Chubb reports P&C combined ratio of 88% for Q2 2017

Chubb Limited has reported a P&C combined ratio of 88% for the second quarter of 2017 ending June 30, down 3.2 points from 91.2% in the same quarter last year.

Chubb released its financial results on Tuesday. The insurer reported a net income of US$1.31 billion, up 79.6% from US$726 million in Q2 2016 and a P&C underwriting income of US$808 million for the quarter, up 32.5% from US$609 million in the second quarter of 2016.

Consolidated and P&C net premiums written (NPW) were US$7.6 billion and US$7.1 billion, respectively, both down 0.8% from Q2 2016, Chubb said in a statement. Operating income was US$1.2 billion compared with US$1.06 billion for the same quarter last year.

Evan G. Greenberg, chair and chief executive officer of Chubb, said in the statement that the strong earnings in the most recent quarter were driven by excellent underwriting results and record investment income. “Our 88% P&C combined ratio, more than two points better than prior year, was truly distinguishing given soft market conditions that have continued for a number of years now,” he said. “We benefited from a substantial improvement in both our expense ratio and our loss ratio as a result of merger-related efficiencies and underwriting actions as well as lower catastrophe losses. Total P&C underwriting income was up 20%.”

For the six months ending June 30, net income was US$2.398 billion compared with US$1.2 billion for H1 2016. Operating income was US$2.355 billion, compared with US$2.08 billion for 2017. The P&C combined ratio for the six months ended June 30 was 87.8%, down from 90.6% in H1 2016, the statement said.

Gross premiums written (GPW) were US$17.7 billion in the first half of this year, up from US$16.66 billion in H1 2016. For the three months ending June 30, GPW were US$9.31 billion compared to US$9.27 billion in Q2 2016.

Total pre-tax and after-tax catastrophe losses for the quarter were US$200 million (3 percentage points of the combined ratio) and US$152 million, respectively, compared with US$390 million (5.7 percentage points of the combined ratio) and US$311 million, respectively, last year.

By segment, North America Commercial P&C Insurance saw NPW of US$3.20 billion, down 1.3% from US$3.25 billion in Q2 2016 and a combined ratio of 85.2%, down from 89.5% in the second quarter of 2016. North America Personal P&C Insurance NPW were US$1.26 billion in the most recent quarter compared to US$1.23 billion in Q2 2016. The personal combined ratio was 89.6% compared to 90.1% in Q2 2016.

North America Agricultural Insurance NPW increased 7.7% to US$403 million from US$375 million in Q2 2016, the statement said, adding that the combined ratio was 93.3% compared with 95.9% in the second quarter of last year.

Overseas General Insurance NPW were US$2.01 billion in the most recent quarter, a 1.2% change from US$2.03 billion in the second quarter of 2016. The segment’s combined ratio improved to 87.3% from 90.9% in Q2 2016.

For Global Reinsurance, NPW decreased 17.7% to US$190 million from US$230 million, “due to market conditions,” the statement said. The combined ratio was 60.2%, compared with 79.8% in the second quarter of 2016.

Life Insurance segment income was US$52 million, compared with $74 million in Q2 2016, “primarily reflecting the adverse impact of updating the long-term benefit ratio in the variable annuity business in the fourth quarter of 2016,” Chubb said in the statement.

Integration-related realized and annualized run-rate savings related to the ACE/Chubb merger are also ahead of expectations, Chubb reported. The company now expects to achieve annualized run-rate savings of US$875 million by the end of 2018, up from the prior estimate of US$800 million. Integration and merger-related expenses are now estimated to be US$903 million, up from US$809 million.

Chubb is the world’s largest publicly traded P&C insurance company, with operations in 54 countries. The insurer provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance.