Reinsurance News

Chubb’s P&C underwriting income hits $622m despite elevated cat losses

28th April 2021 - Author: Luke Gallin

Global re/insurer Chubb has announced a P&C combined ratio of 91.8% for the first-quarter of 2021 and underwriting income of $622 million, despite pre-tax catastrophe losses, net of reinsurance and including reinstatement premiums, of $700 million for the period.

ChubbWhen compared with the first-quarter of 2020, Chubb’s P&C combined ratio has deteriorated slightly but remains solid and in profitable territory.

Underwriting income of $622 million represents a 20% decline from the $778 million recorded in Q1 2020, and is a reflection of elevated catastrophe losses in the most recent quarter.

Pre-tax and after-tax P&C cat losses, net of reinsurance and including reinstatement premiums, totalled $700 million and $570 million, respectively in Q1 2021, compared with $237 million and $199 million, respectively, for the same period in 2020.

A significant $657 million of pre-tax cat losses relate to the impacts of storm losses in the U.S., says Chubb.

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At the same time, the company has reported no material change to the previously reported aggregate P&C COVID-19 losses, most of which remains IBNR.

Within P&C, Chubb has reported net premiums written growth of 9.7%, year-on-year, to more than $8 billion.

Also within P&C, Chubb has announced pre-tax and after-tax favourable prior year reserve development of $192 million and $156 million, respectively.

In Chubb’s North America Agricultural Insurance segment, net premiums written increased by 16.5% year-on-year to $183 million, while the combined ratio weakened from 84.8% to 90.9%.

Net written premium growth of 11.2% to $2.9 billion was also recorded in its Overseas General Insurance business, while the combined ratio here strengthened from 93.5% in Q1 2020 to 88.7% in Q1 2021.

In Global Reinsurance, catastrophes had an impact in Q1. Net premiums written fell by just over 5% to $207 million for the first-quarter of 2021, while the combined ratio deteriorated significantly from 76.1% to 96.4%. However, the current accident year combined ratio excluding cat losses was 78%, which is an improvement on last year’s 80%.

Turning to Chubb’s Life operation, and net premiums written in this part of the business fell by 3.8% to $620 million, as segment income spiked by 11.2% to $104 million.

Overall, Chubb has reported net income of $2.3 billion for the first-quarter of 2021 compared with $252 million for the first-quarter of 2020.

The company explains that book value was negatively impacted by after-tax net realised and unrealised losses of $737 million, including a $1.1 billion loss in the investment portfolio, somewhat offset by a gain of $275 million in the firm’s variable annuity reinsurance portfolio.

Evan Greenberg, Chairman and Chief Executive Officer (CEO) of Chubb, commented: “Chubb had another very good quarter with excellent commercial premium revenue growth globally, double-digit renewal rate change in our commercial P&C businesses, and further expansion of our underwriting margins. Core operating income was $2.52 per share and net income per share was $5.07. Though it was an active quarter for natural catastrophes, we published an excellent combined ratio of 91.8%, while excluding catastrophes, current accident year underwriting income was up over 26%, leading to a world-class combined ratio of 85.2%. Margin improvement from both the loss and expense ratios was broad based.

“Our commercial P&C businesses globally continued to capitalize on favorable underwriting conditions. P&C net premiums were up 9.7% globally, with commercial lines up over 15.5%. Foreign exchange contributed 1.6 points to this outstanding result. Rates continued to increase and varied by line, averaging about 14.5% globally. From what we can see, I am confident these market conditions will endure. Frankly, they are a continued and rational response to the loss environment and years of industry underpricing.

“Our consumer lines globally remain impacted by the pandemic’s effects on travel and other business and consumer-related activity, with net premiums down 2.5%. We see early signs of recovery and, in fact, our personal lines division globally reported modest growth in the quarter. We expect growth to improve as the year goes along.

“Our organization is focused, energized and mission-driven. We are leaning into the current favorable underwriting conditions, growing exposure and expanding margins. We have all of the capabilities in place to grow our company profitably while increasing shareholder value.”

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