The Chubb Corp. reported that net income in the third quarter of 2009 was $596 million or $1.69 per share, compared to $264 million or $0.73 per share in the third quarter of 2008.
Operating income increased 63% to $552 million from $338 million in the third quarter of 2008. Operating income per share increased 68% to $1.56 from $0.93.
The third quarter combined loss and expense ratio was 85.4% in 2009, compared to 98.1% in 2008. Catastrophe losses in the third quarter of 2009 accounted for 0.8 percentage points of the combined ratio, compared to 13.6 points in the third quarter of 2008 which included Hurricane Ike. Excluding catastrophe losses, the third quarter combined ratio was 84.6% in 2009 and 84.5% in 2008. The expense ratio for the third quarter was 31.2% in 2009 and 30.2% in 2008.
While profit improved, total net written premiums for the third quarter declined 7% to $2.7 billion from $2.9 billion; they declined 5% excluding the effect of foreign currency translation. Premiums were down 7% in the U.S. and down 7% outside the U.S.
Property and casualty investment income after taxes for the third quarter declined 3% to $317 million in 2009 from $327 million in 2008.
John D. Finnegan, chairman, president and chief executive officer, said that while the difficult economy continued to adversely affect premium growth, the company was able to maintain disciplined underwriting. Results for the third quarter “also benefited from a benign hurricane season,” he said.
Finnegan, on a call with investment analysts, said the industry’s growth in policy sales would be “lumpy and play out over time,”‘ Reuters reported.
He added Chubb will raise its expectation for catastrophe losses in 2010 and beyond. “It would not be prudent to assume a repeat of this year’s mild catastrophe activity,” he said.
“The company is doing pretty damn well considering all we’ve been through,” said Hexagon analyst David Havens, told Reuters.”It has maintained strong results, good liquidity and solid capitalization without taking much asset risk.”
As reported earlier, Travelers also saw its profits rise in part due to low catastrophe loses for the quarter.
Segment Performance
Chubb Personal Insurance (CPI) net written premiums declined 5% in the third quarter of 2009 to $946 million. CPI’s combined ratio for the quarter was 81.6%, compared to 100.7% in the third quarter of 2008. The impact of catastrophes for the third quarter of 2009 improved the combined ratio by 1 percentage point, largely due to subrogation recoveries. In the third quarter of 2008, catastrophe losses were 16.3 percentage points.
Net written premiums for homeowners declined 4%, and the combined ratio was 77.3%. Personal automobile net written premiums declined 3%, and the combined ratio was 87.2%. Other personal lines premiums were down 10%, and the combined ratio was 90.9%.
Chubb Commercial Insurance (CCI) net written premiums declined 8% in the third quarter to $1.1 billion. CCI’s combined ratio for the quarter was 90.5% in 2009 and 106.0% in 2008. Catastrophe losses accounted for 2.6 percentage points of the combined ratio in the third quarter of 2009 and 19.9 points in the third quarter of 2008.
Average third quarter renewal rates in the U.S. were up 3% for CCI, which retained 82% 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 declined 6% in the third quarter to $669 million. CSI’s combined ratio for the quarter was 83.6%, compared to 82.3% in the third quarter of 2008.
Professional Liability net written premiums declined 5%, and the business had a combined ratio of 90.0%. Average third quarter renewal rates in the U.S. were up 3% for professional liability, which retained 84% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 0.9 to 1.
Surety net written premiums declined 12%, and the combined ratio was 32.5%.
“We were pleased by continued renewal rate increases for commercial and specialty insurance in the third quarter in what is a very competitive marketplace,” said Finnegan.
Nine Months
For the first nine months of 2009, net income was $1.5 billion or $4.18 per share, compared with $1.4 billion or $3.78 per share for the first nine months of 2008.
Operating income for the first nine months increased 8% to $1.6 billion in 2009 from $1.5 billion in 2008. Operating income per share for the first nine months increased 13% to $4.49 from $3.99.
Total net written premiums for the first nine months declined 7% to $8.3 billion from $8.9 billion; they were down 4% excluding the effect of foreign currency translation. Premiums declined 5% in the U.S. and declined 11% outside the U.S. (increased 3% in local currencies).
The combined loss and expense ratio for the first nine months was 86.5% in 2009, compared to 90.2% in 2008. Catastrophe losses in the first nine months accounted for 1.1 percentage points of the combined ratio in 2009, compared to 6.9 points in 2008. Excluding catastrophe losses, the combined ratio for the first nine months was 85.4% in 2009 and 83.3% in 2008. The expense ratio for the first nine months was 30.7% in 2009 and 30.2% in 2008.
Property and casualty investment income after taxes for the first nine months declined 5% to $935 million in 2009 from $981 million in 2008.
Sources: Chubb Corp., Reuters
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