25 July 2014 Insurance

Cat losses drive down Chubb's profits in Q2

Severe US weather and significant losses in homeowners’ and commercial fire lines have driven down Chubb’s profits in the second quarter of 2014.

The company reported that net income in the second quarter of 2014 was $499 million compared with $579 million in the second quarter of 2013.

The second quarter combined ratio was 90 percent in 2014, a minimal increase from 88.8 percent in 2013, while the impact of catastrophes accounted for 4.8 percentage points of the combined ratio in Q2 2014, compared to 7.9 points in the prior year quarter.

Net written premiums for the second quarter of 2014 increased 4 percent to $3.2 billion. Excluding the effect of currency fluctuation, premiums grew 5 percent. Premiums were up 5 percent in the US and up 1 percent outside the US.

Chubb has lowered its earning forecast for the second half of the year. It now expects a 2 to 4 percent increase in net written premiums, a combined ratio of between 90 and 91 percent and catastrophe losses of 5.3 percentage points.

“Chubb produced solid results in the second quarter of 2014, with operating income of $1.70 per share and net income of $2.03,” said John Finnegan, chairman, president and chief executive officer. “Our results benefited from strong premium growth and retention as well as excellent performance in our long-tail lines of business such as professional liability, casualty and workers’ compensation.

“However, our results this quarter were adversely impacted by catastrophe and non-catastrophe losses related to severe weather in the United States as well as an unusually high level of homeowners’ and commercial fire losses.”

“We remain encouraged by the mid-single-digit increases in our US rate change metrics that we achieved in all of our businesses during the second quarter, while also attaining our highest overall level of retention in three years.”

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