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Why Chubb’s Global Reinsurance Division Income Fell

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Division’s income

The Global Reinsurance division of Chubb Limited (CB) consists of reinsurance activities as follows:

  • Chubb Tempest Re USA
  • Chubb Tempest Re Canada
  • Chubb Tempest Re Bermuda
  • Chubb Tempest Re International

The global reinsurance division reported income of $146 million in 9M17, compared to $338 million in 9M16—a substantial 56.8% decline. The division’s net premiums written stood at $580 million in 9M17, compared to $562 million in 9M16—a rise of 3.3%. The division saw a rise in net investment income from $199 million in 9M16 to $207 million in 9M17, a 4.0% rise.

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Pre-tax catastrophe losses

Global Reinsurance division faced pre-tax catastrophe losses (including related reinstatement premiums) of $271 million in 9M17, compared to $64 million in 9M16. Catastrophe losses in 9M17 were mainly driven by hurricanes Maria, Irma, and Harvey. However, unfavorable US natural conditions were also major drivers.

The Global Reinsurance division posted a policy acquisition cost ratio of 25.3% in 9M17 versus 26.3% in 9M16. The division saw an adjusted loss and loss expense ratio of 44.6% in 9M17, compared to 45.3% in 9M16. The administrative expense ratio for the division in 9M17 stood at 6.1%, compared to 7.2% in 9M16.

Over the last 12 months, Chubb’s return on invested capital stood at 2.51%. Peers (XLF) Principal Financial Group (PFG), Hartford Financial Services (HIG), and CNA Financial Corporation (CNA) recorded 0.86%, 1.38%, and 3.53%, respectively.

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