01—Abstract
Summary
Summary of the 8-K filed April 22, 2025. Cited figures are marked; the original filing is the authoritative source.
Chubb reported first-quarter 2025 net income of $1.33 billiona, or $3.29 per diluted share, down 37.9% from $2.14 billion a year earlier, and core operating income of $1.49 billion, or $3.68 per share, down 31.1%.
The decline was driven overwhelmingly by $1.64 billionb in pre-tax catastrophe losses, of which $1.47 billion came from the California wildfires, compared with $435 million a year ago. Excluding catastrophes and prior period development, the current accident year P&C combined ratio improved to 82.3% from 83.7%, and P&C current accident year underwriting income ex-cats rose 12.2% to $1.83 billion, which management highlighted as the underlying earnings power of the franchise. Top-line growth was solid but was partly distorted by one-time items.
Consolidated net premiums written grew 5.7% in constant dollars (3.5% as reported) to $12.6 billionc, P&C NPW grew 5.0% in constant dollars, and Life Insurance NPW rose 10.3% in constant dollars. Investment income was a bright spot, with net investment income up 12.2% to $1.56 billion and adjusted net investment income up 12.7% to $1.67 billion. Book value per share rose 2.7% to $164.01 and tangible book value per share rose 3.9% to $104.27, aided by $825 million of after-tax realized and unrealized investment gains and $302 million of foreign currency gains.
Management reiterated an expectation of double-digit growth in operating income and EPS, excluding catastrophes and FX effects, and flagged macroeconomic uncertainty tied to trade policy, recession risk and inflation. Investors should note that the headline decline reflects a non-recurring catastrophe event rather than a deterioration in core underwriting.
Chubb also redefined core operating income to exclude a Bermuda tax benefit and its subsequent amortization, which affects comparability with prior periods. Capital return remained substantial, with $751 milliond returned to shareholders in the quarter through $385 million of buybacks and $366 million of dividends.
02—Key points
Key Highlights
- Net income fell 37.9% to $1.33 billion ($3.29 per diluted share) and core operating income fell 31.1% to $1.49 billion ($3.68 per share), primarily due to $1.64 billion of pre-tax catastrophe losses, including $1.47 billion from the California wildfires.
- P&C reported combined ratio was 95.7% versus 86.0% a year ago; excluding catastrophes and prior period development, the current accident year combined ratio improved to 82.3% from 83.7%.
- P&C current accident year underwriting income excluding catastrophes rose 12.2% to $1.83 billion, indicating strong underlying profitability.
- Consolidated net premiums written grew 5.7% in constant dollars (3.5% reported) to $12.6 billion; North America growth was depressed by one-time California wildfire reinstatement premiums and prior-year large structured transactions, and was 6.4% excluding those items.
- Net investment income rose 12.2% to $1.56 billion and adjusted net investment income rose 12.7% to $1.67 billion, supporting earnings despite the catastrophe losses.
- Book value per share increased 2.7% to $164.01 and tangible book value per share increased 3.9% to $104.27; annualized ROE fell to 8.2% and core operating ROTE to 13.0%.
- Chubb returned $751 million to shareholders in Q1 ($385 million in buybacks at an average $286.18 per share and $366 million in dividends), and retired an $800 million senior note during the quarter.
03—Questions
Frequently Asked Questions
What drove the sharp decline in Chubb's first-quarter 2025 earnings?
The decline was driven mainly by catastrophe losses. Pre-tax catastrophe losses were $1.64 billion, including $1.47 billion from the California wildfires, compared with $435 million a year earlier. After-tax catastrophe losses were $1.30 billion, or $3.21 per share. Underlying underwriting and investment income grew.
Is Chubb's underlying underwriting performance deteriorating?
Based on the company's disclosures, no. Excluding catastrophe losses and prior period development, the current accident year P&C combined ratio improved to 82.3% from 83.7%, and current accident year underwriting income excluding catastrophes grew 12.2%. North America Commercial P&C also improved its combined ratio, to 82.1% from 85.9%.
Why did premium growth appear weaker than the constant-dollar figures suggest?
Reported net premiums written grew 3.5%, versus 5.7% in constant dollars, because a stronger U.S. dollar reduced the translated value of international premiums. North America growth was also reduced by California wildfire reinstatement premiums and unusually large structured transactions written in the prior year, which together weighed on reported growth.
Did the company change how it reports core operating income?
Yes. Core operating income now excludes the non-recurring tax benefit from Bermuda's tax law enacted in 2023 and adjusted in 2024, along with the amortization of the related deferred tax asset. Prior periods are presented on the adjusted basis for comparability, so investors should use the restated figures when comparing results.
What is management's outlook and what are the key risks?
Management said it expects to continue growing operating income and EPS at a double-digit rate, excluding catastrophes and FX effects. Key risks flagged include trade policy uncertainty, a higher perceived probability of recession, and expected higher inflation. Continued catastrophe activity and currency movements also remain sources of volatility.
04—Continue