The Chubb Corp. reported that its third-quarter net income dropped 64 percent, primarily from catastrophe losses related to Hurricane Ike, but its combined ratio managed to come in below 100 despite the losses.

The Warren, N.J.-based insurer reported net income of $264 million, a drop of $474 million from the same quarter last year ($738 million), translating into net income per share of 73 cents, a drop of $1.14 from a year ago.

Net premium written in the quarter dropped 1 percent versus last year, or $38 million, to $2.9 billion.

For the first nine months of this year, net income dropped 35 percent, or $760 million, to $1.4 billion compared to the same period last year. Net income per share was down $1.55 a share to $3.78. Net premium written over the nine months was virtually unchanged at $8.8 billion.

Due to catastrophe losses, Chubb revised its earnings per share guidance range from $5.70 to $6.10 a share to $5.45 to $5.55 a share.

During a conference call with financial analysts today, John D. Finnegan, chairman and chief executive officer of Chubb, was adamant in saying that the change in guidance was the result of losses from Hurricane Ike.

The company previously reported that third-quarter catastrophe losses would be about $400 million before tax, including its estimated share of assessments to the Texas Windstorm Insurance Association.

The company also reported net realized investment losses, including impairments, of $113 million before tax for the quarter.

The results produced a third-quarter combined ratio of 98.1, a 16.5 point increase over last year, and 90.2 for the first nine months, a 7.6 point increase.

Mr. Finnegan said that despite the challenges facing the insurance industry, both from catastrophe losses and the economic turmoil, the company remains well positioned to take advantage of "market dislocations."

He said, "The weakened financial condition of a number of our competitors could lead to significant market dislocation and, potentially, a flight to quality. Chubb now enjoys an enviable position in the property-casualty sector."

While the company will be seeking new opportunities, it will do so without sacrificing price or underwriting parameters, both he and other executives on the call said.

On the issue of pricing, while there remains softening in the marketplace, the declines are not as sharp as they have been in the past. With the market difficulties and losses insurers have suffered, executives noted during the call that there are indications the market may be ready for flattening or hardening in the future.

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Chubb Says Net Income Down 64%, But Combined Ratio Below 100

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