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Chubb 4Q Profit Drops 27% On Losses, Despite Higher Premiums

Source: Dow Jones

Posted on 27 Jan 2012

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Chubb Corp.'s fourth-quarter earnings fell 27% on higher losses and loss expenses, as the property-and-casualty insurer's core profit also dropped despite more written premium growth.

Separately Thursday, Chubb said its board authorized a new share buyback program of up to $1.2 billion in shares. Based on the stock's closing price, that represents roughly 6.3% of its current market value. Chairman and Chief Executive John D. Finnegan said the move reflected the company's strong financial condition and commitment to capital management.

Finnegan also reported encouraging moves in commercial rates in the latest period. The company had noted signs of pricing improvement in standard commercial book in previous quarters as well.

"We secured an average renewal rate increase of 6% in our U.S. standard commercial business, and average renewal rates in our U.S. professional liability business turned positive for the first time in two years," Finnegan said Thursday.

Losses from catastrophes that occurred in the fourth quarter were partially offset by a downward revision of estimated losses from Hurricane Irene and other catastrophes which occurred earlier in the year.

In past quarters, property insurers struggled with exceptionally high catastrophe losses, including costs from Japan's earthquake and tsunami, a rash of destructive tornadoes in the U.S. and Hurricane Irene damage in the Caribbean and a large swath of the U.S. East Coast. Additionally, insurers' investment portfolios have struggled to recompense the disaster costs because of doggedly low interest rates lately.

For Chubb, recent quarterly results have exceeded expectations. During the financial crisis, the company's conservative approach to underwriting and investing insulated it.