Chubb Reports Q4, 2010 Results; Expects Australia Flood Losses

January 28, 2011

The Chubb Corp. reported that net income in the fourth quarter of 2010 was $620 million, compared to $695 million in the fourth quarter of 2009. For the year ended Dec. 31, 2010, net income was $2.2 billion, the same as in 2009.

The company said it expects losses from the flooding in Australia in the first quarter of this year and, looking down the road into 2011, it sees net written premiums staying flat or up only slightly by about 2 percent and while operating income is likely to fall compared with 2010.

Operating income in the fourth quarter was $519 million, compared to $569 million in the fourth quarter of 2009.

John D. Finnegan, chairman, president and CEO, said the combined ratios that were below 90 in the fourth quarter and for the year and the $1.9 billion of operating income in 2010 were “particularly noteworthy.”

Fourth Quarter Results

Net written premiums for the fourth quarter were $2.9 billion, an increase of 3 percent. Premiums were up 2 percent in the U.S. and up 5 percent outside the U.S.

The fourth quarter combined loss and expense ratio was 87.0 in 2010 and 84.7 in 2009. The impact of catastrophes on the combined ratio was 1.4 percentage points in 2010 and negligible in 2009. Excluding the impact of catastrophes, the combined ratio was 85.6 in 2010 and 84.7 in 2009.

The expense ratio for the fourth quarter was 30.9 in 2010 and 30.1 in 2009.

Property and casualty investment income after taxes for the fourth quarter increased 1 percent to $320 million in 2010 from $317 million in 2009.

Full Year Results

For the year ended Dec. 31, 2010, net income was $2.2 billion, compared to $2.2 billion for 2009. Operating income totaled $1.9 billion in 2010 and $2.2 billion in 2009. Operating income per share was $5.90 in 2010 and $6.14 in 2009.

Total net written premiums in 2010 increased 1 percent to $11.2 billion from $11.1 billion in 2009; excluding the effect of currency fluctuation, premiums were flat. Premiums were down 1 percent in the U.S. and up 9 percent outside the U.S.

The combined ratio in 2010 was 89.3, compared to 86.0 in 2009. The impact of catastrophes accounted for 5.7 percentage points of the combined ratio in 2010 and 0.8 points in 2009. Excluding the impact of catastrophes, the combined ratio was 83.6 in 2010 and 85.2 in 2009. The expense ratio for the year was 31.2 in 2010 and 30.6 in 2009.

Property and casualty investment income after taxes increased 1 percent to $1.3 billion.

Fourth Quarter Operations Review

Chubb’s first quarter 2011 catastrophe losses will be impacted by flooding in Australia that has occurred in January, particularly in and around the city of Brisbane. Chubb’s preliminary estimate of the losses from this flooding is in the range of $75 million to $100 million before tax.

Chubb Personal Insurance (CPI) net written premiums increased 6 percent in the fourth quarter to $963 million. CPI’s combined ratio for the fourth quarter was 83.7 in 2010 and 80.7 in 2009.

Homeowners net written premiums were up 3 percent, and the combined ratio was 78.8. Personal automobile net written premiums increased 10 percent, and the combined ratio was 90.0. Other personal lines net written premiums were up 12 percent, and the combined ratio was 92.7.

Chubb Commercial Insurance (CCI) net written premiums for the fourth quarter were up 4 percent to $1.1 billion. The combined ratio for the quarter was 93.5 in 2010 and 89.9 in 2009. The fourth quarter impact of catastrophes was 2.5% percentin 2010 and negligible in 2009.

Average fourth quarter renewal rates in the U.S. were down 1 percent for CCI, and renewal premium retention was 86 percent. In the U.S., the ratio of new to lost business was 1.3 to 1.

Chubb Specialty Insurance (CSI) net written premiums were down 3 percent in the fourth quarter to $746 million. The combined ratio was 82.4, compared to 84.1 in the fourth quarter of 2009.

Professional Liability (PL) net written premiums declined 4 percent, and PL had a combined ratio of 88.7. Average PL renewal rates in the U.S. were down 3 percent and renewal retention was 87 percent. The ratio of new to lost business in the U.S. was 1.1 to 1.

Surety net written premiums were flat, and the combined ratio was 37.8.

2010 Operations Review

For the year ended Dec. 31, 2010, Chubb Personal Insurance net written premiums increased 5 percent to $3.8 billion. CPI’s combined ratio was 91.5 in 2010 and 84.1 in 2009. The impact of catastrophes accounted for 10.2 percentage points of the combined ratio in 2010 and 0.9 points in 2009.

Homeowners net written premiums increased 2 percent, and the combined ratio was 91.7. Personal automobile net written premiums were up 11 percent, and the combined ratio was 90.8. Other personal lines net written premiums increased 9 percent, and the combined ratio was 91.2.

Chubb Commercial Insurance net written premiums for 2010 were flat at $4.7 billion. The combined ratio was 92.3 in 2010 and 89.9 in 2009. The impact of catastrophes accounted for 5.4 percentage points of the combined ratio in 2010 and 1.2 points in 2009.

Average 2010 renewal rates in the U.S. were flat for CCI, and renewal premium retention was 86 percent. In the U.S., the ratio of new to lost business was 1.2 to 1.

Chubb Specialty Insurance net written premiums were flat at $2.7 billion. The combined ratio was 82.2 in 2010 and 84.1 in 2009.

Professional Liability had a 1 percent decline in net written premiums and a combined ratio of 87.8. In the U.S., average 2010 renewal rates for PL were down 2 percent, renewal premium retention was 87 percent and the ratio of new to lost business was 1.0 to 1.

Surety net written premiums increased 1 percent, and the combined ratio was 41.3.

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