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Chubb 2Q Net Down 8%; Results Hurt By Disaster Claims

Source: Dow Jones

Posted on 23 Jul 2010

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Chubb Corp.'s second-quarter earnings dropped 8% but its operating income fell less than analysts predicted, as catastrophes again took a bite out of the property-and-casualty insurer's bottom line.

Catastrophes costs more than quadrupled in the most recent period, cutting earnings by 38 cents a share. After a long stretch of relative calm, property-and-casualty insurers have been buffeted by high disaster claims in the last two quarters. The most recent period was marked by hailstorms in Oklahoma, thunderstorms in Michigan, Ohio and Illinois and record flooding in parts of Tennessee, while the prior quarter included a large earthquake in Chile and vicious winter storms in the U.S.

In recent quarters, Chubb derived some buoyancy from strengthening equities while underwriting income declined, but in the most recent period, stocks retrenched, falling about 12%. Its conservative approach to underwriting and investing ushered it through the financial crisis relatively unscathed, and it picked up new business from struggling competitors.

Chubb posted a profit of $518 million, or $1.59 a share, compared with $551 million, or $1.54 a share, a year earlier. The company had 8.6% fewer shares outstanding. Operating income, which excludes realized investment gains and losses, fell to $1.41 from $1.49 as net written premiums increased 1.4% to $2.89 billion.

Analysts surveyed by Thomson Reuters had estimated operating income of $1.39 on $2.8 billion in net written premiums.

Underwriting income fell 34% to $263 million.

The combined loss-and-expense ratio, or portion of premium dollars spent on claims and expenses, rose to 90.4% from 85.9%.