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Chubb Ltd. saw price increases accelerate and spread to more classes of business and risk type in the third quarter of 2019, Chairman and CEO Evan G. Greenberg told analysts Wednesday as the insurer reported lower profit and growth in net premiums written.
Chubb had a “strong third quarter with core operating earnings up double-digit and excellent premium revenue growth globally,” Mr. Greenberg said during the call.
“Growth benefited from a continuously improving pricing and underwriting environment where insurance rates and terms continued to firm quarter over quarter in major areas of our business,” he said.
Chubb reported net income of $1.10 billion, down 11.4% compared with the same period last year due to $119 million in mark-to-market losses related to its variable annuity reinsurance portfolio, the insurer said in a statement late Tuesday.
Its property/casualty combined ratio was 90.2% compared with 90.9% in the prior year third quarter, reflecting lower catastrophe losses and higher crop insurance losses, Chubb said in the statement.
Losses from the 2019 California wildfires are “very minor” at the current point, Mr. Greenberg said.
Net written premium for the 2019 third quarter grew to $8.62 billion, a 6.3% increase compared with the same period last year.
Rate increases in both Chubb’s North America commercial lines and in its London wholesale businesses in the third quarter were “double those of the first quarter, at 6.4% versus 3.2% and 17% versus 8%, respectively,” Mr. Greenberg said during the call.
In the U.S., rates continued to firm in wholesale specialty and middle market, he said, while Chubb’s international operations also saw firming conditions continue in the London wholesale market and in Australia, while rates began to increase in the U.K. retail market and parts of the continent, particularly for large risks.
“The market is responding to the fact that rates have not kept pace with lost costs over a number of years, which has put pressure on margins and reserves,” Mr. Greenberg said.
In Chubb’s North America commercial business, prices increased 6.8% on a written basis overall, versus a loss cost trend of 4.5%, he said.
Rates for major accounts were up over 8%, with risk management up 4.5%, excess casualty up 17.5%, and property rates up over 29%, Mr. Greenberg said. Public D&O rates increased over 17.5%, he said.
E&S wholesale rates were up 7.5%, with property up 17% and financial lines up 8.5%, he said.
Middle market pricing was up over 6%, and excluding workers compensation up 6.5%, while pricing for primary casualty was up 7.7%, property rates were up 7.3%, excess umbrella up 7% and public D&O rates up 32%, he said.
For the nine months ended Sept. 30, 2019, Chubb’s net income declined 9.1% to $3.28 billion compared with $3.61 billion for the same period last year. The property/casualty combined ratio was 89.9% for the nine months ended Sept. 30 compared with 89.8% in the prior-year period.
Chubb Ltd. saw profit tumble to $355 million for the fourth quarter of 2018, down more than 75% compared with the same period last year, as property insurance losses exceeded expectations, but executives at the insurer expressed optimism about rates increasing across several lines.