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FOR IMMEDIATE RELEASE
Chubb Reports First
Quarter Net Income per Share of $1.70;
Operating Income per
Share Is $1.35;
Combined Ratio Is 93.7%, including Catastrophe Impact of 9.5 Points
WARREN, New Jersey, April 21, 2011 -- 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
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
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%.
Webcast Conference Call to be
Held Today at
Chubb's
senior management will discuss the company's first quarter performance with
investors and analysts today, April 21st, at 5 P.M. Eastern Daylight
Time. The conference call will be webcast live on the Internet at http://www.chubb.com and
archived later in the day for replay.
About Chubb
Founded in
1882, the Chubb Group of Insurance Companies provides property and casualty
insurance for personal and commercial customers worldwide through 8,500
independent agents and brokers. Chubb's global network includes branches
and affiliates throughout North America, Europe, Latin America, Asia and
Australia.
Chubb’s Supplementary
Investor Information Report has been posted on its Internet site at http://www.chubb.com.
All financial results in this release and attachments are
unaudited.
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For further information contact: |
Investors: |
Glenn
A. Montgomery (908)
903-2365 |
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Media: |
Mark
E. Greenberg (908)
903-2682 |
Definitions of Key Terms
Operating Income: Operating income, a non-GAAP financial
measure, is net income excluding after-tax realized investment gains and
losses. Management uses operating
income, among other measures, to evaluate its performance because the
realization of investment gains and losses in any given period is largely
discretionary as to timing and can fluctuate significantly, which could distort
the analysis of trends.
Underwriting
Income (Loss): Management evaluates underwriting results
separately from investment results. The
underwriting operations consist of four separate business units: personal
insurance, commercial insurance, specialty insurance and reinsurance
assumed. Performance of the business
units is measured based on statutory underwriting results. Statutory accounting principles applicable to
property and casualty insurance companies differ in certain respects from
generally accepted accounting principles (GAAP). Under statutory accounting principles, policy
acquisition and other underwriting expenses are recognized immediately, not at
the time premiums are earned. Statutory
underwriting income (loss) is arrived at by reducing premiums earned by losses
and loss expenses incurred and statutory underwriting expenses incurred.
Management
uses underwriting results determined in accordance with GAAP, among other
measures, to assess the overall performance of the underwriting
operations. To convert statutory
underwriting results to a GAAP basis, policy acquisition expenses are deferred
and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in
accordance with GAAP is defined as premiums earned less losses and loss
expenses incurred and GAAP underwriting expenses incurred.
Property
and Casualty Investment Income After Income Tax: Management uses property and casualty
investment income after income tax, a non-GAAP financial measure, to evaluate its
investment performance because it reflects the impact of any change in the
proportion of the investment portfolio invested in tax exempt securities and is
therefore more meaningful for analysis purposes than investment income before
income tax.
Book
Value per Common Share with Available-for-Sale Fixed Maturities at Amortized
Cost: Book value per common share represents the portion of consolidated
shareholders' equity attributable to one share of common stock outstanding as
of the balance sheet date. Consolidated
shareholders' equity includes, as part of accumulated other comprehensive
income (loss), the after-tax appreciation or depreciation, including unrealized
other-than-temporary impairment losses, of the Corporation's available-for-sale
fixed maturities, which are carried at fair value. The appreciation or depreciation of
available-for-sale fixed maturities is subject to fluctuation due to changes in
interest rates and therefore could distort the analysis of trends. Management believes that book value per
common share with available-for-sale fixed maturities at amortized cost, a
non-GAAP financial measure, is an important measure of the underlying equity
attributable to one share of common stock.
Combined
Loss and Expense Ratio or Combined Ratio: The
combined loss and expense ratio, expressed as a percentage, is the key measure
of underwriting profitability.
Management uses the combined loss and expense ratio calculated in
accordance with statutory accounting principles applicable to property and
casualty insurance companies to evaluate the performance of the underwriting
operations. It is the sum of the ratio
of losses and loss expenses to premiums earned (loss ratio) plus the ratio of
statutory underwriting expenses to premiums written (expense ratio) after
reducing both premium amounts by dividends to policyholders.
Net Written Premiums Growth (Decrease)
Excluding the Impact of Currency Fluctuation: Management uses net written premiums growth
(decrease) excluding the impact of currency fluctuation, a non-GAAP financial
measure, to evaluate the trends in net written premiums, exclusive of the
effect of fluctuations in exchange rates between the U.S. dollar and the
currencies in which our international business is transacted. In
net written premiums growth (decrease) excluding the impact of currency
fluctuation, the effect of fluctuations in the exchange rates is excluded as
these rates may fluctuate significantly and could distort the analysis of
trends. Net written premiums growth
(decrease) excluding the impact of currency fluctuation is determined by using
the same exchange rate to translate each foreign currency denominated net
written premium amount in both periods.
FORWARD-LOOKING
INFORMATION
In the conference call identified above and otherwise,
we make statements regarding our results of operations, financial condition and
other matters that are “forward-looking statements” as that term is defined in
the Private Securities Litigation Reform Act of 1995 (PSLRA). Forward-looking statements are made pursuant to the safe
harbor provisions of the PSLRA. Forward-looking statements generally can be
identified by words such as “believe,” “expect,” “anticipate,” “optimistic,”
“intend,” “plan,” “will,” “may,” “should,” “could,” “would,” “likely,”
“estimate,” “predict,” “potential,” “continue,” or other similar expressions. Forward-looking statements are made based
upon management’s current expectations and beliefs concerning trends and future
developments and their potential effects on Chubb. These statements are not guarantees of future
performance. Actual results may differ materially
from those suggested by forward-looking statements as a result of risks and
uncertainties, which include, among others, those discussed or identified from
time to time in Chubb’s public filings with the Securities and Exchange
Commission and those associated with:
· global
political conditions and the occurrence of terrorist attacks, including any
nuclear, biological, chemical or radiological events;
· the effects of
the outbreak or escalation of war or hostilities;
· premium pricing
and profitability or growth estimates overall or by lines of business or
geographic area, and related expectations with respect to the timing and terms
of any required regulatory approvals;
· adverse changes
in loss cost trends;
· our ability to
retain existing business and attract new business;
· our
expectations with respect to cash flow and investment income and with respect
to other income;
· the adequacy of
our loss reserves, including:
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our expectations relating to
reinsurance recoverables; |
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the willingness of parties, including
us, to settle disputes; |
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developments in judicial decisions or
regulatory or legislative actions relating to coverage and liability, in
particular, for asbestos, toxic waste and other mass tort claims; |
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development of new theories of liability; |
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our estimates relating to ultimate
asbestos liabilities; |
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the impact from the bankruptcy
protection sought by various asbestos producers and other related businesses;
and |
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the effects of proposed asbestos
liability legislation, including the impact of claims patterns arising from
the possibility of legislation and those that may arise if legislation is not
passed; |
· the
availability and cost of reinsurance coverage;
· the occurrence
of significant weather-related or other natural or human-made disasters,
particularly in locations where we have concentrations of risk;
· the impact of
economic factors on companies on whose behalf we have issued surety bonds, and
in particular, on those companies that file for bankruptcy or otherwise
experience deterioration in creditworthiness;
· the effects of
disclosures by, and investigations of, companies relating to possible
accounting irregularities, practices in the financial services industry,
investment losses or other corporate governance issues, including:
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claims and litigation arising out of
stock option “backdating,” “spring loading” and other equity grant practices
by public companies; |
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the effects on the capital markets and
the markets for directors and officers and errors and omissions insurance; |
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claims and litigation arising out of
actual or alleged accounting or other corporate malfeasance by other
companies; |
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claims and litigation arising out of
practices in the financial services industry; |
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claims and litigation relating to uncertainty
in the credit and broader financial markets; and |
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legislative or regulatory proposals or
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· the effects of changes
in market practices in the U.S. property and casualty insurance industry
arising from any legal or regulatory proceedings, related settlements and
industry reform, including changes that have been announced and changes that
may occur in the future;
· the impact of
legislative and regulatory developments on our business, including those
relating to terrorism, catastrophes and the financial markets;
· any downgrade
in our claims-paying, financial strength or other credit ratings;
· the ability of
our subsidiaries to pay us dividends;
· general political,
economic and market conditions, whether globally or in the markets in which we
operate, including:
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changes in interest rates, market
credit spreads and the performance of the financial markets; |
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currency fluctuations; |
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the effects of inflation; |
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changes in domestic and foreign laws,
regulations and taxes; |
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changes in competition and pricing
environments; |
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regional or general changes in asset
valuations; |
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the inability to reinsure certain risks
economically; and |
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changes in the litigation environment; |
· our ability to
implement management’s strategic plans and initiatives.
Chubb
assumes no obligation to update any forward-looking information set forth in
this document, which speak as of the date hereof.
THE
CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
(Unaudited)
Three
Months Ended
March 31
2011 2010
(in millions)
PROPERTY AND CASUALTY INSURANCE
Underwriting
Net Premiums
Written................................... $2,859 $2,765
Decrease (Increase)
in Unearned Premiums............... (5) 17
Premiums
Earned..................................... 2,854
2,782
Losses and
Loss Expenses............................... 1,765
1,730
Operating
Costs and Expenses...........................
904 862
Increase in
Deferred Policy Acquisition Costs..........
(25) (22)
Dividends to
Policyholders............................. 8
8
Underwriting
Income.................................... 202
204
Investments
Investment
Income Before Expenses...................... 391
396
Investment
Expenses.................................... 10
9
Investment
Income...................................... 381
387
Other Income
(Charges).................................. 5
(7)
Property and Casualty
Income............................ 588
584
CORPORATE AND
OTHER...................................... (63) (63)
CONSOLIDATED OPERATING INCOME BEFORE INCOME
TAX.......... 525 521
Federal and Foreign Income
Tax........................... 120 140
CONSOLIDATED
OPERATING INCOME............................
405 381
REALIZED INVESTMENT GAINS AFTER INCOME TAX...............
104 83
CONSOLIDATED
NET INCOME.................................. $ 509 $ 464
PROPERTY AND CASUALTY INVESTMENT INCOME AFTER
INCOME
TAX.............................................. $ 310
$ 313
Three Months Ended
March 31
2011 2010
OUTSTANDING
SHARE DATA
(in millions)
Average Common
and Potentially Dilutive Shares.......
300.0 335.0
Actual Common
Shares at End of Period................
292.5 326.8
DILUTED
EARNINGS PER SHARE DATA
Operating
Income.....................................
$1.35 $1.14
Realized
Investment Gains............................
.35 .25
Net
Income........................................... $1.70 $1.39
Effect of
Catastrophes............................... $(.59) $(.67)
Mar. 31 Dec. 31
Mar. 31
2011 2010 2010
BOOK VALUE
PER COMMON SHARE.................. $53.26
$52.24 $48.17
BOOK VALUE
PER COMMON SHARE,
with
Available-for-Sale Fixed Maturities
at Amortized
Cost........................... 50.41 49.05 45.19
PROPERTY AND CASUALTY UNDERWRITING RATIOS
THREE
MONTHS ENDED MARCH 31
2011 2010
Losses and Loss Expenses to Premiums
Earned........... 62.0%
62.3%
Underwriting Expenses to Premiums
Written............. 31.7 31.3
Combined Loss and Expense
Ratio....................... 93.7% 93.6%
Effect of Catastrophes on
Combined Loss
and Expense Ratio......................
9.5% 12.3%
PROPERTY AND CASUALTY LOSSES AND LOSS
EXPENSES COMPONENTS
THREE
MONTHS ENDED MARCH 31
2011 2010
(in
millions)
Paid Losses and Loss
Expenses......................... $1,467
$1,432
Increase in Unpaid Losses and Loss Expenses...........
298
298
Total Losses and Loss Expenses........................
$1,765 $1,730
PROPERTY
AND CASUALTY PRODUCT MIX
THREE MONTHS ENDED MARCH 31
Net
Premiums Written Combined Loss and
% Increase Expense Ratios
2011 2010 (Decrease) 2011 2010
(in millions)
Personal
Insurance
Automobile............... $ 162 $ 146 11 % 92.8%
91.5%
Homeowners............... 533 517 3
94.8 113.3
Other.................... 199 211 (6) 92.2
87.5
Total
Personal....... 894 874 2
93.8 104.4
Commercial
Insurance
Multiple
Peril........... 267 254
5 105.9
112.6
Casualty................. 436
414 5 83.5 88.4
Workers'
Compensation.... 243
222 9 89.5 90.5
Property and
Marine...... 380
353 8 125.1
87.6
Total
Commercial..... 1,326 1,243 7 100.7
93.8
Specialty
Insurance
Professional
Liability... 551 570
(3)
86.8 86.2
Surety................... 88 76 16
50.5 39.8
Total
Specialty...... 639 646 (1) 82.4 80.9
Total Insurance......
2,859 2,763 3
93.9 94.1
Reinsurance
Assumed........ - 2 (100) * *
Total................ $2,859 $2,765
3 93.7
93.6
* Combined loss and expense ratios are no longer
presented for Reinsurance Assumed
since this
business is in run-off.