10-KPeriod: FY2016

Chubb Ltd Annual Report, Year Ended Dec 31, 2016

Filed February 28, 2017For Securities:CB

Summary

Chubb Limited's 2016 10-K report highlights a transformative year, primarily driven by the successful acquisition of The Chubb Corporation (Chubb Corp) on January 14, 2016. This strategic move significantly expanded Chubb's scale, establishing it as a global property and casualty insurance leader with operations in 54 countries. The company reported substantial growth in net premiums earned, reaching $28.7 billion, up 67.0% from the prior year, largely attributable to the integration of Chubb Corp. Financial performance showed a net income of $4.1 billion, a notable increase from $2.8 billion in 2015, reflecting the combined entity's operational scale and synergies. Chubb's business is diversified across multiple segments, with North America Commercial P&C Insurance being the largest contributor (43% of net premiums earned in 2016), followed by Overseas General Insurance (28%). The company emphasizes its disciplined underwriting approach, aiming for quality over volume. The report also details significant integration expenses related to the Chubb Corp acquisition, amounting to $492 million in 2016, alongside the realization of savings and the ongoing pursuit of further efficiencies. Despite elevated catastrophe losses in 2016, the company maintained a solid combined ratio of 88.3%.

Financial Highlights

39 data points
Beta

Revenue

$31.47B

Net Income

$4.13B

13.1% Net Margin

EPS (Diluted)

$8.87

Total Assets

$159.79B

Cash & Equivalents

$985.00M

Free Cash Flow

$5.29B

Financial Statements
Beta
Revenue$31.47B
Interest Expense$605.00M
Net Income$4.13B
EPS (Basic)$8.94
EPS (Diluted)$8.87
Shares Outstanding (Basic)462.52M
Shares Outstanding (Diluted)465.95M

Key Highlights

  • 1Acquisition of The Chubb Corporation completed on January 14, 2016, significantly expanding scale and market presence.
  • 2Net premiums earned increased by 67.0% to $28.7 billion in 2016, primarily driven by the Chubb Corp acquisition.
  • 3Net income rose to $4.1 billion in 2016 from $2.8 billion in 2015, reflecting improved profitability of the combined entity.
  • 4North America Commercial P&C Insurance and Overseas General Insurance were the largest segments, representing 43% and 28% of net premiums earned, respectively.
  • 5The company reported $492 million in integration expenses related to the Chubb Corp acquisition in 2016, with ongoing efforts to achieve $800 million in annual run-rate savings by the end of 2018.
  • 6Total pre-tax catastrophe losses were $1,060 million in 2016, a significant increase from $322 million in 2015, impacting the combined ratio.
  • 7The company paid $2.74 per share in cash dividends in 2016, continuing its consistent dividend payment history.

Frequently Asked Questions

The primary driver of Chubb's performance in 2016 was the successful completion of the acquisition of The Chubb Corporation in January 2016. This acquisition significantly expanded the company's global reach and product offerings, establishing it as a major player in the property and casualty insurance market.

The acquisition led to a substantial increase in net premiums earned, up 67.0% to $28.7 billion, and a rise in net income to $4.1 billion. While the integration process incurred significant expenses ($492 million in 2016), the company is on track to achieve substantial cost savings and expects the combined entity to generate significant synergies.

Chubb operates through six main segments: North America Commercial P&C Insurance (43% of net premiums earned in 2016), Overseas General Insurance (28%), North America Personal P&C Insurance (15%), Life Insurance (7%), North America Agricultural Insurance (5%), and Global Reinsurance (2%). The North America Commercial P&C Insurance segment is the largest contributor to premiums.

Chubb employs a disciplined underwriting strategy and utilizes reinsurance protection to manage its risk exposures. The company actively monitors catastrophe risk accumulations globally and purchases reinsurance programs to protect against natural catastrophes. However, the company experienced elevated catastrophe losses in 2016, which impacted its combined ratio.