Chubb Limited reported net income for the second quarter ended June 30 of $1,305 million compared with $726 million for the same quarter last year‚ a 79 percent increase. Operating income was $1,180 million compared with $1,058 million for the same quarter last year.
The property/casualty (P&C) combined ratio was 88.0 for the quarter, which was two points better than the prior year (91.2) , and in line with the P/C combined ratio of 87.8 for the six months ending June 30.
Evan G. Greenberg, chairman and chief executive officer of Chubb, credited strong underwriting and record investment income for the quarter’s results. He said the company’s combined ratio of 88.0 for the quarter was “truly distinguishing given soft market conditions that have continued for a number of years now.”
He said Chub benefited from a substantial improvement in both expense ratio and loss ratio as a result of merger-related efficiencies and underwriting actions as well as lower catastrophe losses.
“Although the commercial P/C market is soft around the globe, the trend for pricing improved for the business we wrote with rates flat or the rate of decline substantially slowing in most classes, while in some particularly stressed areas we achieved rate,” Greenberg said. “Our premium revenue growth continued to trend better, as we projected, and was our best since the merger. We wrote less new business in line with our underwriting discipline while renewal retentions were steady.”
He said the giant company, formed by the ACE acquisition of Chubb that closed in January 2016, is in “excellent shape” with its integration-related efficiency efforts. The company now expects to achieve annualized run-rate savings of $875 million by the end of 2018, up from the prior estimate of $800 million. Integration and merger-related expenses are now estimated to be $903 million, up from $809 million. Greenberg said the savings are coming from many areas across the company including support services, personnel, IT and even to some extent in real estate but not from underwriting or sales/marketing.
Merger-related underwriting actions (including the cancellation of certain portfolios or lines of business that do not meet company underwriting standards) and the purchase of additional reinsurance adversely impacted P/C net premiums written growth by $198 million, or 2.8 percentage points. Net premiums earned decreased 2.3 percent. Excluding merger-related underwriting actions, P/C net premiums earned were virtually flat with prior year.
In remarks to analysts, Greenberg said that while large account business has for some time been and still remains very competitive, middle market business is now becoming more competitive as carriers attempt to grow and he expects it to remain competitive for awhile.
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