Global insurer and reinsurer Chubb has posted an 11.4% reduction in net income for the third quarter of 2019, despite significant improvements to its property and casualty (P&C) underwriting.
Net income was recorded at $1.1 billion, compared with $1.2 billion for Q3 2018.
Chubb explained that the figure was unfavourably impacted by mark-to-market loss of $119 million, primarily related to its variable annuity reinsurance portfolio.
This compared with adjusted realised gains of $165 million for the same period in the prior year.
P&C underwriting income, however, faired better at $754 million, representing a 12.6% increase. Global P&C underwriting incomes (excluding Agriculture) similarly increase 27.7% to $753 million.
Chubb’s underwriting result benefited from a considerably lower catastrophe loss bill compared with last year, as losses amounted to $232 million (191 million after-tax) this quarter, down from $450 million ($372 million after-tax) in Q3 2018.
P&C net premiums written also increased 6.2% to $8.0 billion, although higher crop insurance losses impacted results negatively.
The P&C combined ratio improved slightly, from 90.9% last year to 90.2%, while the Global P&C combined ratio (excluding Agriculture) moved from 90.9% to 88.9% this quarter.
Chubb explained that it was benefitting from an improved pricing and underwriting environment and a flight to quality from commercial insurance buyers, with prices firming at more than double the rate seen in Q1 and spreading across more classes of business.
Net investment income was up 6.0% to $873 million pre-tax, the company said.
Looking at the first nine months of the year, income was down 9.1% to $3.3 billion, compared with $3.6 billion in 2018. The P&C combined ratio for this period was 89.9% and the Global P&C combined ratio (excluding Agriculture) was 89.7%.
“Our third quarter results were highlighted by core operating earnings that were up double-digit over prior year and excellent premium revenue growth in many areas of our company,” said Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb.
” Growth was distributed broadly across the globe, with net premiums up 6.5% in our North America insurance operations, up circa 10% in Asia and Latin America, and up 8% and 6%, respectively, in the U.K. and on the European Continent. We are also benefiting from our many product, customer and distribution-related growth initiatives in the U.S., Asia and Latin America,” he continued.
“Book and tangible book value per share were up 2% and 3.3%, respectively, in the quarter, and are up 9.8% and 15.7% for the year. While benefiting temporarily our company’s book value growth, prolonged low interest rates, a result of overreliance on monetary policy, have penalized savers and led to misallocation of capital and overvaluation of assets without substantially supporting business investment and economic growth.”
“Our company is in great shape and we are executing at a high level,” Greenberg concluded.
