Chubb reports $1.15bn of pre-tax catastrophe losses for Q3

Global insurance and reinsurance giant Chubb reported a $1.15 billion pre-tax hit from catastrophe events that occurred during the third-quarter of 2021, with $806 million of this coming from hurricane Ida and a corresponding rise in recoverable suggesting reinsurance support was tapped.

Demonstrating the size and diversification in its business, as well as continued growth, Chubb still managed to report a combined ratio for its property and casualty business of 93.4%, and said that excluding catastrophe losses its P&C current accident year underwriting income would have been $1.44 billion, up 23.1% on the prior year.

In fact, the P&C and Global P&C combined ratios improved by 1.9% and 2% respectively, with the catastrophe loss burden excluded.

The catastrophe loss figures are net of reinsurance recoveries and include reinstatement premiums and it appears Chubb tapped certain reinsurance arrangements for support after the catastrophe impacts of hurricane Ida.

The company reported a relatively significant uplift in its reinsurance recoverable after Q3 2021, with the total rising some $931 million from June 30th to September 30th 2021.

This implies a reasonably large reinsurance recoverable was booked against Q3 catastrophes, likely the majority from hurricane Ida, but with with actual recoveries still set to be made over the coming months.

Chubb’s global reinsurance business, under the Chubb Tempest Re brand, fell to an underwriting loss for the quarter though, with a combined ratio of 121.4%.

However, Chubb continues to expand this area of the business, underwriting 22.3% more in premiums, at $221 million in Q3.

Overall and despite the catastrophe loss impact, Chubb delivered an impressive $1.83 billion of net income for the quarter, on the $1.19 billion reported in the prior year.

P&C insurance growth also continued, with premiums written rising by 16.9% globally and 22% in commercial lines, while North America P&C grew 17.1%.

Chubb has a robust business that can weather significant catastrophe events, but as ever it does rely on its reinsurance partnerships and we expect its ABR Re joint-venture reinsurance company will have played a considerable role again, suggesting third-party investors backing that vehicle will have been important to the re/insurer again.

Evan Greenberg, Chairman and Chief Executive Officer of Chubb, commented on the results, “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.”