Chubb Reports Second Quarter Net Income Per Share of $4.32, Up 54.3%, and Record Core Operating Income Per Share of $4.92, Up 16.6%.
Net income was $1.79 billion, up 50.7%, and core operating income was a record $2.04 billion, up 13.9%. For the six months, net income was $3.69 billion, up 17.2%, and core operating income was a record $3.89 billion, up 12.9%.
P&C net premiums written of $10.68 billion were up 9.8%, or 10.4% in constant dollars.
Global P&C premiums, which exclude Agriculture, were up 10.2%, or 10.9% in constant dollars, with commercial lines up 11.1% and consumer lines up 10.5%. North America was up 10.6%, with personal lines growth of 10.8% and growth of 10.5%, or 14.0% excluding financial lines, in commercial lines. Overseas General was up 9.3%, or 10.9% in constant dollars, with growth of 11.9% in commercial lines and 9.5% in consumer lines; Asia Pacific was up 17.4% and Europe was up 10.5%.
P&C underwriting income was $1.43 billion with a combined ratio of 85.4%. P&C current accident year underwriting income excluding catastrophe losses was $1.63 billion, up 9.4%, leading to a record combined ratio of 83.3%. Global P&C current accident year underwriting income excluding catastrophe losses was a record $1.55 billion, up over 10%.
Pre-tax and after-tax catastrophe losses were $400 million and $319 million, respectively, compared with $291 million and $241 million, last year.
Life Insurance net premiums written increased 126.1%, or 127.6% in constant dollars, to $1.27 billion. Life Insurance segment income was $254 million, up 140.3%.
Pre-tax net investment income was $1.14 billion, up 28.9%, and adjusted net investment income was $1.24 billion, up 30.6%. Both were records.
Annualized return on equity (ROE) was 13.6% and annualized core operating ROE was 13.8%. Annualized core operating return on tangible equity (ROTE) was 21.0%.
Chubb Limited (NYSE: CB) today reported net income for the quarter ended June 30, 2023 of $1.79 billion, or $4.32 per share, and core operating income of $2.04 billion, or $4.92 per share. Book value per share and tangible book value per share increased 0.6% and 0.2%, respectively, from March 31, 2023, and now stand at $128.75 and $78.97, respectively. Book value was unfavorably impacted by after-tax net realized and unrealized losses of $1.23 billion in the company's investment portfolio.
Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Limited, commented: 'We had another simply outstanding quarter - in fact, a record, which contributed to a record six months. Our financial performance included double-digit premium revenue and earnings growth supported by world-class P&C underwriting results and an 85.4% combined ratio, record net investment income, and a doubling of our life earnings. For the quarter, core operating income and income per share were up 13.9% and 16.6%, respectively, and for the first six months, they were up 12.9% and 15.8%. Our operating earnings for the quarter topped $2 billion for the first time. We produced an annualized core operating ROE of 13.8%, with a return on tangible equity of 21%.
'Our exceptional underwriting performance was driven by strong P&C premium revenue growth, excellent current accident year underwriting margins with a record combined ratio of 83.3%, favorable prior period reserve development, and a moderate level of catastrophe losses. On the investment side, record adjusted net investment income was up $290 million, or 30.6%, over prior year. Our investment income run rate will continue to grow as we reinvest cash flow at higher rates and compound income.
'Our total company net written premium growth of 16.8% in constant dollars was balanced and broad-based, driven by double-digit growth in our commercial and consumer P&C businesses in North America and internationally, and 127.6% growth in our life business. The Global P&C constant dollar growth rate of 10.9% was the best we've seen in the last seven quarters. Global P&C premiums in North America grew 10.6%, with our consumer business up 10.8% and our commercial business up 10.5%, or 14% excluding financial lines. In our Overseas General division, premiums grew 10.9% in constant dollars, with strong growth of 17.4% in Asia and 10.5% in Europe.
'The level of rate increases overall in North America commercial P&C accelerated in the quarter to 8.7%, or 12.6% excluding financial lines, driven by increases in both property and casualty lines of business of 22% and 8.9%, respectively. Price increases, which take into account exposure, were even greater.
'We have a lot of momentum heading into the second half. As I look ahead, we remain confident in our ability to continue the pattern of growth in revenue and earnings, and, in turn, drive double-digit EPS growth.'
Consolidated net premiums earned increased 15.2%, or 15.8% in constant dollars. P&C net premiums earned increased 8.1%, or 8.7% in constant dollars.
Operating cash flow was $2.52 billion for the quarter.
Total pre-tax and after-tax P&C catastrophe losses, net of reinsurance and including reinstatement premiums, were $400 million (4.1 percentage points of the combined ratio) and $319 million, respectively, compared with $291 million (3.2 percentage points of the combined ratio) and $241 million, respectively, last year.
Total pre-tax and after-tax favorable prior period development were $200 million and $155 million, respectively, compared with $247 million and $205 million, respectively, last year.
Total capital returned to shareholders in the quarter was $1.08 billion, including share repurchases of $724 million at an average purchase price of $197.04 per share, and dividends of $354 million. Total capital returned to shareholders for the six months ended June 30, 2023 was $1.85 billion, including share repurchases of $1.15 billion at an average purchase price of $202.62 per share, and dividends of $698 million. The company previously announced that its Board of Directors approved a new share repurchase program effective July 1, 2023 of up to $5 billion with no expiration date.
On July 1, 2023, the company completed the acquisition of additional shares in Huatai Insurance Group Co. Ltd. (Huatai Group), a Chinese financial services holding company, bringing its total aggregate ownership in Huatai Group to 69.6%. The company expects the ownership percentage to increase further during the quarter. Chubb will apply consolidation accounting to its Huatai Group investment effective in the third quarter of 2023.
Details of financial results by business segment are available in the Chubb Limited Financial Supplement.
North America Commercial P&C Insurance: The combined ratio increased 5.6 percentage points, reflecting the impact of higher catastrophe losses and lower favorable prior period development. The current accident year combined ratio excluding catastrophe losses decreased 0.1 percentage point, comprising a 0.7 percentage point decrease in the loss ratio and a 0.6 percentage point increase in the expense ratio, as with last quarter, primarily from higher pension expenses reflecting financial market conditions at time of valuation late in 2022.
North America Personal P&C Insurance: The combined ratio increased 2.0 percentage points, primarily reflecting higher catastrophe losses. The current accident year combined ratio excluding catastrophe losses increased 0.8 percentage point, with 0.4 percentage point each from the loss ratio and the expense ratio. The increase in the expense ratio is primarily from higher pension expenses as noted above.
North America Agricultural Insurance: The combined ratio decreased 2.9 percentage points, reflecting lower catastrophe losses. The current accident year combined ratio excluding catastrophe losses increased 2.0 percentage points, including 1.3 percentage points in the loss ratio, which contemplates a lower underwriting gain for the current crop year compared to the loss ratio booked last year at this time.
Overseas General Insurance: The combined ratio increased 2.4 percentage points reflecting both lower catastrophe losses and lower favorable short-tail prior period development in the quarter. For the six months, favorable prior period development was short-tail lines related and similar in dollar value to the prior year-to-date period. The current accident year combined ratio excluding catastrophe losses decreased 1.0 percentage point, including a 0.5 percentage point decrease each from the loss ratio and the expense ratio.
Life Insurance: Segment income was $254 million, up 140.3%, driven substantially by International Life insurance as a result of the acquisition of the Cigna Asian business and Huatai, which had higher investment income.
All comparisons are with the same period last year unless otherwise specifically stated. Please refer to the Chubb Limited Financial Supplement, dated June 30, 2023, which is posted on the company's investor relations website, investors.chubb.com, in the Financials section for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio, and debt and capital.
Chubb Limited will hold its second quarter earnings conference call on Wednesday, July 26, 2023 beginning at 8:00 a.m. Eastern. The earnings conference call will be available via live webcast at investors.chubb.com or by dialing 877-400-4403 (within the United States) or 332-251-2601 (international), passcode 1641662. Please refer to the Chubb website under Events and Presentations for details. A replay will be available after the call at the same location. To listen to the replay, please click here to register and receive dial-in numbers.
'As Adjusted': Effective January 1, 2023, the company adopted the Long-Duration Targeted Improvements (LDTI) U.S. GAAP guidance, which principally impacted the Life Insurance segment. LDTI requires more frequent updating of assumptions and a standardized discount rate for long-duration contracts, a requirement to use the fair value measurement model for policies with market risk benefits and amortization of deferred acquisition costs on a constant level basis. Under LDTI, the company's reinsurance programs covering variable annuity guarantees (principally guaranteed minimum death benefits and guaranteed minimum income benefits) meet the definition of market-risk benefits (MRB) and are measured at fair value and are now reported within 'Market risk benefits' in the financial statements. The impact to 2022 results was immaterial.
Chubb is the world's largest publicly traded property and casualty insurance company. With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. As an underwriting company, we assess, assume and manage risk with insight and discipline. We service and pay our claims fairly and promptly. The company is also defined by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London, Paris and other locations, and employs approximately 40,000 people worldwide. Additional information can be found at: www.chubb.com.