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Chubb’s Q2 net income improves significantly to $2.27bn

28th July 2021 - Author: Luke Gallin

Global insurance carrier Chubb has reported net income of $2.27 billion for the second-quarter of 2021 against a net loss of $331 million a year earlier, as catastrophe losses fell significantly, year-on-year.

ChubbAlongside the robust improvement in net income, Chubb’s operating income also swelled in Q2 2021, reaching $1.6 billion compared with a loss of $254 million a year earlier.

In its property and casualty (P&C) operation, net premiums written (NPW) jumped by 15.5% for the quarter. The segment has produced a Q2 2021 combined ratio of 85.5%, which is a huge improvement on the 112.3% reported for the same period in 2020.

For Q2 2021, pre-tax catastrophe losses, net of reinsurance and including reinstatement premiums, totalled $280 million, which is a notable reduction from the $1.81 billion of cat losses Chubb announced for Q2 2020.

In fact, excluding catastrophe losses, and P&C current accident year underwriting income hit a record $1.2 billion, which is growth of 27%, driven by a P&C current accident year combined ratio excluding catastrophe losses of 85.4%.

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On the asset side of the business, Chubb has reported pre-tax net investment income of $884 million, which is growth of 7% on the prior year.

Turning to Chubb’s H1 2021 performance, and net income totalled $4.57 billion, compared with a net loss of $79 million for H1 2020. Core operating income also improved in H1 2021, reaching $2.76 billion versus $966 million for the prior year period.

For H1 2021, the P&C combined ratio strengthened to 88.6%, compared with 101% a year earlier.

Evan G. Greenberg, Chairman and Chief Executive Officer (CEO) of Chubb, commented: “Chubb had simply an outstanding quarter, highlighted by record core operating earnings and underwriting results. We produced the best P&C premium revenue growth globally in over 15 years, powered by our commercial P&C businesses and supported by continued robust commercial P&C pricing. Operating earnings in the quarter were $1.62 billion or $3.62 per share.

“Our published and current accident year combined ratios of 85.5% and 85.4%, respectively, reflect 200 basis points of underwriting margin improvement, almost entirely loss ratio-related. Current accident year underwriting income of $1.2 billion was up 27%, while on the other side of the balance sheet adjusted net investment income in the quarter of $945 million was also a record and up nearly 9.5% from prior year.

“P&C net premiums written were up 15.5% globally, with commercial premiums excluding agriculture up nearly 21%. For perspective, we have averaged double-digit commercial P&C growth over the past 10 quarters, and both second quarter and year-to-date growth were the strongest since 2004. In North America, we grew our commercial P&C premiums over 16%, while in our international operations premiums grew 33% on a published basis, or 24% in constant dollars. Growth in the quarter was broad based. Net premiums written in our consumer lines remain impacted by the pandemic’s effects on travel and other business and consumer-related activity but are beginning to improve and, in fact, increased 5.6% in the quarter.

“We are capitalizing on a strong commercial P&C pricing environment in most all important regions of the world. Overall rates increased in our North America and international commercial P&C businesses by 13.5% and 16%, respectively, and were well in excess of loss costs. From everything we see today, I am confident these market conditions will continue.

“Our company is firing on all cylinders – we are growing our business while we continue to expand underwriting margins. We will continue to outperform and deliver strong, sustainable shareholder value.”

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