Chubb Ltd
For the period ended Dec 31, 2023. Filed Feb 23, 2024.
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FY2023 · Filed Feb 23, 2024
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Asbestos and Environmental (A&E)
Asbestos and environmental (A&E) reserving considerations
For asbestos, Chubb faces claims relating to policies issued to manufacturers, distributors, installers, and other parties in the chain of commerce for asbestos and products containing asbestos. Claimants will generally allege damages across an extended time period which may coincide with multiple policies covering a wide range of time periods for a single insured.
Environmental claims present exposure for remediation and defense costs associated with the contamination of property or bodily injury as a result of pollution.
The following table presents count information for asbestos claims and environmental claims by account, for direct policies only:
| Asbestos | Environmental | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Open at beginning of year | 1,795 | 1,739 | 1,195 | 1,230 |
| Newly reported/reopened | 230 | 208 | 116 | 64 |
| Closed or otherwise disposed | 241 | 152 | 202 | 99 |
| Open at end of year | 1,784 | 1,795 | 1,109 | 1,195 |
Survival ratios are calculated by dividing the asbestos or environmental loss and allocated loss adjustment expense (ALAE) reserves by the average asbestos or environmental loss and ALAE payments for the three most recent calendar years (3-year survival ratio).
The following table presents the gross and net 3-year survival ratios for Asbestos and Environmental loss and ALAE reserves:
| (in years) | Gross loss and ALAE reserves | Net loss and ALAE reserves |
|---|---|---|
| Asbestos | 4.4 | 4.3 |
| Environmental | 3.1 | 3.4 |
The survival ratios provide only a very rough depiction of reserves and are significantly impacted by a number of factors such as aggressive settlement practices, variations in gross to ceded relationships within the asbestos or environmental claims, and levels of coverage provided. Therefore, we urge caution in using these very simplistic ratios to gauge reserve adequacy.
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