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 six months ended June 30, 2023. 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, 2022 (2022 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 56 Overview 57 Consolidated Operating Results 57 Segment Operating Results 63 Net Realized and Unrealized Gains (Losses) 73 Effective Income Tax Rate 75 Non-GAAP Reconciliation 75 Amortization of Purchased Intangibles and Other Amortization 81 Net Investment Income 82 Interest Expense 82 Investments 82 Critical Accounting Estimates 87 Unpaid Losses and Loss Expenses 87 Future policy benefits 87 Asbestos and Environmental (A&E) 87 Fair Value Measurements 87 Catastrophe Management 88 Global Property Catastrophe Reinsurance Program 89 Capital Resources 90 Liquidity 91 Information Provided In Connection With Outstanding Debt of Subsidiaries 92 55 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; • 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; • severity of pandemics 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 a pandemic; • developments in global financial markets, including changes in interest rates, stock markets, and other financial markets; increased government involvement or intervention in the financial services industry; the cost and availability of financing, and foreign currency exchange rate fluctuations; changing rates of inflation; and other general economic and business conditions, including the depth and duration of potential recession; • the availability of borrowings and letters of credit under our credit facilities; the adequacy of collateral supporting funded high deductible programs; the amount of dividends received from subsidiaries; • changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available for sale fixed maturity investments before their anticipated recovery; • actions that rating agencies may take from time to time, such as financial strength or credit ratings downgrades or placing these ratings on credit watch negative or the equivalent; • the effects of public company bankruptcies and accounting restatements, as well as disclosures by and investigations of public companies relating to possible accounting irregularities, and other corporate governance issues; • acquisitions made performing differently than expected, our failure to realize anticipated expense-related efficiencies or growth from acquisitions, the impact of acquisitions on our pre-existing organization, and risks and uncertainties relating to our planned purchases of additional interests in Huatai Insurance Group Co., Ltd. (Huatai Group), including our ability to receive Chinese insurance regulatory approval and complete the purchases; • risks associated with being a Swiss corporation, including reduced flexibility with respect to certain aspects of capital management and the potential for additional regulatory burdens; share repurchase plans and share cancellations; • loss of the services of any of our executive officers without suitable replacements being recruited in a reasonable time frame; 56 Table of Contents • 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 June 30, 2023, we had total assets of $205 billion and shareholders’ equity of $53 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 2022 Form 10-K. Consolidated Operating Results – Three and Six Months Ended June 30, 2023 and 2022 Three Months Ended Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Net premiums written $ 11,951 $ 10,293 16.1 % $ 22,661 $ 19,482 16.3 % Net premiums written - constant dollars (1) 16.8 % 17.5 % Net premiums earned 10,999 9,549 15.2 % 21,141 18,286 15.6 % Net investment income 1,145 888 28.9 % 2,252 1,710 31.7 % Net realized gains (losses) (304) (503) (39.5) % (381) (480) (20.5) % Market risk benefits gains (losses) (7) (33) (79.9) % (122) 16 NM Total revenues 11,833 9,901 19.5 % 22,890 19,532 17.2 % Losses and loss expenses 5,683 5,206 9.2 % 10,831 9,770 10.9 % Policy benefits 830 361 130.2 % 1,627 734 121.6 % Policy acquisition costs 2,016 1,726 16.8 % 3,964 3,445 15.0 % Administrative expenses 969 818 18.5 % 1,899 1,596 19.0 % Interest expense 165 134 22.8 % 325 266 22.2 % Other (income) expense (100) 101 NM (396) (211) 88.1 % Amortization of purchased intangibles 70 71 (2.0) % 142 142 — Cigna integration expenses 15 3 NM 37 3 NM Total expenses 9,648 8,420 14.6 % 18,429 15,745 17.0 % Income before income tax 2,185 1,481 47.6 % 4,461 3,787 17.8 % Income tax expense 392 291 34.8 % 776 644 20.4 % Net income $ 1,793 $ 1,190 50.7 % $ 3,685 $ 3,143 17.2 % 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. 57 Table of Contents Financial Highlights for the Three Months Ended June 30, 2023 • Net income was $1.8 billion compared with $1.2 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 record net investment income. The acquisition of Cigna's Asian business in 2022 added to net income. In addition, there were after-tax mark-to-market gains on public and private equities of $52 million in the current quarter compared to losses of $489 million in the prior year. • Consolidated net premiums written were $12.0 billion, up 16.1 percent, or 16.8 percent in constant dollars. P&C net premiums written were up 9.8 percent, or 10.4 percent in constant dollars, with commercial and consumer lines up 10.4 percent and 10.5 percent, respectively. Life net premiums written up were up 126.1 percent, or 127.6 percent in constant dollars, driven substantially by the acquisition of Cigna's Asian business. • Consolidated net premiums earned were $11.0 billion, up 15.2 percent, or 15.8 percent in constant dollars . P&C net premiums earned increased 8.1 percent, or 8.7 percent in constant dollars, with commercial and consumer lines up 9.1 percent and 7.7 percent, respectively. • Total pre-tax and after-tax catastrophe losses were $400 million (4.1 percentage points of the P&C combined ratio) and $319 million, respectively, compared with $291 million (3.2 percentage points of the P&C combined ratio) and $241 million, respectively, in the prior year period. Catastrophe losses in the current quarter comprise 25 individual events, primarily in North America. • Total pre-tax and after-tax favorable prior period development were $200 million (2.0 percentage points of the P&C combined ratio) and $155 million, respectively. This compares with $247 million (2.7 percentage points of the P&C combined ratio) and $205 million, respectively, in the prior year period. • The P&C combined ratio was 85.4 percent compared with 84.0 percent in the prior year period. The current year P&C combined ratio increased primarily due to higher catastrophe losses and lower favorable prior period development. The P&C current accident year (CAY) combined ratio excluding catastrophe losses was 83.3 percent compared with 83.5 percent in the prior year period. • Net investment income was a record $1.1 billion compared with $888 million in the prior year period, primarily reflecting higher reinvestment rates. • Operating cash flow was $2.5 billion compared with $2.7 billion in the prior year period. • Shareholders' equity remained essentially flat in the quarter, as net income of $1.8 billion and cumulative translation gains of $216 million were partially offset by net unrealized losses on investments of $1.2 billion from higher interest rates. In addition, shareholders' equity reflects total capital returned to shareholders in the quarter of $1.1 billion, including share repurchases of $724 million, at an average purchase price of $197.04 per share, and dividends of $354 million. We previously announced that our Board of Directors approved a new share repurchase program of up to $5 billion with no expiration date, effective July 1, 2023. • Effective January 1, 2023, we adopted the Long-Duration Targeted Improvements (LDTI) U.S. GAAP guidance, which principally impacted the Life Insurance segment. Financial data for the prior reporting periods in this report are adjusted, as applicable, and are presented in accordance with the new guidance. The impact to 2022 results was immaterial. • On July 1, 2023 we closed on an additional 5.4% ownership interests in Huatai Group, a Chinese financial services holding company, that brings our total aggregate ownership to approximately 69.6%. We will apply consolidation accounting to our Huatai Group investment effective in the third quarter of 2023. Refer to Note 2 to the Consolidated Financial Statements for additional information. 58 Table of Contents Net Premiums Written Three Months Ended June 30 % Change Six Months Ended June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 C$ Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 C$ YTD-23 vs. YTD-22 Commercial casualty $ 2,024 $ 1,773 14.1 % 15.2 % $ 3,927 $ 3,610 8.8 % 10.2 % Workers' compensation 537 546 (1.6) % (1.6) % 1,155 1,149 0.5 % 0.5 % Financial lines 1,244 1,275 (2.3) % (1.5) % 2,400 2,457 (2.3) % (1.0) % Surety 174 172 1.3 % 1.1 % 334 325 2.8 % 2.6 % Commercial multiple peril (1) 391 341 14.3 % 14.3 % 731 631 15.8 % 15.8 % Property and other short-tail lines 2,346 1,970 19.1 % 20.4 % 4,371 3,747 16.7 % 18.5 % Total Commercial P&C lines 6,716 6,077 10.5 % 11.4 % 12,918 11,919 8.4 % 9.6 % Agriculture 767 738 4.0 % 4.0 % 1,060 800 32.5 % 32.5 % Personal automobile 460 423 8.8 % 4.9 % 887 835 6.2 % 2.9 % Personal homeowners 1,174 1,057 11.1 % 11.7 % 2,076 1,887 10.0 % 10.7 % Personal other 485 460 5.2 % 6.6 % 992 955 3.8 % 6.6 % Total Personal lines 2,119 1,940 9.2 % 9.0 % 3,955 3,677 7.6 % 7.8 % Global A&H - P&C 786 714 10.1 % 12.1 % 1,595 1,433 11.3 % 14.2 % Reinsurance lines 293 262 11.6 % 12.4 % 570 515 10.6 % 11.4 % Total Property and Casualty lines 10,681 9,731 9.8 % 10.4 % 20,098 18,344 9.6 % 10.7 % Global A&H - Life 811 244 233.3 % 237.3 % 1,620 500 224.1 % 227.9 % Life 459 318 44.1 % 44.4 % 943 638 47.8 % 49.8 % Life Insurance 1,270 562 126.1 % 127.6 % 2,563 1,138 125.3 % 128.1 % Total consolidated $ 11,951 $ 10,293 16.1 % 16.8 % $ 22,661 $ 19,482 16.3 % 17.5 % (1) Commercial multiple peril represents retail package business (property and general liability). The increase in consolidated net premiums written for the three and six months ended June 30, 2023, reflects growth across most product lines driven by strong premium retention, including rate and exposure increases, and strong new business. In addition, growth for the three and six months ended June 30, 2023 includes the results of Cigna's business acquired during the third quarter of 2022. • Commercial casualty grew in all regions globally, principally in North America and Europe, driven by strong premium retention, including both rate and exposure increases, and strong new business. • Workers' compensation decreased in the quarter from lower new business in North America. • Financial lines decreased, reflecting lower renewal business in North America. • Commercial multiple peril increased due to strong premium retention, including both rate and exposure increases, and strong new business in North America. • Property and other short-tail lines grew globally due to strong premium retention, including both rate and exposure increases, and strong new business. • Agriculture increased due to underlying growth in crop insurance, reflecting higher commodity prices, principally from our fall-seeded crops, and strong new business in Chubb Agribusiness. In addition, the prior year included a return of premium to the U.S. government of $161 million. • Personal lines grew principally in North America and Europe, with growth strongest in homeowners. • Global A&H – P&C increased due to growth in Asia, primarily due to the acquisition of Cigna’s business in 2022, and higher new business and increased consumer activity, including higher travel volume, in Europe, Latin America, and Japan. • Reinsurance lines increased reflecting new business and rate increases in property, partially offset by lower catastrophe reinstatement premiums. 59 Table of Contents • Global A&H – Life increased due to the acquisition of Cigna’s business in Asia. Growth in our North American Combined Insurance supplemental A&H business was more than offset by the non-renewal of a large program. • Life increased primarily due to the acquisition of Cigna's business in Asia. In addition, there was growth in Latin America and Asia, principally in Hong Kong. For additional information on net premiums written, refer to the segment results discussions. Net Premiums Earned Net premiums earned for short-duration contracts, typically P&C contracts, generally reflect the portion of net premiums written that was recorded as revenues for the period as the exposure periods expire. Net premiums earned for long-duration contracts, typically traditional life contracts, generally are recognized as earned when due from policyholders. For the three months ended June 30, 2023, net premiums earned increased $1.5 billion, up 15.2 percent, or 15.8 percent in constant dollars. P&C net premiums earned increased 8.1 percent, or 8.7 percent in constant dollars, comprising growth in commercial and consumer lines of 9.1 percent and 7.7 percent, respectively. For the six months ended June 30, 2023, net premiums earned increased $2.9 billion, up 15.6 percent, or 16.7 percent in constant dollars. P&C net premiums earned increased 8.2 percent, or 9.2 percent in constant dollars, comprising growth in commercial and consumer lines of 9.7 percent and 7.8 percent, respectively. 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. 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. PPD 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 Six Months Ended June 30 June 30 (in millions of U.S. dollars) 2023 2022 2023 2022 Catastrophe losses $ 400 $ 291 $ 858 $ 624 Favorable prior period development $ 200 $ 247 $ 396 $ 487 Catastrophe losses through June 30, 2023 and 2022, were primarily from the following events: • 2023: Severe weather-related events in the U.S. and internationally; and New Zealand storms. • 2022: Severe weather-related events in the U.S. and internationally, Australia storms, and Colorado wildfires. Pre-tax net favorable PPD for the three months ended June 30, 2023, was $200 million, including adverse development of $49 million for molestation claims. Pre-tax net favorable PPD for the six months ended June 30, 2023, was $396 million, including adverse development of $49 million for molestation claims. Excluding the adverse development, we had net favorable development of $445 million with 23 percent in long-tail lines, principally from accident years 2011 through 2019, and 77 percent in short-tail lines, primarily in A&H and surety lines. Pre-tax net favorable PPD for the three months ended June 30, 2022, was $247 million, including adverse development of $155 million for molestation claims, predominantly reviver statute-related. Excluding the adverse development, we had favorable development of $402 million, with 59 percent in long-tail lines, principally from accident years 2017 and prior, and 41 percent in short-tail lines, primarily in A&H, specialty, and automobile lines. Pre-tax net favorable PPD for the six months ended June 30, 2022, was $487 million, including adverse development of $155 million for molestation claims described above, predominantly reviver statute-related. This molestation adverse development included no change to the previously established reserve for the Boy Scouts of America settlement. Excluding the adverse 60 Table of Contents development, we had favorable development of $642 million with 39 percent in long-tail lines, principally from accident years 2017 and prior, and 61 percent in short-tail lines, primarily in A&H, property, and specialty lines. Refer to the prior period development discussion in Note 8 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 Six Months Ended June 30 June 30 2023 2022 2023 2022 Loss and loss expense ratio CAY loss ratio excluding catastrophe losses 57.4 % 57.8 % 56.7 % 57.1 % Catastrophe losses 4.1 % 3.2 % 4.6 % 3.6 % Prior period development (2.2) % (2.7) % (2.2) % (3.3) % Loss and loss expense ratio 59.3 % 58.3 % 59.1 % 57.4 % Policy acquisition cost ratio 17.9 % 17.6 % 18.3 % 18.5 % Administrative expense ratio 8.2 % 8.1 % 8.4 % 8.3 % P&C Combined ratio 85.4 % 84.0 % 85.8 % 84.2 % The loss and loss expense ratio increased for the three and six months ended June 30, 2023, reflecting higher catastrophe losses and lower favorable prior period development. The CAY loss ratio excluding catastrophe losses decreased for the three and six months ended June 30, 2023, primarily from a higher percentage of net premiums earned from lines with a lower loss ratio. The policy acquisition cost ratio increased for the three months ended June 30, 2023, primarily due to lower ceded commissions and the absence of earned premium adjustments recorded in prior year that have a lower expense ratio. The policy acquisition cost ratio decreased for the six months ended June 30, 2023, due to the favorable impact of higher net premiums earned, partially offset by lower ceded commissions. The administrative expense ratio remained essentially flat for the three and six months ended June 30, 2023, as higher pension expenses, which will continue through 2023, is mostly offset by the favorable impact of higher net premiums earned. The increase in pension expense reflects the adverse impact of market conditions in 2022. 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. In addition, Policy benefits for the three and six months ended June 30, 2023 includes the results of Cigna's business acquired during the third quarter of 2022. Refer to the Life Insurance segment operating results section for further discussion. For the three months ended June 30, 2023 and 2022, Policy benefits were $830 million and $361 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 $(12) million and $(18) 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 $842 million and $379 million for the three months ended June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and 2022, Policy benefits were $1,627 million and $734 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 $(37) million and $(49) million, respectively. The offsetting movements of these liabilities are recorded in Other (income) expense on the Consolidated statements of operations. Excluding the separate account gains and losses, Policy benefits were $1,664 million and $783 million for the six months ended June 30, 2023 and 2022, respectively. 61 Table of Contents 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. 62 Table of Contents Segment Operating Results – Three and Six Months Ended June 30, 2023 and 2022 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 2022 Form 10-K. North America Commercial P&C Insurance The North America Commercial P&C Insurance segment comprises operations that provide P&C insurance and services to large, middle market, and small commercial businesses in the U.S., Canada, and Bermuda. This segment includes our North America Major Accounts and Specialty Insurance division (large corporate accounts and wholesale business), and the North America Commercial Insurance division (principally middle market and small commercial accounts). Three Months Ended Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Net premiums written $ 5,155 $ 4,665 10.5 % $ 9,443 $ 8,704 8.5 % Net premiums earned 4,606 4,248 8.4 % 8,975 8,362 7.3 % Losses and loss expenses 2,871 2,446 17.4 % 5,600 4,943 13.3 % Policy acquisition costs 614 545 12.6 % 1,227 1,118 9.7 % Administrative expenses 316 277 13.8 % 611 542 12.7 % Underwriting income 805 980 (17.9) % 1,537 1,759 (12.6) % Net investment income 726 522 39.1 % 1,424 1,011 40.8 % Other (income) expense 5 — NM 12 6 88.2 % Segment income $ 1,526 $ 1,502 1.6 % $ 2,949 $ 2,764 6.7 % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 60.7 % 61.4 % (0.7) pts 60.6 % 61.5 % (0.9) pts Catastrophe losses 5.0 % 2.9 % 2.1 pts 4.4 % 2.4 % 2.0 pts Prior period development (3.4) % (6.7) % 3.3 pts (2.6) % (4.8) % 2.2 pts Loss and loss expense ratio 62.3 % 57.6 % 4.7 pts 62.4 % 59.1 % 3.3 pts Policy acquisition cost ratio 13.3 % 12.8 % 0.5 pts 13.7 % 13.4 % 0.3 pts Administrative expense ratio 6.9 % 6.5 % 0.4 pts 6.8 % 6.5 % 0.3 pts Combined ratio 82.5 % 76.9 % 5.6 pts 82.9 % 79.0 % 3.9 pts NM - Not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Six Months Ended June 30 June 30 (in millions of U.S. dollars) 2023 2022 2023 2022 Catastrophe losses $ 231 $ 124 $ 393 $ 205 Favorable prior period development $ 146 $ 287 $ 218 $ 395 63 Table of Contents Catastrophe losses through June 30, 2023 and 2022, were primarily from the following events: • 2023: U.S. flooding, hail, tornadoes, wind events, and winter storm losses. • 2022: Severe weather-related events and winter storm losses in the U.S. Refer to Note 8 in the Consolidated Financial Statements for detail on prior period development. Premiums Net premiums written increased $490 million, or 10.5 percent, and $739 million, or 8.5 percent for the three and six months ended June 30, 2023, respectively, reflecting strong premium retention, including both rate and exposure increases, and strong new business. The increase in premiums was across most lines of business, most notably in property, but also in casualty excluding workers' compensation and commercial multiple peril lines. This growth was partially offset by a decline in financial lines due to lower renewal business. Net premiums earned increased $358 million, or 8.4 percent, and $613 million, or 7.3 percent for the three and six months ended June 30, 2023, respectively, reflecting the growth in net premiums written described above. Combined Ratio The loss and loss expense ratio increased for the three and six months ended June 30, 2023, primarily from higher catastrophe losses and lower favorable prior period development. Refer to Note 8 in the Consolidated Financial Statements for detail on prior period development. The CAY loss ratio excluding catastrophe losses decreased for the three and six months ended June 30, 2023, primarily from a higher percentage of net premiums earned from property lines that have a lower loss ratio. The policy acquisition cost ratio increased for the three and six months ended June 30, 2023, primarily due to lower ceded commissions. The administrative expense ratio increased for the three and six months ended June 30, 2023, primarily from higher pension expenses which will continue through 2023, partially offset by the favorable impact of higher net premiums earned. The increase in pension expense reflects the adverse impact of market conditions in 2022. 64 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 Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Net premiums written $ 1,581 $ 1,426 10.8 % $ 2,877 $ 2,606 10.4 % Net premiums earned 1,357 1,271 6.7 % 2,677 2,518 6.3 % Losses and loss expenses 846 773 9.4 % 1,734 1,486 16.7 % Policy acquisition costs 277 258 7.1 % 549 518 6.1 % Administrative expenses 84 73 14.0 % 163 142 14.1 % Underwriting income 150 167 (9.8) % 231 372 (37.9) % Net investment income 86 64 33.3 % 168 123 36.1 % Other (income) expense (1) 1 NM — 2 NM Amortization of purchased intangibles 3 3 — 5 5 — Segment income $ 234 $ 227 2.9 % $ 394 $ 488 (19.4) % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 54.0 % 53.6 % 0.4 pts 53.9 % 53.4 % 0.5 pts Catastrophe losses 10.9 % 7.4 % 3.5 pts 11.4 % 7.7 % 3.7 pts Prior period development (2.5) % (0.2) % (2.3) pts (0.5) % (2.1) % 1.6 pts Loss and loss expense ratio 62.4 % 60.8 % 1.6 pts 64.8 % 59.0 % 5.8 pts Policy acquisition cost ratio 20.4 % 20.3 % 0.1 pts 20.5 % 20.5 % — pts Administrative expense ratio 6.1 % 5.8 % 0.3 pts 6.1 % 5.7 % 0.4 pts Combined ratio 88.9 % 86.9 % 2.0 pts 91.4 % 85.2 % 6.2 pts NM - Not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Six Months Ended June 30 June 30 (in millions of U.S. dollars) 2023 2022 2023 2022 Catastrophe losses $ 147 $ 95 $ 306 $ 195 Favorable prior period development $ 33 $ 3 $ 16 $ 54 Catastrophe losses through June 30, 2023 and 2022, were primarily from the following events: • 2023: U.S. flooding, hail, tornadoes, wind events, and winter storm losses. • 2022: Severe weather-related events in the U.S. and Colorado wildfires. Refer to Note 8 in the Consolidated Financial Statements for detail on prior period development. Premiums Net premiums written increased $155 million, or 10.8 percent, and $271 million, or 10.4 percent for the three and six months ended June 30, 2023, respectively, primarily driven by record new business and strong renewal retention, from both rate and exposure increases, across all lines, principally in homeowners. Net premiums earned increased $86 million, or 6.7 percent, and $159 million, or 6.3 percent for the three and six months ended June 30, 2023, respectively, reflecting the growth in net premiums written described above. 65 Table of Contents Combined Ratio The loss and loss expense ratio increased for the three months ended June 30, 2023, primarily reflecting higher catastrophe losses, partially offset by higher favorable prior period development. The loss and loss expense ratio increased for the six months ended June 30, 2023, primarily reflecting higher catastrophe losses in the current year, and a reserve release in the prior year due to lower than expected paid and reported loss activity. The CAY loss ratio excluding catastrophe losses increased for the three and six months ended June 30, 2023, primarily reflecting higher auto and excess liability losses, partially offset by homeowners earned rate and exposure exceeding loss cost trends. The administrative expense ratio increased for the three and six months ended June 30, 2023, primarily from higher pension expenses which will continue through 2023, partially offset by the favorable impact of higher net premiums earned. The increase in pension expense reflects the adverse impact of market conditions in 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 Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Net premiums written $ 767 $ 738 4.0 % $ 1,060 $ 800 32.5 % Net premiums earned 635 573 11.0 % 794 544 46.0 % Losses and loss expenses 507 478 6.2 % 647 386 67.9 % Policy acquisition costs 37 31 20.1 % 52 43 21.3 % Administrative expenses 3 2 65.7 % 6 1 NM Underwriting income 88 62 41.1 % 89 114 (22.3) % Net investment income 14 7 90.1 % 31 14 119.9 % Other (income) expense (1) — NM — — — Amortization of purchased intangibles 7 6 2.4 % 13 13 — Segment income $ 96 $ 63 52.2 % $ 107 $ 115 (6.9) % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 80.9 % 79.6 % 1.3 pts 79.4 % 77.9 % 1.5 pts Catastrophe losses (0.9) % 3.7 % (4.6) pts 2.4 % 4.0 % (1.6) pts Prior period development (0.3) % — (0.3) pts (0.3) % (11.0) % 10.7 pts Loss and loss expense ratio 79.7 % 83.3 % (3.6) pts 81.5 % 70.9 % 10.6 pts Policy acquisition cost ratio 5.9 % 5.4 % 0.5 pts 6.6 % 8.0 % (1.4) pts Administrative expense ratio 0.6 % 0.4 % 0.2 pts 0.7 % 0.1 % 0.6 pts Combined ratio 86.2 % 89.1 % (2.9) pts 88.8 % 79.0 % 9.8 pts NM - Not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Six Months Ended June 30 June 30 (in millions of U.S. dollars) 2023 2022 2023 2022 (Favorable) unfavorable catastrophe losses $ (5) $ 21 $ 19 $ 21 Favorable prior period development $ 3 $ — $ 3 $ 26 66 Table of Contents Catastrophe activity for the three months ended June 30, 2023, relates to development from the first quarter of 2023. Catastrophe losses through June 30, 2023 and 2022, were primarily from the following events: • 2023: U.S. flooding, hail, tornadoes, and wind events. • 2022: Severe weather-related events in Chubb Agribusiness and winter storm losses in the U.S. Refer to Note 8 in the Consolidated Financial Statements for detail on prior period development. Premiums Net premiums written increased $29 million, or 4.0 percent, and $260 million, or 32.5 percent for the three and six months ended June 30, 2023, respectively, reflecting growth in MPCI due to higher commodity prices, principally from our fall-seeded crops, and strong new business in Chubb Agribusiness. In addition, growth for the six months ended June 30, 2023 reflects the return of premium to the U.S. government of $161 million in the first quarter of 2022 as part of a profit-sharing agreement. Under the profit-sharing agreement, we returned additional premiums to the government because of the lower losses experienced in certain states in 2021. Net premiums earned increased $62 million, or 11.0 percent, and $250 million, or 46.0 percent for the three and six months ended June 30, 2023, respectively, reflecting the factors described above. Combined Ratio The CAY loss ratio excluding catastrophe losses increased for the three and six months ended June 30, 2023, primarily due to lower crop year gain estimated in the current year compared to the prior year through June 30 and the year-over-year impact of crop commodity price hedge activity, which resulted in an increase of 0.7 percentage points and 0.8 percentage points, respectively. The decrease in the loss and loss expense ratio for the three months ended June 30, 2023, reflects catastrophe loss development from the first quarter of 2023. The increase in the loss and loss expense ratio for the six months ended June 30, 2023, reflects the prior year impact of the return of premium to the U.S. government mentioned above which had a corresponding reduction in incurred losses, partially offset by lower catastrophe losses. The policy acquisition cost ratio increased for the three months ended June 30, 2023, reflecting changes in mix of business away from products that have a lower acquisition cost ratio. The policy acquisition cost ratio decreased for the six months ended June 30, 2023, primarily from the favorable impact of higher net premiums earned from MPCI. The administrative expense ratio increased for the six months ended June 30, 2023, reflecting lower Administrative and Operating (A&O) reimbursements on the MPCI business. 67 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 Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Net premiums written $ 2,885 $ 2,640 9.3 % $ 6,148 $ 5,719 7.5 % Net premiums written - constant dollars 10.9 % 10.4 % Net premiums earned 2,908 2,696 7.9 % 5,694 5,324 7.0 % Loss and loss expenses 1,267 1,143 10.8 % 2,504 2,439 2.7 % Policy benefits 137 81 69.1 % 247 174 42.0 % Policy acquisition costs 746 697 7.2 % 1,459 1,376 6.1 % Administrative expenses 292 278 4.9 % 572 547 4.4 % Underwriting income 466 497 (6.2) % 912 788 15.8 % Net investment income 200 162 23.5 % 388 309 25.7 % Other (income) expense (10) 3 NM (19) 5 NM Amortization of purchased intangibles 15 14 9.6 % 33 28 16.6 % Segment income $ 661 $ 642 2.9 % $ 1,286 $ 1,064 20.9 % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 49.5 % 50.0 % (0.5) pts 49.5 % 49.7 % (0.2) pts Catastrophe losses 0.9 % 1.8 % (0.9) pts 2.4 % 3.8 % (1.4) pts Prior period development (2.1) % (6.4) % 4.3 pts (3.6) % (4.4) % 0.8 pts Loss and loss expense ratio 48.3 % 45.4 % 2.9 pts 48.3 % 49.1 % (0.8) pts Policy acquisition cost ratio 25.7 % 25.9 % (0.2) pts 25.6 % 25.8 % (0.2) pts Administrative expense ratio 10.0 % 10.3 % (0.3) pts 10.1 % 10.3 % (0.2) pts Combined ratio 84.0 % 81.6 % 2.4 pts 84.0 % 85.2 % (1.2) pts NM - Not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Six Months Ended June 30 June 30 (in millions of U.S. dollars) 2023 2022 2023 2022 Catastrophe losses $ 26 $ 49 $ 139 $ 200 Favorable prior period development $ 61 $ 173 $ 204 $ 233 Catastrophe losses through June 30, 2023 and 2022, were primarily from the following events: • 2023: Storms in New Zealand, flooding in Italy, and international weather-related events. • 2022: Storms in Australia and international weather-related events. Refer to Note 8 to the Consolidated Financial Statements for detail on prior period development. 68 Table of Contents Net Premiums Written by Region Three months ended June 30 (in millions of U.S. dollars, except for percentages) 2023 2023 % of Total 2022 2022 % of Total C$ 2022 Q-23 vs. Q-22 C$ Q-23 vs. Q-22 Region Europe, Middle East, and Africa $ 1,307 45 % $ 1,203 46 % $ 1,183 8.7 % 10.5 % Latin America 613 21 % 549 21 % 571 11.7 % 7.3 % Asia Pacific 772 27 % 690 26 % 657 12.0 % 17.4 % Japan 142 5 % 143 5 % 134 (1.2) % 5.9 % Other (1) 51 2 % 55 2 % 55 (9.1) % (7.1) % Net premiums written $ 2,885 100 % $ 2,640 100 % $ 2,600 9.3 % 10.9 % Six months ended June 30 (in millions of U.S. dollars, except for percentages) 2023 2023 % of Total 2022 2022 % of Total C$ 2022 Y-23 vs. Y-22 C$ Y-23 vs. Y-22 Region Europe, Middle East, and Africa $ 3,028 49 % $ 2,857 50 % $ 2,745 6.0 % 10.3 % Latin America 1,274 21 % 1,154 20 % 1,199 10.4 % 6.2 % Asia Pacific 1,505 24 % 1,333 23 % 1,276 13.0 % 18.0 % Japan 247 4 % 258 5 % 232 (4.3) % 6.4 % Other (1) 94 2 % 117 2 % 114 (20.1) % (17.8) % Net premiums written $ 6,148 100 % $ 5,719 100 % $ 5,566 7.5 % 10.4 % (1) Includes the international supplemental A&H business of Combined Insurance and other international operations including mainland China. Premiums Overall, net premiums written increased $245 million and $429 million, or $285 million and $582 million on a constant dollar basis, for the three and six months ended June 30, 2023, respectively, reflecting growth in both commercial and consumer lines. For the three and six months ended June 30, 2023, commercial lines grew 9.2 percent and 7.6 percent, or 11.9 percent and 11.3 percent on a constant-dollar basis, respectively, and consumer lines grew 9.3 percent and 7.4 percent, or 9.5 percent and 9.0 percent on a constant-dollar basis, respectively. Our European division increased for the three and six months ended June 30, 2023, supported by both our wholesale and retail divisions. The growth in commercial lines was primarily driven by higher new business, and positive rate increases, including commercial property and casualty lines. Consumer lines increased primarily due to increased travel volume in A&H. Latin America increased for the three and six months ended June 30, 2023, driven by growth in commercial lines due to exposure increases, positive rate increases, and new business, primarily property and casualty lines. Consumer lines grew due to increased A&H. Asia Pacific increased for the three and six months ended June 30, 2023, driven by higher new business, higher retention and positive rate increases in commercial lines, including property and casualty lines and growth attributable to the acquisition of Cigna's business in Asia. Consumer lines increased primarily from travel in A&H. Japan increased for the three and six months ended June 30, 2023, on a constant-dollar basis, primarily from higher new business in A&H. Net premiums earned increased $212 million and $370 million, or $244 million and $496 million on a constant-dollar basis, for the three and six months ended June 30, 2023, respectively, reflecting the increase in net premiums written described above. Combined Ratio The loss and loss expense ratio increased for the three months ended June 30, 2023, due to lower favorable prior period development, partially offset by lower catastrophe losses. The loss and loss expense ratio decreased for the six months ended June 30, 2023, due to lower catastrophe losses, partially offset by lower favorable prior period development. The CAY loss ratio excluding catastrophe losses decreased for the three and six months ended June 30, 2023, primarily due to underlying loss ratio improvement. 69 Table of Contents The administrative expense ratio decreased for the three and six months ended June 30, 2023, reflecting the favorable impact of higher net premiums earned, partially offset by increased investment to support growth. 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 Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Net premiums written $ 293 $ 262 11.6 % $ 570 $ 515 10.6 % Net premiums written - constant dollars 12.4 % 11.4 % Net premiums earned 237 222 6.7 % 481 457 5.3 % Losses and loss expenses 91 139 (34.1) % 203 254 (19.9) % Policy acquisition costs 65 57 12.4 % 127 119 6.0 % Administrative expenses 9 10 (9.9) % 18 19 (1.2) % Underwriting income 72 16 NM 133 65 103.4 % Net investment income 48 76 (37.1) % 97 161 (39.5) % Other (income) expense — 1 NM (1) 1 NM Segment income $ 120 $ 91 31.2 % $ 231 $ 225 2.7 % Loss and loss expense ratio: CAY loss ratio excluding catastrophe losses 46.7 % 49.7 % (3.0) pts 47.8 % 49.8 % (2.0) pts Catastrophe losses 0.4 % 0.8 % (0.4) pts 0.2 % 0.6 % (0.4) pts Prior period development (8.4) % 12.1 % (20.5) pts (5.7) % 5.1 % (10.8) pts Loss and loss expense ratio 38.7 % 62.6 % (23.9) pts 42.3 % 55.5 % (13.2) pts Policy acquisition cost ratio 27.0 % 25.6 % 1.4 pts 26.3 % 26.1 % 0.2 pts Administrative expense ratio 3.9 % 4.6 % (0.7) pts 3.8 % 4.1 % (0.3) pts Combined ratio 69.6 % 92.8 % (23.2) pts 72.4 % 85.7 % (13.3) pts NM - not meaningful Catastrophe Losses and Prior Period Development Three Months Ended Six Months Ended June 30 June 30 (in millions of U.S dollars) 2023 2022 2023 2022 Catastrophe losses $ 1 $ 2 $ 1 $ 3 Favorable (unfavorable) prior period development $ 17 $ (25) $ 25 $ (22) Refer to Note 8 in the Consolidated Financial Statements for detail on prior period development. Premiums Net premiums written increased $31 million and $55 million for the three and six months ended June 30, 2023, respectively, primarily from new business and rate increases in property, partially offset by lower catastrophe reinstatement premiums. Net premiums earned increased $15 million and $24 million for the three and six months ended June 30, 2023, respectively, primarily reflecting the increase in net premiums written described above. 70 Table of Contents Combined Ratio The loss and loss expense ratio decreased for the three and six months ended June 30, 2023, mainly from favorable prior period development and lower catastrophe losses. The CAY loss ratio excluding catastrophe losses decreased for the three and six months ended June 30, 2023, primarily from an improvement in market conditions which lowered loss ratio expectations in several lines of business, including property, casualty, and workers' compensation lines. The policy acquisition cost ratio increased for the three months ended June 30, 2023, primarily due to lower catastrophe reinstatement premiums which have a lower acquisition cost ratio. The administrative expense ratio decreased for the three and six months ended June 30, 2023, primarily due to the favorable impact of higher net premiums earned. Life Insurance The Life Insurance segment comprises our international life operations, which commencing in the third quarter of 2022, includes Cigna's A&H and life business in Korea, Taiwan, New Zealand, Hong Kong, and Indonesia, acquired on July 1, 2022. The Life Insurance segment also includes Chubb Tempest Life Re (Chubb Life Re), and the North American supplemental A&H and life business of Combined Insurance. Results for the three and six months ended June 30, 2022, respectively, are adjusted to reflect the adoption of LDTI. Refer to Note 1 c). Three Months Ended Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Net premiums written $ 1,270 $ 562 126.1 % $ 2,563 $ 1,138 125.3 % Net premiums written - constant dollars 127.6 % 128.1 % Net premiums earned 1,256 539 132.9 % 2,520 1,081 133.0 % Losses and loss expenses 35 27 29.6 % 67 51 31.4 % Policy benefits 705 298 136.2 % 1,417 609 132.5 % Policy acquisition costs 277 138 100.2 % 550 271 102.2 % Administrative expenses 170 88 93.5 % 337 172 96.7 % Net investment income 161 109 48.7 % 314 212 48.3 % Other (income) expense (26) (12) 138.0 % (41) (42) (1.2) % Amortization of purchased intangibles 2 3 (9.7) % 6 5 34.1 % Segment income $ 254 $ 106 140.3 % $ 498 $ 227 119.9 % Premiums Net premiums written increased $708 million and $1,425 million, or $712 million and $1,440 million on a constant-dollar basis, for the three and six months ended June 30, 2023, respectively. For our international life operations, net premiums written increased 234.5 percent and 236.1 percent for the three and six months ended June 30, 2023, respectively, primarily due to the acquisition of Cigna's business in Asia. In addition, there was growth in Latin America, primarily in our bank distribution channels, and in Asia, principally in Hong Kong. Net premiums written in our North American Combined Insurance business declined 5.7 percent and 6.3 percent, for the three and six months ended June 30, 2023, respectively, as growth in the supplemental A&H business was more than offset by the non-renewal of a large program. 71 Table of Contents Deposits The following table presents deposits collected on universal life and investment contracts: Three Months Ended Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 C$ 2022 Q-23 vs. Q-22 C$ Q-23 vs. Q-22 2023 2022 C$ 2022 Y-23 vs. Y-22 C$ Y-23 vs. Y-22 Deposits collected on universal life and investment contracts (1) $ 400 $ 427 $ 408 (6.6) % (2.0) % $ 709 $ 984 $ 919 (27.9) % (22.8) % (1) The three months ended June 30, 2023, includes a favorable adjustment of $27 million; excluding this item, deposits decreased 13.0 percent, or 8.7 percent on a constant-dollar basis. 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 $27 million and $275 million for the three and six months ended June 30, 2023, respectively, primarily in Taiwan, reflecting challenging market conditions for deposit products. Partially offsetting the decline for the three and six months ended June 30, 2023, respectively, are deposits collected through the acquired Cigna businesses in Asia. Life Insurance segment income Life Insurance segment income increased $148 million and $271 million for the three and six months ended June 30, 2023, respectively, reflecting growth from the acquisition of Cigna's business in Asia, primarily in Korea. Growth for the three and six months ended June 30, 2023 also reflected higher net investment income due to a higher invested asset base, including from the Cigna acquisition, and $5 million and $10 million, respectively, from equity securities supporting policyholder dividends. Grow th for the three months ended June 30, 2023, also included higher income from our investment in Huatai, our partially-owned insurance entity in China from higher investment income as well as from our increased ownership interest compared to prior year. Income from Huatai is recorded under the equity method of accounting with our share of net income or loss reported in Other (income) expense. Effective July 1, 2023, and starting with our third quarter 2023 reporting, we will apply consolidation accounting to our investment in Huatai. 72 Table of Contents 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. Results for the three and six months ended June 30, 2022, are adjusted to reflect the adoption of LDTI. Refer to Note 1 c). Three Months Ended Six Months Ended June 30 % Change June 30 % Change (in millions of U.S. dollars, except for percentages) 2023 2022 Q-23 vs. Q-22 2023 2022 YTD-23 vs. YTD-22 Losses and loss expenses $ 61 $ 191 (68.4) % $ 72 $ 201 (64.5) % Administrative expenses 95 90 7.4 % 192 173 11.3 % Underwriting loss 156 281 (44.6) % 264 374 (29.5) % Net investment income (loss) 3 (4) NM 14 (9) NM Other (income) expense 14 138 (91.0) % (200) (121) 66.0 % Amortization of purchased intangibles 43 45 (6.1) % 85 91 (6.4) % Net realized gains (losses) (309) (512) (39.6) % (385) (490) (21.2) % Market risk benefits gains (losses) (7) (33) (79.9) % (122) 16 NM Interest expense 165 134 22.8 % 325 266 22.2 % Cigna integration expenses 15 3 NM 37 3 NM Income tax expense 392 291 34.8 % 776 644 20.4 % Net loss $ (1,098) $ (1,441) (24.0) % $ (1,780) $ (1,740) 2.1 % NM - not meaningful Losses and loss expenses primarily includes unfavorable prior period development for molestation claims. Administrative expenses increased $5 million and $19 million for the three and six months ended June 30, 2023, respectively, primarily due to increased spending to support digital growth initiatives. Cigna integration expenses of $15 million and $37 million for the three and six months ended June 30, 2023 , respectively, principally comprised legal and professional fees and all other costs directly related to the integration activities of the Cigna acquisition. These expenses are one-time in nature and are not related to the on-going business activities of the segments. The Chief Executive Officer does not manage segment results or allocate resources to segments when considering these costs and they are therefore excluded from our definition of segment income. 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 Notes 11 and 17 to the Consolidated Financial Statements for additional information on Market risk benefits gains (losses) and Other (income) expense, respectively. 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. 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 2022 Form 10-K. Additionally, Net income is impacted through the reporting of changes in the fair value of public and private equity securities and derivatives, including financial futures, options, and swaps. 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, changes in current discount rate on future policy benefits, changes in instrument-specific credit risk on market risk benefits, 73 Table of Contents unrealized postretirement benefit obligations liability adjustment, and cross-currency swaps designated as hedges for accounting purposes are reported as separate components of Accumulated other comprehensive income (loss) in Shareholders’ equity in the Consolidated balance sheets. The following tables present our net realized and unrealized gains (losses): Three Months Ended June 30 2023 2022 (As Adjusted) (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 $ (107) $ (1,194) $ (1,301) $ (442) $ (4,344) $ (4,786) Fixed income and investment derivatives (55) — (55) (81) — (81) Public equity Sales 2 — 2 163 — 163 Mark-to-market 26 — 26 (426) — (426) Private equity (less than 3 percent ownership) Mark-to-market 20 — 20 4 — 4 Total investment portfolio (114) (1,194) (1,308) (782) (4,344) (5,126) Other derivatives 2 — 2 9 — 9 Foreign exchange (186) 215 29 270 (756) (486) Current discount rate on future policy benefits — (35) (35) — 632 632 Instrument-specific credit risk on market risk benefits — 11 11 — 17 17 Other (6) 48 42 — 5 5 Net (losses), pre-tax $ (304) $ (955) $ (1,259) $ (503) $ (4,446) $ (4,949) Six Months Ended June 30 2023 2022 (As Adjusted) (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 $ (287) $ 592 $ 305 $ (578) $ (8,996) $ (9,574) Fixed income and investment derivatives (101) — (101) (34) — (34) Public equity Sales (3) — (3) 418 — 418 Mark-to-market 42 — 42 (625) — (625) Private equity (less than 3 percent ownership) Mark-to-market 35 — 35 59 — 59 Total investment portfolio (314) 592 278 (760) (8,996) (9,756) Other derivatives 1 — 1 10 — 10 Foreign exchange (55) 38 (17) 344 (689) (345) Current discount rate on future policy benefits — (186) (186) — 1,067 1,067 Instrument-specific credit risk on market risk benefits — 8 8 — 40 40 Other (13) 15 2 (74) 24 (50) Net gains (losses), pre-tax $ (381) $ 467 $ 86 $ (480) $ (8,554) $ (9,034) 74 Table of Contents Pre-tax net unrealized losses of $1,194 million in our investment portfolio for the three months ended June 30, 2023 was primarily driven by higher interest rates as well as the $423 million pre-tax impact of the reclassification of our approximately $8 billion HTM portfolio to our AFS portfolio. This reclassification to AFS increases management's flexibility to execute on its investment strategy to take advantage of higher yields when the opportunity arises, while not making any major change to its current asset allocation. Refer to Note 3 a) to the Consolidated Financial Statements. Pre-tax net unrealized gains of $592 million for the six months ended June 30, 2023 were principally the result of changes in interest rates. In addition, there were pre-tax net realized losses of $114 million and $314 million for the three and six months ended June 30, 2023, respectively, comprising losses from sales and impairments of fixed maturities and derivative losses. 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. For the three and six months ended June 30, 2023, our ETR was 17.9 percent and 17.4 percent, respectively. This compares to an ETR of 19.6 percent and 17.0 percent for the three and six months ended June 30, 2022. The ETR for each period in 2023 was impacted by our mix of earnings among various jurisdictions, most notably related to gains/(losses) that were realized, the impact of our Cigna acquisition, and an increase in the enacted UK tax rate, partially offset by discrete tax items. 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. 75 Table of Contents 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. 76 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 June 30, 2023 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses/policy benefits A $ 2,871 $ 846 $ 507 $ 1,404 $ 91 $ 61 $ 5,780 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (231) (147) 5 (26) (1) — (400) Reinstatement premiums collected (expensed) on catastrophe losses — — — — — — — Catastrophe losses, gross of related adjustments (231) (147) 5 (26) (1) — (400) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 146 33 3 61 17 (60) 200 Net premiums earned adjustments on PPD - unfavorable (favorable) 12 — (2) — — — 10 Expense adjustments - unfavorable (favorable) 4 — — — — — 4 PPD reinstatement premiums - unfavorable (favorable) — — — — 6 — 6 PPD, gross of related adjustments - favorable (unfavorable) 162 33 1 61 23 (60) 220 CAY loss and loss expense ex CATs B $ 2,802 $ 732 $ 513 $ 1,439 $ 113 $ 1 $ 5,600 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 930 $ 361 $ 40 $ 1,038 $ 74 $ 95 $ 2,538 Expense adjustments - favorable (unfavorable) (4) — — — — — (4) Policy acquisition costs and administrative expenses, adjusted D $ 926 $ 361 $ 40 $ 1,038 $ 74 $ 95 $ 2,534 Denominator Net premiums earned E $ 4,606 $ 1,357 $ 635 $ 2,908 $ 237 $ 9,743 Net premiums earned adjustments on PPD - unfavorable (favorable) 12 — (2) — — 10 PPD reinstatement premiums - unfavorable (favorable) — — — — 6 6 Net premiums earned excluding adjustments F $ 4,618 $ 1,357 $ 633 $ 2,908 $ 243 $ 9,759 P&C Combined ratio Loss and loss expense ratio A/E 62.3 % 62.4 % 79.7 % 48.3 % 38.7 % 59.3 % Policy acquisition cost and administrative expense ratio C/E 20.2 % 26.5 % 6.5 % 35.7 % 30.9 % 26.1 % P&C Combined ratio 82.5 % 88.9 % 86.2 % 84.0 % 69.6 % 85.4 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 60.7 % 54.0 % 80.9 % 49.5 % 46.7 % 57.4 % Policy acquisition cost and administrative expense ratio, adjusted D/F 20.0 % 26.5 % 6.5 % 35.7 % 30.1 % 25.9 % CAY P&C Combined ratio ex CATs 80.7 % 80.5 % 87.4 % 85.2 % 76.8 % 83.3 % Combined ratio Combined ratio 85.4 % Add: impact of gains and losses on crop derivatives — P&C Combined ratio 85.4 % 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. 77 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 June 30, 2022 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses/policy benefits A $ 2,446 $ 773 $ 478 $ 1,224 $ 139 $ 191 $ 5,251 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (124) (95) (21) (49) (2) — (291) Reinstatement premiums collected (expensed) on catastrophe losses — — — — — — — Catastrophe losses, gross of related adjustments (124) (95) (21) (49) (2) — (291) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 287 3 — 173 (25) (191) 247 Net premiums earned adjustments on PPD - unfavorable (favorable) 3 — — — — — 3 Expense adjustments - unfavorable (favorable) (1) — — — — — (1) PPD reinstatement premiums - unfavorable (favorable) — — — — (3) — (3) PPD, gross of related adjustments - favorable (unfavorable) 289 3 — 173 (28) (191) 246 CAY loss and loss expense ex CATs B $ 2,611 $ 681 $ 457 $ 1,348 $ 109 $ — $ 5,206 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 822 $ 331 $ 33 $ 975 $ 67 $ 90 $ 2,318 Expense adjustments - favorable (unfavorable) 1 — — — — — 1 Policy acquisition costs and administrative expenses, adjusted D $ 823 $ 331 $ 33 $ 975 $ 67 $ 90 $ 2,319 Denominator Net premiums earned E $ 4,248 $ 1,271 $ 573 $ 2,696 $ 222 $ 9,010 Net premiums earned adjustments on PPD - unfavorable (favorable) 3 — — — — 3 PPD reinstatement premiums - unfavorable (favorable) — — — — (3) (3) Net premiums earned excluding adjustments F $ 4,251 $ 1,271 $ 573 $ 2,696 $ 219 $ 9,010 P&C Combined ratio Loss and loss expense ratio A/E 57.6 % 60.8 % 83.3 % 45.4 % 62.6 % 58.3 % Policy acquisition cost and administrative expense ratio C/E 19.3 % 26.1 % 5.8 % 36.2 % 30.2 % 25.7 % P&C Combined ratio 76.9 % 86.9 % 89.1 % 81.6 % 92.8 % 84.0 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 61.4 % 53.6 % 79.6 % 50.0 % 49.7 % 57.8 % Policy acquisition cost and administrative expense ratio, adjusted D/F 19.4 % 26.1 % 5.8 % 36.2 % 30.7 % 25.7 % CAY P&C Combined ratio ex CATs 80.8 % 79.7 % 85.4 % 86.2 % 80.4 % 83.5 % Combined ratio Combined ratio 84.1 % Add: impact of gains and losses on crop derivatives (0.1) % P&C Combined ratio 84.0 % 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. 78 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 Six Months Ended June 30, 2023 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses/policy benefits A $ 5,600 $ 1,734 $ 647 $ 2,751 $ 203 $ 72 $ 11,007 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (393) (306) (19) (139) (1) — (858) Reinstatement premiums collected (expensed) on catastrophe losses — — — — — — — Catastrophe losses, gross of related adjustments (393) (306) (19) (139) (1) — (858) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 218 16 3 204 25 (70) 396 Net premiums earned adjustments on PPD - unfavorable (favorable) 12 — (2) — — 10 Expense adjustments - unfavorable (favorable) 7 — — — — — 7 PPD reinstatement premiums - unfavorable (favorable) — (1) — — 6 — 5 PPD, gross of related adjustments - favorable (unfavorable) 237 15 1 204 31 (70) 418 CAY loss and loss expense ex CATs B $ 5,444 $ 1,443 $ 629 $ 2,816 $ 233 $ 2 $ 10,567 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 1,838 $ 712 $ 58 $ 2,031 $ 145 $ 192 $ 4,976 Expense adjustments - favorable (unfavorable) (7) — — — — — (7) Policy acquisition costs and administrative expenses, adjusted D $ 1,831 $ 712 $ 58 $ 2,031 $ 145 $ 192 $ 4,969 Denominator Net premiums earned E $ 8,975 $ 2,677 $ 794 $ 5,694 $ 481 $ 18,621 Net premiums earned adjustments on PPD - unfavorable (favorable) 12 — (2) — — 10 PPD reinstatement premiums - unfavorable (favorable) — (1) — — 6 5 Net premiums earned excluding adjustments F $ 8,987 $ 2,676 $ 792 $ 5,694 $ 487 $ 18,636 P&C Combined ratio Loss and loss expense ratio A/E 62.4 % 64.8 % 81.5 % 48.3 % 42.3 % 59.1 % Policy acquisition cost and administrative expense ratio C/E 20.5 % 26.6 % 7.3 % 35.7 % 30.1 % 26.7 % P&C Combined ratio 82.9 % 91.4 % 88.8 % 84.0 % 72.4 % 85.8 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 60.6 % 53.9 % 79.4 % 49.5 % 47.8 % 56.7 % Policy acquisition cost and administrative expense ratio, adjusted D/F 20.3 % 26.6 % 7.3 % 35.6 % 29.8 % 26.7 % CAY P&C Combined ratio ex CATs 80.9 % 80.5 % 86.7 % 85.1 % 77.6 % 83.4 % Combined ratio Combined ratio 85.8 % Add: impact of gains and losses on crop derivatives — P&C Combined ratio 85.8 % 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. 79 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 Six Months Ended June 30, 2022 (in millions of U.S. dollars except for ratios) Numerator Losses and loss expenses/policy benefits A $ 4,943 $ 1,486 $ 386 $ 2,613 $ 254 $ 201 $ 9,883 Catastrophe losses and related adjustments Catastrophe losses, net of related adjustments (205) (195) (21) (200) (3) — (624) Reinstatement premiums collected (expensed) on catastrophe losses — — — — — — — Catastrophe losses, gross of related adjustments (205) (195) (21) (200) (3) — (624) PPD and related adjustments PPD, net of related adjustments - favorable (unfavorable) 395 54 26 233 (22) (199) 487 Net premiums earned adjustments on PPD - unfavorable (favorable) 3 — 159 — — — 162 Expense adjustments - unfavorable (favorable) 5 — (1) — — — 4 PPD reinstatement premiums - unfavorable (favorable) — — — — (2) — (2) PPD, gross of related adjustments - favorable (unfavorable) 403 54 184 233 (24) (199) 651 CAY loss and loss expense ex CATs B $ 5,141 $ 1,345 $ 549 $ 2,646 $ 227 $ 2 $ 9,910 Policy acquisition costs and administrative expenses Policy acquisition costs and administrative expenses C $ 1,660 $ 660 $ 44 $ 1,923 $ 138 $ 173 $ 4,598 Expense adjustments - favorable (unfavorable) (5) — 1 — — — (4) Policy acquisition costs and administrative expenses, adjusted D $ 1,655 $ 660 $ 45 $ 1,923 $ 138 $ 173 $ 4,594 Denominator Net premiums earned E $ 8,362 $ 2,518 $ 544 $ 5,324 $ 457 $ 17,205 Net premiums earned adjustments on PPD - unfavorable (favorable) 3 — 159 — — 162 PPD reinstatement premiums - unfavorable (favorable) — — — — (2) (2) Net premiums earned excluding adjustments F $ 8,365 $ 2,518 $ 703 $ 5,324 $ 455 $ 17,365 P&C Combined ratio Loss and loss expense ratio A/E 59.1 % 59.0 % 70.9 % 49.1 % 55.5 % 57.4 % Policy acquisition cost and administrative expense ratio C/E 19.9 % 26.2 % 8.1 % 36.1 % 30.2 % 26.8 % P&C Combined ratio 79.0 % 85.2 % 79.0 % 85.2 % 85.7 % 84.2 % CAY P&C Combined ratio ex CATs Loss and loss expense ratio, adjusted B/F 61.5 % 53.4 % 77.9 % 49.7 % 49.8 % 57.1 % Policy acquisition cost and administrative expense ratio, adjusted D/F 19.7 % 26.3 % 6.4 % 36.1 % 30.3 % 26.4 % CAY P&C Combined ratio ex CATs 81.2 % 79.7 % 84.3 % 85.8 % 80.1 % 83.5 % Combined ratio Combined ratio 84.3 % Add: impact of gains and losses on crop derivatives (0.1) % P&C Combined ratio 84.2 % 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. 80 Table of Contents Amortization of Purchased Intangibles and Other Amortization Amortization of purchased intangibles Amortization expense related to purchased intangibles was $70 million and $142 million for the three and six months ended June 30, 2023, respectively, compared with $71 million and $142 million for the prior year periods, respectively. At June 30, 2023, the deferred tax liability associated with the Other intangible assets (excluding the fair value adjustment on Unpaid losses and loss expense) was $1,200 million. The following table presents, as of June 30, 2023, the expected reduction to the deferred tax liability associated with the amortization of Other intangible assets, at current foreign currency exchange rates, for the third through fourth quarters of 2023 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 intangible assets Third quarter of 2023 $ 16 Fourth quarter of 2023 16 2024 61 2025 57 2026 52 2027 49 2028 47 Total $ 298 Amortization of the fair value adjustment on acquired invested assets and assumed long-term debt The following table presents, as of June 30, 2023, the expected amortization expense of the fair value adjustment on acquired invested assets related to the acquisitions of Cigna's business in Asia and Chubb Corp, at current foreign currency exchange rates, and the expected amortization benefit from the fair value adjustment on assumed long-term debt related to the Chubb Corp acquisition for the third through fourth quarters of 2023 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 Acquired Chubb Corp invested assets Total acquired invested assets (1) Assumed long-term debt (2) Third quarter of 2023 $ 6 $ (8) $ (2) $ 5 Fourth quarter of 2023 5 (8) (3) 6 2024 19 (20) (1) 21 2025 17 (9) 8 21 2026 15 — 15 21 2027 13 — 13 21 2028 12 — 12 21 Total $ 87 $ (45) $ 42 $ 116 (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. 81 Table of Contents Net Investment Income Three Months Ended June 30 Six Months Ended June 30 (in millions of U.S. dollars) 2023 2022 2023 2022 Fixed maturities (1) $ 1,095 $ 853 $ 2,157 $ 1,652 Short-term investments 49 15 87 24 Other interest income 12 4 29 7 Equity securities 6 34 15 72 Other investments 32 27 58 46 Gross investment income (1) 1,194 933 2,346 1,801 Investment expenses (49) (45) (94) (91) Net investment income (1) $ 1,145 $ 888 $ 2,252 $ 1,710 (1) Includes amortization expense related to fair value adjustment of acquired invested assets $ (3) $ (14) $ (5) $ (30) 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 28.9 percent and 31.7 percent for the three and six months ended June 30, 2023, 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 June 30 Six Months Ended June 30 (in millions of U.S. dollars) 2023 2022 2023 2022 Total mark-to-market gain (loss) on private equity, pre-tax $ 17 $ (130) $ 274 $ 180 Interest Expense Interest expense for the six months ended June 30, 2023, comprised $335 million related to fixed expenses on existing debt obligations and variable expenses, and a $10 million benefit related to the amortization of the fair value of debt assumed in the Chubb Corp acquisition. The variable expenses relate to fees from the usage of certain facilities, including letters of credit, and interest on held collateral and repurchase agreements. Interest expense for the six months ended June 30, 2023, was higher than expected primarily due to rising interest rates on held collateral and repurchase agreements. Based on our existing fixed debt obligations and projected variable expenses, we now expect pre-tax interest expense on these items to be approximately $342 million for the remainder of 2023, or $171 million each quarter. For more information on our debt obligations, refer to Note 9 to the Consolidated Financial Statements, under Item 8 in our 2022 Form 10-K. 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 June 30, 2023. 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- 82 Table of Contents 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 was 4.6 years and 4.5 years at June 30, 2023, and December 31, 2022, respectively. We estimate that a 100 basis point (bps) increase in interest rates would reduce the valuation of our fixed income portfolio by approximately $4.6 billion at June 30, 2023. The following table shows the fair value and cost/amortized cost, net of valuation allowance, of our invested assets: June 30, 2023 December 31, 2022 (in millions of U.S. dollars) Fair Value Cost/ Amortized Cost, Net Fair Value Cost/ Amortized Cost, Net Fixed maturities available for sale $ 96,789 $ 104,031 $ 85,220 $ 93,186 Fixed maturities held to maturity — — 8,439 8,848 Short-term investments 4,097 4,099 4,960 4,962 Fixed income securities 100,886 108,130 98,619 106,996 Equity securities 1,043 1,043 827 827 Other investments 14,707 14,707 13,696 13,696 Total investments $ 116,636 $ 123,880 $ 113,142 $ 121,519 The fair value of our total investments increased $3.5 billion during the six months ended June 30, 2023, primarily due to the investing of operating cash flow and unrealized gains on fixed maturities, partially offset by share repurchases and dividend payments. 83 Table of Contents The following tables present the fair value of our fixed income securities at June 30, 2023, and December 31, 2022. The first table lists investments according to type and second according to S&P credit rating: June 30, 2023 December 31, 2022 (in millions of U.S. dollars, except for percentages) Fair Value % of Total Fair Value % of Total U.S. Treasury / Agency $ 3,744 4 % $ 3,996 4 % Corporate and asset-backed securities 40,177 40 % 38,535 40 % Mortgage-backed securities 17,972 18 % 17,202 17 % Municipal 5,194 5 % 6,964 7 % Non-U.S. 29,702 29 % 26,962 27 % Short-term investments 4,097 4 % 4,960 5 % Total $ 100,886 100 % $ 98,619 100 % AAA $ 13,916 14 % $ 14,779 15 % AA 31,109 31 % 31,195 32 % A 19,233 19 % 18,366 19 % BBB 18,040 18 % 16,802 17 % BB 9,882 9 % 8,722 9 % B 8,191 8 % 8,347 8 % Other 515 1 % 408 — % Total $ 100,886 100 % $ 98,619 100 % Corporate and asset-backed securities The following table presents our 10 largest global exposures to corporate bonds by fair value at June 30, 2023: (in millions of U.S. dollars) Fair Value Bank of America Corp $ 762 JP Morgan Chase & Co 664 Morgan Stanley 663 Wells Fargo & Co 588 Citigroup Inc 515 Goldman Sachs Group Inc 512 UBS Group AG 386 HSBC Holdings Plc 375 Verizon Communications Inc 364 AT&T Inc 363 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 June 30, 2023 (in millions of U.S. dollars) AAA AA A BBB BB and below Total Total Agency residential mortgage-backed securities (RMBS) $ 7 $ 15,051 $ — $ — $ — $ 15,058 $ 16,809 Non-agency RMBS 576 51 48 28 7 710 799 Commercial mortgage-backed securities 1,890 173 128 13 — 2,204 2,422 Total mortgage-backed securities $ 2,473 $ 15,275 $ 176 $ 41 $ 7 $ 17,972 $ 20,030 84 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 44 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 June 30, 2023: (in millions of U.S. dollars) Fair Value Amortized Cost, Net Republic of Korea $ 1,681 $ 1,734 Taiwan 987 954 Canada 945 1,004 Federative Republic of Brazil 649 654 United Mexican States 610 641 Province of Ontario 589 629 Kingdom of Thailand 548 532 Socialist Republic of Vietnam 496 384 Commonwealth of Australia 464 539 United Kingdom 401 450 Other Non-U.S. Government Securities 5,087 5,475 Total $ 12,457 $ 12,996 85 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 June 30, 2023: (in millions of U.S. dollars) Fair Value Amortized Cost, Net United Kingdom $ 2,409 $ 2,621 Canada 1,957 2,063 South Korea 1,456 1,491 United States (1) 1,307 1,388 France 1,227 1,326 Australia 1,028 1,116 Japan 749 802 Netherlands 549 590 Germany 516 572 Switzerland 488 539 Other Non-U.S. Corporate Securities 5,559 5,945 Total $ 17,245 $ 18,453 (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 June 30, 2023, our corporate fixed income investment portfolio included below-investment grade and non-rated securities which, in total, comprised approximately 16 percent of our fixed income portfolio. Our below-investment grade and non-rated portfolio includes over 1,700 issuers, with the greatest single exposure being $155 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. 86 Table of Contents Critical Accounting Estimates 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, 2022 $ 75,747 $ 17,086 $ 58,661 Losses and loss expenses incurred 13,480 2,649 10,831 Losses and loss expenses paid (12,910) (3,119) (9,791) Other (including foreign exchange translation) 163 (8) 171 Balance at June 30, 2023 $ 76,480 $ 16,608 $ 59,872 (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 8 to the Consolidated Financial Statements for a discussion on the changes in the loss reserves. Future policy benefits Effective January 1, 2023, Chubb adopted the long-duration targeted improvement (LDTI) U.S. GAAP accounting guidance which affects the recognition, measurement, presentation, and disclosure requirements for long-duration contracts. For a discussion of our critical accounting estimates, refer to Item 7 in our 2022 Form 10-K. Asbestos and Environmental (A&E) There was no significant A&E reserve activity during the three and six months ended June 30, 2023. A&E reserves are included in Corporate. Refer to our 2022 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. 87 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 June 30, 2023, 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 $ 2,318 4.4 % $ 1,204 2.3 % $ 143 0.3 % 1-in-100 $ 5,197 9.8 % $ 3,477 6.6 % $ 1,392 2.6 % 1-in-250 $ 8,717 16.5 % $ 6,577 12.4 % $ 1,644 3.1 % (1) Worldwide aggregate is comprised of losses arising from tropical cyclones, convective storms, earthquakes, U.S. wildfires, and floods in the U.S., Canada, and Europe, and excludes "non-modeled" perils such as man-made and other catastrophe risks including pandemic. (2) U.S. hurricane losses include losses from wind, storm-surge, and related precipitation-induced flooding. (3) California earthquakes include the fire-following sub-peril. The PML for worldwide and key U.S. peril regions are based on our in-force portfolio at April 1, 2023, and reflect the April 1, 2023, reinsurance program (see Global Property Catastrophe Reinsurance Program section) as well as inuring reinsurance protection coverages. These estimates assume that reinsurance recoverable is fully collectible. According to the model, for the 1-in-100 return period scenario, there is a one percent chance that our pre-tax annual aggregate losses incurred in any year from U.S. hurricane events could be in excess of $3,477 million (or 6.6 percent of our total shareholders’ equity at June 30, 2023). Effective December 31, 2022, our worldwide PMLs include losses from floods in Canada and Europe. Additionally, U.S. hurricane PMLs include losses from hurricane related precipitation-induced flooding. The above estimates of Chubb’s loss profile are inherently uncertain for many reasons, including the following: • While the use of third-party modeling packages to simulate potential catastrophe losses is prevalent within the insurance industry, the models are reliant upon significant meteorology, seismology, and engineering assumptions to estimate catastrophe losses. In particular, modeled catastrophe events are not always a representation of actual events and ensuing additional loss potential; • There is no universal standard in the preparation of insured data for use in the models, the running of the modeling software, and interpretation of loss output. These loss estimates do not represent our potential maximum exposures and it is highly likely that our actual incurred losses would vary materially from the modeled estimates; • The potential effects of climate change add to modeling complexity; and • Changing climate conditions could impact our exposure to natural catastrophe risks. Published studies by leading government, academic, and professional organizations combined with extensive research by Chubb climate scientists reveal the potential for increases in the frequency and severity of key natural perils such as tropical cyclones, inland flood, and wildfire. To understand the potential impacts on the Chubb portfolio, we have conducted stress tests on our peak exposure zone, namely in the U.S., using parameters outlined by the Intergovernmental Panel on Climate Change (IPCC) Climate Change 2021 report. These parameters consider the impacts of climate change and the resulting climate peril impacts over a timescale relevant to our business. The tests are conducted by adjusting our baseline view of risk for the perils of hurricane, inland flood, and wildfire in the U.S. to reflect increases in frequency and severity across the modeled domains for each of these perils. Based on these tests against the Chubb portfolio we do not expect material impacts to our baseline PMLs from climate change through December 31, 2023. 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 2022 Form 10-K for more information on man-made and other catastrophes. 88 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, 2023, through March 31, 2024, 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, 2023, through March 31, 2024, 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 – $1.1 billion Losses retained by Chubb (a) United States (excluding Alaska and Hawaii) $1.1 billion – $1.25 billion All natural perils and terrorism (b) United States (excluding Alaska and Hawaii) $1.25 billion – $2.35 billion All natural perils and terrorism (c) United States (excluding Alaska and Hawaii) $2.35 billion – $3.5 billion All natural perils and terrorism (d) International (including Alaska and Hawaii) $0 million – $200 million Losses retained by Chubb (a) International (including Alaska and Hawaii) $200 million – $1.3 billion All natural perils and terrorism (c) Alaska, Hawaii, and Canada $1.3 billion – $2.45 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. 89 Table of Contents Capital Resources Capital resources consist of funds deployed or available to be deployed to support our business operations. June 30 December 31 2023 2022 (in millions of U.S. dollars, except for ratios) As Adjusted Short-term debt $ 699 $ 475 Long-term debt 13,782 14,402 Total financial debt 14,481 14,877 Trust preferred securities 308 308 Total shareholders’ equity 52,875 50,519 Total capitalization $ 67,664 $ 65,704 Ratio of financial debt to total capitalization 21.4 % 22.6 % Ratio of financial debt plus trust preferred securities to total capitalization 21.9 % 23.1 % 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 six months ended June 30, 2023, we repurchased $1.2 billion of Common Shares in a series of open market transactions under the Board of Directors (Board) share repurchase authorization. At June 30, 2023, there were 20,760,232 Common Shares in treasury with a weighted-average cost of $152.91 per share. In June 2023, the Board authorized the repurchase of up to $5.0 billion of Chubb's Common Shares effective July 1, 2023 with no expiration date. At July 27, 2023, $5.0 billion in share repurchase authorization remained. We generally maintain the ability to issue certain classes of debt and equity securities via a Securities and Exchange Commission (SEC) shelf registration statement which is renewed every three years. 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 14 to the Consolidated Financial Statements for a discussion of our dividend methodology. At our May 2023 annual general meeting, our shareholders approved an annual dividend for the following year of up to $3.44 per share, or CHF 3.09 per share, calculated using the USD/CHF exchange rate as published in the Wall Street Journal on May 17, 2023, expected to be paid in four quarterly installments of $0.86 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 2024 annual general meeting, and is authorized to abstain from distributing a dividend at its discretion. The annual dividend approved in May 2023 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 16, 2022 January 6, 2023 $0.83 (CHF 0.79) March 17, 2023 April 10, 2023 $0.83 (CHF 0.77) June 16, 2023 July 7, 2023 $0.86 (CHF 0.77) 90 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 $4.0 billion, $3.0 billion of which can be used for revolving credit. At June 30, 2023, 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 June 30, 2023. 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 facility or establishing additional facilities when needed. 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 six months ended June 30, 2023, 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 $925 million and $5.8 billion from its Bermuda subsidiaries during the six months ended June 30, 2023 and 2022, 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 six months ended June 30, 2023 and 2022. 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 $458 million and $1.8 billion from its subsidiaries during the six months ended June 30, 2023 and 2022, respectively. Subsequently, in July 2023, Chubb INA received $518 million from its subsidiaries. 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 six months ended June 30, 2023 and 2022. Operating cash flows were $4.8 billion in the six months ended June 30, 2023, compared to $5.2 billion in the prior year period, primarily due to higher net losses paid and higher income taxes paid, partially offset by higher net premiums collected. Cash from (used for) investing was $(2.3) billion in the six months ended June 30, 2023, compared to $1.1 billion in the prior year period, a decrease of $3.3 billion. Cash used for investing in the current period primarily included higher net purchases of fixed maturities and equity securities of $3.3 billion. Cash used for financing was $2.3 billion in the six months ended June 30, 2023, compared to $0.7 billion in the prior year period. The increase of $1.6 billion is from net repayments of $1.9 billion from repurchase agreements and $475 million from long-term debt, partially offset by fewer common shares repurchased of $860 million. We use repurchase agreements as a low-cost alternative. At June 30, 2023, there were $1.5 billion in repurchase agreements outstanding with various maturities over the next eleven 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 91 Table of Contents 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) June 30 December 31 June 30 December 31 (in millions of U.S. dollars) 2023 2022 2023 2022 Assets Investments $ — $ — $ 101 $ 135 Cash 2 40 7 2 Due from parent guarantor/subsidiary issuer — 2 1,411 586 Due from subsidiaries that are not issuers or guarantors 1,813 1,791 640 598 Other assets 9 16 2,650 2,106 Total assets $ 1,824 $ 1,849 $ 4,809 $ 3,427 Liabilities Due to parent guarantor/subsidiary issuer $ 1,411 $ 586 $ — $ 2 Due to subsidiaries that are not issuers or guarantors 257 248 1,773 1,710 Affiliated notional cash pooling programs 435 252 2,801 1,496 Short-term debt — — 699 475 Long-term debt — — 13,782 14,402 Trust preferred securities — — 308 308 Other liabilities 520 616 1,662 1,305 Total liabilities 2,623 1,702 21,025 19,698 Total shareholders’ equity (799) 147 (16,216) (16,271) Total liabilities and shareholders’ equity $ 1,824 $ 1,849 $ 4,809 $ 3,427 92 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: Six Months Ended June 30, 2023 Chubb Limited (Parent Guarantor) Chubb INA Holdings Inc. (Subsidiary Issuer) (in millions of U.S. dollars) Net investment income (loss) $ (5) $ (59) Net realized gains (losses) 30 (76) Administrative expenses 56 (9) Interest (income) expense (8) 226 Other (income) expense (22) 37 Cigna integration expenses — 2 Income tax expense (benefit) 5 (136) Net income (loss) $ (6) $ (255) Comprehensive income (loss) $ (6) $ (383)