FOR IMMEDIATE RELEASE
Chubb Reports Higher First Quarter Earnings
Warren, N.J., April 27, 1999 -- The Chubb Corporation [NYSE: CB] today reported higher operating earnings for the first quarter of 1999, reflecting strong growth and profitability in personal and specialty commercial lines and early success in improving the pricing in standard commercial lines.
First quarter operating earnings, which exclude realized investment gains, were $166.4 million or $1.02 per share compared with $162.8 million or $0.95 per share in 1998. The 1998 amount includes a $26 million or $0.15 per share restructuring charge. Net income was $186.9 million or $1.14 per share compared with $191.8 million or $1.12 per share last year. All per share amounts are calculated on a diluted basis.
Chubb's first quarter results are summarized below:
First Quarter
Millions of Dollars 1999 1998
Operating Income Before
Restructuring Charge $166.4 $188.8
Restructuring Charge - (26.0)
Operating Income After
Restructuring Charge 166.4 162.8
Realized Investment Gains 20.5 29.0
Net Income $186.9 $191.8
Per Diluted Share
Operating Income Before
Restructuring Charge $ 1.02 $1.10
Restructuring Charge - (.15)
Operating Income After
Restructuring Charge 1.01 .95
Realized Investment Gains .12 .17
Net Income Losses $1.14 $1.13
Effects of Catastrophe Losses $ .16 $ .11
“Our favorable first quarter results reflect positive trends in all three major segments of our business,” said Dean R. O’Hare, chairman and chief executive officer. “We continue to produce highly profitable growth in personal and specialty commercial lines, which together comprise about two-thirds of our total premiums. Swift action to correct the one weak area in specialty lines, property and marine, resulted in a turnaround of that line's combined ratio from 116.5% in 1998 to 98.7% in the first quarter of this year.
"Even more significantly for the future, our pricing strategy in standard commercial lines has begun to show the impact we are looking for on our renewal business. Month by month, renewal rate increases are building momentum, and we expect this trend to continue. Moreover, we have been successful in retaining business we want to keep at higher rates, while at the same time we are walking away from business where we can't obtain adequate pricing. By maintaining this profit-oriented discipline, standard commercial lines will likely show a decline in premiums throughout the year and produce improved combined ratios. This decline in premiums should be offset by continued premium growth in personal and specialty commercial lines and by the benefits of a series of growth initiatives begun late last year.
"We were particularly pleased by the improvement in the expense ratio to 32.9% from 33.3%. This resulted from our success in keeping controllable expenses flat compared with the 1998 first quarter. We are right on track to realize $150 million in expense savings as a result of our activity value analysis initiative," said Mr. O'Hare.
Net property and casualty premiums written in the quarter increased 5.6% to $1.4 billion from $1.3 billion in 1998. Personal lines premiums increased nearly 12%. Specialty commercial premiums also grew 12%, and standard commercial premiums decreased 4%. In total, domestic premiums grew 4.0% and our non-U.S. premiums grew 14.0%, paced by continued rapid growth in Europe, Chubb’s largest market outside the United States.
The combined loss and expense ratio for the quarter was 99.2% in 1999, compared with 96.1% in 1998. Catastrophe losses totaled $40.1 million and represented 2.9 percentage points of the 1999 combined ratio. In the first quarter of 1998, catastrophe losses were $29.7 million and represented 2.3 points of the combined ratio.
Property and casualty investment income after taxes increased 5.5% to $163.0 million, or $1.00 per share, from $154.5 million, or $0.90 per share in 1998.
In the first quarter, Chubb repurchased approximately 1.25 million shares of its common stock in the open market.
Mr. O’Hare said that Chubb’s acquisition of Executive Risk Inc. is proceeding on schedule and that he expects the transaction to close by the end of the second quarter.
For further information contact: Gail E. Devlin
(908) 903-3245
Glenn A. Montgomery
(908) 903-2365
THE CHUBB CORPORATION
THREE MONTHS ENDED MARCH 31
First Quarter
1999 1998
(in millions)
Property and Casualty
Underwriting Income (Loss)
After Taxes $ 3.8 $ 28.8
Investment Income After Taxes 163.0 154.5
Property and Casualty
Income 166.8 183.3
Corporate and Other Income
After Taxes (.4) 5.5
Operating Income Before
Restructuring Charge 166.4 188.8
Restructuring Charge
After Taxes - (26.0)
Operating Income After
Restructuring Charge 166.4 162.8
Realized Investment Gains
After Taxes 20.5 29.0
Net Income $186.9 $191.8
PROPERTY AND CASUALTY PRODUCT MIX
THREE MONTHS ENDED MARCH 31
Net Premiums Combined Loss and
Written Expense Ratios
1999 1998 1999 1998
(in millions)
Personal Insurance
Automobile $ 77.2 $ 70.6 83.1% 89.0%
Homeowners 177.9 154.8 101.4 85.8
Other 79.6 73.9 66.2 63.3
Total Personal 334.7 299.3 88.9 81.1
Commercial Insurance
Multiple Peril 189.1 189.6 120.4 118.4
Casualty 214.0 231.8 116.8 114.2
Workers' Compensation 96.0 97.8 116.3 101.0
Total Standard
Commercial 499.1 519.2 117.9 113.4
Property and Marine 127.7 128.0 98.7 116.6
Executive Protection 243.4 223.4 81.9 71.8
Financial Institutions 109.3 98.0 83.3 83.0
Other 91.7 63.6 98.5 95.8
Total Specialty
Commercial 572.1 513.0 88.6 88.6
Total Commercial 1,071.2 1,032.2 102.6 100.9
Total $1,405.9 $1,331.5 99.2% 96.1%