Chubb Corp. says it plans to seek higher rate increases for Homeowners insurance in the Northeast, following the impact of Superstorm Sandy—the largest catastrophe in Chubb's history.
Sandy, which made landfall at Southern New Jersey in late October 2012, affected core states for the Warren, N.J.-based insurer.
The storm set records for the company in terms of claims and net catastrophe loss—$882 million pretax.
And as Chubb looks forward, Dino E. Robusto, president of personal lines, says during an earnings conference call, “We plan to file for rate increases up to the low teens in some areas of the Northeast.
Chubb had been seeking mid-single-digit rate increases in Homeowners insurance in the Northeast prior to the storm.
About 90 percent of Sandy claims came from New York, New Jersey and Connecticut, he says. About 53 percent of the losses were from Chubb's commercial segment. The balance was from its personal lines segment.
Sandy took its toll on Chubb's 2012 fourth-quarter net income—dropping it more than 77 percent to $102 million, compared to net income of $452 million during the same period a year ago.
Net income for the year was $1.5 billion compared to $1.7 billion in 2011.
The storm sky-rocketed the company's fourth-quarter combined ratio, which was 131.3 for homeowners and 118.7 for commercial. Overall the fourth-quarter combined ratio for Chubb was an unprofitable 111.2 compared to 89.9 in 2011.
However, looking beyond the impact of catastrophes was much more promising for Chubb. CEO John D. Finnegan say the fourth quarter combined ratio excluding catastrophes was 81.5—an 8-point improvement over the same time in 2011.
During the conference call, Finnegan says Chubb was able to turn a profit in the quarter despite the huge hit from Sandy “through the pursuit of renewal rate increases, writing new business only when we believe we are securing adequate rates, and continually refining our risk selection to improve profitability of our book of business.”
Renewal rate increases were seen in each of Chubb's business units. Rates were up 9 percent for Professional Liability, 8 percent for Commercial and 6 percent for Personal lines, Finnegan reports.
Paul J. Krump, president of commercial and specialty lines, says Chubb received rate increases on 90 percent of its renewal book in the segment, compared to 70 percent a year ago.
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