The Chubb Corporation reported that net income in the second quarter of 2005 was $496 million, a 39 percent increase over net income of $356 million in the second quarter of 2004. Net income per share increased 32 percent to $2.45 from $1.85.
Operating income increased 35 percent in the second quarter of 2005 to $461 million; operating income per share grew 29 percent to a record $2.28.
Net written premiums for the second quarter increased 6 percent to $3.1 billion. Premiums for the insurance business grew 8 percent: up 7 percent in the U.S. and 13 percent outside the U.S.. Premiums for the reinsurance assumed business (Chubb Re) declined 14 percent.
The combined loss and expense ratio for the second quarter was 88.3 percent, compared to 92.8 percent in the second quarter of 2004. Catastrophe losses for the 2005 second quarter were $21 million, accounting for 0.7 percentage points of the combined ratio. The expense ratio improved to 28.0 percent.
Property and casualty investment income after taxes for the second quarter increased 12 percent to $261 million.
“Chubb’s outstanding second quarter results in personal insurance, commercial insurance and assumed reinsurance, coupled with the improvement in specialty insurance, are especially noteworthy in that they were achieved in a more competitive market environment,” said John D. Finnegan, chairman, president and chief executive officer. “This performance demonstrates the kind of results Chubb can achieve when we focus on our core businesses and execute our disciplined underwriting strategies.”
Outlook for 2005
Finnegan said Chubb was raising guidance for full year 2005 operating earnings per share to a range of $8.30 to $8.70. The company’s previous guidance, provided on February 1, 2005, was $7.60 to $8.00 per share.
Second Quarter Operations Review
Chubb Personal Insurance net written premiums grew 8 percent to $871 million and the combined ratio improved to 81.0 percent, driven primarily by excellent results in homeowners insurance. Catastrophe losses accounted for 1.5 percentage points of the second quarter combined ratio in 2005, compared with 4.9 points in 2004.
The homeowners line grew 10 percent. The combined ratio was 73.7 percent, which included 2.5 percentage points of catastrophe losses.
Personal automobile grew 3 percent and had a combined ratio of 95.2 percent, while other personal lines grew 7 percent and had a combined ratio of 91.6 percent.
Chubb commercial insurance net written premiums grew 6 percent to $1.3 billion. The combined ratio was 86.7 percent and combined ratio in the second quarter of 2004 was 80.5 percent. S
Average renewal rates in the U.S. were down 1 percent for commercial accounts, but 84 percent of the U.S. premiums that came up for renewal were retained. In the U.S., premiums from new accounts exceeded lost business by a 1.2-to-1 margin.
Chubb specialty lines net written premiums grew 12 percent to $743 million. The combined ratio was 98.3 percent, compared to 128.6 percent in the second quarter of 2004.
Professional liability net written premiums grew 12 percent, attributable largely to the company’s decision not to renew a reinsurance treaty. This line had a combined ratio of 101.4 percent, compared to 134.1 percent in the second quarter of 2004. The 2004 results included $160 million of net reserve strengthening for errors & omissions losses related to investment banks.
Surety premiums were up 13 percent, and the combined ratio was 54.2 percent.
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