DEFA14A 1 d169520ddefa14a.htm DEFA14A DEFA14A



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Chubb Limited

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Chubb Limited

Bärengasse 32


CH-8001 Zurich



May 6, 2016


Dear Chubb Limited Shareholders:




I write today, with the unanimous support of the independent directors of Chubb Limited, to urge you to vote in favor of our Swiss say-on-pay and U.S. say-on-pay proposals at our upcoming annual general meeting on May 19, 2016.


Our company had an extraordinary year in 2015, with outstanding financial performance achieved even as we undertook the transformative acquisition of The Chubb Corporation, creating the world’s largest publicly traded P&C company. Our executive compensation proposals reflect both this success and our long standing, disciplined policy of closely aligning executive pay and performance.


We respectfuly but strongly disagree with proxy advisory firm recommendations to vote against these proposals. Those recommendations are based on isolated comparative metrics and proprietary calculations that ignore the full extent to which our CEO, Evan Greenberg, and his executive team have over the past decade-plus built a globally diversified P&C leader capable of delivering the significant shareholder value that we achieved in the last year and poised to deliver enhanced value far into the future.


Our 2015 operating results were again industry-leading, despite a soft insurance market and currency headwinds affecting all global, dollar-based multinationals. We achieved a record P&C combined ratio (87.4%) and record P&C underwriting income ($1.9 billion). Our operating return on equity (11.5%) greatly exceeded our U.S. and global peers. In July 2015, we announced the $29.5 billion acquisition of The Chubb Corporation which furthered the company’s long term strategy of targeted diversification and balanced mix of business, and positions the company for substantial long term growth.


More specifically, the performance of our stock price in the period between announcement of the Chubb Corp. acquisition and the closing was, we believe, extraordinary, and a testament to the deal’s value creation. Typically, the stock price of a public company acquirer in a large M&A transaction decreases between deal announcement and closing. For 2015 M&A transactions by public acquirers with a deal size greater than $5 billion, acquirer stock prices decreased by an average of 5.4% between announcement and closing. However, our stock price rose 9.2% from announcement to closing of the Chubb Corp. acquisition – a favorable swing of more than 14 percentage points compared to the average. Over the same period, that stock price performance also bested (by more than 10 percentage points) the average 1.0% stock price decrease for all U.S.-listed P&C companies, and


outperformed the average of the S&P 500 by 16 points. The attached slides illustrate these differences. We believe our stock price performance over this critical period reflects not only our continued strong operating performance, but also a sign of shareholder confidence in the new Chubb.


Our Compensation Committee and Board take seriously our responsibility to maintain a compensation structure and process designed to ensure strong pay vs. performance linkage. Most of the total compensation paid to our senior executives is at-risk variable compensation based on performance. This compensation includes long-term incentive equity awards that are based on tangible book value performance over time. Applying our criteria, 2015 cash and stock grants for our CEO (and our other named executive officers), excluding one-time supplemental awards for outstanding performance and substantial additional work associated with the Chubb Corp. acquisition, were only modestly higher than the prior year. Our Board firmly believes 2015 executive compensation tightly linked pay to excellent individual and company performance. And while our US say-on-pay proposal looks backward at 2015, our Swiss say-on-pay proposal looks forward, asking for your approval for a fixed compensation pool for our Executive Management, which is appointed by the Board based on the applicable provisions of Swiss law and our Organizational Regulations. This pool sets a maximum, and the amount actually paid will depend on whether individual executive and company performance meet the performance thresholds set in advance by the Board. Moreover, shareholders will have the opportunity to express their views on final awards, which will be subject to the US say-on-pay look back.


In short, and as highlighted above, our consistent outstanding financial performance, coupled with the strategic initiatives undertaken and completed to enable Chubb to increase shareholder value, are essential to evaluating our executive compensation. We encourage you to do so considering the factors discussed in this letter and to cast your vote in favor of the say-on-pay proposals at our upcoming annual general meeting.






Michael P. Connors

Chair, Compensation Committee


Enclosure: Chubb Limited Stock Price Performance – From Announcement to Closing of The Chubb Corporation Acquisition

Slide 0

Price Performance vs. Peers & Market 1 Chubb +9.2% 1/14/16 U.S. P&C (1.0%) S&P 500 (6.8%)

Slide 1

Price Performance vs. Large M&A Deals 2 2015 U.S. transactions > $5B with public acquirors1 Excludes deals for less than 90% of target shares Deal size at announcement Price change from 6/30/15 – transaction announced pre-market on 7/1/15 3