Chubb reported third-quarter 2023 core operating income of $4.95 per share, which outpaced the Zacks Consensus Estimate by 17.6%. This outperformance was driven by higher premium revenues and improved net investment income. The bottom line improved 58.1% from the year-ago quarter.
Chubb’s results reflected higher premium revenue growth across most of the segments, improved underwriting income and lower catastrophe loss.Quarter in Detail
Net premiums written improved 9.1% year over year to $13.1 billion in the quarter, which matched the Zacks Consensus Estimate, while our estimate was $13.5 billion.
Net premiums earned rose 9.9% to $12.7 billion. Our estimate was $11.2 billion.
Net investment income was $1.3 billion, up 34.2%. The Zacks Consensus estimate was pegged at $1.2 billion, while our estimate was pinned at $1 billion.
Property and casualty (P&C) underwriting income was $1.31 billion, which increased 83.8% from the year-ago quarter. Global P&C underwriting income, excluding Agriculture, was $1.2 billion, up 117.2%.
Chubb incurred a pre-tax P&C catastrophe loss of $0.6 billion, narrower than the year-ago catastrophe loss of $1.16 billion. The P&C combined ratio improved 470 basis points (bps) on a year-over-year basis to 88.4% in the quarter under review. The Zacks Consensus Estimate for the combined ratio was pegged at 90, while our estimate was 84.9.
Segmental Update
North America Commercial P&C Insurance: Net premiums written increased 8.7% year over year to $5.1 billion, which was in line with both the Zacks Consensus Estimate and our estimate. The combined ratio improved 670 bps to 84.2%. The Zacks Consensus Estimate was pegged at 88.
North America Personal P&C Insurance: Net premiums written climbed 9.6% year over year to $1.5 billion. Our estimate was $1.4 billion. The combined ratio deteriorated 20 bps to 90.3%. The Zacks Consensus Estimate was pegged at 94.
North America Agricultural Insurance: Net premiums written decreased 11.7% from the year-ago quarter to $1.5 billion. Our estimate was $2 billion, while the Zacks Consensus Estimate was pegged at $1.8 billion. The combined ratio deteriorated 260 bps to 93.2%. The Zacks Consensus Estimate was pegged at 87.
Overseas General Insurance: Net premiums written rose 21.4% year over year to $3.2 billion. Our estimate was $2.8 billion. The combined ratio improved 150 bps to 87%.
Life Insurance: Net premiums written increased 14.9% year over year to $1.4 billion. Our estimate was $1.7 billion. The Life Insurance segment income was $288 million, up 14.8%. It includes earnings from Huatai and higher net investment income.
Financial Update
The cash balance of $2.6 billion, as of Sep 30, 2023, increased 28.5% from the 2022-end level. Total shareholders’ equity increased 13.8% from the level at 2022 end to $57.5 billion as of Sep 30, 2023.
Book value per share, as of Sep 30, 2023, was $128.37, up 5.3% from the figure as of Dec 31, 2022.
Core operating return on tangible equity expanded 710 bps year over year to 21.2%.
Operating cash flow was $4.68 billion in the quarter under consideration.
Capital Deployment
In the quarter, Chubb bought back shares worth $606 million and paid $352 million in dividends.