Chubb Australia to recover gradually after 2022 investment losses

Its reputation is expected to remain strong, S&P Global Ratings said.

Chubb Insurance Australia is expected to continue to recover over the next 12 to 24 months after 2022’s unwinding of unrealised investment losses from the 2022-2023 rate-tightening cycle. 

The insurer saw its statutory net profit after tax rebound to $172.9m (A$266m) last year, after a loss of $22.1m (A$34m) in the previous year.

Chubb Australia’s reputation is expected to remain solid amongst brokers and clients for underwriting more complex commercial risks, reported S&P Global Ratings.

Chubb Australia is highly integrated with the Chubb group, benefiting from shared branding, integrated systems, and access to a global client base. 

The subsidiary also leverages the group's disciplined underwriting, pricing capabilities, and a strong reputation for prudent risk selection. It maintains comprehensive reinsurance arrangements and conservative retention levels on risk and catastrophe cover.

As the sixth-largest property and casualty (P&C) insurer in Australia with a 3.5% market share of total industry gross written premiums in 2023, Chubb Australia is recognised for underwriting complex commercial risks. The insurer's solid capital and earnings profile underpins its strong financial risk assessment.

Chubb Australia plans to resume normal dividend distribution over the next three years, returning surplus capital to the group as long as regulatory capital levels remain within internal targets. Dividends were paused recently due to business growth and unrealised investment losses.

The revised criteria do not affect Chubb Australia's stand-alone credit profile or final supported ratings. Chubb Australia's capital adequacy, under the new model, is redundant at the 99.95% confidence level through 2026, compared to 99.99% under the previous model. 

This decline is due to an added natural catastrophe risk charge at the 99.99% level and the insurer's plans to upstream excess capital to the group. 

The negative capital and earnings adjustment was removed, with capital resources expected to near $1b over the forecast period, maintaining a very strong financial risk profile.

($1.00 = A$1.54)