NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries


		Assets														Liabilities
Three Months Ended September 30, 2019 (in millions of U.S. dollars)		Available-for-Sale Debt Securities								Equity securities		Short-term investments		Other investments			GLB (1)
	Non-U.S.			Corporate and asset-backed securities			MBS

Balance – beginning of period		$	371		$	1,359		$	76	$	56	$	4	$	11		$	403
Transfers into Level 3		0			1			0		0		0		0			0

Change in Net Unrealized Gains/Losses in OCI, including foreign exchange		(8)			(4)			0		(1)		0		0			0

Net Realized Gains/Losses		0			0			0		(1)		0		0			106

Purchases		68			176			1		5		2		0			0
Sales		(35)			(18)			0		(3)		0		0			0
Settlements		(3)			(64)			0		0		0		(1)			0
Balance – end of period		$	393		$	1,450		$	77	$	56	$	6	$	10		$	509
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date		$	0		$	0		$	0	$	(1)	$	0	$	0		$	106

(1)Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. The liability for GLB reinsurance was $935 million at September 30, 2019, and $815 million at June 30, 2019, which includes a fair value derivative adjustment of $509 million and $403 million, respectively.


	Assets															Liabilities
	Available-for-Sale Debt Securities						Equity securities			Short-term investments			Other investments				GLB (1)
Nine Months Ended September 30, 2020 (in millions of U.S. dollars)	Non-U.S.		Corporate and asset-backed securities		MBS

Balance – beginning of period	$	449	$	1,451	$	60		$	69		$	6		$	10			$	456
Transfers into Level 3	0		92		0			0			0			0				0
Transfers out of Level 3	(16)		(73)		0			0			0			0				0
Change in Net Unrealized Gains (Losses) in OCI, including foreign exchange	1		(31)		0			0			(1)			0				0

Net Realized Gains/Losses	(2)		(23)		0��			(1)			0			0				426

Purchases	190		416		2			14			9			0				0
Sales	(81)		(147)		0			(16)			0			0				0
Settlements	(47)		(240)		(1)			0			(7)			0				0
Balance – end of period	$	494	$	1,445	$	61		$	66		$	7		$	10			$	882
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date	$	0	$	(6)	$	0		$	1		$	0		$	0			$	426
Change in Net Unrealized Gains/Losses included in OCI at the Balance sheet date	$	0	$	(25)	$	0		$	0		$	(1)		$	0			$	0

(1)Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. The liability for GLB reinsurance was $1,318 million at September 30, 2020, and$897 millionat December 31, 2019, which includes a fair value derivative adjustment of $882 million and $456 million, respectively.

Assets Liabilities
Nine Months Ended Available-for-Sale Debt Securities
Equity
securities

Short-term investments

Other
investments

GLB ⁽¹⁾

September 30, 2019 Foreign
Corporate
securities
MBS

(in millions of U.S. dollars)
Balance – beginning of period $ 345
$ 1,299
$ 61
$ 57
$ 1
$ 11
$ 452
Transfers into Level 3 3
16
—
—
—
—
—
Transfers out of Level 3 (15 ) —
—
—
—
—
—
Change in Net Unrealized Gains (Losses) included in OCI, including foreign exchange (2 ) 1
—
1
—
—
—
Net Realized Gains/Losses (1 ) —
—
(4 ) —
—
57
Purchases 164
425
19
19
6
—
—
Sales (54 ) (91 ) (1 ) (17 ) —
—
—
Settlements (47 ) (200 ) (2 ) —
(1 ) (1 ) —
Balance – end of period $ 393
$ 1,450
$ 77
$ 56
$ 6
$ 10
$ 509
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date $ —
$ (1 ) $ —
$ (3 ) $ —
$ —
$ 57

⁽¹⁾

Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. The liability for GLB reinsurance was ~~$935 million~~ at ~~September 30, 2019, and~~ ~~$861 million~~ at ~~December 31, 2018, which includes a fair value derivative adjustment of~~ ~~$509 million~~ ~~and~~ ~~$452 million, respectively.~~

Assets Liabilities
Nine Months Ended Available-for-Sale Debt Securities Equity
securities
Short-term investments
Other
investments
Other derivative instruments

GLB ⁽²⁾

September 30, 2018 Foreign

Corporate securities ⁽¹⁾

MBS

(in millions of U.S. dollars)
Balance – beginning of period $ 93
$ 1,037
$ 78
$ 44
$ —
$ 263
$ 2
$ 204
Transfers into Level 3 12
24
1
—
5
—
—
—
Transfers out of Level 3 (2 ) (31 ) —
—
—
—
—
—
Change in Net Unrealized Gains (Losses) included in OCI, including foreign exchange —
(5 ) —
—
—
(2 ) —
—
Net Realized Gains/Losses (2 ) (4 ) —
6
—
1
—
(133 )
Purchases 280
454
5
26
9
50
—
—
Sales (52 ) (114 ) —
(23 ) —
—
—
—
Settlements (6 ) (187 ) (19 ) —
(8 ) (49 ) —
—
Balance – end of period $ 323
$ 1,174
$ 65
$ 53
$ 6
$ 263
$ 2
$ 71
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date $ (1 ) $ (6 ) $ —
$ —
$ —
$ 1
$ —
$ (133 )


⁽¹⁾	~~Purchases in Level 3 primarily consist of privately-placed fixed income securities.~~

⁽²⁾

Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. The liability for GLB reinsurance was ~~$453 million~~ at ~~September 30, 2018, and~~ ~~$550 million~~ at ~~December 31, 2017, which includes a fair value derivative adjustment of~~ ~~$71 million~~ ~~and~~ ~~$204 million, respectively.~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries


		Assets														Liabilities
		Available-for-Sale Debt Securities								Equity securities		Short-term investments		Other investments			GLB (1)
Nine Months Ended September 30, 2019 (in millions of U.S. dollars)	Non-U.S.			Corporate and asset-backed securities			MBS

Balance – beginning of period		$	345		$	1,299		$	61	$	57	$	1	$	11		$	452
Transfers into Level 3		3			16			0		0		0		0			0
Transfers out of Level 3		(15)			0			0		0		0		0			0
Change in Net Unrealized Gains/Losses in OCI, including foreign exchange		(2)			1			0		1		0		0			0

Net Realized Gains/Losses		(1)			0			0		(4)		0		0			57

Purchases		164			425			19		19		6		0			0
Sales		(54)			(91)			(1)		(17)		0		0			0
Settlements		(47)			(200)			(2)		0		(1)		(1)			0
Balance – end of period		$	393		$	1,450		$	77	$	56	$	6	$	10		$	509
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date		$	0		$	(1)		$	0	$	(3)	$	0	$	0		$	57

(1)Our GLB reinsurance product meets the definition of a derivative instrument for accounting purposes and is accordingly carried at fair value. Excluded from the table above is the portion of the GLB derivative liability classified as Future policy benefits in the Consolidated balance sheets. The liability for GLB reinsurance was $935 million at September 30, 2019, and $861 million at December 31, 2018, which includes a fair value derivative adjustment of $509 million and $452 million, respectively.

b) Financial instruments disclosed, but not measured, at fair value

Chubb uses various financial instruments in the normal course of its business. Our insurance contracts are excluded from fair value of financial instruments accounting guidance, and therefore, are not included in the amounts discussed below.

The carrying values of cash, other assets, other liabilities, and other financial instruments not included below approximated their fair values.

Refer to the ~~2018~~2019 Form 10-K for information on the fair value methods and assumptions for investments in partially-owned insurance companies, short-term and long-term debt, repurchase agreements, and trust-preferred securities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following tables present fair value, by valuation hierarchy, and carrying value of the financial instruments not measured at fair value:


September 30, 2019	Fair Value								Carrying Value
September 30, 2020											September 30, 2020	Fair Value								Net Carrying Value
(in millions of U.S. dollars)	Level 1		Level 2		Level 3		Total		Carrying Value		(in millions of U.S. dollars)	Level 1		Level 2		Level 3		Total
Assets:											Assets:
Fixed maturities held to maturity											Fixed maturities held to maturity
U.S. Treasury and agency	$	1,213	$	57	$	—	$	1,270	$	1,234
Foreign	—		1,485		—		1,485		1,401
Corporate securities	—		2,482		32		2,514		2,391
U.S. Treasury / Agency											U.S. Treasury / Agency	$	1,251	$	58	$	0	$	1,309	$	1,240
Non-U.S.											Non-U.S.	0		1,374		0		1,374		1,266
Corporate and asset-backed securities											Corporate and asset-backed securities	0		2,414		0		2,414		2,168
Mortgage-backed securities	—		2,474		—		2,474		2,391		Mortgage-backed securities	0		2,253		0		2,253		2,103
States, municipalities, and political subdivisions	—		5,353		—		5,353		5,205
Municipal											Municipal	0		5,123		0		5,123		4,874
Total assets	$	1,213	$	11,851	$	32	$	13,096	$	12,622	Total assets	$	1,251	$	11,222	$	0	$	12,473	$	11,651
Liabilities:											Liabilities:
Repurchase agreements	$	—	$	1,416	$	—	$	1,416	$	1,416	Repurchase agreements	$	0	$	1,413	$	0	$	1,413	$	1,413
Short-term debt	—		10		—		10		10		Short-term debt	0		1,302		0		1,302		1,300
Long-term debt	—		14,901		—		14,901		13,285		Long-term debt	0		16,995		0		16,995		14,830
Trust preferred securities	—		457		—		457		308		Trust preferred securities	0		462		0		462		308
Total liabilities	$	—	$	16,784	$	—	$	16,784	$	15,019	Total liabilities	$	0	$	20,172	$	0	$	20,172	$	17,851


December 31, 2019	Fair Value								Carrying Value
(in millions of U.S. dollars)	Level 1		Level 2		Level 3		Total
Assets:
Fixed maturities held to maturity
U.S. Treasury / Agency	$	1,292	$	55	$	0	$	1,347	$	1,318
Non-U.S.	0		1,485		0		1,485		1,423
Corporate and asset-backed securities	0		2,436		32		2,468		2,349
Mortgage-backed securities	0		2,396		0		2,396		2,331
Municipal	0		5,309		0		5,309		5,160
Total assets	$	1,292	$	11,681	$	32	$	13,005	$	12,581
Liabilities:
Repurchase agreements	$	0	$	1,416	$	0	$	1,416	$	1,416
Short-term debt	0		1,307		0		1,307		1,299
Long-term debt	0		15,048		0		15,048		13,559
Trust preferred securities	0		467		0		467		308
Total liabilities	$	0	$	18,238	$	0	$	18,238	$	16,582

December 31, 2018 Fair Value Carrying Value
(in millions of U.S. dollars) Level 1
Level 2
Level 3
Total

Assets:
Fixed maturities held to maturity
U.S. Treasury and agency $ 1,128
$ 54
$ —
$ 1,182
$ 1,185
Foreign —
1,542
—
1,542
1,549
Corporate securities —
2,477
31
2,508
2,601
Mortgage-backed securities —
2,486
—
2,486
2,524
States, municipalities, and political subdivisions —
5,541
—
5,541
5,576
Total assets $ 1,128

$ 12,100

$ 31

$ 13,259

$ 13,435
Liabilities:
Repurchase agreements $ —
$ 1,418
$ —
$ 1,418
$ 1,418
Short-term debt —
516
—
516
509
Long-term debt —
12,181
—
12,181
12,087
Trust preferred securities —
409
—
409
308
Total liabilities $ —
$ 14,524
$ —
$ 14,524
$ 14,322

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

5. Reinsurance

Reinsurance recoverable on ceded reinsurance


	September 30, 2020				December 31, 2019
(in millions of U.S. dollars)	Net Reinsurance Recoverable (1)		Valuation allowance		Net Reinsurance Recoverable (1)		Valuation allowance
Reinsurance recoverable on unpaid losses and loss expenses	$	14,767	$	255	$	14,181	$	240
Reinsurance recoverable on paid losses and loss expenses	903		65		1,000		76
Reinsurance recoverable on losses and loss expenses	$	15,670	$	320	$	15,181	$	316
Reinsurance recoverable on policy benefits	$	203	$	4	$	197	$	4

(1)Net of valuation allowance for uncollectible reinsurance.

The increase in reinsurance recoverable on losses and loss expenses was primarily due to catastrophe losses.

We evaluate the financial condition of our reinsurers and potential reinsurers on a regular basis and also monitor concentrations of credit risk with reinsurers. The valuation allowance for uncollectible reinsurance is required principally due to the potential failure of reinsurers to indemnify Chubb, primarily because of disputes under reinsurance contracts and insolvencies. We have established a valuation allowance for amounts estimated to be uncollectible on both unpaid and paid losses as well as future policy benefits.

Management evaluates the need for a valuation allowance for uncollectible reinsurance recoverable using current and historical factors, and forecasts each quarter. These factors include a review of active and run-off lines of business, review of reinsurer financial strength ratings, and review of our largest reinsurers. The evaluation of the valuation allowance includes several judgments including certain aspects of the allocation of reinsurance recoverable on incurred but not reported (IBNR) claims by reinsurer and a default analysis to estimate uncollectible reinsurance. The primary components of the default analysis are reinsurance recoverable balances by reinsurer, net of collateral, and default factors used to determine the portion of a reinsurer's balance deemed uncollectible. Default factors require considerable judgment and are determined using principally the current financial strength rating, or rating equivalent, of each reinsurer. Changes in the valuation allowance for uncollectible reinsurance recoverables are recorded in Losses and loss expenses in the Consolidated statements of operations. For additional information, refer to Note 1 d) to the Consolidated Financial Statements of our 2019 Form 10-K.

The evaluation of the valuation allowance at December 31, 2019 was consistent with the new accounting guidance adopted January 1, 2020, therefore, there was no material change to the valuation allowance upon adoption.

The following table presents a roll-forward of valuation allowance for uncollectible reinsurance related to Reinsurance recoverable on loss and loss expenses:


	Nine Months Ended
	September 30
(in millions of U.S. dollars)	2020
Reinsurance recoverable
Valuation allowance for uncollectible reinsurance - beginning of period	$	316
Provision for uncollectible reinsurance	21
Write-offs charged against the valuation allowance	(19)
Foreign exchange revaluation	2
Valuation allowance for uncollectible reinsurance - end of period	$	320

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

6. Unpaid losses and loss expenses

The following table presents a reconciliation of beginning and ending Unpaid losses and loss expenses:


	Nine Months Ended September 30
(in millions of U.S. dollars)	2020		2019
Gross unpaid losses and loss expenses – beginning of period	$	62,690	$	62,960
Reinsurance recoverable on unpaid losses - beginning of period (1)	(14,181)		(14,689)
Net unpaid losses and loss expenses – beginning of period	48,509		48,271


Net losses and loss expenses incurred in respect of losses occurring in:
Current year	17,109		14,484
Prior years (2)	(212)		(619)
Total	16,897		13,865
Net losses and loss expenses paid in respect of losses occurring in:
Current year	4,766		4,920
Prior years	7,597		8,374
Total	12,363		13,294
Foreign currency revaluation and other	95		(162)
Net unpaid losses and loss expenses – end of period	53,138		48,680
Reinsurance recoverable on unpaid losses (1)	14,767		14,332
Gross unpaid losses and loss expenses – end of period	$	67,905	$	63,012

Nine Months Ended September 30
(in millions of U.S. dollars) 2019
2018
Gross unpaid losses and loss expenses – beginning of period $ 62,960
$ 63,179
Reinsurance recoverable on unpaid losses - beginning of period ⁽¹⁾
(14,689 ) (14,014 )
Net unpaid losses and loss expenses – beginning of period 48,271
49,165
Net losses and loss expenses incurred in respect of losses occurring in:
Current year 14,484
14,186
Prior years ⁽²⁾
(619 ) (729 )
Total 13,865
13,457
Net losses and loss expenses paid in respect of losses occurring in:
Current year 4,920
4,522
Prior years 8,374
8,596
Total 13,294
13,118
Foreign currency revaluation and other (162 ) (440 )
Net unpaid losses and loss expenses – end of period 48,680
49,064
Reinsurance recoverable on unpaid losses ⁽¹⁾
14,332
13,965
Gross unpaid losses and loss expenses – end of period $ 63,012
$ 63,029
(1) Net of valuation allowance for uncollectible reinsurance.


⁽¹⁾ (2) Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $23 million and $60 million for the nine months ended September 30, 2020 and 2019, respectively.	~~Net of provision for uncollectible reinsurance.~~


⁽²⁾	Relates to prior period loss reserve development only and excludes prior period development related to reinstatement premiums, expense adjustments and earned premiums totaling $60 million and $86 million for the nine months ended September 30, 2019 and 2018, respectively.

Gross and net unpaid losses and loss expenses increased ~~$52~~$5,215 million and ~~$409~~$4,629 million, respectively, for the nine months ended September 30, ~~2019, reflecting~~2020, driven by catastrophe losses incurred, an increase in underlying exposure due to premium growth, and reduced payment activity due to the ~~underlying reserves, partially offset by favorable prior period development and payments~~economic slowdown related to ~~catastrophic events.~~the COVID-19 pandemic.

Prior Period Development

Prior period development (PPD) arises from changes to loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the development of earned premium from previous accident years. Long-tail lines include lines such as workers' compensation, general liability, and professional liability; while short-tail lines include lines such as most property lines, energy, personal accident, and agriculture.

2125

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The following table summarizes (favorable) and adverse PPD by segment.


	Three Months Ended September 30						Nine Months Ended September 30
(in millions of U.S. dollars)	Long-tail		Short-tail		Total		Long-tail		Short-tail		Total
2020
North America Commercial P&C Insurance	$	(255)	$	55	$	(200)	$	(439)	$	(12)	$	(451)
North America Personal P&C Insurance	0		48		48		0		48		48
North America Agricultural Insurance	0		18		18		0		4		4
Overseas General Insurance	(71)		11		(60)		(72)		(28)		(100)
Global Reinsurance	(6)		0		(6)		(25)		(4)		(29)
Corporate	54		0		54		339		0		339
Total	$	(278)	$	132	$	(146)	$	(197)	$	8	$	(189)
2019
North America Commercial P&C Insurance	$	(197)	$	88	$	(109)	$	(468)	$	43	$	(425)
North America Personal P&C Insurance	0		(62)		(62)		0		(88)		(88)
North America Agricultural Insurance	0		18		18		0		(43)		(43)
Overseas General Insurance	(66)		41		(25)		(66)		17		(49)
Global Reinsurance	(25)		0		(25)		(59)		26		(33)
Corporate	36		0		36		79		0		79
Total	$	(252)	$	85	$	(167)	$	(514)	$	(45)	$	(559)

Three Months Ended September 30 Nine Months Ended September 30
(in millions of U.S. dollars) Long-tail
Short-tail
Total
Long-tail
Short-tail
Total
2019
North America Commercial P&C Insurance $ (197 ) $ 88
$ (109 ) $ (468 ) $ 43
$ (425 )
North America Personal P&C Insurance —
(62 ) (62 ) —
(88 ) (88 )
North America Agricultural Insurance —
18
18
—
(43 ) (43 )
Overseas General Insurance (66 ) 41
(25 ) (66 ) 17
(49 )
Global Reinsurance (25 ) —
(25 ) (59 ) 26
(33 )
Corporate 36
—
36
79
—
79
Total $ (252 ) $ 85
$ (167 ) $ (514 ) $ (45 ) $ (559 )
2018
North America Commercial P&C Insurance $ (170 ) $ (46 ) $ (216 ) $ (266 ) $ (206 ) $ (472 )
North America Personal P&C Insurance —
58
58
—
59
59
North America Agricultural Insurance —
(1 ) (1 ) —
(77 ) (77 )
Overseas General Insurance (49 ) (23 ) (72 ) (51 ) (115 ) (166 )
Global Reinsurance (39 ) 15
(24 ) (69 ) 15
(54 )
Corporate 12
—
12
67
—
67
Total $ (246 ) $ 3
$ (243 ) $ (319 ) $ (324 ) $ (643 )

Significant prior period movements by segment, principally driven by reserve reviews completed during each respective period, are discussed in more detail below. The remaining net development for long-tail lines and short-tail business for each segment and Corporate comprises numerous favorable and adverse movements across a number of lines and accident years, none of which is significant individually or in the aggregate.

North America Commercial P&C Insurance

2020

For the three months ended September 30, 2020, net favorable PPD was $200 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

~~2019~~

•Net favorable development of $255 million in long-tail business, primarily from:

•Net favorable development of $155 million in workers' compensation business mainly impacting accident years 2016 and prior, driven by lower than expected paid and reported loss activity, and related updates to loss development factors, partly offset by adverse development in accident year 2019;

•Net favorable development of $47 million in commercial excess and umbrella portfolios, driven by accident years 2014 and prior, and accident year 2019. The 2014 and prior development was a function of lower than expected paid and reported loss activity. The development on the 2019 accident year relates to three large policies covering specific perils, which expired in the quarter, with no covered events occurring;

•Net favorable development of $41 million on large multi-line prospective deals in the 2016 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of $26 million tied to the loss performance of the particular deals;

•Net favorable development of $40 million in our foreign casualty business, mainly in accident year 2016, due to lower than expected reported loss activity, partly offset by a large loss in accident year 2017; and

•Net adverse development of $29 million in assumed general liability and excess lines mainly in accident years 2016 and prior due to higher than expected reported loss activity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

•Net adverse development of $55 million in short-tail business, primarily from:

•Net adverse development of $35 million in our property portfolios, due to adverse non-catastrophe loss development mainly in accident year 2019, partially offset by favorable catastrophe-driven loss experience; and

•Net adverse development of $21 million in our marine portfolios, mainly impacting the 2019 accident year, driven by higher than expected non-catastrophe loss development.

For the nine months ended September 30, 2020, net favorable PPD was $451 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•Net favorable development of $439 million in long-tail business, primarily from:

•Net favorable development of $337 million in our workers’ compensation lines. This included favorable development of $62 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2019 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. This favorable development in accident year 2019 was partially offset by some higher than expected activity from other claims. The remaining overall favorable development was mainly in accident years 2016 and prior, driven by lower than expected loss experience and related updates to loss development factors;

•Net favorable development of $66 million in professional liability (errors & omissions and cyber risk), driven by accident years 2016 and prior, which experienced lower than expected loss emergence;

•Net favorable development of $43 million in voluntary environmental lines, in accident years 2016 and prior, due to lower than expected emergence and a related updates to loss development factors;

•Net favorable development of $41 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2020, as described above;

•Net favorable development of $40 million in our foreign casualty businesses due to the same factors experienced for the three months ended September 30, 2020, as described above;

•Net adverse development of $75 million in commercial automobile liability, mainly in high deductible and excess portfolios, driven by adverse paid and reported loss experience and related updates to loss development factors, mainly in accident years 2015 through 2019; and

•Net adverse development of $5 million for U.S. child molestation claims, predominantly reviver statute-related.

•Net favorable development of $12 million in short-tail business due to the same factors experienced for the three months ended September 30, 2020, as described above, which was offset by:

•Net favorable development of $37 million, in accident & health, mainly in accident years 2018 and 2019, driven by lower than expected paid loss emergence; and

•Net favorable development of $31 million in surety, driven by accident year 2018, where loss emergence was lower than expected.

2019

For the three months ended September 30, 2019, net favorable PPD was $109 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:


•	~~Net favorable development of~~ ~~$197 million~~ ~~in long-tail business, primarily from:~~


•	~~Net favorable development of~~ ~~$94 million~~ ~~in workers' compensation business mainly impacting accident years 2015 and prior, driven by lower than expected paid and reported loss activity, and related improvements in loss development factors;~~


•	~~Net favorable development of~~ ~~$39 million~~ ~~in our foreign casualty business, impacting accident years 2015 and prior, driven by reported loss activity that was generally lower than expected;~~

•

~~Net favorable development of~~ ~~$36 million~~ on large multi-line prospective deals in the 2015 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of ~~$34 million~~ ~~tied to the loss performance of the particular deals; and~~

•

~~Net favorable development of~~ ~~$32 million~~ in U.S. commercial excess and umbrella portfolios, mainly in accident years 2013 and prior, driven by lower paid and reported loss activity relative to prior expectations as well as an increase in weighting towards experience-based methods, partly offset by modestly adverse development in more recent accident years, mainly in 2018, due to higher than expected large loss activity.

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Chubb Limited and Subsidiaries

•Net favorable development of $197 million in long-tail business, primarily from:

•

•Net favorable development of $94 million in workers' compensation business mainly impacting accident years 2015 and prior, driven by lower than expected paid and reported loss activity, and related improvements in loss development factors;

•Net favorable development of $39 million in our foreign casualty business, impacting accident years 2015 and prior, driven by reported loss activity that was generally lower than expected;

•Net favorable development of $36 million on large multi-line prospective deals in the 2015 and prior accident years, due to lower than expected reported loss activity. These structured deals typically cover large clients for multiple product lines and with varying loss limitations; this development is net of premium returns of $34 million tied to the loss performance of the particular deals; and

•Net favorable development of $32 million in U.S. commercial excess and umbrella portfolios, mainly in accident years 2013 and prior, driven by lower paid and reported loss activity relative to prior expectations as well as an increase in weighting towards experience-based methods, partly offset by modestly adverse development in more recent accident years, mainly in 2018, due to higher than expected large loss activity.

•Net adverse development of $88 million in short-tail business, primarily in our property and marine portfolios from:

•Net adverse development excluding catastrophes of $116 million, with adverse development of $154 million across our retail, wholesale, and program distribution channels in accident year 2018, primarily due to a higher than expected severity of non-catastrophe claims, partly offset by favorable development of $38 million in 2017 and prior accident years on non-catastrophe claims; and

•Net favorable catastrophe development of $27 million. There was $41 million of favorable development on the 2017 and 2018 natural catastrophes, mostly in 2017, partly offset by some adverse development on older catastrophe events.

~~$88 million~~ ~~in short-tail business, primarily in our property and marine portfolios from:~~

•

~~Net adverse development excluding catastrophes of~~ ~~$116 million, with adverse development of~~ ~~$154 million~~ across our retail, wholesale, and program distribution channels in accident year 2018, primarily due to a higher than expected severity of non-catastrophe claims, partly offset by favorable development of ~~$38 million~~ ~~in 2017 and prior accident years on non-catastrophe claims; and~~


•	~~Net favorable catastrophe development of~~ ~~$27 million. There was~~ ~~$41 million~~ ~~of favorable development on the 2017 and 2018 natural catastrophes, mostly in 2017, partly offset by some adverse development on older catastrophe events.~~

For the nine months ended September 30, 2019, net favorable PPD was $425 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:


•	~~Net favorable development of~~ ~~$468 million~~ ~~in long-tail business, primarily from:~~

•

~~Net favorable development of~~ ~~$294 million~~ ~~in our workers’ compensation lines. This included favorable development of~~ ~~$61 million~~ related to our annual assessment of multi-claimant events including industrial accidents, in the 2018 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. This development in accident year 2018 was partially offset by some higher than expected activity from other claims and from involuntary pools. The remaining overall favorable development was mainly in accident years 2015 and prior, generally driven by lower than expected loss experience and related updates to loss development factors;

•

~~Net favorable development of~~ ~~$63 million~~Net favorable development of $468 million in long-tail business, primarily from:

•Net favorable development of $294 million in our workers’ compensation lines. This included favorable development of $61 million related to our annual assessment of multi-claimant events including industrial accidents, in the 2018 accident year. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. This development in accident year 2018 was partially offset by some higher than expected activity from other claims and from involuntary pools. The remaining overall favorable development was mainly in accident years 2015 and prior, generally driven by lower than expected loss experience and related updates to loss development factors;

•Net favorable development of $63 million in U.S. commercial excess and umbrella portfolios due to the same factors experienced for the three months ended September 30, 2019, as described above with a similar result of favorable development in older accident years, partly offset by some adverse development in several of the more recent prior accident years which led to reserve strengthening in those years;


•	~~Net favorable development of~~ ~~$53 million~~ in professional liability (errors & omissions and cyber), mainly in the 2015 and prior accident years where case activity was less than expected, partially offset by adverse development in the 2016 accident year, which was driven by several large adverse claim developments;


•	~~Net favorable development of~~ ~~$39 million~~ ~~in our foreign casualty business due to the same factors experienced for the three months ended September 30, 2019, as described above;~~


•	~~Net favorable development of~~ ~~$36 million~~ ~~on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2019, as described above; and~~


•	~~Net adverse development of~~ ~~$31 million~~ ~~in automobile liability, driven by adverse paid and reported loss experience mainly in accident years 2014 through 2018.~~


•	~~Net adverse development of~~ ~~$43 million~~ ~~in short-tail business due to the same factors experienced for the three months ended September 30, 2019, as described above, which was partly offset by favorable development of~~ ~~$49 million~~ ~~in surety business, mainly in the 2017 accident year, driven by lower than expected reported loss activity.~~

~~2018~~

~~For~~ the three months ended September 30, ~~2018,~~2019, as described above with a similar result of favorable development in older accident years, partly offset by some adverse development in several of the more recent prior accident years which led to reserve strengthening in those years;

•Net favorable development of $53 million in professional liability (errors & omissions and cyber), mainly in the 2015 and prior accident years where case activity was less than expected, partially offset by adverse development in the 2016 accident year, which was driven by several large adverse claim developments;

•Net favorable development of $39 million in our foreign casualty business due to the same factors experienced for the three months ended September 30, 2019, as described above;

•Net favorable development of $36 million on large multi-line prospective deals due to the same factors experienced for the three months ended September 30, 2019, as described above; and

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Chubb Limited and Subsidiaries

•Net adverse development of $31 million in automobile liability, driven by adverse paid and reported loss experience mainly in accident years 2014 through 2018.

•Net adverse development of $43 million in short-tail business due to the same factors experienced for the three months ended September 30, 2019, as described above, which was partly offset by favorable development of $49 million in surety business, mainly in the 2017 accident year, driven by lower than expected reported loss activity.

North America Personal P&C Insurance

2020

For the three and nine months ended September 30, 2020, net ~~favorable~~adverse PPD was ~~$216~~$48 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:


•	~~Net favorable development of~~ ~~$170 million~~ ~~in long-tail business, primarily from:~~


•	~~Favorable development of~~ ~~$93 million~~ in commercial excess and umbrella portfolios primarily in accident years 2012 and prior driven by lower than expected reported loss activity, and an increase in weighting towards experience-based methods;

~~Table~~•Net adverse development of ~~Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)~~

~~Chubb Limited and Subsidiaries~~


•	~~Favorable development of~~ ~~$45 million~~ in workers' compensation lines mainly impacting accident years 2014 and prior, driven by lower than expected paid and reported loss activity, and related updates to development patterns used in our loss projection methods for select portfolios; and


•	~~Net favorable development of~~ ~~$28 million~~ ~~in our foreign casualty lines, primarily impacting accident years 2014 and prior, driven by reported loss activity that was generally lower than expected.~~


•	~~Net favorable development of~~ ~~$46 million~~ ~~in short-tail business, primarily from:~~


•	~~Net favorable development of~~ ~~$41 million~~ ~~in commercial property and marine businesses due to favorable claim development, including~~ ~~$42 million~~ ~~favorable development on the 2017 natural catastrophes.~~

~~For the nine months ended September 30, 2018, net favorable PPD was $472~~$69 million ~~which was the net result of several underlying favorable~~in our homeowners lines, including valuables, mainly in accident years 2017 through 2019 due to higher than expected non-catastrophe loss emergence and adverse ~~movements,~~development arising from natural catastrophes in accident years 2017 and ~~was~~2018; and

•Net favorable development of $22 million in our personal excess lines, driven by favorable development mainly in the ~~following principal changes:~~


•	~~Net favorable development of~~ 2017 accident year, partly offset by adverse development in accident year 2019.~~$266 million~~ ~~in long-tail business, primarily from:~~

•

~~Net favorable development of~~ ~~$183 million~~ ~~in our workers’ compensation lines with favorable development of~~ ~~$56 million~~ in the 2017 accident year mainly related to our annual assessment of multi-claimant events including industrial accidents. Consistent with prior years, we reviewed these potential exposures after the close of the accident year to allow for late reporting or identification of significant losses. The net remaining favorable development of ~~$127 million~~ ~~was principally due to lower than expected loss experience, mainly impacting accident years 2014 and prior;~~

•

~~Net favorable development of~~ ~~$123 million~~ in our commercial excess and umbrella portfolios, primarily in accident years 2012 and prior. This was driven by lower than expected reported loss activity, and an increase in weighting towards experience-based methods, partially offset by higher than expected claim activity in the 2014 and 2015 accident years which led to reserve strengthening in those years;


•	~~Favorable development of~~ ~~$28 million~~ ~~in our foreign casualty lines due to the same factors as experienced for the three months ended September 30, 2018 as described above;~~


•	~~Net favorable development of~~ ~~$3 million~~ ~~on several lines of business due to favorable claim development on the 2017 natural catastrophes; and~~


•	~~Net adverse development of~~ ~~$71 million~~, mainly in our automobile liability, commercial-multi peril (CMP) liability, products and general liability lines, driven by adverse paid and reported loss activity relative to prior expectations in accident years 2015 through 2017, partly offset by favorable emergence in older accident years.


•	~~Net favorable development of~~ ~~$206 million~~ ~~in short-tail business, primarily from:~~


•	~~Net favorable development of~~ ~~$156 million~~ ~~in our commercial property and marine businesses due to favorable claim development, including~~ ~~$157 million~~ ~~favorable development on the 2017 natural catastrophes; and~~


•	~~Net favorable development of~~ ~~$50 million~~ ~~in other short-tail business, including~~ ~~$19 million~~ in surety and also including several smaller net favorable movements from lower than expected case activity in other classes, such as accident and commercial automobile physical damage, none of which were significant individually or in the aggregate.

~~North America Personal P&C Insurance~~

2019

For the three months ended September 30, 2019, net favorable PPD was $62 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:


•	~~Net favorable development of~~ ~~$36 million~~ in our homeowners lines, including valuables, mainly in accident year 2018. Non-catastrophe loss emergence was generally lower than expected in recent accident years. Losses arising from accident year 2017 natural catastrophes developed adversely; however, this was mostly offset by favorable development on the 2018 catastrophe events; and

•Net favorable development of $36 million in our homeowners lines, including valuables, mainly in accident year 2018. Non-catastrophe loss emergence was generally lower than expected in recent accident years. Losses arising from accident year 2017 natural catastrophes developed adversely; however, this was mostly offset by favorable development on the 2018 catastrophe events; and

~~Table~~•Net favorable development of ~~Contents~~$26 million in our personal excess lines primarily impacting the 2016 accident year, due to lower than expected loss emergence and an increase in weighting towards experience-based methods, partly offset by adverse emergence in accident year 2015.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)~~

~~Chubb Limited and Subsidiaries~~


•	~~Net favorable development of~~ ~~$26 million~~ in our personal excess lines primarily impacting the 2016 accident year, due to lower than expected loss emergence and an increase in weighting towards experience-based methods, partly offset by adverse emergence in accident year 2015.

For the nine months ended September 30, 2019, net favorable PPD was $88 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:


•	~~Net favorable claim development of~~ ~~$132 million~~ ~~on the 2017 and 2018 natural catastrophes for all lines;~~


•	~~Net favorable development of~~ ~~$26 million~~Net favorable claim development of $132 million on the 2017 and 2018 natural catastrophes for all lines; •Net favorable development of $26 million in our personal excess lines due to the same factors ~~experienced for the three months ended September 30, 2019, as described above;~~


•	~~Net favorable development of~~ ~~$16 million, which was the net result of several underlying favorable and adverse movements predominantly in the automobile and recreational marine lines; and~~


•	~~Net adverse development of~~ ~~$82 million~~ ~~in our homeowners lines, including valuables, arising from non-catastrophe loss emergence, mainly in the 2018 accident year.~~

~~2018~~

For the three months ended September 30, 2018, net adverse PPD was $58 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•

~~Net adverse development of~~ ~~$80 million~~ ~~in our homeowners and valuables lines, primarily impacting the 2017 accident year. Overall, non-catastrophe losses were~~ ~~$137 million~~ ~~higher than expected, partially offset by favorable claim development of~~ ~~$57 million~~ on the 2017 natural catastrophes. The higher than expected non-catastrophe homeowners losses were primarily severity driven and included water related claims, large fire losses, and non-catastrophe weather claims; and


•	~~Net favorable development of~~ ~~$24 million~~ ~~in our personal excess lines primarily impacting the 2015 accident year, due to lower than expected loss emergence and an increase in weighting towards experience-based methods.~~

~~For the nine months ended September 30, 2018, net adverse PPD was $59 million, primarily due to the same factors as~~ experienced for the three months ended September 30, ~~2018~~2019, as described ~~above,~~above; and

•Net adverse development of $82 million in our homeowners lines, including ~~$68 million of favorable claim development on~~valuables, arising from non-catastrophe loss emergence, mainly in the ~~2017 natural catastrophes.~~2018 accident year.

North America Agricultural Insurance

2020

For the three and nine months ended September 30, 2020, net adverse PPD was $18 million and $4 million, respectively.

2019

For the three months ended September 30, 2019, net adverse PPD was $18 ~~million, mainly impacting accident year 2018, across multiple product lines in our Farm and Commercial Agriculture businesses.~~million.

For the nine months ended September 30, 2019, net favorable PPD was $43 million, which is the net of the adverse activity noted above and favorable claim development in our Multiple Peril Crop Insurance (MPCI) business, which was due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2019 results based on crop yield results at year-end 2018).

~~2018~~

~~For the three months ended September 30, 2018, net favorable PPD was $1 million, primarily due to favorable claim development on the 2017 natural catastrophes.~~

For the nine months ended September 30, 2018, net favorable PPD was $77 million, including $1 million favorable claim development on the 2017 natural catastrophes. Actual claim development relates to our Multiple Peril Crop Insurance (MPCI) business and is favorable due to better than expected crop yield results in certain states at the prior year-end period (i.e., 2018 results based on crop yield results at year-end 2017).

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Chubb Limited and Subsidiaries

Overseas General Insurance

2020

For the three months ended September 30, 2020, net favorable PPD was $60 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

~~2019~~

•Net favorable development of $71 million in long-tail business, primarily from:

•Net favorable development of $94 million in casualty lines, including favorable development of $143 million in accident years 2016 and prior, due to lower than expected loss emergence across primary and excess lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of $49 million in accident years 2017 through 2019, primarily due to adverse large loss experience in the U.K. and Asia Pacific;

•Net favorable development of $22 million in political risks, driven by benign loss experience in 2018 and 2019; and

•Net adverse development of $57 million in financial lines, with adverse development of $125 million in accident years 2016 through 2019, primarily due to adverse large loss experience in Directors and Officers (D&O) in the U.K. and Asia Pacific. This was partially offset by favorable development of $68 million in accident years 2015 and prior, primarily from favorable case-specific settlements within Continental Europe and Asia Pacific financial institutions.

For the nine months ended September 30, 2020, net favorable PPD was $100 million, which was the net result of several underlying favorable and adverse movements and was driven by the following principal changes:

•Net favorable development of $72 million in long-tail lines due to the same factors experienced for the three months ended September 30, 2020 described above; and

•Net favorable development of $28 million in short-tail business, including $22 million in marine lines across all regions mainly in accident years 2017 and 2018.

2019

For the three months ended September 30, 2019, net favorable PPD was $25 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:

•

•Net favorable development of $66 million in long-tail business, primarily from:

•Net favorable development of $101 million in casualty lines, including favorable development of $123 million in accident years 2015 and prior, due to lower than expected loss emergence mainly across primary lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of $22 million in accident years 2016 through 2018, primarily due to adverse attritional and large loss experience in Continental Europe; and

•Net adverse development of $50 million in financial lines, with favorable development of $75 million in accident years 2015 and prior, due to lower than expected loss emergence across most regions in D&O and Professional Indemnity, which was more than offset by adverse development of $125 million in accident years 2016 through 2018, primarily due to adverse large loss experience in D&O in the U.K. and Asia Pacific.

•Net adverse development of $41 million in short-tail business, primarily due to net adverse development of $27 million in Surety, driven by adverse large loss experience across Continental Europe and Latin America in accident years 2017 and 2018.

~~$66 million~~ ~~in long-tail business, primarily from:~~

•

~~Net favorable development of~~ ~~$101 million~~ ~~in casualty lines, including favorable development of~~ ~~$123 million~~ ~~in accident years 2015 and prior, due to lower than expected loss emergence mainly across primary lines in Continental Europe, U.K., and Asia Pacific, partially offset by adverse development of~~ ~~$22 million~~ ~~in accident years 2016 through 2018, primarily due to adverse attritional and large loss experience in Continental Europe; and~~

•

~~Net adverse development of~~ ~~$50 million~~ ~~in financial lines, with favorable development of~~ ~~$75 million~~ in accident years 2015 and prior, due to lower than expected loss emergence across most regions in Directors and Officers (D&O) and Professional Indemnity, which was more than offset by adverse development of ~~$125 million~~ ~~in accident years 2016 through 2018, primarily due to adverse large loss experience in D&O in the U.K. and Asia Pacific.~~


•	~~Net adverse development of~~ ~~$41 million~~ ~~in short-tail business, primarily due to net adverse development of~~ ~~$27 million~~ ~~in Surety, driven by adverse large loss experience across Continental Europe and Latin America in accident years 2017 and 2018.~~

For the nine months ended September 30, 2019, net favorable PPD was $49 million, which was the net result of several underlying favorable and adverse movements, and was driven by ~~the following principal changes:~~


•	~~Net favorable development of~~ ~~$66~~net favorable development of $66 million in long-tail lines due to the same factors experienced for ~~the three months ended September 30, 2019 described above; and~~


•	~~Net adverse development of~~ ~~$17 million~~ ~~in short-tail lines.~~

~~2018~~

~~For~~ the three months ended September 30, ~~2018, net favorable PPD was $72 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:~~2019 described above.


•	~~Net favorable development of~~ ~~$49 million~~ ~~in long-tail business, primarily from:~~

•

~~Net favorable development of~~ ~~$54 million~~ ~~in casualty lines, with favorable development of~~ ~~$92 million~~ in accident years 2014 and prior, resulting from lower than expected loss emergence across primary and excess lines in the U.K., Continental Europe and Asia Pacific, partially offset by adverse development of ~~$38 million~~ ~~in accident years 2015 through 2017, primarily due to large loss experience in U.K. excess lines and wholesale business, and adverse development in certain Latin America excess lines;~~


•	~~Favorable development of~~ ~~$33 million, primarily including~~ ~~$12 million~~ ~~in political risks,~~ ~~$10 million~~ ~~in aviation and~~ ~~$10 million~~ ~~in environmental; and~~

•

~~Net adverse development of~~ ~~$38 million~~ ~~in financial lines, with favorable development of~~ ~~$93 million~~ in accident years 2014 and prior, resulting from lower than expected loss emergence including favorable development due to specific large claim reductions in Asia financial institutions including wholesale bankers Directors and Officers (D&O) and bankers professional indemnity, and adverse development of ~~$131 million~~ ~~in accident years 2015 through 2017, primarily due to adverse large loss experience in specific D&O and financial institutions portfolios in Australia, Continental Europe and the U.K.~~


•	~~Net favorable development of~~ ~~$23 million~~ ~~in short-tail business, primarily from:~~


•	~~Favorable development of~~ ~~$21 million~~ ~~in marine, primarily across accident years 2012 through 2015 driven mainly by favorable loss emergence in Latin America including favorable salvage/subrogation recoveries; and~~

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Chubb Limited and Subsidiaries


•	~~Adverse development of~~ ~~$4 million~~ ~~from claim development on the 2017 natural catastrophes.~~

For the nine months ended September 30, 2018, net favorable PPD was $166 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:


•	~~Net favorable development of~~ ~~$51 million~~ ~~in long-tail business, driven by the same factors as experienced for the three months ended September 30, 2018 as described above.~~


•	~~Net favorable development of~~ ~~$115 million~~ ~~in short-tail business, primarily from:~~


•	~~Net favorable development of~~ ~~$50 million~~ in property and marine (excluding technical lines), primarily in accident years 2014 through 2016, driven mainly by favorable loss emergence across all regions, including favorable claim-specific loss settlements and salvage/subrogation recoveries;


•	~~Favorable development of~~ ~~$8 million~~ ~~from claim development on the 2017 natural catastrophes; and~~


•	~~Net favorable development of~~ ~~$57 million, primarily including~~ ~~$17 million~~ ~~in personal business,~~ ~~$17 million~~ ~~in surety,$16 million~~ ~~in A&H business, and~~ ~~$13 million~~ ~~in energy lines.~~

Global Reinsurance

2020

For the three and nine months ended September 30, 2020, net favorable PPD was $6 million and $29 million, respectively, which was the net result of several underlying favorable and adverse movements, none of which is significant individually or in the aggregate.

2019

For the three months ended September 30, 2019, net favorable PPD was $25 million, in long-tail business, primarily from professional liability, medical malpractice, and workers' compensation lines primarily from treaty years 2013 and prior principally due to lower than expected loss emergence.

For the nine months ended September 30, 2019, net favorable PPD was $33 million, which was the net result of several underlying favorable and adverse movements, and was driven by the following principal changes:


•	~~Net favorable development of~~ ~~$59 million~~ in long-tail business, primarily in our casualty, professional liability, medical malpractice, and workers’ compensation lines primarily from treaty years 2013 and prior principally due to lower than expected loss emergence; and


•	~~Net adverse development of~~ ~~$26 million~~ ~~in short-tail business, which included~~ ~~$37 million~~ ~~of adverse development primarily on 2017 and 2018 natural catastrophe events.~~

~~2018~~•Net favorable development of $59 million in long-tail business, primarily in our casualty, professional liability, medical malpractice, and workers’ compensation lines primarily from treaty years 2013 and prior principally due to lower than expected loss emergence; and

•Net adverse development of $26 million in short-tail business, which included $37 million of adverse development primarily on 2017 and 2018 natural catastrophe events.

Corporate

2020

For the three months ended September 30, ~~2018,~~2020, net ~~favorable PPD~~adverse development was ~~$24~~$54 million, ~~which was the net result~~driven principally by development in environmental liabilities of ~~several underlying favorable and adverse movements, and was driven by the following principal changes:~~$35 million due to certain case specific incurred activity.


•	~~Net favorable development of~~ ~~$39 million~~ in long-tail business, in our professional liability, medical malpractice, and workers' compensation lines primarily from treaty years 2013 and prior principally resulting from lower than expected loss emergence; and


•	~~Net adverse development of~~ ~~$15 million~~ ~~in short-tail business, due to claim development on the 2017 natural catastrophes.~~

For the nine months ended September 30, ~~2018,~~2020 net ~~favorable PPD~~adverse development was ~~$54~~$339 million, ~~which was~~driven by adverse development of $254 million for U.S. child molestation claims, predominantly reviver statute-related, as well as the ~~net result~~adverse development noted above regarding environmental liabilities. The remainder of ~~several underlying favorable and~~the adverse ~~movements, and~~development was driven by ~~the following principal changes:~~increased claim costs on a limited number of non-A&E run-off casualty and workers’ compensation exposures, and charges relating to unallocated loss adjustment expenses due to run-off operating expenses.


•	~~Net favorable development of~~ ~~$69 million~~ in long-tail business, primarily in our casualty, professional liability, medical malpractice, and workers' compensation lines primarily from treaty years 2013 and prior principally resulting from lower than expected loss emergence; and


•	~~Net adverse development of~~ ~~$15 million~~ ~~in short-tail business, which included~~ ~~$14 million~~ ~~of net adverse claim development on the 2017 natural catastrophes.~~

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~~Chubb Limited and Subsidiaries~~

~~Corporate~~

2019

For the three months ended September 30, 2019, net adverse development was $36 million, driven principally by adverse development in environmental liabilities of $27 million due to case specific settlements and higher than expected remediation expense and defense costs, generally impacting larger modeled accounts. ~~The net adverse development also included charges relating to unallocated loss adjustment expenses due to run-off operating expenses of $9 million.~~

For the nine months ended September 30, 2019, net adverse development was $79 million, driven principally by adverse development on non A&E run-off casualty exposures, including workers' compensation, and by the adverse development in environmental liabilities as described above. The net adverse development also included charges relating to unallocated loss adjustment expenses due to run-off operating expenses of $28 million.

7. Debt

~~2018~~

For the three months ended September 30, 2018, net adverse development was $12 million, driven principally by adverse development in environmental liabilities of $54 million due to case specific settlements and higher than expected remediation expense and defense costs, generally impacting larger modeled accounts. This adverse development was partially offset by a favorable adjustment in our estimate of reinsurance recoverables.

For the nine months ended September 30, 2018, net adverse development was $67 million, driven principally by adverse development on non A&E run-off casualty exposures and by the adverse development in environmental liabilities as described above.

~~5. Debt~~

On ~~June 18, 2019,~~September 17, 2020, Chubb INA Holdings Inc. (Chubb INA) issued ~~€575 million ($650 million based on the foreign exchange rate at the date~~$1 billion of ~~issuance) of 0.875~~1.375 percent ~~Euro denominated~~ senior notes due ~~June 2027 and €575 million ($650 million based on the foreign exchange rate at the date of issuance) of 1.4 percent Euro denominated senior notes due June 2031.~~September 2030. These senior notes are redeemable at any time at Chubb INA's option subject to a “make-whole” premium (the present value of the remaining principal and interest discounted at the applicable comparable government bond rate plus ~~0.20 percent for the senior notes due 2027 and 0.25 percent for the senior notes due 2031)~~0.15 percent). The notes are also redeemable at par plus accrued and unpaid interest in the event of certain changes in tax law. These notes do not have the benefit of any sinking fund. These senior unsecured notes are guaranteed on a senior basis by Chubb and they rank equally with all of Chubb's other senior obligations. They also contain customary limitations on lien provisions as well as customary events of default provisions which, if breached, could result in the accelerated maturity of such senior debt.

~~Chubb INA's $500 million of 5.9 percent senior notes due June 2019 were paid upon maturity.~~

6.8. Commitments, contingencies, and guarantees

a) Derivative instruments

Foreign currency management

As a global company, Chubb entities transact business in multiple currencies. Our policy is to generally match assets, liabilities,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

and required capital for each individual jurisdiction in local currency, which would include the use of derivatives discussed below. We do not hedge our net asset non-U.S. dollar capital positions; however, we do consider economic hedging for planned cross border transactions.

Derivative instruments employed

Chubb maintains positions in derivative instruments such as futures, options, swaps, and foreign currency forward contracts for which the primary purposes are to manage duration and foreign currency exposure, yield enhancement, or to obtain an exposure to a particular financial market. Chubb also maintains positions in convertible securities that contain embedded derivatives. Investment derivative instruments are recorded in either Other assets (OA) or Accounts payable, accrued expenses, and other liabilities (AP), convertible bonds are recorded in Fixed maturities available for sale (FM AFS), and convertible equity securities are recorded in Equity securities (ES) in the Consolidated balance sheets. These are the most numerous and frequent derivative transactions. In addition, Chubb purchases to be announced mortgage-backed securities (TBAs) as part of its investing activities.

Under reinsurance programs covering GLBs, Chubb assumes the risk of GLBs (principally GMIB) associated with variable

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~~Chubb Limited and Subsidiaries~~

annuity contracts. The GMIB risk is triggered if, at the time the contract holder elects to convert the accumulated account value to a periodic payment stream (annuitize), the accumulated account value is not sufficient to provide a guaranteed minimum level of monthly income. The GLB reinsurance product meets the definition of a derivative instrument. Benefit reserves in respect of GLBs are classified as Future policy benefits (FPB) while the fair value derivative adjustment is classified within AP. Chubb also generally maintains positions in exchange-traded equity futures contracts on equity market indices to limit equity exposure in the GMDB and GLB ~~books~~book of business.

All derivative instruments are carried at fair value with changes in fair value recorded in Net realized gains (losses) in the Consolidated statements of operations. None of the derivative instruments are designated as hedges for accounting purposes.

The following table presents the balance sheet locations, fair values of derivative instruments in an asset or (liability) position, and notional values/payment provisions of our derivative instruments:


				September 30, 2020								December 31, 2019
	Consolidated Balance Sheet Location	Fair Value				Notional Value/ Payment Provision			Fair Value					Notional Value/ Payment Provision
(in millions of U.S. dollars)		Derivative Asset		Derivative (Liability)				Derivative Asset			Derivative (Liability)
Investment and embedded derivative instruments:
Foreign currency forward contracts	OA / (AP)	$	12	$	(73)	$	2,550		$	11		$	(78)	$	2,579
Options/Futures contracts on notes, bonds, and equities	OA / (AP)	12		(3)		1,457			13			(15)		1,615
Convertible securities (1)	FM AFS / ES	9		0		11			4			0		5
		$	33	$	(76)	$	4,018		$	28		$	(93)	$	4,199
Other derivative instruments:
Futures contracts on equities (2)	OA / (AP)	$	0	$	(1)	$	648		$	0		$	(13)	$	613
Other	OA / (AP)	3		0		113			2			0		63
		$	3	$	(1)	$	761		$	2		$	(13)	$	676
GLB (3)	(AP) / (FPB)	$	0	$	(1,318)	$	2,071		$	0		$	(897)	$	1,510

September 30, 2019 December 31, 2018

Consolidated
Balance Sheet
Location
Fair Value
Notional
Value/
Payment
Provision

Fair Value
Notional
Value/
Payment
Provision

(in millions of U.S. dollars) Derivative Asset
Derivative (Liability)
Derivative Asset
Derivative (Liability)

Investment and embedded derivative instruments:
Foreign currency forward contracts OA / (AP) $ 10
$ (59 ) $ 2,888
$ 15
$ (19 ) $ 2,185
Cross-currency swaps OA / (AP) —
—
—
—
—
45
Interest rate swaps OA / (AP) —
—
—
—
(115 ) 5,250
Options/Futures contracts on notes, bonds, and equities OA / (AP) 12
(4 ) 853
13
(19 ) 1,046
Convertible securities ⁽¹⁾
FM AFS / ES 5
—
8
9
—
11
TBAs FM AFS —
—
—
6
—
6
$ 27
$ (63 ) $ 3,749
$ 43

$ (153 )
$ 8,543
Other derivative instruments:
Futures contracts on equities⁽²⁾
OA / (AP) $ 6
$ —
$ 582
$ 23
$ —
$ 507
Other OA / (AP) 1
—
207
2
—
74
$ 7
$ —
$ 789
$ 25
$ —
$ 581
GLB ⁽³⁾
(AP) / (FPB) $ —
$ (935 ) $ 1,729
$ —
$ (861 ) $ 1,750
(1)Includes fair value of embedded derivatives.

(2)Related to GMDB and GLB book of business.

(3)Includes both future policy benefits reserves of $436 million and $441 million and fair value derivative adjustment of $882 million and $456 million at September 30, 2020 and December 31, 2019, respectively. Note that the payment provision related to GLB is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.


⁽¹⁾	~~Includes fair value of embedded derivatives.~~


⁽²⁾	~~Related to GMDB and GLB blocks of business.~~


⁽³⁾	~~Includes both future policy benefits reserves of~~ ~~$426 million~~ ~~and~~ ~~$409 million~~ ~~and fair value derivative adjustment of~~ ~~$509 million~~ ~~and~~ ~~$452 million~~ at September 30, 2019 and December 31, 2018, respectively. Note that the payment provision related to GLB is the net amount at risk. The concept of a notional value does not apply to the GLB reinsurance contracts.

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, net derivative liabilities of ~~$30~~$45 million and ~~$95~~$75 million, respectively, included in the table above were subject to a master netting agreement. The remaining derivatives included in the table above were not subject to a master netting agreement.

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The following table presents net realized gains (losses) related to derivative instrument activity in the Consolidated statements of operations:


	Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
	September 30						September 30							September 30				September 30
(in millions of U.S. dollars)	2019			2018			2019			2018			(in millions of U.S. dollars)	2020		2019		2020		2019
Investment and embedded derivative instruments:													Investment and embedded derivative instruments:
Foreign currency forward contracts	$	(20	)	$	(2	)	$	(57	)	$	5		Foreign currency forward contracts	$	0	$	(20)	$	53	$	(57)
Interest rate swaps	(55		)	26			(270		)	26			Interest rate swaps	0		(55)		0		(270)
All other futures contracts, options, and equities	(22		)	13			(83		)	47			All other futures contracts, options, and equities	9		(22)		(15)		(83)
Convertible securities ⁽¹⁾	—			—			2			—			Convertible securities (1)	0		0		0		2

Total investment and embedded derivative instruments	$	(97	)	$	37		$	(408	)	$	78		Total investment and embedded derivative instruments	$	9	$	(97)	$	38	$	(408)
GLB and other derivative instruments:													GLB and other derivative instruments:
GLB ⁽²⁾	$	(106	)	$	54		$	(57	)	$	133		GLB (2)	$	46	$	(106)	$	(426)	$	(57)
Futures contracts on equities ⁽³⁾	(6		)	(100		)	(89		)	(122		)	Futures contracts on equities (3)	(52)		(6)		(30)		(89)
Other	(14		)	(8		)	(8		)	2			Other	1		(14)		(2)		(8)
Total GLB and other derivative instruments	$	(126	)	$	(54	)	$	(154	)	$	13		Total GLB and other derivative instruments	$	(5)	$	(126)	$	(458)	$	(154)
	$	(223	)	$	(17	)	$	(562	)	$	91			$	4	$	(223)	$	(420)	$	(562)


⁽¹⁾ (1)Includes embedded derivatives. (2)Excludes foreign exchange gains (losses) related to GLB. (3)Related to GMDB and GLB book of business.	~~Includes embedded derivatives.~~


⁽²⁾	~~Excludes foreign exchange gains (losses) related to GLB.~~


⁽³⁾	~~Related to GMDB and GLB books of business.~~

b) Derivative instrument objectives

(i) Foreign currency exposure management

A foreign currency forward contract (forward) is an agreement between participants to exchange specific ~~foreign~~ currencies at a future date. Chubb uses forwards to minimize the effect of fluctuating foreign currencies as discussed above.

(ii) Duration management and market exposure

Futures

Futures contracts give the holder the right and obligation to participate in market movements, determined by the index or underlying security on which the futures contract is based. Settlement is made daily in cash by an amount equal to the change in value of the futures contract times a multiplier that scales the size of the contract. Exchange-traded futures contracts on money market instruments, notes, and bonds are used in fixed maturity portfolios to more efficiently manage duration, as substitutes for ownership of the money market instruments, bonds, and notes without significantly increasing the risk in the portfolio. Investments in futures contracts may be made only to the extent that there are assets under management not otherwise committed.

Exchange-traded equity futures contracts are used to limit exposure to a severe equity market decline, which would cause an increase in expected claims and therefore, an increase in reserves for GMDB and GLB reinsurance business.

Options

An option contract conveys to the holder the right, but not the obligation, to purchase or sell a specified amount or value of an underlying security at a fixed price. Option contracts are used in our investment portfolio as protection against unexpected shifts in interest rates, which would affect the duration of the fixed maturity portfolio. By using options in the portfolio, the overall interest rate sensitivity of the portfolio can be reduced. Option contracts may also be used as an alternative to futures contracts in the synthetic strategy as described above.

The price of an option is influenced by the underlying security, expected volatility, time to expiration, and supply and demand.

The credit risk associated with the above derivative financial instruments relates to the potential for non-performance by counterparties. Although non-performance is not anticipated, in order to minimize the risk of loss, management monitors the creditworthiness of its counterparties and obtains collateral. The performance of exchange-traded instruments is guaranteed by the exchange on which they trade. For non-exchange-traded instruments, the counterparties are principally banks which must meet certain criteria according to our investment guidelines.

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Chubb Limited and Subsidiaries

Interest rate swaps

An interest rate swap is a contract between two counterparties in which interest payments are made based on a notional principal amount, which itself is never paid or received. Under the terms of an interest rate swap, one counterparty makes interest payments based on a fixed interest rate and the other counterparty’s payments are based on a floating rate. Interest rate swap contracts are used occasionally in our investment portfolio as protection against unexpected shifts in interest rates, which would affect the fair value of the fixed maturity portfolio. By using interest rate swaps in the portfolio, the overall duration or interest rate sensitivity of the portfolio can be impacted.

Cross-currency swaps

Cross-currency swaps are agreements under which two counterparties exchange interest payments and principal denominated in different currencies at a future date. We use cross-currency swaps to reduce the foreign currency and interest rate risk by converting cash flows back into local currency. We invest in foreign currency denominated investments to improve credit diversification and also to obtain better duration matching to our liabilities that is limited in the local currency market.

Other

Included within Other are derivatives intended to reduce potential losses which may arise from certain exposures in our insurance business. The economic benefit provided by these derivatives is similar to purchased reinsurance. For example, Chubb may enter into crop derivative contracts to protect underwriting results in the event of a significant decline in commodity prices.

(iii) Convertible security investments

A convertible security is a debt instrument or preferred stock that can be converted into a predetermined amount of the issuer’s equity. The convertible option is an embedded derivative within the host instruments which are classified in the investment portfolio as either available for sale or as an equity security. Chubb purchases convertible securities for their total return and not specifically for the conversion feature.

(iv) TBA

By acquiring TBAs, we make a commitment to purchase a future issuance of mortgage-backed securities. For the period between purchase of the TBAs and issuance of the underlying security, we account for our position as a derivative in the consolidated financial statements. Chubb purchases TBAs both for their total return and for the flexibility they provide related to our mortgage-backed security strategy.

(v) GLB

Under the GLB program, as the assuming entity, Chubb is obligated to provide coverage until the expiration or maturity of the underlying deferred annuity contracts or the expiry of the reinsurance treaty. Premiums received under the reinsurance treaties are classified as premium. Expected losses allocated to premiums received are classified as Future policy benefits and valued similar to GMDB reinsurance. Other changes in fair value arise principally from changes in expected losses allocated to expected future premiums. Fair value represents management’s estimate of an exit price and thus, includes a risk margin. We may recognize a realized loss for other changes in fair value due to adverse changes in the capital markets (e.g., declining interest rates and/or declining U.S. and/or international equity markets) and changes in actual or estimated future policyholder behavior (e.g., increased annuitization or decreased lapse rates) although we expect the business to be profitable.

To mitigate adverse changes in the capital markets, we maintain positions in exchange-traded equity futures contracts, as noted under section "(ii) Futures" above. These futures increase in fair value when the S&P 500 index decreases (and decrease in fair value when the S&P 500 index increases). The net impact of gains or losses related to changes in fair value of the GLB liability and the exchange-traded equity futures are included in Net realized gains (losses).

c) Securities lending and secured borrowings

Chubb participates in a securities lending program operated by a third-party banking institution whereby certain assets are loaned to qualified borrowers and from which we earn an incremental return. The securities lending collateral can only be drawn down by Chubb in the event that the institution borrowing the securities is in default under the lending agreement. An indemnification agreement with the lending agent protects us in the event a borrower becomes insolvent or fails to return any of the securities on loan.The collateral is recorded in Securities lending collateral and the liability is recorded in Securities lending payable in the Consolidated balance sheets.

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The following table presents the carrying value of collateral held under securities lending agreements by investment category and remaining contractual maturity of the underlying agreements:


	Remaining contractual maturity

	September 30, 2020		December 31, 2019
(in millions of U.S. dollars)	Overnight and Continuous
Collateral held under securities lending agreements:
Cash	$	615	$	346
U.S. Treasury / Agency	101		6
Non-U.S.	1,047		595
Corporate and asset-backed securities	44		5
Mortgage-backed securities	0		18

Equity securities	44		24

	$	1,851	$	994
Gross amount of recognized liability for securities lending payable	$	1,851	$	994

Remaining contractual maturity
September 30
December 31
2019
2018
(in millions of U.S. dollars) Overnight and Continuous
Collateral held under securities lending agreements:
Cash $ 562
$ 756
U.S. Treasury and agency 70
64
Foreign 249
795
Corporate securities 17
15
Mortgage-backed securities 18
45
Equity securities 46
251
$ 962
$ 1,926
Gross amount of recognized liability for securities lending payable $ 962
$ 1,926

At September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, our repurchase agreement obligations of ~~$1,416~~$1,413 million and ~~$1,418~~$1,416 million, respectively, were fully collateralized. In contrast to securities lending programs, the use of cash received is not restricted for the repurchase obligations.The fair value of the underlying securities sold remains in Fixed maturities available for sale and the repurchase agreement obligation is recorded in Repurchase agreements in the Consolidated balance sheets.

The following table presents the carrying value of collateral pledged under repurchase agreements by investment category and remaining contractual maturity of the underlying agreements:


	Remaining contractual maturity
	September 30, 2020										December 31, 2019
	Up to 30 Days		30-90 Days		Greater than 90 Days		Total		Up to 30 Days		30-90 Days		Greater than 90 Days		Total
(in millions of U.S. dollars)
Collateral pledged under repurchase agreements:
Cash	$	4	$	0	$	0	$	4	$	2	$	0	$	0	$	2
U.S. Treasury / Agency	4		0		102		106		107		0		0		107


Mortgage-backed securities	390		462		471		1,323		399		476		480		1,355
	$	398	$	462	$	573	$	1,433	$	508	$	476	$	480	$	1,464
Gross amount of recognized liabilities for repurchase agreements							$	1,413							$	1,416
Difference (1)							$	20							$	48

Remaining contractual maturity
September 30, 2019 December 31, 2018
30-90 Days

Greater than
90 Days

Total
30-90 Days

Greater than
90 Days

Total
(in millions of U.S. dollars)
Collateral pledged under repurchase agreements:
U.S. Treasury and agency $ —
$ 107
$ 107
$ —
$ 259
$ 259
Mortgage-backed securities 488
879
1,367
496
713
1,209
$ 488
$ 986
$ 1,474
$ 496
$ 972
$ 1,468
Gross amount of recognized liabilities for repurchase agreements $ 1,416
$ 1,418
Difference ⁽¹⁾
$ 58
$ 50
(1)Per the repurchase agreements, the amount of collateral posted is required to exceed the amount of gross liability.


⁽¹⁾	~~Per the repurchase agreements, the amount of collateral posted is required to exceed the amount of gross liability.~~

Potential risks exist in our secured borrowing transactions due to market conditions and counterparty exposure. With collateral that we pledge, there is a risk that the collateral may not be returned at the expiration of the agreement. If the counterparty fails to return the collateral, Chubb will have free use of the borrowed funds until our collateral is returned. In addition, we may encounter the risk that Chubb may not be able to renew outstanding borrowings with a new term or with an existing counterparty due to market conditions including a decrease in demand as well as more restrictive terms from banks due to increased regulatory and capital constraints. Should this condition occur, Chubb may seek alternative borrowing sources or reduce borrowings. Additionally, increased margins and collateral requirements due to market conditions would increase our restricted assets as we are required to provide additional collateral to support the transaction.

d) Fixed maturities

At September 30, ~~2019,~~2020, we have commitments to purchase fixed income securities of ~~$799~~$695 million over the next several years.

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e) Other investments

At September 30, ~~2019,~~2020 included in Other investments in the Consolidated balance ~~sheets~~sheet are investments in limited partnerships and partially-owned investment companies with a carrying value of ~~$4.6~~$5.5 billion. In connection with these investments, we have commitments that may require funding of up to ~~$3.5~~$3.3 billion over the next several years. At December 31, 2019, these investments had a carrying value of $4.7 billion with a commitment that may require funding of up to $3.3 billion.

f) Income ~~Taxes~~taxes

At September 30, ~~2019, $13~~2020, $50 million of unrecognized tax benefits remain ~~outstanding.~~outstanding. It is reasonably possible that over the next twelve months, that the amount of unrecognized tax benefits may change resulting from the re-evaluation of unrecognized tax benefits arising from examinations by taxing authorities, settlements and the lapses of statutes of limitations. The IRS commenced its field examination of Chubb’s federal income tax returns for tax years 2016, 2017, and 2018 during July 2020. With few exceptions, Chubb is no longer subject to income tax examinations for years before ~~2010.~~2010.

g) Legal proceedings

Our insurance subsidiaries are subject to claims litigation involving disputed interpretations of policy coverages and, in some jurisdictions, direct actions by allegedly-injured persons seeking damages from policyholders. These lawsuits, involving claims on policies issued by our subsidiaries which are typical to the insurance industry in general and in the normal course of business, are considered in our loss and loss expense reserves. In addition to claims litigation, we are subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly relate to claims on insurance policies. This category of business litigation typically involves, among other things, allegations of underwriting errors or misconduct, employment claims, regulatory activity, or disputes arising from our business ventures. In the opinion of management, our ultimate liability for these matters could be, but we believe is not likely to be, material to our consolidated financial condition and results of operations.

h) Leases

At September 30, 2020 and December 31, 2019, the right-of-use asset was ~~$577~~$470 million and $551 million, respectively, and is recorded within Other assets on the Consolidated balance sheets. At September 30, 2020 and December 31, 2019, the lease liability was ~~$617~~$517 million ~~which was~~and $603 million, respectively, and is recorded within Accounts payable, accrued expenses, and other liabilities on the Consolidated balance ~~sheet.~~sheets. These leases consist principally of real estate operating leases that are amortized on a straight-line basis over the term of the lease.

7.9. Shareholders’ equity

All of Chubb’s Common Shares are authorized under Swiss corporate law. Though the par value of Common Shares is stated in Swiss francs, Chubb continues to use U.S. dollars as its reporting currency for preparing consolidated financial statements. Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value reduction) or from legal reserves, must be stated in Swiss francs though dividend payments are made by Chubb in U.S. dollars. At September 30, ~~2019,~~2020, our Common Shares had a par value of CHF 24.15 per share.

At our May ~~2018~~2019 and ~~2017~~2018 annual general meetings, our shareholders approved an annual ~~dividend~~dividends for the following year of up to ~~$2.92~~$3.00 per share and~~$2.84~~ $2.92 per share, respectively, which were paid in four quarterly installments of ~~$0.73~~$0.75 per share and~~$0.71~~ $0.73 per share, respectively, at dates determined by the Board of Directors (Board) after the annual general meetings by way of a distribution from capital contribution reserves, transferred to free reserves for payment.

At our May ~~2019~~2020 annual general meeting, our shareholders approved an annual dividend for the following year of up to ~~$3.00~~$3.12 per share, expected to be paid in four quarterly installments of ~~$0.75~~$0.78 per share after the general meeting by way of distribution from capital contribution reserves, transferred to free reserves for payment. The Board will determine the record and payment dates at which the annual dividend may be paid until the date of the ~~2020~~2021 annual general meeting, and is authorized to abstain from distributing a dividend at its discretion.

The following table presents dividend distributions per Common Share in Swiss francs (CHF) and U.S. dollars (USD):

Three Months Ended Nine Months Ended
September 30 September 30
2019 2018 2019 2018
CHF
USD
CHF
USD
CHF
USD
CHF
USD
Total dividend distributions per common share 0.73
$ 0.75
0.72
$ 0.73
2.20
$ 2.23
2.11
$ 2.17


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2020			2019			2020			2019
	CHF	USD		CHF	USD		CHF	USD		CHF	USD
Total dividend distributions per common share	0.71	$	0.78	0.73	$	0.75	2.18	$	2.31	2.20	$	2.23

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Common Shares in treasury are used principally for issuance upon the exercise of employee stock options, grants of restricted stock, and purchases under the Employee Stock Purchase Plan (ESPP). At our May 2020 annual general meeting, our shareholders approved the cancellation of 2,178,600 shares purchased under our share repurchase program during the period beginning September 23, 2019 and ending December 31, 2019. The capital reduction by cancellation of shares was subject to publication requirements and a two-month waiting period in accordance with Swiss law and became effective August 3, 2020. At September 30, ~~2019, 26,250,222~~2020, 26,229,070 Common Shares remain in treasury after share repurchases, share cancellations, and 1,670,777 net shares ~~redeemed~~issued under employee share-based compensation plans.

Chubb Limited securities repurchase ~~authorization~~authorizations

~~In December 2017, the Board authorized a share repurchase program of $1.0 billion of Chubb's Common Shares from January 1, 2018 through December 31, 2018.~~ In December 2018, the Board authorized the repurchase of up to $1.5 billion of Chubb's Common Shares from December 1, 2018 through December 31, 2019. In November 2019, the Board authorized the repurchase of up to $1.5 billion of Chubb's Common Shares from November 21, 2019 through December 31, 2020. We suspended share repurchase activity during the second and third quarters of 2020, given the economic environment. Subsequently, we resumed share repurchases on October 29, 2020 as disclosed below.

The following table presents repurchases of Chubb's Common Shares conducted in a series of open market transactions under the Board authorizations:

Three Months Ended September 30 Nine Months Ended September 30 October 1, 2019 through October 30, 2019
(in millions of U.S. dollars, except share data) 2019
2018
2019
2018

Number of shares repurchased 3,079,618
2,781,307
8,417,838
5,225,162
700,900
Cost of shares repurchased $ 478
$ 379
$ 1,221
$ 703
$ 108
Repurchase authorization remaining at end of period $ 258
$ 297
$ 258
$ 297
$ 150


	Three Months Ended				Nine Months Ended				October 1, 2020 through October 29, 2020
			September 30				September 30
(in millions of U.S. dollars, except share data)	2020		2019		2020		2019
Number of shares repurchased	0		3,079,618		2,266,150		8,417,838		52,500
Cost of shares repurchased	$	0	$	478	$	326	$	1,221	$	7
Repurchase authorization remaining at end of period	$	1,124	$	258	$	1,124	$	258	$	1,117

8.10. Share-based compensation

The Chubb Limited 2016 Long-Term Incentive Plan (the 2016 LTIP) permits grants of both incentive and non-qualified stock options principally at an option price per share equal to the grant date fair value of Chubb's Common Shares. Stock options are generally granted with a 3-year vesting period and a 10-year term. Stock options typically vest in equal annual installments over the respective vesting period, which is also the requisite service period. On February ~~28, 2019,~~27, 2020, Chubb granted ~~2,073,712~~1,957,505 stock options with a weighted-average grant date fair value of ~~$18.79~~$19.89 each. The fair value of the options issued is estimated on the grant date using the Black-Scholes option pricing model.

The 2016 LTIP also permits grants of service-based restricted stock and restricted stock units as well as performance-based restricted stock awards. Chubb generally grants service-based restricted stock and restricted stock units with a 4-year vesting period, based on a graded vesting schedule. Beginning in 2017, the performance-based restricted stock awards granted comprise target awards and premium awards that cliff vest at the end of a 3-year performance period based on both tangible book value (shareholders' equity less goodwill and intangible assets, net of tax) per share growth and P&C combined ratio compared to a defined group of peer companies. Premium awards are subject to an additional vesting provision based on total shareholder return compared to our peer group. The restricted stock is granted at market close price on the grant date. On February ~~28, 2019,~~27, 2020, Chubb granted ~~1,078,247~~1,002,341 service-based restricted stock awards, ~~357,463~~344,501 service-based restricted stock units, and ~~212,059~~203,533 performance-based stock awards to employees and officers with a grant date fair value of ~~$133.90~~$150.11 each. Each restricted stock unit represents our obligation to deliver to the holder one Common Share upon vesting.

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9.11. Postretirement benefits

The components of net pension and other postretirement benefit costs (benefits) reflected in Net income in the Consolidated statements of operations were as follows:


	Pension Benefit Plans								Other Postretirement Benefit Plans
	2020				2019				2020		2019
Three Months Ended September 30	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
(in millions of U.S. dollars)
Service cost	$	0	$	1	$	12	$	3	$	0	$	0
Non-service cost:
Interest cost	24		6		30		6		1		1
Expected return on plan assets	(56)		(11)		(47)		(11)		(1)		(1)
Amortization of net actuarial loss	0		0		0		1		0		0
Amortization of prior service cost	0		1		0		0		(20)		(20)

Settlements	1		0		1		0		0		0
Total non-service (benefit) cost	(31)		(4)		(16)		(4)		(20)		(20)
Net periodic (benefit) cost	$	(31)	$	(3)	$	(4)	$	(1)	$	(20)	$	(20)


																							Pension Benefit Plans												Other Postretirement Benefit Plans
	Pension Benefit Plans														Other Postretirement Benefit Plans								2020							2019					2020			2019
	2019							2018							2019			2018
Three Months Ended September 30	U.S. Plans			Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
Nine Months Ended September 30							Nine Months Ended September 30				U.S. Plans										Non-U.S. Plans				U.S. Plans			Non-U.S. Plans
(in millions of U.S. dollars)	U.S. Plans						Non-U.S. Plans							U.S. Plans			Non-U.S. Plans																	(in millions of U.S. dollars)
Service cost										Service cost		$	0								$	3							$	37		$	8			$	0		$	0
Non-service cost:																					Non-service cost:
Interest cost	30			6				26				6			1			1				Interest cost		74			17				89			20			2			3
Expected return on plan assets	(47		)	(11		)		(53		)		(12		)	(1		)	(2		)	Expected return on plan assets		(168)			(32)				(142)			(33)		(3)			(3)
Amortization of net actuarial loss	—			1				—				1			—			—			Amortization of net actuarial loss		0			1				0			2		0			0
Amortization of prior service cost	—			—				—				—			(20		)	(21		)	Amortization of prior service cost		0			1				0			0		(60)			(60)
Curtailments	—			—				—				—			—			(1		)

Settlements	1			—				—				—			—			—			Settlements		3			0				1			0		0			0
Total non-service (benefit) cost	(16		)	(4		)		(27		)		(5		)	(20		)	(23		)	Total non-service (benefit) cost		(91)			(13)				(52)			(11)		(61)			(60)
Net periodic (benefit) cost	$	(4	)	$	(1	)		$	(13	)		$	(2	)	$	(20	)	$	(22	)	Net periodic (benefit) cost		$	(91)		$	(10)			$	(15)		$	(3)	$	(61)		$	(60)

Pension Benefit Plans
Other Postretirement
Benefit Plans

2019 2018 2019
2018
Nine Months Ended September 30 U.S. Plans
Non-U.S. Plans
U.S. Plans
Non-U.S. Plans

(in millions of U.S. dollars)
Service cost $ 37
$ 8
$ 43
$ 9
$ —
$ 1
Non-service cost:
Interest cost 89
20
79
20
3
3
Expected return on plan assets (142 ) (33 ) (159 ) (38 ) (3 ) (4 )
Amortization of net actuarial loss —
2
—
1
—
—
Amortization of prior service cost —
—
—
—
(60 ) (64 )
Curtailments —
—
—
—
—
(2 )
Settlements 1
—
1
—
—
—
Total non-service (benefit) cost (52 ) (11 ) (79 ) (17 ) (60 ) (67 )
Net periodic (benefit) cost $ (15 ) $ (3 ) $ (36 ) $ (8 ) $ (60 ) $ (66 )

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

The line items in which the service and non-service cost components of net periodic (benefit) cost ~~reflected~~are included in the Consolidated statements of operations were as follows:


	Pension Benefit Plans						Other Postretirement Benefit Plans								Pension Benefit Plans								Other Postretirement Benefit Plans
Three Months Ended September 30	2019			2018			2019				2018			Three Months Ended September 30	2020				2019				2020				2019
(in millions of U.S. dollars)										(in millions of U.S. dollars)
Service Cost:
Service cost:														Service cost:
Losses and loss expenses	$	2		$	2		$	—			$	—		Losses and loss expenses			$	0			$	2			$	0			$	0
Administrative expenses	13			15			—				1			Administrative expenses	1				13				0				0
Total service cost	15			17			—				1			Total service cost	1				15				0				0
Non-service Cost:
Non-service cost:														Non-service cost:
Losses and loss expenses	(1		)	(3		)	(2		)		(3		)	Losses and loss expenses	(3)				(1)				(2)				(2)
Administrative expenses	(19		)	(29		)	(18		)		(20		)	Administrative expenses	(32)				(19)				(18)				(18)
Total non-service (benefit) cost	(20		)	(32		)	(20		)		(23		)	Total non-service (benefit) cost	(35)				(20)				(20)				(20)
Net periodic (benefit) cost	$	(5	)	$	(15	)	$	(20	)		$	(22	)	Net periodic (benefit) cost	$	(34)			$	(5)			$	(20)			$	(20)

Pension Benefit Plans Other Postretirement Benefit Plans
Nine Months Ended September 30 2019
2018
2019
2018
(in millions of U.S. dollars)
Service Cost:
Losses and loss expenses $ 5
$ 5
$ —
$ —
Administrative expenses 40
47
—
1
Total service cost 45
52
—
1
Non-service Cost:
Losses and loss expenses (5 ) (8 ) (6 ) (7 )
Administrative expenses (58 ) (88 ) (54 ) (60 )
Total non-service (benefit) cost (63 ) (96 ) (60 ) (67 )
Net periodic (benefit) cost $ (18 ) $ (44 ) $ (60 ) $ (66 )


	Pension Benefit Plans				Other Postretirement Benefit Plans
Nine Months Ended September 30	2020		2019		2020		2019
(in millions of U.S. dollars)
Service cost:
Losses and loss expenses	$	0	$	5	$	0	$	0
Administrative expenses	3		40		0		0
Total service cost	3		45		0		0
Non-service cost:
Losses and loss expenses	(9)		(5)		(6)		(6)
Administrative expenses	(95)		(58)		(55)		(54)
Total non-service (benefit) cost	(104)		(63)		(61)		(60)
Net periodic (benefit) cost	$	(101)	$	(18)	$	(61)	$	(60)

~~10.~~39

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

12. Segment information

Chubb operates through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance.

Corporate results primarily include income and expenses not attributable to reportable segments and ~~loss~~losses and loss expenses of asbestos and environmental (A&E) liabilities and certain other non-A&E run-off exposures.

~~For segment reporting purposes, certain items are presented in a different manner below than in the consolidated financial statements.~~ Management uses underwriting income (loss) as the main ~~measures~~measure of segment performance. Chubb calculates underwriting income (loss) by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. To calculate Segment income (loss), include Net investment income (loss), Other (income) expense, and Amortization expense of purchased intangibles. ~~For~~Certain items are presented in a different manner for segment reporting purposes than in the ~~North America Agricultural Insurance segment, management includes~~consolidated financial statements. These items are reconciled to the consolidated presentation in the Segment measure reclass column below. These items include:

•Losses and loss expenses include 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 ~~a component~~part of the results of our underwriting income (loss). For example, for the three months ended September 30, 2019, underwriting income in our North America Agricultural Insurance segment was $1 million. This amount includes $14 million of realized losses related to crop derivatives which are reported in Netoperations, and therefore realized gains (losses) from these derivatives are reclassified to losses and loss expenses.

•Policy benefits include gains and losses from fair value changes in separate account assets, as well as the ~~Corporate column below.~~

~~For the Life Insurance segment, management includes Net investment income~~offsetting movement in separate account liabilities. The gains and ~~(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. We view gains and losses from fair value changes in both separate account assets and liabilities as ~~components~~part of ~~Life Insurance~~the results of our underwriting operations, and therefore these gains and losses are reclassified to policy benefits.

•Net investment income includes investment income reclassified from Other (income) expense related to partially-owned investment companies (private equity partnerships) where our ownership interest is in excess of three percent. We view investment income from these equity-method private equity partnerships as net investment income.

The following tables present the Statement of Operations by segment:


For the Three Months Ended September 30, 2020 (in millions of U.S. dollars)	North America Commercial P&C Insurance		North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance		Global Reinsurance		Life Insurance		Corporate		Segment Measure Reclass		Chubb Consolidated



Net premiums written	$	3,778	$	1,285	$	986	$	2,238	$	181	$	610	$	0	$	0	$	9,078
Net premiums earned	3,456		1,231		971		2,337		171		599		0		0		8,765
Losses and loss expenses	2,444		961		845		1,192		154		183		55		1		5,835
Policy benefits	0		0		0		0		0		174		0		24		198
Policy acquisition costs	489		248		56		637		40		175		0		0		1,645
Administrative expenses	243		65		5		260		9		80		71		0		733
Underwriting income (loss)	280		(43)		65		248		(32)		(13)		(126)		(25)		354
Net investment income (loss)	510		64		7		130		85		95		(19)		(32)		840
Other (income) expense	7		1		0		1		0		(23)		(415)		(56)		(485)
Amortization expense of purchased intangibles	0		2		7		10		0		1		52		0		72
Segment income	$	783	$	18	$	65	$	367	$	53	$	104	$	218	$	(1)	$	1,607
Net realized gains (losses)													(142)		1		(141)
Interest expense													130		0		130

Income tax expense													142		0		142
Net income (loss)													$	(196)	$	0	$	1,194

3640

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

underwriting income. For example, for the three months ended September 30, 2019, Life Insurance underwriting income of $79 million includes Net investment income of $92 million and losses from fair value changes in separate account assets of $7 million. The losses from fair value changes in separate account assets are reported in Other (income) expense in the table below.


For the Three Months Ended September 30, 2019 (in millions of U.S. dollars)	North America Commercial P&C Insurance		North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance		Global Reinsurance		Life Insurance		Corporate		Segment Measure Reclass		Chubb Consolidated



Net premiums written	$	3,452	$	1,251	$	938	$	2,228	$	141	$	612	$	0	$	0	$	8,622
Net premiums earned	3,185		1,187		941		2,256		160		598		0		0		8,327
Losses and loss expenses	2,051		674		880		1,154		79		190		38		(14)		5,052
Policy benefits	0		0		0		0		0		165		0		(7)		158
Policy acquisition costs	459		240		56		630		42		176		0		0		1,603
Administrative expenses	256		72		4		257		9		80		74		0		752
Underwriting income (loss)	419		201		1		215		30		(13)		(112)		21		762
Net investment income (loss)	538		66		8		147		71		92		(28)		(21)		873
Other (income) expense	5		1		0		2		0		(17)		(34)		(14)		(57)
Amortization expense of purchased intangibles	0		3		7		11		0		1		54		0		76
Segment income (loss)	$	952	$	263	$	2	$	349	$	101	$	95	$	(160)	$	14	$	1,616
Net realized gains (losses) including OTTI													(141)		(14)		(155)
Interest expense													138		0		138
Chubb integration expenses													2		0		2
Income tax expense													230		0		230
Net income (loss)													$	(671)	$	0	$	1,091

~~The following tables present the Statement of Operations by segment:~~


For the Three Months Ended September 30, 2019 (in millions of U.S. dollars)	North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance				Life Insurance				Corporate				Chubb Consolidated



For the Nine Months Ended September 30, 2020 (in millions of U.S. dollars)																												For the Nine Months Ended September 30, 2020 (in millions of U.S. dollars)	North America Commercial P&C Insurance						North America Personal P&C Insurance			North America Agricultural Insurance						Overseas General Insurance						Global Reinsurance						Life Insurance					Corporate					Segment Measure Reclass				Chubb Consolidated

	Net premiums written	$	3,452		$	1,251		$	938				$	2,228						$				141										$							612						$	—						$	8,622					Net premiums written				$	10,750								$	3,719		$	1,604		$	6,857		$	606		$	1,874		$	0		$	0		$	25,410
	Net premiums earned	3,185			1,187			941					2,256							160													598										—						8,327					Net premiums earned					10,427										3,623						1,441			6,838			520			1,838			0			0			24,687
Losses and loss expenses	2,051			674			866					1,154				79																190										38					5,052				Losses and loss expenses		8,123						2,406					1,223					3,935				314			556			342			(2)			16,897
Policy benefits	—			—			—			—			—					158					—				158		Policy benefits		—						0			0						0						0						542					0					8				550
Policy acquisition costs	459			240			56			630			42				176				—				1,603			Policy acquisition costs	1,452						724			96							1,903						127						551					0					0				4,853
Administrative expenses	256			72			4			257			9				80				74				752			Administrative expenses	751						199			12						759						28						238					214					0				2,201
Underwriting income (loss)	419			201			15			215			30				(6		)		(112		)		762			Underwriting income (loss)	101						294			110						241						51						(49)					(556)					(6)				186
Net investment income (loss)	532			66			8			148			55				92				(28		)		873			Net investment income (loss)	1,544						195			23						396						214						285					(65)					(64)				2,528
Other (income) expense	(1		)	1			—			3			(16		)		(10		)		(34		)		(57		)	Other (income) expense	19						4			1						10						1						(52)					(283)					(72)				(372)
Amortization expense of purchased intangibles	—			3			7			11			—				1				54				76			Amortization expense of purchased intangibles	0						8			20						33						0						3					153					0				217
Segment income (loss)	$	952		$	263		$	16		$	349		$	101			$	95			$	(160	)		$	1,616		Segment income (loss)	$	1,626					$	477		$	112					$	594					$	264					$	285				$	(491)				$	2			$	2,869
Net realized gains (losses) including OTTI																					(155		)		(155		)
Net realized gains (losses)																												Net realized gains (losses)																																	(1,067)					(2)				(1,069)
Interest expense																					138				138			Interest expense																																	390					0				390
Chubb integration expenses																					2				2

Income tax expense																					230				230			Income tax expense																																	295					0				295
Net income (loss)																					$	(685	)		$	1,091		Net income (loss)																																	$	(2,243)				$	0			$	1,115

3741

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

For the Three Months Ended
September 30, 2018
(in millions of U.S. dollars)
North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance

Global
Reinsurance

Life Insurance
Corporate

Chubb
Consolidated

Net premiums written $ 3,199
$ 1,218
$ 884
$ 2,081
$ 164
$ 564
$ —
$ 8,110
Net premiums earned 3,019
1,167
857
2,157
157
551
—
7,908
Losses and loss expenses 1,881
860
719
1,114
86
195
13
4,868
Policy benefits —
—
—
—
—
127
—
127
Policy acquisition costs 458
236
49
582
40
139
—
1,504
Administrative expenses 251
69
2
252
10
77
58
719
Underwriting income (loss) 429

2

87

209

21

13
(71 ) 690
Net investment income (loss) 503
59
7
155
63
85
(49 ) 823
Other (income) expense (1 ) —
—
(7 ) (13 ) 20
(144 ) (145 )
Amortization expense of purchased intangibles —
4
7
8
—
—
64
83
Segment income (loss) $ 933

$ 57

$ 87

$ 363

$ 97

$ 78
$ (40 ) $ 1,575
Net realized gains (losses) including OTTI 19
19
Interest expense 164
164
Chubb integration expenses 16
16
Income tax expense 183
183
Net income (loss) $ (384 ) $ 1,231


For the Nine Months Ended September 30, 2019 (in millions of U.S. dollars)	North America Commercial P&C Insurance			North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance			Global Reinsurance				Life Insurance				Corporate			Chubb Consolidated			For the Nine Months Ended September 30, 2019 (in millions of U.S. dollars)		North America Commercial P&C Insurance					North America Personal P&C Insurance					North America Agricultural Insurance						Overseas General Insurance			Global Reinsurance			Life Insurance			Corporate			Segment Measure Reclass			Chubb Consolidated



Net premiums written	$	9,937		$	3,616	$	1,534			$	6,881			$				540												$	1,770				$	—		$	24,278		Net premiums written		$	9,937		$	3,616		$	1,534		$	6,881		$	540		$	1,770		$	0		$	0		$	24,278
Net premiums earned	9,660			3,509		1,374				6,595				487															1,730					—			23,355			Net premiums earned		9,660			3,509			1,374			6,595			487			1,730			0			0			23,355
Losses and loss expenses	6,238			2,178		1,155				3,385				245															581					83			13,865			Losses and loss expenses		6,238			2,178			1,163			3,385			245			581			83			(8)			13,865
Policy benefits	—			—		—		—			—					515				—			515			Policy benefits		0					0					0						0			0			495			0			20			515
Policy acquisition costs	1,377			708		90		1,855			127					454				—			4,611			Policy acquisition costs		1,377					708					90						1,855			127			454			0			0			4,611
Administrative expenses	755			211		9		771			26				237				211			2,220			Administrative expenses		755					211					9						771			26			237			211			0			2,220
Underwriting income (loss)	1,290			412		120		584			89				(57		)		(294		)	2,144			Underwriting income (loss)		1,290					412					112						584			89			(37)			(294)			(12)			2,144
Net investment income (loss)	1,563			194		22		443			166				278				(98		)	2,568			Net investment income (loss)		1,584					194					22						444			206			278			(98)			(62)			2,568
Other (income) expense	(4		)	2		1		10			(40		)		(57		)		(238		)	(326		)	Other (income) expense		17					2					1						11			0			(37)			(238)			(82)			(326)
Amortization expense of purchased intangibles	—			9		21		34			—				2				163			229			Amortization expense of purchased intangibles		0					9					21						34			0			2			163			0			229
Segment income (loss)	$	2,857		$	595	$	120	$	983		$	295			$	276			$	(317	)	$	4,809		Segment income (loss)		$	2,857				$	595				$	112					$	983		$	295		$	276		$	(317)		$	8		$	4,809
Net realized gains (losses) including OTTI																			(475		)	(475		)	Net realized gains (losses) including OTTI																											(467)			(8)			(475)
Interest expense																			418			418			Interest expense																											418			0			418
Chubb integration expenses																			9			9			Chubb integration expenses																											9			0			9
Income tax expense																			626			626			Income tax expense																											626			0			626
Net income (loss)																			$	(1,845	)	$	3,281		Net income (loss)																											$	(1,837)		$	0		$	3,281

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)~~

~~Chubb Limited and Subsidiaries~~

For the Nine Months Ended
September 30, 2018
(in millions of U.S. dollars) North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global
Reinsurance
Life Insurance
Corporate
Chubb
Consolidated

Net premiums written $ 9,342
$ 3,601
$ 1,380
$ 6,664
$ 554
$ 1,688
$ —
$ 23,229
Net premiums earned 9,325
3,463
1,251
6,425
492
1,643
—
22,599
Losses and loss expenses 5,873
2,474
955
3,263
236
584
72
13,457
Policy benefits —
—
—
—
—
428
—
428
Policy acquisition costs 1,378
701
74
1,754
120
405
—
4,432
Administrative expenses 735
202
—
757
29
235
200
2,158
Underwriting income (loss) 1,339

86

222

651

107

(9 )
(272 ) 2,124
Net investment income (loss) 1,516
177
20
461
192
253
(162 ) 2,457
Other (income) expense (20 ) 1
1
(12 ) (26 ) 24
(275 ) (307 )
Amortization expense of purchased intangibles —
10
21
29
—
1
192
253
Segment income (loss) $ 2,875

$ 252

$ 220

$ 1,095

$ 325

$ 219

$ (351 ) $ 4,635
Net realized gains (losses) including OTTI 35
35
Interest expense 488
488
Chubb integration expenses 39
39
Income tax expense 536
536
Net income (loss) $ (1,379 ) $ 3,607

Underwriting assets are reviewed in total by management for purposes of decision-making. Other than Unpaid losses and loss expenses, Reinsurance recoverables, Goodwill and Other intangible assets, Chubb does not allocate assets to its segments.

~~11.~~13. Earnings per share


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions of U.S. dollars, except share and per share data)	2020		2019		2020		2019
Numerator:
Net income	$	1,194	$	1,091	$	1,115	$	3,281
Denominator:
Denominator for basic earnings per share:
Weighted-average shares outstanding	451,794,046		454,975,143		451,683,093		456,987,560
Denominator for diluted earnings per share:
Share-based compensation plans	1,471,434		3,175,226		1,894,699		2,937,026
Weighted-average shares outstanding and assumed conversions	453,265,480		458,150,369		453,577,792		459,924,586
Basic earnings per share	$	2.64	$	2.40	$	2.47	$	7.18
Diluted earnings per share	$	2.63	$	2.38	$	2.46	$	7.13
Potential anti-dilutive share conversions	7,053,316		575,039		6,767,727		3,874,310

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars, except share and per share data) 2019
2018
2019
2018
Numerator:
Net income $ 1,091
$ 1,231
$ 3,281
$ 3,607
Denominator:
Denominator for basic earnings per share:
Weighted-average shares outstanding 454,975,143
462,981,973
456,987,560
464,644,013
Denominator for diluted earnings per share:
Share-based compensation plans 3,175,226
3,034,525
2,937,026
3,360,511
Weighted-average shares outstanding and assumed conversions 458,150,369
466,016,498
459,924,586
468,004,524
Basic earnings per share $ 2.40
$ 2.66
$ 7.18
$ 7.76
Diluted earnings per share $ 2.38
$ 2.64
$ 7.13
$ 7.71
Potential anti-dilutive share conversions 575,039
3,763,844
3,874,310
3,467,000

Excluded from weighted-average shares outstanding and assumed conversions is the impact of securities that would have been anti-dilutive during the respective periods.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

~~12.~~14. Information provided in connection with outstanding debt of subsidiaries

The following tables present condensed consolidating financial information at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, and for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 for Chubb Limited (Parent Guarantor) and Chubb INA Holdings Inc. (Subsidiary Issuer). The Subsidiary Issuer is an indirect 100 percent-owned subsidiary of the Parent Guarantor. The Parent Guarantor fully and unconditionally guarantees certain of the debt of the Subsidiary Issuer. Condensed consolidating financial information of the Parent Guarantor and Subsidiary Issuer are presented on the equity method of accounting. The revenues and expenses and cash flows of the subsidiaries of the Subsidiary Issuer are presented in the Other Chubb Limited Subsidiaries column on a combined basis.

Condensed Consolidating Balance Sheet at September 30, ~~2019~~2020


(in millions of U.S. dollars)	Chubb Limited (Parent Guarantor)		Chubb INA Holdings Inc. (Subsidiary Issuer)		Other Chubb Limited Subsidiaries		Consolidating Adjustments and Eliminations		Chubb Limited Consolidated
Assets
Investments	$	0	$	724	$	115,323	$	0	$	116,047
Cash (1)	31		0		1,799		(123)		1,707
Restricted cash	0		0		166		0		166
Insurance and reinsurance balances receivable	0		0		13,684		(3,096)		10,588
Reinsurance recoverable on losses and loss expenses	0		0		25,482		(9,812)		15,670
Reinsurance recoverable on policy benefits	0		0		298		(95)		203
Value of business acquired	0		0		286		0		286
Goodwill and other intangible assets	0		0		21,103		0		21,103
Investments in subsidiaries	53,715		54,125		0		(107,840)		0
Due from subsidiaries and affiliates, net	2,991		0		171		(3,162)		0
Other assets	8		391		23,459		(1,842)		22,016
Total assets	$	56,745	$	55,240	$	201,771	$	(125,970)	$	187,786
Liabilities
Unpaid losses and loss expenses	$	0	$	0	$	77,467	$	(9,562)	$	67,905
Unearned premiums	0		0		18,695		(1,193)		17,502
Future policy benefits	0		0		6,050		(95)		5,955
Due to subsidiaries and affiliates, net	0		3,162		0		(3,162)		0
Affiliated notional cash pooling programs (1)	0		123		0		(123)		0
Repurchase agreements	0		0		1,413		0		1,413
Short-term debt	0		1,300		0		0		1,300
Long-term debt	0		14,830		0		0		14,830
Trust preferred securities	0		308		0		0		308
Other liabilities	332		1,374		24,449		(3,995)		22,160
Total liabilities	332		21,097		128,074		(18,130)		131,373
Total shareholders’ equity	56,413		34,143		73,697		(107,840)		56,413
Total liabilities and shareholders’ equity	$	56,745	$	55,240	$	201,771	$	(125,970)	$	187,786

(1)Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various Chubb entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual Chubb accounts are translated daily into a single currency and pooled on a notional basis. Individual Chubb entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2020, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

(in millions of U.S. dollars)
Chubb
Limited
(Parent
Guarantor)

Chubb INA
Holdings Inc.
(Subsidiary
Issuer)

Other Chubb
Limited
Subsidiaries

Consolidating
Adjustments and Eliminations

Chubb Limited
Consolidated

Assets
Investments $ —
$ 227
$ 106,951
$ —
$ 107,178
Cash ⁽¹⁾
2
—
2,706
(1,230 ) 1,478
Restricted cash —
—
111
—
111
Insurance and reinsurance balances receivable —
—
12,519
(2,116 ) 10,403
Reinsurance recoverable on losses and loss expenses —
—
25,284
(9,757 ) 15,527
Reinsurance recoverable on policy benefits —
—
293
(94 ) 199
Value of business acquired —
—
274
—
274
Goodwill and other intangible assets —
—
21,378
—
21,378
Investments in subsidiaries 49,471
53,381
—
(102,852 ) —
Due from subsidiaries and affiliates, net 6,068
—
—
(6,068 ) —
Other assets 7
486
20,011
(1,904 ) 18,600
Total assets $ 55,548
$ 54,094
$ 189,527
$ (124,021 ) $ 175,148
Liabilities
Unpaid losses and loss expenses $ —
$ —
$ 72,389
$ (9,377 ) $ 63,012
Unearned premiums —
—
17,767
(1,196 ) 16,571
Future policy benefits —
—
5,832
(94 ) 5,738
Due to subsidiaries and affiliates, net —
5,953
115
(6,068 ) —
Affiliated notional cash pooling programs ⁽¹⁾
628
602
—
(1,230 ) —
Repurchase agreements —
—
1,416
—
1,416
Short-term debt —
—
10
—
10
Long-term debt —
13,285
—
—
13,285
Trust preferred securities —
308
—
—
308
Other liabilities 348
1,814
21,278
(3,204 ) 20,236
Total liabilities 976
21,962
118,807
(21,169 ) 120,576
Total shareholders’ equity 54,572
32,132
70,720
(102,852 ) 54,572
Total liabilities and shareholders’ equity $ 55,548
$ 54,094
$ 189,527
$ (124,021 ) $ 175,148

⁽¹⁾

Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various Chubb entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual Chubb accounts are translated daily into a single currency and pooled on a notional basis. Individual Chubb entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At ~~September 30, 2019, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.~~

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Condensed Consolidating Balance Sheet at December 31, ~~2018~~2019

(in millions of U.S. dollars)
Chubb
Limited
(Parent
Guarantor)

Chubb INA
Holdings Inc.
(Subsidiary
Issuer)

Other Chubb
Limited
Subsidiaries

Consolidating
Adjustments and Eliminations

Chubb Limited
Consolidated

Assets
Investments $ —
$ 214
$ 100,754
$ —
$ 100,968
Cash ⁽¹⁾
1
2
1,896
(652 ) 1,247
Restricted cash —
—
93
—
93
Insurance and reinsurance balances receivable —
—
11,861
(1,786 ) 10,075
Reinsurance recoverable on losses and loss expenses —
—
26,422
(10,429 ) 15,993
Reinsurance recoverable on policy benefits —
—
306
(104 ) 202
Value of business acquired —
—
295
—
295
Goodwill and other intangible assets —
—
21,414
—
21,414
Investments in subsidiaries 43,531
50,209
—
(93,740 ) —
Due from subsidiaries and affiliates, net 7,074
—
598
(7,672 ) —
Other assets 3
1,007
18,102
(1,628 ) 17,484
Total assets $ 50,609
$ 51,432
$ 181,741
$ (116,011 ) $ 167,771
Liabilities
Unpaid losses and loss expenses $ —
$ —
$ 72,857
$ (9,897 ) $ 62,960
Unearned premiums —
—
16,611
(1,079 ) 15,532
Future policy benefits —
—
5,610
(104 ) 5,506
Due to subsidiaries and affiliates, net —
7,672
—
(7,672 ) —
Affiliated notional cash pooling programs ⁽¹⁾
35
617
—
(652 ) —
Repurchase agreements —
—
1,418
—
1,418
Short-term debt —
500
9
—
509
Long-term debt —
12,086
1
—
12,087
Trust preferred securities —
308
—
—
308
Other liabilities 262
2,545
19,199
(2,867 ) 19,139
Total liabilities 297
23,728
115,705
(22,271 ) 117,459
Total shareholders’ equity 50,312
27,704
66,036
(93,740 ) 50,312
Total liabilities and shareholders’ equity $ 50,609
$ 51,432
$ 181,741
$ (116,011 ) $ 167,771

⁽¹⁾

Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various Chubb entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual Chubb accounts are translated daily into a single currency and pooled on a notional basis. Individual Chubb entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At ~~December 31, 2018, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.~~


(in millions of U.S. dollars)	Chubb Limited (Parent Guarantor)		Chubb INA Holdings Inc. (Subsidiary Issuer)		Other Chubb Limited Subsidiaries		Consolidating Adjustments and Eliminations		Chubb Limited Consolidated
Assets
Investments	$	0	$	1,013	$	108,221	$	0	$	109,234
Cash (1)	2		442		1,093		0		1,537
Restricted cash	0		0		109		0		109
Insurance and reinsurance balances receivable	0		0		12,920		(2,563)		10,357
Reinsurance recoverable on losses and loss expenses	0		0		24,780		(9,599)		15,181
Reinsurance recoverable on policy benefits	0		0		292		(95)		197
Value of business acquired	0		0		306		0		306
Goodwill and other intangible assets	0		0		21,359		0		21,359
Investments in subsidiaries	50,853		52,076		0		(102,929)		0
Due from subsidiaries and affiliates, net	4,776		0		0		(4,776)		0
Other assets	12		408		20,072		(1,829)		18,663
Total assets	$	55,643	$	53,939	$	189,152	$	(121,791)	$	176,943
Liabilities
Unpaid losses and loss expenses	$	0	$	0	$	71,916	$	(9,226)	$	62,690
Unearned premiums	0		0		17,978		(1,207)		16,771
Future policy benefits	0		0		5,909		(95)		5,814
Due to subsidiaries and affiliates, net	0		4,446		330		(4,776)		0

Repurchase agreements	0		0		1,416		0		1,416
Short-term debt	0		1,298		1		0		1,299
Long-term debt	0		13,559		0		0		13,559
Trust preferred securities	0		308		0		0		308
Other liabilities	312		1,649		21,352		(3,558)		19,755
Total liabilities	312		21,260		118,902		(18,862)		121,612
Total shareholders’ equity	55,331		32,679		70,250		(102,929)		55,331
Total liabilities and shareholders’ equity	$	55,643	$	53,939	$	189,152	$	(121,791)	$	176,943

(1)Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Refer to the 2019 Form 10-K for additional information.

4144

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)


For the Three Months Ended September 30, 2020	Chubb Limited (Parent Guarantor)		Chubb INA Holdings Inc. (Subsidiary Issuer)		Other Chubb Limited Subsidiaries		Consolidating Adjustments and Eliminations		Chubb Limited Consolidated
(in millions of U.S. dollars)
Net premiums written	$	0	$	0	$	9,078	$	0	$	9,078
Net premiums earned	0		0		8,765		0		8,765
Net investment income	0		1		839		0		840
Equity in earnings of subsidiaries	1,174		516		0		(1,690)		0
Net realized gains (losses)	3		(192)		48		0		(141)
Losses and loss expenses	0		0		5,835		0		5,835
Policy benefits	0		0		198		0		198
Policy acquisition costs and administrative expenses	21		(33)		2,390		0		2,378
Interest (income) expense	(34)		151		13		0		130
Other (income) expense	(10)		(2)		(473)		0		(485)
Amortization of purchased intangibles	0		0		72		0		72
Income tax expense (benefit)	6		(66)		202		0		142
Net income	$	1,194	$	275	$	1,415	$	(1,690)	$	1,194
Comprehensive income	$	1,952	$	812	$	2,180	$	(2,992)	$	1,952

Condensed Consolidating Statements of Operations and Comprehensive Income


For the Three Months Ended September 30, 2019	Chubb Limited (Parent Guarantor)		Chubb INA Holdings Inc. (Subsidiary Issuer)		Other Chubb Limited Subsidiaries		Consolidating Adjustments and Eliminations		Chubb Limited Consolidated
(in millions of U.S. dollars)
Net premiums written	$	0	$	0	$	8,622	$	0	$	8,622
Net premiums earned	0		0		8,327		0		8,327
Net investment income	1		(3)		875		0		873
Equity in earnings of subsidiaries	1,053		824		0		(1,877)		0
Net realized gains (losses) including OTTI	(4)		68		(219)		0		(155)
Losses and loss expenses	0		0		5,052		0		5,052
Policy benefits	0		0		158		0		158
Policy acquisition costs and administrative expenses	22		(5)		2,338		0		2,355
Interest (income) expense	(59)		171		26		0		138
Other (income) expense	(7)		(3)		(47)		0		(57)
Amortization of purchased intangibles	0		0		76		0		76
Chubb integration expenses	0		0		2		0		2
Income tax expense (benefit)	3		(33)		260		0		230
Net income	$	1,091	$	759	$	1,118	$	(1,877)	$	1,091
Comprehensive income	$	1,473	$	1,138	$	1,517	$	(2,655)	$	1,473

For the Three Months Ended September 30, 2019
Chubb
Limited
(Parent
Guarantor)

Chubb INA
Holdings Inc.
(Subsidiary
Issuer)

Other Chubb
Limited
Subsidiaries

Consolidating
Adjustments and Eliminations

Chubb
Limited
Consolidated

(in millions of U.S. dollars)
Net premiums written $ —
$ —
$ 8,622
$ —
$ 8,622
Net premiums earned —
—
8,327
—
8,327
Net investment income 1
(3 ) 875
—
873
Equity in earnings of subsidiaries 1,053
824
—
(1,877 ) —
Net realized gains (losses) including OTTI (4 ) 68
(219 ) —
(155 )
Losses and loss expenses —
—
5,052
—
5,052
Policy benefits —
—
158
—
158
Policy acquisition costs and administrative expenses 22
(5 ) 2,338
—
2,355
Interest (income) expense (59 ) 171
26
—
138
Other (income) expense (7 ) (3 ) (47 ) —
(57 )
Amortization of purchased intangibles —
—
76
—
76
Chubb integration expenses —
—
2
—
2
Income tax expense (benefit) 3
(33 ) 260
—
230
Net income $ 1,091
$ 759
$ 1,118
$ (1,877 ) $ 1,091
Comprehensive income $ 1,473
$ 1,138
$ 1,517
$ (2,655 ) $ 1,473

~~Condensed Consolidating Statements of Operations and Comprehensive Income~~

For the Three Months Ended September 30, 2018
Chubb
Limited
(Parent
Guarantor)

Chubb INA
Holdings Inc.
(Subsidiary
Issuer)

Other Chubb
Limited
Subsidiaries

Consolidating
Adjustments and Eliminations

Chubb
Limited
Consolidated

(in millions of U.S. dollars)
Net premiums written $ —
$ —
$ 8,110
$ —
$ 8,110
Net premiums earned —
—
7,908
—
7,908
Net investment income 2
3
818
—
823
Equity in earnings of subsidiaries 1,177
709
—
(1,886 ) —
Net realized gains (losses) including OTTI (1 ) 18
2
—
19
Losses and loss expenses —
—
4,868
—
4,868
Policy benefits —
—
127
—
127
Policy acquisition costs and administrative expenses 23
(90 ) 2,290
—
2,223
Interest (income) expense (75 ) 203
36
—
164
Other (income) expense (9 ) 12
(148 ) —
(145 )
Amortization of purchased intangibles —
—
83
—
83
Chubb integration expenses 3
1
12
—
16
Income tax expense (benefit) 5
(24 ) 202
—
183
Net income $ 1,231
$ 628
$ 1,258
$ (1,886 ) $ 1,231
Comprehensive income $ 592
$ 47
$ 640
$ (687 ) $ 592

4245

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Condensed Consolidating Statements of Operations and Comprehensive Income


For the Nine Months Ended September 30, 2019	Chubb Limited (Parent Guarantor)			Chubb INA Holdings Inc. (Subsidiary Issuer)				Other Chubb Limited Subsidiaries				Consolidating Adjustments and Eliminations			Chubb Limited Consolidated
For the Nine Months Ended September 30, 2020							For the Nine Months Ended September 30, 2020				Chubb Limited (Parent Guarantor)							Chubb INA Holdings Inc. (Subsidiary Issuer)					Other Chubb Limited Subsidiaries					Consolidating Adjustments and Eliminations					Chubb Limited Consolidated
(in millions of U.S. dollars)	Chubb Limited (Parent Guarantor)						Chubb INA Holdings Inc. (Subsidiary Issuer)							Other Chubb Limited Subsidiaries								Consolidating Adjustments and Eliminations					Chubb Limited Consolidated					(in millions of U.S. dollars)
Net premiums written										Net premiums written		$	0						$	0						$			25,410					$	0		$	25,410
Net premiums earned	—			—				23,355				—			23,355				Net premiums earned		0				0						24,687					0			24,687
Net investment income	3			(13		)		2,578				—			2,568			Net investment income		(2)				6						2,524					0			2,528
Equity in earnings of subsidiaries	3,147			2,345				—				(5,492		)	—			Equity in earnings of subsidiaries		1,064				838						0					(1,902)			0
Net realized gains (losses) including OTTI	1			34				(510		)		—			(475		)
Net realized gains (losses)																		Net realized gains (losses)		5				(271)						(803)					0			(1,069)
Losses and loss expenses	—			—				13,865				—			13,865			Losses and loss expenses		0				0						16,897					0			16,897
Policy benefits	—			—				515				—			515			Policy benefits		0				0						550					0			550
Policy acquisition costs and administrative expenses	64			(25		)		6,792				—			6,831			Policy acquisition costs and administrative expenses		66				(101)						7,089					0			7,054
Interest (income) expense	(187		)	536				69				—			418			Interest (income) expense		(103)				448						45					0			390
Other (income) expense	(19		)	1				(308		)		—			(326		)	Other (income) expense		(27)				1						(346)					0			(372)
Amortization of purchased intangibles	—			—				229				—			229			Amortization of purchased intangibles		0				0						217					0			217
Chubb integration expenses	—			2				7				—			9
Income tax expense (benefit)	12			(120		)		734				—			626			Income tax expense (benefit)		16				(125)						404					0			295
Net income	$	3,281		$	1,972			$	3,520			$	(5,492	)	$	3,281		Net income		$	1,115			$	350					$	1,552				$	(1,902)		$	1,115
Comprehensive income	$	6,250		$	4,476			$	6,486			$	(10,962	)	$	6,250		Comprehensive income		$	2,352			$	1,484					$	2,840				$	(4,324)		$	2,352

Condensed Consolidating Statements of Operations and Comprehensive Income


For the Nine Months Ended September 30, 2018	Chubb Limited (Parent Guarantor)			Chubb INA Holdings Inc. (Subsidiary Issuer)				Other Chubb Limited Subsidiaries				Consolidating Adjustments and Eliminations			Chubb Limited Consolidated
For the Nine Months Ended September 30, 2019							For the Nine Months Ended September 30, 2019				Chubb Limited (Parent Guarantor)							Chubb INA Holdings Inc. (Subsidiary Issuer)					Other Chubb Limited Subsidiaries					Consolidating Adjustments and Eliminations					Chubb Limited Consolidated
(in millions of U.S. dollars)	Chubb Limited (Parent Guarantor)						Chubb INA Holdings Inc. (Subsidiary Issuer)							Other Chubb Limited Subsidiaries								Consolidating Adjustments and Eliminations					Chubb Limited Consolidated					(in millions of U.S. dollars)
Net premiums written										Net premiums written		$	0						$	0						$			24,278					$	0		$	24,278
Net premiums earned	—			—				22,599				—			22,599				Net premiums earned		0				0						23,355					0			23,355
Net investment income	5			12				2,440				—			2,457			Net investment income		3				(13)						2,578					0			2,568
Equity in earnings of subsidiaries	3,440			2,048				—				(5,488		)	—			Equity in earnings of subsidiaries		3,147				2,345						0					(5,492)			0
Net realized gains (losses) including OTTI	(1		)	67				(31		)		—			35			Net realized gains (losses) including OTTI		1				34						(510)					0			(475)
Losses and loss expenses	—			—				13,457				—			13,457			Losses and loss expenses		0				0						13,865					0			13,865
Policy benefits	—			—				428				—			428			Policy benefits		0				0						515					0			515
Policy acquisition costs and administrative expenses	64			(49		)		6,575				—			6,590			Policy acquisition costs and administrative expenses		64				(25)						6,792					0			6,831
Interest (income) expense	(231		)	616				103				—			488			Interest (income) expense		(187)				536						69					0			418
Other (income) expense	(18		)	28				(317		)		—			(307		)	Other (income) expense		(19)				1						(308)					0			(326)
Amortization of purchased intangibles	—			—				253				—			253			Amortization of purchased intangibles		0				0						229					0			229
Chubb integration expenses	7			2				30				—			39			Chubb integration expenses		0				2						7					0			9
Income tax expense (benefit)	15			(119		)		640				—			536			Income tax expense (benefit)		12				(120)						734					0			626
Net income	$	3,607		$	1,649			$	3,839			$	(5,488	)	$	3,607		Net income		$	3,281			$	1,972					$	3,520				$	(5,492)		$	3,281
Comprehensive income (loss)	$	1,322		$	(199	)		$	1,606			$	(1,407	)	$	1,322
Comprehensive income																		Comprehensive income		$	6,250			$	4,476					$	6,486				$	(10,962)		$	6,250

4346

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Condensed Consolidating Statement of Cash Flows


Nine Months Ended September 30, 2020	Chubb Limited (Parent Guarantor)		Chubb INA Holdings Inc. (Subsidiary Issuer)		Other Chubb Limited Subsidiaries		Consolidating Adjustments and Eliminations		Chubb Limited Consolidated
(in millions of U.S. dollars)
Net cash flows from (used for) operating activities	$	980	$	(363)	$	7,714	$	(1,090)	$	7,241
Cash flows from investing activities
Purchases of fixed maturities available for sale	0		(38)		(20,755)		0		(20,793)
Purchases of fixed maturities held to maturity	0		0		(42)		0		(42)
Purchases of equity securities	0		0		(3,622)		0		(3,622)
Sales of fixed maturities available for sale	0		9		9,528		0		9,537

Sales of equity securities	0		0		1,526		0		1,526
Maturities and redemptions of fixed maturities available for sale	0		35		8,674		0		8,709
Maturities and redemptions of fixed maturities held to maturity	0		0		841		0		841
Net change in short-term investments	0		256		(690)		0		(434)
Net derivative instruments settlements	0		66		(140)		0		(74)
Private equity contributions	0		0		(1,056)		0		(1,056)
Private equity distributions	0		0		588		0		588
Net deposit paid on share acquisition	0		0		(503)		0		(503)
Payment for Huatai Group interest	—		—		(1,054)		—		(1,054)
Capital contribution	(1,200)		0		0		1,200		0
Other	(2)		(3)		(347)		0		(352)
Net cash flows from (used for) investing activities	(1,202)		325		(7,052)		1,200		(6,729)
Cash flows from financing activities
Dividends paid on Common Shares	(1,035)		0		0		0		(1,035)
Common Shares repurchased	(333)		0		0		0		(333)
Proceeds from issuance of long-term debt	0		988		0		0		988

Proceeds from issuance of repurchase agreements	0		0		1,402		0		1,402
Repayment of repurchase agreements	0		0		(1,402)		0		(1,402)
Proceeds from share-based compensation plans	0		0		77		0		77
Dividend to parent company	0		0		(1,090)		1,090		0
Advances (to) from affiliates	1,621		(1,511)		(110)		0		0
Capital contribution	0		0		1,200		(1,200)		0
Net proceeds from (payments to) affiliated notional cash pooling programs (1)	0		123		0		(123)		0
Policyholder contract deposits	0		0		322		0		322
Policyholder contract withdrawals	0		0		(253)		0		(253)

Net cash flows from (used for) financing activities	253		(400)		146		(233)		(234)
Effect of foreign currency rate changes on cash and restricted cash	(2)		(4)		(45)		0		(51)
Net increase (decrease) in cash and restricted cash	29		(442)		763		(123)		227
Cash and restricted cash – beginning of period (1)	2		442		1,202		0		1,646
Cash and restricted cash – end of period (1)	$	31	$	0	$	1,965	$	(123)	$	1,873

Nine Months Ended September 30, 2019
Chubb
Limited
(Parent
Guarantor)

Chubb INA
Holdings Inc.
(Subsidiary
Issuer)

Other Chubb
Limited
Subsidiaries

Consolidating
Adjustments and Eliminations

Chubb
Limited
Consolidated

(in millions of U.S. dollars)
Net cash flows from operating activities $ 421
$ 1,118
$ 5,234
$ (1,860 ) $ 4,913
Cash flows from investing activities
Purchases of fixed maturities available for sale —
(16 ) (19,762 ) —
(19,778 )
Purchases of fixed maturities held to maturity —
—
(143 ) —
(143 )
Purchases of equity securities —
—
(466 ) —
(466 )
Sales of fixed maturities available for sale —
1
10,435
—
10,436
Sales of equity securities —
—
577
—
577
Maturities and redemptions of fixed maturities available for sale —
18
6,372
—
6,390
Maturities and redemptions of fixed maturities held to maturity —
—
814
—
814
Net change in short-term investments —
(5 ) 207
—
202
Net derivative instruments settlements —
(55 ) (592 ) —
(647 )
Private equity contributions —
—
(1,093 ) —
(1,093 )
Private equity distributions —
—
973
—
973
Capital contribution (1,000 ) (110 ) —
1,110
—
Other —
(10 ) (816 ) —
(826 )
Net cash flows used for investing activities (1,000 ) (177 ) (3,494 ) 1,110
(3,561 )
Cash flows from financing activities
Dividends paid on Common Shares (1,014 ) —
—
—
(1,014 )
Common Shares repurchased —
—
(1,203 ) —
(1,203 )
Proceeds from issuance of long-term debt —
1,286
—
—
1,286
Repayment of long-term debt —
(500 ) (1 ) —
(501 )
Proceeds from issuance of repurchase agreements —
—
2,394
—
2,394
Repayment of repurchase agreements —
—
(2,396 ) —
(2,396 )
Proceeds from share-based compensation plans —
—
155
—
155
Dividend to parent company —
—
(1,860 ) 1,860
—
Advances (to) from affiliates 996
(1,715 ) 719
—
—
Capital contribution —
—
1,110
(1,110 ) —
Net proceeds from (payments to) affiliated notional cash pooling programs ⁽¹⁾
593
(15 ) —
(578 ) —
Policyholder contract deposits —
—
376
—
376
Policyholder contract withdrawals —
—
(221 ) —
(221 )
Net cash flows from (used for) financing activities 575
(944 ) (927 ) 172
(1,124 )
Effect of foreign currency rate changes on cash and restricted cash 5
1
15
—
21
Net increase (decrease) in cash and restricted cash 1
(2 ) 828
(578 ) 249
Cash and restricted cash – beginning of period ⁽¹⁾
1
2
1,989
(652 ) 1,340
Cash and restricted cash – end of period ⁽¹⁾
$ 2
$ —
$ 2,817
$ (1,230 ) $ 1,589

⁽¹⁾

Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various Chubb entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual Chubb accounts are translated daily into a single currency and pooled on a notional basis. Individual Chubb entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2020 and December 31, 2019, ~~and~~ ~~December 31, 2018~~, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

4447

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – continued (Unaudited)

Chubb Limited and Subsidiaries

Condensed Consolidating Statement of Cash Flows


Nine Months Ended September 30, 2019	Chubb Limited (Parent Guarantor)		Chubb INA Holdings Inc. (Subsidiary Issuer)		Other Chubb Limited Subsidiaries		Consolidating Adjustments and Eliminations		Chubb Limited Consolidated
(in millions of U.S. dollars)
Net cash flows from operating activities	$	421	$	1,118	$	5,234	$	(1,860)	$	4,913
Cash flows from investing activities
Purchases of fixed maturities available for sale	0		(16)		(19,762)		0		(19,778)
Purchases of fixed maturities held to maturity	0		0		(143)		0		(143)
Purchases of equity securities	0		0		(466)		0		(466)
Sales of fixed maturities available for sale	0		1		10,435		0		10,436
Sales of equity securities	0		0		577		0		577
Maturities and redemptions of fixed maturities available for sale	0		18		6,372		0		6,390
Maturities and redemptions of fixed maturities held to maturity	0		0		814		0		814
Net change in short-term investments	0		(5)		207		0		202
Net derivative instruments settlements	0		(55)		(592)		0		(647)
Private equity contributions	0		0		(1,093)		0		(1,093)
Private equity distributions	0		0		973		0		973
Payment for Huatai Group interest	0		0		(329)		0		(329)
Capital contribution	(1,000)		(110)		0		1,110		0
Other	0		(10)		(487)		0		(497)
Net cash flows used for investing activities	(1,000)		(177)		(3,494)		1,110		(3,561)
Cash flows from financing activities
Dividends paid on Common Shares	(1,014)		0		0		0		(1,014)
Common Shares repurchased	0		0		(1,203)		0		(1,203)
Proceeds from issuance of long-term debt	0		1,286		0		0		1,286
Repayment of long-term debt	0		(500)		(1)		0		(501)
Proceeds from issuance of repurchase agreements	0		0		2,394		0		2,394
Repayment of repurchase agreements	0		0		(2,396)		0		(2,396)
Proceeds from share-based compensation plans	0		0		155		0		155
Dividend to parent company	0		0		(1,860)		1,860		0
Advances (to) from affiliates	996		(1,715)		719		0		0
Capital contribution	0		0		1,110		(1,110)		0
Net proceeds from (payments to) affiliated notional cash pooling programs (1)	593		(15)		0		(578)		0
Policyholder contract deposits	0		0		376		0		376
Policyholder contract withdrawals	0		0		(221)		0		(221)

Net cash flows from (used for) financing activities	575		(944)		(927)		172		(1,124)
Effect of foreign currency rate changes on cash and restricted cash	5		1		15		0		21
Net increase (decrease) in cash and restricted cash	1		(2)		828		(578)		249
Cash and restricted cash – beginning of period (1)	1		2		1,989		(652)		1,340
Cash and restricted cash – end of period (1)	$	2	$	0	$	2,817	$	(1,230)	$	1,589

Nine Months Ended September 30, 2018
Chubb
Limited
(Parent
Guarantor)

Chubb INA
Holdings Inc.
(Subsidiary
Issuer)

Other Chubb
Limited
Subsidiaries

Consolidating
Adjustments and Eliminations

Chubb
Limited
Consolidated

(in millions of U.S. dollars)
Net cash flows from operating activities $ 237
$ 4,701
$ 3,797
$ (4,838 ) $ 3,897
Cash flows from investing activities
Purchases of fixed maturities available for sale —
(30 ) (16,758 ) —
(16,788 )
Purchases of fixed maturities held to maturity —
—
(380 ) —
(380 )
Purchases of equity securities —
—
(148 ) —
(148 )
Sales of fixed maturities available for sale —
6
9,035
—
9,041
Sales of equity securities —
—
247
—
247
Maturities and redemptions of fixed maturities
available for sale
—
15
5,467
—
5,482
Maturities and redemptions of fixed maturities held to maturity —
—
1,001
—
1,001
Net change in short-term investments —
6
58
—
64
Net derivative instruments settlements —
(7 ) (39 ) —
(46 )
Private equity contributions —
—
(1,112 ) —
(1,112 )
Private equity distributions —
—
743
—
743
Capital contribution (1,125 ) (3,500 ) —
4,625
—
Other —
(18 ) (213 ) —
(231 )
Net cash flows used for investing activities (1,125 ) (3,528 ) (2,099 ) 4,625
(2,127 )
Cash flows from financing activities
Dividends paid on Common Shares (1,001 ) —
—
—
(1,001 )
Common Shares repurchased —
—
(732 ) —
(732 )
Proceeds from issuance of long-term debt —
2,171
—
—
2,171
Repayment of long-term debt —
(2,000 ) (1 ) —
(2,001 )
Proceeds from issuance of repurchase agreements —
—
1,572
—
1,572
Repayment of repurchase agreements —
—
(1,566 ) —
(1,566 )
Proceeds from share-based compensation plans —
—
86
—
86
Dividend to parent company —
—
(4,838 ) 4,838
—
Advances (to) from affiliates 1,722
(1,310 ) (412 ) —
—
Capital contribution —
—
4,625
(4,625 ) —
Net proceeds from affiliated notional cash pooling programs ⁽¹⁾
165
(34 ) —
(131 ) —
Policyholder contract deposits —
—
269
—
269
Policyholder contract withdrawals —
—
(222 ) —
(222 )
Net cash flows from (used for) financing activities 886
(1,173 ) (1,219 ) 82
(1,424 )
Effect of foreign currency rate changes on cash and restricted cash (1 ) —
(39 ) —
(40 )
Net increase (decrease) in cash and restricted cash (3 ) —
440
(131 ) 306
Cash and restricted cash – beginning of period ⁽¹⁾
3
1
962
(115 ) 851
Cash and restricted cash – end of period ⁽¹⁾
$ —
$ 1
$ 1,402
$ (246 ) $ 1,157
(1)Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various Chubb entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual Chubb accounts are translated daily into a single currency and pooled on a notional basis. Individual Chubb entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At September 30, 2019 and December 31, 2018, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.

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⁽¹⁾			Chubb maintains two notional multicurrency cash pools (Pools) with a third-party bank. Various Chubb entities participate in one or the other of the Pools, pursuant to which credit and debit balances in individual Chubb accounts are translated daily into a single currency and pooled on a notional basis. Individual Chubb entities are permitted to overdraw on their individual accounts provided the overall Pool balances do not fall below zero. At ~~September 30, 2018~~ ~~and~~ ~~December 31, 2017, the cash balance of one or more entities was negative; however, the overall Pool balances were positive.~~

~~Table of Contents~~

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our results of operations, financial condition, and liquidity and capital resources as of and for the three and nine months ended September 30, ~~2019.~~2020.

All comparisons in this discussion are to the corresponding prior year period unless otherwise indicated. All dollar amounts are rounded. However, percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ.

Our results of operations and cash flows for any interim period are not necessarily indicative of our results for the full year. This discussion should be read in conjunction with our consolidated financial statements and related notes and our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2018 (2018~~2019 (2019 Form 10-K).

Other Information

We routinely post important information for investors on our website (investors.chubb.com). We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Securities and Exchange Commission (SEC) Regulation FD (Fair Disclosure). Accordingly, investors should monitor the Investor Information portion of our website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this report.


MD&A Index		Page
Forward-Looking Statements		50
Overview		52
Financial Highlights		52
Consolidated Operating Results		53

~~MD&A Index~~		~~Page~~
~~Forward-Looking Statements~~Segment Operating Results	4759
~~Overview~~Net Realized and Unrealized Gains (Losses)		4971
~~Financial Highlights~~		49
~~Consolidated Operating Results~~	50
~~Segment Operating Results~~	54
Effective Income Tax Rate	6772
Non-GAAP Reconciliation		6773
Other Income and Expense		7378
Amortization of Purchased Intangibles and Other Amortization		7378
~~Interest Expense~~Net Investment Income		7580

Investments		80
~~Net Investment Income~~Critical Accounting Estimates		7684
~~Net Realized and Unrealized Gains (Losses)~~		76
~~Investments~~		78
~~Critical Accounting Estimates~~	82
~~Reinsurance Recoverable on Ceded Reinsurance~~	82
Unpaid Losses and Loss Expenses	8284
Asbestos and Environmental (A&E)		8384
Fair Value Measurements		8384
Catastrophe Management		8385
Natural Catastrophe Property Reinsurance Program		8486

Liquidity		87
~~Crop Insurance~~Capital Resources		8488
~~Liquidity~~	86
~~Capital Resources~~	87

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Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Any written or oral statements made by us or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks, uncertainties, and other factors that could, should potential events occur, cause actual results to differ materially from such statements. These risks, uncertainties, and other factors, which are described in more detail elsewhere herein and in other documents we file with the U.S. Securities and Exchange Commission (SEC), include but are not limited to:

•losses arising out of natural or man-made catastrophes such as hurricanes, typhoons, earthquakes, floods, climate change (including effects on weather patterns; greenhouse gases; sea, land and air temperatures; sea levels; and rain and snow), nuclear accidents, pandemics (including COVID-19), or terrorism which could be affected by:

•the number of insureds and ceding companies affected;

•the amount and timing of losses actually incurred and reported by insureds;

•the impact of these losses on our reinsurers and the amount and timing of reinsurance recoverable actually received;

•the cost of building materials and labor to reconstruct properties or to perform environmental remediation following a catastrophic event; and

•complex coverage and regulatory issues such as whether losses occurred from storm surge or flooding and related lawsuits;

•actions that rating agencies may take from time to time, such as financial strength or credit ratings downgrades or placing these ratings on credit watch negative or the equivalent;

•the ability to collect reinsurance recoverable, credit developments of reinsurers, and any delays with respect thereto and changes in the cost, quality, or availability of reinsurance;

•actual loss experience from insured or reinsured events and the timing of claim payments;

•actual claims may exceed our best estimate of ultimate insurance losses incurred through September 30, 2020 resulting directly from the COVID-19 pandemic and consequent economic crises; our COVID-19 related reserve at September 30, 2020 could change including as a result of, among other things, the impact of legislative or regulatory actions taken in response to COVID-19;

•the continued impact of COVID-19 and related risks, including from shelter-in-place orders, unemployment, and the financial market volatility, could continue to adversely impact our results, including premiums written and investment income;

•the uncertainties of the loss-reserving and claims-settlement processes, including the difficulties associated with assessing environmental damage and asbestos-related latent injuries, the impact of aggregate-policy-coverage limits, the impact of bankruptcy protection sought by various asbestos producers and other related businesses, and the timing of loss payments;

•changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available for sale fixed maturity investments before their anticipated recovery;

•infection rates and severity of pandemics, including COVID-19, and their effects on our business operations and claims ~~activity;~~activity, and any adverse impact to our insureds, brokers, agents, and employees;

•developments in global financial markets, including changes in interest rates, stock markets, and other financial markets, increased government involvement or intervention in the financial services industry, the cost and availability of financing, and foreign currency exchange rate fluctuations (which we refer to in this report as foreign exchange and foreign currency exchange), which could affect our statement of operations, investment portfolio, financial condition, and financing plans;

•general economic and business conditions resulting from volatility in the stock and credit markets and the depth and duration of potential recession;

•global political conditions, the occurrence of any terrorist attacks, including any nuclear, radiological, biological, or chemical events, or the outbreak and effects of war, and possible business disruption or economic contraction that may result from such events;

•the potential impact of the United Kingdom’s vote to withdraw from the European Union, including political, regulatory, social, and economic uncertainty and market and exchange rate volatility;

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•judicial decisions and rulings, new theories of liability, legal tactics, and settlement terms;

•the effects of public company bankruptcies and/or accounting restatements, as well as disclosures by and investigations of public companies relating to possible accounting irregularities, and other corporate governance issues, including the effects of such events on:

•the capital markets;

•the markets for directors and officers (D&O) and errors and omissions (E&O) insurance; and

•claims and litigation arising out of such disclosures or practices by other companies;

~~Table of Contents~~•

uncertainties relating to governmental, legislative and regulatory policies, developments, actions, investigations, and treaties, which, among other things, could subject us to insurance regulation or taxation in additional jurisdictions or affect our current operations;

•the effects of data privacy or cyber laws or regulation on our current or future business;

•the actual amount of new and renewal business, market acceptance of our products, and risks associated with the introduction of new products and services and entering new markets, including regulatory constraints on exit strategies;

•the competitive environment in which we operate, including trends in pricing or in policy terms and conditions, which may differ from our projections and changes in market conditions that could render our business strategies ineffective or obsolete;

•acquisitions made by us performing differently than expected, our failure to realize anticipated expense-related efficiencies or growth from acquisitions, the impact of acquisitions on our pre-existing organization, or announced acquisitions not closing;

•risks and uncertainties relating to our planned purchases of additional interests in Huatai Insurance Group Company Limited (Huatai Group), including our ability to receive Chinese insurance regulatory approval and complete the purchases;

•risks associated with being a Swiss corporation, including reduced flexibility with respect to certain aspects of capital management and the potential for additional regulatory burdens;

•the potential impact from government-mandated insurance coverage for acts of terrorism;

•the availability of borrowings and letters of credit under our credit facilities;

•the adequacy of collateral supporting funded high deductible programs;

•changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers;

•material differences between actual and expected assessments for guaranty funds and mandatory pooling arrangements;

•the effects of investigations into market practices in the property and casualty (P&C) industry;

•changing rates of inflation and other economic conditions, for example, recession;

•the amount of dividends received from subsidiaries;

•loss of the services of any of our executive officers without suitable replacements being recruited in a reasonable time frame;

•the ability of our technology resources, including information systems and security, to perform as anticipated such as with respect to preventing material information technology failures or third-party infiltrations or hacking resulting in consequences adverse to Chubb or its customers or partners;

•the ability of our company to increase use of data analytics and technology as part of our business strategy and adapt to new technologies;and

•management’s response to these factors and actual events (including, but not limited to, those described above).

The words “believe,” “anticipate,” “estimate,” “project,” “should,” “plan,” “expect,” “intend,” “hope,” “feel,” “foresee,” “will likely result,” or “will continue,” and variations thereof and similar expressions, identify forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future events or otherwise.

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Overview

Chubb Limited is the Swiss-incorporated holding company of the Chubb Group of Companies. Chubb Limited, which is headquartered in Zurich, Switzerland, and its direct and indirect subsidiaries (collectively, the Chubb Group of Companies, Chubb, we, us, or our) are a global insurance and reinsurance organization, serving the needs of a diverse group of clients worldwide. At September 30, ~~2019,~~2020, we had total assets of ~~$175~~$188 billion and shareholders’ equity of ~~$55~~$56 billion. Chubb was incorporated in 1985 at which time it opened its first business office in Bermuda and continues to maintain operations in Bermuda. We operate through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. For more information on our segments refer to “Segment Information” under Item 1 in our ~~2018~~2019 Form 10-K.



Financial Highlights for the Three Months Ended September 30, ~~2019~~2020

•Net income was ~~$1,091~~$1,194 million compared with ~~$1,231~~$1,091 million in the prior year period.

~~Consolidated and P&C~~

•Pre-tax net ~~premiums written were $8.6 billion and $8.0 billion, respectively, up 6.3 percent and 6.2 percent, respectively, or 7.3 percent and 7.2 percent, respectively, on a constant-dollar basis.~~

Combined ratio was 90.0 percent compared with 90.8 percent in the prior year period. P&C combined ratio was 90.2 percent compared with 90.9 percent in the prior year period. P&C current accident year combined ratio excluding catastrophe losses was 89.5 percent compared with 88.2 percent in the prior year period.

~~Total pre-tax and after-tax~~ catastrophe losses were ~~$232~~$925 million, ~~(3.0 percentage points of~~primarily attributable to severe weather-related events globally and wildfires. There were no changes to the combined ratio) and $191 million, respectively, compared with $450 million (6.1 percentage points of the combined ratio) and $372 million, respectively, in the prior year period. In addition, North America Agricultural Insurance underwriting income of $1 million compared with $79 million in the prior year period was adversely impacted by weather conditions in our crop insurance business.previously reported aggregate COVID-19 losses from June 30, 2020.

•Total pre-tax and after-tax favorable prior period development were $146 million (1.8 percentage points of the combined ratio) and $126 million, respectively, compared with prior period development of $167 million (2.3 percentage points of the combined ratio) and $112 million, respectively, ~~compared with $243 million (3.4 percentage points of the combined ratio) and $180 million, respectively,~~ in the prior year period.

•Consolidated net premiums written were $9.1 billion, up 5.3 percent, or 6.0 percent in constant dollars. P&C net premiums written were $8.5 billion, up 5.7 percent, or up 6.4 percent in constant dollars. On a constant-dollar basis, P&C growth comprises 10.8 percent positive growth globally in commercial P&C lines and 3.3 percent negative growth in consumer lines, which includes A&H, travel and personal lines.

•The P&C combined ratio was 95.2 percent compared with 90.2 percent in the prior year, including catastrophe losses of 11.3 percentage points compared with 3.0 percentage points prior year. The P&C current accident year combined ratio excluding catastrophe losses was 85.7 percent compared with 89.5 percent prior year.

•Operating cash flow was ~~$2,205~~$3,544 million compared with ~~$1,700~~$2,205 million in the prior year period. Refer to the Liquidity section for additional information on our cash flows.

~~Net investment income was $873 million compared with $823 million in the prior year period.~~

~~Share repurchases totaled $478 million, or approximately 3.1 million shares, during the quarter, and $1.2 billion, or approximately 8.4 million shares, through September 30, 2019.~~

4952

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Consolidated Operating Results – Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019


	Three Months Ended								Nine Months Ended									Three Months Ended						Nine Months Ended
	September 30						% Change		September 30						% Change			September 30				% Change		September 30				% Change
(in millions of U.S. dollars, except for percentages)	2019			2018			Q-19 vs. Q-18		2019			2018			YTD-19 vs. YTD-18		(in millions of U.S. dollars, except for percentages)	2020		2019		Q-20 vs. Q-19		2020		2019		YTD-20 vs. YTD-19
Net premiums written ⁽¹⁾	$	8,622		$	8,110		6.3	%	$	24,278		$	23,229		4.5	%
Net premiums earned ⁽¹⁾	8,327			7,908			5.3	%	23,355			22,599			3.3	%
Net premiums written																	Net premiums written	$	9,078	$	8,622	5.3	%	$	25,410	$	24,278	4.7	%
Net premiums earned																	Net premiums earned	8,765		8,327		5.3	%	24,687		23,355		5.7	%
Net investment income	873			823			6.0	%	2,568			2,457			4.5	%	Net investment income	840		873		(3.8)	%	2,528		2,568		(1.6)	%
Net realized gains (losses)	(155		)	19			NM		(475		)	35			NM		Net realized gains (losses)	(141)		(155)		(8.8)	%	(1,069)		(475)		125.1	%
Total revenues	9,045			8,750			3.4	%	25,448			25,091			1.4	%	Total revenues	9,464		9,045		4.6	%	26,146		25,448		2.7	%
Losses and loss expenses	5,052			4,868			3.8	%	13,865			13,457			3.0	%	Losses and loss expenses	5,835		5,052		15.5	%	16,897		13,865		21.9	%
Policy benefits	158			127			23.7	%	515			428			20.2	%	Policy benefits	198		158		25.7	%	550		515		6.9	%
Policy acquisition costs	1,603			1,504			6.7	%	4,611			4,432			4.1	%	Policy acquisition costs	1,645		1,603		2.6	%	4,853		4,611		5.2	%
Administrative expenses	752			719			4.7	%	2,220			2,158			2.9	%	Administrative expenses	733		752		(2.6)	%	2,201		2,220		(0.9)	%
Interest expense	138			164			(16.1	)%	418			488			(14.5	)%	Interest expense	130		138		(5.5)	%	390		418		(6.5)	%
Other (income) expense	(57		)	(145		)	(61.0	)%	(326		)	(307		)	6.0	%	Other (income) expense	(485)		(57)		NM		(372)		(326)		14.2	%
Amortization of purchased intangibles	76			83			(9.3	)%	229			253			(9.7	)%	Amortization of purchased intangibles	72		76		(4.4)	%	217		229		(5.0)	%
Chubb integration expenses	2			16			(89.9	)%	9			39			(76.9	)%	Chubb integration expenses	—		2		NM		—		9		NM
Total expenses	7,724			7,336			5.3	%	21,541			20,948			2.8	%	Total expenses	8,128		7,724		5.2	%	24,736		21,541		14.8	%
Income before income tax	1,321			1,414			(6.6	)%	3,907			4,143			(5.7	)%	Income before income tax	1,336		1,321		1.2	%	1,410		3,907		(63.9)	%
Income tax expense	230			183			25.8	%	626			536			16.8	%	Income tax expense	142		230		(38.0)	%	295		626		(52.8)	%
Net income	$	1,091		$	1,231		(11.4	)%	$	3,281		$	3,607		(9.1	)%	Net income	$	1,194	$	1,091	9.4	%	$	1,115	$	3,281	(66.0)	%
Net premiums written - constant dollars (1)																	Net premiums written - constant dollars (1)					6.0	%					5.6	%

NM – not meaningful

⁽¹⁾

(1) On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.

On a constant-dollar basis for the three and nine months ended September 30, 2019, net premiums written increased $589 million, or 7.3 percent, and $1,409 million, or 6.2 percent, respectively, and net premiums earned increased $495 million, or 6.3 percent, and $1,115 million, or 5.0 percent, respectively. Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.

Net Premiums Written

Net premiums written reflect the premiums we retain after purchasing reinsurance protection. For the three and nine months ended September 30, ~~2019~~2020, consolidated net premiums written increased $456 million and $1,132 million, or $512 million and ~~$1,049~~$1,356 million, respectively, on a constant-dollar basis reflecting growth across all segments. The adverse impact of COVID-19 partially offset growth in 2020 due to economic contraction and market limitations resulting in lower exposures in commercial P&C and in personal lines, primarily in personal automobile, and a decrease in global A&H lines due to less travel volume.

•Net premiums written in our North America Commercial P&C Insurance segment increased $326 million, or ~~$589~~9.4 percent, and $813 million, or 8.2 percent, for the three and nine months ended September 30, 2020, respectively. Growth in net premiums written reflected positive rate increases, strong renewal retention and new business written across a number of retail and wholesale lines, including property, financial lines, excess casualty, and commercial multiple peril. Net premiums written for the nine months ended September 30, 2020 also benefited from new business written in large risk casualty, including a year-over-year increase in large structured transactions written. The growth in net premiums written described above was depressed by economic contraction resulting from the COVID-19 pandemic including $160 million of exposure adjustments on in-force policies recognized in the second quarter of 2020, and lower renewal exposures and new business market limitations that impacted several lines of business, including A&H, surety, large corporate accounts, entertainment, hospitality, retail, and construction.

•Net premiums written in our North America Personal P&C Insurance segment increased $34 million, or 2.8 percent, and $103 million, or 2.9 percent, for the three and nine months ended September 30, 2020, respectively, primarily due to rate increases and strong account retention across most lines. In addition, net premiums written also increased due to the favorable year-over-year impact in reinstatement premiums of $7 million and ~~$1,409~~$4 million for the three and nine months ended September 30, 2020. Growth for the three and nine months ended September 30, 2020 was partially offset by $4

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million and $11 million, respectively, in lower automobile premiums as a result of reduced exposures related to the conditions caused by the COVID-19 pandemic.

•Net premiums written in our North America Agricultural Insurance segment increased $48 million, or 5.0 percent, for the three months ended September 30, 2020, primarily due to an increase in MPCI premiums, driven by new policy growth, higher reported acreage from policyholders and favorable change in the mix of crops planted, and growth in our Chubb Agribusiness unit. Net premiums written increased $70 million, or 4.5 percent, for the nine months ended September 30, 2020 due to the year-over-year increase in MPCI premiums reflecting less premiums returned to the U.S. government under the premium-sharing formulas as well as the items noted above, partially offset by lower rates resulting from year-over-year commodity price declines. Under the MPCI premium-sharing formulas, we retained more premiums on the 2019 crop year due to higher than expected losses for that year. Net premiums written in the first nine months of 2019 was lower due to higher cessions to the U.S. government reflecting the more profitable 2018 crop year.

•Net premiums written in our Overseas General Insurance segment increased $10 million and decreased $24 million, or increased $61 million and $183 million on a constant-dollar basis, for the three and nine months ended September 30, 2020, respectively, ~~reflecting~~due to growth in commercial P&C lines across ~~most segments.~~all regions resulting from new business, retention, and positive rate increases, partially offset by the impact of the COVID-19 pandemic which negatively impacted several lines, mainly in consumer personal lines in Latin America and A&H in Asia, resulting from less travel volume and lower exposures. In addition, for the nine months ended September 30, 2020, the growth in net premiums written was partially offset by $24 million of exposure adjustments on in-force policies due to economic contraction resulting from the COVID-19 pandemic.

•

~~Net premiums written in our North America Commercial P&C Insurance segment~~ ~~increased$253 million~~ ~~and~~ ~~$595 million~~ ~~for the~~ ~~three and nine months endedSeptember 30, 2019~~, respectively, reflecting positive rate increases and new business written across most retail lines, including property, financial lines, excess casualty, global casualty, package and A&H, as well as in our wholesale and high excess Bermuda lines, and in our small commercial businesses.

•

~~Net premiums written in our North America Personal P&C Insurance segment~~ ~~increased$33 million~~ ~~and~~ ~~$15 million~~ ~~for the~~ ~~three and nine months endedSeptember 30, 2019~~, respectively, due to strong retention and rate increases, across most lines, partially offset by higher cessions in the current year related to the homeowners quota share reinsurance treaty effective October 1, 2018. In addition, the nine months ended September 30, 2018 benefited from a change we made to harmonize premium registration cut-off between our legacy registration systems.

•

~~Net premiums written in our North America Agricultural Insurance segment~~ ~~increased$54 million~~ ~~and~~ ~~$154 million~~ ~~for the three and nine months ended~~ ~~September 30, 2019~~,•Net premiums written in our Global Reinsurance segment increased $40 million and $66 million, for the three and nine months ended September 30, 2020, respectively, primarily ~~due to an increase in MPCI premium reflecting higher retention, the non-renewal of a quota-share treaty effective with the current crop year, and an increase in current year production.~~

•

~~Net premiums written in our Overseas General Insurance segment~~ ~~increased$147 million~~ ~~and~~ ~~$217 million, or~~ ~~$215 million~~ ~~and~~ ~~$528 million~~ ~~on a constant-dollar basis, for the~~ ~~three and nine months endedSeptember 30, 2019~~, respectively, reflecting growth across all regions and most lines of business. P&C lines growth was across all regions and was principally due to positive rate increases and new business in property, casualty, and financial lines. Personal lines

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~~growth was~~ driven by new business in casualty lines, rate increases in property catastrophe lines and reinstatement premiums on catastrophe losses, partially offset by an increase in retrocessions. In addition, the prior year had unfavorable premium adjustments which lowered premium in 2019.

•Net premiums written in our Life Insurance segment decreased $2 million, or increased $1 million on a constant-dollar basis, for the three months ended September 30, 2020, primarily due to growth in Latin America international life operations, principally driven by our expanded presence in Chile, offset by declines in North America Combined Insurance business including the adverse impact of the COVID-19 pandemic. For the nine months ended September 30, 2020, net premiums written increased $104 million, or $115 million on a constant-dollar basis, primarily reflecting growth in Latin America, and ~~Europe. Accident and health (A&H) lines growth was principally~~Asian international life operations, partially offset by a decline in ~~Asia and Latin~~our North America ~~driven by new~~Combined Insurance business.

•

~~Net premiums written in our Global Reinsurance segment~~

Table of Contents~~decreased$23 million, or~~ ~~$21 million~~ ~~on a constant-dollar basis, for the three months ended~~ ~~September 30, 2019~~, primarily due to the timing of a large treaty, renewed in the first quarter of 2019, which was previously written mainly in the third quarter of 2018, partially offset by an increase in new business writings. For the nine months ended ~~September 30, 2019, net premiums written~~ ~~decreased$14 million, or~~ ~~$6 million~~ ~~on a constant-dollar basis, due to an increase in ceded retrocessions as well as reductions in the International motor line, offset by an increase in new business written in property and marine lines.~~

•

~~Net premiums written in our Life Insurance segment increased~~ ~~$48 million~~ ~~and~~ ~~$82 million, or~~ ~~$51 million~~ ~~and~~ ~~$103 million~~ on a constant-dollar basis, for the three and nine months ended September 30, 2019, respectively, primarily reflecting growth in our Asian and Latin American international life operations and North American Combined Insurance supplemental A&H program, partially offset by our life reinsurance business, which continues to decline as no new life reinsurance business is currently being written.

Net Premiums Written By Line of Business

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars, except for percentages) 2019
2018
% Change Q-19 vs. Q-18
C$ ⁽¹⁾ 2018

C$ ⁽¹⁾ % Change
Q-19 vs. Q-18

2019
2018
% Change YTD-19 vs. YTD-18
C$ ⁽¹⁾ 2018

C$⁽¹⁾ %
Change
YTD-19 vs. YTD-18

Commercial casualty $ 1,508
$ 1,408
7.1 % $ 1,397
7.9 % $ 4,180
$ 3,911
6.9 % $ 3,870
8.0 %
Workers' compensation 462
439
5.3 % 439
5.3 % 1,537
1,515
1.5 % 1,515
1.5 %
Professional liability 981
921
6.5 % 910
7.8 % 2,676
2,583
3.6 % 2,544
5.2 %
Surety 168
159
5.9 % 157
7.2 % 476
481
(0.9 )% 470
1.4 %
Commercial multiple peril ⁽²⁾
252
236
7.0 % 236
7.0 % 725
679
6.7 % 679
6.7 %
Property and other short-tail lines 1,067
911
17.1 % 893
19.4 % 3,410
3,070
11.1 % 2,997
13.8 %
Total Commercial P&C ⁽³⁾
4,438
4,074
9.0 % 4,032
10.1 % 13,004
12,239
6.3 % 12,075
7.7 %

Agriculture 938
884
6.2 % 884
6.2 % 1,534
1,380
11.2 % 1,380
11.2 %

Personal automobile 444
419
5.9 % 418
5.9 % 1,338
1,273
5.2 % 1,259
6.2 %
Personal homeowners 935
895
4.5 % 895
4.5 % 2,646
2,615
1.2 % 2,607
1.5 %
Personal other 372
362
2.5 % 351
5.9 % 1,123
1,138
(1.3 )% 1,095
2.6 %
Total Personal lines 1,751
1,676
4.4 % 1,664
5.2 % 5,107
5,026
1.6 % 4,961
2.9 %
Total Property and Casualty lines 7,127
6,634
7.4 % 6,580
8.3 % 19,645
18,645
5.4 % 18,416
6.7 %

Global A&H lines ⁽⁴⁾
1,052
1,048
0.4 % 1,029
2.3 % 3,255
3,236
0.6 % 3,128
4.1 %
Reinsurance lines 141
164
(14.0 )% 162
(12.8 )% 540
554
(2.5 )% 546
(1.1 )%
Life 302
264
14.4 % 262
15.5 % 838
794
5.4 % 779
7.6 %
Total consolidated $ 8,622
$ 8,110
6.3 % $ 8,033
7.3 % $ 24,278
$ 23,229
4.5 % $ 22,869
6.2 %


⁽¹⁾	~~On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.~~


⁽²⁾	~~Commercial multiple peril represents retail package business (property and general liability).~~

⁽³⁾

The three months ended September 30, 2018 included a reclassification of $52 million from Workers’ compensation to Commercial casualty to better align the reporting with current year. The nine months ended September 30, 2018 included a reclassification of $56 million from Workers’ compensation and $1 million from Commercial multiple peril to Commercial casualty ($48 million) and Property and other short-tail lines ($9 million) to better align the reporting with current year. There is no impact to total Commercial P&C.


⁽⁴⁾	For purposes of this schedule only, A&H results from our Combined North America and International businesses, normally included in the Life Insurance and Overseas General Insurance segments, respectively, as well as the A&H results of our North America Commercial P&C segment, are included in Global A&H lines above.


	Three Months Ended										Nine Months Ended
							September 30										September 30
(in millions of U.S. dollars, except for percentages)	2020		2019		% Change Q-20 vs. Q-19		C$ (1) 2019		C$ (1) % Change Q-20 vs. Q-19		2020		2019		% Change YTD-20 vs. YTD-19		C$ (1) 2019		C$ (1) % Change YTD-20 vs. YTD-19
Commercial casualty	$	1,722	$	1,508	14.2	%	$	1,506	14.3	%	$	4,541	$	4,180	8.6	%	$	4,165	9.0	%
Workers' compensation	432		462		(6.4)	%	462		(6.4)	%	1,485		1,537		(3.4)	%	1,537		(3.4)	%
Professional liability	1,103		981		12.5	%	981		12.5	%	3,012		2,676		12.6	%	2,659		13.3	%
Surety	127		168		(24.0)	%	162		(21.4)	%	394		476		(17.2)	%	462		(14.7)	%
Commercial multiple peril (2)	270		252		7.0	%	252		7.0	%	778		725		7.3	%	725		7.3	%
Property and other short-tail lines	1,270		1,067		19.0	%	1,055		20.3	%	3,948		3,410		15.8	%	3,359		17.5	%
Total Commercial P&C	4,924		4,438		11.0	%	4,418		11.5	%	14,158		13,004		8.9	%	12,907		9.7	%

Agriculture	986		938		5.0	%	938		5.0	%	1,604		1,534		4.5	%	1,534		4.5	%

Personal automobile	380		444		(14.5)	%	421		(9.9)	%	1,174		1,338		(12.2)	%	1,289		(8.9)	%
Personal homeowners	955		935		2.1	%	931		2.6	%	2,708		2,646		2.3	%	2,637		2.7	%
Personal other	417		372		12.2	%	372		11.8	%	1,237		1,123		10.2	%	1,109		11.5	%
Total Personal lines	1,752		1,751		0.1	%	1,724		1.5	%	5,119		5,107		0.2	%	5,035		1.6	%

Total Property and Casualty lines	7,662		7,127		7.5	%	7,080		8.2	%	20,881		19,645		6.3	%	19,476		7.2	%

Global A&H lines (3)	913		1,052		(13.2)	%	1,043		(12.4)	%	2,931		3,255		(10.0)	%	3,206		(8.6)	%
Reinsurance lines	181		141		28.4	%	143		27.2	%	606		540		12.2	%	542		11.9	%
Life	322		302		6.6	%	300		7.5	%	992		838		18.4	%	830		19.6	%
Total consolidated	$	9,078	$	8,622	5.3	%	$	8,566	6.0	%	$	25,410	$	24,278	4.7	%	$	24,054	5.6	%

(1)On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.

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

51(3)For purposes of this schedule only, A&H results from our Combined North America and International businesses, normally included in the Life Insurance and Overseas General Insurance segments, respectively, as well as the A&H results of our North America Commercial P&C segment, are included in Global A&H lines above.

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The increase in net premiums written for the three and nine months ended September 30, ~~2019,~~2020 reflects growth across most lines of business, partially offset by the adverse impact of the economic contraction resulting from ~~positive rate increases and new business.~~ the COVID-19 pandemic.

•The growth in commercial casualty was due to new business, ~~in North America. In addition, commercial casualty grew internationally due to~~ positive rate increases and ~~new business. Growth~~growth in ~~workers’~~Asia and Europe, partially offset by the adverse impact of the COVID-19 pandemic, including $58 million of exposure adjustments on in-force policies which depressed growth by 1.4 percentage points for the nine months ended September 30, 2020. The nine months ended September 30, 2020 also benefited from the year-over-year increase in large structured transactions in North America.

•Workers' compensation was ~~due to new business in North America.~~ adversely impacted by market conditions and by the adverse impact of the economic contraction resulting from COVID-19 pandemic. For the nine months ended September 30, 2020, the decrease included $121 million of exposure adjustments on in-force policies which depressed growth by 7.9 percentage points.

•The increase in professional liability was due to ~~growth in North America and~~ new business and positive rate increases primarily in ~~Australia.~~ North America and Europe.

•Surety decreased in North America and Latin America due to market conditions and the adverse impact of the economic contraction resulting from the COVID-19 pandemic.

•Commercial multiple peril increased due to ~~new business~~higher renewal retention and positive rate increases in North America. For the nine months ended September 30, 2020, the increase was partially offset by the adverse impact of the economic contraction resulting from the COVID-19 pandemic, including $5 million of exposure adjustments on in-force policies which depressed growth by 0.8 percentage points.

•Property and other short-tail lines increased due to ~~growth in North America. In addition, property~~new business and ~~other short-tail lines increased in Australia and Europe, primarily due to new business. Our personal lines increased due to strong retention and~~positive rate increases primarily in North America and ~~new business principally~~Europe.

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•Personal lines increased on a constant-dollar basis primarily due to rate increases and strong retention in ~~Latin~~North America, ~~and~~as well as growth in Europe. In addition, North America benefited from the favorable year-over-year impact in reinstatement premiums. The increase ~~in personal lines~~ was partially offset by ~~higher cessions~~the impact of the COVID-19 pandemic, which caused declines in ~~the current year related to the~~automobile and homeowners ~~quota share reinsurance treaty effective October 1, 2018.~~ business in Latin America.

•Global A&H lines ~~increased~~decreased due to ~~growth~~declines in Asia and Latin America, principally from less travel volume due to COVID-19 pandemic, and in our North American Combined Insurance supplemental A&H ~~program, along with new business in Asia and Latin America.~~ program.

•The increase in Life was primarily driven by growth in Latin America, principally driven by our ~~Asian~~expanded presence in Chile, and ~~Latin American~~Asian international life operations.

For additional information on net premiums written, refer to the segment results discussions.

Net Premiums Earned

Net premiums earned for short-duration contracts, typically P&C contracts, generally reflect the portion of net premiums written that was recorded as revenues for the period as the exposure periods expire. Net premiums earned for long-duration contracts, typically traditional life contracts, generally are recognized as earned when due from policyholders. For the three and nine months ended September 30, ~~2019,~~2020, net premiums earned increased ~~$419~~$438 million and ~~$756~~$1,332 million, ~~or $495 million and $1,115 million on a constant-dollar basis, respectively,~~ reflecting the growth in net premiums written described above, including the impact of premiums that were fully earned when written (e.g., large structured transactions and audit and retrospective premium adjustments). On a constant-dollar basis, for the three and nine months ended September 30, 2020, net premiums earned increased $488 million and $1,542 million, respectively.

P&C Combined Ratio

In evaluating our segments excluding Life Insurance financial performance, we use the P&C combined ratio, the loss and loss expense ratio, the policy acquisition cost ratio, and the administrative expense ratio. We calculate these ratios by dividing the respective expense amounts by net premiums earned. We do not calculate these ratios for the Life Insurance segment as we do not use these measures to monitor or manage that segment. The P&C combined ratio is determined by adding the loss and loss expense ratio, the policy acquisition cost ratio, and the administrative expense ratio. A P&C combined ratio under 100 percent indicates underwriting income, and a combined ratio exceeding 100 percent indicates underwriting loss.


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2020		2019		2020		2019
Loss and loss expense ratio	69.2	%	63.1	%	71.5	%	61.5	%
Policy acquisition cost ratio	18.0	%	18.4	%	18.8	%	19.2	%
Administrative expense ratio	8.0	%	8.7	%	8.6	%	9.2	%
P&C Combined ratio	95.2	%	90.2	%	98.9	%	89.9	%

Three Months Ended Nine Months Ended
September 30 September 30
2019
2018
2019
2018
Loss and loss expense ratio 63.1 % 63.6 % 61.5 % 61.4 %
Policy acquisition cost ratio 18.4 % 18.6 % 19.2 % 19.2 %
Administrative expense ratio 8.7 % 8.7 % 9.2 % 9.2 %
P&C Combined ratio 90.2 % 90.9 % 89.9 % 89.8 %

The loss and loss expense ratio ~~decreased 0.5~~increased 6.1 percentage points and 10.0 percentage points for the three and nine months ended September 30, ~~2019 principally~~2020, respectively, primarily due to ~~lower~~higher catastrophe losses and lower prior period development, partially offset by ~~lower favorable prior period development. In addition,~~a decrease in the ~~prior year~~underlying loss ratio ~~was elevated principally due to increased frequency and severity, primarily from non-catastrophe water and fire~~reflecting earned rate increases outpacing loss cost trends, better underlying claims experience, as well as lower projected crop losses in ~~our homeowners business. Offsetting these items was~~ the ~~adverse impact of~~current year. Included in catastrophe losses for the ~~downward revision in the 2019 crop year margin estimate, higher than expected commercial property~~nine months ended September 30, 2020 were losses ~~and earned price changes modestly below loss trends primarily in long-tail lines.~~

~~Policy acquisition costs consist of commissions, premium taxes, and certain underwriting costs directly~~ related to ~~the successful acquisition of new or renewal insurance contracts. Our~~COVID-19 pandemic claims.

The policy acquisition cost ratio decreased ~~0.2~~0.4 percentage points for both the three and nine months ended September 30, 2020 primarily due to a shift in mix of business towards lines that have a lower acquisition cost ratio.

The administrative expense ratio decreased 0.7 percentage points and 0.6 percentage points for the three and nine months ended September 30, ~~2019 principally~~2020, respectively, primarily due to ~~increased ceding commissions received~~lower business expenses from continued expense management control, including during the COVID-19 pandemic, and the favorable impact of higher ~~cessions under certain reinsurance agreements.~~net premiums earned.

Catastrophe Losses and Prior Period Development

Catastrophe losses exclude reinstatement premiums which are additional premiums paid on certain reinsurance agreements in order to reinstate coverage that had been exhausted by loss occurrences. The reinstatement premium amount is typically a pro rata portion of the original ceded premium paid based on how much of the reinsurance limit had been exhausted. Prior period development is net of related adjustments which typically relate to either profit commission reserves or policyholder dividend

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reserves based on actual claim experience that develops after the policy period ends. The expense adjustments correlate to the prior period loss development on these same policies. Refer to the Non-GAAP Reconciliation section for further information on reinstatement premiums on catastrophe losses and adjustments to prior period development.

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Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S dollars) 2019
2018
2019
2018
Catastrophe losses ⁽¹⁾
$ 234
$ 454
$ 759
$ 1,045
Favorable prior period development $ 167
$ 243
$ 559
$ 643


⁽¹⁾	~~Excludes catastrophe reinstatement premiums~~

~~Catastrophe losses through~~


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions of U.S. dollars)	2020		2019		2020		2019
Catastrophe losses (excludes reinstatement premiums) (1)	$	932	$	234	$	2,950	$	759
Favorable prior period development	$	146	$	167	$	189	$	559

(1) Three and nine months ended September 30, ~~2019~~2020 excludes reinstatement premiums collected (expensed) of $7 million and ~~2018 were primarily from the following events:~~$(13) million, respectively.


•	~~2019~~ ~~: Hurricane Dorian and severe weather-related events in the U.S., including winter-related storms, and storms in Australia.~~


•	~~2018: Hurricane Florence and severe weather-related events in the U.S., including California mudslides and Northeast winter storms.~~

We generally define catastrophe loss events consistent with the definition of the Property Claims Service (PCS) for events in the U.S. and Canada. PCS defines a catastrophe as an event that causes damage of $25 million or more in insured ~~property~~ losses and affects a significant number of insureds. For events outside of the U.S. and Canada, we generally use a similar definition. We also define losses from certain pandemics, such as COVID-19, as a catastrophe loss.

~~Prior~~


	Catastrophe Loss Charge by Event
Three Months Ended	North America Commercial P&C Insurance		North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance		Global Reinsurance		Total excluding RIPs		RIPs collected		Total including RIPs
September 30, 2020
(in millions of U.S. dollars)
Net Losses
U.S. Hurricanes/Tropical storms	$	318	$	117	$	1	$	51	$	47	$	534	$	4	$	530
U.S. wildfires	30		80		—		—		—		110		—		110
Midwest derecho	53		34		8		—		1		96		—		96
International weather-related events	1		3		—		28		—		32		—		32
Other events	14		23		1		2		—		40		—		40
IBNR	35		32		—		—		—		67		—		67
Q1 and Q2 Development	(4)		16		—		14		27		53		3		50
Total	$	447	$	305	$	10	$	95	$	75	$	932
RIPs collected	—		—		—		—		7				7
Total before income tax	$	447	$	305	$	10	$	95	$	68					$	925
Income tax benefit															128
Total after income tax															$	797

In addition to the table above, catastrophe losses through September 30, 2020 included COVID-19 pandemic of $1,378 million, severe weather-related events in the U.S. and internationally, and civil unrest-related losses in the U.S.

Catastrophe losses through September 30, 2019 were primarily due to Hurricane Dorian and severe weather-related events in the U.S., including winter-related storms, and storms in Australia.

Pre-tax net favorable prior period development ~~(PPD) arises from changes~~for the three months ended September 30, 2020 was $146 million, including $35 million adverse development related to ~~loss estimates recognized in the current year that relate to loss events that occurred in previous calendar years and excludes the effect of losses from the~~legacy environmental exposures. The remaining favorable development of ~~earned premium~~$181 million comprises $312 million of favorable development from ~~previous~~long-tail lines, principally from accident ~~years.~~years 2016 and prior, and adverse development of $131 million in short-tail lines.

Pre-tax net favorable prior period development for the nine months ended September 30, 2020 was $189 million, including adverse development of $259 million for U.S. child molestation claims, predominately reviver statute-related and $35 million adverse development related to legacy environmental exposures. The remaining favorable development of $483 million principally comprises favorable development from long-tail lines, principally from accident years 2016 and prior.

Pre-tax net favorable PPD for the three months ended September 30, 2019 was $167 million, including $27 million adverse development related to legacy environmental exposures. The remaining favorable development of $194 million comprises $279

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million favorable development from long-tail lines, principally from accident years 2015 and prior, and adverse development of $85 million in short-tail lines principally from non-catastrophe large losses in commercial property lines.

Pre-tax net favorable PPD for the nine months ended September 30, 2019 was $559 million, including $51 million adverse development related to our run-off non-A&E casualty exposures and environmental liabilities. The remaining favorable development of $610 million comprises $565 million favorable development from long-tail lines, principally from accident years 2015 and prior, and favorable development of $45 million in short-tail lines. ~~For detailed information on PPD for each segment by product line and accident year, refer~~

Refer to the ~~Prior Period Development section~~prior period development discussion in ~~Note 4~~Footnote 6 to the Consolidated Financial ~~Statements.~~Statements for additional information.

Pre-tax net favorable PPD for the three months ended September 30, 2018 was $243 million, which included $80 million of net adverse development related to homeowners and valuables, where losses trended higher than expected, and $54 million of adverse development related to environmental liabilities. The remaining favorable development of $377 million comprised 80 percent long-tail lines, principally for the 2014 and prior accident years, and 20 percent short-tail lines, principally related to the 2017 catastrophe events.

Pre-tax net favorable PPD for the nine months ended September 30, 2018 of $643 million, was evenly split between long-tail lines, principally for the 2014 and prior accident years, and short-tail lines, principally related to the 2017 catastrophe events.

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Current Accident Year (CAY) Loss Ratio excluding CATs and CAY P&C Combined Ratio excluding CATs

The following table presents the impact of catastrophe losses and prior period development on our loss and loss expense ratio. Refer to the Non-GAAP Reconciliation section for additional information.


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2020		2019		2020		2019


Loss and loss expense ratio	69.2	%	63.1	%	71.5	%	61.5	%
Catastrophe losses	(11.3)	%	(3.0)	%	(12.9)	%	(3.5)	%
Prior period development	1.8	%	2.3	%	0.8	%	2.6	%
CAY loss ratio excluding catastrophe losses	59.7	%	62.4	%	59.4	%	60.6	%

Three Months Ended Nine Months Ended
September 30 September 30
2019
2018
2019
2018
Loss and loss expense ratio 63.1 % 63.6 % 61.5 % 61.4 %
Catastrophe losses (3.0 )% (6.1 )% (3.5 )% (5.0 )%
Prior period development 2.3 % 3.6 % 2.6 % 3.3 %
CAY loss ratio excluding catastrophe losses 62.4 % 61.1 % 60.6 % 59.7 %

The CAY loss ratio excluding CATs ~~increased 1.3~~decreased 2.7 percentage points and ~~0.9~~1.2 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to ~~the downward revision~~a decrease in the ~~2019~~underlying loss ratio reflecting earned rate increases outpacing loss cost trends and better underlying claims experience as well as lower projected crop year margin estimate, higher than expected commercial property losses, and earned price changes modestly below loss trends primarily in long-tail lines, partially offset by the adverse impact of elevated homeowners losses in the ~~prior~~current year.

CAY P&C Combined Ratio excluding Catastrophe Losses


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2020		2019		2020		2019
CAY Loss and loss expense ratio ex CATs	59.7	%	62.4	%	59.4	%	60.6	%
CAY Policy acquisition cost ratio ex CATs	18.0	%	18.4	%	18.8	%	19.2	%
CAY Administrative expense ratio ex CATs	8.0	%	8.7	%	8.6	%	9.2	%
CAY P&C combined ratio ex CATs	85.7	%	89.5	%	86.8	%	89.0	%

Three Months Ended Nine Months Ended
September 30 September 30
2019
2018
2019
2018
CAY Loss and loss expense ratio ex CATs 62.4 % 61.1 % 60.6 % 59.7 %
CAY Policy acquisition cost ratio ex CATs 18.4 % 18.4 % 19.2 % 19.1 %
CAY Administrative expense ratio ex CATs 8.7 % 8.7 % 9.2 % 9.2 %
CAY P&C combined ratio ex CATs 89.5 % 88.2 % 89.0 % 88.0 %

Policy benefits

Policy benefits represent losses on contracts classified as long-duration and generally include accident and supplemental health products, term and whole life products, endowment products, and annuities.

Policy benefits were $158 million and $515 million for the three and nine months ended September 30, 2019, respectively, compared with $127 million and $428 million, respectively, in the prior year periods. Refer to the Life Insurance segment operating results section for further discussion.

For the three months ended September 30, 2020 and 2019, Policy benefits were $198 million, and $158 million, respectively, which included separate account liabilities (gains) losses of $24 million and $(7) million, respectively. The offsetting movements of these liabilities are recorded in Other (income) expense on the Consolidated statements of operations. Excluding the separate account gains and losses, Policy benefits were $174 million and $165 million for the three months ended September 30, 2020 and 2019, respectively, reflecting our expanded presence in Chile.

For the nine months ended September 30, 2020 and 2019, Policy benefits were $550 million, and $515 million, respectively, which included separate account liabilities (gains) losses of $8 million and $20 million, respectively. The offsetting movements of these liabilities are recorded in Other (income) expense on the Consolidated statements of operations. Excluding the separate account gains and losses, Policy benefits were $542 million and $495 million for the nine months ended September 30, 2020 and 2019, respectively, reflecting growth in new business as described above and our expanded presence in Chile.

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Refer to the respective sections for a discussion of Net investment income, ~~Interest expense,~~ Other (income) expense, Net realized gains and losses, Amortization of purchased intangibles, and Income tax expense.



Segment Operating Results – Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

We operate through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. For more information on our segments refer to “Segment Information” under Item 1 in our ~~2018~~2019 Form 10-K.

For segment reporting purposes, certain items are presented in a different manner than in the consolidated financial statements. Management uses underwriting income (loss) as the main measures of segment performance. For the North America Agricultural Insurance segment, management includes gains and losses on crop derivatives as a component of adjusted losses and loss expenses within underwriting income. For the Life Insurance segment, management includes the gains and losses on separate account assets that do not qualify for separate account reporting under GAAP as a component of Life Insurance underwriting income.

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North America Commercial P&C Insurance

The North America Commercial P&C Insurance segment comprises operations that provide property and casualty (P&C) insurance and services to large, middle market, and small commercial businesses in the U.S., Canada, and Bermuda. This segment includes our North America Major Accounts and Specialty Insurance division (large corporate accounts and wholesale business), and the North America Commercial Insurance division (principally middle market and small commercial accounts).


	Three Months Ended										Nine Months Ended											Three Months Ended									Nine Months Ended
	September 30						% Change				September 30						% Change					September 30						% Change			September 30						% Change
(in millions of U.S. dollars, except for percentages)	2019			2018			Q-19 vs. Q-18				2019			2018			YTD-19 vs. YTD-18				(in millions of U.S. dollars, except for percentages)	2020			2019			Q-20 vs. Q-19			2020			2019			YTD-20 vs. YTD-19
Net premiums written	$	3,452		$	3,199		7.9			%	$	9,937		$	9,342		6.4			%	Net premiums written	$	3,778		$	3,452		9.4		%	$	10,750		$	9,937		8.2		%
Net premiums earned	3,185			3,019			5.5			%	9,660			9,325			3.6			%	Net premiums earned	3,456			3,185			8.5		%	10,427			9,660			7.9		%
Losses and loss expenses	2,051			1,881			9.0			%	6,238			5,873			6.2			%	Losses and loss expenses	2,444			2,051			19.2		%	8,123			6,238			30.2		%
Policy acquisition costs	459			458			0.1			%	1,377			1,378			(0.1			)%	Policy acquisition costs	489			459			6.6		%	1,452			1,377			5.5		%
Administrative expenses	256			251			2.2			%	755			735			2.7			%	Administrative expenses	243			256			(5.2)		%	751			755			(0.5)		%
Underwriting income	419			429			(2.3			)%	1,290			1,339			(3.6			)%	Underwriting income	280			419			(33.3)		%	101			1,290			(92.2)		%
Net investment income	532			503			5.7			%	1,563			1,516			3.1			%	Net investment income	510			538			(4.9)		%	1,544			1,584			(2.5)		%

Other (income) expense	(1		)	(1		)	—				(4		)	(20		)	(78.5			)%	Other (income) expense	7			5			55.7		%	19			17			12.3		%

Segment income	$	952		$	933		1.9			%	$	2,857		$	2,875		(0.6			)%	Segment income	$	783		$	952		(17.7)		%	$	1,626		$	2,857		(43.1)		%
Loss and loss expense ratio	64.4		%	62.3		%	2.1		pts		64.6		%	63.0		%	1.6		pts		Loss and loss expense ratio	70.7		%	64.4		%	6.3	pts		77.9		%	64.6		%	13.3	pts
Policy acquisition cost ratio	14.4		%	15.2		%	(0.8	)	pts		14.2		%	14.7		%	(0.5	)	pts		Policy acquisition cost ratio	14.2		%	14.4		%	(0.2)	pts		13.9		%	14.2		%	(0.3)	pts
Administrative expense ratio	8.1		%	8.3		%	(0.2	)	pts		7.8		%	7.9		%	(0.1	)	pts		Administrative expense ratio	7.0		%	8.1		%	(1.1)	pts		7.2		%	7.8		%	(0.6)	pts
Combined ratio	86.9		%	85.8		%	1.1		pts		86.6		%	85.6		%	1.0		pt		Combined ratio	91.9		%	86.9		%	5.0	pts		99.0		%	86.6		%	12.4	pts

Premiums

Net premiums written increased ~~$253~~$326 million, or ~~7.9~~9.4 percent, and ~~$595~~$813 million, or ~~6.4~~8.2 percent, for the three and nine months ended September 30, ~~2019, respectively, reflecting~~2020, respectively. Growth in net premiums written reflected positive rate increases, strong renewal retention and new business written across ~~most~~a number of retail and wholesale lines, including property, financial lines, excess casualty, ~~global~~and commercial multiple peril. Net premiums written for the nine months ended September 30, 2020 also benefited from new business written in large risk casualty, ~~package~~including a year-over-year increase in large structured transactions written.

The growth in net premiums written described above was depressed by economic contraction resulting from the COVID-19 pandemic including $160 million of exposure adjustments on in-force policies recognized in the second quarter of 2020, and lower renewal exposures and new business market limitations that impacted several lines of business, including A&H, ~~as well as in our wholesale~~surety, large corporate accounts, entertainment, hospitality, retail, and ~~high excess Bermuda lines, and in our small commercial businesses.~~construction.

Net premiums earned increased ~~$166~~$271 million, or ~~5.5~~8.5 percent, and ~~$335~~$767 million, or ~~3.6~~7.9 percent, for the three and nine months ended September 30, ~~2019,~~2020, respectively, ~~due to~~reflecting the growth in net premiums ~~written described above. The table below shows~~written. Growth for the three and nine months ended September 30, 2020 was adversely impacted by the impact of ~~large structured transactions as well as other transactions that are fully earned when~~the COVID-19 pandemic, including $39 million and $134 million, respectively, of exposure adjustments on in-force policies written ~~(e.g., audit and retrospective premium adjustments).~~in the second quarter of 2020.

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars) 2019
2018
2019
2018
Net premiums written and earned in the same period $ 39
$ (8 ) $ 386
$ 334

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Combined Ratio

The loss and loss expense ratio increased ~~2.1~~6.3 percentage points and ~~1.6~~13.3 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to ~~lower~~higher catastrophe losses, partially offset by higher favorable prior period development and a decrease in the underlying loss ratio reflecting earned rate increases outpacing loss cost trends. In addition, the higher ~~than expected commercial property~~catastrophe losses ~~and earned price changes modestly below loss trends primarily in long-tail lines, partially offset by lower catastrophe losses.~~for the nine months ended September 30, 2020 included losses related to COVID-19 pandemic claims.

The ~~policy acquisition cost~~administrative expense ratio decreased ~~0.8~~1.1 percentage points and ~~0.5~~0.6 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to ~~a change in mix of~~lower business ~~towards~~expenses from continued expense management control, including during the COVID-19 pandemic. These decreases were partially offset by lower ~~acquisition cost ratio lines~~net profit from our third-party claims administration business, ESIS, and ~~increased ceding commissions received from higher cessions under certain reinsurance agreements.~~normal inflationary increases.

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Catastrophe Losses and Prior Period Development


	Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
	September 30				September 30					September 30				September 30
(in millions of U.S. dollars)	2019		2018		2019		2018		(in millions of U.S. dollars)	2020		2019		2020		2019
Catastrophe losses	$	88	$	196	$	319	$	347
Catastrophe losses (excludes reinstatement premiums)									Catastrophe losses (excludes reinstatement premiums)	$	447	$	88	$	1,835	$	319
Favorable prior period development	$	109	$	216	$	425	$	472	Favorable prior period development	$	200	$	109	$	451	$	425

Catastrophe losses through September 30, ~~2019~~2020 and ~~2018~~2019 were primarily from the following events:

•

~~2019~~

•2020: COVID-19 pandemic of $973 million, civil unrest in the U.S., and natural catastrophes including Nashville, Tennessee tornado, Hurricane Laura, Hurricane Sally, Tropical Storm Isaias, Midwest derecho, U.S. wildfires, and other severe weather-related events in the U.S.

•2019: Winter-related storms and other severe weather-related events in the U.S., Hurricane Dorian and Tropical Storm Imelda

~~: Winter-related storms and other severe weather-related events in the U.S., Hurricane Dorian and Tropical Storm Imelda~~


•	~~2018: Hurricane Florence and severe weather-related events in the U.S.~~

Refer to the prior period development discussion in Note 46 to the Consolidated Financial Statements for additional information.

CAY Loss Ratio excluding Catastrophe Losses


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2020		2019		2020		2019
Loss and loss expense ratio	70.7	%	64.4	%	77.9	%	64.6	%
Catastrophe losses	(12.9)	%	(2.8)	%	(17.6)	%	(3.3)	%
Prior period development	6.0	%	3.9	%	4.4	%	4.5	%
CAY loss ratio excluding catastrophe losses	63.8	%	65.5	%	64.7	%	65.8	%

Three Months Ended Nine Months Ended
September 30 September 30
2019
2018
2019
2018
Loss and loss expense ratio 64.4 % 62.3 % 64.6 % 63.0 %
Catastrophe losses (2.8 )% (6.5 )% (3.3 )% (3.7 )%
Prior period development 3.9 % 7.7 % 4.5 % 5.2 %
CAY loss ratio excluding catastrophe losses 65.5 % 63.5 % 65.8 % 64.5 %

The CAY loss ratio excluding catastrophe losses ~~increased 2.0~~decreased 1.7 percentage points and ~~1.3~~1.1 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to ~~higher than expected commercial property losses and~~a decrease in the underlying loss ratio reflecting earned ~~price changes modestly below~~rate increases outpacing loss ~~trends primarily in long-tail lines.~~cost trends.

5660

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North America Personal P&C Insurance

The North America Personal P&C Insurance segment comprises operations that provide high net worth personal lines products, including homeowners and complementary products such as valuable articles, excess liability, automobile, and recreational marine insurance and services in the U.S. and Canada.


	Three Months Ended										Nine Months Ended											Three Months Ended									Nine Months Ended
	September 30						% Change				September 30						% Change					September 30						% Change			September 30						% Change
(in millions of U.S. dollars, except for percentages)	2019			2018			Q-19 vs. Q-18				2019			2018			YTD-19 vs. YTD-18				(in millions of U.S. dollars, except for percentages)	2020			2019			Q-20 vs. Q-19			2020			2019			YTD-20 vs. YTD-19
Net premiums written	$	1,251		$	1,218		2.7			%	$	3,616		$	3,601		0.4			%	Net premiums written	$	1,285		$	1,251		2.8		%	$	3,719		$	3,616		2.9		%
Net premiums earned	1,187			1,167			1.7			%	3,509			3,463			1.3			%	Net premiums earned	1,231			1,187			3.8		%	3,623			3,509			3.3		%
Losses and loss expenses	674			860			(21.6			)%	2,178			2,474			(11.9			)%	Losses and loss expenses	961			674			42.5		%	2,406			2,178			10.4		%
Policy acquisition costs	240			236			1.6			%	708			701			1.0			%	Policy acquisition costs	248			240			3.5		%	724			708			2.3		%
Administrative expenses	72			69			3.8			%	211			202			4.5			%	Administrative expenses	65			72			(8.8)		%	199			211			(5.4)		%
Underwriting income	201			2			NM				412			86			378.5			%
Underwriting income (loss)																					Underwriting income (loss)	(43)			201			NM			294			412			(28.7)		%
Net investment income	66			59			13.1			%	194			177			9.7			%	Net investment income	64			66			(2.1)		%	195			194			1.0		%

Other (income) expense	1			—			NM				2			1			51.5			%	Other (income) expense	1			1			—			4			2			118.1		%
Amortization of purchased intangibles	3			4			(11.1			)%	9			10			(11.1			)%	Amortization of purchased intangibles	2			3			(5.0)		%	8			9			(5.0)		%

Segment income	$	263		$	57		362.9			%	$	595		$	252		136.4			%	Segment income	$	18		$	263		(93.4)		%	$	477		$	595		(19.9)		%
Loss and loss expense ratio	56.9		%	73.7		%	(16.8	)	pts		62.1		%	71.5		%	(9.4	)	pts		Loss and loss expense ratio	78.1		%	56.9		%	21.2	pts		66.4		%	62.1		%	4.3	pts
Policy acquisition cost ratio	20.2		%	20.2		%	—				20.2		%	20.2		%	—				Policy acquisition cost ratio	20.1		%	20.2		%	(0.1)	pts		20.0		%	20.2		%	(0.2)	pts
Administrative expense ratio	6.0		%	5.9		%	0.1		pts		6.0		%	5.8		%	0.2		pts		Administrative expense ratio	5.3		%	6.0		%	(0.7)	pts		5.5		%	6.0		%	(0.5)	pts
Combined ratio	83.1		%	99.8		%	(16.7	)	pts		88.3		%	97.5		%	(9.2	)	pts		Combined ratio	103.5		%	83.1		%	20.4	pts		91.9		%	88.3		%	3.6	pts

NM – not meaningful

Premiums

Net premiums written increased~~$33~~ $34 million, or ~~2.7~~2.8 percent, and ~~$15~~$103 million, or ~~0.4~~2.9 percent, for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to ~~strong retention and~~ rate increases and strong account retention across most ~~lines, partially offset by higher cessions in the current year related~~lines. In addition, net premiums written also increased due to the ~~homeowners quota share reinsurance treaty effective October 1, 2018. In addition,~~favorable year-over-year impact in reinstatement premiums of $7 million and $4 million for the three and nine months ended September 30, ~~2018 benefited from~~2020, respectively. Growth for the three and nine months ended September 30, 2020 was partially offset by $4 million and $11 million, respectively, in lower automobile premiums as a ~~change we made~~result of reduced exposures related to ~~harmonize premium registration cut-off between our legacy registration systems.~~the conditions caused by the COVID-19 pandemic.

Net premiums earned increased ~~$20~~$44 million, or ~~1.7~~3.8 percent, and ~~$46~~$114 million, or ~~1.3~~3.3 percent, for the three and nine months ended September 30, ~~2019,~~2020, respectively, reflecting the growth in net premiums written described above.

Combined Ratio

The loss and loss expense ratio ~~decreased16.8~~increased 21.2 percentage points and ~~9.4~~4.3 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to ~~lower~~higher catastrophe losses and ~~favorable~~unfavorable prior period development in the current year compared to ~~unfavorable~~favorable prior period development in the prior year, ~~periods. Additionally, the prior year loss ratio was elevated principally due to increased frequency and severity, primarily non-catastrophe water and fire losses in our homeowners business. The~~partially offset by a decrease in the underlying loss ratio reflecting better underlying claims experience.

The policy acquisition cost ratio was relatively flat for the three months ended September 30, 2020. The policy acquisition cost ratio decreased 0.2 percentage points for the nine months ended September 30, ~~2019 was~~2020 primarily due to a lower year-over-year amount of supplemental commissions.

The administrative expense ratio decreased 0.7 percentage points and 0.5 percentage points for the three and nine months ended September 30, 2020, respectively, primarily due to lower employee benefit-related expenses and lower business expenses from continued expense management control, including during the COVID-19 pandemic, partially offset by ~~an increase in the underlying loss ratio, reflecting a re-evaluation~~normal inflationary increases.

Table of ~~non-catastrophe loss activity.~~Contents

Catastrophe Losses and Prior Period Development

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars) 2019
2018
2019
2018
Catastrophe losses $ 83
$ 136
$ 329
$ 521
Favorable (unfavorable) prior period development $ 62
$ (58 ) $ 88
$ (59 )

~~Table of Contents~~


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions of U.S. dollars)	2020		2019		2020		2019
Catastrophe losses (excludes reinstatement premiums)	$	305	$	83	$	435	$	329
Favorable (unfavorable) prior period development	$	(48)	$	62	$	(48)	$	88

Catastrophe losses through September 30, ~~2019~~2020 and ~~2018~~2019 were primarily from the following events:


•	~~2019~~ •2020: U.S. wildfires, Tropical Storm Isaias, Midwest derecho, Hurricane Sally, Hurricane Laura, and other severe weather-related events in the U.S. •2019: Winter-related storms and other severe weather-related events in the U.S. and Hurricane Dorian : ~~Winter-related storms and other severe weather-related events in the U.S. and Hurricane Dorian~~


•	~~2018: Colorado rain and hailstorms, Hurricane Florence, California mudslides, Northeast winter storms, and other severe weather-related events in the U.S.~~

Refer to the prior period development discussion in Note 46 to the Consolidated Financial Statements for additional information.

CAY Loss Ratio excluding Catastrophe Losses

Three Months Ended Nine Months Ended
September 30 September 30
2019
2018
2019
2018
Loss and loss expense ratio 56.9 % 73.7 % 62.1 % 71.5 %
Catastrophe losses (7.0 )% (11.6 )% (9.4 )% (15.1 )%
Prior period development 5.2 % (5.0 )% 2.5 % (1.7 )%
CAY loss ratio excluding catastrophe losses 55.1 % 57.1 % 55.2 % 54.7 %


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2020		2019		2020		2019
Loss and loss expense ratio	78.1	%	56.9	%	66.4	%	62.1	%
Catastrophe losses	(24.7)	%	(7.0)	%	(12.0)	%	(9.4)	%
Prior period development	(4.2)	%	5.2	%	(1.4)	%	2.5	%
CAY loss ratio excluding catastrophe losses	49.2	%	55.1	%	53.0	%	55.2	%

The CAY loss ratio excluding catastrophe losses decreased~~2.0~~ 5.9 percentage points and 2.2 percentage points for the three ~~months ended September 30, 2019. The prior year loss ratio was elevated, principally due to increased frequency~~ and ~~severity, primarily non-catastrophe water and fire losses in our homeowners business. The CAY loss ratio excluding catastrophe losses increased 0.5 percentage points for the~~ nine months ended September 30, ~~2019~~2020, respectively, primarily due to ~~an increase~~a decrease in the underlying loss ratio reflecting ~~a re-evaluation~~better underlying claims experience.

Table of ~~non-catastrophe loss activity.~~Contents

North America Agricultural Insurance

The North America Agricultural Insurance segment comprises our North American based businesses that provide a variety of coverages in the U.S. and Canada including crop insurance, primarily Multiple Peril Crop Insurance (MPCI) and crop-hail through Rain and Hail Insurance Service, Inc. (Rain and Hail) as well as farm and ranch and specialty P&C commercial insurance products and services through our Chubb Agribusiness unit.


	Three Months Ended									Nine Months Ended										Three Months Ended									Nine Months Ended
	September 30						% Change			September 30						% Change				September 30						% Change			September 30						% Change
(in millions of U.S. dollars, except for percentages)	2019			2018			Q-19 vs. Q-18			2019			2018			YTD-19 vs. YTD-18			(in millions of U.S. dollars, except for percentages)	2020			2019			Q-20 vs. Q-19			2020			2019			YTD-20 vs. YTD-19
Net premiums written	$	938		$	884		6.2		%	$	1,534		$	1,380		11.2		%	Net premiums written	$	986		$	938		5.0		%	$	1,604		$	1,534		4.5		%
Net premiums earned	941			857			9.8		%	1,374			1,251			9.8		%	Net premiums earned	971			941			3.2		%	1,441			1,374			4.9		%
Adjusted losses and loss expenses ⁽¹⁾	880			727			21.0		%	1,163			953			22.0		%
Losses and loss expenses																			Losses and loss expenses	845			880			(3.9)		%	1,223			1,163			5.2		%
Policy acquisition costs	56			49			14.7		%	90			74			22.3		%	Policy acquisition costs	56			56			—			96			90			6.2		%
Administrative expenses	4			2			214.0		%	9			—			NM			Administrative expenses	5			4			6.9		%	12			9			33.3		%
Underwriting income	1			79			(98.8		)%	112			224			(50.3		)%	Underwriting income	65			1			NM			110			112			(1.1)		%
Net investment income	8			7			19.8		%	22			20			7.3		%	Net investment income	7			8			(15.2)		%	23			22			5.5		%
Other (income) expense	—			—			—			1			1			—			Other (income) expense	—			—			—			1			1			—
Amortization of purchased intangibles	7			7			—			21			21			—			Amortization of purchased intangibles	7			7			—			20			21			(2.1)		%
Segment income	$	2		$	79		(97.6		)%	$	112		$	222		(49.7		)%	Segment income	$	65		$	2		NM			$	112		$	112		0.6		%
Loss and loss expense ratio	93.5		%	84.9		%	8.6	pts		84.7		%	76.2		%	8.5	pts		Loss and loss expense ratio	87.1		%	93.5		%	(6.4)	pts		84.9		%	84.7		%	0.2	pts
Policy acquisition cost ratio	6.0		%	5.7		%	0.3	pts		6.6		%	5.9		%	0.7	pts		Policy acquisition cost ratio	5.8		%	6.0		%	(0.2)	pts		6.6		%	6.6		%	—	pts
Administrative expense ratio	0.4		%	0.1		%	0.3	pts		0.6		%	—			0.6	pts		Administrative expense ratio	0.4		%	0.4		%	—	pts		0.8		%	0.6		%	0.2	pts
Combined ratio	99.9		%	90.7		%	9.2	pts		91.9		%	82.1		%	9.8	pts		Combined ratio	93.3		%	99.9		%	(6.6)	pts		92.3		%	91.9		%	0.4	pts

NM – not meaningful


⁽¹⁾	~~Includes gains (losses) on crop derivatives of~~ ~~$(14) million~~ ~~and~~ ~~$(8) million~~ ~~for the~~ ~~three and nine months endedSeptember 30, 2019, respectively, and~~ ~~$(8) million~~ ~~and~~ ~~$2 million~~ ~~in 2018, respectively.~~

~~Table of Contents~~

Premiums

Net premiums written increased ~~$54~~$48 million, or ~~6.2~~5.0 percent, for the three months ended September 30, 2020 primarily due to an increase in MPCI premiums, driven by new policy growth, higher reported acreage from policyholders and a favorable change in the mix of crops planted, and growth in our Chubb Agribusiness unit. Net premiums written increased $70 million, or 4.5 percent, for the nine months ended September 30, 2020 due to the year-over-year increase in MPCI premiums reflecting less premiums returned to the U.S. government under the premium-sharing formulas as well as the items noted above, partially offset by lower rates resulting from year-over-year commodity price declines. Under the MPCI premium-sharing formulas, we retained more premiums on the 2019 crop year due to higher than expected losses for that year. Net premiums written in the first nine months of 2019 was lower due to higher cessions to the U.S. government reflecting the more profitable 2018 crop year.

Net premiums earned increased $30 million, or 3.2 percent, and ~~$154~~$67 million, or ~~11.2~~4.9 percent, respectively, for the three and nine months ended September 30, 2019, respectively, primarily due to an increase in MPCI premium reflecting higher retention, the non-renewal of a quota-share treaty effective with the current crop year, and an increase in current year production.

~~Net premiums earned increased $84 million, or 9.8 percent, and $123 million, or 9.8 percent, for the three and nine months ended September 30, 2019, respectively,~~2020, reflecting the growth in net premiums written described above.

Combined Ratio

The loss and loss expense ratio ~~increased 8.6 percentage points and 8.5~~decreased 6.4 percentage points for the three months ended September 30, 2020 primarily due to lower projected crop losses in the current year and the favorable year-over-year impact of our crop derivatives, partially offset by higher underlying losses in our Chubb Agribusiness unit. Additionally, the prior year included the adverse impact of weather conditions. The loss and loss expense ratio increased 0.2 percentage points for the nine months ended September 30, ~~2019, respectively, principally~~2020 primarily due to ~~the downward revision in the 2019 crop year margin estimate~~our MPCI business, reflecting ~~the adverse impact of weather conditions, which resulted in a reduction to crop insurance underwriting income. Unfavorable~~unfavorable prior period development, ~~in the current quarter related to our Agribusiness and~~which were partially offset by lower ~~favorable prior period development~~crop losses in the current year ~~also adversely impacted~~and the ~~loss ratio.~~favorable year-over-year impact of our crop derivatives; as well as in our Chubb Agribusiness unit, reflecting higher catastrophe losses, and in our Rain and Hail business, due to higher underlying losses.

The policy acquisition cost ratio ~~increased 0.3 percentage points and 0.7~~decreased 0.2 percentage points for the three ~~and~~months ended September 30, 2020 primarily due to the favorable impact of higher net premiums earned in the current year. The policy acquisition cost ratio was flat for the nine months ended September 30, ~~2019, respectively, primarily due to reinsurance ceded commission earned in the prior year that benefited acquisition expenses.~~2020.

Table of Contents

The administrative expense ratio was flat for the three months ended September 30, 2020. The administrative expense ratio increased ~~0.3 percentage points and 0.6~~0.2 percentage points for the ~~three and~~ nine months ended September 30, ~~2019, respectively,~~2020 primarily due to normal operating expense and inflationary increases and a reduction in the current year Administrative and Operating (A&O) reimbursements onrelated to the MPCI business we earned under the government program.

Catastrophe Losses and Prior Period Development


	Three Months Ended					Nine Months Ended					Three Months Ended				Nine Months Ended
	September 30					September 30					September 30				September 30
(in millions of U.S. dollars)	2019			2018		2019		2018		(in millions of U.S. dollars)	2020		2019		2020		2019
Catastrophe losses	$	3		$	8	$	7	$	11
Catastrophe losses (excludes reinstatement premiums)										Catastrophe losses (excludes reinstatement premiums)	$	10	$	3	$	24	$	7
Favorable (unfavorable) prior period development	$	(18	)	$	1	$	43	$	77	Favorable (unfavorable) prior period development	$	(18)	$	(18)	$	(4)	$	43

Catastrophe losses through September 30, ~~2019~~2020 were primarily from the Midwest derecho and ~~2018~~other severe weather-related events in the U.S. in our farm, ranch, and specialty P&C businesses. Catastrophe losses through September 30, 2019 were primarily from severe weather-related events in the U.S. in our farm, ranch, and specialty P&C businesses.

Refer to the prior period development discussion in Note 46 to the Consolidated Financial Statements for additional information.

For the three months ended September 30, 2020, net unfavorable prior period development was $18 million. For the nine months ended September 30, 2020, net unfavorable prior period development was $4 million which included $1 million of incurred losses due to higher than expected MPCI losses for the 2019 crop year and a $3 million decrease in net premiums earned related to the MPCI profit and loss calculation formula. For the three months ended September 30, 2019, net unfavorable prior period development was $18 million. For the nine months ended September 30, 2019, net favorable prior period development was $43 million which included $72 million of favorable incurred losses and $3 million of lower acquisition costs due to lower than expected MPCI losses for the 2018 crop year, partially offset by a $32 million decrease in net premiums earned related to the MPCI profit and loss calculation formula. For the three months ended September 30, 2018, net favorable prior period development was $1 million. For the nine months ended September 30, 2018, net favorable prior period development was $77 million which included $113 million of favorable incurred losses and $4 million of lower acquisition costs due to lower than expected MPCI losses for the 2017 crop year, partially offset by a $40 million decrease in net premiums earned related to the MPCI profit and loss calculation formula.

~~Table of Contents~~

CAY Loss Ratio excluding Catastrophe Losses


	Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
	September 30				September 30					September 30				September 30
	2019		2018		2019		2018			2020		2019		2020		2019
Loss and loss expense ratio	93.5	%	84.9	%	84.7	%	76.2	%	Loss and loss expense ratio	87.1	%	93.5	%	84.9	%	84.7	%
Catastrophe losses	(0.3	)%	(0.9	)%	(0.5	)%	(0.9	)%	Catastrophe losses	(1.0)	%	(0.3)	%	(1.7)	%	(0.5)	%
Prior period development	(1.9	)%	0.1	%	3.2	%	6.5	%	Prior period development	(1.9)	%	(1.9)	%	(0.2)	%	3.2	%

CAY loss ratio excluding catastrophe losses	91.3	%	84.1	%	87.4	%	81.8	%	CAY loss ratio excluding catastrophe losses	84.2	%	91.3	%	83.0	%	87.4	%

The CAY loss ratio excluding catastrophe losses ~~increased 7.2~~decreased 7.1 percentage points and ~~5.6~~4.4 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, principally due to ~~the downward revision~~lower projected crop losses in the ~~2019 crop~~current year ~~margin estimate reflecting~~and the ~~adverse~~favorable year-over-year impact of ~~weather conditions.~~our crop derivatives, partially offset by higher underlying losses in our Rain and Hail business.

6064

Table of Contents

Overseas General Insurance

Overseas General Insurance segment comprises Chubb International and Chubb Global Markets (CGM). Chubb International comprises our international commercial P&C traditional and specialty lines serving large corporations, middle market and small customers; A&H and traditional and specialty personal lines business serving local territories outside the U.S., Bermuda, and Canada. CGM, our London-based international commercial P&C excess and surplus lines business, includes Lloyd's of London (Lloyd's) Syndicate 2488. Chubb provides funds at Lloyd's to support underwriting by Syndicate 2488 which is managed by Chubb Underwriting Agencies Limited.


	Three Months Ended									Nine Months Ended
	September 30						% Change			September 30						% Change
(in millions of U.S. dollars, except for percentages)	2020			2019			Q-20 vs. Q-19			2020			2019			YTD-20 vs. YTD-19
Net premiums written	$	2,238		$	2,228		0.5		%	$	6,857		$	6,881		(0.3)		%
Net premiums earned	2,337			2,256			3.6		%	6,838			6,595			3.7		%
Losses and loss expenses	1,192			1,154			3.4		%	3,935			3,385			16.3		%
Policy acquisition costs	637			630			1.2		%	1,903			1,855			2.6		%
Administrative expenses	260			257			1.2		%	759			771			(1.6)		%
Underwriting income	248			215			15.2		%	241			584			(58.8)		%
Net investment income	130			147			(11.5)		%	396			444			(10.7)		%
Other (income) expense	1			2			(70.4)		%	10			11			(10.5)		%
Amortization of purchased intangibles	10			11			—			33			34			(1.9)		%
Segment income	$	367		$	349		5.1		%	$	594		$	983		(39.6)		%
Net premiums written - constant dollars (1)							2.8		%							2.7		%


Loss and loss expense ratio	51.0		%	51.1		%	(0.1)	pts		57.6		%	51.3		%	6.3	pts
Policy acquisition cost ratio	27.3		%	28.0		%	(0.7)	pts		27.8		%	28.1		%	(0.3)	pts
Administrative expense ratio	11.1		%	11.4		%	(0.3)	pts		11.1		%	11.7		%	(0.6)	pts
Combined ratio	89.4		%	90.5		%	(1.1)	pts		96.5		%	91.1		%	5.4	pts

Three Months Ended Nine Months Ended
September 30 % Change September 30 % Change
(in millions of U.S. dollars, except for percentages) 2019
2018
Q-19 vs. Q-18 2019
2018
YTD-19 vs. YTD-18
Net premiums written $ 2,228
$ 2,081
7.1 % $ 6,881
$ 6,664
3.3 %
Net premiums written - constant dollars ⁽¹⁾
10.7 % 8.3 %
Net premiums earned 2,256
2,157
4.6 % 6,595
6,425
2.6 %
Losses and loss expenses 1,154
1,114
3.6 % 3,385
3,263
3.7 %
Policy acquisition costs 630
582
8.5 % 1,855
1,754
5.8 %
Administrative expenses 257
252
1.5 % 771
757
1.8 %
Underwriting income 215
209
3.1 % 584
651
(10.3 )%
Underwriting income - constant dollars ⁽¹⁾
9.3 % (2.9 )%
Net investment income 148
155
(4.9 )% 443
461
(4.0 )%
Other (income) expense 3
(7 ) NM 10
(12 ) NM
Amortization of purchased intangibles 11
8
17.9 % 34
29
14.2 %
Segment income $ 349
$ 363
(3.7 )% $ 983
$ 1,095
(10.2 )%
Loss and loss expense ratio 51.1 % 51.7 % (0.6 ) pts
51.3 % 50.8 % 0.5
pts
Policy acquisition cost ratio 28.0 % 26.9 % 1.1
pts
28.1 % 27.3 % 0.8
pts
Administrative expense ratio 11.4 % 11.7 % (0.3 ) pts
11.7 % 11.8 % (0.1 ) pts
Combined ratio 90.5 % 90.3 % 0.2
pts
91.1 % 89.9 % 1.2
pts

~~NM – not meaningful~~


Net Premiums Written by Region	Three months ended September 30
(in millions of U.S. dollars, except for percentages)	2020		2020 % of Total		2019		2019 % of Total		C$ (1) 2019		Q-20 vs. Q-19		C$ (1) Q-20 vs. Q-19
Region
Europe	$	915	41	%	$	782	35	%	$	793	17.1	%	15.5	%
Latin America	442		20	%	551		25	%	484		(19.7)	%	(8.7)	%
Asia	794		35	%	798		36	%	804		(0.5)	%	(1.2)	%
Other (2)	87		4	%	97		4	%	96		(10.3)	%	(9.7)	%
Net premiums written	$	2,238	100	%	$	2,228	100	%	$	2,177	0.5	%	2.8	%


	Nine months ended September 30
(in millions of U.S. dollars, except for percentages)	2020		2020 % of Total		2019		2019 % of Total		C$ (1) 2019		Y-20 vs. Y-19		C$ (1) Y-20 vs. Y-19
Region
Europe	$	2,994	44	%	$	2,698	39	%	$	2,678	11.0	%	11.8	%
Latin America	1,414		21	%	1,657		24	%	1,496		(14.6)	%	(5.5)	%
Asia	2,203		32	%	2,259		33	%	2,237		(2.5)	%	(1.5)	%
Other (2)	246		3	%	267		4	%	263		(8.0)	%	(6.6)	%
Net premiums written	$	6,857	100	%	$	6,881	100	%	$	6,674	(0.3)	%	2.7	%

(1) On a constant-dollar basis, amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.

(2) Comprises Combined International, Eurasia and Africa region, and other international.

Net Premiums Written by Region

(in millions of U.S. dollars, except for percentages)

2019
2019
% of Total
2018
2018
% of Total

C$ ⁽¹⁾
2018

2019 vs. 2018

C$ ⁽¹⁾2019 vs. 2018

Region
Three months ended September 30 Q-19 vs. Q-18 % Change
Europe $ 782
35 % $ 727
35 % $ 701
7.6 % 11.6 %
Latin America 551
25 % 519
25 % 502
6.0 % 9.8 %
Asia 798
36 % 755
36 % 733
5.8 % 8.9 %
Other ⁽²⁾
97
4 % 80
4 % 77
21.8 % 25.9 %
Net premiums written $ 2,228
100 % $ 2,081
100 % $ 2,013
7.1 % 10.7 %
Nine months ended September 30 YTD-19 vs. YTD-18 % Change
Europe $ 2,698
39 % $ 2,641
40 % $ 2,520
2.2 % 7.1 %
Latin America 1,657
24 % 1,597
24 % 1,491
3.7 % 11.1 %
Asia 2,259
33 % 2,176
33 % 2,103
3.8 % 7.5 %
Other ⁽²⁾
267
4 % 250
3 % 239
6.8 % 11.5 %
Net premiums written $ 6,881
100 % $ 6,664
100 % $ 6,353
3.3 % 8.3 %
65


⁽¹⁾	~~On a constant-dollar basis, amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.~~


⁽²⁾	~~Comprises Combined International, Eurasia and Africa region, and other international.~~

Table of Contents

Premiums

Net premiums written increased ~~$147~~$10 million and ~~$217~~decreased $24 million, or ~~$215~~increased $61 million ~~(10.7 percent)~~ and ~~$528~~$183 million ~~(8.3 percent)~~ on a constant-dollar basis, for the three and nine months ended September 30, ~~2019,~~2020, respectively, ~~reflecting~~due to growth in commercial P&C lines across all regions resulting from new business, retention, and ~~most lines of business. P&C lines growth was across all regions and was principally due to~~ positive rate increases, ~~and new business~~partially offset by the impact of the COVID-19 pandemic which negatively impacted several lines, mainly in ~~property, casualty, and financial lines. Personal~~consumer personal lines ~~growth was driven by new business principally~~ in Latin America and ~~Europe. Accident and health (A&H) lines growth was principally~~A&H in Asia, resulting from less travel volume and ~~Latin America driven~~lower exposures. In addition, for the nine months ended September 30, 2020, the growth in net premiums written was partially offset by ~~new business.~~

$24 million of exposure adjustments on in-force policies due to economic contraction resulting from the COVID-19 pandemic.

~~Net premiums earned increased $99 million and $170 million, or $168 million~~
(~~8.0 percent) and $481 million (7.9 percent) on a constant-dollar basis for~~

For the three and nine months ended September 30, ~~2019,~~2020 net premiums earned increased $81 million and $243 million, or $127 million and $436 million on a constant-dollar basis, respectively, reflecting ~~the increase in~~higher net premiums ~~written.~~written in prior periods.

Combined Ratio

The loss and loss expense ratio ~~decreased 0.6 percentage points~~was relatively flat for the three months ended September 30, 2019 primarily due to earned price changes modestly above loss trends and a change in mix of business towards products and regions that have a lower loss and loss expense ratio and a higher policy acquisition cost ratio, as well as lower catastrophe losses which was partially offset by lower favorable prior period development.2020. The loss and loss expense ratio increased ~~0.5~~6.3 percentage points for the nine months ended September 30, ~~2019~~2020 primarily due to higher catastrophe losses, primarily related to the COVID-19 pandemic, along with lower premiums earned from A&H lines in Latin America and Asia, which have a lower loss ratio. These increases were partially offset by higher favorable prior period ~~development, partially offset by lower catastrophe losses as well as the same factors driving the decrease for the three months ended September 30, 2019 as noted above.~~development.

The policy acquisition cost ratio ~~increased 1.1~~decreased 0.7 percentage points and ~~0.8~~0.3 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to a ~~change~~shift in mix of business from A&H lines towards ~~products and regions that~~P&C lines, which have a ~~higher policy~~lower acquisition cost ~~ratio and lower loss and loss expense ratio as noted above and higher underwriting costs resulting from the successful acquisition of business.~~ratio.

The administrative expense ratio decreased 0.3 percentage points and ~~0.1~~0.6 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily ~~driven by~~due to lower business expenses from continued expense management control, including during the COVID-19 pandemic, and the favorable impact of higher ~~underwriting costs as noted above.~~net premiums earned in the current year.

Catastrophe Losses and Prior Period Development


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions of U.S. dollars)	2020		2019		2020		2019
Catastrophe losses (excludes reinstatement premiums)	$	95	$	35	$	568	$	69
Favorable prior period development	$	60	$	25	$	100	$	49

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars) 2019
2018
2019
2018
Catastrophe losses $ 35
$ 80
$ 69
$ 121
Favorable prior period development $ 25
$ 72
$ 49
$ 166

Catastrophe losses through September 30, ~~2019~~2020 and ~~2018~~2019 were primarily from the following events:

•

~~2019~~

•2020: COVID-19 pandemic of $373 million, storms in Australia, Australia wildfires, Hurricane Laura, Hurricane Sally, Tropical Storm Isaias, and other weather-related events

•2019: Typhoon Faxai, Hurricane Dorian, storms in Australia, and other international weather-related events

~~: Typhoon Faxai, Hurricane Dorian, storms in Australia, and other international weather-related events~~


•	~~2018: Typhoons Jebi and Mangkhut and Hurricane Florence~~

Refer to the prior period development discussion in Note 46 to the Consolidated Financial Statements for additional information.

CAY Loss Ratio excluding Catastrophe Losses


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2020		2019		2020		2019
Loss and loss expense ratio	51.0	%	51.1	%	57.6	%	51.3	%
Catastrophe losses	(4.1)	%	(1.5)	%	(8.5)	%	(1.0)	%
Prior period development	2.6	%	1.1	%	1.5	%	0.7	%
CAY loss ratio excluding catastrophe losses	49.5	%	50.7	%	50.6	%	51.0	%

Three Months Ended Nine Months Ended
September 30 September 30
2019
2018
2019
2018
Loss and loss expense ratio 51.1 % 51.7 % 51.3 % 50.8 %
Catastrophe losses (1.5 )% (3.8 )% (1.0 )% (1.9 )%
Prior period development 1.1 % 3.4 % 0.7 % 2.6 %
CAY loss ratio excluding catastrophe losses 50.7 % 51.3 % 51.0 % 51.5 %

The CAY loss ratio excluding catastrophe losses decreased ~~0.6~~1.2 percentage points and ~~0.5~~0.4 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to a decrease in the underlying loss ratio from earned ~~price~~rate changes modestly above loss trends and a

benefit from lower current accident year losses resulting from a decrease in exposures

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~~change~~due to the COVID-19 pandemic, partially offset by lower premiums earned from A&H lines in ~~mix of business towards products~~Latin America and ~~regions that~~Asia, which have a lower loss ~~and loss expense ratio and a higher policy acquisition cost~~ ratio.

Global Reinsurance

The Global Reinsurance segment represents our reinsurance operations comprising Chubb Tempest Re Bermuda, Chubb Tempest Re USA, Chubb Tempest Re International, and Chubb Tempest Re Canada. Global Reinsurance markets its reinsurance products worldwide under the Chubb Tempest Re brand name and provides a broad range of traditional reinsurance coverage to a diverse array of primary P&C companies.


	Three Months Ended										Nine Months Ended											Three Months Ended									Nine Months Ended
	September 30						% Change				September 30						% Change					September 30						% Change			September 30						% Change
(in millions of U.S. dollars, except for percentages)	2019			2018			Q-19 vs. Q-18				2019			2018			YTD-19 vs. YTD-18				(in millions of U.S. dollars, except for percentages)	2020			2019			Q-20 vs. Q-19			2020			2019			YTD-20 vs. YTD-19
Net premiums written	$	141		$	164		(14.0			)%	$	540		$	554		(2.5			)%	Net premiums written	$	181		$	141		28.4		%	$	606		$	540		12.2		%
Net premiums earned	160			157			1.9			%	487			492			(1.1			)%	Net premiums earned	171			160			6.7		%	520			487			6.8		%
Losses and loss expenses	79			86			(8.0			)%	245			236			3.7			%	Losses and loss expenses	154			79			92.6		%	314			245			28.0		%
Policy acquisition costs	42			40			5.8			%	127			120			6.3			%	Policy acquisition costs	40			42			(3.9)		%	127			127			—
Administrative expenses	9			10			(17.7			)%	26			29			(12.8			)%	Administrative expenses	9			9			—			28			26			6.6		%
Underwriting income	30			21			44.9			%	89			107			(16.6			)%
Underwriting income (loss)																					Underwriting income (loss)	(32)			30			NM			51			89			(42.2)		%
Net investment income	55			63			(12.9			)%	166			192			(13.3			)%	Net investment income	85			71			18.5		%	214			206			3.3		%
Other (income) expense	(16		)	(13		)	25.9			%	(40		)	(26		)	52.6			%	Other (income) expense	—			—			—			1			—			NM

Segment income	$	101		$	97		4.6			%	$	295		$	325		(9.1			)%	Segment income	$	53		$	101		(48.2)		%	$	264		$	295		(10.7)		%
Net premiums written - constant dollars (1)																					Net premiums written - constant dollars (1)							27.2		%							11.9		%

Loss and loss expense ratio	49.6		%	55.0		%	(5.4	)	pts		50.3		%	48.0		%	2.3		pts		Loss and loss expense ratio	89.6		%	49.6		%	40.0	pts		60.3		%	50.3		%	10.0	pts
Policy acquisition cost ratio	26.2		%	25.2		%	1.0		pt		26.1		%	24.3		%	1.8		pts		Policy acquisition cost ratio	23.5		%	26.2		%	(2.7)	pts		24.5		%	26.1		%	(1.6)	pts
Administrative expense ratio	5.3		%	6.5		%	(1.2	)	pts		5.3		%	6.0		%	(0.7	)	pts		Administrative expense ratio	5.2		%	5.3		%	(0.1)	pts		5.3		%	5.3		%	—	pts
Combined ratio	81.1		%	86.7		%	(5.6	)	pts		81.7		%	78.3		%	3.4		pts		Combined ratio	118.3		%	81.1		%	37.2	pts		90.1		%	81.7		%	8.4	pts

NM – not meaningful

(1) On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.

Premiums

~~Net premiums written decreased $23 million, or $21 million (12.8 percent) on a constant-dollar basis, for~~For the three and nine months ended September 30, ~~2019,~~2020 net premiums written increased $40 million and $66 million, respectively, primarily ~~due to the timing of a large treaty, renewed~~driven by new business in ~~the first quarter of 2019, which was previously written mainly~~casualty lines, rate increases in ~~the third quarter of 2018,~~property catastrophe lines and reinstatement premiums on catastrophe losses, partially offset by an increase in ~~new business writings.~~ retrocessions. In addition, the prior year had unfavorable premium adjustments which lowered premium in 2019.

For the three and nine months ended September 30, ~~2019,~~2020 net premiums earned increased $11 million and $33 million, respectively, principally reflecting the increase in net premiums written decreased $14 million, or $6 million (1.1 percent) on a constant-dollar basis, due to an increase in ceded retrocessions as well as reductions in the International motor line, offset by an increase in new business written in property and marine lines.

Net premiums earned increased $3 million, or $5 million (3.1 percent) on a constant-dollar basis, for the three months ended September 30, 2019 principally reflecting an increase in new business writings. For the nine months ended September 30, 2019, net premiums earned decreased $5 million, but increased $3 million (0.7 percent) on a constant-dollar basis, reflecting new business writings in 2018 and 2019.described above.

Combined Ratio

The loss and loss expense ratio ~~decreased 5.4~~increased 40.0 percentage points ~~for the three months ended September 30, 2019 primarily due to lower catastrophe losses~~ and favorable loss experience in property and motor lines. The loss and loss expense ratio increased 2.3 percentage points for the nine months ended September 30, 2019 primarily due to lower favorable prior period development, partially offset by lower catastrophe losses and favorable loss experience in property and motor lines. In addition, the increase for the nine months ended September 30, 2019 was also driven by proportionally less premiums earned from property catastrophe business, which has a lower loss ratio.

~~The policy acquisition cost ratio increased 1.0 percentage point and 1.8~~10.0 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily due to higher ~~profit commissions paid on property~~catastrophe losses and ~~motor lines treaties with adjustable commission features,~~lower favorable prior period development, partially offset by ~~favorable commission benefits on increased ceded retrocessions.~~a shift in mix of business towards lines which have a lower loss ratio.

~~Table of Contents~~

The ~~administrative expense~~policy acquisition cost ratio decreased ~~1.2~~2.7 percentage points and ~~0.7~~1.6 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, primarily ~~driven by~~due to lower ~~variable~~profit commissions paid and a shift in mix of business towards lines which have lower acquisition costs.

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Catastrophe Losses and Prior Period Development


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions of U.S dollars)	2020		2019		2020		2019
Catastrophe losses (excludes reinstatement premiums)	$	75	$	25	$	88	$	35
Favorable prior period development	$	6	$	25	$	29	$	33

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S dollars) 2019
2018
2019
2018
Catastrophe losses ⁽¹⁾
$ 25
$ 34
$ 35
$ 45
Favorable prior period development $ 25
$ 24
$ 33
$ 54


⁽¹⁾	~~Excludes catastrophe reinstatement premiums~~

Catastrophe losses through September 30, ~~2019~~2020 and ~~2018~~2019 were primarily from the following events:


•	~~2019~~ •2020: COVID-19 pandemic claims of $10 million, Hurricane Laura, Hurricane Sally, Tropical Storm Isaias, and other severe weather-related events in Canada and the U.S. •2019: Hurricane Dorian and various U.S. and Japanese severe weather-related events : ~~Hurricane Dorian and various U.S. and Japanese severe weather-related events~~


•	~~2018: Hurricane Florence, Typhoon Jebi, Windstorm Friederike, and other various U.S., Canada, and Japanese severe weather-related events~~

Refer to the prior period development discussion in Note 46 to the Consolidated Financial Statements for additional information.

CAY Loss Ratio excluding Catastrophe Losses


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2020		2019		2020		2019
Loss and loss expense ratio	89.6	%	49.6	%	60.3	%	50.3	%
Catastrophe losses	(42.0)	%	(15.4)	%	(16.3)	%	(7.0)	%
Prior period development	2.1	%	15.7	%	5.0	%	6.7	%
CAY loss ratio excluding catastrophe losses	49.7	%	49.9	%	49.0	%	50.0	%

Three Months Ended Nine Months Ended
September 30 September 30
2019
2018
2019
2018
Loss and loss expense ratio 49.6 % 55.0 % 50.3 % 48.0 %
Catastrophe losses (15.4 )% (20.6 )% (7.0 )% (8.7 )%
Prior period development 15.7 % 16.8 % 6.7 % 11.3 %
CAY loss ratio excluding catastrophe losses 49.9 % 51.2 % 50.0 % 50.6 %

The CAY loss ratio excluding catastrophe losses decreased ~~1.3~~0.2 percentage points and ~~0.6~~1.0 percentage points for the three and nine months ended September 30, ~~2019,~~2020, respectively, ~~due to favorable loss experience~~primarily from a shift in ~~property and motor lines. The decrease for the nine months ended September 30, 2019 was partially offset by proportionally less premiums earned from property~~mix of business towards catastrophe ~~business,~~lines which ~~has~~have a lower loss ratio.

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Life Insurance

The Life Insurance segment comprises Chubb's international life operations, Chubb Tempest Life Re (Chubb Life Re), and the North American supplemental A&H and life business of Combined Insurance. We assess the performance of our life business based on Life Insurance underwriting income, which includes Net investment income and (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.


	Three Months Ended						Nine Months Ended
	September 30				% Change		September 30				% Change
(in millions of U.S. dollars, except for percentages)	2020		2019		Q-20 vs. Q-19		2020		2019		YTD-20 vs. YTD-19
Net premiums written	$	610	$	612	(0.4)	%	$	1,874	$	1,770	5.9	%
Net premiums earned	599		598		—		1,838		1,730		6.2	%
Losses and loss expenses	183		190		4.7	%	556		581		(4.6)	%
Policy benefits	174		165		6.1	%	542		495		9.9	%
Policy acquisition costs	175		176		(1.3)	%	551		454		21.2	%
Administrative expenses	80		80		—		238		237		0.5	%
Net investment income	95		92		3.3	%	285		278		2.7	%
Life Insurance underwriting income	82		79		5.4	%	236		241		(1.8)	%
Other (income) expense	(23)		(17)		34.9	%	(52)		(37)		40.7	%
Amortization of purchased intangibles	1		1		—		3		2		50.0	%
Segment income	$	104	$	95	10.0	%	$	285	$	276	3.3	%
Net premiums written - constant dollars (1)					0.2	%					6.5	%

Three Months Ended

Nine Months Ended
September 30 % Change
September 30 % Change
(in millions of U.S. dollars, except for percentages) 2019
2018
Q-19 vs. Q-18
2019
2018
YTD-19 vs. YTD-18
Net premiums written $ 612
$ 564
8.5 % $ 1,770
$ 1,688
4.8 %
Net premiums earned 598
551
8.7 % 1,730
1,643
5.3 %
Losses and loss expenses 190
195
(2.0 )% 581
584
(0.5 )%
Policy benefits ⁽¹⁾
158
127
23.2 % 515
428
20.2 %
(Gains) losses from fair value changes in separate account assets ⁽¹⁾
7
14
(46.3 )% (20 ) 18
NM
Policy acquisition costs 176
139
27.2 % 454
405
12.2 %
Administrative expenses 80
77
3.8 % 237
235
1.0 %
Net investment income 92
85
7.8 % 278
253
10.0 %
Life Insurance underwriting income 79
84
(6.8 )% 241
226
6.4 %
Other (income) expense ⁽¹⁾
(17 ) 6
NM
(37 ) 6
NM
Amortization of purchased intangibles 1
—
NM
2
1
24.7 %
Segment income $ 95
$ 78
20.9 % $ 276
$ 219
25.9 %
(1)On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency rates as the comparable current period.

~~NM – not meaningful~~


⁽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.

Premiums

~~Net~~For the three months ended September 30, 2020, net premiums written ~~increased $48~~decreased $2 million, and ~~$82~~increased $1 million ~~or $51 million (9.1 percent) and $103 million (6.2 percent)~~ on a constant-dollar basis, ~~for~~primarily due to growth in our international life operations of 9.4 percent, principally in Latin America driven by our expanded presence in Chile. The growth in international life operations was offset by declines in North America Combined Insurance business of 6.9 percent, including the ~~three and~~adverse impact of the COVID-19 pandemic. For the nine months ended September 30, ~~2019, respectively,~~2020, net premiums written increased $104 million, or $115 million on a constant-dollar basis, primarily reflecting growth in ~~our Asian and Latin American~~ international life operations of 22.4 percent, principally in Latin America and ~~North American Combined Insurance supplemental A&H program,~~Asia, partially offset by a decline in our ~~life reinsurance~~North America Combined Insurance business ~~which continues to decline as no new life reinsurance business is currently being written.~~of 5.2 percent.

Deposits

The following table presents deposits collected on universal life and investment contracts:


	Three Months Ended										Nine Months Ended
	September 30						% Change				September 30						% Change
(in millions of U.S. dollars, except for percentages)	2020		2019		C$ (1) 2019		Q-20 vs. Q-19		C$ (1) Q-20 vs. Q-19		2020		2019		C$ (1) 2019		Y-20 vs. Y-19		C$ (1) Y-20 vs. Y-19
Deposits collected on Universal life and investment contracts	$	363	$	369	$	384	(1.8)	%	(5.7)	%	$	1,115	$	1,059	$	1,081	5.3	%	3.2	%

Three Months Ended Nine Months Ended
September 30 % Change September 30 % Change
(in millions of U.S. dollars, except for percentages) 2019
2018

C$ ⁽¹⁾ 2018

Q-19 vs. Q-18

C$ ⁽¹⁾
Q-19 vs.
Q-18

2019
2018

C$ ⁽¹⁾ 2018

Y-19 vs. Y-18

C$ ⁽¹⁾ Y-19 vs. Y-18

Deposits collected on Universal life and investment contracts $ 369
$ 392
$ 381
(5.9 )% (3.0 )% $ 1,059
$ 1,163
$ 1,124
(9.0 )% (5.8 )%
(1) On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.


⁽¹⁾	~~On a constant-dollar basis. Amounts are calculated by translating prior period results using the same local currency exchange rates as the comparable current period.~~

Deposits collected on universal life and investment contracts (life deposits) are not reflected as revenues in our Consolidated statements of operations in accordance with GAAP. New life deposits are an important component of production, and although they do not significantly affect current period income from operations, they are key to our efforts to grow our business. Life deposits collected decreased for ~~both~~ the three months ended September 30, 2020 due to competitive market conditions and the impact of the COVID-19 pandemic. Life deposits collected increased for the nine months ended September 30, ~~2019 primarily due to a decline~~2020 as growth in Taiwan ~~driven by competitive market conditions, partially~~during the first quarter more than offset ~~by growth~~declines in ~~Vietnam.~~the second and third quarters.

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Life Insurance underwriting income and Segment income

Life Insurance underwriting income ~~decreased $5~~increased $3 million for the three months ended September 30, ~~2019 as the prior year benefited from a favorable reserve development of $8 million.~~2020 primarily due to higher net investment income. Life Insurance underwriting income ~~increased $15~~decreased $5 million for the nine months ended September 30, ~~2019, principally reflecting an increase~~2020 primarily due to the impact of COVID-19 related catastrophe losses and a decrease in ~~net investment~~underwriting income ~~partially offset by a favorable reserve development~~ in ~~the prior year.~~our variable annuity business, which continues to decline as no new life reinsurance business is currently being written. Additionally, segment income ~~benefited from~~included other income of ~~$17~~$23 million and ~~$37~~$52 million for the three and nine months ended September 30, ~~2019,~~2020, respectively, principally due to our share of net income from Huatai Life, our partially-owned life insurance entity in China.

Corporate

Corporate results primarily include the results of our non-insurance companies, income and expenses not attributable to reportable segments and loss and loss expenses of asbestos and environmental (A&E) liabilities and certain other non-A&E run-off exposures.


	Three Months Ended								Nine Months Ended									Three Months Ended						Nine Months Ended
	September 30						% Change		September 30						% Change			September 30				% Change		September 30				% Change
(in millions of U.S. dollars, except for percentages)	2019			2018			Q-19 vs. Q-18		2019			2018			YTD-19 vs. YTD-18		(in millions of U.S. dollars, except for percentages)	2020		2019		Q-20 vs. Q-19		2020		2019		YTD-20 vs. YTD-19
Losses and loss expenses	$	38		$	13		184.6	%	$	83		$	72		14.9	%	Losses and loss expenses	$	55	$	38	47.1	%	$	342	$	83	NM
Administrative expenses	74			58			31.5	%	211			200			6.2	%	Administrative expenses	71		74		(5.1)	%	214		211		1.1	%
Underwriting loss	112			71			59.1	%	294			272			8.1	%	Underwriting loss	126		112		12.2	%	556		294		89.2	%
Net investment income (loss)	(28		)	(49		)	(42.9	)%	(98		)	(162		)	(40.1	)%	Net investment income (loss)	(19)		(28)		(30.2)	%	(65)		(98)		(32.6)	%
Interest expense	138			164			(16.1	)%	418			488			(14.5	)%	Interest expense	130		138		(5.5)	%	390		418		(6.5)	%
Net realized gains (losses)	(141		)	27			NM		(467		)	33			NM		Net realized gains (losses)	(142)		(141)		0.9	%	(1,067)		(467)		128.2	%
Other (income) expense	(34		)	(144		)	(75.6	)%	(238		)	(275		)	(13.4	)%	Other (income) expense	(415)		(34)		NM		(283)		(238)		18.9	%
Amortization of purchased intangibles	54			64			(14.2	)%	163			192			(14.3	)%	Amortization of purchased intangibles	52		54		(6.6)	%	153		163		(7.0)	%
Chubb integration expenses	2			16			(89.9	)%	9			39			(76.9	)%	Chubb integration expenses	—		2		NM		—		9		NM
Income tax expense	230			183			25.8	%	626			536			16.8	%	Income tax expense	142		230		(38.0)	%	295		626		(52.8)	%
Net loss	$	(671	)	$	(376	)	78.7	%	$	(1,837	)	$	(1,381	)	33.1	%	Net loss	$	(196)	$	(671)	(70.9)	%	$	(2,243)	$	(1,837)	22.1	%

NM - not meaningful

Losses and loss expenses for the three months ended September 30, ~~2019~~2020 and ~~2018~~2019 were primarily from adverse development relating to our Brandywine environmental exposures of $35 million and $27 million, respectively, and unallocated loss adjustment expenses of the A&E claims operations. ~~In addition, the prior year included a favorable adjustment in our estimate of reinsurance recoverables.~~ Losses and loss expenses for the nine months ended September 30, ~~2019 and 2018~~2020 also included ~~charges in~~unfavorable prior period development of $254 million for U.S. child molestation claims, predominantly reviver statute-related, while the ~~second quarter~~prior year-to-date period also included charges for our non-A&E run-off casualty exposures, including workers' compensation.

Administrative expenses ~~increased $16 million and $11~~decreased $3 million for the three months ended September 30, 2020 primarily due to lower advertising expenses and lower travel-related costs. Administrative expenses increased $3 million for the nine months ended September 30, ~~2019, respectively,~~2020 primarily due to the impact of the COVID-19 pandemic and higher ~~global advertising~~legal expenses.

Chubb integration expenses are one-time in nature and are not related to the on-going business activities of the segments. The Chief Executive Officer does not manage segment results or allocate resources to segments when considering these costs and they are therefore excluded from our definition of segment income. Chubb integration expenses in 2019 principally consisted of small residual items related to the Chubb acquisition, and Chubb integration expenses in 2018 principally consisted of personnel-related expenses and rebranding.

Refer to the respective sections for a discussion of Net investment income, ~~Interest expense, Other (income) expense,~~ Net realized gains and losses, Other (income) expense, Amortization of purchased intangibles, and Income tax expense.

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Net Realized and Unrealized Gains (Losses)

We take a long-term view with our investment strategy, and our investment managers manage our investment portfolio to maximize total return within certain specific guidelines designed to minimize risk. The majority of our investment portfolio is available for sale and reported at fair value. Our held to maturity investment portfolio is reported at amortized cost, net of valuation allowance.

The effect of market movements on our fixed maturities portfolio impacts Net income (through Net realized gains (losses)) when securities are sold, when we write down an asset because we intend to sell the security, or when we record a change to the allowance for expected credit losses. For a further discussion related to how we assess the allowance for expected credit losses and the related impact on Net income, refer to Note 3 c) to the Consolidated Financial Statements. Additionally, Net income is impacted through the reporting of changes in the fair value of equity securities, private equity securities where we own less than three percent, and derivatives, including financial futures, options, swaps, and GLB reinsurance. Changes in unrealized appreciation and depreciation on available for sale securities, resulting from the revaluation of securities held, changes in cumulative foreign currency translation adjustment, and unrealized postretirement benefit liability adjustment, are reported as separate components of Accumulated other comprehensive income (loss) in Shareholders’ equity in the Consolidated balance sheets.

The following table presents our net realized and unrealized gains (losses):


	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
(in millions of U.S. dollars)	Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Net Impact		Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Net Impact
Fixed maturities	$	49	$	638	$	687	$	(11)	$	705	$	694
Fixed income and equity derivatives	9		—		9		(97)		—		(97)
Public equity
Sales	34		—		34		24		—		24
Mark-to-market	(34)		—		(34)		(21)		—		(21)
Private equity (less than 3 percent ownership)
Sales	—		—		—		(2)		—		(2)
Mark-to-market	31		—		31		(2)		—		(2)
Total investment portfolio	89		638		727		(109)		705		596
Variable annuity reinsurance derivative transactions, net of applicable hedges	(6)		—		(6)		(112)		—		(112)
Other derivatives	1		—		1		(14)		—		(14)
Foreign exchange	(222)		246		24		84		(193)		(109)
Other	(3)		(23)		(26)		(4)		(17)		(21)
Net gains (losses), pre-tax	$	(141)	$	861	$	720	$	(155)	$	495	$	340

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	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
(in millions of U.S. dollars)	Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Net Impact		Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Net Impact
Fixed maturities	$	(303)	$	1,759	$	1,456	$	(43)	$	3,834	$	3,791
Fixed income and equity derivatives	38		—		38		(408)		—		(408)
Public equity
Sales	197		—		197		57		—		57
Mark-to-market	(78)		—		(78)		9		—		9
Private equity (less than 3 percent ownership)
Sales	—		—		—		(4)		—		(4)
Mark-to-market	(71)		—		(71)		(14)		—		(14)
Total investment portfolio	(217)		1,759		1,542		(403)		3,834		3,431
Variable annuity reinsurance derivative transactions, net of applicable hedges	(456)		—		(456)		(146)		—		(146)
Other derivatives	(2)		—		(2)		(8)		—		(8)
Foreign exchange	(351)		(168)		(519)		86		(143)		(57)
Other	(43)		(59)		(102)		(4)		(62)		(66)
Net gains (losses), pre-tax	$	(1,069)	$	1,532	$	463	$	(475)	$	3,629	$	3,154

Pre-tax net gains of $463 million for the nine months ended September 30, 2020 reflected the financial market volatility in the credit, equity and foreign exchange markets, driven by the impact of the COVID-19 global pandemic. The $1,542 million gain in our investment portfolio was principally a result of a decline in interest rates, partially offset by $163 million of impairments for securities we intended to sell, and securities written to market entering default. The $519 million foreign exchange loss reflected the strengthening of the U.S. dollar against most major currencies. The $456 million realized loss in our variable annuity reinsurance portfolio was principally driven by lower interest rates and lower global equities markets, as discussed below.

The variable annuity reinsurance derivative transactions consist of changes in the fair value of GLB liabilities and gain or losses on other derivative instruments we maintain that decrease in fair value when the S&P 500 index increases. The variable annuity reinsurance derivative transactions resulted in realized losses of $6 million for the three months ended September 30, 2020 reflecting a net decrease in the fair value of the GLB liabilities of $46 million due to higher equity markets, particularly in the U.S., and a net realized loss of $52 million related to these other derivatives. For the nine months ended September 30, 2020, the variable annuity reinsurance derivative transactions resulted in realized losses of $456 million reflecting a net increase in the fair value of the GLB liabilities of $426 million due to lower interest rates and lower international equity markets and a net realized loss of $30 million related to these other derivatives.

The variable annuity reinsurance derivative transactions resulted in realized losses of $112 million and $146 million for the three and nine months ended September 30, 2019, respectively, reflecting a net increase in the fair value of GLB liabilities of $106 million and $57 million, respectively. The net increase in the fair value of GLB liabilities was principally due to lower interest rates. There were realized losses of $6 million and $89 million for the three and nine months ended September 30, 2019, respectively, related to other derivative instruments.


Effective Income Tax Rate

Our effective income tax rate reflects a mix of income or losses in jurisdictions with a wide range of tax rates, permanent differences between US GAAP and local tax laws, and the timing of recording discrete items. A change in the geographic mix of earnings could impact our effective tax rate.

~~For~~Our effective tax rate for the three and nine months ended September 30, 2020 was 10.7 percent and 20.9 percent, respectively. The effective tax rate for each period was impacted by realized gains and realized losses, respectively, generated in lower tax jurisdictions. In addition, the effective tax rate for the nine months ended September 30, 2020 was impacted by the

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high level of catastrophe losses, principally related to COVID-19. This compares to an effective tax rate on our tax expense of 17.4 percent and 16.0 percent for the three and nine months ended September 30, 2019, our effective income tax rate was 17.4 percent and 16.0 percent, respectively, compared to 12.9 percent, in both prior year periods. The effective income tax rates in the current year were higher compared to the prior year periods primarily due to a higher percentage of income generated in higher tax jurisdictions, a higher percentage of realized losses generated in lower tax jurisdictions and lower amounts of tax-exempt income.respectively.

In a referendum held on May 19, 2019, the Swiss voters affirmed the Federal Act on Tax Reform (Swiss tax reform). The reform was enacted on August 6, 2019. The majority of the measures associated with this reform will be effective on January 1, 2020. While we are still reviewing the impact, we do not expect these reforms to have a material impact on our effective tax rate, financial condition, or results of operations.



Non-GAAP Reconciliation

In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP).

Book value per common share, is shareholders’ equity divided by the shares outstanding. Tangible book value per common share, is shareholders’ equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. We believe that 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. The calculation of tangible book value per share does not consider the embedded goodwill attributable to our investments in partially-owned insurance companies until we attain majority ownership and consolidate.

We provide financial measures, including net premiums written, net premiums earned, and underwriting income on a constant-dollar basis. We believe it is useful to evaluate the trends in our results exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period.

P&C performance metrics comprise consolidated operating results (including Corporate) and exclude the operating results of the Life Insurance segment. We believe that these measures are useful and meaningful to investors as they are used by management to assess the company’s P&C operations which are the most economically similar. We exclude the Life Insurance segment because the results of this business do not always correlate with the results of our P&C operations.

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

CAY P&C combined ratio excluding catastrophe losses (CATs) excludes CATs and prior period development (PPD) from the P&C combined ratio. We exclude CATs as they are not predictable as to timing and amount and PPD as these unexpected loss developments on historical reserves are not indicative of our current underwriting performance. The combined ratio numerator is adjusted to exclude CATs, net premiums earned adjustments on PPD, prior period expense adjustments and reinstatement premiums on PPD, and the denominator is adjusted to exclude net premiums earned adjustments on PPD and reinstatement premiums on CATs and PPD. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded from PPD and net premiums earned when calculating the ratios. We believe this measure provides a better evaluation of our underwriting performance and enhances the understanding of the trends in our P&C business that may be obscured by these items. This measure is commonly reported among our peer companies and allows for a better comparison.

Reinstatement premiums are additional premiums paid on certain reinsurance agreements in order to reinstate coverage that had been exhausted by loss occurrences. The reinstatement premium amount is typically a pro rata portion of the original ceded premium paid based on how much of the reinsurance limit had been exhausted.

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Net premiums earned adjustments within PPD are adjustments to the initial premium earned on retrospectively rated policies based on actual claim experience that develops after the policy period ends. The premium adjustments correlate to the prior period loss development on these same policies and are fully earned in the period the adjustments are recorded.

Prior period expense adjustments typically relate to adjustable commission reserves or policyholder dividend reserves based on actual claim experience that develops after the policy period ends. The expense adjustments correlate to the prior period loss development on these same policies.

For this disclosure purpose, the normalized level of CATs, or expected level of CATs, is not intended to represent a probability weighted expectation for the company but rather to represent management’s view of what might be more typical for a given period, based on various factors, including historical experience, seasonal patterns, and consideration of both modeled CATs (e.g., windstorm and earthquake) as well as non-modeled CATs (e.g., wildfires, floods and freeze). The following table presents CATs above (below) expected level and the impact on the combined ratio:

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars, except for percentage points) 2019
2018
2019
2018
Actual level of CATs - pre-tax $ 232
$ 450
$ 757
$ 1,041
Less: Expected level of CATs - pre-tax 336
342
783
772
CATs above (below) expected level - pre-tax $ (104 ) $ 108
$ (26 ) $ 269
Adverse (favorable) impact of CATs above (below) an expected level on
combined ratio
(1.3 )% 1.5 % (0.1 )% 1.4 %
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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:

North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance

Global
Reinsurance

Corporate
Total P&C
Three Months Ended
September 30, 2019
(in millions of U.S. dollars except for ratios)
Numerator
Losses and loss expenses
Losses and loss expenses $ 2,051
$ 674
$ 866
$ 1,154
$ 79
$ 38
$ 4,862
Realized (gains) losses on crop derivatives —
—
14
—
—
—
14
Adjusted losses and loss expenses A $ 2,051
$ 674
$ 880
$ 1,154
$ 79
$ 38
$ 4,876
CATs (excludes reinstatement premiums) (88 ) (83 ) (3 ) (35 ) (25 ) —
(234 )
PPD and related adjustments
PPD, net of related adjustments - favorable (unfavorable) 109
62
(18 ) 25
25
(36 ) 167
Net premiums earned adjustments on PPD - unfavorable (favorable) 39
—
—
—
1
—
40
Expense adjustments - unfavorable (favorable) 3
—
—
—
(1 ) —
2
PPD reinstatement premiums - unfavorable (favorable) (1 ) (1 ) —
1
—
—
(1 )
PPD - gross of related adjustments - favorable (unfavorable) 150
61
(18 ) 26
25
(36 ) 208
CAY loss and loss expense ex CATs B $ 2,113
$ 652
$ 859
$ 1,145
$ 79
$ 2
$ 4,850
Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses C $ 715
$ 312
$ 60
$ 887
$ 51
$ 74
$ 2,099
Expense adjustments - favorable (unfavorable) (3 ) —
—
—
1
—
(2 )
Policy acquisition costs and administrative expenses, adjusted D $ 712
$ 312
$ 60
$ 887
$ 52
$ 74
$ 2,097
Denominator
Net premiums earned E $ 3,185
$ 1,187
$ 941
$ 2,256
$ 160
$ 7,729
Reinstatement premiums (collected) expensed on catastrophe losses

—
—
—
—
(2 ) (2 )
Net premiums earned adjustments on PPD - unfavorable (favorable) 39
—
—
—
1
40
PPD reinstatement premiums - unfavorable (favorable) (1 ) (1 ) —
1
—
(1 )
Net premiums earned excluding adjustments F $ 3,223
$ 1,186
$ 941
$ 2,257
$ 159
$ 7,766
P&C Combined ratio
Loss and loss expense ratio A/E 64.4 % 56.9 % 93.5 % 51.1 % 49.6 % 63.1 %
Policy acquisition cost and administrative expense ratio C/E 22.5 % 26.2 % 6.4 % 39.4 % 31.5 % 27.1 %
P&C Combined ratio 86.9 % 83.1 % 99.9 % 90.5 % 81.1 % 90.2 %
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted B/F 65.5 % 55.1 % 91.3 % 50.7 % 49.9 % 62.4 %
Policy acquisition cost and administrative expense ratio, adjusted D/F 22.1 % 26.2 % 6.4 % 39.3 % 32.2 % 27.1 %
CAY P&C Combined ratio ex CATs 87.6 % 81.3 % 97.7 % 90.0 % 82.1 % 89.5 %
Combined ratio
Combined ratio 90.0 %
Add: impact of gains and losses on crop derivatives 0.2 %
P&C Combined ratio 90.2 %
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.


		North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Corporate		Total P&C
Three Months Ended
September 30, 2020
(in millions of U.S. dollars except for ratios)
Numerator



Losses and loss expenses	A	$	2,444		$	961		$	845		$	1,192		$	154		$	55	$	5,651
Catastrophe losses and related adjustments
Catastrophe losses, net of related adjustments		(447)			(305)			(10)			(95)			(68)			—		(925)
Reinstatement premiums collected (expensed) on catastrophe losses		—			—			—			—			7			—		7
Catastrophe losses, gross of related adjustments		(447)			(305)			(10)			(95)			(75)			—		(932)
PPD and related adjustments
PPD, net of related adjustments - favorable (unfavorable)		200			(48)			(18)			60			6			(54)		146
Net premiums earned adjustments on PPD - unfavorable (favorable)		28			—			—			—			—			—		28
Expense adjustments - unfavorable (favorable)		(1)			—			—			—			(2)			—		(3)
PPD reinstatement premiums - unfavorable (favorable)		—			(8)			—			—			—			—		(8)
PPD, gross of related adjustments - favorable (unfavorable)		227			(56)			(18)			60			4			(54)		163
CAY loss and loss expense ex CATs	B	$	2,224		$	600		$	817		$	1,157		$	83		$	1	$	4,882
Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses	C	$	732		$	313		$	61		$	897		$	49		$	71	$	2,123
Expense adjustments - favorable (unfavorable)		1			—			—			—			2			—		3
Policy acquisition costs and administrative expenses, adjusted	D	$	733		$	313		$	61		$	897		$	51		$	71	$	2,126
Denominator
Net premiums earned	E	$	3,456		$	1,231		$	971		$	2,337		$	171				$	8,166
Reinstatement premiums (collected) expensed on catastrophe losses		—			—			—			—			(7)					(7)
Net premiums earned adjustments on PPD - unfavorable (favorable)		28			—			—			—			—					28
PPD reinstatement premiums - unfavorable (favorable)		—			(8)			—			—			—					(8)
Net premiums earned excluding adjustments	F	$	3,484		$	1,223		$	971		$	2,337		$	164				$	8,179
P&C Combined ratio
Loss and loss expense ratio	A/E	70.7		%	78.1		%	87.1		%	51.0		%	89.6		%			69.2		%
Policy acquisition cost and administrative expense ratio	C/E	21.2		%	25.4		%	6.2		%	38.4		%	28.7		%			26.0		%
P&C Combined ratio		91.9		%	103.5		%	93.3		%	89.4		%	118.3		%			95.2		%
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted	B/F	63.8		%	49.2		%	84.2		%	49.5		%	49.7		%			59.7		%
Policy acquisition cost and administrative expense ratio, adjusted	D/F	21.1		%	25.6		%	6.2		%	38.4		%	31.1		%			26.0		%
CAY P&C Combined ratio ex CATs		84.9		%	74.8		%	90.4		%	87.9		%	80.8		%			85.7		%
Combined ratio
Combined ratio																			95.2		%
Add: impact of gains and losses on crop derivatives																			—
P&C Combined ratio																			95.2		%
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.

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		North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Corporate		Total P&C
Three Months Ended
September 30, 2019
(in millions of U.S. dollars except for ratios)
Numerator
Losses and loss expenses		$	2,051		$	674		$	880		$	1,154		$	79		$	38	$	4,876



Catastrophe losses and related adjustments
Catastrophe losses, net of related adjustments		(88)			(83)			(3)			(35)			(23)			—		(232)
Reinstatement premiums collected (expensed) on catastrophe losses		—			—			—			—			2			—		2
Catastrophe losses, gross of related adjustments		(88)			(83)			(3)			(35)			(25)			—		(234)
PPD and related adjustments
PPD, net of related adjustments - favorable (unfavorable)		109			62			(18)			25			25			(36)		167
Net premiums earned adjustments on PPD - unfavorable (favorable)		39			—			—			—			1			—		40
Expense adjustments - unfavorable (favorable)		3			—			—			—			(1)			—		2
PPD reinstatement premiums - unfavorable (favorable)		(1)			(1)			—			1			—			—		(1)
PPD, gross of related adjustments - favorable (unfavorable)		150			61			(18)			26			25			(36)		208
CAY loss and loss expense ex CATs	B	$	2,113		$	652		$	859		$	1,145		$	79		$	2	$	4,850
Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses	C	$	715		$	312		$	60		$	887		$	51		$	74	$	2,099
Expense adjustments - favorable (unfavorable)		(3)			—			—			—			1			—		(2)
Policy acquisition costs and administrative expenses, adjusted	D	$	712		$	312		$	60		$	887		$	52		$	74	$	2,097
Denominator
Net premiums earned	E	$	3,185		$	1,187		$	941		$	2,256		$	160				$	7,729
Reinstatement premiums (collected) expensed on catastrophe losses		—			—			—			—			(2)					(2)
Net premiums earned adjustments on PPD - unfavorable (favorable)		39			—			—			—			1					40
PPD reinstatement premiums - unfavorable (favorable)		(1)			(1)			—			1			—					(1)
Net premiums earned excluding adjustments	F	$	3,223		$	1,186		$	941		$	2,257		$	159				$	7,766
P&C Combined ratio
Loss and loss expense ratio	A/E	64.4		%	56.9		%	93.5		%	51.1		%	49.6		%			63.1		%
Policy acquisition cost and administrative expense ratio	C/E	22.5		%	26.2		%	6.4		%	39.4		%	31.5		%			27.1		%
P&C Combined ratio		86.9		%	83.1		%	99.9		%	90.5		%	81.1		%			90.2		%
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted	B/F	65.5		%	55.1		%	91.3		%	50.7		%	49.9		%			62.4		%
Policy acquisition cost and administrative expense ratio, adjusted	D/F	22.1		%	26.2		%	6.4		%	39.3		%	32.2		%			27.1		%
CAY P&C Combined ratio ex CATs		87.6		%	81.3		%	97.7		%	90.0		%	82.1		%			89.5		%
Combined ratio
Combined ratio																			90.0		%
Add: impact of gains and losses on crop derivatives																			0.2		%
P&C Combined ratio																			90.2		%
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.

North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance

Global
Reinsurance

Corporate
Total P&C
Three Months Ended
September 30, 2018
(in millions of U.S. dollars except for ratios)
Numerator
Losses and loss expenses
Losses and loss expenses $ 1,881
$ 860
$ 719
$ 1,114
$ 86
$ 13
$ 4,673
Realized (gains) losses on crop derivatives —
—
8
—
—
—
8
Adjusted losses and loss expenses A $ 1,881

$ 860

$ 727

$ 1,114

$ 86

$ 13
$ 4,681
CATs (excludes reinstatement premiums)

(196 ) (136 ) (8 ) (80 ) (34 ) —
(454 )
PPD and related adjustments
PPD, net of related adjustments - favorable (unfavorable) 216
(58 ) 1
72
24
(12 ) 243
Net premiums earned adjustments on PPD - unfavorable (favorable) 40
—
—
—
4
—
44
Expense adjustments - unfavorable (favorable) 1
—
—
—
—
—
1
PPD reinstatement premiums - unfavorable (favorable) 1
1
—
2
—
—
4
PPD - gross of related adjustments - favorable (unfavorable) 258
(57 ) 1
74
28
(12 ) 292
CAY loss and loss expense ex CATs B $ 1,943

$ 667

$ 720

$ 1,108

$ 80

$ 1
$ 4,519
Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses C $ 709
$ 305
$ 51
$ 834
$ 50
$ 58
$ 2,007
Expense adjustments - favorable (unfavorable) (1 ) —
—
—
—
—
(1 )
Policy acquisition costs and administrative expenses, adjusted D $ 708

$ 305

$ 51

$ 834

$ 50

$ 58
$ 2,006
Denominator
Net premiums earned E $ 3,019
$ 1,167
$ 857
$ 2,157
$ 157
$ 7,357
Reinstatement premiums (collected) expensed on catastrophe losses

—
—
—
—
(4 ) (4 )
Net premiums earned adjustments on PPD - unfavorable (favorable) 40
—
—
—
4
44
PPD reinstatement premiums - unfavorable (favorable) 1
1
—
2
—
4
Net premiums earned excluding adjustments F $ 3,060

$ 1,168

$ 857

$ 2,159

$ 157
$ 7,401
P&C Combined ratio
Loss and loss expense ratio A/E 62.3 % 73.7 % 84.9 % 51.7 % 55.0 % 63.6 %
Policy acquisition cost and administrative expense ratio C/E 23.5 % 26.1 % 5.8 % 38.6 % 31.7 % 27.3 %
P&C Combined ratio 85.8 % 99.8 % 90.7 % 90.3 % 86.7 % 90.9 %
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted B/F 63.5 % 57.1 % 84.1 % 51.3 % 51.2 % 61.1 %
Policy acquisition cost and administrative expense ratio, adjusted D/F 23.2 % 26.1 % 5.8 % 38.7 % 31.6 % 27.1 %
CAY P&C Combined ratio ex CATs 86.7 % 83.2 % 89.9 % 90.0 % 82.8 % 88.2 %
Combined ratio
Combined ratio 90.8 %
Add: impact of gains and losses on crop derivatives 0.1 %
P&C Combined ratio 90.9 %
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.
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		North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Corporate		Total P&C
Nine Months Ended
September 30, 2020
(in millions of U.S. dollars except for ratios)
Numerator



Losses and loss expenses	A	$	8,123		$	2,406		$	1,223		$	3,935		$	314		$	342	$	16,343
Catastrophe losses and related adjustments
Catastrophe losses, net of related adjustments		(1,838)			(436)			(24)			(584)			(81)			—		(2,963)
Reinstatement premiums collected (expensed) on catastrophe losses		(3)			(1)			—			(16)			7			—		(13)
Catastrophe losses, gross of related adjustments		(1,835)			(435)			(24)			(568)			(88)			—		(2,950)
PPD and related adjustments
PPD, net of related adjustments - favorable (unfavorable)		451			(48)			(4)			100			29			(339)		189
Net premiums earned adjustments on PPD - unfavorable (favorable)		32			—			3			—			—			—		35
Expense adjustments - unfavorable (favorable)		(1)			—			—			—			(2)			—		(3)
PPD reinstatement premiums - unfavorable (favorable)		—			(8)			—			—			(1)			—		(9)
PPD, gross of related adjustments - favorable (unfavorable)		482			(56)			(1)			100			26			(339)		212
CAY loss and loss expense ex CATs	B	$	6,770		$	1,915		$	1,198		$	3,467		$	252		$	3	$	13,605
Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses	C	$	2,203		$	923		$	108		$	2,662		$	155		$	214	$	6,265
Expense adjustments - favorable (unfavorable)		1			—			—			—			2			—		3
Policy acquisition costs and administrative expenses, adjusted	D	$	2,204		$	923		$	108		$	2,662		$	157		$	214	$	6,268
Denominator
Net premiums earned	E	$	10,427		$	3,623		$	1,441		$	6,838		$	520				$	22,849
Reinstatement premiums (collected) expensed on catastrophe losses		3			1			—			16			(7)					13
Net premiums earned adjustments on PPD - unfavorable (favorable)		32			—			3			—			—					35
PPD reinstatement premiums - unfavorable (favorable)		—			(8)			—			—			(1)					(9)
Net premiums earned excluding adjustments	F	$	10,462		$	3,616		$	1,444		$	6,854		$	512				$	22,888
P&C Combined ratio
Loss and loss expense ratio	A/E	77.9		%	66.4		%	84.9		%	57.6		%	60.3		%			71.5		%
Policy acquisition cost and administrative expense ratio	C/E	21.1		%	25.5		%	7.4		%	38.9		%	29.8		%			27.4		%
P&C Combined ratio		99.0		%	91.9		%	92.3		%	96.5		%	90.1		%			98.9		%
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted	B/F	64.7		%	53.0		%	83.0		%	50.6		%	49.0		%			59.4		%
Policy acquisition cost and administrative expense ratio, adjusted	D/F	21.1		%	25.5		%	7.4		%	38.8		%	30.7		%			27.4		%
CAY P&C Combined ratio ex CATs		85.8		%	78.5		%	90.4		%	89.4		%	79.7		%			86.8		%
Combined ratio
Combined ratio																			98.9		%
Add: impact of gains and losses on crop derivatives																			—
P&C Combined ratio																			98.9		%
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.

North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global
Reinsurance
Corporate
Total P&C
Nine Months Ended
September 30, 2019
(in millions of U.S. dollars except for ratios)
Numerator
Losses and loss expenses
Losses and loss expenses $ 6,238
$ 2,178
$ 1,155
$ 3,385
$ 245
$ 83
$ 13,284
Realized (gains) losses on crop derivatives —
—
8
—
—
—
8
Adjusted losses and loss expenses A $ 6,238
$ 2,178
$ 1,163
$ 3,385
$ 245
$ 83
$ 13,292
CATs (excludes reinstatement premiums)

(319 ) (329 ) (7 ) (69 ) (35 ) —
(759 )
PPD and related adjustments

PPD, net of related adjustments - favorable (unfavorable) 425
88
43
49
33
(79 ) 559
Net premiums earned adjustments on PPD - unfavorable (favorable) 38
—
32
—
1
—
71
Expense adjustments - unfavorable (favorable) (3 ) —
(3 ) —
(1 ) —
(7 )
PPD reinstatement premiums - unfavorable (favorable) (1 ) (4 ) —
1
—
—
(4 )
PPD - gross of related adjustments - favorable (unfavorable) 459
84
72
50
33
(79 ) 619
CAY loss and loss expense ex CATs B $ 6,378
$ 1,933
$ 1,228
$ 3,366
$ 243
$ 4
$ 13,152
Policy acquisition costs and administrative expenses

Policy acquisition costs and administrative expenses C $ 2,132
$ 919
$ 99
$ 2,626
$ 153
$ 211
$ 6,140
Expense adjustments - favorable (unfavorable) 3
—
3
—
1
—
7
Policy acquisition costs and administrative expenses, adjusted D $ 2,135
$ 919
$ 102
$ 2,626
$ 154
$ 211
$ 6,147
Denominator
Net premiums earned E $ 9,660
$ 3,509
$ 1,374
$ 6,595
$ 487
$ 21,625
Reinstatement premiums (collected) expensed on catastrophe losses
—
—
—
—
(2 ) (2 )
Net premiums earned adjustments on PPD - unfavorable (favorable) 38
—
32
—
1
71
PPD reinstatement premiums - unfavorable (favorable) (1 ) (4 ) —
1
—
(4 )
Net premiums earned excluding adjustments F $ 9,697
$ 3,505
$ 1,406
$ 6,596
$ 486
$ 21,690
P&C Combined ratio
Loss and loss expense ratio A/E 64.6 % 62.1 % 84.7 % 51.3 % 50.3 % 61.5 %
Policy acquisition cost and administrative expense ratio C/E 22.0 % 26.2 % 7.2 % 39.8 % 31.4 % 28.4 %
P&C Combined ratio 86.6 % 88.3 % 91.9 % 91.1 % 81.7 % 89.9 %
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted B/F 65.8 % 55.2 % 87.4 % 51.0 % 50.0 % 60.6 %
Policy acquisition cost and administrative expense ratio, adjusted D/F 22.0 % 26.2 % 7.2 % 39.8 % 31.7 % 28.4 %
CAY P&C Combined ratio ex CATs 87.8 % 81.4 % 94.6 % 90.8 % 81.7 % 89.0 %
Combined ratio
Combined ratio 89.9 %
Add: impact of gains and losses on crop derivatives —
P&C Combined ratio 89.9 %
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.
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		North America Commercial P&C Insurance			North America Personal P&C Insurance			North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Corporate		Total P&C
Nine Months Ended
September 30, 2019
(in millions of U.S. dollars except for ratios)
Numerator



Losses and loss expenses	A	$	6,238		$	2,178		$	1,163		$	3,385		$	245		$	83	$	13,292
Catastrophe losses and related adjustments
Catastrophe losses, net of related adjustments		(319)			(329)			(7)			(69)			(33)			—		(757)
Reinstatement premiums collected (expensed) on catastrophe losses		—			—			—			—			2			—		2
Catastrophe losses, gross of related adjustments		(319)			(329)			(7)			(69)			(35)			—		(759)
PPD and related adjustments
PPD, net of related adjustments - favorable (unfavorable)		425			88			43			49			33			(79)		559
Net premiums earned adjustments on PPD - unfavorable (favorable)		38			—			32			—			1			—		71
Expense adjustments - unfavorable (favorable)		(3)			—			(3)			—			(1)			—		(7)
PPD reinstatement premiums - unfavorable (favorable)		(1)			(4)			—			1			—			—		(4)
PPD, gross of related adjustments - favorable (unfavorable)		459			84			72			50			33			(79)		619
CAY loss and loss expense ex CATs	B	$	6,378		$	1,933		$	1,228		$	3,366		$	243		$	4	$	13,152
Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses	C	$	2,132		$	919		$	99		$	2,626		$	153		$	211	$	6,140
Expense adjustments - favorable (unfavorable)		3			—			3			—			1			—		7
Policy acquisition costs and administrative expenses, adjusted	D	$	2,135		$	919		$	102		$	2,626		$	154		$	211	$	6,147
Denominator
Net premiums earned	E	$	9,660		$	3,509		$	1,374		$	6,595		$	487				$	21,625
Reinstatement premiums (collected) expensed on catastrophe losses		—			—			—			—			(2)					(2)
Net premiums earned adjustments on PPD - unfavorable (favorable)		38			—			32			—			1					71
PPD reinstatement premiums - unfavorable (favorable)		(1)			(4)			—			1			—					(4)
Net premiums earned excluding adjustments	F	$	9,697		$	3,505		$	1,406		$	6,596		$	486				$	21,690
P&C Combined ratio
Loss and loss expense ratio	A/E	64.6		%	62.1		%	84.7		%	51.3		%	50.3		%			61.5		%
Policy acquisition cost and administrative expense ratio	C/E	22.0		%	26.2		%	7.2		%	39.8		%	31.4		%			28.4		%
P&C Combined ratio		86.6		%	88.3		%	91.9		%	91.1		%	81.7		%			89.9		%
CAY P&C Combined ratio ex CATs
Loss and loss expense ratio, adjusted	B/F	65.8		%	55.2		%	87.4		%	51.0		%	50.0		%			60.6		%
Policy acquisition cost and administrative expense ratio, adjusted	D/F	22.0		%	26.2		%	7.2		%	39.8		%	31.7		%			28.4		%
CAY P&C Combined ratio ex CATs		87.8		%	81.4		%	94.6		%	90.8		%	81.7		%			89.0		%
Combined ratio
Combined ratio																			89.9		%
Add: impact of gains and losses on crop derivatives																			—
P&C Combined ratio																			89.9		%
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.

North America Commercial P&C Insurance
North America Personal P&C Insurance
North America Agricultural Insurance
Overseas General Insurance
Global
Reinsurance
Corporate
Total P&C
Nine Months Ended
September 30, 2018
(in millions of U.S. dollars except for ratios)
Numerator
Losses and loss expenses
Losses and loss expenses $ 5,873
$ 2,474
$ 955
$ 3,263
$ 236
$ 72
$ 12,873
Realized (gains) losses on crop derivatives —
—
(2 ) —
—
—
(2 )
Adjusted losses and loss expenses A $ 5,873
$ 2,474
$ 953
$ 3,263
$ 236
$ 72
$ 12,871
CATs (excludes reinstatement premiums)

(347 ) (521 ) (11 ) (121 ) (45 ) —
(1,045 )
PPD and related adjustments
PPD, net of related adjustments - favorable (unfavorable) 472
(59 ) 77
166
54
(67 ) 643
Net premiums earned adjustments on PPD - unfavorable (favorable) 29
—
40
—
7
—
76
Expense adjustments - unfavorable (favorable) 7
—
(4 ) —
(1 ) —
2
PPD reinstatement premiums - unfavorable (favorable) 5
1
—
2
—
—
8
PPD - gross of related adjustments - favorable (unfavorable) 513
(58 ) 113
168
60
(67 ) 729
CAY loss and loss expense ex CATs B $ 6,039
$ 1,895
$ 1,055
$ 3,310
$ 251
$ 5
$ 12,555
Policy acquisition costs and administrative expenses
Policy acquisition costs and administrative expenses C $ 2,113
$ 903
$ 74
$ 2,511
$ 149
$ 200
$ 5,950
Expense adjustments - favorable (unfavorable) (7 ) —
4
—
1
—
(2 )
Policy acquisition costs and administrative expenses, adjusted D $ 2,106
$ 903
$ 78
$ 2,511
$ 150
$ 200
$ 5,948
Denominator
Net premiums earned E $ 9,325
$ 3,463
$ 1,251
$ 6,425
$ 492
$ 20,956
Reinstatement premiums (collected) expensed on catastrophe losses —
—
—
—
(4 ) (4 )
Net premiums earned adjustments on PPD - unfavorable (favorable) 29
—
40
—
7
76
PPD reinstatement premiums - unfavorable (favorable) 5
1
—
2
—
8
Net premiums earned excluding adjustments F $ 9,359
$ 3,464
$ 1,291
$ 6,427
$ 495
$ 21,036
P&C Combined ratio
Loss and loss expense ratio A/E 63.0 % 71.5 % 76.2 % 50.8 % 48.0 % 61.4 %
Policy acquisition cost and administrative expense ratio C/E 22.6 % 26.0 % 5.9 % 39.1 % 30.3 % 28.4 %
P&C Combined ratio 85.6 % 97.5 % 82.1 % 89.9 % 78.3 % 89.8 %
CAY P&C Combined ratio ex CATs

Loss and loss expense ratio, adjusted B/F 64.5 % 54.7 % 81.8 % 51.5 % 50.6 % 59.7 %
Policy acquisition cost and administrative expense ratio, adjusted D/F 22.5 % 26.1 % 6.0 % 39.1 % 30.5 % 28.3 %
CAY P&C Combined ratio ex CATs 87.0 % 80.8 % 87.8 % 90.6 % 81.1 % 88.0 %
Combined ratio
Combined ratio 89.8 %
Add: impact of gains and losses on crop derivatives —
P&C Combined ratio 89.8 %
Note: The ratios above are calculated using whole U.S. dollars. Accordingly, calculations using rounded amounts may differ. Letters A, B, C, D, E, and F included in the table are references for calculating the ratios above.

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Other Income and Expense


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions of U.S. dollars)	2020		2019		2020		2019
Equity in net income (loss) of partially-owned entities (1)	$	479	$	81	$	435	$	353
Gains (losses) from fair value changes in separate account assets (2)	24		(7)		8		20
Federal excise and capital taxes	(4)		(5)		(16)		(17)

Other	(14)		(12)		(55)		(30)
Total	$	485	$	57	$	372	$	326

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars) 2019
2018
2019
2018
Equity in net (income) loss of partially-owned entities $ (81 ) $ (178 ) $ (353 ) $ (354 )
(Gains) losses from fair value changes in separate account assets ⁽¹⁾
7
14
(20 ) 18
Federal excise and capital taxes 5
7
17
14
Other 12
12
30
15
Other (income) expense $ (57 ) $ (145 ) $ (326 ) $ (307 )
(1) Equity in net income (loss) of partially-owned entities includes $37 million and $86 million attributable to our investments in Huatai (Huatai Group, Huatai P&C, and Huatai Life) for the three and nine months ended September 30, 2020, respectively, compared to $30 million and $59 million, respectively, for the prior year periods.


⁽¹⁾ (2) Related to gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.	~~Related to (gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.~~

Other ~~(income)~~income and expense includes equity in net ~~(income) loss~~income of partially-owned entities, which includes our share of net ~~(income)~~income or loss related to partially-owned investment companies (private equity) and partially-owned insurance companies. Also included in Other ~~(income)~~income and expense are ~~(Gains) losses~~gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP. The offsetting movement in the separate account liabilities is included in Policy benefits in the Consolidated statements of operations. Certain federal excise and capital taxes incurred as a result of capital management initiatives are included in Other ~~(income)~~income and expense as these are considered capital transactions and are excluded from underwriting results.

Amortization of purchased intangibles and Other amortization

Amortization expense related to purchased intangibles was ~~$76~~$72 million and ~~$229~~$217 million for the three and nine months ended September 30, ~~2019,~~2020, respectively, compared with ~~$83~~$76 million and ~~$253~~$229 million, respectively, in the prior year ~~periods.~~periods and principally relates to the Chubb Corp acquisition. The decrease in amortization expense of purchased intangibles reflects lower intangible amortization expense related to agency distribution relationships and renewal rights and no expense related to internally developed software, which was fully amortized in 2018, partially offset by a lower amortization benefit from the fair value adjustment on unpaid losses and loss expenses.

rights.

The following table presents, as of September 30, ~~2019,~~2020, the estimated pre-tax amortization expense (benefit) of purchased intangibles, at current foreign currency exchange rates, for the fourth quarter of ~~2019~~2020 and the next five years:

Associated with the Chubb Corp Acquisition
For the Years Ending December 31
(in millions of U.S. dollars) Agency distribution relationships and renewal rights
Fair value adjustment on Unpaid losses and loss expenses

Total ⁽¹⁾

Other intangible assets⁽²⁾

Total
Amortization of purchased intangibles

Fourth quarter of 2019 $ 70
$ (15 ) $ 55
$ 21
$ 76
2020 238
(35 ) 203
86
289
2021 215
(20 ) 195
85
280
2022 196
(15 ) 181
94
275
2023 177
(6 ) 171
92
263
2024 159
(5 ) 154
86
240
Total $ 1,055
$ (96 ) $ 959
$ 464
$ 1,423


⁽¹⁾	~~Recorded in Corporate.~~


⁽²⁾	~~Recorded in applicable segment(s) that acquired the intangible assets.~~


	Associated with the Chubb Corp Acquisition
For the Years Ending December 31 (in millions of U.S. dollars)	Agency distribution relationships and renewal rights		Fair value adjustment on Unpaid losses and loss expenses		Total (1)		Other intangible assets (2)		Total Amortization of purchased intangibles
Fourth quarter of 2020	$	60	$	(9)	$	51	$	22	$	73
2021	216		(20)		196		86		282
2022	196		(14)		182		98		280
2023	177		(7)		170		93		263
2024	160		(5)		155		87		242
2025	144		(6)		138		86		224
Total	$	953	$	(61)	$	892	$	472	$	1,364

(1)Recorded in Corporate.

(2)Recorded in applicable segment(s) that acquired the intangible assets.

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Reduction of deferred tax liability associated with intangible assets related to Other intangible assets (excluding the fair value adjustment on Unpaid losses and loss expense)

At September 30, ~~2019,~~2020, the deferred tax liability associated with Other intangible assets (excluding the fair value adjustment on Unpaid losses and loss expense) was ~~$1,368~~$1,301 million.

The following table presents, as of September 30, ~~2019,~~2020, the expected reduction of the deferred tax liability associated with Other intangible assets (which reduces as agency distribution relationships and renewal rights and other intangible assets amortize), at current foreign currency exchange rates, for the fourth quarter of ~~2019~~2020 and for the next five years:


For the Years Ending December 31 (in millions of U.S. dollars)	Reduction to deferred tax liability associated with intangible assets
Fourth quarter of 2020	$	18
2021	67
2022	65
2023	60
2024	55
2025	51
Total	$	316

For the Years Ending December 31
(in millions of U.S. dollars) Reduction to deferred tax liability associated with intangible assets
Fourth quarter of 2019 $ 20
2020 72
2021 67
2022 65
2023 60
2024 55
Total $ 339

Amortization of the fair value adjustment on acquired invested assets and assumed long-term debt

The following table presents at September 30, ~~2019,~~2020, the expected amortization expense of the fair value adjustment on acquired invested assets, at current foreign currency exchange rates, and the expected amortization benefit from the amortization of the fair value adjustment on assumed long-term debt for the fourth quarter of ~~2019~~2020 and for the next five years:


	Amortization (expense) benefit of the fair value adjustment on
For the Years Ending December 31 (in millions of U.S. dollars)	Acquired invested assets (1)		Assumed long-term debt (2)
Fourth quarter of 2020	$	(30)	$	6
2021	(110)		21
2022	(99)		21
2023	—		21
2024	—		21
2025	—		21
Total	$	(239)	$	111

Amortization (expense) benefit of the fair value adjustment on
For the Years Ending December 31
(in millions of U.S. dollars)
Acquired invested assets ⁽¹⁾

Assumed long-term debt ⁽²⁾

Fourth quarter of 2019 $ (35 ) $ 6
2020 (135 ) 21
2021 (105 ) 21
2022 (92 ) 21
2023 —
21
2024 —
21
Total $ (367 ) $ 111
(1)Recorded as a reduction to Net investment income in the Consolidated statements of operations.


⁽¹⁾ (2)Recorded as a reduction to Interest expense in the Consolidated statements of operations.	~~Recorded as a reduction to Net investment income in the Consolidated statements of operations.~~


⁽²⁾	~~Recorded as a reduction to Interest expense in the Consolidated statements of operations.~~

The estimate of amortization expense of the fair value adjustment on acquired invested assets could vary materially based on current market conditions, bond calls, overall duration of the acquired investment portfolio, and foreign exchange.

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~~Interest Expense~~Net Investment Income

The following table presents the estimated interest expense for the fourth quarter of 2019 based on our existing debt obligations as well as fees based on our expected usage of certain facilities including letters of credit, collateral fees, and repurchase agreements.

Our estimated fixed interest expense, at current foreign currency exchange rates, is based on outstanding debt obligations during the period. We redeemed the $500 million 5.9 percent senior note on June 15, 2019, therefore, no interest expense was included after the date of redemption.

We issued €575 million of 0.875 percent and €575 million of 1.4 percent Euro denominated senior notes on June 18, 2019 ($650 million each based on the foreign exchange rate at the date of issuance). Interest expense is included after the date of issuance. Refer to Note 5 to the Consolidated Financial Statements for further information.


	Three Months Ended				Nine Months Ended
	September 30				September 30
(in millions of U.S. dollars)	2020		2019		2020		2019
Fixed maturities (1)	$	826	$	862	$	2,487	$	2,533
Short-term investments	11		21		39		67
Other interest income	4		7		16		19
Equity securities	24		6		57		22
Other investments	18		20		59		57
Gross investment income	883		916		2,658		2,698
Investment expenses	(43)		(43)		(130)		(130)
Net investment income	$	840	$	873	$	2,528	$	2,568
(1) Includes amortization expense related to fair value adjustment on acquired invested assets related to the Chubb Corp acquisition	$	(28)	$	(37)	$	(90)	$	(126)

Our estimated variable interest expense is based on expected usage and interest rates and may fluctuate. These interest expenses include: fees on collateral, repurchase agreements, and credit facilities.

Estimated Interest Expense
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
(in millions of U.S. dollars) 2019
2019
2019
2019
2019
Fixed interest expense based on outstanding debt $ 124
$ 123
$ 120
$ 120
$ 487
Variable interest expense based on expected usage 21
22
23
19
85
Adjusted interest expense $ 145
$ 145
$ 143
$ 139
$ 572
Amortization of the fair value of debt related to the Chubb Corp acquisition (5 ) (5 ) (5 ) (6 ) (21 )
Total interest expense, including amortization of the fair value of debt $ 140
$ 140
$ 138
$ 133
$ 551

Actual Interest Expense
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
(in millions of U.S. dollars) 2018
2018
2018
2018
2018
Fixed interest expense based on outstanding debt $ 140
$ 131
$ 125
$ 124
$ 520
Variable interest expense 29
46
45
34
154
Adjusted interest expense $ 169
$ 177
$ 170
$ 158
$ 674
Amortization of the fair value of debt related to the Chubb Corp acquisition (12 ) (10 ) (6 ) (5 ) (33 )
Total interest expense, including amortization of the fair value of debt $ 157
$ 167
$ 164
$ 153
$ 641

~~Table of Contents~~

~~Net Investment Income~~

Three Months Ended Nine Months Ended
September 30 September 30
(in millions of U.S. dollars) 2019
2018
2019
2018
Fixed maturities ⁽¹⁾
$ 862
$ 779
$ 2,533
$ 2,329
Short-term investments 21
26
67
66
Other interest income ⁽²⁾
7
32
19
98
Equity securities 6
7
22
26
Other investments 20
21
57
64
Gross investment income 916
865
2,698

2,583
Investment expenses (43 ) (42 ) (130 ) (126 )
Net investment income $ 873
$ 823
$ 2,568

$ 2,457
⁽¹⁾Includes amortization expense related to fair value adjustment on acquired invested assets related to the Chubb Corp acquisition
$ (37 ) $ (60 ) $ (126 ) $ (193 )
⁽²⁾Other interest income includes interest earned from operating cash held outside the investment portfolio and also cash held in our global multi-currency notional cash pooling programs. Other interest income fluctuates based on changing interest rates and cash balances.

Net investment income is influenced by a number of factors including the amounts and timing of inward and outward cash flows, the level of interest rates, and changes in overall asset allocation. Net investment income ~~increased 6.0~~decreased 3.8 percent and ~~4.5~~1.6 percent for the three and nine months ended September 30, ~~2019,~~2020, respectively, ~~compared with the prior year periods. The increase was~~ primarily due to ~~higher average invested~~lower reinvestment rates on new and reinvested assets, partially offset by ~~a reduction in the usage of notional cash pooling programs and unfavorable foreign exchange.~~higher average invested assets.

~~Investment income for~~For private equities where we own less than three percent, investment income is included within Net investment income ~~and is shown in “Other investments”~~ in the table above. ~~Investment income for~~For private equities where we own more than three percent, investment income is included within Other income (expense) in the Consolidated statements of operations. ~~The~~Excluded from Net investment income is the mark-to-market movement for private equities, which is ~~included~~recorded within either Other income (expense) or Net realized gains (losses) based on our percentage of ~~ownership, which in~~ownership. The total mark-to-market movement for private equities excluded from Net investment income was as follows:


	Three Months Ended September 30				Nine Months Ended September 30
(in millions of U.S. dollars)	2020		2019		2020		2019



Total mark-to-market gain on private equity, pre-tax	$	436	$	34	$	229	$	227

Three Months Ended Nine Months Ended
March 31
June 30
September 30
September 30
(in millions of U.S. dollars) 2019
2019
2019
2019
Total mark-to-market on private equity, pre-tax

$ (47 ) $ 240
$ 34
$ 227

Three Months Ended Year Ended
March 31
June 30
September 30
December 31
December 31
(in millions of U.S. dollars) 2018
2018
2018
2018
2018
Total mark-to-market on private equity, pre-tax

$ 74
$ 86
$ 157
$ (19 ) $ 298

~~Net Realized and Unrealized Gains (Losses)~~

The effect of market movements on our fixed maturities portfolio impacts Net income (through Net realized gains (losses)) when securities are sold or when we record an Other-than-temporary impairment (OTTI) charge. For a further discussion related to how we assess OTTI for our fixed maturities, including credit-related OTTI, and the related impact on Net income, refer to Note 2 b) to the Consolidated Financial Statements. Additionally, Net income is impacted through the reporting of changes in the fair

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value of equity securities and private equity securities where we own less than three percent and derivatives, including financial futures, options, swaps, and GLB reinsurance. Changes in unrealized appreciation and depreciation on available for sale securities, resulting from the revaluation of securities held, changes in cumulative foreign currency translation adjustment, and unrealized postretirement benefit liability adjustment, are reported as separate components of Accumulated other comprehensive income (loss) in Shareholders’ equity in the Consolidated balance sheets.

~~The following table presents our net realized and unrealized gains (losses):~~

Three Months Ended September 30, 2019 Three Months Ended September 30, 2018
(in millions of U.S. dollars)
Net
Realized
Gains
(Losses)

Net
Unrealized
Gains
(Losses)

Net
Impact

Net
Realized
Gains
(Losses)

Net
Unrealized
Gains
(Losses)

Net
Impact

Fixed maturities $ (11 ) $ 705
$ 694
$ (38 ) $ (213 ) $ (251 )
Fixed income and equity derivatives (97 ) —
(97 ) 37
—
37
Public equity 24
—
24
48
—
48
Mark-to-market on public equity (21 ) —
(21 ) (13 ) —
(13 )
Private equity (2 ) —
(2 ) —
—
—
Mark-to-market on private equity ⁽¹⁾
(2 ) —
(2 ) 5
—
5
Total investment portfolio⁽²⁾
(109 ) 705
596
39
(213 ) (174 )
Variable annuity reinsurance derivative transactions, net of applicable hedges (112 ) —
(112 ) (46 ) —
(46 )
Other derivatives (14 ) —
(14 ) (8 ) —
(8 )
Foreign exchange 84
(193 ) (109 ) 39
(482 ) (443 )
Other (4 ) (17 ) (21 ) (5 ) (21 ) (26 )
Net gains (losses), pre-tax $ (155 ) $ 495
$ 340
$ 19
$ (716 ) $ (697 )


⁽¹⁾Investments			~~Represents mark-to-market movements for private equity investments where we own less than three percent.~~


⁽²⁾	~~For the three months ended September 30, 2019 and 2018, other-than-temporary impairments in Net realized gains (losses) included $24 million and $11 million, respectively, for fixed maturities.~~

Nine Months Ended September 30, 2019 Nine Months Ended September 30, 2018
(in millions of U.S. dollars)
Net
Realized
Gains
(Losses)

Net
Unrealized
Gains
(Losses)

Net
Impact

Net
Realized
Gains
(Losses)

Net
Unrealized
Gains
(Losses)

Net
Impact

Fixed maturities $ (43 ) $ 3,834
$ 3,791
$ (142 ) $ (1,921 ) $ (2,063 )
Fixed income and equity derivatives (408 ) —
(408 ) 78
—
78
Public equity 57
—
57
63
—
63
Mark-to-market on public equity 9
—
9
(41 ) —
(41 )
Private equity (4 ) —
(4 ) —
—
—
Mark-to-market on private equity ⁽¹⁾
(14 ) —
(14 ) 23
—
23
Total investment portfolio⁽²⁾
(403 ) 3,834
3,431
(19 ) (1,921 ) (1,940 )
Variable annuity reinsurance derivative transactions, net of applicable hedges (146 ) —
(146 ) 11
—
11
Other derivatives (8 ) —
(8 ) 2
—
2
Foreign exchange 86
(143 ) (57 ) 102
(659 ) (557 )
Other (4 ) (62 ) (66 ) (61 ) (61 ) (122 )
Net gains (losses), pre-tax $ (475 ) $ 3,629
$ 3,154
$ 35
$ (2,641 ) $ (2,606 )


⁽¹⁾	~~Represents mark-to-market movements for private equity investments where we own less than three percent.~~


⁽²⁾	~~For the nine months ended September 30, 2019 and 2018, other-than-temporary impairments in Net realized gains (losses) included $50 million and $16 million, respectively, for fixed maturities.~~

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The variable annuity reinsurance derivative transactions resulted in realized losses of $112 million and $146 million for the three and nine months ended September 30, 2019, respectively, reflecting a net increase in the fair value of GLB liabilities of $106 million and $57 million, respectively. The net increase in the fair value of GLB liabilities was principally due to lower interest rates. In addition, we maintain positions in derivative instruments that decrease in fair value when the S&P 500 index increases. There were realized losses of $6 million and $89 million for the three and nine months ended September 30, 2019, respectively, related to other derivative instruments.

The variable annuity reinsurance derivative transactions resulted in realized gains (losses) of $(46) million and $11 million for the three and nine months ended September 30, 2018, respectively, reflecting a net decrease in the fair value of GLB liabilities of $54 million and $133 million, respectively. The decrease in the fair value of GLB liabilities was primarily due to rising interest rates and higher equity market levels. In addition, we maintain positions in derivative instruments that decrease in fair value when the S&P 500 index increases. There were realized losses of $100 million and $122 million for the three and nine months ended September 30, 2018, respectively, related to other derivative instruments.

~~Investments~~

Our investment portfolio is invested primarily in publicly traded, investment grade, fixed income securities with an average credit quality of A/Aa as rated by the independent investment rating services Standard and Poor’s (S&P)/Moody’s Investors Service (Moody’s). The portfolio is externally managed by independent, professional investment managers and is broadly diversified across geographies, sectors, and issuers. Other investments principally comprise direct investments, investment funds, and limited partnerships. We hold no collateralized debt obligations in our investment portfolio, and we provide no credit default protection. We have long-standing global credit limits for our entire portfolio across the organization. Exposures are aggregated, monitored, and actively managed by our Global Credit Committee, comprising senior executives, including our Chief Financial Officer, our Chief Risk Officer, our Chief Investment Officer, and our Treasurer. We also have well-established, strict contractual investment rules requiring managers to maintain highly diversified exposures to individual issuers and closely monitor investment manager compliance with portfolio guidelines.

The average duration of our fixed income securities, including the effect of options and swaps, was ~~3.8~~4.0 years and ~~3.7~~3.8 years at September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. We estimate that a 100 basis point (bps) increase in interest rates would reduce the valuation of our fixed income portfolio by approximately ~~$3.8~~$4.3 billion at September 30, ~~2019.~~2020.

We established credit loss valuation allowances as a result of our adoption of guidance on Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (CECL) on January 1, 2020 and established a valuation allowance of $69 million. The COVID-19 global pandemic and related economic conditions adversely impacted our investment portfolio and

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resulted in an increase in our valuation allowance. This adverse impact was mitigated by the overall high credit quality of the portfolio and the stabilization of the valuation of investment grade securities due to measures announced by the U.S. Federal Reserve, including programs to support corporate and asset backed securities. Overall, the valuation allowance increased by $10 million for the nine months ended September 30, 2020. Refer to Note 3 to the Consolidated Financial Statements for additional information on expected credit losses.

The following table shows the fair value and cost/amortized cost, net of valuation allowance, of our invested assets:

September 30, 2019 December 31, 2018
(in millions of U.S. dollars)
Fair
Value

Cost/
Amortized
Cost

Fair
Value

Cost/
Amortized
Cost

Fixed maturities available for sale $ 85,044
$ 82,036
$ 78,470
$ 79,323
Fixed maturities held to maturity 13,096
12,622
13,259
13,435
Short-term investments 2,835
2,838
3,016
3,016
100,975
97,496
94,745
95,774
Equity securities 722
722
770
770
Other investments 5,955
5,955
5,277
5,277
Total investments $ 107,652
$ 104,173
$ 100,792
$ 101,821


	September 30, 2020				December 31, 2019
(in millions of U.S. dollars)	Fair Value		Cost/ Amortized Cost, Net		Fair Value		Cost/ Amortized Cost
Fixed maturities available for sale	$	89,852	$	85,167	$	85,488	$	82,580
Fixed maturities held to maturity	12,473		11,651		13,005		12,581
Short-term investments	4,660		4,662		4,291		4,291
	106,985		101,480		102,784		99,452
Equity securities	3,088		3,088		812		812
Other investments	6,796		6,796		6,062		6,062
Total investments	$	116,869	$	111,364	$	109,658	$	106,326

The fair value of our total investments increased ~~$6.9~~$7.2 billion during the nine months ended September 30, ~~2019,~~2020, primarily due to ~~unrealized appreciation driven by declining interest rates,~~ the investing of operating cash ~~flows~~flow, unrealized appreciation and the investing of ~~net proceeds from the~~ debt ~~issuance.~~issuance proceeds. This increase was partially offset by the payment of ~~dividends on our Common Shares and share repurchases.~~

~~Table~~collateralized deposits for the purchase of ~~Contents~~

additional ownership in Huatai Group.

The following tables present the ~~market~~fair value of our fixed maturities and short-term investments at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. The first table lists investments according to type and second according to S&P credit rating:


	September 30, 2020				December 31, 2019
(in millions of U.S. dollars, except for percentages)	Fair Value		% of Total		Fair Value		% of Total
U.S. Treasury / Agency	$	4,100	4	%	$	4,630	5	%
Corporate and asset-backed securities	37,712		35	%	34,259		33	%
Mortgage-backed securities	21,590		20	%	21,588		21	%
Municipal	12,267		12	%	12,824		12	%
Non-U.S.	26,656		25	%	25,192		25	%
Short-term investments	4,660		4	%	4,291		4	%
Total	$	106,985	100	%	$	102,784	100	%
AAA	$	16,177	15	%	$	15,714	15	%
AA	36,759		34	%	37,504		37	%
A	19,359		18	%	19,236		19	%
BBB	17,009		16	%	13,650		13	%
BB	9,609		9	%	9,474		9	%
B	7,466		7	%	6,897		7	%
Other	606		1	%	309		—
Total	$	106,985	100	%	$	102,784	100	%

September 30, 2019 December 31, 2018
(in millions of U.S. dollars, except for percentages)
Market
Value

% of Total

Market
Value

% of Total
Treasury / Agency $ 4,840
5 % $ 5,327
6 %
Corporate and asset-backed 33,881
34 % 29,091
31 %
Mortgage-backed 21,488
21 % 18,026
19 %
Municipal 13,369
13 % 16,327
17 %
Non-U.S. 24,562
24 % 22,958
24 %
Short-term investments 2,835
3 % 3,016
3 %
Total $ 100,975
100 % $ 94,745
100 %
AAA $ 14,696
15 % $ 14,571
15 %
AA 37,752
37 % 36,715
39 %
A 18,977
19 % 17,253
18 %
BBB 13,228
13 % 12,035
13 %
BB 9,317
9 % 8,363
9 %
B 6,739
7 % 5,596
6 %
Other 266
—
212
—
Total $ 100,975
100 % $ 94,745
100 %

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Corporate and asset-backed securities

The following table presents our 10 largest global exposures to corporate bonds by ~~market~~fair value at September 30, ~~2019:~~2020:


(in millions of U.S. dollars)	Fair Value
Wells Fargo & Co	$	762
Bank of America Corp	670
JP Morgan Chase & Co	658
Comcast Corp	511
Morgan Stanley	459
Citigroup Inc	441
Verizon Communications Inc	430
AT&T Inc	393
Goldman Sachs Group Inc	377
HSBC Holdings Plc	376

(in millions of U.S. dollars) Market Value
Wells Fargo & Co $ 630
JP Morgan Chase & Co 576
Bank of America Corp 558
Comcast Corp 459
HSBC Holdings Plc 385
AT&T Inc 384
Verizon Communications Inc 378
Citigroup Inc 359
Morgan Stanley 337
Goldman Sachs Group Inc 337

Mortgage-backed securities

S&P Credit Rating
Market
Value

Amortized Cost
September 30, 2019 (in millions of U.S. dollars) AAA
AA
A
BBB

BB and
below

Total
Total
Agency residential mortgage-backed (RMBS) $ 191
$ 17,606
$ —
$ —
$ —
$ 17,797
$ 17,257
Non-agency RMBS 132
48
74
17
11
282
280
Commercial mortgage-backed 3,031
247
125
6
—
3,409
3,311
Total mortgage-backed securities $ 3,354
$ 17,901
$ 199
$ 23
$ 11
$ 21,488
$ 20,848
The following table shows the fair value and amortized cost, net of valuation allowance, of our mortgage-backed securities:


	S&P Credit Rating										Fair Value		Amortized Cost, Net
September 30, 2020 (in millions of U.S. dollars)	AAA		AA		A		BBB		BB and below		Total		Total
Agency residential mortgage-backed (RMBS)	$	127	$	17,765	$	—	$	—	$	—	$	17,892	$	16,845
Non-agency RMBS	147		43		78		16		10		294		290
Commercial mortgage-backed securities	2,949		303		137		13		2		3,404		3,240
Total mortgage-backed securities	$	3,223	$	18,111	$	215	$	29	$	12	$	21,590	$	20,375

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Municipal

As part of our overall investment strategy, we may invest in states, municipalities, and other political subdivisions fixed maturity securities (Municipal). We apply the same investment selection process described previously to our Municipal investments. The portfolio is highly diversified primarily in state general obligation bonds and essential service revenue bonds including education and utilities (water, power, and sewers).

Non-U.S.

Our exposure to the Euro results primarily from Chubb European Group SE which is headquartered in France and offers a broad range of coverages throughout the European Union, Central, and Eastern Europe. Chubb primarily invests in Euro denominated investments to support its local currency insurance obligations and required capital levels. Chubb’s local currency investment portfolios have strict contractual investment guidelines requiring managers to maintain a high quality and diversified portfolio to both sector and individual issuers. Investment portfolios are monitored daily to ensure investment manager compliance with portfolio guidelines.

Our non-U.S. investment grade fixed income portfolios are currency-matched with the insurance liabilities of our non-U.S. operations. The average credit quality of our non-U.S. fixed income securities is A and 5048 percent of our holdings are rated AAA or guaranteed by governments or quasi-government agencies. Within the context of these investment portfolios, our government and corporate bond holdings are highly diversified across industries and geographies. Issuer limits are based on credit rating (AA—two percent, A—one percent, BBB—0.5 percent of the total portfolio) and are monitored daily via an internal compliance system. We manage our indirect exposure using the same credit rating based investment approach. Accordingly, we do not believe our indirect exposure is material.

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The following table summarizes the ~~market~~fair value and amortized cost, net of valuation allowance, of our non-U.S. fixed income portfolio by country/sovereign for non-U.S. government securities at September 30, ~~2019:~~2020:

(in millions of U.S. dollars) Market Value
Amortized Cost
Republic of Korea $ 1,056
$ 926
United Kingdom 893
860
Canada 848
833
Federative Republic of Brazil 732
709
Kingdom of Thailand 644
544
Province of Ontario 632
616
United Mexican States 551
538
Province of Quebec 496
480
Commonwealth of Australia 356
301
French Republic 312
268
Other Non-U.S. Government Securities⁽¹⁾
4,851
4,628
Total $ 11,371
$ 10,703


⁽¹⁾	~~There are no investments in Portugal, Ireland, Italy, Greece or Spain.~~

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(in millions of U.S. dollars)	Fair Value		Amortized Cost, Net
Republic of Korea	$	1,058	$	935
Canada	942		896
United Kingdom	905		868
Province of Ontario	681		637
Kingdom of Thailand	612		528
Province of Quebec	539		501
Federative Republic of Brazil	512		502
Commonwealth of Australia	454		397
United Mexican States	453		434
Socialist Republic of Vietnam	380		264
Other Non-U.S. Government Securities	5,486		5,188
Total	$	12,022	$	11,150

The following table summarizes the ~~market~~fair value and amortized cost, net of valuation allowance, of our non-U.S. fixed income portfolio by country/sovereign for non-U.S. corporate securities at September 30, ~~2019:~~2020:


(in millions of U.S. dollars)	Fair Value		Amortized Cost, Net
United Kingdom	$	2,288	$	2,179
Canada	1,833		1,744
France	1,189		1,126
United States (1)	1,155		1,114
Australia	887		839
Netherlands	617		580
Japan	581		557
Switzerland	566		527
Germany	536		511
China	443		424
Other Non-U.S. Corporate Securities	4,539		4,364
Total	$	14,634	$	13,965

(in millions of U.S. dollars) Market Value
Amortized Cost
United Kingdom $ 2,148
$ 2,061
Canada 1,690
1,642
United States⁽¹⁾
1,144
1,101
France 1,048
998
Australia 826
788
Netherlands 654
624
Japan 580
568
Germany 539
514
Switzerland 485
463
China 355
344
Other Non-U.S. Corporate Securities 3,722
3,569
Total $ 13,191
$ 12,672
(1) The countries that are listed in the non-U.S. corporate fixed income portfolio above represent the ultimate parent company's country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations.


⁽¹⁾	The countries that are listed in the non-U.S. corporate fixed income portfolio above represent the ultimate parent company's country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations.

Below-investment grade corporate fixed income portfolio

Below-investment grade securities have different characteristics than investment grade corporate debt securities. Risk of loss from default by the borrower is greater with below-investment grade securities. Below-investment grade securities are generally unsecured and are often subordinated to other creditors of the issuer. Also, issuers of below-investment grade securities usually have higher levels of debt and are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than investment grade issuers. At September 30, ~~2019,~~2020, our corporate fixed income investment portfolio included below-investment grade and non-rated securities which, in total, comprised approximately 1415 percent of our fixed income portfolio. Our below-investment grade and non-rated portfolio includes over ~~1,200~~1,400 issuers, with the greatest single exposure being ~~$154~~$162 million.

We manage high-yield bonds as a distinct and separate asset class from investment grade bonds. The allocation to high-yield bonds is explicitly set by internal management and is targeted to securities in the upper tier of credit quality (BB/B). Our minimum rating for initial purchase is BB/B. ~~Twelve~~Fourteen external investment managers are responsible for high-yield security selection and portfolio construction. Our high-yield managers have a conservative approach to credit selection and very low historical default experience. Holdings are highly diversified across industries and generally subject to a 1.5 percent issuer limit

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as a percentage of high-yield allocation. We monitor position limits daily through an internal compliance system. Derivative and structured securities (e.g., credit default swaps and collateralized loan obligations) are not permitted in the high-yield portfolio.

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Critical Accounting Estimates

As of September 30, ~~2019,~~2020, there were no material changes to our critical accounting estimates. For a full discussion of our critical accounting estimates, refer to Item 7 in our ~~2018~~2019 Form 10-K.

~~Reinsurance recoverable on ceded reinsurance~~

September 30, 2019 December 31, 2018
(in millions of U.S. dollars)
Net Reinsurance Recoverable ⁽¹⁾

Provision for Uncollectible

Net Reinsurance Recoverable ⁽¹⁾

Provision for Uncollectible
Reinsurance recoverable on unpaid losses and loss expenses $ 14,332
$ 250
$ 14,689
$ 251
Reinsurance recoverable on paid losses and loss expenses 1,195
70
1,304
72
Reinsurance recoverable on losses and loss expenses $ 15,527
$ 320
$ 15,993
$ 323
Reinsurance recoverable on policy benefits $ 199
$ 4
$ 202
$ 4


⁽¹⁾	~~Net of provision for uncollectible reinsurance.~~

The decrease in reinsurance recoverable on losses and loss expenses was primarily due to collections on catastrophe losses and collections related to favorable reinsurance settlements in the second quarter.

We evaluate the financial condition of our reinsurers and potential reinsurers on a regular basis and also monitor concentrations of credit risk with reinsurers. The provision for uncollectible reinsurance is required principally due to the potential failure of reinsurers to indemnify Chubb, primarily because of disputes under reinsurance contracts and insolvencies. We have established provisions for amounts estimated to be uncollectible on both unpaid and paid losses as well as future policy benefits.

Unpaid losses and loss expenses

As an insurance and reinsurance company, we are required by applicable laws and regulations and GAAP to establish loss and loss expense reserves for the estimated unpaid portion of the ultimate liability for losses and loss expenses under the terms of our policies and agreements with our insured and reinsured customers. With the exception of certain structured settlements, for which the timing and amount of future claim payments are reliably determinable, and certain reserves for unsettled claims, ~~that are discounted in statutory filings,~~ our loss reserves are not discounted for the time value of money.

The following table presents a roll-forward of our unpaid losses and loss expenses:


(in millions of U.S. dollars)	Gross Losses		Reinsurance Recoverable (1)		Net Losses
Balance at December 31, 2019	$	62,690	$	14,181	$	48,509
Losses and loss expenses incurred	20,682		3,785		16,897
Losses and loss expenses paid	(15,561)		(3,198)		(12,363)
Other (including foreign exchange translation)	94		(1)		95
Balance at September 30, 2020	$	67,905	$	14,767	$	53,138

(in millions of U.S. dollars)
Gross
Losses

Reinsurance
Recoverable ⁽¹⁾

Net
Losses

Balance at December 31, 2018 $ 62,960
$ 14,689
$ 48,271
Losses and loss expenses incurred 17,802
3,937
13,865
Losses and loss expenses paid (17,529 ) (4,235 ) (13,294 )
Foreign currency revaluation and other (221 ) (59 ) (162 )
Balance at September 30, 2019 $ 63,012
$ 14,332
$ 48,680
(1)Net of valuation allowance for uncollectible reinsurance.


⁽¹⁾	~~Net of provision for uncollectible reinsurance.~~

The estimate of the liabilities includes provisions for claims that have been reported but are unpaid at the balance sheet date (case reserves) and for obligations on claims that have been incurred but not reported (IBNR) at the balance sheet date. IBNR may also include provisions to account for the possibility that reported claims may settle for amounts that differ from the established case reserves. Loss reserves also include an estimate of expenses associated with processing and settling unpaid claims (loss expenses).

Refer to Note 46 to the Consolidated Financial Statements for a discussion on the changes in the loss reserves.

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Asbestos and Environmental (A&E)

During the three ~~months~~months ended September 30, ~~2019,~~2020, we increased environmental net loss reserves for Brandywine managed operations by ~~$27~~$35 million. A&E reserves are included in Corporate. Refer to our ~~2018~~2019 Form 10-K for further information on our A&E exposures.

Fair value measurements

Accounting guidance defines fair value as the price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants and establishes a three-level valuation hierarchy based on the reliability of the inputs. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1 inputs) and the lowest priority to unobservable data (Level 3 inputs). Level 2 includes inputs, other than quoted prices within Level 1, that are observable for assets or liabilities either directly or indirectly. Refer to Note 34 to the Consolidated Financial Statements for information on our fair value measurements.

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Catastrophe management

We actively monitor and manage our catastrophe risk accumulation around the world such as setting risk limits based on probable maximum loss (PML) and purchasing catastrophe reinsurance. The table below presents our modeled pre-tax estimates of natural catastrophe PML, net of reinsurance, at September 30, ~~2019,~~2020, for Worldwide, U.S. hurricane and California earthquake events, based on our in-force portfolio at July 1, ~~2019~~2020 and reflecting the April 1, ~~2019~~2020 reinsurance program (see Natural Catastrophe Property Reinsurance Program section) as well as inuring reinsurance protection coverages. According to the model, for the 1-in-100 return period scenario, there is a one percent chance that our pre-tax annual aggregate losses incurred in any year from U.S. hurricane events could be in excess of ~~$2,671~~$2,720 million (or ~~4.9~~4.8 percent of our total shareholders’ equity at September 30, ~~2019)~~2020). These estimates assume that reinsurance recoverable is fully collectible.


	Modeled Net Probable Maximum Loss (PML) Pre-tax
	Worldwide (1)				U.S. Hurricane (2)				California Earthquake (3)
	Annual Aggregate				Annual Aggregate				Single Occurrence
(in millions of U.S. dollars, except for percentages)	Chubb		% of Total Shareholders’ Equity		Chubb		% of Total Shareholders’ Equity		Chubb		% of Total Shareholders’ Equity
1-in-10	$	1,880	3.3	%	$	1,096	1.9	%	$	141	0.2	%
1-in-100	$	3,963	7.0	%	$	2,720	4.8	%	$	1,306	2.3	%
1-in-250	$	6,577	11.7	%	$	4,929	8.7	%	$	1,478	2.6	%

Modeled Net Probable Maximum Loss (PML)

Worldwide ⁽¹⁾

U.S. Hurricane ⁽²⁾

California Earthquake ⁽³⁾
Annual Aggregate Annual Aggregate Single Occurrence
(in millions of U.S. dollars, except for percentages) Chubb % of Total
Shareholders’
Equity Chubb % of Total
Shareholders’
Equity Chubb % of Total
Shareholders’
Equity
1-in-10 $ 1,866
3.4 % $ 1,076
2.0 % $ 127
0.2 %
1-in-100 $ 3,772
6.9 % $ 2,671
4.9 % $ 1,340
2.5 %
1-in-250 $ 6,140
11.3 % $ 4,681
8.6 % $ 1,521
2.8 %
(1) Worldwide losses are comprised of losses arising only from hurricanes, typhoons, convective storms and earthquakes and do not include “non-modeled” perils such as wildfire and flood.


⁽¹⁾ (2) U.S. Hurricane losses include losses from wind and storm-surge and exclude rainfall. (3) California earthquakes include fire-following perils.	~~Worldwide losses are comprised of losses arising only from hurricanes, typhoons, convective storms and earthquakes and do not include “non-modeled” perils such as wildfire and flood.~~


⁽²⁾	~~U.S. Hurricane losses include losses from wind and storm-surge and exclude rainfall.~~


⁽³⁾	~~California earthquakes include fire-following perils.~~

The above estimates of Chubb’s loss profile are inherently uncertain for many reasons, including the following:

•While the use of third-party catastrophe modeling packages to simulate potential hurricane and earthquake losses is prevalent within the insurance industry, the models are reliant upon significant meteorology, seismology, and engineering assumptions to estimate catastrophe losses. In particular, modeled catastrophe events are not always a representation of actual events and ensuing additional loss potential;

•There is no universal standard in the preparation of insured data for use in the models, the running of the modeling software and interpretation of loss output. These loss estimates do not represent our potential maximum exposures and it is highly likely that our actual incurred losses would vary materially from the modeled estimates; and

•The potential effects of climate change add to modeling complexity.

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Natural Catastrophe Property Reinsurance Program

Chubb’s core property catastrophe reinsurance program provides protection against natural catastrophes impacting its primary property operations (i.e., excluding our Global Reinsurance and Life Insurance segments).

We regularly review our reinsurance protection and corresponding property catastrophe exposures. This may or may not lead to the purchase of additional reinsurance prior to a program’s renewal date. In addition, prior to each renewal date, we consider how much, if any, coverage we intend to buy and we may make material changes to the current structure in light of various factors, including modeled PML assessment at various return periods, reinsurance pricing, our risk tolerance and exposures, and various other structuring considerations.

Chubb renewed its Global Property Catastrophe Reinsurance Program for our North American and International operations effectiveApril 1, ~~2019~~2020 through March 31, ~~2020,~~2021, with ~~modest enhancements~~no material changes in coverage from the expiring program. The program consists of three layers in excess of losses retained by Chubb on a per occurrence basis. In addition, Chubb also renewed its terrorism coverage (excluding nuclear, biological, chemical and radiation coverage, with an inclusion of coverage for biological and chemical coverage for personal lines) for the United States from April 1, ~~2019~~2020 through March 31, ~~2020~~2021 with the same limits and retention and percentage placed except that the majority of terrorism coverage is on an aggregate basis above our retentions without a reinstatement.

Loss Location

Layer of Loss

Comments

Notes

United States
(excluding Alaska and Hawaii)

$0 million –

$1.0 billion

Losses retained by Chubb

(a)

United States
(excluding Alaska and Hawaii)

$1.0 billion –

$~~1.2~~1.15 billion

All natural perils and terrorism

(b)

United States
(excluding Alaska and Hawaii)

$~~1.2~~1.15 billion –

$~~2.2~~2.15 billion

All natural perils and terrorism

(c)

United States
(excluding Alaska and Hawaii)

$~~2.2~~2.15 billion –

$3.5 billion

All natural perils and terrorism

(d)

International
(including Alaska and Hawaii)

$0 million –

$175 million

Losses retained by Chubb

(a)

International
(including Alaska and Hawaii)

$175 million –

$1.175 billion

All natural perils and terrorism

(c)

Alaska, Hawaii, and Canada

$1.175 billion –

$~~2.475~~2.525 billion

All natural perils and terrorism

(d)


^(a)	Ultimate retention will depend upon the nature of the loss and the interplay between the underlying per risk programs and certain other catastrophe programs purchased by individual business units. These other catastrophe programs have the potential to reduce our effective retention below the stated levels.


^(b)	~~These coverages are partially placed with Reinsurers.~~


^(c)	~~These coverages are both part of the same Second layer within the Global Catastrophe Program and are fully placed with Reinsurers.~~


^(d)	~~These coverages are both part of the same Third layer within the Global Catastrophe Program and are fully placed with Reinsurers.~~

Chubb also has a property catastrophe bond in place that offers additional natural catastrophe protection for certain parts of the portfolio. The geographic scope of this coverage is from Virginia through Maine. The East Lane VI 2015 bond currently provides $250 million of coverage as part of a $427 million layer in excess of $2.0 billion retention through March 13, 2020.



~~Crop Insurance~~

~~We are, and have been since~~(a) Ultimate retention will depend upon the ~~1980s, one~~nature of the leading writers of crop insurance in the U.S. and have conducted that business through a managing general agent subsidiary of Rain and Hail. We provide protection throughout the U.S. on a variety of crops and are therefore geographically diversified, which reduces the risk of exposure to a single event or a heavy accumulation of losses in any one region. Our crop insurance business comprises two components - Multiple Peril Crop Insurance (MPCI) and crop-hail insurance.

The MPCI program, offered in conjunction with the U.S. Department of Agriculture’s Risk Management Agency (RMA), is a federal subsidized insurance program that covers revenue shortfalls or production losses due to natural causes such as drought, excessive moisture, hail, wind, freeze, insects, and disease. These Revenue Products are defined as providing both commodity

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price and yield coverages. Policies are available for various crops in different areas of the U.S. and generally have deductibles generally ranging from 10 percent to 50 percent of the insured's risk. The USDA's Risk Management Agency (RMA) sets the policy terms and conditions, rates and forms, and is also responsible for setting compliance standards. As a participant in the MPCI program, we report all details of policies to the RMA and are party to a Standard Reinsurance Agreement (SRA). The SRA sets out the relationship between private insurance companiesloss and the ~~Federal Crop Insurance Corporation (FCIC) concerning~~interplay between the ~~terms~~underlying per risk programs and ~~conditions regarding~~certain other catastrophe programs purchased by individual business units. These other catastrophe programs have the risks each will bear including the pro-rata and state stop-loss provisions, which allows companies to limit the exposure of any one state or group of states on their underwriting results. In addition to the pro-rata and excess of loss reinsurance protections inherent in the SRA, we also purchase third-party proportional and stop-loss reinsurance for our MPCI businesspotential to reduce our ~~exposure. We may also enter into crop derivative contracts to further manage our risk exposure.~~effective retention below the stated levels.

(b) These coverages are partially placed with Reinsurers.

Each year the RMA issues a final SRA for the subsequent reinsurance year (i.e., the 2020 SRA covers the 2020 reinsurance year from July 1, 2019 through June 30, 2020). There were no significant changes in the terms and conditions from the 2019 SRA and therefore, the new SRA does not impact Chubb's outlook on the crop program relative to 2020.

We recognize net premiums written as soon as estimable on our MPCI business, which is generally when we receive acreage reports from the policyholders on the various crops throughout the U.S. This allows us to best determine the premium associated with the liability that is being planted. The MPCI program has specific timeframes as to when producers must report acreage to us and in certain cases, the reporting occurs after the close(c) These coverages are both part of the ~~respective reinsurance year. Once~~same Second layer within the ~~net premium written has been recorded, the premium is then earned over the growing season for the crops. A majority~~Global Catastrophe Program and are fully placed with Reinsurers.

(d) These coverages are both part of the ~~crops that~~same Third layer within the Global Catastrophe Program and are covered in the program are typically subject to the SRA in effect at the beginning of the year. Given the major crops covered in the program, we typically see a substantial written and earned premium impact in the second and third quarters.fully placed with Reinsurers.

The pricing of MPCI premium is determined using a number of factors including commodity prices and related volatility (i.e., both impact the amount of premium we can charge to the policyholder). For example, in most states, the pricing for the MPCI Revenue Product for corn (i.e., insurance coverage for lower than expected crop revenue in a given season) includes a factor based on the average commodity price in February. If corn commodity prices are higher in February, compared to the February price in the prior year, and all other factors are the same, the increase in price will increase the corn premium year-over-year. Pricing is also impacted by volatility factors, which measure the likelihood commodity prices will fluctuate over the crop year. For example, if volatility is set at a higher rate compared to the prior year, and all other factors are the same, the premium charged to the policyholder will be higher year-over-year for the same level of coverage.

Losses incurred on the MPCI business are determined using both commodity price and crop yield. With respect to commodity price, there are two important periods on a large portion of the business: The month of February when the initial premium base is set, and the month of October when the final harvest price is set. If the price declines from February to October, with yield remaining at normal levels, the policyholder may be eligible to recover on the policy. However, in most cases there are deductibles on these policies, therefore, the impact of a decline in price would have to exceed the deductible before a policyholder would be eligible to recover.

We evaluate our MPCI business at an aggregate level and the combination of all of our insured crops (both winter and summer) go into our underwriting gain or loss estimate in any given year. Typically, we do not have enough information on the harvest prices or crop yield outputs to quantify the preliminary estimated impact to our underwriting results until the fourth quarter.

Our crop-hail program is a private offering. Premium is earned on the crop-hail program over the coverage period of the policy. Given the very short nature of the growing season, most crop-hail business is typically written in the second and third quarters and the recognition of earned premium is also more heavily concentrated during this timeframe. We use industry data to develop our own rates and forms for the coverage offered. The policy primarily protects farmers against yield reduction caused by hail and/or fire, and related costs such as transit to storage. We offer various deductibles to allow the grower to partially self-insure for a reduced premium cost. We limit our crop-hail exposures through the use of township liability limits and third-party reinsurance on our net retained hail business.

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Liquidity

We anticipate that positive cash flows from operations (underwriting activities and investment income) should be sufficient to cover cash outflows under most loss scenarios for the near term. In addition to cash from operations, routine sales of investments, and financing arrangements, we have agreements with a third-party bank provider which implemented two international multi-currency notional cash pooling programs to enhance cash management efficiency during periods of short-term timing mismatches between expected inflows and outflows of cash by currency. The programs allow us to optimize investment income by avoiding portfolio disruption. Should the need arise, we generally have access to capital markets and ~~an available $1.0 billion~~to credit facilities with letter of ~~credit/revolver facility. We have the ability to increase the~~credit capacity ~~to $2.0~~of $4.0 billion ~~under certain conditions, but any such increase would not raise the~~with a sub-limit of $1.9 billion for revolving ~~loans above $1.0 billion.~~credit. At September 30, ~~2019,~~2020, our ~~letter~~usage under these facilities was $1.7 billion in letters of ~~credit usage was $421 million.~~credit. Our access to ~~funds~~credit under ~~an existing credit facility~~these facilities is dependent on the ability of the banks that are a party to the ~~facility~~facilities to meet their funding commitments. ~~Our existing credit facility has a remaining term expiring in October 2022 and requires~~The facilities require that we maintain certain financial covenants, all of which we met at September 30, ~~2019.~~2020. Should ~~our~~the existing credit ~~provider~~providers on these facilities experience financial difficulty, we may be required to replace credit sources, possibly in a difficult market. If we cannot obtain adequate capital or sources of credit on favorable terms, on a timely basis, or at all, our business, operating results, and financial condition could be adversely affected. To date, we have not experienced difficulty accessing our credit ~~facility. Refer to "Credit Facilities" in our 2018 10-K for additional information.~~facilities.

The payment of dividends or other statutorily permissible distributions from our operating companies are subject to the laws and regulations applicable to each jurisdiction, as well as the need to maintain capital levels adequate to support the insurance and reinsurance operations, including financial strength ratings issued by independent rating agencies. During the nine months ended September 30, ~~2019,~~2020, we were able to meet all of our obligations, including the payments of dividends on our Common Shares, with our net cash flows.

We assess which subsidiaries to draw dividends from based on a number of factors. Considerations such as regulatory and legal restrictions as well as the subsidiary’s financial condition are paramount to the dividend decision. Chubb Limited received dividends of ~~$200~~$800 million and ~~$75~~$200 million from its Bermuda subsidiaries during the nine months ended September 30, 2020 and 2019, respectively. Chubb Limited also received non-cash dividends of $844 million and ~~2018,~~nil from a Swiss subsidiary during the nine months ended September 30, 2020 and 2019, respectively.

The payment of any dividends from CGM or its subsidiaries is subject to applicable U.K. insurance laws and regulations. In addition, the release of funds by Syndicate 2488 to subsidiaries of CGM is subject to regulations promulgated by the Society of Lloyd’s. The U.S. insurance subsidiaries of Chubb INA Holdings Inc. (Chubb INA) may pay dividends, without prior regulatory approval, subject to restrictions set out in state law of the subsidiary’s domicile (or, if applicable, commercial domicile). Chubb INA’s international subsidiaries are also subject to insurance laws and regulations particular to the countries in which the subsidiaries operate. These laws and regulations sometimes include restrictions that limit the amount of dividends payable without prior approval of regulatory insurance authorities. Chubb Limited received no dividends from CGM or Chubb INA during the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. Debt issued by Chubb INA is serviced by statutorily permissible distributions by Chubb INA’s insurance subsidiaries to Chubb INA as well as other group resources. Chubb INA received dividends of ~~$1.7 billion~~$180 million and ~~$4.8~~$1.7 billion from its subsidiaries during the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Cash Flows

Our sources of liquidity include cash from operations, routine sales of investments, and financing arrangements. The following is a discussion of our cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

Operating cash flows were ~~$4.9~~$7.2 billion in the nine months ended September 30, ~~2019,~~2020, compared to ~~$3.9~~$4.9 billion in the prior year ~~period. The $1.0~~period, an increase of $2.3 billion, ~~increase reflected both~~principally reflecting higher ~~underwriting cash flow~~premiums collected and ~~a benefit of approximately $350 million from the deferral of crop insurance premiums remittance as allowed by the Federal Crop Insurance Corporation (FCIC) until the fourth quarter. This~~reduced payment ~~typically occurs in the third quarter. The increase in operating cash flow was offset by higher taxes paid, principally~~activity due to ~~timing of tax payments.~~the economic slowdown related to COVID-19 pandemic.

Cash used for investing was ~~$3.6~~$6.7 billion in the nine months ended September 30, ~~2019,~~2020, compared to ~~$2.1~~$3.6 billion in the prior year period. The current year included a payment of $1,054 million and a deposit, net of return, of approximately $500 million for the purchase of an additional 22.4 percent ownership in Huatai Group, while the prior year included the purchase of an additional 6.2 percent ownership interest in Huatai ~~Insurance~~ Group ~~Company Limited~~ for $329 ~~million and~~million. Refer to Note 2 to the ~~purchase~~Consolidated Financial Statements for additional information. In addition, the current year had cash used of ~~other intangible assets~~$4.3 billion for ~~$245 million.~~ net investments purchased, excluding derivative settlements, compared to cash used of $2.0 billion in the prior year.

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Cash used for financing was ~~$1.1 billion~~$234 million in the nine months ended September 30, ~~2019,~~2020, compared to ~~$1.4~~$1.1 billion in the prior year ~~period. The~~period, a decrease of $890 million principally from fewer share repurchases in the current year ~~included $1.2 billion~~due to the suspension of share repurchases ~~and $1.0 billion of dividends paid~~in April 2020. Refer to Note 9 to the Consolidated Financial Statements for additional information on ~~Common Shares, partially offset by $785 million of net proceeds from the issuance of long-term debt (net of repayments). The prior year included $732 million of~~ share repurchases.

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~~repurchases and $1.0 billion of dividends paid on Common Shares, partially offset by $170 million of net proceeds from the issuance of long-term debt (net of repayments).~~

Both internal and external forces influence our financial condition, results of operations, and cash flows. Claim settlements, premium levels, and investment returns may be impacted by changing rates of inflation and other economic conditions. In many cases, significant periods of time, ranging up to several years or more, may lapse between the occurrence of an insured loss, the reporting of the loss to us, and the settlement of the liability for that loss.

We use repurchase agreements as a funding alternative. At September 30, ~~2019,~~2020, there were $1.4 billion in repurchase agreements outstanding with various maturities over the next ~~six~~five months.



Capital Resources

Capital resources consist of funds deployed or available to be deployed to support our business operations.


	September 30			December 31
(in millions of U.S. dollars, except for ratios)	2020			2019
Short-term debt	$	1,300		$	1,299
Long-term debt	14,830			13,559
Total financial debt	16,130			14,858
Trust preferred securities	308			308
Total shareholders’ equity	56,413			55,331
Total capitalization	$	72,851		$	70,497
Ratio of financial debt to total capitalization	22.1		%	21.1		%
Ratio of financial debt plus trust preferred securities to total capitalization	22.5		%	21.5		%

September 30
December 31
(in millions of U.S. dollars, except for ratios) 2019
2018
Short-term debt $ 10
$ 509
Long-term debt 13,285
12,087
Total financial debt 13,295
12,596
Trust preferred securities 308
308
Total shareholders’ equity 54,572
50,312
Total capitalization $ 68,175
$ 63,216
Ratio of financial debt to total capitalization 19.5 % 19.9 %
Ratio of financial debt plus trust preferred securities to total capitalization 20.0 % 20.4 %

Repurchase agreements are excluded from the table above and are disclosed separately from short-term debt in the Consolidated balance sheets. The repurchase agreements are collateralized borrowings where we maintain the right and ability to redeem the collateral on short notice, unlike short-term debt which comprises the current maturities of our long-term debt instruments.

In September 2020, Chubb INA Holdings Inc. (Chubb INA) issued $1.0 billion of 1.375 percent senior notes due September 2030. At September 30, 2020 and December 31, 2019, total debt included $2.3 billion and $1.3 billion, respectively, of senior notes issued to provide proceeds to retire existing debt coming due in November 2022 and November 2020, respectively. These prefundings had the effect of increasing the leverage ratios at September 30, 2020 and December 31, 2019 by 2.5 percentage points and 1.4 percentage points, respectively. Refer to Note 57 to the Consolidated Financial Statements for ~~information~~additional details about the debt ~~issued and debt redeemed.~~issued.

For the nine months ended September 30, ~~2019,~~2020, we repurchased ~~$1.2 billion~~$326 million of Common Shares in a series of open market transactions under the Board of Directors (Board) share repurchase authorization. At September 30, ~~2019,~~2020, there were ~~26,250,222~~26,229,070 Common Shares in treasury with a weighted average cost of ~~$133.47~~$135.00 per ~~share. For~~share, and $1.12 billion in share repurchase authorization remained through December 31, 2020. We suspended share repurchase activity during the ~~period~~second and third quarters of 2020, given the economic environment. Subsequently, we resumed share repurchases, and on October ~~1 through October 30, 2019,~~29, 2020, we repurchased ~~700,900~~52,500 Common Shares for a total of ~~$108~~$7 million in a series of open market transactions. At October ~~30, 2019, $150 million~~29, 2020, $1.12 billion in share repurchase authorization remained through December 31, ~~2019.~~2020.

We generally maintain the ability to issue certain classes of debt and equity securities via an unlimited Securities and Exchange Commission (SEC) shelf registration which is renewed every three years. This allows us capital market access for refinancing as well as for unforeseen or opportunistic capital needs.

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Dividends

We have paid dividends each quarter since we became a public company in 1993. Under Swiss law, dividends must be stated in Swiss francs though dividend payments are made by Chubb in U.S. dollars. Refer to Note 79 to the Consolidated Financial Statements for a discussion of our dividend methodology.

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At our May ~~2019~~2020 annual general meeting, our shareholders approved an annual dividend for the following year of up to ~~$3.00~~$3.12 per share, or CHF ~~3.00~~3.01 per share, calculated using the USD/CHF exchange rate as published in the Wall Street Journal on May ~~16, 2019,~~20, 2020, expected to be paid in four quarterly installments of ~~$0.75~~$0.78 per share after the general meeting by way of a distribution from capital contribution reserves, transferred to free reserves for payment. The Board determines the record and payment dates at which the annual dividend may be paid until the date of the ~~2020~~2021 annual general meeting, and is authorized to abstain from distributing a dividend at its discretion. The annual dividend approved in May ~~2019~~2020 represented an ~~$0.08~~$0.12 per share increase ($~~0.02~~0.03 per quarter) over the prior year dividend.

The following table represents dividends paid per Common Share to shareholders of record on each of the following dates:

Shareholders of record as of:

Dividends paid as of:

December ~~21, 2018~~20, 2019

January ~~11, 2019~~10, 2020

~~$0.73 (CHF 0.73)~~

~~March 22, 2019~~

~~April 12, 2019~~

~~$0.73 (CHF 0.72)~~

~~June 21, 2019~~

~~July 12, 2019~~

$0.75 (CHF ~~0.75)~~0.74)

~~September~~March 20, ~~2019~~2020

~~October 11, 2019~~April 10, 2020

$0.75 (CHF ~~0.73)~~0.72)

June 19, 2020

July 10, 2020

$0.78 (CHF 0.75)

September 18, 2020

October 9, 2020

$0.78 (CHF 0.71)



ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to Item 7A included in our ~~2018~~2019 Form 10-K.

Foreign currency management

As a global company, Chubb entities transact business in multiple currencies. Our policy is to generally match assets, liabilities and required capital for each individual jurisdiction in local currency, which would include the use of derivatives. We do not hedge our net asset non-U.S. dollar capital positions. We occasionally engage in hedging activity for planned cross border transactions. For an estimated impact of foreign currency movement on our net assets denominated in non-U.S. currencies, refer to Item 7A in our ~~2018~~2019 Form 10-K. This information will be updated and disclosed in interim filings if our net assets in non-U.S. currencies change materially from the December 31, ~~2018~~2019 balances disclosed in the ~~2018~~2019 Form 10-K.

Reinsurance of GMDB and GLB guarantees

Chubb views its variable annuity reinsurance business as having a similar risk profile to that of catastrophe reinsurance with the probability of long-term economic loss relatively small, at the time of pricing. Adverse changes in market factors and policyholder behavior will have an impact on both Life Insurance underwriting income and net income. When evaluating these risks, we expect to be compensated for taking both the risk of a cumulative long-term economic net loss, as well as the short-term accounting variations caused by these market movements. Therefore, we evaluate this business in terms of its long-term economic risk and reward.

Net income is directly impacted by changes in benefit reserves calculated in connection with reinsurance of variable annuity guarantees. In addition, net income is directly impacted by changes in the fair value of the GLB liability (FVL), which is classified as a derivative for accounting purposes. The FVL established for a GLB reinsurance contract represents the difference between the fair value of the contract and the benefit reserves. Benefit reserves and FVL calculations are directly affected by market factors, including equity levels, interest rate levels, credit risk, and implied volatilities, as well as policyholder behaviors, such as annuitization and lapse rates, and policyholder mortality.

The tables below are estimates of the sensitivities to instantaneous changes in economic inputs (e.g., equity shock, interest rate shock etc.) or actuarial assumptions at September 30, ~~2019~~2020 of the FVL and of the fair value of specific derivative instruments held (hedge value) to partially offset the risk in the variable annuity guarantee reinsurance portfolio. The following assumptions should be considered when using the below tables:


•	89 Table of Contents •No changes to the benefit ratio used to establish benefit reserves at September 30, 2020. •~~September 30, 2019~~.

Equity shocks impact all global equity markets equally


•	•Our liabilities are sensitive to global equity markets in the following proportions: 75 percent—85 percent U.S. equity, and 15 percent—25 percent international equity. •~~75 percent~~—~~85 percent~~ ~~U.S. equity, and~~ ~~15 percent~~—~~25 percent~~ ~~international equity.~~

Our current hedge portfolio is sensitive only to U.S. equity markets.

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We would suggest using the S&P 500 index as a proxy for U.S. equity, and the MSCI EAFE index as a proxy for international equity.

•Interest rate shocks assume a parallel shift in the U.S. yield curve

•

•Our liabilities are also sensitive ~~to global interest rates at various points on the yield curve, mainly the U.S. Treasury curve in the following proportions: up~~ to global interest rates at various points on the yield curve, mainly the U.S. Treasury curve in the following proportions: 5 percent—15 percent short-term rates (maturing in less than 5 years), 25 percent—35 percent medium-term rates (maturing between 5 years and 10 years, inclusive), and 55 percent—65 percent long-term rates (maturing beyond 10 years).

•~~10 percent~~ ~~short-term rates (maturing in less than 5 years),~~ ~~25 percent~~—~~35 percent~~ ~~medium-term rates (maturing between 5 years and 10 years, inclusive), and~~ ~~55 percent~~—~~65 percent~~ ~~long-term rates (maturing beyond 10 years).~~

A change in AA-rated credit spreads impacts the rate used to discount cash flows in the fair value model. AA-rated credit spreads are a proxy for both our own credit spreads and the credit spreads of the ceding insurers.


•	•The hedge sensitivity is from September 30, 2020 market levels and only applicable to the equity and interest rate sensitivities table below. •~~September 30, 2019~~ ~~market levels and only applicable to the equity and interest rate sensitivities table below.~~

The sensitivities are not directly additive because changes in one factor will affect the sensitivity to changes in other factors. The sensitivities do not scale linearly and may be proportionally greater for larger movements in the market factors. The sensitivities may also vary due to foreign exchange rate fluctuations. The calculation of the FVL is based on internal models that include assumptions regarding future policyholder behavior, including lapse, annuitization, and asset allocation. These assumptions impact both the absolute level of the FVL as well as the sensitivities to changes in market factors shownbelow. Actual sensitivity of our net income may differ from those disclosed in the tables below due to differences between short-term market movements and management judgment regarding the long-term assumptions implicit in our benefit ratios.

•In addition, the tables below do not reflect the expected quarterly run rate of net income generated by the variable annuity guarantee reinsurance portfolio if markets remain unchanged during the period. All else equal, if markets remain unchanged during the period, the Gross FVL will increase, resulting in a realized loss. This realized loss occurs primarily because the guarantees provided in the underlying contracts continue to become more valuable even when markets remain unchanged. We refer to this increase in Gross FVL as “timing effect”. The unfavorable impact of timing effect on our Gross FVL in a quarter is not reflected in the sensitivity tables below. For this reason, when using the tables below to estimate the sensitivity of Gross FVL in the fourth quarter of 2020 to various changes, it is necessary to assume an additional $5 million to $45 million increase in Gross FVL and realized losses. The impact to Net income is partially mitigated because this realized loss is partially offset by the positive quarterly run rate of Life Insurance underwriting income generated by the variable annuity guarantee reinsurance portfolio if markets remain unchanged during the period. Note that both the timing effect and the quarterly run rate of Life Insurance underwriting income change over time as the book ages.

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Sensitivities to equity and interest rate movements
(in millions of U.S. dollars)		Worldwide Equity Shock
Interest Rate Shock		+10%		Flat		-10%		-20%		-30%		-40%
+100 bps	(Increase)/decrease in Gross FVL	$	386	$	243	$	80	$	(105)	$	(313)	$	(545)
	Increase/(decrease) in hedge value	(65)		—		65		130		195		259
	Increase/(decrease) in net income	$	321	$	243	$	145	$	25	$	(118)	$	(286)
Flat	(Increase)/decrease in Gross FVL	$	157	$	—	$	(177)	$	(375)	$	(596)	$	(834)
	Increase/(decrease) in hedge value	(65)		—		65		130		195		259
	Increase/(decrease) in net income	$	92	$	—	$	(112)	$	(245)	$	(401)	$	(575)
-100 bps	(Increase)/decrease in Gross FVL	$	(52)	$	(220)	$	(406)	$	(618)	$	(847)	$	(1,097)
	Increase/(decrease) in hedge value	(65)		—		65		130		195		259
	Increase/(decrease) in net income	$	(117)	$	(220)	$	(341)	$	(488)	$	(652)	$	(838)

Sensitivities to Other Economic Variables		AA-rated Credit Spreads				Interest Rate Volatility				Equity Volatility
(in millions of U.S. dollars)		+100 bps		-100 bps		+2%		-2%		+2%		-2%
(Increase)/decrease in Gross FVL		$	87	$	(96)	$	(1)	$	1	$	(9)	$	9

Increase/(decrease) in net income		$	87	$	(96)	$	(1)	$	1	$	(9)	$	9

Sensitivities to Actuarial Assumptions						Mortality
(in millions of U.S. dollars)						+20%		+10%		-10%		-20%
(Increase)/decrease in Gross FVL						$	21	$	11	$	(11)	$	(22)

Increase/(decrease) in net income						$	21	$	11	$	(11)	$	(22)

						Lapses
(in millions of U.S. dollars)						+50%		+25%		-25%		-50%
(Increase)/decrease in Gross FVL						$	131	$	68	$	(73)	$	(153)

Increase/(decrease) in net income						$	131	$	68	$	(73)	$	(153)

						Annuitization
(in millions of U.S. dollars)						+50%		+25%		-25%		-50%
(Increase)/decrease in Gross FVL						$	(606)	$	(322)	$	372	$	794

Increase/(decrease) in net income						$	(606)	$	(322)	$	372	$	794

Variable Annuity Net Amount at Risk

All our VA reinsurance treaties include annual or aggregate claim limits and many include an aggregate deductible which limit the net amount at risk under these programs. The tables below present the net amount at risk at September 30, 2020 following an immediate change in equity market levels, assuming all global equity markets are impacted equally.

a) Reinsurance covering the GMDB risk only


	Equity Shock
(in millions of U.S. dollars)	+20		%	Flat		-20		%	-40		%	-60		%	-80		%
GMDB net amount at risk	$	265		$	272	$	479		$	801		$	803		$	678
Claims at 100% immediate mortality	161			186		174			159			142			125

The treaty claim limits function as a ceiling as equity markets fall. As the shocks in the table above become incrementally more negative, the impact on the NAR and claims at 100 percent mortality begin to drop due to the specific nature of these claim limits, many of which are annual claim limits calculated as a percentage of the reinsured account value. There is also some

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impact due to a small portion of the GMDB reinsurance under which claims are positively correlated to equity markets (claims decrease as equity markets fall).

b) Reinsurance covering the GLB risk only


	Equity Shock
(in millions of U.S. dollars)	+20		%	Flat		-20		%	-40		%	-60		%	-80		%
GLB net amount at risk	$	1,119		$	1,581	$	2,099		$	2,616		$	3,022		$	3,324

The treaty claim limits cause the net amount at risk to increase at a declining rate as equity markets fall.

c) Reinsurance covering both the GMDB and GLB risks on the same underlying policyholders


	Equity Shock
(in millions of U.S. dollars)	+20		%	Flat		-20		%	-40		%	-60		%	-80		%
GMDB net amount at risk	$	43		$	51	$	62		$	73		$	83		$	91
GLB net amount at risk	381			490		626			775			926			993
Claims at 100% immediate mortality	35			34		34			34			34			34

The treaty limits control the increase in the GMDB net amount at risk as equity markets fall. The GMDB net amount at risk continues to grow as equity markets fall because most of these reinsurance treaties do not have annual claim limits calculated as a percentage of the underlying account value. The treaty limits cause the GLB net amount at risk to increase at a declining rate as equity markets fall.


•			In addition, the tables below do not reflect the expected quarterly run rate of net income generated by the variable annuity guarantee reinsurance portfolio if markets remain unchanged during the period. All else equal, if markets remain unchanged during the period, the Gross FVL will increase, resulting in a realized loss. This realized loss occurs primarily because the guarantees provided in the underlying contracts continue to become more valuable even when markets remain unchanged. We refer to this increase in Gross FVL as “timing effect”. The unfavorable impact of timing effect on our Gross FVL in a quarter is not reflected in the sensitivity tables below. For this reason, when using the tables below to estimate the sensitivity of Gross FVL in the fourth quarter to various changes, it is necessary to assume an additional ~~$5 million~~ to ~~$45 million~~ increase in Gross FVL and realized losses. The impact to Net income is partially mitigated because this realized loss is partially offset by the positive quarterly run rate of Life Insurance underwriting income generated by the variable annuity guarantee reinsurance portfolio if markets remain unchanged during the period. Note that both the timing effect and the quarterly run rate of Life Insurance underwriting income change over time as the book ages.

~~Table of Contents~~

Sensitivities to equity and interest rate movements
(in millions of U.S. dollars) Worldwide Equity Shock
Interest Rate Shock +10% Flat -10% -20% -30% -40%
+100 bps (Increase)/decrease in Gross FVL $ 353
$ 216
$ 57
$ (128 ) $ (338 ) $ (568 )
Increase/(decrease) in hedge value (58 ) —
58
115
173
231
Increase/(decrease) in net income $ 295
$ 216
$ 115
$ (13 ) $ (165 ) $ (337 )
Flat (Increase)/decrease in Gross FVL $ 157
$ —
$ (180 ) $ (386 ) $ (614 ) $ (856 )
Increase/(decrease) in hedge value (58 ) —
58
115
173
231
Increase/(decrease) in net income $ 99
$ —
$ (122 ) $ (271 ) $ (441 ) $ (625 )
-100 bps (Increase)/decrease in Gross FVL $ (77 ) $ (248 ) $ (442 ) $ (658 ) $ (891 ) $ (1,130 )
Increase/(decrease) in hedge value (58 ) —
58
115
173
231
Increase/(decrease) in net income $ (135 ) $ (248 ) $ (384 ) $ (543 ) $ (718 ) $ (899 )

Sensitivities to Other Economic Variables AA-rated Credit Spreads Interest Rate Volatility Equity Volatility
(in millions of U.S. dollars) +100 bps
-100 bps +2% -2% +2% -2%
(Increase)/decrease in Gross FVL $ 74
$ (82 ) $ —
$ —
$ (8 ) $ 7
Increase/(decrease) in net income $ 74
$ (82 ) $ —
$ —
$ (8 ) $ 7

Sensitivities to Actuarial Assumptions Mortality
(in millions of U.S. dollars) +20% +10% -10% -20%
(Increase)/decrease in Gross FVL $ 20
$ 10
$ (10 ) $ (20 )
Increase/(decrease) in net income $ 20
$ 10
$ (10 ) $ (20 )

Lapses
(in millions of U.S. dollars) +50% +25% -25% -50%
(Increase)/decrease in Gross FVL $ 102
$ 53
$ (58 ) $ (122 )
Increase/(decrease) in net income $ 102
$ 53
$ (58 ) $ (122 )

Annuitization
(in millions of U.S. dollars) +50% +25% -25% -50%
(Increase)/decrease in Gross FVL $ (534 ) $ (283 ) $ 319
$ 602
Increase/(decrease) in net income $ (534 ) $ (283 ) $ 319
$ 602

ITEM 4. Controls and Procedures

Chubb’s management, with the participation of Chubb’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of Chubb’s disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 as of September 30, ~~2019.~~2020. Based upon that evaluation, Chubb’s Chief Executive Officer and Chief Financial Officer concluded that Chubb’s disclosure controls and procedures are effective in allowing information required to be disclosed in reports filed under the Securities Exchange Act of 1934 to be recorded, processed, summarized, and reported within time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to Chubb’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~On January 14, 2016, Chubb completed the acquisition of The Chubb Corporation. For~~There have been no changes in Chubb's internal controls over financial reporting during the three months ended September 30, ~~2019, we continued to integrate the information technology environments of the two companies.~~

~~There were no other changes to Chubb's internal controls over financial reporting for the three months ended September 30, 2019~~2020 that have materially affected, or are reasonably likely to materially affect, Chubb's internal controls over financial reporting.

~~Table of Contents~~

PART II OTHER INFORMATION



ITEM 1. Legal Proceedings

The information required with respect to this item is included in Note 68 g) to the Consolidated Financial Statements, which is hereby incorporated herein by reference.



ITEM 1A. Risk Factors

~~The following supplements~~There have been no material changes to the risk factors ~~that could have a material impact on our results of operations or financial condition as~~ described under "Risk Factors" inunder Item 1A of Part I of our ~~2018~~2019 Form ~~10-K.~~10-K and "Risk Factors" under Item 1A of Part II of our Form 10-Q for the quarterly period ended March 31, 2020.

~~The effects of emerging coverage issues with our business are uncertain.~~

As industry practices and legislative, regulatory, judicial, social, financial, technological and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the frequency and severity of claims. In some instances, these changes may not become apparent until after we have issued insurance or reinsurance contracts that are affected by the changes. For example, recently enacted "reviver" legislation in certain states does allow civil claims relating to molestation and abuse to be asserted against policyholders that would otherwise be barred by statutes of limitations. As a result, the full extent of liability under our insurance may not be known for many years after issuance.

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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities

Issuer’s Repurchases of Equity Securities

The following table provides information with respect to purchases by Chubb of its Common Shares during the three months ended September 30, ~~2019:~~2020:


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan (2)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan (2)
July 1 through July 31	2,259	$	126.65	—	$	1.12	billion
August 1 through August 31	2,649	$	127.23	—	$	1.12	billion
September 1 through September 30	1,070	$	125.09	—	$	1.12	billion
Total	5,978	$	126.63	—

(1)This column represents open market share repurchases and the surrender to Chubb of Common Shares to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees and the exercising of options by employees. We did not engage in any share repurchase activity during the three months ended September 30, 2020.

(2)Refer to Note 9 to the Consolidated Financial Statements for more information on the Chubb Limited securities repurchase authorization. In November 2019, the Board authorized the repurchase of up to $1.5 billion of Chubb's Common Shares from November 21, 2019 through December 31, 2020. We suspended share repurchase activity during the second and third quarters of 2020, given the economic environment. Subsequently, we resumed share repurchases, and on October 29, 2020, we repurchased 52,500 Common Shares for a total of $7 million in a series of open market transactions. At October 29, 2020, $1.12 billion in share repurchase authorization remained through December 31, 2020.

Period
Total
Number of
Shares
Purchased ⁽¹⁾

Average Price
Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plan ⁽²⁾

Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan ⁽³⁾

July 1 through July 31 792,334
$ 150.49
790,417
$ 617 million
August 1 through August 31 1,279,697
$ 154.63
1,270,000
$ 420 million
September 1 through September 30 1,019,878
$ 159.43
1,019,201
$ 258 million
Total 3,091,909
$ 155.15
3,079,618

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⁽¹⁾ITEM 6. Exhibits			This column represents open market share repurchases and the surrender to Chubb of Common Shares to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees and the exercising of options by employees.

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

Original
Number

Date Filed

Filed
Herewith

3.1

Articles of Association of the Company, as amended

8-K

3.1

August 4, 2020

3.2

Organizational Regulations of the Company, as amended

8-K

3.1

November 21, 2016

4.1

Articles of Association of the Company, as amended

8-K

4.1

August 4, 2020

4.2

Organizational Regulations of the Company, as amended

8-K

3.1

November 21, 2016

4.3

Form of Officer's Certificate related to the 1.375% Senior Notes due 2030

8-K

4.1

September 17, 2020

4.4

Form of Global Note for the 1.375% Senior Notes due 2030

8-K

4.2

September 17, 2020

31.1

Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

31.2

Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

32.1

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

32.2

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

101.1

The following financial information from Chubb Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 formatted in Inline XBRL:
(i) Consolidated Balance Sheets at September 30, 2020, and December 31, 2019; (ii) Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2020 and 2019; (iii) Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2020 and 2019; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019; and (v) Notes to Consolidated Financial Statements

104.1

The Cover Page Interactive Data File formatted in Inline XBRL (The cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101.1)

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⁽²⁾SIGNATURES			~~The aggregate value of shares repurchased in the three months ended~~ ~~September 30, 2019~~ ~~as part of the publicly announced plan was~~ ~~$478 million~~.

⁽³⁾

Refer to Note 7 to the Consolidated Financial Statements for more information on the Chubb Limited securities repurchase authorization. In December 2018, the Board authorized the repurchase of up to $1.5 billion of Chubb's Common Shares from December 1, 2018 through December 31, 2019. For the period October 1, 2019 through October 30, 2019, we repurchased 700,900 Common Shares for a total of $108 million in a series of open market transactions. At October 30, 2019, $150 million in share repurchase authorization remained through December 31, 2019.

~~Table of Contents~~

~~ITEM 6. Exhibits~~

Incorporated by Reference
Exhibit
Number
Exhibit Description Form
Original
Number
Date Filed
Filed
Herewith
3.1

Articles of Association of the Company, as amended
8-K 3.1 May 18, 2018

3.2

Organizational Regulations of the Company, as amended
8-K 3.1 November 21, 2016

4.1

Articles of Association of the Company, as amended
8-K 4.1 May 18, 2018

4.2

Organizational Regulations of the Company, as amended
8-K 3.1 November 21, 2016

31.1

Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
X

31.2

Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
X

32.1

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
X

32.2

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
X

101.1
The following financial information from Chubb Limited’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in Inline XBRL:
(i) Consolidated Balance Sheets at September 30, 2019, and December 31, 2018; (ii) Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2019 and 2018; (iii) Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2019 and 2018; (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018; and (v) Notes to Consolidated Financial Statements
X

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~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		CHUBB LIMITED
		(Registrant)

October 30, 2020		~~CHUBB LIMITED~~
	~~(Registrant)~~

~~October 31, 2019~~	/s/ Evan G. Greenberg
		Evan G. Greenberg
		Chairman, President and Chief Executive Officer

October ~~31, 2019~~30, 2020		/s/ Philip V. Bancroft
		Philip V. Bancroft
		Executive Vice President and Chief Financial Officer



Switzerland			98-0091805
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)




Part I.	FINANCIAL INFORMATION		Page
Item 1.	Financial Statements:
	Consolidated Balance Sheets (Unaudited) September 30, ~~2019~~2020 and December 31, ~~2018~~2019		3
	Consolidated Statements of Operations and Comprehensive Income (Unaudited) Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019		4
	Consolidated Statements of Shareholders' Equity (Unaudited) Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019		5
	Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019		6
	Notes to Consolidated Financial Statements (Unaudited)
	Note 1.	General	7
	Note 2.	~~Investments~~Acquisitions	8
	Note 3.	Investments	9
	Note 4.	Fair value measurements	1316
	Note 4.5.	Reinsurance	24
	Note 6.	Unpaid losses and loss expenses	2125
	Note 5.7.	Debt	2831
	Note 6.8.	Commitments, contingencies, and guarantees	2831
	Note 7.9.	Shareholders’ equity	3336
	Note 8.10.	Share-based compensation	3437
	Note 9.11.	Postretirement benefits	3538
	Note ~~10.~~12.	Segment information	3640
	Note ~~11.~~13.	Earnings per share	3942
	Note ~~12.~~14.	Information provided in connection with outstanding debt of subsidiaries	4043

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		4649
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		8889
Item 4.	Controls and Procedures		9092

Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings		9192
Item 1A.	Risk Factors		9192
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities		9193
Item 6.	Exhibits		9294


	Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
	September 30						September 30							September 30				September 30
(in millions of U.S. dollars)	2019			2018			2019			2018			(in millions of U.S. dollars)	2020		2019		2020		2019
Common Shares													Common Shares
Balance – beginning and end of period	$	11,121		$	11,121		$	11,121		$	11,121
Balance – beginning of period													Balance – beginning of period	$	11,121	$	11,121	$	11,121	$	11,121
Cancellation of treasury shares													Cancellation of treasury shares	(57)		0		(57)		0
Balance – end of period													Balance – end of period	11,064		11,121		11,064		11,121
Common Shares in treasury													Common Shares in treasury
Balance – beginning of period	(3,093		)	(2,040		)	(2,618		)	(1,944		)	Balance – beginning of period	(3,866)		(3,093)		(3,754)		(2,618)
Common Shares repurchased	(478		)	(379		)	(1,221		)	(703		)	Common Shares repurchased	0		(478)		(326)		(1,221)
Net shares redeemed under employee share-based compensation plans	67			47			335			275
Cancellation of treasury shares													Cancellation of treasury shares	323		0		323		0
Net shares issued under employee share-based compensation plans													Net shares issued under employee share-based compensation plans	2		67		216		335
Balance – end of period	(3,504		)	(2,372		)	(3,504		)	(2,372		)	Balance – end of period	(3,541)		(3,504)		(3,541)		(3,504)
Additional paid-in capital													Additional paid-in capital
Balance – beginning of period	11,757			13,150			12,557			13,978			Balance – beginning of period	10,416		11,757		11,203		12,557
Net shares redeemed under employee share-based compensation plans	6			—			(184		)	(261		)
Net shares issued under employee share-based compensation plans													Net shares issued under employee share-based compensation plans	(6)		6		(195)		(184)
Exercise of stock options	(17		)	(23		)	(65		)	(42		)	Exercise of stock options	(1)		(17)		(30)		(65)
Share-based compensation expense	60			63			177			186			Share-based compensation expense	59		60		183		177
Funding of dividends declared to Retained earnings	(341		)	(337		)	(1,020		)	(1,008		)	Funding of dividends declared to Retained earnings	(353)		(341)		(1,046)		(1,020)
Balance – end of period	11,465			12,853			11,465			12,853			Balance – end of period	10,115		11,465		10,115		11,465
Retained earnings													Retained earnings
Balance – beginning of period	33,878			30,260			31,700			27,474			Balance – beginning of period	35,991		33,878		36,142		31,700
Cumulative effect of adoption of accounting guidance (refer to Note 1)	—			—			(12		)	410			Cumulative effect of adoption of accounting guidance (refer to Note 1)	0		0		(72)		(12)
Balance – beginning of period, as adjusted	33,878			30,260			31,688			27,884			Balance – beginning of period, as adjusted	35,991		33,878		36,070		31,688
Net income	1,091			1,231			3,281			3,607			Net income	1,194		1,091		1,115		3,281
Cancellation of treasury shares													Cancellation of treasury shares	(266)		0		(266)		0
Funding of dividends declared from Additional paid-in capital	341			337			1,020			1,008			Funding of dividends declared from Additional paid-in capital	353		341		1,046		1,020
Dividends declared on Common Shares	(341		)	(337		)	(1,020		)	(1,008		)	Dividends declared on Common Shares	(353)		(341)		(1,046)		(1,020)
Balance – end of period	34,969			31,491			34,969			31,491			Balance – end of period	36,919		34,969		36,919		34,969
Accumulated other comprehensive income (loss)
Net unrealized appreciation on investments
Accumulated other comprehensive income													Accumulated other comprehensive income
Net unrealized appreciation (depreciation) on investments													Net unrealized appreciation (depreciation) on investments
Balance – beginning of period	2,033			(390		)	(545		)	1,450			Balance – beginning of period	3,424		2,033		2,543		(545)
Cumulative effect of adoption of accounting guidance	—			—			—			(417		)
Balance – beginning of period, as adjusted	2,033			(390		)	(545		)	1,033
Change in period, before reclassification from AOCI, net of income tax benefit (expense) of $(125), $58, $(674) and $358	569			(193		)	3,117			(1,705		)
Amounts reclassified from AOCI, net of income tax benefit (expense) of nil, $(4), $(2) and $(19)	11			34			41			123
Change in period, net of income tax benefit (expense) of $(125), $54, $(676) and $339	580			(159		)	3,158			(1,582		)
Change in period, before reclassification from AOCI, net of income tax expense of $(102), $(125), $(300) and $(674)													Change in period, before reclassification from AOCI, net of income tax expense of $(102), $(125), $(300) and $(674)	585		569		1,156		3,117
Amounts reclassified from AOCI, net of income tax (expense) benefit of $7, NaN, $(35) and $(2)													Amounts reclassified from AOCI, net of income tax (expense) benefit of $7, NaN, $(35) and $(2)	(42)		11		268		41
Change in period, net of income tax expense of $(95), $(125), $(335) and $(676)													Change in period, net of income tax expense of $(95), $(125), $(335) and $(676)	543		580		1,424		3,158
Balance – end of period	2,613			(549		)	2,613			(549		)	Balance – end of period	3,967		2,613		3,967		2,613
Cumulative foreign currency translation adjustment													Cumulative foreign currency translation adjustment
Balance – beginning of period	(1,931		)	(1,379		)	(1,976		)	(1,187		)	Balance – beginning of period	(2,313)		(1,931)		(1,939)		(1,976)
Change in period, net of income tax benefit of $8, $20, $3 and $5	(185		)	(462		)	(140		)	(654		)
Change in period, net of income tax (expense) benefit of $(13), $8, $27 and $3													Change in period, net of income tax (expense) benefit of $(13), $8, $27 and $3	233		(185)		(141)		(140)
Balance – end of period	(2,116		)	(1,841		)	(2,116		)	(1,841		)	Balance – end of period	(2,080)		(2,116)		(2,080)		(2,116)
Postretirement benefit liability adjustment													Postretirement benefit liability adjustment
Balance – beginning of period	37			249			73			280			Balance – beginning of period	(13)		37		15		73
Change in period, net of income tax benefit of $4, $3, $13 and $12	(13		)	(18		)	(49		)	(49		)
Change in period, net of income tax benefit of $5, $4, $13 and $13													Change in period, net of income tax benefit of $5, $4, $13 and $13	(18)		(13)		(46)		(49)
Balance – end of period	24			231			24			231			Balance – end of period	(31)		24		(31)		24
Accumulated other comprehensive income (loss)	521			(2,159		)	521			(2,159		)
Accumulated other comprehensive income													Accumulated other comprehensive income	1,856		521		1,856		521
Total shareholders’ equity	$	54,572		$	50,934		$	54,572		$	50,934		Total shareholders’ equity	$	56,413	$	54,572	$	56,413	$	54,572


			September 30				December 31
			2020				2019
(in millions of U.S. dollars)	Net Carrying Value		Fair Value		Amortized Cost		Fair Value
Available for sale
Due in 1 year or less	$	4,703	$	4,703	$	3,951	$	3,973
Due after 1 year through 5 years	26,319		26,319		27,142		27,720
Due after 5 years through 10 years	26,456		26,456		23,901		24,874
Due after 10 years	13,037		13,037		8,874		9,729
	70,515		70,515		63,868		66,296
Mortgage-backed securities	19,337		19,337		18,712		19,192
	$	89,852	$	89,852	$	82,580	$	85,488
Held to maturity
Due in 1 year or less	$	1,045	$	1,056	$	478	$	479
Due after 1 year through 5 years	3,501		3,667		3,869		3,940
Due after 5 years through 10 years	3,119		3,315		3,756		3,883
Due after 10 years	1,883		2,182		2,147		2,307
	9,548		10,220		10,250		10,609
Mortgage-backed securities	2,103		2,253		2,331		2,396
	$	11,651	$	12,473	$	12,581	$	13,005



			September 30				December 31
			2019				2018
(in millions of U.S. dollars)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
Due in 1 year or less	$	3,869	$	3,889	$	3,569	$	3,568
Due after 1 year through 5 years	27,168		27,728		27,134		27,005
Due after 5 years through 10 years	23,368		24,309		24,095		23,543
Due after 10 years	9,174		10,104		8,767		8,814
	63,579		66,030		63,565		62,930
Mortgage-backed securities	18,457		19,014		15,758		15,540
	$	82,036	$	85,044	$	79,323	$	78,470
Held to maturity
Due in 1 year or less	$	487	$	490	$	536	$	537
Due after 1 year through 5 years	3,567		3,629		3,122		3,106
Due after 5 years through 10 years	3,822		3,959		4,468		4,407
Due after 10 years	2,355		2,544		2,785		2,723
	10,231		10,622		10,911		10,773
Mortgage-backed securities	2,391		2,474		2,524		2,486
	$	12,622	$	13,096	$	13,435	$	13,259



☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



September 30, 2019	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Fair Value		OTTI Recognized in AOCI
(in millions of U.S. dollars)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Fair Value		OTTI Recognized in AOCI
Available for sale
U.S. Treasury and agency	$	3,438	$	133	$	(1	)	$	3,570	$	—
Foreign	21,974		1,171		(68		)	23,077		(27		)
Corporate securities	30,344		1,131		(108		)	31,367		(5		)
Mortgage-backed securities	18,457		570		(13		)	19,014		—
States, municipalities, and political subdivisions	7,823		205		(12		)	8,016		—
	$	82,036	$	3,210	$	(202	)	$	85,044	$	(32	)
Held to maturity
U.S. Treasury and agency	$	1,234	$	36	$	—		$	1,270	$	—
Foreign	1,401		85		(1		)	1,485		—
Corporate securities	2,391		127		(4		)	2,514		—
Mortgage-backed securities	2,391		83		—			2,474		—
States, municipalities, and political subdivisions	5,205		149		(1		)	5,353		—
	$	12,622	$	480	$	(6	)	$	13,096	$	—



December 31, 2018	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Fair Value		OTTI Recognized in AOCI
(in millions of U.S. dollars)	Amortized Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Fair Value		OTTI Recognized in AOCI
Available for sale
U.S. Treasury and agency	$	4,158	$	30	$	(43	)	$	4,145	$	—
Foreign	21,370		395		(349		)	21,416		—
Corporate securities	27,183		150		(750		)	26,583		(6		)
Mortgage-backed securities	15,758		66		(284		)	15,540		(1		)
States, municipalities, and political subdivisions	10,854		49		(117		)	10,786		—
	$	79,323	$	690	$	(1,543	)	$	78,470	$	(7	)
Held to maturity
U.S. Treasury and agency	$	1,185	$	8	$	(11	)	$	1,182	$	—
Foreign	1,549		11		(18		)	1,542		—
Corporate securities	2,601		11		(104		)	2,508		—
Mortgage-backed securities	2,524		5		(43		)	2,486		—
States, municipalities, and political subdivisions	5,576		16		(51		)	5,541		—
	$	13,435	$	51	$	(227	)	$	13,259	$	—


	0 – 12 Months				Over 12 Months				Total
September 30, 2020	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
(in millions of U.S. dollars)
Non-U.S.	$	2,848	$	(89)	$	122	$	(14)	$	2,970	$	(103)
Corporate and asset-backed securities	6,149		(145)		721		(41)		6,870		(186)
Mortgage-backed securities	1,481		(11)		26		(2)		1,507		(13)
Municipal	190		(2)		54		(2)		244		(4)
Total AFS fixed maturities	$	10,668	$	(247)	$	923	$	(59)	$	11,591	$	(306)


				September 30				December 31
	Expected Liquidation Period of Underlying Assets			2020				2019
(in millions of U.S. dollars)		Fair Value		Maximum Future Funding Commitments		Fair Value		Maximum Future Funding Commitments
Financial	2 to 10 Years	$	579	$	293	$	611	$	329
Real Assets	2 to 11 Years	724		704		712		422
Distressed	2 to 8 Years	252		573		263		80
Private Credit	3 to 8 Years	86		272		104		272
Traditional	2 to 14 Years	3,727		1,455		2,844		2,160
Vintage	1 to 2 Years	83		0		116		0
Investment funds	Not Applicable	243		0		271		0
		$	5,694	$	3,297	$	4,921	$	3,263


Investment Category:						Consists of investments in private equity funds:
Financial						targeting financial services companies, such as financial institutions and insurance services worldwide
Real Assets						targeting investments related to hard, physical assets, such as real estate, infrastructure and natural resources
Distressed						targeting distressed corporate debt/credit and equity opportunities in the U.S.
Private Credit						targeting privately originated corporate debt investments, including senior secured loans and subordinated bonds
Traditional						employing traditional private equity investment strategies, such as buyout and growth equity globally
Vintage						funds where the initial fund term has expired


⁽¹⁾	~~Excluded from the table above are partially-owned investments, investment funds, and limited partnerships of $4,871 million~~ ~~and other investments of $88 million~~ at ~~September 30, 2019~~ ~~measured using NAV as a practical expedient.~~



~~Investment Category:~~		~~Consists of investments in private equity funds:~~
~~Financial~~		~~targeting financial services companies, such as financial institutions and insurance services worldwide~~
~~Real Assets~~		~~targeting investments related to hard, physical assets, such as real estate, infrastructure and natural resources~~
~~Distressed~~		~~targeting distressed corporate debt/credit and equity opportunities in the U.S.~~
~~Private Credit~~		~~targeting privately originated corporate debt investments, including senior secured loans and subordinated bonds~~
~~Traditional~~		~~employing traditional private equity investment strategies, such as buyout and growth equity globally~~
~~Vintage~~		~~funds where the initial fund term has expired~~


⁽¹⁾	~~Discussion of the most significant inputs used in the fair value measurement of GLB and the sensitivity of those assumptions is included within Note~~ 3 ~~a) Guaranteed living benefits.~~


	Assets															Liabilities
Three Months Ended September 30, 2020 (in millions of U.S. dollars)	Available-for-Sale Debt Securities						Equity securities			Short-term investments			Other investments				GLB (1)
	Non-U.S.		Corporate and asset-backed securities		MBS

Balance – beginning of period	$	469	$	1,369	$	60		$	64		$	2		$	10			$	928
Transfers into Level 3	0		1		0			0			0			0				0
Transfers out of Level 3	0		(1)		0			0			0			0				0
Change in Net Unrealized Gains (Losses) in OCI	21		13		0			0			(1)			0				0

Net Realized Gains/Losses	1		3		0			2			0			0				(46)

Purchases	41		194		2			3			7			0				0
Sales	(19)		(80)		0			(3)			0			0				0
Settlements	(19)		(54)		(1)			0			(1)			0				0
Balance – end of period	$	494	$	1,445	$	61		$	66		$	7		$	10			$	882
Net Realized Gains/Losses Attributable to Changes in Fair Value at the Balance Sheet Date	$	0	$	3	$	0		$	2		$	0		$	0			$	(46)
Change in Net Unrealized Gains/Losses included in OCI at the Balance sheet date	$	20	$	12	$	0		$	0		$	(1)		$	0			$	0



	Three Months Ended September 30				Nine Months Ended September 30				October 1, 2019 through October 30, 2019
(in millions of U.S. dollars, except share data)	2019		2018		2019		2018		October 1, 2019 through October 30, 2019
Number of shares repurchased	3,079,618		2,781,307		8,417,838		5,225,162		700,900
Cost of shares repurchased	$	478	$	379	$	1,221	$	703	$	108
Repurchase authorization remaining at end of period	$	258	$	297	$	258	$	297	$	150



Nine Months Ended September 30, 2018	Chubb Limited (Parent Guarantor)			Chubb INA Holdings Inc. (Subsidiary Issuer)			Other Chubb Limited Subsidiaries			Consolidating Adjustments and Eliminations			Chubb Limited Consolidated
(in millions of U.S. dollars)
Net cash flows from operating activities	$	237		$	4,701		$	3,797		$	(4,838	)	$	3,897
Cash flows from investing activities
Purchases of fixed maturities available for sale	—			(30		)	(16,758		)	—			(16,788		)
Purchases of fixed maturities held to maturity	—			—			(380		)	—			(380		)
Purchases of equity securities	—			—			(148		)	—			(148		)
Sales of fixed maturities available for sale	—			6			9,035			—			9,041
Sales of equity securities	—			—			247			—			247
Maturities and redemptions of fixed maturities available for sale	—			15			5,467			—			5,482
Maturities and redemptions of fixed maturities held to maturity	—			—			1,001			—			1,001
Net change in short-term investments	—			6			58			—			64
Net derivative instruments settlements	—			(7		)	(39		)	—			(46		)
Private equity contributions	—			—			(1,112		)	—			(1,112		)
Private equity distributions	—			—			743			—			743
Capital contribution	(1,125		)	(3,500		)	—			4,625			—
Other	—			(18		)	(213		)	—			(231		)
Net cash flows used for investing activities	(1,125		)	(3,528		)	(2,099		)	4,625			(2,127		)
Cash flows from financing activities
Dividends paid on Common Shares	(1,001		)	—			—			—			(1,001		)
Common Shares repurchased	—			—			(732		)	—			(732		)
Proceeds from issuance of long-term debt	—			2,171			—			—			2,171
Repayment of long-term debt	—			(2,000		)	(1		)	—			(2,001		)
Proceeds from issuance of repurchase agreements	—			—			1,572			—			1,572
Repayment of repurchase agreements	—			—			(1,566		)	—			(1,566		)
Proceeds from share-based compensation plans	—			—			86			—			86
Dividend to parent company	—			—			(4,838		)	4,838			—
Advances (to) from affiliates	1,722			(1,310		)	(412		)	—			—
Capital contribution	—			—			4,625			(4,625		)	—
Net proceeds from affiliated notional cash pooling programs ⁽¹⁾	165			(34		)	—			(131		)	—
Policyholder contract deposits	—			—			269			—			269
Policyholder contract withdrawals	—			—			(222		)	—			(222		)
Net cash flows from (used for) financing activities	886			(1,173		)	(1,219		)	82			(1,424		)
Effect of foreign currency rate changes on cash and restricted cash	(1		)	—			(39		)	—			(40		)
Net increase (decrease) in cash and restricted cash	(3		)	—			440			(131		)	306
Cash and restricted cash – beginning of period ⁽¹⁾	3			1			962			(115		)	851
Cash and restricted cash – end of period ⁽¹⁾	$	—		$	1		$	1,402		$	(246	)	$	1,157



For the Years Ending December 31 (in millions of U.S. dollars)	Reduction to deferred tax liability associated with intangible assets
Fourth quarter of 2019	$	20
2020	72
2021	67
2022	65
2023	60
2024	55
Total	$	339



	Amortization (expense) benefit of the fair value adjustment on
For the Years Ending December 31 (in millions of U.S. dollars)	Acquired invested assets ⁽¹⁾			Assumed long-term debt ⁽²⁾
Fourth quarter of 2019	$	(35	)	$	6
2020	(135		)	21
2021	(105		)	21
2022	(92		)	21
2023	—			21
2024	—			21
Total	$	(367	)	$	111



										Estimated Interest Expense
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
(in millions of U.S. dollars)	2019			2019			2019			2019			2019
Fixed interest expense based on outstanding debt	$	124		$	123		$	120		$	120		$	487
Variable interest expense based on expected usage	21			22			23			19			85
Adjusted interest expense	$	145		$	145		$	143		$	139		$	572
Amortization of the fair value of debt related to the Chubb Corp acquisition	(5		)	(5		)	(5		)	(6		)	(21		)
Total interest expense, including amortization of the fair value of debt	$	140		$	140		$	138		$	133		$	551



										Actual Interest Expense
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
(in millions of U.S. dollars)	2018			2018			2018			2018			2018
Fixed interest expense based on outstanding debt	$	140		$	131		$	125		$	124		$	520
Variable interest expense	29			46			45			34			154
Adjusted interest expense	$	169		$	177		$	170		$	158		$	674
Amortization of the fair value of debt related to the Chubb Corp acquisition	(12		)	(10		)	(6		)	(5		)	(33		)
Total interest expense, including amortization of the fair value of debt	$	157		$	167		$	164		$	153		$	641



	Three Months Ended							Nine Months Ended
	March 31			June 30		September 30		September 30
(in millions of U.S. dollars)	2019			2019		2019		2019
Total mark-to-market on private equity, pre-tax	$	(47	)	$	240	$	34	$	227



	Three Months Ended									Year Ended
	March 31		June 30		September 30		December 31			December 31
(in millions of U.S. dollars)	2018		2018		2018		2018			2018
Total mark-to-market on private equity, pre-tax	$	74	$	86	$	157	$	(19	)	$	298



	Three Months Ended September 30, 2019									Three Months Ended September 30, 2018
(in millions of U.S. dollars)	Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Net Impact			Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Net Impact
Fixed maturities	$	(11	)	$	705		$	694		$	(38	)	$	(213	)	$	(251	)
Fixed income and equity derivatives	(97		)	—			(97		)	37			—			37
Public equity	24			—			24			48			—			48
Mark-to-market on public equity	(21		)	—			(21		)	(13		)	—			(13		)
Private equity	(2		)	—			(2		)	—			—			—
Mark-to-market on private equity ⁽¹⁾	(2		)	—			(2		)	5			—			5
Total investment portfolio⁽²⁾	(109		)	705			596			39			(213		)	(174		)
Variable annuity reinsurance derivative transactions, net of applicable hedges	(112		)	—			(112		)	(46		)	—			(46		)
Other derivatives	(14		)	—			(14		)	(8		)	—			(8		)
Foreign exchange	84			(193		)	(109		)	39			(482		)	(443		)
Other	(4		)	(17		)	(21		)	(5		)	(21		)	(26		)
Net gains (losses), pre-tax	$	(155	)	$	495		$	340		$	19		$	(716	)	$	(697	)



(in millions of U.S. dollars)	Market Value
Wells Fargo & Co	$	630
JP Morgan Chase & Co	576
Bank of America Corp	558
Comcast Corp	459
HSBC Holdings Plc	385
AT&T Inc	384
Verizon Communications Inc	378
Citigroup Inc	359
Morgan Stanley	337
Goldman Sachs Group Inc	337



	S&P Credit Rating										Market Value		Amortized Cost
September 30, 2019 (in millions of U.S. dollars)	AAA		AA		A		BBB		BB and below		Total		Total
Agency residential mortgage-backed (RMBS)	$	191	$	17,606	$	—	$	—	$	—	$	17,797	$	17,257
Non-agency RMBS	132		48		74		17		11		282		280
Commercial mortgage-backed	3,031		247		125		6		—		3,409		3,311
Total mortgage-backed securities	$	3,354	$	17,901	$	199	$	23	$	11	$	21,488	$	20,848



(in millions of U.S. dollars)	Gross Losses			Reinsurance Recoverable ⁽¹⁾			Net Losses
Balance at December 31, 2018	$	62,960		$	14,689		$	48,271
Losses and loss expenses incurred	17,802			3,937			13,865
Losses and loss expenses paid	(17,529		)	(4,235		)	(13,294		)
Foreign currency revaluation and other	(221		)	(59		)	(162		)
Balance at September 30, 2019	$	63,012		$	14,332		$	48,680



	Modeled Net Probable Maximum Loss (PML)
	Worldwide ⁽¹⁾				U.S. Hurricane ⁽²⁾				California Earthquake ⁽³⁾
	Annual Aggregate				Annual Aggregate				Single Occurrence
(in millions of U.S. dollars, except for percentages)	Chubb		% of Total Shareholders’ Equity		Chubb		% of Total Shareholders’ Equity		Chubb		% of Total Shareholders’ Equity
1-in-10	$	1,866	3.4	%	$	1,076	2.0	%	$	127	0.2	%
1-in-100	$	3,772	6.9	%	$	2,671	4.9	%	$	1,340	2.5	%
1-in-250	$	6,140	11.3	%	$	4,681	8.6	%	$	1,521	2.8	%



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan ⁽²⁾	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan ⁽³⁾
July 1 through July 31	792,334	$	150.49	790,417	$	617	million
August 1 through August 31	1,279,697	$	154.63	1,270,000	$	420	million
September 1 through September 30	1,019,878	$	159.43	1,019,201	$	258	million
Total	3,091,909	$	155.15	3,079,618