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Why Chubb’s Global Reinsurance Division’s Income Rose

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Sep. 6 2017, Updated 10:37 a.m. ET

Underwriting income

Chubb’s (CB) global reinsurance division has witnessed a substantial fall in its net premiums written in 2Q17 as compared to 2Q16. In 2Q17, net premiums written of the global reinsurance division stood at $190 million. In 2Q16, net premiums written stood at $230 million, a substantial fall of 17.7%.

The global reinsurance division has witnessed a decline in its administrative expenses in 2Q17 and stood at $12 million as compared to $14 million in 2Q16, a fall of 14.3%. In 2Q17, the global reinsurance division has incurred policy acquisition costs of $43 million as compared to $47 million in 2Q16, a decline of 8.5%.

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However, the global reinsurance division managed to increase its income by 26% in 2Q17 as compared to 2Q16. In 2Q17, the global reinsurance division reported income amounting to $131 million, and in 2Q16, this division reported income of $104 million. This substantial rise in the division’s income was mainly a result of the 81.1% rise in the division’s underwriting income from $37 million in 2Q16 to $67 million in 2Q17.

Free cash flow yield

On a last-12-month (or LTM) basis, Chubb’s free cash flow yield stood at 6.4%. The free cash flow yields of other insurance companies (IYF) on an LTM basis were as follows:

  • American International Group (AIG): 5.2%
  • Allstate (ALL): 6.1%
  • Prudential Financial (PRU): 3.6%
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