Chubb Corp. reported net income rose nearly 50 percent in the first quarter, described by its chairman as its most profitable in history.

The Warren, N.J.-based property-casualty insurer reported first-quarter net income of $672 million, compared with $470 million for the 2005 period.

The first-quarter combined ratio improved nearly seven points to post at 82.9.

“This was by far the best combined ratio and most profitable quarter in Chubb's history,” said Chubb Chairman John Finnegan. “All three of our insurance businesses made substantial contributions to the bottom line.”

The three segments consist of personal, commercial and specialty lines.

Bear Stearns analyst David Small noted this was the ninth straight quarter the carrier surpassed consensus estimates. Better than expected core profitability, lower than anticipated Hurricane Katrina-related reinsurance reinstatement premiums and positive reserve development drove the results, he wrote.

Catastrophe losses of $21 million were offset by a $20 million reduction in reinsurance reinstatement premium costs related to Katrina.

Net written premiums for the first quarter of 2006 declined 4 percent to $2.9 billion, the company said.

Property-casualty investment income after taxes for the first quarter increased 11 percent to $279 million in 2006 from $252 million in the same period last year, Chubb reported.

Mr. Small expressed concern that Chubb will find it difficult to maintain its current profitability in the coming months, despite the fact that management was bullish for both the property and liability lines rate environment during a conference call yesterday.

“The current profitability of the casualty business leads us to believe that competition will increase in the near term,” Mr. Small wrote. “While we have been pleasantly surprised by Chubb's ability to find profitable underwriting opportunities, we are cautious.”

Mr. Small said his group believes other aggressive players will seek to compete for Chubb's “outsized profits.”

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Chubb Posts Best Quarter Ever

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