinsurance
$ 606
520
Corporate
$-- --
Total P&C
$23,536
22,849
Life Insurance
$ 1,874
1,838
Total Consolidated
$ 25,410
24,687
8,123 --
1,452 751
2,406 -- 724 199
1,223 -- 96 12
3,935 --
1,903 759
314
342 16,343
556
16,899
--
--
--
542
542
127
--
4,302
551
4,853
28
214 1,963
238
2,201
Underwriting income (loss)
Adjusted net investment income
Other income (expense)-- operating
Amortization expense of purchased intangibles
101 1,544
(19) --
294
110
241
51
(556)
241
(49)
192
195
23
396
214
25 2,397
285
2,682
(4)
(1)
(10)
(1)
(32)
(67)
52
(15)
(8)
(20)
(33)
--
(153) (214)
(3)
(217)
Segment income (loss)
$
1,626 $
477 $ 112 $ 594 $ 264 $ (716) $ 2,357 $ 285 $ 2,642
Adjusted interest expense Income tax expense
(406) (363)
(406) (363)
Core operating income (loss) Amortization of fair value adjustment of acquired invested assets and long-term debt, net of $14 million tax benefit Adjusted net realized gains (losses), net of $54 million tax benefit (1)
(1,485)
(60) (698)
1,873
(60) (698)
Net income (loss)
$ (2,243)
$ 1,115
Combined ratio CAY combined ratio ex Cats
99.0% 85.8%
91.9% 78.5%
92.3% 90.4%
96.5% 89.4%
90.1% 79.7%
98.9% 86.8%
(1) Includes Net realized gains (losses) related to unconsolidated entities. Consol Results--YTD 2020
Page 9
Chubb Limited Consolidated Results--Three months ended September 30, 2019
(in millions of U.S. dollars, except ratios) (Unaudited)
Q3 2019
Net premiums written Net premiums earned Adjusted losses and loss
expenses Adjusted policy benefits Policy acquisition costs Administrative expenses
North
America
Commercial P&C
Insurance
$
3,452
3,185
North America Personal P&C Insurance
$ 1,251
1,187
North America Agricultural Insurance
$ 938
941
Overseas General Insurance
$ 2,228
2,256
Global Reinsurance
$ 141
160
Corporate
$-- --
Total P&C
$ 8,010
7,729
Life Insurance
$ 612
598
Total Consolidated
$ 8,622
8,327
2,051 -- 459 256
674
880
1,154
79
38 4,876
190
5,066
--
--
--
--
--
--
165
165
240
56
630
42
-- 1,427
176
1,603
72
4
257
9
74 672
80
752
Underwriting income (loss)
Adjusted net investment income
Other income (expense)-- operating
Amortization expense of purchased intangibles
419
201
1
215
30
(112) 754
(13)
741
538
66
8
147
71
9 839
92
931
(5)
(1)
--
(2)
--
(7) (15)
17
2
--
(3)
(7)
(11)
--
(54) (75)
(1)
(76)
Segment income (loss)
$
952 $
263 $
2 $ 349 $ 101 $ (164) $1,503 $ 95 $ 1,598
Adjusted interest expense Income tax expense
(143) (219)
(143) (219)
Core operating income (loss) Chubb integration expenses, net of nil tax Amortization of fair value adjustment of acquired invested assets and long-term debt, net of $8 million tax benefit Adjusted net realized gains (losses), net of $19 million tax (1)
(526) (2)
(24) (119)
1,236 (2)
(24) (119)
Net income (loss)
$ (671)
$ 1,091
Combined ratio CAY combined ratio ex Cats
86.9% 87.6%
83.1% 81.3%
99.9% 97.7%
90.5% 90.0%
81.1% 82.1%
90.2% 89.5%
(1) Includes Net realized gains (losses) related to unconsolidated entities. Consol Results--QTD 2019
Page 10
Chubb Limited Consolidated Results--Nine months ended September 30, 2019
(in millions of U.S. dollars, except ratios) (Unaudited)
YTD 2019
Net premiums written Net premiums earned Adjusted losses and loss
expenses Adjusted policy benefits Policy acquisition costs Administrative expenses
North
America
Commercial P&C
Insurance
$
9,937
9,660
North America Personal P&C Insurance
$ 3,616
3,509
North America Agricultural Insurance
$ 1,534
1,374
Overseas General Insurance
$ 6,881
6,595
Global Reinsurance
$ 540
487
Corporate
$-- --
Total P&C
$22,508
21,625
Life Insurance
$ 1,770
1,730
Total Consolidated
$ 24,278
23,355
6,238 --
1,377 755
2,178 -- 708 211
1,163 -- 90 9
3,385 --
1,855 771
245
83 13,292
581
13,873
--
--
--
495
495
127
--
4,157
454
4,611
26
211 1,983
237
2,220
Underwriting income (loss)
Adjusted net investment income
Other income (expense)-- operating
Amortization expense of purchased intangibles
1,290 1,584
(17) --
412
112
584
89
(294) 2,193
(37)
2,156
194
22
444
206
28 2,478
278
2,756
(2)
(1)
(11)
--
(18)
(49)
37
(12)
(9)
(21)
(34)
--
(163) (227)
(2)
(229)
Segment income (loss)
$
2,857 $
595 $ 112 $ 983 $ 295 $ (447) $ 4,395 $ 276 $ 4,671
Adjusted interest expense Income tax expense
(433) (637)
(433) (637)
Core operating income (loss) Chubb integration expenses, net of $2 million tax benefit Amortization of fair value adjustment of acquired invested assets and long-term debt, net of $22 million tax benefit Adjusted net realized gains (losses), net of $13 million tax (1)
(1,517) (7)
(89) (224)
3,601 (7)
(89) (224)
Net income (loss)
$ (1,837)
$ 3,281
Combined ratio CAY combined ratio ex Cats
86.6% 87.8%
88.3% 81.4%
91.9% 94.6%
91.1% 90.8%
81.7% 81.7%
89.9% 89.0%
(1) Includes Net realized gains (losses) related to unconsolidated entities. Consol Results--YTD 2019
Page 11
Chubb Limited Segment Results--Consecutive Quarters (in millions of U.S. dollars, except ratios)
(Unaudited)
North America Commercial P&C Insurance
Gross premiums written Net premiums written Net premiums earned Losses and loss expenses Policy acquisition costs Administrative expenses
3Q-20
$ 4,841 3,778 3,456 2,444 489 243
2Q-20
$ 4,401 3,720 3,595 3,498 471 249
1Q-20
$ 4,211 3,252 3,376 2,181 492 259
4Q-19
$ 4,576 3,438 3,262 1,968 454 273
3Q-19
$ 4,533 3,452 3,185 2,051 459 256
YTD 2020
$13,453 10,750 10,427 8,123 1,452 751
YTD 2019
$13,028 9,937 9,660 6,238 1,377 755
Full Year 2019
$ 17,604 13,375 12,922 8,206 1,831 1,028
Underwriting income (loss) Adjusted net investment income Other income (expense)--operating
280
(623)
444
567
419
101
1,290
1,857
510
509
525
525
538
1,544
1,584
2,109
(7)
(6)
(6)
(7)
(5)
(19)
(17)
(24)
Segment income (loss)
$ 783 $ (120) $ 963 $1,085 $ 952 $ 1,626 $ 2,857 $ 3,942
CAY underwriting income ex Cats Combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio
$ 527 $ 504 $ 457 $ 445 $ 398 $ 1,488 $ 1,184 $ 1,629
70.7% 14.2% 7.0%
97.3% 13.1% 6.9%
64.6% 14.6% 7.6%
60.3% 13.9% 8.4%
64.4% 14.4% 8.1%
77.9% 13.9%
7.2%
64.6% 14.2%
7.8%
63.5% 14.2% 7.9%
Combined ratio
91.9% 117.3% 86.8% 82.6% 86.9% 99.0% 86.6% 85.6%
CAY combined ratio ex Cats CAY loss and loss expense ratio ex Cats CAY policy acquisition cost and administrative expense ratio
ex Cats
63.8% 21.1%
66.1% 19.9%
64.2% 22.3%
64.0% 22.4%
65.5% 22.1%
64.7% 21.1%
65.8% 22.0%
65.3% 22.1%
CAY combined ratio ex Cats
84.9% 86.0% 86.5% 86.4% 87.6% 85.8% 87.8% 87.4%
Catastrophe reinstatement premiums expensed--pre-tax Catastrophe losses--pre-tax Favorable prior period development (PPD)--pre-tax % Change versus prior year period Net premiums written Net premiums written adjusted for COVID-19 exposures (1) Net premiums earned Other ratios Net premiums written/gross premiums written Production by Size--Net premiums written (2) Major Accounts & Specialty Commercial
$-- $ 447 $ (200)
$ (3) $ 1,270 $ (146)
$-- $ 118 $ (105)
$-- $ 102 $ (224)
$-- $ 88 $ (109)
$ (3) $ 1,835 $ (451)
$-- $ 319 $ (425)
$-- $ 421 $ (649)
9.4% 8.5%
5.3% 9.8% 6.1%
10.2% 9.4%
9.4% 6.0%
7.9% 5.5%
8.2% 9.8% 7.9%
6.4% 3.6%
7.1% 4.2%
78%
85%
77%
75%
76%
80%
76%
76%
$2,294 $2,350 $1,874 $2,049 $2,043 $ 6,518 $ 5,942 $ 7,991
1,484 1,370 1,378 1,389 1,409
4,232
3,995
5,384
Total
$3,778 $3,720 $3,252 $3,438 $3,452 $10,750 $ 9,937 $ 13,375
(1) YTD 2020 net premiums written were adversely impacted by COVID-19 including $160 million recorded in Q2 2020 of exposure adjustments on in-force policies.
(2) Major Accounts & Specialty: large corporate accounts and wholesale business. Commercial: principally middle market and small commercial accounts. Certain 2019 businesses, previously reported within Commercial, are now reported within Major Accounts & Specialty to align with 2020 reporting. The reclassifications are immaterial and have no impact to total reported North America Commercial P&C Insurance segment net premiums written.
NA Commercial
Page 12
Chubb Limited Segment Results--Consecutive Quarters (in millions of U.S. dollars, except ratios)
(Unaudited)
North America Personal P&C Insurance
Gross premiums written Net premiums written Net premiums earned Losses and loss expenses Policy acquisition costs Administrative expenses
Underwriting income (loss) Net investment income Other income (expense)--operating Amortization expense of purchased intangibles
Segment income
CAY underwriting income ex Cats Combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio
Combined ratio
CAY combined ratio ex Cats CAY loss and loss expense ratio ex Cats CAY policy acquisition cost and administrative expense
ratio ex Cats CAY combined ratio ex Cats
Catastrophe reinstatement premiums expensed--pre-tax Catastrophe losses--pre-tax Unfavorable (favorable) prior period development
(PPD)--pre-tax % Change versus prior year period Net premiums written Net premiums earned Other ratios Net premiums written/gross premiums written
3Q-20
$ 1,448 1,285 1,231 961 248 65 (43) 64 (1) (2)
$ 18 $ 310
78.1% 20.1% 5.3% 103.5%
49.2%
25.6% 74.8% $-- $ 305
$ 48
2.8% 3.8%
89%
2Q-20
$ 1,511 1,327 1,192 762 231 66 133 65 (1) (3)
$ 194 $ 242
63.8% 19.4% 5.6% 88.8%
54.7%
24.9% 79.6% $ (1) $ 109
$ (1)
1.4% 2.1%
88%
1Q-20
$ 1,265 1,107 1,200 683 245 68 204 66 (2) (3)
$ 265 $ 226
57.0% 20.4% 5.6% 83.0%
55.1%
26.1% 81.2% $-- $ 21
$1
4.8% 3.9%
88%
4Q-19
$ 1,349 1,171 1,185 865 240 75 5 64 (1) (3)
$ 65 $ 223
73.0% 20.3% 6.3% 99.6%
55.1%
26.3% 81.4% $ (11) $ 214
$ (7)
9.2% 4.8%
87%
3Q-19
$ 1,422 1,251 1,187 674 240 72 201 66 (1) (3)
$ 263 $ 222
56.9% 20.2% 6.0% 83.1%
55.1%
26.2% 81.3% $-- $ 83
$ (62)
2.7% 1.7%
88%
YTD 2020
$ 4,224 3,719 3,623 2,406 724 199 294 195 (4) (8)
$ 477 $ 778
66.4% 20.0%
5.5% 91.9%
53.0%
25.5% 78.5% $ (1) $ 435
$ 48
2.9% 3.3%
88%
YTD 2019
$ 4,112 3,616 3,509 2,178 708 211 412 194 (2) (9)
$ 595 $ 653
62.1% 20.2%
6.0% 88.3%
55.2%
26.2% 81.4% $-- $ 329
$ (88)
0.4% 1.3%
88%
Full Year 2019
$ 5,461 4,787 4,694 3,043 948 286 417 258 (3) (12)
$ 660 $ 876
64.8% 20.2% 6.1% 91.1%
55.1%
26.3% 81.4% $ (11) $ 543
$ (95)
2.4% 2.2%
88%
NA Personal
Page 13
Chubb Limited Segment Results--Consecutive Quarters (in millions of U.S. dollars, except ratios)
(Unaudited)
North America Agricultural Insurance
Gross premiums written Net premiums written Net premiums earned Adjusted losses and loss expenses (1) Policy acquisition costs Administrative expenses
Underwriting income (loss) Net investment income Other income (expense)--operating Amortization expense of purchased intangibles
Segment income (loss)
CAY underwriting income (loss) ex Cats Combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio
Combined ratio
CAY combined ratio ex Cats CAY loss and loss expense ratio ex Cats CAY policy acquisition cost and administrative expense
ratio ex Cats CAY combined ratio ex Cats
Catastrophe losses--pre-tax Unfavorable (favorable) prior period development
(PPD)--pre-tax % Change versus prior year period Net premiums written Net premiums earned Other ratios Net premiums written/gross premiums written
3Q-20
$ 1,332 986 971 845 56 5
65 7
-- (7)
$ 65
$ 93
2Q-20
$ 652 461 376 313 29 3
31 7 (1) (6)
$ 31
$ 37
1Q-20
$ 220 157 94 65 11 4
14 9 -- (7)
$ 16
$8
4Q-19
$ 282 276 421 453 (6) (3)
(23) 8
-- (7)
$ (22)
$ (59)
3Q-19
$ 1,272 938 941 880 56 4
1 8 -- (7)
$2
$ 22
YTD 2020
$ 2,204 1,604 1,441 1,223 96 12
110 23 (1) (20)
$ 112
$ 138
YTD 2019
$ 2,133 1,534 1,374 1,163 90 9
112 22 (1) (21)
$ 112
$ 76
Full Year 2019
$ 2,415 1,810 1,795 1,616 84 6
89 30 (1) (28)
$ 90
$ 17
87.1% 5.8% 0.4%
93.3%
83.1% 7.8% 0.9%
91.8%
69.6% 11.1% 4.1%
84.8%
107.6% -1.5% -0.7%
105.4%
93.5% 6.0% 0.4%
99.9%
84.9% 6.6% 0.8%
92.3%
84.7% 6.6% 0.6%
91.9%
90.1% 4.7% 0.3%
95.1%
84.2% 81.5% 76.2% 113.6% 91.3% 83.0% 87.4%
93.5%
6.2% 8.7% 14.7%
0.3%
6.4%
7.4%
7.2%
5.6%
90.4% 90.2% 90.9% 113.9% 97.7% 90.4% 94.6%
99.1%
$ 10 $ 6 $ 8 $ 1 $ 3 $ 24 $ 7 $ 8
$ 18 $ -- $ (14) $ (37) $ 18 $ 4 $ (43) $ (80)
5.0% -1.1% 21.2% 3.2% -0.5% 71.8%
40.4% 32.4%
6.2% 9.8%
4.5% 4.9%
11.2% 9.8%
14.8% 14.4%
74% 71% 71%
98%
74%
73%
72%
75%
(1) Includes Realized gains (losses) on crop derivatives. NA Agriculture
Page 14
Chubb Limited Segment Results--Consecutive Quarters (in millions of U.S. dollars, except ratios)
(Unaudited)
Overseas General Insurance
Gross premiums written Net premiums written Net premiums earned Losses and loss expenses Policy acquisition costs Administrative expenses
Underwriting income (loss) Adjusted net investment income Other income (expense)--operating Amortization expense of purchased intangibles
Segment income (loss)
CAY underwriting income ex Cats Combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio
Combined ratio
CAY combined ratio ex Cats CAY loss and loss expense ratio ex Cats CAY policy acquisition cost and administrative
expense ratio ex Cats
CAY combined ratio ex Cats
Catastrophe reinstatement premiums expensed--pre-tax
Catastrophe losses--pre-tax Favorable prior period development (PPD)--pre-tax % Change versus prior year period Net premiums written Net premiums written adjusted for COVID-19
exposures (1) Net premiums earned Net premiums written constant $ Net premiums written adjusted for COVID-19
exposures (1) Net premiums earned constant $ Other ratios Net premiums written/gross premiums written
3Q-20
$ 2,756 2,238 2,337 1,192 637 260
248 130
(1) (10)
$ 367
$ 283
2Q-20
$ 2,561 2,021 2,194 1,485 624 241
(156) 121
(5) (11)
$ (51)
$ 207
1Q-20
$ 3,131 2,598 2,307 1,258 642 258
149 145
(4) (12)
$ 278
$ 235
4Q-19
$ 2,964 2,381 2,287 1,221 646 262
158 144
(1) (11)
$ 290
$ 202
3Q-19
$ 2,705 2,228 2,256 1,154 630 257
215 147
(2) (11)
$ 349
$ 225
YTD 2020
$ 8,448 6,857 6,838 3,935 1,903 759
241 396 (10) (33)
$ 594
$ 725
YTD 2019
$ 8,444 6,881 6,595 3,385 1,855 771
584 444 (11) (34)
$ 983
$ 604
Full Year 2019
$ 11,408 9,262 8,882 4,606 2,501 1,033
742 588 (12) (45)
$ 1,273
$ 806
51.0% 27.3% 11.1%
89.4%
67.7% 28.4% 11.0%
107.1%
54.5% 27.8% 11.2%
93.5%
53.3% 28.3% 11.5%
93.1%
51.1% 28.0% 11.4%
90.5%
57.6% 27.8% 11.1%
96.5%
51.3% 28.1% 11.7%
91.1%
51.9% 28.1% 11.6%
91.6%
49.5%
38.4% 87.9%
51.6%
39.1% 90.7%
50.8%
39.0% 89.8%
51.5%
39.7% 91.2%
50.7%
39.3% 90.0%
50.6%
38.8% 89.4%
51.0%
39.8% 90.8%
51.2%
39.7% 90.9%
$ -- $ (16) $ $ 95 $ 383 $ $ (60) $ (36) $
-- $ 90 $ (4) $
0.5% -10.5%
8.5%
3.6% 2.8%
-9.4% -1.5% -5.1%
9.2% 9.7%
5.7%
-4.0% 4.2%
10.5%
81%
79%
83%
(4) $ -- $ (16) $ 83 $ 35 $ 568 $ (43) $ (25) $ (100) $
-- $ 69 $ (49) $
6.3% 7.1% -0.3%
3.3%
4.6% 4.6% 8.8% 10.7%
0.0% 3.7% 2.7%
2.6% 8.3%
6.9%
8.0%
3.1% 6.8%
7.9%
80%
82%
81%
81%
(4) 152 (92) 4.0%
3.1% 8.4%
7.6% 81%
Production by Region--Net premiums written Europe Latin America Asia Other (2)
Total
3Q-20
$ 915 442 794 87
$ 2,238
3Q-19
$ 782 551 798 97
$ 2,228
% Change
17.1% -19.7% -0.5% -10.3%
0.5%
Constant $ % Change
15.5% -8.7% -1.2% -9.7%
2.8%
YTD 2020
$ 2,994 1,414 2,203 246
$ 6,857
YTD 2019
$ 2,698 1,657 2,259 267
$ 6,881
% Change
11.0% -14.6%
-2.5% -8.0%
-0.3%
Constant $ % Change
11.8% -5.5% -1.5% -6.6%
2.7%
(1) YTD 2020 net premiums written were adversely impacted by COVID-19 including $24 million recorded in Q2 2020 of exposure adjustments on in-force policies.
(2) Primarily includes Eurasia and Africa, and the company's international supplemental A&H business of Combined Insurance.
Overseas General Insurance
Page 15
Chubb Limited Segment Results--Consecutive Quarters (in millions of U.S. dollars, except ratios)
(Unaudited)
Global Reinsurance
Gross premiums written Net premiums written Net premiums earned Losses and loss expenses Policy acquisition costs Administrative expenses
Underwriting income (loss) Adjusted net investment income Other income (expense)--operating
Segment income
CAY underwriting income ex Cats Combined ratio Loss and loss expense ratio Policy acquisition cost ratio Administrative expense ratio
Combined ratio
CAY combined ratio ex Cats CAY loss and loss expense ratio ex Cats CAY policy acquisition cost and administrative expense ratio ex
Cats CAY combined ratio ex Cats
Catastrophe reinstatement premiums collected--pre-tax Catastrophe losses--pre-tax Unfavorable (favorable) prior period development
(PPD)--pre-tax % Change versus prior year period Net premiums written as reported
Net premiums earned as reported Net premiums written constant $
Net premiums earned constant $ Other ratios Net premiums written/gross premiums written
3Q-20
$ 198 181 171 154 40 9 (32) 85 --
$ 53 $ 30
89.6% 23.5% 5.2% 118.3%
49.7%
31.1% 80.8% $7 $ 75
$ (6)
28.4% 6.7%
27.2% 5.4%
91%
2Q-20
$ 262 207 163 73 42 9 39 60 (1)
$ 98 $ 36
45.5% 25.5% 5.6% 76.6%
46.8%
31.4% 78.2% $-- $ 13
$ (16)
4.6% 2.9%
4.9% 4.0%
79%
1Q-20
$ 242 218 186 87 45 10 44 69 --
$ 113 $ 37
46.5% 24.5% 5.1% 76.1%
50.4%
29.6% 80.0% $-- $--
$ (7)
8.4% 10.4%
7.9% 10.2%
90%
4Q-19
$ 111 109 167 107 42 9 9 73 (1)
$ 81 $ 28
64.2% 24.7% 5.7% 94.6%
52.5%
30.8% 83.3% $1 $ 16
$4
-6.0% -5.8%
-4.8% -5.0%
99%
3Q-19
$ 150 141 160 79 42 9 30 71 --
$ 101 $ 28
49.6% 26.2% 5.3% 81.1%
49.9%
32.2% 82.1% $2 $ 25
$ (25)
14.0% 1.9%
12.8% 3.1%
94%
YTD 2020
$ 702 606 520 314 127 28 51 214 (1)
$ 264 $ 103
60.3% 24.5%
5.3% 90.1%
49.0%
30.7% 79.7% $7 $ 88
$ (29)
12.2% 6.8%
11.9% 6.6%
86%
YTD 2019
$ 608 540 487 245 127 26 89 206 --
$ 295 $ 89
50.3% 26.1%
5.3% 81.7%
50.0%
31.7% 81.7% $2 $ 35
$ (33)
-2.5% -1.1%
-1.1% 0.7%
89%
Full Year 2019
$ 719 649 654 352 169 35 98 279 (1)
$ 376 $ 117
53.9% 25.7% 5.4% 85.0%
50.6%
31.5% 82.1% $3 $ 51
$ (29)
-3.2% -2.3%
-1.7% -0.8%
90%
Global Reinsurance
Page 16
Chubb Limited Segment Results--Consecutive Quarters
(in millions of U.S. dollars) (Unaudited)
Life Insurance
Gross premiums written Net premiums written Net premiums earned Losses and loss expenses Adjusted policy benefits Policy acquisition costs Administrative expenses Net investment income
Life Insurance underwriting income (1) Other income (expense)--operating Amortization expense of purchased intangibles
Segment income
% Change versus prior year period Net premiums written Net premiums earned Net premiums written constant $ Net premiums earned constant $
3Q-20
$ 645 610 599 183 174 175 80 95
82 23 (1)
$ 104
2Q-20
$ 653 619 608 171 183 196 82 95
71 17 (1)
$ 87
1Q-20
$ 683 645 631 202 185 180 76 95
83 12 (1)
$ 94
4Q-19
$ 652 622 613 176 201 166 86 95
79 11 --
$ 90
3Q-19
$ 642 612 598 190 165 176 80 92
79 17 (1)
$ 95
YTD 2020
$ 1,981 1,874 1,838 556 542 551 238 285
236 52 (3)
$ 285
YTD 2019
$ 1,865 1,770 1,730 581 495 454 237 278
241 37 (2)
$ 276
Full Year 2019
$ 2,517 2,392 2,343 757 696 620 323 373
320 48 (2)
$ 366
-0.4% 0.0% 0.2% 0.7%
7.0% 6.5% 8.5% 8.0%
11.4% 12.6% 11.3% 12.5%
6.9% 6.6% 6.8% 6.5%
8.5% 8.7% 9.1% 9.3%
5.9% 6.2% 6.5% 6.9%
4.8% 5.3% 6.2% 6.7%
5.3% 5.6% 6.4% 6.6%
(1)We assess the performance of our Life Insurance business based on Life Insurance underwriting income which includes Net investment income and (Gains) losses from fair value changes in separate account assets.
International life insurance net premiums written and deposits breakdown (excludes Combined North America and Life reinsurance businesses):
International life insurance net premiums written International life insurance deposits (2) Total international life insurance net premiums written and
deposits International life insurance segment income
3Q-20
$ 280 363
$ 643 $ 52
3Q-19
$ 259 369
$ 628 $ 40
% Change
8.3% -1.8%
Constant $ % Change
9.4%
-5.7%
YTD 2020
$ 865
1,115
2.3% 26.4%
0.4% $1,980 28.1% $ 134
YTD 2019
$ 715 1,059
$ 1,774 $ 116
% Change
21.0% 5.3%
Constant $ % Change
22.4%
3.2%
11.6% 15.1%
10.8% 16.3%
(2) Includes deposits collected on universal life and investment contracts. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues.
Life Insurance
Page 17
Chubb Limited Segment Results--Consecutive Quarters
(in millions of U.S. dollars) (Unaudited)
Corporate
Gross premiums written Net premiums written Net premiums earned Losses and loss expenses Policy acquisition costs Administrative expenses
3Q-20
$-- -- -- 55 -- 71
2Q-20
$-- -- -- 276 -- 77
1Q-20
$-- -- -- 11 -- 66
4Q-19
$-- -- -- 75 -- 108
3Q-19
$-- -- -- 38 -- 74
YTD 2020
$-- -- -- 342 -- 214
YTD 2019
$-- -- -- 83 -- 211
Full Year 2019
$-- -- -- 158 -- 319
Underwriting loss Adjusted net investment income Other income (expense)--operating Adjusted interest expense Amortization expense of purchased intangibles Income tax (expense) benefit
(126) 9 (7)
(135) (52) (172)
(353) 8 (9)
(134) (51) 46
(77) 8
(16) (137) (50) (237)
(183) 8 (6)
(140) (55) (173)
(112) 9 (7)
(143) (54) (219)
(556) 25 (32)
(406) (153) (363)
(294) 28 (18)
(433) (163) (637)
(477) 36 (24)
(573) (218) (810)
Core operating loss Chubb integration expenses, net of tax Amortization of fair value adjustment of acquired invested assets and long-
term debt, net of tax Adjusted net realized gains (losses), net of tax (1)
(483) --
(19) 306
(493) --
(19) (58)
(509) (549) (526) (1,485) (1,517) (2,066)
--
(12) (2) --
(7)
(19)
(22) (25) (24) (946) 170 (119)
(60) (698)
(89) (224)
(114) (54)
Net loss
$(196) $(570) $(1,477) $(416) $(671) $(2,243) $(1,837) $ (2,253)
Unfavorable prior period development (PPD)--pre-tax
$ 54 $ 274 $ 11 $ 74 $ 36 $ 339 $ 79 $ 153
(1) Includes Net realized gains (losses) related to unconsolidated entities. Corporate
Page 18
Balance at December 31, 2018 Losses and loss expenses incurred Losses and loss expenses paid Other (incl. foreign exch. revaluation)
Balance at March 31, 2019 Losses and loss expenses incurred Losses and loss expenses paid Other (incl. foreign exch. revaluation)
Balance at June 30, 2019 Losses and loss expenses incurred Losses and loss expenses paid Other (incl. foreign exch. revaluation)
Balance at September 30, 2019 Losses and loss expenses incurred Losses and loss expenses paid Other (incl. foreign exch. revaluation)
Balance at December 31, 2019 Losses and loss expenses incurred Losses and loss expenses paid Other (incl. foreign exch. revaluation)
Balance at March 31, 2020 Losses and loss expenses incurred Losses and loss expenses paid Other (incl. foreign exch. revaluation)
Balance at June 30, 2020 Losses and loss expenses incurred Losses and loss expenses paid Other (incl. foreign exch. revaluation)
Balance at September 30, 2020 Add net recoverable on paid losses
Balance including net recoverable on paid losses
Chubb Limited Loss Reserve Rollforward (in millions of U.S. dollars, except ratios)
(Unaudited)
Gross
$62,960 5,261 (5,197) 119
$63,143 5,758 (5,581) (115)
$63,205 6,783 (6,751) (225)
$63,012 5,855 (6,382) 205
$62,690 5,569 (5,345) (700)
$62,214 7,825 (4,874) 534
$65,699 7,288 (5,342) 260
$67,905 --
$67,905
Unpaid Losses Ceded
$14,689 1,163 (1,178) 33
$14,707 1,043 (1,489) (28)
$14,233 1,731 (1,568) (64)
$14,332 990
(1,203) 62
$14,181 1,084 (1,090) (135)
$14,040 1,248 (1,024) 97
$14,361 1,453 (1,084) 37
$14,767 903
$15,670
Net
$48,271 4,098 (4,019) 86
$48,436 4,715 (4,092) (87)
$48,972 5,052 (5,183) (161)
$48,680 4,865 (5,179) 143
$48,509 4,485 (4,255) (565)
$48,174 6,577 (3,850) 437
$51,338 5,835 (4,258) 223
$53,138 (903)
$52,235
Net Paid to Incurred Ratio
98% 87% 103% 106% 95% 59%(1) 73%
(1) The losses and loss expenses incurred increased $2.1 billion in Q2 2020, principally reflecting the significant catastrophe events in the period, principally COVID-19, and resulting in the 59% net paid to incurred ratio for Q2 2020.
Loss Reserve Rollforward
Page 19
Chubb Limited Reinsurance Recoverable Analysis
(in millions of U.S. dollars) (Unaudited)
Net Reinsurance Recoverable by Division
Reinsurance recoverable on paid losses and loss expenses Active operations Brandywine and Other Run-off
Total
Reinsurance recoverable on unpaid losses and loss expenses Active operations Brandywine and Other Run-off
Total
Gross reinsurance recoverable Active operations Brandywine and Other Run-off
Total
Provision for uncollectible reinsurance (1) Active operations Brandywine and Other Run-off
Total
Net reinsurance recoverable Active operations Brandywine and Other Run-off
Total
September 30 2020
$
784
184
$
968
June 30 2020
$ 736 173
$ 909
March 31 2020
$ 748 177
$ 925
December 31 2019
$
887
189
$ 1,076
$ 13,707 $13,315 $ 13,088 $ 13,223
1,315
1,286
1,190
1,198
$ 15,022 $14,601 $ 14,278 $ 14,421
$ 14,491 $14,051 $ 13,836 $ 14,110
1,499
1,459
1,367
1,387
$ 15,990 $15,510 $ 15,203 $ 15,497
$
(185) $ (177) $ (176) $ (180)
(135)
(126)
(129)
(136)
$
(320) $ (303) $ (305) $ (316)
$ 14,306 $13,874 $ 13,660 $ 13,930
1,364
1,333
1,238
1,251
$ 15,670 $15,207 $ 14,898 $ 15,181
(1) The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance, net of usable collateral of approximately $3.4 billion.
Reinsurance Recoverable
Page 20
Chubb Limited Investment Portfolio (in millions of U.S. dollars)
(Unaudited)
Market Value Fixed maturities available for sale Fixed maturities held to maturity Short-term investments
Total fixed maturities
Asset Allocation by Market Value U.S. Treasury / Agency Corporate and asset-backed securities Mortgage-backed securities Municipal Non-U.S. Short-term investments
Total fixed maturities
Credit Quality by Market Value AAA AA A BBB BB B Other
Total fixed maturities
Cost/Amortized Cost, net Fixed maturities available for sale (1) Fixed maturities held to maturity (1) Short-term investments (1)
Subtotal fixed maturities Equity securities Other investments
Total investment portfolio
Avg. duration of fixed maturities Avg. market yield of fixed maturities Avg. credit quality Avg. yield on invested assets (2)
September 30 2020
$ 89,852 12,473 4,660
$ 106,985
June 30 2020
$ 86,712 12,620 4,003
$ 103,335
March 31 2020
$ 81,523 12,468 3,586
$ 97,577
December 31 2019
$ 85,488 13,005 4,291
$ 102,784
$ 4,100 37,712 21,590 12,267 26,656 4,660
$ 106,985
4% 35% 20% 12% 25% 4%
100%
$ 4,190 36,345 20,529 12,291 25,977 4,003
$ 103,335
4% 35% 20% 12% 25%
4%
100%
$ 4,296 32,990 20,252 12,266 24,187 3,586
$ 97,577
4% 33% 21% 13% 25%
4%
100%
$ 4,630 34,259 21,588 12,824 25,192 4,291
$ 102,784
5% 33% 21% 12% 25%
4%
100%
$ 16,177 36,759 19,359 17,009 9,609 7,466 606
$ 106,985
15% 34% 18% 16% 9% 7% 1%
100%
$ 15,411 35,600 19,703 15,690 9,302 7,124 505
$ 103,335
15% 35% 19% 15%
9% 7% 0%
100%
$ 14,577 35,437 18,375 13,617 8,661 6,487 423
$ 97,577
15% 36% 19% 14%
9% 7% 0%
100%
$ 15,714 37,504 19,236 13,650 9,474 6,897 309
$ 102,784
15% 37% 19% 13%
9% 7% 0%
100%
$ 85,167 11,651 4,662
101,480 3,088 6,796
$ 111,364
4.0 years 1.9%
A/Aa 3.3%
$ 82,671 11,845 4,002 98,518 2,394 5,923
$ 106,835
4.0 years 2.2%
A/Aa 3.3%
$ 80,776 12,022 3,582 96,380 2,068 6,075
$ 104,523
3.9 years 3.0%
A/Aa 3.5%
$ 82,580 12,581 4,291 99,452 812 6,062
$ 106,326
3.8 years 2.7%
A/Aa 3.5%
(1) Net of valuation allowance for expected credit losses. (2) Calculated using adjusted net investment income.
Investments
Page 21
Mortgage-backed Fixed Income Portfolio
Chubb Limited Investment Portfolio--2 (in millions of U.S. dollars)
(Unaudited)
Mortgage-backed securities
Market Value at September 30, 2020 Agency residential mortgage-backed securities (RMBS) Non-agency RMBS Commercial mortgage-backed securities Total mortgage-backed securities at market value
AAA
AA
S&P Credit Rating
A
BBB BB and below
Total
$ 127 $17,765 $ -- $ -- $
147
43
78
16
2,949
303
137
13
$3,223 $18,111 $ 215 $ 29 $
-- $17,892
10
294
2 3,404
12 $21,590
U.S. Corporate and Asset-backed Fixed Income Portfolios
Market Value at September 30, 2020
Asset-backed Banks Basic Materials Communications Consumer, Cyclical Consumer, Non-Cyclical Diversified Financial Services Energy Industrial Utilities All Others Total
AAA
$ 3,253 -- -- -- -- 55 7 -- -- -- 247
$ 3,562
S&P Credit Rating
Investment Grade
AA
A
BBB
$ 474 $ 33 $
35
12 1,940
2,144
--
91
285
215
567
1,306
285
508
737
674 1,597
1,836
210
380
460
87
209
710
14
884
914
3 1,092
560
442 1,676
1,158
$2,416 $8,977 $ 10,145
Total
$ 3,795 4,096 376 2,088 1,530 4,162 1,057 1,006 1,812 1,655 3,523
$25,100
Market Value at September 30, 2020
Asset-backed Banks Basic Materials Communications Consumer, Cyclical Consumer, Non-Cyclical Diversified Financial Services Energy Industrial Utilities All Others Total
Investments 2
BB
$5 -- 323 839
1,038 1,408
220 736 839 348 871
$ 6,627
S&P Credit Rating
Below Investment Grade
B
CCC
$ 19 $
3
--
--
229
1
854
57
959
159
1,415
82
101
7
329
12
836
25
35
1
796
65
$5,573 $
412
Total
$ 27 -- 553
1,750 2,156 2,905
328 1,077 1,700
384 1,732
$12,612
Page 22
Non-U.S. Fixed Income Portfolio September 30, 2020
Non-U.S. Government Securities
Republic of Korea Canada United Kingdom Province of Ontario Kingdom of Thailand Province of Quebec Federative Republic of Brazil Commonwealth of Australia United Mexican States Socialist Republic of Vietnam Other Non-U.S. Government Securities Total
Chubb Limited Investment Portfolio--3 (in millions of U.S. dollars)
(Unaudited)
AAA
$-- 942 -- -- -- -- -- 451 -- -- 862
$ 2,255
Market Value by S&P Credit Rating
AA
A
BBB BB and below
$1,058 $ -- $ -- $
--
--
--
--
--
905
--
--
--
--
681
--
--
--
612
--
--
539
--
--
--
--
--
--
512
--
3
--
--
--
--
453
--
--
--
--
380
1,658 1,173
902
891
$4,160 $2,469 $1,355 $ 1,783
Total
$ 1,058 942 905 681 612 539 512 454 453 380
5,486
$12,022
Non-U.S. Corporate Securities
United Kingdom Canada France United States (1) Australia Netherlands Japan Switzerland Germany China Other Non-U.S. Corporate Securities Total
AAA
$ 70 100 8 -- 105 53 -- 57 62 -- 356
$ 811
Market Value by S&P Credit Rating
AA
A
BBB BB and below
$ 54 $ 777 $ 940 $
447
264
441
606
422
46
700
377
58
--
198
307
650
204
319
236
23
94
215
147
108
5
505
71
--
4
270
203
32
45
108
272
49
--
282
89
72
439 1,014 1,644
1,086
$1,155 $4,829 $4,892 $ 2,947
Total
$ 2,288 1,833 1,189 1,155 887 617 581 566 536 443 4,539
$14,634
(1) Countries represent the ultimate parent company's country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations.
Investments 3
Page 23
Fixed Maturity Investment Portfolio
Top 10 Global Corporate Exposures
September 30, 2020
1 Wells Fargo & Co 2 Bank of America Corp 3 JP Morgan Chase & Co 4 Comcast Corp 5 Morgan Stanley 6 Citigroup Inc 7 Verizon Communications Inc 8 AT&T Inc 9 Goldman Sachs Group Inc 10 HSBC Holdings Plc
Investments 4
Chubb Limited Investment Portfolio--4 (in millions of U.S. dollars)
(Unaudited)
Market Value
$
762
670
658
511
459
441
430
393
377
376
Rating
BBB+ AAA-
BBB+ BBB+ BBB+ BBB BBB+
A-
Page 24
Chubb Limited Net Realized and Unrealized Gains (Losses)
(in millions of U.S. dollars) (Unaudited)
Fixed income investments (1) Public equity:
Realized gains (losses) on sales Mark-to-market Private equity: Realized gains (losses) on sales Mark-to-market
Total investment portfolio Mark-to-market from variable annuity
reinsurance derivative transactions, net of applicable hedges (2) Foreign exchange Partially-owned entities (3) Other
Net gains (losses)
Realized Gains (Losses)
Gains
Tax
Gains
(Losses) (Expense) (Losses)
Pre-Tax Benefit After-Tax
$ 58 $ (8) $ 50
34
(2)
32
(34)
5
(29)
--
--
--
436
(8)
428
494
(13)
481
(6) (222)
17 (3)
$ 280 $
--
(6)
38
(184)
--
17
1
(2)
26 $ 306
Three months ended September 30, 2020
Unrealized Gains (Losses)
Realized and Unrealized Gains (Losses)
Gains (Losses) Pre-Tax
Tax (Expense)
Benefit
Gains (Losses) After-Tax
Gains (Losses) Pre-Tax
Tax (Expense)
Benefit
Gains (Losses) After-Tax
$ 638 $ (95) $ 543 $ 696 $ (103) $ 593
--
--
--
34
--
--
--
(34)
(2)
32
5
(29)
--
--
--
--
--
--
--
436
638
(95)
543 1,132
-- (8)
(108)
-- 428 1,024
-- 246 -- (23)
$ 861 $
-- (13) --
5
(103) $
--
(6)
233
24
--
17
(18)
(26)
758 $ 1,141 $
-- 25 --
6
(77) $
(6) 49 17 (20)
1,064
(1)The quarter includes pre-tax realized gains on fixed income derivatives of $9 million, a net reduction of the valuation allowance of expected credit
losses of $42 million, and impairment of $11 million for fixed maturities during the quarter.
(2)The quarter includes $52 million of losses on applicable hedges. These losses are both pre-tax and after-tax.
(3)Partially-owned entities are investments where we hold more than an insignificant percentage of the investee's shares. Refer to the Non-GAAP
financial measures section for additional details.
Fixed income investments (4) Public equity (4):
Realized gains (losses) on sales Mark-to-market Private equity: Realized gains (losses) on sales Mark-to-market
Total investment portfolio Mark-to-market from variable annuity
reinsurance derivative transactions, net of applicable hedges (5) Foreign exchange Partially-owned entities (6) Other
Net gains (losses)
Realized Gains (Losses)
Gains
Tax
Gains
(Losses) (Expense) (Losses)
Pre-Tax Benefit After-Tax
$ (106) $
2 $ (104)
22
(5)
17
(21)
1
(20)
(2)
--
(2)
34
(2)
32
(73)
(4)
(77)
(112) 84 5 (4)
$ (100) $
-- (15) -- --
(19) $
(112) 69 5 (4)
(119)
Three months ended September 30, 2019
Unrealized Gains (Losses)
Realized and Unrealized Gains (Losses)
Gains (Losses) Pre-Tax
Tax (Expense)
Benefit
Gains (Losses) After-Tax
Gains (Losses) Pre-Tax
Tax (Expense)
Benefit
Gains (Losses) After-Tax
$ 705 $ (125) $ 580 $ 599 $ (123) $ 476
--
--
--
22
--
--
--
(21)
(5)
17
1
(20)
--
--
--
(2)
--
(2)
--
--
--
34
(2)
32
705
(125)
580
632
(129)
503
-- (193) -- (17)
$ 495 $
-- 8
-- 4
(113) $
-- (185) -- (13)
382 $
(112) (109)
5 (21)
395 $
-- (7)
-- 4
(132) $
(112) (116)
5 (17)
263
(4) The quarter includes pre-tax realized losses on derivatives of: $95 million in fixed income and $2 million in public equity. Other-than-temporary impairments for the quarter in realized losses were $24 million pre-tax for fixed maturities.
(5) The quarter includes $6 million of losses on applicable hedges. These losses are both pre-tax and after-tax. (6) Partially-owned entities are investments where we hold more than an insignificant percentage of the investee's shares. Refer to the Non-GAAP
financial measures section for additional details.
Net Gains (Losses)
Page 25
Chubb Limited Net Realized and Unrealized Gains (Losses)
(in millions of U.S. dollars) (Unaudited)
Fixed income investments (1) Public equity (1):
Realized gains (losses) on sales Mark-to-market Private equity: Realized gains (losses) on sales Mark-to-market
Total investment portfolio Mark-to-market from variable annuity
reinsurance derivative transactions, net of applicable hedges (2) Foreign exchange Partially-owned entities (3) Other
Net gains (losses)
Realized Gains (Losses)
Gains (Losses) Pre-Tax
Tax (Expense)
Benefit
Gains (Losses) After-Tax
$ (307) $ 32 $ (275)
Nine months ended September 30, 2020
Unrealized Gains (Losses)
Realized and Unrealized Gains (Losses)
Gains (Losses) Pre-Tax
Tax (Expense)
Benefit
Gains (Losses) After-Tax
Gains (Losses) Pre-Tax
Tax (Expense)
Benefit
Gains (Losses) After-Tax
$ 1,759 $ (335) $ 1,424 $ 1,452 $ (303) $ 1,149
239
(44)
195
--
--
--
239
(44)
195
(78)
8
(70) --
--
--
(78)
8
(70)
--
--
--
--
--
--
--
229
(6)
223
--
--
--
229
83
(10)
73 1,759
(335) 1,424 1,842
-- (6)
(345)
-- 223 1,497
(456)
--
(456) --
--
--
(456)
(351)
55
(296) (168)
27
(141)
(519)
15
--
15
--
--
--
15
(43)
9
(34)
(59)
13
(46)
(102)
$ (752) $ 54 $ (698) $ 1,532 $ (295) $ 1,237 $ 780 $
-- 82 -- 22
(241) $
(456) (437)
15 (80)
539
(1) Year to date includes pre-tax realized gains on equity derivatives of $42 million, realized losses on fixed income derivatives of $4 million, expected credit losses of $4 million, and impairments of $163 million related to certain securities the company intended to sell and securities written to market entering default.
(2) Year to date includes $30 million of losses on applicable hedges. These losses are both pre-tax and after-tax. (3) Partially-owned entities are investments where we hold more than an insignificant percentage of the investee's shares. Refer to the Non-GAAP
financial measures section for additional details.
Fixed income investments (4) Public equity (4):
Realized gains (losses) on sales Mark-to-market Private equity: Realized gains (losses) on sales Mark-to-market
Total investment portfolio Mark-to-market from variable annuity
reinsurance derivative transactions, net of applicable hedges (5) Foreign exchange Partially-owned entities (6) Other
Net gains (losses)
Realized Gains (Losses)
Gains
Tax
Gains
(Losses) (Expense) (Losses)
Pre-Tax Benefit After-Tax
$ (417) $ 10 $ (407)
Nine months ended September 30, 2019
Unrealized Gains (Losses)
Realized and Unrealized Gains (Losses)
Gains
Tax
Gains
Gains
Tax
Gains
(Losses) (Expense) (Losses) (Losses) (Expense)
(Losses)
Pre-Tax Benefit After-Tax Pre-Tax
Benefit
After-Tax
$ 3,834 $ (676) $ 3,158 $ 3,417 $ (666) $ 2,751
23
(5)
18
--
--
--
23
9
(3)
6
--
--
--
9
(5)
18
(3)
6
(4)
--
(4) --
--
--
(4)
227
--
227
--
--
--
227
(162)
2
(160) 3,834
(676) 3,158 3,672
-- -- (674)
(4) 227 2,998
(146) 86 15 (4)
$ (211) $
--
(146) --
--
--
(146)
(14)
72 (143)
3
(140)
(57)
(1)
14
--
--
--
15
--
(4)
(62)
13
(49)
(66)
(13) $ (224) $ 3,629 $ (660) $ 2,969 $ 3,418 $
-- (11) (1) 13
(673) $
(146) (68) 14 (53)
2,745
(4) Year to date includes pre-tax realized losses on derivatives of: $374 million in fixed income and $34 million in public equity. Year to date other-thantemporary impairments in realized losses were $50 million pre-tax for fixed maturities.
(5) Year to date includes $89 million of losses on applicable hedges. These losses are both pre-tax and after-tax. (6) Partially-owned entities are investments where we hold more than an insignificant percentage of the investee's shares. Refer to the Non-GAAP
financial measures section for additional details.
Net Gains (Losses) 2
Page 26
Chubb Limited Debt and Capital (in millions of U.S. dollars, except ratios)
(Unaudited)
Financial Debt: Total short-term debt Total long-term debt (1) Total financial debt
Hybrid debt: Total trust preferred securities Total
Capitalization: Shareholders' equity Hybrid debt Financial debt Total capitalization
Leverage ratios (based on total capital): Hybrid debt Financial debt (1) Total hybrid & financial debt
September 30 2020
$ 1,300 14,830
$ 16,130
308 $ 16,438
June 30 2020
$ 1,300 13,656
$14,956
308 $15,264
March 31 2020
$ 1,300 13,510
$ 14,810
308 $ 15,118
December 31 2019
$ 1,299 13,559
$ 14,858
308 $ 15,166
December 31 2018
$
509
12,087
$ 12,596
308 $ 12,904
$ 56,413 308
16,130
$ 72,851
$54,760 308
14,956
$70,024
$ 52,197 308
14,810
$ 67,315
$ 55,331 308
14,858
$ 70,497
$ 50,312 308
12,596
$ 63,216
0.4% 22.1% 22.5%
0.4% 21.4% 21.8%
0.5% 22.0% 22.5%
0.4% 21.1% 21.5%
0.5% 19.9% 20.4%
Note: As of September 30, 2020, there was $1.7 billion usage of credit facilities on total capacity of $4.0 billion.
(1) In September 2020, the company issued $1.0 billion of senior notes at 1.375% due 2030. At September 30, 2020, and December 31, 2019, total debt included $2.3 billion and $1.3 billion, respectively, of senior notes issued to provide proceeds to retire existing debt coming due in November 2022 and November 2020, respectively. These prefundings had the effect of increasing the leverage ratios at September 30, 2020, and December 31, 2019, by 2.5 percentage points and 1.4 percentage points, respectively.
Debt and Capital
Page 27
Chubb Limited Computation of Basic and Diluted Earnings Per Share (in millions of U.S. dollars, except share and per share data)
(Unaudited)
Numerator Core operating income to common shares Amortization of fair value adjustment of acquired invested assets
and long-term debt, pre-tax Tax benefit on amortization adjustment
Chubb integration expenses, pre-tax Tax benefit on Chubb integration expenses
Adjusted net realized gains (losses), pre-tax Tax (expense) benefit on adjusted net realized gains (losses)
Net income
Rollforward of Common Shares Outstanding Shares--beginning of period Repurchase of shares Shares issued, excluding option exercises Issued for option exercises Shares--end of period
Denominator Weighted average shares outstanding (1) Effect of other dilutive securities
Adj. wtd. avg. shares outstanding and assumed conversions
Basic earnings per share Core operating income Amortization of fair value adjustment of acquired invested assets
and long-term debt, net of tax Chubb integration expenses, net of tax Adjusted net realized gains (losses), net of tax
Net income
Diluted earnings per share Core operating income Amortization of fair value adjustment of acquired invested assets
and long-term debt, net of tax Chubb integration expenses, net of tax Adjusted net realized gains (losses), net of tax
Net income
Three months ended September 30
2020
2019
$
907
$
1,236
(23)
(32)
4
8
--
(2)
--
--
280
(100)
26
$
1,194
(19)
$
1,091
451,360,023 --
(13,731) 29,902
451,376,194
456,077,819 (3,079,618) (76,142) 611,583
453,533,642
451,794,046 1,471,434
453,265,480
454,975,143 3,175,226
458,150,369
$
2.01
$
2.72
(0.04)
(0.06)
--
--
0.67
(0.26)
$
2.64
$
2.40
$
2.00
$
2.70
(0.04)
(0.06)
--
--
0.67
(0.26)
$
2.63
$
2.38
Nine months ended September 30
2020
2019
$
1,873
$
3,601
(74) 14 -- -- (752)
(111) 22 (9) 2
(211)
54
$
1,115
(13)
$
3,281
451,971,567 (2,266,150) 1,013,831 656,946
451,376,194
459,203,378 (8,417,838) 1,146,942 1,601,160
453,533,642
451,683,093 1,894,699
453,577,792
456,987,560 2,937,026
459,924,586
$
4.15
$
7.88
(0.13)
(0.19)
--
(0.02)
(1.55)
(0.49)
$
2.47
$
7.18
$
4.13
$
7.83
(0.13)
(0.19)
--
(0.02)
(1.54)
(0.49)
$
2.46
$
7.13
(1) Includes unvested restricted stock units that are not included in common shares outstanding as the shares are not issued until time of vesting, but are eligible to receive dividends (participating securities).
Earnings per share
Page 28
Chubb Limited Book Value and Book Value per Common Share (in millions of U.S. dollars, except share and per share data)
(Unaudited)
Reconciliation of Book Value per Common Share
Shareholders' equity Less: goodwill and other intangible assets, net of tax
Numerator for tangible book value per share
Book value--% change over prior quarter Tangible book value--% change over prior
quarter Denominator
Book value per common share Tangible book value per common share Reconciliation of Book Value Shareholders' equity, beginning of quarter (1) Core operating income (loss) Amortization of fair value adjustment of
acquired invested assets and long-term debt Chubb integration expenses Adjusted net realized gains (losses) (2) Net unrealized gains (losses) on investments Repurchase of shares Dividend declared on common shares Cumulative translation gains (losses) Postretirement benefit liability Other (3)
September 30 2020
$ 56,413
19,802 $ 36,611
3.0%
4.7% 451,376,194
$ 124.98
$
81.11
$ 54,760 907
(19) -- 306 543 -- (353) 233 (18)
54
$ 56,413
June 30 2020
$ 54,760
19,783 $ 34,977
4.9%
7.2% 451,360,023
$ 121.32
$
77.49
$ 52,188 (254)
(19) -- (58) 2,757 -- (353) 451 (17)
65
$ 54,760
March 31 2020
$ 52,188
19,569 $ 32,619
-5.7%
-7.6% 451,367,782
$ 115.62
$
72.27
$ 55,259 1,220
(22) -- (946) (1,876) (326) (340) (825) (11) 55
$ 52,188
December 31 2019
$ 55,331
20,012 $ 35,319
1.4%
2.2% 451,971,567
$ 122.42
$
78.14
$ 54,572 1,040
(25) (12) 170 (70) (310) (340) 177 (9) 138
$ 55,331
September 30 2019
$ 54,572
20,010 $ 34,562
1.4%
2.8% 453,533,642
$ 120.33
$
76.21
$ 53,802 1,236
(24) (2)
(119) 580 (478) (341) (185) (13) 116
$ 54,572
(1) January 1, 2020 included a $72 million after-tax reduction to beginning equity principally related to the adoption of the current expected credit loss accounting guidance.
(2) Includes net realized gains (losses) related to unconsolidated entities. (3) Other primarily includes proceeds from exercise of stock options and stock compensation, offset by the value of any share cancellations for restricted
stock vesting taxes.
Reconciliation Book Value
Page 29
Chubb Limited Non-GAAP Financial Measures
(Unaudited)
Regulation G--Non-GAAP Financial Measures
In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP).
Throughout this document there are various measures presented on a constant-dollar basis (i.e., excludes the impact of foreign exchange). We believe it is useful to evaluate the trends in our results exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period.
Underwriting income (loss) is calculated by subtracting adjusted losses and loss expenses, adjusted policy benefits, policy acquisition costs and administrative expenses from net premiums earned. We use underwriting income (loss) and operating ratios to monitor the results of our operations without the impact of certain factors, including net investment income, other income (expense), interest expense, amortization expense of purchased intangibles, Chubb integration expense, income tax expense and adjusted net realized gains (losses).
CAY underwriting income excluding catastrophe losses (Cats) is underwriting income (loss) adjusted to exclude Cats and prior period development (PPD). We believe it is useful to exclude Cats, as they are not predictable as to timing and amount, and PPD as these unexpected loss developments on historical reserves are not indicative of our current underwriting performance. We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.
Adjusted losses and loss expenses include realized gains and losses on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing impacts underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations, and therefore realized gains (losses) from these derivatives are reclassified to adjusted losses and loss expenses.
Adjusted policy benefits includes gains and losses from fair value changes in separate account assets, as well as the offsetting movement in separate account liabilities, for purposes of reporting Life Insurance underwriting income. The gains and losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified from Other (income) expense. We view gains and losses from fair value changes in both separate account assets and liabilities as part of the results of our underwriting operations, and therefore these gains and losses are reclassified to adjusted policy benefits.
Adjusted net investment income is net investment income excluding the amortization of the fair value adjustment on acquired invested assets from the acquisition of The Chubb Corporation (Chubb Corp) and including investment income from partially-owned investment companies (private equity partnerships) where our ownership interest is in excess of three percent that are accounted for under the equity method. The mark-to-market movement on these private equity partnerships are included in adjusted net realized gains (losses) as described below. We believe this measure is meaningful as it highlights the underlying performance of our invested assets and portfolio management in support of our lines of business.
Adjusted net realized gains (losses), net of tax, includes net realized gains (losses) and net realized gains (losses) recorded in other income (expense) related to unconsolidated subsidiaries, and excludes realized gains and losses on crop derivatives.
Adjusted interest expense is interest expense excluding the amortization of the fair value adjustment on acquired long-term debt, related to the Chubb Corp acquisition due to the size and complexity of this acquisition.
Other income (expense) -- operating excludes from consolidated Other income (expense) the portion of net realized gains and losses related to unconsolidated entities, other income (expense) from private equity partnerships, and gains and losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP. Net realized gains (losses) related to unconsolidated entities is excluded from core operating income (loss) in order to enhance the understanding of our results of underwriting operations as they are heavily influenced by, and fluctuate in part according to, market conditions. Other income (expense) from private equity partnerships and net realized gains and losses related to unconsolidated entities are recorded to Other income (expense) in our income statement on a GAAP basis.
P&C underwriting income and P&C combined ratio exclude the Life Insurance segment. P&C loss and loss expense ratio and P&C combined ratio include adjusted losses and loss expenses in the ratio numerator. P&C expense ratio and P&C combined ratio include policy acquisition costs and administrative expenses in the ratio numerator. A reconciliation of combined ratio to P&C combined ratio is provided on pages 33-36.
CAY P&C combined ratio excluding catastrophe losses excludes Cats and PPD from the P&C combined ratio. We exclude Cats as they are not predictable as to timing and amount and PPD as these unexpected loss developments on historical reserves are not indicative of our current underwriting performance. The combined ratio numerator is adjusted to exclude Cats, net premiums earned adjustments on PPD, prior period expense adjustments and reinstatement premiums on PPD, and the denominator is adjusted to exclude net premiums earned adjustments on PPD and reinstatement premiums on Cats and PPD. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded from PPD and net premiums earned when calculating the ratios. We believe this measure provides a better evaluation of our underwriting performance and enhances the understanding of the trends in our P&C business that may be obscured by these items. This measure is commonly reported among our peer companies and allows for a better comparison.
Expense ratio excluding accident and health (A&H) excludes the impact of our A&H business from our expense ratio. The expense ratio for the A&H business is typically higher than our traditional P&C business, and we believe that this measure provides better comparison to our peer companies that may not have a significant A&H block of business.
Global P&C performance metrics comprise consolidated operating results (including corporate) and exclude the operating results of the company's Life Insurance and North America Agricultural Insurance segments. The agriculture insurance business is a different business in that it is a public sector and private sector partnership in which insurance rates, premium growth, and risk-sharing is not market-driven like the remainder of the company's P&C insurance business. We believe that these measures are useful and meaningful to investors as they are used by management to assess the company's global P&C operations which are the most economically similar. We exclude the North America Agricultural Insurance and Life Insurance segments because the results of these businesses do not always correlate with the results of our global P&C operations.
Core operating income (loss), net of tax, excludes from net income, the after-tax impact of adjusted net realized gains (losses), Chubb integration expenses, and the amortization of fair value adjustment of acquired invested assets and long-term debt related to the Chubb Corp acquisition. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude adjusted net realized gains (losses) because the amount of these gains (losses) are heavily influenced by, and fluctuate in part according to the availability of market opportunities. We exclude the amortization of the fair value adjustments related to purchased invested assets and long-term debt and Chubb integration expenses due to the size and complexity of this acquisition. These integration expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration expenses facilitates the comparison of our financial results to our historical operating results. References to core operating income measures mean net of tax, whether or not noted.
Core operating effective tax rate is income tax expense (benefit) excluding tax expense (benefit) on adjusted net realized gains (losses), tax benefit on amortization of fair value of acquired invested assets and debt, and tax benefit on Chubb integration expenses, divided by income excluding adjusted net realized gains (losses) before tax, amortization of fair value of acquired invested assets and debt before tax, and Chubb integration expenses before tax. We believe the use of this measure is meaningful to show the tax on the underlying performance of our insurance business, by excluding the tax on adjusted net realized gains (losses), the tax on amortization of the fair value adjustments related to purchased invested assets and long-term debt and the tax on Chubb integration expenses. Refer to the definition of core operating income (loss), net of tax above for more information on these adjustments.
Book value per common share, is shareholders' equity divided by the shares outstanding. Tangible book value per common share, is shareholders' equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. We believe that goodwill and other intangible assets are not indicative of our underlying insurance results or trends and make book value comparisons to less acquisitive peer companies less meaningful. Book value per common share excluding mark-to-market, excludes unrealized investment gains (losses). Tangible book value per common share excluding mark-to-market, excludes goodwill and other intangible assets, net of tax, as well as unrealized investment gains (losses), net of tax. We exclude unrealized investment gains (losses) because the amount of these gains (losses) is heavily influenced by changes in market conditions, including interest rate changes, and we believe that excluding these gains and losses would highlight the underlying growth in book value and tangible book value.
International life insurance net premiums written and deposits collected includes deposits collected on universal life and investment contracts (life deposits). Life deposits are not reflected as revenues in our consolidated statements of operations in accordance with GAAP. However, we include life deposits in presenting growth in our life insurance business because new life deposits are an important component of production and key to our efforts to grow our business.
Reconciliation Non-GAAP
Page 30
Chubb Limited Non-GAAP Financial Measures--2 (in millions of U.S. dollars, except per share data and ratios)
(Unaudited)
Regulation G--Non-GAAP Financial Measures (continued)
Core operating effective tax rate
The following table presents the reconciliation of effective tax rate to the Core operating effective tax rate:
Tax expense (benefit), as reported Less: tax benefit on amortization of fair value of acquired
invested assets and debt Less: tax benefit on Chubb integration expenses Less: tax expense (benefit) on adjusted net realized gains
(losses)
3Q-20
$ 142
2Q-20
1Q-20
$ (62) $ 215
4Q-19
$ 169
3Q-19
$ 230
YTD 2020
$ 295
YTD 2019
$ 626
Full Year 2019
$ 795
(4)
(5)
(5)
(4)
(8)
(14)
(22)
(26)
--
--
--
(2)
--
--
(2)
(4)
(26)
(11)
(17)
2
19
(54)
13
15
Tax expense (benefit), adjusted
$ 172 $ (46) $ 237 $ 173 $ 219 $ 363 $ 637 $ 810
Income (loss) before tax, as reported
$ 1,336
Less: amortization of fair value of acquired invested assets and
debt
(23)
Less: Chubb integration expenses
--
Less: adjusted realized gains (losses)
(142)
Less: realized gains (losses) related to unconsolidated entities
422
$ (393)
(24) --
31 (100)
$ 467
(27) -- (956)
(7)
$ 1,342
(29) (14) (55) 227
$ 1,321
(32) (2)
(141) 41
$ 1,410
(74) -- (1,067) 315
$ 3,907
(111) (9)
(467) 256
$ 5,249
(140) (23)
(522) 483
Core operating income (loss) before tax
$1,079 $ (300) $1,457 $1,213 $1,455 $ 2,236 $4,238 $ 5,451
Effective tax rate Adjustment for tax impact of amortization of fair value of
acquired invested assets and debt Adjustment for tax impact of Chubb integration expenses Adjustment for tax impact of adjusted net realized gains
(losses)
10.7%
0.0% 0.0%
5.3%
15.8% 46.0%
-0.4% 0.0%
0.0% 0.0%
-0.1% -29.7%
12.6%
0.0% 0.0%
1.6%
17.4%
0.2% 0.0%
-2.5%
20.9%
0.1% 0.0%
-4.8%
16.0%
0.1% 0.0%
-1.1%
15.1%
0.1% 0.0%
-0.3%
Core operating effective tax rate
16.0% 15.3% 16.3% 14.2% 15.1% 16.2% 15.0% 14.9%
Core operating income The following table presents the reconciliation of Net income (loss) to Core operating income (loss):
Net income (loss), as reported Amortization of fair value adjustment of acquired invested
assets and long-term debt, pre-tax Tax benefit on amortization adjustment
Chubb integration expenses, pre-tax Tax benefit on Chubb integration expenses
Adjusted realized gains (losses), pre-tax Net realized gains (losses) related to unconsolidated entities,
pre-tax (1) Tax (expense) benefit on adjusted net realized gains (losses)
3Q-20
$ 1,194
(23) 4
-- -- (142)
422
26
Core operating income (loss)
$ 907
Catastrophe losses--after-tax
$ 797
Unfavorable (favorable) prior period development
(PPD)--after-tax
$ (126)
Core operating income (loss) per share
$ 2.00
Impact of Cats on Core operating income per share--
Unfavorable
$ (1.76)
Impact of PPD on Core operating income per share--
Favorable (unfavorable)
$ 0.28
Impact of Cats and PPD on Core operating income per share--
Unfavorable
$ (1.48)
2Q-20
$ (331)
(24) 5
-- --
31
(100)
11 $ (254) $ 1,510
$ 52 $ (0.56)
$ (3.35)
$ (0.11)
$ (3.46)
1Q-20
$ 252
(27) 5
-- -- (956)
(7)
17 $ 1,220 $ 199
$ (94) $ 2.68
$ (0.44)
$ 0.21
$ (0.23)
4Q-19
$ 1,173
(29) 4
(14) 2
(55)
227
(2) $ 1,040 $ 353
$ (199) $ 2.28
$ (0.77)
$ 0.43
$ (0.34)
3Q-19
$ 1,091
(32) 8 (2)
-- (141)
41
(19) $ 1,236 $ 191
$ (112) $ 2.70
$ (0.41)
$ 0.24
$ (0.17)
YTD 2020
$ 1,115
(74) 14 -- -- (1,067)
315
54 $ 1,873 $ 2,506
$ (168) $ 4.13
$ (5.52)
$ 0.37
$ (5.15)
YTD 2019
$ 3,281
(111) 22 (9) 2
(467)
256
(13) $ 3,601 $ 613
$ (425) $ 7.83
$ (1.33)
$ 0.92
$ (0.41)
Full Year 2019
$ 4,454
(140) 26 (23) 4
(522)
483
(15) $ 4,641 $ 966
$ (624) $ 10.11
$ (2.11)
$ 1.36
$ (0.75)
(1) Realized gains (losses) on partially-owned entities, which are investments where we hold more than an insignificant percentage of the investee's shares. The net income or loss is included in other income (expense).
Reconciliation Non-GAAP 2
Page 31
Chubb Limited Non-GAAP Financial Measures--3 (in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
Regulation G--Non-GAAP Financial Measures (continued)
Core operating ROE
Core operating return on equity (ROE) and Core operating return on tangible equity (ROTE) are annualized non-GAAP financial measures. The numerator includes core operating income (loss), net of tax. The denominator includes the average shareholders' equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. For the ROTE calculation, the denominator is also adjusted to exclude goodwill and other intangible assets, net of tax. These measures enhances the understanding of the return on shareholders' equity by highlighting the underlying profitability relative to shareholders' equity and tangible equity excluding the effect of unrealized gains and losses on our investments.
Net income
3Q-20
$
1,194
3Q-19
$
1,091
YTD
2020
$
1,115
YTD 2019
$ 3,281
Full Year 2019
$ 4,454
Core operating income Equity--beginning of period, as reported (1)
$
907 $
1,236 $
1,873 $ 3,601 $ 4,641
$ 54,760 $ 53,802 $ 55,259 $ 50,300 $ 50,300
Less: unrealized gains (losses) on investments, net of deferred tax
3,424
2,033
2,543
(545)
(545)
Equity--beginning of period, as adjusted
$ 51,336 $ 51,769 $ 52,716 $ 50,845 $ 50,845
Less: goodwill and other intangible assets, net of tax
$ 19,783 $ 20,170 $ 20,012 $ 20,054 $ 20,054
Equity--beginning of period, as adjusted ex goodwill and other intangible assets
$ 31,553 $ 31,599 $ 32,704 $ 30,791 $ 30,791
Equity--end of period, as reported
$ 56,413 $ 54,572 $ 56,413 $ 54,572 $ 55,331
Less: unrealized gains (losses) on investments, net of deferred tax
3,967
2,613
3,967
2,613
2,543
Equity--end of period, as adjusted
$ 52,446 $ 51,959 $ 52,446 $ 51,959 $ 52,788
Less: goodwill and other intangible assets, net of tax
19,802
20,010
19,802
20,010
20,012
Equity--end of period, as adjusted ex goodwill and other intangible
assets
$
32,644 $
31,949 $
32,644 $ 31,949 $ 32,776
Weighted average equity, as reported
$ 55,587 $ 54,187 $ 55,836 $ 52,436 $ 52,816
Weighted average equity, as adjusted
$ 51,891 $ 51,864 $ 52,581 $ 51,402 $ 51,817
Weighted average equity, as adjusted ex goodwill and other intangible
assets
$ 32,099 $ 31,774 $ 32,674 $ 31,370 $ 31,784
ROE
8.6%
8.1%
2.7%
8.3%
8.4%
Core operating ROE
7.0%
9.5%
4.7%
9.3%
9.0%
Core operating ROTE Private equities realized gains, after-tax (2)
11.3%
15.6%
$
428 $
30 $
7.6%
15.3%
14.6%
223 $ 223 $ 434
Impact of Private equities if included in Core operating ROE-- Favorable (2)
3.3 pts
0.3 pt
0.6 pt
0.6 pt
0.8 pt
Reconciliation of Book Value and Tangible Book Value per Share, excluding mark-to-market
Book value Less: unrealized gains (losses) on investments, net of deferred tax
Book value excluding mark-to-market Less: goodwill and other intangible assets, net of tax
Tangible book value excluding mark-to-market
Denominator
Book value per share excluding mark-to-market Tangible book value per share excluding mark-to-market
September 30 2020
$ 56,413
3,967
52,446 19,802
$ 32,644
451,376,194
$ 116.19
$
72.32
June 30 2020
$ 54,760
3,424
51,336 19,783
$ 31,553
451,360,023
$ 113.74
$
69.90
December 31 2019
$ 55,331
2,543
52,788 20,012
$ 32,776
451,971,567
$ 116.80
$
72.52
QTD
YTD
% Change % Change
2.2% 3.5%
-0.5% -0.3%
(1) January 1, 2020 included a $72 million after-tax reduction to beginning equity principally related to the adoption of the current expected credit loss accounting guidance.
(2) We record the change in the fair value mark and gains (losses) on sales of private equity funds as realized gains (losses) instead of investment income.
Reconciliation Non-GAAP 3
Page 32
Chubb Limited Non-GAAP Financial Measures--4 (in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G--Non-GAAP Financial Measures (continued)
P&C combined ratio
The P&C combined ratio includes the impact of realized gains and losses on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing will impact underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations.
The following tables present the calculation of combined ratio, as reported, for each segment to P&C combined ratio, adjusted for catastrophe losses (Cats) and prior period development (PPD).
Q3 2020
Numerator
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total P&C
Losses and loss expenses
Losses and loss expenses
$
2,444 $
961 $ 846 $ 1,192 $ 154 $ 55 $5,652
Realized (gains) losses on crop
derivatives
--
--
(1)
--
--
--
(1)
Adjusted losses and loss expenses
A $
2,444 $
961 $ 845 $ 1,192 $ 154 $ 55 $5,651
Catastrophe losses and related
adjustments
Catastrophe losses, net of related
adjustments
(447)
(305)
(10)
(95)
(68)
--
(925)
Reinstatement premiums
collected (expensed) on
catastrophe losses
--
--
--
--
7
--
7
Catastrophe losses, gross of
related adjustments
(447)
(305)
(10)
(95)
(75)
--
(932)
PPD and related adjustments
PPD, net of related adjustments--
favorable (unfavorable)
200
(48)
(18)
60
6
(54) 146
Net premiums earned adjustments
on PPD--unfavorable
(favorable)
28
--
--
--
--
--
28
Expense adjustments--
unfavorable (favorable)
(1)
--
--
--
(2)
--
(3)
PPD reinstatement premiums--
unfavorable (favorable)
--
(8)
--
--
--
--
(8)
PPD, gross of related adjustments
--favorable (unfavorable)
227
(56)
(18)
60
4
(54) 163
CAY loss and loss expense ex Cats
B $
2,224 $
600 $ 817 $ 1,157 $
83 $ 1 $4,882
Policy acquisition costs and
administrative expenses
Policy acquisition costs and
administrative expenses
C $
732 $
313 $
61 $ 897 $
49 $ 71 $2,123
Expense adjustments--favorable
(unfavorable)
1
--
--
--
2
--
3
Policy acquisition costs and
administrative expenses, adjusted
D $
733 $
313 $
61 $ 897 $
51 $ 71 $2,126
Denominator
Net premiums earned
E $
3,456 $ 1,231 $ 971 $ 2,337 $ 171
$ 8,166
Reinstatement premiums
(collected) expensed on
catastrophe losses
--
--
--
--
(7)
(7)
Net premiums earned adjustments
on PPD--unfavorable
(favorable)
28
--
--
--
--
28
PPD reinstatement premiums--
unfavorable (favorable)
--
(8)
--
--
--
(8)
Net premiums earned excluding
adjustments
F $
3,484 $ 1,223 $ 971 $ 2,337 $ 164
$ 8,179
P&C combined ratio
Loss and loss expense ratio
A/E
70.7%
78.1%
87.1%
51.0%
89.6%
69.2%
Policy acquisition cost and
administrative expense ratio
C/E
21.2%
25.4%
6.2%
38.4%
28.7%
26.0%
P&C combined ratio
CAY P&C combined ratio ex Cats
Loss and loss expense ratio, adjusted B/F
Policy acquisition cost and
administrative expense ratio,
adjusted
D/F
CAY P&C combined ratio ex Cats
Combined ratio Combined ratio Add: impact of gains and losses on
crop derivatives
P&C combined ratio
91.9% 63.8%
21.1% 84.9%
103.5% 49.2%
25.6% 74.8%
93.3% 84.2%
89.4% 49.5%
6.2% 90.4%
38.4% 87.9%
118.3% 49.7%
31.1% 80.8%
95.2% 59.7%
26.0% 85.7%
95.2% 0.0% 95.2%
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.
Reconciliation Non-GAAP 4
Page 33
Chubb Limited Non-GAAP Financial Measures--5 (in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G--Non-GAAP Financial Measures (continued) P&C combined ratio (continued)
YTD 2020
Numerator Losses and loss expenses
Losses and loss expenses Realized (gains) losses on crop
derivatives
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total P&C
$
8,123 $ 2,406 $ 1,221 $ 3,935 $ 314 $ 342 $ 16,341
--
--
2
--
--
--
2
Adjusted losses and loss expenses
A $
8,123 $ 2,406 $ 1,223 $ 3,935 $ 314 $ 342 $ 16,343
Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments Reinstatement premiums collected (expensed) on catastrophe losses
(1,838) (3)
(436) (1)
(24)
(584)
--
(16)
(81)
--
(2,963)
7
--
(13)
Catastrophe losses, gross of related adjustments
(1,835)
(435)
(24)
(568)
(88)
--
(2,950)
PPD and related adjustments PPD, net of related adjustments-- favorable (unfavorable) Net premiums earned adjustments on PPD--unfavorable (favorable) Expense adjustments--unfavorable (favorable) PPD reinstatement premiums-- unfavorable (favorable)
451
(48)
(4)
100
29
(339)
189
32
--
3
--
--
--
35
(1)
--
--
--
(2)
--
(3)
--
(8)
--
--
(1)
--
(9)
PPD, gross of related adjustments-- favorable (unfavorable)
482
(56)
(1)
100
26
(339)
212
CAY loss and loss expense ex Cats
B $
6,770 $ 1,915 $ 1,198 $ 3,467 $ 252 $ 3 $ 13,605
Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses Expense adjustments--favorable (unfavorable)
C $
2,203 $ 1
923 $ --
108 $ 2,662 $
--
--
155 $ 214 $ 6,265
2
--
3
Policy acquisition costs and administrative expenses, adjusted
D $
2,204 $
923 $ 108 $ 2,662 $ 157 $ 214 $ 6,268
Denominator Net premiums earned
Reinstatement premiums (collected) expensed on catastrophe losses
Net premiums earned adjustments on PPD--unfavorable (favorable)
PPD reinstatement premiums-- unfavorable (favorable)
E $
10,427 $ 3,623 $ 1,441 $ 6,838 $ 520
3
1
--
16
(7)
32
--
3
--
--
--
(8)
--
--
(1)
$ 22,849 13 35 (9)
Net premiums earned excluding adjustments
F $
10,462 $ 3,616 $ 1,444 $ 6,854 $ 512
$ 22,888
P&C combined ratio
Loss and loss expense ratio
A/E
Policy acquisition cost and administrative
expense ratio
C/E
77.9% 21.1%
66.4% 25.5%
84.9% 7.4%
57.6% 38.9%
60.3% 29.8%
71.5% 27.4%
P&C combined ratio
99.0%
91.9%
92.3%
96.5%
90.1%
98.9%
CAY P&C combined ratio ex Cats
Loss and loss expense ratio, adjusted
B/F
Policy acquisition cost and administrative
expense ratio, adjusted
D/F
64.7% 21.1%
53.0% 25.5%
83.0% 7.4%
50.6% 38.8%
49.0% 30.7%
59.4% 27.4%
CAY P&C combined ratio ex Cats
85.8%
78.5%
90.4%
89.4%
79.7%
86.8%
Combined ratio Combined ratio Add: impact of gains and losses on crop
derivatives
98.9% 0.0%
P&C combined ratio
98.9%
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.
Reconciliation Non-GAAP 5
Page 34
Chubb Limited Non-GAAP Financial Measures--6 (in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G--Non-GAAP Financial Measures (continued) P&C combined ratio (continued)
Q3 2019
Numerator Losses and loss expenses
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total P&C
Losses and loss expenses
$
2,051 $
674 $ 866 $ 1,154 $
79 $ 38 $ 4,862
Realized (gains) losses on crop
derivatives
--
--
14
--
--
--
14
Adjusted losses and loss expenses
A $
2,051 $
674 $ 880 $ 1,154 $
79 $ 38 $ 4,876
Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments
(88)
(83)
(3)
(35)
(23)
--
(232)
Reinstatement premiums
collected (expensed) on
catastrophe losses
--
--
--
--
2
--
2
Catastrophe losses, gross of
related adjustments
(88)
(83)
(3)
(35)
(25)
--
(234)
PPD and related adjustments PPD, net of related adjustments-- favorable (unfavorable)
109
62
(18)
25
25
(36)
167
Net premiums earned adjustments
on PPD--unfavorable
(favorable)
39
--
--
--
1
--
40
Expense adjustments--
unfavorable (favorable)
3
--
--
--
(1)
--
2
PPD reinstatement premiums-- unfavorable (favorable)
(1)
(1)
--
1
--
--
(1)
PPD, gross of related adjustments
--favorable (unfavorable)
150
61
(18)
26
25
(36)
208
CAY loss and loss expense ex Cats
B $
2,113 $
652 $ 859 $ 1,145 $
79 $ 2 $ 4,850
Policy acquisition costs and administrative expenses
Policy acquisition costs and
administrative expenses
C $
715 $
312 $
60 $ 887 $
51 $ 74 $ 2,099
Expense adjustments--favorable
(unfavorable)
(3)
--
--
--
1
--
(2)
Policy acquisition costs and
administrative expenses, adjusted
D $
712 $
312 $
60 $ 887 $
52 $ 74 $ 2,097
Denominator Net premiums earned
E $
3,185 $ 1,187 $ 941 $ 2,256 $ 160
$ 7,729
Reinstatement premiums
(collected) expensed on
catastrophe losses
--
--
--
--
(2)
(2)
Net premiums earned adjustments
on PPD--unfavorable
(favorable) PPD reinstatement premiums--
unfavorable (favorable)
39
--
--
--
1
40
(1)
(1)
--
1
--
(1)
Net premiums earned excluding
adjustments
F $
3,223 $ 1,186 $ 941 $ 2,257 $ 159
$ 7,766
P&C combined ratio
Loss and loss expense ratio
A/E
64.4%
56.9%
93.5%
51.1%
49.6%
63.1%
Policy acquisition cost and
administrative expense ratio
C/E
22.5%
26.2%
6.4%
39.4%
31.5%
27.1%
P&C combined ratio
86.9%
83.1%
99.9%
90.5%
81.1%
90.2%
CAY P&C combined ratio ex Cats
Loss and loss expense ratio, adjusted B/F
65.5%
55.1%
91.3%
50.7%
49.9%
62.4%
Policy acquisition cost and
administrative expense ratio,
adjusted
D/F
22.1%
26.2%
6.4%
39.3%
32.2%
27.1%
CAY P&C combined ratio ex Cats
Combined ratio Combined ratio Add: impact of gains and losses on
crop derivatives P&C combined ratio
87.6%
81.3%
97.7%
90.0%
82.1%
89.5%
90.0% 0.2% 90.2%
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.
Reconciliation Non-GAAP 6
Page 35
Chubb Limited Non-GAAP Financial Measures--7 (in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G--Non-GAAP Financial Measures (continued) P&C combined ratio (continued)
YTD 2019
Numerator Losses and loss expenses
Losses and loss expenses Realized (gains) losses on crop
derivatives
Adjusted losses and loss expenses
Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments Reinstatement premiums collected (expensed) on catastrophe losses
Catastrophe losses, gross of related adjustments
PPD and related adjustments PPD, net of related adjustments-- favorable (unfavorable) Net premiums earned adjustments on PPD--unfavorable (favorable) Expense adjustments--unfavorable (favorable) PPD reinstatement premiums-- unfavorable (favorable)
PPD, gross of related adjustments-- favorable (unfavorable)
CAY loss and loss expense ex Cats
Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses Expense adjustments--favorable (unfavorable)
Policy acquisition costs and administrative expenses, adjusted
Denominator Net premiums earned
Reinstatement premiums (collected) expensed on catastrophe losses
Net premiums earned adjustments on PPD--unfavorable (favorable)
PPD reinstatement premiums-- unfavorable (favorable)
Net premiums earned excluding adjustments
P&C combined ratio Loss and loss expense ratio Policy acquisition cost and administrative
expense ratio
P&C combined ratio
CAY P&C combined ratio ex Cats Loss and loss expense ratio, adjusted Policy acquisition cost and administrative
expense ratio, adjusted
CAY P&C combined ratio ex Cats
Combined ratio Combined ratio Add: impact of gains and losses on crop
derivatives
P&C combined ratio
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total P&C
$ A $
6,238 $
-- 6,238 $
2,178 $ 1,155 $ 3,385 $
--
8
--
2,178 $ 1,163 $ 3,385 $
245 $ 83 $13,284
--
--
8
245 $ 83 $13,292
(319) -- (319)
(329) -- (329)
(7)
(69)
--
--
(7)
(69)
(33)
--
(757)
2
--
2
(35)
--
(759)
B $
425 38 (3) (1)
459 6,378 $
88
43
49
--
32
--
--
(3)
--
(4)
--
1
84
72
50
1,933 $ 1,228 $ 3,366 $
33
(79)
559
1
--
71
(1)
--
(7)
--
--
(4)
33
(79)
619
243 $ 4 $13,152
C $
D $ E $
F $ A/E C/E B/F D/F
2,132 $ 3
919 $ --
99 $ 2,626 $
3
--
153 $ 211 $ 6,140
1
--
7
2,135 $
919 $ 102 $ 2,626 $ 154 $ 211 $ 6,147
9,660 $ 3,509 $ 1,374 $ 6,595 $ 487
--
--
--
--
(2)
38
--
32
--
1
(1)
(4)
--
1
--
$21,625 (2) 71 (4)
9,697 $ 3,505 $ 1,406 $ 6,596 $ 486
$21,690
64.6%
22.0% 86.6%
62.1%
26.2% 88.3%
84.7%
7.2% 91.9%
51.3%
39.8% 91.1%
50.3%
31.4% 81.7%
61.5%
28.4% 89.9%
65.8%
22.0% 87.8%
55.2%
26.2% 81.4%
87.4%
7.2% 94.6%
51.0%
39.8% 90.8%
50.0%
31.7% 81.7%
60.6%
28.4% 89.0%
89.9%
0.0% 89.9%
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.
Reconciliation Non-GAAP 7
Page 36
Chubb Limited Glossary
Chubb Limited Consolidated comprises all segments including Corporate.
P&C combined ratio: The sum of the loss and loss expense ratio, policy acquisition cost ratio and the administrative expense ratio excluding the life business and including the realized gains and losses on the crop derivatives.
Book value per common share: Shareholders' equity divided by the shares outstanding.
Tangible book value per common share: Shareholders' equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding.
Average market yield of fixed maturities: Weighted average yield to maturity of our fixed income portfolio based on the market prices of the holdings as of that date.
Average yield on invested assets: Adjusted net investment income divided by average cost of fixed maturities and other investments, and average market value of equity securities.
Total capitalization: The sum of the short-term debt, long-term debt, trust preferreds, and shareholders' equity.
Chubb integration expenses: Chubb integration expenses comprise legal and professional fees and all other costs directly related to the integration activities of the Chubb Corp acquisition. Chubb integration expenses are incurred by the overall company and are therefore included in Corporate. These costs are not related to the on-going business activities of the segments and are therefore excluded from our definition of segment income.
Catastrophe losses (Cats): We generally define catastrophe loss events consistent with the definition of the Property Claims Service (PCS) for events in the U.S. and Canada. PCS defines a catastrophe as an event that causes damage of $25 million or more in insured losses and affects a significant number of insureds, including from pandemics such as COVID-19. For events outside of the U.S. and Canada, we generally use a similar definition. Catastrophe loss events are events that occurred in the current calendar year only. Changes in catastrophe loss estimates in the current calendar year that relate to loss events that occurred in previous calendar years are considered prior period development.
Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from previous accident years.
Reinstatement premiums are additional premiums paid on certain reinsurance agreements in order to reinstate coverage that had been exhausted by loss occurrences. The reinstatement premium amount is typically a pro rata portion of the original ceded premium paid based on how much of the reinsurance limit had been exhausted.
Net premiums earned adjustments within prior period development are adjustments to the initial premium earned on retrospectively rated policies based on actual claim experience that develops after the policy period ends. The premium adjustments correlate to the prior period loss development on these same policies and are fully earned in the period the adjustments are recorded.
Prior period expense adjustments typically relate to either profit commission reserves or policyholder dividend reserves based on actual claim experience that develops after the policy period ends. The expense adjustments correlate to the prior period loss development on these same policies.
Segment income (loss) includes underwriting income (loss), adjusted net investment income, other income (expense) operating, and amortization expense of purchased intangibles.
Commercial P&C lines includes Commercial P&C, Agriculture and Reinsurance lines of business.
Consumer P&C lines includes Personal and Global accident and health (A&H) lines of business.
NM: Not meaningful. Glossary
Page 37
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