What changed in this filing

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Item 1. Financial Statements

2021-10-28 compared with 2021-07-29 · 203 added, 160 removed, 1221 unchanged (23% of the section changed)

2 unchanged sentences

Chubb Limited and Subsidiaries

June 30 December 31

September 30 December 31

(in millions of U.S.

41 unchanged sentences

Common Shares (CHF 24.15 par value;

477,605,264 shares issued;

474,021,114 and 477,605,264 shares issued;

430,876,252 and 450,732,625 shares outstanding)

10 unchanged sentences

Chubb Limited and Subsidiaries

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

(in millions of U.S.

15 unchanged sentences

Total expenses 8,794 8,128 23,209 24,736

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)

Income before income tax 2,051 1,336 7,271 1,410

Income tax expense (includes $( 3 ), $ 7 , $( 5 ), and $( 35 ) on unrealized gains and losses reclassified from AOCI)

218 142 873 295

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

Net income $ 1,833 $ 1,194 $ 6,398 $ 1,115

Other comprehensive income (loss)

Unrealized appreciation (depreciation) $ ( 564 ) $ 687 $ ( 2,151 ) $ 1,456

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

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

10 ( 49 ) ( 26 ) 303

7 unchanged sentences

Earnings per share

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 )

Basic earnings per share $ 4.21 $ 2.64 $ 14.42 $ 2.47

Diluted earnings per share $ 4.18 $ 2.63 $ 14.33 $ 2.46

See accompanying notes to the consolidated financial statements

1 unchanged sentence

Chubb Limited and Subsidiaries

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

(in millions of U.S.

1 unchanged sentence

Common Shares

Balance – beginning and end of period $ 11,064 $ 11,121 $ 11,064 $ 11,121

Balance – beginning of period $ 11,064 $ 11,121 $ 11,064 $ 11,121

Cancellation of treasury shares ( 79 ) ( 57 ) ( 79 ) ( 57 )

Balance – end of period 10,985 11,064 10,985 11,064

Common Shares in treasury

1 unchanged sentence

Common Shares repurchased ( 1,516 ) — ( 3,956 ) ( 326 )

Cancellation of treasury shares 590 323 590 323

Net shares issued under employee share-based compensation plans 77 2 389 216

11 unchanged sentences

Balance – beginning of period, as adjusted 43,902 35,991 39,337 36,070

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

Net income 1,833 1,194 6,398 1,115

Cancellation of treasury shares ( 511 ) ( 266 ) ( 511 ) ( 266 )

Funding of dividends declared from Additional paid-in capital 346 353 1,050 1,046

7 unchanged sentences

( 463 ) 585 ( 1,756 ) 1,156

Amounts reclassified from AOCI, net of income tax expense of

Amounts reclassified from AOCI, net of income tax (expense) benefit of

$( 3 ), $ 7 , $( 5 ), $( 35 )

11 unchanged sentences

Balance – beginning of period ( 197 ) ( 13 ) ( 167 ) 15

Change in period, net of income tax benefit of $ 2 , $ 5 , $ 7 and $ 8

Change in period, net of income tax (expense) benefit of $( 1 ), $ 5 , $ 6

3 ( 18 ) ( 27 ) ( 46 )

5 unchanged sentences

Chubb Limited and Subsidiaries

Six Months Ended

Nine Months Ended

(in millions of U.S.

1 unchanged sentence

Cash flows from operating activities

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

Net income $ 6,398 $ 1,115

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

32 unchanged sentences

Common Shares repurchased ( 3,941 ) ( 333 )

Proceeds from issuance of long-term debt — 988

Proceeds from issuance of repurchase agreements 1,405 1,402

6 unchanged sentences

Effect of foreign currency rate changes on cash and restricted cash ( 33 ) ( 51 )

Net increase in cash and restricted cash 162 63

Net increase (decrease) in cash and restricted cash ( 40 ) 227

Cash and restricted cash – beginning of period 1,836 1,646

21 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:

June 30 December 31

September 30 December 31

(in millions of U.S.

3 unchanged sentences

Total cash and restricted cash shown in the Consolidated statements of cash flows $ 1,796 $ 1,836

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

During the nine months ended September 30, 2021, Goodwill decreased $ 13 million, reflecting the impact of foreign exchange.

d) Accounting guidance not yet adopted

7 unchanged sentences

Chubb Limited and Subsidiaries

Cigna’s Life and Accident and Health (A&H) Insurance Business in Asia-Pacific Markets

On October 7, 2021, we entered into a definitive agreement to acquire the life and non-life insurance companies that house the personal accident, supplemental health and life insurance business of Cigna in seven Asia-Pacific markets, including Korea, Taiwan, New Zealand, Thailand, Hong Kong and Indonesia and its interest in a joint venture in Turkey, for $ 5.75 billion in cash.

The transaction is expected to be completed in 2022.

The timing of completion is subject to required regulatory approvals and customary closing conditions.

Chubb maintains a direct investment in Huatai Insurance Group Co., Ltd.

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

As of September 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.

In 2019, Chubb entered into an agreement to acquire an additional 7.1 percent ownership interest in Huatai Group.

The purchase of the additional 7.1 percent ownership interest is contingent upon important conditions.

Upon completion of the 7.1 percent purchase, Chubb is expected to obtain majority ownership of Huatai Group and control of Huatai.

At that time, Chubb is expected to apply consolidation accounting and discontinue the application of the equity method of accounting.

In July 2021, Chubb signed an agreement of intent to purchase an additional 6.4 percent ownership interest in Huatai Group.

In connection with the agreement, Chubb paid a deposit of approximately $ 143 million.

The purchase of the additional ownership interests is contingent upon important conditions.

As Chubb’s ownership interest increases, we will continue to evaluate the appropriateness of consolidation accounting in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 810, Consolidation , and other applicable regulations.

a) Fixed maturities

June 30, 2021 Amortized

September 30, 2021 Amortized

Cost Valuation Allowance Gross

34 unchanged sentences

Cost Valuation Allowance Net Carrying Value Gross

Appreciation Gross Unrealized Depreciation Fair

Appreciation Gross

Depreciation Fair

Held to maturity

6 unchanged sentences

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

September 30, 2021 December 31, 2020

(in millions of U.S.

10 unchanged sentences

The following table presents fixed maturities by contractual maturity:

June 30 December 31

September 30 December 31

(in millions of U.S.

18 unchanged sentences

b) Gross unrealized loss

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.

Fixed maturities in an unrealized loss position at September 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

June 30, 2021 Fair Value Gross

September 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 Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

(in millions of U.S.

9 unchanged sentences

Other investments 11 31 111 ( 71 )

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

Foreign exchange 106 ( 222 ) 85 ( 351 )

Investment and embedded derivative instruments ( 9 ) 9 9 38

14 unchanged sentences

Chubb Limited and Subsidiaries

Six Months Ended

Nine Months Ended

(in millions of U.S.

4 unchanged sentences

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

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

(in millions of U.S.

19 unchanged sentences

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

June 30 December 31

September 30 December 31

Period of Underlying Assets 2021 2020

47 unchanged sentences

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.

September 30, 2021 and December 31, 2020 are investments, primarily fixed maturities, totaling $ 18.82 billion and $ 19.61 billion, respectively, and cash of $ 176 million and $ 89 million, respectively.

The following table presents the components of restricted assets:

June 30 December 31

September 30 December 31

(in millions of U.S.

58 unchanged sentences

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.

Other investments for which pricing is unobservable are classified within Level 3.

Securities lending collateral

28 unchanged sentences

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

June 30, 2021 Level 1 Level 2 Level 3 Total

September 30, 2021 Level 1 Level 2 Level 3 Total

(in millions of U.S.

17 unchanged sentences

Investment derivative instruments $ 111 $ — $ — $ 111

Other derivative instruments 12 — — 12

Total liabilities measured at fair value $ 111 $ — $ 818 $ 929

(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.

(1) Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $ 9,768 million, policy loans of $ 235 million and other investments of $ 80 million at September 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)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

$ 818 $ 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 and six months ended June 30, 2021 and 2020, no material refinements were made to the model.

For the three and nine months ended September 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

June 30, 2021

September 30, 2021

(in millions of U.S.

21 unchanged sentences

Three Months Ended

June 30, 2020

September 30, 2020

(in millions of U.S.

5 unchanged sentences

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

Transfers into Level 3 — 1 — — — — —

Transfers out of Level 3 — ( 1 ) — — — — —

9 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, 2021

Nine Months Ended

September 30, 2021

(in millions of U.S.

20 unchanged sentences

Assets Liabilities

Six Months Ended

June 30, 2020

Nine Months Ended

September 30, 2020

(in millions of U.S.

25 unchanged sentences

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

June 30, 2021 Fair Value Net Carrying

September 30, 2021 Fair Value Net Carrying

(in millions of U.S.

26 unchanged sentences

Reinsurance recoverable on ceded reinsurance

June 30, 2021 December 31, 2020

September 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.

The increase in reinsurance recoverable on losses and loss expenses was primarily due to higher underlying ceded exposures due to premium growth, unfavorable prior period development in certain lines, crop activity, and catastrophe losses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

1 unchanged sentence

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

Six Months Ended

Nine Months Ended

(in millions of U.S.

8 unchanged sentences

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

Six Months Ended

Nine 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 $ 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.

(2) Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $ 87 million and $ 23 million for the nine months ended September 30, 2021 and 2020, respectively.

Gross and net unpaid losses and loss expenses increased $ 4,820 million and $ 3,917 million, respectively, for the nine months ended September 30, 2021, driven by an increase in underlying exposure due to premium growth, crop activity, and net catastrophe losses incurred, partially offset by favorable prior period development.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

5 unchanged sentences

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

Three Months Ended June 30 Six Months Ended June 30

Three Months Ended September 30 Nine Months Ended September 30

(in millions of U.S.

17 unchanged sentences

North America Commercial P&C Insurance

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:

For the three months ended September 30, 2021, net favorable PPD was $ 157 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 $ 101 million in long-tail business, primarily from:

• 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;

• Net favorable development of $ 97 million in our workers' compensation business mainly impacting accident years 2016 and prior, driven by lower than expected loss experience, and related improvements in loss development factors;

• Net favorable development of $ 36 million on large multi-line prospective deals in the 2017 and prior accident years, due to lower than expected reported loss activity.

These structured deals typically cover large clients for multiple product lines and with varying loss limitations;

this development is net of premium returns of $ 46 million tied to the loss performance of the particular deals;

• Net adverse development of $ 31 million in commercial excess and umbrella portfolios, mainly in accident years 2018 and 2019, driven by higher than expected reported loss activity.

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 $ 56 million in short-tail business, primarily from:

• 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 $ 54 million in our property and marine portfolios, mainly in accident years 2019 and 2020, which experienced lower than expected loss development on catastrophe and non-catastrophe losses.

For the nine months ended September 30, 2021, net favorable PPD was $ 440 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 $ 243 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 $ 255 million in our workers’ compensation business.

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 improvements to loss development factors;

• 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;

1 unchanged sentence

• 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 $ 36 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2021, as described above;

• Net adverse development of $ 26 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 adverse development of $ 74 million in commercial automobile liability, driven by adverse reported loss experience, mainly impacting accident years 2017 and 2019;

• Net adverse development of $ 74 million in commercial excess and umbrella portfolios, with accident years 2016 through 2019 experiencing higher than expected reported loss activity, partly offset by lower than expected emergence in accident years 2015 and prior.

• Net favorable development of $ 197 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.

• Net favorable development of $ 83 million in property and marine coverages mainly in accident years 2019 and 2020, driven by lower than expected loss development;

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

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:

For the three months ended September 30, 2020, net favorable PPD was $ 200 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 $ 255 million in long-tail business, primarily from:

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

• Net favorable development of $ 155 million in workers' compensation business mainly impacting accident years 2016 and prior, driven by lower than expected paid and reported loss activity, and related updates to loss development factors, partly offset by adverse development in accident year 2019;

• Net favorable development of $ 47 million in commercial excess and umbrella portfolios, driven by accident years 2014 and prior, and accident year 2019.

The 2014 and prior development was a function of lower than expected paid and reported loss activity.

The development on the 2019 accident year relates to three large policies covering specific perils, which expired in the quarter, with no covered events occurring;

• Net favorable development of $ 41 million on large multi-line prospective deals in the 2016 and prior accident years, due to lower than expected reported loss activity.

These structured deals typically cover large clients for multiple product lines and with varying loss limitations;

this development is net of premium returns of $ 26 million tied to the loss performance of the particular deals;

• Net favorable development of $ 40 million in our foreign casualty business, mainly in accident year 2016, due to lower than expected reported loss activity, partly offset by a large loss in accident year 2017;

• Net adverse development of $ 29 million in assumed general liability and excess lines mainly in accident years 2016 and prior due to higher than expected reported loss activity.

• Net adverse development of $ 55 million in short-tail business, primarily from:

• Net adverse development of $ 35 million in our property portfolios, due to adverse non-catastrophe loss development mainly in accident year 2019, partially offset by favorable catastrophe-driven loss experience;

• Net adverse development of $ 21 million in our marine portfolios, mainly impacting the 2019 accident year, driven by higher than expected non-catastrophe loss development.

For the nine months ended September 30, 2020, net favorable PPD was $ 451 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 $ 439 million in long-tail business, primarily from:

• Net favorable development of $ 337 million in 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.

This favorable 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 2016 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 favorable development of $ 66 million in professional liability (errors & omissions and cyber risk), driven by accident years 2016 and prior, which experienced lower than expected loss 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 related updates to loss development factors;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

• Net favorable development of $ 41 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2020, as described above;

• Net favorable development of $ 40 million in our foreign casualty businesses due to the same factors experienced for the three months ended September 30, 2020, as described above;

• 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;

1 unchanged sentence

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 $ 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 $ 12 million in short-tail business due to the same factors experienced for the three months ended September 30, 2020, as described above, which was offset by:

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

• 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 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).

For the three months ended September 30, 2021, net favorable PPD was $ 182 million, driven by favorable development of $ 176 million in homeowners, including valuables, mainly in accident year 2020, which experienced better than expected non-catastrophe loss development.

For the nine months ended September 30, 2021, net favorable PPD was $ 266 million, driven by favorable development of $ 216 million in homeowners, including valuables, due to the same factors experienced for the three months ended September 30, 2021 as described above and a favorable $ 43 million in automobile, predominantly from better than expected frequency results in accident year 2020 for physical damage coverages.

For the three and nine months ended September 30, 2020, net adverse PPD was $ 48 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

• Net adverse development of $ 69 million in our homeowners lines, including valuables, mainly in accident years 2017 through 2019 due to higher than expected non-catastrophe loss emergence and adverse development arising from natural catastrophes in accident years 2017 and 2018;

• Net favorable development of $ 22 million in our personal excess lines, driven by favorable development mainly in the 2017 accident year, partly offset by adverse development in accident year 2019.

Overseas General Insurance

For the three months ended September 30, 2021, net favorable PPD was $ 28 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 $ 15 million in short-tail business, primarily from favorable claim development in surety in accident years 2018 through 2020.

• Net favorable development of $ 13 million in long-tail business, primarily from:

• Net favorable development of $ 72 million in casualty lines, including favorable development of $ 97 million in accident years 2017 and prior, due to lower than expected loss emergence across primary and excess lines in Continental Europe and U.K., partially offset by adverse development of $ 25 million in accident years 2018 through 2020, primarily due to higher than expected loss development and corresponding changes in loss development patterns on business in Asia Pacific;

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

• Net favorable development of $ 24 million in other long tail lines including Environmental and Political Risks, primarily in accident years 2017 and prior;

• Net adverse development of $ 84 million in financial lines, with adverse development primarily in accident years 2011 through 2020 in Directors and Officers (D&O) on specific claims in Australia, and U.K., and adverse professional indemnity development, including medical malpractice, in various regions.

For the nine months ended September 30, 2021, net favorable PPD was $ 209 million, primarily from:

• Net favorable development of $ 201 million in short-tail business, primarily from:

• Net favorable development of $ 55 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 $ 54 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 $ 35 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.

For the three months ended September 30, 2020, net favorable PPD was $ 60 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

• Net favorable development of $ 71 million in long-tail business, primarily from:

• Net favorable development of $ 94 million in casualty lines, including favorable development of $ 143 million in accident years 2016 and prior, due to lower than expected loss emergence across primary and excess lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of $ 49 million in accident years 2017 through 2019, primarily due to adverse large loss experience in the U.K.

and Asia Pacific;

• Net favorable development of $ 22 million in political risks, driven by benign loss experience in 2018 and 2019;

• Net adverse development of $ 57 million in financial lines, with adverse development of $ 125 million in accident years 2016 through 2019, primarily due to adverse large loss experience in D&O in the U.K.

and Asia Pacific.

This was partially offset by favorable development of $ 68 million in accident years 2015 and prior, primarily from favorable case-specific settlements within Continental Europe and Asia Pacific financial institutions.

For the nine months ended September 30, 2020, net favorable PPD was $ 100 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 $ 72 million in long-tail lines due to the same factors experienced for the three months ended September 30, 2020 described above;

• Net favorable development of $ 28 million in short-tail business, including $ 22 million in marine lines across all regions mainly in accident years 2017 and 2018.

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.

For the three and nine months ended September 30, 2020, net favorable PPD was $ 6 million and $ 29 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.

For the three months ended September 30, 2021, net adverse development was $ 43 million, driven principally by development in environmental liabilities of $ 33 million due to certain case specific incurred activity.

For the nine months ended September 30, 2021, net adverse development was $ 140 million, driven by adverse development of $ 68 million for molestation claims, as well as the adverse development noted above regarding environmental liabilities.

The remainder of the adverse development was driven by increased claim costs on non-A&E run-off workers’ compensation exposures, and charges relating to unallocated loss adjustment expenses incurred.

For the three months ended September 30, 2020, net adverse development was $ 54 million, driven principally by development in environmental liabilities of $ 35 million due to certain case specific incurred activity.

For the nine months ended September 30, 2020 net adverse development was $ 339 million, driven by adverse development of $ 254 million for U.S.

child molestation claims, predominantly reviver statute-related, as well as the adverse development noted above regarding environmental liabilities.

The remainder of the adverse development 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

21 unchanged sentences

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:

June 30, 2021 December 31, 2020

September 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 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.

At September 30, 2021 and December 31, 2020, net derivative assets of $ 22 million and net derivative liabilities of $ 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.

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

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

(in millions of U.S.

71 unchanged sentences

Remaining contractual maturity

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

(in millions of U.S.

5 unchanged sentences

Mortgage-backed securities 1 4

States, municipalities, and political subdivisions 1 —

Equity securities 1 79

1 unchanged sentence

Gross amount of recognized liability for securities lending payable $ 2,368 $ 1,844

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

At September 30, 2021 and December 31, 2020, our repurchase agreement obligations of $ 1,406 million and $ 1,405 million, respectively, were fully collateralized.

In contrast to securities lending programs, the use of cash received is not restricted for the repurchase obligations.

4 unchanged sentences

Remaining contractual maturity

June 30, 2021 December 31, 2020

Up to 30 Days 30-90 Days Greater than

September 30, 2021 December 31, 2020

30-90 Days Greater than

90 Days Total 30-90 Days Greater than

16 unchanged sentences

d) Fixed maturities

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

At September 30, 2021, we have commitments to purchase fixed income securities of $ 825 million over the next several years.

e) Other investments

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.

At September 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 $ 9.5 billion.

In connection with these investments, we have commitments that may require funding of up to $ 7.1 billion over the next several years.

1 unchanged sentence

f) Income taxes

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

At September 30, 2021, $ 62 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.

8 unchanged sentences

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.

At September 30, 2021 and December 31, 2020, the right-of-use asset was $ 434 million and $ 473 million, respectively, recorded within Other assets on the Consolidated balance sheets and the lease liability was $ 472 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.

4 unchanged sentences

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 September 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.

3 unchanged sentences

dollars (USD):

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

2021 2020 2021 2020

3 unchanged sentences

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.

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.

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 August 4, 2021.

During the nine months ended September 30, 2021, 22,877,400 shares were repurchased, 3,584,150 shares were canceled, and 3,021,027 net shares were issued under employee share-based compensation plans.

At September 30, 2021, 43,144,862 Common Shares remain in treasury.

Chubb Limited securities repurchase authorizations

3 unchanged sentences

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.

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 was used prior to the $ 5.0 billion share repurchase authorization.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

1 unchanged sentence

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

June 30 June 30

Three Months Ended Nine Months Ended October 1, 2021 through October 27, 2021

September 30 September 30

(in millions of U.S.

22 unchanged sentences

Postretirement benefits

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:

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

Pension Benefit Plans Other Postretirement

1 unchanged sentence

2021 2020 2021 2020

Three Months Ended June 30 U.S.

Three Months Ended September 30 U.S.

Plans Non-U.S.

7 unchanged sentences

Amortization of prior service cost (1)

— — — 1 — ( 20 )

Settlements 1 — 1 — — —

1 unchanged sentence

Net periodic benefit cost (benefit) $ ( 45 ) $ ( 4 ) $ ( 31 ) $ ( 3 ) $ 1 $ ( 20 )

(1) At June 30, 2021, the remaining prior service cost amortization related to the 2016 harmonization of our U.S.

retirement program was fully amortized.

Refer to Note 13 to the Consolidated Financial Statements of our 2020 Form 10-K for additional information.

Pension Benefit Plans Other Postretirement

1 unchanged sentence

2021 2020 2021 2020

Six Months Ended June 30 U.S.

Nine Months Ended September 30 U.S.

Plans Non-U.S.

15 unchanged sentences

Benefit Plans

Three Months Ended June 30 2021 2020 2021 2020

Three Months Ended September 30 2021 2020 2021 2020

(in millions of U.S.

10 unchanged sentences

Benefit Plans

Six Months Ended June 30 2021 2020 2021 2020

Nine Months Ended September 30 2021 2020 2021 2020

(in millions of U.S.

11 unchanged sentences

Other income and expense

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

(in millions of U.S.

7 unchanged sentences

Total $ 763 $ 485 $ 2,030 $ 372

(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.

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

Also includes net income from our investment in Huatai of $ 40 million and $ 144 million for the three and nine months ended September 30, 2021, respectively, compared to $ 37 million and $ 86 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.

27 unchanged sentences

For the Three Months Ended

June 30, 2021

September 30, 2021

(in millions of U.S.

17 unchanged sentences

Income tax expense 218 — 218

Net income (loss) $ ( 9 ) $ — $ 2,265

Net income $ 170 $ — $ 1,833

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

1 unchanged sentence

For the Three Months Ended

June 30, 2020

September 30, 2020

(in millions of U.S.

12 unchanged sentences

purchased intangibles — 2 7 10 — 1 52 — 72

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

Segment income $ 783 $ 18 $ 65 $ 367 $ 53 $ 104 $ 218 $ ( 1 ) $ 1,607

Net realized gains (losses) ( 142 ) 1 ( 141 )

Interest expense 130 — 130

Income tax benefit ( 62 ) — ( 62 )

Net loss $ ( 570 ) $ — $ ( 331 )

Income tax expense 142 — 142

Net income (loss) $ ( 196 ) $ — $ 1,194

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

For the Six Months Ended

June 30, 2021

For the Nine Months Ended

September 30, 2021

(in millions of U.S.

17 unchanged sentences

Net income $ 858 $ — $ 6,398

For the Six Months Ended

June 30, 2020

For the Nine Months Ended

September 30, 2020

(in millions of U.S.

16 unchanged sentences

Income tax expense 295 — 295

Net loss $ ( 2,047 ) $ — $ ( 79 )

Net income (loss) $ ( 2,243 ) $ — $ 1,115

Underwriting assets are reviewed in total by management for purposes of decision-making.

3 unchanged sentences

Earnings per share

Three Months Ended Six Months Ended

June 30 June 30

Three Months Ended Nine Months Ended

September 30 September 30

(in millions of U.S.

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

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

Net income $ 1,833 $ 1,194 $ 6,398 $ 1,115

Denominator for basic earnings per share:

2 unchanged sentences

Share-based compensation plans 3,123,550 1,471,434 3,032,989 1,894,699

2,857,242 — 2,900,440 —

Weighted-average shares outstanding and assumed conversions

438,441,638 453,265,480 446,628,015 453,577,792

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 )

Basic earnings per share $ 4.21 $ 2.64 $ 14.42 $ 2.47

Diluted earnings per share $ 4.18 $ 2.63 $ 14.33 $ 2.46

Potential anti-dilutive share conversions 1,758,853 7,053,316 1,439,882 6,767,727

(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.

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