Chubb Reports Fourth Quarter Net Income Per Share of $3.27; Core Operating Income Per Share was $3.17, up 16.5%; Full-Year P&C Net Premiums Written of $27.1 Billion, up 4.2%; Book Value and Tangible Book Value Per Share up 6.5% and 8.6%, Respectively

- Fourth quarter net income of $1,533 million and core operating income (1) of $1,489 million included a provisional tax benefit of $450 million, or $0.96 per share, related to the 2017 U.S. Tax Cuts and Jobs Act (2017 Tax Reform) and a one-time expense related to a contribution of $50 million ($32.5 million after-tax) to the Chubb Charitable Foundation to make a difference in society. Excluding these items, core operating income in the quarter was $2.28 per share.

- Pre-tax catastrophe losses, net of reinsurance and including reinstatement premiums, were $447 million for the quarter, including $320 million for the northern California wildfires and other catastrophe losses as previously announced, $157 million for the southern California wildfires and $30 million of favorable adjustments related to catastrophe loss events in the third quarter.

- Fourth quarter P&C combined ratio was 90.7% compared with 87.8% prior year. The fourth quarter P&C current accident year combined ratio excluding catastrophe losses was 86.4% compared with 87.4% prior year.

- Full-year net income was $3.9 billion, or $8.19 per share, and core operating income was $3.8 billion, or $8.03 per share, including after-tax catastrophe losses of $2.2 billion, or $4.61 per share.

- Full-year P&C combined ratio was 94.7% compared with 88.7% prior year. The P&C current accident year combined ratio excluding catastrophe losses was 87.6% compared with 89.0% prior year. The year-over-year decline of 1.4 percentage points was driven by a decline in the expense ratio of 2.1 percentage points partially offset by an increase in the loss and loss expense ratio of 0.7 percentage points.

- P&C current accident year underwriting income excluding catastrophe losses was $912 million for the quarter, up 10.3%, and $3,347 million for the year, up 13.7%.

- Consolidated and P&C net premiums written were $7.1 billion and $6.5 billion, respectively, for the quarter and $29.2 billion and $27.1 billion, respectively, for the year. Excluding merger-related actions, (2) P&C net premiums written were up 3.7% for the quarter and up 6.3% for the year. Merger-related actions are now largely completed. Foreign currency movement favorably impacted premium growth in the quarter by 1.2% and had no impact on premium growth for the year.

- The annualized ROE and core operating ROE were both 12.1% for the quarter and 7.8% for the year.

- Adjusted net investment income was $873 million, pre-tax, for the quarter and a record $3.5 billion, pre-tax, for the year, up 3.5% and 6.1%, respectively.

- Operating cash flow was $1.1 billion for the quarter and $4.5 billion for the year.

- Book value per share is up 1.5% from the prior quarter and 6.5% for the year. Tangible book value per share is up 1.2% from the prior quarter and 8.6% for the year.

- Core operating effective tax rate for 2018 is expected to be within a range of 13% to 15%.

(1) Effective Q4 2017, in consideration of the SEC guidance on non-GAAP financial measures, the company relabeled operating income, operating return on equity (ROE) and operating effective tax rate to "core operating income," "core operating ROE," and "core operating effective tax rate," respectively. This is a change in terminology only and the method of calculation and definition of these measures is consistent with prior periods. References to core operating income mean net of tax, whether or not noted.

(2) Merger-related actions include the cancellation of certain portfolios or lines of business that do not meet company underwriting standards, the purchase of additional reinsurance, as well as a prior year accounting policy alignment adjustment. For the year there is also a one-time unearned premium reserve (UPR) transfer in 2016.

ZURICH, Jan. 30, 2018 /PRNewswire/ -- Chubb Limited (NYSE: CB) today reported net income for the quarter ended December 31, 2017 of $1,533 million, or $3.27 per share, compared with net income of $1,610 million, or $3.41 per share, for the same quarter last year. Core operating income was $1,489 million, or $3.17 per share, compared with $1,283 million, or $2.72 per share, for the same quarter last year. The property and casualty (P&C) combined ratio was 90.7% for the quarter. Book value per share increased 1.5% and tangible book value per share increased 1.2% from September 30, 2017 and now stand at $110.32 and $65.87, respectively. The 2017 Tax Reform increased book value by $450 million and decreased tangible book value by $293 million, primarily due to the impact of the reduced U.S. corporate tax rate on deferred tax balances and excess foreign tax credits created by the deemed repatriation of foreign subsidiary earnings. Foreign currency movement in the quarter unfavorably impacted book value by $390 million and tangible book value by $190 million.

For the three months ended December 31, 2017 and 2016, the tax expenses (benefits) related to the table above were $(20) million and $(37) million, respectively, for Chubb one-time integration and merger-related expenses; $(23) million and $(22) million, respectively, for amortization of fair value adjustment of acquired invested assets and long-term debt; $(20) million and $46 million, respectively, for adjusted net realized gains and losses; and $(319) million and $272 million, respectively, for core operating income.

For the year ended December 31, 2017, net income was $3,861 million, or $8.19 per share, compared with $4,135 million, or $8.87 per share, for 2016. Core operating income was $3,784 million, or $8.03 per share, compared with $4,716 million, or $10.12 per share, for 2016. The P&C combined ratio was 94.7% for the year. Book value per share increased 6.5% and tangible book value per share increased 8.6% from December 31, 2016. Book value and tangible book value were favorably impacted by net realized and unrealized gains of $742 million after-tax in the company's investment portfolio and $103 million of after-tax realized gains in the company's variable annuity reinsurance business. Additionally, foreign currency movement (FX) favorably impacted book value by $512 million after-tax and tangible book value by $269 million after-tax. The 2017 Tax Reform increased book value by $450 million and decreased tangible book value by $293 million as noted above.

For the years ended December 31, 2017 and 2016, the tax expenses (benefits) related to the table above were $(93) million and $(143) million, respectively, for Chubb one-time integration and merger-related expenses; $(85) million and $(101) million, respectively, for amortization of fair value adjustment of acquired invested assets and long-term debt; $5 million and $68 million, respectively, for adjusted net realized gains and losses; and $34 million and $991 million, respectively, for core operating income.

Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Limited, commented: "Our fourth quarter results were highlighted by core operating income per share, up 16.5%, which was aided by a one-time benefit from tax reform, excellent ex-CAT underwriting performance from every division, a core operating ROE of 12% and improving commercial P&C pricing in a number of our businesses globally. On the other hand, the quarter was impacted by the two largest wildfires in California history. Net P&C premiums excluding merger-related actions were up 3.7% for the quarter and contributed to growth of 6.3% for the year. With merger-related underwriting actions and their impact on revenue growth largely behind us, a strong economy, both domestic and global, and positive momentum continuing to build for commercial P&C pricing in a number of classes, we are quite optimistic about our prospects for improved premium revenue growth in the year ahead.

"For the year, we produced $3.8 billion in core operating income, down 20% from what we would have earned with a normalized level of annual catastrophe losses and without the benefit from tax reform. Pre-tax, current accident year underwriting income excluding CATs was $3.3 billion, up 14%, while investment income was a record $3.5 billion, up 6%. Our published results led to a core operating ROE of nearly 8% and reasonably strong book and tangible book value per share growth of 6.5% and 8.6%, respectively.

"In the quarter, the P&C combined ratio was 90.7%, and for the year it was 94.7%, which includes $2.7 billion in net catastrophe losses. Those combined ratios, given what was likely a record or near-record year for worldwide insured natural catastrophe losses, demonstrate the quality of our underwriting and our balanced book of business. On a current accident year basis excluding the CATs, the combined ratio for the year was 87.6%, compared with 89% in 2016.

"In terms of the current rate environment, positive commercial P&C rate movement accelerated in the quarter month by month, with prices firming in a number of important classes, both property and casualty-related. We achieved some of the best rate change in a number of years and the positive trend has continued into January with momentum appearing to build in certain classes. Renewal retentions remained steady overall across the company and are quite good, but they varied by line of business during the quarter with some areas paying a price in terms of a modestly lower renewal retention level in order to maintain pricing discipline. The same goes with new business – some areas of our company were up while others suffered in terms of new business. These conditions, in my judgment, speak to an insurance market in transition, and rates should continue to firm as the year goes along, although not in all classes or all territories.

"Lastly, tax reform is good for our economy, and Chubb will benefit from both a lower corporate rate and additional insurance exposure growth as the economy continues to expand. We are honored to share a portion of the benefit from tax reform to make a difference in society with a contribution to the Chubb Charitable Foundation of $50 million."

Net premiums earned increased 2.3% for the quarter and 1.0% for the year. Excluding merger-related actions, P&C net premiums earned increased 3.7% for the quarter and 2.9% for the year.

For the quarter, total pre-tax and after-tax catastrophe losses were $447 million (6.7 percentage points of the combined ratio) and $331 million, respectively, compared with $268 million (4.1 percentage points of the combined ratio) and $222 million, respectively, last year.

For the year, total pre-tax and after-tax catastrophe losses were $2,746 million (10.2 percentage points of the combined ratio) and $2,171 million, respectively, compared with $1,060 million (4.0 percentage points of the combined ratio) and $844 million, respectively, last year.

For the quarter, total pre-tax and after-tax favorable prior period development were $158 million (2.4 percentage points of the combined ratio) and $130 million, respectively, compared with $238 million (3.7 percentage points of the combined ratio) and $208 million, respectively, last year. Pre-tax favorable prior period development in the quarter included $138 million of adverse development for legacy exposures, principally asbestos.

For the year, total pre-tax and after-tax favorable prior period development was $829 million (3.1 percentage points of the combined ratio) and $634 million, respectively, compared with $1,135 million pre-tax (4.3 percentage points of the combined ratio) and $898 million after-tax last year.

Adjusted net investment income was $873 million for the quarter, up 3.5%, which exceeded prior guidance due to increased call activity in the company's corporate bond portfolio and higher than projected private equity distributions. For the year, adjusted net investment income was a record $3.5 billion, up 6.1%.

Share repurchases totaled $123 million, or approximately 0.8 million shares, during the quarter and $830 million, or approximately 5.9 million shares, for the year.

Net loss reserves increased $1.2 billion for the year primarily due to significant catastrophe loss events in 2017.

North America Agricultural Insurance: Net premiums written were $126 million in the quarter, an increase of $86 million over the prior year due to higher premium retention as a result of the year-over-year impact of the premium-sharing formulas with the U.S. government. Underwriting income in the quarter was $190 million, including a current year favorable adjustment of $110 million, principally reflecting an upward revision to the 2017 crop year margin estimate. On a comparative basis, the prior year included a favorable adjustment of $154 million.

Global Reinsurance: Net premiums written decreased 8.2%, or 9.3% in constant dollars, for the quarter. The combined ratio for the quarter was 110.2%, compared with 94.0%. The current accident year combined ratio excluding catastrophe losses for the quarter was 81.4%, compared with 78.8%.