AM Best Affirms Credit Ratings of Chubb Limited and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” (Superior) of the subsidiaries of Chubb Limited (Zurich, Switzerland) [NYSE: CB], which includes the members of the Chubb US Group of Insurance Companies (Chubb US Group), as well as Chubb Bermuda Insurance Ltd. (Chubb Bermuda) (Bermuda) and Chubb Tempest Reinsurance Ltd. (Chubb Tempest Re) (Bermuda) and their members.

In addition, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of Combined Insurance Company of America (Chicago, IL) and Combined Life Insurance Company of New York (Latham, NY) (together known as the Combined companies). AM Best also has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of ACE Life Insurance Company (ACE Life) (Stamford, CT).

Lastly, AM Best has affirmed the Long-Term ICRs of “a+” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IR) of Chubb Limited (CB) and Chubb INA Holdings Inc. The outlook of these Credit Ratings (ratings) is stable. (Please see the link below for a detailed listing of the companies and ratings.)

The ratings of the Chubb US Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its very strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Chubb US Group’s very strong operating performance is reflected by return measures that have outperformed those of the commercial casualty composite materially over the past five years. The Chubb US Group has consistently generated strong underwriting performance, operating income and net income, despite the impact of unusually high catastrophe losses in 2021 and 2022, as well as the impact of pandemic-related losses in 2020. A robust pricing environment in the majority of its commercial business lines globally has been particularly supportive of especially strong underwriting performance through 2022, not just for Chubb US Group, but for nearly all of the group’s major operating units. However, sharply elevated inflationary trends affecting both property and casualty lines may constrain prospective underwriting performance.

Chubb US Group is a market leader in several of its principal product and customer segments, including high-net-worth personal lines, commercial and specialty insurance, including management liability and casualty lines, excess and surplus lines and multiperil crop/agricultural insurance. AM Best notes, however, that Chubb US’s risk-adjusted capital strength – while still consistent with a strongest level capital adequacy assessment, as measured by Best’s Capital Adequacy Ratio (BCAR) as of 3Q 2022 – has declined somewhat over the past 12-24 months. This was partly a result of dividends paid to the parent company to fund share repurchases and the completion in July 2022 of the $5.4 billion acquisition of Cigna’s Asia-Pacific life and A&H businesses. However, AM Best expects that capital retention by Chubb US will increase in 2023, in part through a reduced level of share repurchases at the parent, enabling the group’s BCAR scores to return to historically higher levels.

The ratings of Chubb Tempest Re and its member reflect their balance sheet strength, which AM Best assesses as strongest, as well as its very strong operating performance, favorable business profile and appropriate ERM. Chubb Tempest Re principally provides property catastrophe reinsurance to commercial and personal property insurers. Property catastrophe reinsurance is on an occurrence or aggregate basis and protects a ceding company against an accumulation of losses covered by its issued insurance policies, arising from a common event or occurrence. In addition to its external client business, Chubb Tempest Re acts as the internal global reinsurance hub for Chubb’s global operations, providing it with capital and risk management efficiencies resulting from the group’s global spread of risk.

The ratings of Chubb Bermuda and its member reflect their balance sheet strength, which AM Best assesses as strongest, as well as their very strong operating performance, neutral business profile and appropriate ERM.

The ratings of Chubb Bermuda also reflect the implicit support received from Chubb Limited, the ultimate parent. Chubb Bermuda provides commercial insurance products on an excess basis including excess liability, directors and officers, professional liability, property and political risk, with the latter being written by Sovereign Risk Insurance Ltd., a wholly owned managing agent. Chubb Bermuda focuses on Fortune 1000 companies and targets risks that are generally low in frequency and high in severity.

The ratings of the Combined companies reflect their balance sheet strength, which AM Best assesses as very strong, as well as their strong operating performance, neutral business profile and appropriate ERM. The ratings also reflect the companies’ strategic role in supporting the organization’s global accident and health (A&H) segment.

The Combined companies distribute specialty supplemental A&H and life insurance products targeted to middle income consumers and businesses in the United States and Canada; most of these products are primarily fixed-indemnity benefit obligations and are not directly subject to escalating medical cost inflation.

The ratings of ACE Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, very limited business profile and appropriate ERM. The ratings also reflect the continued financial support received from its parent. ACE Life’s very limited business profile reflects the decision in 2010 by its then-ultimate parent, ACE Limited, to discontinue writing life reinsurance business in order to focus on its property/casualty segments.

Each of Chubb’s component groups benefit from the financial flexibility provided by Chubb Limited, the publicly traded ultimate parent, which maintains financial leverage that is in line with its current ratings, as well as additional liquidity sources given its access to capital markets and lines of credit. AM Best expects that earnings and cash flows from Chubb Limited’s operating subsidiaries will continue to allow it to support risk-adjusted capitalization should the need arise. At the same time, surplus growth at each group has been limited at times over the past five years due to payments of dividends. AM Best expects that following capital deployed in connection with the July 2022 acquisition of Cigna’s Asia-Pacific life and A&H businesses, and taking into consideration recent market volatility and stiffer headwinds in several key commercial and personal property/casualty segments, Chubb’s prospective share repurchase activity will be somewhat more restrained over the intermediate term.

A complete listing of Chubb Limited’s FSRs, Long-Term ICRs and Long-Term IRs also is available.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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