Global insurer Chubb has reported pre-tax catastrophe losses of $450 million ($372 million after-tax) for the third-quarter of 2018, and a core operating profit of $1.1 billion, compared with a $60 million loss a year earlier.
Chubb announced previously that it expected Q3 2018 catastrophe losses to amount to $450 million pre-tax, and today, it confirmed the impact of Q3 catastrophe losses on its financial performance.
According to data provided by Chubb, hurricane Florence resulted in a $160 million net loss, or roughly 36% of the firm’s total catastrophe losses in the quarter, with net referring to total consolidated losses including reinstatement premiums.
After Florence, U.S. flooding, hail, tornadoes, and wind events contributed 21%, or $95 million of the total pre-tax loss, while rain and hail storms in Colorado during the period resulting in a $71 million loss. Typhoon Jebi drove a $50 million pre-tax loss and typhoon Mangkhut resulted in a loss of $16 million for Chubb. Other events in the quarter include a $13 million loss from flooding in Japan, $8 million of losses from California wildfires, and $37 million of Chubb’s losses came from other events.
Interestingly, Chubb reveals the gross and net loss for each event, which highlights its prudent use of reinsurance protection to mitigate the financial impact of catastrophe events. Combined, gross losses from catastrophe losses in the third-quarter totalled $685 million, which, after reinsurance and reinstatement premiums declined by 34% to the $450 million pre-tax figure.
So, essentially, Chubb passed just over a third of its Q3 catastrophe losses to reinsurers in the third-quarter.
Chubb’s Q3 cat losses are a fair bit higher than the $211 million reported in Q2 2018, and also above the $380 million recorded in the first-quarter of the year. At the same time, at $450 million, Chubb’s third-quarter 2018 cat losses are lower year-on-year, when the insurer reported cat losses of almost $1.9 billion.
Chairman and Chief Executive Officer (CEO) of Chubb, Evan Greenberg, commented: “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%. Excluding catastrophes, our combined ratio of 84.8% reflects strong current accident year EPS, up 5% 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.”
Chubb’s net income for the quarter totalled $1.2 billion, compared with a net loss of $70 million a year earlier. For the first nine months of the year, Chubb’s net income reached $3.6 billion, which is up on the $2.3 billion reported a year earlier.
“Global P&C net premiums written, which exclude agriculture, increased 4% in the quarter in constant dollars. We had good growth in our U.S. 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%, or 4.6% 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% 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,” said Greenberg.
