Chubb Ltd

17. Postretirement benefits

Chubb provides postretirement benefits to eligible employees and their dependents through various defined contribution plans sponsored by Chubb. In addition, for certain employees, Chubb sponsors other postretirement benefit plans and defined benefit pension plans.

Defined contribution plans (including 401(k))

Under these plans, employees' contributions may be supplemented by Chubb matching contributions based on the level of employee contribution. These contributions are invested at the election of each employee in one or more of several investment portfolios offered by a third-party investment advisor. Expenses for these plans totaled $317 million, $298 million, and $283 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Defined benefit pension plans

We maintain non-contributory defined benefit pension plans that cover certain employees located in the U.S., U.K., Canada, and various other statutorily required countries. We account for pension benefits using the accrual method. Benefits under these plans are based on employees' years of service and compensation during final years of service. All underlying plans are subject to periodic actuarial valuations by qualified actuarial firms using actuarial models to calculate the expense and liability for each plan. We use December 31 as the measurement date for our defined benefit pension plans.

Under the Chubb Corp plans, prior to 2001, benefits were generally based on an employee’s years of service and average compensation during the last five years of employment. Effective January 1, 2001, the formula for providing pension benefits was changed from the final average pay formula to a cash balance formula. Under the cash balance formula, a notional account is established for each employee, which is credited semi-annually with an amount equal to a percentage of eligible compensation based on age and years of service plus interest based on the account balance. Chubb Corp employees hired prior to 2001 will generally be eligible to receive vested benefits based on the higher of the final average pay or cash balance formulas.

Other postretirement benefit plans

Our assumption of Chubb Corp's other postretirement benefit plans, principally healthcare and life insurance, covers retired employees, their beneficiaries, and covered dependents. Healthcare coverage is contributory. Retiree contributions vary based upon the retiree’s age, type of coverage, and years of service requirements. Life insurance coverage is non-contributory. Chubb funds a portion of the healthcare benefits obligation where such funding can be accomplished on a tax-effective basis. Benefits are paid as covered expenses are incurred. We use December 31 as the measurement date for our postretirement benefit plans.

Amendments to U.S. qualified and excess pension plans and U.S. retiree healthcare plan

In 2016, we harmonized and amended several of our U.S. retirement programs to create a unified retirement savings program. The amendments required a remeasurement of the plan assets and benefit obligations with updated assumptions, including discount rates and the expected return on assets. In 2020, we transitioned from a traditional defined benefit pension program that had been in effect for certain employees to a defined contribution program.

Additionally, as of December 31, 2025, the employer subsidy for the U.S. retiree healthcare and life insurance plan that was in place for certain employees was eliminated. In the fourth quarter of 2025, Chubb applied final settlement accounting to the U.S. retiree healthcare and life insurance plan. A pre-tax settlement gain of $8 million was recognized in the Consolidated statements of operations during the period. Chubb plans to withdraw excess plan assets from the U.S. retiree healthcare and life insurance plan in 2026, consistent with applicable law. The reversion of these assets is expected to be subject to an excise tax. Excess plan assets are shown as a negative outflow in foreign currency revaluation and other in the funded status table below. Excess plan assets are reported in Short-term investments and Fixed maturities available for sale in the Consolidated balance sheets as of December 31, 2025.

Obligations and funded status

The funded status of the pension and other postretirement benefit plans as well as the amounts recognized in the Consolidated balance sheets and Accumulated other comprehensive income (loss) at December 31, 2025 and 2024, was as follows:

For the U.S. pension plans, the $34 million actuarial loss and $162 million actuarial gain experienced in 2025 and 2024, respectively, were principally driven by the change in discount rates. In addition, for the non-U.S. pension plans, the $22 million and $54 million actuarial gain experienced in 2025 and 2024, respectively, were principally driven by the change in discount rates.

The accumulated benefit obligation for the pension benefit plans was $3.3 billion at December 31, 2025 and 2024. The accumulated benefit obligation is the present value of pension benefits earned as of the measurement date based on employee service and compensation prior to that date. For the non-U.S. pension plans, this differs from the pension (projected) benefit obligation in the table above in that the accumulated benefit obligation includes no assumptions regarding future compensation levels.

Chubb’s funding policy is to contribute amounts that meet regulatory requirements plus additional amounts determined based on actuarial valuations, market conditions and other factors. All benefit plans satisfy minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA).

The following table provides information on pension plans where the benefit obligation is in excess of plan assets at December 31, 2025 and 2024:

For other postretirement benefit plans with an accumulated benefit obligation in excess of plan assets, the accumulated benefit obligation was $28 million and $20 million at December 31, 2025 and 2024, respectively. These plans have no plan assets.

At December 31, 2025, we estimate that we will contribute $17 million to the pension plans and $1 million to the other postretirement benefits plan in 2026. The estimate is subject to change due to contribution decisions that are affected by various factors including our liquidity, market performance, and management discretion.

At December 31, 2025, our estimated expected future benefit payments are as follows:

The weighted-average assumptions used to determine the projected benefit obligation were as follows:

(1) For the U.S. Pension Plans, benefit accruals were frozen as of December 31, 2019.

The projected benefit cash flows were discounted using the corresponding spot rates derived from a yield curve, which resulted in a single discount rate that would produce the same liability at the respective measurement dates. The same process was applied to service cost cash flows to determine the discount rate associated with the service cost. In general, the discount rates for the non-U.S. plans were developed using a similar methodology by using country-specific yield curves.

The components of net pension and other postretirement benefit costs (benefits) reflected in Net income and other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:

The line items in which the service cost and non-service cost (benefit) components of net periodic benefit cost (benefit) are included in the Consolidated statements of operations were as follows:

The weighted-average assumptions used to determine the net periodic pension and other postretirement benefit costs were as follows:

The weighted-average healthcare cost trend rate assumptions used to measure the expected cost of healthcare benefits were as follows:

Plan Assets

The long-term objective of the pension plan is to provide sufficient funding to cover expected benefit obligations, while assuming a prudent level of portfolio risk. The assets of the pension plan are invested, either directly or through pooled funds, in a diversified portfolio of predominately equity securities and fixed maturities. We seek to obtain a rate of return that over time equals or exceeds the returns of the broad markets in which the plan assets are invested. The target allocation of U.S. plan assets is 50 percent to 60 percent invested in equity securities (including certain other investments measured using NAV), with the remainder primarily invested in fixed maturities and private equity investments. The target allocation of non-U.S. plans varies by country, but the plan assets are principally invested in fixed maturities. We rebalance our pension assets to the target allocation as market conditions permit. We determined the expected long-term rate of return assumption for each asset class based on an analysis of the historical returns and the expectations for future returns. The expected long-term rate of return for the portfolio is a weighted aggregation of the expected returns for each asset class.

In order to minimize risk, the Plan maintains a listing of permissible and prohibited investments. In addition, the Plan has certain concentration limits and investment quality requirements imposed on permissible investments options. Investment risk is measured and monitored on an ongoing basis.

The following tables present the fair values of the pension plan assets, by valuation hierarchy. For additional information on how we classify these assets within the valuation hierarchy, refer to Note 4 to the Consolidated Financial Statements.

(1)Excluded from the table above are $780 million and $253 million of other investments related to the U.S. Plans and Non-U.S. Plans, respectively, private equities of $223 million and $20 million in U.S. Plans and Non-U.S. Plans, respectively, measured using NAV as a practical expedient, and $5 million in cash and accrued income related to the U.S. Plans.

(1)Excluded from the table above are $714 million and $222 million of other investments related to the U.S. Plans and Non-U.S. Plans, respectively, private equities of $223 million and $18 million in U.S. Plans and Non-U.S. Plans, respectively, measured using NAV as a practical expedient, and $3 million in cash and accrued income related to the U.S. Plans.

Following the elimination of the U.S. retiree healthcare and life insurance plan at December 31, 2025, the other postretirement benefit plan had no plan assets. At December 31, 2024, the other postretirement benefit plan had $62 million of plan assets, of which $23 million of fixed maturities were categorized as Level 2, and $39 million of other investments were measured using NAV as a practical expedient.