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Chubb Q1 Profit Rises

Source: Trading Markets

Posted on 23 Apr 2010

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Property and casualty insurance service provider The Chubb Corp., Thursday reported a sharp increase in first quarter profit, helped mainly by the absence of huge investment losses recorded in the prior year.

Consolidated net income of the Warren, New Jersey-based company rose to $464 million or $1.39 per share from $341 million or $0.95 per share in the same quarter a year ago.

Operating income for the first quarter was $381 million, compared to $514 million in the year-ago quarter. On a per share basis, operating income declined 20% to $1.14 in the first quarter, from $1.43 in the year ago quarter of 2009. Operating income is defined by the company as net income excluding after-tax realized investment gains and losses.

On average, twenty-one analysts expected the company to earn $0.96 per share for the quarter. Analysts' estimates typically excludes one-time items.

Current quarter reflects net realized investment gains of $127 million pre-tax or $0.25 per share after-tax, while prior year reflects net realized investment losses, including impairments, of $266 million pre-tax or $0.48 per share after-tax.

During the quarter, Chubb incurred a one-time tax charge of $22 million or $0.07 per share related to the recently enacted federal health care legislation.

The impact of catastrophes on the quarter was $344 million pre-tax, which includes the impact of a late-March storm on the East Coast of the U.S., compared with $26 million pre-tax in the first quarter of 2009.

The impact included losses and loss expenses net of reinsurance recoverable and also includes reinsurance reinstatement premiums. Its impact on first quarter net income and operating income was $0.67 per share in 2010 and $0.05 per share in 2009.

Combined loss and expense ratio was 93.6% for the quarter, compared to 88.1% in 2009. The impact of catastrophes accounted for 12.3 percentage points of the combined ratio, compared to 0.9 percentage points in the year ago quarter. Excluding the impact, the first quarter combined ratio was 81.3% and 87.2% in the first quarter of 2009.

Sequentially, in the fourth quarter, Chubb reported a profit that increased to $695 million or $2.03 per share from $407 million or $1.13 per share in the year-ago quarter.

Net written premiums for the quarter increased 1% to $2.77 billion from $2.74 billion in the same quarter last year. Excluding the effect of currency fluctuation, premiums were down 3%. Premiums declined 4% in the U.S. and increased 16% outside the U.S.

In the sequential fourth quarter total net written premiums were down 4% at $2.78 billion, compared to $2.90 billion in the corresponding quarter last year.

Total personal insurance net written premiums rose 4% to $874 million, Specialty insurance net written premiums increased 3% at $646 million, while Commercial insurance net written premiums were down 1% at $1.24 billion.

Operating costs and expenses increased to $862 million from $843 million in the year-ago quarter.

Amongst others in the industry, property and casualty insurance provider Travelers Companies Inc., in its fourth quarter, reported a 60% surge in profit, bolstered by a 49% increase in net investment income. Travelers' net income was $1.29 billion or $2.36 per share, while revenue advanced 11% to $6.46 billion.