Profits recover at Chubb in Q3 as reinsurance business shrinks
Chubb’s net profits soared in the third quarter reaching $1.2 billion in the period compared with a net loss of $70 million in the same period a year earlier, when it was hit by multiple natural catastrophes. Its combined ratio for the period was 90.9 percent compared with 110.8 percent in the same period a year earlier.
The company’s net premiums written increased by 2.8 percent in the quarter to reach $7.5 billion but there were wide variations in the growth or retraction of various business lines within this.
In its North America Commercial P&C Insurance, net premiums written in the middle market and small commercial divisions increased by 3.6 percent, the growth reflecting a 5.2 percent increase in P&C lines and an increase of 0.2 percent in financial lines. Net premiums written in the small commercial division increased 29.8 percent.
This growth was in stark contrast to its global reinsurance division in which net premiums written decreased by 14.3 percent, principally due to higher reinstatement premiums collected in the prior year relating to the 2017 natural catastrophes. The combined ratio of this unit was 86.7 percent compared with 187.4 percent in the same period a year earlier.
Evan Greenberg, chairman and chief executive of Chubb, said: "As a global insurer with operations in 54 countries, we experienced an active quarter for natural catastrophes around the world, and Chubb's underwriting excellence once again distinguished the company. We produced core operating income of $1.1 billion, or $2.41 per share, and a P&C combined ratio of 90.9% percent.
“Excluding catastrophes, our combined ratio of 84.8 percent reflects strong current accident year EPS, up 5 percent over prior year, and a nice contribution from positive prior period reserve development. The quality and balance of our earnings this quarter were evident, with P&C underwriting income of $669 million and net investment income of $883 million.
"Global P&C net premiums written, which exclude agriculture, increased 4% in the quarter in constant dollars. We had good growth in our US commercial P&C divisions and simply excellent growth in our international P&C business. In our U.S. commercial P&C business excluding agriculture, net premiums increased 3.6 percent, or 4.6 percent excluding merger-related actions, which are now substantially completed and will be behind us after one more quarter.
“We achieved even stronger growth in our Overseas General operations, which include both commercial and consumer lines, with premiums up 7.5 percent in constant dollars. Our global presence and the expanded capabilities of today's Chubb allow us to take advantage of growth opportunities in many areas without sacrificing underwriting standards.
"Commercial P&C pricing for the business we wrote was consistent with the prior quarter. Given market conditions, we are trading some growth for an underwriting profit – a proven strategy that requires discipline. We're confident and optimistic about our ability to outperform the balance of the year and beyond."
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