Insurance Center

October 24, 2008
Chubb Corp., just as many other property and casualty insurance companies, saw its third quarter profit diminished by investment losses such as those from Hurricane Ike, nevertheless however, the New Jersey-based insurer still came out with $264 million in net income, in addition to 300 million in operating income. Its combined loss and expense ratio was under 100 percent.

Granted the net income reported for Chubb Corp. for the third quarter of 2008 was low at $264 million, as compared with the $738 million to they reported for the third quarter of 2007. The figure for 2008 third quarter income reflected net realized investment losses of $113 million before tax, including impairments.

Operating income was down from the third quarter of 2007 at $338 million vs. $662 million for the third quarter of 2007.
At the same time, the total net written premiums for the third quarter was down 1 percent to $2.9 billion. Although reported premiums for the quarter were down 4 percent in the U.S., they were 8 percent for the rest of the world.

In 2008, the third quarter combined loss and expense ratio was set at 98.1 percent, as compared with 81.6 percent for the same quarter in 2007. It appears that the third quarter catastrophes impacted figures for the third quarter of 2008 by 13.6 percentage points from the combined ratio. This is principally related to the affects of Hurricane Ike, and includes Chubb's estimated proportional share of the assessment from the Texas Windstorm Insurance Association. During the third quarter of 2007, the affect of catastrophes accounted for 2.0 points of the total.

If we exclude the catastrophic losses, the third quarter combined ratio for 2007 was 79.6 percent, and it was 84.5 percent in 2008. The expense ratio for the third quarter of 2007 was 29.8 percent, while it was 30.2 percent in 2008.

Third quarter property and casualty investment income after taxes for 2008 increased by 1 percent to $327 million, versus $324 million in 2007.

CEO and president John D. Finnegan says that it is obvious that losses from Hurricane Ike have had a major and an adverse effect on the company’s third quarter results. He adds however, that despite these considerable catastrophic losses, the company was still able to generate over $300 million in operating income. This he says is a reflection of the continuing underlying strength of all of the company’s business units within a challenging environment. He says in addition that the company is especially pleased with the performance of their high-quality investment portfolio during a time of unprecedented financial market disorder.