Chubb Ltd - FORM 8-K - EX-99.2

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8-K - 8-K - Chubb Ltd	d556470d8k.htm
EX-99.1 - EX-99.1 - Chubb Ltd	d556470dex991.htm

Exhibit 99.2

LOGO

Chubb Limited

Financial Supplement

for the Quarter Ended March 31, 2018

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 and Quarterly Reports on Form 10-Q.

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 and severity 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 our post-acquisition integration of The Chubb Corporation.

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.

Chubb Limited

Financial Supplement Table of Contents


		Page
I.	Financial Highlights
	- Consolidated Financial Highlights	1

II.	Consolidated Results
	- Consolidated Statement of Operations	2
	- P&C Results—Consecutive Quarters	3
	- Catastrophe Losses	4
	- Summary Consolidated Balance Sheets	5
	- Line of Business	6
	- Consolidated Results by Segment	7 - 8

III.	Global P&C Results
	- Global P&C Underwriting Results—Consecutive Quarters	9

IV.	Segment Results
	- North America Commercial P&C Insurance	10
	- North America Personal P&C Insurance	11
	- North America Agricultural Insurance	12
	- Overseas General Insurance	13 - 14
	- Global Reinsurance	15
	- Life Insurance	16
	- Corporate	17

V.	Balance Sheet Details
	- Loss Reserve Rollforward	18
	- Reinsurance Recoverable Analysis	19
	- Investment Portfolio	20 - 23
	- Net Realized and Unrealized Gains (Losses)	24
	- Debt and Capital	25
	- Computation of Basic and Diluted Earnings Per Share	26
	- Book Value and Book Value per Common Share	27

VI.	Other Disclosures
	- Non-GAAP Financial Measures	28 - 31
	- Glossary	32

The 2017 gross premiums written and net premiums written amounts for the North America Commercial P&C Insurance and Overseas General Insurance segments have been revised to reflect the transfer of certain multinational accounts between these segments to better align the reporting with the management of these businesses in 2018. The North America Commercial P&C Insurance segment transfers to (from) Overseas General Insurance segment in 2017 were: $12 million for Q1, $1 million for Q2, $3 million for Q3 and ($7) million for Q4. There is no impact on a consolidated basis.

Chubb Limited

Consolidated Financial Highlights

(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.


							% Change			% Change ex Merger Actions ⁽¹⁾					Constant $ % Change			C$ % Change ex Merger Actions ⁽¹⁾
	Three months ended March 31						1Q-18 vs.			1Q-18 vs.			Constant $		1Q-18 vs.			1Q-18 vs.
	2018			2017			1Q-17			1Q-17			2017		1Q-17			1Q-17
Gross premiums written	$	8,733		$	8,401			3.9	%				$	8,584		1.7	%
Net premiums written	$	7,104		$	6,710			5.9	%				$	6,865		3.5	%
P&C net premiums written	$	6,545		$	6,186			5.8	%		6.6	%	$	6,332		3.4	%		4.1	%
Global P&C net premiums written	$	6,437		$	6,125			5.1	%		5.9	%	$	6,271		2.6	%		3.4	%
Net premiums earned	$	7,027		$	6,772			3.8	%				$	6,898		1.9	%
Net investment income	$	806		$	745			8.2	%				$	750		7.5	%
Adjusted net investment income	$	877		$	836			4.9	%				$	841		4.3	%
Core operating income	$	1,097		$	1,175			-6.6	%				$	1,190		-7.8	%
Net income	$	1,082		$	1,093			-1.1	%
Operating cash flow	$	551		$	1,013
P&C combined ratio
Loss and loss expense ratio		60.0	%		57.4	%
Underwriting and administrative expense ratio		30.1	%		30.1	%

Combined ratio		90.1	%		87.5	%
P&C Current Accident Year (CAY) combined ratio—ex Catastrophe losses (Cats)
Loss and loss expense ratio—ex Cats and PPD		57.7	%		58.1	%
Underwriting and administrative expense ratio—ex Cats and PPD		29.9	%		29.9	%

CAY combined ratio ex Cats		87.6	%		88.0	%
ROE		8.4	%		9.0	%
Core operating return on equity (ROE)		8.7	%		9.9	%
Effective tax rate ⁽²⁾		11.1	%		10.5	%
Core operating effective tax rate ⁽²⁾		12.0	%		14.0	%
Diluted earnings per share
Net income	$	2.30		$	2.31			-0.4	%
Core operating income	$	2.34		$	2.48			-5.6	%
Weighted average basic common shares outstanding		465.7			468.9
Weighted average diluted common shares outstanding		469.5			472.7

				December 31 2017			% Change 1Q-18 vs 4Q-17
Book value per common share	$	110.10		$	110.32			-0.2	%
Book value per common share excluding foreign currency ⁽³⁾	$	109.43		$	110.32			-0.8	%
Tangible book value per common share	$	65.65		$	65.87			-0.3	%
Tangible book value per common share excluding foreign currency ⁽³⁾	$	65.35		$	65.87			-0.8	%
Total hybrid & financial debt/capitalization		22.4	%		20.1	%

(1)	Net premiums written were adversely impacted by merger-related actions of $48 million in Q1 2018.

(2)

The core operating effective tax rate is lower in 2018, primarily reflecting the favorable impact of the 2017 tax reform and higher U.S. catastrophe losses in the quarter. Additionally, the impact of the lower U.S. tax rate on integration and fair value amortization expenses, as well as the impact of lower tax benefit resulting from a reduction in integration expenses, increased the overall effective tax rate in the current year.

(3)	For 2018, book value per common share and tangible book value per common share exclude the impact of foreign currency movement during the quarter.


Financial Highlights		Page 1

Chubb Limited

Statement of Operations—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Consolidated Statements of Operations


		1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
	Gross premiums written	$	8,733		$	8,960		$	9,710		$	9,305		$	8,401		$	36,376
	Net premiums written		7,104			7,051			7,902			7,581			6,710			29,244
	Net premiums earned		7,027			7,218			7,807			7,237			6,772			29,034
(1)	Adjusted losses and loss expenses		4,100			4,272			6,252			4,148			3,789			18,461
	Realized (gains) losses on crop derivatives		(2	)		—			5			2			—			7

	Losses and loss expenses		4,102			4,272			6,247			4,146			3,789			18,454
	Policy benefits		151			176			169			163			168			676
	Policy acquisition costs		1,464			1,447			1,488			1,449			1,397			5,781
	Administrative expenses		692			737			714			706			676			2,833
(2)	Adjusted net investment income		877			873			893			855			836			3,457
	Amortization expense of fair value adjustment on acquired invested assets		(71	)		(76	)		(80	)		(85	)		(91	)		(332	)

	Net investment income		806			797			813			770			745			3,125
(3)	Adjusted realized gains (losses)		(4	)		—			(5	)		103			(7	)		91
	Realized gains (losses) on crop derivatives		2			—			(5	)		(2	)		—			(7	)

	Net realized gains (losses)		(2	)		—			(10	)		101			(7	)		84
(4)	Adjusted interest expense		169			168			162			160			166			656
	Amortization benefit of fair value adjustment on acquired long term debt		(12	)		(12	)		(12	)		(13	)		(12	)		(49	)

	Interest expense		157			156			150			147			154			607
	Gains (losses) from fair value changes in separate account assets		6			27			24			16			30			97
	Net realized gains (losses) related to unconsolidated entities		44			122			89			143			52			406
	Other income (expense)—operating		(3	)		(82	)		5			(14	)		(12	)		(103	)

	Other income (expense)		47			67			118			145			70			400
	Amortization expense of purchased intangibles		85			66			65			65			64			260
	Chubb integration expenses		10			77			50			72			111			310
	Income tax expense (benefit)		135			(382	)		(85	)		200			128			(139	)

	Net income (loss)	$	1,082		$	1,533		$	(70	)	$	1,305		$	1,093		$	3,861

(1)	Adjusted losses and loss expenses used throughout this report include realized gains and losses on crop derivatives.

(2)	Adjusted net investment income used throughout this report excludes amortization of the fair value adjustment on acquired invested assets.

(3)	Adjusted realized gains and losses used throughout this report excludes realized gains and losses on crop derivatives.

(4)	Adjusted interest expense used throughout this report excludes amortization benefit of the fair value adjustment on acquired long term debt.


Statement of Operations		Page 2

Chubb Limited

P&C Underwriting Results—Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

Chubb Limited P&C Underwriting Results


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
P&C Underwriting income (Including Corporate and excluding Life Insurance)
Gross premiums written	$	8,141		$	8,374		$	9,142		$	8,748		$	7,851		$	34,115
Net premiums written		6,545			6,496			7,363			7,058			6,186			27,103
Net premiums earned		6,487			6,665			7,280			6,722			6,266			26,933
Adjusted losses and loss expenses		3,895			4,089			6,071			3,966			3,596			17,722
Policy acquisition costs		1,336			1,293			1,356			1,319			1,283			5,251
Administrative expenses		614			660			637			629			604			2,530

P&C Underwriting income (loss)	$	642		$	623		$	(784	)	$	808		$	783		$	1,430

P&C CAY Underwriting income ex Cats	$	813		$	912		$	839		$	838		$	758		$	3,347
% Change versus prior year period
Net premiums written		5.8	%		1.7	%		4.6	%		-0.8	%		12.9	%		4.2	%
Net premiums written excluding merger-related actions ⁽¹⁾		6.6	%		3.7	%		3.9	%		2.0	%		17.9	%		6.3	%
Net premiums earned		3.5	%		2.2	%		1.5	%		-2.5	%		2.7	%		0.9	%
Net premiums written constant $		3.4	%		0.5	%		4.6	%		-0.2	%		13.4	%		4.2	%
Net premiums written constant $ excluding merger-related actions ⁽¹⁾		4.1	%		2.5	%		4.0	%		2.6	%		18.5	%		6.2	%
Net premiums earned constant $		1.6	%		1.0	%		1.3	%		-2.0	%		2.8	%		0.7	%
P&C combined ratio
Loss and loss expense ratio		60.0	%		61.4	%		83.4	%		59.0	%		57.4	%		65.8	%
Policy acquisition cost ratio		20.6	%		19.4	%		18.6	%		19.6	%		20.5	%		19.5	%
Administrative expense ratio		9.5	%		9.9	%		8.8	%		9.4	%		9.6	%		9.4	%

Combined ratio		90.1	%		90.7	%		110.8	%		88.0	%		87.5	%		94.7	%

CAY P&C combined ratio—ex Cats
Loss and loss expense ratio—ex Cats and PPD		57.7	%		57.1	%		61.3	%		58.6	%		58.1	%		58.8	%
Underwriting and administrative expense ratio—ex Cats and PPD		29.9	%		29.3	%		27.2	%		28.9	%		29.9	%		28.8	%

CAY combined ratio ex Cats		87.6	%		86.4	%		88.5	%		87.5	%		88.0	%		87.6	%

Other ratios
Net premiums written/gross premiums written		80	%		78	%		81	%		81	%		79	%		79	%
Expense ratio		30.1	%		29.3	%		27.4	%		29.0	%		30.1	%		28.9	%
Expense ratio excluding A&H		27.9	%		27.2	%		25.1	%		27.1	%		28.0	%		26.8	%
Catastrophe reinstatement premiums (expenses) collected—pre-tax	$	—		$	(15	)	$	22		$	—		$	—		$	7
Catastrophe losses—pre-tax	$	380		$	432		$	1,915		$	200		$	206		$	2,753
Favorable prior period development (PPD)—pre-tax	$	(209	)	$	(158	)	$	(270	)	$	(170	)	$	(231	)	$	(829	)

(1)	Net premiums written were adversely impacted by merger-related actions of $48 million in Q1 2018.

Note: Refer to the Non-GAAP financial measures section for further information on the calculation of the components of combined ratios.


P&C Results		Page 3

Chubb Limited

Segments results—Catastrophe Loss Charges

(in millions of U.S. dollars)

(Unaudited)

Chubb Limited Catastrophe Loss Charges—Q1 2018


	North America Commercial P&C Insurance		North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance		Global Reinsurance		Total Consolidated
Catastrophe Loss Charges by Event—Gross
Northeast Winter Storms	$	57	$	171	$	1	$	—	$	2	$	231
California Mudslides		4		177		—		1		—		182
Other		24		31		—		21		—		76

Total	$	85	$	379	$	1	$	22	$	2	$	489

Catastrophe Loss Charges by Event—Net
Northeast Winter Storms	$	53	$	139	$	1	$	—	$	2	$	195
California Mudslides		4		120		—		1		—		125
Other		21		25		—		14		—		60

Total	$	78	$	284	$	1	$	15	$	2	$	380
Reinstatement premiums		—		—		—		—		—		—

Total impact before income tax	$	78	$	284	$	1	$	15	$	2	$	380

Income tax benefit												77

Total impact after income tax											$	303


Catastrophe Losses		Page 4

Chubb Limited

Summary Consolidated Balance Sheets

(in millions of U.S. dollars, except per share data)

(Unaudited)


	March 31 2018			December 31 2017
Assets
Fixed maturities available for sale, at fair value	$	79,111		$	78,939
Fixed maturities held to maturity, at amortized cost		14,253			14,335
Equity securities, at fair value		948			937
Short-term investments, at fair value		2,874			3,561
Other investments		4,919			4,672

Total investments		102,105			102,444
Cash		1,988			728
Securities lending collateral		2,039			1,737
Insurance and reinsurance balances receivable		9,570			9,334
Reinsurance recoverable on losses and loss expenses		14,982			15,034
Deferred policy acquisition costs		4,843			4,723
Value of business acquired		321			326
Prepaid reinsurance premiums		2,600			2,529
Goodwill and other intangible assets		22,123			22,054
Investments in partially-owned insurance companies		664			662
Other assets		7,546			7,451

Total assets	$	168,781		$	167,022

Liabilities
Unpaid losses and loss expenses	$	63,139		$	63,179
Unearned premiums		15,495			15,216
Future policy benefits		5,412			5,321
Insurance and reinsurance balances payable		6,148			5,868
Securities lending payable		2,039			1,737
Accounts payable, accrued expenses, and other liabilities		10,030			10,953
Deferred tax liabilities		468			699
Short-term debt		1,669			1,013
Long-term debt		12,786			11,556
Trust preferred securities		308			308

Total liabilities		117,494			115,850
Shareholders’ equity
Total shareholders’ equity, excl. AOCI		51,789			50,629
Accumulated other comprehensive income (loss) (AOCI)		(502	)		543

Total shareholders’ equity		51,287			51,172

Total liabilities and shareholders’ equity	$	168,781		$	167,022

Book value per common share	$	110.10		$	110.32
% change over prior quarter		-0.2	%		1.5	%
Tangible book value per common share	$	65.65		$	65.87
% change over prior quarter		-0.3	%		1.2	%


Consol Bal Sheet		Page 5

Chubb Limited

Consolidated Net Premiums Written by Line of Business

(in millions of U.S. dollars)

(Unaudited)


	1Q-18		1Q-17		% Change 1Q-18 vs. 1Q-17
Net premiums written
Commercial multiple peril⁽¹⁾	$	201	$	201		0.0	%
Commercial casualty		1,145		1,049		9.2	%
Workers’ compensation		624		588		6.1	%
Professional liability		773		763		1.3	%
Surety		161		150		7.3	%
Property and other short-tail lines		1,040		1,044		-0.4	%

Total Commercial P&C		3,944		3,795		3.9	%
Agriculture		108		61		76.2	%
Personal automobile—North America		184		165		11.5	%
Personal automobile—International		214		186		15.1	%
Personal homeowners		738		697		5.9	%
Personal other		387		362		6.9	%

Total Personal lines		1,523		1,410		8.0	%
Total Property and Casualty lines		5,575		5,266		5.9	%
Global A&H lines ⁽²⁾		1,072		994		7.8	%
Reinsurance lines		193		199		-3.0	%
Life		264		251		5.2	%

Total consolidated	$	7,104	$	6,710		5.9	%

(1)	Commercial multiple peril represents retail package business (property and general liability).

(2)

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


Line of Business		Page 6

Chubb Limited

Consolidated Results

(in millions of U.S. dollars, except ratios)

(Unaudited)


Q1 2018	North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Corporate			Total P&C			Life Insurance			Total Consolidated
Net premiums written	$	2,812		$	1,048		$	108		$	2,384		$	193		$	—		$	6,545		$	559		$	7,104
Net premiums earned		3,029			1,140			43			2,107			168			—			6,487			540			7,027
Adjusted losses and loss expenses		1,908			886			(55	)		1,078			67			11			3,895			205			4,100
Policy benefits		—			—			—			—			—			—			—			151			151
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		—			—			—			—			—			—			—			(6	)		(6	)
Policy acquisition costs		472			237			(1	)		588			40			—			1,336			128			1,464
Administrative expenses		231			65			(3	)		239			10			72			614			78			692

Underwriting income (loss)		418			(48	)		102			202			51			(83	)		642			(16	)		626
Adjusted net investment income		503			59			7			151			64			10			794			83			877
Other income (expense)—operating⁽¹⁾		6			—			—			(7	)		7			(7	)		(1	)		(2	)		(3	)
Amortization expense of purchased intangibles		—			(3	)		(7	)		(10	)		—			(64	)		(84	)		(1	)		(85	)

Segment income (loss)	$	927		$	8		$	102		$	336		$	122		$	(144	)	$	1,351		$	64		$	1,415

Adjusted interest expense																	(169	)								(169	)
Income tax expense																	(149	)								(149	)

Core operating income (loss)																	(462	)								1,097
Chubb integration expenses, net of $2 million tax benefit																	(8	)								(8	)
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of $9 million tax benefit ⁽²⁾																	(50	)								(50	)
Adjusted net realized gains (losses), net of $3 million tax benefit⁽³⁾																	43									43

Net income (loss)																$	(477	)							$	1,082

Combined ratio		86.2	%		104.2	%		NM			90.4	%		69.5	%					90.1	%
CAY combined ratio ex Cats		87.0	%		79.7	%		67.7	%		90.7	%		77.0	%					87.6	%

(1)	For the Life Insurance segment, (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 (loss) presentation from Other income (expense).

(2)	Related to the acquisition of The Chubb Corporation.

(3)	Includes net realized gains (losses) related to unconsolidated entities.


Consolidated Results 2018		Page 7

Chubb Limited

Consolidated Results

(in millions of U.S. dollars, except ratios)

(Unaudited)


Q1 2017	North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Corporate			Total P&C			Life Insurance			Total Consolidated
Net premiums written	$	2,730		$	984		$	61		$	2,212		$	199		$	—		$	6,186		$	524		$	6,710
Net premiums earned		3,041			1,086			14			1,936			189			—			6,266			506			6,772
Adjusted losses and loss expenses		1,860			633			(73	)		1,071			94			11			3,596			193			3,789
Policy benefits		—			—			—			—			—			—			—			168			168
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		—			—			—			—			—			—			—			(30	)		(30	)
Policy acquisition costs		487			217			(1	)		529			51			—			1,283			114			1,397
Administrative expenses		231			65			(5	)		245			10			58			604			72			676

Underwriting income (loss)		463			171			93			91			34			(69	)		783			(11	)		772
Adjusted net investment income		478			55			6			148			62			12			761			75			836
Other income (expense)—operating⁽¹⁾		(4	)		(1	)		—			1			—			(7	)		(11	)		(1	)		(12	)
Amortization expense of purchased intangibles		—			(3	)		(7	)		(11	)		—			(42	)		(63	)		(1	)		(64	)

Segment income (loss)	$	937		$	222		$	92		$	229		$	96		$	(106	)	$	1,470		$	62		$	1,532

Adjusted interest expense																	(166	)								(166	)
Income tax expense																	(191	)								(191	)

Core operating income (loss)																	(463	)								1,175
Chubb integration expenses, net of $37 million tax benefit																	(74	)								(74	)
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of $24 million tax benefit ⁽²⁾																	(55	)								(55	)
Adjusted net realized gains (losses), net of $2 million tax benefit ⁽³⁾																	47									47

Net income (loss)																$	(545	)							$	1,093

Combined ratio		84.8	%		84.2	%		NM			95.3	%		82.1	%					87.5	%
CAY combined ratio ex Cats		87.9	%		78.3	%		74.6	%		92.1	%		77.0	%					88.0	%

(1)	For the Life Insurance segment, (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 (loss) presentation from Other income (expense).

(2)	Related to the acquisition of The Chubb Corporation.

(3)	Includes net realized gains (losses) related to unconsolidated entities.


Consolidated Results 2017		Page 8

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 10), North America Personal P&C Insurance segment (refer to page 11), Overseas General Insurance segment (refer to page 13), Global Reinsurance segment (refer to page 15), and Corporate (refer to page 17). Global P&C excludes the North America Agricultural Insurance and Life Insurance segments.

Global P&C (Including Corporate and excluding Agriculture)


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Global P&C Underwriting income
Gross premiums written	$	7,936		$	8,098		$	7,839		$	8,179		$	7,684		$	31,800
Net premiums written		6,437			6,370			6,437			6,655			6,125			25,587
Net premiums earned		6,444			6,413			6,382			6,378			6,252			25,425
Adjusted losses and loss expenses		3,950			4,029			5,307			3,674			3,669			16,679
Policy acquisition costs		1,337			1,287			1,307			1,292			1,284			5,170
Administrative expenses		617			664			638			627			609			2,538

Global P&C Underwriting income (loss)	$	540		$	433		$	(870	)	$	785		$	690		$	1,038

Global P&C CAY Underwriting income ex Cats	$	786		$	758		$	752		$	807		$	739		$	3,056
% Change versus prior year period
Net premiums written		5.1	%		0.3	%		4.0	%		-1.2	%		13.1	%		3.6	%
Net premiums written excluding merger-related actions ⁽¹⁾		5.9	%		2.3	%		3.3	%		1.7	%		18.2	%		5.8	%
Net premiums earned		3.1	%		0.6	%		0.4	%		-2.9	%		2.9	%		0.2	%
Net premiums written constant $		2.6	%		-0.8	%		4.0	%		-0.6	%		13.7	%		3.6	%
Net premiums written constant $ excluding merger-related actions ⁽¹⁾		3.4	%		1.2	%		3.3	%		2.4	%		18.7	%		5.8	%
Net premiums earned constant $		1.2	%		-0.6	%		0.3	%		-2.3	%		3.0	%		0.0	%
Combined ratio
Loss and loss expense ratio		61.3	%		62.8	%		83.1	%		57.6	%		58.7	%		65.6	%
Policy acquisition cost ratio		20.8	%		20.1	%		20.5	%		20.3	%		20.5	%		20.3	%
Administrative expense ratio		9.5	%		10.4	%		10.0	%		9.8	%		9.8	%		10.0	%

Combined ratio		91.6	%		93.3	%		113.6	%		87.7	%		89.0	%		95.9	%

CAY combined ratio—ex Cats
Loss and loss expense ratio—ex Cats and PPD		57.6	%		57.9	%		58.0	%		57.3	%		57.9	%		57.8	%
Underwriting and administrative expense ratio—ex Cats and PPD		30.2	%		30.3	%		30.2	%		30.1	%		30.3	%		30.2	%

CAY combined ratio ex Cats		87.8	%		88.2	%		88.2	%		87.4	%		88.2	%		88.0	%

Other ratios
Net premiums written/gross premiums written		81	%		79	%		82	%		81	%		80	%		80	%
Expense ratio		30.3	%		30.5	%		30.5	%		30.1	%		30.3	%		30.3	%
Expense ratio excluding A&H		28.2	%		28.4	%		28.3	%		28.2	%		28.1	%		28.3	%
Catastrophe reinstatement premiums (expenses) collected—pre-tax	$	—		$	(15	)	$	22		$	—		$	—		$	7
Catastrophe losses—pre-tax	$	379		$	432		$	1,910		$	192		$	201		$	2,735
Favorable prior period development (PPD)—pre-tax	$	(133	)	$	(122	)	$	(266	)	$	(170	)	$	(152	)	$	(710	)

(1)	Net premiums written were adversely impacted by merger-related actions of $48 million in Q1 2018.


Global P&C		Page 9

Chubb Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

North America Commercial P&C Insurance


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Gross premiums written ⁽¹⁾	$	3,678		$	4,102		$	3,919		$	4,077		$	3,653		$	15,751
Net premiums written ⁽¹⁾		2,812			3,000			3,086			3,203			2,730			12,019
Net premiums earned		3,029			3,035			3,016			3,099			3,041			12,191
Losses and loss expenses		1,908			1,911			2,580			1,936			1,860			8,287
Policy acquisition costs		472			453			469			464			487			1,873
Administrative expenses		231			253			256			241			231			981

Underwriting income (loss)		418			418			(289	)		458			463			1,050
Net investment income		503			496			497			490			478			1,961
Other income (expense)—operating		6			(5	)		4			4			(4	)		(1	)

Segment income	$	927		$	909		$	212		$	952		$	937		$	3,010

CAY Underwriting income ex Cats	$	395		$	386		$	346		$	429		$	367		$	1,528
Combined ratio
Loss and loss expense ratio		63.0	%		63.0	%		85.5	%		62.5	%		61.2	%		68.0	%
Policy acquisition cost ratio		15.6	%		14.9	%		15.5	%		15.0	%		16.0	%		15.4	%
Administrative expense ratio		7.6	%		8.3	%		8.6	%		7.7	%		7.6	%		8.0	%

Combined ratio		86.2	%		86.2	%		109.6	%		85.2	%		84.8	%		91.4	%

CAY combined ratio—ex Cats
Loss and loss expense ratio—ex Cats and PPD		64.0	%		64.1	%		65.2	%		63.4	%		64.4	%		64.3	%
Underwriting and administrative expense ratio—ex Cats and PPD		23.0	%		23.2	%		23.5	%		22.7	%		23.5	%		23.2	%

CAY combined ratio ex Cats		87.0	%		87.3	%		88.7	%		86.1	%		87.9	%		87.5	%

Catastrophe reinstatement premiums expensed—pre-tax	$	—		$	(1	)	$	(3	)	$	—		$	—		$	(4	)
Catastrophe losses—pre-tax	$	78		$	167		$	868		$	102		$	83		$	1,220
Favorable prior period development (PPD)—pre-tax ⁽²⁾	$	(101	)	$	(200	)	$	(236	)	$	(131	)	$	(179	)	$	(746	)
% Change versus prior year period
Net premiums written		3.0	%		-2.7	%		-0.7	%		-1.3	%		18.6	%		2.4	%
Net premiums written excluding merger-related actions ⁽³⁾		4.4	%		-1.0	%		1.1	%		1.3	%		22.2	%		4.7	%
Net premiums earned		-0.4	%		-1.7	%		-2.3	%		-1.6	%		5.0	%		-0.2	%
Other ratios
Net premiums written/gross premiums written		76	%		73	%		79	%		79	%		75	%		76	%
Production by Size
Net Premiums Written ⁽¹⁾
Major Accounts & Specialty⁽⁴⁾	$	1,630		$	1,753		$	1,786		$	1,965		$	1,572		$	7,076
Commercial ⁽⁴⁾		1,182			1,247			1,300			1,238			1,158			4,943

Total	$	2,812		$	3,000		$	3,086		$	3,203		$	2,730		$	12,019

(1)

2017 amounts (Q1: $12 million; Q2: $1 million; Q3: $3 million; Q4: $(7) million) have been revised to reflect the North America Commercial P&C Insurance segment transfer of certain multinational accounts to (from) the Overseas General Insurance segment to better align the reporting with the management of these businesses in 2018. There is no impact on a consolidated basis.

(2)	For Q1 2018, favorable prior period development is net of $6 million of unfavorable expense adjustments and $4 million of unfavorable reinstatement premium adjustments. For Q1 2017, favorable prior period development is net of $9 million of favorable reinstatement premium adjustments.

(3)	Q1 2018 includes the adverse impact of merger-related actions, respectively, as follows: Major Accounts & Specialty $38 million and Commercial $2 million.

(4)	Major Accounts & Specialty: principally large corporate accounts and wholesale business. Commercial: principally middle market and small commercial accounts.


NA Commercial		Page 10

Chubb Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

North America Personal P&C Insurance


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Gross premiums written	$	1,181		$	1,260		$	1,338		$	1,409		$	1,145		$	5,152
Net premiums written		1,048			1,100			1,194			1,255			984			4,533
Net premiums earned		1,140			1,103			1,117			1,093			1,086			4,399
Losses and loss expenses		886			887			1,062			683			633			3,265
Policy acquisition costs		237			226			226			230			217			899
Administrative expenses		65			72			61			66			65			264

Underwriting income (loss)		(48	)		(82	)		(232	)		114			171			(29	)
Net investment income		59			58			57			56			55			226
Other expense—operating		—			(1	)		(1	)		(1	)		(1	)		(4	)
Amortization expense of purchased intangibles		(3	)		(4	)		(4	)		(5	)		(3	)		(16	)

Segment income (loss)	$	8		$	(29	)	$	(180	)	$	164		$	222		$	177

CAY Underwriting income ex Cats	$	230		$	218		$	251		$	228		$	236		$	933
Combined ratio
Loss and loss expense ratio		77.7	%		80.4	%		95.1	%		62.4	%		58.3	%		74.2	%
Policy acquisition cost ratio		20.8	%		20.5	%		20.2	%		21.1	%		20.0	%		20.4	%
Administrative expense ratio		5.7	%		6.6	%		5.5	%		6.1	%		5.9	%		6.1	%

Combined ratio		104.2	%		107.5	%		120.8	%		89.6	%		84.2	%		100.7	%

CAY combined ratio—ex Cats
Loss and loss expense ratio—ex Cats and PPD		53.3	%		54.0	%		51.9	%		52.1	%		52.4	%		52.6	%
Underwriting and administrative expense ratio—ex Cats and PPD		26.4	%		26.5	%		25.6	%		27.2	%		25.9	%		26.3	%

CAY combined ratio ex Cats		79.7	%		80.5	%		77.5	%		79.3	%		78.3	%		78.9	%

Catastrophe reinstatement premiums expensed—pre-tax	$	—		$	(19	)	$	(3	)	$	—		$	—		$	(22	)
Catastrophe losses—pre-tax	$	284		$	278		$	448		$	77		$	68		$	871
Unfavorable (favorable) prior period development (PPD)—pre-tax	$	(6	)	$	3		$	32		$	37		$	(3	)	$	69
% Change versus prior year period
Net premiums written		6.5	%		5.8	%		18.0	%		2.0	%		13.0	%		9.1	%
Net premiums earned		5.1	%		2.6	%		3.4	%		-4.0	%		6.0	%		1.9	%
Other ratios
Net premiums written/gross premiums written		89	%		87	%		89	%		89	%		86	%		88	%


NA Personal		Page 11

Chubb Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

North America Agricultural Insurance


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Gross premiums written	$	205		$	276		$	1,303		$	569		$	167		$	2,315
Net premiums written		108			126			926			403			61			1,516
Net premiums earned		43			252			898			344			14			1,508
Adjusted losses and loss expenses ⁽¹⁾		(55	)		60			764			292			(73	)		1,043
Policy acquisition costs		(1	)		6			49			27			(1	)		81
Administrative expenses		(3	)		(4	)		(1	)		2			(5	)		(8	)

Underwriting income		102			190			86			23			93			392
Net investment income		7			7			6			6			6			25
Other expense—operating		—			(1	)		—			(1	)		—			(2	)
Amortization expense of purchased intangibles		(7	)		(7	)		(8	)		(7	)		(7	)		(29	)

Segment income	$	102		$	189		$	84		$	21		$	92		$	386

CAY Underwriting income ex Cats	$	27		$	154		$	87		$	31		$	19		$	291
Combined ratio
Loss and loss expense ratio		NM			23.7	%		85.1	%		85.2	%		NM			69.2	%
Policy acquisition cost ratio		NM			2.4	%		5.4	%		7.7	%		NM			5.4	%
Administrative expense ratio		NM			-1.7	%		-0.1	%		0.4	%		NM			-0.6	%

Combined ratio		NM			24.4	%		90.4	%		93.3	%		NM			74.0	%

CAY combined ratio—ex Cats
Loss and loss expense ratio—ex Cats and PPD		68.9	%		36.9	%		84.9	%		83.0	%		75.8	%		76.2	%
Underwriting and administrative expense ratio—ex Cats and PPD		-1.2	%		3.1	%		5.4	%		8.1	%		-1.2	%		5.3	%

CAY combined ratio ex Cats		67.7	%		40.0	%		90.3	%		91.1	%		74.6	%		81.5	%

Catastrophe losses—pre-tax	$	1		$	—		$	5		$	8		$	5		$	18
Favorable prior period development (PPD)—pre-tax ⁽²⁾	$	(76	)	$	(36	)	$	(4	)	$	—		$	(79	)	$	(119	)
% Change versus prior year period
Net premiums written		76.2	%		214.3	%		9.0	%		7.7	%		-4.6	%		14.2	%
Net premiums earned		214.2	%		72.3	%		9.6	%		5.4	%		-41.6	%		14.6	%
Other ratios
Net premiums written/gross premiums written		53	%		46	%		71	%		71	%		37	%		66	%

(1)	Includes realized gains/losses on crop derivatives.

(2)

For Q1 2018, favorable prior period development is net of $40 million unfavorable net earned premium adjustments and $4 million of favorable profit-sharing commissions. For Q1 2017, favorable prior period development is net of $61 million unfavorable net earned premium adjustments and $4 million of favorable profit-sharing commissions.


NA Agriculture		Page 12

Chubb Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

Overseas General Insurance


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Gross premiums written ⁽¹⁾	$	2,872		$	2,632		$	2,380		$	2,465		$	2,674		$	10,151
Net premiums written ⁽¹⁾		2,384			2,165			1,966			2,007			2,212			8,350
Net premiums earned		2,107			2,113			2,064			2,018			1,936			8,131
Losses and loss expenses		1,078			965			1,281			964			1,071			4,281
Policy acquisition costs		588			568			569			555			529			2,221
Administrative expenses		239			248			246			243			245			982

Underwriting income (loss)		202			332			(32	)		256			91			647
Net investment income		151			150			164			148			148			610
Other income (expense)—operating		(7	)		(10	)		10			3			1			4
Amortization expense of purchased intangibles		(10	)		(12	)		(11	)		(11	)		(11	)		(45	)

Segment income	$	336		$	460		$	131		$	396		$	229		$	1,216

CAY Underwriting income ex Cats	$	195		$	204		$	195		$	178		$	153		$	730
Combined ratio
Loss and loss expense ratio		51.1	%		45.7	%		62.1	%		47.8	%		55.3	%		52.6	%
Policy acquisition cost ratio		27.9	%		26.9	%		27.6	%		27.5	%		27.3	%		27.3	%
Administrative expense ratio		11.4	%		11.7	%		11.9	%		12.0	%		12.7	%		12.1	%

Combined ratio		90.4	%		84.3	%		101.6	%		87.3	%		95.3	%		92.0	%

CAY combined ratio—ex Cats
Loss and loss expense ratio—ex Cats and PPD		51.4	%		51.6	%		51.3	%		51.6	%		52.1	%		51.7	%
Underwriting and administrative expense ratio—ex Cats and PPD		39.3	%		38.7	%		39.3	%		39.6	%		40.0	%		39.3	%

CAY combined ratio ex Cats		90.7	%		90.3	%		90.6	%		91.2	%		92.1	%		91.0	%

Catastrophe reinstatement premiums (expenses) collected—pre-tax	$	—		$	5		$	(9	)	$	—		$	—		$	(4	)
Catastrophe losses—pre-tax	$	15		$	(55	)	$	326		$	10		$	50		$	331
Unfavorable (favorable) prior period development (PPD)—pre-tax	$	(22	)	$	(68	)	$	(108	)	$	(88	)	$	12		$	(252	)
% Change versus prior year period
Net premiums written		7.8	%		2.5	%		1.3	%		-1.1	%		8.3	%		2.8	%
Net premiums earned		8.8	%		3.1	%		1.4	%		-3.6	%		-0.9	%		0.0	%
Net premiums written constant $		1.4	%		-0.2	%		1.3	%		0.3	%		10.0	%		2.8	%
Net premiums earned constant $		3.0	%		0.2	%		0.9	%		-2.3	%		-0.3	%		-0.4	%
Other ratios
Net premiums written/gross premiums written		83	%		82	%		83	%		81	%		83	%		82	%

(1)


Overseas General Insurance		Page 13

Chubb Limited

Segment Results

(in millions of U.S. dollars)

(Unaudited)

Overseas General Insurance—Production by Region


	1Q-18		1Q-17		% Change 1Q-18 vs. 1Q-17			Constant $ 1Q-17		Constant $ % Change 1Q-18 vs. 1Q-17
Net premiums written
Europe	$	1,110	$	1,030		7.8	%	$	1,128		-1.6	%
Latin America		528		497		6.2	%		507		4.1	%
Asia		657		577		13.9	%		604		8.8	%
Other^{(1) (2)}		89		108		-17.6	%		112		-20.5	%

Total	$	2,384	$	2,212		7.8	%	$	2,351		1.4	%

(1)	Q1 2017 was revised to include $12 million, representing the transfer of certain multinational accounts from the North America Commercial P&C Insurance segment to better align the reporting with the management of these businesses in 2018. There is no impact on a consolidated basis.

(2)	Primarily includes Eurasia and Africa, and the company’s international supplemental A&H business of Combined Insurance.


Overseas General Ins. - Region		Page 14

Chubb Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

Global Reinsurance


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Gross premiums written	$	205		$	104		$	202		$	228		$	212		$	746
Net premiums written		193			105			191			190			199			685
Net premiums earned		168			162			185			168			189			704
Losses and loss expenses		67			126			295			46			94			561
Policy acquisition costs		40			40			43			43			51			177
Administrative expenses		10			11			11			12			10			44

Underwriting income (loss)		51			(15	)		(164	)		67			34			(78	)
Net investment income		64			66			80			65			62			273
Other income (expense)—operating		7			(1	)		3			(1	)		—			1

Segment income (loss)	$	122		$	50		$	(81	)	$	131		$	96		$	196

CAY Underwriting income ex Cats	$	39		$	32		$	26		$	39		$	42		$	139
Combined ratio
Loss and loss expense ratio		40.1	%		78.9	%		158.2	%		27.8	%		49.6	%		79.8	%
Policy acquisition cost ratio		23.6	%		24.4	%		23.4	%		25.7	%		26.8	%		25.1	%
Administrative expense ratio		5.8	%		6.9	%		5.8	%		6.7	%		5.7	%		6.3	%

Combined ratio		69.5	%		110.2	%		187.4	%		60.2	%		82.1	%		111.2	%

CAY combined ratio—ex Cats
Loss and loss expense ratio—ex Cats and PPD		47.7	%		50.1	%		46.5	%		44.4	%		43.2	%		46.0	%
Underwriting and administrative expense ratio—ex Cats and PPD		29.3	%		31.3	%		35.7	%		32.6	%		33.8	%		33.2	%

CAY combined ratio ex Cats		77.0	%		81.4	%		82.2	%		77.0	%		77.0	%		79.2	%

Catastrophe reinstatement premiums collected—pre-tax	$	—		$	—		$	37		$	—		$	—		$	37
Catastrophe losses—pre-tax	$	2		$	42		$	268		$	3		$	—		$	313
Unfavorable (favorable) prior period development (PPD)—pre-tax ⁽¹⁾	$	(14	)	$	5		$	(41	)	$	(31	)	$	8		$	(59	)
% Change versus prior year period
Net premiums written as reported		-3.0	%		-8.2	%		47.1	%		-17.7	%		-0.9	%		1.4	%
Net premiums earned as reported		-11.0	%		-3.4	%		20.4	%		-9.6	%		-6.4	%		-0.7	%
Net premiums written constant $		-4.8	%		-9.3	%		47.9	%		-16.5	%		0.2	%		2.2	%
Net premiums earned constant $		-12.8	%		-5.1	%		20.0	%		-8.1	%		-5.5	%		-0.4	%
Other ratios
Net premiums written/gross premiums written		94	%		100	%		95	%		83	%		94	%		92	%

(1)	For Q1 2018, favorable prior period development includes $1 million of unfavorable net earned premium adjustments. For Q1 2017, unfavorable prior period development includes $7 million of favorable net earned premium adjustments.


Global Reinsurance		Page 15

Chubb Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life Insurance


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Gross premiums written	$	592		$	586		$	568		$	557		$	550		$	2,261
Net premiums written		559			555			539			523			524			2,141
Net premiums earned		540			553			527			515			506			2,101
Losses and loss expenses		205			183			181			182			193			739
Policy benefits ⁽¹⁾		151			176			169			163			168			676
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		(6	)		(27	)		(24	)		(16	)		(30	)		(97	)
Policy acquisition costs		128			154			132			130			114			530
Administrative expenses		78			77			77			77			72			303
Net investment income		83			83			78			77			75			313

Life Insurance underwriting income⁽²⁾		67			73			70			56			64			263
Other expense—operating		(2	)		(3	)		(5	)		(4	)		(1	)		(13	)
Amortization expense of purchased intangibles		(1	)		—			(1	)		—			(1	)		(2	)

Segment income	$	64		$	70		$	64		$	52		$	62		$	248

% Change versus prior year period
Net premiums written		6.7	%		1.2	%		1.1	%		-0.7	%		1.6	%		0.8	%
Net premiums earned		6.8	%		3.5	%		2.8	%		0.8	%		1.6	%		2.2	%
Net premiums written constant $		5.0	%		0.3	%		1.1	%		-1.0	%		0.9	%		0.3	%
Net premiums earned constant $		5.0	%		2.3	%		2.8	%		0.5	%		0.7	%		1.6	%

(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 America and Life reinsurance businesses):


	1Q-18		1Q-17		% Change 1Q-18 vs. 1Q-17			Constant $ % Change 1Q-18 vs. 1Q-17
International life insurance net premiums written	$	217	$	198		10.0	%		6.2	%
International life insurance deposits ⁽³⁾		379		310		22.0	%		16.9	%

Total international life insurance net premiums written and deposits	$	596	$	508		17.3	%		12.8	%

International life insurance segment income	$	17	$	13		32.5	%		32.6	%

(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.


Life Insurance		Page 16

Chubb Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Corporate


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Gross premiums written	$	—		$	—		$	—		$	—		$	—		$	—
Net premiums written		—			—			—			—			—			—
Net premiums earned		—			—			—			—			—			—
Losses and loss expenses		11			140			89			45			11			285
Policy acquisition costs		—			—			—			—			—			—
Administrative expenses		72			80			64			65			58			267

Underwriting loss		(83	)		(220	)		(153	)		(110	)		(69	)		(552	)
Adjusted net investment income		10			13			11			13			12			49
Other expense—operating		(7	)		(61	)		(6	)		(14	)		(7	)		(88	)
Adjusted interest expense⁽¹⁾		(169	)		(168	)		(162	)		(160	)		(166	)		(656	)
Amortization (expense) benefit of purchased intangibles		(64	)		(43	)		(41	)		(42	)		(42	)		(168	)
2017 tax reform transition benefit		—			450			—			—			—			450
Income tax (expense) benefit ex 2017 tax reform transition benefit		(149	)		(131	)		61			(223	)		(191	)		(484	)

Core operating loss		(462	)		(160	)		(290	)		(536	)		(463	)		(1,449	)
Chubb integration expenses, net of tax		(8	)		(57	)		(36	)		(50	)		(74	)		(217	)
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax		(50	)		(41	)		(50	)		(52	)		(55	)		(198	)
Adjusted net realized gains (losses), net of tax⁽²⁾		43			142			76			227			47			492

Net loss	$	(477	)	$	(116	)	$	(300	)	$	(411	)	$	(545	)	$	(1,372	)

Unfavorable prior period development (PPD)—pre-tax	$	10		$	138		$	87		$	43		$	10		$	278

(1)	See Non-GAAP financial measures.

(2)	Includes net realized gains (losses) related to unconsolidated entities.


Corporate		Page 17

Chubb Limited

Loss Reserve Rollforward

(in millions of U.S. dollars, except ratios)

(Unaudited)


	Unpaid Losses									Net Paid to Incurred Ratio
	Gross			Ceded			Net			Net Paid to Incurred Ratio
Balance at December 31, 2016	$	60,540		$	12,708		$	47,832
Losses and loss expenses incurred		4,752			963			3,789
Losses and loss expenses paid		(4,830	)		(923	)		(3,907	)		103	%
Other (incl. foreign exch. revaluation)		117			63			54

Balance at March 31, 2017	$	60,579		$	12,811		$	47,768
Losses and loss expenses incurred		5,016			870			4,146
Losses and loss expenses paid		(5,356	)		(1,234	)		(4,122	)		99	%
Other (incl. foreign exch. revaluation)		155			38			117

Balance at June 30, 2017	$	60,394		$	12,485		$	47,909
Losses and loss expenses incurred		8,410			2,163			6,247
Losses and loss expenses paid		(5,207	)		(909	)		(4,298	)		69	%
Other (incl. foreign exch. revaluation)		556			131			425

Balance at September 30, 2017	$	64,153		$	13,870		$	50,283
Losses and loss expenses incurred		5,755			1,483			4,272
Losses and loss expenses paid		(6,419	)		(1,298	)		(5,121	)		120	%
Other (incl. foreign exch. revaluation)		(310	)		(41	)		(269	)

Balance at December 31, 2017	$	63,179		$	14,014		$	49,165
Losses and loss expenses incurred		5,028			926			4,102
Losses and loss expenses paid		(5,448	)		(1,206	)		(4,242	)		103	%
Other (incl. foreign exch. revaluation)		380			88			292

Balance at March 31, 2018	$	63,139		$	13,822		$	49,317
Add net recoverable on paid losses		—			1,160			(1,160	)

Balance including net recoverable on paid losses	$	63,139		$	14,982		$	48,157


Loss Reserve Rollforward		Page 18

Chubb Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	March 31 2018			December 31 2017
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	972		$	808
Brandywine and Other Run-off		271			286

Total	$	1,243		$	1,094

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	12,842		$	12,992
Brandywine and Other Run-off		1,217			1,269

Total	$	14,059		$	14,261

Gross reinsurance recoverable
Active operations	$	13,814		$	13,800
Brandywine and Other Run-off		1,488			1,555

Total	$	15,302		$	15,355

Provision for uncollectible reinsurance ⁽¹⁾
Active operations	$	(188	)	$	(183	)
Brandywine and Other Run-off		(132	)		(138	)

Total	$	(320	)	$	(321	)

Net reinsurance recoverable
Active operations	$	13,626		$	13,617
Brandywine and Other Run-off		1,356			1,417

Total	$	14,982		$	15,034

(1)	The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance, net of usable collateral of approximately $3.7 billion.


Reinsurance Recoverable		Page 19

Chubb Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	March 31 2018					December 31 2017
Market Value
Fixed maturities available for sale	$	79,111				$	78,939
Fixed maturities held to maturity		14,122					14,474
Short-term investments		2,874					3,561

Total fixed maturities	$	96,107				$	96,974

Asset Allocation by Market Value
Treasury	$	4,277		4	%	$	4,049		4	%
Agency		593		1	%		564		1	%
Corporate and asset-backed		26,564		28	%		27,215		28	%
Mortgage-backed		18,467		19	%		18,032		19	%
Municipal		19,550		20	%		20,766		21	%
Non-U.S.		23,782		25	%		22,787		23	%
Short-term investments		2,874		3	%		3,561		4	%

Total fixed maturities	$	96,107		100	%	$	96,974		100	%

Credit Quality by Market Value
AAA	$	14,723		15	%	$	15,512		16	%
AA		37,322		39	%		37,407		39	%
A		18,306		19	%		18,369		19	%
BBB		12,616		13	%		12,377		13	%
BB		7,710		8	%		7,941		8	%
B		5,235		6	%		5,135		5	%
Other		195		0	%		233		0	%

Total fixed maturities	$	96,107		100	%	$	96,974		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	79,208				$	77,835
Fixed maturities held to maturity		14,253					14,335
Short-term investments		2,874					3,561

Subtotal fixed maturities		96,335					95,731
Equity securities		948					737
Other investments		4,919					4,417

Total investment portfolio	$	102,202				$	100,885

Avg. duration of fixed maturities		4.3 years					4.2 years
Avg. market yield of fixed maturities		3.3	%				2.9	%
Avg. credit quality		A/Aa					A/Aa
Avg. yield on invested assets⁽¹⁾		3.4	%				3.5	%

(1)	Calculated using adjusted net investment income.


Investments		Page 20

Chubb Limited

Investment Portfolio—2

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Mortgage-backed securities
Market Value at March 31, 2018
Agency residential mortgage-backed (RMBS)	$	—	$	15,176	$	—	$	—	$	—	$	15,176
Non-agency RMBS		28		27		85		29		24		193
Commercial mortgage-backed		2,809		203		86		—		—		3,098

Total mortgage-backed securities at market value	$	2,837	$	15,406	$	171	$	29	$	24	$	18,467

U.S. Corporate and Asset-backed Fixed Income Portfolios


	S&P Credit Rating
	Investment Grade
	AAA		AA		A		BBB		Total
Market Value at March 31, 2018
Asset-backed	$	715	$	102	$	41	$	26	$	884
Banks		—		15		1,616		1,491		3,122
Basic Materials		—		—		101		207		308
Communications		—		163		260		1,257		1,680
Consumer, Cyclical		—		227		476		663		1,366
Consumer, Non-Cyclical		107		525		1,692		1,368		3,692
Diversified Financial Services		7		13		464		239		723
Energy		—		49		72		557		678
Industrial		—		27		745		522		1,294
Utilities		—		23		830		398		1,251
All Others		158		396		908		723		2,185

Total	$	987	$	1,540	$	7,205	$	7,451	$	17,183


	S&P Credit Rating
	Below Investment Grade
	BB		B		CCC		Total
Market Value at March 31, 2018
Asset-backed	$	3	$	2	$	9	$	14
Banks		—		—		—		—
Basic Materials		320		133		1		454
Communications		794		746		4		1,544
Consumer, Cyclical		1,032		551		40		1,623
Consumer, Non-Cyclical		826		1,194		47		2,067
Diversified Financial Services		188		124		—		312
Energy		626		240		4		870
Industrial		521		519		14		1,054
Utilities		209		70		—		279
All Others		726		424		14		1,164

Total	$	5,245	$	4,003	$	133	$	9,381


Investments 2		Page 21

Chubb Limited

Investment Portfolio—3

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

March 31, 2018


	Market Value by S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Non-U.S. Government Securities
United Kingdom	$	—	$	1,392	$	—	$	—	$	—	$	1,392
Republic of Korea		—		1,071		—		—		—		1,071
Canada		988		—		—		—		—		988
Federative Republic of Brazil		—		—		—		—		812		812
Province of Ontario		—		9		630		—		—		639
United Mexican States		—		—		454		125		—		579
Province of Quebec		—		510		—		—		—		510
Federal Republic of Germany		494		—		—		—		—		494
Kingdom of Thailand		—		—		488		—		—		488
French Republic		—		343		—		—		—		343
Other Non-U.S. Government Securities		972		1,077		908		569		1,016		4,542

Total	$	2,454	$	4,402	$	2,480	$	694	$	1,828	$	11,858


	Market Value by S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Non-U.S. Corporate Securities
United Kingdom	$	139	$	93	$	620	$	980	$	232	$	2,064
Canada		104		164		371		478		337		1,454
United States ⁽¹⁾		3		26		188		380		401		998
France		6		49		543		278		35		911
Australia		126		174		355		159		14		828
Netherlands		71		10		340		193		50		664
Germany		154		38		117		216		24		549
Japan		—		37		376		7		4		424
Switzerland		50		19		164		158		19		410
China		—		1		258		43		8		310
Other Non-U.S. Corporate Securities		431		361		997		947		576		3,312

Total	$	1,084	$	972	$	4,329	$	3,839	$	1,700	$	11,924

(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 22

Chubb Limited

Investment Portfolio—4

(in millions of U.S. dollars)

(Unaudited)

Fixed Maturity Investment Portfolio

Top 10 Global Corporate Exposures


	March 31, 2018	Market Value		Rating
1	Wells Fargo & Co	$	542	A-
2	JP Morgan Chase & Co		417	A-
3	Goldman Sachs Group Inc		410	BBB+
4	AT&T Inc		399	BBB+
5	Anheuser-Busch InBev NV		354	A-
6	Bank of America Corp		340	A-
7	Verizon Communications Inc		338	BBB+
8	General Electric Co		334	A
9	Morgan Stanley		328	BBB+
10	HSBC Holdings Plc		307	A


Investments 4		Page 23

Chubb Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended March 31, 2018
	Realized Gains (Losses)									Unrealized Gains (Losses)									Realized and Unrealized Gains (Losses)
	Gains (Losses) Pre-Tax			Tax (Expense) Benefit			Gains (Losses) After-Tax			Gains (Losses) Pre-Tax			Tax (Expense) Benefit			Gains (Losses) After-Tax			Gains (Losses) Pre-Tax			Tax (Expense) Benefit			Gains (Losses) After-Tax
Fixed maturities ⁽¹⁾	$	(23	)	$	3		$	(20	)	$	(1,211	)	$	223		$	(988	)	$	(1,234	)	$	226		$	(1,008	)
Fixed income derivatives		17			(1	)		16			—			—			—			17			(1	)		16
Public equity		10			(2	)		8			—			—			—			10			(2	)		8
Private equity		44			(9	)		35			—			—			—			44			(9	)		35
Mark-to-market on public and private equity⁽²⁾		8			3			11			—			—			—			8			3			11

Total investment portfolio		56			(6	)		50			(1,211	)		223			(988	)		(1,155	)		217			(938	)
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges ⁽³⁾		60			—			60			—			—			—			60			—			60
Foreign exchange		(77	)		9			(68	)		397			(19	)		378			320			(10	)		310
Partially-owned entities ⁽⁴⁾		(1	)		—			(1	)		—			—			—			(1	)		—			(1	)
Other ⁽⁵⁾		2			—			2			(23	)		4			(19	)		(21	)		4			(17	)

Net gains (losses)	$	40		$	3		$	43		$	(837	)	$	208		$	(629	)	$	(797	)	$	211		$	(586	)

(1)	Other-than-temporary impairments for the quarter in realized gains (losses) were $1 million for fixed maturities.

(2)

Effective Q1 2018, the company adopted new guidance that requires the recognition of mark-to-market changes of public equities and cost-method private equities to be recognized through realized gains (losses) on the income statement. Previously these unrealized gains (losses) were recorded through other comprehensive income (loss) on the balance sheet.

(3)	The quarter includes $22 million of gains on applicable hedges. These gains are both pre-tax and after-tax.

(4)	Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. Refer to the Non-GAAP financial measures section for additional details.

(5)	Other unrealized gains (losses) are primarily related to the company’s post-retirement programs.


	Three months ended March 31, 2017
	Realized Gains (Losses)									Unrealized Gains (Losses)									Realized and Unrealized Gains (Losses)
	Gains (Losses) Pre-Tax			Tax (Expense) Benefit			Gains (Losses) After-Tax			Gains (Losses) Pre-Tax			Tax (Expense) Benefit			Gains (Losses) After-Tax			Gains (Losses) Pre-Tax			Tax (Expense) Benefit			Gains (Losses) After-Tax
Fixed maturities	$	(12	)	$	6		$	(6	)	$	256		$	(95	)	$	161		$	244		$	(89	)	$	155
Fixed income derivatives		6			6			12			—			—			—			6			6			12
Public equity		4			—			4			28			(10	)		18			32			(10	)		22
Private equity		50			(18	)		32			31			(3	)		28			81			(21	)		60

Total investment portfolio ⁽⁶⁾		48			(6	)		42			315			(108	)		207			363			(114	)		249
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges ⁽⁷⁾		19			—			19			—			—			—			19			—			19
Foreign exchange		(19	)		6			(13	)		134			(3	)		131			115			3			118
Partially-owned entities ⁽⁸⁾		(6	)		2			(4	)		—			—			—			(6	)		2			(4	)
Other ⁽⁹⁾		3			—			3			(20	)		(4	)		(24	)		(17	)		(4	)		(21	)

Net gains (losses)	$	45		$	2		$	47		$	429		$	(115	)	$	314		$	474		$	(113	)	$	361

(6)	Other-than-temporary impairments for the quarter in realized gains (losses) include $6 million for fixed maturities, $5 million for public equity and $8 million for private equity.

(7)	The quarter includes $74 million of losses on applicable hedges. These losses are both pre-tax and after-tax.

(8)	Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. Refer to the Non-GAAP financial measures section for additional details.

(9)	Other unrealized gains (losses) are primarily related to the company’s post-retirement programs.


Net Gains (Losses)		Page 24

Chubb Limited

Debt and Capital

(in millions of U.S. dollars, except ratios)

(Unaudited)


	March 31 2018			December 31 2017			December 31 2016
Financial Debt:
Total short-term debt ⁽¹⁾	$	1,669		$	1,013		$	500
Total long-term debt ⁽²⁾		12,786			11,556			12,610

Total financial debt	$	14,455		$	12,569		$	13,110
Hybrid debt:
Total trust preferred securities		308			308			308

Total	$	14,763		$	12,877		$	13,418

Capitalization:
Shareholders’ equity	$	51,287		$	51,172		$	48,275
Hybrid debt		308			308			308
Financial debt		14,455			12,569			13,110

Total capitalization	$	66,050		$	64,049		$	61,693

Leverage ratios (based on total capital):
Hybrid debt		0.5	%		0.5	%		0.5	%
Financial debt		21.9	%		19.6	%		21.3	%

Total hybrid & financial debt		22.4	%		20.1	%		21.8	%

Note: As of March 31, 2018, there was $0.3 billion usage of credit facilities on a total commitment of $1.0 billion.

(1)	During March 2018, the $300 million 5.8% senior notes matured and were fully paid. In addition, the $1.0 billion junior subordinated capital securities were reclassified to short-term debt. Subsequently, on April 6, 2018, the capital securities were redeemed.

(2)	In March 2018, we issued $2.2 billion of European senior notes (€900 million at 1.55% due 2028 and €900 million at 2.5% due 2038).


Debt and Capital		Page 25

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 March 31
	2018			2017
Numerator
Core operating income to common shares	$	1,097		$	1,175
Amortization of fair value adjustment of acquired invested assets and long-term debt, pre-tax ⁽¹⁾		(59	)		(79	)
Tax benefit on amortization adjustment		9			24
Chubb integration expenses, pre-tax		(10	)		(111	)
Tax benefit on Chubb integration expenses		2			37
Adjusted net realized gains (losses), pre-tax		40			45
Tax benefit on adjusted net realized gains (losses)		3			2

Net income	$	1,082		$	1,093

Rollforward of Common Shares Outstanding
Shares—beginning of period		463,833,179			465,968,716
Repurchase of shares		—			(1,036,064	)
Shares issued, excluding option exercises		1,575,789			1,684,373
Issued for option exercises		422,518			605,994

Shares—end of period		465,831,486			467,223,019

Denominator
Weighted average shares outstanding ⁽²⁾		465,703,240			468,903,086
Effect of other dilutive securities		3,770,351			3,828,604

Adj. wtd. avg. shares outstanding and assumed conversions		469,473,591			472,731,690

Basic earnings per share
Core operating income	$	2.35		$	2.50
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax ⁽¹⁾		(0.11	)		(0.12	)
Chubb integration expenses, net of tax		(0.02	)		(0.16	)
Adjusted net realized gains (losses), net of tax		0.10			0.11

Net income	$	2.32		$	2.33

Diluted earnings per share
Core operating income	$	2.34		$	2.48
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax ⁽¹⁾		(0.11	)		(0.12	)
Chubb integration expenses, net of tax		(0.02	)		(0.16	)
Adjusted net realized gains (losses), net of tax		0.09			0.11

Net income	$	2.30		$	2.31

(1)	Related to the acquisition of The Chubb Corporation.

(2)	Includes unvested restricted stock units that are not included in common shares outstanding as the shares are not issued until time of vesting, but are eligible to receive dividends (participating securities).


Earnings per share		Page 26

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


	March 31 2018			December 31 2017			March 31 2017
Shareholders’ equity	$	51,287		$	51,172		$	49,224
Less: goodwill and other intangible assets, net of tax		20,706			20,621			20,013

Numerator for tangible book value per share	$	30,581		$	30,551		$	29,211

Book value - % change over prior quarter		0.2	%		1.4	%		2.0	%
Tangible book value - % change over prior quarter		0.1	%		1.2	%		3.4	%
Denominator		465,831,486			463,833,179			467,223,019

Book value per common share	$	110.10		$	110.32		$	105.35
Tangible book value per common share	$	65.65		$	65.87		$	62.52
Reconciliation of Book Value
Shareholders’ equity, beginning of quarter	$	51,172		$	50,471		$	48,275
Core operating income		1,097			1,489			1,175
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax ⁽¹⁾		(50	)		(41	)		(55	)
Chubb integration expenses, net of tax		(8	)		(57	)		(74	)
Adjusted net realized gains (losses), net of tax ⁽²⁾		43			142			47
Net unrealized gains (losses) on the investment portfolio		(988	)		(193	)		207
Repurchase of shares		—			(123	)		(140	)
Dividend declared on common shares		(332	)		(330	)		(324	)
Cumulative translation		378			(411	)		131
Postretirement benefit liability		(18	)		78			(24	)
Other⁽³⁾		(7	)		147			6

	$	51,287		$	51,172		$	49,224

(1)	Related to the acquisition of The Chubb Corporation.

(2)	Includes net realized gains (losses) related to unconsolidated entities.

(3)	Other primarily includes proceeds from exercise of stock options and stock compensation, offset by the value of any share cancellations for restricted stock vesting taxes.


Reconciliation Book Value		Page 27

Chubb Limited

Non-GAAP Financial Measures

(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 core operating income (loss) 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 losses and loss expenses includes realized gains and losses on crop derivatives. The crop derivatives are 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 from adjusted net realized gains (losses), also a non-GAAP financial measure.

Adjusted net realized gains (losses), net of tax includes net realized gains (losses) and net realized gains (losses) recorded in other income (expense) related to unconsolidated subsidiaries, and 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 impacts underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations, and therefore realized gains (losses) from these derivatives are reclassified to adjusted losses and loss expenses. The P&C combined ratio includes adjusted losses and loss expenses in the ratio numerator.

In presenting our segment income (loss) 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 adjusted 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. 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. P&C expense ratio (a non-GAAP financial measure) and P&C combined ratio include policy acquisition costs and administrative expenses in the ratio numerator. A reconciliation of combined ratio to P&C combined ratio is provided on page 31.

P&C combined ratio is the sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding the life business and including the realized gains and losses on the crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing will impact underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations.

CAY P&C combined ratio excluding the impact of catastrophe losses and prior period development (PPD) is a non-GAAP financial measure. The combined ratio numerator includes adjusted losses and loss expenses, policy acquisition costs, and administrative expenses. The 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 the ratios. 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.

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 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 adjusted operating results (including corporate) and exclude the adjusted 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.

Adjusted net investment income is net investment income excluding the amortization of the fair value adjustment on acquired invested assets. We believe this measure is meaningful as it highlights the underlying performance of our invested assets and portfolio management in support of our lines of business.

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 segments’ operations as they are heavily influenced by, and fluctuate in part according to market conditions. Other income (expense) – operating and net realized gains and losses related to unconsolidated entities are recorded to Other income (expense) in our income statement on a GAAP basis.

Core operating income (loss) 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 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 adjusted realized gains and losses because the amount of these gains (losses) are heavily influenced by, and fluctuate in part according to the availability of market opportunities. We exclude Chubb integration expenses due to the size and complexity of this acquisition. These integration expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration expenses facilitates the comparison of our financial results to our historical operating results. 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 (loss), as well.

Core operating income excluding catastrophe losses excludes the impact of catastrophe losses due to the significant size and number of these events in Q1 2018 which could obscure the underlying operating results. We believe this measure provides a better evaluation of our operating performance and enhances the understanding of the trends in our property and casualty business. Core operating income with expected level of catastrophe losses is a non-GAAP financial measure which excludes catastrophe losses above expected level. The adjustment for normalized catastrophe activity reduces the unusually large impact of catastrophe activity in Q1 2018 which could obscure our underlying performance. Current accident year core operating income excluding catastrophe losses is core operating income adjusted to exclude catastrophe losses and prior period development (PPD). We believe it is useful to exclude catastrophe losses, as they are not predictable as to timing and amount, and PPD, as these unexpected loss developments on historical reserves are not indicative of our underlying performance. Core operating income, Core operating income excluding catastrophe losses, Core operating income with expected level of catastrophe losses, and Current accident year core operating income excluding catastrophe losses should not be viewed as a substitute for net income determined in accordance with GAAP. References to core operating income measures mean net of tax, whether or not noted.

Core operating effective tax rate is a non-GAAP financial measure. The numerator excludes tax on adjusted net realized gains (losses), tax on Chubb integration expenses, and tax on the amortization of the fair value adjustments related to purchased invested assets and long-term debt from the Chubb Corp acquisition. The denominator is core operating income (loss), before tax. Core 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 27. In addition, we disclose per share measures that exclude the impact of foreign currency fluctuations during 2017 in order to adjust for the distortive effects of fluctuations in exchange rates.

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.

Net premiums written excluding merger-related actions is a non-GAAP performance measure. Since the acquisition of The Chubb Corporation, we have entered into new reinsurance agreements with third-party reinsurers for the Chubb Corp businesses and have taken other merger-related actions, including exiting certain types of business that do not meet our underwriting standards or adhere to our risk diversification strategy. We believe that these measures are meaningful to evaluate trends in our underlying business on a comparable basis.


Reconciliation Non-GAAP		Page 28

Chubb Limited

Non-GAAP Financial Measures—2

(in millions of U.S. dollars, except ratios)

(Unaudited)

Regulation G—Non-GAAP Financial Measures (continued)

Core operating ROE

Core operating return on equity (ROE) or ROE calculated using core operating income: The ROE numerator includes income adjusted to exclude after-tax adjusted net realized gains (losses), Chubb integration 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. Core operating ROE is a useful measure 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.


	1Q-18			1Q-17			Full Year 2017
Net income	$	1,082		$	1,093		$	3,861
Core operating income	$	1,097		$	1,175		$	3,784
Equity—beginning of period, as reported	$	51,172		$	48,275		$	48,275
Less: unrealized gains (losses) on investments, net of deferred tax ⁽¹⁾		1,033			1,058			1,058

Equity—beginning of period, as adjusted	$	50,139		$	47,217		$	47,217

Equity—end of period, as reported	$	51,287		$	49,224		$	51,172
Less: unrealized gains (losses) on investments, net of deferred tax		45			1,265			1,450

Equity—end of period, as adjusted	$	51,242		$	47,959		$	49,722

Weighted average equity, as reported	$	51,230		$	48,750		$	49,724
Weighted average equity, as adjusted	$	50,691		$	47,588		$	48,470
ROE		8.4	%		9.0	%		7.8	%
Core operating ROE		8.7	%		9.9	%		7.8	%

(1)	During Q1 2018, the company adopted new guidance that requires the reclassification of $417 million of unrealized appreciation to beginning retained earnings related to public equities and cost-method private equities. Refer to footnote 2 on page 24 for further information.

Core operating effective tax rate

The following table presents the reconciliation of effective tax rate to the core operating effective tax rate:


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Tax expense (benefit), as reported	$	135		$	(382	)	$	(85	)	$	200		$	128		$	(139	)
Tax benefit on amortization of fair value of acquired invested assets and debt ⁽¹⁾		(9	)		(23	)		(18	)		(20	)		(24	)		(85	)
Tax benefit on Chubb integration expenses		(2	)		(20	)		(14	)		(22	)		(37	)		(93	)
Tax expense (benefit) on adjusted net realized gains (losses)		(3	)		(20	)		8			19			(2	)		5

Tax expense (benefit), adjusted	$	149		$	(319	)	$	(61	)	$	223		$	191		$	34

Income (loss) before tax, as reported	$	1,217		$	1,151		$	(155	)	$	1,505		$	1,221		$	3,722
Less: amortization of fair value of acquired invested assets and debt ⁽¹⁾		(59	)		(64	)		(68	)		(72	)		(79	)		(283	)
Less: Chubb integration expenses		(10	)		(77	)		(50	)		(72	)		(111	)		(310	)
Less: adjusted realized gains (losses)		(4	)		—			(5	)		103			(7	)		91
Less: realized gains (losses) related to unconsolidated entities		44			122			89			143			52			406

Core operating income (loss) before tax	$	1,246		$	1,170		$	(121	)	$	1,403		$	1,366		$	3,818

Effective tax rate		11.1	%		-33.1	%		54.7	%		13.3	%		10.5	%		-3.7	%
Adjustment for tax impact of amortization of fair value of acquired invested assets and debt ⁽¹⁾		0.2	%		3.7	%		8.6	%		0.6	%		1.0	%		2.3	%
Adjustment for tax impact of Chubb integration expenses		0.1	%		3.8	%		6.6	%		0.8	%		1.7	%		2.6	%
Adjustment for tax impact of adjusted net realized gains (losses)		0.6	%		-1.6	%		-19.0	%		1.3	%		0.8	%		-0.3	%

Core operating effective tax rate		12.0	%		-27.2	%		50.9	%		16.0	%		14.0	%		0.9	%

(1)	Related to the acquisition of The Chubb Corporation.

Core operating income (loss)

The following table presents the reconciliation of Net income (loss) to Core operating income (loss):


	1Q-18			4Q-17			3Q-17			2Q-17			1Q-17			Full Year 2017
Net income (loss), as reported	$	1,082		$	1,533		$	(70	)	$	1,305		$	1,093		$	3,861
Amortization of fair value adjustment of acquired invested assets and long-term debt, pre-tax ⁽¹⁾		(59	)		(64	)		(68	)		(72	)		(79	)		(283	)
Tax benefit on amortization adjustment		9			23			18			20			24			85
Chubb integration expenses, pre-tax		(10	)		(77	)		(50	)		(72	)		(111	)		(310	)
Tax benefit on Chubb integration expenses		2			20			14			22			37			93
Adjusted net realized gains (losses)		(4	)		—			(5	)		103			(7	)		91
Net realized gains (losses) related to unconsolidated entities ⁽²⁾		44			122			89			143			52			406
Tax benefit (expense) on adjusted net realized gains (losses)		3			20			(8	)		(19	)		2			(5	)

Core operating income (loss)	$	1,097		$	1,489		$	(60	)	$	1,180		$	1,175		$	3,784

(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).


Reconciliation Non-GAAP 2		Page 29

Chubb Limited

Non-GAAP Financial Measures—3

(in millions of U.S. dollars, except per share data, and ratios)

(Unaudited)

Regulation G—Non-GAAP Financial Measures (continued)

Core operating ROE with expected level of Cats


	1Q-18
Equity—beginning of period, as reported	$	51,172
Less: unrealized gains (losses) on investments, net of deferred tax		1,033

Equity—beginning of period, as adjusted	$	50,139

Equity—end of period, as reported	$	51,287
Less: unrealized gains (losses) on investments, net of deferred tax		45

Equity—end of period, as adjusted	$	51,242

Add: Actual Cats above expected levels		135

Equity—end of period, as adjusted, w/ expected level of Cats	$	51,377

Weighted average equity, as reported	$	51,230
Weighted average equity, as adjusted	$	50,691
Weighted average equity, as adjusted, w/ expected level of Cats	$	50,758
ROE		8.4	%
Core operating ROE		8.7	%
Core operating ROE, w/ expected level of Cats		9.7	%

Core operating income measures


	1Q-18			1Q-17			% Change 1Q-18 vs. 1Q-17
Core operating income	$	1,097		$	1,175
Less: Catastrophe losses		(303	)		(164	)

Core operating income ex Cats	$	1,400		$	1,339			4.6	%
Less: Prior period development		166			155

Core operating income ex Cats and PPD	$	1,234		$	1,184

Core operating income	$	1,097		$	1,175
Add: Actual Cats above expected levels		135			8

Core operating income w/ expected level of Cats	$	1,232		$	1,183			4.2	%

Core operating income ex Cats per share	$	2.98		$	2.83			5.3	%

Core operating income ex Cats and PPD per share	$	2.63		$	2.50			5.2	%

Core operating income w/ expected level of Cats per share	$	2.62		$	2.50			4.8	%

P&C combined ratio with expected level of Cats


	1Q-18			1Q-17
P&C combined ratio		90.1	%		87.5	%
Less: Catastrophe losses		5.8	%		3.3	%
Less: Prior period development		-3.3	%		-3.8	%


P&C CAY combined ratio excluding Cats		87.6	%		88.0	%
Add: Expected level of Cats		3.1	%		3.2	%

P&C CAY combined ratio w/ expected level of Cats		90.7	%		91.2	%
Add: Prior period development		-3.3	%		-3.8	%

P&C combined ratio w/ expected level of Cats		87.4	%		87.4	%


Reconciliation Non-GAAP 3		Page 30

Chubb Limited

Non-GAAP Financial Measures—4

(in millions of U.S. dollars, except ratios)

(Unaudited)

Regulation G—Non-GAAP Financial Measures (continued)

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.

The following tables present the calculation of combined ratio, as reported, for each segment to P&C combined ratio, adjusted for catastrophe losses (CATs) and PPD.


Q1 2018		North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Corporate			Total P&C
Numerator
Losses and loss expenses
Losses and loss expenses		$	1,908		$	886		$	(53	)	$	1,078		$	67		$	11		$	3,897
Realized (gains) losses on crop derivatives			—			—			(2	)		—			—			—			(2	)

Adjusted losses and loss expenses	A	$	1,908		$	886		$	(55	)	$	1,078		$	67		$	11		$	3,895

Catastrophe losses			(78	)		(284	)		(1	)		(15	)		(2	)		—			(380	)
PPD and related adjustments
PPD, net of related adjustments—favorable (unfavorable)			101			6			76			22			14			(10	)		209
Net earned premium adjustments on PPD—unfavorable (favorable)			—			—			40			—			1			—			41
Expense adjustments—unfavorable (favorable)			6			—			(4	)		—			—			—			2
PPD reinstatement premiums			4			—			—			—			—			—			4

PPD—gross of related adjustments—favorable (unfavorable)			111			6			112			22			15			(10	)		256

Loss and loss expense ex CATs and PPD	B	$	1,941		$	608		$	58		$	1,085		$	80		$	1		$	3,773

Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses	C	$	703		$	302		$	(4	)	$	827		$	50		$	72		$	1,950
Expense adjustments—favorable (unfavorable)			(6	)		—			4			—			—			—			(2	)

Policy acquisition costs and administrative expenses, adjusted	D	$	697		$	302		$	—		$	827		$	50		$	72		$	1,948

Denominator
Net premiums earned	E	$	3,029		$	1,140		$	43		$	2,107		$	168					$	6,487
Net earned premium adjustments on PPD—unfavorable (favorable)			—			—			40			—			1						41
Reinstatement premiums expensed on PPD			4			—			—			—			—						4

Net premiums earned excluding adjustments	F	$	3,033		$	1,140		$	83		$	2,107		$	169					$	6,532

P&C Combined ratio
Losses and loss expense ratio	A/E		63.0	%		77.7	%		NM			51.1	%		40.1	%					60.0	%
Policy acquisition costs and administrative expense ratio	C/E		23.2	%		26.5	%		NM			39.3	%		29.4	%					30.1	%

P&C Combined ratio			86.2	%		104.2	%		NM			90.4	%		69.5	%					90.1	%

CAY P&C combined ratio—ex Cats
Loss and loss expense ratio, adjusted	B/F		64.0	%		53.3	%		68.9	%		51.4	%		47.7	%					57.7	%
Policy acquisition costs and administrative expense ratio, adjusted	D/F		23.0	%		26.4	%		-1.2	%		39.3	%		29.3	%					29.9	%

CAY P&C combined ratio—ex Cats			87.0	%		79.7	%		67.7	%		90.7	%		77.0	%					87.6	%

Combined ratio
Combined ratio																					90.1	%
Add: impact of gains and losses on crop derivatives																					0.0	%

P&C Combined ratio																					90.1	%

Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.


Reconciliation Non-GAAP 4		Page 31

Chubb Limited

Glossary

Chubb Limited Consolidated comprises all segments including Corporate.

Book value per common share: Shareholders’ equity divided by the shares outstanding.

P&C combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding the life business and including realized gains and losses on crop derivatives.

Core operating effective tax rate: Income tax expense excluding tax expense (benefit) on adjusted net realized gains (losses), tax benefit on amortization of fair value of acquired invested assets and debt, and tax benefit on Chubb integration expenses, divided by income excluding adjusted net realized gains (losses) before tax, amortization of fair value of acquired invested assets and debt before tax, and Chubb integration expenses before tax.

Tangible book value per common share: Shareholders’ equity less goodwill and other intangible assets, net of tax, 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.

Chubb integration expenses: Chubb integration expenses comprise legal and professional fees and all other costs directly related to the integration activities of the Chubb Corp acquisition. 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.

NM: Not meaningful.


Glossary		Page 32

Chubb Ltd - FORM 8-K - EX-99.2 - April 24, 2018

Attached files

Chubb Ltd Reports