Chubb posts strong profit on double-digit global premium growth

Chubb Ltd. swung to a profit for the second quarter from a loss in the year-earlier period as it posted double-digit premium growth globally, driven by a strong commercial property/casualty pricing environment.

Chubb Chairman and CEO Evan G. Greenberg told analysts during an earnings call Wednesday that the company continues to capitalize on “a hard or firming market” for commercial property/casualty in most areas of the world. “Based on what we see today I am confident these conditions will continue,” he said.

Mr. Greenberg also said during the call that cyber is a fundamental issue that is about more than just rate, and that companies should be required to get permission from the Treasury to make ransomware payments.

Chubb on Tuesday reported a net profit of $2.27 billion for the second quarter, compared with a net loss of $331 million in the same period of 2020. Its pre-tax catastrophe losses were $280 million — primarily from severe weather-related events in the U.S. — versus $1.81 billion in the same period last year.

The insurer’s property/casualty combined ratio for the second quarter was 85.5%, compared with 112.3% in the same period of 2020.

Net premiums written rose 14.3% to $9.55 billion, while property/casualty net premiums written climbed 15.5% globally to $8.93 billion. This was driven by a 19.9% increase in commercial net written premiums.

Mr. Greenberg said Chubb continues to experience a “needed and robust” commercial property/casualty pricing environment with “continued year-on-year improvement in rate to exposure” on both new and renewal business.

In North America commercial property/casualty overall rates increased by 13.5%, which was on top of a 14.7% rate increase last year for the same business, bringing the two-year cumulative rate increase to more than 30%, he said.

“In North America, rates have been rising for almost four years. However, they have exceeded loss costs for only about two years now,” Mr. Greenberg said.

In major accounts in North America, rates increased by about 16% in the second quarter, and risk management-related primary casualty rates were up almost 9%, while general casualty rates surged 27%. Property rates were up nearly 12%, and financial lines increased almost 20%.

In excess and surplus lines, wholesale rates were up about 18%.  Property rates rose about 16.5%, casualty rates were up about 21%, and financial lines were up more than 21%.

Middle-market business rates increased by over 9.5% in the quarter. Property rates were up over 10.5%, while casualty rates rose 11%, excluding workers compensation. Workers compensation rates were down half a percent, and financial lines rates increased over 17.5%.

In Chubb’s international general insurance operations, the United Kingdom and Australia stood out in terms of rate increases, Mr. Greenberg said. In the U.K. rates were up 18% in the second quarter, while rates in Australia increased by 23%. London wholesale rates climbed in the quarter by 13%.

“The industry starts at a loss ratio that is quite high. To achieve reasonable risk-adjusted return it has to continue to achieve rate in excess of loss cost for a prolonged period of time,” Mr. Greenberg told analysts.

Cyber, like pandemic, has a catastrophe potential that has no time or geographic boundary to it, he said. Chubb is beginning to address this in its underwriting, but others have been “slow to react,” Mr. Greenberg said.

“While I don’t think the government should outlaw ransomware payments at this time, I do think we ought to be looking at whether we allow cryptocurrency payments,” he said.

Anti-money laundering laws should require companies to get permission from the Treasury to make a ransomware payment. “We should be removing incentive out of the system for ransomware attacks which are all about money,” Mr. Greenberg said.

For the first half of 2021, Chubb posted net income of $4.57 billion, versus a net loss of $79 million for the same period of 2020.

The property/casualty combined ratio improved to 88.6% for the first half, compared with 101% for the first half of 2020.