10-QPeriod: Q3 FY2009

Chubb Ltd Quarterly Report for Q3 Ended Sep 30, 2009

Filed November 9, 2009For Securities:CB

Summary

Chubb Ltd. (formerly Ace Limited) reported solid financial results for the nine months ended September 30, 2009. The company demonstrated resilience in a challenging economic environment, with net income increasing significantly by 36% to $1.596 billion compared to the same period in 2008. This growth was driven by a recovery in underwriting income across its segments, particularly in Global Reinsurance and Insurance – Overseas General, coupled with favorable prior period development. Investment income, though slightly down, remained robust, and the company benefited from significantly reduced net realized losses compared to the previous year. The balance sheet strengthened, with total assets growing to $77.8 billion and shareholders' equity increasing by approximately $4.3 billion to $18.7 billion, largely due to strong net income and positive unrealized gains on investments. The company's diversification across different lines of business and geographies proved to be a strength, with improvements noted in specific lines like specialty casualty and professional lines. Despite some headwinds from unfavorable foreign exchange rates and pricing pressures in certain wholesale markets, Chubb maintained a strong combined ratio of 87.8% for the nine months ended September 30, 2009 (excluding Life business), indicating effective underwriting. The company also managed its expenses efficiently, demonstrating strong cost control measures across its operations. The acquisition of Combined Insurance continued to integrate well, contributing positively to the Life and Insurance – Overseas General segments.

Financial Highlights

30 data points
Beta

Revenue

$3.68B

Net Income

$494.00M

13.4% Net Margin

EPS (Diluted)

$1.46

Total Assets

$77.82B

Cash & Equivalents

$742.00M

Free Cash Flow

$1.01B

Financial Statements
Beta
Revenue$3.68B
Interest Expense$60.00M
Net Income$494.00M
EPS (Basic)$1.46
EPS (Diluted)$1.46
Shares Outstanding (Basic)337.19M
Shares Outstanding (Diluted)338.41M

Key Highlights

  • 1Net income grew by 36% year-over-year to $1.596 billion for the nine months ended September 30, 2009.
  • 2Total shareholders' equity increased by approximately $4.3 billion to $18.7 billion, reflecting strong profitability and investment gains.
  • 3The combined ratio (excluding Life business) improved to 87.8% for the nine months ended September 30, 2009, demonstrating effective underwriting.
  • 4Net investment income decreased slightly to $1.519 billion, impacted by lower yields and foreign exchange rates, but average invested assets increased.
  • 5Net realized losses significantly decreased by 42% to $569 million for the nine months ended September 30, 2009, a positive development compared to the prior year's volatile markets.
  • 6The company experienced favorable prior period development across its segments, contributing to improved underwriting results.
  • 7Total assets grew to $77.8 billion, with a significant portion ($46 billion) in investments, managed across diversified portfolios.

Frequently Asked Questions

Chubb's net income for the nine months ended September 30, 2009, increased by 36% to $1.596 billion, up from $1.177 billion in the same period of 2008. This improvement was driven by strong underwriting results across most segments and a significant reduction in net realized losses.

Excluding the Life segment, Chubb's combined ratio for the nine months ended September 30, 2009, was 87.8%. This ratio, calculated by summing the loss and loss expense ratio, policy acquisition cost ratio, and administrative expense ratio, indicates strong underwriting performance as it is below 100%, signifying that the company earned more in premiums than it paid out in claims and expenses.

Chubb's investment portfolio saw its fair value increase to $46.0 billion. Net investment income decreased slightly to $1.519 billion for the nine months ended September 30, 2009, primarily due to lower reinvestment yields and unfavorable foreign exchange movements, partially offset by higher average invested assets. The company benefited from significant net unrealized gains of $3.2 billion due to tightening credit spreads and increased demand for fixed income investments.

The substantial reduction in net realized losses to $569 million for the nine months ended September 30, 2009 (a 42% decrease from the prior year) reflects a less volatile market environment and effective risk management. Favorable prior period development, arising from favorable adjustments to prior year loss estimates, further bolstered underwriting income, demonstrating prudent reserve management and claims handling.