@Cincinnati Financial Corporation.
After the volatility of 2022, 2023 saw largely increased incomes and healthy investment portfolio returns, according to a slew of quarterly and annual results released over the past week from major US and Bermudian P&C insurers.
Once again, it was strong fixed income results that drove the healthy investment returns, as most US portfolios are largely held in this area. With the US property market red hot in many areas (despite office vacancies), a strong labour outlook, and low unemployment, it’s likely these will continue to do well even with continued efforts by the Federal Reserve to cap inflation.
Others said it was mild weather - both Atlantic Hurricane season and early winter - that helped keep down some costs.
Chubb and Everest Group also spoke of seeing record breaking and their "most profitable" years ever.
Read below for a recap of which companies have reported.
US domestic P&C giant Allstate said it had a strong Q4 2023 due to auto insurance and mild weather causing fewer natural catastrophe events.
“Improved underwriting performance and higher investment income generated adjusted net income of $1.5 billion in the fourth quarter,” said Tom Wilson, Chair, President and CEO of The Allstate Corporation. “Property-Liability written premiums increased to $12.6 billion, 10.1% over the prior year quarter driven by rate increases in auto and home insurance and growth in policies at National General.”
Wilson added that property-liability underwriting income totalled $1.3 billion in the quarter with a combined ratio of 89.5. “The investment portfolio return was 4.6% as proactive actions, including fixed income duration extension, resulted in excellent investment returns,” he said.
Full-year net investment income was $2.478 billion compared to $2.403 billion in 2022. For Q4, the net investment income was $604 million in 2023, compared to $557 million in 2022.
For Q4, that was an increase was 30.2%, compared to the prior year quarter, which Allstate said was “reflecting higher yields in the $48.9 billion fixed income portfolio”.
“Fixed income duration ended 2023 at 4.8 years compared to 3.4 years at the prior year end,” the statement said.
Allstate Investments’s total portfolio stood at $66.7 billion.
Ohio-based Cincinnati Financial said it had Q4 2023 net income of $1.183 billion, compared with net income of $1.013 billion, in the fourth quarter of 2022.
Its full-year 2023 net income was $1.843 billion, compared with a net loss of $487 million in 2022.
The $170 million increase in fourth-quarter 2023 net income “reflected the after-tax net effect of a $126 million increase in after-tax property casualty underwriting profit, a $25 million increase in net investment income and a $13 million increase in net investment gains,” it said in its statement on the results.
For Q4 2023, the investment income, net of expenses, was $239 million, a 15% increase from Q4 2022's $208 million.
For 2023 full-year results, the company recorded net investment income of $894 million, a 14% increase from 2022’s $781 million.
"Our ample capital allows us to execute on our long-term strategies."
The 15% Q4 2023 increase on pre-tax investment income included a 19% increase in bond interest income and a 7% increase in stock portfolio dividends, it said, and added that the full-year results grew partly due to a 12% increase in the stock portfolio and a 14% increase in the bond portfolio.
"Non-GAAP operating income finished the year strong,” said Steven Johnston, Chairman and CEO. “Net income continued its pattern of wide swings as the effects of a robust equity market in the fourth quarter pushed it to nearly $2 billion at the end of the year, compared with a net loss in 2022.”
"Consolidated cash and total investments reached more than $26 billion. Our ample capital allows us to execute on our long-term strategies,” he said. “Our value creation ratio for 2023, which considers the dividends we pay as well as growth in book value, was 19.5%, ahead of our 10% to 13% average annual target for this measure."
For Everest Group, net investment income improved to $411 million in Q4 2023 versus $210 million in the same time in 2022, which it said was “a company record”, and was driven by strong fixed income and alternative investment returns.
The Bermudian-domiciled group saw $143 million of pre-tax catastrophe losses net of recoveries and reinstatement premiums, primarily driven by Hurricane Otis, versus $15 million in the prior year.
Its full-year 2023 results showed $16.6 billion in gross written premium with year-over-year growth of 20.9% as reported for the Group, 26.4% for reinsurance, and 10.3% for insurance.
"2023 was the most profitable year in our history.”
For Q4 2023, there was $4.3 billion in gross written premium with year-over-year growth of 18.3% for the Group, 21.9% for reinsurance, and 11.6% for insurance.
“Everest's strong fourth quarter performance capped off an exceptional 2023, delivering record annual results in underwriting income, net investment income, operating income, net income, and cash flow from operations,” said Juan Andrade, Everest President and CEO. "2023 was the most profitable year in our history.”
For full-year net investment income, the company was $1.434 billion, compared to $830 million in 2022.
Total invested assets and cash stood at $37.1 billion versus $29.9 billion on December 31, 2022.
For the global P&C and life giant, its Q4 2023 pre-tax net investment income was $1.37 billion, up 30.2%, and adjusted net investment income was $1.49 billion, up 33%.
For full-year 2023, pre-tax net investment income was $4.94 billion, up 31.9%, and adjusted net investment income was $5.34 billion, up 32.8%.
“Both were records,” said Chubb’s statement on its results.
For the year ended December 31, 2023, net income was $9.03 billion core operating income was $9.34 billion.
It said book value was favourably impacted by after-tax net realised and unrealised gains of $3.17 billion in the company's investment portfolio, principally due to the mark-to-market impact in the fixed-income portfolio.
Tangible book value included the adverse impact of $3.53 billion after tax for Chubb's portion of goodwill and other intangible assets related to the consolidation of Chinese insurer Huatai Group into the Group.
For full-year 2023, net income and core operating income were $9.03 billion and $9.34 billion, respectively, up 72.1% and 45.2%, and included the tax benefit noted above of $1.14 billion. Excluding the tax benefit from Q4, net income and core operating income were $7.89 billion and a record $8.20 billion, respectively, up 50.4% and 27.6%.
Consolidated net premiums written were up 13.5%, with commercial insurance up 8.6% and consumer insurance up 24.2%.
In Q4, Global P&C net premiums written were up 10.5%. North America was up 6.2%, and Overseas General was up 19.3%, with growth of 37.2% in Asia and 15.4% for Europe and Latin America.
Net income and core operating income were at $3.30 billion and $3.41 billion, respectively, up 151.7% and 103.6%, which included a one-time deferred tax benefit of $1.14 billion related to the enactment of Bermuda's new income tax law (tax benefit). Excluding the tax benefit, net income and core operating income were $2.16 billion and $2.27 billion, respectively, up 65.1% and 35.8%.
Consolidated net premiums written were up 13.4%, with commercial insurance up 10% and consumer insurance up 19.9%.
For the Markel Group, net investment income for 2023 was $734.5 million, compared to $446.7 million in 2022. Net investment gains for 2023 were $1.52 billion compared to a loss of $1.59 billion in 2022.
"We enjoyed excellent returns in 2023 from Markel Ventures, our investment operations, and many portions of our insurance business," said Thomas Gayner, CEO of Virginia-based Markel on the company’s 2023 fortunes. "While we remain focused on some areas of improvement for our insurance operations, our three-engine system continues to drive profitable growth. Strong operating cash flows from each of our insurance, investments, and Markel Ventures engines can now be reinvested to continue growing shareholder value."
“Net investment gains in 2023 reflect an increase in the fair market value of our equity portfolio resulting from favourable market value movements."
Markel’s net investment income “increased 64% in 2023 due to higher yields across our fixed maturity securities, short-term investments and cash equivalents and an increase in our allocation of cash to money market funds,” said the company’s press statement.
“Net investment gains in 2023 reflect an increase in the fair market value of our equity portfolio resulting from favourable market value movements,” it said.
It added that on the unrealised gains and losses on fixed maturity securities that [the company invests] in “high credit quality, investment grade securities, with durations that are generally matched to the expected timing of claims-related payments”.
“As such, unrealised gains and losses from our bond portfolio are generally expected to reverse as the securities mature,” it said.
Broking and financial services company WTW reported a 7% increase in revenue for Q4 2023 to $2.9 billion and an increase of 7% to $9.5 billion for its full-year 2023 results.
“Alongside the strong revenue growth, our progress simplifying and transforming our operations drove efficiencies and margin expansion in the quarter,” said Carl Hess, WTW’s CEO. “We also made progress on our commitment to improve cash flow.”
