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MarketScreener Homepage  >  Equities  >  Nyse  >  Chubb Limited    CB   CH0044328745

CHUBB LIMITED

(CB)
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CHUBB : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/30/2020 | 12:08pm EST

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


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

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

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

Page

  Forward-Looking Statements                                            50
  Overview                                                              52
  Financial Highlights                                                  52
  Consolidated Operating Results                                        53

  Segment Operating Results                                             59
  Net Realized and Unrealized Gains (Losses)                            71
  Effective Income Tax Rate                                             72
  Non-GAAP Reconciliation                                               73
  Other Income and Expense                                              78
  Amortization of Purchased Intangibles and Other Amortization          78
  Net Investment Income                                                 80

  Investments                                                           80
  Critical Accounting Estimates                                         84

  Unpaid Losses and Loss Expenses                                       84
  Asbestos and Environmental (A&E)                                      84
  Fair Value Measurements                                               84
  Catastrophe Management                                                85
  Natural Catastrophe Property Reinsurance Program                      86

  Liquidity                                                             87
  Capital Resources                                                     88



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                          Forward-Looking Statements


The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Any written or oral statements made by us or on
our behalf may include forward-looking statements that reflect our current views
with respect to future events and financial performance. These forward-looking
statements are subject to certain risks, uncertainties, and other factors that
could, should potential events occur, cause actual results to differ materially
from such statements. These risks, uncertainties, and other factors, which are
described in more detail elsewhere herein and in other documents we file with
the U.S. Securities and Exchange Commission (SEC), include but are not limited
to:
•losses arising out of natural or man-made catastrophes such as hurricanes,
typhoons, earthquakes, floods, climate change (including effects on weather
patterns; greenhouse gases; sea, land and air temperatures; sea levels; and rain
and snow), nuclear accidents, pandemics (including COVID-19), or terrorism which
could be affected by:
•the number of insureds and ceding companies affected;
•the amount and timing of losses actually incurred and reported by insureds;
•the impact of these losses on our reinsurers and the amount and timing of
reinsurance recoverable actually received;
•the cost of building materials and labor to reconstruct properties or to
perform environmental remediation following a catastrophic event; and
•complex coverage and regulatory issues such as whether losses occurred from
storm surge or flooding and related lawsuits;
•actions that rating agencies may take from time to time, such as financial
strength or credit ratings downgrades or placing these ratings on credit watch
negative or the equivalent;
•the ability to collect reinsurance recoverable, credit developments of
reinsurers, and any delays with respect thereto and changes in the cost,
quality, or availability of reinsurance;
•actual loss experience from insured or reinsured events and the timing of claim
payments;
•actual claims may exceed our best estimate of ultimate insurance losses
incurred through September 30, 2020 resulting directly from the COVID-19
pandemic and consequent economic crises; our COVID-19 related reserve at
September 30, 2020 could change including as a result of, among other things,
the impact of legislative or regulatory actions taken in response to COVID-19;
•the continued impact of COVID-19 and related risks, including from
shelter-in-place orders, unemployment, and the financial market volatility,
could continue to adversely impact our results, including premiums written and
investment income;
•the uncertainties of the loss-reserving and claims-settlement processes,
including the difficulties associated with assessing environmental damage and
asbestos-related latent injuries, the impact of aggregate-policy-coverage
limits, the impact of bankruptcy protection sought by various asbestos producers
and other related businesses, and the timing of loss payments;
•changes to our assessment as to whether it is more likely than not that we will
be required to sell, or have the intent to sell, available for sale fixed
maturity investments before their anticipated recovery;
•infection rates and severity of pandemics, including COVID-19, and their
effects on our business operations and claims activity, and any adverse impact
to our insureds, brokers, agents, and employees;
•developments in global financial markets, including changes in interest rates,
stock markets, and other financial markets, increased government involvement or
intervention in the financial services industry, the cost and availability of
financing, and foreign currency exchange rate fluctuations (which we refer to in
this report as foreign exchange and foreign currency exchange), which could
affect our statement of operations, investment portfolio, financial condition,
and financing plans;
•general economic and business conditions resulting from volatility in the stock
and credit markets and the depth and duration of potential recession;
•global political conditions, the occurrence of any terrorist attacks, including
any nuclear, radiological, biological, or chemical events, or the outbreak and
effects of war, and possible business disruption or economic contraction that
may result from such events;
•the potential impact of the United Kingdom's vote to withdraw from the European
Union, including political, regulatory, social, and economic uncertainty and
market and exchange rate volatility;

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•judicial decisions and rulings, new theories of liability, legal tactics, and
settlement terms;
•the effects of public company bankruptcies and/or accounting restatements, as
well as disclosures by and investigations of public companies relating to
possible accounting irregularities, and other corporate governance issues,
including the effects of such events on:
•the capital markets;
•the markets for directors and officers (D&O) and errors and omissions (E&O)
insurance; and
•claims and litigation arising out of such disclosures or practices by other
companies;
•uncertainties relating to governmental, legislative and regulatory policies,
developments, actions, investigations, and treaties, which, among other things,
could subject us to insurance regulation or taxation in additional jurisdictions
or affect our current operations;
•the effects of data privacy or cyber laws or regulation on our current or
future business;
•the actual amount of new and renewal business, market acceptance of our
products, and risks associated with the introduction of new products and
services and entering new markets, including regulatory constraints on exit
strategies;
•the competitive environment in which we operate, including trends in pricing or
in policy terms and conditions, which may differ from our projections and
changes in market conditions that could render our business strategies
ineffective or obsolete;
•acquisitions made by us performing differently than expected, our failure to
realize anticipated expense-related efficiencies or growth from acquisitions,
the impact of acquisitions on our pre-existing organization, or announced
acquisitions not closing;
•risks and uncertainties relating to our planned purchases of additional
interests in Huatai Insurance Group Company Limited (Huatai Group), including
our ability to receive Chinese insurance regulatory approval and complete the
purchases;
•risks associated with being a Swiss corporation, including reduced flexibility
with respect to certain aspects of capital management and the potential for
additional regulatory burdens;
•the potential impact from government-mandated insurance coverage for acts of
terrorism;
•the availability of borrowings and letters of credit under our credit
facilities;
•the adequacy of collateral supporting funded high deductible programs;
•changes in the distribution or placement of risks due to increased
consolidation of insurance and reinsurance brokers;
•material differences between actual and expected assessments for guaranty funds
and mandatory pooling arrangements;
•the effects of investigations into market practices in the property and
casualty (P&C) industry;
•changing rates of inflation and other economic conditions, for example,
recession;
•the amount of dividends received from subsidiaries;
•loss of the services of any of our executive officers without suitable
replacements being recruited in a reasonable time frame;
•the ability of our technology resources, including information systems and
security, to perform as anticipated such as with respect to preventing material
information technology failures or third-party infiltrations or hacking
resulting in consequences adverse to Chubb or its customers or partners;
•the ability of our company to increase use of data analytics and technology as
part of our business strategy and adapt to new technologies; and
•management's response to these factors and actual events (including, but not
limited to, those described above).
The words "believe," "anticipate," "estimate," "project," "should," "plan,"
"expect," "intend," "hope," "feel," "foresee," "will likely result," or "will
continue," and variations thereof and similar expressions, identify
forward-looking statements. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. We
undertake no obligation to publicly update or review any forward-looking
statements, whether as a result of new information, future events or otherwise.

                                                                            

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                                   Overview


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

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


•Pre-tax net catastrophe losses were $925 million, primarily attributable to
severe weather-related events globally and wildfires. There were no changes to
the previously reported aggregate COVID-19 losses from June 30, 2020.

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


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

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

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






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Consolidated Operating Results - Three and Nine Months Ended September 30, 2020 and 2019



                                                       Three Months Ended                                                 Nine Months Ended
                                                             September 30                     % Change                         September 30                  % Change
(in millions of U.S. dollars, except
for percentages)                              2020                2019                   Q-20 vs. Q-19            2020              2019            YTD-20 vs. YTD-19
Net premiums written                    $    9,078$ 8,622                          5.3  %       $  25,410$ 24,278                       4.7  %
Net premiums earned                          8,765               8,327                          5.3  %          24,687            23,355                       5.7  %
Net investment income                          840                 873                         (3.8) %           2,528             2,568                      (1.6) %
Net realized gains (losses)                   (141)               (155)                        (8.8) %          (1,069)             (475)                    125.1  %
Total revenues                               9,464               9,045                          4.6  %          26,146            25,448                       2.7  %
Losses and loss expenses                     5,835               5,052                         15.5  %          16,897            13,865                      21.9  %
Policy benefits                                198                 158                         25.7  %             550               515                       6.9  %
Policy acquisition costs                     1,645               1,603                          2.6  %           4,853             4,611                       5.2  %
Administrative expenses                        733                 752                         (2.6) %           2,201             2,220                      (0.9) %
Interest expense                               130                 138                         (5.5) %             390               418                      (6.5) %
Other (income) expense                        (485)                (57)                             NM            (372)             (326)                     14.2  %
Amortization of purchased intangibles           72                  76                         (4.4) %             217               229                      (5.0) %
Chubb integration expenses                       -                   2                              NM               -                 9                           NM
Total expenses                               8,128               7,724                          5.2  %          24,736            21,541                      14.8  %
Income before income tax                     1,336               1,321                          1.2  %           1,410             3,907                     (63.9) %
Income tax expense                             142                 230                        (38.0) %             295               626                     (52.8) %
Net income                              $    1,194$ 1,091                          9.4  %       $   1,115$  3,281                     (66.0) %
Net premiums written - constant dollars
(1)                                                                                             6.0  %                                                         5.6  %


NM - not meaningful
(1)   On a constant-dollar basis. Amounts are calculated by translating prior
period results using the same local currency exchange rates as the comparable
current period.

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

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

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

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


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

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

•Net premiums written in our Global Reinsurance segment increased $40 million
and $66 million, for the three and nine months ended September 30, 2020,
respectively, primarily driven by new business in casualty lines, rate increases
in property catastrophe lines and reinstatement premiums on catastrophe losses,
partially offset by an increase in retrocessions. In addition, the prior year
had unfavorable premium adjustments which lowered premium in 2019.

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

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Net Premiums Written By Line of Business

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

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

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

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

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


(1)On a constant-dollar basis. Amounts are calculated by translating prior
period results using the same local currency exchange rates as the comparable
current period.
(2)Commercial multiple peril represents retail package business (property and
general liability).
(3)For purposes of this schedule only, A&H results from our Combined North
America and International businesses, normally included in the Life Insurance
and Overseas General Insurance segments, respectively, as well as the A&H
results of our North America Commercial P&C segment, are included in Global A&H
lines above.

The increase in net premiums written for the three and nine months ended
September 30, 2020 reflects growth across most lines of business, partially
offset by the adverse impact of the economic contraction resulting from the
COVID-19 pandemic.
•The growth in commercial casualty was due to new business, positive rate
increases and growth in Asia and Europe, partially offset by the adverse impact
of the COVID-19 pandemic, including $58 million of exposure adjustments on
in-force policies which depressed growth by 1.4 percentage points for the nine
months ended September 30, 2020. The nine months ended September 30, 2020 also
benefited from the year-over-year increase in large structured transactions in
North America.
•Workers' compensation was adversely impacted by market conditions and by the
adverse impact of the economic contraction resulting from COVID-19 pandemic. For
the nine months ended September 30, 2020, the decrease included $121 million of
exposure adjustments on in-force policies which depressed growth by 7.9
percentage points.
•The increase in professional liability was due to new business and positive
rate increases primarily in North America and Europe.
•Surety decreased in North America and Latin America due to market conditions
and the adverse impact of the economic contraction resulting from the COVID-19
pandemic.
•Commercial multiple peril increased due to higher renewal retention and
positive rate increases in North America. For the nine months ended September
30, 2020, the increase was partially offset by the adverse impact of the
economic contraction resulting from the COVID-19 pandemic, including $5 million
of exposure adjustments on in-force policies which depressed growth by 0.8
percentage points.
•Property and other short-tail lines increased due to new business and positive
rate increases primarily in North America and Europe.

                                                                            

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•Personal lines increased on a constant-dollar basis primarily due to rate
increases and strong retention in North America, as well as growth in Europe. In
addition, North America benefited from the favorable year-over-year impact in
reinstatement premiums. The increase was partially offset by the impact of the
COVID-19 pandemic, which caused declines in automobile and homeowners business
in Latin America.
•Global A&H lines decreased due to declines in Asia and Latin America,
principally from less travel volume due to COVID-19 pandemic, and in our North
American Combined Insurance supplemental A&H program.
•The increase in Life was primarily driven by growth in Latin America,
principally driven by our expanded presence in Chile, and Asian international
life operations.
For additional information on net premiums written, refer to the segment results
discussions.

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

P&C Combined Ratio
In evaluating our segments excluding Life Insurance financial performance, we
use the P&C combined ratio, the loss and loss expense ratio, the policy
acquisition cost ratio, and the administrative expense ratio. We calculate these
ratios by dividing the respective expense amounts by net premiums earned. We do
not calculate these ratios for the Life Insurance segment as we do not use these
measures to monitor or manage that segment. The P&C combined ratio is determined
by adding the loss and loss expense ratio, the policy acquisition cost ratio,
and the administrative expense ratio. A P&C combined ratio under 100 percent
indicates underwriting income, and a combined ratio exceeding 100 percent
indicates underwriting loss.
                                                                            Three Months Ended                        Nine Months Ended
                                                                                  September 30                             September 30
                                                                      2020                2019                 2020                2019
Loss and loss expense ratio                                        69.2  %             63.1  %              71.5  %             61.5  %
Policy acquisition cost ratio                                      18.0  %             18.4  %              18.8  %             19.2  %
Administrative expense ratio                                        8.0  %              8.7  %               8.6  %              9.2  %
P&C Combined ratio                                                 95.2  %             90.2  %              98.9  %             89.9  %



The loss and loss expense ratio increased 6.1 percentage points and 10.0
percentage points for the three and nine months ended September 30, 2020,
respectively, primarily due to higher catastrophe losses and lower prior period
development, partially offset by a decrease in the underlying loss ratio
reflecting earned rate increases outpacing loss cost trends, better underlying
claims experience, as well as lower projected crop losses in the current year.
Included in catastrophe losses for the nine months ended September 30, 2020 were
losses related to COVID-19 pandemic claims.

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

The administrative expense ratio decreased 0.7 percentage points and 0.6
percentage points for the three and nine months ended September 30, 2020,
respectively, primarily due to lower business expenses from continued expense
management control, including during the COVID-19 pandemic, and the favorable
impact of higher net premiums earned.

Catastrophe Losses and Prior Period Development
Catastrophe losses exclude reinstatement premiums which are additional premiums
paid on certain reinsurance agreements in order to reinstate coverage that had
been exhausted by loss occurrences. The reinstatement premium amount is
typically a pro rata portion of the original ceded premium paid based on how
much of the reinsurance limit had been exhausted. Prior period development is
net of related adjustments which typically relate to either profit commission
reserves or policyholder dividend reserves based on actual claim experience that
develops after the policy period ends. The expense adjustments correlate to the
prior period loss development on these same policies. Refer to the Non-GAAP
Reconciliation section for further information on reinstatement premiums on
catastrophe losses and adjustments to prior period development.

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

(1) Three and nine months ended September 30, 2020 excludes reinstatement premiums collected (expensed) of $7 million and $(13) million, respectively.


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

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



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

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

Pre-tax net favorable prior period development for the three months ended
September 30, 2020 was $146 million, including $35 million adverse development
related to legacy environmental exposures. The remaining favorable development
of $181 million comprises $312 million of favorable development from long-tail
lines, principally from accident years 2016 and prior, and adverse development
of $131 million in short-tail lines.

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

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

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

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

Refer to the prior period development discussion in Footnote 6 to the Consolidated Financial Statements for additional information.


Current Accident Year (CAY) Loss Ratio excluding CATs and CAY P&C Combined Ratio
excluding CATs
The following table presents the impact of catastrophe losses and prior period
development on our loss and loss expense ratio. Refer to the Non-GAAP
Reconciliation section for additional information.
                                                                         Three Months Ended                        Nine Months Ended
                                                                               September 30                             September 30
                                                                   2020                2019                 2020                2019

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



The CAY loss ratio excluding CATs decreased 2.7 percentage points and 1.2 percentage points for the three and nine months ended September 30, 2020, respectively, primarily due to a decrease in the underlying loss ratio reflecting earned rate increases outpacing loss cost trends and better underlying claims experience as well as lower projected crop losses in the current year.

CAY P&C Combined Ratio excluding Catastrophe Losses

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



Policy benefits
Policy benefits represent losses on contracts classified as long-duration and
generally include accident and supplemental health products, term and whole life
products, endowment products, and annuities. Refer to the Life Insurance segment
operating results section for further discussion.

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

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


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

Segment Operating Results - Three and Nine Months Ended September 30, 2020 and 2019



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


North America Commercial P&C Insurance


The North America Commercial P&C Insurance segment comprises operations that
provide property and casualty (P&C) insurance and services to large, middle
market, and small commercial businesses in the U.S., Canada, and Bermuda. This
segment includes our North America Major Accounts and Specialty Insurance
division (large corporate accounts and wholesale business), and the North
America Commercial Insurance division (principally middle market and small
commercial accounts).
                                                       Three Months Ended                                                   Nine Months Ended
                                                             September 30                         % Change                       September 30                   % Change
(in millions of U.S. dollars, except for
percentages)                                    2020              2019                       Q-20 vs. Q-19           2020             2019             YTD-20 vs. YTD-19
Net premiums written                        $   3,778$ 3,452                              9.4  %       $ 10,750$ 9,937                        8.2  %
Net premiums earned                             3,456            3,185                              8.5  %         10,427            9,660                        7.9  %
Losses and loss expenses                        2,444            2,051                             19.2  %          8,123            6,238                       30.2  %
Policy acquisition costs                          489              459                              6.6  %          1,452            1,377                        5.5  %
Administrative expenses                           243              256                             (5.2) %            751              755                       (0.5) %
Underwriting income                               280              419                            (33.3) %            101            1,290                      (92.2) %
Net investment income                             510              538                             (4.9) %          1,544            1,584              

(2.5) %


Other (income) expense                              7                5                             55.7  %             19               17                       12.3  %

Segment income                              $     783$   952                            (17.7) %       $  1,626$ 2,857                      (43.1) %
Loss and loss expense ratio                      70.7  %          64.4  %                    6.3       pts           77.9  %          64.6  %             13.3       pts
Policy acquisition cost ratio                    14.2  %          14.4  %                   (0.2)      pts           13.9  %          14.2  %             (0.3)      pts
Administrative expense ratio                      7.0  %           8.1  %                   (1.1)      pts            7.2  %           7.8  %             (0.6)      pts
Combined ratio                                   91.9  %          86.9  %                    5.0       pts           99.0  %          86.6  %             12.4       pts



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

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

Net premiums earned increased $271 million, or 8.5 percent, and $767 million, or
7.9 percent, for the three and nine months ended September 30, 2020,
respectively, reflecting the growth in net premiums written. Growth for the
three and nine months ended September 30, 2020 was adversely impacted by the
impact of the COVID-19 pandemic, including $39 million and $134 million,
respectively, of exposure adjustments on in-force policies written in the second
quarter of 2020.


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Combined Ratio
The loss and loss expense ratio increased 6.3 percentage points and 13.3
percentage points for the three and nine months ended September 30, 2020,
respectively, primarily due to higher catastrophe losses, partially offset by
higher favorable prior period development and a decrease in the underlying loss
ratio reflecting earned rate increases outpacing loss cost trends. In addition,
the higher catastrophe losses for the nine months ended September 30, 2020
included losses related to COVID-19 pandemic claims.

The administrative expense ratio decreased 1.1 percentage points and 0.6
percentage points for the three and nine months ended September 30, 2020,
respectively, primarily due to lower business expenses from continued expense
management control, including during the COVID-19 pandemic. These decreases were
partially offset by lower net profit from our third-party claims administration
business, ESIS, and normal inflationary increases.

Catastrophe Losses and Prior Period Development

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

Catastrophe losses (excludes reinstatement premiums) $ 447$ 88$ 1,835

              $ 319
Favorable prior period development                      $      200$ 109$       451$ 425



Catastrophe losses through September 30, 2020 and 2019 were primarily from the
following events:
•2020: COVID-19 pandemic of $973 million, civil unrest in the U.S., and natural
catastrophes including Nashville, Tennessee tornado, Hurricane Laura, Hurricane
Sally, Tropical Storm Isaias, Midwest derecho, U.S. wildfires, and other severe
weather-related events in the U.S.
•2019: Winter-related storms and other severe weather-related events in the
U.S., Hurricane Dorian and Tropical Storm Imelda

Refer to the prior period development discussion in Note 6 to the Consolidated
Financial Statements for additional information.
CAY Loss Ratio excluding Catastrophe Losses
                                                                        Three Months Ended                        Nine Months Ended
                                                                              September 30                             September 30
                                                                   2020               2019                 2020                2019
Loss and loss expense ratio                                     70.7  %    
       64.4  %              77.9  %             64.6  %
Catastrophe losses                                             (12.9) %            (2.8) %             (17.6) %             (3.3) %
Prior period development                                         6.0  %             3.9  %               4.4  %              4.5  %
CAY loss ratio excluding catastrophe losses                     63.8  %            65.5  %              64.7  %             65.8  %



The CAY loss ratio excluding catastrophe losses decreased 1.7 percentage points
and 1.1 percentage points for the three and nine months ended September 30,
2020, respectively, primarily due to a decrease in the underlying loss ratio
reflecting earned rate increases outpacing loss cost trends.


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North America Personal P&C Insurance

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

                                                       Three Months Ended                                                   Nine Months Ended
                                                             September 30                         % Change                       September 30                   % Change
(in millions of U.S. dollars, except for
percentages)                                    2020              2019                       Q-20 vs. Q-19           2020             2019             YTD-20 vs. YTD-19
Net premiums written                        $   1,285$ 1,251                              2.8  %       $  3,719$ 3,616                        2.9  %
Net premiums earned                             1,231            1,187                              3.8  %          3,623            3,509                        3.3  %
Losses and loss expenses                          961              674                             42.5  %          2,406            2,178                       10.4  %
Policy acquisition costs                          248              240                              3.5  %            724              708                        2.3  %
Administrative expenses                            65               72                             (8.8) %            199              211                       (5.4) %
Underwriting income (loss)                        (43)             201                                  NM            294              412                      (28.7) %
Net investment income                              64               66                             (2.1) %            195              194                        1.0  %

Other (income) expense                              1                1                                -                 4                2                      118.1  %
Amortization of purchased intangibles               2                3                             (5.0) %              8                9                       (5.0) %

Segment income                              $      18$   263                            (93.4) %       $    477$   595                      (19.9) %
Loss and loss expense ratio                      78.1  %          56.9  %                   21.2       pts           66.4  %          62.1  %              4.3       pts
Policy acquisition cost ratio                    20.1  %          20.2  %                   (0.1)      pts           20.0  %          20.2  %             (0.2)      pts
Administrative expense ratio                      5.3  %           6.0  %                   (0.7)      pts            5.5  %           6.0  %             (0.5)      pts
Combined ratio                                  103.5  %          83.1  %                   20.4       pts           91.9  %          88.3  %              3.6       pts


NM - not meaningful

Premiums
Net premiums written increased $34 million, or 2.8 percent, and $103 million, or
2.9 percent, for the three and nine months ended September 30, 2020,
respectively, primarily due to rate increases and strong account retention
across most lines. In addition, net premiums written also increased due to the
favorable year-over-year impact in reinstatement premiums of $7 million and $4
million for the three and nine months ended September 30, 2020, respectively.
Growth for the three and nine months ended September 30, 2020 was partially
offset by $4 million and $11 million, respectively, in lower automobile premiums
as a result of reduced exposures related to the conditions caused by the
COVID-19 pandemic.

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


Combined Ratio
The loss and loss expense ratio increased 21.2 percentage points and 4.3
percentage points for the three and nine months ended September 30, 2020,
respectively, primarily due to higher catastrophe losses and unfavorable prior
period development in the current year compared to favorable prior period
development in the prior year, partially offset by a decrease in the underlying
loss ratio reflecting better underlying claims experience.

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

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


                                                                            

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Catastrophe Losses and Prior Period Development

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

Catastrophe losses (excludes reinstatement premiums) $ 305 $

  83          $     435$  329
Favorable (unfavorable) prior period development      $      (48)         $ 

62 $ (48)$ 88



Catastrophe losses through September 30, 2020 and 2019 were primarily from the
following events:
•2020: U.S. wildfires, Tropical Storm Isaias, Midwest derecho, Hurricane Sally,
Hurricane Laura, and other severe weather-related events in the U.S.
•2019: Winter-related storms and other severe weather-related events in the U.S.
and Hurricane Dorian

Refer to the prior period development discussion in Note 6 to the Consolidated
Financial Statements for additional information.
CAY Loss Ratio excluding Catastrophe Losses
                                                                        Three Months Ended                        Nine Months Ended
                                                                              September 30                             September 30
                                                                   2020               2019                 2020                2019
Loss and loss expense ratio                                     78.1  %    
       56.9  %              66.4  %             62.1  %
Catastrophe losses                                             (24.7) %            (7.0) %             (12.0) %             (9.4) %
Prior period development                                        (4.2) %             5.2  %              (1.4) %              2.5  %
CAY loss ratio excluding catastrophe losses                     49.2  %            55.1  %              53.0  %             55.2  %



The CAY loss ratio excluding catastrophe losses decreased 5.9 percentage points
and 2.2 percentage points for the three and nine months ended September 30,
2020, respectively, primarily due to a decrease in the underlying loss ratio
reflecting better underlying claims experience.


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North America Agricultural Insurance


The North America Agricultural Insurance segment comprises our North American
based businesses that provide a variety of coverages in the U.S. and Canada
including crop insurance, primarily Multiple Peril Crop Insurance (MPCI) and
crop-hail through Rain and Hail Insurance Service, Inc. (Rain and Hail) as well
as farm and ranch and specialty P&C commercial insurance products and services
through our Chubb Agribusiness unit.
                                                          Three Months Ended                                                   Nine Months Ended
                                                                September 30                         % Change                       September 30                   % Change
(in millions of U.S. dollars, except for
percentages)                                    2020                  2019                      Q-20 vs. Q-19           2020             2019             YTD-20 vs. YTD-19
Net premiums written                        $    986$ 938                              5.0  %       $  1,604$ 1,534                        4.5  %
Net premiums earned                              971                  941                              3.2  %          1,441            1,374                        4.9  %
Losses and loss expenses                         845                  880                             (3.9) %          1,223            1,163                        5.2  %
Policy acquisition costs                          56                   56                                -                96               90                        6.2  %
Administrative expenses                            5                    4                              6.9  %             12                9                       33.3  %
Underwriting income                               65                    1                                  NM            110              112                       (1.1) %
Net investment income                              7                    8                            (15.2) %             23               22                        5.5  %
Other (income) expense                             -                    -                                -                 1                1                          -
Amortization of purchased intangibles              7                    7                                -                20               21                       (2.1) %
Segment income                              $     65$   2                                  NM       $    112$   112                        0.6  %
Loss and loss expense ratio                     87.1   %             93.5  %                   (6.4)      pts           84.9  %          84.7  %              0.2    pts
Policy acquisition cost ratio                    5.8   %              6.0  %                   (0.2)      pts            6.6  %           6.6  %                -    pts
Administrative expense ratio                     0.4   %              0.4  %                      -       pts            0.8  %           0.6  %              0.2    pts
Combined ratio                                  93.3   %             99.9  %                   (6.6)      pts           92.3  %          91.9  %              0.4    pts


NM - not meaningful

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

Net premiums earned increased $30 million, or 3.2 percent, and $67 million, or
4.9 percent, respectively, for the three and nine months ended September 30,
2020, reflecting the growth in net premiums written described above.

Combined Ratio
The loss and loss expense ratio decreased 6.4 percentage points for the three
months ended September 30, 2020 primarily due to lower projected crop losses in
the current year and the favorable year-over-year impact of our crop
derivatives, partially offset by higher underlying losses in our Chubb
Agribusiness unit. Additionally, the prior year included the adverse impact of
weather conditions. The loss and loss expense ratio increased 0.2 percentage
points for the nine months ended September 30, 2020 primarily due to our MPCI
business, reflecting unfavorable prior period development, which were partially
offset by lower crop losses in the current year and the favorable year-over-year
impact of our crop derivatives; as well as in our Chubb Agribusiness unit,
reflecting higher catastrophe losses, and in our Rain and Hail business, due to
higher underlying losses.

The policy acquisition cost ratio decreased 0.2 percentage points for the three
months ended September 30, 2020 primarily due to the favorable impact of higher
net premiums earned in the current year. The policy acquisition cost ratio was
flat for the nine months ended September 30, 2020.


                                                                            

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

Catastrophe Losses and Prior Period Development

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

Catastrophe losses (excludes reinstatement premiums) $ 10$ 3$ 24$ 7 Favorable (unfavorable) prior period development $ (18)$ (18)$ (4)$ 43




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

Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information.


For the three months ended September 30, 2020, net unfavorable prior period
development was $18 million. For the nine months ended September 30, 2020, net
unfavorable prior period development was $4 million which included $1 million of
incurred losses due to higher than expected MPCI losses for the 2019 crop year
and a $3 million decrease in net premiums earned related to the MPCI profit and
loss calculation formula. For the three months ended September 30, 2019, net
unfavorable prior period development was $18 million. For the nine months
ended September 30, 2019, net favorable prior period development was $43
million which included $72 million of favorable incurred losses and $3
million of lower acquisition costs due to lower than expected MPCI losses for
the 2018 crop year, partially offset by a $32 million decrease in net premiums
earned related to the MPCI profit and loss calculation formula.
CAY Loss Ratio excluding Catastrophe Losses
                                                                        Three Months Ended                        Nine Months Ended
                                                                              September 30                             September 30
                                                                   2020               2019                 2020                2019
Loss and loss expense ratio                                     87.1  %    
       93.5  %              84.9  %             84.7  %
Catastrophe losses                                              (1.0) %            (0.3) %              (1.7) %             (0.5) %
Prior period development                                        (1.9) %            (1.9) %              (0.2) %              3.2  %

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



The CAY loss ratio excluding catastrophe losses decreased 7.1 percentage points
and 4.4 percentage points for the three and nine months ended September 30,
2020, respectively, principally due to lower projected crop losses in the
current year and the favorable year-over-year impact of our crop derivatives,
partially offset by higher underlying losses in our Rain and Hail business.


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Overseas General InsuranceOverseas General Insurance segment comprises Chubb International and Chubb
Global Markets (CGM). Chubb International comprises our international commercial
P&C traditional and specialty lines serving large corporations, middle market
and small customers; A&H and traditional and specialty personal lines business
serving local territories outside the U.S., Bermuda, and Canada. CGM, our
London-based international commercial P&C excess and surplus lines business,
includes Lloyd's of London (Lloyd's) Syndicate 2488. Chubb provides funds at
Lloyd's to support underwriting by Syndicate 2488 which is managed by Chubb
Underwriting Agencies Limited.
                                                         Three Months Ended                                             Nine Months Ended
                                                               September 30                         % Change                 September 30                  % Change
(in millions of U.S. dollars, except for
percentages)                                       2020             2019                       Q-20 vs. Q-19     2020             2019            YTD-20 vs. YTD-19
Net premiums written                          $   2,238$ 2,228                              0.5  % $  6,857$ 6,881                      (0.3) %
Net premiums earned                               2,337            2,256                              3.6  %    6,838            6,595                       3.7  %
Losses and loss expenses                          1,192            1,154                              3.4  %    3,935            3,385                      16.3  %
Policy acquisition costs                            637              630                              1.2  %    1,903            1,855                       2.6  %
Administrative expenses                             260              257                              1.2  %      759              771                      (1.6) %
Underwriting income                                 248              215                             15.2  %      241              584                     (58.8) %
Net investment income                               130              147                            (11.5) %      396              444                     (10.7) %
Other (income) expense                                1                2                            (70.4) %       10               11                     (10.5) %
Amortization of purchased intangibles                10               11                                -          33               34                      (1.9) %
Segment income                                $     367$   349                              5.1  % $    594$   983                     (39.6) %
Net premiums written - constant dollars (1)                                                           2.8  %                                                 2.7  %

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



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



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


(1)  On a constant-dollar basis, amounts are calculated by translating prior
period results using the same local currency exchange rates as the comparable
current period.
(2)  Comprises Combined International, Eurasia and Africa region, and other
international.

                                                                            

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

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

Combined Ratio
The loss and loss expense ratio was relatively flat for the three months ended
September 30, 2020. The loss and loss expense ratio increased 6.3 percentage
points for the nine months ended September 30, 2020 primarily due to higher
catastrophe losses, primarily related to the COVID-19 pandemic, along with lower
premiums earned from A&H lines in Latin America and Asia, which have a lower
loss ratio. These increases were partially offset by higher favorable prior
period development.

The policy acquisition cost ratio decreased 0.7 percentage points and 0.3 percentage points for the three and nine months ended September 30, 2020, respectively, primarily due to a shift in mix of business from A&H lines towards P&C lines, which have a lower acquisition cost ratio.


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

Catastrophe Losses and Prior Period Development

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

$ 100$ 49




Catastrophe losses through September 30, 2020 and 2019 were primarily from the
following events:
•2020: COVID-19 pandemic of $373 million, storms in Australia, Australia
wildfires, Hurricane Laura, Hurricane Sally, Tropical Storm Isaias, and other
weather-related events
•2019: Typhoon Faxai, Hurricane Dorian, storms in Australia, and other
international weather-related events

Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information.

CAY Loss Ratio excluding Catastrophe Losses

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



The CAY loss ratio excluding catastrophe losses decreased 1.2 percentage points
and 0.4 percentage points for the three and nine months ended September 30,
2020, respectively, primarily due to a decrease in the underlying loss ratio
from earned rate changes modestly above loss trends and a benefit from lower
current accident year losses resulting from a decrease in exposures

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due to the COVID-19 pandemic, partially offset by lower premiums earned from A&H lines in Latin America and Asia, which have a lower loss ratio.

Global Reinsurance


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

                                                     Three Months Ended                                          Nine Months Ended
                                                           September 30                   % Change                    September 30                        % Change
(in millions of U.S. dollars, except
for percentages)                           2020                 2019                 Q-20 vs. Q-19     2020                2019                  YTD-20 vs. YTD-19
Net premiums written                   $    181$ 141                       28.4  % $    606$ 540                            12.2  %
Net premiums earned                         171                  160                        6.7  %      520                 487                             6.8  %
Losses and loss expenses                    154                   79                       92.6  %      314                 245                            28.0  %
Policy acquisition costs                     40                   42                       (3.9) %      127                 127                               -
Administrative expenses                       9                    9                          -          28                  26                             6.6  %
Underwriting income (loss)                  (32)                  30                            NM       51                  89                           (42.2) %
Net investment income                        85                   71                       18.5  %      214                 206                             3.3  %
Other (income) expense                        -                    -                          -           1                   -                                 NM

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

Loss and loss expense ratio                89.6   %             49.6  %    
        40.0       pts     60.3   %            50.3  %                  10.0       pts
Policy acquisition cost ratio              23.5   %             26.2  %             (2.7)      pts     24.5   %            26.1  %                  (1.6)      pts
Administrative expense ratio                5.2   %              5.3  %             (0.1)      pts      5.3   %             5.3  %                     -       pts
Combined ratio                            118.3   %             81.1  %             37.2       pts     90.1   %            81.7  %                   8.4       pts



NM - not meaningful
(1) On a constant-dollar basis. Amounts are calculated by translating prior
period results using the same local currency rates as the comparable current
period.

Premiums

For the three and nine months ended September 30, 2020 net premiums written
increased $40 million and $66 million, respectively, primarily driven by new
business in casualty lines, rate increases in property catastrophe lines and
reinstatement premiums on catastrophe losses, partially offset by an increase in
retrocessions. In addition, the prior year had unfavorable premium adjustments
which lowered premium in 2019.

For the three and nine months ended September 30, 2020 net premiums earned
increased $11 million and $33 million, respectively, principally reflecting the
increase in net premiums written described above.
Combined Ratio
The loss and loss expense ratio increased 40.0 percentage points and 10.0
percentage points for the three and nine months ended September 30, 2020,
respectively, primarily due to higher catastrophe losses and lower favorable
prior period development, partially offset by a shift in mix of business towards
lines which have a lower loss ratio.

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

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Catastrophe Losses and Prior Period Development

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

$ 29$ 33




Catastrophe losses through September 30, 2020 and 2019 were primarily from the
following events:
•2020: COVID-19 pandemic claims of $10 million, Hurricane Laura, Hurricane
Sally, Tropical Storm Isaias, and other severe weather-related events in Canada
and the U.S.
•2019: Hurricane Dorian and various U.S. and Japanese severe weather-related
events

Refer to the prior period development discussion in Note 6 to the Consolidated Financial Statements for additional information.

CAY Loss Ratio excluding Catastrophe Losses

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



The CAY loss ratio excluding catastrophe losses decreased 0.2 percentage points and 1.0 percentage points for the three and nine months ended September 30, 2020, respectively, primarily from a shift in mix of business towards catastrophe lines which have a lower loss ratio.

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Life Insurance

The Life Insurance segment comprises Chubb's international life operations,
Chubb Tempest Life Re (Chubb Life Re), and the North American supplemental A&H
and life business of Combined Insurance. We assess the performance of our life
business based on Life Insurance underwriting income, which includes Net
investment income and (Gains) losses from fair value changes in separate account
assets that do not qualify for separate account reporting under GAAP.
                                                      Three Months Ended                                               Nine Months Ended
                                                            September 30                   % Change                         September 30                % Change
(in millions of U.S. dollars, except for
percentages)                                     2020            2019                 Q-20 vs. Q-19             2020             2019          YTD-20 vs. YTD-19
Net premiums written                       $      610$  612                       (0.4) %       $    1,874$ 1,770                     5.9  %
Net premiums earned                               599             598                          -               1,838            1,730                     6.2  %
Losses and loss expenses                          183             190                        4.7  %              556              581                    (4.6) %
Policy benefits                                   174             165                        6.1  %              542              495                     9.9  %
Policy acquisition costs                          175             176                       (1.3) %              551              454                    21.2  %
Administrative expenses                            80              80                          -                 238              237                     0.5  %
Net investment income                              95              92                        3.3  %              285              278                     2.7  %
Life Insurance underwriting income                 82              79                        5.4  %              236              241                    (1.8) %
Other (income) expense                            (23)            (17)                      34.9  %              (52)             (37)                   40.7  %
Amortization of purchased intangibles               1               1                          -                   3                2                    50.0  %
Segment income                             $      104$   95                       10.0  %       $      285$   276                     3.3  %
Net premiums written - constant dollars                                                      0.2  %                                                       6.5  %
(1)

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

Premiums

For the three months ended September 30, 2020, net premiums written decreased $2
million, and increased $1 million on a constant-dollar basis, primarily due to
growth in our international life operations of 9.4 percent, principally in Latin
America driven by our expanded presence in Chile. The growth in international
life operations was offset by declines in North America Combined Insurance
business of 6.9 percent, including the adverse impact of the COVID-19 pandemic.
For the nine months ended September 30, 2020, net premiums written increased
$104 million, or $115 million on a constant-dollar basis, primarily reflecting
growth in international life operations of 22.4 percent, principally in Latin
America and Asia, partially offset by a decline in our North America Combined
Insurance business of 5.2 percent.

Deposits

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


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

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


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Life Insurance underwriting income and Segment income
Life Insurance underwriting income increased $3 million for the three months
ended September 30, 2020 primarily due to higher net investment income. Life
Insurance underwriting income decreased $5 million for the nine months ended
September 30, 2020 primarily due to the impact of COVID-19 related catastrophe
losses and a decrease in underwriting income in our variable annuity business,
which continues to decline as no new life reinsurance business is currently
being written. Additionally, segment income included other income of $23 million
and $52 million for the three and nine months ended September 30, 2020,
respectively, principally due to our share of net income from Huatai Life, our
partially-owned life insurance entity in China.

Corporate


Corporate results primarily include the results of our non-insurance companies,
income and expenses not attributable to reportable segments and loss and loss
expenses of asbestos and environmental (A&E) liabilities and certain other
non-A&E run-off exposures.
                                                           Three Months Ended                                               Nine Months Ended
                                                                 September 30                   % Change                         September 30                 % Change
(in millions of U.S. dollars, except for
percentages)                                     2020                 2019                 Q-20 vs. Q-19            2020                 2019        YTD-20 vs. YTD-19
Losses and loss expenses                   $       55$   38                       47.1  %       $     342$     83                          NM
Administrative expenses                            71                   74                       (5.1) %             214               211                      1.1  %
Underwriting loss                                 126                  112                       12.2  %             556               294                     89.2  %
Net investment income (loss)                      (19)                 (28)                     (30.2) %             (65)              (98)                   (32.6) %
Interest expense                                  130                  138                       (5.5) %             390               418                     (6.5) %
Net realized gains (losses)                      (142)                (141)                       0.9  %          (1,067)             (467)                   128.2  %
Other (income) expense                           (415)                 (34)                           NM            (283)             (238)                    18.9  %
Amortization of purchased intangibles              52                   54                       (6.6) %             153               163                     (7.0) %
Chubb integration expenses                          -                    2                            NM               -                 9                          NM
Income tax expense                                142                  230                      (38.0) %             295               626                    (52.8) %
Net loss                                   $     (196)$ (671)                     (70.9) %       $  (2,243)$ (1,837)                    22.1  %


NM - not meaningful

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

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


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


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                   Net Realized and Unrealized Gains (Losses)


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

The effect of market movements on our fixed maturities portfolio impacts Net
income (through Net realized gains (losses)) when securities are sold, when we
write down an asset because we intend to sell the security, or when we record a
change to the allowance for expected credit losses. For a further discussion
related to how we assess the allowance for expected credit losses and the
related impact on Net income, refer to Note 3 c) to the Consolidated Financial
Statements. Additionally, Net income is impacted through the reporting of
changes in the fair value of equity securities, private equity securities where
we own less than three percent, and derivatives, including financial futures,
options, swaps, and GLB reinsurance. Changes in unrealized appreciation and
depreciation on available for sale securities, resulting from the revaluation of
securities held, changes in cumulative foreign currency translation adjustment,
and unrealized postretirement benefit liability adjustment, are reported as
separate components of Accumulated other comprehensive income (loss) in
Shareholders' equity in the Consolidated balance sheets.
The following table presents our net realized and unrealized gains (losses):
                                                             Three Months Ended September 30, 2020                         Three Months Ended September 30, 2019
                                                          Net                 Net                                       Net                 Net
                                                     Realized          Unrealized                                  Realized          Unrealized
                                                        Gains               Gains              Net                    Gains               Gains              Net
(in millions of U.S. dollars)                        (Losses)            (Losses)           Impact                 (Losses)            (Losses)           Impact
Fixed maturities                           $            49          $      638$   687          $           (11)         $      705$   694
Fixed income and equity derivatives                      9                   -                9                      (97)                  -              (97)
Public equity
Sales                                                   34                   -               34                       24                   -               24
Mark-to-market                                         (34)                  -              (34)                     (21)                  -              (21)
Private equity (less than 3 percent
ownership)
Sales                                                    -                   -                -                       (2)                  -               (2)
Mark-to-market                                          31                   -               31                       (2)                  -               (2)
Total investment portfolio                              89                 638              727                     (109)                705              596
Variable annuity reinsurance derivative
transactions, net of applicable hedges                  (6)                  -               (6)                    (112)                  -             (112)
Other derivatives                                        1                   -                1                      (14)                  -              (14)
Foreign exchange                                      (222)                246               24                       84                (193)            (109)
Other                                                   (3)                (23)             (26)                      (4)                (17)             (21)
Net gains (losses), pre-tax                $          (141)         $      861$   720          $          (155)         $      495$   340




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                                                              Nine Months Ended September 30, 2020                       Nine Months Ended September 30, 2019
                                                         Net                  Net                                   Net                  Net
                                                    Realized           Unrealized                              Realized           Unrealized
                                                       Gains                Gains              Net                Gains                Gains              Net
(in millions of U.S. dollars)                       (Losses)             (Losses)           Impact             (Losses)             (Losses)           Impact
Fixed maturities                           $         (303)         $    

1,759 $ 1,456$ (43)$ 3,834$ 3,791 Fixed income and equity derivatives

                    38                    -               38                 (408)                   -             (408)
Public equity
Sales                                                 197                    -              197                   57                    -               57
Mark-to-market                                        (78)                   -              (78)                   9                    -                9
Private equity (less than 3 percent
ownership)
Sales                                                   -                    -                -                   (4)                   -               (4)
Mark-to-market                                        (71)                   -              (71)                 (14)                   -              (14)
Total investment portfolio                           (217)               1,759            1,542                 (403)               3,834            3,431
Variable annuity reinsurance derivative
transactions, net of applicable hedges               (456)                   -             (456)                (146)                   -             (146)
Other derivatives                                      (2)                   -               (2)                  (8)                   -               (8)
Foreign exchange                                     (351)                (168)            (519)                  86                 (143)             (57)
Other                                                 (43)                 (59)            (102)                  (4)                 (62)             (66)
Net gains (losses), pre-tax                $       (1,069)$     1,532$   463$      (475)$     3,629$ 3,154



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

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

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

                          Effective Income Tax Rate


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

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

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high level of catastrophe losses, principally related to COVID-19. This compares
to an effective tax rate on our tax expense of 17.4 percent and 16.0 percent for
the three and nine months ended September 30, 2019, respectively.

                            Non-GAAP Reconciliation


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

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

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

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

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

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

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

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

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


                                                                            

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

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

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

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

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

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

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




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

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

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

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Nine Months Ended
September 30, 2019                                  North America            North America               North America
(in millions of U.S. dollars except                Commercial P&C             Personal P&C                Agricultural       Overseas General              Global
for ratios)                                             Insurance                Insurance                   Insurance              Insurance         Reinsurance           Corporate         Total P&C
Numerator

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

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

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                            Other Income and Expense


                                                               Three Months Ended                   Nine Months Ended
                                                                     September 30                        September 30
(in millions of U.S. dollars)                               2020             2019               2020             2019
Equity in net income (loss) of partially-owned
entities (1)                                       $      479          $    

81 $ 435$ 353 Gains (losses) from fair value changes in separate account assets (2)

                                         24               (7)                 8               20
Federal excise and capital taxes                           (4)              (5)               (16)             (17)

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


(1)   Equity in net income (loss) of partially-owned entities includes $37
million and $86 million attributable to our investments in Huatai (Huatai Group,
Huatai P&C, and Huatai Life) for the three and nine months ended September 30,
2020, respectively, compared to $30 million and $59 million, respectively, for
the prior year periods.
(2)   Related to gains (losses) from fair value changes in separate account
assets that do not qualify for separate account reporting under GAAP.
Other income and expense includes equity in net income of partially-owned
entities, which includes our share of net income or loss related to
partially-owned investment companies (private equity) and partially-owned
insurance companies. Also included in Other income and expense are gains
(losses) from fair value changes in separate account assets that do not qualify
for separate account reporting under GAAP. The offsetting movement in the
separate account liabilities is included in Policy benefits in the Consolidated
statements of operations. Certain federal excise and capital taxes incurred as a
result of capital management initiatives are included in Other income and
expense as these are considered capital transactions and are excluded from
underwriting results.

          Amortization of purchased intangibles and Other amortization


Amortization expense related to purchased intangibles was $72 million and $217
million for the three and nine months ended September 30, 2020, respectively,
compared with $76 million and $229 million, respectively, in the prior year
periods and principally relates to the Chubb Corp acquisition. The decrease in
amortization expense of purchased intangibles reflects lower intangible
amortization expense related to agency distribution relationships and renewal
rights.

The following table presents, as of September 30, 2020, the estimated pre-tax
amortization expense (benefit) of purchased intangibles, at current foreign
currency exchange rates, for the fourth quarter of 2020 and the next five years:
                           Associated with the Chubb Corp Acquisition
                                                           Fair value
For the Years Ending                Agency              adjustment on                                                                  Total
December 31                   distribution              Unpaid losses                                                        Amortization of
(in millions of U.S.     relationships and                   and loss                            Other intangible                  purchased
dollars)                    renewal rights                   expenses           Total (1)              assets (2)                intangibles
Fourth quarter of 2020   $           60                $        (9)$       51          $           22          $              73
2021                                216                        (20)                196                      86                        282
2022                                196                        (14)                182                      98                        280
2023                                177                         (7)                170                      93                        263
2024                                160                         (5)                155                      87                        242
2025                                144                         (6)                138                      86                        224
Total                    $          953                $       (61)$      892          $          472          $           1,364


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


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

The following table presents, as of September 30, 2020, the expected reduction
of the deferred tax liability associated with Other intangible assets (which
reduces as agency distribution relationships and renewal rights and other
intangible assets amortize), at current foreign currency exchange rates, for the
fourth quarter of 2020 and for the next five years:
                                                                              Reduction to
                                                                              deferred tax
                                                                                 liability
For the Years Ending December 31                                           associated with
(in millions of U.S. dollars)                                            intangible assets
Fourth quarter of 2020                                                 $             18
2021                                                                                 67
2022                                                                                 65
2023                                                                                 60
2024                                                                                 55
2025                                                                                 51
Total                                                                  $            316



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

(expense) benefit of the fair

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


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

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


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                             Net Investment Income


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



Net investment income is influenced by a number of factors including the amounts
and timing of inward and outward cash flows, the level of interest rates, and
changes in overall asset allocation. Net investment income decreased 3.8 percent
and 1.6 percent for the three and nine months ended September 30, 2020,
respectively, primarily due to lower reinvestment rates on new and reinvested
assets, partially offset by higher average invested assets.

For private equities where we own less than three percent, investment income is
included within Net investment income in the table above. For private equities
where we own more than three percent, investment income is included within Other
income (expense) in the Consolidated statements of operations. Excluded from Net
investment income is the mark-to-market movement for private equities, which is
recorded within either Other income (expense) or Net realized gains (losses)
based on our percentage of ownership. The total mark-to-market movement for
private equities excluded from Net investment income was as follows:
                                                               Three Months Ended              Nine Months Ended
                                                                     September 30                   September 30
(in millions of U.S. dollars)                              2020              2019         2020              2019

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



                                  Investments


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

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


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

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

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

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


The fair value of our total investments increased $7.2 billion during the nine
months ended September 30, 2020, primarily due to the investing of operating
cash flow, unrealized appreciation and the investing of debt issuance proceeds.
This increase was partially offset by the payment of collateralized deposits for
the purchase of additional ownership in Huatai Group.

The following tables present the fair value of our fixed maturities and
short-term investments at September 30, 2020 and December 31, 2019. The first
table lists investments according to type and second according to S&P credit
rating:
                                                                                September 30, 2020                           December 31, 2019
                                                                      Fair                                        Fair
(in millions of U.S. dollars, except for percentages)                Value              % of Total               Value              % of Total
U.S. Treasury / Agency                                       $    4,100                       4  %       $    4,630                       5  %
Corporate and asset-backed securities                            37,712                      35  %           34,259                      33  %
Mortgage-backed securities                                       21,590                      20  %           21,588                      21  %
Municipal                                                        12,267                      12  %           12,824                      12  %
Non-U.S.                                                         26,656                      25  %           25,192                      25  %
Short-term investments                                            4,660                       4  %            4,291                       4  %
Total                                                        $  106,985                     100  %       $  102,784                     100  %
AAA                                                          $   16,177                      15  %       $   15,714                      15  %
AA                                                               36,759                      34  %           37,504                      37  %
A                                                                19,359                      18  %           19,236                      19  %
BBB                                                              17,009                      16  %           13,650                      13  %
BB                                                                9,609                       9  %            9,474                       9  %
B                                                                 7,466                       7  %            6,897                       7  %
Other                                                               606                       1  %              309                       -
Total                                                        $  106,985                     100  %       $  102,784                     100  %




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Corporate and asset-backed securities
The following table presents our 10 largest global exposures to corporate bonds
by fair value at September 30, 2020:
(in millions of U.S. dollars)      Fair Value
Wells Fargo & Co                 $      762
Bank of America Corp                    670
JP Morgan Chase & Co                    658
Comcast Corp                            511
Morgan Stanley                          459
Citigroup Inc                           441
Verizon Communications Inc              430
AT&T Inc                                393
Goldman Sachs Group Inc                 377
HSBC Holdings Plc                       376



Mortgage-backed securities

The following table shows the fair value and amortized cost, net of valuation allowance, of our mortgage-backed securities:

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

Total mortgage-backed securities $ 3,223$ 18,111$ 215$ 29$ 12$ 21,590$ 20,375

Municipal

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

Non-U.S.

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

Our non-U.S. investment grade fixed income portfolios are currency-matched with
the insurance liabilities of our non-U.S. operations. The average credit quality
of our non-U.S. fixed income securities is A and 48 percent of our holdings are
rated AAA or guaranteed by governments or quasi-government agencies. Within the
context of these investment portfolios, our government and corporate bond
holdings are highly diversified across industries and geographies. Issuer limits
are based on credit rating (AA-two percent, A-one percent, BBB-0.5 percent of
the total portfolio) and are monitored daily via an internal compliance system.
We manage our indirect exposure using the same credit rating based investment
approach. Accordingly, we do not believe our indirect exposure is material.

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The following table summarizes the fair value and amortized cost, net of
valuation allowance, of our non-U.S. fixed income portfolio by country/sovereign
for non-U.S. government securities at September 30, 2020:
(in millions of U.S. dollars)             Fair Value       Amortized Cost, Net
Republic of Korea                      $     1,058      $                935
Canada                                         942                       896
United Kingdom                                 905                       868
Province of Ontario                            681                       637
Kingdom of Thailand                            612                       528
Province of Quebec                             539                       501
Federative Republic of Brazil                  512                       502
Commonwealth of Australia                      454                       397
United Mexican States                          453                       434
Socialist Republic of Vietnam                  380                       264
Other Non-U.S. Government Securities         5,486                     5,188
Total                                  $    12,022      $             11,150

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

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

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


Below-investment grade corporate fixed income portfolio
Below-investment grade securities have different characteristics than investment
grade corporate debt securities. Risk of loss from default by the borrower is
greater with below-investment grade securities. Below-investment grade
securities are generally unsecured and are often subordinated to other creditors
of the issuer. Also, issuers of below-investment grade securities usually have
higher levels of debt and are more sensitive to adverse economic conditions,
such as recession or increasing interest rates, than investment grade issuers.
At September 30, 2020, our corporate fixed income investment portfolio included
below-investment grade and non-rated securities which, in total, comprised
approximately 15 percent of our fixed income portfolio. Our below-investment
grade and non-rated portfolio includes over 1,400 issuers, with the greatest
single exposure being $162 million.

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

                                                                            

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

                         Critical Accounting Estimates

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


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

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

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

$ 14,767 $ 53,138

(1)Net of valuation allowance for uncollectible reinsurance.


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

Refer to Note 6 to the Consolidated Financial Statements for a discussion on the changes in the loss reserves.


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


Fair value measurements
Accounting guidance defines fair value as the price to sell an asset or transfer
a liability (an exit price) in an orderly transaction between market
participants and establishes a three-level valuation hierarchy based on the
reliability of the inputs. The fair value hierarchy gives the highest priority
to quoted prices in active markets (Level 1 inputs) and the lowest priority to
unobservable data (Level 3 inputs). Level 2 includes inputs, other than quoted
prices within Level 1, that are observable for assets or liabilities either
directly or indirectly. Refer to Note 4 to the Consolidated Financial Statements
for information on our fair value measurements.


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                            Catastrophe management


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

Modeled Net Probable Maximum Loss (PML) Pre-tax

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


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

The above estimates of Chubb's loss profile are inherently uncertain for many
reasons, including the following:
•While the use of third-party catastrophe modeling packages to simulate
potential hurricane and earthquake losses is prevalent within the insurance
industry, the models are reliant upon significant meteorology, seismology, and
engineering assumptions to estimate catastrophe losses. In particular, modeled
catastrophe events are not always a representation of actual events and ensuing
additional loss potential;
•There is no universal standard in the preparation of insured data for use in
the models, the running of the modeling software and interpretation of loss
output. These loss estimates do not represent our potential maximum exposures
and it is highly likely that our actual incurred losses would vary materially
from the modeled estimates; and
•The potential effects of climate change add to modeling complexity.



                                                                            

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                Natural Catastrophe Property Reinsurance Program

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


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

Chubb renewed its Global Property Catastrophe Reinsurance Program for our North
American and International operations effective April 1, 2020 through March 31,
2021, with no material changes in coverage from the expiring program. The
program consists of three layers in excess of losses retained by Chubb on a per
occurrence basis. In addition, Chubb also renewed its terrorism coverage
(excluding nuclear, biological, chemical and radiation coverage, with an
inclusion of coverage for biological and chemical coverage for personal lines)
for the United States from April 1, 2020 through March 31, 2021 with the same
limits and retention and percentage placed except that the majority of terrorism
coverage is on an aggregate basis above our retentions without a reinstatement.
Loss Location                                 Layer of Loss              Comments                                  Notes
United States                            $0 million -                    Losses retained by Chubb                   (a)
(excluding Alaska and Hawaii)            $1.0 billion
United States                            $1.0 billion -                  All natural perils and terrorism           (b)
(excluding Alaska and Hawaii)            $1.15 billion
United States                            $1.15 billion -                 All natural perils and terrorism           (c)
(excluding Alaska and Hawaii)            $2.15 billion
United States                            $2.15 billion -                 All natural perils and terrorism           (d)
(excluding Alaska and Hawaii)            $3.5 billion
International                            $0 million -                    Losses retained by Chubb                   (a)
(including Alaska and Hawaii)            $175 million
International                            $175 million -                  All natural perils and terrorism           (c)
(including Alaska and Hawaii)            $1.175 billion
Alaska, Hawaii, and Canada               $1.175 billion -                All natural perils and terrorism           (d)
                                         $2.525 billion


(a)  Ultimate retention will depend upon the nature of the loss and the
interplay between the underlying per risk programs and certain other catastrophe
programs purchased by individual business units. These other catastrophe
programs have the potential to reduce our effective retention below the stated
levels.
(b)  These coverages are partially placed with Reinsurers.
(c)  These coverages are both part of the same Second layer within the Global
Catastrophe Program and are fully placed with Reinsurers.
(d)  These coverages are both part of the same Third layer within the Global
Catastrophe Program and are fully placed with Reinsurers.


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                                   Liquidity


We anticipate that positive cash flows from operations (underwriting activities
and investment income) should be sufficient to cover cash outflows under most
loss scenarios for the near term. In addition to cash from operations, routine
sales of investments, and financing arrangements, we have agreements with a
third-party bank provider which implemented two international multi-currency
notional cash pooling programs to enhance cash management efficiency during
periods of short-term timing mismatches between expected inflows and outflows of
cash by currency. The programs allow us to optimize investment income by
avoiding portfolio disruption. Should the need arise, we generally have access
to capital markets and to credit facilities with letter of credit capacity of
$4.0 billion with a sub-limit of $1.9 billion for revolving credit. At September
30, 2020, our usage under these facilities was $1.7 billion in letters of
credit. Our access to credit under these facilities is dependent on the ability
of the banks that are a party to the facilities to meet their funding
commitments. The facilities require that we maintain certain financial
covenants, all of which we met at September 30, 2020. Should the existing credit
providers on these facilities experience financial difficulty, we may be
required to replace credit sources, possibly in a difficult market. If we cannot
obtain adequate capital or sources of credit on favorable terms, on a timely
basis, or at all, our business, operating results, and financial condition could
be adversely affected. To date, we have not experienced difficulty accessing our
credit facilities.

The payment of dividends or other statutorily permissible distributions from our
operating companies are subject to the laws and regulations applicable to each
jurisdiction, as well as the need to maintain capital levels adequate to support
the insurance and reinsurance operations, including financial strength ratings
issued by independent rating agencies. During the nine months ended September
30, 2020, we were able to meet all our obligations, including the payments of
dividends on our Common Shares, with our net cash flows.

We assess which subsidiaries to draw dividends from based on a number of
factors. Considerations such as regulatory and legal restrictions as well as the
subsidiary's financial condition are paramount to the dividend decision. Chubb
Limited received dividends of $800 million and $200 million from its Bermuda
subsidiaries during the nine months ended September 30, 2020 and 2019,
respectively. Chubb Limited also received non-cash dividends of $844 million and
nil from a Swiss subsidiary during the nine months ended September 30, 2020 and
2019, respectively.

The payment of any dividends from CGM or its subsidiaries is subject to
applicable U.K. insurance laws and regulations. In addition, the release of
funds by Syndicate 2488 to subsidiaries of CGM is subject to regulations
promulgated by the Society of Lloyd's. The U.S. insurance subsidiaries of Chubb
INA Holdings Inc. (Chubb INA) may pay dividends, without prior regulatory
approval, subject to restrictions set out in state law of the subsidiary's
domicile (or, if applicable, commercial domicile). Chubb INA's international
subsidiaries are also subject to insurance laws and regulations particular to
the countries in which the subsidiaries operate. These laws and regulations
sometimes include restrictions that limit the amount of dividends payable
without prior approval of regulatory insurance authorities. Chubb Limited
received no dividends from CGM or Chubb INA during the nine months ended
September 30, 2020 and 2019. Debt issued by Chubb INA is serviced by statutorily
permissible distributions by Chubb INA's insurance subsidiaries to Chubb INA as
well as other group resources. Chubb INA received dividends of $180 million and
$1.7 billion from its subsidiaries during the nine months ended September 30,
2020 and 2019, respectively.

Cash Flows
Our sources of liquidity include cash from operations, routine sales of
investments, and financing arrangements. The following is a discussion of our
cash flows for the nine months ended September 30, 2020 and 2019.

Operating cash flows were $7.2 billion in the nine months ended September 30,
2020, compared to $4.9 billion in the prior year period, an increase of $2.3
billion, principally reflecting higher premiums collected and reduced payment
activity due to the economic slowdown related to COVID-19 pandemic.

Cash used for investing was $6.7 billion in the nine months ended September 30,
2020, compared to $3.6 billion in the prior year period. The current year
included a payment of $1,054 million and a deposit, net of return, of
approximately $500 million for the purchase of an additional 22.4 percent
ownership in Huatai Group, while the prior year included the purchase of an
additional 6.2 percent ownership interest in Huatai Group for $329 million.
Refer to Note 2 to the Consolidated Financial Statements for additional
information. In addition, the current year had cash used of $4.3 billion for net
investments purchased, excluding derivative settlements, compared to cash used
of $2.0 billion in the prior year.

                                                                            

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Cash used for financing was $234 million in the nine months ended September 30,
2020, compared to $1.1 billion in the prior year period, a decrease of $890
million principally from fewer share repurchases in the current year due to the
suspension of share repurchases in April 2020. Refer to Note 9 to the
Consolidated Financial Statements for additional information on share
repurchases.

Both internal and external forces influence our financial condition, results of
operations, and cash flows. Claim settlements, premium levels, and investment
returns may be impacted by changing rates of inflation and other economic
conditions. In many cases, significant periods of time, ranging up to several
years or more, may lapse between the occurrence of an insured loss, the
reporting of the loss to us, and the settlement of the liability for that loss.

We use repurchase agreements as a funding alternative. At September 30, 2020, there were $1.4 billion in repurchase agreements outstanding with various maturities over the next five months.

                               Capital Resources

Capital resources consist of funds deployed or available to be deployed to support our business operations.

                                                                                  September 30          December 31
(in millions of U.S. dollars, except for ratios)                                          2020                 2019
Short-term debt                                                                $      1,300$     1,299
Long-term debt                                                                       14,830               13,559
Total financial debt                                                                 16,130               14,858
Trust preferred securities                                                              308                  308
Total shareholders' equity                                                           56,413               55,331
Total capitalization                                                           $     72,851$    70,497
Ratio of financial debt to total capitalization                                        22.1  %              21.1  %
Ratio of financial debt plus trust preferred securities to total
capitalization                                                                         22.5  %              21.5  %



Repurchase agreements are excluded from the table above and are disclosed
separately from short-term debt in the Consolidated balance sheets. The
repurchase agreements are collateralized borrowings where we maintain the right
and ability to redeem the collateral on short notice, unlike short-term debt
which comprises the current maturities of our long-term debt instruments.

In September 2020, Chubb INA Holdings Inc. (Chubb INA) issued $1.0 billion of
1.375 percent senior notes due September 2030. At September 30, 2020 and
December 31, 2019, total debt included $2.3 billion and $1.3 billion,
respectively, of senior notes issued to provide proceeds to retire existing debt
coming due in November 2022 and November 2020, respectively. These prefundings
had the effect of increasing the leverage ratios at September 30, 2020 and
December 31, 2019 by 2.5 percentage points and 1.4 percentage points,
respectively. Refer to Note 7 to the Consolidated Financial Statements for
additional details about the debt issued.

For the nine months ended September 30, 2020, we repurchased $326 million of
Common Shares in a series of open market transactions under the Board of
Directors (Board) share repurchase authorization. At September 30, 2020, there
were 26,229,070 Common Shares in treasury with a weighted average cost of
$135.00 per share, and $1.12 billion in share repurchase authorization remained
through December 31, 2020. We suspended share repurchase activity during the
second and third quarters of 2020, given the economic environment. Subsequently,
we resumed share repurchases, and on October 29, 2020, we repurchased 52,500
Common Shares for a total of $7 million in a series of open market transactions.
At October 29, 2020, $1.12 billion in share repurchase authorization remained
through December 31, 2020.

We generally maintain the ability to issue certain classes of debt and equity
securities via an unlimited Securities and Exchange Commission (SEC) shelf
registration which is renewed every three years. This allows us capital market
access for refinancing as well as for unforeseen or opportunistic capital needs.

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Dividends
We have paid dividends each quarter since we became a public company in 1993.
Under Swiss law, dividends must be stated in Swiss francs though dividend
payments are made by Chubb in U.S. dollars. Refer to Note 9 to the Consolidated
Financial Statements for a discussion of our dividend methodology.

At our May 2020 annual general meeting, our shareholders approved an annual
dividend for the following year of up to $3.12 per share, or CHF 3.01 per share,
calculated using the USD/CHF exchange rate as published in the Wall Street
Journal on May 20, 2020, expected to be paid in four quarterly installments of
$0.78 per share after the general meeting by way of a distribution from capital
contribution reserves, transferred to free reserves for payment. The Board
determines the record and payment dates at which the annual dividend may be paid
until the date of the 2021 annual general meeting, and is authorized to abstain
from distributing a dividend at its discretion. The annual dividend approved in
May 2020 represented an $0.12 per share increase ($0.03 per quarter) over the
prior year dividend.

The following table represents dividends paid per Common Share to shareholders
of record on each of the following dates:
Shareholders of record as of:       Dividends paid as of:
December 20, 2019                   January 10, 2020           $0.75 (CHF 0.74)
March 20, 2020                      April 10, 2020             $0.75 (CHF 0.72)
June 19, 2020                       July 10, 2020              $0.78 (CHF 0.75)
September 18, 2020                  October 9, 2020            $0.78 (CHF 0.71)

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