The Chubb Corp. reported today that second-quarter net incomerose 18 percent.

The Warren, N.J.-based multiline insurer posted income of $709million, or $1.75 per share, compared with $598 million or $1.41per share in the second quarter of 2006.

Bear Stearns analyst David Small said that greater thananticipated reserve development drove much of the earningsupward.

Favorable loss trends are pushing down rates, in particular forprofessional liability, he said.

Mr. Small wrote that the firm's analysis suggests that while thelitigation environment has improved, “historically, major tortchanges have not been the driver for professional liabilityclaims.”

In addition, Chubb's reputation for stricter underwriting shouldlead to greater stability through the soft cycle, according to hisanalysis. “Brokers we have spoken with have suggested that Chubb,more than others, has been the last to move on price terms, headded.

Other second-quarter highlights:

o Total net written premiums for the second quarter declined 1percent to $3.1 billion. Net written premiums for the insurancebusiness increased 2 percent overall, minus 1 percent in the U.S.and up 7 percent outside the U.S. (3 percent in localcurrencies).

o Net written premiums for the reinsurance assumed businessdeclined 75 percent since the Chubb Re-Harbor Point transactioncompleted in December 2005. In that deal, Bermuda-based HarborPoint essentially purchased Chubb's reinsurance unit for about $200million, which represented 16 percent of the new company.

o The combined loss and expense ratio was 82.7, compared with85.2 in 2006.