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Chubb’s Q4 ‘Excellent’ Results Boosted by Commercial Lines Price Hikes

2021-02-03 12:56:56

Global insurer Chubb reported its fourth quarter 2020 results significantly better than the same period in 2019.

For the fourth quarter of 2020, Chubb's net income grew significantly, as did net written premiums, which were up double digits for commercial real estate / accident lines in particular. Underwriting income from P / C grew nearly 82 percent, and there was also an appreciation in Chubb's investment portfolio.

"Chubb had an excellent end to the year in the fourth quarter, culminating in very strong earnings, which resulted from a continued improvement in underwriting margins and global double-digit growth in commercial premiums," said Chubb Chairman and CEO Evan Greenberg in prepared comments.

He added that the price environment during the quarter was "the strongest we've seen since rates in certain classes" started to rise about three years ago.

“The margin improvement in our combined ratio was the result of broad based improvements in both the expense and loss ratios. Nearly all of our commercial P&C activities achieve rates that are higher than the loss costs, ”Greenberg said.

However, for the year as a whole, Chubb's net profit of $ 3.5 billion was more than 20 percent lower than in 2019.

The global property / casualty insurer posted more than $ 2.4 billion in net income for the quarter, or $ 5.34 per share. That compares to nearly $ 1.2 billion, or $ 2.57 per share, for the same period in 2019.

Chubb reported fourth quarter realized and unrealized after tax gains of $ 2 billion, including a profit of $ 1.63 billion in the investment portfolio, a favorable exchange rate of $ 348 million and a profit of $ 146 million in the reinsurance portfolio with variable annuities.

Commercial P / C rate increases averaged a staggering 16.5 percent in Chubb & # 39; s North America Insurance arm during the fourth quarter, and 18.5 percent in the Overseas General Insurance division.

Net written premium on P / C in the fourth quarter grew 5.4 percent and increased 6 percent globally (excluding agriculture). When broken down further, the numbers reflect positive growth of 11.3 percent in commercial P / C lines worldwide and just under 4 percent negative growth in consumer lines, mostly outside North America.

Adjusted net investment income was $ 924 million, compared to $ 917 million in Q4 2019.

So far, 2021 looks more of the same.

"We are off to a good start in & # 39; 21 with both growth and the level of commercial P&C rate hikes that are similar to the fourth quarter underwriting conditions," Greenberg added.

Here are other Q4 results:

  • Fourth quarter pre-tax and post-tax catastrophe losses were $ 314 million and $ 271 million, respectively, compared to $ 430 million and $ 353 million in the fourth quarter of 2019, respectively. Chubb said there were no changes in previously reported total P / C COVID-19 loss costs.
  • Chubb's net premiums on P / C reached nearly $ 7.8 billion during the quarter, from just under $ 7.4 billion the year before.
  • P / C's underwriting income was $ 969 million, 81.8 percent more than the $ 533 million produced in the fourth quarter of 2019.
  • The combined P / C ratio for Q4 was 87.6, better than the 92.7 generated a year ago.
  • Chubb backed up $ 190 million in shares in the fourth quarter, at an average price of $ 144.3 per share.

Source: Chubb

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