01—Abstract
Summary
Summary of the 8-K filed July 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Chubb reported strong second-quarter 2024 results, with net income of $2.23 billiona, or $5.46 per diluted share, up 26.4% year over year, and core operating income of $2.20 billion, or $5.38 per share, up 9.3%.
Year-to-date results were records, with core operating income of $4.41 billionb, up 13.5%. Consolidated net premiums written rose 11.8% to $13.4 billion (12.3% in constant dollars), with P&C up 10.6% in constant dollars and Life Insurance up 27.6%. Underwriting remained solid: the P&C combined ratio was 86.8%, versus 85.4% a year earlier, driven by $580 million of pre-tax catastrophe losses (5.4 points).
The current accident year combined ratio excluding catastrophes was a record-low 83.2%. The quarter's headline earnings were helped by investment income. Pre-tax net investment income rose 28.2% to $1.47 billionc, and adjusted net investment income reached a record $1.56 billion.
Book value per share rose 1.3% sequentially to $151.05d, and tangible book value per share rose 1.7% to $91.05. Both were pressured by $437 million of after-tax portfolio realized and unrealized losses and $457 million of foreign exchange losses. Excluding AOCI, book value per share grew 2.6% and tangible book value per share grew 3.1%.
Returns were 14.7% ROE and 21.1% core operating ROTE. For investors, the quarter shows broad-based premium growth, record ex-catastrophe underwriting profitability, and rising investment income, partly offset by a higher catastrophe load and mark-to-market headwinds in the balance sheet.
Capital return was active, with $939 million returned to shareholders in the quarter ($570 million of buybacks at an average price of $253.02 and $369 million of dividends). The company also noted that Overseas General's combined ratio rose 4.2 points on catastrophes and that Huatai consolidation contributed to premium growth.
02—Key points
Key Highlights
- Q2 2024 net income of $2.23B ($5.46/share), up 26.4%; core operating income of $2.20B ($5.38/share), up 9.3%
- Consolidated net premiums written of $13.4B, up 11.8% (12.3% constant dollars); Life NPW up 24.5%
- P&C combined ratio of 86.8% vs. 85.4% last year, with catastrophe losses of $580M (5.4 pts) vs. $400M
- Record current accident year ex-cat combined ratio of 83.2% and record ex-cat underwriting income of $1.81B, up 11.1%
- Pre-tax net investment income up 28.2% to $1.47B; adjusted net investment income a record $1.56B
- Book value per share of $151.05 (+1.3% QoQ) and tangible book value per share of $91.05 (+1.7% QoQ), held back by $437M of after-tax investment losses and $457M of FX losses
- Returned $939M to shareholders in Q2 ($570M buybacks, $369M dividends)
03—Questions
Frequently Asked Questions
Why did core operating EPS grow less than GAAP EPS this quarter?
GAAP net income per share of $5.46 benefited from $0.15 of adjusted net realized gains and other items, and core operating income per share of $5.38 excludes them. Versus last year, GAAP EPS rose 26.4% but core EPS rose 9.3%, because Q2 2023 included a $0.58 per-share realized loss that depressed the prior-year GAAP comparison, while core operating results were less distorted.
How much did catastrophe losses affect underwriting results?
Pre-tax catastrophe losses were $580M, or 5.4 points of the P&C combined ratio, compared with $400M (4.1 points) a year earlier. Favorable prior period development of $192M offset part of this impact. Excluding catastrophes and prior-period development, the current accident year combined ratio was 83.2%, roughly flat year over year and a record low for the quarter.
What drove premium growth, and is it sustainable?
Global P&C NPW grew 11.2%, with commercial up 9.6% and consumer up 15.2%. North America Personal P&C grew 12.3% on high-net-worth personal lines, while commercial lines grew 6.7%, led by P&C lines up 8.7%. Overseas General grew 15.6%, helped by consolidation of Huatai. Management said commercial property is becoming more competitive while casualty pricing is firming, so growth mix may shift. Organic growth excluding Huatai in Overseas General was 8.4%.
Why did book value decline relative to expectations?
Book value per share rose only 1.3% sequentially because of $437M of after-tax net realized and unrealized investment losses and $457M of foreign exchange losses. Excluding AOCI, which removes interest-rate and currency swings, book value per share grew 2.6% and tangible book value per share grew 3.1%, showing underlying growth was stronger than the headline figure.
04—Continue