Chubb to Seek More Rate in Northeast; Q4 Profit Drops 77% on Sandy Losses

Chubb Corp. says it plans to seek higher rate increases for Homeowners insurance in the Northeast, following the impact of Superstorm Sandy—the largest catastrophe in Chubb’s history.

Sandy, which made landfall at Southern New Jersey in late October 2012, affected core states for the Warren, N.J.-based insurer.

The storm set records for the company in terms of claims and net catastrophe loss—$882 million pretax.

And as Chubb looks forward, Dino E. Robusto, president of personal lines, says during an earnings conference call, “We plan to file for rate increases up to the low teens in some areas of the Northeast.

Chubb had been seeking mid-single-digit rate increases in Homeowners insurance in the Northeast prior to the storm.

About 90 percent of Sandy claims came from New York, New Jersey and Connecticut, he says. About 53 percent of the losses were from Chubb’s commercial segment. The balance was from its personal lines segment.

Sandy took its toll on Chubb’s 2012 fourth-quarter net income—dropping it more than 77 percent to $102 million, compared to net income of $452 million during the same period a year ago.

Net income for the year was $1.5 billion compared to $1.7 billion in 2011.

The storm sky-rocketed the company’s fourth-quarter combined ratio, which was 131.3 for homeowners and 118.7 for commercial. Overall the fourth-quarter combined ratio for Chubb was an unprofitable 111.2 compared to 89.9 in 2011.

However, looking beyond the impact of catastrophes was much more promising for Chubb. CEO John D. Finnegan say the fourth quarter combined ratio excluding catastrophes was 81.5—an 8-point improvement over the same time in 2011.

During the conference call, Finnegan says Chubb was able to turn a profit in the quarter despite the huge hit from Sandy “through the pursuit of renewal rate increases, writing new business only when we believe we are securing adequate rates, and continually refining our risk selection to improve profitability of our book of business.”

Renewal rate increases were seen in each of Chubb’s business units. Rates were up 9 percent for Professional Liability, 8 percent for Commercial and 6 percent for Personal lines, Finnegan reports.

Paul J. Krump, president of commercial and specialty lines, says Chubb received rate increases on 90 percent of its renewal book in the segment, compared to 70 percent a year ago.

Comments

Resource Center

View All »

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

How Many Of Your Clients Are At Risk Of Flood?

Every home is vulnerable to flooding. Learn four compelling reasons why discussing flood insurance with...

Gauging your Business Intelligence Analytics Capabilities and the Impact of...

Big Data, Data Lakes and Data Swamps, How to gauge your company's Big Data readiness....

Extending Contact Center Capabilities Across the Insurance Enterprise

Today advancements in technology are making a big impact on business and society. To yield...

Drug and Alcohol Testing Requirements

In this two-part series, NBIS Risk Management team will break down the requirements to assist...

Why Cyber Liability is Essential for Human Service Organizations

For traditional low-tech operations, information is often compromised in ways that don't involve technology. Access...

A Solution for Large Commercial Habitational Accounts

6 Reasons to place your LARGE Habitational Accounts with Dauntless.

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.