Chubb Posts Higher Profit, Raises Guidance

Chubb Posts Higher Profit, Raises Guidance

NU Online News Service, July 31, 3:53 p.m. EDT? Chubb Corp. late yesterday posted a 20 percent gain in net income citing higher premium rates and investment income.

Second quarter net income was $252.1 million compared with $210.2 million recorded for the period in 2002.

Net premiums written for Chubb's property-casualty lines in the second quarter rose 24 percent to $2.6 billion compared to one year ago, the insurer said. The combined loss and expense ratio also improved during the quarter, dropping to 95.3 percent from 98 percent during the corresponding period last year.

Chubb noted that the company achieved this second-quarter improvement despite $70.6 million in catastrophe losses from heavy storm claims, which represented 2.8 percentage points in the quarterly combined ratio. In comparison, the company recorded only $10.3 million in catastrophe losses one year ago.

The company also posted better numbers for its investment income: its property-casualty investment income for the quarter reached $207.2 million, a jump of 8.6 percent from $190.8 million recorded one year ago.

Commenting on the latest financial figures, John Finnegan, Chubb's chief executive officer, said, "We have had two consecutive quarters of record earnings and strong premium growth. We had another outstanding quarter in our commercial lines, coupled with solid results in personal lines. Average renewal rates continued to increase, and we had high rates of retention and new business."

Mr. Finnegan noted that premiums for Chubb commercial insurance, which accounted for 37 percent of net written premiums for the quarter, grew 25 percent to reach $959 million compared to one year ago. The company's average renewal rates in the United States improved by 12 percent for commercial insurance, retaining more than 80 percent of the U.S. accounts that came up for renewal. The company's commercial insurance also wrote 23 percent more new business domestically compared to one year ago, said Mr. Finnegan.

Chubb's specialty insurance premiums, which accounted for 37 percent of the insurer's total second quarter premiums, also grew by 31 percent to reach $963 million. The company's personal insurance premiums, which accounted for 26 percent of the insurer's total premiums, also improved by 13 percent to $695 million, compared to the year-ago period.

Chubb management also said it sees more positive financial landscape in the coming months, and the insurer said it is raising its profit guidance for the rest of the year. "In light of first half earnings and our expectation of continued strong performance, we are raising guidance for full-year 2003 earnings by 30 cents to a range of $4.90 to $5.30 per share," said Mr. Finnegan.