Chubb has recorded a 4.8% decline in fourth-quarter net income, as earnings took a hit from the California wildfires.

However, the insurer is upbeat its business will rebound this year thanks to rate rises and benefits from the recent US tax reform.

Net income for the December quarter fell to $US1.53 billion ($1.9 billion) from $US1.61 billion ($2 billion) in the corresponding period of 2016, but net written premium grew 1.7% to $US6.5 billion ($8.07 billion).

The property and casualty combined operating ratio deteriorated to 90.7% from 87.8% as pre-tax catastrophe losses grew to $US447 million ($555.89 million) from $US268 million ($333.38 million).

“Positive commercial [property and casualty] rate movement accelerated in the quarter month by month, with prices firming in a number of important classes, both property and casualty-related,” CEO Evan Greenberg said.

“We achieved some of the best rate change in a number of years and the positive trend has continued into January, with momentum appearing to build in certain classes. Lastly, tax reform is good for our economy, and Chubb will benefit from both a lower corporate rate and additional insurance exposure growth as the economy continues to expand.”

Overall net income last year fell to $US3.86 billion ($4.8 billion) from $US4.14 billion ($5.15 billion) in 2016.