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Chubb reports $70 million loss on catastrophe crush

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Chubb Ltd. on Thursday reported a 2017 third-quarter loss of $70 million, compared with net income of $1.36 billion for third quarter 2016, as it became the latest insurer to be pushed to a quarterly loss by the unprecedented string of catastrophes in September and October.

Pretax catastrophe losses, net of reinsurance and including reinstatement premiums, were $1.89 billion in the third quarter, including $650 million for hurricane Harvey, $891 million for Irma, and $220 million for Maria, along with $25 million from the earthquakes in Mexico and $107 million from other catastrophe losses, leading to after-tax catastrophe losses of $1.53 billion, the company said in its earnings statement.

However, Chubb Chairman and CEO Evan G. Greenberg took a bullish tone on the company’s third-quarter earnings call Friday morning, becoming the latest industry executive to see the quarter’s losses as a potential catalyst for a market turn.

“Given the inadequacy of pricing and terms in a number of important classes around the globe and the consequent anemic industry results, along with the magnitude of year-to-date catastrophe losses, we should be at the beginning of a firming market, and believe we are.”

He described the catastrophe loss as within the company’s risk tolerance and executives pointed to growth in premiums and investment income.

Net premiums written rose 4.3% to $7.90 billion, while property/catastrophe net premiums written grew 4.6% to $7.40 billion, according to Chubb’s earnings report.

Record net investment income, up 7.5% to a record $893 million, was “higher than expected,” according to Chief Financial Officer Phil Bancroft, speaking on the call, due to a $44 million distribution from a co- investment by Chubb with one of the company’s private equity fund partners.

Chubb’s third-quarter property/casualty combined ratio worsened to 110.8% from 86.0% in the year-ago quarter, according to the report.

For the nine months, net income fell 7.8% to $2.33 billion vs. the same period last year. Net premiums written grew 4.4% to $2.22 billion vs. the year-ago period. The company’s nine-month property/casualty combined ratio worsened to 96.0% from 89.0% in the same period last year.

Mr. Greenberg pointed out the cumulative nature of recent large catastrophe loss years and returned to the theme of a market recovery.

“2017 is on track to join 2005 and 2011 as the third $100 billion-plus year for insured catastrophe losses in the last 12,” Mr. Greenberg said.

While timing and recovery rates will vary by geography and business, “pricing should and will move,” Mr. Greenberg said.