Sign in
CL

Chubb Ltd (CB)·Q2 2025 Earnings Summary

Executive Summary

  • Chubb delivered a record quarter: core operating EPS of $6.14 (+14% YoY) and core operating income of $2.48B on stronger underwriting and investment income; P&C combined ratio improved to 85.6% and underwriting income reached a record $1.63B .
  • EPS beat Wall Street consensus ($6.14 vs $5.97), and revenue (S&P-defined) was well above consensus ($14.93B vs $12.53B); momentum was broad-based across segments and regions, with personal lines notably strong in North America (combined ratio 73.5%) .
  • Capital return remained robust ($1.06B; $676M buybacks, $388M dividends), and the Board authorized a new $5B repurchase program effective July 1; CFO guided adjusted net investment income to $1.72–$1.74B in Q3 and maintained core operating tax rate at 19–19.5% .
  • Management emphasized discipline amid increasingly competitive large-account property markets; growth is shifting toward middle market, small commercial, casualty, and consumer lines internationally—supportive for sustained earnings growth despite CATs and FX .

What Went Well and What Went Wrong

What Went Well

  • Record underwriting: P&C underwriting income of $1.63B (+15% YoY) with combined ratio 85.6%, aided by a 1.5pt improvement in current accident year loss ratio .
  • Personal lines execution: North America Personal P&C NPW +9.1%; combined ratio improved to 73.5% (CAY ex-cat 72.2%), driven by loss ratio (-5.4pts) and expense ratio (-1.0pt) improvements; management: “our high-net-worth personal lines business had a simply outstanding quarter” .
  • International breadth: Overseas General NPW +8.5% (+10.2% constant $), consumer +12.2%, commercial +6.0%; regional strength in Latin America (+17.3%), Asia (+12.7%), Europe (+8.2%) .

What Went Wrong

  • Property rate pressure in large accounts: North America major accounts retail and E&S grew 1.5% as property-related lines declined 4.2%; management flagged “much more competitive” pricing (down >12% in large accounts) .
  • Overseas General combined ratio increased to 90.3% from 88.2% (mix shift toward consumer; higher cats); CAT losses internationally were $252M vs $157M last year .
  • Agriculture softness: North America Agriculture NPW fell 3.3% on lower commodity prices despite improved combined ratio (89.1%) .

Financial Results

Key Metrics vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Core Operating EPS ($)6.02 3.68 6.14
Net Income EPS ($)6.33 3.29 7.35
Net Premiums Written ($B)12.06 12.65 14.20
Net Premiums Earned ($B)12.60 12.00 13.13
P&C Underwriting Income ($B)1.58 0.44 1.63
P&C Combined Ratio (%)85.7% 95.7% 85.6%
Adjusted Net Investment Income ($B)1.69 1.67 1.69
Catastrophe Losses (pre-tax, $MM)607 1,641 630

Estimates Comparison (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
EPS Consensus Mean ($)5.45*3.23*5.97*
EPS Actual ($)6.02 3.68 6.14
Revenue Consensus Mean ($B)10.87*11.22*12.53*
Revenue Actual ($B)14.24*13.42*14.93*

Values retrieved from S&P Global.*

  • Significant beat: EPS +2.8% vs consensus (6.14 vs 5.97) and revenue materially above consensus; Q1 and Q4 also exceeded EPS estimates .

Segment Breakdown – Q2 2025

SegmentNet Premiums Written ($B)Combined Ratio (%)CAY CR ex-cat (%)Segment Income ($MM)
North America Commercial P&C5.72 83.5 81.1 1,785
North America Personal P&C1.94 73.5 72.2 561
North America Agricultural0.73 89.1 88.8 78
Overseas General3.62 90.3 85.4 596
Global Reinsurance0.38 71.0 73.5 183
Life Insurance1.80 ——305

KPIs and Capital

KPIQ4 2024Q1 2025Q2 2025
Book Value/Share ($)159.77 164.01 174.07
Tangible BV/Share ($)100.38 104.27 112.64
ROE (Annualized, %)15.9 8.2 17.6
Core Operating ROE (%)14.3 8.6 13.9
Core Operating ROTE (%)22.0 13.0 21.0
Capital Returned ($B)1.09 0.75 1.06

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Net Investment Income (pre-tax)Q3 2025—$1.72–$1.74B New/Increase vs Q2 actual ($1.69B)
Core Operating Effective Tax RateFY 202519–19.5% 19–19.5% Maintained
Share Repurchase AuthorizationOpen-ended—New $5B program effective July 1 Raised capacity
Quarterly DividendQ3 2025$0.97/share (2025 program)$0.97/share declared, payable Oct 3 Maintained
Senior Notes Issuance2035 maturity—$1.25B 4.90% notes, use of proceeds for general purposes/partial 2026 notes repayment Executed capital action

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Large-account property pricingIncreasingly competitive; CAT-sensitive; YoY higher cats Q4 and Q1 commentary on competitiveness Pricing down (>12% in large accounts); terms steady; Chubb walking away where inadequate More competitive; disciplined underwriting
Casualty pricingFirming noted Q1 North America casualty pricing +11.6%; ahead of loss cost trend Positive/favorable
Personal lines marginsQ4 improved; Q1 elevated CATs (wildfires) Strong margin and growth; homeowners pricing +10% vs trend ~8.9% Improving/stable
International growthQ4 broad strength (Asia, LatAm) Overseas General +10.2% constant $; consumer +15.3%; Asia/LatAm/Europe strong Durable growth
Investment incomeQ4 records Guidance to grow adjusted NII to $1.72–$1.74B next quarter Upward trajectory
Social inflation/regulatory—CEO commentary on litigation cost inflation (7–9%) and tort reform; impacts pricing/terms Ongoing industry headwind
Reinsurance stanceQ4 reinsurance strong growth Muted; stepped away from trades not meeting price adequacy; last year’s one-off structured deal impacts YoY More selective

Management Commentary

  • “We produced a record $2.5 billion in core operating income…driven by record underwriting and strong investment income, and double-digit growth in life income.” — Evan Greenberg .
  • “The commercial P&C underwriting environment for large account retail and E&S property-related business has grown much more competitive…we are disciplined underwriters, and our growth patterns reflect market conditions.” — Evan Greenberg .
  • “Our high-net-worth personal lines business had a simply outstanding quarter…rate over trend and underwriting shaping of the portfolio.” — Evan Greenberg .
  • “We now expect adjusted net investment income to be approximately $1.72–$1.74 billion next quarter…annual core operating effective tax rate 19–19.5%.” — Peter Enns .

Q&A Highlights

  • Social inflation and litigation funding: CEO highlighted elevated litigation cost inflation (~7–9%) and tightening terms/retentions; balance of risk shifted back to clients to avoid “dollar swapping” .
  • Large-account property: Pricing declines and capital inflows create trading-style placement; Chubb maintains price discipline and expects economics to respond to future loss experience and cats .
  • Latin America: Strength across Mexico auto, small commercial, A&H, and digital partnerships (e.g., Nubank, Bci Seguros); double-digit growth outlook .
  • FEMA/private flood: Potential phase-out would have modest impact on HNW; Chubb participates in growing private flood markets with better mapping/underwriting .
  • Investment income and buybacks: Alternative income variability acknowledged; higher portfolio cash flows support NII growth; buybacks to be flexed opportunistically; $5B authorization open-ended .
  • Workers’ comp medical inflation: Not seeing the same drivers as health insurers; reserving factors remain prudent with long-tail awareness .

Estimates Context

  • Q2 2025 EPS beat: $6.14 actual vs $5.97 consensus; Q1 and Q4 also surpassed EPS consensus. Revenue (S&P-defined) meaningfully exceeded consensus, reflecting strong earned premium growth and investment/other income components.*
  • FY 2025 EPS consensus sits at $23.62*, FY 2026 at $26.25*—investment income guidance supports potential upward revisions; competitive property pricing in large accounts may temper margin expectations in that subsegment.*
  • Number of estimates: EPS (Q2) 18; revenue (Q2) 4—indicates moderate coverage with potential post-print revisions.*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EPS and revenue beats underscore diversified engines (underwriting, investment income, life) with strong personal lines and international consumer growth; stock supported by breadth of performance .
  • Mix shift away from underpriced large-account property and toward middle market/small commercial and casualty should sustain margin quality despite cyclical property softness .
  • Near-term catalyst: CFO’s NII guidance ($1.72–$1.74B) plus buyback capacity ($5B) provide EPS support into Q3; dividend remains consistent at $0.97/share .
  • Risk lens: Elevated CAT exposure (Q2 $630M; YTD $2.23B at Global P&C) and social inflation remain headwinds; Chubb’s discipline and favorable PPD mitigate combined ratio volatility .
  • Life segment continues to scale (segment income $305M; NPW +14.1%), offering diversification and growth optionality in Asia and North America Combined Insurance .
  • Capital structure flexibility: $1.25B notes issuance (4.90% due 2035) and AM Best’s a+ issue rating support funding optionality for growth and opportunistic buybacks .
  • Near-term trading setup: Beat/raise narrative (EPS beat, higher NII guide) vs macro CAT seasonality/property pricing competition; posture constructive but selective given property dynamics .

Appendix – Additional Relevant Q2 Press Releases

  • Dividend: Quarterly dividend $0.97/share payable Oct 3, 2025 .
  • Debt: $1.25B 4.90% senior notes priced; intent to repay part of 2026 notes .
  • AM Best: a+ (LT issue) assigned to the 2035 notes; outlook stable .
  • Partnerships: Healthy Paws (Chubb) partnering with PetSmart to expand pet insurance access ; WonderCare watch insurance with The 1916 Company via Chubb Studio .