Chubb Profit Gains 43 Percent to $579 Million on Prices

Chubb Corp. (CB), the insurer of corporate boards and luxury homes, said second-quarter profit advanced 43 percent on higher rates for coverage.

Net income rose to $579 million, or $2.21 a share, from $404 million, or $1.48, a year earlier, the Warren, New Jersey-based company said today in a statement. Operating profit, which excludes some investment results, was $1.77 a share, beating the $1.38 average estimate of 20 analysts surveyed by Bloomberg.

“They had a lot of claims last year in the latter half of the year,” Cathy Seifert, an equity analyst at Standard & Poor’s Capital IQ, said in a telephone interview before the announcement. “As a result of that, they received permission from regulators to raise rates.”

Chairman and Chief Executive Officer John Finnegan, 64, has charged some clients more for coverage and tightened policy terms to improve profitability as low interest rates pressure income from the bond portfolio. Property and casualty insurers including Travelers Cos. and Ace Ltd. have been helped by price increases during the past two years.

Chubb climbed less than 1 percent to $86.43 at 4 p.m. in New York before posting results. It has gained about 15 percent this year, compared with the 30 percent rise in the 22-company S&P 500 Insurance Index.

Renewal Rates

Chubb earned 11.2 cents for every dollar in premium collected for the quarter, up from 6.2 cents a year earlier.

“We remain encouraged by the renewal rate increases we continued to obtain in all of our business units,” Finnegan said in the statement.

Investment income fell to $349 million from $373 million a year earlier. Book value, a measure of assets minus liabilities, declined to $60.76 a share from $61.79 at the end of March.

Premium revenue was about $3 billion, compared with $2.98 billion a year earlier. P&C insurers increased commercial rates by 5 percent in the second quarter from the same period in 2012, according to MarketScout data compiled by Bloomberg.

The insurer boosted its full-year guidance for per-share operating income to a range of $7.30 to $7.50. That compares with a projection of $6.40 to $6.80 made in January.

To contact the reporter on this story: Kathleen Chaykowski in San Francisco at kchaykowski2@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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