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Chubb expects higher operating earnings


Nearly one year after the acquisition of Chubb Corp. by Ace Ltd., the combined insurer estimates it will see higher operating earnings per share than were originally expected and an $815 million reduction in net written premium.

According to an investor presentation posted to the insurer’s website Monday, Chubb Ltd., formed in January on completion of the deal, estimates it will see operating earnings per share of $9.75 to $9.85 in 2016, compared with the $9.22 it had modeled when the deal was put together in June 2015.

The insurer had previously reported significant increases in operating earnings during 2016 quarterly results reports.

According to the presentation, the decline in net written premium results from increased reinsurance purchased, “harmonized underwriting risk appetite and risk guidelines” and from cutting business that did not meet Chubb’s underwriting standards or exceeded its risk appetite, among other things.

The reduction is broken down as: $220 million in Chubb-canceled business; $430 million in additional reinsurance purchased; and $165 million in estimated business lost due to concentration.

The insurer said it remains on track to achieve annualized expense savings of $800 million by 2018. When the deal was announced last year, it had expected savings of $650 million by 2018 but had previously upped its estimate. Through October, Chubb had eliminated 2,000 positions globally, about 60% of the targeted total, according to the presentation.

Chubb’s estimated business mix for 2016 is 64.1% commercial and 35.9% consumer, which includes personal lines, accident and health and life insurance.