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Chubb Ltd (CB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered record P&C underwriting income of $1.58B with a combined ratio of 85.7% and adjusted net investment income of $1.69B, driving core operating income of $2.45B ($6.02) and diluted EPS of $6.33 .
  • Global P&C net premiums written (ex-Agriculture) grew 6.7% YoY; North America was +6.3% and Overseas General +6.8% in constant dollars, while Life net premiums written rose 8.5% in constant dollars .
  • Management guided adjusted net investment income to $1.67–$1.75B per quarter over the next six months (raised from prior $1.57–$1.63B for 2H24); 2025 core effective tax rate guided to 19.0%–19.5% .
  • A potential near‑term catalyst is final quantification and market impact of Q1 2025 California wildfire losses (~$1.5B net pre‑tax) alongside any ensuing rate actions and underwriting posture in California and property markets .

What Went Well and What Went Wrong

What Went Well

  • Record underwriting and investment income: P&C underwriting income hit $1.58B and adjusted net investment income reached $1.69B (+13.7% YoY); management reiterated confidence in sustaining double‑digit EPS growth via underwriting, investments, and life income .
  • Broad premium growth: Global P&C (ex‑Agriculture) NPW +6.7% with commercial +6.4% and consumer +7.5%; North America personal lines grew 10% and Asia-Pacific led Overseas General growth (+11.6% YoY) .
  • Strong message on momentum and discipline: “We have very good momentum as we enter ’25… confident in our ability to continue growing operating earnings and EPS at a double-digit rate” — Evan Greenberg .

What Went Wrong

  • Higher catastrophes and FX/book value pressure: Q4 pre‑tax CATs were $607M (vs. $300M LY) and book value was pressured by after‑tax investment losses of $2.44B and FX losses of $1.13B; BV/share fell 2.1% QoQ to $159.77 (TBV/share $100.38) .
  • Overseas General margin compression: Combined ratio rose to 87.6% (+1.7 pts YoY) on higher CAT losses and lower favorable prior‑period development .
  • Financial lines competitive pressure: Management flagged continued competition in D&O/EPL with current accident-year margins under pressure; Chubb is shrinking where pricing is inadequate .

Financial Results

Consolidated metrics vs prior quarters

MetricQ2 2024Q3 2024Q4 2024
Net Premiums Written ($USD Billions)$13.36B $13.83B $12.06B
Net Premiums Earned ($USD Billions)$12.29B $13.37B $12.60B
Diluted EPS (Chubb net income) ($)$5.46 $5.70 $6.33
Core Operating EPS ($)$5.38 $5.72 $6.02
P&C Combined Ratio (%)86.8% 87.7% 85.7%
Adjusted Net Investment Income ($USD Billions)$1.56B $1.64B $1.69B
P&C Underwriting Income ($USD Billions)$1.42B $1.46B $1.58B
Pre-tax Catastrophe Losses ($USD Billions)$0.58B $0.77B $0.61B

Segment breakdown (Net Premiums Written and Combined Ratios)

SegmentQ2 2024 NPW ($B)Q2 2024 CR (%)Q3 2024 NPW ($B)Q3 2024 CR (%)Q4 2024 NPW ($B)Q4 2024 CR (%)
North America Commercial P&C$5.50 82.9% $5.50 86.5% $4.90 80.6%
North America Personal P&C$1.78 83.5% $1.68 81.3% $1.62 82.6%
North America Agricultural$0.76 94.4% $1.38 90.4% $0.32 76.1%
Overseas General$3.33 88.2% $3.37 86.0% $3.44 87.6%
Global Reinsurance$0.41 72.7% $0.35 94.4% $0.22 99.9%
Life Insurance (NPW)$1.58 n/a$1.55 n/a$1.56 n/a

KPIs

KPIQ2 2024Q3 2024Q4 2024
Annualized ROE (%)14.7% 14.7% 15.9%
Core Operating ROE (%)13.3% 13.9% 14.3%
Core Operating ROTE (%)21.1% 21.7% 22.0%
Operating Cash Flow ($B)$4.08B $4.32B $4.57B
Capital Returned ($B)$0.94B $0.78B $1.09B
Book Value / Share ($)$151.05 $163.16 $159.77
Tangible BV / Share ($)$91.05 $102.67 $100.38
Book Value / Share excl. AOCI ($)$171.60 $176.23 $181.34
Tangible BV / Share excl. AOCI ($)$109.08 $113.72 $118.57

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Net Investment Income (quarterly run-rate)Next 6 months (through mid‑2025)$1.57–$1.63B (2H24) $1.67–$1.75B Raised
Core Effective Tax RateFY 2025n/a19.0%–19.5% Established
Core Effective Tax RateQ4 2024 / FY 2024Q4: 19.0%–19.25%, FY: 18.0%–18.25% Achieved Q4 core ETR 18.2% (quarter) Maintained (execution update)
California Wildfire Loss Estimate (net pre‑tax)Q1 2025 eventn/a~$1.5B net pre‑tax New
Reinsurance PurchasingJan 1 renewalsn/a“None” (no changes) Maintained
DividendPayable Jan 3, 2025Prior quarterly cadence$0.91/share (declared Nov 21, 2024) Maintained dividend stream

Earnings Call Themes & Trends

TopicQ2 (7/24)Q3 (10/30)Q4 (1/29)Trend
Casualty pricing vs loss trendPricing ahead of loss cost; P&C ex FL/comp pricing +8.3% vs loss cost 7.3%; casualty loss cost ~8.6% Casualty pricing up ~12.7%; selective long-tail reserve actions; mix matters Continued firming; pockets of opportunity in reinsurance casualty; disciplined underwriting Firming and selective growth
Financial lines competition (D&O/EPL)Competitive; shrinking where inadequate Ongoing competition; margins pressured; Chubb patient and selective “Current accident year margins under pressure” Pressure persists
Property pricing dynamicsMiddle market firm; shared/layered/E&S more competitive Similar; London market competition noted Adequate pricing overall; watch California wildfire impact on broader pricing Competitive but adequate
Investment income trajectoryAdjusted NII record; run-rate $1.57–$1.63B remaining 2024 Continued growth; record adjusted NII Raised run-rate to $1.67–$1.75B next 6 months Upward
Reserve development & strengthBalanced PPD (short-tail favorable, long-tail actions) Casualty cohort studied; mixed favorable/unfavorable; overall modest charges Active company PPD favorable; runoff adverse; overall strong reserves Consistently managed
Overseas General performanceGrowth strong; higher CATs lift CR CR improved YoY ex prior-year treaty adjustment; pricing positive CR up on CATs/PPD; CAY CR ex‑CAT down slightly Solid growth, margin variability on CATs
North America personal linesDouble-digit growth; homeowners pricing ahead of loss trend Outstanding quarter; 10% growth; strong HNW demand Combined ratio improved; NPW +10% Strong and improving
California wildfiren/an/a~$1.5B net pre‑tax estimate; exposure shrinking in affected areas New Q1 2025 impact

Management Commentary

  • Evan Greenberg: “Record P&C underwriting income with a world-class combined ratio of 85.7% and record investment income led to core operating income up 9.4% on a pre-tax basis... we are confident in our ability to continue growing operating earnings and EPS at a double-digit rate” .
  • On California wildfires: “Our current estimate… is $1.5 billion net pretax and is a first quarter 2025 event” .
  • CFO Peter Enns: “Adjusted net investment income… $1.69 billion… We expect quarterly adjusted net investment income to have a run rate between $1.67 billion and $1.75 billion over the next 6 months” .
  • Strategic tone: “Overall market conditions are quite favorable… good growth opportunity for over 80% of our global P&C business… optimistic about the year ahead” .

Q&A Highlights

  • California wildfire estimate clarification: Ground‑up loss estimate includes FAIR Plan assessment; no subrogation credit taken .
  • Structured transactions: Adverse ~40bps to North America Commercial combined ratio; structured deals typically run higher loss ratios .
  • Reserve development: Long‑tail development can be favorable/unfavorable by cohort; disciplined studies drive actions; strong reserve posture .
  • London market competition: CEO cautioned classic competitive behavior in London wholesale across property/casualty; vigilance required .
  • Reinsurance purchasing: No changes at 1/1; disciplined approach continues .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and revenue was unavailable due to data access limits at the time of analysis; therefore, we cannot present beat/miss versus Wall Street estimates for Q4. Values would normally be retrieved from S&P Global and compared to actuals reported here.

Key Takeaways for Investors

  • Core earnings quality remains high: combined ratio improved to 85.7% and adjusted NII hit a record, supporting double‑digit EPS growth ambitions into 2025 .
  • Near‑term watch: Q1 2025 California wildfire losses (~$1.5B net pre‑tax) and any related pricing/underwriting shifts in California/property lines; reinsurance market response will be informative .
  • Growth breadth: Solid NPW growth across regions and lines, especially HNW personal lines and Asia; disciplined shrinkage in financial lines where margins compress .
  • Capital deployment: Robust operating cash flow and raised investment income run‑rate underpin continued capital return and reinvestment, with BV ex‑AOCI rising QoQ/YoY despite market volatility .
  • Margin variability: Overseas General margins sensitive to CATs and PPD; expect quarter‑to‑quarter noise but underlying CAY results remain strong .
  • Tax and investment guideposts: New 2025 core ETR range (19–19.5%) and higher adjusted NII run‑rate support modeling confidence for 1H25 earnings trajectory .
  • Discipline remains a differentiator: Management’s emphasis on underwriting rigor (casualty rate adequacy, selective reinsurance casualty, financial lines restraint) positions CB well through the cycle .

Notes on Non‑GAAP

  • Core operating income excludes adjusted net realized gains/losses and market risk benefits; adjusted net investment income excludes acquisition fair value amortization and includes certain equity‑method PE income; combined ratio definitions include crop derivatives effects per Reg G .