Chubb down as wealthy hurt

Chubb Corporation said that net income in the first quarter of 2009 was almost halved to $341m from $664m in 2008 as customers cut back their insurance cover and investments declined.

Q1 highlights (2008 in brackets)

• Operating income $514m ($620m)
• Net written premiums down 7% to $2.7bn
• Excluding the currency fluctuation, premiums were down 2%.
• Premiums declined 5% in the US and 12% outside the US (increased 5% in local currencies)
• Combined loss and expense ratio was 88.1% (83.9%)
• Catastrophes accounted for 0.9 percentage points of the combined ratio in the first quarter of 2009, compared to 1.8 percentage points in the first quarter of 2008.
• Excluding catastrophes, the combined ratio was 87.2% (82.1%)
• Expense ratio 30.8% (30.5%)
• Property and casualty investment income after taxes fell 6% to $306m ($327m) due to currency fluctuation.
• Net income, including impairments, of $266m before tax
• Chubb repurchased 1,804,500 shares of its common stock at a total cost of $74m (an average of $40.87 per share). As of March 31, 2009, there were 17,979,400 shares of common stock remaining for repurchase under the current authorisation.

John Finnegan, chairman, president and chief executive officer, said: “In the first quarter, Chubb continued to perform well in a difficult economic and investment environment. We generated substantial underwriting profits, reflecting contributions from all of our business units, and our investment portfolio performed extremely well in what continued to be very volatile global capital markets.

“In looking at developments in the quarter, we were especially pleased by the continued improvement in premium rates, as evidenced by the fact that our commercial and professional liability US renewal rate changes were both positive for the first time in five years.”

Detailed breakdown

• Chubb personal insurance (CPI) net written premiums declined 4% to $843m
• CPI's combined ratio was 90.0% (84.8%)
• Catastrophes accounted for 1.5 percentage points (1.7 points)
• Excluding catastrophes, CPI’s first quarter combined ratio was 88.5% (83.1%)
• Net written premiums for Homeowners declined 5%, and the combined ratio was 88.2%.
• Personal Automobile net written premiums declined 8%, and the combined ratio was 89.8%.
• Other Personal lines grew 1% and had a combined ratio of 97.4%.
• Chubb Commercial Insurance (CCI) net written premiums declined 6 to $1.3bn
• Combined ratio was 90.2% (87.2%)
• Catastrophes accounted for 1.0 percentage point (3.0 points)
• Excluding catastrophes, combined ratio was 89.2% (84.2%)
• Average first quarter renewal rates in the US were up 1% for CCI, which retained 85% of the US premiums that came up for renewal.
• Chubb Specialty Insurance (CSI) net written premiums down 10% to $630m
• Combined ratio was 85.1% (78.1%)
• Professional liability (PL) net written premiums declined 8%, and the business had a combined ratio of 91.3%
• Average first quarter renewal rates in the US were up 1% for PL, which retained 85% of the US premiums that came up for renewal
• Surety net written premiums were down 22%, and the combined ratio was 38.3%