What changed in this filing

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Item 1. Financial Statements

2021-07-29 compared with 2021-04-30 · 369 added, 181 removed, 1012 unchanged (35% of the section changed)

2 unchanged sentences

Chubb Limited and Subsidiaries

March 31 December 31

June 30 December 31

(in millions of U.S.

54 unchanged sentences

Chubb Limited and Subsidiaries

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

5 unchanged sentences

Net realized gains (losses) (includes $ 12 , $( 33 ), $ 36 , and $( 352 ) reclassified from AOCI)

( 33 ) 30 854 ( 928 )

Total revenues 9,664 8,985 19,635 16,682

7 unchanged sentences

Total expenses 7,082 9,378 14,415 16,608

Income before income tax 2,638 467

Income (loss) before income tax 2,582 ( 393 ) 5,220 74

Income tax expense (benefit) (includes $( 6 ), $( 2 ), $( 2 ), and $( 42 ) on unrealized gains and losses reclassified from AOCI)

Net income $ 2,300 $ 252

317 ( 62 ) 655 153

Net income (loss) $ 2,265 $ ( 331 ) $ 4,565 $ ( 79 )

Other comprehensive income (loss)

Unrealized depreciation $ ( 2,293 ) $ ( 2,479 )

Reclassification adjustment for net realized (gains) losses included in net income

Unrealized appreciation (depreciation) $ 706 $ 3,248 $ ( 1,587 ) $ 769

Reclassification adjustment for net realized (gains) losses included in net income (loss)

( 12 ) 33 ( 36 ) 352

694 3,281 ( 1,623 ) 1,121

Cumulative foreign currency translation adjustment 308 445 330 ( 414 )

Postretirement benefit liability adjustment ( 9 ) ( 22 ) ( 37 ) ( 36 )

Other comprehensive loss, before income tax ( 2,323 ) ( 3,033 )

Income tax benefit related to OCI items 412 321

Other comprehensive loss ( 1,911 ) ( 2,712 )

Comprehensive income (loss) $ 389 $ ( 2,460 )

Other comprehensive income (loss), before income tax 993 3,704 ( 1,330 ) 671

Income tax (expense) benefit related to OCI items ( 129 ) ( 513 ) 283 ( 192 )

Other comprehensive income (loss) 864 3,191 ( 1,047 ) 479

Comprehensive income $ 3,129 $ 2,860 $ 3,518 $ 400

Earnings per share

Basic earnings per share $ 5.10 $ 0.56

Diluted earnings per share $ 5.07 $ 0.55

Basic earnings (loss) per share $ 5.09 $ ( 0.73 ) $ 10.20 $ ( 0.17 )

Diluted earnings (loss) per share $ 5.06 $ ( 0.73 ) $ 10.13 $ ( 0.17 )

See accompanying notes to the consolidated financial statements

1 unchanged sentence

Chubb Limited and Subsidiaries

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

18 unchanged sentences

Balance – beginning of period, as adjusted 41,637 36,322 39,337 36,070

Net income 2,300 252

Net income (loss) 2,265 ( 331 ) 4,565 ( 79 )

Funding of dividends declared from Additional paid-in capital 352 353 704 693

1 unchanged sentence

Balance – end of period 43,902 35,991 43,902 35,991

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Net unrealized appreciation (depreciation) on investments

Balance – beginning of period 2,761 667 4,673 2,543

Change in period, before reclassification from AOCI, net of income tax benefit of

$ 401 and $ 324

Change in period, before reclassification from AOCI, net of income tax

(expense) benefit of $( 107 ), $( 522 ), $ 294 and $( 198 )

599 2,726 ( 1,293 ) 571

Amounts reclassified from AOCI, net of income tax (expense) benefit of $ 4 and $( 40 )

Change in period, net of income tax benefit of $ 405 and $ 284

Amounts reclassified from AOCI, net of income tax expense of

$( 6 ), $( 2 ), $( 2 ), $( 42 )

( 18 ) 31 ( 38 ) 310

Change in period, net of income tax (expense) benefit of $( 113 ), $( 524 ),

$ 292 and $( 240 )

581 2,757 ( 1,331 ) 881

Balance – end of period 3,342 3,424 3,342 3,424

1 unchanged sentence

Balance – beginning of period ( 1,613 ) ( 2,764 ) ( 1,637 ) ( 1,939 )

Change in period, net of income tax benefit of $ 2 and $ 34

Change in period, net of income tax (expense) benefit of $( 18 ), $ 6 , $( 16 )

290 451 314 ( 374 )

Balance – end of period ( 1,323 ) ( 2,313 ) ( 1,323 ) ( 2,313 )

4 unchanged sentences

Balance – end of period ( 197 ) ( 13 ) ( 197 ) ( 13 )

Accumulated other comprehensive income (loss) 958 ( 2,093 )

Accumulated other comprehensive income 1,822 1,098 1,822 1,098

Total shareholders’ equity $ 60,062 $ 54,760 $ 60,062 $ 54,760

2 unchanged sentences

Chubb Limited and Subsidiaries

Three Months Ended

Six Months Ended

(in millions of U.S.

1 unchanged sentence

Cash flows from operating activities

Net income $ 2,300 $ 252

Net income (loss) $ 4,565 $ ( 79 )

Adjustments to reconcile net income to net cash flows from operating activities

12 unchanged sentences

Deferred policy acquisition costs ( 198 ) ( 62 )

Other ( 196 ) 140

( 1,347 ) ( 22 )

Net cash flows from operating activities 5,227 3,697

49 unchanged sentences

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:

March 31 December 31

June 30 December 31

(in millions of U.S.

3 unchanged sentences

Total cash and restricted cash shown in the Consolidated statements of cash flows $ 1,998 $ 1,836

During the three months ended March 31, 2021, Goodwill increased $ 12 million, primarily reflecting the impact of foreign exchange.

During the six months ended June 30, 2021, Goodwill increased $ 106 million, reflecting the impact of foreign exchange.

d) Accounting guidance not yet adopted

15 unchanged sentences

In November 2020, we completed the purchase of an incremental 0.9 percent ownership interest in Huatai Group for approximately $ 65 million, which was paid in January 2021.

As of March 31, 2021, Chubb's aggregate ownership interest in Huatai Group was approximately 47.1 percent.

As of June 30, 2021, Chubb's aggregate ownership interest in Huatai Group was approximately 47.1 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.

4 unchanged sentences

a) Fixed maturities

March 31, 2021 Amortized

June 30, 2021 Amortized

Cost Valuation Allowance Gross

42 unchanged sentences

$ 11,697 $ ( 44 ) $ 11,653 $ 859 $ ( 2 ) $ 12,510

The following table presents the amortized cost of our HTM securities according to S&P rating:

March 31, 2021 December 31, 2020

The following table presents the amortized cost of our Held to Maturity (HTM) securities according to S&P rating:

June 30, 2021 December 31, 2020

(in millions of U.S.

10 unchanged sentences

The following table presents fixed maturities by contractual maturity:

March 31 December 31

June 30 December 31

(in millions of U.S.

18 unchanged sentences

b) Gross unrealized loss

Fixed maturities in an unrealized loss position at March 31, 2021 comprised both investment grade and below investment grade securities for which fair value declined primarily due to widening credit spreads since the date of purchase.

The following tables present, for 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:

Fixed maturities in an unrealized loss position at June 30, 2021 comprised both investment grade and below investment grade securities for which fair value declined primarily due to widening credit spreads since the date of purchase.

The following tables present, for Available for Sale (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:

0 – 12 Months Over 12 Months Total

March 31, 2021 Fair Value Gross

June 30, 2021 Fair Value Gross

Loss Fair Value Gross

21 unchanged sentences

The following table presents the components of Net realized gains (losses):

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

5 unchanged sentences

Impairment (1)

( 1 ) ( 31 ) ( 1 ) ( 152 )

Total fixed maturities $ 12 $ ( 33 ) $ 36 $ ( 352 )

1 unchanged sentence

Other investments 62 ( 107 ) 100 ( 102 )

Foreign exchange gains (losses) 76 ( 68 )

Foreign exchange losses ( 97 ) ( 61 ) ( 21 ) ( 129 )

Investment and embedded derivative instruments ( 91 ) 14 18 29

10 unchanged sentences

Net gains (losses) recognized during the period $ 150 $ 62 $ 212 $ 148 $ ( 107 ) $ 41

Net gains (losses) recognized from sales of securities 45 — 45 ( 24 ) — ( 24 )

Net gains recognized from sales of securities 45 — 45 187 — 187

Unrealized gains (losses) recognized for securities still held at reporting date $ 105 $ 62 $ 167 $ ( 39 ) $ ( 107 ) $ ( 146 )

1 unchanged sentence

Chubb Limited and Subsidiaries

Six Months Ended

(in millions of U.S.

dollars) Equity Securities Other Investments Total Equity Securities Other Investments Total

Net gains (losses) recognized during the period $ 517 $ 100 $ 617 $ 119 $ ( 102 ) $ 17

Net gains recognized from sales of securities 90 — 90 163 — 163

Unrealized gains (losses) recognized for securities still held at reporting date $ 427 $ 100 $ 527 $ ( 44 ) $ ( 102 ) $ ( 146 )

The following table presents a roll-forward of valuation allowance for expected credit losses on fixed maturities:

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

5 unchanged sentences

Initial allowance for purchased securities with credit deterioration — 3 — 5

Write-offs charged against the expected credit loss — ( 5 ) — ( 5 )

Recovery of expected credit loss ( 5 ) ( 134 ) ( 14 ) ( 134 )

6 unchanged sentences

Valuation allowance for expected credit losses - end of period $ 37 $ 51 $ 37 $ 51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

d) Alternative investments

1 unchanged sentence

The following table presents, by investment category, the expected liquidation period, fair value, and maximum future funding commitments of alternative investments:

March 31 December 31

June 30 December 31

Period of Underlying Assets 2021 2020

21 unchanged sentences

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Investment Category:

21 unchanged sentences

We have investments in segregated portfolios primarily to provide collateral or guarantees for LOC and derivative transactions.

Included in restricted assets at March 31, 2021 and December 31, 2020 are investments, primarily fixed maturities, totaling $ 20.8 billion and $ 19.6 billion, respectively, and cash of $ 157 million and $ 89 million, respectively.

Included in restricted assets at

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

June 30, 2021 and December 31, 2020 are investments, primarily fixed maturities, totaling $ 18.7 billion and $ 19.6 billion, respectively, and cash of $ 155 million and $ 89 million, respectively.

The following table presents the components of restricted assets:

March 31 December 31

June 30 December 31

(in millions of U.S.

8 unchanged sentences

Total $ 18,847 $ 19,694

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Fair value measurements

28 unchanged sentences

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 lack of market based inputs may increase the potential that an investment's

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

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.

7 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

approaching maturity, and as such, their cost approximates fair value.

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.

25 unchanged sentences

Separate account assets are recorded in Other assets in the Consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Guaranteed living benefits

5 unchanged sentences

Because of the significant use of unobservable inputs including policyholder behavior, GLB reinsurance is classified within Level 3.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Financial instruments measured at fair value on a recurring basis, by valuation hierarchy

March 31, 2021 Level 1 Level 2 Level 3 Total

June 30, 2021 Level 1 Level 2 Level 3 Total

(in millions of U.S.

19 unchanged sentences

Total liabilities measured at fair value $ 106 $ — $ 760 $ 866

(1) Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $ 7,457 million, policy loans of $ 232 million and other investments of $ 70 million at March 31, 2021 measured using NAV as a practical expedient.

(1) Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $ 8,253 million, policy loans of $ 237 million and other investments of $ 70 million at June 30, 2021 measured using NAV as a practical expedient.

(2) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.

33 unchanged sentences

Unobservable Inputs Ranges Weighted Average (1)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

$ 760 $ 1,089 Actuarial model Lapse rate 3 % – 34 %

12 unchanged sentences

The model and related assumptions are regularly re-evaluated by management and enhanced, as appropriate, based upon additional experience obtained related to policyholder behavior and availability of updated information such as market conditions, market participant assumptions, and demographics of in-force annuities.

For the three months ended March 31, 2021 and 2020, no material refinements were made to the model.

For the three and six months ended June 30, 2021 and 2020, no material refinements were made to the model.

For detailed information on our lapse and annuitization rate assumptions, refer to Note 4 to the Consolidated Financial Statements of our 2020 Form 10-K.

2 unchanged sentences

Three Months Ended

March 31, 2021

June 30, 2021

(in millions of U.S.

6 unchanged sentences

Transfers into Level 3 — 29 — — — — —

Transfers out of Level 3 ( 10 ) ( 3 ) — — — — —

Change in Net Unrealized Gains/Losses in OCI 5 6 — — — — —

12 unchanged sentences

Three Months Ended

March 31, 2020

June 30, 2020

(in millions of U.S.

5 unchanged sentences

Balance, beginning of period $ 465 $ 1,502 $ 60 $ 67 $ 1 $ 10 $ 1,591

Transfers out of Level 3 ( 13 ) ( 71 ) — — — — —

Change in Net Unrealized Gains/ Losses in OCI ( 6 ) 1 — ( 1 ) — — —

Net Realized Gains/Losses ( 1 ) ( 13 ) — ( 1 ) — — ( 213 )

Purchases 67 83 — 8 1 — —

Sales ( 16 ) ( 48 ) — ( 9 ) — — —

Settlements ( 27 ) ( 85 ) — — — — —

Other — — — — — — ( 6 )

Balance, end of period $ 469 $ 1,369 $ 60 $ 64 $ 2 $ 10 $ 1,372

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date $ — $ 5 $ — $ 1 $ — $ — $ ( 213 )

Change in Net Unrealized Gains/Losses included in OCI at the Balance sheet date $ ( 5 ) $ 7 $ — $ — $ — $ — $ —

(1) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.

Assets Liabilities

Six Months Ended

June 30, 2021

(in millions of U.S.

dollars) Available-for-Sale Debt Securities Equity

securities Short-term investments Other

investments GLB (1)

Corporate and asset-

backed securities Mortgage-backed securities

Balance, beginning of period $ 546 $ 1,573 $ 60 $ 73 $ 5 $ 10 $ 1,089

Transfers into Level 3 — 46 — — — — —

10 unchanged sentences

(1) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Assets Liabilities

Six Months Ended

June 30, 2020

(in millions of U.S.

dollars) Available-for-Sale Debt Securities Equity

securities Short-term investments Other

investments GLB (1)

Corporate and asset-

backed securities Mortgage-backed securities

Balance, beginning of period $ 449 $ 1,451 $ 60 $ 69 $ 6 $ 10 $ 897

Transfers into Level 3 — 91 — — — — —

Transfers out of Level 3 ( 16 ) ( 72 ) — — — — —

Change in Net Unrealized Gains/Losses in OCI ( 20 ) ( 44 ) — — — — —

Net Realized Gains/Losses ( 3 ) ( 26 ) — ( 3 ) — — 472

Purchases 149 222 — 11 2 — —

Sales ( 62 ) ( 67 ) — ( 13 ) — — —

Settlements ( 28 ) ( 186 ) — — ( 6 ) — —

Other — — — — — — 3

Balance, end of period $ 469 $ 1,369 $ 60 $ 64 $ 2 $ 10 $ 1,372

Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date $ — $ ( 9 ) $ — $ ( 1 ) $ — $ — $ 472

Change in Net Unrealized Gains/Losses included in OCI at the Balance sheet date $ ( 20 ) $ ( 37 ) $ — $ — $ — $ — $ —

(1) Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value.

b) Financial instruments disclosed, but not measured, at fair value

6 unchanged sentences

The following tables present fair value, by valuation hierarchy, and carrying value of the financial instruments not measured at fair value:

March 31, 2021 Fair Value Net Carrying

June 30, 2021 Fair Value Net Carrying

(in millions of U.S.

25 unchanged sentences

Total liabilities $ — $ 19,365 $ — $ 19,365 $ 16,661

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Reinsurance recoverable on ceded reinsurance

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in millions of U.S.

7 unchanged sentences

(1) Net of valuation allowance for uncollectible reinsurance.

The increase in reinsurance recoverable on losses and loss expenses was primarily due to unfavorable prior period development in certain lines and catastrophe losses in the quarter.

The increase in reinsurance recoverable on losses and loss expenses was primarily due to unfavorable prior period development in certain lines.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following table presents a roll-forward of valuation allowance for uncollectible reinsurance related to Reinsurance recoverable on loss and loss expenses:

Three Months Ended

Six Months Ended

(in millions of U.S.

3 unchanged sentences

Write-offs charged against the valuation allowance ( 1 ) ( 19 )

Foreign exchange revaluation — 1

Valuation allowance for uncollectible reinsurance - end of period $ 322 $ 303

For additional information, refer to Note 1 d) to the Consolidated Financial Statements of our 2020 Form 10-K.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Unpaid losses and loss expenses

The following table presents a reconciliation of beginning and ending Unpaid losses and loss expenses:

Three Months Ended

Six Months Ended

(in millions of U.S.

19 unchanged sentences

(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 $ 4 million and $ 2 million for the three months ended March 31, 2021 and 2020, respectively.

Gross and net unpaid losses and loss expenses increased $ 1,444 million and $ 1,231 million, respectively, for the three months ended March 31, 2021, reflecting an increase in underlying exposure due to premium growth and catastrophe losses incurred, partially offset by favorable prior period development.

(2) Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $ 27 million and $ 6 million for the six months ended June 30, 2021 and 2020, respectively.

Gross and net unpaid losses and loss expenses increased $ 2,478 million and $ 2,404 million, respectively, for the six months ended June 30, 2021, reflecting an increase in underlying exposure due to premium growth partially offset by favorable prior period development.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Prior Period Development

2 unchanged sentences

while short-tail lines include lines such as most property lines, energy, personal accident, and agriculture.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following table summarizes (favorable) and adverse PPD by segment.

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

(in millions of U.S.

dollars) Long-tail Short-tail Total

dollars) Long-tail Short-tail Total Long-tail Short-tail Total

North America Commercial P&C Insurance $ ( 96 ) $ ( 60 ) $ ( 156 ) $ ( 142 ) $ ( 141 ) $ ( 283 )

15 unchanged sentences

North America Commercial P&C Insurance

For the three months ended March 31, 2021, net favorable PPD was $ 127 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

For the three months ended June 30, 2021, net favorable PPD was $ 156 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $ 96 million in long-tail business, primarily from:

• Net favorable development of $ 51 million in professional liability (errors & omissions and third-party cyber risk), driven by accident years 2016 and 2017, which saw lower than expected loss emergence, partly offset by higher than expected development in accident year 2019;

• Net favorable development of $ 35 million in voluntary environmental lines, driven by accident years 2017 and prior, which saw lower than expected loss emergence, partly offset by higher than expected development in accident year 2019;

• Net adverse development of $ 57 million in excess and umbrella portfolios, with accident years 2015 through 2019 continuing to experience higher than expected loss development, partly offset by favorable development in accident years 2014 and prior.

• Net favorable development of $ 137 million in our workers’ compensation lines.

This included favorable development of $ 36 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2020 accident year.

Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses.

The remaining overall favorable development was mainly in accident years 2016 and prior, driven by lower than expected loss experience and related updates to loss development factors;

• Net favorable development of $ 45 million in general liability portfolios, driven by lower than expected paid and reported case incurred activity in accident years 2017 and prior, partly offset by higher than expected reported case incurred activity in accident years 2018 and 2019;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

• Net adverse development of $ 76 million in commercial automobile liability, driven by adverse reported loss experience, mainly impacting accident years 2017 and 2019;

• Net adverse development of $ 27 million in high deductible general liability coverages, driven by higher than expected loss severities, mainly impacting accident years 2016 through 2020, partly offset by favorable loss development in older accident years.

• Net favorable development of $ 60 million in short-tail business, primarily from:

• Net favorable development of $ 49 million in surety, mainly in accident years 2018 and 2019, driven by lower than expected loss emergence;

• Net favorable development of $ 41 million in surety, $ 35 million of which was due to lower than expected COVID-19 claim activity in accident year 2020;

• The remaining favorable development is predominantly driven by automobile, which experienced lower than expected claim development related to physical damage coverages in the 2020 accident year.

For the six months ended June 30, 2021, net favorable PPD was $ 283 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $ 142 million in long-tail business, primarily from:

• Net favorable development of $ 158 million in workers’ compensation lines, mainly due to the same factors experienced for the three months ended June 30, 2021, as described above;

• Net favorable development of $ 51 million in professional liability (errors & omissions and cyber), driven by accident years 2016 and 2017, from lower than expected emergence, partly offset by higher than expected development in accident year 2019;

• Net favorable development of $ 40 million in voluntary environmental lines, driven by accident years 2017 and prior, from lower than expected emergence, partly offset by higher than expected development in accident year 2019;

• Net favorable development of $ 37 million in general liability portfolios, driven by lower than expected paid and reported case incurred activity in accident years 2017 and prior, partly offset by higher than expected reported case incurred activity in accident years 2018 and 2019;

• Net adverse development of $ 26 million in high deductible general liability coverages, as described above;

• Net adverse development of $ 43 million in excess and umbrella portfolios, with accident years 2016 through 2019 experiencing higher than expected reported development, partly offset by lower than expected emergence in accident years 2015 and prior;

• Net adverse development of $ 74 million in commercial automobile liability, due to the same factors experienced for the three months ended June 30, 2021.

• Net favorable development of $ 141 million in short-tail business, primarily from:

• Net favorable development of $ 89 million in surety, mainly in accident years 2018 through 2020, driven by lower than expected loss emergence;

• Net favorable development of $ 46 million in accident & health, driven by accident years 2019 and 2020, where loss emergence was lower than expected;

• Net favorable development of $ 29 million in property and marine coverages in accident year 2020, driven by lower than expected loss development;

• Net adverse development of $ 41 million in first-party cyber risk, driven by accident years 2019 and 2020, which experienced higher than expected loss development as well as heightened frequency and severity.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

• Net favorable development of $ 25 million in property and marine coverages in accident year 2020, driven by lower than expected non-catastrophe loss development;

For the three months ended March 31, 2020, net favorable PPD was $ 105 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

For the three months ended June 30, 2020, net favorable PPD was $ 146 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $ 141 million in long-tail business, primarily from:

• Net favorable development of $ 66 million in professional liability (errors & omissions and third-party cyber risk), driven by accident years 2016 and prior, which saw lower than expected emergence;

• Net favorable development of $ 43 million in voluntary environmental lines, driven by accident years 2016 and prior, which saw lower than expected emergence and a favorable revision to loss development patterns;

• Net favorable development of $ 28 million in construction workers’ compensation, mainly in accident years 2016 and prior, which saw lower than expected reported loss emergence and a favorable revision to loss development patterns;

• Net favorable development of $ 152 million in our workers’ compensation lines.

This included favorable development of $ 62 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2019 accident year.

Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses.

This development in accident year 2019 was partially offset by some higher than expected activity from other claims.

The remaining overall favorable development was mainly in accident years 2015 and prior, driven by lower than expected loss experience and related updates to loss development factors;

• Net favorable development of $ 59 million in general liability portfolios, mainly driven by lower than expected paid and reported loss experience in accident years 2016 and prior, partly offset by some adverse emergence in accident years 2017 through 2019;

• Net adverse development of $ 75 million in commercial automobile liability, mainly in high deductible and excess portfolios, driven by adverse paid and reported loss experience and related updates to loss development factors, mainly in accident years 2015 through 2019;

• Net adverse development of $ 5 million for U.S.

child molestation claims, predominantly reviver statute-related.

For the six months ended June 30, 2020, net favorable PPD was $ 251 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $ 184 million in long-tail business, primarily from:

• Net favorable development of $ 182 million in workers’ compensation lines, mainly due to the same factors experienced for the three months ended June 30, 2020, as described above;

• Net favorable development of $ 66 million in professional liability (errors & omissions and cyber), in accident years 2016 and prior, due to lower than expected emergence;

• Net favorable development of $ 43 million in voluntary environmental lines, in accident years 2016 and prior, due to lower than expected emergence and a favorable revision to loss development patterns;

• Net favorable development of $ 36 million in general liability coverages, mainly due to the same factors experienced for the three months ended June 30, 2020, as described above, as well as adverse wholesale general liability results, driven by higher than expected reported loss emergence in accident years 2014 through 2019;

• Net adverse development of $ 75 million in commercial automobile liability, due to the same factors experienced for the three months ended June 30, 2020, as described above;

• Net adverse development of $ 40 million in excess and umbrella portfolios, with accident years 2015 through 2019 experiencing higher than expected reported development, partially offset by lower than expected emergence in accident years 2014 and prior;

• Net adverse development of $ 23 million in wholesale general liability coverages, driven by higher than expected reported loss emergence in accident years 2014 through 2019.

• Net adverse development of $ 5 million for U.S.

child molestation claims, predominantly reviver statute-related.

• Net favorable development of $ 67 million in short-tail business, primarily from:

• Net favorable development of $ 37 million, in accident & health, mainly in accident years 2018 and 2019, driven by lower than expected paid loss emergence;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

• Net favorable development of $ 31 million in surety, driven by accident year 2018, where loss emergence was lower than expected.

North America Personal P&C Insurance

For the three months ended March 31, 2021, net favorable PPD was $ 40 million, driven by accident year 2020, which experienced better than expected non-catastrophe loss development in homeowners and valuables.

For the three months ended June 30, 2021, net favorable PPD was $ 44 million, driven by favorable development of $ 43 million in automobile, predominantly from better than expected frequency results in accident year 2020 for physical damage coverages.

For the six months ended June 30, 2021 net favorable PPD was $ 84 million, driven by the $ 43 million in automobile described above along with better than expected non-catastrophe loss development in accident year 2020 for homeowners and valuables.

North America Agricultural Insurance

Prior period development in this segment mainly relates to our Multiple Peril Crop Insurance (MPCI) business and was favorable due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2020 results based on 2019 crop year).

Overseas General Insurance

For the three months ended March 31, 2021, net favorable PPD was $ 25 million, which reflects favorable loss experience across several lines, mainly in accident year 2020, none of which were significant individually or in the aggregate.

• Net favorable development of $ 161 million in short-tail business, primarily from:

• Net favorable development of $ 50 million, in property lines in accident years 2019 and 2020, including a $ 21 million favorable reduction in COVID-19 estimates in accident year 2020.

The remaining favorable development was across most regions in accident years 2019 and 2020;

• Net favorable development of $ 49 million, in accident and health lines, mainly due to favorable loss development across all regions in accident years 2019 and 2020;

• Net favorable development of $ 31 million in marine lines in accident years 2018 through 2020, driven by favorable loss development, specific claim reductions, and salvage and subrogation recoveries in Continental Europe and Asia Pacific.

For the six months ended June 30, 2021, net favorable PPD was $ 181 million, primarily from:

• Net favorable development of $ 186 million in short-tail business, primarily from:

• Net favorable development of $ 58 million in property lines, net favorable development of $ 55 million in accident and health lines, and net favorable development of $ 35 million in marine, due to the same factors experienced for the three months ended June 30, 2021.

For the three and six months ended June 30, 2020, net favorable PPD was $ 36 million and $ 40 million, respectively, which was the net result of several underlying favorable and adverse movements, including $ 19 million and $ 22 million, respectively, in marine lines across all regions mainly in accident years 2017 and 2018, and favorable case-specific settlements in accident years 2014 and prior.

Global Reinsurance

For the three and six months ended June 30, 2020, net favorable PPD was $ 16 million and $ 23 million, respectively, which was the net result of several underlying favorable and adverse movements, none of which is significant individually or in the aggregate.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

For the three and six months ended June 30, 2021, net adverse development was $ 88 million and $ 97 million, respectively, driven by adverse development of $ 68 million for molestation claims.The remainder of the adverse development was driven by increased claim costs on non-A&E runoff workers’ compensation exposures, and charges relating to run-off operating expenses incurred.

For the three and six months ended June 30, 2020, net adverse development was $ 274 million and $ 285 million, respectively, driven by adverse development of $ 254 million for U.S.

child molestation claims, predominantly reviver statute-related.

The remainder of the adverse development ($ 20 million and $ 31 million, respectively) was driven by increased claim costs on a limited number of non-A&E run-off casualty and workers’ compensation exposures, and charges relating to unallocated loss adjustment expenses due to run-off operating expenses.

Commitments, contingencies, and guarantees

18 unchanged sentences

None of the derivative instruments are designated as hedges for accounting purposes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

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:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Balance Sheet

19 unchanged sentences

The concept of a notional value does not apply to the GLB reinsurance contracts.

At March 31, 2021 and December 31, 2020, net derivative liabilities of $ 12 million and $ 30 million, respectively, included in the table above were subject to a master netting agreement.

At June 30, 2021 and December 31, 2020, net derivative liabilities of $ 37 million and $ 30 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following table presents net realized gains (losses) related to derivative instrument activity in the Consolidated statements of operations:

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

8 unchanged sentences

Futures contracts on equities (2)

( 64 ) ( 103 ) ( 108 ) 22

Other 3 ( 1 ) 2 ( 3 )

7 unchanged sentences

Chubb uses forwards to minimize the effect of fluctuating foreign currencies as discussed above.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

(ii) Duration management and market exposure

13 unchanged sentences

For non-exchange-traded instruments, the counterparties are principally banks which must meet certain criteria according to our investment guidelines.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Interest rate swaps

14 unchanged sentences

Chubb purchases convertible securities for their total return and not specifically for the conversion feature.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

By acquiring TBAs, we make a commitment to purchase a future issuance of mortgage-backed securities.

14 unchanged sentences

The collateral is recorded in Securities lending collateral and the liability is recorded in Securities lending payable in the Consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

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:

Remaining contractual maturity

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in millions of U.S.

8 unchanged sentences

Gross amount of recognized liability for securities lending payable $ 2,369 $ 1,844

At March 31, 2021 and December 31, 2020, our repurchase agreement obligations of $ 1,405 million were fully collateralized.

At June 30, 2021 and December 31, 2020, our repurchase agreement obligations of $ 1,405 million 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following table presents the carrying value of collateral pledged under repurchase agreements by investment category and remaining contractual maturity of the underlying agreements:

Remaining contractual maturity

March 31, 2021 December 31, 2020

30-90 Days Greater than

June 30, 2021 December 31, 2020

Up to 30 Days 30-90 Days Greater than

90 Days Total 30-90 Days Greater than

16 unchanged sentences

d) Fixed maturities

At March 31, 2021, we have commitments to purchase fixed income securities of $ 591 million over the next several years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

At June 30, 2021, we have commitments to purchase fixed income securities of $ 877 million over the next several years.

e) Other investments

At March 31, 2021, included in Other investments in the Consolidated balance sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of $ 7.2 billion.

At June 30, 2021, included in Other investments in the Consolidated balance sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of $ 8.0 billion.

In connection with these investments, we have commitments that may require funding of up to $ 8.0 billion over the next several years.

1 unchanged sentence

f) Income taxes

At March 31, 2021, $ 62 million of unrecognized tax benefits remain out standing.

At June 30, 2021, $ 60 million of unrecognized tax benefits remain out standing.

It is reasonably possible that over the next twelve months, that the amount of unrecognized tax benefits may change resulting from the re-evaluation of unrecognized tax benefits arising from examinations by taxing authorities, settlements and the lapses of statutes of limitations.

6 unchanged sentences

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.

At March 31, 2021 and December 31, 2020, the right-of-use asset was $ 448 million and $ 473 million, respectively, recorded within Other assets on the Consolidated balance sheets and the lease liability was $ 490 million and $ 517 million, respectively, which was recorded within Accounts payable, accrued expenses, and other liabilities on the Consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

At June 30, 2021 and December 31, 2020, the right-of-use asset was $ 429 million and $ 473 million, respectively, recorded within Other assets on the Consolidated balance sheets and the lease liability was $ 468 million and $ 517 million, respectively, which was 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.

3 unchanged sentences

dollars as its reporting currency for preparing the Consolidated Financial statements.

Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value reduction) or from legal reserves, must be stated in Swiss francs though dividend payments are made by Chubb in U.S.

At March 31, 2021, our Common Shares had a par value of CHF 24.15 per share.

At our May 2020 and 2019 annual general meetings, our shareholders approved annual dividends for the following year of up to $ 3.12 per share and $ 3.00 per share, respectively, which were paid in four quarterly installments of $ 0.78 per share and $ 0.75 per share, respectively, at dates determined by the Board of Directors (Board) after the annual general meetings by way of a distribution from capital contribution reserves, transferred to free reserves for payment.

Dividend distributions per Common Share for the three months ended March 31, 2021 and 2020 were $ 0.78 (CHF 0.70 ) and $ 0.75 (CHF 0.72 ), respectively.

Under Swiss corporate law, dividends, including distributions from legal reserves or through a reduction in par value (par value reduction), must be stated in Swiss francs though dividend payments are made by Chubb in U.S.

At June 30, 2021, our Common Shares had a par value of CHF 24.15 per share.

At our May 2021 annual general meeting, our shareholders approved an annual dividend for the following year of up to $ 3.20 per share, expected to be paid in four quarterly installments of $ 0.80 per share after the 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 2022 annual general meeting, and is authorized to abstain from distributing a dividend at its discretion.

At our May 2020 and 2019 annual general meetings, our shareholders approved annual dividends for the following year of up to $ 3.12 per share and $ 3.00 per share, respectively, which were paid in four quarterly installments of $ 0.78 per share and $ 0.75 per share, respectively, at dates determined by the Board after the annual general meetings by way of a distribution from capital contribution reserves, transferred to free reserves for payment.

The following table presents dividend distributions per Common Share in Swiss francs (CHF) and U.S.

dollars (USD):

Three Months Ended Six Months Ended

June 30 June 30

2021 2020 2021 2020

CHF USD CHF USD CHF USD CHF USD

Total dividend distributions per common share 0.71 $ 0.80 0.75 $ 0.78 1.41 $ 1.58 1.47 $ 1.53

Increases in Common Shares in treasury are due to open market repurchases of Common Shares and the surrender of Common Shares to satisfy tax withholding obligations in connection with the vesting of restricted stock and the forfeiture of unvested restricted stock.

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

At March 31, 2021, 27,928,305 Common Shares remain in treasury after share repurchases and 2,054,334 net shares issued under employee share-based compensation plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

During the six months ended June 30, 2021, 14,465,400 shares were repurchased and 2,449,988 net shares were issued under employee share-based compensation plans.

At June 30, 2021, 38,888,051 Common Shares remain in treasury.

Chubb Limited securities repurchase authorizations

In November 2019, the Board authorized the repurchase of up to $ 1.5 billion of Chubb's Common Shares from November 21, 2019 through December 31, 2020.

In November 2020, the Board authorized the repurchase of up to $ 1.5 billion of Chubb's Common Shares from November 19, 2020 through December 31, 2021.

The $ 1.5 billion November 2019 Board authorization remained effective through December 31, 2020.

Repurchases through December 31, 2020 were made under this authorization.

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

In February 2021, the Board approved an increase to the November 2020 share repurchase program of $ 1.0 billion to a total of $ 2.5 billion, effective through December 31, 2021.

Subsequently, on July 19, 2021, the Board authorized a one-time incremental share repurchase program of up to $ 5.0 billion through June 30, 2022.

The $ 2.5 billion share repurchase authorization will be used prior to the $ 5.0 billion share repurchase authorization.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following table presents repurchases of Chubb's Common Shares conducted in a series of open market transactions under the Board authorizations:

Three Months Ended April 1, 2021 through

April 29, 2021

Three Months Ended Six Months Ended July 1, 2021 through July 28, 2021

June 30 June 30

(in millions of U.S.

16 unchanged sentences

Each restricted stock unit represents our obligation to deliver to the holder one Common Share upon vesting.

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, the number of Common Shares available for delivery increased by 13.4 million.

This is in addition to any shares that remain available for delivery since the initial establishment of the 2016 LTIP, plus any shares covered by outstanding awards granted under the ACE Limited 2004 Long-Term Incentive Plan that are forfeited, expired or canceled after the effective date of the Amended 2016 LTIP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

1 unchanged sentence

Postretirement benefits

The components of net pension and other postretirement benefit costs (benefits) reflected in Net income in the Consolidated statements of operations were as follows:

The components of net pension and other postretirement benefit costs (benefits) reflected in Net income (loss) in the Consolidated statements of operations were as follows:

Pension Benefit Plans Other Postretirement

1 unchanged sentence

2021 2020 2021 2020

Three Months Ended March 31 U.S.

Three Months Ended June 30 U.S.

Plans Non-U.S.

10 unchanged sentences

Net periodic benefit cost (benefit) $ ( 46 ) $ ( 5 ) $ ( 30 ) $ ( 4 ) $ ( 6 ) $ ( 21 )

Pension Benefit Plans Other Postretirement

Benefit Plans

2021 2020 2021 2020

Six Months Ended June 30 U.S.

Plans Non-U.S.

(in millions of U.S.

Service cost $ — $ 2 $ — $ 2 $ — $ —

Non-service cost (benefit):

Interest cost 35 9 50 11 — 1

Expected return on plan assets ( 127 ) ( 22 ) ( 112 ) ( 21 ) — ( 2 )

Amortization of net actuarial loss — 2 — 1 — —

Amortization of prior service cost — — — — ( 26 ) ( 40 )

Settlements — — 2 — — —

Total non-service cost (benefit) ( 92 ) ( 11 ) ( 60 ) ( 9 ) ( 26 ) ( 41 )

Net periodic benefit cost (benefit) $ ( 92 ) $ ( 9 ) $ ( 60 ) $ ( 7 ) $ ( 26 ) $ ( 41 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

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:

1 unchanged sentence

Benefit Plans

Three Months Ended March 31 2021 2020 2021 2020

Three Months Ended June 30 2021 2020 2021 2020

(in millions of U.S.

8 unchanged sentences

Net periodic benefit cost (benefit) $ ( 51 ) $ ( 34 ) $ ( 6 ) $ ( 21 )

Pension Benefit Plans Other Postretirement

Benefit Plans

Six Months Ended June 30 2021 2020 2021 2020

(in millions of U.S.

Service cost:

Losses and loss expenses $ — $ — $ — $ —

Administrative expenses 2 2 — —

Total service cost 2 2 — —

Non-service cost (benefit):

Losses and loss expenses ( 9 ) ( 6 ) ( 3 ) ( 4 )

Administrative expenses ( 94 ) ( 63 ) ( 23 ) ( 37 )

Total non-service cost (benefit) ( 103 ) ( 69 ) ( 26 ) ( 41 )

Net periodic benefit cost (benefit) $ ( 101 ) $ ( 67 ) $ ( 26 ) $ ( 41 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Other income and expense

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

dollars) 2021 2020 2021 2020

Equity in net income (loss) of partially-owned entities (1)

$ 774 $ ( 73 ) $ 1,271 $ ( 44 )

Gains (losses) from fair value changes in separate account assets (2)

15 40 19 ( 16 )

Federal excise and capital taxes ( 5 ) ( 6 ) ( 10 ) ( 12 )

Other ( 7 ) ( 19 ) ( 13 ) ( 41 )

Total $ 777 $ ( 58 ) $ 1,267 $ ( 113 )

(1) Principally comprises our share of operating income and mark-to-market gains on private equities where we hold more than three percent.

Also includes net income from our investment in Huatai of $ 49 million and $ 98 million for the three and six months ended June 30, 2021, respectively, compared to $ 31 million and $ 49 million, respectively, for the prior year periods.

(2) 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.

Segment information

17 unchanged sentences

We view investment income from these equity-method private equity partnerships as net investment income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following tables present the Statement of Operations by segment:

For the Three Months Ended

March 31, 2021

June 30, 2021

(in millions of U.S.

10 unchanged sentences

Other (income) expense (1)

14 ( 5 ) — 2 — ( 26 ) ( 708 ) ( 54 ) ( 777 )

Amortization expense of

4 unchanged sentences

Income tax expense 317 — 317

Net income $ 697 $ — $ 2,300

Net income (loss) $ ( 9 ) $ — $ 2,265

(1) Principally includes our share of operating income and market-to-market gains on private equities where we hold more than three percent.

Refer to Note 11 for additional information.

For the Three Months Ended

June 30, 2020

(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 Corporate Segment Measure Reclass Chubb

Net premiums written $ 3,720 $ 1,327 $ 461 $ 2,021 $ 207 $ 619 $ — $ — $ 8,355

Net premiums earned 3,595 1,192 376 2,194 163 608 — — 8,128

Losses and loss expenses 3,498 762 313 1,485 73 171 276 ( 1 ) 6,577

Policy benefits — — — — — 183 — 40 223

Policy acquisition costs 471 231 29 624 42 196 — — 1,593

Administrative expenses 249 66 3 241 9 82 77 — 727

Underwriting income (loss) ( 623 ) 133 31 ( 156 ) 39 ( 24 ) ( 353 ) ( 39 ) ( 992 )

Net investment income (loss) 509 65 7 121 60 95 ( 22 ) ( 8 ) 827

Other (income) expense 6 1 1 5 1 ( 17 ) 109 ( 48 ) 58

Amortization expense of

purchased intangibles — 3 6 11 — 1 51 — 72

Segment income (loss) $ ( 120 ) $ 194 $ 31 $ ( 51 ) $ 98 $ 87 $ ( 535 ) $ 1 $ ( 295 )

Net realized gains (losses) 31 ( 1 ) 30

Interest expense 128 — 128

Income tax benefit ( 62 ) — ( 62 )

Net loss $ ( 570 ) $ — $ ( 331 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

For the Three Months Ended

March 31, 2020

For the Six Months Ended

June 30, 2021

(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 Corporate Segment Measure Reclass Chubb Consolidated

Net premiums written $ 7,949 $ 2,461 $ 695 $ 5,387 $ 481 $ 1,235 $ — $ — $ 18,208

Net premiums earned 7,477 2,408 520 5,057 372 1,200 — — 17,034

Losses and loss expenses 4,986 1,495 416 2,449 230 383 98 2 10,059

Policy benefits — — — — — 333 — 19 352

Policy acquisition costs 1,003 492 39 1,367 92 370 — — 3,363

Administrative expenses 499 127 6 545 18 165 159 — 1,519

Underwriting income (loss) 989 294 59 696 32 ( 51 ) ( 257 ) ( 21 ) 1,741

Net investment income (loss) 1,075 129 15 290 151 199 ( 32 ) ( 80 ) 1,747

Other (income) expense 16 ( 4 ) — 3 — ( 60 ) ( 1,123 ) ( 99 ) ( 1,267 )

Amortization expense of

purchased intangibles — 6 13 25 — 2 99 — 145

Segment income $ 2,048 $ 421 $ 61 $ 958 $ 183 $ 206 $ 735 $ ( 2 ) $ 4,610

Net realized gains (losses) 852 2 854

Interest expense 244 — 244

Income tax expense 655 — 655

Net income $ 688 $ — $ 4,565

For the Six Months Ended

June 30, 2020

(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 Corporate Segment Measure Reclass Chubb

14 unchanged sentences

Income tax expense 153 — 153

Net income (loss) $ ( 1,477 ) $ — $ 252

Net loss $ ( 2,047 ) $ — $ ( 79 )

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Earnings per share

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

dollars, except share and per share data) 2021 2020 2021 2020

Net income $ 2,300 $ 252

Net income (loss) $ 2,265 $ ( 331 ) $ 4,565 $ ( 79 )

Denominator for basic earnings per share:

2 unchanged sentences

Share-based compensation plans (1)

2,857,242 — 2,900,440 —

Weighted-average shares outstanding and assumed conversions

447,951,920 451,402,807 450,702,519 451,635,733

Basic earnings per share $ 5.10 $ 0.56

Diluted earnings per share $ 5.07 $ 0.55

Basic earnings (loss) per share $ 5.09 $ ( 0.73 ) $ 10.20 $ ( 0.17 )

Diluted earnings (loss) per share $ 5.06 $ ( 0.73 ) $ 10.13 $ ( 0.17 )

Potential anti-dilutive share conversions 1,777,555 8,378,447 1,879,882 6,583,319

(1) For the three and six months ended June 30, 2020, weighted-average shares outstanding used in calculating diluted loss per share excludes the effect of dilutive securities of 1,395,951 and 2,044,144 shares, respectively.

In periods where a net loss is recognized, inclusion of incremental dilution is anti-dilutive.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

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.

Certain information included relates to our compliance with our debt covenants.

The following table presents the condensed balance sheets of Chubb Limited and Chubb INA Holdings Inc.:

Chubb Limited

(Parent Guarantor) (1)

Chubb INA Holdings Inc.

(Subsidiary Issuer)

(in millions of U.S.

dollars) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020

Investments $ — $ — $ 206 $ 197

Cash 23 84 1 1

Due from subsidiaries and affiliates, net 3,510 3,522 — —

Other assets 8 10 415 463

Total assets $ 3,541 $ 3,616 $ 622 $ 661

Due to subsidiaries and affiliates, net $ — $ — $ 3,079 $ 3,008

Affiliated notional cash pooling programs — — 361 272

Long-term debt — — 14,879 14,948

Trust preferred securities — — 308 308

Other liabilities 337 323 1,281 1,418

Total liabilities 337 323 19,908 19,954

Total shareholders’ equity (2)

3,204 3,293 ( 19,286 ) ( 19,293 )

Total liabilities and shareholders’ equity $ 3,541 $ 3,616 $ 622 $ 661

(1) Excludes investment in subsidiary issuer (presented separately).

(2) Total shareholders' equity of Parent Guarantor excludes $ 55.9 billion and $ 56.1 billion of investment in subsidiaries, including Subsidiary Issuer, at March 31, 2021 and December 31, 2020, respectively.

Total shareholders' equity of Subsidiary Issuer excludes $ 54.5 billion and $ 55.2 billion of investment in subsidiaries at March 31, 2021 and December 31, 2020, respectively.

The following table presents the condensed statements of operations and comprehensive income of Chubb Limited and Chubb INA Holdings Inc.:

Chubb Limited

(Parent Guarantor) (1)

Chubb INA Holdings Inc.

(Subsidiary Issuer)

Three Months Ended March 31 2021 2020 2021 2020

(in millions of U.S.

Net investment income (loss) $ 1 $ ( 2 ) $ 1 $ 4

Net realized gains (loss) 13 ( 21 ) 67 113

Administrative expenses 22 24 ( 52 ) ( 38 )

Interest (income) expense ( 34 ) ( 34 ) 145 148

Other (income) expense ( 13 ) ( 9 ) ( 5 ) 8

Income tax expense (benefit) 11 — ( 22 ) 7

Net income (loss) (2)

$ 28 $ ( 4 ) $ 2 $ ( 8 )

Comprehensive income (loss) $ 28 $ ( 4 ) $ 1 $ ( 38 )

(1) Excludes investment in subsidiary issuer (presented separately).

(2) Net income of Parent Guarantor excludes equity in earnings from investment in subsidiaries, including Subsidiary Issuer, of $ 2,272 million and $ 256 million for the three months ended March 31, 2021 and 2020, respectively.

Net income of Subsidiary Issuer excludes equity in earnings from investment in subsidiaries of $ 1,031 million and $ 593 million for the three months ended March 31, 2021 and 2020, respectively .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements