Chubb Ltd

As our Bermuda subsidiaries are non-admitted insurers and reinsurers in the U.S., the terms of certain U.S. insurance and reinsurance contracts require them to provide collateral, which can be in the form of letters of credit (LOCs). LOCs may also be used for general corporate purposes.

Should the need arise, we generally have access to the long-term capital markets, credit facilities and commercial paper. Our group syndicated credit facility has capacity of $3.0 billion and expires in December 2030. Our total letter of credit capacity is $3.8 billion, $3.0 billion of which can be used for revolving credit. At December 31, 2025, LOC borrowings outstanding under these facilities was $935 million. Our access to credit under these facilities is dependent on the ability of the bank counterparties to meet their funding commitments. 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 or establishing additional facilities when needed.

We have the ability to borrow a total of $2.0 billion in commercial paper, supported by the $3.0 billion in group syndicated credit facility. At December 31, 2025, there were no commercial paper borrowings outstanding.

In the event we are required to provide alternative security to clients, the security could take the form of additional insurance trusts supported by our investment portfolio or funds withheld using our cash resources. The value of LOCs required is driven by, among other things, statutory liabilities reported by variable annuity guarantee reinsurance clients, loss development of existing reserves, the payment pattern of such reserves, the expansion of business, and loss experience of such business.

The facilities noted above require that we maintain certain covenants, all of which have been met at December 31, 2025. These covenants include a minimum consolidated net worth of not less than $46.0 billion, which is below our actual consolidated net worth of $78.7 billion.

Our failure to comply with the covenants under any credit facility would, subject to grace periods in the case of certain covenants, result in an event of default. This could require us to repay any outstanding borrowings or to cash collateralize LOCs under such facility. Our failure to repay material financial obligations, as well as our failure with respect to certain other events expressly identified, would result in an event of default under the facility.