WARREN, N.J., April 21, 2011 /PRNewswire/ — The Chubb Corporation (NYSE: CB) today reported that net income in the first quarter of 2011 was $509 million compared to $464 million in the first quarter of 2010. Net income per share increased 22% to $1.70 from $1.39 per share.
Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, was $405 million in the first quarter of 2011 and $381 million in the first quarter of 2010. First quarter operating income per share increased 18% to $1.35 in 2011 from $1.14 in 2010.
The impact of catastrophes in the first quarter of 2011 was $270 million before tax, including winter storms in the U.S., flooding in Australia, and earthquakes in New Zealand and Japan. In the first quarter of 2010, the impact of catastrophes was $344 million before tax. The impact of catastrophes on first quarter net income and operating income per share was $0.59 in 2011 and $0.67 in 2010. The impact of catastrophes includes losses and loss expenses net of reinsurance recoverable and also includes reinsurance reinstatement premiums.
The first quarter combined loss and expense ratio was 93.7% in 2011 compared to 93.6% in 2010. The impact of catastrophes accounted for 9.5 percentage points of the combined ratio in the first quarter of 2011, compared to 12.3 percentage points in the first quarter of 2010. Excluding the impact of catastrophes, the first quarter combined ratio was 84.2% in 2011 and 81.3% in 2010.
The expense ratio for the first quarter was 31.7% in 2011 and 31.3% in 2010.
Net written premiums for the first quarter increased 3% to $2.9 billion. Premiums increased 1% in the U.S. and 10% outside the U.S. (9% in local currencies).
Property and casualty investment income after taxes for the first quarter declined 1% to $310 million in 2011 from $313 million in 2010.
Net income for the first quarter of 2011 reflected net realized investment gains of $160 million pre-tax ($0.35 per share after-tax). Net income for the first quarter of 2010 reflected net realized investment gains of $127 million pre-tax ($0.25 per share after-tax). The gains in both quarters related mostly to the company’s alternative investments.
“The big story for the property and casualty insurance industry in the first quarter was the high level of natural catastrophes around the globe,” said John D. Finnegan, Chairman, President and Chief Executive Officer. “Although these catastrophes had a negative impact of $0.59 per share on Chubb’s first quarter results, we still produced strong operating income per share of $1.35 and net income per share of $1.70. Our combined ratio of 84.2% excluding catastrophes reflected continued outstanding underwriting performance across all of our business units.
“While the property and casualty market environment remained competitive,” said Mr. Finnegan, “net written premiums increased 3% for the second consecutive quarter, an encouraging sign. This is a positive change from the flat to negative premium growth, excluding the effect of currency fluctuation, that we experienced during each of the past five calendar years.”
During the first quarter of 2011, Chubb repurchased approximately 6.6 million shares of its common stock at a total cost of $387 million (an average of $58.91 per share). As of March 31, 2011, there were 21.9 million shares of common stock remaining for repurchase under the current authorization.
Average diluted shares outstanding for the first quarter were 300.0 million in 2011 and 335.0 million in 2010.
First Quarter Operations Review
Chubb Personal Insurance (CPI) net written premiums increased 2% in the first quarter to $894 million. CPI’s combined ratio for the quarter was 93.8%, compared to 104.4% in the first quarter of 2010. The first-quarter impact of catastrophes accounted for 7.8 percentage points in 2011, compared to 22.8 points in 2010. Excluding the impact of catastrophes, CPI’s first quarter combined ratio was 86.0% in 2011 and 81.6% in 2010.
Net written premiums for Homeowners increased 3%, and the combined ratio was 94.8%. The impact of catastrophes in the first quarter accounted for 12.3 percentage points of the Homeowners combined ratio. Excluding the impact of catastrophes, the combined ratio for Homeowners was 82.5%. Personal Automobile premiums increased 11%, and the combined ratio was 92.8%. For Other Personal lines, premiums declined 6% and the combined ratio was 92.2%.
Chubb Commercial Insurance (CCI) net written premiums increased 7% in the first quarter to $1.3 billion. The combined ratio for the quarter was 100.7% in 2011 and 93.8% in 2010. The impact of catastrophes in the first quarter accounted for 16.2 percentage points of the combined ratio in 2011, compared to 11.4 points in 2010. Excluding the impact of catastrophes, CCI’s first quarter combined ratio was 84.5% in 2011 and 82.4% in 2010.
Average first quarter renewal rates in the U.S. were flat for CCI, and renewal premium retention was 87%. In the U.S., the ratio of new to lost business was 1.3 to 1.
Chubb Specialty Insurance (CSI) net written premiums were down 1% in the first quarter to $639 million. The combined ratio for CSI was 82.4%, compared to 80.9% in the first quarter of 2010.
Professional Liability (PL) net written premiums were down 3%, and the business had a combined ratio of 86.8%. Average first quarter renewal rates for PL in the U.S. were down 3%, and renewal premium retention was 87%. In the U.S., the ratio of new to lost business was 1.1 to 1.
Surety net written premiums were up 16%, and the combined ratio was 50.5%.
The full earnings release is available here (PDF).
Source: PRNewswire