Big Commercial Rate Hikes Continue at Chubb; Investment Portfolio Takes Hit

Chubb’s 2021 first quarter landed with massive net income. The company alsi benefited from double-digit commercial premium rate hikes and a healthy P/C combined ratio. COVID-19 continued to adversely affect consumer lines, however, though a rebound might be coming.

The insurer’s book value took a hit from after-tax net realized and unrealized losses of $737 million, including a $1.1 billion loss in its investment portfolio. Rising interest rates were to blame, but a $275 million gain in the company’s variable annuity reinsurance portfolio helped partially offset this.

Meanwhile, the coronavirus pandemic continued to adversely affect Chubb’s consumer lines, but Chubb Chairman and CEO Evan Greenberg said there appears to be a light at the end of the tunnel.

“Our consumer lines globally remain impacted by the pandemic’s effects on travel and other business and consumer-related activity, with net premiums down 2.5 percent [but] we see early signs of recovery and, in fact, our personal lines division globally reported modest growth in the quarter,” Greenberg said. “We expect to improve as the year goes along.”

Chubb booked $2.3 billion in net income during the first quarter, or $5.07 per share, versus $252 million in net income, or $0.55 per share in the 2020 first quarter.

Pre-tax net investment income was $863 million, versus $861 million the year before.

Chubb’s P/C combined ratio landed at a healthy 91.8 for Q1, but it represented a slight worsening from the 89.1 combined ratio recorded in Q1 2020.

Pre-tax P/C catastrophe losses were $700 million during the quarter, or $570 million after-tax. That compares to $237 million and $199 million, respectively over the same period last year. The number included $657 million in pre-tax U.S. storm losses. Chubb said that aggregate P/C COVID-19 losses saw no change, and continue to be counted as incurred but not reported.

Here are some additional Q1 2020 highlights:

• P/C net premiums written reached $8 billion during the quarter, up from $7.3 billion in Q1 2020.
• Commercial P/C premiums grew by nearly 14 percent, but consumer P/C premiums dipped almost 4 percent.
• Global P/C net premiums written (excluding agriculture) jumped almost 8 percent year-over year. Broken down, commercial P/C net premiums written grew by 13.8 percent, but consumer P/C net premiums written dipped by almost 4 percent.
• Chubb’s biggest North America commercial P/C rate hikes came from Major Accounts Retail and E&S Wholesale, with a17.4 percent year-over-year increase. But middle market and small commercial saw rates soar more than 11 percent higher. Accident and health, however, experienced a rate decline of 18.5 percent.

Source: Chubb