10-QPeriod: Q3 FY2013

Chubb Ltd Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 30, 2013For Securities:CB

Summary

Chubb Ltd (CB) reported a strong third quarter of 2013, with net income increasing significantly to $916 million, up from $640 million in the prior year period. This growth was driven by improved underwriting results, evidenced by a lower combined ratio of 86.5% compared to 92.0% in Q3 2012. The company saw growth in its Insurance – Overseas General and Insurance – North American P&C segments, which more than offset a decline in the North American Agriculture segment and Global Reinsurance. Investment income remained stable, although slightly down due to lower reinvestment rates. The company also demonstrated solid cash flow from operations. Acquisitions made during the year, specifically ABA Seguros and Fianzas Monterrey in Mexico, are integrated and contributing to premium growth. Overall, Chubb exhibited robust performance characterized by improved profitability and strategic growth initiatives.

Financial Highlights

35 data points
Beta

Revenue

$5.20B

Net Income

$785.00M

15.1% Net Margin

EPS (Diluted)

$2.32

Total Assets

$94.58B

Cash & Equivalents

$768.00M

Free Cash Flow

$928.00M

Financial Statements
Beta
Revenue$5.20B
Interest Expense$72.00M
Net Income$785.00M
EPS (Basic)$2.35
EPS (Diluted)$2.32
Shares Outstanding (Basic)340.89M
Shares Outstanding (Diluted)343.82M

Key Highlights

  • 1Net income increased by 43.1% to $916 million for the three months ended September 30, 2013, compared to $640 million in the prior year.
  • 2The P&C combined ratio improved to 86.5% from 92.0% in the prior year period, indicating stronger underwriting profitability.
  • 3Insurance – Overseas General and Insurance – North American P&C segments showed significant premium growth, driven by organic growth and recent acquisitions.
  • 4Net investment income was $522 million, a slight decrease of 2.0% from the prior year, reflecting lower reinvestment rates.
  • 5Operating cash flow was strong at $928 million for the quarter.
  • 6The company successfully integrated two acquisitions in Mexico (ABA Seguros and Fianzas Monterrey), contributing to premium growth.
  • 7Favorable prior period development of $210 million contributed positively to the loss and loss expense ratio.

Frequently Asked Questions

The primary driver of the significant increase in net income was improved underwriting results, as indicated by a lower P&C combined ratio (86.5% in Q3 2013 vs. 92.0% in Q3 2012), coupled with solid growth in key business segments like Insurance – Overseas General and Insurance – North American P&C.

The acquisitions of ABA Seguros and Fianzas Monterrey in Mexico, completed in the second quarter of 2013, contributed positively to premium growth in the Insurance – Overseas General segment. The company reported that these acquisitions are integrated and are contributing to the overall growth of the business.

Net investment income saw a slight decrease of 2.0% to $522 million for the quarter. Management attributes this to lower reinvestment rates and the impact of foreign exchange, despite a higher overall invested asset base. The company's investment portfolio remains diversified and is primarily invested in investment-grade fixed-income securities.

The Insurance – North American Agriculture segment experienced a significant decline in net premiums written (-30.8%) and earned (-27.2%) primarily due to lower premium retention in the MPCI program, a result of purchasing additional reinsurance and a change in prior year retention dynamics. This segment also contributed to a higher expense ratio for the P&C business overall.