) second-quarter 2014 earnings came in at $1.70 per share,
significantly behind the Zacks Consensus Estimate of $1.90.
Earnings also declined 4% year over year.
Chubb's second-quarter results were affected by catastrophe and
non-catastrophe losses related to severe weather in the United
States. An unusually high level of Homeowners' and Commercial fire
losses added to the company's woes.
The Chubb Corporation - Earnings Surprise |
Net written premium for the reported quarter was up 4% year over
year at $3.2 billion. While the company registered 5% growth in
premium from its U.S. business, only 1% premium growth was seen in
its international business.
Property and casualty investment income after tax was down 4% year
over year to $275 million.
Chubb's underwriting income of $278 million suffered a 12% decline
during the quarter, due to higher loss and operating cost.
Catastrophe losses amounted to $146 million, down 38.4% year over
Combined ratio for the quarter deteriorated by 120 basis points
(bps) year over year to 90.0% reflecting loss incurred from
catastrophes and high fire-related claims in Homeowners and
Book value per share, a measure of net worth was $68.60, up 13.0%
year over year.
segment, net written premium increased 3% year over year to $1.4
billion during the reported quarter. The combined ratio
deteriorated by 340 bps year over year to 93.3% due to cat loss.
's net written premiums increased 5% year over year to $655 million
attributable to 8% increase in surety insurance and 4% increase in
professional liability insurance. The combined ratio improved 730
bps year over year to 78.7%.
segment's net written premiums rose 5% year over year to $1.2
billion, primarily driven by higher premium in Personal lines and
Homeowners' insurance. Combined ratio deteriorated 310 bps year
over year to 92.7%.
During the quarter, Chubb repurchased 4.0 million shares of its
common stock at a total cost of $375 million.
Lowered 2014 Guidance
Following the review of results over the past six months, Chubb has
lowered its 2014 earnings guidance. It now expects earnings in the
range of $6.75 to $6.95, considerably down from the earlier
projection of $7.10 to $7.40. Chubb expects to see 2% to 4% premium
growth, combined ratio in the range of 90% to 91% and a 4% to 6%
decline in net investment income. Moreover, cat losses might create
a 5.3% adverse impact on 2014 combined ratio, more than 1% higher
than the 2013 impact.
Though the quarter's results reflect the burden of high claims, we
expect the company to perform favorably over the long term.
Chubb's Commercial Insurance has been witnessing a low single-digit
increase in average renewal rates for the past several quarters.
Retention ratio stands at a stable level.
Chubb's Personal Insurance is also witnessing a gradual market
improvement. Net premium written in this segment has been
increasing over several quarters, led by strong premium increases
from international business.
The strength in Chubb's international business is in fact its
arsenal for its future growth.
Strong capital management witnessed by regular share repurchases
will also aid its bottom line.
Other players that missed second-quarter earnings include The
Travelers Companies, Inc.
Allied World Assurance Company Holdings, AG (
), and Everest Re Group Ltd. (
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
TRAVELERS COS (TRV): Free Stock Analysis Report
CHUBB CORP (CB): Free Stock Analysis Report
EVEREST RE LTD (RE): Free Stock Analysis Report
ALLIED WORLD AS (AWH): Free Stock Analysis
To read this article on Zacks.com click here.