Chubb posts higher 2nd-quarter profit, raises view

Property and casualty insurer Chubb Corp (CB.N: Quote, Profile, Research) said on Tuesday earnings rose in the second quarter, helped by lower payouts, and it raised its full-year outlook.
Net earnings were $709 million, or $1.75 per share, up from $598 million, or $1.41 per share, in the year-earlier quarter.
Chubb, based in Warren, New Jersey, said operating earnings, which analysts use to measure performance because it excludes investments, rose to $648 million, or $1.60 per share.
Analysts on average had expected the high-end property insurer to earn $1.39 a share, according to Reuters Estimates.
In the year-ago quarter, Chubb had operating income of $571 million, or $1.35 per share.
Chubb raised its outlook for operating earnings for the full year to a range of $5.70 to $6.10 per share from its previous view of $5.00 to $5.40.
"They had a very good quarter, earnings-wise, but revenue growth remains sluggish." said Donald Light, an analyst with Celent LLC. "
While earnings rose, total net written premiums for the quarter declined 1 percent to $3.1 billion.
But payouts and expenses also dropped as Chubb maintained "underwriting discipline," said Chief Executive John Finnegan in a statement -- meaning Chubb would not take policies where it could not make money.
The company's "combined ratio," a measure of premiums earned against payouts and expenses, improved by 2.5 percentage points to 82.7 percent, a record for the company.
Catastrophe losses represented 3.2 percentage points of that ratio in the first half, due in part to storms in Northeastern United States and flooding in England, but Chubb warned they could be higher in the second half, which is hurricane season in the United States.
Property and casualty investment income increased 9 percent to $313 million.
But some areas showed softness. Chubb's professional liability unit recorded a 1 percent decline in premiums, reflecting fierce competition to insure executives and boards.
Commercial insurance renewal rates dropped 3 percent in the U.S.
Chubb shares closed down 2.34 percent at $49.63 in regular trading on the New York Stock Exchange before rising slightly to $51 in after-hours trading.
The stock is little changed from a year ago. In the same period, the Standard & Poor's insurance index (.GSPINSC: Quote, Profile, Research) has risen about 13 percent.