Syndicate results 2021 #40 2488 Chubb

The Lloyd’s syndicates have now published their results for 2021 and, in some cases, added detail and an outlook for 2022. Some have stuck to the bare bones. As last year, IMN is summarizing the results from all syndicates that have a marine interest, which have provided some information on the marine side.

Active Underwriter   R Q Wilson

Switzerland-incorporated, New York-listed Chubb Ltd, the ultimate parent of CUAL, is the holding company for the Chubb Group of Companies. At December 31st 2021, Chubb Ltd held total assets of $200.1bn and shareholders’ equity of $59.7 billion. Chubb, with executive offices in Zurich, New York, London, Paris and other locations, employs about 31,000 people worldwide.

The syndicate reported losses directly related to Covid-19, net of reinsurance, amounting to £4.7m for 2021. It said that this was within expectations and was a significant improvement of the £28.3m stated in 2020.

Underlying accident year loss statistics across a range of classes benefited from favourable indirect COVID-19 lockdown related impacts.

KPIs

£m 2021 2020
Gross premiums written 561.3 528.3
Net premiums written 465.9 420.6
Combined ratio 88.8% 97.6%
Profit for financial year 58.5 87.8

Chubb noted that the London insurance market experienced premium rate increases across a broad range of business classes in 2021, although there were now signs that the hard market was abating somewhat. The overall rate movement on 2488’s renewal portfolio was about 13%, with notable increases in Financial Lines, Property, Marine and Energy. Aviation pricing came under some pressure towards the end of the year.

An underwriting profit of £49.9m was booked in 2021 (2020: £9.3m) which equated to a combined ratio of 88.8% (2020: 97.6%). The underwriting profit benefited from a prior period reserve release of £6.8m (2020: £31.5m). The combined ratio, excluding the prior period reserve releases, was 90.3% (2020: 105.7%) and included 1.0% for Covid-19 related losses (2020: 7.2%) and 9.8% for other catastrophe events (2020: 12.4%). The catastrophic events were principally the US winter storms and Hurricane Ida.

There were no major changes to the syndicate’s reinsurance purchasing strategy in 2021.

Gross written premiums of £561.3m in 2021 were 6.2% higher than the prior year, or 12.3% greater if the impact of changes in foreign exchange rates are taken out. The growth in 2021 reflected continued increases in premium rates and new business wins, and was strongest in Financial Lines, Marine Cargo and Property classes of business.

Wilson wrote that ” 2021 was another rollercoaster of a year and presented us with continuing uncertainty throughout.”

He said that, although the hard market was now showing signs of abatement, “price adequacy remains generally strong with rates continuing to exceed loss costs in most areas”.

Net investment returns were £16.8m, significantly lower than the previous calendar year, this being the result of negative returns for investment grade bonds, which were mitigated by positive returns from the syndicate’s alternative investment assets. Reported profits for the year were £58.5m.

Movement in prior years for MAT was £15.53m (2020 £2.86m).

The total prior years movement was £6.79m (2020 £31.49m).

Segmental Analysis

2021 £000s GPW GPE GCI GOE Reins Bal
Direct MAT 91,584 89,048 (40,900) (29,905) (3,477)
Reinsurance acceptances 118,499 117,151 (51,501) (21,964) (22,302)
TOTAL 561,297 540,284 (311,826) (163,373) (15,141)
2020 £000s GPW GPE GCI GOE Reins Bal
Direct MAT 88,029 76,210 (48,435) (23,038) (361)
Reinsurance acceptances 115,507 113,555 (82,519) (22,308) (8,275)
TOTAL 528,252 499,139 (384,182) (140,553) 34,909

The amounts paid to the Active Underwriters for 2020 have been restated since the December 31st 2020 financial statements were finalized to include all amounts paid to both Active Underwriters who served during the 2020 calendar year. The restatement increases the amount paid from £94,988 to £411,372.

£ 2021 2020
Active Underwriter 695,485 411,372

https://assets.lloyds.com/media/8220f877-5ceb-4b1f-b65a-7950a524e579/SRA2488a.pdf