The Chubb Corp., Warren, N.J., reported 2005 fourth-quarter income rose 31 percent compared to 2004, reflecting results of company cost-cutting.
The personal and commercial lines carrier reported net income of $614 million for the fourth quarter of 2005, compared to $468 million for the same period 2004.
Bear Stearns analyst David Small said “the majority of the upside was driven by lower than expected expenses, as the company continues to focus on cost control.”
The company reported net written premiums for the fourth quarter increased 1 percent to $3.1 billion compared to the same period in 2004. The combined ratio was 89.3 in the fourth quarter, compared to 90.6 in the year-ago period.
Mr. Small noted the company continues to write very profitable business. He expressed concern that renewal rates in the commercial and specialty businesses were down 1 percent and 3 percent, respectively, “suggesting the insurance markets have not responded to the '05 cats as many had anticipated.”
He also said that while the share price will benefit from an aggressive share repurchase program, a competitive pricing environment and higher reinsurance costs could slow profit growth.
For the full year, the company reported net income rising 20 percent to $1.8 billion from $1.5 billion for the same period last year. The year-end combined ratio remained at 92.3 for both 2004 and 2005.
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