UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant To Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 4, 2016
Chubb Limited
(Exact name of registrant as specified in its charter)
Switzerland | 1-11778 | 98-0091805 | ||
(State or other jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
Baerengasse 32
CH-8001 Zurich, Switzerland
Telephone: +41 (0)43 456 76 00
(Address of principal executive offices)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition |
On May 4, 2016, Chubb Limited issued a Press Release reporting its first quarter 2016 results and the availability of its first quarter 2016 Financial Supplement. The Press Release and the Financial Supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are hereby incorporated herein by reference.
Item 9.01. | Financial Statements, Pro Forma Financial Information and Exhibits |
(d) Exhibits
Exhibit Number |
Description | |
99.1 | Press Release, Dated May 4, 2016, Reporting First Quarter 2016 Results | |
99.2 | First Quarter 2016 Financial Supplement |
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 | ||||
DATE: May 4, 2016 | By: | /s/ Philip V. Bancroft | ||
Philip V. Bancroft | ||||
Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
Number |
Description |
Method of Filing | ||
99.1 | Press Release, Dated May 4, 2016, Reporting First Quarter 2016 Results | Furnished herewith | ||
99.2 | First Quarter 2016 Financial Supplement | Furnished herewith |
Exhibit 99.1
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Chubb Limited Bärengasse 32 CH-8001 Zurich Switzerland |
new.chubb.com @Chubb |
News Release
Chubb Reports First Quarter Operating EPS of $2.26 Versus $2.25 Prior Year; Operating EPS with 14-Day Stub Period is $2.29; P&C Combined Ratio is 90.0% and Annualized Operating ROE is 10.2%; Operating Return on Tangible Equity is 18.5%
● | As reported Global P&C net premiums written of $5.4 billion, up 63.6% in constant dollars; Global P&C net premiums written of $6.3 billion that include the companys results for the first 14 days of January, herein called 2016 pro forma results, down 1.0% in constant dollars when compared with prior year as if ACE and Chubb were one company in 2015, herein called 2015 pro forma results* |
● | As reported P&C underwriting income of $612 million, up 52.3%, or 59.4% in constant dollars, leading to a combined ratio of 90.0%; on a 2016 and 2015 pro forma basis, P&C underwriting income of $720 million, up 23.2%, or 28.6% in constant dollars, leading to a combined ratio of 88.9% |
● | Adjusted net investment income of $767 million, or $812 million on a 2016 pro forma basis that includes $45 million from 14-day stub period |
● | Operating cash flow was $1.0 billion. Adjusted for the 14-day stub period and certain merger-related expenses in the quarter, underlying cash flow was $1.3 billion |
● | As reported unfavorable foreign currency movement negatively impacted consolidated operating income in the quarter by $21 million, or $0.05 per share |
● | Integration expense savings annualized run rate now projected at approximately $750 million by 2018, compared with original estimate of $650 million, or $610 million at current foreign currency rates. Annual investment income run rate to improve by approximately $100 million to $120 million pre-tax by the third or fourth quarter, depending on market conditions, from what the company would otherwise earn as a result of investment portfolio management improvements. Before the improvements, the companys revised estimate of quarterly investment income was expected to be in the range of $790 million to $810 million. Now, with the improvements, quarterly investment income is expected to be in the range of $820 million to $840 million for the balance of the year. |
* 2016 pro forma results include the combined companys results for the first 14 days of January. (The Chubb Corporation acquisition closed 1/14/16.) 2016 pro forma results do not include any impact from purchase accounting adjustments related to the acquisition. 2015 pro forma results include Legacy ACE plus Legacy Chubb historical results.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 1 |
Chubb Limited News Release
ZURICH May 4, 2016 Chubb Limited (NYSE: CB) today reported net income for the quarter ended March 31, 2016, of $0.97 per share, compared with $2.05 per share for the same quarter last year.(1) Operating income was $2.26 per share, compared with $2.25 per share for the same quarter last year. The property and casualty (P&C) combined ratio for the quarter was 90.0%. Book value per share increased 10.1%, reflecting the impact of The Chubb Corporation (Chubb Corp) acquisition, including the issuance of 137 million common shares totaling $15.2 billion and $323 million of equity awards related to the transaction. Tangible book value per share decreased 25.5% from December 31, 2015, reflecting $15.4 billion, net of tax, of goodwill and other intangibles related to the Chubb Corp acquisition. The dilution at the time of the acquisition closing was 29.3%, as expected. Book value per share and tangible book value per share were favorably impacted by income, favorable foreign currency movement and net realized and unrealized gains. Book value and tangible book value per share now stand at $98.85 and $53.83, respectively. Annualized operating return on equity for the quarter was 10.2%.
Chubb Limited
First Quarter Summary
(in millions, except per share amounts)
(Unaudited)
(Per Share - Diluted) | ||||||||||||||||||||
As Reported | 2016
|
2015
|
Change
|
2016
|
2015
|
Change
| ||||||||||||||
Operating income, net of tax (1) |
$ 1,019 | $ 745 | 36.8% | $ 2.26 | $ 2.25 | 0.4% | ||||||||||||||
Chubb one-time integration and merger-related expenses, net of tax |
(106) | | NM | (0.24) | | NM | ||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax | (59) | | NM | (0.13) | | NM | ||||||||||||||
Adjusted net realized gains (losses), net of tax |
(415)
|
|
(64)
|
|
NM
|
|
(0.92)
|
|
|
(0.20)
|
|
NM
| ||||||||
Net income (2) |
$ 439
|
|
$ 681
|
|
(35.6)%
|
|
$ 0.97
|
|
|
$ 2.05
|
|
(52.7)%
|
(1) | Operating income was adversely impacted by purchase accounting adjustments of $0.06 per share. |
(2) | Net income was adversely impacted by $0.43 per share comprising Chubb integration and related expenses, the amortization of fair value adjustments, and purchase accounting adjustments on operating income of $0.06 per share as noted above. |
Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Limited, commented: Were off to a good start as the new Chubb with strong earnings for the first quarter, driven by excellent operating and underwriting results exclusive of the impact of one-time acquisition-related costs. After-tax operating income was $2.26 per share compared to $2.25 prior year. Comparing our results in 2016 to 2015 as if we were one company in both periods, our EPS in 16 was $2.29 and our underwriting income of $720 million was up 23% over prior year with an excellent combined ratio of 88.9%. Book value per share was up over 10%, or 2.3% when excluding the merger impact, while our annualized operating ROE for the quarter was over 10%%.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 2 |
Chubb Limited News Release
Total premium revenue in the quarter was impacted by market conditions as we maintained underwriting discipline, as well as continued foreign exchange headwinds and integration-related activities. Our client renewal retention rates were very strong in the quarter, so the impact to growth came predominantly from new business, where greater momentum has begun to build. The impact of merger-related focus is diminishing and foreign exchange should have a reduced effect in the second quarter. In fact, we are already beginning to see evidence of both.
Concerning the merger, our integration efforts are on track and going well. Our people are highly focused on serving their clients and writing business, and as they do so, we are knitting ourselves together at every level of the organization. Reception to the new Chubb in the market from customers, agents and brokers around the globe has been terrific. We also now project that we will surpass our original run-rate target for integration-related expense savings and, separately, we expect to increase our investment income run rate from what we would otherwise earn as a result of investment portfolio management improvements. In sum, the value creation that will come from the new Chubb is exceeding our initial expectations.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 3 |
Chubb Limited News Release
Operating highlights for the quarter ended March 31, 2016, were as follows:
As Reported | Pro Forma(1) | |||||||||||||||||||||
Chubb Limited | Q1 | Q1 | Q1 | Q1 | ||||||||||||||||||
(in millions of U.S. dollars except for percentages) | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
P&C |
||||||||||||||||||||||
Net premiums written | $ | 5,479 | $ | 3,585 | 52.8% | $ | 6,333 | $ | 6,700 | (5.5)% | ||||||||||||
Net premiums written constant-dollar | $ | 3,397 | 61.3% | $ | 6,422 | (1.4)% | ||||||||||||||||
Underwriting income | $ | 612 | $ | 402 | 52.3% | $ | 720 | $ | 585 | 23.2% | ||||||||||||
Underwriting income constant-dollar | $ | 384 | 59.4% | $ | 560 | 28.6% | ||||||||||||||||
Combined ratio | 90.0% | 88.4% | 88.9% | 91.1% | ||||||||||||||||||
Current accident year underwriting income excluding catastrophe losses | $ | 623 | $ | 370 | 68.3% | $ | 731 | $ | 708 | 3.3% | ||||||||||||
Current accident year underwriting income excluding catastrophe losses constant-dollars | $ | 355 | 75.7% | $ | 686 | 6.6% | ||||||||||||||||
Current accident year combined ratio excluding catastrophe losses | 89.9% | 89.3% | 88.8% | 89.2% | ||||||||||||||||||
Global P&C (excludes Agriculture) | ||||||||||||||||||||||
Net premiums written | $ | 5,415 | $ | 3,497 | 54.9% | $ | 6,269 | $ | 6,612 | (5.2)% | ||||||||||||
Net premiums written constant-dollar | $ | 3,309 | 63.6% | $ | 6,334 | (1.0)% | ||||||||||||||||
Underwriting income | $ | 559 | $ | 355 | 57.7% | $ | 667 | $ | 538 | 24.2% | ||||||||||||
Underwriting income constant-dollar | $ | 337 | 66.1% | $ | 513 | 30.1% | ||||||||||||||||
Combined ratio | 90.8% | 89.5% | 89.7% | 91.7% | ||||||||||||||||||
Current accident year underwriting income excluding catastrophe losses | $ | 609 | $ | 355 | 71.9% | $ | 717 | $ | 693 | 3.7% | ||||||||||||
Current accident year underwriting income excluding catastrophe losses constant-dollar | $ | 339 | 79.7% | $ | 670 | 7.1% | ||||||||||||||||
Current accident year combined ratio excluding catastrophe losses | 90.0% | 89.5% | 88.9% | 89.3% |
(1) Note about pro forma results: 2016 pro forma results include the combined companys results for the first 14 days of January ($44 million pre-tax in P&C underwriting income). (The Chubb Corp acquisition closed 1/14/16.) 2016 pro forma results do not include any impact from purchase accounting adjustments related to the acquisition ($64 million pre-tax in P&C underwriting income). 2015 pro forma results include Legacy ACE plus Legacy Chubb historical results.
Refer to the Non-GAAP Financial Measures section of the Financial Supplement for a reconciliation of these measures to pro forma measures calculated in accordance with SEC guidance.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 4 |
Chubb Limited News Release
● | Results for the quarter on an as-reported basis exclude the results of operations of Chubb Corp for the 14 days prior to the acquisition closing date (stub period) totaling $845 million in P&C net premiums written, $44 million in P&C underwriting income and $60 million in operating income. The stub period amounts for underwriting are included in the 2016 pro forma results found in the operating highlights table above. |
● | P&C net premiums earned increased 76.7% reflecting the acquisition of Chubb Corp. On a 2016 and 2015 pro forma basis, P&C net premiums earned decreased 0.7%, or increased 2.9% in constant dollars. |
● | On an as-reported basis, the P&C expense ratio was 32.7%, compared with 31.3% last year. The Global P&C expense ratio was 32.8%, compared with 32.0% last year. On a 2016 and 2015 pro forma basis, the P&C expense ratio was 31.6%, compared with 31.8% last year, and the Global P&C expense ratio was 31.7%, compared with 32.1% last year. |
● | On an as-reported basis, total pre-tax and after-tax catastrophe losses, including reinstatement premiums, were $258 million (4.3 percentage points of the combined ratio) and $204 million, respectively, compared with $51 million (1.5 percentage points of the combined ratio) and $40 million, respectively, last year. On a 2015 pro forma basis, total pre-tax and after-tax catastrophe losses, including reinstatement premiums, were $315 million (4.8 percentage points of the combined ratio) and $243 million, respectively. |
● | On an as-reported basis, total P&C pre-tax and after-tax favorable prior period development was $247 million (4.2 percentage points of the combined ratio) and $198 million, respectively, compared with $83 million pre-tax (2.4 percentage points of the combined ratio) and $67 million after-tax last year. On a 2015 pro forma basis, total P&C pre-tax and after-tax favorable prior period development for first quarter of 2015 was $192 million (2.9 percentage points of the combined ratio) and $148 million, respectively. |
● | Adjusted net investment income, which excludes a purchase accounting adjustment not included in operating income, was $767 million, compared with $551 million last year. The current period excludes $45 million related to the 14-day stub period. On a 2016 and 2015 pro forma basis, adjusted net investment income was $812 million, compared with $878 million, primarily due to a lower invested asset base, plus unfavorable foreign currency movement and lower reinvestment yields. |
● | Net realized and unrealized gains pre-tax totaled $952 million, including unrealized gains of $1.4 billion and net realized losses of $419 million. Net unrealized pre-tax gains comprised primarily unrealized gains of $1.1 billion in the investment portfolio and unrealized foreign exchange gains of $312 million. Net realized losses included $210 million in the investment portfolio and $243 million from derivative accounting related to the companys variable annuity business. |
● | Operating cash flow was $1.0 billion. Adjusted for the 14-day stub period and certain merger-related expenses, underlying cash flow was $1.3 billion. |
● | Net loss reserves increased $21.4 billion, primarily comprising $20.5 billion of acquired reserves and an increase of $715 million related to the fair value adjustment at the acquisition close. Excluding the Chubb Corp acquisition, net loss reserves increased $125 million adjusted for foreign exchange. |
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 5 |
Chubb Limited News Release
● | Book value per share increased 10.1% to $98.85 from $89.77 at December 31, 2015, reflecting the impact of the Chubb Corp acquisition, including the issuance of 137 million common shares totaling $15.2 billion and $323 million of equity awards related to the transaction (7.8% of the increase). In addition, book value per share was favorably impacted by income, favorable foreign currency movement, and net realized and unrealized gains (2.3% of the increase). |
● | Tangible book value per share declined 25.5% to $53.83 from $72.25 at December 31, 2015, reflecting $15.4 billion, net of tax, of goodwill and other intangibles related to the Chubb Corp acquisition. The dilution at acquisition was 29.3%, as expected. Tangible book value per share benefited 3.8% from income, favorable foreign currency movement, and net realized and unrealized gains. |
Effective with the first quarter of 2016, Chubb Limited reports its financial results within the newly defined business segments as outlined below. Details of financial results by business segment are available in the Chubb Limited Financial Supplement. Key segment items for the quarter ended March 31, 2016, are presented below:
As Reported | Pro Forma | |||||||||||||||||||||
Chubb Limited | Q1 | Q1 | Q1 | Q1 | ||||||||||||||||||
(in millions of U.S. dollars except for percentages) | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
North America Commercial P&C Insurance* | ||||||||||||||||||||||
Net premiums written |
$ | 2,302 | $ | 1,297 | 77.4% | $ | 2,821 | $ | 2,928 | (3.7)% | ||||||||||||
Net premiums written constant-dollar |
$ | 1,290 | 78.4% | $ | 2,923 | (3.5)% | ||||||||||||||||
Combined ratio |
86.1% | 86.7% | 85.2% | 86.6% | ||||||||||||||||||
Current accident year combined ratio excluding catastrophe losses | 89.5% | 88.1% | 88.3% | 88.2% | ||||||||||||||||||
North America Personal P&C Insurance | ||||||||||||||||||||||
Net premiums written |
$ | 871 | $ | 133 | NM | $ | 971 | $ | 909 | 6.8% | ||||||||||||
Net premiums written constant-dollar |
$ | 133 | NM | $ | 904 | 7.4% | ||||||||||||||||
Combined ratio |
97.5% | 110.2% | 92.3% | 106.2% | ||||||||||||||||||
Current accident year combined ratio excluding catastrophe losses | 82.5% | 85.3% | 78.7% | 82.6% | ||||||||||||||||||
Overseas General Insurance | ||||||||||||||||||||||
Net premiums written |
$ | 2,041 | $ | 1,794 | 13.8% | $ | 2,256 | $ | 2,480 | (9.0)% | ||||||||||||
Net premiums written constant-dollar |
$ | 1,620 | 26.1% | $ | 2,219 | 1.7% | ||||||||||||||||
Combined ratio |
91.4% | 89.1% | 92.2% | 89.5% | ||||||||||||||||||
Current accident year combined ratio excluding catastrophe losses | 92.0% | 90.3% | 92.8% | 91.6% |
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 6 |
Chubb Limited News Release
* The North America Commercial P&C Insurance segment includes the Commercial Insurance Division, which comprises the middle market and small commercial business units, and the Major Accounts & Specialty Division. In the future, the company expects to treat these two divisions as separate segments for reporting purposes.
● | North America Agricultural Insurance: Net premiums written decreased 27.0%, primarily due to lower premium retention as a result of the premium-sharing formulas with the U.S. government that resulted from a true-up in 2016 of the 2015 crop year loss estimates. The current accident year combined ratio excluding catastrophe losses was 80.6%, compared with 76.7%. |
● | Global Reinsurance: Net premiums written decreased 26.3%, or 24.6% in constant dollars due to market conditions. The combined ratio was 77.3%, compared with 73.2%. The current accident year combined ratio excluding catastrophe losses was 78.5%, compared with 75.5%. |
● | Life Insurance: Segment income was $64 million, compared with $77 million, reflecting the runoff of the companys life reinsurance business and unfavorable claims reserve development of $9 million in Combined Insurances U.S. operations. International life insurance net premiums and deposits collected increased 3.3% in constant dollars. |
The company originally announced that it expected integration-related savings of $650 million, or $610 million at current foreign currency rates. The company now expects integration-related savings of $750 million. The following table shows annualized and realized integration-related savings and integration and merger-related expenses expected by year:
Chubb Limited | ||||||||||||||||||||
(in millions of U.S. dollars) | FY 2015 |
FY 2016 |
FY 2017 |
FY 2018 |
Total |
|||||||||||||||
Chubb integration-related savings (1) |
||||||||||||||||||||
Annualized savings |
| $ 470 | $ 690 | $ 750 | $ 750 | |||||||||||||||
Realized savings |
| $ 275 | $ 530 | $ 715 | $ 750 | |||||||||||||||
Chubb integration and merger-related expenses (2) |
||||||||||||||||||||
One-time integration expenses related to savings |
$ 22 | $ 343 | $ 119 | $ 41 | $ 525 | |||||||||||||||
Other one-time merger-related expenses |
11 | 210 | 56 | 9 | 286 | |||||||||||||||
Total expected integration and merger-related expenses |
$ 33 | $ 553 | $ 175 | $ 50 | $ 811 |
(1) | Realized savings are the portion that is recorded in the financial statements in the current period. Annualized savings are the annualized run rate of the realized savings that will impact future years. |
(2) | Integration expenses related to savings are one-time costs that are directly attributable to the achievement of the annualized savings, including employee severance, third-party consulting fees, and systems integration expenses. Other merger-related expenses are one-time costs directly attributable to the merger, including rebranding, employee retention costs and other professional and legal fees related to the acquisition. |
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 7 |
Chubb Limited News Release
Please refer to the Chubb Limited Financial Supplement, dated March 31, 2016, which is posted on the companys investor relations website, investors.chubb.com, in the Financials section for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio and debt and capital.
Chubb Limited will hold its first quarter earnings conference call on Thursday, May 5, 2016, beginning at 8:30 a.m. Eastern. The earnings conference call will be available via live webcast at investors.chubb.com or by dialing 888-312-9841 (within the United States) or 719-325-2349 (international), passcode 9430974. Please refer to the Chubb website under Events for details. A replay of the call will be available until Thursday, May 19, 2016, and the archived webcast will be available for approximately one month. To listen to the replay, please dial 888-203-1112 (in the United States) or 719-457-0820 (international), passcode 9430974.
About the new Chubb
Chubb is the worlds largest publicly traded property and casualty insurance company. With operations in 54 countries, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. The company is distinguished by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength, underwriting excellence, superior claims handling expertise and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London and other locations, and employs approximately 31,000 people worldwide. Additional information can be found at: new.chubb.com.
Investor Contact
Helen Wilson: (441) 299-9283; helen.wilson@chubb.com
Media Contact
Jeffrey Zack: (212) 827-4444; jeffrey.zack@chubb.com
(1) | All comparisons are with the same period last year unless specifically stated. |
Regulation G - Non-GAAP Financial Measures
In presenting our results, we included and discussed certain non-GAAP measures, including pro forma measures. These non-GAAP measures and pro forma 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).
Throughout this document there are various measures presented on a constant-dollar basis (i.e., excludes the impact of foreign exchange). 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.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 8 |
Chubb Limited News Release
Pro forma measures presented throughout this document are prepared exclusive of purchase accounting adjustments in order to present the underlying profitability of the our insurance business. We believe that excluding these adjustments provide visibility and comparability into our results.
Adjusted net investment income is net investment income excluding the amortization of the fair value adjustment on acquired assets.
Adjusted interest expense is interest expense excluding the amortization of the fair value adjustment of acquired debt and the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. We believe that excluding these items are meaningful in order to present the underlying economics of the companys business.
Adjusted net realized gains (losses), net of tax, includes net realized gains (losses) and net realized gains (losses) recorded in other income (expense) related to unconsolidated subsidiaries, and excludes realized gains and losses on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing impacts underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations, and therefore realized gains (losses) from these derivatives are reclassified to adjusted losses and loss expenses. The P&C combined ratio includes adjusted losses and loss expenses in the ratio numerator.
Underwriting income, P&C underwriting income, and Global P&C underwriting income are calculated by subtracting losses and loss expenses, policy benefits, policy acquisition costs and administrative expenses from net premiums earned. P&C underwriting income also includes gains (losses) on crop derivatives. We use underwriting income and operating ratios to monitor the results of our operations without the impact of certain factors, including net investment income, other income (expense), interest and income tax expense and adjusted net realized gains (losses). Current accident year underwriting income excluding catastrophe losses is underwriting income adjusted to exclude catastrophe losses and prior period development (PPD). We believe it is useful to exclude catastrophe losses, as they are not predictable as to timing and amount, and PPD as these unexpected loss developments on historical reserves are not indicative of our current underwriting performance. We believe the use of these measures enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.
Segment income includes underwriting income and adjusted net investment income.
Operating income, net of tax, excludes adjusted realized gains and losses, Chubb integration and related expenses, and the amortization of the fair value adjustments of acquired debt and invested assets related to the Chubb Corp acquisition. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude adjusted net realized gains (losses) because the amount of these gains (losses) is heavily influenced by the availability of market opportunities. We also exclude Chubb integration and related expenses related to the acquisition due to the size, complexity, and volume of this acquisition, which may not be indicative of such future costs. We believe that excluding the Chubb integration and related expenses facilitates the comparison of our financial results to our historical operating results. These costs include legal and professional fees and all costs directly related to the integration activities of the Chubb acquisition including pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. The interest expense on the $5.3 billion senior notes was included within operating income subsequent to the acquisition close (i.e., after January 14, 2016). Operating income should not be viewed as a substitute for net income determined in accordance with GAAP. In addition, we disclose operating income excluding the impact of foreign exchange in order to adjust for the distortive effects of fluctuations in exchange rates.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 9 |
Chubb Limited News Release
P&C combined ratio excluding catastrophe losses and PPD and current accident year P&C combined ratio excluding catastrophe losses exclude impacts of catastrophe losses and PPD. We believe this measure provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property and casualty business that may be obscured by these items.
Global P&C performance metrics comprise consolidated operating results (including corporate) and exclude the operating results of the companys Life and Insurance North American Agriculture segments. We believe that these measures are useful and meaningful to investors as they are used by management to assess the companys global P&C operations which are the most economically similar. We exclude the Insurance North American Agriculture and Life segments because the results of these businesses do not always correlate with the results of our global P&C operations.
International life net premiums written and deposits collected, is adjusted to include deposits collected on universal life and investment contracts (life deposits). Life deposits are not reflected as revenues in our consolidated statements of operations in accordance with GAAP. However, we include life deposits in presenting growth in our life insurance business because new life deposits are an important component of production and key to our efforts to grow our business.
Operating return on equity (ROE) or ROE calculated using operating income and operating return on tangible equity are annualized financial measures. The ROE numerator includes income adjusted to exclude after-tax adjusted net realized gains (losses), Chubb integration and related expenses, and the amortization of the fair value adjustment of acquired invested assets and long-term debt. The ROE denominator includes the average shareholders equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. In addition, the denominator was adjusted to account for the weighted-average impact of the $15,527 million issuance of common shares and equity awards related to the Chubb Corp acquisition on January 14, 2016 . To annualize 2016 operating ROE, include the 14-day stub period adjustment in future quarters (i.e., Q2 through Q4 assumes a full quarter of operating income to account for the distortive impact of Q1 not having a full quarter given the acquisition close on January 14, 2016). For the operating return on tangible equity, we excluded goodwill and other intangibles from the denominator to eliminate the distortive impact of acquisitions. Operating ROE and operating return on tangible equity are useful measures as they enhance the understanding of the return on shareholders equity by highlighting the underlying profitability relative to shareholders equity excluding the effect of unrealized gains and losses on our investments and the distortive impact of acquisitions.
Tangible book value per common share is shareholders equity less goodwill and other intangible assets divided by the shares outstanding. The intangibles related to the Chubb Corp acquisition is excluded from the tangible book value per share calculation net of tax. 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. In addition, we disclose per share measures for book value and tangible book value that exclude the impact of foreign currency fluctuations and the acquisition during 2016 in order to adjust for the distortive effects of fluctuations in exchange rates.
Other income (expense) - operating excludes from consolidated Other income (expense) the portion of net realized gains and losses related to unconsolidated entities and gains and losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP. Net realized gains (losses) related to unconsolidated entities is excluded from operating income in order to enhance the understanding of our core results of operations as they are heavily influenced by, and fluctuate in part according to market conditions.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 10 |
Chubb Limited News Release
Chubb integration and related expenses include legal and professional fees and all costs directly related to the integration activities of the Chubb acquisition as well as the pre-acquisition interest expense related to the $5.3 billion senior notes issued in November 2015 to finance a portion of the Chubb acquisition. We exclude this pre-acquisition interest expense from operating income because the operations for which the debt was issued were not part of our operating activities prior to the completion of the acquisition. Effective with the close of the Chubb acquisition (January 14, 2016), the interest on this debt was considered a cost of our operations and will then be included within operating income.
See reconciliation of Non-GAAP Financial Measures on pages 25-29 in the Financial Supplement. These measures should not be viewed as a substitute for measures determined in accordance with GAAP or with SEC guidance under Article 11 for pro forma measures, including premium, net income, return on equity, adjusted net investment income, and effective tax rate.
NM - not meaningful comparison
Cautionary Statement Regarding Forward-Looking Statements:
Forward-looking statements made in this press release, such as those related to company performance, including 2016 performance and growth opportunities; integration activities and expected expense savings and income run rate; other expected benefits of the ACE and Chubb merger; and our plans, objectives, expectations and intentions and other statements that are not historical facts reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the following: competition, pricing and policy term trends, the levels of new and renewal business achieved, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, integration activities and performance of acquired companies, loss of key employees or disruptions to our operations, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance recoverable, credit developments among reinsurers, rating agency action, possible terrorism or the outbreak and effects of war, economic, political, regulatory, insurance and reinsurance business conditions, potential strategic opportunities including acquisitions and our ability to achieve and integrate them, as well as managements response to these factors, and other factors identified in our filings with the Securities and Exchange Commission (SEC).
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 11 |
Chubb Limited News Release
Chubb Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
(Unaudited)
March 31 | December 31 | |||
2016 |
2015 | |||
Assets |
||||
Investments |
$ 97,586 | $ 66,251 | ||
Cash |
1,091 | 1,775 | ||
Insurance and reinsurance balances receivable |
7,692 | 5,323 | ||
Reinsurance recoverable on losses and loss expenses |
12,891 | 11,386 | ||
Goodwill and other intangible assets |
23,359 | 5,683 | ||
Other assets |
14,025 | 11,888 | ||
|
| |||
Total assets |
$ 156,644 | $ 102,306 | ||
|
| |||
Liabilities |
||||
Unpaid losses and loss expenses |
$ 60,206 | $ 37,303 | ||
Unearned premiums |
14,896 | 8,439 | ||
Other liabilities |
35,645 | 27,429 | ||
|
| |||
Total liabilities |
$ 110,747 | $ 73,171 | ||
|
| |||
Shareholders equity |
||||
Total shareholders equity |
45,897 | 29,135 | ||
|
| |||
Total liabilities and shareholders equity |
$ 156,644 | $ 102,306 | ||
|
| |||
Book value per common share |
$ 98.85 | $ 89.77 | ||
Tangible book value per common share |
$ 53.83 | $ 72.25 | ||
Book value per common share |
$ 101.57 | $ 94.51 | ||
Tangible book value per common share
|
$ 55.81 | $ 75.30 |
(1) | Cumulative translation losses was $1.3 billion in 2016 and $1.5 billion in 2015 |
(2) | Cumulative translation losses was $345 million in 2016 and $550 million in 2015 |
Chubb Limited
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 12 |
Chubb Limited News Release
Summary Consolidated Financial Data
(in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
Three Months Ended | ||||||||
March 31 | ||||||||
2016
|
2015
|
|||||||
Gross premiums written |
$ | 7,389 | $ | 5,322 | ||||
Net premiums written |
5,995 | 4,076 | ||||||
Net premiums earned |
6,597 | 3,927 | ||||||
Losses and loss expenses |
3,674 | 2,122 | ||||||
Policy benefits |
126 | 142 | ||||||
Policy acquisition costs |
1,413 | 707 | ||||||
Administrative expenses |
772 | 554 | ||||||
Net investment income |
|
674 |
|
|
551 |
| ||
Net realized gains (losses) |
(394) | (89) | ||||||
Interest expense |
146 | 68 | ||||||
Other income (expense): |
||||||||
Gains (losses) from separate account assets |
|
(3) |
|
|
11 |
| ||
Other |
|
(25) |
|
|
24 |
| ||
Amortization of purchased intangibles |
7 | 30 | ||||||
Chubb integration expenses |
148 | | ||||||
Income tax expense |
124 | 120 | ||||||
|
|
|
|
|||||
Net income |
$ | 439 | $ | 681 | ||||
|
|
|
|
|||||
Diluted earnings per share: |
||||||||
Operating income |
$ | 2.26 | $ | 2.25 | ||||
Net income |
$ | 0.97 | $ | 2.05 | ||||
Weighted average diluted shares outstanding
|
|
450.0
|
|
|
331.7
|
| ||
P&C combined ratio |
||||||||
Loss and loss expense ratio |
57.3% | 57.1% | ||||||
Policy acquisition cost ratio |
|
21.2% |
|
|
17.4% |
| ||
Administrative expense ratio |
|
11.5% |
|
|
13.9% |
| ||
|
|
|
|
|||||
P&C combined ratio |
90.0% | 88.4% | ||||||
P&C underwriting income |
$ | 612 | $ | 402 |
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 13 |
Chubb Limited News Release
Chubb Limited
Consolidated Supplemental Segment Information
(in millions of U.S. dollars)
(Unaudited)
Three Months Ended | ||||||
March 31 | ||||||
2016 |
2015 | |||||
Gross Premiums Written | ||||||
North America Commercial P&C Insurance |
$ 3,004 | $ 1,979 | ||||
North America Personal P&C Insurance |
974 | 146 | ||||
North America Agricultural Insurance |
136 | 128 | ||||
Overseas General Insurance |
2,516 | 2,255 | ||||
Global Reinsurance |
213 | 292 | ||||
Life Insurance |
546 | 522 | ||||
|
| |||||
Total |
$ 7,389 | $ 5,322 | ||||
|
| |||||
Net Premiums Written | ||||||
North America Commercial P&C Insurance |
$ 2,302 | $ 1,297 | ||||
North America Personal P&C Insurance |
871 | 133 | ||||
North America Agricultural Insurance |
64 | 88 | ||||
Overseas General Insurance |
2,041 | 1,794 | ||||
Global Reinsurance |
201 | 273 | ||||
Life Insurance |
516 | 491 | ||||
|
| |||||
Total |
$ 5,995 | $ 4,076 | ||||
|
| |||||
Net Premiums Earned | ||||||
North America Commercial P&C Insurance |
$ 2,896 | $ 1,380 | ||||
North America Personal P&C Insurance |
1,024 | 146 | ||||
North America Agricultural Insurance |
23 | 64 | ||||
Overseas General Insurance |
1,955 | 1,637 | ||||
Global Reinsurance |
202 | 226 | ||||
Life Insurance |
497 | 474 | ||||
|
| |||||
Total |
$ 6,597 | $ 3,927 | ||||
|
| |||||
Segment Income (loss) | ||||||
North America Commercial P&C Insurance |
$ 827 | $ 442 | ||||
North America Personal P&C Insurance |
73 | (10) | ||||
North America Agricultural Insurance |
58 | 53 | ||||
Overseas General Insurance |
314 | 316 | ||||
Global Reinsurance |
113 | 136 | ||||
Life Insurance |
64 | 77 | ||||
Corporate |
(73) | (50) | ||||
|
| |||||
Total |
$ 1,376 | $ 964 | ||||
|
|
Chubb®, Chubb logo® and Chubb. Insured.SM are trademarks of Chubb Limited. | 14 |
Exhibit 99.2
Chubb Limited
Financial Supplement
for the Quarter Ended March 31, 2016
Investor Contact
Helen M. Wilson
Phone: (441) 299-9283
email: investorrelations@chubb.com
This report is for informational purposes only. It should be read in conjunction with documents filed by Chubb Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and the closing reports on Form 8-K/A filed on March 24, 2016.
New Financial Reporting Disclosures
Effective Q1 2016, Chubb Limited will report financial results within the following business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. This reflects the companys significantly larger and expanded operations subsequent to its acquisition of The Chubb Corporation on January 14, 2016. In addition, the company also redefined Corporate to include all run-off asbestos and environmental (A&E) exposures, the results of its Brandywine business, the results of its Westchester Specialty operations for 1996 and prior years, certain other mass tort exposures and Legacy Chubb A&E and mass tort exposures. Chubb integration expenses are incurred by the overall company and are therefore included in Corporate. The costs are not related to the on-going business activities of the segments and are therefore excluded from our definition of segment income. All prior periods have been revised to conform to the new segment presentation. Unless otherwise indicated, the term pro forma is used to represent the combined companys normal course of business without purchase accounting adjustments in order to present the underlying economics of the companys business. Pro forma is defined as follows:
2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments.
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Pro forma results presented throughout this document are unaudited and are provided for informational purposes only. A reconciliation of pro forma results as defined above to pro forma results in accordance with SEC guidance under Article 11, is provided in the Reconciliation of non-GAAP starting on page 25.
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in this financial supplement reflect Chubbs current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from as indicated by such statements. For example, forward-looking statements related to financial performance including exposures, reserves and recoverables could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, currency exchange fluctuations, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable and credit developments among reinsurers.
Our forward-looking statements could also be affected by competition, pricing and policy term trends, market acceptance, changes in demand, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
New Disclosures
Chubb Limited
Financial Supplement Table of Contents
Page | ||||
I. |
Financial Highlights | |||
- Consolidated Financial Highlights | 1 | |||
II. |
Consolidated Results | |||
- Consolidated Results - Consecutive Quarters | 2 | |||
- Summary Consolidated Balance Sheets | 3 | |||
- Pro Forma Consolidated Statement of Operations | 4 | |||
- Consolidated Statement of Operations | 5 - 6 | |||
III. |
Global P&C Results | |||
- Global P&C Results - Consecutive Quarters | 7 | |||
IV. |
Segment Results | |||
- North America Commercial P&C Insurance | 8 | |||
- North America Personal P&C Insurance | 9 | |||
- North American Agricultural Insurance | 10 | |||
- Overseas General Insurance | 11 | |||
- Global Reinsurance | 12 | |||
- Life Insurance | 13 | |||
- Corporate | 14 | |||
V. |
Balance Sheet Details | |||
- Loss Reserve Rollforward | 15 | |||
- Reinsurance Recoverable Analysis | 16 | |||
- Investment Portfolio | 17 - 20 | |||
- Net Realized and Unrealized Gains (Losses) | 21 | |||
- Debt and Capital | 22 | |||
- Computation of Basic and Diluted Earnings Per Share | 23 | |||
- Book Value and Book Value per Common Share | 24 | |||
VI. |
Other Disclosures | |||
- Non-GAAP Financial Measures | 25 - 29 | |||
- Glossary | 30 |
Chubb Limited
Consolidated Financial Highlights
(in millions of U.S. dollars, except share, per share data, and ratios)
(Unaudited)
Note: All dollar amounts in the Financial Supplement are rounded. However, percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ.
As Reported | Pro Forma* | |||||||||||||||||||||||||||||||||||||||
Constant $ | Constant $ | |||||||||||||||||||||||||||||||||||||||
Three months ended March 31 | % Change | % Change | Three months ended March 31 | % Change | % Change | |||||||||||||||||||||||||||||||||||
1Q-16 vs. | Constant $ | 1Q-16 vs. | 1Q-16 vs. | Constant $ | 1Q-16 vs. | |||||||||||||||||||||||||||||||||||
2016 | 2015 | 1Q-15 | 2015 (1) | 1Q-15 (1) | 2016 | 2015 | 1Q-15 | 2015 (1) | 1Q-15 (1) | |||||||||||||||||||||||||||||||
Gross premiums written |
$ | 7,389 | $ | 5,322 | 38.8 | % | $ | 5,067 | 45.8 | % | $ | 8,321 | $ | 8,700 | -4.4 | % | $ | 8,352 | -0.4 | % | ||||||||||||||||||||
Net premiums written |
$ | 5,995 | $ | 4,076 | 47.1 | % | $ | 3,865 | 55.1 | % | $ | 6,850 | $ | 7,216 | -5.1 | % | $ | 6,916 | -1.0 | % | ||||||||||||||||||||
P&C net premiums written (2) |
$ | 5,479 | $ | 3,585 | 52.8 | % | $ | 3,397 | 61.3 | % | $ | 6,333 | $ | 6,700 | -5.5 | % | $ | 6,422 | -1.4 | % | ||||||||||||||||||||
Global P&C net premiums written (2) |
$ | 5,415 | $ | 3,497 | 54.9 | % | $ | 3,309 | 63.6 | % | $ | 6,269 | $ | 6,612 | -5.2 | % | $ | 6,334 | -1.0 | % | ||||||||||||||||||||
Net premiums earned |
$ | 6,597 | $ | 3,927 | 68.0 | % | $ | 3,745 | 76.2 | % | $ | 6,988 | $ | 7,037 | -0.7 | % | $ | 6,785 | 3.0 | % | ||||||||||||||||||||
Adjusted net investment income (2) |
$ | 767 | $ | 551 | 39.3 | % | $ | 540 | 42.1 | % | ||||||||||||||||||||||||||||||
Operating income |
$ | 1,019 | $ | 745 | 36.8 | % | $ | 724 | 40.7 | % | ||||||||||||||||||||||||||||||
Net income |
$ | 439 | $ | 681 | -35.6 | % | ||||||||||||||||||||||||||||||||||
Comprehensive income |
$ | 1,541 | $ | 642 | 139.6 | % | ||||||||||||||||||||||||||||||||||
Operating cash flow |
$ | 1,020 | $ | 1,075 | ||||||||||||||||||||||||||||||||||||
P&C combined ratio (2) |
||||||||||||||||||||||||||||||||||||||||
Loss and loss expense ratio |
57.3 | % | 57.1 | % | 57.3 | % | 59.3 | % | ||||||||||||||||||||||||||||||||
Underwriting and administrative expense ratio |
32.7 | % | 31.3 | % | 31.6 | % | 31.8 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
Combined ratio |
90.0 | % | 88.4 | % | 88.9 | % | 91.1 | % | ||||||||||||||||||||||||||||||||
Operating return on equity (ROE) |
10.2 | % | 10.8 | % | ||||||||||||||||||||||||||||||||||||
Operating return on tangible equity |
18.5 | % | ||||||||||||||||||||||||||||||||||||||
ROE |
4.7 | % | 9.2 | % | ||||||||||||||||||||||||||||||||||||
Operating effective tax rate (3) |
16.5 | % | 13.7 | % | ||||||||||||||||||||||||||||||||||||
Effective tax rate |
22.1 | % | 15.0 | % | ||||||||||||||||||||||||||||||||||||
Diluted earnings per share |
||||||||||||||||||||||||||||||||||||||||
Operating income |
$ | 2.26 | $ | 2.25 | 0.4 | % | ||||||||||||||||||||||||||||||||||
Net income |
$ | 0.97 | $ | 2.05 | -52.7 | % | ||||||||||||||||||||||||||||||||||
Full quarter diluted earnings per share (4) |
||||||||||||||||||||||||||||||||||||||||
Operating income |
$ | 2.29 | ||||||||||||||||||||||||||||||||||||||
Net income |
$ | 1.06 | ||||||||||||||||||||||||||||||||||||||
December
31 2015 |
% Change 1Q-16 vs 4Q-15 |
|||||||||||||||||||||||||||||||||||||||
Book value per common share |
$ | 98.85 | $ | 89.77 | 10.1 | % | ||||||||||||||||||||||||||||||||||
Book value per common share excluding foreign currency (5) |
$ | 98.20 | $ | 89.77 | 9.4 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share |
$ | 53.83 | $ | 72.25 | -25.5 | % | ||||||||||||||||||||||||||||||||||
Tangible book value per common share excluding foreign currency (5) |
$ | 53.62 | $ | 72.25 | -25.8 | % | ||||||||||||||||||||||||||||||||||
Weighted average basic common shares outstanding |
446.7 | 328.2 | 325.6 | |||||||||||||||||||||||||||||||||||||
Weighted average diluted common shares outstanding |
450.0 | 331.7 | 328.8 | |||||||||||||||||||||||||||||||||||||
Total hybrid & financial debt/capitalization |
22.6 | % | 25.0 | % |
(1) | Prior periods on a constant dollar basis. |
(2) | See non-GAAP financial measures. |
(3) | Operating effective tax rate is dependent upon the mix of earnings from different jurisdictions with various tax rates. A change in the geographic mix of earnings would change the effective tax rate. The increase in the operating effective tax rate for the quarter was primarily due to a higher percentage of operating earnings being generated in higher tax paying jurisdictions. |
(4) | Full quarter diluted earnings per share for Q1 2016 includes the combined company results inclusive of the first 14 days of January 2016 and includes the impact of purchase accounting adjustments related to The Chubb Corporation acquisition. |
(5) | For 2016, book value per common share and tangible book value per common share exclude the impact of foreign currency movement during the quarter. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Financial Highlights | Page 1 |
Chubb Limited
P&C Consolidated Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 | |||||||||||||||||||||||||
Chubb Limited Consolidated |
||||||||||||||||||||||||||||||||
P&C Consolidated Results (Including Corporate) Excluding Life Insurance Segment (1) |
||||||||||||||||||||||||||||||||
Gross premiums written |
$ | 6,843 | $ | 7,774 | $ | 8,151 | $ | 5,091 | $ | 5,824 | $ | 5,975 | $ | 4,800 | $ | 21,690 | ||||||||||||||||
Net premiums written |
5,479 | 6,333 | 6,700 | 3,629 | 4,217 | 4,284 | 3,585 | 15,715 | ||||||||||||||||||||||||
Net premiums earned |
6,100 | 6,489 | 6,539 | 3,701 | 4,239 | 3,873 | 3,453 | 15,266 | ||||||||||||||||||||||||
Adjusted losses and loss expenses (1) |
3,497 | 3,719 | 3,877 | 2,146 | 2,494 | 2,282 | 1,970 | 8,892 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) |
721 | 1,287 | 1,284 | 602 | 654 | 609 | 600 | 2,465 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible (2) |
570 | | | | | | | | ||||||||||||||||||||||||
Administrative expenses |
700 | 763 | 793 | 500 | 494 | 504 | 481 | 1,979 | ||||||||||||||||||||||||
|
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|
|
|
|
|
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|
|
|
|
|
|||||||||||||||||
Underwriting income |
612 | 720 | 585 | 453 | 597 | 478 | 402 | 1,930 | ||||||||||||||||||||||||
Adjusted net investment income (1) |
700 | 465 | 483 | 496 | 485 | 1,929 | ||||||||||||||||||||||||||
Adjusted interest expense (1) |
149 | 64 | 68 | 71 | 68 | 271 | ||||||||||||||||||||||||||
Other income (expense) - operating (3) |
| (6 | ) | 12 | (1 | ) | (2 | ) | 3 | |||||||||||||||||||||||
Amortization of purchased intangibles |
7 | 35 | 51 | 55 | 30 | 171 | ||||||||||||||||||||||||||
Income tax expense |
201 | 97 | 140 | 136 | 119 | 492 | ||||||||||||||||||||||||||
|
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|
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|
|
|||||||||||||||||||||
P&C Operating income (including Corporate) excluding Life Insurance segment |
955 | 716 | 833 | 711 | 668 | 2,928 | ||||||||||||||||||||||||||
Life Insurance segment income |
64 | 64 | 64 | 77 | 77 | 282 | ||||||||||||||||||||||||||
|
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|
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|
|||||||||||||||||||||
Consolidated operating income |
1,019 | 780 | 897 | 788 | 745 | 3,210 | ||||||||||||||||||||||||||
Chubb integration and related expenses, net of tax |
(106 | ) | (35 | ) | (7 | ) | | | (42 | ) | ||||||||||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (2)(4) |
(59 | ) | | | | | | |||||||||||||||||||||||||
Adjusted net realized gains (losses) (1) |
(394 | ) | (57 | ) | (393 | ) | 128 | (89 | ) | (411 | ) | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
(25 | ) | (17 | ) | 25 | 33 | 26 | 67 | ||||||||||||||||||||||||
Income tax expense (benefit) on adjusted net realized gains (losses) |
(4 | ) | (12 | ) | (6 | ) | 7 | 1 | (10 | ) | ||||||||||||||||||||||
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Consolidated net income |
$ | 439 | $ | 683 | $ | 528 | $ | 942 | $ | 681 | $ | 2,834 | ||||||||||||||||||||
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% Change versus prior year period (1) |
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Net premiums written |
52.8 | % | -5.5 | % | -4.6 | % | -0.4 | % | 5.5 | % | -2.9 | % | -0.5 | % | ||||||||||||||||||
Net premiums earned |
76.7 | % | -0.7 | % | -4.4 | % | -0.6 | % | 0.8 | % | -1.0 | % | -1.3 | % | ||||||||||||||||||
Net premiums written constant $ |
61.3 | % | -1.4 | % | 1.7 | % | 5.6 | % | 11.6 | % | 1.7 | % | 5.3 | % | ||||||||||||||||||
Net premiums earned constant $ |
85.3 | % | 2.9 | % | 1.6 | % | 5.4 | % | 7.0 | % | 3.5 | % | 4.4 | % | ||||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written (1) |
80 | % | 81 | % | 82 | % | 71 | % | 72 | % | 72 | % | 75 | % | 72 | % | ||||||||||||||||
Operating effective tax rate |
16.5 | % | 11.1 | % | 13.5 | % | 14.7 | % | 13.7 | % | 13.3 | % | ||||||||||||||||||||
P&C combined ratio (1) |
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Loss and loss expense ratio |
57.3 | % | 57.3 | % | 59.3 | % | 58.0 | % | 58.8 | % | 58.9 | % | 57.1 | % | 58.2 | % | ||||||||||||||||
Policy acquisition cost ratio |
21.2 | % | 19.8 | % | 19.6 | % | 16.2 | % | 15.4 | % | 15.7 | % | 17.4 | % | 16.1 | % | ||||||||||||||||
Administrative expense ratio |
11.5 | % | 11.8 | % | 12.2 | % | 13.5 | % | 11.7 | % | 13.1 | % | 13.9 | % | 13.1 | % | ||||||||||||||||
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Combined ratio |
90.0 | % | 88.9 | % | 91.1 | % | 87.7 | % | 85.9 | % | 87.7 | % | 88.4 | % | 87.4 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
89.9 | % | 88.8 | % | 89.2 | % | 88.4 | % | 89.2 | % | 88.4 | % | 89.3 | % | 88.8 | % | ||||||||||||||||
P&C expense ratio |
32.7 | % | 31.6 | % | 31.8 | % | 29.7 | % | 27.1 | % | 28.8 | % | 31.3 | % | 29.2 | % | ||||||||||||||||
P&C expense ratio excluding A&H |
30.8 | % | 29.8 | % | 29.9 | % | 26.3 | % | 23.6 | % | 25.5 | % | 27.9 | % | 25.7 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax |
$ | | $ | | $ | | $ | (1 | ) | $ | | $ | | $ | | $ | (1 | ) | ||||||||||||||
Catastrophe losses - pre-tax |
$ | 258 | $ | 258 | $ | 315 | $ | 74 | $ | 72 | $ | 124 | $ | 51 | $ | 321 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax |
$ | (247 | ) | $ | (247 | ) | $ | (192 | ) | $ | (100 | ) | $ | (210 | ) | $ | (153 | ) | $ | (83 | ) | $ | (546 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
57.4 | % | 57.4 | % | 57.5 | % | 58.5 | % | 62.2 | % | 59.7 | % | 58.1 | % | 59.7 | % |
(1) | See non-GAAP financial measures. |
(2) | Purchase accounting adjustments related to the acquisition of The Chubb Corporation. |
(3) | Excludes portion of net realized investment gains and losses related to unconsolidated entities. |
(4) | Includes $65 million, after-tax, of amortization expense on the fair value adjustment related to acquired invested assets, partially offset by an amortization benefit of $6 million, after-tax, on the fair value adjustment related to acquired long-term debt. |
Note: See Glossary on page 30 for further information on the calculation of the components of combined ratios.
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Consolidated Results | Page 2 |
Chubb Limited
Summary Consolidated Balance Sheets
(in millions of U.S. dollars, except per share data)
(Unaudited)
Legacy ACE | ||||||||
March 31 | December 31 | |||||||
2016 | 2015 | |||||||
Assets |
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Fixed maturities available for sale, at fair value |
$ | 77,538 | $ | 43,587 | ||||
Fixed maturities held to maturity, at amortized cost |
11,280 | 8,430 | ||||||
Equity securities, at fair value |
893 | 497 | ||||||
Short-term investments, at fair value |
3,382 | 10,446 | ||||||
Other investments |
4,493 | 3,291 | ||||||
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Total investments |
97,586 | 66,251 | ||||||
Cash |
1,091 | 1,775 | ||||||
Securities lending collateral |
1,003 | 1,046 | ||||||
Insurance and reinsurance balances receivable |
7,692 | 5,323 | ||||||
Reinsurance recoverable on losses and loss expenses |
12,891 | 11,386 | ||||||
Deferred policy acquisition costs |
3,376 | 2,873 | ||||||
Value of business acquired |
390 | 395 | ||||||
Prepaid reinsurance premiums |
2,376 | 2,082 | ||||||
Goodwill and other intangible assets |
23,359 | 5,683 | ||||||
Deferred tax assets |
| 318 | ||||||
Investments in partially-owned insurance companies |
654 | 653 | ||||||
Other assets |
6,226 | 4,521 | ||||||
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Total assets |
$ | 156,644 | $ | 102,306 | ||||
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Liabilities |
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Unpaid losses and loss expenses |
$ | 60,206 | $ | 37,303 | ||||
Unearned premiums |
14,896 | 8,439 | ||||||
Future policy benefits |
4,869 | 4,807 | ||||||
Insurance and reinsurance balances payable |
4,733 | 4,270 | ||||||
Securities lending payable |
1,004 | 1,047 | ||||||
Accounts payable, accrued expenses, and other liabilities |
10,453 | 7,609 | ||||||
Deferred tax liabilities |
1,142 | | ||||||
Short-term debt |
500 | | ||||||
Long-term debt |
12,636 | 9,389 | ||||||
Trust preferred securities |
308 | 307 | ||||||
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Total liabilities |
110,747 | 73,171 | ||||||
Shareholders equity |
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Total shareholders equity, excl. AOCI |
45,530 | 29,870 | ||||||
Accumulated other comprehensive income (AOCI) |
367 | (735 | ) | |||||
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Total shareholders equity |
45,897 | 29,135 | ||||||
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Total liabilities and shareholders equity |
$ | 156,644 | $ | 102,306 | ||||
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Book value per common share |
$ | 98.85 | $ | 89.77 | ||||
% change over prior quarter |
10.1 | % | -0.1 | % | ||||
Tangible book value per common share |
$ | 53.83 | $ | 72.25 | ||||
% change over prior quarter |
-25.5 | % | 0.0 | % |
Consol Bal Sheet | Page 3 |
Chubb Limited
Pro Forma Segment Results
(in millions of U.S. dollars)
(Unaudited)
Pro Forma* (excluding purchase accounting adjustments) | ||||||||||||||||||||||||||||||||||||
North America Commercial P&C Insurance |
North America Personal P&C Insurance |
North America Agricultural Insurance |
Overseas General Insurance |
Global Reinsurance |
Corporate | Total P&C | Life Insurance | Total Consolidated |
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Pro Forma Q1 2016 |
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Net premiums written |
$ | 2,821 | $ | 971 | $ | 64 | $ | 2,256 | $ | 221 | $ | | $ | 6,333 | $ | 517 | $ | 6,850 | ||||||||||||||||||
Net premiums earned |
3,104 | 1,134 | 23 | 2,026 | 202 | | 6,489 | 499 | 6,988 | |||||||||||||||||||||||||||
Losses and loss expenses |
1,874 | 714 | (30 | ) | 1,063 | 89 | 9 | 3,719 | 177 | 3,896 | ||||||||||||||||||||||||||
Policy benefits |
| | | | | | | 126 | 126 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets |
| | | | | | | 3 | 3 | |||||||||||||||||||||||||||
Policy acquisition costs |
469 | 232 | 4 | 529 | 53 | | 1,287 | 123 | 1,410 | |||||||||||||||||||||||||||
Administrative expenses |
301 | 101 | (4 | ) | 275 | 14 | 76 | 763 | 73 | 836 | ||||||||||||||||||||||||||
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Adjusted underwriting income (loss) |
$ | 460 | $ | 87 | $ | 53 | $ | 159 | $ | 46 | $ | (85 | ) | $ | 720 | $ | (3 | ) | $ | 717 | ||||||||||||||||
Adjusted combined ratio |
85.2 | % | 92.3 | % | -126.9 | % | 92.2 | % | 77.3 | % | 88.9 | % | ||||||||||||||||||||||||
Adjusted combined ratio excluding catastrophe losses and PPD |
88.3 | % | 78.7 | % | 80.6 | % | 92.8 | % | 78.5 | % | 88.8 | % | ||||||||||||||||||||||||
Pro Forma* (excluding purchase accounting adjustments) | ||||||||||||||||||||||||||||||||||||
North America Commercial P&C Insurance |
North America Personal P&C Insurance |
North America Agricultural Insurance |
Overseas General Insurance |
Global Reinsurance |
Corporate | Total P&C | Life Insurance | Total Consolidated |
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Pro Forma Q1 2015 |
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Net premiums written |
$ | 2,928 | $ | 909 | $ | 88 | $ | 2,480 | $ | 295 | $ | | $ | 6,700 | $ | 516 | $ | 7,216 | ||||||||||||||||||
Net premiums earned |
3,074 | 1,007 | 64 | 2,166 | 228 | | 6,539 | 498 | 7,037 | |||||||||||||||||||||||||||
Losses and loss expenses |
1,892 | 767 | 22 | 1,081 | 98 | 17 | 3,877 | 164 | 4,041 | |||||||||||||||||||||||||||
Policy benefits |
| | | | | | | 142 | 142 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets |
| | | | | | | (11 | ) | (11 | ) | |||||||||||||||||||||||||
Policy acquisition costs |
473 | 220 | (4 | ) | 542 | 53 | | 1,284 | 113 | 1,397 | ||||||||||||||||||||||||||
Administrative expenses |
298 | 83 | (1 | ) | 316 | 15 | 82 | 793 | 82 | 875 | ||||||||||||||||||||||||||
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Underwriting income (loss) |
$ | 411 | $ | (63 | ) | $ | 47 | $ | 227 | $ | 62 | $ | (99 | ) | $ | 585 | $ | 8 | $ | 593 | ||||||||||||||||
Combined ratio |
86.6 | % | 106.2 | % | 26.4 | % | 89.5 | % | 73.0 | % | 91.1 | % | ||||||||||||||||||||||||
Combined ratio excluding catastrophe losses and PPD |
88.2 | % | 82.6 | % | 76.7 | % | 91.6 | % | 75.8 | % | 89.2 | % | ||||||||||||||||||||||||
The following table presents the reconciliation of Q1 2016 as reported underwriting income (loss) for each segment to Q1 2016 adjusted underwriting income (loss) shown 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 | Life Insurance | Total Consolidated |
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Q1 2016 |
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Underwriting income (loss) as reported |
$ | 401 | $ | 26 | $ | 53 | $ | 168 | $ | 46 | $ | (82 | ) | $ | 612 | $ | (3 | ) | $ | 609 | ||||||||||||||||
Add: Pre-acquisition underwriting income (loss) (14 days prior to close) |
13 | 30 | | 4 | | (3 | ) | 44 | | 44 | ||||||||||||||||||||||||||
Less: amortization of acquired UPR intangible (1) |
315 | 181 | | 74 | | | 570 | | 570 | |||||||||||||||||||||||||||
Add: elimination of DAC benefit (1) |
(269 | ) | (150 | ) | | (87 | ) | | | (506 | ) | | (506 | ) | ||||||||||||||||||||||
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Adjusted underwriting income (loss) |
$ | 460 | $ | 87 | $ | 53 | $ | 159 | $ | 46 | $ | (85 | ) | $ | 720 | $ | (3 | ) | $ | 717 | ||||||||||||||||
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(1) | Related to the acquisition of The Chubb Corporation. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Pro Forma | Page 4 |
Chubb Limited
Consolidated Statement of Operations - as reported results
(in millions of U.S. dollars, except ratios)
(Unaudited)
As Reported | ||||||||||||||||||||||||||||||||||||
North America Commercial P&C Insurance |
North America Personal P&C Insurance |
North America Agricultural Insurance |
Overseas General Insurance |
Global Reinsurance |
Corporate | Total P&C |
Life Insurance |
Total
(3) Consolidated |
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Q1 2016 |
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Net premiums written |
$ | 2,302 | $ | 871 | $ | 64 | $ | 2,041 | $ | 201 | $ | | $ | 5,479 | $ | 516 | $ | 5,995 | ||||||||||||||||||
Net premiums earned |
2,896 | 1,024 | 23 | 1,955 | 202 | | 6,100 | 497 | $ | 6,597 | ||||||||||||||||||||||||||
Losses and loss expenses |
1,747 | 661 | (30 | ) | 1,021 | 89 | 9 | 3,497 | 177 | 3,674 | ||||||||||||||||||||||||||
Policy benefits |
| | | | | | | 126 | 126 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets (1) |
| | | | | | | 3 | 3 | |||||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) |
167 | 68 | 4 | 429 | 53 | | 721 | 122 | 843 | |||||||||||||||||||||||||||
Amortization of acquired UPR intangible (2) |
315 | 181 | | 74 | | | 570 | | 570 | |||||||||||||||||||||||||||
Administrative expenses |
266 | 88 | (4 | ) | 263 | 14 | 73 | 700 | 72 | 772 | ||||||||||||||||||||||||||
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Underwriting income (loss) |
401 | 26 | 53 | 168 | 46 | (82 | ) | 612 | (3 | ) | 609 | |||||||||||||||||||||||||
Adjusted net investment income (3) |
426 | 47 | 5 | 146 | 67 | 9 | 700 | 67 | 767 | |||||||||||||||||||||||||||
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Segment income |
$ | 827 | $ | 73 | $ | 58 | $ | 314 | $ | 113 | $ | (73 | ) | $ | 1,312 | $ | 64 | $ | 1,376 | |||||||||||||||||
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Adjusted interest expense (3) |
149 | 149 | ||||||||||||||||||||||||||||||||||
Other income (expense) - operating (1) |
| | ||||||||||||||||||||||||||||||||||
Amortization of purchased intangibles |
7 | 7 | ||||||||||||||||||||||||||||||||||
Income tax expense |
201 | 201 | ||||||||||||||||||||||||||||||||||
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Operating income (loss) |
(430 | ) | 1,019 | |||||||||||||||||||||||||||||||||
Chubb integration and related expenses, net of tax |
(106 | ) | (106 | ) | ||||||||||||||||||||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (2) |
(59 | ) | (59 | ) | ||||||||||||||||||||||||||||||||
Net realized gains (losses) (1) |
(394 | ) | (394 | ) | ||||||||||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
(25 | ) | (25 | ) | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
(4 | ) | (4 | ) | ||||||||||||||||||||||||||||||||
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Net income (loss) |
$ | (1,010 | ) | $ | 439 | |||||||||||||||||||||||||||||||
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P&C Combined ratio |
86.1 | % | 97.5 | % | -126.9 | % | 91.4 | % | 77.3 | % | 90.0 | % | ||||||||||||||||||||||||
P&C Combined ratio excluding catastrophe losses and PPD |
89.5 | % | 82.5 | % | 80.6 | % | 92.0 | % | 78.5 | % | 89.9 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified for segment income presentation from Other income (expense). |
(2) | Related to the acquisition of the Chubb Corporation. |
(3) | See non-GAAP financial measures. |
Consol P&L 2016 | Page 5 |
Chubb Limited
Consolidated Statement of Operations - as reported results
(in millions of U.S. dollars, except ratios)
(Unaudited)
Legacy ACE - adjusted to conform to new segment presentation | ||||||||||||||||||||||||||||||||||||
North America Commercial P&C Insurance |
North America Personal P&C Insurance |
North America Agricultural Insurance |
Overseas General Insurance |
Global Reinsurance |
Corporate | Total P&C |
Life Insurance |
Total
(4) Consolidated |
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Q1 2015 |
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Net premiums written |
$ | 1,297 | $ | 133 | $ | 88 | $ | 1,794 | $ | 273 | $ | | $ | 3,585 | $ | 491 | $ | 4,076 | ||||||||||||||||||
Net premiums earned |
1,380 | 146 | 64 | 1,637 | 226 | | 3,453 | 474 | 3,927 | |||||||||||||||||||||||||||
Losses and loss expenses |
915 | 111 | 22 | 814 | 99 | 9 | 1,970 | 152 | 2,122 | |||||||||||||||||||||||||||
Policy benefits |
| | | | | | | 142 | 142 | |||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets (1) |
| | | | | | | (11 | ) | (11 | ) | |||||||||||||||||||||||||
Policy acquisition costs |
130 | 31 | (4 | ) | 389 | 54 | | 600 | 107 | 707 | ||||||||||||||||||||||||||
Administrative expenses |
151 | 19 | (1 | ) | 256 | 12 | 44 | 481 | 73 | 554 | ||||||||||||||||||||||||||
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Underwriting income (loss) |
184 | (15 | ) | 47 | 178 | 61 | (53 | ) | 402 | 11 | 413 | |||||||||||||||||||||||||
Net investment income |
258 | 5 | 6 | 138 | 75 | 3 | 485 | 66 | 551 | |||||||||||||||||||||||||||
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Segment income |
$ | 442 | $ | (10 | ) | $ | 53 | $ | 316 | $ | 136 | $ | (50 | ) | $ | 887 | $ | 77 | $ | 964 | ||||||||||||||||
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Interest expense |
68 | 68 | ||||||||||||||||||||||||||||||||||
Other income (expense) - |
(2 | ) | (2 | ) | ||||||||||||||||||||||||||||||||
Amortization of purchased intangibles |
30 | 30 | ||||||||||||||||||||||||||||||||||
Income tax expense |
119 | 119 | ||||||||||||||||||||||||||||||||||
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Operating income (loss) |
(269 | ) | 745 | |||||||||||||||||||||||||||||||||
Chubb integration and related expenses, net of tax |
| | ||||||||||||||||||||||||||||||||||
Net realized gains (losses) |
(89 | ) | (89 | ) | ||||||||||||||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
26 | 26 | ||||||||||||||||||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
1 | 1 | ||||||||||||||||||||||||||||||||||
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Net income (loss) |
$ | (333 | ) | $ | 681 | |||||||||||||||||||||||||||||||
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P&C Combined ratio |
86.7 | % | 110.2 | % | 26.4 | % | 89.1 | % | 73.2 | % | 88.4 | % | ||||||||||||||||||||||||
P&C Combined ratio excluding catastrophe losses and PPD |
88.1 | % | 85.3 | % | 76.7 | % | 90.3 | % | 75.5 | % | 89.3 | % |
(1) | (Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified for segment income presentation from Other income (expense). |
Consol P&L 2015 | Page 6 |
Chubb Limited
Global P&C Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
Global P&C includes the companys North America Commercial P&C Insurance segment (refer to page 8), North America Personal P&C Insurance segment (refer to page 9), Overseas General Insurance segment (refer to page 11), Global Reinsurance segment (refer to page 12), and Corporate (refer to page 14). Global P&C excludes the North America Agricultural segment.
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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Global P&C (Including Corporate and excluding Agriculture) |
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Gross premiums written |
$ | 6,707 | $ | 7,638 | $ | 8,023 | $ | 4,821 | $ | 4,581 | $ | 5,409 | $ | 4,672 | $ | 19,483 | ||||||||||||||||
Net premiums written |
5,415 | 6,269 | 6,612 | 3,487 | 3,480 | 3,905 | 3,497 | 14,369 | ||||||||||||||||||||||||
Net premiums earned |
6,077 | 6,466 | 6,475 | 3,461 | 3,500 | 3,552 | 3,389 | 13,902 | ||||||||||||||||||||||||
Losses and loss expenses |
3,527 | 3,749 | 3,855 | 1,968 | 1,870 | 2,009 | 1,948 | 7,795 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) |
717 | 1,283 | 1,288 | 594 | 612 | 586 | 604 | 2,396 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible (2) |
570 | | | | | | | | ||||||||||||||||||||||||
Administrative expenses |
704 | 767 | 794 | 502 | 494 | 500 | 482 | 1,978 | ||||||||||||||||||||||||
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Underwriting income |
559 | 667 | 538 | 397 | 524 | 457 | 355 | 1,733 | ||||||||||||||||||||||||
Adjusted net investment income (1) |
695 | 459 | 478 | 490 | 479 | 1,906 | ||||||||||||||||||||||||||
Adjusted interest expense (1) |
149 | 64 | 68 | 71 | 68 | 271 | ||||||||||||||||||||||||||
Other income (expense) - operating (3) |
| (6 | ) | 12 | (1 | ) | (2 | ) | 3 | |||||||||||||||||||||||
Amortization of purchased intangibles |
7 | 35 | 51 | 55 | 30 | 171 | ||||||||||||||||||||||||||
Income tax expense |
201 | 97 | 140 | 136 | 119 | 492 | ||||||||||||||||||||||||||
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Global P&C operating income |
897 | 654 | 755 | 684 | 615 | 2,708 | ||||||||||||||||||||||||||
Chubb integration and related expenses, net of tax |
(106 | ) | (35 | ) | (7 | ) | | | (42 | ) | ||||||||||||||||||||||
Amortization of fair value adjustments of acquired invested assets and long-term debt, net of tax (2) |
(59 | ) | | | | | | |||||||||||||||||||||||||
Net realized gains (losses) |
(394 | ) | (57 | ) | (393 | ) | 128 | (89 | ) | (411 | ) | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
(25 | ) | (17 | ) | 25 | 33 | 26 | 67 | ||||||||||||||||||||||||
Income tax expense (benefit) on net realized gains (losses) |
(4 | ) | (12 | ) | (6 | ) | 7 | 1 | (10 | ) | ||||||||||||||||||||||
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Global P&C net income |
$ | 317 | $ | 557 | $ | 386 | $ | 838 | $ | 551 | $ | 2,332 | ||||||||||||||||||||
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% Change versus prior year period |
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Net premiums written |
54.9 | % | -5.2 | % | -2.0 | % | 0.3 | % | 6.4 | % | 0.0 | % | 1.2 | % | ||||||||||||||||||
Net premiums earned |
79.4 | % | -0.1 | % | -2.4 | % | 0.0 | % | 1.2 | % | 0.1 | % | -0.3 | % | ||||||||||||||||||
Net premiums written constant $ |
63.6 | % | -1.0 | % | 4.9 | % | 7.8 | % | 13.2 | % | 5.0 | % | 7.7 | % | ||||||||||||||||||
Net premiums earned constant $ |
88.3 | % | 3.6 | % | 4.3 | % | 7.6 | % | 8.0 | % | 4.8 | % | 6.2 | % | ||||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
81 | % | 82 | % | 82 | % | 72 | % | 76 | % | 72 | % | 75 | % | 74 | % | ||||||||||||||||
Combined ratio |
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Loss and loss expense ratio |
58.0 | % | 58.0 | % | 59.6 | % | 56.9 | % | 53.4 | % | 56.5 | % | 57.5 | % | 56.1 | % | ||||||||||||||||
Policy acquisition cost ratio |
21.2 | % | 19.9 | % | 19.9 | % | 17.1 | % | 17.5 | % | 16.5 | % | 17.8 | % | 17.2 | % | ||||||||||||||||
Administrative expense ratio |
11.6 | % | 11.8 | % | 12.2 | % | 14.5 | % | 14.1 | % | 14.1 | % | 14.2 | % | 14.2 | % | ||||||||||||||||
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Combined ratio |
90.8 | % | 89.7 | % | 91.7 | % | 88.5 | % | 85.0 | % | 87.1 | % | 89.5 | % | 87.5 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
90.0 | % | 88.9 | % | 89.3 | % | 89.1 | % | 88.8 | % | 88.2 | % | 89.5 | % | 88.9 | % | ||||||||||||||||
Expense ratio |
32.8 | % | 31.7 | % | 32.1 | % | 31.6 | % | 31.6 | % | 30.6 | % | 32.0 | % | 31.4 | % | ||||||||||||||||
Expense ratio excluding A&H |
31.0 | % | 29.9 | % | 30.3 | % | 28.3 | % | 28.2 | % | 27.4 | % | 28.7 | % | 28.1 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax |
$ | | $ | | $ | | $ | (1 | ) | $ | | $ | | $ | | $ | (1 | ) | ||||||||||||||
Catastrophe losses - pre-tax |
$ | 256 | $ | 256 | $ | 314 | $ | 73 | $ | 72 | $ | 117 | $ | 50 | $ | 312 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax |
$ | (206 | ) | $ | (206 | ) | $ | (159 | ) | $ | (93 | ) | $ | (205 | ) | $ | (153 | ) | $ | (50 | ) | $ | (501 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
57.2 | % | 57.2 | % | 57.2 | % | 57.3 | % | 57.3 | % | 57.6 | % | 57.6 | % | 57.4 | % |
(1) | See non-GAAP financial measures. |
(2) | Purchase accounting adjustments related to the acquisition of The Chubb Corporation. |
(3) | Excludes portion of net realized investment gains and losses related to unconsolidated entities. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Global P&C | Page 7 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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North America Commercial P&C Insurance |
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Gross premiums written |
$ | 3,004 | $ | 3,572 | $ | 3,752 | $ | 2,408 | $ | 1,994 | $ | 2,070 | $ | 1,979 | $ | 8,451 | ||||||||||||||||
Net premiums written |
2,302 | 2,821 | 2,928 | 1,557 | 1,433 | 1,428 | 1,297 | 5,715 | ||||||||||||||||||||||||
Net premiums earned |
2,896 | 3,104 | 3,074 | 1,425 | 1,410 | 1,419 | 1,380 | 5,634 | ||||||||||||||||||||||||
Losses and loss expenses |
1,747 | 1,874 | 1,892 | 917 | 913 | 916 | 915 | 3,661 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) |
167 | 469 | 473 | 128 | 142 | 131 | 130 | 531 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible (1) |
315 | | | | | | | | ||||||||||||||||||||||||
Administrative expenses |
266 | 301 | 298 | 162 | 154 | 154 | 151 | 621 | ||||||||||||||||||||||||
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Underwriting income |
401 | 460 | 411 | 218 | 201 | 218 | 184 | 821 | ||||||||||||||||||||||||
Adjusted Net investment income |
426 | 252 | 260 | 262 | 258 | 1,032 | ||||||||||||||||||||||||||
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Segment income |
$ | 827 | $ | 470 | $ | 461 | $ | 480 | $ | 442 | $ | 1,853 | ||||||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
60.3 | % | 60.4 | % | 61.6 | % | 64.4 | % | 64.7 | % | 64.5 | % | 66.3 | % | 65.0 | % | ||||||||||||||||
Policy acquisition cost ratio |
16.7 | % | 15.1 | % | 15.4 | % | 8.9 | % | 10.1 | % | 9.2 | % | 9.4 | % | 9.4 | % | ||||||||||||||||
Administrative expense ratio |
9.1 | % | 9.7 | % | 9.6 | % | 11.3 | % | 11.0 | % | 10.9 | % | 11.0 | % | 11.0 | % | ||||||||||||||||
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Combined ratio |
86.1 | % | 85.2 | % | 86.6 | % | 84.6 | % | 85.8 | % | 84.6 | % | 86.7 | % | 85.4 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
89.5 | % | 88.3 | % | 88.2 | % | 88.3 | % | 89.3 | % | 88.6 | % | 88.1 | % | 88.6 | % | ||||||||||||||||
Catastrophe losses - pre-tax |
$ | 81 | $ | 81 | $ | 66 | $ | 25 | $ | 10 | $ | 41 | $ | 9 | $ | 85 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax |
$ | (178 | ) | $ | (178 | ) | $ | (115 | ) | $ | (79 | ) | $ | (59 | ) | $ | (96 | ) | $ | (30 | ) | $ | (264 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
63.7 | % | 63.5 | % | 63.2 | % | 67.8 | % | 68.3 | % | 68.6 | % | 67.9 | % | 68.2 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written |
77.4 | % | -3.7 | % | 2.1 | % | 2.9 | % | -3.3 | % | 0.4 | % | 0.5 | % | ||||||||||||||||||
Net premiums earned |
109.9 | % | 1.0 | % | 0.5 | % | 2.3 | % | 1.4 | % | 2.1 | % | 1.6 | % | ||||||||||||||||||
Net premiums written constant $ |
78.4 | % | -3.5 | % | ||||||||||||||||||||||||||||
Net premiums earned constant $ |
111.1 | % | 1.3 | % | ||||||||||||||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
77 | % | 79 | % | 78 | % | 65 | % | 72 | % | 69 | % | 66 | % | 68 | % |
(1) | Related to the acquisition of The Chubb Corporation. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
NA Commercial | Page 8 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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North America Personal P&C Insurance |
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Gross premiums written |
$ | 974 | $ | 1,083 | $ | 978 | $ | 314 | $ | 378 | $ | 835 | $ | 146 | $ | 1,673 | ||||||||||||||||
Net premiums written |
871 | 971 | 909 | 234 | 278 | 547 | 133 | 1,192 | ||||||||||||||||||||||||
Net premiums earned |
1,024 | 1,134 | 1,007 | 261 | 272 | 269 | 146 | 948 | ||||||||||||||||||||||||
Losses and loss expenses |
661 | 714 | 767 | 144 | 179 | 156 | 111 | 590 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) |
68 | 232 | 220 | 26 | 13 | (1 | ) | 31 | 69 | |||||||||||||||||||||||
Amortization of acquired UPR intangible (1) |
181 | | | | | | | | ||||||||||||||||||||||||
Administrative expenses |
88 | 101 | 83 | 34 | 36 | 34 | 19 | 123 | ||||||||||||||||||||||||
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Underwriting income (loss) |
26 | 87 | (63 | ) | 57 | 44 | 80 | (15 | ) | 166 | ||||||||||||||||||||||
Adjusted Net investment income |
47 | 6 | 7 | 7 | 5 | 25 | ||||||||||||||||||||||||||
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Segment income (loss) |
$ | 73 | $ | 63 | $ | 51 | $ | 87 | $ | (10 | ) | $ | 191 | |||||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
64.6 | % | 62.9 | % | 76.2 | % | 55.2 | % | 65.8 | % | 57.9 | % | 76.4 | % | 62.3 | % | ||||||||||||||||
Policy acquisition cost ratio |
24.3 | % | 20.5 | % | 21.9 | % | 10.1 | % | 4.9 | % | -0.3 | % | 21.0 | % | 7.3 | % | ||||||||||||||||
Administrative expense ratio |
8.6 | % | 8.9 | % | 8.1 | % | 13.1 | % | 13.0 | % | 13.0 | % | 12.8 | % | 13.0 | % | ||||||||||||||||
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Combined ratio |
97.5 | % | 92.3 | % | 106.2 | % | 78.4 | % | 83.7 | % | 70.6 | % | 110.2 | % | 82.6 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
82.5 | % | 78.7 | % | 82.6 | % | 77.5 | % | 70.5 | % | 65.5 | % | 85.3 | % | 73.2 | % | ||||||||||||||||
Catastrophe losses - pre-tax |
$ | 156 | $ | 156 | $ | 243 | $ | 2 | $ | 12 | $ | 13 | $ | 36 | $ | 63 | ||||||||||||||||
Unfavorable (favorable) prior period development (PPD) - pre-tax |
$ | (3 | ) | $ | (3 | ) | $ | (5 | ) | $ | | $ | 25 | $ | | $ | | $ | 25 | |||||||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
49.6 | % | 49.3 | % | 52.6 | % | 54.3 | % | 52.6 | % | 52.7 | % | 51.5 | % | 52.9 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written |
NM | 6.8 | % | 62.7 | % | 86.0 | % | 247.0 | % | 5.0 | % | 106.4 | % | |||||||||||||||||||
Net premiums earned |
NM | 12.7 | % | 82.5 | % | 92.6 | % | 92.5 | % | 6.7 | % | 69.2 | % | |||||||||||||||||||
Net premiums written constant $ |
NM | 7.4 | % | |||||||||||||||||||||||||||||
Net premiums earned constant $ |
NM | 12.7 | % | |||||||||||||||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
89 | % | 90 | % | 93 | % | 75 | % | 74 | % | 65 | % | 91 | % | 71 | % |
(1) | Related to the acquisition of The Chubb Corporation. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
NA Personal | Page 9 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
1Q-16 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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North America Agricultural Insurance |
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Gross premiums written |
$ | 136 | $ | 270 | $ | 1,243 | $ | 566 | $ | 128 | $ | 2,207 | ||||||||||||
Net premiums written |
64 | 142 | 737 | 379 | 88 | 1,346 | ||||||||||||||||||
Net premiums earned |
23 | 240 | 739 | 321 | 64 | 1,364 | ||||||||||||||||||
Losses and loss expenses (1) |
(30 | ) | 178 | 624 | 273 | 22 | 1,097 | |||||||||||||||||
Policy acquisition costs |
4 | 8 | 42 | 23 | (4 | ) | 69 | |||||||||||||||||
Administrative expenses |
(4 | ) | (2 | ) | | 4 | (1 | ) | 1 | |||||||||||||||
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Underwriting income |
53 | 56 | 73 | 21 | 47 | 197 | ||||||||||||||||||
Net investment income |
5 | 6 | 5 | 6 | 6 | 23 | ||||||||||||||||||
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Segment income |
$ | 58 | $ | 62 | $ | 78 | $ | 27 | $ | 53 | $ | 220 | ||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
-125.2 | % | 73.9 | % | 84.5 | % | 85.3 | % | 33.3 | % | 80.4 | % | ||||||||||||
Policy acquisition cost ratio |
15.9 | % | 3.4 | % | 5.7 | % | 7.2 | % | -6.0 | % | 5.1 | % | ||||||||||||
Administrative expense ratio |
-17.6 | % | -0.9 | % | 0.0 | % | 1.1 | % | -0.9 | % | 0.0 | % | ||||||||||||
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Combined ratio |
-126.9 | % | 76.4 | % | 90.2 | % | 93.6 | % | 26.4 | % | 85.5 | % | ||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
80.6 | % | 79.2 | % | 90.8 | % | 91.4 | % | 76.7 | % | 88.2 | % | ||||||||||||
Catastrophe losses - pre-tax |
$ | 2 | $ | 1 | $ | | $ | 7 | $ | 1 | $ | 9 | ||||||||||||
Favorable prior period development (PPD) - pre-tax (2) |
$ | (41 | ) | $ | (7 | ) | $ | (5 | ) | $ | | $ | (33 | ) | $ | (45 | ) | |||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
75.1 | % | 75.4 | % | 85.1 | % | 83.1 | % | 83.2 | % | 82.8 | % | ||||||||||||
% Change versus prior year period |
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Net premiums written |
-27.0 | % | -41.9 | % | -3.5 | % | -2.4 | % | -54.6 | % | -15.3 | % | ||||||||||||
Net premiums earned |
-63.7 | % | -26.2 | % | -3.6 | % | -2.9 | % | -37.2 | % | -10.6 | % | ||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
47 | % | 52 | % | 59 | % | 67 | % | 69 | % | 61 | % |
(1) | Include gains/losses on crop derivatives. |
(2) | For Q1 2016, favorable prior period development is net of $47 million of unfavorable net earned premium adjustments. |
NA Agriculture | Page 10 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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Overseas General Insurance |
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Gross premiums written (1) |
$ | 2,516 | $ | 2,749 | $ | 2,972 | $ | 1,990 | $ | 2,019 | $ | 2,212 | $ | 2,255 | $ | 8,476 | ||||||||||||||||
Net premiums written (1) |
2,041 | 2,256 | 2,480 | 1,587 | 1,584 | 1,669 | 1,794 | 6,634 | ||||||||||||||||||||||||
Net premiums earned |
1,955 | 2,026 | 2,166 | 1,575 | 1,615 | 1,644 | 1,637 | 6,471 | ||||||||||||||||||||||||
Losses and loss expenses |
1,021 | 1,063 | 1,081 | 748 | 674 | 816 | 814 | 3,052 | ||||||||||||||||||||||||
Policy acquisition costs (excluding amortization of acquired UPR intangible) |
429 | 529 | 542 | 391 | 405 | 396 | 389 | 1,581 | ||||||||||||||||||||||||
Amortization of acquired UPR intangible (2) |
74 | | | | | | | | ||||||||||||||||||||||||
Administrative expenses |
263 | 275 | 316 | 241 | 246 | 254 | 256 | 997 | ||||||||||||||||||||||||
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Underwriting income |
168 | 159 | 227 | 195 | 290 | 178 | 178 | 841 | ||||||||||||||||||||||||
Adjusted Net investment income |
146 | 125 | 132 | 139 | 138 | 534 | ||||||||||||||||||||||||||
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Segment income |
$ | 314 | $ | 320 | $ | 422 | $ | 317 | $ | 316 | $ | 1,375 | ||||||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
52.2 | % | 52.4 | % | 49.9 | % | 47.5 | % | 41.7 | % | 49.7 | % | 49.7 | % | 47.2 | % | ||||||||||||||||
Policy acquisition cost ratio |
25.7 | % | 26.1 | % | 25.0 | % | 24.8 | % | 25.1 | % | 24.1 | % | 23.8 | % | 24.4 | % | ||||||||||||||||
Administrative expense ratio |
13.5 | % | 13.7 | % | 14.6 | % | 15.3 | % | 15.2 | % | 15.4 | % | 15.6 | % | 15.4 | % | ||||||||||||||||
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Combined ratio |
91.4 | % | 92.2 | % | 89.5 | % | 87.6 | % | 82.0 | % | 89.2 | % | 89.1 | % | 87.0 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
92.0 | % | 92.8 | % | 91.6 | % | 89.7 | % | 90.5 | % | 89.8 | % | 90.3 | % | 90.1 | % | ||||||||||||||||
Catastrophe reinstatement premiums - pre-tax |
$ | | $ | | $ | | $ | (2 | ) | $ | | $ | | $ | | $ | (2 | ) | ||||||||||||||
Catastrophe losses - pre-tax |
$ | 18 | $ | 18 | $ | 5 | $ | 40 | $ | 39 | $ | 58 | $ | 5 | $ | 142 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax |
$ | (30 | ) | $ | (30 | ) | $ | (50 | ) | $ | (74 | ) | $ | (177 | ) | $ | (68 | ) | $ | (24 | ) | $ | (343 | ) | ||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
52.8 | % | 53.0 | % | 52.0 | % | 49.6 | % | 50.2 | % | 50.3 | % | 50.9 | % | 50.3 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written as reported |
13.8 | % | -9.0 | % | -9.3 | % | -7.9 | % | -5.1 | % | 1.3 | % | -5.2 | % | ||||||||||||||||||
Net premiums earned as reported |
19.4 | % | -6.4 | % | -10.5 | % | -6.4 | % | -3.9 | % | 1.6 | % | -4.9 | % | ||||||||||||||||||
Net premiums written constant $ |
26.1 | % | 1.7 | % | 3.6 | % | 6.1 | % | 7.6 | % | 11.0 | % | 7.1 | % | ||||||||||||||||||
Net premiums earned constant $ |
31.3 | % | 4.0 | % | 1.7 | % | 7.8 | % | 9.4 | % | 11.2 | % | 7.5 | % | ||||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
81 | % | 82 | % | 83 | % | 80 | % | 78 | % | 75 | % | 80 | % | 78 | % |
As Reported | Pro Forma* | |||||||||||||||||||||||||||||||||||||||
1Q-16 | 1Q-15 | % Growth | Constant
$ 1Q-15(3) |
Constant $ % Growth |
1Q-16 | 1Q-15 | % Growth | Constant
$ 1Q-15(3) |
Constant $ % Growth |
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(1) Production by Region |
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Gross premiums written |
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Europe |
$ | 1,203 | $ | 1,056 | 13.9 | % | $ | 996 | 20.8 | % | $ | 1,398 | $ | 1,454 | -3.9 | % | $ | 1,376 | 1.6 | % | ||||||||||||||||||||
Latin America |
591 | 573 | 3.1 | % | 467 | 26.6 | % | 607 | 732 | -17.1 | % | 574 | 5.7 | % | ||||||||||||||||||||||||||
Asia |
634 | 521 | 21.7 | % | 485 | 30.7 | % | 656 | 681 | -3.7 | % | 625 | 5.0 | % | ||||||||||||||||||||||||||
Other (4) |
88 | 105 | -16.2 | % | 95 | -7.4 | % | 88 | 105 | -16.2 | % | 95 | -7.4 | % | ||||||||||||||||||||||||||
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Overseas General Insurance |
$ | 2,516 | $ | 2,255 | 11.6 | % | $ | 2,043 | 23.1 | % | $ | 2,749 | $ | 2,972 | -7.5 | % | $ | 2,670 | 3.0 | % | ||||||||||||||||||||
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Net Premiums Written |
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Europe |
$ | 899 | $ | 780 | 15.3 | % | $ | 734 | 22.5 | % | $ | 1,079 | $ | 1,163 | -7.2 | % | $ | 1,097 | -1.6 | % | ||||||||||||||||||||
Latin America |
482 | 459 | 5.0 | % | 372 | 29.6 | % | 496 | 611 | -18.8 | % | 475 | 4.4 | % | ||||||||||||||||||||||||||
Asia |
570 | 452 | 26.1 | % | 421 | 35.4 | % | 591 | 603 | -2.0 | % | 554 | 6.7 | % | ||||||||||||||||||||||||||
Other (4) |
90 | 103 | -12.6 | % | 93 | -3.2 | % | 90 | 103 | -12.6 | % | 93 | -3.2 | % | ||||||||||||||||||||||||||
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Overseas General Insurance |
$ | 2,041 | $ | 1,794 | 13.8 | % | $ | 1,620 | 26.1 | % | $ | 2,256 | $ | 2,480 | -9.0 | % | $ | 2,219 | 1.7 | % | ||||||||||||||||||||
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(2) | Related to the acquisition of The Chubb Corporation. |
(3) | Prior periods on a constant dollar basis. |
(4) | Primarily includes Eurasia and Africa, and the companys international supplemental A&H business of Combined Insurance. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Overseas General Insurance | Page 11 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
Full Year | ||||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | 2015 | |||||||||||||||||||||||||
Global Reinsurance |
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Gross premiums written |
$ | 213 | $ | 234 | $ | 321 | $ | 109 | $ | 190 | $ | 292 | $ | 292 | $ | 883 | ||||||||||||||||
Net premiums written |
201 | 221 | 295 | 109 | 185 | 261 | 273 | 828 | ||||||||||||||||||||||||
Net premiums earned |
202 | 202 | 228 | 200 | 203 | 220 | 226 | 849 | ||||||||||||||||||||||||
Losses and loss expenses |
89 | 89 | 98 | 99 | 20 | 72 | 99 | 290 | ||||||||||||||||||||||||
Policy acquisition costs |
53 | 53 | 53 | 48 | 52 | 60 | 54 | 214 | ||||||||||||||||||||||||
Administrative expenses |
14 | 14 | 15 | 12 | 12 | 13 | 12 | 49 | ||||||||||||||||||||||||
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Underwriting income |
46 | 46 | 62 | 41 | 119 | 75 | 61 | 296 | ||||||||||||||||||||||||
Net investment income |
67 | 70 | 76 | 79 | 75 | 300 | ||||||||||||||||||||||||||
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Segment Income |
$ | 113 | $ | 111 | $ | 195 | $ | 154 | $ | 136 | $ | 596 | ||||||||||||||||||||
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Combined ratio |
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Loss and loss expense ratio |
44.3 | % | 44.3 | % | 42.8 | % | 49.7 | % | 9.6 | % | 32.9 | % | 43.6 | % | 34.2 | % | ||||||||||||||||
Policy acquisition cost ratio |
26.2 | % | 26.2 | % | 23.4 | % | 24.1 | % | 25.4 | % | 27.2 | % | 24.0 | % | 25.2 | % | ||||||||||||||||
Administrative expense ratio |
6.8 | % | 6.8 | % | 6.8 | % | 6.0 | % | 6.2 | % | 5.6 | % | 5.6 | % | 5.8 | % | ||||||||||||||||
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Combined ratio |
77.3 | % | 77.3 | % | 73.0 | % | 79.8 | % | 41.2 | % | 65.7 | % | 73.2 | % | 65.2 | % | ||||||||||||||||
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Combined ratio excluding catastrophe losses and PPD |
78.5 | % | 78.5 | % | 75.8 | % | 76.6 | % | 75.3 | % | 79.6 | % | 75.5 | % | 76.8 | % | ||||||||||||||||
Catastrophe reinstatement premiums collected - pre-tax |
$ | | $ | | $ | | $ | 1 | $ | | $ | | $ | | $ | 1 | ||||||||||||||||
Catastrophe losses - pre-tax |
$ | 1 | $ | 1 | $ | | $ | 6 | $ | 11 | $ | 5 | $ | | $ | 22 | ||||||||||||||||
Favorable prior period development (PPD) - pre-tax |
$ | (3 | ) | $ | (3 | ) | $ | (6 | ) | $ | | $ | (78 | ) | $ | (36 | ) | $ | (5 | ) | $ | (119 | ) | |||||||||
Loss and loss expense ratio excluding catastrophe losses and PPD |
45.5 | % | 45.5 | % | 45.6 | % | 46.5 | % | 44.3 | % | 46.7 | % | 46.0 | % | 45.9 | % | ||||||||||||||||
% Change versus prior year period |
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Net premiums written as reported |
-26.3 | % | -25.1 | % | -22.1 | % | -11.5 | % | -5.9 | % | -11.4 | % | -11.4 | % | ||||||||||||||||||
Net premiums earned as reported |
-10.7 | % | -11.5 | % | -11.3 | % | -20.4 | % | -15.5 | % | -20.6 | % | -17.2 | % | ||||||||||||||||||
Net premiums written constant $ |
-24.6 | % | -23.4 | % | -20.2 | % | -9.5 | % | -3.9 | % | -9.1 | % | -9.3 | % | ||||||||||||||||||
Net premiums earned constant $ |
-9.2 | % | -10.0 | % | -9.0 | % | -18.1 | % | -13.2 | % | -19.0 | % | -15.1 | % | ||||||||||||||||||
Other ratios |
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Net premiums written/gross premiums written |
94 | % | 94 | % | 92 | % | 100 | % | 97 | % | 90 | % | 93 | % | 94 | % |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Global Reinsurance | Page 12 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars)
(Unaudited)
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
Full Year | ||||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | 2015 | |||||||||||||||||||||||||
Life Insurance |
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Gross premiums written |
$ | 546 | $ | 547 | $ | 549 | $ | 548 | $ | 522 | $ | 529 | $ | 522 | $ | 2,121 | ||||||||||||||||
Net premiums written |
516 | 517 | 517 | 515 | 492 | 500 | 491 | 1,998 | ||||||||||||||||||||||||
Net premiums earned |
497 | 499 | 498 | 506 | 480 | 487 | 474 | 1,947 | ||||||||||||||||||||||||
Losses and loss expenses (1) |
177 | 177 | 164 | 159 | 153 | 137 | 152 | 601 | ||||||||||||||||||||||||
Policy benefits (2) |
126 | 126 | 142 | 159 | 89 | 153 | 142 | 543 | ||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets (2) |
3 | 3 | (11 | ) | (13 | ) | 49 | (6 | ) | (11 | ) | 19 | ||||||||||||||||||||
Policy acquisition costs |
122 | 123 | 113 | 134 | 117 | 118 | 107 | 476 | ||||||||||||||||||||||||
Administrative expenses |
72 | 73 | 82 | 70 | 74 | 74 | 73 | 291 | ||||||||||||||||||||||||
Net investment income |
67 | 67 | 66 | 67 | 66 | 66 | 66 | 265 | ||||||||||||||||||||||||
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Life Insurance segment income (3) |
$ | 64 | $ | 64 | $ | 74 | $ | 64 | $ | 64 | $ | 77 | $ | 77 | $ | 282 | ||||||||||||||||
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% Change versus prior year period |
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Net premiums written |
5.1 | % | 0.0 | % | -1.6 | % | -0.8 | % | 0.3 | % | -0.6 | % | -0.7 | % | ||||||||||||||||||
Net premiums earned |
4.9 | % | 0.2 | % | 1.4 | % | -1.9 | % | -0.8 | % | -1.9 | % | -0.8 | % | ||||||||||||||||||
Net premiums written constant $ (4) |
10.2 | % | 4.6 | % | 3.7 | % | 4.4 | % | 4.1 | % | 2.4 | % | 3.7 | % | ||||||||||||||||||
Net premiums earned constant $ |
9.8 | % | 4.7 | % | 6.8 | % | 3.4 | % | 3.0 | % | 0.9 | % | 3.5 | % |
(1) | Q1 2016 includes unfavorable reserve development of $9 million compared to Q1 2015 which includes $1 million of unfavorable reserve development. |
(2) | (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), recorded in corporate, for purposes of presenting Life segment income in the Life Insurance segment. The offsetting movement in the separate account liabilities is included in Policy benefits. |
(3) | We assess the performance of our Life Insurance business based on Life Insurance segment income which includes (Gains) losses from fair value changes in separate account assets. |
(4) | International life insurance net premiums written and deposits breakdown (excludes Combined North American and Life reinsurance businesses): |
As Reported | ||||||||||||
Constant $ | ||||||||||||
% Change | ||||||||||||
Constant $ | 1Q-16 vs. | |||||||||||
1Q-16 | 1Q-15(6) | 1Q-15(6) | ||||||||||
International life insurance net premiums written |
$ | 203 | $ | 162 | 25.3 | % | ||||||
International life insurance deposits (5) |
213 | 241 | -11.5 | % | ||||||||
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Total international life insurance net premiums written and deposits |
$ | 416 | $ | 403 | 3.3 | % | ||||||
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(5) | Includes deposits collected on universal life and investment contracts. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues. |
(6) | Prior periods on a constant dollar basis. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. 2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results. |
Life Insurance | Page 13 |
Chubb Limited
Segment Results - Consecutive Quarters
(in millions of U.S. dollars, except ratios)
(Unaudited)
As Reported | Pro Forma* | Legacy ACE | ||||||||||||||||||||||||||||||
Full Year | ||||||||||||||||||||||||||||||||
1Q-16 | 1Q-16 | 1Q-15 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | 2015 | |||||||||||||||||||||||||
Corporate |
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Gross premiums written |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||||
Net premiums written |
| | | | | | | | ||||||||||||||||||||||||
Net premiums earned |
| | | | | | | | ||||||||||||||||||||||||
Losses and loss expenses |
9 | 9 | 17 | 60 | 84 | 49 | 9 | 202 | ||||||||||||||||||||||||
Policy acquisition costs |
| | | 1 | | | | 1 | ||||||||||||||||||||||||
Administrative expenses |
73 | 76 | 82 | 53 | 46 | 45 | 44 | 188 | ||||||||||||||||||||||||
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Underwriting loss |
(82 | ) | (85 | ) | (99 | ) | (114 | ) | (130 | ) | (94 | ) | (53 | ) | (391 | ) | ||||||||||||||||
Net investment income |
9 | 6 | 3 | 3 | 3 | 15 | ||||||||||||||||||||||||||
Adjusted interest expense (1) |
149 | 64 | 68 | 71 | 68 | 271 | ||||||||||||||||||||||||||
Other income (expense) - operating (1) |
| (6 | ) | 12 | (1 | ) | (2 | ) | 3 | |||||||||||||||||||||||
Amortization of purchased intangibles |
7 | 35 | 51 | 55 | 30 | 171 | ||||||||||||||||||||||||||
Income tax expense |
201 | 97 | 140 | 136 | 119 | 492 | ||||||||||||||||||||||||||
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Operating loss |
(430 | ) | (310 | ) | (374 | ) | (354 | ) | (269 | ) | (1,307 | ) | ||||||||||||||||||||
Chubb integration and related expenses, net of tax |
(106 | ) | (35 | ) | (7 | ) | | | (42 | ) | ||||||||||||||||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (1) |
(59 | ) | | | | | | |||||||||||||||||||||||||
Adjusted net realized gains (losses) (1) |
(394 | ) | (57 | ) | (393 | ) | 128 | (89 | ) | (411 | ) | |||||||||||||||||||||
Net realized gains (losses) related to unconsolidated entities |
(25 | ) | (17 | ) | 25 | 33 | 26 | 67 | ||||||||||||||||||||||||
Income tax expense (benefit) on adjusted net realized gains (losses) |
(4 | ) | (12 | ) | (6 | ) | 7 | 1 | (10 | ) | ||||||||||||||||||||||
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Net loss |
$ | (1,010 | ) | $ | (407 | ) | $ | (743 | ) | $ | (200 | ) | $ | (333 | ) | $ | (1,683 | ) | ||||||||||||||
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Unfavorable prior period development (PPD) - pre-tax |
$ | 8 | $ | 8 | $ | 17 | $ | 60 | $ | 84 | $ | 47 | $ | 9 | $ | 200 |
Note: The Company presents all profit and loss items below net investment income within the Corporate segment.
(1) | See non-GAAP financial measures. |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Corporate | Page 14 |
Chubb Limited
Loss Reserve Rollforward
(in millions of U.S. dollars, except ratios)
(Unaudited)
Unpaid Losses | Net Paid to | |||||||||||||||
Gross | Ceded | Net | Incurred Ratio | |||||||||||||
Balance at December 31, 2014 |
$ | 38,315 | $ | 11,307 | $ | 27,008 | ||||||||||
Losses and loss expenses incurred |
2,743 | 621 | 2,122 | |||||||||||||
Losses and loss expenses paid |
(3,062 | ) | (744 | ) | (2,318 | ) | 109 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(670 | ) | (197 | ) | (473 | ) | ||||||||||
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Balance at March 31, 2015 |
$ | 37,326 | $ | 10,987 | $ | 26,339 | ||||||||||
Losses and loss expenses incurred |
3,065 | 648 | 2,417 | |||||||||||||
Losses and loss expenses paid |
(2,830 | ) | (547 | ) | (2,283 | ) | 94 | % | ||||||||
Other (incl. foreign exch. revaluation) |
669 | 60 | 609 | |||||||||||||
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Balance at June 30, 2015 |
$ | 38,230 | $ | 11,148 | $ | 27,082 | ||||||||||
Losses and loss expenses incurred |
3,252 | 609 | 2,643 | |||||||||||||
Losses and loss expenses paid |
(3,391 | ) | (908 | ) | (2,483 | ) | 94 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(527 | ) | (193 | ) | (334 | ) | ||||||||||
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Balance at September 30, 2015 |
$ | 37,564 | $ | 10,656 | $ | 26,908 | ||||||||||
Losses and loss expenses incurred |
3,481 | 1,179 | 2,302 | |||||||||||||
Losses and loss expenses paid |
(3,616 | ) | (1,050 | ) | (2,566 | ) | 111 | % | ||||||||
Other (incl. foreign exch. revaluation) |
(126 | ) | (44 | ) | (82 | ) | ||||||||||
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Balance at December 31, 2015 |
$ | 37,303 | $ | 10,741 | $ | 26,562 | ||||||||||
Losses and loss expenses incurred |
4,663 | 989 | 3,674 | |||||||||||||
Losses and loss expenses paid |
(4,692 | ) | (1,143 | ) | (3,549 | ) | 97 | % | ||||||||
Acquired reserve (Legacy Chubb) |
22,878 | 1,515 | 21,363 | |||||||||||||
Other (incl. foreign exch. revaluation) |
54 | 25 | 29 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Balance at March 31, 2016 |
$ | 60,206 | $ | 12,127 | $ | 48,079 | ||||||||||
Add net recoverable on paid losses |
| 764 | (764 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Balance including net recoverable on paid losses |
$ | 60,206 | $ | 12,891 | $ | 47,315 | ||||||||||
|
|
|
|
|
|
Loss Reserve Rollforward | Page 15 |
Chubb Limited
Reinsurance Recoverable Analysis
(in millions of U.S. dollars)
(Unaudited)
Legacy ACE | ||||||||
March 31 | December 31 | |||||||
2016 | 2015 | |||||||
Net Reinsurance Recoverable by Division |
||||||||
Reinsurance recoverable on paid losses and loss expenses |
||||||||
Active operations |
$ | 592 | $ | 450 | ||||
Brandywine and Other Run-off |
269 | 288 | ||||||
|
|
|
|
|||||
Total |
$ | 861 | $ | 738 | ||||
|
|
|
|
|||||
Reinsurance recoverable on unpaid losses and loss expenses |
||||||||
Active operations |
$ | 11,169 | $ | 9,884 | ||||
Brandywine and Other Run-off |
1,182 | 1,092 | ||||||
|
|
|
|
|||||
Total |
$ | 12,351 | $ | 10,976 | ||||
|
|
|
|
|||||
Gross reinsurance recoverable |
||||||||
Active operations |
$ | 11,761 | $ | 10,334 | ||||
Brandywine and Other Run-off |
1,451 | 1,380 | ||||||
|
|
|
|
|||||
Total |
$ | 13,212 | $ | 11,714 | ||||
|
|
|
|
|||||
Provision for uncollectible reinsurance (1) |
||||||||
Active operations |
$ | (164 | ) | $ | (194 | ) | ||
Brandywine and Other Run-off |
(157 | ) | (134 | ) | ||||
|
|
|
|
|||||
Total |
$ | (321 | ) | $ | (328 | ) | ||
|
|
|
|
|||||
Net reinsurance recoverable |
||||||||
Active operations |
$ | 11,597 | $ | 10,140 | ||||
Brandywine and Other Run-off |
1,294 | 1,246 | ||||||
|
|
|
|
|||||
Total |
$ | 12,891 | $ | 11,386 | ||||
|
|
|
|
(1) | The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance, net of usable collateral of approximately $3.1 billion. |
Reinsurance Recoverable | Page 16 |
Chubb Limited
Investment Portfolio
(in millions of U.S. dollars)
(Unaudited)
Legacy ACE | ||||||||||||||||
March 31 | December 31 | |||||||||||||||
2016 | 2015 | |||||||||||||||
Market Value |
||||||||||||||||
Fixed maturities available for sale |
$ | 77,538 | $ | 43,587 | ||||||||||||
Fixed maturities held to maturity |
11,580 | 8,552 | ||||||||||||||
Short-term investments |
3,382 | 10,446 | ||||||||||||||
|
|
|
|
|||||||||||||
Total fixed maturities |
$ | 92,500 | $ | 62,585 | ||||||||||||
|
|
|
|
|||||||||||||
Asset Allocation by Market Value |
||||||||||||||||
Treasury |
$ | 3,145 | 3 | % | $ | 2,395 | 4 | % | ||||||||
Agency |
647 | 1 | % | 878 | 1 | % | ||||||||||
Corporate and asset-backed |
25,244 | 27 | % | 17,985 | 28 | % | ||||||||||
Mortgage-backed |
13,761 | 15 | % | 11,701 | 19 | % | ||||||||||
Municipal |
24,945 | 27 | % | 4,950 | 8 | % | ||||||||||
Non-U.S. |
21,376 | 23 | % | 14,230 | 23 | % | ||||||||||
Short-term investments |
3,382 | 4 | % | 10,446 | 17 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total fixed maturities |
$ | 92,500 | 100 | % | $ | 62,585 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Credit Quality by Market Value |
||||||||||||||||
AAA |
$ | 19,524 | 21 | % | $ | 14,369 | 23 | % | ||||||||
AA |
34,399 | 37 | % | 22,141 | 36 | % | ||||||||||
A |
17,726 | 19 | % | 10,163 | 16 | % | ||||||||||
BBB |
11,604 | 13 | % | 8,941 | 14 | % | ||||||||||
BB |
5,484 | 6 | % | 3,775 | 6 | % | ||||||||||
B |
3,494 | 4 | % | 3,018 | 5 | % | ||||||||||
Other |
269 | 0 | % | 178 | 0 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total fixed maturities |
$ | 92,500 | 100 | % | $ | 62,585 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost/Amortized Cost |
||||||||||||||||
Fixed maturities available for sale |
$ | 75,991 | $ | 43,149 | ||||||||||||
Fixed maturities held to maturity |
11,280 | 8,430 | ||||||||||||||
Short-term investments |
3,382 | 10,446 | ||||||||||||||
|
|
|
|
|||||||||||||
Subtotal fixed maturities |
90,653 | 62,025 | ||||||||||||||
Equity securities |
841 | 441 | ||||||||||||||
Other investments |
4,233 | 2,993 | ||||||||||||||
|
|
|
|
|||||||||||||
Total investment portfolio |
$ | 95,727 | $ | 65,459 | ||||||||||||
|
|
|
|
|||||||||||||
Avg. duration of fixed maturities |
3.9 years | 3.5 years | ||||||||||||||
Avg. market yield of fixed maturities |
2.5 | % | 2.8 | % | ||||||||||||
Avg. credit quality |
AA/Aa | A/Aa | ||||||||||||||
Avg. yield on invested assets (1) |
3.4 | % | 3.4 | % |
(1) | Calculated using adjusted net investment income. |
Investment | Page 17 |
Chubb Limited
Investment Portfolio - 2
(in millions of U.S. dollars)
(Unaudited)
Mortgage-backed Fixed Income Portfolio
Mortgage-backed securities
S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
Market Value at March 31, 2016 |
||||||||||||||||||||||||
Agency residential mortgage-backed (RMBS) |
$ | | $ | 10,658 | $ | | $ | | $ | | $ | 10,658 | ||||||||||||
Non-agency RMBS |
6 | 6 | 11 | 11 | 44 | 78 | ||||||||||||||||||
Commercial mortgage-backed |
2,985 | 27 | 13 | | | 3,025 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total mortgage-backed securities at market value |
$ | 2,991 | $ | 10,691 | $ | 24 | $ | 11 | $ | 44 | $ | 13,761 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Corporate and Asset-backed Fixed Income Portfolios
S&P Credit Rating | ||||||||||||||||||||
Investment Grade | ||||||||||||||||||||
AAA | AA | A | BBB | Total | ||||||||||||||||
Market Value at March 31, 2016 |
||||||||||||||||||||
Asset-backed |
$ | 758 | $ | 41 | $ | | $ | | $ | 799 | ||||||||||
Banks |
165 | 128 | 1,802 | 1,652 | 3,747 | |||||||||||||||
Basic Materials |
| 3 | 113 | 256 | 372 | |||||||||||||||
Communications |
| 160 | 292 | 1,355 | 1,807 | |||||||||||||||
Consumer, Cyclical |
| 182 | 624 | 778 | 1,584 | |||||||||||||||
Consumer, Non-Cyclical |
143 | 541 | 1,773 | 1,102 | 3,559 | |||||||||||||||
Diversified Financial Services |
262 | 38 | 468 | 208 | 976 | |||||||||||||||
Energy |
25 | 36 | 266 | 654 | 981 | |||||||||||||||
Industrial |
| 368 | 551 | 489 | 1,408 | |||||||||||||||
Utilities |
1 | 34 | 1,091 | 721 | 1,847 | |||||||||||||||
All Others |
83 | 445 | 714 | 528 | 1,770 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 1,437 | $ | 1,976 | $ | 7,694 | $ | 7,743 | $ | 18,850 | ||||||||||
|
|
|
|
|
|
|
|
|
|
S&P Credit Rating | ||||||||||||||||
Below Investment Grade | ||||||||||||||||
BB | B | CCC | Total | |||||||||||||
Market Value at March 31, 2016 |
||||||||||||||||
Asset-backed |
$ | 7 | $ | | $ | 5 | $ | 12 | ||||||||
Banks |
34 | | | 34 | ||||||||||||
Basic Materials |
129 | 82 | 2 | 213 | ||||||||||||
Communications |
756 | 513 | 8 | 1,277 | ||||||||||||
Consumer, Cyclical |
639 | 508 | 34 | 1,181 | ||||||||||||
Consumer, Non-Cyclical |
600 | 845 | 12 | 1,457 | ||||||||||||
Diversified Financial Services |
158 | 45 | 2 | 205 | ||||||||||||
Energy |
319 | 75 | 19 | 413 | ||||||||||||
Industrial |
305 | 322 | 16 | 643 | ||||||||||||
Utilities |
217 | 86 | 10 | 313 | ||||||||||||
All Others |
372 | 257 | 17 | 646 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 3,536 | $ | 2,733 | $ | 125 | $ | 6,394 | ||||||||
|
|
|
|
|
|
|
|
Investment 2 | Page 18 |
Chubb Limited
Investment Portfolio - 3
(in millions of U.S. dollars)
(Unaudited)
Non-U.S. Fixed Income Portfolio
March 31, 2016
Market Value by S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
Non-U.S. Government Securities |
||||||||||||||||||||||||
United Kingdom |
$ | 1,848 | $ | | $ | | $ | | $ | | $ | 1,848 | ||||||||||||
Canada |
1,391 | | | | | 1,391 | ||||||||||||||||||
Republic of Korea |
| 970 | | | | 970 | ||||||||||||||||||
Federative Republic of Brazil |
| | | | 774 | 774 | ||||||||||||||||||
Germany |
680 | | | | | 680 | ||||||||||||||||||
United Mexican States |
| | 354 | 161 | | 515 | ||||||||||||||||||
Province of Ontario |
| | 480 | | | 480 | ||||||||||||||||||
Kingdom of Thailand |
| | 409 | | | 409 | ||||||||||||||||||
Province of Quebec |
| | 398 | | | 398 | ||||||||||||||||||
Australia |
305 | 3 | | | | 308 | ||||||||||||||||||
Other Non-U.S. Government Securities |
1,360 | 1,374 | 509 | 391 | 555 | 4,189 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 5,584 | $ | 2,347 | $ | 2,150 | $ | 552 | $ | 1,329 | $ | 11,962 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Market Value by S&P Credit Rating | ||||||||||||||||||||||||
AAA | AA | A | BBB | BB and below | Total | |||||||||||||||||||
Non-U.S. Corporate Securities |
||||||||||||||||||||||||
United Kingdom |
$ | 123 | $ | 58 | $ | 739 | $ | 829 | $ | 218 | $ | 1,967 | ||||||||||||
Canada |
74 | 236 | 236 | 288 | 164 | 998 | ||||||||||||||||||
United States(1) |
2 | 135 | 156 | 222 | 268 | 783 | ||||||||||||||||||
France |
33 | 58 | 345 | 273 | 22 | 731 | ||||||||||||||||||
Netherlands |
80 | 16 | 379 | 192 | 61 | 728 | ||||||||||||||||||
Australia |
74 | 121 | 270 | 86 | 26 | 577 | ||||||||||||||||||
Germany |
67 | 48 | 123 | 195 | 24 | 457 | ||||||||||||||||||
Switzerland |
38 | 23 | 95 | 115 | 36 | 307 | ||||||||||||||||||
Sweden |
14 | 160 | 43 | 27 | 8 | 252 | ||||||||||||||||||
China |
| 96 | 112 | 27 | 5 | 240 | ||||||||||||||||||
Other Non-U.S. Corporate Securities |
214 | 226 | 852 | 605 | 477 | 2,374 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 719 | $ | 1,177 | $ | 3,350 | $ | 2,859 | $ | 1,309 | $ | 9,414 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Countries represent the ultimate parent companys country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations. |
Investment 3 | Page 19 |
Chubb Limited
Investment Portfolio - 4
(in millions of U.S. dollars)
(Unaudited)
Fixed Maturity Investment Portfolio
Top 10 Global Corporate Exposures
March 31, 2016 |
Market Value | Rating | ||||||||
1 |
JP Morgan Chase & Co | $ | 557 | A- | ||||||
2 |
General Electric Co | 495 | AA+ | |||||||
3 |
Wells Fargo & Co | 443 | A | |||||||
4 |
Goldman Sachs Group Inc | 403 | BBB+ | |||||||
5 |
Verizon Communications Inc | 389 | BBB+ | |||||||
6 |
Bank of America Corp | 383 | BBB+ | |||||||
7 |
Anheuser-Busch InBev NV | 341 | A- | |||||||
8 |
AT&T Inc | 334 | BBB+ | |||||||
9 |
Rabobank Nederland NV | 300 | A+ | |||||||
10 |
Berkshire Hathaway Inc | 293 | AA |
Investment 4 | Page 20 |
Chubb Limited
Net Realized and Unrealized Gains (Losses)
(in millions of U.S. dollars)
(Unaudited)
Three months ended March 31, 2016 | ||||||||||||||||||||
Net Realized | Net Unrealized | Net | Tax | Net | ||||||||||||||||
Gains | Gains | Impact | Expense | Impact | ||||||||||||||||
(Losses) (1) | (Losses) | Pre-tax | (Benefit) | After-tax | ||||||||||||||||
Fixed maturities |
$ | (190 | ) | $ | 1,088 | $ | 898 | $ | 218 | $ | 680 | |||||||||
Fixed income derivatives |
(39 | ) | | (39 | ) | (5 | ) | (34 | ) | |||||||||||
Public equity |
38 | (4 | ) | 34 | 12 | 22 | ||||||||||||||
Private equity |
(19 | ) | (27 | ) | (46 | ) | (6 | ) | (40 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total investment portfolio (2) |
(210 | ) | 1,057 | 847 | 219 | 628 | ||||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges (3) |
(243 | ) | | (243 | ) | |
|
(243 |
) | |||||||||||
Foreign exchange (4) |
39 | 312 | 351 | 45 | 306 | |||||||||||||||
Partially-owned entities (5) |
(3 | ) | | (3 | ) | | (3 | ) | ||||||||||||
Other |
(2 | ) | 2 | | 1 | (1 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net gains (losses) |
$ | (419 | ) | $ | 1,371 | $ | 952 | $ | 265 | $ | 687 | |||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Other-than-temporary impairments for the quarter includes $59 million for fixed maturities, $1 million for public equity and $3 million for private equity. |
(2) | Total after-tax net realized losses on the investment portfolio were $196 million for the quarter. Total after-tax net unrealized gains on the investment portfolio were $824 million for the quarter. |
(3) | The quarter includes $15 million of losses on applicable hedges. These losses are both pre-tax and after-tax. |
(4) | Realized foreign exchange gains, after-tax, for the quarter were $29 million. Unrealized foreign exchange gains, after-tax, for the quarter were $277 million. |
(5) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investees shares. The net income or loss is included in other income (expense). |
Legacy ACE | ||||||||||||||||||||
Three months ended March 31, 2015 | ||||||||||||||||||||
Net Realized | Net Unrealized | Net | Tax | Net | ||||||||||||||||
Gains | Gains | Impact | Expense | Impact | ||||||||||||||||
(Losses) (6) | (Losses) | Pre-tax | (Benefit) | After-tax | ||||||||||||||||
Fixed maturities |
$ | (4 | ) | $ | 438 | $ | 434 | $ | 83 | $ | 351 | |||||||||
Fixed income derivatives |
1 | | 1 | (6 | ) | 7 | ||||||||||||||
Public equity |
1 | 18 | 19 | 7 | 12 | |||||||||||||||
Private equity |
13 | (12 | ) | 1 | | 1 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total investment portfolio (7) |
11 | 444 | 455 | 84 | 371 | |||||||||||||||
Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges (8) |
(57 | ) | | (57 | ) | | (57 | ) | ||||||||||||
Foreign exchange (9) |
(31 | ) | (421 | ) | (452 | ) | (12 | ) | (440 | ) | ||||||||||
Partially-owned entities (10) |
13 | | 13 | 3 | 10 | |||||||||||||||
Other |
1 | 13 | 14 | 1 | 13 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net gains (losses) |
$ | (63 | ) | $ | 36 | $ | (27 | ) | $ | 76 | $ | (103 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
(6) | Other-than-temporary impairments for the quarter includes $13 million for fixed maturities. |
(7) | Total after-tax net realized gains on the investment portfolio were $10 million for the quarter. Total after-tax net unrealized gains on the investment portfolio were $361 million for the quarter. |
(8) | The quarter includes $19 million of losses on applicable hedges. |
(9) | Realized foreign exchange losses, after-tax, for the quarter were $30 million. Unrealized foreign exchange losses, after-tax, for the quarter were $410 million. |
(10) | Partially-owned entities are investments where we hold more than an insignificant percentage of the investees shares. The net income or loss is included in other income (expense). |
Net Gains (Losses) | Page 21 |
Chubb Limited
Debt and Capital
(in millions of U.S. dollars, except ratios)
(Unaudited)
Legacy ACE | ||||||||||||
March 31 | December 31 | December 31 | ||||||||||
2016 | 2015 | 2014 | ||||||||||
Financial Debt: |
||||||||||||
Total short-term debt |
$ | 500 | $ | | $ | 1,150 | ||||||
Total long-term debt (1) |
12,636 | 9,389 | 3,334 | |||||||||
|
|
|
|
|
|
|||||||
Total financial debt |
$ | 13,136 | $ | 9,389 | $ | 4,484 | ||||||
Hybrid debt |
||||||||||||
Total trust preferred securities |
308 | 307 | 307 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 13,444 | $ | 9,696 | $ | 4,791 | ||||||
|
|
|
|
|
|
|||||||
Capitalization: |
||||||||||||
Shareholders equity |
$ | 45,897 | $ | 29,135 | $ | 29,587 | ||||||
Hybrid debt |
308 | 307 | 307 | |||||||||
Financial debt |
13,136 | 9,389 | 4,484 | |||||||||
|
|
|
|
|
|
|||||||
Total capitalization |
$ | 59,341 | $ | 38,831 | $ | 34,378 | ||||||
|
|
|
|
|
|
|||||||
Leverage ratios (based on total capital) |
||||||||||||
Hybrid debt |
0.5 | % | 0.8 | % | 0.9 | % | ||||||
Financial debt |
22.1 | % | 24.2 | % | 13.0 | % | ||||||
|
|
|
|
|
|
|||||||
Total hybrid & financial debt |
22.6 | % | 25.0 | % | 13.9 | % |
Effective Q1 2016, the company retrospectively adopted guidance that required presentation of debt issuance costs (previously included within Other assets on the balance sheet) as a deduction from the carrying amount of the related debt. Prior year amounts have been reclassified to conform to this new presentation. The carrying amount of long-term debt was reduced by $58 million and $23 million for 2015 and 2014, respectively, and the carrying amount of trust preferred securities was reduced by $2 million for both 2015 and 2014 as a result of this new guidance.
Note: As of March 31, 2016, there was $0.7 billion usage of credit facilities on a total commitment of $1.5 billion.
(1) | In connection with our acquisition of The Chubb Corporation, we assumed $3.3 billion par value of Legacy Chubbs debt, fair valued at $3.8 billion for purchase accounting purposes. This included $1 billion of junior subordinated capital securities. |
Debt and Capital | Page 22 |
Chubb Limited
Computation of Basic and Diluted Earnings Per Share
(in millions of U.S. dollars, except share and per share data)
(Unaudited)
Three months ended March 31 | ||||||||
2016 | 2015 | |||||||
Numerator |
||||||||
Operating income to common shares |
$ | 1,019 | $ | 745 | ||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (1) |
(59 | ) | | |||||
Chubb integration and related expenses, net of tax |
(106 | ) | | |||||
Adjusted net realized gains (losses), net of tax |
(415 | ) | (64 | ) | ||||
|
|
|
|
|||||
Net income |
$ | 439 | $ | 681 | ||||
|
|
|
|
|||||
Rollforward of Common Shares Outstanding |
||||||||
Shares - beginning of period |
324,563,441 | 328,659,686 | ||||||
Share Issuance for Chubb Acquisition |
136,950,381 | | ||||||
Repurchase of shares |
| (3,027,463 | ) | |||||
Shares issued, excluding option exercises |
2,172,161 | 1,011,030 | ||||||
Issued for option exercises |
597,537 | 441,509 | ||||||
|
|
|
|
|||||
Shares - end of period |
464,283,520 | 327,084,762 | ||||||
|
|
|
|
|||||
Denominator |
||||||||
Weighted average shares outstanding |
446,739,586 | 328,212,376 | ||||||
Effect of other dilutive securities |
3,270,156 | 3,480,344 | ||||||
|
|
|
|
|||||
Adj. wtd. avg. shares outstanding and assumed conversions |
450,009,742 | 331,692,720 | ||||||
|
|
|
|
|||||
Basic earnings per share |
||||||||
Operating income |
$ | 2.28 | $ | 2.27 | ||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (1) |
(0.13 | ) | | |||||
Chubb integration and related expenses, net of tax |
(0.24 | ) | | |||||
Adjusted net realized gains (losses), net of tax |
(1.06 | ) | (0.19 | ) | ||||
|
|
|
|
|||||
Net income |
$ | 0.98 | $ | 2.08 | ||||
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Diluted earnings per share |
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Operating income |
$ | 2.26 | $ | 2.25 | ||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (1) |
(0.13 | ) | | |||||
Chubb integration and related expenses, net of tax |
(0.24 | ) | | |||||
Adjusted net realized gains (losses), net of tax |
(0.92 | ) | (0.20 | ) | ||||
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Net income |
$ | 0.97 | $ | 2.05 | ||||
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(1) | Related to the acquisition of the Chubb Corporation. |
Earnings Per Share | Page 23 |
Chubb Limited
Book Value and Book Value per Common Share
(in millions of U.S. dollars, except share and per share data)
(Unaudited)
Reconciliation of Book Value per Common Share
March 31 | December 31 | March 31 | ||||||||||
2016 | 2015 | 2015 | ||||||||||
Shareholders equity |
$ | 45,897 | $ | 29,135 | $ | 29,702 | ||||||
Less: goodwill and other intangible assets, net of tax |
20,904 | 5,683 | 5,516 | |||||||||
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Numerator for tangible book value per share |
$ | 24,993 | $ | 23,452 | $ | 24,186 | ||||||
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Book value - % change over prior quarter |
57.5 | % | 0.0 | % | 0.4 | % | ||||||
Tangible book value - % change over prior quarter |
6.6 | % | 0.2 | % | 1.4 | % | ||||||
Denominator |
464,283,520 | 324,563,441 | 327,084,762 | |||||||||
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Book value per common share |
$ | 98.85 | $ | 89.77 | $ | 90.81 | ||||||
Tangible book value per common share |
$ | 53.83 | $ | 72.25 | $ | 73.94 | ||||||
Reconciliation of Book Value |
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Shareholders equity, beginning of quarter |
$ | 29,135 | $ | 29,127 | $ | 29,587 | ||||||
Operating income |
1,019 | 780 | 745 | |||||||||
Amortization of fair value adjustment of acquired invested assets and long-term debt, net of tax (1) |
(59 | ) | | | ||||||||
Chubb integration and related expenses, net of tax |
(106 | ) | (35 | ) | | |||||||
Adjusted net realized gains (losses), net of tax |
(415 | ) | (62 | ) | (64 | ) | ||||||
Net unrealized gains (losses) on the investment portfolio, net of tax |
824 | (411 | ) | 361 | ||||||||
Share Issuance related to acquisition of The Chubb Corp. |
15,204 | | | |||||||||
Fair value of equity awards assumed in acquisition of The Chubb Corp. |
323 | |||||||||||
Repurchase of shares |
| | (340 | ) | ||||||||
Dividend declared on common shares |
(314 | ) | (218 | ) | (222 | ) | ||||||
Cumulative translation, net of tax |
277 | (133 | ) | (410 | ) | |||||||
Pension liability |
1 | 1 | 10 | |||||||||
Other (2) |
8 | 86 | 35 | |||||||||
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$ | 45,897 | $ | 29,135 | $ | 29,702 | |||||||
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(1) | Related to the acquisition of the Chubb Corporation. |
(2) | Other primarily includes proceeds from exercise of stock options and stock compensation. |
Reconciliation Book Value | Page 24 |
Chubb Limited
Non-GAAP Financial Measures
(in millions of U.S. dollars)
(Unaudited)
Regulation G - Non-GAAP Financial Measures
In presenting our results, we included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP).
We provide financial measures such as gross premiums written, net premiums written, net premiums earned, and operating income on a constant-dollar basis. We believe it is useful to evaluate the trends in these measures exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period.
Adjusted net realized gains (losses) is a non-GAAP financial measure that excludes realized gains and losses on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing will impact underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations and therefore realized gains and losses from these derivatives are reclassified to Adjusted losses and loss expenses (a non-GAAP financial measure). Adjusted losses and loss expenses include gains and losses on crop derivatives. P&C loss and loss expense ratio and P&C combined ratio (both non-GAAP financial measures) include adjusted losses and loss expenses in the ratio numerator. A reconciliation of GAAP combined ratio to P&C combined ratio is provided on page 27.
Other income (expense) operating is a non-GAAP financial measure and excludes the portion of net realized gains and losses related to unconsolidated entities from other income (expense). These gains and losses are reported as Net realized gains (losses) and represent the non-operating activities of entities where we hold more than an insignificant percentage of the investees shares. We exclude these gains and losses from other income (expense) to enhance the understanding of our core results of operations as they are heavily influenced by, and fluctuate in part according to market conditions.
In presenting our segment income results, we have shown our performance with reference to underwriting results. Underwriting results are calculated by subtracting adjusted losses and loss expenses, policy benefits, policy acquisition costs, and administrative expenses from net premiums earned. We use underwriting results and operating ratios to monitor the results of our operations without the impact of certain factors, including investment income, other income and expenses, interest and income tax expense, and adjusted net realized gains (losses). P&C underwriting income is a non-GAAP financial measure which excludes the Life Insurance segment. North America Agricultural Insurance underwriting income includes gains (losses) on crop derivatives. Life Insurance segment income includes adjusted net investment income and gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.
P&C combined ratio excluding catastrophe losses and prior period development (PPD) is a non-GAAP financial measure. The ratio numerator includes adjusted losses and loss expenses, policy acquisition costs, and administrative expenses adjusted to exclude catastrophe losses and PPD. The ratio denominator includes net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected and net earned premium adjustments on loss sensitive policies. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.
P&C loss and loss expense ratio excluding the impact of catastrophe losses and PPD is a non-GAAP financial measure. The loss ratio numerator includes adjusted losses and loss expenses and excludes catastrophe losses and PPD. The loss ratio denominator includes Net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded from PPD and net earned premiums when calculating this ratio. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.
P&C expense ratio excluding accident and health (A&H) is a non-GAAP financial measure and excludes the impact of our A&H business from our consolidated expense ratio. The expense ratio for the A&H business is typically higher than our traditional P&C business, and we believe that this measure provides better comparison to our peer companies that may not have a significant A&H block of business.
Global P&C performance metrics are non-GAAP financial measures and comprise consolidated operating results (including corporate) and exclude the operating results of the companys Life Insurance and North American Agricultural Insurance segments. We believe that these measures are useful and meaningful to investors as they are used by management to assess the companys global P&C operations which are the most economically similar. We exclude the North American Agricultural Insurance and Life Insurance segments because the results of these businesses do not always correlate with the results of our global P&C operations.
International life insurance net premiums written and deposits collected, is a non-GAAP financial measure. Deposits collected on universal life and investment contracts (life deposits) are not reflected as revenues in our consolidated statements of operations in accordance with GAAP. However, we include life deposits in presenting growth in our life insurance business because new life deposits are an important component of production and key to our efforts to grow our business.
Operating effective tax rate is a non-GAAP financial measure. The numerator excludes tax on adjusted net realized gains (losses). The denominator excludes adjusted net realized gains (losses), before tax. We exclude adjusted net realized gains (losses) and the related tax impact because these amounts are heavily influenced by, and fluctuate in part according to, the availability of market opportunities. Operating effective tax rate should not be viewed as a substitute for effective tax rate determined in accordance with GAAP.
Tangible book value per common share is a non-GAAP financial measure and is shareholders equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. We believe that goodwill and other intangible assets are not indicative of our underlying insurance results or trends and make book value comparisons to less acquisitive peer companies less meaningful. A reconciliation of tangible book value per share is provided on page 25. Tangible book value per common share excluding acquisitions is shareholders equity less goodwill and other intangible assets, net of tax, divided by the shares outstanding. The numerator adds back the goodwill and other intangible assets, net of tax, related to the acquisition of The Chubb Corporation in order to adjust for the distortive effect of the acquisition. In addition, we disclose per share measures that exclude the impact of foreign currency fluctuations during 2016 in order to adjust for the distortive effects of fluctuations in exchange rates.
Operating income is a non-GAAP financial measure that excludes the after-tax impact of adjusted net realized gains (losses), net realized gains (losses) included in other income (expense) related to partially owned entities, Chubb integration and related expenses, and the amortization of the fair value adjustments related to purchased invested assets and long-term debt from the Chubb Corp acquisition. We exclude realized gains and losses because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. We also exclude Chubb integration and related expenses due to the size and complexity of this acquisition. Chubb integration expenses are incurred by the overall company and are therefore included in Corporate. The costs are not related to the on-going activities of the individual segments and are therefore excluded from our definition of segment income, as well. These integration and related expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration and related expenses facilitate the comparison of our financial results to our historical operating results. These expenses include legal and professional fees and all other costs directly related to the integration activities of the Chubb Corp acquisition. In addition, we excluded the pre-acquisition interest expense of $4 million, net of tax, on the $5.3 billion senior notes issued in November 2015 from operating income because the operations for which the debt was issued were not part of our operating activities prior to the completion of the acquisition. Effective with the close of the Chubb acquisition (January 14, 2016), this debt was considered a cost of our operations and interest expense associated with this debt was included within operating income. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. Operating income should not be viewed as a substitute for net income determined in accordance with GAAP.
Adjusted net investment income is net investment income excluding the amortization of the fair value adjustment on acquired assets. Adjusted interest expense is interest expense excluding the amortization of the fair value adjustment of acquired debt and the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. We believe that excluding these items are meaningful in order to present the underlying economics of the companys business.
Reconciliation Non-GAAP | Page 25 |
Chubb Limited
Non-GAAP Financial Measures - 2
(in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
Operating income
Operating income is a common performance measure for insurance companies and is presented throughout this report.
The following table presents the reconciliation of Net income to Operating income:
1Q-16 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
|||||||||||||||||||
Net income, as reported |
$ | 439 | $ | 683 | $ | 528 | $ | 942 | $ | 681 | $ | 2,834 | ||||||||||||
Amortization of fair value of acquired invested assets and long-term debt, net of tax (1) |
(59 | ) | | | | | | |||||||||||||||||
Chubb integration and related expenses, net of tax |
(106 | ) | (35 | ) | (7 | ) | | | (42 | ) | ||||||||||||||
Adjusted net realized gains (losses) |
(394 | ) | (57 | ) | (393 | ) | 128 | (89 | ) | (411 | ) | |||||||||||||
Net realized gains (losses) related to unconsolidated entities (2) |
(25 | ) | (17 | ) | 25 | 33 | 26 | 67 | ||||||||||||||||
Income tax expense (benefit) on adjusted net realized gains (losses) |
(4 | ) | (12 | ) | (6 | ) | 7 | 1 | (10 | ) | ||||||||||||||
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Operating income |
$ | 1,019 | $ | 780 | $ | 897 | $ | 788 | $ | 745 | $ | 3,210 | ||||||||||||
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(1) | Related to the acquisition of the Chubb Corporation |
(2) | Realized gains (losses) on partially-owned entities, which are investments where we hold more than an insignificant percentage of the investees shares. The net income or loss is included in other income (expense). |
Operating ROE
Operating return on equity (ROE) or ROE calculated using operating income is an annualized financial measure. The ROE numerator includes income adjusted to exclude after-tax adjusted net realized gains (losses), Chubb integration and related expenses, and the amortization of the fair value adjustment of acquired invested assets and long-term debt. The ROE denominator includes the average shareholders equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. In addition, the denominator was adjusted to account for the weighted-average impact of the $15,527 million issuance of common shares and equity awards related to the Chubb Corp acquisition on January 14, 2016 . To annualize 2016 operating ROE, include the 14-day stub period adjustment in future quarters (i.e., Q2 through Q4 assumes a full quarter of operating income to account for the distortive impact of Q1 not having a full quarter given the acquisition close on January 14, 2016). Operating ROE is a useful measure as it enhances the understanding of the return on shareholders equity by highlighting the underlying profitability relative to shareholders equity excluding the effect of unrealized gains and losses on our investments and the distortive impact of acquisitions.
1Q-16 | 1Q-15 | Full Year 2015 |
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Net income |
$ | 439 | $ | 681 | $ | 2,834 | ||||||
Operating income |
$ | 1,019 | $ | 745 | $ | 3,210 | ||||||
Equity - beginning of period, as reported |
$ | 29,135 | $ | 29,587 | $ | 29,587 | ||||||
Add: weighted average impact of equity issuance (77 days) |
13,138 | |||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax |
874 | 1,851 | 1,851 | |||||||||
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Equity - beginning of period, as adjusted |
$ | 41,399 | $ | 27,736 | $ | 27,736 | ||||||
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Equity - end of period, as reported |
$ | 45,897 | $ | 29,702 | $ | 29,135 | ||||||
Less: weighted average impact of equity issuance (14 days) |
2,389 | |||||||||||
Less: unrealized gains (losses) on investments, net of deferred tax |
1,698 | 2,212 | 874 | |||||||||
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Equity - end of period, as adjusted |
$ | 44,810 | $ | 27,490 | $ | 28,261 | ||||||
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Weighted average equity, as reported |
$ | 42,479 | $ | 29,645 | $ | 29,361 | ||||||
Weighted average equity, as adjusted |
$ | 41,605 | $ | 27,613 | $ | 27,999 | ||||||
Operating ROE |
10.2 | % | 10.8 | % | 11.5 | % | ||||||
ROE |
4.7 | % | 9.2 | % | 9.7 | % |
Reconciliation Non-GAAP 2 | Page 26 |
Chubb Limited
Non-GAAP Financial Measures - 3
(in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
Operating effective tax rate
The following table presents the reconciliation of effective tax rate to the operating effective tax rate:
1Q-16 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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Tax expense, as reported |
$ | 124 | $ | 67 | $ | 132 | $ | 143 | $ | 120 | $ | 462 | ||||||||||||
Tax benefit on amortization of fair value of acquired invested assets and debt (1) |
(24 | ) | | | | | | |||||||||||||||||
Tax benefit on Chubb integration and related expenses |
(49 | ) | (18 | ) | (2 | ) | | | (20 | ) | ||||||||||||||
Tax expense (benefit) on adjusted net realized gains (losses) |
(4 | ) | (12 | ) | (6 | ) | 7 | 1 | (10 | ) | ||||||||||||||
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Tax expense, adjusted |
$ | 201 | $ | 97 | $ | 140 | $ | 136 | $ | 119 | $ | 492 | ||||||||||||
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Income before tax, as reported |
$ | 563 | $ | 750 | $ | 660 | $ | 1,085 | $ | 801 | $ | 3,296 | ||||||||||||
Less: amortization of fair value of acquired invested assets and debt (1) |
(83 | ) | | | | | | |||||||||||||||||
Less: Chubb integration and related expenses |
(155 | ) | (53 | ) | (9 | ) | | | (62 | ) | ||||||||||||||
Less: adjusted realized gains (losses) |
(394 | ) | (57 | ) | (393 | ) | 128 | (89 | ) | (411 | ) | |||||||||||||
Less: realized gains (losses) related to unconsolidated entities |
(25 | ) | (17 | ) | 25 | 33 | 26 | 67 | ||||||||||||||||
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Operating income before tax |
$ | 1,220 | $ | 877 | $ | 1,037 | $ | 924 | $ | 864 | $ | 3,702 | ||||||||||||
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Effective tax rate |
22.1 | % | 9.0 | % | 20.1 | % | 13.2 | % | 15.0 | % | 14.0 | % | ||||||||||||
Adjustment for tax impact of amortization of fair value of acquired invested assets and debt (1) |
0.9 | % | | | | | | |||||||||||||||||
Adjustment for tax impact of Chubb integration and related expenses |
2.2 | % | 1.5 | % | -0.1 | % | | | 0.3 | % | ||||||||||||||
Adjustment for tax impact of adjusted net realized gains (losses) |
-8.7 | % | 0.6 | % | -6.5 | % | 1.5 | % | -1.3 | % | -1.0 | % | ||||||||||||
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Operating effective tax rate |
16.5 | % | 11.1 | % | 13.5 | % | 14.7 | % | 13.7 | % | 13.3 | % | ||||||||||||
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(1) | Related to the acquisition of The Chubb Corporation |
P&C combined ratio
The following table presents the reconciliation of GAAP combined ratio to P&C combined ratio. The P&C combined ratio includes the impact of realized gains and losses on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing will impact underwriting results. We view gains and losses on these derivatives as part of the results of our underwriting operations.
1Q-16 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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GAAP combined ratio |
90.0 | % | 87.7 | % | 85.8 | % | 87.6 | % | 88.4 | % | 87.3 | % | ||||||||||||
Impact of gains and losses on crop derivatives |
0.0 | % | 0.0 | % | 0.1 | % | 0.1 | % | 0.0 | % | 0.1 | % | ||||||||||||
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P&C combined ratio |
90.0 | % | 87.7 | % | 85.9 | % | 87.7 | % | 88.4 | % | 87.4 | % |
Adjusted interest expense
The following table presents the reconciliation of Consolidated Interest expense on a GAAP basis to Consolidated Adjusted interest expense.
1Q-16 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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Interest expense (GAAP) |
146 | 93 | 68 | 71 | 68 | 300 | ||||||||||||||||||
Less: amortization of fair value adjustment of acquired long-term debt |
10 | |||||||||||||||||||||||
Less: pre-acquisition interest expense related to $5.3 billion senior notes |
(7 | ) | (29 | ) | | | | (29 | ) | |||||||||||||||
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Adjusted interest expense |
$ | 149 | $ | 64 | $ | 68 | $ | 71 | $ | 68 | $ | 271 | ||||||||||||
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Adjusted net investment income
The following table presents the reconciliation of Consolidated Net investment income on a GAAP basis to Consolidated Adjusted net investment income.
1Q-16 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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Net investment income (GAAP) |
674 | 532 | 549 | 562 | 551 | 2,194 | ||||||||||||||||||
Less: amortization of fair value adjustment of acquired invested assets |
93 | | | | | |||||||||||||||||||
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Adjusted net investment income |
$ | 767 | $ | 532 | $ | 549 | $ | 562 | $ | 551 | $ | 2,194 | ||||||||||||
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Reconciliation Non-GAAP 3 | Page 27 |
Chubb Limited
Non-GAAP Financial Measures - 4
(in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
Chubb integration and related expenses, net of tax
Chubb integration and related expenses is a non-GAAP financial measure and includes legal and professional fees and all other costs directly related to the integration activities of the Chubb acquisition, including the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. We exclude Chubb integration expenses related to the Chubb acquisition from operating income due to the size and complexity of this acquisition. We exclude the pre-acquisition interest expense from operating income because the operations for which the debt was issued were not part of our operating activities prior to the completion of the acquisition. Effective with the close of the Chubb acquisition (January 14, 2016), the interest on this debt was considered a cost of our operations and was included within operating income. These integration and related expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration and related expenses facilitate the comparison of our financial results to our historical operating results. The following table presents the reconciliation of Chubb integration expenses, net of tax on a GAAP basis to Chubb integration and related expenses, net of tax.
1Q-16 | 4Q-15 | 3Q-15 | 2Q-15 | 1Q-15 | Full Year 2015 |
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Chubb integration expenses, net of tax |
$ | 102 | $ | 16 | $ | 7 | $ | | $ | | $ | 23 | ||||||||||||
Add: pre-acquisition interest expense related to $5.3 billion senior notes, net of tax |
4 | 19 | | | | 19 | ||||||||||||||||||
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Chubb integration and related expenses, net of tax |
$ | 106 | $ | 35 | $ | 7 | $ | | $ | | $ | 42 | ||||||||||||
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Pro Forma
Pro forma measures presented throughout this document are prepared exclusive of purchase accounting adjustments in order to present the underlying profitability of the our insurance business. We believe that excluding these adjustments provide visibility and comparability into our results. Pro forma is defined as follows:
2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments.
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
The following presents the reconciliation of earnings per share to earnings per share, including the 14 day stub period for Q1 2016:
Reconciliation Non-GAAP 4 | Page 28 |
Chubb Limited
Non-GAAP Financial Measures - 5
(in millions of U.S. dollars, except ratios)
(Unaudited)
Regulation G - Non-GAAP Financial Measures (continued)
The following presents the reconciliation of Q1 2016 Pro Forma underwriting income excluding purchase accounting adjustments to Q1 2016 as reported underwriting results.
PGAAP adjustments | 14 Day Stub Period | |||||||||||||||||||||||||||||||||||||||
Total Consolidated Pro Forma* (Excluding PGAAP) |
Acquisition expense elimination |
UPR intangible amortization |
North America Commercial P&C Insurance |
North America Personal P&C Insurance |
Overseas General Insurance |
Global Reinsurance |
Life Insurance |
Corporate | Total Consolidated As reported |
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Q1 2016 |
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Net premiums written |
$ | 6,850 | $ | 519 | $ | 100 | $ | 215 | $ | 20 | $ | 1 | $ | | $ | 5,995 | ||||||||||||||||||||||||
Net premiums earned |
6,988 | 208 | 109 | 72 | | 2 | | 6,597 | ||||||||||||||||||||||||||||||||
Losses and loss expenses |
3,896 | 127 | 53 | 42 | | | | 3,674 | ||||||||||||||||||||||||||||||||
Policy benefits |
126 | | | | | | | 126 | ||||||||||||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets |
3 | | | | | | | 3 | ||||||||||||||||||||||||||||||||
Policy acquisition costs |
1,410 | (506 | ) | 33 | 14 | 13 | | 1 | | 843 | ||||||||||||||||||||||||||||||
Amortization of acquired UPR intangible |
| 570 | | | | | | | 570 | |||||||||||||||||||||||||||||||
Administrative expenses |
836 | 35 | 13 | 12 | | 1 | 3 | 772 | ||||||||||||||||||||||||||||||||
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Adjusted underwriting income (loss) |
$ | 717 | $ | 13 | $ | 29 | $ | 5 | $ | | $ | | $ | (3 | ) | $ | 609 | (1) |
(1) | Refer to page 5 for a reconciliation of underwriting income to net income. |
The following presents the reconciliation of Q1 2015 Pro Forma underwriting income excluding purchase accounting adjustments, as used throughout this report, to Pro Forma results calculated in accordance with SEC guidance under Article 11:
As Reported | PGAAP adjustments (1) | |||||||||||||||||||||||||||
Legacy ACE | Legacy Chubb | Accounting policy alignment (2) |
Pro forma* | Acquisition expense elimination |
UPR intangible amortization |
SEC Pro Forma 2015 (3) |
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Q1 2015 |
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Net premiums written |
$ | 4,076 | $ | 3,106 | $ | 34 | $ | 7,216 | $ | 7,216 | ||||||||||||||||||
Net premiums earned |
3,927 | 3,105 | 5 | 7,037 | 7,037 | |||||||||||||||||||||||
Losses and loss expenses |
2,122 | 1,920 | (1 | ) | 4,041 | 4,041 | ||||||||||||||||||||||
Policy benefits |
142 | | | 142 | 142 | |||||||||||||||||||||||
(Gains) losses from fair value changes in separate account assets |
(11 | ) | | | (11 | ) | (11 | ) | ||||||||||||||||||||
Policy acquisition costs |
707 | 626 | 64 | 1,397 | (543 | ) | 854 | |||||||||||||||||||||
Amortization of acquired UPR intangible |
| | | 674 | 674 | |||||||||||||||||||||||
Administrative expenses |
554 | 354 | (33 | ) | 875 | 875 | ||||||||||||||||||||||
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Underwriting income (loss) |
$ | 413 | $ | 205 | $ | (25 | ) | $ | 593 | $ | 462 |
(1) | As if acquisition occurred on January 1, 2015 |
(2) | Refer to the closing Form 8-K/A filed on March 24, 2016 for further information on these adjustments. |
(3) | Based on SEC guidance under Article 11 |
* | 2016 Pro forma results: The combined company results inclusive of the first 14 days of January 2016. The 2016 and 2015 pro forma underwriting results do not include any impact from purchase accounting adjustments. |
2015 Pro forma results: Legacy ACE plus Legacy Chubb historical results. For comparative purposes, the company reclassified certain income and expense items in the 2015 reported amounts of Legacy Chubb to be on the same basis as Legacy ACE results.
Reconciliation Non-GAAP 5 | Page 29 |
Chubb Limited
Glossary
Chubb Limited Consolidated comprises all segments including Corporate.
Operating return on equity (ROE) or ROE calculated using operating income and operating return on tangible equity: The ROE numerator includes income adjusted to exclude after-tax adjusted net realized gains (losses), Chubb integration and related expenses, and the amortization of the fair value adjustment of acquired invested assets and long-term debt. The ROE denominator includes the average shareholders equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. In addition, the denominator was adjusted to account for the weighted-average impact of the $15,527 million issuance of common shares and equity awards related to the Chubb Corp acquisition on January 14, 2016 . To annualize 2016 operating ROE, include the 14-day stub period adjustment in future quarters (i.e., Q2 through Q4 assumes a full quarter of operating income to account for the distortive impact of Q1 not having a full quarter given the acquisition close on January 14, 2016). For the operating return on tangible equity, we excluded goodwill and other intangibles from the denominator to eliminate the distortive impact of acquisitions. Operating ROE and operating return on tangible equity are useful measures as they enhance the understanding of the return on shareholders equity by highlighting the underlying profitability relative to shareholders equity excluding the effect of unrealized gains and losses on our investments and the distortive impact of acquisitions.
Book value per common share: Shareholders equity divided by the shares outstanding.
Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding life business.
Operating effective tax rate: Income tax expense excluding tax expense (benefit) on adjusted net realized gains (losses) divided by income excluding adjusted net realized gains (losses) before tax.
Tangible book value per common share: Shareholders equity less goodwill and other intangible assets divided by the shares outstanding.
Average market yield of fixed maturities: Weighted average yield to maturity of our fixed income portfolio based on the market prices of the holdings as of that date.
Average yield on invested assets: Net investment income divided by average cost of fixed maturities and other investments, and average market value of equity securities.
Tangible capital: Total capitalization less goodwill and other intangible assets.
Total capitalization: Short-term debt, long-term debt, trust preferreds, and shareholders equity.
NM: Not meaningful.
Chubb integration and related expenses, net of tax: Chubb integration expenses comprise legal and professional fees and all other costs directly related to the integration activities of the Chubb acquisition including the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015. The pre-acquisition interest expense is included in operating income subsequent to January 14th, 2016, the date of the acquisition close. Chubb integration expenses are incurred by the overall company and are therefore included in Corporate. The costs are not related to the on-going business activities of the segments and are therefore excluded from our definition of segment income.
Glossary | Page 30 |
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