Chubb’s 2020 income down 20% despite rebound in Q4 spurred by strong rates

Chubb’s net and core income bounced back strongly in the fourth quarter of 2020 as the insurer pushed through rate increases of 18.5% in overseas general insurance, but Covid-19 losses saw income fall 20.7% to $3.53bn for the year. Chubb said the Q4 rate increases in general overseas business and 16.5% rise in North America were the strongest it has seen since the market began to harden in certain classes about three years ago. The increases exceeded loss cost trends by 15.5% in overseas and 11.5% in North America. The insurer’s fourth-quarter net income increased by 106.2% to $2.42bn, with core operating income up 38.4% to $1.44bn. P&C underwriting income was up 81.8% to $969m as Chubb delivered a combined ratio of 87.6%, compared to 92.7% a year earlier. Fourth-quarter pre-tax cat losses were $314m and $271m after tax. This compares with losses of $430m and $353m respectively in the same period last year. P&C cat losses were $296m before tax and $258m after tax. Chubb said there has been no changes to its P&C Covid-19 losses reported in its half-year results. Its current fourth-quarter P&C accident year combined ratio excluding cat losses was 86.4%, compared to 90% in the same period of 2019. Chubb’s net P&C premiums written were up 5.4% to $7.7bn. There was 11.3% growth in commercial P&C lines globally and a 3.9% fall in Chubb’s consumer lines. Fourth-quarter pre-tax net investment income stood at $847m, from $858 in the same quarter of 2019. Overseas general insurance’s combined ratio improved a touch to 92.4% from 93.1% in the fourth quarter of 2019. Net written premiums were up 4.1% to $2.48bn after a rise of 14.2% to $1.48bn in commercial lines. But Chubb’s full-year net income was down 20.7% to $3.53bn, with core operating income falling 28.6% to $3.1bn. The bottom line was hit by $2.78bn of cat losses after tax, compared to $966m in 2019. This includes $1.19bn of after-tax Covid-19 losses. Chubb said the majority of this charge remains as incurred but not reported. P&C underwriting income for the year fell 55.6% to $1.21bn, with the combined ratio deteriorating to 96.1% from 90.6%. The P&C current accident year combined ratio excluding catastrophe losses was 86.7%, compared with 89.2% in 2019. P&C net premiums written rose by 4.8% to $31.3bn. This included 9.3% growth in global commercial P&C and a 2.5% fall in consumer lines. Pre-tax net investment income was $3.38bn, from $3.43bn in 2019. Overseas general insurance saw its combined ratio deteriorate to 95.4% for the year, from 91.6%. New written premiums were up 0.8% to $9.34bn, with a rise of 9.1% to $5.42bn in commercial business. Chubb’s chairman and CEO, Evan G Greenberg, said the company had an “excellent” fourth-quarter finish to the year. This included “very strong earnings” from continued underwriting margin improvement and double-digit commercial lines premium growth globally, he said. He added that virtually all of Chubb’s commercial P&C lines are achieving rates that exceed loss costs and he expects the favourable underwriting conditions to continue. Mr Greenberg said commercial P&C rates increases so far in 2021 “resemble” Q4 2020 underwriting conditions. He added that full-year results were “reasonably good”, given the “remarkable and unprecedented events”.

Chubb’s 2020 income down 20% despite rebound in Q4 spurred by strong rates

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