Chubb profit more than halves in Q3 as it takes $975m hit on Ian losses
Global property/casualty insurer Chubb’s third-quarter profit declined 55.7% from last year as it booked almost $1.2 billion of catastrophe losses, with $975 million coming from Hurricane Ian. The company’s chief executive Evan Greenberg (Pictured), however, is optimistic about the momentum of the businesses despite challenging conditions, and assured that it is staying on top of inflation in terms of both pricing and reserving.
Chubb reported a net profit of $812 million for the quarter ended September 30, down 55.7% from $1.83 billion in the prior year. Profit in the quarter was adversely impacted by realised losses of $502 million after tax, principally due to the mark-to-market impact on derivatives and private equities as well as from sales in fixed income securities.
The P&C underwriting income of $710 million was up 15% and led to a combined ratio of 93.1%, compared to 93.4% prior year. It included pre-tax catastrophe losses of $1.2 billion, with $975 million from Hurricane Ian.
The company said its book value was “unfavourably impacted” by after-tax net realised and unrealised losses of $3.59 billion in the company's investment portfolio, principally due to the mark-to-market impact from rising interest rates in the fixed income portfolio.
Greenberg said the company “continued to capitalise on rising interest rates, deploying cash at an average reinvestment rate of 5.8% versus a portfolio yield of 3.4%. Adjusted net investment income was a record $1.1 billion, up over 12% and topping $1 billion for the first time.”
The insurer’s consolidated net premiums written, which include P&C and life insurance, grew over 17% in constant dollars, as it benefitted from the strengthening of the dollar, which is at a 20-year high. P&C grew 11%, with commercial lines up 11.5% and consumer lines up 9.5% in constant dollars. Life premiums grew 117% with the consolidation of Cigna's business in Asia.
Commercial P&C pricing remained strong and continued to exceed our loss costs, the CEO stated. It increased 8.5% in North America and about 11% in Chubb’s international operations.
Greenberg, chairman and CEO of Chubb, praised the company’s “excellent underwriting results despite an active catastrophe quarter” where he said all major areas of its business contributed.
“We had record investment income, which is and will be a growing source of earnings; double-digit P&C premium revenue growth in constant dollars, which was well balanced between commercial and consumer lines; and life insurance premiums that more than doubled with the closing of our acquisition of Cigna's business in Asia,” he said.
“We are focused on inflation and staying on top of it in terms of both pricing and reserving,” Greenberg noted.
“While we are operating in a challenging economic and geopolitical environment, we are optimistic about our prospects given the strengths and momentum of our businesses. With the combination of growth and underwriting margins in our P&C businesses; our growth in investment income; and the future revenue and earnings contributions from our life insurance businesses in Asia, we expect EPS to continue to grow at a healthy rate into the future,” he concluded.
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