Chubb third-quarter net income rises to $2.84 billion as core profit falls 2.2%

Chubb Limited (CB) said Tuesday in a regulatory filing that net income for the third quarter ended Sept. 30 rose 1.5% to $2.84 billion, or $7.30 per share, up 4.4%.

Core operating income, which excludes realized investment gains and losses and several other items, fell 2.2% to $2.98 billion, or $7.66 per share, up 0.8%.

For the first nine months, the company said net income was a record $8.02 billion, up 12.9%, and core operating income was a record $8.60 billion, up 21.0%.

Here's how the company did:

• Net income per share: $7.30 vs. $6.99 a year earlier
• Core operating income per share: $7.66 vs. $7.60 a year earlier
• Net income: $2.84 billion, up 1.5%
• Core operating income: $2.98 billion, down 2.2%
• Net premiums written: $15.14 billion vs. $14.87 billion a year earlier
• Net premiums earned: $14.92 billion vs. $14.36 billion a year earlier

Here's how Chubb's segments did during the quarter:

• North America Commercial P&C net premiums written: $5.51 billion, down 2.7%
• North America Personal P&C net premiums written: $1.91 billion, up 5.3%
• North America Agricultural net premiums written: $1.53 billion, up 5.1%
• Overseas General net premiums written: $3.94 billion, up 6.7%
• Life Insurance segment income: $369 million, up 11.4%

Consolidated net premiums written rose 1.9% in the quarter, or 1.8% in constant dollars, a measure that strips out currency effects.

P&C underwriting income was $2.06 billion, down 8.8% from $2.26 billion a year earlier. The combined ratio, or the share of premiums paid out in losses and expenses, was 84.1% compared with 81.8%.

Pre-tax catastrophe losses were $705 million, compared with $285 million a year earlier. Favorable prior period development, or changes to reserves for earlier years’ claims, was $511 million compared with $361 million.

Chairman and Chief Executive Officer Evan G. Greenberg said, “We had a really strong quarter with strong contributions from all of our businesses.” He said the company’s diversification “is highly supportive of growth and sustained margins.”

Life Insurance net premiums written were $1.96 billion, up 1.4%. International life net premiums written and deposits collected rose 15.7% to $2.44 billion.

Pre-tax net investment income was $1.79 billion, up 8.6%. Adjusted net investment income was $1.89 billion, up 6.3%. Both were records.

Operating cash flow was $6.07 billion and adjusted operating cash flow was $5.55 billion. Both were records.

Capital returned and book value

Total capital returned to shareholders in the quarter was $1.57 billion, including share repurchases of $1.18 billion at an average price of $344.32 per share and dividends of $393 million.

For the nine months, capital returned was $4.47 billion, including $3.30 billion of repurchases and $1.17 billion of dividends.

Book value per share rose 5.1% from a year earlier to $191.43. Tangible book value per share rose 5.7% to $126.96.

The company said after-tax net realized and unrealized investment losses of $4.48 billion reduced book value in the quarter, partly offset by $551 million of foreign currency gains.

Strategic Holdings sale and commercial outlook

The company said its Strategic Holdings partnership with KKR agreed to sell its investment in USI Insurance Services to Aon. The sale, which the company said was publicly announced earlier in the quarter, is expected to result in a realized gain of $460 million on an investment of $740 million.

Greenberg said the market “continues to grow more competitive in commercial P&C across the board,” particularly in the U.S. and London. The company said the substantial majority of its underwriting businesses grew in the quarter.

North America Commercial P&C premiums fell 2.7%. The company attributed the decline to a reduction in exposure, including more use of reinsurance and non-renewals, mostly in property and financial lines.

“I fully expect North America commercial growth to improve in future quarters,” Greenberg said.

Overseas General premiums rose 6.7%, with Latin America up 11.7%, Asia up 7.5% and Europe up 6.8%.

Greenberg said he is “confident in our ability to continue to outperform.”

The filing does not include new financial guidance.

Chubb will hold its third-quarter earnings call Wednesday, Oct. 21, at 8:30 a.m. Eastern, with a live webcast on its investor relations site. The company operates in 54 countries and territories and employs about 45,000 people, according to the release.