Chubb Reports ‘Outstanding’ Q3

October 24, 2014

Calmer weather, rate increases, high account retention and lower expenses powered The Chubb Corp. to a what the firm’s CEO said was an “outstanding” third quarter. The New Jersey-based insurer reported that net income in the third quarter of 2014 increased to $594 million from $541 million in the third quarter of 2013.

Operating income was $522 million in the third quarter of 2014 compared to $529 million in the third quarter of 2013 while operating income per share increased 5 percent to a record $2.17.

The impact of catastrophes in the third quarter was $74 million in 2014 compared to $92 million in 2013.

The third quarter combined loss and expense ratio was 85.8 in 2014 and 85.7 in 2013. The impact of catastrophes accounted for 2.4 percentage points of the combined ratio in the third quarter of 2014 compared to 3.0 percentage points in the third quarter of 2013. Excluding the impact of catastrophes, the third quarter combined ratio was 83.4 in 2014 and 82.7 in 2013.

The expense ratio for the third quarter was 31.8 in 2014 compared to 32.7 in 2013.

Net written premiums increased 5 percent in the third quarter of 2014 to $3.2 billion. Premiums increased 5 percent in the U.S. and 4 percent outside the U.S.

Property/casualty investment income after taxes for the third quarter declined 4 percent to $270 million in 2014.

“Chubb had an outstanding third quarter,” said John D. Finnegan, chairman, president and chief executive officer.

Finnegan said Chubb achieved mid-single-digit increases in its U.S. rates, as well as high retention levels in all of its businesses. He also said the quarter’s 85.8 combined ration reflected “strong underwriting performance” in all business units as well as relatively low catastrophe losses.

Nine-Month Results

For the first nine months of 2014, net income was $1.5 billion compared to $1.8 billion for the first nine months of 2013. Operating income for the first nine months totaled $1.3 billion compared to $1.6 billion in 2013.

The impact of catastrophes in the first nine months of 2014 was $419 million compared to $347 million in the first nine months of 2013.

Chubb’s combined ratio for the first nine months was 89.6 in 2014 compared to 86.4 in 2013. The impact of catastrophes in the first nine months accounted for 4.6 percentage points of the combined ratio in 2014 and 3.9 points in 2013. Excluding the impact of catastrophes, the combined ratio for the first nine months was 85.0 in 2014 compared to 82.5 in 2013.

The expense ratio for the first nine months was 31.7 in 2014 and 32.3 in 2013.

Net written premiums increased 3 percent in the first nine months of 2014 to $9.5 billion. Premiums increased 4 percent in the U.S. and declined 1 percent outside the U.S.

Property/casualty investment income after taxes for the first nine months declined 4 percent to $822 million in 2014.

Net income for the first nine months of 2014 reflected net realized investment gains of $351 million, close to the $335 million realized in 2013.

Third Quarter Operations

Chubb Personal Insurance (CPI) net written premiums increased 6 percent in the third quarter of 2014 to $1.2 billion. CPI’s combined ratio for the quarter was 85.9 compared to 88.3 in the third quarter of 2013. The impact of catastrophe losses in the third quarter accounted for 3.5 percentage points of the combined ratio in 2014 and 7.0 points in 2013. Excluding the impact of catastrophe losses, CPI’s third quarter combined ratio was 82.4 in 2014 and 81.3 in 2013.

Net written premiums for homeowners increased 4 percent, and the combined ratio was 80.3. Personal automobile net written premiums increased 3 percent, and the combined ratio was 95.2. Other personal lines premiums were up 13 percent, and the combined ratio was 95.4.

Chubb Commercial Insurance (CCI) net written premiums were up 4 percent in the third quarter of 2014 to $1.3 billion. The combined ratio for the third quarter was 89.5 in 2014 and 85.2 in 2013. The impact of catastrophe losses in the third quarter accounted for 2.6 percentage points of the combined ratio in 2014 and 1.4 points in 2013. Excluding the impact of catastrophe losses, CCI’s third quarter combined ratio was 86.9 in 2014 and 83.8 in 2013.

In the U.S., average third quarter CCI renewal rates were up 3 percent, renewal premium retention was 87 percent and the ratio of new to lost business was 1.0 to 1, the company said.

Chubb Specialty Insurance (CSI) net written premiums increased 5 percent in the third quarter of 2014 to $701 million. The combined ratio was 78.3 compared to 82.3 in the third quarter of 2013.

Professional Liability (PL) net written premiums were up 6 percent, and the business had a combined ratio of 81.3. In the U.S., average third quarter PL renewal rates were up 5 percent, premium renewal retention was 89 percent and the ratio of new to lost business was 1.3 to 1.

Surety net written premiums declined 5 percent, and the combined ratio was 54.8.

Source: Chubb Corp.

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