Chubb joins ranks of Q3 loss-making carriers

Chubb has added to the long list of carriers to report third-quarter losses on the back of hurricanes Harvey, Irma and Maria. However, unlike many of its peers, the US-listed and Swiss-domiciled group managed a respectable profit for the first nine months of 2017.

Last week Chubb reported a third-quarter net loss of $70m, a huge swing from its year-earlier income of $1.36bn. The change in fortune was down to $1.89bn in catastrophe losses, largely from the three hurricanes and two earthquakes in Mexico.

Evan Greenberg, chairman and chief executive of Chubb, noted that 2017 is on course to be the third $100bn-plus year for insured global catastrophe losses in the past 12 years.

Chubb’s nat cat losses resulted in an $870m underwriting loss for the firm’s P&C business, compared with an income of $912m in the third quarter of 2016. The group’s P&C combined ratio, excluding agriculture, deteriorated almost 28 percentage points to 113.6%.

Despite the catastrophe losses, Chubb’s net income for the first nine months of 2017 was only 7.8% lower than the same period last year at $2.3bn, while operating income was down 33% at $2.3bn. The nine-month combined ratio was 7.7 points higher at 96.1%.

Without catastrophe losses, Chubb would have reported a combined ratio of 88.2% in the third quarter of 2017, a small improvement on the 88.8% posted in the same period of 2016.

“Our underlying operating results demonstrate the strength and vitality of the company. P&C net premiums written grew about 4.5% in the quarter. Excluding the catastrophe losses, both operating earnings and underwriting results were simply excellent,” said Mr Greenberg.

In contrast, Bermuda-based XL Group reported a net loss of $1.04bn for the third quarter of the year, following $1.48bn in losses form hurricanes Harvey, Irma and Maria. Unlike Chubb, XL also produced an operating loss for the first nine months of 2017 at $637.6m. XL reported a combined ratio of 132.5% in the third quarter of 2017, and 111.6% for the first nine months.

Other US and Bermudian insurers and reinsurers have posted third-quarter losses, although some carriers fared better than others. Markel, Axis Capital, Arch Capital and Aspen all reported losses in the third quarter of 2017, owing to recent hurricane losses.

Catastrophe losses pushed specialty insurer and reinsurer Markel into the red for both the third-quarter and nine-month periods. The Virginia-based company suffered natural catastrophe losses of $503m in Q3, resulting in a net loss of $259.1m in the third quarter compared with income of $83.8m in the same period of 2016. For the first nine months of the year, Markel reported a net loss of $39.6m, compared with net income of $323m in the first nine months 2016.

Axis Capital was also hit hard by natural catastrophes, posting losses in both the third quarter and first nine months. The Bermudian-based group reported a third-quarter net loss of $467.7m, after absorbing catastrophe losses of $617m. For the first nine months of the year, Axis reported a net loss of $377.7m compared with income of $334.6m during the same period of 2016.

Fellow Bermudian insurer Aspen Insurance Holdings also posted losses in the third quarter and first nine months of 2017. It incurred catastrophe losses of $360.3m in Q3 from Harvey, Irma and Maria, and the two Mexican earthquakes. The group reported a net loss of $253.8m in the third quarter of 2017 and a net loss of $81.5m for the first nine months.

Arch Capital posted a third-quarter net loss of $52.8m, after posting $347.8m in catastrophe losses. For the first nine months of the year, Arch net income fell 40% to $363m, while its combined ratio deteriorated 3.6 points to 90%.

Validus Holdings posted a net loss of $250.4m in the third quarter of 2017, after digesting gross losses of $1bn and net losses of about $400m. Its combined ratio increased 118.1 percentage points, to 200.5%, in the third quarter of 2017.

Meanwhile, Mapfre has reported losses of €176m from third-quarter hurricanes in the US and Caribbean, with recent catastrophes costing its global risks unit €73m. Mapfre Global Risks recorded a loss of €87m in the first nine months of this year, from profits of €30.5m during the same period of 2016.

Mapfre group profits were down 22% for the nine-month period, but remained in the black at €445m with strong performances from its insurance business, where profits were up almost 10%.

Swiss Re has reported a loss of $468m for the first nine months of this year including a $762m loss at its Corporate Solutions business, which has needed a $1bn capital injection. Swiss Re said the capital injection underlines its commitment to Corporate Solutions and believes rate increases are on the way for both primary insurance and reinsurance buyers.

Last week Munich Re said it expects to post a third-quarter loss of €1.4bn and estimates that Hurricanes Harvey, Irma and Maria will cost the firm €2.7bn.The reinsurer projects that the Q3 loss, driven by “exceptional major-loss expenditure” from recent nat cats, will see it make just a small profit in 2017. In March, Munich Re’s profit guidance for the year was in the €2bn to €2.4bn range.