Chubb’s Greenberg expects firmer pricing
Hurricane losses associated with Harvey, Irma and Maria piled up for Chubb Corp in the third quarter, contributing to pre-tax catastrophe losses of $1.9 billion.
However, the operating loss per share was 13 cents, beating a Wall Street consensus of 24 cents. And Evan Greenberg, chairman and CEO, believes the soft pricing market may be at an end.
He said: “I believe we are at the beginning of a firming price environment, driven by years of soft pricing that has resulted in inadequate rates in many classes.
“The magnitude of this year’s cat losses, which on a worldwide aggregate basis was between a one-in-five and one-in-ten year industry event, simply adds to the pressure to return to pricing that produces an adequate risk-adjusted return. In that regard, we intend as usual to demonstrate leadership.”
Pre-tax catastrophe losses for each of the hurricanes was $650 million for Harvey, $890 million for Irma, and $220 million for Maria.
Chubb’s net loss for the quarter was $70 million, compared with income of $1.36 billion for the same period a year ago.
Operating income, excluding catastrophe losses, was $1.46 billion, or $3.12 per share.
Mr Greenberg said: “We experienced a series of significant natural catastrophes, including three hurricanes and two earthquakes, which will likely produce the third $100 billion-plus year for insured catastrophe losses globally for the industry in the last 12 years.
“We ran a 111 per cent combined ratio and produced a loss of 13 cents per share, or essentially a quarter of our annual earnings, which is within our tolerance for risk and the amount of loss we would expect for these events.”
He added: “I’m proud of our claims and loss prevention organisation’s response serving our customers in their time of need. They continue to distinguish our company.”
Net premiums written were $7.9 billion, up 4.3 per cent year-on-year.
Yesterday, before the earnings data was released, Chubb’s shares on the New York Stock Exchange closed 59 cents, or 0.38 per cent, higher at $154.75.