Chubb Ltd
For the period ended Dec 31, 2023. Filed Feb 23, 2024.
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FY2023 · Filed Feb 23, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
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Reinsurance
- Reinsurance
a) Consolidated reinsurance
Chubb purchases reinsurance to manage various exposures including catastrophe risks. Although reinsurance agreements contractually obligate Chubb's reinsurers to reimburse it for the agreed-upon portion of its gross paid losses, they do not discharge Chubb's primary liability. The amounts for net premiums written and net premiums earned in the Consolidated statements of operations are net of reinsurance. The following table presents direct, assumed, and ceded premiums:
| Year Ended December 31 | |||
|---|---|---|---|
| (in millions of U.S. dollars) | 2023 | 2022 | 2021 |
| Premiums written | |||
| Direct | $52,969 | $47,511 | $42,811 |
| Assumed | 4,557 | 4,467 | 3,928 |
| Ceded | (10,165) | (10,258) | (8,912) |
| Net | $47,361 | $41,720 | $37,827 |
| Premiums earned | |||
| Direct | $51,582 | $46,160 | $41,116 |
| Assumed | 4,289 | 4,395 | 3,609 |
| Ceded | (10,159) | (10,195) | (8,433) |
| Net | $45,712 | $40,360 | $36,292 |
Ceded losses and loss expenses incurred were $7.2 billion, $6.9 billion, and $5.9 billion for the years ended December 31, 2023, 2022, and 2021, respectively.
b)Reinsurance recoverable on ceded reinsurance
| December 31, 2023 | December 31, 2022 | |||
|---|---|---|---|---|
| (in millions of U.S. dollars) | Net Reinsurance Recoverable (1) | Valuation allowance | Net Reinsurance Recoverable (1) | Valuation allowance |
| Reinsurance recoverable on unpaid losses and loss expenses | $17,884 | $285 | $17,086 | $289 |
| Reinsurance recoverable on paid losses and loss expenses | 2,068 | 82 | 1,773 | 62 |
| Reinsurance recoverable on losses and loss expenses | $19,952 | $367 | $18,859 | $351 |
| Reinsurance recoverable on policy benefits | $280 | $— | $302 | $4 |
(1) Net of valuation allowance for uncollectible reinsurance.
The increase in reinsurance recoverable on losses and loss expenses in 2023 was primarily due to the consolidation of Huatai Group and prior period development in certain lines.
The following table presents a roll-forward of valuation allowance for uncollectible reinsurance related to Reinsurance recoverable on loss and loss expenses:
| Year Ended December 31 | ||
|---|---|---|
| (in millions of U.S. dollars) | 2023 | 2022 |
| Valuation allowance for uncollectible reinsurance - beginning of period | $351 | $329 |
| Provision for uncollectible reinsurance | 47 | 43 |
| Write-offs charged against the valuation allowance | (32) | (19) |
| Foreign exchange revaluation | 1 | (2) |
| Valuation allowance for uncollectible reinsurance - end of period | $367 | $351 |
The following tables present a listing, at December 31, 2023, of the categories of Chubb's reinsurers:
| December 31, 2023 | Gross Reinsurance Recoverable on Losses and Loss Expenses | Valuation allowance for Uncollectible Reinsurance | % of Gross Reinsurance Recoverable |
|---|---|---|---|
| (in millions of U.S. dollars, except for percentages) | |||
| Categories | |||
| Largest reinsurers | $10,993 | $117 | 1.1% |
| Other reinsurers rated A- or better | 4,898 | 57 | 1.2% |
| Other reinsurers rated lower than A- or not rated | 455 | 56 | 12.3% |
| Pools | 441 | 14 | 3.2% |
| Structured settlements | 493 | 11 | 2.2% |
| Captives | 2,653 | 16 | 0.6% |
| Other | 386 | 96 | 24.9% |
| Total | $20,319 | $367 | 1.8% |
| Largest Reinsurers | ||
|---|---|---|
| ABR Reinsurance Capital Holdings | Lloyd's of London | Renaissance Re Holdings Ltd |
| Berkshire Hathaway Insurance Group | Munich Re Group | Swiss Re Group |
| HDI Group (Hannover Re) | PartnerRe Group | |
| Categories of Chubb's reinsurers | Comprises: |
|---|---|
| Largest reinsurers | • All groups of reinsurers or captives where the gross recoverable exceeds one percent of Total Chubb shareholders' equity. |
| Other reinsurers rated A- or better | • All reinsurers rated A- or better that were not included in the largest reinsurer category. |
| Other reinsurers rated lower than A- or not rated | • All reinsurers rated lower than A- or not rated that were not included in the largest reinsurer category. |
| Pools | • Related to Chubb's voluntary pool participation and Chubb's mandatory pool participation required by law in certain states. |
| Structured settlements | • Annuities purchased from life insurance companies to settle claims. Since we retain ultimate liability in the event that the life company fails to pay, we reflect the amounts as both a liability and a recoverable/receivable for U.S. GAAP purposes. |
| Captives | • Companies established and owned by our insurance clients to assume a significant portion of their direct insurance risk from Chubb; structured to allow clients to self-insure a portion of their reinsurance risk. It generally is our policy to obtain collateral equal to expected losses. Where appropriate, exceptions are granted but only with review and approval at a senior officer level. Excludes captives included in the largest reinsurer category. |
| Other | • Amounts recoverable that are in dispute or are from companies that are in supervision, rehabilitation, or liquidation. |
The valuation allowance for uncollectible reinsurance is principally based on an analysis of the credit quality of the reinsurer and collateral balances. We establish the valuation allowance for uncollectible reinsurance for the Other category based on a case-by-case analysis of individual situations including the merits of the underlying matter, credit and collateral analysis, and consideration.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.