Chubb Net Income Drops On Storm Losses

Warren, N.J.-based insurer Chubb Corp. reported net income dropped 34 percent in the first quarter primarily on storm losses resulting in a close to six-point rise in its combined ratio for the second quarter.

“In an otherwise excellent quarter, our results were adversely impacted by unusually high catastrophe losses and by one large surety loss,” John D. Finnegan, chairman, president and chief executive officer of the carrier, said in a statement, noting that these losses were primarily from storms in the Midwest.

For the quarter, the company reported net income of $469 million, down $240 million from last year's $709 million. That translated into a 48 cent loss per share to $1.27. The losses came on a slight downtick in net premiums written for the quarter of $3 billion down $11 million.

In the first half of the year, net income was off $286 million, or 20 percent, to $1.13 billion or $3.04 a share, down 42 cents from the same period last year. Net premiums written rose less than 1 percent, or $58 million, to $5.98 billion.

Mr. Finnegan said that due to the higher than expected catastrophe losses in the first six months, and finding itself in the midst of the hurricane season, Chubb increased its catastrophe loss assumption for the year from three to four points. However, the company reiterated its earnings guidance for full-year 2008 of for earnings per share to be $5.70 to $6.10 a share.

By line of business, combined ratio for personal lines for the past six month period rose one point to 83.3 percent; commercial lines business rose 3.8 points to 90.5; and specialty insurance rose 4.2 points to 83.6.