NU Online News Service, Jan. 27, 12:43 p.m. EST
Warren, N.J.-based insurer Chubb says its 2011 fourth-quarter net income decreased 27 percent as losses and operating costs increased over the same period last year.
Despite the results, John D. Finnegan, chairman, president and chief executive officer describes the results as a solid performance for the company as it saw sustained rate increases across the board. Nonetheless, he says the insurance market remains competitive.
In the fourth quarter, Chubb says net income was down $168 million from the same period in 2010 to $452 million. Earnings per share were off 42 cents a share to $1.60. Premiums earned rose 4 percent or $109 million to $2.9 billion. The company's combined ratio increased 2.9 points to 89.9. The effect of catastrophes on the combined ratio was 0.4.
For the year, Chubb says net income was down 23 percent, or $496 million, to $1.7 billion for 2011. Earnings per share dropped $1 to $5.76 a share. Premiums earned increased 4 percent or $429 million to $11.6 billion. The combined ratio rose 6 points to 95.3 with catastrophes assuming 8.9 points of the results for the year.
The company issued 2012 earnings guidance of operating income per share in the range of $5.30 to $5.70, assuming a combined ratio between 93 and 95 for the year.
During a conference call with financial analysts, executives said the company was obtaining rate increases across the board in both commercial and personal-lines business. A small percentage of risks received decreases on the commercial side, they said.
Finnegan credited the company's underwriting discipline and the firming insurance market for delivering strong results for the year despite catastrophe losses and difficult economic environment.
He said 2012 would be a transition year for the industry.
"The good news is that the market continues to firm and we expect to see continued rate increases in 2012," said Finnegan.
However, he continued, the economy and low interest rates will continue to prove to be a challenge for the industry. Coupled with dwindling reserve releases, the industry will face significant obstacles to profitability in 2012. He said as rates rise the industry should benefit and begin to experience margin expansion.
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