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Chubb sees Q3 net income rise 54% despite $1bn+ of catastrophe losses

27th October 2021 - Author: Luke Gallin

U.S.-based insurer and reinsurer, Chubb, has announced strong net income of $1.83 billion for the third quarter of 2021, alongside an improved P&C underwriting performance in spite of higher losses from catastrophe events.

ChubbYear-on-year, Chubb’s net income increased by 53.5% in the third quarter of this year, while core operating income jumped by 27.5% to roughly $1.2 billion.

Within the firm’s P&C operations, net premiums written (NPW) were up by almost 17% for the quarter to $9.9 billion, driven by 22% growth in commercial P&C premiums. In Global P&C (excludes Agriculture) NPW increased by 13.4% to roughly $8.5 billion, driven by 18% growth in commercial P&C.

During the quarter, Chubb has recorded catastrophe losses, net of reinsurance and reinstatement premiums of $1.15 billion, pre-tax ($943m after-tax), compared with $925 million, pre-tax ($797m after-tax) for the same period last year.

Chubb says that catastrophe losses in Q3 2021 included a pre-tax net impact of $806 million from hurricane Ida in the U.S.

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All in all, Chubb has reported P&C underwriting income for the third quarter of $617 million, which represents growth of 57.5%, resulting in a combined ratio for the period of 93.4%, against 95.2% a year earlier.

The P&C current accident year underwriting income excluding cat losses reached $1.44 billion, up more than 23%, leading to a P&C current accident year combined ratio excluding cat losses of 84.8% compared with 85.7% in the prior year, both of which were record quarterly underwriting results.

Evan G. Greenberg, Chairman and Chief Executive Officer (CEO) of Chubb, said: “Chubb had a very strong third quarter, highlighted by outstanding premium revenue growth globally and simply excellent underwriting results. P&C net premiums written grew 17%, our strongest organic growth since 2004, driven by commercial lines growth of 22% globally.

“Despite $1.1 billion of catastrophe losses in the quarter, we reported P&C underwriting income of $617 million, up 58%, and a 93.4% combined ratio, which illustrates the strengths that come from our underwriting capabilities and the broad diversification of our company’s businesses. Core operating income in the quarter of $2.64 per share was up 32% from prior year with per share net income of $4.18 up 59%. Year to date, we have produced record earnings, both net and core operating.

“Our current accident year combined ratio of 84.8% is a quarterly record that featured two percentage points of margin improvement adjusting for a one-time COVID-related frequency benefit in last year’s quarterly result. Through nine months, we have produced $2.4 billion in underwriting income and a combined ratio of 90.4% despite an elevated level of CAT losses year to date. The growing impact of climate change globally is evident in industry results, and we are reacting thoughtfully but swiftly to ensure we maintain an adequate risk-adjusted return on the business we write.

“We continue to capitalize on robust commercial P&C pricing conditions in most regions of the world. Our premium revenue growth in the quarter was broad based with contributions from virtually all of our commercial P&C businesses and year-on-year improvement in rate-to-exposure that is well in excess of loss costs. Commercial lines grew 22.5% in North America and over 20.5%, or 16% in constant dollars, in our international operations. In addition, our international consumer lines businesses are recovering steadily from the impact of the pandemic’s ongoing effects on consumer activity with premiums up almost 10% in the quarter, or 5% in constant dollars.

“In sum, our company is in great shape. We are growing our business, expanding our margins and, as our recent Asia-Pacific transaction announcement demonstrates, investing in our capabilities to position us for continued growth in the future.”

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