Oct. 22 (Bloomberg) -- Chubb Corp., the insurer of corporate boards and high-end homes, raised its earnings forecast for the second time this year after profit doubled on lower costs tied to natural disasters.

Third-quarter net income jumped to $596 million, or $1.69 a share, from $264 million, or 73 cents, in same period a year earlier, the Warren, New Jersey-based company said today in a statement. Income excluding some investment results was $1.56 a share, beating the $1.26 average estimate of 17 analysts surveyed by Bloomberg.

Property-casualty insurers are recovering after results were hampered in 2008 by hurricanes, tornadoes and investment losses. Chubb’s $402 million of catastrophe claims in last year’s third quarter resulted in its lowest net income since 2005. The insurer, which reported its second straight profit increase, has avoided the investment losses that plagued rivals American International Group Inc. and XL Capital Ltd.

“They’re pretty well positioned for the current market environment,” said Mark Dwelle, an analyst with RBC Capital Markets who has an “outperform” rating on Chubb shares. “Last year, you had Hurricane Ike in the numbers.”

The third quarter yielded a single U.S. landfall, Tropical Storm Claudette, which struck Florida in August. By this time in 2008, Hurricane Dolly had hit Texas, Gustav came ashore in Louisiana, Tropical Storm Hanna brushed past the Carolinas and Ike lashed nine states, killing more than 100 people.

Hurricane Claims

Ike accounted for $340 million of costs at Chubb in last year’s third quarter and, according to Insurance Services Office Inc., helped push the industry into a $9.9 billion net loss in the period. Chubb’s worst result of the last five years was the $246.4 million profit in the third quarter of 2005 amid claims tied to Hurricane Katrina, the costliest U.S. storm.

Claims on catastrophes plummeted 94 percent to 4 cents a share in the third quarter this year.

Chubb said it expects full-year operating earnings to be $5.90 to $6 a share, compared with an earlier projection of $5.20 to $5.50. That’s higher than the $5.48 average estimate of 18 analysts surveyed by Bloomberg.

The insurer sidestepped losses from the subprime home loans that have hobbled competitors by investing in municipal bonds, U.S. Treasuries and mortgage securities issued by government- backed companies. Chubb increased its dividend this year and has remained profitable during the recession while most of its largest competitors have cut their quarterly payouts or reported quarterly losses.

Exhausting Buyback

Chubb spent $412 million buying back 8.67 million of its shares in the third quarter. The company said it expects to repurchase 7 million shares by the end of the year, exhausting its authorization. Policy sales slipped 6.7 percent to $2.71 billion in the three months ended Sept. 30, Chubb said.

“While the difficult economic environment continued to adversely affect premium growth, we remained focused on bottom- line earnings,” Chief Executive Officer John Finnegan said in the statement.

Chubb, which has advanced 21 percent in the last 12 months, rose $2.64, or 5.2 percent, to $53.79 at 4:15 p.m. in New York Stock Exchange composite trading, reaching its highest in 13 months.

AIG, once the world’s largest insurer, was saved by the government last year amid $99 billion of losses. Hartford Financial Services Group Inc. slashed its dividend to 5 cents a share before obtaining a U.S. bailout, while Bermuda-based XL reported a $2.55 billion 2008 loss.

Larger rival Travelers Cos. raised its dividend, increased its full-year profit forecast and authorized a share buyback program after saying today that third-quarter profit quadrupled to $935 million.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.

Last Updated: October 22, 2009 16:58 EDT