NU Online News Service, July 24, 2:31 p.m. EDT
Citing what it expects to be improved performance in the coming year, Warren, N.J.-based insurer Chubb Corp. raised its earnings guidance by 30-cents per share on the high end as it reported second-quarter net income increased 17 percent.
"Chubb turned in an outstanding quarter in every respect despite the recessionary conditions in the United States and around the world," said John D. Finnegan, Chubb's chairman, president and chief executive officer during an analyst's conference call. "We had terrific underwriting results and our investment portfolio performed extremely well."
Chubb raised its earnings guidance for the year from $4.80 to $5.20 per share to $5.20 to $5.50 per share.
Among the items the company cited for the change was revised guidance on its combined ratio to between 88 and 90 from 90 to 92 at the beginning of the year.
The company also expects catastrophe losses for the year of 3 percentage points compared to assumed guidance in January of 3 to 4 points. Chubb said the impact of each point of catastrophe loss on operating income per share for the year amounts to approximately 21-cents.
For the second quarter, the carrier reported net income rose $82 million to $551 million from $469 million for the same period last year. The results translated into earnings per share of $1.54, up from $1.27 last year. Net premium written dropped almost 7 percent, or $201 million, to $2.85 billion.
Chubb said excluding the effects of foreign currency translation, premiums were down approximately 3 percent in the quarter.
For the first six months of this year, net income is off 21 percent, or $241 million, to $892 million compared to the same period last year. Earnings per share for the first half of the year dropped to $2.49 a share from $3.04 last year. Net premium written fell 7 percent, or $394 million, to $5.59 billion.
The quarter's combined ratio improved 2.6 points to 85.9. For the first six months of the year the combined ratio is up 0.8 points to 87 compared to the same period last year.
In answering questions of analysts during the call, Chubb executives indicated that the company is seeing improvements in its premium rates. However, other insurers are cutting rates to keep existing business, which was surprising in some cases, they said.
Chubb also announced that Vice Chairman and Chief Operating Officer John J. Degnan will defer his retirement until Dec. 21, 2010 and the company would announce a decision about filling his responsibilities later next year.
During the conference call, Mr. Finnegan said the board wanted Mr. Degnan to remain in his post as COO because of the outstanding job he has done there. He also said that there are many executive candidates within Chubb who are ready to fill the position.
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