Chubb ups use of artificial intelligence, posts lower profitPosted On: Apr. 26, 2023 10:22 AM CST
Chubb Ltd.’s use of artificial intelligence technology is growing, and it will start rolling out AI tools at scale, the insurer’s top executive said Wednesday while discussing the company’s first-quarter results.
“We have a variety of use cases that have proven themselves out and we continue to iterate with it,” Evan G. Greenberg, Chubb’s chairman and CEO, said Wednesday morning on an earnings call with analysts.
Chubb has been experimenting with deep-learning and math-based AI tools for five years across different business areas, including underwriting, claims, analytics, marketing and customer service, Mr. Greenberg said.
“It’s not going to replace our highest-skilled knowledge workers. It won’t do that for quite a while, but it certainly enhances their capabilities. We’re in the dawn of a period where we use these tools at scale,” he said.
Chubb reported Tuesday after markets closed first-quarter net income of $1.89 billion, down 3.2% from $1.95 billion in the year-earlier period, as premium growth was offset by higher catastrophe losses.
First-quarter pre-tax catastrophe losses totaled $458 million, compared with $333 million in the year-earlier period.
Winter storms and other severe weather events in the U.S. accounted for 76% of catastrophe losses, with storms in New Zealand and Australia accounting for much of the remainder, the insurer’s top executives said during the earnings call.
Chubb’s property/casualty combined ratio was 86.3%, compared with 84.3% in the year-earlier period.
Consolidated net premiums written were $10.71 billion, up 16.6% from the first quarter of 2022. Property/casualty net premiums written increased 9.3% to $9.42 billion, with commercial lines up 11.5%.
North America net premiums written increased 11.3%, with growth of 11.7% in commercial lines.
Pre-tax net investment income was a record $1.11 billion, up 34.7%.
Growth was balanced and broad-based with double-digit increases in North America, Europe and Asia, Mr. Greenberg said.
In North America, both property/casualty rate and price increases accelerated again in the quarter with commercial property/casualty pricing increasing 11.2%, Chubb said.
Pricing for commercial property and casualty excluding financial lines and workers comp rose 16.9%, Mr. Greenberg said. Property pricing was up 27%, while casualty pricing increased 9.9%, he said.
For professional lines and workers comp, including risk management, “the competitive environment is aggressive, and rates have continued to decline in recognition of favorable experience,” he said.
Rates and pricing for North America financial lines in aggregate were down about 2% in the quarter, while workers comp pricing was up 6.4%, he said.
In Chubb’s retail international operations, pricing was up about 8%.
“We had an excellent quarter, a strong start to the year with a lot of momentum heading into the second quarter. Looking forward, we are confident in our ability to continue growing revenue and operating earnings,” Mr. Greenberg said.