Chubb beats earnings estimates in ‘outstanding’ quarter

US insurer Chubb surpassed earnings estimates for the third quarter of 2014, in what it described as an “outstanding third quarter”.

The insurer’s operating income, which the company defines as net income excluding after-tax realised investment gains and losses, was $522 million in the third quarter of 2014 compared with $529 million in the third quarter of 2013.

Its operating income per share increased by 5 percent to a record $2.17 from $2.06. This surpassed investment research firm Zacks’ consensus estimate by 11.3 percent.

“The solid performance and low CAT losses in the quarter reflect the company’s improved performance, which compelled it to raise its guidance as well. We expect Chubb to continue this improvement, going forward,” said Zacks.

The insurer’s net income in the third quarter of 2014 increased to $594 million, compared with $541 million in the third quarter of 2013. This reflected net realised investment gains of $110 million before tax, compared with $18 million before tax in the third quarter of 2013.

Catastrophe losses were lower in the quarter, with $74 million of losses before tax, compared with $92 million in the prior-year quarter. Its combined ratio hit 85.8 percent in the third quarter of 2014, a slight deterioration compared with 85.7 percent in 2013.

The insurer has revised its full-year 2014 operating income per share guidance to a range of $7.35 to $7.45 from the $6.75 to $6.95 range it provided in July 2014. This revised guidance is based on operating income per share of $5.35 for the first nine months and an estimated range of $2.00 to $2.10 for the fourth quarter.

“Chubb had an outstanding third quarter,” said John Finnegan, chairman, president and chief executive officer. “We produced record quarterly operating income per share of $2.17. Our combined ratio was an excellent 85.8 percent, reflecting strong underwriting performance in all our business units as well as relatively low catastrophe losses.

“We are also pleased that in the third quarter we once again achieved mid-single-digit increases in our US rate change metrics, as well as high retention levels in all of our businesses.”