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Fourth-quarter profit gains put new Chubb on solid footing


Net income for the new Chubb Ltd.'s legacy Ace Ltd. operation increased 23.0% in the fourth quarter of 2015 to $683 million, the insurer said Tuesday.

The final quarter of 2015 was “a good quarter that contributed to a very good year,” said Chubb Chairman and CEO Evan Greenberg during an earnings call Wednesday, stressing that the results reflected only Ace Ltd.'s performance.

Ace closed its acquisition of Chubb Corp. on Jan. 15, launching the new Chubb Ltd., which Mr. Greenberg said is the largest publicly traded property/casualty insurer in the world.

Mr. Greenberg cited “excellent” property/casualty underwriting results as key to the company's performance. It posted record property/casualty underwriting income of $1.93 billion for all of 2015, an increase of 1.7% from the previous year.

During the conference call, Mr. Greenberg said the insurer would “always trade market share” for underwriting discipline.

For the quarter ended Dec. 31, Chubb Ltd. reported legacy Ace Ltd. net written premiums of $3.63 billion, a 4.6% decline year to year. Its combined ratio improved to 87.7% from 88.5% from the same period a year earlier.

For the year as a whole, legacy Ace Ltd.'s net income dropped less than 1% to $2.83 billion. Net written premiums fell less than 1% to $15.72 billion and the combined ratio improved to 87.4% from 87.7% in 2014.

Chubb Ltd. also released fourth-quarter and full-year 2015 results for its legacy Chubb Corp. operations but did not comment on them.

For the fourth quarter, legacy Chubb's net income rose 19.4% to $666 million. Net written premiums fell less than 1% to $3.05 billion and the combined ratio rose to 86.3% from 84.3%.

For the year, legacy Chubb's net income rose 1.7% to $2.14 billion, while net written premiums remained virtually flat at $12.63 billion and the combined ratio improved to 87.2% from 88.3%

Analysts liked what they saw.

“As shown in these results, this is a merger of two strong companies,” said Cliff Gallant, an analyst with Nomura Securities International Inc. in San Francisco. “Without operations in need of 'fixing,' we expect the challenges ahead will be easier to accomplish.”

“The last reported quarter of legacy Ace was typical of most quarters — excellent underwriting results and reasonable growth (excluding agriculture and foreign exchange) with steady investment results,” Mark Dwelle, an insurance analyst with RBC Capital Markets Inc. in Richmond, Virginia, said in a research note. “While there were some plusses and minuses in the quarter, we don't see anything in the results that was a fundamental departure from either recent results or our expectations. We expect attention will now turn to the integration of the former Ace Ltd. and Chubb Corp. into the new Chubb Ltd.”