December 15, 2017

Chubb Reports Third Quarter 2013 Results

Warren, NJ -(PRNewswire)- The Chubb Corporation [NYSE: CB] recently reported that net income in the third quarter of 2013 was $541 million compared to $533 million in the third quarter of 2012. Net income per share increased 6% to $2.10 from $1.98.

Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, was $529 million in the third quarter of 2013 compared to $533 million in the third quarter of 2012. Operating income per share increased 4% to $2.06 from $1.98.

Average diluted shares outstanding for the third quarter were 257.1 million in 2013 and 269.2 million in 2012.

The third quarter impact of catastrophes before tax was $92 million in 2013 and $17 million in 2012. The impact of catastrophes on third quarter net income and operating income per share was $0.23 in 2013 and $0.04 in 2012.

The third quarter combined loss and expense ratio improved to 85.7% in 2013 from 86.3% in 2012. The impact of catastrophes accounted for 3.0 percentage points of the combined ratio in the third quarter of 2013, compared to 0.6 percentage points in the third quarter of 2012. Excluding the impact of catastrophes, the third quarter combined ratio improved to 82.7% in 2013 from 85.7% in 2012.

The expense ratio for the third quarter was 32.7% in 2013 and 32.5% in 2012.

Net written premiums increased 4% in the third quarter of 2013 to $3.0 billion. Foreign currency translation had an insignificant effect on third quarter premium growth. Premiums increased 5% in the U.S. and were flat outside the U.S. (were up 1% in local currencies).

Property and casualty investment income after taxes for the third quarter declined 6% to $280 million in 2013 from $297 million in 2012.

Net realized investment gains before tax for the third quarter of 2013 were $18 million or $0.04 per share after tax, compared to net realized investment losses of less than $1 million in the third quarter of 2012.

During the third quarter, Chubb repurchased 3.8 million shares of its common stock at a total cost of $326 million (an average of $86.17 per share). As of September 30, 2013, there remained approximately $433 million available for share repurchases under the current authorization.

“Chubb had an outstanding third quarter,” said John D. Finnegan, Chairman, President and Chief Executive Officer. “We produced operating income per share of $2.06, the second-highest of any quarter in our history. Our combined ratio was an excellent 85.7%, reflecting the impact of higher rates and strong underwriting performance in all our business units as well as relatively low catastrophe losses. During the quarter, the market tone in the U.S. remained firm in both our standard commercial and specialty lines business units, where we achieved high-single-digit renewal rate increases and higher retention levels.”

Nine-Month Results
For the first nine months of 2013, net income was $1.8 billion or a record $6.80 per share, compared with $1.4 billion or $5.29 per share for the first nine months of 2012. Operating income for the first nine months totaled $1.6 billion or a record $5.97 per share in 2013, compared with $1.4 billion or $5.04 per share in 2012.

Average diluted shares outstanding for the first nine months were 261.1 million in 2013 and 272.9 million in 2012.

The impact of catastrophes in the first nine months of 2013 was $347 million before tax. In the first nine months of 2012, the impact of catastrophes was $264 million before tax. The impact of catastrophes on net income and operating income per share for the first nine months was $0.86 in 2013 and $0.63 in 2012.

The combined ratio for the first nine months improved to 86.4% in 2013 from 90.1% in 2012. The impact of catastrophes in the first nine months accounted for 3.9 percentage points of the combined ratio in 2013 and 3.0 points in 2012. Excluding the impact of catastrophes, the combined ratio in the first nine months improved to 82.5% in 2013 from 87.1% in 2012.

The expense ratio for the first nine months was 32.3% in 2013 and 32.0% in 2012.

Net written premiums increased 2% in the first nine months of 2013 to $9.2 billion. Foreign currency translation had an insignificant effect on premium growth in the first nine months. Premiums increased 3% in the U.S. and increased 1% outside the U.S. (increased 3% in local currencies).

Property and casualty investment income after taxes for the first nine months declined 6% to $854 million in 2013 from $908 million in 2012.

Net income for the first nine months of 2013 reflected net realized investment gains of $335 million before tax ($0.83 per share after-tax). Net income for the first nine months of 2012 reflected net realized investment gains of $103 million before tax ($0.25 per share after-tax).

During the first nine months of 2013, Chubb repurchased 11.4 million shares of common stock at a total cost of $975 million (an average of $85.39 per share).

Revised Guidance for 2013
“Based on our record operating income per share for the first nine months and our outlook for the fourth quarter,” said Mr. Finnegan, “we are increasing our full year 2013 operating income per share guidance to a range of $7.90 to $8.00 from the $7.30 to $7.50 range we provided in July 2013. This revised guidance is based on operating income per share of $5.97 for the first nine months and an estimated range of $1.93 to $2.03 for the fourth quarter.”

The revised guidance for 2013 operating income per share assumes an impact on the combined ratio from catastrophes of 2 percentage points in the fourth quarter, resulting in an assumed impact of catastrophes for the year of 3.4 points, compared to an assumption of 4.6 points for the year in the July 2013 guidance. The impact of each percentage point of catastrophe losses on 2013 full year operating income per share is approximately $0.30.

The revised guidance assumes 259 million average diluted shares outstanding for the year, unchanged from the previous guidance.

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

Third Quarter Operations Review
Chubb Personal Insurance (CPI) net written premiums increased 4% in the third quarter of 2013 to $1.1 billion. CPI’s combined ratio was 88.3%, compared to 82.8% in the third quarter of 2012. The impact of catastrophe losses in the third quarter accounted for 7.0 percentage points of the combined ratio in 2013 and 1.5 points in 2012. Excluding the impact of catastrophe losses, CPI’s third quarter combined ratio was 81.3% in both 2013 and 2012.

Net written premiums for Homeowners increased 4%, and the combined ratio was 84.3%. Personal Automobile net written premiums increased 9%, and the combined ratio was 95.8%. Other Personal lines premiums were flat, and the combined ratio was 94.9%.

Chubb Commercial Insurance (CCI) net written premiums were up 4% in the third quarter of 2013 to $1.3 billion. The combined ratio for the third quarter was 85.2% in 2013 and 87.2% in 2012. The impact of catastrophe losses in the third quarter accounted for 1.4 percentage points of the combined ratio in 2013 and 0.2 points in 2012. Excluding the impact of catastrophe losses, CCI’s third quarter combined ratio was 83.8% in 2013 and 87.0% in 2012.

In the U.S., average third quarter CCI renewal rates were up 7%, premium renewal retention was 85% and the ratio of new to lost business was 0.9 to 1.

Chubb Specialty Insurance (CSI) net written premiums increased 5% in the third quarter of 2013 to $670 million. The combined ratio was 82.3% compared to 91.9% in the third quarter of 2012.

Professional Liability (PL) net written premiums were up 5%, and the business had a combined ratio of 87.6%. In the U.S., average third quarter PL renewal rates were up 8%, premium renewal retention was 86% and the ratio of new to lost business was 0.8 to 1.

Surety net written premiums were up 4%, and the combined ratio was 41.3%.

The complete earnings release is available here: Chubb Third Quarter 2013 Results (PDF)

Source: PRNewswire

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