Chubb reports significant rise in net income as P&C underwriting profit swells in Q3

November 02, 2023 | 11:09
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Property and casualty (P&C) insurer Chubb has reported net and core operating incomes for Q3/2023 of $2.04 billion each, up 157.8 and 55.4 per cent, respectively. The news comes as its P&C arm delivered a combined ratio of 88.4 per cent with an underwriting income of $1.31 billion.
Chubb reports significant rise in net income as P&C underwriting profit swells in Q3

The P&C underwriting result improved significantly from the $710 million gain seen in Q3/2022, when Chubb reported a combined ratio of 93.1 per cent.

In fact, the segment’s current accident year underwriting income excluding catastrophe losses was a record $1.78 billion, with a combined ratio of 84.3 per cent.

Growth was also solid for P&C in the third quarter of this year, with net written premiums jumping by more than 8 per cent on-year to $11.7 billion.

Within P&C, Chubb recorded pre-tax and after-tax catastrophe losses, net of reinsurance and including reinstatement premiums, of $670 million and $544 million, respectively – down from $1.16 billion and $949 million in Q3 last year.

Additionally, pre-tax and after-tax favourable prior period development totalled $200 million and $116 million, respectively, compared with $222 million and $162 million last year.

Within the firm’s Global P&C arm, which excludes agriculture, the underwriting income was $1.20 billion, up 117.2 per cent with a combined ratio of 87.6 per cent. Meanwhile, Global P&C’s current accident year underwriting income excluding catastrophe losses was a record $1.66 billion, with a combined ratio of 83 per cent.

Net written premiums for the Global P&C arm rose by 12.3 per cent to more than $10.1 billion.

In its Life business, Chubb has reported Q3/2023 income of $288 million, up almost 15 per cent from the $252 million seen a year earlier. The segment also recorded net written premium growth of 15 per cent to $1.5 billion.

Pre-tax net investment income increased by more than 34 per cent to $1.31 billion in Q3/2023, which is a record.

Evan G. Greenberg, chairman and CEO of Chubb Ltd. said, "We had another outstanding quarter, which contributed to a record nine months. Our performance in the quarter included double-digit Global P&C premium revenue growth, world-class P&C underwriting results, record net investment income, and strong life operating income."

"Over $2 billion of core operating income led to earnings per share (EPS) growth of 58.1 per cent for the quarter and 27.5 per cent for the year. The annualised core operating return on equity (ROE) was 13.5 per cent, with a return on tangible equity of 21.2 per cent. In the quarter, we increased our ownership in Huatai Group to 72 per cent and consolidated our results, which were accretive to EPS and ROE," he added.

The P&C underwriting income of $1.3 billion this quarter was up almost 8.4 per cent. Meanwhile, its underwriting results were driven by strong P&C earned premium growth, excellent current accident year underwriting margins inclusive of catastrophe losses, and favourable prior period reserve development in both North America and Overseas General.

The published calendar year combined ratio was 88.4 per cent, while the Global P&C current accident year combined ratio excluding catastrophe losses was 83 per cent.

“Global P&C premium growth was 12.3 per cent, with commercial lines up 10.3 per cent and consumer lines up 17.6 per cent," said Greenberg.

"In North America, commercial, property, and casualty premiums were up 10.5 per cent, while financial lines were up 1 per cent. Our huge US middle-market business had its best growth of the year at 16.3 per cent. Our market-leading high-net-worth personal lines business had another outstanding quarter, with growth of 9.6 per cent. The Overseas General division had a great quarter with premiums up 21.4 per cent, including double-digit growth in Europe, Asia-Pacific, and Latin America. Huatai contributed 7.5 percentage points to Overseas General’s growth. In our Asia-focused international life business, premiums were up nearly 20 per cent, including the impact of Huatai."

"The rates and price increases in our commercial P&C lines of business remained strong for the quarter globally. Pricing was up 13.9 per cent in North America and 11.7 per cent in our international business. Financial lines pricing was down in North America and up modestly overseas. In North America and Overseas General, P&C pricing exceeded loss cost trends, which were stable over the quarter. We are vigilant and disciplined, and are staying on top of loss cost inflation."

"We are confident in our ability to continue growing our revenue and operating earnings – which in turn drive EPS – through the three engines of P&C underwriting, investment, and life income,” concluded Greenberg.

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