Chubb hurt by catastrophes

Chubb reported that net income in the first quarter of 2010 was $464m compared to $341m in the first quarter of 2009 but operating income fell to $381m compared with $514m in the first quarter of 2009.

It blamed catastrophes for $344m pre-tax, compared with $26m pre-tax in the first quarter of 2009. The $344m includes the higher than stated impact of a late-March storm on the East Coast of the US.

Net written premiums grew 1% to $2.8bn, Chubb said but excluding the effect of currency fluctuation, premiums were down 3%. Premiums fell 4% in the US and increased 16% outside the US (up 2% in local currencies).

Combined ratio

Chubb’s combined loss and expense ratio was 93.6% in 2010 compared to 88.1% in 2009. Catastrophes accounted for 12.3 percentage points of the combined ratio in the first quarter of 2010, compared to 0.9 percentage points in the first quarter of 2009.

Excluding the impact of catastrophes, the combined ratio was 81.3% in 2010 and 87.2% in 2009, Chubb said.

Property and casualty investment income after taxes for the first quarter increased 2% to $313m in 2010 from $306m in 2009.

Natural catastrophes

“The headline for the property and casualty insurance industry in the first quarter was the extraordinary level of natural catastrophes worldwide, including the earthquake in Chile, storms in Australia and Europe and several severe storms on the East Coast of the US,” said John Finnegan, chairman, president and chief executive officer.

“Although these catastrophes had a negative impact of $0.67 per share on Chubb's first quarter results, we still produced strong operating income of $1.14 per share for the quarter -- an excellent result.

“This reflected outstanding underwriting results, with a combined ratio excluding catastrophes of 81.3%, nearly 6 percentage points better than a year ago.

“This was our best combined ratio excluding catastrophes since 2007 and was driven by strong contributions from all of our business units.”

During the first quarter of 2010, Chubb repurchased 7m shares of its common stock at a total cost of $344m (an average of $49.47 per share). As of March 31, 2010, there were 15.2m shares of common stock remaining for repurchase under the current authorisation.

Personal lines

Chubb Personal Insurance (CPI) net written premiums increased 4% in the to $874m. CPI's combined ratio f was 104.4%, compared to 90.0% in the first quarter of 2009.

The impact of catastrophes accounted for 22.8 percentage points compared to 1.5 points in 2009. Excluding the impact of catastrophes, CPI’s first quarter combined ratio was 81.6% in 2010 and 88.5% in 2009.

Homeowners

Net written premiums for Homeowners increased 1%, and the combined ratio was 113.3% compared to 88.2% in the year-ago first quarter.

The impact of catastrophes accounted for 35.1 percentage points of the Homeowners combined ratio in 2010 compared to 2.4 points in 2009. Excluding the impact of catastrophes, the combined ratio for Homeowners i was 78.2% in 2010 and 85.8% in 2009.

In the first quarter of 2010, Personal Automobile net written premiums increased 11%, and the combined ratio was 91.5%. Other Personal lines grew 7% and had a combined ratio of 87.5%.

Commercial lines

Chubb Commercial Insurance (CCI) net written premiums declined 1% in the to $1.2bn. The combined ratio for was 93.8% in 2010 and 90.2% in 2009. The impact of catastrophes accounted for 11.4 percentage points compared to 1.0 points in 2009. Excluding the impact of catastrophes, CCI’s first quarter combined ratio was 82.4% in 2010 and 89.2% in 2009.

Average first quarter renewal rates in the US were up 1% for CCI, which retained 84% of the US premiums that came up for renewal.

Speciality

Chubb Specialty Insurance (CSI) net written premiums were up 3% to $646m. The combined ratio for CSI was 80.9%, compared to 85.1% in 2009.

Professional Liability (PL) net written premiums were up 3%, and the business had a combined ratio of 86.2%. Average first quarter renewal rates in the US were down 1% for PL, which retained 85% of the US premiums that came up for renewal.

Surety net written premiums were down 1%, and the combined ratio was 39.8%.