Chubb Limited
Annual Report
2022
Financial Summary
Chairman and CEO Letter to Shareholders
Review of Operations
Citizenship at Chubb
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
Greenhouse Gas Emissions Statement
1
2
26
44
46
48
49
50
About the Photography
The cover and executive photographs in this annual report feature images from
550 Madison Avenue, the landmark building that will become executive offices for
Chubb in New York City. For Chubb’s New York area colleagues, the building will be
a place to collaborate, innovate, mentor and forge the connections and relationships
that sustain and strengthen culture. In the second half of 2023, employees from three
city locations will begin moving to the newly renovated building known for its iconic
Chippendale design. 550 Madison Avenue will be one of the city’s most energy-
efficient structures and the only building targeting both LEED Platinum and WELL
Gold status, the highest office design standards for health and wellness. The cover
image was taken in the public plaza.
Financial Summary
In millions of U.S. dollars
except per share data and ratios
Year Ended
Dec. 31, 2022
Year Ended
Dec. 31, 2021
Percentage
Change
Gross premiums written
$52,013
$46,780
Net premiums written
Net premiums earned
P&C combined ratio
P&C current accident year combined ratio
excluding catastrophe losses
Net income
Core operating income
Diluted earnings per share – net income
Diluted earnings per share – core operating income
Total investments
Total assets
Shareholders’ equity
Book value per share
41,755
37,868
40,389
36,355
87.6%
89.1%
84.2%
84.8%
5,313
6,457
12.55
15.24
8,539
5,569
19.27
12.56
113,551
122,323
199,144
200,054
11.2%
10.3%
11.1%
NM
NM
-37.8%
15.9%
-34.9%
21.3%
-7.2%
-0.5%
50,540
59,714
-15.4%
121.90
139.99
-12.9%
Book value per share excluding AOCI
146.49
139.16
5.3%
Tangible book value per share
Tangible book value per share excluding tangible AOCI
Return on equity
Core operating return on tangible equity
Core operating return on equity
72.20
94.60
9.6%
17.2%
11.2%
94.38
91.85
14.3%
15.3%
9.9%
-23.5%
3.0%
NM
NM
NM
This document contains non-GAAP financial measures. Refer to
pages 50-52 for reconciliations to the most directly comparable
GAAP measures.
NM—not meaningful
Percentage
Change
Constant
Dollars
13.7%
13.0%
13.9%
1
Evan G. Greenberg
Chairman and Chief Executive Officer
Chubb Group
2
To My Fellow Shareholders
Chubb had the best financial
performance in our company’s history
in 2022. We produced record core
operating income and continued to
capitalize on favorable commercial P&C
underwriting conditions around the
world while our consumer businesses
recovered from the pandemic’s lingering
effects. Together, we had another year of
double-digit premium revenue growth.
We once again demonstrated our
risk-taking prowess in an increasingly
perilous world by achieving industry-
leading underwriting profitability,
including record P&C underwriting
income and an 87.6% combined ratio.
We produced record investment income
and took advantage of rising interest
rates and widening spreads to reposition
our fixed income portfolio to generate
higher future returns. We made excellent
progress in our efforts to advance
many of our longer-term strategies
that position us for future revenue and
earnings growth. They include, notably,
the acquisition of Cigna’s supplemental
health and life insurance business in Asia
and the regulatory approval to increase
our stake in Huatai Insurance Group
in China. Together, they deepen our
presence in this fast-growing region, now
approaching 20% of the company’s global
insurance business.
Altogether, as we look forward, the
combination of P&C revenue growth
and underwriting margins, growth in
investment income, and expansion of our
life business in Asia, point to continued
operating income and earnings per share
(EPS) growth for the future.
In this year’s letter, as I have done in
the past, I will describe who we are and
our accomplishments and set out the
important elements of our strategy and
objectives. I will explain why we look to
the future with conviction and optimism
for the benefit of our shareholders,
customers and employees despite
the tremendous risk and uncertainty
surrounding us globally. Successful
companies, in my judgment, operate with
clarity of purpose, knowing who they are
and why they exist. So, let me begin by
describing in just a few words our unique
and distinctive company.
Chubb is the largest publicly traded P&C
insurance company and among the top
five insurers in the world as measured
by market capitalization. Ten years ago,
we were #13, and since then we have
more than tripled our market cap. By the
way, 20 years ago we were #24. We are
a global insurer, predominantly engaged
in all forms of commercial and consumer
P&C, with substantial local operations
in 54 countries and territories, and we
have a sizable and growing Asia life
insurance business. Life insurance now
represents about 13% of our revenue
and earnings if you include a full year
of Cigna and Huatai results. We have
an enviable long-term track record of
financial performance, including growth
in earnings and book and tangible
book value, which is underpinned
by distinguished underwriting and
investment performance. At our core,
we are first an underwriting company,
dedicated to the art and science of
taking risk.
Culturally, we are an ambitious and
highly disciplined organization — patient
in long-term strategy and impatient in
execution. Our success navigating the
multi-year commercial P&C pricing
cycle is an excellent example of strategic
patience. In the years leading up to 2019,
we shrank exposure, or market share, in
those lines where we were not getting
paid adequately to take risk and grew in
others where we were, all while building
our capabilities for future opportunity.
Then, when other insurers pulled back
because of damage to their balance
sheets and income statements from
underwriting inadequately priced and
structured risk, and as a consequence
underwriting conditions became more
favorable, we mobilized the organization
and turned on a dime from defense to
offense. Since 2019, we’ve grown our
commercial P&C business by about 40%.
Strategic patience is also exemplified
by our two signature transactions in
Asia last year. Some 15 years ago, we
attempted to acquire Cigna’s accident
and health (A&H) and life insurance
business in the region but were rebuffed
at the time. The regulatory approval
to increase our ownership in Huatai
to nearly 85% was the culmination of
a 20-year effort to gain control of
this company.
We have thoughtfully constructed
and manage a global portfolio of
top-performing, multibillion-dollar
businesses, with substantial scale and
scope for growth. It’s a well-balanced mix
of business: 69% comes from commercial
lines, where we insure the smallest to the
largest companies with more than 200
different property and casualty related
products; and 31% from consumer
lines, where we insure people’s lives
and the things they own — everything
from autos to homes and their contents
to cellphones. We market through an
extensive range of channels designed to
3
reach the target consumer in the most
efficient manner. In addition to being an
important partner of the largest global
brokers, our distribution network spans
50,000 brokers and independent agents,
hundreds of thousands of exclusive
life and health agents, and hundreds of
direct-to-consumer partnerships that
give us access to hundreds of millions of
existing and potential customers through
digital, phone and face-to-face sales.
The economic and geopolitical
environment
I would characterize the external
environment as complex, uncertain,
and with plenty of risk and opportunity
for those with the strength to take
advantage. In my judgment, inflation in
the United States is moderating, but it’s
stubborn. Taming inflation, along with
financial system stability, will continue to
be the principal objective of most central
banks. Additional rate increases are very
likely, and inflation will remain higher for
longer than most think.
We will continue to experience stress
in the financial markets coming off an
extended period of near-zero interest
rates and excessive liquidity — a period
marked by excessive and naive risk-
taking with asset valuations inflated
beyond reason. Substantial leverage, or
the carry trade, was employed in search
of higher returns. Illiquidity as a risk was
ignored by many. Speculative asset prices
are adjusting, from crypto to real estate
to tech, as they should be, and there is
more volatility and stress in financial
markets yet to come. How the Fed and
Treasury choose to manage between
preservation of fundamental economic
and financial stability while avoiding
bailouts and support for bad behavior is
the question. The freedom to fail is part
of our system. Our free-market construct
depends on striking the right balance.
The U.S. economy is fundamentally
strong, and it is broad-based. The odds of
recession have grown, particularly given
the recent and emerging stress in the
financial industry. Looking beyond this
moment, the U.S. economy is capable of
faster growth, but political partisanship
at the federal level holds hostage our
ability to address fundamental issues
around the increase to our labor force
at scale through smart immigration and
skills training and, separately, removing
regulatory burdens on business, at all
levels, that create an unnecessary drag
on growth. Faster growth would provide
breathing room to invest more in our
competitive profile while cutting deficits,
meeting our social needs and investing in
our military.
Inflation is a global problem and, in
addressing it, the specter of recession
is rising in numerous areas of the world.
In Europe, inflation has become more
entrenched, and the impact of the
war and energy supply disruption will
continue to weigh on its economy. China,
while resuming more rapid growth post-
pandemic, will likely not return to historic
levels given its economic policy, excessive
debt levels and shrinking labor force.
On the geopolitical front, the
international system is experiencing
growing fragmentation as the world
transitions toward an era of greater
multipolarity, with the distribution of
power shifting around two central poles
— the United States and China. In 2022,
geopolitical fault lines grew deeper and
global stresses more pronounced as
great power rivalries involving the U.S.,
China and Russia intensified. The war in
Ukraine has exacerbated global food and
Geographic Sources
of Premium
2022 net premiums written
Latin America 6%
Europe 13%
Asia 14%
4
Bermuda/Canada 6%
United States 61%
energy insecurity and generated spillover
social, economic and security pressures
across Europe.
The United States passed major
legislation intended to strengthen
national competitiveness, but which
also signaled a shift toward greater
protectionism and industrial policy.
Meanwhile, technological decoupling
accelerated between the U.S. and China.
Beijing ratcheted up pressure on Taiwan,
and the U.S. and others responded with
increased support for Taipei, raising
concerns about conflict in the Taiwan
Strait. Greater cohesion has been
forming among developed nations that
collectively share common interests
and are confronting China’s use of
economic and military power in pursuit
of its national ambitions. This pattern of
targeted coalition-building is occurring
among developed Western and Asian
countries, with few developing countries
joining such efforts.
Directionally, trade and politics will
interact at the international, national
and local levels in ways that heighten
volatility in 2023. For instance, China will
attempt further measures to harden its
economy against external vulnerabilities,
while Russia likely will intensify efforts
to skirt international sanctions and
look for China’s support in propping
up its economy. In response, China will
probably seek to extract benefits from
Russia’s dependence but do so in ways
that limit the risk of Western sanctions
and alienation of Europe. China will
aim to attract foreign and domestic
private capital, even as Beijing moves
toward more state-directed, centralized
economic decision-making. The European
Union will seek to limit degradation of
their economic competitiveness in the
face of American industrial policies.
The United States will advance efforts
to limit China’s access to high-end
technologies while it works to reduce an
overdependence on critical supplies and
seeks the cooperation of European and
Asian allies.
Decoupling in high-end technologies will
be a market reality raising uncertainties
for global supply chains. Amid these
shifts, energy markets are reordering in
ways that benefit the U.S.
Underwriting outperformance
in another active CAT year
Last year was another active year in
terms of natural catastrophes (CATs)
and one of the costliest on record for
the insurance industry. Exacerbated
by climate change and urbanization,
the industry and society face a growing
frequency of costly CATs. It’s part of the
new normal — every season of the year
is a major CAT season, punctuated by
extremes in temperature from hot to
cold, moisture from rain and flooding to
drought, fire and wind. Industry insured
losses last year were estimated at
$120 billion, essentially the same as
2021’s elevated level and above the five-
year average of $97 billion. For Chubb,
our total pre-tax CAT losses in 2022 were
$2.2 billion compared with $2.4 billion
in 2021 and our five-year average of
$2.1 billion.
Our 2022 published calendar year
combined ratio of 87.6% compared with
90.9%, 90.8% and 90.1%, respectively,
for the three-, five- and 10-year periods.
As you can see from the nearby chart,
in any period you choose over the past
“ At our core, we are
first an underwriting
company, dedicated
to the art and science
of taking risk.”
5
15 years — or longer for that matter
— Chubb’s P&C combined ratio has
outperformed our peers, with last
year’s outperformance exceeding 5.4
percentage points. As a balance sheet
business, wealth creation is measured by
growth in book and tangible book value.
Since underwriting is our basic business,
we strive to never allow our underwriting
results to destroy book value.
As a secondary measure of underlying
health, our current accident year
combined ratio excluding catastrophe
losses was 84.2%, compared with 84.8%
prior year. Given CATs are growing
in frequency and severity, and occur
year-round, they are a natural and
expected part of a property and casualty
insurer’s operating results. While I
fully understand the logic, judging an
insurer’s results excluding CATs doesn’t
make a lot of sense to me. The revenue
associated with taking the CAT risk is
in the denominator and the losses are
excluded from the numerator, so the
more levered against CAT exposure,
the better the insurer looks. Viewing
results excluding CATs is an attempt to
see through volatility, which made sense
when the volatility was rare, but it is not
anymore. The best measure for investors
is the published calendar year combined
ratio including CATs. It is reality.
at a loss. We are now experiencing a
reinsurer-led hard market cycle in CAT-
exposed property insurance, which is
most property.
Favorable commercial P&C
underwriting conditions
For the year, our $29 billion global
commercial P&C insurance business
produced growth of 11% in constant
dollars. Commercial P&C underwriting
conditions remained favorable
throughout the year with prices
adequate to earn an appropriate risk-
adjusted return. At the same time, the
loss-cost environment has hardly been
benign given inflationary pressures,
economic and social, and the impacts
of climate change. I expect favorable
industry underwriting conditions overall
to continue and, as I write this, that is
the case. However, loss-cost pressures
on price adequacy will persist. Insurers
need to be mindful, or risk underwriting
A rise in reinsurance pricing, reduced
terms of coverage and reduced
availability of capacity are forcing
insurers to assume more exposure and
volatility on their balance sheets or to
shed risk. This presents an opportunity
for us. We are fully prepared to take
more risk and, consequently, more
volatility — thoughtfully and within
reason — as long as we are compensated.
It’s a good use of shareholder capital.
Given the realities of climate change
and the increasing values at risk due
to growing urbanization, I doubt these
conditions are going away anytime soon.
By the way, I am concerned about a
growing public policy problem as a
shortage of insurance or reinsurance
capacity at reasonable prices is sustained
in areas where there is concentration
of values; think Florida or California.
If states deny insurers the ability to
price and tailor coverage adequately
and deny them the flexibility to manage
P&C Combined Ratio
Versus Peers
The company’s underwriting results
have outperformed the average of
its peers over the last 15 years.
105%
100%
95%
90%
85%
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
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
1 Includes AIG, Allianz, AXA, CNA, HIG, QBE,
TRV, Zurich.
Source: SNL and company disclosures
Averages:
Peers1
Chubb
1 year
93.0%
87.6%
3 year
95.8%
90.9%
5 year
96.6%
90.8%
10 year
15 year
97.4%
90.1%
97.6%
90.5%
6
their concentration of risk, insurers
will continue to shed exposure, which
threatens the availability and price
of quality insurance. Even with total
freedom to price and tailor coverage,
there is a limit to how much risk insurers
can take and how much people can pay.
Climate change is driving insurers to send
price signals about the consequences,
and that may ultimately contribute
to individual behavior in terms of
where people choose to live and where
businesses choose to locate. There is a
cost associated with living in extreme
CAT-prone areas. Governments cannot
for long force insurers to subsidize this
behavior, or do so themselves, and think
they can avoid the price. On the other
hand, affordability is a real problem for
many who simply cannot pick up and
move. The issue creates political and
social tensions, and there are no
easy answers.
Rebound in global
consumer growth
Growth in our $13 billion global
consumer operations picked up as
the year went on, recovering from
the pandemic’s effects on consumer
behavior. In addition to our own
capabilities, which we continuously
enhance, several macro factors
contributed to growth and continue
today, though an economic slowdown or
recession can impact us temporarily in
some areas. For instance, our high-net-
worth personal lines business in North
America, where we are the market leader,
had its best year in terms of growth with
net premiums written up 6%. Our sizable
A&H direct marketing business based
in Asia and Latin America capitalized
on reasonably strong consumer credit
and purchasing activity, while our global
travel insurance business benefited as
business and leisure travel resumed. We
are investing in capabilities and growing
our North America Combined Insurance
voluntary benefits business as companies
small and large have experienced strong
employment growth and business
activity. And our Asia life insurance
business got a major boost from the
Cigna acquisition.
Chubb’s A&H, personal lines and life
insurance divisions all experienced
upticks in growth in ’22, with total
company consumer net premiums
written up over 17% in constant dollars.
I expect solid growth ahead for our
consumer business globally, led by Asia
as a result of the newly acquired Cigna
and Huatai operations.
Record financial
performance in ’22
In sum, our company produced superb
full-year 2022 performance, including
several record results:
• Core operating income was a record
$6.5 billion, or $15.24 per share, up
21% on a per-share basis compared
with 2021.
• Record P&C underwriting income of
$4.6 billion was up 23%, driven by
growth in revenue and margin, leading
to an 87.6% combined ratio — a world-
class result and an improvement of
1.5 points over prior year.
“ We are fully prepared
to take more risk
and, consequently,
more volatility —
thoughtfully and
within reason —
as long as we are
compensated.
It’s a good use of
shareholder capital.”
7
• Record adjusted net investment income
was $4 billion, up more than 8% as a
result of rising rates and strong cash
flow. Investment income will make up a
growing percentage of our company’s
earnings as we look forward.
• Total consolidated gross premiums
written, which include both P&C
and Life, were $52 billion while net
premiums written, which are the
premiums we retain on our balance
sheet, were $41.8 billion, up 13.7%
and 13%, respectively, before the
impact of foreign exchange. P&C net
premiums written grew 10.3% to
$38.1 billion, while Life Insurance
premiums, which benefited from the
midyear Cigna acquisition, grew 52%
to $3.6 billion, and are $5.7 billion on
an annualized run-rate basis including
Huatai Life.
Rising rates and a strong dollar during
the year produced sizable mark-to-
market losses on our fixed income
invested assets, which have temporarily
impacted book value in a significant way.
For the year, book and tangible book
value per share decreased 12.9% and
23.5%, respectively, driven mostly by
after-tax net realized and unrealized
losses of $10.9 billion in the investment
portfolio. Ironically, I view the mark as
a good thing because it speaks to future
income power. We are predominantly
a buy-and-hold, fixed income investor
with an average portfolio duration of 4.5
years, so the mark is transitory. In fact,
about half of the mark will accrete back
to book value over two years.
Our core operating return on equity
(ROE) and core operating return on
tangible equity last year were 11.2% and
17.2%, respectively. As we look forward,
hand in glove with growing income and
EPS, and well in excess of our cost of
capital that we calculate to be circa 7%,
we expect Chubb to generate an ROE of
13%-plus and a tangible ROE of 20%-plus
on a deployed capital basis.
Our policy is to manage for capital
flexibility — after all, we are a balance
sheet business, in the business of risk,
and we are ambitious to grow. We
maintain flexibility for both and return
the balance to shareholders. The last
two years are instructive. We organically
grew our P&C premiums by 21.5%, and
that required capital. We deployed
$5.4 billion for the Cigna acquisition
and invested a further $1.4 billion to
increase our ownership in Huatai, both
strategic acquisitions. At the same time,
we returned more than $10.5 billion of
capital to shareholders through share
repurchases (over 9% of outstanding
shares) and dividends — all the while
maintaining strong capital adequacy
given our earnings generation power.
In what was the worst year in more than
a decade for global equities and bonds,
Chubb shareholders were rewarded
in 2022 with 14% appreciation in the
stock price and a total return of 16%,
outperforming our peer group’s 8% and
12%, respectively, and far superior to the
S&P 500’s negative returns. Over three
years, our stock has increased 42% with
a total return of 50%. Insurance is a long-
term business, and attractive long-term
shareholder returns are a derivative of
doing our job well. In that regard, our
10-year total return of 243% compares
favorably to both the S&P 500 (227%)
and the S&P 500/Financials (215%).
Next to our people, the balance sheet is
our most important asset. We have
$66 billion in total capital — up from
$33 billion 10 years ago and $9 billion
20 years ago — and $51 billion in equity
at December 31. Our company is rated
AA by S&P and A++ by AM Best.
Three engines of future
earnings growth
Looking forward, our focus is on
continuing to grow operating earnings
at a healthy rate, which, in turn, will
drive EPS. We have three engines of
future earnings growth: 1) underwriting
income; 2) investment income; and 3) our
emerging life division, particularly in Asia.
Underwriting income power is about
revenue growth and superior margins.
We will continue growing P&C premium
revenue by capitalizing on favorable
commercial P&C market conditions
and advancing our P&C diversification
in commercial and consumer lines
globally. Our record $4.6 billion of
pre-tax P&C underwriting income last
year was an annual increase of nearly
$1 billion. At Chubb, accountability for
underwriting discipline starts at the
top: Management owns it and is deeply
engaged at every level and in all parts of
the organization around the world. We
have operationalized our underwriting
culture with a balance between local
capability and autonomy, as well as global
8
command-and-control oversight, which
we have honed over the years without
impacting accountability and speed.
When we see market opportunity, we
strive to quickly seize it.
On the other hand, our willingness to
trade market share for underwriting
profitability, along with relentless
expense management and efficiency, is
a competitive advantage. Our expense
ratio is superior to the average of other
P&C insurers across the market-cap
spectrum. Expense discipline is in our
culture, and it’s how we operate, but it
doesn’t prevent us from investing in our
future, including our people, technology
and presence in new territories or
product areas.
The second engine of our future earnings
growth is investment income. After
decades of historically low interest
rates, the environment changed in ’22
and we entered a favorable period for a
fixed income investor. During the year,
in response to inflation that reached the
highest level in four decades, the U.S.
Federal Reserve raised rates seven times,
lifting the federal funds rate from 0.25%
to a current range of 4.5% to 4.75%,
and it will go higher. The age of cheap
money is over for a while, and we have
capitalized and fully intend to continue.
We were well prepared for the rapid rise
in rates. Our $114 billion investment
portfolio is 87% fixed income and of high
quality and, with a portfolio duration of
about 4.5 years, every 100 basis points of
increase in our portfolio yield generates
approximately $1.1 billion in annualized
pre-tax income. Throughout the year,
we thoughtfully and meaningfully
accelerated the turnover of our portfolio
in a targeted manner so that we could
put more cash to work more quickly at
higher yields. By the end of the year, our
reinvestment rate was averaging 5.6%, up
from 2.3% in the fourth quarter of ’21. As
that higher reinvestment rate found its
way into our portfolio, our average yield
on invested assets reached 3.6% in the
fourth quarter, up from 3.1% prior year,
with the average yield on fixed income
reaching nearly 4%.
Our growing earning power began to
show in the second half of ’22, with
quarterly adjusted investment income
of about $1.1 billion and our quarterly
run rate by the end of the year up $200
million from the prior year fourth quarter
— and that momentum will continue to
build. Contributing to that increasing
investment income was growth in
our invested assets, which stood at
$113.6 billion at December 31 and was
supported by record operating cash
flow of $11.2 billion and the addition of
approximately $4.5 billion in invested
assets from the Cigna Asia acquisition.
With the addition of Cigna’s life
insurance companies in Asia and the
potential over time for Huatai Life in
China, we have added substantially to
our life division foundation. We have
ambitious plans for this business, which
includes Chubb Life, our Asia-based
international life insurance business, and
our North America-based Combined
Insurance affiliate. As an emerging
source of operating income and growth,
“ We thoughtfully
and meaningfully
accelerated the
turnover of our
portfolio in a targeted
manner so that we
could put more cash
to work more quickly
at higher yields.”
9
and with an annualized run rate of nearly
$6 billion in gross written premiums and
earnings approaching $1 billion in ’23,
I view our life division as another source
of future earnings growth.
Strong, balanced growth from
our commercial and consumer
businesses globally
Chubb has approximately 34,000
employees operating out of more than
500 offices in the U.S., Europe, Asia, Latin
America and other parts of the world.
When we consolidate Huatai, they will
grow to 40,000 and 1,200, respectively.
Let me briefly describe each of our
major businesses so that I may bring the
company to life for you.
North America
Our North America Insurance franchise,
with substantial presence in the
United States, Canada and Bermuda,
writes about $33 billion in gross P&C
premiums annually and is Chubb’s
largest business, comprising more than
60% of the company. In the U.S., which
represents almost a third of the global
insurance market, we are the largest
commercial P&C insurer and serve
all sizes of companies. Capitalizing
on continued favorable underwriting
conditions and a resilient U.S. economy,
North America had an excellent year
in ’22. Net premiums grew 9.7%, with
commercial lines up 10.6% and personal
lines up 6.2%. Since the beginning of the
commercial P&C hard market cycle in
2019, we’ve added about $8 billion of
gross premiums to this division while
driving down the combined ratio by
almost 2.5 points.
Within North America, our Major
Accounts division, with $9.8 billion in
annual gross premiums, serves America’s
largest domestic and multinational
corporations and is the #1 insurer not
only in terms of size but also in product
and service capability, presence and
know-how. Major Accounts provides
core risk management services,
combining sophisticated risk-sharing
capabilities for companies that self-
insure with a broad range of risk-transfer
coverage delivered on a global basis
through our extensive international
network. Coverage includes all forms of
property and liability-related products,
from traditional P&C to specialties such
as directors and officers (D&O) and
errors and omissions (E&O) to excess
casualty and cyber. While 98% of the
Fortune 1000 are already Chubb clients,
we have billions of dollars of opportunity
available over time by writing more
coverage for each customer: About half
of our largest 4,000 U.S. clients buy
three or fewer coverages from us. Major
Accounts benefited from continued
favorable market conditions last year and
grew net premiums by about 8.5%.
With $7.9 billion of annual gross
premiums, Commercial Insurance is
our North America division that serves
middle-market companies, where we are
the #3 provider, and small businesses.
The division grew net premiums
8% in 2022. This is a vast segment of the
economy, ranging from publicly traded
mid-size multinational organizations
to single-location private companies
and everything in between. For middle-
market companies, we offer core P&C
products complemented by more than
35 specialty coverages, along with
expertise and risk engineering services
tailored to 25 industries, from healthcare
and construction to life sciences and
technology, all delivered through an
extensive local branch and regional
network. In ’22, we launched a dedicated
product and service offering targeted to
the lower middle market — a relatively
undeveloped customer segment for
Chubb historically. We are building a
fully digital division focused on small
companies that offers a highly automated
experience — from solicitation to data
ingestion to quoting to issuance to claims
and servicing via agent self-service tools.
We have a significant position in the
U.S. excess and surplus (E&S) insurance
market for hard-to-place risks through
our Westchester division. Westchester
writes more than $4 billion in annual
gross premiums through wholesale
brokers and has capitalized on the hard
market with net premium growth of 53%
since 2019. The business offers a broad
range of coverage, including property,
casualty and specialty products such as
construction, financial lines, cyber and
product recall. Last year, Westchester’s
net premiums increased 11%, and this
trading business is well-positioned to
grow in current market conditions.
The original ACE company founded
in 1985, Chubb Bermuda specializes
in excess or high limits of liability and
property protection for some of the
10
largest corporations. Complementing
our Major Accounts team, Chubb
Bermuda rounds out large global
insurance programs for companies in
industries such as pharmaceuticals and
energy that are exposed to class action
litigation-related claims and other
legal exposures. A subsidiary of Chubb
Bermuda is the political risk specialist
firm, Sovereign Risk. Sovereign and
sister company Chubb Global Markets
in London together make us one of the
largest political risk and cross-border
trade credit underwriters in the world — a
specialized field that was in the spotlight
in ’22 given ongoing geopolitical
tensions.
With about 20% market share and 88
million acres insured, Chubb is the #1
provider of multi-peril crop insurance
in America through our Rain and Hail
affiliate, founded in 1919. We also
have a growing P&C agribusiness that
serves the nation’s farming and ranching
communities. Together, these operations
make up our Agriculture division, which
writes $4.4 billion of gross premiums
annually. Net premiums were up
21.7% last year and can fluctuate up
and down based on commodity prices.
Crop insurance is a CAT-like business,
vulnerable to weather volatility, and
we produced reasonably good financial
results in below-average crop conditions.
Crop insurance is a public-private
partnership with the U.S. government,
and we operate a sophisticated, highly
automated, data-rich business with
skilled professionals, most of whom come
from an agricultural background.
Chubb Personal Risk Services (PRS)
is the #1 insurer to high-net-worth
individuals and families in North
America. With $6 billion of gross
annual premium, Chubb leads this niche
category — which we created more
than 35 years ago — and today we have
an estimated market share of about
60% among the specialist insurers that
serve this category. We carefully tailor a
collection of underwriting, engineering,
appraisal and claims-related services to
best handle these discriminating clients’
complex personal risks — from multiple
homes, boats and planes to fine art,
jewelry and other valuables to personal
liability. These exposures are growing
for our clients, and so is their demand for
insurance, and we are well-positioned
to serve them. In return, we’ve earned
tremendous loyalty: With more than 90%
annual retention by customer and 99%
by premium, PRS exemplifies the Chubb
brand’s reputation for quality in America.
Our focus on the top high-net-worth
Signature and Premier clients, who value
rich coverage and exceptional service
more than price, resulted in net premium
growth of 12.5% last year.
With rising healthcare costs and financial
protection an increasing concern for
employers and employees, Combined
Insurance is our growing worksite
benefits business. The business has
two distribution channels that offer
supplemental A&H and life voluntary
benefits plans. A team of more than
2,200 independent agents focus on small
businesses, and they grew annualized
sales 16% in 2022, while Chubb
Workplace Benefits caters to mid- and
large-market employers through brokers
and grew annualized new business by
“ In the U.S., which
represents almost a
third of the global
insurance market,
we are the largest
commercial P&C
insurer and serve all
sizes of companies.”
11
17%. Many of Combined’s agents, by
the way, are veterans, and the company
was recognized as one of America’s
top Military Friendly® Employers
by VIQTORY in 2022 for the fifth
consecutive year.
International
Almost 40% of Chubb’s gross premiums
last year, or $19.7 billion, originated
outside the U.S. Beyond North America,
Chubb operates in 51 countries in three
major regions of the world: Europe,
Asia and Latin America. We have more
than 350 branch offices overseas,
with Chubb professionals competing
locally for business of all kinds. Our
international P&C business, Overseas
General Insurance, wrote $13.7 billion
in gross premiums through multiple
commercial and consumer divisions. Our
international life insurance business,
Chubb Life, with an annualized run rate
of $4.9 billion in gross premiums, is
Asia-focused and provides protection
and savings-oriented coverage for
consumers.
Last year, international P&C net
premiums written grew 11.4% in
constant dollars but only 3.2% after
foreign exchange translation. With
the strongest U.S. dollar in 20 years,
the negative impact of FX masked the
real strength of this business, which
experienced its best growth in a decade.
Commercial P&C lines grew 11.8%,
and since the beginning of the hard
market cycle in 2019, they have grown
more than 40%. At the same time, our
international consumer P&C business,
which experienced slow growth during
the pandemic, rebounded well in ’22 with
net written premiums growth of 10.8%
in constant dollars.
Europe is Chubb’s second-largest
commercial P&C market after North
America and the company’s third-
largest region overall, with annual gross
premiums of $6.9 billion. Our European
Group includes separate retail P&C and
E&S wholesale divisions with operations
in 27 countries. We have a substantial
longstanding presence in the region,
which spans from the U.K. across the
entire European continent and also
includes some parts of the Middle East
and South Africa.
The retail operation writes $4.9 billion in
gross premiums and serves businesses of
all types in the U.K. and on the Continent,
from multinational corporations to
Premium Growth by Geography
North America
Asia
Latin America
Europe
Total for
All Regions
Percentage change in P&C net
premiums written in 2022 versus
2021 in constant dollars
Overall growth
Commercial businesses
Consumer businesses
16.8% 16.9% 16.8%
15.2%
13.3%
11.5%
10.8%
10%
6.5%
9.9%
7.8%
11.0%
10.3%
8.4%
Data excludes net premiums written from
the Life segment
1.4%
12
medium-size and small companies. In ’22,
the retail commercial P&C business had
another excellent year. Capitalizing on
the hard market by providing a consistent
and visible presence with a steady source
of capacity at a time when other insurers
were less willing to take risk, Chubb
emerged as a major and trusted brand-
name insurer of large domestic and
multinational European corporations.
Today, we insure more than 90% of the
companies in the CAC 40 in France and
write five or more lines of business with
almost 70% of the companies in the
FTSE 100 in the U.K. Earning the trust of
these clients and winning business from
entrenched local competitors takes time
and commitment — another example
of our strategic patience. Over the past
three years, Chubb in Europe has grown
more than 40% in constant dollars as we
expanded our appetite and delivery in all
key markets on the continent, including
France, Germany and Spain, as well as
across the U.K.
On the consumer side, the division
includes an A&H business that is a leader
in employer-paid group personal and
travel accident insurance for employees.
In the U.K. and Continental Europe, we
are the leading cellphone insurer for the
customers of mobile network operators,
and we also have a market-leading
position in the U.K. high-net-worth
personal lines segment.
Our international E&S business, known
as Chubb Global Markets (CGM),
operates in the London wholesale market
and Lloyd’s and writes $2 billion in gross
premiums annually. From marine cargo
and ships to airlines and oil rigs, from
political risk to property around the
world, CGM is a recognized leader in the
market. Net premiums grew 8.3% last
year. We shrunk CGM’s premiums to a
low point of about $600 million in 2017
at a time when we were simply not being
paid enough to generate a proper risk-
adjusted return. Since then, the business
has more than doubled in size.
In Latin America, we have major
operations in nine countries and insure
commercial customers of all sizes as
well as consumers through A&H
and personal lines, in sum producing
$2.9 billion in gross premiums annually.
After experiencing a considerable
slowdown during the pandemic, Latin
America resumed growing. Today, it is
a very healthy business for Chubb and
is, in fact, our most digitally advanced
region. Our partnerships with innovative
digital enterprises such as Nubank and
Uber complement our strong traditional
business presence in countries such as
Mexico, where we are the #3 auto insurer
with nearly 2 million insured vehicles,
and in Brazil and Chile, the latter
anchored by our long-term relationship
with Banco de Chile, the nation’s
largest bank.
The region returned to double-digit
growth in ’22 with net premiums
up 16.8% in constant dollars. The
commercial team saw a steady increase
in rates, with strong customer retention
and new business in major P&C client
segments, producing double-digit
growth. On the consumer side, premiums
also had double-digit growth, driven by
our distribution partnerships through
leading banks, retailers and digital
platforms.
“ Almost 40% of
Chubb’s gross
premiums last year,
or $19.7 billion,
originated outside
the U.S.”
13
Chubb has had a large and growing
presence in Asia for many years with
both non-life and life operations. As
I mentioned in the beginning, two
strategic acquisitions in 2022 elevated
the position of Asia for our company,
making it the second largest region after
North America. In July, we completed
the acquisition of Cigna’s A&H and life
insurance business in six countries across
Asia-Pacific. In November, we received
regulatory approval to increase our
ownership stake in Huatai Insurance
Group in China to 83.2%.
With a current annualized run rate
of $9.8 billion in gross premiums, our
insurance operations in Asia have more
than 200 offices in 15 countries and
territories, serving both commercial
and consumer customers with P&C,
A&H, personal lines and life through
dozens of major brokers and hundreds of
thousands of agents. Very few insurers
have anything comparable. The region is
well balanced between non-life and life,
with a greater concentration in insurance
revenue for consumers than commercial
customers.
In 2022, Asia generated P&C net
premium growth of 13.3% in constant
dollars, with both commercial and
consumer lines equally contributing.
Commercial business benefited from
favorable underwriting conditions,
particularly in Australia, whereas
consumer P&C growth was driven
principally from activity in our large
direct marketing business and our travel
insurance business, where growth
has picked up substantially. As China
has reopened from its strict pandemic
controls, this will further stimulate
growth in the region; think trade, which
benefits commercial lines and business
travel, and think tourist travel, as millions
of Chinese begin to travel again.
The Cigna life company operations,
an outstanding franchise, writes
predominantly A&H business and
provides both an immediate boost to
revenue and earnings and adds to a
substantial foundation for future growth
in the region. Korea — now Chubb’s
second-largest country with nearly
$3 billion of annualized premium —
features a well-established, highly
respected and extremely well-managed
life company as the centerpiece, and a
significant, well-run, non-life company
presence. In Korea, we have a unified
vision around marketing life and non-
life products, centered on our massive
telemarketing and consumer database
capabilities, emerging digital tools, and
continuous product innovation. We also
have a network of thousands of agents
and brokers. Our unified life/non-life
vision in Korea will serve as a model for
other countries in the region.
We are on track with the integration of
the Cigna operations into Chubb and
expect to deliver all of the value-creation
benefits we previously communicated,
including revenue and expense synergies,
EPS and ROE accretion, and an IRR of
about 20%.
As for Huatai, our increased ownership
makes Chubb the first foreign financial
institution to majority-own a Chinese
financial services holding company,
with separate P&C, life and asset
management/mutual fund subsidiaries.
Chubb and Huatai employees have
worked as colleagues for 20 years and
know each other well. We have the
vision and plans to significantly grow
and improve Huatai’s capability and
profitability over time — we are looking
at five to seven years and beyond —
transforming it into a much larger,
high-performing Chinese company with
Chubb characteristics. To be clear, Huatai
is not about short-term financial returns.
We bought an incredibly rare asset with
a valuable set of licenses and more than
700 branches in 28 provinces. Given
the size of the Chinese economy and
the country’s aging population, growing
middle class and limited government
safety net, Huatai represents an
attractive long-term opportunity, though
the risks of doing business in China
are unquestionably high, including the
geopolitical, in particular, the U.S.-China
relationship.
Our growing Asia presence is an
important component of our company’s
long-term future. With a young and
industrious population renowned for its
work ethic, and its family- and savings-
oriented culture, Asia is the region of
the world likely to generate the most
economic growth and wealth creation in
coming decades, and we are positioned
to capitalize. Today, the region accounts
for more than 40% of global economic
output, but only 26% of the world
14
insurance market: China alone is the
second-largest life insurance market in
the world after the United States. So, the
medium- and long-term opportunity is
promising.
Two sides of the digital coin:
company transformation and
digitally native business unit
Chubb has been on a journey, reimagining
our future and how we will remain
vital and relevant in a digital age. This
is central to both our short- and long-
term strategies. We think of our digital
mission as two sides of the same coin
that will converge over time. On one side
are our vision and the ongoing efforts to
transform our businesses in a targeted
way, which means everything we do in
our company. On the other side is the
progress we’re making in growing our
digitally native business unit, which is
about generating revenue and income.
We have a plan to transform our
traditional flow businesses to operate as
fully digital businesses. Mostly serving
consumers and small commercial
entities, flow businesses are well
suited for total automation and other
efficiencies, and they currently represent
the majority of the company’s total
premium. Transformation includes how
we organize, who works with whom, the
skill sets we employ, how we do business,
the use of data and analytics, technology
and our tech organization. The timeline
for this endeavor is four to five years and
we’re making good progress.
We have established and staffed a
transformation office to lead, guide
and help each division make the flip
to a digital way of doing business.
In our vision, our future workforce
will consist of fewer but more highly
skilled employees who will market, sell,
underwrite and service in a customer-
centric way, supported in everything
by data, technology and automation.
It’s all about how we do our business,
our speed of change, improved insights
and flexibility to adapt. In our vision,
transformation will ultimately result
in premium growth with little marginal
cost, superior risk selection and pricing,
increased speed to change across all of
our functions, and radical automation,
which we define as straight-through
processing of 75% or more of all major
processes. Our efforts to date have
achieved significant efficiencies with
run-rate savings projected to exceed
$420 million by the end of 2023.
Turning to the other side, our digital
business unit is expanding quickly
in terms of revenue, products and
capabilities, with nearly 200 leading
digitally native platforms and financial
institutions, particularly in Asia and Latin
America. This business has 20 million
digital policies in force and access to
more than 375 million customers. If you
think about what I just described about
our operation in Korea and imagine
these digital capabilities there, you
understand why we are excited about
the future. In 2022 we produced about
$500 million in gross premiums through
digital platforms, and in 2023 we should
achieve close to $750 million with an
underwriting profit.
“ Our increased
ownership in Huatai
makes Chubb
the first foreign
financial institution
to majority-own a
Chinese financial
services holding
company.”
15
The risk environment: staying
on top of rising loss costs
Returning briefly to the current risk
environment, generally speaking,
loss costs rise every year. If pricing
doesn’t rise at the same rate, all things
being equal, loss ratios rise. Insurers’
underwriting margins have increased
over the past few years, but, as I
mentioned earlier, loss costs have been
rising as well. We face a risk environment
that is more threatening and challenging
to navigate. While numerous risks are
driving a rise in loss costs, three stand
out: 1) CPI inflation-driven expenses
such as auto repairs, building supplies
and labor, which are driving property or
physical asset costs; 2) social-, medical-
and litigation-related expenses, which
are driving liability costs; and 3) climate-
driven costs from natural perils such as
hurricanes, flooding and wildfires.
When inflation is accelerating, the lag
time and accuracy of loss-cost data
become critically important to an insurer
— much more so than in periods of low
inflation. Last year, we enhanced our
ability to collect and assess loss-cost data
more quickly and accurately so that we
could react rapidly and frequently. This
enabled us to be more insightful in the
pricing and reserving of our short- and
long-tail lines, and endeavor to stay on
top of inflation. In 2022, the vast majority
of our portfolio achieved favorable
risk-adjusted returns, and we charged
additional rate primarily to keep pace
with rising loss costs.
Heightened loss-cost inflation — which,
given the nature of the drivers, is likely to
ameliorate in ’23 for short-tail property
lines as general inflation begins to abate
— will remain an industry challenge for
long-tail casualty lines. Elevated loss
trends are showing up in everything
from auto accidents to securities class
action suits, from medical malpractice
and professional liability claims to sexual
abuse-related reviver statutes. While
the insurance market is reasonably
disciplined at the moment, casualty rates
in most classes will need to rise at an
accelerated rate or else the industry will
fail to keep pace.
A major contributor to frequency
and severity of loss in casualty lines is
litigation as a business, driven by an
aggressive trial bar and turbocharged
by litigation funding, a multibillion-
dollar global investment class that
allows investors who have suffered no
harm to pay litigation costs on behalf
of the plaintiff in exchange for a cut of
a favorable settlement. Set against a
backdrop of societal attitudes around
social justice, anti-corporate sentiment
and juries sympathetic to “victims,”
plaintiff attorneys drive up litigation-
related costs by testing exaggerated
theories of liability and corporate
responsibility.
The costs and compensation in the U.S.
tort system amounted to $443 billion
in 2020, equivalent to 2.1% of U.S. GDP,
or $3,621 per American household,
according to a recent survey by the
Institute for Legal Reform. These levels
are the highest since at least 2016 and
have outpaced the growth in inflation
and GDP over the same period. Only
53 cents of every dollar reach claimants,
while the rest goes to litigation costs
and other expenses — including the cut
for the litigation funders. The insurance
industry actively supports reform efforts,
but this isn’t simply our fight, and insurers
are not the most effective advocates for
reform. Excessive litigation is a tax on the
Premium Distribution
by Product
2022 net premiums written
Global Reinsurance 2%
Agriculture 7%
Global A&H and Life 16%
Personal Lines 18%
16
Large Corporate
Commercial P&C 20%
Middle Market/
Small Commercial
P&C 25%
Wholesale Specialty
Commercial P&C 12%
economy and business, and the business
community as a whole must take the
lead if we are to bring this back to a more
rational place. Innovation and progress
are impacted by an excessively litigious
society, which in turn impacts economic
growth.
Supporting the transition to
a net-zero future
As an insurer, our business is to provide
protection to our insureds, which
includes supporting their resilience
against the threat of a changing climate.
We have an objective to help society
make an orderly transition to a net-zero
economy in a responsible way that does
not sacrifice our energy security needs.
Through our underwriting actions, we
can support and encourage businesses
to adopt best practices to achieve these
goals. We are serious about being a
leader in sustainability and continue
to demonstrate our commitment with
realistic, tangible actions rather than
make hollow net-zero pledges that
are, in my judgment, little more than
greenwashing.
We appointed an expert in environmental
and global climate issues as global
climate officer to lead our climate-
related strategies, including business
and public policy initiatives. In January
2023, we launched a new climate-
focused division, Chubb Climate+, that
brings together our extensive technical
capabilities in underwriting and risk
engineering to support businesses
engaged in developing or employing
new technologies and processes to
reduce dependence on carbon. The
business presents opportunities to
expand our underwriting in carbon
capture, hydrogen, electric vehicle (EV)
charging stations, and industrial battery
storage systems that allow clean energy
producers (e.g., wind and solar) to store
energy for efficient distribution. Chubb
is already a leading provider of many
of these products and services, and in
2022 wrote more than $675 million in
premium revenue related to businesses
engaged in carbon reduction.
A recently announced major effort is
the development and introduction of
another industry first: carbon-reduction
and sustainability-based underwriting
criteria to assess oil and gas extraction
projects that encourage our clients to
limit carbon emissions, or we won’t take
their risk. We are specifically focused on
the capture or reduction of methane, a
byproduct of oil and gas production that
can be effectively managed through the
adoption of controls and technologies
to eliminate routine venting and flaring.
This is a first step, and our underwriting
standards will continue to evolve over
time as we examine more areas. We are
also focused on limiting underwriting
of oil and gas extraction in globally
recognized conservation areas. These
efforts go far beyond our existing self-
imposed underwriting and investing
limits on coal and tar sands.
The Chubb Charitable Foundation
continues to demonstrate our
philanthropic support of a net-
zero economy through a range of
environmental causes. In 2022, the
Foundation approved a grant to The
Conservation Fund (TCF) to grow the
Chubb Land Legacy Revolving Fund. With
this additional funding, TCF can protect
“ We have an objective
to help society make
an orderly transition
to a net-zero economy
in a responsible way
that does not sacrifice
our energy security
needs.”
17
more acres of biosensitive lands across
the U.S. that are important to wildlife
and support resilience and restoration
projects that aid in the recovery of
damaged ecosystems.
Trade contributes to America’s
economic strength
Earlier, I touched on America’s efforts to
strengthen its national competitiveness.
International trade has become
politically unpopular in the United
States. Calls for protectionism generally,
and decoupling from China specifically,
have grown louder on the left and the
right of the political spectrum. Opening
markets, including our own, is equated
with others taking advantage of America,
with offshoring, hollowing out America’s
manufacturing sector, job losses, and
favoring wealth concentration above
labor interests.
This trend stands in tension with
America’s tradition of leading the world
in pushing forward a vision of a rules-
based, market-oriented trading system.
Since World War II, America’s persistent
efforts to open markets in exchange for
access to our own has contributed to
a period of unprecedented American
power and influence on the world
stage. These efforts were guided by a
recognition that roughly three-quarters
of world purchasing power and more
than 95% of world consumers are outside
our borders. Our trade policy also was
informed by an awareness that others
were drawn to the United States in large
part by the economic opportunities
partnership provided. Trade policy should
be viewed as a significant feature of our
foreign policy.
America’s national power rests on the
foundation of a strong economy. Trade
contributes to our economic strength,
which enables the country to invest in
basic science, national infrastructure,
military advancements, and social
safety net programs. International
trade also enables American companies
to build scale, which makes them
more globally competitive. America’s
continued global leadership demands
increased investments in these building
blocks of national competitiveness.
However, when it comes to trade, the
United States is moving in the opposite
direction. Washington is not advancing
negotiations for new agreements and is
not enforcing existing ones.
Global trade flows are reordering.
China overtook the United States as the
European Union’s largest trading partner
in 2020 and trade volume between the
two has grown since. A similar story
applies to China’s trade ties with Africa,
India and Southeast Asia. Nearly two-
thirds of all countries now trade more
with China than the U.S., making China
the world’s largest trading power.
In Asia, two regional agreements, the
Comprehensive and Progressive Trans-
Pacific Partnership (CPTPP) and the
Regional Comprehensive Economic
Partnership (RCEP), have come into force
without United States involvement. We
should bind the world’s fastest-growing
region more closely to our economy
by joining the CPTPP. Doing so would
lower American consumer prices and
allow Southeast Asia to hedge against
overreliance on China for its future
economic growth.
As our country adapts to shifting trade
patterns and reduces reliance on China
for the manufacture of key inputs, it
needs to regain its voice in pushing for
high-standard trade agreements. The
most recent trade agreement ratified
by Congress, the United States-Mexico-
Canada Agreement (USMCA), contains
provisions on market access, services,
investment and intellectual property
protections, subsidies and dispute
settlement provisions. This should be the
benchmark for future trade agreements.
In our efforts to maintain global
competitiveness, the United States has
passed legislation to invest in specific
sectors, such as through the Inflation
Reduction Act, the CHIPS and Science
Act, and the Infrastructure Investment
and Jobs Act. These laws, which combine
industrial policy and protectionism to
benefit specific sectors and companies,
privilege American companies and
foreign corporations that move to our
country. Our economic history shows
that such efforts have failed more often
than they have succeeded. Such state-led
intervention betrays a lack of confidence
in our market-based economic model to
direct private capital where it can most
effectively support innovation.
18
“ America’s national
power rests on the
foundation of a strong
economy. Trade
contributes to our
economic strength.”
Take, for example, the CHIPS Act. The
primary impediment to the growth of
our domestic semiconductor sector is
not access to capital. Allocating subsidies
and benefits to spur construction of
new semiconductor fabrication plants
without also addressing the shortage
of skilled labor in this sector, and
regulation at every level that adds time
and cost of construction, misdiagnoses
root problems and will likely generate
much waste and inefficiency. Similarly,
protectionist requirements embedded in
the Inflation Reduction Act already are
damaging relationships with close allies
in Europe and Asia who object to having
their firms and countries disadvantaged
by this legislation.
Paradoxically, as the United States has
implemented new industrial policy
and protectionist measures, we are
encouraging a “friend-shoring” agenda,
i.e., shifting supply chains to countries
that are not hostile to American interests
or values. These efforts are designed to
ensure predictable and resilient supply
chains. In the face of growing hostility
with China, there is a sound logic for the
U.S. to strengthen supply chain resiliency
in designated critical sectors. If such
efforts are used as a vehicle to advance
a protectionist policy agenda, the
danger is that the costs in degradation
of national competitiveness outweigh
potential gains.
The U.S.-China relationship
In my judgment, China’s policy direction
is damaging its own interests by
overplaying the role of the state in the
economy. The costs can be measured in
declining GDP growth rates, diminishing
returns on capital, lower rates of
productivity, thin capital markets,
overreliance on the property sector for
growth, and unprecedented levels of
debt. China’s economic policy trajectory
reflects Chinese leaders’ suspicion of
market forces and their drive for Party
control. Beijing has shown a preference
for statist economic policies that allow
them to direct the flow of capital and
talent to state-owned enterprises and
priority industrial sectors.
The jury is out on the long-term
effectiveness of China’s state-guided
economic policies. From a historical
perspective, no country has delivered
sustained growth for long by replacing
the judgment of markets with that of
the state, as China increasingly is doing.
In these matters of economic policy,
credibility is easy to lose and hard to
recover. Soothing words will not restore
private sector foreign and domestic
business confidence and encourage
investment. Only sustained, predictable,
market-oriented performance will.
China’s economy will rebound in 2023,
but likely not to a pre-COVID growth
trajectory. Foreign and domestic capital
will be cautious. China’s state-backed
plans to dominate the commanding
heights of technological innovation,
19
combined with its aggressive efforts
to appropriate foreign intellectual
property by whatever means necessary,
are generating backlash from other
advanced economies. China’s large-
scale military advances are sharpening
international focus on the country as a
strategic challenger. In the U.S.-China
context, rivalry and mutual perception of
threat are growing, creating a dynamic
that is feeding upon itself. This trend is
undermining arguments for strategic
patience and managing competition
with an eye toward long-term national
interests.
Even with these myriad challenges, China
will remain a central feature of the global
financial picture for decades to come.
The country is the world’s second-largest
economy, its largest manufacturer,
and largest trader. Notwithstanding
talk about U.S.-China decoupling, the
two countries set a record for bilateral
trade volume in 2022, with goods trade
reaching $680.7 billion.
Taiwan presents the most proximate risk
of conflict for the U.S.-China relationship.
Beijing has made its ambition clear that
it wants to pull Taiwan into its orbit and,
increasingly, is matching resources to
its ambitions. Washington is improving
coordination with allies to collectively
deter China from using force, while
at the same time supporting Taiwan’s
efforts to improve its self-defense.
We should, however, tone down
rhetoric and symbolism around Taiwan.
Supporting Taiwan as a demonstration
of opposition to China does not improve
America’s national security; it just
raises China’s insecurity and feeds its
impulses to overreact to Taiwan-related
events. American policy decisions on
Taiwan should be measured by clarity
of objective — preserving peace and
stability in the Taiwan Strait.
China is not 10 feet tall and will not
rise on a linear trajectory. The country
poses a challenge to America’s global
leadership, but it is not predestined to
emerge as an enemy or a winner. The
United States maintains fundamental
advantages over China, including
its global network of alliances and
partnerships, benign borders, a rule-of-
law system, a market-based economy, a
culture of innovation, abundant natural
resources, and a tradition of attracting
the best and brightest. These assets
should afford our leaders greater
confidence in our model and capacity to
deal with challenges posed by China.
There will be policy focus in Washington
in the coming year on shoring up
vulnerabilities against China, including
by limiting China’s access to technologies
or capital that could be used to target
the United States or its partners.
This will generate greater scrutiny
of U.S. technology transfers to China
and of Chinese investments in the
United States. It may also take form
in an outbound investment screening
mechanism. The more that America
crafts trade and investment restrictions
on China that are narrowly tailored and
capable of attracting support from allies
and partners, the more impactful they
will be.
More important than the tactics, though,
is clarity on the purpose of American
strategy. China will continue to run its
own race as it seeks to outperform the
United States. America will need to run
its race better to sustain its lead over
China. Any efforts to contain China
or seek to compel the collapse of the
Chinese Communist Party would be self-
isolating; there is not enthusiasm in other
countries for joining such a coalition. At
the same time, the United States must
vigorously defend its economic and
security interests.
Ultimately, the U.S. and China will
have to establish terms of coexistence.
Rivalry will be a feature, but not the
only defining feature. Both countries
also will be compelled by self-interest
to trade and to coordinate on global
threats, such as climate change and
public health. Responsible leadership of
major power relations demands nothing
less. This means active engagement led
by the presidents of each country is
required. In the first instance, our leaders
must meet and set an agenda that lays
the groundwork for stability, conflict
avoidance and a framework to begin
managing our differences.
A high-performance organization
with a strong work ethic
Chubb is a growing business, and we
need the right people to grow with us.
We aren’t for everyone, and our culture
ensures a certain self-selection. We are
a high-performance organization with a
strong work ethic. People who do well
here are principled, ambitious and set
high expectations and standards for
themselves — they want to be part of
20
sheet, world-class service quality
reputation and sterling brand. Our
product and distribution capabilities
are well integrated with a disciplined,
execution-oriented culture. With a
presence in all important areas of
the world, and clarity of strategy and
opportunity, our sights are set on
significant long-term revenue growth and
earning power. We are confident that our
best days are in front of us, and that we
will outperform and deliver exceptional
value to you, our shareholders, long into
the future.
On behalf of the entire organization,
thank you for your investment and trust
in us.
Sincerely,
Evan G. Greenberg
Chairman and Chief Executive Officer
something bigger than themselves. We’re
a place where people have confidence
and pride in their work and practice their
craft at a high level of excellence — from
underwriting, claims and actuarial to
finance, analytical sciences, and software
and risk engineering, to name a few.
These are the kinds of people we are
attracting, grooming and retaining, and
we want more of them.
At the same time, we strive to achieve
a true meritocracy and an inclusive
culture that provides opportunity for all,
regardless of gender or race. All must feel
comfortable and energized to do their
best, contribute, and be recognized and
rewarded. While we have made tangible
progress, we have more work to do to
create a truly level playing field and an
organization that is blind to anything
but talent, capability, the right kind of
attitude and individual results — after
all, it’s iterative and takes time. Chubb
is a top quartile company in terms of
business performance, and we strive to
be a top quartile company in gender and
racial diversity.
A lot has been written of late about
the workplace of the future and what
employees now seek in terms of their
work-life balance in a post-pandemic
world. While we operate in most places
with a minimum hybrid 3/2 workweek
schedule that provides flexibility, we
are fundamentally a work-from-office
company — not for all positions, but most
colleagues are in the office or on the
road four to five days per week. People
who are committed to that reality with
the requisite drive and ambition belong
here; people who are not probably don’t.
Companies that compete for talent by
simply offering an easier life, full-time
work from home, a smaller workload, and
more money are hardly on a path to long-
term success.
Last year, my colleagues once again
demonstrated why they are the best
in the business. I have many to thank
for another year of record growth and
accomplishment, beginning with my
fellow employees and strong senior
management team. I’m surrounded
by dedicated, engaged and supportive
professionals — amazing people who
care so much about our company and
their customers. We are a company of
builders who want to win. Without their
individual and collective sacrifice, our
achievements, and the mission we are
on to constantly push the boundaries as
we create a great and enduring company,
simply would not be possible. I also want
to thank Chubb’s active and supportive
Board of Directors, whose commitment
and counsel have been essential to our
company’s success. A special thank you
goes to Mary Cirillo, a longtime director
who is retiring in ’23 after 17 years of
stellar service to the company, and to Luis
Téllez, who joined the Board in ’21 and
has decided not to stand for re-election.
Chubb is a compelling long-term
shareholder value creation story. We
are a leader in our industry and have
a unique, well-diversified portfolio of
outstanding businesses with substantial
capabilities, including global presence
and scale, backed by a strong balance
21
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.
Argentina
Australia
Austria
Belgium
Bermuda
Brazil
Canada
Chile
China
Colombia
Czech
Republic
Denmark
Ecuador
Egypt
Finland
France
Germany
Gibraltar
Japan
Korea
Pakistan
Panama
Macau SAR
Peru
Hong Kong SAR
Malaysia
Philippines
Hungary
Mexico
Indonesia
Myanmar
Poland
Portugal
Saudi Arabia
Singapore
South Africa
Spain
Sweden
Switzerland
Ireland
Italy
Netherlands
Puerto Rico
Taiwan
New Zealand
Russia
Thailand
Norway
Tunisia
Turkey
United Arab
Emirates
United
Kingdom
United States
Vietnam
22
Chubb Senior Operating Leaders
Bryce Johns
Senior Vice President,
Chubb Group;
President,
Chubb Life
John Keogh
President and
Chief Operating Officer,
Chubb Group
John Lupica
Vice Chairman,
Chubb Group;
President,
North America Insurance
Juan Luis Ortega
Executive Vice President,
Chubb Group;
President,
Overseas General Insurance
Chubb’s senior operating leadership includes the company’s
President and Chief Operating Officer and the presidents
of the North America, Overseas General and Chubb Life
insurance operations.
23
Chubb Corporate and
Global Functional Leaders
Timothy Boroughs
Executive Vice President,
Chubb Group;
Chief Investment Officer
Rainer Kirchgaessner
Executive Vice President,
Chubb Group;
Global Corporate
Development Officer
Julie Dillman
Executive Vice President,
Chubb Group;
Senior Executive, Operations
and Technology, and Digital
Transformation Officer
Peter Enns
Executive Vice President,
Chubb Group;
Chief Financial Officer
Joseph Wayland
Executive Vice President,
Chubb Group;
General Counsel
24
Timothy Boroughs
Executive Vice President,
Chubb Group;
Chief Investment Officer
Joseph Wayland
Executive Vice President,
Chubb Group;
General Counsel
Sean Ringsted
Executive Vice President,
Chubb Group;
Chief Risk Officer and Chief
Digital Business Officer
Jo Ann Rabitz
Senior Vice President,
Chubb Group;
Global Human Resources
Officer
Michael W. Smith
Senior Vice President,
Chubb Group;
Global Claims Officer
25
North America Insurance
Chubb’s insurance businesses in North
America serve clients ranging from the
largest multinationals, middle-market
companies and small businesses to
successful individuals and families, and
the agriculture community.
“Chubb’s North America businesses
delivered excellent results for the year,”
said John Lupica, Vice Chairman, Chubb
Group and President, North America
Insurance. “We generated strong growth
in our retail and wholesale commercial
P&C businesses, which benefited from
continued favorable market conditions
across property and casualty lines, and in
our personal lines business. Our results
in North America are the outcome of our
continuing work to build this franchise,
the investments we make in people and
technology, our unyielding focus on
execution, and the quality, value and
consistency we deliver to clients, agents
and brokers.”
“Chubb produced world-class results,
outperforming our peers in a risk
environment characterized by elevated
natural catastrophes, economic inflation,
continued growth in social inflation,
war in Europe, higher energy costs and
supply chain disruptions affecting people
and businesses in the U.S. and globally,”
said John Keogh, President and Chief
Operating Officer of Chubb Group,
referring to both the company’s North
America and international operations.
During the year, Chubb continued to
distinguish itself through the quality
of its claims service. Those capabilities
were on full display as we helped clients
prepare for and recover from the impact
of Hurricane Ian. Some 13,000 calls
were handled by the team, with each
one answered by a live person in less
than six seconds. “We are at our best
when we are helping our customers,” said
Lupica. “Every day, our team responds
quickly and compassionately to natural
catastrophes and other claim-driven
events for consumer and commercial
clients.”
Total net premiums written for the
company’s North America P&C insurance
businesses were $26.1 billion, up 9.7%
from 2021. Underwriting income was
$3.7 billion, leading to a combined ratio
of 85.4%.
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
9.0% from 2021. The combined ratio
for the segment was 83.3%, exceptional
performance given the elevated level
of natural catastrophes. Underwriting
income was $2.9 billion, and segment
income was $5.1 billion.
Major Accounts, Chubb’s P&C business
unit that serves large corporations, is
recognized for the breadth and depth
of its product and service offerings,
technical underwriting expertise,
Key Financial Results
Dollars in millions
Total North America
P&C Insurance
2022
Gross premiums written
Net premiums written
Combined ratio
Current accident year
combined ratio excluding
catastrophe losses
$33,343
$26,109
85.4%
82.2%
North America Commercial
P&C Insurance
2022
Gross premiums written
Net premiums written
Combined ratio
Current accident year
combined ratio excluding
catastrophe losses
Segment income
$22,865
$17,889
83.3%
81.1%
$5,083
North America Personal
P&C Insurance
2022
Gross premiums written
Net premiums written
Combined ratio
Current accident year
combined ratio excluding
catastrophe losses
Segment income
North America Agricultural
Insurance
2022
Gross premiums written
Net premiums written
Combined ratio
Current accident year
combined ratio excluding
catastrophe losses
Segment income
$6,066
$5,313
87.5%
78.9%
$915
$4,412
$2,907
94.2%
94.4%
$174
26
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
Personal Risk
Services
Commercial P&C insurance products
for middle-market and small
businesses sold by independent
agents and retail brokers
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
Excess liability, financial lines,
property and political risk coverages
sold by large international brokers
Agriculture
Crop insurance from Rain and Hail
and farm and other P&C coverages
sold by agents and brokers
superior customer service, and global
web-based application built to service
complex, bespoke insurance programs
in many countries around the world. It’s
a high-touch business where Chubb,
with its strong client- and broker-centric
culture, has developed long-term,
enduring relationships. One indicator
of the range of Chubb’s business: about
98% of the Fortune 1000 companies
have at least one policy with Chubb. In
2022, the division generated $1.3 billion
of new business and renewal retention
was 102%.
Major Accounts’ annual Client Advisory
Board Meetings continued to serve as
a forum for Chubb to hear important
feedback from clients and share the
company’s perspective on top issues.
Themes in 2022 included inflation, loss
cost trends, supply chain disruption,
cyber and natural catastrophe risks.
“When we talk to our clients, these
issues are top of mind,” said Lupica. “We
value hearing the experiences they share
with us at these events, which, in turn,
gives us an opportunity to discuss the
risk environment as well as the solutions
we offer as a stable and reliable partner.”
The company’s Westchester division,
which specializes in hard-to-place
casualty, property and specialty lines
for middle market and small businesses,
produced record new business, which
contributed to its third consecutive year
of double-digit growth in net premiums
written. In 2022, Westchester was able
to expand its writings in a favorable
market for the vast majority of its
products within its brokerage, programs
and digitally focused small business
divisions.
27
North American Business Unit Leaders
Matthew Merna
Senior Vice President,
Chubb Group;
Division President,
North America Major
Accounts
Ana Robic
Vice President,
Chubb Group;
Division President,
North America Personal
Risk Services
Christopher A. Maleno
Senior Vice President,
Chubb Group;
Division President,
North America Field
Operations
28
Chubb Bermuda, which provides high
excess casualty and property capacity
as well as financial lines and political risk
products, posted its fourth consecutive
year of double-digit growth as well
as record premium revenue, topping
its 2021 record. Chubb Bermuda
operates with a high severity/low
frequency business model and offers
broad coverage and sizable capacity to
clients and brokers around the world.
The business has developed deep client
relationships over the nearly four
decades since it was founded in 1985.
“Chubb Bermuda exemplifies the
company’s underwriting discipline,
strategic patience and ability to move
quickly to seize opportunity in a shifting
market,” said Lupica. “When the market
began to turn in 2019, and rates reached
a level of adequacy for the size of
capacity we are able to offer, the team
was ready. Chubb Bermuda continues
to demonstrate its relevance to our
partners in all four lines.”
Together, Major Accounts and Specialty
insurance in North America produced
$10.8 billion in net premiums written
in 2022.
Commercial Insurance is Chubb’s
division that provides P&C coverage
to medium and small-sized companies
with revenues up to $1 billion. In 2022,
net premiums written in the division
grew 8.0% to $7.1 billion, a record.
Underwriting income for the division was
also a record in 2022. Growth was driven
by the strong performance of the core
property and casualty lines, as well as
the cross-selling of specialty coverages,
including financial lines, which includes
the company’s cyber insurance offering.
In the middle-market segment, Chubb’s
core package product is complemented
by the industry’s largest offering of
standard and specialty coverages,
including auto, workers compensation,
marine, cyber, environmental,
multinational, directors and officers
(D&O), errors and omissions (E&O), and
A&H coverages. Commercial Insurance
is distinguished by its more than 25
industry practices, each handled by
teams of experienced underwriting,
claims and risk engineering professionals
who understand the particular exposures
of that industry. The industry practice
model ensures that Chubb addresses
the needs of clients as thoroughly as
possible by cultivating talent with deep
expertise in coverage solutions for
specific industries. To focus even greater
attention on the products, coverages and
services specific to key industries, Chubb
in 2022 appointed dedicated leadership
to oversee the company’s industry
practices.
In 2022, Chubb focused on expanding
its business with companies in the
lower middle market, which represents
a significant growth opportunity for
the company. Initiatives to introduce
products and services targeted to
this underserved segment include
Benchmarq, a package product that
offers a broader range of coverages while
offering agents and brokers a scalable
solution, faster quoting and a streamlined
product design.
Chubb continued its progress in
expanding its agency footprint and
enhancing service for distribution
partners. New relationships with
more than 1,100 independent agents,
serving both commercial and consumer
customers, were established during
the year. In 2022, Chubb rolled out an
enhanced portal for agents and brokers
that features a streamlined, personalized
dashboard, and enables distribution
partners to do business with Chubb
securely and more easily. For example,
agents can view their entire book of
business and access policies digitally
in one place. The portal, which also
supports personal lines, enables users to
easily toggle between their dashboards
for commercial and consumer clients.
Chubb continues to invest in other
technologies that make it easier for
distribution partners to work with the
company across its commercial P&C
businesses. Worldview® is a web-based
application that provides U.S. and
multinational clients and their brokers
instant access to Chubb to collaborate,
research, analyze and manage risk for
their clients anywhere in the world. For
agents and brokers serving small and
lower middle market businesses, Chubb
MarketplaceSM streamlines quoting,
issuing and servicing. Today, Marketplace
is deployed to nearly 59,000 users at
approximately 7,900 agencies.
29
Chubb’s commercial P&C clients also
benefit from the company’s in-house
network of more than 400 risk engineers
who help businesses identify, anticipate
and reduce risks. In 2022, the equipment
breakdown and property casualty risk
engineers completed about 36,000
client engagements.
The Chubb Risk Engineering Center,
a 14,000-square-foot facility in New
Jersey, is a showcase for the breadth
of solutions for which the company’s
risk engineers can design customized
programs and services. The center is the
only place in the world where property,
casualty, worker safety, equipment
breakdown and Internet of Things (IoT)
training are all offered under the same
roof. In 2022, more than 7,000 clients,
agents, brokers and colleagues received
technical training in person or streamed
globally from the state-of-the-art facility.
“Our risk engineering center provides
valuable education for our customers
across different industries all over the
globe,” said Lupica. “We want to promote
safety and help our insureds prevent
claims. The center is an essential tool for
doing just that.”
To meet the needs of small businesses,
Chubb continued to invest in digital
technology to deliver an industry-leading
customer experience and enhance risk
selection through the application of data
and analytics. Today, the company is
using proprietary systems that convert
and fuse together structured and
unstructured data from Chubb, third
parties and web scraping. This benefits
agents, who can get faster and more
accurate quotes with minimal data entry
and less underwriting intervention. The
insights gained from these tools enable
Chubb to make more proactive and
relevant up-sell offers.
Another significant commercial P&C
initiative was the launch of Chubb
Climate+, a new global climate business
unit that draws on Chubb’s extensive
technical capabilities in underwriting
and risk engineering and brings together
existing units engaged in traditional,
alternative and renewable energy,
climate tech, agribusiness and risk
engineering services. Chubb Climate+
will provide a full spectrum of insurance
products and services to businesses
engaged in developing or employing
new technologies and processes that
help reduce the dependence on carbon.
It will also provide risk management
and resiliency services to help those
managing the impact of climate change.
Together, these businesses generated
more than $675 million in premium
revenue globally for Chubb in 2022.
In North America, Chubb Climate+
will serve business from national and
multinational corporations to middle
market and small businesses.
“With our global capabilities and
presence, dedicated underwriters and
risk engineers, Chubb can scale to meet
our customers’ needs, however complex,”
said Keogh. “In the coming months,
we expect to introduce additional
capabilities that will support our
customers across all industries as they
seek to become more carbon neutral
and resilient from the threat of a
changing climate.”
“ Chubb’s results are a
credit to our culture,
the commitment and
dedication of our
people, our strong
relationships with
distribution partners,
and the work we have
done together to build
an organization that
can deliver for clients,
agents and brokers.”
— John Lupica
30
North American Business Unit Leaders
Scott Meyer
Senior Vice President,
Chubb Group;
Division President,
Westchester
Scott Arnold
Vice President,
Chubb Group;
Division President,
Chubb Agriculture;
President,
Rain and Hail
Judy Gonsalves
Vice President,
Chubb Group;
Division President,
Chubb Bermuda
Benjamin Rockwell
Vice President,
Chubb Group;
Division President,
North America Middle
Market
31
North America Agricultural
Insurance
Chubb’s Rain and Hail subsidiary is the
leading crop insurer in North America.
The business serves approximately
120,000 farmers, insuring approximately
120 different crops on 88 million acres.
Chubb’s North America agriculture
segment includes Chubb Agribusiness,
which is focused on P&C offerings that
provide commercial insurance coverages
for manufacturers, processors and
distributors in the agriculture sector.
Chubb also offers property insurance
for farms and ranches, including hobby
farms, complex corporate farms and
equine services.
For the year, the segment produced
a combined ratio of 94.2%. Segment
income was $174 million. Net premiums
written were $2.9 billion, up 21.7%
from prior year.
Crop insurance is a public-private
partnership that operates with a proven
model. The federal government sets
the rate, terms and conditions. Market
participants like Chubb compete based
on service, technology, risk selection
and claims handling. It’s a playing field
where Rain and Hail brings strengths,
including experienced underwriters,
unmatched data, a significant branch
network and strong agency relationships.
In 2022, Rain and Hail built on its market
leadership by covering approximately
8 million new acres. Across the U.S.,
many areas experienced average-to-
excellent growing conditions while some
corn belt states were impacted by a late
season drought, contributing to a record
number of claims handled by Rain
and Hail.
“Chubb’s agriculture team has a long and
proud history with American farmers.
Last year, we processed 165,000 claims,
driven largely by western U.S. drought
and Hurricane Ian. It was critical that we
were able to offer a level of service that
allowed farmers to continue delivering a
safe, stable food supply,” said Lupica. “We
are honored to be a recognized leader
in the agriculture space and, in 2022, we
were rated the number one insurer in
technology by major agriculture clients
for the seventh consecutive year.”
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 (PRS) is
known for its broad product offering,
superior claims and risk consulting
services, and access to Chubb’s extensive
branch network in the U.S. and Canada.
Chubb clients 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 $5.3 billion, up 6.2%
from prior year. The combined ratio
was 87.5%. Segment income was
$915 million.
“PRS delivered strong growth in 2022,”
said Lupica. “We focused on our target
Premier and Signature customer
“ Chubb produced
world-class results,
outperforming
our peers in a
risk environment
characterized by
elevated natural
catastrophes,
economic inflation,
continued growth
in social inflation,
war in Europe,
higher energy costs
and supply chain
disruptions affecting
people and businesses
in the U.S. and
globally.”
— John Keogh
32
“ Chubb’s agriculture
team has a long and
proud history with
American farmers.
Last year, we
processed 165,000
claims, driven
largely by western
U.S. drought and
Hurricane Ian. It was
critical that we were
able to offer a level of
service that allowed
farmers to continue
delivering a safe,
stable food supply.”
— John Lupica
segments, which both produced double-
digit growth in premiums. We generated
more than $410 million of new business
and closely managed our risk exposures
while delivering the high levels of claims
service that distinguish this business.”
Since it pioneered insurance coverage
tailored for this discerning client
segment, Chubb has continued to
innovate, offering capabilities such
as assisting customers who have
second homes that suffer damage from
hurricane-force winds and monitoring
and protection for homes threatened
by wildfire. To help clients prevent or
mitigate damage from burst pipes,
broken hoses and other internal water
leaks, Chubb offers clients solutions
including water shutoff devices and
Internet of Things sensors. In 2022,
Chubb risk consultants conducted
more than 36,000 risk consulting visits.
Service offerings introduced in 2022
include MyHome Survey, an option that
allows select clients to assist in the home
inspection process by completing a self-
guided assessment of their home entirely
from a mobile device. The Replacement
Coverage Estimator, also introduced
during the year, is an easy-to-use, self-
service tool that allows agents to get an
instant estimate of home replacement
costs when they are preparing quotes.
Digital technology further enables Chubb
to inform and serve clients on the terms
that fit their preferences. Clients can
access their policies via the mobile app or
speak with a live representative in just a
few seconds. Chubb has also introduced
self-service capabilities that allow clients
to interact with the company digitally.
A chat bot introduced in 2022, which
offers the option of live chats, has helped
thousands of clients get answers to their
questions. Clients can also connect with
us via our portal and mobile app. These
platforms offer a number of interesting
tools, including a widely used feature on
the mobile app that allows clients to track
wildfires, hurricanes, earthquakes and
other major events in relation to their
insured properties. Chubb is offering
other creative insurance solutions in a
digital way, from personal cyber coverage
to protections for wine, watches and
other valuables.
Chubb’s ability to serve customers
and partners with excellence also
requires investing in our people. In
2022, Chubb welcomed more than
2,500 new colleagues in North America.
Throughout the year, approximately
12,000 employees in North America
completed more than 1,000 learning
and development programs. Chubb’s
commitment to professional
development is also reflected in another
number: Nearly 3,200 employees were
promoted during the year. We continue
to hire a diverse slate of new early career
talent and experienced hires.
“In sum, it was a tremendous year,”
concluded Lupica. “Chubb’s results are
a credit to our culture, the commitment
and dedication of our people, our strong
relationships with distribution partners,
and the work we have done together to
build an organization that can deliver for
clients, agents and brokers.”
33
Overseas General Insurance
Chubb’s international general insurance
operation comprises two main
businesses: one with a retail presence
in four regions of the world and the
other an excess and surplus (E&S) lines
operation in the London wholesale
market.
“This was a year of strong growth and
dynamism in Chubb’s international
general insurance business,” said Juan
Luis Ortega, Executive Vice President,
Chubb Group and President, Overseas
General Insurance. “Our commercial P&C
businesses, both retail and wholesale,
generated excellent financial results.
Our consumer businesses, which had
slowed during the COVID pandemic,
came roaring back. The performance
was broad-based globally, from Asia-
Pacific and Latin America to Europe.
We strengthened and deepened
our network of digital distribution
partnerships, invested in talent and
technology, introduced new products
and services, and engaged with our
distribution partners around the world.
Our underwriting results, as measured
by the combined ratio, were the best in
20 years.”
Looking at Chubb’s results over a
three-year period further highlights
the opportunities seized in a favorable
operating environment for commercial
P&C. Gross premiums written in
commercial lines increased 40% since
2019. That represents a three-year
compound annual growth rate of 10.9%.
Overall, Overseas General Insurance
generated net premiums written of
$11.1 billion in 2022, up 3.2%, or 11.4%
in constant dollars. Commercial P&C
businesses grew 11.8% in constant
dollars while net premiums written in
consumer businesses increased 10.8%.
The combined ratio for the year was
84.6%. Segment income was $2.2 billion.
Europe produced $5.2 billion of net
premiums written in 2022, up 8.4%
from prior year in constant dollars.
Commercial P&C net premiums written
in the region were up 10.6% in constant
dollars. In Asia-Pacific, net premiums
written were $2.8 billion, up 15.4% in
constant dollars, with commercial P&C
premiums up 13.1%. The Latin America
region generated net premiums written
of $2.3 billion, up 16.8% from 2021 in
constant dollars. Commercial P&C net
premiums written were up 16.9% on a
constant-dollar basis. In the Far East
region, which encompasses Japan, net
premiums written grew 4.2% in constant
dollars, with commercial P&C up 1.7%.
“The combination of our global presence
and local market knowledge distinguishes
Chubb,” said Keogh. “Our work over
the last couple of years to build even
greater capabilities and broader, deeper
distribution benefited us as many
overseas markets — especially in Asia —
reopened.”
Major Accounts, Chubb’s P&C business
unit that serves large corporations,
helped to drive the strong growth in
commercial P&C. Chubb has capabilities,
including best-in-class service,
underwriting expertise, an extensive
product offering, and a broker- and
client-centric culture, that few, if any,
Key Financial Results
Dollars in millions
Overseas General Insurance
2022
Gross premiums written
Net premiums written
Combined ratio
Current accident year
combined ratio excluding
catastrophe losses
Segment income
$13,705
$11,060
84.6%
85.4%
$2,230
34
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 four regions:
Europe
Asia-Pacific
Latin America
Far East
Operations in 27 countries, including
seven in the Middle East and Africa,
comprising P&C commercial lines and
consumer lines, including A&H and
specialty personal lines
Operations in 14 countries and
territories serving commercial
customers and consumers with
P&C, A&H and personal lines
Operations in nine countries serving
commercial customers with P&C
products and consumers through
A&H and personal lines
Operations in Japan 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 sold by wholesale brokers in the
London market and through Lloyd’s
competitors can match. Growth was
particularly strong in the U.K., Europe
and Australia.
“In this business, Chubb is focused on
leveraging its global network, building
relationships with risk managers
and brokers, looking for cross-sell
opportunities, and bringing to the market
consistent capacity and risk appetite,”
said Ortega. “Globally, Chubb is the
largest trading partner of the four largest
brokers in the world.”
Today, Chubb does business with 84% of
Fortune’s Global 500, writes five or more
coverages for about 70% of the FTSE 100
in the U.K., and insures 90% of the CAC
40 in France.
Chubb Global Markets, which provides
global access to specialist underwriters
in aviation, energy, financial lines, marine,
political risk and credit, and property,
had another year of strong double-
digit growth. Like Chubb Bermuda and
Westchester in North America, Chubb
Global Markets stands as an example of
the company’s underwriting discipline
through all market cycles — and its
ability to seize opportunities. When
the underwriting environment was
challenging, Chubb intentionally shrunk
the business, hitting a low point of
$925 million of gross premiums written
in 2017. As the market turned in 2018,
Chubb was ready to shift from defense
to offense, growing gross written
premiums over 6%. In the last three
years, premiums have grown 71%.
35
Overseas General Regional Leaders
Diego Sosa
Regional President,
Far East
Paul McNamee
Senior Vice President,
Chubb Group;
Regional President,
Asia-Pacific
David Furby
Senior Vice President,
Chubb Group;
Regional President,
Europe, Middle East &
Africa;
Division President,
Chubb Global Markets
Marcos Gunn
Senior Vice President,
Chubb Group;
Regional President,
Latin America
36
Chubb continues to expand its
capabilities to serve middle market
and small businesses in all regions.
Investments in digital platforms are
making it even easier for clients and
brokers to do business with the company.
Last year, Chubb introduced fully
automated digital platforms to connect
with more broker organizations across
Australia, streamlining the process for
agents and brokers to quote, issue and
service their small business clients. In
2023, Chubb expects to launch similar
platforms in other Asia-Pacific markets
as well as Latin America. Across Chubb’s
platforms supporting small businesses,
more than 75% of transactions
were handled with straight-through
processing, which doesn’t require manual
intervention.
Clients and distribution partners
are also positioned to benefit from
Chubb’s initiatives to further enhance
its underwriting capabilities and
services. In early 2023, Chubb opened
the multilingual Continental Europe
Underwriting and Service Centre in a
state-of-the-art facility in Madrid. We
have 200 talented employees from
30 countries across our underwriting,
operations and claims teams meeting
the needs of our clients and distribution
partners across Europe.
For Chubb’s international non-life
consumer businesses, 2022 was a year
of accelerated growth. The company’s
accident and health (A&H) business,
which faced the biggest impact from the
pandemic, posted its strongest growth
in 15 years. In addition to being a global
leader in A&H coverages, including
employer-paid group personal and travel
accident insurance, Chubb’s international
personal lines businesses encompass
cellphone insurance for mobile network
operators in the U.K. and Europe, home
and contents coverages in Latin America
and Asia, and a growing business serving
the needs of high-net-worth consumers
and families in select markets, including
the U.K., where we’re the leader, as well
as Australia.
“COVID had a big impact on consumer
sales in 2020 and the first half of 2021,”
said Ortega. “In 2022, as the world
opened up, Chubb was well-positioned
in both our global A&H and international
personal lines businesses. We are now
well ahead of where we were before
COVID hit, and have solid momentum as
we look ahead.”
Another important growth platform for
Chubb’s international consumer business
is the company’s growing network of
digital distribution partnerships with
some of the world’s leading brands,
from banks and fintechs to e-commerce
companies and digital natives. Asia and
Latin America are home to some of our
most exciting partnerships that leverage
the company’s local operations and
extensive product offering.
Chubb’s award-winning tech integration
platform, Chubb Studio, provides partner
companies with digital access to Chubb’s
extensive range of consumer and small
business insurance products, customer
services and claims. By embedding in
partner company ecosystems using API
technology, Chubb is able to provide
contextual insurance offerings to their
customers seamlessly. With Chubb
Studio, partners can gain an ancillary
income stream and help to narrow the
protection gap for their own customers.
Today, Chubb Studio is live in more
than 30 countries, has 20 million digital
policies in force and digital access to
more than 375 million people who are
potential customers. Among the new
and expanded partnerships was the
launch of an auto insurance offering with
OXXO, the largest Mexican convenience
store chain. Covered travelers who
visit the United States using their
Mexican vehicles, whether for shopping,
vacation or business, will have fast
access and comprehensive protection,
including third-party liability coverage
for property damage and bodily injury,
medical expenses for passengers, vehicle
assistance services and legal assistance
for drivers while in the U.S.
In 2022, Chubb Studio introduced next-
generation features that provide Chubb’s
distribution partners with access to
Chubb-developed software development
kits (SDKs) that enable the company’s
partners to embed products and services
natively within their apps; the option to
add products and services from other
insurance carriers, third-party or non-
Chubb companies; and the BlinkSM by
Chubb® experience, previously available
only in the U.S., to other regions around
the world.
Chubb Studio’s first multi-partner
alliance involves its distribution partner
Grab, a leading super app in Asia.
Grab drivers and delivery-partners
37
in the Philippines now have exclusive
access to flexible insurance protection,
underwritten by another leading carrier,
for a wide range of life and wellness
problems that may impact their financial
livelihoods. Chubb Studio’s single-
point-of-integration technology allows
products from Chubb and other carriers
to be digitally delivered in a simple,
seamless way.
Chubb’s platform for growth in
international consumer lines was further
expanded with the acquisition of Cigna’s
personal accident, supplemental health
and life insurance business in six Asia-
Pacific markets. “Cigna’s customers have
only been offered A&H and life products,”
said Ortega. “We have a significant
opportunity to build a powerhouse of
digitally and traditionally distributed
consumer products, both life and non-
life, to a base of millions of customers.
Over time, this can include products
ranging from residential, mobile phone
and personal protection products to
simplified A&H offerings.”
The Cigna acquisition also highlights the
growing scale of Chubb’s business in Asia,
on both an absolute and relative basis. In
2022, Asia represented nearly one-fifth
of the company’s premium revenue
on an annualized run-rate basis that
includes a full year of Cigna and Huatai
Insurance Group, the Chinese holding
company majority-owned by Chubb that
includes life, general insurance and asset
management subsidiaries.
“Asia is a market with substantial
long-term growth opportunities,” said
Keogh. “It’s important to us, and we are
well-positioned to capitalize on those
opportunities.”
Across Overseas General there are
nearly 2,800 claims professionals for
whom maintaining and enhancing
Chubb’s market-leading standard of
claims service remains a priority. “Our
claims teams continued to provide
top-class, rapid-response claims service
in another year of elevated natural
catastrophes,” commented Ortega.
To pursue opportunity and navigate
challenges, Chubb continues to invest in
its people. One of the principal ways the
company develops talent is by promoting
intra- and inter-regional mobility
that exposes employees to different
markets and cultures. In the past two
years alone, nearly 250 colleagues were
promoted to a job in another country,
including some who transferred to a
role in a different region. In addition,
more than 1,800 colleagues each year
are promoted into a new job or granted
expanded responsibilities. These career
progression opportunities recognize the
performance of colleagues and create
an environment for continuous learning.
Among those learning opportunities is
Centurion, a professional development
program for the next generation of
leaders.
“Our ability to have a consistent and
reliable presence in the market, forge
relationships with brokers, develop and
introduce products and services that
meet the protection needs of clients
and deliver excellent claims service is a
reflection of our culture,” said Ortega.
“This is a place where our people learn
and have opportunities to develop
and grow, to work on diverse and
dynamic teams that value and respect
differences, and to be recognized for
their contributions. This culture makes
Chubb a rewarding place to work
while delivering for our customers and
business partners.”
“ Our ability to have
a consistent and
reliable presence in
the market, forge
relationships with
brokers, develop and
introduce products
and services that meet
the protection needs
of clients and deliver
excellent claims
service is a reflection
of our culture.”
— Juan Luis Ortega
38
Overseas General and Reinsurance
Business Unit Leaders
Timothy O’Donnell
Vice President,
Chubb Group;
Division President,
Commercial Property
and Casualty
John Thompson
Vice President,
Chubb Group;
Division President,
Personal Insurance
Daniela Hernandez
Division President,
International Accident
& Health
James Wixtead
Senior Vice President,
Chubb Group;
President,
Chubb Tempest Re Group
39
Life Insurance
Chubb’s Life Insurance segment
comprises two businesses. Chubb Life
is an international life insurer, primarily
focused on Asia and also operating across
Latin America. The business offers life,
health and savings-oriented insurance
products and services 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 of $3.6
billion, up 47.1%, or 52% in constant
dollars, favorably impacted by six months
of the acquired Cigna business in Asia.
Segment income was $704 million, up
68.3%, or 69.1% in constant dollars.
Chubb Life
Chubb Life serves the needs of
consumers through a variety of
distribution channels, including captive
agents, independent financial advisors,
retailers, banks and direct marketing
capabilities, both telemarketing and
digital. Chubb Life has operations in nine
Asia-Pacific markets: Korea (operating
as LINA), mainland China, Hong Kong
SAR and Taiwan in North Asia; Vietnam,
Thailand, Indonesia and Myanmar in
Southeast Asia; and New Zealand.
In mainland China, the company has
majority ownership of Huatai Life, a fast-
growing life insurer in the second-largest
insurance market in the world. Huatai
Life is part of a holding company that
also includes P&C insurance and asset
management subsidiaries. Huatai Life’s
operations have nearly 550 branches
across 136 cities and 20 provinces,
with more than 16,500 agents and
approximately 1.1 million customers in
China. “As we look ahead to the potential
in China, with its vast, underserved
health, life and pensions markets, aging
population and growing wealth, having
a market-leading asset management
company, with just under $100 billion in
assets under management, is an excellent
complement to our broader life insurance
operations,” said Bryce Johns, Senior Vice
President, Chubb Group and President,
Chubb Life.
Key growth markets in Latin America
include Brazil, Chile and Mexico.
Together, Chubb Life and Huatai Life
have 777 offices, 9,675 employees,
more than 70,000 captive agents, 3,600
telemarketers and more than 100
distribution partnerships.
The most significant developments of
2022 were Chubb’s acquisition of the life
insurance and A&H businesses of Cigna
in six Asia-Pacific markets, completed in
July, and regulatory approval to acquire
majority ownership of Huatai Group.
“The Cigna acquisition meaningfully
expands the breadth, depth and scale of
our life insurance operations in Asia. We
are now a much larger, more vibrant and
diverse business, and a leader in direct
marketing,” said Johns. “With the addition
of LINA Life, Korea is now the second-
largest market for Chubb globally. LINA
Life has a renowned brand, a rich history
of market-leading innovation, a broad
palette of A&H products — especially
in the areas of dementia, cancer and
dental coverage — and world-class direct
marketing capabilities. The opportunity
to introduce a wider palette of life and
Key Financial Results
Dollars in millions
Life Insurance
2022
Net premiums written
Segment income
Total international life
insurance net premiums
written and deposits
International life insurance
segment income
$3,643
$704
$4,380
$412
40
non-life products and services to LINA
and Chubb customers and distributors in
Korea, in a digitally integrated manner,
provides a tremendous growth platform
into the future.”
recovery at different paces in the second
half of 2022, as markets emerged from
aggressive COVID lockdowns, and agents
and brokers were finally able to start
personally reconnecting with customers.
Through the Cigna acquisition, we have
also expanded Chubb Life’s presence in
Taiwan, where we are now the market
leader in direct marketing and A&H,
complementing our wealth capabilities
through banks and brokers there as
well as in Indonesia and Hong Kong.
Post-acquisition, Chubb’s non-life
business in Thailand has the leading
direct marketing platform, creating
opportunity to grow our life capabilities
in this arena, complementing our captive
agency and partnership channels. We
also have a new market in our portfolio:
New Zealand, where Chubb Life is a top
five player, with a health and protection
focus and an exclusive distribution
partnership with ANZ Bank.
The integration of the Cigna and Chubb
businesses has been proceeding on track,
with Indonesia and Taiwan operations
legally integrated, and New Zealand
operating under the Chubb Life brand.
We also have 3,000 new talented
employees. “We now have a really strong
leadership bench,” said Johns. “And as we
continue to build this out, the market is
recognizing our presence, intent and the
opportunities we can offer.”
With the addition of Cigna’s operations,
international life insurance net premiums
written were $2.6 billion, up 96.9%,
or 108.4% in constant dollars. Chubb
Life’s existing operations demonstrated
The resumption of cross-border travel
between Hong Kong and mainland
China in early 2023, along with the rapid
evolution and increasing integration of
the Greater Bay Area, provides growth
engines for both Huatai Life and Chubb
Life Hong Kong.
Chubb Studio, the company’s global
digital distribution platform, is becoming
an important channel for the company’s
life products via affinity groups, banks
and super apps in Asia and Latin America.
Our flagship life example is Chubb’s
partnership with Nubank, the largest
independent digital bank in Brazil, where
we have garnered over 700,000 term
life customers in 18 months via a fully
digitally integrated experience. Chubb
Studio offers us an unrivaled ability to
offer life insurance products and services
alongside other A&H and personal lines
products and services in a uniquely
embedded and integrated manner,
whether directly to customers or via
agents/brokers and partner platforms.
“Chubb Life enters 2023 much better
equipped to engage consumers on their
life, health and wealth insurance needs,
via a much wider set of distribution
channels and partnerships — especially
in Asia’s deep and rebounding growth
economies. This couldn’t be more timely
given the turbulent macro-economic
climate our customers are experiencing.
Moreover, the opportunity to connect
these customers to the wider gamut
of Chubb products and services in a
digitally integrated way is compelling and
distinctive.”
“ The Cigna acquisition
meaningfully expands
the breadth, depth
and scale of our life
insurance operations
in Asia. We are now
a much larger, more
vibrant and diverse
business, and a leader
in direct marketing.”
— Bryce Johns
41
Combined Insurance
Combined Insurance is a leading
provider of supplemental health,
accident, disability and life insurance
products across the U.S. and Canada. For
Combined Insurance, 2022 was a year
to mark its rich history — the business
celebrated its 100th anniversary — and
to continue its transformation to provide
voluntary worksite benefits to businesses
of all sizes. Today, Combined Insurance’s
U.S. agency business focuses on providing
tailored solutions to small businesses
while its Chubb Workplace Benefits
division caters to mid- and large-market
employers with distribution through
brokers and benefits consultants.
“In 2022, we made substantial progress
building our voluntary worksite benefits
business while delivering strong double-
digit growth in premiums,” said Joe
Vasquez, Senior Vice President, Chubb
Group, Global Accident & Health.
“Combined has increased its distribution
footprint over 65%, selling its products
through more than 3,500 agents in the
U.S. and Canada.”
In 2022, the business broadened its
distribution through independent
brokers and agents, expanding beyond
the captive agency channel that has
previously been the primary avenue for
selling products.
“With rising healthcare costs an
increasing concern for employers and
employees, the demand and need for
the products we offer has never been
greater,” said Vasquez. “More and more
people are looking for supplemental
health benefits to offset the increase in
out-of-pocket expenses in their primary
health plans. The products Combined
Insurance offers can also provide
financial protection for other expenses
that may occur when someone has an
unexpected medical event.”
For employers, broadening the portfolio
of benefits they offer to their employees
is an increasingly important expectation
in talent acquisition and retention.
In 2022, Combined Insurance launched
a new, customizable hospital indemnity
product specifically for small businesses.
Hospital Champion pays cash benefits
directly to employees for unexpected
hospitalization due to sickness or
injury. Benefit payments can be used
by individuals and their families as they
choose, including toward deductibles or
co-pays, prescriptions, and even for other
costs such as transportation, groceries
or bills.
For middle market and large companies,
Chubb Workplace Benefits was the
first voluntary benefits carrier to offer
the Benefit Resource Genie™ service to
employer clients. The service provides
a personalized, hands-on approach in
helping employees understand and
select health benefit options that best fit
their needs. This service can help save
employers up to 10% of their employee
health care spend by helping employees
identify optimal health plan coverage to
minimize out-of-pocket costs.
Combined is also broadening its suite
of products to offer a more holistic
approach to wellness. One innovative
example is Cancer Advocate Plus, a
first-of-its-kind cancer-specific, genetics-
based insurance program introduced by
Chubb Workplace Benefits in early 2023.
Cancer Advocate Plus provides tools and
resources for an individual to proactively
understand their risk of cancer and more
effectively manage a cancer diagnosis,
and offers insurance protection to help
with the potential financial impact of a
cancer diagnosis.
“This program meets Americans at the
intersection of science, wellness and
insurance coverage,” said Vasquez. “It’s
unique and can help save lives.”
Among the ranks of agents and
employees at Combined Insurance,
military veterans and their families
are well represented. Since 2010,
Combined Insurance has hired more
than 5,500 veterans, military spouses,
and their family members as part of
its veteran recruiting program. The
business’s commitment to be a welcome
place, where those who served their
country can grow their careers, has been
recognized by VIQTORY, the publisher
of G.I. Jobs® magazine. In 2022, for the
fifth consecutive year, VIQTORY named
Combined Insurance the top Military
Friendly® Employer in the U.S. among
businesses with $1 billion to $5 billion in
revenue. The company has been ranked
a Top 10 Military Friendly® Employer for
12 consecutive years.
“Combined Insurance is well-positioned
to continue its transformation and
deliver innovative solutions to
employers, brokers, benefits consultants
and the individuals and families who
need financial protection for unexpected
events,” said Vasquez.
42
Key Financial Results
Dollars in millions
Global Reinsurance
2022
Gross premiums written
Net premiums written
Combined ratio
Current accident year
combined ratio excluding
catastrophe losses
Segment income
$1,095
$943
102.6%
81.5%
$256
Global Reinsurance
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 and Zurich,
the business has deep underwriting,
actuarial and claims expertise.
As a subsidiary of Chubb, Tempest Re
benefits from the company’s global reach,
financial strength and deep insights into
insurance markets across geographies
and lines of business. Chubb’s geographic
and product diversity also gives the
company optionality in terms of where it
can deploy capacity to achieve adequate
risk-adjusted returns. In 2022, as the
trading environment for reinsurers
began to catch up with the firming that
has characterized the primary insurance
market for several years, Chubb Tempest
Re saw more opportunities that fit its risk
appetite. The market shift began with
property catastrophe reinsurance, and
expanded into casualty, professional and
other specialty lines.
“Chubb Tempest Re has maintained a
steady, consistent view of risk,” said
James Wixtead, Senior Vice President,
Chubb Group and President, Chubb
Tempest Re Group. “As the market has
been hardening, we are finding more
opportunities to deploy capital that
meet our hurdles for a reasonable risk-
adjusted return.”
The trading environment for reinsurers
improved in 2022, with rates,
terms and conditions experiencing
favorable actions. There was, however,
continued volatility, including another
year of elevated catastrophe losses
that negatively impacted reinsurer
profitability. Net premiums written for
Chubb’s Global Reinsurance segment
were $943 million, up 8.0% from prior
year, or 9.5% in constant dollars. The
combined ratio was 102.6% and segment
income was $256 million. Pre-tax
catastrophe losses were $216 million
versus $240 million prior year.
Since 2019, net premiums written have
increased 45%. The elevated natural
catastrophes in 2020, 2021 and 2022,
however, negatively impacted our
underwriting income. “We took action
in 2022 to mitigate volatility in our
portfolio, and we continue to do so in
2023,” said Wixtead.
In the current market, Chubb Tempest
Re is also seeing more opportunities
to do business with national and global
carriers.
The business is navigating the market
with a seasoned leadership team and a
deep bench of talent. In recent years, two
leadership roles were filled by executives
who each had more than 15 years of
experience with the company. “We have
been able to promote from within as well
as attract strong, experienced leaders
from outside the company,” said Wixtead.
Looking ahead to 2023, Chubb Tempest
Re remains focused on monitoring
volatility in the portfolio and looking
for business that meets its hurdles for
assuming risk. “Chubb Tempest Re is
well-positioned for growth and potential
opportunities as the market develops,”
said Wixtead.
43
Citizenship at Chubb
Philanthropy
The Chubb Charitable Foundation
believes that meaningful contributions
that support our communities globally
provide lasting benefits to society, to
Chubb and to Chubb employees. Through
philanthropy, global partnerships
and company-sponsored volunteer
activities focused on giving the gift of
time and donations, the Foundation
supports clearly defined projects that
solve problems with measurable and
sustainable outcomes, helping people
in the countries where we live and work
build productive and healthy lives.
Our philanthropy is funded principally
through the Chubb Charitable
Foundation and the Chubb Rule of Law
Fund. Our commitment to assist those
with fewer resources and to be stewards
of the planet is focused on the areas of
education, poverty and health, and the
environment. In the last decade, Chubb
has contributed more than $100 million
to the Foundation.
For example, the Chubb Charitable
Foundation has supported the
International Rescue Committee.
Through partnerships with The Nature
Conservancy, Rainforest Trust and
other conservation organizations, the
Foundation supports programs to save
endangered wildlife, protect threatened
lands and waters, and promote
resiliency, and continues to identify
new environmental projects to support.
Additionally, the Foundation serves as a
major partner for Teach for America and
Teach for All programs in the U.S. and
globally.
As part of our commitments to expand
and enhance our broader diversity,
equity and inclusion agenda, we are
working through the Chubb Charitable
Foundation to support a range of
programs to address inequality and
promote social, economic and racial
justice. For example, in 2021, the
Foundation established a scholarship
with Georgia State University’s risk
management and insurance program
to support students from diverse
backgrounds and expand the pipeline
of those individuals in the insurance
industry.
Environment
& Climate Change
Chubb recognizes the reality of climate
change and supports the global goal of
net-zero carbon emissions by 2050.
In early 2023, the company launched
Chubb Climate+, a global climate
business unit that draws on the
company’s extensive technical
capabilities in underwriting and risk
engineering and brings together
Chubb units engaged in traditional,
alternative and renewable energy,
climate tech, agribusiness and risk
engineering services. Chubb Climate+
will provide a full spectrum of insurance
products and services to businesses
engaged in developing or employing
new technologies and processes that
help reduce the dependence on carbon.
It will also provide risk management
and resiliency services to help those
managing the impact of climate change.
In early 2023, Chubb announced new
climate and conservation-focused
underwriting standards for oil and gas
extraction, the first of their kind in the
insurance industry. In 2019, Chubb
was the first insurer with major U.S.
operations to adopt a policy concerning
coal-related underwriting and
investment. In 2022, we announced an oil
sands policy prohibiting the underwriting
of risks for projects involving direct
mining or in situ extraction and
processing of bitumen from oil sands.
Our Mission
Protecting the Present and
Building a Better Future
Good corporate citizenship lies at
our core — how we practice our
craft of insurance, how we work
together to serve our customers,
how we treat each other, and how
we work to help make a better
world for our communities and
our planet. Citizenship is about
responsibility — and we express
that responsibility in a way that
reflects our core values and our
mission to protect the present and
build a better future.
We accomplish our mission by
providing the security from risk
that allows people and businesses
to grow and prosper. Our mission
is realized by sustaining a
culture that values and rewards
excellence, integrity, inclusion
and opportunity; by working to
protect our planet and assisting
less fortunate individuals and
communities in achieving and
sustaining productive and healthy
lives; and by promoting the rule
of law.
From our roots in 18th century
Philadelphia, we have built
Chubb to be a dynamic, forward-
looking global enterprise with
a commitment to responsible
citizenship. We act on this
promise of responsibility through
a wide range of activities that
include our contributions of time
and money.
Here are a few of the many
initiatives that we are proud of
and hope you find of interest.
44
The company’s short-term, science-
based operational greenhouse gas (GHG)
emissions reduction goal, which uses
2016 as the baseline, was achieved in
2019, and our long-term goal of reducing
operational GHG emissions 40% was
achieved by year-end 2021. Chubb is in
the process of developing new ambitious
operational GHG emissions goals.
The Chubb Charitable Foundation and
the company’s employees support a
range of environmental philanthropies,
as well as volunteer activities in local
communities around the world.
Chubb reported on initiatives and
progress in support of the global net-zero
transition in its 2022 TCFD report and
Climate Change Policy.
Diversity, Equity
& Inclusion
Chubb operates within a dynamic and
changing global environment where
marketplaces and customers are
culturally diverse and broad. Meeting
diverse customer needs requires the
best minds collaborating in a rewarding
and supportive environment. We
recognize our responsibility to ensure
opportunity within our own organization
by creating an atmosphere where all
colleagues, regardless of who they are,
feel comfortable bringing their best to
the table. Our strategy for diversity,
equity and inclusion (DE&I) is designed
to support Chubb’s ability to attract,
develop and retain the best talent —
regardless of background.
Chubb’s culture holds true to the
principles of accountability and
ownership and requires collective and
individual responsibility. Making and
sustaining progress requires holding
leadership accountable; developing and
advancing diverse talent; increasing
gender and multicultural leadership
diversity; and deploying inclusive
recruitment, development and
promotional practices.
Chubb is continuing the commitment
it made in 2020 to take specific actions
related to racial equity in recruitment,
career development and advancement
opportunities; promoting a greater
sense of belonging for Black colleagues;
and increasing the knowledge and
understanding of the Black employee
experience through open two-way
dialogue and education. These actions
support our goal of becoming an anti-
racist company.
In 2022, Chubb reinforced leadership
accountability and commitment to
improving gender balance and racial
diversity in leadership through goal
setting and linkage to performance
reviews and compensation at the
executive level.
Other DE&I initiatives include
mentorships and affinity groups, such
as Business Roundtables and Regional
Inclusion Councils, which promote
dynamic networking across the business
and engage hundreds of employees in
constructive dialogue. Chubb is also a
founding sponsor of the Black Insurance
Industry Collective, an industry-wide
effort to support and accelerate the
advancement of Black insurance
professionals and increase industry
representation of Black managers,
leaders and executives.
To provide further transparency and
accountability for its DE&I efforts,
Chubb publishes its EEO-1 workforce
demographic data.
Chubb Rule of
Law Fund
As a corporate citizen, Chubb recognizes
the rule of law as the foundation of a
liberal world order that the company
embraces as essential to the proper
functioning of markets and the
protection of personal freedoms.
Through the Chubb Rule of Law Fund, a
unique corporate initiative, we support
projects around the world that promote
the preservation and advancement of the
rule of law.
Since it was founded in 2008, the Fund
has supported 71 projects in countries
around the world focused on improving
access to justice, strengthening courts,
fighting corruption and creating the
conditions of security and freedom in
which our customers, employees and
fellow citizens can thrive.
The events that unfolded across the U.S.
in 2020 focused Chubb’s attention more
intensely on the persistent challenges
arising from bigotry, racism and racial
injustice in society, particularly for
Black people. Chubb is taking specific
actions to be an anti-racist company,
including supporting programs through
the Chubb Rule of Law Fund to address
inequality and promote social, economic
and racial justice. The Fund has made 11
grants — including four in 2022 that total
$1 million — for initiatives to improve
police and community relations, and to
understand and reduce racial inequities
throughout the criminal justice process.
Since 2020, the Fund has awarded more
than $2.2 million in grants to support
racial justice projects.
Along with racial justice, the Chubb
Rule of Law Fund is currently focusing
on funding projects that address
anticorruption, access to justice, and
maintaining democratic norms.
The Chubb Rule of Law Fund is funded
by the Chubb Charitable Foundation and
contributions from 16 partner law firms.
45
Officers and Executives
Chubb Group Corporate Officers
Evan G. Greenberg*
Chairman and Chief Executive Officer, Chubb Group
John Keogh*
President and Chief Operating Officer, Chubb Group
John Lupica**
Vice Chairman, Chubb Group;
President, North America Insurance
Juan Luis Ortega**
Executive Vice President, Chubb Group;
President, Overseas General Insurance
Timothy Boroughs**
Executive Vice President, Chubb Group;
Chief Investment Officer
Julie Dillman
Executive Vice President, Chubb Group;
Senior Executive, Operations and Technology,
and Digital Transformation Officer
Peter Enns*
Executive Vice President, Chubb Group;
Chief Financial Officer
Rainer Kirchgaessner
Executive Vice President, Chubb Group;
Global Corporate Development Officer
Sean Ringsted**
Executive Vice President, Chubb Group;
Chief Risk Officer and Chief Digital Business Officer
Joseph Wayland*
Executive Vice President, Chubb Group;
General Counsel
Brad Bennett
Senior Vice President, Chubb Group;
Chief Operating Officer, Chubb Life
David Furby
Senior Vice President, Chubb Group;
Regional President, Europe, Middle East and Africa;
Division President, Chubb Global Markets
Marcos Gunn
Senior Vice President, Chubb Group;
Regional President, Latin America
Bryce Johns**
Senior Vice President, Chubb Group;
President, Chubb Life
Cheryl Krauss
Senior Vice President, Chubb Group;
Chief Communications Officer
Thomas Kropp
Senior Vice President, Chubb Group;
Global Head of Operations and Technology
Christopher A. Maleno
Senior Vice President, Chubb Group;
Division President, North America Field Operations
Paul McNamee
Senior Vice President, Chubb Group;
Regional President, Asia-Pacific
Matthew Merna
Senior Vice President, Chubb Group;
Division President, North America Major Accounts
Scott A. Meyer
Senior Vice President, Chubb Group;
Division President, Westchester
Frances D. O’Brien
Senior Vice President, Chubb Group;
Deputy Chief Risk Officer
Paul O’Connell
Senior Vice President, Chubb Group;
Chief Actuary
Jo Ann Rabitz
Senior Vice President, Chubb Group;
Global Human Resources Officer
Michael W. Smith
Senior Vice President, Chubb Group;
Global Claims Officer
Derek Talbott
Senior Vice President, Chubb Group;
Division President, North America Property
and Specialty Lines
Joe Vasquez
Senior Vice President, Chubb Group;
Global Accident & Health
James E. Wixtead
Senior Vice President, Chubb Group;
President, Chubb Tempest Re Group
*Chubb Limited Executive Management and Executive Officer for SEC reporting purposes
**Executive Officer for SEC reporting purposes
46
Chubb Group Corporate Officers
Evan G. Greenberg*
Chairman and Chief Executive Officer, Chubb Group
President and Chief Operating Officer, Chubb Group
John Keogh*
John Lupica**
Vice Chairman, Chubb Group;
President, North America Insurance
Juan Luis Ortega**
Executive Vice President, Chubb Group;
President, Overseas General Insurance
Timothy Boroughs**
Executive Vice President, Chubb Group;
Chief Investment Officer
Julie Dillman
Executive Vice President, Chubb Group;
Senior Executive, Operations and Technology,
and Digital Transformation Officer
Peter Enns*
Executive Vice President, Chubb Group;
Chief Financial Officer
Rainer Kirchgaessner
Executive Vice President, Chubb Group;
Global Corporate Development Officer
Sean Ringsted**
Executive Vice President, Chubb Group;
Chief Risk Officer and Chief Digital Business Officer
Executive Vice President, Chubb Group;
Joseph Wayland*
General Counsel
Brad Bennett
Senior Vice President, Chubb Group;
Chief Operating Officer, Chubb Life
David Furby
Senior Vice President, Chubb Group;
Regional President, Europe, Middle East and Africa;
Division President, Chubb Global Markets
Marcos Gunn
Senior Vice President, Chubb Group;
Regional President, Latin America
Scott Arnold
Vice President, Chubb Group;
Division President, Chubb Agriculture;
President, Rain and Hail
Ross Bertossi
Vice President, Chubb Group;
Global Underwriting
Judy Gonsalves
Vice President, Chubb Group;
Division President, Chubb Bermuda
Annmarie Hagan
Vice President, Chubb Group;
Chief Accounting Officer
Stephen M. Haney
Vice President, Chubb Group;
Division President, North America Surety;
Chief Underwriting Officer, Global Surety
Michael Kessler
Vice President, Chubb Group;
Division President, Global Cyber Risk
Yancy Molnar
Vice President, Chubb Group;
Head of International Government Affairs & Public Policy
Timothy O’Donnell
Vice President, Chubb Group;
Division President, Commercial Property and Casualty
Overseas General Insurance
Ana Robic
Vice President, Chubb Group;
Division President, North America Personal Risk Services
Benjamin Rockwell
Vice President, Chubb Group;
Division President, North America Middle Market
John Thompson
Vice President, Chubb Group;
Division President, Personal Insurance
Overseas General Insurance
Karen Valanzano
Vice President, Chubb Group;
Head of Federal Government & Political Affairs
Other Executives
Alex Faynberg
Division President, Chubb Workplace Benefits
Samantha Froud
Chief Administration Officer, Bermuda Operations
Daniela Hernandez
Division President, International Accident & Health
Overseas General Insurance
Jeremiah Konz
Chief Reinsurance Officer, Chubb Group
Eric Larson
Chief Compliance Officer, Chubb Group
David Lupica
Chief Operating & Distribution Management Officer,
Westchester
Sara Mitchell
Division President, Continental Europe, Middle East
and North Africa
Michael O’Donnell
Division President, Chubb Tempest Re USA
George Ohsiek
Chief Auditor, Chubb Group
Sam Peters
Division President, Chubb Tempest Re Bermuda
Mark Roberts
Division President, United Kingdom, Ireland and South Africa
Steve Roberts
Division President, Chubb Tempest Re International
Diego Sosa
Regional President, Far East
Drew Spitzer
Treasurer, Chubb Group
Rich Williams
President, Combined Insurance
47
Chubb Limited Board of Directors
Board Committees
Audit Committee
Robert W. Scully, Chair
Kathy Bonanno
Theodore E. Shasta
David H. Sidwell
Luis Téllez
Compensation Committee
Frances F. Townsend, Chair
Mary Cirillo
Michael P. Connors
Nominating & Governance
Committee
Mary Cirillo, Chair
Michael P. Connors
Frances F. Townsend
Risk & Finance Committee
Olivier Steimer, Chair
Michael G. Atieh
Sheila P. Burke
Robert J. Hugin
Executive Committee
Evan G. Greenberg, Chair
Mary Cirillo
Michael P. Connors
Robert W. Scully
Olivier Steimer
Frances F. Townsend
Evan G. Greenberg
Chairman and
Chief Executive Officer
Chubb Limited
Robert J. Hugin
Former Chairman and
Chief Executive Officer
Celgene Corporation
Michael G. Atieh
Retired Chief Financial
and Business Officer
Ophthotech Corporation
Robert W. Scully
Retired Co-President
Morgan Stanley
Kathy Bonanno
Business Finance Officer
Google Cloud
Theodore E. Shasta
Retired Partner
Wellington Management
Company
Sheila P. Burke
Faculty Research Fellow
John F. Kennedy School
of Government
Harvard University
Mary Cirillo
Retired Executive
Vice President and
Managing Director
Deutsche Bank
Michael P. Connors
Independent Lead Director
Chubb Limited
Chairman and
Chief Executive Officer
Information Services
Group, Inc.
David H. Sidwell
Retired Chief
Financial Officer
Morgan Stanley
Olivier Steimer
Former Chairman
Banque Cantonale
Vaudoise
Luis Téllez
Former Chairman and
Chief Executive Officer
Mexican Stock Exchange
Frances F. Townsend
Senior Counsel and Former
Executive Vice President
for Corporate Affairs
Activision Blizzard
48
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.
Transfer Agent & Registrar
Independent Auditors
Computershare
150 Royall St., Suite 101
Canton, MA 02021 USA
U.S.: 877 522 3752
Outside the U.S.: 201 680 6898
PricewaterhouseCoopers AG
Birchstrasse 160
8050 Zurich
Switzerland
Tel: 41 58 792 44 00
PricewaterhouseCoopers LLP
Two Commerce Square
2001 Market Street, Suite 1800
Philadelphia, PA 19103 USA
Tel: 267 330 3000
New York Stock Exchange Symbol
CB
Chubb Common Shares CUSIP Number
Address Investor Relations Inquiries to:
Address Shareholder Inquiries to:
Investor Relations
Chubb Limited
1133 Avenue of the Americas
11th Floor
New York, NY 10036
Tel: 212 827 4445
Email: investorrelations@chubb.com
By regular mail:
Computershare
P.O. Box 43006
Providence, RI 02940-3006 USA
By overnight delivery:
Computershare
150 Royall St., Suite 101
Canton, MA 02021 USA
Website:
www.computershare.com/investor
H1467J 104
Send Certificates for Transfer and Address
Changes to:
Computershare
P.O. Box 43006
Providence, RI 02940-3006 USA
Cautionary Statement Regarding
Forward-Looking Statements
Forward-looking statements made in this
document, such as those related to company
performance, growth opportunities, economic
and market conditions, product and service
offerings, commitments, and our expectations
and intentions and other statements that
are not historical facts, reflect our current
views with respect to future events and
financial performance and are made pursuant
to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such
statements involve risks and uncertainties
that could cause actual results to differ
materially, including without limitation, the
following: competition, pricing and policy
term trends, the levels of new and renewal
business achieved, the frequency and severity
of unpredictable catastrophic events, actual
loss experience, uncertainties in the reserving
or settlement process, integration activities
and performance of acquired companies,
loss of key employees or disruptions to our
operations, new theories of liability, judicial,
legislative, regulatory and other governmental
developments, litigation tactics and
developments, investigation developments
and actual settlement terms, the amount
and timing of reinsurance recoverable, credit
developments among reinsurers, rating
agency action, infection rates and severity of
pandemics and their effects on our business
operations and claims activity, possible
terrorism or the outbreak and effects of war,
economic, political, regulatory, insurance and
reinsurance business conditions, potential
strategic opportunities including acquisitions
and our ability to achieve and integrate
them, as well as management’s response to
these factors, and other factors identified in
our filings with the Securities and Exchange
Commission (SEC). Readers are cautioned
not to place undue reliance on these forward-
looking statements, which speak only as of the
dates on which they are made. We undertake
no obligation to publicly update or revise any
forward-looking statements, whether as a
result of new information, future events or
otherwise.
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 papers certified to the international standards of the Forest Stewardship Council (FSC), which promotes responsible management of
the world’s forests.
49
The following table presents the reconciliation of Net income
to Core operating income:
(in millions of U.S. dollars except
share and per share data)
Net income, as reported
Amortization of fair value adjustment
of acquired invested assets and
long-term debt, pre-tax
Tax benefit on amortization
adjustment
Cigna integration expenses,
pre-tax
Tax benefit on Cigna integration
expenses
Adjusted realized gains (losses),
pre-tax(1)
Net realized gains (losses) related to
unconsolidated entities, pre-tax(2)
Tax (expense) benefit on adjusted
net realized gains (losses)
Core operating income
Full Year
2022
$5,313
Full Year
2021
$8,539
(20)
1
(48)
10
(954)
(262)
129
$6,457
(64)
11
-
-
1,160
2,134
(271)
$5,569
Denominator: adj. wtd. avg. shares
outstanding and assumed conversions
423,527,444
443,197,278
Diluted earnings per share
Net income
Amortization of fair value adjustment
of acquired invested assets and
long-term debt, net of tax
Cigna integration expenses, net of tax
Adjusted net realized gains (losses),
net of tax
Core operating income
% Change from prior year
$12.55
$19.27
(0.04)
(0.09)
(2.56)
$15.24
21.3%
(0.12)
-
6.83
$12.56
(1) Excludes realized gains (losses) on crop derivatives of $(11) million and $(8) million for 2022
and 2021, respectively.
(2) Realized gains (losses) on partially owned entities, which are investments where we hold more
than an insignificant percentage of the investee’s shares. The net income or loss is included in
Other income (expense) in our income statement on a GAAP basis.
Non-GAAP Financial Measures
Non-GAAP Financial Measures
This document contains non-GAAP financial measures.
The below non-GAAP financial measures, which may be
defined differently by other companies, are important for an
understanding of our overall results of operations and financial
condition. However, these measures should not be viewed
as a substitute for measures determined in accordance with
generally accepted accounting principles (GAAP).
We provide certain financial measures on a constant-dollar
basis (i.e., excluding the impact of foreign exchange). We believe
it is useful to evaluate the trends in our results exclusive of the
effect of fluctuations in exchange rates between the U.S. dollar
and the currencies in which our international business
is transacted, as these exchange rates could fluctuate
significantly between periods and distort the analysis of
trends. The impact is determined by assuming constant foreign
exchange rates between periods by translating prior period
results using the same local currency exchange rates as the
comparable current period.
Core operating income, net of tax, excludes from net income
the after-tax impact of adjusted net realized gains (losses),
Cigna integration expenses, and the amortization of fair
value adjustment of acquired invested assets and long-term
debt related to the Chubb Corporation acquisition and
Cigna business. We believe this presentation enhances the
understanding of our results of operations by highlighting the
underlying profitability of our insurance business. We exclude
adjusted net realized gains (losses) because the amount of
these gains (losses) is heavily influenced by, and fluctuates in
part according to, the availability of market opportunities. We
exclude the amortization of the fair value adjustments related
to purchased invested assets and long-term debt, related to
the Chubb Corp acquisition and Cigna business, due to the size
and complexity of these acquisitions. We also exclude Cigna
integration expenses due to the size and complexity of this
acquisition. Cigna integration expenses are incurred by the
overall company and are therefore included in Corporate. The
costs are not related to the ongoing activities of the individual
segments and are therefore excluded from our definition
of segment income as well. These integration expenses are
distortive to our results and are not indicative of our underlying
profitability. We believe that excluding these integration
expenses facilitates the comparison of our financial results to
our historical operating results. These expenses include legal
and professional fees and all other costs directly related to the
integration activities of the Cigna acquisition. References to
core operating income measures mean net of tax, whether or
not noted.
50
Core operating return on equity (ROE) and Core operating
return on tangible equity (ROTE) are annualized non-GAAP
financial measures. The numerator includes core operating
income, net of tax. The denominator includes the average
shareholders’ equity for the period adjusted to exclude
unrealized gains (losses) on investments, net of tax. For the
ROTE calculation, the denominator is also adjusted to exclude
goodwill and other intangible assets, net of tax. These measures
enhance the understanding of the return on shareholders’
equity by highlighting the underlying profitability relative to
shareholders’ equity and tangible equity excluding the effect of
unrealized gains and losses on our investments that are heavily
influenced by available market opportunities. We believe
ROTE is meaningful because it measures the performance
of our operations without the impact of goodwill and other
intangible assets.
(in millions of U.S. dollars except ratios)
Net income
Core operating income
Full Year
Full Year
2022
2021
$5,313
$6,457
$8,539
$5,569
Combined ratio measures the underwriting profitability of
our property and casualty business. P&C combined ratio
and P&C Current Accident Year (CAY) combined ratio
excluding Catastrophe losses (CATs) are non-GAAP financial
measures. Refer to the Non-GAAP Reconciliation section in
the 2022 Form 10-K, on pages 63-66, for the definition of
these non-GAAP financial measures and reconciliation to the
Combined ratio.
The following table presents the reconciliation of combined
ratio to P&C combined ratio, and the reconciliation of P&C
combined ratio to P&C CAY combined ratio excluding CATs:
Combined ratio
Add: impact of gains and losses
on crop derivatives
P&C combined ratio
Less: catastrophe losses
Less: prior period development
Full Year
Full Year
2022
87.6%
0.0%
87.6%
5.9%
–2.5%
84.2%
2021
89.1%
0.0%
89.1%
7.1%
–2.8%
84.8%
Equity — beginning of period, as reported
$59,714
$59,441
P&C CAY combined ratio excluding CATs
Less: unrealized gains (losses) on
investments, net of deferred tax
2,256
4,673
Equity — beginning of period, as adjusted
$57,458
$54,768
Less: goodwill and other intangible assets,
net of tax
Equity — beginning of period, as
adjusted, excluding goodwill and other
intangible assets
19,456
19,916
$38,002
$34,852
Equity — end of period, as reported
$50,540
$59,714
Less: unrealized gains (losses) on
investments, net of deferred tax
(7,279)
2,256
Equity — end of period, as adjusted
$57,819
$57,458
Less: goodwill and other intangible assets,
net of tax
Equity — end of period, as
adjusted, excluding goodwill and other
intangible assets
20,605
19,456
$37,214
$38,002
Weighted average equity, as reported
$55,127
$59,578
Weighted average equity, as adjusted
$57,639
$56,113
Book value per common share is shareholders’ equity divided
by the shares outstanding. Tangible book value per common
share is shareholders’ equity less goodwill and other intangible
assets, net of tax, divided by the shares outstanding. We believe
that goodwill and other intangible assets are not indicative of
our underlying insurance results or trends and make book value
comparisons to less acquisitive peer companies less meaningful.
The following table presents a reconciliation of book value per
common share to tangible book value per common share:
(in millions of U.S. dollars,
except share and
per share data)
December 31
December 31
2022
2021
% Change
Book value
$50,540
$59,714
Less: goodwill and
other intangible
assets, net of tax
Numerator for tangible
book value per share
20,605
19,456
$29,935
$40,258
Weighted average equity, as adjusted,
excluding goodwill and other intangible assets
$37,608
$36,427
Denominator: shares
outstanding
414,594,856
426,572,612
ROE
Core operating ROTE
Core operating ROE
9.6%
17.2%
11.2%
14.3%
15.3%
9.9%
Book value per
common share
Tangible book value
per common share
$121.90
$139.99
-12.9%
$72.20
$94.38
-23.5%
51
Book value per common share and tangible book value per
common share excluding accumulated other comprehensive
income (loss) (AOCI), excludes AOCI from the numerator
because it eliminates the effect of items that can fluctuate
significantly from period to period, primarily based on changes
in interest rates and foreign currency movement, to highlight
underlying growth in book and tangible book value.
The following table provides a reconciliation of growth in book
value per common share and tangible book value per common
share excluding AOCI:
(in millions of U.S. dollars,
except share and
per share data)
Book value
Less: AOCI
Book value excluding
AOCI
Tangible book value
Less: tangible AOCI
Tangible book value
excluding tangible AOCI
Denominator: shares
outstanding
Book value per share
excluding AOCI
Tangible book value
per share excluding
tangible AOCI
December 31
December 31
2022
$50,540
(10,193)
$60,733
$29,935
(9,287)
2021
% Change
$59,714
350
$59,364
$40,258
1,078
$39,222
$39,180
414,594,856
426,572,612
$146.49
$139.16
5.3%
$94.60
$91.85
3.0%
International life insurance net premiums written and
deposits is a non-GAAP financial measure, which includes
International life insurance net premiums written and deposits
collected on universal life and investment contracts. 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. However, new life deposits
are an important component of production and key to our efforts
to grow our business.
The following table presents a reconciliation of International
life insurance net premiums written and deposits (excludes
Combined North America and Life reinsurance businesses):
(in millions of U.S. dollars)
International life insurance net premiums
written
Full Year
Full Year
2022
2021
$2,580
$1,310
International life insurance deposits
1,800
2,441
Total international life insurance net premiums
written and deposits
$4,380
$3,751
Adjusted net investment income is net investment income
excluding the amortization of the fair value adjustment on
acquired invested assets from the acquisitions of Chubb Corp
and Cigna business in Asia and including investment income
from partially owned investment companies (private equity
partnerships) where our ownership interest is in excess of 3%
that are accounted for under the equity method. We believe
this measure is meaningful as it highlights the underlying
performance of our invested assets and portfolio management in
support of our lines of business.
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 expense of fair
value adjustment on acquired
invested assets
Add: other income from private equity
partnerships
Full Year
Full Year
2022
2021
$3,742
$3,456
(41)
(84)
240
179
Adjusted net investment income
$4,023
$3,719
% Change from prior year
8.2%
52
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
☑
☐
For the Transition Period from to
Commission File No. 1-11778
CHUBB LIMITED
(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)
Securities registered pursuant to Section 12(b) of the Act: See Exhibit 99.1
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 ☑ No ☐
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 ☐ No ☑
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 ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☑
Non-accelerated filer
☐
Accelerated filer
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 has filed a report on and attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of voting stock held by non-affiliates as of June 30, 2022 (the last business day of the registrant's most recently
completed second fiscal quarter), was approximately $82 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 17, 2023, there were 413,506,316 Common Shares par value CHF 24.15 of the registrant outstanding.
Certain portions of the registrant's definitive proxy statement relating to its 2023 Annual General Meeting of Shareholders are incorporated by
reference into Part III of this report.
Documents Incorporated by Reference
CHUBB LIMITED INDEX TO 10-K
PART I
ITEM 1. Business
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 2. Properties
Legal Proceedings
ITEM 3.
ITEM 4. Mine Safety Disclosures
PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
[Reserved]
ITEM 6.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
ITEM 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9.
ITEM 9A. Controls and Procedures
ITEM 9B. Other Information
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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
SIGNATURES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
2
21
33
33
33
33
34
35
36
84
89
89
89
89
90
91
91
91
92
92
93
100
100
F-2
1
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, 2022, we had total assets of $199 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, to become a global property and casualty (P&C) leader. We have also expanded
our personal accident and supplemental health (A&H), and life insurance business with the acquisition of Cigna's business in
several Asian markets. This complementary strategic acquisition on July 1, 2022 expands our presence and advances our long-
term growth opportunity in Asia. On January 4, 2023, we increased our ownership interest in Huatai Insurance Group Co. Ltd
(Huatai Group) from 47.3 percent to 64.2 percent. Refer to Note 2 to the Consolidated Financial Statements for additional
information on our acquisitions.
With operations in 54 countries and territories, Chubb provides commercial and consumer P&C insurance, A&H, reinsurance,
and life insurance to a diverse group of clients. We provide 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 financial lines to various specialty-casualty and umbrella and excess
casualty lines to niche areas such as aviation and energy. We also offer consumer lines insurance coverage including
homeowners, automobile, valuables, umbrella liability, and recreational marine products. In addition, we supply A&H 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 in certain international markets and for high net worth individuals in
the U.S., 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.
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 the Board of Directors (the Board). Printed documents are available by contacting our Investor Relations
Department (Telephone: +1 (212) 827-4445, 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 SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other
information regarding issuers that file 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
assists 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.
2
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.
The insurance industry is changing rapidly. 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 using digital
capabilities in an everchanging competitive landscape and incorporating, among other things, climate and environmental
changes into our insurance processes, products, and services. Our broad market capabilities in personal, commercial, specialty,
and A&H lines made available by our underwriting expertise, business infrastructure, and global presence, help define our
competitive advantage. Our superior claims service is a significant asset to our business, our business partners and customers,
and is unique in the industry. 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.
Human Capital Management
Our employees are critical to our mission to protect the present and build a better future, by providing our customers with the
security from risk that allows people and businesses to grow and prosper. To accomplish this mission, we seek to attract and
retain the very best insurance professionals and to provide an inclusive and supportive culture that allows all of our employees
to reach their full potential as we deliver insurance solutions and claims service for individuals, families and businesses of all
sizes. Our highly collaborative, inclusive approach helps us drive better business outcomes. We track and report internally on
key talent metrics including employee demographics, critical role succession planning, diversity data, and employee retention
and engagement. This information is regularly reported to senior management as well as the Chubb Board of Directors. As of
December 31, 2022, we employed approximately 34,000 people in 54 countries and territories around the world, including 47
percent in North America, 12 percent in Europe, Eurasia and Africa, 26 percent in Asia, and 15 percent in Latin America. While
we have not been immune from voluntary turnover generally reflecting the highly competitive environment for talent, we believe
we have effectively managed it through talent acquisition and retention actions. We believe that employee relations are good.
The average age of our workforce is 41 years and the average tenure is 7.5 years.
Diversity, Equity and Inclusion
Diversity, equity and inclusion are integral to Chubb’s culture. We recognize our responsibility to provide opportunity within our
own organization, where we aim to foster a diverse and inclusive meritocracy. Our extensive efforts in this area include
mentorships, affinity groups, diversity awareness training, and education, open dialogue on race and racism, management
development programs, and inclusive hiring practices.
We set goals and track progress on improving gender and racial diversity, particularly at the leadership levels and with early
career program hires. We also look at the diversity rates in our hires and promotions and the diversity of our candidate interview
slates for leadership roles. In 2022, there was year over year progress on gender and racial diversity at the leadership level,
most notably on gender and racial diversity at our senior vice president and above levels, and we also improved the diversity of
hiring into our development programs. We depend on our culture of leadership accountability to continue progress in diversity,
equity and inclusion at Chubb.
3
In 2022 we continued to support our Business Roundtables (our employee affinity groups) and Regional Inclusion Councils,
which promote dynamic networking across the business and engage hundreds of employees in constructive dialogue. These
circles of support focus on employee onboarding, development and retention and help us build stronger relationships with, and
gain deeper insights into, our varied customer and distribution partner communities. We also continued our leadership and
involvement externally in the Black Insurance Industry Collective (BIIC), whose mission is to accelerate the advancement of
Black professionals within the insurance industry and to increase representation of Black leaders at the executive level through
leadership development, mentoring, sponsorships and networking within the industry. Other internal programs include Chubb
Start, which supports the continuous professional development of women who are early in their careers; Chubb Signatures, a
global and regional lecture series for successful senior women, diverse men and inclusion champions to share their unique
backgrounds, experiences and hard-earned lessons in business; inclusive hiring practices and intentional inclusion training for
managers to mitigate unconscious bias and to create greater awareness and proficiency in attracting and hiring diverse talent
and building diverse teams.
Attraction, Development and Retention
The foundation to Chubb’s long-term success is our disciplined approach to attracting, developing and retaining the next
generation of insurance professionals and leaders. We strive to be an inclusive meritocracy, where all employees regardless of
race, gender or background can thrive. Learning and professional development are central to the Chubb culture, and we are
committed to providing opportunities to evolve professionally. Our talent development efforts are for all employee levels and we
expect our employees to own and drive their development by availing themselves of the structured and unstructured learning we
offer, including on-the-job training, personal interaction and involvement, and online and classroom learning. Chubb has made
substantial investments for a robust technical and leadership development environment and, where appropriate, fills open
positions with internal sourcing of talent.
In addition, in response to the increasingly competitive labor market, we have taken steps to retain key talent, with competitive
compensation actions including long-term incentives and more development opportunities, and to deepen our talent acquisition
efforts by adding more recruiters and enhancing our employee referral program. Globally, we promoted more than 6,100
employees and successfully recruited more than 6,900 new employees (including more than 450 into early career programs) to
fill openings and to support our growth plans.
Compensation and Benefits
Chubb is committed to delivering competitive compensation and benefits to its employees worldwide as a means to attract and
retain a highly qualified, experienced, talented and motivated workforce. We vary and adjust our offerings to support the human
resources requirements of our business in markets around the world in which we operate. Additionally, we structure our
compensation programs for leaders to include a mix of short- and long-term awards, with a focus on linking pay to Chubb's
performance and the enhancement of shareholder value over the medium- and long-term.
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. In 2022,
consolidated net premiums earned (NPE) was $40.4 billion. Additional financial information about our segments is included in
Note 15 to the Consolidated Financial Statements.
North America Commercial P&C Insurance (42 percent of 2022 Consolidated NPE)
Overview
The North America Commercial P&C Insurance segment comprises operations that provide P&C and A&H insurance and
services to large, middle market, and small commercial businesses in the U.S., Canada, and Bermuda. This segment includes:
•
Commercial Insurance (40 percent of this segment's 2022 NPE), which includes the retail division focused on middle
market customers and small businesses
• Major Accounts (39 percent of this segment's 2022 NPE), the retail division focused on large institutional organizations and
corporate companies
• Westchester (17 percent of this segment's 2022 NPE), our wholesale and specialty division
Chubb Bermuda (4 percent of this segment’s 2022 NPE), our high excess retail division
•
Products and Distribution
The Commercial Insurance operations, which include Small Commercial, provides a broad range of P&C, financial lines, and
A&H products targeted to U.S and Canadian-based middle market customers in a variety of industries, while the Small
4
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.
•
•
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, A&H, and international coverages. Commercial Insurance distributes its insurance products through a North
American network of independent retail agents, and regional, 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 product or a portfolio of
products, which is a collection of insurance offerings designed to cover various needs.
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 coverage; and other lines including workers’ compensation, automobile liability, and
international coverages. Products are generally offered through a North American network of independent agents and
brokers, as well as eTraditional, which are digital platforms where we electronically quote, bind, and issue for agents and
brokers. An example of this is the Chubb Marketplace.
Major Accounts provides a broad array of commercial lines of products and services, including traditional and specialty P&C,
risk management, and A&H products 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, workers’ compensation, general liability, automobile liability,
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 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, and managing risk for workers’ compensation, general liability and automobile
liability coverages as well as offering casualty insurance solutions for commercial real estate. 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, inland marine, and aerospace products.
Casualty Risk provides coverages including umbrella and excess liability, environmental risk, casualty programs for
commercial construction related projects for companies and institutions, and medical risk specialty liability products for the
healthcare industry.
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 are targeted to middle market, large corporate and affinity groups, and 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. A&H also provides specialty consumer lines products,
including credit card enhancement programs (identity theft, rental car collision damage waiver, trip travel, and purchase
protection benefits).
•
Financial Lines provides management liability and professional liability (D&O and E&O), transactional risk, and cyber risk
products to public companies as well as to private and not for profit organizations.
5
•
ESIS Inc. (ESIS) is an in-house third-party claims administrator that 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.
Westchester is our wholesale and specialty division that 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 and provides specialty products for property, casualty,
environmental, professional liability, inland marine, product recall, small business, binding and program coverages in the U.S.
and Canada. Products are offered through the wholesale distribution channel.
Chubb Bermuda is our high excess retail division which 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. Products are offered primarily through the Bermuda offices of major, internationally recognized
insurance brokers.
Competitive Environment
The 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. Recent competitive developments
include the growth of new digital-based distribution models. 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.
Major Accounts competes against a number of large, global 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.
North America Personal P&C Insurance (13 percent of 2022 Consolidated NPE)
Overview
The North America Personal P&C Insurance segment includes the business written by Chubb Personal Risk Services division,
which includes high net worth personal lines business, with operations in the U.S. and Canada. This segment provides affluent
and high net worth individuals and families with homeowners, high value automobile and collector cars, valuable articles
(including fine arts), personal and excess liability, travel insurance, cyber, 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 2022.
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 address the specific needs of high net worth families and individuals, to provide superior service
to our customers, and to develop and deploy digital production and processes.
6
North America Agricultural Insurance (7 percent of 2022 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
Rain and Hail provides comprehensive MPCI and crop-hail insurance coverages.
• MPCI is federally subsidized crop protection from numerous causes of loss, including drought, excessive moisture, freeze,
disease and more. The MPCI program is offered in conjunction with the U.S. Department of Agriculture. MPCI products
include revenue protection (defined as providing both commodity price and yield coverages), yield protection, margin
protection, prevented planting coverage and replant coverage. For additional information on our MPCI program, refer to
“Crop Insurance” under Item 7.
•
Crop-Hail coverage provides crop protection from damage caused by hail and/or fire, with options in some markets for other
perils such as wind or theft. Coverage is provided on an acre-by-acre basis and is available in the U.S. and in some parts of
Canada. Crop-Hail can be used in conjunction with MPCI or other comprehensive coverages to offset the deductible and
provide protection up to the actual cash value of the crop.
Chubb Agribusiness comprises Commercial Agribusiness and Farm and Ranch Agribusiness.
•
•
Commercial Agribusiness offers specialty P&C coverages for commercial companies that manufacture, process and
distribute agricultural products. Commercial products and services include property, general liability for premises/operations
and product liability, commercial automobile, workers' compensation, employment practices liability coverage, built-in
coverage for premises pollution, cyber and information security, and product withdrawal.
Farm and Ranch Agribusiness offers an extensive line of coverages for farming operations from Hobby/Gentleman farms to
complex corporate farms and equine services including personal use, boarding, and training. Coverages include farm and
ranch structures, automobile and other vehicle coverages, and machinery and other equipment coverages.
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. We seek a competitive advantage through our ability to provide superior
service to our customers, including the development of digital solutions. 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 (27 percent of 2022 Consolidated NPE)
Overview
The Overseas General Insurance segment comprises Chubb International, our retail division, Chubb Global Markets (CGM), our
wholesale division, and the international supplemental A&H business of Combined International Insurance. Chubb International
comprises our international retail commercial P&C and corporate A&H traditional and specialty lines serving large corporations,
middle market and small customers; consumer A&H and traditional and specialty personal lines business serving local territories
outside the U.S., Bermuda, and Canada. CGM, our London-based international specialty and excess and surplus lines wholesale
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 £630 million for the Lloyd’s 2023
account year. The syndicate is managed by Chubb’s Lloyd’s managing agency, Chubb Underwriting Agencies Limited. The
Overseas General Insurance segment also includes the P&C related operations of our investment in China based Huatai Group.
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, Middle East and Africa, Asia Pacific, Japan, and Latin America. Products offered include
commercial P&C and corporate A&H lines, including specialty coverages and services, and consumer lines, including A&H and
personal lines insurance products. Chubb International's P&C business is generally written, on both a direct and assumed basis,
7
through major international, regional, and local brokers and agents. Certain branded products are also offered via digital-
commerce platforms, allowing agents and brokers to quote, bind, and issue policies at their convenience. 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, including
thousands of telemarketers, 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, cyber, surety,
aviation, political risk, and specialty personal lines products. Chubb International personal lines operations provide a wide range
of consumer lines products to meet the needs of specific target markets around the world. Products include high net worth
homes, traditional homeowners, automobile, and specialty products that cover smart phones, eyeglasses, and personal cyber
risk.
As of December 31, 2022, Chubb International’s presence in China included its 47.3 percent ownership interest in Huatai
Group. Huatai Group wholly owns Huatai Property & Casualty Insurance Co., Ltd. (Huatai P&C). Therefore, Chubb owned a
47.3 percent indirect ownership interest in Huatai P&C, which provides a range of commercial and personal P&C products in
China, including property, professional liability, product liability, employer liability, business interruption, marine cargo, personal
accident, and specialty risk. These products are marketed through a variety of distribution channels including over 200 licensed
sales locations in 28 Chinese provinces. On January 4, 2023, we increased our ownership interest in Huatai Group to 64.2
percent. Refer to Note 2 to the Consolidated Financial Statements for additional information.
CGM offers products through its parallel distribution network via two legal entities, Chubb European Group SE (CEG) 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. They also use CEG to underwrite similar classes, including in the U.S. where
they are eligible to write excess and surplus lines business. Factors influencing the decision to place business with the Syndicate
or CEG include licensing eligibilities and client/broker preference. CGM also has a presence outside London, in the U.S.,
Canada, Europe, Asia and Latin America, for certain specialty lines of business (political risk and trade credit as well as aviation)
which are underwritten by local Chubb entities. 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 credit.
Combined International Insurance uses an international sales force to distribute a wide range of supplemental A&H products
including personal accident, short-term disability, critical conditions and cancer aid, and hospital confinement/recovery. Most of
these products are primarily fixed-indemnity obligations and are not subject directly to escalating medical cost inflation.
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 and personal lines businesses, 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. Our international operations also have the advantage of selling products
through a variety of distribution channels including partnerships with major international, regional, and local brokers and agents.
Additionally, as noted above, certain branded products are also offered via digital-commerce platforms. 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 having a significant presence in all of the countries in which we operate, giving us
the advantage of accessing local technical expertise and regulatory environments, understanding local markets and culture,
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. All lines of business face competition, depending on the business
class, from Lloyd's syndicates, other carriers operating in 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 CEG), and the quality of its underwriting and claims service.
8
Global Reinsurance (2 percent of 2022 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 its
reinsurance products worldwide primarily through reinsurance brokers under the Chubb Tempest Re brand name and provides a
broad range of traditional and non-traditional reinsurance coverage to a diverse array of primary P&C companies.
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. Global Reinsurance’s diversified portfolio is produced
through reinsurance intermediaries.
Chubb Tempest Re Bermuda principally provides property catastrophe reinsurance 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 treaty. Chubb Tempest Re Bermuda also
writes other types of reinsurance on a limited basis for some select clients.
Chubb Tempest Re USA offers an array of traditional and specialty P&C reinsurance for the North American market, principally
on a treaty basis, with a focus on writing property and casualty reinsurance. Chubb Tempest Re USA underwrites reinsurance
on both a proportional and excess of loss basis.
Chubb Tempest Re International offers an array of traditional and specialty P&C reinsurance to insurance companies worldwide,
with emphasis on non-U.S. and non-Canadian risks, including but not limited to property, property catastrophe, casualty,
marine, and specialty through its London- and Zurich-based offices. Chubb Tempest Re International underwrites reinsurance on
both a proportional and excess of loss basis.
Chubb Tempest Re Canada offers an array of traditional and specialty P&C reinsurance for the Canadian market, including but
not limited to property, property catastrophe, casualty, surety, and crop-hail. 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. Government sponsored or backed catastrophe funds can also
affect demand for reinsurance. Global Reinsurance 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 Chubb's strong capital position, analytical capabilities, experienced underwriting team and quality
customer service. The key competitors in our markets vary by geographic region and product line. An advantage of our
international platform is that we can 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 our offices, except
for Bermuda, provide local reinsurance license capabilities which benefit our clients in dealing with country regulators.
Life Insurance (9 percent of 2022 Consolidated NPE)
Overview
The Life Insurance segment comprises our 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 Asia, including Hong Kong, Indonesia, South Korea,
Taiwan, Thailand, Vietnam, and Myanmar. On July 1, 2022, we expanded our presence in Asia with the acquisition of Cigna’s
A&H and life insurance operations. Predominantly writing a portfolio of personal accident and supplemental health insurance
and term life, the operations are located in Korea, Taiwan, Hong Kong, New Zealand, and Indonesia. Chubb Life also provides
9
coverage throughout Latin America; selectively in Europe; Egypt; and in China through our direct and indirect investments in
Huatai Group, Huatai Life Insurance Co., Ltd. (Huatai Life) and Huatai Asset Management Co., Ltd.
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, Group Employee benefits, unit linked
contracts, and credit protection insurance for automobile, motorcycle, and home loans. 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. We earn income from both insurance contracts subject to mortality and morbidity risks and investment contracts
not subject to insurance risks. Funds received from policyholders for investment contracts are not recorded as premium revenue,
but rather as a policyholder deposits with an offsetting policy holder account balance liability on the balance sheet. We earn
income on investment contracts from both net investment spreads on policy holder account balances and fees for management
and administrative services. The size of policyholder account balances will primarily determine the amount of income generated
from investment contracts. These investment contracts are an important component of production and are key to our efforts to
grow our business. Chubb Life sells to consumers through a variety of distribution channels including captive and independent
agencies, bancassurance, worksite marketing, retailers, brokers, telemarketing, mobilassurance, and direct to consumer
marketing. We continue to expand Chubb Life with a focus on opportunities in international markets that we believe will result
in sustainable operating profits and achieve target returns on invested capital. 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.
As of December 31, 2022, Chubb had a 57.7 percent direct and indirect ownership interest in Huatai Life, comprising a 20
percent direct ownership interest as well as a 37.7 percent indirect ownership interest through Huatai Group, the parent
company of Huatai Life. Huatai Life 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 including whole life, universal
life, medical and health, personal accident, and disability. These products are marketed through a variety of distribution
channels including over 400 licensed sales locations in 20 Chinese provinces. We also have an indirect investment in Huatai
Asset Management, a third-party investment management firm, through our direct ownership in Huatai Group. On January 4,
2023, we increased our direct and indirect ownership interest in Huatai Life to 71.1 percent, through our increased ownership
in Huatai Group. Refer to Note 2 to the Consolidated Financial Statements for additional information.
Chubb Life Re's core business is a Bermuda-based operation which provides reinsurance to primary life insurers, focusing on
guarantees included in certain 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 net income 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 through both direct marketing and worksite sales, through our Chubb Workplace
Benefits platform. 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, local insurers, joint ventures, and
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.
10
Corporate
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
including molestation 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, abuse or molestation claims principally arises out of liabilities acquired when we purchased Westchester
Specialty in 1998, CIGNA’s P&C business in 1999, and The Chubb Corporation 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. We recognize that climate changes and weather patterns, as well as inflationary forces, are integral to our
underwriting process and we continually adjust our process to address these changes. This is intended to help ensure that
exposures are priced appropriately and resulting 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 “Global Property
Catastrophe 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,
11
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 “Global Property Catastrophe 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 the loss is recognized. 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, our loss reserves are not discounted for the time
value of money. The net undiscounted reserves related to structured settlements and certain reserves for unsettled claims are
immaterial.
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, 2022. 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, 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 also invest in limited partnerships and investment funds. 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
12
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, the District
of Columbia, and all U.S. Territories. 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
The Pennsylvania Insurance Department (Department) is the group-wide supervisor for the Chubb Group of Companies. In
consultation with other insurance regulatory bodies that oversee Chubb's insurance activities, the Department has convened the
Chubb Supervisory College (College) bi-annually since 2012, with regulator-only interim Colleges held in intervening years since
2017. The most recent College was held in September 2022. During these meetings, the College reviewed extensive
information about Chubb, without material adverse comment.
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 and personal lines insurance for individuals of Swiss companies, and 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.
13
U.S. Operations
Our U.S. insurance subsidiaries are subject to extensive regulation 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 U.S.
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 our U.S. insurers. 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 annually with the Department an enterprise risk report that identifies material risks within our
system that could pose enterprise risk to our U.S. insurers, a disclosure report that identifies our corporate governance practices,
a report reflecting our internal assessment of material risks associated with our current business plan and the sufficiency of our
capital resources to support those risks, and a group capital calculation report that provides a baseline quantitative measure for
group 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 National Association of Insurance Commissioners (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 continues 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., has been extended under the
Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA) through December 31, 2027, 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
14
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.
Numerous states require us to certify our compliance with their data protection laws.
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, 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.
Additionally, the NAIC adopted an Insurance Data Security Model Law, which requires licensed insurance entities to comply
with detailed information security requirements. The NAIC model law is similar in many respects to the NYDFS Cybersecurity
Regulation.
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. The GAAP 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, each year, the Bermuda
domiciled insurers are required to file with the BMA a capital and solvency return along with an annual statutory financial
return. The prescribed form of capital and solvency return is comprised of the BMA’s risk-based capital model, termed the
Bermuda Solvency Capital Requirement (BSCR) or an approved internal capital model in lieu thereof; a statutory economic
balance sheet; the approved actuary’s opinion; and several prescribed schedules. The BSCR is 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. Bermuda statutory reporting rules include an Economic Balance Sheet (EBS)
framework. 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 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. Failure to maintain statutory capital at least equal to the TCL would likely result in increased BMA regulatory
oversight.
Under the BMA’s powers to set standards on public disclosure under the Insurance Act, the Bermuda domiciled subsidiaries are
required to prepare and publish a Financial Condition Report (FCR). The FCR provides details of measures governing the
15
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.
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 signed by at least two directors of the
relevant Bermuda domiciled subsidiary (one of whom must be a director resident in Bermuda) and by the relevant Bermuda
domiciled subsidiary’s principal representative, 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 be less than the aggregate of its liabilities.
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's financial statements, 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, such as the
International Accounting Standard Board’s accounting standard for insurance contracts (IFRS 17), 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 such as the General Data Protection Regulation (GDPR), 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.
16
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,
which encompasses climate risk, 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 strategic 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, advanced analytics, metrics and processes (such as probabilistic
exposure and economic capital models to assess aggregation risk from natural and other catastrophes) 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, (including our Risk &
Finance Committee and our Nominating & Governance Committee), 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 (CEO) in the oversight
and review of the ERM framework which covers the processes and guidelines used to manage the entire landscape of insurance,
financial, strategic, and operational risks. The RUC is chaired by Chubb Group’s Chief Risk Officer (Chair). The RUC meets at
least twice a quarter, and is comprised of Chubb Group's most senior executives which, in addition to the Chair, includes the
CEO, President and Chief Operating Officer, Chief Financial Officer, Chief Investment Officer, Chief Actuary, Chief Claims Officer,
General Counsel, President – North America Insurance, President – Overseas General Insurance, Deputy Chief Risk Officer, 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. The first relates to external information that provides insight to the RUC
on existing or emerging risks that might significantly impact Chubb's key objectives while the second involves 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 with the Risk & Finance Committee at least annually in order to exercise its duties under New
York Stock Exchange Rules.
Others within the overall 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.
17
Climate Change Risk Management
Chubb has a comprehensive, coordinated global environmental program that is embedded in all areas of the organization and its
activities and performance are reported to the RUC and executive team. In January 2023, Chubb appointed a Global Climate
Officer (GCO) as the senior executive responsible for overseeing the global environmental program. The GCO reports to both the
CEO, who approves the goals and objectives of the environmental program, and Chubb's General Counsel. The GCO has
executive management responsibility for Chubb's climate-related strategies, including business and policy initiatives and the
execution of related underwriting and portfolio management processes.
The potential impacts of climate change on the insurance industry, including Chubb, are complex, myriad and will develop over
a multi-year time horizon. These risks primarily include physical risks, and to a lesser extent transition risks and liability risks.
Physical risks arise from direct weather–related events, such as floods, storms and wildfire and these risks may increase
insurance claims.
Our insurance contracts are typically renewable annually. Consequently, we can respond to changes as needed by adjusting our
pricing or by restricting our exposure.
As described in "Catastrophe Management" under Item 7, Chubb uses catastrophe models to quantify natural catastrophe risk
for product pricing and portfolio management purposes. Based on science and our own experience to date, we have conducted
extensive work to understand the potential impact of climate change on our risk profile. These findings actively inform our
underwriting risk appetite for property-related exposures for wild-fire, where we have significantly reduced our business in
certain western states, and other perils such as flood and hurricane.
Chubb regularly applies exclusions as part of its underwriting process, which depend on the specific conditions and
circumstances of the risk being evaluated. Those exclusions may reflect environmental, social and governance (ESG) and
climate-related considerations, such as restricted participation in certain industries, including mining and reclamation
operations, oil refining, pipeline and related distribution operations, and chemical manufacturing and distribution. Chubb
adopted a policy limiting underwriting in companies involved in thermal coal. Additionally, we continue to assess our investment
in carbon–intensive industries and plans for transitioning to a lower–carbon economy. As part of this assessment, Chubb has
pledged to not make new debt or equity investments in companies that generate more than 30 percent of revenues from thermal
coal mining or energy production from coal. Chubb also closely follows emerging trends in climate litigation to assess potential
risks to additional insurance products. In 2022, Chubb adopted a policy that it will no longer underwrite risks for projects
involving direct mining or in-situ extraction and processing of bitumen from oil sands.
Chubb mitigates exposure to climate change risk by hedging catastrophe risk in our insurance portfolio through both reinsurance
and capital markets, and our investment portfolio through the diversification of risk, industry, location, type and duration of
security. Asset concentrations are actively managed in hurricane-and flood-exposed areas, and our investment portfolio is
relatively short-dated with an average duration of about four years.
Chubb supports industries involved in mitigating climate risk, by offering solutions to Cleantech companies, the renewable
energy sector, and for green building restoration by providing coverage for additional costs associated with repair or replacement
to a “green” standard not covered by traditional property insurance policies. Additionally, in 2023, Chubb created a new global
climate business unit which provides a full spectrum of insurance products and services to businesses engaging in developing or
employing new technologies and processes that help reduce the dependence on carbon.
Tax Matters
Refer to “Risk Factors”, under Item 1A and Note 1 p) and Note 8 to the Consolidated Financial Statements, under Item 8.
18
Information about our Executive Officers
The following sets forth information regarding our executive officers as of February 24, 2023:
Name
Age
Position
Evan G. Greenberg
John W. Keogh
Peter C. Enns
John J. Lupica
Joseph F. Wayland
Sean Ringsted
Timothy A. Boroughs
Juan Luis Ortega
Bryce L. Johns
68
58
57
57
65
60
73
48
47
Chairman, Chief Executive Officer, and Director
President and Chief Operating Officer
Executive Vice President and Chief Financial Officer
Vice Chairman; President, North America Insurance
Executive Vice President and General Counsel
Executive Vice President, Chief Digital Business Officer, and Chief Risk Officer
Executive Vice President and Chief Investment Officer
Executive Vice President; President, Overseas General Insurance
Senior Vice President; President, Chubb Life
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 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 President and Chief Operating Officer of American International Group (AIG), a position he held from 1997 until
2000.
John W. Keogh was appointed President of Chubb in December 2020, and has served as Chief Operating Officer since July
2011. Mr. Keogh was appointed Vice Chairman of Chubb Limited in 2010 and Executive Vice Chairman in 2015. Mr. Keogh
joined Chubb in 2006 as Chairman, Insurance – Overseas General. Before joining Chubb, Mr. Keogh held a range of positions
with increasing responsibility during a 20-year career with AIG, including Senior Vice President, Domestic General Insurance,
and President and Chief Executive Officer of National Union Fire Insurance Company of Pittsburgh, an AIG member company.
He began his insurance career as an underwriter with AIG in 1986.
Peter C. Enns was appointed Executive Vice President and Chief Financial Officer of Chubb Limited in July 2021. Mr. Enns,
who joined Chubb in April 2021 as Executive Vice President, Finance, has more than 30 years of finance and investment
banking experience. Before joining Chubb, Mr. Enns held several management positions at HSBC from 2018 to 2020, including
Global Head of Financial Institutions Group, Global Co-Head of Corporate Finance Coverage, and Global Co-Head of Investment
Banking Coverage. Prior to HSBC, Mr. Enns held several senior positions through 2017 during a more than 20-year career at
Goldman Sachs, including Chairman and CEO of Goldman Sachs Canada, Head of the Asia Financial Institutions Group, and
Partner of the U.S. Financial Institutions Group.
John J. Lupica was appointed President, North America Insurance in September 2020 and has served as Vice Chairman of
Chubb since November 2013. Prior to his current role, Mr. Lupica served in several senior management positions since joining
Chubb in 2000, including President, North America Major Accounts and Specialty Insurance; Chairman, Insurance - North
America; Chief Operating Officer, Insurance - North America; President of ACE USA; Division President of U.S. Professional Risk
business and U.S. Regional Operations; and Executive Vice President of Professional Risk. 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, and 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 Business 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, Chief Actuary of Chubb Group from 2004 to 2008, Executive Vice President and Chief Risk Officer for Chubb Tempest
19
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 Chief Investment Officer of Chubb Group in 2000 and Executive Vice President in 2014.
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.
Juan Luis Ortega was appointed Executive Vice President, Chubb Group and President, Overseas General Insurance in August
2019. Mr. Ortega previously served as Senior Vice President, Chubb Group and Regional President of Latin America from 2016
to 2019, and Regional President of Asia Pacific from 2013 to 2016. Mr. Ortega had also held several senior roles since joining
Chubb in 1999, including Senior Vice President, Accident & Health, for the Asia Pacific region from 2011 to 2013 and Senior
Vice President and Regional Head of Accident & Health for the Latin America region from 2008 to 2010. Mr. Ortega joined
Chubb in 1999 and advanced through a series of accident and health and credit insurance management positions in Miami,
Puerto Rico, and Mexico, before being named Country President of Chile in 2005.
Bryce L. Johns was appointed Senior Vice President, Chubb Group and President, Chubb Life in April 2022. Mr. Johns has
more than 25 years of experience in insurance, wealth management and capital management. Mr. Johns previously served as
Group General Manager and Global CEO of HSBC Life and Insurance Partnerships from August 2016 to December 2021, where
he was responsible for HSBC Life's 10 businesses across Asia, Europe and Latin America, and the group's strategic insurance
distribution partnerships globally. Prior to joining HSBC in 2016, Mr. Johns led the bancassurance for Citigroup globally and
held a leadership role for regional branch distribution in Asia. Earlier in his career, Mr. Johns held leadership roles at Manulife
Asia in Hong Kong and at Old Mutual Group in South Africa, India and the U.K.
20
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, droughts, 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. The incidence and severity of catastrophes are inherently unpredictable and our
losses from catastrophes could be substantial. In addition, climate change and resulting changes in global temperatures,
weather patterns, and sea levels may both increase the frequency and severity of natural catastrophes and the resulting losses in
the future and impact our risk modeling assumptions. 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 and the resulting impact on various sectors of the economy may
impact our business. Exposure to cyber risk is increasing systematically due to greater digital dependence and increases possible
losses due to a catastrophic cyber event. Cyber catastrophic scenarios are not bound by time or geographic limitations and cyber
catastrophic perils don’t have well-established definitions and fundamental physical properties. Rather, cyber risks are
engineered by human actors and thus are continuously evolving, often in ways that are engineered specifically to evade
established loss mitigation controls. 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. 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.
COVID-19, the effects of global actions taken to contain its spread, and its economic and societal impact could adversely
impact our businesses, invested assets, financial condition, and results of operations.
Although the adverse impact of COVID-19 and related variants (the “pandemic”) is lessening through medical advances
(including the widespread distribution of vaccines, antiviral medicines, and other treatments) and the removal or lessening of
government restrictions on economic and social activity, COVID-19 continues to threaten further disruption to public health, the
global economy, financial markets, and commercial, social and community activity generally. Depending on the course of the
pandemic, including the spread of new variants, and government responses, COVID-19 may continue to affect our current and
future financial results. We may experience higher levels of loss and, claims activity in certain lines of business in excess of
losses we have already recognized, and our premiums could also be adversely affected by any repeated or further suppression of
global commercial activity that results in a reduction in insurable assets and other exposure. Financial conditions resulting from
the pandemic and the economic consequences of the resulting fiscal and monetary policy may also have a negative effect on the
value and quality of our portfolio of invested assets, thereby adversely affecting our investment returns and increasing our credit
and related risk. Certain lines of our business, such as our variable annuity life reinsurance business, may require additional
forms of collateral in the event of a decline in the securities and benchmarks to which those repayment mechanisms are linked.
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
21
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.
We include in our loss reserves 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, 2022, gross A&E liabilities represented
approximately 2.0 percent of our gross 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 addition, the amount and timing of the settlement of our P&C liabilities are
uncertain 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, technological 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. For example, "reviver" legislation in certain states does allow civil claims relating to molestation to be
asserted against policyholders that would otherwise be barred by statutes of limitations. 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 or man-made catastrophes, 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.
22
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, 2022, we had $19.2 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, 2022, the aggregate reinsurance balances ceded by our
active subsidiaries to Century were approximately $1.9 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 future policy
benefit (FPB) reserve and fair value liability changes that are directly affected by market and other factors and assumptions.
Our pricing, establishment of liabilities for 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. Effective January 1, 2023, we adopted new U.S. GAAP accounting guidance for long-duration contracts
(LDTI) that affects the accounting for guaranteed minimum death benefits (GMDB) and guaranteed living benefits (GLB),
principally guaranteed minimum income benefits (GMIB), associated with variable annuity contracts, collectively referred to as
market risk benefits (MRB). The process of establishing MRB liabilities 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 MRB liabilities 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 GMDB and GMIB, associated with
variable annuity contracts. We ceased writing this business in 2007. Our net income is directly impacted by the change in the
fair value of the MRB liability. 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 consolidated net income.
With the adoption of LDTI, effective January 1, 2023, the accounting for our FPB reserves will also be sensitive to changing
interest rate conditions. The LDTI guidance requires that we update FPB reserves for changes in discount rates quarterly which
could cause volatility in our shareholders' equity.
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
23
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 various commercial and contractual counterparties, our reliance on brokers, and certain of our policies may
subject us to credit risk.
We have exposure to counterparties through a variety of commercial transactions and arrangements, including reinsurance
transactions; agreements with 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. This includes exposure to financial institutions in the
form of secured and unsecured debt instruments and equity securities. Moreover, deposits paid in connection with our
agreements to acquire additional shares of Huatai Group expose us to risk if the transactions are not completed.
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 this
credit risk.
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 brokers and agents 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, insurance and
reinsurance brokers, and bancassurance relationships. 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. Our investment performance is highly sensitive to many factors, including
interest rates, 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
24
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 17 percent at December 31, 2022, 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 current expected credit losses for all
held-to-maturity securities and evaluate expected credit losses for available-for-sale securities when fair value is below amortized
cost, which considers reasonable and supportable forecasts of future economic conditions in addition to information about past
events and current conditions. This analysis requires a high degree of judgment. Financial assets with similar risk characteristics
and relevant historical loss information are included in the development of an estimate of expected lifetime losses. Declines in
relevant stock and other financial markets and other factors impacting the value of our investments could result in an adverse
effect on 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. Under Swiss law, we would be prohibited from selling shares in an equity
financing at a purchase price below our then-current par value. 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. The increasing impact of climate change could affect our cost of claims, loss ratios, and
financial results. 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
25
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 that owns shares of its operating insurance and reinsurance subsidiaries along with several
loans receivable from affiliates. Beyond this it does not itself have any significant operations or liquid assets. Repayment of
loans receivable, guarantee fees and dividends and other permitted distributions from our insurance subsidiaries are its primary
sources of funds to meet ongoing cash requirements, including any future debt service payments, other expenses, repurchases of
its shares, 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 (or
other intercompany amounts due, such as intercompany debt obligations) 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 repurchase shares
and pay dividends to our shareholders.
Swiss law imposes certain restrictions on our ability to repurchase our shares.
Swiss law imposes certain withholding tax and other restrictions on a Swiss company’s ability to return earnings or capital to its
shareholders, including through the repurchase of its own shares. We may only repurchase shares to the extent that sufficient
freely distributable reserves are available. In addition, Swiss law requires that the total par value of Chubb's treasury shares
must not be in excess of 10 percent of its total share capital, although an exemption from the 10 percent limit applies for
repurchased treasury shares dedicated for cancellation and acquired pursuant to a shareholder-ratified repurchase program. As a
result, in order to maintain our share repurchase program, our shareholders must periodically approve a reduction in our share
capital through the cancellation of designated blocks of repurchased shares held in treasury and may from time to time as
necessary, in a separate vote, ratify our share repurchase program. If our shareholders do not approve the cancellation of
repurchased shares or, if necessary, ratify our share repurchase program, we may be restricted or unable to return capital to
shareholders through share repurchases in the future. Furthermore, our current repurchase program relies on Swiss tax rulings.
Any future revocation or loss of our Swiss tax rulings or the inability to conduct repurchases in accordance with these rulings
could jeopardize our ability to continue repurchasing our shares.
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 Korean won, Chinese yuan, Canadian dollar, Australian dollar,
Mexican peso, Brazilian real, Thai baht, Japanese yen, euro, and Hong Kong dollar. At December 31, 2022, approximately
33.3 percent of our unhedged 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.
We may from time to time face challenges resulting from changes in applicable law and regulations in particular jurisdictions, or
changes in approach to oversight of our business from insurance or other regulators.
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.
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
26
laundering laws, and anti-corruption laws. 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 continue to work 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 is developing an international capital standard for such IAIGs. The details of this global
capital standard and its applicability to Chubb are evolving and uncertain at this time. In addition, Chubb businesses across the
European Union (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. The impact to
Chubb of these developments remains uncertain, although currently we do not expect that our capital management strategies,
results of operations and financial condition will be materially affected by these regulatory changes.
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 and 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, sometimes conflict, and
could expose Chubb to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one
or more jurisdictions.
For example, 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. 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, the National Association of Insurance Commissioners (NAIC) adopted an Insurance Data Security Model Law,
which requires licensed insurance entities to comply with detailed information security requirements. A number of states have
enacted it into law, and it is not yet known whether or not, and to what extent, additional states will enact it. 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.
The EU General Data Protection Regulation (the GDPR) is a comprehensive regulation applying across all EU member states. All
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 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.
Significant other comprehensive privacy laws have been enacted by other jurisdictions, most notably the California Consumer
Privacy Act (CCPA), the California Privacy Rights Act (CPRA), and Brazil’s Lei Geral de Protecao de Dados (LGPD), which may
affect our use of data and could affect our operations and subject us to fines and actions for noncompliance. In the U.S., several
other states are considering similar legislation, and there are ongoing discussions regarding a National Privacy Law. New laws
similar to the GDPR and the CCPA are expected to be enacted in coming years in various countries and jurisdictions in which
we operate.
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; social, political or economic instability resulting from climate change; and nationalization of our
27
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. Like all global companies, our systems have and those of our
third-party service providers, have been, and will likely continue to be, subject to threats from viruses or other malicious codes,
unauthorized access, cyber-attacks, cyber frauds or other computer-related penetrations. Although we have implemented
administrative and technical controls and have taken protective actions to reduce the risk of cyber incidents and to protect our
information technology and assets, including conducting due diligence security reviews and negotiating agreements with third-
party service providers, and we additionally endeavor to modify such procedures and agreements as circumstances warrant,
such measures may be insufficient to prevent unauthorized access, computer viruses, malware or other malicious code or cyber-
attack, business compromise attacks, catastrophic events, system failures and disruptions, employee errors, negligence or
malfeasance, loss of assets or data and other events that could have security consequences (each, a Security Event). As the
breadth and complexity of our security infrastructure continues to grow, the potential risk of a Security Event increases. Such an
event or 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
costs and losses, regulatory penalties (as described above) and financial losses that are either not insured against or not fully
covered by insurance maintained. In instances where we rely on third parties to perform business functions and process data on
our behalf, Chubb may be exposed to additional data security risk.
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. Climate change may make modeled
outcomes less certain or produce new, non-modeled risks. 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.
28
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, and 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/or 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 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 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. This may also apply to companies in which we acquire majority ownership. Our existing businesses
could also be negatively impacted by acquisitions. In addition, goodwill and intangible assets recorded in connection with
29
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, 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 Inflation Reduction Act.
On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) of 2022 (H.R. 5376). Key tax provisions
included in the IRA include a 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income for
corporations with average profits over $1 billion, and a 1 percent excise tax on repurchases of corporate stock. The CAMT and
the excise tax on share repurchases are effective for tax years beginning after December 31, 2022. Since enactment, the IRS
and U.S. Treasury Department have issued notices to assist taxpayers in understanding and implementing the new provisions.
This guidance remains subject to comment; thus, there are many uncertainties relating to its ultimate application and effects on
our company.
The Organization for Economic Cooperation and Development (OECD), European Union (EU), Swiss Federal Council, and
other jurisdictions are considering or have passed measures that might change long standing tax principles that could
increase our taxes.
The OECD has published a framework for taxation that in many respects is different than long standing international tax
principles. This framework and proposed changes could redefine what income is taxed in which country and institute a 15
percent global minimum tax in 2024 or later years. The enactment of these reforms is very uncertain at this time, but if enacted
could cause uncertainties to and increases in our income taxes.
Several 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 still unclear what all 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 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.
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
30
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. The 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.
31
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 capital contribution reserve reduction or par value reduction is not subject to Swiss withholding tax. We have
previously obtained shareholder approval for dividends to be paid in such form. It is our practice 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, 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, certain share repurchases, fluctuations in U.S. dollar/Swiss franc exchange rate, changes in par value or
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 a 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
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. In
2022, the U.S. Treasury Department and the IRS released proposed regulations that may cause more income to be treated as
RPII than under current law.
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 (i) Chubb Limited is considered a CFC and the tax-
exempt shareholder is a 10 percent U.S. shareholder or (ii) 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 recent final and proposed regulations issued by the IRS and U.S. Treasury Department contain new rules that may
affect the application of the PFIC provisions to an insurance company. The final regulations are effective for tax years beginning
after January 15, 2021 and applied to us in 2022. Shareholders are advised to consult their tax advisors.
32
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 Japan. Most of our office facilities are leased, although we own major
facilities in Hamilton, Bermuda; Seoul, South Korea; and in the U.S., including in Philadelphia, Pennsylvania; Wilmington,
Delaware; 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 i) to the Consolidated Financial Statements, under Item
8, which is hereby incorporated herein by reference.
ITEM 4. Mine Safety Disclosures
Item not applicable.
33
PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases 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".
We have paid dividends each quarter since we became a public company in 1993. In 2022 and 2021, 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.
Chubb Limited is a holding company whose principal sources of income are dividends and interest income 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 other such factors as the Board deems relevant. Refer to Part I, Item 1A and
Part II, Item 7 for additional information.
The number of record holders of Common Shares as of February 17, 2023 was 5,985. 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, 2022
Period
October 1 through October 31
November 1 through November 30
December 1 through December 31
Total
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 the
Plan (3)
3,810 $
2,092 $
907,152 $
913,054 $
201.60
214.82
221.65
221.55
— $
— $
1.82 billion
1.82 billion
902,300 $
1.62 billion
902,300
(1)
(2)
(3)
This column represents open market share repurchases and the surrender to Chubb of Common Shares to satisfy tax withholding obligations in connection with the vesting
of restricted stock issued to employees and to cover the cost of the exercise of options by employees through stock swaps.
The aggregate value of shares purchased in the three months ended December 31, 2022 as part of the publicly announced plan was $199 million. Refer to Note 11 to the
Consolidated Financial Statements for more information on the Chubb Limited securities repurchase authorizations.
For the period January 1, 2023 through February 23, 2023, we repurchased 1,633,300 Common Shares for a total of $347 million in a series of open market
transactions. As of February 23, 2023, $1.27 billion in share repurchase authorization remained through June 30, 2023.
34
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, 2017, through December 31, 2022, 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, 2018, 2019,
2020, 2021, and 2022, of a $100 investment made on December 31, 2017, with all dividends reinvested.
$250
$200
$150
$100
$50
Chubb Limited
S&P 500 Index
S&P 500 P&C Index
ITEM 6. [Reserved]
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
Chubb
S&P 500 Index
S&P 500 P&C Index
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
$100
$100
$100
$90
$96
$95
$111
$126
$120
$113
$149
$128
$144
$192
$153
$167
$157
$182
35
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion of our financial condition and results of operations for the years ended December 31, 2022 and
2021 and comparisons between 2022 and 2021. This discussion should be read in conjunction with the Consolidated
Financial Statements and related Notes, under Item 8 of this Form 10-K. Comparisons between 2021 and 2020 have been
omitted from this Form 10-K, but can be found in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Part II, Item 7 of our Form 10-K for the year ended December 31, 2021.
All comparisons in this discussion are to the prior year unless otherwise indicated. All dollar amounts are rounded. However,
percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ.
Page
37
38
39
48
53
62
63
67
67
68
69
72
73
75
75
76
77
79
83
84
82
MD&A Index
Forward-Looking Statements
Overview
Critical Accounting Estimates
Consolidated Operating Results
Segment Operating Results
Net Realized and Unrealized Gains (Losses)
Non-GAAP Reconciliation
Net Investment Income
Interest Expense
Amortization of Purchased Intangibles and Other Amortization
Investments
Asbestos and Environmental (A&E)
Catastrophe Management
Global Property Catastrophe Reinsurance Program
Political Risk and Credit Insurance
Crop Insurance
Liquidity
Capital Resources
Information provided in connection with outstanding debt of subsidiaries
Credit Facilities
Ratings
36
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. The words “believe,” “anticipate,” “estimate,” “project,” “should,” “plan,” “expect,”
“intend,” “hope,” “feel,” “foresee,” “will likely result,” “will continue,” and variations thereof and similar expressions, identify
forward-looking statements. 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, and elsewhere herein and in
other documents we file with the U.S. Securities and Exchange Commission (SEC), include but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
actual amount of new and renewal business, premium rates, underwriting margins, market acceptance of our products, and
risks associated with the introduction of new products and services and entering new markets; 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;
losses arising out of natural or man-made catastrophes; 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;
infection rates and severity of COVID-19 and related risks, and their effects on our business operations and claims activity,
and any adverse impact to our insureds, brokers, agents, and employees; actual claims may exceed our best estimate of
ultimate insurance losses incurred which could change including as a result of, among other things, the impact of legislative
or regulatory actions taken in response to COVID-19;
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
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;
uncertainties relating to governmental, legislative and regulatory policies, developments, actions, investigations, and
treaties; judicial decisions and rulings, new theories of liability, legal tactics, and settlement terms; the effects of data
privacy or cyber laws or regulation; global political conditions and possible business disruption or economic contraction that
may result from such events;
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; changing rates of inflation; and other general economic and business
conditions, including the depth and duration of potential recession;
the availability of borrowings and letters of credit under our credit facilities; the adequacy of collateral supporting funded
high deductible programs; the amount of dividends received from subsidiaries;
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;
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 effects of public company bankruptcies and accounting restatements, as well as disclosures by and investigations of
public companies relating to possible accounting irregularities, and other corporate governance issues;
acquisitions made 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, and risks and uncertainties relating to
our planned purchases of additional interests in Huatai Insurance Group Co., Ltd. (Huatai Group), including our ability to
receive Chinese insurance regulatory approval and complete the purchases;
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; share repurchase plans and share cancellations;
loss of the services of any of our executive officers without suitable replacements being recruited in a reasonable time frame;
37
•
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; the ability of our company to increase use of data analytics
and technology as part of our business strategy and adapt to new technologies; and
• management’s response to these factors and actual events (including, but not limited to, those described above).
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. Refer to Note 2 to the Consolidated Financial Statements for our most recent acquisitions.
Our product and geographic diversification differentiate 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.
38
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 and non-A&E casualty
exposures;
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 valuation allowance for uncollectible reinsurance;
the valuation of our investment portfolio and assessment of valuation allowance for expected credit losses;
the valuation of deferred income taxes; and
the assessment of goodwill for impairment.
Effective January 1, 2023, Chubb adopted the long-duration targeted improvement (LDTI) U.S. GAAP accounting guidance
which affects the recognition, measurement, presentation, and disclosure requirements for long-duration contracts. Therefore,
the assumptions and methods used for future policy benefit reserves, VOBA, and deferred policy acquisition costs will be
changed to reflect this new accounting guidance. Refer to Note 1 t) to the Consolidated Financial Statements for additional
information.
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, and Net Realized and Unrealized Gains (Losses).
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, 2022, our gross unpaid loss and loss
expense reserves were $76.3 billion and our net unpaid loss and loss expense reserves were $59.2 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, our loss reserves are not discounted for the time value of money. The net undiscounted
reserves related to structured settlements and certain reserves for unsettled claims are immaterial.
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)
Balance, end of year
(1)
Net of valuation allowance for uncollectible reinsurance.
December 31, 2022
December 31, 2021
Gross
Losses
Reinsurance
Recoverable (1) Net Losses
Gross
Losses
Reinsurance
Recoverable (1) Net Losses
$ 72,943 $
16,184 $ 56,759 $ 67,811 $
14,647 $ 53,164
30,346
7,004
23,342
28,033
6,053
21,980
(26,129)
(5,806)
(20,323)
(22,242)
(4,358)
(17,884)
(837)
(254)
(583)
(659)
(158)
(501)
$ 76,323 $
17,128 $ 59,195 $ 72,943 $
16,184 $ 56,759
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
39
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 losses
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. The impact of COVID on both underlying exposures and the legal and claim adjudication processes adds
an additional layer of complexity. The effects of recent heightened inflation create additional uncertainty, while climate change
could, over time, add new uncertainties to the loss reserving process.
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 or 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, 2022, 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.
40
North America Commercial P&C Insurance - Workers' Compensation
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 percentage point change
in the tail factor (i.e., 1.04 changed to either 1.05 or 1.03) would cause a change of approximately $1.1 billion, either positive
or negative, for the projected net loss and loss expense reserves. This represents an impact of about 10.6 percent relative to
recorded net loss and loss expense reserves of approximately $10.0 billion.
North America Commercial P&C Insurance – Liability
As is the case for Workers’ Compensation above, given the long reporting and paid development patterns, 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, for our main U.S. Excess/Umbrella portfolios, a five
percentage point change in the tail factor (e.g., 1.10 changed to either 1.15 or 1.05) would cause a change of approximately
$637 million, either positive or negative, for the projected net loss and loss expense reserves. This represents an impact of
about 17.8 percent relative to recorded net loss and loss expense reserves of approximately $3.6 billion for these portfolios.
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 (almost 95 percent) of Personal Lines net ultimate losses and allocated loss adjustment expenses are typically paid
within five years of the accident date and 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 58 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 financial 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 financial lines for accident years 2020 and prior by approximately $582 million.
This represents an impact of 14.0 percent relative to recorded net loss and loss expense reserves of approximately $4.2
billion.
41
Global Reinsurance
At December 31, 2022, net unpaid losses and loss expenses for the Global Reinsurance segment aggregated to $1.7 billion,
consisting of $764 million of case reserves and $938 million of IBNR. In comparison, at December 31, 2021, net unpaid
losses and loss expenses for the Global Reinsurance segment aggregated to $1.6 billion, consisting of $781 million of case
reserves and $783 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, 2022, the case reserves, net of retrocessions,
reported to us by our ceding companies approximated our recorded case reserves. 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.
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 $205 million. This represents an impact of
28 percent relative to recorded net loss and loss expense reserves of approximately $745 million.
42
Corporate
Within Corporate, we have exposure to certain liability insurance and reinsurance lines that have been in run-off, generally,
since 1994. Unpaid losses and loss expenses relating to this run-off business reside within the Brandywine Division. Most of the
remaining unpaid loss and loss expense reserves for the run-off business relate to A&E as well as molestation claims.
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 asbestos
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.
Chubb's exposure to molestation claims principally arises out of liabilities acquired when it purchased CIGNA's P&C business in
1999 and Chubb Corp in 2016. The vast majority of the current liability relates to exposure from recently enacted "reviver"
legislation in certain states that allow civil claims relating to molestation to be asserted against policyholders that would
otherwise be barred by statutes of limitations.
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. For
traditional long-duration contracts, these assumptions also include a provision for adverse deviation (PAD), and 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; while for non-traditional long-duration contracts, the
assumptions do not include a PAD and are unlocked at each reporting date. 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. Effective January 1, 2023, we adopted LDTI that affects the
accounting for future policy benefit reserves. As a result, cash flow assumptions underlying the liability for future policy benefits
for traditional and limited-payment contracts must be updated at least annually reflecting current best estimate assumptions
whereas under prior U.S. GAAP guidance such assumptions are locked-in for the life of the policy as noted previously. The
discount rate at contract issuance is locked in for purposes of determining interest accretion recognized through earnings over
the life of the contract; however, on a quarterly basis, LDTI also requires the remeasurement of the liability for future policy
benefits using the then-current discount rate with changes recognized in OCI. In addition, under LDTI a provision for adverse
deviation is no longer allowed when establishing reserves, premium deficiency testing is no longer required, and the net
premium ratio cannot exceed 100 percent for any given cohort of contracts.
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
43
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. Effective January
1, 2023, we adopted LDTI that affects the accounting for deferred policy acquisition costs and VOBA. As a result, we will
amortize deferred policy acquisition costs on a straight-line basis over the estimated life of the contract, as compared to in
proportion to premium revenue or expected gross profits as noted previously. In addition, we have elected to align our VOBA
amortization with the new requirement under LDTI for deferred policy acquisition costs.
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. We use various tests to accomplish this, one of which is the
ratio of the net present value of losses and commissions divided by the net present value of premiums equals or exceeds 110
percent with at least a 10 percent probability. 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.
44
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 valuation allowance for uncollectible reinsurance. The valuation allowance 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 valuation allowance that reduces
the reinsurance recoverable asset and, in turn, shareholders' equity. Changes in the valuation allowance 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 valuation allowance 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 valuation allowance 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 forward looking 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 valuation allowance
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;
45
•
•
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 valuation allowance 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
valuation allowance 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 valuation allowance for uncollectible reinsurance by establishing a default
factor pursuant to information received; and
•
For captives and other recoverables, management determines the valuation allowance for uncollectible reinsurance based
on the specific facts and circumstances.
The following table summarizes reinsurance recoverables and the valuation allowance for uncollectible reinsurance for each type
of recoverable balance at December 31, 2022:
(in millions of U.S. dollars)
Type
Reinsurers with credit ratings
Reinsurers not rated
Reinsurers under supervision and insolvent reinsurers
Captives
Other, including structured settlements and pools
Total
Gross Reinsurance
Recoverable on
Losses and Loss
Expenses
Recoverables
(net of Usable
Collateral)
Valuation allowance
for Uncollectible
Reinsurance (1)
$
15,179 $
13,256 $
251
70
2,455
1,297
171
67
348
1,276
$
19,252 $
15,118 $
174
57
27
13
80
351
(1) The valuation allowance for uncollectible reinsurance is based on a default analysis applied to gross reinsurance recoverables, net of approximately $4.1 billion of collateral
at December 31, 2022.
At December 31, 2022, the use of different assumptions within our approach could have a material effect on the valuation
allowance for uncollectible reinsurance. To the extent the creditworthiness of our reinsurers was 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 valuation allowance 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 valuation allowance, we cannot precisely quantify the effect a specific industry event may have on the valuation
allowance for uncollectible reinsurance. However, based on the composition (particularly the average credit quality) of the
reinsurance recoverable balance at December 31, 2022, we estimate that a ratings downgrade of one notch for all rated
reinsurers (e.g., from A to A- or A- to BBB+) could increase our valuation allowance for uncollectible reinsurance by
approximately $93 million or approximately 0.5 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 valuation allowance 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, under item 8, for additional information.
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, under
item 8, for information on our fair value measurements.
46
Assessment of investment portfolio credit losses
Each quarter, we evaluate current expected credit losses (CECL) for fixed maturity securities classified as held to maturity and
expected credit losses (ECL) for fixed maturity securities classified as available for sale. Because our investment portfolio is the
largest component of consolidated assets, CECL and ECL could be material to our financial condition and results of operations.
Refer to Notes 1 e) and 3 to the Consolidated Financial Statements, under item 8, for more information.
Deferred income taxes
At December 31, 2022, our net deferred tax liability was $292 million. 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 deferred tax assets and liabilities. 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 determination of the need for a valuation allowance is based on all available information including
projections of future taxable income, principally derived from business plans and where appropriate available tax planning
strategies. Projections of future taxable income incorporate 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 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, 2022, the valuation allowance of $916 million reflects
management's assessment that it is more likely than not that a portion of the deferred tax assets will not be realized due to the
inability of certain subsidiaries to generate sufficient taxable income.
Goodwill impairment assessment
Goodwill, which represents the excess of acquisition cost over the estimated fair value of net assets acquired, was $16.3 billion
and $15.2 billion at December 31, 2022 and 2021, respectively. During 2022, our goodwill balance increased reflecting the
acquisition of Cigna's Asia business. 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, under item 8. 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 2022, we determined no impairment was required and none of our reporting units were at risk for
impairment.
47
Consolidated Operating Results – Years Ended December 31, 2022, 2021, and 2020
(in millions of U.S. dollars, except for percentages)
Net premiums written
Net premiums written - constant dollars (1)
Net premiums earned
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
Cigna integration expenses
Total expenses
Income before income tax
Income tax expense
Net income
2022
2021
2020
$ 41,755 $ 37,868 $ 33,820
40,389
36,355
33,117
3,742
(965)
43,166
23,342
1,492
7,392
3,395
570
74
285
48
3,456
1,152
40,963
21,980
699
6,918
3,136
492
(2,365)
287
—
2022 vs.
2021
% Change
2021 vs.
2020
10.3 %
13.0 %
11.1 %
8.3 %
NM
5.4 %
6.2 %
12.0 %
10.5 %
9.8 %
2.4 %
NM
13.8 %
1.2 %
3,375
(498)
35,994
21,710
784
113.5 %
(10.9) %
6,547
2,979
516
(994)
290
—
6.8 %
8.3 %
15.9 %
5.7 %
5.3 %
(4.7) %
NM
137.9 %
(0.7) %
(0.9) %
NM
—
36,598
31,147
31,832
17.5 %
(2.2) %
6,568
1,255
9,816
1,277
4,162
(33.1) %
135.9 %
629
(1.7) %
102.9 %
$
5,313 $
8,539 $
3,533
(37.8) %
141.7 %
NM – not meaningful
(1)
On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.
Financial Highlights for the Year Ended December 31, 2022
• Net income was $5.3 billion compared with $8.5 billion in 2021. Net income in 2022 was driven by strong underwriting
results, including growth in net premiums earned, improvement in our combined ratios, and record net investment income.
Net income is lower compared to prior year, reflecting after-tax mark-to-market losses on private and public equities of
$791 million, compared to gains of $2.4 billion in the prior year.
Consolidated net premiums written were $41.8 billion, up 10.3 percent, or 13.0 percent in constant dollars, primarily from
strong premium retention, including both rate and exposure increases, and strong new business in our P&C business.
Additionally, the acquisition of Cigna's business in Asia added 3.8 percentage points, or 3.9 percentage points in constant
dollars, to the growth in net premiums written.
Consolidated net premiums earned were $40.4 billion, up 11.1 percent, or 13.9 percent in constant dollars. The
acquisition of Cigna's business in Asia added 3.9 percentage points, or 4.0 percentage points in constant dollars, to the
growth in net premiums earned.
Total pre-tax and after-tax catastrophe losses were $2.2 billion (5.9 percentage points of the P&C combined ratio) and $1.8
billion, respectively, compared with $2.4 billion (7.1 percentage points of the P&C combined ratio) and $2.0 billion,
respectively, in 2021. Pre-tax catastrophe losses in 2022 were primarily from Hurricane Ian losses of $975 million, winter
storm Elliott losses of $400 million, and other global weather-related events.
•
•
•
48
•
•
Total pre-tax and after-tax favorable prior period development were $876 million (2.5 percentage points of the combined
ratio) and $729 million, respectively, including pre-tax adverse development of $155 million for molestation claims,
predominantly reviver statute-related, and $113 million related to legacy asbestos and environmental exposures. Excluding
the adverse development, we had pre-tax favorable development of $1,144 million, with 18 percent in long-tail lines, and
82 percent in short-tail lines. This compares with favorable prior period development of $926 million (2.8 percentage
points of the combined ratio) and $756 million, respectively, in 2021. Refer to Note 7 to the Consolidated Financial
Statements, under Item 8, for further information on prior period development.
The P&C combined ratio was 87.6 percent compared with 89.1 percent in 2021. P&C current accident year (CAY)
combined ratio excluding catastrophe losses was 84.2 percent compared with 84.8 percent in the prior year. The current
year ratios decreased due to the favorable impact of higher net premiums earned on the expense ratios and underlying loss
ratio improvement, partially offset by late-season losses in crop insurance.
• Net investment income was a record $3.7 billion compared with $3.5 billion in 2021, primarily due to higher reinvestment
rates on fixed maturities, partially offset by lower income from equity securities and private equities.
• Operating cash flow was a record $11.2 billion compared with $11.1 billion in 2021.
•
Shareholders' equity decreased by $9.2 billion in 2022, as net income of $5.3 billion was more than offset by unrealized
losses on investments of $9.5 billion after-tax from rising interest rates and a loss of $927 million related to cumulative
foreign exchange translation. In addition, shareholders' equity reflected total capital returned to shareholders in the year of
$4.4 billion, including share repurchases of $3.0 billion, at an average purchase price of $201.96 per share, and dividends
of $1.4 billion.
• On January 4, 2023, we completed transactions that increased our ownership interest in Huatai Group from 47.3 percent
to 64.2 percent. We received regulatory approval for an additional 19 percent and expect to close on these shares upon
completion of certain closing conditions, at which time we expect to consolidate the operations of Huatai Group as a
subsidiary of Chubb under the U.S. GAAP consolidation standard.
Outlook
2022 was an outstanding year in terms of underlying business and investment performance. We had record net investment
income and an excellent combined ratio despite late-season losses in crop insurance. Consolidated net premiums written
increased to $41.8 billion, reflecting strong growth across our P&C segments and a growing Life Insurance segment with the
addition of the Cigna Asian business on July 1, 2022. Looking ahead, we are starting off strong in the first quarter 2023 thus
far, with growth in our Asian consumer business, including P&C, life insurance and A&H. Our global consumer lines growth is
gaining momentum highlighted by a combination of strong consumer lending, increased foot traffic across retail and banking
operations, and the resurgence of leisure and business travel. We had good growth in net investment income and will continue
to grow as we reinvest cash flow at higher rates. In summary, the strong trajectory of growth from investment income and our
Asia life insurance companies, provides an optimistic outlook for the future.
49
Total Commercial P&C
24,077
22,381
19,202
Net Premiums Written
(in millions of U.S. dollars, except for percentages)
Commercial casualty
Workers' compensation
Financial lines
Surety
Commercial multiple peril (1)
Property and other short-tail lines
Agriculture
Personal automobile
Personal homeowners
Personal other
Total Personal lines
Total Property and Casualty lines
Global A&H lines (2)
Reinsurance lines
Life
Total consolidated
2022
2021
2020
2022 vs.
2021
2021 vs.
2020
C$ 2022 vs.
2021
$
7,715 $
6,994 $
6,177
10.3 %
13.2 %
12.4 %
% Change
2,164
5,070
622
1,311
7,195
2,130
5,067
572
1,193
6,425
2,015
4,201
531
1,047
5,231
1.6 %
—
8.6 %
10.0 %
12.0 %
7.6 %
5.7 %
20.6 %
7.9 %
13.9 %
22.8 %
16.6 %
1.6 %
2.4 %
10.1 %
10.0 %
15.7 %
9.9 %
2,907
2,388
1,846
21.7 %
29.3 %
21.7 %
1,631
3,901
1,817
7,349
1,525
3,719
1,825
7,069
1,550
3,627
1,656
6,833
34,333
31,838
27,881
4,894
943
1,585
3,763
873
1,394
731
1,349
3,859
30.1 %
$ 41,755 $ 37,868 $ 33,820
6.9 %
4.9 %
(1.6) %
2.5 %
(0.4) %
10.2 %
4.0 %
7.8 %
8.0 %
13.7 %
10.3 %
3.4 %
14.2 %
(2.5) %
19.5 %
3.4 %
12.0 %
8.8 %
5.9 %
6.1 %
6.6 %
10.0 %
37.3 %
9.5 %
19.9 %
13.0 %
(1)
(2)
Commercial multiple peril represents retail package business (property and general liability).
For purposes of this schedule only, A&H results from our Combined North America and International businesses, normally included in the Life Insurance and Overseas
General Insurance segments, respectively, as well as the A&H results of our North America Commercial P&C segment, are included in Global A&H lines above.
The growth in consolidated net premiums written in 2022 principally reflects growth across most lines of business, driven by
higher renewal retention, positive rate increases, increased exposure, and strong new business. The acquisition of
Cigna's business in Asia contributed $1,434 million in 2022.
•
Commercial casualty grew primarily in North America, Europe, and Asia, driven by strong new business and retention,
including exposure and rate increases.
• Workers' compensation growth was due to exposure increases in North America.
•
Financial lines grew on a constant dollar basis primarily from renewal retention, including exposure and positive rate
increases in North America, Asia, and Latin America.
Surety increased due to strong new business and renewal retention in North America.
Commercial multiple peril increased due to strong new business and renewal retention, including exposure and positive rate
increases in North America.
Property and other short-tail lines grew globally due to strong new business and renewal retention, including positive rate
increases and increased exposure.
Agriculture increased due to underlying growth in crop insurance, reflecting higher commodity prices, higher reported
acreage from policyholders, and policy count growth, partially offset by a return of premium to the U.S. government in the
first quarter of 2022 of $161 million.
Personal lines grew in most regions reflecting new business, strong renewal retention, and both rate and exposure increases,
primarily in high net worth homeowners and automobile in North America, high net worth and specialty lines in Asia, and
specialty lines and automobile in Latin America. Partially offsetting growth in North America were additional cancellations
in parts of California exposed to wildfires.
•
•
•
•
•
• Global A&H lines increased due to the acquisition of Cigna's business in Asia in the third quarter of 2022, which
contributed $1,148 million to the full year growth. Additionally, growth in Asia, Latin America, Europe, and Japan on a
constant dollar basis, was driven by higher new business and increased consumer activity, including higher travel volume.
Our North American Combined Insurance supplemental A&H business decreased primarily due to the non-renewal of a large
program.
• Reinsurance lines increased primarily due to continued growth in the portfolio mainly from new business, favorable
premium adjustments and higher catastrophe reinstatement premiums.
50
•
International life operations increased due to the acquisition of Cigna's business in Asia in the third quarter of 2022, which
contributed $286 million to the full year growth. Growth from new business in Asia, primarily in Thailand and Indonesia,
was more than offset by lower business in Taiwan and Latin America, principally reflecting the non-renewal of certain large
account business in Chile.
For additional information on net premiums written, refer to the segment results discussions.
Net Premiums Earned
Net premiums earned for short-duration contracts, typically P&C contracts, generally reflect the portion of net premiums written
that was 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 $4.0 billion, or $4.9 billion on a constant-dollar basis in 2022.
Catastrophe Losses and Prior Period Development
Catastrophe losses include reinstatement premiums which are additional premiums paid on certain reinsurance agreements in
order to reinstate coverage that had been exhausted by loss occurrences. The reinstatement premium amount is typically a pro
rata portion of the original ceded premium paid based on how much of the reinsurance limit had been exhausted. Prior period
development is net of expense adjustments which typically relate to either profit commission reserves or policyholder dividend
reserves based on actual claim experience that develops after the policy period ends. Refer to the Non-GAAP Reconciliation
section for further information on reinstatement premiums on catastrophe losses and adjustments to prior period development.
We generally define catastrophe loss events consistent with the definition of the Property Claims Service (PCS) for events in the
U.S. and Canada. PCS defines a catastrophe as an event that causes damage of $25 million or more in insured losses and
affects a significant number of insureds. For events outside of the U.S. and Canada, we generally use a similar definition. We
also define losses from certain pandemics, such as COVID-19, as a catastrophe loss. 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.
(in millions of U.S. dollars)
Catastrophe losses
Favorable prior period development
2022
2021
2020
2,182 $
2,401 $
3,283
876 $
926 $
395
$
$
Catastrophe losses were primarily from the following events:
• 2022: Hurricane Ian losses of $975 million, winter storm Elliott losses of $400 million, severe weather-related events in the
U.S. and internationally, Australia storms, and Colorado wildfires.
• 2021: Hurricane Ida losses of $834 million, winter storm losses in the U.S., flooding in Europe, and other severe weather-
related events in the U.S. and internationally.
• 2020: COVID-19 pandemic claims of $1,396 million, severe weather-related events in the U.S. and internationally, and civil
unrest-related losses in the U.S.
Pre-tax net favorable prior period development for 2022 was $876 million, including adverse development of $155 million for
molestation claims, primarily reviver statute-related, and $113 million related to legacy asbestos and environmental exposures.
The remaining favorable development of $1,144 million is primarily comprised of 18 percent in long-tail lines, principally from
accident years 2011 through 2017, and 82 percent in short-tail lines, mainly in property and A&H lines.
Pre-tax net favorable prior period development for 2021 was $926 million, including adverse development of $443 million for
molestation claims, of which $375 million was related to the pending Boy Scouts of America settlement in the fourth quarter,
and $83 million related to legacy A&E exposures. The remaining favorable development of $1,452 million, including favorable
development of $430 million for COVID-related claims, is primarily comprised of 39 percent in long-tail lines, principally from
accident years 2020 and 2017 and prior, and 61 percent in short-tail lines, mainly in homeowners, accident and health,
property, and surety lines.
Pre-tax net favorable prior period development for 2020 was $395 million, which included adverse development of $259
million for U.S. child molestation claims, predominately reviver statute-related, and $106 million adverse development related
to legacy asbestos and environmental liabilities. The remaining favorable development of $760 million principally comprises 89
percent long-tail lines, principally from accident years 2016 and prior, and 11 percent short-tail lines.
51
Refer to the Prior Period Development section in Note 7 to the Consolidated Financial Statements for additional information.
P&C Combined Ratio
In evaluating our segments excluding Life Insurance financial performance, 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.
Loss and loss expense ratio
CAY loss ratio excluding catastrophe losses
Catastrophe losses
Favorable prior period development
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
P&C Combined ratio
2022
2021
2020
58.8 %
6.0 %
(2.8) %
62.0 %
17.8 %
7.8 %
87.6 %
58.3 %
7.1 %
(2.8) %
62.6 %
18.3 %
8.2 %
89.1 %
59.2 %
10.6 %
(1.3) %
68.5 %
18.9 %
8.7 %
96.1 %
The loss and loss expense ratio decreased in 2022, primarily due to lower catastrophe losses. The CAY loss ratio excluding
catastrophe losses increased in 2022, primarily due to a lower 2022 crop year margin, partially offset by earned rate exceeding
loss cost trends.
The policy acquisition cost ratio decreased in 2022 primarily due to a higher percent of net premiums earned from lines that
have a lower acquisition cost ratio.
The administrative expense ratio decreased in 2022 primarily due to higher net premiums earned, which outpaced higher
employee-related expenses, and increased investment to support growth.
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. Refer to the Life Insurance segment operating
results section for further discussion.
Policy benefits were $1,492 million, $699 million and $784 million in 2022, 2021, and 2020, respectively, which included
(gains) losses from fair value changes in separate account liabilities that do not qualify for separate account reporting under
GAAP of $(42) million, $(8) million and $58 million, respectively. The offsetting movements of these liabilities are recorded in
Other (income) expense on the Consolidated statements of operations. Excluding the separate account gains and losses, Policy
benefits were $1,534 million, $707 million, and $726 million in 2022, 2021, and 2020, respectively. The increase in Policy
benefits for 2022 is primarily due to the acquisition of Cigna's business in Asia.
Refer to the respective sections that follow for a discussion of Net investment income, Other (income) expense, Net realized
gains (losses), Interest expense, Amortization of purchased intangibles, and Income tax expense.
52
Segment Operating Results – Years Ended December 31, 2022, 2021, and 2020
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 our run-off Brandywine business, including all run-off asbestos and environmental (A&E) exposures, and the results of
Westchester specialty operations for 1996 and prior years are presented within Corporate.
North America Commercial P&C Insurance
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 our North America
Major Accounts and Specialty Insurance division (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)
2022
2021
2020
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:
$ 17,889
$ 16,415
$ 14,474
17,107
15,461
13,964
10,828
10,015
10,129
2,313
2,082
1,942
1,113
1,052
1,006
2,853
2,312
887
2,247
2,078
2,061
17
31
23
$ 5,083
$ 4,359
$ 2,925
2022 vs.
2021
9.0 %
10.6 %
8.1 %
11.1 %
5.7 %
23.4 %
8.1 %
(45.9) %
16.6 %
% Change
2021 vs.
2020
13.4 %
10.7 %
(1.1) %
7.1 %
4.6 %
160.8 %
0.8 %
39.2 %
49.0 %
CAY loss ratio excluding catastrophe losses
61.3 %
62.7 %
64.2 % (1.4)
pts (1.5)
Catastrophe losses
Prior period development
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
5.6 %
(3.6) %
63.3 %
13.5 %
6.5 %
7.2 %
13.4 % (1.6)
pts (6.2)
(5.1) %
64.8 %
13.4 %
6.8 %
(5.1) % 1.5
pts —
72.5 % (1.5)
pts (7.7)
14.0 % 0.1
pts (0.6)
7.2 % (0.3)
pts (0.4)
83.3 %
85.0 %
93.7 % (1.7)
pts (8.7)
pts
pts
pts
pts
pts
pts
pts
Catastrophe Losses and Prior Period Development
(in millions of U.S. dollars)
Catastrophe losses
Favorable prior period development
2022
2021
2020
$
$
961 $ 1,112 $ 1,871
562 $
762 $
702
•2022: Hurricane Ian losses, winter storm Elliott losses, and other severe weather-related events in the U.S.
•2021: Hurricane Ida losses; winter storm losses and flooding; hail, tornados, and wind events in the U.S.
•2020: COVID-19 pandemic claims; U.S. hurricanes and tropical storms; and U.S. flooding, hail, tornados, and wind events.
Refer to Note 7 to the Consolidated Financial Statements for detail on prior period development.
53
Premiums
Net premiums written increased $1,474 million, or 9.0 percent, in 2022, reflecting strong premium retention, including both
rate and exposure increases, and strong new business. The increase in premiums was across most lines of business, including
large risk casualty, commercial multiple peril, primary and excess casualty, and property.
Net premiums earned increased $1,646 million, or 10.6 percent, in 2022, reflecting the growth in net premiums written
described above.
Combined Ratio
The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses decreased in 2022 primarily reflecting
earned rate exceeding loss cost trends. The loss and loss expense ratio in 2022 also benefited from lower catastrophe losses
compared to the prior year, partially offset by lower favorable prior period development.
The administrative expense ratio decreased in 2022 primarily due to higher net premiums earned, which outpaced higher
employee-related expenses.
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
Net investment income
Other (income) expense
Amortization of purchased intangibles
Segment income
Loss and loss expense ratio:
2022
2021
2020
$ 5,313
$ 5,002
$ 4,920
5,180
4,915
4,866
3,186
2,924
3,187
1,057
1,001
974
291
276
270
646
714
435
283
249
260
4
10
(2)
10
5
11
2022 vs.
2021
% Change
2021 vs.
2020
6.2 %
5.4 %
8.9 %
5.6 %
5.7 %
(9.5) %
13.3 %
NM
—
1.7 %
1.0 %
(8.3) %
2.9 %
2.0 %
64.0 %
(4.1) %
NM
(5.1) %
40.6 %
$ 915
$ 955
$ 679
(4.2) %
CAY loss ratio excluding catastrophe losses
52.9 %
52.0 %
53.1 % 0.9
pts (1.1)
Catastrophe losses
Prior period development
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful
12.2 %
13.6 %
11.0 % (1.4)
pts 2.6
(3.6) %
(6.1) %
1.4 % 2.5
pts (7.5)
61.5 %
59.5 %
65.5 % 2.0
pts (6.0)
20.4 %
20.4 %
20.0 % —
pts 0.4
5.6 %
5.6 %
5.6 % —
pts —
87.5 %
85.5 %
91.1 % 2.0
pts (5.6)
pts
pts
pts
pts
pts
pts
pts
Catastrophe Losses and Prior Period Development
(in millions of U.S. dollars)
Catastrophe losses
Favorable (unfavorable) prior period development
2022
2021
2020
631 $
679 $
534
186 $
305 $
(63)
$
$
54
•2022: Hurricane Ian losses, winter storm Elliott losses, and other severe weather-related events in the U.S., including
Colorado wildfires
•2021: Hurricane Ida losses, winter storm losses, and flooding; hail, tornados, and wind events in the U.S.
•2020: U.S. hurricanes and tropical storms; U.S. flooding, hail, tornados, and wind events; and U.S. wildfires.
Refer to Note 7 to the Consolidated Financial Statements for detail on prior period development.
Premiums
Net premiums written increased $311 million, or 6.2 percent, for 2022, primarily driven by strong new business and renewal
retention, from both rate and exposure increases, primarily in homeowners and automobile; partially offset by additional
cancellations in parts of California exposed to wildfires.
Net premiums earned increased $265 million, or 5.4 percent, for 2022, reflecting the growth in net premiums written
described above.
Combined Ratio
The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses increased in 2022, as losses are returning to
pre-pandemic levels, particularly in automobile lines. The loss and loss expense ratio also increased due to lower favorable prior
period development, partially offset by lower catastrophe losses.
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)
Net premiums written
Net premiums earned
Losses and loss expenses
Policy acquisition costs
Administrative expenses
Underwriting income
Net investment income
Other (income) expense
Amortization of purchased intangibles
Segment income
Loss and loss expense ratio:
2022
2021
2020
$ 2,907
$ 2,388
$ 1,846
2,838
2,338
1,822
2,557
1,962
1,544
126
(10)
165
36
1
26
124
123
(3)
9
255
146
28
1
26
30
1
27
2022 vs.
2021
21.7 %
21.4 %
30.4 %
1.4 %
NM
(35.4) %
26.6 %
—
—
$ 174
$ 256
$ 148
(32.3) %
% Change
2021 vs.
2020
29.3 %
28.3 %
27.1 %
1.2 %
NM
74.1 %
(4.1)
—
(0.8) %
73.0 %
CAY loss ratio excluding catastrophe losses
90.5 %
81.5 %
83.7 % 9.0
pts
(2.2)
Catastrophe losses
Prior period development
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful
2.2 %
(2.6) %
1.7 %
0.7 %
2.0 % 0.5
pts
(0.3)
(1.0) %
(3.3)
pts 1.7
90.1 %
83.9 %
84.7 % 6.2
pts
(0.8)
4.4 %
(0.3) %
5.3 %
(0.1) %
6.8 %
(0.9)
pts
(1.5)
0.5 %
(0.2)
pts
(0.6)
94.2 %
89.1 %
92.0 % 5.1
pts
(2.9)
pts
pts
pts
pts
pts
pts
pts
55
Catastrophe Losses and Prior Period Development
(in millions of U.S. dollars)
Catastrophe losses
Favorable (unfavorable) prior period development
2022
2021
2020
$
$
64 $
40 $
61 $
(10) $
36
10
•2022: Hurricane Ian losses, severe weather-related events in the Chubb Agribusiness, and winter storm losses in the U.S.
•2021 and 2020: U.S. flooding, hail, tornados, and wind events.
Refer to Note 7 to the Consolidated Financial Statements for detail on prior period development.
Premiums
Net premiums written increased $519 million, or 21.7 percent, in 2022, primarily due to an increase in MPCI, reflecting higher
commodity prices, higher reported acreage from policyholders, and policy count growth, partly offset by a return of premium to
the U.S. government in the first quarter of 2022 of $161 million. Under the profit-sharing agreement, we returned additional
premiums to the government because of the lower losses experienced in certain states in 2021. This return of premium reduced
net premiums written growth in 2022 by 6.7 percentage points.
Net premiums earned increased $500 million, or 21.4 percent, in 2022 reflecting the growth in net premiums written
described above.
Underwriting income
Underwriting income decreased $90 million in 2022, reflecting a lower 2022 crop year margin from drought conditions
experienced in specific areas, which caused lower yields across spring crops and, to a lesser extent, higher harvest prices.
Combined Ratio
The combined ratio for 2022 was impacted by the return of premium to the U.S. government under the profit-sharing
agreement related to the profitable 2021 crop year described above. This prior period development resulted in a reduction to net
premiums earned of $161 million and a corresponding reduction to incurred losses, with no net impact to underwriting income.
The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses increased in 2022, reflecting the lower
2022 crop year margin noted above.
The policy acquisition cost ratio decreased in 2022 primarily due to the favorable impact of higher net premiums earned from
MPCI.
56
Overseas General Insurance
Overseas General Insurance segment comprises Chubb International and Chubb Global Markets (CGM). Chubb International
comprises our international 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)
2022
2021
2020
Net premiums written
Net premiums written - constant dollars
Net premiums earned
Losses and loss expenses
Policy acquisition costs
Administrative expenses
Underwriting income
Net investment income
Other (income) expense
Amortization of purchased intangibles
Segment income
Loss and loss expense ratio:
CAY loss ratio excluding catastrophe losses
Catastrophe losses
Prior period development
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful
$ 11,060
$ 10,713 $ 9,335
10,803
10,441
9,285
5,252
5,143
5,255
2,818
2,799
2,568
1,070
1,078
1,034
1,663
1,421
626
597
2
—
57
48
428
534
13
45
$ 2,230
$ 1,970
$ 904
2022 vs.
2021
% Change
2021 vs.
2020
3.2 %
11.4 %
3.5 %
2.1 %
0.7 %
(0.8) %
17.1 %
4.9 %
NM
19.4 %
13.2 %
14.8 %
10.6 %
12.5 %
(2.1) %
9.0 %
4.3 %
232.2 %
11.9 %
NM
8.2 %
118.1 %
49.4 %
50.1 %
50.7 % (0.7)
3.3 %
3.5 %
7.5 % (0.2)
(4.1) %
(4.3) %
(1.6) %
0.2
48.6 %
49.3 %
56.6 % (0.7)
26.1 %
26.8 %
27.7 % (0.7)
9.9 %
10.3 %
11.1 % (0.4)
84.6 %
86.4 %
95.4 % (1.8)
pts
pts
pts
pts
pts
pts
pts
(0.6)
(4.0)
(2.7)
(7.3)
(0.9)
(0.8)
(9.0)
pts
pts
pts
pts
pts
pts
pts
Catastrophe Losses and Prior Period Development
(in millions of U.S. dollars)
Catastrophe losses
Favorable prior period development
2022
2021
2020
$
$
365 $
358 $
448 $
441 $
705
150
Catastrophe losses were primarily from the following events:
•2022: Hurricane Ian losses, international weather-related events, and storms in Australia.
•2021: Hurricane Ida losses, winter-related storms, international weather-related events, and flooding in Europe.
•2020: COVID-19 pandemic claims; U.S. hurricanes and tropical storms; and international weather-related events.
Refer to Note 7 to the Consolidated Financial Statements for detail on prior period development.
57
Net Premiums Written by Region
(in millions of U.S. dollars, except for percentages)
Region
Europe, Middle East, and Africa
Latin America
Asia Pacific
Japan
Other (1)
Net premiums written
Region
Europe, Middle East, and Africa
Latin America
Asia Pacific
Japan
Other (1)
Net premiums written
% Change
C$
2022
2021
2020
C$
2021
2022 vs.
2021
2022 vs.
2021
2021 vs.
2020
$ 5,222
$ 5,242
$ 4,247
$ 4,818
2,312
2,044
1,928
2,833
2,661
2,368
459
234
520
246
515
277
1,979
2,454
440
235
$ 11,060
$ 10,713
$ 9,335
$ 9,926
(0.4) %
13.1 %
6.4 %
(11.7) %
(4.5) %
3.2 %
8.4 %
23.4 %
16.8 %
15.4 %
4.2 %
6.1 %
12.4 %
0.9 %
(0.1) %
(11.4) %
11.4 %
14.8 %
2022
% of Total
2021
% of Total
2020
% of Total
47 %
21 %
26 %
4 %
2 %
49 %
19 %
25 %
5 %
2 %
45 %
21 %
25 %
6 %
3 %
100 %
100 %
100 %
(1)
Includes the international supplemental A&H business of Combined Insurance and other international operations including mainland China.
Premiums
Net premiums written increased $347 million in 2022, or $1,134 million on a constant-dollar basis, reflecting growth in
commercial lines of 4.3 percent, or 11.8 percent on a constant-dollar basis, and growth in consumer lines of 1.5 percent, or
10.8 percent on a constant-dollar basis.
Our European division increased in 2022, on a constant-dollar basis, supported by both our wholesale and retail divisions. This
growth was primarily driven by higher new business, and positive rate increases in commercial lines, including commercial
property and casualty lines. Consumer lines increased primarily due to increased travel volume in A&H and high net worth in
personal. Additionally, A&H in the prior year was adversely impacted by restrictions resulting from the COVID-19 pandemic.
Latin America increased in 2022, driven by growth in consumer lines, including automobile in personal and travel in A&H.
Commercial lines also grew due to exposure increases, positive rate increases, and new business, primarily property.
Asia Pacific increased in 2022, driven by higher new business, higher retention and positive rate increases in commercial lines,
including property and casualty, and financial lines, and growth in consumer lines, primarily high net worth and specialty in
personal, and travel in A&H. The acquisition of Cigna's business in Asia contributed $74 million (3.0 percentage points in
constant dollars) in 2022.
Japan increased in 2022, on a constant-dollar basis, primarily from higher new business in A&H.
Net premiums earned increased $362 million in 2022, or $1,141 million on a constant-dollar basis, reflecting the increase in
commercial and consumer net premiums written described above.
Combined Ratio
The loss and loss expense ratio and CAY loss ratio excluding catastrophe losses decreased in 2022, reflecting underlying loss
ratio improvement, including earned rate exceeding loss cost trends.
The policy acquisition cost ratio decreased in 2022, primarily due to a change in the mix of business, including less premiums
earned from personal lines that have a higher acquisition cost ratio and higher premiums earned from commercial lines that
have a lower acquisition cost ratio than consumer lines.
The administrative expense ratio decreased in 2022, reflecting continued expense management control and the favorable impact
of higher net premiums earned.
58
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 primarily through reinsurance brokers under the Chubb Tempest Re brand name and provides a
broad range of traditional and non-traditional reinsurance coverage to a diverse array of primary P&C companies.
(in millions of U.S. dollars, except for percentages)
2022
2021
2020
Net premiums written
Net premiums written - constant dollars
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:
CAY loss ratio excluding catastrophe losses
Catastrophe losses
Prior period development
Loss and loss expense ratio
Policy acquisition cost ratio
Administrative expense ratio
Combined ratio
NM – not meaningful
$ 943
$ 873
$ 731
922
670
240
36
(24)
281
1
798
632
200
35
(69)
331
—
698
435
174
37
52
307
2
2022 vs.
2021
8.0 %
9.5 %
15.6 %
6.0 %
20.0 %
1.7 %
65.7 %
(15.2) %
NM
% Change
2021 vs.
2020
19.5 %
18.0 %
14.3 %
45.2 %
15.3 %
(4.5) %
NM
7.7 %
NM
$ 256
$ 262
$ 357
(2.3) %
(26.8) %
49.7 %
20.3 %
50.7 %
49.1 % (1.0)
pts 1.6
28.3 %
17.0 % (8.0)
pts 11.3
2.6 %
0.2 %
(3.8) % 2.4
pts 4.0
72.6 %
26.1 %
79.2 %
62.3 % (6.6)
25.1 %
24.9 %
1.0
3.9 %
4.4 %
5.3 % (0.5)
102.6 %
108.7 %
92.5 % (6.1)
pts
pts
pts
pts
16.9
0.2
(0.9)
16.2
pts
pts
pts
pts
pts
pts
pts
Catastrophe Losses and Prior Period Development
(in millions of U.S dollars)
Catastrophe losses
(Unfavorable) favorable prior period development
2022
2021
2020
$
$
161 $
212 $
113
(22) $
(3) $
29
Catastrophe losses were primarily from the following events:
•2022: Hurricane Ian losses, and other sever weather-related events in the U.S., Australia, and Canada.
•2021: Hurricane Ida losses, and other sever weather-related events in the U.S., Canada and Europe.
•2020: U.S. hurricanes and tropical storms; U.S. flooding, hail, tornadoes, and wind events; and COVID-19 pandemic claims.
Refer to Note 7 to the Consolidated Financial Statements for detail on prior period development.
Premiums
Net premiums written increased $70 million in 2022, or $82 million on a constant-dollar basis, primarily due to continued
growth in the portfolio mainly from new business, favorable premium adjustments and higher catastrophe reinstatement
premiums.
Net premiums earned increased $124 million in 2022, primarily reflecting the factors described above and the impact of higher
new business written in the prior year for which premiums are earned in the current year.
59
Combined Ratio
The loss and loss expense ratio decreased in 2022, primarily due to lower catastrophe losses, partially offset by higher
unfavorable prior period development. The CAY loss ratio excluding catastrophe losses decreased in 2022 primarily due to a
shift in the mix of business.
The policy acquisition cost ratio increased in 2022, primarily due to a shift in the mix of business, partially offset by the impact
of the higher reinstatement premiums described above.
The administrative expense ratio decreased in 2022, primarily from the favorable impact of higher net premiums earned.
Overall, the combined ratio decreased in 2022 primarily due to lower catastrophe losses, partially offset by higher unfavorable
prior period development. The CAY combined ratio excluding catastrophe losses increased due to a shift in the mix of business,
partially offset by higher net premiums earned, which outpaced increases in expenses.
Life Insurance
The Life Insurance segment comprises our international life operations, which commencing in the third quarter of 2022,
includes Cigna's A&H and life business in Korea, Taiwan, New Zealand, Hong Kong, and Indonesia, acquired on July 1, 2022.
The Life Insurance segment also includes 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)
Net premiums written
Net premiums written - constant dollars
Net premiums earned
Losses and loss expenses
Policy benefits
Policy acquisition costs
Administrative expenses
Net investment income
Life Insurance underwriting income
Other (income) expense
Amortization of purchased intangibles
Segment income
% Change
2022 vs.
2021
2021 vs.
2020
2022
2021
2020
$ 3,643 $ 2,477 $ 2,514
3,539
2,402
2,482
497
1,534
838
510
509
669
740
707
712
333
407
317
724
726
766
320
385
331
47.1 %
52.0 %
47.4 %
(32.8) %
117.2 %
17.6 %
53.5 %
25.0 %
111.0 %
(45)
(106)
(74)
(57.8) %
10
5
4
112.9 %
$
704 $
418 $
401
68.3 %
(1.5) %
(2.8) %
(3.2) %
2.3 %
(2.7) %
(7.1) %
3.8 %
5.6 %
(4.2) %
42.4 %
23.3 %
4.1 %
Premiums
Net premiums written increased $1,166 million in 2022, or $1,247 million on a constant-dollar basis. For our International
Life operations, net premiums written increased 96.9 percent, primarily due to the acquisition of Cigna's business in Asia, which
contributed $1,360 million. In addition, growth from new business in Indonesia and Thailand, was more than offset by lower
business in Taiwan and Latin America, principally reflecting non-renewal of certain large account business in Chile. Net
premiums written in our North America Combined Insurance business declined 9.1 percent, primarily due to the non-renewal of
a large program.
60
Deposits
The following table presents deposits collected on universal life and investment contracts:
(in millions of U.S. dollars, except for percentages)
2022
2021
2020
% Change
2022 vs.
2021
C$ 2022
vs. 2021
2021 vs.
2020
Deposits collected on universal life and investment
contracts
$ 1,800 $ 2,441 $ 1,559
(26.2) %
(22.3) %
56.6 %
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 decreased $641 million, or $517 million on a constant-dollar basis, in 2022, primarily in Taiwan, reflecting
challenging market conditions for deposit products. Additionally, the prior year benefited from successful sales campaigns in
broker and bank channels in Taiwan. Partially offsetting the decline is $91 million from deposits collected from the acquired
Cigna business in Asia, primarily in Korea.
Life Insurance segment income
Life Insurance segment income increased $286 million in 2022 from higher underwriting income of $352 million, including
$195 million of growth reflecting six months of the acquisition of Cigna's business in Asia, strong performance in Combined
Insurance North America reflecting favorable reserve development, and higher net investment income. This increase was
partially offset by an adverse non-recurring adjustment of $52 million in 2022 related to Huatai Life, our partially owned
insurance entity in China.
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 and certain other non-A&E run-
off exposures, including molestation.
(in millions of U.S. dollars, except for percentages)
2022
2021
2020
Losses and loss expenses
Administrative expenses
Underwriting loss
Net investment income (loss)
Interest expense
Net realized gains (losses)
Other (income) expense
Amortization of purchased intangibles
Cigna integration expenses
Income tax expense
Net income (loss)
NM – not meaningful
$
363 $
572 $
385
748
—
570
365
937
(55)
492
(954)
1,160
292
182
48
(2,118)
198
—
1,255
1,277
435
303
738
(87)
516
(499)
(791)
203
—
629
% Change
2022 vs.
2021
2021 vs.
2020
(36.4) %
5.6 %
(20.1) %
31.4 %
20.6 %
26.9 %
NM
(35.6) %
15.9 %
(4.7) %
NM
NM
NM
168.0 %
(7.8) %
(3.2) %
NM
—
(1.7) %
102.9 %
$
(4,049) $
319 $
(1,881)
NM
NM
Losses and loss expenses decreased in 2022 primarily due to the inclusion of Boy Scouts of America related abuse claims in
2021. Refer to Note 7 of the Consolidated Financial Statements for further information. Administrative expenses increased in
2022, primarily due to increased spending to support digital growth initiatives.
Cigna integration expenses of $48 million for 2022 principally comprised legal and professional fees and all other costs directly
related to the integration activities of the Cigna acquisition. These 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.
61
Refer to the respective sections that follow for a discussion of Net realized gains (losses), Net investment income (loss),
Amortization of purchased intangibles, and Income tax expense (benefit). Refer to Note 14 to the Consolidated Financial
Statements for additional information on Other (income) expense.
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 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, net of valuation
allowance.
The effect of market movements on our fixed maturities portfolio impacts Net income (through Net realized gains (losses)) when
securities are sold, when we write down an asset, or when we record a change to the valuation allowance for expected credit
losses. For a further discussion related to how we assess the valuation allowance for expected credit losses and the related
impact on Net income, refer to Note 1 e) to the Consolidated Financial Statements. Additionally, Net income is impacted
through the reporting of changes in the fair value of equity securities, private equity funds where we own less than three
percent, and 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, unrealized postretirement benefit obligations liability adjustment, and cross-currency swaps
designated as hedges for accounting purposes are reported as separate components of Accumulated other comprehensive
income (loss) 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
Year Ended December 31
Net
Realized
Gains
(Losses)
Net
Unrealized
Gains
(Losses)
2022
Net
Impact
Net
Realized
Gains
(Losses)
Net
Unrealized
Gains
(Losses)
2021
Net
Impact
2020
Net
Realized
Gains
(Losses)
$ (1,049) $ (10,598) $ (11,647) $
3 $
(2,919) $ (2,916) $
(281)
Fixed income and investment derivatives
(43)
(43)
(72)
—
(72)
81
Public equity
Sales
Mark-to-market
Private equity (less than 3 percent ownership)
Mark-to-market
Total investment portfolio
Mark-to-market from variable annuity
reinsurance derivative transactions, net of
applicable hedges
Other derivatives
Foreign exchange
Other
—
—
—
—
409
(639)
(31)
409
(639)
(31)
157
505
111
704
—
—
157
505
455
131
—
111
(32)
(2,919) (2,215)
354
(1,353)
(10,598) (11,951)
124
(11)
—
—
124
114
(11)
(8)
—
—
114
(310)
(8)
1
393
(986)
(593)
348
(530)
(182)
(483)
(118)
(80)
(198)
(6)
503
497
(60)
Net gains (losses), pre-tax
$
(965) $ (11,664) $ (12,629) $ 1,152 $
(2,946) $ (1,794) $
(498)
Pre-tax net unrealized losses of $10,598 million in our investment portfolio were principally the result of an increase in interest
rates. In addition, there were pre-tax net realized losses of $1,353 million primarily from mark-to-market losses on public and
private equities of $670 million. Additionally, there were net losses of $683 million comprising of an increase in the valuation
allowance of expected credit losses, impairments on fixed income securities, derivative losses, and losses from sales of fixed
maturities, offset by gains from sales of equity securities.
The variable annuity reinsurance derivative transactions consist of changes in the fair value of GLB liabilities and gains or losses
on other derivative instruments we maintain that decrease in fair value when the S&P 500 index increases. In 2022, the
variable annuity reinsurance derivative transactions resulted in realized gains of $124 million, reflecting a net loss of $63
62
million, primarily from a decrease in the fair value of the GLB liabilities due to higher interest rates, partially offset by lower
global equity markets, and a net realized gain of $187 million related to the other derivative instruments. In 2021, the variable
annuity reinsurance derivative transactions resulted in realized gains of $114 million, reflecting a net gain of $316 million,
primarily from a decrease in the fair value of the GLB liabilities due to higher global equity markets and higher interest rates,
and a net realized loss of $202 million related to the other derivative instruments.
Effective Income Tax Rate
Our effective tax rate (ETR) was 19.1 percent, 13.0 percent, and 15.1 percent in 2022, 2021, and 2020, respectively. Our
ETR reflects a mix of income or losses in jurisdictions with a wide range of tax rates, permanent differences between U.S. GAAP
and local tax laws, and the impact of discrete items. A change in the geographic mix of earnings could impact our ETR. The
increase in the ETR from 2021 to 2022 was due primarily to the impact of discrete items and realized losses as compared to
realized gains in lower tax jurisdictions in the prior year.
Non-GAAP Reconciliation
In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be
defined differently by other companies, are important for an understanding of our overall results of operations and financial
condition. However, they should not be viewed as a substitute for measures determined in accordance with GAAP.
Book value per common share is shareholders’ equity divided by the shares outstanding. Tangible book value per common share
is shareholders’ equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. We believe that
book value comparisons to less acquisitive peer companies are more meaningful when adjusted for goodwill and other intangible
assets. The calculation of tangible book value per share does not consider the embedded goodwill attributable to our
investments in partially-owned insurance companies until we consolidate.
We provide financial measures, including net premiums written, net premiums earned, and underwriting income on a constant-
dollar basis. We believe it is useful to evaluate the trends in our results exclusive of the effect of fluctuations in exchange rates
between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could
fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign
exchange rates between periods by translating prior period results using the same local currency exchange rates as the
comparable current period.
P&C performance metrics 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. P&C combined ratio
is the sum of the loss and loss expense ratio, policy acquisition cost ratio and the administrative expense ratio excluding the life
business and including the realized gains and losses on the crop derivatives. These derivatives were purchased to provide
economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing
impacts underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations.
CAY P&C combined ratio excluding catastrophe losses (CATs) excludes CATs and prior period development (PPD) from the P&C
combined ratio. We exclude CATs as they are not predictable as to timing and amount and PPD as these unexpected loss
developments on historical reserves are not indicative of our current underwriting performance. The combined ratio numerator is
adjusted to exclude CATs, net premiums earned adjustments on PPD, prior period expense adjustments and reinstatement
premiums on PPD, and the denominator is adjusted to exclude net premiums earned adjustments on PPD and reinstatement
premiums on CATs and PPD. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded
from PPD and net premiums earned when calculating the ratios. We believe this measure provides a better evaluation of our
underwriting performance and enhances the understanding of the trends in our P&C business that may be obscured by these
items. This measure is commonly reported among our peer companies and allows for a better comparison.
Reinstatement premiums are additional premiums paid on certain reinsurance agreements in order to reinstate coverage that
had been exhausted by loss occurrences. The reinstatement premium amount is typically a pro rata portion of the original ceded
premium paid based on how much of the reinsurance limit had been exhausted.
Net premiums earned adjustments within PPD are adjustments to the initial premium earned on retrospectively rated policies
based on actual claim experience that develops after the policy period ends. The premium adjustments correlate to the prior
period loss development on these same policies and are fully earned in the period the adjustments are recorded.
Prior period expense adjustments typically relate to adjustable commission reserves or policyholder dividend reserves based on
actual claim experience that develops after the policy period ends. The expense adjustments correlate to the prior period loss
development on these same policies.
63
The following tables present the calculation of combined ratio, as reported for each segment to P&C combined ratio, adjusted for
CATs and PPD:
For the Year Ended
December 31, 2022
(in millions of U.S. dollars except for ratios)
Numerator
North
America
Commercial
P&C
Insurance
North
America
Personal
P&C
Insurance
North
America
Agricultural
Insurance
Overseas
General
Insurance
Global
Reinsurance
Corporate
Total P&C
Losses and loss expenses
A $ 10,828
$ 3,186
$ 2,557
$ 5,252
$
670
$
363 $ 22,856
Catastrophe losses and related adjustments
Catastrophe losses, net of related adjustments
(961)
(631)
(64)
(365)
(161)
Reinstatement premiums collected (expensed) on
catastrophe losses
(1)
(2)
Catastrophe losses, gross of related adjustments
(960)
(629)
—
(64)
(3)
(362)
55
(216)
—
—
—
(2,182)
49
(2,231)
PPD and related adjustments
PPD, net of related adjustments - favorable
(unfavorable)
Net premiums earned adjustments on PPD -
unfavorable (favorable)
Expense adjustments - unfavorable (favorable)
PPD reinstatement premiums - unfavorable
(favorable)
PPD, gross of related adjustments - favorable
(unfavorable)
562
186
61
448
(22)
(359)
876
88
24
—
—
—
—
168
(2)
—
—
—
—
—
1
(2)
—
—
—
256
23
(2)
674
186
227
448
(23)
(359)
1,153
CAY loss and loss expense ex CATs
B $ 10,542
$ 2,743
$ 2,720
$ 5,338
$
431
$
4 $ 21,778
Policy acquisition costs and administrative
expenses
Policy acquisition costs and administrative
expenses
C $ 3,426
$ 1,348
$
116
$ 3,888
$
276
$
385 $ 9,439
Expense adjustments - favorable (unfavorable)
(24)
—
2
—
(1)
—
(23)
Policy acquisition costs and administrative expenses,
adjusted
D $ 3,402
$ 1,348
$
118
$ 3,888
$
275
$
385 $ 9,416
Denominator
Net premiums earned
Reinstatement premiums (collected) expensed on
catastrophe losses
Net premiums earned adjustments on PPD -
unfavorable (favorable)
PPD reinstatement premiums - unfavorable
(favorable)
E $ 17,107
$ 5,180
$ 2,838
$ 10,803
$
922
$ 36,850
1
88
—
2
—
—
—
168
—
3
—
—
(55)
—
(2)
(49)
256
(2)
Net premiums earned excluding adjustments
F $ 17,196
$ 5,182
$ 3,006
$ 10,806
$
865
$ 37,055
P&C Combined ratio
Loss and loss expense ratio
Policy acquisition cost and administrative expense
ratio
P&C Combined ratio
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted
Policy acquisition cost and administrative expense
ratio, adjusted
CAY P&C Combined ratio ex CATs
A/E
C/E
B/F
D/F
Combined ratio
Combined ratio
Add: impact of gains and losses on crop derivatives
P&C Combined ratio
63.3 %
61.5 %
90.1 %
48.6 %
72.6 %
20.0 %
26.0 %
4.1 %
36.0 %
30.0 %
83.3 %
87.5 %
94.2 %
84.6 %
102.6 %
61.3 %
52.9 %
90.5 %
49.4 %
49.7 %
19.8 %
81.1 %
26.0 %
78.9 %
3.9 %
36.0 %
94.4 %
85.4 %
31.8 %
81.5 %
62.0 %
25.6 %
87.6 %
58.8 %
25.4 %
84.2 %
87.6 %
—
87.6 %
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.
64
For the Year Ended
December 31, 2021
(in millions of U.S. dollars except for ratios)
Numerator
North
America
Commercial
P&C
Insurance
North
America
Personal
P&C
Insurance
North
America
Agricultural
Insurance
Overseas
General
Insurance
Global
Reinsurance
Corporate
Total P&C
Losses and loss expenses
A $ 10,015
$ 2,924
$ 1,962
$ 5,143
$
632
$
572 $ 21,248
Catastrophe losses and related adjustments
Catastrophe losses, net of related adjustments
(1,112)
(679)
(40)
(358)
(212)
—
(2,401)
Reinstatement premiums collected (expensed) on
catastrophe losses
Catastrophe losses, gross of related adjustments
PPD and related adjustments
PPD, net of related adjustments - favorable
(unfavorable)
Net premiums earned adjustments on PPD -
unfavorable (favorable)
Expense adjustments - unfavorable (favorable)
PPD reinstatement premiums - unfavorable
(favorable)
PPD, gross of related adjustments - favorable
(unfavorable)
—
(1,112)
(16)
(663)
(2)
(38)
—
(358)
28
(240)
—
—
10
(2,411)
762
305
(10)
441
(3)
(569)
926
67
6
6
—
—
(1)
(25)
(3)
—
—
—
7
841
304
(38)
448
—
—
3
—
—
—
—
42
3
15
(569)
986
CAY loss and loss expense ex CATs
B $ 9,744
$ 2,565
$ 1,886
$ 5,233
$
392
$
3 $ 19,823
Policy acquisition costs and administrative
expenses
Policy acquisition costs and administrative
expenses
C $ 3,134
$ 1,277
$
121
$ 3,877
$
235
$
365 $ 9,009
Expense adjustments - favorable (unfavorable)
(6)
—
3
—
—
—
(3)
Policy acquisition costs and administrative expenses,
adjusted
D $ 3,128
$ 1,277
$
124
$ 3,877
$
235
$
365 $ 9,006
Denominator
Net premiums earned
Reinstatement premiums (collected) expensed on
catastrophe losses
Net premiums earned adjustments on PPD -
unfavorable (favorable)
PPD reinstatement premiums - unfavorable
(favorable)
E $ 15,461
$ 4,915
$ 2,338
$ 10,441
$
798
$ 33,953
—
67
6
16
—
(1)
2
(25)
—
—
—
7
(28)
—
3
(10)
42
15
Net premiums earned excluding adjustments
F $ 15,534
$ 4,930
$ 2,315
$ 10,448
$
773
$ 34,000
P&C Combined ratio
Loss and loss expense ratio
A/E
64.8 %
59.5 %
83.9 %
49.3 %
79.2 %
Policy acquisition cost and administrative expense
ratio
P&C Combined ratio
CAY P&C Combined ratio ex CATs
C/E
20.2 %
26.0 %
5.2 %
37.1 %
29.5 %
85.0 %
85.5 %
89.1 %
86.4 %
108.7 %
Loss and loss expense ratio, adjusted
B/F
62.7 %
52.0 %
81.5 %
50.1 %
50.7 %
Policy acquisition cost and administrative expense
ratio, adjusted
D/F
20.2 %
25.9 %
5.3 %
37.1 %
CAY P&C Combined ratio ex CATs
82.9 %
77.9 %
86.8 %
87.2 %
30.5 %
81.2 %
Combined ratio
Combined ratio
Add: impact of gains and losses on crop derivatives
P&C Combined ratio
62.6 %
26.5 %
89.1 %
58.3 %
26.5 %
84.8 %
89.1 %
—
89.1 %
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.
65
For the Year Ended
December 31, 2020
(in millions of U.S. dollars except for ratios)
Numerator
North
America
Commercial
P&C
Insurance
North
America
Personal
P&C
Insurance
North
America
Agricultural
Insurance
Overseas
General
Insurance
Global
Reinsurance
Corporate
Total P&C
Losses and loss expenses
A $ 10,129
$ 3,187
$ 1,544
$ 5,255
$
435
$
435 $ 20,985
Catastrophe losses and related adjustments
Catastrophe losses, net of related adjustments
(1,871)
(534)
(36)
(705)
(113)
Reinstatement premiums collected (expensed) on
catastrophe losses
(3)
(1)
Catastrophe losses, gross of related adjustments
(1,868)
(533)
(1)
(35)
(15)
(690)
10
(123)
—
—
—
(3,259)
(10)
(3,249)
PPD and related adjustments
PPD, net of related adjustments - favorable
(unfavorable)
Net premiums earned adjustments on PPD -
unfavorable (favorable)
Expense adjustments - unfavorable (favorable)
PPD reinstatement premiums - unfavorable
(favorable)
PPD, gross of related adjustments - favorable
(unfavorable)
702
(63)
10
150
29
(433)
395
32
(1)
—
733
—
—
(18)
(81)
3
6
—
19
—
—
—
—
(2)
(1)
—
—
—
35
3
(19)
150
26
(433)
414
CAY loss and loss expense ex CATs
B $ 8,994
$ 2,573
$ 1,528
$ 4,715
$
338
$
2 $ 18,150
Policy acquisition costs and administrative
expenses
Policy acquisition costs and administrative
expenses
C $ 2,948
$ 1,244
$
132
$ 3,602
$
211
$
303 $ 8,440
Expense adjustments - favorable (unfavorable)
1
—
(6)
—
2
—
(3)
Policy acquisition costs and administrative expenses,
adjusted
D $ 2,949
$ 1,244
$
126
$ 3,602
$
213
$
303 $ 8,437
Denominator
Net premiums earned
Reinstatement premiums (collected) expensed on
catastrophe losses
Net premiums earned adjustments on PPD -
unfavorable (favorable)
PPD reinstatement premiums - unfavorable
(favorable)
E $ 13,964
$ 4,866
$ 1,822
$ 9,285
$
698
$ 30,635
3
32
—
1
—
(18)
1
3
—
15
—
—
(10)
—
(1)
10
35
(19)
Net premiums earned excluding adjustments
F $ 13,999
$ 4,849
$ 1,826
$ 9,300
$
687
$ 30,661
P&C Combined ratio
Loss and loss expense ratio
Policy acquisition cost and administrative expense
ratio
P&C Combined ratio
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted
Policy acquisition cost and administrative expense
ratio, adjusted
A/E
C/E
B/F
D/F
72.5 %
65.5 %
84.7 %
56.6 %
62.3 %
21.2 %
25.6 %
7.3 %
38.8 %
93.7 %
91.1 %
92.0 %
95.4 %
30.2 %
92.5 %
64.2 %
53.1 %
83.7 %
50.7 %
49.1 %
21.1 %
25.6 %
6.8 %
38.7 %
31.0 %
80.1 %
CAY P&C Combined ratio ex CATs
85.3 %
78.7 %
90.5 %
89.4 %
Combined ratio
Combined ratio
Add: impact of gains and losses on crop derivatives
P&C Combined ratio
68.5 %
27.6 %
96.1 %
59.2 %
27.5 %
86.7 %
96.1 %
—
96.1 %
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.
66
Net Investment Income
(in millions of U.S. dollars, except for percentages)
Average invested assets
Net investment income (1)
Yield on average invested assets
Market yield on fixed maturities
2022
2021
2020
$ 120,733
$ 116,475
$ 109,766
$
3,742
$
3,456
$
3,375
3.1 %
5.6 %
3.0 %
2.3 %
3.1 %
1.7 %
(1)
Includes $41 million, $84 million, and $116 million of amortization expense related to the fair value adjustment of acquired invested assets in 2022, 2021, and 2020,
respectively. Excludes investment income from our private equities where we own more than 3 percent interest.
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 8.3 percent in 2022
compared with 2021, primarily due to higher reinvestment rates on fixed maturities, offset by reduced call activity in fixed
income securities, and lower income from equity securities and private equities. Refer to Note 1 e) to the Consolidated Financial
Statements for additional information.
For private equities where we own less than three percent, investment income is included within Net investment income in the
table above. For private equities where we own more than three percent, investment income is included within Other income
(expense) in the Consolidated statements of operations. Excluded from Net investment income is the mark-to-market movement
for private equities, which is recorded within either Other income (expense) or Net realized gains (losses) based on our
percentage of ownership. The total mark-to-market movement for private equities excluded from Net investment income was as
follows:
(in millions of U.S. dollars)
Total mark-to-market gain (loss) on private equity, pre-tax
2022
2021
2020
$
(250) $
2,115 $
714
Interest Expense
Interest expense was $570 million, $492 million, and $516 million for the years ended December 31, 2022, 2021, and
2020, respectively. Interest expense increased in 2022 primarily from the issuance of $600 million of 2.85 percent senior
notes and $1,000 million of 3.05 percent senior notes in the fourth quarter of 2021. Additionally, interest expense in 2022
includes interest on $2.0 billion of repurchase agreements issued during the second quarter of 2022 which expired prior to
December 31, 2022. Pre-tax interest expense is expected to total $602 million for 2023 based on our existing debt obligations,
at current foreign exchange rates, fees from expected usage of certain facilities, including letters of credit, and interest on held
collateral and repurchase agreements. Interest on held collateral and repurchase agreements is expected to be higher as a result
of rising interest rates. Refer to Note 9 to the Consolidated Financial Statements, under Item 8, for more information.
67
Amortization of Purchased Intangibles and Other Amortization
Amortization of purchased intangibles
Amortization expense related to purchased intangibles was $285 million, $287 million, and $290 million for the years ended
December 31, 2022, 2021, and 2020, respectively. The amortization of purchased intangibles expense in 2023 is expected to
be $281 million, or approximately $70 million each quarter. Refer to Note 6 to the Consolidated Financial Statements, under
Item 8, for more information on the expected pre-tax amortization expense of purchased intangibles, at current foreign currency
exchange rates for the next five years.
At December 31, 2022, the deferred tax liability associated with the Other intangible assets (excluding the fair value adjustment
on Unpaid losses and loss expenses) was $1,213 million.
The following table presents at December 31, 2022, the expected reduction to the deferred tax liability associated with the
amortization of Other intangible assets, at current foreign currency exchange rates, for the next five years:
For the Years Ending December 31
(in millions of U.S. dollars)
Reduction to deferred tax liability
associated with intangible assets
2023
2024
2025
2026
2027
Total
$
$
64
59
55
51
47
276
Amortization of the fair value adjustment on acquired invested assets and assumed long-term debt
The following table presents at December 31, 2022, the expected amortization expense of the fair value adjustment on acquired
invested assets related to the acquisitions of Cigna's business in Asia and Chubb Corp, at current foreign currency exchange
rates, and the expected amortization benefit from the fair value adjustment on assumed long-term debt related to the Chubb
Corp acquisition for the next five years:
For the Years Ending December 31
(in millions of U.S. dollars)
Acquired Cigna
invested assets
Acquired Chubb
Corp invested assets
Total acquired
invested assets (1)
Assumed long-term
debt (2)
Amortization (expense) benefit of the fair value adjustment on
2023
2024
2025
2026
2027
Total
$
35 $
32
30
28
27
(50) $
(16)
—
—
—
(15) $
16
30
28
27
$
152 $
(66) $
86 $
21
21
21
21
21
105
(1)
Recorded as an increase (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.
The estimate of amortization expense of the fair value adjustment on acquired invested assets could vary based on current
market conditions, bond calls, overall duration of the acquired investment portfolio, and foreign exchange.
68
Investments
Our investment portfolio is invested primarily in publicly traded, investment grade, fixed income securities with an average credit
quality of A/A 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 4.5 years and 4.1 years at
December 31, 2022 and 2021, respectively. We estimate that a 100 basis point (bps) increase in interest rates would reduce
the valuation of our fixed income portfolio by approximately $4.4 billion at December 31, 2022. The following table shows the
fair value and cost/amortized cost, net of valuation allowance, of our invested assets:
(in millions of U.S. dollars)
Fixed maturities available for sale
Fixed maturities held to maturity
Short-term investments
Fixed income securities
Equity securities
Other investments
Total investments
December 31, 2022
Cost/
Amortized
Cost, Net
Fair
Value
December 31, 2021
Cost/
Amortized
Cost
Fair
Value
$
85,220 $
93,186 $
93,108 $
90,479
8,439
4,960
8,848
4,962
10,647
3,146
10,118
3,147
98,619
106,996
106,901
103,744
827
827
13,696
13,696
4,782
11,169
4,782
11,169
$ 113,142 $ 121,519 $ 122,852 $ 119,695
The fair value of our total investments decreased $9.7 billion during the year ended December 31, 2022, reflecting unrealized
losses on fixed maturities, principally from rising interest rates and from share repurchases, partially offset by an increase in
investments from operating cash flows.
The following tables present the fair value of our fixed income securities at December 31, 2022 and 2021. The first table lists
investments according to type and second according to S&P credit rating:
(in millions of U.S. dollars, except for percentages)
U.S. Treasury / Agency
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Non-U.S.
Short-term investments
Total
AAA
AA
A
BBB
BB
B
Other
Total
December 31, 2022
December 31, 2021
Fair Value
% of Total
Fair Value
% of Total
$
3,996
4 % $
3,458
$
$
38,535
17,202
6,964
26,962
4,960
98,619
14,779
31,195
18,366
16,802
8,722
8,347
408
40 %
41,264
17 %
22,292
7 %
9,650
27 %
27,091
5 %
3,146
3 %
39 %
21 %
9 %
25 %
3 %
100 % $ 106,901
100 %
15 % $
15,364
32 %
35,179
19 %
20,171
17 %
17,362
9 %
8 %
— %
9,084
9,202
539
14 %
33 %
19 %
16 %
8 %
9 %
1 %
$
98,619
100 % $ 106,901
100 %
69
Corporate and asset-backed securities
The following table presents our 10 largest global exposures to corporate bonds by fair value at December 31, 2022:
(in millions of U.S. dollars)
Bank of America Corp
JP Morgan Chase & Co
Morgan Stanley
Wells Fargo & Co
Citigroup Inc
Goldman Sachs Group Inc
Verizon Communications Inc
Comcast Corp
HSBC Holdings Plc
Anheuser-Busch InBev SA/NV
Mortgage-backed securities
$
Fair Value
744
656
624
579
519
504
438
362
341
315
The following table shows the fair value and amortized cost, net of valuation allowance, of our mortgage-backed securities:
S&P Credit Rating
Fair
Value
Amortized
Cost, Net
December 31, 2022
(in millions of U.S. dollars)
AAA
AA
A
BBB
BB and
below
Total
Total
Agency residential mortgage-backed (RMBS)
$
7 $ 14,220 $
— $
— $
— $ 14,227 $ 16,044
Non-agency RMBS
Commercial mortgage-backed securities
Total mortgage-backed securities
479
2,042
40
171
52
136
36
12
4
3
611
701
2,364
2,578
$ 2,528 $ 14,431 $
188 $
48 $
7 $ 17,202 $ 19,323
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 SE which is headquartered in France 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 45 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. We manage our indirect exposure using the same credit rating based investment approach. Accordingly, we do not
believe our indirect exposure is material.
70
The following table summarizes the fair value and amortized cost, net of valuation allowance, of our non-U.S. fixed income
portfolio by country/sovereign for non-U.S. government securities at December 31, 2022:
(in millions of U.S. dollars)
Republic of Korea
Canada
Taiwan
Federative Republic of Brazil
Province of Ontario
United Mexican States
Kingdom of Thailand
Commonwealth of Australia
United Kingdom
Province of Quebec
Other Non-U.S. Government Securities
Total
Fair Value
Amortized Cost, Net
$
1,593 $
1,659
918
897
583
568
519
486
455
393
379
4,832
$
11,623 $
982
906
598
609
555
495
533
433
404
5,239
12,413
The following table summarizes the fair value and amortized cost, net of valuation allowance, of our non-U.S. fixed income
portfolio by country/sovereign for non-U.S. corporate securities at December 31, 2022:
(in millions of U.S. dollars)
Fair Value
Amortized Cost, Net
United Kingdom
Canada
South Korea
France
United States (1)
Australia
Japan
Netherlands
Germany
Switzerland
Other Non-U.S. Corporate Securities
Total
$
2,250 $
1,804
1,220
1,153
1,075
905
718
503
498
469
4,744
$
15,339 $
2,467
1,946
1,274
1,255
1,196
1,002
775
546
563
540
5,164
16,728
(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, 2022, our corporate fixed income investment portfolio included below-
investment grade and non-rated securities which, in total, comprised approximately 16 percent of our fixed income portfolio.
Our below-investment grade and non-rated portfolio includes over 1,700 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. Fifteen 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 debt obligations) are not permitted in the high-yield portfolio.
71
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 or
bodily injury 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/reopened
Closed or otherwise disposed
Open at end of year
Asbestos (by causative agent)
2021
2022
Environmental (by account)
2021
2022
1,739
208
152
1,795
1,723
191
175
1,739
1,230
64
99
1,195
1,234
131
135
1,230
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 following table presents the gross and net 3-year survival ratios for Asbestos and Environmental loss and ALAE reserves:
(in years)
Asbestos
Environmental
Gross loss and
ALAE reserves
Net loss and
ALAE reserves
4.7
3.3
5.1
3.9
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. Therefore, we urge caution in using these very simplistic ratios to gauge reserve adequacy.
72
Catastrophe Management
We actively monitor and manage our catastrophe risk accumulation around the world from natural perils, including setting risk
limits based on probable maximum loss (PML), and purchasing catastrophe reinsurance, to ensure sufficient liquidity and
capital to meet the expectations of regulators, rating agencies and policyholders, and to provide shareholders with an
appropriate risk-adjusted return. Chubb uses 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. The table below presents our modeled pre-tax estimates of natural catastrophe
PML, net of reinsurance, at December 31, 2022, and does not represent our expected catastrophe losses for any one year.
Worldwide (1)
Annual Aggregate
Modeled Net Probable Maximum Loss (PML) Pre-tax
U.S. Hurricane (2)
Annual Aggregate
California Earthquake (3)
Single Occurrence
(in millions of U.S. dollars, except for
percentages)
Chubb
% of Total
Shareholders’
Equity
Chubb
% of Total
Shareholders’
Equity
Chubb
% of Total
Shareholders’
Equity
1-in-10
1-in-100
1-in-250
$
$
$
2,215
4,903
8,234
4.4 % $
1,175
2.3 % $
149
9.7 % $
3,188
6.3 % $
1,324
16.3 % $
6,256
12.4 % $
1,526
0.3 %
2.6 %
3.0 %
(1) Worldwide aggregate is comprised of losses arising from tropical cyclones, convective storms, earthquakes, U.S. wildfires, and floods in the U.S., Canada, and Europe, and
excludes "non-modeled" perils such as man-made and other catastrophe risk including pandemic.
(2) U.S. hurricane losses include losses from wind, storm-surge, and related precipitation-induced flooding.
(3) California earthquakes include the fire-following sub-peril.
The PML for worldwide and key U.S. peril regions are based on our in-force portfolio at October 1, 2022, and reflect the April
1, 2022, reinsurance program (see Global Property Catastrophe Reinsurance Program section) as well as inuring reinsurance
protection coverages. These estimates assume that reinsurance recoverable is fully collectible.
According to the model, for the 1-in-100 return period scenario, there is a one percent chance that our pre-tax annual aggregate
losses incurred in any year from U.S. hurricane events could be in excess of $3,188 million (or 6.3 percent of our total
shareholders’ equity at December 31, 2022). Effective December 31, 2022, our worldwide PMLs include losses from floods in
Canada and Europe. Additionally, U.S. hurricane PMLs include losses from hurricane related precipitation-induced flooding.
•
•
•
The above estimates of Chubb’s loss profile are inherently uncertain for many reasons, including the following:
• While the use of third-party modeling packages to simulate potential catastrophe 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;
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;
The potential effects of climate change add to modeling complexity; and
Changing climate conditions could impact our exposure to natural catastrophe risks. Published studies by leading
government, academic and professional organizations combined with extensive research by Chubb climate scientists reveal
the potential for increases in the frequency and severity of key natural perils such as tropical cyclones, inland flood, and
wildfire. To understand the potential impacts on the Chubb portfolio, we have conducted stress tests on our peak exposure
zone, namely in the U.S., using parameters outlined by the Intergovernmental Panel on Climate Change (IPCC) Climate
Change 2021 report. These parameters consider the impacts of climate change and the resulting climate peril impacts over
a timescale relevant to our business. The tests are conducted by adjusting our baseline view of risk for the perils of
hurricane, inland flood, and wildfire in the U.S. to reflect increases in frequency and severity across the modeled domains
for each of these perils. Based on these tests against the Chubb portfolio we do not expect material impacts to our baseline
PMLs from climate change over the next 12 months. These tests reflect current exposures only and exclude potentially
mitigating factors such as changes to building codes, public or private risk mitigation, regulation, and public policy.
73
Man-made and other catastrophes
We have substantial exposure to losses resulting from man-made catastrophes including terrorism, cyber-attack, financial
events, and other catastrophe events, including pandemics. These events are inherently unpredictable and could impact a
variety of our businesses, including commercial and personal lines, life insurance, A&H, and reinsurance products. Our losses
from these events could be substantial.
Terrorism
We offer terrorism coverage in the U.S. and in many other countries through various insurance products. We actively monitor
terrorism risk and manage exposures through set risk limits based on modeled losses from certain terrorism attack scenarios, the
purchase of reinsurance, and the reliance on government-sponsored terrorism reinsurance programs. In the U.S., certain
protections of our terrorism exposure are provided through the Terrorism Risk Insurance Program Reauthorization Act of 2019
(TRIPRA). In 2022, TRIPRA covers 80 percent of insured losses above a deductible, estimated to be approximately $3.0
billion. Refer to “Global Property Catastrophe Reinsurance Program” for information on our reinsurance protection purchased. At
our largest exposure location in the U.S., our maximum modeled losses from a 10-ton truck-bomb explosion are estimated to be
$1.9 billion pre-tax based on the exposures, net of reinsurance and TRIPRA as of December 31, 2022.
Cyber Insurance
While frequency and severity trends are being managed through long-standing underwriting strategies, the potential catastrophe
risk that aggregation of cyber exposures presents to insurers is unique and unprecedented. In contrast with natural catastrophe
risks, catastrophic cyber event scenarios are not bound by time or geography. Further, catastrophic cyber perils do not have
well-established definitions or fundamental physical properties. For these reasons, catastrophic cyber events have the inherent
potential for significant economic loss. Although cyber risk does not represent a material component of our net premiums written
and we engage in significant risk mitigation through our underwriting and use of reinsurance, we are exposed to material losses
in the event of a systemic cyber-attack.
Financial Risk
The consequences of adverse global or regional market and economic conditions may affect our investment portfolio. Our
investment portfolio is subject to credit or default risk and may also be less liquid in times of economic weakness or market
disruptions. Our investments are subject to market risks and risks inherent in individual securities. Our investment performance
is highly sensitive to many factors, including interest rates, 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.
Moreover, we have substantial exposure to insurance products which are sensitive to certain system-wide financial conditions,
such as our financial lines, surety, political risk, involuntary loss of employment (outside U.S.), and trade credit products. These
products tend to be characterized by infrequent but potentially high severity losses. The majority of our exposure in these
products may be impacted by an adverse economic climate such as an economic recession or depression. If the financial
condition of these insureds 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. We monitor credit
exposures to single counterparties and to sectors of interest from sources across our operations (e.g. investments, insurance
products, reinsurance recoverable, bank deposits, letters of credit) and establish guidelines for credit risk exposure at the
counterparty level. Our net income may be volatile because certain variable annuity reinsurance products sold expose us to
reserve and fair value liability changes that are directly affected by market and other factors and assumptions.
Pandemic
An outbreak of pandemic disease, such as the COVID-19 pandemic, could have a materially adverse effect on our results of
operations. The vast majority of our property and liability coverages do not provide coverage for pandemic claims. However, we
are subject to the potential of aggregation of loss from coverages provided in our life, A&H, and workers' compensation
portfolios. We assess our direct pandemic exposure using stress scenarios that consider mortality, morbidity, and other causes
of insured loss such as trip cancellation. Our assessment also incorporates the impact of a severe economic downturn which, as
stated above under Financial Risk, includes an adverse impact to our investment portfolio and to our insurance products
sensitive to certain system-wide financial conditions.
74
Global Property Catastrophe 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, 2022, through March 31, 2023, with no material changes in coverage to the expired program. The program
consists of three layers in excess of losses retained by Chubb on a per occurrence basis. In addition, Chubb 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, 2022, through March 31, 2023, 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)
United States
(excluding Alaska and Hawaii)
United States
(excluding Alaska and Hawaii)
United States
(excluding Alaska and Hawaii)
International
(including Alaska and Hawaii)
International
(including Alaska and Hawaii)
Alaska, Hawaii, and Canada
Layer of Loss
$0 million –
$1.0 billion
$1.0 billion –
$1.15 billion
$1.15 billion –
$2.25 billion
$2.25 billion –
$3.5 billion
$0 million –
$175 million
$175 million –
$1.275 billion
$1.275 billion –
$2.525 billion
Comments
Notes
Losses retained by Chubb
All natural perils and terrorism
All natural perils and terrorism
All natural perils and terrorism
Losses retained by Chubb
All natural perils and terrorism
All natural perils and terrorism
(a)
(b)
(c)
(d)
(a)
(c)
(d)
(a)
(b)
(c)
(d)
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.
These coverages are partially placed with Reinsurers.
These coverages are both part of the same Second layer within the Global Property Catastrophe Reinsurance Program and are fully placed with Reinsurers.
These coverages are both part of the same Third layer within the Global Property Catastrophe Reinsurance Program and are fully placed with Reinsurers.
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 emerging markets. We participate in this market through our Bermuda based 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, 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, private equity firms 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, New York, Los Angeles and Washington, D.C.
Our political risk insurance products provide protection to commercial lenders against defaults on cross border loans, cover
investors against equity losses, and protect 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
75
scheduled payments against risks of non-payment or non-honoring of government guarantees. Private equity investors and
corporations cover their equity investments against financial losses, such as expropriatory events, inability to repatriate
dividends, and physical damage to their operations caused by covered political risk events. Our export contracts product
provides coverage for both exporters and their financing banks against the risk of contract frustration due to government actions,
including non-payment by governmental 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. CGM also has limited capacity for Specialist Credit insurance products which
provide coverage for project finance and working capital loans for large corporations and banks.
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 such as 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 mitigate losses and to agree on recovery strategies if a
claim does materialize. We have the option to pay claims over the original loan repayment 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 insurance contracts, not financial guarantees, and
claims are only paid after conditions and warranties are fulfilled. Political risk and credit insurance policies 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 quota share and excess of loss reinsurance protection as well as
quarterly modeling and stress-testing of the portfolio. We have a dedicated Country and Credit Risk management team that is
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. Given its concentration of risk exposed to temperature, moisture, drought, hail and the
more frequent and severe storms associated with climate change, crop insurance is a business with catastrophe-like features.
Our crop insurance business comprises two components - Multiple Peril Crop Insurance (MPCI) and crop-hail insurance.
The MPCI program, offered in conjunction with the U.S. Department of Agriculture’s Risk Management Agency (RMA), is a
federal subsidized insurance program that covers revenue shortfalls or production losses due to natural causes such as drought,
excessive moisture, hail, wind, freeze, insects, and disease. These revenue products are defined as providing both commodity
price and yield coverages. Policies are available for various crops in different areas of the U.S. and generally 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 participant in the MPCI program,
we report all details of policies 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 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 (i.e., the 2023 SRA covers the 2023 reinsurance
year from July 1, 2022 through June 30, 2023). There were no significant changes in the terms and conditions from the 2022
SRA and therefore, the new SRA does not impact Chubb's outlook on the crop program relative to 2023.
76
We recognize net premiums written as soon as estimable on our MPCI business, 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 (i.e.,
both impact the amount of premium we can charge to the policyholder). For example, in most states, the pricing for the MPCI
revenue product for corn (i.e., insurance coverage for lower than expected crop revenue in a given season) includes a factor
based on the average commodity price in February. If corn commodity prices are higher in February, compared to the February
price in the prior year, and all other factors are the same, the increase in price will increase the corn premium year-over-year.
Pricing is also impacted by volatility factors, which measure the likelihood commodity prices will fluctuate over the crop year.
For example, if volatility is set at a higher rate compared to the prior year, and all other factors are the same, the premium
charged to the policyholder will be higher year-over-year for the same level of coverage.
Losses incurred on the MPCI business are determined using both commodity price and crop yield. With respect to commodity
price, there are two important periods on a large portion of the business: The month of February when the initial premium base
is set, and the month of October when the final harvest price is set. If the price declines from February to October, with yield
remaining at normal levels, the policyholder may be eligible to recover on the policy. However, in most cases there are
deductibles on these policies, therefore, the impact of a decline in price would have to exceed the deductible before a
policyholder would be eligible to recover.
We evaluate our MPCI business at an aggregate level and the combination of all of our insured crops (both winter and summer)
go into our underwriting gain or loss estimate in any given year. Typically, we do not have enough information on the harvest
prices or crop yield outputs to quantify the preliminary estimated impact to our underwriting results until the fourth quarter.
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
and the recognition of earned premium is also more heavily concentrated during this timeframe. 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
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 and other
statutorily permissible payments. Historically, dividends and other statutorily permitted 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 or establishing additional facilities when needed.
77
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. At December 31, 2022, the
average duration of our fixed maturities (4.5 years) approximates the average expected duration of our insurance liabilities (4.0
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 2022, we were able
to meet all 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 $7.5 billion and $3.7 billion from its Bermuda subsidiaries in 2022 and 2021, respectively. Chubb Limited
received cash dividends of $32 million and $21 million and non-cash dividends of $348 million and $916 million from a Swiss
subsidiary in 2022 and 2021, respectively. Chubb Limited also received dividends of $134 million from its other international
subsidiary in 2022.
The U.S. insurance subsidiaries of Chubb INA Holdings Inc. (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 2022 and 2021. 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 $2.0 billion and $2.3 billion from its subsidiaries in 2022 and
2021, respectively. At December 31, 2022, the amount of dividends available to be paid to Chubb INA in 2023 from its
subsidiaries without prior approval of insurance regulatory authorities totals $3.1 billion.
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. For additional information regarding estimates of future claim payments over the next twelve months, refer to our
discussion of Cash Requirements within "Capital Resources". Sources of liquidity include cash from operations, routine sales of
investments, and financing arrangements. The following is a discussion of our cash flows for 2022, 2021, and 2020.
Operating cash flows reflect Net income for each period, adjusted for non-cash items and changes in working capital. Operating
cash flows were $11.2 billion in 2022, compared to $11.1 billion and $9.8 billion in 2021 and 2020, respectively.
Cash used for investing was $5.7 billion in 2022, compared to $6.7 billion and $7.5 billion in 2021 and 2020, respectively.
Cash used for investing in 2022 was primarily due to cash paid for the purchase of Cigna's business in Asia of $5.0 billion, net
78
of cash acquired. Excluding this, cash used for investing was lower by $6.0 billion compared to 2021, primarily from cash
received from net sales of equity securities and fixed maturities of $1.8 billion compared to net purchases of $3.9 billion,
primarily in fixed maturities. In addition, cash used for the acquisitions of Huatai Group ownership interest was lower by $1.0
billion, partially offset by higher private equity contributions, net of distributions received, of $582 million in 2022 compared to
2021.
Cash used for financing was $5.1 billion in 2022, compared to $4.4 billion and $2.1 billion in 2021 and 2020, respectively.
The increase of $718 million in 2022 compared to 2021 is principally from repayment of long-term debt of $1.0 billion in the
current year, compared to proceeds of $1.6 billion in the prior year, partially offset by lower common shares repurchased of
$2.0 billion in 2022. Refer to Note 11 to the Consolidated Financial Statements for additional information on 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.
We use repurchase agreements as a low-cost funding alternative. At December 31, 2022, there were $1.4 billion in repurchase
agreements outstanding with various maturities over the next two 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
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
2022
December 31
2021
$
475
$
999
14,402
308
50,540
15,169
308
59,714
$
65,725
$
76,190
22.6 %
23.1 %
21.2 %
21.6 %
The ratios of financial debt to total capitalization in the table above are higher at December 31, 2022 compared to December
31, 2021 from the decline in shareholders' equity, principally reflecting net unrealized depreciation on investments in the
current year compared to net unrealized appreciation in 2021.
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.
79
Chubb INA's $1.0 billion of 2.875 percent senior notes due November 2022 was paid upon maturity. Refer to Note 9 to the
Consolidated Financial Statements for details about the debt issued and debt redeemed.
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 Securities
and Exchange Commission (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. In October 2021, we filed a new shelf registration statement
which allows us to issue an unlimited amount of certain classes of debt and equity from time to time, replacing the shelf
registration statement that was filed in October 2018. This new shelf registration statement expires in October 2024.
Securities Repurchases
From time to time, we repurchase shares as part of our capital management program. On July 19, 2021, the Board authorized
a one-time incremental share repurchase program of up to $5.0 billion of Chubb Common Shares effective through June 30,
2022. In May 2022, the Board authorized the repurchase of up to $2.5 billion of Chubb Common Shares effective through
June 30, 2023, which is the only Board authorization currently in effect.
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 2022, 2021, and 2020 we repurchased $3.0 billion, $4.9 billion, and
$516 million, respectively, of Common Shares in a series of open market transactions under the Board share repurchase
authorizations at an average per share price of $201.96, $175.85, and $143.91, respectively. For the period January 1, 2023
through February 23, 2023, we repurchased 1,633,300 Common Shares for a total of $347 million in a series of open market
transactions under the share repurchase program authorization. At February 23, 2023, $1.3 billion in share repurchase
authorization remained through June 30, 2023.
Common Shares
Our Common Shares had a par value of CHF 24.15 each at December 31, 2022.
As of December 31, 2022, there were 31,781,758 Common Shares in treasury with a weighted-average cost of $160.88 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 2022 annual general meeting, our shareholders approved an annual dividend for the following year of up to $3.32
per share, expected to be paid in four quarterly installments of $0.83 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 2023 annual general meeting, and is authorized
to abstain from distributing a dividend at its discretion. The first three quarterly installments each of $0.83 per share, have been
distributed by the Board as expected.
At our May 2021 annual general meeting, our shareholders approved an annual dividend for the following year of up to $3.20
per share, which was paid in four quarterly installments of $0.80 per share at dates determined by the Board after the annual
general meeting by way of distribution from capital contribution reserves, transferred to free reserves for payment.
Dividend distributions on Common Shares amounted to CHF 3.11 ($3.29) per share for the year ended December 31, 2022.
Refer to Note 11 to the Consolidated Financial Statements for additional information on our dividends.
80
Cash Requirements
Our cash requirements within the next twelve months include claims payable to claimants and other routine obligations typical
to our business. We also have commitments related to our limited partnerships as well as for the incremental ownership
interests in Huatai Group. We expect the cash required to meet these obligations to be primarily generated through a
combination of cash on hand, cash from operations, routine sales of investments, and financing arrangements. We believe these
sources will be sufficient to meet our anticipated cash requirements for at least the next twelve months, while maintaining
sufficient liquidity for normal operating purposes. 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, if necessary. At
December 31, 2022, our long-term cash requirements under our various contractual obligations and commitments include:
• 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. Total cash requirements are not determinable
from underlying contracts and must be estimated. Gross loss payments under insurance and reinsurance contracts are
estimated at $76.4 billion with $21.7 billion estimated due over the next twelve months. These estimated gross 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 reserves and related estimates as to the timing of future loss payments, differences between actual and estimated loss
payments will not necessarily indicate a commensurate change in ultimate loss estimates. Refer to Note 7 to the
Consolidated Financial Statements for additional information.
•
•
•
•
Estimated payments for future policy benefits and GLB - Total estimated payments for future policy benefits and GLB are
estimated at $35.9 billion and $1.5 billion, respectively, with a total $2.5 billion estimated due over the next twelve
months. These estimated payments, which are not determinable from the contracts, are gross of fees or premiums from the
underlying contracts. These estimated payments are higher than the future policy benefits reserves and GLB liability
presented on our Consolidated balance sheets which are discounted and are reflected net of fees and premiums due from
the underlying contracts. The timing and amount of actual payments may vary from the estimates. Refer to Note 1 j) to the
Consolidated Financial Statements for additional information.
Short-term and Long-term debt, trust preferred securities, and related interest payments - Total obligations for short-term
and long-term debt and trust preferred securities maturities are $15.0 billion with $0.5 billion due in March 2023. Interest
payments related to these obligations total $6.6 billion with $0.5 billion due over the next twelve months. These estimates
are based on current exchange rates. Refer to Note 9 to the Consolidated Financial Statements for additional information.
Commitments on invested assets - Total obligations for commitments related to our invested assets are $8.2 billion with
$1.7 billion due over the next twelve months. Refer to Note 10 to the Consolidated Financial Statements for additional
information.
Pending acquisition - Cash requirements for pending incremental shares in Huatai Group are approximately $0.8 billion,
based on current exchange rates, expected to be paid over the next twelve months. The timing of completion is contingent
upon important conditions. Refer to Note 2 to the Consolidated Financial Statements for additional information.
• Deposit liabilities - Total obligations for deposit liabilities, including contract holder deposit funds, are $2.6 billion with
$102 million due over the next twelve months. Refer to Note 1 l) to the Consolidated Financial Statements for additional
information.
• Repurchase agreements - We use repurchase agreements as a low-cost funding alternative. At December 31, 2022, there
were $1.4 billion in repurchase agreements outstanding with various maturities over the next two months. Refer to Note 9
to the Consolidated Financial Statements for additional information.
• Operating leases - Total obligations for operating leases are $754 million with $160 million estimated due over the next
twelve months. Refer to Note 10 j) to the Consolidated Financial Statements for additional information. As of December 31,
2022, we entered into two separate leases for office space that are not yet recorded on our Consolidated balance sheets
and are not included in the total obligations referenced above. The leases are expected to commence in 2023 and 2025
with initial terms of approximately 21 years and 23 years, respectively. Total cash requirements are estimated at
approximately $1.2 billion over the terms of these two leases.
81
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 Financials/
Financial Strength Rating) 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.
82
Information provided in connection with outstanding debt of subsidiaries
Chubb INA Holdings Inc. (Subsidiary Issuer) is an indirect 100 percent-owned and consolidated subsidiary of Chubb Limited
(Parent Guarantor). The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer.
The following table presents the condensed balance sheets of Chubb Limited and Chubb INA Holdings Inc., after elimination of
investment in any non-guarantor subsidiary:
Chubb Limited
(Parent Guarantor)
December 31
Chubb INA Holdings Inc.
(Subsidiary Issuer)
December 31
(in millions of U.S. dollars)
2022
2021
2022
2021
Assets
Investments
Cash
Due from parent guarantor/subsidiary issuer
Due from subsidiaries that are not issuers or guarantors
Other assets
Total assets
Liabilities
Due to parent guarantor/subsidiary issuer
Due to subsidiaries that are not issuers or guarantors
$
$
Affiliated notional cash pooling programs
Short-term debt
Long-term debt
Trust preferred securities
Other liabilities
Total liabilities
Total shareholders’ equity
Total liabilities and shareholders’ equity
$
— $
— $
135 $
40
2
1,791
16
1
2
1,805
16
2
586
598
2,264
1,849 $
1,824 $
3,585 $
149
580
348
526
1,667
3,270
586 $
348 $
2 $
2
248
252
—
—
—
616
1,702
147
241
8
—
—
—
363
960
864
1,710
1,496
475
1,647
—
999
14,402
15,169
308
1,305
308
1,803
19,698
19,928
(16,113)
(16,658)
$
1,849 $
1,824 $
3,585 $
3,270
The following table presents the condensed statements of operations and comprehensive income of Chubb Limited and Chubb
INA Holdings Inc., excluding equity in earnings from non-guarantor subsidiaries:
Year Ended December 31, 2022
(in millions of U.S. dollars)
Net investment income (loss)
Net realized gains (loss)
Administrative expenses
Interest (income) expense
Other (income) expense
Cigna integration expenses
Income tax expense (benefit)
Net income (loss)
Comprehensive income (loss)
Chubb Limited
(Parent Guarantor)
Chubb INA
Holdings Inc.
(Subsidiary Issuer)
$
1 $
29
113
(53)
(48)
10
18
(10) $
(10) $
$
$
(12)
111
(86)
531
79
1
(701)
275
67
83
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.
Should the need arise, we generally have access to capital markets and to credit facilities. In October 2022, we consolidated
three syndicated facilities into a new group syndicated credit facility with increased capacity expiring in October 2027. Our letter
of credit capacity for the new and existing facilities is $4.0 billion, $3.0 billion of which can be used for revolving credit. At
December 31, 2022, our usage under these facilities was $1.4 billion in LOCs. Our access to credit under these facilities is
dependent on the ability of the banks that are a party to the facilities to meet their funding commitments. Should the existing
credit providers on these facilities 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 facilities or establishing additional facilities when needed.
In the event we are required to provide alternative security to clients, the security 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 facilities noted above require that we maintain certain financial covenants, all of which have been met at December 31,
2022. These covenants include:
(i) a minimum consolidated net worth of not less than $41.959 billion; and
(ii) a ratio of consolidated debt to total capitalization of not greater than 0.35 to 1.
At December 31, 2022, (a) the minimum consolidated net worth requirement under the covenant described in (i) above was
$41.959 billion and our actual consolidated net worth as calculated under that covenant was $60.7 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 0.22 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.
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 fixed maturities portfolio impacts Net
income (through Net realized gains (losses)) when securities are sold, when we write down an asset, or when we record a
change to the allowance for expected credit losses. 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, 2022 and 2021, our notional exposure to derivative instruments was $9.8 billion and $20.0 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, from
84
time to time we 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. From time-to-time, we use derivatives to
hedge planned cross border transactions and, beginning in September 2022, we designated certain derivatives to hedge foreign
currency risk on our euro denominated debt and exposure in the net investments of certain foreign subsidiaries.
The following is a discussion of our primary market risk exposures at December 31, 2022. Except hedging certain non-U.S. net
asset or liability positions discussed above, our policies to address these risks in 2022 were not materially different from 2021.
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, 2022 and 2021, 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
2022
2021
$
98.6
$ 106.9
$
4.4
$
4.4
4.5 %
4.1 %
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, 2022 and 2021, 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
Pre-tax impact of 100 bps decrease in interest rates:
Increase in dollars
As a percentage of total debt obligations at fair value
2022
2021
$ 14,770
$ 19,733
$ 1,085
$ 1,799
7.4 %
9.1 %
85
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.
The following table summarizes the unhedged portion of net assets (liabilities) in non-U.S. currencies at December 31, 2022
and 2021:
Value of
net assets
(liabilities)
2022
Exchange
rate
per USD
Value of
net assets
(liabilities)
2021
Exchange
rate
per USD
2022 vs. 2021
% change in
exchange rate
per USD
$
5,333
0.0793 $
805
(in millions of U.S. dollars, except for percentages)
Korean won (KRW) (x100)
Chinese yuan renminbi (CNY) (1)
Canadian dollar (CAD)
Australian dollar (AUD)
New Taiwan dollar (TWD)
Mexican peso (MXN)
Brazilian real (BRL)
Baht (THB)
British pound sterling (GBP)
Euro (EUR) (2)
Other foreign currencies
Value of unhedged portion of net assets
denominated in foreign currencies (3)
As a percentage of total net assets
0.0840
0.1573
0.7914
0.7263
0.0361
0.0487
0.1795
0.0301
1.3532
1.1370
various
(5.6) %
(7.9) %
(6.8) %
(6.2) %
(10.0) %
5.3 %
5.4 %
(4.0) %
(10.7) %
(5.8) %
NM
4,664
2,166
1,269
880
801
624
522
486
(2,006)
2,106
$ 16,845
33.3 %
0.1450
0.7378
0.6813
0.0325
0.0513
0.1892
0.0289
3,519
2,624
1,347
359
728
577
413
1.2083
2,333
1.0705
(3,013)
various
2,840
$ 12,532
21.0 %
$
1,139
Pre-tax decrease to Shareholders' equity of a
hypothetical 10 percent strengthening of the USD $
1,531
NM – not meaningful
(1) Includes deposits relating to purchases of incremental ownership interests in Huatai Group.
(2) Includes unhedged portion of euro denominated debt of $3.0 billion and net assets of $1.0 billion in 2022, and $4.9 billion and $1.9 billion, respectively, in 2021.
Excludes hedged euro denominated debt of $1.6 billion in 2022 and none in 2021.
(3) The unhedged net assets denominated in foreign currencies comprised goodwill and other intangible assets of approximately 37 percent and 45 percent at December 31,
2022 and 2021, respectively.
In September 2022, Chubb entered into certain cross-currency swaps designated as fair value hedges and net investment
hedges for foreign currency exposure associated with portions of our euro denominated debt and the net investment in certain
foreign subsidiaries, respectively. These cross-currency swaps are agreements under which two counterparties exchange
principal and interest payments in different currencies at a future date.
The objective of the fair value cross-currency swaps is to hedge euro 1.5 billion of the foreign currency risk on our euro
denominated debt by converting cash flows back into the U.S dollar. The objective of the net investment cross-currency swaps
is to hedge the foreign currency exposure in the net investments of certain foreign subsidiaries by converting cash flows from
U.S. dollar to the British pound sterling (GBP 957 million), Japanese yen (JPY 43 billion), and Swiss franc (CHF 96 million).
The hedged risk is designated as the foreign currency exposure arising between the functional currency of the foreign subsidiary
and the functional currency of its parent entity. For additional information refer to Note 10 to the Consolidated Financial
Statements.
Net asset exposure is higher in 2022 compared to 2021, reflecting the acquisition of Cigna's business in Asia, with net assets
principally denominated in KRW. This is partially offset by the strengthening of the U.S. dollar against most foreign currencies
during 2022.
Effective April 1, 2022, Turkey was designated as a highly inflationary economy and therefore we changed the functional
currency for our Turkish operations from Turkish lira to the U.S. dollar. Our net assets denominated in the Turkish lira
86
represented less than 0.1% of consolidated shareholders' equity. Therefore, this change in functional currency of our Turkish
operations did not have a material impact on our financial condition or results of operations.
Reinsurance of GMDB and GLB guarantees
Chubb views its variable annuity reinsurance business, including guaranteed living benefits (GLB) and guaranteed living death
benefits (GMDB), 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 realized gains (losses) 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.
Effective January 1, 2023, we adopted new U.S. GAAP accounting guidance for long-duration contracts that affects the
accounting for GMDB and GLB liabilities, collectively referred to as market risk benefits (MRB). Under the new accounting
guidance, MRB will be measured at fair value using a valuation model based on current exposures, market data, our experience,
and other factors. Upon adoption of this accounting guidance, changes in fair value will be recorded to Market risk benefits
gains (losses) in the Consolidated statements of operations, except for the change in fair value due to a change in the
instrument-specific credit risk which will be recognized in Other comprehensive income. Previously, only the GLB were
measured at fair value. The quantitative disclosures below reflect the market risk sensitivities under this new accounting
guidance effective for 2023 reporting periods.
The tables below are estimates of the sensitivities to instantaneous changes in economic inputs (e.g., equity shock, interest rate
shock, etc.) at December 31, 2022, of both the fair value of the MRB liability (FVL) and 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:
•
Equity shocks impact all global equity markets equally
• Our liabilities are sensitive to global equity markets in the following proportions: 80 percent—90 percent U.S. equity,
and 10 percent—20 percent international equity.
• Our current hedge portfolio is sensitive only to U.S. equity markets.
• We would suggest using the S&P 500 index as a proxy for U.S. equity, and the MSCI EAFE index as a proxy for
international 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: 5 percent—15 percent short-term rates (maturing in less than 5 years), 15 percent
—25 percent medium-term rates (maturing between 5 years and 10 years, inclusive), and 70 percent—80 percent
long-term rates (maturing beyond 10 years).
•
A change in AA-rated credit spreads impacts the rate used to discount cash flows in the fair value model. AA-rated
credit spreads are a proxy for both our own credit spreads and the credit spreads of the ceding insurers.
•
•
The hedge sensitivity is from December 31, 2022, market levels and only applicable to the equity and interest rate
sensitivities table below.
The sensitivities do not scale linearly and may be proportionally greater for larger movements in the market factors. Actual
sensitivity of our net income may differ from those disclosed in the tables below due to fluctuations in short-term market
movements.
87
Sensitivities to equity and interest rate movements
(in millions of U.S. dollars)
Interest Rate Shock
+100 bps
Worldwide Equity Shock
+10 %
Flat
-10 %
-20 %
-30 %
-40 %
(Increase)/decrease in FVL
$ 304
$
199 $
Increase/(decrease) in hedge value
(91)
—
72
91
$
(90)
$ (302)
$
(552)
181
272
362
Flat
Increase/(decrease) in net income
$ 213
(Increase)/decrease in FVL
$ 124
Increase/(decrease) in hedge value
Increase/(decrease) in net income
-100 bps
(Increase)/decrease in FVL
$
$
Increase/(decrease) in hedge value
(91)
33
(99)
(91)
$
$
$
$
199 $ 163
$
91
$
(30)
— $ (155)
$ (357)
$ (596)
$
$
(190)
(874)
—
91
181
272
362
— $
(64)
$ (176)
$ (324)
$
(512)
(249) $ (443)
$ (671)
$ (938)
$ (1,240)
—
91
181
272
362
Increase/(decrease) in net income
$
(190)
$
(249) $ (352)
$ (490)
$ (666)
$
(878)
Sensitivities to Other Economic Variables
(in millions of U.S. dollars)
(Increase)/decrease in FVL
Increase/(decrease) in net income
AA-rated Credit Spreads
Interest Rate Volatility
Equity Volatility
+100 bps
-100 bps
+2 %
-2 %
+2 %
$
$
56
56
$
$
(63) $
(63) $
(2)
(2)
$
$
2
2
$
$
(15)
(15)
$
$
-2 %
14
14
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, 2022, following
an immediate change in equity market levels, assuming all global equity markets are impacted equally.
a) Reinsurance covering the GMDB risk only
(in millions of U.S. dollars)
GMDB net amount at risk
+20 %
Flat
-20 %
-40 %
-60 %
-80 %
$ 275
$
468 $
731
$
817
$
746
$
620
Claims at 100% immediate mortality
158
163
156
145
131
118
Equity Shock
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
+20 %
Flat
-20 %
-40 %
-60 %
-80 %
$ 1,059
$ 1,442 $ 2,074
$ 2,504
$ 2,878
$ 3,085
Equity Shock
The treaty claim limits cause the net amount at risk to increase at a declining rate as equity markets fall.
88
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 %
$
51
$
61 $
72
$
82
$
90
$
96
433
32
537
32
660
32
783
32
901
32
909
32
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 increase 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, 2022. 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 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.
On July 1, 2022, we acquired the personal accident, supplemental health, and life insurance business of Cigna in several Asian
markets (Cigna Asia business). As of and for the year ended December 31, 2022, Cigna's Asia business represented
approximately 3 percent of consolidated revenues and 3 percent of total assets. We currently exclude, and are in the process of
working to incorporate, Cigna's Asia business in our evaluation of internal controls over financial reporting, and related disclosure
controls and procedures.
Other than working to incorporate Cigna's Asia business as noted above, there have been no changes in Chubb's internal
controls over financial reporting during the three months ended December 31, 2022, 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 pages F-4,
F-5, and F-6.
ITEM 9B. Other Information
On February 23, 2023, the Board of Directors (Board) amended the Organizational Regulations of Chubb Limited (Company).
The amendments clarify the Lead Director’s ability to convene Board meetings; set the agenda for executive sessions; propose
matters for Board consideration; provide input on Board design and organization; lead the Board’s review of the performance
evaluation and CEO compensation determination; and personally conduct individual director evaluations. The amendments also
incorporate certain updates to Swiss corporate law relating to Swiss-required Board duties and responsibilities, enable circular
resolutions to be passed by electronic signature, and make additional other editorial changes. A copy of the amended and
restated Organizational Regulations is attached hereto as Exhibit 3.2 and incorporated herein by reference.
Additionally, on February 22, 2023, Mary Cirillo and Luis Téllez, members of the Board of the Company, each informed the
Company of their respective decision to retire from the Board and not to stand for re-election at the Company’s 2023 Annual
89
General Meeting (Annual Meeting), which is scheduled to occur in May 2023. The decisions of Ms. Cirillo and Mr. Téllez were
in each case not the result of any disagreement with the Company.
Ms. Cirillo is currently the Chair of the Board’s Nominating & Governance Committee and a member of each of the
Compensation Committee and Executive Committee. Mr. Téllez is currently a member of the Audit Committee. Each will remain
on the Board and a member of their respective committees until the Annual Meeting.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item not applicable.
90
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”, and “Corporate Governance - The
Committees of the Board - Audit Committee” of the definitive proxy statement for the 2023 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 “Information about our Executive Officers” 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 (about.chubb.com/governance.html).
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 2023 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
The following table presents securities authorized for issuance under equity compensation plans at December 31, 2022:
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
10,410,278 $
146.81
16,039,112
22,982
(1) These totals include securities available for future issuance under the following plans:
(i) Chubb Limited 2016 Long-Term Incentive Plan, as amended and restated (Amended 2016 LTIP). A total of 32,900,000 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 Amended 2016 LTIP shall be equal to the sum of: (x) 32,900,000 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 Amended 2016 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, 2022, a total of 8,011,047 option awards and 798,660
restricted stock unit awards are outstanding, and 15,223,940 shares remain available for future issuance under this plan.
(ii) ACE Limited 2004 Long-Term Incentive Plan (ACE LTIP). As of December 31, 2022, a total of 2,365,986 option awards are
outstanding. No additional grants will be made pursuant to the ACE LTIP.
(iii) Chubb Corporation Long-Term Incentive Plan (2014) (Chubb Corp. LTIP). As of December 31, 2022, a total of 33,245
option awards and 25,862 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 are authorized for purchase at a discount. As of December 31, 2022, 815,172
shares remain available for future issuance under this plan.
91
(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.
Additional information is incorporated by reference to the section entitled "Information About Our Share Ownership" of the
definitive proxy statement for the 2023 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 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 2023 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 2023 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.
92
PART IV
ITEM 15. Exhibits, Financial Statement Schedules
(a)
Financial Statements, Schedules, and Exhibits
1. 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, 2022 and 2021
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2022, 2021,
and 2020
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2022, 2021, and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
–
–
–
–
Schedule I - Summary of Investments - Other Than Investments in Related Parties at December 31, 2022
Schedule II - Condensed Financial Information of Registrant (Parent Company Only) at December 31, 2022 and
2021, and for the years ended December 31, 2022, 2021, and 2020
Schedule IV - Supplemental Information Concerning Reinsurance for the years ended December 31, 2022, 2021,
and 2020
Schedule VI - Supplementary Information Concerning Property and Casualty Operations as of and for the years
ended December 31, 2022, 2021, and 2020
Page
F-3
F-4
F-7
F-8
F-9
F-10
F-11
F-98
F-99
F-101
F-102
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.
3. Exhibits
Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
Original
Number
Date Filed
Filed
Herewith
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
Articles of Association of the Company, as amended and restated
8-K
3.1
August 9, 2022
Organizational Regulations of the Company as amended
Articles of Association of the Company, as amended and restated
8-K
4.1
August 9, 2022
Organizational Regulations of the Company as amended
Specimen share certificate representing Common Shares
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
8-K
8-K
S-3
ASR
4.3
4.1
July 18, 2008
March 22, 2002
4.4
December 10, 2014
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
X
X
93
Exhibit
Number
4.7
4.8
4.9
Exhibit Description
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
Incorporated by Reference
Form
10-K
Original
Number
Date Filed
Filed
Herewith
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
4.10
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 2.875 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
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)
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)
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)
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
4.1
4.2
4.3
4.1
4.1
4.2
4.3
4.4
4.1
March 13, 2013
March 13, 2013
March 13, 2013
May 27, 2014
March 16, 2015
November 3, 2015
November 3, 2015
November 3, 2015
January 15, 2016
S-3
4(a)
October 27, 1989
8-K
4.1
March 30, 2007
S-3
4(a)
October 27, 1989
8-K
4.1
May 11, 2007
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
94
Exhibit Description
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)
Incorporated by Reference
Form
8-K
Original
Number
4.2
Filed
Herewith
Date Filed
May 6, 2008
Procedures regarding the registration of shareholders in the share
register of Chubb Limited
10-K
4.32
February 28, 2017
Exhibit
Number
4.24
4.25
4.26
Form of Officer's Certificate related to the 1.550% Senior Notes
due 2028 and 2.500% Senior Notes due 2038
4.27
Form of Global Note for the 1.550% Senior Notes due 2028
4.28
Form of Global Note for the 2.500% Senior Notes due 2038
4.29
Form of Officer's Certificate related to the 0.875% Senior Notes
due 2027 and 1.400% Senior Notes due 2031
4.30
Form of Global Note for the 0.875% Senior Notes due 2027
4.31
Form of Global Note for the 1.400% Senior Notes due 2031
4.32
Form of Officer’s Certificate related to the 0.300% Senior Notes
due 2024 and 0.875% Senior Notes due 2029
4.33
Form of Global Note for the 0.300% Senior Notes due 2024
4.34
Form of Global Note for the 0.875% Senior Notes due 2029
4.35
Form of Officer's Certificate related to the 1.375% Senior Notes
due 2030
4.36
Form of Global Note for the 1.375% Senior Notes due 2030
4.37
Form of Officer’s Certificate related to the 2.850% Senior Notes
due 2051 and the 3.050% Senior Notes due 2061
4.38
Form of Global Note for the 2.850% Senior Notes due 2051
4.39
Form of Global Note for the 3.050% Senior Notes due 2061
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
4.1
4.2
4.3
4.1
4.2
4.3
4.1
4.2
4.3
March 6, 2018
March 6, 2018
March 6, 2018
June 17, 2019
June 17, 2019
June 17, 2019
December 5, 2019
December 5, 2019
December 5, 2019
4.1
September 17, 2020
4.2
September 17, 2020
4.1
November 18, 2021
4.2
November 18, 2021
4.3
November 18, 2021
4.40
Description of the Registrant's Securities
X
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
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
10.3*
Employment Terms dated October 29, 2001, between ACE
Limited and Evan Greenberg
10-K
10.64
March 27, 2003
95
Exhibit
Number
10.4*
Exhibit Description
Employment Terms dated April 10, 2006, between ACE and
John Keogh
Incorporated by Reference
Form
10-K
Original
Number
Date Filed
Filed
Herewith
10.29
February 29, 2008
10.5*
Executive Severance Agreement between ACE and John Keogh
10-K
10.30
February 29, 2008
10.6*
10.7*
ACE Limited Executive Severance Plan as amended effective May
18, 2011
10-K
10.21
February 24, 2012
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
10.8*
Outside Directors Compensation Parameters
10-K
10.8
February 24, 2022
10.9*
ACE Limited Elective Deferred Compensation Plan (as amended
and restated effective January 1, 2005)
10-K
10.24
March 16, 2006
10.10*
Aircraft Time Sharing Agreement, dated as of September 19,
2022, between Chubb INA Holdings Inc. and Evan G. Greenberg
[certain information omitted]
10-Q
10.1
October 28, 2022
10.11*
ACE USA Officer Deferred Compensation Plan (as amended
through January 1, 2001)
10-K
10.25
March 16, 2006
10.12*
ACE USA Officer Deferred Compensation Plan (as amended and
restated effective January 1, 2011)
10-Q
10.7
October 30, 2013
10.13*
ACE USA Officer Deferred Compensation Plan (as amended and
restated effective January 1, 2009)
10-K
10.36
February 27, 2009
10.14*
First Amendment to the Amended and Restated ACE USA
Officers Deferred Compensation Plan
10-K
10.28
February 25, 2010
10.15*
Form of Swiss Mandatory Retirement Benefit Agreement (for
Swiss-employed named executive officers)
10-Q
10.2
May 7, 2010
10.16*
ACE Limited Elective Deferred Compensation Plan (as amended
and restated effective January 1, 2009)
10-K
10.39
February 27, 2009
10.17*
ACE Limited Elective Deferred Compensation Plan (as amended
and restated effective January 1, 2011)
10-Q
10.5
October 30, 2013
10.18*
Deferred Compensation Plan amendments, effective January 1,
2009
10-K
10.40
February 27, 2009
10.19*
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
10.20*
ACE USA Supplemental Employee Retirement Savings Plan (as
amended through the Second Amendment)
10-K
10.30
March 1, 2007
10.21*
ACE USA Supplemental Employee Retirement Savings Plan (as
amended through the Third Amendment)
10-K
10.31
March 1, 2007
10.22*
ACE USA Supplemental Employee Retirement Savings Plan (as
amended and restated)
10-K
10.46
February 27, 2009
10.23*
First Amendment to the Amended and Restated ACE USA
Supplemental Employee Retirement Savings Plan
10-K
10.39
February 25, 2010
96
Exhibit
Number
10.24*
Exhibit Description
The ACE Limited 1995 Outside Directors Plan (as amended
through the Seventh Amendment)
10.25*
ACE Limited 2004 Long-Term Incentive Plan (as amended
through the Fifth Amendment)
10.26*
ACE Limited 2004 Long-Term Incentive Plan (as amended
through the Sixth Amendment)
Form
10-Q
8-K
8-K
Incorporated by Reference
Original
Number
Date Filed
Filed
Herewith
10.1
August 14, 2003
10
May 21, 2010
10.1
May 20, 2013
10.27*
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
10.28*
Director Restricted Stock Award Terms under the ACE Limited
2004 Long-Term Incentive Plan
10-Q
10.1
November 9, 2009
10.29*
Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan
8-K
10.4
September 13, 2004
10.30*
Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan
10-Q
10.4
May 8, 2008
10.31*
Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan
10-K
10.63
February 27, 2009
10.32*
Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan
10-Q
10.3
October 30, 2013
10.33*
Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan
8-K
10.5
September 13, 2004
10.34*
Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan
10-Q
10.3
May 8, 2008
10.35*
Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan
10-Q
10.4
October 30, 2013
10.36*
Form of Restricted Stock Unit Award Terms (for outside directors)
under the ACE Limited 2004 Long-Term Incentive Plan
10-Q
10.2
November 7, 2007
10.37*
Form of Restricted Stock Unit Award Terms (for outside directors)
under the ACE Limited 2004 Long-Term Incentive Plan
10-Q
10.2
August 7, 2009
10.38*
10.39*
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
10-Q
10.1
August 4, 2011
10-Q
10.2
August 4, 2011
10.40*
Form of Incentive Stock Option Terms under the ACE Limited
2004 Long-Term Incentive Plan for Swiss Executive Management
10-K
10.71
February 27, 2015
10.41*
Form of Non-Qualified Stock Option Terms under the ACE
Limited 2004 Long-Term Incentive Plan for Swiss Executive
Management
10-K
10.72
February 27, 2015
10.42*
Form of Executive Management Non-Competition Agreement
8-K
10.1
May 22, 2015
97
Exhibit
Number
10.43
Exhibit Description
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
Incorporated by Reference
Form
10-K
Original
Number
Date Filed
Filed
Herewith
10.72
February 26, 2016
10.44
Chubb Limited 2016 Long-Term Incentive Plan
S-8
4.4
May 26, 2016
10.45*
Form of Incentive Stock Option Terms under the Chubb Limited
2016 Long-Term Incentive Plan
10-Q
10.2
August 5, 2016
10.46*
Form of Restricted Stock Award Terms under the Chubb Limited
2016 Long-Term Incentive Plan
10-Q
10.3
August 5, 2016
10.47*
Form of Restricted Stock Unit Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan
10-Q
10.4
August 5, 2016
10.48*
Form of Non-Qualified Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan
10-Q
10.5
August 5, 2016
10.49*
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
10.50*
Form of Restricted Stock Award Terms under the Chubb Limited
2016 Long-Term Incentive Plan for Swiss Executive Management
10-Q
10.7
August 5, 2016
Form of Restricted Stock Unit Award 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
10-Q
10.8
August 5, 2016
10-Q
10.9
August 5, 2016
Chubb Limited Employee Stock Purchase Plan, as amended and
restated
S-8
4.4
May 25, 2017
Director Restricted Stock Award Terms under the Chubb Limited
2016 Long-Term Incentive Plan
10-Q
10.1
August 3, 2017
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
Second Amended and Restated Credit Agreement for
$3,000,000 Senior Unsecured Letter of Credit Facility, dated as
of October 6, 2022, among Chubb Limited, and certain
subsidiaries and Wells Fargo Bank, National Association as
Administrative Agent, the Swingline Bank and an Issuing Bank
10-K
10.88
February 23, 2018
X
Form of Incentive Stock Option Terms under the Chubb Limited
2016 Long-Term Incentive Plan for Executive Officers
10-K
10.89
February 23, 2018
Form of Restricted Stock Award Terms under the Chubb Limited
2016 Long-Term Incentive Plan for Executive Officers
10-K
10.90
February 23, 2018
Form of Non-Qualified Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Executive Officers
10-K
10.92
February 23, 2018
10.51*
10.52*
10.53*
10.54*
10.55
10.56
10.57*
10.58*
10.59*
98
Exhibit
Number
10.60*
10.61*
10.62*
Exhibit Description
Form of Restricted Stock Unit Award Terms under the Chubb
Limited 2016 Long-Term Plan for Executive Officers
Incorporated by Reference
Form
10-K
Original
Number
Date Filed
Filed
Herewith
10.93
February 23, 2018
Form of Incentive Stock Option Terms under the Chubb Limited
2016 Long-Term Incentive Plan for Swiss Executive Management
10-K
10.94
February 23, 2018
Form of Non-Qualified Stock Option Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management
10-K
10.95
February 23, 2018
10.63*
Form of Restricted Stock Award Terms under the Chubb Limited
2016 Long-Term Incentive Plan for Swiss Executive Management
10-K
10.96
February 23, 2018
10.64*
Form of Restricted Stock Unit Award Terms under the Chubb
Limited 2016 Long-Term Incentive Plan for Swiss Executive
Management
10-K
10.97
February 23, 2018
10.65*
Chubb Limited Clawback Policy
10-K
10.99
February 23, 2018
10.66*
10.67*
10.68*
10.69*
The Chubb Corporation Key Employee Deferred Compensation
Plan (2005)
Amendment One to The Chubb Corporation Key Employee
Deferred Compensation Plan (2005)
Amendment No. 2 to The Chubb Corporation Key Employee
Deferred Compensation Plan (2005)
Amendment No. 3 to The Chubb Corporation Key Employee
Deferred Compensation Plan (2005)
8-K
8-K
10.9
March 9, 2005
10.1
September 12, 2005
10-K
10.20
March 2, 2009
10-K
10.32
February 28, 2013
10.70*
Pension Excess Benefit Plan of The Chubb Corporation
10-K
10.77
February 25, 2021
10.71*
10.72*
10.73*
10.74*
10.75*
10.76*
10.77*
10.78*
10.79*
Amendment No. 2 to the Pension Excess Benefit Plan of The
Chubb Corporation
10-K
10.78
February 25, 2021
Amendment No. 3 to the Pension Excess Benefit Plan of The
Chubb Corporation
10-K
10.79
February 25, 2021
Amendment No. 4 to the Pension Excess Benefit Plan of The
Chubb Corporation
10-K
10.8
February 25, 2021
Amendments to the Chubb U.S. Supplemental Employee
Retirement Plan, the Chubb U.S. Deferred Compensation Plan,
and Pension Excess Benefit Plan of The Chubb Corporation
Form of Performance Based Restricted Stock Award 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 Executive
Officers
10-K
10.81
February 25, 2021
10-K
10.82
February 25, 2021
10-K
10.83
February 25, 2021
Chubb Limited 2016 Long-Term Incentive Plan, as amended and
restated
8-K
10.1
May 24, 2021
Employment Terms dated December 8, 2020, between Chubb
Limited and Peter Enns [personal email removed]
10-K
10.76
February 24, 2022
Chubb US Deferred Compensation Plan (as amended and
restated effective January 1, 2023)
21.1
Subsidiaries of the Company
X
X
99
Incorporated by Reference
Form
Original
Number
Date Filed
Filed
Herewith
X
X
X
X
X
X
X
X
Exhibit
Number
22.1
23.1
31.1
31.2
32.1
32.2
99.1
101
Exhibit Description
Guaranteed Securities
Consent of Independent Registered Public Accounting Firm
Certification Pursuant to Section 302 of The Sarbanes-Oxley Act
of 2002
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
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
List of Securities Registered Pursuant to Section 12(b) of the
Securities Exchange Act of 1934, formatted in inline XBRL.
The following financial information from Chubb Limited's Annual
Report on Form 10-K for the year ended December 31, 2022,
formatted in Inline XBRL: (i) Consolidated Balance Sheets at
December 31, 2022 and 2021; (ii) Consolidated Statements of
Operations and Comprehensive Income for the years ended
December 31, 2022, 2021, and 2020; (iii) Consolidated
Statements of Shareholders' Equity for the years ended December
31, 2022, 2021, and 2020; (iv) Consolidated Statements of
Cash Flows for the years ended December 31, 2022, 2021, and
2020; and (v) Notes to the Consolidated Financial Statements
104
The Cover Page Interactive Data File formatted in Inline XBRL
(The cover page XBRL tags are embedded in the Inline XBRL
document and included in Exhibit 101)
* Management contract, compensatory plan or arrangement
ITEM 16. Form 10-K Summary
None.
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/ Peter C. Enns
Peter C. Enns
Executive Vice President and Chief Financial Officer
February 24, 2023
100
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, Chief Executive Officer, and Director
February 24, 2023
Evan G. Greenberg
/s/ Peter C. Enns
Executive Vice President and Chief Financial Officer
February 24, 2023
Peter C. Enns
(Principal Financial Officer)
/s/ Annmarie T. Hagan
Chief Accounting Officer
Annmarie T. Hagan
(Principal Accounting Officer)
/s/ Michael G. Atieh
Director
Michael G. Atieh
/s/ Kathy Bonanno
Director
Kathy Bonanno
February 24, 2023
February 24, 2023
February 24, 2023
/s/ Sheila P. Burke
Director
February 24, 2023
Sheila P. Burke
/s/ Mary A. Cirillo
Director
Mary A. Cirillo
/s/ Michael P. Connors
Director
Michael P. Connors
/s/ Robert J. Hugin
Director
Robert J. Hugin
/s/ Robert W. Scully
Director
Robert W. Scully
/s/ Theodore E. Shasta
Director
Theodore E. Shasta
/s/ David H. Sidwell
Director
David H. Sidwell
/s/ Olivier Steimer
Director
Olivier Steimer
/s/ Luis Téllez
Director
Luis Téllez
/s/ Frances F. Townsend
Director
Frances F. Townsend
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
101
CHUBB LIMITED AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022
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 (PCAOB ID 238)
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.
Note 10.
Note 11.
Note 12.
Note 13.
Note 14.
Note 15.
Summary of significant accounting policies
Acquisitions
Investments
Fair value measurements
Reinsurance
Goodwill, Other intangible assets, and Value of business acquired
Unpaid losses and loss expenses
Taxation
Debt
Commitments, contingencies, and guarantees
Shareholders' equity
Share-based compensation
Postretirement benefits
Other income and expense
Segment information
Note 16.
Earnings per share
Note 17.
Related party transactions
Note 18.
Statutory financial information
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-7
F-8
F-9
F-10
F-11
F-21
F-24
F-31
F-38
F-40
F-42
F-65
F-69
F-70
F-77
F-80
F-84
F-90
F-90
F-95
F-95
F-97
F-98
F-99
F-101
F-102
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 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.
Management's Report on 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, 2022, 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, management has concluded that Chubb's internal control over financial reporting was effective as of December 31,
2022.
In conducting our evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022, we
have excluded the acquisition of the life and non-life insurance companies that house the personal accident, supplemental
health, and life insurance business of Cigna in several Asian markets (Cigna) as permitted by the guidance issued by the Office
of the Chief Accountant of the Securities and Exchange Commission (not to extend one year beyond the date of acquisition or
one annual reporting period). The acquisition was completed on July 1, 2022. As of and for the year ended December 31,
2022, Cigna's assets represented 3 percent of consolidated assets and revenues represented 3 percent of consolidated
revenues. See Note 2 for further discussion of this acquisition and its impact on Chubb's Consolidated financial statements.
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, 2022. The report, which expresses an unqualified opinion on the effectiveness of
Chubb's internal control over financial reporting as of December 31, 2022, 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/ Peter C. Enns
Peter C. Enns
Chairman 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 (the "Company") as of
December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive income, of
shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2022, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2022 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, 2022, 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 Report on 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.
As described in Management's Report on Internal Control over Financial Reporting, management has excluded Cigna from its
assessment of internal control over financial reporting as of December 31, 2022, because it was acquired by the Company in a
purchase business combination during 2022. We have also excluded Cigna from our audit of internal control over financial
reporting. Cigna is comprised of wholly-owned subsidiaries whose total assets and total revenues excluded from management's
assessment and our audit of internal control over financial reporting represent 3 percent and 3 percent, respectively, of the
related consolidated financial statement amounts as of and for the year ended December 31, 2022.
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
F-4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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.
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.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Unpaid Losses and Loss Expenses, Net of Reinsurance
As described in Note 7 to the consolidated financial statements, as of December 31, 2022, the Company’s liability for unpaid
losses and loss expenses, net of reinsurance, was $59.2 billion. The majority of the Company’s net unpaid losses and loss
expenses arise from the Company’s long-tail casualty business (such as general liability and professional liability), U.S. sourced
workers’ compensation, asbestos-related, environmental pollution and other exposures with high estimation uncertainty. The
process of establishing loss and loss expense reserves requires the use of estimates and judgments based on circumstances
underlying the insured loss at the date of accrual. The judgments involved in projecting the ultimate losses include 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 reserves for the various product lines each
require different qualitative and quantitative assumptions and judgments, including 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 the Company’s insured parties.
The principal considerations for our determination that performing procedures relating to the valuation of unpaid losses and loss
expenses, net of reinsurance, from the long-tail and other exposures as described above, is a critical audit matter are (i) the
significant judgment by management in determining the reserve liability, which in turn led to a high degree of auditor
subjectivity and judgment in performing procedures relating to the valuation; (ii) the significant audit effort and judgment in
evaluating the audit evidence relating to the actuarial reserving methods and assumptions related to extrapolation of actual
historical data, loss development patterns, industry data, other benchmarks, and the impact of qualitative and quantitative
subjective assumptions and judgments; and (iii) the audit effort involved the use of professionals with specialized skill and
knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
Company’s valuation of unpaid losses and loss expenses, net of reinsurance, including controls over the selection of actuarial
reserving methods and development of significant assumptions. These procedures also included, among others, the involvement
of professionals with specialized skill and knowledge to assist in performing one or a combination of procedures, including (i)
independently estimating reserves on a sample basis using actual historical data and loss development patterns, as well as
industry data and other benchmarks, to develop an independent estimate and comparing the independent estimate to
management’s actuarially determined reserves and (ii) evaluating the appropriateness of management’s actuarial reserving
methods and the reasonableness of the aforementioned assumptions, as well as assessing qualitative adjustments to carried
reserves and the consistency of management’s approach period-over-period. Performing these procedures involved testing the
completeness and accuracy of data provided by management.
F-5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Acquisition of Cigna's Life and Accident and Health Insurance Business in Asian Markets - Valuation of Business Acquired
Intangible Asset
As described in Notes 1 and 2 to the consolidated financial statements, the Company completed the acquisition of Cigna’s
personal accident, supplemental health, and life insurance business in several Asian markets on July 1, 2022 for a total
purchase price of $5.4 billion, which generated $3.5 billion of value of business acquired (VOBA). VOBA represents the fair
value of the future profits of in-force long duration contracts. Management determined the fair value of VOBA by calculating the
present value of estimated net cash flows for the contracts in force at the acquisition date. As described in Note 6, management
judgment was applied in estimating VOBA, which was based on many factors including mortality, morbidity, persistency,
investment yields, expenses and the discount rate, with the discount rate being the most significant factor.
The principal considerations for our determination that performing procedures relating to the valuation of VOBA is a critical audit
matter are (i) the significant judgment by management when determining the fair value; (ii) a high degree of auditor judgment,
subjectivity and effort in performing procedures and evaluating the significant assumption related to the discount rate; and (iii)
the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
valuation of VOBA and controls over the development of the discount rate significant assumption. These procedures also
included, among others, (i) testing management’s process for developing the fair value estimate of VOBA, (ii) evaluating the
appropriateness of the present value of estimated net cash flows method, (iii) testing the completeness and accuracy of the data
used in the method, and (iv) evaluating the reasonableness of the discount rate significant assumption. Professionals with
specialized skill and knowledge were used to assist in evaluating the appropriateness of the method used by management and
evaluating the reasonableness of the discount rate significant assumption.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Philadelphia, PA
February 24, 2023
We have served as the Company’s auditor since 1985, which includes periods before the Company became subject to SEC
reporting requirements.
F-6
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, net of valuation allowance - $169 and $14
(amortized cost – $93,355 and $90,493)
Fixed maturities held to maturity, at amortized cost, net of valuation allowance - $34 and $35
(fair value – $8,439 and $10,647)
Equity securities, at fair value
Short-term investments, at fair value (amortized cost – $4,962 and $3,147)
Other investments, at fair value
Total investments
Cash
Restricted cash
Securities lending collateral
Accrued investment income
Insurance and reinsurance balances receivable, net of valuation allowance - $52 and $46
Reinsurance recoverable on losses and loss expenses, net of valuation allowance - $351 and $329
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 (refer to Note 10)
Shareholders’ equity
Common Shares (CHF 24.15 par value; 446,376,614 and 474,021,114 shares issued;
$
December 31 December 31
2021
2022
$
85,220 $
93,108
8,848
827
4,960
13,696
113,551
2,012
115
1,523
941
11,933
18,901
303
5,788
3,596
10,118
4,782
3,146
11,169
122,323
1,659
152
1,831
821
11,322
17,366
213
5,513
236
16,287
15,213
5,441
3,140
2,877
5,455
3,028
3,130
12,736
11,792
76,323 $
72,943
20,360
10,120
7,795
1,523
15,587
292
1,419
475
14,402
308
19,101
5,947
7,243
1,831
15,004
389
1,406
999
15,169
308
148,604
140,340
$ 199,144 $ 200,054
414,594,856 and 426,572,612 shares outstanding)
Common Shares in treasury (31,781,758 and 47,448,502 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
F-7
10,346
10,985
(5,113)
(7,464)
7,166
48,334
(10,193)
50,540
8,478
47,365
350
59,714
$ 199,144 $ 200,054
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Chubb Limited and Subsidiaries
For the years ended December 31, 2022, 2021, and 2020
(in millions of U.S. dollars, except per share data)
Revenues
Net premiums written
Increase in unearned premiums
Net premiums earned
Net investment income
Net realized gains (losses)
Total revenues
Expenses
Losses and loss expenses
Policy benefits
Policy acquisition costs
Administrative expenses
Interest expense
Other (income) expense
Amortization of purchased intangibles
Cigna integration expenses
Total expenses
Income before income tax
Income tax expense
Net income
Other comprehensive income (loss)
Change in:
Unrealized appreciation (depreciation)
Cumulative foreign currency translation adjustment
Other, including 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 (loss)
Earnings per share
Basic earnings per share
Diluted earnings per share
See accompanying notes to the Consolidated Financial Statements
2022
2021
2020
$
41,755 $
37,868 $
33,820
(1,366)
(1,513)
(703)
40,389
3,742
36,355
3,456
33,117
3,375
(965)
1,152
(498)
43,166
40,963
35,994
23,342
21,980
21,710
1,492
7,392
3,395
570
74
285
48
699
6,918
3,136
492
(2,365)
287
—
784
6,547
2,979
516
(994)
290
—
36,598
31,147
31,832
6,568
1,255
9,816
1,277
4,162
629
$
5,313 $
8,539 $
3,533
$
(10,578) $
(2,938) $
2,592
(986)
(100)
(530)
522
306
(232)
(11,664)
(2,946)
2,666
1,121
427
(416)
(10,543)
(2,519)
2,250
$
(5,230) $
6,020 $
5,783
$
$
12.66 $
19.41 $
12.55 $
19.27 $
7.82
7.79
F-8
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Chubb Limited and Subsidiaries
For the years ended December 31, 2022, 2021, and 2020
(in millions of U.S. dollars)
Common Shares
Balance – beginning of year
Cancellation of treasury shares
Balance – end of year
Common Shares in treasury
Balance – beginning of year
Common Shares repurchased
Cancellation of treasury shares
Net shares issued under employee share-based compensation plans
Balance – end of year
Additional paid-in capital
Balance – beginning of year
Net shares issued under employee share-based compensation plans
Exercise of stock options
Share-based compensation expense
Funding of dividends declared to Retained earnings
Balance – end of year
Retained earnings
Balance – beginning of year
Cumulative effect of adoption of accounting standards
Balance – beginning of year, as adjusted
Net income
Cancellation of treasury shares
Funding of dividends declared from Additional paid-in capital
Dividends declared on Common Shares
Balance – end of year
Accumulated other comprehensive income (loss) (AOCI)
Balance – beginning of year
Total other comprehensive income (loss)
Balance – end of year
Total shareholders’ equity
See accompanying notes to the Consolidated Financial Statements
2022
2021
2020
$
10,985 $
11,064 $
11,121
(639)
(79)
(57)
10,346
10,985
11,064
(7,464)
(3,644)
(3,754)
(3,014)
(4,861)
(516)
4,983
382
590
451
323
303
(5,113)
(7,464)
(3,644)
8,478
9,815
11,203
(173)
(43)
283
(179)
(52)
286
(195)
(50)
255
(1,379)
(1,392)
(1,398)
7,166
8,478
9,815
47,365
39,337
36,142
—
47,365
5,313
—
39,337
8,539
(4,344)
(511)
1,379
1,392
(72)
36,070
3,533
(266)
1,398
(1,379)
(1,392)
(1,398)
48,334
47,365
39,337
350
2,869
(10,543)
(2,519)
(10,193)
350
619
2,250
2,869
$
50,540 $
59,714 $
59,441
F-9
CONSOLIDATED STATEMENTS OF CASH FLOWS
Chubb Limited and Subsidiaries
For the years ended December 31, 2022, 2021, and 2020
(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 purchased intangibles
Equity in net income of partially-owned entities
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
Deferred policy acquisition costs
Other
Net cash flows from operating activities
Cash flows from investing activities
Purchases of fixed maturities available for sale
Purchases of fixed maturities held to maturity
Purchases of equity securities
Sales of fixed maturities available for sale
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
Private equity contributions
Private equity distributions
Acquisition of subsidiaries (net of cash acquired of $366, nil, and nil)
Payment, including deposit, for Huatai Group interest
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 and other
Policyholder contract withdrawals and other
Tax withholding payments for share-based compensation plans
Net cash flows used for financing activities
Effect of foreign currency rate changes on cash and restricted cash
Net increase (decrease) in cash and restricted cash
Cash and restricted cash – beginning of year
Cash and restricted cash – end of year
Supplemental cash flow information
Taxes paid
Interest paid
See accompanying notes to the Consolidated Financial Statements
2022
2021
2020
$
5,313 $
8,539 $
3,533
965
189
285
(16)
132
4,222
1,477
464
461
223
(149)
(696)
(1,776)
(328)
477
11,243
(27,844)
(618)
(895)
16,855
4,615
9,415
1,712
(1,452)
(84)
(2,649)
1,017
(4,982)
(184)
(560)
(5,654)
(1,152)
332
287
(2,433)
(74)
5,791
1,857
239
582
536
48
(984)
(1,953)
(247)
(219)
11,149
(30,222)
(594)
(1,167)
6,596
1,018
17,361
1,964
1,175
(219)
(2,471)
1,421
—
(1,184)
(337)
(6,659)
(1,375)
(2,894)
—
4,510
(1,000)
(4,508)
264
496
(519)
(101)
(5,127)
(146)
316
1,811
2,127 $
(1,401)
(4,861)
1,576
1,858
—
(1,858)
300
512
(454)
(81)
(4,409)
(106)
(25)
1,836
1,811 $
498
367
290
(1,019)
(333)
4,664
846
236
535
(98)
46
(114)
(336)
(89)
759
9,785
(26,298)
(202)
(6,419)
11,377
3,880
12,450
995
(81)
(113)
(1,924)
907
—
(1,623)
(470)
(7,521)
(1,388)
(523)
988
2,354
(1,301)
(2,354)
145
470
(386)
(87)
(2,082)
8
190
1,646
1,836
1,242 $
552 $
1,298 $
492 $
902
524
F-10
$
$
$
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 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 and non-A&E casualty
exposures;
future policy benefits reserves;
amortization of deferred policy acquisition costs and value of business acquired (VOBA);
reinsurance recoverable, including a valuation allowance for uncollectible reinsurance;
the assessment of risk transfer for certain structured insurance and reinsurance contracts;
the valuation of the investment portfolio and assessment of valuation allowance for expected credit losses;
the valuation of deferred income taxes;
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 property and casualty (P&C) insurance and reinsurance products, premiums written are primarily earned on a pro-rata basis
over the policy terms to which they relate. Unearned premiums represent the portion of premiums written applicable to the
unexpired portion of the policies in force. For retrospectively-rated policies, written premiums are adjusted to reflect expected
ultimate premiums consistent with changes to incurred losses, or other measures of exposure as stated in the policy, and earned
over the policy coverage period.
Mandatory reinstatement premiums assessed on reinsurance policies are earned in the period of the loss event that gave rise to
the reinstatement premiums. All remaining unearned premiums are recognized over the remaining coverage period.
Premiums from long-duration contracts such as certain traditional term life, whole life, endowment, and long-duration personal
accident and health (A&H) policies are generally recognized as revenue when due from policyholders. Traditional life policies
include those contracts with fixed and guaranteed premiums and benefits. Benefits and expenses are matched with income to
result in the recognition of profit over the life of the contracts.
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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 the criteria for reinsurance accounting are recorded
using the deposit method as described below in Note 1 l).
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 is 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 $243 million and
$189 million at December 31, 2022 and 2021, respectively. Amortization expense for deferred marketing costs was $121
million, $85 million, and $99 million for the years ended December 31, 2022, 2021, and 2020, respectively.
Effective on January 1, 2023, we adopted new U.S. GAAP accounting guidance for long-duration contracts that affects the
accounting for deferred policy acquisition costs and VOBA. Refer to the Note 1 t) for additional information.
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 l).
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 valuation allowance for uncollectible reinsurance determined based upon a review
of the financial condition of reinsurers and other factors. The valuation allowance 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 allowance 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. Changes in the valuation allowance for uncollectible reinsurance recoverables are recorded in Losses and loss
expenses in the Consolidated statements of operations. The more significant considerations to calculate the valuation allowance
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 valuation allowance 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 valuation
allowance 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 valuation allowance for uncollectible reinsurance by establishing a default factor pursuant
to information received; and
•
For other recoverables, management determines the valuation allowance for uncollectible reinsurance based on the specific
facts and circumstances.
The methods used to determine the reinsurance recoverable balance and related valuation allowance for uncollectible
reinsurance are regularly reviewed and updated, and any resulting adjustments are reflected in earnings in the period identified.
The methods used to determine the valuation allowance for uncollectible high deductible recoverable amounts and valuation
allowance for insurance and reinsurance balances receivable are similar to the processes used to determine the valuation
allowance for uncollectible reinsurance recoverable. For information on high deductible policies, refer to section i) Unpaid losses
and loss expenses, below.
Prepaid reinsurance premiums represent the portion of premiums ceded to reinsurers applicable to the unexpired coverage terms
of the reinsurance contracts in-force.
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
e) Investments
Fixed maturities, equity securities, and short-term investments
Fixed maturities are classified as either available for sale or held to maturity.
•
Available for sale (AFS) portfolio is reported at fair value, net of a valuation allowance for credit losses, with changes in fair
value recorded as a separate component of AOCI in Shareholders' equity.
• Held to maturity (HTM) portfolio includes securities for which we have the ability and intent to hold to maturity or
redemption and is reported at amortized cost, net of a valuation allowance for credit losses.
Equity securities are reported at fair value with changes in fair value recorded in Net realized gains (losses) on the Consolidated
statements of operations.
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.
Interest, dividend income, and amortization of fixed maturity market premiums and discounts, related to these securities are
recorded in Net investment income, net of investment management and custody fees, in the Consolidated statements of
operations. Realized gains or losses on sales of investments are determined on a first-in, first-out basis.
In addition, net investment income includes the amortization of the fair value adjustment related to the acquired invested assets
of Cigna's business in Asia and the Chubb Corp. At December 31, 2022, the remaining balance of this fair value adjustment
was $211 million which is expected to accrete as a net benefit over the next eleven years; however, the estimate could vary
based on current market conditions, bond calls, and the 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.
Valuation allowance for fixed income securities
Management evaluates current expected credit losses (CECL) for all HTM securities each quarter. U.S. treasury and agency
securities and U.S. government agency mortgage-backed securities are assumed to have no risk of non-payment and therefore
are excluded from the CECL evaluation. The remaining HTM securities are evaluated for potential credit loss on a collective pool
basis. We elected to pool HTM securities by 1) external credit rating and 2) time to maturity (duration). These characteristics
are the most representative of similar risk characteristics within our portfolio. Chubb pools HTM securities and calculates an
expected credit loss for each pool using Moody’s corporate bond default average, corporate bond recovery rate, and an economic
cycle multiplier. The multiplier is based on the leading economic index and will adjust the average default frequency for a
forward-looking economic outlook. Management monitors the credit quality of HTM securities through the review of external
credit ratings on a quarterly basis.
Management evaluates expected credit losses (ECL) for AFS securities when fair value is below amortized cost. AFS securities
are evaluated for potential credit loss on an individual security level but the evaluation may use assumptions consistent with
expectations of credit losses for a group of similar securities. If management has the intent to sell or will be required to sell the
security before recovery, the entire impairment loss will be recorded through income to Net realized gains and losses. If
management does not have the intent to sell or will not be required to sell the security before recovery, an allowance for credit
losses is established and is recorded through income to Net realized gains and losses, and the non-credit loss portion is
recorded through other comprehensive income.
Examples of criteria that are collectively evaluated to determine if a credit loss has occurred include the following:
•
•
The extent to which the fair value is less than amortized cost;
Adverse conditions related to the security, industry, or geographic area;
• Downgrades in the security's credit rating by a rating agency; and
•
Failure of the issuer to make scheduled principal or interest payments.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
AFS securities that meet any one of the criteria included above will be subject to a discounted cash flow analysis by comparing
the present value of expected future cash flows with the amortized cost basis. Projected cash flows are driven primarily by
assumptions regarding probability of default and the timing and amount of recoveries associated with defaults. Chubb developed
the projected cash flows using market data, issuer-specific information, and credit ratings. In combination with contractual cash
flows and the use of historical default and recovery data by Moody's Investors Service (Moody's) rating category we generate
expected cash flows using the average cumulative issuer-weighted global default rates by letter rating.
If the present value of expected future cash flows is less than the amortized cost, a credit loss exists and an allowance for credit
losses will be recognized. If the present value of expected future cash flows is equal to or greater than the amortized cost basis,
management will conclude an expected credit loss does not exist.
Management reviews credit losses and the valuation allowance for expected credit losses each quarter. When all or a portion of
a fixed maturity security is identified to be uncollectible and written off, the valuation allowance for expected credit losses is
reduced. In general, a security is considered uncollectible no later than when all efforts to collect contractual cash flows have
been exhausted. Below are considerations for when a security may be deemed uncollectible:
• We have sufficient information to determine that the issuer of the security is insolvent;
• We receive notice that the issuer of the security has filed for bankruptcy, and the collectability is expected to be adversely
impacted by the bankruptcy;
The issuer of a security has violated multiple debt covenants;
Amounts have been past due for a specified period of time with no response from the issuer;
A significant deterioration in the value of the collateral has occurred; and
•
•
•
• We have received correspondence from the issuer of the security indicating that it doesn’t intend to pay the contractual
principal and interest.
We elected to not measure an allowance for accrued investment income as uncollectible balances are written off in a timely
manner, typically 30 to 45 days after uncollected balances are due.
Other investments
Other investments principally comprise investment funds, limited partnerships, partially-owned investment companies, life
insurance policies, policy loans, and non-qualified separate account assets.
Investment funds and limited partnerships
Investment funds, limited partnerships, and all other investments over which Chubb cannot exercise significant influence are
accounted for as follows. Generally, we own less than three percent of the investee’s shares.
•
•
•
•
Income and expenses from these funds are reported within Net investment income.
These funds are carried at net asset value, which approximates fair value with changes in fair value recorded in Net realized
gains (losses) on the Consolidated statements of operations. Refer to Note 4 for a further discussion on net asset value.
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.
Sales of these investments are reported within Net realized gains (losses).
Partially-owned investment companies
Partially-owned investment companies are limited partnerships 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.
F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Other
•
•
Policy loans are carried at outstanding balance and interest income is reflected in Net investment income.
Life insurance policies are carried at policy cash surrender value and income is reflected in Other (income) expense.
• Non-qualified separate account assets are supported by assets that do not qualify for separate accounting reporting under
GAAP. The underlying securities are recorded on a trade date basis and carried at fair value. Unrealized gains and losses on
non-qualified separate account assets are reflected in Other (income) expense.
Investments in partially-owned insurance companies
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. Generally, we own twenty percent or more of the investee’s
shares. We report our share of the net income or loss of the partially-owned insurance companies in Other (income) expense.
Securities lending program
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 which is recorded within Net investment income in
the Consolidated statements of operations.
Borrowers provide collateral, in the form of either cash or approved securities, at a minimum 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 in the Consolidated balance sheets.
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.
Repurchase agreements
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 and record the fees under these repurchase agreements
within Interest expense on the Consolidated statements of operations.
Refer to Note 4 for a discussion on the determination of fair value for Chubb's various investment securities.
f) Derivative instruments
Derivative instruments are carried at fair value in the Consolidated balance sheets in either Accounts payable, accrued expenses,
and other liabilities or Other assets. We participate in these 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. This category principally comprised our GLB contracts; and
(ii) To mitigate financial risks and manage certain investment portfolio risks and exposures, including assets and liabilities
denominated in foreign currencies. We use derivative instruments including futures, options, swaps, and foreign currency
forward contracts. Refer to Note 10 for additional information.
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Changes in fair value of derivatives not designated as hedging instruments are included in Net realized gains (losses) in the
Consolidated statements of operations.
Additionally, certain derivative instruments are designated as hedging instruments and qualify for hedge accounting. These
derivatives designated as hedging instruments must be highly effective in mitigating the designated changes in fair value or cash
flows of the hedged item. We assess at the hedge's inception, and continue to qualitatively assess on a quarterly basis, whether
the derivatives that are used in hedging transactions have been and are expected to be highly effective in offsetting changes in
the hedged items. Derivatives designated as hedging instruments include cross-currency swaps designated as fair value hedges
for foreign currency exposure associated with portions of our euro denominated debt and net investment hedges for foreign
currency exposure in the net investments of certain foreign subsidiaries. Refer to Note 10 for additional information.
Changes in fair value of net investment hedges are recorded in Cumulative translation adjustments (CTA) within OCI. Changes in
fair value of fair value hedges that principally offset the foreign currency remeasurement on the hedged debt is recorded within
Net realized gains (losses) on the Consolidated statement of operations with the remaining change in fair value recorded in
Other, within OCI.
g) Cash
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.
Restricted cash
Restricted cash in the Consolidated balance sheets represents amounts held for the benefit of third parties and is legally or
contractually restricted as to withdrawal or usage. Amounts include deposits with U.S. and non-U.S. regulatory authorities, trust
funds set up for the benefit of ceding companies, and amounts pledged as collateral to meet financing arrangements.
The following table provides a reconciliation of cash and restricted cash reported within the Consolidated balance sheets that
total to the amounts shown in the Consolidated statements of cash flows:
(in millions of U.S. dollars)
Cash
Restricted cash
December 31
2022
2021
2020
$
2,012 $
1,659 $
1,747
115
152
89
Total cash and restricted cash shown in the Consolidated statements of cash flows
$
2,127 $
1,811 $
1,836
h) 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 it is
more likely than not that carrying value exceeds fair 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 with an average original useful life of 25 years. Intangible assets are regularly reviewed for indicators of
impairment. Impairment is recognized if the carrying amount is not recoverable from its undiscounted cash flows and is
measured as the difference between the carrying amount and fair value.
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
i) 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 income 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 unpaid loss and loss expense reserves for certain structured settlements for which the timing and amount of
future claim payments are reliably determinable and certain reserves for unsettled claims, Chubb does not discount its P&C loss
reserves. The net undiscounted reserves related to structured settlements and certain reserves for unsettled claims are
immaterial.
Included in Unpaid losses and loss expenses are liabilities for 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 the fair value adjustment of $74 million and $90 million at December 31,
2022 and 2021, respectively, principally 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 through the year 2032, based on the estimated payout patterns of
unpaid loss and loss expenses at the acquisition date.
Our loss reserves are presented net of contractual deductible recoverable amounts due from policyholders. 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. We
generally seek to mitigate this risk through collateral agreements.
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.
j) 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 include a margin for
adverse deviation. Interest rates used in calculating reserves range from less than 1.0 percent to 9.0 percent at both December
31, 2022 and 2021. 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.
F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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 non-qualified separate account assets 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.
Effective on January 1, 2023, we adopted new U.S. GAAP accounting guidance for long-duration contracts that affects the
accounting for future policy benefits. Refer to the Note 1 t) for additional information.
k) 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. 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) 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. 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 Realized gains (losses) in the Consolidated statements of
operations. Refer to Note 10 a) for additional information.
Effective on January 1, 2023, we adopted new accounting guidance issued by the FASB for long-duration contracts that affects
the accounting for GMDB and GLB contracts. Refer to the Note 1 t) for additional information.
l) 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 statements 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 $96 million and $101 million at December 31, 2022 and 2021, 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 $70 million and $74 million at December 31, 2022 and 2021,
respectively and contract holder deposit funds of $2.5 billion and $2.2 billion at December 31, 2022 and 2021, respectively.
Deposit liabilities are reflected in Accounts payable, accrued expenses, and other liabilities in the Consolidated balance sheets.
At contract inception, the deposit liability equals net cash received. An accretion rate is established based on actuarial estimates
F-19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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.
m) Property and Equipment
Property and equipment used in operations are capitalized and carried at cost less accumulated depreciation and are reported
within Other assets in the Consolidated balance sheets. At December 31, 2022, property and equipment totaled $2.4 billion,
consisting principally of capitalized software costs of $1.6 billion incurred to develop or obtain computer software for internal
use and company-owned facilities of $253 million. Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets. For capitalized software, the estimated useful life is generally three to five years, but can be as long as
15 years and for company-owned facilities the estimated useful life is 40 years. At December 31, 2021, property and
equipment totaled $2.0 billion.
n) 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 in Shareholders' equity.
Functional statement of operations amounts expressed in functional currencies are translated using average exchange rates.
o) 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 income of ESIS is included within Administrative expenses in the Consolidated
statements of operations and were $12 million, $25 million, and $18 million for the years ended December 31, 2022, 2021,
and 2020, respectively.
p) Income taxes
Income taxes have been recorded related to those operations subject to income tax. 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 the period that
includes the enactment date. A valuation allowance against deferred tax assets is recorded if it is more likely than not that all, or
some portion, of the benefits related to these deferred tax assets will not be realized. The valuation allowance assessment
considers tax planning strategies, where appropriate.
We recognize uncertain tax positions that are determined to be 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.
q) 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.
F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
r) 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 vesting of share-based payment awards with only service conditions 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. For
retirement-eligible participants, compensation costs for certain share-based payment awards are recognized immediately at the
date of grant. Refer to Note 12 for additional information.
s) Cigna integration expenses
Direct costs related to the acquisition of Cigna's business in Asia were expensed as incurred. Cigna integration expenses were
$48 million for the year ended December 31, 2022 and include all internal and external costs directly related to the integration
activities of the acquisition of Cigna's business in Asia. These expenses principally consisted of third-party consulting fees,
employee-related retention costs, and other professional and legal fees related to the acquisition.
t) New accounting pronouncements
Accounting guidance adopted in 2023
Targeted Improvements to the Accounting for Long-Duration Contracts
In August 2018, the FASB issued guidance to improve the recognition, measurement, presentation, and disclosure requirements
for long-duration contracts issued by an insurance entity. The amendments in this update require updating of assumptions at
least annually, updating to then-current discount rates quarterly using a standardized discount rate for non-participating
traditional and limited pay insurance contract liabilities, a requirement to use the fair value measurement model for market risk
benefits, simplified amortization of deferred acquisition costs and VOBA, and enhanced disclosures. We adopted the standard
effective January 1, 2023, under the modified retrospective method.
The most significant impact of the standard relates to our accounting for future policy benefits. Cash flow assumptions used to
measure the liability for certain future policy benefits are to be reviewed and, if necessary, updated for both changes in future
assumptions and actual experience at least annually. Additionally, the discount rate assumption used to measure the liability for
certain future policy benefits is required to be based on an upper-medium grade fixed income instrument yield, which will be
updated each quarter with the impact recorded through Other Comprehensive Income. Further, the amortization of deferred
acquisition costs and VOBA will be required to be amortized on a constant level basis over the expected term of the related
contract, independent of expected profitability. We previously amortized deferred acquisition costs and VOBA using models
linked to revenue or profit of the related insurance contracts.
Upon adoption on January 1, 2023, we will record a cumulative effect adjustment and decrease January 1, 2021 beginning
Shareholders' equity by approximately $1.8 billion after-tax. However, adoption of this guidance is expected to have an
immaterial impact to Shareholders' equity at December 31, 2022.
2. Acquisitions
Cigna’s Accident and Health (A&H) and Life Insurance Business in Asia-Pacific Markets
On July 1, 2022, we completed the acquisition of the life and non-life insurance companies that house the personal accident,
supplemental health, and life insurance business of Cigna in several Asian markets. Chubb paid approximately $5.4 billion in
cash for the operations, which include Cigna's accident and health (A&H) and life business in Korea, Taiwan, New Zealand,
Thailand, Hong Kong, and Indonesia, collectively referred to as Cigna's business in Asia. This complementary strategic
acquisition expands our presence and advances our long-term growth opportunity in Asia. Effective July 1, 2022, the results of
operations of this acquired business are reported primarily in our Life Insurance segment and, to a lesser extent, our Overseas
General Insurance segment.
The consolidated financial statements include the results of Cigna's business in Asia from July 1, 2022. The acquisition of
Cigna's business in Asia generated $1,250 million of goodwill, attributable to expected growth and profitability, and $309
million of other intangible assets. None of the goodwill is expected to be deductible for income tax purposes. Additionally, the
acquisition of Cigna's business in Asia generated $3,503 million of value of business acquired (VOBA). Refer to Note 6 for more
information. Chubb financed the transaction through a combination of available cash and $2.0 billion in repurchase agreements
that expired at the end of 2022.
The following table summarizes Chubb's best estimate of fair value of the assets acquired and liabilities assumed at July 1,
2022. The fair value of assets and liabilities, including intangible assets and tax-related items (classified below in Other assets
and Other liabilities), are preliminary and may change with offsetting adjustments to goodwill. Chubb may make further
F-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
adjustments to its purchase price allocation through the end of the permissible one-year measurement period. Chubb does not
expect changes, if any, to materially affect its financial position, results of operations, or cash flows.
Preliminary estimate of assets acquired and liabilities assumed from Cigna's business in Asia
(in millions of U.S. dollars)
Assets
Investments and Cash
Accrued investment income
Insurance and reinsurance balances receivable
Reinsurance recoverable on losses and loss expenses
Reinsurance recoverable on future policy benefits
Value of business acquired
Goodwill and intangible assets
Other assets
Total assets
Liabilities
Unpaid losses and loss expenses
Unearned premiums
Future policy benefits
Insurance and reinsurance balances payable
Accounts payable, accrued expenses, and other liabilities
Deferred tax liabilities
Total liabilities
Net acquired assets, including goodwill
Total
July 1
2022
5,275
33
52
3
82
3,503
1,559
649
11,156
12
59
3,817
115
924
870
5,797
5,359
11,156
$
$
$
$
$
Direct costs related to the acquisition were expensed as incurred. Cigna integration expenses were $48 million for the year
ended December 31, 2022, which include one-time costs that are directly attributable to third-party consulting fees, employee-
related retention costs, and other professional and legal fees related to the acquisition.
The following table summarizes the results of the acquired Cigna's A&H and Life business operations since the acquisition date
that have been included within our Consolidated statements of operations.
(in millions of U.S. dollars)
Total revenues
Net income
July 1, 2022 to
December 31, 2022
$
$
1,507
148
The preliminary purchase price allocation to intangible assets recorded in connection with the Cigna acquisition and their related
useful lives at July 1, 2022, are as follows:
(in millions of U.S. dollars)
Definite life
Agency distribution relationships and renewal rights
Unearned premium reserves (UPR) intangible asset
Indefinite life
Trademarks
Total identified intangible assets
Amount
Weighted-average
useful life
$
$
230
9
70
309
22 years
1 year
Indefinite
F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following table presents supplemental unaudited pro forma consolidated information for the periods indicated as though the
acquisition of Cigna's business in Asia that occurred on July 1, 2022, had instead occurred on January 1, 2021, for each of the
respective periods. The unaudited pro forma consolidated financial information is presented for informational purposes only and
is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated on
January 1, 2021, nor is it necessarily indicative of future operating results. Significant assumptions used to determine pro forma
operating results include amortization of VOBA and other intangible assets and recognition of interest expense associated with
the repurchase agreement transactions used to effect the acquisition.
Pro forma:
(in millions of U.S. dollars, except per share data)
Net premiums earned
Total revenues
Net income
Huatai Group
For the Year Ended December 31
2022
2021
41,913 $
39,495
44,673 $
44,166
5,503 $
8,921
$
$
$
Chubb maintains a direct investment in Huatai Insurance Group Co., Ltd. (Huatai Group). Huatai Group is the parent company
of, and owns 100 percent of, Huatai Property & Casualty Insurance Co., Ltd. (Huatai P&C), 80 percent of Huatai Life Insurance
Co., Ltd. (Huatai Life), and 82 percent of Huatai Asset Management Co., Ltd. (collectively, Huatai). Huatai Group's insurance
operations have more than 700 branches and approximately 19 million customers in China.
As of December 31, 2022, Chubb's aggregate ownership interest in Huatai Group was 47.3 percent. Chubb applies the equity
method of accounting to its investment in Huatai Group by recording its share of net income or loss in Other (income) expense
in the Consolidated statements of operations.
During 2021, Chubb entered into agreements with several counterparties to purchase incremental ownership interests in Huatai
Group totaling 31.8 percent for approximately $2 billion. In connection with these agreements, Chubb paid net deposits of
$1.1 billion in 2021 and $184 million in 2022. Chubb entered into an agreement to acquire a 7.05 percent ownership interest
in Huatai Group for approximately $0.5 billion, which was paid as a deposit in 2020. Completion of all such transactions would
result in approximately 86.1 percent ownership in Huatai Group.
In 2022, we received regulatory approval to increase our ownership in Huatai Group to 83.2 percent and, in January 2023, we
completed transactions that increased our ownership interest to approximately 64.2 percent. The acquisition of the remaining
additional 22.0 percent in incremental ownership interests is pending completion of certain closing conditions, of which
approximately 3.0 percent also requires regulatory approval.
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
3. Investments
a) Fixed maturities
December 31, 2022
(in millions of U.S. dollars)
Available for sale
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Held to maturity
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Amortized
Cost
Valuation
Allowance
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Fair Value
$
2,792 $
— $
5 $
(171) $
2,626
28,064
40,547
17,871
4,081
(59)
(107)
(3)
—
108
49
4
8
(2,205)
25,908
(3,534)
36,955
(2,021)
15,851
(209)
3,880
$
93,355 $
(169) $
174 $
(8,140) $
85,220
Amortized
Cost
Valuation
Allowance
Net Carrying
Value
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Fair
Value
$
1,417 $
— $
1,417 $
1 $
(48) $
1,370
1,140
1,733
1,456
3,136
(4)
(28)
(1)
(1)
1,136
1,705
1,455
3,135
—
1
—
1
(82)
1,054
(126)
1,580
(104)
1,351
(52)
3,084
$
8,882 $
(34) $
8,848 $
3 $
(412) $
8,439
December 31, 2021
(in millions of U.S. dollars)
Available for sale
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Amortized
Cost
Valuation
Allowance
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Fair Value
$
2,111 $
— $
109 $
(6) $
2,214
25,156
37,844
20,080
5,302
(8)
(6)
—
—
953
1,410
532
216
(272)
25,829
(185)
39,063
(123)
20,489
(5)
5,513
$
90,493 $
(14) $
3,220 $
(591) $
93,108
Held to maturity
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Amortized
Cost
Valuation
Allowance
Net Carrying
Value
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Fair Value
$
1,213 $
— $
1,213 $
34 $
(3) $
1,244
1,201
2,032
1,731
3,976
(5)
(28)
(1)
(1)
1,196
2,004
1,730
3,975
66
197
74
162
—
—
1,262
2,201
(1)
1,803
—
4,137
$
10,153 $
(35) $
10,118 $
533 $
(4) $ 10,647
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following table presents the amortized cost of our HTM securities according to S&P rating:
(in millions of U.S. dollars, except for percentages)
AAA
AA
A
BBB
BB
Other
Total
2022
December 31
2021
Amortized cost
% of Total
Amortized cost
% of Total
$
1,612
5,023
1,634
593
20
—
18 % $
57 %
18 %
7 %
— %
— %
2,089
5,303
1,964
773
23
1
21 %
52 %
19 %
8 %
— %
— %
$
8,882
100 % $
10,153
100 %
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
Net Carrying
Value
2022
Fair Value
Net Carrying
Value
December 31
2021
Fair Value
$
2,962 $
2,962 $
4,498 $
$
$
24,791
26,679
14,937
69,369
15,851
24,791
26,679
14,937
69,369
15,851
25,542
28,207
14,372
72,619
20,489
85,220 $
85,220 $
93,108 $
1,015 $
1,003 $
888 $
3,658
1,460
1,260
7,393
1,455
3,531
1,423
1,131
7,088
1,351
3,744
2,242
1,514
8,388
1,730
4,498
25,542
28,207
14,372
72,619
20,489
93,108
894
3,846
2,349
1,755
8,844
1,803
$
8,848 $
8,439 $
10,118 $
10,647
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.
F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
b) Gross unrealized loss
Fixed maturities in an unrealized loss position at December 31, 2022 and 2021 comprised both investment grade and below
investment grade securities for which fair value declined, principally due to rising interest rates since the date of purchase.
The following tables present, for AFS fixed maturities in an unrealized loss position (including securities on loan) that are not
deemed to have expected credit losses, the aggregate fair value and gross unrealized loss by length of time the security has
continuously been in an unrealized loss position:
December 31, 2022
(in millions of U.S. dollars)
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed
securities
Mortgage-backed securities
Municipal
0 – 12 Months
Over 12 Months
Fair Value
Gross
Unrealized
Loss
Fair Value
Gross
Unrealized
Loss
Fair Value
Total
Gross
Unrealized
Loss
$
2,152 $
(125) $
386 $
(46) $
2,538 $
(171)
15,538
(1,012)
5,490
(704)
21,028
(1,716)
25,687
10,561
3,251
(1,793)
(1,033)
(152)
4,190
4,770
155
(552)
29,877
(941)
15,331
(48)
3,406
(2,345)
(1,974)
(200)
Total AFS fixed maturities
$
57,189 $
(4,115) $
14,991 $
(2,291) $
72,180 $
(6,406)
December 31, 2021
(in millions of U.S. dollars)
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed
securities
Mortgage-backed securities
Municipal
0 – 12 Months
Over 12 Months
Fair Value
Gross
Unrealized
Loss
Fair Value
Gross
Unrealized
Loss
Fair Value
$
363 $
(3) $
70 $
(3) $
433 $
6,917
(196)
1,093
(62)
8,010
9,449
8,086
226
(145)
(116)
(5)
806
190
—
(32)
10,255
(7)
—
8,276
226
Total
Gross
Unrealized
Loss
(6)
(258)
(177)
(123)
(5)
Total AFS fixed maturities
$
25,041 $
(465) $
2,159 $
(104) $
27,200 $
(569)
The following table presents a roll-forward of valuation allowance for expected credit losses on fixed maturities:
(in millions of U.S. dollars)
Available for sale
Valuation allowance for expected credit losses - beginning of period
Provision for expected credit loss
Recovery of expected credit loss
Valuation allowance for expected credit losses - end of period
Held to maturity
Valuation allowance for expected credit losses - beginning of period
Provision for expected credit loss
Recovery of expected credit loss
Valuation allowance for expected credit losses - end of period
Year Ended December 31
2022
2021
$
$
$
$
14 $
237
(82)
169 $
35 $
2
(3)
34 $
20
14
(20)
14
44
1
(10)
35
F-26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
c) Net realized gains (losses)
The following table presents the components of net realized gains (losses) and the change in net unrealized appreciation
(depreciation) of investments:
(in millions of U.S. dollars)
Fixed maturities:
Gross realized gains
Gross realized losses
Net (provision for) recovery of expected credit losses
Impairment (1)
Total fixed maturities
Equity securities
Other investments
Foreign exchange
Investment and embedded derivative instruments
Fair value adjustments on insurance derivative
S&P futures
Other derivative instruments
Other
Net realized gains (losses) (pre-tax)
Change in net unrealized appreciation (depreciation) on investments (pre-tax):
Fixed maturities available for sale
Fixed maturities held to maturity
Other
Income tax (expense) benefit
Change in net unrealized appreciation (depreciation) on investments (after-tax)
(1)
Relates to certain securities we intended to sell and securities written to market entering default.
Year Ended December 31
2022
2021
2020
$
619 $
142 $
(1,379)
(123)
(154)
(135)
(1,049)
(230)
(31)
393
(43)
(63)
187
(11)
(118)
14
(30)
3
662
111
348
(72)
316
(202)
(8)
(6)
$
(965) $
1,152 $
244
(366)
11
(170)
(281)
586
(32)
(483)
81
(202)
(108)
1
(60)
(498)
$
(10,583) $
(2,901) $
2,628
(15)
20
1,043
(18)
(19)
521
(24)
(12)
(462)
$
(9,535) $
(2,417) $
2,130
Realized gains and losses from Equity securities and Other investments from the table above include sales of securities and
unrealized gains and losses from fair value changes as follows:
(in millions of U.S. dollars)
Net gains (losses) recognized
during the period
Less: Net gains recognized
from sales of securities
Unrealized gains (losses)
recognized for securities still
held at reporting date
Equity
Securities
Other
Investments
2022
Total
Equity
Securities
Other
Investments
Year Ended December 31
2021
Total
Equity
Securities
Other
Investments
2020
Total
$
(230) $
(31) $ (261) $
662 $
111 $ 773 $
586 $
(32) $ 554
409
—
409
157
—
157
455
—
455
$
(639) $
(31) $ (670) $
505 $
111 $ 616 $
131 $
(32) $
99
F-27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
d) Other investments
(in millions of U.S. dollars)
Alternative investments:
Partially-owned investment companies
Limited partnerships
Investment funds
Alternative investments
Life insurance policies
Policy loans
Non-qualified separate account assets (1)
Other
Total
2022
December 31
2021
$
10,527 $
1,455
373
12,355
399
343
223
376
9,210
631
267
10,108
481
243
278
59
$
13,696 $
11,169
(1)
Non-qualified separate account assets are comprised of mutual funds, supported by assets that do not qualify for separate account reporting under GAAP.
Alternative investments
Alternative investments include partially-owned investment companies, investment funds, and limited partnerships measured at
fair value using net asset value (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
Maximum
Future Funding
Commitments
Fair Value
2022
December 31
2021
Maximum
Future Funding
Commitments
2 to 10 Years $
1,074 $
505 $
1,096 $
2 to 13 Years
2 to 8 Years
3 to 8 Years
2 to 14 Years
1 to 2 Years
Not Applicable
2,166
1,048
215
7,424
55
373
681
755
429
1,193
753
84
267
766
641
279
5,025
6,647
5,200
—
—
68
267
—
—
$ 12,355 $
7,395 $ 10,108 $
7,153
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
funds where the initial fund term has expired
F-28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Included in partially-owned investment companies and limited partnerships are 168 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.
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 are up to 270 days. Chubb can redeem its investment funds
without consent from the investment fund managers.
e) Investments in partially-owned insurance companies
The following table presents Investments in partially-owned insurance companies:
December 31, 2022
December 31, 2021
(in millions of U.S. dollars, except for
percentages)
Carrying Value
Goodwill
Direct
Ownership
Percentage
Carrying Value
Goodwill
Huatai Group
$
2,490 $
1,247
47 % $
2,698 $
1,355
Huatai Life Insurance Company
Freisenbruch-Meyer
Chubb Arabia Cooperative Insurance
Company
Russian Reinsurance Company
ABR Reinsurance Ltd.
215
11
24
—
137
65
3
—
—
—
20 %
40 %
30 %
23 %
19 %
253
10
23
4
142
71
3
—
—
—
Total
$
2,877 $
1,315
$
3,130 $
1,429
Direct
Ownership
Percentage
47 %
20 %
40 %
Domicile
China
China
Bermuda
30 % Saudi Arabia
23 %
17 %
Russia
Bermuda
Chubb’s aggregate direct and indirect ownership in Huatai Life is 57.7 percent, comprising 20 percent direct and 37.7 percent
indirect ownership interest at December 31, 2022. The table above excludes the 16.9 percent of additional ownership in
Huatai Group that was acquired in January 2023 and 22.0 percent that is pending completion of certain closing conditions.
Refer to Note 2 for additional information.
F-29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
f) Net investment income
(in millions of U.S. dollars)
Fixed maturities (1)
Short-term investments
Other interest income
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
Year Ended December 31
2022
2021
2020
$
3,594 $
3,300 $
3,321
81
42
99
104
3,920
35
11
150
147
48
19
81
82
3,643
3,551
(178)
(187)
(176)
3,742 $
3,456 $
3,375
(41) $
(84) $
(116)
$
$
g) 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, which represent Chubb's agreement to sell securities and repurchase them at a future date for a
predetermined price. We 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 have investments in segregated
portfolios primarily to provide collateral or guarantees for LOC and derivative transactions. Included in restricted assets are
investments, primarily fixed maturities, totaling $15,721 million and $17,092 million, and cash of $115 million and $152
million, at December 31, 2022 and 2021, 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
Total
December 31
2022
$
8,120 $
2,345
2,959
1,527
885
2021
9,915
2,402
2,873
1,420
634
$
15,836 $
17,244
F-30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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 or pricing models, 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) and may
require the use of models to be priced. The lack of market based inputs 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-31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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
supplemental retirement plans and are classified within the valuation hierarchy on the same basis as other equity securities and
fixed maturities.
Securities lending collateral
The underlying assets included in Securities lending collateral in the Consolidated balance sheets are fixed maturities which are
classified in the valuation hierarchy on the same basis as other fixed maturities. Excluded from the valuation hierarchy is the
corresponding liability related to 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 derivatives
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 and interest rate 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.
Derivatives designated as hedging instruments
Certain of our derivatives are cross-currency swaps designated as fair value and net investment hedging instruments. The fair
value of cross-currency swaps and interest rate 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 maintain positions in exchange-traded equity futures contracts designed to limit exposure to a severe equity market decline,
which would cause an increase in expected claims and, therefore, an increase in future policy benefit reserves for our
guaranteed minimum death benefits (GMDB) and an increase in the fair value liability for our guaranteed living benefits (GLB)
reinsurance business. Our positions in exchange-traded equity futures contracts are classified within Level 1. The fair value of
the majority of the remaining positions in other derivative instruments is based on significant observable inputs including equity
security and interest rate indices. Accordingly, these are classified within Level 2. Other derivative instruments based on
unobservable inputs are classified within Level 3. Other derivative instruments are recorded in either Other assets or Accounts
payable, accrued expenses, and other liabilities in the Consolidated balance sheets.
Separate account assets
Separate account assets represent segregated funds where investment risks are borne by the customers, except to the extent of
certain guarantees made by 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) associated with variable annuity contracts. GLBs are recorded in Accounts payable, accrued
expenses, and other liabilities 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
F-32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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. Because of the significant use of unobservable inputs including
policyholder behavior, GLB reinsurance is classified within Level 3.
Financial instruments measured at fair value on a recurring basis, by valuation hierarchy
December 31, 2022
(in millions of U.S. dollars)
Assets:
Fixed maturities available for sale
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Equity securities
Short-term investments
Other investments (1)
Securities lending collateral
Investment derivatives
Derivatives designated as hedging instruments
Other derivative instruments
Separate account assets
Total assets measured at fair value (1)
Liabilities:
Investment derivatives
Derivatives designated as hedging instruments
GLB (2)
Total liabilities measured at fair value
Level 1
Level 2
Level 3
Total
$
2,100 $
526 $
— $
—
—
—
—
2,100
737
3,108
552
—
82
—
33
5,101
25,344
34,506
15,840
3,880
80,096
—
1,849
399
1,523
—
17
—
89
564
2,449
11
—
3,024
90
3
—
—
—
—
—
—
2,626
25,908
36,955
15,851
3,880
85,220
827
4,960
951
1,523
82
17
33
5,190
$
$
$
11,713 $
83,973 $
3,117 $
98,803
139 $
— $
— $
—
—
53
—
—
736
139 $
53 $
736 $
139
53
736
928
(1)
(2)
Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $12,355 million, policy loans of $343 million and other
investments of $47 million at December 31, 2022 measured using NAV as a practical expedient.
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.
F-33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
December 31, 2021
(in millions of U.S. dollars)
Assets:
Fixed maturities available for sale
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Equity securities
Short-term investments
Other investments (1)
Securities lending collateral
Investment derivatives
Separate account assets
Total assets measured at fair value (1)
Liabilities:
Investment derivatives
Other derivative instruments
GLB (2)
Total liabilities measured at fair value
Level 1
Level 2
Level 3
Total
$
1,680 $
534 $
— $
—
—
—
—
1,680
4,705
1,744
286
—
58
5,461
25,196
37,014
20,463
5,513
88,720
—
1,395
481
1,831
—
99
633
2,049
26
—
2,708
77
7
—
—
—
—
2,214
25,829
39,063
20,489
5,513
93,108
4,782
3,146
767
1,831
58
5,560
$
$
$
13,934 $
92,526 $
2,792 $
109,252
166 $
— $
— $
16
—
—
—
—
745
182 $
— $
745 $
166
16
745
927
(1)
(2)
Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $10,108 million, policy loans of $243 million and other
investments of $51 million at December 31, 2021 measured using NAV as a practical expedient.
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.
Level 3 financial instruments
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. The majority of our fixed maturities classified as Level 3 used
external pricing when markets are less liquid due to the lack of market inputs (i.e., stale pricing, broker quotes).
(in millions of U.S. dollars, except for percentages)
Fair Value at
December 31
2022
Valuation
Technique
Significant
Unobservable
Inputs
Ranges
Weighted
Average (1)
GLB (1)
$
736
Actuarial model
Lapse rate
3% - 30%
Annuitization rate
0% - 100%
3.6 %
4.4 %
(1)
The weighted average lapse and annuitization rates are determined by weighting each treaty's rates by the GLB contracts fair value.
The most significant policyholder behavior assumptions include lapse rates and the GMIB annuitization rates. 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. Assumptions regarding lapse rates and GMIB annuitization rates differ by treaty, but the underlying
methodologies to determine rates applied to each treaty are comparable.
The 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.
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 by blending the experience with data received
from other ceding companies. 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
F-34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
such as market conditions, market participant assumptions, and demographics of in-force annuities. In the third quarter of
2022, we completed a review of policyholder behavior related to annuitizations, partial withdrawals, lapses, and mortality for
our variable annuity reinsurance business. As a result, we refined our policyholder behavior assumptions (mainly those relating
to annuitizations and partial withdrawals). This refinement increased the fair value of GLB liabilities, and resulted in a realized
loss of approximately $40 million. During the year ended December 31, 2022, we also made routine model refinements to the
internal valuation model which had an insignificant impact on net income.
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):
Year Ended December 31, 2022
(in millions of U.S. dollars)
Balance, beginning of year
Transfers into Level 3
Transfers out of Level 3
Change in Net Unrealized Gains/Losses in
OCI
Net Realized Gains/Losses
Purchases
Sales
Settlements
Other
Assets
Liabilities
Available-for-Sale Debt Securities
Corporate
and asset-
backed
securities
Mortgage-
backed
securities
Non-U.S.
Equity
securities
Short-term
investments
GLB (1)
$
633 $
2,049 $
26 $
77 $
7
$
745
23
(23)
(53)
(6)
156
47
(97)
(80)
(14)
921
(59)
(85)
—
(9)
—
—
4
—
(107)
(292)
(10)
—
—
—
1
—
—
15
9
(12)
—
—
—
—
—
(2)
3
—
(5)
—
—
—
—
63
—
—
—
(72)
736
Balance, end of year
$
564 $
2,449 $
11 $
90 $
3
$
Net Realized Gains/Losses Attributable to
Changes in Fair Value at the Balance Sheet
Date
Change in Net Unrealized Gains/Losses
included in OCI at the Balance Sheet Date
$
(2) $
(9) $
— $
14 $
(1) $
63
(1)
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.
$
(53) $
(84) $
— $
— $
—
$
—
F-35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Year Ended December 31, 2021
(in millions of U.S. dollars)
Non-U.S.
Corporate
and asset-
backed
securities
Mortgage-
backed
securities
Available-for-Sale Debt Securities
Equity
securities
Short-term
investments
Other
investments
GLB (1)
Balance, beginning of year
$
546 $
1,573 $
60 $
73 $
5 $
10 $
1,089
Assets
Liabilities
Transfers into Level 3
Transfers out of Level 3
Change in Net Unrealized
Gains/Losses in OCI
Net Realized Gains/Losses
Purchases
Sales
Settlements
Other
Balance, end of year
Net Realized Gains/Losses
24
(11)
(30)
(1)
91
(76)
15
(2)
275
1,154
(48)
(99)
(122)
(607)
—
—
—
(18)
—
—
18
(1)
(33)
—
—
—
—
8
21
(25)
—
—
—
—
(1)
—
9
—
(6)
—
—
(10)
—
—
—
—
—
—
$
633 $
2,049 $
26 $
77 $
7 $
— $
—
—
—
(316)
—
—
—
(28)
745
Attributable to Changes in Fair
Value at the Balance Sheet
Date
Change in Net Unrealized Gains/
Losses included in OCI at the
Balance Sheet Date
$
$
— $
3 $
— $
5 $
— $
— $
(316)
(25) $
17 $
— $
— $
— $
— $
—
(1) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.
Assets
Liabilities
Year Ended December 31, 2020
(in millions of U.S. dollars)
Non-U.S.
Corporate
and asset-
backed
securities
Mortgage-
backed
securities
Available-for-Sale Debt Securities
Equity
securities
Short-term
investments
Other
investments
GLB (1)
Balance, beginning of year
$
449 $
1,451 $
60 $
69 $
6 $
10 $
897
Transfers into Level 3
Transfers out of Level 3
Change in Net Unrealized
Gains/Losses in OCI
Net Realized Gains/Losses
Purchases
Sales
Settlements
Other
Balance, end of year
Net Realized Gains/Losses
—
134
(16)
(73)
19
(1)
274
(122)
(57)
—
(8)
(30)
708
(186)
(423)
—
—
(1)
—
—
2
—
(1)
—
—
(3)
—
1
23
(17)
—
—
—
—
—
(1)
14
(2)
(12)
—
—
—
—
—
—
—
—
—
—
—
—
202
—
—
—
(10)
$
546 $
1,573 $
60 $
73 $
5 $
10 $
1,089
Attributable to Changes in Fair
Value at the Balance Sheet
Date
Change in Net Unrealized Gains/
Losses included in OCI at the
Balance Sheet Date
$
$
— $
(5) $
— $
4 $
— $
— $
202
16 $
(6) $
— $
— $
— $
— $
—
(1)
Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.
F-36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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.
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:
Level 1
Level 2
Level 3
Total
Fair Value
Net Carrying
Value
$
1,299 $
71 $
— $
1,370 $
—
—
—
—
1,054
1,580
1,351
3,084
—
—
—
—
1,054
1,580
1,351
3,084
1,299 $
7,140 $
— $
8,439 $
1,417
1,136
1,705
1,455
3,135
8,848
— $
1,419 $
— $
1,419 $
1,419
—
—
—
473
12,495
383
—
—
—
473
475
12,495
14,402
383
308
$
— $
14,770 $
— $
14,770 $
16,604
$
$
December 31, 2022
(in millions of U.S. dollars)
Assets:
Fixed maturities held to maturity
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Total assets
Liabilities:
Repurchase agreements
Short-term debt
Long-term debt
Trust preferred securities
Total liabilities
F-37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
December 31, 2021
(in millions of U.S. dollars)
Assets:
Fixed maturities held to maturity
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Total assets
Liabilities:
Repurchase agreements
Short-term debt
Long-term debt
Trust preferred securities
Total liabilities
5. Reinsurance
Level 1
Level 2
Level 3
Total
Fair Value
Net Carrying
Value
$
1,192 $
52 $
— $
1,244 $
—
—
—
—
1,262
2,201
1,803
4,137
—
—
—
—
1,262
2,201
1,803
4,137
1,213
1,196
2,004
1,730
3,975
$
$
1,192 $
9,455 $
— $
10,647 $
10,118
— $
1,406 $
— $
1,406 $
1,406
—
—
—
1,019
16,848
460
—
—
—
1,019
16,848
460
999
15,169
308
$
— $
19,733 $
— $
19,733 $
17,882
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
2022
2021
2020
$
47,511 $
42,811 $
37,749
$
$
4,502
3,969
(10,258)
(8,912)
3,512
(7,441)
41,755 $
37,868 $
33,820
46,154 $
41,138 $
37,037
4,430
3,650
(10,195)
(8,433)
3,323
(7,243)
$
40,389 $
36,355 $
33,117
Ceded losses and loss expenses incurred were $7.0 billion, $6.1 billion, and $5.0 billion for the years ended December 31,
2022, 2021, and 2020, respectively.
F-38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
b) Reinsurance recoverable on ceded reinsurance
(in millions of U.S. dollars)
Reinsurance recoverable on unpaid losses and loss expenses
Reinsurance recoverable on paid losses and loss expenses
Reinsurance recoverable on losses and loss expenses
Reinsurance recoverable on policy benefits
(1) Net of valuation allowance for uncollectible reinsurance.
December 31, 2022
December 31, 2021
Net Reinsurance
Recoverable (1)
Valuation
allowance
Net Reinsurance
Recoverable (1)
Valuation
allowance
$
$
$
17,128 $
289 $
16,184 $
1,773
62
1,182
18,901 $
351 $
17,366 $
303 $
4 $
213 $
271
58
329
4
The increase in reinsurance recoverable on losses and loss expenses in 2022 was primarily due to higher underlying ceded
exposures reflecting premium growth and prior period development in certain lines, partially offset by foreign currency
movement.
The following table presents a roll-forward of valuation allowance for uncollectible reinsurance related to Reinsurance
recoverable on loss and loss expenses:
(in millions of U.S. dollars)
Year Ended December 31
2022
2021
Valuation allowance for uncollectible reinsurance - beginning of period
$
329 $
Provision for uncollectible reinsurance
Write-offs charged against the valuation allowance
Foreign exchange revaluation
43
(19)
(2)
Valuation allowance for uncollectible reinsurance - end of period
$
351 $
314
66
(50)
(1)
329
The following tables present a listing, at December 31, 2022, of the categories of Chubb's reinsurers:
December 31, 2022
(in millions of U.S. dollars, except for percentages)
Categories
Largest reinsurers
Other reinsurers rated A- or better
Other reinsurers rated lower than A- or not rated
Pools
Structured settlements
Captives
Other
Total
Largest Reinsurers
Gross Reinsurance
Recoverable on
Losses and Loss
Expenses
Valuation
allowance for
Uncollectible
Reinsurance
% of Gross
Reinsurance
Recoverable
$
10,826 $
114
4,161
443
425
507
2,455
435
47
70
14
11
13
82
$
19,252 $
351
1.1 %
1.1 %
15.8 %
3.3 %
2.2 %
0.5 %
18.8 %
1.8 %
ABR Reinsurance Capital Holdings
HDI Group (Hannover Re)
Partner Re Group
Swiss Re Group
Alleghany Corp
Lloyd's of London
Renaissance Re Holdings Ltd
Berkshire Hathaway Insurance Group Munich Re Group
Starr International Group
F-39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Categories of Chubb's reinsurers
Comprises:
Largest reinsurers
• 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
Other reinsurers rated lower than
A- or not rated
Pools
Structured settlements
Captives
• All reinsurers rated A- or better that were not included in the largest reinsurer
category.
• All reinsurers rated lower than A- or not rated that were not included in the largest
reinsurer category.
• 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.
Other
• Amounts recoverable that are in dispute or are from companies that are in
supervision, rehabilitation, or liquidation.
The valuation allowance for uncollectible reinsurance is principally based on an analysis of the credit quality of the reinsurer and
collateral balances. We establish the valuation allowance 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.
6. Goodwill, Other intangible assets, and Value of business acquired
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, 2020
$
6,972 $
2,240 $
134 $
4,836 $
371 $
847 $
15,400
Foreign exchange revaluation and other
—
—
—
(183)
—
(4)
(187)
Balance at December 31, 2021
$
6,972 $
2,240 $
134 $
4,653 $
371 $
843 $
15,213
Acquisition of Cigna's business in Asia
—
—
Foreign exchange revaluation and other
(27)
(10)
—
—
90
(138)
—
—
1,160
1,250
(1)
(176)
Balance at December 31, 2022
$
6,945 $
2,230 $
134 $
4,605 $
371 $
2,002 $
16,287
Other intangible assets
Other intangible assets that are subject to amortization principally relate to agency distribution relationships and renewal rights
and other intangible assets that are not subject to amortization principally relate to trademarks.
(in millions of U.S. dollars)
Subject to amortization
Not subject to amortization
Total
$
$
2022
2,459 $
2,982
5,441 $
December 31
2021
2,508
2,947
5,455
F-40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Amortization expense related to purchased intangibles was $285 million, $287 million, and $290 million for the years ended
December 31, 2022, 2021, and 2020, respectively. The following table presents, as of December 31, 2022, the expected
estimated pre-tax amortization expense of purchased intangibles, at current foreign currency exchange rates, for the next five
years:
(in millions of U.S. dollars)
2023
2024
2025
2026
2027
Total
For the Years Ending
December 31
Total Amortization of
purchased intangibles
281
260
242
220
205
1,208
$
$
VOBA
Value of business acquired (VOBA) represents the fair value of the future profits of in-force long duration contracts, and is
amortized in relation to the profit emergence of the underlying contracts, in a manner similar to deferred acquisition costs. The
VOBA calculation is based on many factors including mortality, morbidity, persistency, investment yields, expenses, and the
discount rate, with the discount rate being the most significant factor.
The following table presents a roll-forward of VOBA:
(in millions of U.S. dollars)
Balance, beginning of year
Acquisition of Cigna's business in Asia
Amortization of VOBA (1)
Foreign exchange revaluation and other
Balance, end of year
(1)
Recognized in Policy acquisition costs in the Consolidated statements of operations.
Year Ended December 31
2022
2021
2020
$
236 $
263 $
3,503
(164)
21
—
(22)
(5)
$
3,596 $
236 $
306
—
(27)
(16)
263
For the year ended December 31, 2022, amortization of VOBA associated with the acquisition of Cigna's business in Asia was
$145 million pre-tax.
The following table presents, as of December 31, 2022, the expected estimated pre-tax amortization expense related to VOBA
for the next five years at current foreign currency exchange rates:
For the Years Ending December 31
(in millions of U.S. dollars)
2023
2024
2025
2026
2027
F-41
$
VOBA
333
299
270
243
219
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
7. Unpaid losses and loss expenses
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, 2022, 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 beginning and ending 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
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)
Year Ended December 31
2022
2021
2020
$
72,943 $
67,811 $
62,690
(16,184)
(14,647)
(14,181)
56,759
53,164
48,509
24,495
22,966
22,124
(1,153)
(986)
(414)
23,342
21,980
21,710
8,117
12,206
20,323
7,836
10,048
17,884
(583)
(501)
59,195
17,128
56,759
16,184
7,782
9,652
17,434
379
53,164
14,647
Gross unpaid losses and loss expenses, end of year
$
76,323 $
72,943 $
67,811
(1) Net of valuation allowance 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 $277 million, $60 million, and $19 million for 2022, 2021, and 2020, respectively.
The increase in gross and net unpaid losses and loss expense in 2022 is due to an increase in underlying exposure due to
premium growth, increased loss severity trends and net catastrophe losses, partially offset by favorable prior period
development, and favorable foreign exchange movement. The increase in gross and net unpaid losses and loss expense in
2021 is due to an increase in underlying exposure due to premium growth, partially offset by favorable prior period
development.
The loss development tables under section c) below, present Chubb’s historical incurred and paid claims development by broad
product line through December 31, 2022, net of reinsurance, as well as the cumulative number of reported claims, IBNR
balances, and other supplementary information.
Recent period inflation is higher than the levels underlying our loss development triangles. To account for this, our loss
estimates for a number of product lines include explicit adjustments by accident year for the potential increase in ultimate
claim severity.
F-42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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:
December 31, 2022
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.
$
9,962
20,014
2,530
3,253
3,225
7,287
3,206
1,208
494
5,210
56,389
1,274
6,920
888
1,883
530
2,481
1,702
55
171
1,410
17,314
943
1,677
76,323
F-43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Business excluded from the loss development tables
“Other” shown in the reconciliation table comprises businesses excluded from the loss development tables:
•
Corporate segment business, which includes run-off liabilities such as asbestos, environmental, and molestation and other
mass tort exposures and which impact accident years older than those shown in the loss development tables;
• 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; and
Certain subsets of our business due to data limitations or unsuitability to the loss development table presentation, including:
•
•
•
Various loss portfolio transfers; 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 Alternative Risk Solutions business
within the North America Commercial P&C Insurance 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;
Purchase accounting adjustments related to unpaid losses and loss expenses for Chubb Corp;
•
• Reinsurance recoverable bad debt; and
• Balances with insufficient detail.
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.
The process of establishing loss and loss expense reserves can be complex and is subject to considerable uncertainty as it
requires the use of estimates and judgments based on circumstances underlying the insured loss at the date of accrual. The
reserves for our various product lines each require different qualitative and quantitative assumptions and judgments to be made.
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;
reported and projected loss trends;
extent of emerged loss experience relative to the remaining expected period of loss emergence;
rate monitor information for new and renewal business;
changes in claims handling practice, including impact of COVID-19 on adjudication environment;
inflation;
the legal environment, including impact of COVID-19 on judicial proceedings;
facts and circumstances of large claims;
terms and conditions of the contracts sold to our insured parties;
impact of applicable reinsurance recoveries; and
nature and extent of underlying assumptions.
F-44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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
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
The judgments involved in projecting the ultimate losses include 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.
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.
F-45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Short-tail business
Short-tail business generally describes product lines for which losses are typically known and paid shortly after the loss 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 an
event and then subsequent revisions of the estimated losses as our insureds provide updated actual loss information.
The nature and complexity of underlying coverage provided and net limits of exposure provided;
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, including the
indirect impact of COVID-19 that has changed loss reporting and development patterns. In addition, uncertain future inflationary
trends, changes in future legal environments, and the potential impact of major claims, such as molestation claims including the
Boy Scouts of America (BSA) agreement-in-principle, added to the uncertainty and volatility in the long-tail business. Other
factors are:
•
• 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 business mix or volume 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.
F-46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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, 2013, to December 31, 2021, and average historical
claim duration as of December 31, 2022, 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, 2022.
• 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-dollar 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
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 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 incurred loss development table. In our North
America segments, we generally consider a reported claim to be one claim per coverage per claimant. In our Overseas General
Insurance segment, we generally consider a reported claim to be on a per occurrence basis. Global Reinsurance segment’s
portfolio comprises a mix of proportional and non-proportional treaties. The proportional treaties are reported on a bulk basis
and do not lend themselves to meaningful claim count data. As such, we do not provide claim count information for our Global
Reinsurance segment.
We exclude claims closed without payment. Claims are counted on a direct basis without consideration of ceded reinsurance.
Use of the presented claim counts in analysis of company experience has significant limitations, including:
•
•
•
Claims for certain events and/or product lines, such as portions of our A&H business, are not reported on an individual
basis, but rather in bulk and thus not available for inclusion in this disclosure.
Each segment typically has a mixture of primary and excess experience which has shifted over time.
Captive business, especially in Workers' Compensation and Liability, largely represents fronted business where our net
exposure to loss is minimal; however, since the claim count is based on direct claims, there is a mismatch between direct
claims and net loss dollars, the extent of which varies by accident year.
Reported claim counts include open claims which have case reserves but exclude claims that have been incurred but not
reported. As such the reported claims are not consistent with the incurred losses in the triangle, which include incurred but not
reported losses. One can calculate reported losses by subtracting incurred but not reported losses from incurred losses in the
triangle. Reported claim counts are also inconsistent with losses in the paid loss triangle, since reported counts would include
claims with case reserves but no payments to date.
F-47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
North America Commercial P&C Insurance — Workers' Compensation — Long-tail
This product line has a broad mix of exposures across industries as well as a mix of policy coverages. 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-60.
Net Incurred Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2013
2017
$ 1,109 $ 1,108 $ 1,122 $ 1,127 $ 1,086 $ 1,073 $ 1,037 $ 1,014 $ 989 $
2020
2021
2019
2018
2014
2015
2016
2022
968 $
1,207
1,201
1,217
1,215
1,163
1,100
1,073
1,037
1,007
1,282
1,259
1,276
1,279
1,217
1,154
1,128
1,092
1,366
1,361
1,383
1,378
1,269
1,206
1,177
1,412
1,380
1,399
1,393
1,376
1,176
1,359
1,361
1,380
1,385
1,384
1,391
1,384
1,400
1,409
1,367
1,388
1,409
1,348
1,330
1,344
$ 12,296
264
338
380
465
631
656
852
780
988
As of December 31
2022
Net
IBNR
Reserves
219
Reported
Claims (in
thousands)
43
45
50
52
50
51
48
31
37
32
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
2013
107 $
$
2014
286 $
113
2015
422 $
295
116
2016
506 $
410
301
122
2017
553 $
484
418
326
120
2018
587 $
532
501
452
313
130
2019
616 $
566
564
529
437
329
143
2020
633 $
599
606
584
516
451
341
111
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
$
$
2021
650 $
617
628
621
564
528
467
282
120
2022
664
634
645
653
601
597
575
390
331
131
$ 5,221
December 31, 2022
2,887
7,075
9,962
F-48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
North America Commercial P&C Insurance — Workers' Compensation — Long-tail (continued)
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
$
$
(132)
(305)
(437)
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022
(Unaudited)
Age in Years
Percentage
1
2
3
10 %
16 %
10 %
4
7 %
5
5 %
6
3 %
7
3 %
8
2 %
9
10
2 %
1 %
North America Commercial P&C Insurance — Liability — Long-tail
This line consists of primary and excess general liability exposures, 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 general 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
Years Ended December 31
As of December 31
2022
(in millions of U.S. dollars)
Unaudited
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$ 3,540 $ 3,534 $ 3,534 $ 3,524 $ 3,422 $ 3,208 $ 3,115 $ 2,958 $ 2,950 $ 2,997 $
3,528
3,578
3,552
3,667
3,701
3,526
3,710
3,810
3,587
3,315
3,648
3,966
3,684
3,491
3,367
3,463
3,934
3,797
3,573
3,485
3,445
3,340
3,727
3,792
3,623
3,688
3,620
4,102
3,192
3,700
3,764
3,545
3,820
3,858
3,826
4,315
3,142
3,569
3,755
3,434
3,900
4,050
3,919
4,349
4,561
$ 37,676
Net
IBNR
Reserves
247
278
390
589
758
1,041
1,488
2,184
3,263
4,176
Reported
Claims (in
thousands)
25
24
27
27
26
28
30
24
24
24
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
F-49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$
129 $
546 $ 1,189 $ 1,593 $ 2,003 $ 2,228 $ 2,369 $ 2,460 $ 2,520 $ 2,609
164
678
138
1,248
604
171
1,801
1,203
662
161
2,199
1,852
1,334
616
189
2,439
2,287
1,973
1,160
753
175
2,580
2,527
2,331
1,698
1,301
669
152
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
2,669
2,743
2,593
2,000
1,773
1,245
589
174
2,753
2,921
2,820
2,322
2,335
1,888
1,147
608
144
$ 19,547
December 31, 2022
$
$
1,885
18,129
20,014
December 31, 2022
$
$
98
145
243
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
4 %
2
3
4
5
13 %
16 %
16 %
12 %
6
8 %
7
5 %
8
4 %
9
10
2 %
3 %
F-50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
North America Commercial P&C Insurance — Other Casualty — Long-tail
This product line consists of the remaining commercial casualty coverages such as automobile liability and aviation as well as
our foreign casualty exposures (mainly auto, general liability and employer responsibility coverages) on U.S.-based multinational
accounts. The paid and reported data are impacted by some catastrophe loss activity.
Net Incurred Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
As of December 31
2022
Net IBNR
Reserves
Reported
Claims (in
thousands)
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$ 525 $ 530 $ 521 $ 514 $ 468 $ 461 $ 461 $ 457 $ 459 $ 458 $
594
582
580
595
554
537
538
530
486
469
500
514
457
454
462
503
501
527
523
480
479
531
565
576
616
604
535
563
574
579
605
636
685
640
633
675
526
457
469
590
575
743
656
709
782
$ 5,965
8
6
23
27
36
25
143
265
379
611
17
17
15
16
17
17
17
11
12
11
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$
68 $
196 $
270 $
348 $
384 $
410 $
418 $
425 $
438 $
80
220
47
317
137
52
391
214
145
66
454
304
246
175
74
472
370
323
312
169
70
500
394
374
381
270
189
54
508
411
398
446
365
318
156
60
441
513
423
424
496
472
465
273
176
82
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
$ 3,765
December 31, 2022
$
$
330
2,200
2,530
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
F-51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
North America Commercial P&C Insurance — Other-Casualty — Long-tail (continued)
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
$
$
56
77
133
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
2
3
4
5
11 %
19 %
19 %
16 %
13 %
6
6 %
7
4 %
8
2 %
9
2 %
10
1 %
North America Commercial P&C Insurance — Non-Casualty — Short-tail
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 impacted by natural catastrophes mainly in the 2017 and 2018 accident years, and
in accident year 2020 by direct COVID.
Net Incurred Loss and Allocated Loss Adjustment Expenses
Years Ended December 31
As of December 31
2022
(in millions of U.S. dollars)
Unaudited
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$ 1,427 $ 1,417 $ 1,330 $ 1,352 $ 1,333 $ 1,333 $ 1,330 $ 1,337 $ 1,336 $ 1,340 $
1,639
1,655
1,573
1,552
1,543
1,544
1,552
1,545
1,544
1,730
1,740
1,645
1,633
1,600
1,585
1,587
1,592
1,904
1,884
1,794
1,775
1,811
1,824
1,820
2,699
2,602
2,501
2,517
2,509
2,519
2,047
2,234
2,169
2,161
2,170
2,046
2,031
1,953
1,944
3,139
2,942
2,726
2,941
2,824
3,048
$ 21,527
2
1
26
65
35
52
105
368
1,467
Net
IBNR
Reserves
3
Reported
Claims (in
thousands)
455
483
545
650
764
903
1,043
1,124
857
751
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
$
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
816
2014
2015
2017
2018
2019
2021
2020
2016
1,368
724
1,478
1,339
844
2022
2013
647 $ 1,132 $ 1,231 $ 1,278 $ 1,304 $ 1,318 $ 1,326 $ 1,328 $ 1,329 $ 1,338
1,552
1,582
1,790
2,427
2,113
1,856
2,466
2,100
1,050
$ 18,274
1,552
1,583
1,779
2,403
2,068
1,800
2,260
1,085
1,547
1,570
1,754
2,389
2,012
1,672
1,390
1,540
1,567
1,726
2,299
1,820
1,028
1,525
1,552
1,650
2,083
1,025
1,499
1,484
1,499
977
F-52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
North America Commercial P&C Insurance — Non-Casualty — Short-tail (continued)
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
—
3,253
3,253
$
$
December 31, 2022
$
$
(11)
(319)
(330)
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
2
45 %
36 %
3
8 %
4
3 %
5
1 %
6
1 %
7
1 %
8
9
10
— %
— %
1 %
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. During this ten-year period, this segment was also impacted by natural catastrophes,
mainly in the 2017 and 2018 accident years.
Net Incurred Loss and Allocated Loss Adjustment Expenses
Years Ended December 31
As of December 31
2022
Reported
Claims (in
thousands)
132
144
148
154
163
170
156
123
129
94
(in millions of U.S. dollars)
Unaudited
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$ 1,848 $ 1,876 $ 1,884 $ 1,888 $ 1,912 $ 1,924 $ 1,932 $ 1,935 $ 1,936 $ 1,933 $
Net IBNR
Reserves
18
2,198
2,199
2,185
2,139
2,153
2,140
2,134
2,134
2,487
2,542
2,553
2,536
2,556
2,562
2,559
2,433
2,529
2,538
2,476
2,464
2,457
3,027
3,062
2,995
2,991
2,991
3,001
3,029
2,948
3,095
2,985
3,110
2,986
2,922
2,627
3,027
2,133
2,561
2,465
3,000
3,131
2,978
2,626
2,877
3,102
$ 26,806
9
12
17
16
93
116
206
245
1,217
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
F-53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
North America Personal P&C Insurance — Short-tail (continued)
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2015
2014
2013
2018
2021
2016
2019
2017
2020
1,306
1,759
1,495
1,919
2,078
1,449
2022
$ 1,036 $ 1,494 $ 1,676 $ 1,775 $ 1,831 $ 1,873 $ 1,884 $ 1,906 $ 1,904 $ 1,910
2,119
2,535
2,422
2,930
2,971
2,718
2,223
2,368
1,411
$ 23,607
2,116
2,526
2,391
2,863
2,857
2,610
1,990
1,583
2,109
2,501
2,364
2,793
2,699
2,431
1,330
2,100
2,472
2,308
2,661
2,542
1,663
2,073
2,385
2,205
2,514
1,922
2,028
2,264
2,046
1,693
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
26
3,199
3,225
December 31, 2022
(5)
(123)
(128)
$
$
$
$
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
56 %
2
24 %
9
— %
3
7 %
8
1 %
7
1 %
4
5 %
5
3 %
6
2 %
10
— %
F-54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Overseas General Insurance — Casualty — Long-tail
This product line comprises 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 45 percent of Chubb Overseas General business is generated by European accounts, exclusive of
Lloyd's market. There is some U.S. exposure in Casualty from multinational accounts and in financial lines for Lloyd's market.
The financial lines coverages are typically written on a claims-made form, while general liability coverages are typically on an
occurrence basis and comprises 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
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$ 1,186 $ 1,181 $ 1,174 $ 1,217 $ 1,172 $ 1,139 $ 1,084 $ 1,054 $ 1,074 $ 1,094 $
1,186
1,253
1,261
1,277
1,197
1,118
1,081
1,092
1,096
1,107
1,199
1,226
1,248
1,229
1,172
1,157
1,174
1,138
1,234
1,298
1,327
1,317
1,328
1,263
1,128
1,224
1,271
1,318
1,283
1,319
1,224
1,273
1,332
1,375
1,330
1,295
1,360
1,382
1,373
1,669
1,589
1,509
100
131
117
149
282
358
835
1,604
1,650
1,111
1,741
1,475
$ 13,549
As of December 31
2022
Net
IBNR
Reserves
65
Reported
Claims (in
thousands)
37
38
40
42
43
43
42
34
35
29
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2013
$
78 $
2014
246 $
104
2015
393 $
273
79
2016
532 $
440
265
119
2017
667 $
567
460
303
90
2018
763 $
675
631
500
296
104
2019
826 $
754
745
642
494
309
116
2020
875 $
815
821
760
647
465
313
101
2021
896 $
857
895
851
805
602
440
271
110
2022
913
886
927
974
931
718
642
425
268
83
$ 6,767
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
$
$
505
6,782
7,287
F-55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Overseas General Insurance — Casualty — Long-tail (continued)
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
$
$
8
(76)
(68)
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
7 %
2
3
4
5
14 %
13 %
12 %
10 %
6
8 %
7
7 %
8
4 %
9
10
2 %
2 %
Overseas General Insurance — Non-Casualty — Short-tail
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. In
general, these lines have relatively stable payment and reporting patterns although they are impacted by natural catastrophes
mainly in the 2017, 2018, and 2022 accident years. For the Chubb Overseas General non-casualty book, Europe, exclusive of
Lloyd's market, makes up about one third, Latin America makes up about one quarter, and Asia makes up about one fifth.
Net Incurred Loss and Allocated Loss Adjustment Expenses
Years Ended December 31
As of December 31
2022
(in millions of U.S. dollars)
Unaudited
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$ 1,656 $ 1,651 $ 1,590 $ 1,545 $ 1,540 $ 1,513 $ 1,501 $ 1,492 $ 1,483 $ 1,481 $
Net
IBNR
Reserves
12
1,727
1,790
1,737
1,725
1,691
1,682
1,675
1,669
1,661
1,815
1,932
1,907
1,876
1,860
1,853
1,836
1,835
1,920
1,914
1,901
1,880
1,883
1,913
1,911
2,067
2,107
2,093
2,075
2,099
2,096
2,022
2,107
2,070
2,044
2,013
5
7
35
23
39
2,044
2,060
2,000
1,989
(15)
2,378
2,244
2,120
2,462
2,374
2,728
$ 20,208
164
241
696
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
Reported
Claims (in
thousands)
560
534
557
566
577
612
631
533
541
597
F-56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Overseas General 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
$
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
699
2014
2015
2020
2018
2016
2019
2017
2021
1,327
789
1,526
1,437
938
2013
2022
643 $ 1,186 $ 1,369 $ 1,399 $ 1,433 $ 1,451 $ 1,458 $ 1,461 $ 1,458 $ 1,458
1,641
1,801
1,845
2,062
1,893
1,869
1,746
1,692
1,122
$ 17,129
1,648
1,798
1,840
2,004
1,878
1,804
1,602
944
1,641
1,781
1,831
1,964
1,812
1,620
1,003
1,627
1,754
1,807
1,893
1,620
979
1,614
1,732
1,740
1,726
930
1,585
1,656
1,554
980
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
$
$
127
3,079
3,206
December 31, 2022
$
$
(10)
(270)
(280)
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
2
3
45 %
34 %
10 %
4
3 %
5
1 %
6
1 %
7
1 %
8
9
10
— %
— %
— %
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
This product line includes proportional and excess coverages in general, automobile liability, professional liability, medical
malpractice, and workers' compensation, 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.
F-57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Global Reinsurance — Casualty — Long-tail (continued)
Net Incurred Loss and Allocated Loss Adjustment Expenses
Years Ended December 31
As of December 31
2022
(in millions of U.S. dollars)
Unaudited
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$ 317 $ 323 $ 326 $ 326 $ 327 $ 320 $ 313 $ 307 $ 305 $ 302 $
329
330
280
335
285
218
338
295
222
208
339
296
230
210
237
343
304
229
214
240
232
326
300
238
212
247
240
241
326
304
238
213
243
236
245
277
325
306
243
212
246
235
236
281
293
$ 2,679
Net
IBNR
Reserves
6
8
11
11
4
12
37
60
136
206
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2013
$
64 $
2014
142 $
91
2015
185 $
183
89
2016
221 $
216
157
56
2017
240 $
247
189
111
46
2018
258 $
262
215
140
98
40
2019
266 $
273
230
157
120
93
39
2020
269 $
283
247
172
137
122
88
41
2021
275 $
292
263
189
152
145
114
98
35
2022
279
297
272
205
172
166
137
123
86
39
$ 1,776
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
December 31, 2022
$
$
305
903
1,208
December 31, 2022
$
$
(7)
(1)
(8)
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
2
3
20 %
23 %
11 %
4
9 %
5
6 %
6
6 %
7
4 %
8
2 %
9
2 %
10
1 %
F-58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Global Reinsurance — Non-Casualty — Short-tail
This product line includes property, property catastrophe, marine, credit/surety, mortgage, A&H and energy. This product line is
impacted by natural catastrophes, particularly in the 2017, 2018, 2020, 2021, and 2022 accident years. Of the non-
catastrophe book, the mixture of business varies by year with approximately 85 percent of loss on proportional treaties in treaty
year 2013 and after. This percentage has increased over time with the proportion being approximately 79 percent for treaty
years 2013-2017 growing to an average of 91 percent for treaty years 2018 to 2022, with the remainder being written on an
excess of loss basis.
Net Incurred Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
As of December 31
2022
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2016
2014
2015
2013
2017
$ 157 $ 154 $ 143 $ 137 $ 139 $ 136 $ 136 $ 135 $ 134 $
177
158
182
395
174
152
176
175
144
2018
2019
2020
2021
159
175
158
184
421
279
174
151
187
451
287
132
173
156
183
449
290
130
209
172
154
181
453
286
127
253
340
2022
134 $
170
154
181
456
291
121
277
350
346
$ 2,480
Net
IBNR
Reserves
—
1
—
2
12
7
8
34
43
220
Net Cumulative Paid Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Years Ended December 31
Unaudited
Accident
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total
2013
$
45 $
2014
100 $
63
2015
118 $
125
56
2016
127 $
147
102
56
2017
130 $
157
130
129
191
2018
132 $
162
140
155
321
94
2019
133 $
164
144
166
400
250
35
2020
134 $
166
148
172
414
266
81
62
2021
134 $
166
150
175
427
269
95
177
158
2022
134
167
151
176
433
273
103
215
277
74
$ 2,003
Net Liabilities for Loss and Allocated Loss Adjustment Expenses
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
Supplementary Information: (Favorable)/ Adverse Prior Period Development
(in millions of U.S. dollars)
Accident years prior to 2013
Accident years 2013 - 2022 from tables above
All Accident years
F-59
December 31, 2022
$
$
17
477
494
December 31, 2022
$
$
(4)
34
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Global Reinsurance — Non-Casualty — Short-tail (continued)
Supplementary Information: Average Annual Percentage Payout of Net Incurred Claims by Age, as of December 31, 2022 (Unaudited)
Age in Years
Percentage
1
2
3
34 %
40 %
15 %
4
5 %
5
3 %
6
2 %
7
1 %
8
9
10
— %
— %
— %
Prior Period Development — Supplementary Information
The following table presents a reconciliation of the loss development triangles above to prior period development:
Components of PPD
Year Ended December 31, 2022
(in millions of U.S. dollars)
(favorable)/unfavorable
Accident
years prior
to 2013
2013 - 2021
accident years
(implied PPD
per loss
triangles)
Other (1)
PPD on loss
reserves
RIPs,
Expense
adjustments,
and earned
premiums
North America Commercial P&C Insurance
Long-tail
Short-tail
North America Personal P&C Insurance
(Short-tail)
Overseas General Insurance
$
(83) $
22 $
(253)
$
(314) $
(319)
(11)
(30)
(402)
11
(283) (2)
(4)
(360)
(674)
(123)
(5)
(58)
(186)
(76)
8
3
(270)
(10)
(103)
(346)
(2)
(100) (5)
(1)
34
33
(7)
(4)
(11)
1
—
1
(65)
(383)
(448)
(7)
30
23
Long-tail
Short-tail
Global Reinsurance
Long-tail
Short-tail
Subtotal
North America Agricultural Insurance
(Short-tail)
Corporate (Long-tail)
Consolidated PPD
$
(838) $
(7) $
(440)
$
(1,285) $
111
$
(1,174)
$
(227) $
166
$
359
—
(61)
359
$
(1,153) $
277
$
(876)
(1) Other includes the impact of foreign exchange.
(2)
Includes favorable development of $161 million related to our Alternative Risk Solutions business (U.S. and Bermuda) and an adjustment to exclude $46 million in
unfavorable development in the workers' compensation line, associated with an increase in exposure for which additional premiums were collected; the remaining difference
relates to a number of other items, none of which are individually material.
(3)
(4)
(5)
Includes premium returns associated with our Alternative Risk Solutions business, which is excluded from the triangles.
Includes $48 million relating to the Colorado Wildfire CAT event that began December 30, 2021.
Includes favorable development of $105 million related to International A&H business; the remaining difference relates to a number of other items, none of which are
individually material.
F-60
Total
(229)
(333)
(562)
(186)
(65)
(383)
(448)
(7)
29
22
$
85
27
112 (3)
—
—
—
—
—
(1)
(1)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
Prior Period Development
Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events
that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from
previous accident years. Long-tail lines include lines such as workers' compensation, general liability, and financial lines; while
short-tail lines include lines such as most property lines, energy, personal accident, and agriculture. The following table
summarizes (favorable) and adverse PPD by segment:
Years Ended December 31
(in millions of U.S. dollars, except for percentages)
2022
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total
2021
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total
2020
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global Reinsurance
Corporate
Total
Long-tail
Short-tail
Total
% of beginning
net unpaid
reserves (1)
$
(229) $
(333) $
—
—
(65)
(7)
359
(186)
(61)
(383)
29
—
(562)
(186)
(61)
(448)
22
359
$
$
$
$
58 $
(934) $
(876)
(482) $
(280) $
—
—
(106)
(25)
569
(305)
10
(335)
28
—
(44) $
(882) $
(762)
(305)
10
(441)
3
569
(926)
(672) $
(30) $
(702)
—
—
(49)
(25)
433
63
(10)
(101)
(4)
—
$
(313) $
(82) $
63
(10)
(150)
(29)
433
(395)
1.0 %
0.3 %
0.1 %
0.8 %
— %
0.6 %
1.5 %
1.4 %
0.6 %
— %
0.8 %
— %
1.1 %
1.7 %
1.4 %
0.1 %
— %
0.3 %
0.1 %
0.9 %
0.8 %
(1) Calculated based on the beginning of period consolidated net unpaid losses and loss expenses.
Significant prior period movements by segment, principally driven by reserve reviews completed during each respective period,
are discussed in more detail below. The remaining net development for long-tail lines and short-tail business for each segment
and Corporate comprises numerous favorable and adverse movements across a number of lines and accident years, none of
which is significant individually or in the aggregate.
North America Commercial P&C Insurance. Net favorable development in 2022 included $496 million in workers'
compensation from lower than expected loss experience, updates to loss development factors, and our annual assessment of
multi-claimant events, including industrial accidents. The favorable development was partially offset by net adverse development
of $177 million in commercial auto liability, driven by adverse reported loss experience and explicit recognition of anticipated
increases in claim severity trend, $96 million from commercial umbrella/excess portfolios, driven by higher than expected loss
emergence and increases in our claims severity trend assumptions, and $82 million from medical risk where reported loss
activity was higher than expected, driven by claim severity increases and large loss activity. Net favorable development on our
short-tail businesses primarily included $206 million from property and marine portfolios, where paid and reported loss activity
for the most recent accident years was lower than expected.
Net favorable development in 2021 included favorable development of $303 million on COVID-19 reserves, including $256
million on management liability portfolios. Total favorable development on management liability portfolios of $278 million,
F-61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
including the COVID-19 referenced above, was driven by lower than expected claim frequency including securities class actions.
Net favorable development also included $260 million in our workers' compensation business, driven by lower than expected
loss experience and related improvements to loss development factors, and $164 million in property and marine coverages,
driven by lower than expected loss development.
Net favorable development of $702 million in 2020 represented 1.4 percent of the beginning consolidated net unpaid losses
and loss expense reserves.
North America Personal P&C Insurance. Net favorable development in 2022 primarily included favorable development in the
homeowners and valuables lines of business, driven by lower than expected claims reserve development.
Net favorable development in 2021 included favorable development primarily in the homeowners and valuables lines of
business, which experienced better than expected non-catastrophe loss development.
Net adverse development of $63 million in 2020 represented 0.1 percent of the beginning consolidated net unpaid losses and
loss expense reserves.
Overseas General Insurance. Net favorable development in 2022 included $105 million in A&H lines, driven by favorable loss
development in the Asia Pacific, U.K., and Europe regions. Net favorable development also included $100 million in property
lines, driven by favorable loss development across most regions, favorable catastrophe development in recent accident years,
specific case reductions, and salvage and subrogation recoveries.
Net favorable development in 2021 included favorable development of $127 million on COVID-19 reserves, including $104
million impact on financial lines. Net favorable development also included favorable development of $111 million in A&H lines
across most regions. The favorable development was partially offset by adverse development of $90 million in D&O on specific
claims in Australia and the U.K., and adverse professional indemnity development, including medical malpractice, in various
regions.
Net favorable development of $150 million in 2020 represented 0.3 percent of the beginning consolidated net unpaid losses
and loss expense reserves.
Corporate. Net adverse development in 2022, 2021, and 2020, included adverse development for molestation claims of $155
million, $417 million, and $254 million, respectively. The $417 million adverse development in 2021 was primarily driven by
a settlement-in-principle with the BSA regarding molestation claims. Refer to the Molestation claims section below for further
information. Net adverse development for all years also included adverse development for asbestos and environmental liabilities.
Molestation claims
Chubb's exposure to molestation claims principally arises out of liabilities acquired when it purchased CIGNA's P&C business in
1999, and Chubb Corp in 2016. The vast majority of the current liability relates to exposure from recently enacted "reviver"
legislation in certain states that allow civil claims relating to molestation to be asserted against policyholders that would
otherwise be barred by statutes of limitations. These exposures are predominantly included in our inactive run-off operations
included in the Corporate segment with an immaterial amount in the North America Commercial P&C segment.
In December 2021, Chubb reached an agreement-in-principle regarding the bankruptcy of the Boy Scouts of America (BSA).
Under this agreement, which is contingent on a variety of conditions and court approvals, our inactive run-off company, Century
Indemnity Company, and certain active Chubb companies will pay their respective share of $800 million and obtain a broad
release for all Chubb companies from BSA-related abuse claims. This liability was included in our Unpaid losses and loss
expenses as of December 31, 2021, and is gross of reinsurance recoverable and previously carried reserves, collectively, of
$425 million.
In the third quarter of 2022, the bankruptcy court approved the agreement-in-principle regarding the bankruptcy of the Boy
Scouts of America (BSA), which will proceed to further approval before the U.S. District Court. Of the $800 million that will be
paid per the agreement, $300 million was paid as of December 31, 2022, and the remaining $500 million liability is expected
to be paid in 2023.
F-62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 valuation allowance for uncollectible paid and
unpaid reinsurance recoverables:
(in millions of U.S. dollars)
Balance at December 31, 2019
Incurred activity
Paid activity
Balance at December 31, 2020
Incurred activity
Paid activity
Balance at December 31, 2021
Incurred activity
Paid activity
Asbestos
Environmental
Gross
Net
Gross
Net
Gross
Total
Net
$ 1,459 $
916 $
529 $
410 $ 1,988 $ 1,326
150
90
79
41
229
131 (1)
(258)
(133)
(91)
(72)
(349)
(205)
1,351
96
873
64
517
52
379
40
1,868
1,252
148
104 (1)
(221)
(137)
(167)
(117)
(388)
(254)
1,226
87
800
55
402
125
302
77
1,628
1,102
212
132 (1)
(215)
(152)
(115)
(69)
(330)
(221)
Balance at December 31, 2022
$ 1,098 $
703 $
412 $
310 $ 1,510 $ 1,013
(1)
Excludes unallocated loss expenses and the net activity reflects third-party reinsurance other than the aggregate excess of loss reinsurance provided by National Indemnity
Company (NICO) to Westchester Specialty (see Westchester Specialty section below).
The A&E net loss reserves including allocated loss expense reserves and valuation allowance for uncollectible reinsurance at
December 31, 2022 and 2021, 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
2022
$
602 $
98
266
47
December 31
2021
646
100
286
70
$
1,013 $
1,102
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.
F-63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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.
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. In 2022 and 2021, $75 million and $50 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 required 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 2022 and 2021,
capital contributions of $106 million and $18 million were made, respectively, from the Dividend Retention Fund to Century.
The Dividend Retention Fund may not be terminated without prior written approval from the Pennsylvania Insurance
Commissioner.
In 2004, Chubb INA contributed $100 million to Century in exchange for a surplus note. After giving effect to the surplus note,
contributions from the Dividend Retention Fund, results from operations and other items impacting statutory surplus, the
statutory surplus of Century at December 31, 2022, was $25 million and $669 million in statutory-basis losses have been
ceded to the XOL Agreement on an inception-to-date basis. The XOL Agreement statutory-basis remaining limit at December 31,
2022, is $131 million. 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, 2022 and
2021, the aggregate reinsurance recoverables owed by Century to certain active Chubb companies were approximately $1.9
billion and $1.8 billion, respectively, on an undiscounted basis. Chubb believes the active company intercompany reinsurance
recoverables, which relate to direct liabilities payable over many years, are not impaired. At December 31, 2022 and 2021,
Century's carried gross reserves (including reserves assumed from the active Chubb companies) were $2.1 billion and $2.2
billion, respectively. Changes in laws and regulations may have an adverse effect on Century's reserves; for example, the
enactment of "reviver" statutes relating to claims of sexual molestation may give rise to additional claims that would have been
barred by the statutes of limitations in effect at the time of the alleged molestation. Should Century's loss reserves experience
adverse development, as a result of such changes or otherwise, 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, 2022, the remaining unused incurred limit under the Westchester NICO agreement
was $347 million.
F-64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
8. Taxation
Under Swiss law through December 31, 2022, 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. Furthermore, participation relief (i.e., tax relief) is granted to Chubb Limited at the
federal, cantonal, and communal level for qualifying dividend income. Chubb Limited is subject to an annual cantonal and
communal capital tax on the taxable equity of Chubb Limited in Switzerland.
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 written assurances 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 income taxes. Lloyd's is required to
pay U.S. income tax on U.S. connected 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 this income.
Chubb Group Holdings and its respective subsidiaries are subject to income taxes imposed by U.S. authorities and file a
consolidated U.S. Federal income tax 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 (Chubb Life Insurance Hong Kong Limited and Chubb Life Insurance Korea Company Ltd.) 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.
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. As
a result of Swiss federal tax reform which was effective in 2020, the tax rate changed from 7.83 percent to 21.2 percent. The
tax rate further changed to 19.7 percent for 2021 and 2022 due to changes in Cantonal tax rates.
F-65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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
$
$
$
Year Ended December 31
2022
2021
2020
234 $
349 $
6,334
9,467
6,568 $
9,816 $
350
3,812
4,162
15 $
65 $
1,066
1,081
34
140
174
1,294
1,359
(15)
(67)
(82)
$
1,255 $
1,277 $
52
876
928
2
(301)
(299)
629
The most significant jurisdictions contributing to the overall taxation of Chubb are calculated using the following rates in 2022:
Switzerland 19.7 percent, U.S. 21.0 percent, U.K. 19.0 percent, and Bermuda 0.0 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
Net withholding taxes
Other
Provision for income taxes
Year Ended December 31
2022
2021
$
1,291 $
1,934 $
2020
880
(244)
(740)
(337)
75
133
78
5
$
1,255 $
1,277 $
67
19
629
F-66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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
Loss carry-forwards
Investments
Unrealized depreciation on investments
Depreciation
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Deferred policy acquisition costs
Other intangible assets, including VOBA
Un-remitted foreign earnings
Investments
Unrealized appreciation on investments
Total deferred tax liabilities
2022
December 31
2021
$
1,001 $
417
76
104
57
1,387
126
175
3,343
916
2,427
276
2,194
249
—
—
2,719
950
544
156
139
—
—
190
296
2,275
92
2,183
679
1,268
121
144
360
2,572
(389)
Net deferred tax liabilities
$
(292) $
The valuation allowance of $916 million and $92 million at December 31, 2022 and 2021, respectively, reflects
management's assessment, based on available information, that it is more likely than not that a portion of the deferred tax
assets will not be realized due to the inability of certain 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.
For the year ended December 31, 2022, the tax benefit on certain unrealized losses in our investment portfolio was reduced by
a valuation allowance of $815 million necessary due to limitations on the utilization of these losses. As part of evaluating
whether it was more likely than not that we could realize the tax benefit of these losses, we considered realized gains, carryback
ability and available tax planning strategies.
At December 31, 2022, Chubb has net operating loss carry-forwards of $346 million which, if unused, will expire starting in
2023, and a foreign tax credit carry-forward in the amount of $76 million which, if unused, will expire starting in 2028.
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 prior years
Reductions for settlements with taxing authorities
Balance, end of year
Year Ended December 31
2021
2022
64 $
4
(1)
67 $
76
7
(19)
64
$
$
At December 31, 2022 and 2021, the gross unrecognized tax benefits of $67 million and $64 million, respectively, can be
reduced by $21 million and $26 million, respectively, associated with foreign tax credits. The net amounts of $46 million and
$38 million at December 31, 2022 and 2021, respectively, if recognized, would favorably affect the effective tax rate. It is
reasonably possible that over the next twelve months, that the amount of unrecognized tax benefits may change further resulting
F-67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
from the re-evaluation of unrecognized tax benefits arising from examinations by taxing authorities and the lapses of statutes of
limitations.
Chubb recognizes accruals for interest and penalties, if any, related to unrecognized tax benefits in Income tax expense in the
Consolidated statements of operations. Tax-related interest expense and penalties reported in the Consolidated statements of
operations were $4 million, $1 million, and $8 million at December 31, 2022, 2021, and 2020, respectively. Liabilities for
tax-related interest and penalties in our Consolidated balance sheets were $18 million and $14 million at December 31, 2022
and 2021, respectively.
In March 2017, the IRS commenced its field examination of Chubb Group Holdings’ U.S. Federal income tax returns for 2014
and 2015 which is still ongoing. In July 2020, the IRS commenced its field examination of Chubb Group Holdings' U.S. Federal
income tax returns for 2016, 2017 and 2018 which is also still ongoing. No material adjustments have been proposed by the
IRS for any year under examination. As a multinational company, we also have examinations under way in non-US jurisdictions.
With few exceptions, Chubb is no longer subject to income tax examinations for years prior to 2012.
The following table summarizes tax years open for examination by major income tax jurisdiction:
At December 31, 2022
Australia
Brazil
Canada
France
Germany
Italy
Korea (1)
Mexico
Spain
Switzerland
United Kingdom
United States
(1)
Includes an examination for a pre-acquisition period subject to indemnification by Cigna Corp.
2016 - 2022
2016 - 2022
2012 - 2022
2021 - 2022
2016 - 2022
2019 - 2022
2017 - 2022
2016 - 2022
2012 - 2022
2018 - 2022
2015 - 2022
2014 - 2022
F-68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
9. Debt
(in millions of U.S. dollars)
2022
2021
Early Redemption Option
Repurchase agreements (weighted average interest rate of
3.9% in 2022 and 0.2% in 2021)
$
1,419 $
1,406
None
December 31
December 31
Short-term debt
Chubb INA:
$1,000 million 2.875% senior notes due November 2022 $
— $
999
Make-whole premium plus 20 bps
$475 million 2.7% senior notes due March 2023
475
—
Make-whole premium plus 10 bps
Total short-term debt
$
475 $
999
Long-term debt
Chubb INA:
$475 million 2.7% senior notes due March 2023
$
— $
$700 million 3.35% senior notes due May 2024
€700 million 0.3% senior notes due December 2024
$800 million 3.15% senior notes due March 2025
699
742
798
474
698
787
798
Make-whole premium plus 10 bps
Make-whole premium plus 15 bps
Make-whole premium plus 15 bps
Make-whole premium plus 15 bps
$1,500 million 3.35% senior notes due May 2026
1,496
1,494
Make-whole premium plus 20 bps
€575 million 0.875% senior notes due June 2027
€900 million 1.55% senior notes due March 2028
$100 million 8.875% debentures due August 2029
€700 million 0.875% senior notes due December 2029
$1,000 million 1.375% senior notes due September 2030
€575 million 1.4% senior notes due June 2031
$200 million 6.8% debentures due November 2031
$300 million 6.7% senior notes due May 2036
$800 million 6.0% senior notes due May 2037
€900 million 2.5% senior notes due March 2038
$600 million 6.5% senior notes due May 2038
$475 million 4.15% senior notes due March 2043
609
952
100
740
993
606
234
298
927
949
726
471
645
Make-whole premium plus 20 bps
1,009
Make-whole premium plus 15 bps
100
785
992
642
238
298
936
None
Make-whole premium plus 20 bps
Make-whole premium plus 15 bps
Make-whole premium plus 25 bps
Make-whole premium plus 25 bps
Make-whole premium plus 20 bps
Make-whole premium plus 20 bps
1,007
Make-whole premium plus 25 bps
735
470
Make-whole premium plus 30 bps
Make-whole premium plus 15 bps
$1,500 million 4.35% senior notes due November 2045
1,485
1,485
Make-whole premium plus 25 bps
$600 million 2.85% senior notes due December 2051
$1,000 million 3.05% senior notes due December 2061
593
984
593
983
Make-whole premium plus 15 bps
Make-whole premium plus 20 bps
Total long-term debt
Trust preferred securities
$
14,402 $
15,169
Chubb INA capital securities due April 2030
$
308 $
308
Redemption prices(1)
(1)
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.
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.
F-69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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 and are reflected in the table above.
c) Long-term debt
With the exception of the $100 million of 8.875 percent debentures due August 2029, which do not have an early redemption
option, the senior notes in the table above are redeemable at any time at Chubb INA's option subject to a “make-whole”
premium plus additional basis points as defined 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. These debt securities are also redeemable at
par plus accrued and unpaid interest in the event of certain changes in tax law.
The senior notes and debentures do not have the benefit of any sinking fund and 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.
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.
10. Commitments, contingencies, and guarantees
a) Derivative instruments
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 and derivatives designated as hedges for accounting purposes 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.
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. Some of Chubb's derivatives satisfy hedge accounting requirements, as discussed below. We also consider economic
hedging for planned cross border transactions.
Under reinsurance programs covering GLBs, Chubb assumes the risk of GLBs, principally GMIB, 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 GLB reinsurance product meets the definition of a derivative instrument and is classified within
F-70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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 book of business.
The following table presents the balance sheet locations, fair values of derivative instruments in an asset or (liability) position,
and notional values/payment provisions of our derivative instruments:
December 31, 2022
December 31, 2021
Consolidated
Balance Sheet
Location
Derivative
Asset
Derivative
(Liability)
Fair Value
Notional
Value/
Payment
Provision
Fair Value
Derivative
Asset
Derivative
(Liability)
Notional
Value/
Payment
Provision
OA / (AP) $
64 $
(115) $ 4,134 $
25 $
(139) $ 6,182
OA / (AP)
FM AFS / ES
18
30
(24)
1,511
—
37
33
11
(27) 12,944
—
12
$
112 $
(139) $ 5,682 $
69 $
(166) $ 19,138
OA / (AP) $
33 $
— $
939 $
— $
(16) $
905
OA / (AP)
—
—
—
—
—
3
$
33 $
— $
939 $
— $
(16) $
908
(AP) $
— $
(736) $ 1,979 $
— $
(745) $ 1,432
(in millions of U.S. dollars)
Investment and embedded derivatives not
designated as hedging instruments:
Foreign currency forward contracts
Options/Futures contracts on notes and
bonds
Convertible securities (1)
Other derivative instruments:
Futures contracts on equities (2)
Other
GLB (3)
Derivatives designated as hedging
instruments:
Cross-currency swaps - fair value hedges
OA / (AP) $
17 $
— $ 1,595 $
— $
— $
—
Cross-currency swaps - net investment
hedges
OA / (AP)
—
(53)
1,604
—
—
$
17 $
(53) $ 3,199 $
— $
— $
—
—
(1)
(2)
(3)
Includes fair value of embedded derivatives.
Related to GMDB and GLB book of business.
Note that the payment provision related to GLB is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.
At December 31, 2022 and 2021, net derivative liabilities of $60 million and $123 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) Hedge accounting
We designate certain derivatives as fair value hedges and net investment hedges for accounting purposes to hedge for foreign
currency exposure associated with portions of our euro denominated debt and the net investment in certain foreign subsidiaries,
respectively. These derivatives comprise cross-currency swaps, which are agreements under which two counterparties exchange
interest payments and principal denominated in different currencies at a future date.
(i) Cross-currency swaps - fair value hedges
In September 2022, Chubb entered into certain cross-currency swaps designated as fair value hedges. The objective of these
cross-currency swaps is to hedge the foreign currency risk on €1.5 billion, or approximately $1.6 billion at December 31,
2022, of our euro denominated debt, by converting cash flows back into the U.S dollar.
These fair value hedges are carried at fair value. The hedges are expected to be highly effective, with gains or losses on the fair
value hedges offsetting the foreign currency remeasurement on the hedged euro denominated senior notes within Net realized
gains (losses). The remaining change in fair value is recorded in Other comprehensive income (OCI), with an immaterial amount
recorded in interest expense.
For the year ended December 31, 2022, the fair value hedge was in a net gain position of $17 million, comprising $105
million of net realized gains, $5 million of interest expense, and the remaining change in fair value of $83 million pre-tax of
other comprehensive loss recorded within OCI.
F-71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
(ii) Cross-currency swaps - net investment hedges
In September 2022, Chubb entered into certain cross-currency swaps designated as net investment hedges. The objective of
these cross-currency swaps is to hedge the foreign currency exposure in the net investments of certain foreign subsidiaries by
converting cash flows from U.S. dollar to the British pound sterling, Japanese yen, and Swiss franc. The hedged risk is
designated as the foreign currency exposure arising between the functional currency of the foreign subsidiary and the functional
currency of its parent entity.
These net investment hedges are carried at fair value, with changes in fair value recorded in Cumulative translation adjustments
(CTA) within OCI, with an immaterial amount recorded to interest expense. The mark-to-market adjustments for foreign currency
changes will remain until the underlying hedge subsidiary is deconsolidated or if hedge accounting is discontinued.
For the year ended December 31, 2022, the net investment hedges were in a loss position of $53 million, comprising $57
million pre-tax of cumulative translation losses recorded in OCI, and $4 million of interest income.
c) Derivative instruments not designated as hedges
Derivative instruments which are not designated as hedges are carried at fair value with changes in fair value recorded in Net
realized gains (losses) in the Consolidated statements of operations. 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, options, and equities
Convertible securities (1)
Total investment and embedded derivative instruments
GLB and other derivative instruments:
GLB
Futures contracts on equities (2)
Other
Total GLB and other derivative instruments
(1)
(2)
Includes embedded derivatives.
Related to GMDB and GLB book of business.
2022
Year Ended December 31
2020
2021
$
(339) $
297
(1)
(43) $
(62) $
(10)
—
(72) $
(63) $
316 $
187
(11)
113 $
70 $
(202)
(8)
106 $
34 $
$
$
$
$
65
16
—
81
(202)
(108)
1
(309)
(228)
(i) Foreign currency exposure management
A foreign currency forward contract (forward) is an agreement between participants to exchange specific 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 future policy benefit reserves for GMDB and an increase in the fair
value liability for GLB reinsurance business.
F-72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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 our 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, level of interest rates, 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.
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, from time to time, 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, from time to time, both for their total return and for the flexibility
they provide related to our mortgage-backed security strategy.
(v) GLB
Under the GLB program, as the assuming entity, Chubb is obligated to provide coverage until the expiration or maturity of the
underlying deferred annuity contracts or the expiry of the reinsurance treaty. The GLB is accounted for as a derivative and is
recorded at fair value. 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 U.S. and/or international 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.
To mitigate adverse changes in the capital markets, we maintain positions in exchange-traded equity futures contracts, as noted
under section "(ii) Futures" above. These futures increase in fair value when the S&P 500 index decreases (and decrease in fair
value when the S&P 500 index increases). The net impact of gains or losses related to changes in fair value of the GLB liability
and the exchange-traded equity futures are included in Net realized gains (losses).
d) Securities lending and 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. 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.
F-73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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 / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Equity securities
Remaining contractual maturity
December 31, 2022
December 31, 2021
Overnight and Continuous
$
820 $
72
604
27
—
—
931
128
752
12
1
7
1,831
1,831
Gross amount of recognized liability for securities lending payable
$
$
1,523 $
1,523 $
At December 31, 2022 and 2021, our repurchase agreement obligations of $1,419 million and $1,406 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.
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 / Agency
Mortgage-backed securities
Gross amount of recognized liabilities for repurchase
agreements
Difference (1)
Remaining contractual maturity
December 31, 2022
December 31, 2021
Up to 30
Days
30-90
Days
Total
30-90
Days
Greater
than 90
Days
Total
$
12 $
— $
12 $
— $
29 $
29
—
101
101
103
—
103
921
493
1,414
—
1,288
1,288
$
933 $
594 $ 1,527 $
103 $ 1,317 $ 1,420
$ 1,419
$
108
$ 1,406
$
14
(1)
Per the repurchase agreements, the amount of collateral posted is required to exceed the amount of gross liability.
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.
F-74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
e) 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 corporate exposures by issuer at December 31, 2022, were Bank of America Corp, JP Morgan
Chase & Co., and Morgan Stanley. Our largest exposure by industry at December 31, 2022, 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. Approximately 11 percent of our gross premiums written
were generated from or placed by Marsh & McLennan Companies, Inc., for the year ended December 31, 2022, compared to
approximately 12 percent for the years ended December 31, 2021 and 2020. This entity is a large, well-established company,
and there are no indications that it is financially troubled at December 31, 2022. No other broker or one insured accounted for
more than 10 percent of our gross premiums written for these years.
f) Fixed maturities
At December 31, 2022 and 2021, commitments to purchase fixed income securities over the next several years were $770
million and $771 million, respectively.
g) Other investments
At December 31, 2022, included in Other investments in the Consolidated balance sheet are investments in limited
partnerships and partially-owned investment companies with a carrying value of $12.0 billion. In connection with these
investments, we have commitments that may require funding of up to $7.4 billion over the next several years. At December 31,
2021, these investments had a carrying value of $9.8 billion with commitments that may have required funding of up to
$7.2 billion.
h) Letters of credit
On October 6, 2022, Chubb entered into a new group syndicated credit facility through 2027, with capacity of $3.0 billion.
This facility consolidated our three existing syndicated facilities with capacity of $2.7 billion.
Overall, we have access to capital markets and to credit facilities with letter of credit capacity of $4.0 billion, $3.0 billion of
which can be used for revolving credit. Our existing credit facilities have remaining terms expiring through October 2027. At
December 31, 2022, our LOC usage was $1.4 billion.
i) 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-75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
j) Lease commitments
At December 31, 2022 and 2021, the right-of-use asset was $607 million and $445 million, respectively, recorded within
Other assets, and the lease liability was $633 million and $484 million, respectively, recorded within Accounts payable,
accrued expenses, and other liabilities on the Consolidated balance sheets. These leases consist principally of real estate
operating leases that are amortized on a straight-line basis over the term of the lease, which expire at various dates. As of
December 31, 2022, the weighted average remaining lease term and weighted average discount rate for the operating leases
was 7.8 years and 3.5 percent, respectively. Rent expense was $161 million, $149 million, and $152 million for the years
ended December 31, 2022, 2021, and 2020, respectively.
Future minimum lease payments under the operating leases are expected to be as follows:
For the years ending December 31
(in millions of U.S. dollars)
Undiscounted cash flows:
2023
2024
2025
2026
2027
Thereafter
Total undiscounted lease payments
Less: Present value adjustment
Net lease liabilities reported as of December 31, 2022
$
$
$
160
123
87
73
50
261
754
121
633
As of December 31, 2022, we entered into leases for office space that are not yet recorded on our Consolidated balance sheets
and are not included in the total obligations referenced above. The leases are expected to commence in 2023 and 2025 with
initial terms of approximately 21 years and 23 years, respectively. Total cash requirements are estimated at approximately
$1.2 billion over the terms of these two leases.
F-76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
11. Shareholders’ equity
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 2022 annual general meeting, our shareholders approved an annual dividend for the following year of up to $3.32
per share, expected to be paid in four quarterly installments of $0.83 per share after the annual general meeting by way of
distribution from capital contribution reserves, transferred to free reserves for payment. The Board of Directors (Board) will
determine the record and payment dates at which the annual dividend may be paid until the date of the 2023 annual general
meeting, and is authorized to abstain from distributing a dividend at its discretion. The first three quarterly installments each of
$0.83 per share, have been distributed by the Board as expected.
At our May 2021 and 2020 annual general meetings, our shareholders approved annual dividends for the following year of up
to $3.20 per share and $3.12 per share, respectively, which were paid in four quarterly installments of $0.80 per share and
$0.78 per share, respectively, 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.
Dividend distributions
Under Swiss corporate law, dividends must be stated in Swiss francs though dividend payments are made by Chubb in U.S.
dollars. We issue dividends without subjecting them to withholding tax by way of distributions from capital contribution reserves
and payment out of free reserves.
The following table presents dividend distributions per Common Share in Swiss francs (CHF) and U.S. dollars (USD):
2022
USD
2021
USD
CHF
2020
USD
CHF
CHF
Year Ended December 31
Total dividend distributions per common share
3.11 $
3.29
2.88 $
3.18
2.89 $
3.09
b) Shares issued, outstanding, authorized, and conditional
2022
Year Ended December 31
2021
2020
Common Shares authorized and issued, beginning of year
474,021,114
477,605,264
479,783,864
Cancellation of treasury shares
(27,644,500)
(3,584,150)
(2,178,600)
Common Shares authorized and issued, end of year
446,376,614
474,021,114
477,605,264
Common Shares in treasury, beginning of year (at cost)
(47,448,502)
(26,872,639)
(27,812,297)
Net shares issued under employee share-based compensation plans
2,947,272
3,484,487
2,345,208
Shares repurchased
Cancellation of treasury shares
Common Shares in treasury, end of year (at cost)
Common Shares outstanding, end of year
(14,925,028)
(27,644,500)
(3,584,150)
27,644,500
3,584,150
2,178,600
(31,781,758)
(47,448,502)
(26,872,639)
414,594,856
426,572,612
450,732,625
Increases in Common Shares in treasury are due to open market repurchases of Common Shares, 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, purchases under the Employee Stock Purchase Plan (ESPP), and share cancellations. At our May 2022 annual general
meeting, our shareholders approved the cancellation of 13,179,100 shares purchased under our share repurchase program
during the last six months of 2021. The capital reduction by cancellation of shares was subject to publication requirements and
F-77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
a two-month waiting period in accordance with Swiss law and became effective on August 4, 2022. At the Chubb Limited
Extraordinary General Meeting of Shareholders, held on November 3, 2021, shareholders approved the cancellation of
14,465,400 shares repurchased under our share repurchase program during the first six months of 2021. The capital reduction
by cancellation of shares was subject to publication requirements and a two-month waiting period in accordance with Swiss law
and became effective on January 17, 2022.
At our May 2021 annual general meeting, our shareholders approved the cancellation of 3,584,150 shares purchased under
our share repurchase program during 2020. The capital reduction by cancellation of shares was subject to publication
requirements and a two-month waiting period in accordance with Swiss law and became effective on August 4, 2021. At our
May 2020 annual general meeting, our shareholders approved the cancellation of 2,178,600 shares purchased under our share
repurchase program during the period beginning September 23, 2019 and ending December 31, 2019. The capital reduction
by cancellation of shares was subject to publication requirements and a two-month waiting period in accordance with Swiss law
and became effective on August 3, 2020.
Authorized share capital for general purposes under Swiss law
In accordance with Swiss law, the Board has shareholder-approved authority as set forth in the Articles of Association to
increase Chubb's share capital from time to time until May 19, 2024, by the issuance for general purposes 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. Any such increases would be subject to Swiss rules and procedure.
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, 2022) 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, 2022) in connection with the exercise of option rights granted to any employee
of Chubb, 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. The Board has
authorized share repurchase programs as follows:
•
•
•
$1.5 billion of Chubb Common Shares from November 21, 2019 through December 31, 2020;
$1.5 billion of Chubb Common Shares from November 19, 2020 through December 31, 2021;
$1.0 billion increase to the November 2020 share repurchase program to a total of $2.5 billion in February 2021, effective
through December 31, 2021;
• One-time incremental share repurchase program of $5.0 billion of Chubb Common Shares from July 19, 2021 through
June 30, 2022; and
$2.5 billion of Chubb Common Shares from May 19, 2022 through June 30, 2023.
•
Share repurchases may be in the open market, in privately negotiated transactions, block trades, accelerated repurchases and
through option or other forward transactions. 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
Year Ended December 31
January 1, 2023 through
2022
2021
2020
February 23, 2023
14,925,028
27,644,500
3,584,150
$
3,014 $
4,861 $
516 $
1,633,300
347
F-78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
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.
e) Accumulated other comprehensive income (loss)
The following table presents changes in accumulated other comprehensive income (loss):
(in millions of U.S. dollars)
Accumulated other comprehensive income (loss) (AOCI)
Net unrealized appreciation (depreciation) on investments
Year Ended December 31
2022
2021
2020
Balance – beginning of year, net of tax
$
2,256 $
4,673 $
Change in year, before reclassification from AOCI (before tax)
Amounts reclassified from AOCI (before tax)
Change in year, before tax
Income tax (expense) benefit
Balance – end of year, net of tax
Cumulative foreign currency translation adjustment
Balance – beginning of year, net of tax
Change in year, before reclassification from AOCI (before tax)
Amounts reclassified from AOCI (before tax)
Change in year, before tax
Income tax (expense) benefit
Balance – end of year, net of tax
Fair value hedging instruments
Balance – beginning of year, net of tax
Change in year, before reclassification from AOCI (before tax)
Amounts reclassified from AOCI (before tax)
Change in year, before tax
Income tax benefit
Balance – end of year, net of tax
Postretirement benefit liability adjustment
Balance – beginning of year, net of tax
Change in year, before tax
Income tax (expense) benefit
Balance – end of year, net of tax
(11,627)
(2,935)
1,049
(3)
(10,578)
(2,938)
1,043
(7,279)
521
2,256
2,543
2,311
281
2,592
(462)
4,673
(2,146)
(1,637)
(1,939)
(982)
(4)
(986)
59
(530)
—
(530)
21
306
—
306
(4)
(3,073)
(2,146)
(1,637)
—
17
(100)
(83)
17
(66)
240
(17)
2
225
—
—
—
—
—
—
(167)
522
(115)
240
—
—
—
—
—
—
15
(232)
50
(167)
Accumulated other comprehensive income (loss)
$
(10,193) $
350 $
2,869
F-79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following table presents reclassifications from accumulated other comprehensive income (loss) to the consolidated
statements of operations:
(in millions of U.S. dollars)
Fixed maturities available for sale
Income tax benefit
Cumulative foreign currency translation adjustment
Cross-currency swaps
Income tax expense
Net gains (losses) of fair value hedging instruments
Cross-currency swaps
Cross-currency swaps
Income tax expense
Total amounts reclassified from AOCI
12. Share-based compensation
Year Ended December 31
2022
2021
2020
Consolidated Statement
of Operations Location
(1,049) $
3 $
(281) Net realized gains (losses)
170
6
36
Income tax expense
(879) $
9 $
(245) Net income
4 $
(1)
3 $
— $
—
— $
—
Interest Expense
—
Income tax expense
— Net income
105 $
— $
— Net realized gains (losses)
(5)
(21)
79 $
(797) $
—
—
— $
9 $
—
Interest Expense
—
Income tax expense
— Net income
(245)
$
$
$
$
$
$
$
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 and members of the Board.
In May 2021, our shareholders approved the Chubb Limited 2016 Long-Term Incentive Plan, as amended and restated (the
Amended 2016 LTIP). Under the Amended 2016 LTIP, Common Shares of Chubb are authorized to be issued pursuant to
awards, including 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, with equal percentages of the
award subject to vesting over a number of years (typically three or four). Chubb recognizes compensation cost for vesting of
restricted stock and stock option grants with only service conditions 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. We incorporate an estimate of
future forfeitures in determining compensation cost for both grants of restricted stock and stock options.
In addition, Chubb grants performance-based restricted stock to certain executives that vest based on certain performance
criteria as compared to a defined group of peer companies. Performance-based stock awards comprise target awards and
premium awards that cliff vest at the end of a 3-year performance period based on both our tangible book value (shareholders'
equity less goodwill and intangible assets, net of tax) per share growth and P&C combined ratio compared to our peer group.
Premium awards are subject to an additional vesting provision based on total shareholder return (TSR) compared to our peer
group. Shares representing target awards and premium awards are issued when the awards are approved and are subject to
forfeiture if applicable performance criteria are not met at the end of the 3-year performance period. Prior to January 2017,
performance-based restricted stock awards had a 4-year vesting period with the potential to vest as to a portion each year, and
excluded the P&C combined ratio and TSR additional vesting criteria.
Under the Amended 2016 LTIP, 32,900,000 Common Shares are authorized to be issued (which includes all shares available
for delivery since the establishment of the Chubb Limited 2016 Long-Term Incentive Plan in 2016). This is in addition to any
shares subject to awards outstanding under the ACE Limited 2004 Long-Term Incentive Plan (2004 LTIP) immediately prior to
the effective date of the Amended 2016 LTIP that are forfeited, expired or canceled after such effective date without delivery of
shares (or which result in forfeiture of shares back to Chubb). At December 31, 2022, a total of 15,223,940 shares remain
F-80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
available for future issuance under the Amended 2016 LTIP, which includes shares forfeited, expired or canceled relating to
grants under the 2004 LTIP.
Under the Employee Stock Purchase Plan (ESPP), 6,500,000 shares are authorized to be issued. At December 31, 2022, a
total of 815,172 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
Common Shares in treasury.
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 (1)
Year Ended December 31
2022
2021
2020
$
$
$
$
60 $
38 $
55 $
36 $
230 $
179 $
210 $
164 $
45
38
210
164
(1)
The windfall tax benefit recorded to Income tax expense in the Consolidated statement of operations was $29 million, $19 million, and $10 million for the years ended
December 31, 2022, 2021, and 2020, respectively.
Unrecognized compensation expense related to the unvested portion of Chubb's employee share-based awards of restricted
stock, restricted stock units, and stock options was $313 million at December 31, 2022 and is expected to be recognized over
a weighted-average period of approximately 1.4 years.
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 2022 share-based compensation expense includes a portion of the cost related to the 2019 through 2022 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
2022
1.7 %
20.1 %
1.9 %
Year Ended December 31
2021
1.9 %
26.0 %
1.0 %
2020
2.1 %
18.0 %
1.2 %
5.8 years
5.8 years
5.7 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) is estimated using the historical exercise behavior of employees. The expected
volatility is calculated as a blend of (a) historical volatility based on daily closing prices over a period equal to the expected life
assumption and (b) implied volatility derived from Chubb's publicly traded options.
F-81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, 2019
10,885,257 $
116.79
Granted
Exercised
Forfeited and expired
Options outstanding, December 31, 2020
Granted
Exercised
Forfeited and expired
Options outstanding, December 31, 2021
Granted
Exercised
Forfeited and expired
Options outstanding, December 31, 2022
Options exercisable, December 31, 2022
1,958,279 $
150.10 $
19.89
(1,158,633) $
(206,720) $
11,478,183 $
86.90
138.77
125.09
1,805,234 $
164.89 $
33.05
(2,284,795) $
(236,135) $
10,762,487 $
112.12
150.16
133.94
1,731,904 $
198.36 $
35.46
(1,878,147) $
(205,966) $
10,410,278 $
7,134,817 $
117.83
171.45
146.81
131.90
$
76
$
140
$
$
$
163
768
633
The weighted-average remaining contractual term was 5.8 years for stock options outstanding and 4.6 years for stock options
exercisable at December 31, 2022. Cash received from the exercise of stock options for the year ended December 31, 2022
was $216 million.
Restricted stock and restricted stock units
Grants of restricted stock and restricted stock units awarded under the Amended 2016 LTIP typically have a 4-year vesting
period, subject to vesting as to one-quarter of the award each anniversary of grant. Restricted stock and restricted stock units
are principally 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.
Chubb also grants restricted stock awards to non-management directors which vest at the following year's annual general
meeting.
Chubb's 2022 share-based compensation expense includes a portion of the cost related to the restricted stock granted in the
years 2018 through 2022.
F-82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following table presents a roll-forward of our restricted stock awards. Included in the roll-forward below are 13,440
restricted stock awards, 15,586 restricted stock awards, and 27,679 restricted stock awards that were granted to non-
management directors during the years ended December 31, 2022, 2021, and 2020, respectively:
Unvested restricted stock, December 31, 2019
Granted
Vested
Forfeited
Unvested restricted stock, December 31, 2020
Granted
Vested
Forfeited
Unvested restricted stock, December 31, 2021
Granted
Vested
Forfeited
Unvested restricted stock, December 31, 2022
Service-based
Restricted Stock Awards
and Restricted Stock Units
Performance-based
Restricted Stock Awards
and Restricted Stock Units
Weighted-Average
Grant-Date Fair
Number of Shares
Value Number of Shares
Weighted-Average
Grant-Date Fair
Value
3,294,010 $
1,425,667 $
(1,304,308) $
(152,074) $
3,263,295 $
1,288,042 $
(1,283,185) $
(216,341) $
3,051,811 $
1,193,016 $
(1,191,452) $
(199,505) $
2,853,870 $
136.20
148.56
134.02
140.72
142.32
165.32
140.62
150.19
152.19
199.18
148.18
168.12
172.39
876,212 $
186,291 $
(490,185) $
— $
572,318 $
294,315 $
(169,442) $
— $
697,191 $
296,944 $
(199,343) $
— $
131.16
151.14
125.66
—
142.38
164.75
143.07
—
151.74
199.09
133.90
—
794,792 $
173.83
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 provided 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 was 1-year and the maximum was 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, 2022, there were 136,216 deferred restricted stock units.
ESPP
The ESPP gives participating employees the right to purchase Common Shares through payroll deductions during consecutive
subscription periods at a purchase price of 85 percent of the fair value of a Common Share on the exercise date (Purchase
Price). Annual purchases by participants are limited to the number of whole shares that can be purchased by an amount equal
to ten percent of the participant's compensation or $25,000, whichever is less. The ESPP has two six-month subscription
periods each year, the first of which runs between January 1 and June 30 and the second of which runs between July 1 and
December 31. The amounts collected from participants during a subscription period are used on the exercise date to purchase
full shares of Common Shares. An exercise date is generally the last trading day of a subscription period. The number of shares
purchased is equal to the total amount, at the exercise date, collected from the participants through payroll deductions for that
subscription period, divided by the Purchase Price, rounded down to the next full share. Participants may withdraw from an
offering before the exercise date and obtain a refund of amounts withheld through payroll deductions. Pursuant to the provisions
of the ESPP, during the years ended December 31, 2022, 2021, and 2020, employees paid $48 million, $47 million, and
$45 million to purchase 271,650 shares, 315,405 shares, and 383,751 shares, respectively.
F-83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
13. Postretirement benefits
Chubb provides postretirement benefits to eligible employees and their dependents through various defined contribution plans
sponsored by Chubb. In addition, for certain employees, Chubb sponsors other postretirement benefit plans, and prior to 2020,
Chubb sponsored defined benefit pension plans.
Defined contribution plans (including 401(k))
Under these plans, employees' contributions may be supplemented by Chubb matching contributions based on the level of
employee contribution. These contributions are invested at the election of each employee in one or more of several investment
portfolios offered by a third-party investment advisor. Expenses for these plans totaled $230 million, $214 million, and
$211 million for the years ended December 31, 2022, 2021, and 2020, respectively.
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
Our assumption of Chubb Corp's other postretirement benefit plans, principally healthcare and life insurance, covers retired
employees, their beneficiaries, and covered dependents. Healthcare coverage is contributory. Retiree contributions vary based
upon the 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. We use December 31 as the measurement date for our postretirement benefit plans.
Amendments to U.S. qualified and excess pension plans and U.S. retiree healthcare plan
In 2016, we harmonized and amended several of our U.S. retirement programs to create a unified retirement savings program.
In 2020, we transitioned 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 is currently 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 amendment
of the retiree healthcare plan resulted in a reduction in the obligation of $383 million, of which $410 million was amortized as
a reduction to expense as it relates to benefits already accrued. As of June 2021, the amendment of the retiree healthcare plan
was fully amortized. For the years ended December 31, 2021 and 2020, $26 million and $79 million, respectively, were
amortized as a reduction to expense.
F-84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 the Consolidated
balance sheets and Accumulated other comprehensive income (loss) at December 31, 2022 and 2021 was as follows:
(in millions of U.S. dollars)
U.S. Plans
Pension Benefit Plans
Other Postretirement
Benefit Plans
2021
2022
2021
U.S. Plans
Non-U.S.
Plans
2022
Non-U.S.
Plans
Benefit obligation, beginning of year
$
3,732 $
1,122 $
3,967 $
1,199
$
62 $
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Curtailments
Settlements
Foreign currency revaluation and other
Benefit obligation, end of year
Plan assets at fair value, beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Settlements
Foreign currency revaluation and other
Plan assets at fair value, end of year
Funded status at end of year
—
85
4
23
(890)
(391)
(146)
(28)
—
—
—
—
—
—
70
(161)
(133)
—
(11)
(33)
—
4
19
(47)
(33)
—
—
(20)
$
$
$
$
2,781 $
697 $
3,732 $
1,122
4,151 $
1,318 $
3,739 $
1,284
(692)
(285)
3
8
543
13
(146)
(28)
(133)
—
—
—
(11)
(75)
—
83
8
(33)
—
(24)
3,316 $
938 $
4,151 $
1,318
535 $
241 $
419 $
196
$
$
$
$
1
1
(4)
(16)
—
—
(1)
43 $
(2)
1
(37)
—
—
81 $
38 $
Amounts recognized in the Consolidated balance sheets:
Assets
Liabilities
Total
$
$
601 $
290 $
492 $
214
$
56 $
(66)
(49)
(73)
(18)
(18)
535 $
241 $
419 $
196
$
38 $
Amounts recognized in Accumulated other comprehensive
income (loss), pre-tax, not yet recognized in net periodic cost (benefit):
Net actuarial loss (gain)
Prior service cost (benefit)
Total
$
(290) $
7 $
(375) $
73
$
(12) $
—
8
—
9
(4)
$
(290) $
15 $
(375) $
82
$
(16) $
119 $
120
86
1
1
(10)
(15)
—
—
(1)
62
(1)
15
(15)
—
—
119
57
77
(20)
57
(10)
(5)
(15)
For the U.S. pension plans, the $890 million and $161 million actuarial gains experienced in 2022 and 2021, respectively,
were principally driven by the increase in the discount rate from the respective prior year. In addition, the non-U.S. pension
plans experienced an actuarial gain in 2022, which was principally driven by an increase in the discount rate from 2021.
The accumulated benefit obligation for the pension benefit plans was $3.4 billion and $4.8 billion at December 31, 2022 and
2021, respectively. The accumulated benefit obligation is the present value of pension benefits earned as of the measurement
date based on employee service and compensation prior to that date. It differs from the pension (projected) benefit obligation in
the table above in that the accumulated benefit obligation includes no assumptions regarding future compensation levels.
Chubb’s funding policy is to contribute amounts that meet regulatory requirements plus additional amounts determined based
on actuarial valuations, market conditions and other factors. All benefit plans satisfy minimum funding requirements of the
Employee Retirement Income Security Act of 1974 (ERISA).
F-85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following table provides information on pension plans where the benefit obligation is in excess of plan assets at December
31, 2022 and 2021:
(in millions of U.S. dollars)
Plans with projected benefit obligation in excess of plan assets:
Projected benefit obligation
Fair value of plan assets
Net funded status
Plans with accumulated benefit obligation in excess of plan assets:
Accumulated benefit obligation
Fair value of plan assets
2022
U.S. Plans
Non-U.S.
Plans
U.S. Plans
$
$
$
$
66 $
87 $
73 $
—
38
—
(66) $
(49) $
(73) $
66 $
— $
61 $
30 $
73 $
— $
2021
Non-U.S.
Plans
418
400
(18)
380
367
For other postretirement benefit plans with an accumulated benefit obligation in excess of plan assets, the accumulated benefit
obligation was $18 million and $20 million at December 31, 2022 and 2021, respectively. These plans have no plan assets.
At December 31, 2022, we estimate that we will contribute $38 million to the pension plans and $1 million to the other
postretirement benefits plan in 2023. The estimate is subject to change due to contribution decisions that are affected by
various factors including our liquidity, market performance, and management discretion.
At December 31, 2022, our estimated expected future benefit payments are as follows:
For the years ending December 31
(in millions of U.S. dollars)
2023
2024
2025
2026
2027
2028-2032
Pension Benefit Plans
U.S.
Plans
Non-U.S.
Plans
Other
Postretirement
Benefit Plans
$
186 $
40 $
173
178
180
186
967
32
34
34
36
216
14
10
6
1
1
5
The weighted-average assumptions used to determine the projected benefit obligation were as follows:
December 31, 2022
Discount rate
Rate of compensation increase (1)
Interest crediting rate
December 31, 2021
Discount rate
Rate of compensation increase (1)
Interest crediting rate
(1) For the U.S. Pension Plans, benefit accruals were frozen as of December 31, 2019.
Pension Benefit Plans
U.S.
Plans
Non-U.S.
Plans
Other
Postretirement
Benefit Plans
5.22 %
N/A
4.32 %
2.75 %
N/A
4.10 %
5.27 %
3.98 %
5.83 %
N/A
2.23 %
3.63 %
2.06 %
N/A
F-86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The projected benefit cash flows were discounted using the corresponding spot rates derived from a yield curve, which resulted
in a single discount rate that would produce the same liability at the respective measurement dates. The same process was
applied to service cost cash flows to determine the discount rate associated with the service cost. In general, the discount rates
for the non-U.S. plans were developed using a similar methodology by using country-specific yield curves.
The components of net pension and other postretirement benefit costs (benefits) reflected in Net income and other changes in
plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:
Year Ended December 31
(in millions of U.S. dollars)
Costs reflected in Net income, pre-tax:
Service cost
Non-service cost (benefit):
Interest cost
Expected return on plan assets
Amortization of net actuarial loss
Amortization of prior service cost
Curtailments
Settlements
Total non-service cost (benefit)
Net periodic benefit cost (benefit)
Changes in plan assets and benefit
obligations recognized in other
comprehensive income (loss)
Net actuarial loss (gain)
Prior service cost (benefit)
Amortization of net actuarial loss
Amortization of prior service cost
Curtailments
Settlements
Total decrease (increase) in other
comprehensive income (loss), pre-tax
Pension Benefit Plans
U.S. Plans
Non-U.S. Plans
Other Postretirement
Benefit Plans
2022
2021
2020
2022
2021
2020
2022
2021
2020
$ — $ — $ — $
4 $
4 $
4 $
1 $
1 $
1
85
70
99
23
19
22
1
1
(283)
(255)
(224)
(43)
(44)
(41)
(1)
(1)
—
—
—
—
4
2
—
—
2
(5)
—
—
—
—
—
—
—
—
(26)
(83)
—
—
—
—
—
(1) —
—
—
3
3
—
—
—
—
—
—
—
(198)
(182)
(122)
(20)
(21)
(18) —
(26)
(86)
$ (198) $ (182) $ (122) $
(16) $
(17) $
(14) $
1 $
(25) $
(85)
$ 85 $ (450) $ 102 $
(67) $
(86) $ 56 $
(1) $
(5) $
(2)
—
—
—
—
—
—
—
—
—
—
—
—
(4)
(2) —
—
—
—
—
—
—
(1) —
26
—
—
—
—
—
(1) —
—
—
(3)
(3) —
—
—
—
—
—
—
83
—
—
$ 85 $ (453) $ 99 $
(67) $
(90) $ 52 $
(1) $ 21 $
81
The line items in which the service cost and non-service cost (benefit) components of net periodic benefit cost (benefit) are
included in the Consolidated statements of operations were as follows:
Year Ended December 31
(in millions of U.S. dollars)
Service cost:
Losses and loss expenses
Administrative expenses
Total service cost
Non-service cost (benefit):
Losses and loss expenses
Administrative expenses
Total non-service cost (benefit)
Net periodic benefit cost (benefit)
F-87
Pension Benefit Plans Other Postretirement Benefit Plans
2022
2021
2020
2022
2021
2020
$
— $
— $
— $
— $
— $
4
4
4
4
4
4
(20)
(18)
(12)
(198)
(185)
(128)
(218)
(203)
(140)
1
1
—
—
—
1
1
(3)
(23)
(26)
$
(214) $
(199) $
(136) $
1 $
(25) $
—
1
1
(9)
(77)
(86)
(85)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The weighted-average assumptions used to determine the net periodic pension and other postretirement benefit costs were as
follows:
Year Ended December 31
2022
Discount rate in effect for determining service cost
Discount rate in effect for determining interest cost
Rate of compensation increase
Expected long-term rate of return on plan assets
Interest crediting rate
2021
Discount rate in effect for determining service cost
Discount rate in effect for determining interest cost
Rate of compensation increase
Expected long-term rate of return on plan assets
Interest crediting rate
2020
Discount rate in effect for determining service cost
Discount rate in effect for determining interest cost
Rate of compensation increase
Expected long-term rate of return on plan assets
Interest crediting rate
Pension Benefit Plans
U.S.
Plans
Non-U.S.
Plans
Other
Postretirement
Benefit Plans
N/A
2.34 %
N/A
7.00 %
4.10 %
N/A
1.81 %
N/A
7.00 %
4.10 %
N/A
2.85 %
N/A
7.00 %
4.10 %
7.23 %
2.13 %
3.63 %
3.44 %
N/A
5.58 %
1.57 %
3.24 %
3.37 %
N/A
6.04 %
2.24 %
3.26 %
3.83 %
N/A
3.22 %
1.89 %
N/A
1.00 %
N/A
2.53 %
1.23 %
N/A
1.00 %
N/A
3.00 %
2.64 %
N/A
3.00 %
N/A
The weighted-average healthcare cost trend rate assumptions used to measure the expected cost of healthcare benefits were as
follows:
Healthcare cost trend rate
Rate to which the cost trend rate is assumed to decline
(the ultimate trend rate)
U.S. Plans
Non-U.S. Plans
2022
2021
2020
2022
2021
2020
5.72 %
5.59 %
5.96 %
5.28 %
5.26 %
5.04 %
4.00 %
4.50 %
4.50 %
4.04 %
4.00 %
4.00 %
Year that the rate reaches the ultimate trend rate
2046
2038
2038
2040
2040
2040
Plan Assets
The long term objective of the pension plan is to provide sufficient funding to cover expected benefit obligations, while assuming
a prudent level of portfolio risk. The assets of the pension plan are invested, either directly or through pooled funds, in a
diversified portfolio of predominately equity securities and fixed maturities. We seek to obtain a rate of return that over time
equals or exceeds the returns of the broad markets in which the plan assets are invested. The target allocation of U.S. plan
assets is 55 percent to 65 percent invested in equity securities (including certain other investments measured using NAV), with
the remainder primarily invested in fixed maturities. The target allocation of non-U.S. plans varies by country, but the plan
assets are principally invested in fixed maturities. We rebalance our pension assets to the target allocation as market conditions
permit. We determined the expected long term rate of return assumption for each asset class based on an analysis of the
historical returns and the expectations for future returns. The expected long term rate of return for the portfolio is a weighted
aggregation of the expected returns for each asset class.
In order to minimize risk, the Plan maintains a listing of permissible and prohibited investments. In addition, the Plan has
certain concentration limits and investment quality requirements imposed on permissible investments options. Investment risk is
measured and monitored on an ongoing basis.
F-88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following tables present the fair values of the pension plan assets, by valuation hierarchy. For additional information on how
we classify these assets within the valuation hierarchy, refer to Note 4 to the Consolidated Financial Statements.
December 31, 2022
(in millions of U.S. dollars)
U.S. Plans:
Short-term investments
U.S. Treasury / Agency
Non-U.S. and corporate bonds
Municipal
Equity securities
Investment derivative instruments
Total U.S. Plan assets (1)
Non-U.S. Plans:
Short-term investments
Non-U.S. and corporate bonds
Equity securities
Total Non-U.S. Plan assets (1)
Level 1
Level 2
Level 3
Total
Pension Benefit Plans
$
42 $
— $
— $
431
—
—
1,321
4
110
627
5
—
—
—
—
—
—
—
42
541
627
5
1,321
4
1,798 $
742 $
— $
2,540
10 $
— $
— $
—
107
454
146
—
4
$
117 $
600 $
4 $
10
454
257
721
$
$
(1)
Excluded from the table above are $538 million and $201 million of other investments related to the U.S. Plans and Non-U.S. Plans, respectively, limited partnerships of
$233 million and $16 million in U.S. Plans and Non-U.S. Plans, respectively, measured using NAV as a practical expedient, and $5 million in cash and accrued income
related to the U.S. Plans.
December 31, 2021
(in millions of U.S. dollars)
U.S. Plans:
Short-term investments
U.S. Treasury / Agency
Non-U.S. and corporate bonds
Municipal
Equity securities
Investment derivative instruments
Total U.S. Plan assets (1)
Non-U.S. Plans:
Short-term investments
Non-U.S. and corporate bonds
Equity securities
Total Non-U.S. Plan assets (1)
Level 1
Level 2
Level 3
Total
Pension Benefit Plans
$
33 $
— $
— $
380
—
—
1,871
3
92
923
4
—
—
—
—
—
1
—
33
472
923
4
1,872
3
$
$
2,287 $
1,019 $
1 $
3,307
5 $
— $
— $
—
153
679
291
—
—
5
679
444
$
158 $
970 $
— $
1,128
(1)
Excluded from the table above are $542 million and $175 million of other investments related to the U.S. Plans and Non-U.S. Plans, respectively, limited partnerships of
$175 million and $15 million in U.S. Plans and Non-U.S. Plans, respectively, measured using NAV as a practical expedient, and $127 million in cash and accrued income
related to the U.S. Plans.
At December 31, 2022, the other postretirement benefit plan had $81 million of plan assets, of which $50 million of fixed
maturities were categorized as Level 2, and $31 million of other investments were measured using NAV as a practical
expedient. At December 31, 2021, the other postretirement benefit plan had $119 million of other investments measured using
NAV as a practical expedient.
F-89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
14. Other income and expense
(in millions of U.S. dollars)
Equity in net income of partially-owned entities (1)
Gains (losses) from fair value changes in separate account assets (2)
Federal excise and capital taxes
Other
Total
Year Ended December 31
2022
2021
$
16 $
2,433 $
(42)
(21)
(27)
(8)
(19)
(41)
$
(74) $
2,365 $
2020
1,019
58
(22)
(61)
994
(1)
(2)
Equity in net income (loss) of partially-owned entities includes mark-to-market gain (loss) on private equities where we own more than three percent, totaling
$(219) million, $2,004 million, and $747 million for the years ended December 31, 2022, 2021, and 2020, respectively. This line item also includes net income of
$5 million, $233 million, and $167 million attributable to our investments in Huatai for the years ended December 31, 2022, 2021, and 2020, respectively.
Related to gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.
Other income and expense includes equity in net income of partially-owned entities, which includes our share of net income or
loss, both underlying operating income and mark-to-market movement, related to partially-owned investment companies (private
equity) and partially-owned insurance companies. Also included in Other income and expense are gains (losses) from fair value
changes in separate account assets that do not qualify for separate account reporting under GAAP. The offsetting movement in
the separate account liabilities is included in Policy benefits in the Consolidated statements of operations. Certain federal excise
and capital taxes incurred as a result of capital management initiatives are included in Other income and expense as these are
considered capital transactions and are excluded from underwriting results. Bad debt expense for uncollectible premiums is also
included in Other income and expense.
15. 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. These
segments distribute their products through various forms of brokers, agencies, and direct marketing programs. All business
segments have established relationships with reinsurance intermediaries. Segment results for year ended December 31, 2022,
include the results of Cigna's business in Asia from July 1, 2022, which are principally assigned to our Life Insurance segment
and, to a lesser extent, our Overseas General Insurance segment according to the nature of the business written.
•
•
•
•
The North America Commercial P&C Insurance segment comprises operations that provide P&C and A&H insurance and
services to large, middle market, and small commercial businesses in the U.S., Canada, and Bermuda. This segment
includes our retail divisions: Major Accounts; Commercial Insurance, including Small Commercial Insurance; Chubb
Bermuda, our high excess business; and Westchester, our wholesale and specialty division. These divisions write a variety
of coverages, including property, casualty, workers’ compensation, package policies, risk management, financial lines,
marine, construction, environmental, medical risk, cyber risk, surety, excess casualty, and A&H insurance.
The North America Personal P&C Insurance segment comprises the business written by Chubb Personal Risk Services
division, which includes high net worth personal lines business, with operations in the U.S. and Canada. This segment
provides affluent and high net worth individuals and families with homeowners, high value automobile and collector cars,
valuable articles (including fine arts), personal and excess liability, travel insurance, and recreational marine insurance and
services.
The North America Agricultural Insurance segment includes the business written by Rain and Hail Insurance Service, Inc. in
the U.S. and Canada, which provides comprehensive multiple peril crop insurance (MPCI) and crop-hail insurance, and
Chubb Agribusiness, which offers farm and ranch property as well as specialty P&C coverages, including commercial
agriculture products.
The Overseas General Insurance segment includes the business written by two Chubb divisions that provides both
commercial and consumer P&C insurance and services in the 51 countries and territories outside of North America where
the company operates. Chubb International, our retail division, provides commercial P&C, A&H and traditional and specialty
personal lines for large corporations, middle markets and small customers through retail brokers, agents and other channels
locally around the world. CGM provides commercial P&C excess and surplus lines wholesale business primarily through
F-90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
wholesale brokers in the London market and through Lloyd’s. These divisions write a variety of coverages, including
traditional commercial P&C, specialty categories such as financial lines, marine, energy, aviation, political risk and
construction, as well as group A&H and traditional and specialty personal lines.
•
•
The Global Reinsurance segment includes the reinsurance business written by Chubb Tempest Re, comprising Chubb
Tempest Re Bermuda, Chubb Tempest Re USA, Chubb Tempest Re International, and Chubb Tempest Re Canada. Chubb
Tempest Re provides a broad range of traditional and specialty reinsurance coverages to a diverse array of primary P&C
companies, including small, mid-sized, and multinational ceding companies.
The Life Insurance segment includes our international life operations (Chubb Life) which, commencing on July 1, 2022,
includes the acquired Cigna A&H and life insurance business in Korea, Taiwan, New Zealand, Hong Kong, and Indonesia.
The Life Insurance segment also includes Chubb Tempest Life Re (Chubb Life Re), and the North American supplemental
A&H and life insurance business of Combined Insurance.
Corporate primarily includes the results of all run-off A&E exposures, run-off Brandywine business, Westchester specialty
operations for 1996 and prior years, and certain other run-off exposures, including molestation claims. In addition, Corporate
includes the results of our non-insurance companies including Chubb Limited, Chubb Group Management and Holdings Ltd.,
and Chubb INA Holdings Inc. Our exposure to A&E and molestation claims principally arises out of liabilities acquired when we
purchased Westchester Specialty in 1998, CIGNA’s P&C business in 1999, and Chubb Corp in 2016.
Management uses underwriting income (loss) as the basis for segment performance. Chubb calculates underwriting income
(loss) by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net
premiums earned. Segment income (loss) includes underwriting income (loss), net investment income (loss), and other
operating income and expense items such as each segment's share of the operating income (loss) related to partially-owned
entities and miscellaneous income and expense items for which the segments are held accountable. Our main measure of
segment performance is Segment income (loss), which also includes amortization of purchased intangibles acquired by the
segment. We determined that this definition of segment income (loss) is appropriate and aligns with how the business is
managed. We continue to evaluate our segments as our business continues to evolve and may further refine our segments and
segment income (loss) measures.
Revenue and expenses managed at the corporate level, including net realized gains (losses), interest expense, Cigna integration
expenses, and income tax are reported within Corporate. Cigna integration expenses are one-time costs that are directly
attributable to third-party consulting fees, employee-related retention costs, and other professional and legal fees related to the
acquisition of Cigna's A&H and Life insurance companies in several Asian markets. These items are not allocated to the segment
level as they are one-time in nature and are not related to the ongoing business activities of the segment. The Chief Executive
Officer does not manage segment results or allocate resources to segments when considering these costs, and therefore are
excluded from our definition of segment income (loss).
Certain items are presented in a different manner for segment reporting purposes than in the Consolidated Financial Statements.
These items are reconciled to the consolidated presentation in the Segment measure reclass column below and include:
• Losses and loss expenses include realized gains and losses on crop derivatives. These derivatives were purchased to provide
economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing
impacts underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting
operations, and therefore, realized gains (losses) from these derivatives are reclassified to losses and loss expenses.
• Policy benefits include fair value changes on separate accounts that do not qualify for separate accounting under U.S. GAAP.
These gains and losses have been reclassified from Other (income) expense. We view gains and losses from fair value
changes in both separate account assets and liabilities as part of the results of our underwriting operations, and therefore
these gains and losses are reclassified to policy benefits.
• Net investment income includes investment income reclassified from Other (income) expense related to partially-owned
investment companies (private equity partnerships) where our ownership interest is in excess of three percent. We view
investment income from these equity-method private equity partnerships as net investment income for segment reporting
purposes.
F-91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following tables present the Statement of Operations by segment:
North
America
For the Year Ended
Commercial
December 31, 2022
P&C
(in millions of U.S. dollars)
Insurance
Net premiums written
Net premiums earned
Losses and loss expenses
Policy benefits
Policy acquisition costs
Administrative expenses
Underwriting income (loss)
Net investment income
Other (income) expense
10,828
17,107
2,313
2,853
1,113
2,247
17
—
North
America
Personal
P&C
Insurance
North
America
Agricultural
Insurance
Overseas
General
Insurance
Global
Reinsurance
Life
Insurance
Corporate
Segment
Measure
Reclass
Chubb
Consolidated
$ 17,889 $ 5,313 $ 2,907 $ 11,060 $
943 $ 3,643 $ — $ — $ 41,755
5,180
2,838
10,803
922
3,539
3,186
2,557
5,252
670
497
—
—
—
—
1,534
1,057
126
2,818
(10) 1,070
165
1,663
(24)
240
36
838
510
160
509
626
2
281
1
291
646
283
4
—
363
—
—
385
(748)
—
40,389
(11) 23,342
(42)
1,492
—
—
53
7,392
3,395
4,768
—
(240)
3,742
(45)
292
(198)
74
Amortization expense of
purchased intangibles
—
10
$ 5,083 $ 915 $
Segment income (loss)
Net realized gains (losses)
Interest expense
Cigna integration expenses
Income tax expense
Net income (loss)
57
—
10
182
—
285
174 $ 2,230 $
256 $ 704 $ (1,222) $
11 $ 8,151
(954)
(11)
(965)
570
48
1,255
—
—
—
570
48
1,255
$ (4,049) $ — $ 5,313
36
1
26
North
America
For the Year Ended
Commercial
December 31, 2021
P&C
(in millions of U.S. dollars)
Insurance
Net premiums written
Net premiums earned
Losses and loss expenses
Policy benefits
Policy acquisition costs
Administrative expenses
Underwriting income (loss)
Net investment income (loss)
Other (income) expense
15,461
10,015
2,082
1,052
2,312
2,078
31
—
Amortization expense of
purchased intangibles
Segment income
North
America
Personal
P&C
Insurance
North
America
Agricultural
Insurance
Overseas
General
Insurance
Global
Reinsurance
Life
Insurance
Corporate
Segment
Measure
Reclass
Chubb
Consolidated
$ 16,415 $ 5,002 $ 2,388 $ 10,713 $
873 $ 2,477 $ — $ — $ 37,868
4,915
2,338
10,441
798
2,402
2,924
1,962
5,143
—
—
—
1,001
124
2,799
(3) 1,078
632
—
200
35
740
707
712
333
—
572
—
—
365
276
714
249
(2)
—
10
255
1,421
(69)
(90)
(937)
28
1
26
597
—
331
—
407
(55)
(179)
3,456
(106) (2,118)
(171)
(2,365)
48
—
5
198
—
287
—
36,355
(8)
21,980
(8)
699
—
—
16
6,918
3,136
3,622
$ 4,359 $ 955 $
256 $ 1,970 $
262 $ 418 $ 928 $
8 $
9,156
Net realized gains (losses)
Interest expense
Income tax expense
Net income
1,160
(8)
1,152
492
1,277
—
—
492
1,277
$ 319 $ — $
8,539
F-92
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
North
America
For the Year Ended
Commercial
December 31, 2020
P&C
(in millions of U.S. dollars)
Insurance
Net premiums written
Net premiums earned
Losses and loss expenses
Policy benefits
Policy acquisition costs
Administrative expenses
Underwriting income (loss)
Net investment income (loss)
Other (income) expense
10,129
13,964
2,061
1,942
1,006
887
23
—
North
America
Personal
P&C
Insurance
North
America
Agricultural
Insurance
Overseas
General
Insurance
Global
Reinsurance
Life
Insurance
Corporate
Segment
Measure
Reclass
Chubb
Consolidated
$ 14,474 $ 4,920 $ 1,846 $ 9,335 $
731 $ 2,514 $ — $ — $ 33,820
4,866
1,822
9,285
698
2,482
3,187
1,544
5,255
—
974
270
435
260
5
—
—
123
2,568
9
1,034
146
30
1
428
534
13
435
—
174
37
52
307
2
—
435
—
—
303
—
1
58
—
—
33,117
21,710
784
6,547
2,979
724
726
766
320
(54)
(738)
(59)
1,097
385
(87)
(115)
3,375
(74)
(791)
(173)
(994)
Amortization expense of
purchased intangibles
Segment income (loss)
Net realized gains (losses)
Interest expense
Income tax expense
Net income (loss)
—
11
27
45
—
4
203
—
290
$ 2,925 $ 679 $
148 $ 904 $
357 $ 401 $
(237) $
(1) $
5,176
(499)
516
629
1
—
—
(498)
516
629
$ (1,881) $ — $
3,533
Underwriting assets are reviewed in total by management for purposes of decision-making. Other than Unpaid losses and loss
expenses, Future policy benefits, Reinsurance recoverables, Goodwill and Other intangible assets, Chubb does not allocate
assets to its segments.
F-93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
The following table presents net premiums earned for each segment by line of business:
(in millions of U.S. dollars)
North America Commercial P&C Insurance
Property & other short-tail lines
Casualty & all other
A&H
Total North America Commercial P&C Insurance
North America Personal P&C Insurance
Personal automobile
Personal homeowners
Personal other
Total North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Property & other short-tail lines
Casualty & all other
Personal lines
A&H
Total Overseas General Insurance
Global Reinsurance
Property
Property catastrophe
Casualty & all other
Total Global Reinsurance
Life Insurance
Life
A&H
Total Life Insurance
Total net premiums earned
For the Year Ended December 31
2022
2021
2020
$
3,383 $
2,942 $
2,423
13,056
11,905
10,812
668
614
729
17,107
15,461
13,964
811
3,557
812
5,180
2,838
3,382
3,232
2,020
2,169
781
3,384
750
4,915
2,338
3,105
3,114
2,109
2,113
10,803
10,441
211
208
503
922
1,484
2,055
3,539
151
190
457
798
1,320
1,082
2,402
822
3,327
717
4,866
1,822
2,468
2,738
1,981
2,098
9,285
104
173
421
698
1,317
1,165
2,482
$
40,389 $
36,355 $
33,117
The following table presents net premiums earned by geographic region. Allocations have been made on the basis of location of
risk:
2022
2021
2020
(1)
Europe includes Middle East and Africa regions.
North America
Europe (1)
Asia Pacific /
Japan
Latin America
69 %
70 %
70 %
11 %
12 %
11 %
14 %
12 %
12 %
6 %
6 %
7 %
F-94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
16. Earnings per share
(in millions of U.S. dollars, except share and per share data)
2022
2021
2020
Year Ended December 31
Numerator:
Net income
Denominator:
Denominator for basic earnings per share:
Weighted-average shares outstanding
Denominator for diluted earnings per share:
Share-based compensation plans
Weighted-average shares outstanding
and assumed conversions
Basic earnings per share
Diluted earnings per share
Potential anti-dilutive share conversions
$
5,313 $
8,539 $
3,533
419,779,847
439,968,422
451,602,820
3,747,597
3,228,856
1,838,692
423,527,444
443,197,278
453,441,512
$
$
12.66 $
19.41 $
12.55 $
19.27 $
7.82
7.79
1,467,840
1,532,066
6,811,966
Excluded from weighted-average shares outstanding and assumed conversions is the impact of securities that would have been
anti-dilutive during the respective years. These securities consisted of stock options in which the underlying exercise prices were
greater than the average market prices of our Common Shares. Refer to Note 12 for additional information on stock options.
17. Related party transactions
Starr Indemnity & Liability Company and its affiliates (collectively, Starr)
We have agency, claims services and underwriting services agreements with Starr, the Chairman of which is related to a
member of our senior management team. The Board has reviewed and approved our arrangements with Starr. We have agency,
claims services and underwriting services agreements with various Starr subsidiaries. Under the agency agreement, we secure
the ability to sell our insurance policies through Starr as one of our non-exclusive agents for writing policies, contracts, binders,
or agreements of insurance or reinsurance. Under the claims services agreements, Starr adjusts the claims under policies and
arranges for third party treaty and facultative agreements covering such policies. Under the underwriting services agreements,
Starr underwrites insurance policies on our behalf and we agree to reinsure such policies to Starr under quota share reinsurance
agreements.
The agency agreement also contains a profit-sharing arrangement based on loss ratios, triggered if Starr underwrites a minimum
of $20 million of annual program business net premiums written on our behalf. No profit share commission has been payable
yet under this arrangement. Transactions generated under Starr agreements were as follows:
(in millions of U.S. dollars)
Consolidated statement of operations
Gross premiums written
Ceded premiums written
Commissions paid
Commissions received
Losses and loss expenses
Consolidated balance sheets
Reinsurance recoverable on losses and loss expenses
Ceded reinsurance premium payable
F-95
Year Ended December 31
2022
2021
2020
618 $
353 $
122 $
79 $
592 $
321 $
114 $
73 $
225 $
157 $
507
253
97
59
170
541 $
96 $
516
88
$
$
$
$
$
$
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
ABR Re
At December 31, 2022, we own 18.8 percent of the common equity of ABR Reinsurance Capital Holdings Ltd. and warrants to
acquire 0.5 percent of additional equity. ABR Reinsurance Capital Holdings Ltd., is the parent company of ABR Reinsurance
Ltd. (ABR Re), an independent reinsurance company. Through long-term arrangements, Chubb will be the sole source of
reinsurance risks ceded to ABR Re, and BlackRock, Inc. serves as an investment management service provider. As an investor,
Chubb is expected to benefit from underwriting profit generated by ABR Re’s reinsuring a wide range of Chubb’s primary
insurance business and the income and capital appreciation BlackRock, Inc. seeks to deliver through its investment
management services. In addition, Chubb has an arrangement with BlackRock, Inc. under which both Chubb and BlackRock,
Inc. will be entitled to an equal share of the aggregate amount of certain fees, including underwriting and investment
management performance related fees, in connection with their respective reinsurance and investment management
arrangements with ABR Re. In connection with this arrangement with BlackRock, Inc., we recorded income of $7 million, $11
million, and $3 million in 2022, 2021, and 2020, respectively, which is recorded in Other (income) expense on the
Consolidated statements of operations.
ABR Re is a variable interest entity; however, Chubb is not the primary beneficiary and does not consolidate ABR Re because
Chubb does not have the power to control and direct ABR Re’s most significant activities, including investing and underwriting.
Our ownership interest is accounted for under the equity method of accounting. Chubb cedes premiums to ABR Re and
recognizes the associated commissions.
Transactions generated under ABR Re agreements were as follows:
(in millions of U.S. dollars)
Consolidated statements of operations
Ceded premiums written
Commissions received
Consolidated balance sheets
Reinsurance recoverable on losses and loss expenses
Ceded reinsurance premium payable
Year Ended December 31
2022
2021
2020
507 $
138 $
442 $
133 $
350
100
1,050 $
110 $
963
107
$
$
$
$
Aquiline Capital Partners LLC
Chubb invests in private investment funds managed by Aquiline Capital Partners LLC (collectively, Aquiline Funds), of which its
chief executive officer is related to a member of our senior management team. We have more than a three percent ownership
interest in these funds and therefore account for them under the equity method of accounting. At December 31, 2022, Chubb
has approximately $267 million of future contribution commitments to Aquiline Funds.
Transactions generated from investments in Aquiline Funds are as follows:
(in millions of U.S. dollars)
Consolidated statements of operations
Other income (expense)
Consolidated balance sheets
Other investments
Year Ended December 31
2022
2021
2020
8 $
68 $
2
271 $
245
$
$
F-96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Chubb Limited and Subsidiaries
18. Statutory financial information
Our subsidiaries file financial statements prepared in accordance with statutory accounting practices prescribed or permitted by
insurance regulators. Statutory accounting differs from GAAP in the reporting of certain reinsurance contracts, investments,
subsidiaries, acquisition expenses, fixed assets, deferred income taxes, and certain other items. Some jurisdictions impose
complex regulatory requirements on insurance companies while other jurisdictions impose fewer requirements. In some
jurisdictions, we must obtain licenses issued by governmental authorities to conduct local insurance business. These licenses
may be subject to reserves and minimum capital and solvency tests. Jurisdictions may impose fines, censure, and/or criminal
sanctions for violation of regulatory requirements. The 2022 amounts below are based on estimates.
Chubb's insurance and reinsurance subsidiaries are subject to insurance laws and regulations in the jurisdictions in which they
operate. These regulations include restrictions that limit the amount of dividends or other distributions, such as loans or cash
advances, available to shareholders without prior approval of the local insurance regulatory authorities. The amount of dividends
available to be paid in 2023 without prior approval totals $5.7 billion.
The statutory capital and surplus of our insurance subsidiaries met regulatory requirements for 2022, 2021, and 2020. The
minimum amounts of statutory capital and surplus necessary to satisfy regulatory requirements was $36.9 billion and
$34.0 billion for December 31, 2022 and 2021, respectively. These minimum regulatory capital requirements were
significantly lower than the corresponding amounts required by the rating agencies which review Chubb’s insurance and
reinsurance subsidiaries.
The following tables present the combined statutory capital and surplus and statutory net income (loss) of our Property and
casualty and Life subsidiaries:
(in millions of U.S. dollars)
Statutory capital and surplus
Property and casualty
Life
(in millions of U.S. dollars)
Statutory net income (loss)
Property and casualty
Life
December 31
2021
2022
$
$
40,824 $
46,662
4,834 $
2,294
2022
Year Ended December 31
2020
2021
$
$
4,028 $
7,983 $
4,354
1,425 $
424 $
(245)
Several insurance subsidiaries follow accounting practices prescribed or permitted by the jurisdiction of domicile that differ from
the applicable local statutory practice. The application of prescribed or permitted accounting practices does not have a material
impact on Chubb's statutory surplus and income. As prescribed by the Restructuring discussed previously in Note 7, certain of
our U.S. subsidiaries discount certain A&E liabilities, which increased statutory capital and surplus by approximately $120
million and $129 million at December 31, 2022 and 2021, respectively.
Federal Insurance Company (Federal), a direct subsidiary of Chubb INA Holdings Inc., has a permitted practice granted by the
Indiana Department of Insurance that relates to its investment in a foreign affiliate. Under Statement of Statutory Accounting
Principles No. 97, Investments in Subsidiary, Controlled and Affiliated Entities, in order for a reporting entity to admit its
investments in foreign subsidiaries and affiliates, audited financial statements of the subsidiary or affiliate must be obtained to
support the carrying value. Such financial statements must be prepared in accordance with U.S. GAAP, or alternatively, in
accordance with the local statutory requirements in the subsidiary’s or affiliate’s country of domicile, with an audited footnote
reconciliation of net income and shareholder’s equity as reported to a U.S. GAAP basis. With the explicit permission of the
Indiana Department of Insurance, Federal obtains audited financial statements for its admitted foreign affiliate, which had an
aggregate carrying value of approximately $79 million and $72 million at December 31, 2022 and 2021, respectively,
prepared in accordance with their respective local statutory requirements and supplemented with a separate unaudited
reconciliation of shareholder’s equity as reported to a U.S. GAAP basis.
F-97
SCHEDULE I
Chubb Limited and Subsidiaries
SUMMARY OF INVESTMENTS – OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 2022
(in millions of U.S. dollars)
Fixed maturities available for sale
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Total fixed maturities available for sale
Fixed maturities held to maturity
U.S. Treasury / Agency
Non-U.S.
Corporate and asset-backed securities
Mortgage-backed securities
Municipal
Total fixed maturities held to maturity
Equity securities
Industrial, miscellaneous, and all other
Short-term investments
Other investments (2)
Cost or
Amortized Cost,
Net (1)
Fair Value
Amount at Which
Shown in the
Balance Sheet
$
2,792 $
2,626 $
28,005
40,440
17,868
4,081
93,186
1,417
1,136
1,705
1,455
3,135
8,848
827
4,962
13,425
25,908
36,955
15,851
3,880
85,220
1,370
1,054
1,580
1,351
3,084
8,439
827
4,960
13,425
2,626
25,908
36,955
15,851
3,880
85,220
1,417
1,136
1,705
1,455
3,135
8,848
827
4,960
13,425
Total investments - other than investments in related parties
$
121,248 $
112,871 $
113,280
(1) Net of valuation allowance for expected credit losses.
(2)
Excludes $271 million of related party investments.
F-98
SCHEDULE II
Chubb Limited and Subsidiaries
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS (Parent Company Only)
(in millions of U.S. dollars)
Assets
December 31
December 31
2022
2021
Investments in subsidiaries and affiliates on equity basis
$
50,393 $
Total investments
Cash
Due from subsidiaries and affiliates, net
Other assets
Total assets
Liabilities
Affiliated notional cash pooling programs
Accounts payable, accrued expenses, and other liabilities
Total liabilities
Shareholders' equity
Common Shares
Common Shares in treasury
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Total shareholders' equity
Total liabilities and shareholders' equity
51,408 $
60,085
$
$
50,393
40
959
16
252 $
616
868
10,346
(5,113)
7,166
48,334
(10,193)
50,540
$
51,408 $
58,850
58,850
1
1,218
16
8
363
371
10,985
(7,464)
8,478
47,365
350
59,714
60,085
The condensed financial information should be read in conjunction with the Consolidated Financial Statements and notes thereto.
F-99
SCHEDULE II (continued)
Chubb Limited and Subsidiaries
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS (Parent Company Only)
(in millions of U.S. dollars)
Revenues
Investment income (1)
Equity in net income of subsidiaries and affiliates
Total revenues
Expenses
Administrative and other (income) expense
Cigna integration expenses
Income tax expense
Total expenses
Net income
Comprehensive income (loss)
Year Ended December 31
2022
2021
2020
$
83 $
96 $
5,323
5,406
65
10
18
93
8,514
8,610
56
—
15
71
$
$
5,313 $
(5,230) $
8,539 $
6,020 $
155
3,457
3,612
55
—
24
79
3,533
5,783
(1) Includes net investment income, interest income, and net realized gains (losses).
The condensed financial information should be read in conjunction with the Consolidated Financial Statements and notes thereto.
STATEMENTS OF CASH FLOWS (Parent Company Only)
Year Ended December 31
(in millions of U.S. dollars)
Net cash flows from operating activities (1)
Cash flows from investing activities
Capital contribution
Other
Net cash flows used for investing activities
Cash flows from financing activities
Dividends paid on Common Shares
Common Shares repurchased
Repayment of intercompany loans
Net proceeds from affiliated notional cash pooling programs (2)
2022
2021
$
7,831 $
4,167 $
(4,046) $
—
(4,046) $
(1,375)
(2,894)
279
245
—
—
—
(1,401)
(4,861)
2,003
8
Net cash flows used for financing activities
(3,745)
(4,251)
Effect of foreign currency rate changes on cash and restricted cash
Net increase (decrease) in cash and restricted cash
Cash and restricted cash – beginning of year
Cash and restricted cash – end of year
(1)
39
1
40 $
1
(83)
84
1 $
$
(1) Includes cash dividends received from subsidiaries of $7.7 billion, $3.7 billion, and $2.0 billion in 2022, 2021, and 2020, respectively.
(2) Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to Note 1 g) for additional information.
The condensed financial information should be read in conjunction with the Consolidated Financial Statements and notes thereto.
2020
1,933
(1,200)
(2)
(1,202)
(1,388)
(523)
1,265
—
(646)
(3)
82
2
84
F-100
SCHEDULE IV
Chubb Limited and Subsidiaries
SUPPLEMENTAL INFORMATION CONCERNING REINSURANCE
Premiums Earned
For the years ended December 31, 2022, 2021, and 2020
(in millions of U.S. dollars, except for percentages)
Direct
Amount
Ceded To
Other
Companies
Assumed
From Other
Companies
Net Amount
Percentage
of Amount
Assumed to
Net
$
39,449 $
9,678 $
4,242 $
34,013
5,206
1,499
411
106
97
91
4,892
1,484
$
46,154 $
10,195 $
4,430 $
40,389
$
35,767 $
7,982 $
3,441 $
31,226
4,062
1,309
362
89
109
100
3,809
1,320
$
41,138 $
8,433 $
3,650 $
36,355
$
31,546 $
6,782 $
3,044 $
27,808
4,249
1,242
368
93
111
168
3,992
1,317
$
37,037 $
7,243 $
3,323 $
33,117
12 %
2 %
6 %
11 %
11 %
3 %
8 %
10 %
11 %
3 %
13 %
10 %
2022
Property and Casualty
Accident and Health
Life
Total
2021
Property and Casualty
Accident and Health
Life
Total
2020
Property and Casualty
Accident and Health
Life
Total
F-101
SCHEDULE VI
Chubb Limited and Subsidiaries
SUPPLEMENTARY INFORMATION CONCERNING PROPERTY AND CASUALTY OPERATIONS
As of and for the years ended December 31, 2022, 2021, and 2020
(in millions of U.S. dollars)
Deferred
Policy
Acquisition
Costs
Net Reserves
for Unpaid
Losses and
Loss
Expenses
Unearned
Premiums
Net
Premiums
Earned
Net
Investment
Income
Net Losses and Loss
Expenses Incurred
Related to
Current
Year
Prior
Year
Amortization
of Deferred
Policy
Acquisition
Costs
Net Paid
Losses and
Loss Expenses
Net
Premiums
Written
2022
2021
2020
$
$
$
4,462 $
59,195 $ 20,360 $ 38,905 $
3,381 $ 24,495 $ (1,153) $
6,873 $
20,323 $ 40,170
4,260 $
56,759 $ 19,101 $ 35,035 $
3,133 $ 22,966 $
(986) $
6,440 $
17,884 $ 36,474
4,244 $
53,164 $ 17,652 $ 31,800 $
3,074 $ 22,124 $
(414) $
6,076 $
17,434 $ 32,471
F-102
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON
THE (US GAAP) CONSOLIDATED FINANCIAL STATEMENTS
Report of the statutory auditor on the consolidated financial statements
Opinion
We have audited the accompanying consolidated financial statements of Chubb Limited and its subsidiaries (the "Company"),
which comprise the consolidated balance sheets as of December 31, 2022 and 2021, and the related consolidated statements
of operations and comprehensive income, consolidated statements of shareholders’ equity and consolidated statements of cash
flows for each of the three years in the period ended December 31, 2022, and the related notes, including a summary of
significant accounting policies (collectively referred to as the "consolidated financial statements").
In our opinion, the accompanying consolidated financial statements (pages F-7 to F-97) present fairly, in all material respects,
the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2022 in accordance with accounting principles generally accepted
in the United States of America (US GAAP) and comply with Swiss law.
Basis for opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (US GAAS),
Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are further
described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are
independent of the Company and have fulfilled our other ethical responsibilities, in accordance with the relevant ethical
requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Key audit matters
Key audit matters are those matters that were communicated with those charged with governance and, in our professional
judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters
were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
F-103
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON
THE (US GAAP) CONSOLIDATED FINANCIAL STATEMENTS (continued)
Valuation of Unpaid Losses and Loss Expenses, Net of Reinsurance
Key audit matter
How our audit addressed the key audit matter
Addressing the matter involved performing procedures and
evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements.
These procedures included testing the effectiveness of controls
relating to the Company’s valuation of unpaid losses and loss
expenses, net of reinsurance, including controls over the
selection of actuarial reserving methods and development of
significant assumptions. These procedures also included,
among others, the involvement of professionals with
specialized skill and knowledge to assist in performing one or
a combination of procedures, including (i) independently
estimating reserves on a sample basis using actual historical
data and loss development patterns, as well as industry data
and other benchmarks, to develop an independent estimate
and comparing the independent estimate to management’s
actuarially determined reserves and (ii) evaluating the
appropriateness of management’s actuarial reserving methods
and the reasonableness of the aforementioned assumptions,
as well as assessing qualitative adjustments to carried reserves
and the consistency of management’s approach period-over-
period. Performing these procedures involved testing the
completeness and accuracy of data provided by management.
As described in Note 7 to the consolidated financial
statements, as of December 31, 2022, the Company's liability
for unpaid losses and loss expenses, net of reinsurance, was
$59.2 billion. The majority of the Company's net unpaid losses
and loss expenses arise from the Company's long-tail casualty
business (such as general liability and professional liability),
U.S. sourced workers' compensation, asbestos-related,
environmental pollution and other exposures with high
estimation uncertainty. The process of establishing loss and
loss expense reserves requires the use of estimates and
judgments based on circumstances underlying the insured loss
at the date of accrual. The judgments involved in projecting
the ultimate losses include 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 reserves for the various product lines each
require different qualitative and quantitative assumptions and
judgments, including 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 the Company's insured parties.
The principal considerations for our determination that
performing procedures relating to the valuation of unpaid
losses and loss expenses, net of reinsurance, from the long-tail
and other exposures as described above, is a key audit matter
are (i) the significant judgment by management in determining
the reserve liability, which in turn led to a high degree of
auditor subjectivity and judgment in performing procedures
relating to the valuation; (ii) the significant audit effort and
judgment in evaluating the audit evidence relating to the
actuarial reserving methods and assumptions related to
extrapolation of actual historical data, loss development
patterns, industry data, other benchmarks, and the impact of
qualitative and quantitative subjective assumptions and
judgments; and (iii) the audit effort involved the use of
professionals with specialized skill and knowledge.
F- 104
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON
THE (US GAAP) CONSOLIDATED FINANCIAL STATEMENTS (continued)
Acquisition of Cigna's Life and Accident and Health Insurance Business in Asian Markets -
Valuation of Business Acquired Intangible Asset
Key audit matter
How our audit addressed the key audit matter
As described in Notes 1 and 2 to the consolidated financial
statements, the Company completed the acquisition of Cigna's
life and accident and health insurance business in several
Asian markets on July 1, 2022 for a total purchase price of
$5.4 billion, which generated $3.5 billion of value of business
acquired (VOBA). VOBA represents the fair value of the future
profits of in-force long duration contracts. Management
determined the fair value of VOBA by calculating the present
value of estimated net cash flows for the contracts in force at
the acquisition date. As described in Note 6, management
judgment was applied in estimating VOBA, which was based
on many factors including mortality, morbidity, persistency,
investment yields, expenses and the discount rate, with the
discount rate being the most significant factor.
The principal considerations for our determination that
performing procedures relating to the valuation of VOBA is a
key audit matter are (i) the significant judgment by
management when determining the fair value; (ii) a high
degree of auditor judgment, subjectivity and effort in
performing procedures and evaluating the significant
assumption related to the discount rate; and (iii) the audit
effort involved the use of professionals with specialized skill
and knowledge.
Addressing the matter involved performing procedures and
evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements.
These procedures included testing the effectiveness of controls
relating to the valuation of VOBA and controls over the
development of the discount rate significant assumption.
These procedures also included, among others, (i) testing
management's process for developing the fair value estimate of
VOBA, (ii) evaluating the appropriateness of the present value
of estimated net cash flows method, (iii) testing the
completeness and accuracy of the data used in the method,
and (iv) evaluating the reasonableness of the discount rate
significant assumption. Professionals with specialized skill and
knowledge were used to assist in evaluating the
appropriateness of the method used by management and
evaluating the reasonableness of the discount rate significant
assumption.
Other matter
Accounting principles generally accepted in the United States of America (US GAAP) requires that the supplementary
information based on the requirements of ASU 2015-09, Disclosures about Short-Duration Contracts, on pages F-46 to F-57 be
presented to supplement the consolidated financial statements. Such information is the responsibility of management and,
although not part of the consolidated financial statements, is required by the Financial Accounting Standards Board, which
considers it an essential part of financial reporting for placing the consolidated financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America (US GAAS), which
consisted of inquiries of management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the consolidated financial statements and other knowledge we
obtained during our audit of the consolidated financial statements. We do not express an opinion or provide any assurance on
the supplementary information because the limited procedures do not provide us with sufficient evidence to express an opinion
or provide any assurance.
Responsibilities of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with US GAAP and the provisions of Swiss law, and for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for
one year after the date the financial statements are available to be issued; to disclose, as applicable, matters related to going
concern; and to use the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to do so.
F-105
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON
THE (US GAAP) CONSOLIDATED FINANCIAL STATEMENTS (continued)
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that
an audit conducted in accordance with US GAAS, Swiss law and SA-CH will always detect a material misstatement when it
exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are
considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the consolidated financial statements.
In performing an audit in accordance with US GAAS, Swiss law and SA-CH, we:
•
•
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks. Such procedures include examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control. Accordingly, no such opinion is expressed.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made, as well as evaluate the overall presentation of the consolidated financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial
doubt about the Company's ability to continue as a going concern for a reasonable period of time.
Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Company to express an opinion on the financial statements. We are responsible for the direction,
supervision, and performance of the Company audit. We remain solely responsible for our audit opinion.
We are required to communicate with the Board of Directors regarding, among other matters, the planned scope and timing of
the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter
or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
F- 106
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON
THE (US GAAP) CONSOLIDATED FINANCIAL STATEMENTS (continued)
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included in the
annual report, but does not include the consolidated financial statements, the Swiss statutory financial statements of Chubb
Limited, the Swiss statutory compensation report of Chubb Limited and our auditor's reports thereon. The annual report is
expected to be made available to us after the date of this auditor's report.
Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information when it
becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists,
which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of
Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG
/s/ Peter Eberli
Peter Eberli
Audit expert
Auditor in charge
Zurich, February 24, 2023
/s/ Beat Walter
Beat Walter
Audit expert
F-107
CHUBB LIMITED
SWISS STATUTORY FINANCIAL STATEMENTS
December 31, 2022
S-1
December 31
December 31
2022
2021
37
11
49
97
38,184
1,495
7
39,686
39,783
388
1,289
326
32
2,035
2,035
1
9
40
50
34,074
1,495
7
35,576
35,626
27
991
317
10
1,345
1,345
10,780
11,448
6,858
1,213
2,224
8,115
1,257
2,599
(2,879)
(4,445)
11,904
7,648
37,748
39,783
10,977
4,330
34,281
35,626
SWISS STATUTORY BALANCE SHEET (Unconsolidated)
Chubb Limited
(in millions of Swiss francs)
Assets
Cash and cash equivalents
Prepaid expenses and other assets
Receivable from subsidiaries
Total current assets
Investments in subsidiaries
Loans to subsidiaries
Other assets
Total non-current assets
Total assets
Liabilities
Accounts payable
Payable to subsidiaries
Capital distribution payable
Deferred unrealized exchange gain
Total short-term liabilities
Total liabilities
Shareholders' equity
Share capital
Statutory capital reserves:
Capital contribution reserves
Reserve for dividends from capital contributions
Reserves for treasury shares
Treasury shares
Statutory retained earnings:
Retained earnings
Profit for the year
Total shareholders' equity
Total liabilities and shareholders' equity
The accompanying notes form an integral part of these statutory financial statements
S-2
SWISS STATUTORY STATEMENT OF INCOME (Unconsolidated)
Chubb Limited
For the years ended December 31, 2022 and December 31, 2021
(in millions of Swiss francs)
Dividend income
Interest income from subsidiaries
Debt guarantee fee income
Other income
Administrative and other expenses
Foreign exchange gains/(losses)
Operating results
Interest income (expense) third-party only
Earnings before taxes
Tax expense
Profit for the year
The accompanying notes form an integral part of these statutory financial statements
2022
7,661
53
43
7
(125)
16
7,655
(1)
7,654
(6)
7,648
2021
4,304
102
38
10
(96)
(17)
4,341
3
4,344
(14)
4,330
S-3
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Chubb Limited
1. Basis of presentation
Chubb Limited (Chubb), domiciled in Zurich, Switzerland, is the holding company of Chubb Group (Group) with a listing on the
New York Stock Exchange (NYSE). Chubb's principal activity is the holding of subsidiaries. Revenues consist mainly of dividend
and interest income. The accompanying financial statements comply with Swiss law. The financial statements present the
financial position of the holding company on a standalone basis and do not represent the consolidated financial position of the
holding company and its subsidiaries.
The financial statements have been prepared in accordance with the provisions of commercial accounting as set out in the
Swiss Code of Obligations (Art. 957 to 963b CO, effective since January 1, 2013).
All amounts in the notes are shown in millions of Swiss francs unless otherwise stated.
2. Significant accounting policies
a) Cash and cash equivalents
Cash and cash equivalents includes cash on hand and deposits with an original maturity of three months or less at time of
purchase.
Chubb and certain of its subsidiaries (participating entities) have agreements with a third-party bank provider which
implemented two international multi-currency notional cash pooling programs. In each program, participating 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. Participants of the notional pool either pay
or receive interest from the third-party bank provider. The bank extends overdraft credit to any participating 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 participating entity would be guaranteed by Chubb up to CHF 278 million ($300 million) in the
aggregate. Our syndicated letter of credit facility allows for same day drawings to fund a net pool overdraft should participating
entities withdraw contributed funds from the pool.
b) Investments in subsidiaries
Investments in subsidiaries are equity interests, which are held on a long-term basis for the purpose of the holding company's
business activities. They are carried at a value no higher than their cost less adjustments for impairment. An impairment
analysis of the investments in subsidiaries is performed on an annual basis.
c) Translation of foreign currencies
The financial statements are translated from U.S. dollar into Swiss francs using the following exchange rates:
• Investments in subsidiaries at historical exchange rates;
• Other assets and liabilities at period end exchange rates;
• Treasury shares and shareholders' equity at historical exchange rates; and
• Revenues and expenses at average exchange rates (where approximatively accurate), otherwise at transaction date exchange
rates
Exchange losses are recorded in the statement of income and unrealized exchange gains are recorded on the balance sheet and
deferred until realized.
d) Dividend income
Chubb collects dividend income from its direct subsidiaries. Dividends are recognized in the year they are declared.
e) Interest income (expense) from subsidiaries
Chubb collects interest income from loans issued to its subsidiaries which are reflected within operating income. Additionally,
Chubb either collects or pays interest related to a reciprocal line of credit with one of its subsidiaries.
f) Debt guarantee fee income
Chubb collects a fee for Chubb's guarantee of the debt issued by one of its subsidiaries.
S-4
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
g) Other Income
Chubb has entered into an arrangement with BlackRock, Inc. under which both Chubb and BlackRock, Inc. will be entitled to
an equal share of the aggregate amount of certain fees, including underwriting and investment management performance related
fees, in connection with their respective reinsurance and investment management arrangements with ABR Re, an independent
reinsurance Company. The fees received by Chubb were CHF 7 million and CHF 10 million for the years ended December 31,
2022 and 2021, respectively.
3. Commitments, contingencies, and guarantees
a) Letters of credit (LOC)
Chubb has access to capital markets and credit facilities with a letter of credit capacity of CHF 3.7 billion ($4.0 billion), CHF
2.8 billion ($3.0 billion) of which can be used for revolving credit. Chubb's LOC usage was CHF 1.3 billion ($1.4 billion) and
CHF 1.4 billion ($1.4 billion) for the years ended December 31, 2022 and 2021, respectively.
The letter of credit facility required that Chubb maintains certain financial covenants, all of which were met at December 31,
2022 and 2021.
b) Lease commitments
Chubb leases property under an operating lease which was extended in February 2023. The new agreement will extend the
operating lease for an additional one-year period through September 2024 for an additional commitment of CHF 1.5 million.
The following table presents future annual minimum lease payments as of December 31, 2022.
Year ending December 31
(in millions of Swiss francs)
2023
Thereafter
Total minimum future lease commitments
1.1
—
1.1
At December 31, 2021, the total minimum future lease commitments were CHF 2.6 million.
c) Guarantee of debt
Chubb fully and unconditionally guarantees certain subsidiary debt totaling CHF 14.1 billion ($15.2 billion) and CHF 14.9
billion ($16.4 billion) at December 31, 2022 and 2021, respectively, and receives a fee.
S-5
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
4. Significant investments
a) Share capital
The following table presents information regarding share capital held of subsidiaries at December 31, 2022 and 2021.
Amounts are expressed in whole U.S. dollars, Swiss francs, or Korean wons. In addition, the table shows the shareholdings as a
percentage of total share capital of the subsidiary, which is equal to the voting rights.
Holdings as of December 31, 2022 and 2021:
Year
Country
Chubb Group Holdings, Inc.
Chubb INA Holdings, Inc.
2022
2021
2022
2021
U.S.A.
U.S.A.
U.S.A.
U.S.A.
Chubb Insurance (Switzerland) Limited
2022 Switzerland
Chubb Reinsurance (Switzerland) Limited
2022 Switzerland
2021
Switzerland
Chubb Group Management and Holdings Ltd.
LINA Life Insurance Co. of Korea (1)
2021
Switzerland
2022
2021
2022
2021
Bermuda
Bermuda
Korea
—
(1)
Share capital is CHF 25.9 million at the time of acquisition, July 1, 2022.
% of
Possession
& Voting
100 %
100 %
20 %
20 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
—
Currency
Share Capital
Purpose
USD
USD
USD
USD
11
11
1
1
Holding company
Holding company
Holding company
Holding company
CHF 100,000,000
Insurance company
CHF 100,000,000
Insurance company
CHF
44,000,000 Reinsurance company
CHF
44,000,000
Reinsurance company
USD
USD
100
100
Holding company
Holding company
KRW 34,860,000,000
Insurance company
—
—
—
b) Investments in subsidiaries
The following table presents information regarding investments in subsidiaries at December 31, 2022 and 2021. On July 1,
2022, Chubb and its subsidiaries completed the acquisition of the life and non-life insurance companies that house the
personal accident, supplemental health, and life insurance business of Cigna in six Asian markets, inclusive of the LINA Life
Insurance Co. of Korea, a direct subsidiary of Chubb Limited, for CHF 3.8 billion ($3.9 billion).
(in millions of Swiss francs)
Chubb Group Holdings, Inc.
Chubb INA Holdings, Inc.
Chubb Group Management Holdings Ltd.
Chubb Insurance (Switzerland) Limited
Chubb Reinsurance (Switzerland) Limited
LINA Life Insurance Co. of Korea
Balance - end of year
2022
17,004
2,062
14,928
185
242
3,763
38,184
2021
17,004
2,043
14,600
185
242
—
34,074
S-6
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
5. Common Share ownership of the Board of Directors and Group Executives
a) Board of Directors
The following table presents information, at December 31, 2022 and 2021, with respect to the ownership of Common Shares
by each member of the Board of Directors. Unless otherwise indicated, the named individual has sole voting and investment
power over the Common Shares listed in the Common Shares Beneficially Owned column. Common Share ownership of Evan G.
Greenberg, the Chairman of the Board, is included in Note 5 b) below.
Name of Beneficial Owner
Michael G. Atieh (3)
Kathy Bonanno
Sheila P. Burke
Mary A. Cirillo
Michael P. Connors
Robert J. Hugin (4)
Robert W. Scully (5)
Eugene B. Shanks, Jr.
Theodore E. Shasta
David H. Sidwell
Olivier Steimer
Luis Tellez
Frances F. Townsend
Total
Number of
Common
Shares
Beneficially
Owned
1,159
847
—
—
6,056
5,244
27,537
26,070
15,091
14,279
15,087
13,251
44,337
42,802
—
11,369
14,556
15,017
11,962
11,150
20,276
19,251
812
—
2,102
1,290
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Number of
Restricted
Stock
Units (1)
37,422
36,812
—
—
39,987
39,805
15,582
15,328
—
—
—
—
—
—
—
—
—
—
—
—
3,775
3,713
—
—
—
—
Number of
Restricted
Common
Stock (2)
932
1,083
932
—
932
1,083
1,692
1,956
932
1,083
1,594
1,836
1,766
2,047
—
1,083
932
1,083
932
1,083
932
1,083
932
1,083
932
1,083
2022
158,975
2021
160,570
96,766
95,658
13,440
15,586
(1)
Represents Common Shares that will be issued to the director upon his or her separation from the Board. These Common Shares relate to stock units granted as director's
compensation prior to 2008 and associated dividend reinvestment accruals.
For Ms. Burke includes deferred stock units and market value units granted prior to the merger that will settle following separation from service. The number of vested market
value units for Ms. Burke was 11,150 at December 31, 2022. The market value units include dividend reinvestment accruals for 2022 valued at $35,973.
(2)
Represents Common Shares with respect to which the individual has the power to vote (but not to dispose of).
(3)
Common Shares beneficially owned includes 847 shares held by a family foundation. Mr. Atieh has no pecuniary interest in these shares.
(4)
Common Shares beneficially owned includes 335 shares held by Mr. Hugin's sons, of which Mr. Hugin disclaims beneficial ownership.
(5)
Common Shares beneficially owned includes 2,775 shares held by Mr. Scully's daughter, of which Mr. Scully disclaims beneficial ownership.
S-7
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
b) Group Executives
The following table presents information, at December 31, 2022 and 2021, with respect to the beneficial ownership of
Common Shares by each of the following Group Executives. Unless otherwise indicated, the named individual has sole voting
and investment power over the Common Shares listed in the Common Shares Beneficially Owned column.
Name of Beneficial Owner
Evan G. Greenberg (3) (4)
Peter C. Enns
John W. Keogh (5)
Joseph Wayland
Total
Number of
Common
Shares
Beneficially
Owned
Number of
Common
Shares
Subject to
Options (1)
Weighted
Average
Option
Exercise Price
in CHF
Year
2022
720,351
730,287
2021
753,083
790,532
2022
2021
4,662
3,000
14,084
—
2022
165,166
228,345
2021
182,178
224,670
2022
40,847
2021
34,552
97,370
84,869
2022
931,026
1,070,086
2021
972,813
1,100,071
126.40
109.58
162.75
—
132.75
117.42
129.56
119.30
Option
Exercise
Years
4.55
4.38
8.51
—
5.18
5.19
4.87
5.39
Number of
Restricted
Common
Stock (2)
170,383
163,646
25,020
19,374
73,621
69,082
21,002
22,452
290,026
274,554
(1)
Represents Common Shares that the individual has the right to acquire within 60 days of December 31, 2022 and 2021, through option exercises, both vested and unvested.
(2)
(3)
Represents Common Shares with respect to which the individual has the power to vote (but not to dispose of).
Mr. Greenberg shares with other persons the power to vote and/or dispose of 41,564 and 72,085 of the Common Shares listed at December 31, 2022 and 2021,
respectively. The amount included in the table for Mr. Greenberg also contains 444,738 and 318,885 additional pledged Common shares that are owned by trusts or entities
in which adult family members of Mr. Greenberg are beneficiaries at December 31, 2022 and 2021, respectively.
(4)
Mr. Greenberg pledged 240,000 Common Shares Beneficially Owned in connection with a margin account at December 31, 2022 and 2021.
(5)
Mr. Keogh shares with other persons the power to vote and/or dispose of 13,675 and 7,978 of the Common Shares listed at December 31, 2022 and 2021, respectively.
6. Shareholders' equity
The following table presents issued, authorized, and conditional share capital, at December 31, 2022 and 2021. Treasury
shares held by Chubb which are issued, but not outstanding totaled 14,925,028 and 27,644,500 shares for the years ended
December 31, 2022 and 2021, respectively. In addition to the treasury shares held by Chubb, subsidiaries of Chubb held
16,856,730 treasury shares at a cost of CHF 2.2 billion ($2.3 billion) and 19,804,002 treasury shares at a cost of CHF 2.6
billion ($2.7 billion), for the years ended December 31, 2022 and 2021, respectively.
Shares Issued
Authorized share capital for general purposes
Conditional share capital for bonds and similar debt instruments
Conditional share capital for employee benefit plans
Year ended December 31
2022
2021
446,376,614
474,021,114
200,000,000
200,000,000
33,000,000
33,000,000
25,410,929
25,410,929
S-8
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
a) Shares authorized and issued
All Common Shares are authorized under Swiss Corporate law. Chubb's share capital consisted of 446,376,614 and
474,021,114 Common Shares, with a par value of CHF 24.15 per share for the period ending December 31, 2022 and 2021,
respectively. 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, 2024, 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.
b) Conditional share capital
(i) Conditional share capital for bonds and similar debt instruments
At both December 31, 2022 and 2021, the share capital of Chubb was authorized to be increased through the issuance of a
maximum of 33,000,000 fully paid up shares each with a par value of CHF 24.15 per share 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.
(ii) Conditional share capital for employee benefit plans
At both December 31, 2022 and 2021, the share capital of Chubb was authorized to be increased through the issuance of a
maximum of 25,410,929 fully paid up shares each with a par value of CHF 24.15 per share in connection with the exercise of
option rights granted to any employee of Chubb or a subsidiary, and any consultant, director, or other person providing services
to Chubb or a subsidiary.
c) Capital contribution reserves
At our May 2021 annual general meeting, our shareholders approved an annual dividend for the following year of up to $3.20
per share, which were paid in four quarterly installments of $0.80 per share after the annual general meeting by way of
distribution from capital contribution reserves, transferred to free reserves for payment.
At our May 2022 annual general meeting, our shareholders approved an annual dividend for the following year of up to $3.32
per share, expected to be paid in four quarterly installments of $0.83 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 2023 annual general meeting, and is authorized
to abstain from distributing a dividend at its discretion. The first three quarterly installments each of $0.83 per share have been
distributed by the Board as expected.
The following table presents dividend distributions per Common Share in Swiss francs (CHF) and U.S. dollars (USD) for the
years ended December 31, 2022 and 2021:
Dividends - distributed from Capital contribution reserves
Total dividend distributions per common share
CHF
3.11 $
3.11 $
2022
USD
3.29
3.29
CHF
2.88 $
2.88 $
2021
USD
3.18
3.18
S-9
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
d) Treasury Shares - Owned by Chubb
Treasury shares held by Chubb are carried at cost. At our May 2022 annual general meeting, our shareholders approved the
cancellation of 13,179,100 shares purchased under our share repurchase program during the last six months of 2021. The
capital reduction by cancellation of shares was subject to publication requirements and a two-month waiting period in
accordance with Swiss law and became effective on August 4, 2022. At the Chubb Limited Extraordinary General Meeting of
Shareholders, held on November 3, 2021, shareholders approved the cancellation of 14,465,400 shares repurchased under
our share repurchase program during the first six months of 2021. The capital reduction by cancellation of shares was subject
to publication requirements and a two-month waiting period in accordance with Swiss law and became effective on January 17,
2022. The following table presents a roll-forward of treasury shares held by Chubb for the years ended December 31, 2022 and
2021:
(cost in millions of Swiss francs)
Balance – beginning of year
Repurchase of shares
Cancellation of shares
Number of
Shares
2022
Cost
Number of
Shares
27,644,500
4,445
3,606,053
2021
Cost
486
14,925,028
2,879
27,644,500
4,445
(27,644,500)
(4,445) (3,584,150)
(484)
(2)
Redeemed under share-based compensation plans
—
—
(21,903)
Balance – end of year
14,925,028
2,879
27,644,500
4,445
e) Treasury Shares - Reserve for Treasury Shares
Treasury shares held by Chubb subsidiaries are carried at cost. The following table presents a roll-forward of treasury shares
held by Chubb subsidiaries for the years ended December 31, 2022 and 2021:
(cost in millions of Swiss francs)
Balance – beginning of year
Number of
Shares
2022
Cost
Number of
Shares
19,804,002
2,599
23,266,586
Additions related to share-based compensation plans
709,528
138
717,377
Redeemed under share-based compensation plans
(3,656,800)
(513) (4,179,961)
2021
Cost
3,046
104
(551)
Balance – end of year
16,856,730
2,224
19,804,002
2,599
Increases in treasury shares held by Chubb and its subsidiaries are due to 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 treasury shares are principally due to grants of restricted stock, exercises of stock options, and purchases under the
Employee Stock Purchase Plan (ESPP).
f) Movements in Statutory Retained earnings
(in millions of Swiss francs)
Balance – beginning of year
Attribution to / release reserve for treasury shares
Cancellation of treasury shares
Profit for the year
Balance – end of year
S-10
Year ended December 31
2022
2021
15,307
10,928
374
(3,777)
7,648
19,552
447
(398)
4,330
15,307
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
g) Chubb securities repurchase authorization
From time to time, Chubb repurchases 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 November 19, 2020 through December 31, 2021;
$1.0 billion increase to the November 2020 share repurchase program to a total $2.5 billion in February 2021,
effective through December 31, 2021;
• One-time incremental share repurchase program of $5.0 billion of Chubb Common Shares from July 19, 2021 through
June 30, 2022; and
$2.5 billion of Chubb Common Shares from May 19, 2022 through June 30, 2023.
•
Share repurchases may be in the open market, in privately negotiated transactions, block trades, accelerated repurchases and/or
through option or other forward transactions.
The following table presents repurchases of Chubb's Common Shares conducted in a series of open market transactions under
the Board authorizations:
(cost in millions of Swiss francs)
Number of shares repurchased
Cost of shares repurchased
Year ended December 31
2022
2021
14,925,028
27,644,500
2,879
4,445
h) General restrictions
Holders of Common Shares are entitled to receive dividends as proposed by the Board and 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. 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.
7. Significant shareholders
The following table presents information regarding each person, including corporate groups, known to Chubb to own beneficially
or of record more than five percent of Chubb's outstanding Common Shares at December 31, 2022 and 2021.
Name of Beneficial Owner
Vanguard Group, Inc.
BlackRock, Inc.
T. Rowe Price Associates, Inc.
Wellington Management Group, LLP
State Street Corporation
Capital International Investors
* Represented less than five percent
8. Other disclosures required by Swiss law
2022
2021
Number of Shares
Beneficially
Owned
Percent of
Class
Number of Shares
Beneficially Owned
Percent of
Class
38,144,673
9.19 %
35,503,624
28,694,321
6.90 %
27,072,528
24,611,406
5.90 %
22,571,047
*
*
*
*
*
*
27,645,799
21,994,670
21,774,217
8.24 %
6.30 %
5.20 %
6.42 %
5.11 %
5.10 %
a) Expenses
Total personnel expenses amounted to CHF 11.1 million and CHF 10.4 million for the years ended December 31, 2022 and
2021, respectively. The number of full-time positions on an annual average was no more than 50 for years ended December
31, 2022 and 2021.
S-11
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS (continued)
Chubb Limited
Total amortization expense related to tangible property amounted to CHF 0.5 million and CHF 0.3 million for the years ended
December 31, 2022 and 2021, respectively.
b) Fees paid to auditors
Fees paid to auditors by Chubb Limited totaled CHF 5.2 million and CHF 3.9 million for the years ended December 31, 2022
and 2021, respectively. An allocation of audit fees for professional services rendered in connection with the integrated audit of
our consolidated financial statements and internal controls over financial reporting and audit fees for the standalone Swiss
statutory financial statements totaled CHF 4.8 million and CHF 3.6 million for the years ended December 31, 2022 and 2021,
respectively. Tax fees totaled CHF 0.4 million and CHF 0.3 million for the years ended December 31, 2022 and 2021,
respectively.
c) Loans to subsidiaries
The following table presents information regarding loans to subsidiaries at December 31, 2022 and 2021.
(in millions of Swiss francs)
Loans to Chubb Group Holdings, Inc.
Loans to Chubb INA International Holdings Ltd., Agencia en Chile
Total loans to subsidiaries
2022
1,230
265
1,495
d) Receivables from subsidiaries
The following table presents information regarding receivables from subsidiaries at December 31, 2022 and 2021.
(in millions of Swiss francs)
Receivables from Chubb Group Holdings, Inc.
Receivables from Chubb Group Management and Holdings, Ltd.
Total receivables from subsidiaries
2022
48
1
49
e) Payable to subsidiaries
The following table presents information regarding payables to subsidiaries at December 31, 2022 and 2021.
(in millions of Swiss francs)
Payable to Chubb Group Holdings, Inc.
Payable to Chubb INA Holdings, Inc.
Payable to Chubb Group Management and Holdings, Ltd.
Payable to Chubb Insurance (Switzerland) Ltd.
Payable to Chubb Reinsurance (Switzerland) Ltd.
Total payable to subsidiaries
2022
538
542
203
6
—
1,289
2021
1,229
266
1,495
2021
39
1
40
2021
475
317
191
4
4
991
S-12
PROPOSED APPROPRIATION OF AVAILABLE EARNINGS
Chubb Limited
Proposed appropriation of available earnings
Our Board of Directors proposes to the Annual General Meeting that the Company's disposable profit (including the net income
and the other items as shown below) be carried forward. The following table shows the appropriation of available earnings as
proposed by the Board of Directors for the year ended December 31, 2022.
(in millions of Swiss francs)
Balance brought forward
Profit for the year
Cancellation of treasury shares
Attribution to reserve for treasury shares
Balance carried forward
2022
15,307
7,648
(3,777)
374
19,552
2021
10,928
4,330
(398)
447
15,307
In order to pay dividends, our Board of Directors proposes that an aggregate amount equal to CHF 2.2 billion be released from
the capital contribution reserves account in 2023 and allocated to a segregated reserve for dividends account (the "Dividend
Reserve"). The Board proposes to distribute a dividend to the shareholders up to an aggregate amount totaling $3.44 per
Common Share from, and limited at a maximum to the amount of, the Dividend Reserve in one or more installments, in such
amounts and on such record and payment dates as determined by the Board in its discretion. If the Board deems it advisable for
the Company, the Board shall be authorized to abstain (in whole or in part) from distributing a dividend in its discretion. The
authorization of the Board to distribute the installments from the Dividend Reserve will expire on the date of the 2024 annual
general meeting, on which date any balance remaining in the Dividend Reserve will be automatically reallocated to the capital
contribution reserves account.
If the Annual General Meeting approves this proposal, our Board currently intends to distribute the dividend in four equal
installments of $0.86 each, on record dates at about the end of June, September, December and March, respectively, with
payment dates about 21 days thereafter.
At December 31, 2022, 414,594,856 of the Company's Common Shares were eligible for dividends.
At the 2022 annual general meeting, the Company’s shareholders approved an aggregate annual dividend by way of a
distribution from Capital contribution reserves, transferred to free reserves at the time of payment in 2022 totaling $3.32 per
Common Share. The annual dividend was payable in four installments, each denominated in CHF but adjusted appropriately so
that the U.S. dollar value of the installment remained at $0.83. The installments were subject to a dividend cap expressed in
CHF which was not reached for 2022.
S-13
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON THE
(SWISS STATUTORY) FINANCIAL STATEMENTS
Report on the audit of the financial statements
Opinion
We have audited the Swiss statutory financial statements of Chubb Limited (the Company), which comprise the Swiss statutory
balance sheet as at December 31, 2022, and the Swiss statutory statement of income for the year then ended, and notes to
Swiss statutory financial statements, including significant accounting policies.
In our opinion, the accompanying financial statements comply with Swiss law and the company's articles of association.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities under
those provisions and standards are further described in the 'Auditor's responsibilities for the audit of the financial statements'
section of our report. We are independent of the Company in accordance with the provisions of Swiss law and the requirements
of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Overview
Overall materiality: CHF 250 million
We tailored the scope of our audit in order to perform sufficient work to enable
us to provide an opinion on the financial statements as a whole, taking into
account the structure of the Company, the accounting processes and controls,
and the industry in which the Company operates.
As key audit matter the following area of focus has been identified:
•
Investments in subsidiaries
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance
that the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are
considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial statements.
S-14
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON THE
(SWISS STATUTORY) FINANCIAL STATEMENTS (continued)
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall
materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the
effect of misstatements, both individually and in aggregate, on the financial statements as a whole.
Overall materiality
CHF 250 million
Benchmark applied
Net Assets
Rationale for the materiality
benchmark applied
We chose Net Assets as the benchmark because, in our view, it is the benchmark which
best reflects the purpose of the Company, that is to hold investments in affiliates, but not
to conduct its own operations.
We agreed with the Audit Committee that we would report to them misstatements above CHF 12 million identified during our
audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.
Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements.
In particular, we considered where subjective judgements were made; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also
addressed the risk of management override of internal controls, including among other matters consideration of whether there
was evidence of bias that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
S-15
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON THE
(SWISS STATUTORY) FINANCIAL STATEMENTS (continued)
Investments in subsidiaries
Key audit matter
How our audit addressed the key audit matter
As set out in the balance sheet and at footnote 4, the
Company owns six direct subsidiaries as at December 31,
2022 with a total book value of CHF 38.2 billion,
representing 96% of the Company’s total assets.
We obtained an understanding of management's process and
controls and assessed and tested the design and operating
effectiveness of a selected key control over the recoverability of
the carrying value of investments in subsidiaries.
The acquisition of LINA Life Insurance Co. of Korea on July 1,
2022 contributed CHF 3.8 billion to this balance.
In relation to the particular matters set out opposite, our
testing procedures included the following:
We focused on investments in subsidiaries due to the size of
this area relative to the total assets, and the fact that there is
judgment involved in assessing whether the carrying values of
the investments in subsidiaries were impaired.
The Swiss accounting law generally requires an individual
impairment assessment at the investment or unit of account
level.
Tje
•
For the LINA Life Insurance Co. of Korea acquisition we
agreed the initial acquisition value of the investment to
the Stock Purchase Agreement.
• We tested the Company’s impairment analyses performed
for the six direct subsidiaries. The assessment of potential
impairment indicators included as a first step the
comparison of the recorded Swiss statutory carrying value
with the net asset value of each subsidiary. In case the
net asset value was smaller than the carrying value, a
more detailed assessment was performed, to assess
whether there was any potential need for impairment.
• Where a more detailed assessment was triggered, we
challenged management as to whether the subsidiaries'
performance was in line with expectation and whether
there are any other indicators such as adverse volume,
claims, regulatory or other market developments.
Based on the work performed we consider management's
impairment analyses including the assumptions used to
support the carrying value of investments in subsidiaries as
reasonable.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included in the
annual report, but does not include the Swiss statutory financial statements, the consolidated financial statements, the Swiss
statutory compensation report and our auditor's reports thereon. The annual report is expected to be made available to us after
the date of this auditor's report.
Our opinion on the Swiss statutory financial statements does not cover the other information and we will not express any form of
assurance conclusion thereon.
In connection with our audit of the Swiss statutory financial statements, our responsibility is to read the other information when
it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Swiss statutory
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
S-16
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON THE
(SWISS STATUTORY) FINANCIAL STATEMENTS (continued)
Board of Directors' responsibilities for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss
law and the company's articles of incorporation, and for such internal control as the Board of Directors determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but
to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and SA-CH will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
A more detailed description of our responsibilities for the audit of the financial statements can be found on the EXPERTsuisse
website: http://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report.
Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists
which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of
association. We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AG
/s/ Peter Eberli
Peter Eberli
Audit expert
Auditor in charge
Zurich, February 27, 2023
/s/ Beat Walter
Beat Walter
Audit expert
S-17
CHUBB LIMITED
SWISS STATUTORY COMPENSATION REPORT
December 31, 2022
SC- 1
SWISS STATUTORY COMPENSATION REPORT
A. General
Under the Swiss ordinance against excessive compensation in stock exchange listed companies (the “Ordinance”) and our
Articles of Association, we are required to prepare a separate Swiss Statutory Compensation Report each year that contains
specific items in a presentation format determined by these regulations. This compensation report covers compensation for our
Board of Directors and Executive Management for the 2022 financial year.
Our Executive Management (as defined under Swiss law) is appointed by our Board. For 2022, our Executive Management
consisted of Evan G. Greenberg, Chairman and Chief Executive Officer; Peter C. Enns, Chief Financial Officer; John W. Keogh,
President and Chief Operating Officer; and Joseph F. Wayland, General Counsel and Secretary. For 2021, our Executive
Management consisted of Messrs. Greenberg, Enns (from July 1), Keogh and Wayland, as well as Mr. Philip V. Bancroft, former
Chief Financial Officer (through June 30).
For more detailed information about compensation for our Board of Directors and Executive Management, please review our
Proxy Statement in connection with our 2023 annual general meeting of shareholders. You may access this report on the
Investor Information section of our website at investors.chubb.com/governance/general-meeting-of-shareholders/default.aspx or
by contacting Investor Relations by telephone, email or mail at:
Telephone:
+1 (212) 827-4445
Email:
Mail:
investorrelations@chubb.com
Investor Relations, Chubb Limited, 1133 Avenue of the Americas, 11th Floor, New York, New York 10036
References in this report to “we,” “our” or “Chubb” are to Chubb Limited.
B. Compensation of the Board of Directors and Executive Management
Basis of Presentation
The following information sets forth the compensation for the years ended December 31, 2022 and 2021, of the members of
the Board and Executive Management for all of the functions that they have performed for Chubb. Compensation of the Board is
paid by Chubb. Compensation of Executive Management is paid by Chubb and the Chubb group entities where they are
employed. Compensation is paid as a combination of both U.S. dollars, our functional reporting currency, with translation of
certain amounts to whole Swiss francs. Where presented, 2022 and 2021 Swiss franc compensation figures have been
translated at the average exchange rates. Swiss franc-equivalent total compensation of the Board and Executive Management is
included in Tables 1 and 2 below. The average exchange rate we used for U.S. dollars into Swiss francs was 0.95497047 for
2022 and 0.9143082 for 2021.
This report is established in accordance with the provisions of the Ordinance.
Compensation of the Board of Directors
Our directors receive compensation in accordance with our Outside Directors Compensation Parameters. The Board made
changes to the Outside Directors Compensation Parameters effective at the May 2022 annual general meeting. The changes
were based on, among other things, a comparison of our compensation structure to that of our competitors and other insurance
and similarly sized companies, finding that total director compensation was below the median of such companies, and the fact
that the annual cash and equity retainers had not been increased since 2019. As a result, the annual cash retainer was
increased from $125,000 to $135,000 and the annual equity retainer was increased from $180,000 to $190,000. The
compensation for the Board for the financial year 2022 set forth in Table 1 is therefore composed of compensation under the
prior parameters from January 1 to the date of our 2022 annual general meeting, and compensation under the revised
parameters from such date through the end of 2022. No changes were made to our Outside Director Compensation Parameters
in 2021.
The equity retainer noted above is in the form of restricted stock awards, based on the fair value of Chubb's Common Shares as
of the date of the award. Restricted stock awards vest at the following year's annual general meeting. The cash retainer is paid
SC- 2
SWISS STATUTORY COMPENSATION REPORT (continued)
to non-employee directors quarterly, although directors may elect to receive up to all of their compensation, other than
compensation for special meetings, in the form of restricted stock awards.
The Lead Director received a fee of $50,000 (CHF 47,749) in 2022, which was unchanged from 2021. Committee chair fees,
also unchanged from 2021, were received as follows:
Audit Committee - $35,000 (CHF 33,424)
Compensation Committee - $25,000 (CHF 23,874)
Nominating & Governance Committee - $20,000 (CHF 19,099)
Risk & Finance Committee - $25,000 (CHF 23,874)
Directors are not paid fees for attending regular Board or committee meetings, but, at the discretion of the Chairman of the
Board and the Lead Director, Chubb may pay an additional $2,000 fee for each special meeting attended by telephone and
$3,000 for each special meeting attended in person. Meeting fees were not paid in 2022. A $2,000 (CHF 1,829) meeting fee
was paid to each non-employee director that attended a special Board meeting in 2021.
Chubb’s Corporate Governance Guidelines specify director equity ownership requirements. Chubb awards non-employee
directors restricted stock awards and mandates minimum equity ownership. The minimum equity ownership during 2022 and
2021 was $600,000 (based on the stock price on the date of award). In February 2023 the Board increased the minimum
equity ownership going forward from $600,000 to $700,000. Each director has until the fifth anniversary of his or her initial
election to the Board to achieve this minimum. The previously granted restricted stock awards (whether or not vested) are
counted toward achieving this minimum.
Once a director has achieved the minimum equity ownership, this requirement will remain satisfied going forward as long as he
or she retains the number of shares valued at the minimum amount based on the New York Stock Exchange closing price for
Chubb’s Common Shares as of the date the minimum threshold is initially met. Any vested shares held by a director in excess of
the minimum share equivalent specified above may be sold at the director's discretion after consultation with Chubb’s General
Counsel.
No compensation was paid to former directors nor did any former director receive any benefits in kind or waivers of claims
during the years ended December 31, 2022 and 2021. During the years ended December 31, 2022 and 2021, no current
directors received benefits in kind or waivers of claims and no compensation had been paid to any related party of current or
former directors, except as noted below with respect to our director charitable contributions program. Additionally, no related
party of current or former directors received any benefits in kind or waivers of claims during 2022 or 2021. At each of
December 31, 2022 and 2021, no current or former directors or any related party of current or former directors had
outstanding loans or credits from Chubb.
Chubb has a matching contribution program for directors under which Chubb will match director charitable contributions to
eligible registered charities, churches, and other places of worship or schools up to a maximum, which was $40,000 per year
for both 2022 and 2021. For Swiss law purposes, some of these matching contributions during the years ended December 31,
2022 and 2021 qualified as related party transactions because our directors or members of their immediate family were
directors or officers of the organization. Chubb matched a total of $70,000 (CHF 66,848) in contributions to six organizations
in 2022 and $62,000 (CHF 56,687) in contributions to four such organizations in 2021.
The following Table 1 presents information concerning director compensation paid or, in the case of restricted stock awards,
earned in the years ended December 31, 2022 and 2021. Although Evan G. Greenberg is Chairman of the Board, Mr.
Greenberg received no compensation in respect of these duties. Details of Mr. Greenberg's compensation in his capacity as a
member of Executive Management are included in Table 2 below.
SC- 3
SWISS STATUTORY COMPENSATION REPORT (continued)
Michael P. Connors
2022
Lead Director
182,500
186,250
Table 1 — audited
Name
Michael G. Atieh
Kathy Bonanno (3)
Sheila P. Burke
James I. Cash
Mary Cirillo
Year
2022
2021
2022
2022
2021
2022
2021
2022
2021
John A. Edwardson
Robert J. Hugin
Robert W. Scully
2021
2022
2021
2022
2021
2022
2021
Eugene B. Shanks, Jr. 2022
Theodore E. Shasta
David H. Sidwell
Olivier Steimer
Luis Tellez (3)
2021
2022
2021
2022
2021
2022
2021
2022
2021
Frances F. Townsend
2022
Total
2021
2022
2021
Board Function
Fees
Earned or Paid
Stock Awards (1)
All Other (2)
Total in USD
Total in CHF
Member $
Member $
132,500 $
127,000 $
186,250 $
180,000 $
— $
— $
Member
Member
Member
Retired
Member (Retired)
Member
Chair - Nominating &
Governance
Member
Chair - Nominating &
Governance
101,250
132,500
127,000
—
33,250
118,750
186,250
180,000
—
67,500
—
337,500
2,000
325,000
Lead Director
183,250
180,000
Retired
Member (Retired)
Member
Member
Member
Chair - Audit
Member
Chair - Audit
Member (Retired)
Member
Member
Member
Member
Member
Member
Chair - Risk & Finance
Member
Chair - Risk & Finance
Member
Member
Member
Chair - Compensation
Member
Chair - Compensation
—
2,000
—
2,000
—
114,375
317,500
305,000
—
352,500
2,000
340,000
31,250
127,000
132,500
127,000
132,500
127,000
67,500
180,000
186,250
180,000
186,250
180,000
157,500
186,250
152,000
180,000
132,500
93,750
157,500
145,750
186,250
112,500
186,250
180,000
318,750
307,000
220,000
318,750
307,000
—
107,706
CHF 304,397
CHF 280,693
210,094
304,397
280,693
—
98,476
337,500
322,303
327,000
298,979
368,750
352,145
363,250
332,122
—
119,679
317,500
307,000
352,500
342,000
103,143
307,000
318,750
307,000
318,750
307,000
—
109,423
303,203
280,693
336,627
312,693
98,499
280,693
304,397
280,693
304,397
280,693
343,750
328,271
332,000
303,550
318,750
206,250
343,750
325,750
304,397
188,576
328,271
297,836
—
—
—
—
6,956
—
—
—
—
—
3,304
—
—
—
—
4,393
—
—
—
—
—
—
—
—
—
—
—
$ 1,292,500 $
2,683,750 $
4,393 $ 3,980,643
CHF 3,801,398
$ 1,251,000 $
2,704,375 $
10,260 $ 3,965,635
CHF 3,625,813
(1) The Stock Awards column reflects restricted stock awards earned during 2022 and 2021. These stock awards were granted at fair value in May 2022 and May 2021,
respectively, at the annual general meetings and vest at the subsequent year's annual general meeting.
(2) The All Other column includes retirement gifts for retiring directors.
(3)
Prior to her election to the Board in May 2022, Ms. Kathy Bonanno served a consultant to the Board. For such service, which terminated prior to her election to the Board,
Ms. Bonanno received consultant fees in 2022 of $31,250 (CHF 29,843), none of which related to service as a director.
SC- 4
SWISS STATUTORY COMPENSATION REPORT (continued)
Compensation of Executive Management
The following table presents information concerning Executive Management’s 2022 and 2021 compensation.
Table 2 — audited
Name and
Principal Position
Evan G.
Greenberg
Chairman and
Chief Executive
Officer, Chubb
Limited (highest
paid executive)
All Other
Executive
Management (4)
Total (5)
Year
Salary
Bonus
Stock
Awards (1)
Option
Awards (2)
All Other
Compensation (3)
Total in USD
Total in CHF
2022
$ 1,400,000 $ 7,700,000 $ 15,650,006 $
— $
1,404,637 $ 26,154,643
CHF 24,976,912
2021
$ 1,400,000 $ 7,500,000 $ 11,625,143 $ 3,022,290 $
1,159,233 $ 24,706,666
CHF 22,589,507
2022
$ 2,806,924 $ 5,669,000 $ 12,300,487 $
— $
939,787 $ 21,716,198
CHF 20,738,328
2021
$ 2,934,846 $ 6,989,100 $ 11,930,339 $ 2,814,383 $
1,213,729 $ 25,882,397
CHF 23,664,487
2022
$ 4,206,924 $ 13,369,000 $ 27,950,493 $
— $
2,344,424 $ 47,870,841
CHF 45,715,240
2021
$ 4,334,846 $ 14,489,100 $ 23,555,482 $ 5,836,673 $
2,372,962 $ 50,589,063
CHF 46,253,995
(1)
The Stock Awards column discloses the fair value of the stock awards granted on February 23, 2023 for 2022 and February 24, 2022 for 2021, respectively. In comparison,
the Summary Compensation Table in the Company’s annual proxy statement (unaudited) only discloses equity grants for a particular fiscal year based on the grants made
during that fiscal year. This column includes time-based restricted stock and performance share awards. For 2022, this column also includes the fair value of an off-cycle
award granted to a member of Executive Management during 2022 and, for 2021, includes the fair value of restricted stock and performance share awards granted to Mr.
Enns in April 2021 as a buyout or replacement of a portion of his unvested deferred cash and equity and a bonus he forfeited upon leaving his prior employer to join the
Company.
(2)
The Option Awards column discloses the fair value of the stock options granted on February 24, 2022 for 2021. In comparison, the Summary Compensation Table in the
Company's annual proxy statement (unaudited) only discloses equity grants for a particular fiscal year based on the grants made during that fiscal year. This column also
includes the fair value of options granted to Mr. Enns in April 2021 for the purposes described in footnote (1).
(3)
All Other Compensation column includes perquisites and other personal benefits, consisting of the following:
• For Mr. Greenberg, contributions to retirement plans of $1,068,000 for 2022 (CHF 1,019,908) and $852,000 (CHF 778,991) in 2021, personal use of corporate
aircraft of $302,815 for 2022 (CHF 289,179) and $269,494 (CHF 246,401) in 2021, and miscellaneous other benefits of $33,822 for 2022 (CHF 32,299) and
$37,739 (CHF 34,505) in 2021, including executive medical coverage and matching contributions made under our matching charitable contributions program. In
August 2022, Mr. Greenberg entered into an Aircraft Time Sharing Agreement with the Company that allows him to reimburse Chubb for his personal use of corporate
aircraft based on the incremental cost of each flight to Chubb, provided that the amount does not exceed the maximum allowed under U.S. Federal Aviation
Administration (FAA) regulations. Such reimbursed amounts are not perquisites and are not included in the table above. The Board requires Mr. Greenberg to use
corporate aircraft for all travel whenever practicable for security reasons and in light of the international nature of the Company’s business.
• For the other members of Executive Management, contributions to retirement plans, personal use of corporate aircraft and corporate apartment, and miscellaneous
other benefits, including, as applicable, club memberships, financial planning, executive medical coverage, matching contributions made under our matching
charitable contributions program, car allowance or car lease and car maintenance allowance.
• Personal use of the corporate aircraft was limited to space available on normally scheduled management business flights.
• Other personal benefits including housing allowance.
• Contributions to retirement plans for 2022 and 2021 totaled $1.71 million (CHF 1.63 million) and $1.62 million (CHF 1.48 million), respectively. These consist
of discretionary and non-discretionary employer contributions. The discretionary employer contributions for 2022 have been calculated and are expected to be paid
in April 2023.
(4)
On July 1, 2021, Peter C. Enns was appointed Chief Financial Officer and a new member of Executive Management, replacing Philip V. Bancroft who retired from the position
of Chief Financial Officer and member of Executive Management on such date. As a result, "All Other Executive Management" compensation for 2021 includes Mr. Bancroft’s
compensation for the first six months of 2021 in the performance of his duties as Chief Financial Officer, and Mr. Enns for all of 2021.
(5)
For 2021, and in accordance with Article 25(d) of Chubb's Articles of Association, compensation payable to a new member of Executive Management may be paid in addition
to the aggregate maximum amount of compensation approved by shareholders, as long as the additional amount does not exceed $18.4 million, or 40% of the approved
maximum aggregate amount. Mr. Enns was a new member of Executive Management in 2021. A total amount of $4.59 million of his compensation was paid out of such
additional amount as per Article 25(d) of Chubb's Articles of Association, and the balance of compensation paid to Executive Management was paid out of the shareholder-
approved amount. This includes a one-time equity award grant with a fair value of $3.6 million to Mr. Enns as a buyout or replacement of a portion of his unvested deferred
cash and equity and a bonus he forfeited upon leaving his prior employer to join the Company, as described in footnotes (1) and (2). Compensation paid to our Executive
Management for 2021 was therefore within the limits prescribed by Swiss law, our Articles of Association and the resolution adopted by shareholders at Chubb's 2020
annual general meeting. No changes to Executive Management were made in 2022.
No former member of Executive Management or any related party of current or former Executive Management received non-
market standard compensation from Chubb during each of the years ended December 31, 2022 and 2021. Following his
retirement as Chief Financial Officer and a member of Executive Management effective July 1, 2021, for the remainder of 2021
Mr. Bancroft served as an advisor to Chubb and continued to receive his base salary, which was $870,000 (CHF 795,448). No
current or former member of Executive Management or any related party thereto received benefits in kind or waivers of claims
during 2022 or 2021 other than as described in the footnotes to Table 2.
At each of December 31, 2022 and 2021, no current or former member of Executive Management or any related party of a
current or former member of Executive Management had outstanding loans or credits from Chubb.
SC- 5
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON
THE (SWISS STATUTORY) COMPENSATION REPORT
Report on the audit of the compensation report
Opinion
We have audited the compensation report of Chubb Limited (the Company) for the year ended December 31, 2022. The audit
was limited to the information on remuneration, loans and advances pursuant to Art. 14 to 16 of the Ordinance against
Excessive Remuneration in Listed Companies Limited by Shares (Ordinance) in the tables marked 'audited' on pages SC-4 to
SC-5 of the compensation report.
In our opinion, the information on remuneration, loans and advances in the accompanying compensation report complies with
Swiss law and article 14 to 16 of the Ordinance.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities under
those provisions and standards are further described in the 'Auditor’s responsibilities for the audit of the compensation report'
section of our report. We are independent of the Company in accordance with the provisions of Swiss law and the requirements
of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included in the
annual report, but does not include the tables marked 'audited' in the compensation report, the consolidated financial
statements, the financial statements and our auditor’s reports thereon.
Our opinion on the compensation report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the compensation report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the audited financial information in the compensation
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Board of Directors’ responsibilities for the compensation report
The Board of Directors is responsible for the preparation of a compensation report in accordance with the provisions of Swiss
law and the company's articles of incorporation, and for such internal control as the Board of Directors determines is necessary
to enable the preparation of a compensation report that is free from material misstatement, whether due to fraud or error. The
Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s responsibilities for the audit of the compensation report
Our objectives are to obtain reasonable assurance about whether the information on remuneration, loans and advances pursuant
to article 14 to 16 of the Ordinance is free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of this compensation report.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement in the compensation report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
SC- 6
REPORT OF THE STATUTORY AUDITOR TO THE GENERAL MEETING OF CHUBB LIMITED, ZURICH ON
THE (SWISS STATUTORY) COMPENSATION REPORT (continued)
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, actions taken to eliminate threats or safe-guards applied.
PricewaterhouseCoopers AG
/s/ Peter Eberli
Peter Eberli
Audit expert
Auditor in charge
Zurich, March 23, 2023
/s/ Beat Walter
Beat Walter
Audit expert
SC- 7
GREENHOUSE GAS EMISSIONS STATEMENT
As an insurance company with operations primarily conducted in office space, Chubb's operational greenhouse gas (GHG) emissions
are relatively modest. However, through our greenhouse gas inventory program and reduction goals, we work to minimize our
contribution to global emissions.
In 2019, Chubb announced companywide goals to reduce GHG emissions globally 20% on an absolute basis by 2025 and 40% by
2035. Both goals use 2016 emissions levels as the baseline and are aligned with the two-degree Celsius target outlined in the Paris
Climate Agreement, as well as the quantitatively supported science-based standards (SBTi’s) methodology. Chubb achieved its first
goal of reducing emissions by 20% in 2019 and its second goal of reducing emissions by 40% in 2021. Chubb’s 2021 emissions
reductions build on earlier progress.
In 2007, the company, then named ACE, joined the voluntary U.S. Environmental Protection Agency (EPA)-sponsored Climate
Leaders program and developed a robust GHG emissions Inventory Management Plan. In addition to conducting the inaugural GHG
emissions inventory, Chubb set a preliminary GHG emissions reduction goal of 8% per employee.
While the EPA program was discontinued in September 2011, Chubb’s corporate GHG inventory program remains active using its
methodology, which is based on the World Resources Institute and the World Business Council for Sustainable Development (WRI/
WBCSD) GHG Protocol for data collection and analysis. In 2012, Chubb successfully met its first-generation GHG reduction goal with
a 27% reduction in emissions per employee since 2006. In September 2014, the company announced a second GHG reduction
target to reduce emissions 10% per employee by 2020 from a 2012 base year. From 2015 to 2018, Chubb reduced its global
absolute GHG emissions by 21%.
Chubb 2022 GHG Emissions (Scope 1 and Scope 2 metric tons CO2-eq.)
Global Market-Based Emissions
(Less) Purchased Carbon Offsets
Net Global Emissions
2022
30,111
(30,500)
—
The data above represent 22,405 metric tons of CO2-eq. of Scope 1 emissions from fossil fuel combustion and 7,706 metric tons of
CO2-eq. of market-based Scope 2 emissions from purchased electricity. Chubb purchased renewable energy in a combination of
bundled and unbundled RECs in 2022, totaling 29,992 metric tons of CO2-eq. While the energy was mostly purchased in the
United States and United Kingdom, Chubb purchased RECs in most of the 54 countries and territories in which it operates.
Additionally, Chubb’s 2021 TCFD report stated that Chubb would be carbon neutral in 2022. To achieve this objective, Chubb
purchased 30,500 metric tons of CO2-eq. from The Nature Conservancy from its Cold Hollow Carbon – Improved Forest
Management Project. The offsets are issued by and registered with the American Carbon Registry and the retirement of the credits is
permanent. Chubb is in the process of setting future GHG reduction goals and evaluating future use of renewable energy, carbon
offsets and other emissions reductions measures.
Chubb’s GHG emissions data are reviewed by a third-party on an annual basis. The company's most recent 2022 GHG inventory was
reviewed by Apex Companies, LLC and the verification statement can be found on the following page.
In addition to inventorying and verifying its GHG emissions, Chubb reports its GHG emissions data to the CDP, an organization that
scores carbon emissions information from thousands of corporations on behalf of the global investment community. In 2022,
Chubb’s response to the questionnaire resulted in a score of B.
Information about Chubb's full strategy and response to the global challenge of climate change can be found in the annual Taskforce
on Climate-Related Financial Disclosures (TCFD) report, which is available at https://about.chubb.com/citizenship/environment.html.
E-1
VERIFICATION OPINION DECLARATION
GREENHOUSE GAS EMISSIONS
Apex Companies, LLC (Apex) was engaged
to provide Limited
Assurance and conduct an independent verification of the greenhouse
gas (GHG) emissions and energy consumption reported by Chubb from
January 1, 2022 to December 31, 2022. This Verification Opinion
Declaration applies to the related information included within the scope
of work described below.
The determination of the GHG emissions is the sole responsibility of
Chubb. Apex was not involved in determining the GHG emissions. Our
sole responsibility was to provide independent verification on the
accuracy of the GHG emissions reported, and on the underlying systems
and processes used to collect, analyze and review the information.
Boundaries of the reporting company GHG emissions covered by
the verification:
•
•
Operational Control
Global
Emissions verified in Metric tonnes of CO2-equivalent (tCO2e):
•
•
•
•
•
•
Scope 1 Emissions: 22,405
Scope 2 Emissions (Location-Based): 37,698
Scope 2 Emissions (Market-Based): 7,706
Purchased GHG Emission Offsets (tCO2e): 30,500
Net Emissions CO2e for Scopes 1 and 2 (Scope 1 + Scope 2
Market-Based - Purchased GHG Emission Offsets): 0
Scope 3 Emissions (Business Travel – Air and Rail): 17,492
Data and information supporting the Scope 1 & Scope 2 GHG emissions
were historical in nature and in some cases estimated, based on
historical data for similar properties in similar locations. Data and
information supporting the Scope 3 GHG emissions assertion were in
some cases estimated rather than historical in nature.
Period covered by GHG emissions verification:
•
January 1, 2022 to December 31, 2022
Reporting Protocols against which verification was conducted:
• World Resources Institute (WRI)/World Business Council for
Sustainable Development (WBCSD) Greenhouse Gas
Protocol, Corporate Accounting and Reporting Standard
(Scope 1 & 2)
• WRI/WBCSD Corporate Value Chain (Scope 3) Accounting
and Reporting Standard (Scope 3)
GHG Verification Protocols used to conduct the verification:
•
ISO 14064-3 Second Edition 2019-04: Greenhouse gases -
Part 3: Specification with guidance for the verification and
validation of greenhouse gas statements
Level of Assurance and Qualifications:
Limited
•
• Materiality Threshold: ±5%
Verification Methodology:
•
•
•
•
Interviews with relevant personnel of Chubb;
Review of documentary evidence produced by Chubb;
information systems and
Review of Chubb data and
methodology for collection, aggregation, analysis and review of
information used to determine GHG emissions;
Audit of samples of data used by Chubb to determine GHG
emissions.
Assurance Opinion:
Based on the results of our verification process, Apex provides Limited
Assurance of the GHG emissions and energy assertion shown above,
and found no evidence that the assertion:
•
•
is not materially correct and is not a fair representation of
the GHG emissions data and information; and
is not prepared in accordance with the WRI/WBCSD GHG
Protocol Corporate Accounting and Reporting Standard.
It is our opinion that Chubb has established appropriate systems for the
collection, aggregation and analysis of quantitative data for determination
of GHG emissions for the stated period and boundaries.
Statement of independence, impartiality and competence
Apex has implemented a Code of Ethics across the business to maintain
high ethical standards among staff
their day-to-day business
activities. We are particularly vigilant in the prevention of conflicts of
interest.
in
No member of the verification team has a business relationship with
Chubb,
this
assignment. We conducted this verification independently and to our
knowledge there has been no conflict of interest.
its Directors or Managers beyond
that required of
The verification team has extensive experience in conducting assurance
over environmental, social, ethical and health and safety information,
systems and processes, has over 30 years combined experience in this
field and an excellent understanding of Apex standard methodology for
the verification of greenhouse gas emissions data.
Attestation:
Mary E. Armstrong-Friberg, Lead Verifier
Senior Project Manager
Sustainability and Climate Change Services
Apex Companies, LLC
March 9, 2023
This verification statement, including the opinion expressed herein, is provided to Chubb and is solely for the benefit of Chubb in accordance with the terms of
our agreement. We consent to the release or publication of this statement by Chubb in order to satisfy its ESG disclosure requirements and objectives, but
without accepting or assuming any responsibility or liability on our part to any party who may have access to this statement.
APEX Companies, LLC
E-2
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
[This Page Intentionally Left Blank]
Chubb Limited
Bärengasse 32
CH—8001 Zurich
Switzerland
chubb.com
002CSNDA52