Sign in
CL

Chubb Ltd (CB)·Q1 2025 Earnings Summary

Executive Summary

  • Catastrophe-driven headline miss overshadowed strong underlying fundamentals. Q1 2025 core operating EPS was $3.68 vs $5.27 last year (California wildfires drove $1.64B pre-tax CAT losses), but ex-CAT underwriting improved with a current accident year combined ratio ex-CAT of 82.3% (down ~140 bps YoY) and adjusted NII rose 12.7% to $1.67B .
  • Company beat Wall Street consensus on both EPS and revenue: Primary EPS (S&P Global) $3.68 vs $3.23 est (+$0.45); Revenue (S&P Global) $13.42B vs $11.22B est (beat by ~$2.2B). Management reiterated confidence in double‑digit operating income/EPS growth over time, CATs and FX notwithstanding (no formal guidance) . Values retrieved from S&P Global*.
  • P&C NPW grew 3.2% (5.0% constant-currency) to $10.93B; Life NPW grew 5.3% (10.3% cc) to $1.72B; Life segment income up 8.6% to $291M, demonstrating diversification support amid CAT volatility .
  • Strategic/portfolio updates: Announced acquisitions of Liberty Mutual’s P&C businesses in Thailand and Vietnam (2024 NPW ~$275M; Thailand closed Apr 1; Vietnam expected by early 2026) and subsequently raised the annual dividend 6.6% to $3.88 and authorized a new $5B buyback starting July 1, 2025 (post‑quarter, but supportive to capital return narrative) .

What Went Well and What Went Wrong

  • What Went Well

    • Underlying underwriting strength: current accident year combined ratio ex‑CAT improved to 82.3% (vs 83.7% LY) with P&C CAY underwriting income ex‑CAT up 12.2% YoY to $1.83B .
    • Investment income tailwind: adjusted net investment income rose 12.7% to $1.67B; CFO noted portfolio yield ~5% and new money ~5.5% .
    • Life growth and earnings resilience: Life NPW +5.3% (+10.3% cc) to $1.72B and segment income +8.6% to $291M, aiding overall results amid elevated CATs .
    • Management tone: “We had a good first quarter…supported principally by excellent underlying underwriting results, double-digit growth in investment income and growing life insurance income… I expect we will continue to grow operating income and EPS at a double-digit rate, CATs and FX notwithstanding.” — Evan G. Greenberg .

  • What Went Wrong

    • Severe CATs: Pre-tax net CAT losses of $1.64B (15.9 pts on combined ratio), including $1.47B from California wildfires; after-tax CAT losses $1.30B ($3.21/share) .
    • North America Personal P&C hit by wildfires: combined ratio 159.5% (+72 pts YoY), with 72.9 pts from higher CATs; reinstatement premiums also pressured NPW growth optics .
    • FX headwind and one-timers: Strong USD reduced core op income by ~$36M ($0.09/share), while NA premium growth was dampened by reinstatement premiums and prior-year one-off structured transactions; ex these, NA P&C up 6.4% (run-rate) .

Financial Results

Headline metrics vs prior periods and estimates

MetricQ1 2024Q4 2024Q1 2025
Core Operating EPS ($)$5.27 $6.02 $3.68
Diluted GAAP EPS ($)$5.23 $6.33 $3.29
Net Premiums Earned ($B)$11.583 $12.598 $12.000
P&C Combined Ratio (%)86.0% 85.7% 95.7%
CAY ex‑CAT P&C Combined Ratio (%)83.7% 82.2% 82.3%
Adjusted Net Investment Income ($B)$1.482 $1.691 $1.670
Life Segment Income ($M)$268 $270 $291

Q1 2025 vs S&P Global consensus (Actual vs Estimate)

MetricQ1 2025 ActualQ1 2025 Consensus
Primary EPS (S&P Global)* ($)3.68*3.23*
Revenue (S&P Global)* ($B)13.42*11.22*
  • Beat/miss: EPS +$0.45 vs est; Revenue +$2.20B vs est. Values retrieved from S&P Global*.

Segment breakdown (Q1 2025 vs Q1 2024)

SegmentNPW Q1’24 ($M)NPW Q1’25 ($M)YoY %Combined Ratio Q1’24Combined Ratio Q1’25
North America Commercial P&C4,689 4,787 2.1%85.9% 82.1%
North America Personal P&C1,456 1,552 6.6%87.4% 159.5%
North America Agriculture249 276 11.0%56.6% 67.5%
Overseas General3,835 3,903 1.8%83.8% 83.4%
Global Reinsurance359 408 13.7%76.9% 95.6%
Life Insurance (NPW)1,633 1,720 5.3%——

KPIs and capital

KPIQ1 2024Q4 2024Q1 2025
P&C Underwriting Income ($M)1,400 1,575 441
CAY ex‑CAT Underwriting Income ($M)1,628 1,969 1,827
Pre-tax CAT Losses ($M)435 607 1,604
After-tax CAT Losses ($M)347 515 1,300
CAT Impact on P&C CR (pts)4.4 5.5 15.9
Favorable PPD pre‑tax ($M)207 213 255
Operating Cash Flow ($B)—4.57 1.57
Capital Returned ($M)—1,092 751
Book Value/Share ($)149.09 (3/31/24) 159.77 (12/31/24) 164.01 (3/31/25)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent UpdateChange
Core operating income/EPS outlookMulti‑yearNo formal guidanceCEO expects continued double‑digit growth in operating income and EPS over time, CATs/FX notwithstanding (qualitative) Qualitatively positive
Adjusted net investment incomeQ2 20256‑month guidance range (not restated)CFO: expect Q2 adjusted NII at midpoint of prior 6‑month guidance Maintained (midpoint)
Core effective tax rateFY 2025—Expected 19.0–19.5% (core operating) New range
DividendFrom July 2025$3.64 annualRaised 6.6% to $3.88 annual ($0.97 quarterly) Raised
Share repurchaseFrom July 2025Existing program through 6/30/25New $5B authorization effective 7/1/25 (no expiration) Increased capacity

Note: Chubb does not provide formal revenue/EPS guidance; management commentary is qualitative .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
CATs and underwritingQ3: Active CAT quarter; published CR 87.7; maintained property appetite with discipline . Q4: Disclosed $1.5B CA wildfire estimate would hit Q1’25 .Q1: $1.64B pre‑tax CATs (CA wildfires); yet CAY ex‑CAT CR 82.3%; favorable PPD $255M .Elevated CATs; underlying strength intact.
Pricing and market conditionsQ3: Large account/E&S property more competitive; casualty firming; middle market property disciplined . Q4: Overall conditions favorable; pricing ahead of loss cost; double‑digit growth outlook .CEO: Large account/E&S property more competitive; middle & small commercial disciplined; NA casualty pricing +13.4% (rates +12.6%); financial lines soft .Similar narrative; casualty firm remains tailwind.
FX impactQ3: Constant‑currency growth emphasized . Q4: Book value hit by FX losses; ex‑AOCI growth strong .Q1: Strong USD reduced core op income by ~$36M ($0.09/share); CEO noted dollar has since weakened .FX headwind in quarter; potential easing noted.
Investment incomeQ3: Adj NII record $1.64B (+15.9%) . Q4: Adj NII record $1.69B (+13.7%) .Q1: Adj NII $1.67B (+12.7%); portfolio yield ~5%, new money ~5.5% .Sustained NII tailwind.
Technology / AI—CEO: ~$1.1–$1.2B tech spend; ~50–55% on development incl. data/analytics/AI, connectivity, and process automation; focus on expense ratio advantage .Ongoing investment; efficiency lever.
Macro/trade/tariffsQ3: London competitiveness highlighted .CEO flagged trade policy uncertainty; tariffs may impact inflation; underwriting/pricing will adjust as clarity emerges .Heightened macro vigilance.
Capital returnsQ3/Q4: Robust buybacks/dividends .May 2025: Dividend +6.6%; new $5B buyback from 7/1 .Increasing capital return firepower.

Management Commentary

  • “Our published combined ratio was 95.7% with underwriting income of $441 million, a notable result given $1.6 billion of catastrophe losses. Excluding CATs, the current accident year combined ratio was 82.3%…adjusted investment income of $1.7 billion was up 12.7% and life income was $291 million, up 8.6%.” — Evan G. Greenberg .
  • “Our fixed income portfolio yield is 5%, and our current new money rate is averaging 5.5%.” — Evan G. Greenberg .
  • “The quarter produced adjusted operating cash flow of $2 billion…Book and tangible book value per share, excluding AOCI, grew 0.9% and 1.6%.” — Peter Enns .
  • “In North America…overall commercial pricing for property and casualty…was up 8.3%…Property pricing was down 9.6% in large account… and up 10.2% in middle and small…Casualty pricing in North America was up 13.4%.” — Evan G. Greenberg .
  • “We don’t give guidance… I remain confident in our ability to continue growing operating earnings and EPS at a double‑digit rate, CATs and FX notwithstanding.” — Evan G. Greenberg .

Q&A Highlights

  • CAT inflation and outlook: Management emphasized inherent volatility and continuous model/peril updates; no formal guidance on cat loads; focus on pricing/accumulation discipline .
  • Tariffs/macro: Tariff uncertainty could affect short‑tail inflation; company will adjust pricing as inflation markers change; waiting for policy clarity (USMCA/China negotiations) .
  • Casualty pricing adequacy: Casualty rates are rising where needed; company is growing casualty exposure where returns are adequate .
  • Reinsurance: Global property cat program renewed essentially unchanged on April 1; as seller/buyer, approach remains “steady as she goes” .
  • Technology/AI spend: ~$1.1–$1.2B total tech; ~half development including data/analytics/AI; supports top‑line access and best‑in‑class expense ratio over time .
  • Agriculture: Hedges used akin to reinsurance to manage commodity price volatility; corn/soy near February pricing at time of call .

Estimates Context

  • Q1 2025 result vs S&P Global: Primary EPS $3.68 vs $3.23 est (beat); Revenue $13.42B vs $11.22B est (beat). Values retrieved from S&P Global*.
  • Forward look (S&P Global): Q2 2025 Primary EPS estimate 5.97 (actual subsequently 6.14) and Revenue estimate $12.53B (actual subsequently $14.93B) indicate momentum; CAT volatility remains the principal swing factor. Values retrieved from S&P Global*.
  • Implication: Street likely revises full-year upward for core operating EPS/Revenue to reflect resilient ex‑CAT underwriting, stronger NII, and Life contribution; however, CAT seasonality (wildfires/hurricanes) introduces forecast dispersion .

Key Takeaways for Investors

  • Underlying earnings power is intact and improving: ex‑CAT underwriting and rising investment income offset a significant CAT quarter; Life earnings add ballast .
  • Q1 headline weakness was CAT‑specific; published metrics should rebound absent repeat events, given disciplined pricing and mix (casualty firmness; middle/small commercial property) .
  • The stock narrative should refocus on double‑digit operating EPS growth potential (management stance) and compounding book/tangible book value ex‑AOCI .
  • Capital return is accelerating (dividend hike; $5B buyback starting July 1), enhancing TSR and downside support through cycles .
  • Watch NA Personal lines CAT exposure and E&S property competitiveness; monitor tariff/inflation paths for potential short‑tail claims cost pressure .
  • International expansion (Liberty Thailand/Vietnam) reinforces long‑term growth in Asia; modest near‑term P&L impact, favorable strategic positioning .
  • Key model levers: CAY ex‑CAT CR trajectory, adj. NII run‑rate (midpoint guide for Q2), core tax rate 19–19.5%, and CAT assumptions by peril/region .

Footnote: *Values retrieved from S&P Global.