What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-07-29 compared with 2022-04-29 · 449 added, 256 removed, 836 unchanged (46% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our results of operations, financial condition, and liquidity and capital resources as of and for the three months ended March 31, 2022.

The following is a discussion of our results of operations, financial condition, and liquidity and capital resources as of and for the three and six months ended June 30, 2022.

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

18 unchanged sentences

Net Investment Income

Interest Expense

Critical Accounting Estimates

51 unchanged sentences

Chubb Limited, which is headquartered in Zurich, Switzerland, and its direct and indirect subsidiaries (collectively, the Chubb Group of Companies, Chubb, we, us, or our) are a global insurance and reinsurance organization, serving the needs of a diverse group of clients worldwide.

At March 31, 2022, we had total assets of $198 billion and shareholders’ equity of $57 billion.

At June 30, 2022, we had total assets of $196 billion and shareholders’ equity of $52 billion.

Chubb was incorporated in 1985 at which time it opened its first business office in Bermuda and continues to maintain operations in Bermuda.

2 unchanged sentences

For more information on our segments refer to “Segment Information” under Item 1 in our 2021 Form 10-K.

Consolidated Operating Results – Three Months Ended March 31, 2022 and 2021

Three Months Ended

March 31 % Change

On July 1, 2022, we completed the acquisition of the life and non-life insurance companies that house the personal accident, supplemental health, and life insurance business of Cigna in six Asia-Pacific markets.

Chubb paid $5.36 billion in cash for the operations, which include Cigna's accident and health (A&H) and life business in Korea, Taiwan, New Zealand, Thailand, Hong Kong, and Indonesia.

The efficiencies created by the transaction are expected to provide greater flexibility for the company to invest in people, technology, products and distribution in the region.

With the acquisition completed on July 1, we will have a full quarter of earnings in the third quarter of 2022.

We now expect expense synergies to reach a run-rate of about $100 million pre-tax, which is higher than our initial estimate.

To achieve that run-rate savings, we expect one-time pre-tax integration costs over the next three years to be $140 million on an economic basis, as the deal price was reduced by $30 million of non-cash employee-related retention costs.

The $30 million will also be recorded as an integration cost, resulting in total expected integration costs of $170 million pre-tax.

Consolidated Operating Results – Three and Six Months Ended June 30, 2022 and 2021

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Net premiums written $ 10,302 $ 9,546 7.9 % $ 19,501 $ 18,208 7.1 %

2 unchanged sentences

Net investment income 888 884 0.4 % 1,710 1,747 (2.1) %

Net realized gains (losses) 101 887 (88.6) %

Net realized gains (losses) (504) (33) NM (403) 854 NM

Total revenues 9,941 9,664 2.9 % 19,610 19,635 (0.1) %

4 unchanged sentences

Interest expense 134 122 10.7 % 266 244 9.0 %

Other (income) expense (310) (490) (36.7) %

Other (income) expense 101 (777) NM (209) (1,267) (83.5) %

Amortization of purchased intangibles 71 73 (1.7) % 142 145 (1.8) %

Cigna integration expenses 3 — NM 3 — NM

Total expenses 8,433 7,082 19.1 % 15,773 14,415 9.4 %

2 unchanged sentences

Net income $ 1,215 $ 2,265 (46.4) % $ 3,189 $ 4,565 (30.1) %

NM - not meaningful

(1) On a constant-dollar basis.

Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.

Financial Highlights for the Three Months Ended March 31, 2022

Financial Highlights for the Three Months Ended June 30, 2022

• Net income was $1.2 billion compared with $2.3 billion in the prior year period.

Net income in the current quarter was driven by strong underwriting results, including growth in net premiums earned and improvements in our combined ratios.

Net income is lower in the current year from lower year-over-year after-tax net realized gains on equity securities of $257 million and a lower gain of $198 million on our variable annuity reinsurance portfolio.

• Consolidated net premiums written were $9.2 billion, up 6.2 percent, or 8.1 percent in constant dollars, primarily from growth in both commercial lines and consumer lines of 7.9 percent and 2.9 percent, respectively, or 9.4 percent and 5.5 percent in constant dollars, respectively.

• Consolidated net premiums earned were $8.7 billion, up 6.4 percent, or 8.0 percent in constant dollars, primarily from growth in both commercial lines and consumer lines of 9.9 percent and 0.2 percent, respectively, or 11.1 percent and 2.7 percent in constant dollars, respectively.

Net income is lower compared to prior year, reflecting the after-tax mark-to-market losses on public and private equities of $345 million and $144 million, respectively, compared to gains of $82 million and $712 million, respectively, in the prior year.

Additionally, losses in the fixed income portfolio were higher year-over-year by $362 million after-tax.

• Consolidated net premiums written were $10.3 billion, up 7.9 percent, or 10.0 percent in constant dollars, primarily from growth in commercial lines and consumer lines of 10.6 percent and 2.5 percent, respectively, or 12.1 percent and 5.5 percent in constant dollars, respectively.

• Consolidated net premiums earned were $9.6 billion, up 8.4 percent, or 10.7 percent in constant dollars.

Commercial lines growth was 13.0 percent, or 14.8 percent in constant dollars, while consumer lines were essentially flat, or up 2.8 percent in constant dollars.

• Total pre-tax and after-tax catastrophe losses were $291 million (3.2 percentage points of the P&C combined ratio) and $241 million, respectively, compared with $280 million (3.4 percentage points of the P&C combined ratio) and $226 million, respectively, in the prior year period.

• Total pre-tax and after-tax favorable prior period development were $240 million (3.2 percentage points of the P&C combined ratio) and $195 million, respectively, compared with $192 million (2.5 percentage points of the P&C combined ratio) and $156 million, respectively, in the prior year period.

Catastrophe losses in the current quarter were from weather-related events globally with approximately 79 percent in the U.S.

and 21 percent internationally.

• Total pre-tax and after-tax favorable prior period development were $247 million (2.7 percentage points of the P&C combined ratio) and $205 million, respectively, including pre-tax adverse development of $155 million for molestation claims, predominantly reviver statute-related.

Excluding the adverse development, we had pre-tax favorable development of

$402 million, with 59 percent in long-tail lines, and 41 percent in short-tail lines.

This compares with pre-tax and after-tax favorable prior period development of $268 million (3.3 percentage points of the P&C combined ratio) and $224 million, respectively, in the prior year period.

• The P&C combined ratio was 84.0 percent compared with 85.5 percent in the prior year period.

P&C current accident year (CAY) combined ratio excluding catastrophe losses was 83.5 percent compared with 85.2 percent in the prior year period.

The current year ratios decreased due to underlying loss ratio improvement and the favorable impact of higher net premiums earned on the expense ratio.

• Net investment income was $822 million compared with $863 million in the prior year period, reflecting lower reinvestment rates on new and reinvested fixed maturities.

The P&C current accident year (CAY) combined ratio excluding catastrophe losses was 83.5 percent compared with 85.4 percent in the prior year period.

The current year ratios decreased due to underlying loss ratio improvement, including earned rate exceeding lost cost trends, and the favorable impact of higher net premiums earned on the expense ratio.

• Net investment income was a record $888 million compared with $884 million in the prior year period.

• Operating cash flow was $2.7 billion for the quarter compared with $3.1 billion in the prior year period.

• Shareholders' equity decreased by $3.0 billion in the quarter, as net income of $2.0 billion was more than offset by net unrealized losses on investments of $3.8 billion after-tax from rising interest rates.

• Shareholders' equity decreased by $5.0 billion in the quarter, as net income of $1.2 billion was more than offset by net unrealized losses on investments of $4.1 billion after-tax from rising interest rates and $746 million related to cumulative foreign exchange translation.

In addition, shareholders' equity reflected total capital returned to shareholders in the quarter of $1.5 billion, including share repurchases of $1.1 billion, at an average purchase price of $206.11 per share, and dividends of $348 million.

Net Premiums Written Three Months Ended

March 31 % Change

June 30 % Change Six Months Ended

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Commercial casualty $ 1,773 $ 1,609 10.2 % 11.9 % $ 3,610 $ 3,258 10.8 % 12.4 %

19 unchanged sentences

(2) For purposes of this schedule only, A&H results from our Combined North America and International businesses, normally included in the Life Insurance and Overseas General Insurance segments, respectively, as well as the A&H results of our North America Commercial P&C segment, are included in Global A&H lines above.

The increase in consolidated net premiums written for the three months ended March 31, 2022 reflects growth across most lines of business.

Commercial lines growth was 7.9 percent and consumer lines growth was 2.9 percent, or 9.4 percent and 5.5 percent, respectively, on a constant dollar basis, driven by higher new business, positive rate increases, and strong renewal retention.

Agriculture growth was impacted by $161 million of return of premium to the U.S.

government under the profit-sharing agreement reflecting the profitable 2021 crop year.

Commercial lines growth excluding Agriculture increased 10.3 percent, or 11.9 percent in constant dollars.

• Commercial casualty grew primarily in North America, Europe and Asia, driven by higher new business, strong retention and positive rate increases.

• Workers' compensation growth was due to higher renewal business, including exposure increases, in North America.

The increase in consolidated net premiums written for the three and six months ended June 30, 2022 reflects growth across most lines of business.

For the three months ended June 30, 2022, commercial lines growth was 10.6 percent and consumer lines growth was 2.5 percent, or 12.1 percent and 5.5 percent, respectively, on a constant dollar basis, driven by higher new business, positive rate increases, and strong renewal retention.

• Commercial casualty grew primarily in North America, Europe, and Asia, driven by higher new business and strong retention, including exposure and rate increases.

• Workers' compensation growth for the six months ended June 30, 2022 was due to exposure increases in North America.

• Financial lines grew in North America, Asia, and Europe reflecting higher new business, strong retention and positive rate increases.

• Commercial multiple peril increased due to higher renewal business, including exposure and rate increases, in North America.

• Property and other short-tail lines grew due to higher new business, strong retention, and positive rate increases in North America, Europe, Latin America and Asia.

• Agriculture decreased due to return of premium to the U.S.

government noted above.

Excluding this return of premium, there was underlying growth in crop insurance and Chubb Agribusiness, reflecting higher commodity prices and volatility factors, which improved pricing, and policy count growth.

• Personal lines increased due to new business and strong renewal retention, from both rate and exposure increases, mainly in homeowners;

partially offset by cancellations in parts of California exposed to wildfires.

In addition, the prior year included the unfavorable impact of reinstatement premiums related to 2021 winter storm losses and automobile return premiums.

This prior year impact and adverse impact of the cancellations noted above, contributed 1.8 percentage points to the year-over-year growth.

• Global A&H lines increased on a constant-dollar basis as lines in Latin America, Europe, and Asia began to recover from less travel volume and reduced consumer activity in the prior year.

Our North American Combined Insurance supplemental A&H business decreased due to the continued impact of the COVID-19 pandemic on face-to-face and worksite sales.

• The increase in reinsurance was due to continued growth in the portfolio reflecting the impact of new treaties bound in the current quarter and in 2021, as well as favorable premium adjustments.

• International life operations declined, as new business in Asia was offset by a decline Latin America.

• Commercial multiple peril increased due to strong new business and renewal retention, including exposure and positive rate increases in North America.

• Property and other short-tail lines grew globally due to strong new business and renewal retention, including positive rate increases and increased exposure.

• Agriculture increased for the three and six months ended June 30, 2022 due to underlying growth in crop insurance, reflecting higher commodity prices and policy count growth.

Partially offsetting growth for the six months was a return of premium to the U.S.

government in the first quarter of 2022 of $161 million.

• Personal lines grew in most regions reflecting new business and strong renewal retention, from both rate and exposure increases, primarily in homeowners and automobile in North America, high net worth and specialty lines in Asia, and specialty lines and automobile in Latin America.

Partially offsetting growth in North America were additional cancellations in parts of California exposed to wildfires.

• Global A&H lines grew in Asia, Latin America, Europe, and Japan on a constant dollar basis, driven by higher new business and recovery from less travel volume and reduced consumer activity in the prior year.

Our North American Combined Insurance supplemental A&H business decreased primarily due to the non-renewal of a large program.

• Reinsurance lines decreased for the quarter as the impact of new treaties bound was offset by a one-time portfolio transfer in the prior year.

The year-to-date increase reflects continued growth in the portfolio from the impact of new treaties bound in the current year and in 2021;

and favorable premium adjustments.

• International life operations declined, as new business in Asia, primarily in Thailand, was offset by lower business in Hong Kong, driven by the continued impact of the pandemic on our agency force, and Latin America, principally reflecting the non-renewal of certain large account business in Chile.

For additional information on net premiums written, refer to the segment results discussions.

2 unchanged sentences

Net premiums earned for long-duration contracts, typically traditional life contracts, generally are recognized as earned when due from policyholders.

For the three months ended March 31, 2022, net premiums earned increased $525 million, or 6.4 percent, comprising 9.9 percent positive growth in commercial lines and 0.2 percent positive growth in consumer lines.

Partially offsetting the increase in net premiums earned is the return of premium under the profit-sharing agreement related to the profitable 2021 crop year as described above.

For the three months ended June 30, 2022, net premiums earned increased $744 million, or 8.4 percent, comprising 13.0 percent positive growth in commercial lines, or 14.8 percent in constant dollars, while consumer lines were flat, or up 2.8 percent in constant dollars, as the acceleration of growth in net premiums written described above are not yet reflected in net premiums earned.

For the six months ended June 30, 2022, net premiums earned increased $1,269 million, or 7.4 percent, comprising 11.5 percent positive growth in commercial lines, or 13.0 percent in constant dollars, while consumer lines were flat, or up 2.7 percent in constant dollars.

Catastrophe Losses and Prior Period Development

7 unchanged sentences

Refer to the Non-GAAP Reconciliation section for further information on reinstatement premiums on catastrophe losses and adjustments to prior period development.

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

2 unchanged sentences

Favorable prior period development $ 247 $ 268 $ 487 $ 460

Catastrophe losses through March 31, 2022 and 2021 were primarily from the following events:

Australia storms, Colorado wildfires, and other severe weather-related events in the U.S.

and internationally.

Catastrophe losses through June 30, 2022 and 2021 were primarily from the following events:

Severe weather-related events in the U.S.

and internationally, Australia storms, and Colorado wildfires.

Winter storm losses in the U.S.

2 unchanged sentences

Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from previous accident years.

Pre-tax net favorable PPD for the three months ended March 31, 2022 was $240 million, with five percent in long-tail lines, principally from accident years 2018 and prior, and 95 percent in short-tail lines, primarily in A&H, property, and surety lines.

Pre-tax net favorable PPD for the three months ended March 31, 2021 was $192 million, with 19 percent in long-tail lines, principally from accident years 2017 and prior, and 81 percent in short-tail lines, primarily in A&H, surety, and property lines.

Pre-tax net favorable PPD for the three months ended June 30, 2022 was $247 million, including adverse development of $155 million for molestation claims, predominantly reviver statute-related.

Excluding the adverse development, we had favorable development of $402 million, with 59 percent in long-tail lines, principally from accident years 2017 and prior, and 41 percent in short-tail lines, primarily in A&H, specialty, and automobile lines.

Pre-tax net favorable PPD for the six months ended June 30, 2022 was $487 million, including adverse development of $155 million for molestation claims described above, predominantly reviver statute-related.

This molestation adverse development includes no change to the previously established reserve for the Boy Scouts of America settlement.

Excluding the adverse development, we had favorable development of $642 million with 39 percent in long-tail lines, principally from accident years 2017 and prior, and 61 percent in short-tail lines, primarily in A&H, property, and specialty lines.

Pre-tax net favorable PPD for the three months ended June 30, 2021 was $268 million, including adverse development of $68 million for molestation claims.

Excluding the adverse development, we had favorable development of $336 million with 28 percent in long-tail lines, principally from accident years 2017 and prior, and 72 percent in short-tail lines, primarily in A&H, property, and surety lines.

Pre-tax net favorable PPD for the six months ended June 30, 2021 was $460 million, including adverse development of $68 million for molestation claims described above.

Excluding the adverse development, we had favorable development of $528 million with 25 percent in long-tail lines, principally from accident years 2017 and prior, and 75 percent in short-tail lines, primarily in A&H, property, and surety lines.

Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information.

4 unchanged sentences

A P&C combined ratio under 100 percent indicates underwriting income, and a combined ratio exceeding 100 percent indicates underwriting loss.

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

2022 2021 2022 2021

Loss and loss expense ratio

6 unchanged sentences

P&C Combined ratio 84.0 % 85.5 % 84.2 % 88.6 %

The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses decreased 7.2 percentage points and 0.9 percentage points, respectively, for the three months ended March 31, 2022, reflecting underlying loss ratio improvement, including earned rate exceeding loss cost trends.

The loss and loss expense ratio for the three months ended March 31, 2022 also benefited from lower catastrophe losses and higher favorable prior period development.

The policy acquisition cost ratio and administrative expense ratio were relatively flat for the three months ended March 31, 2022.

The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses decreased for the three and six months ended June 30, 2022, reflecting earned rate exceeding loss cost trends.

The loss and loss expense ratio for the three months ended June 30, 2022 was favorably impacted by higher net premiums earned, partially offset by higher catastrophe losses and lower favorable prior period development.

The loss and loss expense ratio for the six months ended June 30, 2022 benefited from higher net premiums earned, lower catastrophe losses compared to the prior year, and higher favorable prior period development.

The policy acquisition cost ratio decreased for the three and six months ended June 30, 2022, primarily due to a higher percentage of net premiums earned from commercial P&C lines that have a lower acquisition cost ratio.

The administrative expense ratio decreased for the three and six months ended June 30, 2022, primarily due to the favorable impact of higher net premiums earned, partially offset by increased investment to support growth and higher employee-related expenses.

Policy benefits

1 unchanged sentence

Refer to the Life Insurance segment operating results section for further discussion.

For the three months ended March 31, 2022 and 2021, Policy benefits were $145 million and $167 million, respectively, which included (gains) losses from fair value changes in separate account liabilities that do not qualify for separate account reporting under GAAP of $(31) million and $4 million, respectively.

For the three months ended June 30, 2022 and 2021, Policy benefits were $159 million and $185 million, respectively, which included (gains) losses from fair value changes in separate account liabilities that do not qualify for separate account reporting under GAAP of $(18) million and $15 million, respectively.

The offsetting movements of these liabilities are recorded in Other (income) expense on the Consolidated statements of operations.

Excluding the separate account gains and losses, Policy benefits were $176 million and $163 million for the three months ended March 31, 2022 and 2021, respectively.

Excluding the separate account gains and losses, Policy benefits were $177 million and $170 million for the three months ended June 30, 2022 and 2021, respectively.

For the six months ended June 30, 2022 and 2021, Policy benefits were $304 million and $352 million, respectively, which included (gains) losses from fair value changes in separate account liabilities that do not qualify for separate account reporting under GAAP of $(49) million and $19 million, respectively.

The offsetting movements of these liabilities are recorded in Other (income) expense on the Consolidated statements of operations.

Excluding the separate account gains and losses, Policy benefits were $353 million and $333 million for the six months ended June 30, 2022 and 2021, respectively.

Refer to the respective sections that follow for a discussion of Net investment income, Other (income) expense, Net realized gains (losses), Amortization of purchased intangibles, and Income tax expense.

Segment Operating Results – Three Months Ended March 31, 2022 and 2021

Segment Operating Results – Three and Six Months Ended June 30, 2022 and 2021

We operate through six business segments:

4 unchanged sentences

This segment includes our North America Major Accounts and Specialty Insurance division (large corporate accounts and wholesale business), and the North America Commercial Insurance division (principally middle market and small commercial accounts).

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Net premiums written $ 4,665 $ 4,285 8.9 % $ 8,704 $ 7,949 9.5 %

5 unchanged sentences

Net investment income 522 535 (2.5) % 1,011 1,075 (6.0) %

Other (income) expense 6 2 123.0 %

Other (income) expense — 14 NM 6 16 (61.9) %

Segment income $ 1,502 $ 1,164 29.1 % $ 2,764 $ 2,048 35.0 %

Loss and loss expense ratio:

CAY loss ratio excluding catastrophe losses 61.5 % 63.4 % (1.9) pts

Catastrophe losses 2.0 % 9.9 % (7.9) pts

Prior period development (2.8) % (3.6) % 0.8 pts

Loss and loss expense ratio 60.7 % 69.7 % (9.0) pts

Policy acquisition cost ratio 13.9 % 14.0 % (0.1) pts

Administrative expense ratio 6.5 % 6.9 % (0.4) pts

Combined ratio 81.1 % 90.6 % (9.5) pts

Catastrophe Losses and Prior Period Development Three Months Ended

CAY loss ratio excluding catastrophe losses 61.4 % 63.7 % (2.3) pts 61.5 % 63.6 % (2.1) pts

Catastrophe losses 2.9 % 4.3 % (1.4) pts 2.4 % 7.0 % (4.6) pts

Prior period development (6.7) % (4.2) % (2.5) pts (4.8) % (3.9) % (0.9) pts

Loss and loss expense ratio 57.6 % 63.8 % (6.2) pts 59.1 % 66.7 % (7.6) pts

Policy acquisition cost ratio 12.8 % 12.9 % (0.1) pts 13.4 % 13.4 % — pts

Administrative expense ratio 6.5 % 6.4 % 0.1 pts 6.5 % 6.7 % (0.2) pts

Combined ratio 76.9 % 83.1 % (6.2) pts 79.0 % 86.8 % (7.8) pts

NM - not meaningful

Catastrophe Losses and Prior Period Development Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

2 unchanged sentences

Favorable prior period development $ 287 $ 156 $ 395 $ 283

Catastrophe losses through March 31, 2022 and 2021 were primarily from winter storm losses and other severe weather-related events in the U.S.

Catastrophe losses through June 30, 2022 and 2021 were primarily from severe weather-related events and winter storm losses in the U.S.

Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information.

Net premiums written increased $375 million, or 10.2 percent, for the three months ended March 31, 2022, comprising:

Net premiums written increased $380 million, or 8.9 percent, and $755 million, or 9.5 percent, for the three and six months ended June 30, 2022, respectively, comprising:

• Commercial lines:

Positive growth of 10.5 percent reflecting strong premium retention, including rate and exposure increases, and new business across a number of retail and wholesale lines, including property, financial lines, primary and excess casualty, workers' compensation and commercial multiple peril.

Positive growth of 8.7 percent and 9.6 percent, respectively, reflecting strong premium retention, including both rate and exposure increases, as well as new business across a number of retail and wholesale lines, including property, primary and excess casualty, commercial multiple peril, surety, and financial lines.

Growth for the six months ended June 30, 2022 also reflects strong premium retention, including rate and exposure increases, from workers’ compensation.

• Consumer lines:

Positive growth of 4.4 percent due to recovery in A&H lines from exposure declines in the prior year and strong new business.

Net premiums earned increased $440 million, or 12.0 percent for the three months ended March 31, 2022, reflecting the growth in net premiums written described above.

Positive growth of 11.6 percent and 7.9 percent, respectively, due to recovery in A&H lines from exposure declines in the prior year and strong new business.

Net premiums earned increased $445 million, or 11.7 percent, and $885 million, or 11.8 percent for the three and six months ended June 30, 2022, respectively, reflecting the growth in net premiums written described above.

Combined Ratio

The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses decreased for the three months ended March 31, 2022, primarily reflecting underlying loss ratio improvement, including earned rate exceeding loss cost trends.

The loss and loss expense ratio was also impacted by lower catastrophe losses, partially offset by lower favorable prior period development.

The administrative expense ratio decreased for the three months ended March 31, 2022, primarily due to the favorable impact of growth in net premiums earned, partially offset by higher employee-related benefit expenses.

The loss and loss expense ratio decreased for the three and six months ended June 30, 2022, reflecting lower catastrophe losses, higher favorable prior period development, and earned rate exceeding loss cost trends.

The administrative expense ratio was relatively flat for the three and six months ended June 30, 2022, primarily due to the favorable impact of higher net premiums earned, offset by higher employee-related expenses and increased investment to support growth.

North America Personal P&C Insurance

The North America Personal P&C Insurance segment comprises operations that provide high net worth personal lines products, including homeowners and complementary products such as valuable articles, excess liability, automobile, and recreational marine insurance and services in the U.S.

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Net premiums written $ 1,426 $ 1,363 4.7 % $ 2,606 $ 2,461 5.9 %

5 unchanged sentences

Net investment income 64 64 — 123 129 (4.5) %

Other (income) expense 1 1 —

Other (income) expense 1 (5) NM 2 (4) NM

Amortization of purchased intangibles 3 3 — 5 6 (5.2) %

1 unchanged sentence

Loss and loss expense ratio:

CAY loss ratio excluding catastrophe losses 53.3 % 53.2 % 0.1 pts

Catastrophe losses 8.0 % 19.3 % (11.3) pts

Prior period development (4.1) % (3.3) % (0.8) pts

Loss and loss expense ratio 57.2 % 69.2 % (12.0) pts

Policy acquisition cost ratio 20.8 % 20.9 % (0.1) pts

Administrative expense ratio 5.5 % 5.0 % 0.5 pts

Combined ratio 83.5 % 95.1 % (11.6) pts

CAY loss ratio excluding catastrophe losses 53.6 % 53.6 % — pts 53.4 % 53.4 % — pts

Catastrophe losses 7.4 % 5.3 % 2.1 pts 7.7 % 12.2 % (4.5) pts

Prior period development (0.2) % (3.7) % 3.5 pts (2.1) % (3.5) % 1.4 pts

Loss and loss expense ratio 60.8 % 55.2 % 5.6 pts 59.0 % 62.1 % (3.1) pts

Policy acquisition cost ratio 20.3 % 20.0 % 0.3 pts 20.5 % 20.4 % 0.1 pts

Administrative expense ratio 5.8 % 5.5 % 0.3 pts 5.7 % 5.3 % 0.4 pts

Combined ratio 86.9 % 80.7 % 6.2 pts 85.2 % 87.8 % (2.6) pts

NM - not meaningful

Catastrophe Losses and Prior Period Development

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

2 unchanged sentences

Favorable prior period development $ 3 $ 44 $ 54 $ 84

Catastrophe losses through March 31, 2022 and 2021 were primarily from the following events:

Colorado wildfires and severe weather-related events in the U.S.

Catastrophe losses through June 30, 2022 and 2021 were primarily from the following events:

Severe weather-related events in the U.S.

and Colorado wildfires.

Winter storm losses and other severe weather-related events in the U.S.

Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information.

Net premiums written increased $82 million, or 7.4 percent for the three months ended March 31, 2022, primarily driven by new business and strong renewal retention, from both rate and exposure increases, mainly in homeowners;

partially offset by cancellations in parts of California exposed to wildfires.

In addition, the prior year included the unfavorable impact of reinstatement premiums related to 2021 winter storm losses and automobile return premiums.

This prior year impact and adverse impact of the cancellations noted above, contributed 1.8 percentage points to the year-over-year growth.

Net premiums earned increased $63 million, or 5.3 percent for the three months ended March 31, 2022, reflecting the growth in net premiums written.

Net premiums written increased $63 million, or 4.7 percent, and $145 million, or 5.9 percent for the three and six months ended June 30, 2022, respectively, primarily driven by new business and strong renewal retention, from both rate and exposure increases, primarily in homeowners and automobile;

partially offset by additional cancellations in parts of California exposed to wildfires.

Net premiums earned increased $47 million, or 3.9 percent, and $110 million, or 4.6 percent for the three and six months ended June 30, 2022, respectively, reflecting the growth in net premiums written described above.

Combined Ratio

The loss and loss expense ratio decreased for the three months ended March 31, 2022, due to lower catastrophe losses and higher favorable prior period development.

The CAY loss ratio excluding catastrophe losses increased primarily due to slightly higher losses in automobile, offset by earned rate exceeding loss cost trends in homeowners.

The administrative expense ratio increased for the three months ended March 31, 2022, primarily due to increased spending to support growth and higher employee-related benefit expenses.

The loss and loss expense ratio increased for the three months ended June 30, 2022, primarily from higher catastrophe losses and lower favorable prior period development.

The loss and loss expense ratio decreased for the six months ended June 30, 2022, reflecting lower catastrophe losses compared to the prior year, partially offset by lower favorable prior period development.

The CAY loss ratio excluding catastrophe losses was flat for the three and six months ended June 30, 2022, reflecting slightly higher losses in automobile, offset by earned rate exceeding loss cost trends in homeowners.

The policy acquisition cost ratio increased for the three and six months ended June 30, 2022, primarily due to a higher year-over-year amount of supplemental commissions.

The administrative expense ratio increased for the three and six months ended June 30, 2022, primarily due to increased investment to support growth and higher employee-related expenses.

North America Agricultural Insurance

2 unchanged sentences

(Rain and Hail) as well as farm and ranch and specialty P&C commercial insurance products and services through our Chubb Agribusiness unit.

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Net premiums written $ 738 $ 512 44.0 % $ 800 $ 695 15.1 %

Net premiums earned (29) 110 NM

Losses and loss expenses (92) 85 NM

Net premiums earned 573 410 39.6 % 544 520 4.6 %

Losses and loss expenses 478 331 44.1 % 386 416 (7.3) %

Policy acquisition costs 31 27 14.2 % 43 39 10.4 %

Administrative expenses (1) 3 NM

Underwriting income 52 10 NM

Administrative expenses 2 3 (24.3) % 1 6 (86.6) %

Underwriting income 62 49 26.9 % 114 59 93.9 %

Net investment income 7 8 (1.0) % 14 15 (5.3) %

Amortization of purchased intangibles 6 6 — 13 13 —

Segment income $ 52 $ 10 NM

Segment income $ 63 $ 51 25.6 % $ 115 $ 61 90.1 %

Loss and loss expense ratio:

CAY loss ratio excluding catastrophe losses 70.6 % 71.2 % 0.6 pts

Catastrophe losses NM 7.4 % NM

Prior period development NM (1.1) % NM

Loss and loss expense ratio NM 77.5 % NM

Policy acquisition cost ratio NM 10.7 % NM

Administrative expense ratio NM 2.7 % NM

Combined ratio NM 90.9 % NM

NM - not meaningful

Catastrophe Losses and Prior Period Development Three Months Ended

CAY loss ratio excluding catastrophe losses 79.6 % 79.7 % (0.1) pts 77.9 % 77.9 % — pts

Catastrophe losses 3.7 % 1.0 % 2.7 pts 4.0 % 2.3 % 1.7 pts

Prior period development — — — pts (11.0) % (0.2) % (10.8) pts

Loss and loss expense ratio 83.3 % 80.7 % 2.6 pts 70.9 % 80.0 % (9.1) pts

Policy acquisition cost ratio 5.4 % 6.7 % (1.3) pts 8.0 % 7.6 % 0.4 pts

Administrative expense ratio 0.4 % 0.7 % (0.3) pts 0.1 % 1.1 % (1.0) pts

Combined ratio 89.1 % 88.1 % 1.0 pts 79.0 % 88.7 % (9.7) pts

Catastrophe Losses and Prior Period Development Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

2 unchanged sentences

Favorable prior period development $ — $ — $ 26 $ 2

Catastrophe losses through March 31, 2021 were primarily from winter storm losses and other severe weather-related events in the U.S.

in Chubb Agribusiness.

Catastrophe losses through June 30, 2022 and 2021 were primarily from severe weather-related events in Chubb Agribusiness and winter storm losses in the U.S.

Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information.

Net premiums written decreased $121 million, or 65.9 percent, for the three months ended March 31, 2022, primarily due to $161 million of return of premium to the U.S.

government as part of the profit-sharing agreement reflecting the profitable 2021 crop year in our MPCI business.

Under the profit-sharing agreement, we return additional premiums to the government because of the lower losses experienced in certain states in 2021.

Excluding this return of premium, net premiums written increased 22 percent due mainly to an increase in MPCI, primarily reflecting higher commodity prices and volatility factors, both of which impact pricing, as well as higher reported acreage from policyholders and policy count growth.

In addition, our Chubb Agribusiness unit contributed to growth with strong renewal retention, including rate increases, and new business.

Net premiums earned decreased $139 million for the three months ended March 31, 2022, due to the factors described above.

Net premiums written increased $226 million, or 44.0 percent for the three months ended June 30, 2022, primarily due to an increase in MPCI, primarily reflecting higher commodity prices and policy count growth.

Net premiums written increased $105 million, or 15.1 percent for the six months ended June 30, 2022, primarily due to an increase in MPCI due to the factors noted above, partly offset by a return of premium to the U.S.

government in the first quarter of 2022 of $161 million.

Under the profit-sharing agreement, we returned additional premiums to the government because of the lower losses experienced in certain states in 2021.

This return of premium reduced net premiums written growth for the six months ended June 30, 2022 by 23.2 percentage points.

Net premiums earned increased $163 million, or 39.6 percent, and increased $24 million, or 4.6 percent for the three and six months ended June 30, 2022, respectively, reflecting the growth in net premiums written described above.

Combined Ratio

The combined ratio for the three months ended March 31, 2022 was impacted by higher favorable prior period development, including the return of premium to the U.S.

The combined ratio for the six months ended June 30, 2022, was impacted by the return of premium to the U.S.

government under the profit-sharing agreement related to the profitable 2021 crop year described above.

This return of premium resulted in a reduction to net premiums earned of $161 million and a corresponding reduction to incurred losses, with no net impact to underwriting income.

The CAY loss and loss expense ratio decreased 0.6 percentage point for the three months ended March 31, 2022, primarily due to the favorable year-over-year impact of the commodity hedge gain of 1.9 percentage points, partially offset by higher premiums earned from MPCI, which have a higher loss ratio.

The CAY policy acquisition cost ratio decreased 0.9 percentage point for the three months ended March 31, 2022, primarily due to higher premiums earned from MPCI, which have a lower acquisition cost ratio.

The CAY administrative expense ratio decreased 3.7 percentage points for the three months ended March 31, 2022, primarily due to higher Administrative and Operating (A&O) reimbursements on the MPCI business, as well as expense management.

This prior period development resulted in a reduction to net premiums earned of $161 million and a corresponding reduction to incurred losses, with no net impact to underwriting income.

The loss and loss expense ratio increased for the three months ended June 30, 2022, primarily from higher catastrophe losses.

The loss and loss expense ratio decreased for the six months ended June 30, 2022, primarily due to the impact of the return of premium described above.

The CAY loss ratio excluding catastrophe losses was relatively flat for the three and six months ended June 30, 2022.

The policy acquisition cost ratio decreased for the three months ended June 30, 2022, primarily due to the favorable impact of higher net premiums earned from MPCI.

The policy acquisition cost ratio increased for the six months ended June 30, 2022, primarily due to the impact of the return of premium described above.

The CAY policy acquisition cost ratio, which excludes the unfavorable impact of catastrophe losses and prior period development of 1.7 percentage points, decreased 1.3 percentage points for the six months ended June 30, 2022, mainly due to the favorable impact of higher net premiums earned from MPCI.

The administrative expense ratio decreased for the three and six months ended June 30, 2022, reflecting the favorable impact of higher net premiums earned from MPCI, higher Administrative and Operating (A&O) reimbursements on the MPCI business, and strong expense management.

Overseas General Insurance

4 unchanged sentences

Chubb provides funds at Lloyd's to support underwriting by Syndicate 2488 which is managed by Chubb Underwriting Agencies Limited.

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Net premiums written $ 2,640 $ 2,497 5.7 % $ 5,719 $ 5,387 6.2 %

10 unchanged sentences

Loss and loss expense ratio:

CAY loss ratio excluding catastrophe losses 49.4 % 49.9 % (0.5) pts

Catastrophe losses 5.8 % 2.1 % 3.7 pts

Prior period development (2.3) % (1.0) % (1.3) pts

Loss and loss expense ratio 52.9 % 51.0 % 1.9 pts

Policy acquisition cost ratio 25.8 % 27.0 % (1.2) pts

Administrative expense ratio 10.2 % 10.7 % (0.5) pts

Combined ratio 88.9 % 88.7 % 0.2 pts

CAY loss ratio excluding catastrophe losses 50.0 % 50.6 % (0.6) pts 49.7 % 50.3 % (0.6) pts

Catastrophe losses 1.8 % 1.6 % 0.2 pts 3.8 % 1.8 % 2.0 pts

Prior period development (6.4) % (6.2) % (0.2) pts (4.4) % (3.7) % (0.7) pts

Loss and loss expense ratio 45.4 % 46.0 % (0.6) pts 49.1 % 48.4 % 0.7 pts

Policy acquisition cost ratio 25.9 % 27.1 % (1.2) pts 25.8 % 27.0 % (1.2) pts

Administrative expense ratio 10.3 % 10.8 % (0.5) pts 10.3 % 10.8 % (0.5) pts

Combined ratio 81.6 % 83.9 % (2.3) pts 85.2 % 86.2 % (1.0) pts

Catastrophe Losses and Prior Period Development

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S.

2 unchanged sentences

Favorable prior period development $ 173 $ 156 $ 233 $ 181

Catastrophe losses through March 31, 2022 and 2021 were primarily from the following events:

Australia storms and international weather-related events.

Catastrophe losses through June 30, 2022 and 2021 were primarily from the following events:

International weather-related events and storms in Australia.

Winter storm losses in the U.S.

2 unchanged sentences

Net Premiums Written by Region

Three months ended March 31

Three months ended June 30

(in millions of U.S.

3 unchanged sentences

2021 Q-22 vs.

Q-21 C$ Q-22 vs.

Europe, Middle East, and Africa $ 1,203 46 % $ 1,188 48 % $ 1,106 1.3 % 8.7 %

Latin America 549 21 % 451 18 % 446 21.5 % 23.2 %

Asia Pacific ex Japan 668 22 % 637 22 % 605 4.9 % 10.4 %

Asia Pacific 690 26 % 652 26 % 613 5.6 % 12.5 %

Japan 143 5 % 162 6 % 142 (11.7) % 0.8 %

1 unchanged sentence

Net premiums written $ 2,640 100 % $ 2,497 100 % $ 2,348 5.7 % 12.4 %

(1) Includes the international supplemental A&H business of Combined Insurance and other international operations.

Net premiums written increased $189 million, or $327 million on a constant-dollar basis, for the three months ended March 31, 2022, reflecting an increase in commercial lines of 8.6 percent, or 13.6 percent on a constant-dollar basis, and growth in consumer lines of 3.0 percent, or 9.0 percent on a constant-dollar basis.

Growth in Europe, Middle East, and Africa for the three months ended March 31, 2022 was primarily driven by higher new business and positive rate increases in commercial lines, including commercial casualty, property, and financial lines.

Six months ended June 30

(in millions of U.S.

dollars, except for percentages) 2022 2022

% of Total 2021 2021

% of Total C$

2021 Y-22 vs.

Europe, Middle East, and Africa $ 2,857 50 % $ 2,739 51 % $ 2,588 4.3 % 10.4 %

Latin America 1,154 20 % 988 18 % 958 16.8 % 20.5 %

Asia Pacific 1,333 23 % 1,255 23 % 1,184 6.2 % 12.6 %

Japan 258 5 % 286 6 % 255 (9.8) % 1.1 %

117 2 % 119 2 % 115 (1.7) % 1.7 %

Net premiums written $ 5,719 100 % $ 5,387 100 % $ 5,100 6.2 % 12.1 %

(1) Includes the international supplemental A&H business of Combined Insurance and other international operations including mainland China.

Overall, net premiums written increased $143 million and $332 million, or $292 million and $619 million on a constant dollar basis, for the three and six months ended June 30, 2022, respectively, reflecting growth in both commercial and consumer lines.

For the three and six months ended June 30, 2022, commercial lines grew 7.0 percent and 7.9 percent, or 13.0 percent and 13.3 percent on a constant-dollar basis, respectively, and consumer lines grew 3.9 percent and 3.4 percent, or 11.6 percent and 10.2 percent on a constant-dollar basis, respectively.

Growth in our European division for the three and six months ended June 30, 2022 was supported by both our wholesale and retail divisions.

This growth was primarily driven by higher new business, premium retention, and positive rate increases in commercial lines, including commercial property and casualty, and financial lines.

Consumer lines increased primarily due to A&H, reflecting increased travel volume.

Additionally, A&H in the prior year was adversely impacted by restrictions resulting from the COVID-19 pandemic.

Latin America increased for the three months ended March 31, 2022 driven by growth in consumer lines, including automobile in personal and travel in A&H.

Commercial lines also grew due to exposure increases and new business in commercial lines, primarily property.

Asia Pacific ex Japan increased for the three months ended March 31, 2022 driven by higher new business, higher retention and positive rate increases in commercial lines, including financial lines, property and casualty, and growth in consumer lines, primarily specialty in personal and travel in A&H.

Japan increased for the three months ended March 31, 2022 primarily from new business in A&H.

Net premiums earned increased $150 million, or $261 million on a constant-dollar basis, for the three months ended March 31, 2022, reflecting the increase in net premiums written described above.

Latin America increased for the three and six months ended June 30, 2022 driven by growth in consumer lines, including automobile in personal and travel in A&H.

Commercial lines also grew due to exposure increases, positive rate increases, and new business, primarily property.

Asia Pacific increased for the three and six months ended June 30, 2022 driven by higher new business, higher retention and positive rate increases in commercial lines, including property and casualty, financial lines, and growth in consumer lines, primarily specialty and high net worth in personal, and travel in A&H.

Japan increased for the three and six months ended June 30, 2022 on a constant-dollar basis primarily from new business in A&H.

Net premiums earned increased $117 million and $267 million, or $270 million and $531 million on a constant-dollar basis, for the three and six months ended June 30, 2022, respectively, reflecting the increase in net premiums written described above.

Combined Ratio

The loss and loss expense ratio increased for the three months ended March 31, 2022, primarily due to higher catastrophe losses, partially offset by higher favorable prior period development.

The CAY loss ratio excluding catastrophe losses decreased for the three months ended March 31, 2022, primarily reflecting underlying loss ratio improvement, including earned rate exceeding loss cost trends.

The policy acquisition cost ratio decreased for the three months ended March 31, 2022, primarily due to a change in the mix of business, including less premiums earned from consumer lines that have a higher acquisition cost ratio and higher premiums earned from commercial lines that have a lower acquisition cost ratio.

The administrative expense ratio decreased for the three months ended March 31, 2022, primarily due to the favorable impact of higher net premiums earned, partially offset by increased investment to support growth.

The loss and loss expense ratio decreased for the three months ended June 30, 2022, due to underlying loss ratio improvement and higher favorable prior period development, partially offset by higher catastrophe losses.

The loss and loss expense ratio increased for the six months ended June 30, 2022, primarily due to higher catastrophe losses, partially offset by higher

favorable prior period development.

The CAY loss ratio excluding catastrophe losses decreased for the three and six months ended June 30, 2022, primarily reflecting underlying loss ratio improvement, including earned rate exceeding loss cost trends.

The policy acquisition cost ratio decreased for the three and six months ended June 30, 2022, primarily due to a change in the mix of business, including higher premiums earned from commercial lines that have a lower acquisition cost ratio than consumer lines.

The administrative expense ratio decreased for the three and six months ended June 30, 2022, reflecting continued expense management control and the favorable impact of higher net premiums earned.

Global Reinsurance

1 unchanged sentence

Global Reinsurance markets its reinsurance products worldwide primarily through reinsurance brokers under the Chubb Tempest Re brand name and provides a broad range of traditional and non-traditional reinsurance coverage to a diverse array of primary P&C companies.

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Net premiums written $ 262 $ 274 (4.0) % $ 515 $ 481 7.2 %

4 unchanged sentences

Administrative expenses 10 10 — 19 18 4.6 %

Underwriting income 49 7 NM

Underwriting income 16 25 (38.3) % 65 32 101.6 %

Net investment income 76 81 (5.6) % 161 151 6.6 %

Other (income) expense 1 — NM 1 — NM

Segment income $ 91 $ 106 (14.3) % $ 225 $ 183 22.9 %

Loss and loss expense ratio:

CAY loss ratio excluding catastrophe losses 49.9 % 48.3 % 1.6 pts

Catastrophe losses 0.4 % 23.8 % (23.4) pts

Prior period development (1.5) % (5.2) % 3.7 pts

Loss and loss expense ratio 48.8 % 66.9 % (18.1) pts

Policy acquisition cost ratio 26.5 % 24.9 % 1.6 pts

Administrative expense ratio 3.7 % 4.6 % (0.9) pts

Combined ratio 79.0 % 96.4 % (17.4) pts

CAY loss ratio excluding catastrophe losses 49.7 % 50.9 % (1.2) pts 49.8 % 49.6 % 0.2 pts

Catastrophe losses 0.8 % 5.2 % (4.4) pts 0.6 % 14.2 % (13.6) pts

Prior period development 12.1 % 0.7 % 11.4 pts 5.1 % (2.1) % 7.2 pts

Loss and loss expense ratio 62.6 % 56.8 % 5.8 pts 55.5 % 61.7 % (6.2) pts

Policy acquisition cost ratio 25.6 % 24.7 % 0.9 pts 26.1 % 24.8 % 1.3 pts

Administrative expense ratio 4.6 % 5.1 % (0.5) pts 4.1 % 4.8 % (0.7) pts

Combined ratio 92.8 % 86.6 % 6.2 pts 85.7 % 91.3 % (5.6) pts

NM - not meaningful

Catastrophe Losses and Prior Period Development

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

(in millions of U.S dollars) 2022 2021 2022 2021

Catastrophe losses $ 2 $ 10 $ 3 $ 50

Favorable prior period development $ 3 $ 7

Catastrophe losses through March 31, 2021 were primarily from winter storm losses in the U.S.

Net premiums written increased $46 million for the three months ended March 31, 2022, primarily due to continued growth in the portfolio reflecting the impact of new treaties bound in the current quarter and in 2021, as well as favorable premium adjustments.

Net premiums earned increased $55 million for the three months ended March 31, 2022, primarily reflecting the increase in net premiums written described above.

(Unfavorable) favorable prior period development $ (25) $ — $ (22) $ 7

Catastrophe losses through June 30, 2022 were primarily from storms in Australia.

Catastrophe losses through June 30, 2021 were primarily from winter storm losses in the U.S.

Net premiums written decreased $12 million for the three months ended June 30, 2022 as the impact of new treaties bound was offset by a one-time portfolio transfer in the prior year.

Net premiums written increased $34 million for the six months ended June 30, 2022 due to continued growth in the portfolio reflecting the impact of new treaties bound in the current year and in 2021, and favorable premium adjustments.

Net premiums earned increased $30 million and $85 million for the three and six months ended June 30, 2022, respectively, primarily reflecting the factors as described above.

The change was also due to the impact of higher new business written in the prior year for which premiums are earned in the current year.

Combined Ratio

The loss and loss expense ratio decreased for the three months ended March 31, 2022, primarily due to lower catastrophe losses.

The CAY loss ratio excluding catastrophe losses increased for the three months ended March 31, 2022, primarily due to a shift in the mix of business.

The policy acquisition cost ratio increased for the three months ended March 31, 2022, primarily due to a shift in the mix of business.

The administrative expense ratio decreased for the three months ended March 31, 2022, primarily from the favorable impact of higher net premiums earned.

The loss and loss expense ratio increased for the three months ended June 30, 2022, primarily due to unfavorable prior period development in the current year.

The loss and loss expense ratio decreased for the six months ended June 30, 2022, primarily due to lower catastrophe losses, partially offset by unfavorable prior period development in the current year.

The CAY loss ratio excluding catastrophe losses decreased for the three months ended June 30, 2022 primarily due to a shift in the mix of business.

The policy acquisition cost ratio increased for the three and six months ended June 30, 2022, primarily due to a shift in the mix of business.

The administrative expense ratio decreased for the three and six months ended June 30, 2022, primarily from the favorable impact of higher net premiums earned.

Life Insurance

1 unchanged sentence

We assess the performance of our life business based on Life Insurance underwriting income, which includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Net premiums written $ 571 $ 615 (7.2) % $ 1,157 $ 1,235 (6.4) %

10 unchanged sentences

Segment income $ 101 $ 102 0.3 % $ 216 $ 206 5.2 %

Net premiums written decreased $34 million, or $21 million on a constant-dollar basis for the three months ended March 31, 2022.

For our International life operations, net premiums written decreased 4.5 percent as growth in Asia from new business in Taiwan and Vietnam was offset by a decline in Latin America from lower business in Chile.

Net premiums written also reflects a decline in our North American Combined Insurance business of 7.4 percent.

Net premiums written decreased $44 million and $78 million, or $29 million and $50 million on a constant-dollar basis, for the three and six months ended June 30, 2022, respectively.

For our international life operations, net premiums written decreased 4.9 percent for the three months ended June 30, 2022, as growth in Asia from new business, principally in Thailand and Indonesia, was offset by lower business in H ong Kong and Korea, driven by the continued impact of the pandemic on our agency force, and Latin America, principally reflecting the non-renewal of certain large account business in Chile.

For the six months ended June 30, 2022, net premiums written declined 4.7 percent as growth in Thailand, Taiwan, Indonesia and Vietnam were more than offset by declines in Hong Kong, Korea, and Latin America as noted above.

Net premiums written in our North American Combined Insurance business declined 10.2 percent and 8.8 percent, for the three and six months ended June 30, 2022, respectively, primarily due to the non-renewal of a large program.

The following table presents deposits collected on universal life and investment contracts:

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

1 unchanged sentence

2021 Q-22 vs.

Q-21 2022 2021 C$ 2021 Y-22 vs.

Deposits collected on universal life and investment contracts $ 427 $ 605 $ 591 (29.3) % (27.5) % $ 984 $ 1,156 $ 1,145 (14.9) % (14.1) %

1 unchanged sentence

New life deposits are an important component of production, and although they do not significantly affect current period income from operations, they are key to our efforts to grow our business.

Life deposits collected increased $6 million for the three months ended March 31, 2022, primarily in Taiwan.

Life deposits collected decreased $178 million and $172 million for the three and six months ended June 30, 2022, respectively, primarily in Taiwan, reflecting challenging market conditions for deposit products.

The prior year benefited from successful sales campaigns in broker and bank channels in Taiwan.

Life Insurance underwriting income and Segment income

Life Insurance underwriting income increased $18 million for the three months ended March 31, 2022, primarily reflecting lower year-over-year COVID-related losses.

Segment income increased $11 million for the three months ended March 31, 2022, primarily due to the increase in underwriting income described above, partially offset by lower income from our investment in Huatai, our partially-owned insurance entity in China.

Life Insurance underwriting income increased $15 million and $33 million for the three and six months ended June 30, 2022, respectively, reflecting lower year-over-year COVID-related losses and lower policy acquisition costs primarily due to the decrease in net premiums written and deposits collected noted above.

Segment income was flat for the three months ended June 30, 2022.

Segment income increased $10 million for the six months ended June 30, 2022, primarily due to the increase in underwriting income described above, partially offset by lower income from our investment in Huatai, our partially-owned insurance entity in China.

Corporate results primarily include the results of our non-insurance companies, income and expenses not attributable to reportable segments and loss and loss expenses of asbestos and environmental (A&E) liabilities and certain other non-A&E run-off exposures, including molestation.

Three Months Ended

March 31 % Change

Three Months Ended Six Months Ended

June 30 % Change June 30 % Change

(in millions of U.S.

dollars, except for percentages) 2022 2021 Q-22 vs.

Q-21 2022 2021 YTD-22 vs.

Losses and loss expenses $ 191 $ 89 116.2 % $ 201 $ 98 105.9 %

3 unchanged sentences

Interest expense 134 122 10.7 % 266 244 9.0 %

Net realized gains (losses) 100 888 (88.8) %

Other (income) expense (259) (415) (37.5) %

Net realized gains (losses) (513) (36) NM (413) 852 NM

Other (income) expense 138 (708) NM (121) (1,123) (89.2) %

Amortization of purchased intangibles 45 50 (8.0) % 91 99 (7.8) %

Cigna integration expenses 3 — NM 3 — NM

Income tax expense 293 317 (7.5) % 648 655 (1.0) %

Net income (loss) $ (272) $ 697 NM

Net income (loss) $ (1,411) $ (9) NM $ (1,683) $ 688 NM

NM - not meaningful

Administrative expenses increased $12 million for the three months ended March 31, 2022, primarily due to higher employee-related expenses and increased investment to support growth.

Losses and loss expenses primarily includes unfavorable prior period development for molestation claims.

Administrative expenses were relatively flat for the three months ended June 30, 2022.

Administrative expenses increased $14 million for the six months ended June 30, 2022, primarily due to higher employee-related expenses and increased investment to support growth.

Cigna integration expenses are one-time in nature and are not related to the on-going business activities of the segments.

The Chief Executive Officer does not manage segment results or allocate resources to segments when considering these costs and they are therefore excluded from our definition of segment income.

Refer to the respective sections that follow for a discussion of Net realized gains (losses), Net investment income (loss), Amortization of purchased intangibles, and Income tax expense (benefit).

7 unchanged sentences

Additionally, Net income is impacted through the reporting of changes in the fair value of equity securities, private equity funds where we own less than three percent, and derivatives, including financial futures, options, swaps, and GLB reinsurance.

reported as separate components of Accumulated other comprehensive income in Shareholders’ equity in the Consolidated balance sheets.

The following table presents our net realized and unrealized gains (losses):

Three Months Ended March 31

Changes in unrealized appreciation and depreciation on available for sale securities, resulting from the revaluation of securities held, changes in cumulative foreign currency translation adjustment, and unrealized postretirement benefit obligations liability adjustment, are reported as separate components of Accumulated other comprehensive income in Shareholders’ equity in the Consolidated balance sheets.

The following tables present our net realized and unrealized gains (losses):

Three Months Ended June 30

(in millions of U.S.

10 unchanged sentences

Foreign exchange 268 (777) (509) (97) 308 211

Other — 5 5 — (9) (9)

Net gains (losses), pre-tax $ (504) $ (5,116) $ (5,620) $ (33) $ 993 $ 960

Six Months Ended June 30

(in millions of U.S.

Fixed maturities $ (578) $ (8,996) $ (9,574) $ 36 $ (1,623) $ (1,587)

Fixed income and equity derivatives (34) — (34) 18 — 18

Public equity

Sales 418 — 418 90 — 90

Mark-to-market (625) — (625) 427 — 427

Private equity (less than 3 percent ownership)

Mark-to-market 59 — 59 100 — 100

Total investment portfolio (760) (8,996) (9,756) 671 (1,623) (952)

Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges 78 — 78 203 — 203

Other derivatives 10 — 10 2 — 2

Foreign exchange 343 (710) (367) (21) 330 309

(74) 24 (50) (1) (37) (38)

1 unchanged sentence

(1) Other realized losses include impairment of assets related to Chubb's Russian entities.

Pre-tax net losses of $4,630 million in our investment portfolio for the three months ended March 31, 2022 were principally the result of an increase in interest rates.

Pre-tax net unrealized losses of $4,344 million and $8,996 million in our investment portfolio for the three and six months ended June 30, 2022, respectively, were principally the result of an increase in interest rates.

In addition, there were realized losses of $782 million and $760 million for the three and six months ended June 30, 2022, respectively, primarily from mark-to-market losses on public equities and sales in fixed income securities.

The variable annuity reinsurance derivative transactions consist of changes in the fair value of GLB liabilities and gains or losses on other derivative instruments we maintain that decrease in fair value when the S&P 500 index increases.

The variable annuity reinsurance derivative transactions resulted in realized gains of $77 million for the three months ended March 31, 2022, reflecting a net gain of $35 million, primarily from a decrease in the fair value of the GLB liabilities due to higher interest rates, partially offset by lower global equity markets, and a net realized gain of $42 million related to these derivative instruments.

For the three months ended March 31, 2021, the variable annuity reinsurance derivative transactions resulted in realized gains of $275 million, reflecting a net decrease in the fair value of the GLB liabilities of $319 million due to higher interest rates and higher global equity markets, partially offset by a net realized loss of $44 million related to these derivative instruments.

The variable annuity reinsurance derivative transactions resulted in realized gains of $1 million for the three months ended June 30, 2022, reflecting a net loss of $143 million, primarily from an increase in the fair value of the GLB liabilities, and a net realized gain of $144 million related to these derivative instruments.

The variable annuity reinsurance derivative transactions resulted in realized gains of $78 million for the six months ended June 30, 2022, reflecting a net loss of $108 million, primarily from an increase in the fair value of the GLB liabilities, and a net realized gain of $186 million related to these derivative instruments.

The increase in the fair value of the GLB liabilities for the three and six months ended June 30, 2022, was primarily due to lower global equity markets and higher volatility, partially offset by higher interest rates.

For the three months ended June 30, 2021, the variable annuity reinsurance derivative transactions resulted in realized losses of $72 million, reflecting principally a net realized loss of $64 million related to these other derivatives.

The fair value of the GLB liabilities remained relatively flat for the three months ended June 30, 2021, as the impact of higher global equity markets was offset by lower interest rates.

For the six months ended June 30, 2021, the variable annuity reinsurance derivative transactions resulted in realized gains of $203 million reflecting a net gain of $311 million principally related to a decrease in the fair value of the GLB liabilities due to higher interest rates and higher global equity markets, partially offset by a net realized loss of $108 million related to these other derivatives.

Effective Income Tax Rate

Our effective tax rate (ETR) for the three months ended March 31, 2022 was 15.2 percent compared to 12.8 percent in the prior year period.

Our ETR reflects a mix of income or losses in jurisdictions with a wide range of tax rates, permanent differences between GAAP and local tax laws, and the impact of discrete items.

The ETR in the current year period was impacted by our mix of earnings among various jurisdictions and discrete tax benefits.

Our effective tax rate (ETR) reflects a mix of income or losses in jurisdictions with a wide range of tax rates, permanent differences between GAAP and local tax laws, and the impact of discrete items.

A change in the geographic mix of earnings could impact our ETR.

For the three and six months ended June 30, 2022 our ETR was 19.4 percent and 16.9 percent, respectively.

This compares to an ETR of 12.3 percent and 12.5 percent for the three and six months ended June 30, 2021, respectively.

The ETR for each period was impacted by our mix of earnings among various jurisdictions and discrete tax benefits.

Non-GAAP Reconciliation

32 unchanged sentences

Three Months Ended

March 31, 2022

June 30, 2022

(in millions of U.S.

37 unchanged sentences

Three Months Ended

March 31, 2021

June 30, 2021

(in millions of U.S.

8 unchanged sentences

Net premiums earned adjustments on PPD - unfavorable (favorable) 11 — — — — — 11

PPD reinstatement premiums - unfavorable (favorable) 6 1 — 7 (2) — 12

PPD, gross of related adjustments - favorable (unfavorable) 173 45 — 163 (2) (88) 291

CAY loss and loss expense ex CATs B $ 2,434 $ 653 $ 327 $ 1,309 $ 97 $ 1 $ 4,821

Policy acquisition costs and administrative expenses

Policy acquisition costs and administrative expenses C $ 734 $ 312 $ 30 $ 978 $ 57 $ 88 $ 2,199

Expense adjustments - favorable (unfavorable) — — — — — — —

Policy acquisition costs and administrative expenses, adjusted D $ 734 $ 312 $ 30 $ 978 $ 57 $ 88 $ 2,199

Net premiums earned E $ 3,803 $ 1,224 $ 410 $ 2,579 $ 192 $ 8,208

Reinstatement premiums (collected) expensed on catastrophe losses — (7) — — (1) (8)

Net premiums earned adjustments on PPD - unfavorable (favorable) 11 — — — — 11

PPD reinstatement premiums - unfavorable (favorable) 6 1 — 7 (2) 12

Net premiums earned excluding adjustments F $ 3,820 $ 1,218 $ 410 $ 2,586 $ 189 $ 8,223

P&C Combined ratio

Loss and loss expense ratio A/E 63.8 % 55.2 % 80.7 % 46.0 % 56.8 % 58.7 %

Policy acquisition cost and administrative expense ratio C/E 19.3 % 25.5 % 7.4 % 37.9 % 29.8 % 26.8 %

P&C Combined ratio 83.1 % 80.7 % 88.1 % 83.9 % 86.6 % 85.5 %

CAY P&C Combined ratio ex CATs

Loss and loss expense ratio, adjusted B/F 63.7 % 53.6 % 79.7 % 50.6 % 50.9 % 58.6 %

Policy acquisition cost and administrative expense ratio, adjusted D/F 19.2 % 25.6 % 7.4 % 37.8 % 30.3 % 26.8 %

CAY P&C Combined ratio ex CATs 82.9 % 79.2 % 87.1 % 88.4 % 81.2 % 85.4 %

Combined ratio

Combined ratio 85.5 %

impact of gains and losses on crop derivatives —

P&C Combined ratio 85.5 %

The ratios above are calculated using whole U.S.

Accordingly, calculations using rounded amounts may differ.

Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.

North America Commercial P&C Insurance North America Personal P&C Insurance North America Agricultural Insurance Overseas General Insurance Global Reinsurance Corporate Total P&C

Six Months Ended

June 30, 2022

(in millions of U.S.

dollars except for ratios)

Losses and loss expenses A $ 4,943 $ 1,486 $ 386 $ 2,613 $ 254 $ 201 $ 9,883

Catastrophe losses and related adjustments

Catastrophe losses, net of related adjustments (205) (195) (21) (200) (3) — (624)

Reinstatement premiums collected (expensed) on catastrophe losses — — — — — — —

Catastrophe losses, gross of related adjustments (205) (195) (21) (200) (3) — (624)

PPD and related adjustments

PPD, net of related adjustments - favorable (unfavorable) 395 54 26 233 (22) (199) 487

Net premiums earned adjustments on PPD - unfavorable (favorable) 3 — 159 — — — 162

Expense adjustments - unfavorable (favorable) 5 — (1) — — — 4

7 unchanged sentences

Net premiums earned E $ 8,362 $ 2,518 $ 544 $ 5,324 $ 457 $ 17,205

Net premiums earned adjustments on PPD - unfavorable (favorable) 3 — 159 — — 162

PPD reinstatement premiums - unfavorable (favorable) — — — — (2) (2)

Net premiums earned excluding adjustments F $ 8,365 $ 2,518 $ 703 $ 5,324 $ 455 $ 17,365

P&C Combined ratio

Loss and loss expense ratio A/E 59.1 % 59.0 % 70.9 % 49.1 % 55.5 % 57.4 %

Policy acquisition cost and administrative expense ratio C/E 19.9 % 26.2 % 8.1 % 36.1 % 30.2 % 26.8 %

P&C Combined ratio 79.0 % 85.2 % 79.0 % 85.2 % 85.7 % 84.2 %

CAY P&C Combined ratio ex CATs

Loss and loss expense ratio, adjusted B/F 61.5 % 53.4 % 77.9 % 49.7 % 49.8 % 57.1 %

Policy acquisition cost and administrative expense ratio, adjusted D/F 19.7 % 26.3 % 6.4 % 36.1 % 30.3 % 26.4 %

CAY P&C Combined ratio ex CATs 81.2 % 79.7 % 84.3 % 85.8 % 80.1 % 83.5 %

Combined ratio

Combined ratio 84.3 %

impact of gains and losses on crop derivatives (0.1) %

P&C Combined ratio 84.2 %

The ratios above are calculated using whole U.S.

Accordingly, calculations using rounded amounts may differ.

Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.

North America Commercial P&C Insurance North America Personal P&C Insurance North America Agricultural Insurance Overseas General Insurance Global Reinsurance Corporate Total P&C

Six Months Ended

June 30, 2021

(in millions of U.S.

dollars except for ratios)

Losses and loss expenses A $ 4,986 $ 1,495 $ 416 $ 2,449 $ 230 $ 98 $ 9,674

Catastrophe losses and related adjustments

Catastrophe losses, net of related adjustments (527) (301) (12) (90) (50) — (980)

Reinstatement premiums collected (expensed) on catastrophe losses — (16) — — 6 — (10)

Catastrophe losses, gross of related adjustments (527) (285) (12) (90) (56) — (970)

PPD and related adjustments

PPD, net of related adjustments - favorable (unfavorable) 283 84 2 181 7 (97) 460

Net premiums earned adjustments on PPD - unfavorable (favorable) 11 — (2) — — — 9

Expense adjustments - unfavorable (favorable) 3 — — — — — 3

PPD reinstatement premiums - unfavorable (favorable) 6 1 — 7 1 — 15

PPD, gross of related adjustments - favorable (unfavorable) 303 85 — 188 8 (97) 487

CAY loss and loss expense ex CATs B $ 4,762 $ 1,295 $ 404 $ 2,547 $ 182 $ 1 $ 9,191

Policy acquisition costs and administrative expenses

Policy acquisition costs and administrative expenses C $ 1,502 $ 619 $ 45 $ 1,912 $ 110 $ 159 $ 4,347

Expense adjustments - favorable (unfavorable) (3) — — — — — (3)

Policy acquisition costs and administrative expenses, adjusted D $ 1,499 $ 619 $ 45 $ 1,912 $ 110 $ 159 $ 4,344

Net premiums earned E $ 7,477 $ 2,408 $ 520 $ 5,057 $ 372 $ 15,834

Reinstatement premiums (collected) expensed on catastrophe losses — 16 — — (6) 10

Net premiums earned adjustments on PPD - unfavorable (favorable) 11 — (2) — — 9

PPD reinstatement premiums - unfavorable (favorable) 6 1 — 7 1 15

Net premiums earned excluding adjustments F $ 7,494 $ 2,425 $ 518 $ 5,064 $ 367 $ 15,868

15 unchanged sentences

Amortization of Purchased Intangibles and Other Amortization

Amortization expense related to purchased intangibles was $71 million and $72 million for the three months ended March 31, 2022 and 2021, respectively, and principally relates to the Chubb Corp acquisition.

The following table presents, as of March 31, 2022, the estimated pre-tax amortization expense (benefit) of purchased intangibles, at current foreign currency exchange rates, for the second through fourth quarters of 2022 and for the next five years:

Amortization expense related to purchased intangibles was $71 million and $142 million for the three and six months ended June 30, 2022, respectively, and principally relates to the Chubb Corp acquisition.

The following table presents, as of June 30, 2022, the estimated pre-tax amortization expense (benefit) of purchased intangibles, at current foreign currency exchange rates, for the third and fourth quarters of 2022 and for the next five years:

Associated with the Chubb Corp Acquisition

4 unchanged sentences

Amortization of purchased intangibles

Second quarter of 2022 $ 49 $ (4) $ 45 $ 25 $ 70

Third quarter of 2022 $ 49 $ (3) $ 46 $ 24 $ 70

9 unchanged sentences

Reduction of deferred tax liability associated with Other intangible assets

At March 31, 2022, the deferred tax liability associated with Other intangible assets (excluding the fair value adjustment on Unpaid losses and loss expense) was $1,200 million.

The following table presents as of March 31, 2022, the expected reduction to the deferred tax liability associated with the amortization of Other intangible assets, at current foreign currency exchange rates, for the second through fourth quarters of 2022 and for the next five years:

At June 30, 2022, the deferred tax liability associated with Other intangible assets (excluding the fair value adjustment on Unpaid losses and loss expense) was $1,171 million.

The following table presents as of June 30, 2022, the expected reduction to the deferred tax liability associated with the amortization of Other intangible assets, at current foreign currency exchange rates, for the third and fourth quarters of 2022 and for the next five years:

For the Years Ending December 31

1 unchanged sentence

dollars) Reduction to deferred tax liability associated with intangible assets

Second quarter of 2022 $ 16

Third quarter of 2022 16

1 unchanged sentence

Amortization of the fair value adjustment on acquired invested assets and assumed long-term debt

The following table presents at March 31, 2022, the expected amortization expense of the fair value adjustment on acquired invested assets related to the Chubb Corp acquisition, at current foreign currency exchange rates, and the expected amortization benefit from the fair value adjustment on assumed long-term debt for the second through fourth quarters of 2022 and for the next five years:

The following table presents at June 30, 2022, the expected amortization expense of the fair value adjustment on acquired invested assets related to the Chubb Corp acquisition, at current foreign currency exchange rates, and the expected amortization benefit from the fair value adjustment on assumed long-term debt for the third and fourth quarters of 2022 and for the next five years:

Amortization (expense) benefit of the fair value adjustment on

3 unchanged sentences

Assumed long-term debt (2)

Second quarter of 2022 $ (19) $ 5

Third quarter of 2022 (15) 5

6 unchanged sentences

Three Months Ended

June 30 Six Months Ended

(in millions of U.S.

1 unchanged sentence

Fixed maturities (1)

$ 853 $ 836 $ 1,652 $ 1,676

Short-term investments 15 8 24 17

3 unchanged sentences

Gross investment income (1)

933 931 1,801 1,841

Investment expenses (45) (47) (91) (94)

Net investment income (1)

$ 888 $ 884 $ 1,710 $ 1,747

(1) Includes amortization expense related to fair value adjustment of acquired invested assets

2 unchanged sentences

Net investment income is influenced by a number of factors including the amounts and timing of inward and outward cash flows, the level of interest rates, and changes in overall asset allocation.

Net investment income decreased 4.8 percent for the three months ended March 31, 2022, primarily due to lower reinvestment rates on new and reinvested fixed maturities.

Net investment income increased 0.4 percent for the three months ended June 30, 2022, primarily due to higher reinvestment rates on fixed maturities, offset by reduced call activity in fixed income securities, and lower income from equity securities and private equities, which are included in Other investments.

Net investment income decreased 2.1 percent for the six months ended June 30, 2022, due to reduced call activity in fixed income securities and lower income from equity securities, and private equities, which are included in Other investments.

For private equities where we own less than three percent, investment income is included within Net investment income in the table above.

3 unchanged sentences

Three Months Ended

June 30 Six Months Ended

(in millions of U.S.

dollars) 2022 2021 2022 2021

Total mark-to-market gain on private equity, pre-tax $ 310 $ 438

Our investment portfolio is invested primarily in publicly traded, investment grade, fixed income securities with an average credit quality of A/A as rated by the independent investment rating services Standard and Poor’s (S&P)/Moody’s Investors Service (Moody’s) at March 31, 2022.

Total mark-to-market gain (loss) on private equity, pre-tax $ (130) $ 736 $ 180 $ 1,174

Interest Expense

Interest expense was $266 million for the six months ended June 30, 2022, including a benefit of $10 million related to the amortization of the fair value of debt assumed in the Chubb Corp acquisition.

Pre-tax interest expense for our existing debt obligations and fees based on expected usage of certain facilities, including letters of credit, collateral fees, and repurchase agreements, is expected to be $297 million for the rest of 2022, or, $573 million for the full year 2022 based on current foreign exchange rates.

This is an increase of about $30 million from our previous estimate of $543 million for full year 2022 as disclosed in our 2021 Form 10-K.

This increase is primarily driven by interest from an additional $2.0 billion in repurchase agreements which Chubb entered into during the second quarter of 2022 to finance a portion of the acquisition of Cigna's accident and health (A&H) and life business in six Asia-Pacific markets.

The $2.0 billion repurchase agreements are due to expire by the end of 2022.

In addition, we expect a benefit of $11 million related to the fair value of debt amortization for the rest of 2022, or, $21 million for the full year 2022.

For more information on our debt obligations, refer to Note 9 to the Consolidated Financial Statements, under Item 8 in our 2021 Form 10-K.

The portfolio is externally managed by independent, professional investment managers and is broadly diversified across geographies, sectors, and issuers.

4 unchanged sentences

We also have well-established, strict contractual investment rules requiring managers to maintain highly diversified exposures to individual issuers and closely monitor investment manager compliance with portfolio guidelines.

The average duration of our fixed income securities, including the effect of options and swaps, was 4.2 years and 4.1 years at March 31, 2022 and December 31, 2021, respectively.

We estimate that a 100 basis point (bps) increase in interest rates would reduce the valuation of our fixed income portfolio by approximately $4.3 billion at March 31, 2022.

The average duration of our fixed income securities, including the effect of options and swaps, was 4.3 years and 4.1 years at June 30, 2022 and December 31, 2021, respectively.

We estimate that a 100 basis point (bps) increase in interest rates would reduce the valuation of our fixed income portfolio by approximately $4.1 billion at June 30, 2022.

The following table shows the fair value and cost/amortized cost, net of valuation allowance, of our invested assets:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in millions of U.S.

8 unchanged sentences

Total investments $ 109,650 $ 116,220 $ 122,852 $ 119,695

The fair value of our total investments decreased $4.5 billion during the three months ended March 31, 2022 due to unrealized losses on fixed maturities and share repurchases, partially offset by strong operating cash flows.

The following tables present the fair value of our fixed income securities at March 31, 2022 and December 31, 2021.

The fair value of our total investments decreased $13.2 billion during the six months ended June 30, 2022 due to unrealized losses on fixed maturities, sales of fixed income securit ies, and sh are repurchases, partially offset by strong operating cash flows.

The following tables present the fair value of our fixed income securities at June 30, 2022 and December 31, 2021.

The first table lists investments according to type and second according to S&P credit rating:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in millions of U.S.

18 unchanged sentences

Corporate and asset-backed securities

The following table presents our 10 largest global exposures to corporate bonds by fair value at March 31, 2022:

The following table presents our 10 largest global exposures to corporate bonds by fair value at June 30, 2022:

(in millions of U.S.

3 unchanged sentences

Wells Fargo & Co 487

Morgan Stanley 449

Comcast Corp 414

Verizon Communications Inc 412

Morgan Stanley 436

Citigroup Inc 385

Goldman Sachs Group Inc 366

Anheuser-Busch InBev SA/NV 315

HSBC Holdings Plc 324

Mortgage-backed securities

2 unchanged sentences

Value Amortized Cost, Net

March 31, 2022

June 30, 2022

(in millions of U.S.

22 unchanged sentences

fixed income portfolio by country/sovereign for non-U.S.

government securities at March 31, 2022:

government securities at June 30, 2022:

(in millions of U.S.

dollars) Fair Value Amortized Cost, Net

Canada $ 957 $ 995

Republic of Korea $ 949 $ 982

Province of Ontario 633 654

Canada 890 956

Federative Republic of Brazil 605 629

Province of Ontario 575 616

United Mexican States 508 548

Kingdom of Thailand 510 498

United Kingdom 440 461

Kingdom of Thailand 435 461

Socialist Republic of Vietnam 426 339

6 unchanged sentences

fixed income portfolio by country/sovereign for non-U.S.

corporate securities at March 31, 2022:

corporate securities at June 30, 2022:

(in millions of U.S.

6 unchanged sentences

Japan 722 766

Germany 578 594

Switzerland 518 565

Germany 502 552

Netherlands 495 530

12 unchanged sentences

Also, issuers of below-investment grade securities usually have higher levels of debt and are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than investment grade issuers.

At March 31, 2022, our corporate fixed income investment portfolio included below-investment grade and non-rated securities which, in total, comprised approximately 16 percent of our fixed income portfolio.

At June 30, 2022, our corporate fixed income investment portfolio included below-investment grade and non-rated securities which, in total, comprised approximately 16 percent of our fixed income portfolio.

Our below-investment grade and non-rated portfolio includes 1,739 issuers, with the greatest single exposure being $143 million.

8 unchanged sentences

Critical Accounting Estimates

As of March 31, 2022, there were no material changes to our critical accounting estimates.

As of June 30, 2022, there were no material changes to our critical accounting estimates.

For a full discussion of our critical accounting estimates, refer to Item 7 in our 2021 Form 10-K.

11 unchanged sentences

Other (including foreign exchange translation) (827) (239) (588)

Balance at March 31, 2022 $ 73,844 $ 16,646 $ 57,198

Balance at June 30, 2022 $ 74,092 $ 16,573 $ 57,519

(1) Net of valuation allowance for uncollectible reinsurance.

4 unchanged sentences

Asbestos and Environmental (A&E)

There was no significant A&E reserve activity during the three months ende d March 31, 2022.

There was no significant A&E reserve activity during the three and six months ended June 30, 2022.

A&E reserves are included in Corporate.

8 unchanged sentences

Chubb uses internal and external data together with sophisticated analytical, catastrophe loss and risk modeling techniques to ensure an appropriate understanding of risk, including diversification and correlation effects, across different product lines and territories.

The table below presents our modeled pre-tax estimates of natural catastrophe PML, net of reinsurance, at March 31, 2022, and does not represent our expected catastrophe losses for any one year.

The table below presents our modeled pre-tax estimates of natural catastrophe PML, net of reinsurance, at June 30, 2022, and does not represent our expected catastrophe losses for any one year.

Modeled Net Probable Maximum Loss (PML) Pre-tax

18 unchanged sentences

The PML for worldwide and key U.S.

peril regions are based on our in-force portfolio at January 1, 2022, and reflect the April 1, 2022 reinsurance program (see Global Property Catastrophe Reinsurance Program section) as well as inuring reinsurance protection coverages.

peril regions are based on our in-force portfolio at April 1, 2022, and reflect the April 1, 2022, reinsurance program (see Global Property Catastrophe Reinsurance Program section) as well as inuring reinsurance protection coverages.

These estimates assume that reinsurance recoverable is fully collectible.

According to the model, for the 1-in-100 return period scenario, there is a one percent chance that our pre-tax annual aggregate losses incurred in any year from U.S.

hurricane events could be in excess of $2,889 million (or 5.1 percent of our total shareholders’ equity at March 31, 2022).

hurricane events could be in excess of $2,916 million (or 5.6 percent of our total shareholders’ equity at June 30, 2022).

Effective December 31, 2021, our worldwide PMLs include losses from U.S.

58 unchanged sentences

Should the need arise, we generally have access to capital markets and to credit facilities with letter of credit capacity of $3.7 billion with a sub-limit of $2.0 billion for revolving credit.

At March 31, 2022, our usage under these facilities was $1.3 billion in letters of credit.

At June 30, 2022, our usage under these facilities was $1.3 billion in letters of credit.

Our access to credit under these facilities is dependent on the ability of the banks that are a party to the facilities to meet their funding commitments.

The facilities require that we maintain certain financial covenants, all of which we met at March 31, 2022.

The facilities require that we maintain certain financial covenants, all of which we met at June 30, 2022.

Should the existing credit providers on these facilities experience financial difficulty, we may be required to replace credit sources, possibly in a difficult market.

2 unchanged sentences

The payment of dividends or other statutorily permissible distributions from our operating companies are subject to the laws and regulations applicable to each jurisdiction, as well as the need to maintain capital levels adequate to support the insurance and reinsurance operations, including financial strength ratings issued by independent rating agencies.

During the three months ended March 31, 2022, we were able to meet all our obligations, including the payments of dividends on our Common Shares, with our net cash flows.

During the six months ended June 30, 2022, we were able to meet all our obligations, including the payments of dividends on our Common Shares, with our net cash flows.

We assess which subsidiaries to draw dividends from based on a number of factors.

Considerations such as regulatory and legal restrictions as well as the subsidiary’s financial condition are paramount to the dividend decision.

Chubb Limited received dividends of $1.0 billion and $740 million from its Bermuda subsidiaries during the three months ended March 31, 2022 and 2021, respectively.

Chubb Limited received dividends of $5.8 billion and $1.8 billion from its Bermuda subsidiaries during the six months ended June 30, 2022 and 2021, respectively.

Chubb Limited received cash dividends of nil and $21 million and non-cash dividends of nil and $536 million from a Swiss subsidiary during the six months ended June 30, 2022 and 2021, respectively.

insurance subsidiaries of Chubb INA Holdings Inc.

2 unchanged sentences

These laws and regulations sometimes include restrictions that limit the amount of dividends payable without prior approval of regulatory insurance authorities.

Chubb Limited received no dividends from Chubb INA during the three months ended March 31, 2022 and 2021.

Chubb Limited received no dividends from Chubb INA during the six months ended June 30, 2022 and 2021.

Debt issued by Chubb INA is serviced by statutorily permissible distributions by Chubb INA’s insurance subsidiaries to Chubb INA as well as other group resources.

Chubb INA received no dividends from its subsidiaries during the three months ended March 31, 2022 and 2021.

Chubb INA received $1.8 billion and $470 million from its subsidiaries during the six months ended June 30, 2022 and 2021, respectively.

Our sources of liquidity include cash from operations, routine sales of investments, and financing arrangements.

The following is a discussion of our cash flows for the three months ended March 31, 2022 and 2021.

Operating cash flows were $2.4 billion in the three months ended March 31, 2022, compared to $2.1 billion in the prior year period.

The increase of $335 million is due to higher premiums collected reflecting premium growth, principally in our commercial lines, and lower taxes paid, partially offset by higher losses paid.

Cash used for investing was $995 million in the three months ended March 31, 2022, compared to $1.3 billion in the prior year period, a decrease of $257 million.

Cash used for investing in the current year included higher net sales of equity securities of $730 million, partially offset by higher private equity contributions, net of distributions received, of $241 million, and higher net purchases of fixed maturities of $95 million.

The following is a discussion of our cash flows for the six months ended June 30, 2022 and 2021.

Operating cash flows were $5.2 billion in both the six months ended June 30, 2022, and 2021.

Cash from (used for) investing was $1.1 billion in the six months ended June 30, 2022, compared to $(2.0) billion in the prior period, an increase of $3.1 billion.

Cash from investing in the current period included higher net sales of fixed maturities and equity securities of $3.7 billion, partially offset by higher private equity contributions, net of distributions received, of $606 million.

In addition, cash used related to acquisitions of Huatai Group ownership interest was $113 million in 2022 compared to $65 million in 2021.

Cash used for financing was $1.3 billion in the three months ended March 31, 2022, compared to $812 million in the prior year period, an increase of $490 million, principally from more shares repurchased in the current year.

Cash used for financing was $0.7 billion in the six months ended June 30, 2022, compared to $3.0 billion in the prior year period.

This decrease of $2.3 billion was the result of an additional $2.0 billion in repurchase agreements which Chubb entered into during the second quarter of 2022 to finance a portion of the acquisition of Cigna's A&H and life business in six Asia-Pacific markets.

Chubb uses repurchase agreements as a low-cost funding alternative.

At June 30, 2022, there were $3.4 billion in repurchase agreements outstanding with various maturities over the next six months.

Both internal and external forces influence our financial condition, results of operations, and cash flows.

Claim settlements, premium levels, and investment returns may be impacted by changing rates of inflation and other economic conditions.

cases, significant periods of time, ranging up to several years or more, may lapse between the occurrence of an insured loss, the reporting of the loss to us, and the settlement of the liability for that loss.

We use repurchase agreements as a low-cost funding alternative.

At March 31, 2022, there were $1.4 billion in repurchase agreements outstanding with various maturities over the next seven months.

In many cases, significant periods of time, ranging up to several years or more, may lapse between the occurrence of an insured loss, the reporting of the loss to us, and the settlement of the liability for that loss.

Capital Resources

Capital resources consist of funds deployed or available to be deployed to support our business operations.

March 31 December 31

June 30 December 31

(in millions of U.S.

8 unchanged sentences

Ratio of financial debt plus trust preferred securities to total capitalization 23.8 % 21.6 %

The ratios of financial debt to total capitalization in the table above are higher at March 31, 2022 compared to December 31, 2021 from the decline in shareholders' equity, principally reflecting net unrealized depreciation on investments in the current period compared to net unrealized appreciation in 2021.

The ratios of financial debt to total capitalization in the table above are higher at June 30, 2022 compared to December 31, 2021 from the decline in shareholders' equity, principally reflecting net unrealized depreciation on investments in the current period compared to net unrealized appreciation in 2021.

Repurchase agreements are excluded from the table above and are disclosed separately from short-term debt in the Consolidated balance sheets.

The repurchase agreements are collateralized borrowings where we maintain the right and ability to redeem the collateral on short notice, unlike short-term debt which comprises the current maturities of our long-term debt instruments.

For the three months ended March 31, 2022, we repurchased $1.0 billion of Common Shares in a series of open market transactions under the Board of Directors (Board) share repurchase authorization.

At March 31, 2022, there were 35,880,387 Common Shares in treasury with a weighted-average cost of $158.85 per share, and $1.6 billion in share repurchase authorization remained through June 30, 2022.

For the period April 1, 2022 through April 28, 2022, we repurchased 115,000 Common Shares for a total of $24 million in a series of open market transactions.

At April 28, 2022, $1.6 billion in share repurchase authorization remained.

For the six months ended June 30, 2022, we repurchased $2.1 billion of Common Shares in a series of open market transactions under the Board of Directors (Board) share repurchase authorization.

At June 30, 2022, there were 41,081,627 Common Shares in treasury with a weighted-average cost of $165.36 per share, and $2.5 billion in share repurchase authorization remained through June 30, 2023.

For the period July 1, 2022 through July 28, 2022, we repurchased 1,513,728 Common Shares for a total of $281 million in a series of open market transactions.

At July 28, 2022, $2.2 billion in share repurchase authorization remained.

We generally maintain the ability to issue certain classes of debt and equity securities via a Securities and Exchange Commission (SEC) shelf registration statement which is renewed every three years.

5 unchanged sentences

The Board determines the record and payment dates at which the annual dividend may be paid until the date of the 2023 annual general meeting, and is authorized to abstain from distributing a dividend at its discretion.

The four quarterly installments each of $0.80 per share were distributed by the Board as expected.

The annual dividend approved in May 2022 represented a $0.12 per share increase ($0.03 per quarter) over the prior year dividend.

4 unchanged sentences

March 18, 2022 April 8, 2022 $0.80 (CHF 0.74)

June 17, 2022 July 8, 2022 $0.83 (CHF 0.80)

Information provided in connection with outstanding debt of subsidiaries

6 unchanged sentences

(Subsidiary Issuer)

March 31 December 31 March 31 December 31

June 30 December 31 June 30 December 31

(in millions of U.S.

3 unchanged sentences

Due from parent guarantor/subsidiary issuer 4 2 1,070 348

Due from subsidiaries that are not issuers or guarantors 1,825 1,805 567 526

Due from subsidiaries that are not issuers or

guarantors 1,814 1,805 571 526

Other assets 5 16 2,195 1,667

1 unchanged sentence

Due to parent guarantor/subsidiary issuer $ 1,070 $ 348 $ 4 $ 2

Due to subsidiaries that are not issuers or guarantors 325 241 2,130 1,647

Due to subsidiaries that are not issuers or

guarantors 239 241 1,823 1,647

Affiliated notional cash pooling programs 243 8 425 —

7 unchanged sentences

The following table presents the condensed statements of operations and comprehensive income of Chubb Limited and Chubb INA Holdings Inc., excluding equity in earnings from non-guarantor subsidiaries:

Three Months Ended March 31, 2022 Chubb Limited

Six Months Ended June 30, 2022 Chubb Limited

(Parent Guarantor) Chubb INA Holdings Inc.

2 unchanged sentences

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

Net realized gains (loss) 24 96

Net realized gains (losses) 14 200

Administrative expenses 54 (52)

1 unchanged sentence

Other (income) expense (24) 20

Cigna integration expenses — 1

Income tax expense (benefit) 6 (22)

2 unchanged sentences

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 2. Management’s Discussion and Analysis