Chubb’s net income fell 56% in the third quarter due to Hurricane Ian claims in Florida, while strong pricing conditions boosted its global business-insurance operations.
One of the world’s largest insurers in terms of market capitalization and premium volume, Chubb said premium growth has continued to outpace the impact of inflation and other higher claims costs.
Chubb’s clients range from multinational corporations to small businesses. The carrier also insures wealthy people’s homes and other personal property, farmers’ crops, and middle-income consumers worldwide who purchase accident and supplemental health insurance.
Chubb is one of the largest publicly traded carriers in Florida by market share among those that have reported third-quarter earnings so far. According to Moody’s Investors Service data, Chubb is the third largest commercial-property insurer by premium volume and one of the top ten home insurers.
Chubb reported $1.16 billion in catastrophe costs, including $975 million from Hurricane Ian, net of reinsurance. That was roughly in line with the previous year, which was also a difficult quarter for property insurers. Then, Hurricane Ida hit Louisiana, bringing tornadoes and catastrophic flooding as it made its way to the Northeastern United States. Chubb’s third-quarter catastrophe costs in the previous year totaled $1.15 billion, the majority of which came from Ida.
According to Wall Street analysts, the catastrophe totals for Ian disclosed so far in third-quarter results by publicly traded property insurers indicate that industrywide insured damage will be in the $50 billion to $60 billion range. If that holds true, Ian will overtake Ida as the nation’s second-costliest natural disaster to property insurers, with an estimated $36 billion in insured damage, according to trade group Insurance Information Institute.
The carrier’s most recent net income was $812 million, down from $1.83 billion the previous year. Realized losses of $502 million reduced net income, primarily due to the mark-to-market impact on derivatives and certain investments, as well as sales of fixed-income securities in a rising interest-rate environment.
The company’s “core operating income,” which excludes nonrecurring items and is closely watched by Wall Street analysts, increased 15% to $1.33 billion.
Chubb CEO Evan Greenberg stated that all major areas of the company had contributed to the improvement, and that underwriting results were excellent “despite an active catastrophe quarter.” “We’re focused on inflation and staying on top of it in terms of both pricing and reserving,” he said.
Consolidated net premiums written, a key indicator of revenue growth, increased 14% to $12.02 billion. Property-and-casualty net premiums written increased by 8.5%. Premiums in the company’s life-insurance operations more than doubled to $1.27 billion, reflecting the acquisition of an Asian business from Cigna.
Commercial pricing, which includes changes in both premium rates and policy coverage, increased 8.5% in North America and about 11% in international operations in constant dollars, excluding the impact of foreign-exchange movements. Pretax net investment income reached a new high of $979 million, a 13% increase. Chubb said it took advantage of rising interest rates by deploying cash at an average reinvestment rate of 5.8%, compared to the company’s investment portfolio’s 3.4% yield.