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United States : Chubb Reports Second Quarter Per Share Net Income and Core Operating Income of $2.50 and $2.60, Respectively; Consolidated Net Premiums Written of $8.3 Billion, Up 4.1%, or 5.9% in Constant Dollars.

Chubb Limited reported net income for the quarter ended June 30, 2019 of $1,150 million, or $2.50 per share, compared with $1,294 million, or $2.76 per share, for the same quarter last year. Core operating income was $1,195 million, or $2.60 per share, compared with $1,253 million, or $2.68 per share, for the same quarter last year. The property and casualty (P&C) combined ratio was 90.1%.

Book and tangible book value per share increased 3.2% and 4.7%, respectively, from March 31, 2019 and now stand at $117.97 and $73.74, respectively. Book and tangible book value per share were favorably impacted by net realized and unrealized gains of $1.1 billion after-tax in the company's investment portfolio, principally driven by a decline in interest rates.

For the three months ended June 30, 2019 and 2018, the tax expenses (benefits) related to the table above were $(1) million and $(3) million, respectively, for Chubb integration expenses; $(6) million and $(11) million, respectively, for amortization of fair value adjustment of acquired invested assets and long-term debt; $(1) million and $14 million, respectively, for adjusted net realized gains and losses; and $216 million and $218 million, respectively, for core operating income.

For the six months ended June 30, 2019, net income was $2,190 million, or $4.75 per share, compared with $2,376 million, or $5.07 per share, for 2018. Core operating income was $2,365 million, or $5.13 per share, compared with $2,350 million, or $5.01 per share, for 2018. The P&C combined ratio was 89.6% for the six months ended June 30, 2019. Book and tangible book value per share increased 7.7% and 11.9%, respectively, from December 31, 2018. Book and tangible book value per share were favorably impacted by net realized and unrealized gains of $2.5 billion after-tax in the company's investment portfolio, principally driven by a decline in interest rates.

For the six months ended June 30, 2019 and 2018, the tax expenses (benefits) related to the table above were $(2) million and $(5) million, respectively, for Chubb integration expenses; $(14) million and $(20) million, respectively, for amortization of fair value adjustment of acquired invested assets and long-term debt; $(6) million and $11 million, respectively, for adjusted net realized gains and losses; and $418 million and $367 million, respectively, for core operating income.

Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Limited, commented: "Chubb had a very good second quarter, with core operating income of $2.60 per share, excellent underwriting results and strong premium revenue growth. Our P&C combined ratio was 90.1% and our current accident year combined ratio excluding catastrophe losses was 88.9% both world-class. Book and tangible book value per share increased 3.2% and 4.7%, respectively, in the quarter, benefiting from both earnings and unrealized gains from falling interest rates.

"P&C net premiums written were up 6% in constant dollars, with strong growth of 6% in our North America commercial insurance operations and 9% in our Overseas General division. We benefited from an improved pricing and underwriting environment, flight to quality from commercial insurance buyers, and our various global growth initiatives. Pricing continued to tighten in the quarter while spreading to more classes and segments of business, particularly in the U.S. and London wholesale market. We're also seeing early signs that market-firming conditions are spreading to more territories around the world.

"In sum, this quarter was about growth and pricing, and we have good momentum. Our organization is executing at a high level and we are confident in our ability to outperform."

Total pre-tax and after-tax catastrophe losses were $275 million (3.8 percentage points of the combined ratio) and $221 million, respectively, compared with $211 million (3.0 percentage points of the combined ratio) and $173 million, respectively, last year.

Total pre-tax and after-tax favorable prior period development were $188 million (2.6 percentage points of the combined ratio) and $152 million, respectively, compared with $191 million (2.7 percentage points of the combined ratio) and $158 million, respectively, last year.

Net investment income was $859 million pre-tax and adjusted net investment income was $902 million pre-tax.

Operating cash flow was $1.4 billion.

Share repurchases totaled $376 million during the quarter at an average purchase price of $145.65 per share, and $743 million through June 30, 2019 at an average purchase price of $139.27 per share.

Net loss reserves increased $754 million, or $831 million in constant dollars.

Realized mark-to-market gains on private equities of $237 million after-tax, which are not a component of the company's core operating income, would have increased core operating income by $0.51 per share and annualized core operating ROE by 1.8 percentage points compared to the reported 9.3%. Other companies record these gains within core operating income.

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Publication:Mena Report
Article Type:Financial report
Date:Jul 24, 2019
Words:838
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