10-QPeriod: Q1 FY2015

Chubb Ltd Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 29, 2015For Securities:CB

Summary

Chubb Ltd. (CB) reported its first-quarter financial results for 2015, showcasing a solid operational performance despite a slight decrease in net income compared to the prior year. The company maintained a strong combined ratio of 88.4%, indicating effective underwriting. Net premiums written saw a marginal decrease of 2.6% primarily due to foreign exchange fluctuations, but on a constant-dollar basis, they increased by 1.8%, signaling underlying business growth. Investment income remained stable, and the company continued its share repurchase program, returning capital to shareholders. Acquisitions made in late 2014 are beginning to contribute to premium growth, particularly in the Overseas General segment. The company's balance sheet remains robust with substantial assets and equity, and its liquidity position is strong, supported by operating cash flows and available credit facilities.

Financial Highlights

34 data points
Beta

Revenue

$4.39B

Net Income

$681.00M

15.5% Net Margin

EPS (Diluted)

$2.05

Total Assets

$98.40B

Cash & Equivalents

$948.00M

Free Cash Flow

$1.07B

Financial Statements
Beta
Revenue$4.39B
Net Income$681.00M
EPS (Basic)$2.08
EPS (Diluted)$2.05
Shares Outstanding (Basic)328.21M
Shares Outstanding (Diluted)331.69M

Key Highlights

  • 1Net income for the quarter was $681 million, a decrease of 7.2% from $734 million in the prior year, largely influenced by foreign currency impacts and a higher effective tax rate.
  • 2The combined ratio improved slightly to 88.4% from 88.8% in Q1 2014, reflecting efficient underwriting operations.
  • 3Net premiums written decreased by 2.6% to $4,076 million, primarily due to adverse foreign exchange movements. However, on a constant-dollar basis, net premiums written increased by 1.8%.
  • 4Net investment income was stable at $551 million, marginally down from $553 million in the prior year, with a negative impact from foreign exchange.
  • 5The company repurchased $340 million of its common shares during the quarter, demonstrating a commitment to returning capital to shareholders.
  • 6The Insurance – Overseas General segment showed strong growth, with net premiums written increasing by 11.0% on a constant-dollar basis, boosted by recent acquisitions.
  • 7Operating cash flow remained strong at $1.08 billion, though lower than the $1.25 billion in the prior year, mainly due to higher net losses paid and increased income taxes paid.

Frequently Asked Questions

Chubb Ltd. demonstrates a generally healthy financial position. The company maintained a strong combined ratio, indicating effective underwriting. Total assets were $98.4 billion and shareholders' equity was $29.7 billion as of March 31, 2015. Operating cash flow was robust, and the company has access to credit facilities and capital markets for liquidity needs.

The acquisitions made in late 2014, specifically the large corporate account P&C insurance business of Itaú Seguros in Brazil and the Siam Commercial Samaggi Insurance PCL in Thailand, are beginning to contribute to premium growth. The Insurance – Overseas General segment saw an increase of $102 million in net premiums written from these acquisitions on a constant-dollar basis.

The decrease in net income from $734 million in Q1 2014 to $681 million in Q1 2015 was primarily influenced by adverse foreign currency movements and a higher effective income tax rate, which increased to 15.0% from 11.3% in the prior year. This increase in the tax rate was due to a higher percentage of earnings being generated in higher tax-paying jurisdictions.

Chubb's investment portfolio is primarily invested in publicly traded, investment-grade fixed income securities with an average credit quality of A/Aa. The portfolio is diversified and externally managed. Key risks include changes in interest rates, credit spreads, and foreign currency fluctuations. The company actively monitors its investment portfolio and manages risks through diversification and credit limits.