LA wildfires take toll on Chubb’s Q1 profit

Chubb Ltd. reported first-quarter net income of $1.33 billion, off 37.9% from the year-earlier period as insured losses from the Los Angeles wildfires blunted earnings.

Catastrophe losses more than tripled to $1.64 billion from $435 million in last year’s first quarter and included $1.47 billion from the California wildfires, the insurer said in its earnings statement released after markets closed Monday.

The catastrophe losses took their toll on Chubb’s combined ratio, which worsened to 95.7% from 86.0% in last year’s first quarter.

The increased catastrophe losses translated to 15.9 percentage points of the combined ratio, compared with 4.4 points in the year-earlier period.

Net premiums written increased 3.5% to $1.26 billion. Property/casualty net premiums written rose 3.2% to $10.93 billion.

Net investment income increased 12.2% to $1.56 billion.

While large account, short-tail business “is growing quite competitive,”  middle-market and small commercial property “remain much more disciplined and orderly,” Chubb Chairman and CEO Evan G. Greenberg said during a Wednesday morning earnings call.

“A lot more capital is chasing the business, prices are softening” in the large account space, while “rates, in fact, continue to rise” in the middle-market and small commercial space, he said.

He noted the effects of currency fluctuations on earnings, as unfavorable foreign currency movement hurt core operating income by $36 million.

Mr. Greenberg also addressed how macroeconomic factors are stressing the business environment.

“There is currently a great deal of uncertainty and confusion surrounding our government’s approach to trade. It’s impacting business and consumer confidence,” he said.

“The odds of recession have risen substantially. Higher inflation is all but certain. To what degree is an open question.”