Chubb Annual Report 2017

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FY2017 Annual Report · Chubb

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Chubb Limited

Bärengasse 32

CH—8001 Zurich

Switzerland

chubb.com

Chubb Limited
Annual Report
2017

Delivering Exceptional Service to Our Customers

At Chubb, we’re proud of the service we provide to our

customers — individuals, families and businesses of

all sizes. For many customers, the ultimate test of our

promise to them comes after they have suffered a loss.

That’s why Chubb has built a claims handling capability

that is second to none in the industry. At the same

time, we are doing more to predict and prevent

losses from happening in the first place through our

risk engineering, loss prevention and residential risk

consulting services. There is nothing that provides

us with greater satisfaction than hearing the powerful

personal stories of our customers. In 2017, a year

of hurricanes, wildfires, earthquakes and everyday

disasters and mishaps, there were more than the usual

number of heartfelt, and even dramatic, stories. Turn

the page to find just a few from our valued customers.

002CSN8D0E

Chubb Limited

Bärengasse 32

CH—8001 Zurich

Switzerland

chubb.com

Chubb Limited

Annual Report

2017

Delivering Exceptional Service to Our Customers

At Chubb, we’re proud of the service we provide to our

customers — individuals, families and businesses of

all sizes. For many customers, the ultimate test of our

promise to them comes after they have suffered a loss.

That’s why Chubb has built a claims handling capability

that is second to none in the industry. At the same

time, we are doing more to predict and prevent

losses from happening in the first place through our

risk engineering, loss prevention and residential risk

consulting services. There is nothing that provides

us with greater satisfaction than hearing the powerful

personal stories of our customers. In 2017, a year

of hurricanes, wildfires, earthquakes and everyday

disasters and mishaps, there were more than the usual

number of heartfelt, and even dramatic, stories. Turn

the page to find just a few from our valued customers.

002CSN8D0E

“ Chain saws, lawn mowers, leaf
blowers: they all pollute the air
we breathe. That’s why we made
our products electric. We wanted
to expand outside of China
but our liability risk was huge.
We could have lost everything.
Chubb wrote a policy so we could
export around the world without
threatening everything we had
built. And it worked.”

— Huang Minda

General Counsel,
Chervon
Nanjing, China

“ We awoke to water leaking at
the entrance to our house. The
whole wall was coming down.
I called my agent, who said, ‘I’ll
take care of it.’ Within an hour
or two, Chubb had sent a team
here to take care of the water
damage. I was overwhelmed by
their response. They are honest
and have incredible integrity.”

— Ed Krampf

Sacramento, California

“ Hurricane Irma caused major
damage to our home, uprooting
dozens of trees, damaging
our roof and destroying the
lanai. Chubb made a disastrous
experience easy to navigate.
Our claims adjuster was caring,
provided continuous updates
and was always available. Chubb
delivered prompt, expedient
service. We will remain a loyal
client forever.”

— Joseph and Karen Benaroya

Naples, Florida

“ I had just completed a home

renovation project. Everything

was perfect. In the bedroom,

I saw a giant bubble bulging in

the wall. I poked it and water

ran down the wall. Then water

was pouring from the ceiling like

rainfall. Water was everywhere.

When I called Chubb they

jumped into action. As bad as

the damage was, the experience

was awesome. I feel grateful to

be a Chubb client.”

— Carol Wetmore

Chicago, Illinois

“ A neighbor alerted me: ‘Sonoma

Valley is on fire and it’s coming

our way.’ As a homeowner, you

want to try everything to save

your home, and first responders

can’t be everywhere at once.

Chubb’s Wildfire Defense

Service, which supplemented

an unbelievable effort by first

responders, saved our home.

I will be a Chubb customer

for life.”

— Dick Fredericks

Glen Ellen, California

“ Betty called me at 6:00 a.m.

She thought it was a fire. It

was worse. A sinkhole opened

up under our museum. Eight

priceless Corvettes had plunged

into it. Chubb was there within

hours. They made sure we had

the right people — structural

engineers, construction

managers, sinkhole experts.

Everyone we needed to get the

museum back up and running.”

— Wendell Strode

Executive Director,

National Corvette Museum

Bowling Green, Kentucky

“ Chain saws, lawn mowers, leaf

blowers: they all pollute the air

we breathe. That’s why we made

our products electric. We wanted

to expand outside of China

but our liability risk was huge.

We could have lost everything.

Chubb wrote a policy so we could

export around the world without

threatening everything we had

built. And it worked.”

— Huang Minda

General Counsel,

Chervon

Nanjing, China

“ We awoke to water leaking at

the entrance to our house. The

whole wall was coming down.

I called my agent, who said, ‘I’ll

take care of it.’ Within an hour

or two, Chubb had sent a team

here to take care of the water

damage. I was overwhelmed by

their response. They are honest

and have incredible integrity.”

— Ed Krampf

Sacramento, California

“ Hurricane Irma caused major

damage to our home, uprooting

dozens of trees, damaging

our roof and destroying the

lanai. Chubb made a disastrous

experience easy to navigate.

Our claims adjuster was caring,

provided continuous updates

and was always available. Chubb

delivered prompt, expedient

service. We will remain a loyal

client forever.”

— Joseph and Karen Benaroya

Naples, Florida

“ A neighbor alerted me: ‘Sonoma
Valley is on fire and it’s coming
our way.’ As a homeowner, you
want to try everything to save
your home, and first responders
can’t be everywhere at once.
Chubb’s Wildfire Defense
Service, which supplemented
an unbelievable effort by first
responders, saved our home.
I will be a Chubb customer
for life.”

— Dick Fredericks

Glen Ellen, California

“ Betty called me at 6:00 a.m.
She thought it was a fire. It
was worse. A sinkhole opened
up under our museum. Eight
priceless Corvettes had plunged
into it. Chubb was there within
hours. They made sure we had
the right people — structural
engineers, construction
managers, sinkhole experts.
Everyone we needed to get the
museum back up and running.”

— Wendell Strode

Executive Director,
National Corvette Museum
Bowling Green, Kentucky

“ I had just completed a home
renovation project. Everything
was perfect. In the bedroom,
I saw a giant bubble bulging in
the wall. I poked it and water
ran down the wall. Then water
was pouring from the ceiling like
rainfall. Water was everywhere.
When I called Chubb they
jumped into action. As bad as
the damage was, the experience
was awesome. I feel grateful to
be a Chubb client.”

— Carol Wetmore
Chicago, Illinois

“ During harvest time, any
problems that shut down the
production line are catastrophic.
So Chubb used infrared
detectors to find electrical boxes
that might fail, and provided
guidance when we started
exporting internationally. Now
we’re working with them on
cyber security. My grandfather
taught me to make a wine
that over–delivers. Chubb
over–delivers.”

— Tony Torres
Director,
Trinchero Family Estates
St. Helena, California

“ Several Grupo Xtra properties
in Mexico City were damaged
in the earthquake. While the
buildings remained standing, we
had to reinforce and fix several
collapsed walls. Chubb’s response
was excellent. Their expert team
assessed and evaluated each
of our buildings, and our claims
payments were made in a timely
matter. Chubb was positive
and gave us peace of mind.”

— Isaac Michan

Real Estate Operations Director,
Grupo Xtra
Mexico City, Mexico

“ In the 20 years I have been with
Chubb, there have been too
many incidents to remember
them all. Once, when traveling
to Hong Kong, my wife got sick
and saw several doctors. When
we came back we filed a claim
and all of the expenses were
covered. Whenever I need them,
Chubb will settle the claim for
me quickly.”

— Alfred Lun

Seattle, Washington

Financial Summary

Chairman and CEO Letter to Shareholders

Review of Operations

Sustainability and Global Citizenship

Chubb Group Corporate Officers and Other Executives

Chubb Limited Board of Directors

Shareholder Information

Non–GAAP Financial Measures

Form 10–K

Swiss Statutory Financial Statements

Swiss Statutory Compensation Report

Environmental Statement

Financial Summary

In millions of U.S. dollars
except per share data and ratios

Gross premiums written

Net premiums written

Net premiums earned

P&C combined ratio

Current accident year combined ratio excluding catastrophe losses

Core operating income

Net income

Diluted earnings per share — net income

Diluted earnings per share — core operating income

Total investments

Total assets

Shareholders’ equity

Book value per share

Tangible book value per share

Core operating return on equity

This document contains non–GAAP financial measures. Refer to pages 46–47 for
reconciliations to the most directly comparable GAAP measures.

NM—not meaningful

Year Ended
Dec. 31, 2017

Year Ended
Dec. 31, 2016

Percentage Change

$36,376

$34,983

((((4.0%

29,244

28,145

29,034

28,749

94.7%

87.6%

3,784

3,861

8.19

8.03

88.7%

89.0%

4,716

4,135

8.87

10.12

102,444

99,094

167,022

159,786

51,172

110.32

65.87

7.8%

48,275

103.60

60.64

10.5%

3.9%

1.0%

–19.7%

–6.6%

–7.7%

–20.7%

3.4%

4.5%

6.0%

6.5%

8.6%

Evan G. Greenberg
Chairman and Chief Executive Officer
Chubb Limited/Chubb Group

To My Fellow Shareholders

The weather events of the third and
fourth quarters, notably the hurricanes
that struck Texas, Florida and the
Caribbean, the Mexican earthquakes
and the wildfires of northern and
southern California, were among
the major headlines of 2017 and
contributed to what will likely be
a record or near–record year for
worldwide insured natural catastrophe
losses. While the 2017 CATs cost us
about a third of our annual earnings
and dented our ROE, the events did not
distract or prevent us from achieving
any of our other important objectives.
There was no crying or hand–wringing
around here — the losses were within
our risk management expectations, and
insuring risk, including catastrophe
risk, is the business we’re in.

Catastrophes aside, the health of
our company is exceptionally strong
and 2017 was, in fact, another really
good year for Chubb operationally
and strategically. Our underwriting
performance was excellent and our
distinguished service reputation,
particularly as delivered by our claims
organization, was burnished under
the challenging multiple–catastrophe
conditions. We made numerous
investments and formed important new
partnerships that further enhanced
our product, distribution, service and
technology capabilities. We made real
strides in operationalizing our future
in a digital age to ensure we remain
relevant and compelling long into
the future. We ended the year with
great optimism.

As a reminder of who we are and
what we do, Chubb is the world’s
largest publicly traded P&C insurer as
measured by a market cap of $67 billion
at the time of this writing, and we are
the largest commercial insurer in the
United States. We write gross premiums
of over $36 billion, 65% of which come
from commercial property and casualty
(P&C) lines and 35% from consumer
lines, including life insurance. On the
commercial side, we are a dominant
middle market and small commercial
insurer principally distributed through
agents — representing about 25% of
our company — combined with a
leading large industrial commercial
and specialty lines insurer distributed
through brokers — almost 35%. It’s
rare when an insurer does both well.
We literally serve companies of all
sizes, from the largest corporations to
small businesses, with traditional and
specialty coverages. On the consumer
side, we’re a major personal lines
writer, serving customers ranging from
affluent to mass market depending on
the country. Our consumer offerings
for individuals and families include
protection for their homes and the
contents in the homes, as well as other
valuables, from yachts to art to cell
phones, and we also insure their lives
and their health. Both our commercial
and consumer businesses share our
global presence and scale — we are one
of only a few insurers in the world with
substantial operations and expertise in
54 countries and territories capable of
serving both local customers as well as
the local risks of multinationals.

We have leadership positions in many
product lines of business. In the United
States, for example, we are the #1
provider of personal lines coverage and
service for affluent customers. As the #1
commercial insurer, we are the leader

in casualty products and risk
management services designed for
large global corporations, the third–
largest commercial insurer serving
the vast middle and small business
market, and the leading writer of
crop insurance for farmers. Globally,
we’re the leaders in professional
lines, including directors and officers
(D&O) and errors and omissions (E&O)
coverage for companies, and a top
personal accident and supplemental
health insurance (A&H) provider for
consumers. Our products and services
are distributed through brokers,
independent agents, exclusive agents
and various forms of direct marketing.
With $64 billion in total capital and
$51 billion in equity, our balance sheet
is backed by ratings of AA from S&P
and A++ from A.M. Best.

Last year our company navigated
an external operating environment
marked by generally positive and stable
economic conditions globally, low
financial market volatility, and

competitive but improving insurance
market conditions late in the year. In
the global P&C industry, commercial
insurance pricing was overly
competitive despite deteriorating
operating results for most companies,
with rates in many classes below what
is adequate to earn a reasonable return
for the risk taken. Industry capital was
and remains abundant with balance
sheets in reasonable shape, though
it varies by company, and stress
has begun to show for most in their
earnings and reserves.

At Chubb, underwriting discipline
is a hallmark and a constant of our
company — we sacrifice market share
(though not happily) in order to
maintain an underwriting profit. In the
third quarter, we began to achieve flat–
to–modestly positive rate change

but we paid a price in terms of new
business and the retention of some
customers as the market simply didn’t
follow along. Frankly, our industry has
been operating with inadequate pricing
for too long. Steadily rising loss costs
and a more difficult risk environment
in some areas added to the industry’s
deteriorating results. Add on top of
that the magnitude of the industry’s
underwriting losses from the third
and fourth quarter CATs, and it was
no surprise that by the end of the year
the direction started to change, with
prices beginning to firm in a number
of important classes. We observed that
trend continue into January with some
signs of momentum building, and so
we now may be in a transition market
where rates move in a meaningful and
positive direction over time — although
not in all classes and territories. That
would be logical but it may be my
mistake. I’ll have more to say about
this topic later.

105%

100%

95%

90%

85%

2013

2014

2015

2016

2017

Averages:

1 year

3 year

5 year

North American Peers1

104.1%

100.5%

98.5%

Global Peers2

Chubb3

100.1%

94.7%

97.5%

90.1%

97.1%

89.1%

P&C Combined Ratio
versus Peers

The company’s underwriting results
outperformed the averages of North
American and global peers over the
last five years.

1 Includes AIG, CNA, HIG, TRV, XL.

2 Includes Allianz, AXA, Munich Re, QBE, RSA, Zurich.

3 Historical combined ratios as if ACE and Chubb

were one company; 2016 combined ratio includes
results from the first 14 days of January prior to the
acquisition close, excludes purchase accounting
adjustments and a one–time pension plan
harmonization benefit of $113 million.

Source: SNL and company disclosures

The catastrophes of last year should
remind everyone that we are in the
risk business, and that means a certain
profile of volatility to our results. With
total annual insured losses globally
from natural catastrophes estimated
to exceed $135 billion, 2017 will be
the third year since 2005 with $100
billion or more of aggregate industry
catastrophe losses. For Chubb, our
pre–tax net catastrophe losses for
the year were $2.7 billion, compared
to $1.1 billion in 2016, which, again,
was within our risk tolerance and the
amount of loss we would expect from
what we judge was between a one–
in–five and one–in–10–year event
in aggregate.

Throughout the year, inflation was
tame, interest rates remained low and
equity markets rose around the globe
with U.S. equity prices, in particular,
setting consecutive records in response
to the Trump Administration’s pro–
growth policies. By the end of the
year, the world’s largest and most
important economies, i.e., the U.S.,
China, Europe and Japan, were all
experiencing positive growth — the first
time in a while. Synchronous global
economic growth, together with the
benefits of U.S. tax reform, should fuel
strong economic growth, which means
exposure growth, which is good for
insurance and good for Chubb. After
all, that’s what we do — we insure
exposure. So, for the immediate year
ahead, the short–term macroeconomic
outlook is quite favorable and I am
reasonably bullish.

On the other hand, there’s reason
for vigilance. We have had ebullient
financial markets and, until recently, an
eerie lack of volatility, supported by 10
years of central bank stimulus. Loose

monetary policy to support economic
growth has produced asset inflation,
with investors in many asset classes
chasing absolute rather than risk
adjusted yields; incented increased
government deficit spending; and
because of quantitative easing, resulted
in inflated central bank balance
sheets. Volatility is beginning to
return to financial markets as central
banks reverse policy and seek to
manage a potential rise in inflation.
In the U.S., the risk of inflation is
growing given the stimulus from
tax reform and government deficit
spending at a time when the economy
is operating close to full capacity.
Unless this record stimulus leads to
increased capital investment and
longer–term productivity growth, we
run the risk that large U.S. deficits
will become structurally permanent.
Contributing to this will be sizable
unfunded entitlement and debt service
obligations, which will consume
in excess of 80% of government
spending. This would ultimately lead
to higher inflation and real interest
rates, a weaker U.S. dollar and slower
economic growth.

International trade discord, growing
populist and protectionist rhetoric,
signs of the erosion of democracy
in various parts of the world, and
security–related concerns, including
the hotspots of the Middle East and
North Korea, are all contributing to
geopolitical tension. Ironically, these
very real risks have been disconnected
from financial asset prices and
volatility, though that can’t last.

For the year, we produced core
operating income of $3.8 billion, or
$8.03 per share, down 21% from 2016.
For perspective, had we experienced
an average level of annual catastrophe
losses, we would have earned over
$5 billion. We grew book and tangible

“ At Chubb, underwriting
discipline is a hallmark
and a constant of
our company — we
sacrifice market share
(though not happily) in
order to maintain an
underwriting profit.”

book value per share, our primary
measures of wealth creation for
shareholders, 6.5% and 8.6%,
respectively — a good result considering
the underwriting year and low interest
rates. These measures have increased
14% and 29%, respectively, since the
closing of the Chubb Corp. acquisition
in January of 2016. Tangible book
value per share, which was down just
over 29% at the merger closing, has
recovered more than two–thirds of the
dilution. Our core operating ROE of
7.8% reflects the impact of the CATs;
normalized, it would have been 10.6%,
which compares to our average of 12%
over the last decade.

Excellent underlying
underwriting performance

To endure and remain compelling in
a market economy, every company
needs a reason to exist, and that’s
the north star of its culture. Chubb
is an underwriting company. At our
core, we practice the art and science
of assuming and managing risk, and
our insights are constantly improving
as data and analytics combine with
a culture of discipline and oversight,
from the top down, that strongly
believes in the noble profession of
underwriting. We have a clear appetite
for risk that doesn’t extend beyond
our balance sheet wherewithal, and
we will accept volatility of results if we
are paid for it and earn an adequate
risk–adjusted return. We have good
command and control across the
company with line of sight from senior
levels on all aspects of our business —
from claims and engineering to
marketing and sales to finance and
actuarial, and covering all geographies.

portfolios not meeting our standards
or exceeding our risk appetite.
These actions, which included either
cancelling or reinsuring certain
business, reduced our premiums but
improved our risk–reward profile.
Merger–related actions are now largely
completed, with about $150 million
remaining compared to $1.7 billion
taken over ’16 and ’17.

Record net investment income
for the year

Next to underwriting income, the other
way we make our money is through
investment income. Each must produce
adequate returns independent of the
other. We take most of our risk on the
liability side of the balance sheet, with
our capital leveraged against insurance
risk exposure. On the asset side, we are
predominantly fixed income investors
and have built a well–balanced portfolio
diversified by asset class and issuer
with a strategy focused primarily,
though not exclusively, on predictable,
repeatable income versus alpha or
capital gains, although both contribute
to growth in book value. We measure
yield adequacy on a risk–adjusted basis
and we don’t chase yield. In a world
with investors chasing absolute return,
that’s a more difficult approach that, in
my judgment, we have navigated well.
Last year, our pre–tax net investment
income of $3.5 billion was up over 6%,
a very good result given the interest
rate environment and an important
contribution to our earnings. For the
year, our invested assets grew to $102
billion, and the portfolio generated
an average book yield of 3.5% versus
average new money rates of about
2.8%. As I write this, we are deploying
cash flow at an average rate of 3.2%.

We measure ourselves first by
underwriting profit and combined
ratio. In 2016, we produced $3
billion of pre–tax P&C underwriting
income. Last year, due to the impact
of the CATs, we produced $1.4 billion
and generated a calendar year P&C
combined ratio of 94.7%, compared
to 88.7% prior year — a reasonable
result and quite respectable compared
to our North American and global
peer groups’ average combined ratios
of 104.1% and 100.1%, respectively.
Moreover, we were paid for that
volatility. As important, the underlying
underwriting performance, excluding
the CATs and simply to unmask their
impact, was excellent as measured by
the combined ratio for our ’17 business
exposure, an industry convention
known as the current accident year
before catastrophe losses, which was
87.6% last year compared with 89.0%
prior year.

By the way, this current accident year
ex–CAT measure, which has become
an industry standard, is misleading
in my judgment since the calculation
retains all of the CAT–related premium
in the denominator but eliminates all
of the CAT losses from the numerator,
in essence subsidizing the real ex–CAT
profit margin. A better way to measure
— one that I prefer but the industry
doesn’t embrace and investors should
request — is simply the published
calendar year and current accident
year combined ratios, both including
expected annual CAT losses, since
that’s what the premium is meant to
cover over time. On that basis, our ’17
combined ratios were 87.9% and 91.0%,
respectively — darn good.

For the year, total gross premiums
written for the company were
$36.4 billion while P&C net premiums
written, what we retain on our balance
sheet, were $27.1 billion, up 6.3%
excluding a second year of planned
merger–related actions in certain

Sustained Book Value per Share Growth in a World of Risk

Outstanding book value per share results since 2005 despite three
$100 billion–plus CAT years and other major risk events

Three $100 Billion–plus CAT years

$126 Billion

$134 Billion

$135 Billion+
(est.)

Natural
Catastrophes

Man—made
Disasters

Political
Unrest

Financial
Crisis

BVPS: $32.50

Japan Tsunami

Thai Floods

Japan
Earthquake

Thai Coup

Financial Crisis/
Great Recession

Deepwater Horizon
Oil Spill

Hurricanes Harvey,
Irma and Maria

Hurricanes Katrina,
Rita and Wilma

Hurricane Ike

New Zealand
Earthquake

Superstorm
Sandy

U.S. Drought

U.S. Tornadoes

Chile
Earthquake

CA Wildfires

Hurricane
Matthew

U.S. Winter
Storms

Mexico
Earthquakes

Arab Spring

Ukraine/Crimea
Crisis

2
0
0
5

2
0
0
6

2
0
0
7

2
0
0
8

2
0
0
9

2
0
1
0

2
0
1
1

2
0
1
2

2
0
1
3

2
0
1
4

2
0
1
5

2
0
1
6

2
0
1
7

2
0
1
8

Peers: AIG, ALL, CNA, Hartford, Travelers, XL, Zurich

CAGR

BVPS: +9.9%
$110.32

TBVPS: +8.5%

Peers
(ex.AIG)
BVPS: +2.8%

TBVPS: +2.4%

Peers
BVPS: (4.0%)

TBVPS: (4.4%)

Facing an uncertain investment
environment and the unwinding over
time of monetary accommodation,
changes in U.S. tax policies and
extended financial market valuations,
our investment management activities
are not on autopilot. With the credit
cycle now the oldest on record and
credit pricing at cyclical highs, we
are actively constructing strategies
to mitigate the impact of rising rates,
protect book value, earn a reasonable
risk–adjusted return in each asset class
and grow net investment income.
However, contrary to how some
investors react, from our view, the
mark–to–market impact on the portfolio
as interest rates rise is a head–fake. All
things being equal, we applaud higher
real rates. We hold our fixed income
assets, which have a four–year average
duration, to maturity so the mark
amortizes away while we increase our
earning power.

Book value has more than tripled
in the last 10 years

Chubb is a growth company and we are
a balance sheet business so we measure
growth by book value over time. Our
book value has more than tripled in the
last 10 years (from $16.7 billion to $51.2
billion) and has grown at a compound
annual rate of 11.9%; over the past three
and five years, annual growth has been
20% and 13.2%, respectively. Going
back even further in time, beginning
with the $100 billion–plus CAT year of
2005 with Hurricanes Katrina, Rita and
Wilma, Chubb has outperformed while
navigating a world of constant and

challenging risk events, some due
to nature, others man–made. As the
nearby chart illustrates, Chubb’s per
share book and tangible book value
have grown at compound annual
rates considerably greater than those
of our peers.

Chubb’s earning power is a derivative
of our strategy, including the careful
construction of our product portfolio
and geographic mix, the size and
strength of our balance sheet, and
the quality and character of our
leadership and people, which in turn
speaks to culture. These are, in my
mind, the most important factors
that drive long–term sustainable book
and tangible book value growth. Not
only has our strategy over the past
decade generated superior returns for
our shareholders and improved our
company, it has tripled Chubb’s market
capitalization and doubled our earning
power. Our growth strategy has led
to total shareholder returns of 36%,
105% and 198% for the three–, five–
and 10–year periods while at the same
time we advanced from the 25th to
the 6th largest publicly traded insurer
and the #1 publicly traded P&C insurer
in the world. And the good news:
we now have so much greater future
optionality given our scale, capabilities
and earning power. Our future growth
potential over time is awesome.

We have also followed a clear and
consistent capital management
strategy, retaining capital for risk and
growth, and using M&A only when it
furthers what we are doing organically
and generates superior returns.
Beyond that, we return surplus capital
to shareholders as demonstrated by
occasional share repurchases and a
dividend with a 20–plus–year track
record of annual increases and a target
payout ratio of approximately 30%.
Over the last decade, we produced

substantial capital and deployed most
of it for growth organically and through
acquisitions. We spent $36 billion
in M&A, which generated an IRR of
22%, with the cash M&A transactions
before Chubb generating a 21% IRR.
(The terminal value used to calculate
IRR is our trading multiple.) Those
returns are far in excess of our cost of
capital, which averaged approximately
8% during the period. Had we instead
used the cash M&A funds to repurchase
our own shares, the strategy many
companies follow and many in the
analyst community advocate, we would
have generated about an 11% IRR.

I clearly understand buying shares and
returning capital to shareholders is
the wise and responsible thing to do
if a company does not have a sound
alternate use for that capital over time.
But we do. We’re patient builders, not
simply financial engineers. The vast
majority of our shareholders encourage
our thinking. At the same time, it is
ironic and troubling to me how at proxy
time many of the proxy departments
of fund managers look to guidance
from the proxy advisory firms, which
primarily measure success based on
short–term one– and three–year total
shareholder return, or TSR. Managers
want to get paid and that approach
encourages share buy–backs to juice
EPS at the expense of longer–term
value creation, and that’s a problem.

Before I begin giving you a forward–
looking perspective of our company,
I will report for the last time on our
merger integration activities. The job
is now done — only certain IT systems
integration work remains and that will
be completed in ’18. Merger–related
financial results are highlighted by

the $975 million annualized run–rate
expense savings we achieved by year–
end, which are one year ahead of
schedule. (As a reminder, the original
target was $650 million.) We have
achieved more than three percentage
points of annualized combined ratio
benefit from expense synergies as of
year–end ’17, which was partially offset
by natural expense growth and the
investments we are making to increase
our competitive profile. Net–net, our
expense ratio has declined 2.1 points
over the last year.

Our diversified spread of businesses
and our growth potential

Chubb is a unique global insurance
franchise. We have a well–diversified
spread of businesses and that
diversification has and continues to
serve our shareholders well. When
one business is down due to economic
conditions, another is up somewhere
else in the world; when, for example,
one area of commercial P&C is under
revenue or margin pressure because
of market conditions, another less–
cyclical business could be enjoying
good growth like A&H, personal lines,
small commercial or a new line of P&C
coverage such as cyber.

We’re intently focused on the power of
the organization — where one plus one
equals three — by selling more products
to more customer cohorts in more
territories through more distribution.
Our extensive capabilities and well
integrated, execution–oriented culture
give us great confidence in achieving
our growth potential over time, and
there’s plenty of room to grow. The
global P&C industry is about $2 trillion
in premiums and we have $36 billion
of it — about 1.5%. With a primary
strategic focus to grow and further
diversify our businesses, including

product areas, customer segments
and local presence globally, we have
many multi–year initiatives underway
and I’d like to highlight several areas to
illustrate the power of Chubb today.

For large commercial, or what we call
major accounts, Chubb is a leader or
has significant presence across the
globe, not only in the U.S where we
have longstanding relationships with
nearly all of the Fortune 1000, but in
virtually every major market such as
Australia, Brazil, Hong Kong, China,
the U.K., and across the continent
of Europe. Large commercial P&C
is at the very core of who we are.
We have products ranging from
primary risk management casualty to
property, political risk, D&O, cyber
and environmental — over 200 distinct
products at last count. Our ability
to serve these large sophisticated
organizations through our global
network is unmatched, and it
distinguishes us from others and gives
us good scope for growth over time.

Importantly, this franchise serves not
only multinationals from every region
of the world operating globally, but
large domestic companies in every
country where we operate. Along
these lines, we announced last year a
strategic cooperation agreement with
PICC Property & Casualty Company
of China, the country’s largest P&C
insurer, that will leverage Chubb’s
global capabilities and network in
support of PICC’s customers and other
Chinese–affiliated companies around
the world in line with the Chinese
government’s drive to promote the
country’s “Going Out” and “One Belt
One Road” initiatives. PICC now has the
ability to offer some of China’s largest
enterprises, many of which have

“ Chubb’s earning power
is a derivative of our
strategy, including the
careful construction of
our product portfolio
and geographic mix,
the size and strength
of our balance sheet,
and the quality and
character of our
leadership and people,
which in turn speaks
to culture.”

complex operations in multiple foreign
jurisdictions, access to our capabilities
in countries beyond their home
market. The large corporate market is
the most susceptible to the commercial
P&C pricing cycle and there’s a finite
number of customers. While there
is scope for growth, it’s dependent
on the pricing environment and also
when customers choose us for our
capabilities and not simply our capacity
or price.

In our global wholesale or excess and
surplus lines (E&S) businesses, which
include Westchester in the U.S., Chubb
Global Markets in London and Chubb
Bermuda, we have about 2.5% share
of the $160 billion global E&S market.
We have the broadest product lineup
of any E&S insurer — from specialty
property and liability offerings to
product recall and railroad liability,
as examples. Simplistically stated,
E&S means harder to place or unusual
risks that require tailored coverage
standard companies cannot or will not
write. When insurance markets are
“soft” and become highly competitive
and standard companies seek growth
in areas they don’t understand, the
E&S marketplace shrinks. In a harder
market, E&S typically expands. In the
short term, we expect to capitalize
on what should be a more positive
rate environment that’s beginning to
show in a more meaningful way in
E&S stressed lines, where a number
of classes are getting rate but more
is needed. Until prices improve
sufficiently, however, E&S, like major
accounts, will have low–to–moderate
growth prospects.

Another specialty line of business is
agriculture, where we are the clear
market leader in crop insurance in the
U.S. with 19% of a $9 billion market.
Our technology is unmatched, as is our
nationwide field organization of 5,600
independent agents. This business is
all about how we serve farmers and
the government, and the processes of
risk selection and claims management.
Crop insurance is a CAT–like business
and therefore it has a certain volatility
to it by definition — it’s weather–
exposed, with weather impacting crop
yields and commodity prices. We’ve
experienced both sides of volatility —
the last two years with great growing
seasons and others with drought.
Nevertheless, this is a good business
for Chubb with growth potential
coming from leveraging our technology
and analytic capabilities based on
more than 50 years of proprietary
data. Complementing our crop
insurance business, our commercial
agriculture business also has good
growth prospects as we deliver more
of our P&C insurance capabilities
to manufacturers, processors and
distributors, as well as ranchers
and farmers.

We have a tremendous opportunity
to grow our $8.9 billion worldwide
middle market and small commercial
businesses, which are also at the core of
who we are. In the U.S., we’re building
on our leadership position serving the
middle market business community by
bringing everything we have to bear: an
extensive local presence on a national
basis and an ability to serve these
companies as they grow their business
outside of the U.S.; unrivaled product
breadth ranging from basic package
plans to broad specialty coverage
options for all businesses such as D&O,
cyber and environmental; nearly two
dozen vertical industry practices that
bring deep knowledge and specific
coverage needs to target middle market

industries like life sciences, healthcare
and advanced manufacturing; a huge
independent agency and brokerage
distribution plan; and a sterling service
reputation and brand.

Outside of the U.S., we have good
opportunity for above–average steady
growth as economies in many regions
around the world expand, with the vast
majority of economic growth coming
from small and mid–sized businesses.
In markets such as Mexico, Colombia,
Malaysia, Australia and France, we are
transforming ourselves from primarily
a monoline and specialty lines focused
provider for mid–market companies
to a full–service, full–capability carrier
offering package plans rounded out
with specialty and global capabilities,
complemented with deep expertise in
industry segments and outstanding
risk engineering, claims and
policyholder services. While our
growth is dependent on market
conditions, middle market business by
its nature is less cyclical than the large
account segment.

We’re making real progress with our
small commercial business initiative
globally. In the U.S., we added an
entirely new division to serve small
businesses and launched a broader,
more competitive product set than
what most other companies offer,
connected to a powerful technology
platform called the Chubb Small
Commercial MarketplaceSM. Built for,
and by, our independent agents,
the Marketplace makes it easy for
our distribution partners to quote,
issue and service their small business
customers. Internationally, our focus is
on expanding product and distribution
through easy–to–use technology. We’re
seriously investing to build an SME

presence in select markets using both
traditional and digital distribution. We
have tens of thousands of agents now
selling Chubb.

On the consumer side, there’s very
good growth potential over time for our
$5 billion U.S. personal lines business
for affluent clients, tapping what we
see is a large, underserved market.
This is a highly recognized brand for
Chubb — we are so well known for
the rich protection and outstanding
related services we provide to these
discriminating, successful individuals
and families. In fact, when it comes
to service, this is the business we are
best known for in America. We’ve
been upping our game substantially
in marketing to seek out new clients
and agents and introduce ourselves
and educate them, and while it’s early
days, we’re encouraged by what we
see. We’re investing in technology
to provide a truly digital, i.e.,
“anytime–anywhere” customer service
experience — where digital service is a
real part of the product — and we are
working on new product features from
a number of angles to better match
risks and needs.

We have substantial opportunities
to grow our large $4.4 billion global
A&H business through initiatives
in both the U.S. and overseas. For
example, we’re rapidly growing our
U.S. worksite marketing division called
Chubb Workplace Benefits. This is a
compelling suite of voluntary employee
benefits for our traditional P&C
brokerage and agent relationships to
offer their mid–to–large clients. We
have the technology to offer this
product to our customers’ employees

in a seamless way — a key requirement
for success in this space. Outside of
North America, we’re growing our A&H
and personal lines operation, aimed at
the emerging middle class in Asia and
Latin America. Products range from
personal accident, supplemental health
and travel insurance, to specialty
personal lines like cellphone handset
replacement insurance, and targeted
automobile and homeowners coverage.
While more and more of this business
will be distributed digitally over time,
telemarketing and agency remain
vibrant means of distribution for us in
many markets.

Lastly, the Asia life insurance market
is expected to double in the next 10
years to $2 trillion — one of the largest
and most attractive growth markets for
insurance. Net premiums and deposits
in our Asia–focused life business were
up over 20% last year to $2.3 billion
and have nearly doubled over the last
five years. In the six Asian countries
with life operations, all of which
are now producing positive GAAP
earnings, we have 36,000 captive
agents. Additionally, our 36% stake in
Huatai Life in China is a strategic asset,
with production up 22% last year and
another 38,000 captive agents. Our life
business earned $54 million of income
last year and should grow to $250
million within the next five years.

The Chubb brand — craftsmanship
and service

The Chubb brand stands for
exceptional service, which quite
honestly is in a class by itself. The
multiple CAT events of the third
and fourth quarters for Chubb were
first and foremost about service and
responding to our customers in their
time of need. Actually, an insurer and

“ The Chubb brand

stands for exceptional
service, which quite
honestly is in a class
by itself. The multiple
CAT events of the third
and fourth quarters for
Chubb were first and
foremost about service
and responding to
our customers in their
time of need.”

client’s moment of truth is at the time
of a claim. Our claims team handled
over 74 catastrophe events globally last
year, which generated 31,000 claims —
just a fraction of the nearly 4 million
new claims the organization managed.
In the third quarter alone, over 95% of
the 52,000 customer calls received by
our North America service centers were
answered in less than five seconds, and
by a human being from our company
trained in empathy, not a machine
or third party.

In addition to the personal service and
assistance that comes with a claim,
our personal lines clients in the U.S.
have access to two distinguishing
benefits of being a Chubb customer.
We communicated with our clients
throughout the hurricanes regarding
their residences in the path of the
oncoming storm, and our special
Chubb Property Manager Service
visited clients’ homes after the storm
to check for damage, provided them
with a condition report and started the
claims process if necessary. Another
distinctive capability is our Wildfire
Defense Service, which sends private
firefighters and equipment on engines

to safeguard our clients’ homes in the
event of an advancing fire — and in
some cases, fight actual fires on the
property. Our service responded to 37
fires over the course of 2017 and visited
over 1,000 of our clients’ homes.

Of course, no one can speak more
powerfully or convincingly about
Chubb and the value of our coverage
and service than our customers. In
the latter half of 2017, we launched
a global advertising campaign that
highlights Chubb commercial and
personal insurance clients describing in
their own words and in a personal way
how we helped them better manage
and anticipate risks, recover quickly
when the unfortunate occurred, or
prevent loss entirely. The campaign
features a series of films showcasing
Chubb’s service: helping a Napa Valley
winery avoid unexpected mishaps;
saving a Texas family’s home from
an encroaching wildfire; ensuring a
Canadian couple got back on their feet
quickly after two consecutive water
leaks damaged their home; helping

a Chinese manufacturer export its
power tools safely around the world;
and assisting a Spanish company build
a next–generation wireless network
across Mexico. The stories bring to life
our “craftsmanship” focus — depicting
that just as the finest craftspeople
demand excellence of themselves, their
products and service, Chubb holds
itself to the same exacting standards.
Our brand is not known or cherished
globally to the same degree as it is in
the U.S., but over time it will be. I
invite you to take a look at these
stories at chubb.com/ourstories.

Chubb’s future growth is in part
dependent on maximizing its
distribution prowess. As I pointed
out in the beginning of this letter, we
are both an agency company and a
brokerage company — it’s a powerful
combination that gives us exceptional
access to customers. Our relationships
are longstanding and deep — Chubb’s
agency background in the United
States, for example, goes back over 150
years. Paired with a substantial field
organization and network of about 50
branch offices, our U.S. independent
agent distribution capability is a
distinguishing feature of the company.

Geographic Sources
of Premium

2017 Net Premiums Written

Latin America 8%

Asia 11%

Europe/Eurasia & Africa 13%

Bermuda/Canada 5%

United States 63%

We’ve also been growing a sizable
agency presence globally. In Mexico
alone, we have over 4,000 agents and
65 branch offices with lots of room
to keep growing. We also have tens
of thousands of exclusive agents who
market personal accident insurance for
our Combined Insurance subsidiary in
North America and, as I noted earlier,
life insurance across Asia. Our digital
efforts are in part aimed at ensuring the
relevance of this means of distribution.

Beyond agents and brokers, we have
other valuable distribution partners
around the globe. These include
hundreds of sponsoring organizations,
employers and banks that sell our A&H,
personal lines and small commercial
products to their millions of customers
and members, either through their own
channels or through our specialized
direct marketing capabilities. In our
direct marketing operation, we have
almost 7,000 telemarketers in over 100
call centers making about 100 million
calls each year.

In 2017, we signed a 15–year exclusive
distribution agreement with one
of Asia’s most respected banks,
Singapore–based DBS. At the heart
of this venture is our joint ability to
market and service insurance digitally
to millions of DBS customers, both
consumers and businesses, in five Asia
Pacific countries. Access to DBS’s large
customer base broadens and deepens
Chubb’s already significant presence in
the region, and provides multiple new
channels for our individual and small
commercial P&C insurance products.
DBS’s commitment to technology
will also provide a strong platform to
expand our digital distribution across
these important Asian markets.

Ensuring Chubb thrives in a
digital age

We are investing for the long term and
one of our strategic focus areas is to
transform ourselves to thrive in a digital
age, which will significantly enhance
our competitive profile and contribute
revenue growth and efficiencies in
the medium and longer term. As it
does for basically all industries, digital
holds much promise for insurance to
redefine or modernize what we do and
how we do it. The world is digitizing
economically, socially and politically.
Those that remain analog will be
left behind. For Chubb, this is not
simply a technology play — it’s multi–
dimensional. We’re making substantial
investments to transform the
company into a digitally integrated
organization, and a major portion of
our annual $1 billion technology
spend, for example, goes to enable
our digital journey.

We have initiatives under way in a
number of our businesses. In our areas
of focus, we are reorganizing to do
business differently for a future that
requires providers to be more nimble
and flexible in delivering products
and services. In a practical way, we’re
aiming to reduce cycle times of change
from years to months and from months
to weeks and days, even hours for
some functions. We’re reinventing the
insurance product we sell and how it
functions. While the basic insurance
function, i.e., the taking of risk, is
still the product, what we insure, the
customer experience, and how we
deliver and fulfill our promise are also
part of our definition of product. In
a digital world, where the customer
experience often is the product,
it’s hard to separate them. Straight–
through processing of underwriting
and claims, where no human in our
company touches the customer input,
is a fundamental requirement. Data–
scraping and analytic capabilities that
gather information, rather than ask
customers questions, is the reality.

“ The world is digitizing
economically, socially
and politically. Those
that remain analog
will be left behind.
For Chubb, this is not
simply a technology
play — it’s multi–
dimensional.”

We’re evolving our distribution
from offline to online channels,
including mobile, and we are mixing
and matching capabilities between
offline and online. Consumers, both
commercial and individual, expect
anywhere–anytime service — that’s the
growing reality of a digital age. The
skills of our people are evolving — they
need to be able to constantly learn
and reskill and certify skill levels in a
formal way. We’re focused on gaining
efficiencies in our operations that
improve speed, accuracy and agility,
while supporting high–level analytics
and thinking. This is not future stuff —
it’s now and the power will only
build in an iterative and constantly
evolving process.

Non–modeled flood and
wildfire risk

There is little doubt — in fact there’s
no question in my mind — that the
risk environment is becoming more
complex, both due to nature and man–
made activity: climate change, and
where modern society chooses to

build and live; as the world digitizes,
technology and the risks surrounding
it, including cyber and non–physical
assets; political risk, terrorism and
social instability in a more globalized
and interconnected world; and legal
exposures as a consequence of evolving
notions of individual and corporate
responsibility in our modern society.
And the list goes on.

The increased frequency and severity
of natural catastrophes is linked to
climate change, which in my opinion
is simply a reality and substantially
caused by human activity. The evidence
of climate change is immediately
apparent, profound and disturbing. It
can be found in its extremes — from
drought to flooding — with rising
sea levels and warmer oceans likely
contributing to large wind events
that contain more moisture or
creating weather patterns favorable
to massive wildfire conditions. Then
add modern society urbanizing and
concentrating exposures in areas that
are more vulnerable to weather events,
particularly coastlines, all exacerbated
by government policies that subsidize
this development and insulate people
and society from coming to grips with
the true costs of their decisions.

Last year’s CATs included a consider-
able amount of both what we call
modeled and non–modeled loss.
Harvey was a wind event first, and then
a major flood event. While the industry
had Houston flood models, they
didn’t imagine correctly the extent of
flooding. Given there have been three
one–in–100–year floods in 18 months,
how can Harvey represent a 1% chance
of occurring as the models suggested?
Models provide an organized
framework for thinking; they don’t
represent truth. If Irma moved just
a few dozen miles to the east, we
likely would have been looking at a
$150 billion industry–modeled event —
over three times the current estimate.

The most difficult non–modeled or
poorly modeled events we and the
industry have to get our heads around
are the wildfires last year — they were
hardly a one–off freak occurrence.
In fact, we experienced the largest
wildfire in California history by both
the amount of acreage destroyed
(288,000 acres) and the amount of
insured loss (approximately $9 billion),
with estimated industry insured losses

Premium Distribution
by Product

2017 Net Premiums Written

Global Reinsurance 2%

Agriculture 5%

Global A&H and Life 17%

Personal Lines 22%

Large Corporate
Commercial P&C 18%

Middle Market/
Small Business
Commercial P&C 26%

Wholesale Specialty
Commercial P&C 10%

for all California wildfires likely topping
$12 billion in 2017. Whether it’s wildfire
or flood, we need a rational and
refined approach to risk–taking and a
cooperative, less politicized regulatory
environment that encourages private
sector solutions.

The NFIP and the role of
private insurance

That leads me to the National Flood
Insurance Program, or NFIP. This past
year demonstrated once again that the
U.S. approach to flood risk protection
doesn’t work. The NFIP was founded
in 1968 at a time when the insurance
industry did not have the historical
data or modeling tools to underwrite
communities exposed to flooding,
so the government stepped in and
has provided coverage to individual
homeowners who chose to live near
the water or in flood–exposed areas.
Today, it’s about $37 billion in debt —
that’s how much losses have exceeded
premiums over time. If the NFIP was a
private insurance company, it would
be bankrupt.

There are three reasons for its
condition. First, it’s not actuarially
sound — the government doesn’t charge
the right rate to the customer for the
exposure. Today, rates for the most
high–risk properties are subsidized
by properties in lower–risk areas.
Funding in aggregate is inadequate
and taxpayers pay the difference.
Inadequately priced coverage
encourages people to live in places they
shouldn’t and discourages participation
from the private market. Inadequate
pricing is exacerbated by outdated
technology and flood zone maps, some
dating back 40 years. Second, there’s
more exposure — we have greater
concentrations of risk along the coasts
and other flood–exposed areas. The
total coastal insured value on the Gulf

and East coasts rose from $7.2 trillion
in 2004 to $10.6 trillion in 2012, an
increase of almost 50% in less than 10
years. At the same time, there’s been
a lack of government investment in
protective infrastructure to mitigate
exposure. Third, climate change is
causing larger, more destructive and
more frequent flood–related events,
which, combined with rising sea levels,
is resulting in more flooding. In sum,
we have a massive underpricing of
risk — a system that undercharges and
subsidizes the true cost of living in
flood–exposed areas, encourages more
building in coastal or flood plain areas,
discourages investing in the necessary
infrastructure improvements to prevent
flooding in the first place, all while
crowding out the private insurance
market to a fair degree.

Our country requires a more
comprehensive solution, which
includes the expertise and capacity
of private insurers, to help solve the
growing flood insurance problem. We
have more sophisticated modeling
and mapping capability now as a
result of technological advancements
and are more capable of shouldering
a major portion of flood insurance
responsibility. We will charge an
actuarially sound rate that reflects
the true cost of risk and therefore
incents the right individual and local
government behaviors. There is still
an important role for the federal
government to play as an insurer of
last resort, helping those who are
compelled to live in a flood zone area
and can’t afford coverage, as well
as acting as a backstop to insurers
for extreme events that exceed the
industry’s wherewithal, similar to
what it does now for terrorism, as the
industry’s capacity evolves.

“ Whether it’s wildfire
or flood, we need a
rational and refined
approach to risk–taking
and a cooperative, less
politicized regulatory
environment that
encourages private
sector solutions.”

The legal environment — an issue
for business and our economy

Another part of the risk environment
that is an unnecessary tax on
corporate America and impacts our
competitiveness is in the legal realm,
specifically, litigation trends related to
directors and officers liability coverage.
Costs are rising for both public and
private companies as the frequency
of securities class action and mergers
and acquisitions objection litigation
has worsened, and it’s coming from
different exposures. The number of
U.S. federal securities class actions
filed last year was 412, more than
double the 168 in 2014. Fifteen years
ago, there were a handful of plaintiff
firms that drove most all the litigation,
at least in the U.S. Today, the number
of plaintiff firms is multiples of that,
and they all go to work every day with
the ambition to create and pursue
new theories of litigation and liability
against corporate America to enrich
themselves, cloaked in the mantle of
protecting shareholders from corporate
wrongdoing. It’s a growing, thriving,
profit–making industry.

The purpose of securities class action
and M&A objection litigation should
be to protect shareholders’ interest
when actual harm exists, which does
occur. But that’s not what happens a
large and growing part of the time — the
system has become distorted with the
primary beneficiary being the legal
profession. It’s clearly an inefficient
system to adjudicate alleged harms
to shareholders when, based on our
data, half of the nearly $23 billion in
securities claim costs in the last five
years have gone to the lawyers, plaintiff
and defense, and in the case of mergers
and acquisitions objections, over 65%.

And that doesn’t include the cost of
courts and lost productivity. In fact,
85% of settled M&A claims provide no
monetary benefit to shareholders — all
of the money goes to lawyers in what
amounts to legal industry hit–and–runs
of corporations.

There is a real need for legal reform
at both the state and federal levels.
We have a declining number of
publicly traded companies — down
nearly 50% since 1996 — and this is a
contributing factor and a threat to our
competitiveness. With the number of
securities class actions over the last five
years going up year over year during
generally rising economic conditions
and equity markets and growing
shareholder wealth, what will happen
when there’s a real market correction?
From an insurer’s perspective, the
answer is not simply to raise D&O
prices to reflect current risk but to lead
businesses to advocate for reforms.
This includes Congress at the federal
level but also states with a history of
this abuse. Businesses should pressure
those states, demand and encourage
reform and avoid their municipal bonds
until they enact appropriate reforms.

P&C market conditions and the
need for rate adequacy

Soft or declining prices for commercial
P&C insurance globally continued to
pressure industry results last year, both
income and balance sheet. Remember,
loss costs rise every year, and if pricing
remains flat or declines even modestly,
loss ratios come under pressure.
Pricing and terms are and have been
inadequate, or in danger of such, in a
number of important classes around
the globe — property, primary and
excess casualty, and D&O, to name
a few. In addition, companies
supplement their results during a

period of low catastrophe losses with
the revenue charged to cover CATs, in
effect, subsidizing the balance of their
results and masking their true health.
Last year’s CAT losses only exacerbated
conditions, placing pressure on
industry current year results and
beginning to show in the strength
of reserves.

We are seeing signs of a firming market.
Pricing should and is beginning to
move, although not in all classes and
not in all countries. How far, how
much and whether it will be enough
to achieve adequacy — I don’t know.
Rationally, it should move, but most
companies don’t have our data,
discipline or command and control.
Many aren’t thinking about the long
term. In the meantime, we have to
do what is right for our company and
clients, and as leaders in the industry
we have a responsibility to help lead
that movement in a thoughtful and
resolute way. We’re encouraged by
the evidence we see so far, with prices
firming in the fourth quarter, month
by month, and as of the time of this
writing, a continuing trend that may
be building momentum, but it remains
a mixed bag. As I said at the opening,
we believe we’re now in a transition
market where rates should continue to
move in a positive direction throughout
’18, but who knows.

At Chubb, we insist on receiving an
adequate rate for the coverage we
provide. This includes educating our
customers and distribution partners
about the reasons and need to move
pricing to adequacy where it is not, so
that we earn a reasonable risk–adjusted
return and avoid more volatile price
moves in the future if rates continue

to stagnate or erode. We are not
taking a blunt instrument to this.
We are approaching rate increases
thoughtfully, business by business, line
by line, account by account. Chubb’s
risk appetite is robust. We have an
exceptionally strong balance sheet
and we are willing to deploy it
wherever we can achieve an adequate
underwriting margin.

Tax reform, NAFTA and the need
for American leadership

On the U.S. political front, I support
the corporate portion of the tax reform
law that Congress passed at the end
of the year. The lower corporate rate
and the introduction of a territorial
tax system were both sorely needed —
American business was at a competitive
disadvantage. While tax reform is good
for business and good for the economy,
and therefore individual citizens
broadly, as is the case with most
things in life, it’s not perfect. I would
have liked to see it address carried
interest, for example, and closer to
home, the way the bill discourages the
use of affiliate reinsurance by global
companies, in my judgment, is simply
bad policy. Affiliate reinsurance has a
sound, legitimate business purpose,
including the efficient management,
diversification and pooling of insurance
risk. It is a powerful tool to hold down
prices and use the global industry
balance sheet to create more capacity.
But don’t take my word for it — the
OECD made the same points in its
recent base erosion review.

As you saw, we recorded a one–time
benefit from the new tax law of $450
million in our fourth quarter results
and we estimate a lower tax rate going
forward. We are using a portion of the
future benefit from tax reform to make
a difference in the communities in

which we live and work with a pre–tax
contribution to the Chubb Charitable
Foundation of $50 million. Our
company has a history of fostering
philanthropic engagement in the
community through volunteerism,
grants, sponsorships, matching gifts
and scholarship programs, and for over
20 years has contributed annually to
its charitable foundation, which
focuses on three primary areas —
education, poverty and health, and
the environment.

I am concerned about my country’s
America First brand of nationalism and
its impact on our image and leadership
in both trade and geopolitics in the
short and potentially longer term. By
diminishing the country’s reputation
for reliability, the overly nationalistic
approach damages our credibility. Our
rejection of multilateral agreements
like the Trans–Pacific Partnership is
a missed opportunity to lead with a
vision of market–oriented, rules–based
trade. When it comes to trade, we
are becoming a source of potential
instability at a time when we are
needed to galvanize like–minded
countries in a unified direction. After
all, the U.S. essentially pioneered the
global multilateral system and has
supported it for 60–70 years. Our
approach to bilateral negotiations now
seems to reflect a narrow view of our
interests while ignoring the interests
of trading partners as if somehow it’s
simply a privilege to trade with the
United States — it overestimates our
power and underestimates the value of
trade agreements for the country.

The narrowing approach of U.S.
leadership in a world with so many
geopolitical tensions, such as the ones
I mentioned at the beginning of this

“ At Chubb, we insist on
receiving an adequate
rate for the coverage
we provide. This
includes educating
our customers and
distribution partners
about the reasons and
need to move pricing
to adequacy where
it is not.”

letter, comes at the same time as the
center of economic gravity continues
to shift to the east as China and India
rise. The early signs are there of other
countries seeking alternatives and a
future in trade and security that doesn’t
rely as much on America. At the same
time, the U.S. needs to address its
own state of competitiveness. This
includes worker skills in an age of
globalization and technology, badly
needed infrastructure improvements,
continued regulatory reform that
encourages innovation and economic
activity, and improving our fiscal health
including reining in a growing federal
deficit, which is a cancer on our future,
through entitlement reforms.

In last year’s letter, I expressed
concern about the incoming Trump
Administration threatening to tear
up and walk away from NAFTA, the
North American Free Trade Agreement
with the United States, Canada and
Mexico, which has removed tariff
barriers and strengthened economic
integration among the three countries.
One year later, negotiations concerning
modernizing NAFTA continue and are
under threat of cancellation by the
U.S., which has expressed demands
that once again represent a narrow
view of our interests. From agriculture
to small business, to manufacturing,
to financial services, to services
broadly, NAFTA has been good for the
country — economically it has created
millions of jobs and it has lowered
costs to consumers. I can think of no
better strategy to improve the U.S.’s
competitive profile in the world today
than to have a modernized NAFTA.
Beyond its economic benefits,

rules–based system of trade, and one
that’s fair. America has been at the
vanguard of leading that effort and
should continue to be at the forefront,
especially since 95% of the world lies
beyond our borders.

The U.S. and China

As the two largest economies and the
most important bilateral relationship
in the world, the United States and
China have benefited enormously
from trade and investment ties. Our
economic relations today not only have
a bilateral impact, but a global one
as well. However, there is an array of
market access barriers and industrial
policies that limit greater economic
and commercial opportunities between
the two countries. The fundamental
question is this: how does a market–
oriented economy like the United States
effectively engage with a party or state–
directed economy such as China to
create equal access and opportunity for
American business, promote economic
growth and prosperity in both
countries, and continue to support a
strong overall U.S.–China relationship?
It’s really a question of what’s in our
national interest and what’s best for the
long–term health of our country and
the global economy.

The answer, I believe, starts with a
number of action–oriented principles.
For example, we should begin with
a comprehensive sense of what
we want to accomplish, and then
negotiations between Washington and
Beijing should set clear timelines and
specific expectations for measurable,

NAFTA has brought stability, peace
and prosperity to our borders and
has been a distinct advantage for all
three countries. Unfortunately, the
U.S. negotiating position is creating
considerable uncertainty, including
in the important Mexican presidential
election scheduled for July of ’18.

Chubb has benefited from the positive
environment NAFTA created. We have
grown in Mexico both organically and
through acquisitions over the past 23
years since NAFTA was implemented.
Today Mexico is our fourth–largest
market and Chubb is the third–largest
property and casualty insurer in the
country. Mexico’s growing middle class,
which has been fostered by the nation’s
market–oriented stance since NAFTA,
has created significant opportunities
for our industry. Mexicans are buying
more homes and cars and establishing
new businesses, all of which require
insurance protection. Chubb insures
a significant and growing number of
U.S. firms operating in Mexico as well
as Mexican firms operating around the
world, and we have more than one
million automobile insurance policies
in Mexico through our wholly owned
subsidiary ABA Seguros. Chubb also
has significant operations in Canada,
our third–largest market, where
we have had a presence since 1821
when we became the first American
insurance company to appoint an
agent in Canada.

It’s troubling to imagine a NAFTA that
goes backwards — our first principle for
renegotiation should be to do no harm.
Interrupting the $1.3 trillion in annual
trade across our borders, or reverting
to the high tariffs and other trade
barriers that preceded NAFTA, would
be devastating for workers, farmers,
service providers and exporters in all
three countries. Trade agreements such
as NAFTA ensure a market–oriented,

The potential of this great company

I have many people to thank beginning
with all of my fellow employees,
my senior management team — the
absolute best in the business — and
our highly committed, active and
supportive Board of Directors, without
whom our achievements last year
would not have been possible. I would
like to acknowledge the contributions
of Leo Mullin, who is retiring from
the Board this year after 10 years of
distinguished service. It has been
a pleasure and an honor to work
with you, Leo, and thank you for
your encouragement and wisdom at
important moments.

I have never been more confident in
the potential of our company and the
promise of what we can achieve. We
are realists about the ever–changing
external environment and our
optimism rises above those issues
beyond our control. We prefer, instead,
to focus our time and energy on the
tremendous opportunities we have in
our hands and within our reach. We
believe in ourselves — and once again,
thank you for believing in us.

Sincerely,

Evan G. Greenberg
Chairman and Chief Executive Officer

commercially meaningful outcomes.
The U.S. should work with like–minded
partners that have similar issues with
China–related trade and investment
policies and seek practical solutions
that address business interests rather
than resorting to punitive measures
that damage broader ties. The U.S. and
China should strive to act in ways that
are consistent with market principles,
honor their international obligations
and support the global rules–based
order — in other words, the rule of law.
International trade and investment
rules, as embodied in the World Trade
Organization, should be updated to fit
today’s global economic realities and
not be based on outdated facts and
commitments. If we fail to move in
this direction and achieve meaningful
progress, the outcome will likely be
increased protectionism. In sum, both
the U.S. and China have an interest in
seeing the concerns regarding bilateral
trade and investment addressed in
order to establish a balanced and
sustainable economic relationship.

Before I conclude, I have one last item
from 2017 worth mentioning. The U.K.’s
mid–2016 EU and Brexit referendum
decision impacts financial services
companies and last year we responded
with the announcement that Chubb
will locate its EU headquarters in
France post–Brexit. The decision was
straightforward for us — Paris is the
principal office for our Continental
European operations and we have a
significant investment there in both
financial and human resources, as
well as a meaningful portfolio of
commercial and consumer insurance
businesses throughout France. We are
encouraged by France’s commitment to
greater market–oriented and business–
friendly principles. Our choice of
France reinforces our commitment to
our business in both France and across
the Continent.

A Global Leader in Property and Casualty Insurance

A local presence in 54 countries and territories around the world

Chubb has operations in the countries and territories listed here and can help
clients manage their risks anywhere in the world.

Chile

China

Colombia

Czech
Republic

Denmark

Ecuador

Egypt

Finland

Argentina

Australia

Austria

Bahrain

Belgium

Bermuda

Brazil

Canada

France

Germany

Gibraltar

Hong Kong

Hungary

Indonesia

Ireland

Italy

Japan

Korea

Macau

Malaysia

Mexico

Netherlands

Pakistan

Panama

Peru

Philippines

Poland

Portugal

Saudi Arabia

Singapore

South Africa

Spain

Sweden

Switzerland

New Zealand

Puerto Rico

Taiwan

Norway

Russia

Thailand

Tunisia

Turkey

United Arab
Emirates

United
Kingdom

United States

Vietnam

Chubb Senior Operating Leaders

Chubb’s senior operating leadership includes the company’s Chief Operating
Officer, the leaders of North America and Overseas General insurance operations
and the head of the Global Accident & Health and Life insurance businesses.

John Lupica
Vice Chairman
Chubb Group;
President
North America Major
Accounts and Specialty
Insurance

Paul J. Krump
Executive Vice President
Chubb Group;
President
North America Commercial
and Personal Insurance

John Keogh
Executive Vice Chairman
Chubb Limited/Chubb Group;
Chief Operating Officer

Edward Clancy
Executive Vice President
Chubb Group;
Global Accident & Health
and Life

Juan C. Andrade
Executive Vice President
Chubb Group;
President
Overseas General Insurance

North America Insurance

Key Financial Results
Dollars in millions

Total North America
P&C Insurance

2017
Gross premiums written
Net premiums written
Combined ratio
P&C current accident year
combined ratio excluding
catastrophe losses

$23,227
$18,077
92.2%

84.9%

North America Commercial
P&C Insurance

2017
Gross premiums written
Net premiums written
Combined ratio
P&C current accident year
combined ratio excluding
catastrophe losses
Segment income

North America Personal
P&C Insurance

2017
Gross premiums written
Net premiums written
Combined ratio
P&C current accident year
combined ratio excluding
catastrophe losses
Segment income

$15,760
$12,028
91.4%

87.5%
$3,010

$5,152
$4,533
100.7%

78.9%
$177

North America Agricultural
Insurance

2017
Gross premiums written
Net premiums written
Combined ratio
Segment income

$2,315
$1,516
74.0%
$386

Total net premiums written for
the company’s North America P&C
insurance businesses were $18.1
billion, up 5.0% from 2016. Excluding
merger–related actions, net premiums
written for the year rose 6.5%. Chubb’s
focus on carefully managing its
risk exposures is evident in its P&C
underwriting results for all of North
America. In a near–record year for
insured natural catastrophe losses,
Chubb reported a combined ratio of
92.2%. Excluding catastrophe losses,
the current accident year combined
ratio was a strong 84.9%, compared to
86.8% prior year.

Another major trend in North America,
in part driven by the magnitude of the
2017 catastrophes, was the beginning
of what appeared to be an insurance
market in transition. After several years
of competition that put pressure
on pricing and terms and conditions,
there were signs of change as the
year progressed.

“Pricing discipline started to show itself
in the second half of the year as we
and others looked for price adequacy
in certain product lines,” said John
Lupica, Vice Chairman, Chubb Group
and President of North America Major
Accounts and Specialty Insurance.
“By the end of 2017, it’s safe to say the
market was as firm as we have seen in
the last two years.”

Other themes that cut across Chubb’s
North American businesses were
cross–selling, product innovations
and digital initiatives to enhance the
customer experience.

Chubb’s insurance businesses in North
America serve clients ranging from
the largest multinationals, mid–size
companies and small businesses to
successful individuals and families, and
the agriculture community.

Any discussion of the North American
property and casualty insurance
market in 2017 begins with the natural
catastrophes that touched so many in
the U.S., including Chubb customers.
Hurricanes Harvey, Irma and Maria,
which were followed by the massive
wildfires in northern and southern
California, put a spotlight on the P&C
insurance industry, both in terms
of underwriting performance and
claims response.

In a challenging year, Chubb
distinguished itself across its North
American businesses. “Chubb’s
performance in 2017 speaks to the
strength of the company,” said John
Keogh, Executive Vice Chairman,
Chubb Group and Chief Operating
Officer. “In some ways, 2017 was a test
of the risk management work that went
into integrating the two companies
following the merger in early 2016.
And from a risk perspective, the
events of 2017 confirmed our efforts
to understand our exposure to a
particular client or in the aggregate.”

Chubb also delivered on its
commitment to customers who
suffered losses from the catastrophes
of 2017. “When it comes to claims and
risk engineering, our company stood
tall,” said Paul Krump, Executive Vice
President, Chubb Group and President
of North America Commercial and
Personal Insurance. “We brought the
full resources of Chubb to service our
clients, agents and brokers. In doing so,
we really came together as a company
and burnished the Chubb brand.”

Chubb’s North America Insurance
Business Units

Major Accounts

Commercial P&C insurance products for the large
corporate market sold by retail brokers

Commercial Insurance Commercial P&C insurance products for middle

market companies sold by independent agents
and retail brokers

Small Commercial

P&C insurance products for small commercial
clients sold by independent agents and
retail brokers

Personal Risk Services Personal lines coverage, including home, auto,

valuables, umbrella and recreational marine
insurance, for successful individuals and families
sold by independent agents and brokers

Westchester

Commercial P&C excess and surplus lines sold
through wholesale brokers

Chubb Bermuda

Liability, property, political risk coverages and
captive programs sold by large international brokers

Agriculture

Crop insurance from Rain and Hail and farm and
other P&C coverages, sold by agents and brokers

North America Commercial
P&C Insurance

Chubb is the largest commercial lines
insurer in the U.S., offering a full range
of traditional and specialty products for
businesses of all sizes. Net premiums
written for North America Commercial
P&C Insurance increased 2.5% from
2016. Excluding merger–related actions,
net premiums written rose 4.8%.
The combined ratio for the segment
was 91.4%. The current accident year
combined ratio excluding catastrophe
losses was 87.5%. Underwriting income
was $1.1 billion, and segment income
was $3.0 billion.

“Our results reflect the balance
and diversification of our portfolio,
operational excellence, and a
rigorous, disciplined approach to risk
management,” said Mr. Lupica. “In
our North American commercial P&C
businesses, we have focused on cross–
selling and distribution management,
including expanding our footprint with
agents that sell Chubb products and
deepening our agency presence. Our
customers and agents are seeing a more
unified and collaborative Chubb.”

“We’ve also added new industry
practices and created new tailored
products to make us more attractive
to our large and middle market
customers,” said Mr. Krump. “When
an agent or broker comes to us, we
are able to offer more products as
well as industry–leading claims and
risk engineering capabilities. In a
transitioning market, agents and
clients can continue to look to Chubb
for a balanced, stable and reasonable
approach to meet their risk needs.”

North America Insurance

“ Our results reflect the
balance and diversification
of our portfolio, operational
excellence, and a rigorous,
disciplined approach to
risk management. Our
customers and agents are
seeing a more unified and
collaborative Chubb.”

— John Lupica

One key product introduction in
Major Accounts was the expansion
of Chubb’s global cyber facility. First
introduced in 2015, the global cyber
facility is an enterprise solution for
companies to assess their cyber and
data privacy risks in a single policy that
offers up to $100 million in capacity.
In addition to providing loss control
and post–breach services, the global
cyber facility now offers a suite of
multiline cyber peril endorsements
that enable risk managers to customize
their existing insurance portfolio to
close gaps related to cyber exposures.
Policyholders have a single point of
contact at Chubb to manage their
cyber exposures.

Another Major Accounts initiative
was the launch of industry practices
that provide innovative insurance
products, industry–leading service
and risk management solutions.
The new or expanded practices
include Transportation, Real Estate
& Hospitality, Financial Institutions,
Energy, Healthcare and Private
Equity. In addition, Chubb continued
to focus on bringing the advantages
of its extensive network to offer
multinational companies global
A&H programs.

In 2017, Chubb continued to directly
engage with and listen to Major
Accounts clients through its Client
Advisory Boards. The eight regional
boards are comprised of about 250 risk
managers from major corporations
across North America. Client risk
managers meet in interactive sessions
with Chubb leaders, creating a valuable
forum for Chubb to listen and learn
how it is doing as an organization. At
the same time, the meetings provide an
opportunity for Chubb to brief clients
on macro issues in the marketplace.
Learnings from these sessions help the
business adjust to better meet client
needs. Chubb also convenes Producer
Advisory Boards, which operate in
parallel with Client Advisory Boards,
and allow Chubb to listen, learn and
adjust from direct engagement with
distribution partners.

In the excess and surplus lines market,
Westchester specializes in hard–to–
place casualty, property catastrophe
and specialty lines for large corporate,
middle market and small businesses.
For retail brokers that do not have
the capability or expertise for E&S
products, Westchester is an important
wholesale channel to access Chubb.
In 2017, Westchester introduced new
products, including commercial
package, admitted special events
and admitted product recall, and
enhanced current offerings, such as
cyber enterprise risk management. To
make Westchester more visible across
more products and to drive broader
and deeper broker relationships,
a dedicated wholesale business
development team was created.
Chubb Bermuda has remained
focused on its core excess businesses,

including property, excess casualty and
financial lines as well as its political
risk business. In 2017, Chubb Bermuda
continued to demonstrate its long–
standing commitment to providing
world–class claims service by utilizing
all available resources to respond
to its insureds at their times of need
wherever in the world they arise.

Chubb has been positioning its ESIS®
division as a premium brand in the
third–party administrator marketplace
through investments in technology,
people, services and delivery. The
company generated record revenues
for the second consecutive year.
For ESIS, 2017 was also a year of
innovation. The division launched
an enhanced integrated disability
management product that enables
employers to effectively manage claims,
reduce employee absence and increase
cost savings. Other product launches
included ESIS NurseLine, a telephone–
based service that helps registered
nurses triage work–related injuries, and
ESIS CareSM, a workers’ compensation
solution designed to streamline the
claims process.

Commercial Insurance, the P&C
business unit serving middle market
companies, is distinguished by its
more than 20 industry practices, each
handled by a team of experienced
underwriting, claims and risk
engineering professionals who
understand the particular risks of
that industry. In 2017, Chubb
introduced new industry practices for
Healthcare and Private Equity. Cross–
selling efforts focused on workers’
compensation, package, directors
and officers, excess and umbrella,
and cyber coverages. Bringing
A&H products to this market segment
through the branch network was
also a priority.

North America Business Unit Leaders

(From left)

Michael J. Coleman
Vice President
Chubb Group;
Division President
North America
Agriculture

Frances D. O’Brien
Senior Vice President
Chubb Group;
Division President
North America
Personal Risk Services

Christopher A. Maleno
Senior Vice President
Chubb Group;
Division President
North America Major
Accounts

C. Scott Gunter
Senior Vice President
Chubb Group;
Division President
North America
Commercial
Insurance

Gerard M. Butler
Senior Vice President
Chubb Group;
Division President
Field Operations
North America
Insurance

Bruce L. Kessler
Senior Vice President
Chubb Group;
Division President
Westchester

North America Insurance

“ When it comes to claims
and risk engineering,
our company stood tall.
We brought the full
resources of Chubb to
service our clients,
agents and brokers.”

— Paul Krump

“Our middle market business continued
to perform well in 2017,” said Mr.
Krump. “Our customer retention was
high and fully half of our new business
was through cross–selling new products
to existing customers. We were
particularly encouraged by our success
in cross–selling standard products to
financial lines customers. Importantly,
in a tumultuous year, we maintained
underwriting discipline through the
hard work, diligence and craftsmanship
of our underwriting team.”

Excluding merger–related actions, net
premiums written for Commercial
Insurance and Small Commercial grew
8.9% in 2017.

Chubb’s Small Commercial division
delivers packaged insurance programs
for smaller businesses through Chubb’s
extensive network of independent
agents and brokers, including specialty
coverages for management and
professional liability and standard
insurance coverages for businesses with
annual revenues up to $10 million. One
of the most important accomplish–
ments in 2017 was the successful
development and rollout of the Chubb

Small Commercial MarketplaceSM. The
Marketplace is a platform that provides
agents straight–through processing for
quotes, policy issuance and ongoing
management of their small business
customers. Designed to meet the
needs of agency customer service
representatives, the portal has had a
positive reception.

has consistently delivered the best
products and services. Our track record
handling claims and our commitment
to innovation and technology have
enabled us to further strengthen
our leadership position in this market.
This is a good business for Chubb
and we are proud to serve the
American farmer.”

North America Personal
P&C Insurance

Chubb is the leading provider of
personal lines insurance for successful
individuals and families in the U.S.
and Canada. Chubb Personal Risk
Services shares many of the strengths
of the company’s North American
commercial P&C insurance businesses,
including a broad product offering,
superior claims and risk consulting
services, and access to Chubb’s
extensive branch network in the U.S.
and Canada. Clients of Chubb Personal
Risk Services also benefit from the
company’s global presence, which
offers protection for their assets
around the world.

Net premiums written for the North
America Personal P&C Insurance
segment were $4.5 billion for the year,
up 9.1% from 2016. In a year of near–
record industry losses from natural
catastrophes, the 2017 combined ratio
for Personal Risk Services was 100.7%.
The current accident year combined
ratio excluding catastrophe losses
was 78.9%. Segment income was
$177 million.

“Customer service reps find it intuitive
and easy to use,” Mr. Krump noted.
“It’s efficient, saves time and helps
them manage their books of business.
Marketplace is an example of the great
strides we are making in building
out our infrastructure to serve the
important and growing small
business market.”

North America
Agricultural Insurance

Chubb’s Rain and Hail subsidiary is
the leading crop insurance managing
general agency in North America,
insuring more than 100 different
crops and 2.4 million farm fields
comprising 70 million acres. Crop
insurance is a successful public–private
partnership that operates with a proven
model. Chubb distinguishes itself in
the multi–peril crop insurance market
through its national footprint, track
record of delivering superior service
and demonstrated commitment to
the market. In addition to Rain and
Hail, the North America Agricultural
segment includes farm, ranch and P&C
commercial agriculture coverages. In
2017, the growing season was excellent,
leading to a combined ratio of 74.0%
and segment income of $386 million.
Net written premiums were $1.5 billion.

“2017 was another terrific year for the
best agriculture insurance company
and brand in the industry,” said Mr.
Lupica. “Year after year, Rain and Hail

For the personal lines business in the
U.S., the big story of 2017 was the series
of natural catastrophes, including
three back–to–back hurricanes
and some of the worst wildfires in
California history. Chubb deployed its
considerable resources and capabilities
on behalf of its clients. The company’s
three–pronged claims response
included service centers staffed
with knowledgeable professionals
available 24/7; a field organization
of claims adjusters deployed to
visit clients in impacted areas; and
technology resources, including
drones, to complement claims and
risk engineering professionals in
risk and loss assessment following
a catastrophe. Immediately after
Hurricane Irma, as an example, we
had more than 400 dedicated claim
professionals and staff servicing clients.
The average wait time to speak with
a live Chubb representative at one
of our service centers was under
five seconds.

Chubb also deployed its wildfire
defense services to protect homes
before, during and after the California
wildfires. Available in 18 states, our
WDS partners monitor the homes of
policyholders and, based on the threat
level, will take actions such as clearing
of hazardous objects and material
around the home to create a more
defensible space, installing sprinklers,
addressing hot spots and, as a last
line of defense in home protection,
applying fire retardant gel to the home.
Tens of thousands of policyholders in
wildfire–prone states are enrolled in
this complimentary service. During the
historic Thomas wildfire, the largest
in California history, 10 engines were
deployed to monitor and protect the
homes of Chubb policyholders.

Chubb is focused on finding other
ways to predict and prevent losses.
For example, internal water leaks have
emerged as one of the most frequent,
severe — and preventable — types
of claim. Over the past decade, the
frequency of damages from sudden
pipe bursts and failed hoses has nearly
doubled. According to the most recent
data from the Insurance Information
Institute, water damage accounted for
nearly half of all property damage. To
raise awareness of this peril, and to
encourage policyholders to take action
to avoid the damage and inconvenience
from a water leak, Chubb Personal
Risk Services has engaged in a proactive
outreach campaign to customers.
Homeowners, for example, are
offered a discount on a device that
automatically shuts off the water when
it detects a leak.

Chubb is also using analytics to identify
clients that have a higher propensity
for a loss, and is working with them
and their agents proactively in
order to mitigate or prevent a loss
from happening in the first place.

“The work we’re doing to help predict
and prevent losses builds on Chubb’s
long–time strengths in handling
appraisals for our personal lines
clients and the deep risk engineering
capabilities we have in commercial
lines,” said Mr. Krump. “Now, we’re
taking it a step further.”

Chubb is also utilizing technology to
make it easier for independent agents
and brokers to grow their businesses.
In 2017, Chubb launched a resource
center designed to help them engage
more effectively with current and
prospective clients. Today, many
successful individuals and families do
not recognize that they would benefit
from the specialized type of insurance

offered by Chubb. The resource center
gives agent and broker partners
access to research and actionable
recommendations on how they can
incorporate the research findings into
their day–to–day business practices.
In addition, Chubb enhanced its
family office portal to provide a more
efficient online experience for family
office managers.

Chubb has increasingly embraced
multichannel marketing, including
social media, to reach successful
individuals and families who would
benefit from the specialized insurance
solutions provided by the company.

“In 2017, Chubb delivered across its
North American commercial and
personal lines businesses. We were
there for our customers before, during
and after the natural catastrophes,”
said Mr. Keogh. “We maintained
underwriting discipline, focused on
execution, invested in our businesses
and our people, and expanded and
deepened our distribution capabilities.
We advanced our strategy to transform
Chubb digitally, both on the back end
and in how we serve our customers.”

Looking toward the future, Mr. Keogh
also highlighted Chubb’s commitment
to attract and retain talent, including
expanded learning and development
programs. “There are tremendous
opportunities at Chubb. You could join
the company at age 22 and work here
until you retire and have an incredible
variety of roles and experiences under
the banner of Chubb. We understand
that retaining the best talent requires
continuous training, development
and offering new challenges and
opportunities for our people.”

Corporate, Global Functional and Claims Leaders

(From left)

Philip Bancroft
Executive Vice President
Chubb Limited/Chubb Group;
Chief Financial Officer

Paul Medini
Senior Vice President
Chubb Group;
Chief Accounting Officer

Ken Koreyva
Senior Vice President
Chubb Group;
Treasurer

Timothy Boroughs
Executive Vice President
Chubb Group;
Chief Investment Officer

(From left)

Julie Dillman
Senior Vice President
Chubb Group;
Global Head of Operations

Paul O’Connell
Senior Vice President
Chubb Group;
Chief Actuary

Michael W. Smith
Chief Claims Officer
Chubb Group

Monique Shivanandan
Chief Information Officer
Chubb Group

Sean Ringsted
Executive Vice President
Chubb Group;
Chief Risk Officer and
Chief Digital Officer

(From left)

Rainer Kirchgaessner
Executive Vice President
Chubb Group;
Global Corporate
Development Officer

Phillip Cole
Senior Vice President
Chubb Group;
Global Human
Resources Officer

Joseph Wayland
Executive Vice President
Chubb Limited/Chubb Group;
General Counsel

(From left)

Mary Beth Pittinger
Senior Vice President
Regional Claims

William C. Turnbull, Jr.
Senior Vice President
North American
Property Claims

Frank Lattal
Senior Vice President
Chubb Group;
Claims

Tiffany Alvey
Senior Vice President
Deputy Head of Claims
Service Centers
North American Claims

Clyde C. Douglas III
Senior Vice President
Head of North American
Claim Operations &
Claim Service Centers

Lope A. Garcia
Senior Vice President
Claims
Latin America

Overseas General Insurance

Chubb’s international general insurance
operations comprise two businesses:
one with distribution through retail
brokers in five regions of the world and
the other an excess and surplus (E&S)
lines business with distribution through
brokers in the London wholesale
market and Lloyd’s.

The external operating environment
in 2017 was challenging, as a result of
the catastrophe activity around the
world and the continued soft market
conditions through most of the year.

In the face of those headwinds,
Overseas General Insurance generated
solid growth and profitability. Net
premiums written were $8.3 billion, up
2.7%. Excluding merger–related actions,
net premiums written grew 5.9%. The
combined ratio for the year was 92.0%.
The current accident year combined
ratio excluding catastrophe losses
was 91.0%, and segment income
was $1.2 billion.

“Our international operations
continued to perform well in 2017,”
said Juan C. Andrade, Executive Vice
President, Chubb Group and President,
Overseas General Insurance. “This is a
reflection of our technical underwriting
capabilities, implementation of our
focused growth strategies and our
expense discipline. These results are
also driven by our strong culture,
extensive capabilities and diversified
businesses, geographic presence and
distribution channels.”

Today, about 60% of the segment’s
revenues are from commercial
P&C, with the remaining 40% from

consumer lines, including auto,
homeowners and renters insurance,
personal accident and supplemental
health insurance. Chubb’s international
operations are diversified by geography
and distribution, with revenues about
evenly split between emerging markets
in Asia and Latin America and the
developed markets of Europe, Australia
and Japan.

“Chubb is very much a local
multinational company. Our
international operations are deeply
rooted locally, both in infrastructure
and in management,” said Mr. Keogh.
“It’s one of our strengths, and part of
what makes Chubb who we are across
the globe.”

In 2017, Chubb advanced its growth
initiatives across its international
commercial P&C, personal lines, and
accident and health businesses.

“Chubb is making investments in
technology, distribution, products and
efficiency. All of this is being done with
a focus on innovation and adapting
to changing customer needs and
buying habits,” said Mr. Andrade. “Our
investments include developing and
deploying digital technology, which
is one of the most powerful forces
influencing our industry.”

In Chubb’s international retail P&C
operations, growth was led by
the small commercial and middle
market segments. In the large account
segment, growth was impacted
by soft market conditions. The
company’s industry practices, which
are staffed with teams of specialists
that understand the particular risks
of specific industries, contributed to
growth and profitability.

Key Financial Results
Dollars in millions

Overseas General Insurance

2017
Gross premiums written
Net premiums written
Combined ratio
P&C current accident year
combined ratio excluding
catastrophe losses
Segment income

$10,142
$8,341
92.0%

91.0%
$1,216

Chubb’s Overseas General Insurance
Business Units

International

Commercial P&C, A&H and traditional and specialty
personal lines sold by retail brokers, agents and
other channels in five regions:

Europe

Operations in the U.K. and 18 other countries
comprised of P&C commercial lines and consumer
lines, including A&H and specialty personal lines

Asia Pacific

Operations in 14 countries serving commercial
customers and consumers with P&C, A&H and
personal lines

Latin America

Operations in nine countries serving commercial
customers with P&C products and consumers
through A&H and personal lines

Far East

Operations in Japan serving commercial customers
with P&C products and consumers through A&H
and personal lines

Eurasia & Africa

Operations in nine countries serving commercial
customers with P&C products and consumers
through A&H and personal lines

Chubb Global Markets Commercial P&C excess and surplus lines and A&H

sold by wholesale brokers in the London market
and through Lloyd’s

In the middle market P&C segment,
Chubb continued to expand and
emphasize its unique multiline
capability, bringing together property
and casualty with specialty lines and
multinational capabilities. With more
than 20,000 agent and broker partners
outside of North America, Chubb
has extensive reach into this market.
In addition, the product and service
offerings of Chubb’s dedicated industry
practices, supplemented by risk
engineering and claims capabilities, are
clear differentiators.

In the small and medium–sized
enterprises (SME) segment, the focus
was on expanding product offerings to
our distribution partners via easy–to–
use technology solutions, which can
be integrated with affiliate and partner
platforms for a streamlined customer
experience. SME insurance solutions
are offered as stand–alone coverages
or bundled together in a convenient
package.

Expanding our cyber insurance
solutions for businesses internationally
was another priority. Today, cyber is
one of Chubb’s fastest–growing product
categories, and the company is building
on its market leadership in Europe,
Asia Pacific and Latin America through
innovation and investments in growth.

Personal lines also generated
strong growth in 2017. Highlights
included the company’s automobile
business in Mexico, where top–tier
sales and service capabilities have led
to accelerated growth. The personal
lines business also benefited from

Overseas General Insurance

“ Emerging markets are
attractive to Chubb.
Compared to Europe and
North America, insurance
penetration in the emerging
markets of Latin America
and Asia is low. With our
infrastructure, footprint,
products and distribution,
we have tremendous
runway for growth.”

— Juan Andrade

the targeted management of our
distribution capabilities and partner
relationships, as well as the addition
of new products to our portfolio.
Production through our agency and
small broker channel was driven
by both increasing the number of
producers and higher productivity
from existing producers. Chubb is also
leveraging its market–leading expertise
in personal lines specialty products
in Europe to drive growth in Latin
America and Asia.

Chubb’s international accident and
health business produced strong
underwriting results for the year.
The business is focused on driving
profitable growth through its core
direct marketing business, growing
group business through large and
small brokers and agents, and
growing the business and leisure
travel segment. All of this is enabled

by investments in digital technology,
distribution expansion, product
enhancements and servicing and
processing efficiency.

Presence, Solutions, Technology and
Service helped the division to capitalize
on its expertise in meeting complex
risk management needs.

Product initiatives in 2017 included
the launch of a flight delay insurance
product with App in the Air, a mobile
app that allows travelers to keep up
to date on their flights. The innovative
coverage, underwritten by Chubb
in partnership with Swiss Re and
FlightStats, allows customers on eligible
flights to receive £100 compensation
if they are delayed by more than one
hour. Payments are automatically
triggered when a flight is canceled
or diverted. Chubb also forged an
agreement with a low–cost airline in
Central and Eastern Europe
to provide the airline’s customers
with travel and flight cancellation
insurance coverage. The protection is
available in 23 countries in Europe
and in 17 languages.

Other Chubb launches included an
enhanced version of its Travel Smart
app. This provides travel information
and safety alerts for business travelers
around the world and is designed to
help companies meet duty of care
requirements for employees traveling
on business. To assist distribution
partners in the U.K. and Ireland,
Chubb launched an online platform
for brokers and their small and middle
market clients. The Chubb Ignite
platform allows brokers to quote and
bind within minutes, with instant
documentation available online
or via email.

“In A&H, we are continuing to
execute our strategy,” said Ed Clancy,
Executive Vice President, Chubb
Group and Global Accident & Health
and Life. “We have an excellent mix of
products, including personal accident,
supplemental medical and travel,
which we continually enhance. At the
same time, we are driving ahead with
digital distribution, where Chubb has
made meaningful investments.”

Europe is Chubb’s second–largest
region behind North America,
operating in 19 countries, with $4.4
billion of gross premiums written,
representing 12% of the company total.
Market conditions were competitive
for much of the year, and these were
combined with continued political
and economic uncertainty in many of
the region’s countries. Despite this,
Chubb maintained strong underwriting
discipline and achieved steady
premium growth across the region,
driven by insight, innovation, product
expansion and distribution.

The U.K. saw strong growth driven by
personal lines, including coverages for
successful individuals and families,
and the small and middle market
commercial segments. A new dedicated
real estate industry practice was also
launched to capitalize on growth
potential in the U.K. and Ireland.

While market conditions in the large
account space were more competitive,
Chubb’s Global Accounts division
continued to cement its leadership in
the multinational space. Its new “Five
Pillar” strategy built around People,

Overseas General Regional and Business Unit Leaders

(From left)

Juan Luis Ortega
Senior Vice President
Chubb Group;
Regional President
Latin America

Andrew Kendrick
Senior Vice President
Chubb Group;
Regional President
European Group

Paul McNamee
Senior Vice President
Chubb Group;
Regional President
Asia Pacific

(From left)

David Furby
Vice President
Chubb Group;
Division President
Commercial Property
& Casualty

John Thompson
Division President
International
Accident & Health

Darryl Page
Vice President
Chubb Group;
Division President
Personal Insurance

Overseas General Insurance

“ In A&H, we are continuing
to execute our strategy.
We have an excellent mix
of products, including
personal accident, supple–
mental medical and travel,
which we continually
enhance. At the same
time, we are driving ahead
with digital distribution,
where Chubb has made
meaningful investments.”

— Ed Clancy

In 2017, gross premiums written in
Chubb’s business in Eurasia and
Africa grew across all territories and
lines of business despite a variety of
economic and political challenges
in the region. During the year, we
continued to build out our product
range and distribution capability, and
developed market–leading positions
in specialist areas such as cyber
insurance in Turkey. Continued focus
on strengthening the operating model
also improved expense efficiency.

Chubb’s Asia Pacific region generated
gross premiums written of $2.4 billion,
representing 7% of the company total.
Growth and profitability were strong
across the region in 2017. Chubb’s
commercial P&C business began to
benefit in the second half of the year
from the transitioning insurance
market in the developed countries of
Australia and New Zealand, and we
continued to see an extension of this
shift in early 2018.

In 2017, Chubb ramped up efforts to
build out its small commercial business
in Southeast Asia and Australia,
launching new products targeted at
emerging businesses across the region.
As in other markets, Chubb is deploying
digital technology and automation to
streamline and simplify the experience
for agents and customers.

Digital capabilities are also at the heart
of Chubb’s distribution agreement
forged with DBS Bank, the largest
banking group in Southeast Asia. With
this agreement, Chubb will distribute
general insurance products on an
exclusive or preferred basis through
multiple DBS banking channels,
including in–branch and various direct
marketing channels. The partnership
covers five markets in Asia — Singapore,
Hong Kong, Taiwan, Indonesia and
China. By early 2018, Chubb was
already offering travel insurance online
to DBS customers. Additional products,
including commercial P&C, personal
lines and A&H coverages, will be added
over time.

Chubb’s innovation and the creativity
of its employees were on display in
the company’s first innovation
competition, which was open to
employees from around the globe.
More than 130 teams from every region
participated by submitting ideas for
an innovative new product. Six finalist
teams — half of them from the Asia
Pacific region — met in New York to
present their ideas and face questions

from a panel of Chubb’s most senior
executives, including the Chairman and
CEO. The two winning ideas — one for
a new A&H product and the other for
an innovative cyber product — hailed
from teams in Southeast Asia.

Chubb has continued to build and
deepen its presence in China, the
largest economy in Asia and the
second–largest in the world. In 2017,
Chubb proudly celebrated its 120th
anniversary of participation in China’s
insurance market, which dates
back to 1897, when the Insurance
Company of North America, a
predecessor company, appointed
an agent in Shanghai, becoming
the first U.S. insurance company to
conduct business in China. Today, the
company operates a fully licensed,
100% Chubb–owned subsidiary with
branch offices in Shanghai, Beijing,
Jiangsu and Guangdong. Chubb China
offers one of the largest commercial
P&C product portfolios in the Chinese
insurance market. It also offers a series
of protection products such as personal
accident, homeowners, travel and
personal devices insurance via the
rapidly growing internet channel to
Chinese families and individuals
across the country.

In late 2017, Chubb entered into a
strategic cooperation agreement with
PICC Property & Casualty Company
of China, the nation’s largest P&C
insurance company. The agreement
leverages Chubb’s global capabilities in
support of PICC’s customers and other
Chinese–affiliated companies around
the world. With the agreement, Chubb
and PICC are establishing dedicated
underwriting and service centers —

called China Desks — for Chinese–
affiliated enterprises in Chubb’s offices
throughout the world. In addition,
Chubb will make its global insurance
capabilities available to PICC and its
customers. Chinese companies with
multinational insurance programs
will be able to have their overseas
insurance needs serviced through
Chubb’s operations in 54 countries and
territories along with its partners in
nearly 150 other countries.

Chubb’s Latin America region
generated gross premiums written
of $2.6 billion representing 7% of the
company total. While the operating
environment in some markets was
challenging, the region overall
produced strong profitability and
growth. Highlights included Mexico,
where Chubb’s personal lines and small
commercial businesses leveraged our
wide network of 65 branches across
the country.

As in the developing markets of Asia,
the countries where Chubb operates in
Latin America have a growing middle
class, a vibrant small and middle
market business sector, large domestic
and international businesses, younger
populations and faster–growing
economies. “Emerging markets are
attractive to Chubb. Compared to
Europe and North America, insurance
penetration in the emerging markets
of Latin America and Asia is low. With
our infrastructure, footprint, products
and distribution, we have tremendous
runway for growth,” said Mr. Andrade.

One of Chubb’s fastest–growing product
categories is cyber insurance. In 2017,
the company launched cyber coverages
in several countries in the region,
including Colombia, Mexico and
Brazil. Chubb’s cyber solution provides
coverage for threats such as system
outages, data breaches, data corruption
and ransomware.

Chubb Global Markets

Chubb Global Markets, the London
market wholesale and specialty arm
of Chubb, provides global access to
specialist underwriters in aviation,
energy, financial lines, marine, political
risk and credit, property, and accident
and health.

As in other regions around the
world, Chubb is building out its small
commercial business in Latin America.
By the end of 2017, we collaborated
with more than 9,000 agents across
the region. Latin America is also an
attractive market for the company’s
A&H products. For corporations with
large risks, Chubb has underwriting
capacity and specialized products, as
well as extensive capabilities in risk
engineering and claims.

In 2017, the commercial P&C excess
and surplus market remained the most
competitive insurance market in the
world. Chubb distinguished itself by
maintaining underwriting discipline,
and the business produced solid
profit. Notably, there were strong signs
later in the year of an insurance market
in transition in the London wholesale
market, which had significant exposure
to the natural catastrophes in the third
and fourth quarters.

On the digital front, Chubb is working
with local bank sponsors to sell simple
pre–underwritten insurance products
through one–click purchase buttons
in mobile apps and other digital
assets. Our teams coordinate the use
of multiple platforms, including social
media, to reach target consumers.
This digital effort leverages data
analytics to target customers efficiently
without the constraints of traditional
direct marketing distribution.

Chubb’s Far East region, which
encompasses Japan, had an excellent
year. Improved product capabilities
contributed to growth in the
commercial P&C business serving
middle market and small businesses.
Consumer strategies led by A&H
and personal lines enjoyed overall
growth and continued improvement
of profitability.

“The breadth of relationships that
Chubb has around the world today
with clients is simply stunning,” said
Mr. Keogh. “For us, the difference is
our presence in local markets and
local communities. We understand
local cultures and the unique
demographic, economic, social and
legal characteristics. That kind of
presence brings opportunity, as it
helps us see things others may not. The
insights we gain from being close to our
customers and distribution partners
enables us to better serve each market
with the right products, capabilities
and services. We find that so many of
our customers, in both commercial and
personal lines, want to do more with
Chubb. We will be there for them.”

Chubb’s Life Insurance segment is
comprised of two businesses. Chubb
Life is an international life insurer,
primarily focused on Asia, that
provides protection and savings–
oriented life insurance products
to individuals and groups.
Combined Insurance provides
personal accident and supplemental
health insurance coverages to
consumers in North America.

For the year, the Life Insurance
segment generated net premiums
written and deposits of $3.6 billion,
up 14.3% from prior year.

Chubb Life

Chubb Life serves the needs of
consumers through a variety
of distribution channels including
primarily captive agents, but also
through banks, retailers, brokers,
independent agents and direct
marketing. In the six Asian markets
where Chubb Life has full operations —
Hong Kong, Indonesia, Korea, Taiwan,
Thailand and Vietnam — the number
of captive agents has reached 36,000.
In China, the company is also a joint
venture partner in Huatai Life, a
fast–growing life insurer with more
than 370 office locations across
the country.

In 2017 there was continuity in Chubb
Life’s strategy and approach to the
market. The business focused on
growing sales and diversifying its

captive agency force. With interest
rates remaining at historically low
levels, protection–oriented products,
as opposed to savings products,
remained the focus.

Across the region, Chubb Life focuses
on two market segments. In emerging
economies where growing middle
classes are beginning to accumulate
wealth, the company’s protection–
oriented products provide individuals
and families a vehicle to transfer the
financial risks associated with death,
illness and accidents. In the developed
markets of Asia where the company
operates, Chubb’s life insurance
products are a tool for legacy planning
and wealth management.

“Chubb Life has the products,
distribution, and service capabilities
to meet the needs of both middle class
customers in emerging markets and
successful individuals and families
in the developed nations where we
operate,” said Mr. Clancy.

In 2017, Chubb Life Vietnam generated
strong top–line growth, opened new
branches and further expanded
its agency force, which now totals
more than 27,000 dedicated agents.
In Taiwan, the business achieved
strong growth in its non–agency or
partnership channel, including the
addition of a new bank partner.

Huatai Life had an excellent year in
2017, with its rate of growth outpacing
the overall market. The business
entered a new province, added 40
offices and increased its network of
exclusive agents to more than 39,000.

Life Insurance

Key Financial Results
Dollars in millions

Life Insurance

2017
Net premiums written
and deposits*
Segment income

$3,577
$248

*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 revenue.

Life Insurance Business Unit Leaders

(From left)

Kevin Goulding
President
Combined Insurance

Russell G. Bundschuh
Senior Vice President
Chubb Group;
President
Chubb Life

Cunqiang Li
Chief Operating Officer
Chubb Life

Life Insurance

“ The economic environment
and demographic character–
istics in the markets where
we operate, along with the
breadth and quality of Chubb
Life’s products, services and
agency capabilities, continue
to present significant growth
opportunities for us.”

— Russell G. Bundschuh

focused on providing innovative life
insurance products and services
for middle class customers in the
developing countries where we
operate, further building out our
product offerings and expanding our
distribution networks. The economic
environment and demographic
characteristics in the markets where
we operate, along with the breadth
and quality of Chubb Life’s products,
services and agency capabilities,
continue to present significant growth
opportunities for us.”

Chubb Life is also part of the digital
transformation underway at Chubb. In
several markets, including Indonesia
and Thailand, the company has
introduced new digital technology
to help enable direct sales. The new
mobile platform, called “eSMART,”
provides straight–through processing
of applications. A new version of the
technology will be introduced in Korea
and Hong Kong through 2018.

“In our life business, digital technology
will continue to provide new avenues
to enhance distribution. It’s a big part
of our strategy in 2018,” said Russell
G. Bundschuh, Senior Vice President,
Chubb Group and President, Chubb
Life. “At the same time, we remain

Combined Insurance

Combined Insurance generated good
results in 2017, including a 6.5%
increase in net premiums written
in North America — a record rate of
growth for the business.

During the year, the business made
progress advancing a major initiative
launched in 2016. The expansion of
Chubb Workplace Benefits, which
brings together Combined’s workplace
products with Chubb’s substantial
relationships with leading national and
regional insurance brokerage firms,
produced strong, double–digit growth.
The business serves large and middle
market companies by partnering with
benefit brokers, agents and consultants,
offering a line of supplemental
insurance products, including accident,
critical illness, hospital indemnity, life
and disability income.

“We have embedded our Workplace
Benefits business within Chubb
branches around the country to take
advantage of our distribution power

across North America,” said Mr. Clancy.
“This business has tremendous growth
potential over the next few years.”

Early in 2018, Combined announced
plans to hire 3,000 more sales agents
across the U.S. during the year. Among
the new recruits, Combined aims to
hire 800 military veterans, continuing
its commitment to provide meaningful
employment opportunities for those
who have served their nation in
uniform. In 2017, the business was
ranked by G.I. Jobs Magazine as a Top
10 Military Friendly® Employer for the
seventh consecutive year. Additionally,
U.S. Veterans Magazine selected
Combined Insurance for its 2017
Best of the Best list of Top Veteran–
Friendly Companies.

Combined’s hiring plan also aims to
bring on board 1,000 Spanish–speaking
sales agents to meet the needs of its
growing Latino initiative. Latinos,
a large, growing and underserved
market segment for affordable accident
and supplemental health insurance
products, represented 26% of new
sales in 2017. Combined was named
one of the top diversity employers
in the nation for 2017 by Hispanic
Network Magazine.

Global Reinsurance

Key Financial Results
Dollars in millions

Global Reinsurance

2017
Gross premiums written
Net premiums written
Combined ratio
P&C current accident year
combined ratio excluding
catastrophe losses
Segment income

$746
$685
111.2%

79.2%
$196

“ When things are nice, neat
and orderly, reinsurers
can all look the same to
clients. But when losses
occur, companies start to
look very different. That’s
when the rubber hits
the road.”

— James Wixtead

Chubb’s reinsurance business, which
operates under the Chubb Tempest Re
brand, offers a broad range of products
to a diverse group of primary property
and casualty insurers worldwide.
Doing business globally with offices in
Bermuda, Stamford, London, Montreal,
Shanghai and Zurich, the business
has deep underwriting, actuarial and
claims expertise.

As 2017 began, reinsurers faced a soft
market that continued to be defined
by the magnitude of excess capital.
Other challenges emerged as the
year progressed. In the U.K., the
adjustment in the Ogden rate, which
is used to calculate upfront personal
injury payments, negatively impacted
the market for motor insurance.
Then there were the large natural
catastrophes, particularly hurricanes
Harvey, Irma and Maria, in the second
half of the year.

“When things are nice, neat and
orderly, reinsurers can all look the
same to clients. But when losses
occur, companies start to look very
different. That’s when the rubber
hits the road,” said James Wixtead,
Senior Vice President, Chubb Group,
and President of Chubb Tempest Re
Group. “Our business performed
within our expectations for the types
of events that occurred. At the same
time, we were able to distinguish
Chubb Tempest Re by the rapidness
and efficiency with which we delivered
payments to our clients.”

The Global Reinsurance segment
posted net written premiums of $685
million, up 1.4% from prior year, or
2.2% in constant dollars. The combined
ratio was 111.2%, and the current
accident year combined ratio excluding
catastrophe losses was 79.2%. Segment
income was $196 million.

James E. Wixtead
Senior Vice President
Chubb Group;
President
Chubb Tempest Re Group

In this operating environment,
Chubb Tempest Re is positioning
itself as a valued trading partner to
clients that has financial strength
and a diverse risk appetite. With its
seasoned underwriting team, the
business is strongly positioned to tailor
reinsurance programs to meet clients’
specific needs. Chubb’s exposure–based
approach to underwriting, which
focuses on analyzing risk at the line
of business level, means that the
company does not need to overreact
to catastrophe losses that are in line
with its expectations.

“In this kind of market, the value of
underwriting — understanding risk,
knowing how we should get paid for
that risk, and having the technical skill
to structure reinsurance programs — is
paramount,” said Mr. Wixtead. “As the
trading environment becomes more
favorable, we will be looking to grow
our portfolio.”

Sustainability and Global Citizenship

Philanthropy

Environment

Diversity & Inclusion

Chubb has a rich history of fostering
philanthropic engagement in the
communities where our employees live
and work. We are proud to invest in the
well–being of our local communities
through volunteerism, grants,
sponsorships, matching gifts and
scholarship programs. Chubb supports
communities around the world
through our established philanthropic
entities and via company–sponsored
volunteer initiatives.

The company’s foundations, which
primarily focus philanthropic support
in the areas of education, poverty and
health, and the environment, made
grants and matching gifts of nearly
$6 million in 2017. The company
announced that it plans to use a
portion of the future benefit from the
U.S. Tax Cut and Jobs Act to make a
difference in society with a one–time
pre–tax contribution of $50 million to
the Chubb Charitable Foundation.

One notable initiative in 2017 was
the Foundation’s $940,000 grant to
Teach For All, a global network of
independent, locally led and governed
partner organizations that work to
develop leadership in classrooms and
communities to ensure all children
can fulfill their potential. The two–
year grant is helping fund a global
leadership development program
and also directly supporting the
organization’s network partners in
Colombia, Mexico, Thailand and
the United States.

With operations in 54 countries and
territories, the company’s business and
operations are exposed to the
full impact of global climate change.
Chubb recognizes that a changing
climate affects everyone — customers,
employees, shareholders, business
partners and the communities
we serve.

Chubb’s Corporate Environmental
Program is now in its tenth year.
In our business, Chubb is a leader
in developing insurance products
and risk management services that
facilitate market–based solutions to
environmental and climate–related
issues. For example, Chubb has been
a pioneer in developing coverages
for premises–based exposures,
contractors’ and project pollution
liability, renewable energy, clean tech
and environmental cleanup projects,
as well as “green building” consulting
services and a property policy
that enables greener rebuilding
after a loss.

In our operations, the company has
had a formal program to measure,
record and reduce greenhouse gas
(GHG) emissions in its own operations
since 2006. From 2015 to 2017, Chubb
has reduced absolute global GHG
emissions by 11%. In 2017, Chubb
earned a score of A– on the CDP’s
climate change program ranking.

Because we recognize that the diversity
of our workforce is a strength and
competitive advantage, a commitment
to diversity and inclusion is integral
to our culture. Chubb strives to be an
inclusive meritocracy that actively
seeks out the best local talent who
bring different perspectives to foster
innovative and relevant solutions for
our customers. Our corporate strategy
includes workforce diversification —
we aim to build and sustain greater
diversity and better representation
at all levels of Chubb. Because the
definition of diversity differs by
geography, our focus varies by
region to reflect diverse populations
and other unique geographic realities.

For example, we launched Chubb
Rising, a regional and global forum
for selected senior women to connect
directly with other women across
Chubb on strategic business issues,
career navigation strategies and other
topics. We established active Business
Roundtables and Inclusion Councils
which are employee–led, Chubb–
supported groups formed by shared
commonalities of background and
experiences. In addition, we remain
attuned to demographic shifts within
our workforce to implement employee
policies, procedures and systems that
reflect this commitment. To ensure
our progress, we depend on our
culture of leadership accountability.
We expect all leaders to set the tone
for what is important, and to behave
in ways that reflect and reinforce a
respectful, inclusive and meritocratic
environment.

Learning & Development

Chubb Rule of Law Fund

UN Global Compact

As a member of the United Nations
Global Compact, Chubb supports the
world’s largest corporate sustainability
initiative in its commitment to align
business operations with the Compact’s
10 principles, which address human
rights, labor, the environment and
anti–corruption.

Established in 2000, the UN Global
Compact is a voluntary initiative based
on CEO commitments to implement
universal sustainability principles.
“This commitment will not only expand
Chubb’s ongoing sustainability efforts,
but underlines our strong commitment
to the overall well–being of the global
society,” commented Chubb Chairman
and CEO Evan Greenberg. “Chubb is
proud to help advance the sustainable
practices of the UN Global Compact
and be part of the momentum toward
advancing these critical societal goals.”

A commitment to learning and
professional development is central
to Chubb’s culture. Chubb’s ability to
deliver outstanding business results
rests on the caliber of its talent and
the efforts of employees at all levels of
the organization. For employees, our
value proposition is the opportunity to
constantly evolve as a professional and
to reach one’s potential.

Chubb has made substantial
investments in learning and
development. We understand this
is essential to developing the next
generation of insurance professionals.
Learning happens on the job, through
personal interaction and involvement,
and through exposure to others, as
well as digital, online and classroom
learning. Chubb’s full complement of
technical, leadership, management
and personal effectiveness learning
solutions provides professionals
with the opportunity to develop the
technical and professional skills they
need to succeed in positions such as
underwriting, sales and service.

The Chubb Rule of Law Fund
advances the rule of law by supporting
organizations focused on building
and strengthening legal institutions.
Projects funded primarily focus on:
supporting the judiciary in emerging
markets; helping develop and draft
laws where not yet existent; aiming
to ensure fair and proper access
within governmental bodies, for
dispute resolution, and/or truth
and reconciliation commissions;
systemically combating corruption;
systemically combating cybercrime,
terrorism financing, money laundering,
human trafficking and other cross–
border crimes; and striving to provide
systematic access to legal advice.

The Fund was founded and is operated
by Chubb lawyers, and is funded by
the voluntary contributions of Chubb
lawyers and compliance professionals
worldwide; the company and its
charitable foundation; and Chubb’s
partner law firms. Recent Fund–
supported projects in Africa, Latin
America, the Middle East and the U.S.
have focused on helping incarcerated
youths, the poor, victims of violent
political conflicts and refugees, and
combating transnational organized
crime and corruption within the
legal profession.

For more information about Chubb’s
Sustainability and Global Citizenship
initiatives, including Risk Management,
Governance and Compliance, as well as
Information Security and Privacy, please
visit About Us on chubb.com.

Officers and Executives

Chubb Group Corporate Officers

Evan G. Greenberg*
Chairman and
Chief Executive Officer
Chubb Limited/Chubb Group

John Keogh*
Executive Vice Chairman
Chubb Limited/Chubb Group;
Chief Operating Officer

John Lupica*
Vice Chairman
Chubb Group;
President
North America Major Accounts
and Specialty Insurance

Paul J. Krump*
Executive Vice President
Chubb Group;
President
North America Commercial
and Personal Insurance

Juan C. Andrade*
Executive Vice President
Chubb Group;
President
Overseas General Insurance

Philip Bancroft*
Executive Vice President
Chubb Limited/Chubb Group;
Chief Financial Officer

Timothy Boroughs*
Executive Vice President
Chubb Group;
Chief Investment Officer

Edward Clancy
Executive Vice President
Chubb Group;
Global Accident & Health and Life

Rainer Kirchgaessner
Executive Vice President
Chubb Group;
Global Corporate
Development Officer

Sean Ringsted*
Executive Vice President
Chubb Group;
Chief Risk Officer and
Chief Digital Officer

*Executive Officers for SEC reporting purposes

Joseph Wayland*
Executive Vice President
Chubb Limited/Chubb Group;
General Counsel

Brad Bennett
Senior Vice President
Chubb Group;
Regional President
Far East

Russell G. Bundschuh
Senior Vice President
Chubb Group;
President
Chubb Life

Gerard M. Butler
Senior Vice President
Chubb Group;
Division President
Field Operations
North America Insurance

Phillip Cole
Senior Vice President
Chubb Group;
Global Human Resources Officer

Julie Dillman
Senior Vice President
Chubb Group;
Global Head of Operations

C. Scott Gunter
Senior Vice President
Chubb Group;
Division President
North America
Commercial Insurance

Andrew Kendrick
Senior Vice President
Chubb Group;
Regional President
European Group

Bruce L. Kessler
Senior Vice President
Chubb Group;
Division President
Westchester

Ken Koreyva
Senior Vice President
Chubb Group;
Treasurer

Frank Lattal
Senior Vice President
Chubb Group;
Claims

Edward Levin
Senior Vice President
Chubb Group;
Digital Business Officer

Christopher A. Maleno
Senior Vice President
Chubb Group;
Division President
North America Major Accounts

Patrick McGovern
Senior Vice President
Chubb Group;
Chief Communications Officer

Paul McNamee
Senior Vice President
Chubb Group;
Regional President
Asia Pacific

Paul Medini
Senior Vice President
Chubb Group;
Chief Accounting Officer

Frances D. O’Brien
Senior Vice President
Chubb Group;
Division President
North America Personal
Risk Services

Paul O’Connell
Senior Vice President
Chubb Group;
Chief Actuary

Juan Luis Ortega
Senior Vice President
Chubb Group;
Regional President
Latin America

James E. Wixtead
Senior Vice President
Chubb Group;
President
Chubb Tempest Re Group

Ross Bertossi
Vice President
Chubb Group;
Global Underwriting

Richard Betzler
Vice President
Chubb Group;
Global Tax

Joseph S. Clabby
Vice President
Chubb Group;
Division President
Bermuda and Global Accounts

Michael J. Coleman
Vice President
Chubb Group;
Division President
North America Agriculture

Sean Corridon
Vice President
Chubb Group;
Deputy Chief Investment Officer

David Furby
Vice President
Chubb Group;
Division President
Commercial Property & Casualty
Overseas General Insurance

Michael Kessler
Vice President
Chubb Group;
Chief Reinsurance Officer

Darryl Page
Vice President
Chubb Group;
Division President
Personal Insurance
Overseas General Insurance

James Williamson
Vice President
Chubb Group;
Division President
North America Small
Commercial Insurance

Other Executives

Jodi Hanson Bond
Executive Vice President
Global Government
and Industry Affairs

Adam Clifford
Division President
Continental Europe

Dimitry DiRienzo
Chief Auditor
Chubb Group

Samantha Froud
Chief Administration Officer
Bermuda Operations

Kevin Goulding
President
Combined Insurance

Marcos Gunn
Division President
Northern Latin America;
Chief Operating Officer
Latin America

Stephen M. Haney
Division President
North America Surety;
Chief Underwriting Officer
Global Surety

Ivy Kusinga
Chief Culture Officer
Chubb Group

Eric Larson
Chief Compliance Officer
Chubb Group

Cunqiang Li
Chief Operating Officer
Chubb Life

David Lupica
Chief Operating &
Distribution Management Officer
Westchester

Timothy Mardon
Division President
Chubb Tempest Re Bermuda

Scott A. Meyer
Division President
North America Financial Lines

Timothy O’Donnell
Chief Operating Officer
Commercial Property & Casualty
Overseas General Insurance

Michael O’Donnell
Division President
Chubb Tempest Re USA

Jalil Rehman
Chief Business Operations Officer
European Group

Steve Roberts
Division President
Chubb Tempest Re International

David Robinson
Division President
U.K. & Ireland

Matthew Shaw
Division President
Chubb Global Markets

Monique Shivanandan
Chief Information Officer
Chubb Group

Michael W. Smith
Chief Claims Officer
Chubb Group

John Thompson
Division President
International Accident & Health
Overseas General Insurance

Derek Talbott
Division President
North America Property

Giles Ward
Regional President
Eurasia & Africa

Chubb Limited Board of Directors

Evan G. Greenberg
Chairman and
Chief Executive Officer
Chubb Limited

Michael G. Atieh
Retired Chief Financial
and Business Officer
Ophthotech Corporation

Sheila P. Burke
Faculty Research Fellow
John F. Kennedy School
of Government
Harvard University

James I. Cash
Emeritus Professor of
Business Administration
Harvard University

Mary Cirillo
Retired Executive
Vice President and
Managing Director
Deutsche Bank

Michael P. Connors
Chairman and
Chief Executive Officer
Information Services
Group, Inc.

John A. Edwardson
Retired Chairman and
Chief Executive Officer
CDW Corporation

Robert M. Hernandez
Lead Director
Chubb Limited

Retired Vice Chairman
and Chief Financial Officer
USX Corporation

Leo F. Mullin
Retired Chairman and
Chief Executive Officer
Delta Airlines

Kimberly A. Ross
Former Chief
Financial Officer
Baker Hughes
Incorporated

Robert W. Scully
Retired Co–President
Morgan Stanley

Eugene B. Shanks, Jr.
Retired President
Bankers Trust Company

Theodore E. Shasta
Retired Partner
Wellington Management
Company

David H. Sidwell
Retired Chief Financial
Officer
Morgan Stanley

Olivier Steimer
Former Chairman
Banque Cantonale
Vaudoise

James M. Zimmerman
Retired Chairman and
Chief Executive Officer
Federated Department
Stores, Inc. (Macy’s)

Board Committees

Audit Committee
Michael G. Atieh, Chair
James I. Cash
Kimberly A. Ross
Theodore E. Shasta
David H. Sidwell

Compensation Committee
Michael P. Connors, Chair
Mary Cirillo
Robert M. Hernandez
Robert W. Scully
James M. Zimmerman

Nominating & Governance
Committee
Mary Cirillo, Chair
Michael P. Connors
Robert M. Hernandez
Robert W. Scully
James M. Zimmerman

Risk & Finance Committee
Olivier Steimer, Chair
Sheila P. Burke
John A. Edwardson
Leo F. Mullin
Eugene B. Shanks, Jr.

Executive Committee
Evan G. Greenberg, Chair
Michael G. Atieh
Mary Cirillo
Michael P. Connors
Robert M. Hernandez
Olivier Steimer

Shareholder Information

Visit investors.chubb.com,
write to the Investor Relations
Department at Chubb Limited or
email investorrelations@chubb.com
for copies of the company’s reports
to the Securities and Exchange
Commission on Form 10–K,
Form 10–Q or Form 8–K, all of which
are available without charge.

Address Investor Relations Inquiries to:

Investor Relations
Chubb Limited
17 Woodbourne Avenue
Hamilton HM 08
Bermuda
Tel: 441 299 9283
Email: investorrelations@chubb.com

Transfer Agent & Registrar

Independent Auditors

PricewaterhouseCoopers AG
Birchstrasse 160
8050 Zurich
Switzerland
Tel: 41 58 792 44 00

PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1800
Philadelphia, PA 19103 USA

Tel: 267 330 3000

New York Stock Exchange Symbol

Chubb Common Shares CUSIP Number

H1467J 104

Computershare
462 South 4th Street
Louisville, KY 40202 USA
US: 877 522 3752
Outside the US: 201 680 6898

Address Shareholder Inquiries to:

By regular mail:
Computershare
P.O. Box 505000
Louisville, KY 40233–5000 USA

By overnight delivery:
Computershare
462 South 4th Street
Louisville, KY 40202 USA
Website:
www–us.computershare.com/Investor

Send Certificates for Transfer and
Address Changes to:

Computershare
P.O. Box 505000
Louisville, KY 40233–5000 USA

Price Range of Common Shares and Dividends

As of February 12, 2018, the company had 464,091,254 Common Shares outstanding with 8,466 registered holders of Common Shares. The
accompanying table sets forth the cash dividends and the high/low closing sales prices of the company’s Common Shares, as reported on the
NYSE Composite Tape for the periods indicated. We have paid dividends each quarter since we became a public company in 1993. Following
Chubb’s redomestication to Switzerland, our dividends have been distributed primarily by way of a par value reduction. The method of
payment of our dividend approved at our May 2017 and May 2016 annual general meetings was a distribution from capital contribution
reserves (additional paid–in capital).

2017

Dividends

2016

Dividends

Quarter Ending

High

Low

USD

CHF

High

Low

USD

CHF

March 31

June 30

$140.38

$128.48

$0.69

0.69

$122.47

$108.00

$0.67

0.66

$147.58

$135.48

$0.71

0.69

$130.71

$117.19

$0.69

0.68

September 30

$149.87

$134.88

$0.71

0.68

$130.32

$124.28

$0.69

0.67

December 31

$155.19

$144.70

$0.71

0.70

$133.32

$121.88

$0.69

0.69

This annual report contains trademarks, trade names and service marks owned by Chubb Limited and its subsidiaries, including Chubb®, Chubb logo®,
Chubb. Insured.® and Craftsmanship®. In addition, this report contains trademarks, trade names or service marks of companies other than Chubb, which belong
to their respective owners.

This report is printed on paper containing 10% post–consumer recycled content. These papers are certified to the international standards of the Forest
Stewardship Council (FSC), which promotes responsible management of the world’s forests.

Non–GAAP Financial Measures

Non–GAAP Financial Measures
This document contains non–GAAP financial measures. These
measures should not be viewed as a substitute for measures
determined in accordance with GAAP, including net income, return
on equity, net investment income, and book value per share.

Core operating income, net of tax, excludes adjusted realized
gains and losses, net realized gains (losses) included in other income
(expense) related to partially owned entities, Chubb integration
expenses, and the amortization of the fair value adjustments of
acquired debt and invested assets related to the acquisition of
The Chubb Corporation (Chubb Corp). We exclude realized gains
and 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 Chubb integration and
related expenses due to the size and complexity of the Chubb
Corp acquisition. We believe that these expenses are distortive to
our results and are not indicative of our underlying profitability
and excluding these expenses facilitate the comparison of our
financial results to our historical operating results. We believe
this presentation enhances the understanding of our results of
operations by highlighting the underlying profitability of our
insurance business.

Core operating income with average level of annual
catastrophe losses (CATs) is a non–GAAP financial measure
which excludes catastrophe losses above average level due to the
significant size and number of these events in 2017 which could
obscure the underlying operating results.

The following table presents the reconciliation of Net income to
Core operating income and Core operating income with average
level of catastrophe losses:

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

Net income

Amortization of fair value adjustment
of acquired invested assets and
long–term debt, pre–tax(1)

Tax benefit on amortization
adjustment

Chubb integration and related
expenses, pre–tax

Tax benefit on Chubb
integration and related expenses

Adjusted net realized gains (losses)(2)

Net realized gains related to
unconsolidated entities

Tax expense on adjusted net
realized gains (losses)

Core operating income

Catastrophe losses above
average level

Core operating income with
average level of catastrophe losses

2017

$3,861

2016

$4,135

143

(140)

227

(68)

$4,716

406

(5)

$3,784

1,455

$5,239

Denominator

471,196,901

465,949,399

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

Diluted earnings per share

2017

2016

Net income

$8.19

$ 8.87

Amortization of fair value adjustment
of acquired invested assets and long–
term debt, net of tax

Chubb integration and related
expenses, net of tax

Adjusted net realized gains (losses),
net of tax

Core operating income

% Change from prior year

0.52

0.76

(0.03)

$10.12

0.42

0.46

(1.04)

$8.03

–20.7%

(1)Related to the Chubb Corp acquisition.
(2)Excludes realized losses on crop derivatives of $7 million and $5 million for 2017 and
2016, respectively.

Core operating return on equity (ROE) or ROE calculated using
core operating income. The ROE numerator includes core operating
income. The ROE denominator includes the average shareholders’
equity for the period adjusted to exclude unrealized gains (losses)
on investments, net of tax. Core operating ROE is a useful measure
as it enhances the understanding of the return on shareholders’
equity by highlighting the underlying profitability excluding the
effect of unrealized gains and losses on our investments.

(in millions of U.S. dollars except ratios)

Net income
Core operating income
Core operating income with average level of
catastrophe losses

Equity — beginning of period, as reported
Less: unrealized gains on investments, net

of deferred tax

(283)

(345)

Equity — beginning of period, as adjusted

101

(310)

(499)

Add: 2016 catastrophe losses above average level

Equity — beginning of period, as adjusted with average
level of catastrophe losses

Equity — end of period, as reported
Less: unrealized gains on investments, net of

deferred tax

Equity — beginning of period, as adjusted

Add: 2017 catastrophe losses above average levels

Equity — end of period, as adjusted with average

level of catastrophe losses

Weighted average equity, as reported
Weighted average equity, as adjusted
Weighted average equity, as adjusted with average
level of catastrophe losses

ROE
Core operating ROE
Core operating ROE, as adjusted with average
levels of catastrophe losses

2017

$3,861
$3,784

$5,239

$48,275

1,058

$47,217

$47,232

$51,172

1,450

$49,722

1,455

$51,777

$49,724
$48,470

$49,505

7.8%
7.8%

10.6%

P&C underwriting income is used to monitor results of
operations without the impact of certain factors as detailed below.
We believe that P&C underwriting income is a useful measure
as it enhances the understanding of our results of operations by
highlighting the underlying profitability of our P&C insurance
business.

The following table presents a reconciliation of Net income to P&C
underwriting income:

Less:

(in millions of U.S. dollars)

Net income

Income tax (expense) benefit
Chubb integration expense
Amortization expense of purchased
intangibles
Other income
Interest expense
Pension curtailment benefit
Net investment income
Net realized gains (losses)
Life Insurance underwriting loss(1)

Add:

Crop derivative losses

P&C underwriting income

2017

2016

$3,861

$4,135

139
(310)

(815)
(492)

(260)
400
(607)
–
3,125
84
(147)

(19)
222
(605)
113
2,865
(145)
(12)

(7)

(5)

$1,430

$3,018

(1) Excludes gains on fair value changes of separate account assets of $97 million in 2017
and $11 million in 2016 and Life Insurance net investment income of $313 million in 2017
and $283 million in 2016.

Adjusted net investment income excludes the amortization of
the fair value adjustment of acquired invested assets. We believe
that excluding this item is meaningful in order to present the
underlying economics of the company’s business without the
impact of purchase accounting adjustment related to the Chubb
Corp acquisition.

The following table presents a reconciliation of net investment
income to adjusted net investment income:

(in millions of U.S. dollars)

Net investment income

Less:

Amortization of fair value adjustment of
invested assets

Adjusted net investment income

2017

2016

$3,125

$2,865

(332)

(393)

$3,457

$3,258

Current accident year (CAY) P&C combined ratio excluding
catastrophe losses and CAY P&C combined ratio with average
level of catastrophe losses are non–GAAP financial measures. The
ratio numerator includes underwriting and administrative expenses
and loss and loss expense but excludes catastrophe losses and prior
period development. The ratio denominator includes net premiums
earned adjusted to exclude the amount of reinstatement premiums
(expensed) collected. For 2016, the P&C combined ratio excludes
the one–time pension curtailment benefit of $113 million recognized
in the fourth quarter of 2016. We believe that excluding the impact
of catastrophe losses and PPD 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. We also provide measures exclusive of catastrophe
losses above average level due to the significant size and number of
catastrophe losses in 2017.

2017

2016

Combined ratio
Less: impact of pension curtailment benefit

P&C combined ratio
Less: Catastrophe losses
Less: Prior period development

CAY P&C combined ratio excluding
catastrophe losses
Add: Average level of catastrophe losses

CAY P&C combined ratio with average level of
catastrophe losses
Add: Prior period developments

P&C combined ratio with average level of
catastrophe losses

94.7%
0.0%

94.7%
10.2%
–3.1%

87.6%
3.4%

91.0%
–3.1%

87.9%

88.3%
0.4%

88.7%
4.0%
–4.3%

89.0%

P&C underwriting and administrative
expense ratio
Less: Expense adjustment on PPD

CAY P&C underwriting and administrative
expense ratio

28.9%
0.1%

30.9%
0.0%

28.8%

30.9%

Tangible book value per 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.

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

Shareholders’ equity
Less: goodwill and other intangible

assets, net of tax

Numerator for tangible book value
per share

2017

2016

$51,172

$48,275

20,621

20,019

$30,551

$28,256

Denominator

463,833,179

465,968,716

Book value per share

Tangible book value per share

$110.32

$ 65.87

$103.60

$60.64

Form 10–K

U N I T E D S T A T E S S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N
Washington, D.C. 20549

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

F O R M 1 0 - K

For the Transition Period from to

Commission File No. 1-11778

C H U B B L I M I T E D
(Exact name of registrant as specified in its charter)

Switzerland
(State or other jurisdiction of incorporation or organization)

98-0091805
(I.R.S. Employer Identification No.)

Baerengasse 32
Zurich, Switzerland CH-8001
(Address of principal executive offices) (Zip Code)
+41 (0)43 456 76 00
(Registrant’s telephone number, including area code)

Title of each class
Common Shares, par value CHF 24.15 per share

Name of each exchange on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by
reference into Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” "smaller reporting
company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company

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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES

The aggregate market value of voting stock held by non-affiliates as of June 30, 2017 (the last business day of the registrant's most recently
completed second fiscal quarter), was approximately $67 billion. For the purposes of this computation, shares held by directors and officers
of the registrant have been excluded. Such exclusion is not intended, nor shall it be deemed, to be an admission that such persons are
affiliates of the registrant.

As of February 12, 2018 there were 464,091,254 Common Shares par value CHF 24.15 of the registrant outstanding.

Certain portions of the registrant's definitive proxy statement relating to its 2018 Annual General Meeting of Shareholders are
incorporated by reference into Part III of this report.

Documents Incorporated by Reference

[This Page Intentionally Left Blank]

CHUBB LIMITED INDEX TO 10-K

PART I

ITEM 1. Business

ITEM 1A. Risk Factors

ITEM 1B. Unresolved Staff Comments

ITEM 2.

Properties

ITEM 3.

Legal Proceedings

ITEM 4. Mine Safety Disclosures

PART II

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases

ITEM 6.

of Equity Securities
Selected Financial Data

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

ITEM 8.

Financial Statements and Supplementary Data

ITEM 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

ITEM 9A. Controls and Procedures

ITEM 9B. Other Information

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

ITEM 11. Executive Compensation

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

ITEM 14. Principal Accounting Fees and Services

PART IV

ITEM 15. Exhibits, Financial Statements Schedules

ITEM 16. Form 10-K Summary

Page

100

101

102

103

111

PART I

ITEM 1. Business

General

Chubb Limited is the Swiss-incorporated holding company of the Chubb Group of Companies. Chubb Limited, which is
headquartered in Zurich, Switzerland, and its direct and indirect subsidiaries (collectively, the Chubb Group of Companies,
Chubb, we, us, or our) are a global insurance and reinsurance organization, serving the needs of a diverse group of clients
worldwide. At December 31, 2017, we had total assets of $167 billion and shareholders’ equity of $51 billion. Chubb was
incorporated in 1985 at which time it opened its first business office in Bermuda and continues to maintain operations in
Bermuda. We have grown our business through increased premium volume, expansion of product offerings and geographic
reach, and the acquisition of other companies, including The Chubb Corporation (Chubb Corp), to become a global property and
casualty (P&C) leader.

With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance,
personal accident and supplemental health insurance (A&H), reinsurance, and life insurance to a diverse group of clients. We
offer commercial insurance products and service offerings such as risk management programs, loss control, and engineering
and complex claims management. We provide specialized insurance products ranging from Directors & Officers (D&O) and
professional liability to various specialty-casualty and umbrella and excess casualty lines to niche areas such as aviation and
energy. We also offer personal lines insurance coverage including homeowners, automobile, valuables, umbrella liability, and
recreational marine products. In addition, we supply personal accident, supplemental health, and life insurance to individuals in
select countries.

We serve multinational corporations, mid-size and small businesses with property and casualty insurance and risk engineering
services; affluent and high net worth individuals with substantial assets to protect; individuals purchasing life, personal
accident, supplemental health, homeowners, automobile, and specialty personal insurance coverage; companies and affinity
groups providing or offering accident and health insurance programs and life insurance to their employees or members; and
insurers managing exposures with reinsurance coverage.

At December 31, 2017, we employed approximately 31,000 people. We believe that employee relations are satisfactory.

We make available free of charge through our website (investors.chubb.com, under Financials) our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, if any, filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after they have been electronically
filed with or furnished to the U.S. Securities and Exchange Commission (SEC). Also available through our website (under
Investor Relations / Corporate Governance) are our Corporate Governance Guidelines, Code of Conduct, and Charters for the
Committees of our Board of Directors (the Board). Printed documents are available by contacting our Investor Relations
Department (Telephone: +1 (441) 299-9283, E-mail: investorrelations@chubb.com).

We also use our website as a means of disclosing material, non-public information and for complying with our disclosure
obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor the Investor Relations portion of
our website, in addition to following our press releases, SEC filings, and public conference calls and webcasts. The information
contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this
report. The public may also read and copy any materials Chubb files with the SEC at the SEC's Public Reference Room at 100
F Street, NE, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC.

Customers
For most commercial and personal lines of business we offer, insureds typically use the services of an insurance broker or agent.
An insurance broker acts as an agent for the insureds, offering advice on the types and amount of insurance to purchase and
also assisting in the negotiation of price and terms and conditions. We obtain business from the local and major international
insurance brokers and typically pay a commission to brokers for any business accepted and bound. Loss of all or a substantial
portion of the business provided by one or more of these brokers could have a material adverse effect on our business. In our
opinion, no material part of our business is dependent upon a single insured or group of insureds. We do not believe that the

loss of any one insured would have a material adverse effect on our financial condition or results of operations, and no one
insured or group of affiliated insureds account for as much as 10 percent of our total revenues.

Competition
Competition in the insurance and reinsurance marketplace is substantial. We compete on an international and regional basis
with major U.S., Bermuda, European, and other international insurers and reinsurers and with underwriting syndicates, some of
which have greater financial, technological, marketing, distribution and management resources than we do. In addition, capital
market participants have created alternative products that are intended to compete with reinsurance products. We also compete
with new companies and existing companies that move into the insurance and reinsurance markets. Competitors include other
stock companies, mutual companies, alternative risk sharing groups (such as group captives and catastrophe pools), and other
underwriting organizations. Competitors sell through various distribution channels and business models, across a broad array of
product lines, and with a high level of variation regarding geographic, marketing, and customer segmentation. We compete for
business not only on the basis of price but also on the basis of availability of coverage desired by customers and quality of
service. Our ability to compete is dependent on a number of factors, particularly our ability to maintain the appropriate financial
strength ratings as assigned by independent rating agencies and effectively utilize new technology in our business. Our broad
market capabilities in personal, commercial, specialty, and A&H lines made available by our underwriting expertise, business
infrastructure, and global presence, define our competitive advantage. Our strong balance sheet is attractive to businesses, and
our strong capital position and global platform affords us opportunities for growth not available to smaller, less diversified
insurance companies. Refer to “Segment Information” for competitive environment by segment.

Trademarks and Trade Names
Various trademarks and trade names we use protect names of certain products and services we offer and are important to the
extent they provide goodwill and name recognition in the insurance industry. We use commercially reasonable efforts to protect
these proprietary rights, including various trade secret and trademark laws. We intend to retain material trademark rights in
perpetuity, so long as it satisfies the use and registration requirements of applicable countries. One or more of the trademarks
and trade names could be material to our ability to sell our products and services. We have taken appropriate steps to protect
our ownership of key names, and we believe it is unlikely that anyone would be able to prevent us from using names in places
or circumstances material to our operations.

Segment Information
Chubb operates through six business segments: North America Commercial P&C Insurance, North America Personal P&C
Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. The
following table presents net premiums earned (NPE) by segment:

Years Ended December 31
(in millions of U.S. dollars, except for percentages)

2017 Net
Premiums

Earned % of Total

2016 Net
Premiums

Earned % of Total

2015 Net
Premiums

North America Commercial P&C Insurance

$ 12,191

42% $ 12,217

43% $

Earned % of Total
33%
5,634

North America Personal P&C Insurance

North America Agricultural Insurance

Overseas General Insurance

Global Reinsurance

Life Insurance

Total

4,399

1,508

8,131

704

2,101

15%

28%

4,319

1,316

8,132

710

2,055

15%

28%

948

1,364

6,471

849

1,947

38%

11%

$ 29,034

100% $ 28,749

100% $ 17,213

100%

The results of operations of Chubb Corp are included from the acquisition date forward (i.e., after January 14, 2016).
Additional financial information about our segments, including net premiums earned by geographic region, is included in
Note 15 to the Consolidated Financial Statements.

North America Commercial P&C Insurance (42 percent of 2017 Consolidated NPE)

Overview
The North America Commercial P&C Insurance segment comprises operations that provide P&C insurance and services to large,
middle market, and small commercial businesses in the U.S., Canada, and Bermuda. This segment includes:

• Major Accounts, a retail division focused on large institutional organizations and corporate companies
• Commercial Insurance, which includes the retail division focused on middle market customers and small businesses
• Westchester and Chubb Bermuda, our wholesale and specialty divisions

Products and Distribution
Major Accounts provides a broad array of traditional and specialty P&C, A&H, and risk management products and services to
large U.S. and Canadian-based institutional organizations and corporate companies. Major Accounts distributes its insurance
products primarily through a limited number of retail brokers. In addition to using brokers, certain products are also distributed
through general agents, independent agents, managing general agents (MGA), managing general underwriters, alliances, affinity
groups, and direct marketing operations. Products and services offered include property, professional liability, cyber risk, excess
casualty, commercial marine, surety, environmental, construction, medical risk, inland marine, A&H coverages, as well as claims
and risk management products and services.

The Major Accounts operations, which represented approximately 40 percent of North America Commercial P&C Insurance’s net
premiums earned in 2017, are organized into the following distinct business units, each offering specialized products and
services targeted at specific markets:

• Chubb Global Casualty offers a range of customized risk management primary casualty products designed to help large

insureds, including national accounts, address the significant costs of financing and managing risk for workers’
compensation, general liability and automobile liability coverages. Chubb Global Casualty also provides products which
insure specific global operating risks of U.S.-based multinational companies and include deductible programs, captive
programs, and paid or incurred loss retrospective plans. Within Chubb Global Casualty, Chubb Alternative Risk Solutions
Group underwrites contractual indemnification policies which provides prospective coverage for loss events within the
insured’s policy retention levels, and underwrites assumed loss portfolio transfer (LPT) contracts in which insured loss
events have occurred prior to the inception of the contract.

• Property provides products and services including primary, quota share and excess all-risk insurance, risk management

programs and services, commercial and inland marine products.

• Surety offers a wide variety of surety products and specializes in underwriting both commercial and contract bonds and has

the capacity for bond issuance on an international basis.

• Accident & Health (A&H) products include employee benefit plans, occupational accident, student accident, and worldwide
travel accident and global medical programs. With respect to products that include supplemental medical and hospital
indemnity coverages, we typically pay fixed amounts for claims and are therefore insulated from rising healthcare costs.
Accident & Health also provides specialty personal lines products, including credit card enhancement programs (identity
theft, rental car collision damage waiver, trip travel, and purchase protection benefits) distributed through affinity groups.

• Financial Lines provides management liability and professional liability (D&O and E&O) and cyber risk products to public

companies as well as to private and not for profit organizations.

• Casualty Risk provides coverages including umbrella and excess liability, environmental risk, and casualty programs for

commercial construction related projects for companies and institutions.

• Medical Risk offers a wide range of specialty liability products for the healthcare industry through licensed excess and

surplus lines brokers. Products include primary coverages for professional liability and general liability for selected types of
medical facilities, excess/umbrella liability for medical facilities, primary and excess coverages for products liability for large
biotechnology and specialty pharmaceutical companies, and liability insurance for human clinical trials.

• ESIS Inc. (ESIS), is an in-house third-party claims administrator, performs claims management and risk control services for
domestic and international organizations as well as for the North America Commercial P&C Insurance segment. ESIS
services include comprehensive medical managed care; integrated disability services; pre-loss control and risk
management; health, safety and environmental consulting; salvage and subrogation; and healthcare recovery services. The
net results for ESIS are included in North America Commercial P&C Insurance’s administrative expenses.

The Commercial Insurance operations, which include Small Commercial, represented approximately 40 percent of North
America Commercial P&C Insurance’s net premiums earned in 2017. Commercial Insurance provides a broad range of P&C,
professional lines, and Accident & Health products targeted to U.S and Canadian-based middle market customers in a variety of
industries with annual revenues generally greater than $10 million, while the Small Commercial operations provide a broad
range of property and casualty, workers' compensation, small commercial management and professional liability for small
businesses based in the U.S., targeted to customers with annual revenues up to $10 million.

• Commercial Insurance products and services offered include traditional property and casualty lines of business, including
Package which combines property and general liability, workers' compensation, automobile, umbrella; financial lines of
business, including professional liability, management liability and cyber risk coverage; and other lines including
environmental, accident & health, international coverages, and product recall. Commercial Insurance distributes its
insurance products through a North American network of independent retail agents, regional brokers, multinational and
digital brokers. Generally, our customers purchase insurance through a single retail agent or broker, do not employ a risk
management department and do not retain significant risk through self-insured retentions. The majority of our customers
purchase a Package or Portfolio product.

• Small Commercial Insurance products and services offered include property and casualty lines of business, including a
business owner policy which contains property and general liability, financial lines, including professional liability,
management liability, and cyber risk, workers’ compensation, automobile liability, and international coverages. Products are
generally offered through a North American network of retail agents and brokers.

Wholesale and Specialty P&C, which represented approximately 20 percent of North America Commercial P&C Insurance’s net
premiums earned in 2017, comprises Westchester and Chubb Bermuda. Westchester serves the market for business risks that
tend to be hard to place or not easily covered by traditional policies due to unique or complex exposures. Products offered
include wholesale excess and surplus lines property, casualty, environmental, professional liability, inland marine, and product
recall coverages in the U.S., Canada, and Bermuda.

Chubb Bermuda provides commercial insurance products on an excess basis including excess liability, D&O, professional
liability, property, and political risk, the latter being written by Sovereign Risk Insurance Ltd., a wholly-owned managing agent.
Chubb Bermuda focuses on Fortune 1000 companies and targets risks that are generally low in frequency and high in severity.
Chubb Bermuda offers its products primarily through the Bermuda offices of major, internationally recognized insurance brokers.

Competitive Environment
Major Accounts competes against a number of large, national carriers as well as regional competitors and other entities offering
risk alternatives such as self-insured retentions and captive programs. The markets in which we compete are subject to
significant cycles of fluctuating capacity and wide disparities in price adequacy. We pursue a specialist strategy and focus on
market opportunities where we can compete effectively based on service levels and product design, while still achieving an
adequate level of profitability. We also achieve a competitive advantage through Major Accounts’ innovative product offerings
and our ability to provide multiple products to a single client due to our nationwide local presence. In addition, all our domestic
commercial units are able to deliver global products and coverage to customers in concert with our Overseas General Insurance
segment.

The Commercial Insurance and Small Commercial Insurance operations compete against numerous insurance companies
ranging from large national carriers to small and mid-size insurers who provide specialty coverages and standard P&C products.

Westchester competes against a number of large, national carriers as well as regional competitors and other entities offering risk
alternatives such as self-insured retentions and captive programs. Chubb Bermuda competes against international commercial
carriers writing business on an excess of loss basis.

North America Personal P&C Insurance (15 percent of 2017 Consolidated NPE)

Overview
The North America Personal P&C Insurance segment includes the business written by Chubb Personal Risk Services division,
which comprises Chubb high net worth personal lines business and ACE Private Risk Services, with operations in the U.S. and
Canada. This segment provides affluent and high net worth individuals and families with homeowners, automobile and collector
cars, valuable articles (including fine arts), personal and excess liability, travel insurance, and recreational marine insurance and
services. Our homeowners business, including valuable articles, represented 69 percent of North America Personal P&C
Insurance’s net premiums earned in 2017.

Products and Distribution
Chubb Personal Risk Services offers comprehensive personal insurance products and services to meet the evolving needs of high
net worth families and individuals. Our seamless customer experience and superior coverage protect not only our clients’ most
valuable possessions, but also their standard of living. Our target customers consist of high net worth consumers with insurance
needs that typically extend beyond what mass market carriers can offer. These coverages are offered solely through independent
regional agents and brokers.

Competitive Environment
Chubb Personal Risk Services competes against insurance companies of varying sizes that sell personal lines products through
various distribution channels, including retail agents as well as online distribution channels. We achieve a competitive
advantage through our ability to provide superior service to our customers as well as our ability to address the specific needs of
high net worth families and individuals.

North America Agricultural Insurance (6 percent of 2017 Consolidated NPE)

Overview
The North America Agricultural Insurance segment comprises our U.S. and Canadian-based businesses that provide a variety of
coverages including crop insurance, primarily Multiple Peril Crop Insurance (MPCI) and crop-hail insurance through Rain and
Hail Insurance Service, Inc. (Rain and Hail) as well as farm and ranch and specialty P&C commercial insurance products and
services through our Chubb Agribusiness unit.

Products and Distribution
The Rain and Hail business provides comprehensive MPCI and crop-hail insurance, and Chubb Agribusiness offers farm and
ranch coverages as well as specialty P&C coverages for companies that manufacture, process and distribute agriculture
products. The MPCI program is offered in conjunction with the U.S. Department of Agriculture (USDA). The USDA's Risk
Management Agency (RMA) sets the policy terms and conditions, rates and forms, and is also responsible for setting
compliance standards. As a participating company, we report all details of policies underwritten to the RMA and are party to a
Standard Reinsurance Agreement (SRA). The SRA sets out the relationship between private insurance companies and the
Federal Crop Insurance Corporation (FCIC) concerning the terms and conditions regarding the risks each will bear including the
pro-rata and state stop-loss provisions which allow companies to limit the exposure of any one state or group of states on their
underwriting results. In addition to the pro-rata and excess of loss reinsurance protections inherent in the SRA, we also
purchase third-party proportional and stop-loss reinsurance for our MPCI business to reduce our exposure. We may also enter
into crop derivative contracts to further manage our risk exposure. For additional information, refer to “Crop Insurance”, under
Item 7.

Competitive Environment
Rain and Hail primarily operates in a federally regulated program where all approved providers offer the same product forms and
rates through independent and/or captive agents. Chubb Agribusiness competes against both national and regional competitors
offering specialty P&C insurance coverages to companies that manufacture, process, and distribute agricultural products.

Overseas General Insurance (28 percent of 2017 Consolidated NPE)

Overview
The Overseas General Insurance segment comprises Chubb International and Chubb Global Markets (CGM). CGM, our London-
based international specialty and excess and surplus lines business, includes Lloyd's of London (Lloyd's) Syndicate 2488, a
wholly-owned Chubb syndicate supported by funds at Lloyd’s provided by Chubb Corporate Members. Syndicate 2488 has an
underwriting capacity of £405 million for the Lloyd’s 2018 year of account. The syndicate is managed by Chubb’s Lloyd’s
managing agency, ACE Underwriting Agencies Limited.

Products and Distribution
Chubb International maintains a presence in every major insurance market in the world and is organized geographically along
product lines as follows: Europe, Asia Pacific, Eurasia and Africa, Far East, and Latin America. Products offered include P&C,
A&H, specialty coverages, and personal lines insurance products and services. Chubb International's P&C business is generally
written, on both a direct and assumed basis, through major international, regional, and local brokers and agents. Certain
European branded products are also offered via a digital-commerce platform, Chubb Online, that allows brokers to quote, bind,
and issue specialty policies online. Property insurance products include traditional commercial fire coverage as well as energy
industry-related, marine, construction, and other technical coverages. Principal casualty products are commercial primary and
excess casualty, environmental, and general liability. A&H and other consumer lines products are distributed through brokers,
agents, direct marketing programs, and sponsor relationships. The A&H operations primarily offer personal accident and
supplemental medical coverages including accidental death, business/holiday travel, specified disease, disability, medical and
hospital indemnity, and income protection. We are not in the primary healthcare business. With respect to our supplemental
medical and hospital indemnity products, we typically pay fixed amounts for claims and are therefore largely insulated from the
direct impact of rising healthcare costs. Chubb International specialty coverages include D&O, professional indemnity, energy,
aviation, political risk, and specialty personal lines products. Chubb International's personal lines operations provide specialty
products and services designed to meet the needs of specific target markets and include property damage, automobile,
homeowners, and personal liability.

CGM offers products through its parallel distribution network via two legal entities, Chubb European Group Limited (CEGL) and
Chubb Underwriting Agencies Limited, managing agent of Syndicate 2488. CGM uses the syndicate to underwrite P&C business
on a global basis through Lloyd's worldwide licenses. CGM uses CEGL to underwrite similar classes of business through its
network of U.K. and European licenses, and in the U.S. where it is eligible to write excess and surplus lines business. Factors
influencing the decision to place business with the syndicate or CEGL include licensing eligibilities, capitalization requirements,
and client/broker preference. All business underwritten by CGM is accessed through registered brokers. The main lines of
business include aviation, property, energy, professional lines, marine, financial lines, political risk, and A&H.

Competitive Environment
Chubb International's primary competitors include U.S.-based companies with global operations, as well as non-U.S. global
carriers and indigenous companies in regional and local markets. For the A&H lines of business, locally based competitors also
include financial institutions and bank owned insurance subsidiaries. Our international operations have the distinct advantage of
being part of one of the few international insurance groups with a global network of licensed companies able to write policies on
a locally admitted basis. The principal competitive factors that affect the international operations are underwriting expertise and
pricing, relative operating efficiency, product differentiation, producer relations, and the quality of policyholder services. A
competitive strength of our international operations is our global network and breadth of insurance programs, which assist
individuals and business organizations to meet their risk management objectives, while also giving us the advantage of
accessing local technical expertise, accomplishing a spread of risk, and offering a global network to service multinational
accounts.

CGM is one of the preeminent international specialty insurers in London and is an established lead underwriter on a significant
portion of the risks it underwrites for all lines of business. This leadership position allows CGM to set the policy terms and
conditions of many of the policies written. All lines of business face competition, depending on the business class, from Lloyd's
syndicates, the London market, and other major international insurers and reinsurers. Competition for international risks is also
seen from domestic insurers in the country of origin of the insured. CGM differentiates itself from competitors through long
standing experience in its product lines, its multiple insurance entities (Syndicate 2488 and CEGL), and the quality of its
underwriting and claims service.

Global Reinsurance (2 percent of 2017 Consolidated NPE)

Overview
The Global Reinsurance segment represents Chubb's reinsurance operations comprising Chubb Tempest Re Bermuda, Chubb
Tempest Re USA, Chubb Tempest Re International, and Chubb Tempest Re Canada. Global Reinsurance markets reinsurance
products worldwide under the Chubb Tempest Re brand name and provides solutions for small to mid-sized clients and
multinational ceding companies. Global Re offers a broad array of traditional and non-traditional (e.g., loss portfolio transfer)
property and casualty products.

Products and Distribution
Global Reinsurance services clients globally through its major units. Major international brokers submit business to one or more
of these units' underwriting teams who have built strong relationships with both key brokers and clients by providing a
responsive, client-focused approach to risk assessment and pricing.

Chubb Tempest Re Bermuda principally provides property catastrophe reinsurance globally to insurers of commercial and
personal property. Property catastrophe reinsurance is on an occurrence or aggregate basis and protects a ceding company
against an accumulation of losses covered by its issued insurance policies, arising from a common event or occurrence. Chubb
Tempest Re Bermuda underwrites reinsurance principally on an excess of loss basis, meaning that its exposure only arises after
the ceding company's accumulated losses have exceeded the attachment point of the reinsurance policy. Chubb Tempest Re
Bermuda also writes other types of reinsurance on a limited basis for selected clients. Examples include proportional property
where the reinsurer shares a proportional part of the premiums and losses of the ceding company, together with casualty
(catastrophe workers' compensation) and specialty lines (assumed retrocessional catastrophe business and terrorism). Chubb
Tempest Re Bermuda's business is produced through reinsurance intermediaries.

Chubb Tempest Re USA writes all lines of traditional and specialty P&C reinsurance, and surety and fidelity reinsurance for the
North American market, principally on a treaty basis, with a focus on writing property per risk and casualty reinsurance. Chubb
Tempest Re USA underwrites reinsurance on both a proportional and excess of loss basis. This unit's diversified portfolio is
produced through reinsurance intermediaries.

Chubb Tempest Re International provides traditional and specialty P&C reinsurance to insurance companies worldwide, with
emphasis on non-U.S. and Canadian risks. Chubb Tempest Re International writes all lines of traditional and specialty
reinsurance including property risk and property catastrophe, casualty, marine, aviation, and specialty through our London- and
Zurich-based divisions. The London-based divisions of Chubb Tempest Re International focus on the development of business
sourced through London market brokers and, accordingly, write a diverse book of international business using Syndicate 2488
and CEGL. The Zurich-based division focuses on providing reinsurance to continental European insurers via continental
European brokers while also serving Asian and Latin American markets. Chubb Tempest Re International also includes our
Shanghai, China office which provides reinsurance coverage for Chinese-based risks. Chubb Tempest Re International
underwrites reinsurance on both a proportional and excess of loss basis.

Chubb Tempest Re Canada offers a full array of traditional and specialty P&C, and reinsurance to the Canadian market,
including casualty, property risk and property catastrophe, surety, and crop hail. Chubb Tempest Re Canada provides coverage
through its Canadian company platform and also offers clients access to Syndicate 2488. Chubb Tempest Re Canada
underwrites reinsurance on both a proportional and excess of loss basis.

Competitive Environment
The Global Reinsurance segment competes worldwide with major U.S. and non-U.S. reinsurers as well as reinsurance
departments of numerous multi-line insurance organizations. In addition, capital markets participants have developed
alternative capital sources intended to compete with traditional reinsurance. Additionally, government sponsored or backed
catastrophe funds can affect demand for reinsurance. Global Reinsurance is considered a lead reinsurer and is typically involved
in the negotiation and quotation of the terms and conditions of the majority of the contracts in which it participates. Global
Reinsurance competes effectively in P&C markets worldwide because of its strong capital position, analytical capabilities and
quality customer service, the leading role it plays in setting the terms, pricing, and conditions in negotiating contracts, and its
customized approach to risk selection. The key competitors in our markets vary by geographic region and product line. An
advantage of our international platform is that we are able to change our mix of business in response to changes in competitive
conditions in the territories in which we operate. Our geographic reach is also sought by multinational ceding companies since
all of our offices, with the exception of Bermuda, provide local reinsurance license capabilities which benefit our clients in
dealing with country regulators.

Life Insurance (7 percent of 2017 Consolidated NPE)

Overview
The Life segment comprises Chubb's international life operations (Chubb Life), Chubb Tempest Life Re (Chubb Life Re), and the
North American supplemental A&H and life business of Combined Insurance.

Products and Distribution
Chubb Life provides individual life and group benefit insurance primarily in developing markets, including Hong Kong,
Indonesia, South Korea, Taiwan, Thailand, Vietnam, and Egypt; also throughout Latin America; selectively in Europe; and in
China through a non-consolidated joint venture insurance company. Chubb Life offers a broad portfolio of protection and savings
products including whole life, endowment plans, individual term life, group term life, medical and health, personal accident,
credit life, universal life, and unit linked contracts. The policies written by Chubb Life generally provide funds to beneficiaries of
insureds after death and/or protection and/or savings benefits while the contract owner is living. Chubb Life sells to consumers
through a variety of distribution channels including captive and independent agencies, bancassurance, worksite marketing,
retailers, brokers, and direct to consumer marketing. We continue to expand Chubb Life with a focus on opportunities in
developing markets that we believe will result in strong and sustainable operating profits as well as a favorable return on capital
commitments over time. Our dedicated captive agency distribution channel, whereby agents sell Chubb Life products
exclusively, enables us to maintain direct contact with the individual consumer, promote quality sales practices, and exercise
greater control over the future of the business. We have developed a substantial sales force of agents principally located in our
Asia-Pacific countries. Chubb also maintains approximately 36 percent direct and indirect ownership interest in Huatai Life
Insurance Co., Ltd. (Huatai Life), which commenced operations in 2005 and has since grown to become one of the larger life
insurance foreign joint ventures in China. Huatai Life offers a broad portfolio of insurance products through a variety of
distribution channels including approximately 373 licensed sales locations in 17 Chinese provinces.

Chubb Life Re's core business is a Bermuda-based operation which provides reinsurance to primary life insurers, focusing on
guarantees included in certain fixed and variable annuity products and also on more traditional mortality reinsurance protection.
Chubb Life Re's U.S.-based traditional life reinsurance operation was discontinued for new business in January 2010. Since
2007, Chubb Life Re has not quoted on new opportunities in the variable annuity reinsurance marketplace and our focus has
been on managing the current portfolio of risk, both in the aggregate and on a contract basis. This business is managed with a
long-term perspective and short-term earnings volatility is expected.

Combined Insurance distributes specialty supplemental A&H and life insurance products targeted to middle income consumers
and businesses in the U.S. and Canada. Combined Insurance's substantial North American sales force distributes a wide range
of supplemental accident and sickness insurance products, including personal accident, short-term disability, critical illness,
Medicare supplement products, and hospital confinement/recovery. Most of these products are primarily fixed-indemnity benefit
obligations and are not directly subject to escalating medical cost inflation.

Competitive Environment
Chubb Life's competition differs by location but generally includes multinational insurers, and in some locations, local insurers,
joint ventures, or state-owned insurers. Chubb's financial strength and reputation as an entrepreneurial organization with a
global presence gives Chubb Life a strong base from which to compete. While Chubb Life Re is not currently quoting on new
opportunities in the variable annuity reinsurance marketplace, we continue to monitor developments in this market. Combined
Insurance competes for A&H business in the U.S. against numerous A&H and life insurance companies across various industry
segments.

Corporate

Overview
Corporate results primarily include results of all run-off asbestos and environmental (A&E) exposures, the results of our run-off
Brandywine business, the results of Westchester specialty operations for 1996 and prior years, certain other run-off exposures,
and income and expenses not attributable to reportable segments and the results of our non-insurance companies. The run-off
operations do not actively sell insurance products, but are responsible for the management of existing policies and settlement of
related claims.

Our exposure to A&E claims principally arises out of liabilities acquired when we purchased Westchester Specialty in 1998, CIGNA’s
P&C business in 1999, and Chubb Corp A&E claims in 2016. The A&E liabilities principally relate to claims arising from bodily-
injury claims related to asbestos products and remediation costs associated with hazardous waste sites.

Underwriting
Chubb is an underwriting company and we strive to emphasize quality of underwriting rather than volume of business or market
share. Our underwriting strategy is to manage risk by employing consistent, disciplined pricing and risk selection. This, coupled
with writing a number of less cyclical product lines, has helped us develop flexibility and stability of our business, and has
allowed us to maintain a profitable book of business throughout market cycles. Clearly defined underwriting authorities,
standards, and guidelines coupled with a strong underwriting audit function are in place in each of our local operations and
global profit centers. Global product boards ensure consistency of approach and the establishment of best practices throughout
the world. Our priority is to help ensure adherence to criteria for risk selection by maintaining high levels of experience and
expertise in our underwriting staff. In addition, we employ a business review structure that helps ensure control of risk quality
and appropriate use of policy limits and terms and conditions. Underwriting discipline is at the heart of our operating
philosophy.

Actuaries in each region work closely with the underwriting teams to provide additional expertise in the underwriting process.
We use internal and external data together with sophisticated analytical, catastrophe loss and risk modeling techniques to
ensure an appropriate understanding of risk, including diversification and correlation effects, across different product lines and
territories. This is intended to help to ensure that losses are contained within our risk tolerance and appetite for individual
product lines, businesses, and Chubb as a whole. Our use of such tools and data also reflects an understanding of their inherent
limitations and uncertainties. We also purchase protection from third parties, including, but not limited to, reinsurance as a tool
to diversify risk and limit the net loss potential of catastrophes and large or unusually hazardous risks. For additional information
refer to "Risk Factors" under Item 1A, “Reinsurance Protection”, below, “Catastrophe Management” and “Natural Catastrophe
Property Reinsurance Program”, under Item 7, and Note 5 to the Consolidated Financial Statements, under Item 8.

Reinsurance Protection
As part of our risk management strategy, we purchase reinsurance protection to mitigate our exposure to losses, including
certain catastrophes, to a level consistent with our risk appetite. Although reinsurance agreements contractually obligate our
reinsurers to reimburse us for an agreed-upon portion of our gross paid losses, reinsurance does not discharge our primary
liability to our insureds and, thus, we ultimately remain liable for the gross direct losses. In certain countries, reinsurer selection
is limited by local laws or regulations. In most countries there is more freedom of choice, and the counterparty is selected based
upon its financial strength, claims settlement record, management, line of business expertise, and its price for assuming the risk
transferred. In support of this process, we maintain a Chubb authorized reinsurer list that stratifies these authorized reinsurers
by classes of business and acceptable limits. This list is maintained by our Reinsurance Security Committee (RSC), a committee
comprising senior management personnel and a dedicated reinsurer security team. Changes to the list are authorized by the
RSC and recommended to the Chair of the Risk and Underwriting Committee. The reinsurers on the authorized list and potential
new markets are regularly reviewed and the list may be modified following these reviews. In addition to the authorized list, there
is a formal exception process that allows authorized reinsurance buyers to use reinsurers already on the authorized list for higher
limits or different lines of business, for example, or other reinsurers not on the authorized list if their use is supported by
compelling business reasons for a particular reinsurance program.

A separate policy and process exists for captive reinsurance companies. Generally, these reinsurance companies are established
by our clients or our clients have an interest in them. It is generally our policy to obtain collateral equal to the expected losses
that may be ceded to the captive. Where appropriate, exceptions to the collateral requirement are granted but only after senior
management review. Specific collateral guidelines and an exception process are in place for the North America Commercial P&C
Insurance, North America Personal P&C Insurance, and Overseas General Insurance segments, all of which have credit
management units evaluating the captive's credit quality and that of their parent company. The credit management units,
working with actuaries, determine reasonable exposure estimates (collateral calculations), ensure receipt of collateral in an
acceptable form, and coordinate collateral adjustments as and when needed. Financial reviews and expected loss evaluations
are performed annually for active captive accounts and as needed for run-off exposures. In addition to collateral, parental
guarantees are often used to enhance the credit quality of the captive.

In general, we seek to place our reinsurance with highly rated companies with which we have a strong trading relationship. For
additional information refer to “Catastrophe Management” and “Natural Catastrophe Property Reinsurance Program” under Item
7, and Note 5 to the Consolidated Financial Statements, under Item 8.

Unpaid Losses and Loss Expenses
We establish reserves for unpaid losses and loss expenses, which are estimates of future payments on reported and unreported
claims for losses and related expenses, with respect to insured events that have occurred. These reserves are recorded in
Unpaid losses and loss expenses in the Consolidated balance sheets. The process of establishing loss and loss expense reserves
for P&C claims can be complex and is subject to considerable uncertainty as it requires the use of informed estimates and
judgments based on circumstances known at the date of accrual. These estimates and judgments are based on numerous
factors, and may be revised as additional experience and other data become available and are reviewed, as new or improved
methodologies are developed, or as laws change. Internal actuaries regularly analyze the levels of loss and loss expense
reserves, taking into consideration factors that may impact the ultimate settlement value of the unpaid losses and loss
expenses. These analyses could result in future changes in the estimates of loss and loss expense reserves or reinsurance
recoverables and any such changes would be reflected in our results of operations in the period in which the estimates are
changed. Losses and loss expenses are charged to income as incurred. The reserve for unpaid losses and loss expenses
represents the estimated ultimate losses and loss expenses less paid losses and loss expenses, and comprises case reserves and
incurred but not reported (IBNR) reserves. With the exception of certain structured settlements, for which the timing and
amount of future claim payments are reliably determinable, and certain reserves for unsettled claims that are discounted in
statutory filings, our loss reserves are not discounted for the time value of money. In connection with such structured
settlements and certain reserves for unsettled claims, we carried net discounted reserves of $77 million at December 31, 2017.

For each product line, management, after consultation with internal actuaries, develops a “best estimate” of the ultimate
settlement value of the unpaid losses and loss expenses that it believes provides a reasonable estimate of the required reserve.
We evaluate our estimates of reserves quarterly in light of developing information. While we are unable at this time to determine
whether additional reserves may be necessary in the future, we believe that our reserves for unpaid losses and loss expenses are
adequate at December 31, 2017. Future additions to reserves, if needed, could have a material adverse effect on our financial
condition, results of operations, and cash flows. For additional information refer to “Critical Accounting Estimates – Unpaid
losses and loss expenses”, under Item 7, and Note 7 to the Consolidated Financial Statements, under Item 8.

Investments
Our objective is to maximize investment income and total return while ensuring an appropriate level of liquidity, and investment
quality, and diversification. As such, Chubb's investment portfolio is invested primarily in investment-grade fixed-income
securities as measured by the major rating agencies. We do not allow leverage in our investment portfolio.

The critical aspects of the investment process are controlled by Chubb Asset Management, an indirect wholly-owned subsidiary
of Chubb. These aspects include asset allocation, portfolio and guideline design, risk management, and oversight of external
asset managers. In this regard, Chubb Asset Management:

•

conducts formal asset allocation modeling for each of the Chubb subsidiaries, providing formal recommendations for the
portfolio's structure;

• establishes recommended investment guidelines that are appropriate to the prescribed asset allocation targets;
• provides the analysis, evaluation, and selection of our external investment advisors;
• establishes and develops investment-related analytics to enhance portfolio engineering and risk control;
• monitors and aggregates the correlated risk of the overall investment portfolio; and
• provides governance over the investment process for each of our operating companies to ensure consistency of approach

and adherence to investment guidelines.

Under our guidance and direction, external asset managers conduct security and sector selection and transaction execution. Use
of multiple managers benefits Chubb in several ways – it provides us with operational and cost efficiencies, diversity of styles
and approaches, innovations in investment research and credit and risk management, all of which enhance the risk adjusted
returns of our portfolios.

Chubb Asset Management determines the investment portfolio's allowable, targeted asset allocation and ranges for each of the
segments. These asset allocation targets are derived from sophisticated asset and liability modeling that measures correlated
histories of returns and volatility of returns. Allowable investment classes are further refined through analysis of our operating
environment including expected volatility of cash flows, potential impact on our capital position, and regulatory and rating
agency considerations.

The Board has established a Risk & Finance Committee which helps execute the Board's supervisory responsibilities pertaining
to enterprise risk management including investment risk. Under the overall supervision of the Risk & Finance Committee,
Chubb's governance over investment management is rigorous and ongoing. Among its responsibilities, the Risk & Finance
Committee of the Board:

•

reviews and approves asset allocation targets and investment policy to ensure that it is consistent with our overall goals,
strategies, and objectives;
reviews and approves investment guidelines to ensure that appropriate levels of portfolio liquidity, credit quality,
diversification, and volatility are maintained; and
systematically reviews the portfolio's exposures including any potential violations of investment guidelines.

We have long-standing global credit limits for our entire portfolio across the organization and for individual obligors. Exposures
are aggregated, monitored, and actively managed by our Global Credit Committee, comprising senior executives, including our
Chief Financial Officer, our Chief Risk Officer, our Chief Investment Officer, and our Treasurer.

Within the guidelines and asset allocation parameters established by the Risk & Finance Committee, individual investment
committees of the segments determine tactical asset allocation. Additionally, these committees review all investment-related
activity that affects their operating company, including the selection of outside investment advisors, proposed asset allocation
changes, and the systematic review of investment guidelines.

For additional information regarding the investment portfolio, including breakdowns of the sector and maturity distributions,
refer to Note 3 to the Consolidated Financial Statements under Item 8.

Regulation
Our insurance and reinsurance subsidiaries conduct business globally, including in all 50 states of the United States and the
District of Columbia. Our business is subject to varying degrees of regulation and supervision in each of the jurisdictions in
which our insurance and reinsurance subsidiaries are domiciled and on a group basis. The laws and regulations of the
jurisdictions in which our insurance and reinsurance subsidiaries are domiciled require among other things that these
subsidiaries maintain minimum levels of statutory capital, surplus, and liquidity, meet solvency standards, and submit to
periodic examinations of their financial condition. The complex regulatory environments in which Chubb operates are subject to
change and are regularly monitored.

Group Supervision
In September 2012, the Pennsylvania Insurance Department (Department), in consultation with other insurance regulatory
bodies that oversee Chubb's insurance activities, convened the first Chubb Supervisory College (College). Regulators from
approximately 15 jurisdictions worldwide were invited to participate in the College, the purpose of which was to initiate
establishment of, and to clarify the membership, participation, functionality, and ongoing activities in, the College with respect
to group-wide supervision of Chubb. Representatives from approximately ten jurisdictions attended the College in Philadelphia,
Pennsylvania, during which the supervisors reviewed, without adverse comment, information on Chubb. On October 19, 2012,
the Department, in cooperation with the other supervisory college regulators, published a notice of its determination that it is
the appropriate group-wide supervisor for Chubb.

Since September 2012, the College has convened bi-annually in person; and in July 2017, the College convened its first interim
College teleconference. During these meetings, the College reviewed, without adverse comment, information on Chubb. The
next in-person College is scheduled for September 2018 in Philadelphia, Pennsylvania.

The following is an overview of regulations for our operations in Switzerland, the U.S., Bermuda, and other international
locations.

Swiss Operations
The Swiss Financial Market Supervisory Authority (FINMA) has the discretion to supervise Chubb on a group-wide basis.
However, FINMA acknowledges the Department's assumption of group supervision over us.

In 2008, we formed Chubb Insurance (Switzerland) Limited which offers property and casualty insurance to Swiss companies,
A&H insurance for individuals of Swiss Corporations as well as reinsurance predominantly in Continental Europe. We have also
formed a reinsurance subsidiary named Chubb Reinsurance (Switzerland) Limited, which we operate as primarily a provider of
reinsurance to Chubb entities. Both companies are licensed and governed by FINMA.

U.S. Operations
Our U.S. insurance subsidiaries are subject to extensive regulation and supervision by the states in which they do business. The
laws of the various states establish departments of insurance with broad authority to regulate, among other things: the
standards of solvency that must be met and maintained, the licensing of insurers and their producers, approval of policy forms
and rates, the nature of and limitations on investments, restrictions on the size of the risks which may be insured under a single
policy, deposits of securities for the benefit of policyholders, requirements for the acceptability of reinsurers, periodic
examinations of the affairs of insurance companies, the form and content of reports of financial condition required to be filed,
and the adequacy of reserves for unearned premiums, losses, and other exposures.

Our U.S. insurance subsidiaries are required to file detailed annual and quarterly reports with state insurance regulators. In
addition, our U.S. insurance subsidiaries' operations and financial records are subject to examination at regular intervals by state
regulators.

All states have enacted legislation that regulates insurance holding companies. This legislation provides that each insurance
company in the insurance holding company system (system) is required to register with the insurance department of its state of
domicile and furnish information concerning the operations of companies within the system that may materially affect the
operations, management, or financial condition of the insurers within the system. We are required to file an annual enterprise
risk report with the Department, identifying the material risks within our system that could pose enterprise risk to the insurance
subsidiaries in the system. All transactions within a system must be fair and equitable. Notice to the insurance departments is
required prior to the consummation of transactions affecting the ownership or control of an insurer and of certain material
transactions between an insurer and an entity in its system. In addition, certain transactions may not be consummated without
the department's prior approval.

We are also required to file an annual summary report with the Department, reflecting our internal assessment of material risks
associated with our current business plan and the sufficiency of our capital resources to support those risks.

Statutory surplus is an important measure used by the regulators and rating agencies to assess our U.S. insurance subsidiaries'
ability to support business operations and provide dividend capacity. Our U.S. insurance subsidiaries are subject to various state
statutory and regulatory restrictions that limit the amount of dividends that may be paid without prior approval from regulatory
authorities. These restrictions differ by state, but are generally based on calculations incorporating statutory surplus, statutory
net income, and/or investment income.

The NAIC has a risk-based capital requirement for P&C insurance companies. This risk-based capital formula is used by many
state regulatory authorities to identify insurance companies that may be undercapitalized and which merit further regulatory
attention. These requirements are designed to monitor capital adequacy using a formula that prescribes a series of risk
measurements to determine a minimum capital amount for an insurance company, based on the profile of the individual
company. The ratio of a company's actual policyholder surplus to its minimum capital requirement will determine whether any
state regulatory action is required. There are progressive risk-based capital failure levels that trigger more stringent regulatory
action. If an insurer's policyholders' surplus falls below the Mandatory Control Level (70 percent of the Authorized Control Level,
as defined by the NAIC), the relevant insurance commissioner is required to place the insurer under regulatory control.

However, an insurance regulator may allow a P&C company operating below the Mandatory Control Level that is writing no
business and is running off its existing business to continue its run-off. Brandywine is running off its liabilities consistent with
the terms of an order issued by the Insurance Commissioner of Pennsylvania. This includes periodic reporting obligations to the
Department.

Government intervention has also occurred in the insurance and reinsurance markets in relation to terrorism coverage in the
U.S. (and through industry initiatives in other countries). The U.S. Terrorism Risk Insurance Act (TRIA), which was enacted in
2002 to ensure the availability of insurance coverage for certain types of terrorist acts in the U.S., was extended in 2015 for six
years, through December 31, 2020, and applies to certain of our operations.

From time to time, Chubb and its subsidiaries and affiliates receive inquiries from state agencies and attorneys general, with
which we generally comply, seeking information concerning business practices, such as underwriting and non-traditional or loss
mitigation insurance products. Moreover, many recent factors, such as consequences of and reactions to industry and economic
conditions and focus on domestic issues, have contributed to the potential for change in the legal and regulatory framework
applicable to Chubb's U.S. operations and businesses. We cannot assure that changes in laws or investigative or enforcement

activities in the various states in the U.S. will not have a material adverse impact on our financial condition, results of
operations, or business practices.

We are subject to numerous U.S. federal and state laws governing the protection of personal and confidential information of our
clients or employees. These laws and regulations are increasing in complexity, and the requirements are extensive and detailed.
Several states, including New York and Connecticut, require us to certify our compliance with their data protection laws.

On March 1, 2017, we became subject to the New York Department of Financial Services’ Cybersecurity Regulation (the
NYDFS Cybersecurity Regulation) which mandates detailed cybersecurity standards for all institutions, including insurance
entities, authorized by the NYDFS to operate in New York. Among the requirements are the maintenance of a cybersecurity
program with governance controls, risk-based minimum data security standards for technology systems, cyber breach
preparedness and response requirements, including reporting obligations, vendor oversight, training, and program record
keeping and certification obligations. Because our North America systems are integrated our companies domiciled in other
states may also be impacted by this requirement.

Bermuda Operations
The Insurance Act 1978 of Bermuda and related regulations, as amended (the Insurance Act), regulates the insurance business
of our Bermuda domiciled (re)insurance subsidiaries (Bermuda domiciled subsidiaries) and provides that no person may carry
on any insurance business in or from within Bermuda unless registered as an insurer by the Bermuda Monetary Authority
(BMA). The Insurance Act imposes solvency and liquidity standards and auditing and reporting requirements on Bermuda
insurance companies and grants the BMA powers to supervise, investigate, and intervene in the affairs of insurance companies.

Bermuda domiciled subsidiaries must prepare and file with the BMA, audited annual statutory financial statements and audited
annual financial statements prepared in accordance with accounting principles generally accepted in the U.S. (GAAP),
International Financial Reporting Standards (IFRS), or any such other generally accepted accounting principles as the BMA may
recognize. These audited financial statements are made public by the BMA. The Insurance Act prescribes rules for the
preparation and content of the statutory financial statements that require Bermuda domiciled subsidiaries to give detailed
information and analyses regarding premiums, claims, reinsurance, and investments. In addition, commencing with the 2016
financial year end filing, the Bermuda domiciled subsidiaries are required to prepare and publish a Financial Condition Report
(FCR). The FCR provides details of measures governing the business operations, corporate governance framework, solvency and
financial performance. The FCR must be filed with the BMA and requires Bermuda insurance companies to make the FCR
publicly available.

Effective January 1, 2016, Bermuda implemented a new solvency and risk management regime which has been deemed
equivalent to the EU’s Solvency II regime. Bermuda statutory reporting rules have been amended to introduce an economic
balance sheet (EBS) framework. The Bermuda domiciled subsidiaries submitted their first annual filings under the EBS
framework in April 2017.

Bermuda’s regulatory regime provides a risk-based capital model, termed the Bermuda Solvency Capital Requirement (BSCR),
as a tool to assist the BMA both in measuring risk and in determining appropriate levels of capitalization. The BSCR employs a
standard mathematical model that correlates the risk underwritten by Bermuda insurers to their capital. The BSCR framework
applies a standard measurement format to the risk associated with an insurer's assets, liabilities, and premiums, including a
formula to take into account catastrophe risk exposure.

The BMA established risk-based regulatory capital adequacy and solvency margin requirements for Bermuda insurers that
mandate that a Bermuda domiciled subsidiary’s Enhanced Capital Requirement (ECR) be calculated by either (a) BSCR, or (b)
an internal capital model which the BMA has approved for use for this purpose. The Bermuda domiciled subsidiaries use the
BSCR in calculating their solvency requirements. The EBS framework is embedded as part of the BSCR and forms the basis of
our ECR.

In order to minimize the risk of a shortfall in capital arising from an unexpected adverse deviation and in moving towards the
implementation of a risk based capital approach, the BMA has established a threshold capital level, (termed the Target Capital

Level (TCL)), set at 120 percent of ECR, that serves as an early warning tool for the BMA and failure to maintain statutory
capital at least equal to the TCL will likely result in increased BMA regulatory oversight.

Under the Insurance Act, Chubb's Bermuda domiciled subsidiaries are prohibited from declaring or paying any dividends of
more than 25 percent of total statutory capital and surplus, as shown in its previous financial year statutory balance sheet,
unless at least seven days before payment of the dividends, it files with the BMA an affidavit that it will continue to meet its
required solvency margins. Furthermore, Bermuda domiciled subsidiaries may only declare and pay a dividend from retained
earnings and a dividend or distribution from contributed surplus if it has no reasonable grounds for believing that it is, or would
after the payment be, unable to pay its liabilities as they become due, or if the realizable value of its assets would not be less
than the aggregate of its liabilities and its issued share capital and share premium accounts.

In addition, Chubb's Bermuda domiciled subsidiaries must obtain the BMA's prior approval before reducing total statutory
capital, as shown in its previous financial year statutory balance sheet, by 15 percent or more.

Other International Operations
The extent of insurance regulation varies significantly among the countries in which non-U.S. Chubb operations conduct
business. While each country imposes licensing, solvency, auditing, and financial reporting requirements, the type and extent of
the requirements differ substantially. For example:

•

in some countries, insurers are required to prepare and file monthly and/or quarterly financial reports, and in others, only
annual reports;

some regulators require intermediaries to be involved in the sale of insurance products, whereas other regulators permit
direct sales contact between the insurer and the customer;

•

the extent of restrictions imposed upon an insurer's use of local and offshore reinsurance vary;

• policy form filing and rate regulation vary by country;

•

the frequency of contact and periodic on-site examinations by insurance authorities differ by country; and

regulatory requirements relating to insurer dividend policies vary by country.

Significant variations can also be found in the size, structure, and resources of the local regulatory departments that oversee
insurance activities. Certain regulators prefer close relationships with all subject insurers and others operate a risk-based
approach.

Chubb operates in some countries through subsidiaries and in some countries through branches of subsidiaries. Local capital
requirements applicable to a subsidiary generally include its branches. Certain Chubb companies are jointly owned with local
companies to comply with legal requirements for local ownership. Other legal requirements include discretionary licensing
procedures, compulsory cessions of reinsurance, local retention of funds and records, data privacy and protection program
requirements, and foreign exchange controls. Chubb's international companies are also subject to multinational application of
certain U.S. laws.

There are various regulatory bodies and initiatives that impact Chubb in multiple international jurisdictions and the potential for
significant impact on Chubb could be heightened as a result of recent industry and economic developments.

On March 29, 2017, the UK government gave notice to the European Union (EU), under Article 50(2) of the Treaty on EU, of
the UK’s intention to withdraw from the EU. The UK is currently in the process of negotiating a withdrawal agreement. If the UK
leaves the EU as expected in March 2019, we intend to locate our EU headquarters in France. The decision to choose France
as the headquarters for our Continental European operations is contingent upon receiving all necessary regulatory and other
governmental approvals, which might not be obtained in a timely manner or at all.

The EU’s General Data Protection Regulation (GDPR) comes into effect on May 25, 2018, and requires businesses operating in
the EU or foreign business offering goods and services to or monitoring the behavior of customers in the EU, to comply with
onerous accountability obligations and significantly enhanced conditions to processing personal data. For example, the GDPR
has more rigorous rules for obtaining consent on the use of personal data and more stringent guidelines to demonstrate
compliance. The GDPR also has specific requirements regarding the transfer of data out of the EU, including only transfers to
countries deemed to have adequate data protection laws.

The EU’s executive body, the European Commission, implemented a new capital adequacy and risk management regulations for
the European insurance industry, known as Solvency II, which aims to establish a revised set of EU-wide capital requirements
and risk management standards that replaced the Solvency I requirements. The Solvency II requirements were effective January
1, 2016 for our European operations. Our capital management strategies, results of operations, and financial condition were not
materially affected by the Solvency II requirements.

Enterprise Risk Management
As an insurer, Chubb is in the business of profitably managing risk for its customers. Since risk management must permeate an
organization conducting a global insurance business, we have an established Enterprise Risk Management (ERM) framework
that is integrated into management of our businesses and is led by Chubb's senior management. As a result, ERM is a part of
the day-to-day management of Chubb and its operations.

Our global ERM framework is broadly multi-disciplinary and its objectives include:

• External Risks: identify, analyze, quantify, and where possible, mitigate significant external risks that could materially hamper

the financial condition of Chubb and/or the achievement of corporate business objectives over the next 36 months;

• Exposure Accumulations: identify and quantify the accumulation of exposure to individual counterparties, products or industry
sectors, particularly those that materially extend across or correlate between business units or divisions and/or the balance
sheet;

• Risk Modeling: develop and use various data-sets, analytical tools, metrics and processes (including economic capital models
and advanced analytics) that help business and corporate leaders make informed underwriting, portfolio management and risk
management decisions within a consistent risk/reward framework;

• Governance: establish and coordinate risk guidelines that reflect the corporate appetite for risk, monitor exposure accumulations
relative to established guidelines, and ensure effective internal risk management communication up to management and the
Board, down to the various business units and legal entities, and across the firm; and

• Disclosure: develop protocols and processes for risk-related disclosure internally as well as externally to rating agencies,

regulators, shareholders and analysts.

Chubb Group's Risk and Underwriting Committee (RUC) reports to and assists the Chief Executive Officer in the oversight and
review of the ERM framework which covers the processes and guidelines used to manage insurance risk, financial risk, strategic
risk, and operational risk. The RUC is chaired by Chubb Group’s Chief Risk Officer. The RUC meets at least monthly, and is
comprised of Chubb Group's most senior executives, in addition to the Chair, including the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, Chief Investment Officer, Chief Claims Officer, General Counsel, President – North
America Commercial and Personal Insurance, President – North America Major Accounts and Specialty Insurance, President –
Overseas General Insurance, and Chief Underwriting Officer.

The RUC is assisted in its activities by Chubb's Enterprise Risk Unit (ERU) and Product Boards. The ERU is responsible for the
collation and analysis of risk insight in two key areas. First, external information that provides insight to the RUC on existing or
emerging risks that might significantly impact Chubb's key objectives and second, internal risk aggregations arising from Chubb's
business writings and other activities such as investments and operations. The ERU is independent of the operating units and
reports to our Chief Risk Officer. The Product Boards exist to provide oversight for products that we offer globally. A Product
Board currently exists for each of Chubb's major product areas. Each Product Board is responsible for ensuring consistency in
underwriting and pricing standards, identification of emerging issues, and guidelines for relevant accumulations.

Chubb's Chief Risk Officer also reports to the Board's Risk & Finance Committee, which helps execute the Board's supervisory
responsibilities pertaining to ERM. The role of the Risk & Finance Committee includes evaluation of the integrity and
effectiveness of our ERM procedures, systems, and information; governance on major policy decisions pertaining to risk
aggregation and minimization; and assessment of our major decisions and preparedness levels pertaining to perceived material
risks. The Audit Committee meets annually and on an as needed basis with the Risk & Finance Committee in order to exercise
its duties under New York Stock Exchange Rules.

Others within the ERM structure contribute toward accomplishing Chubb's ERM objectives, including regional management,
Corporate Underwriting, Internal Audit, Compliance, external consultants, and managers of our internal control processes and
procedures.

Tax Matters
Refer to “Risk Factors”, under Item 1A and Note 1 o) and Note 8 to the Consolidated Financial Statements, under Item 8.

EXECUTIVE OFFICERS OF THE REGISTRANT

Name
Evan G. Greenberg

John W. Keogh

Philip V. Bancroft

John J. Lupica

Joseph F. Wayland

Sean Ringsted

Timothy A. Boroughs

Paul J. Krump

Juan C. Andrade

Age
63

Position
Chairman, President, Chief Executive Officer, and Director

Executive Vice Chairman and Chief Operating Officer

Executive Vice President and Chief Financial Officer

Vice Chairman; President, North America Major Accounts & Specialty Insurance

Executive Vice President and General Counsel

Executive Vice President, Chief Digital Officer, and Chief Risk Officer

Executive Vice President and Chief Investment Officer

Executive Vice President; President, North America Commercial and Personal Insurance

Executive Vice President; President, Overseas General Insurance

Evan G. Greenberg has been a director of Chubb Limited since August 2002. Mr. Greenberg was elected Chairman of the Board
of Directors in May 2007. Mr. Greenberg was a director of The Coca-Cola Company from February 2011 until his resignation in
October 2016. Mr. Greenberg was appointed to the position of President and Chief Executive Officer of Chubb Limited in May
2004, and in June 2003, was appointed President and Chief Operating Officer of Chubb Limited. Mr. Greenberg was appointed
to the position of Chief Executive Officer of Chubb Overseas General in April 2002. He joined Chubb as Vice Chairman, Chubb
Limited, and Chief Executive Officer of Chubb Tempest Re in November 2001. Prior to joining Chubb, Mr. Greenberg was most
recently President and Chief Operating Officer of American International Group (AIG), a position he held from 1997 until 2000.

John W. Keogh was appointed Executive Vice Chairman of Chubb Limited in November 2015. Mr. Keogh has served as Chief
Operating Officer of Chubb Limited since July 2011 and Vice Chairman of Chubb Limited and Chubb Group Holdings since
August 2010. Mr. Keogh joined Chubb as Chief Executive Officer of Overseas General Insurance in April 2006 and became
Chairman of Overseas General Insurance in August 2010. Prior to joining Chubb, Mr. Keogh served as Senior Vice President,
Domestic General Insurance of AIG, and President and Chief Executive Officer of National Union Fire Insurance Company, AIG's
member company that specializes in D&O and fiduciary liability coverages. Mr. Keogh joined AIG in 1986. He served in a
number of other senior positions there including as Executive Vice President of AIG's Domestic Brokerage Group and as
President and Chief Operating Officer of AIG's Lexington Insurance Company unit.

Philip V. Bancroft was appointed Chief Financial Officer of Chubb Limited in January 2002. For nearly 20 years, Mr. Bancroft
worked for PricewaterhouseCoopers LLP. Prior to joining Chubb, he served as partner-in-charge of the New York Regional
Insurance Practice. Mr. Bancroft had been a partner with PricewaterhouseCoopers LLP for ten years.

John J. Lupica was appointed President, North America Major Accounts & Specialty Insurance in January 2016, Vice Chairman
of Chubb Limited and Chubb Group Holdings in November 2013 and Chairman, Insurance - North America, in July 2011. Mr.
Lupica had been Chief Operating Officer, Insurance - North America, since 2010 and President of ACE USA since 2006. He
also previously served as Division President of U.S. Professional Risk business and U.S. Regional Operations. Mr. Lupica joined
Chubb as Executive Vice President of Professional Risk in 2000. Prior to joining Chubb, he served as Senior Vice President for
Munich-American Risk Partners, Inc. He also held various management positions at AIG.

Joseph F. Wayland was appointed Executive Vice President of Chubb Limited in January 2016, General Counsel and Secretary
of Chubb Limited in July 2013. Mr. Wayland joined Chubb from the law firm of Simpson Thacher & Bartlett LLP, where he was
a partner since 1994. From 2010 to 2012, he served in the United States Department of Justice, first as Deputy Assistant
Attorney General of the Antitrust Division, and was later appointed as the Acting Assistant Attorney General in charge of that
division.

Sean Ringsted was appointed Executive Vice President and Chief Digital Officer in February 2017 and Chief Risk Officer in
November 2008. Mr. Ringsted previously served as Chief Actuary of Chubb Limited from November 2008 to January 2017. Mr.

Ringsted’s previous roles at Chubb also include Chief Actuary for Chubb Group from 2004 to 2008, Executive Vice President
and Chief Risk Officer for Chubb Tempest Re from 2002 to 2004, and Senior Vice President and Chief Actuary for Chubb
Tempest Re from 1998 to 2002. Prior to joining Chubb, Mr. Ringsted was a consultant at Tillinghast-Towers Perrin.

Timothy A. Boroughs was appointed Executive Vice President and Chief Investment Officer of Chubb Group in June 2000. Prior
to joining Chubb, Mr. Boroughs was Director of Fixed Income at Tudor Investment Corporation from 1997 to 2000, and
Managing Partner and Director of Global Leveraged Investment Activity at Fischer Francis Trees & Watts from 1976 to 1997.

Paul J. Krump was appointed Executive Vice President, Chubb Group and President North America Commercial and Personal
Insurance in January 2016. Prior to Chubb Limited’s January 2016 acquisition of The Chubb Corporation, Mr. Krump was Chief
Operating Officer of The Chubb Corporation, responsible for the company’s Commercial, Specialty, Personal and Accident &
Health insurance lines; Claims; Global Field Operations; Information Technology; Human Resources; Communications; and
External Affairs. Mr. Krump joined The Chubb Corporation in 1982 as a commercial underwriting trainee in the Minneapolis
office. He held numerous headquarters and field positions in the United States and Europe, including President of Personal
Lines and Claims and President of Commercial and Specialty Lines.

Juan C. Andrade was appointed Executive Vice President, Chubb Group and President, Overseas General Insurance in January
2016. Mr. Andrade joined Chubb in December 2010 to lead the global personal lines and small commercial property & casualty
insurance businesses. In January 2013, he became the Chief Operating Officer for Overseas General Insurance. Prior to joining
Chubb, Mr. Andrade was President and Chief Operating Officer of property & casualty operations for The Hartford Financial
Services Group. He joined The Hartford in 2006 as head of the property & casualty claims organization.

ITEM 1A. Risk Factors
Factors that could have a material impact on our results of operations or financial condition are outlined below. Additional risks
not presently known to us or that we currently deem insignificant may also impair our business or results of operations as they
become known or as facts and circumstances change. Any of the risks described below could result in a material adverse effect
on our results of operations or financial condition.

Insurance

Our results of operations or financial condition could be adversely affected by the occurrence of natural and man-made
disasters.
We have substantial exposure to losses resulting from natural disasters, man-made catastrophes such as terrorism or cyber-
attack, and other catastrophic events, including pandemics. This could impact a variety of our businesses, including our
commercial and personal lines, and life and accident and health (A&H) products. Catastrophes can be caused by various
events, including hurricanes, typhoons, earthquakes, hailstorms, drought, explosions, severe winter weather, fires, war, acts of
terrorism, nuclear accidents, political instability, and other natural or man-made disasters, including a global or other wide-
impact pandemic or a significant cyber-attack. 2017 witnessed a particularly significant set of catastrophes, principally in the
form of Hurricanes Harvey, Irma and Maria; the Mexican earthquakes; and the California wildfires. The incidence and severity of
catastrophes are inherently unpredictable and our losses from catastrophes could be substantial. In addition, climate conditions
may be changing, primarily through changes in global temperatures, which may increase the frequency and severity of natural
catastrophes and the resulting losses in the future. We cannot predict the impact that changing climate conditions, if any, may
have on our results of operations or our financial condition. Additionally, we cannot predict how legal, regulatory and/or social
responses to concerns around global climate change may impact our business. The occurrence of claims from catastrophic
events could result in substantial volatility in our results of operations or financial condition for any fiscal quarter or year. The
historical incidence for events such as earthquakes, pandemics and cyber-attacks is infrequent and may not be representative of
contemporary exposures and risks. As an example, increases in the values and concentrations of insured property may increase
the severity of these occurrences in the future. Although we attempt to manage our exposure to such events through the use of
underwriting controls, risk models, and the purchase of third-party reinsurance, catastrophic events are inherently unpredictable
and the actual nature of such events when they occur could be more frequent or severe than contemplated in our pricing and
risk management expectations. As a result, the occurrence of one or more catastrophic events could have an adverse effect on
our results of operations and financial condition.

If actual claims exceed our loss reserves, our financial results could be adversely affected.
Our results of operations and financial condition depend upon our ability to accurately assess the potential losses associated
with the risks that we insure and reinsure. We establish reserves for unpaid losses and loss expenses, which are estimates of
future payments of reported and unreported claims for losses and related expenses, with respect to insured events that have

occurred at or prior to the balance sheet date. The process of establishing reserves can be highly complex and is subject to
considerable variability as it requires the use of informed estimates and judgments.

Actuarial staff in each of our segments regularly evaluates the levels of loss reserves. Any such evaluation could result in future
changes in estimates of losses or reinsurance recoverables and would be reflected in our results of operations in the period in
which the estimates are changed. Losses and loss expenses are charged to income as incurred. During the loss settlement
period, which can be many years in duration for some of our lines of business, additional facts regarding individual claims and
trends often will become known which may result in a change in overall reserves. In addition, application of statistical and
actuarial methods may require the adjustment of overall reserves upward or downward from time to time.

Included in our loss reserves are liabilities for latent claims such as asbestos and environmental (A&E), which are principally
related to claims arising from remediation costs associated with hazardous waste sites and bodily-injury claims related to
exposure to asbestos products and environmental hazards. At December 31, 2017, gross A&E liabilities represented
approximately 3.5 percent of our loss reserves. The estimation of these liabilities is subject to many complex variables
including: the current legal environment; specific settlements that may be used as precedents to settle future claims;
assumptions regarding trends with respect to claim severity and the frequency of higher severity claims; assumptions regarding
the ability to allocate liability among defendants (including bankruptcy trusts) and other insurers; the ability of a claimant to
bring a claim in a state in which it has no residency or exposure; the ability of a policyholder to claim the right to non-products
coverage; whether high-level excess policies have the potential to be accessed given the policyholder's claim trends and liability
situation; payments to unimpaired claimants; and the potential liability of peripheral defendants. Accordingly, the ultimate
settlement of losses, arising from either latent or non-latent causes, may be significantly greater or less than the loss and loss
expense reserves held at the balance sheet date. In particular the amount and timing of the settlement of our P&C liabilities are
not determinate and our actual payments could be higher than contemplated in our loss reserves owing to the impact of
insurance, judicial decisions, and/or social inflation. If our loss reserves are determined to be inadequate, we may be required to
increase loss reserves at the time of the determination and our net income and capital may be reduced.

The effects of emerging claim and coverage issues on our business are uncertain.
As industry practices and legislative, regulatory, judicial, social, financial, technology and other environmental conditions
change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our
business by either extending coverage beyond our underwriting intent or by increasing the frequency and severity of claims. In
some instances, these changes may not become apparent until after we have issued insurance or reinsurance contracts that are
affected by the changes. As a result, the full extent of liability under our insurance or reinsurance contracts may not be known
for many years after issuance.

The failure of any of the loss limitation methods we use could have an adverse effect on our results of operations and
financial condition.
We seek to manage our loss exposure by maintaining a disciplined underwriting process throughout our insurance operations.
We also look to limit our loss exposure by writing a number of our insurance and reinsurance contracts on an excess of loss
basis. Excess of loss insurance and reinsurance indemnifies the insured against losses in excess of a specified amount. In
addition, we limit program size for each client and purchase third-party reinsurance for our own account. In the case of our
assumed proportional reinsurance treaties, we seek per occurrence limitations or loss and loss expense ratio caps to limit the
impact of losses ceded by the client. In proportional reinsurance, the reinsurer shares a proportional part of the premiums and
losses of the reinsured. We also seek to limit our loss exposure by geographic diversification. Geographic zone limitations
involve significant underwriting judgments, including the determination of the area of the zones and the inclusion of a particular
policy within a particular zone's limits.

However, there are inherent limitations in all of these tactics and no assurance can be given against the possibility of an event
or series of events that could result in loss levels that could have an adverse effect on our financial condition or results of
operations. It is also possible that losses could manifest themselves in ways that we do not anticipate and that our risk
mitigation strategies are not designed to address. Additionally, various provisions of our policies, such as limitations or
exclusions from coverage or choice of forum negotiated to limit our risks, may not be enforceable in the manner we intend. As a
result, one or more natural catastrophes and/or terrorism or other events could result in claims that substantially exceed our
expectations, which could have an adverse effect on our results of operations and financial condition.

We may be unable to purchase reinsurance, and/or if we successfully purchase reinsurance, we are subject to the possibility
of non-payment.
We purchase protection from third parties including, but not limited to, reinsurance to protect against catastrophes and other
sources of volatility, to increase the amount of protection we can provide our clients, and as part of our overall risk management
strategy. Our reinsurance business also purchases retrocessional protection which allows a reinsurer to cede to another
company all or part of the reinsurance originally assumed by the reinsurer. A reinsurer's or retrocessionaire's insolvency or
inability or unwillingness to make timely payments under the terms of its reinsurance agreement with us could have an adverse
effect on us because we remain liable to the insured. From time to time, market conditions have limited, and in some cases
have prevented, insurers and reinsurers from obtaining the types and amounts of reinsurance or retrocessional reinsurance that
they consider adequate for their business needs.

There is no guarantee our desired amounts of reinsurance or retrocessional reinsurance will be available in the marketplace in
the future. In addition to capacity risk, the remaining capacity may not be on terms we deem appropriate or acceptable or with
companies with whom we want to do business. Finally, we face some degree of counterparty risk whenever we purchase
reinsurance or retrocessional reinsurance. Consequently, the insolvency of these counterparties, or the inability, or unwillingness
of any of our present or future reinsurers to make timely payments to us under the terms of our reinsurance or retrocessional
agreements could have an adverse effect on us. At December 31, 2017, we had $15.2 billion of reinsurance recoverables, net
of reserves for uncollectible recoverables.

Certain active Chubb companies are primarily liable for A&E and other exposures they have reinsured to our inactive run-off
company Century Indemnity Company (Century). At December 31, 2017, the aggregate reinsurance balances ceded by our
active subsidiaries to Century were approximately $1.4 billion. Should Century's loss reserves experience adverse development
in the future and should Century be placed into rehabilitation or liquidation, the reinsurance recoverables due from Century to
its affiliates would be payable only after the payment in full of third party expenses and liabilities, including administrative
expenses and direct policy liabilities. Thus, the intercompany reinsurance recoverables would be at risk to the extent of the
shortage of assets remaining to pay these recoverables. While we believe the intercompany reinsurance recoverables from
Century are not impaired at this time, we cannot assure that adverse development with respect to Century's loss reserves, if
manifested, will not result in Century's insolvency, which could result in our recognizing a loss to the extent of any uncollectible
reinsurance from Century. This could have an adverse effect on our results of operations and financial condition.

Our net income may be volatile because certain products sold by our Life Insurance business expose us to reserve and fair
value liability changes that are directly affected by market and other factors and assumptions.
Our pricing, establishment of reserves for future policy benefits and valuation of life insurance and annuity products, including
reinsurance programs, are based upon various assumptions, including but not limited to equity market changes, interest rates,
mortality rates, morbidity rates, and policyholder behavior. The process of establishing reserves for future policy benefits relies
on our ability to accurately estimate insured events that have not yet occurred but that are expected to occur in future periods.
Significant deviations in actual experience from assumptions used for pricing and for reserves for future policy benefits could
have an adverse effect on the profitability of our products and our business.

Under reinsurance programs covering variable annuity guarantees, we assumed the risk of guaranteed minimum death benefits
(GMDB) and guaranteed living benefits (GLB) associated with variable annuity contracts. Our GLB liability includes guaranteed
minimum income benefits (GMIB) and guaranteed minimum accumulation benefits (GMAB). We ceased writing this business in
2007. Our net income is directly impacted by changes in the reserves calculated in connection with the reinsurance of GMDB
and GLB liabilities. In addition, our net income is directly impacted by the change in the fair value of the GLB liability. Reported
liabilities for both GMDB and GLB reinsurance are determined using internal valuation models which require considerable
judgment and are subject to significant uncertainty. Refer to the “Critical Accounting Estimates – Guaranteed living benefits
(GLB) derivatives” under Item 7 and “Quantitative and Qualitative Disclosures about Market Risk – Reinsurance of GMDB and
GLB guarantees” under Item 7A for additional information on the assumptions used in this program. We view our variable
annuity reinsurance business as having a similar risk profile to that of catastrophe reinsurance, with the probability of long-term
economic loss relatively small at the time of pricing. Adverse changes in market factors and policyholder behavior will have an
impact on both Life Insurance underwriting income and consolidated net income.

Payment of obligations under surety bonds could have an adverse effect on our results of operations.
The surety business tends to be characterized by infrequent but potentially high severity losses. The majority of our surety
obligations are intended to be performance-based guarantees. When losses occur, they may be mitigated, at times, by recovery
rights to the customer’s assets, contract payments, and collateral and bankruptcy recoveries. We have substantial commercial
and construction surety exposure for current and prior customers. In that regard, we have exposures related to surety bonds

issued on behalf of companies that have experienced or may experience deterioration in creditworthiness. If the financial
condition of these companies were adversely affected by the economy or otherwise, we may experience an increase in filed
claims and may incur high severity losses, which could have an adverse effect on our results of operations.

Our exposure to counterparties in various industries, our reliance on brokers, and certain of our policies may subject us to
credit risk.
We have exposure to counterparties through reinsurance and in various industries, including banks, hedge funds and other
investment vehicles, and derivative transactions that expose us to credit risk in the event our counterparty fails to perform its
obligations. We also have exposure to financial institutions in the form of secured and unsecured debt instruments and equity
securities.

In accordance with industry practice, we generally pay amounts owed on claims to brokers who, in turn, remit these amounts to
the insured or ceding insurer. Although the law is unsettled and depends upon the facts and circumstances of the particular
case, in some jurisdictions, if a broker fails to make such a payment, we might remain liable to the insured or ceding insurer for
the deficiency. Conversely, in certain jurisdictions, if a broker does not remit premiums paid for these policies over to us, these
premiums might be considered to have been paid and the insured or ceding insurer will no longer be liable to us for those
amounts, whether or not we have actually received the premiums from the broker. Consequently, we assume a degree of credit
risk associated with a broker with whom we transact business. However, due to the unsettled and fact-specific nature of the
law, we are unable to quantify our exposure to this risk. To date, we have not experienced any material losses related to these
credit risks.

Under the terms of certain high-deductible policies which we offer, such as workers’ compensation and general liability, our
customers are responsible to reimburse us for an agreed-upon dollar amount per claim. In nearly all cases we are required
under such policies to pay covered claims first, and then seek reimbursement for amounts within the applicable deductible from
our customers. This obligation subjects us to credit risk from these customers. While we generally seek to mitigate this risk
through collateral agreements and maintain a provision for uncollectible accounts associated with this credit exposure, an
increased inability of customers to reimburse us in this context could have an adverse effect on our financial condition and
results of operations. In addition, a lack of credit available to our customers could impact our ability to collateralize this risk to
our satisfaction, which in turn, could reduce the amount of high-deductible policies we could offer.

Since we depend on a few distribution partners for a large portion of our revenues, loss of business provided by any one of
them could adversely affect us.
We market our insurance and reinsurance worldwide primarily through independent insurance agents and insurance and
reinsurance brokers. Accordingly, our business is dependent on the willingness of these agents and brokers to recommend our
products to their customers, who may also promote and distribute the products of our competitors. Deterioration in
relationships with our agent and broker distribution network or their increased promotion and distribution of our competitors'
products could adversely affect our ability to sell our products. Loss of all or a substantial portion of the business provided by
one or more of these agents and brokers could have an adverse effect on our business.

Financial

Our investment performance may affect our financial results and our ability to conduct business.
Our investment assets are invested by professional investment management firms under the direction of our management team
in accordance with investment guidelines approved by the Risk & Finance Committee of the Board of Directors. Although our
investment guidelines stress diversification of risks and conservation of principal and liquidity, our investments are subject to
market risks and risks inherent in individual securities. Interest rates are highly sensitive to many factors, including inflation,
monetary and fiscal policies, and domestic and international political conditions. The volatility of our losses may force us to
liquidate securities, which may cause us to incur capital losses. Realized and unrealized losses in our investment portfolio
would reduce our book value, and if significant, can affect our ability to conduct business.

Volatility in interest rates could impact the performance of our investment portfolio which could have an adverse effect on our
investment income and operating results. Although we take measures to manage the risks of investing in a changing interest
rate environment, we may not be able to effectively mitigate interest rate sensitivity. Our mitigation efforts include maintaining a
high quality portfolio of primarily fixed income investments with a relatively short duration to reduce the effect of interest rate
changes on book value. A significant increase in interest rates would generally have an adverse effect on our book value. Our life
insurance investments typically focus on longer duration bonds to better match the obligations of this business. For the life
insurance business, policyholder behavior may be influenced by changing interest rate conditions and require a re-balancing of
duration to effectively manage our asset/liability position.

As stated, our fixed income portfolio is primarily invested in high quality, investment-grade securities. However, a smaller
portion of the portfolio, approximately 13 percent at December 31, 2017, is invested in below investment-grade securities.
These securities, which pay a higher rate of interest, also have a higher degree of credit or default risk and may also be less
liquid in times of economic weakness or market disruptions. While we have put in place procedures to monitor the credit risk
and liquidity of our invested assets, it is possible that, in periods of economic weakness (such as recession), we may experience
credit or default losses in our portfolio, which could adversely affect our results of operations and financial condition.

As a part of our ongoing analysis of our investment portfolio, we are required to assess whether the debt and equity securities
we hold for which we have recorded an unrealized loss have been “other-than-temporarily impaired” under GAAP, which implies
an inability to recover the full economic benefits of these securities. Refer to Note 3 to the Consolidated Financial Statements
for additional information. This analysis requires a high degree of judgment and requires us to make certain assessments about
the potential for recovery of the assets we hold. Declines in relevant stock and other financial markets, and other factors
impacting the value of our investments, could result in impairments and could adversely affect our net income and other
financial results.

We may require additional capital or financing sources in the future, which may not be available or may be available only on
unfavorable terms.
Our future capital and financing requirements depend on many factors, including our ability to write new business successfully
and to establish premium rates and reserves at levels sufficient to cover losses, as well as our investment performance and
capital expenditure obligations, including with respect to acquisitions. We may need to raise additional funds through financings
or access funds through existing or new credit facilities or through short-term repurchase agreements. We also from time to time
seek to refinance debt or credit as amounts become due or commitments expire. Any equity or debt financing or refinancing, if
available at all, may be on terms that are not favorable to us. In the case of equity financings, dilution to our shareholders could
result, and in any case, such securities may have rights, preferences, and privileges that are senior to those of our Common
Shares. Our access to funds under existing credit facilities is dependent on the ability of the banks that are parties to the
facilities to meet their funding commitments. If we cannot obtain adequate capital or sources of credit on favorable terms, or at
all, we could be forced to use assets otherwise available for our business operations, and our business, results of operations,
and financial condition could be adversely affected.

We may be required to post additional collateral because of changes in our reinsurance liabilities to regulated insurance
companies, or because of regulatory changes that affect our companies.
If our reinsurance liabilities increase, including in our property & casualty and variable annuity reinsurance businesses, we may
be required to post additional collateral for insurance company clients. In addition, regulatory changes sometimes affect our
obligations to post collateral. The need to post this additional collateral, if significant enough, may require us to sell investments
at a loss in order to provide securities of suitable credit quality or otherwise secure adequate capital at an unattractive cost. This
could adversely impact our net income and liquidity and capital resources.

U.S. and global economic and financial industry events and their consequences could harm our business, our liquidity and
financial condition, and our stock price.
The consequences of adverse global or regional market and economic conditions may affect (among other aspects of our
business) the demand for and claims made under our products, the ability of customers, counterparties, and others to establish
or maintain their relationships with us, our ability to access and efficiently use internal and external capital resources, the
availability of reinsurance protection, the risks we assume under reinsurance programs covering variable annuity guarantees,
and our investment performance. Volatility in the U.S. and other securities markets may adversely affect our stock price.

A decline in our financial strength ratings could affect our standing among distribution partners and customers and cause our
premiums and earnings to decrease. A decline in our debt ratings could increase our borrowing costs and impact our ability
to access capital markets.
Ratings are an important factor in establishing the competitive position of insurance and reinsurance companies. The objective
of these rating systems is to provide an opinion of an insurer's financial strength and ability to meet ongoing obligations to its
policyholders. A ratings downgrade could result in a substantial loss of business as insureds, ceding companies, and brokers
move to other insurers and reinsurers with higher ratings. If one or more of our debt ratings were downgraded, we could also
incur higher borrowing costs, and our ability to access the capital markets could be impacted. Additionally, we could be
required to post collateral or be faced with the cancellation of policies and resulting premium in certain circumstances. We
cannot give any assurance regarding whether or to what extent any of the rating agencies might downgrade our ratings in the
future.

Our ability to pay dividends and/or to make payments on indebtedness may be constrained by our holding company
structure.
Chubb Limited is a holding company and does not have any significant operations or assets other than its ownership of the
shares of its operating insurance and reinsurance subsidiaries. Dividends and other permitted distributions from our insurance
subsidiaries are our primary source of funds to meet ongoing cash requirements, including any future debt service payments
and other expenses, and to pay dividends to our shareholders. Some of our insurance subsidiaries are subject to significant
regulatory restrictions limiting their ability to declare and pay dividends. The inability of our insurance subsidiaries to pay
dividends in an amount sufficient to enable us to meet our cash requirements at the holding company level could have an
adverse effect on our operations and our ability to pay dividends to our shareholders and/or meet our debt service obligations.

Our operating results and shareholders' equity may be adversely affected by currency fluctuations.
Our reporting currency is the U.S. dollar. In general, we match assets and liabilities in local currencies. Where possible, capital
levels in local currencies are limited to satisfy minimum regulatory requirements and to support local insurance operations. The
principal currencies creating foreign exchange risk are the British pound sterling, the euro, the Mexican peso, the Brazilian real,
the Korean won, the Canadian dollar, the Japanese yen, the Thai baht, the Australian dollar, and the Hong Kong dollar. At
December 31, 2017, approximately 27.7 percent of our net assets were denominated in foreign currencies. We may experience
losses resulting from fluctuations in the values of non-U.S. currencies, which could adversely impact our results of operations
and financial condition.

Operational

The regulatory and political regimes under which we operate, and their volatility, could have an adverse effect on our
business.
Our insurance and reinsurance subsidiaries conduct business globally. Our businesses in each jurisdiction are subject to varying
degrees of regulation and supervision. The laws and regulations of the jurisdictions in which our insurance and reinsurance
subsidiaries are domiciled require, among other things, maintenance of minimum levels of statutory capital, surplus, and
liquidity; various solvency standards; and periodic examinations of subsidiaries' financial condition. In some jurisdictions, laws
and regulations also restrict payments of dividends and reductions of capital. Applicable statutes, regulations, and policies may
also restrict the ability of these subsidiaries to write insurance and reinsurance policies, to make certain investments, and to
distribute funds. The purpose of insurance laws and regulations generally is to protect policyholders and ceding insurance
companies, not our shareholders. For example, some jurisdictions have enacted various consumer protection laws that make it
more burdensome for insurance companies to sell policies and interact with customers in personal lines businesses. Failure to
comply with such regulations can lead to significant penalties and reputational injury. Fines and penalties in the U.S. in
particular have been trending upwards.

The foreign and U.S. federal and state laws and regulations that are applicable to our operations are complex and may increase
the costs of regulatory compliance or subject our business to the possibility of regulatory actions or proceedings. Laws and
regulations not specifically related to the insurance industry include trade sanctions that relate to certain countries, anti-money
laundering laws, and anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act 2010, the anti-
bribery provisions of the Swiss Penal Code and similar local laws prohibiting corrupt payments to governmental officials. The
insurance industry is also affected by political, judicial, and legal developments that may create new and expanded regulations
and theories of liability. The current economic and financial climates present additional uncertainties and risks relating to
increased regulation and the potential for increased involvement of the U.S. and other governments in the financial services
industry.

Regulators in countries where we have operations are working with the International Association of Insurance Supervisors (IAIS)
to consider changes to insurance company supervision, including with respect to group supervision and solvency requirements.
The IAIS has developed a Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame)
which is focused on the effective group-wide supervision of international active insurance groups (IAIGs), such as Chubb. As
part of ComFrame, the IAIS has announced plans to develop an international capital standard for insurance groups. The details
of ComFrame including this global capital standard and its applicability to Chubb are uncertain at this time. In addition, Chubb
businesses across the EU are subject to Solvency II, a capital and risk management regime and our Bermuda businesses are
subject to an equivalent of the EU's Solvency II regime. Also applicable to Chubb businesses are the requirements of the Swiss
Financial Market Supervisory Authority (FINMA) whose regulations include Swiss Solvency Tests. There are also Risk Based
Capital (RBC) requirements in the U.S. which are also subject to revision in response to global developments. While it is not

certain how or if these actions will impact Chubb, we do not currently expect that our capital management strategies, results of
operations and financial condition will be materially affected by these regulatory changes.

In the event or absence of changes in applicable laws and regulations in particular jurisdictions, we may from time to time face
challenges, or changes in approach to oversight of our business from insurance or other regulators, including challenges
resulting from requiring the use of information technology that cannot be quickly adjusted to address new regulatory
requirements.

We may not be able to comply fully with, or obtain appropriate exemptions from, applicable statutes and regulations and any
changes thereto, which could have an adverse effect on our business. Failure to comply with or obtain appropriate
authorizations and/or exemptions under any applicable laws and regulations could result in restrictions on our ability to do
business or undertake activities that are regulated in one or more of the jurisdictions in which we conduct business and could
subject us to fines and other sanctions.

Evolving privacy and data security regulations could adversely affect our business.
We are subject to numerous U.S. federal and state laws and non-U.S. regulations governing the protection of personal and
confidential information of our clients or employees, including in relation to medical records, credit card data and financial
information. These laws and regulations are increasing in complexity and number, change frequently and sometimes conflict.

We are subject to the New York Department of Financial Services’ Cybersecurity Regulation (the NYDFS Cybersecurity
Regulation) which mandates detailed cybersecurity standards for all institutions, including insurance entities, authorized by the
NYDFS to operate in New York. Among the requirements are the maintenance of a cybersecurity program with governance
controls, risk-based minimum data security standards for technology systems, cyber breach preparedness and response
requirements, including reporting obligations, vendor oversight, training, and program record keeping and certification
obligations. The NYDFS Cybersecurity Regulation has increased our compliance costs and could increase the risk of
noncompliance and subject us to regulatory enforcement actions and penalties, as well as reputation risk.

Additionally, on October 24, 2017, the National Association of Insurance Commissioners (NAIC) adopted an Insurance Data
Security Model Law, which would require licensed insurance entities to comply with detailed information security requirements.
The NAIC model law is similar in many respects to the NYDFS Cybersecurity Regulation. It is not yet known whether or not, and
to what extent, states legislatures or insurance regulators where we operate will enact the Insurance Data Security Model Law
in whole or in part, or in a modified form. Such enactments, especially if inconsistent between states or with existing laws and
regulations could raise compliance costs or increase the risk of noncompliance, with the attendant risk of being subject to
regulatory enforcement actions and penalties, as well as reputational harm. Any such events could potentially have an adverse
impact on our business, financial condition or results of operations.

We operate in a number of countries outside of the U.S. whose laws may in some cases be more stringent than the
requirements in the U.S. For example, European Union (EU) member countries have specific requirements relating to cross-
border transfers of personal information to certain jurisdictions, including to the U.S. In addition, some countries provide
stronger individual rights and have stricter consumer notice and/or consent requirements for the collection, use or sharing of
personal information and more stringent requirements relating to organizations’ privacy programs. Moreover, international
privacy and data security regulations may become more complex and have greater consequences.

May 25, 2018 is the date on which enforcement begins for the General Data Protection Regulation (the “GDPR”) that was
adopted by the EU in 2016 as a comprehensive regulation for all EU member states. All of our business units (regardless of
whether they are located in the EU) may be subject to the GDPR when personal data is processed in relation to the offer of
goods and services to individuals within the EU. Our compliance with GDPR will require preparation, expenditures, and ongoing
compliance efforts. Further, as the GDPR has not yet come into effect, enforcement priorities and interpretation of certain
provisions are still unclear. Under the GDPR there are penalties for non-compliance which could result in a material fine for
certain activities of up to 4 percent of a firm’s global annual revenue per violation. Our failure to comply with GDPR and other
countries’ privacy or data security-related laws, rules or regulations could result in significant penalties imposed by regulators,
which could have an adverse effect on our business, financial condition and results of operations.

Political uncertainty in the United Kingdom and the European Union may lead to volatility and/or have an adverse effect on
our business, our liquidity and financial condition, and our stock price.
On June 23, 2016, the United Kingdom (UK) voted in a national referendum to withdraw from the European Union (EU). On
March 29, 2017, the UK government gave notice to the EU, under Article 50(2) of the Treaty on EU, of the UK’s intention to

withdraw from the EU. The UK is currently in the process of negotiating a withdrawal agreement with the EU. However, a
withdrawal agreement may not be concluded and ratified within the time limit specified in Article 50(3), in which case the UK
may be required to withdraw from the EU without a withdrawal agreement being in force.

The possible exit of the UK (or any other country) from the EU, or prolonged periods of uncertainty relating to such a possibility
could result in significant macroeconomic deterioration including, but not limited to, decreases in global stock exchange indices,
increased foreign exchange volatility (in particular a further weakening of the pound sterling and euro against other leading
currencies), decreased GDP in the UK, and a downgrade of the UK’s sovereign credit rating. In addition, these events could
push the UK, Eurozone, and/or United States into an economic recession any of which, were they to occur, would further
destabilize the global financial markets and could have a material adverse effect on our business, financial condition, and
results of operations. We have significant operations in the UK and other EU member states. If the UK leaves the EU as
expected in March 2019, we intend to relocate our EU headquarters in France. The decision to choose France as the
headquarters for our Continental European operations is contingent upon receiving all necessary regulatory and other
governmental approvals, which might not be obtained in a timely manner or at all. Paris is the principal office for our
Continental European operations. We have a significant investment there in both financial and human resources, as well as a
large portfolio of commercial and consumer insurance business throughout France. Following the withdrawal of the UK from the
EU, Chubb will continue to have a substantial presence in London in addition to its offices and operations across the UK and
EU.

The rules governing the EU Single Market (which is made up of the 27 other EU member states and to some extent, Iceland,
Liechtenstein, and Norway (together, the European Economic Area or EEA)) require local risks to be underwritten by a local
authorized insurer, an EEA authorized insurer or a non-local insurer with the benefit of an EU “passport”. As such, UK insurers,
including us, are currently able to underwrite risks from the UK into EEA member states via a “passport”. The UK government
has announced that it will not be seeking membership of the EU Single Market during the withdrawal negotiations. However,
there can be no assurance that there will be any agreement between the UK and the EU by the date on which the UK
withdraws from the EU, by the end of any transitional period, or at all. In addition, any such free trade agreement may not
maintain the passporting rights of UK insurers nor deem relevant UK regulations to be equivalent to those of the EU. In the
event that, following the UK’s withdrawal from the EU, UK insurers are unable to access the EU Single Market via a passporting
arrangement, a regulatory equivalence regime or other similar arrangement, such insurers may not be able to underwrite risks
into EEA member states except through local branches incorporated in the EEA. Such branches might require local
authorization, regulatory and prudential supervision, and capital to be deposited. Although we have commenced
implementation of plans to ensure we would have a locally authorized insurer in the UK as well as an EEA authorized insurer
able to underwrite risks in EEA/EU member states via a "passport", any change to the terms of the UK’s access to the EU Single
Market following the withdrawal of the UK from the EU could still have a material adverse effect on our business, financial
condition, and results of operations.

In addition, Lloyd’s currently benefits from EU Single Market passporting arrangements, which allow its syndicates and
coverholders (i.e., only those authorized by our managing agency to enter into a contract but only in accordance with specified
terms) to write business in EEA member states. Although Lloyd's has announced steps it will take to maintain its passporting
rights within the EU, if it is not successful in maintaining those rights, our ability to write business in the EEA through Lloyd’s
syndicates and coverholders could have a material adverse effect on our business, financial condition, and results of operations.

Our worldwide operations, particularly in developing nations, expose us to global geopolitical developments that could have
an adverse effect on our business, liquidity, results of operations, and financial condition.
With operations in 54 countries and territories, we provide insurance and reinsurance products and services to a diverse group
of clients worldwide, including operations in various developing nations. Both current and future foreign operations could be
adversely affected by unfavorable geopolitical developments including law changes, tax changes, changes in trade policies,
changes to visa or immigration policies, regulatory restrictions, government leadership changes, political events and upheaval,
sociopolitical instability, and nationalization of our operations without compensation. Adverse activity in any one country could
negatively impact operations, increase our loss exposure under certain of our insurance products, and could, otherwise, have an
adverse effect on our business, liquidity, results of operations, and financial condition depending on the magnitude of the events
and our net financial exposure at that time in that country.

A failure in our operational systems or infrastructure or those of third parties, including due to security breaches or cyber-
attacks, could disrupt business, damage our reputation, and cause losses.
Our operations rely on the secure processing, storage, and transmission of confidential and other information and assets,
including in our computer systems and networks and those of third-party service providers. Our business depends on effective

information security and systems and the integrity and timeliness of the data our information systems use to run our business.
Our ability to adequately price products and services, to establish reserves, to provide effective, efficient and secure service to
our customers, to value our investments and to timely and accurately report our financial results also depends significantly on
the integrity and availability of the data we maintain, including that within our information systems, as well as data in and
assets held through third-party service providers and systems. In an effort to ensure the integrity of such data, we implement
new security measures and systems, including the use of confidential intellectual property, and improve or upgrade our existing
security measures and systems on a continuing basis. The instances of major cyber incidents have continued to expand in
recent years, as exemplified by the 2017 "Petya" and “WannaCry” ransomware attacks. Although we have implemented
administrative and technical controls and take protective actions to reduce the risk of cyber incidents and to protect our
information technology and assets, and although we additionally endeavor to modify such procedures as circumstances warrant
and negotiate agreements with third-party providers to protect our assets, such measures may be insufficient to prevent
unauthorized access, computer viruses, malware or other malicious code or cyber-attack, catastrophic events, system failures
and disruptions (including in relation to new security measures and systems), employee errors or malfeasance, third party
(including outsourced service providers) errors or malfeasance, loss of assets and other events that could have security
consequences (each, a Security Event). In some cases, such events may not be immediately detected. As the breadth and
complexity of our security infrastructure continues to grow, the potential risk of a Security Event increases. Like other global
companies, we have from time to time experienced Security Events, none of which had, individually or in the aggregate, an
adverse impact on our business, results of operations, or financial condition. If additional Security Events occur, these events
may jeopardize Chubb's or its clients' or counterparties' confidential and other information processed and stored within Chubb,
and transmitted through its computer systems and networks, or otherwise cause interruptions, delays, or malfunctions in
Chubb's, its clients', its counterparties', or third parties' operations, or result in data loss or loss of assets which could result in
significant losses, reputational damage or an adverse effect on our operations and critical business functions. Chubb may be
required to expend significant additional resources to modify our protective measures or to investigate and remediate
vulnerabilities or other exposures and to pursue recovery of lost data or assets and we may be subject to litigation and financial
losses that are either not insured against or not fully covered by insurance maintained.

The regulatory environment surrounding information security and privacy is increasingly demanding. We are subject to
numerous U.S. federal and state laws and regulations in jurisdictions outside the U.S. governing the protection of personal and
confidential information of our clients or employees, including in relation to medical records, credit card data and financial
information. These laws and regulations are increasing in complexity and number, change frequently and sometimes conflict. If
any person, including any of our employees or those with whom we share such information, negligently disregards or
intentionally breaches our established controls with respect to our client data, or otherwise mismanages or misappropriates that
data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in
one or more jurisdictions.

Despite the contingency plans and facilities we have in place and our efforts to observe the regulatory requirements surrounding
information security, our ability to conduct business may be adversely affected by a disruption of the infrastructure that supports
our business in the communities in which we are located, or of outsourced services or functions. This may include a disruption
involving electrical, communications, transportation, or other services used by Chubb. If a disruption occurs in one location and
Chubb employees in that location are unable to occupy our offices and conduct business or communicate with or travel to other
locations, our ability to service and interact with clients may suffer and we may not be able to successfully implement
contingency plans that depend on communication or travel.

We use analytical models to assist our decision making in key areas such as underwriting, claims, reserving, and catastrophe
risks but actual results could differ materially from the model outputs and related analyses.
We use various modeling techniques (e.g., scenarios, predictive, stochastic and/or forecasting) and data analytics to analyze
and estimate exposures, loss trends and other risks associated with our assets and liabilities. We use the modeled outputs and
related analyses to assist us in decision-making (e.g., underwriting, pricing, claims, reserving, reinsurance, and catastrophe
risk) and to maintain competitive advantage. The modeled outputs and related analyses are subject to various assumptions,
uncertainties, model errors and the inherent limitations of any statistical analysis, including the use of historical internal and
industry data. In addition, the modeled outputs and related analyses may from time to time contain inaccuracies, perhaps in
material respects, including as a result of inaccurate inputs or applications thereof. Consequently, actual results may differ
materially from our modeled results. If, based upon these models or other factors, we misprice our products or underestimate
the frequency and/or severity of loss events, or overestimate the risks we are exposed to, new business growth and retention of
our existing business may be adversely affected which could have an adverse effect on our results of operations and financial
condition.

We could be adversely affected by the loss of one or more key executives or by an inability to attract and retain qualified
personnel.
Our success depends on our ability to retain the services of our existing key executives and to attract and retain additional
qualified personnel in the future. The loss of the services of any of our key executives or the inability to hire and retain other
highly qualified personnel in the future could adversely affect our ability to conduct or grow our business. This risk may be
particularly acute for us relative to some of our competitors because some of our senior executives work in countries where they
are not citizens and work permit and immigration issues could adversely affect the ability to retain or hire key persons. We do
not maintain key person life insurance policies with respect to our employees.

Employee error and misconduct may be difficult to detect and prevent and could adversely affect our business, results of
operations, and financial condition.
Losses may result from, among other things, fraud, errors, failure to document transactions properly, failure to obtain proper
internal authorization, failure to comply with underwriting or other internal guidelines, or failure to comply with regulatory
requirements. It is not always possible to deter or prevent employee misconduct and the precautions that we take to prevent
and detect this activity may not be effective in all cases. Resultant losses could adversely affect our business, results of
operations, and financial condition.

Strategic

The continually changing landscape, including competition, technology and products, existing and new market entrants could
reduce our margins and adversely impact our business and results of operations.
Insurance and reinsurance markets are highly competitive. We compete on an international and regional basis with major U.S.,
Bermuda, European, and other international insurers and reinsurers and with underwriting syndicates, some of which have
greater financial, technological, marketing, distribution and management resources than we do. In addition, capital market
participants have created alternative products that are intended to compete with reinsurance products. We also compete with
new companies and existing companies that move into the insurance and reinsurance markets. If competition, or technological
or other changes to the insurance markets in which we operate, limits our ability to retain existing business or write new
business at adequate rates or on appropriate terms, our business and results of operations could be materially and adversely
affected. Increased competition could also result in fewer submissions, lower premium rates, and less favorable policy terms
and conditions, which could reduce our profit margins and adversely impact our net income and shareholders' equity.

Recent technological advancements in the insurance industry and information technology industry present new and fast-
evolving competitive risks as participants seek to increase transaction speeds, lower costs and create new opportunities.
Advancements in technology are occurring in underwriting, claims, distribution and operations at a pace that may quicken,
including as companies increase use of data analytics and technology as part of their business strategy. We will be at a
competitive disadvantage if, over time, our competitors are more effective than us in their utilization of technology and evolving
data analytics. If we do not anticipate or keep pace with these technological and other changes impacting the insurance
industry, it could also limit our ability to compete in desired markets.

Insurance and reinsurance markets are historically cyclical, and we expect to experience periods with excess underwriting
capacity and unfavorable premium rates.
The insurance and reinsurance markets have historically been cyclical, characterized by periods of intense price competition due
to excessive underwriting capacity as well as periods when shortages of capacity permitted favorable premium levels. An
increase in premium levels is often offset by an increasing supply of insurance and reinsurance capacity, either by capital
provided by new entrants or by the commitment of additional capital by existing insurers or reinsurers, which may cause prices
to decrease. Any of these factors could lead to a significant reduction in premium rates, less favorable policy terms, and fewer
submissions for our underwriting services. In addition to these considerations, changes in the frequency and severity of losses
suffered by insureds and insurers may affect the cycles of the insurance and reinsurance markets significantly, as could periods
of economic weakness (such as recession).

The integration of acquired companies may not be as successful as we anticipate.
Acquisitions, such as our acquisition of The Chubb Corporation (Chubb Corp) through a merger (the Chubb acquisition), involve
numerous operational, strategic, financial, accounting, legal, tax, and other risks; potential liabilities associated with the
acquired businesses; and uncertainties related to design, operation and integration of acquired businesses’ internal controls over
financial reporting. Difficulties in integrating an acquired company, along with its personnel, may result in the acquired
company performing differently than we expected, in operational challenges or in our failure to realize anticipated expense-
related efficiencies. Our existing businesses could also be negatively impacted by acquisitions. In addition, goodwill and

intangible assets recorded in connection with insurance company acquisitions may be impaired if premium growth,
underwriting profitability, agency retention and policy persistency, among other factors, differ from expectations.

There is also the potential that proposed acquisitions that have been publicly announced will not be consummated, even if a
definitive agreement has been signed by the parties. If an agreement is terminated before closing, the result would be that our
proposed acquisition would not occur, which could, among other things, expose us to damages or liability and adversely impact
our stock price and future operations.

We may be subject to U.S. tax and Bermuda tax which may have an adverse effect on our results of operations and
shareholder investment.
Chubb Limited and our non-U.S. subsidiaries operate in a manner so that none of these companies should be subject to U.S.
tax (other than U.S. excise tax on insurance and reinsurance premium income attributable to insuring or reinsuring U.S. risks
and U.S. withholding tax on some types of U.S. source investment income), because none of these companies should be
treated as engaged in a trade or business within the U.S. However, because there is considerable uncertainty as to the activities
that constitute being engaged in a trade or business within the U.S., we cannot be certain that the Internal Revenue Service
(IRS) will not contend successfully that Chubb Limited or its non-U.S. subsidiaries are engaged in a trade or business in the
U.S. If Chubb Limited or any of its non-U.S. subsidiaries were considered to be engaged in a trade or business in the U.S., such
entity could be subject to U.S. corporate income and branch profits taxes on the portion of its earnings effectively connected to
such U.S. business, in which case our results of operations and our shareholders' investments could be adversely affected.

The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, as amended, has
given Chubb Limited and its Bermuda insurance subsidiaries a written assurance that if any legislation is enacted in Bermuda
that would impose tax computed on profits or income, or computed on any capital asset, gain, or appreciation, or any tax in the
nature of estate duty or inheritance tax, then the imposition of any such tax would not be applicable to those companies or any
of their respective operations, shares, debentures, or other obligations until March 31, 2035, except insofar as such tax would
apply to persons ordinarily resident in Bermuda or is payable by us in respect of real property owned or leased by us in
Bermuda. We cannot be certain that we will not be subject to any Bermuda tax after March 31, 2035.

We could be adversely affected by certain features of the 2017 U.S. tax reform legislation.
New tax legislation known as the Tax Cuts and Jobs Act (2017 Tax Act) became law in the U.S. on December 22, 2017. In
addition to reducing the U.S. corporate income tax rate from 35 percent to 21 percent, it fundamentally changed many
elements of the pre-2017 Tax Act U.S. tax law and introduced several new concepts to tax multinational corporations such as
us. Among the most notable new rules are the Base Erosion and Anti-Abuse Tax (commonly called BEAT), which generally
applies to payments by U.S. taxpayers to non-U.S. affiliates, and the Global Intangible Low Taxed Income (GILTI) addition to
Subpart F income, which for insurance groups potentially expands U.S. taxation on the earnings of foreign subsidiaries. The
2017 Tax Act also includes a one-time reduced-rate transition tax in 2017 on previously untaxed post-1986 earnings of foreign
subsidiaries of U.S. corporations. The 2017 Tax Act, which is generally effective for 2018, is a complex law with many
significant new provisions and it will be a while before the IRS/Treasury provides meaningful guidance on its application. Thus,
there are many uncertainties relating to its ultimate application and effects on our company.

The Organization for Economic Cooperation and Development (OECD) and the European Union (EU) are considering
measures that might encourage countries to increase our taxes.
A number of multilateral organizations, including the EU and the OECD have, in recent years, expressed concern about some
countries not participating in adequate tax information exchange arrangements and have threatened those that do not agree to
cooperate with punitive sanctions by member countries. It is as yet unclear what all of these sanctions might be, which
countries might adopt them, and when or if they might be imposed. We cannot assure, however, that the Tax Information
Exchange Agreements (TIEAs) that have been or will be entered into by Switzerland and Bermuda will be sufficient to preclude
all of the sanctions described above, which, if ultimately adopted, could adversely affect us or our shareholders.

The OECD has published an action plan to address base erosion and profit shifting (BEPS) impacting its member countries and
other jurisdictions. It is possible that jurisdictions in which we do business could react to the BEPS initiative or their own
concerns by enacting tax legislation that could adversely affect us or our shareholders.

Shareholders

There are provisions in our charter documents that may reduce the voting rights and diminish the value of our Common
Shares.
Our Articles of Association generally provide that shareholders have one vote for each Common Share held by them and are
entitled to vote at all meetings of shareholders. However, the voting rights exercisable by a shareholder may be limited so that
certain persons or groups are not deemed to hold 10 percent or more of the voting power conferred by our Common Shares.
Moreover, these provisions could have the effect of reducing the voting power of some shareholders who would not otherwise be
subject to the limitation by virtue of their direct share ownership. Our Board of Directors may refuse to register holders of shares
as shareholders with voting rights based on certain grounds, including if the holder would, directly or indirectly, formally,
constructively or beneficially own (as described in Articles 8 and 14 of our Articles of Association) or otherwise control voting
rights with respect to 10 percent or more of the registered share capital recorded in the commercial register. In addition, the
Board of Directors shall reject entry of holders of registered shares as shareholders with voting rights in the share register or
shall decide on their deregistration when the acquirer or shareholder upon request does not expressly state that she/he has
acquired or holds the shares in her/his own name and for her/his account.

Applicable laws may make it difficult to effect a change of control of our company.
Before a person can acquire control of a U.S. insurance company, prior written approval must be obtained from the insurance
commissioner of the state where the domestic insurer is domiciled. Prior to granting approval of an application to acquire
control of a domestic insurer, the state insurance commissioner will consider such factors as the financial strength of the
applicant, the integrity and management of the applicant's Board of Directors and executive officers, the acquirer's plans for the
future operations of the domestic insurer, and any anti-competitive results that may arise from the consummation of the
acquisition of control. Generally, state statutes provide that control over a domestic insurer is presumed to exist if any person,
directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10 percent or more of the
voting securities of the domestic insurer. Because a person acquiring 10 percent or more of our Common Shares would
indirectly control the same percentage of the stock of our U.S. insurance subsidiaries, the insurance change of control laws of
various U.S. jurisdictions would likely apply to such a transaction. Laws of other jurisdictions in which one or more of our
existing subsidiaries are, or a future subsidiary may be, organized or domiciled may contain similar restrictions on the
acquisition of control of Chubb.

While our Articles of Association limit the voting power of any shareholder to less than 10 percent, we cannot assure that the
applicable regulatory body would agree that a shareholder who owned 10 percent or more of our Common Shares did not,
because of the limitation on the voting power of such shares, control the applicable insurance subsidiary.

These laws may discourage potential acquisition proposals and may delay, deter, or prevent a change of control of Chubb,
including transactions that some or all of our shareholders might consider to be desirable.

Shareholder voting requirements under Swiss law may limit our flexibility with respect to certain aspects of capital
management.
Swiss law allows our shareholders to authorize share capital which can be issued by the Board of Directors without shareholder
approval but this authorization must be renewed by the shareholders every two years. Swiss law also does not provide as much
flexibility in the various terms that can attach to different classes of stock as permitted in other jurisdictions. Swiss law also
reserves for approval by shareholders many corporate actions over which the Board of Directors had authority prior to our re-
domestication to Switzerland. For example, dividends must be approved by shareholders. While we do not believe that Swiss
law requirements relating to our capital management will have an adverse effect on Chubb, we cannot assure that situations
will not arise where such flexibility would have provided substantial benefits to our shareholders.

Chubb Limited is a Swiss company; it may be difficult to enforce judgments against it or its directors and executive officers.
Chubb Limited is incorporated pursuant to the laws of Switzerland. In addition, certain of our directors and officers reside
outside the U.S. and all or a substantial portion of our assets and the assets of such persons are located in jurisdictions outside
the U.S. As such, it may be difficult or impossible to effect service of process within the U.S. upon those persons or to recover
against us or them on judgments of U.S. courts, including judgments predicated upon civil liability provisions of the U.S. federal
securities laws.

Chubb has been advised by its Swiss counsel that there is doubt as to whether the courts in Switzerland would enforce:
•

judgments of U.S. courts based upon the civil liability provisions of the U.S. federal securities laws obtained in actions
against it or its directors and officers, who reside outside the U.S.; or

• original actions brought in Switzerland against these persons or Chubb predicated solely upon U.S. federal securities laws.

Chubb has also been advised by its Swiss counsel that there is no treaty in effect between the U.S. and Switzerland providing
for this enforcement and there are grounds upon which Swiss courts may not enforce judgments of U.S. courts. Some remedies
available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities laws, would
not be allowed in Swiss courts as contrary to that nation's public policy.

Under Swiss law, if we need to raise equity capital at a time when our share price is below the par value of our shares, the
equity issuance could be delayed by the need to obtain shareholder approval, which cannot be assured.
As of December 31, 2017, the par value of our Common Shares is CHF 24.15 per share. Under Swiss law, we generally may
not issue registered shares below their par value. In the event there is a need to raise common equity capital at a time when the
trading price of our registered shares is below our par value, we will need to obtain approval of our shareholders to decrease the
par value of our registered shares. We cannot assure that we would be able to obtain such shareholder approval. Furthermore,
obtaining shareholder approval would require filing a preliminary proxy statement with the SEC and convening a meeting of
shareholders which would delay any capital raising plans. Furthermore, any reduction in par value would decrease our ability to
pay dividends as a repayment of share capital which is not subject to Swiss withholding tax. See “Shareholders may be subject
to Swiss withholding taxes on the payment of dividends” for additional information.

Shareholders may be subject to Swiss withholding taxes on the payment of dividends.
Our dividends are generally subject to a Swiss withholding tax at a rate of 35 percent; however, payment of a dividend in the
form of a par value reduction or qualifying capital contribution reserves reduction is not subject to Swiss withholding tax. We
have previously obtained shareholder approval for dividends to be paid in such form. We currently intend to recommend to
shareholders that they annually approve the payment of dividends in such form but we cannot assure that our shareholders will
continue to approve a reduction in such form each year or that we will be able to meet the other legal requirements for a
reduction in par value, or that Swiss withholding tax rules will not be changed in the future. We estimate we would be able to
pay dividends in such form, and thus exempt from Swiss withholding tax until 2028–2033. This range may vary depending
upon changes in annual dividends, special dividends, fluctuations in U.S. dollar/Swiss franc exchange rates, changes in par
value or qualifying capital contribution reserves or changes or new interpretations to Swiss corporate or tax law or regulations.

Under certain circumstances, U.S. shareholders may be subject to adverse U.S. federal income tax consequences.
Under certain circumstances, a U.S. person who owns or is deemed to own 10 percent or more of the voting power or value of
a foreign corporation that is a “controlled foreign corporation” (CFC) (a foreign corporation in which 10 percent U.S.
shareholders own or are deemed to own more than 50 percent of the voting power or value of the stock of a foreign corporation
or more than 25 percent of certain foreign insurance corporations) for any period during a taxable year must include in gross
income for U.S. federal income tax purposes such "10 percent U.S. Shareholder's" pro rata share of the CFC's
"subpart F income". We believe that because of the dispersion of our share ownership it is unlikely that any U.S. person who
acquires shares of Chubb Limited directly or indirectly through one or more foreign entities should be required to include any
subpart F income in income under the CFC rules of U.S. tax law.

Separately, any U.S. persons who hold shares may be subject to U.S. federal income taxation at ordinary income tax rates on
their proportionate share of our Related Person Insurance Income (RPII). If the RPII of any of our non-U.S. insurance
subsidiaries (each a "Non-U.S. Insurance Subsidiary") were to equal or exceed 20 percent of that company's gross insurance
income in any taxable year and direct or indirect insureds (and persons related to those insureds) own directly or indirectly
through foreign entities 20 percent or more of the voting power or value of Chubb Limited, then a U.S. person who owns any
shares of Chubb Limited (directly or indirectly through foreign entities) on the last day of the taxable year would be required to
include in his or her income for U.S. federal income tax purposes such person's pro rata share of such company's RPII for the
entire taxable year. In addition, any RPII that is includible in the income of a U.S. tax-exempt organization may be treated as
unrelated business taxable income. We believe that the gross RPII of each Non-U.S. Insurance Subsidiary did not in prior years
of operation and is not expected in the foreseeable future to equal or exceed 20 percent of each such company's gross insurance
income. Likewise, we do not expect the direct or indirect insureds of each Non-U.S. Insurance Subsidiary (and persons related
to such insureds) to directly or indirectly own 20 percent or more of either the voting power or value of our shares. However, we
cannot be certain that this will be the case because some of the factors which determine the extent of RPII may be beyond our
control. If these thresholds are met or exceeded, any U.S. person’s investment in Chubb Limited could be adversely affected.

A U.S. tax-exempt organization may recognize unrelated business taxable income if a portion of our insurance income is
allocated to the organization. This generally would be the case if either we are a CFC and the tax-exempt shareholder is a 10
percent U.S. shareholder or there is RPII, certain exceptions do not apply, and the tax-exempt organization, directly or indirectly
through foreign entities, owns any shares of Chubb Limited. Although we do not believe that any U.S. tax-exempt organization

should be allocated such insurance income, we cannot be certain that this will be the case. Potential U.S. tax-exempt investors
are advised to consult their tax advisors.

U.S. persons who hold shares will be subject to adverse tax consequences if we are considered to be a Passive Foreign
Investment Company (PFIC) for U.S. federal income tax purposes.
If Chubb Limited is considered a PFIC for U.S. federal income tax purposes, a U.S. person who holds Chubb Limited shares will
be subject to adverse U.S. federal income tax consequences in which case their investment could be adversely affected. In
addition, if Chubb Limited were considered a PFIC, upon the death of any U.S. individual owning shares, such individual's heirs
or estate would not be entitled to a "step-up" in the basis of the shares which might otherwise be available under U.S. federal
income tax laws. We believe that we are not, have not been, and currently do not expect to become, a PFIC for U.S. federal
income tax purposes. We cannot assure, however, that we will not be deemed a PFIC by the IRS. Recently enacted U.S. federal
tax law and proposed regulations previously issued by the IRS contain objective and subjective standards regarding the
application of the PFIC provisions to an insurance company. Final regulations or pronouncements interpreting or clarifying these
rules may be forthcoming. We cannot predict what impact, if any, such guidance would have on an investor that is subject to
U.S. federal income taxation.

Changes in tax law could adversely affect an investment in us and our securities.
New U.S. federal tax law was recently enacted containing significant changes. Portions of the new law address certain
previously perceived tax advantages of domestic companies (including insurance companies) that have affiliates with legal
domiciles outside the U.S. The new law is complex and lacks developed administrative guidance; thus, the full impact to us, or
our investors, is currently unclear. This new law or future tax law changes, administrative guidance, or U.S. court decisions
regarding tax law could have an adverse impact on us or our investors.

Similarly, jurisdictions outside the U.S. in which we do business could enact tax legislation in the future that could have an
adverse impact on us or our investors. For example, Switzerland is currently pursuing the implementation of corporate tax
reform measures. The first effort was rejected by a public vote; however a revised corporate tax reform measure is expected.
The next tax reform version could adversely affect us or our investors.

Risks Relating to The Chubb Corporation Acquisition (Chubb Corp Acquisition)

We may fail to realize all of the anticipated benefits of the Chubb Corp Acquisition.
The integration of Chubb Corp may not be as successful as we anticipate. The success of the Chubb Corp acquisition will
depend, in part, on our ability to realize the anticipated benefits of cross-selling and other revenue-related benefits from
combining our businesses. Some of the assumptions that we have made, such as the achievement of revenue synergies,
premium growth and underwriting profitability, among other factors, may differ from expectations.

ITEM 1B. Unresolved Staff Comments
There are currently no unresolved SEC staff comments regarding our periodic or current reports.

ITEM 2. Properties
We maintain office facilities around the world including in North America, Europe (including our principal executive offices in
Switzerland), Bermuda, Latin America, Asia Pacific, and the Far East. Most of our office facilities are leased, although we own
major facilities in Hamilton, Bermuda, and in the U.S., including in Philadelphia, Pennsylvania; Wilmington, Delaware;
Whitehouse Station, New Jersey; and Simsbury, Connecticut. Management considers its office facilities suitable and adequate
for the current level of operations.

ITEM 3. Legal Proceedings
The information required with respect to Item 3 is included in Note 10 h) to the Consolidated Financial Statements, which is
hereby incorporated herein by reference.

ITEM 4. Mine Safety Disclosures
Item not applicable.

PART II

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities

Our Common Shares have been listed on the New York Stock Exchange since March 25, 1993, with a current par value of CHF
24.15 per share. The trading symbol for our Common Shares is "CB."

Quarterly Stock Information
The following table sets forth the high and low closing sales prices of our Common Shares per fiscal quarter, as reported on the
New York Stock Exchange Composite Tape, and cash dividends on Common Shares:

Quarter Ended
March 31

June 30

September 30

December 31

2017

Dividends

High

Low

USD

CHF

High

Low

USD

$140.38 $128.48 $

0.69

0.69 $ 122.47 $ 108.00 $

0.67

$147.58 $135.48 $

0.71

0.69 $ 130.71 $ 117.19 $

0.69

$149.87 $134.88 $

0.71

0.68 $ 130.32 $ 124.28 $

0.69

$155.19 $144.70 $

0.71

0.70 $ 133.32 $ 121.88 $

0.69

2016

Dividends

CHF

0.66

0.68

0.67

0.69

We have paid dividends each quarter since we became a public company in 1993. Following Chubb's redomestication to
Switzerland, our dividends have been distributed primarily by way of a par value reduction. However, our annual dividends were
paid by way of a distribution from capital contribution reserves (Additional paid-in capital) through the transfer of dividends
from Additional paid-in capital to Retained earnings (free reserves) as approved by our shareholders in 2017 and 2016.

Chubb Limited is a holding company whose principal sources of income are investment income and dividends from its operating
subsidiaries. The ability of the operating subsidiaries to pay dividends to us and our ability to pay dividends to our shareholders
are each subject to legal and regulatory restrictions. The recommendation and payment of future dividends will be based on the
determination of the Board of Directors (Board) and will be dependent upon shareholder approval, profits and financial
requirements of Chubb and other factors, including legal restrictions on the payment of dividends and such other factors as the
Board deems relevant. Refer to Part I, Item 1A and Part II, Item 7 for additional information.

The last reported sale price of the Common Shares on the New York Stock Exchange Composite Tape on February 12, 2018
was $144.61.

The number of record holders of Common Shares as of February 12, 2018 was 8,466. This is not the actual number of
beneficial owners of Chubb's Common Shares since most of our shareholders hold their shares through a stockbroker, bank or
other nominee rather than directly in their own names.

Refer to Part III, Item 12 for information relating to compensation plans under which equity securities are authorized for
issuance.

Issuer's Repurchases of Equity Securities for the Three Months Ended December 31, 2017

Period

Total Number of
Shares Purchased(1)

Average Price
Paid per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plan(2)

Approximate Dollar
Value of Shares that
May Yet be
Purchased Under
Publicly Announced
Plan(3)
289 million

October 1 through October 31
November 1 through November 30
December 1 through December 31
Total
(1) This column includes activity related to the surrender to Chubb of common shares to satisfy tax withholding obligations in connection with the vesting of restricted stock issued

251 million
170 million (4)

833,599

253,599

555,000

257,154

556,632

841,832

147.54

146.69

149.01

25,000

150.78

28,046

to employees and the exercising of options by employees.

(2) The aggregate value of shares purchased in the three months ended December 31, 2017 as part of the publicly announced plan was $123 million.
(3) In November 2016, our Board authorized $1.0 billion of share repurchases through December 31, 2017.
(4) Refer to Note 11 to the Consolidated Financial Statements for more information on the Chubb Limited securities repurchase authorization. In December 2017, our Board

authorized the repurchase of up to $1.0 billion of Chubb’s Common Shares through December 31, 2018.

Performance Graph
Set forth below is a line graph comparing the dollar change in the cumulative total shareholder return on Chubb's Common
Shares from December 31, 2012, through December 31, 2017, as compared to the cumulative total return of the Standard &
Poor's 500 Stock Index and the cumulative total return of the Standard & Poor's Property-Casualty Insurance Index. The
cumulative total shareholder return is a concept used to compare the performance of a company's stock over time and is the
ratio of the stock price change plus the cumulative amount of dividends over the specified time period (assuming dividend
reinvestment), to the stock price at the beginning of the time period. The chart depicts the value on December 31, 2013,
2014, 2015, 2016, and 2017, of a $100 investment made on December 31, 2012, with all dividends reinvested.

Chubb Limited
S&P 500 Index
S&P 500 P&C Index

12/31/2012

12/31/2013

12/31/2014

12/31/2015

12/31/2016

12/31/2017

$100

$132

$138

$151

$160

$157

$153

$175

$182

$171

$203

$205

$208

$248

ITEM 6. Selected Financial Data

On January 14, 2016, we completed the acquisition of the Chubb Corporation (Chubb Corp). The results of operations of
Chubb Corp are included in our results from the acquisition date forward (i.e., after January 14, 2016 and only in the 2016
and 2017 columns) within the table below. Refer to Note 2 to the Consolidated Financial Statements for additional information
on the acquisition.

(in millions, except per share data and percentages)

2017

2016

2015

2014

2013

Operations data:

Net premiums earned – excluding Life Insurance segment

$ 26,933

$ 26,694

$ 15,266

$ 15,464

$ 14,708

Net premiums earned – Life Insurance segment

Total net premiums earned

Net investment income

Losses and loss expenses

Policy benefits

Policy acquisition costs and administrative expenses

Net income

Weighted-average shares outstanding – diluted

Diluted earnings per share

Balance sheet data (at end of period):

Total investments

Total assets

Net unpaid losses and loss expenses

Net future policy benefits

Long-term debt

Trust preferred securities

Total liabilities

Shareholders' equity

Book value per share

Selected data:
Loss and loss expense ratio (1)
Underwriting and administrative expense ratio (2)
Combined ratio (3)
Cash dividends per share (4)

2,101

29,034

3,125

18,454

676

8,614

3,861

471

2,055

28,749

2,865

16,052

588

8,985

4,135

466

1,947

17,213

2,194

9,484

543

5,211

2,834

329

1,962

17,426

2,252

9,649

517

5,320

2,853

339

1,905

16,613

2,144

9,348

515

4,870

3,758

344

8.19

8.87

8.62

8.42

10.92

$ 102,444

$ 99,094

$ 66,251

$ 62,904

$ 60,928

167,022

159,786

102,306

49,165

5,137

11,556

308

47,832

4,854

12,610

308

115,850

111,511

51,172

48,275

26,562

4,620

9,389

307

73,171

29,135

98,223

27,008

4,537

3,334

307

68,636

29,587

94,487

26,831

4,397

3,786

307

65,662

28,825

$ 110.32

$ 103.60

89.77

90.02

84.83

65.8%

28.9%

94.7%

57.7%

30.6%

88.3%

58.1%

29.2%

87.3%

58.7%

29.4%

88.1%

59.6%

28.4%

88.0%

2.82

2.74

2.66

2.70

2.02

(1) The Loss and loss expense ratio is calculated by dividing losses and loss expenses, excluding the Life Insurance segment, by Net premiums earned – excluding Life Insurance
segment. Losses and loss expenses for the Life Insurance segment were $739 million, $663 million, $601 million, $589 million, and $582 million for the years ended
December 31, 2017, 2016, 2015, 2014, and 2013, respectively.

(2) The Underwriting and administrative expense ratio is calculated by dividing the policy acquisition costs and administrative expenses, excluding the Life Insurance segment, by
Net premiums earned – excluding Life Insurance segment. Policy acquisition costs and administrative expenses for the Life Insurance segment were $833 million, $816
million, $767 million, $763 million, and $701 million for the years ended December 31, 2017, 2016, 2015, 2014, and 2013, respectively.

(3) The combined ratio is the sum of Loss and loss expense ratio and the Underwriting and administrative expense ratio.
(4) Cash dividends per share in 2014 include a $0.12 per share increase related to the fourth quarter 2013, approved by our shareholders on January 10, 2014.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our results of operations, financial condition, and liquidity and capital resources as of and for
the year ended December 31, 2017. This discussion should be read in conjunction with the consolidated financial
statements and related Notes, under Item 8 of this Form 10-K.

All comparisons in this discussion are to the corresponding prior year unless otherwise indicated.

MD&A Index

Forward-Looking Statements

Overview

Financial Highlights

Critical Accounting Estimates

Consolidated Operating Results

Integration-Related Savings

Segment Operating Results

Net Investment Income

Net Realized and Unrealized Gains (Losses)

Amortization of Purchased Intangibles and Other Amortization

Interest Expense

Investments

Asbestos and Environmental (A&E)

Catastrophe Management

Natural Catastrophe Property Reinsurance Program

Political Risk and Credit Insurance

Crop Insurance

Liquidity

Capital Resources

Contractual Obligations and Commitments

Credit Facilities

Ratings

Page

Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Any written or
oral statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect
to future events and financial performance. These forward-looking statements are subject to certain risks, uncertainties, and
other factors that could, should potential events occur, cause actual results to differ materially from such statements. These
risks, uncertainties, and other factors, which are described in more detail under Part I, Item 1A, under Risk Factors, starting on
page 18 and elsewhere herein and in other documents we file with the U.S. Securities and Exchange Commission (SEC),
include but are not limited to:

•

losses arising out of natural or man-made catastrophes such as hurricanes, typhoons, earthquakes, floods, climate change
(including effects on weather patterns; greenhouse gases; sea; land and air temperatures; sea levels; and rain and snow),
nuclear accidents, or terrorism which could be affected by:

•

the number of insureds and ceding companies affected;

the amount and timing of losses actually incurred and reported by insureds;

the impact of these losses on our reinsurers and the amount and timing of reinsurance recoverable actually received;

the cost of building materials and labor to reconstruct properties or to perform environmental remediation following a
catastrophic event; and

complex coverage and regulatory issues such as whether losses occurred from storm surge or flooding and related
lawsuits;

• actions that rating agencies may take from time to time, such as financial strength or credit ratings downgrades or placing

these ratings on credit watch negative or the equivalent;

•

the ability to collect reinsurance recoverable, credit developments of reinsurers, and any delays with respect thereto and
changes in the cost, quality, or availability of reinsurance;

• actual loss experience from insured or reinsured events and the timing of claim payments;

•

the uncertainties of the loss-reserving and claims-settlement processes, including the difficulties associated with assessing
environmental damage and asbestos-related latent injuries, the impact of aggregate-policy-coverage limits, the impact of
bankruptcy protection sought by various asbestos producers and other related businesses, and the timing of loss payments;

changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell,
available for sale fixed maturity investments before their anticipated recovery;

•

infection rates and severity of pandemics and their effects on our business operations and claims activity;

• developments in global financial markets, including changes in interest rates, stock markets, and other financial markets,
increased government involvement or intervention in the financial services industry, the cost and availability of financing,
and foreign currency exchange rate fluctuations (which we refer to in this report as foreign exchange and foreign currency
exchange), which could affect our statement of operations, investment portfolio, financial condition, and financing plans;

• general economic and business conditions resulting from volatility in the stock and credit markets and the depth and

duration of potential recession;

• global political conditions, the occurrence of any terrorist attacks, including any nuclear, radiological, biological, or chemical
events, or the outbreak and effects of war, and possible business disruption or economic contraction that may result from
such events;

•

the potential impact of the United Kingdom’s vote to withdraw from the European Union, including political, regulatory,
social, and economic uncertainty and market and exchange rate volatility;

•

judicial decisions and rulings, new theories of liability, legal tactics, and settlement terms;

•

the effects of public company bankruptcies and/or accounting restatements, as well as disclosures by and investigations of
public companies relating to possible accounting irregularities, and other corporate governance issues, including the effects
of such events on:

•

the capital markets;

the markets for directors and officers (D&O) and errors and omissions (E&O) insurance; and

claims and litigation arising out of such disclosures or practices by other companies;

• uncertainties relating to governmental, legislative and regulatory policies, developments, actions, investigations, and

treaties, which, among other things, could subject us to insurance regulation or taxation in additional jurisdictions or affect
our current operations;

•

the actual amount of new and renewal business, market acceptance of our products, and risks associated with the
introduction of new products and services and entering new markets, including regulatory constraints on exit strategies;

the competitive environment in which we operate, including trends in pricing or in policy terms and conditions, which may
differ from our projections and changes in market conditions that could render our business strategies ineffective or
obsolete;

• acquisitions made by us performing differently than expected, our failure to realize anticipated expense-related efficiencies
or growth from acquisitions, the impact of acquisitions on our pre-existing organization, or announced acquisitions not
closing;

•

risks associated with being a Swiss corporation, including reduced flexibility with respect to certain aspects of capital
management and the potential for additional regulatory burdens;

the potential impact from government-mandated insurance coverage for acts of terrorism;

the availability of borrowings and letters of credit under our credit facilities;

the adequacy of collateral supporting funded high deductible programs;

changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers;

• material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements;

•

the effects of investigations into market practices in the property and casualty (P&C) industry;

changing rates of inflation and other economic conditions, for example, recession;

the amount of dividends received from subsidiaries;

loss of the services of any of our executive officers without suitable replacements being recruited in a reasonable time
frame;

the ability of our technology resources, including information systems and security, to perform as anticipated such as with
respect to preventing material information technology failures or third-party infiltrations or hacking resulting in
consequences adverse to Chubb or its customers or partners; and

• management’s response to these factors and actual events (including, but not limited to, those described above).

The words “believe,” “anticipate,” “estimate,” “project,” “should,” “plan,” “expect,” “intend,” “hope,” “feel,” “foresee,” “will
likely result,” or “will continue,” and variations thereof and similar expressions, identify forward-looking statements. You are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We
undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information,
future events or otherwise.

Overview
We operate through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance,
North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. For more
information on our segments refer to “Segment Information” under Item 1.

We have grown our business through increased premium volume, expansion of product offerings and geographic reach, and
acquisitions of other companies. Acquisitions in 2016 and 2015 are as follows:

• All segments excluding North America Agricultural Insurance: The Chubb Corporation (Chubb Corp) (January 14, 2016).

• North America Personal P&C Insurance: Fireman's Fund Insurance Company high net worth personal lines insurance

business in the U.S. (April 1, 2015).

The consolidated financial statements include results of acquired businesses from the acquisition dates. Refer to Note 2 to the
Consolidated Financial Statements for additional information on our acquisitions.

Our product and geographic diversification differentiates us from the vast majority of our competitors and has been a source of
stability during periods of industry volatility. Our long-term business strategy focuses on sustained growth in book value
achieved through a combination of underwriting and investment income. By doing so, we provide value to our clients and
shareholders through use of our substantial capital base in the insurance and reinsurance markets.

We are organized along a profit center structure by line of business and territory that does not necessarily correspond to
corporate legal entities. Profit centers can access various legal entities subject to licensing and other regulatory rules. Profit
centers are expected to generate underwriting income and appropriate risk-adjusted returns. Our corporate structure has
facilitated the development of management talent by giving each profit center's senior management team the necessary
autonomy within underwriting authorities to make operating decisions and create products and coverages needed by its target
customer base. We are focused on delivering underwriting profit by only writing policies which we believe adequately
compensate us for the risk we accept.

Our insurance and reinsurance operations generate gross revenues from two principal sources: premiums and investment
income. Cash flow is generated from premiums collected and investment income received less paid losses and loss expenses,
policy acquisition costs, and administrative expenses. Invested assets are substantially held in liquid, investment grade fixed
income securities of relatively short duration. Claims payments in any short-term period are highly unpredictable due to the
random nature of loss events and the timing of claims awards or settlements. The value of investments held to pay future
claims is subject to market forces such as the level of interest rates, stock market volatility, and credit events such as corporate
defaults. The actual cost of claims is also volatile based on loss trends, inflation rates, court awards, and catastrophes. We
believe that our cash balance, our highly liquid investments, credit facilities, and reinsurance protection provide sufficient
liquidity to meet unforeseen claim demands that might occur in the year ahead. Refer to “Liquidity” and “Capital Resources” for
additional information.

Combined legacy ACE and legacy Chubb Corp results ("comparative basis")

We discuss financial measures on a "comparative basis" for the 2016 and 2015 periods throughout the Management's
Discussion and Analysis section. We believe these measures provide visibility into our results, allow for comparability to our
historical results and are consistent with how management evaluates results. We define our results discussed on a "comparative
basis" as follows:

2016 "comparative basis" results: The combined company results do not include the impact of the unearned premium reserves
intangible amortization and the elimination of the historical policy acquisition costs as a result of purchase accounting related to
the Chubb Corp acquisition. The combined company results for the year ended December 31, 2016 are inclusive of the first 14
days of January 2016 (the Chubb Corp acquisition closed January 14, 2016).

2015 "comparative basis" results: Legacy ACE plus legacy Chubb Corp historical results after accounting policy alignment
adjustments, including reclassifying certain legacy Chubb Corp corporate expenses to administrative expenses and redefining
legacy Chubb Corp segment underwriting income by allocating the amortization of deferred policy acquisition costs to each
segment. 2015 "comparative basis" results exclude purchase accounting adjustments related to the Chubb Corp acquisition.

A reconciliation of "comparative basis" results as defined above is provided under the Non-GAAP Reconciliation section starting
on page 74.

Financial Highlights for the Year Ended December 31, 2017

• Net income was $3,861 million compared with $4,135 million last year. Net income in 2017 was adversely impacted
by significant catastrophe losses in the year of $2,171 million after-tax and favorably impacted by a provisional tax
benefit of $450 million, related to the 2017 U.S. Tax Cuts and Jobs Act (2017 Tax Act). Net income included a one-time
contribution of $50 million ($32.5 million after-tax) to the Chubb Charitable Foundation.

• Total company and P&C net premiums written were $29.2 billion and $27.1 billion, respectively, up 3.9 percent and 4.2

percent, respectively.

• Total pre-tax and after-tax catastrophe losses, including reinstatement premiums, were $2,746 million (10.2 percentage
points of the combined ratio) and $2,171 million, respectively, compared with $1,060 million (4.0 percentage points of
the combined ratio) and $844 million, respectively, in 2016. Pre-tax catastrophe losses, net of reinsurance and including
reinstatement premiums, included $650 million, $880 million, and $201 million from Hurricanes Harvey, Irma, and
Maria, respectively, $277 million and $157 million from the northern and southern California wildfires, respectively, and
$556 million from other catastrophe losses, principally U.S. weather-related events.

• Since the acquisition of Chubb Corp, we have entered into new reinsurance agreements with third-party reinsurers for

certain legacy Chubb Corp business and have taken other merger-related underwriting actions, including exiting certain
types of business that do not meet our underwriting standards or adhere to our risk diversification strategy. Together,
these items adversely impacted P&C net premiums written growth by $545 million. Accounting policy alignment also
adversely impacted P&C net premiums written growth by $126 million. In addition, net premiums written growth in
2016 was adversely impacted from a one-time unearned premium reserve (UPR) transfer in 2016 which reduced net
premiums written by $128 million in the prior year.

• P&C combined ratio was 94.7 percent compared with 88.7 percent in 2016. P&C current accident year combined ratio

excluding catastrophe losses was 87.6 percent compared with 89.0 percent in 2016.

• Total pre-tax and after-tax favorable prior period development was $829 million (3.1 percentage points of the combined
ratio) and $634 million, respectively, compared with $1,135 million pre-tax (4.3 percentage points of the combined
ratio) and $898 million after-tax in 2016.

• Net investment income was $3,125 million compared with $2,865 million in 2016. Excluding the amortization of the

fair value adjustment on acquired invested assets of Chubb Corp, net investment income was $3,457 million, compared
with $3,258 million in 2016, up 6.1 percent.

• Share repurchases totaled $830 million, or approximately 5.9 million shares for the year.

Outlook

In 2017, we produced net income per share of $8.19 and book value per share growth of 6.5 percent, despite large natural
catastrophe events in the year, including Hurricanes Harvey, Irma, and Maria in the U.S and Caribbean, large earthquakes in
Mexico, and multiple large wildfires in California. We had strong net premiums written of $29.2 billion, up nearly 4 percent.
We are optimistic about our growth prospects for 2018 given strengthening economies in the U.S. and globally, an improving
pricing environment, and because our merger-related underwriting actions and their impact on revenue growth are largely
behind us. In particular, we expect our commercial P&C business to continue to grow and benefit from improving pricing
conditions in a number of our businesses globally in 2018. We also expect growth to improve in our U.S. middle market and
small commercial business, and expect good growth in this area outside the U.S. as well. We also expect good growth in our
global A&H and personal lines business from investments we are making in marketing and technology to provide a more
digital experience for customers and business partners. One of our strategic focus areas is to transform ourselves to thrive in a
digital age. We expect this to significantly enhance our competitive profile and contribute revenue growth and efficiencies in
the medium and longer term.

We also expect to benefit from both a lower U.S. corporate tax rate as a result of the 2017 Tax Act and the additional
insurance exposure growth that will accompany a growing economy.

There are a number of factors that impact the variability in investment income. Nevertheless, excluding the amortization of
the fair value adjustment on acquired invested assets, we expect quarterly investment income to be in the range of $865
million to $875 million, and expect it to improve as the year progresses.

Our distribution agreement with Singapore’s DBS Bank, the largest banking group in Southeast Asia, and our strategic
cooperation agreement with China’s PICC Property & Casualty Company, both announced in 2017, are investments that we
believe will further expand our global growth potential. At the heart of the distribution agreement with DBS Bank is our joint

ability to market and service insurance digitally to millions of DBS customers, both consumers and businesses, in Asia Pacific
countries. The strategic cooperation agreement with PICC is an opportunity to support the insurance needs of PICC and its
customers, some of the largest enterprises in China.

We achieved annualized run rate integration-related savings of $875 million by the end of 2017, ahead of schedule and
above initial projections. Through 2017 we have realized $766 million of savings, of which 63 percent favorably impacted
administrative expenses. The expected incremental realized savings in 2018 is more highly weighted to claims expense
savings than the administrative expense savings experienced to date. While incremental savings are expected to benefit us in
2018, these savings will be partially offset by increased spending to support growth, including our continued investment in
marketing, technology and digitization, and strategic partnerships, such as those mentioned above.

Critical Accounting Estimates
Our consolidated financial statements include amounts that, either by their nature or due to requirements of generally accepted
accounting principles in the U.S. (GAAP), are determined using best estimates and assumptions. While we believe that the
amounts included in our consolidated financial statements reflect our best judgment, actual amounts could ultimately materially
differ from those currently presented. We believe the items that require the most subjective and complex estimates are:

•

unpaid loss and loss expense reserves, including long-tail asbestos and environmental (A&E) reserves;

future policy benefits reserves;

the valuation of value of business acquired (VOBA) and amortization of deferred policy acquisition costs and VOBA;

the assessment of risk transfer for certain structured insurance and reinsurance contracts;

reinsurance recoverable, including a provision for uncollectible reinsurance;

the valuation of our investment portfolio and assessment of other-than-temporary impairments (OTTI);

the valuation of deferred tax assets;

the valuation of derivative instruments related to guaranteed living benefits (GLB); and

the assessment of goodwill for impairment.

We believe our accounting policies for these items are of critical importance to our consolidated financial statements. The
following discussion provides more information regarding the estimates and assumptions required to arrive at these amounts
and should be read in conjunction with the sections entitled: Prior Period Development, Asbestos and Environmental (A&E),
Reinsurance Recoverable on Ceded Reinsurance, Investments, Net Realized and Unrealized Gains (Losses), and Other Income
and Expense Items.

Unpaid losses and loss expenses
As an insurance and reinsurance company, we are required by applicable laws and regulations and GAAP to establish loss and
loss expense reserves for the estimated unpaid portion of the ultimate liability for losses and loss expenses under the terms of
our policies and agreements with our insured and reinsured customers. At December 31, 2017, our gross unpaid loss and loss
expense reserves were $63.2 billion and our net unpaid loss and loss expense reserves were $49.2 billion. With the exception
of certain structured settlements, for which the timing and amount of future claim payments are reliably determinable, and
certain reserves for unsettled claims that are discounted in statutory filings, our loss reserves are not discounted for the time
value of money. In connection with such structured settlements and certain reserves for unsettled claims, we carried net
discounted reserves of $77 million and $88 million at December 31, 2017 and 2016, respectively.

The following table presents a roll-forward of our unpaid losses and loss expenses:

(in millions of U.S. dollars)

Balance, beginning of year
Losses and loss expenses incurred
Losses and loss expenses paid
Other (including foreign exchange translation)
Losses and loss expenses acquired
Balance, end of year
(1) Net of provision for uncollectible reinsurance.

December 31, 2017

December 31, 2016

Gross
Losses

Reinsurance
Recoverable (1)

Net
Losses

Gross
Losses

Reinsurance
Recoverable (1)

Net
Losses

$ 60,540 $

12,708 $ 47,832 $ 37,303 $

10,741 $ 26,562

23,933

(21,812)

518

—

5,479

18,454

20,195

4,143

16,052

(4,364)

(17,448)

(19,436)

(3,721)

(15,715)

191

—

327

—

(445)

22,923

(469)

1,521

21,402

$ 63,179 $

14,014 $ 49,165 $ 60,540 $

12,708 $ 47,832

The estimate of the liabilities includes provisions for claims that have been reported but are unpaid at the balance sheet date
(case reserves) and for obligations on claims that have been incurred but not reported (IBNR) at the balance sheet date. IBNR
may also include provisions to account for the possibility that reported claims may settle for amounts that differ from the
established case reserves. Loss reserves also include an estimate of expenses associated with processing and settling unpaid
claims (loss expenses). Our loss reserves comprise approximately 78 percent casualty-related business, which typically
encompasses long-tail risks, and other risks where a high degree of judgment is required.

The process of establishing loss reserves for property and casualty claims can be complex and is subject to considerable
uncertainty as it requires the use of informed estimates and judgments based on circumstances underlying the insured loss
known at the date of accrual. For example, the reserves established for high excess casualty claims, asbestos and
environmental claims, claims from major catastrophic events, or for our various product lines each require different assumptions
and judgments to be made. Necessary judgments are based on numerous factors and may be revised as additional experience
and other data become available and are reviewed, as new or improved methods are developed, or as laws change. Hence,
ultimate loss payments may differ from the estimate of the ultimate liabilities made at the balance sheet date. Changes to our
previous estimates of prior period loss reserves impact the reported calendar year underwriting results, adversely if our
estimates increase and favorably if our estimates decrease. The potential for variation in loss reserve estimates is impacted by
numerous factors. Reserve estimates for casualty lines are particularly uncertain given the lengthy reporting patterns and
corresponding need for IBNR.

Case reserves for those claims reported by insureds or ceding companies to us prior to the balance sheet date and where we
have sufficient information are determined by our claims personnel as appropriate based on the circumstances of the claim(s),
standard claim handling practices, and professional judgment. Furthermore, for our Brandywine run-off operations and our
assumed reinsurance operation, Global Reinsurance, we may adjust the case reserves as notified by the ceding company if the
judgment of our respective claims department differs from that of the cedant.

With respect to IBNR reserves and those claims that have been incurred but not reported prior to the balance sheet date, there
is, by definition, limited actual information to form the case reserve estimate and reliance is placed upon historical loss
experience and actuarial methods to estimate the ultimate loss obligations and the corresponding amount of IBNR. IBNR
reserve estimates are generally calculated by first projecting the ultimate amount of losses for a product line and subtracting
paid losses and case reserves for reported claims. The judgments involved in projecting the ultimate losses may pertain to the
use and interpretation of various standard actuarial reserving methods that place reliance on the extrapolation of actual
historical data, loss development patterns, industry data, and other benchmarks as appropriate. The estimate of the required
IBNR reserve also requires judgment by actuaries and management to reflect the impact of more contemporary and subjective
factors, both qualitative and quantitative. Among some of these factors that might be considered are changes in business mix or
volume, changes in ceded reinsurance structures, changes in claims handling practices, reported and projected loss trends,
inflation, the legal environment, and the terms and conditions of the contracts sold to our insured parties.

Determining management's best estimate
Our recorded reserves represent management's best estimate of the provision for unpaid claims as of the balance sheet date,
and establishing them involves a process that includes collaboration with various relevant parties in the company. For
information on our reserving process, refer to Note 7 to the Consolidated Financial Statements.

Sensitivity to underlying assumptions
While we believe that our reserve for unpaid losses and loss expenses at December 31, 2017, is adequate, new
information or emerging trends that differ from our assumptions may lead to future development of losses and loss
expenses that is significantly greater or less than the recorded reserve, which could have a material effect on future
operating results. As noted previously, our best estimate of required loss reserves for most portfolios is judgmentally
selected for each origin year after considering the results from a number of reserving methods and is not a purely
mechanical process. Therefore, it is difficult to convey, in a simple and quantitative manner, the impact that a change to a
single assumption will have on our best estimate. In the examples below, we attempt to give an indication of the potential
impact by isolating a single change for a specific reserving method that would be pertinent in establishing the best
estimate for the product line described. We consider each of the following sensitivity analyses to represent a reasonably
likely deviation in the underlying assumption.

North America Commercial P&C Insurance
Given the long reporting and paid development patterns for workers' compensation business, the development factors used to
project actual current losses to ultimate losses for our current exposure require considerable judgment that could be material to
consolidated loss and loss expense reserves. Specifically, adjusting ground up ultimate losses by a one percent change in the
tail factor (i.e., 1.04 changed to either 1.05 or 1.03) would cause a change of approximately $658 million, either positive or
negative, for the projected net loss and loss expense reserves. This represents an impact of about 8.3 percent relative to
recorded net loss and loss expense reserves of approximately $7.9 billion.

The reserve portfolio for our Chubb Bermuda operations contains exposure to predominantly high excess liability coverage on
an occurrence-first-reported basis (typically with attachment points in excess of $325 million and gross limits of up to $150
million) and D&O and other professional liability coverage on a claims-made basis (typically with attachment points in excess
of $125 million and gross limits of up to $75 million). Due to the layer of exposure covered, the expected frequency for this
book is very low. As a result of the low frequency/high severity nature of the book, a small difference in the actual vs. expected
claim frequency, either positive or negative, could result in a material change to the projected ultimate loss if such change in
claim frequency was related to a policy where close to maximum limits were deployed.

North America Personal P&C Insurance
Due to the relatively short-tailed nature of many of the coverages involved (e.g., homeowners property damage), most of the
incurred losses in Personal Lines are resolved within a few years of occurrence. As shown in our loss triangle disclosure, the
vast majority (over 95 percent) of Personal Lines net ultimate losses and allocated loss adjustment expenses are typically paid
within five years of the accident date and over 80 percent within two years. Even though there are significant reserves
associated with some liability exposures such as personal excess/umbrella liability, our incurred loss triangle also shows a
roughly consistent pattern of only relatively minor movements in incurred estimates over time by accident year especially after
twenty four months of maturity. While the liability exposures are subject to additional uncertainties from more protracted
resolution times, the main drivers of volatility in the Personal Lines business are relatively short-term in nature and relate to
things like natural catastrophes, non-catastrophe weather events, man-made risks, and individual large loss volatility from other
fortuitous claim events.

North America Agricultural Insurance
Approximately 69 percent of the reserves for this segment are from the crop related lines, which all have short payout
patterns, with the majority of the liabilities expected to be resolved in the ensuing twelve months. Claim reserves for our
Multiple Peril Crop Insurance (MPCI) product are set on a case-by-case basis and our aggregate exposure is subject to state
level risk sharing formulae as well as third-party reinsurance. The majority of the development risk arises out of the accuracy
of case reserve estimates and the time needed for final crop conditions to be assessed. We do not view our Agriculture
reserves as substantially influenced by the general assumptions and risks underlying more typical P&C reserve estimates.

Overseas General Insurance
Certain long-tail lines, such as casualty and professional lines, are particularly susceptible to changes in loss trend and claim
inflation. Heightened perceptions of tort and settlement awards around the world can increase the demand for these products
as well as contributing to the uncertainty in the reserving estimates. Our reserving methods rely on loss development patterns
estimated from historical data and while we attempt to adjust such factors for known changes in the current tort environment,
it is possible that such factors may not entirely reflect all recent trends in tort environments. For example, when applying the
reported loss development method, the lengthening of our selected loss development patterns by six months would increase
reserve estimates on long-tail casualty and professional lines for accident years 2015 and prior by approximately $484

million. This represents an impact of 13.7 percent relative to recorded net loss and loss expense reserves of approximately
$3.5 billion.

Global Reinsurance
Typically, there is inherent uncertainty around the length of paid and reported development patterns, especially for certain
casualty lines such as excess workers' compensation or general liability, which may take decades to fully develop. This
uncertainty is accentuated by the need to supplement client development patterns with industry development patterns due to
the sometimes low statistical credibility of the data. The underlying source and selection of the final development patterns can
thus have a significant impact on the selected ultimate net losses and loss expenses. For example, a 20 percent shortening or
lengthening of the development patterns used for U.S. long-tail lines would cause the loss reserve estimate derived by the
reported Bornhuetter-Ferguson method for these lines to change by approximately $458 million. This represents an impact of
52 percent relative to recorded net loss and loss expense reserves of approximately $888 million.

Assumed reinsurance
At December 31, 2017, net unpaid losses and loss expenses for the Global Reinsurance segment aggregated to $1.7 billion,
consisting of $843 million of case reserves and $870 million of IBNR. In comparison, at December 31, 2016, net unpaid
losses and loss expenses for the Global Reinsurance segment aggregated to $1.7 billion, consisting of $760 million of case
reserves and $978 million of IBNR.

For our catastrophe business, we principally estimate unpaid losses and loss expenses on an event basis by considering various
sources of information, including specific loss estimates reported by our cedants, ceding company and overall industry loss
estimates reported by our brokers, and our internal data regarding reinsured exposures related to the geographical location of
the event. Our internal data analysis enables us to establish catastrophe reserves for known events with more certainty at an
earlier date than would be the case if we solely relied on reports from third parties to determine carried reserves.

For our casualty reinsurance business, we generally rely on ceding companies to report claims and then use that data as a key
input to estimate unpaid losses and loss expenses. Due to the reliance on claims information reported by ceding companies, as
well as other factors, the estimation of unpaid losses and loss expenses for assumed reinsurance includes certain risks and
uncertainties that are unique relative to our direct insurance business. These include, but are not necessarily limited to, the
following:

• The reported claims information could be inaccurate;

• Typically, a lag exists between the reporting of a loss event to a ceding company and its reporting to us as a reinsurance
claim. The use of a broker to transmit financial information from a ceding company to us increases the reporting lag.
Because most of our reinsurance business is produced by brokers, ceding companies generally first submit claim and other
financial information to brokers, who then report the proportionate share of such information to each reinsurer of a
particular treaty. The reporting lag generally results in a longer period of time between the date a claim is incurred and the
date a claim is reported compared with direct insurance operations. Therefore, the risk of delayed recognition of loss
reserve development is higher for assumed reinsurance than for direct insurance lines; and

• The historical claims data for a particular reinsurance contract can be limited relative to our insurance business in that
there may be less historical information available. Further, for certain coverages or products, such as excess of loss
contracts, there may be relatively few expected claims in a particular year so the actual number of claims may be
susceptible to significant variability. In such cases, the actuary often relies on industry data from several recognized
sources.

We mitigate the above risks in several ways. In addition to routine analytical reviews of ceding company reports to ensure
reported claims information appears reasonable, we perform regular underwriting and claims audits of certain ceding companies
to ensure reported claims information is accurate, complete, and timely. As appropriate, audit findings are used to adjust claims
in the reserving process. We also use our knowledge of the historical development of losses from individual ceding companies to
adjust the level of adequacy we believe exists in the reported ceded losses.

On occasion, there will be differences between our carried loss reserves and unearned premium reserves and the amount of loss
reserves and unearned premium reserves reported by the ceding companies. This is due to the fact that we receive consistent
and timely information from ceding companies only with respect to case reserves. For IBNR, we use historical experience and
other statistical information, depending on the type of business, to estimate the ultimate loss. We estimate our unearned
premium reserve by applying estimated earning patterns to net premiums written for each treaty based upon that treaty's
coverage basis (i.e., risks attaching or losses occurring). At December 31, 2017, the case reserves reported to us by our ceding

companies were $827 million, compared with the $843 million we recorded. Our policy is to post additional case reserves in
addition to the amounts reported by our cedants when our evaluation of the ultimate value of a reported claim is different than
the evaluation of that claim by our cedant.

Within Corporate, we also have exposure to certain liability reinsurance lines that have been in run-off since 1994. Unpaid
losses and loss expenses relating to this run-off reinsurance business resides within the Brandywine Division of Corporate. Most
of the remaining unpaid loss and loss expense reserves for the run-off reinsurance business relate to A&E claims. Refer to the
“Asbestos and Environmental (A&E)” section for additional information.

Asbestos and environmental reserves
Included in our liabilities for losses and loss expenses are amounts for A&E (A&E liabilities). The A&E liabilities principally relate
to claims arising from bodily-injury claims related to asbestos products and remediation costs associated with hazardous waste
sites. The estimation of our A&E liabilities is particularly sensitive to future changes in the legal, social, and economic
environment. We have not assumed any such future changes in setting the value of our A&E liabilities, which include provisions
for both reported and IBNR claims.

There are many complex variables that we consider when estimating the reserves for our inventory of asbestos accounts and
these variables may directly impact the predicted outcome. We believe the most significant variables relating to our A&E
liabilities include the current legal environment; specific settlements that may be used as precedents to settle future claims;
assumptions regarding trends with respect to claim severity and the frequency of higher severity claims; assumptions regarding
the ability to allocate liability among defendants (including bankruptcy trusts) and other insurers; the ability of a claimant to
bring a claim in a state in which they have no residency or exposure; the ability of a policyholder to claim the right to
unaggregated coverage; whether high-level excess policies have the potential to be accessed given the policyholder's claim
trends and liability situation; payments to unimpaired claimants; and, the potential liability of peripheral defendants. Based on
the policies, the facts, the law, and a careful analysis of the impact that these factors will likely have on any given account, we
estimate the potential liability for indemnity, policyholder defense costs, and coverage litigation expense.

The results in asbestos cases announced by other carriers or defendants may well have little or no relevance to us because
coverage exposures are highly dependent upon the specific facts of individual coverage and resolution status of disputes among
carriers, policyholders, and claimants.

For additional information refer to the “Asbestos and Environmental (A&E)” section and to Note 7 to the Consolidated Financial
Statements.

Future policy benefits reserves
We issue contracts in our Overseas General Insurance and Life Insurance segments that are classified as long-duration. These
contracts generally include accident and supplemental health products, term and whole life products, endowment products, and
annuities. In accordance with GAAP, we establish reserves for contracts determined to be long-duration based on approved
actuarial methods that include assumptions related to expenses, mortality, morbidity, persistency, and investment yields with a
factor for adverse deviation. These assumptions are “locked in” at the inception of the contract, meaning we use our original
assumptions throughout the life of the policy and do not subsequently modify them unless we deem the reserves to be
inadequate. The future policy benefits reserves balance is regularly evaluated for a premium deficiency. If experience is less
favorable than assumptions, additional liabilities may be required, resulting in a charge to policyholder benefits and claims.

Valuation of value of business acquired (VOBA), and amortization of deferred policy acquisition costs and VOBA
As part of the acquisition of businesses that sell long-duration contracts, such as life products, we established an intangible
asset related to VOBA, which represented the fair value of the future profits of the in-force contracts. The valuation of VOBA at
the time of acquisition is derived from similar assumptions to those used to establish the associated future policy benefits
reserves. The most significant input in this calculation is the discount rate used to arrive at the present value of the net cash
flows. We amortize deferred policy acquisition costs associated with long-duration contracts and VOBA (collectively policy
acquisition costs) over the estimated life of the contracts, generally in proportion to premium revenue recognized based upon
the same assumptions used in estimating the liability for future policy benefits. For non-traditional long-duration contracts, we
amortize policy acquisition costs over the expected life of the contracts in proportion to estimates of expected gross profits. The
estimated life is established at the inception of the contracts or upon acquisition and is based on current persistency
assumptions. Policy acquisition costs, which consist of commissions, premium taxes, and certain underwriting costs related
directly to the successful acquisition of a new or renewal insurance contract, are reviewed to determine if they are recoverable
from future income, including investment income. Unrecoverable costs are expensed in the period identified.

Risk transfer
In the ordinary course of business, we both purchase (or cede) and sell (or assume) reinsurance protection. We discontinued the
purchase of all finite risk reinsurance contracts, as a matter of policy, in 2002. For both ceded and assumed reinsurance, risk
transfer requirements must be met in order to use reinsurance accounting, principally resulting in the recognition of cash flows
under the contract as premiums and losses. If risk transfer requirements are not met, a contract is to be accounted for as a
deposit, typically resulting in the recognition of cash flows under the contract through a deposit asset or liability and not as
revenue or expense. To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of
underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity. We also apply similar risk
transfer requirements to determine whether certain commercial insurance contracts should be accounted for as insurance or a
deposit. Contracts that include fixed premium (i.e., premium not subject to adjustment based on loss experience under the
contract) for fixed coverage generally transfer risk and do not require judgment.

Reinsurance and insurance contracts that include both significant risk sharing provisions, such as adjustments to premiums or
loss coverage based on loss experience, and relatively low policy limits, as evidenced by a high proportion of maximum
premium assessments to loss limits, can require considerable judgment to determine whether or not risk transfer requirements
are met. For such contracts, often referred to as finite or structured products, we require that risk transfer be specifically
assessed for each contract by developing expected cash flow analyses at contract inception. To support risk transfer, the cash
flow analyses must demonstrate that a significant loss is reasonably possible, such as a scenario in which the ratio of the net
present value of losses divided by the net present value of premiums equals or exceeds 110 percent. For purposes of cash flow
analyses, we generally use a risk-free rate of return consistent with the expected average duration of loss payments. In
addition, to support insurance risk, we must prove the reinsurer's risk of loss varies with that of the reinsured and/or support
various scenarios under which the assuming entity can recognize a significant loss.

To ensure risk transfer requirements are routinely assessed, qualitative and quantitative risk transfer analyses and memoranda
supporting risk transfer are developed by underwriters for all structured products. We have established protocols for structured
products that include criteria triggering an accounting review of the contract prior to quoting. If any criterion is triggered, a
contract must be reviewed by a committee established by each of our segments with reporting oversight, including peer review,
from our global Structured Transaction Review Committee.

With respect to ceded reinsurance, we entered into a few multi-year excess of loss retrospectively-rated contracts, principally in
2002. These contracts primarily provided severity protection for specific product divisions. Because traditional one-year
reinsurance coverage had become relatively costly, these contracts were generally entered into in order to secure a more cost-
effective reinsurance program. All of these contracts transferred risk and were accounted for as reinsurance. In addition, we
maintain a few aggregate excess of loss reinsurance contracts that were principally entered into prior to 2003, such as the
National Indemnity Company (NICO) contracts referred to in the section entitled, “Asbestos and Environmental (A&E)”. We have
not purchased any other retroactive ceded reinsurance contracts since 1999.

With respect to assumed reinsurance and insurance contracts, products giving rise to judgments regarding risk transfer were
primarily sold by our financial solutions business. Although we have significantly curtailed writing financial solutions business,
several contracts remain in-force and principally include multi-year retrospectively-rated contracts and loss portfolio transfers.
Because transfer of insurance risk is generally a primary client motivation for purchasing these products, relatively few
insurance and reinsurance contracts have historically been written for which we concluded that risk transfer criteria had not
been met. For certain insurance contracts that have been reported as deposits, the insured desired to self-insure a risk but was
required, legally or otherwise, to purchase insurance so that claimants would be protected by a licensed insurance company in
the event of non-payment from the insured.

Reinsurance recoverable
Reinsurance recoverable includes balances due to us from reinsurance companies for paid and unpaid losses and loss expenses
and is presented net of a provision for uncollectible reinsurance. The provision for uncollectible reinsurance is determined based
upon a review of the financial condition of the reinsurers and other factors. Ceded reinsurance contracts do not relieve our
primary obligation to our policyholders. Consequently, an exposure exists with respect to reinsurance recoverable to the extent
that any reinsurer is unable or unwilling to meet its obligations or disputes the liabilities assumed under the reinsurance
contracts. We determine the reinsurance recoverable on unpaid losses and loss expenses using actuarial estimates as well as a
determination of our ability to cede unpaid losses and loss expenses under existing reinsurance contracts.

The recognition of a reinsurance recoverable asset requires two key judgments. The first judgment involves our estimation based
on the amount of gross reserves and the percentage of that amount which may be ceded to reinsurers. Ceded IBNR, which is a
major component of the reinsurance recoverable on unpaid losses and loss expenses, is generally developed as part of our loss
reserving process and, consequently, its estimation is subject to similar risks and uncertainties as the estimation of gross IBNR
(refer to “Critical Accounting Estimates – Unpaid losses and loss expenses”). The second judgment involves our estimate of the
amount of the reinsurance recoverable balance that we may ultimately be unable to recover from reinsurers due to insolvency,
contractual dispute, or for other reasons. Estimated uncollectible amounts are reflected in a provision that reduces the
reinsurance recoverable asset and, in turn, shareholders' equity. Changes in the provision for uncollectible reinsurance are
reflected in net income.

Although the obligation of individual reinsurers to pay their reinsurance obligations is based on specific contract provisions, the
collectability of such amounts requires estimation by management. The majority of the recoverable balance will not be due for
collection until sometime in the future, and the duration of our recoverables may be longer than the duration of our direct
exposures. Over this period of time, economic conditions and operational performance of a particular reinsurer may impact their
ability to meet these obligations and while they may continue to acknowledge their contractual obligation to do so, they may not
have the financial resources or willingness to fully meet their obligation to us.

To estimate the provision for uncollectible reinsurance, the reinsurance recoverable must first be determined for each reinsurer.
This determination is based on a process rather than an estimate, although an element of judgment must be applied. As part of
the process, ceded IBNR is allocated to reinsurance contracts because ceded IBNR is not generally calculated on a contract by
contract basis. The allocations are generally based on premiums ceded under reinsurance contracts, adjusted for actual loss
experience and historical relationships between gross and ceded losses. If actual premium and loss experience vary materially
from historical experience, the allocation of reinsurance recoverable by reinsurer will be reviewed and may change. While such
change is unlikely to result in a large percentage change in the provision for uncollectible reinsurance, it could, nevertheless,
have a material effect on our net income in the period recorded.

Generally, we use a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are
reinsurance recoverable balances by reinsurer, net of collateral, and default factors used to estimate the probability that the
reinsurer may be unable to meet its future obligations in full. The definition of collateral for this purpose requires some
judgment and is generally limited to assets held in a Chubb-only beneficiary trust, letters of credit, and liabilities held by us
with the same legal entity for which we believe there is a right of offset. We do not currently include multi-beneficiary trusts.
However, we have several reinsurers that have established multi-beneficiary trusts for which certain of our companies are
beneficiaries. The determination of the default factor is principally based on the financial strength rating of the reinsurer and a
corresponding default factor applicable to the financial strength rating. Default factors require considerable judgment and are
determined using the current financial strength rating, or rating equivalent, of each reinsurer as well as other key considerations
and assumptions. Significant considerations and assumptions include, but are not necessarily limited to, the following:

• For reinsurers that maintain a financial strength rating from a major rating agency, and for which recoverable balances are

considered representative of the larger population (i.e., default probabilities are consistent with similarly rated reinsurers
and payment durations conform to averages), the judgment exercised by management to determine the provision for
uncollectible reinsurance of each reinsurer is typically limited because the financial rating is based on a published source
and the default factor we apply is based on a historical default factor of a major rating agency applicable to the particular
rating class. Default factors applied for financial ratings of AAA, AA, A, BBB, BB, B, and CCC, are 0.8 percent, 1.2
percent, 1.7 percent, 4.9 percent, 19.6 percent, 34.0 percent, and 62.2 percent, respectively. Because our model is
predicated on the historical default factors of a major rating agency, we do not generally consider alternative factors.
However, when a recoverable is expected to be paid in a brief period of time by a highly-rated reinsurer, such as certain
property catastrophe claims, a default factor may not be applied;

• For balances recoverable from reinsurers that are both unrated by a major rating agency and for which management is
unable to determine a credible rating equivalent based on a parent or affiliated company, we may determine a rating
equivalent based on our analysis of the reinsurer that considers an assessment of the creditworthiness of the particular
entity, industry benchmarks, or other factors as considered appropriate. We then apply the applicable default factor for that
rating class. For balances recoverable from unrated reinsurers for which our ceded reserve is below a certain threshold, we
generally apply a default factor of 34.0 percent;

• For balances recoverable from reinsurers that are either insolvent or under regulatory supervision, we establish a default

factor and resulting provision for uncollectible reinsurance based on specific facts and circumstances surrounding each
company. Upon initial notification of an insolvency, we generally recognize expense for a substantial portion of all balances
outstanding, net of collateral, through a combination of write-offs of recoverable balances and increases to the provision for

uncollectible reinsurance. When regulatory action is taken on a reinsurer, we generally recognize a default factor by
estimating an expected recovery on all balances outstanding, net of collateral. When sufficient credible information
becomes available, we adjust the provision for uncollectible reinsurance by establishing a default factor pursuant to
information received; and

• For captives and other recoverables, management determines the provision for uncollectible reinsurance based on the

specific facts and circumstances.

The following table summarizes reinsurance recoverables and the provision for uncollectible reinsurance for each type of
recoverable balance at December 31, 2017:

(in millions of U.S. dollars)

Gross Reinsurance
Recoverables on
Losses and Loss
Expenses

Recoverables
(net of Usable
Collateral)

Provision for
Uncollectible
Reinsurance (1)

Type
Reinsurers with credit ratings
Reinsurers not rated
Reinsurers under supervision and insolvent reinsurers
Captives
Other - structured settlements and pools
Total
(1) The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance recoverables, net of approximately $3.7 billion and $3.3 billion of

10,097 $

11,634 $

15,355 $

11,442 $

1,188

2,199

992

258

426

100

190

166

321

collateral at December 31, 2017 and 2016, respectively.

At December 31, 2017, the use of different assumptions within our approach could have a material effect on the provision for
uncollectible reinsurance. To the extent the creditworthiness of our reinsurers were to deteriorate due to an adverse event
affecting the reinsurance industry, such as a large number of major catastrophes, actual uncollectible amounts could be
significantly greater than our provision for uncollectible reinsurance. Such an event could have a material adverse effect on our
financial condition, results of operations, and our liquidity. Given the various considerations used to estimate our uncollectible
provision, we cannot precisely quantify the effect a specific industry event may have on the provision for uncollectible
reinsurance. However, based on the composition (particularly the average credit quality) of the reinsurance recoverable balance
at December 31, 2017, we estimate that a ratings downgrade of one notch for all rated reinsurers (i.e., from A to A- or A- to
BBB+) could increase our provision for uncollectible reinsurance by approximately $64 million or approximately 0.4 percent of
the gross reinsurance recoverable balance, assuming no other changes relevant to the calculation. While a ratings downgrade
would result in an increase in our provision for uncollectible reinsurance and a charge to earnings in that period, a downgrade in
and of itself does not imply that we will be unable to collect all of the ceded reinsurance recoverable from the reinsurers in
question. Refer to Note 5 to the Consolidated Financial Statements for additional information.

Other-than-temporary impairments (OTTI)
Each quarter, we review securities in an unrealized loss position (impaired securities), including fixed maturities, securities
lending collateral, equity securities, and other investments, to identify impaired securities to be specifically evaluated for a
potential OTTI. Because our investment portfolio is the largest component of consolidated assets, OTTI could be material to our
financial condition and results of operations. Refer to Note 3 d) to the Consolidated Financial Statements for a description of the
OTTI process.

Deferred taxes
At December 31, 2017, our net deferred tax liability was $699 million. Many of our insurance businesses operate in income
tax-paying jurisdictions. Our deferred tax assets and liabilities primarily result from temporary differences between the amounts
recorded in our consolidated financial statements and the tax basis of our assets and liabilities. We determine deferred tax
assets and liabilities separately for each tax-paying component (an individual entity or group of entities that is consolidated for
tax purposes) in each tax jurisdiction. The realization of deferred tax assets depends upon the existence of sufficient taxable
income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. There may be changes
in tax laws in a number of countries where we transact business that impact our tax balances. For example, the recently
enacted 2017 Tax Act in the U.S. required us to reassess our deferred tax balances, principally to reflect the reduction of the
corporate tax rate from 35 percent to 21 percent. We have adjusted our deferred tax balances in the fourth quarter of 2017
based on our best estimate and understanding of the new tax legislation. However, the 2017 Tax Act is a complex law with

many new provisions. Until additional guidance is issued, there are many uncertainties relating to its ultimate application. Refer
to Note 8 to the Consolidated Financial Statements for additional information.

At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred tax assets
when it is more likely than not that all, or some portion, of the deferred tax assets will not be realized. The valuation allowance
is based on all available information including projections of future taxable income from each tax-paying component in each tax
jurisdiction, principally derived from business plans and available tax planning strategies. Projections of future taxable income
incorporate several assumptions of future business and operations that are apt to differ from actual experience. If our
assumptions and estimates that resulted in our forecast of future taxable income for each tax-paying component prove to be
incorrect, an additional valuation allowance could become necessary, which could have a material adverse effect on our
financial condition, results of operations, and liquidity. At December 31, 2017, the valuation allowance of $99 million reflects
management's assessment that it is more likely than not that a portion of the deferred tax asset will not be realized due to the
potential inability to utilize foreign tax credits in the U.S. and the inability of certain foreign subsidiaries to generate sufficient
taxable income.

Fair value measurements
Accounting guidance defines fair value as the price to sell an asset or transfer a liability (an exit price) in an orderly transaction
between market participants and establishes a three-level valuation hierarchy based on the reliability of the inputs. The fair
value hierarchy gives the highest priority to quoted prices in active markets (Level 1 inputs) and the lowest priority to
unobservable data (Level 3 inputs). Level 2 includes inputs, other than quoted prices within Level 1, that are observable for
assets or liabilities either directly or indirectly. Refer to Note 4 and Note 13 to the Consolidated Financial Statements for
information on our fair value measurements.

Assumed reinsurance programs involving minimum benefit guarantees under variable annuity contracts
Chubb reinsures various death and living benefit guarantees associated with variable annuities issued primarily in the United
States and Japan. We ceased writing this business in 2007. Guarantees which are payable on death are referred to as
guaranteed minimum death benefits (GMDB). Guarantees on living benefits (GLB) includes guaranteed minimum income
benefits (GMIB) and guaranteed minimum accumulation benefits (GMAB). For further description of this product and related
accounting treatment, refer to Note 1 j) to the Consolidated Financial Statements.

Guaranteed living benefits (GLB) derivatives
Our GLB reinsurance is classified as a derivative for accounting purposes and therefore carried at fair value. We believe that the
most meaningful presentation of these GLB derivatives is as follows:

• Estimates of the average modeled value of future cash outflows is recorded as incurred losses (i.e., benefit reserves). Cash
inflows or revenue are reported as net premiums earned and changes in the benefit reserves are reflected as Policy benefits
expense in the Consolidated statements of operations, which is included in underwriting income.

• The incremental difference between the fair value of GLB reinsurance contracts and benefit reserves is reflected in Accounts
payable, accrued expenses, and other liabilities in the Consolidated balance sheets and related changes in fair value are
reflected in Net realized gains (losses) in the Consolidated statements of operations.

Determination of GLB fair value
The fair value of GLB reinsurance is estimated using an internal valuation model, which includes current market information
and estimates of policyholder behavior from the perspective of a theoretical market participant that would assume these
liabilities. All of our treaties contain claim limits, which are factored into the valuation model. The fair value depends on a
number of factors, including interest rates, equity markets, credit risk, current account value, market volatility, expected
annuitization rates and other policyholder behavior, and changes in policyholder mortality. The model and related assumptions
are regularly re-evaluated by management and enhanced, as appropriate, based upon additional experience obtained related to
policyholder behavior and availability of more timely market information. Due to the inherent uncertainties of the assumptions
used in the valuation models to determine the fair value of these derivative products, actual experience may differ materially
from the estimates reflected in our Consolidated Financial Statements.

We intend to hold these derivative contracts to maturity (i.e., the expiration of the underlying liabilities through lapse,
annuitization, death, or expiration of the reinsurance contract). To partially offset the risk of changes in the fair value of GLB
reinsurance contracts, we invest in derivative hedge instruments. At maturity, the cumulative realized gains and losses
(excluding cumulative hedge gains or losses) from fair value changes of GLB reinsurance contracts will net to zero because, over
time, the insurance liability will be increased or decreased to equal our obligation.

Determination of GLB and Guaranteed minimum death benefits (GMDB) benefit reserves
Management established benefit reserves based on a long-term benefit ratio (or loss ratio) calculated using assumptions
reflecting management’s best estimate of the future short-term and long-term performance of the variable annuity line of
business. Despite the long-term nature of the risk, the benefit ratio calculation is impacted by short-term market movements
that may be judged by management to be transient. Management regularly examines both qualitative and quantitative analysis,
including a review of the differential between the benefit ratio used at the most recent valuation date and the benefit ratio
calculated on subsequent dates. Management regularly evaluates its estimates and uses judgment to determine the extent to
which assumptions underlying the benefit ratio calculation should be adjusted. For the year ended December 31, 2017,
management determined that no change to the benefit ratio was warranted.

For further information on the estimates and assumptions used in determining the fair value of GLB reinsurance, refer to Note 4
to the Consolidated Financial Statements. For a sensitivity discussion of the effect of changes in interest rates, equity indices,
and other assumptions on the fair value of GLBs, and the estimated resulting impact on our net income, refer to Item 7A.

Risk Management
We employ a strategy to manage the financial market and policyholder behavior risks embedded in the reinsurance of variable
annuity (VA) guarantees. Risk management begins with underwriting a prospective client and guarantee design, with particular
focus on protecting our position from policyholder options that, because of anti-selective behavior, could adversely impact our
obligation.

A second layer of risk management is the structure of the reinsurance contracts. All VA guarantee reinsurance contracts include
some form of annual or aggregate claim limit(s). For example, for 65 percent of the GMDB portfolio (based on guaranteed
value), there is an annual claim limit of 2 percent of account value. The different categories of claim limits are as follows:

Reinsurance program covering

% of total guaranteed
value (GV)

% of GV that has
additional
reinsurance
coverage

Additional terms

GMDB with an annual claim limit of
2% of account value (AV)

GMDB with annual claim limits that
are a function of underlying GV
(varies from 0.4% to 2.0% of GV)

65% of total GMDB

2% for GLB N/A

30% of total GMDB

80% for GLB • 50% of GV subject to annual claim

GMDB and GMAB

5% of total GLB
5% of total GMDB

deductibles(1) of 0.1% to 0.2% of GV

• 30% of GV subject to an aggregate claim limit

of approximately $275 million

N/A • Programs are quota-share (QS) agreements
with QS % decreasing as ratio of AV to GV
decreases:
— QS 100% for ratios between 100% - 75%
— QS 60% for ratios between 75% - 45%
— QS 30% for ratios less than 45%
• 5% of GV subject to a per policy claim

deductible of 8.8% of GV for GMAB only(1)

GMIB with annual claim limits that
are a function of underlying GV
(typically 10% of GV)

GMIB with an aggregate claim limit of
$2.0 billion

65% of total GLB

45% for GMDB • Annual annuitization limit range 17.5% - 30%:

— 55% subject to limit of 30%
— 45% subject to limit of 20% or under

• 43% of GV subject to minimum annuity

conversion factors that limits exposure to low
interest rates

30% of total GLB

35% for GMDB • Annual annuitization limit of 20%

• 65% of GV subject to minimum annuity

conversion factors that limit exposure to low
interest rates

• 40% of GV subject to an aggregate claim

deductible of 2% of underlying annuity deposits

(1) Chubb would only pay total annual claims in excess of deductibles.

A third layer of risk management is the hedging strategy which looks to mitigate both long-term economic loss over time as well
as dampen income statement volatility. We owned financial market instruments as part of the hedging strategy with a fair value
(liability) asset of $(21) million and $1 million at December 31, 2017 and 2016, respectively. The instruments are
substantially collateralized by our counterparties, on a daily basis.

We also limit the aggregate amount of variable annuity reinsurance guarantee risk we are willing to assume. The last
substantive transactions were quoted in late 2007. The aggregate number of policyholders is currently decreasing through
policyholder withdrawals, annuitizations, and deaths at a rate of 5 percent to 15 percent per annum.

Note that GLB claims cannot occur for any reinsured policy until it has reached the end of its “waiting period”. As shown in the
table below, 80 percent of the policies we reinsure reached the end of their “waiting periods” in 2017 and prior.

Year of first payment eligibility

2017 and prior

2018

2019

2020

2021

2022 and after

Total

Percent of living benefit
account values
80%

10%

100%

The following table presents the historical cash flows under these policies for the periods indicated. The amounts represent
accrued past premium received and claims paid, split by benefit type.

(in millions of U.S. dollars)

GMDB

GLB

2017

Total

GMDB

GLB

2016

Total

GMDB

GLB

Premium received

Less paid claims

Net cash received

49 $

110 $

159 $

55 $

118 $

173 $

61 $

121 $

18 $

56 $

74 $

13 $

79 $

92 $

33 $

105 $

2015

Total

182

138

Collateral
Chubb holds collateral on behalf of most of its clients in the form of qualified assets in trust or letters of credit, typically in an
amount sufficient for the client to obtain statutory reserve credit for the reinsurance. The timing of the calculation and amount
of the collateral varies by client according to the particulars of the reinsurance treaty and the statutory reserve guidelines of the
client's domicile.

Goodwill impairment assessment
Goodwill, which represents the excess of acquisition cost over the estimated fair value of net assets acquired, was $15.5 billion
and $15.3 billion at December 31, 2017 and 2016, respectively. Goodwill is assigned to applicable reporting units of acquired
entities at the time of acquisition. Our reporting units are the same as our reportable segments. For goodwill balances by
reporting units, refer to Note 6 to the Consolidated Financial Statements.

Goodwill is not amortized but is subject to a periodic evaluation for impairment at least annually, or earlier if there are any
indications of possible impairment. Impairment is tested at the reporting unit level. The impairment evaluation first uses a
qualitative assessment to determine whether it is more likely than not (i.e., more than a 50 percent probability) that the fair
value of a reporting unit is greater than its carrying amount. If a reporting unit fails this qualitative assessment, a single
quantitative analysis is used to measure and record the amount of the impairment.

In assessing the fair value of a reporting unit, we make assumptions and estimates about the profitability attributable to our
reporting units, including:

short-term and long-term growth rates; and

•
• estimated cost of equity and changes in long-term risk-free interest rates.

If our assumptions and estimates made in assessing the fair value of acquired entities change, we could be required to write-
down the carrying value of goodwill which could be material to our results of operations in the period the charge is taken.
Based on our impairment testing for 2017, we determined no impairment was required and none of our reporting units were at
risk for impairment.

Consolidated Operating Results – Years Ended December 31, 2017, 2016, and 2015

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

Net premiums written (1)
Net premiums earned (1)
Net investment income
Net realized gains (losses)

Total revenues

Losses and loss expenses
Policy benefits
Policy acquisition costs
Administrative expenses
Interest expense
Other (income) expense
Amortization of purchased intangibles
Chubb integration expenses

Total expenses

Income before income tax
Income tax expense (benefit)

Net income

NM – not meaningful

29,244 $

28,145 $

17,713

29,034

3,125

28,749

2,865

(145)

17,213

2,194

(420)

18,987

9,484

543

2,941

2,270

300

(51)

171

31,469

16,052

588

5,904

3,081

605

(222)

492

26,519

15,691

4,950

815

3,296

462

3,861 $

4,135 $

2,834

32,243

18,454

676

5,781

2,833

607

(400)

260

310

28,521

3,722

(139)

2017 vs.
2016

% Change

2016 vs.
2015

3.9 %

1.0 %

9.1 %

2.5 %

15.0 %

(2.1)%

(8.0)%

0.3 %

58.9 %

67.0 %

30.6 %

(65.5)%

65.7 %

69.3 %

8.3 %

100.7 %

35.7 %

101.7 %

80.2 %

335.3 %

(88.9)%

(37.0)%

7.5 %

(24.8)%

(6.6)%

69.0 %

50.2 %

76.4 %

45.9 %

(1) On a constant-dollar basis for the years ended December 31, 2017 and 2016, net premiums written increased $1.1 billion, or 3.9 percent, and $10.8 billion, or 62.3
percent, respectively, and net premiums earned increased $232 million, or 0.8 percent, and $11.9 billion, or 70.3 percent, respectively. Amounts are calculated by
translating prior period results using the same local currency rates as the comparable current period.

Net Premiums Written
2017 vs. 2016
Net premiums written reflect the premiums we retain after purchasing reinsurance protection. Consolidated net premiums
written increased $1.1 billion in 2017, reflecting growth across most segments. The increase is also due to the timing of the
Chubb Corp acquisition in the prior year, which excluded approximately $855 million of production generated prior to the
Chubb Corp acquisition close on January 14, 2016 (14-day stub period). On a comparative basis, which includes the 14-day
stub period, net premiums written increased $244 million. This increase in premiums was partially offset by merger-related
actions of $582 million. Merger-related actions include the cancellation of certain portfolios or lines of business that do not
meet our underwriting standards and the purchase of additional reinsurance due to the acquisition of Chubb Corp.

• Net premiums written in our North America Commercial P&C Insurance segment increased $288 million in 2017. On a
comparative basis, which includes the 14-day stub period ($519 million), net premiums written decreased $231 million
driven by merger-related actions ($278 million). Excluding these items, net premiums written increased $47 million, or 0.4
percent, as growth, primarily in our risk management and casualty business was offset by declines in property and select
components of our financial lines businesses due to competitive market conditions.

• Net premiums written in our North America Personal P&C Insurance segment increased $380 million in 2017. On a

comparative basis, which includes the 14-day stub period ($100 million), net premiums written increased $280 million
reflecting both growth across most lines as well as the non-renewal of a quota share treaty in 2017 covering the acquired
Fireman's Fund homeowners and automobile businesses ($189 million).

• Net premiums written in our North America Agricultural Insurance segment increased $188 million in 2017, primarily due
to an increase in MPCI production and growth in our Agriculture P&C products. The increase in MPCI premium was driven
in part by higher policy count and the year-over-year impact of our update to the MPCI margin estimate which resulted in a
smaller cession to the U.S. government in 2016. Under the government's crop insurance profit and loss calculation
formulas, we retained more premiums in 2017 as losses were higher compared to 2016.

• Net premiums written in our Overseas General Insurance segment increased $217 million in 2017, or $220 million on a
constant-dollar basis. Excluding the favorable impact of the 14-day stub period ($215 million), unfavorable impact of
merger-related accounting policy adjustments in 2016 to align the timing of premium recognition ($126 million) and
merger-related actions ($131 million), net premiums written increased $262 million on a constant-dollar basis, driven by
growth in personal lines business, primarily from new automobile business written in Latin America, as well as growth
across most property and casualty (P&C) lines, primarily in Asia and Latin America.

• Net premiums written in our Global Reinsurance segment increased $9 million in 2017 primarily due to a $30 million

increase in catastrophe reinstatement premiums and the favorable impact of the 14-day stub period ($20 million). These
increases were negatively impacted by merger-related actions of $10 million, declining rates and increasing competition.

• Net premiums written in our Life Insurance segment increased $17 million in 2017 due to growth in our Asian international
life operations and Combined Insurance supplemental A&H program business. This growth was partially offset by planned
declines in our Latin American operations, reflecting merger-related actions of $37 million, and in our life reinsurance
business, which continues to decline as no new business is currently being written.

2016 vs. 2015
Consolidated net premiums written increased $10.4 billion in 2016, primarily due to the Chubb Corp acquisition, which added
about $10.8 billion of growth to premiums. This increase in premiums was partially offset by the adverse impact of foreign
exchange of $367 million. On a constant-dollar basis, as if legacy ACE and legacy Chubb were one company in 2015 and since
the beginning of 2016 (comparative basis), net premiums written decreased $843 million in 2016, primarily driven by merger-
related actions ($650 million), including the purchase of additional reinsurance. See below for additional items impacting net
premiums written.

• Net premiums written in our North America Commercial P&C Insurance segment increased $6,025 million in 2016. On a
comparative basis, net premiums written decreased $355 million in 2016, principally due to merger-related actions ($241
million). In addition, net premiums decreased due to lower new business written, driven by competitive market conditions
and rate declines.

• Net premiums written in our North America Personal P&C Insurance segment increased $2,961 million in 2016. On a
comparative basis, excluding the impact of a number of risk management related actions ($525 million), net premiums
written were up 1.3 percent in 2016 due to growth in our high net worth homeowners and auto lines.

• Net premiums written in our Overseas General Insurance segment increased $1,490 million in 2016, and increased $95

million, on a comparative constant-dollar basis, primarily driven by growth in personal lines, property and casualty lines
(P&C), and A&H lines. This increase was partially offset by declines in our business written by Chubb Global Markets and
by merger-related actions ($119 million).

• Net premiums written in our Life Insurance segment increased $126 million in 2016 and increased $32 million on a

comparative basis. Growth in our international life operations and in our Combined Insurance Supplemental A&H program
business was partially offset by the adverse effect of foreign exchange. Our life reinsurance business continues to decline as
there is no new life reinsurance business currently being written. On a constant-dollar basis, production, which includes
deposits collected on universal life and investment contracts of $1,006 million in 2016 and $997 million in 2015,
increased 6.0 percent.

• Net premiums written in our North America Agricultural Insurance segment decreased $18 million in 2016, primarily due
to the revision to the 2016 crop year margin estimate related to the MPCI program, which resulted in lower premium
retention under the premium sharing formula with the U.S. government. This decrease was partially offset by lower
cessions under existing third-party proportional reinsurance programs.

• Net premiums written in our Global Reinsurance segment decreased $152 million in 2016 and decreased $161 million on

a comparative basis, as we maintained underwriting discipline in an environment of declining rates and increasing
competition. In addition, the decline in premiums reflects increased cessions of $17 million due to the purchase of
additional property catastrophe reinsurance coverage in 2016.

Line of Business
The following table presents a breakdown of consolidated net premiums written by line of business for the years indicated:

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

% Change

C$ (1)
2016

C$ (1)
2017 vs.
2016

C$ (1) % Change
ex Merger actions
2017 vs. 2016

Commercial multiple peril (2)

879 $

815 $

— $

816

Commercial casualty

Workers' compensation

Professional liability

Surety

Property and other short-tail lines

International other casualty

Total Commercial P&C

3,638

2,067

3,491

627

3,866

1,092

3,433

2,006

3,544

584

3,856

1,038

2,171

901

1,516

323

2,884

755

3,434

2,006

3,541

585

3,859

1,019

15,660

15,276

8,550

15,260

7.7 %

5.9 %

3.0 %

(1.4)%

7.2 %

0.2 %

7.2 %

2.6 %

8.2 %

8.5 %

7.1 %

0.1 %

8.1 %

3.2 %

9.8 %

5.1 %

Agriculture

1,516

1,328

1,346

1,328

14.2 %

Personal automobile - North America

Personal automobile - International

Personal homeowners

Personal other

Total Personal lines

775

788

3,302

1,441

6,306

698

674

3,053

1,399

5,824

219

700

937

606

2,462

700

671

3,057

1,402

5,830

10.7 %

17.4 %

8.0 %

2.8 %

8.2 %

Total Property and Casualty lines

23,482

22,428

12,358

22,418

4.7 %

Other Lines

Global A&H (3)

Reinsurance

Life

Total consolidated

4,056

3,970

3,548

685

676

1,021

1,071

828

979

3,990

670

1,077

$29,244 $ 28,145 $ 17,713 $ 28,155

1.7 %

2.2 %

(5.2)%

3.9 %

10.7 %

18.6 %

7.6 %

9.3 %

9.6 %

6.8 %

3.3 %

3.7 %

(1.8)%

5.9 %

(1) On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.
(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 the Global A&H line item above.

On a constant-dollar basis, total consolidated net premiums written, excluding merger actions, increased 5.9 percent in 2017
due to the following:

•

Total commercial P&C net premiums written, excluding merger actions, increased 5.1 percent in 2017 due to growth in
our risk management and casualty business as well as growth in Asia and Latin America.

Total personal lines net premiums written, excluding merger actions, increased 9.6 percent in 2017 primarily due to
new automobile business written in Latin America and the non-renewal of a quota share treaty in 2017.

• Global A&H lines, excluding merger actions, increased 3.3 percent in 2017 due to growth in North America, Latin

America and Asia, as well as in our Combined Insurance Supplemental A&H program business.

• Reinsurance lines, excluding merger actions, increased 3.7 percent in 2017 primarily due to increased catastrophe

reinstatement premiums, partially offset by declining rates and increasing competition.

Net Premiums Earned
2017 vs. 2016
Net premiums earned for short-duration contracts, typically P&C contracts, generally reflect the portion of net premiums written
that were recorded as revenues for the period as the exposure periods expire. Net premiums earned for long-duration contracts,
typically traditional life contracts, generally are recognized as earned when due from policyholders. Net premiums earned
increased $285 million, or $232 million on a constant-dollar basis in 2017, primarily due to the same factors driving the
increase in net premiums written as described above.

The prior year excluded approximately $391 million of premiums earned in the 14-day stub period. On a comparative constant-
dollar basis, which includes the 14-day stub period, net premiums earned decreased $159 million as growth was more than
offset by merger-related actions.

2016 vs. 2015
Net premiums earned increased $11.5 billion in 2016, primarily due to the Chubb Corp acquisition which added about $11.8
billion of growth to premiums, partially offset by the adverse impact of foreign currency of $328 million. On a constant-dollar
basis, net premiums earned increased $11.9 billion in 2016.

Combined Ratio
In evaluating our segments excluding Life Insurance, we use the P&C combined ratio, the loss and loss expense ratio, the policy
acquisition cost ratio, and the administrative expense ratio. We calculate these ratios by dividing the respective expense
amounts by net premiums earned. We do not calculate these ratios for the Life Insurance segment as we do not use these
measures to monitor or manage that segment. The P&C combined ratio is determined by adding the loss and loss expense ratio,
the policy acquisition cost ratio, and the administrative expense ratio. A P&C combined ratio under 100 percent indicates
underwriting income, and a combined ratio exceeding 100 percent indicates underwriting loss.

The following table presents the components of the combined ratio:

Loss and loss expense ratio

Policy acquisition cost ratio

Administrative expense ratio

Combined ratio

2017

65.8%

19.5%

9.4%

94.7%

2016

57.7%

20.2%

10.4%

88.3%

The following table presents pre-tax catastrophe losses and pre-tax favorable prior period development, net of related
reinstatement premiums:

(in millions of U.S dollars)

2017

2016

Catastrophe losses, pre-tax
Favorable prior period development net of related reinstatement premiums, pre-tax

2,753 $

1,067 $

829 $

1,135 $

2015

58.1%

16.1%

13.1%

87.3%

2015

321

546

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 property losses
and affects a significant number of insureds. For events outside of the U.S. and Canada, we generally use a similar definition.
The following table presents the break out of catastrophe losses for the twelve months ended December 31, 2017, by segment,
net of reinsurance as well as reinstatement premiums (RIPs) collected (expensed):

North
America
Commercial
P&C
Insurance

North
America
Personal
P&C
Insurance

North
America
Agricultural
Insurance

Overseas
General
Insurance

Global
Reinsurance

Total
excluding
RIPs

RIPs
collected
(expensed)

Total
including
RIPs

Catastrophe Loss Charge by Event

61 $

151 $

— $

2 $

42 $

256 $

(21) $

391

464

—

231

134

175

206

—

205

—

159

—

157

655

910

194

556

1,220 $

871 $

18 $

331 $

313 $

2,753

(4)

(22)

—

(4)

1,224 $

893 $

18 $

335 $

276

—

(7)

—

277

157

650

880

201

556

2,746

(in millions of U.S. dollars)
Net losses

N. California wildfires

S. California wildfires

Hurricane Harvey

Hurricane Irma

Hurricane Maria

Mexico Earthquakes

Other

Total

Reinstatement premium
collected (expensed)

Total before income tax

Catastrophe losses through December 31, 2016 included severe weather-related events in the U.S., including Hurricane
Matthew, severe weather-related events in Europe, a wildfire in Canada, and earthquakes in Ecuador and New Zealand.
Catastrophe losses through December 31, 2015 included severe weather-related events in the U.S. and Asia, a chemical
storage facility explosion in Tianjin, China, a hailstorm in Australia, and flooding and an earthquake in Chile.

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. Favorable prior period development was $829 million in 2017 compared to $1,135 million in the prior
year, a decline of $306 million, pre-tax primarily reflecting favorable prior accident year loss activity, though at a reduced level
from 2016. In addition, 2017 included higher adverse development related to asbestos, environmental, and other run-off
liabilities compared to the prior year. Refer to the Prior Period Development section in Note 7 to the Consolidated Financial
Statements for additional information.

The loss ratio numerator includes losses and loss expenses adjusted to exclude catastrophe losses and PPD. The loss ratio
denominator includes net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected.
Reinstatement premiums are additional fully-earned, prorated premiums payable to reinsurers to restore coverage that has been
reduced by reinsurance loss payments. In periods where there are adjustments on loss sensitive policies, these adjustments are
excluded from PPD and net premiums earned when calculating this ratio. We believe that excluding the impact of catastrophe
losses and PPD provides a better evaluation of our underwriting performance and enhances the understanding of the trends in
our property & casualty business that may be obscured by these items.

The following table presents the current accident year loss and loss expense ratio, excluding catastrophe losses and related
reinstatement premiums ("CAY loss ratio excluding catastrophe losses"):

Loss and loss expense ratio

Catastrophe losses and related reinstatement premiums

Prior period development net of related reinstatement premiums

Current accident year loss and loss expense ratio excluding catastrophe losses

2017

2016

2015

65.8 %

57.7 %

58.1 %

(10.2)%

3.2 %

(4.0)%

4.3 %

(2.1)%

3.6 %

58.8 %

58.0 %

59.6 %

2017 vs. 2016
The CAY loss ratio excluding catastrophe losses increased 0.8 percentage points in 2017, primarily due to the following:
• Higher non-catastrophe large losses in property lines and mix of business in our Major Accounts division in our North

America Commercial P&C Insurance segment, driven by growth in casualty lines which have a higher loss ratio and declines
in property lines which have a lower loss ratio (0.4 percentage points);

• Higher non-catastrophe large losses in our North America Personal P&C Insurance segment (0.2 percentage point);
•

An updated allocation that more appropriately classified certain claims-related expenses as loss adjustment expenses
(previously reported as administrative expenses). This updated allocation increased loss adjustment expenses (0.4
percentage points), with an offsetting decrease to administrative expenses;
Partially offset by integration-related claims handling expense savings realized of $128 million (0.5 percentage points).

•

Policy acquisition costs consist of commissions, premium taxes, and certain underwriting costs directly related to the successful
acquisition of a new or renewal insurance contract. Our policy acquisition cost ratio decreased 0.7 percentage points in 2017,
compared to the prior year period, which included a net unfavorable impact of purchase accounting adjustments related to the
Chubb Corp acquisition (0.7 percentage points). The decrease was also due to integration-related expense savings realized (0.2
percentage points),which was offset by a change in the mix of business, principally in our Overseas General Insurance segment,
and the non-renewal of the Fireman's Fund quota share treaty.

Our administrative expense ratio decreased 1.0 percentage point in 2017, primarily due to integration-related expense savings
realized as a result of the Chubb Corp acquisition of $262 million (1.0 percentage point), lower employee benefit-related
expenses (0.7 percentage points), and the updated loss expenses and administrative expenses allocation as noted above (0.4
percentage points), partially offset by the impact of merit-based salary increases, inflation, and increased spending to support
growth.

2016 vs. 2015
The CAY loss ratio excluding catastrophe losses decreased 1.6 percentage points in 2016, primarily due to the net favorable
impact of the Chubb Corp acquisition which experienced a relatively lower loss ratio in our North America P&C businesses but
experienced a higher loss ratio in our international business. The current year also included claims handling expense savings
realized in connection with the integration of Chubb Corp of $60 million (0.2 percentage points).

On a comparative basis, the CAY loss ratio excluding catastrophe losses decreased 0.1 percentage points in 2016.

Policy acquisition costs consist of commissions, premium taxes, and certain underwriting costs directly related to the successful
acquisition of a new or renewal insurance contract. Our policy acquisition cost ratio increased 4.1 percentage points in 2016,
primarily due to the addition of the Chubb Corp business which carried a higher acquisition cost ratio (2.1 percentage points)
and due to the net unfavorable impact of purchase accounting adjustments (1.4 percentage points) related to the Chubb Corp
acquisition in the current year and the Fireman's Fund acquisition in the prior year. In addition, during 2016, we determined
that certain underwriting costs that are directly attributable to the successful acquisition of business previously classified as

administrative expenses were more appropriately classified as policy acquisition costs. This resulted in a $290 million (1.1
percentage points) increase to policy acquisition costs, with an offsetting decrease to administrative expenses in 2016.

On a comparative basis, the policy acquisition cost ratio increased 0.3 percentage points in 2016, primarily due to the impact
of the Fireman’s Fund acquisition in 2015 which favorably impacted the prior year ratio by 0.4 percentage points.

Our administrative expense ratio decreased 2.7 percentage points in 2016, primarily due to cost savings realized as a result of
the Chubb Corp acquisition of $223 million (0.8 percentage points), the $290 million (1.1 percentage points) reclassification of
underwriting costs that are directly attributable to the successful acquisition of business, as discussed above, and the one-time
pension curtailment benefit of $90 million (0.3 percentage points) related to the amendment of our U.S. pension plan as part of
a harmonization effort that moves us toward a more unified retirement savings approach.

On a comparative basis, our administrative expense ratio decreased 0.5 percentage points in 2016, primarily due to cost
savings realized as a result of the Chubb Corp acquisition and the one-time pension curtailment benefit, as discussed above,
partially offset by increased spending to support growth initiatives.

Policy benefits
Policy benefits represent losses on contracts classified as long-duration and generally include accident and supplemental health
products, term and whole life products, endowment products, and annuities. Policy benefits also include gains and losses from
changes in liabilities associated with our separate account assets that do not qualify for separate account reporting under GAAP.
Certain of our long duration contracts are supported by assets that do not qualify for separate account reporting under GAAP.
These assets are classified as trading securities and reported in Other investments and the offsetting liabilities are reported in
Future policy benefits in the Consolidated balance sheet. Fair value changes in separate account assets that do not qualify for
separate account reporting under GAAP are reported in Other income (expense) and the offsetting movements in the liabilities
are included in Policy benefits in the Consolidated statements of operations.

Policy benefits were $676 million, $588 million and $543 million in 2017, 2016 and 2015, respectively, which included
separate account liabilities losses (gains) of $97 million, $11 million and $(19) million, respectively. The offsetting movements
of these liabilities are recorded in Other income (expense) on the Consolidated statement of operations. Excluding the separate
account gains and losses, Policy benefits were $579 million in 2017, compared with $577 million and $562 million in 2016
and 2015, respectively.

Refer to the Corporate results section below for information on Net investment income, Interest expense, and Income tax
expense.

Integration-Related Savings
Integration-related savings realized were $152 million, $177 million, $201 million, and $236 million for the first, second,
third, and fourth quarters of 2017, respectively. Integration-related savings of $236 million in the fourth quarter of 2017
included savings realized of $71 million in Losses and loss expenses, $32 million in Policy acquisition costs, $130 million in
Administrative expenses, and $3 million in Net investment income.

The following table presents consolidated integration-related savings realized by segment and income statement line item:

2017

(in millions of U.S. dollars)

Losses and loss expenses

Policy acquisition costs

Administrative expenses

Net investment income

Total

2016

Losses and loss expenses

Policy acquisition costs

Administrative expenses

Net investment income

Total

Incremental Change

Losses and loss expenses

Policy acquisition costs

Administrative expenses

Net investment income

Total

North
America
Commercial
P&C
Insurance

North
America
Personal
P&C
Insurance

Overseas
General
Insurance

Global
Reinsurance

Corporate

Total P&C

Life
Insurance

Consolidated

Years Ended December 31

102 $

37 $

49 $

— $

188 $

— $

169

182

—

479

—

314 $

119 $

265 $

2 $

60 $

760 $

6 $

34 $

15 $

11 $

— $

60 $

— $

—

221

—

146 $

61 $

89 $

1 $

26 $

323 $

2 $

68 $

22 $

38 $

— $

128 $

— $

—

116

—

258

—

168 $

58 $

176 $

1 $

34 $

437 $

4 $

188

485

766

223

325

128

262

441

Segment Operating Results – Years Ended December 31, 2017, 2016, and 2015

We operate through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance,
North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. In addition, the
results of all run-off asbestos and environmental (A&E) exposures, the results of our run-off Brandywine business, the results of
Westchester specialty operations for 1996 and prior years, and certain other run-off exposures are presented within Corporate.

North America Commercial P&C Insurance

The North America Commercial P&C Insurance segment comprises operations that provide property and casualty (P&C)
insurance and services to large, middle market, and small commercial businesses in the U.S., Canada, and Bermuda. This
segment includes our North America Major Accounts and Specialty Insurance division (principally large corporate accounts and
wholesale business), and the North America Commercial Insurance division (principally middle market and small commercial
accounts).

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

Net premiums written
Net premiums earned
Losses and loss expenses
Policy acquisition costs
Administrative expenses
Underwriting income
Net investment income
Other (income) expense
Segment income
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful

$ 12,028

$ 11,740

5,715

12,191

12,217

8,287

1,873

981

1,050

1,961

7,439

2,023

1,125

1,630

1,860

(2)

5,634

3,661

531

621

821

1,032

(7)

2017 vs.
2016
2.5 %

(0.2)%

11.4 %

(7.4)%

(12.8)%

(35.6)%

5.4 %

% Change

2016 vs.
2015
105.4 %

116.9 %

103.2 %

281.0 %

81.2 %

98.5 %

80.2 %

(71.4)%

87.7 %

$ 3,010

$ 3,492

1,860

(13.8)%

68.0%

15.4%

8.0%

91.4%

60.9%

16.6%

9.2%

86.7%

65.0% 7.1

9.4% (1.2)

11.0% (1.2)

85.4% 4.7

pts

(4.1)

7.2

(1.8)

1.3

pts

Premiums
2017 vs. 2016
Net premiums written increased $288 million in 2017 due to the timing of the Chubb Corp acquisition in 2016. Approximately
$519 million of production was generated prior to the acquisition close on January 14, 2016 (14-day stub period). On a
comparative basis, which includes the 14-day stub period, net premiums written, excluding merger-related actions of $278
million, increased $47 million, or 0.4 percent, as growth, primarily in our risk management and casualty business was offset by
declines in property and select components of our financial lines businesses due to competitive market conditions.

Net premiums earned decreased $26 million in 2017. On a comparative basis, which includes the 14-day stub period ($208
million), net premiums earned decreased $234 million driven primarily by merger-related actions.

2016 vs. 2015
Net premiums written increased $6,025 million in 2016 primarily due to the Chubb Corp acquisition which added about $5.9
billion in premiums to this segment.

On a comparative basis (refer to non-GAAP section), net premiums written declined $355 million in 2016, principally reflecting
merger-related actions ($241 million) which decreased premiums, and lower new business written, driven by competitive
market conditions and rate declines, particularly in our property and financial lines. Partially offsetting the decline was growth in
our global risk management and workers' compensation lines reflecting new business and strong renewal retention.

Net premiums earned increased $6,583 million in 2016 primarily due to the Chubb Corp acquisition which added about $6.5
billion in earned premiums. On a comparative basis, net premiums earned decreased $59 million primarily due to the same

factors driving the decrease in net premiums written as described above, partially offset by the earning in of prior year premium
growth.

Combined Ratio
The following table presents pre-tax catastrophe losses and pre-tax favorable prior period development net of related
reinstatement premiums:

(in millions of U.S. dollars)
Catastrophe losses, pre-tax

Favorable prior period development net of related reinstatement premiums, pre-tax

2017

1,220 $

746 $

2016

448 $

778 $

2015

264

Catastrophe losses were primarily from the following events:
• 2017: Hurricane Irma, Hurricane Harvey, Hurricane Maria and severe weather-related events in the U.S., including

California wildfires

• 2016: severe weather-related events in the U.S., including Hurricane Matthew, and a wildfire in Canada
• 2015: severe-weather related events in the U.S., a Mexican hurricane, and civil unrest in Baltimore, Maryland

The following table presents the current accident year loss and loss expense ratio, excluding catastrophe losses and related
reinstatement premiums ("CAY loss ratio excluding catastrophe losses"):

Loss and loss expense ratio

Catastrophe losses and related reinstatement premiums

Prior period development net of related reinstatement premiums

Current accident year loss and loss expense ratio excluding catastrophe losses

2017

68.0 %

(10.0)%

6.3 %

64.3 %

2016

2015

60.9 %

(3.7)%

6.5 %

63.7 %

65.0 %

(1.5)%

4.7 %

68.2 %

2017 vs. 2016
The CAY loss ratio excluding catastrophe losses increased 0.6 percentage points for 2017, primarily due to mix of business in
our Major Accounts division, driven by growth in casualty lines which have a higher loss ratio and declines in property lines
which have a lower loss ratio, as well as an updated allocation that more appropriately classified certain claims-related
expenses as loss adjustment expenses (previously reported as administrative expenses). This updated allocation increased loss
adjustment expenses (0.6 percentage points for 2017) with an offsetting decrease to administrative expenses. This increase
was partially offset by integration-related expense savings realized of $68 million (0.5 percentage points).

The policy acquisition cost ratio decreased 1.2 percentage points in 2017, compared to the prior year which included the net
unfavorable impact of initial year purchase accounting adjustments related to the Chubb Corp acquisition (1.1 percentage
points). Excluding this item, the policy acquisition cost ratio decreased 0.1 percentage points primarily due to integration-
related expense savings realized of $21 million.

The administrative expense ratio decreased 1.2 percentage points in 2017 primarily reflecting integration-related expense
savings realized of $78 million (0.7 percentage points), lower employee benefit-related expenses of $107 million (0.9
percentage points), and the updated loss expenses and administrative expenses allocation as noted above (0.6 percentage
points for 2017), partially offset by the impact of merit-based salary increases, inflation, and increased spending to support
growth.

2016 vs. 2015
The CAY loss ratio excluding catastrophe losses decreased 4.5 percentage points in 2016, primarily due to the addition of the
Chubb Corp business, which experienced a lower loss ratio. On a comparative basis, CAY loss ratio excluding catastrophe losses
increased 0.8 percentage points in 2016, primarily due to lower non-catastrophe losses in the prior year, partially offset by
integration related claims handling expense savings realized of $34 million (0.3 percentage points).

The policy acquisition cost ratio increased 7.2 percentage points in 2016, primarily due to the addition of the Chubb Corp
business which carried a higher acquisition cost ratio and due to the normal impact of initial year purchase accounting
adjustments related to the Chubb Corp acquisition. In addition, during 2016, we determined that certain underwriting costs that
are directly attributable to the successful acquisition of business previously classified as administrative expenses were more

appropriately classified as policy acquisition costs. Excluding these items, the policy acquisition cost ratio decreased 0.4
percentage points in 2016, primarily due to integration related savings realized.

The normal impact of initial year purchase accounting adjustments related to the Chubb Corp acquisition includes a fair value
adjustment for the unearned premiums at the date of the purchase. This adjustment is then amortized into policy acquisition
costs. Partially offsetting this is a favorable impact related to the recognition of the acquired unearned premiums without having
to recognize the associated policy acquisition costs. The net impact of these purchase accounting adjustments was an increase
to policy acquisition costs of $130 million (1.1 percentage points) in 2016, which did not recur in 2017. In addition, the
reclassification described above resulted in a $129 million (1.1 percentage points of the ratio) increase to policy acquisition
costs in 2016 with an offsetting decrease to administrative expenses.

On a comparative basis, which excludes purchase accounting adjustments, the policy acquisition cost ratio decreased 0.4
percentage points in 2016, primarily due to integration related savings realized as described above.

The administrative expense ratio decreased 1.8 percentage points in 2016 due to the $129 million reclassification noted above
which decreased the administrative expense ratio by 1.1 percentage points, and the inclusion of the Chubb Corp businesses
which carried a lower administrative expense ratio, partially offset by increased spending to support growth.

On a comparative basis, the administrative expense ratio decreased 0.2 percentage points in 2016, as cost savings realized of
$91 million (0.7 percentage points) were partially offset by increased spending to support growth.

North America Personal P&C Insurance

The North America Personal P&C Insurance segment comprises operations that provide high net worth personal lines products,
including homeowners and complementary products such as valuable articles, excess liability, automobile, and recreational
marine insurance and services in the U.S. and Canada.

(in millions of U.S. dollars, except for percentages)

Net premiums written
Net premiums earned
Losses and loss expenses
Policy acquisition costs
Administrative expenses
Underwriting income (loss)
Net investment income
Other (income) expense
Amortization of purchased intangibles
Segment income
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful

2017

2016

2015

$ 4,533

$ 4,153

$ 1,192

4,399

3,265

4,319

2,558

899

264

(29)

226

966

363

432

207

948

590

123

166

$ 177

$ 614

$ 111

2017 vs.
2016
9.1 %

1.9 %

27.6 %

(6.9)%

(27.3)%

9.2 %

(33.3)%

(15.8)%

(71.2)%

% Change

2016 vs.
2015
248.4 %

355.5 %

333.6 %

195.1 %

160.2 %

200.0 %

(75.6)%

453.2 %

74.2%

20.4%

6.1%

100.7%

59.2%

22.4%

8.4%

90.0%

62.3% 15.0

7.3% (2.0)

13.0% (2.3)

82.6% 10.7

pts

(3.1)

15.1

(4.6)

7.4

pts

Premiums
2017 vs. 2016
Net premiums written increased $380 million in 2017. On a comparative basis, which includes the 14-day stub period ($100
million), net premiums written increased $280 million reflecting both growth across most lines as well as the non-renewal of a
quota share treaty in 2017 covering the acquired Fireman's Fund homeowners and automobile businesses ($189 million).

Net premiums earned increased $80 million, primarily due to the factors described above.

2016 vs. 2015
Net premiums written increased $2,961 million in 2016. On a comparative basis, excluding the impact of a number of risk
management related actions ($525 million), net premiums written were up 1.3 percent in 2016 due to growth in our high net
worth homeowners and auto lines.

Net premiums earned increased $3,371 million in 2016 primarily due to the Chubb Corp acquisition. On a comparative basis,
net premiums earned decreased slightly in 2016.

Combined Ratio
The following table presents pre-tax catastrophe losses and pre-tax unfavorable prior period development:

(in millions of U.S. dollars)
Catastrophe losses, pre-tax
Unfavorable prior period development net of related reinstatement premiums, pre-tax $

2017

2016

871 $

(69) $

326 $

(27) $

2015

(25)

Catastrophe losses were primarily from the following events:
• 2017: Hurricane Harvey, Hurricane Irma, and severe weather-related events in the U.S., including California wildfires
• 2016: severe weather-related events in the U.S., including Hurricane Matthew
• 2015: severe weather-related events in the U.S., including the California wildfires

The following table presents the current accident year loss and loss expense ratio, excluding catastrophe losses and related
reinstatement premiums ("CAY loss ratio excluding catastrophe losses"):

Loss and loss expense ratio
Catastrophe losses and related reinstatement premiums
Prior period development net of related reinstatement premiums
Current accident year loss and loss expense ratio excluding catastrophe losses

2017

74.2 %

(20.1)%

(1.5)%

52.6 %

2016

2015

59.2 %

(7.5)%

(0.7)%

51.0 %

62.3 %

(6.7)%

(2.7)%

52.9 %

2017 vs. 2016
The CAY loss ratio excluding catastrophe losses increased 1.6 percentage points in 2017, primarily due to higher non-
catastrophe large losses (1.2 percentage points), as well as an updated allocation that more appropriately classified certain
claims-related expenses as loss adjustment expenses (previously reported as administrative expenses). This updated allocation
increased loss adjustment expenses (0.5 percentage points), with an offsetting decrease to administrative expenses. This
increase was partially offset by integration-related claims handling expense savings realized of $22 million (0.5 percentage
points).

The policy acquisition cost ratio decreased 2.0 percentage points in 2017 compared to the prior year which included the net
unfavorable impact from purchase accounting adjustments (1.9 percentage points) related to the Chubb Corp acquisition.
Excluding this adjustment, the policy acquisition cost ratio remained flat as the increase related to the non-renewal of the
Fireman's Fund quota share treaty which had a higher ceded acquisition cost ratio was offset by integration-related expense
savings realized of $7 million (0.2 percentage points).

The administrative expense ratio decreased 2.3 percentage points in 2017, due to integration-related expense savings realized
of $29 million (0.7 percentage points), lower employee benefit-related expenses of $42 million (0.9 percentage points), and the
updated loss expenses and administrative expenses allocation as noted above (0.5 percentage points).

2016 vs. 2015
The CAY loss ratio excluding catastrophe losses decreased 1.9 percentage points in 2016 primarily due to the addition of the
Chubb Corp business, which experienced a lower loss ratio. On a comparative basis, CAY loss ratio excluding catastrophe losses
decreased 0.8 percentage points reflecting lower non-catastrophe weather related losses and integration related claims handling
expense savings of $15 million (0.3 percentage points).

The policy acquisition cost ratio increased 15.1 percentage points in 2016, primarily due to the net unfavorable impact of
purchase accounting adjustments (12.5 percentage points) related to the Chubb Corp acquisition in the current year, which will

not recur in 2017, and the Fireman's Fund acquisition in the prior year and due to the addition of the Chubb Corp business
which carried a higher acquisition cost ratio (2.7 percentage points).

On a comparative basis, which excludes purchase accounting adjustments related to the Chubb Corp acquisition, the policy
acquisition cost ratio increased 0.9 percentage points in 2016, primarily due to our Fireman's Fund acquisition in the prior year
which favorably impacted the prior year policy acquisition cost ratio by $100 million (2.2 percentage points). This increase was
partially offset by the favorable impact of the ceded commission benefits related to the additional reinsurance purchased in
2016.

The administrative expense ratio decreased 4.6 percentage points in 2016, primarily due to the Chubb Corp acquisition which
carried a lower administrative expense ratio.

On a comparative basis, the administrative expense ratio remained flat as cost savings realized as a result of the Chubb Corp
acquisition of $38 million (0.9 percentage points) were offset by increased spending to support growth.

North America Agricultural Insurance

The North America Agricultural Insurance segment comprises our North American based businesses that provide a variety of
coverages in the U.S. and Canada including crop insurance, primarily Multiple Peril Crop Insurance (MPCI) and crop-hail
through Rain and Hail Insurance Service, Inc. (Rain and Hail) as well as farm and ranch and specialty P&C commercial
insurance products and services through our Chubb Agribusiness unit.

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

Net premiums written
Net premiums earned
Losses and loss expenses (1)
Policy acquisition costs
Administrative expenses
Underwriting income
Net investment income
Other (income) expense
Amortization of purchased intangibles
Segment income
Loss and loss expense ratio

$1,516

$ 1,328

$ 1,346

1,508

1,043

1,316

898

1,364

1,097

(8)

392

(6)

341

197

$ 386

$ 331

$ 189

2017 vs.
2016
14.2 %

14.6 %

16.1 %

(2.4)%

33.3 %

15.0 %

25.0 %

100.0 %

—

16.6 %

% Change

2016 vs.
2015
(1.3)%

(3.6)%

(18.1)%

20.3 %

73.1%

(13.0)%

—

(3.3)%

75.1 %

69.2 %

68.3 %

80.4%

0.9

pts

(12.1)

pts

Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful
(1) Gains (losses) on crop derivatives were $(7) million, $(5) million, and $(9) million in 2017, 2016, and 2015, respectively. These gains (losses) are included in Net realized
gains (losses) in our Consolidated statements of operations but are reclassified to Losses and loss expenses for purposes of presenting North America Agricultural Insurance
underwriting income.

74.0 %

74.1 %

(0.6)%

(0.5)%

85.5%

(11.4)

(0.1)

(0.5)

5.4 %

6.3 %

5.1%

(0.9)

1.2

pts

—

pts

Premiums
2017 vs 2016
Net premiums written increased $188 million in 2017, primarily due to an increase in MPCI production and growth in our
Agriculture P&C products. The increase in MPCI premium was driven in part by higher policy count and the year over year
impact of our update to the MPCI margin estimate which resulted in a smaller cession to the U.S. government. Under the
government's crop insurance profit and loss calculation formulas, we retained more premiums in 2017 as losses were higher
compared to 2016.

Net premiums earned increased $192 million in 2017, due to the factors described above.

2016 vs 2015
Net premiums written decreased $18 million in 2016 primarily due to the revision to the 2016 crop year margin estimate
related to the MPCI program, which resulted in lower premium retention under the premium sharing formula with the U.S.
government. Under the government's crop insurance profit and loss calculation formulas, we retained less premiums in 2016 as
losses were lower compared to 2015. This decrease was partially offset by lower cessions under existing third-party
proportional reinsurance programs.

Net premiums earned decreased $48 million in 2016 primarily due to the same factors driving the decrease in net premiums
written as described above.

Underwriting income increased $144 million in 2016 primarily due to the favorable revision to the 2016 crop year margin
estimate reflecting a combination of better than average yields and less than expected movement in price between base price
and harvest price this year.

Combined Ratio
The following table presents pre-tax catastrophe losses and pre-tax favorable prior period development net of related
reinstatement premiums:

(in millions of U.S. dollars)
Catastrophe losses, pre-tax
Favorable prior period development net of related reinstatement premiums, pre-tax

2017

2016

2015

18 $

119 $

19 $

72 $

Catastrophe losses in 2017, 2016, and 2015 were primarily from our farm, ranch and specialty P&C business. Net favorable
prior period development was $119 million, $72 million, and $45 million in 2017, 2016, and 2015, respectively. For 2017,
the prior period development amount included $174 million of favorable incurred losses and $11 million of lower acquisition
costs due to lower than expected MPCI losses for the 2016 crop year, partially offset by a $66 million decrease in net
premiums earned related to the MPCI profit and loss calculation formula. For 2016, the prior period development amount
included $99 million of favorable incurred losses due to lower than expected MPCI losses for the 2015 crop year, partially offset
by $52 million of unfavorable decrease in net premiums earned related to the government’s crop insurance profit and loss
calculation formulas. Also included in prior period development, but not impacting the loss and loss expense ratio was a $12
million favorable benefit of ceded profit share commissions earned from third-party reinsurers.

The following table presents the current accident year loss and loss expense ratio, excluding catastrophe losses and related
reinstatement premiums ("CAY loss ratio excluding catastrophe losses"):

2017

2016

2015

69.2 %

(1.2)%

8.2 %

76.2 %

68.3 %

(1.5)%

5.6 %

72.4 %

80.4 %

(0.7)%

3.1 %

82.8 %

2017 vs 2016
The CAY loss ratio excluding catastrophe losses increased 3.8 percentage points in 2017 reflecting the revision to the 2017
crop year margin estimate as discussed above.

The policy acquisition cost ratio decreased 0.9 percentage point in 2017, primarily due to lower direct commissions in the
current year and an increase in MPCI net premiums earned.

The administrative expense ratio remained relatively flat in 2017.

2016 vs 2015
The CAY loss ratio excluding catastrophe losses decreased 10.4 percentage points in 2016 reflecting the revision to the 2016
crop year margin estimate as discussed above.

The policy acquisition cost ratio increased 1.2 percentage point in 2016, primarily due to the reduction in net premiums earned
related to the government's crop insurance profit and loss calculation formula this year of $202 million, compared to a reduction

of $30 million in the prior year. Excluding the impact of these reductions in net premiums earned, the policy acquisition ratio
increased over prior year by 0.4 percentage points, primarily due to higher agent profit sharing commissions in the current year.
In addition, during 2016, we determined that certain underwriting costs that are directly attributable to the successful
acquisition of business previously classified as administrative expenses were more appropriately classified as policy acquisition
costs. This resulted in a $2 million (0.2 percentage points) increase to policy acquisition costs, with an offsetting decrease to
administrative expenses in 2016.

The administrative expense ratio decreased 0.5 percentage points in 2016 primarily due to higher Administrative and Operating
(A&O) reimbursements on the MPCI business and the reclassification as noted above.

Overseas General Insurance

Overseas General Insurance segment comprises Chubb International and Chubb Global Markets (CGM). Chubb International
comprises our commercial P&C traditional and specialty lines serving large corporations, middle market and small customers,
A&H and traditional and specialty personal lines business serving local territories outside the U.S., Bermuda, and Canada.
CGM, our London-based international commercial P&C excess and surplus lines business, includes Lloyd's of London (Lloyd's)
Syndicate 2488. Chubb provides funds at Lloyd's to support underwriting by Syndicate 2488 which is managed by Chubb
Underwriting Agencies Limited.

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

2017 vs.
2016

% Change

2016 vs.
2015

—

2.7 %

22.5 %

$ 8,124

$ 6,634

$ 8,341

4,005

6,471

3,052

2,136

8,132

2,221

8,131

4,281

25.7 %

Net premiums written (1)
Net premiums earned
Losses and loss expenses
Policy acquisition costs
Administrative expenses
Underwriting income (2)
Net investment income
Other (income) expense
Amortization of purchased intangibles
Segment income
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
(1) On a constant-dollar basis, for the years ended December 31, 2017 and 2016, net premiums written increased $220 million, or 2.7 percent, and increased $1,792 million,

15.4% (0.8)

$ 1,216

$ 1,331

(35.3)%

(21.3)%

$ 1,497

(63.6)%

(18.8)%

(30.7)%

12.5 %

31.2 %

11.1 %

35.1 %

12.4 %

(6.3)%

(7.1)%

27.3%

12.1%

52.6%

92.0%

24.4%

49.3%

26.3%

47.2%

88.5%

12.9%

87.0%

1,581

1,057

6.0 %

6.9 %

1.7 %

(2.5)

(11)

(17)

647

610

982

997

934

534

600

841

4 %

pts.

3.3

1.0

3.5

1.9

2.1

1.5

(4)

pt.

or 28.3 percent, respectively. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.

(2) On a constant-dollar basis, for the years ended December 31, 2017 and 2016, underwriting income decreased $310 million, or 32.3 percent, and increased $115 million

or 14.1 percent, respectively. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.

Premiums
2017 vs. 2016
Net premiums written increased $217 million in 2017, or $220 million on constant-dollar basis. Excluding the favorable
impact of the 14-day stub period ($215 million), adverse impact of merger-related accounting policy adjustments in 2016 to
align the timing of premium recognition ($126 million) and merger-related actions ($131 million), net premiums written
increased $262 million on a constant-dollar basis, driven by growth in personal lines business, primarily from new automobile
business written in Latin America, as well as growth across most property and casualty (P&C) lines, primarily in Asia and Latin
America.

Net premiums earned remained flat in 2017, and decreased $31 million on a constant-dollar basis, primarily due to a higher
mix of multi-year policies written in the current year in comparison to the growth in net premiums written, as well as
from the merger-related actions described above. These decreases were partially offset by the favorable impact of the 14-day
stub period, as noted above.

2016 vs. 2015
Net premiums written increased $1,490 million in 2016, primarily due to the impact of the Chubb Corp acquisition, which
added about $1.5 billion of growth in premiums. This increase was partially offset by the adverse impact of foreign exchange
which decreased premiums by $302 million in 2016.

In 2016, net premiums written increased $95 million, on a constant-dollar comparative basis, primarily driven by growth in
personal lines, property and casualty lines (P&C), and A&H lines, partially offset by declines in our business written by Chubb
Global Markets. Personal lines and P&C growth was primarily in Europe and Asia. Growth in personal lines was negatively
impacted by our decision to exit the legacy Chubb Brazilian high net worth automobile business due to competitive market
conditions. Growth in P&C was partially offset by declines in Latin America, reflecting economic conditions. A&H lines growth
was driven by new business, primarily in Latin America and Asia. Additionally, growth was partially offset by merger-related
actions ($119 million).

Net premiums earned increased $1,661 million in 2016, and increased $81 million on a constant-dollar comparative basis,
primarily due to the same factors driving the movements in net premiums written as described above.

Overseas General Insurance conducts business internationally and in most major foreign currencies. The following tables present
a regional breakdown of Overseas General Insurance net premiums written:

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

% Change

C$ (1)
2016

2017 vs.
2016

C$ (1)
2017 vs.
2016

2016 vs.
2015

Region
Europe
Latin America
Asia
Other (2)
Net premiums written

$ 3,281

$ 3,227

$ 2,508

$ 3,162

2,108

2,596

356

1,992

2,537

368

1,767

1,963

396

2,044

2,549

366

$ 8,341

$ 8,124

$ 6,634

$ 8,121

1.7 %

5.8 %

2.3 %

(3.3)%

2.7 %

3.8 %

3.1 %

1.8 %

(2.7)%

2.7 %

28.7 %

12.7 %

29.2 %

(7.1)%

22.5 %

2017
% of Total

2016
% of Total

2015
% of Total

Region
Europe
Latin America
Asia
Other (2)
Net premiums written
(1) On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.
(2) Comprises Combined International, Eurasia and Africa region, and other international.

100%

40%

25%

31%

38%

27%

30%

25%

40%

31%

Combined Ratio
The following table presents pre-tax catastrophe losses and pre-tax favorable prior period development net of related
reinstatement premiums:

(in millions of U.S. dollars)
Catastrophe losses, pre-tax
Favorable prior period development net of related reinstatement premiums, pre-tax

2017

2016

331 $

252 $

183 $

423 $

2015

142

343

Catastrophe losses were primarily from the following events:
•

2017: Hurricane Maria, Hurricane Harvey, Hurricane Irma, Earthquakes in Mexico, Cyclone Debbie in Australia, and
flooding in Latin America
2016: severe weather related events in Europe, earthquakes in Ecuador and New Zealand, and flooding in the U.K.
2015: a chemical storage facility explosion in Tianjin, China, a hailstorm in Australia, flooding and an earthquake in Chile,
and severe storms in the U.K. and Asia

•
•

The following table presents the current accident year loss and loss expense ratio, excluding catastrophe losses and related
reinstatement premiums ("CAY loss ratio excluding catastrophe losses"):

Loss and loss expense ratio

Catastrophe losses and related reinstatement premiums

Prior period development net of related reinstatement premiums

Current accident year loss and loss expense ratio excluding catastrophe losses

2017

52.6 %

(4)%

3.1 %

51.7 %

2016

49.3 %

(2.3)%

5.2 %

52.2 %

2015.

47.2 %

(2.2)%

5.3 %

50.3 %

2017 vs. 2016
The CAY loss ratio excluding catastrophe losses decreased 0.5 percentage points in 2017, primarily due to a change in the mix
of business (0.5 percentage points) towards products and regions that have a lower loss ratio and a higher acquisition cost ratio
and integration-related claims handling expense savings realized of $38 million (0.5 percentage points), partially offset by a
higher non-catastrophe large losses in the current year (0.2 percentage points).

The policy acquisition cost ratio increased 1.0 percentage point in 2017, compared to the prior year periods, which included
the net favorable impact of initial year purchase accounting adjustments related to the Chubb Corp acquisition (0.3 percentage
points). Excluding this item, the policy acquisition cost ratio increased 0.7 percentage points for the twelve months ended
December 31, 2017, primarily due to a change in the mix of business (0.4 percentage points) towards products and regions
within personal lines which have a higher acquisition cost ratio and a lower loss ratio. In addition, the adverse impact of
aligning accounting policy after the Chubb Corp acquisition in the prior year increased the policy acquisition ratio by 0.2
percentage points. These increases were partially offset by integration-related expense savings realized of $22 million (0.3
percentage points).

The administrative expense ratio decreased 0.8 percentage points in 2017, primarily due to integration-related expense savings
realized of $116 million (1.4 percentage points). This decrease was partially offset by the impact of merit-based salary
increases, inflation, and increased spending to support growth initiatives.

2016 vs. 2015
The CAY loss ratio excluding catastrophe losses increased 1.9 percentage points in 2016, primarily due to the Chubb Corp
acquisition which experienced a higher loss ratio.

On a comparative basis (refer to non-GAAP section), the CAY loss ratio excluding catastrophe losses increased 0.5 percentage
points in 2016, primarily due to a lower level of short-tail large losses in the prior year.

The policy acquisition cost ratio increased 1.9 percentage points in 2016, primarily because we determined that certain
underwriting costs that are directly attributable to the successful acquisition of business previously classified as administrative
expenses were more appropriately classified as policy acquisition costs. This resulted in a $144 million (1.8 percentage points)
increase to policy acquisition costs, with an offsetting decrease to administrative expenses in 2016.

On a comparative basis, which excludes purchase accounting adjustments related to the Chubb Corp acquisition, the policy
acquisition cost ratio increased 0.8 percentage points in 2016, due to a shift in the mix of business away from E&S lines,
which carry a lower acquisition cost ratio, towards more personal lines products which carry a higher acquisition cost ratio.

The administrative expense ratio decreased 2.5 percentage points in 2016, due to the $144 million (1.8 percentage points)
reclassification noted above, and cost savings realized as a result of the Chubb Corp acquisition of $66 million (0.8 percentage
points).

On a comparative basis, the administrative expense ratio decreased 1.0 percentage points in 2016, primarily due to cost
savings realized as a result of the Chubb Corp acquisition as noted above.

Global Reinsurance

The Global Reinsurance segment represents our reinsurance operations comprising Chubb Tempest Re Bermuda, Chubb
Tempest Re USA, Chubb Tempest Re International, and Chubb Tempest Re Canada. Global Reinsurance markets its reinsurance
products worldwide under the Chubb Tempest Re brand name and provides a broad range of traditional reinsurance coverage to
a diverse array of primary P&C companies.

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

Net premiums written
Net premiums earned
Losses and loss expenses
Policy acquisition costs
Administrative expenses
Underwriting income (loss)
Net investment income
Other (income) expense
Segment income
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful

685

704

561

177

(78)

273

(1)

676

710

325

187

146

263

828

849

290

214

296

300

(4)

(6)

196

413

602

2017 vs.
2016

1.4 %

(0.7)%

72.6 %

(5.3)%

(15.4)%

3.8 %

(75.0)%

(52.5)%

% Change

2016 vs.
2015

(18.4)%

(16.5)%

12.1 %

(12.6)%

6.1 %

(50.7)%

(12.3)%

(33.3)%

(31.4)%

79.8 %

25.1 %

6.3 %

111.2 %

45.7 %

26.3 %

7.5 %

79.5 %

34.2 % 34.1

25.2 % (1.2)

5.8 % (1.2)

65.2 % 31.7

pts
.
pts
.
pts
.
pts
.

11.5

1.1

1.7

14.3

pts
.
pts
.
pts
.
pts
.

Premiums
2017 vs. 2016
Net premiums written increased $9 million in 2017 primarily due to a $30 million increase in catastrophe reinstatement
premiums and the timing of the Chubb Corp acquisition which excluded approximately $20 million of production generated
prior to the Chubb Corp acquisition close on January 14, 2016 (14-day stub period). These increases were negatively impacted
by merger-related actions of $10 million, declining rates and increasing competition.

Net premiums earned were about flat in 2017, which is approximately in line with the modest increase in net premiums
written.

2016 vs. 2015
Net premiums written decreased $152 million in 2016 as we maintained underwriting discipline in an environment of declining
rates and increasing competition. In addition, the decline in premiums reflects increased cessions of $17 million due to the
purchase of additional property catastrophe reinsurance in 2016. On a comparative basis (refer to non-GAAP section), net
premiums written declined $161 million in 2016 due to the same factors as described above.

Net premiums earned decreased $139 million in 2016 and $165 million on a comparative basis, primarily due to the same
factors driving the decrease in net premiums written as described above.

Combined Ratio
The following table presents pre-tax catastrophe losses and pre-tax favorable prior period development net of related reinstatement
premiums:

(in millions of U.S dollars)
Catastrophe losses, pre-tax (1)

Favorable prior period development net of related reinstatement premiums, pre-tax (2) $

(1) Excludes catastrophe reinstatement premiums collected - pre-tax

(2) Excludes reinstatement premiums (collected) expensed on prior period development - pre-tax

59 $

37 $

(4) $

2017

2016

313 $

91 $

78 $

7 $

5 $

2015

119

Catastrophe losses were primarily from the following events:
• 2017: Hurricane Irma, Hurricane Maria, Hurricane Harvey, Northern California Wildfires, and severe weather related events

in the U.S.

• 2016: Fort McMurray wildfire, Hurricane Matthew, and severe weather-related events in Europe, the U.S. and Canada
• 2015: severe weather-related events in the U.S.

The following table presents the current accident year loss and loss expense ratio, excluding catastrophe losses and related
reinstatement premiums ("CAY loss ratio excluding catastrophe losses"):

2017

79.8 %

(42.4)%

8.6 %

46.0 %

2016

45.7 %

(12.5)%

11.8 %

45.0 %

2015

34.2 %

(2.6)%

14.3 %

45.9 %

2017 vs. 2016
The CAY loss ratio excluding catastrophe losses increased 1.0 percentage point in 2017 mainly due to an increase in the loss
ratio on our U.S. property business.

The policy acquisition cost ratio decreased 1.2 percentage points in 2017 primarily due to higher net earned premiums from fully
earned catastrophe reinstatement premiums, partially offset by lower profit commissions receivable on our outbound retrocessional
treaties.

The administrative expense ratio decreased 1.2 percentage points in 2017 primarily reflecting expense reductions implemented
to align our cost structure with our premium base and integration-related expense savings realized.

2016 vs. 2015
The CAY loss ratio excluding catastrophe losses decreased 0.9 percentage points in 2016 primarily due to a change in the mix
of business towards products that have a lower loss ratio. On a comparative basis, the CAY loss ratio excluding catastrophe
losses decreased 1.7 percentage points in 2016 due to the change in the mix of business as described above.

The policy acquisition cost ratio increased 1.1 percentage points in 2016 primarily due to a change in the mix of business towards
regions and products that have higher acquisition cost ratios, partially offset by the impact of the Chubb Corp acquisition which
carries a lower acquisition cost ratio. On a comparative basis, the policy acquisition cost ratio increased 1.9 percentage points in
2016, primarily due to the change in the mix of business as described above.

The administrative expense ratio increased 1.7 percentage points in 2016 primarily due to decreases in net premiums earned and
the inclusion of the Chubb Corp business. On a comparative basis, the administrative expense ratio increased 1.2 percentage points
in 2016 primarily due to decreases in net premiums earned outpacing the decline in administrative expenses.

Life Insurance

The Life Insurance segment comprises Chubb's international life operations (Chubb Life), Chubb Tempest Life Re (Chubb Life
Re), and the North American supplemental A&H and life business of Combined Insurance. We assess the performance of our
life business based on Life Insurance underwriting income, which includes Net investment income and (Gains) losses from fair
value changes in separate account assets that do not qualify for separate account reporting under GAAP.

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

% Change

2017 vs.
2016

2016 vs
2015

663

739

0.8 %

2,055

1,947

2,101

$ 2,141 $ 2,124 $ 1,998

Net premiums written
Net premiums earned
Losses and loss expenses
Policy benefits (1)
(Gains) losses from fair value changes in separate account assets (1)
Policy acquisition costs
Administrative expenses
Net investment income
Life Insurance underwriting income
Other (income) expense (1)
Amortization of purchased intangibles
Segment income
NM – not meaningful
(1) (Gains) 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

(18.8)%

(33.3)%

248 $

263 $

10.6 %

11.5 %

15.0 %

(1.3)%

(6.7)%

(5.7)%

4.1 %

2.2 %

(97)

(11)

676

263

313

303

530

282

265

276

283

588

601

509

543

476

307

291

6.3 %

5.6 %

10.3 %

8.3 %

6.9 %

5.5 %

6.8 %

—

300.0 %

50.0 %

(4.7)%

(expense) for purposes of presenting Life Insurance underwriting income. The offsetting movement in the separate account liabilities is included in Policy benefits.

Premiums
2017 vs. 2016
Net premiums written increased $17 million in 2017, due to growth in our Asian international life operations and Combined
Insurance supplemental A&H program business. This growth was partially offset by planned declines in our Latin American
operations, reflecting merger-related actions of $37 million, and in our life reinsurance business, which continues to decline as
no new business is currently being written.

2016 vs. 2015
Net premiums written increased $126 million in 2016, primarily reflecting the impact of the Chubb Corp acquisition, which
added $64 million of growth to premiums. In addition, growth in our international life operations, primarily in Asia, and in our
Combined Insurance supplemental A&H program business contributed to the increase. The adverse effect of foreign exchange
impacted growth in net premiums written by $41 million in 2016. Our life reinsurance business continues to decline as there is
no new life reinsurance business currently being written. On a comparative basis, net premiums written increased $32 million in
2016 due to the same factors as described above.

Deposits
The following table presents deposits collected on universal life and investment contracts:

(in millions of U.S. dollars, except for percentages)

2017

2016

2015

% Change

2017 vs.
2016

C$ (1)
2017 vs.
2016

2016 vs.
2015

Deposits collected on universal life and investment
contracts

$ 1,436 $ 1,006 $ 1,015

42.7%

39.4%

(0.9)%

(1) On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.

Deposits collected on universal life and investment contracts (life deposits) are not reflected as revenues in our Consolidated
statements of operations in accordance with GAAP. New life deposits are an important component of production, and although
they do not significantly affect current period income from operations they are key to our efforts to grow our business. Life

deposits collected increased in 2017 due to growth in Taiwan, partially offset by a decline in Korea. Foreign exchange favorably
impacted growth by $25 million in 2017.

Life deposits collected decreased slightly in 2016 due to a decline in Korea, partially offset by growth in other Asian markets,
primarily in Hong Kong, Vietnam, and Taiwan. Foreign exchange adversely impacted growth by $18 million in 2016.

Life Insurance underwriting income
Life Insurance underwriting income decreased $19 million in 2017 compared to 2016 primarily due to the adverse impact of
updating our long-term benefit ratio in our variable annuity business in 2016 ($48 million). This decrease was partially offset by
higher net investment income as well as improved margins in our international life operations and growth in our Combined
North America operations.

Life Insurance underwriting income remained flat in 2016 compared to 2015 due to the adverse impact of updating our long-
term benefit ratio in the fourth quarter of 2016 as described above ($17 million), which was offset by unfavorable loss reserve
development in the prior year in our Combined Insurance supplemental A&H program business.

Corporate

Corporate results primarily include the results of our non-insurance companies, income and expenses not attributable to
reportable segments and loss and loss expenses of asbestos and environmental (A&E) liabilities.

Our exposure to A&E claims principally arises out of liabilities acquired when we purchased Westchester Specialty in 1998,
CIGNA’s P&C business in 1999, and legacy Chubb Corp A&E claims in 2016. Corporate staff expenses and net investment
income of Chubb Limited, including the amortization of the fair value adjustment on acquired invested assets and debt, interest
expense, amortization of purchased intangibles related to the Chubb Corp acquisition, Chubb integration expenses and other
merger related expenses, the one-time pension curtailment benefit related to the harmonization of our U.S. pension plans, and
the results of Chubb Group Management and Holdings Ltd, and Chubb INA Holdings Inc. are reported within Corporate.

(in millions of U.S. dollars, except for percentages)

2017

2016

Losses and loss expenses

Policy acquisition costs

Administrative expenses
Underwriting loss

Net investment income (loss)
Interest expense

Adjusted net realized gains (losses)

Other (income) expense
Amortization expense (benefit) of purchased intangibles

Chubb integration expenses

Income tax expense (benefit)

Net corporate loss
NM – not meaningful

285 $

169 $

—

267

552

(283)

607

(318)

168

310

(139)

—

183

352

(368)

605

(140)

(217)

(80)

492

815

2015

202

188

391

300

(411)

(47)

—

462

% Change

2017 vs.
2016

2016 vs.
2015

68.6 %

(16.3)%

—

45.9 %

56.8 %

(23.1)%

(2.7)%

(10.0)%

0.3 %

101.7 %

(65.9)%

46.5 %

361.7 %

(37.0)%

76.4 %

61.2 %

(1,372) $

(2,475) $

(1,535)

(44.6)%

Losses and loss expenses in 2017, 2016, and 2015 were primarily due to unfavorable prior period development related to
Brandywine asbestos and environmental exposures and related unallocated loss adjustment expenses. Refer to Note 7 of the
Consolidated Financial Statements for further information. Additionally, during the fourth quarter of 2016, we amended several
of our U.S. retirement programs as part of a harmonization effort that moved us towards a more unified retirement savings
approach. This resulted in a one-time pension curtailment benefit of $113 million, $23 million of which was related to claims
staff and was therefore recorded in losses and loss expenses in the above table. Refer to Note 13 to the Consolidated Financial
Statements for further discussion of the pension curtailment.

Administrative expenses were higher by $84 million in 2017 compared to 2016 which included the one-time pension
curtailment benefit in 2016 discussed above, of which $90 million reduced administrative expenses last year. This increase was
partially offset by integration-related expense savings ($34 million) and lower post-retirement benefit expenses ($7 million).

Administrative expenses were lower by $5 million in 2016 compared to 2015 primarily due to the one-time pension
curtailment benefit in 2016, offset by the addition of Chubb Corp expenses from the Chubb Corp acquisition of $69 million. On
a comparative basis, administrative expenses decreased $131 million, primarily due to the one-time pension curtailment benefit
and cost savings of $25 million realized as a result of the Chubb Corp acquisition.

Net investment income for the years ended December 31, 2017 and 2016 included amortization of $332 million and $393
million, respectively, related to the fair value adjustment on invested assets related to the Chubb Corp acquisition. Excluding the
fair value adjustment amortization, net investment income increased by $24 million and $10 million at December 31, 2017
and 2016, respectively, primarily due to a higher overall invested asset base. Refer to the Net Investment Income section for a
discussion on consolidated Net investment income.

Interest expense increased $2 million in 2017 primarily due to the timing of the Chubb Corp acquisition in the prior year which
excluded approximately $8 million of interest expense incurred prior to the Chubb Corp acquisition close on January 14, 2016
and higher interest expense related to our notional cash pool ($30 million) and repurchase agreements ($6 million) in 2017.
These increases were partially offset by the conversion of the interest rate on our $1.0 billion of unsecured junior subordinated
capital securities to a floating rate, equal to the three-month LIBOR plus 2.25 percentage points ($17 million) and the
retirement of the $500 million of 5.7% senior debt that matured in February 2017 ($25 million). Interest expense increased
$305 million in 2016 primarily driven by the $5.3 billion senior notes issued in November 2015, as well as the $3.3 billion
par value of debt assumed in connection with the Chubb Corp acquisition.

During 2017, net realized gains of $91 million were primarily associated with a net decrease in the fair value of GLB liabilities
of $364 million. The decrease was primarily due to higher global equity market levels and annual changes in our assumptions
for interest rates and assumptions on policyholder behavior. These impacts were partially offset by the unfavorable impact of
discounting future claims for one less year. The net gains associated with the valuation of GLB liabilities were partially offset by
realized losses on our investment portfolio of $37 million. Refer to Note 4 of the Consolidated Financial Statements for further
information regarding the fair value of GLB liabilities.

During 2016, net realized losses of $140 million were primarily associated with net losses on our investment portfolio of $156
million, partially offset by realized gains associated with a net decrease in the fair value of GLB liabilities of $50 million. The
decrease was primarily due to higher global equity market levels and the impact of updating our assumptions on policyholder
behavior, partially offset by the unfavorable impact of discounting future claims for one less year.

During 2015, realized losses of $411 million were primarily associated with a net increase in the fair value of GLB liabilities;
this increase was primarily due to the falling equity market levels and the unfavorable impact of discounting future claims for
one less year, partially offset by higher interest rates. Additionally, there were realized losses on our investment portfolio of $106
million.

As part of our loss mitigation strategy for our GLB exposures, we maintain positions in derivative instruments that decrease in
fair value when the S&P 500 index increases. During the years ended December 31, 2017, 2016, and 2015, we experienced
realized losses of $261 million, $136 million, and $10 million, respectively, related to these derivative instruments. For further
discussion of the remaining Net realized gains and (losses), refer to the Net Realized and Unrealized Gains (Losses) section.

For the year ended December 31, 2017, Other income recognized in Corporate was $318 million, compared to $217 million
and $47 million in the years ended December 31, 2016 and 2015, respectively, comprised of:

• Other income in 2017 of $406 million, compared to $227 million, and $67 million in 2016 and 2015, respectively, from

our share of net realized gains from partially-owned investment companies.

• Other expense in 2017 of $88 million, compared to $10 million and $20 million in 2016 and 2015, respectively. The

higher expense in 2017 was primarily due to a $50 million charitable contribution to The Chubb Charitable Foundation and
an increase in capital taxes resulting from a higher equity base after the Chubb Corp acquisition.

Amortization expense of purchased intangibles increased $248 million for the year ended December 31, 2017, primarily
reflecting the increase in intangible amortization expense related to agency distribution relationships and renewal rights as well
as lower amortization benefit from the fair value adjustment of Unpaid losses and loss expenses acquired as part of the Chubb
Corp acquisition. Refer to the Amortization of purchased intangibles and Other amortization section for further information.

Chubb integration expenses
The following table presents the components of Chubb integration expenses:

(in millions of U.S dollars)
Personnel-related expenses

Consulting fees

Leases and real estate termination costs

Legal fees

System integration costs

Advisor fees

Other

Totals

2017

2016

2015

168 $

181 $

—

125

—

310 $

492 $

—

Chubb integration expenses are one-time in nature and are not related to the on-going business activities of the segments. The
Chief Executive Officer does not manage segment results or allocate resources to segments when considering these costs and
they are therefore excluded from our definition of segment income.

Effective income tax rate
Our effective income tax rate, which we calculate as income tax expense divided by income before income tax, is dependent
upon the mix of earnings from different jurisdictions with various tax rates. A change in the geographic mix of earnings would
change the effective income tax rate.

In 2017, 2016, and 2015, our effective income tax rate was (3.7) percent, 16.5 percent, and 14.0 percent, respectively. The
effective income tax rate in 2017 included the favorable transition income tax benefit of $450 million, representing our best
estimate of the impact of the 2017 Tax Act. This benefit was recorded in the fourth quarter of 2017, the period when the
legislation was enacted. In addition, the income tax benefit in 2017 reflects the significant catastrophe losses in the year. Refer
to Note 8 to the Consolidated Financial Statements for additional information on the 2017 Tax Act. The increase in the effective
income tax rate in 2016 compared to 2015 was primarily due to realized losses being generated in lower taxing jurisdictions
and realized gains being generated in higher taxing jurisdictions in 2016, compared to net realized losses in both higher and
lower taxing jurisdictions in 2015. Additionally, a higher percentage of profit excluding realized gains and losses were generated
in higher taxing jurisdictions in 2016, largely driven by earnings generated as a result of the Chubb Corp acquisition.

The lower tax rates attributed to our foreign operations primarily reflect the lower corporate tax rates that have prevailed outside
of the U.S. prior to the U.S. tax reform. During 2017, approximately 62 percent of our total pre-tax income was tax effected
based on these lower rates compared with 54 percent and 69 percent in 2016 and 2015, respectively. The significant lower
taxing jurisdictions outside of the U.S. include the U.K., Switzerland, and Bermuda with federal income tax rates in those
countries of 19.0 percent, 7.83 percent, and 0.0 percent, respectively.

Non-GAAP Reconciliation

We provide financial measures such as net premiums written and net premiums earned on a constant-dollar basis. We believe it
is useful to evaluate the trends in these measures 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.

P&C performance metrics are non-GAAP financial measures and comprise consolidated operating results (including Corporate)
and exclude the operating results of the Life Insurance segment. We believe that these measures are useful and meaningful to
investors as they are used by management to assess the company’s P&C operations which are the most economically similar.
We exclude the Life Insurance segment because the results of this business do not always correlate with the results of our P&C
operations.

The P&C combined ratio is a non-GAAP financial measure and 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 P&C combined ratio also excludes the one-time pension
curtailment benefit recognized in 2016. Current accident year (CAY) P&C combined ratio excluding catastrophe losses excludes
the impact of catastrophe losses and PPD. 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.

The following table presents the calculation of combined ratio, as reported, to combined ratio, adjusted for catastrophe losses
(CATs) and PPD:

For the Twelve Months Ended
December 31, 2017
(in millions of U.S. dollars except for ratios)
Numerator
Losses and loss expenses

Losses and loss expenses

Catastrophe losses

PPD and related adjustments

PPD, net of related adjustments -
favorable (unfavorable)
Net earned premium adjustments on
PPD - unfavorable (favorable)
Expense adjustments - unfavorable
(favorable)

Reinstatement premiums expensed on PPD

PPD - gross of related adjustments -
favorable (unfavorable)

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 $ 8,287

$3,265

$ 1,043

$ 4,281

561

$ 285

$ 17,722

(1,220)

(871)

(18)

(331)

(313)

—

(2,753)

746

(69)

—

119

(11)

252

(278)

—

(4)

—

829

104

(5)

803

(69)

174

252

(278)

937

CAY Loss and loss expense ex CATs

B $ 7,870

$2,325

$ 1,199

$ 4,202

303

$ 15,906

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 earned premium adjustments on
PPD - unfavorable (favorable)

Reinstatement premiums expensed on PPD

Net premiums earned excluding
adjustments
Combined ratio
Losses and loss expense ratio

Policy acquisition costs and administrative
expense ratio
Combined ratio

CAY Combined ratio, adjusted for CATs

Loss and loss expense ratio, adjusted

Policy acquisition costs and administrative
expense ratio, adjusted

C $ 2,854

$1,163

$ 3,203

221

$ 267

$ 7,781

(6)

—

D $ 2,848

$1,163

$ 3,203

E $12,191

$4,399

$ 1,508

$ 8,131

—

221

$ 267

$ 7,786

704

(37)

(4)

—

$ 26,933

(7)

104

F $12,246

$4,421

$ 1,574

$ 8,135

663

$ 27,039

A/E

C/E

B/F

D/F

68.0 %

74.2 %

69.2 %

52.6 %

79.8%

23.4 %

26.5 %

4.8 %

39.4 %

31.4%

91.4 % 100.7 %

74.0 %

92.0 %

111.2%

64.3 %

52.6 %

76.2 %

51.7 %

46.0%

23.2 %

26.3 %

5.3 %

39.3 %

33.2%

65.8%

28.9%

94.7%

58.8%

28.8%

87.6%

CAY Combined ratio, adjusted for CATs

87.5 %

78.9 %

81.5 %

91.0 %

79.2%

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.

"Comparative basis" measures presented throughout this section are prepared exclusive of the impact of the unearned premium
reserves intangible amortization and the elimination of the historical policy acquisition costs as a result of purchase accounting
related to the Chubb Corp acquisition in order to present the underlying profitability of our insurance business for the entire
relevant periods. We believe this measure provides visibility into our results, allows for comparability to our historical results and
is consistent with how management evaluates results. We have discussed our results on a "Comparative basis" for 2016 and
2015, defined below:

2016 "Comparative basis" results: The combined company results do not include the impact of the unearned premium reserves
intangible amortization and the elimination of the historical policy acquisition costs as a result of purchase accounting related to
the Chubb Corp acquisition. The combined company results for the year ended December 31, 2016 are inclusive of the first 14
days of January 2016 (the Chubb Corp acquisition closed January 14, 2016).

2015 "Comparative basis" results: Legacy ACE plus legacy Chubb Corp historical results after accounting policy alignment
adjustments, including reclassifying certain legacy Chubb Corp corporate expenses to administrative expenses and redefining
legacy Chubb Corp segment underwriting income by allocating the amortization of deferred policy acquisition costs to each
segment. 2015 "Comparative basis" results exclude purchase accounting adjustments.

The following tables present a reconciliation of 2016 "Comparative basis" results to 2016 results, as well as 2015 "Comparative
basis" results to 2015 results and pro forma results as calculated in accordance with SEC Article 11:

Constant-dollar 2015 Comparative basis

$ 12,605

Constant-dollar change Comparative basis $

(346)

(in millions of U.S. dollars, except
percentages)

Net premiums written

2016

Net premiums written

14 day stub period

2016 Comparative basis

2015 Comparative basis

Net premiums written

Legacy Chubb

Accounting policy alignment
2015 Comparative basis (1)

Constant-dollar percent change
Comparative basis

Net premiums earned

2016

Net premiums earned

14 day stub period

2016 Comparative basis

2015 Comparative basis

Net premiums earned

Legacy Chubb

Accounting policy alignment
2015 Comparative basis (1)

North
America
Commercial
P&C
Insurance

North
America
Personal
P&C
Insurance

North
America
Agricultural
Insurance

Overseas
General
Insurance

Global
Reinsurance

Life
Insurance

Consolidated

(2.8)%

(10.6)%

(1.3)%

$ 11,740

519

$ 12,259

5,715

6,899

—

$ 12,614

$ 12,217

208

$ 12,425

5,634

6,850

—

$ 12,484

4,153

100

4,253

1,192

3,570

—

4,762

4,756

(503)

1,328

—

1,328

1,346

—

1,346

(18)

4,319

110

4,429

948

3,506

—

4,454

(25)

1,316

—

1,316

1,364

—

1,364

(48)

8,124

215

8,339

6,634

2,099

8,751

8,244

676

696

828

—

857

843

(147)

1.2%

(17.5)%

8,132

8,203

6,471

2,096

(1)

8,566

8,122

710

—

710

849

—

875

863

(153)

2,124

$ 28,145

855

2,125

$ 29,000

1,998

$ 17,713

12,633

2,093

2,049

$ 30,423

$ 29,843

(843)

3.7%

(2.8)%

2,055

$ 28,749

391

2,057

$ 29,140

1,947

$ 17,213

12,518

2,043

2,001

$ 29,786

$ 29,275

(135)

Constant-dollar 2015 Comparative basis

$ 12,471

Constant-dollar change Comparative basis $

(46)

Constant-dollar percent change
Comparative basis

(0.4)%

(0.6)%

(3.6)%

1.0%

(17.9)%

2.8%

(0.5)%

(1) Comparative basis amounts for premium are calculated on the same basis as SEC pro forma.

(in millions of U.S. dollars)

Loss and loss expenses
2016

Loss and loss expenses

14 day stub period

(Gain) loss on crop derivatives

Pension curtailment benefit

2016 Comparative basis
2015

Loss and loss expenses

Legacy Chubb

(Gain) loss on crop derivatives

Accounting policy alignments
2015 Comparative basis (1)

Policy acquisition costs
2016

Policy acquisition costs

Amortization of acquired UPR intangible asset

Elimination of deferred acquisition cost benefit

14 day stub period

2016 Comparative basis
2015

Policy acquisition costs

Legacy Chubb

Accounting policy alignment

2015 Comparative basis

Amortization of acquired UPR intangible asset

Elimination of deferred acquisition cost benefit

2015 SEC pro forma

Administrative expenses
2016

Administrative expenses

Pension curtailment benefit

14 day stub period

2016 Comparative basis
2015

Administrative expenses
Legacy Chubb

Accounting policy alignment
2015 Comparative basis (1)

(Favorable) unfavorable PPD, pre-tax
2015

(Favorable) unfavorable PPD, pre-tax

Legacy Chubb
2015 Comparative basis (1)

Catastrophe losses, pre-tax

2015

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

7,439

$ 2,558

893

$ 4,005

325

169

$ 15,389

127

—

7,566

$ 2,611

3,661

3,681

590

2,079

—

898

$ 4,047

1,088

$ 3,052

—

1,064

—

325

290

—

222

192

$ 15,639

202

105

—

(14)

$ 8,883

6,934

(10)

7,342

$ 2,669

1,097

$ 4,120

295

293

$ 15,816

2,023

966

(859)

729

1,926

531

1,321

128

1,980

855

(709)

(492)

406

894

774

858

490

(406)

2,126

942

—

$ 2,136

187

— $ 5,395

(208)

238

$ 2,179

$ 1,581

491

138

—

187

214

—

$ 2,210

214

205

(169)

—

$ 2,246

214

—

(1,559)

1,373

— $ 5,269

—

$ 2,465

2,586

281

$ 5,332

1,550

(1,284)

$ 5,598

1,125

363

(6)

$ 1,057

—

1,160

621
694

(128)

—

376

123
271

(15)

1,187

379

—

(6)

$ 1,069

1
—

—

997
343

(142)

$ 1,198

—

49
6

—

183

$ 2,774

276

$ 2,927

188
45

$ 1,979
1,359

(201)

317

$ 3,137

(264)

(519)

(783)

(43)

(18)

(45)

—

(45)

(343)

(134)

(477)

(119)

(19)

(138)

200

(546)

(624)

291

$ (1,170)

Catastrophe losses, pre-tax
Legacy Chubb
2015 Comparative basis (1)
848
(1) Comparative basis amounts for Loss and loss expenses, Administrative expenses, Prior period development and Catastrophe losses are calculated on the same basis as
SEC pro forma.

— $
—

321
527

63
320

85
183

142
20

22
4

— $

9
—

268

383

162

Net Investment Income

(in millions of U.S. dollars)
Fixed maturities
Short-term investments
Equity securities
Other investments
Gross investment income (1)
Investment expenses
Net investment income (1)
(1) Includes amortization expense related to fair value adjustment of acquired invested assets

related to the Chubb Corp acquisition

2017

2016

2,987 $

2,779 $

131

133

3,289

(164)

3,006

(141)

2015

2,157

2,308

(114)

3,125 $

2,865 $

2,194

(332) $

(393) $

—

Net investment income is influenced by a number of factors including the amounts and timing of inward and outward cash
flows, the level of interest rates, and changes in overall asset allocation. Net investment income increased 9.1 percent in 2017
compared with 2016 primarily reflecting higher private equity income distributions that included a $44 million final distribution
from a co-investment with one of our private equity fund partners and a higher overall invested asset base. Additionally, the
current year's amortization expense related to the fair value adjustment of acquired invested assets is $61 million less than prior
year. Net investment income increased 30.6 percent in 2016 compared with 2015 primarily due to the Chubb Corp acquisition
which added $1.2 billion of net investment income, partially offset by the unfavorable impact of liquidating investments to fund
the acquisition, and the unfavorable impact of amortizing the purchase accounting fair value adjustment to investments at the
date of acquisition of $393 million.

Our yield on average invested assets was 3.5 percent in 2017 and 3.4 percent and 3.5 percent in 2016 and 2015,
respectively, which is primarily driven by the yield on our fixed maturities. This compares to the average market yield, which
represents the weighted average yield to maturity of our fixed income portfolio based on market prices of the holdings
throughout the period, of 2.8 percent for 2017 and 2.4 percent and 2.8 percent in 2016 and 2015, respectively.

The following table shows the yield on average invested assets:

(in millions of U.S. dollars, except for percentages)
Average invested assets
Net investment income
Yield on average invested assets (1)

2017

2016

2015

$ 99,675

$ 96,656

$ 63,252

3,125

2,865

2,194

3.5%

3.4%

3.5%

(1) Excludes $332 million and $393 million of amortization on the purchase accounting fair value adjustment of acquired invested assets related to the Chubb Corp acquisition in

2017 and 2016, respectively.

Net Realized and Unrealized Gains (Losses)

We take a long-term view with our investment strategy, and our investment managers manage our investment portfolio to
maximize total return within certain specific guidelines designed to minimize risk. The majority of our investment portfolio is
available for sale and reported at fair value. Our held to maturity investment portfolio is reported at amortized cost.

The effect of market movements on our available for sale investment portfolio impacts Net income (through Net realized gains
(losses)) when securities are sold or when we record an Other-than-temporary impairment (OTTI) charge in Net income. For a
discussion related to how we assess OTTI for all of our investments, including credit-related OTTI, and the related impact on
Net income, refer to Note 3 d) to the Consolidated Financial Statements. Additionally, Net income is impacted through the
reporting of changes in the fair value of derivatives, including financial futures, options, swaps, and GLB reinsurance. Changes
in unrealized appreciation and depreciation on available for sale securities resulting from the revaluation of securities held,
changes in cumulative foreign currency translation adjustment, and unrealized postretirement benefit obligations liability
adjustment, are reported as separate components of Accumulated other comprehensive income in Shareholders’ equity in the
Consolidated balance sheets.

The following table presents our net realized and unrealized gains (losses):

(in millions of U.S. dollars)

Fixed maturities

Fixed income derivatives

Public equity

Private equity

Total investment portfolio (1)

Variable annuity reinsurance derivative

transactions, net of applicable hedges

Other derivatives

Foreign exchange

Other

Year Ended December 31, 2017

Year Ended December 31, 2016

Net
Realized
Gains
(Losses)

Net
Unrealized
Gains
(Losses)

Net
Impact

Net
Realized
Gains
(Losses)

Net
Unrealized
Gains
(Losses)

Net
Impact

(31) $

537 $

506 $

(163) $

83 $

(11)

(37)

103

(5)

(13)

—

633

—

471

(16)

(11)

104

(3)

596

103

(5)

507

(29)

(33)

(4)

(156)

(83)

(10)

118

(14)

—

(49)

—

(154)

543

(80)

(33)

(53)

(70)

(83)

(10)

(36)

529

330

Net gains (losses) before tax

84 $

1,088 $

1,172 $

(145) $

475 $

(1) For the year ended December 31, 2017, other-than-temporary impairments in Net realized gains (losses) include $23 million for fixed maturities, $10 million for public equity,
and $12 million for private equity. For the year ended December 31, 2016, other-than-temporary impairments in Net realized gains (losses) include $81 million for fixed
maturities, $8 million for public equity, and $14 million for private equity.

Amortization of purchased intangibles and Other amortization

Amortization expense related to purchased intangibles amounted to $260 million, $19 million, and $171 million for the years
ended December 31, 2017, 2016, and 2015, respectively. Amortization expense of purchased intangibles was low in 2016
reflecting the favorable impact of the amortization benefit from the fair value adjustment on acquired Unpaid losses and loss
expenses. This benefit was lower in 2017 and will be comparatively lower in 2018. As a result, the amortization of purchased
intangibles is expected to increase to $338 million in 2018 as presented in the table below.

Amortization expense in 2018 is expected to be $338 million as shown in the table below, or approximately $85 million each
quarter.

The following table presents, as of December 31, 2017, the estimated pre-tax amortization expense (benefit) of purchased
intangibles, at current foreign currency exchange rates, for the next five years:

Associated with the Chubb Corp Acquisition

For the Years Ending
December 31
(in millions of U.S. dollars)

Agency distribution
relationships and
renewal rights

Internally
developed
technology

Fair value
adjustment on
Unpaid losses and
loss expense

Total (1)

Other intangible
assets (2)

Total
Amortization of
purchased
intangibles

2018

2019

2020

2021

2022

325 $

32 $

(102) $

255 $

83 $

282

241

218

198

—

(63)

(36)

(20)

(14)

219

205

198

184

338

294

272

259

241

Total
(1) Recorded in Corporate.
(2) Recorded in applicable segment(s) that acquired the intangible assets.

1,264 $

32 $

(235) $

1,061 $

343 $

1,404

Reduction of deferred tax liability associated with intangible assets related to Other intangible assets (excluding the fair value
adjustment on Unpaid losses and loss expense)
At December 31, 2017, the deferred tax liability associated with the Other intangibles assets (excluding the fair value
adjustment on Unpaid losses and loss expenses) was $1,433 million.

The following table presents, as of December 31, 2017, the expected reduction to the deferred tax liability associated with
Other intangible assets (which reduces as agency distribution relationships and renewal rights, internally developed technology,
and other intangible assets amortize), at current foreign currency exchange rates for the next five years:

For the Years Ending December 31
(in millions of U.S. dollars)

2018

2019

2020

2021

2022

Total

Reduction to deferred tax
liability associated with
intangible assets

361

Amortization of the fair value adjustment on acquired invested assets and assumed long-term debt
The following table presents at December 31, 2017, the expected amortization expense of the fair value adjustment on
acquired invested assets, at current foreign currency exchange rates, and the expected amortization benefit from the
amortization of the fair value adjustment on assumed long-term debt for the next five years as follows:

For the Years Ending December 31
(in millions of U.S. dollars)

2018
2019
2020
2021
2022
Total
(1) Recorded as a reduction to Net investment income in the Consolidated statements of operations.
(2) Recorded as a reduction to Interest expense in the Consolidated statements of operations.

Amortization (expense) benefit of the fair value
adjustment on

Acquired invested
assets (1)

Assumed long-term
debt (2)

(300) $

(270)

(250)

(38)

—

(858) $

107

The estimate of amortization expense of the fair value adjustment on acquired invested assets could vary materially based on
current market conditions, bond calls, overall duration of the acquired investment portfolio, and foreign exchange.

Interest Expense

Interest expense in 2017 of $607 million was comprised of interest expense on our debt obligations ($560 million) which
included $8 million of amortization of debt issuance costs, interest expense on notional pools ($56 million), fees on collateral,
and repurchase agreements and credit facility usage ($40 million). This expense was offset by the amortization of the fair value
of debt related to the Chubb Corp acquisition ($49 million). Interest expense in 2016 was comparable at $605 million.

For 2018, interest expense on our existing debt obligations is expected to be $513 million, which includes $8 million of
amortization of debt issuance costs. This estimate excludes interest expense expected to be incurred in 2018 relating to our
notional pools, fees on collateral, repurchase agreements and credit facilities, as interest expense in these arrangements are
based on usage and could fluctuate from prior years. This estimated interest expense also excludes $31 million of expected
amortization of fair value of debt related to the Chubb Corp acquisition.

Investments

Our investment portfolio is invested primarily in publicly traded, investment grade, fixed income securities with an average
credit quality of A/Aa as rated by the independent investment rating services Standard and Poor’s (S&P)/ Moody’s Investors
Service (Moody’s). The portfolio is externally managed by independent, professional investment managers and is broadly
diversified across geographies, sectors, and issuers. Other investments principally comprise direct investments, investment
funds, and limited partnerships. We hold no collateralized debt obligations in our investment portfolio, and we provide no credit
default protection. We have long-standing global credit limits for our entire portfolio across the organization. Exposures are
aggregated, monitored, and actively managed by our Global Credit Committee, comprising senior executives, including our Chief
Financial Officer, our Chief Risk Officer, our Chief Investment Officer, and our Treasurer. We also have well-established, strict
contractual investment rules requiring managers to maintain highly diversified exposures to individual issuers and closely
monitor investment manager compliance with portfolio guidelines.

The average duration of our fixed income securities, including the effect of options and swaps, was 4.2 years at both
December 31, 2017 and 2016. We estimate that a 100 basis point (bps) increase in interest rates would reduce the valuation
of our fixed income portfolio by approximately $4.1 billion at December 31, 2017.

The following table shows the fair value and cost/amortized cost of our invested assets:

(in millions of U.S. dollars)

Fixed maturities available for sale

Fixed maturities held to maturity

Short-term investments

Equity securities

Other investments

Total investments

December 31, 2017

December 31, 2016

Fair
Value

78,939 $

Cost/
Amortized
Cost
77,835 $

Fair
Value

80,115 $

Cost/
Amortized
Cost
79,536

14,474

3,561

96,974

937

4,672

14,335

3,561

95,731

737

4,417

10,670

3,002

93,787

814

4,519

10,644

3,002

93,182

706

4,270

102,583 $

100,885 $

99,120 $

98,158

The fair value of our total investments increased $3.5 billion during the year ended December 31, 2017, primarily due to the
investing of operating cash flows, unrealized appreciation, and the favorable impact of foreign exchange, partially offset by the
payment of dividends on our Common Shares, repurchases of our Common Shares, and the repayment of $500 million senior
notes that matured in February 2017.

The following tables present the market value of our fixed maturities and short-term investments at December 31, 2017 and
2016. The first table lists investments according to type and the second according to S&P credit rating:

(in millions of U.S. dollars, except for percentages)

Market Value

% of Total Market Value

% of Total

December 31, 2017

December 31, 2016

4,049

4% $

2,832

Treasury

Agency

Corporate and asset-backed securities

Mortgage-backed securities

Municipal

Non-U.S.

Short-term investments

Total

AAA

BBB

Other

Total

564

27,215

18,032

20,766

22,787

3,561

96,974

15,512

37,407

18,369

12,377

7,941

5,135

233

28%

19%

21%

23%

699

26,944

15,435

22,768

22,107

3,002

29%

16%

24%

100% $

93,787

100%

16% $

15,746

39%

19%

13%

—

36,235

17,519

12,237

6,993

4,814

243

17%

39%

19%

13%

—

96,974

100% $

93,787

100%

Corporate and asset-backed securities
The following table presents our 10 largest global exposures to corporate bonds by market value at December 31, 2017:

Market Value

579

465

439

437

406

376

345

335

320

312

(in millions of U.S. dollars)
Wells Fargo & Co

JP Morgan Chase & Co

Anheuser-Busch InBev NV

Goldman Sachs Group Inc

AT&T Inc

General Electric Co

Verizon Communications Inc

Morgan Stanley

Bank of America Corp

Citigroup Inc

Mortgage-backed securities

December 31, 2017
(in millions of U.S. dollars)

AAA

BBB

BB and
below

Total

Agency residential mortgage-backed (RMBS)

— $ 14,876 $

— $

— $ 14,876 $ 14,857

Non-agency RMBS

Commercial mortgage-backed

Total mortgage-backed securities

2,858

118

—

135

133

3,021

3,013

$ 2,869 $ 15,004 $

117 $

16 $

26 $ 18,032 $ 18,003

S&P Credit Rating

Market
Value

Amortized
Cost

Municipal
As part of our overall investment strategy, we may invest in states, municipalities, and other political subdivisions fixed maturity
securities (Municipal). We apply the same investment selection process described previously to our Municipal investments. The
portfolio is highly diversified primarily in state general obligation bonds and essential service revenue bonds including education
and utilities (water, power, and sewers).

Non-U.S.
Our exposure to the Euro results primarily from Chubb European Group Limited which is headquartered in London and offers a
broad range of coverages throughout the European Union, Central, and Eastern Europe. Chubb primarily invests in Euro
denominated investments to support its local currency insurance obligations and required capital levels. Chubb’s local currency
investment portfolios have strict contractual investment guidelines requiring managers to maintain a high quality and diversified
portfolio to both sector and individual issuers. Investment portfolios are monitored daily to ensure investment manager
compliance with portfolio guidelines.

Our non-U.S. investment grade fixed income portfolios are currency-matched with the insurance liabilities of our non-U.S.
operations. The average credit quality of our non-U.S. fixed income securities is A and 55 percent of our holdings are rated AAA
or guaranteed by governments or quasi-government agencies. Within the context of these investment portfolios, our government
and corporate bond holdings are highly diversified across industries and geographies. Issuer limits are based on credit rating
(AA—two percent, A—one percent, BBB—0.5 percent of the total portfolio) and are monitored daily via an internal compliance
system. Because of this investment approach, we do not have a direct exposure to troubled sovereign borrowers in Europe. We
manage our indirect exposure using the same credit rating based investment approach. Accordingly, we do not believe our
indirect exposure is material.

The following table summarizes the market value and amortized cost of our non-U.S. fixed income portfolio by country/
sovereign for non-U.S. government securities at December 31, 2017:

(in millions of U.S. dollars)

United Kingdom

Republic of Korea

Canada

Federative Republic of Brazil

Province of Ontario

United Mexican States

Province of Quebec

Kingdom of Thailand

Federal Republic of Germany

French Republic
Other Non-U.S. Government Securities (1)
Total

(1) There are no investments in Portugal, Ireland, Italy, Greece or Spain.

Market Value

Amortized Cost

1,387 $

1,364

1,056

933

741

646

536

507

462

424

326

978

944

730

647

544

507

431

419

313

4,497

4,385

11,515 $

11,262

The following table summarizes the market value and amortized cost of our non-U.S. fixed income portfolio by country/
sovereign for non-U.S. corporate securities at December 31, 2017:

(in millions of U.S. dollars)

United Kingdom

Canada

United States (1)

France

Netherlands

Australia

Germany

Switzerland

Japan

China

Other Non-U.S. Corporate Securities

Total

Market Value

Amortized Cost

1,979 $

1,413

1,904

1,396

960

829

773

758

561

356

319

312

939

804

754

743

545

345

320

308

3,012

2,932

11,272 $

10,990

(1) The countries that are listed in the non-U.S. corporate fixed income portfolio above represent the ultimate parent company's country of risk. Non-U.S. corporate securities could

be issued by foreign subsidiaries of U.S. corporations.

Below-investment grade corporate fixed income portfolio
Below-investment grade securities have different characteristics than investment grade corporate debt securities. Risk of loss
from default by the borrower is greater with below-investment grade securities. Below-investment grade securities are generally
unsecured and are often subordinated to other creditors of the issuer. Also, issuers of below-investment grade securities usually
have higher levels of debt and are more sensitive to adverse economic conditions, such as recession or increasing interest rates,
than investment grade issuers. At December 31, 2017, our corporate fixed income investment portfolio included below-
investment grade and non-rated securities which, in total, comprised approximately 12 percent of our fixed income portfolio.
Our below-investment grade and non-rated portfolio includes over 1,100 issuers, with the greatest single exposure being $152
million.

We manage high-yield bonds as a distinct and separate asset class from investment grade bonds. The allocation to high-yield
bonds is explicitly set by internal management and is targeted to securities in the upper tier of credit quality (BB/B). Our
minimum rating for initial purchase is BB/B. Nine external investment managers are responsible for high-yield security selection
and portfolio construction. Our high-yield managers have a conservative approach to credit selection and very low historical
default experience. Holdings are highly diversified across industries and generally subject to a 1.5 percent issuer limit as a
percentage of high-yield allocation. We monitor position limits daily through an internal compliance system. Derivative and
structured securities (e.g., credit default swaps and collateralized loan obligations) are not permitted in the high-yield portfolio.

Asbestos and Environmental (A&E)

Asbestos and environmental (A&E) reserving considerations
For asbestos, Chubb faces claims relating to policies issued to manufacturers, distributors, installers, and other parties in the
chain of commerce for asbestos and products containing asbestos. Claimants will generally allege damages across an extended
time period which may coincide with multiple policies covering a wide range of time periods for a single insured.

Environmental claims present exposure for remediation and defense costs associated with the contamination of property as a
result of pollution.

The following table presents count information for asbestos claims by causative agent and environmental claims by account, for
direct policies only:

Open at beginning of year
Newly reported
Closed or otherwise disposed
Acquired
Open at end of year

Asbestos (by causative agent)

Environmental (by account)

2017

1,766

106

123

—

1,749

2016

1,145

563

1,766

2017

1,395

138

—

1,338

2016

1,011

326

1,395

Closed or otherwise disposed claims were significantly higher in 2017 due to a review of pending cases completed in 2017.
Survival ratios are calculated by dividing the asbestos or environmental loss and allocated loss adjustment expense (ALAE)
reserves by the average asbestos or environmental loss and ALAE payments for the three most recent calendar years (3-year
survival ratio). The 3-year survival ratios for gross and net Asbestos loss and ALAE reserves were 4.5 years and 5.2 years,
respectively. The 3-year survival ratios for gross and net Environmental loss and ALAE reserves were 4.3 years and 4.4 years,
respectively. The survival ratios provide only a very rough depiction of reserves and are significantly impacted by a number of
factors such as aggressive settlement practices, variations in gross to ceded relationships within the asbestos or environmental
claims, and levels of coverage provided. We, therefore, urge caution in using these very simplistic ratios to gauge reserve
adequacy.

Catastrophe Management

We actively monitor and manage our catastrophe risk accumulation around the world. The table below presents our modeled
pre-tax estimates of natural catastrophe probable maximum loss (PML), net of reinsurance, for Worldwide, U.S. hurricane and
California earthquake events as of December 31, 2017. For example, according to the model, for the 1-in-100 return period
scenario, there is a one percent chance that our losses incurred in any year from U.S. hurricane events could be in excess of
$2,889 million (or 5.6 percent of our total shareholders’ equity at December 31, 2017).

Worldwide (1)

Annual Aggregate

Modeled Net PML
U.S. Hurricane

Annual Aggregate

California Earthquake

Single Occurrence

(in millions of U.S. dollars,
except for percentages)

1-in-10

1-in-100

Chubb

2,033

4,450

% of Total
Shareholders’
Equity

Chubb

% of Total
Shareholders’
Equity

Chubb

% of Total
Shareholders’
Equity

4.0% $

8.7% $

1,166

2,889

2.3% $

5.6% $

366

1,395

0.7%

2.7%

2.9%
1-in-250
(1) Worldwide losses are comprised of losses arising only from hurricanes, typhoons, convective storms and earthquakes and do not include “non-modeled” perils such as wildfire

10.1% $

14.2% $

5,144

1,495

7,267

and flood.

The above modeled loss information at December 31, 2017 reflects our in-force portfolio at October 1, 2017. The
December 31, 2017 modeled loss information reflects the April 1, 2017 reinsurance program (see Natural Catastrophe
Property Reinsurance Program section) as well as inuring reinsurance protection coverages. Included in the loss estimates for
hurricane and earthquake are estimates for losses arising from storm-surge and fire-following perils respectively.

The above estimates of Chubb’s loss profile are inherently uncertain owing to key assumptions. First, while the use of third-
party catastrophe modeling packages to simulate potential hurricane and earthquake losses is prevalent within the insurance
industry, the models are reliant upon significant meteorology, seismology, and engineering assumptions to estimate catastrophe
losses. In particular, modeled catastrophe events are not always a representation of actual events and ensuing additional loss
potential. Second, there is no universal standard in the preparation of insured data for use in the models, the running of the
modeling software and interpretation of loss output. These loss estimates do not represent our potential maximum exposures
and it is highly likely that our actual incurred losses would vary materially from the modeled estimates.

Natural Catastrophe Property Reinsurance Program
Chubb’s core property catastrophe reinsurance program provides protection against natural catastrophes impacting its primary
property operations (i.e., excluding our Global Reinsurance and Life Insurance segments).

We regularly review our reinsurance protection and corresponding property catastrophe exposures. This may or may not lead to
the purchase of additional reinsurance prior to a program’s renewal date. In addition, prior to each renewal date, we consider
how much, if any, coverage we intend to buy and we may make material changes to the current structure in light of various
factors, including modeled PML assessment at various return periods, reinsurance pricing, our risk tolerance and exposures, and
various other structuring considerations.

Chubb renewed its Global Property Catastrophe Reinsurance Program for our North American and International operations
effective April 1, 2017 through March 31, 2018, with no significant change in coverage from the expiring program. The
program consists of three layers in excess of losses retained by Chubb. In addition, Chubb also renewed its terrorism coverage
(excluding nuclear, biological, chemical and radiation coverage, with an inclusion of coverage for biological and chemical
coverage for personal lines) for the United States from April 1, 2017 through March 31, 2018 with the same limits and
retention and percentage placed except that the majority of terrorism coverage is on an aggregate basis above our retentions
without a reinstatement.

Loss Location

United States
(excluding Alaska and Hawaii)

International
(including Alaska and Hawaii)

Alaska, Hawaii, and Canada

Layer of Loss

$0 million –
$1.0 billion

$1.0 billion –
$1.25 billion

$1.25 billion –
$2.0 billion

$2.0 billion –
$3.5 billion

$0 million –
$175 million

$175 million –
$925 million

$925 million –
$2.425 billion

Comments

Notes

Losses retained by Chubb

All natural perils and terrorism

Losses retained by Chubb

All natural perils and terrorism

(a)

(b)

(c)

(d)

(a)

(c)

(d)

(a) Ultimate retention will depend upon the nature of the loss and the interplay between the underlying per risk programs and certain other catastrophe programs purchased by
individual business units. These other catastrophe programs have the potential to reduce our effective retention below the stated levels.

(b) These coverages are 20 percent placed with Reinsurers.
(c) These coverages are both part of the same Second layer within the Global Catastrophe Program and are 100 percent placed with Reinsurers. As such, it may be exhausted in
one region and not available in the other.
(d) These coverages are both part of the same Third layer within the Global Catastrophe Program and are 100 percent placed with Reinsurers. As such, it may be exhausted in
one region and not available in the other.

Chubb also has two series of property catastrophe bonds in place (assumed as part of the Chubb Corp acquisition) that offer
additional natural catastrophe protection for certain parts of the portfolio. The geographic scope of this coverage is from Virginia
through Maine. The East Lane VI 2014 series currently provides $270 million of coverage as part of a $300 million layer in
excess of $2,660 million retention through March 14, 2018. The East Lane VI 2015 series currently provides $250 million of
coverage as part of a $408 million layer in excess of $2,014 million retention through March 13, 2020.

Political Risk and Credit Insurance

Political risk insurance is a specialized coverage that provides clients with protection against unexpected, catastrophic political
or macroeconomic events, primarily in developing markets. We participate in this market through our wholly-owned subsidiary
Sovereign Risk Insurance Ltd. (Sovereign), and through a unit of our London-based CGM operation. Chubb is one of the world's
leading underwriters of political risk and credit insurance and has a global portfolio spread across more than 150 countries, and
is also a member of the Berne Union. Our clients include financial institutions, national export credit agencies, leading
multilateral agencies, and multinational corporations. CGM writes political risk and credit insurance business out of underwriting
offices in London, United Kingdom; Hamburg, Germany; Sao Paulo, Brazil; Singapore; Tokyo, Japan; and in the U.S. in the
following locations: Chicago, Illinois; New York, New York; and Los Angeles, California.

Our political risk insurance provides protection to commercial lenders against defaults on cross border loans, insulates investors
against equity losses, and protects exporters against defaults on contracts. Commercial lenders, our largest client segment, are
covered for missed scheduled loan repayments due to acts of confiscation, expropriation or nationalization by the host
government, currency inconvertibility or exchange transfer restrictions, or war or other acts of political violence. In addition, in
the case of loans to government-owned entities or loans that have a government guarantee, political risk policies cover
scheduled payments against risks of non-payment or non-honoring of government guarantees. Equity investors and corporations
receive similar coverage to that of lenders, except they are protected against financial losses, inability to repatriate dividends,
and physical damage to their operations caused by covered events. Our export contracts protection provides coverage for both
exporters and their financing banks against the risk of contract frustration due to government actions, including non-payment by
government entities.

CGM's credit insurance businesses cover losses due to insolvency, protracted default, and political risk perils including export
and license cancellation. Our credit insurance product provides coverage to larger companies that have sophisticated credit risk
management systems, with exposure to multiple customers and that have the ability to self-insure losses up to a certain level
through excess of loss coverage. It also provides coverage to trade finance banks, exporters, and trading companies, with
exposure to trade-related financing instruments.

We have implemented structural features in our policies in order to control potential losses within the political risk and credit
insurance businesses. These include basic loss sharing features that include co-insurance and deductibles, and in the case of
trade credit, the use of non-qualifying losses that drop smaller exposures deemed too difficult to assess. Ultimate loss severity is
also limited by using waiting periods to enable the insurer and insured to agree on recovery strategies, and the subrogation of
the rights of the lender/exporter to the insurer following a claim. We have the option to pay claims over the original loan
payment schedule, rather than in a lump sum in order to provide insureds and the insurer additional time to remedy problems
and work towards full recoveries. It is important to note that political risk and credit policies are named peril conditional
contracts, not financial guarantees, and claims are only paid after conditions and warranties are fulfilled. Political risk and credit
insurance do not cover currency devaluations, bond defaults, movements in overseas equity markets, transactions deemed
illegal, situations where corruption or misrepresentation has occurred, or debt that is not legally enforceable. In addition to
assessing and mitigating potential exposure on a policy-by-policy basis, we also have specific risk management measures in
place to manage overall exposure and risk. These measures include placing country, credit, and individual transaction limits
based on country risk and credit ratings, combined single loss limits on multi-country policies, the use of reinsurance protection,
and regular modeling and stress-testing of the portfolio. We have a dedicated Country and Credit Risk management team that
are responsible for the portfolio.

Crop Insurance

We are, and have been since the 1980s, one of the leading writers of crop insurance in the U.S. and have conducted that
business through a managing general agent subsidiary of Rain and Hail. We provide protection throughout the U.S. on a variety
of crops and are therefore geographically diversified, which reduces the risk of exposure to a single event or a heavy
accumulation of losses in any one region. Our crop insurance business comprises two components – Multiple Peril Crop
Insurance (MPCI) and crop-hail insurance.

The MPCI program is offered in conjunction with the U.S. Department of Agriculture (USDA). The policies cover revenue
shortfalls or production losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease.
Generally, policies have deductibles ranging from 10 percent to 50 percent of the insured's risk. The USDA's Risk Management

Agency (RMA) sets the policy terms and conditions, rates and forms, and is also responsible for setting compliance standards.
As a participating company, we report all details of policies underwritten to the RMA and are party to a Standard Reinsurance
Agreement (SRA). The SRA sets out the relationship between private insurance companies and the Federal Crop Insurance
Corporation (FCIC) concerning the terms and conditions regarding the risks each will bear including the pro-rata and state stop-
loss provisions which allows companies to limit the exposure of any one state or group of states on their underwriting results. In
addition to the pro-rata and excess of loss reinsurance protections inherent in the SRA, we also purchase third-party
proportional and stop-loss reinsurance for our MPCI business to reduce our exposure. We may also enter into crop derivative
contracts to further manage our risk exposure.

Each year the RMA issues a final SRA for the subsequent reinsurance year. In June 2017, the RMA released the 2018 SRA
which establishes the terms and conditions for the 2018 reinsurance year (i.e., July 1, 2017 through June 30, 2018) that
replaced the 2017 SRA. There were no significant changes in the terms and conditions, and therefore the new SRA does not
impact Chubb's outlook on the crop program relative to 2018.

On the MPCI business, we recognize net premiums written as soon as estimable, which is generally when we receive acreage
reports from the policyholders on the various crops throughout the U.S. This allows us to best determine the premium
associated with the liability that is being planted. The MPCI program has specific timeframes as to when producers must report
acreage to us and in certain cases, the reporting occurs after the close of the respective reinsurance year. Once the net premium
written has been recorded, the premium is then earned over the growing season for the crops. A majority of the crops that are
covered in the program are typically subject to the SRA in effect at the beginning of the year. Given the major crops covered in
the program, we typically see a substantial written and earned premium impact in the second and third quarters.

The pricing of MPCI premium is determined using a number of factors including commodity prices and related volatility. For
instance, in most states the pricing for the MPCI Revenue Product for corn includes a factor that is based on the average price
in February of the Chicago Board of Trade December corn futures. To the extent that the corn commodity prices are higher in
February than they were in the previous February, and all other factors are the same, the increase in corn prices will increase
the corn premium year over year.

Our crop-hail program is a private offering. Premium is earned on the crop-hail program over the coverage period of the policy.
Given the very short nature of the growing season, most crop-hail business is typically written in the second and third quarters
with the earned premium also more heavily occurring during this time frame. We use industry data to develop our own rates
and forms for the coverage offered. The policy primarily protects farmers against yield reduction caused by hail and/or fire, and
related costs such as transit to storage. We offer various deductibles to allow the grower to partially self-insure for a reduced
premium cost. We limit our crop-hail exposures through the use of township liability limits and third-party proportional and
stop-loss reinsurance on our net retained hail business.

Liquidity
Liquidity is a measure of a company's ability to generate cash flows sufficient to meet short-term and long-term cash
requirements. As a holding company, Chubb Limited possesses assets that consist primarily of the stock of its subsidiaries and
other investments. In addition to net investment income, Chubb Limited's cash flows depend primarily on dividends or other
statutorily permissible payments. Historically, these dividends and other payments have come primarily from Chubb's
Bermuda-based operating subsidiaries, which we refer to as our Bermuda subsidiaries. Our consolidated sources of funds
consist primarily of net premiums written, fees, net investment income, and proceeds from sales and maturities of investments.
Funds are used at our various companies primarily to pay claims, operating expenses, and dividends, to service debt, to
purchase investments, and to fund acquisitions.

We anticipate that positive cash flows from operations (underwriting activities and investment income) should be sufficient to
cover cash outflows under most loss scenarios for the near term. Should the need arise, we generally have access to capital
markets and available credit facilities. Refer to “Credit Facilities” below for additional information. Our access to funds under the
existing credit facility is dependent on the ability of the bank that is a party to the facility to meet its funding commitments.
Should our existing credit provider experience financial difficulty, we may be required to replace credit sources, possibly in a
difficult market. If we cannot obtain adequate capital or sources of credit on favorable terms, on a timely basis, or at all, our
business, operating results, and financial condition could be adversely affected. To date, we have not experienced difficulty
accessing our credit facility.

To further ensure the sufficiency of funds to settle unforeseen claims, we hold certain invested assets in cash and short-term

investments. In addition, for certain insurance, reinsurance, or deposit contracts that tend to have relatively large and
reasonably predictable cash outflows, we attempt to establish dedicated portfolios of assets that are duration-matched with the
related liabilities. With respect to the duration of our overall investment portfolio, we manage asset durations to both maximize
return given current market conditions and provide sufficient liquidity to cover future loss payments. All things being equal, in a
low interest rate environment, the overall duration of our fixed maturities tends to be shorter and in a high interest rate
environment, such duration tends to be longer. At December 31, 2017, the average duration of our fixed maturities (4.2 years)
is less than the average expected duration of our insurance liabilities (4.3 years).

Despite our safeguards, if paid losses accelerate beyond our ability to fund such paid losses from current operating cash flows,
we might need to either liquidate a portion of our investment portfolio or arrange for financing. Potential events causing such a
liquidity strain could include several significant catastrophes occurring in a relatively short period of time, large uncollectible
reinsurance recoverables on paid losses (as a result of coverage disputes, reinsurers' credit problems, or decreases in the value
of collateral supporting reinsurance recoverables) or increases in collateral postings under our variable annuity reinsurance
business. Because each subsidiary focuses on a more limited number of specific product lines than is collectively available from
the Chubb Group of Companies, the mix of business tends to be less diverse at the subsidiary level. As a result, the probability
of a liquidity strain, as described above, may be greater for individual subsidiaries than when liquidity is assessed on a
consolidated basis. If such a liquidity strain were to occur in a subsidiary, we could be required to liquidate a portion of our
investments, potentially at distressed prices, as well as be required to contribute capital to the particular subsidiary and/or
curtail dividends from the subsidiary to support holding company operations.

The payment of dividends or other statutorily permissible distributions from our operating companies are subject to the laws
and regulations applicable to each jurisdiction, as well as the need to maintain capital levels adequate to support the insurance
and reinsurance operations, including financial strength ratings issued by independent rating agencies. During 2017, we were
able to meet all of our obligations, including the payments of dividends on our Common Shares, with our net cash flows.

We assess which subsidiaries to draw dividends from based on a number of factors. Considerations such as regulatory and legal
restrictions as well as the subsidiary's financial condition are paramount to the dividend decision. Chubb Limited received
dividends of $450 million and $1.0 billion from its Bermuda subsidiaries in 2017 and 2016, respectively.

The payment of any dividends from CGM or its subsidiaries is subject to applicable U.K. insurance laws and regulations. In
addition, the release of funds by Syndicate 2488 to subsidiaries of CGM is subject to regulations promulgated by the Society of
Lloyd's. Chubb Limited received no dividends from CGM in 2017 and 2016.

The U.S. insurance subsidiaries of Chubb INA may pay dividends, without prior regulatory approval, subject to restrictions set
out in state law of the subsidiary's domicile (or, if applicable, commercial domicile). Chubb INA's international subsidiaries are
also subject to insurance laws and regulations particular to the countries in which the subsidiaries operate. These laws and
regulations sometimes include restrictions that limit the amount of dividends payable without prior approval of regulatory
insurance authorities. Chubb Limited received no dividends from Chubb INA in 2017 and 2016. Debt issued by Chubb INA is
serviced by statutorily permissible distributions by Chubb INA's insurance subsidiaries to Chubb INA as well as other group
resources. Chubb INA received dividends of $2.1 billion and $1.8 billion from its subsidiaries in 2017 and 2016, respectively.
At December 31, 2017, the amount of dividends available to be paid to Chubb INA in 2018 from its subsidiaries without prior
approval of insurance regulatory authorities totals $3.3 billion.

Chubb INA received $1.0 billion in capital contributions from Chubb Limited and $4.2 billion from Chubb Group Holdings
during 2016. Chubb INA did not receive any capital contributions in 2017.

Cash Flows
Our insurance and reinsurance operations provide liquidity in that premiums are received in advance, sometimes substantially in
advance, of the time claims are paid. Generally, cash flows are affected by claim payments that, due to the nature of our
operations, may comprise large loss payments on a limited number of claims and which can fluctuate significantly from period
to period. The irregular timing of these loss payments can create significant variations in cash flows from operations between
periods. Refer to “Contractual Obligations and Commitments” for our estimate of future claim payments by period. Sources of
liquidity include cash from operations, routine sales of investments, and financing arrangements. The following is a discussion
of our cash flows for 2017, 2016, and 2015.

Operating cash flows reflect Net income for each period, adjusted for non-cash items and changes in working capital.

Operating cash flows were $4.5 billion in 2017, compared to $5.3 billion and $3.9 billion in 2016 and 2015, respectively.
Operating cash flow was lower in 2017 compared to 2016 principally reflecting higher claims paid, principally due to the
significant catastrophe losses in the year. The increase in operating cash flows of $1.4 billion in 2016 compared to 2015 was
primarily due to cash flow contributions from legacy Chubb Corp operations, partially offset by integration expenses paid, higher
interest paid on long-term debt, and higher taxes paid.

Cash used for investing was $2.4 billion in 2017, compared to $5.3 billion and $6.3 billion in 2016 and 2015, respectively.
Cash used for investing in 2017 was lower compared to 2016 which included cash paid for the purchase of Chubb Corp of
$14.3 billion, largely funded by sales in our investment portfolio, including net proceeds in short-term investments. Cash used
for investing in 2015 included an increase in short-term investments to fund the Chubb Corp acquisition.

Cash (used for) from financing was $(2.3) billion in 2017, compared to $(742) million in 2016, and $3.7 billion in 2015.
Cash used for financing was higher by $1.6 billion in 2017 compared to 2016 principally reflecting $501 million of
repayments of long-term debt and $801 million of share repurchases. Cash from financing in 2015 included $4.9 billion of net
proceeds from the issuance of long-term debt (net of repayments) partially offset by $862 million of dividends paid on Common
Shares and $758 million of share repurchases.

Both internal and external forces influence our financial condition, results of operations, and cash flows. Claim settlements,
premium levels, and investment returns may be impacted by changing rates of inflation and other economic conditions. In many
cases, significant periods of time, ranging up to several years or more, may lapse between the occurrence of an insured loss, the
reporting of the loss to us, and the settlement of the liability for that loss.

In the current low interest rate environment, we use repurchase agreements as a low-cost funding alternative. At December 31,
2017, there were $1.4 billion in repurchase agreements outstanding with various maturities over the next 7 months.

In addition to cash from operations, routine sales of investments, and financing arrangements, we have agreements with a third-
party bank provider which implemented two international multi-currency notional cash pooling programs to enhance cash
management efficiency during periods of short-term timing mismatches between expected inflows and outflows of cash by
currency. The programs allow us to optimize investment income by avoiding portfolio disruption. In each program, participating
Chubb entities establish deposit accounts in different currencies with the bank provider. Each day the credit or debit balances in
every account are notionally translated into a single currency (U.S. dollars) and then notionally pooled. The bank extends
overdraft credit to all participating Chubb entities as needed, provided that the overall notionally pooled balance of all accounts
in each pool at the end of each day is at least zero. Actual cash balances are not physically converted and are not commingled
between legal entities. Chubb entities may incur overdraft balances as a means to address short-term liquidity needs. Any
overdraft balances incurred under this program by a Chubb entity would be guaranteed by Chubb Limited (up to $300 million
in the aggregate). Our syndicated letter of credit facility allows for same day drawings to fund a net pool overdraft should
participating Chubb entities withdraw contributed funds from the pool.

Capital Resources
Capital resources consist of funds deployed or available to be deployed to support our business operations.

(in millions of U.S. dollars, except for percentages)

Short-term debt
Long-term debt

Total financial debt
Trust preferred securities
Total shareholders’ equity
Total capitalization

Ratio of financial debt to total capitalization
Ratio of financial debt plus trust preferred securities to total capitalization

December 31
2017

December 31
2016

1,013

11,556

12,569

308

51,172

64,049

500

12,610

13,110

308

48,275

61,693

19.6%

20.1%

21.3%

21.8%

Repurchase agreements are excluded from the table above and are disclosed separately from short-term debt in the
Consolidated balance sheets. The repurchase agreements are collateralized borrowings where we maintain the right and ability

to redeem the collateral on short notice, unlike short-term debt which comprises the current maturities of our long-term debt
instruments.

Included in the debt obligations are junior subordinated capital securities of $1.0 billion. Prior to April 15, 2017, these
securities carried a fixed interest rate of 6.375 percent. Effective April 15, 2017, these securities bear interest at a rate equal to
the three-month LIBOR plus 2.25 percentage points. The current interest rate at the time of this filing on these securities is
3.97 percent. The scheduled maturity date for these securities is April 15, 2037.

We believe our financial strength provides us with the flexibility and capacity to obtain available funds externally through debt or
equity financing on both a short-term and long-term basis. Our ability to access the capital markets is dependent on, among
other things, market conditions and our perceived financial strength. We have accessed both the debt and equity markets from
time to time. We generally maintain the ability to issue certain classes of debt and equity securities via an unlimited SEC shelf
registration which is renewed every three years. This allows us capital market access for refinancing as well as for unforeseen
or opportunistic capital needs. We have an unlimited shelf registration which allows us to issue certain classes of debt and
equity. This shelf registration expires in October 2018.

Securities Repurchases
From time to time, we repurchase shares as part of our capital management program. Our Board of Directors has authorized share
repurchase programs as follows:

•
•
•

$1.5 billion of Chubb Common Shares from January 1, 2015 through December 31, 2015
$1.0 billion of Chubb Common Shares from November 17, 2016 through December 31, 2017
$1.0 billion of Chubb Common Shares from January 1, 2018 through December 31, 2018.

Share repurchases may be made in the open market, in privately negotiated transactions, block trades, accelerated repurchases
and/or through option or other forward transactions. In 2015, we repurchased $734 million of Common Shares in a series of
open market transactions under the Board share repurchase authorization. There were no share repurchases in 2016. In 2017,
we repurchased $830 million of Common Shares in a series of open market transactions under the Board share repurchase
authorization.

Common Shares
Our Common Shares had a par value of CHF 24.15 each at December 31, 2017.

As of December 31, 2017, there were 15,950,685 Common Shares in treasury with a weighted average cost of $121.85 per
share.

Under Swiss law, dividends must be stated in Swiss francs though dividend payments are made by Chubb in U.S. dollars.

At our May 2016 annual general meeting, our shareholders approved an annual dividend for the following year of up to $2.76
per share, which was paid in four quarterly installments of $0.69 per share at dates determined by the Board after the annual
general meeting by way of a distribution from capital contribution reserves, transferred to free reserves for payment.

At our May 2017 annual general meeting, our shareholders approved an annual dividend for the following year of up to $2.84
per share, expected to be paid in four quarterly installments of $0.71 per share after the annual general meeting by way of
distribution from capital contribution reserves, transferred to free reserves for payment. The Board will determine the record and
payment dates at which the annual dividend may be paid until the date of the 2018 annual general meeting, and is authorized
to abstain from distributing a dividend at its discretion. The first three quarterly installments each of $0.71 per share, have
been distributed by the Board as expected.

Dividend distributions on Common Shares amounted to CHF 2.76 ($2.82) per share for the year ended December 31, 2017.
Refer to Note 11 to the Consolidated Financial Statements for additional information on our dividends.

Contractual Obligations and Commitments

The following table presents our future payments due by period under contractual obligations at December 31, 2017:

(in millions of U.S. dollars)

Payment amounts determinable from the respective contracts
Deposit liabilities (1)
Purchase obligations (2)
Investments, including Limited Partnerships (3)
Operating leases
Repurchase agreements
Short-term debt
Long-term debt
Trust preferred securities
Interest on debt obligations (4)
Total obligations in which payment amounts are determinable from

the respective contracts

Payment amounts not determinable from the respective contracts
Estimated gross loss payments under insurance and reinsurance

contracts

Payments Due By Period

Total

2018

2019
and 2020

2021
and 2022

Thereafter

1,872 $

20 $

33 $

46 $ 1,773

641

5,081

900

1,408

1,000

11,260

309

7,044

209

1,728

181

1,408

1,000

—

516

290

1,576

286

—

142

1,111

203

—

1,810

1,000

—

926

—

851

—

666

230

—

8,450

309

4,751

29,515

5,062

4,921

3,353

16,179

63,202

17,139

17,559

8,859

19,645

Estimated payments for future policy benefits
Total contractual obligations and commitments
(1) Refer to Note 1 k) to the Consolidated Financial Statements.
(2) Primarily comprises audit fees and agreements with vendors to purchase system software administration and maintenance services.
(3) Funding commitment primarily related to limited partnerships. The timing of the payments of these commitments is uncertain and may differ from the estimated timing in the

$ 112,656 $ 23,144 $ 24,266 $ 13,807 $ 51,439

19,939

15,615

1,786

1,595

943

table.

(4) Included in the debt obligations are junior subordinated capital securities of $1.0 billion, these securities bear interest at a rate equal to the three-month LIBOR plus 2.25

percentage points. For purposes of the above table, interest from January 1, 2018 through January 15, 2018, was calculated at a rate of 3.609 percent. Interest after January
15, 2018 is calculated using the three-month LIBOR rate as of January 12, 2018 plus 2.25 percentage points totaling 3.972 percent. The scheduled maturity date for these
securities is April 15, 2037. Interest payments for the period from the scheduled maturity date through the final maturity date, March 29, 2067, would increase the
contractual obligation by $1,207 million.

The above table excludes the following items:

•

Pension obligations: Minimum funding requirements for our pension obligations are immaterial. Subsequent funding
commitments are apt to vary due to many factors and are difficult to estimate at this time. Refer to Note 13 to the
Consolidated Financial Statements for additional information.

Liabilities for unrecognized tax benefits: The liability for unrecognized tax benefits, excluding interest, was $13 million at
December 31, 2017. We recognize accruals for interest and penalties, if any, related to unrecognized tax benefits in Income
tax expense in the Consolidated statements of operations. At December 31, 2017, we had $3 million in liabilities for
income tax-related interest and penalties in our Consolidated balance sheets. We are unable to make a reasonably reliable
estimate for the timing of cash settlement with respect to these liabilities. Refer to Note 8 to the Consolidated Financial
Statements for additional information.

We have no other significant contractual obligations or commitments not reflected in the table above. We do not have any off-
balance sheet arrangements that are reasonably likely to have a material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Estimated gross loss payments under insurance and reinsurance contracts
We are obligated to pay claims under insurance and reinsurance contracts for specified loss events covered under those
contracts. Such loss payments represent our most significant future payment obligation as a P&C insurance and reinsurance
company. In contrast to other contractual obligations, cash payments are not determinable from the terms specified within the

contract. For example, we do not ultimately make a payment to our counterparty for many insurance and reinsurance contracts
(i.e., when a loss event has not occurred) and if a payment is to be made, the amount and timing cannot be determined from
the contract. In the table above, we estimate payments by period relating to our gross liability for unpaid losses and loss
expenses included in the Consolidated balance sheet at December 31, 2017, and do not take into account reinsurance
recoverable. These estimated loss payments are inherently uncertain and the amount and timing of actual loss payments are
likely to differ from these estimates and the differences could be material. Given the numerous factors and assumptions involved
in both estimates of loss and loss expense reserves and related estimates as to the timing of future loss and loss expense
payments in the table above, differences between actual and estimated loss payments will not necessarily indicate a
commensurate change in ultimate loss estimates. The liability for Unpaid losses and loss expenses presented in our balance
sheet is discounted for certain structured settlements for which the timing and amount of future claim payments are reliably
determinable and certain reserves for unsettled claims that are discounted in statutory filings. Accordingly, the estimated
amounts in the table exceed the liability for Unpaid losses and loss expenses presented in our balance sheet. Refer to Note 1 h)
to the Consolidated Financial Statements for additional information.

Estimated payments for future policy benefits
We establish reserves for future policy benefits for life, long-term health, and annuity contracts. The amounts in the table are
gross of fees or premiums due from the underlying contracts. The liability for Future policy benefits for life, long-term health,
and annuity contracts presented in our balance sheet is discounted and reflected net of fees or premiums due from the
underlying contracts. Accordingly, the estimated amounts in the table exceed the liability for Future policy benefits presented in
our balance sheet. Payment amounts related to these reserves must be estimated and are not determinable from the
contract. Due to the uncertainty with respect to the timing and amount of these payments, actual results could materially differ
from the estimates in the table.

Credit Facilities

As our Bermuda subsidiaries are non-admitted insurers and reinsurers in the U.S., the terms of certain U.S. insurance and
reinsurance contracts require them to provide collateral, which can be in the form of letters of credit (LOCs). LOCs may also be
used for general corporate purposes.

On October 25, 2017, we entered into a credit facility that provides for up to $1.0 billion of availability, all of which may be
used for the issuance of LOC and for revolving loans. We have the ability to increase the capacity to $2.0 billion under certain
conditions, but any such increase would not raise the sub-limit for revolving loans above $1.0 billion. Our existing credit facility
has a remaining term expiring in October 2022. At December 31, 2017, our LOC usage was $250 million.

Our access to funds under an existing credit facility is dependent on the ability of the banks that are a party to the facility to
meet their funding commitments. In the event that such credit support is insufficient, we could be required to provide
alternative security to clients. This could take the form of additional insurance trusts supported by our investment portfolio or
funds withheld using our cash resources. The value of LOCs required is driven by, among other things, statutory liabilities
reported by variable annuity guarantee reinsurance clients, loss development of existing reserves, the payment pattern of such
reserves, the expansion of business, and loss experience of such business.

The facility noted above requires that we maintain certain covenants, all of which have been met at December 31, 2017.
These covenants include:

(i) a minimum consolidated net worth of not less than $34.985 billion; and
(ii) a ratio of consolidated debt to total capitalization of not greater than 0.35 to 1.

At December 31, 2017, (a) the minimum consolidated net worth requirement under the covenant described in (i) above was
$34.985 billion and our actual consolidated net worth as calculated under that covenant was $50.6 billion and (b) our ratio of
debt to total capitalization, as calculated under the covenant which excludes the fair value adjustment of debt acquired through
the Chubb Corp acquisition, was 0.19 to 1, which is below the maximum debt to total capitalization ratio of 0.35 to 1 as
described in (ii) above.

Our failure to comply with the covenants under any credit facility would, subject to grace periods in the case of certain
covenants, result in an event of default. This could require us to repay any outstanding borrowings or to cash collateralize LOCs

under such facility. Our failure to repay material financial obligations, as well as our failure with respect to certain other events
expressly identified, would result in an event of default under the facility.

Should our existing credit provider experience financial difficulty, we may be required to replace credit sources, possibly in a
difficult market. If we cannot obtain adequate capital or sources of credit on favorable terms, on a timely basis, or at all, our
business, operating results, and financial condition could be adversely affected. To date, we have not experienced difficulty
accessing our credit facility.

Ratings

Chubb Limited and its subsidiaries are assigned credit and financial strength (insurance) ratings from internationally recognized
rating agencies, including S&P, A.M. Best, Moody's, and Fitch. The ratings issued on our companies by these agencies are
announced publicly and are available directly from the agencies. Our Internet site (investors.chubb.com, under Shareholder
Resources/Rating Agency Ratings) also contains some information about our ratings, but such information on our website is not
incorporated by reference into this report.

Financial strength ratings reflect the rating agencies' opinions of a company's claims paying ability. Independent ratings are one
of the important factors that establish our competitive position in the insurance markets. The rating agencies consider many
factors in determining the financial strength rating of an insurance company, including the relative level of statutory surplus
necessary to support the business operations of the company. These ratings are based upon factors relevant to policyholders,
agents, and intermediaries and are not directed toward the protection of investors. Such ratings are not recommendations to
buy, sell, or hold securities.

Credit ratings assess a company's ability to make timely payments of principal and interest on its debt.

It is possible that, in the future, one or more of the rating agencies may reduce our existing ratings. If one or more of our ratings
were downgraded, we could incur higher borrowing costs, and our ability to access the capital markets could be impacted. In
addition, our insurance and reinsurance operations could be adversely impacted by a downgrade in our financial strength
ratings, including a possible reduction in demand for our products in certain markets. Also, we have insurance and reinsurance
contracts which contain rating triggers. In the event the S&P or A.M. Best financial strength ratings of Chubb fall, we may be
faced with the cancellation of premium or be required to post collateral on our underlying obligation associated with this
premium. We estimate that at December 31, 2017, a one-notch downgrade of our S&P or A.M. Best financial strength ratings
would result in an immaterial loss of premium or requirement for collateral to be posted.

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk

Market Sensitive Instruments and Risk Management
Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments. We are exposed to
potential losses from various market risks including changes in interest rates, equity prices, and foreign currency exchange rates.
Further, through writing the GLB and GMDB products, we are exposed to volatility in the equity and credit markets, as well as
interest rates. Our investment portfolio consists primarily of fixed income securities, denominated in both U.S. dollars and
foreign currencies, which are sensitive to changes in interest rates and foreign currency exchange rates. The majority of our fixed
income portfolio is classified as available for sale. The effect of market movements on our available for sale investment portfolio
impacts Net income (through Net realized gains (losses)) when securities are sold or when we record an OTTI charge in Net
income. Changes in interest rates and foreign currency exchange rates will have an immediate effect on Shareholders' equity and
Comprehensive income and in certain instances, Net income. From time to time, we also use derivative instruments such as
futures, options, swaps, and foreign currency forward contracts to manage the duration of our investment portfolio and foreign
currency exposures and also to obtain exposure to a particular financial market. At December 31, 2017 and 2016, our notional
exposure to derivative instruments was $4.8 billion and $6.2 billion, respectively. These instruments are recognized as assets or
liabilities in our consolidated financial statements and are sensitive to changes in interest rates, foreign currency exchange rates,
and equity security prices. As part of our investing activities, we from time to time purchase to be announced mortgage backed
securities (TBAs). Changes in the fair value of TBAs are included in Net realized gains (losses) and therefore, have an immediate
effect on both our Net income and Shareholders' equity.

We seek to mitigate market risk using a number of techniques, including maintaining and managing the assets and liabilities of
our international operations consistent with the foreign currencies of the underlying insurance and reinsurance businesses,
thereby limiting exchange rate risk to net assets denominated in foreign currencies.

The following is a discussion of our primary market risk exposures at December 31, 2017. Our policies to address these risks in
2017 were not materially different from 2016. We do not currently anticipate significant changes in our primary market risk
exposures or in how those exposures are managed in future reporting periods based upon what is known or expected to be in
effect in future reporting periods.

Interest rate risk – fixed income portfolio and debt obligations
Our fixed income portfolio and debt obligations have exposure to interest rate risk. Changes in investment values attributable to
interest rate changes are mitigated by corresponding and partially offsetting changes in the economic value of our insurance
reserves and debt obligations. We monitor this exposure through periodic reviews of our asset and liability positions.

The following table presents the impact at December 31, 2017 and 2016, on the fair value of our fixed income portfolio of a
hypothetical increase in interest rates of 100 bps applied instantly across the U.S. yield curve (an immediate time horizon was
used as this presents the worst case scenario):

(in billions of U.S. dollars, except for percentages)

Fair value of fixed income portfolio
Pre-tax impact of 100 bps increase in interest rates:

Decrease in dollars
As a percentage of total fixed income portfolio at fair value

2017

97.0

4.1

4.2%

2016

93.8

3.9

4.2%

Changes in interest rates will have an immediate effect on Comprehensive income and Shareholders' equity but will not
ordinarily have an immediate effect on Net income. Variations in market interest rates could produce significant changes in the
timing of prepayments due to available prepayment options. For these reasons, actual results could differ from those reflected in
the tables.

Although our debt and trust preferred securities (collectively referred to as debt obligations) are reported at amortized cost and
not adjusted for fair value changes, changes in interest rates could have a material impact on their fair value, albeit there would
be no impact on our consolidated financial statements.

The following table presents the impact at December 31, 2017 and 2016, on the fair value of our debt obligations of a
hypothetical decrease in interest rates of 100 bps applied instantly across the U.S. yield curve (an immediate time horizon was
used as this presents the worst case scenario):

(in millions of U.S. dollars, except for percentages)

Fair value of debt obligations, including repurchase agreements
Impact of 100 bps decrease in interest rates:

Increase in dollars
As a percentage of total debt obligations at fair value

2017

2016

$ 15,221

15,360

1,144

1,154

7.5%

Foreign currency management
As a global company, Chubb entities transact business in multiple currencies. Our policy is to generally match assets, liabilities
and required capital for each individual jurisdiction in local currency, which would include the use of derivatives. We do not
hedge our net asset non-U.S. dollar capital positions; however, we do consider hedging for planned cross border transactions.

The following table summarizes the net assets in non-U.S. currencies at December 31, 2017 and 2016:

(in millions of U.S. dollars, except for percentages)
British pound sterling (GBP)

Canadian dollar (CAD)

Euro (EUR)

Brazilian real (BRL)

Australian dollar (AUD)

Mexican peso (MXN)

Korean won (KRW) (x100)

Thai baht (THB)

Japanese yen (JPY)

Hong Kong dollar (HKD)

Other foreign currencies

2016

Exchange
rate
per USD

2017 vs. 2016
% change in
exchange rate
per USD

Value of
Net Assets

2,696

2,289

1,846

1,524

1,283

815

674

513

465

400

2017

Exchange
rate
per USD

1.3513 $

0.7955

1.2005

0.3019

0.7809

0.0509

0.0937

0.0307

0.0089

0.1280

2,643

2,508

1,871

1,194

1,327

687

316

429

391

370

1.2340

0.7440

1.0517

0.3072

0.7208

0.0483

0.0829

0.0279

0.0086

0.1289

9.5 %

6.9 %

14.1 %

(1.7)%

8.3 %

5.3 %

13.0 %

10.0 %

3.1 %

(0.7)%

1,644

various

1,191

various

Value of net assets denominated in foreign
currencies
As a percentage of total net assets

14,149

12,927

27.7%

26.8%

Pre-tax decrease to Shareholders' equity of a
hypothetical 10 percent strengthening of the
U.S. dollar
NM – not meaningful
(1) At December 31, 2017, net assets denominated in foreign currencies comprised approximately 41 percent tangible assets and 59 percent intangible assets, primarily

1,285

1,175

goodwill.

Reinsurance of GMDB and GLB guarantees
Chubb views its variable annuity reinsurance business as having a similar risk profile to that of catastrophe reinsurance with the
probability of long-term economic loss relatively small, at the time of pricing. Adverse changes in market factors and
policyholder behavior will have an impact on both Life insurance underwriting income and net income. When evaluating these
risks, we expect to be compensated for taking both the risk of a cumulative long-term economic net loss, as well as the short-
term accounting variations caused by these market movements. Therefore, we evaluate this business in terms of its long-term
economic risk and reward.

Net income is directly impacted by changes in benefit reserves calculated in connection with reinsurance of variable annuity
guarantees, primarily GMDB and GLB. In addition, net income is directly impacted by changes in the fair value of the GLB
liability (FVL), which is classified as a derivative for accounting purposes. The FVL established for a GLB reinsurance contract
represents the difference between the fair value of the contract and the benefit reserves. Benefit reserves and FVL calculations
are directly affected by market factors, including equity levels, interest rate levels, credit risk, and implied volatilities, as well as
policyholder behaviors, such as annuitization and lapse rates.

The tables below are estimates of the sensitivities to instantaneous changes in economic inputs (e.g., equity shock, interest rate
shock etc.) or actuarial assumptions at December 31, 2017 of the FVL and of the fair value of specific derivative instruments
held (hedge value) to partially offset the risk in the variable annuity guarantee reinsurance portfolio. The following assumptions
should be considered when using the below tables:

• No changes to the benefit ratio used to establish benefit reserves at December 31, 2017.

• Equity shocks impact all global equity markets equally

• Our liabilities are sensitive to global equity markets in the following proportions: 75 percent—85 percent U.S. equity,

10 percent—20 percent international equity ex-Japan, up to 10 percent Japan equity.

• Our current hedge portfolio is sensitive to global equity markets in the following proportions: 100 percent U.S. equity.

• We would suggest using the S&P 500 index as a proxy for U.S. equity, the MSCI EAFE index as a proxy for

international equity, and the TOPIX as a proxy for Japan equity.

•

Interest rate shocks assume a parallel shift in the U.S. yield curve

• Our liabilities are also sensitive to global interest rates at various points on the yield curve, mainly the U.S. Treasury

curve in the following proportions: up to 10 percent short-term rates (maturing in less than 5 years), 20 percent—30
percent medium-term rates (maturing between 5 years and 10 years, inclusive), and 60 percent—70 percent long-
term rates (maturing beyond 10 years).

• A change in AA-rated credit spreads (AA-rated credit spreads are a proxy for both our own credit spreads and the credit

spreads of the ceding insurers) impacts the rate used to discount cash flows in the fair value model.

• The hedge sensitivity is from December 31, 2017 market levels.

• The sensitivities are not directly additive because changes in one factor will affect the sensitivity to changes in other factors.
The sensitivities do not scale linearly and may be proportionally greater for larger movements in the market factors. The
sensitivities may also vary due to foreign exchange rate fluctuations. The calculation of the FVL is based on internal models
that include assumptions regarding future policyholder behavior, including lapse, annuitization, and asset allocation. These
assumptions impact both the absolute level of the FVL as well as the sensitivities to changes in market factors shown
below. Actual sensitivity of our net income may differ from those disclosed in the tables below due to differences between
short-term market movements and management judgment regarding the long-term assumptions implicit in our benefit
ratios. Furthermore, the sensitivities below could vary by multiples of the sensitivities in the tables below.

•

In addition, the tables below do not reflect the expected quarterly run rate of net income generated by the variable annuity
guarantee reinsurance portfolio if markets remain unchanged during the period. All else equal, if markets remain unchanged
during the period, the Gross FVL will increase, resulting in a realized loss. The realized loss occurs primarily because,
during the period, we will collect premium on the full population while 80 percent of that population has become eligible to
annuitize and generate a claim (since approximately 20 percent of policies are not eligible to annuitize until after
December 31, 2017). This increases the Gross FVL because future premiums are lower by the amount collected in the
quarter, and also because future claims are discounted for a shorter period. We refer to this increase in Gross FVL as
“timing effect”. The unfavorable impact of timing effect on our Gross FVL in a quarter is not reflected in the sensitivity
tables below. For this reason, when using the tables below to estimate the sensitivity of Gross FVL in the first quarter 2018
to various changes, it is necessary to assume an additional $5 million to $45 million increase in Gross FVL and realized
losses. However, the impact to Net income is substantially mitigated because the majority of this realized loss is offset by
the positive quarterly run rate of Life insurance underwriting income generated by the variable annuity guarantee
reinsurance portfolio if markets remain unchanged during the period. Note that both the timing effect and the quarterly run
rate of Life insurance underwriting income change over time as the book ages.

Interest Rate Shock
(in millions of U.S. dollars)

+100 bps

(Increase)/decrease in Gross FVL

Increase/(decrease) in hedge value

Increase/(decrease) in net income

Flat

(Increase)/decrease in Gross FVL

Increase/(decrease) in hedge value

Increase/(decrease) in net income

-100 bps

(Increase)/decrease in Gross FVL

Increase/(decrease) in hedge value

+10%

228

(157)

120

(157)

(37)

(57)

(157)

Worldwide Equity Shock

Flat

-10%

-20%

-30%

-40%

(160)

(389)

(656)

148

—

148

157

186

— $

(180)

—

157

— $

(23)

(232)

(438)

—

157

315

155

(397)

315

(82)

(683)

315

472

(658)

472

630

(26)

(952)

630

(186)

(322)

(966)

$ (1,277)

472

630

Increase/(decrease) in net income

(214)

(232)

(281)

(368)

(494)

(647)

AA-rated Credit Spreads

Interest Rate Volatility

Equity Volatility

+100 bps

-100 bps

+2%

-2%

+2%

-2%

—

(65)

— $

(6)

—

(65)

— $

(6)

Mortality

+20%

+10%

-10%

—

-20%

(20)

—

+50%

—

(10)

—

(10)

(20)

—

Lapses

+25%

-25%

-50%

—

(50)

(106)

—

(50)

(106)

Annuitization

+50%

+25%

-25%

-50%

(388)

(207)

171

—

(388)

(207)

171

341

—

341

Sensitivities to Other Economic Variables
(in millions of U.S. dollars)
(Increase)/decrease in Gross FVL

Increase/(decrease) in hedge value

Increase/(decrease) in net income

Sensitivities to Actuarial Assumptions
(in millions of U.S. dollars)
(Increase)/decrease in Gross FVL

Increase/(decrease) in hedge value

Increase/(decrease) in net income

(in millions of U.S. dollars)
(Increase)/decrease in Gross FVL

Increase/(decrease) in hedge value

Increase/(decrease) in net income

(in millions of U.S. dollars)
(Increase)/decrease in Gross FVL

Increase/(decrease) in hedge value

Increase/(decrease) in net income

Variable Annuity Net Amount at Risk
All our VA reinsurance treaties include annual or aggregate claim limits and many include an aggregate deductible which limit
the net amount at risk under these programs. The tables below present the net amount at risk at December 31, 2017 following
an immediate change in equity market levels, assuming all global equity markets are impacted equally. For further information
on the net amount at risk, refer to Note 5 c) to the Consolidated Financial Statements.

a) Reinsurance covering the GMDB risk only

(in millions of U.S. dollars)

GMDB net amount at risk

Claims at 100% immediate mortality

Equity Shock

+20%

Flat

-20%

-40%

-60%

-80%

308

176

279 $

189

478

184

944

200

994

217

852

219

The treaty claim limits function as a ceiling as equity markets fall. As the shocks in the table above become incrementally more
negative, the impact on the NAR and claims at 100 percent mortality begin to drop due to the specific nature of these claim
limits, many of which are annual claim limits calculated as a percentage of the reinsured account value. There is also some
impact due to a small portion of the GMDB reinsurance under which claims are positively correlated to equity markets (claims
decrease as equity markets fall).

b) Reinsurance covering the GLB risk only

(in millions of U.S. dollars)

GLB net amount at risk

Equity Shock

+20%

Flat

-20%

-40%

-60%

-80%

420

691 $ 1,215

$ 2,044

$ 2,620

$ 2,912

The treaty claim limits cause the net amount at risk to increase at a declining rate as equity markets fall.

c) Reinsurance covering both the GMDB and GLB risks on the same underlying policyholders

(in millions of U.S. dollars)

GMDB net amount at risk

GLB net amount at risk

Claims at 100% immediate mortality

Equity Shock

+20%

Flat

-20%

-40%

-60%

-80%

81 $

255

392

102

624

119

989

130

136

1,398

142

1,748

180

The treaty limits control the increase in the GMDB net amount at risk as equity markets fall. The GMDB net amount at risk
continues to grow as equity markets fall because most of these reinsurance treaties do not have annual claim limits calculated
as a percentage of the underlying account value. The treaty limits cause the GLB net amount at risk to increase at a declining
rate as equity markets fall.

ITEM 8. Financial Statements and Supplementary Data
The financial statements and supplementary data are included in this Form 10-K commencing on page F-1.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

ITEM 9A. Controls and Procedures
Chubb’s management, with the participation of Chubb’s Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of Chubb’s disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) under the
Securities Exchange Act of 1934 as of December 31, 2017. Based upon that evaluation, Chubb’s Chief Executive Officer and
Chief Financial Officer concluded that Chubb’s disclosure controls and procedures are effective in allowing information required
to be disclosed in reports filed under the Securities and Exchange Act of 1934 to be recorded, processed, summarized, and
reported within time periods specified in the rules and forms of the SEC, and that such information is accumulated and
communicated to Chubb’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.

In 2016, Chubb completed the acquisition of The Chubb Corporation. For the year ended December 31, 2017, we continued to
integrate the information technology environments of the two companies.

There were no other changes to Chubb's internal controls over financial reporting for the year ended December 31, 2017 that
have materially affected, or are reasonably likely to materially affect, Chubb's internal controls over financial reporting. Chubb's
management report on internal control over financial reporting is included on page F-3 and PricewaterhouseCoopers LLP's audit
report is included on page F-4.

ITEM 9B. Other Information

Disclosure of Certain Activities Under Section 13(r) of the Securities Exchange Act of 1934

Section 13(r) of the Securities Exchange Act of 1934, as amended, requires an issuer to disclose in its annual or quarterly
reports whether it or an affiliate knowingly engaged in certain activities described in that section, including certain activities
related to Iran during the period covered by the report.

Chubb, through certain of its non-U.S. subsidiaries, provides insurance and reinsurance coverage relating to marine risks for
policyholders with global operations. As a result of the modification of U.S. and European sanctions on Iran in 2016, several
marine policyholders have informed us that they are shipping cargo to and from Iran, including transporting crude oil,
petrochemicals and refined petroleum products. As the activities of our insureds and reinsureds are permitted under applicable
laws and regulations, including U. S. Department of Treasury General License H, Chubb intends for its non-U.S. subsidiaries to
continue providing such coverage to its insureds and reinsureds to the extent permitted by applicable law. Since these policies
insure multiple voyages and fleets containing multiple ships, we are unable to attribute gross revenues and net profits from such
marine policies to these activities involving Iran.

100

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

Information pertaining to this item is incorporated by reference to the sections entitled “Agenda Item 5 - Election of the Board of
Directors”, “Corporate Governance - The Board of Directors - Director Nomination Process”, “Corporate Governance - The
Committees of the Board - Audit Committee”, and “Corporate Governance - Did Our Officers and Directors Comply with
Section 16(a) Beneficial Ownership Reporting in 2017?” of the definitive proxy statement for the 2018 Annual General Meeting
of Shareholders which will be filed with the SEC not later than 120 days after the close of the fiscal year pursuant to Regulation
14A. Also incorporated herein by reference is the text under the caption “Executive Officers of the Registrant” appearing at the
end of Part I Item 1 of the Annual Report on Form 10-K.

Code of Ethics
Chubb has adopted a Code of Conduct, which sets forth standards by which all Chubb employees, officers, and directors must
abide as they work for Chubb. Chubb has posted this Code of Conduct on its Internet site (investors.chubb.com, under
Corporate Governance/Highlights and Governance Documents/The Chubb Code of Conduct). Chubb intends to disclose on its
Internet site any amendments to, or waivers from, its Code of Conduct that are required to be publicly disclosed pursuant to the
rules of the SEC or the New York Stock Exchange.

ITEM 11. Executive Compensation

This item is incorporated by reference to the sections entitled “Executive Compensation”, “Compensation Committee Report”
and “Director Compensation” of the definitive proxy statement for the 2018 Annual General Meeting of Shareholders which will
be filed with the SEC not later than 120 days after the close of the fiscal year pursuant to Regulation 14A.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Plan category

Equity compensation plans approved by security holders (1)
Equity compensation plans not approved by security holders (2)

Number of securities
to be issued upon
exercise of
outstanding options,
warrants, and rights

Weighted-average
exercise price of
outstanding options,
warrants, and rights (3)

Number of securities
remaining available for
future issuance under
equity compensation
plans

12,679,686 $

99.09

19,517,763

39,756

(1) These totals include securities available for future issuance under the following plans:

(i) Chubb Limited 2016 Long-Term Incentive Plan (LTIP). A total of 19,500,000 shares are authorized to be issued pursuant to
awards made as options, stock appreciation rights, stock units, performance shares, performance units, restricted stock, and
restricted stock units. The maximum number of shares that may be delivered to participants and their beneficiaries under the LTIP
shall be equal to the sum of: (x) 19,500,000 shares of stock; and (y) any shares of stock that have not been delivered pursuant to
the ACE LTIP (as defined in clause (ii) of this footnote (1) below) and remain available for grant pursuant to the ACE LTIP, including
shares of stock represented by awards granted under the ACE LTIP that are forfeited, expire or are canceled after the effective date of
the LTIP without delivery of shares of stock or which result in the forfeiture of the shares of stock back to the Company to the extent
that such shares would have been added back to the reserve under the terms of the ACE LTIP. As of December 31, 2017, a total of
2,009,261 option awards and 348,792 restricted stock unit awards are outstanding, and 17,065,705 shares remain available for
future issuance under this plan.

(ii) ACE Limited 2004 Long-Term Incentive Plan (ACE LTIP). As of December 31, 2017, a total of 8,255,720 option awards,
508,851 restricted stock unit awards and nil performance unit awards are outstanding. No additional grants will be made pursuant
to the ACE LTIP.

(iii) The Chubb Corporation Long-Term Incentive Plan (2014) (Chubb Corp. LTIP). As of December 31, 2017, a total of
184,845 option awards, 755,504 restricted stock unit awards, 490,470 performance unit awards (representing 100% of
the aggregate target in accordance with the Chubb Corp. merger agreement) and 165,999 deferred stock unit awards are
outstanding. No additional grants will be made pursuant to the Chubb Corp. LTIP.

(iv) ESPP. A total of 6,500,000 shares have been authorized for purchase at a discount. As of December 31, 2017,
2,452,058 shares remain available for future issuance under this plan.

101

(2) These plans are the Chubb Corp. CCAP Excess Benefit Plan (CCAP Excess Benefit Plan) and the Chubb Corp. Deferred

Compensation Plan for Directors, under which no Common Shares are available for future issuance other than with respect to
outstanding rewards. The CCAP Excess Benefit Plan is a nonqualified, defined contribution plan and covers those participants
in the Capital Accumulation Plan of The Chubb Corporation (CCAP) (Chubb Corp.’s legacy 401(k) plan) and Chubb Corp.’s
legacy employee stock ownership plan (ESOP) whose total benefits under those plans are limited by certain provisions of the
Internal Revenue Code. A participant in the CCAP Excess Benefit Plan is entitled to a benefit equaling the difference between
the participant’s benefits under the CCAP and the ESOP, without considering the applicable limitations of the Code, and the
participant’s actual benefits under such plans. A participant’s excess ESOP benefit is expressed as Common Shares.
Payments under the CCAP Excess Benefit Plan are generally made: (i) for excess benefits related to the CCAP, in cash
annually as soon as practical after the amount of excess benefit can be determined; and (ii) for excess benefits related to the
ESOP, in Common Shares as soon as practicable after the participant’s termination of employment. Allocations under the
ESOP ceased in 2004. Accordingly, other than dividends, no new contributions are made to the ESOP or the CCAP Excess
Benefit Plan with respect to excess ESOP benefits.

(3) Weighted average exercise price excludes shares issuable under performance unit awards and restricted stock unit awards.

ITEM 13. Certain Relationships and Related Transactions and Director Independence

This item is incorporated by reference to the sections entitled “Corporate Governance - What Is Our Related Party Transactions
Approval Policy and What Procedures Do We Use to Implement It?”, “Corporate Governance - What Related Party Transactions
Do We Have?”, and “Corporate Governance - The Board of Directors - Director Independence” of the definitive proxy statement
for the 2018 Annual General Meeting of Shareholders which will be filed with the SEC not later than 120 days after the close of
the fiscal year pursuant to Regulation 14A.

ITEM 14. Principal Accounting Fees and Services

This item is incorporated by reference to the section entitled “Agenda Item 4 – Election of Auditors – 4.2 – Ratification of
appointment of PricewaterhouseCoopers LLP (United States) as independent registered public accounting firm for purposes of
U.S. securities law reporting” of the definitive proxy statement for the 2018 Annual General Meeting of Shareholders which will
be filed with the SEC not later than 120 days after the close of the fiscal year pursuant to Regulation 14A.

102

PART IV

ITEM 15. Exhibits, Financial Statement Schedules

(a)

Financial Statements, Schedules, and Exhibits

Consolidated Financial Statements

Management's Responsibility for Financial Statements and Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2017 and 2016

Consolidated Statements of Operations and Comprehensive Income for the years ended December 31,

2017, 2016, and 2015

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2017, 2016, and

2015

Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015

Notes to Consolidated Financial Statements

Financial Statement Schedules

Schedule I - Summary of Investments - Other Than Investments in Related Parties at

December 31, 2017

Schedule II - Condensed Financial Information of Registrant (Parent Company Only) at December
31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015

Schedule IV - Supplemental Information Concerning Reinsurance for the years ended December 31, 2017,

2016 and 2015

Schedule VI - Supplementary Information Concerning Property and Casualty Operations as of and for the years

ended December 31, 2017, 2016 and 2015

Page

F-3

F-4

F-6

F-7

F-8

F-9

F-10

F-110

F-111

F-114

F-115

Other schedules have been omitted as they are not applicable to Chubb, or the required information has been included in
the Consolidated Financial Statements and related notes.

Exhibits

Exhibit
Number

2.1

3.1

3.2

4.1

4.2

4.3

4.4

Exhibit Description

Agreement and Plan of Merger, by and among ACE Limited,
William Investment Holdings Corporation and The Chubb
Corporation, dated as of June 30, 2015

Articles of Association of the Company, as amended and
restated

Organizational Regulations of the Company as amended

Articles of Association of the Company, as amended and
restated

Organizational Regulations of the Company as amended

Specimen share certificate representing Common Shares

Form of 2.6 percent Senior Notes due 2015

Incorporated by Reference

Form

8-K

Original
Number

2.1

Filed
Herewith

Date Filed

July 7, 2015

8-K

3.1

4.1

3.1

4.3

4.1

May 20, 2016

November 21, 2016

May 20, 2016

November 21, 2016

July 18, 2008

November 23, 2010

103

Exhibit
Number

Exhibit Description

Indenture, dated March 15, 2002, between ACE Limited and
Bank One Trust Company, N.A.

Senior Indenture, dated August 1, 1999, among ACE INA
Holdings, Inc., ACE Limited and Bank of New York Mellon
Trust Company, N.A. (as successor), as trustee

Incorporated by Reference

Original
Number

Date Filed

Filed
Herewith

4.1

March 22, 2002

4.4

December 10, 2014

Form

8-K

S-3
ASR

Indenture, dated November 30, 1999, among ACE INA
Holdings, Inc. and Bank One Trust Company, N.A., as trustee

10-K

10.38

March 29, 2000

Indenture, dated December 1, 1999, among ACE INA
Holdings, Inc., ACE Limited and Bank One Trust Company,
National Association, as trustee

Amended and Restated Trust Agreement, dated March 31,
2000, among ACE INA Holdings, Inc., Bank One Trust
Company, National Association, as property trustee, Bank One
Delaware Inc., as Delaware trustee and the administrative
trustees named therein

10-K

10.41

March 29, 2000

10-K

4.17

March 16, 2006

Common Securities Guarantee Agreement, dated March 31,
2000

10-K

4.18

March 16, 2006

Capital Securities Guarantee Agreement, dated March 31,
2000

10-K

4.19

March 16, 2006

Form of 2.70 percent Senior Notes due 2023

Form of 4.15 percent Senior Notes due 2043

First Supplemental Indenture dated as of March 13, 2013 to
the Indenture dated as of August 1, 1999 among ACE INA
Holdings, Inc., as Issuer, ACE Limited, as Guarantor, and The
Bank of New York Mellon Trust Company, N.A., as Successor
Trustee

Form of 3.35 percent Senior Notes due 2024

Form of 3.150 percent Senior Notes due 2025

Form of 2.30 percent Senior Notes due 2020

Form of 2.875 percent Senior Notes due 2022

Form of 3.35 percent Senior Notes due 2026

Form of 4.35 percent Senior Notes due 2045

First Supplemental Indenture to the Chubb Corp Senior
Indenture dated as of January 15, 2016 to the Indenture
dated as of October 25, 1989 among ACE INA Holdings, Inc.,
as Successor Issuer, ACE Limited, as Guarantor, and The Bank
of New York Mellon Trust Company, N.A., as Trustee

Second Supplemental Indenture to the Chubb Corp Junior
Subordinated Indenture dated as of January 15, 2016 to the
Indenture dated as of March 29, 2007 among ACE INA
Holdings, Inc., as Successor Issuer, ACE Limited, as
Guarantor, and The Bank of New York Mellon Trust Company,
N.A., as Trustee

Chubb Corp Senior Indenture (incorporated by reference to
Exhibit 4(a) to Chubb Corp's Registration Statement on Form
S-3 filed on October 27, 1989) (File No. 33-31796)

8-K

4.1

4.2

4.3

4.1

4.2

4.3

4.4

4.1

March 13, 2013

May 27, 2014

March 16, 2015

November 3, 2015

January 15, 2016

8-K

4.2

January 15, 2016

S-3

4(a)

October 27, 1989

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

4.17

4.18

4.19

4.20

4.21

4.22

4.23

104

Exhibit
Number

4.24

4.25

4.26

4.27

4.28

4.29

4.30

4.31

Exhibit Description

Chubb Corp Junior Subordinated Indenture (incorporated by
reference to Exhibit 4.1 to Chubb Corp's Current Report on
Form 8-K filed on March 30, 2007) (File No. 001-08661)

First Supplemental Indenture to the Chubb Corp Junior
Subordinated Indenture dated as of March 29, 2007 between
the Chubb Corporation and The Bank of New York Trust
Company, N.A., as Trustee (incorporated by reference to
Exhibit 4.2 to Chubb Corp's Current Report on Form 8-K filed
on March 30, 2007) (File No. 001-08661)

Form of 5.75 percent Chubb Corp Senior Notes due 2018
(incorporated by reference to Exhibit 4.1 to Chubb Corp's
Current Report on Form 8-K filed on May 6, 2008) (File No.
001-08661)

Form of 6.60 percent Chubb Corp Debentures due 2018
(incorporated by reference to Exhibit 4(a) to Chubb Corp's
Registration Statement on Form S-3 filed on October 27,
1989) (File No. 33-31796)

Form of 6.80 percent Chubb Corp Debentures due 2031
(incorporated by reference to Exhibit 4(a) to Chubb Corp's
Registration Statement on Form S-3 filed on October 27,
1989) (File No. 33-31796)

Form of 6.00 percent Chubb Corp Senior Notes due 2037
(incorporated by reference to Exhibit 4.1 to Chubb Corp's
Current Report on Form 8-K filed on May 11, 2007) (File No.
001-08661)

Form of 6.50 percent Chubb Corp Senior Notes due 2038
(incorporated by reference to Exhibit 4.2 to Chubb Corp's
Current Report on Form 8-K filed on May 6, 2008) (File No.
001-08661)

Form of debenture for the 6.375 percent Chubb Corp DISCs
(incorporated by reference to Exhibit 4.3 to Chubb Corp's
Current Report on Form 8-K filed on March 30, 2007) (File
No. 001-08661)

Incorporated by Reference

Original
Number

Date Filed

Filed
Herewith

4.1

March 30, 2007

Form

8-K

4.2

March 30, 2007

8-K

4.1

May 6, 2008

S-3

4(a)

October 27, 1989

S-3

4(a)

October 27, 1989

8-K

4.1

May 11, 2007

8-K

4.2

May 6, 2008

8-K

4.3

March 30, 2007

4.32

Procedures regarding the registration of shareholders in the
share register of Chubb Limited

10-K

4.32

February 28, 2017

10.1*

Form of Indemnification Agreement between the Company and
the directors of the Company, dated August 13, 2015

10-K

10.1

February 26, 2016

10.2

10.3*

10.4*

10.5*

Credit Agreement for $1,000,000,000 Senior Unsecured
Letter of Credit Facility, dated as of November 6, 2012,
among ACE Limited, and certain subsidiaries and Wells Fargo
Bank, National Association as Administrative Agent, the
Swingline Bank and an Issuing Bank

10-K

10.13

February 28, 2013

Employment Terms dated October 29, 2001, between ACE
Limited and Evan Greenberg

10-K

10.64

March 27, 2003

Employment Terms dated November 2, 2001, between ACE
Limited and Philip V. Bancroft

10-K

10.65

March 27, 2003

Executive Severance Agreement between ACE Limited and
Philip Bancroft, effective January 2, 2002

10-Q

10.1

May 10, 2004

105

Exhibit
Number

10.6*

Exhibit Description

Letter Regarding Executive Severance between ACE Limited
and Philip V. Bancroft

Incorporated by Reference

Form

10-K

Original
Number

Date Filed

Filed
Herewith

10.17

February 25, 2011

10.7*

Employment Terms dated April 10, 2006, between ACE and
John Keogh

10-K

10.29

February 29, 2008

10.8*

Executive Severance Agreement between ACE and John Keogh

10-K

10.30

February 29, 2008

10.9*

ACE Limited Executive Severance Plan as amended effective
May 18, 2011

10-K

10.21

February 24, 2012

10.10*

Form of employment agreement between the Company (or
subsidiaries of the Company) and executive officers of the
Company to allocate a percentage of aggregate salary to the
Company (or subsidiaries of the Company)

8-K

10.1

July 16, 2008

10.11*

Description of Executive Officer Cash Compensation for 2011

10-Q

10.1

November 3, 2011

10.12*

Outside Directors Compensation Parameters

10-K

10.12

February 28, 2017

10.13*

ACE Limited Annual Performance Incentive Plan

S-1

10.13

January 21, 1993

10.14*

ACE Limited Elective Deferred Compensation Plan (as
amended and restated effective January 1, 2005)

10-K

10.24

March 16, 2006

10.15*

ACE USA Officer Deferred Compensation Plan (as amended
through January 1, 2001)

10-K

10.25

March 16, 2006

10.16*

ACE USA Officer Deferred Compensation Plan (as amended
and restated effective January 1, 2011)

10-Q

10.7

October 30, 2013

10.17*

ACE USA Officer Deferred Compensation Plan (as amended
and restated effective January 1, 2009)

10-K

10.36

February 27, 2009

10.18*

First Amendment to the Amended and Restated ACE USA
Officers Deferred Compensation Plan

10-K

10.28

February 25, 2010

10.19*

Form of Swiss Mandatory Retirement Benefit Agreement (for
Swiss-employed named executive officers)

10-Q

10.2

May 7, 2010

10.20*

ACE Limited Supplemental Retirement Plan (as amended and
restated effective July 1, 2001)

10-Q

10.1

November 14, 2001

10.21*

ACE Limited Supplemental Retirement Plan (as amended and
restated effective January 1, 2011)

10-Q

10.6

October 30, 2013

10.22*

Amendments to the ACE Limited Supplemental Retirement
Plan and the ACE Limited Elective Deferred Compensation
Plan

10-K

10.38

February 29, 2008

10.23*

ACE Limited Elective Deferred Compensation Plan (as
amended and restated effective January 1, 2009)

10-K

10.39

February 27, 2009

10.24*

ACE Limited Elective Deferred Compensation Plan (as
amended and restated effective January 1, 2011)

10-Q

10.5

October 30, 2013

10.25*

Deferred Compensation Plan amendments, effective January
1, 2009

10-K

10.40

February 27, 2009

10.26*

Amendment to the ACE Limited Supplemental Retirement
Plan

10-K

10.39

February 29, 2008

106

Exhibit
Number

10.27*

10.28*

Exhibit Description

Amendment and restated ACE Limited Supplemental
Retirement Plan, effective January 1, 2009

Incorporated by Reference

Form

10-K

Original
Number

Date Filed

Filed
Herewith

10.42

February 27, 2009

ACE USA Supplemental Employee Retirement Savings Plan
(see exhibit 10.6 to Form 10-Q filed with the SEC on May 15,
2000)

10-Q

10.6

May 15, 2000

10.29*

ACE USA Supplemental Employee Retirement Savings Plan
(as amended through the Second Amendment)

10-K

10.30

March 1, 2007

10.30*

ACE USA Supplemental Employee Retirement Savings Plan
(as amended through the Third Amendment)

10-K

10.31

March 1, 2007

10.31*

ACE USA Supplemental Employee Retirement Savings Plan
(as amended and restated)

10-K

10.46

February 27, 2009

10.32*

First Amendment to the Amended and Restated ACE USA
Supplemental Employee Retirement Savings Plan

10-K

10.39

February 25, 2010

10.33*

The ACE Limited 1995 Outside Directors Plan (as amended
through the Seventh Amendment)

10-Q

10.1

August 14, 2003

10.34*

ACE Limited 1998 Long-Term Incentive Plan (as amended
through the Fourth Amendment)

10-K

10.34

March 1, 2007

10.35*

ACE Limited 2004 Long-Term Incentive Plan (as amended
through the Fifth Amendment)

10.36*

ACE Limited 2004 Long-Term Incentive Plan (as amended
through the Sixth Amendment)

8-K

May 21, 2010

10.1

May 20, 2013

10.37*

ACE Limited Rules of the Approved U.K. Stock Option
Program (see exhibit 10.2 to Form 10-Q filed with the SEC on
February 13, 1998)

10-Q

10.2

February 13, 1998

10.38*

Form of Restricted Stock Award Terms under the ACE Limited
2004 Long-Term Incentive Plan

10-K

10.54

February 27, 2009

10.39*

Form of Restricted Stock Award Terms under the ACE Limited
2004 Long-Term Incentive Plan

10-K

10.55

February 27, 2009

10.40*

Director Restricted Stock Award Terms under the ACE Limited
2004 Long-Term Incentive Plan

10-Q

10.1

November 9, 2009

10.41*

Form of Restricted Stock Unit Award Terms under the ACE
Limited 2004 Long-Term Incentive Plan

10-Q

10.1

May 8, 2008

10.42*

Form of Restricted Stock Unit Award Terms under the ACE
Limited 2004 Long-Term Incentive Plan

10-Q

10.2

May 8, 2008

10.43*

Form of Restricted Stock Unit Award Terms under the ACE
Limited 2004 Long-Term Incentive Plan

10-K

10.60

February 27, 2009

10.44*

Form of Restricted Stock Unit Award Terms under the ACE
Limited 2004 Long-Term Incentive Plan

10-Q

10.2

October 30, 2013

10.45*

Form of Restricted Stock Unit Award Terms under the ACE
Limited 2004 Long-Term Incentive Plan for Chief Executive
Officer, Chief Financial Officer and the General Counsel

10-K

10.56

February 28, 2014

107

Exhibit
Number

10.46*

Exhibit Description

Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan

Incorporated by Reference

Form

8-K

Original
Number

Date Filed

Filed
Herewith

10.4

September 13, 2004

10.47*

Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan

10-Q

10.4

May 8, 2008

10.48*

Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan

10-K

10.63

February 27, 2009

10.49*

Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan

10-Q

10.3

October 30, 2013

10.50*

Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan

8-K

10.5

September 13, 2004

10.51*

Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan

10-Q

10.3

May 8, 2008

10.52*

Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan

10-Q

10.4

October 30, 2013

10.53*

Form of Performance Based Restricted Stock Award Terms
under the ACE Limited 2004 Long-Term Incentive Plan, as
updated through May 4, 2006

10-Q

10.3

May 5, 2006

10.54*

Revised Form of Performance Based Restricted Stock Award
Terms under the ACE Limited 2004 Long-Term Incentive Plan

10-Q

10.2

November 8, 2006

10.55*

Revised Form of Performance Based Restricted Stock Award
Terms under The ACE Limited 2004 Long-Term Incentive Plan

10-K

10.65

February 25, 2011

10.56*

Form of Performance Based Restricted Stock Award Terms
under the ACE Limited 2004 Long-Term Incentive Plan

10-K

10.67

February 28, 2014

10.57*

10.58*

10.59*

10.60*

10.61*

10.62*

Form of Performance Based Restricted Stock Award Terms
under the ACE Limited 2004 Long-Term Incentive Plan for
Chief Executive Officer, Chief Financial Officer and the General
Counsel

Form of Restricted Stock Unit Award Terms (for outside
directors) under the ACE Limited 2004 Long-Term Incentive
Plan

Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan for Messrs. Greenberg and
Cusumano

Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan for Messrs. Greenberg
and Cusumano

Form of Restricted Stock Award Terms under the ACE Limited
2004 Long-Term Incentive Plan for Messrs. Greenberg and
Cusumano

10-K

10.68

February 28, 2014

10-Q

10.2

November 7, 2007

10-Q

10.2

August 7, 2009

10-Q

10.1

August 4, 2011

10-Q

10.2

August 4, 2011

10-Q

10.3

August 4, 2011

10.63*

ACE Limited Employee Stock Purchase Plan, as amended

8-K

10.1

May 22, 2012

108

Exhibit
Number

10.64*

Exhibit Description

Form of Performance Based Restricted Stock Award Terms
under the ACE Limited 2004 Long-Term Incentive Plan for
Messrs. Greenberg and Cusumano

Incorporated by Reference

Form

10-K

Original
Number

Date Filed

Filed
Herewith

10.72

February 24, 2012

10.65*

Separation and Release Agreement between the Company and
Robert Cusumano, dated July 24, 2013

10-Q

10.8

October 30, 2013

10.66*

10.67*

10.68*

10.69*

10.70*

Form of Restricted Stock Award Terms under the ACE Limited
2004 Long-Term Incentive Plan for Swiss Executive
Management

Form of Performance Based Restricted Stock Award Terms
under the ACE Limited 2004 Long-Term Incentive Plan for
Swiss Executive Management

Form of Restricted Stock Unit Award Terms under the ACE
Limited 2004 Long-Term Incentive Plan for Swiss Executive
Management

Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan for Swiss Executive
Management

Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan for Swiss Executive
Management

10-K

10.68

February 27, 2015

10-K

10.69

February 27, 2015

10-K

10.70

February 27, 2015

10-K

10.71

February 27, 2015

10-K

10.72

February 27, 2015

10.71*

Form of Executive Management Non-Competition Agreement

8-K

10.1

May 22, 2015

10.72

Commitment Increase Agreement to increase the credit
capacity under the Credit Agreement originally entered into on
November 6, 2012 to $1,500,000,000 under the Senior
Unsecured Letter of Credit Facility, dated as of December 11,
2015, among ACE Limited, and certain subsidiaries, and
Wells Fargo Bank, National Association as Administrative
Agent, the Swingline Bank and an Issuing Bank

10-K

10.72

February 26, 2016

10.73*

Form of Performance Based Restricted Stock Award Terms
under the ACE Limited 2004 Long-Term Incentive Plan

10-K

10.73

February 26, 2016

10.74*

Form of Performance Based Restricted Stock Award Terms
under the ACE Limited 2004 Long-Term Incentive Plan for
Special Award for Messrs. Greenberg and Keogh

10-K

10.74

February 26, 2016

10.75*

Chubb Limited 2016 Long-Term Incentive Plan

S-8

4.4

May 26, 2016

10.76*

Form of Incentive Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan

10-Q

10.2

August 5, 2016

10.77*

Form of Restricted Stock Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan

10-Q

10.3

August 5, 2016

10.78*

Form of Restricted Stock Unit Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan

10-Q

10.4

August 5, 2016

10.79*

Form of Non-Qualified Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan

10-Q

10.5

August 5, 2016

10.80*

Form of Incentive Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management

10-Q

10.6

August 5, 2016

109

Exhibit
Number

10.81*

10.82*

10.83*

10.84*

Exhibit Description

Form of Restricted Stock Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management

Form of Restricted Stock Unit Award Terms under the Chubb
Limited 206 Long-Term Incentive Plan for Swiss Executive
Management

Form of Non-Qualified Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management

Form of Performance Based Restricted Stock Award Terms
under the Chubb Limited 2016 Long-Term Incentive Plan for
Swiss Executive Management

Incorporated by Reference

Form

10-Q

Original
Number

10.7

Date Filed

August 5, 2016

Filed
Herewith

10-Q

10.8

August 5, 2016

10-Q

10.9

August 5, 2016

10-K

10.84

February 28, 2017

10.85*

Form of Performance Based Restricted Stock Award Terms
under the Chubb Limited 2016 Long-Term Incentive Plan

10-K

10.85

February 28, 2017

10.86*

Chubb Limited Employee Stock Purchase Plan, as amended
and restated

S-8

4.4

May 25, 2017

10.87*

Director Restricted Stock Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan

10-Q

10.1

August 3, 2017

10.88

Amended and Restated Credit Agreement for $1,000,000
Senior Unsecured Letter of Credit Facility, dated as of October
25, 2017, among Chubb Limited, and certain subsidiaries
and Wells Fargo Bank, National Association as Administrative
Agent, the Swingline Bank and an Issuing Bank

10.89*

Form of Incentive Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Executive Officers

10.90*

Form of Restricted Stock Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Executive Officers

10.91*

Form of Performance Based Restricted Stock Award Terms
under the Chubb Limited 2016 Long-Term Incentive Plan for
Executive Officers

10.92*

Form of Non-Qualified Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Executive Officers

10.93*

Form of Restricted Stock Unit Award Terms under the Chubb
Limited 2016 Long-Term Plan for Executive Officers

Form of Incentive Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management

Form of Non-Qualified Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management

Form of Restricted Stock Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management

Form of Restricted Stock Unit Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management

10.94*

10.95*

10.96*

10.97*

110

Exhibit
Number

10.98*

Exhibit Description

Form of Performance Based Restricted Stock Award Terms
under the Chubb Limited 2016 Long-Term Incentive Plan for
Swiss Executive Management

10.99*

Chubb Limited Clawback Policy

Incorporated by Reference

Form

Original
Number

Date Filed

Filed
Herewith

12.1

18.1

21.1

23.1

31.1

31.2

32.1

32.2

101

Ratio of earnings to fixed charges

Preferability Letter of Independent Registered Public
Accounting Firm

10-Q

18.1

October 29, 2014

Subsidiaries of the Company

Consent of Independent Registered Public Accounting Firm

Certification Pursuant to Section 302 of The Sarbanes-Oxley
Act of 2002

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

The following financial information from Chubb Limited's
Annual Report on Form 10-K for the year ended December
31, 2017, formatted in XBRL: (i) Consolidated Balance
Sheets at December 31, 2017 and 2016; (ii) Consolidated
Statements of Operations and Comprehensive Income for the
years ended December 31, 2017, 2016, and 2015;
(iii) Consolidated Statements of Shareholders' Equity for the
years ended December 31, 2017, 2016, and 2015;
(iv) Consolidated Statements of Cash Flows for the years
ended December 31, 2017, 2016, and 2015; and (v) Notes
to the Consolidated Financial Statements

* Management contract, compensatory plan or arrangement

ITEM 16. Form 10-K Summary

None.

111

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHUBB LIMITED

By:

/s/ Philip V. Bancroft
Philip V. Bancroft
Executive Vice President and Chief Financial Officer

February 23, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Evan G. Greenberg

Chairman, President, Chief Executive Officer, and Director

February 23, 2018

Evan G. Greenberg

/s/ Philip V. Bancroft

Executive Vice President and Chief Financial Officer

February 23, 2018

Philip V. Bancroft

(Principal Financial Officer)

/s/ Paul B. Medini

Chief Accounting Officer

February 23, 2018

Paul B. Medini

(Principal Accounting Officer)

/s/ Michael G. Atieh

Director

Michael G. Atieh

/s/ Sheila P. Burke

Director

Sheila P. Burke

/s/ James I. Cash

Director

James I. Cash

/s/ Mary A. Cirillo

Director

Mary A. Cirillo

/s/ Michael P. Connors

Director

Michael P. Connors

112

February 23, 2018

Signature

Title

Date

/s/ John Edwardson

Director

John Edwardson

/s/ Robert M. Hernandez

Director

Robert M. Hernandez

/s/ Leo F. Mullin

Director

Leo F. Mullin

/s/ Kimberly Ross

Director

Kimberly Ross

/s/ Robert Scully

Director

Robert Scully

/s/ Eugene B. Shanks, Jr.

Director

Eugene B. Shanks, Jr.

/s/ Theodore E. Shasta

Director

Theodore E. Shasta

/s/ David Sidwell

Director

David Sidwell

/s/ Olivier Steimer

Director

Olivier Steimer

/s/ James M. Zimmerman

Director

James M. Zimmerman

February 23, 2018

113

CHUBB LIMITED AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017

F-1

Chubb Limited
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Management's Responsibility for Financial Statements and Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Note 1.

Note 2.

Note 3.

Note 4.

Note 5.

Note 6.

Note 7.

Note 8.

Note 9.

Summary of significant accounting policies

Acquisitions

Investments

Fair value measurements

Reinsurance

Goodwill and Other intangible assets

Unpaid losses and loss expenses

Taxation

Debt

Note 10.

Commitments, contingencies, and guarantees

Note 11.

Shareholders' equity

Note 12.

Share-based compensation

Note 13.

Postretirement benefits

Note 14.

Other (income) expense

Note 15.

Segment information

Note 16.

Earnings per share

Note 17.

Related party transactions

Note 18.

Statutory financial information

Note 19.

Information provided in connection with outstanding debt of subsidiaries

Note 20.

Condensed unaudited quarterly financial data

Financial Statement Schedules

Schedule I

Summary of Investments - Other Than Investments in Related Parties

Schedule II

Condensed Financial Information of Registrant

Schedule IV Supplemental Information Concerning Reinsurance

Schedule VI Supplementary Information Concerning Property and Casualty Operations

Page

F-3

F-4

F-6

F-7

F-8

F-9

F-10

F-20

F-23

F-32

F-41

F-44

F-46

F-72

F-76

F-78

F-83

F-85

F-89

F-94

F-95

F-99

F-100

F-102

F-109

F-110

F-111

F-114

F-115

F-2

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS AND
INTERNAL CONTROL OVER FINANCIAL REPORTING

Financial Statements
The consolidated financial statements of Chubb Limited (Chubb) were prepared by management, which is responsible for their
reliability and objectivity. The statements have been prepared in conformity with accounting principles generally accepted in
the United States of America and, as such, include amounts based on informed estimates and judgments of management.
Financial information elsewhere in this annual report is consistent with that in the consolidated financial statements.

The Board of Directors (Board), operating through its Audit Committee, which is composed entirely of directors who are not
officers or employees of Chubb, provides oversight of the financial reporting process and safeguarding of assets against
unauthorized acquisition, use or disposition. The Audit Committee annually recommends the appointment of an independent
registered public accounting firm and submits its recommendation to the Board for approval.

The Audit Committee meets with management, the independent registered public accountants and the internal auditor;
approves the overall scope of audit work and related fee arrangements; and reviews audit reports and findings. In addition, the
independent registered public accountants and the internal auditor meet separately with the Audit Committee, without
management representatives present, to discuss the results of their audits; the adequacy of Chubb's internal control; the quality
of its financial reporting; and the safeguarding of assets against unauthorized acquisition, use or disposition.

The consolidated financial statements have been audited by an independent registered public accounting firm,
PricewaterhouseCoopers LLP, which has been given unrestricted access to all financial records and related data, including
minutes of all meetings of the Board and committees of the Board. Chubb believes that all representations made to our
independent registered public accountants during their audits were valid and appropriate.

Internal Control over Financial Reporting
The management of Chubb is responsible for establishing and maintaining adequate internal control over financial reporting.
Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a
process designed by, or under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external
purposes in accordance with accounting principles generally accepted in the United States of America.

As of December 31, 2017, management has evaluated the effectiveness of Chubb's internal control over financial reporting
based on the criteria for effective internal control over financial reporting established in “Internal Control - Integrated
Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this
evaluation, we have concluded that Chubb's internal control over financial reporting was effective as of December 31, 2017.

PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the consolidated financial
statements of Chubb included in this Annual Report, has issued a report on the effectiveness of Chubb's internal controls over
financial reporting as of December 31, 2017. The report, which expresses an unqualified opinion on the effectiveness of
Chubb's internal control over financial reporting as of December 31, 2017, is included in this Item under “Report of
Independent Registered Public Accounting Firm” and follows this statement.

/s/ Evan G. Greenberg

Evan G. Greenberg

/s/ Philip V. Bancroft

Philip V. Bancroft

Chairman, President and Chief Executive Officer

Executive Vice President and Chief Financial Officer

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Chubb Limited

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Chubb Limited and its subsidiaries as of December 31,
2017 and 2016, and the related consolidated statements of operations and comprehensive income, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 2017, including the related notes and financial
statement schedules listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial
statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Responsibility for Financial Statements and Internal Control over Financial Reporting. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control
over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all
material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

F-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

February 23, 2018

We have served as the Company’s auditor since 1985, which includes periods before the Company became subject to SEC
reporting requirements.

F-5

CONSOLIDATED BALANCE SHEETS
Chubb Limited and Subsidiaries

(in millions of U.S. dollars, except share and per share data)
Assets
Investments

Fixed maturities available for sale, at fair value (amortized cost – $77,835 and $79,536)
(includes hybrid financial instruments of $5 and $2)
Fixed maturities held to maturity, at amortized cost (fair value – $14,474 and $10,670)
Equity securities, at fair value (cost – $737 and $706)
Short-term investments, at fair value and amortized cost
Other investments (cost – $4,417 and $4,270)

Total investments

Cash
Securities lending collateral
Accrued investment income
Insurance and reinsurance balances receivable
Reinsurance recoverable on losses and loss expenses
Reinsurance recoverable on policy benefits
Deferred policy acquisition costs
Value of business acquired
Goodwill
Other intangible assets
Prepaid reinsurance premiums
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
Repurchase agreements
Short-term debt
Long-term debt
Trust preferred securities
Total liabilities
Commitments and contingencies
Shareholders’ equity
Common Shares (CHF 24.15 par value; 479,783,864 shares issued; 463,833,179 and

465,968,716 shares outstanding)

Common Shares in treasury (15,950,685 and 13,815,148 shares)
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss) (AOCI)
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying notes to the consolidated financial statements

December 31
2017

December 31
2016

78,939 $

80,115

14,335

937

3,561

4,672

102,444

728

1,737

909

9,334

15,034

184

4,723

326

15,541

6,513

2,529

662

6,358

10,644

814

3,002

4,519

99,094

985

1,092

918

8,970

13,577

182

4,314

355

15,332

6,763

2,448

666

5,090

167,022 $

159,786

63,179 $

15,216

60,540

14,779

5,321

5,868

1,737

9,545

699

1,408

1,013

11,556

308

5,036

5,637

1,093

8,617

988

1,403

500

12,610

308

115,850

111,511

11,121

(1,944)

13,978

27,474

543

51,172

11,121

(1,480)

15,335

23,613

(314)

48,275

167,022 $

159,786

F-6

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Chubb Limited and Subsidiaries

For the years ended December 31, 2017, 2016 and 2015
(in millions of U.S. dollars, except per share data)
Revenues

Net premiums written

(Increase) decrease in unearned premiums

Net premiums earned

Net investment income

Net realized gains (losses):

Other-than-temporary impairment (OTTI) losses gross

Portion of OTTI losses recognized in other comprehensive income (OCI)

Net OTTI losses recognized in income

Net realized gains (losses) excluding OTTI losses

Total net realized gains (losses) (includes $(15), $(119), and $(151) reclassified from

AOCI)

Total revenues

Expenses

Losses and loss expenses

Policy benefits

Policy acquisition costs

Administrative expenses

Interest expense

Other (income) expense

Amortization of purchased intangibles

Chubb integration expenses

Total expenses

Income before income tax

Income tax expense (benefit) (includes $(13), $28, and $(2) on reclassified unrealized

gains and losses)

Net income

Other comprehensive income (loss)

Unrealized appreciation (depreciation)

Reclassification adjustment for net realized (gains) losses included in net income

Change in:

Cumulative foreign currency translation adjustment

Postretirement benefit liability adjustment

Other comprehensive income (loss), before income tax

Income tax (expense) benefit related to OCI items

Other comprehensive income (loss)

Comprehensive income

Earnings per share

Basic earnings per share

Diluted earnings per share

See accompanying notes to the consolidated financial statements

F-7

2017

2016

2015

29,244 $

28,145 $

17,713

(210)

29,034

3,125

604

28,749

2,865

(500)

17,213

2,194

(46)

(45)

129

(111)

(103)

(42)

(151)

(112)

(308)

(145)

(420)

32,243

31,469

18,987

18,454

16,052

676

5,781

2,833

607

(400)

260

310

588

5,904

3,081

605

(222)

492

9,484

543

2,941

2,270

300

(51)

171

28,521

3,722

26,519

4,950

15,691

3,296

(139)

815

462

3,861 $

4,135 $

2,834

618 $

(35) $

(1,280)

633

471

(16)

1,088

(231)

857

119

(154)

545

475

(54)

421

151

(1,129)

(958)

(2,072)

146

(1,926)

4,718 $

4,556 $

908

8.26 $

8.19 $

8.94 $

8.87 $

8.71

8.62

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Chubb Limited and Subsidiaries

For the years ended December 31, 2017, 2016 and 2015
(in millions of U.S. dollars)
Common Shares

Balance – beginning of year
Shares issued for Chubb Corp acquisition
Dividends declared on Common Shares – par value reduction
Balance – end of year
Common Shares in treasury

Balance – beginning of year
Common Shares repurchased
Net shares redeemed under employee share-based compensation plans
Balance – end of year
Additional paid-in capital

Balance – beginning of year
Shares issued for Chubb Corp acquisition
Equity awards assumed in Chubb Corp acquisition
Net shares redeemed under employee share-based compensation plans
Exercise of stock options
Share-based compensation expense and other
Funding of dividends declared to Retained earnings
Tax benefit on share-based compensation expense
Balance – end of year
Retained earnings

Balance – beginning of year
Net income
Funding of dividends declared from Additional paid-in capital
Dividends declared on Common Shares
Balance – end of year
Accumulated other comprehensive income (loss)

Net unrealized appreciation on investments
Balance – beginning of year
Change in year, before reclassification from AOCI, net of income tax

benefit (expense) of $(228), $72, and $154

Amounts reclassified from AOCI, net of income tax benefit (expense) of $(13), $28,

and $(2)

Change in year, net of income tax benefit (expense) of $(241), $100, and $152
Balance – end of year
Cumulative foreign currency translation adjustment
Balance – beginning of year
Change in year, net of income tax benefit of $5, $30, and nil
Balance – end of year
Postretirement benefit liability adjustment
Balance – beginning of year
Change in year, net of income tax benefit (expense) of $5, $(184), and $(6)
Balance – end of year
Accumulated other comprehensive income (loss)
Total shareholders’ equity

See accompanying notes to the consolidated financial statements

2017

2016

2015

11,121 $

7,833 $

8,055

—

3,288

—

11,121

—

(222)

7,833

(1,480)

(1,922)

(1,448)

(830)

366

—

442

(734)

260

(1,944)

(1,480)

(1,922)

15,335

—

(313)

(58)

331

4,481

11,916

323

(382)

(64)

313

(1,317)

(1,284)

—

5,145

—

(160)

(61)

184

(653)

13,978

15,335

4,481

23,613

19,478

3,861

1,317

(1,317)

27,474

4,135

1,284

(1,284)

23,613

1,058

390

392

874

147

184

1,450

1,058

(1,663)

476

(1,187)

291

(11)

280

543

(1,539)

(124)

(1,663)

(70)

361

291

(314)

16,644

2,834

653

(653)

19,478

1,851

(1,126)

149

(977)

874

(581)

(958)

(1,539)

(79)

(70)

(735)

51,172 $

48,275 $

29,135

F-8

CONSOLIDATED STATEMENTS OF CASH FLOWS
Chubb Limited and Subsidiaries

For the years ended December 31, 2017, 2016, and 2015
(in millions of U.S. dollars)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows from operating activities

Net realized (gains) losses
Amortization of premiums/discounts on fixed maturities
Amortization of UPR related to the Chubb Corp acquisition and other intangibles
Deferred income taxes
Unpaid losses and loss expenses
Unearned premiums
Future policy benefits
Insurance and reinsurance balances payable
Accounts payable, accrued expenses, and other liabilities
Income taxes payable
Insurance and reinsurance balances receivable
Reinsurance recoverable on losses and loss expenses
Reinsurance recoverable on policy benefits
Deferred policy acquisition costs
Prepaid reinsurance premiums
Other
Net cash flows from operating activities

Cash flows from investing activities
Purchases of fixed maturities available for sale
Purchases of to be announced mortgage-backed securities
Purchases of fixed maturities held to maturity
Purchases of equity securities
Sales of fixed maturities available for sale
Sales of to be announced mortgage-backed securities
Sales of equity securities
Maturities and redemptions of fixed maturities available for sale
Maturities and redemptions of fixed maturities held to maturity
Net change in short-term investments
Net derivative instruments settlements
Acquisition of subsidiaries (net of cash acquired of $nil, $71, and $629)
Other

Net cash flows used for investing activities

Cash flows from financing activities
Dividends paid on Common Shares
Common Shares repurchased
Proceeds from issuance of long-term debt
Proceeds from issuance of repurchase agreements
Repayment of long-term debt
Repayment of repurchase agreements
Proceeds from share-based compensation plans
Policyholder contract deposits
Policyholder contract withdrawals
Other

Net cash flows (used for) from financing activities

Effect of foreign currency rate changes on cash and cash equivalents
Net (decrease) increase in cash
Cash – beginning of year
Cash – end of year
Supplemental cash flow information
Taxes paid
Interest paid
See accompanying notes to the consolidated financial statements

F-9

2017

2016

2015

3,861 $

4,135 $

2,834

(84)
694
260
(527)
2,137
264
217
271
(517)
(365)
(243)
(1,248)
—
(317)
(82)
182
4,503

(25,720)
(27)
(352)
(173)
13,228
27
187
10,425
879
(537)
(265)
—
(114)
(2,442)

(1,308)
(801)
—
2,353
(501)
(2,348)
151
442
(307)
—
(2,319)
1
(257)
985
728 $

736 $
644 $

$
$

145
737
1,578
96
332
(680)
188
848
(97)
147
(616)
(365)
7
(1,449)
18
268
5,292

(30,759)
(56)
(282)
(146)
16,621
56
1,000
9,349
958
12,350
(168)
(14,248)
10
(5,315)

(1,173)
—
—
2,310
—
(2,311)
167
522
(253)
(4)
(742)
(25)
(790)
1,775

985 $

662 $
642 $

420
158
171
113
(375)
335
216
268
179
(148)
(53)
218
33
(435)
(212)
142
3,864

(16,040)
(31)
(62)
(158)
10,783
31
183
6,567
669
(8,216)
(21)
264
(263)
(6,294)

(862)
(758)
6,090
2,029
(1,150)
(2,027)
131
503
(221)
(40)
3,695
(145)
1,120
655
1,775

469
259

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries

1. Summary of significant accounting policies

a) Basis of presentation

Chubb Limited is a holding company incorporated in Zurich, Switzerland. Chubb Limited, through its subsidiaries, provides a
broad range of insurance and reinsurance products to insureds worldwide. Our results are reported through the following
business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America
Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. Refer to Note 15 for additional
information.

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

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. Amounts included in the
Consolidated financial statements reflect our best estimates and assumptions; actual amounts could differ materially from these
estimates. Chubb's principal estimates include:

• unpaid loss and loss expense reserves, including long-tail asbestos and environmental (A&E) reserves;

•

future policy benefits reserves;

the valuation of value of business acquired (VOBA) and amortization of deferred policy acquisition costs and VOBA;

reinsurance recoverable, including a provision for uncollectible reinsurance;

the assessment of risk transfer for certain structured insurance and reinsurance contracts;

the valuation of the investment portfolio and assessment of OTTI;

the valuation of deferred tax assets;

the valuation of derivative instruments related to guaranteed living benefits (GLB);

the valuation and amortization of purchased intangibles; and

the assessment of goodwill for impairment.

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

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

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

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

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

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

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

Advertising costs are expensed as incurred except for direct-response campaigns that qualify for cost deferral, principally related
to long-duration A&H business produced by the Overseas General Insurance segment, which are deferred and recognized as a
component of Policy acquisition costs. For individual direct-response marketing campaigns that we can demonstrate have
specifically resulted in incremental sales to customers and such sales have probable future economic benefits, incremental costs
directly related to the marketing campaigns are capitalized as Deferred policy acquisition costs. Deferred policy acquisition
costs, including deferred marketing costs, are reviewed regularly for recoverability from future income, including investment
income, and amortized in proportion to premium revenue recognized, primarily over a ten-year period, the expected economic
future benefit period based upon the same assumptions used in estimating the liability for future policy benefits. The expected
future benefit period is evaluated periodically based on historical results and adjusted prospectively. The amount of deferred
marketing costs reported in Deferred policy acquisition costs in the Consolidated balance sheets was $271 million and $256
million at December 31, 2017 and 2016, respectively. Amortization expense for deferred marketing costs was $116 million,
$92 million, and $78 million for the years ended December 31, 2017, 2016, and 2015, respectively.

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

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

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

Reinsurance recoverable is presented net of a provision for uncollectible reinsurance determined based upon a review of the
financial condition of reinsurers and other factors. The provision for uncollectible reinsurance is based on an estimate of the
reinsurance recoverable balance that will ultimately be unrecoverable due to reinsurer insolvency, a contractual dispute, or any
other reason. The valuation of this provision includes several judgments including certain aspects of the allocation of reinsurance
recoverable on IBNR claims by reinsurer and a default analysis to estimate uncollectible reinsurance. The primary components
of the default analysis are reinsurance recoverable balances by reinsurer, net of collateral, and default factors used to determine
the portion of a reinsurer's balance deemed uncollectible. The definition of collateral for this purpose requires some judgment
and is generally limited to assets held in a Chubb-only beneficiary trust, letters of credit, and liabilities held with the same legal
entity for which Chubb believes there is a contractual right of offset. The determination of the default factor is principally based
on the financial strength rating of the reinsurer. Default factors require considerable judgment and are determined using the
current financial strength rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions. The
more significant considerations include, but are not necessarily limited to, the following:

•

For reinsurers that maintain a financial strength rating from a major rating agency, and for which recoverable balances are
considered representative of the larger population (i.e., default probabilities are consistent with similarly rated reinsurers
and payment durations conform to averages), the financial rating is based on a published source and the default factor is
based on published default statistics of a major rating agency applicable to the reinsurer's particular rating class. When a
recoverable is expected to be paid in a brief period of time by a highly rated reinsurer, such as certain property catastrophe
claims, a default factor may not be applied;

For balances recoverable from reinsurers that are both unrated by a major rating agency and for which management is
unable to determine a credible rating equivalent based on a parent, affiliate, or peer company, we determine a rating
equivalent based on an analysis of the reinsurer that considers an assessment of the creditworthiness of the particular
entity, industry benchmarks, or other factors as considered appropriate. We then apply the applicable default factor for that
rating class. For balances recoverable from unrated reinsurers for which the ceded reserve is below a certain threshold, we
generally apply a default factor of 34 percent, consistent with published statistics of a major rating agency;

For balances recoverable from reinsurers that are either insolvent or under regulatory supervision, we establish a default
factor and resulting provision for uncollectible reinsurance based on reinsurer-specific facts and circumstances. Upon initial
notification of an insolvency, we generally recognize an expense for a substantial portion of all balances outstanding, net of
collateral, through a combination of write-offs of recoverable balances and increases to the provision for uncollectible
reinsurance. When regulatory action is taken on a reinsurer, we generally recognize a default factor by estimating an
expected recovery on all balances outstanding, net of collateral. When sufficient credible information becomes available, we
adjust the provision for uncollectible reinsurance by establishing a default factor pursuant to information received; and

•

For other recoverables, management determines the provision for uncollectible reinsurance based on the specific facts and
circumstances.

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

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

The value of reinsurance business assumed of $18 million and $20 million at December 31, 2017 and 2016, respectively,
included in Other assets in the accompanying Consolidated balance sheets, represents the excess of estimated ultimate value of
the liabilities assumed under retroactive reinsurance contracts over consideration received. The value of reinsurance business
assumed is amortized and recorded to Losses and loss expenses based on the payment pattern of the losses assumed and
ranges between 9 and 40 years. The unamortized value is reviewed regularly to determine if it is recoverable based upon the
terms of the contract, estimated losses and loss expenses, and anticipated investment income. Unrecoverable amounts are
expensed in the period identified.

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

Other investments principally comprise life insurance policies, policy loans, trading securities, other direct equity investments,
investment funds, and limited partnerships.

•

Life insurance policies are carried at policy cash surrender value and income is recorded in Other income (expense).

Policy loans are carried at outstanding balance and interest income is recorded to Net investment income.

Trading securities are recorded on a trade date basis and carried at fair value. Unrealized gains and losses on trading
securities are reflected in Other (income) expense.

• Other investments over which Chubb can exercise significant influence are accounted for using the equity method and

income is recorded in Other (income) expense.

•

All other investments over which Chubb cannot exercise significant influence are carried at fair value with changes in fair
value recognized through OCI. For these investments, investment income is recognized in Net investment income and
realized gains are recognized as related distributions are received.

Partially-owned investment companies comprise entities in which we hold an ownership interest in excess of three percent.
These investments as well as Chubb's investments in investment funds where our ownership interest is in excess of three
percent are accounted for under the equity method because Chubb exerts significant influence. These investments apply
investment company accounting to determine operating results, and Chubb retains the investment company accounting in
applying the equity method. This means that investment income, realized gains or losses, and unrealized gains or losses are
included in the portion of equity earnings reflected in Other (income) expense. As a result of the timing of the receipt of
valuation data from the investment managers, these investments are generally reported on a three month lag.

Investments in partially-owned insurance companies primarily represent direct investments in which Chubb has significant
influence and, as such, meet the requirements for equity accounting. We report our share of the net income or loss of the
partially-owned insurance companies in Other (income) expense.

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

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

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

Net investment income includes interest and dividend income and amortization of fixed maturity market premiums and
discounts and is net of investment management and custody fees. In addition, net investment income includes the amortization
of the fair value adjustment related to the acquired invested assets of Chubb Corp. An adjustment of $1,652 million related to
the fair value of Chubb Corp’s fixed maturities securities was recorded (fair value adjustment) at the date of acquisition. At
December 31, 2017, the remaining balance of this fair value adjustment was $858 million which is expected to amortize over
the next four years; however, the estimate could vary materially based on current market conditions, bond calls, and the

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

duration of the acquired investment portfolio. In addition, sales of these acquired fixed maturities would also reduce the fair
value adjustment balance. For mortgage-backed securities, and any other holdings for which there is a prepayment risk,
prepayment assumptions are evaluated and revised as necessary. Any adjustments required due to the resultant change in
effective yields and maturities are recognized prospectively. Prepayment fees or call premiums that are only payable when a
security is called prior to its maturity are earned when received and reflected in Net investment income.

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

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

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

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

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

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

Indefinite lived intangible assets are not subject to amortization. Finite lived intangible assets are amortized over their useful
lives, generally ranging from 1 to 30 years. Intangible assets are regularly reviewed for indicators of impairment. Impairment is

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

recognized if the carrying amount is not recoverable from its undiscounted cash flows and is measured as the difference
between the carrying amount and fair value.

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

Except for net loss and loss expense reserves of $36 million net of discount, held at December 31, 2017, representing certain
structured settlements for which the timing and amount of future claim payments are reliably determinable and $41 million, net
of discount, of certain reserves for unsettled claims that are discounted in statutory filings, Chubb does not discount its P&C loss
reserves. This compares with reserves of $38 million for certain structured settlements and $50 million of certain reserves for
unsettled claims at December 31, 2016. Structured settlements represent contracts purchased from life insurance companies
primarily to settle workers' compensation claims, where payments to the claimant by the life insurance company are expected to
be made in the form of an annuity. Chubb retains the liability to the claimant in the event that the life insurance company fails
to pay. At December 31, 2017, the liability due to claimants was $586 million, net of discount, and reinsurance recoverables
due from the life insurance companies was $550 million, net of discount. For structured settlement contracts where payments
are guaranteed regardless of claimant life expectancy, the amounts recoverable from the life insurance companies at
December 31, 2017 are included in Other assets in the Consolidated balance sheets, as they do not meet the requirements for
reinsurance accounting.

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

Also included in Unpaid losses and loss expenses is a fair value adjustment of $309 million at December 31, 2017 related to
Chubb Corp’s historical unpaid losses and loss expenses. The estimated fair value consists of the present value of the expected
net unpaid loss and loss adjustment expense payments adjusted for an estimated risk margin. The estimated cash flows are
discounted at a risk free rate. The estimated risk margin varies based on the inherent risks associated with each type of reserve.
The fair value is amortized through Amortization of purchased intangibles on the consolidated statements of operations over a
range of 5 to 17 years, based on the estimated payout patterns of unpaid loss and loss expenses at the acquisition date.

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

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

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

i) Future policy benefits
The valuation of long-duration contract reserves requires management to make estimates and assumptions regarding expenses,
mortality, persistency, and investment yields. Estimates are primarily based on historical experience and information provided by
ceding companies and include a margin for adverse deviation. Interest rates used in calculating reserves range from less than
1.0 percent to 8.0 percent at both December 31, 2017 and 2016. Actual results could differ materially from these estimates.
Management monitors actual experience and where circumstances warrant, will revise assumptions and the related reserve
estimates. Revisions are recorded in the period they are determined.

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

j) Assumed reinsurance programs involving minimum benefit guarantees under variable annuity contracts
Chubb reinsures various death and living benefit guarantees associated with variable annuities issued primarily in the United
States and Japan. We generally receive a monthly premium during the accumulation phase of the covered annuities (in-force)
based on a percentage of either the underlying accumulated account values or the underlying accumulated guaranteed values.
Depending on an annuitant's age, the accumulation phase can last many years. To limit our exposure under these programs, all
reinsurance treaties include annual or aggregate claim limits and many include an aggregate deductible.

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

Under reinsurance programs covering GLBs, we assume the risk of guaranteed minimum income benefits (GMIB) and
guaranteed minimum accumulation benefits (GMAB) associated with variable annuity contracts. The GMIB risk is triggered if, at
the time the contract holder elects to convert the accumulated account value to a periodic payment stream (annuitize), the
accumulated account value is not sufficient to provide a guaranteed minimum level of monthly income. The GMAB risk is
triggered if, at contract maturity, the contract holder's account value is less than a guaranteed minimum value. Our GLB
reinsurance products meet the definition of a derivative for accounting purposes and are carried at fair value with changes in fair
value recognized in income. Refer to Notes 5 c) and 10 a) for additional information.

k) Deposit assets and liabilities
Deposit assets arise from ceded reinsurance contracts purchased that do not transfer significant underwriting or timing risk.
Deposit liabilities include reinsurance deposit liabilities and contract holder deposit funds. The reinsurance deposit liabilities
arise from contracts sold for which there is not a significant transfer of risk. Contract holder deposit funds represent a liability for
investment contracts sold that do not meet the definition of an insurance contract, and certain of these contracts are sold with a
guaranteed rate of return. Under deposit accounting, consideration received or paid is recorded as a deposit asset or liability in
the balance sheet as opposed to recording premiums and losses in the statement of operations.

Interest income on deposit assets, representing the consideration received or to be received in excess of cash payments related
to the deposit contract, is earned based on an effective yield calculation. The calculation of the effective yield is based on the
amount and timing of actual cash flows at the balance sheet date and the estimated amount and timing of future cash flows.
The effective yield is recalculated periodically to reflect revised estimates of cash flows. When a change in the actual or
estimated cash flows occurs, the resulting change to the carrying amount of the deposit asset is reported as income or expense.
Deposit assets of $89 million and $93 million at December 31, 2017 and 2016, respectively, are reflected in Other assets in
the Consolidated balance sheets and the accretion of deposit assets related to interest pursuant to the effective yield calculation
is reflected in Net investment income in the Consolidated statements of operations.

Deposit liabilities include reinsurance deposit liabilities of $100 million and $108 million and contract holder deposit funds of
$1.8 billion and $1.5 billion at December 31, 2017 and 2016, respectively. Deposit liabilities are reflected in Accounts

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

payable, accrued expenses, and other liabilities in the Consolidated balance sheets. At contract inception, the deposit liability
equals net cash received. An accretion rate is established based on actuarial estimates whereby the deposit liability is increased
to the estimated amount payable over the contract term. The deposit accretion rate is the rate of return required to fund
expected future payment obligations. We periodically reassess the estimated ultimate liability and related expected rate of
return. Changes to the deposit liability are generally reflected through Interest expense to reflect the cumulative effect of the
period the contract has been in force, and by an adjustment to the future accretion rate of the liability over the remaining
estimated contract term.

The liability for contract holder deposit funds equals accumulated policy account values, which consist of the deposit payments
plus credited interest less withdrawals and amounts assessed through the end of the period.

l) Property and Equipment
Property and equipment used in operations, including certain costs incurred to develop or obtain computer software for internal
use, are capitalized and carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method
over the estimated useful lives of the assets. Property and equipment are included in Other assets in the Consolidated balance
sheets and totaled $1.3 billion and $1.2 billion at December 31, 2017 and 2016, respectively.

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

n) Administrative expenses
Administrative expenses generally include all operating costs other than policy acquisition costs. The North America Commercial
P&C Insurance segment manages and uses an in-house third-party claims administrator, ESIS Inc. (ESIS). ESIS performs claims
management and risk control services for domestic and international organizations that self-insure P&C exposures as well as
internal P&C exposures. The net operating results of ESIS are included within Administrative expenses in the Consolidated
statements of operations and were $38 million, $32 million, and $30 million for the years ended December 31, 2017, 2016,
and 2015, respectively.

o) Income taxes
Income taxes have been recorded related to those operations subject to income taxes. Deferred tax assets and liabilities result
from temporary differences between the amounts recorded in the Consolidated financial statements and the tax basis of our
assets and liabilities. The effect on deferred tax assets and liabilities of a change in tax law or rates is recognized in income in
the period that includes the enactment date. For example, we recorded a net reduction in our deferred tax balances reflecting
the impact of the Tax Cuts and Jobs Act (2017 Tax Act) in the fourth quarter of 2017, the period when the legislation was
enacted. Refer to Note 8 for additional information. A valuation allowance against deferred tax assets is recorded if it is more
likely than not that all, or some portion, of the benefits related to deferred tax assets will not be realized. The valuation
allowance assessment considers tax planning strategies, where applicable.

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

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

q) Cash flow information
Premiums received and losses paid associated with the GLB reinsurance products, which as discussed previously meet the
definition of a derivative instrument for accounting purposes, are included within Cash flows from operating activities. Cash

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

flows, such as settlements and collateral requirements, associated with GLB and all other derivative instruments are included on
a net basis within Cash flows from investing activities. Purchases, sales, and maturities of short-term investments are recorded
on a net basis within Cash flows from investing activities.

r) Derivatives
Chubb recognizes all derivatives at fair value in the Consolidated balance sheets and participates in derivative instruments in
two principal ways:

(i) To sell protection to customers as an insurance or reinsurance contract that meets the definition of a derivative for

accounting purposes. For 2017 and 2016, the reinsurance of GLBs was our primary product falling into this category; and

(ii) To mitigate financial risks, principally arising from investment holdings, products sold, or assets and liabilities held in

foreign currencies. For these instruments, changes in assets or liabilities measured at fair value are recorded as realized
gains or losses in the Consolidated statements of operations.

We did not designate any derivatives as accounting hedges during 2017, 2016, or 2015.

s) Share-based compensation
Chubb measures and records compensation cost for all share-based payment awards at grant-date fair value. Compensation
costs are recognized for share-based payment awards with only service conditions that have graded vesting schedules on a
straight-line basis over the requisite service period for each separately vesting portion of the award as if the award were, in
substance, multiple awards. Refer to Note 12 for additional information.

t) Chubb integration expenses
Direct costs related to the Chubb Corp acquisition were expensed as incurred. Chubb integration expenses were $310 million
and $492 million for the years ended December 31, 2017 and 2016, respectively, and include all internal and external costs
directly related to the integration activities of the Chubb Corp acquisition, consisting primarily of personnel-related expenses,
including severance and employee retention and relocation; lease termination costs; and consulting fees. Chubb integration
expenses were $33 million for the year ended December 31, 2015, consisting primarily of personnel-related expenses;
consulting fees; and advisor fees.

u) New accounting pronouncements
Adopted in 2017
Stock Compensation
Effective January 2017, we prospectively adopted new guidance on stock compensation which requires recognition of the
excess tax benefits or deficiencies of share-based compensation awards to employees through net income rather than through
additional paid in capital. The calculation of the excess tax benefits or deficiencies is based on the difference between the
market value of a stock award at the date of vesting, or at the time of exercise for a stock option, compared to the grant date fair
value recognized as compensation expense in the Consolidated statements of operations. For the year ended December 31,
2017, the excess tax benefit recorded to Income tax expense in the Consolidated statement of operations was $48 million.
Additionally, the guidance allowed for an election to account for forfeitures related to share-based payments either as they occur
or through an estimation method. We elected to retain our current accounting for compensation expense using a forfeiture
estimation process.

Income Tax Accounting Implications of the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act (2017 Tax Act) was signed into legislation in December 2017. Among other things, the 2017 Tax
Act reduces the U.S. federal income tax rate to 21 percent from 35 percent effective in 2018, institutes a dividends received
deduction for foreign earnings with a related tax for the deemed repatriation of unremitted foreign earnings and creates a new
base erosion anti-abuse tax (BEAT) which is a new U.S. minimum tax.

The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the
Tax Cuts and Jobs Act, which provides guidance for the application of the 2017 Tax Act. The income tax guidance allows for the
transition impact of the 2017 Tax Act to be recorded as 1) complete with all accounting implications identified, 2) provisional
based on a reasonable estimate, or 3) not recorded as no reasonable estimate was determinable.

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

We recorded a $450 million income tax transition benefit in the fourth quarter of 2017 on a provisional basis. This income tax
benefit principally reflects our best estimate of the impact of the reduced U.S. corporate tax rate and other provisions of the
2017 Tax Act. Refer to Note 8 for additional information.

Adopted in 2018
Revenue from Contracts with Customers
In May 2014, the FASB issued an accounting standard that supersedes most existing revenue recognition guidance. The
standard excludes from its scope the accounting for insurance contracts, leases, financial instruments, and certain other
agreements that are governed under other GAAP guidance, but could affect the revenue recognition for certain of our claims
management and risk control services. The updated guidance requires an entity to recognize revenue as performance obligations
are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration
the entity is entitled to receive for those goods or services. This guidance was effective for us on January 1, 2018. The adoption
of this guidance did not have a material impact on our financial condition or results of operations given that the majority of our
business is outside the scope of this guidance.

Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities
In January 2016, the FASB issued guidance that affects the recognition, measurement, presentation, and disclosure of financial
instruments. The guidance requires equity investments to be measured at fair value with changes in fair value recognized
through net income (other than those accounted for under equity method of accounting or those that result in consolidation of
the investee). The standard was effective for us in the first quarter of 2018 and required recognition of a cumulative effect
adjustment at adoption to beginning retained earnings. As a result, in the first quarter of 2018, we reduced other
comprehensive income by $455 million, representing the unrealized appreciation on our equity investments, other than those
accounted for under the equity method, with an offsetting increase in retained earnings. All subsequent changes in fair value
will be recognized within realized gains (losses) on the consolidated statement of operations.

Statement of Cash Flows
In August 2016, the FASB issued guidance clarifying the classification of certain cash receipts and cash payments within the
statement of cash flows, including distributions received from equity method investments. The guidance requires entities to
make an accounting policy election to present cash flows received either in operating cash flows or investing cash flows based
on cumulative equity-method earnings or on the nature of the distributions. We adopted this guidance effective January 1,
2018 and elected to retain our current presentation of cash receipts and cash payments based on the nature of the
distributions.

Goodwill Impairment
In January 2017, the FASB issued updated guidance on goodwill impairment testing that eliminates Step 2 of the goodwill
impairment test requiring entities to calculate the implied fair value of goodwill through a hypothetical purchase price allocation.
Under the updated guidance, impairment will now be recognized as the amount by which a reporting unit’s carrying value
exceeds its fair value. Although the standard would have been effective for us in the first quarter of 2020 on a prospective
basis, we adopted this guidance early effective January 1, 2018, as permitted. The adoption of this guidance did not have an
impact on our financial condition or results of operations.

Accounting guidance not yet adopted
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
In February 2018, the FASB issued guidance that allows the reclassification from accumulated other comprehensive loss to
retained earnings for stranded tax effects resulting from the newly enacted corporate tax rate. Because the adjustment of
deferred taxes due to the reduction of the corporate tax rate is required to be included in net income, the tax effects of items
within accumulated other comprehensive income (referred to as stranded tax effects) do not reflect the appropriate tax rates.
The amount of the reclassification will be the difference between the 35 percent historical U.S. corporate tax rate and the newly
enacted 21 percent U.S. corporate tax rate. This guidance is effective for us in the first quarter of 2019 with early adoption
permitted.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Premium Amortization on Purchased Callable Debt Securities
In March 2017, the FASB issued guidance on the amortization period for purchased callable debt securities held at a premium.
The guidance requires the premium to be amortized to the earliest call date. Under current guidance, premiums generally are
amortized over the contracted life of the security. This guidance is effective for us in the first quarter of 2019 on a modified
retrospective basis through a cumulative effect adjustment to beginning retained earnings. Early adoption is permitted.
Securities held at a discount do not require an accounting change. Based on our best estimate at the time of this filing, the
cumulative effect adjustment at the time of adoption would be approximately $30 million pre-tax.

Lease Accounting
In February 2016, the FASB issued accounting guidance requiring leases with lease terms of more than 12 months to recognize
a right of use asset and a corresponding lease liability on the balance sheets. This accounting guidance is effective for us in the
first quarter of 2019 on a modified retrospective basis with early adoption permitted. In January 2018, the FASB issued a
proposed update that provides an alternative transition method of adoption, permitting the recognition of a cumulative-effect
adjustment to retained earnings on the date of adoption. The adoption of the guidance is not expected to have a material impact
on our financial condition or results of operations. We expect that the most significant impact will be the recognition of a right of
use asset and a corresponding lease liability for our real estate leases.

Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued guidance on the accounting for credit losses of financial instruments that are measured at
amortized cost, including held to maturity securities and reinsurance recoverables, by applying an approach based on the
current expected credit losses (CECL). The estimate of expected credit losses should consider historical information, current
information, as well as reasonable and supportable forecasts, including estimates of prepayments. The allowance for credit
losses is a valuation account that is deducted from the amortized cost basis of the financial asset in order to present the net
carrying value at the amount expected to be collected on the financial asset on the Consolidated balance sheet.

The guidance also amends the current debt security other-than-temporary impairment model by requiring an estimate of the
expected credit loss (ECL) only when the fair value is below the amortized cost of the asset. The length of time the fair value of
an AFS debt security has been below the amortized cost will no longer impact the determination of whether a potential credit
loss exists. The AFS debt security model will also require the use of a valuation allowance as compared to the current practice
of writing down the asset.

The standard is effective for us in the first quarter of 2020 with early adoption permitted in the first quarter of 2019. We will be
able to assess the effect of adopting this guidance on our financial condition and results of operations closer to the date of
adoption.

2. Acquisitions

The Chubb Corporation (Chubb Corp)
On January 14, 2016, we completed the acquisition of Chubb Corp, a leading provider of middle-market commercial, specialty,
surety, and personal insurance for $29.5 billion, comprising $14.3 billion in cash and $15.2 billion in newly-issued stock. In
addition, we assumed outstanding equity awards to employees and directors with an attributed value of $323 million. The total
consideration, including the assumption of equity awards, was $29.8 billion. We recognized goodwill of $10.5 billion,
attributable to expected growth and profitability, none of which is expected to be deductible for income tax purposes. We
financed the cash portion of the transaction through a combination of $9.0 billion sourced from various Chubb Limited and
Chubb Corp companies plus $5.3 billion of senior notes, which were issued in November 2015. Refer to Note 9 for additional
information on the senior notes.

Upon completion of the merger, each Chubb Corp common share (other than shares held by certain legacy Chubb Corp
employee benefit plans) was canceled and converted, in accordance with the procedures set forth in the merger agreement, into
the right to receive (i) 0.6019 of a Chubb Limited common share and (ii) $62.93 in cash. In addition, replacement equity
awards were issued by Chubb Limited to the holders of Chubb Corp's outstanding equity awards (stock options, restricted stock
units, deferred stock units, deferred unit obligations, and performance units).

We believe the Chubb Corp acquisition is highly complementary to our existing business lines, distribution channels, customer
segments, and underwriting skills. Chubb Corp has a substantial presence in the U.S. with a broad variety of coverages serving
large corporate and upper middle market accounts, middle market and small commercial accounts, and personal lines. Together
we are one of the largest commercial insurers in the U.S. Internationally, where legacy ACE is a truly global insurer with

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

extensive presence in 54 countries and territories, Chubb Corp's operations in 25 markets added to our presence and
capabilities and positioned us to better pursue important market opportunities globally. The combined company is a leader in a
number of global specialty and traditional products such as professional lines, risk management, workers' compensation,
accident and health (A&H), and other property and general casualty lines.

The table below details the purchase consideration and allocation of assets acquired and liabilities assumed:

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

Purchase consideration
Chubb Limited common shares

Chubb Corp common shares outstanding

Per share exchange ratio

Common shares issued by Chubb Limited

Common share price of Chubb Limited at January 14, 2016

Fair value of common shares issued by Chubb Limited to common shareholders of Chubb Corp

Cash consideration

Chubb Corp common shares outstanding

Agreed cash price per share paid to common shareholders of Chubb Corp

Cash consideration paid by Chubb Limited to common shareholders of Chubb Corp

Stock-based awards

Fair value of equity awards issued (1)

Fair value of purchase consideration

Assets acquired and (liabilities) assumed

Cash

Investments

Accrued investment income

Insurance and reinsurance balances receivable

Reinsurance recoverable on losses and loss expenses

Indefinite lived intangible assets

Finite lived intangible assets

Prepaid reinsurance premiums

Other assets

Unpaid losses and loss expenses

Unearned premiums

Insurance and reinsurance balances payable

Accounts payable, accrued expenses, and other liabilities

Deferred tax liabilities

Long-term debt

Total identifiable net assets acquired

Goodwill

Purchase price

228

0.6019

137

111.02

15,204

228

62.93

14,319

323

29,846

42,967

359

3,095

1,676

2,860

4,795

280

853

(22,923)

(7,011)

(603)

(2,030)

(1,292)

(3,765)

19,332

10,514

29,846

(1) The fair value of the replacement equity awards was $525 million, of which $323 million was attributed to service periods prior to the acquisition and was included in the

purchase consideration. Refer to Note 12 for further information on these replacement equity awards.

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The purchase price allocation to intangible assets recorded in connection with the Chubb Corp acquisition and their related
useful lives are as follows:

(in millions of U.S. dollars)

Definite life

Unearned premium reserves (UPR) intangible asset

Agency distribution relationships and renewal rights

Internally developed technology

Indefinite life

Trademarks

Licenses

Syndicate capacity

Total identified intangible assets

Purchase price
Allocation at
January 14, 2016

Estimated useful
life

1,550 1 year

3,150 24 years

95 3 years

2,800 Indefinite

50 Indefinite

10 Indefinite

7,655

Refer to Note 6 for additional information on goodwill and intangible assets acquired.

The following table summarizes the results of the acquired Chubb Corp operations since the acquisition date that have been
included within our Consolidated statement of operations:

(in millions of U.S. dollars)

Total revenues

Net income

January 14, 2016 to
December 31, 2016

12,376

1,756

The following table provides supplemental unaudited pro forma consolidated information for the years ended December 31,
2016 and 2015, as if Chubb Corp had been acquired as of January 1, 2015. The unaudited pro forma consolidated financial
statements are presented solely for informational purposes and are not necessarily indicative of the consolidated results of
operations that might have been achieved had the transaction been completed as of the date indicated, nor are they meant to
be indicative of any anticipated consolidated future results of operations that the combined company will experience after the
transaction.

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

Total revenues

Net income

Earnings per share

Basic earnings per share

Diluted earnings per share

Year Ended December 31

2016

2015

31,937 $

32,622

4,183 $

4,478

8.95 $

8.88 $

9.61

9.52

Total revenues and net income were lower for the year ended December 31, 2016, compared to the prior year, primarily
reflecting merger-related actions in 2016, which lowered net premiums earned.

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Fireman's Fund Insurance Company High Net Worth Personal Lines Insurance Business in the U.S. (Fireman's Fund)
On April 1, 2015, we acquired the Fireman's Fund Insurance Company high net worth personal lines insurance business in the
U.S., which included the renewal rights for new and existing business and reinsurance of all existing reserves for $365 million
in cash. We acquired assets with a fair value of $753 million, consisting primarily of cash of $629 million and insurance and
reinsurance balances receivable of $124 million. We assumed liabilities with a fair value of $863 million, consisting primarily
of unpaid losses and loss expenses of $417 million and unearned premiums of $428 million. This acquisition generated $196
million of goodwill, attributable to expected growth and profitability, all of which is expected to be deductible for income tax
purposes, and other intangible assets of $278 million, primarily related to renewal rights, based on Chubb’s purchase price
allocation. The acquisition expanded our position in the high net worth personal lines insurers in the U.S. The Fireman’s Fund
business was integrated into our existing high net worth personal lines business, offering a broad range of coverage including
homeowners, automobile, umbrella and excess liability, collectibles, and yachts. Goodwill and other intangible assets arising
from this acquisition are included in our North America Personal P&C Insurance segment.

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

3. Investments

a) Transfers of securities
During December 2017, we transferred securities, considered essential holdings in a diversified portfolio, with a total fair value
of $4.3 billion from Fixed maturities available for sale to Fixed maturities held to maturity. These securities, which we have the
intent and ability to hold to maturity, were transferred given the growth in our investment portfolio over the last several years, as
well as continued efforts to manage the diversification of our global portfolio. The net unrealized appreciation at the date of the
transfer continues to be reported in the carrying value of the transferred investments and is amortized through OCI over the
remaining life of the securities using the effective interest method in a manner consistent with the amortization of any premium
or discount. This transfer represents a non-cash transaction and does not impact the Consolidated statements of cash flows.

b) Fixed maturities

December 31, 2017

(in millions of U.S. dollars)

Available for sale

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Held to maturity

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Amortized
Cost

Gross
Unrealized
Appreciation

Gross
Unrealized
Depreciation

Fair
Value

OTTI
Recognized
in AOCI

3,701 $

32 $

(35) $

3,698 $

20,514

23,453

15,279

14,888

622

638

111

125

(106)

(95)

(100)

(88)

21,030

23,996

15,290

14,925

77,835 $

1,528 $

(424) $

78,939 $

908 $

12 $

(5) $

915 $

1,738

3,159

2,724

5,806

(8)

(7)

(5)

(15)

1,757

3,219

2,742

5,841

14,335 $

179 $

(40) $

14,474 $

—

(1)

(4)

(1)

—

(6)

—

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

December 31, 2016

(in millions of U.S. dollars)

Available for sale

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Held to maturity

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Amortized
Cost

Gross
Unrealized
Appreciation

Gross
Unrealized
Depreciation

Fair
Value

OTTI
Recognized
in AOCI

2,883 $

32 $

(45) $

2,870 $

20,929

23,736

14,066

17,922

636

580

135

(125)

(167)

(194)

(345)

21,440

24,149

14,007

17,649

—

(5)

(8)

(1)

—

79,536 $

1,455 $

(876) $

80,115 $

(14)

655 $

9 $

(3) $

661 $

640

2,771

1,393

5,185

(1)

(26)

—

(92)

667

2,795

1,428

5,119

10,644 $

148 $

(122) $

10,670 $

—

As discussed in Note 3 d), if a credit loss is incurred on an impaired fixed maturity, an OTTI is considered to have occurred and
the portion of the impairment not related to credit losses (non-credit OTTI) is recognized in OCI. Included in the “OTTI
Recognized in AOCI” columns above are the cumulative amounts of non-credit OTTI recognized in OCI adjusted for subsequent
sales, maturities, and redemptions. OTTI recognized in AOCI does not include the impact of subsequent changes in fair value of
the related securities. In periods subsequent to a recognition of OTTI in OCI, changes in the fair value of the related fixed
maturities are reflected in Net unrealized appreciation on investments in the Consolidated statements of shareholders' equity.
For the years ended December 31, 2017 and 2016, $2 million of net unrealized depreciation and $62 million of net unrealized
appreciation, respectively, related to such securities is included in OCI. At December 31, 2017 and 2016, AOCI included
cumulative net unrealized appreciation of $7 million and $10 million, respectively, related to securities remaining in the
investment portfolio for which a non-credit OTTI was recognized.

Mortgage-backed securities (MBS) issued by U.S. government agencies are combined with all other to be announced mortgage
derivatives held (refer to Note 10 c) (iv)) and are included in the category, “Mortgage-backed securities”. Approximately 83
percent and 81 percent of the total mortgage-backed securities at December 31, 2017 and 2016, respectively, are represented
by investments in U.S. government agency bonds. The remainder of the mortgage exposure consists of collateralized mortgage
obligations and non-government mortgage-backed securities, the majority of which provide a planned structure for principal and
interest payments and carry a rating of AAA by the major credit rating agencies.

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents fixed maturities by contractual maturity:

(in millions of U.S. dollars)

Available for sale

Due in 1 year or less

Due after 1 year through 5 years

Due after 5 years through 10 years

Due after 10 years

Mortgage-backed securities

Held to maturity

Due in 1 year or less

Due after 1 year through 5 years

Due after 5 years through 10 years

Due after 10 years

Mortgage-backed securities

December 31
2017

December 31
2016

Amortized Cost

Fair Value

Amortized Cost

Fair Value

3,164 $

3,182 $

3,892 $

24,749

25,388

9,255

62,556

15,279

25,068

25,704

9,695

63,649

15,290

24,027

27,262

10,289

65,470

14,066

77,835 $

78,939 $

79,536 $

743 $

746 $

430 $

2,669

4,744

3,455

11,611

2,724

2,688

4,756

3,542

11,732

2,742

2,646

2,969

3,206

9,251

1,393

3,913

24,429

27,379

10,387

66,108

14,007

80,115

435

2,691

2,944

3,172

9,242

1,428

14,335 $

14,474 $

10,644 $

10,670

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

c) Equity securities

(in millions of U.S. dollars)
Cost

Gross unrealized appreciation

Gross unrealized depreciation

Fair value

December 31
2017

737 $

212

(12)

937 $

December 31
2016
706

129

(21)

814

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

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

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

•
•

•

the amount of time a security has been in a loss position and the magnitude of the loss position;
the period in which cost is expected to be recovered, if at all, based on various criteria including economic conditions and
other issuer-specific developments; and
our ability and intent to hold the security to the expected recovery period.

As a general rule, we also consider that equity securities in an unrealized loss position for twelve consecutive months are other
than temporarily impaired. For mutual funds included in equity securities in our Consolidated balance sheets, we employ
analysis similar to fixed maturities, when applicable.

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

U.S. Treasury and agency obligations (including agency mortgage-backed securities); foreign government obligations; and states,
municipalities, and political subdivisions obligations
U.S. Treasury and agency obligations (including agency mortgage-backed securities); foreign government obligations; and
states, municipalities, and political subdivisions obligations represent $311 million of gross unrealized loss at December 31,
2017. These securities were evaluated for credit loss primarily using qualitative assessments of the likelihood of credit loss
considering credit rating of the issuers and level of credit enhancement, if any. We concluded that the high level of
creditworthiness of the issuers coupled with credit enhancement, where applicable, supports recognizing no credit loss in Net
income.

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

The following table presents default assumptions by Moody's rating category (historical mean default rate provided for comparison):

Moody's Rating Category

Investment Grade:

Aaa-Baa

Below Investment Grade:

Caa-C

1-in-100 Year
Default Rate

Historical Mean
Default Rate

0.0-1.3%

0.0-0.3%

4.8%

12.1%

36.8%

1.0%

3.2%

10.5%

Application of the methodology and assumptions described above resulted in credit losses recognized in Net income for
corporate securities of $5 million, $30 million, and $50 million for the years ended December 31, 2017, 2016, and 2015,
respectively.

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Mortgage-backed securities
For mortgage-backed securities, credit impairment is assessed using a cash flow model that estimates the cash flows on the
underlying mortgages, using the security-specific collateral and transaction structure. The model estimates cash flows from the
underlying mortgage loans and distributes those cash flows to various tranches of securities, considering the transaction
structure and any subordination and credit enhancements that exist in that structure. The cash flow model incorporates actual
cash flows on the mortgage-backed securities through the current period and then projects the remaining cash flows using a
number of assumptions, including default rates, prepayment rates, and loss severity rates (the par value of a defaulted security
that will not be recovered) on foreclosed properties.

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

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

For the years ended December 31, 2017 and 2015, there were no credit losses recognized in Net income for mortgage-backed
securities. For the year ended December 31, 2016, there was $1 million of credit losses recognized in Net income for
mortgage-backed securities.

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents the Net realized gains (losses) and the losses included in Net realized gains (losses) and OCI as a
result of conditions which caused us to conclude the decline in fair value of certain investments was “other-than-temporary”
and the change in net unrealized appreciation (depreciation) of investments:

(in millions of U.S. dollars)

Fixed maturities:

OTTI on fixed maturities, gross

OTTI on fixed maturities recognized in OCI (pre-tax)

OTTI on fixed maturities, net

Gross realized gains excluding OTTI

Gross realized losses excluding OTTI

Total fixed maturities

Equity securities:

OTTI on equity securities

Gross realized gains excluding OTTI

Gross realized losses excluding OTTI

Total equity securities

OTTI on other investments

Foreign exchange gains (losses)

Investment and embedded derivative instruments

Fair value adjustments on insurance derivative

S&P put options and futures

Other derivative instruments

Other

Net realized gains (losses)

Change in net unrealized appreciation (depreciation) on investments:

Fixed maturities available for sale

Fixed maturities held to maturity

Equity securities

Other

Income tax (expense) benefit

Change in net unrealized appreciation (depreciation) on investments

Total net realized gains (losses) and change in net unrealized

appreciation (depreciation) on investments

Year Ended December 31

2017

2016

2015

(24) $

(89) $

(23)

149

(157)

(31)

(10)

(2)

(12)

(11)

364

(261)

(5)

(12)

519

(241)

392

(81)

183

(265)

(163)

(8)

(13)

(14)

118

(33)

(136)

(10)

(4)

(145)

142

(59)

(51)

100

184

(142)

(103)

158

(235)

(180)

(7)

(11)

(2)

(80)

(203)

(10)

(12)

(420)

(1,119)

(17)

(36)

152

(977)

476 $

39 $

(1,397)

The following table presents a roll-forward of pre-tax credit losses related to fixed maturities for which a portion of OTTI was
recognized in OCI:

(in millions of U.S. dollars)

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

Additions where no OTTI was previously recorded

Additions where an OTTI was previously recorded

Reductions for securities sold during the period

Balance of credit losses related to securities still held – end of year

Year Ended December 31

2017

2016

2015

35 $

53 $

(19)

22 $

(49)

35 $

(25)

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

e) Other investments

(in millions of U.S. dollars)

Investment funds

Limited partnerships

Partially-owned investment companies

Life insurance policies

Policy loans

Trading securities

Other

Total

December 31
2017
Cost

Fair Value

December 31
2016
Cost

Fair Value

270 $

123 $

251 $

549

2,803

305

244

333

168

441

2,803

305

244

333

168

730

2,645

248

209

296

140

126

607

2,645

248

209

295

140

4,672 $

4,417 $

4,519 $

4,270

Investment funds include one highly diversified fund investment as well as several direct funds that employ a variety of
investment styles such as long/short equity and arbitrage/distressed. Included in limited partnerships and partially-owned
investment companies are 138 individual limited partnerships covering a broad range of investment strategies including large
cap buyouts, specialist buyouts, growth capital, distressed, mezzanine, real estate, and co-investments. The underlying portfolio
consists of various public and private debt and equity securities of publicly traded and privately held companies and real estate
assets. The underlying investments across various partnerships, geographies, industries, asset types, and investment strategies
provide risk diversification within the limited partnership portfolio and the overall investment portfolio. Trading securities
comprise $333 million of mutual funds supported by assets that do not qualify for separate account reporting under GAAP at
December 31, 2017 compared with $271 million at December 31, 2016. There were no trading securities held in rabbi trusts
at December 31, 2017, compared with $14 million of equity securities and $11 million of fixed maturities at December 31,
2016.

f) Investments in partially-owned insurance companies
The following table presents Investments in partially-owned insurance companies:

(in millions of U.S. dollars, except for percentages)

Huatai Group

Huatai Life Insurance Company

Freisenbruch-Meyer

Chubb Arabia Cooperative Insurance Company
Russian Reinsurance Company

ABR Reinsurance Ltd.

Total

December 31, 2017

December 31, 2016

Issued
Share
Capital

Ownership
Percentage

Carrying
Value

Issued
Share
Capital

Ownership
Percentage

616

495

—

800

20% $

447

20%

40%

30%

23%

11%

624

428

800

20%

40%

30%

23%

11%

Carrying
Value

438 $

105

662 $ 1,942

666

$ 1,888

Domicile

China

Bermuda

Saudi Arabia

Russia

Bermuda

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

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

g) Gross unrealized loss
At December 31, 2017, there were 9,828 fixed maturities out of a total of 30,932 fixed maturities in an unrealized loss
position. The largest single unrealized loss in the fixed maturities was $7 million. There were 82 equity securities out of a total
of 328 equity securities in an unrealized loss position. The largest single unrealized loss in the equity securities was $3 million.
Fixed maturities in an unrealized loss position at December 31, 2017, comprised both investment grade and below investment
grade securities for which fair value declined primarily due to widening credit spreads since the date of purchase.

The following tables present, for all securities in an unrealized loss position (including securities on loan), the aggregate fair
value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:

December 31, 2017

(in millions of U.S. dollars)

Fair Value

0 – 12 Months

Over 12 Months

Gross
Unrealized
Loss

Fair Value

Gross
Unrealized
Loss

Fair Value

Total

Gross
Unrealized
Loss

U.S. Treasury and agency

2,172 $

(14) $

1,249 $

(26) $

3,421 $

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and
political subdivisions

Total fixed maturities

Equity securities

Other investments

Total

5,657

5,210

6,194

9,259

28,492

115

(65)

(56)

(31)

(71)

(237)

(12)

(8)

1,693

1,332

3,209

1,402

8,885

—

(49)

(46)

(74)

(32)

(227)

—

7,350

6,542

9,403

10,661

37,377

115

28,685 $

(257) $

8,885 $

(227) $

37,570 $

December 31, 2016

(in millions of U.S. dollars)

Fair Value

Gross
Unrealized
Loss

Fair Value

Gross
Unrealized
Loss

Fair Value

U.S. Treasury and agency

2,216 $

(48) $

— $

2,216 $

0 – 12 Months

Over 12 Months

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and
political subdivisions

Total fixed maturities

Equity securities

Other investments

Total

5,918

7,021

8,638

19,448

43,241

199

201

(99)

(149)

(189)

(435)

(920)

(21)

(18)

386

641

234

1,310

—

(27)

(44)

(5)

(2)

(78)

—

6,304

7,662

8,872

19,497

44,551

199

201

43,641 $

(959) $

1,310 $

(78) $

44,951 $

(1,037)

F-30

(40)

(114)

(102)

(105)

(103)

(464)

(12)

(8)

(484)

Total

Gross
Unrealized
Loss

(48)

(126)

(193)

(194)

(437)

(998)

(21)

(18)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

h) Net investment income

(in millions of U.S. dollars)

Fixed maturities

Short-term investments

Equity securities

Other investments
Gross investment income (1)
Investment expenses
Net investment income (1)
(1) Includes amortization expense related to fair value adjustment of acquired invested

assets related to the Chubb Corp acquisition

Year Ended December 31

2017

2016

2,987 $

2,779 $

2015

2,157

2,308

(114)

131

133

3,289

(164)

3,006

(141)

3,125 $

2,865 $

2,194

(332) $

(393) $

—

i) Restricted assets
Chubb is required to maintain assets on deposit with various regulatory authorities to support its insurance and reinsurance
operations. These requirements are generally promulgated in the statutory regulations of the individual jurisdictions. The assets
on deposit are available to settle insurance and reinsurance liabilities. Chubb is also required to restrict assets pledged under
repurchase agreements. We also use trust funds in certain large reinsurance transactions where the trust funds are set up for
the benefit of the ceding companies and generally take the place of letter of credit (LOC) requirements. We also have
investments in segregated portfolios primarily to provide collateral or guarantees for LOC and derivative transactions. Included in
restricted assets at December 31, 2017 and 2016, are investments, primarily fixed maturities, totaling $23.3 billion and
$20.1 billion, and cash of $123 million and $103 million, respectively.

The following table presents the components of restricted assets:

(in millions of U.S. dollars)

Trust funds

Deposits with U.S. regulatory authorities

Deposits with non-U.S. regulatory authorities

Assets pledged under repurchase agreements

Other pledged assets

December 31

2017

2016

17,011 $

13,880

2,345

2,250

1,434

414

2,203

2,191

1,461

435

23,454 $

20,170

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

4. Fair value measurements

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

The three levels of the hierarchy are as follows:

• Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets;
• Level 2 – Includes, among other items, inputs other than quoted prices that are observable for the asset or liability such as
interest rates and yield curves, quoted prices for similar assets and liabilities in active markets, and quoted prices
for identical or similar assets and liabilities in markets that are not active; and

• Level 3 – Inputs that are unobservable and reflect management’s judgments about assumptions that market participants

would use in pricing an asset or liability.

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

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

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

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

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

Other investments
Fair values for the majority of Other investments including investments in partially-owned investment companies, investment
funds, and limited partnerships are based on their respective net asset values or equivalent (NAV) and are excluded from the
fair value hierarchy table below. Certain of our long-duration contracts are supported by assets that do not qualify for separate
account reporting under GAAP. These assets comprise mutual funds classified within Level 1 in the valuation hierarchy on the
same basis as other equity securities traded in active markets. Other investments also include equity securities classified within
Level 1, and fixed maturities, classified within Level 2, held in rabbi trusts maintained by Chubb for deferred compensation
plans and are classified within the valuation hierarchy on the same basis as other equity securities and fixed maturities. Other
investments for which pricing is unobservable are classified within Level 3.

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

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

Other derivative instruments
We generally maintain positions in other derivative instruments including exchange-traded equity futures contracts and option
contracts designed to limit exposure to a severe equity market decline, which would cause an increase in expected claims and,
therefore, an increase in reserves for our guaranteed minimum death benefits (GMDB) and guaranteed living benefits (GLB)
reinsurance business. Our position in exchange-traded equity futures contracts is classified within Level 1. At December 31,
2017, we held no positions in option contracts on equity market indices. The fair value of the majority of the remaining
positions in other derivative instruments is based on significant observable inputs including equity security and interest rate
indices. Accordingly, these are classified within Level 2. Other derivative instruments based on unobservable inputs are
classified within Level 3. Other derivative instruments are recorded in either Other assets or Accounts payable, accrued
expenses, and other liabilities in the Consolidated balance sheets.

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

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

F-33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The most significant policyholder behavior assumptions include lapse rates and the GMIB annuitization rates. Assumptions
regarding lapse rates and GMIB annuitization rates differ by treaty, but the underlying methodologies to determine rates applied
to each treaty are comparable.

A lapse rate is the percentage of in-force policies surrendered in a given calendar year. All else equal, as lapse rates increase,
ultimate claim payments will decrease. In general, the base lapse function assumes low lapse rates (ranging from about 3
percent to 9 percent per annum) during the surrender charge period of the GMIB contract, followed by a “spike” lapse rate
(ranging from about 6 percent to 33 percent per annum) in the year immediately following the surrender charge period, and
then reverting to an ultimate lapse rate (generally around 10 percent per annum), typically over a 2-year period. This base rate
is adjusted downward for policies with more valuable guarantees (policies with guaranteed values far in excess of their account
values) by multiplying the base lapse rate by a factor ranging from 15 percent to 75 percent. Partial withdrawals and the
impact of older policyholders with tax-qualified contracts (due to required minimum distributions) are also reflected in our
modeling.

The GMIB annuitization rate is the percentage of policies for which the policyholder will elect to annuitize using the guaranteed
benefit provided under the GMIB. All else equal, as GMIB annuitization rates increase, ultimate claim payments will increase,
subject to treaty claim limits. All GMIB reinsurance treaties include claim limits to protect Chubb in the event that actual
annuitization behavior is significantly higher than expected. In general, Chubb assumes that GMIB annuitization rates will be
higher for policies with more valuable guarantees (policies with guaranteed values far in excess of their account values). In
addition, we also assume that GMIB annuitization rates are higher in the first year immediately following the waiting period (the
first year the policies are eligible to annuitize using the GMIB) in comparison to all subsequent years. We do not yet have fully
credible annuitization experience for all clients.

The level of annuitization assumptions at December 31, 2017 are as follows:

% of total GMIB guaranteed value

Year of GMIB eligibility

(per year) Maximum annuitization rates based on

Maximum annuitization rate(s)

67%

30%

First year

Subsequent years

First year

Subsequent years

First year

Subsequent years

2% - 52%

1% - 100%

N/A

12%, 100%

25%, 56%

12%, 36%

Actual Experience

N/A (1)
Weighted average(2)

Weighted average(2)

(1) Because all policies in this bracket are past the first year of eligibility, first year annuitization assumptions are no longer modeled.
(2) Weighted average of two different annuitization rates.

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

In the fourth quarter of 2017, we completed a review of policyholder behavior related to annuitizations, partial withdrawals,
lapses, and mortality for our variable annuity reinsurance business.

• As annuitization experience continued to emerge, we refined our annuitization assumptions including age-based behavior,
which generally lowered the annuitization rate. The change in annuitization assumptions decreased the fair value of GLB
liabilities and generated a realized gain of approximately $117 million.

• Reinsured policies allow for policyholders to make periodic withdrawals from their account values without lapsing the

policy. The partial withdrawal results in a reduction to the associated guaranteed value that is either equal or proportional
to the amount of the reduction in account value. Based on continued emerging experience, we refined our assumptions

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

around the types of partial withdrawals according to their impact on guaranteed value. This resulted in an increase to the
fair value of GLB liabilities generating a realized loss of approximately $43 million.

• As lapse experience continued to emerge, we further refined our assumptions which resulted in a net increase to the fair

value of GLB liabilities generating a realized loss of approximately $9 million.

• We studied mortality experience for our variable annuity business for the first time this year and subsequently refined our
mortality assumptions. The updated mortality rates increased the fair value of GLB liabilities generating a realized loss of
approximately $25 million.

In addition to the updates described above, we updated aspects of our valuation model relating to interest rates during the year
ended December 31, 2017. This resulted in a decrease to the fair value of GLB liabilities generating a realized gain of
approximately $94 million.

During the year ended December 31, 2017, we also made minor technical refinements to the internal valuation model which
resulted in no material impact on the financial statements.

Financial instruments measured at fair value on a recurring basis, by valuation hierarchy

December 31, 2017

(in millions of U.S. dollars)

Assets:

Fixed maturities available for sale

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Equity securities

Short-term investments

Other investments (1)

Securities lending collateral

Investment derivative instruments

Other derivative instruments

Separate account assets

Total assets measured at fair value (1)

Liabilities:

Investment derivative instruments

Other derivative instruments

GLB (2)

Total liabilities measured at fair value

Level 1

Level 2

Level 3

Total

3,129 $

569 $

— $

—

3,129

893

2,309

466

—

2,635

20,937

22,959

15,212

14,925

74,602

—

1,252

305

1,737

—

1,037

—

1,208

—

263

—

3,698

21,030

23,996

15,290

14,925

78,939

937

3,561

1,034

1,737

2,734

9,451 $

77,995 $

1,515 $

88,961

30 $

— $

—

204

51 $

— $

206 $

204

257

(1) Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $3,623 million and other investments of $15 million at

December 31, 2017 measured using NAV as a practical expedient.

(2) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is

the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. Refer to Note 5 c) for additional information.

F-35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

December 31, 2016

(in millions of U.S. dollars)

Assets:

Fixed maturities available for sale

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Equity securities

Short-term investments

Other investments (1)

Securities lending collateral

Investment derivative instruments

Other derivative instruments

Separate account assets

Total assets measured at fair value (1)

Liabilities:

Investment derivative instruments

Other derivative instruments

GLB (2)

Total liabilities measured at fair value

Level 1

Level 2

Level 3

Total

2,175 $

695 $

— $

—

2,175

773

1,757

384

—

1,784

21,366

23,468

13,962

17,649

77,140

—

1,220

259

1,092

—

681

—

800

225

—

6,907 $

79,806 $

1,091 $

54 $

— $

—

559

54 $

— $

572 $

2,870

21,440

24,149

14,007

17,649

80,115

814

3,002

868

1,092

1,879

87,804

559

626

(1) Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $3,626 million and other investments of $25 million at

December 31, 2016 measured using NAV as a practical expedient.

(2) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is

the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. Refer to Note 5 c) for additional information.

There were no transfers of financial instruments between Level 1 and Level 2 for the years ended December 31, 2017, 2016,
and 2015.

F-36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Fair value of alternative investments
Alternative investments include investment funds, limited partnerships, and partially-owned investment companies measured at
fair value using NAV as a practical expedient.

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

(in millions of U.S. dollars)

Financial

Real Assets

Distressed

Private Credit

Traditional

Vintage

Investment funds

Expected
Liquidation
Period of
Underlying Assets

Fair Value

December 31
2017

Maximum
Future Funding
Commitments

December 31
2016

Maximum
Future Funding
Commitments

Fair Value

5 to 9 Years $

540 $

330 $

548 $

3 to 7 Years

651

289

187

114

141

327

536

485

236

3 to 15 Years

1,656

3,149

1,550

1 to 2 Years

Not Applicable

270

—

251

428

230

179

259

930

—

3,623 $

4,061 $

3,627 $

2,040

Included in all categories in the above table, except for Investment funds, are investments for which Chubb will never have the
contractual option to redeem but receives distributions based on the liquidation of the underlying assets. Further, for all
categories except for Investment funds, Chubb does not have the ability to sell or transfer the investments without the consent
from the general partner of individual funds.

Investment Category

Consists of investments in private equity funds:

Financial

Real Assets

Distressed

Private Credit

Traditional

Vintage

targeting financial services companies such as financial institutions and insurance services worldwide

targeting investments related to hard physical assets such as real estate, infrastructure, and natural
resources

targeting distressed corporate debt/credit and equity opportunities in the U.S.

targeting privately originated corporate debt investments including senior secured loans and
subordinated bonds
employing traditional private equity investment strategies such as buyout and growth equity globally

made before 2002 or where the funds’ commitment periods had already expired

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

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

The following table presents the significant unobservable inputs used in the Level 3 liability valuations. Excluded from the table
below are inputs used to determine the fair value of Level 3 assets which are based on single broker quotes and contain no
quantitative unobservable inputs developed by management.

(in millions of U.S. dollars, except for percentages)

Fair Value at
December 31, 2017

Valuation
Technique

Significant
Unobservable Inputs

Ranges

GLB(1)

204

Actuarial model

Lapse rate

3% – 33%

Annuitization rate

0% – 100%

(1) Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note 4 a) Guaranteed living

benefits.

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

Available-for-Sale Debt Securities

Year Ended December 31, 2017

(in millions of U.S. dollars)

Foreign

Corporate
securities (1)

MBS

Equity
securities

Short-term
investments

Other
investments

Other
derivative
instruments

GLB(2)

Balance, beginning of year

74 $

681 $

45 $

41 $

25 $

225 $

13 $

559

Assets

Liabilities

Transfers into Level 3

Transfers out of Level 3

Change in Net Unrealized
Gains (Losses) included
in OCI

Net Realized Gains/Losses

Purchases

Sales

Settlements

Balance, end of year

Net Realized Gains/Losses

Attributable to Changes in
Fair Value at the Balance
Sheet Date

—

(3)

—

(59)

(6)

231

(93)

(12)

—

521

(111)

(180)

—

(1)

(24)

—

(1)

(22)

—

(41)

(24)

—

(9)

—

(2)

—

(364)

—

93 $

1,037 $

78 $

44 $

— $

263 $

2 $

204

(1) $

(2) $

— $

(1) $

— $

(2) $

(364)

(1) Transfers into and Purchases in Level 3 primarily consist of privately-placed fixed income securities.
(2) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is

the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. Refer to Note 5 c) for additional information.

F-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Available-for-Sale Debt Securities

Year Ended December 31, 2016

(in millions of U.S. dollars)

Foreign

Corporate
securities

MBS

Equity
securities

Short-term
investments

Other
investments

Other
derivative

instruments

GLB(1)

Balance, beginning of year

57 $

174 $

53 $

16 $

— $

212 $

6 $

609

Assets

Liabilities

Transfers into Level 3

Transfers out of Level 3

Change in Net Unrealized

Gains (Losses) included in
OCI

Net Realized Gains/Losses
Purchases (2)
Sales

Settlements

Balance, end of year

Net Realized Gains/Losses

Attributable to Changes in
Fair Value at the Balance
Sheet Date

(24)

(6)

(17)

(16)

(10)

(13)

566

(59)

(45)

—

(1)

—

(8)

—

(5)

—

(50)

—

(2)

—

(19)

—

(50)

—

74 $

681 $

45 $

41 $

25 $

225 $

13 $

559

(5) $

(11) $

— $

1 $

5 $

(50)

(1) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is

the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. The liability for GLB reinsurance was $853 million at
December 31, 2016 and $888 million at December 31, 2015, which includes a fair value derivative adjustment of $559 million and $609 million, respectively.

(2) Includes acquired invested assets as a result of the Chubb Corp acquisition.

Assets

Liabilities

Year Ended December 31, 2015

(in millions of U.S. dollars)

Foreign

Corporate
securities

MBS

Equity
securities

Other
investments

Other
derivative
instruments

Available-for-Sale Debt Securities

Balance, beginning of year

22 $

187 $

15 $

2 $

204 $

4 $

Transfers into Level 3

Transfers out of Level 3

Change in Net Unrealized

Gains (Losses) included in
OCI

Net Realized Gains/Losses

Purchases

Sales

Settlements

Balance, end of year

Net Realized Gains/Losses

Attributable to Changes in
Fair Value at the Balance
Sheet Date

—

(2)

(1)

(3)

(8)

—

(1)

(4)

(28)

(48)

—

(2)

(1)

—

(2)

—

(6)

—

(19)

—

57 $

174 $

53 $

16 $

212 $

6 $

609

(1) $

(2) $

— $

(2) $

— $

2 $

203

GLB(1)

406

—

203

—

(1) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is

the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. The liability for GLB reinsurance was $888 million at
December 31, 2015 and $663 million at December 31, 2014, which includes a fair value derivative adjustment of $609 million and $406 million, respectively.

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

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

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Investments in partially-owned insurance companies
Fair values for investments in partially-owned insurance companies are based on Chubb’s share of the net assets based on the
financial statements provided by those companies and are excluded from the valuation hierarchy tables below.

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

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

December 31, 2017

(in millions of U.S. dollars)

Assets:

Fixed maturities held to maturity

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Total assets

Liabilities:

Repurchase agreements

Short-term debt

Long-term debt

Trust preferred securities

Total liabilities

December 31, 2016

(in millions of U.S. dollars)

Assets:

Fixed maturities held to maturity

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

States, municipalities, and political subdivisions

Total assets

Liabilities:

Repurchase agreements

Short-term debt

Long-term debt

Trust preferred securities

Total liabilities

Level 1

Level 2

Level 3

Total

Fair Value

857 $

58 $

— $

915 $

—

1,757

3,184

2,742

5,841

—

1,757

3,219

2,742

5,841

Carrying
Value

908

1,738

3,159

2,724

5,806

857 $

13,582 $

35 $

14,474 $

14,335

— $

1,408 $

— $

1,408 $

—

1,013

12,332

468

—

1,013

12,332

468

1,408

1,013

11,556

308

— $

15,221 $

— $

15,221 $

14,285

Level 1

Level 2

Level 3

Total

Fair Value

555 $

106 $

— $

661 $

—

667

2,782

1,428

5,119

—

667

2,795

1,428

5,119

Carrying
Value

655

640

2,771

1,393

5,185

555 $

10,102 $

13 $

10,670 $

10,644

— $

1,403 $

— $

1,403 $

1,403

—

503

12,998

456

—

503

12,998

456

500

12,610

308

— $

15,360 $

— $

15,360 $

14,821

F-40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

5. Reinsurance

a) Consolidated reinsurance
Chubb purchases reinsurance to manage various exposures including catastrophe risks. Although reinsurance agreements
contractually obligate Chubb's reinsurers to reimburse it for the agreed-upon portion of its gross paid losses, they do not
discharge Chubb's primary liability. The amounts for net premiums written and net premiums earned in the Consolidated
statements of operations are net of reinsurance. The following table presents direct, assumed, and ceded premiums:

(in millions of U.S. dollars)

Premiums written
Direct
Assumed
Ceded
Net
Premiums earned
Direct
Assumed
Ceded
Net

Year Ended December 31

2017

2016

2015

33,137 $

31,543 $

3,239

(7,132)

3,440

(6,838)

29,244 $

28,145 $

32,782 $

31,811 $

3,332

(7,080)

3,744

(6,806)

29,034 $

28,749 $

19,879

3,932

(6,098)

17,713

19,355

3,676

(5,818)

17,213

Ceded losses and loss expenses incurred were $5.5 billion, $4.1 billion, and $3.1 billion for the years ended December 31,
2017, 2016, and 2015, respectively.

b) Reinsurance recoverable on ceded reinsurance

(in millions of U.S. dollars)

Reinsurance recoverable on unpaid losses and loss expenses (1)
Reinsurance recoverable on paid losses and loss expenses (1)
Reinsurance recoverable on losses and loss expenses (1)
Reinsurance recoverable on policy benefits (1)
(1) Net of a provision for uncollectible reinsurance.

December 31

2017

2016

14,014 $

12,708

1,020

869

15,034 $

13,577

184 $

182

The increase in reinsurance recoverable on loss and loss expenses was principally related to the California wildfires and other
catastrophe losses in 2017.

We evaluate the financial condition of our reinsurers and potential reinsurers on a regular basis and also monitor concentrations
of credit risk with reinsurers. The provision for uncollectible reinsurance is required principally due to the potential failure of
reinsurers to indemnify Chubb, primarily because of disputes under reinsurance contracts and insolvencies. We have
established provisions for amounts estimated to be uncollectible. At December 31, 2017 and 2016, the provision for
uncollectible reinsurance was $321 million and $300 million, respectively.

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following tables present a listing, at December 31, 2017, of the categories of Chubb's reinsurers:

December 31, 2017

(in millions of U.S. dollars, except for percentages)

Categories
Largest reinsurers
Other reinsurers rated A- or better
Other reinsurers with ratings lower than A- or not rated
Pools
Structured settlements
Captives
Other
Total

Gross Reinsurance
Recoverable on
Loss and Loss
Expenses

Provision for
Uncollectible
Reinsurance

% of Gross
Reinsurance
Recoverable

5,190 $

5,898

681

577

550

2,199

260

15,355 $

321

1.1%

1.0%

11.0%

2.6%

2.9%

0.8%

30.8%

2.1%

Largest Reinsurers
Berkshire Hathaway Insurance Group
HDI Group (Hannover Re)

Categories of Chubb's reinsurers
Largest reinsurers

Lloyd's of London
Munich Re Group

Comprises:

Swiss Re Group

• All groups of reinsurers or captives where the gross recoverable exceeds one

percent of Chubb's total shareholders' equity.

Other reinsurers rated A- or better

• All reinsurers rated A- or better that were not included in the largest reinsurer

category.

Other reinsurers rated lower than A-
or not rated

• All reinsurers rated lower than A- or not rated that were not included in the

largest reinsurer category.

Pools

Structured settlements

Captives

Other

• Related to Chubb's voluntary pool participation and Chubb's mandatory pool

participation required by law in certain states.

• Annuities purchased from life insurance companies to settle claims. Since we
retain ultimate liability in the event that the life company fails to pay, we
reflect the amounts as both a liability and a recoverable/receivable for GAAP
purposes.

• Companies established and owned by our insurance clients to assume a
significant portion of their direct insurance risk from Chubb; structured to
allow clients to self-insure a portion of their reinsurance risk. It generally is
our policy to obtain collateral equal to expected losses. Where appropriate,
exceptions are granted but only with review and approval at a senior officer
level. Excludes captives included in the largest reinsurer category.

• Amounts recoverable that are in dispute or are from companies that are in

supervision, rehabilitation, or liquidation.

The provision for uncollectible reinsurance is principally based on an analysis of the credit quality of the reinsurer and collateral
balances. We establish the provision for uncollectible reinsurance for the Other category based on a case-by-case analysis of
individual situations including the merits of the underlying matter, credit and collateral analysis, and consideration of our
collection experience in similar situations.

F-42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

c) Assumed life reinsurance programs involving minimum benefit guarantees under variable annuity contracts
The following table presents income and expenses relating to GMDB and GLB reinsurance. GLBs include GMIBs as well as
some GMABs originating in Japan.

(in millions of U.S. dollars)

GMDB
Net premiums earned
Policy benefits and other reserve adjustments
GLB
Net premiums earned
Policy benefits and other reserve adjustments
Net realized gains (losses)
Gain (loss) recognized in Net income
Net cash received and other
Net decrease (increase) in liability

Year Ended December 31

2017

2016

2015

49 $

40 $

55 $

45 $

110 $

118 $

105

363

368 $

114 $

121

(203)

(127)

303 $

35 $

(225)

Net realized gains (losses) in the table above include gains (losses) related to foreign exchange and fair value adjustments on
insurance derivatives and exclude gains (losses) on S&P put options and futures used to partially offset the risk in the GLB
reinsurance portfolio. Refer to Note 10 for additional information.

At December 31, 2017 and 2016, the reported liability for GMDB reinsurance was $129 million and $120 million,
respectively. At December 31, 2017 and 2016, the reported liability for GLB reinsurance was $550 million and $853 million,
respectively, which includes a fair value derivative adjustment of $204 million and $559 million, respectively. Reported
liabilities for both GMDB and GLB reinsurance are determined using internal valuation models. Such valuations require
considerable judgment and are subject to significant uncertainty. The valuation of these products is subject to fluctuations
arising from, among other factors, changes in interest rates, changes in equity markets, changes in credit markets, changes in
the allocation of the investments underlying annuitants’ account values, and assumptions regarding future policyholder behavior.
These models and the related assumptions are regularly reviewed by management and enhanced, as appropriate, based upon
improvements in modeling assumptions and availability of updated information, such as market conditions and demographics of
in-force annuities.

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Variable Annuity Net Amount at Risk

The net amount at risk is defined as the present value of future claim payments assuming policy account values and guaranteed
values are fixed at the valuation date (December 31, 2017 and 2016, respectively) and reinsurance coverage ends at the
earlier of the maturity of the underlying variable annuity policy or the reinsurance treaty. In addition, the following assumptions
were used:

(in millions of U.S. dollars,
except for percentages)

Net amount at risk

December 31
2017

December 31
2016

2017
Future claims
discount rate Other assumptions

Total claims at
100% mortality at
December 31, 2017(1)

Reinsurance covering

GMDB Risk Only

GLB Risk Only

279 $

341 4.00% - 4.50% No lapses or withdrawals

691 $

800 4.25% - 4.75% No deaths, lapses or withdrawals

Mortality according to 100% of
the Annuity 2000 mortality table

Annuitization at a frequency most
disadvantageous to Chubb(2)

Claim calculated using interest
rates in line with rates used to
calculate reserve

Both Risks: (3)

GMDB $

81 $

88 4.25% - 4.75% No lapses or withdrawals

GLB

392 $

464 4.25% - 4.75% Annuitization at a frequency most

disadvantageous to Chubb(2)

Mortality according to 100% of
the Annuity 2000 mortality table

Claim calculated using interest
rates in line with rates used to
calculate reserve

(1) Takes into account all applicable reinsurance treaty claim limits.
(2) Annuitization at a level that maximizes claims taking into account the treaty limits.
(3) Covering both the GMDB and GLB risks on the same underlying policyholders.

189

N/A

The average attained age of all policyholders for all risk categories above, weighted by the guaranteed value of each reinsured
policy, is approximately 70 years.

6. Goodwill and Other intangible assets

At December 31, 2017 and 2016, Goodwill was $15.5 billion and $15.3 billion, respectively, and Other intangible assets were
$6.5 billion and $6.8 billion, respectively.

a) Goodwill
The following table presents a roll-forward of Goodwill by segment:

(in millions of U.S. dollars)

North
America
Commercial
P&C
Insurance

North
America
Personal
P&C
Insurance

North
America
Agricultural
Insurance

Overseas
General
Insurance

Global
Reinsurance

Life
Insurance

Chubb
Consolidated

Balance at December 31, 2015

1,203 $

196 $

134 $

2,078 $

365 $

820 $

4,796

Acquisition of Chubb Corp

5,714

2,025

Foreign exchange revaluation and other

—

2,775

(36)

—

10,514

Balance at December 31, 2016

Foreign exchange revaluation and other

Balance at December 31, 2017

6,961 $

2,235 $

134 $

4,817 $

365 $

820 $

15,332

—

187

—

209

6,976 $

2,240 $

134 $

5,004 $

365 $

822 $

15,541

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

b) Other intangible assets
The majority of the Other intangible assets balance at December 31, 2017 relates to the Chubb Corp acquisition and
comprised of $3.5 billion that are subject to amortization, principally Agency distribution relationships and renewal rights, and
$3.0 billion that are not subject to amortization, principally trademarks. This compares to $3.8 billion and $3.0 billion at
December 31, 2016, respectively.

Amortization of purchased intangibles
Amortization expense related to purchased intangibles amounted to $260 million, $19 million, and $171 million for the years
ended December 31, 2017, 2016, and 2015, respectively. The increase in amortization expense of purchased intangibles
primarily reflects higher intangible amortization expense related to agency distribution relationships and renewal rights and
lower amortization benefit from the fair value adjustment on Unpaid losses and loss expenses, both related to the Chubb Corp
acquisition.

The following table presents, as of December 31, 2017, the expected estimated pre-tax amortization expense (benefit) of
purchased intangibles, at current foreign currency exchange rates, for the next five years:

For the Year Ending December 31
(in millions of U.S. dollars)

Agency
distribution
relationships and
renewal rights

Associated with the Chubb Corp Acquisition
Fair value
adjustment on
Unpaid losses and
loss expense (1)

Total

Internally
developed
technology

Other
intangible
assets

Total
Amortization
of purchased
intangibles

2018

2019

2020

2021

2022

Total

325 $

32 $

(102) $

255 $

83 $

282

241

218

198

—

(63)

(36)

(20)

(14)

219

205

198

184

338

294

272

259

241

1,264 $

32 $

(235) $

1,061 $

343 $

1,404

(1) In connection with the Chubb Corp acquisition, we recorded an increase to Unpaid losses and loss expenses acquired to adjust the carrying value of Chubb Corp's historical

unpaid losses and loss expenses to fair value as of the acquisition date. This fair value adjustment amortizes through Amortization of purchased intangibles on the
Consolidated statements of operations over a range of 5 to 17 years. The balance of the fair value adjustment on Unpaid losses and loss expense at December 31, 2017 was
$309 million. Refer to Note 1(h) for additional information.

c) VOBA
The following table presents a roll-forward of VOBA:

(in millions of U.S. dollars)

Balance, beginning of year

Amortization of VOBA (1)

Foreign exchange revaluation

Balance, end of year

(1) Recognized in Policy acquisition costs in the Consolidated statements of operations.

2017

2016

355 $

395 $

(35)

(41)

326 $

355 $

2015

466

(42)

(29)

395

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents, as of December 31, 2017, the expected estimated pre-tax amortization expense related to VOBA for
the next five years:

For the Year Ending December 31

(in millions of U.S. dollars)

2018

2019

2020

2021

2022

Total

7. Unpaid losses and loss expenses

VOBA

126

Chubb establishes reserves for the estimated unpaid ultimate liability for losses and loss expenses under the terms of its policies
and agreements. Reserves include estimates for both claims that have been reported and for IBNR claims, and include
estimates of expenses associated with processing and settling these claims. Reserves are recorded in Unpaid losses and loss
expenses in the consolidated balance sheets. While we believe that our reserves for unpaid losses and loss expenses at
December 31, 2017 are adequate, new information or trends may lead to future developments in incurred loss and loss
expenses significantly greater or less than the reserves provided. Any such revisions could result in future changes in estimates
of losses or reinsurance recoverable and would be reflected in our results of operations in the period in which the estimates are
changed.

The following table presents a reconciliation of Unpaid losses and loss expenses:

(in millions of U.S. dollars)
Gross unpaid losses and loss expenses, beginning of year
Reinsurance recoverable on unpaid losses (1)
Net unpaid losses and loss expenses, beginning of year
Acquisition of subsidiaries
Total

Net losses and loss expenses incurred in respect of losses occurring in:

Current year
Prior years (2)
Total

Net losses and loss expenses paid in respect of losses occurring in:

Current year
Prior years
Total
Foreign currency revaluation and other
Net unpaid losses and loss expenses, end of year
Reinsurance recoverable on unpaid losses (1)
Gross unpaid losses and loss expenses, end of year

Year Ended December 31

2017

2016

2015

60,540 $

37,303 $

38,315

(12,708)

47,832

—

47,832

19,391

(937)

18,454

6,575

10,873

17,448

327

49,165

14,014

(10,741)

26,562

21,402

47,964

17,256

(1,204)

16,052

5,899

9,816

15,715

(469)

47,832

12,708

63,179 $

60,540 $

(11,307)

27,008

417

27,425

10,030

(546)

9,484

4,053

5,612

9,665

(682)

26,562

10,741

37,303

(1) Net of provision for uncollectible reinsurance.
(2) Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments, and earned premiums

totaling $108 million, $69 million, and nil, for 2017, 2016, and 2015, respectively.

The increase in gross and net unpaid losses and loss expenses in 2017 primarily reflects the significant catastrophe events,
principally from California wildfires, hurricanes Harvey, Irma, and Maria and the earthquakes in Mexico. The increase in gross

F-46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

and net unpaid losses and loss expenses in 2016 reflects the acquisition of Chubb Corp.

The loss development tables under section c) below, present Chubb’s historical incurred and paid claims development by broad
product line through December 31, 2017, net of reinsurance, as well as the cumulative number of reported claims, IBNR
balances, and other supplementary information.

The following table presents a reconciliation of the loss development tables to the liability for unpaid losses and loss expenses in
the consolidated balance sheet:

Reconciliation of Reserve Balances to Liability for Unpaid Loss and Loss Expenses

(in millions of U.S. dollars)

Presented in the loss development tables:

North America Commercial P&C Insurance — Workers' Compensation

North America Commercial P&C Insurance — Liability

North America Commercial P&C Insurance — Other Casualty

North America Commercial P&C Insurance — Non-Casualty

North America Personal P&C Insurance

Overseas General Insurance — Casualty

Overseas General Insurance — Non-Casualty

Global Reinsurance — Casualty

Global Reinsurance — Non-Casualty

Excluded from the loss development tables:

Other

Net unpaid loss and allocated loss adjustment expense

Ceded unpaid loss and allocated loss adjustment expense:

North America Commercial P&C Insurance — Workers' Compensation

North America Commercial P&C Insurance — Liability

North America Commercial P&C Insurance — Other Casualty

North America Commercial P&C Insurance — Non-Casualty

North America Personal P&C Insurance

Overseas General Insurance — Casualty

Overseas General Insurance — Non-Casualty

Global Reinsurance — Casualty

Global Reinsurance — Non-Casualty

Other

Ceded unpaid loss and allocated loss adjustment expense

Unpaid loss and loss expense on other than short-duration contracts (1)

Unpaid unallocated loss adjustment expenses

Unpaid losses and loss expenses
(1) Primarily includes the claims reserve of our international A&H business and Life Insurance segment reserves.

F-47

December 31, 2017

8,873

16,631

1,789

2,398

2,421

6,026

2,549

1,340

371

4,302

46,700

1,737

4,133

813

1,336

503

2,550

1,269

142

1,628

14,187

810

1,482

63,179

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Business excluded from the loss development tables
“Other” shown in the reconciliation table above comprises businesses excluded from the loss development tables below:
• North America Agricultural Insurance segment business, which is short-tailed with the majority of the liabilities expected to

•

•
•

be resolved in the ensuing twelve months;
Corporate segment business, which includes run-off liabilities such as asbestos and environmental and other mass tort
exposures and which impact accident years older than those shown in the exhibits below;
Life Insurance segment business, which is generally written using long-duration contracts; and
Certain subsets of our business due to data limitations or unsuitability to the development table presentation, including:
We underwrite loss portfolio transfers at various times; by convention, all premium and losses associated with
these transactions are recorded to the policy period of the transaction, even though the accident dates of the
claims covered may be a decade or more in the past. We also underwrite certain high attachment, high limit,
multiple-line and excess of aggregate coverages for large commercial clients. Changes in incurred loss and cash
flow patterns are volatile and sufficiently different from those of typical insureds. This category includes the loss
portfolio transfer of Fireman’s Fund personal lines run-off liabilities and Alternative Risk Solutions business within
the North America Commercial P&C segment;
2015 and prior paid history on a subset of previously acquired international businesses, within the Overseas
General Insurance segment, due to limitations on the data prior to the acquisition;
Reinsurance recoverable bad debt;
Purchase accounting adjustments related to unpaid losses and loss expenses for Chubb Corp.

a) Description of Reserving Methodologies
Our recorded reserves represent management's best estimate of the provision for unpaid claims as of the balance sheet date.
Management's best estimate is developed after collaboration with actuarial, underwriting, claims, legal, and finance
departments and culminates with the input of reserve committees. Each business unit reserve committee includes the
participation of the relevant parties from actuarial, finance, claims, and unit senior management and has the responsibility for
finalizing, recommending and approving the estimate to be used as management's best estimate. Reserves are further reviewed
by Chubb's Chief Actuary and senior management. The objective of such a process is to determine a single estimate that we
believe represents a better estimate than any other and which is viewed by management to be the best estimate of ultimate
loss settlements.

This estimate is based on a combination of exposure and experience-based actuarial methods (described below) and other
considerations such as claims reviews, reinsurance recovery assumptions and/or input from other knowledgeable parties such as
underwriting. Exposure-based methods are most commonly used on relatively immature origin years (i.e., the year in which the
losses were incurred — “accident year” or “report year”), while experience-based methods provide a view based on the
projection of loss experience that has emerged as of the valuation date. Greater reliance is placed upon experience-based
methods as the pool of emerging loss experience grows and where it is deemed sufficiently credible and reliable as the basis for
the estimate. In comparing the held reserve for any given origin year to the actuarial projections, judgment is required as to the
credibility, uncertainty and inherent limitations of applying actuarial techniques to historical data to project future loss
experience. Examples of factors that impact such judgments include, but are not limited to, the following:

•
•
•
•
•
•
•
•
•

nature and complexity of underlying coverage provided and net limits of exposure provided;
segmentation of data to provide sufficient homogeneity and credibility for loss projection methods;
extent of credible internal historical loss data and reliance upon industry information as required;
historical variability of actual loss emergence compared with expected loss emergence;
extent of emerged loss experience relative to the remaining expected period of loss emergence;
rate monitor information for new and renewal business;
facts and circumstances of large claims;
impact of applicable reinsurance recoveries; and
nature and extent of underlying assumptions.

We have actuarial staff within each of our business units who analyze loss reserves (including loss expenses) and regularly
project estimates of ultimate losses and the corresponding indications of the required IBNR reserve. Our reserving approach is a
comprehensive ground-up process using data at a detailed level that reflects the specific types and coverages of the diverse
products written by our various operations. The data presented in this disclosure was prepared on a more aggregated basis and
with a focus on changes in incurred loss estimates over time as well as associated cash flows. We note that data prepared on

F-48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

this basis may not demonstrate the full spectrum of characteristics that are evident in the more detailed level studied internally.

We perform an actuarial reserve review for each product line at least once a year. For most product lines, one or more standard
actuarial reserving methods may be used to determine estimates of ultimate losses and loss expenses, and from these
estimates, a single actuarial central estimate is selected. The actuarial central estimate is an input to the reserve committee
process described above. For the few product lines that do not lend themselves to standard actuarial reserving methods,
appropriate techniques are applied to produce the actuarial central estimates. For example, run-off asbestos and environmental
liability estimates are better suited to the application of account-specific exposure-based analyses to best evaluate their
associated aggregate reserve levels.

b) Standard actuarial reserving methods
Standard actuarial reserving methods include, but are not limited to, expected loss ratio, paid and reported loss development,
and Bornhuetter-Ferguson methods. A general description of these methods is provided below. In addition to these standard
methods, depending upon the product line characteristics and available data, we may use other recognized actuarial methods
and approaches. Implicit in the standard actuarial methods that we generally utilize is the need for two fundamental
assumptions: first, the pattern by which losses are expected to emerge over time for each origin year, and second the expected
loss ratio for each origin year.

The expected loss ratio for any particular origin year is selected after consideration of a number of factors, including historical
loss ratios adjusted for rate changes, premium and loss trends, industry benchmarks, the results of policy level loss modeling at
the time of underwriting, and/or other more subjective considerations for the product line (e.g., terms and conditions) and
external environment as noted above. The expected loss ratio for a given origin year is initially established at the start of the
origin year as part of the planning process. This analysis is performed in conjunction with underwriters and management. The
expected loss ratio method arrives at an ultimate loss estimate by multiplying the expected ultimate loss ratio by the
corresponding premium base. This method is most commonly used as the basis for the actuarial central estimate for immature
origin periods on product lines where the actual paid or reported loss experience is not yet deemed sufficiently credible to serve
as the principal basis for the selection of ultimate losses. The expected loss ratio for a given origin year may be modified over
time if the underlying assumptions differ from the original assumptions (e.g., the assessment of prior year loss ratios, loss trend,
rate changes, actual claims, or other information).

Our selected paid and reported development patterns provide a benchmark against which the actual emerging loss experience
can be monitored. Where possible, development patterns are selected based on historical loss emergence by origin year. For
product lines where the historical data is viewed to have low statistical credibility, the selected development patterns also reflect
relevant industry benchmarks and/or experience from similar product lines written elsewhere within Chubb. This most
commonly occurs for relatively new product lines that have limited historical data or for high severity/low frequency portfolios
where our historical experience exhibits considerable volatility and/or lacks credibility. The paid and reported loss development
methods convert the selected loss emergence pattern to a set of multiplicative factors which are then applied to actual paid or
reported losses to arrive at an estimate of ultimate losses for each period. Due to their multiplicative nature, the paid and
reported loss development methods will leverage differences between actual and expected loss emergence. These methods tend
to be utilized for more mature origin periods and for those portfolios where the loss emergence has been relatively consistent
over time.

The Bornhuetter-Ferguson method is a combination of the expected loss ratio method and the loss development method, where
the loss development method is given more weight as the origin year matures. This approach allows a logical transition between
the expected loss ratio method which is generally utilized at earlier maturities and the loss development methods which are
typically utilized at later maturities. We usually apply this method using reported loss data although paid data may also be
used.

Short-tail business
Short-tail business generally describes product lines for which losses are typically known and paid shortly after the loss actually
occurs. This would include, for example, most property, personal accident, and automobile physical damage policies that we
write. Due to the short reporting and development pattern for these product lines, the uncertainty associated with our estimate
of ultimate losses for any particular accident period diminishes relatively quickly as actual loss experience emerges. We typically
assign credibility to methods that incorporate actual loss emergence, such as the paid and reported loss development and
Bornhuetter-Ferguson methods, sooner than would be the case for long-tail lines at a similar stage of development for a given
origin year. The reserving process for short-tail losses arising from catastrophic events typically involves an assessment by the
claims department, in conjunction with underwriters and actuaries, of our exposure and estimated losses immediately following

F-49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

an event and then subsequent revisions of the estimated losses as our insureds provide updated actual loss information.

Long-tail business
Long-tail business describes lines of business for which specific losses may not be known/reported for some period and for
which claims can take significant time to settle/close. This includes most casualty lines such as general liability, D&O, and
workers' compensation. There are various factors contributing to the uncertainty and volatility of long-tail business. Among these
are:

• The nature and complexity of underlying coverage provided and net limits of exposure provided;
• Our historical loss data and experience is sometimes too immature and lacking in credibility to rely upon for reserving
purposes. Where this is the case, in our reserve analysis we may utilize industry loss ratios or industry benchmark
development patterns that we believe reflect the nature and coverage of the underwritten business and its future
development, where available. For such product lines, actual loss experience may differ from industry loss statistics as well
as loss experience for previous underwriting years;

• The difficulty in estimating loss trends, claims inflation (e.g., medical and judicial) and underlying economic conditions;
• The need for professional judgment to estimate loss development patterns beyond that represented by historical data using

supplemental internal or industry data, extrapolation, or a blend of both;

• The need to address shifts in mix over time when applying historical paid and reported loss development patterns from
older origin years to more recent origin years. For example, changes over time in the processes and procedures for
establishing case reserves can distort reported loss development patterns or changes in ceded reinsurance structures by
origin year can alter the development of paid and reported losses;

• Loss reserve analyses typically require loss or other data be grouped by common characteristics in some manner. If data
from two combined lines of business exhibit different characteristics, such as loss payment patterns, the credibility of the
reserve estimate could be affected. Additionally, since casualty lines of business can have significant intricacies in the terms
and conditions afforded to the insured, there is an inherent risk as to the homogeneity of the underlying data used in
performing reserve analyses; and

• The applicability of the price change data used to estimate ultimate loss ratios for most recent origin years.

As described above, various factors are considered when determining appropriate data, assumptions, and methods used to
establish the loss reserve estimates for long-tail product lines. These factors may also vary by origin year for given product lines.
The derivation of loss development patterns from data and the selection of a tail factor to project ultimate losses from actual
loss emergence require considerable judgment, particularly with respect to the extent to which historical loss experience is relied
upon to support changes in key reserving assumptions.

c) Loss Development Tables
The tables were designed to present business with similar risk characteristics which exhibit like development patterns and
generally similar trends, in order to provide insight into the nature, amount, timing and uncertainty of cash flows related to our
claims liabilities.

Each table follows a similar format and reflects the following:

• The incurred loss triangle includes both reported case reserves and IBNR liabilities.
• Both the incurred and paid loss triangles include allocated loss adjustment expense (i.e., defense and investigative costs
particular to individual claims) but exclude unallocated loss adjustment expense (i.e., the costs associated with internal
claims staff and third-party administrators).

• The amounts in both triangles for the years ended December 31, 2008, to December 31, 2016 and average historical claim

duration as of December 31, 2017, are presented as supplementary information.

• All data presented in the triangles is net of reinsurance recoverables.
• The IBNR reserves shown to the right of each incurred loss development exhibit reflect the net IBNR recorded as of

December 31, 2017.

• The tables are presented retrospectively with respect to acquisitions where these are material and doing so is practicable.
Most notably, the Chubb Corp acquisition is presented retrospectively. The unaudited consolidated data is presented solely
for informational purposes and is not necessarily indicative of the consolidated data that might have been observed had the
transactions been completed prior to the date indicated.

Historical dollar amounts are presented in this footnote on a constant-currency basis, which is achieved by assuming constant
foreign exchange rates for all periods in the loss triangles, translating prior period amounts using the same local currency

F-50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

exchange rates as the current year end. The impact of this conversion is to show the change between periods exclusive of the
effect of fluctuations in exchange rates, which would otherwise distort the change in incurred loss and cash flow patterns
shown. The change in incurred loss shown will differ from other U.S. GAAP disclosures of incurred prior period reserve
development amounts, which include the effect of fluctuations in exchanges rates.

We provided guidance above on key assumptions that should be considered when reviewing this disclosure and information
relating to how loss reserve estimates are developed. We believe the information provided in the “Loss Development Tables”
section of the disclosure is of limited use for independent analysis or application of standard actuarial estimations.

Cumulative Number of Reported Claims
Reported claim counts, on a cumulative basis, are provided to the far right of each paid loss development table. We generally
consider a reported claim to be one claim per coverage per claimant. We exclude claims closed without payment. Use of the
presented claim counts in analysis of company experience has significant limitations, including:

• High deductible workers' compensation claim counts include claims below the applicable policy deductible.
• Professional liability and certain other lines have a high proportion of claims reported which will be closed without any

payment; shifts in total reported counts may not meaningfully impact reported and ultimate loss experience.

• Claims for certain events and/or product lines, such as portions of assumed reinsurance and A&H business, are not reported
on an individual basis, but rather in bulk and thus not available for inclusion in this disclosure. For certain A&H business,
where bulk reporting affected only the oldest few accident years, presented claim counts for these years were estimated.

• Each of the segments below typically has a mixture of primary and excess experience which has shifted over time.

Reported claim counts include open claims which have case reserves and exclude claims that have been incurred but not reported.
As such the reported claims are consistent with reported losses, which can be calculated by subtracting incurred but not reported
losses from incurred losses. Reported claim counts are inconsistent with losses in the incurred loss triangle, which include incurred
but not reported losses, and are also inconsistent with losses in the paid loss triangle, which exclude case reserves.

North America Commercial P&C Insurance — Workers' Compensation — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented.

This product line has a substantial geographic spread and a broad mix across industries. Types of coverage include risk management
business predominantly with high deductible policies, loss sensitive business (i.e., retrospectively-rated policies), business fronted
for captives, as well as excess and primary guaranteed cost coverages.

The triangle below shows all loss and allocated expense development for the workers' compensation product line. In our prior
period development disclosure, we exclude any loss development where there is a directly related premium adjustment. For
workers' compensation, changes in the exposure base due to payroll audits will drive changes in ultimate losses. In addition, we
record involuntary pool assumptions (premiums and losses) on a lagged basis. Both of these items will influence the
development in the triangle, particularly the first prior accident year, and are included in the reconciliation table presented on
page F-65.

F-51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Commercial P&C Insurance — Workers' Compensation — Long-tail (continued)
Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 1,084 $ 1,042 $ 1,043 $ 1,037 $ 1,036 $ 1,010 $ 1,009 $ 1,004 $ 986 $

993 $

1,029

998

997

990

980

977

966

972

1,049

1,037

1,050

1,065

1,064

1,052

1,028

1,037

1,030

1,050

1,046

1,011

1,109

1,049

1,030

1,108

1,207

1,053

1,040

1,122

1,201

1,282

1,022

1,011

1,127

1,217

1,259

1,367

965

1,020

1,012

989

1,085

1,214

1,271

1,367

1,411

$ 11,327

214

233

262

294

326

368

553

631

806

1,080

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 124 $ 275 $ 371 $ 439 $ 503 $ 546 $ 578 $ 607 $ 632 $

107

258

123

348

300

119

416

411

294

111

475

493

411

271

107

519

551

484

365

286

113

550

592

533

436

422

295

116

597

617

567

486

506

410

301

122

651

617

641

595

532

553

484

418

326

120

333

282

304

287

288

300

337

339

310

307

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

$ 4,937

December 31, 2017

2,483

8,873

December 31, 2017

(35)

(108)

F-52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Commercial P&C Insurance — Workers' Compensation — Long-tail (continued)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

10%

16%

10%

North America Commercial P&C Insurance — Liability — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented.

This line consists of primary and excess liability exposures, including medical liability, and professional lines, including directors
and officers (D&O) liability, errors and omissions (E&O) liability, employment practices liability (EPL), fidelity bonds, and
fiduciary liability.

The primary and excess liability business represents the largest part of these exposures. The former includes both monoline and
commercial package liability. The latter includes a substantial proportion of commercial umbrella, excess and high excess
business, where loss activity can produce significant volatility in the loss triangles at later ages within an accident year (and
sometimes across years) due to the size of the limits afforded and the complex nature of the underlying losses.

This line includes management and professional liability products provided to a wide variety of clients, from national accounts to
small firms along with private and not-for-profit organizations, distributed through brokers, agents, wholesalers and MGAs.
Many of these coverages, particularly D&O and E&O, are typically written on a claims-made form. While most of the coverages
are underwritten on a primary basis, there are significant amounts of excess exposure with large policy limits.

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 3,792 $ 3,823 $ 3,812 $ 3,791 $ 3,652 $ 3,412 $ 3,352 $ 3,278 $ 3,174 $ 3,157 $

3,798

3,783

3,578

3,770

3,583

3,500

3,743

3,601

3,585

3,552

3,642

3,559

3,629

3,628

3,546

3,392

3,419

3,664

3,613

3,541

3,535

3,316

3,250

3,593

3,564

3,542

3,585

3,559

3,244

3,128

3,498

3,524

3,532

3,674

3,708

3,533

3,103

3,107

3,383

3,426

3,430

3,717

3,818

3,594

3,386

$ 34,121

245

250

423

589

856

1,090

1,526

1,941

2,381

2,994

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

F-53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Commercial P&C Insurance — Liability — Long-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 147 $ 580 $1,110 $ 1,643 $ 1,992 $2,323 $ 2,558 $ 2,657 $2,753 $ 2,836

135

587

126

1,160

611

160

1,672

1,108

652

166

2,019

1,559

1,209

656

130

2,357

1,893

1,805

1,172

548

164

2,545

2,259

2,214

1,680

1,192

679

138

2,678

2,426

2,476

2,092

1,597

1,250

605

171

2,730

2,527

2,659

2,326

2,007

1,804

1,206

663

161

$18,919

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

December 31, 2017

1,429

16,631

December 31, 2017

(154)

(434)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

14%

17%

15%

12%

North America Commercial P&C Insurance — Other Casualty — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented.

This product line consists of the remaining commercial casualty coverages such as automobile liability and aviation. There is
also a small portion of commercial multi-peril (CMP) business in accident years 2014 and prior. The paid and reported data are
impacted by some catastrophe loss activity primarily on the CMP exposures just noted.

F-54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Commercial P&C Insurance — Other-Casualty — Long-tail (continued)

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 693 $ 733 $ 700 $ 661 $ 644 $ 647 $ 643 $ 646 $ 641 $

637 $

594

584

610

550

604

577

531

598

586

632

488

543

578

604

526

454

503

545

575

530

592

447

475

530

559

522

581

486

445

477

521

518

515

579

469

503

441

489

513

517

468

594

501

494

531

$ 5,185

147

191

249

387

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 144 $ 342 $ 446 $ 520 $ 566 $ 591 $ 602 $ 610 $ 618 $

206

287

236

337

322

235

374

364

341

223

402

392

400

319

197

414

434

437

386

271

220

423

444

461

435

348

317

137

617

428

449

466

470

385

391

215

146

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

F-55

$ 3,633

December 31, 2017

237

1,789

December 31, 2017

—

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Commercial P&C Insurance — Other-Casualty — Long-tail (continued)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

15%

26%

17%

12%

—%

North America Commercial P&C Insurance — Non-Casualty — Short-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented.

This product line represents first party commercial product lines that are short-tailed in nature, such as property, inland marine,
ocean marine, surety and A&H. There is a wide diversity of products, primary and excess coverages, and policy sizes. During
this ten-year period, this product line was also impacted by natural catastrophes mainly in the 2008, 2012, and 2017 accident
years.

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 1,999 $ 1,941 $ 1,916 $ 1,901 $ 1,890 $ 1,881 $ 1,877 $ 1,865 $ 1,863 $ 1,859 $

1,310

1,307

1,507

1,251

1,543

1,963

1,222

1,466

1,938

2,034

1,205

1,430

1,881

1,918

1,434

1,198

1,428

1,859

1,884

1,424

1,647

1,198

1,420

1,839

1,866

1,337

1,663

1,737

1,195

1,416

1,843

1,861

1,360

1,581

1,746

1,911

1,194

1,410

1,838

1,848

1,340

1,561

1,650

1,888

2,641

$ 17,229

168

1,089

F-56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Commercial P&C Insurance — Non-Casualty — Short-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 965 $ 1,622 $ 1,744 $ 1,794 $ 1,823 $ 1,832 $ 1,838 $ 1,847 $ 1,848 $ 1,851

620

1,035

724

1,125

1,223

939

1,149

1,323

1,573

715

1,163

1,359

1,718

1,577

651

1,171

1,384

1,777

1,698

1,138

820

1,179

1,393

1,787

1,766

1,237

1,373

726

1,181

1,396

1,811

1,795

1,285

1,484

1,343

846

1,181

1,397

1,816

1,822

1,311

1,505

1,488

1,504

979

$ 14,854

2017

999

1,125

1,059

1,053

1,037

1,074

1,102

1,173

1,293

1,175

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

December 31, 2017

2,398

December 31, 2017

—

(188)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

46%

37%

—%

North America Personal P&C Insurance — Short-tail
Chubb provides personal lines coverages for high-net-worth individuals and families in North America including homeowners,
automobile, valuable articles (including fine art), umbrella liability, and recreational marine insurance offered through
independent regional agents and brokers. A portfolio acquired from Fireman’s Fund is presented on a prospective basis
beginning in May of accident year 2015. Reserves associated with prior accident periods were acquired through a loss portfolio
transfer, which does not allow for a retrospective presentation. During this ten-year period, this segment was also impacted by
natural catastrophes, mainly in 2008, 2012, and 2017 accident years.

F-57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Personal P&C Insurance — Short-tail (continued)

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 1,779 $ 1,779 $ 1,749 $ 1,724 $ 1,695 $ 1,677 $ 1,670 $ 1,661 $ 1,661 $ 1,659 $

1,611

1,598

1,870

1,568

1,878

2,208

1,554

1,855

2,210

2,185

1,545

1,838

2,185

2,183

1,860

1,538

1,834

2,173

2,183

1,888

2,205

1,538

1,830

2,164

2,191

1,896

2,206

2,494

1,534

1,825

2,160

2,185

1,899

2,192

2,549

2,439

1,533

1,822

2,159

2,186

1,924

2,145

2,560

2,542

3,034

$21,564

126

248

725

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

Years Ended December 31

(in millions of U.S. dollars)

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 975 $ 1,409 $ 1,521 $ 1,586 $ 1,622 $ 1,638 $ 1,644 $ 1,647 $ 1,651 $ 1,651

887

1,236

1,153

1,347

1,522

1,360

1,439

1,670

1,835

1,176

1,486

1,729

1,971

1,806

1,043

1,503

1,772

2,051

1,957

1,504

1,310

1,513

1,793

2,105

2,063

1,687

1,764

1,499

1,521

1,805

2,129

2,117

1,786

1,925

2,083

1,453

1,523

1,811

2,138

2,149

1,843

2,034

2,270

2,051

1,698

$ 19,168

139

125

149

168

173

126

135

139

140

123

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

December 31, 2017

2,421

December 31, 2017

(10)

F-58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

North America Personal P&C Insurance — Short-tail (continued)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years
Percentage

1
58%

2
24%

3
7%

4
5%

5
3%

6
1%

7
1%

8
—%

9
—%

10
—%

Overseas General Insurance — Casualty — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented.

This product line is comprised of D&O liability, E&O liability, financial institutions (including crime/fidelity coverages), and non-
U.S. general liability as well as aviation and political risk. Exposures are located around the world, including Europe, Latin
America, and Asia. Approximately 40 percent of Chubb International’s business is generated by European accounts.
There is some U.S. exposure in Casualty from multinational accounts. The financial lines coverages are typically written on a
claims-made form, while general liability coverages are typically on an occurrence basis and comprised of a mix of primary and
excess businesses.

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 1,220 $ 1,334 $ 1,423 $ 1,444 $ 1,453 $ 1,408 $ 1,336 $ 1,315 $ 1,330 $ 1,281 $

1,284

1,425

1,231

1,474

1,311

1,272

1,485

1,358

1,277

1,311

1,482

1,430

1,270

1,281

1,289

1,365

1,262

1,348

1,284

1,295

1,257

1,312

1,176

1,367

1,284

1,366

1,223

1,256

1,183

1,109

1,363

1,330

1,377

1,324

1,227

1,202

1,178

1,094

1,345

1,270

1,388

1,353

1,333

1,229

$12,673

157

279

314

506

542

749

968

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

F-59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Overseas General Insurance — Casualty — Long-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 121 $ 306 $ 472 $ 642 $ 790 $ 895 $ 971 $ 1,029 $ 1,083 $ 1,116

123

341

109

524

277

667

481

250

763

629

400

254

824

740

534

443

272

117

896

831

638

598

432

299

993

883

719

714

584

481

296

127

1,020

938

795

856

727

614

504

328

$ 6,997

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

December 31, 2017

350

6,026

December 31, 2017

(13)

(68)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

15%

14%

12%

10%

Overseas General Insurance — Non-Casualty — Short-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented. In addition, the Overseas General segment
disclosure has been enhanced to include some previously excluded international business as data became available. This
includes historical experience for most acquisitions. The added business is principally Non-Casualty; personal automobile,
property and surety lines in Latin America and Asia Pacific regions.

This product line is comprised of commercial fire, marine (predominantly cargo), surety, personal automobile (in Latin America,
Asia Pacific and Japan), personal cell phones, personal residential (including high net worth), energy and construction. Latin
America and Europe each make up about 35 percent of the Chubb International non-casualty book. In general, these lines have
relatively stable payment and reporting patterns although they are impacted by natural catastrophes mainly in the 2008, 2010,
2011, and 2017 accident years.

F-60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Overseas General Insurance — Non-Casualty — Short-tail (continued)

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 1,609 $ 1,608 $ 1,563 $ 1,547 $ 1,553 $ 1,527 $ 1,524 $ 1,519 $ 1,508 $ 1,504 $

1,564

1,534

1,713

1,446

1,734

1,950

1,415

1,705

2,035

1,775

1,395

1,693

1,978

1,764

1,868

1,377

1,687

1,939

1,723

1,859

1,975

1,377

1,673

1,920

1,667

1,787

2,048

2,111

1,366

1,660

1,908

1,661

1,739

1,985

2,243

2,164

1,366

1,643

1,901

1,650

1,730

1,959

2,195

2,148

2,349

$18,445

157

307

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 646 $ 1,218 $ 1,360 $ 1,428 $ 1,451 $ 1,461 $ 1,469 $ 1,477 $ 1,477 $ 1,484

602

1,095

698

1,233

1,276

793

1,300

1,480

1,520

716

1,324

1,543

1,728

1,284

738

1,335

1,583

1,786

1,479

1,340

800

1,341

1,596

1,817

1,539

1,541

1,497

901

1,344

1,603

1,832

1,562

1,574

1,715

1,638

1,083

1,343

1,604

1,841

1,572

1,612

1,782

1,873

1,752

1,098

$15,961

539

518

561

579

600

622

594

627

637

616

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

F-61

December 31, 2017

2,549

December 31, 2017

(3)

(141)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Overseas General Insurance — Non-Casualty — Short-tail (continued)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

44%

35%

11%

—%

— %

—%

Global Reinsurance
Chubb analyzes its Global Reinsurance business on a treaty year basis rather than on an accident year basis. Treaty year data
was converted to an accident year basis for the purposes of this disclosure. Mix shifts are an important consideration in these
product line groupings. As proportional business and excess of loss business have different earning and loss reporting and
payment patterns, this change in mix will affect the cash flow patterns across the accident years. In addition, the shift from
excess to proportional business over time will make the cash flow patterns of older and more recent years difficult to compare.
In general, the proportional business will pay out more quickly than the excess of loss business, as such, using older years
development patterns may overstate the ultimate loss estimates in more recent years.

Global Reinsurance — Casualty — Long-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented.

This product line includes proportional and excess coverages in general, automobile liability, professional liability, medical
malpractice, workers' compensation and aviation, with exposures located around the world. In general, reinsurance exhibits less
stable development patterns than primary business. In particular general casualty reinsurance and excess coverages are long-
tailed and can be very volatile.

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 399 $ 420 $ 439 $ 431 $ 428 $ 407 $ 408 $ 404 $ 401 $

399 $

319

351

401

363

421

409

370

432

416

387

366

443

431

383

321

347

432

434

391

327

333

331

426

429

394

330

334

285

320

416

419

379

330

340

289

224

316

402

415

372

331

343

300

228

214

$ 3,320

121

F-62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Global Reinsurance — Casualty — Long-tail (continued)

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Reported Claims
(in thousands)

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

33 $

77 $ 131 $ 176 $ 220 $ 253 $ 277 $ 295 $ 305 $

116

125

154

179

146

187

221

195

167

209

249

236

222

143

227

274

267

261

186

185

241

292

291

292

222

218

159

315

256

307

311

308

242

249

191

113

2017

1.209

0.868

0.795

0.660

0.472

0.337

0.400

0.304

0.258

0.088

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

$ 2,339

December 31, 2017

359

1,340

December 31, 2017

(60)

(72)

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

19%

20%

12%

11%

Global Reinsurance — Non-Casualty — Short-tail
During the year ended December 31, 2017, we refined our loss development groupings based on the similarity of loss payout
characteristics. The new groupings were applied consistently to all years presented.

This product line includes property, property catastrophe, marine, credit/surety, A&H and energy. This product line is impacted
by natural catastrophes, particularly in the 2008, 2011 and 2017 years. Of the non-catastrophe book, the mixture of business
varies by year with approximately 72 percent of loss on proportional treaties in Treaty Year 2008 and after. This percentage has
increased over time with the proportion being approximately 60 percent from 2008 to 2012 growing to an average of 84
percent from 2013 to 2017, with the remainder being written on an excess of loss basis.

F-63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Global Reinsurance — Non-Casualty — Short-tail (continued)

Net Incurred Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Years Ended December 31

Unaudited

December 31
2017

Net IBNR
Reserves

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

$ 316 $ 310 $ 301 $ 292 $ 286 $ 286 $ 287 $ 284 $ 285 $

286 $

141

172

200

152

235

274

150

224

275

232

144

218

272

210

163

141

222

262

200

160

163

139

224

263

191

149

179

146

139

225

264

189

143

179

154

182

139

225

264

187

144

182

161

188

396

$ 2,172

Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses

Years Ended December 31

(in millions of U.S. dollars)

Unaudited

Accident
Year

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

79 $ 177 $ 228 $ 260 $ 274 $ 276 $ 278 $ 280 $ 280 $

106

122

162

129

188

176

132

200

207

129

134

205

232

156

103

134

216

251

166

121

128

134

214

255

172

131

151

103

280

134

217

258

177

133

162

132

191

December 31
2017

Reported Claims
(in thousands)

2017

0.179

0.114

0.101

0.128

0.113

0.119

0.100

0.110

0.168

0.205

Net Liabilities for Loss and Allocated Loss Adjustment Expenses

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

Supplementary Information: (Favorable)/ Adverse Prior Period Development

(in millions of U.S. dollars)

Accident years prior to 2008

All Accident years

$ 1,816

December 31, 2017

371

December 31, 2017

—

Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2017

Age in Years

Percentage

34%

38%

14%

—%

— %

F-64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Prior Period Development — Supplementary Information
The following table presents a reconciliation of the loss development triangles above to prior period development:

Year Ended December 31, 2017
(in millions of U.S. dollars)
(favorable)/unfavorable

North America Commercial P&C Insurance

Long-tail

Short-tail

North America Personal P&C Insurance
(Short-tail)

Overseas General Insurance

Long-tail

Short-tail

Global Reinsurance

Long-tail

Short-tail

Subtotal

North America Agricultural Insurance
(Short-tail)

Corporate (Long-tail)

Consolidated PPD

Components of PPD

2008 - 2016
accident years
(implied PPD
per loss
triangles)

Accident
years prior
to 2008

Other (1)

PPD on loss
reserves

RIPs,
Expense
adjustments,
and earned
premiums

(367) $

(175) $

(76)

(618) $

56 $

(188)

(555)

—

(175)

(10)

(55)

(138)

(193)

(12)

(13)

(3)

(16)

(60)

—

(60)

(73) (2)

(7)

(3)

(40)
(43) (3)

—

(185)

(803)

(71)

(181)

(252)

(71)

(55)

—

(7)

(4)

Total

(562)

(184)

(746)

(71)

(181)

(252)

(68)

(59)

(658) $

(261) $

(122)

(1,041) $

53 $

(988)

(174) $

55 $

278

—

(937) $

108 $

(119)

278

(829)

(1) Other includes the impact of foreign exchange.
(2) Includes favorable development of $55 million related to our Alternative Risk Solutions business; the remaining difference relates to a number of other items, none

of which are individually material.

(3) Includes favorable development of $35 million related to International A&H business, the remaining difference relates to a number of other items, none of which are

individually material.

Prior Period Development
The following table summarizes (favorable) and adverse prior period development (PPD) by segment. Long-tail lines include
lines such as workers' compensation, general liability, and professional liability; while short-tail lines include lines such as most
property lines, energy, personal accident, and agriculture. In 2017, we determined that the loss development classification for
certain businesses, previously grouped within the short-tail column in the table below, would be more appropriately grouped
within the long-tail column to better align with the classification of these businesses within our loss development triangles. We
also determined that the loss development for certain other businesses should be reclassified from long-tail to short-tail. We
updated our 2016 and 2015 amounts below to conform to the current year presentation and reclassified $101 million and $46
million, respectively, of net favorable development into long-tail from short-tail. These changes to the previously disclosed
amounts have no impact to our financial condition and results of operations.

F-65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Years Ended December 31
(in millions of U.S. dollars, except for percentages)

Long-tail

Short-tail

Total

% of beginning
net unpaid
reserves (1)

—

278

(68)

(71)

(59)

0.6%

1.6%

0.1%

0.2%

0.1%

0.5%

(119)

(252)

(181)

(119)

(746)

(423) $

(562) $

(184) $

(406) $

2017
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total
2016
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total
2015
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
2.0%
Total
(1) Calculated based on the beginning of period consolidated net unpaid losses and loss expenses. For 2016, the percent of beginning net unpaid reserves is calculated inclusive of
the net unpaid losses and loss expenses acquired in the Chubb Corp acquisition of $21.4 billion.

(263) $

(162) $

(817) $

(693) $

(283) $

(102) $

(318) $

(1,135)

(85) $

(829)

(192)

(236)

(109)

(187)

(151)

(546)

(264)

(778)

(343)

(119)

(423)

1.7%

2.4%

0.1%

0.4%

1.6%

0.2%

0.1%

1.0%

0.9%

0.1%

0.7%

0.4%

1.3%

0.2%

(45)

(78)

(10)

(72)

(45)

(77)

200

189

200

189

(1)

—

North America Commercial P&C Insurance
2017
North America Commercial P&C Insurance experienced net favorable PPD of $746 million, which was the net result of several
underlying favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $562 million in long-tail business, primarily from:

• Net favorable development of $184 million in our commercial excess and umbrella portfolios, primarily in accident
years 2011 and prior, driven by lower than expected case activity and an increase in weighting towards experience-
based methods. Large loss activity in accident year 2015 led to adverse development in that year, partially offsetting
the favorable development in the older years;

• Net favorable development of $181 million in our management liability portfolios, favorably impacting accident years

2012 and prior where paid and reported loss activity was lower than expected, partially offset by adverse development
in accident years 2014 through 2016, mostly as a result of higher severity claim costs compared to prior expectations
in certain lines or coverages;

• Net favorable development of $123 million in our workers’ compensation businesses (including excess workers'

compensation) with favorable development of $57 million in the 2016 accident year related to our annual assessment
of multi-claimant events including industrial accidents. Consistent with prior years, we reviewed these potential
exposures after the close of the accident year to allow for late reporting or identification of significant losses. Net
favorable development of $65 million was principally due to lower than expected loss experience and updates to
development patterns used in our loss projection methods, mainly impacting accident years 2013 and prior, and

F-66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

partially offset by smaller adverse development in the more recent prior accident years;

• Net favorable development of $32 million in our professional Errors and Omissions (E&O) portfolios, primarily in the

2012 and 2013 accident years, arising from lower than expected reported loss activity, partially offset by claim-specific
adverse development in other years;

• Net favorable development of $28 million on several large multi-line prospective deals primarily impacting the 2012

and 2013 accident years, due to lower than expected reported loss activity. These structured deals typically cover large
clients for multiple product lines and with varying loss limitations; this development is net of premium adjustments of
$26 million tied to the loss performance of the particular deals;

• Net favorable development of $21 million in our political risk portfolio, primarily impacting the 2013 accident year,
principally due to reported experience below expectations and an increase in weighting towards experience-based
methods; and

• Net adverse development of $21 million in our auto liability lines, primarily in the 2012 through 2015 accident years,

driven by higher than expected paid and reported experience.

• Net favorable development of $184 million in short-tail business, primarily from:

• Net favorable development of $98 million in our property and inland marine portfolios, impacting the 2012 through

2016 accident years, resulting from lower than expected loss emergence;

• Net favorable development of $45 million in our surety business, primarily due to lower than expected claims severity

in the 2015 accident year; and

• Net favorable development of $20 million in our accident & health (A&H) business, primarily due to lower than

expected loss emergence in the 2015 and 2016 accident years.

2016
North America Commercial P&C Insurance experienced net favorable PPD of $778 million, which was the net result of several
underlying favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $693 million in long-tail business, primarily from:

• Net favorable development of $264 million in our commercial excess and umbrella portfolios, primarily in accident
years 2010 and prior, driven by lower than expected reported loss activity and an increase in weighting towards
experience-based methods; in general, the severity of claims has been less than expected;

• Net favorable development of $220 million in our management liability portfolios, where paid and reported loss activity
was lower than expected. The majority of this favorable activity impacted accident years 2011 and prior. Partially
offsetting this were smaller amounts of adverse development in the more recent accident years, mostly as a result of
higher severity claim costs compared to prior expectations in some lines;

• Net favorable development of $141 million in our workers’ compensation lines with favorable development of $40
million in the 2015 accident year related to our annual assessment of multi-claimant events including industrial
accidents. Favorable development of $92 million driven by accident years 2012 and prior was principally due to lower
than expected loss experience and revision to the basis for selecting development patterns used in our loss projection
methods for select portfolios;

• Favorable development of $58 million in our professional Errors & Omission (E&O) portfolios, primarily impacting the
2012 and prior accident years and arising from both lower than expected reported loss activity and re-assessments of
remaining claim-specific liabilities for the older accident years; and

• Net favorable development of $21 million in our political risk business, mainly due to favorable claim emergence in the

2012 accident year.

F-67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

• Net favorable development of $85 million in short-tail business, primarily from our property and inland marine portfolios,

impacting the 2014 and 2015 accident years, resulting from lower than expected loss emergence.

2015
North America Commercial P&C Insurance experienced net favorable PPD of $264 million, representing 1.0 percent of the
beginning consolidated net unpaid losses and loss expense reserves.

North America Personal P&C Insurance
2017
North America Personal P&C Insurance incurred net adverse PPD of $69 million, which was the net result of several underlying
favorable and adverse movements, and was driven by the following principal changes:

• Net adverse development of $105 million in our homeowners lines, primarily impacting the 2013 and 2016 accident

years, due to higher than expected loss severity; and

• Net favorable development of $58 million in our personal excess lines primarily impacting the 2014 accident year, due to

lower than expected loss experience and an increased weighting towards experience-based methods.

2016
North America Personal P&C Insurance incurred net adverse PPD of $27 million, in our homeowners and umbrella lines due to
higher than expected loss emergence. Average loss severities were higher than expected, and to a lesser degree, reinsurance and
other recoveries were lower than expected.

2015
North America Personal P&C Insurance incurred net adverse PPD of $25 million, representing 0.1 percent of the beginning
consolidated net unpaid losses and loss expense reserves.

North America Agricultural Insurance
North America Agricultural Insurance experienced net favorable development of $119 million, $72 million, and $45 million in
2017, 2016, and 2015, respectively. Actual claim development relates to our Multiple Peril Crop Insurance (MPCI) business
and is favorable due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2017 results
based on crop yield results at year-end 2016).

Overseas General Insurance
2017
Overseas General Insurance experienced net favorable PPD of $252 million, which was the net result of several underlying
favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $71 million in long-tail business, primarily from:

• Net favorable development of $34 million in financial lines, with favorable development of $124 million in accident

years 2013 and prior, resulting from lower than expected loss emergence including favorable development on specific,
litigated claims, partially offset by adverse development of $90 million in accident years 2014 through 2016, primarily
due to large loss experience in specific Directors and Officers (D&O) portfolios within the U.K., Continental Europe, and
Australia and Financial Institutions lines in the U.K. and Continental Europe; and

• Net favorable development of $10 million in casualty lines, with favorable development of $69 million in accident
years 2013 and prior, resulting from lower than expected loss emergence, partially offset by adverse development
of $32 million driven by a change in the discount rate in the U.K. (Ogden rate) impacting the 2016 and prior accident
years and adverse development of $27 million in accident years 2014 to 2016, primarily due to large loss experience
in U.K. excess lines and wholesale business.

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

• Net favorable development of $48 million in A&H lines, primarily from favorable loss emergence in Asia Pacific and

Continental Europe in accident years 2014 through 2016;

F-68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

• Net favorable development of $43 million in technical and energy lines, primarily from favorable loss emergence in

accident years 2014 through 2016 primarily in offshore and power generation where experience has been better than
expected;

• Favorable development of $42 million in marine, primarily in accident years 2015 and 2016, driven mainly by

favorable cargo loss emergence, including favorable claim-specific loss settlements and recoveries; and

• Favorable development of $25 million in property (excluding technical lines), primarily in accident years 2013 through
2015, driven mainly by favorable loss emergence, including claim-specific loss settlements in all regions except Asia
Pacific, partially offset by adverse Asia Pacific large loss experience in accident year 2016.

2016
Overseas General Insurance experienced net favorable PPD of $423 million, which was the net result of several underlying
favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $236 million in long-tail business, primarily from:

• Net favorable development of $177 million, primarily in casualty and financial lines, with favorable development of
$266 million in accident years 2012 and prior, resulting from lower than expected loss emergence, and adverse
development of $89 million in accident years 2013 to 2015, primarily due to large loss experience in our D&O
portfolio in Asia and financial lines in Europe;

• Favorable development of $28 million in aviation lines due to lower than expected loss emergence and case-specific

reserve reductions impacting accident years 2012 and prior; and

• Favorable development of $25 million on an individual legacy liability case reserve take-down. This release follows a

legal analysis completed in 2016, based on court opinion in the year and discussions with defense counsel, which
concluded that these reserves were no longer required.

• Net favorable development of $187 million in short-tail business, primarily from:

• Favorable development of $97 million in property (including technical lines), primarily from favorable Continental

Europe loss emergence in accident years 2012 through 2014;

• Favorable development of $43 million in energy lines, driven by favorable loss emergence in accident years 2010
through 2014, primarily in offshore where experience on multi-year construction accounts has been better than
expected, as well as a claims review of catastrophe impacts on underwriting years 2004 through 2008; and

• Favorable development of $28 million in accident & health (A&H) lines related to development of claim reserves, due
to lower than expected loss emergence, primarily in Asia Pacific and Continental Europe in accident years 2013
through 2015.

2015
Overseas General Insurance experienced net favorable PPD of $343 million, representing 1.3 percent of the beginning
consolidated net unpaid losses and loss expense reserves.

Global Reinsurance
2017
Global Reinsurance experienced net favorable PPD of $59 million, which was the net result of several underlying favorable and
adverse movements, and was driven by the following principal changes:

• Net favorable development of $68 million on long-tail lines of business, primarily from:

• Net favorable development of $67 million in our casualty (excluding motor), professional liability, and medical

malpractice lines, primarily from treaty years 2013 and prior, principally resulting from lower than expected loss
emergence in the U.S. portfolios; and

F-69

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

• Net adverse development of $10 million in our motor and excess liability lines, primarily due to adverse development of
$9 million driven by a change in the discount rate in the U.K. (Ogden rate) primarily impacting the 2015 and prior
treaty years.

• Net adverse development of $9 million in our short-tail business, none of which was significant individually or in the

aggregate.

2016
Global Reinsurance experienced net favorable PPD of $78 million, which was the net result of several underlying favorable and
adverse movements, and was driven by the following principal changes:

• Net favorable development of $42 million in casualty lines primarily impacting treaty years 2011 and prior, principally

resulting from lower than expected loss emergence; and

• Net favorable development of $30 million in professional liability lines primarily impacting treaty years 2011 and prior due

to lower than expected loss emergence.

2015
Global Reinsurance experienced net favorable PPD of $119 million, representing 0.4 percent of the beginning consolidated net
unpaid losses and loss expense reserves.

Corporate
2017
Corporate incurred adverse development of $278 million in long-tail lines, driven by the following principal changes:

• Adverse development of $239 million in asbestos, environmental, and other run-off liabilities, driven primarily by resolution
of a limited number of direct cases, increases in severity trends, somewhat greater than expected defense spending and
increases in reported claims for certain assumed reinsurance portfolios; and

• Adverse development of $39 million on unallocated loss adjustment expenses due to run-off operating expenses paid and

incurred in 2017.

2016
Corporate incurred adverse development of $189 million in long-tail lines, driven by the following principal changes:

• Adverse development of $141 million in asbestos, environmental, and other run-off liabilities primarily arose as a result of

the annual review of individual accounts and case specific exposures, with account changes driven by recent frequency and
severity trends, certain case specific settlements and higher than expected defense spending; and

• Adverse development of $48 million on unallocated loss adjustment expenses due to run-off operating expenses paid and

incurred in 2016.

2015
Corporate incurred adverse PPD of $200 million, representing 0.7 percent of the beginning consolidated net unpaid losses and
loss expense reserves.

F-70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Asbestos and environmental (A&E)

Chubb's exposure to A&E claims principally arises out of liabilities acquired when it purchased Westchester Specialty in 1998,
CIGNA's P&C business in 1999, and Chubb Corp in 2016. The following table presents a roll-forward of consolidated A&E loss
reserves including allocated loss expense reserves for A&E exposures, and the provision for uncollectible paid and unpaid
reinsurance recoverables:

Asbestos

Environmental

Total

(in millions of U.S. dollars)
Balance at December 31, 2016
Incurred activity
Paid activity
Balance at December 31, 2017
(1) Excludes unallocated loss expenses and the net activity reflects third-party reinsurance other than the aggregate excess of loss reinsurance provided by National Indemnity
Company (NICO) to Westchester Specialty (see Westchester Specialty section below).

476 $ 2,228 $ 1,527

490 $ 2,303 $ 1,609

$ 1,621 $ 1,051 $

$ 1,726 $ 1,119 $

607 $

577 $

(169)

(172)

(127)

(299)

(502)

(333)

Gross

199

113

427

104

228

217

Net

(1)

The A&E net loss reserves including allocated loss expense reserves and provision for uncollectible reinsurance at December 31,
2017 and 2016 shown in the table above is comprised of:

(in millions of U.S. dollars)

Brandywine operations

Westchester Specialty

Chubb Corp

Other, mainly Overseas General Insurance

Total

December 31

2017

2016

849 $

113

486

760

112

657

1,527 $

1,609

The incurred activity of $217 million in 2017 and $164 million in 2016 were primarily the result of our annual internal,
ground-up review of A&E liabilities.

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

In 1996, the Pennsylvania Insurance Commissioner approved a plan to restructure INA Financial Corporation and its
subsidiaries (the Restructuring) which included the division of Insurance Company of North America (INA) into two separate
corporations:

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

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

As part of the Restructuring, most A&E liabilities of various U.S. affiliates of INA were reinsured to Century. Century and certain
other run-off companies having A&E and other liabilities were contributed to Brandywine Holdings.

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

XOL Agreement
In 1996, in connection with the Restructuring, a Chubb INA insurance subsidiary provided reinsurance coverage to Century in
the amount of $800 million under an Aggregate Excess of Loss Reinsurance Agreement (XOL Agreement), triggerable if the
statutory capital and surplus of Century falls below $25 million or if Century lacks liquid assets with which to pay claims as
they become due.

F-71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Dividend Retention Fund
INA Financial Corporation established and funded a dividend retention fund (the Dividend Retention Fund) consisting of
$50 million plus investment earnings. The full balance of the Dividend Retention Fund was contributed to Century as of
December 31, 2002. Under the Restructuring Order, while any obligation to maintain the Dividend Retention Fund is in effect,
to the extent dividends are paid by INA Holdings Corporation to its parent, INA Financial Corporation, and to the extent INA
Financial Corporation then pays such dividends to INA Corporation, a portion of those dividends must be withheld to replenish
the principal of the Dividend Retention Fund to $50 million. During 2011 and 2010, $35 million and $15 million, respectively,
were withheld from such dividends and deposited into the Dividend Retention Fund as a result of dividends paid up to the INA
Corporation. Pursuant to a 2011 amendment to the Restructuring Order, capital contributions from the Dividend Retention Fund
to Century are not required until the XOL Agreement has less than $200 million of capacity remaining on an incurred basis for
statutory reporting purposes. The amount of the capital contribution shall be the lesser of the amount necessary to restore the
XOL Agreement remaining capacity to $200 million or the Dividend Retention Fund balance. In 2017, the Pennsylvania
Department of Insurance approved a capital contribution of $49 million from the Dividend Retention Fund to Century in order to
restore the XOL capacity to $200 million. The Dividend Retention Fund may not be terminated without prior written approval
from the Pennsylvania Insurance Commissioner.

Effective December 31, 2004, Chubb INA contributed $100 million to Century in exchange for a surplus note. After giving
effect to the contribution and issuance of the surplus note, the statutory surplus of Century at December 31, 2017 was $25
million and $672 million in statutory-basis losses have been ceded to the XOL Agreement on an inception-to-date basis.
Century reports the amount ceded under the XOL Agreement in accordance with statutory accounting principles, which differ
from GAAP by, among other things, allowing Century to discount its liabilities, including certain asbestos related and
environmental pollution liabilities and Century's reinsurance payable to active companies. For GAAP reporting purposes,
intercompany reinsurance recoverables related to the XOL are eliminated upon consolidation.

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

Certain active Chubb companies are primarily liable for asbestos, environmental, and other exposures that they have reinsured
to Century. Accordingly, if Century were to become insolvent and placed into rehabilitation or liquidation, some or all of the
recoverables due to these active Chubb companies from Century could become uncollectible. At December 31, 2017 and
2016, the aggregate reinsurance recoverables owed by Century to certain active Chubb companies were approximately $1.4
billion and $1.2 billion, respectively. Chubb believes the active company intercompany reinsurance recoverables, which relate to
direct liabilities payable over many years, are not impaired. At both December 31, 2017 and 2016, Century's carried gross
reserves (including reserves assumed from the active Chubb companies) were $2.0 billion. Should Century's loss reserves
experience adverse development in the future and should Century be placed into rehabilitation or liquidation, the reinsurance
recoverables due from Century to certain active Chubb companies would be payable only after the payment in full of certain
expenses and liabilities, including administrative expenses and direct policy liabilities. Thus, the intercompany reinsurance
recoverables would be at risk to the extent of the shortage of assets remaining to pay these recoverables.

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

As part of the Westchester Specialty acquisition in 1998, NICO provided a 75 percent pro-rata share of $1.0 billion of
reinsurance protection on losses and loss adjustment expenses incurred on or before December 31, 1996, in excess of a
retention of $721 million. At December 31, 2017, the remaining unused incurred limit under the Westchester NICO agreement
was $409 million.

8. Taxation

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

F-72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Chubb has two Swiss operating subsidiaries, an insurance company, Chubb Insurance (Switzerland) Limited and a reinsurance
company, Chubb Reinsurance (Switzerland) Limited. Both are subject to federal, cantonal, and communal income tax and to
annual cantonal and communal capital tax.

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

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

Chubb Group Holdings and its respective subsidiaries are subject to income taxes imposed by U.S. authorities and file a
consolidated U.S. tax return. As part of the Chubb Corp acquisition, immediately following the merger, Chubb Corp merged with
and into Chubb INA Holdings Inc., and therefore, joined the Chubb Group Holdings consolidated return. Should Chubb Group
Holdings pay a dividend to Chubb Limited, withholding taxes would apply. Currently, however, no withholding taxes are accrued
with respect to such un-remitted earnings as management has no intention of remitting these earnings. Similarly, no taxes have
been provided on the un-remitted earnings of certain foreign subsidiaries (Hong Kong and Korea life companies) as management
has no intention of remitting these earnings. The cumulative amount that would be subject to withholding tax, if distributed, as
well as the determination of the associated tax liability are not practicable to compute; however, such amount would be material
to Chubb. Certain international operations of Chubb are also subject to income taxes imposed by the jurisdictions in which they
operate.

Chubb's domestic operations are in Switzerland, the jurisdiction where we are legally organized, incorporated, and registered.

The following table presents pre-tax income and the related provision for income taxes:

(in millions of U.S. dollars)

Pre-tax income:

Switzerland

Outside Switzerland

Total pre-tax income

Provision for income taxes

Current tax expense:

Switzerland

Outside Switzerland

Total current tax expense

Deferred tax expense (benefit):

Switzerland

Outside Switzerland

Total deferred tax expense (benefit)

Provision for income taxes

F-73

Year Ended December 31

2017

2016

2015

527 $

766 $

3,195

4,184

3,722 $

4,950 $

469

2,827

3,296

46 $

97 $

313

359

(500)

(498)

727

824

(27)

(9)

(139) $

815 $

266

304

154

158

462

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The most significant jurisdictions contributing to the overall taxation of Chubb are calculated using the following rates in 2017:
Switzerland 7.83 percent, Bermuda 0.0 percent, U.S. 35.0 percent, and U.K. 19.0 percent. Effective January 1, 2018, the
U.S. corporate rate was reduced to 21 percent.

The following table presents a reconciliation of the difference between the provision for income taxes and the expected tax
provision at the Swiss statutory income tax rate:

(in millions of U.S. dollars)
Expected tax provision at Swiss statutory tax rate
Permanent differences:
Taxes on earnings subject to rate other than Swiss statutory rate
Tax-exempt interest and dividends received deduction, net of proration
Net withholding taxes
Excess tax benefit on share-based compensation
Impact of 2017 Tax Act
Corporate owned life insurance
Other
Total provision for income taxes

Year Ended December 31

2017

2016

291 $

388 $

263

(199)

(48)

(450)

(37)

582

(200)

—

2015

258

193

(32)

—

(139) $

815 $

462

The following table presents the components of net deferred tax assets and liabilities:

(in millions of U.S. dollars)
Deferred tax assets:

Loss reserve discount
Unearned premiums reserve
Foreign tax credits
Provision for uncollectible balances
Loss carry-forwards
Debt related amounts
Compensation related amounts
Cumulative translation adjustments
Other, net
Total deferred tax assets

Deferred tax liabilities:

Deferred policy acquisition costs
Other intangible assets, including VOBA
Un-remitted foreign earnings
Investments
Unrealized appreciation on investments
Depreciation
Total deferred tax liabilities

Valuation allowance
Net deferred tax assets (liabilities)

December 31
2017

December 31
2016

715 $

231

340

260

1,269

498

2,115

219

449

1,858

4,842

635

1,437

184

2,458

842

2,352

2,001

406

5,752

(699) $

(988)

The 2017 Tax Act, enacted on December 22, 2017, among other things, reduces the U.S. federal income tax rate to 21 percent
from 35 percent effective in 2018. We have not completed our assessment of the effects of the 2017 Tax Act; however, we have
made our best estimate of those effects based on our current understanding of the provisions in the Act. Accordingly, we recorded

F-74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

a $450 million income tax transition benefit in the fourth quarter of 2017 on a provisional basis, principally reflecting the reduction
in the U.S. corporate tax rate from 35 percent to 21 percent. This is comprised of a $743 million reduction in the deferred tax
liabilities principally related to certain intangible assets, a $371 million reduction in net deferred tax assets related to other net
assets, and a net benefit of $78 million related to the impact of excess foreign tax credits generated by the deemed repatriation
rules and the impact of the reduced rate on our foreign branches. We have computed these amounts based on the best available
information and our understanding of the 2017 Tax Act.

As we complete our analysis of the 2017 Tax Act, collect and prepare necessary data and interpret any additional guidance issued
by the IRS, the Treasury Department and other standard setting agencies, we may make adjustments to the provisional amounts.
Those adjustments may materially impact our provision for income taxes in the period in which the adjustments are made.

The valuation allowance of $99 million at December 31, 2017, and $78 million at December 31, 2016, reflects
management's assessment, based on available information, that it is more likely than not that a portion of the deferred tax
assets will not be realized due to the potential inability to utilize foreign tax credits in the U.S. and the inability of certain foreign
subsidiaries to generate sufficient taxable income. Adjustments to the valuation allowance are made when there is a change in
management's assessment of the amount of deferred tax assets that are realizable.

At December 31, 2017, Chubb has net operating loss carry-forwards of $329 million which, if unused, will expire starting in
2018, and a foreign tax credit carry-forward in the amount of $340 million which, if unused, will expire in the years 2022
through 2027.

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

(in millions of U.S. dollars)
Balance, beginning of year
Additions based on tax positions related to the current year
Additions based on tax positions related to prior years (1)
Reductions for tax positions of prior years
Reductions for the lapse of the applicable statutes of limitations
Balance, end of year
(1) Assumed in connection with the Chubb Corp acquisition in 2016.

December 31
2017

December 31
2016
16

17 $

—

(4)

(3)

13 $

(4)

—

At December 31, 2017 and 2016, the total amount of unrecognized tax benefits that would affect the effective tax rate, if
recognized, were $13 million and $17 million, respectively.

Chubb recognizes accruals for interest and penalties, if any, related to unrecognized tax benefits in income tax expense in the
Consolidated statements of operations. For the years ended December 31, 2017, 2016, and 2015, tax-related interest expense
(income) and penalties reported in the Consolidated statements of operations was $1 million for each of the three years. At
December 31, 2017 and 2016, liabilities for tax-related interest and penalties in our Consolidated balance sheets were $3
million and $4 million, respectively.

In September 2016, the IRS completed its examination of Chubb Group Holdings’ (formerly ACE Group Holdings) federal tax
returns for the 2010-2012 tax years. No material adjustments resulted from this examination. During 2017, the IRS
commenced its field examination of Chubb Group Holdings federal income tax returns for 2014 and 2015 and Chubb Corp’s
federal tax return for 2014 which were still ongoing at December 31, 2017. It is reasonably possible that over the next twelve
months, the amount of unrecognized tax benefits may change resulting from the re-evaluation of unrecognized tax benefits
arising from examinations of taxing authorities and the closing of tax statutes of limitations. With few exceptions, Chubb is no
longer subject to state and local and non-U.S. income tax examinations for years before 2010.

F-75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

9. Debt

(in millions of U.S. dollars)

2017

2016

Early Redemption Option

Repurchase agreements (weighted average interest rate
of 1.5% in 2017 and 0.8% in 2016)

1,408 $

1,403

None

December 31

Short-term debt

Chubb INA senior notes:

$500 million 5.7% due February 2017

— $

500 Make-whole premium plus 0.20%

$300 million 5.8% due March 2018

$600 million 5.75% due May 2018

$100 million 6.6% due August 2018

Total short-term debt

Long-term debt

Chubb INA senior notes:

300

610

103

1,013 $

— Make-whole premium plus 0.35%

— Make-whole premium plus 0.30%

—

500

None

$300 million 5.8% due March 2018

— $

300 Make-whole premium plus 0.35%

$600 million 5.75% due May 2018

$100 million 6.6% due August 2018

$500 million 5.9% due June 2019

$1,300 million 2.3% due November 2020

$1,000 million 2.875% due November 2022

$475 million 2.7% due March 2023

$700 million 3.35% due May 2024

$800 million 3.15% due March 2025

—

499

1,296

995

472

695

795

635 Make-whole premium plus 0.30%

107

None

498 Make-whole premium plus 0.40%

1,294 Make-whole premium plus 0.15%

994 Make-whole premium plus 0.20%

471 Make-whole premium plus 0.10%

695 Make-whole premium plus 0.15%

794 Make-whole premium plus 0.15%

$1,500 million 3.35% due May 2026

1,489

1,488 Make-whole premium plus 0.20%

$100 million 8.875% due August 2029

$200 million 6.8% due November 2031

$300 million 6.7% due May 2036

$800 million 6.0% due May 2037

$600 million 6.5% due May 2038

$475 million 4.15% due March 2043

100

254

297

971

768

469

100

None

257 Make-whole premium plus 0.25%

297 Make-whole premium plus 0.20%

980 Make-whole premium plus 0.20%

776 Make-whole premium plus 0.30%

469 Make-whole premium plus 0.15%

$1,500 million 4.35% due November 2045

1,482

1,482 Make-whole premium plus 0.25%

Chubb INA $1,000 million 6.375% capital securities

due March 2067(1)

Other long-term debt (2.75% to 7.1%

due December 2019 to September 2020)

Total long-term debt

Trust preferred securities

Chubb INA capital securities due April 2030

964

962

11,556 $

12,610

Make-whole premium plus
0.25%-0.50%

None

308 $

308

Redemption prices(2)

(1)

(2)

6.375% interest rate through April 14, 2017; interest rate equal to three-month LIBOR rate plus 2.25% thereafter. The current interest rate at the time of this filing is
3.97%.

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

F-76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

a) Repurchase agreements
Chubb has executed repurchase agreements with certain counterparties under which Chubb agreed to sell securities and
repurchase them at a future date for a predetermined price.

b) Short-term debt
Short-term debt comprises the current maturities of our long-term debt instruments described below. These short-term debt
instruments were reclassified from long-term debt during 2017 and are reflected in the table above.

c) Long-term debt
Certain of Chubb INA's senior notes and capital securities are redeemable at any time at Chubb INA's option subject to the
provisions described in the table above. A "make-whole" premium is the present value of the remaining principal and interest
discounted at the applicable U.S. Treasury rate. The senior notes and capital securities are also redeemable at par plus accrued
and unpaid interest in the event of certain changes in tax law.

The senior notes do not have the benefit of any sinking fund. These senior unsecured notes are guaranteed on a senior basis by
Chubb Limited and they rank equally with all of Chubb's other senior obligations. They also contain customary limitations on
lien provisions as well as customary events of default provisions which, if breached, could result in the accelerated maturity of
such senior debt.

We have outstanding $1.0 billion of unsecured junior subordinated capital securities at December 31, 2017, which were
assumed by Chubb INA in connection with the Chubb Corp acquisition. Effective April 15, 2017, the interest rate on our $1.0
billion of unsecured junior subordinated capital securities converted to a floating rate, equal to the three-month LIBOR plus
2.25 percentage points. Previously, these capital securities carried interest at a rate of 6.375 percent. The current interest rate
at the time of this filing on these securities is 3.97 percent. The scheduled maturity date for these securities is April 15, 2037.

In August 2017, Chubb eliminated the Replacement Capital Covenant (RCC) associated with these capital securities which
benefited the holders of the 6.8 percent debentures due November 2031. The RCC was eliminated through a consent
solicitation process whereby the holders of the 6.8 percent debentures agreed to waive their rights under the RCC in exchange
for a nominal fee. Chubb received the requisite number of consents required to eliminate the RCC and as a result, the RCC was
terminated in August 2017.

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

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

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

F-77

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

10. Commitments, contingencies, and guarantees

a) Derivative instruments
Foreign currency management
As a global company, Chubb entities transact business in multiple currencies. Our policy is to generally match assets, liabilities,
and required capital for each individual jurisdiction in local currency, which would include the use of derivatives discussed
below. We do not hedge our net asset non-U.S. dollar capital positions; however, we do consider economic hedging for planned
cross border transactions.

Derivative instruments employed
Chubb maintains positions in derivative instruments such as futures, options, swaps, and foreign currency forward contracts for
which the primary purposes are to manage duration and foreign currency exposure, yield enhancement, or to obtain an
exposure to a particular financial market. Chubb also maintains positions in convertible securities that contain embedded
derivatives. Investment derivative instruments are recorded in either Other assets (OA) or Accounts payable, accrued expenses,
and other liabilities (AP), convertible bonds are recorded in Fixed maturities available for sale (FM AFS), and convertible equity
securities are recorded in Equity securities (ES) in the Consolidated balance sheets. These are the most numerous and frequent
derivative transactions. In addition, Chubb from time to time purchases to be announced mortgage-backed securities (TBAs) as
part of its investing activities.

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

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

The following table presents the balance sheet locations, fair values of derivative instruments in an asset or (liability) position,
and notional values/payment provisions of our derivative instruments:

(in millions of U.S. dollars)
Investment and embedded derivative

instruments:

Foreign currency forward contracts
Cross-currency swaps

Options/Futures contracts on notes and

bonds

Convertible securities (1)

Other derivative instruments:
Futures contracts on equities (2)
Other

December 31, 2017

December 31, 2016

Consolidated
Balance
Sheet
Location

Fair Value

Derivative
Asset

Derivative
(Liability)

Notional
Value/
Payment
Provision

Derivative
Asset

Fair Value

Derivative
(Liability)

Notional
Value/
Payment
Provision

OA / (AP) $

14 $

(27) $

2,064

25 $

(50) $

2,220

OA / (AP)

FM AFS/ES

—

(3)

—

1,007

23 $

(30) $

3,122

OA / (AP) $

— $

(21) $

1,553

OA / (AP)

(2)

1 $

(23) $

1,628

—

(4)

—

2,344

33 $

(54) $

4,666

1 $

— $

1,316

(13)

214

3 $

(13) $

1,530

— $

(853) $

1,264

GLB (3)

(AP) / (FPB) $

— $

(550) $

1,083

(1) Includes fair value of embedded derivatives.
(2) Related to GMDB and GLB blocks of business.
(3) Includes both future policy benefits reserves and fair value derivative adjustment. Refer to Note 5 c) for additional information. Note that the payment provision related to GLB

is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.

F-78

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

At December 31, 2017 and 2016, derivative liabilities of $24 million and $10 million, respectively, included in the table above
were subject to a master netting agreement. The remaining derivatives included in the table above were not subject to a master
netting agreement.

b) Secured borrowings
Chubb participates in a securities lending program operated by a third-party banking institution whereby certain assets are
loaned to qualified borrowers and from which we earn an incremental return. At December 31, 2017 and 2016, our securities
lending collateral was $1,737 million and $1,092 million, respectively, and our securities lending payable, reflecting our
obligation to return the collateral plus interest, was $1,737 million and $1,093 million, respectively. The securities lending
collateral can only be drawn down by Chubb in the event that the institution borrowing the securities is in default under the
lending agreement. An indemnification agreement with the lending agent protects us in the event a borrower becomes insolvent
or fails to return any of the securities on loan. The collateral is recorded in Securities lending collateral and the liability is
recorded in Securities lending payable in the Consolidated balance sheets.

The following table presents the carrying value of collateral held under securities lending agreements by investment category
and remaining contractual maturity of the underlying agreements:

(in millions of U.S. dollars)

Collateral held under securities lending agreements:

Cash

U.S. Treasury and agency

Foreign

Corporate securities

Mortgage-backed securities

Equity securities

Gross amount of recognized liability for securities lending payable

Remaining contractual maturity

December 31
2017

December 31
2016

Overnight and Continuous

828 $

712

—

1,737 $

423

578

—

1,092

1,093

Difference (1)
(1) The carrying value of the securities lending collateral held is $1 million lower than the securities lending payable at December 31, 2016 due to accrued interest recorded in

— $

(1)

the securities lending payable.

At December 31, 2017 and 2016, our repurchase agreement obligations of $1,408 million and $1,403 million, respectively,
were fully collateralized. In contrast to securities lending programs, the use of cash received is not restricted for the repurchase
obligations. The fair value of the underlying securities sold remains in Fixed maturities available for sale, and the repurchase
agreement obligation is recorded in Repurchase agreements in the Consolidated balance sheets.

F-79

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents the carrying value of collateral pledged under repurchase agreements by investment category and
remaining contractual maturity of the underlying agreements:

(in millions of U.S. dollars)

Collateral pledged under repurchase agreements:

Cash

U.S. Treasury and agency

Mortgage-backed securities

Remaining contractual maturity

December 31, 2017

December 31, 2016

Up to 30
Days

Greater
than 90
Days

Total

Up to 30
Days

Greater
than 90
Days

— $

1 $

369

230

826

239

1,195

230

339

881

Total

240

1,220

378 $ 1,056 $ 1,434 $

569 $ 892 $ 1,461

Gross amount of recognized liabilities for repurchase agreements

Difference (1)
(1) Per the repurchase agreements, the amount of collateral posted is required to exceed the amount of gross liability.

$ 1,408

$ 1,403

Potential risks exist in our secured borrowing transactions due to market conditions and counterparty exposure. With collateral
that we pledge, there is a risk that the collateral may not be returned at the expiration of the agreement. If the counterparty fails
to return the collateral, Chubb will have free use of the borrowed funds until our collateral is returned. In addition, we may
encounter the risk that Chubb may not be able to renew outstanding borrowings with a new term or with an existing
counterparty due to market conditions including a decrease in demand as well as more restrictive terms from banks due to
increased regulatory and capital constraints. Should this condition occur, Chubb may seek alternative borrowing sources or
reduce borrowings. Additionally, increased margins and collateral requirements due to market conditions would increase our
restricted assets as we are required to provide additional collateral to support the transaction.

The following table presents net realized gains (losses) related to derivative instrument activity in the Consolidated statements of
operations:

(in millions of U.S. dollars)
Investment and embedded derivative instruments:
Foreign currency forward contracts
All other futures contracts and options
Convertible securities (1)
Total investment and embedded derivative instruments
GLB and other derivative instruments:
GLB (2)
Futures contracts on equities (3)
Other
Total GLB and other derivative instruments

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

2017

Year Ended December 31
2015

2016

9 $

(31) $

(21)

(10)

(11) $

(33) $

364 $

53 $

(261)

(5)

98 $

87 $

(136)

(10)

(93) $

(126) $

(8)

(203)

(8)

(14)

(225)

(193)

F-80

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

c) Derivative instrument objectives
(i) Foreign currency exposure management
A foreign currency forward contract (forward) is an agreement between participants to exchange specific foreign currencies at a
future date. Chubb uses forwards to minimize the effect of fluctuating foreign currencies as discussed above.

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

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

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

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

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

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

Other
Included within Other are derivatives intended to reduce potential losses which may arise from certain exposures in our
insurance business. The economic benefit provided by these derivatives is similar to purchased reinsurance. For example,
Chubb may enter into crop derivative contracts to protect underwriting results in the event of a significant decline in commodity
prices.

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

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

F-81

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

d) Concentrations of credit risk
Our investment portfolio is managed following prudent standards of diversification. Specific provisions limit the allowable
holdings of a single issue and issuer. We believe that there are no significant concentrations of credit risk associated with our
investments. Our three largest exposures by issuer at December 31, 2017, were Wells Fargo & Co., JP Morgan Chase & Co.,
and Anheuser-Busch InBev NV. Our largest exposure by industry at December 31, 2017 was financial services.

We market our insurance and reinsurance worldwide primarily through insurance and reinsurance brokers. We assume a degree
of credit risk associated with brokers with whom we transact business. No broker or one insured accounted for more than 10
percent of gross written premium for the years ended December 31, 2017, 2016, and 2015.

e) Fixed maturities
At December 31, 2017, we have commitments to purchase fixed income securities of $1,020 million over the next several
years.

f) Other investments
At December 31, 2017, included in Other investments in the Consolidated balance sheet are investments in limited
partnerships and partially-owned investment companies with a carrying value of $3.4 billion. In connection with these
investments, we have commitments that may require funding of up to $4.1 billion over the next several years.

g) Letters of credit
On October 25, 2017, we replaced our $1.5 billion letter of credit/revolver facility that was set to expire in November 2017
with an amended and restated credit facility that provides for up to $1.0 billion of availability, all of which may be used for the
issuance of letters of credit and for revolving loans. We have the ability to increase the capacity under our existing credit facility
to $2.0 billion under certain conditions, but any such increase would not raise the sub-limit for revolving loans above $1.0
billion. The letter of credit facility required that we maintain certain financial covenants, all of which we met at December 31,
2017. At December 31, 2017, outstanding LOCs issued under this facility were $250 million.

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

F-82

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

i) Lease commitments
We lease office space and equipment under operating leases which expire at various dates through 2033. Rent expense was
$211 million, $209 million, and $126 million for the years ended December 31, 2017, 2016, and 2015, respectively. Future
minimum lease payments under the leases are expected to be as follows:

For the years ending December 31
(in millions of U.S. dollars)
2018
2019
2020
2021
2022
Thereafter
Total minimum future lease commitments

11. Shareholders’ equity

181

153

133

114

230

900

a) Common Shares
All of Chubb’s Common Shares are authorized under Swiss corporate law. Though the par value of Common Shares is stated in
Swiss francs, Chubb continues to use U.S. dollars as its reporting currency for preparing the consolidated financial statements.
Under Swiss corporate law, we are generally prohibited from issuing Common Shares below their par value. If there were a need
to raise common equity at a time when the trading price of Chubb's Common Shares is below par value, we would need in
advance to obtain shareholder approval to decrease the par value of the Common Shares.

Dividend approval
At our May 2016 and 2015 annual general meetings, our shareholders approved an annual dividend for the following year of
up to $2.76 and $2.68 per share, respectively, which was paid in four quarterly installments of $0.69 per share and $0.67 per
share, respectively, at dates determined by the Board of Directors (Board) after the annual general meeting by way of a
distribution from capital contribution reserves, transferred to free reserves for payment.

Dividend distributions
Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value reduction), must be
stated in Swiss francs though dividend payments are made by Chubb in U.S. dollars. Dividend distributions following Chubb's
redomestication to Switzerland have generally been made by way of par value reduction (under the methods approved by our
shareholders at our annual general meetings) and had the effect of reducing par value per Common Share each time a dividend
was distributed. We may also issue dividends without subjecting them to withholding tax by way of distributions from capital
contribution reserves and payment out of free reserves. We employed this method of dividends for the annual dividends
approved in May 2015, 2016 and 2017 as noted above.

F-83

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

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

Dividends - par value reduction

Dividends - distributed from capital contribution reserves

Total dividend distributions per common share

b) Shares issued, outstanding, authorized, and conditional

Shares issued, beginning of year

Shares issued for Chubb Corp acquisition

Shares issued, end of year

Common Shares in treasury, end of year (at cost)

Shares issued and outstanding, end of year

CHF

— $

2.76

2.76 $

2017
USD

—

2.82

CHF

— $

2.70

2.70 $

2016
USD

—

2.74

Year Ended December 31
2015
USD

CHF

0.62 $

1.94

2.56 $

0.65

2.01

2.66

Year Ended December 31

2017

2016

2015

479,783,864

342,832,412

— 136,951,452

—

479,783,864

342,832,412

(15,950,685)

(13,815,148)

(18,268,971)

463,833,179

465,968,716

324,563,441

Increases in Common Shares in treasury are due to open market repurchases of Common Shares and the surrender of Common
Shares to satisfy tax withholding obligations in connection with the vesting of restricted stock and the forfeiture of unvested
restricted stock. Decreases in Common Shares in treasury are principally due to grants of restricted stock, exercises of stock
options, and purchases under the Employee Stock Purchase Plan (ESPP).

Authorized share capital for general purposes
The Board has shareholder-approved authority as set forth in the Articles of Association to increase for general purposes Chubb's
share capital from time to time until May 19, 2018, by the issuance of up to 200,000,000 fully paid up Common Shares, with
a par value equal to the par value of Chubb's Common Shares as set forth in the Articles of Association at the time of any such
issuance. Chubb intends to seek shareholder approval at its 2018 annual general meeting for a new pool of authorized share
capital for general purposes to replace the existing 200,000,000 share pool when it expires.

Conditional share capital for bonds and similar debt instruments
Chubb's share capital may be increased through the issuance of a maximum of 33,000,000 fully paid up Common Shares (with
a par value of CHF 24.15 as of December 31, 2017) through the exercise of conversion and/or option or warrant rights granted
in connection with bonds, notes, or similar instruments, issued or to be issued by Chubb, including convertible debt
instruments.

Conditional share capital for employee benefit plans
Chubb's share capital may be increased through the issuance of a maximum of 25,410,929 fully paid up Common Shares (with
a par value of CHF 24.15 as of December 31, 2017) in connection with the exercise of option rights granted to any employee
of Chubb, and any consultant, director, or other person providing services to Chubb.

c) Chubb Limited securities repurchases
From time to time, we repurchase shares as part of our capital management program and to partially offset potential dilution
from the exercise of stock options and the granting of restricted stock under share-based compensation plans. Our Board of
Directors has authorized share repurchase programs as follows:

• $1.5 billion of Chubb Common Shares from January 1, 2015 through December 31, 2015
• $1.0 billion of Chubb Common Shares from November 17, 2016 through December 31, 2017
• $1.0 billion of Chubb Common Shares from January 1, 2018 through December 31, 2018

Share repurchases may be in the open market, in privately negotiated transactions, block trades, accelerated repurchases and/or
through option or other forward transactions.

F-84

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents repurchases of Chubb's Common Shares conducted in a series of open market transactions under
the Board authorizations:

(in millions of U.S. dollars, except share data)
Number of shares repurchased
Cost of shares repurchased

2017
5,866,612

Year Ended December 31
2015
6,677,663

2016
—

830 $

— $

734

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

12. Share-based compensation

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

In connection with the Chubb Corp acquisition in 2016, we assumed outstanding equity awards consisting of service-based
restricted stock units, performance-based restricted stock units, and stock options issued by Chubb Corp to employees and
directors with a fair value of $525 million, of which $323 million is attributed to purchase consideration for the acquisition.
These awards were generally granted with a 3-year vesting period, and the stock options generally have a 10-year term.

In May 2016, our shareholders approved the Chubb Limited 2016 Long-Term Incentive Plan (the 2016 LTIP), which replaced
both the ACE Limited 2004 LTIP (the 2004 LTIP) and The Chubb Corporation Long-Term Incentive Plan (2014). The 2016
LTIP is substantially similar to the 2004 LTIP in its operation and the types of awards that may be granted. Under the 2016
LTIP, Common Shares of Chubb were authorized to be issued pursuant to awards made as stock options, stock appreciation
rights, performance shares, performance units, restricted stock, and restricted stock units.

Chubb principally issues restricted stock grants and stock options on a graded vesting schedule. Chubb recognizes
compensation cost for restricted stock and stock option grants with only service conditions that have a graded vesting schedule
on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-
substance, multiple awards. We incorporate an estimate of future forfeitures (6.5 percent assumption used for grants made in
2017, 2016, and 2015) in determining compensation cost for both grants of restricted stock and stock options.

Chubb generally grants restricted stock and restricted stock units with a 4-year vesting period, which vest in equal annual
installments over the respective vesting period. The restricted stock is granted at market close price on the day of grant. Each
restricted stock unit represents our obligation to deliver to the holder one Common Share upon vesting.

Under the 2016 LTIP, 19,500,000 Common Shares were authorized to be issued, in addition to any shares that have not been
delivered pursuant to the 2004 LTIP and remain available for grant pursuant to the 2004 LTIP, including any shares covered by
awards granted under the 2004 LTIP that are forfeited, expire or are canceled after the effective date of the 2016 LTIP without
delivery of shares or which result in the forfeiture of the shares back to Chubb. At December 31, 2017, a total of 17,065,705
shares remain available for future issuance under the 2016 LTIP, which includes shares canceled or forfeited from the 2004
LTIP, in addition to common shares that were previously registered and authorized to be issued.

In May 2017, our shareholders approved an increase of 2,000,000 shares authorized to be issued under the Employee Stock
Purchase Plan (ESPP), bringing the total shares authorized to 6,500,000 shares. At December 31, 2017, a total of
2,452,058 shares remain available for issuance under the ESPP.

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

F-85

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents pre-tax and after-tax share-based compensation expense:

(in millions of U.S. dollars)

Stock options and shares issued under ESPP:

Pre-tax

After-tax (1)

Restricted stock:

Pre-tax

After-tax

Year Ended December 31

2017

2016

2015

41 $

26 $

259 $

151 $

33 $

20 $

268 $

167 $

143

(1) Excludes windfall tax benefit for share-based compensation recognized as a direct adjustment to Additional paid-in capital of $32 million and $26 million for the years ended
December 31, 2016 and 2015, respectively. Due to the adoption of new accounting guidance, windfall tax benefits for share-based compensation beginning in 2017 are
recognized through Net income rather than Additional paid-in capital. The excess tax benefit recorded to Income tax expense in the Consolidated statement of operations was
$48 million for the year ended December 31, 2017.

Unrecognized compensation expense related to the unvested portion of Chubb's employee share-based awards was $345
million at December 31, 2017, and is expected to be recognized over a weighted-average period of approximately 1 year.

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

Chubb's 2017 share-based compensation expense includes a portion of the cost related to the 2014 through 2017 stock option
grants. Stock option fair value was estimated on the grant date using the Black-Scholes option-pricing model that uses the
weighted-average assumptions noted below:

Dividend yield

Expected volatility

Risk-free interest rate

Expected life

2017

2.0%

19.7%

2.0%

Year Ended December 31

2016

2.3%

23.2%

1.3%

2015

2.3%

21.0%

1.7%

5.8 years

5.6 years

5.8 years

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

F-86

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents a roll-forward of Chubb's stock options:

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

Number of
Options

Weighted-Average
Exercise Price

Weighted-Average
Fair Value

Total Intrinsic
Value

Options outstanding, December 31, 2014

9,623,986 $

69.06

Granted

Exercised

Forfeited

Options outstanding, December 31, 2015

Assumed in Chubb Corp Acquisition

Granted

Exercised

Forfeited

Options outstanding, December 31, 2016

Granted

Exercised

Forfeited

Options outstanding, December 31, 2017

Options exercisable, December 31, 2017

1,892,641 $

114.78 $

18.49

(1,457,580) $

(205,551) $

9,853,496 $

60.88

100.25

78.40

339,896 $

77.83 $

1,929,616 $

118.39 $

36.07

21.52

(1,728,949) $

(213,339) $

10,180,720 $

66.65

110.01

87.29

2,079,522 $

139.00 $

22.97

(1,632,629) $

(194,297) $

10,433,316 $

6,675,491 $

73.53

119.44

99.20

82.59

111

490

424

The weighted-average remaining contractual term was 6.2 years for stock options outstanding and 4.8 years for stock options
exercisable at December 31, 2017. Cash received from the exercise of stock options for the year ended December 31, 2017
was $133 million.

Restricted stock and restricted stock units
Grants of restricted stock and restricted stock units awarded under both the 2004 LTIP and 2016 LTIP typically have a 4-year
vesting period, based on a graded vesting schedule. Chubb grants performance-based restricted stock to certain executives that
vest based on tangible book value (shareholders' equity less goodwill and intangible assets, net of tax) per share growth
compared to a defined group of peer companies. The performance-based stock awards comprise target awards which have four
installments that vest annually based on the performance criteria, and premium awards, which are earned only if tangible book
value per share growth over the cumulative 4-year period after the grant of the associated target awards exceeds a higher
threshold compared to our peer group. Shares representing target awards are issued when the performance award is approved.
They are subject to forfeiture if applicable performance criteria are not met. For awards granted prior to February 2014, shares
representing premium awards were not issued at the time the target award was approved. Rather, they were subject to issuance
following the 4-year performance period, if and to the extent the premium awards were earned. For awards granted in February
2014 and thereafter, premium awards have been issued subject to vesting if actually earned or forfeited if not earned at the end
of the 4-year performance period.

The terms of performance-based restricted stock awards granted beginning in January 2017 were updated to now include a 3-
year cliff vesting provision in place of the 4-year graded vesting period. In addition, these awards now include an additional
vesting criteria based on the P&C combined ratio compared to a defined group of peer companies as well as an additional
vesting provision based on total shareholder return (TSR) compared to a defined group of peer companies.

Chubb also grants restricted stock awards to non-management directors which vest at the following year's annual general
meeting. The restricted stock is granted at market close price on the grant date. Each restricted stock unit represents our
obligation to deliver to the holder one Common Share upon vesting. Chubb's 2017 share-based compensation expense
includes a portion of the cost related to the restricted stock granted in the years 2013 through 2017.

F-87

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

The following table presents a roll-forward of our restricted stock awards. Included in the roll-forward below are 22,013
restricted stock awards, 23,812 restricted stock awards, and 24,945 restricted stock awards that were granted to non-
management directors during the years ended December 31, 2017, 2016, and 2015, respectively:

Service-based
Restricted Stock Awards

and Restricted Stock Units

Performance-based
Restricted Stock Awards
and Restricted Stock Units

Number of Shares

Value Number of Shares

Weighted-Average
Grant-Date Fair

Weighted-Average
Grant-Date Fair
Value

3,837,097 $

1,417,965 $

(1,341,358) $

(424,535) $

3,489,169 $

3,706,639 $

1,622,065 $

(2,592,622) $

(420,125) $

5,805,126 $

1,707,094 $

(2,646,084) $

(156,694) $

83.60

114.37

80.05

87.36

97.01

111.02

118.70

100.87

109.42

109.39

139.18

107.73

114.54

378,690 $

326,860 $

(110,340) $

— $

90.87

113.29

98.70

—

595,210 $

101.73

— $

517,507 $

(181,548) $

— $

931,169 $

267,282 $

(222,954) $

— $

—

118.96

102.43

—

111.17

138.90

113.30

—

Unvested restricted stock, December 31, 2014

Granted

Vested

Forfeited

Unvested restricted stock, December 31, 2015

Assumed in Chubb Corp Acquisition

Granted

Vested

Forfeited

Unvested restricted stock, December 31, 2016

Granted

Vested

Forfeited

Unvested restricted stock, December 31, 2017

4,709,422 $

121.16

975,497 $

118.28

Prior to 2009, legacy ACE granted restricted stock units with a 1-year vesting period to non-management directors. Delivery of
Common Shares on account of these restricted stock units to non-management directors is deferred until after the date of the
non-management directors' termination from the Board. Legacy Chubb Corp historically allowed directors and certain key
employees of Chubb Corp and its subsidiaries to defer a portion of their compensation earned with respect to services
performed in the form of deferred stock units. In addition, legacy Chubb Corp provides supplemental retirement benefits for
certain employees through its Defined Contribution Excess Benefit Plan in the form of deferred shares of stock. The minimum
vesting period under these legacy Chubb Corp deferred plans is 1-year and the maximum is 3-years. Employees and directors
had the option to elect to receive their awards at a future specified date or upon their termination of service with Chubb. At
December 31, 2017, there were 279,986 deferred restricted stock units.

ESPP
The ESPP gives participating employees the right to purchase Common Shares through payroll deductions during consecutive
subscription periods at a purchase price of 85 percent of the fair value of a Common Share on the exercise date (Purchase
Price). Annual purchases by participants are limited to the number of whole shares that can be purchased by an amount equal
to ten percent of the participant's compensation or $25,000, whichever is less. The ESPP has two six-month subscription
periods each year, the first of which runs between January 1 and June 30 and the second of which runs between July 1 and
December 31. Legacy Chubb Corp employees were eligible to participate in the ESPP beginning in the July 1 to December 31
subscription period of 2016. The amounts collected from participants during a subscription period are used on the exercise date
to purchase full shares of Common Shares. An exercise date is generally the last trading day of a subscription period. The
number of shares purchased is equal to the total amount, at the exercise date, collected from the participants through payroll
deductions for that subscription period, divided by the Purchase Price, rounded down to the next full share. Participants may
withdraw from an offering before the exercise date and obtain a refund of amounts withheld through payroll deductions.
Pursuant to the provisions of the ESPP, during the years ended December 31, 2017, 2016, and 2015, employees paid $34
million, $24 million, and $18 million to purchase 271,185 shares, 211,492 shares, and 197,442 shares, respectively.

F-88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

13. Postretirement benefits

Chubb provides postretirement benefits to eligible employees and their dependents through various defined contribution plans
and defined benefit plans sponsored by Chubb. With the acquisition, Chubb assumed the outstanding pension and other
postretirement benefit plan obligations of Chubb Corp, which consisted of several non-contributory defined benefit pension
plans covering substantially all its employees, and several other postretirement benefit plans to retired employees. After the
acquisition, Chubb also sponsors the defined contribution plans covering Chubb Corp employees.

Defined benefit pension plans
We maintain non-contributory defined benefit pension plans that cover certain employees located in the U.S., U.K., Canada,
and various other statutorily required countries. We account for pension benefits using the accrual method. Benefits under these
plans are based on employees' years of service and compensation during final years of service. All underlying plans are subject
to periodic actuarial valuations by qualified actuarial firms using actuarial models to calculate the expense and liability for each
plan. We use December 31 as the measurement date for our defined benefit pension plans.

Under the Chubb Corp plans, prior to 2001, benefits were generally based on an employee’s years of service and average
compensation during the last five years of employment. Effective January 1, 2001, the formula for providing pension benefits
was changed from the final average pay formula to a cash balance formula. Under the cash balance formula, a notional account
is established for each employee, which is credited semi-annually with an amount equal to a percentage of eligible
compensation based on age and years of service plus interest based on the account balance. Chubb Corp employees hired prior
to 2001 will generally be eligible to receive vested benefits based on the higher of the final average pay or cash balance
formulas.

Other postretirement benefit plans
We also assumed Chubb Corp other postretirement benefit plans, principally healthcare and life insurance, to retired employees,
their beneficiaries, and covered dependents. Healthcare coverage is contributory. Retiree contributions vary based upon retiree’s
age, type of coverage, and years of service requirements. Life insurance coverage is non-contributory. Chubb funds a portion of
the healthcare benefits obligation where such funding can be accomplished on a tax-effective basis. Benefits are paid as
covered expenses are incurred.

Amendments to U.S. Qualified and Excess Pension Plans and U.S. Retiree Healthcare Plan
On October 31, 2016, we harmonized and amended several of our U.S. retirement programs to create a unified retirement
savings program. In 2020, we will transition from a traditional defined benefit pension program that had been in effect for
certain employees to a defined contribution program. Additionally, after 2025, we plan to eliminate a subsidized U.S. retiree
healthcare and life insurance plan that had been in place for certain employees. Both amendments required a remeasurement
of the plan assets and benefit obligations with updated assumptions, including discount rates and the expected return on
assets.

The plan amendments and related remeasurement of the obligation at October 31, 2016 resulted in a net decrease to the
benefit obligations of $496 million as follows:

• The amendment of the pension plan and excess pension plan resulted in a pre-tax curtailment gain of $113 million

immediately recognized in income during the fourth quarter of 2016 as it reduced expected years of future service of active
plan participants.

• The amendment of the retiree healthcare plan resulted in a reduction in the obligation of $383 million, of which $410

million will be amortized as a reduction to expense over the next 4.5 years as it relates to benefits already accrued. During
the fourth quarter of 2016 and for the year ended 2017, $15 million and $89 million, respectively, was amortized as a
reduction to expense. Additionally, during 2017, the number of involuntary departures due to the Chubb integration met
our established threshold for recognition in income. As a result, we recognized $39 million of accelerated amortization. At
December 31, 2017, the remaining curtailment benefit balance was $267 million which will be amortized as a reduction
to expense over the next 3.5 years.

F-89

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Chubb Limited and Subsidiaries

Obligations and funded status
The funded status of the pension and other postretirement benefit plans as well as the amounts recognized in Accumulated
other comprehensive income at December 31, 2017 and 2016 was as follows:

Pension Benefits