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Chubb profit down on catastrophe losses

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A jump in catastrophe losses helped drive Chubb Ltd.'s net income for the second quarter of 2016 down 22.9% from that of the corresponding period of 2015 to $726 million, the insurer reported.

The company, which reported second-quarter results Tuesday, had announced earlier this month that its pretax catastrophe losses for the quarter were $390 million, up from $124 million during the second quarter of 2015.

During an earnings call Wednesday, Chubb Chairman and CEO Evan Greenberg said that $320 million of the total stemmed from North American catastrophe losses. He said that 25 catastrophes have occurred this year.

Net written premiums for the quarter surged 59.7% from those reported by Ace Ltd., which acquired Chubb Corp. earlier this year and renamed itself Chubb Ltd., during the same period in 2015 to $7.64 billion. The insurer's combined ratio deteriorated to 91.2% from 87.7%.

“We had a pretty good quarter,” said Mr. Greenberg during the earnings call. He noted that Chubb has a retention rate of 90.6% in its major accounts business.

“We remain on track” with the integration of the two insurers, said Mr. Greenberg,

“We'd view this as overall an in-line quarter,” said Mark Dwelle, an insurance analyst with RBC Capital Inc. in Richmond, Virginia, in a note. “While there were a few pluses and minuses within particular business units relative to our estimates, this is as likely the by-product of the estimation process as it is of any particular surprises in the underlying businesses.”

For the first six months of the year, net income dropped 28.2% to $1.17 billion. Net written premiums increased 53.9% from those posted by Ace in the first six months of 2015 to $13.63 billion. The combined ratio deteriorated to 90.6% from 88.0% during the same period a year earlier.

During a question-and-answer session in the earnings call, Mr. Greenberg said that the United Kingdom's withdrawal from the European Union would have “no short-term impact” on Chubb. He said that the long-term impact would depend on the outcome of negotiations on the terms of the withdrawal.

He also said that growing trade protectionism is “worrying.” Growth in global trade “has served the world well,” said Mr. Greenberg.