December 5, 2017

Chubb Reports Second Quarter 2012 Results

Warren, NJ -(PRNewswire)- The Chubb Corporation [NYSE: CB] today reported that net income in the second quarter of 2012 was $404 million compared to $419 million in the second quarter of 2011. Net income per share increased 4% to $1.48 from $1.42.

Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, was $374 million in the second quarter of 2012, the same as in the second quarter of 2011. Operating income per share increased 8% to $1.37 from $1.27.

Average diluted shares outstanding for the second quarter were 273.3 million in 2012 and 295.4 million in 2011.

The impact of catastrophes in the second quarter of 2012 was $223 million before tax ($0.53 per share after tax); catastrophe losses during the quarter were related primarily to severe hail and wind storms from 13 catastrophe events in the United States. In the second quarter of 2011, the impact of catastrophes was $329 million before tax ($0.72 per share after tax).

The second quarter combined loss and expense ratio was 93.8% in 2012 compared to 94.9% in 2011. The impact of catastrophes accounted for 7.5 percentage points of the combined ratio in the second quarter of 2012, compared to 11.3 points in the second quarter of 2011. Excluding the impact of catastrophes, the second quarter combined ratio was 86.3% in 2012 and 83.6% in 2011.

The expense ratio for the second quarter of 2012 was 31.3%, the same as in the corresponding year-earlier quarter.

Net written premiums for the second quarter of 2012 increased 1% to $3.1 billion. Excluding the effect of foreign currency translation, premiums were up approximately 2%. Premiums increased 3% in the U.S. and declined 3% outside the U.S. (increased 1% in local currencies).

Property and casualty investment income after taxes for the second quarter declined 5% to $303 million in 2012 from $318 million in 2011.

Net income for the second quarter of 2012 reflected net realized investment gains of $47 million before tax ($0.11 per share after-tax), compared to $69 million before tax ($0.15 per share after-tax) in the second quarter of 2011.

During the second quarter, Chubb repurchased approximately 4.3 million shares of its common stock at a total cost of $305 million (an average of $71.63 per share). As of June 30, 2012, there remained approximately $658 million available for share repurchases under the current authorization.

“Chubb produced strong results in the second quarter of 2012 despite a high level of catastrophe losses,” said John D. Finnegan, Chairman, President and Chief Executive Officer. “Although catastrophe losses had an adverse impact of $0.53 per share, we still generated operating income of $1.37 per share and net income of $1.48 per share. Our combined ratio of 86.3% excluding catastrophes reflected strong underlying performance.

“We are also encouraged by the continued upward momentum of rate increases in all our businesses,” said Mr. Finnegan.

Six-Month Results
For the first six months of 2012, net income was $910 million or $3.31 per share compared with $928 million or $3.12 per share for the first half of 2011. Operating income for the first half of 2012 totaled $843 million or $3.07 per share compared with $779 million or $2.62 per share for the first half of 2011.

Average diluted shares outstanding for the first six months were 274.8 million in 2012 and 297.7 million in 2011.

The impact of catastrophes in the first six months of 2012 was $247 million before tax. In the first half of 2011, the impact of catastrophes was $599 million before tax. The impact of catastrophes on net income and operating income per share for the first six months was $0.58 in 2012 and $1.31 in 2011.

The combined ratio for the first six months was 92.0% in 2012 compared to 94.3% in 2011. The impact of catastrophes in the first half accounted for 4.2 percentage points of the combined ratio in 2012 and 10.4 points in 2011. Excluding the impact of catastrophes, the combined ratio in the first half was 87.8% in 2012 and 83.9% in 2011.

The expense ratio for the first six months was 31.7% in 2012 and 31.5% in 2011.

Net written premiums for the first six months of 2012 increased 2% to $6.0 billion. Excluding the effect of foreign currency translation, premiums were up approximately 3% in the first half of 2012. Premiums increased 4% in the U.S. and declined 2% outside the U.S. (increased 1% in local currencies).

Property and casualty investment income after taxes for the first six months declined 3% to $611 million in 2012 from $628 million in 2011.

Net income for the first six months of 2012 reflected net realized investment gains of $103 million before tax ($0.24 per share after-tax). Net income for the first half of 2011 reflected net realized investment gains of $229 million before tax ($0.50 per share after-tax).

During the first six months of 2012, Chubb repurchased approximately 8.6 million shares of common stock at a total cost of $606 million (an average of $70.01 per share).

Outlook for 2012
“In light of our performance in the first half of the year and our outlook for the second half,” said Mr. Finnegan, “we have increased our guidance for full year 2012 operating income per share to a range of $5.70 to $5.95 from the $5.30 to $5.70 range we provided in our January 2012 guidance. We have raised our guidance despite an increase in our catastrophe loss assumption for the full year from 3.5 percentage points to 4.3 points, largely reflecting higher than expected catastrophe losses in the first six months.”

The impact of each percentage point of catastrophe losses on 2012 full year operating income per share is approximately $0.28.

The revised guidance also assumes for full year 2012:

  • A 1% to 3% increase in net written premiums, including a 1% negative impact of foreign currency translation based on exchange rates as of June 30, 2012.
  • A combined ratio between 93% and 94%.
  • A decline of 4% to 6% in property and casualty investment income after taxes.
  • Approximately 271 million average diluted shares outstanding for the year.

Guidance and related assumptions are subject to the risks outlined in the company’s forward-looking information safe-harbor statements.

Second Quarter Operations Review
Chubb Personal Insurance (CPI) net written premiums increased 4% in the second quarter of 2012 to $1.1 billion. CPI’s combined ratio for the quarter was 91.2%, compared to 96.9% in the second quarter of 2011. The impact of catastrophe losses in the second quarter accounted for 11.5 percentage points of the combined ratio in 2012 and 14.5 points in 2011. Excluding the impact of catastrophe losses, CPI’s second quarter combined ratio was 79.7% in 2012 and 82.4% in 2011.

Net written premiums for Homeowners increased 4%, and the combined ratio was 90.3%. Personal Automobile net written premiums increased 2%, and the combined ratio was 93.2%. Other Personal lines premiums increased 8%, and the combined ratio was 92.6%.

Chubb Commercial Insurance (CCI) net written premiums were up 3% in the second quarter to $1.4 billion. The combined ratio for the second quarter was 97.5% in 2012 and 102.5% in 2011. The impact of catastrophe losses in the second quarter accounted for 8.2 percentage points of the combined ratio in 2012 and 15.2 points in 2011. Excluding the impact of catastrophe losses, CCI’s second quarter combined ratio was 89.3% in 2012 and 87.3% in 2011.

Average second quarter renewal rates in the U.S. were up 9% for CCI, which retained 84% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 0.9 to 1.

Chubb Specialty Insurance (CSI) net written premiums were down 6% in the second quarter to $638 million. The second quarter combined ratio was 91.4% in 2012 and 80.0% in 2011.

Professional Liability (PL) net written premiums were down 7%, and the business had a combined ratio of 97.9%. In the U.S., average second quarter PL renewal rates were up 7%, premium renewal retention was 82% and the ratio of new to lost business was 0.7 to 1.

Surety net written premiums were down 2%, and the combined ratio was 42.8%.

The complete release is available here: Chubb Second Quarter 2012 Results

Source: PRNewswire

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