Chubb’s Q1 underwriting gain drops 69% to $441 million as cat losses surge to $1.64 billion

By Michael Loney

April 22 - (The Insurer) – Chubb has reported a 9.7 percentage point deterioration in its combined ratio to 95.7% in the first quarter and 3.2% growth in property casualty net premiums written to $10.93 billion.

Chubb reported core operating income of $1.49 billion for the quarter, down from $2.16 billion in the same period last year.

The $3.68 operating income per share beat the $3.19 consensus estimate of 26 analysts, and was down from $5.27 a share in Q1 2024.

P&C underwriting income was $441 million with a combined ratio of 95.7%, a deterioration on the $1.40 billion in P&C underwriting income with a combined ratio of 86.0% in the first quarter of 2024.

The P&C current accident year underwriting income excluding catastrophe losses was $1.83 billion, up 12.2% over the prior-year period, with a combined ratio of 82.3% compared with 83.7% in Q1 2024.

Total pre-tax net catastrophe losses were $1.64 billion in this year’s first quarter, or 15.9 percentage points of the combined ratio, and included $1.47 billion from the California wildfires. Chubb had provided guidance of a $1.5 billion wildfire loss in late January.

This compared with $435 million of net catastrophe losses, or 4.4 percentage points of the combined ratio, in the first quarter of last year.

Total pre-tax favorable prior period development was $255 million in this year’s first quarter, compared with $207 million in the same period of last year.

P&C net premiums written were $10.93 billion, up 3.2% from the $10.59 billion in the prior-year period, or 5.0% in constant dollars.

North America NPW was up 3.4% to $6.62 billion with growth affected by two one-time items: reinstatement premiums related to the California wildfires in personal insurance, and unusually large structured transactions written in the prior year in commercial insurance.

Excluding both of those items, North America was up 6.4%, including growth of 10.1% in personal insurance and 5.3% in commercial insurance, with P&C lines up 6.4% and financial lines down 1.3%.

The North America P&C combined ratio deteriorated to 99.8% in the first quarter, from 85.6% in the prior-year period.

Overseas general NPW was up 1.8% to $3.90 billion in the first quarter, or 6.5% in constant dollars.

This included growth of 5.0% in consumer insurance and 7.3% in commercial insurance, with P&C lines up 9.3% and financial lines down 1.6%. Latin America, Asia and Europe, were up 6.1%, 6.1% and 5.5%, respectively.

The overseas general insurance combined ratio improved to 83.4% in the quarter from 83.8% in Q1 2024.

"We had a good first quarter that was overshadowed by the significant catastrophe losses we incurred from the California wildfires,” said Chubb chairman and CEO Evan Greenberg.

The executive said that the $1.5 billion in core operating income in the quarter was supported principally by “excellent” underlying underwriting results, double-digit growth in investment income and growing life insurance income.

Greenberg said that income and premium revenue in the quarter were affected by foreign exchange due to a strong dollar, which has since weakened considerably.

"In terms of the commercial P&C underwriting environment, large account admitted and E&S property continued to grow more competitive while casualty is firm and responding to the loss-cost environment,” Greenberg said.

“In middle market and small commercial, both admitted and E&S, underwriting conditions remain favorable across both property and casualty lines of business,” he continued.

Greenberg reiterated his observation at the beginning of this year that about 80% of Chubb’s global P&C business, commercial and consumer, and life business have “very good growth prospects."

“There is a lot of opportunity, though we are mindful of the external environment. There is currently a great deal of uncertainty and confusion surrounding our government's approach to trade, and it's impacting business and consumer confidence as well as our image abroad,” he said.

Greenberg said the odds of recession have risen substantially, and higher inflation appears all but certain.