I think Chubb’s quarter deserves a more qualified description than chief executive Evan Greenberg’s “a really strong quarter”. My disagreement is with that broad assessment. The underwriting deterioration deserves equal prominence with record core operating income per share. A record is precise about the measure it describes. It should not become shorthand for the whole result.
Our Chubb results brief reports pre-tax net catastrophe losses of $705m, against $285m a year earlier. The property and casualty combined ratio rose to 84.1% from 81.8%. Favourable development of reserves for earlier periods increased to $511m from $361m, offsetting part of the catastrophe cost. These figures make the narrower underwriting margin central to my reading.
The strongest case against my view is substantial. Net income rose 1.5% to $2.84bn. Core operating income per share reached a record $7.66. Overseas, personal and agriculture businesses grew. Investment income and the life business contributed to earnings. A judgement on the whole company should recognise those contributions. On that basis, Greenberg’s description has clear support.
I still think the qualification matters. Total core operating income fell 2.2%, while the per-share measure rose 0.8%. Pre-tax net investment income increased 8.6%. The result therefore contains different directions of travel. Readers should be able to see which measure improved, which weakened and where support came from.
I would put the narrower underwriting margin beside the earnings record whenever this quarter is assessed. That gives proper weight to the higher catastrophe cost while retaining the evidence of earnings strength. It also sets a useful standard for the next results: judge each measure on its own terms before applying an adjective to the whole.
What this draws on
Chubb's third-quarter combined ratio rises to 84.1% as catastrophe losses more than double
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