The Chubb Corporation today reported that net income in the second quarter of 2009 was $551 million or $1.54 per share, compared to $469 million or $1.27 per share in the second quarter of 2008.
Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, increased to $533 million from $518 million in the second quarter of 2008. Operating income per share increased 6% to $1.49 from $1.40.
Total net written premiums for the second quarter of 2009 were $2.8 billion, a decline of 7% from premiums of $3.0 billion in the second quarter of 2008. Excluding the effect of foreign currency translation, premiums were down approximately 3% in the second quarter of 2009. Premiums were down 5% in the U.S. and down 12% outside the U.S. (up 3% in local currencies).
The second quarter combined loss and expense ratio was 85.9% in 2009, compared to 88.5% in 2008. Catastrophe losses for the second quarter of 2009 accounted for 1.5 percentage points of the combined ratio. In the second quarter of 2008, catastrophe losses accounted for 5.4 points of the combined ratio. The expense ratio for the second quarter was 30.2% in 2009 and 29.8% in 2008.
Property and casualty investment income after taxes for the second quarter declined 5% to $312 million in 2009 from $327 million in 2008.
During the second quarter, Chubb repurchased 2,310,029 shares of its common stock at a total cost of $90 million. As of June 30, 2009, there were 15,669,371 shares of common stock remaining under the current repurchase authorization.
“Chubb’s excellent results in the second quarter demonstrate our ability to deliver superior performance to our customers and shareholders in a very challenging economic environment,” said John D. Finnegan, Chairman, President and Chief Executive Officer. “Chubb performed very well across the board in underwriting, investments and earnings, and this is reflected in our strong return on equity and in the significant increase in our book value per share. These results were achieved through our focus on underwriting discipline, our conservative investment philosophy and our strong capital position, all of which continue to differentiate Chubb in the marketplace. We also saw a continuation of the positive momentum in commercial and specialty premium rate increases that we have seen in recent quarters.
“In light of Chubb’s earnings in the first half and our outlook for the rest of the year,” said Mr. Finnegan, “we are increasing our 2009 guidance for operating income per share to a range of $5.20 to $5.50. Given our strong capital position and the improved capital market environment, we also intend to accelerate the timing of our share repurchases. We now expect to repurchase by the end of this year all of the 15.7 million shares remaining as of June 30, 2009 under our current share repurchase authorization.”
Mr. Finnegan also said that John J. Degnan, Vice Chairman and Chief Operating Officer, will defer his expected retirement until December 31, 2010 and that the company would announce a decision about filling his responsibilities later next year.
