Chubb Limited CEO and Chairman Evan G Greenberg said that the company’s 2016 financial results have reflected the benefits of the nearly $30 billion ACE/Chubb merger that created today’s Chubb about one year ago.
“Operationally and culturally, our integration efforts are on track and we have either achieved or exceeded substantially all of the financial and non-financial targets we set at the time of the merger,” Greenberg said Wednesday in announcing recent results.
“Chubb had a very good quarter that contributed to a year of great accomplishment in both financial and non-financial results,” he said.
Even with elevated natural catastrophe losses and soft property/casualty market conditions globally, underwriting results in the quarter were simply “excellent,” he said, pointing to a combined ratio of 87.6 that was driven by strong performances from global P/C businesses and the agriculture division. For the year, the company’s P/C combined ratio was 88 compared to 87.5 prior year as if it were one company then, a ratio he termed “simply world-class.
He added that the results reflect $100 million in additional catastrophe losses compared to the prior year, plus “slightly-less positive prior year period reserve development.”
For Q4, Chubb booked $1.6 billion in net income, or $3.41 per share. That compares to $683 million, or $2.08 share for the legacy ACE business.
Chubb said that consolidated net premiums for Q4 hit $6.9 billion. For all of 2016, they reached $28.1 billion. Those numbers are 67.4 percent higher and 58.9 percent higher, respectively, than the previous year. Meanwhile, P/C net premiums written were $6.4 billion for the quarter and $26 billion for the year, reflecting jumps of 76.1 percent and 65.6 percent, respectively, over 2015.
Adjusted net investment income, excluding a purchase accounting adjustment of $101 million, was $845 million for the quarter. For the year, the number was $3.3 billion, including a $393 million purchase accounting adjustment.
For the year, Chubb’s net income was $4.1 billion or $8.87 per share, versus $2.8 billion in legacy ACE net income in 2015, or $8.62 per share.
Greenberg called Chubb a “company built to outperform” and expressed optimism about its future despite some current political tensions.
“We are operating in a time of uncertainty, economically and geopolitically. On the one hand, the world is a tense place, marked by growing nationalism and populism that are feeding protectionist sentiment,” Greenberg said in his prepared remarks. “On the other hand, in the U.S., the monetary and fiscal changes afoot around tax, regulation of business, infrastructure and higher interest rates are potentially a real positive for business, jobs and the economy if implemented in a way that does not exacerbate budget deficits.”
Key segment items for the quarter and year ended December 31, 2016 as reported by Chubb are presented below:
Legacy
ACE As If
Chubb Limited Q4 Q4 Q4 Q4
(in millions of U.S. dollars except for percentages) 2016 2015 Change 2016 2015 Change
North America Commercial P&C Insurance
Net premiums written $ 3,083 $ 1,557 97.9% $ 3,083 $ 3,247 (5.1)%
Net premiums written excluding merger-related underwriting actions (1.7 pts) and additional reinsurance (0.9 pts) (2.5)%
Combined ratio 84.8% 84.6% 84.4% 84.2%
Current accident year combined ratio excluding catastrophe losses 88.9% 88.3% 88.5% 88.5%
North America Personal P&C Insurance
Net premiums written $ 1,040 $ 234 NM $ 1,040 $ 1,093 (4.8)%
Net premiums written excluding additional reinsurance (6.7 pts) and total Fireman’s Fund
(0.3 pts)
2.2%
Combined ratio 88.3% 78.4% 87.6% 80.9%
Current accident year combined ratio excluding catastrophe losses 82.9% 77.5% 82.1% 80.9%
North America Agricultural Insurance
Net premiums written $ 40 $ 142 (71.6)%
Combined ratio (25.4)% 76.4%
Current accident year combined ratio excluding catastrophe losses (10.9)% 79.2%
Overseas General Insurance
Net premiums written $ 2,112 $ 1,587 33.2% $ 2,112 $ 2,078 1.6%
Net premiums written constant-dollar $ 1,567 34.7% $ 2,031 4.0%
Net premiums written constant-dollar excluding merger-related underwriting actions (1.7 pts) and additional reinsurance (0.8 pts) 6.5% *
Combined ratio 90.6% 87.6% 90.8% 88.5%
Current accident year combined ratio excluding catastrophe losses 91.2% 89.7% 91.4% 91.2%
* Included in Q4 2016 is a one-time increase in net premiums written of $48 million that will not recur in 2017. Excluding this item, as well as the merger-related underwriting actions noted above, net premiums written increased 4.1 percent in constant dollars for the quarter.
Legacy
ACE As If
Chubb Limited FY FY FY FY
(in millions of U.S. dollars except for percentages) 2016 2015 Change 2016 2015 Change
North America Commercial P&C Insurance
Net premiums written $ 11,740 $ 5,715 105.4% $ 12,259 $ 12,614 (2.8)%
Net premiums written excluding merger-related underwriting actions (0.9 pts) and additional reinsurance (1.0 pts) (0.9)%
Combined ratio 86.7% 85.4% 85.7% 84.2%
Current accident year combined ratio excluding catastrophe losses 89.4% 88.6% 88.4% 88.3%
North America Personal P&C Insurance
Net premiums written $ 4,153 $ 1,192 248.4% $ 4,253 $ 4,762 (10.7)%
Net premiums written excluding additional reinsurance (5.7 pts) and total Fireman’s Fund
(6.5 pts)
1.5%
Combined ratio 90.0% 82.6% 87.6% 87.7%
Current accident year combined ratio excluding catastrophe losses 81.8% 73.2% 79.6% 79.5%
Current accident year combined ratio excluding catastrophe losses and Fireman’s Fund non-recurring transfer 83.8% 81.8%
North America Agricultural Insurance
Net premiums written $ 1,328 $ 1,346 (1.3)%
Combined ratio 74.1% 85.5%
Current accident year combined ratio excluding catastrophe losses 78.9% 88.2%
Overseas General Insurance
Net premiums written $ 8,124 $ 6,634 22.5% $ 8,339 $ 8,751 (4.7)%
Net premiums written constant-dollar $ 6,332 28.3% $ 8,244 1.2%
Net premiums written constant-dollar excluding merger-related underwriting actions (1.1 pts) and additional reinsurance (0.3 pts) 2.6%
Combined ratio 88.5% 87.0% 88.9% 87.9%
Current accident year combined ratio excluding catastrophe losses 91.5% 90.1% 91.9% 91.5%
North America Agricultural Insurance: Net premiums written decreased 71.6 percent in the quarter primarily due to lower premium retention as a result of the premium-sharing formulas with the U.S. government reflecting an upward revision to the 2016 crop year margin estimate. These adjustments, which reduced net premiums earned by $150 million and losses by $304 million, favorably impacted the combined ratio in the quarter and year.
Global Reinsurance: Net premiums written increased 4.0 percent for the quarter. For the year, net premiums written decreased 18.4% due to market conditions. The combined ratio for the quarter was 94.0, compared with 79.8. The combined ratio for the year was 79.5 compared with 65.2. The current accident year combined ratio excluding catastrophe losses for the quarter was 78.8 percent, compared with 76.6. The current accident year combined ratio excluding catastrophe losses for the year was 78.6, compared with 76.8.
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