CB

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How CB rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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New in FY2025

Catastrophic events are inherently unpredictable and the actual nature of such events, when they occur, could be more frequent or severe than contemplated in our pricing and risk management expectations.
At December 31, 2025, gross A&E liabilities represented approximately 1.4 percent of our gross loss reserves.
We seek to manage our loss exposure by maintaining a disciplined underwriting process throughout our insurance operations, including the use of underwriting controls and risk models.
At December 31, 2025, we had $20.6 billion of reinsurance recoverables, net of reserves for uncollectible recoverables.
At December 31, 2025, the aggregate reinsurance balances ceded by our active subsidiaries to Century were approximately $1.9 billion.
The surety business is characterized by infrequent but potentially high severity losses.
We generally pay amounts owed on claims to brokers who, in turn, remit these amounts to the insured or ceding insurer.
An increased inability of customers to reimburse us in this context could have an adverse effect on our financial condition and results of operations.
Our investment assets are invested by professional investment management firms under the direction of our management team in accordance with investment guidelines approved by the Board.
Our investments are subject to market risks and risks inherent in individual securities.
We may not be able to effectively mitigate interest rate sensitivity.
Our fixed income portfolio is primarily invested in high quality, investment-grade securities.
However, a smaller portion of the portfolio, approximately 17 percent at December 31, 2025, is invested in below investment-grade securities.
It is possible that in periods of economic weakness (such as recession), we may experience credit or default losses in our portfolio, which could adversely affect our results of operations and financial condition.
The amount of capital that our insurance subsidiaries have and must hold to maintain their financial strength and credit ratings and meet other requirements can vary significantly from time to time and is sensitive to a number of factors, some of which are outside of our control.
Capital requirements for our insurance subsidiaries are prescribed by the applicable insurance regulators, while rating agencies establish requirements that inform ratings for our insurance subsidiaries.
Projecting surplus and the related capital requirements is complex and requires making assumptions regarding how our business will perform within the broader macroeconomic environment.
Insurance regulators and rating agencies evaluate company capital through financial models that calculate minimum capitalization requirements based on risk-based capital formulas for property and casualty insurance groups and their subsidiaries.
In any particular year, capital levels and risk-based capital requirements may increase or decrease depending on a variety of factors including the mix of business written by our insurance subsidiaries and correlation or diversification in the business profile, the amount of additional capital our insurance subsidiaries must hold to support business growth, the value of securities in our investment portfolio, changes in interest rates and foreign currency exchange rates, as well as changes to the regulatory and rating agency models used to determine our required capital.
Our ability to pay dividends and make payments on indebtedness may be constrained by our holding company structure.
In addition, Swiss law requires that the total par value of Chubb's treasury shares must not be in excess of 10 percent of its total share capital, although, to the extent permitted by Swiss law, exemptions from the 10 percent limit apply for repurchased treasury shares dedicated for cancellation under our shareholder-approved capital band and for shares acquired pursuant to a shareholder-ratified repurchase program and dedicated for cancellation.
The principal currencies creating foreign exchange risk are the Korean won, Chinese yuan renminbi, Canadian dollar, Australian dollar, Mexican peso, Thai baht, Hong Kong dollar, Brazilian real, New Zealand dollar, and euro.
At December 31, 2025, approximately 26.7 percent of our unhedged net assets were denominated in foreign currencies.
Our insurance and reinsurance subsidiaries conduct business globally and are subject to varying degrees of supervision and regulation by the regulatory authorities under which they conduct business.
The extent of regulation on our insurance business varies across the jurisdictions where we operate, but generally is governed by laws that delegate regulatory, supervisory and administrative authority to insurance departments and similar regulatory agencies.
The laws and regulations of the jurisdictions in which our insurance and reinsurance subsidiaries are domiciled generally grant regulatory agencies and/or self-regulatory organizations broad rulemaking and enforcement powers, including the power to regulate the issuance, marketing, sale and distribution of our products, the manner in which we underwrite our policies, the delivery of our services, the nature or extent of disclosures that we give our customers, the compensation of our distribution partners, the manner in which we handle claims on our policies and the administration of our policies and contracts, as well as the power to limit or restrict our business for failure to comply with applicable laws and regulations.
Applicable statutes, regulations and policies require, among other things, maintenance of minimum levels of statutory capital, surplus, and liquidity, various solvency standards, and periodic examinations of subsidiaries' financial condition.
This has resulted in expanded and increasingly complex expectations related to reporting under multiple, disparate and potentially inconsistent reporting requirements, increased due diligence, and potential requirements for the reporting of scope 3 greenhouse gas emissions.
New reporting standards, regulations and requirements with various aims and goals could expose us to legal, regulatory, investor and other stakeholder scrutiny, and customers that disagree with our actions may determine not to do business with us, all of which may adversely affect our business, reputation and results of operations.
Several nations in Asia are also considering legislation or regulatory guidance.
Both current and future foreign operations could be adversely affected by unfavorable geopolitical developments, including law changes; tax changes; changes in trade policies; changes to visa or immigration policies; regulatory restrictions; government leadership changes; political events and upheaval; sociopolitical instability; and nationalization of our operations without compensation.
Our systems and those of our third-party service providers, have been, and will likely continue to be, targeted by or subject to viruses, malware or other malicious codes, unauthorized access, cyber-attacks, cyber frauds, ransomware or other unauthorized occurrences, on or conducted through our information systems, which jeopardize the confidentiality, integrity or availability of our information or information systems.
The administrative and technical controls and protective actions we have taken (including conducting due diligence security reviews and negotiating agreements with third-party service providers), which are designed to reduce the risk of cyber incidents and to protect our information technology and assets, may be insufficient to prevent cybersecurity events, which may include unauthorized access, computer viruses, malware or other malicious code or cyber-attack, ransomware, phishing scams, or similar attempts to fraudulently induce our employees, third party vendors or others to take actions that compromise our information or information systems, business compromise attacks, catastrophic events, system failures and disruptions, employee errors, negligence or malfeasance, loss of assets or data and other events that could have security consequences.
Our ability to conduct business may be adversely affected by a disruption of the infrastructure that supports our business in the communities in which we are located, or of outsourced services or functions.
It is not always possible to deter or prevent employee, agent, broker or vendor misconduct, and the precautions that we take to prevent and detect this activity may not be effective in all cases.
We compete on an international and regional basis with major U.S., Bermudian, European, and other international insurers and reinsurers and with underwriting syndicates, some of which have greater financial, technological, marketing, distribution and management resources than we do.
We will be at a competitive disadvantage if our competitors are more effective than us in their utilization of technology and evolving data analytics.
Our non-U.S. companies may be subject to U.S. tax which may have an adverse effect on our results of operations and shareholders' equity.
Our Bermuda operations are subject to taxation in Bermuda because of the newly effective Bermuda Corporate Income Tax Act.
Historically, our Bermuda operations had not been subject to Bermuda income tax.

and 8 more.

Gone since FY2024

Although we attempt to manage our exposure to such events through the use of underwriting controls, risk models, and the purchase of third-party reinsurance, catastrophic events are inherently unpredictable and the actual nature of such events, when they occur, could be more frequent or severe than contemplated in our pricing and risk management expectations.
At December 31, 2024, gross A&E liabilities represented approximately 1.6 percent of our gross loss reserves.
We seek to manage our loss exposure by maintaining a disciplined underwriting process throughout our insurance operations.
At December 31, 2024, we had $20.1 billion of reinsurance recoverables, net of reserves for uncollectible recoverables.
At December 31, 2024, the aggregate reinsurance balances ceded by our active subsidiaries to Century were approximately $1.9 billion.
The surety business tends to be characterized by infrequent but potentially high severity losses.
In accordance with industry practice, we generally pay amounts owed on claims to brokers who, in turn, remit these amounts to the insured or ceding insurer.
While we generally seek to mitigate this risk through collateral agreements and maintain a provision for uncollectible accounts associated with this credit exposure, an increased inability of customers to reimburse us in this context could have an adverse effect on our financial condition and results of operations.
Our investment assets are invested by professional investment management firms under the direction of our management team in accordance with investment guidelines approved by the Risk & Finance Committee of the Board of Directors.
Although our investment guidelines stress diversification of risks and conservation of principal and liquidity, our investments are subject to market risks and risks inherent in individual securities.
Although we take measures to manage the risks of investing in a changing interest rate environment, we may not be able to effectively mitigate interest rate sensitivity.
As stated, our fixed income portfolio is primarily invested in high quality, investment-grade securities.
However, a smaller portion of the portfolio, approximately 17 percent at December 31, 2024, is invested in below investment-grade securities.
While we have put in place procedures to monitor the credit risk and liquidity of our invested assets, it is possible that, in periods of economic weakness (such as recession), we may experience credit or default losses in our portfolio, which could adversely affect our results of operations and financial condition.
The increasing impact of climate change could affect our cost of claims, loss ratios, and financial results.
Our ability to pay dividends and to make payments on indebtedness may be constrained by our holding company structure.
In addition, Swiss law requires that the total par value of Chubb's treasury shares must not be in excess of 10 percent of its total share capital, although, to the extent permitted by Swiss law, exemptions from the 10 percent limit apply for repurchased treasury shares dedicated for cancellation under our shareholder-approved capital band or for shares acquired pursuant to a shareholder-ratified repurchase program and dedicated for cancellation.
The principal currencies creating foreign exchange risk are the Korean won, Chinese yuan renminbi, Canadian dollar, Australian dollar, Mexican peso, British pound sterling, Hong Kong dollar, Thai baht, New Taiwan dollar, and euro.
At December 31, 2024, approximately 29.9 percent of our unhedged net assets were denominated in foreign currencies.
Our insurance and reinsurance subsidiaries conduct business globally.
Our businesses in each jurisdiction are subject to varying degrees of regulation and supervision.
The laws and regulations of the jurisdictions in which our insurance and reinsurance subsidiaries are domiciled require, among other things, maintenance of minimum levels of statutory capital, surplus, and liquidity, various solvency standards, and periodic examinations of subsidiaries' financial condition.
This has resulted in expanded and increasingly complex expectations related to reporting under multiple, various, disparate and potentially inconsistent reporting requirements, increased due diligence, and potential requirements for the reporting of scope 3 greenhouse gas emissions.
New reporting standards, regulations and requirements with various aims and goals could expose us to legal, regulatory, investor and other stakeholder scrutiny, and customers that disagree with our actions or reporting on climate change may determine not to do business with us, all of which may adversely affect our business, reputation and results of operations.
Both current and future foreign operations could be adversely affected by unfavorable geopolitical developments, including law changes; tax changes; changes in trade policies; changes to visa or immigration policies; regulatory restrictions; government leadership changes; political events and upheaval; sociopolitical instability; social, political or economic instability resulting from climate change; and nationalization of our operations without compensation.
Like all global companies, our systems and those of our third-party service providers, have been, and will likely continue to be, targeted by or subject to viruses, malware or other malicious codes, unauthorized access, cyber-attacks, cyber frauds, ransomware or other unauthorized occurrences, on or conducted through our information systems, which jeopardize the confidentiality, integrity or availability of our information or information systems.
Although we have implemented administrative and technical controls and have taken protective actions designed to reduce the risk of cyber incidents and to protect our information technology and assets, including conducting due diligence security reviews and negotiating agreements with third-party service providers, and we additionally endeavor to modify such procedures and agreements as circumstances warrant, such measures may be insufficient to prevent cybersecurity events, which may include unauthorized access, computer viruses, malware or other malicious code or cyber-attack, ransomware, phishing scams, or similar attempts to fraudulently induce our employees or others to take actions that compromise our information or information systems, business compromise attacks, catastrophic events, system failures and disruptions, employee errors, negligence or malfeasance, loss of assets or data and other events that could have security consequences.
Despite the contingency plans and facilities we have in place and our efforts to observe the regulatory requirements surrounding information security, our ability to conduct business may be adversely affected by a disruption of the infrastructure that supports our business in the communities in which we are located, or of outsourced services or functions.
It is not always possible to deter or prevent employee misconduct, and the precautions that we take to prevent and detect this activity may not be effective in all cases.
We compete on an international and regional basis with major U.S., Bermuda, European, and other international insurers and reinsurers and with underwriting syndicates, some of which have greater financial, technological, marketing, distribution and management resources than we do.
We will be at a competitive disadvantage if, over time, our competitors are more effective than us in their utilization of technology and evolving data analytics.
We may be subject to U.S. tax and Bermuda tax which may have an adverse effect on our results of operations and shareholders' equity.
Historically, our Bermuda operations have not been subject to Bermuda income tax.
However, on December 27, 2023, the Government of Bermuda enacted a 15 percent income tax effective January 1, 2025.
The new Bermuda income tax will be a covered tax under the OECD’s global minimum tax regime discussed in our Risk Factor below titled “The Organization for Economic Cooperation and Development (OECD), European Union (EU), Swiss Federal Council, and other jurisdictions are considering, have considered, or have passed measures that might change long standing tax principles that could increase our taxes.” Therefore, we would expect any implementation of the OECD global minimum tax regime to count any current Bermuda income tax toward such OECD minimum tax.
The imposition of the Bermuda corporate income tax will increase our effective tax rate and cash taxes paid beginning in 2025.
We could be adversely affected by certain features of the Inflation Reduction Act.
On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) of 2022 (H.R. 5376).
Key tax provisions included in the Inflation Reduction Act include a 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income for corporations with average profits over $1 billion, and a 1 percent excise tax on repurchases of corporate stock.
The CAMT and the excise tax on share repurchases are effective for tax years beginning after December 31, 2022.

and 13 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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