Chubb Reports Q4 Net Income Falls 2%; Says No Fear of ACE, Google

By | February 2, 2015

The Chubb Corp. in Warren, New Jersey, reported net income of $558 million for the 2014 fourth quarter, a 1.9 percent decrease from $569 million net income during the prior year fourth quarter.

The operating income, which Chubb defines as net income excluding after-tax realized investment gains and losses, improved to $544 million for the fourth quarter, a 3.4 percent increase from $526 million a year ago.

The 2014 fourth quarter net premiums written were $3.138 billion, a 3.3 percent increase from $3.038 billion during the prior year fourth quarter.

The fourth quarter combined loss and expense ratio was 84.3 percent, improving from 85.5 percent one year ago.

The fourth quarter property/casualty investment income after taxes was $267 million, a 6 percent decline from $284 million a year ago.

The fourth quarter’s $558 million net income included net realized investment gains of $18 million before tax, compared to net realized investment gains of $67 million before tax during the prior year fourth quarter.

Looking at the fourth quarter operations, Chubb Personal Insurance (CPI) net written premiums were $1.1 billion, a 4 percent increase from a year ago. Chubb Personal Insurance’s combined ratio for the fourth quarter was 83.9 percent, compared to 83.5 percent a year ago.

Chubb Commercial Insurance (CCI) net written premiums for the 2014 fourth quarter were $1.3 billion, a 5 percent increase from a year ago. The combined ratio for the latest quarter was 88.5 percent, compared to 89.0 percent a year ago.

In the U.S., the average 2014 fourth quarter Chubb Commercial Insurance renewal rates were up 2 percent, renewal premium retention was 88 percent and the ratio of new to lost business was 1.4 to 1.

Chubb Specialty Insurance (CSI) net written premiums for the 2014 fourth quarter were $701 million, a 1 percent decline. The combined ratio for the quarter was 76.7 percent, compared to 81.9 percent a year ago.

In Specialty Insurance, Professional Liability (PL) net written premiums were $628 million for the latest quarter, a 0.2 percent increase from a year ago. Professional Liability had a combined ratio of 80.3 percent, compared to 85.9 percent a year ago. In the U.S., the average 2014 fourth quarter Professional Liability renewal rates were up 4 percent, renewal premium retention was 89 percent and the ratio of new to lost business was 1.3 to 1.

The Chubb Corp. Chairman, President and CEO John D. Finnegan said Chubb had an outstanding fourth quarter and an excellent 2014. He said the 2014 fourth quarter’s 84.3 percent combined ratio was Chubb’s best combined ratio for any quarter in the past six years, which reflected strong underwriting performance as well as low catastrophe losses.

“We are also pleased that in the fourth quarter we continued to achieve renewal rate increases while maintaining high retention levels in all of our businesses,” said Finnegan.

ACE, Google

During an earnings conference call, Paul Krump, Chubb president of Personal Lines and Claims, responded to analyst questions on issues ranging from Google’s foray into the insurance business to ACE Insurance buying the U.S. personal lines business of Allianz Group’s Fireman’s Fund unit.

When asked about Google entering insurance business and whether that is a concern to Chubb, Krump said it is too early to know if these price comparison distribution platforms work or not, citing experience in the United Kingdom where he said they have had “little to no impact” on Chubb’s business.

He also said that Chubb is not concerned about ACE Insurance buying Fireman’s Fund business and becoming more of a factor in the high-net worth marketplace where Chubb is a big player. “We are the pioneers, we developed it,” he said of the market, adding that Chubb has successfully competed against others that have entered, and left, the affluent market and is confident it will continue to be successful.

The company also said while early indications are that claims from the recent Juno winter storm are looking to be “insignificant,” it is too early to judge the full impact because storm claims can take awhile to surface.

Full Year Results

For the full-year 2014, net income was $2.100 billion, a 10.4 percent decrease from $2.345 billion for the full-year 2013. Operating income totaled $1.858 billion in 2014, a 10.8 percent decrease from $2.084 billion in 2013.

Net written premiums increased 3 percent to $12.592 billion for the full-year 2014 from $12.224 billion in 2013. The combined ratio in 2014 was 88.3 percent compared to 86.1 percent in 2013.

Property/casualty investment income after taxes for the full-year 2014 declined 4 percent to $1.1 billion. Net income for the full-year 2014 included net realized investment gains of $369 million before tax, compared to net realized investment gains of $402 million before tax for 2013.

During 2014, Chubb repurchased 16.9 million shares of its common stock at a total cost of $1.6 billion.

Was this article valuable?

Here are more articles you may enjoy.