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WARREN, N.J., Jan. 30, 2014 /PRNewswire/ -- The Chubb Corporation [NYSE: CB] today reported net income in the fourth quarter of 2013 of $569 million or $2.24 per share, compared to $102 million or $0.38 per share in the fourth quarter of 2012.
Operating income was $526million or $2.07 per share in the fourth quarter of 2013,compared to$44million or $0.16 per share in the corresponding quarter of 2012. The company defines operating income as net income excludingafter-tax realized investment gainsand losses.
Results for the fourth quarter of 2012 were adversely affected by Storm Sandy-related losses net of reinsurance recoverable as well as reinsurance reinstatement premiums.
Net written premiums for the fourth quarter increased 4% to $3.0 billion in 2013 from $2.9 billion in 2012. Premiums were up 7% in the U.S. and down 3% outside the U.S. (up 1% in local currencies). The negative 1% effect of foreign currency translation on fourth quarter premium growth was offset by the impact of reinsurance reinstatement premiums related to Storm Sandy, which reduced net written premiums in the year-ago fourth quarter.
The fourth quarter combined loss and expense ratio was 85.5% in 2013 and 111.2% in 2012. The impact of catastrophes on the fourth quarter combined ratio was 2.1 percentage points in 2013 and 29.7 points in 2012. Excluding the impact of catastrophes, the fourth quarter combined ratio was 83.4% in 2013 and 81.5% in 2012.
The expense ratiofor the fourth quarter was 30.8%in 2013and 30.9%in 2012.
Propertyandcasualtyinvestment income after taxesfor the fourth quarter declined 4%to$284million in 2013from$296million in 2012.
Net incomeforthefourthquarterof2013includednetrealizedinvestment gainsof $67millionbeforetax($0.17pershareafter-tax). Netincomeforthefourthquarterof2012 reflectednetrealizedinvestmentgainsof$90millionbeforetax($0.22pershareafter-tax).
During the fourth quarter of 2013,Chubbrepurchased 3.5 million shares of its common stockata totalcost of $325million,or anaverage cost of $93.72 per share.
Averagedilutedsharesoutstandingforthefourthquarterwere 254.1millionin2013 and266.8millionin2012.
Book value per share was$64.83atDecember 31,2013compared to$62.04at the end of the third quarter and$60.45atDecember 31,2012.
"Chubb had an excellent fourth quarter and an outstanding 2013," said John D. Finnegan, Chairman, President and Chief Executive Officer. "For the quarter, we produced operating income per share of $2.07 and net income per share of $2.24, both of which were the second-highest of any quarter in our history. Our combined ratio in the quarter was a very strong 85.5%, once again reflecting the impact of higher rates and strong underwriting performance in all of our business units. During the fourth quarter, the market tone in the U.S. remained firm, and we achieved mid- to high-single-digit changes in our rate increase metrics in all of our business units.
"For the full year 2013," said Mr. Finnegan, "we generated record operating income per share of $8.03 and record net income per share of $9.04. Our excellent results in 2013, and our consistent financial performance over time, demonstrate the successful execution of our business and underwriting strategies. We remain committed to our long-standing strategy of focusing on underwriting discipline and superior claims handling, combined with best-in-class producer relationships, a strong balance sheet and active capital management."
Full Year Results
For the year endedDecember 31,2013, net income was$2.3billion or a record $9.04 per share,compared to$1.5billion or $5.69 per share for the year ended December 31,2012. Operating income totaled$2.1billion in 2013and$1.4 billion in 2012.
Operating income per share increased to a record $8.03 in 2013from$5.23 in 2012.
Netwritten premiums increased 3%to$12.2 billion in 2013 from $11.9 billion in 2012. Foreign currency translation and Storm Sandy reinsurance reinstatement premiums had an insignificant effect on premium growth for the year. Premiumswere up 4%in the U.S.and were flat outside the U.S.(up 2%in local currencies).
The combinedratio in 2013was 86.1%,compared to 95.3% in 2012. The impact of catastrophesaccountedfor 3.4percentage points of the combinedratio in 2013and 9.6 points in 2012. Excluding the impact of catastrophes,the combinedratiowas 82.7% in 2013and 85.7%in 2012.
The expense ratiofor the year was 31.9%in 2013and 31.7%in 2012.
Propertyandcasualtyinvestment income after taxes in 2013 declined 5% to $1.1billion in 2013 from $1.2 billion in 2012.
Netincomefor2013includednetrealizedinvestmentgainsof$402millionbeforetax ($1.01pershareafter-tax). Netincomefor2012reflectednetrealizedinvestmentgainsof $193millionbeforetax($0.46pershareafter-tax).
During 2013,Chubbrepurchased 14.9million shares of itscommon stockata totalcost of $1.3 billion,or anaverage cost of $87.33 per share.
Averagedilutedsharesoutstandingwere 259.4millionin2013and271.4millionin 2012.
Chubb Personal Insurance(CPI) netwritten premiums increased 6%in the fourth quarter of 2013 to$1.1 billion.Net written premiums were up 3% excluding reinsurance reinstatement premiums related to Storm Sandy. CPI'scombinedratiofor the fourth quarter was 83.5%in 2013and 117.9%in 2012.The impact of catastrophes onCPI'scombinedratio in the fourth quarter was 5.3 percentage points in 2013and 40.1 points in 2012. Excluding the impact of catastrophes,the combinedratiofor the fourth quarter was 78.2%in 2013 and 77.8%in 2012.
Homeowners netwritten premiumswere up 6% (up 2% excluding Storm Sandy reinsurance reinstatement premiums),and the combinedratiowas 75.8% (67.3% excluding the impact of catastrophes). PersonalAutomobile netwritten premiums increased 2%,and the combined ratiowas 93.9%. Other Personal lines netwritten premiumswere up 9%,and the combinedratiowas 96.8%.
Chubb Commercial Insurance (CCI) netwritten premiumsfor the fourth quarter of 2013 increased 4%to$1.3billion. Net written premiums were up 2% excluding reinsurance reinstatement premiums related to Storm Sandy. The combinedratiofor the quarter was 89.0%in 2013 and 118.7%in 2012. The impact of catastrophes on CCI's combined ratio in the fourth quarter accounted for 0.6 points in 2013 compared to an impact of 36.8 percentage points in 2012. Excluding the impact of catastrophes,the combinedratiofor the fourth quarter was 88.4%in 2013and 81.9%in 2012.
In the U.S.,average fourth quarter CCIrenewal rateswere up 6%, renewal premiumretentionwas 83%andthe ratio of newto lost businesswas 0.7to 1.
Chubb Specialty Insurance (CSI) netwritten premiums increased 2%in the fourth quarter to$705million.The combinedratiowas 81.9%,compared to 88.5%in the fourth quarter of 2012.
ProfessionalLiability(PL) netwritten premiums increased 2%,andPLhada combinedratio of 85.9%. In the U.S.,average PLrenewalrateswere up8%,renewal premiumretentionwas 84% and the ratio of newto lost businesswas 0.8to 1.
Suretynetwritten premiumswere up 4%, and the combinedratiowas 53.9%.
For the year endedDecember 31,2013, Chubb Personal Insurancenetwritten premiums increased 5%to$4.3 billion. Net written premiums were up 4% excluding reinsurance reinstatement premiums related to Storm Sandy. CPI'scombinedratiowas 87.0%in 2013and 94.4%in 2012. The impact of catastrophesaccountedfor 7.2percentage points of the combinedratio in 2013and 13.7 points in 2012. Excluding the impact of catastrophes, the combinedratiowas 79.8%in 2013and 80.7%in 2012.
Homeowners netwritten premiums increased 4% (increased 3% excluding Storm Sandy reinsurance reinstatement premiums),and the combinedratiowas 82.3% (70.8% excluding the impact of catastrophes). PersonalAutomobile netwritten premiumswere up 6%,and the combinedratio was 94.8%. Other Personal lines netwritten premiums increased 6%,and the combined ratiowas 94.8%.
Chubb Commercial Insurance netwritten premiumsfor 2013 increased 2%to $5.3 billion. Net written premiums were up 1% excluding reinsurance reinstatement premiums related to Storm Sandy. The combinedratiowas 86.5% in 2013and 99.0%in 2012.The impact of catastrophesaccountedfor 2.1percentage points of the combinedratio in 2013and 11.4points in 2012. Excluding the impact of catastrophes,the combinedratiowas 84.4%in 2013and 87.6%in 2012.
In the U.S.,average CCI renewalrateswere up 7%,renewal premiumretention was 84%and the ratio of newto lost businesswas 0.8to 1.
Chubb Specialty Insurance netwritten premiumsfor 2013 increased 3% to $2.6billion.The combinedratiowas 84.3%in2013and 91.3%in 2012.
ProfessionalLiability's netwritten premiumswere up 2%. PLhada combinedratio of 89.3%. In the U.S.,average 2013renewalratesfor PL were up 8%,renewal premiumretentionwas 84%and the ratio of newto lost businesswas 0.8to 1.
Suretynetwritten premiums increased 6%,and the combinedratiowas 47.2%.
January 2014 Winter Weather Losses
Chubb's first quarter 2014 results will be impacted by losses related to the severe winter weather that has occurred during the month of January in the United States. To date, that weather has resulted in two declared catastrophes related to the freezing and winter storms that occurred between January 3rd and 8th in 19 states. Chubb's preliminary estimate of the losses from these two catastrophes is in the range of $150 million to $200 million before tax or $0.39 to $0.52 per share after tax. This estimate does not include an estimate for any other January weather related losses.
Based on management's current outlook, Chubb expects to achieve 2014 operating income per share in the range of $7.10 to $7.40.
This operating income guidance assumes for the full year 2014:
The guidance andrelatedassumptionsare subject to the risks outlined in the company'sforward-looking information safe-harbor statements(see below).
Chubb's senior managementwill discuss the company'sfourth quarter performance with investorsandanalysts today,January30th,at5P.M. EasternStandardTime. The conference callwill be webcast live on the Internetat http://www.chubb.comand archived later in the dayfor replay.
Since 1882, members of the Chubb Group of Insurance Companies have provided property and casualty insurance products to customers around the globe. These products are offered through a worldwide network of independent agents and brokers. The Chubb Group of Insurance Companies is known for financial strength, underwriting and loss-control expertise, tailoring products for the needs of high net worth individuals and commercial customers in niche markets and select industry segments, and outstanding claim service.
The Chubb Group of Insurance Companies is the marketing term used to describe several separately incorporated insurance companies under the common ownership of The Chubb Corporation. The Chubb Corporation is listed on the New York Stock Exchange (NYSE: CB) and, together with its subsidiaries, employs approximately 10,000 people throughout North America, Europe, Latin America, Asia and Australia. For more information regarding The Chubb Corporation, including a listing of the insurers in the Chubb Group of Insurance Companies, visit www.chubb.com.
Chubb'sSupplementaryInvestor InformationReport has been posted on its Internet site at http://www.chubb.com.
Allfinancialresults in thisrelease andattachmentsare unaudited.
For further informationcontact:
Definitions of Key Terms
Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.
Underwriting Income (Loss):
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.
Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, certain policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.
Property and Casualty Investment Income After Income Tax:
Management uses property and casualty investment income after income tax, a non-GAAP financial measure, to evaluate its investment results because it reflects the impact of any change in the proportion of tax exempt investment income to total investment income and is therefore more meaningful for analysis purposes than investment income before income tax.
Book Value per Common Share with Available-for-Sale Fixed Maturities at Amortized Cost:
Book value per common share represents the portion of consolidated shareholders' equity attributable to one share of common stock outstanding as of the balance sheet date. Consolidated shareholders' equity includes, as part of accumulated other comprehensive income (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation's available-for-sale fixed maturities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities is subject to fluctuation due to changes in interest rates and therefore could distort the analysis of trends. Management believes that book value per common share with available-for-sale fixed maturities at amortized cost, a non-GAAP financial measure, is an important measure of the underlying equity attributable to one share of common stock.
Combined Loss and Expense Ratio or Combined Ratio:
The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.
Net Written Premiums Growth (Decrease) Excluding the Impact of Foreign Currency Translation, Net Written Premiums Growth (Decrease) Excluding the Impact of Reinsurance Reinstatement Premiums, Net Written Premiums Growth (Decrease) Excluding the Impact of Foreign Currency Translation and Reinsurance Reinstatement Premiums:
Management uses net written premiums growth (decrease) excluding the impact of foreign currency translation, net written premiums growth (decrease) excluding the impact of reinsurance reinstatement premiums, and net written premiums growth (decrease) excluding the impact of foreign currency translation and reinsurance reinstatement premiums, non-GAAP financial measures, to evaluate the trends in net written premiums, exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which international business is transacted and/or the effect of reinsurance reinstatement premiums. The impact of foreign currency translation is excluded as exchange rates may fluctuate significantly and the effect of fluctuations could distort the analysis of trends. When excluding the impact of foreign currency translation, management uses the same exchange rate to translate each foreign currency denominated net written premium amount in both periods. The impact of reinsurance reinstatement premiums related to a major catastrophe event such as Storm Sandy are excluded as these reinsurance reinstatement premiums are infrequent and could distort the analysis of trends. When excluding the impact of reinsurance reinstatement premiums, net written premiums are increased by the amount of reinsurance reinstatement premiums recognized in the period.
In this press release, the conference call identified above and otherwise, we may make statements regarding our results of operations, financial condition and other matters that are "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements are made pursuant to the safe-harbor provisions of the PSLRA and include statements regarding Chubb's first quarter 2014 catastrophe losses from January weather in the United States and management's 2014 operating income per share guidance and related assumptions. Forward-looking statements frequently can be identified by words such as "believe," "expect," "anticipate," "intend," "plan," "will," "may," "should," "could," "would," "likely," "estimate," "predict," "potential," "continue," or other similar expressions. Forward-looking statements are made based upon management's current expectations and beliefs concerning trends and future developments and their potential effects on Chubb. These statements are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties, which include, among others, those discussed or identified from time to time in Chubb's public filings with the Securities and Exchange Commission and those associated with:
Chubb assumes no obligation to update any forward-looking information set forth in this document, which speak as of the date hereof.
THE CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
Periods Ended December 31
PROPERTY AND CASUALTY INSURANCE
Net Premiums Written
Decrease (Increase) in
Losses and Loss Expenses
Operating Costs and Expenses
Decrease (Increase) in Deferred
Policy Acquisition Costs
Dividends to Policyholders
Underwriting Income (Loss)
Investment Income Before
Other Income (Charges)
Property and Casualty Income
CORPORATE AND OTHER
CONSOLIDATED OPERATING INCOME
(LOSS) BEFORE INCOME TAX
Federal and Foreign Income
CONSOLIDATED OPERATING INCOME
REALIZED INVESTMENT GAINS
AFTER INCOME TAX
CONSOLIDATED NET INCOME
PROPERTY AND CASUALTY INVESTMENT
INCOME AFTER INCOME TAX
OUTSTANDING SHARE DATA
Average Common and Potentially
Actual Common Shares at
End of Period
DILUTED EARNINGS PER SHARE DATA
Realized Investment Gains
Effect of Catastrophes
BOOK VALUE PER COMMON SHARE
BOOK VALUE PER COMMON SHARE,
with Available-for-Sale Fixed Maturities
at Amortized Cost
PROPERTY AND CASUALTY UNDERWRITING RATIOS
PERIODS ENDED DECEMBER 31
Losses and Loss Expenses to
Underwriting Expenses to
Combined Loss and Expense Ratio
Effect of Catastrophes on
Combined Loss and Expense Ratio
PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS
Paid Losses and Loss Expenses
Increase (Decrease) in Unpaid Losses
and Loss Expenses
Total Losses and Loss Expenses
The increase in unpaid losses and loss expenses for both the fourth quarter and the twelve months ended 2012 included $620 million related to Storm Sandy.
PROPERTY AND CASUALTY PRODUCT MIX
QUARTERS ENDED DECEMBER 31
Net Premiums Written
% Increase (Decrease)
Combined Loss and
Property and Marine
* The change in net premiums written and the combined loss and expense ratios are no longer presented for the Reinsurance Assumed business since it is in runoff.
TWELVE MONTHS ENDED DECEMBER 31
Property and Marine
* The change in net premiums written and the combined loss and expense ratios are no longer presented for the Reinsurance Assumed business since it is in runoff
SOURCE Chubb Corporation