Chubb Corp. reports a jump in third-quarter net income of nearly 80 percent, as the company benefited from a significant drop in catastrophe losses compared to the same period last year.

During 2011's third quarter Chubb booked $420 million in catastrophes losses, pretax. That total plummeted to what CEO John D. Finnegan called an “unusually low” $17 million for the third quarter this year.

The Warren, N.J.-based insurer's third-quarter net income stands at $533 million—up from $298 million a year ago.

During a conference call Finnegan says Chubb “continued to achieve rate increases in all of our businesses.”

“These positive factors [low catastrophes losses and more rate] were more than enough to offset the continuing effects of a challenging global economic environment and the impact of low interest rates,” he adds.

Net premiums at Chubb Commercial Insurance were up 2 percent in the third quarter. Renewal rate increases in the quarter were up 8 percent—the sixth straight quarter of rate increases at CCI, reports Paul Krump, president of commercial and specialty lines.

Krump adds that Chubb Specialty Insurance saw third-quarter net premiums decline 4 percent. Professional liability renewal rates in the U.S. were up 8 percent in the third quarter.

During the company's second-quarter call, Finnegan said Chubb was getting rid of some underperforming professional liability accounts.

Krump updates, “While professional liability submissions have increased, we remain steadfast in quoting prices to potential new customers that will earn an adequate return. We are willing to accept a decline in new professional liability business and overall growth as we re-profile the book.”

Net premiums written at Chubb Personal Insurance increased 3 percent during the third-quarter and the combined ratio drastically improved to 82.8 from 115.6 for the 2011 third quarter, caused by catastrophe claims.

Dino Robusto, president of commercial lines, says premiums grew 3 percent in homeowners' insurance business and the combined ratio was a profitable 76.2 compared to 126.1 a year ago.

However, as a whole, Finnegan says Chubb “from an overall perspective, we're not rate adequate.”

The company is benefitting from low catastrophe losses and favorable reserve development of $145 million for the third quarter, he explains.

Each line is different and there may be some that are adequate, but overall, “you'd have to say that on an accident-year basis with a full [catastrophe] load and normal weather-related activity, we're not at target [returns on equity] for the book as a whole,” Finnegan says.

Special Reports /

Chubb Q3 Profit Soars 80% on 'Unusually Low' Catastrophe Losses

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