Investor Presentation Chubb Limited December 2016 The New Chubb: A - - PDF document

Chubb Limited Investor Presentation

December 2016

The New Chubb: A Unique Global P&C Franchise

1

Substantial Scale Wide Geographic Presence Balance Sheet Strength 1 Financial Outperform ance 2 In-Depth Capabilities Custom er & Product Diversification

• #1 P&C insurer by market cap globally
• $36B gross written premium;

$4.5B - $4.6B operating income (2016E)

• 9 businesses with $2B+ premium
• ~31,000 employees
• 54 Countries, 658 Offices
• $7B premium and deposits Asia

& Latin America (2016E)

• $48B equity; $62B total capital
• Financial leverage ~22%
• Excellent ratings

(“AA” S&P, “A++” A.M. Best)

• Last 10 years:

– TRS > 8x vs. peers – Market cap >3x

• 64% commercial, 36% consumer
• 62% U.S., 38% International
• Talent and culture – underwriting,

claims, engineering

• Products
• Distribution
• Technology and analytics

Respected Brand

Note: 2016 figures inclusive of first 14 days of January 1. As of September 30, 2016 2. As of November 30, 2016

Personal P&C - N.A. 13.6% Personal P&C - Int'l 4.6% A&H 11.8% Life 5.9%

Well Diversified by Product and Customer

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U.S. 61.6% Canada / Bermuda 5.1% U.K. / Europe 13.5% Asia Pacific 12.5% Latin America 7.3%

• Comm. P&C - N.A.

Major & Spec. 25.5%

• Comm. P&C - N.A.

Mid Market & Small Comm. 13.9%

• Comm. P&C - Int'l

16.8% Agr. 5.9% Global Re 2.0%

Product & Custom er Mix

Leading international commercial P&C insurer ($6B) ~85% retail in 54 countries ~15% London wholesale (longstanding Lloyd’s presence) #1 U.S. crop insurer ($2B) #1 U.S. high net worth insurer ($5B) One of the largest supplemental A&H providers globally ($4B) Asia life insurance business ($2B)1

Total 20 16E GPW and Deposits: $37 billion 1

Geographic Mix

Leading U.S. mid-market insurer ($5B) Large Asia & Latin America presence ($7B)1

• One of the largest P&C portfolios

Consum er: 35.9% Com m ercial: 64.1%

Leading major and multinational accounts insurer ($7B) #3 U.S. excess & surplus ($2B)

• 1. Life insurance production includes $1B of deposits collected on universal life and investment contracts. Consistent with

GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues #1 U.S. commercial lines ($15B) #1 Global professional lines ($4B)

A Strong Start: The First 9 Months

3

Legacy ACE New Chubb

($ in billions, except per share am ounts)

9/ 30 / 15 9/ 30 / 16 Change Gross Prem ium s Written 1

$18.2 $27.1 1.5x

P&C Com bined Ratio 1, 2

87.2% 88.2%

• Operating Incom e 1

$2.4 $3.5 1.5x

Shareholders’ Equity

$29.1 $48.4 1.7x

Operating Cash Flow

$2.7 $3.8 1.4x

Operating Incom e per Share 1

$7.38 $7.42 +1%

Book Value per Share 3

$89.88 $103.96 +16%

Tangible Book Value per Share 3

$72.25 $60.26

• 17%

(vs. -29% at close)

Market Capitalization

$33.5 $58.5 1.7x

1. 2016 YTD includes the 14 day period in January prior to transaction closing 2. 2016 YTD combined ratio does not include any impact from purchase accounting adjustments 3. Includes unrealized appreciation/ depreciation on investment portfolio

Our Key Objectives

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Manage risk exposure in line with capital and balance sheet asset and liability risk

Integrate and realize efficiencies, unify culture, improve operating and earnings power Invest for the long term

Generate attractive shareholder returns

Realize potential growth and diversification Remain a growing and vital industry leader that serves customers globally Create a unified and exciting culture for employees

The Year 1 Story: Integration, Customers and Growth

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Operational Integration

• Management team put in place before closing with detailed plans in hand
• Senior management led 16 work streams with 450 people, actively managing all geographies, lines of business

and functions: real estate, IT, culture and people, HR, finance, branding

• Merger-related expense savings ahead of plan: $800M annualized by end of 2018 versus $650M announced;

related costs of $0.62 per $1 of savings ($497M total)

• Nearly 2,000 positions eliminated globally through October 2016, ~60% of targeted total

20 16E 20 17E 20 18 E Annualized Savings $515M $740M $800M Realized Savings $310M $580M $760M

Risk & Balance Sheet Integration

• Harmonized underwriting risk appetite and risk guidelines
• Underwriting actions taken in certain portfolios not meeting standards or exceeding risk appetite. Actions,

which include cancelling or reinsuring certain business, reduce premium but improve risk/ reward profile

• Integrated and rebalanced investment portfolio to improve investment performance at reduced cost

(~ $120M more investment income) 20 16E Chubb-cancelled business $220M Additional reinsurance purchased $430M Estimated business lost due to concentration $165M Total NPW Impact $815M

Custom ers & Growth

• Retained customers – renewal retention rate in line with or at historic highs: N.A. major accounts 92%; N.A.

mid-market 88%; international P&C 85%; N.A. personal lines 94% (excluding Fireman’s Fund)

• Building cross-sell and up-sell momentum: power of the new company generated revenue synergies of circa

$300M NPW in 2016

• Focused on customers and distribution partners
• Launched new products – small commercial

Portfolio Well Balanced to Perform in All P&C Market Conditions

6

Note: bubble size based on relative GPW and deposits of business; market conditions vary by product and territory

Lesser Greater Pricing Power Less Favorable More Favorable Term s & Conditions

N.A. Major & Specialty A&H Life Int’l Personal Global Sm all Com m ercial Agriculture International Large P&C N.A. Personal U.S. & London Wholesale, Berm uda E&S, Global Re Global Mid-Market

22%

Commercial Consumer

39% 33% 6%

Global P&C Industry Expected to Increase $1.7T over Next 10 Years

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Global P&C Direct Prem ium s Written, 20 15 to 20 25E

($ in billions)

Source: Swiss Re

2015 2025E Growth

4.5% p.a. 4.6% p.a. 14.1% p.a. 6.2% p.a. 6.8% p.a.

$1,322 $473 $849 $945 $340 $605 $631 $463 $169 $470 $213 $256 $83 $89 $172 North Am erica Europe China Asia Pacific Latin Am erica

Plenty of Room for Sm art Growth

• Global P&C market expected to grow from $2.0T to $3.7T by 2025
• Fragmented market: top 10 insurers have only ~20% market share, virtually unchanged from

5 years ago – no single player dominates

• Asia life market represents ~$900B of premium growing to nearly $2T by 2025

Chubb is positioned to capitalize on growth. With just 11 countries with $40 0 M prem ium or m ore, plenty of room to grow over tim e given local presence, deep underwriting culture and product and distribution capabilities.

Significant Opportunities for Growth and Diversification

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Segm ent Opportunity Chubb Capability Com m ercial Mid-Market and Small Commercial

• Combine complementary product and

distribution capabilities to grow and serve new and existing customers in select markets globally

• Breadth of traditional, specialty and package

products

• Deep expertise in specific industries
• Agency and broker distribution
• Operations in 54 countries and knowledge of

territories

• Local underwriting globally
• Claims handling and risk engineering expertise
• Technology: Worldview, global risk straight-through

processing, digital technology/ mobile (micro) Major and Global Accounts

• Expand business with large, multinational

corporations that have complex, interconnected risks globally – only few carriers can serve Cross-sell and Up-sell (Revenue Synergies)

• Combine complementary product and

distribution capabilities to grow and serve existing large and mid-market customers Consum er International A&H

• Growth of middle-income consumers in

select markets

• Comprehensive product offering
• Local underwriting globally
• Exceptional claims and risk control capabilities and

reputation

• Insights from deep and expanded data pools
• Multi-channel distribution capabilities: brokerage,

agency, direct marketing, captive agency force, worksite marketing, bancassurance

• Technology

U.S. High Net Worth

• Large untapped market: $40B,

< 20% with dedicated HNW carriers International Personal Lines

• Select markets in Europe, Asia and Latin

America North America Combined Insurance

• Under-served lower middle income

market; mid-market worksite voluntary benefits and Hispanic market Asia Life

• $900B market in region with largest

wealth creation potential next 20-30 years

Investing for the Long Term

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• Insurance is changing – technology, alternative sources of capital, new market entrants, global concentrations of

evolving risk types, etc.

• Continuing to make substantial investments to improve competitive profile across the entire value chain and better

position company to grow in a more globalized, digital world

• Merger efficiencies and increased earnings power provide greater operating freedom to fund investments

People

• Developing next generation of insurance professionals and internationalists
• Investing in well established training and development and talent management programs

Technology & Digital

• Enhancing foundational technologies from front end to back office, commercial and consumer lines

– State-of-the-art global infrastructure with enhanced bandwidth and security; anytime, anywhere capabilities; more nimble, flexible and quick; lower cost

• Continuing investments in data acquisition, management and analytics
• Transforming Chubb into digitally integrated company that connects to networks around the globe
• Initiatives underway focusing on consumer, small commercial, agriculture, mid-market and large

risk businesses with wide scope: distribution, customer sales and servicing, underwriting and claims Products & Services

• Enhancing claims and engineering services capabilities
• Innovating, launching new products – industry-driven, emerging exposures-driven, customer

segment-driven Brand

• Promoting, burnishing and protecting the distinctive Chubb brand which stands for excellence,

quality and service – a unique reputation in the industry

• Building awareness of Chubb with agents, brokers and customers with global advertising

183% 22% 108% 137% 35% 31% 14% 6%

Growth and Capital Management Strategies

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$57B of Capital Generated: Jan ’0 7 – Sept ’16

Capital Invested in Strategic M&A

• 17 transactions

Capital Returned to Shareholders Capital Retained

Chubb Approach to Capital Managem ent

• Chubb is a growth company as defined by growth in book value while

deploying capital efficiently

• Retaining capital flexibility for risk and growth opportunities has

served shareholders well: – 5 and 10 year operating ROE (10.7% / 13.5%) well ahead of peers (+271 bps / +367 bps) and well in excess of cost of capital – 20+ year record of annual dividend increases with target payout ratio

• f 30%
• Announced up to $1B share repurchase program for 2017

Pre-Chubb $7B

Total Return to Shareholders through Nov ’16

10 -Year 5-Year 3-Year 1-Year

161% 29% 4% 8% Chubb Peers

Chubb Market Cap Growth

($ in billions)

Peers: AIG, ALL, CNA, HIG, TRV, XL, Zurich

Producing Superior Shareholder Value Creation Over Time

$18.5 $59.6 Nov-06 Nov-16

$36B $11B $10 B

Pre-Chubb $7B

No change in long-term strategy – preserve capital in line with risk and growth opportunities. Chubb will continue to capture organic growth and consider selective M&A where it enhances strategic position and returns are attractive.

$9.22 Deal Model Forecast 2016 $97.8 8 Deal Model Forecast 2016

2016 Expected Results vs. Original Deal Model

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9.9% Deal Model Forecast 2016 $9.75 – $9.8 5

Operating Earnings per Share

$10 0 .0 0 – $10 2.0 0

Book Value per Share

10 .2% – 10 .4%

Operating Return on Equity

Financial Update vs. Merger Announcement

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Metric Announcem ent Behind On Track Ahead Current Status

Expense savings

• $650M by 2018



• $800M by 2018 (+23%)

Revenue synergies

• Balanced with expense

savings by 2020



• Significant wins to date and

momentum beginning to build Underwriting actions

• Not provided



• Premium loss including

reinsurance more than expected Operating EPS

• Immediately accretive



• On track to be more accretive in

2016 than expected Operating return

• n investment
• ROI exceeds cost of capital

in year 2



• On track to deliver ROIs ahead of
• riginal plan
• Double-digit ROI in year 3



Book value per share1

• Immediately accretive



• BVPS up 7.2% at closing,

up 15.8% as of Q3 2016 Tangible book value per share1

• 29% dilutive on close



• TBVPS down 29.3% at closing,

down 16.6% as of Q3 2016

• Return to pre-deal level

within about 3 years



• On track to hit pre-deal level in

3 to 3½ years

1. Includes unrealized appreciation/ depreciation on investment portfolio

Appendix

Explanatory Note

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This document and the remarks made during the presentation today may contain forward-looking statements, both written and spoken, including as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “anticipate,” “estimate,” “project,” “should,” “plan,” “expect,” “intend,” “hope,” “feel,” “foresee,” “will likely result,” or “will continue,” and variations thereof and similar expressions, may identify forward-looking statements and may include statements relating to Company performance including 2016 performance and growth opportunities, pricing and business mix, economic and insurance market conditions including foreign exchange, and completion and integration of acquisitions including our acquisition of The Chubb Corporation and potential synergies, savings and commercial and investment benefits we may realize. Such statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the following: competition, pricing and policy term trends, the levels of new and renewal business achieved, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, integration activities and performance of acquired companies, loss of key employees or disruptions to our operations, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance recoverable, credit developments among reinsurers, rating agency action, possible terrorism or the outbreak and effects of war, economic, political, regulatory, insurance and reinsurance business conditions, potential strategic opportunities including acquisitions and our ability to achieve and integrate them, as well as management’s response to these factors, and other factors identified in our filings with the Securities and Exchange Commission (SEC). You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this

• presentation. The Company undertakes no obligation to publicly update or review any forward-looking statements,

whether as a result of new information, future events, or otherwise. This document and the remarks made during the presentation today may also contain non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most direct comparable GAAP measures and related information are provided in our quarterly earnings press release and financial supplement, which are available on the Investor Relations section of our website at investors.chubb.com, and in the Appendix to this presentation.

Regulation G - Non-GAAP Financial Measures

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Operating incom e Operating income is a non-GAAP financial measure that excludes the after-tax impact of adjusted net realized gains (losses), net realized gains (losses) included in other income (expense) related to partially owned entities, Chubb integration and related expenses, and the amortization of the fair value adjustments related to purchased invested assets and long-term debt from The Chubb Corp acquisition. We exclude realized gains and losses because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. We also exclude Chubb integration and related expenses due to the size and complexity of this acquisition. Chubb integration expenses are incurred by the overall company and are therefore included in Corporate. The costs are not related to the on-going activities of the individual segments and are therefore excluded from our definition of segment income, as well. These integration and related expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration and related expenses facilitate the comparison of our financial results to our historical operating results. These expenses include legal and professional fees and all other costs directly related to the integration activities of The Chubb Corp acquisition. In addition, we excluded the pre-acquisition interest expense on the $5.3 billion senior notes issued in November 2015 from operating income because the operations for which the debt was issued were not part of our operating activities prior to the completion of the acquisition. Effective with the close of The Chubb Corp acquisition (January 14, 2016), this debt was considered a cost of our operations and interest expense associated with this debt is included within operating income. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. Operating income should not be viewed as a substitute for net income determined in accordance with GAAP. The following table presents the reconciliation of Net income to Operating income:

YTD YTD Q3 20 16 Q3 20 15 Net income, as reported $ 2,525 $ 2,151 Amortization of fair value adjustment of acquired invested assets and long-term debt, pre-tax (1) (257)

• Tax benefit on amortization adjustment

79

• Chubb integration and related expenses, pre tax

(368) (9) Tax benefit on Chubb integration and related expenses 106 2 Adjusted net realized gains (losses) (511) (354) Net realized gains (losses) related to unconsolidated entities (2) 65 84 Tax (expense) benefit on adjusted net realized gains (losses) (22) (2) Operating income $ 3,433 $ 2,430

(1) Related to the acquisition of The Chubb Corporation. (2) Realized gains (losses) on partially-owned entities, which are investments where we hold more than an insignificant percentage of the investee's shares. The net income or loss is included in other income (expense).

YTD YTD Operating incom e per share Q3 20 16 Q3 20 15 Denominator Weighted average shares outstanding 460,631,794 325,904,502 Effect of other dilutive securities 3,439,017 3,269,724

• Adj. wtd. avg. shares outstanding and assumed conversions

464,070,811 329,174,226 Diluted earnings per share Operating income $ 7.40 $ 7.38 Amortization of fair value adjustment of acquired invested assets and long-term debt (1) (0.39)

• Chubb integration and related expenses

(0.56) (0.02) Adjusted net realized gains (losses) (1.01) (0.83) Net income $ 5.44 $ 6.53

Regulation G - Non-GAAP Financial Measures (continued)

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Operating incom e including the first 14 days of January 20 16 prior to the acquisition close The following presents the reconciliation of earnings per share to earnings per share, including the first 14 days of January 2016 prior to the acquisition close: YTD YTD Numerator Q3 20 16 Denominator Q3 20 16 Operating income as reported $ 3,433 Weighted average shares outstanding and assumed conversions 464,070,811 Add: 14-day stub period income Impact of shares issued in connection with Chubb Corp acquisition 6,719,638 Underwriting income 44 As If adjusted weighted average shares outstanding 470,790,449 Net investment income 45 Interest expense (9) Diluted earnings per share, including 14 day stub period Income tax expense (20) Operating income per share $ 7.42 Total 14-day stub period income 60 Net income per share $ 5.49 Operating income, including 14 day stub period $ 3,493 Net income as reported $ 2,525 Add: 14-day stub period income from above 60 Net income, including 14 day stub period $ 2,585 Tangible book value per share Tangible book value per common share is a non-GAAP financial measure and is shareholders' equity less goodwill and other intangible assets, net of tax, divided by the shares

• utstanding. 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 following table presents a reconciliation of book value per share to tangible book value per share: Septem ber 30 Septem ber 30 20 16 20 15 Shareholders' equity $ 48,372 $ 29,127 Less: goodwill and other intangible assets, net of tax 20,332 5,713 Numerator for tangible book value per share $ 28,040 $ 23,414 Denominator 465,286,110 324,062,368 Book value per common share $ 103.96 $ 89.88 Tangible book value per common share $ 60.26 $ 72.25

Regulation G - Non-GAAP Financial Measures (continued)

17 Com bined Ratio The 2016 P&C combined ratio presented in this report does not include any impact from purchase accounting adjustments in order to present the underlying profitability of our insurance business. We believe that excluding these adjustments provide visibility and comparability into our

• results. The P&C combined ratio also includes results from the first 14 days of January prior to the acquisition close.

The following table presents the reconciliation of GAAP combined ratio to P&C combined ratio: YTD Q3 20 16 GAAP combined ratio 89.0% Less: Acquisition expense elimination 6.2% Less: UPR intangible amortization

• 7.0%

Add: Impact of 14 day stub period

• P&C combined ratio

88.2% Operating ROE Operating return on equity (ROE) or ROE calculated using operating income: The ROE numerator includes income adjusted to exclude after-tax adjusted net realized gains (losses), Chubb integration and related expenses, and the amortization of the fair value adjustment of acquired invested assets and long-term debt. The ROE denominator includes the average shareholders' equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. In addition, the denominator was adjusted to account for the weighted-average impact of the $15,527 million issuance of common shares and equity awards related to The Chubb Corp acquisition on January 14, 2016 . Operating ROE is a useful measures as it enhances the understanding of the return on shareholders' equity by highlighting the underlying profitability relative to shareholders' equity excluding the effect of unrealized gains and losses on our investments.