Chubb's Profit Surges on Strong Underwriting and Investment Income

Insurer Chubb Limited reported a significant surge in adjusted profit for the fourth quarter of 2024, driven by robust underwriting and investment income. The company's strong performance sent U.S.-listed shares up by 2.8% in after-market trading. Chubb's consolidated net premiums written rose by 13.4% in the quarter, with commercial insurance up 10% and consumer insurance up 19.9%. The insurance industry typically enjoys stable demand for its products, regardless of the economic backdrop, as policies are often guaranteed by employers and some are mandated by the government.



Heightened expectations of a soft landing have also boosted sentiment among businesses and reduced uncertainty, encouraging them to ramp up their spending on insurance policies. Chubb's adjusted net investment income surged by 33% to $1.49 billion, driven by higher interest rates and an equities rally. The U.S. Federal Reserve's multiple rate hikes have helped insurers earn higher interest from safe-haven investments such as U.S. Treasuries and other high-grade corporate bonds.



Chubb's core operating income, excluding a one-time tax benefit, rose to $2.28 billion, or $5.54 per share, in the three months ended Dec. 31, compared with $1.67 billion, or $4 per share, a year earlier. The insurer's strong performance highlights broader economic trends affecting the insurance sector. A resilient economic backdrop, firm labor market, and expectations of a soft landing have boosted sentiment among businesses and reduced uncertainty, encouraging them to ramp up their spending on insurance policies.

In summary, Chubb's profit surge on strong underwriting and investment income reflects a broader economic trend of a strengthening economy, improved consumer and business confidence, and higher interest rates. This has positive implications for the insurance sector as a whole, as firms are likely to sustain strong performance in a healthy economic climate.