Chubb’s Q2 net profit down, operating profit up, after merger
Chubb, which merged with ACE after being acquired on January 14, 2016, reported lower net profit for the second quarter compared to the same period a year ago, while operating income was up.
Operating income increased to $1.06 billion net of tax compared with $788 million in the second quarter of 2015. Operating income excluding catastrophe losses was $1.4 billion in the quarter compared with $894 million for the same period in 2015.
Evan Greenberg, chairman and chief executive officer of Chubb, commented: “Chubb produced very good operating results in the quarter despite a greater level of industry natural catastrophe losses globally than has occurred in recent years, though industry insured losses appear in line with longer-term historical averages.
"Our earnings were driven in particular by strong underwriting margins as reflected in the published P&C combined ratio of 91.2 percent, or 90.2 percent excluding purchase accounting and other temporary merger-related items.”
Net income for the quarter dropped to $726 million compared to $942 million in the same quarter of 2015. It was impacted by adjusted net realized losses, net of tax, of $195 million, amortisation of fair value adjustment of acquired invested assets and long-term debt, net of tax, of $66 million and $71 million for Chubbs one-time integration and merger-related expenses, net of tax.
“Concerning the merger, our integration efforts, both growth and expense-related, are on track and going well. In fact, the strength of the new Chubb, including cross-selling and the introduction of our total product portfolio to an expanded distribution base, is receiving greater attention and, while early days, the efforts are beginning to contribute to revenue growth,” Greenberg said.
P&C net premiums written were down 4.7 percent year over year in constant dollars when compared with prior year as if ACE and Chubb were one company in 2015 and down 1.4 percent in constant dollars excluding the nonrecurring Fireman’s Fund transfer in 2015.
The transfer of Fireman’s Fund in-force business in April 2015 contributed $252 million of net premiums written, $49 million of underwriting income and $15 million of operating income that were nonrecurring in 2016.
