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Chubb profit down in Q4, up for year

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Evan G. Greenberg

Chubb Ltd. saw its net profit fall 11.5% to $2.14 billion in the fourth quarter, but its full-year profit for 2021 more than doubled as it benefited from strong commercial premium growth.

Rate increases, while robust, are “naturally slowing as portfolios achieve or approach rate adequacy,” Evan G. Greenberg, chairman and CEO of Chubb, said on a Wednesday morning earnings call with analysts.

Property/casualty net premiums written increased to $8.52 billion in the fourth quarter, up 9.6% over the same period in 2020, Chubb said in its earnings statement released earlier Tuesday. Commercial net premiums written increased 13%.

“This strong performance capped a year where we grew our premium revenue 13%, the strongest organic growth since 2003, with commercial up 17.7% and consumer up 2.3%,” Mr. Greenberg said.

Growth in the fourth quarter was broad-based, with contributions from all commercial businesses globally, Mr. Greenberg said.

Pretax catastrophe losses were $275 million for the quarter, or $245 million net, down 7.1% from the year-earlier period. Catastrophe losses were primarily from weather-related events — $214 million in the U.S. and $61 million internationally, Chubb CFO Peter Enns said.

Chubb’s property/casualty combined ratio was 85.5%, an improvement from 87.6% in the same period in 2020.

Whether short-tail or long-tail the loss environment is “anything but benign,” Mr. Greenberg said. “The level of rate increases remains in excess of loss costs, and I expect this trend to continue for some time,” he said.

Total net written premiums in North America grew 8.7% in the quarter, with commercial premiums up 11.2%.

Total exposure declined 0.6% in the quarter, due to “underwriting changes such as increased attachment points and higher deductibles — a good thing, though it negatively impacted growth,” Mr. Greenberg said.

Economic exposure due to higher payrolls, sales and other activity was up 3.4%, however.

Commercial property/casualty rates in North America increased by 10.5% in the quarter.

In major accounts, risk management-related primary casualty rates climbed over 4%, while general casualty rates were up over 16% and varied by class of casualty. Property rates were up over 9.7%, while financial lines rates increased over 17%.

In Chubb’s Westchester E&S wholesale business, rates increased by 14.5% in the quarter. Property rates were up 12.5%, casualty rates rose nearly 17%, and financial lines rates were up over 18.5%.

In Chubb’s middle-market business, rates increased in the quarter about 9%. Rates for property were up 9%; casualty rates excluding comp were up nearly 9%; and workers compensation rates were down 1.5%. Financial lines rates were up about 19%.

For the full year, Chubb’s profit rose by 141.7% to $8.54 billion, and property/casualty net premium written increased to $35.39 billion, up 13% compared with 2020. Chubb’s 2021 combined ratio improved to 89.1%, from 96.1% the prior year.

Chubb’s adjusted net investment income topped $900 million for the quarter and a record $3.7 billion for the year.

“With the Fed finally accepting that inflation is a reality that is not going away any time soon, interest rates are rising and will continue to rise,” Mr. Greenberg said.

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