10-QPeriod: Q1 FY2022

Chubb Ltd Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 29, 2022For Securities:CB

Summary

Chubb Ltd. reported solid financial results for the first quarter of 2022, despite a challenging market environment. The company demonstrated resilience with a notable increase in net premiums written, up 6.2% to $9.2 billion, or 8.1% in constant dollars. This growth was driven by strong performance across most lines of business, particularly in commercial and consumer insurance segments, reflecting higher new business, positive rate increases, and strong renewal retention. The company maintained a healthy underwriting performance, evidenced by a P&C combined ratio of 84.3%, a significant improvement from 91.8% in the prior year period. This was supported by a lower current accident year loss ratio and a decrease in catastrophe losses, partially offset by favorable prior period development. Net investment income saw a slight decrease due to lower reinvestment rates, while net realized gains were substantially lower year-over-year, impacting overall net income. Despite these pressures, operating cash flow remained robust at $2.4 billion, underscoring the company's strong operational execution.

Financial Highlights

36 data points
Beta

Revenue

$9.63B

Net Income

$1.95B

20.3% Net Margin

EPS (Diluted)

$4.55

Total Assets

$197.99B

Cash & Equivalents

$1.73B

Free Cash Flow

$2.44B

Financial Statements
Beta
Revenue$9.63B
Interest Expense$132.00M
Net Income$1.95B
EPS (Basic)$4.59
EPS (Diluted)$4.55
Shares Outstanding (Basic)425.81M
Shares Outstanding (Diluted)429.79M

Key Highlights

  • 1Net premiums written increased by 6.2% to $9.2 billion, demonstrating strong top-line growth.
  • 2The P&C combined ratio improved to 84.3% from 91.8% in the prior year, indicating enhanced underwriting profitability.
  • 3Catastrophe losses decreased significantly to $333 million from $700 million year-over-year, benefiting underwriting results.
  • 4Favorable prior period development contributed positively to underwriting results, totaling $240 million pre-tax.
  • 5Net investment income decreased slightly to $822 million due to lower reinvestment rates.
  • 6Shareholders' equity decreased by $3.0 billion, primarily due to unrealized investment losses from rising interest rates, while capital returned to shareholders through repurchases and dividends amounted to $1.3 billion.
  • 7Operating cash flow was strong at $2.4 billion, up from $2.1 billion in the prior year period.

Frequently Asked Questions

Chubb experienced robust premium growth, with consolidated net premiums written increasing by 6.2% to $9.2 billion, or 8.1% in constant dollars. This growth was broad-based, with commercial lines up 9.9% and consumer lines up 0.2% (or 11.1% and 2.7% in constant dollars, respectively). This was driven by factors such as higher new business, positive rate increases, and strong renewal retention across various lines of insurance.

Underwriting profitability improved significantly, as shown by the P&C combined ratio decreasing to 84.3% from 91.8% in the prior year. This improvement was driven by a lower current accident year loss ratio (excluding catastrophes), reduced catastrophe losses, and increased favorable prior period development. The underlying loss ratio also improved, benefiting from earned rates exceeding loss cost trends.

Net investment income decreased by 4.8% to $822 million, primarily due to lower reinvestment rates on fixed maturities. Net realized gains decreased substantially by 88.6% to $101 million, largely driven by lower year-over-year after-tax net realized gains on equity securities and a lower gain on the variable annuity reinsurance portfolio. These factors, combined with unrealized losses on investments due to rising interest rates, led to a decrease in overall net income compared to the prior year.

Chubb returned $1.3 billion to shareholders in the first quarter of 2022, comprising $1.0 billion in share repurchases and $340 million in dividends. The company has a substantial share repurchase authorization remaining, indicating a continued commitment to returning capital to shareholders.