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# Chubb Limited (CB): Business, Risks and Management's Discussion ## Business *Source: Annual Report on Form 10-K for the fiscal year ended December 31, 2025, accession 0000896159-26-000005.* Chubb sells property and casualty (P&C) insurance to businesses and individuals. It also sells personal accident and supplemental health (A&H) cover, reinsurance, and life insurance. It operates in 54 countries and territories. Its customers range from multinational corporations to mid-size and small businesses, affluent and high-net-worth families, individual life and A&H buyers, employers and affinity groups, and other insurers that buy reinsurance. Most business comes through brokers and independent agents, who are paid commissions. Chubb earns money in three ways: P&C underwriting income, investment income, and Life segment income. Management calls Chubb "an underwriting company" that puts quality of underwriting ahead of volume or market share. The parent, Chubb Limited, is a Swiss holding company headquartered in Zurich. At December 31, 2025 it had total assets of $272 billion, Chubb shareholders' equity of $74 billion and about 45,000 employees. **Segments.** In 2025 consolidated net premiums earned (NPE) were $53.0 billion, split across six segments: - **North America Commercial P&C Insurance (38% of 2025 NPE).** P&C, financial lines and A&H for large, middle-market and small businesses in the U.S., Canada and Bermuda. Its divisions and their share of the segment's 2025 NPE: - Commercial Insurance (40%): middle market and small business, sold through independent agents and through digital platforms such as Chubb Marketplace. - Major Accounts (36%): large corporate and institutional risk management, property, casualty, surety, A&H and financial lines (D&O, E&O, cyber). Also includes the ESIS claims administrator. - Westchester (19%): wholesale and E&S specialty, including pet insurance through Healthy Paws, acquired from Aon in 2024. - Chubb Bermuda (5%): high-excess liability, D&O and political risk for Fortune 1000 companies. - **North America Personal P&C Insurance (13%).** The Personal Risk Services division writes high-net-worth personal lines in the U.S. and Canada: homeowners, high-value auto and collector cars, valuable articles, excess liability, cyber and recreational marine. Homeowners, including valuable articles, was 69% of the segment's 2025 NPE. - **North America Agricultural Insurance (5%).** Through Rain and Hail, federally subsidized Multiple Peril Crop Insurance (MPCI, written with the USDA under the Standard Reinsurance Agreement) and private crop-hail. Through Chubb Agribusiness, farm, ranch and commercial agribusiness P&C. - **Overseas General Insurance (27%).** Chubb International writes commercial and consumer P&C and A&H across Europe/Middle East/Africa, Asia and Latin America, including Huatai P&C in China (about 87.2% owned). Huatai P&C sells through nearly 200 licensed sales locations in 28 provinces. Chubb Global Markets is the London wholesale and specialty platform, including Lloyd's Syndicate 2488 (capacity of £630 million for the 2026 account year). The segment added LMG Insurance in Thailand in 2025. - **Global Reinsurance (3%).** The Chubb Tempest Re units in Bermuda, the USA, International and Canada write property catastrophe, property, casualty and specialty reinsurance through brokers. - **Life Insurance (14%).** Chubb Life operates mainly in Asia: South Korea, mainland China, Hong Kong, Taiwan, Thailand, Vietnam, New Zealand and Indonesia. Asia accounts for 95% of its net written premiums, deposits and earnings. The segment also includes: - Huatai Life (89.5% owned) and the Huatai asset-management companies. Huatai Asset Management has over $155 billion of assets under management, more than 90% of it for third parties. - Chubb Benefits, which sells worksite and supplemental A&H, disability and life in the U.S. and Canada. - Chubb Life Re, a closed variable-annuity and mortality reinsurance book that has quoted no new variable-annuity business since 2007. A Corporate segment carries the Brandywine run-off: legacy asbestos and environmental (A&E) exposure and molestation claims. **How it underwrites and invests.** Chubb runs a profit-center structure with centralized underwriting authorities, global product boards and an underwriting audit function. It buys reinsurance, including a Global Property Catastrophe Reinsurance Program, to cap catastrophe losses. Its in-house unit, Chubb Asset Management, sets asset allocation and oversees the external managers who run the portfolio. The portfolio is mainly investment-grade fixed income with an average credit quality of A/A. It held no collateralized debt obligations and used no portfolio leverage. Average fixed-income duration was 5.0 years, against an expected insurance-liability duration of 7.0 years. **Regulation.** The Pennsylvania Insurance Department is group-wide supervisor. Bermuda subsidiaries are regulated by the Bermuda Monetary Authority, and Swiss entities by FINMA. Bermuda introduced a 15% corporate income tax effective January 1, 2025. ## Risk factors *Source: FY2025 Form 10-K, Item 1A, with the reserve-mix figure from Item 7, accession 0000896159-26-000005. The June 30, 2026 catastrophe estimate is from the Q2 2026 Form 10-Q, accession 0000896159-26-000017, which reports no material changes to these risk factors.* - **Catastrophes.** Natural disasters and man-made catastrophes (terrorism, cyber, pandemic, war) can cause large, volatile losses. Climate change may raise how often natural catastrophes happen and how severe they are, and it complicates risk modeling. A systemic cyber event is singled out as unbounded by time or geography. In 2025 California wildfire losses alone were $1.47 billion. At June 30, 2026, the 1-in-100-year modeled U.S. hurricane annual aggregate loss, net of reinsurance, was $3,766 million (5.0% of Chubb shareholders' equity). - **Reserve adequacy.** Loss reserves are estimates. About 76% of loss reserves relate to casualty business, much of it long-tail, which is exposed to social inflation and judicial trends. Gross A&E liabilities were about 1.4% of gross loss reserves at year-end 2025. "Reviver" laws in some states let molestation claims be brought after the statute of limitations had expired, and these claims have produced repeated adverse development in the run-off book. - **Reinsurance and counterparty credit.** Chubb had $20.6 billion of reinsurance recoverables at December 31, 2025 and stays liable to its insureds if a reinsurer fails to pay. Active subsidiaries had ceded about $1.9 billion to the inactive run-off company Century Indemnity. Those recoverables would be at risk if Century were placed in rehabilitation or liquidation. Brokers, high-deductible policyholders and surety obligors are further sources of credit exposure. - **Life and variable-annuity volatility.** Under the LDTI accounting standard, future policy benefit reserves and market risk benefit liabilities move with interest rates, equity markets and policyholder behavior. That includes the closed GMDB/GMIB variable-annuity reinsurance book. - **Investments and interest rates.** Rising rates reduce book value. About 17% of the fixed-income portfolio was below investment grade at year-end 2025, which brings credit and default risk. - **Capital, ratings and holding-company structure.** A ratings downgrade could cost business and raise borrowing costs. Chubb Limited depends on regulated subsidiaries for dividends, which caps what it can pay out. - **Swiss share repurchases.** Swiss law limits buybacks to freely distributable reserves and caps treasury shares at 10% of share capital unless the shares are earmarked for cancellation. The buyback program also depends on shareholder-approved capital bands and on Swiss tax rulings. - **Currency.** About 26.7% of unhedged net assets were in foreign currencies at year-end 2025. The main ones were the Korean won, Chinese yuan, Canadian and Australian dollars, Mexican peso, Thai baht, Hong Kong dollar, Brazilian real, New Zealand dollar and euro. - **Regulation, privacy and AI.** Risks come from evolving capital regimes (the IAIS international capital standard, Solvency II, Swiss Solvency Test, U.S. risk-based capital), from data-privacy and cybersecurity rules (NYDFS, GDPR, CCPA/CPRA), and from emerging AI regulation. Operating in developing markets adds political and nationalization risk. - **Operations and cyber.** Breaches, ransomware or system failures, including at third-party providers, could disrupt operations and expose data. Model error in underwriting, pricing and catastrophe analytics is a separate risk. - **Competition and cycle.** Insurance pricing is cyclical. New capital, alternative capital and technology-led competitors can push rates and terms down. - **Acquisitions.** Acquired businesses may underperform or integrate poorly. Goodwill and intangibles, $20.2 billion of goodwill at year-end 2025, could be impaired. - **Tax.** The non-U.S. companies could be found to be engaged in a U.S. trade or business. Bermuda's 15% tax and the OECD 15% global minimum tax, partly enacted in Switzerland from 2025, raise tax costs. OECD guidance issued January 15, 2025 could create additional tax if the Bermuda deferred tax asset reverses after 2026. - **Shareholder matters.** Voting by any holder is limited to below 10%, and insurance change-of-control laws make takeovers difficult. U.S. judgments may be hard to enforce in Switzerland. Dividends are subject to 35% Swiss withholding tax unless paid from capital contribution reserves, which Chubb estimates it can keep doing until 2032–2036. U.S. holders also face CFC, RPII and PFIC tax risks. ## Management's discussion: fiscal 2025 *Source: FY2025 Form 10-K, Item 7, accession 0000896159-26-000005. Core operating income, P&C underwriting income and per-share figures are from the fourth-quarter 2025 earnings release furnished as Exhibit 99.1 to Form 8-K, accession 0001193125-26-035589.* **Results.** Net income attributable to Chubb was a record $10.31 billion ($25.68 per share), up from $9.27 billion in 2024. Core operating income, a non-GAAP measure, was $9.95 billion ($24.79 per share), up 8.9%. Management credited double-digit growth in both P&C underwriting income and Life segment income, plus higher investment income. Net premiums written rose 6.6% to $54.84 billion (7.0% in constant dollars): - P&C rose 5.4% to $47.56 billion. Commercial was up 4.0% and consumer up 9.2%, led by primary and excess casualty, small and mid-market retail, E&S and property. These gains were partly offset by rate decreases in large-risk and E&S brokerage property. - Life rose 15.1% to $7.28 billion (17.3% in constant dollars). Total revenues were $59.40 billion. **Underwriting.** The P&C combined ratio improved to a record 85.7% from 86.6%. The current-accident-year combined ratio excluding catastrophes improved to 81.9% from 83.1%, on lower loss ratios partly offset by a higher acquisition-cost ratio from business mix. Net catastrophe losses were $2.92 billion, up from $2.39 billion, including $1.47 billion from the January 2025 California wildfires. Favorable prior-period development was $1.13 billion, up from $856 million. That was $1.44 billion favorable in active companies, mainly short-tail property, marine and surety, offset by $306 million of adverse development in the corporate run-off book from environmental and molestation claims. P&C underwriting income was a record $6.53 billion. **Segments (2025 versus 2024):** - **North America Commercial.** Net premiums written $21.28 billion, up 3.4%. Middle market and small commercial grew 6.4% and major accounts and specialty grew 1.4%. Combined ratio 81.4% (83.9%), helped by lower catastrophe losses. Segment income $7.56 billion, up 12.2%. - **North America Personal.** Net premiums written up 7.5%, after $50 million of wildfire reinstatement premiums. Combined ratio 91.5% (83.6%), driven by $1.72 billion of catastrophe losses, but the current-accident-year ratio excluding catastrophes improved to 72.3% (78.5%) on rate and lower underlying losses. Segment income $1.05 billion, down 27.0%. - **North America Agricultural.** Net premiums written up 8.2%, including a favorable $179 million year-over-year federal profit-share adjustment. Combined ratio 82.3% (86.9%). Segment income $577 million, up 40.0%. - **Overseas General.** Net premiums written up $1.05 billion (consumer up 11.0%, commercial up 5.2%), with growth in Europe, Asia (helped by the Thailand acquisition) and Latin America (Mexico auto). Combined ratio 85.0% (86.4%). Segment income $3.17 billion, up 10.8%. - **Global Reinsurance.** Net premiums written down 2.8%, reflecting a large one-off structured deal in 2024. Combined ratio 79.3% (85.9%). Segment income $634 million, up 46.5%. - **Life Insurance.** Net premiums written $7.28 billion, up 15.1%. International life grew 17.4% in constant dollars, driven by North Asia (Hong Kong, Huatai, Taiwan, Korea) and including a $117 million one-time New Zealand transaction. Chubb Benefits grew 17.3% on 32.1% worksite growth. Segment income was a record $1.24 billion, up 13.1%. **Investments and tax.** Net investment income was a record $6.47 billion, up 9.0%, on higher average invested assets from strong operating cash flow. Pre-tax net unrealized gains of $2.66 billion came mainly from lower interest rates. The effective tax rate rose to 18.6% from 15.8%, mainly because of Bermuda's new income tax. **Cash and capital.** Operating cash flow was $12.8 billion, down from $16.2 billion, because of higher losses, expenses and taxes paid and $1.1 billion of purchases by consolidated investment products. Capital returned and financing in 2025: - Share repurchases of $3.4 billion, at an average $282.57 per share. - Dividends of CHF 3.18 ($3.82) per share. - Debt raised: Chubb INA issued $1.25 billion of 4.9% notes due 2035 and Chinese yuan bonds and term loans, and repaid $800 million of 3.15% notes. Financial debt to total adjusted capitalization was 18.4%. Chubb Limited received $4.5 billion in 2025 from Chubb INA's redemption of part of its ownership interest. This is under a plan to convert Chubb INA to a limited liability company and fully redeem Chubb Limited's remaining 20% interest by the end of 2027. **Outlook given with the annual results.** Management guided 2026 pre-tax interest expense of about $772 million and purchased-intangibles amortization of $287 million (about $72 million a quarter). In the February 3, 2026 release, the CEO said commercial markets were growing "incrementally more competitive," and that "We anticipate an excellent '26 with strong growth in operating earnings and double-digit growth in EPS and tangible book value, macro conditions notwithstanding." ## Current quarter: second quarter 2026 *Source: Form 10-Q for the quarter ended June 30, 2026, accession 0000896159-26-000017. Non-GAAP measures (core operating income, P&C underwriting income, adjusted net investment income), per-share, return and book-value figures, regional growth rates, invested assets and management quotations are from the second-quarter 2026 earnings release furnished as Exhibit 99.1 to Form 8-K, accession 0001193125-26-310312. Comparisons are with the second quarter of 2025 unless noted.* **Headline.** Net income attributable to Chubb was $2.85 billion ($7.30 per share), against $2.97 billion ($7.35). The 10-Q attributes the dip to lower mark-to-market gains on private equity, which offset growth in P&C underwriting income, Life segment income and net investment income. Consolidated other income fell to $196 million from $655 million. Core operating income rose 14.6% to $2.84 billion, or 18.2% to $7.26 per share. Annualized ROE was 15.3% and core operating return on tangible equity was 21.2%. Book value per share was $195.45 and tangible book value per share $131.93, up 12.3% and 17.1% from a year earlier. For the first half, net income was $5.17 billion, up from $4.30 billion. First-half 2025 catastrophe losses had been $2.27 billion, including $1.47 billion from the California wildfires, against $975 million in the first half of 2026. **Premiums: growth held back deliberately in property.** Consolidated net premiums written rose 3.6% to $14.71 billion (2.0% in constant dollars). P&C was up 3.0%. Consumer was up 8.7% but commercial only 0.8%, because underwriting actions in large-account and E&S property cut commercial growth by 4.5 points. Excluding large-account and E&S property, P&C grew 6.3%. Property and other short-tail lines fell 10.1%, while commercial casualty rose 6.4%. The CEO said that "overly soft underwriting conditions persist in certain areas of property insurance globally, particularly large account and E&S related," that Chubb "will not underwrite knowingly at a loss," and that soft conditions are "spreading to certain areas of casualty while financial lines also remain soft." **Underwriting.** The P&C combined ratio improved to 83.8% from 85.6%, on lower catastrophe losses: $475 million against $630 million. The current-accident-year combined ratio excluding catastrophes was flat at 82.2% (82.3%). Net favorable prior-period development was $283 million. Active companies developed $441 million favorably, mainly auto physical damage, property and workers' compensation. The corporate run-off book developed $158 million adversely, mainly from molestation claims. P&C underwriting income rose 18.8% to $1.94 billion. **Segments (Q2 2026 versus Q2 2025):** - **North America Commercial.** Net premiums written $5.59 billion, down 2.3%. Middle market and small commercial rose 8.9%, while major accounts and specialty fell 9.0%, with its property and other short-tail lines down 30.1%. Combined ratio 85.4% (83.5%), on higher catastrophe losses and a less property-heavy mix. Segment income $1.73 billion (Q2 2025: $1.79 billion). - **North America Personal.** Net premiums written $2.05 billion, up 6.0%, on new business, retention, rate and exposure, mainly in homeowners. Combined ratio 67.3% (73.5%). Segment income $728 million ($561 million). - **North America Agricultural.** Net premiums written $776 million, up 6.0%, from MPCI and crop-hail. Combined ratio 89.7% (89.1%). Segment income $79 million ($78 million). - **Overseas General.** Net premiums written $3.99 billion, up 10.2% (4.8% in constant dollars). Latin America rose 15.6%, Asia 12.0% and Europe 5.1%. Combined ratio 82.2% (90.3%), mostly from lower catastrophe losses. Segment income $995 million, up 67.2%. - **Global Reinsurance.** Net premiums written $354 million, down 6.7%, as clients kept more catastrophe risk and rates fell. Combined ratio 76.1% (71.0%). Segment income $182 million ($183 million). - **Life Insurance.** Net premiums written $1.94 billion, up 7.5%. International life rose 6.2%, as regular-premium products grew 12.4% (mainly Taiwan and Hong Kong) and Huatai bancassurance single-premium sales fell. Chubb Benefits rose 14.0%. International life deposits collected rose $197 million (38.3%). Segment income $332 million, up 9.0%. **Investments, expenses and tax.** Net investment income rose 12.3% to a record $1.76 billion on higher average invested assets. Adjusted net investment income was $1.88 billion, and invested assets reached $175 billion. Total investments rose $3.9 billion in the first half, as operating cash was invested, partly offset by unrealized losses on fixed maturities as rates rose. The quarter's effective tax rate was 20.5%. Management raised its full-year 2026 interest expense estimate to about $808 million, from the $772 million guided in February, citing new issuance. **Capital and financing.** Chubb INA's debt transactions in 2026: | Date | Transaction | Approx. US$ at issue | |---|---|---| | March 2026 | Issued CHF 200 million of 1.02% notes due 2032 | $254 million | | May 2026 | Repaid $1.5 billion of 3.35% notes at maturity | — | | May 2026 | Issued $1.0 billion of 5.30% notes due 2036 | — | | May 2026 | Issued CNH 4.0 billion of notes at 2.40% (due 2031) and 2.85% (due 2036) | $587 million | | June 2026 | Issued CAD 800 million of notes at 3.780% (due 2031) and 4.034% (due 2033) | $572 million | Financial debt was $18.1 billion at June 30, 2026, and financial debt to total adjusted capitalization was 18.6%. First-half operating cash flow was $7.68 billion, up $2.6 billion. Share repurchases were $979 million in the quarter and $2.12 billion in the first half (6.5 million shares). At June 30, $547 million of the July 2025 authorization lapsed unused. In May 2026 the Board approved a new $7.5 billion authorization, effective July 1, 2026. At the May 2026 annual general meeting, shareholders approved an annual dividend of up to $4.08 per share (CHF 3.20), payable as $1.02 a quarter, up $0.20 from the prior year. **Catastrophe protection.** The Global Property Catastrophe Reinsurance Program renewed for April 1, 2026 to March 31, 2027: - U.S. (excluding Alaska and Hawaii): Chubb retains the first $1.75 billion per occurrence, with three reinsured layers above that up to $5.7 billion. - International (including Alaska and Hawaii): Chubb retains $225 million, with cover above it up to $1.325 billion. - Alaska, Hawaii and Canada: a second layer runs from $1.325 billion to $2.475 billion. **Management outlook.** The CEO said: "CATs and FX aside, we are confident in our ability to continue to outperform and generate strong growth in operating earnings and EPS, and double-digit growth in tangible book value," and that "The growth penalty we are paying in property will dissipate going forward." ## Subsequent events *Source: Form 10-Q for the quarter ended June 30, 2026, accession 0000896159-26-000017 (Note 13, Part II Item 2, and MD&A Capital Resources). Items dated after the 2025 year-end are from the FY2025 Form 10-K, accession 0000896159-26-000005 (Notes 2 and 12).* - **Share repurchases after the quarter.** From July 1 through July 27, 2026, Chubb repurchased 40,000 common shares for $14 million in open-market transactions under the new $7.5 billion authorization. That left $7.49 billion of authorization at July 27, 2026. - **Dividend payment.** The quarterly dividend of $1.02 per share (CHF 0.80), the first installment of the dividend approved in May 2026, was paid on July 2, 2026 to shareholders of record on June 12, 2026. - **No post-quarter deals or financings disclosed.** The quarterly report discloses no acquisition, divestiture, new borrowing or litigation outcome occurring after June 30, 2026. - **Earlier in 2026 (disclosed after fiscal year-end 2025).** - On February 2, 2026, Chubb completed its purchase of Liberty Insurance in Vietnam from Liberty Mutual, completing the two-country deal agreed on March 3, 2025. The business is reported in Overseas General from the first quarter of 2026. No purchase price was disclosed, and the acquisitions are described as not material. The Thailand half, LMG Insurance, closed on April 1, 2025 for $321 million. - In January 2026 the IRS began examining Chubb Group Holdings' U.S. tax returns for 2019 through 2023.