NU Online News Service, Jan. 28, 12:05 p.m. EST
Chubb Corp. net income during the 2010 fourth quarter fell 11 percent compared to the same period in 2009, and floods in Australia are expected to impact results to start off 2011.
Chubb said net income for the 2010 fourth quarter was $620 million compared to $695 million the year before.
During a conference call to discuss earnings, Dino Robusto, president of Chubb personal lines and claims, said that although the company did not suffer major catastrophe losses at the end of 2010 due to winter storms in the United States and the first round of flooding in Australia, a second round of flooding is expected to cause some losses.
Mr. Robusto said the preliminary loss estimate for the flooding in Australia is between $75 million and $100 million before tax.
"Our inspections are underway as we speak," he said.
Total projected losses for the industry due to the Australian floods are between $5 billion and $10 billion, Chubb said.
Continuing to look ahead, Mr. Robusto said winter storms in the U.S. so far this year have generated the types of claims that are typical for winter storms. "None of these events have been large enough to be categorized as a catastrophe, [nor] did any one have a material impact on Chubb. Nonetheless, in the aggregate they will probably result in significant weather-related non-cat losses for the month," he said.
Chief Operating Officer John Degnan reported that net written premiums in personal lines was up 4 percent and the combined ratio in the segment was 85.4 compared to 81.6 in 2009. Homeowners and automobile insurance premiums were up 2 percent and 7 percent, respectively, he said.
Commercial lines premiums were relatively flat and renewal rates were down 1 percent.
"Overall, market conditions in the third quarter were largely unchanged from the first half. We continue to see competitive pressure on rates. But on the other hand, the repercussions of poor economic conditions continue to abate slightly, and we had some improvement in exposures and endorsement activity," Mr. Degnan said during the call.
In light of the Federal Deposit Insurance Corp.'s plan to go after failed banks, Mr. Degnan said Chubb has "not yet seen significant claims activity in the community bank arena to date." Chubb's exposure to community banks' errors and omissions portion of a policy "is not thought at the moment by us to be significant," he said.
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