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Chubb Reports First Quarter Net Income per Share of $1.80; Operating Income per Share Is $1.50; Combined Ratio of 93.2% Includes 6.6 Point Impact of...

May 9, 2014



Chubb Reports First Quarter Net Income per Share of $1.80; Operating Income per Share Is $1.50; Combined Ratio of 93.2% Includes 6.6 Point Impact of Catastrophes

By a News Reporter-Staff News Editor at Insurance Weekly News -- The Chubb Corporation (NYSE: CB) reported that net income in the first quarter of 2014 was $449 million, compared to $656 million in the first quarter of 2013. First quarter net income per share was $1.80 in 2014 and $2.48 in 2013.

Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, was $374 million in the first quarter of 2014 and $566 million in the first quarter of 2013. First quarter operating income per share was $1.50 in 2014 and $2.14 in 2013.

Chubb's results for the first quarter of 2014 were adversely affected by catastrophe losses of $199 million before tax ($0.52 per share after tax) related mostly to severe winter weather in the United States. In the first quarter of 2013, the adverse impact of catastrophes was $18 million before tax ($0.04 per share after tax).

The first quarter combined loss and expense ratio was 93.2% in 2014 and 84.6% in 2013. The impact of catastrophes on the first quarter combined ratio was 6.6 percentage points in 2014 and 0.6 points in 2013. Excluding the impact of catastrophes, the first quarter combined ratio was 86.6% in 2014 and 84.0% in 2013. The expense ratio for the first quarter was 32.1% in 2014 and 32.3% in 2013.

Net written premiums for the first quarter of 2014 were $3.1 billion, flat compared to the first quarter of 2013. Excluding the effect of foreign currency translation, premiums were up approximately 1%. Premiums were up 3% in the U.S. and down 6% outside the U.S. (down 4% in local currencies).

Property and casualty investment income after taxes for the first quarter declined 4% to $277 million in 2014 from $288 million in 2013.

Net income for the first quarter of 2014 reflected net realized investment gains of $116 million before tax ($0.30 per share after tax). Net income for the first quarter of 2013 reflected net realized investment gains of $138 million before tax ($0.34 per share after tax).

"Chubb produced solid results in the first quarter of 2014," said John D. Finnegan, Chairman, President and Chief Executive Officer. "Results were adversely impacted by several factors, including catastrophe and non-catastrophe losses related to severe winter weather in the United States. Chubb also suffered an unusually high level of Homeowners fire losses after many quarters with relatively benign loss experience. Although catastrophe losses alone had an adverse impact of $0.52 per share in the first quarter, we still generated operating income of $1.50 per share and net income of $1.80 per share, reflecting a combined ratio of 86.6% excluding catastrophes," he said.

"We remain encouraged by the mid-to-high-single-digit increases in our rate change metrics that we achieved in all of our business units during the first quarter, while enjoying an overall increase in renewal retention," said Mr. Finnegan.

During the first quarter of 2014, Chubb repurchased approximately 4.7 million shares of its common stock at a total cost of $409 million (an average cost per share of $86.73). As of March 31, 2014, there was $1.2 billion available for share repurchases under the current authorization.

Average diluted shares outstanding for the first quarter were 249.2 million in 2014 and 264.8 million in 2013.

Book value per share was $66.36 at March 31, 2014, compared to $61.79 at March 31, 2013 and $64.83 at December 31, 2013.

First Quarter Operations Review

Chubb Personal Insurance (CPI) net written premiums increased 3% in the first quarter to $1.0 billion. CPI's combined ratio for the quarter was 101.8%, compared to 87.0% in the first quarter of 2013. The first quarter impact of catastrophes accounted for 11.2 percentage points of the combined ratio in 2014 and 3.9 points in 2013. Excluding the impact of catastrophes, CPI's first quarter combined ratio was 90.6% in 2014 and 83.1% in 2013.

Net written premiums for Homeowners increased 4%, and the combined ratio was 104.9%. The impact of catastrophes in the first quarter accounted for 17.9 percentage points of the Homeowners combined ratio. Excluding the impact of catastrophes, the combined ratio for Homeowners was 87.0%. Personal Automobile premiums declined 2%, and the combined ratio was 101.4%. For Other Personal lines, premiums increased 3% and the combined ratio was 92.4%.

Chubb Commercial Insurance (CCI) net written premiums declined 1% in the first quarter to $1.4 billion. The combined ratio for the quarter was 88.5% in 2014 and 81.9% in 2013. The impact of catastrophes on the CCI combined ratio in the first quarter of 2014 was 6.1 percentage points. The impact of catastrophes in the first quarter of 2013 improved CCI's combined ratio by 1.7 points. Excluding the impact of catastrophes, CCI's first quarter combined ratio was 82.4% in 2014 and 83.6% in 2013.

In the United States, average first quarter CCI renewal rates increased 5%, renewal premium retention was 85% and the ratio of new to lost business was 0.9 to 1.

Chubb Specialty Insurance (CSI) net written premiums declined 1% in the first quarter to $624 million. The combined ratio for CSI was 88.9%, compared to 87.4% in the first quarter of 2013.

Professional Liability (PL) net written premiums grew 1%, and the combined ratio was 84.6%. In the United States, average first quarter renewal rates for PL increased 7%, renewal premium retention was 85% and the ratio of new to lost business was 0.9 to 1.

Surety net written premiums were down 13%, and the combined ratio was 122.9% driven by one large loss.

Webcast Conference Call to be Held Today at 5 P.M.

Chubb's senior management will discuss the company's first quarter performance with investors and analysts today, April 24th, at 5 P.M. Eastern Daylight Time. The conference call will be webcast live on the Internet at http://www.chubb.com and archived later in the day for replay.

Keywords for this news article include: Homeowners, Real Estate, Chubb Corporation.

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Source: Insurance Weekly News