Chubb reports $700m of pre-tax catastrophe losses on winter storm

In reporting its first-quarter results late yesterday, global insurance and reinsurance giant Chubb revealed a $700 million pre-tax hit from catastrophe events, $657 million of which came from US storms.

While Chubb’s P&C combined ratio was up slightly at 91.8%, it’s testament to the re/insurers scale that this is still well within the bounds of underwriting profitability, despite such a large hit from the severe weather and winter storms in the United States during the quarter.

Even Chubb’s global reinsurance business, under the Chubb Tempest Re brand, managed an underwriting profit, with a combined ratio of 96.7% and delivering $7 million of underwriting income.

However, the company has reported a net recoverable against its paid losses that stands at over $1 billion at the end of March 2021, while its reinsurance recoverable on active operations for the quarter was $915 million for the quarter, suggesting significant support from its reinsurance partners last quarter.

Chubb also said that its losses from the COVID-19 pandemic remained flat in Q1, with its largely IBNR reserves against P&C potential losses seen as still adequate.

Chubb reported that its core operating income for Q1 2021 was $1.14 billion, only slightly down on the $1.22 billion reported for the prior year.

Net premiums written across the P&C business rose by almost 10% to $8.042 billion in Q1, with the commercial P&C business growing most strongly at 15.6%.

Chubb’s reinsurance business was a little more conservative though, with net premiums of $207 million slightly down on the prior years $218 million.

Looking ahead, the insurer sees opportunities to bulk up its book in positive market conditions.

Evan Greenberg, Chairman and CEO of Chubb Limited, commented on the results, “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.”