XML 19 R9.htm IDEA: XBRL DOCUMENT
v3.23.3

Acquisitions | 9 Months Ended
--- | ---
Sep. 30, 2023
Business Combinations [Abstract] |
Acquisitions | Acquisitions Huatai Group Huatai Insurance Group Co., Ltd. (Huatai Group) is a Chinese financial services holding company and the parent company of, among others, Huatai Property & Casualty Insurance Co., Ltd. (Huatai P&C), Huatai Life Insurance Co., Ltd. (Huatai Life), Huatai Asset Management Co., Ltd., and Huatai Baoxing Fund Management Co., Ltd., of which Huatai Group owns 100 percent, 80 percent, 82 percent, and 85 percent, respectively (collectively, Huatai). On July 1, 2023, Chubb increased its investment in Huatai Group from approximately 64.2 percent to approximately 69.6 percent. Chubb paid $318 million for the incremental 5.4 percent ownership interest. On October 1, 2023, we closed on an incremental ownership interest of approximately 2.5 percent for $146 million, which was previously paid as a deposit. Chubb has agreements in place to acquire approximately 14.1 percent of incremental ownership interests, pending completion of certain closing conditions, of which approximately 3 percent also requires regulatory approval. We have paid deposits of $416 million for the approximately 14.1 percent of ownership interests, and the remaining aggregate purchase price to be paid upon closing is approximately $433 million, based on current exchange rates. Refer to Note 2 to the Consolidated Financial Statements in our 2022 Form 10-K for additional information. Upon discontinuation of the equity method of accounting, Chubb remeasured the 64.2 percent equity method investment to its fair value of $4.1 billion as of July 1, 2023, resulting in a one-time realized gain of $744 million after-tax, reflecting the remeasurement of the previously held equity interest's historical carrying value to fair value. There was also a net realized and unrealized loss of $17 million after-tax reflecting the write-off of AOCI loss balances accumulated while under the equity method of $611 million with an offset to realized loss of $628 million. The acquisition of a controlling majority interest in Huatai Group generated $3,394 million of Goodwill, attributable to expected growth and profitability, and $1,655 million of Other intangible assets. None of the goodwill is expected to be deductible for income tax purposes. Additionally, the acquisition of a controlling majority interest in Huatai Group generated $309 million of Value of business acquired (VOBA). Chubb financed the transaction through available cash on hand. Direct costs related to the acquisition were expensed as incurred. These include one-time costs that are directly attributable to third-party consulting fees and other professional and legal fees related to the acquisition. The following table summarizes Chubb's best estimate of fair value of the assets acquired and liabilities assumed on July 1, 2023. The fair value of assets and liabilities are preliminary and may change with offsetting adjustments to goodwill. Chubb may make further adjustments to its purchase price allocation and the fair value of noncontrolling interest through the end of the permissible one-year measurement period.
Preliminary estimate of Huatai Group assets and liabilities consolidated | July 1
(in millions of U.S. dollars) | 2023
Assets |
Investments and Cash | $ | 13,346 |
Accrued investment income | 60 |
Insurance and reinsurance balances receivable | 277 |
Reinsurance recoverable on losses and loss expenses | 581 |
Reinsurance recoverable on future policy benefits | 27 |
Value of business acquired | 309 |
Goodwill and intangible assets | 5,049 |
Other assets | 748 |
Total assets | $ | 20,397 |
Liabilities |
Unpaid losses and loss expenses | $ | 831 |
Unearned premiums | 800 |
Future policy benefits | 2,287 |
Policyholders' account balances | 4,014 |
Insurance and reinsurance balances payable | 644 |
Accounts payable, accrued expenses, and other liabilities | 702 |
Deferred tax liabilities | 232 |
Repurchase agreements | 1,269 |
Total liabilities | $ | 10,779 |
Net acquired assets, including goodwill, attributable to Chubb | 4,408 |
Net acquired assets, attributable to noncontrolling interests | 5,210 |
Net acquired assets, including goodwill | $ | 9,618 |
The following table summarizes the results of the acquired Huatai Group operations that have been included within our Consolidated statements of operations for the three and nine months ended September 30, 2023:
(in millions of U.S. dollars) |  |  |  |  |  |  |
Total revenues |  |  |  |  |  |  | $ | 389 |
Net loss |  |  |  |  |  |  | $ | (11) |
Net loss attributable to Chubb |  |  |  |  |  |  | $ | (9) |
The preliminary purchase price allocation to intangible assets recorded in connection with the Huatai Group acquisition and their related useful lives at July 1, 2023, are as follows:
(in millions of U.S. dollars) | Amount |  | Weighted-average useful life
Definite life |  |  |
Agency distribution relationships | $ | 332 |  |  | 20 years
Asset management customer contracts | 94 |  |  | 16 years
Unearned premium reserves (UPR) intangible asset | 95 |  |  | 3 years
Land use rights | 569 |  |  | 31 years
Technology | 45 |  |  | 6 years
Indefinite life |  |  |
Trademarks | 398 |  |  | Indefinite
Asset management mutual funds | 122 |  |  | Indefinite
Total identified intangible assets | $ | 1,655 |  |  |
The following table presents supplemental unaudited pro forma consolidated information for the periods indicated as though the acquisition of a controlling majority interest in Huatai Group that occurred on July 1, 2023, had instead occurred on January 1, 2022. The unaudited pro forma consolidated financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisition of a controlling majority interest been consummated on January 1, 2022, nor is it necessarily indicative of future operating results. Significant assumptions used to determine pro forma operating results include amortization of VOBA and other intangible assets.
| Three Months Ended |  | Nine Months Ended
Pro forma: | September 30 |  | September 30
(in millions of U.S. dollars) | 2023 |  | 2022 |  | 2023 |  | 2022
Net premiums earned | $ | 12,674 |  |  | $ | 11,952 |  |  | $ | 34,605 |  |  | $ | 30,996 |
Total revenues | $ | 13,755 |  |  | $ | 12,612 |  |  | $ | 37,589 |  |  | $ | 33,019 |
Net income | $ | 1,905 |  |  | $ | 787 |  |  | $ | 5,595 |  |  | $ | 3,975 |
Net income attributable to Chubb | $ | 1,912 |  |  | $ | 777 |  |  | $ | 5,587 |  |  | $ | 3,935 |
Cigna’s Accident and Health (A&H) and Life Insurance Business in Asian Markets On July 1, 2022, we completed the acquisition of the life and non-life insurance companies that house the personal accident, supplemental health, and life insurance business of Cigna in several Asian markets. Chubb paid approximately $5.4 billion in cash for the operations, which include Cigna's accident and health (A&H) and life business in Korea, Taiwan, New Zealand, Thailand, Hong Kong, and Indonesia, collectively referred to as Cigna's business in Asia. This complementary strategic acquisition expands our presence and advances our long-term growth opportunity in Asia. Effective July 1, 2022, the results of operations of this acquired business are reported primarily in our Life Insurance segment and, to a lesser extent, our Overseas General Insurance segment. Refer to the 2022 Form 10-K for additional information on this acquisition. The acquisition of Cigna's business in Asia generated $1,177 million of goodwill, attributable to expected growth and profitability, and $309 million of other intangible assets. None of the goodwill is expected to be deductible for income tax purposes. Additionally, the acquisition of Cigna's business in Asia generated $3,633 million of value of business acquired (VOBA). Chubb financed the transaction through a combination of available cash and $2.0 billion in repurchase agreements that expired at the end of 2022. Direct costs related to the acquisition were expensed as incurred. The following table summarizes the fair value of the assets acquired and liabilities assumed at July 1, 2022:
Assets acquired and liabilities assumed from Cigna's business in Asia | July 1
(in millions of U.S. dollars) | 2022
Assets |
Investments and Cash | $ | 5,274 |
Accrued investment income | 33 |
Insurance and reinsurance balances receivable | 52 |
Reinsurance recoverable on losses and loss expenses | 3 |
Reinsurance recoverable on future policy benefits | 85 |
Value of business acquired | 3,633 |
Goodwill and intangible assets | 1,486 |
Other assets | 648 |
Total assets | $ | 11,214 |
Liabilities |
Unpaid losses and loss expenses | $ | 12 |
Unearned premiums | 60 |
Future policy benefits | 3,856 |
Insurance and reinsurance balances payable | 115 |
Accounts payable, accrued expenses, and other liabilities | 926 |
Deferred tax liabilities | 886 |
Total liabilities | $ | 5,855 |
Net acquired assets, including goodwill | 5,359 |
Total | $ | 11,214 |
The following table summarizes the results of the acquired Cigna business in Asia that have been included within our Consolidated statements of operations for the three and nine months ended September 30, 2022:
(in millions of U.S. dollars) |  |  |  |  |  |  |
Total revenues |  |  |  |  |  |  | $ | 681 |
Net income |  |  |  |  |  |  | $ | 17 |
The following table presents supplemental unaudited pro forma consolidated information for the periods indicated as though the acquisition of Cigna's business in Asia that occurred on July 1, 2022, had instead occurred on January 1, 2021. The unaudited pro forma consolidated financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated on January 1, 2021, nor is it necessarily indicative of future operating results. Significant assumptions used to determine pro forma operating results include amortization of VOBA and other intangible assets and recognition of interest expense associated with the repurchase agreement transactions used to effect the acquisition.
|  |  | Three Months Ended |  |  |  | Nine Months Ended
Pro forma: |  |  | September 30 |  |  |  | September 30
(in millions of U.S. dollars) |  |  | 2022 |  |  |  | 2022
Net premiums earned |  |  | $ | 11,530 |  |  |  |  | $ | 31,341 |
Total revenues |  |  | $ | 12,124 |  |  |  |  | $ | 33,161 |
Net income |  |  | $ | 837 |  |  |  |  | $ | 4,172 |

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration