@The Hartford.
The normal rush of companies announcing results started in earnest this week after Travelers became the first out of the gate as per the norm last week.
The larger companies praised their fixed income returns as part of the reason for the strong numbers and highlighted the duality of underwriting and investment income as essential for companies in the current market.
Berkshire Hathaway company The Hartford said its net investment income for Q1 2024 was $593 million, before tax, compared with $515 million in Q1 2023, which was driven by higher yields on the fixed income portfolio and a higher level of invested assets.
In its press released it said its Q1 2024 net income available to common stockholders of $748 million, which improved from $530 million in Q1 2023, primarily due to a higher P&C underwriting gain, driven by strong premium growth, higher net investment income, a change to net realised gains in 2024 from net realised losses in 2023, and an improvement in the Group benefits loss ratio, driven by group life results.
"The Hartford’s Q1 2024 financial results were excellent with a
trailing 12-month core earnings ROE of 16.6%."
It added that, included in the Q1 2024 net income, was a benefit of $24 million, before tax, from amortisation of a deferred gain on retroactive reinsurance related to an adverse development cover for Navigators pertaining to 2018 and prior accident years.
As per the theme of the quarter, the results were called excellent by CEO, Christopher Swift, who said "The Hartford’s Q1 2024 financial results were excellent with a trailing 12-month core earnings ROE of 16.6%,” said The Hartford’s Chairman and CEO Christopher Swift.
Net investment income for Connecticut-based W.R. Berkley grew 43.2% to a record $319.8 million, according to its press release on Q1 results. This was compared to $223 million in Q1 2023.
The net investment income increase over the prior year first quarter, came despite “challenges during this quarter with our investment funds”. In February, W.R. Berkley said its full-year net investment income grew 35.1% to a record $1.1 billion for 2023.
“Our combined ratio was 88.8% even as we continued our
prudent view of loss trends.”
“Our total-return investment strategy seeks to maximise risk-adjusted returns over the long-term across all market cycles and economic environments,” said the company. “New money rates remain higher than our book yield, which along with extremely strong operating cash flow, positions us well for future investment income growth.”
The company said that growth in Q1 net premiums written accelerated year over year to 10.7%, as “market conditions remained favourable in many areas of our business”.
“Our combined ratio was 88.8% even as we continued our prudent view of loss trends,” said the press release.
Net Income Increased 50.4% to $442 Million and Operating Income Increased 53.4% to a Record $423 Million; Return on Equity of 23.7% and Operating Return on Equity of 22.7%.
Earlier this year, W.R. Berkley said its full-year net investment income grew 35.1% to a record $1.1 billion for 2023.
Elsewhere, regional carrier RLI Corp, said it saw a 21% increase in net investment income.
Net investment income for the quarter increased to $32.8 million, compared to the same period in 2023. The investment portfolio’s total return was 1.8% for the quarter.
“Overall, underwriting income delivered [a] significant margin, which complemented investment returns to support an 8% increase in book value,” said RLI Corp. President & CEO Craig Kliethermes.
RLI’s comprehensive earnings were $115.2 million for the quarter, compared to $136.5 million for the same quarter in 2023. In addition to net earnings, comprehensive earnings for 2024 included after-tax unrealised losses from the fixed income portfolio, due to rising interest rates.
In Q4 2023, the company said it saw a 40% increase in net investment income compared to the previous year.
Aaron Diefenthaler, Chief Investment Officer, RLI Corp., recently spoke with Insurance Investor about his approach to investment strategy – and how to achieve returns without complications.
Global giant Chubb said its pre-tax net investment income was $1.39 billion, up 25.7%, and adjusted net investment income was $1.48 billion, up 23.5%.
Earlier this year, Chubb said 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%.
Book value was unfavourably impacted by after-tax net realised and unrealised losses of $622 million in the company's investment portfolio, principally due to the mark-to-market impact in the fixed-income portfolio.
As a whole, the company reported net income for the quarter ended March 31, 2024, of $2.14 billion, and core operating income of $2.22 billion.
“[We had] adjusted net investment income of nearly $1.5 billion.”
Evan Greenberg, Chairman and Chief Executive Officer of Chubb called the results “excellent”. “Core operating income was up double-digit, driven by P&C underwriting income up over 15% with a published combined ratio of 86%, investment income up more than 23%, and life insurance income up almost 10%,” he said. “We produced double-digit premium revenue growth from across the globe with strong results in our commercial and consumer P&C and Asia life businesses.”
He added that the company’s sources of earnings were “well balanced” and of an enduring quality. “[We had] P&C underwriting income of $1.4 billion, driven by strong earned premium growth and great underwriting margins; adjusted net investment income of nearly $1.5 billion; and life segment income of $268 million.”
