Chubb Ltd 10-Q

ITEM 2. 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 and nine months ended September 30, 2022. All comparisons in this discussion are to the corresponding prior year period unless otherwise indicated. All dollar amounts are rounded. However, percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ. Our results of operations and cash flows for any interim period are not necessarily indicative of our results for the full year. This discussion should be read in conjunction with our consolidated financial statements and related notes and our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Form 10-K). Other Information We routinely post important information for investors on our website (investors.chubb.com). We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Securities and Exchange Commission (SEC) Regulation FD (Fair Disclosure). Accordingly, investors should monitor the Investor Information portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this report. MD&A Index Page Forward-Looking Statements 44 Overview 45 Consolidated Operating Results 46 Segment Operating Results 51 Net Realized and Unrealized Gains (Losses) 62 Effective Income Tax Rate 63 Non-GAAP Reconciliation 64 Amortization of Purchased Intangibles and Other Amortization 69 Net Investment Income 70 Investments 70 Critical Accounting Estimates 75 Unpaid Losses and Loss Expenses 75 Asbestos and Environmental (A&E) 75 Fair Value Measurements 75 Catastrophe Management 76 Global Property Catastrophe Reinsurance Program 77 Capital Resources 78 Liquidity 79 Information Provided In Connection With Outstanding Debt of Subsidiaries 80 43 Table of Contents Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Any written or oral statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. The words “believe,” “anticipate,” “estimate,” “project,” “should,” “plan,” “expect,” “intend,” “hope,” “feel,” “foresee,” “will likely result,” “will continue,” and variations thereof and similar expressions, identify forward-looking statements. These forward-looking statements are subject to certain risks, uncertainties, and other factors that could, should potential events occur, cause actual results to differ materially from such statements. These risks, uncertainties, and other factors, which are described in more detail elsewhere herein and in other documents we file with the U.S. Securities and Exchange Commission (SEC), include but are not limited to: • actual amount of new and renewal business, premium rates, underwriting margins, market acceptance of our products, and risks associated with the introduction of new products and services and entering new markets; the competitive environment in which we operate, including trends in pricing or in policy terms and conditions, which may differ from our projections and changes in market conditions that could render our business strategies ineffective or obsolete; • losses arising out of natural or man-made catastrophes; actual loss experience from insured or reinsured events and the timing of claim payments; the uncertainties of the loss-reserving and claims-settlement processes, including the difficulties associated with assessing environmental damage and asbestos-related latent injuries, the impact of aggregate-policy-coverage limits, the impact of bankruptcy protection sought by various asbestos producers and other related businesses, and the timing of loss payments; • infection rates and severity of COVID-19 and related risks, and their effects on our business operations and claims activity, and any adverse impact to our insureds, brokers, agents, and employees; actual claims may exceed our best estimate of ultimate insurance losses incurred which could change including as a result of, among other things, the impact of legislative or regulatory actions taken in response to COVID-19; • changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers; material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements; the ability to collect reinsurance recoverable, credit developments of reinsurers, and any delays with respect thereto and changes in the cost, quality, or availability of reinsurance; • uncertainties relating to governmental, legislative and regulatory policies, developments, actions, investigations, and treaties; judicial decisions and rulings, new theories of liability, legal tactics, and settlement terms; the effects of data privacy or cyber laws or regulation; global political conditions and possible business disruption or economic contraction that may result from such events; • developments in global financial markets, including changes in interest rates, stock markets, and other financial markets; increased government involvement or intervention in the financial services industry; the cost and availability of financing, and foreign currency exchange rate fluctuations; changing rates of inflation; and other general economic and business conditions, including the depth and duration of potential recession; • the availability of borrowings and letters of credit under our credit facilities; the adequacy of collateral supporting funded high deductible programs; the amount of dividends received from subsidiaries; • changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available for sale fixed maturity investments before their anticipated recovery; • actions that rating agencies may take from time to time, such as financial strength or credit ratings downgrades or placing these ratings on credit watch negative or the equivalent; • the effects of public company bankruptcies and accounting restatements, as well as disclosures by and investigations of public companies relating to possible accounting irregularities, and other corporate governance issues; • acquisitions made performing differently than expected, our failure to realize anticipated expense-related efficiencies or growth from acquisitions, the impact of acquisitions on our pre-existing organization, including with respect to our announced acquisitions not closing; risks and uncertainties relating to our planned purchases of additional interests in Huatai Insurance Group Co., Ltd. (Huatai Group), including our ability to receive Chinese insurance regulatory approval and complete the purchases; • risks associated with being a Swiss corporation, including reduced flexibility with respect to certain aspects of capital management and the potential for additional regulatory burdens; share repurchase plans and share cancellations; 44 Table of Contents • loss of the services of any of our executive officers without suitable replacements being recruited in a reasonable time frame; • the ability of our technology resources, including information systems and security, to perform as anticipated such as with respect to preventing material information technology failures or third-party infiltrations or hacking resulting in consequences adverse to Chubb or its customers or partners; the ability of our company to increase use of data analytics and technology as part of our business strategy and adapt to new technologies; and • management’s response to these factors and actual events (including, but not limited to, those described above). You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future events or otherwise. Overview Chubb Limited is the Swiss-incorporated holding company of the Chubb Group of Companies. Chubb Limited, which is headquartered in Zurich, Switzerland, and its direct and indirect subsidiaries (collectively, the Chubb Group of Companies, Chubb, we, us, or our) are a global insurance and reinsurance organization, serving the needs of a diverse group of clients worldwide. At September 30, 2022, we had total assets of $198 billion and shareholders’ equity of $48 billion. Chubb was incorporated in 1985 at which time it opened its first business office in Bermuda and continues to maintain operations in Bermuda. We operate through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. For more information on our segments refer to “Segment Information” under Item 1 in our 2021 Form 10-K. 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 Asian markets. Our results for the three and nine months ended September 30, 2022, include the results of these acquired businesses from July 1, 2022, and are included in our Life Insurance segment and, to a lesser extent, Overseas General Insurance segment according to the nature of the business written. Refer to Note 2 to the Consolidated Financial Statements for additional information on our acquisition. 45 Table of Contents Consolidated Operating Results – Three and Nine Months Ended September 30, 2022 and 2021 Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Net premiums written $ 12,020 $ 10,510 14.4 % $ 31,521 $ 28,718 9.8 % Net premiums written - constant dollars (1) 17.3 % 12.1 % Net premiums earned 11,535 10,000 15.3 % 29,838 27,034 10.4 % Net investment income 979 866 13.1 % 2,689 2,613 2.9 % Net realized gains (losses) (384) (21) NM (787) 833 NM Total revenues 12,130 10,845 11.9 % 31,740 30,480 4.1 % Losses and loss expenses 7,279 6,629 9.8 % 17,474 16,688 4.7 % Policy benefits 486 151 221.1 % 790 503 57.1 % Policy acquisition costs 1,975 1,778 11.1 % 5,451 5,141 6.0 % Administrative expenses 883 806 9.6 % 2,479 2,325 6.6 % Interest expense 150 122 23.3 % 416 366 13.8 % Other (income) expense 188 (763) NM (21) (2,030) (99.0) % Amortization of purchased intangibles 69 71 (3.2) % 211 216 (2.3) % Cigna integration expenses 23 — NM 26 — NM Total expenses 11,053 8,794 25.7 % 26,826 23,209 15.6 % Income before income tax 1,077 2,051 (47.5) % 4,914 7,271 (32.4) % Income tax expense 265 218 21.2 % 913 873 4.5 % Net income $ 812 $ 1,833 (55.7) % $ 4,001 $ 6,398 (37.5) % 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 September 30, 2022 • Net income was $812 million compared with $1.8 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 improvement in our combined ratios. Net income is lower compared to prior year, reflecting the after-tax mark-to-market losses on private equities of $231 million, compared to gains of $705 million in the prior year. • Consolidated net premiums written were $12.0 billion, up 14.4 percent, or 17.3 percent in constant dollars. The acquisition of Cigna's business in Asia added 7.1 percentage points, or 7.2 percentage points in constant dollars, to the growth in net premiums written. • Consolidated net premiums earned were $11.5 billion, up 15.3 percent, or 18.6 percent in constant dollars. The acquisition of Cigna's business in Asia added 7.3 percentage points, or 7.5 percentage points in constant dollars, to the growth in net premiums earned. • Total pre-tax and after-tax catastrophe losses were $1.2 billion (11.3 percentage points of the P&C combined ratio) and $949 million, respectively, compared with $1.1 billion (12.2 percentage points of the P&C combined ratio) and $943 million, respectively, in the prior year period. Catastrophe losses in the current quarter were primarily from Hurricane Ian losses of $975 million pre-tax and global weather-related events. • Total pre-tax and after-tax favorable prior period development were $222 million (2.2 percentage points of the P&C combined ratio) and $162 million, respectively, including pre-tax adverse development of $52 million related to legacy environmental exposures. Excluding the adverse development, we had pre-tax favorable development of $274 million, with 5 percent in long-tail lines, and 95 percent in short-tail lines. This compares with pre-tax and after-tax favorable prior 46 Table of Contents period development of $321 million (3.6 percentage points of the P&C combined ratio) and $227 million, respectively, in the prior year period. • The P&C combined ratio was 93.1 percent compared with 93.4 percent in the prior year period. The P&C current accident year (CAY) combined ratio excluding catastrophe losses was 84.0 percent compared with 84.8 percent in the prior year period. The current year ratios decreased due to the favorable impact of higher net premiums earned on the expense ratio. • Net investment income was a record $979 million compared with $866 million in the prior year period. • Operating cash flow was $3.4 billion compared with $3.3 billion in the prior year period. • Shareholders' equity decreased by $4.0 billion in the quarter, as net income of $812 million was more than offset by net unrealized losses on investments of $2.9 billion after-tax from rising interest rates and $1.0 billion related to cumulative foreign exchange translation. In addition, shareholders' equity reflected total capital returned to shareholders in the quarter of $1.0 billion, including share repurchases of $685 million, at an average purchase price of $186.22 per share, and dividends of $346 million. Net Premiums Written Three Months Ended September 30 % Change Nine Months Ended September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 C$ Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 C$ YTD-22 vs. YTD-21 Commercial casualty $ 2,167 $ 1,957 10.7 % 12.8 % $ 5,777 $ 5,215 10.8 % 12.5 % Workers' compensation 476 488 (2.5) % (2.5) % 1,625 1,597 1.7 % 1.7 % Financial lines 1,270 1,328 (4.4) % (1.9) % 3,727 3,681 1.2 % 3.2 % Surety 152 139 9.9 % 11.8 % 477 435 9.7 % 11.1 % Commercial multiple peril (1) 341 310 10.1 % 10.1 % 972 889 9.4 % 9.4 % Property and other short-tail lines 1,756 1,572 11.8 % 15.8 % 5,503 4,906 12.2 % 15.3 % Total Commercial P&C lines 6,162 5,794 6.4 % 8.8 % 18,081 16,723 8.1 % 10.0 % Agriculture 1,723 1,415 21.8 % 21.8 % 2,523 2,110 19.6 % 19.6 % Personal automobile 404 383 5.4 % 7.9 % 1,239 1,134 9.2 % 11.4 % Personal homeowners 1,023 978 4.5 % 5.6 % 2,910 2,778 4.7 % 5.6 % Personal other 451 454 (0.7) % 7.8 % 1,406 1,386 1.4 % 6.8 % Total Personal lines 1,878 1,815 3.4 % 6.6 % 5,555 5,298 4.8 % 7.2 % Total Property and Casualty lines 9,763 9,024 8.2 % 10.4 % 26,159 24,131 8.4 % 10.3 % Global A&H lines (2) 1,518 922 64.7 % 75.3 % 3,451 2,855 20.9 % 26.7 % Reinsurance lines 265 221 19.5 % 21.8 % 780 702 11.1 % 12.2 % Life 474 343 38.6 % 48.0 % 1,131 1,030 9.9 % 15.3 % Total consolidated $ 12,020 $ 10,510 14.4 % 17.3 % $ 31,521 $ 28,718 9.8 % 12.1 % (1) Commercial multiple peril represents retail package business (property and general liability). (2) For purposes of this schedule only, A&H results include Combined North America and International businesses, which are 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 and nine months ended September 30, 2022, reflects growth across most lines of business driven by positive rate increases, new business, and strong renewal retention. The acquisition of Cigna's business in Asia contributed $738 million for the three and nine months ended September 30, 2022. • Commercial casualty grew primarily in North America, Europe, and Asia, driven by strong new business and retention, including exposure and rate increases. 47 Table of Contents • Workers' compensation decreased for the quarter due to a favorable COVID-related exposure adjustment in the prior year. Growth for the nine months ended September 30, 2022, was due to exposure increases in North America. • Financial lines decreased for the quarter as growth in Asia and Latin America was more than offset by lower retention and lower new business in North America. The year-to-date increase reflects growth across most regions from strong new business and retention, and rate increases. • Surety increased due to strong new business in North America. • Commercial multiple peril increased due to strong new business and renewal retention, including exposure and positive rate increases in North America. • Property and other short-tail lines grew globally due to strong new business and renewal retention, including positive rate increases and increased exposure. • Agriculture increased due to underlying growth in crop insurance, reflecting higher commodity prices, higher reported acreage from policyholders, and policy count growth. Partially offsetting growth for the nine 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 increased due to the acquisition of Cigna's business in Asia in the third quarter of 2022, which contributed $ 593 m illion. Additionally, growth in Asia, Latin America, Europe, and Japan on a constant dollar basis, was driven by higher new business and increased travel volume and consumer activity. Our North American Combined Insurance supplemental A&H business decreased primarily due to the non-renewal of a large program. • Reinsurance lines increased for the quarter primarily due to higher catastrophe reinstatement premiums. Growth for the nine months ended September 30, 2022, was driven by new business and favorable premium adjustments; partially offset by a one-time portfolio transfer in the prior year. • International life operations increased due to the acquisition of Cigna's business in Asia in the third quarter of 2022, which contributed $145 million. Growth from new business in Asia, primarily in Thailand, Indonesia and Vietnam, was more than offset by lower business in 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. 48 Table of Contents Net Premiums Earned Net premiums earned for short-duration contracts, typically P&C contracts, generally reflect the portion of net premiums written that was recorded as revenues for the period as the exposure periods expire. Net premiums earned for long-duration contracts, typically traditional life contracts, generally are recognized as earned when due from policyholders. For the three months ended September 30, 2022, net premiums earned increased $1,535 million, or 15.3 percent. For the nine months ended September 30, 2022, net premiums earned increased $2,804 million, or 10.4 percent. Catastrophe Losses and Prior Period Development We generally define catastrophe loss events consistent with the definition of the Property Claims Service (PCS) for events in the U.S. and Canada. PCS defines a catastrophe as an event that causes damage of $25 million or more in insured losses and affects a significant number of insureds. For events outside of the U.S. and Canada, we generally use a similar definition. We also define losses from certain pandemics, such as COVID-19, as a catastrophe loss. Prior period development includes adjustments relating to either profit commission reserves or policyholder dividend reserves based on actual claim experience that develops after the policy period ends. The expense adjustments correlate to the prior period loss development on these same policies. 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 Nine Months Ended September 30 September 30 (in millions of U.S. dollars) 2022 2021 2022 2021 Catastrophe losses $ 1,158 $ 1,146 $ 1,782 $ 2,126 Favorable prior period development $ 222 $ 321 $ 709 $ 781 Catastrophe losses through September 30, 2022 and 2021, were primarily from the following events: • 2022: Hurricane Ian losses of $975 million, severe weather-related events in the U.S. and internationally, Australia storms, and Colorado wildfires. • 2021: Hurricane Ida losses of $806 million, winter storm losses in the U.S., flooding in Europe, and other severe weather-related events in the U.S. and internationally. 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 September 30, 2022, was $222 million, including adverse development of $52 million related to legacy environmental exposures. Excluding the adverse development, we had favorable development of $274 million, with 5 percent in long-tail lines, principally from accident years 2018 and prior, and 95 percent in short-tail lines, primarily in property lines. Pre-tax net favorable PPD for the nine months ended September 30, 2022, was $709 million, including adverse development of $155 million for molestation claims, predominantly reviver statute-related, and adverse development of $52 million related to legacy environmental exposures. The 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 $916 million with 29 percent in long-tail lines, principally from accident years 2018 and prior, and 71 percent in short-tail lines, primarily in property and A&H lines. Pre-tax net favorable PPD for the three months ended September 30, 2021, was $321 million, including adverse development of $33 million related to legacy environmental exposures. Excluding the adverse development, we had favorable development of $354 million with 30 percent in long-tail lines, principally from accident years 2017 and prior, and 70 percent in short-tail lines, primarily in homeowners and property lines. Pre-tax net favorable PPD for the nine months ended September 30, 2021, was $781 million, including adverse development of $33 million related to legacy environmental exposures and $68 million for molestation claims. Excluding the adverse development, we had favorable development of $882 million with 27 percent in long-tail lines, principally from accident years 2017 and prior, and 73 percent in short-tail lines, primarily in homeowners, A&H, property, and surety lines. 49 Table of Contents Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information. P&C Combined Ratio In evaluating our segments, excluding Life Insurance financial performance, we use the P&C combined ratio. We calculate this ratio by dividing the respective expense amounts by net premiums earned. We do not calculate this ratio for the Life Insurance segment as we do not use this measure to monitor or manage that segment. A P&C combined ratio under 100 percent indicates underwriting income, and a combined ratio exceeding 100 percent indicates underwriting loss. Three Months Ended Nine Months Ended September 30 September 30 2022 2021 2022 2021 Loss and loss expense ratio CAY loss ratio excluding catastrophe losses 60.6 % 60.1 % 58.4 % 58.7 % Catastrophe losses 11.4 % 12.2 % 6.6 % 8.4 % Prior period development (2.4) % (3.7) % (3.0) % (3.2) % Loss and loss expense ratio 69.6 % 68.6 % 62.0 % 63.9 % Policy acquisition cost ratio 16.6 % 17.1 % 17.7 % 18.3 % Administrative expense ratio 6.9 % 7.7 % 7.8 % 8.2 % P&C Combined ratio 93.1 % 93.4 % 87.5 % 90.4 % The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses increased for the three months ended September 30, 2022, reflecting the impact of a current accident year benefit recorded in the prior year partially offset by earned rate exceeding loss cost trends. The loss and loss expense ratio and the CAY loss ratio excluding catastrophe losses decreased for the nine months ended September 30, 2022, primarily from earned rate exceeding loss cost trends. The loss and loss expense ratio for the nine months ended September 30, 2022, also benefited from higher net premiums earned and lower catastrophe losses, partially offset by lower favorable prior period development. The policy acquisition cost ratio decreased for the three and nine months ended September 30, 2022, primarily due to a higher percentage of net premiums earned from lines that have a lower acquisition cost ratio. The administrative expense ratio decreased for the three and nine months ended September 30, 2022, primarily due to the favorable impact of higher net premiums earned, partially offset by higher employee-related expenses and increased investment to support growth. Policy benefits Policy benefits represent losses on contracts classified as long-duration and generally include accident and supplemental health products, term and whole life products, endowment products, and annuities. Refer to the Life Insurance segment operating results section for further discussion. For the three months ended September 30, 2022 and 2021, Policy benefits were $486 million and $151 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 $(67) million and $(24) 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 $553 million and $175 million for the three months ended September 30, 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, Policy benefits were $790 million and $503 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 $(116) million and $(5) 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 $906 million and $508 million for the nine months ended September 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. 50 Table of Contents Segment Operating Results – Three and Nine Months Ended September 30, 2022 and 2021 We operate through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. For more information on our segments refer to “Segment Information” under Item 1 in our 2021 Form 10-K. North America Commercial P&C Insurance The North America Commercial P&C Insurance segment comprises operations that provide property and casualty (P&C) and accident & health (A&H) insurance and services to large, middle market, and small commercial businesses in the U.S., Canada, and Bermuda. This segment includes our North America Major Accounts and Specialty Insurance division (large corporate accounts and wholesale business), and the North America Commercial Insurance division (principally middle market and small commercial accounts). Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Net premiums written $ 4,722 $ 4,369 8.1 % $ 13,426 $ 12,318 9.0 % Net premiums earned 4,283 3,954 8.3 % 12,645 11,431 10.6 % Losses and loss expenses 3,036 2,754 10.3 % 7,979 7,740 3.1 % Policy acquisition costs 583 537 8.5 % 1,701 1,540 10.5 % Administrative expenses 272 273 (0.2) % 814 772 5.5 % Underwriting income 392 390 0.2 % 2,151 1,379 55.9 % Net investment income 589 507 16.4 % 1,600 1,582 1.2 % Other (income) expense 6 8 (17.8) % 12 24 (48.4) % Segment income $ 975 $ 889 9.6 % $ 3,739 $ 2,937 27.3 % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 61.5 % 62.3 % (0.8) pts 61.5 % 63.1 % (1.6) pts Catastrophe losses 14.0 % 11.9 % 2.1 pts 6.3 % 8.7 % (2.4) pts Prior period development (4.6) % (4.5) % (0.1) pts (4.7) % (4.1) % (0.6) pts Loss and loss expense ratio 70.9 % 69.7 % 1.2 pts 63.1 % 67.7 % (4.6) pts Policy acquisition cost ratio 13.6 % 13.5 % 0.1 pts 13.5 % 13.5 % — pts Administrative expense ratio 6.4 % 6.9 % (0.5) pts 6.4 % 6.7 % (0.3) pts Combined ratio 90.9 % 90.1 % 0.8 pts 83.0 % 87.9 % (4.9) pts Catastrophe Losses and Prior Period Development Three Months Ended Nine Months Ended September 30 September 30 (in millions of U.S. dollars) 2022 2021 2022 2021 Catastrophe losses $ 598 $ 472 $ 803 $ 999 Favorable prior period development $ 166 $ 157 $ 561 $ 440 51 Table of Contents Catastrophe losses through September 30, 2022 and 2021, were primarily from the following events: • 2022: Hurricane Ian losses, severe weather-related events and winter storm losses in the U.S. • 2021: Hurricane Ida losses, 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. Premiums Net premiums written increased $353 million, or 8.1 percent, and $1,108 million, or 9.0 percent, for the three and nine months ended September 30, 2022, respectively, reflecting strong premium retention, including both rate and exposure increases. Additionally, there was new business across a number of retail and wholesale lines, including property, primary and excess casualty, commercial multiple peril, and surety. A&H growth reflects recovery in A&H lines from exposure declines in the prior year and strong new business. Growth for the nine months ended September 30, 2022 also reflects strong premium retention, including rate and exposure increases, from financial lines and workers’ compensation. Net premiums earned increased $329 million, or 8.3 percent, and $1,214 million, or 10.6 percent for the three and nine months ended September 30, 2022, respectively, reflecting the growth in net premiums written described above. Combined Ratio The loss and loss expense ratio increased for the three months ended September 30, 2022, primarily from higher catastrophe losses. The loss and loss expense ratio decreased for the nine months ended September 30, 2022, primarily from lower catastrophe losses and higher favorable prior period development. The CAY loss ratio excluding catastrophe losses decreased for the three and nine months ended September 30, 2022, primarily from earned rate exceeding loss cost trends. The administrative expense ratio decreased for the three and nine months ended September 30, 2022, primarily due to a one-time expense accrual release and the favorable impact of higher net premiums earned, partially offset by higher employee-related expenses. 52 Table of Contents North America Personal P&C Insurance The North America Personal P&C Insurance segment comprises operations that provide high net worth personal lines products, including homeowners and complementary products such as valuable articles, excess liability, automobile, and recreational marine insurance and services in the U.S. and Canada. Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Net premiums written $ 1,392 $ 1,300 7.1 % $ 3,998 $ 3,761 6.3 % Net premiums earned 1,334 1,244 7.2 % 3,852 3,652 5.5 % Losses and loss expenses 857 846 1.1 % 2,343 2,341 0.1 % Policy acquisition costs 274 254 8.3 % 792 746 6.2 % Administrative expenses 71 73 (3.2) % 213 200 6.5 % Underwriting income 132 71 86.8 % 504 365 38.4 % Net investment income 76 60 26.6 % 199 189 5.3 % Other (income) expense 1 1 — 3 (3) NM Amortization of purchased intangibles 2 2 — 7 8 (5.2) % Segment income $ 205 $ 128 61.1 % $ 693 $ 549 26.3 % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 53.6 % 50.7 % 2.9 pts 53.5 % 52.5 % 1.0 pts Catastrophe losses 20.6 % 31.9 % (11.3) pts 12.2 % 18.9 % (6.7) pts Prior period development (10.0) % (14.6) % 4.6 pts (4.9) % (7.3) % 2.4 pts Loss and loss expense ratio 64.2 % 68.0 % (3.8) pts 60.8 % 64.1 % (3.3) pts Policy acquisition cost ratio 20.6 % 20.4 % 0.2 pts 20.6 % 20.4 % 0.2 pts Administrative expense ratio 5.3 % 5.9 % (0.6) pts 5.5 % 5.5 % — pts Combined ratio 90.1 % 94.3 % (4.2) pts 86.9 % 90.0 % (3.1) pts NM - not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Nine Months Ended September 30 September 30 (in millions of U.S. dollars) 2022 2021 2022 2021 Catastrophe losses $ 274 $ 397 $ 469 $ 698 Favorable prior period development $ 133 $ 182 $ 187 $ 266 Catastrophe losses through September 30, 2022 and 2021, were primarily from the following events: • 2022: Hurricane Ian losses, severe weather-related events in the U.S. and Colorado wildfires. • 2021: Hurricane Ida losses, 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. Premiums Net premiums written increased $92 million, or 7.1 percent, and $237 million, or 6.3 percent for the three and nine months ended September 30, 2022, respectively, primarily driven by strong new business and renewal retention, from both rate and exposure increases, primarily in homeowners and automobile; partially offset by additional cancellations in parts of California exposed to wildfires. Net premiums earned increased $90 million, or 7.2 percent, and $200 million, or 5.5 percent for the three and nine months ended September 30, 2022, respectively, reflecting the growth in net premiums written described above. 53 Table of Contents Combined Ratio The loss and loss expense ratio decreased for the three and nine months ended September 30, 2022, primarily from lower catastrophe losses, partially offset by lower favorable prior period development. The CAY loss ratio excluding catastrophe losses increased for the three and nine months ended September 30, 2022, reflecting higher losses in automobile and, to a lesser extent, homeowners. The policy acquisition cost ratio was relatively flat for the three and nine months ended September 30, 2022. The administrative expense ratio decreased for the three months ended September 30, 2022, primarily due to a one-time expense accrual release, the favorable impact of higher net premiums earned and strong expense management. The administrative expense ratio was flat for the nine months ended September 30, 2022. North America Agricultural Insurance The North America Agricultural Insurance segment comprises our North American based businesses that provide a variety of coverages in the U.S. and Canada including crop insurance, primarily Multiple Peril Crop Insurance (MPCI) and crop-hail through Rain and Hail Insurance Service, Inc. (Rain and Hail) as well as farm and ranch and specialty P&C commercial insurance products and services through our Chubb Agribusiness unit. Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Net premiums written $ 1,723 $ 1,415 21.8 % $ 2,523 $ 2,110 19.6 % Net premiums earned 1,673 1,338 25.0 % 2,217 1,858 19.3 % Losses and loss expenses 1,444 1,138 27.0 % 1,830 1,554 17.8 % Policy acquisition costs 68 61 11.4 % 111 100 11.0 % Administrative expenses 3 4 (21.4) % 4 10 (58.1) % Underwriting income 158 135 16.3 % 272 194 39.9 % Net investment income 9 6 28.9 % 23 21 5.6 % Other (income) expense 1 — NM 1 — NM Amortization of purchased intangibles 7 7 — 20 20 — Segment income $ 159 $ 134 17.9 % $ 274 $ 195 40.2 % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 84.0 % 84.0 % — pts 82.2 % 82.3 % (0.1) pts Catastrophe losses 1.8 % 0.6 % 1.2 pts 2.3 % 1.1 % 1.2 pts Prior period development 0.5 % 0.4 % 0.1 pts (2.0) % 0.2 % (2.2) pts Loss and loss expense ratio 86.3 % 85.0 % 1.3 pts 82.5 % 83.6 % (1.1) pts Policy acquisition cost ratio 4.1 % 4.6 % (0.5) pts 5.1 % 5.4 % (0.3) pts Administrative expense ratio 0.2 % 0.3 % (0.1) pts 0.2 % 0.6 % (0.4) pts Combined ratio 90.6 % 89.9 % 0.7 pts 87.8 % 89.6 % (1.8) pts NM - not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Nine Months Ended September 30 September 30 (in millions of U.S. dollars) 2022 2021 2022 2021 Catastrophe losses $ 31 $ 8 $ 52 $ 20 (Unfavorable) favorable prior period development $ (9) $ (7) $ 17 $ (5) 54 Table of Contents Catastrophe losses through September 30, 2022 and 2021, were primarily from the following events: • 2022: Hurricane Ian losses, severe weather-related events in the Chubb Agribusiness, and winter storm losses in the U.S. • 2021: 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. Premiums Net premiums written increased $308 million, or 21.8 percent for the three months ended September 30, 2022, primarily due to an increase in MPCI, primarily reflecting higher commodity prices, higher reported acreage from policyholders, and policy count growth. Net premiums written increased $413 million, or 19.6 percent for the nine months ended September 30, 2022, primarily due to an increase in MPCI reflecting 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 nine months ended September 30, 2022, by 7.6 percentage points. Net premiums earned increased $335 million, or 25.0 percent, and $359 million, or 19.3 percent for the three and nine months ended September 30, 2022, respectively, reflecting the growth in net premiums written described above. Combined Ratio The combined ratio for the nine months ended September 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 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 September 30, 2022, primarily from higher catastrophe losses. The loss and loss expense ratio decreased for the nine months ended September 30, 2022, primarily due to favorable prior period development compared with unfavorable prior period development in the prior year, partially offset by higher catastrophe losses. The CAY loss ratio excluding catastrophe losses was relatively flat for the three and nine months ended September 30, 2022. The policy acquisition cost ratio decreased for the three and nine months ended September 30, 2022, primarily due to the favorable impact of higher net premiums earned from MPCI. The administrative expense ratio decreased for the three and nine months ended September 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. 55 Table of Contents Overseas General Insurance Overseas General Insurance segment comprises Chubb International and Chubb Global Markets (CGM). Chubb International comprises our international commercial P&C traditional and specialty lines serving large corporations, middle market and small customers; A&H and traditional and specialty personal lines business serving local territories outside the U.S., Bermuda, and Canada. CGM, our London-based international commercial P&C excess and surplus lines business, includes Lloyd's of London (Lloyd's) Syndicate 2488. Chubb provides funds at Lloyd's to support underwriting by Syndicate 2488 which is managed by Chubb Underwriting Agencies Limited. Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Net premiums written $ 2,645 $ 2,596 1.9 % $ 8,364 $ 7,983 4.8 % Net premiums written - constant dollars 11.7 % 12.0 % Net premiums earned 2,741 2,664 2.9 % 8,065 7,721 4.5 % Losses and loss expenses 1,441 1,487 (3.1) % 4,054 3,936 3.0 % Policy acquisition costs 720 703 2.5 % 2,096 2,070 1.3 % Administrative expenses 264 266 (0.9) % 811 811 — Underwriting income 316 208 51.7 % 1,104 904 22.1 % Net investment income 151 157 (3.2) % 460 447 3.1 % Other (income) expense (2) — NM 3 3 — % Amortization of purchased intangibles 12 11 8.0 % 40 36 11.9 % Segment income $ 457 $ 354 29.1 % $ 1,521 $ 1,312 15.9 % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 49.2 % 49.8 % (0.6) pts 49.5 % 50.1 % (0.6) pts Catastrophe losses 3.6 % 7.0 % (3.4) pts 3.7 % 3.6 % 0.1 pts Prior period development (0.2) % (1.0) % 0.8 pts (2.9) % (2.7) % (0.2) pts Loss and loss expense ratio 52.6 % 55.8 % (3.2) pts 50.3 % 51.0 % (0.7) pts Policy acquisition cost ratio 26.3 % 26.4 % (0.1) pts 26.0 % 26.8 % (0.8) pts Administrative expense ratio 9.6 % 10.0 % (0.4) pts 10.0 % 10.5 % (0.5) pts Combined ratio 88.5 % 92.2 % (3.7) pts 86.3 % 88.3 % (2.0) pts NM- Not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Nine Months Ended September 30 September 30 (in millions of U.S. dollars) 2022 2021 2022 2021 Catastrophe losses $ 98 $ 188 $ 298 $ 278 Favorable prior period development $ 5 $ 28 $ 238 $ 209 Catastrophe losses through September 30, 2022 and 2021, were primarily from the following events: • 2022: Hurricane Ian losses, International weather-related events, and storms in Australia. • 2021: Flooding in Europe, Hurricane Ida, winter storm losses and international weather-related events. Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information. 56 Table of Contents Net Premiums Written by Region Three months ended September 30 (in millions of U.S. dollars, except for percentages) 2022 2022 % of Total 2021 2021 % of Total C$ 2021 Q-22 vs. Q-21 C$ Q-22 vs. Q-21 Region Europe, Middle East, and Africa $ 1,133 43 % $ 1,173 45 % $ 1,055 (3.4) % 7.4 % Latin America 565 21 % 501 20 % 476 12.9 % 18.6 % Asia Pacific 801 30 % 732 28 % 673 9.5 % 19.1 % Japan 101 4 % 116 4 % 94 (12.8) % 7.0 % Other (1) 45 2 % 74 3 % 71 (39.8) % (37.1) % Net premiums written $ 2,645 100 % $ 2,596 100 % $ 2,369 1.9 % 11.7 % Nine months ended September 30 (in millions of U.S. dollars, except for percentages) 2022 2022 % of Total 2021 2021 % of Total C$ 2021 Y-22 vs. Y-21 C$ Y-22 vs. Y-21 Region Europe, Middle East, and Africa $ 3,990 48 % $ 3,912 49 % $ 3,643 2.0 % 9.5 % Latin America 1,719 21 % 1,489 18 % 1,434 15.5 % 19.9 % Asia Pacific 2,134 25 % 1,987 25 % 1,857 7.4 % 15.0 % Japan 359 4 % 402 6 % 349 (10.7) % 2.7 % Other (1) 162 2 % 193 2 % 186 (16.3) % (13.1) % Net premiums written $ 8,364 100 % $ 7,983 100 % $ 7,469 4.8 % 12.0 % (1) Includes the international supplemental A&H business of Combined Insurance and other international operations including mainland China. Premiums Overall, net premiums written increased $49 million and $381 million, or $276 million and $895 million on a constant dollar basis, for the three and nine months ended September 30, 2022, respectively, reflecting growth in both commercial and consumer lines. For the three and nine months ended September 30, 2022, commercial lines grew 2.5 percent and 6.1 percent, or 11.0 percent and 12.6 percent on a constant-dollar basis, respectively, and consumer lines grew 1.1 percent and 2.7 percent, or 12.7 percent and 11.0 percent on a constant-dollar basis, respectively. The acquisition of Cigna's business in Asia contributed $39 million for the three and nine months ended September 30, 2022. Our European division increased for the three and nine months ended September 30, 2022 on a constant dollar basis, supported by both our wholesale and retail divisions. This growth was primarily driven by higher new business, and positive rate increases in commercial lines, including commercial property and casualty lines. Consumer lines increased primarily due to 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 and nine months ended September 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 nine months ended September 30, 2022 driven by higher new business, higher retention and positive rate increases in commercial lines, including property and casualty, and financial lines, and growth in consumer lines, primarily specialty and high net worth in personal, and travel in A&H. The acquisition of Cigna's business in Thailand also contributed to the increase, as described above. Japan increased for the three and nine months ended September 30, 2022 on a constant-dollar basis primarily from new business in A&H. Net premiums earned increased $77 million and $344 million, or $317 million and $848 million on a constant-dollar basis, for the three and nine months ended September 30, 2022, respectively, reflecting the increase in net premiums written described above. 57 Table of Contents Combined Ratio The loss and loss expense ratio decreased for the three months ended September 30, 2022, due to lower catastrophe losses, partially offset by lower favorable prior period development. The loss and loss expense ratio decreased for the nine months ended September 30, 2022, due to higher favorable prior period development. The CAY loss ratio excluding catastrophe losses decreased for the three and nine months ended September 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 nine months ended September 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 nine months ended September 30, 2022, reflecting continued expense management control and the favorable impact of higher net premiums earned. 58 Table of Contents Global Reinsurance The Global Reinsurance segment represents our reinsurance operations comprising Chubb Tempest Re Bermuda, Chubb Tempest Re USA, Chubb Tempest Re International, and Chubb Tempest Re Canada. Global Reinsurance markets its reinsurance products worldwide primarily through reinsurance brokers under the Chubb Tempest Re brand name and provides a broad range of traditional and non-traditional reinsurance coverage to a diverse array of primary P&C companies. Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Net premiums written $ 265 $ 221 19.5 % $ 780 $ 702 11.1 % Net premiums written - constant dollars 21.8 % 12.2 % Net premiums earned 255 211 20.9 % 712 583 22.0 % Losses and loss expenses 311 192 61.8 % 565 422 33.9 % Policy acquisition costs 59 55 6.5 % 178 147 20.7 % Administrative expenses 8 9 (4.0) % 27 27 1.8 % Underwriting loss (123) (45) 172.5 % (58) (13) NM Net investment income 71 99 (28.5) % 232 250 (7.3) % Other (income) expense — — — 1 — NM Segment income (loss) $ (52) $ 54 NM $ 173 $ 237 (27.2) % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 49.6 % 52.0 % (2.4) pts 49.8 % 50.5 % (0.7) pts Catastrophe losses 72.6 % 41.7 % 30.9 pts 26.1 % 24.2 % 1.9 pts Prior period development (0.1) % (2.5) % 2.4 pts 3.5 % (2.3) % 5.8 pts Loss and loss expense ratio 122.1 % 91.2 % 30.9 pts 79.4 % 72.4 % 7.0 pts Policy acquisition cost ratio 22.9 % 26.0 % (3.1) pts 25.0 % 25.2 % (0.2) pts Administrative expense ratio 3.4 % 4.2 % (0.8) pts 3.8 % 4.6 % (0.8) pts Combined ratio 148.4 % 121.4 % 27.0 pts 108.2 % 102.2 % 6.0 pts NM - not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Nine Months Ended September 30 September 30 (in millions of U.S dollars) 2022 2021 2022 2021 Catastrophe losses $ 157 $ 81 $ 160 $ 131 Favorable (Unfavorable) prior period development $ — $ 4 $ (22) $ 11 Catastrophe losses through September 30, 2022, were primarily from Hurricane Ian, and storms in Australia and Canada. Catastrophe losses through September 30, 2021, were primarily from severe weather-related events in the U.S. and Canada, including Hurricane Ida. Premiums Net premiums written increased $44 million and $78 million for the three and nine months ended September 30, 2022, respectively, primarily due to higher catastrophe reinstatement premiums, continued growth in the portfolio from new business and favorable premium adjustments. Growth for the nine months ended September 30, 2022 was partially offset by a one-time portfolio transfer in the prior year. 59 Table of Contents Net premiums earned increased $44 million and $129 million for the three and nine months ended September 30, 2022, respectively, primarily reflecting the factors described above. The increase for the nine months ended September 30, 2022 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 increased for the three and nine months ended September 30, 2022, primarily due to higher catastrophe losses and the unfavorable impact of prior period development. The CAY loss ratio excluding catastrophe losses decreased for the three and nine months ended September 30, 2022 primarily due to a shift in the mix of business. The policy acquisition cost ratio decreased for the three and nine months ended September 30, 2022, primarily due to catastrophe reinstatement premiums, which were fully earned in the three months ended September 30, 2022 and more than offset the impact of a shift in the mix of business. The administrative expense ratio decreased for the three and nine months ended September 30, 2022, primarily from the favorable impact of higher net premiums earned. Life Insurance The Life Insurance segment comprises our international life operations, which commencing this quarter, includes Cigna's A&H and life business in six Asian markets acquired on July 1, 2022. The Life Insurance segment also includes Chubb Tempest Life Re (Chubb Life Re), and the North American supplemental A&H and life business of Combined Insurance. We assess the performance of our life business based on Life Insurance underwriting income, which includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP. Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Net premiums written $ 1,273 $ 609 108.8 % $ 2,430 $ 1,844 31.7 % Net premiums written - constant dollars 117.4 % 35.5 % Net premiums earned 1,249 589 112.0 % 2,347 1,789 31.1 % Losses and loss expenses 135 179 (23.7) % 437 562 (22.2) % Policy benefits 553 175 NM 906 508 78.4 % Policy acquisition costs 271 168 60.5 % 573 538 6.5 % Administrative expenses 174 82 113.9 % 346 247 40.0 % Net investment income 147 102 44.8 % 359 301 19.3 % Life Insurance underwriting income 263 87 197.7 % 444 235 88.3 % Other (income) expense (10) (19) (41.3) % (50) (79) (35.7) % Amortization of purchased intangibles 2 2 — 7 4 87.2 % Segment income $ 271 $ 104 158.3 % $ 487 $ 310 57.0 % NM- Not meaningful Premiums Net premiums written increased $664 million and $586 million, or $687 million and $637 million on a constant-dollar basis, for the three and nine months ended September 30, 2022, respectively. For our international life operations, net premiums written increased 214.1 percent and 67.9 percent for the three and nine months ended September 30, 2022, respectively, primarily due to the acquisition of Cigna's business in Asia, which contributed $699 million. In addition, there was growth in Asia from new business, principally in Thailand, Indonesia and Vietnam, which was more than offset by lower business in Latin America, principally reflecting non-renewals of certain large account business in Chile. Net premiums written in our North American Combined Insurance business declined 8.6 percent and 8.7 percent, for the three and nine months ended September 30, 2022, respectively, primarily due to the non-renewal of a large program. 60 Table of Contents Deposits The following table presents deposits collected on universal life and investment contracts: Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 C$ 2021 Q-22 vs. Q-21 C$ Q-22 vs. Q-21 2022 2021 C$ 2021 Y-22 vs. Y-21 C$ Y-22 vs. Y-21 Deposits collected on universal life and investment contracts $ 449 $ 658 $ 615 (31.8) % (27.1) % $ 1,433 $ 1,814 $ 1,760 (21.0) % (18.6) % Deposits collected on universal life and investment contracts (life deposits) are not reflected as revenues in our Consolidated statements of operations in accordance with GAAP. New life deposits are an important component of production, and although they do not significantly affect current period income from operations, they are key to our efforts to grow our business. Life deposits collected decreased $209 million and $381 million for the three and nine months ended September 30, 2022, respectively, primarily in Taiwan, reflecting challenging market conditions for deposit products. Additionally, the prior year benefited from successful sales campaigns in broker and bank channels in Taiwan. Partially offsetting the decline is $36 million from deposits collected through the acquired Cigna businesses in Asia, primarily in Korea. Life Insurance underwriting income and Segment income Life Insurance underwriting income increased $176 million and $209 million for the three and nine months ended September 30, 2022, respectively, with $159 million of growth from the acquisition of Cigna's business in Asia, and lower year-over-year COVID-related losses. Segment income increased $167 million and $177 million for the three and nine months ended September 30, 2022, respectively, reflecting the increase in underwriting income described above. Corporate Corporate results primarily include the results of our non-insurance companies, income and expenses not attributable to reportable segments and loss and loss expenses of asbestos and environmental (A&E) liabilities and certain other non-A&E run-off exposures, including molestation. Three Months Ended Nine Months Ended September 30 % Change September 30 % Change (in millions of U.S. dollars, except for percentages) 2022 2021 Q-22 vs. Q-21 2022 2021 YTD-22 vs. YTD-21 Losses and loss expenses $ 74 $ 43 71.1 % $ 275 $ 141 95.3 % Administrative expenses 91 99 (8.8) % 264 258 2.1 % Underwriting loss 165 142 15.2 % 539 399 34.9 % Net investment income (loss) 5 (10) NM (4) (42) (87.9) % Interest expense 150 122 23.3 % 416 366 13.8 % Net realized gains (losses) (365) (11) NM (778) 841 NM Other (income) expense 194 (722) NM 73 (1,845) NM Amortization of purchased intangibles 46 49 (7.6) % 137 148 (7.7) % Cigna integration expenses 23 — NM 26 — NM Income tax expense 265 218 21.2 % 913 873 4.5 % Net income (loss) $ (1,203) $ 170 NM $ (2,886) $ 858 NM NM - not meaningful Losses and loss expenses for the three months ended September 30, 2022 and 2021 were primarily from adverse development relating to our Brandywine environmental exposures of $52 million and $33 million, respectively. Losses and loss expenses for the nine months ended September 30, 2022 also includes unfavorable prior period development for molestation claims. 61 Table of Contents Administrative expenses decreased $8 million for the three months ended September 30, 2022, primarily due to lower employee-related expenses. Administrative expenses increased $6 million for the nine months ended September 30, 2022, primarily due to increased spending to support digital growth initiatives. Cigna integration expenses of $23 million and $26 million for the three and nine months ended September 30, 2022, respectively, principally comprised transfer taxes and employee-related expenses. These expenses are one-time in nature and are not related to the on-going business activities of the segments. The Chief Executive Officer does not manage segment results or allocate resources to segments when considering these costs and they are therefore excluded from our definition of segment income. Refer to the respective sections that follow for a discussion of Net realized gains (losses), Net investment income (loss), Amortization of purchased intangibles, and Income tax expense (benefit). Refer to Note 12 to the Consolidated Financial Statements for additional information on Other (income) expense. Net Realized and Unrealized Gains (Losses) We take a long-term view with our investment strategy, and our investment managers manage our investment portfolio to maximize total return within specific guidelines designed to minimize risk. The majority of our investment portfolio is available for sale and reported at fair value. Our held to maturity investment portfolio is reported at amortized cost, net of valuation allowance. The effect of market movements on our fixed maturities portfolio impacts Net income (through Net realized gains (losses)) when securities are sold, when we write down an asset, or when we record a change to the valuation allowance for expected credit losses. For a further discussion related to how we assess the valuation allowance for expected credit losses and the related impact on Net income, refer to Note 1 e) to the Consolidated Financial Statements in our 2021 Form 10-K. Additionally, Net income is impacted through the reporting of changes in the fair value of equity securities, private equity funds where we own less than three percent, and derivatives, including financial futures, options, swaps, and GLB reinsurance. Changes in unrealized appreciation and depreciation on available for sale securities, resulting from the revaluation of securities held, changes in cumulative foreign currency translation adjustment, 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 September 30 2022 2021 (in millions of U.S. dollars) Net Realized Gains (Losses) Net Unrealized Gains (Losses) Net Impact Net Realized Gains (Losses) Net Unrealized Gains (Losses) Net Impact Fixed maturities $ (279) $ (3,045) $ (3,324) $ (10) $ (554) $ (564) Fixed income and investment derivatives (198) — (198) (9) — (9) Public equity Sales (12) — (12) 19 — 19 Mark-to-market (68) — (68) (61) — (61) Private equity (less than 3 percent ownership) Mark-to-market (42) — (42) 11 — 11 Total investment portfolio (599) (3,045) (3,644) (50) (554) (604) Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges 76 — 76 (63) — (63) Other derivatives (19) — (19) (10) — (10) Foreign exchange 198 (966) (768) 106 (414) (308) Other (1) (40) (59) (99) (4) 4 — Net losses, pre-tax $ (384) $ (4,070) $ (4,454) $ (21) $ (964) $ (985) (1) Other realized losses includes $36 million related to impairment of fixed assets. 62 Table of Contents Nine Months Ended September 30 2022 2021 (in millions of U.S. dollars) Net Realized Gains (Losses) Net Unrealized Gains (Losses) Net Impact Net Realized Gains (Losses) Net Unrealized Gains (Losses) Net Impact Fixed maturities $ (857) $ (12,041) $ (12,898) $ 26 $ (2,177) $ (2,151) Fixed income and investment derivatives (232) — (232) 9 — 9 Public equity Sales 406 — 406 109 — 109 Mark-to-market (693) — (693) 366 — 366 Private equity (less than 3 percent ownership) Mark-to-market 17 — 17 111 — 111 Total investment portfolio (1,359) (12,041) (13,400) 621 (2,177) (1,556) Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges 154 — 154 140 — 140 Other derivatives (9) — (9) (8) — (8) Foreign exchange 541 (1,676) (1,135) 85 (84) 1 Other (1) (114) (35) (149) (5) (33) (38) Net gains (losses), pre-tax $ (787) $ (13,752) $ (14,539) $ 833 $ (2,294) $ (1,461) (1) Other realized losses includes $36 million related to impairment of fixed assets. Pre-tax net unrealized losses of $3,045 million and $12,041 million in our investment portfolio for the three and nine months ended September 30, 2022, respectively, were principally the result of an increase in interest rates. In addition, there were realized losses of $599 million and $1,359 million for the three and nine months ended September 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 $76 million for the three months ended September 30, 2022, reflecting a net gain of $22 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 changes made to our valuation model relating to policyholder behavior, and a net realized gain of $54 million related to these other derivative instruments. The variable annuity reinsurance derivative transactions resulted in realized gains of $154 million for the nine months ended September 30, 2022, reflecting a net loss of $86 million, primarily from an increase in the fair value of the GLB liabilities due to lower global equity markets and changes to our valuation model relating to policyholder behavior, partially offset by higher interest rates, and a net realized gain of $240 million related to these other derivative instruments. For the three months ended September 30, 2021, the variable annuity reinsurance derivative transactions resulted in realized losses of $63 million, reflecting a net loss of $59 million, primarily from an increase in the fair value of the GLB liabilities due to underperformance in certain equity markets, partially offset by an increase in interest rates, and a net realized loss of $4 million related to these other derivatives. For the nine months ended September 30, 2021, the variable annuity reinsurance derivative transactions resulted in net realized gains of $140 million reflecting a net gain of $252 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 $112 million related to these other derivatives. Effective Income Tax Rate 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. 63 Table of Contents For the three and nine months ended September 30, 2022 our ETR was 24.6 percent and 18.6 percent, respectively. This compares to an ETR of 10.7 percent and 12.0 percent for the three and nine months ended September 30, 2021, respectively. The ETR for each period in 2022 was impacted by the acquisition of Cigna's business in Asia, our mix of earnings among various jurisdictions, and discrete tax benefits. Non-GAAP Reconciliation In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with GAAP. Book value per common share is shareholders’ equity divided by the shares outstanding. Tangible book value per common share is shareholders’ equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. We believe that book value comparisons to less acquisitive peer companies are more meaningful when adjusted for goodwill and other intangible assets. The calculation of tangible book value per share does not consider the embedded goodwill attributable to our investments in partially-owned insurance companies until we consolidate . We provide financial measures, including net premiums written, net premiums earned, and underwriting income on a constant-dollar basis. We believe it is useful to evaluate the trends in our results exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period. P&C performance metrics comprise consolidated operating results (including Corporate) and exclude the operating results of the Life Insurance segment. We believe that these measures are useful and meaningful to investors as they are used by management to assess the company’s P&C operations which are the most economically similar. We exclude the Life Insurance segment because the results of this business do not always correlate with the results of our P&C operations. P&C combined ratio is the sum of the loss and loss expense ratio, policy acquisition cost ratio and the administrative expense ratio excluding the life business and including the realized gains and losses on the crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing impacts underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations. CAY P&C combined ratio excluding catastrophe losses (CATs) excludes CATs and prior period development (PPD) from the P&C combined ratio. We exclude CATs as they are not predictable as to timing and amount and PPD as these unexpected loss developments on historical reserves are not indicative of our current underwriting performance. The combined ratio numerator is adjusted to exclude CATs, net premiums earned adjustments on PPD, prior period expense adjustments and reinstatement premiums on PPD, and the denomi nator is adjusted to exclude net premiums earned adjustments on PPD and reinstatement premiums on CATs and PPD. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded from PPD and net premiums earned when calculating the ratios. We believe this measure provides a better evaluation of our underwriting performance and enhances the understanding of the trends in our P&C business that may be obscured by these items. This measure is commonly reported among our peer companies and allows for a better comparison. Reinstatement premiums are additional premiums paid on certain reinsurance agreements in order to reinstate coverage that had been exhausted by loss occurrences. The reinstatement premium amount is typically a pro rata portion of the original ceded premium paid based on how much of the reinsurance limit had been exhausted. Net premiums earned adjustments within PPD are adjustments to the initial premium earned on retrospectively rated policies based on actual claim experience that develops after the policy period ends. The premium adjustments correlate to the prior period loss development on these same policies and are fully earned in the period the adjustments are recorded. Prior period expense adjustments typically relate to adjustable commission reserves or policyholder dividend reserves based on actual claim experience that develops after the policy period ends. The expense adjustments correlate to the prior period loss development on these same policies. 64 Table of Contents The following tables present the calculation of combined ratio, as reported for each segment to P&C combined ratio, adjusted for CATs and PPD: 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 Three Months Ended September 30, 2022 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses A $ 3,036 $ 857 $ 1,444 $ 1,441 $ 311 $ 74 $ 7,163 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (598) (274) (31) (98) (157) — (1,158) Reinstatement premiums collected (expensed) on catastrophe losses — — — — 55 — 55 Catastrophe losses, gross of related adjustments (598) (274) (31) (98) (212) — (1,213) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 166 133 (9) 5 — (73) 222 Net premiums earned adjustments on PPD - unfavorable (favorable) 80 — — — — — 80 Expense adjustments - unfavorable (favorable) (1) — — — — — (1) PPD, gross of related adjustments - favorable (unfavorable) 245 133 (9) 5 — (73) 301 CAY loss and loss expense ex CATs B $ 2,683 $ 716 $ 1,404 $ 1,348 $ 99 $ 1 $ 6,251 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 855 $ 345 $ 71 $ 984 $ 67 $ 91 $ 2,413 Expense adjustments - favorable (unfavorable) 1 — — — — — 1 Policy acquisition costs and administrative expenses, adjusted D $ 856 $ 345 $ 71 $ 984 $ 67 $ 91 $ 2,414 Denominator Net premiums earned E $ 4,283 $ 1,334 $ 1,673 $ 2,741 $ 255 $ 10,286 Reinstatement premiums (collected) expensed on catastrophe losses — — — — (55) (55) Net premiums earned adjustments on PPD - unfavorable (favorable) 80 — — — — 80 Net premiums earned excluding adjustments F $ 4,363 $ 1,334 $ 1,673 $ 2,741 $ 200 $ 10,311 P&C Combined ratio Loss and loss expense ratio A/E 70.9 % 64.2 % 86.3 % 52.6 % 122.1 % 69.6 % Policy acquisition cost and administrative expense ratio C/E 20.0 % 25.9 % 4.3 % 35.9 % 26.3 % 23.5 % P&C Combined ratio 90.9 % 90.1 % 90.6 % 88.5 % 148.4 % 93.1 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 61.5 % 53.6 % 84.0 % 49.2 % 49.6 % 60.6 % Policy acquisition cost and administrative expense ratio, adjusted D/F 19.6 % 25.9 % 4.2 % 35.9 % 33.4 % 23.4 % CAY P&C Combined ratio ex CATs 81.1 % 79.5 % 88.2 % 85.1 % 83.0 % 84.0 % Combined ratio Combined ratio 92.9 % Add: impact of gains and losses on crop derivatives 0.2 % P&C Combined ratio 93.1 % Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above. 65 Table of Contents 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 Three Months Ended September 30, 2021 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses A $ 2,754 $ 846 $ 1,138 $ 1,487 $ 192 $ 43 $ 6,460 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (472) (397) (8) (188) (81) — (1,146) Reinstatement premiums collected (expensed) on catastrophe losses — — — — 12 — 12 Catastrophe losses, gross of related adjustments (472) (397) (8) (188) (93) — (1,158) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 157 182 (7) 28 4 (43) 321 Net premiums earned adjustments on PPD - unfavorable (favorable) 56 — — — — — 56 Expense adjustments - unfavorable (favorable) 3 — — — — — 3 PPD reinstatement premiums - unfavorable (favorable) — (2) — — 3 — 1 PPD, gross of related adjustments - favorable (unfavorable) 216 180 (7) 28 7 (43) 381 CAY loss and loss expense ex CATs B $ 2,498 $ 629 $ 1,123 $ 1,327 $ 106 $ — $ 5,683 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 810 $ 327 $ 65 $ 969 $ 64 $ 99 $ 2,334 Expense adjustments - favorable (unfavorable) (3) — — — — — (3) Policy acquisition costs and administrative expenses, adjusted D $ 807 $ 327 $ 65 $ 969 $ 64 $ 99 $ 2,331 Denominator Net premiums earned E $ 3,954 $ 1,244 $ 1,338 $ 2,664 $ 211 $ 9,411 Reinstatement premiums (collected) expensed on catastrophe losses — — — — (12) (12) Net premiums earned adjustments on PPD - unfavorable (favorable) 56 — — — — 56 PPD reinstatement premiums - unfavorable (favorable) — (2) — — 3 1 Net premiums earned excluding adjustments F $ 4,010 $ 1,242 $ 1,338 $ 2,664 $ 202 $ 9,456 P&C Combined ratio Loss and loss expense ratio A/E 69.7 % 68.0 % 85.0 % 55.8 % 91.2 % 68.6 % Policy acquisition cost and administrative expense ratio C/E 20.4 % 26.3 % 4.9 % 36.4 % 30.2 % 24.8 % P&C Combined ratio 90.1 % 94.3 % 89.9 % 92.2 % 121.4 % 93.4 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 62.3 % 50.7 % 84.0 % 49.8 % 52.0 % 60.1 % Policy acquisition cost and administrative expense ratio, adjusted D/F 20.1 % 26.3 % 4.9 % 36.4 % 31.5 % 24.7 % CAY P&C Combined ratio ex CATs 82.4 % 77.0 % 88.9 % 86.2 % 83.5 % 84.8 % Combined ratio Combined ratio 93.3 % Add: impact of gains and losses on crop derivatives 0.1 P&C Combined ratio 93.4 % Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above. 66 Table of Contents 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 Nine Months Ended September 30, 2022 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses A $ 7,979 $ 2,343 $ 1,830 $ 4,054 $ 565 $ 275 $ 17,046 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (803) (469) (52) (298) (160) — (1,782) Reinstatement premiums collected (expensed) on catastrophe losses — — — — 55 — 55 Catastrophe losses, gross of related adjustments (803) (469) (52) (298) (215) — (1,837) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 561 187 17 238 (22) (272) 709 Net premiums earned adjustments on PPD - unfavorable (favorable) 83 — 159 — — — 242 Expense adjustments - unfavorable (favorable) 4 — (1) — — — 3 PPD reinstatement premiums - unfavorable (favorable) — — — — (2) — (2) PPD, gross of related adjustments - favorable (unfavorable) 648 187 175 238 (24) (272) 952 CAY loss and loss expense ex CATs B $ 7,824 $ 2,061 $ 1,953 $ 3,994 $ 326 $ 3 $ 16,161 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 2,515 $ 1,005 $ 115 $ 2,907 $ 205 $ 264 $ 7,011 Expense adjustments - favorable (unfavorable) (4) — 1 — — — (3) Policy acquisition costs and administrative expenses, adjusted D $ 2,511 $ 1,005 $ 116 $ 2,907 $ 205 $ 264 $ 7,008 Denominator Net premiums earned E $ 12,645 $ 3,852 $ 2,217 $ 8,065 $ 712 $ 27,491 Reinstatement premiums (collected) expensed on catastrophe losses — — — — (55) (55) Net premiums earned adjustments on PPD - unfavorable (favorable) 83 — 159 — — 242 PPD reinstatement premiums - unfavorable (favorable) — — — — (2) (2) Net premiums earned excluding adjustments F $ 12,728 $ 3,852 $ 2,376 $ 8,065 $ 655 $ 27,676 P&C Combined ratio Loss and loss expense ratio A/E 63.1 % 60.8 % 82.5 % 50.3 % 79.4 % 62.0 % Policy acquisition cost and administrative expense ratio C/E 19.9 % 26.1 % 5.3 % 36.0 % 28.8 % 25.5 % P&C Combined ratio 83.0 % 86.9 % 87.8 % 86.3 % 108.2 % 87.5 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 61.5 % 53.5 % 82.2 % 49.5 % 49.8 % 58.4 % Policy acquisition cost and administrative expense ratio, adjusted D/F 19.7 % 26.1 % 4.9 % 36.1 % 31.2 % 25.3 % CAY P&C Combined ratio ex CATs 81.2 % 79.6 % 87.1 % 85.6 % 81.0 % 83.7 % Combined ratio Combined ratio 87.5 % Add: impact of gains and losses on crop derivatives — % P&C Combined ratio 87.5 % Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above. 67 Table of Contents 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 Nine Months Ended September 30, 2021 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses A $ 7,740 $ 2,341 $ 1,554 $ 3,936 $ 422 $ 141 $ 16,134 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (999) (698) (20) (278) (131) — (2,126) Reinstatement premiums collected (expensed) on catastrophe losses — (16) — — 18 — 2 Catastrophe losses, gross of related adjustments (999) (682) (20) (278) (149) — (2,128) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 440 266 (5) 209 11 (140) 781 Net premiums earned adjustments on PPD - unfavorable (favorable) 67 — (2) — — — 65 Expense adjustments - unfavorable (favorable) 6 — — — — — 6 PPD reinstatement premiums - unfavorable (favorable) 6 (1) — 7 4 — 16 PPD, gross of related adjustments - favorable (unfavorable) 519 265 (7) 216 15 (140) 868 CAY loss and loss expense ex CATs B $ 7,260 $ 1,924 $ 1,527 $ 3,874 $ 288 $ 1 $ 14,874 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 2,312 $ 946 $ 110 $ 2,881 $ 174 $ 258 $ 6,681 Expense adjustments - favorable (unfavorable) (6) — — — — — (6) Policy acquisition costs and administrative expenses, adjusted D $ 2,306 $ 946 $ 110 $ 2,881 $ 174 $ 258 $ 6,675 Denominator Net premiums earned E $ 11,431 $ 3,652 $ 1,858 $ 7,721 $ 583 $ 25,245 Reinstatement premiums (collected) expensed on catastrophe losses — 16 — — (18) (2) Net premiums earned adjustments on PPD - unfavorable (favorable) 67 — (2) — — 65 PPD reinstatement premiums - unfavorable (favorable) 6 (1) — 7 4 16 Net premiums earned excluding adjustments F $ 11,504 $ 3,667 $ 1,856 $ 7,728 $ 569 $ 25,324 P&C Combined ratio Loss and loss expense ratio A/E 67.7 % 64.1 % 83.6 % 51.0 % 72.4 % 63.9 % Policy acquisition cost and administrative expense ratio C/E 20.2 % 25.9 % 6.0 % 37.3 % 29.8 % 26.5 % P&C Combined ratio 87.9 % 90.0 % 89.6 % 88.3 % 102.2 % 90.4 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 63.1 % 52.5 % 82.3 % 50.1 % 50.5 % 58.7 % Policy acquisition cost and administrative expense ratio, adjusted D/F 20.1 % 25.8 % 5.9 % 37.3 % 30.5 % 26.4 % CAY P&C Combined ratio ex CATs 83.2 % 78.3 % 88.2 % 87.4 % 81.0 % 85.1 % Combined ratio Combined ratio 90.4 % Add: impact of gains and losses on crop derivatives — P&C Combined ratio 90.4 % Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above. 68 Table of Contents Amortization of Purchased Intangibles and Other Amortization Amortization expense related to purchased intangibles was $69 million and $211 million for the three and nine months ended September 30, 2022, respectively, compared with $71 million and $216 million for the prior year periods, respectively. The respective increases principally relate to purchased intangibles from the acquisition of Cigna's business in Asia. Refer to Note 7 to the Consolidated Financial Statements for more information on the expected pre-tax amortization expense (benefit) of purchased intangibles, at current foreign currency exchange rates, for the fourth quarter of 2022 and for the next five years. Reduction of deferred tax liability associated with Other intangible assets At September 30, 2022, the deferred tax liability associated with Other intangible assets (excluding the fair value adjustment on Unpaid losses and loss expense) was $1,206 million. The following table presents, as of September 30, 2022, the expected reduction to the deferred tax liability associated with the amortization of Other intangible assets, at current foreign exchange rates, for the fourth quarter of 2022 and for the next five years: For the Years Ending December 31 (in millions of U.S. dollars) Reduction to deferred tax liability associated with other intangibles Fourth quarter of 2022 $ 17 2023 61 2024 56 2025 53 2026 49 2027 46 Total $ 282 Amortization of the fair value adjustment on acquired invested assets and assumed long-term debt The following table presents, as of September 30, 2022, the expected amortization expense of the fair value adjustment on acquired invested assets related to the acquisition of Cigna's business in Asia and prior acquisitions, at current foreign currency exchange rates, and the expected amortization benefit from the fair value adjustment on assumed long-term debt related to the Chubb Corp acquisition for the fourth quarter of 2022 and for the next five years: Amortization (expense) benefit of the fair value adjustment on For the Years Ending December 31 (in millions of U.S. dollars) Acquired Cigna invested assets Other acquired invested assets Total invested assets (1) Assumed long-term debt (2) Fourth quarter of 2022 $ 6 $ (14) $ (8) $ 6 2023 35 (50) (15) 21 2024 32 (13) 19 21 2025 30 — 30 21 2026 28 — 28 21 2027 27 — 27 21 Total $ 158 $ (77) $ 81 $ 111 (1) Recorded as an increase (reduction) to Net investment income in the Consolidated statements of operations. (2) Recorded as a reduction to Interest expense in the Consolidated statements of operations. The estimate of amortization expense of the fair value adjustment on acquired invested assets could vary based on current market conditions, bond calls, overall duration of the acquired investment portfolio, and foreign exchange. 69 Table of Contents Net Investment Income Three Months Ended September 30 Nine Months Ended September 30 (in millions of U.S. dollars) 2022 2021 2022 2021 Fixed maturities (1) $ 932 $ 804 $ 2,584 $ 2,480 Short-term investments 25 9 49 26 Other interest income 14 3 21 8 Equity securities 21 40 93 117 Other investments 32 56 78 122 Gross investment income (1) 1,024 912 2,825 2,753 Investment expenses (45) (46) (136) (140) Net investment income (1) $ 979 $ 866 $ 2,689 $ 2,613 (1) Includes amortization expense related to fair value adjustment of acquired invested assets related to the Chubb Corp acquisition $ (6) $ (19) $ (36) $ (67) Net investment income is influenced by a number of factors including the amounts and timing of inward and outward cash flows, the level of interest rates, and changes in overall asset allocation. Net investment income increased 13.1 percent and 2.9 percent for the three and nine months ended September 30, 2022, respectively, primarily due to higher reinvestment rates on fixed maturities. For private equities where we own less than three percent, investment income is included within Net investment income in the table above. For private equities where we own more than three percent, investment income is included within Other income (expense) in the Consolidated statements of operations. Excluded from Net investment income is the mark-to-market movement for private equities, which is recorded within either Other income (expense) or Net realized gains (losses) based on our percentage of ownership. The total mark-to-market movement for private equities excluded from Net investment income was as follows: Three Months Ended September 30 Nine Months Ended September 30 (in millions of U.S. dollars) 2022 2021 2022 2021 Total mark-to-market gain (loss) on private equity, pre-tax $ (232) $ 713 $ (52) $ 1,887 Investments Our investment portfolio is invested primarily in publicly traded, investment grade, fixed income securities with an average credit quality of A/A as rated by the independent investment rating services Standard and Poor’s (S&P)/Moody’s Investors Service (Moody’s) at September 30, 2022. The portfolio is externally managed by independent, professional investment managers and is broadly diversified across geographies, sectors, and issuers. Other investments principally comprise direct investments, investment funds, and limited partnerships. We hold no collateralized debt obligations in our investment portfolio, and we provide no credit default protection. We have long-standing global credit limits for our entire portfolio across the organization. Exposures are aggregated, monitored, and actively managed by our Global Credit Committee, comprising senior executives, including our Chief Financial Officer, our Chief Risk Officer, our Chief Investment Officer, and our Treasurer. We also have well-established, strict contractual investment rules requiring managers to maintain highly diversified exposures to individual issuers and clos ely monitor investment manager compliance with portfolio guidelines. The average duration of our fixed income securities, including the effect of options and swaps, was 4.5 years and 4.1 years at September 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 $4.4 billion at September 30, 2022. The following table shows the fair value and cost/amortized cost, net of valuation allowance, of our invested assets: 70 Table of Contents September 30, 2022 December 31, 2021 (in millions of U.S. dollars) Fair Value Cost/ Amortized Cost, Net Fair Value Cost/ Amortized Cost, Net Fixed maturities available for sale $ 83,741 $ 93,169 $ 93,108 $ 90,479 Fixed maturities held to maturity 8,491 8,976 10,647 10,118 Short-term investments 4,534 4,536 3,146 3,147 Fixed income securities 96,766 106,681 106,901 103,744 Equity securities 844 844 4,782 4,782 Other investments 13,645 13,645 11,169 11,169 Total investments $ 111,255 $ 121,170 $ 122,852 $ 119,695 The fair value of our total investments decreased $11.6 billion during the nine months ended September 30, 2022 due to unrealized losses on fixed maturities, sales of equity securities , and sh are repurchases, partially offset by strong operating cash flows. 71 Table of Contents The following tables present the fair value of our fixed income securities at September 30, 2022 and December 31, 2021. The first table lists investments according to type and second according to S&P credit rating: September 30, 2022 December 31, 2021 (in millions of U.S. dollars, except for percentages) Fair Value % of Total Fair Value % of Total U.S. Treasury / Agency $ 3,785 4 % $ 3,458 3 % Corporate and asset-backed securities 37,965 39 % 41,264 39 % Mortgage-backed securities 17,673 18 % 22,292 21 % Municipal 7,670 8 % 9,650 9 % Non-U.S. 25,139 26 % 27,091 25 % Short-term investments 4,534 5 % 3,146 3 % Total $ 96,766 100 % $ 106,901 100 % AAA $ 14,715 15 % $ 15,364 14 % AA 30,778 32 % 35,179 33 % A 17,916 18 % 20,171 19 % BBB 16,067 17 % 17,362 16 % BB 8,621 9 % 9,084 8 % B 8,265 9 % 9,202 9 % Other 404 — % 539 1 % Total $ 96,766 100 % $ 106,901 100 % Corporate and asset-backed securities The following table presents our 10 largest global exposures to corporate bonds by fair value at September 30, 2022: (in millions of U.S. dollars) Fair Value Bank of America Corp $ 713 JP Morgan Chase & Co 590 Morgan Stanley 587 Wells Fargo & Co 531 Citigroup Inc 482 Goldman Sachs Group Inc 458 Verizon Communications Inc 418 Comcast Corp 353 HSBC Holdings Plc 330 AT&T Inc 328 Mortgage-backed securities The following table shows the fair value and amortized cost, net of valuation allowance, of our mortgage-backed securities: S&P Credit Rating Fair Value Amortized Cost, Net September 30, 2022 (in millions of U.S. dollars) AAA AA A BBB BB and below Total Total Agency residential mortgage-backed securities (RMBS) $ 8 $ 14,233 $ — $ — $ — $ 14,241 $ 16,227 Non-agency RMBS 483 42 57 38 5 625 712 Commercial mortgage-backed securities 2,439 215 141 9 3 2,807 3,033 Total mortgage-backed securities $ 2,930 $ 14,490 $ 198 $ 47 $ 8 $ 17,673 $ 19,972 72 Table of Contents Municipal As part of our overall investment strategy, we may invest in states, municipalities, and other political subdivisions fixed maturity securities (Municipal). We apply the same investment selection process described previously to our Municipal investments. The portfolio is highly diversified primarily in state general obligation bonds and essential service revenue bonds including education and utilities (water, power, and sewers). Non-U.S. Our exposure to the Euro results primarily from Chubb European Group SE which is headquartered in France and offers a broad range of coverages throughout the European Union, Central, and Eastern Europe. Chubb primarily invests in Euro denominated investments to support its local currency insurance obligations and required capital levels. Chubb’s local currency investment portfolios have strict contractual investment guidelines requiring managers to maintain a high quality and diversified portfolio to both sector and individual issuers. Investment portfolios are monitored daily to ensure investment manager compliance with portfolio guidelines. Our non-U.S. investment grade fixed income portfolios are currency-matched with the insurance liabilities of our non-U.S. operations. The average credit quality of our non-U.S. fixed income securities is A and 45 percent of our holdings are rated AAA or guaranteed by governments or quasi-government agencies. Within the context of these investment portfolios, our government and corporate bond holdings are highly diversified across industries and geographies. Issuer limits are based on credit rating (AA—two percent, A—one percent, BBB—0.5 percent of the total portfolio) and are monitored daily via an internal compliance system. We manage our indirect exposure using the same credit rating based investment approach. Accordingly, we do not believe our indirect exposure is material. The following table summarizes the fair value and amortized cost, net of valuation allowance, of our non-U.S. fixed income portfolio by country/sovereign for non-U.S. government securities at September 30, 2022: (in millions of U.S. dollars) Fair Value Amortized Cost, Net Republic of Korea $ 1,416 $ 1,504 Canada 864 925 Taiwan 804 834 Federative Republic of Brazil 581 598 Province of Ontario 535 576 United Mexican States 486 533 Kingdom of Thailand 415 446 Province of Quebec 377 401 Commonwealth of Australia 365 429 Socialist Republic of Vietnam 357 341 Other Non-U.S. Government Securities 4,532 5,093 Total $ 10,732 $ 11,680 73 Table of Contents The following table summarizes the fair value and amortized cost, net of valuation allowance, of our non-U.S. fixed income portfolio by country/sovereign for non-U.S. corporate securities at September 30, 2022: (in millions of U.S. dollars) Fair Value Amortized Cost, Net United Kingdom $ 2,029 $ 2,295 Canada 1,747 1,922 South Korea 1,106 1,151 France 1,060 1,179 United States (1) 1,022 1,184 Australia 848 948 Japan 707 773 Switzerland 496 571 Netherlands 474 530 Germany 443 510 Other Non-U.S. Corporate Securities 4,475 5,004 Total $ 14,407 $ 16,067 (1) The countries that are listed in the non-U.S. corporate fixed income portfolio above represent the ultimate parent company's country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations. Below-investment grade corporate fixed income portfolio Below-investment grade securities have different characteristics than investment grade corporate debt securities. Risk of loss from default by the borrower is greater with below-investment grade securities. Below-investment grade securities are generally unsecured and are often subordinated to other creditors of the issuer. Also, issuers of below-investment grade securities usually have higher levels of debt and are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than investment grade issuers. At September 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 1,763 issuers, with the greatest single exposure being $146 million. We manage high-yield bonds as a distinct and separate asset class from investment grade bonds. The allocation to high-yield bonds is explicitly set by internal management and is targeted to securities in the upper tier of credit quality (BB/B). Our minimum rating for initial purchase is BB/B. Sixteen external investment managers are responsible for high-yield security selection and portfolio construction. Our high-yield managers have a conservative approach to credit selection and very low historical default experience. Holdings are highly diversified across industries and generally subject to a 1.5 percent issuer limit as a percentage of high-yield allocation. We monitor position limits daily through an internal compliance system. Derivative and structured securities (e.g., credit default swaps and collateralized debt obligations) are not permitted in the high-yield portfolio. 74 Table of Contents Critical Accounting Estimates As of September 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. Unpaid losses and loss expenses As an insurance and reinsurance company, we are required by applicable laws and regulations and GAAP to establish loss and loss expense reserves for the estimated unpaid portion of the ultimate liability for losses and loss expenses under the terms of our policies and agreements with our insured and reinsured customers. With the exception of certain structured settlements, for which the timing and amount of future claim payments are reliably determinable, and certain reserves for unsettled claims, our loss reserves are not discounted for the time value of money. The following table presents a roll-forward of our unpaid losses and loss expenses: (in millions of U.S. dollars) Gross Losses Reinsurance Recoverable (1) Net Losses Balance at December 31, 2021 $ 72,943 $ 16,184 $ 56,759 Losses and loss expenses incurred 22,857 5,383 17,474 Losses and loss expenses paid (18,015) (3,694) (14,321) Other (including foreign exchange translation) (1,793) (493) (1,300) Balance at September 30, 2022 $ 75,992 $ 17,380 $ 58,612 (1) Net of valuation allowance for uncollectible reinsurance. The estimate of the liabilities includes provisions for claims that have been reported but are unpaid at the balance sheet date (case reserves) and for obligations on claims that have been incurred but not reported (IBNR) at the balance sheet date. IBNR may also include provisions to account for the possibility that reported claims may settle for amounts that differ from the established case reserves. Loss reserves also include an estimate of expenses associated with processing and settling unpaid claims (loss expenses). Refer to Note 6 to the Consolidated Financial Statements for a discussion on the changes in the loss reserves. Asbestos and Environmental (A&E) During the three months ended September 30, 2022, we increased environmental net loss reserves for Brandywine managed operations by $52 million. A&E reserves are included in Corporate. Refer to our 2021 Form 10-K for further information on our A&E exposures. Fair value measurements Accounting guidance defines fair value as the price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants and establishes a three-level valuation hierarchy based on the reliability of the inputs. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1 inputs) and the lowest priority to unobservable data (Level 3 inputs). Level 2 includes inputs, other than quoted prices within Level 1, that are observable for assets or liabilities either directly or indirectly. Refer to Note 4 to the Consolidated Financial Statements for information on our fair value measurements. 75 Table of Contents Catastrophe Management We actively monitor and manage our catastrophe risk accumulation around the world from natural perils, including setting risk limits based on probable maximum loss (PML) and purchasing catastrophe reinsurance, to ensure sufficient liquidity and capital to meet the expectations of regulators, rating agencies, and policyholders, and to provide shareholders with an appropriate risk-adjusted return. Chubb uses internal and external data together with sophisticated, analytical catastrophe loss and risk modeling techniques to ensure an appropriate understanding of risk, including diversification and correlation effects, across different product lines and territories. The table below presents our modeled pre-tax estimates of natural catastrophe PML, net of reinsurance, at September 30, 2022, and does not represent our expected catastrophe losses for any one year. Modeled Net Probable Maximum Loss (PML) Pre-tax Worldwide (1) U.S. Hurricane (2) California Earthquake (3) Annual Aggregate Annual Aggregate Single Occurrence (in millions of U.S. dollars, except for percentages) Chubb % of Total Shareholders’ Equity Chubb % of Total Shareholders’ Equity Chubb % of Total Shareholders’ Equity 1-in-10 $ 2,142 4.5 % $ 1,098 2.3 % $ 146 0.3 % 1-in-100 $ 4,521 9.5 % $ 2,869 6.0 % $ 1,320 2.8 % 1-in-250 $ 7,506 15.8 % $ 5,439 11.4 % $ 1,517 3.2 % (1) Worldwide aggregate is comprised of losses arising from tropical cyclones, convective storms, earthquakes, and U.S. wildfires and inland floods, and excludes "non-modeled" perils such as man-made and other catastrophe risks including pandemic. (2) U.S. hurricane losses include losses from wind and storm-surge and exclude rainfall. (3) California earthquakes include the fire-following sub-peril. The PML for worldwide and key U.S. peril regions are based on our in-force portfolio at July 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 $2,869 million (or 6.0 percent of our total shareholders’ equity at September 30, 2022). Effective December 31, 2021, our worldwide PMLs include losses from U.S. wildfire and U.S. inland flood. The above estimates of Chubb’s loss profile are inherently uncertain for many reasons, including the following: • While the use of third-party modeling packages to simulate potential catastrophe losses is prevalent within the insurance industry, the models are reliant upon significant meteorology, seismology, and engineering assumptions to estimate catastrophe losses. Modeled catastrophe events are not always a representation of actual events and ensuing additional loss potential; • There is no universal standard in the preparation of insured data for use in the models, the running of the modeling software, and interpretation of loss output. These loss estimates do not represent our potential maximum exposures and it is highly likely that our actual incurred losses would vary materially from the modeled estimates; • The potential effects of climate change add to modeling complexity; and • Changing climate conditions could impact our exposure to natural catastrophe risks. Published studies by leading government, academic, and professional organizations combined with extensive research by Chubb climate scientists reveal the potential for increases in the frequency and severity of key natural perils such as tropical cyclones, inland flood, and wildfire. To understand the potential impacts on the Chubb portfolio, we have conducted stress tests on our peak exposure zone, namely in the U.S., using parameters outlined by the Intergovernmental Panel on Climate Change (IPCC) Climate Change 2021 report. These parameters consider the impacts of climate change and the resulting climate peril impacts over a timescale relevant to our business. The tests are conducted by adjusting our baseline view of risk for the perils of hurricane, inland flood, and wildfire in the U.S. to reflect increases in frequency and severity across the modeled domains for each of these perils. Based on these tests against the Chubb portfolio we do not expect material impacts to our baseline PMLs from climate change through December 31, 2022. These tests reflect current exposures only and exclude potentially mitigating factors such as changes to building codes, public or private risk mitigation, regulation, and public policy. Refer to Item 7 in our 2021 Form 10-K for more information on man-made and other catastrophes. 76 Table of Contents Global Property Catastrophe Reinsurance Program Chubb’s core property catastrophe reinsurance program provides protection against natural catastrophes impacting its primary property operations (i.e., excluding our Global Reinsurance and Life Insurance segments). We regularly review our reinsurance protection and corresponding property catastrophe exposures. This may or may not lead to the purchase of additional reinsurance prior to a program’s renewal date. In addition, prior to each renewal date, we consider how much, if any, coverage we intend to buy and we may make material changes to the current structure in light of various factors, including modeled PML assessment at various return periods, reinsurance pricing, our risk tolerance and exposures, and various other structuring considerations. Chubb renewed its Global Property Catastrophe Reinsurance Program for our North American and International operations effective April 1, 2022, through March 31, 2023, with no material changes in coverage from the expiring program. The program consists of three layers in excess of losses retained by Chubb on a per occurrence basis. In addition, Chubb renewed its terrorism coverage (excluding nuclear, biological, chemical and radiation coverage, with an inclusion of coverage for biological and chemical coverage for personal lines) for the United States from April 1, 2022, through March 31, 2023, with the same limits and retention and percentage placed except that the majority of terrorism coverage is on an aggregate basis above our retentions without a reinstatement. Loss Location Layer of Loss Comments Notes United States (excluding Alaska and Hawaii) $0 million – $1.0 billion Losses retained by Chubb (a) United States (excluding Alaska and Hawaii) $1.0 billion – $1.15 billion All natural perils and terrorism (b) United States (excluding Alaska and Hawaii) $1.15 billion – $2.25 billion All natural perils and terrorism (c) United States (excluding Alaska and Hawaii) $2.25 billion – $3.5 billion All natural perils and terrorism (d) International (including Alaska and Hawaii) $0 million – $175 million Losses retained by Chubb (a) International (including Alaska and Hawaii) $175 million – $1.275 billion All natural perils and terrorism (c) Alaska, Hawaii, and Canada $1.275 billion – $2.525 billion All natural perils and terrorism (d) (a) Ultimate retention will depend upon the nature of the loss and the interplay between the underlying per risk programs and certain other catastrophe programs purchased by individual business units. These other catastrophe programs have the potential to reduce our effective retention below the stated levels. (b) These coverages are partially placed with Reinsurers. (c) These coverages are both part of the same Second layer within the Global Property Catastrophe Reinsurance Program and are fully placed with Reinsurers. (d) These coverages are both part of the same Third layer within the Global Property Catastrophe Reinsurance Program and are fully placed with Reinsurers. 77 Table of Contents Capital Resources Capital resources consist of funds deployed or available to be deployed to support our business operations. September 30 December 31 (in millions of U.S. dollars, except for ratios) 2022 2021 Short-term debt $ 1,475 $ 999 Long-term debt 14,044 15,169 Total financial debt 15,519 16,168 Trust preferred securities 308 308 Total shareholders’ equity 47,639 59,714 Total capitalization $ 63,466 $ 76,190 Ratio of financial debt to total capitalization 24.5 % 21.2 % Ratio of financial debt plus trust preferred securities to total capitalization 25.0 % 21.6 % The ratios of financial debt to total capitalization in the table above are higher at September 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 nine months ended September 30, 2022, we repurchased $2.8 billion of Common Shares in a series of open market transactions under the Board of Directors (Board) share repurchase authorization. At September 30, 2022, there were 31,356,130 Common Shares in treasury with a weighted-average cost of $158.76 per share, and $1.8 billion in share repurchase authorization remained through June 30, 2023. 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. This allows us capital market access for refinancing as well as for unforeseen or opportunistic capital needs. Dividends We have paid dividends each quarter since we became a public company in 1993. Under Swiss law, dividends must be stated in Swiss francs though dividend payments are made by Chubb in U.S. dollars. Refer to Note 9 to the Consolidated Financial Statements for a discussion of our dividend methodology. At our May 2022 annual general meeting, our shareholders approved an annual dividend for the following year of up to $3.32 per share, or CHF 3.22 per share, calculated using the USD/CHF exchange rate as published in the Wall Street Journal on May 19, 2022, expected to be paid in four quarterly installments of $0.83 per share after the general meeting by way of a distribution from capital contribution reserves, transferred to free reserves for payment. 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 annual dividend approved in May 2022 represented a $0.12 per share increase ($0.03 per quarter) over the prior year dividend. The following table represents dividends paid per Common Share to shareholders of record on each of the following dates: Shareholders of record as of: Dividends paid as of: December 17, 2021 January 7, 2022 $0.80 (CHF 0.74) March 18, 2022 April 8, 2022 $0.80 (CHF 0.74) June 17, 2022 July 8, 2022 $0.83 (CHF 0.80) September 16, 2022 October 7, 2022 $0.83 (CHF 0.78) 78 Table of Contents Liquidity We anticipate that positive cash flows from operations (underwriting activities and investment income) should be sufficient to cover cash outflows under most loss scenarios for the near term. In addition to cash from operations, routine sales of investments, and financing arrangements, we have agreements with a third-party bank provider which implemented two international multi-currency notional cash pooling programs to enhance cash management efficiency during periods of short-term timing mismatches between expected inflows and outflows of cash by currency. The programs allow us to optimize investment income by avoiding portfolio disruption. 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 September 30, 2022, our usage under these facilities was $1.4 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 September 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. If we cannot obtain adequate capital or sources of credit on favorable terms, on a timely basis, or at all, our business, operating results, and financial condition could be adversely affected. To date, we have not experienced difficulty accessing our credit facilities. In October 2022, Chubb entered into a new group syndicated credit facility through 2027 with capacity of $3.0 billion. This facility consolidated our three existing syndicated facilities with capacity of $2.7 billion. 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 nine months ended September 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 $6.8 billion and $3.1 billion from its Bermuda subsidiaries during the nine months ended September 30, 2022 and 2021, respectively. Chubb Limited received cash dividends of $32 million and $21 million and non-cash dividends of $348 million and $536 million from a Swiss subsidiary during the nine months ended September 30, 2022 and 2021, respectively. The U.S. insurance subsidiaries of Chubb INA Holdings Inc. (Chubb INA) may pay dividends, without prior regulatory approval, subject to restrictions set out in state law of the subsidiary’s domicile (or, if applicable, commercial domicile). Chubb INA’s international subsidiaries are also subject to insurance laws and regulations particular to the countries in which the subsidiaries operate. These laws and regulations sometimes include restrictions that limit the amount of dividends payable without prior approval of regulatory insurance authorities. Chubb Limited received no dividends from Chubb INA during the nine months ended September 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 $1.8 billion and $910 million from its subsidiaries during the nine months ended September 30, 2022 and 2021, respectively. Cash Flows 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 nine months ended September 30, 2022 and 2021. Operating cash flows were $8.6 billion in the nine months ended September 30, 2022, compared to $8.5 billion in the prior year period. Cash used for investing was $5.2 billion in the nine months ended September 30, 2022, compared to $3.8 billion in the prior year period. Cash used for investing in the current year was primarily due to cash paid for the purchase of Cigna's business in Asia of $5.0 billion, which is net of cash acquired of $366 million. There were net sales, principally in equities securities and fixed maturities of $1.9 billion, in part to fund the acquisition of Cigna's business in Asia, compared to net purchases of $2.3 billion in the prior year. In addition, the current year included higher private equity contributions, net of distributions received, of $1.5 billion compared to $981 million in the prior year. 79 Table of Contents Cash used for financing was $2.7 billion in the nine months ended September 30, 2022, compared to $4.8 billion in the prior year period. This decrease of $2.1 billion reflects lower Common Shares repurchased of $1.2 billion and proceeds of $1.0 billion from repurchase agreements, which were used to finance a portion of the acquisition of Cigna's business in Asia. At September 30, 2022, there were $2.4 billion in repurchase agreements outstanding with various maturities over the next four 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. 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. Information provided in connection with outstanding debt of subsidiaries Chubb INA Holdings Inc. (Subsidiary Issuer) is an indirect 100 percent-owned and consolidated subsidiary of Chubb Limited (Parent Guarantor). The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. The following table presents the condensed balance sheets of Chubb Limited and Chubb INA Holdings Inc., after elimination of investment in any non-guarantor subsidiary: Chubb Limited (Parent Guarantor) Chubb INA Holdings Inc. (Subsidiary Issuer) September 30 December 31 September 30 December 31 (in millions of U.S. dollars) 2022 2021 2022 2021 Assets Investments $ 1 $ — $ 137 $ 149 Cash 32 1 2 580 Due from parent guarantor/subsidiary issuer 2 2 897 348 Due from subsidiaries that are not issuers or guarantors 1,771 1,805 691 526 Other assets 10 16 2,317 1,667 Total assets $ 1,816 $ 1,824 $ 4,044 $ 3,270 Liabilities Due to parent guarantor/subsidiary issuer $ 897 $ 348 $ 2 $ 2 Due to subsidiaries that are not issuers or guarantors 230 241 1,726 1,647 Affiliated notional cash pooling programs 345 8 593 — Short-term debt — — 1,475 999 Long-term debt — — 14,044 15,169 Trust preferred securities — — 308 308 Other liabilities 387 363 2,101 1,803 Total liabilities 1,859 960 20,249 19,928 Total shareholders’ equity (43) 864 (16,205) (16,658) Total liabilities and shareholders’ equity $ 1,816 $ 1,824 $ 4,044 $ 3,270 80 Table of Contents 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: Nine Months Ended September 30, 2022 Chubb Limited (Parent Guarantor) Chubb INA Holdings Inc. (Subsidiary Issuer) (in millions of U.S. dollars) Net investment income (loss) $ 3 $ (3) Net realized gains (losses) 4 321 Administrative expenses 80 (72) Interest (income) expense (41) 405 Other (income) expense (34) 32 Cigna integration expenses 10 — Income tax expense (benefit) 2 (23) Net income (loss) $ (10) $ (24) Comprehensive income (loss) $ (10) $ (65)