Chubb Profit Falls in Q3

October 21, 2011

The Chubb Corp. reported that net income in the third quarter of 2011 was $298 million compared to $572 million in the third quarter of 2010. Net income per share declined to $1.04 from $1.80.

Operating income was $252 million in the third quarter of 2011 compared to $537 million in the third quarter of 2010. Operating income per share declined to $0.88 from $1.69.

The impact of catastrophes in the third quarter of 2011 was $420 million before tax, largely from Hurricane Irene as well as other storms in the U.S. In the third quarter of 2010, the impact of catastrophes was $58 million before tax. The impact of catastrophes on third quarter net income and operating income per share was $0.95 in 2011 and $0.12 in 2010.

The third quarter combined loss and expense ratio was 102.6 in 2011 compared to 86.2 in 2010. The impact of catastrophes accounted for 14.4 percentage points of the combined ratio in the third quarter of 2011, compared to 2.1 percentage points in the third quarter of 2010. Excluding the impact of catastrophes, the third quarter combined ratio was 88.2 in 2011 and 84.1 in 2010.

The expense ratio for the third quarter was 32.4 in 2011 and 31.7 in 2010.

Net written premiums increased 5 percent in the third quarter of 2011 to $2.9 billion. Excluding the effect of foreign currency translation, premiums were up approximately 4 percent. Premiums increased 2 percent in the U.S. and 17 percent outside the U.S.

Property/casualty investment income after taxes for the third quarter increased 1 percent to $321 million in 2011 from $317 million in 2010.

Net income for the third quarter of 2011 reflected net realized investment gains of $71 million before tax ($0.16 per share after-tax), compared to $54 million before tax ($0.11 per share after-tax) in the third quarter of 2010.

John D. Finnegan, chairman, president and chief executive officer, said that this was the third consecutive quarter with unusually high catastrophe losses yet Chubb still produced net income for the quarter of $298 million, driven by a solid combined ratio of 88.2 excluding catastrophes, which “reflects the strong underlying performance” of all business units.

“With regard to the insurance market, we were pleased to see continued incremental rate improvement in the third quarter, especially in our U.S. standard commercial book, where renewal rates were up 4 percent on average year over year,” said Finnegan. “However, rates will need to continue to increase to offset the negative impact on industry earnings attributable to the prolonged soft market, record level of catastrophe losses and significantly lower yields currently available on investments.”

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