Just shy of two weeks after closing on their merger, ACE Ltd. and Chubb Corp. released financial results for their last quarter and year as separate entities.
On January 14, 2016, ACE closed on its acquisition of Chubb Corp. creating to the world’s largest publicly-traded property/casualty insurer, which has taken the name Chubb.
That deal capped a year for ACE that CEO Evan Greenberg, who is also heading the new Chubb, called “historic and transformational.” It was a year in which ACE completed the acquisition of Fireman’s Fund’s U.S. high net worth personal lines business and launched ABR Re, before announcing in July the largest insurance transaction in history: its $29.5 billion acquisition of Chubb Corp.
For the fourth quarter of 2015, both the former ACE and former Chubb Corp. reported higher net income and improved underwriting results. Both also reported lower operating results for the quarter.
Nomura analyst Cliff Gallant was impressed.
“As shown in these results, this is a merger of two strong companies,” he said, adding that “without operations in need of fixing,” he expects the challenges ahead will be easier to accomplish. “Over recent weeks, management has been clear and decisive in making announcements in regard to the pro-forma operational structure. Chubb has hit the ground running,” the analyst said.
ACE for Year 2015
In its full-year results, ACE reported:
A 1.7 percent increase in property/casualty underwriting income to $1.93 billion
A record 87.4 combined ratio in P/C versus 87.7 for 2014
Investment income for the year of $2.2 billion, down a bit from $2.2 billion in 2014
A P/C expense ratio for the year of 29.2 compared with 29.4 last year.
ACE ‘s North American P/C operation reported net premiums written increased 10.3 percent for the year. Net premiums written, excluding Fireman’s Fund in-force business in the second quarter of 2015, increased 6.3 percent for the year. The combined ratio for the the North American P/C operation for the year was 88.1 compared with 88.4.
ACE 4th Quarter
For the first quarter of 2015, ACE reported:
Net income rose 23.0 percent to $683 million, compared with $555 million last year for the period
Operating earnings were down 5.8 percent to $780 million, from $827 million
P/C net premiums written decreased 4.6 percent to $3.63 billion
The P/C expense ratio for the quarter was 29.7 compared with 29.9 last year
In its North American P/C operations for the quarter, ACE reported that net premiums written increased 7.4 percent. The combined ratio for the quarter was 87.2 compared with 90.2 last year for the same period.
The “old” Chubb reported its results for the fourth quarter and year 2015, without comment.
Chubb for Year 2015
For the year ended December 31, 2015, net income increased to $2.1 billion
For the year, the combined ratio was 87.2 in 2015 compared to 88.3 in 2014
For the year, net written premiums for 2015 were flat at $12.6 billion. Premiums were up 4 percent in the U.S. and down 10 percent outside the U.S.
The expense ratio for the year was 31.5 in 2015 and 31.4 in 2014
Chubb Personal Insurance (CPI): For the year, net written premiums were flat at $4.5 billion. Net written premiums were up 5 percent in the U.S. and down 15 percent outside the U.S. The CPI combined ratio was 91.1 compared to 90.9 in 2014.
Chubb Commercial Insurance (CCI): For the year, net written premiums increased 1 percent to $5.5 billion. Net written premiums were up 4 percent in the U.S. and down 7 percent outside the U.S. The CCI combined ratio was 89.0 in 2015 and 89.9 in 2014. In the U.S., average 2015 CCI renewal rates were flat, renewal premium retention was 88 percent and the ratio of new to lost business was 1.2 to 1.
Chubb Specialty Insurance (CSI): For the year, net written premiums declined 1 percent to $2.6 billion. Net written premiums were up 2 percent in the U.S. and down 8 percent outside the U.S. The combined ratio was 77.3 in 2015 and 80.5 in 2014.
Chubb 4th Quarter
Net income for the fourth quarter was $666 million compared to $558 million in the fourth quarter of 2014
Operating income was $469 million in the fourth quarter of 2015 compared to $544 million in the fourth quarter of 2014. It was down due to both lower underwriting income, lower investment income and expenses related to the merger.
Net written premiums for the fourth quarter of 2015 declined 3 percent to $3.0 billion from $3.1 billion. Premiums were up 1 percent in the U.S. and down 14 percent outside the U.S.
The fourth quarter combined ratio was 86.3 in 2015 compared to 84.3 in 2014
The impact of catastrophes in the fourth quarter was $74 million in 2015 compared to $25 million in 2014
Chubb Personal Insurance (CPI): Net written premiums declined 3 percent in the quarter to $1.1 billion. Net written premiums were up 4 percent in the U.S. and down 23 percent outside the U.S.. CPI’s combined ratio was 85.1 compared to 83.9 in 2014.
Chubb Commercial Insurance (CCI): Net written premiums declined 4 percent in the quarter to $1.3 billion. Net written premiums were down 2 percent in the U.S. and down 10 percent outside the U.S. The combined ratio for the fourth quarter was 91.9 in 2015 compared to 88.5 in 2014. Average fourth quarter renewal rates in the U.S. were flat for CCI, which retained 88 percent of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1.0 to 1.
Chubb Specialty Insurance (CSI): Net written premiums declined 1 percent in the quarter to $691 million. Net written premiums were flat in the U.S. and down 6 percent outside the U.S. The combined ratio was 77.6 in 2015 compared to 76.7 in 2014.