Thursday, property and casualty insurance provider Chubb Corp. (CB) reported a fourth-quarter profit that increased from last year, reflecting a 5% growth in operating income per share, notwithstanding a 4% decline in total net written premiums. Looking ahead, the insurer initiated its operating earnings outlook for fiscal year 2010.
The Warren, New Jersey based company reported net income for the fourth quarter of $695 million or $2.03 per share, compared to $407 million or $1.13 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 $569 million, flat with the fourth quarter of 2008. Operating income per share increased 5% to $1.66 from $1.58 in the same quarter last year.
On average, twenty-one analysts polled by Thomson Reuters expected the company to earn $1.46 per share for the quarter. Analysts estimates typically exclude special items.
Total net written premiums for the fourth quarter decreased 4% to $2.78 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 8% in the U.S. and up 9% outside the U.S., while it increased 4% in local currencies. Fourteen analysts had a revenue consensus of $2.78 billion for the fourth quarter.
For the preceding quarter, the company posted a profit that more than doubled year-over-year to to $596 million or $1.69 per share, reflecting a 63% surge in operating income and a benign hurricane season, notwithstanding a 7% decline in total net written premiums. Net premiums written declined 7% to $2.70 billion from $2.90 billion in the comparable quarter last year. Total net premiums, excluding the effect of foreign currency translation, declined 5%. Premiums dropped 7% in the U.S. and outside the U.S. respectively, while it increased 1% in local currencies.
Amongst others in the industry, St. Paul, Minnesota-based property casualty insurance provider Travelers Companies Inc. (TRV), on January 26, posted a fourth-quarter profit that surged 60% from last year, bolstered by a 49% increase in net investment income. The company's fourth-quarter net income was $1.29 billion or $2.36 per share, compared to $801 million or $1.35 per share in the prior-year quarter. Operating income was $1.16 billion or $2.12 per share for the fourth-quarter, compared to $939 million or $1.58 per share in the corresponding quarter of the previous year. Total revenue for the quarter advanced 11% to $6.46 billion from the previous year's revenue of $5.81 billion
Chubb's premiums earned for the quarter under review were $2.84 billion, down from $2.90 billion in the prior year quarter.
Property and casualty income for the quarter was $833 million, down from $836 million in the previous year period. Property and casualty investment income after taxes for the quarter edged up to $317 million from $316 million in the year-earlier period. Underwriting income for the quarter dropped to $436 million from $443 million in the year-earlier period.
Combined loss and expense ratio for the quarter was 84.7% , up from 84.3% in the year-earlier period. The impact of fourth quarter catastrophe losses on the combined ratio was negligible in both 2009 and 2008. The expense ratio for the fourth quarter was 30.1% in 2009 and 30.4% in 2008.
Segment-wise, Chubb Personal Insurance net written premiums for the quarter declined 3% year-over-year to $907 million. Combined ratio for the quarter shrank slightly to 80.7% from 80.9% in the previous-year quarter. The impact of catastrophes on the combined ratio in the fourth quarter of 2009 was negligible.
Personal Insurance included net written premiums for Homeowners that decreased 4%, with a combined ratio of 75.8%. Personal Automobile net written premiums declined 3%, with a combined ratio of 94.2%. Other personal lines premiums decreased 7% with a combined ratio of 85.5%.
Chubb Commercial Insurance net written premiums for the quarter declined 6% to $1.1 billion from the prior year quarter. Combined ratio for the fourth quarter was 89.9% in 2009, while it was and 80.9% in 2008.
Chubb Specialty Insurance net written premiums for the quarter declined 1% to $771 million, while combined ratio was 84.1%, compared to 83.8% in the previous year quarter. Professional Liability net written premiums declined 2%, with a combined ratio of 89.5%. Surety net written premiums improved 8%, and the combined ratio was 40.5%.
During the fourth quarter of 2009, Chubb repurchased 9.8 million shares of its common stock at a total cost of $489 million. At December 31, 2009, book value per share increased 4% to $47.09 from $45.43 at the end of the third quarter.
For the fiscal year 2009, net income rose to $2.2 billion or $6.18 per share from $1.8 billion or $4.92 per share in the year-earlier period.
Operating income for fiscal 2009 increased to $2.2 billion from $2.0 billion last year. Operating income per share for the period increased 10% to $6.14 from $5.58.
Total net written premiums for fiscal 2009 declined 6% to $11.1 billion from $11.8 billion in the comparable period last year. Premiums earned were $11.33 billion, down from $11.83 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 6% outside the U.S., while premiums increased 3% in local currencies.
Analysts were looking for earnings of $5.95 per share, on revenues of $11.09 billion for fiscal 2009.
Looking ahead to fiscal year 2010, Chubb expects operating earnings in the range of $5.15 - $5.55 per share. The guidance assumes that net written premiums that are flat to down 2%, including about a 2 percentage point positive impact of currency based on 2009 year end exchange rates.
Analysts currently anticipate the company to earn $5.40 per share for the full year.
CB closed Thursday's regular trading at $49.63, down $0.65 or 1.29%, on a volume of 3.18 million shares on the NYSE. However, the stock gained $0.12 or 0.24%, trading at $49.75 in after hours. In the past 52 weeks, the stock trended in a broad range of $34.44 - $53.79, with a three-month average volume of 2.48 million shares.
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