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Chubb profit up 79% as investments surge

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Chubb Ltd.’s second-quarter 2017 net income jumped 79.6% from the prior-year period to $1.31 billion on improved underwriting, “record” investment income and lower catastrophe losses, the insurer said Wednesday.

Net written premium declined 0.8% to $7.58 billion from the year-ago period, the Zurich-based insurer said in its earnings report. The company’s combined ratio for the second quarter improved to 88.0% from 91.2% in the year-ago period, while net investment income rose 4.8% to a record $855 million, Chubb said.

Property/casualty net written premiums declined 0.8% in the quarter to $7.06 billion.

“The commercial property and casualty market is, with a few exceptions, soft globally, though conditions vary depending on territory, line of business, and size of risk,” Chubb Chairman and CEO Evan G. Greenberg said on a Wednesday morning call discussing results. “Most areas of the property/casualty market are soft and highly competitive.”

“The good news is, for the business we wrote, the trend for pricing improved,” said Mr. Greenberg. Rates were essentially flat and the rate of decline slowed, he said, adding that in stressed classes such as commercial auto, “we were able to achieve some rate.”

Business varied by account size, according to Mr. Greenberg.

“Large-account business, particularly shared and layered, remains very competitive, though pricing may be beginning to bottom,” he said. “Middle-market business, with the exception of commercial auto, continues to grow more competitive by quarter.”

Organic growth, however, remained challenging, Mr. Greenberg said.

“Globally, new business has been hard to come by,” he said.

Both lower catastrophe losses and record investment income helped propel results, according to the insurer’s chief financial officer.

“Investment income of $855 million was a record and was $20 million higher than expectations,” said Philip V. Bancroft, the insurer’s executive vice president and CFO, adding that half of that increase came from higher-than-anticipated private equity distributions.

The company also saw a substantial decline in catastrophe losses to nearly half of year-ago levels.

“Catastrophe losses for the quarter were $200 million compared with $390 million in the prior year,” Mr. Bancroft said. “Catastrophe losses in this period were primarily from U.S. weather-related events.”

For the six months ended June 30, net income at Chubb rose 105.8% to $2.4 billion from the same period last year. Net premiums written rose 4.8% to $14.29 billion from the year-ago period.

The company’s six-month combined ratio improved to 87.8% from 90.6% a year ago as net investment income climbed 9.6% to $1.52 billion for the period.