Chubb reports $1.2bn of cat losses for Q3, reinsurance partners to take share

Global insurance and reinsurance group Chubb reported almost $1.2 billion of catastrophe losses for the third-quarter of 2022, with $975 million coming from hurricane Ian alone, while its quarterly data suggests a reliance on reinsurance to help pay its claims.

Despite the impact of hurricane Ian in the quarter, Chubb reported positive combined ratios for much of its business after the third-quarter of the year.

In fact, the P&C combined ratio was just 93.1% for Q3 2022, which was actually an improvement on the prior year despite elevated levels of catastrophe losses.

The one segment that did not fare so well due to hurricane Ian’s impacts was Chubb’s global reinsurance underwriting business, Chubb Tempest Re, which reported a combined ratio of 148.4% and an underwriting loss of $123 million.

The company delivered overall core operating income of $1.33 billion, which was up 15.1%, even though there were realised and unrealised losses to the investment portfolio, while net income fell to $812 million, down from $1.83 billion prior year.

Reinsurance capital has helped Chubb avoid a greater impact to its business from catastrophes and in particular hurricane Ian, it seems.

While its own reinsurance division was hurt by elevated losses in Q3, it seems Chubb’s overall business will benefit from robust use of reinsurance across the P&C units.

The company’s gross reinsurance recoverable soared by $988 million during Q3 2022, which is its largest increase in any quarter for two years.

At the same time, Chubb’s gross loss reserve balance rose by $1.9 billion and its ceded loss reserves by $807 million.

Each of which figures have risen significantly in the quarter, implying a positive response from Chubb’s reinsurance to the elevated levels of catastrophe losses suffered in Q3 and in particular to hurricane Ian.

Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Limited, commented on the results, “The broad-based strength of the company globally was clearly evident in the quarter, with core operating income up 15% and per share earnings of $3.17 up 20%. All major areas of our business contributed. We produced simply excellent underwriting results despite an active catastrophe quarter. We had record investment income, which is and will be a growing source of earnings; double-digit P&C premium revenue growth in constant dollars, which was well balanced between commercial and consumer lines; and life insurance premiums that more than doubled with the closing of our acquisition of Cigna’s business in Asia.

“P&C underwriting income of $710 million was up 15% and led to a combined ratio of 93.1%, which included pre-tax catastrophe losses of $1.2 billion, with $975 million from Hurricane Ian. For the year, record underwriting income of $3.4 billion was up more than 40% or over $1 billion, with an 87.5% combined ratio, an improvement of nearly three points over prior.

“We continued to capitalize on rising interest rates, deploying cash at an average reinvestment rate of 5.8% versus a portfolio yield of 3.4%. Adjusted net investment income was a record $1.1 billion, up over 12% and topping $1 billion for the first time.

“Consolidated net premiums written, which include P&C and life insurance, grew over 17% in constant dollars. We are a global company and published growth was impacted by the strength of the dollar, which is at a 20-year high. P&C grew 11%, with commercial lines up 11.5% and consumer lines up 9.5% in constant dollars. Life premiums grew 117% with the consolidation of Cigna’s business in Asia.

“Commercial P&C pricing remained strong and continued to exceed our loss costs. We are focused on inflation and staying on top of it in terms of both pricing and reserving. Commercial pricing, which includes rate and exposure, increased 8.5% in North America and about 11% in our international operations in constant dollars.

“While we are operating in a challenging economic and geopolitical environment, we are optimistic about our prospects given the strengths and momentum of our businesses. With the combination of growth and underwriting margins in our P&C businesses; our growth in investment income; and the future revenue and earnings contributions from our life insurance businesses in Asia, we expect EPS to continue to grow at a healthy rate into the future.”