U.S. property/casualty insurer Chubb Corp posted a higher quarterly profit on Thursday, beating Wall Street expectations, as investment gains and lower underwriting losses offset declining policy sales.
Second-quarter net income rose nearly 18 percent to $551 million.
“These results were achieved through our focus on underwriting discipline, our conservative investment philosophy and our strong capital position,” said Chief Executive John Finnegan.
As with other insurers, a dearth of major catastrophes in the quarter helped cut Chubb’s underwriting losses, boosting operating results.
Finnegan said the company was raising its full-year outlook to reflect the stronger results and for being able to impose higher rates on policyholders, including executives and directors seeking protection against the costs of lawsuits.
The company raised its outlook for 2009 operating income to between $5.20 and $5.50, from a previous range of $4.80 to $5.20.
Chubb shares, which had risen 2.58 percent in the regular session to $42.61, were up another 3.4 percent in after-market trading.
Profit on this basis rose to $1.49 per share, beating analysts’ average expectations of $1.30 a share, according to Reuters Estimates.
Operating results exclude realized investment gains or losses.
Underwriters have been successful in a “consistent drive to secure rate increases,” Finnegan told investors on a quarterly earnings call.
That will help offset lower demand from some buyers of insurance. The full-year earnings range assumes policy sale declines of between 5 percent and 6 percent over 2009, slightly below the 7 percent dip seen by Chubb in the second quarter.
Commercial insurance prices, in sharp decline in recent years, are beginning to show signs of stabilizing, according to data from the Council of Insurance Agents and Brokers earlier this month.
In the second quarter, Chubb’s net written premiums fell to $2.8 billion, but this was largely offset by lower underwriting losses and loss expenses, which fell 10 percent to $1.6 billion.
Chubb also posted realized investment gains of $18 million during the quarter, compared with realized investment losses of $49 million a year ago.
Some of those gains came from its sale of an investment in Allied World Assurance Holdings, executives said.
The company has also in recent quarters been able to pick up business from rivals badly hurt by forays into risky investments that lost value amid the credit crisis.
Finnegan said Chubb was still gaining “flight to quality” customers and is prepared to do everything it can to stand out from firms that have been propped up with government aid.
Chubb competes against American International Group Inc , which has received $83 billion of federal loans, and Hartford Financial Services, which is taking more than $3 billion of government support.
“We will compete vigorously with companies that are unsustainable but for government bailouts,” said Finnegan.
John Degnan, chief operating officer, is to defer his expected retirement until the end of 2010, said Finnegan. He will likely be replaced by an internal candidate, he added.
Chubb is the seventh-largest insurer of U.S. homeowners, and the eighth-largest commercial lines insurer, based on 2007 regulatory figures. (Editing by Matthew Lewis and Steve Orlofsky)
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