NU Online News Service, April 20, 11:04 a.m. EDT
Chubb Corp. says the first quarter saw renewal rate increases across the board in U.S. commercial and specialty lines while first quarter net income for 2012 fell slightly to $506 million.
Net income fell less than 1 percent, or $3 million, from first quarter mark in 2011 of $509 million for the Warren, N.J.-based carrier.
“We are pleased with the [Chubb Commercial Insurance]’s average U.S. renewal rate increase in the first quarter of 8 percent, continuing the rate momentum that we have been discussing,” says Paul J. Krump, president of commercial and specialty lines, during a conference call.
The 8 percent renewal rate increase reflects increases in each line of commercial business. It compares to flat renewals during the first quarter last year. The rate increase builds upon a 6 percent renewal rate increase seen during the 2011 fourth quarter, adds Krump.
“Further evidence of continued rate momentum can be found in the growing proportion of our accounts that are renewing with rate increases,” Krump says.
About 80 percent of U.S. accounts got a rate increase during the first three months of this year, compared to 70 percent during the same period last year, he explains.
Monoline property rate increases saw the highest increase, up double-digits.
At Chubb Specialty Insurance, average renewal rates for U.S. professional liability jumped 4 percent—significant positive movement considering renewal rates were down 3 percent during the first quarter of 2011. Again, there appears to be a continued momentum in rate increase, noting professional liability was up 1 percent during the fourth quarter of 2011.
Private company directors’ and officers’ liability led rate increases, followed by nonprofit D&O, employment practices liability, fiduciary and public company D&O.
The leap in rate from the first quarter last year “reflects our push for rate in the professional liability marketplace,” Krump says.
Net written premiums in the specialty segment were down 6 percent to $602 million in the first quarter and the combined ratio was 98.5 compared to 86.8 for the first quarter of 2011. The increase, explains Krump, can be blamed on less favorable prior-year reserve development.
Chubb has written less new business in commercial and specialty, with retention down slightly by 2 percent from the fourth quarter.
John D. Finnegan, chief executive officer, says rate improvements were also seen in personal lines. “A continuation of this rate environment should bode well for our future profitability,” she says.
Net written premiums in Chubb Personal Insurance increased 5 percent in the first quarter, compared to the same time last year, to $940 million.
Due to relatively benign catastrophe losses, the personal insurance segment posted a combined ratio of 85.5 in the first quarter compared to 93.8 for the same period a year ago.