Chubb’s Greenberg lauds good results despite high catastrophe losses

Chubb 2018 results show “a very good year” despite higher catastrophe losses than expected, said Evan G. Greenberg, chairman and chief executive officer of the property and casualty insurance firm.

Gross written premiums for the 2018 year end were $37,9 billion up from $36.3 billion in 2017, while net income was also up, to $3.9 billion from $3.8 billion the year before.

The full-year P&C combined ratio was 90.6 percent an improvement on 94.7 percent in 2017.

Greenberg said the Q4 results showed good performance for the insurer despite elevated natural catastrophe losses in those three months.

Fourth quarter results for 2018 showed gross written premiums were up to $9.2 billion from $8.9 billion in the same period in 2017. Net income was $355m down from $1.5 billion in Q4 2017, and the fourth quarter combined ratio was up 93.1 percent compared with 90.7 percent in the same period a year earlier.

Greenberg said: "Chubb performed well in a quarter marked by elevated natural catastrophe losses, on the one hand, and stronger premium revenue growth, improved commercial P&C pricing globally and record net investment income, on the other. Core operating income was $935 million compared with $1.5 billion prior year, which included a one-time tax benefit and lighter CAT activity. Our P&C combined ratio of 93.1 percent included 8.5 points of pre-tax CAT losses.

"P&C net premiums written in the quarter grew nearly 6 percent in constant dollars, driven by our growth initiatives and improved pricing in the US, London and a number of other markets around the world. In North America, commercial P&C premiums grew about 5 percent, while in our international operations premiums were up 8 percent in constant dollars. Globally, this was our best quarter of the year – and for some of our businesses the best in several years – in terms of the pace and broad-based nature of price change and improved underwriting conditions.

"Benefiting from higher reinvestment rates and our strong cash flow, adjusted pre-tax net investment income in the quarter was $903 million, up about 3.5 percent, and contributed to investment income of $3.6 billion for the year – both records.

"Looking at our 12-month results, a more meaningful perspective given the natural quarter-to-quarter volatility of the risk business, we completed a very good year with core operating income of $4.4 billion, or $9.44 per share, up 18 percent on a per share basis from '17. Net premiums written grew 4.5 percent. The full-year P&C combined ratio was 90.6 percent, compared to 94.7 percent prior year, and that's with $1.6 billion of CAT losses – about $700 million more than we expected. The current accident year combined ratio excluding CATs was 88 percent versus 87.6 percent prior year.

"Our earnings led to a core operating ROE of 8.7 percent, or 9.8 percent with an expected level of catastrophe losses. Book and tangible book value per share growth were impacted last year by the mark-to-market effect of rising interest rates on the investment portfolio, which will amortize away over a reasonably short period of time. Book value per share was down about 0.5 percent while tangible book value per share growth was flat; excluding the mark, they grew 2.7 percent and 5.8 percent, respectively.

"We have good momentum as we execute on our business initiatives across the globe and take advantage of an improving price and underwriting environment that the industry needs. Our organization is optimistic about the year ahead and we are off to a good start."

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