The Chubb Corp. reported a drop in net income in the first quarter of 2014 to $449 million, compared to $656 million in the first quarter of 2013. The drop was due in large measure to claims from severe winter weather and unusually large home fire losses, according to the Warren, New Jersey-based carrier.
Operating income was $374 million in the first quarter of 2014 and $566 million in the first quarter of 2013.
Chubb’s said first quarter catastrophe losses amounted to $199 million before tax related mostly to severe winter weather in the United States. In the first quarter last year, catastrophes cost the insurer $18 million before tax.
The first quarter combined loss and expense ratio was 93.2 in 2014 and 84.6 in 2013. The impact of catastrophes on the first quarter combined ratio was 6.6 percentage points in 2014 and 0.6 points in 2013.
“Results were adversely impacted by several factors, including catastrophe and non-catastrophe losses related to severe winter weather in the United States. Chubb also suffered an unusually high level of homeowners’ fire losses…,” President, CEO and Chief Executive John D. Finnegan said in a statement.
Net written premiums for the first quarter of 2014 were $3.1 billion, flat compared to the first quarter of 2013. Excluding the effect of foreign currency translation, premiums were up approximately 1 percent. Premiums were up 3 percent in the U.S. and down 6 percent outside the U.S. (down 4 percent in local currencies).
Property and casualty investment income after taxes for the first quarter declined 4 percent to $277 million in 2014 from $288 million in 2013.
Net income for the first quarter of 2014 reflected net realized investment gains of $116 million before tax ($0.30 per share after tax). Net income for the first quarter of 2013 reflected net realized investment gains of $138 million before tax ($0.34 per share after tax).
Despite the higher claims, management said it was pleased with the quarter’s results and its pricing strategy. “We remain encouraged by the mid-to-high-single-digit increases in our rate change metrics that we achieved in all of our business units during the first quarter, while enjoying an overall increase in renewal retention,” said Finnegan.
First Quarter Review
Chubb Personal Insurance (CPI) net written premiums increased 3 percent in the first quarter to $1.0 billion. CPI’s combined ratio for the quarter was 101.8 percent, compared to 87.0 percent in the first quarter of 2013.
Net written premiums for homeowners increased 4 percent, and the combined ratio was 104.9.
Chubb Commercial Insurance (CCI) net written premiums declined 1 percent in the first quarter to $1.4 billion. The combined ratio for the quarter was 88.5 in 2014 and 81.9 in 2013. The impact of catastrophes on the CCI combined ratio in the first quarter of 2014 was 6.1 percentage points.
In the United States, average first quarter CCI renewal rates increased 5 percent and renewal premium retention was 85 percent.
Chubb Specialty Insurance (CSI) net written premiums declined 1 percent in the first quarter to $624 million. The combined ratio for CSI was 88.9, compared to 87.4 in the first quarter of 2013.
Professional Liability (PL) net written premiums grew 1 percent, and the combined ratio was 84.6. In the United States, average first quarter renewal rates for PL increased 7 percent, while renewal premium retention was 85 percent.
Surety net written premiums were down 13 percent, and the combined ratio was 122.9 driven by one large loss, according to the insurer.
Source: Chubb Corp.
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