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Why Chubb’s Personal Insurance Business Saw a Rise in Income

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Oct. 18 2017, Updated 9:14 a.m. ET

Underwriting income

Chubb Limited’s (CB) Personal Property and Casualty business’s underwriting income rose from $138.0 million in 1H16 to $285.0 million in 1H17, reflecting an increase of 106.5%.

This substantial increase was mostly due to a significant fall in the division’s administrative expenses in 1H17 compared to 1H16.

Chubb Limited’s (CB) Personal Property and Casualty division reported net premiums written of ~$2.2 billion in 1H17 compared to $2.1 billion in 1H16, which reflects an increase of 6.5%. This rise resulted from the exclusion of production revenues generated in the first 14 days of January 2016, as the acquisition was completed on January 14, 2016.

Chubb Limited currently has a market capitalization of ~$69.6 billion. Insurance peers (IYF) RenaissanceRe Holdings Limited (RNR), Everest Re Group (RE), and Allstate (ALL) have market cap levels of ~$5.6 billion, ~$9.8 billion, and ~$33.4 billion, respectively.

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Administrative expense ratio

Chubb’s North America Personal Property and Casualty business reduced its administrative expense ratio from 8.6% in 1H16 to 6.0% in 1H17. This decline was mostly due to the realization of savings in relation to the acquisition expenses, as well as decreased expenses in relation to employee benefits.

However, this division witnessed an increase in its net investment income from $102.0 million in 1H16 to $111.0 million in 1H17, which reflects an increase of 8.8%.

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