Exhibit 99.2
Chubb Limited
Financial Supplement
for the Quarter Ended September 30, 2016
Investor Contact
Helen M. Wilson
Phone: (441) 299-9283
email: investorrelations@chubb.com
This report is for informational purposes only. It should be read in conjunction with documents filed by Chubb Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and the closing reports on Form 8-K/A filed on March 24, 2016.
Segment Reporting and Combined Legacy ACE and Legacy Chubb Results (“As If”) Disclosures
Since the completion of its acquisition of The Chubb Corporation (referred to as Legacy Chubb) on January 14, 2016, Chubb Limited (formerly ACE Limited and referred to as Legacy ACE) began reporting its financial results within the following 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. Corporate includes all run-off asbestos and environmental (A&E) exposures, the results of its Brandywine business, the results of its Westchester Specialty operations for 1996 and prior years, certain other run-off exposures and Legacy Chubb A&E and mass tort exposures. Revenue and expenses managed at the corporate level and Chubb integration expenses, which are incurred by the overall company, are included in Corporate. These integration costs are not related to the on-going business activities of the segments and are therefore excluded from our definition of segment income.
During the third quarter of 2016, the company further refined the definition of our segment measure to include amortization expense related to business combination intangible assets purchased by the segment and other purchase accounting related intangible assets, including agency relationships, renewal rights, and client lists. In the first and second quarter of 2016, these costs were included in Corporate. The amortization of intangible assets purchased as part of The Chubb Corporation acquisition is considered a Corporate cost as these are incurred by the overall company. This updated definition better aligns with how the business is managed as we continue to refine the process. As the company progresses through the integration, it may continue to further refine its segments and segment income measures.
“As If” company measures presented throughout this document are prepared exclusive of the impact of the unearned premium reserves intangible amortization and the elimination of the historical policy acquisition costs, as a result of purchase accounting, in order to present the underlying profitability of our insurance business. We believe this measure provides visibility into our results and allows for comparability to our historical results and is consistent with how management evaluates results. We have discussed our results on an “As If” basis for both the current and prior year periods, which are defined as follows:
2016 “As If” results: The 2016 and 2015 As If underwriting results do not include any impact from purchase accounting adjustments. The first quarter and year to date combined company results are inclusive of the results of Legacy Chubb for the first 14 days of January 2016 when the acquisition had not yet been completed.
2015 “As If” results:Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
“As If” company results presented throughout this document are unaudited and are provided for informational purposes only. A reconciliation of “As If” company results as defined above to pro forma results in accordance with SEC guidance under Article 11, is provided in the Reconciliation of non-GAAP section starting on page 39.
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in this financial supplement reflect Chubb Limited’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from as indicated by such statements. For example, forward-looking statements related to financial performance including exposures, reserves and recoverables could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, currency exchange fluctuations, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable, credit developments among reinsurers, and activities and expenses related to post-acquisition integration of Legacy ACE and Legacy Chubb.
Our forward-looking statements could also be affected by competition, pricing and policy term trends, market acceptance, changes in demand, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
As If Results Definition |
Chubb Limited
Financial Supplement Table of Contents
Page | ||||||
I. | Financial Highlights | |||||
- Consolidated Financial Highlights | 1-2 | |||||
II. | Consolidated Results | |||||
- Consolidated Statement of Operations | 3 | |||||
- P&C Results - Consecutive Quarters | 4-5 | |||||
- Summary Consolidated Balance Sheets | 6 | |||||
- Line of Business | 7 | |||||
- Consolidated Results by Segment | 8-11 | |||||
- Consolidated Results by Segment - “As If” Basis | 12-13 | |||||
III. | Global P&C Results | |||||
- Global P&C Underwriting Results - Consecutive Quarters | 14-15 | |||||
IV. | Segment Results | |||||
- North America Commercial P&C Insurance | 16-17 | |||||
- North America Personal P&C Insurance | 18-19 | |||||
- North America Agricultural Insurance | 20 | |||||
- Overseas General Insurance | 21-22 | |||||
- Global Reinsurance | 23-24 | |||||
- Life Insurance | 25-26 | |||||
- Corporate | 27 | |||||
V. | Balance Sheet Details | |||||
- Loss Reserve Rollforward | 28 | |||||
- Reinsurance Recoverable Analysis | 29 | |||||
- Investment Portfolio | 30-33 | |||||
- Net Realized and Unrealized Gains (Losses) | 34-35 | |||||
- Debt and Capital | 36 | |||||
- Computation of Basic and Diluted Earnings Per Share | 37 | |||||
- Book Value and Book Value per Common Share | 38 | |||||
VI. | Other Disclosures | |||||
- Non-GAAP Financial Measures | 39-47 | |||||
- Glossary | 48 |
Chubb Limited
Consolidated Financial Highlights - Quarter
(in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
Note: All dollar amounts in the Financial Supplement are rounded. However, percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ.
As If * | ||||||||||||||||||||||||||||||||||||||||
Constant $ | Constant $ | |||||||||||||||||||||||||||||||||||||||
% Change | % Change | % Change | % Change | |||||||||||||||||||||||||||||||||||||
Three months ended September 30 | 3Q-16 vs. | Constant $ | 3Q-16 vs. | Three months ended September 30 | 3Q-16 vs. | Constant $ | 3Q-16 vs. | |||||||||||||||||||||||||||||||||
2016 | 2015 | 3Q-15 | 2015 (1) | 3Q-15(1) | 2016 | 2015 | 3Q-15 | 2015 (1) | 3Q-15(1) | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 9,483 | $ | 6,346 | 49.4 | % | $ | 6,288 | 50.8 | % | $ | 9,483 | $ | 9,780 | -3.0 | % | $ | 9,676 | -2.0 | % | ||||||||||||||||||||
Net premiums written | $ | 7,573 | $ | 4,709 | 60.8 | % | $ | 4,659 | 62.5 | % | $ | 7,573 | $ | 7,890 | -4.0 | % | $ | 7,799 | -2.9 | % | ||||||||||||||||||||
P&C net premiums written | $ | 7,041 | $ | 4,217 | 67.0 | % | $ | 4,171 | 68.8 | % | $ | 7,041 | $ | 7,375 | -4.5 | % | $ | 7,288 | -3.4 | % | ||||||||||||||||||||
Global P&C net premiums written | $ | 6,192 | $ | 3,480 | 78.0 | % | $ | 3,434 | 80.3 | % | $ | 6,192 | $ | 6,638 | -6.7 | % | $ | 6,551 | -5.5 | % | ||||||||||||||||||||
Net premiums earned | $ | 7,688 | $ | 4,719 | 62.9 | % | $ | 4,673 | 64.6 | % | $ | 7,688 | $ | 7,903 | -2.7 | % | $ | 7,811 | -1.6 | % | ||||||||||||||||||||
Net investment income | $ | 739 | $ | 549 | 34.7 | % | $ | 544 | 36.0 | % | ||||||||||||||||||||||||||||||
Adjusted net investment income | $ | 830 | $ | 549 | 51.2 | % | $ | 544 | 52.8 | % | ||||||||||||||||||||||||||||||
Operating income | $ | 1,356 | $ | 897 | 51.1 | % | $ | 890 | 52.4 | % | ||||||||||||||||||||||||||||||
Net income | $ | 1,360 | $ | 528 | 157.2 | % | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | $ | 1,376 | $ | (271 | ) | N/M | ||||||||||||||||||||||||||||||||||
Operating cash flow | $ | 1,684 | $ | 808 | ||||||||||||||||||||||||||||||||||||
P&C combined ratio | ||||||||||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 57.0 | % | 58.8 | % | 57.0 | % | 55.9 | % | ||||||||||||||||||||||||||||||||
Underwriting and administrative expense ratio | 29.0 | % | 27.1 | % | 28.5 | % | 29.1 | % | ||||||||||||||||||||||||||||||||
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Combined ratio | 86.0 | % | 85.9 | % | 85.5 | % | 85.0 | % | ||||||||||||||||||||||||||||||||
Operating return on equity (ROE) | 12.0 | % | 12.9 | % | ||||||||||||||||||||||||||||||||||||
ROE | 11.4 | % | 7.2 | % | ||||||||||||||||||||||||||||||||||||
Operating effective tax rate(2) | 18.4 | % | 13.5 | % | ||||||||||||||||||||||||||||||||||||
Effective tax rate | 17.0 | % | 20.0 | % | ||||||||||||||||||||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||||||||||||||||||
Operating income | $ | 2.88 | $ | 2.74 | 5.1 | % | ||||||||||||||||||||||||||||||||||
Net income | $ | 2.88 | $ | 1.62 | 77.8 | % | ||||||||||||||||||||||||||||||||||
Weighted average basic common shares outstanding | 468.0 | 324.2 | ||||||||||||||||||||||||||||||||||||||
Weighted average diluted common shares outstanding | 471.4 | 327.2 |
(1) | Prior periods on a constant dollar basis. |
(2) | Operating effective tax rate is dependent upon the mix of earnings from different jurisdictions with various tax rates. A change in the geographic mix of earnings would change the effective tax rate. The increase in the operating effective tax rate for the quarter was primarily due to a higher percentage of operating earnings being generated in higher tax paying jurisdictions. |
* | 2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results. |
Financial Highlights - QTR | Page 1 |
Chubb Limited
Consolidated Financial Highlights - Year to Date
(in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
As If * | ||||||||||||||||||||||||||||||||||||||||
Constant $ | Constant $ | |||||||||||||||||||||||||||||||||||||||
% Change | % Change | % Change | % Change | |||||||||||||||||||||||||||||||||||||
Nine months ended September 30 | YTD-16 vs | Constant $ | YTD-16 vs | Nine months ended September 30 | YTD-16 vs | Constant $ | YTD-16 vs | |||||||||||||||||||||||||||||||||
2016 | 2015 | YTD-15 | 2015 (1) | YTD-15(1) | 2016 | 2015 | YTD-15 | 2015 (1) | YTD-15(1) | |||||||||||||||||||||||||||||||
Gross premiums written | $ | 26,146 | $ | 18,172 | 43.9 | % | $ | 17,746 | 47.3 | % | $ | 27,078 | $ | 28,530 | -5.1 | % | $ | 27,918 | -3.0 | % | ||||||||||||||||||||
Net premiums written | $ | 21,207 | $ | 13,569 | 56.3 | % | $ | 13,225 | 60.4 | % | $ | 22,062 | $ | 23,214 | -5.0 | % | $ | 22,687 | -2.8 | % | ||||||||||||||||||||
P&C net premiums written | $ | 19,632 | $ | 12,086 | 62.4 | % | $ | 11,781 | 66.6 | % | $ | 20,486 | $ | 21,659 | -5.4 | % | $ | 21,173 | -3.2 | % | ||||||||||||||||||||
Global P&C net premiums written | $ | 18,344 | $ | 10,882 | 68.6 | % | $ | 10,577 | 73.4 | % | $ | 19,198 | $ | 20,455 | -6.1 | % | $ | 19,969 | -3.9 | % | ||||||||||||||||||||
Net premiums earned | $ | 21,690 | $ | 13,006 | 66.8 | % | $ | 12,698 | 70.8 | % | $ | 22,081 | $ | 22,443 | -1.6 | % | $ | 21,979 | 0.5 | % | ||||||||||||||||||||
Net investment income | $ | 2,121 | $ | 1,662 | 27.7 | % | $ | 1,638 | 29.5 | % | ||||||||||||||||||||||||||||||
Adjusted net investment income | $ | 2,413 | $ | 1,662 | 45.3 | % | $ | 1,638 | 47.4 | % | ||||||||||||||||||||||||||||||
Operating income (2) | $ | 3,433 | $ | 2,430 | 41.3 | % | $ | 2,392 | 43.5 | % | ||||||||||||||||||||||||||||||
Net income | $ | 2,525 | $ | 2,151 | 17.4 | % | ||||||||||||||||||||||||||||||||||
Comprehensive income | $ | 4,457 | $ | 768 | N/M | |||||||||||||||||||||||||||||||||||
Operating cash flow | $ | 3,837 | $ | 2,699 | ||||||||||||||||||||||||||||||||||||
P&C combined ratio | ||||||||||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 58.0 | % | 58.3 | % | 58.0 | % | 57.2 | % | ||||||||||||||||||||||||||||||||
Underwriting and administrative expense ratio | 31.0 | % | 28.9 | % | 30.2 | % | 30.4 | % | ||||||||||||||||||||||||||||||||
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Combined ratio | 89.0 | % | 87.2 | % | 88.2 | % | 87.6 | % | ||||||||||||||||||||||||||||||||
Operating return on equity (ROE) | 10.4 | % | 11.7 | % | ||||||||||||||||||||||||||||||||||||
ROE | 7.4 | % | 9.8 | % | ||||||||||||||||||||||||||||||||||||
Operating effective tax rate(2) | 17.3 | % | 14.0 | % | ||||||||||||||||||||||||||||||||||||
Effective tax rate | 18.1 | % | 15.5 | % | ||||||||||||||||||||||||||||||||||||
Diluted earnings per share | ||||||||||||||||||||||||||||||||||||||||
Operating income | $ | 7.40 | $ | 7.38 | 0.3 | % | ||||||||||||||||||||||||||||||||||
Net income | $ | 5.44 | $ | 6.53 | -16.7 | % | ||||||||||||||||||||||||||||||||||
Full nine months diluted earnings per share(3) | ||||||||||||||||||||||||||||||||||||||||
Operating income | $ | 7.42 | $ | 7.38 | 0.5 | % | ||||||||||||||||||||||||||||||||||
Net income | $ | 5.49 | $ | 6.53 | -15.9 | % | ||||||||||||||||||||||||||||||||||
% Change | ||||||||||||||||||||||||||||||||||||||||
December 31 | 3Q-16 vs | |||||||||||||||||||||||||||||||||||||||
2015 | 4Q-15 | |||||||||||||||||||||||||||||||||||||||
Book value per common share | $ | 103.96 | $ | 89.77 | 15.8 | % | ||||||||||||||||||||||||||||||||||
Book value per common share excluding foreign currency(4) | $ | 103.35 | $ | 89.77 | 15.1 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share | $ | 60.26 | $ | 72.25 | -16.6 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share excluding foreign currency(4) | $ | 60.05 | $ | 72.25 | -16.9 | % | ||||||||||||||||||||||||||||||||||
Weighted average basic common shares outstanding | 460.6 | 325.9 | 325.6 | |||||||||||||||||||||||||||||||||||||
Weighted average diluted common shares outstanding | 464.1 | 329.2 | 328.8 | |||||||||||||||||||||||||||||||||||||
Total hybrid & financial debt/capitalization | 21.7 | % | 25.0 | % |
(1) | Prior periods on a constant dollar basis. |
(2) | Operating effective tax rate is dependent upon the mix of earnings from different jurisdictions with various tax rates. A change in the geographic mix of earnings would change the effective tax rate. The increase in the operating effective tax rate for the year was primarily due to a higher percentage of operating earnings being generated in higher tax paying jurisdictions. |
(3) | Full nine months diluted earnings per share includes the combined company results inclusive of the first 14 days of January 2016 and includes the impact of purchase accounting adjustments related to The Chubb Corporation acquisition. |
(4) | For 2016, book value per common share and tangible book value per common share exclude the impact of foreign currency movement during the year. |
* | 2016 As If results: The 2016 and 2015 As If underwriting results do not include any impact from purchase accounting adjustments. The YTD 2016 combined company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Financial Highlights - YTD | Page 2 |
Chubb Limited
Statement of Operations - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)
Consolidated Statements of Operations
Legacy ACE | ||||||||||||||||||||||||||||||||||
Legacy ACE | YTD | YTD | Full Year | |||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||||
Gross premiums written | $9,483 | $9,274 | $7,389 | $5,639 | $6,346 | $26,146 | $18,172 | $23,811 | ||||||||||||||||||||||||||
Net premiums written | 7,573 | 7,639 | 5,995 | 4,144 | 4,709 | 21,207 | 13,569 | 17,713 | ||||||||||||||||||||||||||
Net premiums earned | 7,688 | 7,405 | 6,597 | 4,207 | 4,719 | 21,690 | 13,006 | 17,213 | ||||||||||||||||||||||||||
Losses and loss expenses | 4,269 | 4,254 | 3,674 | 2,302 | 2,643 | 12,197 | 7,182 | 9,484 | ||||||||||||||||||||||||||
Policy benefits | 155 | 146 | 126 | 159 | 89 | 427 | 384 | 543 | ||||||||||||||||||||||||||
Policy acquisition costs | 1,514 | 1,560 | 1,413 | 736 | 771 | 4,487 | 2,205 | 2,941 | ||||||||||||||||||||||||||
Administrative expenses | 772 | 829 | 772 | 570 | 568 | 2,373 | 1,700 | 2,270 | ||||||||||||||||||||||||||
Net investment income: | ||||||||||||||||||||||||||||||||||
(1) | Adjusted net investment income | 830 | 816 | 767 | 532 | 549 | 2,413 | 1,662 | 2,194 | |||||||||||||||||||||||||
Amortization expense of fair value adjustment on acquired invested assets | (91) | (108) | (93) | — | — | (292) | — | — | ||||||||||||||||||||||||||
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Total net investment income | 739 | 708 | 674 | 532 | 549 | 2,121 | 1,662 | 2,194 | ||||||||||||||||||||||||||
Net realized gains (losses): | ||||||||||||||||||||||||||||||||||
(2) | Adjusted realized gains (losses) | 97 | (214) | (394) | (57) | (393) | (511) | (354) | (411) | |||||||||||||||||||||||||
Realized gains (losses) on crop derivatives | 3 | (2) | — | (3) | (4) | 1 | (6) | (9) | ||||||||||||||||||||||||||
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Total net realized gains (losses) | 100 | (216) | (394) | (60) | (397) | (510) | (360) | (420) | ||||||||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||||||||||
(3) | Adjusted interest expense | 164 | 166 | 149 | 64 | 68 | 479 | 207 | 271 | |||||||||||||||||||||||||
Interest expense related to pre-acquisition debt | — | — | 7 | 29 | — | 7 | — | 29 | ||||||||||||||||||||||||||
Amortization benefit of fair value adjustment on acquired long term debt | (12) | (13) | (10) | — | — | (35) | — | — | ||||||||||||||||||||||||||
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Total interest expense | 152 | 153 | 146 | 93 | 68 | 451 | 207 | 300 | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||||||
Gains (losses) from fair value changes in separate account assets | 22 | 3 | (3) | 13 | (49) | 22 | (32) | (19) | ||||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities | 72 | 18 | (25) | (17) | 25 | 65 | 84 | 67 | ||||||||||||||||||||||||||
Other income (expense) - operating | (3) | 8 | — | (6) | 12 | 5 | 9 | 3 | ||||||||||||||||||||||||||
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Total other income (expense) | 91 | 29 | (28) | (10) | (12) | 92 | 61 | 51 | ||||||||||||||||||||||||||
Amortization expense of purchased intangibles | 4 | 5 | 7 | 35 | 51 | 16 | 136 | 171 | ||||||||||||||||||||||||||
Chubb integration expenses | 115 | 98 | 148 | 24 | 9 | 361 | 9 | 33 | ||||||||||||||||||||||||||
Income tax expense | 277 | 155 | 124 | 67 | 132 | 556 | 395 | 462 | ||||||||||||||||||||||||||
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Net income | $1,360 | $726 | $439 | $683 | $528 | $2,525 | $2,151 | $2,834 | ||||||||||||||||||||||||||
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(1) | Adjusted net investment income used throughout this report excludes amortization of fair value adjustment on acquired invested assets. |
(2) | Adjusted realized gains (losses) used throughout this report excludes realized gains (losses) on crop derivatives. |
(3) | Adjusted interest expense used throughout this report excludes interest expense related to pre-acquisition debt and amortization benefit of fair value adjustment on acquired long term debt. |
Statement of Operations | Page 3 |
Chubb Limited
P&C Underwriting Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Chubb Limited P&C Underwriting Results
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
P&C Underwriting Income (Including Corporate and excluding Life Insurance) | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 8,921 | $ | 8,717 | $ | 6,843 | $ | 5,091 | $ | 5,824 | $ | 24,481 | $ | 16,599 | $ | 21,690 | ||||||||||||||||
Net premiums written | 7,041 | 7,112 | 5,479 | 3,629 | 4,217 | 19,632 | 12,086 | 15,715 | ||||||||||||||||||||||||
Net premiums earned | 7,176 | 6,893 | 6,100 | 3,701 | 4,239 | 20,169 | 11,565 | 15,266 | ||||||||||||||||||||||||
Adjusted losses and loss expenses | 4,092 | 4,109 | 3,497 | 2,146 | 2,494 | 11,698 | 6,746 | 8,892 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) | 1,067 | 898 | 721 | 602 | 654 | 2,686 | 1,863 | 2,465 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible(1) | 320 | 525 | 570 | — | — | 1,415 | — | — | ||||||||||||||||||||||||
Administrative expenses | 695 | 752 | 700 | 500 | 494 | 2,147 | 1,479 | 1,979 | ||||||||||||||||||||||||
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P&C Underwriting income | $ | 1,002 | $ | 609 | $ | 612 | $ | 453 | $ | 597 | $ | 2,223 | $ | 1,477 | $ | 1,930 | ||||||||||||||||
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P&C Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 606 | $ | 434 | $ | 565 | $ | 2,217 | $ | 1,396 | $ | 1,830 | ||||||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | 67.0 | % | 66.0 | % | 52.8 | % | -4.6 | % | -0.4 | % | 62.4 | % | 0.8 | % | -0.5 | % | ||||||||||||||||
Net premiums earned | 69.3 | % | 77.9 | % | 76.7 | % | -4.4 | % | -0.6 | % | 74.4 | % | -0.2 | % | -1.3 | % | ||||||||||||||||
Net premiums written constant $ | 68.8 | % | 68.8 | % | 61.3 | % | 1.7 | % | 5.6 | % | 66.6 | % | 6.4 | % | 5.3 | % | ||||||||||||||||
Net premiums earned constant $ | 71.0 | % | 81.1 | % | 85.3 | % | 1.6 | % | 5.4 | % | 78.6 | % | 5.4 | % | 4.4 | % | ||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 79 | % | 82 | % | 80 | % | 71 | % | 72 | % | 80 | % | 73 | % | 72 | % | ||||||||||||||||
P&C combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 57.0 | % | 59.6 | % | 57.3 | % | 58.0 | % | 58.8 | % | 58.0 | % | 58.3 | % | 58.2 | % | ||||||||||||||||
Policy acquisition cost ratio | 19.3 | % | 20.6 | % | 21.2 | % | 16.2 | % | 15.4 | % | 20.3 | % | 16.1 | % | 16.1 | % | ||||||||||||||||
Administrative expense ratio | 9.7 | % | 11.0 | % | 11.5 | % | 13.5 | % | 11.7 | % | 10.7 | % | 12.8 | % | 13.1 | % | ||||||||||||||||
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Combined ratio | 86.0 | % | 91.2 | % | 90.0 | % | 87.7 | % | 85.9 | % | 89.0 | % | 87.2 | % | 87.4 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 88.9 | % | 89.9 | % | 89.9 | % | 88.4 | % | 89.2 | % | 89.5 | % | 89.0 | % | 88.8 | % | ||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 89.9 | % | 88.9 | % | 89.9 | % | 88.8 | % | 89.7 | % | 89.5 | % | ||||||||||||||||||||
P&C expense ratio | 29.0 | % | 31.6 | % | 32.7 | % | 29.7 | % | 27.1 | % | 31.0 | % | 28.9 | % | 29.2 | % | ||||||||||||||||
P&C expense ratio excluding A&H | 27.0 | % | 29.8 | % | 30.8 | % | 26.3 | % | 23.6 | % | 29.1 | % | 25.5 | % | 25.7 | % | ||||||||||||||||
Catastrophe reinstatement premiums (expensed) collected - pre-tax | $ | — | $ | 6 | $ | — | $ | (1 | ) | $ | — | $ | 6 | $ | — | $ | (1 | ) | ||||||||||||||
Catastrophe losses - pre-tax | $ | 144 | $ | 396 | $ | 258 | $ | 74 | $ | 72 | $ | 798 | $ | 247 | $ | 321 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (349 | ) | $ | (301 | ) | $ | (247 | ) | $ | (100 | ) | $ | (210 | ) | $ | (897 | ) | $ | (446 | ) | $ | (546 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 60.0 | % | 58.4 | % | 57.4 | % | 58.5 | % | 62.2 | % | 58.7 | % | 60.1 | % | 59.7 | % |
(1) | Purchase accounting adjustments related to the acquisition of The Chubb Corporation. |
Note: See Glossary on page 48 for further information on the calculation of the components of combined ratios.
P&C Results - Reported | Page 4 |
Chubb Limited
P&C Underwriting Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Chubb Limited P&C Underwriting Results - As If Basis
As If * | ||||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
P&C Underwriting Income (Including Corporate and excluding Life Insurance) | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 8,921 | $ | 8,717 | $ | 7,774 | $ | 8,359 | $ | 9,234 | $ | 25,412 | $ | 26,882 | $ | 35,241 | ||||||||||||||||
Net premiums written | 7,041 | 7,112 | 6,333 | 6,671 | 7,375 | 20,486 | 21,659 | 28,330 | ||||||||||||||||||||||||
Net premiums earned | 7,176 | 6,893 | 6,489 | 6,812 | 7,400 | 20,558 | 20,931 | 27,743 | ||||||||||||||||||||||||
Adjusted losses and loss expenses | 4,092 | 4,109 | 3,719 | 3,835 | 4,134 | 11,920 | 11,981 | 15,816 | ||||||||||||||||||||||||
Policy acquisition costs | 1,348 | 1,357 | 1,287 | 1,330 | 1,385 | 3,992 | 4,002 | 5,332 | ||||||||||||||||||||||||
Administrative expenses | 695 | 752 | 763 | 780 | 773 | 2,210 | 2,357 | 3,137 | ||||||||||||||||||||||||
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P&C Underwriting income | $ | 1,041 | $ | 675 | $ | 720 | $ | 867 | $ | 1,108 | $ | 2,436 | $ | 2,591 | $ | 3,458 | ||||||||||||||||
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P&C Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 714 | $ | 848 | $ | 1,076 | $ | 2,430 | $ | 2,510 | $ | 3,358 | ||||||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | -4.5 | % | -6.2 | % | -5.5 | % | -5.4 | % | ||||||||||||||||||||||||
Net premiums earned | -3.0 | % | -1.4 | % | -0.7 | % | -1.8 | % | ||||||||||||||||||||||||
Net premiums written constant $ | -3.4 | % | -4.7 | % | -1.4 | % | -3.2 | % | ||||||||||||||||||||||||
Net premiums earned constant $ | -1.9 | % | 0.1 | % | 2.9 | % | 0.3 | % | ||||||||||||||||||||||||
Net premiums written constant $ excluding merger-related underwriting actions, including additional reinsurance(1) | 1.1 | % | -1.2 | % | ||||||||||||||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 79 | % | 82 | % | 81 | % | 80 | % | 80 | % | 81 | % | 81 | % | 80 | % | ||||||||||||||||
P&C combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 57.0 | % | 59.6 | % | 57.3 | % | 56.3 | % | 55.9 | % | 58.0 | % | 57.2 | % | 57.0 | % | ||||||||||||||||
Policy acquisition cost ratio | 18.8 | % | 19.6 | % | 19.8 | % | 19.5 | % | 18.7 | % | 19.4 | % | 19.1 | % | 19.2 | % | ||||||||||||||||
Administrative expense ratio | 9.7 | % | 11.0 | % | 11.8 | % | 11.5 | % | 10.4 | % | 10.8 | % | 11.3 | % | 11.3 | % | ||||||||||||||||
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Combined ratio | 85.5 | % | 90.2 | % | 88.9 | % | 87.3 | % | 85.0 | % | 88.2 | % | 87.6 | % | 87.5 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 88.4 | % | 88.9 | % | 88.8 | % | 88.6 | % | 88.9 | % | 88.7 | % | 88.7 | % | 88.7 | % | ||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 88.8 | % | 88.9 | % | 89.4 | % | 88.0 | % | 89.1 | % | 89.0 | % | ||||||||||||||||||||
P&C expense ratio | 28.5 | % | 30.6 | % | 31.6 | % | 31.0 | % | 29.1 | % | 30.2 | % | 30.4 | % | 30.5 | % | ||||||||||||||||
P&C expense ratio excluding A&H | 26.4 | % | 28.8 | % | 29.8 | % | 29.1 | % | 27.3 | % | 28.3 | % | 28.5 | % | 28.6 | % | ||||||||||||||||
Catastrophe reinstatement premiums (expensed) collected - pre-tax | $ | — | $ | 6 | $ | — | $ | (1 | ) | $ | — | $ | 6 | $ | — | $ | (1 | ) | ||||||||||||||
Catastrophe losses - pre-tax | $ | 144 | $ | 396 | $ | 258 | $ | 158 | $ | 101 | $ | 798 | $ | 690 | $ | 848 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (349 | ) | $ | (301 | ) | $ | (247 | ) | $ | (253 | ) | $ | (389 | ) | $ | (897 | ) | $ | (917 | ) | $ | (1,170 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 60.0 | % | 58.4 | % | 57.4 | % | 57.6 | % | 59.8 | % | 58.6 | % | 58.4 | % | 58.2 | % |
(1) | Included in Q3 2016 is a decrease in net premiums written of $328 million, comprising of $260 million due to additional reinsurance purchased and $68 million due to other merger-related underwriting actions. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
P&C Results - As If | Page 5 |
Chubb Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
(Unaudited)
Legacy ACE | ||||||||||||||||
September 30 | June 30 | March 31 | December 31 | |||||||||||||
2016 | 2016 | 2016 | 2015 | |||||||||||||
Assets | ||||||||||||||||
Fixed maturities available for sale, at fair value | $ | 81,358 | $ | 79,951 | $ | 77,538 | $ | 43,587 | ||||||||
Fixed maturities held to maturity, at amortized cost | 10,927 | 11,090 | 11,280 | 8,430 | ||||||||||||
Equity securities, at fair value | 803 | 787 | 893 | 497 | ||||||||||||
Short-term investments, at fair value | 3,548 | 3,631 | 3,382 | 10,446 | ||||||||||||
Other investments | 4,400 | 4,387 | 4,493 | 3,291 | ||||||||||||
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Total investments | 101,036 | 99,846 | 97,586 | 66,251 | ||||||||||||
Cash | 870 | 1,011 | 1,091 | 1,775 | ||||||||||||
Securities lending collateral | 1,140 | 1,142 | 1,003 | 1,046 | ||||||||||||
Insurance and reinsurance balances receivable | 8,493 | 8,532 | 7,692 | 5,323 | ||||||||||||
Reinsurance recoverable on losses and loss expenses | 13,448 | 13,235 | 12,891 | 11,386 | ||||||||||||
Deferred policy acquisition costs | 4,238 | 3,948 | 3,376 | 2,873 | ||||||||||||
Value of business acquired | 368 | 381 | 390 | 395 | ||||||||||||
Prepaid reinsurance premiums | 2,449 | 2,464 | 2,376 | 2,082 | ||||||||||||
Goodwill and other intangible assets | 22,472 | 22,923 | 23,359 | 5,683 | ||||||||||||
Deferred tax assets | — | — | — | 318 | ||||||||||||
Investments in partially-owned insurance companies | 665 | 658 | 654 | 653 | ||||||||||||
Other assets | 6,631 | 6,063 | 6,226 | 4,521 | ||||||||||||
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Total assets | $ | 161,810 | $ | 160,203 | $ | 156,644 | $ | 102,306 | ||||||||
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Liabilities | ||||||||||||||||
Unpaid losses and loss expenses | $ | 61,347 | $ | 60,819 | $ | 60,206 | $ | 37,303 | ||||||||
Unearned premiums | 15,054 | 15,229 | 14,896 | 8,439 | ||||||||||||
Future policy benefits | 5,010 | 4,975 | 4,869 | 4,807 | ||||||||||||
Insurance and reinsurance balances payable | 4,885 | 4,944 | 4,733 | 4,270 | ||||||||||||
Securities lending payable | 1,141 | 1,143 | 1,004 | 1,047 | ||||||||||||
Accounts payable, accrued expenses, and other liabilities | 11,154 | 11,019 | 10,453 | 7,609 | ||||||||||||
Deferred tax liabilities | 1,418 | 1,409 | 1,142 | — | ||||||||||||
Short-term debt | 500 | 500 | 500 | — | ||||||||||||
Long-term debt | 12,621 | 12,631 | 12,636 | 9,389 | ||||||||||||
Trust preferred securities | 308 | 308 | 308 | 307 | ||||||||||||
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Total liabilities | 113,438 | 112,977 | 110,747 | 73,171 | ||||||||||||
Shareholders’ equity | ||||||||||||||||
Total shareholders’ equity, excl. AOCI | 47,175 | 46,045 | 45,530 | 29,870 | ||||||||||||
Accumulated other comprehensive income (AOCI) | 1,197 | 1,181 | 367 | (735 | ) | |||||||||||
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Total shareholders’ equity | 48,372 | 47,226 | 45,897 | 29,135 | ||||||||||||
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Total liabilities and shareholders’ equity | $ | 161,810 | $ | 160,203 | $ | 156,644 | $ | 102,306 | ||||||||
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Book value per common share | $ | 103.96 | $ | 101.56 | $ | 98.85 | $ | 89.77 | ||||||||
% change over prior quarter | 2.4 | % | 2.7 | % | 10.1 | % | -0.1 | % | ||||||||
Tangible book value per common share | $ | 60.26 | $ | 57.14 | $ | 53.83 | $ | 72.25 | ||||||||
% change over prior quarter | 5.5 | % | 6.1 | % | -25.5 | % | 0.0 | % |
Consol Bal Sheet | Page 6 |
Chubb Limited
Consolidated Net Premiums Written by Line of Business
(in millions of U.S. dollars)
(Unaudited)
Constant $ | ||||||||||||||||||||||||||||
% Change | ||||||||||||||||||||||||||||
3Q-16 vs. | ||||||||||||||||||||||||||||
As If 3Q-15 | ||||||||||||||||||||||||||||
Excluding | ||||||||||||||||||||||||||||
Constant $ | Merger-related | |||||||||||||||||||||||||||
% Change | % Change | Underwriting | ||||||||||||||||||||||||||
3Q-16 vs. | Constant $ (1) | 3Q-16 vs. | Actions | |||||||||||||||||||||||||
Legacy ACE | As If | As If | As If | As If | and | |||||||||||||||||||||||
3Q-16 | 3Q-15 | 3Q-15 | 3Q-15 | 3Q-15 | 3Q-15 | Total FF(2) | ||||||||||||||||||||||
Net premiums written | ||||||||||||||||||||||||||||
Commercial multiple peril(3) | $ | 228 | $ | — | $ | 247 | -7.7 | % | $ | 247 | -7.7 | % | -7.7 | % | ||||||||||||||
Commercial casualty | 955 | 595 | 932 | 2.5 | % | 930 | 2.7 | % | 7.8 | % | ||||||||||||||||||
Workers’ compensation | 471 | 178 | 493 | -4.5 | % | 493 | -4.5 | % | -3.2 | % | ||||||||||||||||||
Professional liability | 958 | 398 | 1,015 | -5.6 | % | 1,005 | -4.7 | % | -2.6 | % | ||||||||||||||||||
Surety | 158 | 86 | 161 | -1.9 | % | 156 | 1.3 | % | 1.3 | % | ||||||||||||||||||
Property and other short-tail lines | 905 | 635 | 983 | -7.9 | % | 961 | -5.8 | % | -3.1 | % | ||||||||||||||||||
International other casualty | 239 | 177 | 235 | 1.7 | % | 226 | 5.8 | % | 7.1 | % | ||||||||||||||||||
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Total Commercial P&C(2) | 3,914 | 2,069 | 4,066 | -3.7 | % | 4,018 | -2.6 | % | 0.0 | % | ||||||||||||||||||
Agriculture | 849 | 737 | 737 | 15.2 | % | 737 | 15.2 | % | 15.2 | % | ||||||||||||||||||
Personal automobile | 358 | 223 | 358 | 0.0 | % | 348 | 2.9 | % | 6.3 | % | ||||||||||||||||||
Personal homeowners | 680 | 180 | 874 | -22.2 | % | 874 | -22.2 | % | 2.9 | % | ||||||||||||||||||
Personal other | 383 | 188 | 404 | -5.2 | % | 388 | -1.3 | % | 0.8 | % | ||||||||||||||||||
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Total Personal lines(2) | 1,421 | 591 | 1,636 | -13.1 | % | 1,610 | -11.7 | % | 3.2 | % | ||||||||||||||||||
Total Property and Casualty lines | 6,184 | 3,397 | 6,439 | -4.0 | % | 6,365 | -2.8 | % | 2.6 | % | ||||||||||||||||||
Other Lines | ||||||||||||||||||||||||||||
Global A&H(2) (4) | 990 | 889 | 1,005 | -1.5 | % | 994 | -0.4 | % | 1.0 | % | ||||||||||||||||||
Reinsurance(2) | 131 | 185 | 185 | -29.8 | % | 182 | -28.5 | % | -25.0 | % | ||||||||||||||||||
Life | 268 | 238 | 261 | 2.7 | % | 258 | 3.9 | % | 3.9 | % | ||||||||||||||||||
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Total consolidated | $ | 7,573 | $ | 4,709 | $ | 7,890 | -4.0 | % | $ | 7,799 | -2.9 | % | 1.8 | % | ||||||||||||||
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(1) | Prior periods on a constant dollar basis. |
(2) | Included in Commercial P&C is a decrease in net premiums written of $104 million, comprising of $54 million due to additional reinsurance purchased and $50 million due to other merger-related underwriting actions. |
Included in Personal lines is a decrease in net premiums written of $204 million, comprising of $200 million due to additional reinsurance purchased and $4 million due to other merger-related underwriting actions. Premium related to Fireman’s Fund high net worth personal lines business was $76 million in 2016 compared to $109 million in 2015.
Included in Global A&H is a decrease in net premiums written of $14 million due to merger-related underwriting actions.
Included in Reinsurance is a decrease in net premiums written of $6 million due to additional reinsurance purchased.
(3) | Commercial multiple peril represents retail package business (property and general liability). |
(4) | For purposes of this schedule only, A&H results from our Combined North America and International businesses, normally included in the Life Insurance and Overseas General Insurance segments, respectively, as well as the A&H results of our North America Commercial P&C segment, are included in the Global A&H line item above. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results.
Line of Business | Page 7 |
Chubb Limited
Consolidated Results - Three months ended September 30, 2016
(in millions of U.S. dollars, except ratios)
(Unaudited)
North | North | North | ||||||||||||||||||||||||||||||||||
America | America | America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | Life | Total | |||||||||||||||||||||||||||||
Q3 2016 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | P&C | Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 3,110 | $ | 1,011 | $ | 849 | $ | 1,940 | $ | 131 | $ | — | $ | 7,041 | $ | 532 | $ | 7,573 | ||||||||||||||||||
Net premiums earned | 3,086 | 1,081 | 819 | 2,034 | 156 | — | 7,176 | 512 | 7,688 | |||||||||||||||||||||||||||
Adjusted losses and loss expenses | 1,863 | 594 | 680 | 843 | 49 | 63 | 4,092 | 174 | 4,266 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 155 | 155 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets(1) | — | — | — | — | — | — | — | (22 | ) | (22 | ) | |||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) | 346 | 128 | 48 | 503 | 42 | — | 1,067 | 127 | 1,194 | |||||||||||||||||||||||||||
Amortization of acquired UPR intangible (2) | 176 | 101 | — | 43 | — | — | 320 | — | 320 | |||||||||||||||||||||||||||
Administrative expenses | 275 | 89 | 1 | 261 | 12 | 57 | 695 | 77 | 772 | |||||||||||||||||||||||||||
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Underwriting income (loss) | 426 | 169 | 90 | 384 | 53 | (120 | ) | 1,002 | 1 | 1,003 | ||||||||||||||||||||||||||
Adjusted net investment income | 477 | 53 | 5 | 152 | 67 | 5 | 759 | 71 | 830 | |||||||||||||||||||||||||||
Other income (expense) - operating (1) | (3 | ) | (2 | ) | — | 6 | — | (2 | ) | (1 | ) | (2 | ) | (3 | ) | |||||||||||||||||||||
Amortization (expense) benefit of purchased intangibles | — | (4 | ) | (7 | ) | (12 | ) | — | 20 | (3 | ) | (1 | ) | (4 | ) | |||||||||||||||||||||
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Segment income (loss) | $ | 900 | $ | 216 | $ | 88 | $ | 530 | $ | 120 | $ | (97 | ) | $ | 1,757 | $ | 69 | $ | 1,826 | |||||||||||||||||
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Adjusted interest expense | (164 | ) | (164 | ) | ||||||||||||||||||||||||||||||||
Income tax expense | (306 | ) | (306 | ) | ||||||||||||||||||||||||||||||||
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Operating income (loss) | (567 | ) | 1,356 | |||||||||||||||||||||||||||||||||
Chubb integration expenses, net of $30 million tax benefit | (85 | ) | (85 | ) | ||||||||||||||||||||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of $26 million tax benefit(2) | (53 | ) | (53 | ) | ||||||||||||||||||||||||||||||||
Adjusted net realized gains (losses), net of $15 million tax | 82 | 82 | ||||||||||||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities, net of $12 million tax | 60 | 60 | ||||||||||||||||||||||||||||||||||
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Net income (loss) | $ | (563 | ) | $ | 1,360 | |||||||||||||||||||||||||||||||
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Combined ratio | 86.2 | % | 84.4 | % | 88.9 | % | 81.2 | % | 66.3 | % | 86.0 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD | 89.4 | % | 78.8 | % | 90.1 | % | 91.1 | % | 78.1 | % | 88.9 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified for underwriting income presentation from Other income (expense). |
(2) | Related to the acquisition of The Chubb Corporation. |
Consol Results 2016 - QTD | Page 8 |
Chubb Limited
Consolidated Results - Three months ended September 30, 2015
(in millions of U.S. dollars, except ratios)
(Unaudited)
Legacy ACE | ||||||||||||||||||||||||||||||||||||
North | North | North | ||||||||||||||||||||||||||||||||||
America | America | America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | Life | Total | |||||||||||||||||||||||||||||
Q3 2015 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | P&C | Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 1,433 | $ | 278 | $ | 737 | $ | 1,584 | $ | 185 | $ | — | $ | 4,217 | $ | 492 | $ | 4,709 | ||||||||||||||||||
Net premiums earned | 1,410 | 272 | 739 | 1,615 | 203 | — | 4,239 | 480 | 4,719 | |||||||||||||||||||||||||||
Adjusted Losses and loss expenses | 913 | 179 | 624 | 674 | 20 | 84 | 2,494 | 153 | 2,647 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 89 | 89 | |||||||||||||||||||||||||||
(Gains) losses from fair value | — | — | — | — | — | — | — | 49 | 49 | |||||||||||||||||||||||||||
Policy acquisition costs | 142 | 13 | 42 | 405 | 52 | — | 654 | 117 | 771 | |||||||||||||||||||||||||||
Administrative expenses | 154 | 36 | — | 246 | 12 | 46 | 494 | 74 | 568 | |||||||||||||||||||||||||||
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Underwriting income (loss) | 201 | 44 | 73 | 290 | 119 | (130 | ) | 597 | (2 | ) | 595 | |||||||||||||||||||||||||
Net investment income | 260 | 7 | 5 | 132 | 76 | 3 | 483 | 66 | 549 | |||||||||||||||||||||||||||
Other income (expense) - operating (1) | 3 | (1 | ) | 1 | 6 | 4 | (2 | ) | 11 | 1 | 12 | |||||||||||||||||||||||||
Amortization expense of purchased intangibles | — | (31 | ) | (8 | ) | (12 | ) | — | — | (51 | ) | — | (51 | ) | ||||||||||||||||||||||
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Segment income (loss) | $ | 464 | $ | 19 | $ | 71 | $ | 416 | $ | 199 | $ | (129 | ) | $ | 1,040 | $ | 65 | $ | 1,105 | |||||||||||||||||
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Interest expense | (68 | ) | (68 | ) | ||||||||||||||||||||||||||||||||
Income tax expense | (140 | ) | (140 | ) | ||||||||||||||||||||||||||||||||
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Operating income (loss) | (337 | ) | 897 | |||||||||||||||||||||||||||||||||
Chubb integration expenses, net of $2 million tax benefit | (7 | ) | (7 | ) | ||||||||||||||||||||||||||||||||
Adjusted net realized gains (losses), net of $13 million tax benefit | (380 | ) | (380 | ) | ||||||||||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities, net of $7 million tax |
| 18 | 18 | |||||||||||||||||||||||||||||||||
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Net income (loss) | $ | (706 | ) | $ | 528 | |||||||||||||||||||||||||||||||
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Combined ratio | 85.8 | % | 83.7 | % | 90.2 | % | 82.0 | % | 41.2 | % | 85.9 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD | 89.3 | % | 70.5 | % | 90.8 | % | 90.5 | % | 75.3 | % | 89.2 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified for underwriting income presentation from Other income (expense). |
Consol Results 2015 - QTD | Page 9 |
Chubb Limited
Consolidated Results - Nine months ended September 30, 2016
(in millions of U.S. dollars, except ratios)
(Unaudited)
North | North | North | ||||||||||||||||||||||||||||||||||
America | America | America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | Life | Total | |||||||||||||||||||||||||||||
YTD 2016 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | P&C | Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 8,657 | $ | 3,113 | $ | 1,288 | $ | 6,012 | $ | 562 | $ | — | $ | 19,632 | $ | 1,575 | $ | 21,207 | ||||||||||||||||||
Net premiums earned | 9,130 | 3,245 | 1,169 | 6,082 | 543 | — | 20,169 | 1,521 | 21,690 | |||||||||||||||||||||||||||
Adjusted losses and loss expenses | 5,581 | 1,916 | 936 | 2,953 | 225 | 87 | 11,698 | 498 | 12,196 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 427 | 427 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets(1) | — | — | — | — | — | — | — | (22 | ) | (22 | ) | |||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) | 768 | 300 | 77 | 1,399 | 142 | — | 2,686 | 386 | 3,072 | |||||||||||||||||||||||||||
Amortization of acquired UPR intangible (2) | 781 | 447 | — | 187 | — | — | 1,415 | — | 1,415 | |||||||||||||||||||||||||||
Administrative expenses | 840 | 275 | (1 | ) | 801 | 40 | 192 | 2,147 | 226 | 2,373 | ||||||||||||||||||||||||||
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Underwriting income (loss) | 1,160 | 307 | 157 | 742 | 136 | (279 | ) | 2,223 | 6 | 2,229 | ||||||||||||||||||||||||||
Adjusted net investment income | 1,371 | 155 | 15 | 445 | 199 | 21 | 2,206 | 207 | 2,413 | |||||||||||||||||||||||||||
Other income (expense) - operating (1) | 6 | (6 | ) | — | 16 | 3 | (6 | ) | 13 | (8 | ) | 5 | ||||||||||||||||||||||||
Amortization (expense) benefit of purchased intangibles | — | (16 | ) | (22 | ) | (36 | ) | — | 60 | (14 | ) | (2 | ) | (16 | ) | |||||||||||||||||||||
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Segment income (loss) | $ | 2,537 | $ | 440 | $ | 150 | $ | 1,167 | $ | 338 | $ | (204 | ) | $ | 4,428 | $ | 203 | $ | 4,631 | |||||||||||||||||
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Adjusted interest expense | (479 | ) | (479 | ) | ||||||||||||||||||||||||||||||||
Income tax expense | (719 | ) | (719 | ) | ||||||||||||||||||||||||||||||||
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Operating income (loss) | (1,402 | ) | 3,433 | |||||||||||||||||||||||||||||||||
Chubb integration and related expenses, net of $106 million tax benefit | (262 | ) | (262 | ) | ||||||||||||||||||||||||||||||||
Amortization of fair value adjustment of acquired investedassets and long-term debt, net of $79 million tax benefit (2) | (178 | ) | (178 | ) | ||||||||||||||||||||||||||||||||
Adjusted net realized gains (losses), net of $13 million tax | (524 | ) | (524 | ) | ||||||||||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities, net of $9 million tax | 56 | 56 | ||||||||||||||||||||||||||||||||||
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Net income (loss) | $ | (2,310 | ) | $ | 2,525 | |||||||||||||||||||||||||||||||
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Combined ratio | 87.3 | % | 90.5 | % | 86.6 | % | 87.8 | % | 75.0 | % | 89.0 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD | 89.5 | % | 81.4 | % | 90.0 | % | 91.5 | % | 78.5 | % | 89.5 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified for underwriting income presentation from Other income (expense). |
(2) | Related to the acquisition of The Chubb Corporation. |
Consol Results 2016 - YTD | Page 10 |
Chubb Limited
Consolidated Results - Nine months ended September 30, 2015
(in millions of U.S. dollars, except ratios)
(Unaudited)
Legacy ACE | ||||||||||||||||||||||||||||||||||||
North | North | North | ||||||||||||||||||||||||||||||||||
America | America | America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | Life | Total | |||||||||||||||||||||||||||||
YTD 2015 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | P&C | Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 4,158 | $ | 958 | $ | 1,204 | $ | 5,047 | $ | 719 | $ | — | $ | 12,086 | $ | 1,483 | $ | 13,569 | ||||||||||||||||||
Net premiums earned | 4,209 | 687 | 1,124 | 4,896 | 649 | — | 11,565 | 1,441 | 13,006 | |||||||||||||||||||||||||||
Adjusted losses and loss expenses | 2,744 | 446 | 919 | 2,304 | 191 | 142 | 6,746 | 443 | 7,188 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 383 | 384 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets(1) | — | — | — | — | — | — | — | 32 | 32 | |||||||||||||||||||||||||||
Policy acquisition costs | 403 | 43 | 61 | 1,190 | 166 | — | 1,863 | 342 | 2,205 | |||||||||||||||||||||||||||
Administrative expenses | 459 | 89 | 3 | 756 | 37 | 135 | 1,479 | 221 | 1,700 | |||||||||||||||||||||||||||
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Underwriting income (loss) | 603 | 109 | 141 | 646 | 255 | (277 | ) | 1,477 | 20 | 1,497 | ||||||||||||||||||||||||||
Net investment income | 780 | 19 | 17 | 409 | 230 | 9 | 1,464 | 198 | 1,662 | |||||||||||||||||||||||||||
Other income (expense) - operating (1) | 5 | (1 | ) | (1 | ) | 12 | 5 | (11 | ) | 9 | — | 9 | ||||||||||||||||||||||||
Amortization expense of purchased intangibles | — | (63 | ) | (22 | ) | (50 | ) | — | — | (135 | ) | (1 | ) | (136 | ) | |||||||||||||||||||||
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Segment income (loss) | $ | 1,388 | $ | 64 | $ | 135 | $ | 1,017 | $ | 490 | $ | (279 | ) | $ | 2,815 | $ | 217 | $ | 3,032 | |||||||||||||||||
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Interest expense | (207 | ) | (207 | ) | ||||||||||||||||||||||||||||||||
Income tax expense | (395 | ) | (395 | ) | ||||||||||||||||||||||||||||||||
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Operating income (loss) | (881 | ) | 2,430 | |||||||||||||||||||||||||||||||||
Chubb integration expenses, net of $2 million tax benefit | (7 | ) | (7 | ) | ||||||||||||||||||||||||||||||||
Adjusted net realized gains (losses), net of $10 million tax benefit | (344 | ) | (344 | ) | ||||||||||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities, net of $12 million tax | 72 | 72 | ||||||||||||||||||||||||||||||||||
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Net income (loss) | $ | (1,160 | ) | $ | 2,151 | |||||||||||||||||||||||||||||||
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Combined ratio | 85.7 | % | 84.1 | % | 87.5 | % | 86.8 | % | 60.6 | % | 87.2 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD | 88.7 | % | 71.6 | % | 90.1 | % | 90.2 | % | 76.8 | % | 89.0 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified for underwriting income presentation from Other income (expense). |
Consol Results 2015 - YTD | Page 11 |
Chubb Limited
Segment Results - As If Basis
(in millions of U.S. dollars, except ratios)
(Unaudited)
As If * (excluding purchase accounting adjustments) | ||||||||||||||||||||||||||||||||||||
North America | North America | North America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | |||||||||||||||||||||||||||||||
Q3 2016 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | Total P&C | Life Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 3,110 | $ | 1,011 | $ | 849 | $ | 1,940 | $ | 131 | $ | — | $ | 7,041 | $ | 532 | $ | 7,573 | ||||||||||||||||||
Net premiums earned | 3,086 | 1,081 | 819 | 2,034 | 156 | — | 7,176 | 512 | 7,688 | |||||||||||||||||||||||||||
Adjusted losses and loss expenses | 1,863 | 594 | 680 | 843 | 49 | 63 | 4,092 | 174 | 4,266 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 155 | 155 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | — | — | — | — | — | — | — | (22 | ) | (22 | ) | |||||||||||||||||||||||||
Policy acquisition costs | 496 | 211 | 48 | 551 | 42 | — | 1,348 | 127 | 1,475 | |||||||||||||||||||||||||||
Administrative expenses | 275 | 89 | 1 | 261 | 12 | 57 | 695 | 77 | 772 | |||||||||||||||||||||||||||
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Adjusted underwriting income (loss) | $ | 452 | $ | 187 | $ | 90 | $ | 379 | $ | 53 | $ | (120 | ) | $ | 1,041 | $ | 1 | $ | 1,042 | |||||||||||||||||
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Adjusted combined ratio | 85.3 | % | 82.8 | % | 88.9 | % | 81.4 | % | 66.3 | % | 85.5 | % | ||||||||||||||||||||||||
Adjusted combined ratio excluding catastrophe losses and PPD | 88.6 | % | 77.2 | % | 90.1 | % | 91.3 | % | 78.1 | % | 88.4 | % | ||||||||||||||||||||||||
As If * (excluding purchase accounting adjustments) | ||||||||||||||||||||||||||||||||||||
North America | North America | North America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | |||||||||||||||||||||||||||||||
Q3 2015 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | Total P&C | Life Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 3,186 | $ | 1,210 | $ | 737 | $ | 2,057 | $ | 185 | $ | — | $ | 7,375 | $ | 515 | $ | 7,890 | ||||||||||||||||||
Net premiums earned | 3,156 | 1,147 | 739 | 2,146 | 212 | — | 7,400 | 503 | 7,903 | |||||||||||||||||||||||||||
Adjusted losses and loss expenses | 1,798 | 629 | 624 | 948 | 21 | 114 | 4,134 | 165 | 4,299 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 89 | 89 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | — | — | — | — | — | — | — | 49 | 49 | |||||||||||||||||||||||||||
Policy acquisition costs | 517 | 211 | 42 | 563 | 52 | — | 1,385 | 120 | 1,505 | |||||||||||||||||||||||||||
Administrative expenses | 288 | 98 | — | 290 | 13 | 84 | 773 | 83 | 856 | |||||||||||||||||||||||||||
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Underwriting income (loss) | $ | 553 | $ | 209 | $ | 73 | $ | 345 | $ | 126 | $ | (198 | ) | $ | 1,108 | $ | (3 | ) | $ | 1,105 | ||||||||||||||||
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Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 177 | $ | 1,076 | $ | 1,073 | ||||||||||||||||||||||||||||||
Combined ratio | 82.5 | % | 81.8 | % | 90.2 | % | 83.9 | % | 40.3 | % | 85.0 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD | 88.4 | % | 77.6 | % | 90.8 | % | 92.7 | % | 75.4 | % | 88.9 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 80.4 | % | 89.4 | % |
The following table presents the reconciliation of Q3 2016 underwriting income (loss) for each segment to Q3 2016 adjusted underwriting income (loss) shown above.
North America | North America | North America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | |||||||||||||||||||||||||||||||
Q3 2016 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | Total P&C | Life Insurance | Consolidated | |||||||||||||||||||||||||||
Underwriting income (loss) | $ | 426 | $ | 169 | $ | 90 | $ | 384 | $ | 53 | $ | (120 | ) | $ | 1,002 | $ | 1 | $ | 1,003 | |||||||||||||||||
Less: amortization of acquired UPR intangible (1) | 176 | 101 | — | 43 | — | — | 320 | — | 320 | |||||||||||||||||||||||||||
Add: elimination of DAC benefit(1) | (150 | ) | (83 | ) | — | (48 | ) | — | — | (281 | ) | — | (281 | ) | ||||||||||||||||||||||
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Adjusted underwriting income (loss) | $ | 452 | $ | 187 | $ | 90 | $ | 379 | $ | 53 | $ | (120 | ) | $ | 1,041 | $ | 1 | $ | 1,042 | |||||||||||||||||
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(1) | Related to the acquisition of The Chubb Corporation. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
As If - QTD | Page 12 |
Chubb Limited
Segment Results - As If Basis
(in millions of U.S. dollars, except ratios)
(Unaudited)
As If * (excluding purchase accounting adjustments) | ||||||||||||||||||||||||||||||||||||
North America | North America | North America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | |||||||||||||||||||||||||||||||
YTD 2016 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | Total P&C | Life Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 9,176 | $ | 3,213 | $ | 1,288 | $ | 6,227 | $ | 582 | $ | — | $ | 20,486 | $ | 1,576 | $ | 22,062 | ||||||||||||||||||
Net premiums earned | 9,338 | 3,355 | 1,169 | 6,153 | 543 | — | 20,558 | 1,523 | 22,081 | |||||||||||||||||||||||||||
Adjusted losses and loss expenses | 5,708 | 1,969 | 936 | 2,995 | 225 | 87 | 11,920 | 498 | 12,418 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 427 | 427 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | — | — | — | — | — | — | — | (22 | ) | (22 | ) | |||||||||||||||||||||||||
Policy acquisition costs | 1,464 | 683 | 77 | 1,626 | 142 | — | 3,992 | 387 | 4,379 | |||||||||||||||||||||||||||
Administrative expenses | 875 | 288 | (1 | ) | 813 | 40 | 195 | 2,210 | 227 | 2,437 | ||||||||||||||||||||||||||
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Adjusted underwriting income (loss) | $ | 1,291 | $ | 415 | $ | 157 | $ | 719 | $ | 136 | $ | (282 | ) | $ | 2,436 | $ | 6 | $ | 2,442 | |||||||||||||||||
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Adjusted combined ratio | 86.2 | % | 87.6 | % | 86.6 | % | 88.3 | % | 75.0 | % | 88.2 | % | ||||||||||||||||||||||||
Adjusted combined ratio excluding catastrophe losses and PPD | 88.4 | % | 78.8 | % | 90.0 | % | 92.0 | % | 78.5 | % | 88.7 | % | ||||||||||||||||||||||||
As If * (excluding purchase accounting adjustments) | ||||||||||||||||||||||||||||||||||||
North America | North America | North America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | |||||||||||||||||||||||||||||||
YTD 2015 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | Total P&C | Life Insurance | Consolidated | |||||||||||||||||||||||||||
Net premiums written | $ | 9,367 | $ | 3,669 | $ | 1,204 | $ | 6,673 | $ | 746 | $ | — | $ | 21,659 | $ | 1,555 | $ | 23,214 | ||||||||||||||||||
Net premiums earned | 9,344 | 3,314 | 1,124 | 6,482 | 667 | — | 20,931 | 1,512 | 22,443 | |||||||||||||||||||||||||||
Adjusted losses and loss expenses | 5,498 | 2,072 | 919 | 3,109 | 192 | 191 | 11,981 | 477 | 12,458 | |||||||||||||||||||||||||||
Policy benefits | — | — | — | — | — | — | — | 384 | 384 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | — | — | — | — | — | — | — | 32 | 32 | |||||||||||||||||||||||||||
Policy acquisition costs | 1,482 | 630 | 61 | 1,663 | 166 | — | 4,002 | 356 | 4,358 | |||||||||||||||||||||||||||
Administrative expenses | 883 | 283 | 3 | 911 | 43 | 234 | 2,357 | 248 | 2,605 | |||||||||||||||||||||||||||
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Underwriting income (loss) | $ | 1,481 | $ | 329 | $ | 141 | $ | 799 | $ | 266 | $ | (425 | ) | $ | 2,591 | $ | 15 | $ | 2,606 | |||||||||||||||||
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Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 229 | $ | 2,491 | $ | 2,506 | ||||||||||||||||||||||||||||||
Combined ratio | 84.2 | % | 90.1 | % | 87.5 | % | 87.7 | % | 59.9 | % | 87.6 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD | 88.2 | % | 79.1 | % | 90.1 | % | 91.7 | % | 77.2 | % | 88.7 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 81.5 | % | 89.1 | % |
The following table presents the reconciliation of YTD 2016 underwriting income (loss) for each segment to YTD 2016 adjusted underwriting income (loss) shown above.
North America | North America | North America | Overseas | |||||||||||||||||||||||||||||||||
Commercial P&C | Personal P&C | Agricultural | General | Global | Total | |||||||||||||||||||||||||||||||
YTD 2016 | Insurance | Insurance | Insurance | Insurance | Reinsurance | Corporate | Total P&C | Life Insurance | Consolidated | |||||||||||||||||||||||||||
Underwriting income (loss) | $ | 1,160 | $ | 307 | $ | 157 | $ | 742 | $ | 136 | $ | (279 | ) | $ | 2,223 | $ | 6 | $ | 2,229 | |||||||||||||||||
Add: Pre-acquisition underwriting income (loss) (14 days prior to close) | 13 | 30 | — | 4 | — | (3 | ) | 44 | — | 44 | ||||||||||||||||||||||||||
Less: amortization of acquired UPR intangible (1) | 781 | 447 | — | 187 | — | — | 1,415 | — | 1,415 | |||||||||||||||||||||||||||
Add: elimination of DAC benefit(1) | (663 | ) | (369 | ) | — | (214 | ) | — | — | (1,246 | ) | — | (1,246 | ) | ||||||||||||||||||||||
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Adjusted underwriting income (loss) | $ | 1,291 | $ | 415 | $ | 157 | $ | 719 | $ | 136 | $ | (282 | ) | $ | 2,436 | $ | 6 | $ | 2,442 | |||||||||||||||||
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(1) | Related to the acquisition of The Chubb Corporation. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
As If - YTD | Page 13 |
Chubb Limited
Global P&C Underwriting Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Global P&C includes the company’s North America Commercial P&C Insurance segment (refer to page 16), North America Personal P&C Insurance segment (refer to page 18), Overseas General Insurance segment (refer to page 21), Global Reinsurance segment (refer to page 23), and Corporate (refer to page 27). Global P&C excludes the North America Agricultural Insurance and Life Insurance segments.
Global P&C (Including Corporate and excluding Agriculture)
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Global P&C Underwriting Income | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 7,681 | $ | 8,172 | $ | 6,707 | $ | 4,821 | $ | 4,581 | $ | 22,560 | $ | 14,662 | $ | 19,483 | ||||||||||||||||
Net premiums written | 6,192 | 6,737 | 5,415 | 3,487 | 3,480 | 18,344 | 10,882 | 14,369 | ||||||||||||||||||||||||
Net premiums earned | 6,357 | 6,566 | 6,077 | 3,461 | 3,500 | 19,000 | 10,441 | 13,902 | ||||||||||||||||||||||||
Losses and loss expenses | 3,412 | 3,823 | 3,527 | 1,968 | 1,870 | 10,762 | 5,827 | 7,795 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) | 1,019 | 873 | 717 | 594 | 612 | 2,609 | 1,802 | 2,396 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible(1) | 320 | 525 | 570 | — | — | 1,415 | — | — | ||||||||||||||||||||||||
Administrative expenses | 694 | 750 | 704 | 502 | 494 | 2,148 | 1,476 | 1,978 | ||||||||||||||||||||||||
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Global P&C Underwriting income | $ | 912 | $ | 595 | $ | 559 | $ | 397 | $ | 524 | $ | 2,066 | $ | 1,336 | $ | 1,733 | ||||||||||||||||
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Global P&C Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 553 | $ | 378 | $ | 492 | $ | 2,060 | $ | 1,255 | $ | 1,633 | ||||||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | 78.0 | % | 72.5 | % | 54.9 | % | -2.0 | % | 0.3 | % | 68.6 | % | 2.3 | % | 1.2 | % | ||||||||||||||||
Net premiums earned | 81.6 | % | 84.8 | % | 79.4 | % | -2.4 | % | 0.0 | % | 82.0 | % | 0.5 | % | -0.3 | % | ||||||||||||||||
Net premiums written constant $ | 80.3 | % | 75.7 | % | 63.6 | % | 4.9 | % | 7.8 | % | 73.4 | % | 8.7 | % | 7.7 | % | ||||||||||||||||
Net premiums earned constant $ | 83.8 | % | 88.4 | % | 88.3 | % | 4.3 | % | 7.6 | % | 86.8 | % | 6.8 | % | 6.2 | % | ||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 81 | % | 82 | % | 81 | % | 72 | % | 76 | % | 81 | % | 74 | % | 74 | % | ||||||||||||||||
Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 53.7 | % | 58.2 | % | 58.0 | % | 56.9 | % | 53.4 | % | 56.6 | % | 55.8 | % | 56.1 | % | ||||||||||||||||
Policy acquisition cost ratio | 21.1 | % | 21.3 | % | 21.2 | % | 17.1 | % | 17.5 | % | 21.2 | % | 17.3 | % | 17.2 | % | ||||||||||||||||
Administrative expense ratio | 10.9 | % | 11.4 | % | 11.6 | % | 14.5 | % | 14.1 | % | 11.3 | % | 14.1 | % | 14.2 | % | ||||||||||||||||
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Combined ratio | 85.7 | % | 90.9 | % | 90.8 | % | 88.5 | % | 85.0 | % | 89.1 | % | 87.2 | % | 87.5 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 88.8 | % | 89.8 | % | 90.0 | % | 89.1 | % | 88.8 | % | 89.5 | % | 88.8 | % | 88.9 | % | ||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 90.1 | % | 89.6 | % | 89.8 | % | 88.8 | % | 89.6 | % | 89.6 | % | ||||||||||||||||||||
Expense ratio | 32.0 | % | 32.7 | % | 32.8 | % | 31.6 | % | 31.6 | % | 32.5 | % | 31.4 | % | 31.4 | % | ||||||||||||||||
Expense ratio excluding A&H | 30.0 | % | 31.0 | % | 31.0 | % | 28.3 | % | 28.2 | % | 30.7 | % | 28.1 | % | 28.1 | % | ||||||||||||||||
Catastrophe reinstatement premiums (expensed) collected - pre-tax | $ | — | $ | 6 | $ | — | $ | (1 | ) | $ | — | $ | 6 | $ | — | $ | (1 | ) | ||||||||||||||
Catastrophe losses - pre-tax | $ | 143 | $ | 382 | $ | 256 | $ | 73 | $ | 72 | $ | 781 | $ | 239 | $ | 312 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (338 | ) | $ | (301 | ) | $ | (206 | ) | $ | (93 | ) | $ | (205 | ) | $ | (845 | ) | $ | (408 | ) | $ | (501 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 56.9 | % | 57.1 | % | 57.2 | % | 57.3 | % | 57.3 | % | 57.1 | % | 57.5 | % | 57.4 | % |
(1) | Related to the acquisition of The Chubb Corporation. |
Global P&C - Reported | Page 14 |
Chubb Limited
Global P&C Underwriting Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Global P&C includes the company’s North America Commercial P&C Insurance segment (refer to page 17), North America Personal P&C Insurance segment (refer to page 19), Overseas General Insurance segment (refer to page 22), Global Reinsurance segment (refer to page 24), and Corporate (refer to page 27). Global P&C excludes the North America Agricultural Insurance and Life Insurance segments.
Global P&C (Including Corporate and excluding Agriculture)
As If * | ||||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Global P&C Underwriting Income | ||||||||||||||||||||||||||||||||
Gross premiums written | $ | 7,681 | $ | 8,172 | $ | 7,638 | $ | 8,089 | $ | 7,991 | $ | 23,491 | $ | 24,945 | $ | 33,034 | ||||||||||||||||
Net premiums written | 6,192 | 6,737 | 6,269 | 6,529 | 6,638 | 19,198 | 20,455 | 26,984 | ||||||||||||||||||||||||
Net premiums earned | 6,357 | 6,566 | 6,466 | 6,572 | 6,661 | 19,389 | 19,807 | 26,379 | ||||||||||||||||||||||||
Losses and loss expenses | 3,412 | 3,823 | 3,749 | 3,657 | 3,510 | 10,984 | 11,062 | 14,719 | ||||||||||||||||||||||||
Policy acquisition costs | 1,300 | 1,332 | 1,283 | 1,322 | 1,343 | 3,915 | 3,941 | 5,263 | ||||||||||||||||||||||||
Administrative expenses | 694 | 750 | 767 | 782 | 773 | 2,211 | 2,354 | 3,136 | ||||||||||||||||||||||||
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Global P&C Underwriting income | $ | 951 | $ | 661 | $ | 667 | $ | 811 | $ | 1,035 | $ | 2,279 | $ | 2,450 | $ | 3,261 | ||||||||||||||||
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Global P&C Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 661 | $ | 792 | $ | 1,003 | $ | 2,273 | $ | 2,369 | $ | 3,161 | ||||||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | -6.7 | % | -6.5 | % | -5.2 | % | -6.1 | % | ||||||||||||||||||||||||
Net premiums earned | -4.5 | % | -1.6 | % | -0.1 | % | -2.1 | % | ||||||||||||||||||||||||
Net premiums written constant $ | -5.5 | % | -4.9 | % | -1.0 | % | -3.9 | % | ||||||||||||||||||||||||
Net premiums earned constant $ | -3.3 | % | 0.0 | % | 3.6 | % | 0.0 | % | ||||||||||||||||||||||||
Net premiums written constant $ excluding merger-related underwriting actions, including additional reinsurance (1) | -0.5 | % | -1.6 | % | ||||||||||||||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 81 | % | 82 | % | 82 | % | 81 | % | 83 | % | 82 | % | 82 | % | 82 | % | ||||||||||||||||
Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 53.7 | % | 58.2 | % | 58.0 | % | 55.6 | % | 52.7 | % | 56.6 | % | 55.8 | % | 55.8 | % | ||||||||||||||||
Policy acquisition cost ratio | 20.4 | % | 20.3 | % | 19.9 | % | 20.1 | % | 20.1 | % | 20.2 | % | 19.9 | % | 19.9 | % | ||||||||||||||||
Administrative expense ratio | 10.9 | % | 11.4 | % | 11.8 | % | 12.0 | % | 11.7 | % | 11.4 | % | 11.9 | % | 11.9 | % | ||||||||||||||||
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Combined ratio | 85.0 | % | 89.9 | % | 89.7 | % | 87.7 | % | 84.5 | % | 88.2 | % | 87.6 | % | 87.6 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 88.2 | % | 88.8 | % | 88.9 | % | 89.0 | % | 88.7 | % | 88.6 | % | 88.6 | % | 88.7 | % | ||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 89.0 | % | 89.3 | % | 89.2 | % | 87.9 | % | 89.0 | % | 89.1 | % | ||||||||||||||||||||
Expense ratio | 31.3 | % | 31.7 | % | 31.7 | % | 32.1 | % | 31.8 | % | 31.6 | % | 31.8 | % | 31.8 | % | ||||||||||||||||
Expense ratio excluding A&H | 29.3 | % | 29.9 | % | 29.9 | % | 30.2 | % | 29.9 | % | 29.7 | % | 29.9 | % | 30.0 | % | ||||||||||||||||
Catastrophe reinstatement premiums (expensed) collected - pre-tax | $ | — | $ | 6 | $ | — | $ | (1 | ) | $ | — | $ | 6 | $ | — | $ | (1 | ) | ||||||||||||||
Catastrophe losses - pre-tax | $ | 143 | $ | 382 | $ | 256 | $ | 157 | $ | 101 | $ | 781 | $ | 682 | $ | 839 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (338 | ) | $ | (301 | ) | $ | (206 | ) | $ | (246 | ) | $ | (384 | ) | $ | (845 | ) | $ | (879 | ) | $ | (1,125 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 56.9 | % | 57.1 | % | 57.2 | % | 56.9 | % | 57.0 | % | 57.1 | % | 56.9 | % | 56.9 | % |
(1) | Included in Q3 2016 is a decrease in net premiums written of $328 million, comprising of $260 million due to additional reinsurance purchased and $68 million due to other merger-related underwriting actions. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Global P&C - As If | Page 15 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
North America Commercial P&C Insurance
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 3,832 | $ | 4,041 | $ | 3,004 | $ | 2,408 | $ | 1,994 | $ | 10,877 | $ | 6,043 | $ | 8,451 | ||||||||||||||||
Net premiums written | 3,110 | 3,245 | 2,302 | 1,557 | 1,433 | 8,657 | 4,158 | 5,715 | ||||||||||||||||||||||||
Net premiums earned | 3,086 | 3,148 | 2,896 | 1,425 | 1,410 | 9,130 | 4,209 | 5,634 | ||||||||||||||||||||||||
Losses and loss expenses | 1,863 | 1,971 | 1,747 | 917 | 913 | 5,581 | 2,744 | 3,661 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) | 346 | 255 | 167 | 128 | 142 | 768 | 403 | 531 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible(1) | 176 | 290 | 315 | — | — | 781 | — | — | ||||||||||||||||||||||||
Administrative expenses | 275 | 299 | 266 | 162 | 154 | 840 | 459 | 621 | ||||||||||||||||||||||||
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Underwriting income | 426 | 333 | 401 | 218 | 201 | 1,160 | 603 | 821 | ||||||||||||||||||||||||
Adjusted net investment income | 477 | 468 | 426 | 252 | 260 | 1,371 | 780 | 1,032 | ||||||||||||||||||||||||
Other income (expense) - operating | (3 | ) | 9 | — | 2 | 3 | 6 | 5 | 7 | |||||||||||||||||||||||
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Segment income | $ | 900 | $ | 810 | $ | 827 | $ | 472 | $ | 464 | $ | 2,537 | $ | 1,388 | $ | 1,860 | ||||||||||||||||
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Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 60.4 | % | 62.6 | % | 60.3 | % | 64.4 | % | 64.7 | % | 61.1 | % | 65.2 | % | 65.0 | % | ||||||||||||||||
Policy acquisition cost ratio | 16.9 | % | 17.3 | % | 16.7 | % | 8.9 | % | 10.1 | % | 17.0 | % | 9.6 | % | 9.4 | % | ||||||||||||||||
Administrative expense ratio | 8.9 | % | 9.6 | % | 9.1 | % | 11.3 | % | 11.0 | % | 9.2 | % | 10.9 | % | 11.0 | % | ||||||||||||||||
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Combined ratio | 86.2 | % | 89.5 | % | 86.1 | % | 84.6 | % | 85.8 | % | 87.3 | % | 85.7 | % | 85.4 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 89.4 | % | 89.7 | % | 89.5 | % | 88.3 | % | 89.3 | % | 89.5 | % | 88.7 | % | 88.6 | % | ||||||||||||||||
Catastrophe losses - pre-tax | $ | 90 | $ | 160 | $ | 81 | $ | 25 | $ | 10 | $ | 331 | $ | 60 | $ | 85 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (187 | ) | $ | (168 | ) | $ | (178 | ) | $ | (79 | ) | $ | (59 | ) | $ | (533 | ) | $ | (185 | ) | $ | (264 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 63.8 | % | 62.9 | % | 63.7 | % | 67.8 | % | 68.3 | % | 63.5 | % | 68.3 | % | 68.2 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | 117.1 | % | 127.4 | % | 77.4 | % | 2.1 | % | 2.9 | % | 108.2 | % | -0.1 | % | 0.5 | % | ||||||||||||||||
Net premiums earned | 119.1 | % | 121.8 | % | 109.9 | % | 0.5 | % | 2.3 | % | 117.0 | % | 1.9 | % | 1.6 | % | ||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 81 | % | 80 | % | 77 | % | 65 | % | 72 | % | 80 | % | 69 | % | 68 | % |
(1) | Related to the acquisition of The Chubb Corporation. |
NA Commercial - Reported | Page 16 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
North America Commercial P&C Insurance
As If* | ||||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 3,832 | $ | 4,041 | $ | 3,572 | $ | 4,237 | $ | 3,906 | $ | 11,445 | $ | 11,706 | $ | 15,943 | ||||||||||||||||
Net premiums written | 3,110 | 3,245 | 2,821 | 3,247 | 3,186 | 9,176 | 9,367 | 12,614 | ||||||||||||||||||||||||
Net premiums earned | 3,086 | 3,148 | 3,104 | 3,140 | 3,156 | 9,338 | 9,344 | 12,484 | ||||||||||||||||||||||||
Losses and loss expenses | 1,863 | 1,971 | 1,874 | 1,844 | 1,798 | 5,708 | 5,498 | 7,342 | ||||||||||||||||||||||||
Policy acquisition costs | 496 | 499 | 469 | 498 | 517 | 1,464 | 1,482 | 1,980 | ||||||||||||||||||||||||
Administrative expenses | 275 | 299 | 301 | 304 | 288 | 875 | 883 | 1,187 | ||||||||||||||||||||||||
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Underwriting income | $ | 452 | $ | 379 | $ | 460 | $ | 494 | $ | 553 | $ | 1,291 | $ | 1,481 | $ | 1,975 | ||||||||||||||||
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Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 60.4 | % | 62.6 | % | 60.4 | % | 58.7 | % | 57.0 | % | 61.1 | % | 58.8 | % | 58.8 | % | ||||||||||||||||
Policy acquisition cost ratio | 16.0 | % | 15.8 | % | 15.1 | % | 15.9 | % | 16.3 | % | 15.7 | % | 15.9 | % | 15.9 | % | ||||||||||||||||
Administrative expense ratio | 8.9 | % | 9.6 | % | 9.7 | % | 9.6 | % | 9.2 | % | 9.4 | % | 9.5 | % | 9.5 | % | ||||||||||||||||
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Combined ratio | 85.3 | % | 88.0 | % | 85.2 | % | 84.2 | % | 82.5 | % | 86.2 | % | 84.2 | % | 84.2 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 88.6 | % | 88.3 | % | 88.3 | % | 88.5 | % | 88.4 | % | 88.4 | % | 88.2 | % | 88.3 | % | ||||||||||||||||
Catastrophe losses - pre-tax | $ | 90 | $ | 160 | $ | 81 | $ | 84 | $ | 18 | $ | 331 | $ | 184 | $ | 268 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (187 | ) | $ | (168 | ) | $ | (178 | ) | $ | (220 | ) | $ | (202 | ) | $ | (533 | ) | $ | (563 | ) | $ | (783 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 63.8 | % | 62.9 | % | 63.5 | % | 62.9 | % | 62.9 | % | 63.4 | % | 63.0 | % | 62.9 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | -2.4 | % | -0.2 | % | -3.7 | % | -2.0 | % | ||||||||||||||||||||||||
Net premiums earned | -2.2 | % | 1.1 | % | 1.0 | % | 0.0 | % | ||||||||||||||||||||||||
Net premiums written excluding merger-related underwriting actions, including additional reinsurance(1) | 0.0 | % | -0.3 | % | ||||||||||||||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 81 | % | 80 | % | 79 | % | 77 | % | 82 | % | 80 | % | 80 | % | 79 | % | ||||||||||||||||
Production by Size | 3Q-16 | |||||||||||||||||||||||||||||||
Net Premiums Written | ||||||||||||||||||||||||||||||||
Major account & specialty (2) | $ | 1,832 | ||||||||||||||||||||||||||||||
Commercial(3) | 1,278 | |||||||||||||||||||||||||||||||
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Total | $ | 3,110 | ||||||||||||||||||||||||||||||
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(1) | Included in Q3 2016 is a decrease in net premiums written of $75 million, comprising of $47 million due to additional reinsurance purchased and $28 million due to other merger-related underwriting actions. |
(2) | Principally large corporate accounts and wholesale business. |
(3) | Principally middle market and small commercial accounts. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
NA Commercial - As If | Page 17 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
North America Personal P&C Insurance
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 1,323 | $ | 1,369 | $ | 974 | $ | 314 | $ | 378 | $ | 3,666 | $ | 1,359 | $ | 1,673 | ||||||||||||||||
Net premiums written | 1,011 | 1,231 | 871 | 234 | 278 | 3,113 | 958 | 1,192 | ||||||||||||||||||||||||
Net premiums earned | 1,081 | 1,140 | 1,024 | 261 | 272 | 3,245 | 687 | 948 | ||||||||||||||||||||||||
Losses and loss expenses | 594 | 661 | 661 | 144 | 179 | 1,916 | 446 | 590 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) | 128 | 104 | 68 | 26 | 13 | 300 | 43 | 69 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible(1) | 101 | 165 | 181 | — | — | 447 | — | — | ||||||||||||||||||||||||
Administrative expenses | 89 | 98 | 88 | 34 | 36 | 275 | 89 | 123 | ||||||||||||||||||||||||
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Underwriting income | 169 | 112 | 26 | 57 | 44 | 307 | 109 | 166 | ||||||||||||||||||||||||
Adjusted net investment income | 53 | 55 | 47 | 6 | 7 | 155 | 19 | 25 | ||||||||||||||||||||||||
Other expense - operating | (2 | ) | (3 | ) | (1 | ) | (1 | ) | (1 | ) | (6 | ) | (1 | ) | (2 | ) | ||||||||||||||||
Amortization expense of purchased intangibles | (4 | ) | (4 | ) | (8 | ) | (15 | ) | (31 | ) | (16 | ) | (63 | ) | (78 | ) | ||||||||||||||||
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Segment income | $ | 216 | $ | 160 | $ | 64 | $ | 47 | $ | 19 | $ | 440 | $ | 64 | $ | 111 | ||||||||||||||||
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Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 20 | $ | 38 | $ | 12 | $ | 301 | $ | 28 | $ | 66 | ||||||||||||||||||||
Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 54.9 | % | 58.0 | % | 64.6 | % | 55.2 | % | 65.8 | % | 59.1 | % | 64.9 | % | 62.3 | % | ||||||||||||||||
Policy acquisition cost ratio | 21.2 | % | 23.6 | % | 24.3 | % | 10.1 | % | 4.9 | % | 23.0 | % | 6.3 | % | 7.3 | % | ||||||||||||||||
Administrative expense ratio | 8.3 | % | 8.5 | % | 8.6 | % | 13.1 | % | 13.0 | % | 8.4 | % | 12.9 | % | 13.0 | % | ||||||||||||||||
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Combined ratio | 84.4 | % | 90.1 | % | 97.5 | % | 78.4 | % | 83.7 | % | 90.5 | % | 84.1 | % | 82.6 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 78.8 | % | 83.0 | % | 82.5 | % | 77.5 | % | 70.5 | % | 81.4 | % | 71.6 | % | 73.2 | % | ||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 83.1 | % | 84.6 | % | 82.5 | % | 81.7 | % | 83.5 | % | 83.8 | % | ||||||||||||||||||||
Catastrophe losses - pre-tax | $ | 22 | $ | 97 | $ | 156 | $ | 2 | $ | 12 | $ | 275 | $ | 61 | $ | 63 | ||||||||||||||||
Unfavorable (favorable) prior period development (PPD) - pre-tax | $ | 38 | $ | (15 | ) | $ | (3 | ) | $ | — | $ | 25 | $ | 20 | $ | 25 | $ | 25 | ||||||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 49.3 | % | 50.9 | % | 49.6 | % | 54.3 | % | 52.6 | % | 50.0 | % | 52.4 | % | 52.9 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | 263.4 | % | 125.1 | % | NM | 62.7 | % | 86.0 | % | 225.0 | % | 120.9 | % | 106.4 | % | |||||||||||||||||
Net premiums earned | 296.3 | % | 322.4 | % | NM | 82.5 | % | 92.6 | % | 372.1 | % | 64.6 | % | 69.2 | % | |||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 76 | % | 90 | % | 89 | % | 75 | % | 74 | % | 85 | % | 70 | % | 71 | % |
(1) | Related to the acquisition of The Chubb Corporation. |
NA Personal - Reported | Page 18 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
North America Personal P&C Insurance
As If* | ||||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 1,323 | $ | 1,369 | $ | 1,083 | $ | 1,226 | $ | 1,368 | $ | 3,775 | $ | 4,218 | $ | 5,444 | ||||||||||||||||
Net premiums written | 1,011 | 1,231 | 971 | 1,093 | 1,210 | 3,213 | 3,669 | 4,762 | ||||||||||||||||||||||||
Net premiums earned | 1,081 | 1,140 | 1,134 | 1,140 | 1,147 | 3,355 | 3,314 | 4,454 | ||||||||||||||||||||||||
Losses and loss expenses | 594 | 661 | 714 | 597 | 629 | 1,969 | 2,072 | 2,669 | ||||||||||||||||||||||||
Policy acquisition costs | 211 | 240 | 232 | 228 | 211 | 683 | 630 | 858 | ||||||||||||||||||||||||
Administrative expenses | 89 | 98 | 101 | 96 | 98 | 288 | 283 | 379 | ||||||||||||||||||||||||
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Underwriting income | $ | 187 | $ | 141 | $ | 87 | $ | 219 | $ | 209 | $ | 415 | $ | 329 | $ | 548 | ||||||||||||||||
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Underwriting income excluding Fireman’s Fund non-recurring unearned premium reserve transfer | $ | 81 | $ | 200 | $ | 177 | $ | 409 | $ | 248 | $ | 448 | ||||||||||||||||||||
Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 54.9 | % | 58.0 | % | 62.9 | % | 52.4 | % | 54.9 | % | 58.7 | % | 62.5 | % | 59.9 | % | ||||||||||||||||
Policy acquisition cost ratio | 19.6 | % | 21.1 | % | 20.5 | % | 20.0 | % | 18.4 | % | 20.4 | % | 19.1 | % | 19.3 | % | ||||||||||||||||
Administrative expense ratio | 8.3 | % | 8.5 | % | 8.9 | % | 8.5 | % | 8.5 | % | 8.5 | % | 8.5 | % | 8.5 | % | ||||||||||||||||
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Combined ratio | 82.8 | % | 87.6 | % | 92.3 | % | 80.9 | % | 81.8 | % | 87.6 | % | 90.1 | % | 87.7 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 77.2 | % | 80.5 | % | 78.7 | % | 80.9 | % | 77.6 | % | 78.8 | % | 79.1 | % | 79.5 | % | ||||||||||||||||
Combined ratio excluding catastrophe losses, PPD and Fireman’s Fund non-recurring unearned premium reserve transfer | 79.3 | % | 82.5 | % | 80.4 | % | 79.0 | % | 81.5 | % | 81.8 | % | ||||||||||||||||||||
Catastrophe losses - pre-tax | $ | 22 | $ | 97 | $ | 156 | $ | 15 | $ | 30 | $ | 275 | $ | 368 | $ | 383 | ||||||||||||||||
Unfavorable (favorable) prior period development (PPD) - pre-tax | $ | 38 | $ | (15 | ) | $ | (3 | ) | $ | (15 | ) | $ | 19 | $ | 20 | $ | (3 | ) | $ | (18 | ) | |||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 49.3 | % | 50.9 | % | 49.3 | % | 52.4 | % | 50.7 | % | 49.9 | % | 51.5 | % | 51.7 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | -16.4 | % | -20.6 | % | 6.8 | % | -12.4 | % | ||||||||||||||||||||||||
Net premiums earned | -5.9 | % | -1.8 | % | 12.7 | % | 1.2 | % | ||||||||||||||||||||||||
Net premiums written excluding merger-related underwriting actions, including additional reinsurance and total Fireman’s Fund(1) | 3.1 | % | 1.4 | % | ||||||||||||||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 76 | % | 90 | % | 90 | % | 89 | % | 89 | % | 85 | % | 87 | % | 87 | % |
(1) | Included in Q3 2016 is a decrease in net premiums written of $200 million due to additional reinsurance purchased. Q3 2016 and YTD 2016 included net premiums written of $76 million and $191 million, respectively, related to Fireman’s Fund high net worth personal lines business. Q3 2015 and YTD 2015 included Fireman’s Fund net premiums written of $109 million and $487 million, respectively. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
NA Personal - As If | Page 19 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
North America Agricultural Insurance
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 1,240 | $ | 545 | $ | 136 | $ | 270 | $ | 1,243 | $ | 1,921 | $ | 1,937 | $ | 2,207 | ||||||||||||||||
Net premiums written | 849 | 375 | 64 | 142 | 737 | 1,288 | 1,204 | 1,346 | ||||||||||||||||||||||||
Net premiums earned | 819 | 327 | 23 | 240 | 739 | 1,169 | 1,124 | 1,364 | ||||||||||||||||||||||||
Losses and loss expenses(1) | 680 | 286 | (30 | ) | 178 | 624 | 936 | 919 | 1,097 | |||||||||||||||||||||||
Policy acquisition costs | 48 | 25 | 4 | 8 | 42 | 77 | 61 | 69 | ||||||||||||||||||||||||
Administrative expenses | 1 | 2 | (4 | ) | (2 | ) | — | (1 | ) | 3 | 1 | |||||||||||||||||||||
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Underwriting income | 90 | 14 | 53 | 56 | 73 | 157 | 141 | 197 | ||||||||||||||||||||||||
Net investment income | 5 | 5 | 5 | 6 | 5 | 15 | 17 | 23 | ||||||||||||||||||||||||
Other income (expense) - operating | — | — | — | — | 1 | — | (1 | ) | (1 | ) | ||||||||||||||||||||||
Amortization expense of purchased intangibles | (7 | ) | (8 | ) | (7 | ) | (8 | ) | (8 | ) | (22 | ) | (22 | ) | (30 | ) | ||||||||||||||||
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Segment income | $ | 88 | $ | 11 | $ | 51 | $ | 54 | $ | 71 | $ | 150 | $ | 135 | $ | 189 | ||||||||||||||||
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Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 83.0 | % | 87.5 | % | -125.2 | % | 73.9 | % | 84.5 | % | 80.1 | % | 81.8 | % | 80.4 | % | ||||||||||||||||
Policy acquisition cost ratio | 5.9 | % | 7.7 | % | 15.9 | % | 3.4 | % | 5.7 | % | 6.6 | % | 5.4 | % | 5.1 | % | ||||||||||||||||
Administrative expense ratio | 0.0 | % | 0.7 | % | -17.6 | % | -0.9 | % | 0.0 | % | -0.1 | % | 0.3 | % | 0.0 | % | ||||||||||||||||
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Combined ratio | 88.9 | % | 95.9 | % | -126.9 | % | 76.4 | % | 90.2 | % | 86.6 | % | 87.5 | % | 85.5 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 90.1 | % | 91.6 | % | 80.6 | % | 79.2 | % | 90.8 | % | 90.0 | % | 90.1 | % | 88.2 | % | ||||||||||||||||
Catastrophe losses - pre-tax | $ | 1 | $ | 14 | $ | 2 | $ | 1 | $ | — | $ | 17 | $ | 8 | $ | 9 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (11 | ) | $ | — | $ | (41 | ) | $ | (7 | ) | $ | (5 | ) | $ | (52 | ) | $ | (38 | ) | $ | (45 | ) | |||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 84.2 | % | 83.3 | % | 75.1 | % | 75.4 | % | 85.1 | % | 83.4 | % | 84.4 | % | 82.8 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | 15.2 | % | -1.2 | % | -27.0 | % | -41.9 | % | -3.5 | % | 6.9 | % | -10.5 | % | -15.3 | % | ||||||||||||||||
Net premiums earned | 10.9 | % | 1.6 | % | -63.7 | % | -26.2 | % | -3.6 | % | 4.0 | % | -6.3 | % | -10.6 | % | ||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 68 | % | 69 | % | 47 | % | 52 | % | 59 | % | 67 | % | 62 | % | 61 | % |
(1) | Includes realized gains/losses on crop derivatives. |
NA Agriculture | Page 20 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Overseas General Insurance
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 2,383 | $ | 2,494 | $ | 2,516 | $ | 1,990 | $ | 2,019 | $ | 7,393 | $ | 6,486 | $ | 8,476 | ||||||||||||||||
Net premiums written | 1,940 | 2,031 | 2,041 | 1,587 | 1,584 | 6,012 | 5,047 | 6,634 | ||||||||||||||||||||||||
Net premiums earned | 2,034 | 2,093 | 1,955 | 1,575 | 1,615 | 6,082 | 4,896 | 6,471 | ||||||||||||||||||||||||
Losses and loss expenses | 843 | 1,089 | 1,021 | 748 | 674 | 2,953 | 2,304 | 3,052 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) | 503 | 467 | 429 | 391 | 405 | 1,399 | 1,190 | 1,581 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible(1) | 43 | 70 | 74 | — | — | 187 | — | — | ||||||||||||||||||||||||
Administrative expenses | 261 | 277 | 263 | 241 | 246 | 801 | 756 | 997 | ||||||||||||||||||||||||
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Underwriting income | 384 | 190 | 168 | 195 | 290 | 742 | 646 | 841 | ||||||||||||||||||||||||
Adjusted net investment income | 152 | 147 | 146 | 125 | 132 | 445 | 409 | 534 | ||||||||||||||||||||||||
Other income - operating | 6 | 5 | 5 | 5 | 6 | 16 | 12 | 17 | ||||||||||||||||||||||||
Amortization expense of purchased intangibles | (12 | ) | (13 | ) | (11 | ) | (11 | ) | (12 | ) | (36 | ) | (50 | ) | (61 | ) | ||||||||||||||||
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Segment income | $ | 530 | $ | 329 | $ | 308 | $ | 314 | $ | 416 | $ | 1,167 | $ | 1,017 | $ | 1,331 | ||||||||||||||||
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Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 41.5 | % | 52.1 | % | 52.2 | % | 47.5 | % | 41.7 | % | 48.6 | % | 47.1 | % | 47.2 | % | ||||||||||||||||
Policy acquisition cost ratio | 26.8 | % | 25.6 | % | 25.7 | % | 24.8 | % | 25.1 | % | 26.1 | % | 24.3 | % | 24.4 | % | ||||||||||||||||
Administrative expense ratio | 12.9 | % | 13.2 | % | 13.5 | % | 15.3 | % | 15.2 | % | 13.1 | % | 15.4 | % | 15.4 | % | ||||||||||||||||
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Combined ratio | 81.2 | % | 90.9 | % | 91.4 | % | 87.6 | % | 82.0 | % | 87.8 | % | 86.8 | % | 87.0 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 91.1 | % | 91.5 | % | 92.0 | % | 89.7 | % | 90.5 | % | 91.5 | % | 90.2 | % | 90.1 | % | ||||||||||||||||
Catastrophe reinstatement premiums expensed - pre-tax | $ | — | $ | — | $ | — | $ | (2 | ) | $ | — | $ | — | $ | — | $ | (2 | ) | ||||||||||||||
Catastrophe losses - pre-tax | $ | 20 | $ | 73 | $ | 18 | $ | 40 | $ | 39 | $ | 111 | $ | 102 | $ | 142 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (223 | ) | $ | (85 | ) | $ | (30 | ) | $ | (74 | ) | $ | (177 | ) | $ | (338 | ) | $ | (269 | ) | $ | (343 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 51.4 | % | 52.7 | % | 52.8 | % | 49.6 | % | 50.2 | % | 52.3 | % | 50.5 | % | 50.3 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written as reported | 22.5 | % | 21.6 | % | 13.8 | % | -9.3 | % | -7.9 | % | 19.1 | % | -3.9 | % | -5.2 | % | ||||||||||||||||
Net premiums earned as reported | 26.0 | % | 27.3 | % | 19.4 | % | -10.5 | % | -6.4 | % | 24.2 | % | -3.0 | % | -4.9 | % | ||||||||||||||||
Net premiums written constant $ | 25.8 | % | 26.7 | % | 26.1 | % | 3.6 | % | 6.1 | % | 26.2 | % | 8.3 | % | 7.1 | % | ||||||||||||||||
Net premiums earned constant $ | 29.0 | % | 32.4 | % | 31.3 | % | 1.7 | % | 7.8 | % | 30.9 | % | 9.5 | % | 7.5 | % | ||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 81 | % | 81 | % | 81 | % | 80 | % | 78 | % | 81 | % | 78 | % | 78 | % |
(1) | Related to the acquisition of The Chubb Corporation. |
Overseas General Insurance - RP | Page 21 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Overseas General Insurance
As If* | ||||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 2,383 | $ | 2,494 | $ | 2,749 | $ | 2,515 | $ | 2,526 | $ | 7,626 | $ | 8,211 | $ | 10,726 | ||||||||||||||||
Net premiums written | 1,940 | 2,031 | 2,256 | 2,078 | 2,057 | 6,227 | 6,673 | 8,751 | ||||||||||||||||||||||||
Net premiums earned | 2,034 | 2,093 | 2,026 | 2,084 | 2,146 | 6,153 | 6,482 | 8,566 | ||||||||||||||||||||||||
Losses and loss expenses | 843 | 1,089 | 1,063 | 1,011 | 948 | 2,995 | 3,109 | 4,120 | ||||||||||||||||||||||||
Policy acquisition costs | 551 | 546 | 529 | 547 | 563 | 1,626 | 1,663 | 2,210 | ||||||||||||||||||||||||
Administrative expenses | 261 | 277 | 275 | 287 | 290 | 813 | 911 | 1,198 | ||||||||||||||||||||||||
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Underwriting income | $ | 379 | $ | 181 | $ | 159 | $ | 239 | $ | 345 | $ | 719 | $ | 799 | $ | 1,038 | ||||||||||||||||
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Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 41.5 | % | 52.1 | % | 52.4 | % | 48.5 | % | 44.2 | % | 48.7 | % | 48.0 | % | 48.1 | % | ||||||||||||||||
Policy acquisition cost ratio | 27.0 | % | 26.0 | % | 26.1 | % | 26.3 | % | 26.2 | % | 26.4 | % | 25.7 | % | 25.8 | % | ||||||||||||||||
Administrative expense ratio | 12.9 | % | 13.2 | % | 13.7 | % | 13.7 | % | 13.5 | % | 13.2 | % | 14.0 | % | 14.0 | % | ||||||||||||||||
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Combined ratio | 81.4 | % | 91.3 | % | 92.2 | % | 88.5 | % | 83.9 | % | 88.3 | % | 87.7 | % | 87.9 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 91.3 | % | 92.0 | % | 92.8 | % | 91.2 | % | 92.7 | % | 92.0 | % | 91.7 | % | 91.5 | % | ||||||||||||||||
Catastrophe reinstatement premiums expensed - pre-tax | $ | — | $ | — | $ | — | $ | (2 | ) | $ | — | $ | — | $ | — | $ | (2 | ) | ||||||||||||||
Catastrophe losses - pre-tax | $ | 20 | $ | 73 | $ | 18 | $ | 49 | $ | 42 | $ | 111 | $ | 113 | $ | 162 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (223 | ) | $ | (85 | ) | $ | (30 | ) | $ | (106 | ) | $ | (231 | ) | $ | (338 | ) | $ | (371 | ) | $ | (477 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 51.4 | % | 52.7 | % | 53.0 | % | 51.2 | % | 52.9 | % | 52.4 | % | 51.9 | % | 51.8 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written as reported | -5.7 | % | -5.0 | % | -9.0 | % | -6.7 | % | ||||||||||||||||||||||||
Net premiums earned as reported | -5.1 | % | -3.5 | % | -6.4 | % | -5.0 | % | ||||||||||||||||||||||||
Net premiums written constant $ | -1.7 | % | 0.5 | % | 1.7 | % | 0.2 | % | ||||||||||||||||||||||||
Net premiums earned constant $ | -1.3 | % | 1.2 | % | 4.0 | % | 1.2 | % | ||||||||||||||||||||||||
Net premiums written constant $ excluding merger-related underwriting actions, including additional reinsurance(1) | 0.7 | % | 1.3 | % | ||||||||||||||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 81 | % | 81 | % | 82 | % | 83 | % | 81 | % | 82 | % | 81 | % | 82 | % |
Production by Region | 3Q-16 | 3Q-15 | % Change 3Q-16 vs 3Q-15 | Constant $ 3Q-15 (2) | Constant $ % Change 3Q-16 vs 3Q-15(2) | YTD-16 | YTD-15 | % Change YTD-16 vs YTD-15 | Constant $ YTD-15(2) | Constant $ % Change YTD-16 vs YTD-15(2) | ||||||||||||||||||||||||||||||
Gross premiums written | ||||||||||||||||||||||||||||||||||||||||
Europe | $ | 945 | $ | 1,015 | -6.9 | % | $ | 963 | -1.9 | % | $ | 3,427 | $ | 3,602 | -4.9 | % | $ | 3,456 | -0.8 | % | ||||||||||||||||||||
Latin America | 593 | 682 | -13.0 | % | 635 | -6.6 | % | 1,807 | 2,188 | -17.4 | % | 1,876 | -3.7 | % | ||||||||||||||||||||||||||
Asia | 760 | 737 | 3.1 | % | 751 | 1.2 | % | 2,134 | 2,129 | 0.2 | % | 2,071 | 3.0 | % | ||||||||||||||||||||||||||
Other (3) | 85 | 92 | -7.6 | % | 89 | -4.5 | % | 258 | 292 | -11.6 | % | 280 | -7.9 | % | ||||||||||||||||||||||||||
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Total | $ | 2,383 | $ | 2,526 | -5.7 | % | $ | 2,438 | -2.3 | % | $ | 7,626 | $ | 8,211 | -7.1 | % | $ | 7,683 | -0.7 | % | ||||||||||||||||||||
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Net Premiums Written | ||||||||||||||||||||||||||||||||||||||||
Europe | $ | 712 | $ | 756 | -5.8 | % | $ | 713 | -0.1 | % | $ | 2,598 | $ | 2,751 | -5.6 | % | $ | 2,631 | -1.3 | % | ||||||||||||||||||||
Latin America | 470 | 555 | -15.3 | % | 510 | -7.8 | % | 1,449 | 1,751 | -17.2 | % | 1,486 | -2.5 | % | ||||||||||||||||||||||||||
Asia | 663 | 646 | 2.6 | % | 657 | 0.9 | % | 1,895 | 1,870 | 1.3 | % | 1,817 | 4.3 | % | ||||||||||||||||||||||||||
Other (3) | 95 | 100 | -5.0 | % | 94 | 1.1 | % | 285 | 301 | -5.3 | % | 279 | 2.2 | % | ||||||||||||||||||||||||||
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Total | $ | 1,940 | $ | 2,057 | -5.7 | % | $ | 1,974 | -1.7 | % | $ | 6,227 | $ | 6,673 | -6.7 | % | $ | 6,213 | 0.2 | % | ||||||||||||||||||||
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(1) | Included in Q3 2016 is a decrease in net premiums written of $47 million, comprising of $7 million due to additional reinsurance purchased and $40 million due to other merger-related underwriting actions. |
(2) | Prior periods on a constant dollar basis. |
(3) | Primarily includes Eurasia and Africa, and the company’s international supplemental A&H business of Combined Insurance. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Overseas General Ins. – As If | Page 22 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Global Reinsurance
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 143 | $ | 268 | $ | 213 | $ | 109 | $ | 190 | $ | 624 | $ | 774 | $ | 883 | ||||||||||||||||
Net premiums written | 131 | 230 | 201 | 109 | 185 | 562 | 719 | 828 | ||||||||||||||||||||||||
Net premiums earned | 156 | 185 | 202 | 200 | 203 | 543 | 649 | 849 | ||||||||||||||||||||||||
Losses and loss expenses | 49 | 87 | 89 | 99 | 20 | 225 | 191 | 290 | ||||||||||||||||||||||||
Policy acquisition costs | 42 | 47 | 53 | 48 | 52 | 142 | 166 | 214 | ||||||||||||||||||||||||
Administrative expenses | 12 | 14 | 14 | 12 | 12 | 40 | 37 | 49 | ||||||||||||||||||||||||
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Underwriting income | 53 | 37 | 46 | 41 | 119 | 136 | 255 | 296 | ||||||||||||||||||||||||
Net investment income | 67 | 65 | 67 | 70 | 76 | 199 | 230 | 300 | ||||||||||||||||||||||||
Other income - operating | — | 2 | 1 | 1 | 4 | 3 | 5 | 6 | ||||||||||||||||||||||||
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Segment income | $ | 120 | $ | 104 | $ | 114 | $ | 112 | $ | 199 | $ | 338 | $ | 490 | $ | 602 | ||||||||||||||||
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Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 31.3 | % | 46.9 | % | 44.3 | % | 49.7 | % | 9.6 | % | 41.5 | % | 29.4 | % | 34.2 | % | ||||||||||||||||
Policy acquisition cost ratio | 27.1 | % | 25.5 | % | 26.2 | % | 24.1 | % | 25.4 | % | 26.3 | % | 25.5 | % | 25.2 | % | ||||||||||||||||
Administrative expense ratio | 7.9 | % | 7.4 | % | 6.8 | % | 6.0 | % | 6.2 | % | 7.2 | % | 5.7 | % | 5.8 | % | ||||||||||||||||
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Combined ratio | 66.3 | % | 79.8 | % | 77.3 | % | 79.8 | % | 41.2 | % | 75.0 | % | 60.6 | % | 65.2 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 78.1 | % | 78.9 | % | 78.5 | % | 76.6 | % | 75.3 | % | 78.5 | % | 76.8 | % | 76.8 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax | $ | — | $ | 6 | $ | — | $ | 1 | $ | — | $ | 6 | $ | — | $ | 1 | ||||||||||||||||
Catastrophe losses - pre-tax | $ | 11 | $ | 52 | $ | 1 | $ | 6 | $ | 11 | $ | 64 | $ | 16 | $ | 22 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (28 | ) | $ | (47 | ) | $ | (3 | ) | $ | — | $ | (78 | ) | $ | (78 | ) | $ | (119 | ) | $ | (119 | ) | |||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 44.2 | % | 46.0 | % | 45.5 | % | 46.5 | % | 44.3 | % | 45.3 | % | 45.7 | % | 45.9 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written as reported | -29.4 | % | -11.9 | % | -26.3 | % | -22.1 | % | -11.5 | % | -21.9 | % | -9.5 | % | -11.4 | % | ||||||||||||||||
Net premiums earned as reported | -23.5 | % | -15.7 | % | -10.7 | % | -11.3 | % | -20.4 | % | -16.4 | % | -18.8 | % | -17.2 | % | ||||||||||||||||
Net premiums written constant $ | -28.1 | % | -11.6 | % | -24.6 | % | -20.2 | % | -9.5 | % | -20.7 | % | -7.4 | % | -9.3 | % | ||||||||||||||||
Net premiums earned constant $ | -22.2 | % | -15.0 | % | -9.2 | % | -9.0 | % | -18.1 | % | -15.2 | % | -16.8 | % | -15.1 | % | ||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 91 | % | 86 | % | 94 | % | 100 | % | 97 | % | 90 | % | 93 | % | 94 | % |
Global Reinsurance - Reported | Page 23 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Global Reinsurance
As If* | ||||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 143 | $ | 268 | $ | 234 | $ | 111 | $ | 191 | $ | 645 | $ | 810 | $ | 921 | ||||||||||||||||
Net premiums written | 131 | 230 | 221 | 111 | 185 | 582 | 746 | 857 | ||||||||||||||||||||||||
Net premiums earned | 156 | 185 | 202 | 208 | 212 | 543 | 667 | 875 | ||||||||||||||||||||||||
Losses and loss expenses | 49 | 87 | 89 | 103 | 21 | 225 | 192 | 295 | ||||||||||||||||||||||||
Policy acquisition costs | 42 | 47 | 53 | 48 | 52 | 142 | 166 | 214 | ||||||||||||||||||||||||
Administrative expenses | 12 | 14 | 14 | 12 | 13 | 40 | 43 | 55 | ||||||||||||||||||||||||
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Underwriting income | $ | 53 | $ | 37 | $ | 46 | $ | 45 | $ | 126 | $ | 136 | $ | 266 | $ | 311 | ||||||||||||||||
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Combined ratio | ||||||||||||||||||||||||||||||||
Loss and loss expense ratio | 31.3 | % | 46.9 | % | 44.3 | % | 49.2 | % | 9.7 | % | 41.5 | % | 28.8 | % | 33.7 | % | ||||||||||||||||
Policy acquisition cost ratio | 27.1 | % | 25.5 | % | 26.2 | % | 23.6 | % | 24.3 | % | 26.3 | % | 24.6 | % | 24.4 | % | ||||||||||||||||
Administrative expense ratio | 7.9 | % | 7.4 | % | 6.8 | % | 5.8 | % | 6.3 | % | 7.2 | % | 6.5 | % | 6.3 | % | ||||||||||||||||
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Combined ratio | 66.3 | % | 79.8 | % | 77.3 | % | 78.6 | % | 40.3 | % | 75.0 | % | 59.9 | % | 64.4 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD | 78.1 | % | 78.9 | % | 78.5 | % | 77.8 | % | 75.4 | % | 78.5 | % | 77.2 | % | 77.3 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax | $ | — | $ | 6 | $ | — | $ | 1 | $ | — | $ | 6 | $ | — | $ | 1 | ||||||||||||||||
Catastrophe losses - pre-tax | $ | 11 | $ | 52 | $ | 1 | $ | 9 | $ | 11 | $ | 64 | $ | 17 | $ | 26 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax | $ | (28 | ) | $ | (47 | ) | $ | (3 | ) | $ | (7 | ) | $ | (84 | ) | $ | (78 | ) | $ | (131 | ) | $ | (138 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD | 44.2 | % | 46.0 | % | 45.5 | % | 48.4 | % | 45.3 | % | 45.3 | % | 46.2 | % | 46.7 | % | ||||||||||||||||
% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written as reported | -29.8 | % | -13.3 | % | -25.1 | % | -22.0 | % | ||||||||||||||||||||||||
Net premiums earned as reported | -26.8 | % | -18.2 | % | -11.5 | % | -18.6 | % | ||||||||||||||||||||||||
Net premiums written constant $ | -28.5 | % | -13.0 | % | -23.4 | % | -20.9 | % | ||||||||||||||||||||||||
Net premiums earned constant $ | -25.6 | % | -17.6 | % | -10.0 | % | -17.5 | % | ||||||||||||||||||||||||
Net premiums written constant $ excluding merger-related underwriting actions, including additional reinsurance (1) | -25.0 | % | -18.7 | % | ||||||||||||||||||||||||||||
Other ratios | ||||||||||||||||||||||||||||||||
Net premiums written/gross premiums written | 91 | % | 86 | % | 94 | % | 99 | % | 97 | % | 90 | % | 92 | % | 93 | % |
(1) | Included in Q3 2016 is a decrease in net premiums written of $6 million due to additional reinsurance purchased. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Global Reinsurance – As If | Page 24 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)
Life Insurance
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 562 | $ | 557 | $ | 546 | $ | 548 | $ | 522 | $ | 1,665 | $ | 1,573 | $ | 2,121 | ||||||||||||||||
Net premiums written | 532 | 527 | 516 | 515 | 492 | 1,575 | 1,483 | 1,998 | ||||||||||||||||||||||||
Net premiums earned | 512 | 512 | 497 | 506 | 480 | 1,521 | 1,441 | 1,947 | ||||||||||||||||||||||||
Losses and loss expenses | 174 | 147 | 177 | 159 | 153 | 498 | 442 | 601 | ||||||||||||||||||||||||
Policy benefits(1) | 155 | 146 | 126 | 159 | 89 | 427 | 384 | 543 | ||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets (1) | (22 | ) | (3 | ) | 3 | (13 | ) | 49 | (22 | ) | 32 | 19 | ||||||||||||||||||||
Policy acquisition costs | 127 | 137 | 122 | 134 | 117 | 386 | 342 | 476 | ||||||||||||||||||||||||
Administrative expenses | 77 | 77 | 72 | 70 | 74 | 226 | 221 | 291 | ||||||||||||||||||||||||
Net investment income | 71 | 69 | 67 | 67 | 66 | 207 | 198 | 265 | ||||||||||||||||||||||||
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Life Insurance underwriting income (2) | 72 | 77 | 64 | 64 | 64 | 213 | 218 | 282 | ||||||||||||||||||||||||
Other income (expense) - operating(1) | (2 | ) | (3 | ) | (3 | ) | (4 | ) | 1 | (8 | ) | — | (4 | ) | ||||||||||||||||||
Amortization expense of purchased intangibles | (1 | ) | — | (1 | ) | (1 | ) | — | (2 | ) | (1 | ) | (2 | ) | ||||||||||||||||||
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Segment income | $ | 69 | $ | 74 | $ | 60 | $ | 59 | $ | 65 | $ | 203 | $ | 217 | $ | 276 | ||||||||||||||||
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% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | 8.1 | % | 5.5 | % | 5.1 | % | -1.6 | % | -0.8 | % | 6.2 | % | -0.4 | % | -0.7 | % | ||||||||||||||||
Net premiums earned | 6.7 | % | 5.1 | % | 4.9 | % | 1.4 | % | -1.9 | % | 5.5 | % | -1.5 | % | -0.8 | % | ||||||||||||||||
Net premiums written constant $ | 9.1 | % | 8.2 | % | 10.2 | % | 3.7 | % | 4.4 | % | 9.1 | % | 3.7 | % | 3.7 | % | ||||||||||||||||
Net premiums earned constant $ | 7.6 | % | 7.8 | % | 9.8 | % | 6.8 | % | 3.4 | % | 8.4 | % | 2.4 | % | 3.5 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified from Other income (expense) for purposes of presenting Life Insurance underwriting income. The offsetting movement in the separate account liabilities is included in Policy benefits. |
(2) | We assess the performance of our Life Insurance business based on Life Insurance underwriting income which includes Net investment income and (Gains) losses from fair value changes in separate account assets. |
International life insurance net premiums written and deposits breakdown (excludes Combined North American and Life reinsurance businesses):
3Q-16 | Constant $ 3Q-15 (4) | Constant $ % Change 3Q-16 vs. 3Q-15(4) | YTD-16 | Constant $ YTD-15(4) | Constant $ % Change YTD-16 vs YTD-15(4) | |||||||||||||||||||
International life insurance net premiums written | $ | 209 | $ | 175 | 19.3 | % | $ | 616 | $ | 514 | 19.8 | % | ||||||||||||
International life insurance deposits(3) | 273 | 211 | 29.8 | % | 748 | 703 | 6.5 | % | ||||||||||||||||
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Total international life insurance net premiums written and deposits | $ | 482 | $ | 386 | 25.0 | % | $ | 1,364 | $ | 1,217 | 12.1 | % | ||||||||||||
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(3) | Includes deposits collected on universal life and investment contracts. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues. |
(4) | Prior periods on a constant dollar basis. |
Life Insurance – Reported | Page 25 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)
Life Insurance
As If* | ||||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | 562 | $ | 557 | $ | 547 | $ | 572 | $ | 546 | $ | 1,666 | $ | 1,648 | $ | 2,220 | ||||||||||||||||
Net premiums written | 532 | 527 | 517 | 538 | 515 | 1,576 | 1,555 | 2,093 | ||||||||||||||||||||||||
Net premiums earned | 512 | 512 | 499 | 531 | 503 | 1,523 | 1,512 | 2,043 | ||||||||||||||||||||||||
Losses and loss expenses | 174 | 147 | 177 | 171 | 165 | 498 | 477 | 648 | ||||||||||||||||||||||||
Policy benefits(1) | 155 | 146 | 126 | 159 | 89 | 427 | 384 | 543 | ||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets(1) | (22 | ) | (3 | ) | 3 | (13 | ) | 49 | (22 | ) | 32 | 19 | ||||||||||||||||||||
Policy acquisition costs | 127 | 137 | 123 | 138 | 120 | 387 | 356 | 494 | ||||||||||||||||||||||||
Administrative expenses | 77 | 77 | 73 | 80 | 83 | 227 | 248 | 328 | ||||||||||||||||||||||||
Net investment income | 71 | 69 | 67 | 67 | 66 | 207 | 198 | 265 | ||||||||||||||||||||||||
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Life Insurance underwriting income (2) | $ | 72 | $ | 77 | $ | 64 | $ | 63 | $ | 63 | $ | 213 | $ | 213 | $ | 276 | ||||||||||||||||
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% Change versus prior year period | ||||||||||||||||||||||||||||||||
Net premiums written | 3.4 | % | 0.7 | % | 0.0 | % | 1.4 | % | ||||||||||||||||||||||||
Net premiums earned | 1.6 | % | 0.2 | % | 0.2 | % | 0.7 | % | ||||||||||||||||||||||||
Net premiums written constant $ | 4.3 | % | 3.5 | % | 4.6 | % | 4.1 | % | ||||||||||||||||||||||||
Net premiums earned constant $ | 2.5 | % | 2.9 | % | 4.7 | % | 3.3 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified from Other income (expense). The offsetting movement in the separate account liabilities is included in Policy benefits. |
(2) | We assess the performance of our Life Insurance business based on Life Insurance underwriting income which includes Net investment income and (Gains) losses from fair value changes in separate account assets. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Life Insurance – As If | Page 26 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Corporate
Legacy ACE | Legacy ACE | |||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Net premiums written | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net premiums earned | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Losses and loss expenses | 63 | 15 | 9 | 60 | 84 | 87 | 142 | 202 | ||||||||||||||||||||||||
Policy acquisition costs | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||
Administrative expenses | 57 | 62 | 73 | 53 | 46 | 192 | 135 | 188 | ||||||||||||||||||||||||
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Underwriting loss | (120 | ) | (77 | ) | (82 | ) | (114 | ) | (130 | ) | (279 | ) | (277 | ) | (391 | ) | ||||||||||||||||
Net investment income | 5 | 7 | 9 | 6 | 3 | 21 | 9 | 15 | ||||||||||||||||||||||||
Other expense - operating | (2 | ) | (2 | ) | (2 | ) | (9 | ) | (2 | ) | (6 | ) | (11 | ) | (20 | ) | ||||||||||||||||
Adjusted interest expense (1) | (164 | ) | (166 | ) | (149 | ) | (64 | ) | (68 | ) | (479 | ) | (207 | ) | (271 | ) | ||||||||||||||||
Amortization benefit of purchased intangibles(2) | 20 | 20 | 20 | — | — | 60 | — | — | ||||||||||||||||||||||||
Income tax expense | (306 | ) | (212 | ) | (201 | ) | (97 | ) | (140 | ) | (719 | ) | (395 | ) | (492 | ) | ||||||||||||||||
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Operating loss | (567 | ) | (430 | ) | (405 | ) | (278 | ) | (337 | ) | (1,402 | ) | (881 | ) | (1,159 | ) | ||||||||||||||||
Chubb integration and related expenses, net of tax | (85 | ) | (71 | ) | (106 | ) | (35 | ) | (7 | ) | (262 | ) | (7 | ) | (42 | ) | ||||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (1) | (53 | ) | (66 | ) | (59 | ) | — | — | (178 | ) | — | — | ||||||||||||||||||||
Adjusted net realized gains (losses)(1) | 97 | (214 | ) | (394 | ) | (57 | ) | (393 | ) | (511 | ) | (354 | ) | (411 | ) | |||||||||||||||||
Net realized gains (losses) related to unconsolidated entities | 72 | 18 | (25 | ) | (17 | ) | 25 | 65 | 84 | 67 | ||||||||||||||||||||||
Income tax (expense) benefit on adjusted net realized gains (losses) | (27 | ) | 1 | 4 | 12 | 6 | (22 | ) | (2 | ) | 10 | |||||||||||||||||||||
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Net loss | $ | (563 | ) | $ | (762 | ) | $ | (985 | ) | $ | (375 | ) | $ | (706 | ) | $ | (2,310 | ) | $ | (1,160 | ) | $ | (1,535 | ) | ||||||||
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Unfavorable prior period development (PPD) - pre-tax | $ | 62 | $ | 14 | $ | 8 | $ | 60 | $ | 84 | $ | 84 | $ | 140 | $ | 200 | ||||||||||||||||
As If* | ||||||||||||||||||||||||||||||||
YTD | YTD | Full Year | ||||||||||||||||||||||||||||||
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
Gross premiums written | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Net premiums written | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net premiums earned | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Losses and loss expenses | 63 | 15 | 9 | 102 | 114 | 87 | 191 | 293 | ||||||||||||||||||||||||
Policy acquisition costs | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||
Administrative expenses | 57 | 62 | 76 | 83 | 84 | 195 | 234 | 317 | ||||||||||||||||||||||||
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Underwriting loss | $ | (120 | ) | $ | (77 | ) | $ | (85 | ) | $ | (186 | ) | $ | (198 | ) | $ | (282 | ) | $ | (425 | ) | $ | (611 | ) | ||||||||
Unfavorable prior period development (PPD) - pre-tax | $ | 62 | $ | 14 | $ | 8 | $ | 102 | $ | 114 | $ | 84 | $ | 189 | $ | 291 |
(1) | See non-GAAP financial measures. |
(2) | Related to the acquisition of The Chubb Corporation. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Corporate | Page 27 |
Chubb Limited
Loss Reserve Rollforward
(in millions of U.S. dollars, except ratios)
(Unaudited)
Unpaid Losses | Net Paid to | |||||||||||||||
Gross | Ceded | Net | Incurred Ratio | |||||||||||||
Balance at December 31, 2014 | $ | 38,315 | $ | 11,307 | $ | 27,008 | ||||||||||
Losses and loss expenses incurred | 2,743 | 621 | 2,122 | |||||||||||||
Losses and loss expenses paid | (3,062 | ) | (744 | ) | (2,318 | ) | 109 | % | ||||||||
Other (incl. foreign exch. revaluation) | (670 | ) | (197 | ) | (473 | ) | ||||||||||
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Balance at March 31, 2015 | $ | 37,326 | $ | 10,987 | $ | 26,339 | ||||||||||
Losses and loss expenses incurred | 3,065 | 648 | 2,417 | |||||||||||||
Losses and loss expenses paid | (2,830 | ) | (547 | ) | (2,283 | ) | 94 | % | ||||||||
Other (incl. foreign exch. revaluation) | 669 | 60 | 609 | |||||||||||||
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Balance at June 30, 2015 | $ | 38,230 | $ | 11,148 | $ | 27,082 | ||||||||||
Losses and loss expenses incurred | 3,252 | 609 | 2,643 | |||||||||||||
Losses and loss expenses paid | (3,391 | ) | (908 | ) | (2,483 | ) | 94 | % | ||||||||
Other (incl. foreign exch. revaluation) | (527 | ) | (193 | ) | (334 | ) | ||||||||||
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Balance at September 30, 2015 | $ | 37,564 | $ | 10,656 | $ | 26,908 | ||||||||||
Losses and loss expenses incurred | 3,481 | 1,179 | 2,302 | |||||||||||||
Losses and loss expenses paid | (3,616 | ) | (1,050 | ) | (2,566 | ) | 111 | % | ||||||||
Other (incl. foreign exch. revaluation) | (126 | ) | (44 | ) | (82 | ) | ||||||||||
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Balance at December 31, 2015 | $ | 37,303 | $ | 10,741 | $ | 26,562 | ||||||||||
Losses and loss expenses incurred | 4,663 | 989 | 3,674 | |||||||||||||
Losses and loss expenses paid | (4,692 | ) | (1,143 | ) | (3,549 | ) | 97 | % | ||||||||
Acquired reserve (Legacy Chubb) | 22,878 | 1,515 | 21,363 | |||||||||||||
Other (incl. foreign exch. revaluation) | 54 | 25 | 29 | |||||||||||||
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Balance at March 31, 2016 | $ | 60,206 | $ | 12,127 | $ | 48,079 | ||||||||||
Losses and loss expenses incurred | 5,239 | 985 | 4,254 | |||||||||||||
Losses and loss expenses paid | (4,708 | ) | (752 | ) | (3,956 | ) | 93 | % | ||||||||
Other (incl. foreign exch. revaluation) | 82 | 36 | 46 | |||||||||||||
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Balance at June 30, 2016 | $ | 60,819 | $ | 12,396 | $ | 48,423 | ||||||||||
Losses and loss expenses incurred | 5,335 | 1,066 | 4,269 | |||||||||||||
Losses and loss expenses paid | (4,612 | ) | (782 | ) | (3,830 | ) | 90 | % | ||||||||
Other (incl. foreign exch. revaluation) | (195 | ) | (4 | ) | (191 | ) | ||||||||||
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Balance at September 30, 2016 | $ | 61,347 | $ | 12,676 | $ | 48,671 | ||||||||||
Add net recoverable on paid losses | — | 772 | (772 | ) | ||||||||||||
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Balance including net recoverable on paid losses | $ | 61,347 | $ | 13,448 | $ | 47,899 | ||||||||||
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Loss Reserve Rollforward | Page 28 |
Chubb Limited
Reinsurance Recoverable Analysis
(in millions of U.S. dollars)
(Unaudited)
Net Reinsurance Recoverable by Division
Legacy ACE | ||||||||||||||||
September 30 | June 30 | March 31 | December 31 | |||||||||||||
2016 | 2016 | 2016 | 2015 | |||||||||||||
Reinsurance recoverable on paid losses and loss expenses | ||||||||||||||||
Active operations | $ | 558 | $ | 598 | $ | 592 | $ | 450 | ||||||||
Brandywine and Other Run-off | 300 | 323 | 269 | 288 | ||||||||||||
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Total | $ | 858 | $ | 921 | $ | 861 | $ | 738 | ||||||||
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Reinsurance recoverable on unpaid losses and loss expenses | ||||||||||||||||
Active operations | $ | 11,790 | $ | 11,535 | $ | 11,169 | $ | 9,884 | ||||||||
Brandywine and Other Run-off | 1,113 | 1,097 | 1,182 | 1,092 | ||||||||||||
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Total | $ | 12,903 | $ | 12,632 | $ | 12,351 | $ | 10,976 | ||||||||
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Gross reinsurance recoverable | ||||||||||||||||
Active operations | $ | 12,348 | $ | 12,133 | $ | 11,761 | $ | 10,334 | ||||||||
Brandywine and Other Run-off | 1,413 | 1,420 | 1,451 | 1,380 | ||||||||||||
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Total | $ | 13,761 | $ | 13,553 | $ | 13,212 | $ | 11,714 | ||||||||
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Provision for uncollectible reinsurance(1) | ||||||||||||||||
Active operations | $ | (163 | ) | $ | (162 | ) | $ | (164 | ) | $ | (194 | ) | ||||
Brandywine and Other Run-off | (150 | ) | (156 | ) | (157 | ) | (134 | ) | ||||||||
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Total | $ | (313 | ) | $ | (318 | ) | $ | (321 | ) | $ | (328 | ) | ||||
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Net reinsurance recoverable | ||||||||||||||||
Active operations | $ | 12,185 | $ | 11,971 | $ | 11,597 | $ | 10,140 | ||||||||
Brandywine and Other Run-off | 1,263 | 1,264 | 1,294 | 1,246 | ||||||||||||
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Total | $ | 13,448 | $ | 13,235 | $ | 12,891 | $ | 11,386 | ||||||||
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(1) | The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance, net of usable collateral of approximately $3.2 billion. |
Reinsurance Recoverable | Page 29 |
Chubb Limited
Investment Portfolio
(in millions of U.S. dollars)
(Unaudited)
Legacy ACE | ||||||||||||||||||||||||||||||||
September 30 | June 30 | March 31 | December 31 | |||||||||||||||||||||||||||||
2016 | 2016 | 2016 | 2015 | |||||||||||||||||||||||||||||
Market Value | ||||||||||||||||||||||||||||||||
Fixed maturities available for sale | $ | 81,358 | $ | 79,951 | $ | 77,538 | $ | 43,587 | ||||||||||||||||||||||||
Fixed maturities held to maturity | 11,366 | 11,581 | 11,580 | 8,552 | ||||||||||||||||||||||||||||
Short-term investments | 3,548 | 3,631 | 3,382 | 10,446 | ||||||||||||||||||||||||||||
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Total fixed maturities | $ | 96,272 | $ | 95,163 | $ | 92,500 | $ | 62,585 | ||||||||||||||||||||||||
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Asset Allocation by Market Value | ||||||||||||||||||||||||||||||||
Treasury | $ | 2,885 | 3 | % | $ | 2,864 | 3 | % | $ | 3,145 | 3 | % | $ | 2,395 | 4 | % | ||||||||||||||||
Agency | 558 | 1 | % | 550 | 1 | % | 634 | 1 | % | 878 | 1 | % | ||||||||||||||||||||
Corporate and asset-backed | 26,754 | 28 | % | 25,450 | 27 | % | 24,060 | 26 | % | 17,985 | 28 | % | ||||||||||||||||||||
Mortgage-backed | 15,040 | 15 | % | 14,440 | 15 | % | 13,757 | 15 | % | 11,701 | 19 | % | ||||||||||||||||||||
Municipal | 24,240 | 25 | % | 24,975 | 26 | % | 24,945 | 27 | % | 4,950 | 8 | % | ||||||||||||||||||||
Non-U.S. | 23,247 | 24 | % | 23,253 | 24 | % | 22,577 | 24 | % | 14,230 | 23 | % | ||||||||||||||||||||
Short-term investments | 3,548 | 4 | % | 3,631 | 4 | % | 3,382 | 4 | % | 10,446 | 17 | % | ||||||||||||||||||||
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Total fixed maturities | $ | 96,272 | 100 | % | $ | 95,163 | 100 | % | $ | 92,500 | 100 | % | $ | 62,585 | 100 | % | ||||||||||||||||
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Credit Quality by Market Value | ||||||||||||||||||||||||||||||||
AAA | $ | 16,878 | 17 | % | $ | 17,412 | 18 | % | $ | 19,524 | 21 | % | $ | 14,369 | 23 | % | ||||||||||||||||
AA | 37,325 | 39 | % | 36,802 | 39 | % | 34,399 | 37 | % | 22,141 | 36 | % | ||||||||||||||||||||
A | 17,956 | 19 | % | 18,016 | 19 | % | 17,726 | 19 | % | 10,163 | 16 | % | ||||||||||||||||||||
BBB | 12,387 | 13 | % | 12,148 | 13 | % | 11,604 | 13 | % | 8,941 | 14 | % | ||||||||||||||||||||
BB | 6,719 | 7 | % | 6,465 | 7 | % | 5,484 | 6 | % | 3,775 | 6 | % | ||||||||||||||||||||
B | 4,722 | 5 | % | 4,061 | 4 | % | 3,494 | 4 | % | 3,018 | 5 | % | ||||||||||||||||||||
Other | 285 | 0 | % | 259 | 0 | % | 269 | 0 | % | 178 | 0 | % | ||||||||||||||||||||
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Total fixed maturities | $ | 96,272 | 100 | % | $ | 95,163 | 100 | % | $ | 92,500 | 100 | % | $ | 62,585 | 100 | % | ||||||||||||||||
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Cost/Amortized Cost | ||||||||||||||||||||||||||||||||
Fixed maturities available for sale | $ | 78,630 | $ | 77,436 | $ | 75,991 | $ | 43,149 | ||||||||||||||||||||||||
Fixed maturities held to maturity | 10,927 | 11,090 | 11,280 | 8,430 | ||||||||||||||||||||||||||||
Short-term investments | 3,548 | 3,631 | 3,382 | 10,446 | ||||||||||||||||||||||||||||
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Subtotal fixed maturities | 93,105 | 92,157 | 90,653 | 62,025 | ||||||||||||||||||||||||||||
Equity securities | 695 | 703 | 841 | 441 | ||||||||||||||||||||||||||||
Other investments | 4,170 | 4,152 | 4,233 | 2,993 | ||||||||||||||||||||||||||||
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Total investment portfolio | $ | 97,970 | $ | 97,012 | $ | 95,727 | $ | 65,459 | ||||||||||||||||||||||||
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Avg. duration of fixed maturities | 3.9 years | 3.9 years | 3.9 years | 3.5 years | ||||||||||||||||||||||||||||
Avg. market yield of fixed maturities | 2.2 | % | 2.3 | % | 2.5 | % | 2.8 | % | ||||||||||||||||||||||||
Avg. credit quality | A/Aa | A/Aa | AA/Aa | A/Aa | ||||||||||||||||||||||||||||
Avg. yield on invested assets (1) | 3.4 | % | 3.4 | % | 3.4 | % | 3.4 | % |
(1) | Calculated using adjusted net investment income. |
Investments | Page 30 |
Chubb Limited
Investment Portfolio - 2
(in millions of U.S. dollars)
(Unaudited)
Mortgage-backed Fixed Income Portfolio
Mortgage-backed securities
S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
Market Value at September 30, 2016 | ||||||||||||||||||||||||
Agency residential mortgage-backed (RMBS) | $ | — | $ | 12,175 | $ | — | $ | — | $ | — | $ | 12,175 | ||||||||||||
Non-agency RMBS | 1 | 5 | 11 | 5 | 34 | 56 | ||||||||||||||||||
Commercial mortgage-backed | 2,776 | 27 | 6 | — | — | 2,809 | ||||||||||||||||||
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Total mortgage-backed securities at market value | $ | 2,777 | $ | 12,207 | $ | 17 | $ | 5 | $ | 34 | $ | 15,040 | ||||||||||||
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|
|
U.S. Corporate and Asset-backed Fixed Income Portfolios
Market Value at September 30, 2016
S&P Credit Rating | ||||||||||||||||||||
Investment Grade | ||||||||||||||||||||
AAA | AA | A | BBB | Total | ||||||||||||||||
Asset-backed | $ | 788 | $ | 32 | $ | — | $ | — | $ | 820 | ||||||||||
Banks | — | 17 | 1,659 | 1,688 | 3,364 | |||||||||||||||
Basic Materials | — | — | 93 | 265 | 358 | |||||||||||||||
Communications | — | 167 | 274 | 1,263 | 1,704 | |||||||||||||||
Consumer, Cyclical | — | 189 | 632 | 745 | 1,566 | |||||||||||||||
Consumer, Non-Cyclical | 116 | 548 | 1,841 | 1,099 | 3,604 | |||||||||||||||
Diversified Financial Services | 28 | 29 | 499 | 216 | 772 | |||||||||||||||
Energy | — | 60 | 105 | 733 | 898 | |||||||||||||||
Industrial | — | 388 | 559 | 509 | 1,456 | |||||||||||||||
Utilities | 1 | 8 | 1,008 | 658 | 1,675 | |||||||||||||||
All Others | 115 | 512 | 824 | 634 | 2,085 | |||||||||||||||
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|
| |||||||||||
Total | $ | 1,048 | $ | 1,950 | $ | 7,494 | $ | 7,810 | $ | 18,302 | ||||||||||
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Market Value at September 30, 2016
S&P Credit Rating | ||||||||||||||||
Below Investment Grade | ||||||||||||||||
BB | B | CCC | Total | |||||||||||||
Asset-backed | $ | 3 | $ | 3 | $ | 10 | $ | 16 | ||||||||
Banks | 25 | — | — | 25 | ||||||||||||
Basic Materials | 197 | 171 | 3 | 371 | ||||||||||||
Communications | 858 | 783 | 19 | 1,660 | ||||||||||||
Consumer, Cyclical | 1,002 | 693 | 34 | 1,729 | ||||||||||||
Consumer, Non-Cyclical | 762 | 1,071 | 36 | 1,869 | ||||||||||||
Diversified Financial Services | 193 | 41 | 4 | 238 | ||||||||||||
Energy | 349 | 133 | 22 | 504 | ||||||||||||
Industrial | 391 | 419 | 32 | 842 | ||||||||||||
Utilities | 272 | 78 | 1 | 351 | ||||||||||||
All Others | 453 | 376 | 18 | 847 | ||||||||||||
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| |||||||||
Total | $ | 4,505 | $ | 3,768 | $ | 179 | $ | 8,452 | ||||||||
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Investments 2 | Page 31 |
Chubb Limited
Investment Portfolio - 3
(in millions of U.S. dollars)
(Unaudited)
Non-U.S. Fixed Income Portfolio
September 30, 2016
Non-U.S. Government Securities
Market Value by S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
United Kingdom | $ | — | $ | 1,719 | $ | — | $ | — | $ | — | $ | 1,719 | ||||||||||||
Canada | 1,187 | — | — | — | — | 1,187 | ||||||||||||||||||
Republic of Korea | — | 1,117 | — | — | — | 1,117 | ||||||||||||||||||
Federative Republic of Brazil | — | — | — | — | 808 | 808 | ||||||||||||||||||
Province of Ontario | — | 1 | 493 | — | — | 494 | ||||||||||||||||||
Germany | 465 | — | — | — | — | 465 | ||||||||||||||||||
Kingdom of Thailand | — | — | 436 | — | — | 436 | ||||||||||||||||||
United Mexican States | — | — | 292 | 140 | — | 432 | ||||||||||||||||||
Province of Quebec | — | 8 | 415 | — | — | 423 | ||||||||||||||||||
Australia | 317 | 3 | — | — | — | 320 | ||||||||||||||||||
Other Non-U.S. Government Securities | 1,148 | 1,552 | 513 | 391 | 688 | 4,292 | ||||||||||||||||||
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Total | $ | 3,117 | $ | 4,400 | $ | 2,149 | $ | 531 | $ | 1,496 | $ | 11,693 | ||||||||||||
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Non-U.S. Corporate Securities
Market Value by S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
United Kingdom | $ | 102 | $ | 127 | $ | 807 | $ | 913 | $ | 270 | $ | 2,219 | ||||||||||||
Canada | 115 | 318 | 310 | 461 | 239 | 1,443 | ||||||||||||||||||
United States(1) | 2 | 93 | 183 | 317 | 283 | 878 | ||||||||||||||||||
France | 22 | 49 | 487 | 277 | 38 | 873 | ||||||||||||||||||
Netherlands | 96 | 12 | 434 | 234 | 51 | 827 | ||||||||||||||||||
Australia | 100 | 156 | 275 | 94 | 41 | 666 | ||||||||||||||||||
Germany | 144 | 67 | 128 | 248 | 30 | 617 | ||||||||||||||||||
Japan | — | 38 | 357 | 18 | 10 | 423 | ||||||||||||||||||
Switzerland | 31 | 19 | 116 | 141 | 38 | 345 | ||||||||||||||||||
China | — | 127 | 121 | 24 | 5 | 277 | ||||||||||||||||||
Other Non-U.S. Corporate Securities | 475 | 452 | 832 | 701 | 526 | 2,986 | ||||||||||||||||||
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| |||||||||||||
Total | $ | 1,087 | $ | 1,458 | $ | 4,050 | $ | 3,428 | $ | 1,531 | $ | 11,554 | ||||||||||||
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(1) | Countries represent the ultimate parent company’s country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations. |
Investments 3 | Page 32 |
Chubb Limited
Investment Portfolio - 4
(in millions of U.S. dollars)
(Unaudited)
Fixed Maturity Investment Portfolio
Top 10 Global Corporate Exposures
September 30, 2016 | Market Value | Rating | ||||||
1 | JP Morgan Chase & Co | $ | 572 | A- | ||||
2 | Wells Fargo & Co | 487 | A | |||||
3 | General Electric Co | 448 | AA- | |||||
4 | Goldman Sachs Group Inc | 430 | BBB+ | |||||
5 | Anheuser-Busch InBev NV | 371 | A- | |||||
6 | Verizon Communications Inc | 365 | BBB+ | |||||
7 | Morgan Stanley | 342 | BBB+ | |||||
8 | AT&T Inc | 340 | BBB+ | |||||
9 | Bank of America Corp | 339 | BBB+ | |||||
10 | Berkshire Hathaway Inc | 331 | AA |
Investments 4 | Page 33 |
Chubb Limited
Net Realized and Unrealized Gains (Losses)
(in millions of U.S. dollars)
(Unaudited)
Three months ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||
Realized Gains (Losses) | Unrealized Gains (Losses) | Realized and Unrealized Gains (Losses) | ||||||||||||||||||||||||||||||||||
Gains | Tax | Gains | Gains | Tax | Gains | Gains | Tax | Gains | ||||||||||||||||||||||||||||
(Losses) (1) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | ||||||||||||||||||||||||||||
Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | ||||||||||||||||||||||||||||
Fixed maturities | $ | 27 | $ | (8 | ) | $ | 19 | $ | 195 | $ | (67 | ) | $ | 128 | $ | 222 | $ | (75 | ) | $ | 147 | |||||||||||||||
Fixed income derivatives | 1 | 2 | 3 | — | — | — | 1 | 2 | 3 | |||||||||||||||||||||||||||
Public equity | 6 | (3 | ) | 3 | 23 | (1 | ) | 22 | 29 | (4 | ) | 25 | ||||||||||||||||||||||||
Private equity | 59 | (12 | ) | 47 | (4 | ) | (3 | ) | (7 | ) | 55 | (15 | ) | 40 | ||||||||||||||||||||||
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| |||||||||||||||||||
Total investment portfolio | 93 | (21 | ) | 72 | 214 | (71 | ) | 143 | 307 | (92 | ) | 215 | ||||||||||||||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges(2) | 44 | — | 44 | — | — | — | 44 | — | 44 | |||||||||||||||||||||||||||
Foreign exchange | 29 | (6 | ) | 23 | (124 | ) | (7 | ) | (131 | ) | (95 | ) | (13 | ) | (108 | ) | ||||||||||||||||||||
Partially-owned entities(3) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other | 3 | — | 3 | 5 | (1 | ) | 4 | 8 | (1 | ) | 7 | |||||||||||||||||||||||||
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Net gains (losses) | $ | 169 | $ | (27 | ) | $ | 142 | $ | 95 | $ | (79 | ) | $ | 16 | $ | 264 | $ | (106 | ) | $ | 158 | |||||||||||||||
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(1) | Other-than-temporary impairments for the quarter includes $7 million for fixed maturities, $1 million for public equity and $4 million for private equity. |
(2) | The quarter includes $45 million of losses on applicable hedges. These losses are both pre-tax and after-tax. |
(3) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense). |
Legacy ACE | ||||||||||||||||||||||||||||||||||||
Three months ended September 30, 2015 | ||||||||||||||||||||||||||||||||||||
Realized Gains (Losses) | Unrealized Gains (Losses) | Realized and Unrealized Gains (Losses) | ||||||||||||||||||||||||||||||||||
Gains | Tax | Gains | Gains | Tax | Gains | Gains | Tax | Gains | ||||||||||||||||||||||||||||
(Losses) (4) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | ||||||||||||||||||||||||||||
Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | ||||||||||||||||||||||||||||
Fixed maturities | $ | (51 | ) | $ | 5 | $ | (46 | ) | $ | (237 | ) | $ | 8 | $ | (229 | ) | $ | (288 | ) | $ | 13 | $ | (275 | ) | ||||||||||||
Fixed income derivatives | (22 | ) | 4 | (18 | ) | — | — | — | (22 | ) | 4 | (18 | ) | |||||||||||||||||||||||
Public equity | 2 | (1 | ) | 1 | (34 | ) | 9 | (25 | ) | (32 | ) | 8 | (24 | ) | ||||||||||||||||||||||
Private equity | 9 | (5 | ) | 4 | (12 | ) | — | (12 | ) | (3 | ) | (5 | ) | (8 | ) | |||||||||||||||||||||
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Total investment portfolio | (62 | ) | 3 | (59 | ) | (283 | ) | 17 | (266 | ) | (345 | ) | 20 | (325 | ) | |||||||||||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges(5) | (313 | ) | — | (313 | ) | — | — | — | (313 | ) | — | (313 | ) | |||||||||||||||||||||||
Foreign exchange | (2 | ) | 5 | 3 | (575 | ) | 28 | (547 | ) | (577 | ) | 33 | (544 | ) | ||||||||||||||||||||||
Partially-owned entities(6) | 14 | (2 | ) | 12 | 10 | — | 10 | 24 | (2 | ) | 22 | |||||||||||||||||||||||||
Other | (5 | ) | — | (5 | ) | 4 | — | 4 | (1 | ) | — | (1 | ) | |||||||||||||||||||||||
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Net gains (losses) | $ | (368 | ) | $ | 6 | $ | (362 | ) | $ | (844 | ) | $ | 45 | $ | (799 | ) | $ | (1,212 | ) | $ | 51 | $ | (1,161 | ) | ||||||||||||
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(4) | Other-than-temporary impairments for the quarter includes $26 million for fixed maturities, $3 million for public equity and $1 million for private equity. |
(5) | The quarter includes $83 million of gains on applicable hedges. These gains are both pre-tax and after-tax. |
(6) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense). |
Net Gains (Losses) 1 | Page 34 |
Chubb Limited
Net Realized and Unrealized Gains (Losses)
(in millions of U.S. dollars)
(Unaudited)
Nine months ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||
Realized Gains (Losses) | Unrealized Gains (Losses) | Realized and Unrealized Gains (Losses) | ||||||||||||||||||||||||||||||||||
Gains | Tax | Gains | Gains | Tax | Gains | Gains | Tax | Gains | ||||||||||||||||||||||||||||
(Losses) (1) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | ||||||||||||||||||||||||||||
Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | ||||||||||||||||||||||||||||
Fixed maturities | $ | (156 | ) | $ | (2 | ) | $ | (158 | ) | $ | 2,237 | $ | (533 | ) | $ | 1,704 | $ | 2,081 | $ | (535 | ) | $ | 1,546 | |||||||||||||
Fixed income derivatives | (85 | ) | 14 | (71 | ) | — | — | — | (85 | ) | 14 | (71 | ) | |||||||||||||||||||||||
Public equity | 39 | (14 | ) | 25 | 52 | (10 | ) | 42 | 91 | (24 | ) | 67 | ||||||||||||||||||||||||
Private equity | 73 | (9 | ) | 64 | (73 | ) | — | (73 | ) | — | (9 | ) | (9 | ) | ||||||||||||||||||||||
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Total investment portfolio | (129 | ) | (11 | ) | (140 | ) | 2,216 | (543 | ) | 1,673 | 2,087 | (554 | ) | 1,533 | ||||||||||||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges(2) | (358 | ) | — | (358 | ) | — | — | — | (358 | ) | — | (358 | ) | |||||||||||||||||||||||
Foreign exchange | 46 | (12 | ) | 34 | 269 | (18 | ) | 251 | 315 | (30 | ) | 285 | ||||||||||||||||||||||||
Partially-owned entities(3) | (5 | ) | 1 | (4 | ) | — | — | — | (5 | ) | 1 | (4 | ) | |||||||||||||||||||||||
Other | — | — | — | 8 | — | 8 | 8 | — | 8 | |||||||||||||||||||||||||||
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Net gains (losses) | $ | (446 | ) | $ | (22 | ) | $ | (468 | ) | $ | 2,493 | $ | (561 | ) | $ | 1,932 | $ | 2,047 | $ | (583 | ) | $ | 1,464 | |||||||||||||
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(1) | Year to date other-than-temporary impairments includes $77 million for fixed maturities, $7 million for public equity and $7 million for private equity. |
(2) | Year to date includes $88 million of losses on applicable hedges. These losses are both pre-tax and after-tax. |
(3) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense). |
Legacy ACE | ||||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2015 | ||||||||||||||||||||||||||||||||||||
Realized Gains (Losses) | Unrealized Gains (Losses) | Realized and Unrealized Gains (Losses) | ||||||||||||||||||||||||||||||||||
Gains | Tax | Gains | Gains | Tax | Gains | Gains | Tax | Gains | ||||||||||||||||||||||||||||
(Losses) (4) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | (Losses) | (Expense) | (Losses) | ||||||||||||||||||||||||||||
Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | Pre-Tax | Benefit | After-Tax | ||||||||||||||||||||||||||||
Fixed maturities | $ | (50 | ) | $ | — | $ | (50 | ) | $ | (630 | ) | $ | 101 | $ | (529 | ) | $ | (680 | ) | $ | 101 | $ | (579 | ) | ||||||||||||
Fixed income derivatives | 6 | 1 | 7 | — | — | — | 6 | 1 | 7 | |||||||||||||||||||||||||||
Public equity | 32 | (10 | ) | 22 | (40 | ) | 11 | (29 | ) | (8 | ) | 1 | (7 | ) | ||||||||||||||||||||||
Private equity | 49 | (8 | ) | 41 | (19 | ) | — | (19 | ) | 30 | (8 | ) | 22 | |||||||||||||||||||||||
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Total investment portfolio | 37 | (17 | ) | 20 | (689 | ) | 112 | (577 | ) | (652 | ) | 95 | (557 | ) | ||||||||||||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges(5) | (268 | ) | — | (268 | ) | — | — | — | (268 | ) | — | (268 | ) | |||||||||||||||||||||||
Foreign exchange | (73 | ) | 17 | (56 | ) | (860 | ) | 35 | (825 | ) | (933 | ) | 52 | (881 | ) | |||||||||||||||||||||
Partially-owned entities(6) | 45 | (4 | ) | 41 | 10 | — | 10 | 55 | (4 | ) | 51 | |||||||||||||||||||||||||
Other | (11 | ) | 2 | (9 | ) | 11 | (2 | ) | 9 | — | — | — | ||||||||||||||||||||||||
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Net gains (losses) | $ | (270 | ) | $ | (2 | ) | $ | (272 | ) | $ | (1,528 | ) | $ | 145 | $ | (1,383 | ) | $ | (1,798 | ) | $ | 143 | $ | (1,655 | ) | |||||||||||
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(4) | Year to date other-than-temporary impairments includes $46 million for fixed maturities, $4 million for public equities and $1 million for private equity. |
(5) | Year to date includes $69 million of gains on applicable hedges. These gains are both pre-tax and after-tax. |
(6) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense). |
Net Gains (Losses) 2 | Page 35 |
Chubb Limited
Debt and Capital
(in millions of U.S. dollars, except ratios)
(Unaudited)
Legacy ACE | ||||||||||||||||||||
September 30 | June 30 | March 31 | December 31 | December 31 | ||||||||||||||||
2016 | 2016 | 2016 | �� | 2015 | 2014 | |||||||||||||||
Financial Debt: | ||||||||||||||||||||
Total short-term debt | $ | 500 | $ | 500 | $ | 500 | $ | — | $ | 1,150 | ||||||||||
Total long-term debt(1) | 12,621 | 12,631 | 12,636 | 9,389 | 3,334 | |||||||||||||||
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| |||||||||||
Total financial debt | $ | 13,121 | $ | 13,131 | $ | 13,136 | $ | 9,389 | $ | 4,484 | ||||||||||
Hybrid debt: | ||||||||||||||||||||
Total trust preferred securities | 308 | 308 | 308 | 307 | 307 | |||||||||||||||
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| |||||||||||
Total | $ | 13,429 | $ | 13,439 | $ | 13,444 | $ | 9,696 | $ | 4,791 | ||||||||||
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| |||||||||||
Capitalization: | ||||||||||||||||||||
Shareholders’ equity | $ | 48,372 | $ | 47,226 | $ | 45,897 | $ | 29,135 | $ | 29,587 | ||||||||||
Hybrid debt | 308 | 308 | 308 | 307 | 307 | |||||||||||||||
Financial debt | 13,121 | 13,131 | 13,136 | 9,389 | 4,484 | |||||||||||||||
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| |||||||||||
Total capitalization | $ | 61,801 | $ | 60,665 | $ | 59,341 | $ | 38,831 | $ | 34,378 | ||||||||||
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Leverage ratios (based on total capital): | ||||||||||||||||||||
Hybrid debt | 0.5 | % | 0.5 | % | 0.5 | % | 0.8 | % | 0.9 | % | ||||||||||
Financial debt | 21.2 | % | 21.6 | % | 22.1 | % | 24.2 | % | 13.0 | % | ||||||||||
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| |||||||||||
Total hybrid & financial debt | 21.7 | % | 22.1 | % | 22.6 | % | 25.0 | % | 13.9 | % |
Note: As of September 30, 2016, there was $0.5 billion usage of credit facilities on a total commitment of $1.5 billion.
(1) | In connection with our acquisition of The Chubb Corporation, we assumed $3.3 billion par value of Legacy Chubb’s debt, fair valued at $3.8 billion for purchase accounting purposes. This included $1 billion of junior subordinated capital securities. |
Debt and Capital | Page 36 |
Chubb Limited
Computation of Basic and Diluted Earnings Per Share
(in millions of U.S. dollars, except share and per share data)
(Unaudited)
Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Numerator | ||||||||||||||||
Operating income to common shares | $ | 1,356 | $ | 897 | $ | 3,433 | $ | 2,430 | ||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, pre-tax(1) | (79 | ) | — | (257 | ) | — | ||||||||||
Tax benefit on amortization adjustment | 26 | — | 79 | — | ||||||||||||
Chubb integration and related expenses, pre-tax | (115 | ) | (9 | ) | (368 | ) | (9 | ) | ||||||||
Tax benefit on Chubb integration and related expenses | 30 | 2 | 106 | 2 | ||||||||||||
Adjusted net realized gains (losses), pre-tax | 169 | (368 | ) | (446 | ) | (270 | ) | |||||||||
Tax (expense) benefit on adjusted net realized gains (losses) | (27 | ) | 6 | (22 | ) | (2 | ) | |||||||||
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Net income | $ | 1,360 | $ | 528 | $ | 2,525 | $ | 2,151 | ||||||||
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Rollforward of Common Shares Outstanding | ||||||||||||||||
Shares - beginning of period | 465,012,980 | 323,814,281 | 324,563,441 | 328,659,686 | ||||||||||||
Share Issuance for Chubb Acquisition | — | — | 136,950,381 | — | ||||||||||||
Repurchase of shares | — | — | — | (6,677,663 | ) | |||||||||||
Shares issued, excluding option exercises | 34,510 | (78,863 | ) | 2,504,257 | 1,039,238 | |||||||||||
Issued for option exercises | 238,620 | 326,950 | 1,268,031 | 1,041,107 | ||||||||||||
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Shares - end of period | 465,286,110 | 324,062,368 | 465,286,110 | 324,062,368 | ||||||||||||
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Denominator | ||||||||||||||||
Weighted average shares outstanding | 468,021,093 | 324,210,936 | 460,631,794 | 325,904,502 | ||||||||||||
Effect of other dilutive securities | 3,375,269 | 2,962,484 | 3,439,017 | 3,269,724 | ||||||||||||
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Adj. wtd. avg. shares outstanding and assumed conversions | 471,396,362 | 327,173,420 | 464,070,811 | 329,174,226 | ||||||||||||
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Basic earnings per share | ||||||||||||||||
Operating income | $ | 2.90 | $ | 2.77 | $ | 7.45 | $ | 7.46 | ||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax(1) | (0.11 | ) | — | (0.39 | ) | — | ||||||||||
Chubb integration and related expenses, net of tax | (0.18 | ) | (0.02 | ) | (0.57 | ) | (0.02 | ) | ||||||||
Adjusted net realized gains (losses), net of tax | 0.29 | (1.12 | ) | (1.01 | ) | (0.84 | ) | |||||||||
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Net income | $ | 2.90 | $ | 1.63 | $ | 5.48 | $ | 6.60 | ||||||||
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Diluted earnings per share | ||||||||||||||||
Operating income | $ | 2.88 | $ | 2.74 | $ | 7.40 | $ | 7.38 | ||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt(1) | (0.11 | ) | — | (0.39 | ) | — | ||||||||||
Chubb integration and related expenses | (0.18 | ) | (0.02 | ) | (0.56 | ) | (0.02 | ) | ||||||||
Adjusted net realized gains (losses) | 0.29 | (1.10 | ) | (1.01 | ) | (0.83 | ) | |||||||||
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Net income | $ | 2.88 | $ | 1.62 | $ | 5.44 | $ | 6.53 | ||||||||
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(1) | Related to the acquisition of The Chubb Corporation. |
Earnings per share | Page 37 |
Chubb Limited
Book Value and Book Value per Common Share
(in millions of U.S. dollars, except share and per share data)
(Unaudited)
Reconciliation of Book Value per Common Share
September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||||||||
2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||
Shareholders’ equity | $ | 48,372 | $ | 47,226 | $ | 45,897 | $ | 29,135 | $ | 29,127 | ||||||||||
Less: goodwill and other intangible assets, net of tax | 20,332 | 20,656 | 20,904 | 5,683 | 5,713 | |||||||||||||||
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Numerator for tangible book value per share | $ | 28,040 | $ | 26,570 | $ | 24,993 | $ | 23,452 | $ | 23,414 | ||||||||||
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Book value - % change over prior quarter | 2.4 | % | 2.9 | % | 57.5 | % | 0.0 | % | -1.4 | % | ||||||||||
Tangible book value - % change over prior quarter | 5.5 | % | 6.3 | % | 6.6 | % | 0.2 | % | -0.7 | % | ||||||||||
Denominator | 465,286,110 | 465,012,980 | 464,283,520 | 324,563,441 | 324,062,368 | |||||||||||||||
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Book value per common share | $ | 103.96 | $ | 101.56 | $ | 98.85 | $ | 89.77 | $ | 89.88 | ||||||||||
Tangible book value per common share | $ | 60.26 | $ | 57.14 | $ | 53.83 | $ | 72.25 | $ | 72.25 | ||||||||||
Reconciliation of Book Value | ||||||||||||||||||||
Shareholders’ equity, beginning of quarter | $ | 47,226 | $ | 45,897 | $ | 29,135 | $ | 29,127 | $ | 29,555 | ||||||||||
Operating income | 1,356 | 1,058 | 1,019 | 780 | 897 | |||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax(1) | (53 | ) | (66 | ) | (59 | ) | — | — | ||||||||||||
Chubb integration and related expenses, net of tax | (85 | ) | (71 | ) | (106 | ) | (35 | ) | (7 | ) | ||||||||||
Adjusted net realized gains (losses), net of tax | 142 | (195 | ) | (415 | ) | (62 | ) | (362 | ) | |||||||||||
Net unrealized gains (losses) on the investment portfolio | 143 | 706 | 824 | (411 | ) | (255 | ) | |||||||||||||
Share Issuance related to acquisition of The Chubb Corp. | — | — | 15,204 | — | — | |||||||||||||||
Fair value of equity awards assumed in acquisition of The Chubb Corp. | — | — | 323 | — | — | |||||||||||||||
Dividend declared on common shares | (323 | ) | (323 | ) | (314 | ) | (218 | ) | (218 | ) | ||||||||||
Cumulative translation | (131 | ) | 105 | 277 | (133 | ) | (547 | ) | ||||||||||||
Pension liability | 4 | 3 | 1 | 1 | 3 | |||||||||||||||
Other (2) | 93 | 112 | 8 | 86 | 61 | |||||||||||||||
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$ | 48,372 | $ | 47,226 | $ | 45,897 | $ | 29,135 | $ | 29,127 | |||||||||||
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(1) | Related to the acquisition of The Chubb Corporation. |
(2) | Other primarily includes proceeds from exercise of stock options and stock compensation. |
Reconciliation Book Value | Page 38 |
Chubb Limited
Non-GAAP Financial Measures
(in millions of U.S. dollars)
(Unaudited)
Regulation G - Non-GAAP Financial Measures
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 generally accepted accounting principles (GAAP).
We provide financial measures such as gross premiums written, net premiums written, net premiums earned, and operating income on a constant-dollar basis. We believe it is useful to evaluate the trends in these measures 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.
Adjusted net realized gains (losses) is a non-GAAP financial measure that excludes realized gains and losses on 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 will impact underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations and therefore realized gains and losses from these derivatives are reclassified to Adjusted losses and loss expenses (a non-GAAP financial measure). Adjusted losses and loss expenses include gains and losses on crop derivatives. P&C loss and loss expense ratio and P&C combined ratio (both non-GAAP financial measures) include adjusted losses and loss expenses in the ratio numerator. A reconciliation of GAAP combined ratio to P&C combined ratio is provided on page 41.
Other income (expense) – operating is a non-GAAP financial measure and excludes the portion of net realized gains and losses related to unconsolidated entities from other income (expense). These gains and losses are reported as net realized gains (losses) and represent the non-operating activities of entities where we hold more than an insignificant percentage of the investee’s shares. We exclude these gains and losses from other income (expense) to enhance the understanding of our underwriting operations as they are heavily influenced by, and fluctuate in part according to market conditions. The focus of our business is underwriting operations. Excluding results that are not underwriting related provide visibility into the effectiveness of our company pricing underwriting risks. Results based on market conditions, such as realized gains and losses from our investment portfolio, and results that are driven by unusual items, such as the size and complexity of our recent Chubb Corp acquisition and the related integration costs and purchase accounting adjustments, are not indicative measure of our effectiveness in pricing underwriting risks.
In presenting our segment income results, we have shown our performance with reference to underwriting results. Underwriting results are calculated by subtracting adjusted losses and loss expenses, policy benefits, policy acquisition costs, and administrative expenses from net premiums earned. We use underwriting results and operating ratios to monitor the results of our operations without the impact of certain factors, including investment income, other income and expenses, interest and income tax expense, and adjusted net realized gains (losses). P&C underwriting income is a non-GAAP financial measure which excludes the Life Insurance segment. North America Agricultural Insurance underwriting income includes gains (losses) on crop derivatives.
P&C combined ratio excluding catastrophe losses and prior period development (PPD) is a non-GAAP financial measure. The ratio numerator includes adjusted losses and loss expenses, policy acquisition costs, and administrative expenses adjusted to exclude catastrophe losses and PPD. The ratio denominator includes net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected and net earned premium adjustments on loss sensitive policies. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.
P&C loss and loss expense ratio excluding the impact of catastrophe losses and PPD is a non-GAAP financial measure. The loss ratio numerator includes adjusted losses and loss expenses and excludes catastrophe losses and PPD. The loss ratio denominator includes Net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded from PPD and net earned premiums when calculating this ratio. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.
P&C expense ratio excluding accident and health (A&H) is a non-GAAP financial measure and excludes the impact of our A&H business from our consolidated expense ratio. The expense ratio for the A&H business is typically higher than our traditional P&C business, and we believe that this measure provides better comparison to our peer companies that may not have a significant A&H block of business.
Global P&C performance metrics are non-GAAP financial measures and comprise consolidated operating results (including corporate) and exclude the operating results of the company’s Life Insurance and North America Agricultural Insurance segments. We believe that these measures are useful and meaningful to investors as they are used by management to assess the company’s global P&C operations which are the most economically similar. We exclude the North America Agricultural Insurance and Life Insurance segments because the results of these businesses do not always correlate with the results of our global P&C operations.
International life insurance net premiums written and deposits collected, is a non-GAAP financial measure. 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. However, we include life deposits in presenting growth in our life insurance business because new life deposits are an important component of production and key to our efforts to grow our business.
Operating effective tax rate is a non-GAAP financial measure. The numerator excludes tax on adjusted net realized gains (losses). The denominator excludes adjusted net realized gains (losses), before tax. We exclude adjusted net realized gains (losses) and the related tax impact because these amounts are heavily influenced by, and fluctuate in part according to, the availability of market opportunities. Operating effective tax rate should not be viewed as a substitute for effective tax rate determined in accordance with GAAP.
Tangible book value per common share is a non-GAAP financial measure and is shareholders’ equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. We believe that goodwill and other intangible assets are not indicative of our underlying insurance results or trends and make book value comparisons to less acquisitive peer companies less meaningful. A reconciliation of tangible book value per share is provided on page 38. Tangible book value per common share excluding acquisitions is shareholders’ equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. The numerator adds back the goodwill and other intangible assets, net of tax, related to the acquisition of The Chubb Corporation in order to adjust for the distortive effect of the acquisition. In addition, we disclose per share measures that exclude the impact of foreign currency fluctuations during 2016 in order to adjust for the distortive effects of fluctuations in exchange rates.
Operating income is a non-GAAP financial measure that excludes the after-tax impact of adjusted net realized gains (losses), net realized gains (losses) included in other income (expense) related to partially owned entities, Chubb integration and related expenses, and the amortization of the fair value adjustments related to purchased invested assets and long-term debt from The Chubb Corp acquisition. We exclude realized gains and losses because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. We also exclude Chubb integration and related expenses due to the size and complexity of this acquisition. Chubb integration expenses are incurred by the overall company and are therefore included in Corporate. The costs are not related to the on-going activities of the individual segments and are therefore excluded from our definition of segment income, as well. These integration and related expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration and related expenses facilitate the comparison of our financial results to our historical operating results. These expenses include legal and professional fees and all other costs directly related to the integration activities of The Chubb Corp acquisition. In addition, we excluded the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015 from operating income because the operations for which the debt was issued were not part of our operating activities prior to the completion of the acquisition. Effective with the close of The Chubb Corp acquisition (January 14, 2016), this debt was considered a cost of our operations and interest expense associated with this debt is included within operating income. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. Operating income should not be viewed as a substitute for net income determined in accordance with GAAP.
Adjusted net investment income is net investment income excluding the amortization of the fair value adjustment of acquired invested assets. Adjusted interest expense is interest expense excluding the amortization of the fair value adjustment of acquired debt and the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. We believe that excluding these items are meaningful in order to present the underlying economics of the company’s business.
Net premiums written excluding merger-related underwriting actions, including additional reinsurance are non-GAAP performance measures. Since the acquisition of The Chubb Corporation, we have entered into reinsurance agreements with third-party reinsurers for the Legacy Chubb Corp businesses and have taken other merger-related underwriting actions, in conformity with our underwriting and risk diversification strategy. We believe that these measures are meaningful to evaluate trends in our production on a comparable basis to the prior year As If we were one company in 2015.
We acquired the Fireman’s Fund high net worth personal lines business in April 2015 and recognized as written premiums non-recurring unearned premiums reserves of $252 million. Due to the size of this non-recurring transfer, we believe that excluding this one-time benefit in 2015 will allow for comparability when assessing trends in our business. We present measures exclusive of Fireman’s Fund high net worth business from our 2016 and 2015 results in order to show its impact on our results and to highlight the impact of Fireman’s Fund low retention on our business.
Reconciliation Non-GAAP | Page 39 |
Chubb Limited
Non-GAAP Financial Measures - 2
(in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
Operating income
Operating income is a common performance measure for insurance companies and is presented throughout this report.
The following table presents the reconciliation of Net income to Operating income:
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Net income, as reported | $ | 1,360 | $ | 726 | $ | 439 | $ | 683 | $ | 528 | $ | 2,525 | $ | 2,151 | $ | 2,834 | ||||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, pre-tax(1) | (79 | ) | (95 | ) | (83 | ) | — | — | (257 | ) | — | — | ||||||||||||||||||||
Tax benefit on amortization adjustment | 26 | 29 | 24 | — | — | 79 | — | — | ||||||||||||||||||||||||
Chubb integration and related expenses, pre tax | (115 | ) | (98 | ) | (155 | ) | (53 | ) | (9 | ) | (368 | ) | (9 | ) | (62 | ) | ||||||||||||||||
Tax benefit on Chubb integration and related expenses | 30 | 27 | 49 | 18 | 2 | 106 | 2 | 20 | ||||||||||||||||||||||||
Adjusted net realized gains (losses) | 97 | (214 | ) | (394 | ) | (57 | ) | (393 | ) | (511 | ) | (354 | ) | (411 | ) | |||||||||||||||||
Net realized gains (losses) related to unconsolidated entities (2) | 72 | 18 | (25 | ) | (17 | ) | 25 | 65 | 84 | 67 | ||||||||||||||||||||||
Tax (expense) benefit on adjusted net realized gains (losses) | (27 | ) | 1 | 4 | 12 | 6 | (22 | ) | (2 | ) | 10 | |||||||||||||||||||||
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Operating income | $ | 1,356 | $ | 1,058 | $ | 1,019 | $ | 780 | $ | 897 | $ | 3,433 | $ | 2,430 | $ | 3,210 | ||||||||||||||||
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(1) | Related to the acquisition of The Chubb Corporation. |
(2) | Realized gains (losses) on partially-owned entities, which are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense). |
Operating ROE
Operating return on equity (ROE) or ROE calculated using operating income: The ROE numerator includes income adjusted to exclude after-tax adjusted net realized gains (losses), Chubb integration and related expenses, and the amortization of the fair value adjustment of acquired invested assets and long-term debt. The ROE denominator includes the average shareholders’ equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. In addition, for the nine months ended September 30, 2016, the denominator was adjusted to account for the weighted-average impact of the $15,527 million issuance of common shares and equity awards related to The Chubb Corp acquisition on January 14, 2016 . To annualize YTD 2016 operating ROE, include the 14-day stub period adjustment in the numerator (i.e., include income from the first 14 days of January of approximately $60 million to account for the distortive impact of Q1 not having a full quarter given the acquisition close on January 14, 2016). Operating ROE is a useful measures as it enhances the understanding of the return on shareholders’ equity by highlighting the underlying profitability relative to shareholders’ equity excluding the effect of unrealized gains and losses on our investments.
3Q-16 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | ||||||||||||||||
Net income | $ | 1,360 | $ | 528 | $ | 2,525 | $ | 2,151 | $ | 2,834 | ||||||||||
Operating income | $ | 1,356 | $ | 897 | $ | 3,433 | $ | 2,430 | $ | 3,210 | ||||||||||
Equity - beginning of period, as reported | $ | 47,226 | $ | 29,555 | $ | 29,135 | $ | 29,587 | $ | 29,587 | ||||||||||
Add: weighted average impact of equity issuance (260 days) | — | — | 14,734 | — | — | |||||||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax | 2,404 | 1,540 | 874 | 1,851 | 1,851 | |||||||||||||||
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Equity - beginning of period, as adjusted | $ | 44,822 | $ | 28,015 | $ | 42,995 | $ | 27,736 | $ | 27,736 | ||||||||||
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Equity - end of period, as reported | $ | 48,372 | $ | 29,127 | $ | 48,372 | $ | 29,127 | $ | 29,135 | ||||||||||
Less: weighted average impact of equity issuance (14 days) | — | — | 793 | — | — | |||||||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax | 2,547 | 1,285 | 2,547 | 1,285 | 874 | |||||||||||||||
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Equity - end of period, as adjusted | $ | 45,825 | $ | 27,842 | $ | 45,032 | $ | 27,842 | $ | 28,261 | ||||||||||
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Weighted average equity, as reported | $ | 47,799 | $ | 29,341 | $ | 45,724 | $ | 29,357 | $ | 29,361 | ||||||||||
Weighted average equity, as adjusted | $ | 45,324 | $ | 27,929 | $ | 44,014 | $ | 27,789 | $ | 27,999 | ||||||||||
Operating ROE | 12.0 | % | 12.9 | % | 10.4 | % | 11.7 | % | 11.5 | % | ||||||||||
ROE | 11.4 | % | 7.2 | % | 7.4 | % | 9.8 | % | 9.7 | % |
Reconciliation Non-GAAP 2 | Page 40 |
Chubb Limited
Non-GAAP Financial Measures - 3
(in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
Operating effective tax rate
The following table presents the reconciliation of effective tax rate to the operating effective tax rate:
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Tax expense, as reported | $ | 277 | $ | 155 | $ | 124 | $ | 67 | $ | 132 | $ | 556 | $ | 395 | $ | 462 | ||||||||||||||||
Tax benefit on amortization of fair value of acquired invested assets and debt(1) | (26 | ) | (29 | ) | (24 | ) | — | — | (79 | ) | — | — | ||||||||||||||||||||
Tax benefit on Chubb integration and related expenses | (30 | ) | (27 | ) | (49 | ) | (18 | ) | (2 | ) | (106 | ) | (2 | ) | (20 | ) | ||||||||||||||||
Tax expense (benefit) on adjusted net realized gains (losses) | 27 | (1 | ) | (4 | ) | (12 | ) | (6 | ) | 22 | 2 | (10 | ) | |||||||||||||||||||
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Tax expense, adjusted | $ | 306 | $ | 212 | $ | 201 | $ | 97 | $ | 140 | $ | 719 | $ | 395 | $ | 492 | ||||||||||||||||
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Income before tax, as reported | $ | 1,637 | $ | 881 | $ | 563 | $ | 750 | $ | 660 | $ | 3,081 | $ | 2,546 | $ | 3,296 | ||||||||||||||||
Less: amortization of fair value of acquired invested assets and debt(1) | (79 | ) | (95 | ) | (83 | ) | — | — | (257 | ) | — | — | ||||||||||||||||||||
Less: Chubb integration and related expenses | (115 | ) | (98 | ) | (155 | ) | (53 | ) | (9 | ) | (368 | ) | (9 | ) | (62 | ) | ||||||||||||||||
Less: adjusted realized gains (losses) | 97 | (214 | ) | (394 | ) | (57 | ) | (393 | ) | (511 | ) | (354 | ) | (411 | ) | |||||||||||||||||
Less: realized gains (losses) related to unconsolidated entities | 72 | 18 | (25 | ) | (17 | ) | 25 | 65 | 84 | 67 | ||||||||||||||||||||||
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Operating income before tax | $ | 1,662 | $ | 1,270 | $ | 1,220 | $ | 877 | $ | 1,037 | $ | 4,152 | $ | 2,825 | $ | 3,702 | ||||||||||||||||
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Effective tax rate | 17.0 | % | 17.6 | % | 22.1 | % | 9.0 | % | 20.0 | % | 18.1 | % | 15.5 | % | 14.0 | % | ||||||||||||||||
Adjustment for tax impact of amortization of fair value of acquired invested assets and debt(1) | 0.7 | % | 1.1 | % | 0.9 | % | — | — | 0.9 | % | — | — | ||||||||||||||||||||
Adjustment for tax impact of Chubb integration and related expenses | 0.6 | % | 0.9 | % | 2.2 | % | 1.5 | % | -0.1 | % | 1.1 | % | — | 0.3 | % | |||||||||||||||||
Adjustment for tax impact of adjusted net realized gains (losses) | 0.1 | % | -2.9 | % | -8.7 | % | 0.6 | % | -6.4 | % | -2.8 | % | -1.5 | % | -1.0 | % | ||||||||||||||||
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Operating effective tax rate | 18.4 | % | 16.7 | % | 16.5 | % | 11.1 | % | 13.5 | % | 17.3 | % | 14.0 | % | 13.3 | % | ||||||||||||||||
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(1) | Related to the acquisition of The Chubb Corporation |
P&C combined ratio
The following table presents the reconciliation of GAAP combined ratio to P&C combined ratio. The P&C combined ratio includes the impact of realized gains and losses on 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 will impact underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations.
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
GAAP combined ratio | 86.0 | % | 91.2 | % | 90.0 | % | 87.7 | % | 85.8 | % | 89.0 | % | 87.2 | % | 87.3 | % | ||||||||||||||||
Impact of gains and losses on crop derivatives | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.0 | % | 0.0 | % | 0.1 | % | ||||||||||||||||
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P&C combined ratio | 86.0 | % | 91.2 | % | 90.0 | % | 87.7 | % | 85.9 | % | 89.0 | % | 87.2 | % | 87.4 | % |
Reconciliation Non-GAAP 3 | Page 41 |
Chubb Limited
Non-GAAP Financial Measures - 4
(in millions of U.S. dollars, except share data)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
Chubb integration and related expenses, net of tax
Chubb integration and related expenses is a non-GAAP financial measure and includes legal and professional fees and all other costs directly related to the integration activities of The Chubb Corp acquisition, including the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. We exclude Chubb integration expenses related to The Chubb Corp acquisition from operating income due to the size and complexity of this acquisition. We exclude the pre-acquisition interest expense from operating income because the operations for which the debt was issued were not part of our operating activities prior to the completion of the acquisition. Effective with the close of The Chubb Corp acquisition (January 14, 2016), the interest on this debt was considered a cost of our operations and is included within operating income. These integration and related expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration and related expenses facilitate the comparison of our financial results to our historical operating results. The following table presents the reconciliation of Chubb integration expenses on a GAAP basis to Chubb integration and related expenses.
3Q-16 | 2Q-16 | 1Q-16 | 4Q-15 | 3Q-15 | YTD 2016 | YTD 2015 | Full Year 2015 | |||||||||||||||||||||||||
Chubb integration expenses, net of tax | $ | 85 | $ | 71 | $ | 102 | $ | 16 | $ | 7 | $ | 258 | $ | 7 | $ | 23 | ||||||||||||||||
Add: pre-acquisition interest expense related to $5.3 billion senior notes, net of tax | — | — | 4 | 19 | — | 4 | — | 19 | ||||||||||||||||||||||||
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Chubb integration and related expenses, net of tax | 85 | 71 | 106 | 35 | 7 | 262 | 7 | 42 | ||||||||||||||||||||||||
Tax benefit | 30 | 27 | 49 | 18 | 2 | 106 | 2 | 20 | ||||||||||||||||||||||||
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Chubb integration and related expenses, pre- tax | $ | 115 | $ | 98 | $ | 155 | $ | 53 | $ | 9 | $ | 368 | $ | 9 | $ | 62 | ||||||||||||||||
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As If Results
As If results presented throughout this document are prepared exclusive of purchase accounting adjustments in order to present the underlying profitability of our insurance business. We believe that excluding these adjustments provide visibility and comparability into our results. As If is defined as follows:
2016 As If results: The 2016 and 2015 As If underwriting results do not include any impact from purchase accounting adjustments. The first quarter and year to date combined company results are inclusive of the first 14 days of January 2016.
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
The following presents the reconciliation of earnings per share to earnings per share, including the 14 day stub period for YTD 2016:
Numerator | YTD 2016 | |||
Operating income as reported | $ | 3,433 | ||
Add: 14-day stub period income | ||||
Underwriting income | 44 | |||
Net investment income | 45 | |||
Interest expense | (9 | ) | ||
Income tax expense | (20 | ) | ||
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Total 14-day stub period income | 60 | |||
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As If operating income, including 14 day stub period | $ | 3,493 | ||
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Net income as reported | $ | 2,525 | ||
Add: 14-day stub period income from above | 60 | |||
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As If net income, including 14 day stub period | $ | 2,585 | ||
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Denominator | YTD 2016 | |||
Weighted average shares outstanding and assumed conversions | 464,070,811 | |||
Impact of shares issued in connection with Chubb Corp acquisition | 6,719,638 | |||
As If adjusted weighted average shares outstanding | 470,790,449 | |||
Diluted earnings per share, including 14 day stub period | ||||
Operating income per share | $ | 7.42 | ||
Net income per share | $ | 5.49 |
Reconciliation Non-GAAP 4 | Page 42 |
Chubb Limited
Non-GAAP Financial Measures - 5
(in millions of U.S. dollars)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
The following table presents the reconciliation of Q1 2016 As If underwriting income excluding purchase accounting adjustments and including 14 days prior to the acquisition (14 Day Stub Period) to Q1 2016 underwriting results.
Purchase Accounting adjustments (1) | 14 Day Stub Period | |||||||||||||||||||||||||||||||||||||||
Total Consolidated As If* (Excluding Purchase Accounting) | Acquisition expense elimination | UPR intangible amortization | North America Commercial P&C Insurance | North America Personal P&C Insurance | Overseas General Insurance | Global Reinsurance | Life Insurance | Corporate | Total Consolidated | |||||||||||||||||||||||||||||||
Q1 2016 | ||||||||||||||||||||||||||||||||||||||||
Net premiums written | $ | 6,850 | $ | 519 | $ | 100 | $ | 215 | $ | 20 | $ | 1 | $ | — | $ | 5,995 | ||||||||||||||||||||||||
Net premiums earned | 6,988 | 208 | 109 | 72 | — | 2 | — | 6,597 | ||||||||||||||||||||||||||||||||
Losses and loss expenses | 3,896 | 127 | 53 | 42 | — | — | — | 3,674 | ||||||||||||||||||||||||||||||||
Policy benefits | 126 | — | — | — | — | — | — | 126 | ||||||||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | 3 | — | — | — | — | — | — | 3 | ||||||||||||||||||||||||||||||||
Policy acquisition costs | 1,410 | (506 | ) | 33 | 14 | 13 | — | 1 | — | 843 | ||||||||||||||||||||||||||||||
Amortization of acquired UPR intangible | — | 570 | — | — | — | — | — | — | 570 | |||||||||||||||||||||||||||||||
Administrative expenses | 836 | 35 | 13 | 12 | — | 1 | 3 | 772 | ||||||||||||||||||||||||||||||||
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Adjusted underwriting income (loss) | $ | 717 | $ | 13 | $ | 29 | $ | 5 | $ | — | $ | — | $ | (3 | ) | $ | 609 |
(1) | Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
The following table presents the reconciliation of underwriting income excluding purchase accounting adjustments, as used throughout this report (As If), to Pro Forma results calculated in accordance with SEC guidance under Article 11:
Purchase Accounting adjustments (1) | ||||||||||||||||||||||||||||
Legacy ACE | Legacy Chubb | Accounting policy alignment (2) | As If* | Acquisition expense elimination | UPR intangible amortization | SEC Pro Forma 2015(3) | ||||||||||||||||||||||
Q1 2015 | ||||||||||||||||||||||||||||
Net premiums written | $ | 4,076 | $ | 3,106 | $ | 34 | $ | 7,216 | $ | 7,216 | ||||||||||||||||||
Net premiums earned | 3,927 | 3,105 | 5 | 7,037 | 7,037 | |||||||||||||||||||||||
Losses and loss expenses | 2,122 | 1,920 | (1 | ) | 4,041 | 4,041 | ||||||||||||||||||||||
Policy benefits | 142 | — | — | 142 | 142 | |||||||||||||||||||||||
(Gains) losses from fair value | (11 | ) | — | — | (11 | ) | (11 | ) | ||||||||||||||||||||
Policy acquisition costs | 707 | 626 | 64 | 1,397 | (543 | ) | 854 | |||||||||||||||||||||
Amortization of acquired UPR intangible | — | — | — | — | 674 | 674 | ||||||||||||||||||||||
Administrative expenses | 554 | 354 | (33 | ) | 875 | 875 | ||||||||||||||||||||||
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Underwriting income (loss) | $ | 413 | $ | 205 | $ | (25 | ) | $ | 593 | $ | 462 |
(1) | As if acquisition occurred on January 1, 2015. |
(2) | Refer to the closing Form 8-K/A filed on March 24, 2016 for further information on these adjustments. |
(3) | Based on SEC guidance under Article 11. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Reconciliation Non-GAAP 5 | Page 43 |
Chubb Limited
Non-GAAP Financial Measures - 6
(in millions of U.S. dollars)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
The following presents the reconciliation of Q2 2016 As If underwriting income excluding purchase accounting adjustments to Q2 2016 underwriting results.
Purchase Accounting adjustments(1) | ||||||||||||||||
Total Consolidated As If* (Excluding Purchase Accounting) | Acquisition expense elimination | UPR intangible amortization | Total Consolidated | |||||||||||||
Q2 2016 | ||||||||||||||||
Net premiums written | $ | 7,639 | $ | 7,639 | ||||||||||||
Net premiums earned | 7,405 | 7,405 | ||||||||||||||
Losses and loss expenses | 4,256 | 4,256 | ||||||||||||||
Policy benefits | 146 | 146 | ||||||||||||||
(Gains) losses from fair value changes in separate account assets | (3 | ) | (3 | ) | ||||||||||||
Policy acquisition costs | 1,494 | (459 | ) | 1,035 | ||||||||||||
Amortization of acquired UPR intangible | — | 525 | 525 | |||||||||||||
Administrative expenses | 829 | 829 | ||||||||||||||
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Adjusted underwriting income | $ | 683 | $ | 617 | (1) |
(1) | Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
The following table presents the reconciliation of underwriting income excluding purchase accounting adjustments, as used throughout this report (As If), to Pro Forma results calculated in accordance with SEC guidance under Article 11:
Purchase Accounting adjustments (1) | ||||||||||||||||||||||||||||
Legacy ACE | Legacy Chubb | Accounting policy alignment (2) | As If* | Acquisition expense elimination | UPR intangible amortization | SEC Pro Forma 2015(3) | ||||||||||||||||||||||
Q2 2015 | ||||||||||||||||||||||||||||
Net premiums written | $ | 4,784 | $ | 3,309 | $ | 15 | $ | 8,108 | $ | 8,108 | ||||||||||||||||||
Net premiums earned | 4,360 | 3,133 | 10 | 7,503 | 7,503 | |||||||||||||||||||||||
Losses and loss expenses | 2,419 | 1,707 | (8 | ) | 4,118 | 4,118 | ||||||||||||||||||||||
Policy benefits | 153 | — | — | 153 | 153 | |||||||||||||||||||||||
(Gains) losses from fair value | (6 | ) | — | — | (6 | ) | (6 | ) | ||||||||||||||||||||
Policy acquisition costs | 727 | 652 | 77 | 1,456 | (395 | ) | 1,061 | |||||||||||||||||||||
Amortization of acquired UPR intangible | — | — | — | — | 489 | 489 | ||||||||||||||||||||||
Administrative expenses | 578 | 346 | (50 | ) | 874 | 874 | ||||||||||||||||||||||
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Underwriting income (loss) | $ | 489 | $ | 428 | $ | (9 | ) | $ | 908 | $ | 814 |
(1) | As if acquisition occurred on January 1, 2015. Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
(2) | Refer to the closing Form 8-K/A filed on March 24, 2016 for further information on these adjustments. |
(3) | Based on SEC guidance under Article 11. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Reconciliation Non-GAAP 6 | Page 44 |
Chubb Limited
Non-GAAP Financial Measures - 7
(in millions of U.S. dollars)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
The following presents the reconciliation of Q3 2016 As If underwriting income excluding purchase accounting adjustments to Q3 2016 underwriting results.
Purchase Accounting adjustments(1) | ||||||||||||||||
Total Consolidated As If* (Excluding Purchase Accounting) | Acquisition expense elimination | UPR intangible amortization | Total Consolidated | |||||||||||||
Q3 2016 | ||||||||||||||||
Net premiums written | $ | 7,573 | $ | 7,573 | ||||||||||||
Net premiums earned | 7,688 | 7,688 | ||||||||||||||
Losses and loss expenses | 4,266 | 4,266 | ||||||||||||||
Policy benefits | 155 | 155 | ||||||||||||||
(Gains) losses from fair value changes in separate account assets | (22 | ) | (22 | ) | ||||||||||||
Policy acquisition costs | 1,475 | (281 | ) | 1,194 | ||||||||||||
Amortization of acquired UPR intangible | — | 320 | 320 | |||||||||||||
Administrative expenses | 772 | 772 | ||||||||||||||
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Adjusted underwriting income | $ | 1,042 | $ | 1,003 | (1) |
(1) | Refer to page 8 for a reconciliation of underwriting income to net income. Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
The following table presents the reconciliation of underwriting income excluding purchase accounting adjustments, as used throughout this report (As If), to Pro Forma results calculated in accordance with SEC guidance under Article 11:
Purchase Accounting adjustments (1) | ||||||||||||||||||||||||||||
Legacy ACE | Legacy Chubb | Accounting policy alignment (2) | As If* | Acquisition expense elimination | UPR intangible amortization | SEC Pro Forma 2015(3) | ||||||||||||||||||||||
Q3 2015 | ||||||||||||||||||||||||||||
Net premiums written | $ | 4,709 | $ | 3,171 | $ | 10 | $ | 7,890 | $ | 7,890 | ||||||||||||||||||
Net premiums earned | 4,719 | 3,166 | 18 | 7,903 | 7,903 | |||||||||||||||||||||||
Losses and loss expenses | 2,647 | 1,633 | 19 | 4,299 | 4,299 | |||||||||||||||||||||||
Policy benefits | 89 | — | — | 89 | 89 | |||||||||||||||||||||||
(Gains) losses from fair value | 49 | — | — | 49 | 49 | |||||||||||||||||||||||
Policy acquisition costs | 771 | 663 | 71 | 1,505 | (247 | ) | 1,258 | |||||||||||||||||||||
Amortization of acquired UPR intangible | — | — | — | — | 288 | 288 | ||||||||||||||||||||||
Administrative expenses | 568 | 345 | (57 | ) | 856 | 856 | ||||||||||||||||||||||
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Underwriting income (loss) | $ | 595 | $ | 525 | $ | (15 | ) | $ | 1,105 | $ | 1,064 |
(1) | As if acquisition occurred on January 1, 2015. Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
(2) | Refer to the closing Form 8-K/A filed on March 24, 2016 for further information on these adjustments. |
(3) | Based on SEC guidance under Article 11. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Reconciliation Non-GAAP 7 | Page 45 |
Chubb Limited
Non-GAAP Financial Measures - 8
(in millions of U.S. dollars)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
The following presents the reconciliation of YTD 2016 As If underwriting income excluding purchase accounting adjustments and including 14 days prior to the acquisition (14 Day Stub Period) to YTD 2016 as reported underwriting results.
Purchase Accounting adjustments(1) | 14 Day Stub Period | |||||||||||||||||||||||||||||||||||||||
Total Consolidated As If* (Excluding Purchase Accounting) | Acquisition expense elimination | UPR intangible amortization | North America Commercial P&C Insurance | North America Personal P&C Insurance | Overseas General Insurance | Global Reinsurance | Life Insurance | Corporate | Total Consolidated | |||||||||||||||||||||||||||||||
Nine months ended September 30, 2016 | ||||||||||||||||||||||||||||||||||||||||
Net premiums written | $ | 22,062 | $ | 519 | $ | 100 | $ | 215 | $ | 20 | $ | 1 | $ | — | $ | 21,207 | ||||||||||||||||||||||||
Net premiums earned | 22,081 | 208 | 109 | 72 | — | 2 | — | 21,690 | ||||||||||||||||||||||||||||||||
Losses and loss expenses | 12,418 | 127 | 53 | 42 | — | — | — | 12,196 | ||||||||||||||||||||||||||||||||
Policy benefits | 427 | — | — | — | — | — | — | 427 | ||||||||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | (22 | ) | — | — | — | — | — | — | (22 | ) | ||||||||||||||||||||||||||||||
Policy acquisition costs | 4,379 | (1,246 | ) | 33 | 14 | 13 | — | 1 | — | 3,072 | ||||||||||||||||||||||||||||||
Amortization of acquired UPR intangible | — | 1,415 | — | — | — | — | — | — | 1,415 | |||||||||||||||||||||||||||||||
Administrative expenses | 2,437 | 35 | 13 | 12 | — | 1 | 3 | 2,373 | ||||||||||||||||||||||||||||||||
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Adjusted underwriting income (loss) | $ | 2,442 | $ | 13 | $ | 29 | $ | 5 | $ | — | $ | — | $ | (3 | ) | $ | 2,229 | (1) |
(1) | Refer to page 10 for a reconciliation of underwriting income to net income. Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
The following table presents the reconciliation of underwriting income excluding purchase accounting adjustments, as used throughout this report (“As If”), to Pro Forma results calculated in accordance with SEC guidance under Article 11:
Purchase Accounting adjustments(1) | ||||||||||||||||||||||||||||
Legacy ACE | Legacy Chubb | Accounting policy alignment (2) | As If* | Acquisition expense elimination | UPR intangible amortization | SEC Pro Forma 2015(3) | ||||||||||||||||||||||
Nine months ended September 30, 2015 | ||||||||||||||||||||||||||||
Net premiums written | $ | 13,569 | $ | 9,586 | $ | 59 | $ | 23,214 | $ | 23,214 | ||||||||||||||||||
Net premiums earned | 13,006 | 9,404 | 33 | 22,443 | 22,443 | |||||||||||||||||||||||
Losses and loss expenses | 7,188 | 5,260 | 10 | 12,458 | 12,458 | |||||||||||||||||||||||
Policy benefits | 384 | — | — | 384 | 384 | |||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | 32 | — | — | 32 | 32 | |||||||||||||||||||||||
Policy acquisition costs | 2,205 | 1,941 | 212 | 4,358 | (1,185 | ) | 3,173 | |||||||||||||||||||||
Amortization of acquired UPR intangible | — | — | — | — | 1,451 | 1,451 | ||||||||||||||||||||||
Administrative expenses | 1,700 | 1,045 | (140 | ) | 2,605 | 2,605 | ||||||||||||||||||||||
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Underwriting income (loss) | $ | 1,497 | $ | 1,158 | $ | (49 | ) | $ | 2,606 | $ | 2,340 |
(1) | As if acquisition occurred on January 1, 2015. Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
(2) | Refer to the closing Form 8-K/A filed on March 24, 2016 for further information on these adjustments. |
(3) | Based on SEC guidance under Article 11. |
* | 2016 As If results: The 2016 and 2015 As If company underwriting results do not include any impact from purchase accounting adjustments. The Q1 2016 and YTD 2016 As If company results are inclusive of the first 14 days of January 2016. |
2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Reconciliation Non-GAAP 8 | Page 46 |
Chubb Limited
Non-GAAP Financial Measures - 9
(in millions of U.S. dollars)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
The following tables present the reconciliation of combined company underwriting income (“As If”) used throughout this report to Pro Forma results calculated in accordance with SEC guidance under Article 11:
Purchase Accounting adjustments (1) | ||||||||||||||||||||||||||||
Legacy ACE | Legacy Chubb | Accounting policy alignment(2) | As If* | Acquisition expense elimination | UPR intangible amortization | SEC Pro Forma 2015(3) | ||||||||||||||||||||||
Q4 2015 | ||||||||||||||||||||||||||||
Net premiums written | $ | 4,144 | $ | 3,047 | $ | 18 | $ | 7,209 | $ | 7,209 | ||||||||||||||||||
Net premiums earned | 4,207 | 3,114 | 22 | 7,343 | 7,343 | |||||||||||||||||||||||
Losses and loss expenses | 2,305 | 1,693 | 8 | 4,006 | 4,006 | |||||||||||||||||||||||
Policy benefits | 159 | — | — | 159 | 159 | |||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | (13 | ) | — | — | (13 | ) | (13 | ) | ||||||||||||||||||||
Policy acquisition costs | 736 | 652 | 80 | 1,468 | (99 | ) | 1,369 | |||||||||||||||||||||
Amortization of acquired UPR intangible | — | — | — | — | 99 | 99 | ||||||||||||||||||||||
Administrative expenses | 570 | 334 | (44 | ) | 860 | 860 | ||||||||||||||||||||||
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Underwriting income (loss) | $ | 450 | $ | 435 | $ | (22 | ) | $ | 863 | $ | 863 | |||||||||||||||||
Purchase Accounting adjustments (1) | ||||||||||||||||||||||||||||
Legacy ACE | Legacy Chubb | Accounting policy alignment (2) | As If* | Acquisition expense elimination | UPR intangible amortization | SEC Pro Forma 2015(3) | ||||||||||||||||||||||
Full Year 2015 | ||||||||||||||||||||||||||||
Net premiums written | $ | 17,713 | $ | 12,633 | $ | 77 | $ | 30,423 | $ | 30,423 | ||||||||||||||||||
Net premiums earned | 17,213 | 12,518 | 55 | 29,786 | 29,786 | |||||||||||||||||||||||
Losses and loss expenses | 9,493 | 6,953 | 18 | 16,464 | 16,464 | |||||||||||||||||||||||
Policy benefits | 543 | — | — | 543 | 543 | |||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets | 19 | — | — | 19 | 19 | |||||||||||||||||||||||
Policy acquisition costs | 2,941 | 2,593 | 292 | 5,826 | (1,284 | ) | 4,542 | |||||||||||||||||||||
Amortization of acquired UPR intangible | — | — | — | — | 1,550 | 1,550 | ||||||||||||||||||||||
Administrative expenses | 2,270 | 1,379 | (184 | ) | 3,465 | 3,465 | ||||||||||||||||||||||
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Underwriting income (loss) | $ | 1,947 | $ | 1,593 | $ | (71 | ) | $ | 3,469 | $ | 3,203 |
(1) | As if acquisition occurred on January 1, 2015. Purchase accounting adjustments include the amortization of the fair value adjustment related to unearned premiums at the date of purchase amortized over the remaining coverage period. In addition, as part of purchase accounting, we recognize a benefit (Acquisition expense elimination) associated with the acquired unearned premiums being recognized over the remaining coverage period with no expense for the historical acquisition costs. |
(2) | Refer to the closing Form 8-K/A filed on March 24, 2016 for further information on these adjustments. |
(3) | Based on SEC guidance under Article 11. |
* | 2015 As If results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results. |
Reconciliation Non-GAAP 9 | Page 47 |
Chubb Limited
Glossary
Chubb Limited Consolidatedcomprises all segments including Corporate.
Book value per common share: Shareholders’ equity divided by the shares outstanding.
Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding life business.
Operating effective tax rate: Income tax expense excluding tax expense (benefit) on adjusted net realized gains (losses) divided by income excluding adjusted net realized gains (losses) before tax.
Tangible book value per common share: Shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding.
Average market yield of fixed maturities:Weighted average yield to maturity of our fixed income portfolio based on the market prices of the holdings as of that date.
Average yield on invested assets:Net investment income divided by average cost of fixed maturities and other investments, and average market value of equity securities.
Tangible capital:Total capitalization less goodwill and other intangible assets.
Total capitalization: Short-term debt, long-term debt, trust preferreds, and shareholders’ equity.
NM: Not meaningful.
Chubb integration and related expenses: Chubb integration expenses comprise legal and professional fees and all other costs directly related to the integration activities of the Chubb acquisition including the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. The pre-acquisition interest expense is included in operating income subsequent to January 14th, 2016, the date of the acquisition close. Chubb integration expenses are incurred by the overall company and are therefore included in Corporate. These costs are not related to the on-going business activities of the segments and are therefore excluded from our definition of segment income.
Glossary | Page 48 |