WARREN, N.J.—Investors bid up Chubb Corp.'s stock Friday after the Warren, N.J.-based insurer raised its profit forecast for the year, saying its underlying business showed signs of improvement despite record second-quarter catastrophe losses.
The insurer said it had $329 million in catastrophe losses during the quarter—the highest second-quarter losses in its history. The vast majority of the losses were due to U.S. tornadoes and storms. In the first three months of the year, Chubb lost $170 million before tax, including winter storms in the U.S., flooding in Australia, and earthquakes in New Zealand and Japan.
In a statement, Chubb said its second-quarter combined ratio deteriorated to 94.9% vs. 90.4% in the comparable period of 2010. The first quarter combined loss and expense ratio was 93.7%.
Chubb also said Thursday that its net income was $419 million for the second quarter vs. $518 million in the second quarter of 2010. During the first half of the year, net income was $928 million compared with $982 million during the same period of 2010.
Chubb said it had $3.1 billion in net written premiums during the quarter, a 6% increase over the previous year. Net written premiums for the first six months increased 5% to $5.9 billion.
Pricing improving
“In addition, we saw signs that the overall pricing environment is improving in our standard commercial lines in the U.S. and in the more catastrophe-exposed areas of the world,” John D. Finnegan, Chubb's chairman, president and CEO, said in a statement.
During an analyst conference call Thursday, Chief Financial Officer Richard Spiro noted the impact of Chubb's “strong underlying performance, year-to-date” on his revised forecast.
Chubb also increased its full-year guidance for its anticipated operating income per share to between $5.55 and $5.85, from the $5.35 to $5.75 per share range it had provided in January.
Investors cheered the news. At midday Friday, Chubb's stock had risen about 3% vs. Thursday's close.
MILWAUKEE—A Chubb Corp. unit has agreed to pay $110,000 to settle a case in which the Equal Employment Opportunity Commission accused it of discrimination and retaliation against a Hmong employee seeking promotion to underwriter.