Chubb Corp. reports third-quarter net income of $541 million, a 1.5 percent increase from the same time a year ago, as the company says higher rates and better underwriting overcame $92 million in catastrophe losses.
Overall, net premiums during the third quarter increased to # billion—4 percent better than the same time in 2012.
During a conference call to discuss earnings, Paul J. Krump, president of commercial and specialty lines, said Chubb Commercial Insurance saw renewal rate increases in each line of business in the third quarter—led by general liability and workers compensation. U.S. renewal rates increased 7 percent, on top of 8 percent increases during the 2013 second quarter, he added. Retention was up 2 percent to 85 percent.
“While this retention and rate movement quarter-to-quarter is relatively minor, it reflects directionally the progress we have made with differentiated rate-taking the past few years,” Krump said. “This has been done using a performance ranking system that segments customers based on our assessment of rate adequacy. The bottom line is that we now have less premium volume in our lowest performing groups, where rate increases were the highest, and we have more premium volume in our better performing groups, where the rate increases were lower.”
Third-quarter net written premiums increased 5 percent to $670 million in Chubb Specialty Insurance, with a 6-point improvement in the unit's combined ratio, to 82.3.
Krump says 85 percent of U.S. professional liability policies renewed with rate increases during the third quarter. Average renewal rates went up 8 percent.
Premiums also grew in Chubb's homeowners and auto segment—4 percent and 9 percent, respectively—during the third quarter.
Catastrophe affected the homeowners line, accounting for 11 points of the 84.3 combined ratio for the line. The ratio was 76 during the third quarter last year, when catastrophe losses were $17 million.
Finnegan to Stay CEO
The Warren, N.J.-based insurer simultaneously said John D. Finnegan will remain chairman, president and CEO until 2017—departing from a board policy that senior executives retire at 65 years old. Finnegan has been CEO since 2002.
The roles of other executive will be realigned. Paul J. Krump will become president of personal lines and claims. He is now president of commercial and specialty lines.
Dino E. Robuso, now president of personal lines and claims, will become president of commercial and specialty lines. He retains responsibility for information technology.
Richard G. Spiro assumes responsibility for corporate development while keeping his title as CFO.
Chubb Lead Director James M. Zimmerman said the decision to keep Finnegan was based on “a high level of satisfaction with Chubb's overall performance.” Other than “consistently strong operating earnings” under Finnegan, Chubb has also become an “employer of choice,” added Zimmerman.
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