Chubb Limited Investor Presentation December 2019
YTD 2019: Strong Operating Results YTD YTD ($ in billions of U.S. dollars, except per share amounts and ratios) 9/30/18 9/30/19 Change 5.1% $28.7 $30.2 Gross Premiums Written 6.6% C$ 4.5% $23.2 $24.3 Net Premiums Written 6.2% C$ 0.1% pts 89.8% 89.9% P&C Combined Ratio 88.0% 89.0% 1.0% pts CAY ex. CATs 3.7% $3.5 $3.6 Core Operating Income 5.5% C$ 5.5% Core Operating Earnings per Share $7.42 $7.83 26.1% Operating Cash Flow $3.9 $4.9 7.1% Shareholders’ Equity $50.9 $54.6 8.9% Book Value per Share $110.46 $120.33 14.0% Tangible Book Value per Share $66.83 $76.21 5.9% Invested Assets $101.2 $107.2 18.8% Market Capitalization 1 $61.6 $73.2 0.2% pts Core Operating Return on Equity 9.1% 9.3% Core Operating Return on Tangible Equity 15.2% 15.3% 0.1% pts 1. Market capitalization change from 9/30/18 to 9/30/19 1
Chubb Today – Who We Are Underwriting Proven Global Exceptional Excellence Leadership Presence Service • Superior underwriting • Management: hands-on with • 600+ offices in 54 countries • Renowned for service culture deep global industry and territories = local excellence in claims, risk knowledge, builders; presence globally engineering and related • P&C combined ratio 8 underwriters lead the services percentage points better • A leading global commercial company than peers’ average over (60%) and consumer (40%) • Digitally enhanced past 10 years 1 • Stability: leaders average 30 insurer • Recognized and admired years of industry experience, • A leading commercial and the brand with nearly 20 at the #1 HNW insurer in the U.S.; company substantial operations in Asia and Latin America growing at high single/double-digit rates The largest publicly traded P&C insurer globally, providing commercial insurance to large corporate, mid-market and small businesses and consumer insurance to lower-middle income to high net worth individuals and families Strategic Product & Scale & Strong Optionality Distribution Breadth Financial Strength 2 Culture • Earning power, strategy, • 200+ P&C products • $55 billion • Disciplined and balance sheet and scale, shareholders’ equity execution-oriented; high- • Distribution through including global presence, performance brokerage, independent and • $68 billion total capital capabilities and knowledge exclusive agents and direct- • Flat organization: rapid • $175 billion in assets • Well positioned to quickly to-consumer platform decision-making • Top ratings – “AA” S&P and take advantage of secular partnerships • Accountable, frank “A++” AM Best and cyclical growth trends • Optimistic globally • Digital capability fast evolving 1. 2009 – 2018; peers: AIG, Allianz, AXA, CNA, HIG, TRV, XL, Zurich 2 2. As of September 30, 2019
Our Financial Objectives Chubb is a growth company as defined by growth in book and tangible book value. Our earning power will continue to come first from growing the company. Premium • Execute company’s well defined growth strategies, leverage secular and cyclical trends = grow revenue Revenue Grow Underwriting Income Underwriting • Consistently achieve industry-leading combined ratio = maintain or potentially expand margin as stressed classes achieve improved Profitability rate adequacy Grow Investment • Growth in invested assets – strong operating cash flow and retained Investment Income earnings Income Balance Sheet • Strength of reserves, strong tangible capital position, conservative leverage Strength Growth in earnings drives superior book and tangible book value growth over time + Our capital management strategy supports the efficient use of capital and produces superior ROTEs and ROEs significantly in excess of our cost of equity with a double-digit target; we prefer to redeploy our capital into the business to grow the company and return excess capital to shareholders = The combination drives our earning power, and BVPS and TBVPS growth 3
Strategic Priorities Description Chubb Portfolio by Segment Secular 2019F NPW + Deposits: $33.5B • Growth of consumer classes and small and mid-sized businesses globally (in the Other Global Re 1% Fastest 2% U.S. and developed and developing Agriculture economies in Asia and Latin America, 5% Growth and Europe) Opportunities • China, including impact on Asia Int'l Pers. Lines Global Major Accounts 6% 19% Competitive • Digital capabilities: data and analytics, International Life technology, product, distribution, Profile & 7% underwriting, customer experience, cost Enhanced reduction Growth Global E&S N.A. Mid & 8% Small Comm. 16% Int'l Mid & Small Comm. 9% • Firming commercial P&C pricing U.S. High Cyclical environment Net Worth Personal Lines Growth Global A&H • 45%+ of portfolio and growing – across 14% 13% many short- and long-tail classes: Opportunities – Major accounts globally – U.S. middle market – E&S wholesale – London and U.S. – U.K., Australia and portions of Continental Europe and Asia retail • Flight to quality – Choose Chubb 4
Building Chubb to Thrive in a Digital Age Our Vision: Transform Chubb to be compelling in a digital age: becoming digital = fully integrated into our business, adding to revenue growth, driving expense reductions, modernizing what insurance does and how it does it. Five Pillars Our Approach • Experience: Customer experience as the product • Focus on portfolio of internal digital bets • Distribution: Digital channel for our products o Made rapidly (e-Partners, e-Traditional) o Scaled as/where successful • Capability: Digitally enabled product, OMNI-channel • Quickly monetize our capability (premium, expense saves) service and claims • Invest in foundational technology and service • Insights: Underwriting and claims excellence through data and analytics • Process: Intelligent automation of tasks, both underwriting and processes Pathway to Scale Chubb Digital Today • Major partners (banks, travel, ride-hail) • Distribution partner funnel focus • Digital tech foundation o Customer: COG consumers and North America HNW • Basic end-to-end digital services o Businesses: small-to-mid-size, large • Two-question underwriting (small business) and claims (A&H) • With partners, innovate insurance product for today’s expectations (onboarding, service, claims, value-add) • New technologies, e.g., AI, IoT • Quicken product development cycle times • Modernizing legacy tech infrastructure – significant spend • Solve operational last mile • Chubb digital DNA and Centers of Excellence Financial Outcomes: GPW by 2022: Automation expense savings by 2023: • e-Partners: $700M+ • $500M (gross); $350M (net of expenses) • e-Traditional: $6B 5
Investment Portfolio: Stability and Growth • Slowing global growth, low inflation for now, loose central bank policies and likely negative rates will continue to depress fixed income yields • While credit spreads remain narrow, rising fiscal deficits may very well drive the yield curve • We will maintain a conservative approach to our invested asset allocation and not “reach for yield” • Enhancements to the fixed income portfolio have stabilized our book yield without raising overall portfolio risk • Our strong cash flow has and will continue to support net investment income Market vs. Book Yield Assets & Investment Income ($B) Chubb book yield down only 160bp vs. 420bp for market yield, despite Strong operating cash flow more than makes up for falling maintaining average investment quality of AA reinvestment rates 1 $3.6 $3.6 $3.5 $3.3 7.0% $2.2 $2.3 $2.2 $2.2 $107.2 6.5% $2.1 $2.1 $2.0 $99.1 $102.4$101.0 $4.9 6.0% $4.5 $5.5 $5.3 5.5% 5.0% $51.4 $55.7 $60.3 $60.9 $62.9 $66.3 4.5% $3.9 $4.5 $4.0 $4.0 4.0% $46.5 $3.5 $3.5 3.7% $3.3 3.5% (1.6%) 3.0% 2.5% 2.7% (4.2%) 2.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep '19 Year-End Invested Assets Operating Cash Flow Market Yield Book Yield (New Money) Adjusted Investment Income (1) Assumes adjusted net investment income of $900M for Q4 2019 6
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