Q1 profits soar at Chubb driven by P/C unit

Chubb enjoyed a very profitable first quarter and strong growth aided by underwriting income generated by the property/casualty business leading to substantial underwriting income and improved investment returns.

The world’s biggest property/casualty insurer made a net profit of $1.09 billion in the first quarter, an increase of 149 percent on the $439 million it made a year earlier. Its operating profit for the quarter was $1.17 billion, a 15 percent improvement and its combined ratio was 87.5 percent, also an improvement on the 90 percent it posted last year.

The underwriting income generated by its property/casualty business reached $783 million, a 28 percent increase on the first quarter of 2016.

The company also enjoyed some growth. Its net written premiums increased by 11.9 percent to $6.7 billion in the first quarter. Its investment income in the quarter reached $836 million, a 9 percent improvement on the year before.

It noted that pre-tax catastrophe losses were $206 million compared with $258 million last year and that prior period development in the quarter included a $41 million pre-tax charge related to a change in the discount rate in the UK (Ogden rate).

Evan Greenberg, chairman and chief executive of Chubb, said: "Chubb had a very good quarter. After-tax operating income per share increased 10 percent, driven by both strong P&C underwriting income, up 28 percent, and adjusted net investment income, which was up 9 percent. Comparing our results as if we were one company for the full quarter last year, operating income per share was up 8 percent while underwriting and investment income were up 9 percent and 3 percent, respectively. Our strong earnings led to very good book and tangible book value growth.

"Our underwriting income growth was driven by combined ratios that were simply excellent in the quarter on both a calendar and accident-year basis in spite of elevated natural catastrophe losses and a one-time reserve charge related to the change in the Ogden discount rate in the UK. Our underwriting margins are benefiting in particular from expense efficiencies generated from the merger.

"The market is soft and companies are chasing volume in spite of a difficult underwriting environment. Our premium revenue growth was in line with our expectations and benefited from strong business retentions and growth in new business over prior year, which was constrained nonetheless due to competitive P&C conditions globally."

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