Tags: Chubb | CB | insurance | storms

Despite Storms, Insurer Chubb Ups Outlook

By    |   Tuesday, 06 Sep 2011 03:30 PM

U.S. insurer The Chubb Corporation (CB) took a hit during the early part of 2011 thanks to severe weather that pummeled a large chunk of the United States. Tornadoes, blizzards, and storms did their share of damage. Insurers thus had to pay the property claims, which shook up second-quarter earnings.

Net income for the second quarter of 2011, ending June 30, came to $419 million, down 19 percent from the $518 million reported in the second quarter of 2010. Net income per share fell 11 percent to $1.42 from $1.59.

Operating income, defined as net income excluding after-tax realized investment gains and losses, came to $374 million in the second quarter of 2011, down from $460 million in the second quarter of 2010. Operating income per share declined 10 percent to $1.27 from $1.41.

The impact of catastrophes in the second quarter of 2011 came to $329 million before taxes, largely from tornadoes and other storms in the United States. In the second quarter of 2010, the impact of catastrophes was $193 million before taxes.

Net premiums written during the quarter rose 6 percent to $3.1 billion and the company expects profits to increase going forward, even when taking into account a greater possibility that exposure to catastrophes could increase.

"In light of our performance in the first half of the year and our outlook for the second half we are increasing our guidance for full year 2011 operating income per share to a range of $5.55 to $5.85 from the range of $5.35 to $5.75 that we provided last January," says Chubb Chairman, President and CEO John D. Finnegan.

"This increase in earnings guidance comes despite an increase in our catastrophe loss assumption for the full year from 3.5 percentage points to 7.5 points as a result of higher than expected catastrophe losses in the first six months."

Blue skies ahead

The company recently won two key recommendations from Wall Street. In early August of 2011, Barclays upgraded Chubb to overweight from equal weight and, in April, RBC Capital Markets reiterated a market perform recommendation.

According to Moody's Investors Service, which has assigned an Aa2 rating on the company's debt, Chubb is a solid underwriter, particularly for high-end homeowners' insurance and professional liability insurance, and sticks with a solid and historically conservative financial management profile and financial flexibility.

"Chubb's franchise strength is corroborated by its strong underwriting margins," says Alan Murray, senior credit officer at Moody's and lead analyst for Chubb. The ratings agency says it's sticking with a stable outlook on the insurer. Chubb next reports on or about Oct. 20.

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U.S. insurer The Chubb Corporation (CB) took a hit during the early part of 2011 thanks to severe weather that pummeled a large chunk of the United States. Tornadoes, blizzards, and storms did their share of damage. Insurers thus had to pay the property claims, which shook...
Chubb,CB,insurance,storms
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2011-30-06
Tuesday, 06 Sep 2011 03:30 PM
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