Chubb Limited Annual Report 2019 Report Annual Limited Chubb Chubb Limited Bärengasse 32 Chubb Limited CH—8001 Zurich Switzerland Annual Report chubb.com 2019 002CSNA958 Financial Summary 1 Chairman and CEO Letter to Shareholders 2 Elevating the Customer Experience 20 Review of Operations 24 Citizenship at Chubb 44 Chubb Group Corporate Officers and Other Executives 46 Chubb Limited Board of Directors 48 Shareholder Information 49 Non–GAAP Financial Measures 50 Form 10–K Swiss Statutory Financial Statements Swiss Statutory Compensation Report Environmental Statement Financial Summary In millions of U.S. dollars except per share data and ratios Percentage Change Year Ended Year Ended Percentage Constant Dec. 31, 2019 Dec. 31, 2018 Change Dollars Gross premiums written $40,124 $37,968 5.7% 7.0% Net premiums written 32,275 30,579 5.5% 7.0% Net premiums earned 31,290 30,064 4.1% 5.5% P&C combined ratio 90.6% 90.6% NM Current accident year P&C combined ratio excluding catastrophe losses 89.2% 88.0% NM Net income 4,454 3,962 12.4% Core operating income 4,641 4,407 5.3% 6.8% Diluted earnings per share — net income 9.71 8.49 14.4% Diluted earnings per share — core operating income 10.11 9.44 7.1% 8.6% Total investments 109,234 100,968 8.2% Total assets 176,943 167,771 5.5% Shareholders’ equity 55,331 50,312 10.0% Book value per share 122.42 109.56 11.7% Tangible book value per share 78.14 65.89 18.6% Return on equity 8.4% 7.8% NM Core operating return on equity 9.0% 8.7% NM Core operating return on tangible equity 14.6% 14.6% NM This document contains non–GAAP financial measures. Refer to pages 50–52 for reconciliations to the most directly comparable GAAP measures. NM—not meaningful 1 Evan G. Greenberg Chairman and Chief Executive Officer Chubb Group 2 To My Fellow Shareholders As this letter goes to press, the U.S. and many other nations of the world are shutting down much of their social and economic activity in response to the spread and threat of the coronavirus. We simply don’t know at this time how fast or far it will spread, or how effective we will be in slowing the spread, treating victims and dealing with the consequences. For Chubb, we are clear about our priorities and resolute in our response: To the extent possible, we will take care of our people and keep them safe; we will remain consistent in how we take care of our customers and business partners, doing everything in our power to serve their needs with minimal disruption; and we will be a responsible citizen in our community, heeding the advice of government and health authorities, and as a solid contributor to recovery. Chubb had a very good year in 2019. and competitive shape and have real and surplus (E&S) or difficult to We produced strong financial results, momentum going into ’20 for future place risks, and we are the #1 crop including per share growth in earnings, growth and profitability. insurer. On the consumer side, Chubb book value and tangible book value. We is by far the leading personal lines capitalized on opportunity, benefiting In my judgment, all successful insurer protecting America’s affluent from improved commercial property companies have a clearly articulated individuals and families. Our Combined and casualty (P&C) pricing and view of who they are and why they Insurance affiliate serves middle– underwriting conditions globally and exist, so let me begin by describing in income households with a variety of generating our best organic premium a few words our unique and distinctive personal accident and supplemental revenue growth in over five years. We company. Chubb is the largest publicly health insurance products. achieved another year of excellent traded P&C insurer and the fifth largest underwriting profitability — a direct insurer in the world as measured by About 40% of our business originates result of our time–tested discipline market capitalization. (Fifteen years outside the United States and it’s in underwriting and managing risk. ago, we were #5 and #26, respectively — growing faster than our U.S. business. Driven by growth in our invested we are patient and persistent.) We are a Our extensive local operations assets, we generated record investment truly global commercial and consumer throughout Europe and the United income despite low interest rates. insurer — one of only a few in the Kingdom, which represent about half world. With substantial local operations of our international portfolio, in 2019 Throughout the year, Chubb in 54 countries and territories, we had their best growth in a decade. The professionals distinguished themselves compete for local business while balance is equally split between the through their actions serving customers serving the needs of multinationals. developed and developing markets and business partners, contributing We have an enviable long–term track of Asia and Latin America, both of to our admired brand and reputation record of financial performance which are growing at high–single or for quality service. We made progress including growth in earnings, book double–digit rates. Our international in our efforts to advance our many and tangible book value and insurance businesses are essentially longer–term strategies that will position market capitalization, underpinned split 50/50 in terms of their commercial us for future growth, including our by distinguished underwriting and consumer focus. In addition to presence in China with an increased performance. our retail commercial P&C businesses ownership stake in Huatai Insurance present in just about every major Group. We demonstrated leadership In the United States, which represents market around the globe, we also in environmental sustainability about 30% of the global insurance have significant E&S wholesale market by announcing a progressive policy market, we are a top–two commercial operations in London and Bermuda. curtailing our underwriting and P&C insurer that serves all sizes of We serve consumers in international investments in coal. We concluded the companies — from global to middle markets through our large global year in excellent financial, operational market to small businesses — with accident and health (A&H) business, hundreds of traditional and specialty which writes personal accident and coverages, including a leading position in the wholesale market for excess 3 supplemental health insurance, which are the premiums we retain on 2019 concluded on a more encouraging and our international personal our balance sheet, were $32.3 billion, note with the signing of the USMCA lines business, which underwrites both up 7% before the impact of trade agreement and a phase one everything from cell phones to autos foreign exchange. Our balance sheet is U.S.–China trade pact, both a net to homes and their contents. exceptionally strong, with $70 billion positive given where we were, as in total capital and over $55 billion well as increased political certainty As the first company to convert a in equity at December 31, and our surrounding Brexit. By themselves, domestic Chinese financial services company is rated AA by S&P and A++ these developments may provide holding company to a foreign–invested by AM Best. With a good balance of moderately improved business joint venture, we are on a path, underwriting and investment income, confidence and, in turn, increased subject to regulatory and shareholder last year we produced core operating investment, although we still face approvals, to achieve majority income of $4.6 billion, or $10.11 per considerable uncertainty: ownership of China’s Huatai Insurance share, up 7.1% on a per share basis Group, the holding company of P&C, from 2018. • Tariffs with China remain in place, life and asset management subsidiaries as do tariffs with others at year–end. with over 600 offices. We also have Manufacturing globally is in recession. a growing Asia–based life insurance The macro environment in 2019 The phase one agreement, while a business that is becoming a more good start, doesn’t address many of important contributor to earnings. I would have characterized the external the fundamental trade issues with operating environment in ’19 and as we China — in that regard, it kicks the can Taken together, Chubb has a began to move into ’20 as marked by down the road. thoughtfully constructed and managed great opportunity, risk and complexity. global portfolio of simply outstanding That is until the coronavirus outbreak, • More broadly, protectionist businesses. Most are top–performing which began in China and subsequently sentiments persist. The rules–based multibillion–dollar businesses, with spread to the rest of the world. Now, trading system is under attack from the substantial scale and scope for growth, with the specter of a true pandemic world’s two largest economies with the and the envy of the industry. We have upon us, and the substantial damage U.S. unilateral approach using tariffs a well–balanced mix of business — 66% to be inflicted on society, economies and a strong–arm approach (and by commercial lines, 34% consumer and commerce alike, markets are the way the EU is on deck later this lines — and our product breadth and severely stressed and signaling global year) and China, with its predatory balance are a real strength. We sell our recession. As of this writing, to what behavior, gaming the global system to products globally through an extensive degree and how long it will last is its advantage. We are evolving from range of distribution channels: over simply unknowable — it depends on a unipolar to a multipolar world — 50,000 brokers and independent the rate and severity of infection.