posted a 56% decline in net income in the third quarter, as Hurricane Ian claims in Florida dented results, while strong pricing conditions continued to buoy its worldwide business-insurance operations.
Chubb, one of the world’s biggest insurers by market capitalization and premium volume, said its premium growth continued to exceed the impact of inflation and other higher costs of claims.
Chubb’s customers range from multinationals to small businesses. It also insures homes and other personal property of wealthy people, farmers’ crops and middle-income consumers around the globe who buy accident and supplemental health insurance.
Of publicly traded carriers to report third-quarter earnings so far, Chubb is one of the biggest by market share in Florida. Chubb is the third biggest commercial-property insurer by premium volume, and ranks in the top-10 of its home insurers, according to data from Moody’s Investors Service.
Driven by Ian’s damage, Chubb said its catastrophe costs were $1.16 billion, including $975 million from Hurricane Ian, net of reinsurance. That was roughly level with the year-earlier period, which also was also a tough quarter for property insurers. Then, Hurricane Ida struck Louisiana and delivered tornadoes and catastrophic flooding as it made its way to the Northeastern U.S. Chubb’s year-earlier third-quarter catastrophe costs totaled $1.15 billion, mostly from Ida.
Publicly traded property insurers’ catastrophe totals for Ian as disclosed so far in third-quarter results indicate that industrywide insured damage will be in the $50 billion to $60 billion range, Wall Street analysts said. If that holds, Ian would become the nation’s second-costliest natural disaster to property insurers, displacing Ida, whose insured damage stands at an estimated $36 billion, according to trade group Insurance Information Institute.
The carrier’s most-recent net income totaled $812 million compared with $1.83 billion in the year-earlier period. Net income was hurt by realized losses of $502 million, principally due to the mark-to-market impact on derivatives and certain investments, as well as sales of fixed-income securities in the rising interest-rate environment.
The company’s “core operating income,” which excludes items considered nonrecurring and is closely followed by Wall Street analysts, rose 15% to $1.33 billion.
Chubb Chief Executive
said all major areas of the company had contributed to the improvement, calling underwriting results excellent “despite an active catastrophe quarter.” He said the company is “focused on inflation and staying on top of it in terms of both pricing and reserving.”
Consolidated net premiums written, an important measure of revenue growth, were up 14% to $12.02 billion. Within that, property-and-casualty net premiums written were up 8.5%. The company’s life-insurance operations saw a more-than-doubling of premiums, to $1.27 billion, reflecting the acquisition of an Asian business from
Commercial pricing, including changes both in premium rates and what is covered in a policy, increased 8.5% in North America and about 11% in international operations in constant dollars, which excludes the impact of foreign-exchange movements. Pretax net investment income totaled a record $979 million, up 13%. Chubb said it capitalized on rising interest rates, deploying cash at an average reinvestment rate of 5.8%, compared with a 3.4% yield on the company’s investment portfolio.
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