Chubb's Q1 Edged Down .06%, Premium Growth Improving with Price Increases

Source: Dow Jones

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Posted on 20 Apr 2012

Chubb Corp.'s first-quarter profit edged down 0.6% amid weaker investment gains, while the property-and-casualty insurer's core operating earnings improved sharply on stronger underwriting income.

Chubb, like many U.S. property insurers, reported mostly weaker core earnings last year as catastrophe losses ballooned following a series of massive disasters, including a rash of destructive tornadoes and damage from Hurricane Irene. Insurers' investment portfolios have also struggled to recompense the disaster costs because of doggedly low interest rates.

At the same time, Chubb has continued to report stronger premium growth as its pricing improves. The company signaled its optimism in January when it launched a new $1.2 billion stock buyback program and the following month said it would raise its quarterly dividend by 5.1%, to 41 cents a share.

"We are especially encouraged by the momentum of renewal-rate increases we experienced during the quarter in both standard-commercial and specialty lines, as well as the continued rate improvement in personal lines," Chairman and Chief Executive John D. Finnegan said Thursday.

In the latest quarter, Chubb posted a profit of $506 million, down from $509 million a year earlier. On a per-share basis, earnings rose to $1.83 from $1.70 as the latest period had about 7.9% fewer shares outstanding.

Operating income, which excludes realized investment gains and losses, grew to $1.70 from $1.35 on a per-share basis as net premiums written increased 3.2% to $2.95 billion.

Analysts polled by Thomson Reuters expected $1.52 a share in operating income with $2.99 billion of net premiums written.

Overall underwriting income rose 50% to $303 million as losses, loss expenses and operating costs edged down.

The combined loss-and-expense ratio, or portion of premium dollars spent on claims and expenses, improved to 90.2% from 93.7%. Excluding the impact of catastrophes, the combined ratio increased to 89.2% from 84.2%.