Canadian Underwriter

Chubb reports P&C combined ratio of 86% for Q3

October 26, 2016   by Canadian Underwriter

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Chubb Limited has reported a property and casualty combined ratio of 86% for the third quarter of 2016 ending Sept. 30, virtually unchanged from 85.9% in the prior-year quarter.

For Global P&C (excluding agriculture), the combined ratio was 85.7% for Q3 2016, compared to 85% in Q3 2015. The combined ratio for North America Commercial P&C Insurance was 86.2% in Q3 2016 (Q3 2015: 85.8%); North America Personal P&C Insurance’s combined ratio was 84.4% in Q3 2016 (Q3 2015: 83.7%); and the combined ratio for Overseas General Insurance was 81.2% for the third quarter of 2016 compared to 82% in the third quarter of 2015.

In its financial results released on Tuesday, Chubb also reported net income for the most recent quarter of US$1.360 billion compared to US$528 million for the same quarter last year. Operating income was US$1.356 billion compared with US$897 million for the same quarter last year.

The company said in a statement that consolidated and P&C net premiums were US$7.6 billion and US$7 billion, respectively, up 60.8% and 67%. Excluding merger-related underwriting actions, including additional reinsurance purchased, P&C net premiums written were up 1.1% in constant dollars, the statement said. Global P&C net premiums written (excluding agriculture) were US$6.192 billion for Q3 2016, up 78% from US$3.480 billion in the prior-year quarter.

Chubb noted in the statement that the purchase of additional merger-related reinsurance adversely impacted P&C net premiums written growth by US$260 million, of which US$200 million was related to personal lines and US$60 million related primarily to commercial P&C lines.

For the nine months ending Sept. 30, Chubb’s net income was US$2.525 billion compared with US$2.151 billion for 2015. Operating income was US$3.433 billion compared with US$2.430 billion for 2015. The P&C combined ratio for the nine month period was 89%.

Gross premiums written (GPW) for the third quarter of 2016 were US$9.483 billion, compared to US$6.346 billion in the prior-year quarter. For the first nine months of the year, GPW were US$26.146 billion, up from US$18.172 billion in the prior-year quarter, the statement said.

North America Commercial P&C GPW for Q3 were US$3.832 billion, nearly double the US$1.994 billion in Q3 2015 (9M 2016: US$10.877 billion; 9M 2015: US$6.043 billion). North America Personal P&C Insurance GPW for the most recent quarter were US$1.323 billion compared to US$378 million in Q3 2015 (9M 2016: US$3.666 billion; 9M 2015: US$1.359 billion). North America Agricultural Insurance GPW for Q3 2016 were US$1.24 billion, essentially unchanged from US$1.243 billion in Q3 2015 (9M 2016: US$1.921 billion; 9M 2015: US$1.937).

Total pre-tax and after-tax catastrophe losses were US$144 million, or 2 percentage points of the combined ratio, and US$107 million, respectively, compared with US$72 million (1.7 percentage points of the combined ratio) and US$59 million, respectively, last year. Total pre-tax and after-tax favourable prior period development was US$349 million (4.9 percentage points of the combined ratio) and US$252 million, respectively, compared with US$210 million pre-tax (5.0 percentage points of the combined ratio) and US$180 million after-tax last year. Favourable prior period reserve development in the quarter is net of a pre-tax environmental liability run-off charge in the company’s Brandywine operation of US$52 million, the statement said.

Evan G. Greenberg, chairman and chief executive officer of Chubb Limited, said in the statement that the insurer “had an excellent quarter with record operating earnings per share and exceptionally strong underwriting results. Our after-tax operating income of $2.88 per share, up 5% over prior year, indicates the accretive nature of our merger, which is going well and is on track. The P&C combined ratio of 86% was simply world-class.”

Greenberg added that previously contemplated merger-related underwriting actions taken on select portfolios of business, particularly a greater use of reinsurance, reduced P&C net premium growth in the quarter by about 4.5 points, while improving the company’s risk-reward profile.

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

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