The Chubb Corp. reported $533 million net profit for its third quarter, up 78.8 percent from $298 million reported during the same period one year ago.
The quarterly results got a boost from significantly lower catastrophe (CAT) losses as well as continued rate increases. The third-quarter CAT losses before tax were $17 million, compared to the $420 million losses reported during the same period a year ago.
Overall net written premiums for the third quarter were $2.9 billion, up 1.2 percent from $2.88 billion one year ago.
The combined ratio for the quarter was 86.3 percent, improving from 102.6 percent one year ago.
Property and casualty investment income after taxes was $297 million, down 7 percent from $321 million a year ago.
“Our outstanding third quarter benefited from strong underwriting results as well unusually low catastrophe losses,” CEO John Finnegan said during Chubb’s earnings conference call Thursday.
“At the same time, we continue to achieve rate increases in all of our businesses. These positive factors were more than enough to offset the continuing effects of a challenging global economic environment and the impact of low interest rates,” said Finnegan.
Looking at financial results for individual segments:
For the Commercial Insurance segment, net written premiums for the quarter were up 2 percent to $1.2 billion. The combined ratio was 87.2 percent, improving from 101.1 percent one year ago. The Commercial Insurance segment’s average U.S. renewal rate in the third quarter rose by 8 percent — representing the sixth consecutive quarter of rate hikes for the commercial segment.
The renewal rate increase in the commercial segment was down slightly from the 9 percent rate hike obtained in the second quarter — but the company says the drop is attributable to some small differences in the mix of business available for renewal in the third quarter compared to the last. “We had fewer large commercial real estate property accounts available to be renewed compared to the second quarter,” said Paul Krump, executive vice president and president of commercial and specialty lines.
The 8 percent renewal rate hike for the commercial segment for the third quarter is “solid rate-on-rate as it comes on top of the 4 percent average rate increase secured in the third quarter of 2011,” said Krump.
The Commercial Insurance segment achieved U.S. renewal rate renewal hikes in each line of business during the third quarter. Workers’ comp rates rose the most, with a low double-digit average, followed by monoline property, general liability, package, excess umbrella, auto, boiler and marine, said Krump.
He said the commercial insurance segment continued to achieve broad-based pricing improvement, with around 90 percent of renewals receiving rate hikes in the third quarter, in line with the 2012 second quarter.
The commercial insurance segment’s U.S. renewal retention was 84 percent, remaining at the same level from the 2012 second quarter.
For the Specialty Insurance segment, net written premiums were $640 million, down 4 percent compared to one year ago. The combined ratio was 91.9 percent, deteriorating from 88.3 percent one year ago.
The average renewal rates for Chubb’s professional liability lines in the U.S. rose by 8 percent in the quarter. “In each of our professional liability lines of business in the U.S., average renewal rates increased in the third quarter,” said Krump. Increases were led by private company directors-and-officers, which had average rate hikes in the mid teens. That was followed by employment practices liability, crime, not-for-profit D&O, public D&O, errors and omissions, and fiduciary, said Krump.
In the Personal Insurance segment, net written premiums were $1.1 billion, up 3 percent from one year ago. The segment had a combined ratio of 82.8 percent, improving from 115.6 percent one year ago.
The company said it’s in the process of filing homeowners insurance rate increases. While they vary by state, the rate hikes are generally in the mid-single digit and above, with targeted effective dates in the next two quarters.