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Chubb’s profits fall

Chubb’s profits fall

Chubb’s profits fall For the second quarter of 2016, major insurer Chubb posted a net income of $726 million, down from $942 million in the same period in 2015.

According to The Royal Gazette, the company’s earnings per diluted common share were $1.54, while its earnings adjusted for investment costs were $2.25 per share.

On the other hand, gross written premiums were $9.27 billion for the quarter; a year-on-year improvement from last year’s $6.5 billion.

Chubb’s current incarnation is the result of Ace Ltd. acquiring The Chubb Corporation in January.

The company’s property and casualty combined ratio was 91.2% for the second quarter, compared to 87.7% in the second quarter of 2015 when calculating as if Ace and Chubb were one company.

“Chubb produced very good operating results in the quarter despite a greater level of industry natural catastrophe losses globally than has occurred in recent years, though industry insured losses appear in line with longer-term historical averages,” commented Chubb chief executive officer Evan Greenberg.

“After-tax operating income of $2.25 per share was down 6.3 per cent over prior year and included $0.66 of after-tax catastrophe losses. For illustrative purposes, excluding the catastrophe losses, operating EPS for the quarter was up 7 per cent from prior year and up 11 per cent for six months, demonstrating the underlying health and earnings power of the new Chubb and depicting the accretive nature of our merger.”

“Our earnings were driven in particular by strong underwriting margins as reflected in the published P&C combined ratio of 91.2 per cent, or 90.2 per cent excluding purchase accounting and other temporary merger-related items,” Greenberg added.

“The P&C current accident year combined ratio excluding catastrophe losses was 88.9 per cent versus 88 per cent when comparing results as if we were one company last year,” he pointed out. “Our six-month results include an annualised operating ROE of circa 10 per cent and book value per share growth of over 13 per cent.”

“Premium revenue in the quarter was impacted by foreign exchange, more competitive market conditions and underwriting actions that we took on select portfolios of business. These underwriting actions, including greater use of reinsurance, impacted net premium growth in the quarter by about 1.5 points while improving our risk-reward profile.”

“Our integration efforts, both growth and expense-related, are on track and going well,” Greenberg said of the merger. “In fact, the strength of the new Chubb, including cross-selling and the introduction of our total product portfolio to an expanded distribution base, is receiving greater attention and, while early days, the efforts are beginning to contribute to revenue growth.”

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