30 January 2015 Insurance

Chubb profits fall as cat losses take their toll

US insurer Chubb posted a small fall in profits for 2014, largely because of high catastrophe losses in the first half of 2014.

The insurer’s profits fell slightly to $2.1 billion for 2014, compared with $2.3 billion for 2013. Its operating income also fell to $1.9 billion for 2014, compared with $2.3 billion for 2013.

Severe US weather drove down profits in the first half of 2014, although Chubb surpassed earnings estimates for the third quarter as it benefitted from low cat losses.

Its net written premiums increased by 3 percent to $12.6 billion in 2014, compared with $12.2 billion in 2013. Chubb said its premiums increased by 4 percent in the US and declined by 1 percent outside of the US.

Chubb’s combined ratio deteriorated by 2 percentage points to 88.3 percent in 2014, compared with 86.1 percent in 2013.

Based on its current outlook, Chubb expects to achieve 2015 operating income per share in the range of $7.35 to $7.65, with an increase of 1-3 percent in net written premiums. This includes a 2 percent negative impact of foreign currency translation. It added that it expects a combined ratio of 89-90 percent.

“Chubb had an outstanding fourth quarter and an excellent 2014,” said John Finnegan, chairman, president and chief executive officer.

“For the full year 2014 we generated operating income per share of $7.63 and net income per share of $8.62, both of which were the second-highest of any year in our history. Our excellent results in 2014, and our consistent financial performance over time, demonstrate the successful execution of our business and underwriting strategies.

“We remain committed to our long-standing strategy of focusing on underwriting discipline and superior claims handling, combined with best-in-class producer relationships, a strong balance sheet and active capital management.”

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