10-QPeriod: Q1 FY2021

Chubb Ltd Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 30, 2021For Securities:CB

Summary

Chubb Ltd. reported a substantial increase in net income for the first quarter of 2021, reaching $2.3 billion compared to $252 million in the prior year period. This surge was driven by a significant rebound in net realized gains, which swung from a loss of $958 million in Q1 2020 to a gain of $887 million in Q1 2021. The company also experienced robust growth in net premiums written, up 8.6% to $8.7 billion, with strong performance in its commercial P&C lines contributing significantly. While the P&C combined ratio slightly increased to 91.8% from 89.1% primarily due to higher catastrophe losses from winter storms, the underlying current accident year combined ratio excluding catastrophes improved. The company's investment portfolio remains largely stable with a focus on investment-grade fixed income securities. Chubb also continued its share repurchase program, returning capital to shareholders through repurchases totaling $519 million during the quarter.

Financial Highlights

32 data points
Beta

Revenue

$9.97B

Net Income

$2.30B

23.1% Net Margin

EPS (Diluted)

$5.07

Total Assets

$191.98B

Cash & Equivalents

$1.68B

Free Cash Flow

$2.10B

Financial Statements
Beta
Revenue$9.97B
Net Income$2.30B
EPS (Basic)$5.10
EPS (Diluted)$5.07
Shares Outstanding (Basic)450.54M
Shares Outstanding (Diluted)453.34M

Key Highlights

  • 1Net income surged to $2.3 billion in Q1 2021, a significant increase from $252 million in Q1 2020, primarily due to a strong recovery in net realized investment gains.
  • 2Consolidated net premiums written grew by 8.6% to $8.7 billion, driven by strong performance in commercial P&C lines (+16.5%).
  • 3The P&C combined ratio rose to 91.8% from 89.1% year-over-year, largely influenced by higher catastrophe losses, including significant winter storm impact in the U.S.
  • 4The current accident year P&C combined ratio, excluding catastrophe losses, improved to 85.2% from 87.5%, indicating solid underwriting performance apart from weather events.
  • 5Favorable prior period development contributed $192 million pre-tax to earnings in Q1 2021, up from $118 million in the prior year.
  • 6Chubb repurchased $519 million of its common shares during the quarter, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

The primary driver for the substantial increase in net income was the turnaround in net realized investment gains. In the first quarter of 2021, Chubb reported net realized gains of $887 million, a significant improvement from a net realized loss of $958 million in the same period of 2020.

Catastrophe losses were higher in Q1 2021 compared to Q1 2020, totaling $700 million compared to $237 million. This increase, primarily driven by winter storm losses in the U.S., contributed to a higher overall P&C combined ratio of 91.8%.

Chubb demonstrated strong premium growth, with consolidated net premiums written increasing by 8.6%. Growth was particularly robust in commercial P&C lines (+16.5%), while personal lines experienced a slight decline (-0.1%), partly due to mandated auto premium returns related to the pandemic. The company anticipates continued growth, especially in its commercial segments.

Chubb's investment portfolio is primarily composed of investment-grade, fixed-income securities. The company actively manages its portfolio, with a focus on diversification and credit quality. While net investment income remained relatively flat year-over-year, the significant unrealized depreciation on available-for-sale securities due to rising interest rates impacted other comprehensive income.