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Chubb Corp. reports an increase in net income and an improved combined ratio thanks to low weather-related losses, analysts say.
Chubb reported net income of $601 million for 2015's third quarter, up 1.2% from $594 million in the third quarter of 2014.
Net written premiums were $3.2 billion in the quarter, the same as in the prior-year period, the Warren, New Jersey-based insurer said Tuesday in a statement.
Operating income, which excludes after-tax realized investment gains and losses, was $547 million in the quarter, up 4.8% from the same period last year, the company said.
The combined ratio improved to 83.3% from 85.8% in the prior-year quarter, with catastrophes accounting for 1.0 percentage point, Chubb said.
The impact of catastrophes was $32 million before tax in the third quarter of 2015, compared with $74 million before tax in the same period last year when catastrophes accounted for 2.4 percentage points of the combined ratio, according to the statement.
Chubb's results are “fairly consistent with what we've seen from a handful of other companies, like Travelers (Cos. Inc.) and Ace (Ltd.), that have reported also, so far,” said J. Paul Newsome, managing director at Sandler O'Neill & Partners L.P. in Chicago. “It was a good quarter for weather-related losses. They were very low — much lower than we expected … It's more earnings, more cash, more book value than we would have expected.”
Ace announced in July that it would buy Chubb for $28.3 billion in cash and stock and that the new company would take the Chubb name.
While the Federal Trade Commission granted its approval last month, “completion of the transaction is subject to the satisfaction of a number of closing conditions, including obtaining regulatory and shareholder approvals,” Chubb said in the statement.
“You kind of have to assume that it's going to go through and, if that's the case, you know there's going to be a big integration that takes place,” said Gerry B. Glombicki, director at Fitch Ratings Inc. in Chicago. “There could be some disruptions that come from that.”
Mr. Glombicki added that both companies “definitely are operating with contingency plans” in case the deal doesn't go through for some reason.
The transaction is expected to close in the first quarter of 2016.
For the first nine months of 2015, Chubb reported net income of $1.47 billion, down 4.7% from the same period last year. Operating income for the period was $1.40 billion, up 6.2% from 2014.
The combined ratio for the first nine months was 87.5%, an improvement from the same period last year when the combined ratio was 89.6%, according to the statement.
The impact of catastrophes in the first nine months of both 2015 and 2014 accounted for 4.6 percentage points of the combined ratio, the company said.
Longtime Chubb executive Julie Stephenson will join rival insurer CNA Financial Corp. as senior vice president and chief underwriting officer for CNA Commercial.