The Chubb Corp. reported that net income in the fourth quarter of 2005 was $614 million or $2.92 per share, compared to $468 million or $2.39 per share in the fourth quarter of 2004.
Operating income, which the company defines as net income excluding after- tax realized investment gains and losses, increased to a record $493 million from $421 million in the fourth quarter of 2004. Operating income per share increased 9 percent to $2.34 from $2.15.
Net written premiums for the fourth quarter increased 1 percent to $3.1 billion. Premiums for the insurance business grew 5 percent: 4 percent in the U.S. and 9 percent outside the U.S. (10 percent in local currencies). Premium growth in the insurance business units other than Chubb Personal Insurance was attributable to Chubb’s decision not to renew certain reinsurance treaties, resulting in less premium ceded to reinsurers. Premiums for the Reinsurance Assumed business declined 41 percent.
The fourth quarter combined loss and expense ratio was 89.3 percent in 2005 and 90.6 percent in 2004. The impact of catastrophes for the quarter accounted for 4.0 percentage points of the combined ratio in 2005, compared to 0.4 points in 2004. The expense ratio for the fourth quarter was 27.5 percent in 2005 and 27.9 percent in 2004.
Property and casualty investment income after taxes for the fourth quarter increased 9 percent to $276 million in 2005 from $254 million in 2004.
During the fourth quarter of 2005, Chubb repurchased 1,393,900 shares of its common stock at a total cost of $135 million.
For the year ended Dec. 31, 2005, net income was $1.8 billion or $8.94 per share, compared with $1.5 billion or $8.01 per share for the year ended Dec. 31, 2004. Operating income for 2005 totaled a record $1.6 billion or $7.73 per share, compared with $1.4 billion or $7.26 per share in 2004.
Net written premiums in 2005 increased 2 percent to $12.3 billion. Premiums for the insurance business grew 4 percent: 3 percent in the U.S. and 8 percent outside the U.S. (6% in local currencies). Premiums for the Reinsurance Assumed business declined 21 percent.
The combined ratio in 2005 was 92.3 percent, the same as in 2004. The impact of catastrophes accounted for 5.6 percentage points of the combined ratio in 2005. In 2004, catastrophe losses accounted for 2.3 points, which reflected the release in the second quarter of $80 million of net reserves for losses related to the Sept. 11, 2001 attack on the World Trade Center. The expense ratio for the year was 28.0 percent in 2005 and 29.2 percent in 2004.
Property and casualty investment income after taxes increased 11 percent to $1.1 billion in 2005 from $949 million in 2004.
Chubb Personal Insurance (CPI) net written premiums grew 5 percent to $820 million. CPI’s combined ratio was 86.8 percent, compared to 82.9 percent in the fourth quarter of 2004. Catastrophe losses were 7.5 percentage points in 2005, while in 2004 they were 0.7 points.
The Homeowners line grew 5 percent, and the combined ratio was 80.5 percent. The Personal Automobile line grew 2 percent and had a combined ratio of 88.3 percent, while other personal lines grew 11 percent and had a combined ratio of 109.1 percent.
Chubb Commercial Insurance (CCI) net written premiums grew 5 percent to $1.3 billion. The combined ratio improved to 87.4 percent in 2005 from 90.3 percent in 2004. Catastrophe losses were 3.6 percentage points in 2005 and 0.5 points in 2004.
Average renewal rates in the U.S. were down 1 percent for CCI, which retained 82 percent of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 0.8 to 1.
Chubb Specialty Insurance (CSI) net written premiums were up 6 percent to $829 million. The combined ratio was 92.7 percent, compared to 99.0 percent in the fourth quarter of 2004.
Professional Liability (PL) net written premiums were up 4 percent, and the business had a combined ratio of 97.6 percent. Average renewal rates in the U.S. for PL were down 3 percent, and renewal retention was 78 percent. The ratio of new to lost business in the U.S. was 0.8 to 1. Surety premiums were up 29 percent, and the combined ratio was 39.5 percent.
Reinsurance Assumed net written premiums were down 41 percent. The combined ratio was 101.8 percent, compared to 93.3 percent in the fourth quarter of 2004.