Thursday, property and casualty insurance provider Chubb Corp. (CB), reported a third-quarter profit that more than doubled year-over-year, reflecting a 63% surge in operating income and a benign hurricane season, notwithstanding a 7% decline in total net written premiums. As a result, the insurer raised its operating earnings outlook for fiscal year 2009.
The Warren, New Jersey based company's net income for the third quarter surged to $596 million or $1.69 per share from $264 million or $0.73 per share in the year-ago quarter.
Operating income, defined as net income excluding after-tax realized investment gains and losses, for the quarter was $552 million, up from $338 million in the prior-year quarter. On a per share basis, operating income increased 68% to $1.56 from $0.93 last year.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $1.27 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the preceding second quarter, Chubb reported a net income that increased to $551 million or $1.54 per share from $469 million or $1.27 per share in the same quarter last year.
Total net written premiums for the recent third quarter decreased 7% to $2.70 billion from $2.90 billion in the comparable quarter last year. Excluding the effect of foreign currency translation, total net premiums declined 5%. Premiums dropped 7% in the U.S. and outside the U.S. respectively, while it increased 1% in local currencies. Analysts expected the company to report revenue of $2.83 billion for the quarter.
For the preceding second quarter, net premiums written declined 7% to $2.85 billion from $3.05 billion in the comparable quarter last year. Premiums, excluding the effect of foreign currency translation, were down about 3%. Premiums decreased 5% in the U.S. and premiums written outside the US fell 12%, while it increased 3% in local currencies.
Premiums earned for the third quarter under review were $2.84 billion, down from $2.96 billion in the prior year quarter.
Property and casualty income for the quarter was $801 million, up from $484 million in the previous year period. Property and casualty investment income after taxes for the quarter declined 3% to $317 million from $327 million in the year-earlier period. Underwriting income for the quarter surged to $423 million from $69 million in the year-earlier period.
Combined loss and expense ratio for the quarter was 85.4% , down from 98.1% in the year-earlier period. The impact of catastrophe losses in the third quarter of 2008 accounted for 0.8 percentage points of the combined ratio and was principally related to Hurricane Ike. Expense ratio was 31.2% in 2009 quarter and 30.2% in 2008.
John D. Finnegan, "Following a very strong second quarter, Chubb delivered even better financial results in the third quarter."
Segment-wise, Chubb Personal Insurance net written premiums for the quarter declined 5% year-over-year to $961 million. Combined ratio for the quarter shrank to 81.6% from 100.7% in the previous-year quarter. Catastrophe losses during the quarter accounted for 16.3 percentage points in the latest quarter.
Personal Insurance included net written premiums for Homeowners that decreased 4%, with a combined ratio of 77.3%. Personal Automobile net written premiums declined 3%, with a combined ratio of 87.2%. Other personal lines decreased 10% with a combined ratio of 90.9%.
Chubb Commercial Insurance net written premiums for the quarter declined 8% to $1.1 billion from the prior year quarter. Combined ratio for the second quarter was 90.5% in 2009. For the quarter, Catastrophe losses accounted for 2.6 percentage points, compared to 19.9 percentage points a year-ago.
Chubb Specialty Insurance net written premiums for the quarter declined 6% to $669 million, while combined ratio was 83.6%, compared to 82.3% in the previous year quarter. Professional Liability net written premiums declined 5%, with a combined ratio of 90.0%. Surety net written premiums dropped 12%, and the combined ratio was 32.5%.
During the third quarter of 2009, Chubb repurchased 8.7 million shares of its common stock at a total cost of $412 million. At September 30, 2009, there were 7.00 million shares of common stock remaining under the current repurchase authorization.
Looking ahead to fiscal year 2009, Chubb now expects operating earnings in the range of $5.90 - $6.00 per share, compared to earlier issued forecast of $5.20 - $5.50 per share. The revised guidance is based on operating income per share of $4.49 in the first nine months and forecast range of $1.41 - $1.51 per share for the fourth quarter. Analysts currently anticipate the company to earn $5.15 per share for the full year.
For the nine-month period, net income rose to $1.50 billion or $4.18 per share from $1.40 billion or $3.78 per share in the year-earlier period.
Operating income for nine months increased 8% to $1.60 billion from $1.48 billion last year. Operating income per share for the period increased 13% to $4.49 from $3.99.
Total net written premiums for the nine months declined 7% to $8.30 billion from $8.90 billion in the comparable period last year. Premiums earned were $8.50 billion, down from $8.92 billion a year ago.
Excluding the effect of foreign currency translation, premiums were down about 4%. Premiums declined 5% in the U.S. and declined 11% outside the U.S., while premiums increased 3% in local currencies.
Amongst others in the industry, St. Paul, Minnesota-based Property casualty insurance provider Travelers Companies Inc. (TRV), on October 22, posted a third-quarter profit that rose more than four fold. The company's third-quarter net income was $935 million or $1.65 per share, compared to $214 million or $0.36 per share in the prior-year quarter. Operating income was $914 million or $1.61 per share for the third-quarter ended September 30, 2009, compared to $330 million or $0.55 per share in the corresponding quarter of the previous year. Total revenue for the latest quarter advanced to $6.33 billion from the previous year's revenue of $6.15 billion
CB closed Thursday's regular trading at $53.79, up $2.64 or 5.16%, on a volume of 5.00 million shares on the NYSE. In after hours, the stock lost $1.02 or 1.90%, trading at $53.15. In the past 52 weeks, the stock trended in a broad range of $34.44 - $53.79, with a three-month average volume of 2.58 million shares.
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