After acquisition, ACE and Chubb earnings dip

Less than two weeks after ACE completed the $29.5bn acquisition of its rival, operating earnings fell for both insurance companies

Insurance News


Less than two weeks after ACE Ltd. completed its $29.5 billion acquisition of rival insurer Chubb Corp., both carriers posted a decrease in fourth-quarter operating earnings.

During the three-month period that ended December 31, operating earnings fell 5.8% for ACE, driven by acquisition charges and negative currency. The insurer reported operating earnings of $780 million, down from $927 million during the same period last year. Property/casualty net premiums written decreased 4.6% to $3.63 billion and integration-related expenses totaled $35 million.

Meanwhile, the former Chubb Corp. reported operating earnings of $469 million – down from $544 million a year earlier. Net premiums written also declined for the insurer, falling 4% to $3 billion. The fourth quarter period included after-tax catastrophe losses of 21 cents a share, compared with seven cents a share a year earlier.

Overall, however, Chubb posted a profit of $666 million, up from $558 million in 2014.

“As shown in these results, this is a merger of two strong companies,” said Nomura analyst Cliff Gallant. “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 dip in operating earnings for both insurers is nonetheless significant as a benchmark for financial health. These figures exclude realized capital gains and losses from companies’ investment portfolios.

The merger between the two insurers under the Chubb name was completed earlier this month, creating one of the biggest property/casualty insurance companies in the world.

"ACE and Chubb are now one, and we could not be more excited about moving forward together with our new colleagues and our new brand," said Evan G. Greenberg, Chairman and CEO of Chubb Limited.

He said the new brand stands for “superior underwriting, service and execution.”

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