Chubb’s Profits Contracted in 2008

Fourth quarter profits at Warren, New Jersey-based The Chubb Corp. fell 37 percent to $407 million from $650 million in the same quarter last year.

For the full year, net income was down 36 percent to $1.8 billion from $2.8 billion last year.

Net written premiums for the fourth quarter were down 4 percent to $2.9 billion – with about half the decline attributable to currency fluctuation. For the full year, net written premiums decreased 1 percent to $11.8 billion.

In 2008, premiums were down 3 percent in the U.S. and up 6 percent outside the U.S.

Chubb said its combined ratio in 2008 was 88.7 percent, compared with 82.9 percent in 2007. The impact of catastrophes accounted for 5.1 percentage points of the combined ratio in 2008 and 3 points in 2007.

The expense ratio was 30.2 percent in 2008 and 30.1 percent in 2007.

Property and casualty investment income after taxes for the fourth quarter was down 5 percent to $316 million, compared with $331 million in the fourth quarter of 2007, largely due to currency fluctuation and lower yields on short term investments.

“While net income was adversely affected by continued turmoil in capital markets, the relatively modest size of our investment losses reflects the successful execution of our conservative philosophy in managing our $39 billion portfolio,” said John D. Finnegan, chairman, president and chief executive officer.

Breakdown by Lines
In 2008, Chubb Personal Insurance (CPI) net written premiums grew 3 percent to $3.8 billion. CPI’s combined ratio was 87.1 percent in 2008 compared to 84.8 percent in 2007. The impact of catastrophes accounted for 5.4 percentage points of the combined ratio in 2008 and 6.3 points in 2007.

The Homeowners line grew 1 percent and had a combined ratio of 83.7 percent. Personal Automobile net written premiums declined 3 percent, and the combined ratio was 87.6 percent. Other Personal lines grew 17 percent and had a combined ratio of 97.5 percent.

Chubb Commercial Insurance (CCI) net written premiums declined 2 percent in 2008 to $5 billion. The combined ratio was 93.9 percent in 2008 and 85.8 percent in 2007. The impact of catastrophes accounted for 8.1 percentage points of the combined ratio in 2008 and 2.6 points in 2007. Average 2008 renewal rates in the U.S. were down 5 percent for CCI, which retained 85 percent of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1 to 1.

Chubb Specialty Insurance (CSI) net written premiums declined 2 percent in 2008 to $2.9 billion. The combined ratio was 83.3 percent in 2008 and 77.4 percent in 2007.

Professional Liability had a 2 percent decrease in net written premiums and a combined ratio of 85 percent. In the U.S., average 2008 renewal rates for professional liability were down 2 percent, renewal premium retention was 88 percent and the ratio of new to lost business was 1.3 to 1.

Surety had a net written premium increase of 4 percent and a combined ratio of 69.9 percent.
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Source: The Chubb Corp.