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.
A major commercial and personal lines property insurer in the United States, Chubb was hit by windstorm and wildfire losses that led to pretax catastrophe losses of $1.6 billion, more than twice the amount the insurer had planned for during the quarter, said Evan G. Greenberg, chairman and CEO of Chubb, on a Wednesday conference call discussing the results.
Net premium written increased to $7.35 billion, up 4.2% over the same period last year. Chubb’s combined ratio deteriorated to 93.1% in the fourth quarter from 90.7% in the same period in 2017.
Mr. Greenberg said rising interest rates led to improved investment income, which grew 6.4% to $848 million for the fourth quarter.
Insurance pricing also increased in the fourth quarter, he said.
In North America, rates were up about 2.5% overall, and “renewal price change, which includes exposure, was up about 4%,” Mr. Greenberg said. Rates for risk management business increased less than 1%, but excess casualty rates increased 10%, property increased 12%, and public directors and officers liability insurance rates increased 8.5%, he said.
Some international rates also increased, and Chubb saw premium increases in several regions, Mr. Greenberg said: “We benefited from our growth initiatives and improved price environment in certain markets, particularly London and Australia.”
Overall international retail rates increased 4%, “the best in some time, though concentrated in a few countries and lines of business,” he said. For example, international property rates increased 5%, professional lines increased 7% and rates in Chubb’s London-based wholesale business were up 10%.
For the full year, Chubb’s profit increased 2.6% to $3.96 billion, and net premium written increased to $30.58 billion, up 4.6% compared with 2017. Chubb’s 2018 combined ratio improved to 90.6% compared with 94.7% in 2017.