News from The Chubb Corporation
The Chubb Corporation
15 Mountain View Road • P.O. Box 1615
Warren, New Jersey 07061-1615
Telephone: 908-903-2000
FOR IMMEDIATE RELEASE
Chubb Reports 2nd Quarter Operating Income of $.80 Per Share
WARREN, N.J., July 26, 2001 – The Chubb Corporation [NYSE: CB]
today reported operating income of $142.4 million or $.80 per share
for the second quarter of 2001. As previously announced, this
quarter’s earnings were heavily affected by catastrophe losses. In
the year-earlier second quarter, operating income was $180.7 million
or $1.00 per share. Net income, which includes realized investment
gains, was $146.8 million or $.83 per share in the second quarter of
2001, compared with $184.6 million or $1.02 per share in the second
quarter of 2000.
For the six months ended June 30, 2001, operating income was
$315.1 million or $1.76 per share compared with $330.6 million or
$1.85 per share in the first six months of 2000. Net income for the
first half of 2001 was $321.8 million or $1.80 per share compared with
2000 first half net income of $338.3 million or $1.89 per share.
Reported property and casualty net premiums written in the second
quarter of 2001 grew 7.0% to $1.6 billion. U.S. premiums grew 6.1%.
Non-U.S. premiums grew about 16% in local currencies. Reported
property and casualty net premiums written in the first six months of
2001 increased 8.0% to $3.4 billion.
The combined loss and expense ratio for the second quarter was
103.5% in 2001 and 98.6% in 2000. For the first half, the combined
ratio was 101.7% in 2001 and 100.2% in 2000.
Catastrophe losses for the 2001 second quarter and six months
were $80.3 million and $91.8 million, respectively, adding
4.9 and 2.8 percentage points to the respective combined ratios for
these periods. Tropical Storm Allison accounted for approximately
two-thirds of the second quarter catastrophe losses. In the second
quarter and first half of 2000, catastrophe losses were $24.3 million
and $54.6 million, respectively, adding 1.6 and 1.8 percentage points
to the respective combined ratios for these periods.
2
Chubb’s second quarter and six month after-tax results are
summarized below:
Millions of Dollars
Operating Income
Realized Investment Gains
Net Income
Second Quarter
2001
2000
Six Months
2001
2000
$142.4
4.4
$146.8
$180.7
3.9
$184.6
$315.1
6.7
$321.8
$330.6
7.7
$338.3
Operating Income
Realized Investment Gains
Net Income
$ .80
.03
$ .83
$1.00
.02
$1.02
$1.76
.04
$1.80
$1.85
.04
$1.89
Effect of Catastrophe
Losses
$ .29
$ .09
$ .33
$ .20
Per Diluted Share
"Chubb Commercial Insurance (CCI) made good progress in the
second quarter," said Dean R. O’Hare, Chairman and Chief Executive
Officer. "Excluding catastrophe losses, CCI’s combined ratio improved
to 105.2% from 110.4% in the corresponding quarter a year ago."
Catastrophe losses added 7.6 points to CCI’s combined ratio in the
second quarter of 2001 and zero points in the second quarter of 2000.
Commercial Multi-Peril and Workers' Compensation underwriting results
improved significantly, while the monoline Property business performed
poorly. CCI’s net written premiums increased by 6.4% to $544 million,
compared with a double-digit decline in the corresponding quarter a
year ago. Renewal rates in the U.S. increased 15%, the same as in the
first quarter of 2001, and retention rates improved compared to the
year-ago second quarter. "We are back in the market successfully
selling the Chubb difference in broad coverages, loss control
services, financial strength, global capabilities and unparalleled
claim service," said Mr. O’Hare.
Chubb Specialty Insurance (CSI) second quarter net written
premiums grew 0.3% to $566 million, and the combined ratio was 94.7%.
Executive Protection (EP) net written premiums were flat because of
reduced sales of multi-year policies compared with previous years;
EP’s earned premiums grew 11.2% in the second quarter. The EP and
Financial Institutions businesses had combined ratios of 93.9% and
85.3%, respectively.
Chubb Personal Insurance (CPI) produced a combined ratio of
103.4% as premiums grew 16.0% to $528 million. Mr. O’Hare said that
the Valuable Articles and Excess Liability lines were highly
profitable but that the Homeowners line was unprofitable due to rate
deficiencies in a number of states and an increase in loss frequency,
particularly large losses. "Chubb’s Masterpiece® product remains the
industry’s premier offering," said Mr. O’Hare, "but we have found that
in some locations it is underpriced relative to the outstanding value
provided. We are applying for rate increases in these jurisdictions.
This will provide some relief, but we have also stepped up our efforts
to make sure that the amount of coverage reflects the full current
value of the home and contents and takes into consideration the
escalating costs of restoring vintage homes."
3
Property and casualty investment income after taxes for the
second quarter increased 4.0% to $188.0 million from $180.8 million in
2000. On a per share basis, property and casualty investment income
after taxes increased 6.0% to $1.06 from $1.00. For the first half,
property and casualty investment income after taxes in 2001 increased
2.9% to $372.6 million or $2.09 per share from $362.1 million or
$2.03 per share in 2000.
During the second quarter, Chubb purchased 3.3 million shares of
its common stock in open-market transactions, compared with
1.0 million shares in the second quarter of 2000. During the first
six months of 2001, Chubb purchased 3.9 million shares.
For further information contact:
Weston M. Hicks
(908) 903-4334
Glenn A. Montgomery
(908) 903-2365
FORWARD LOOKING INFORMATION
Certain statements in this communication may be considered to be "forward
looking statements" as that term is defined in the Private Securities Litigation
Reform Act of 1995 such as statements that include words or phrases "will result,"
"is expected to," "will continue," "is anticipated," "estimates," or similar
expressions. Such statements are subject to certain risks and uncertainties. The
factors which could cause actual results to differ materially from those suggested
by any such statements include but are not limited to those discussed or identified
from time to time in the Corporation's public filings with the Securities and
Exchange Commission and specifically to: risks or uncertainties associated with the
Corporation's expectations with respect to premium price increases, its insuranceto-value and restoration cost review efforts, and the timing and adequacy of
regulatory action on rate filings, and more generally to: general economic
conditions including changes in interest rates and the performance of the financial
markets, changes in domestic and foreign laws, regulations and taxes, changes in
competition and pricing environments, regional or general changes in asset
valuations, weather-related or other natural disasters, the inability to reinsure
certain risks economically, the adequacy of loss reserves, as well as general market
conditions, competition, pricing and restructurings.
4
THE CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
(Unaudited)
Periods Ended June 30
Second Quarter
Six Months
2001
2000
2001
2000
(in millions)
PROPERTY AND CASUALTY INSURANCE
Underwriting
Net Premiums Written........... $1,638.0
Decrease (Increase) in
Unearned Premiums.............
2.5
Premiums Earned............. 1,640.5
Claims and Claim Expenses...... 1,143.1
Operating Costs and Expenses...
545.9
Increase in Deferred Policy
Acquisition Costs.............
(1.7)
Dividends to Policyholders.....
7.2
Underwriting Income (Loss).....
$1,530.6
(54.0)
$3,370.9
$3,119.9
(10.7)
1,519.9
996.8
498.4
(109.8)
3,261.1
2,224.1
1,114.3
(108.1)
3,011.8
2,024.2
1,016.4
(3.1)
6.6
(29.9)
14.2
(32.1)
13.3
21.2
(61.6)
(10.0)
Investments
Investment Income Before
Expenses......................
Investment Expenses............
229.3
2.5
218.7
2.6
454.7
7.1
439.0
6.9
Investment Income..............
226.8
216.1
447.6
432.1
(13.4)
(18.2)
(24.8)
223.9
367.8
397.3
Amortization of Goodwill and
Other Charges..................
Property and Casualty Income....
CORPORATE AND OTHER..............
(7.8)
165.0
(5.6)
(5.8)
(2.5)
(10.9)
CONSOLIDATED OPERATING INCOME
BEFORE INCOME TAX...............
159.4
218.1
365.3
386.4
Federal and Foreign Income Tax...
17.0
37.4
50.2
55.8
CONSOLIDATED OPERATING INCOME....
142.4
180.7
315.1
330.6
REALIZED INVESTMENT GAINS
AFTER INCOME TAX................
4.4
3.9
6.7
7.7
CONSOLIDATED NET INCOME.......... $
146.8
$
184.6
$
321.8
$
338.3
PROPERTY AND CASUALTY INVESTMENT
INCOME AFTER INCOME TAX......... $
188.0
$
180.8
$
372.6
$
362.1
5
Periods Ended June 30
Second Quarter
Six Months
2001
2000
2001
2000
OUTSTANDING SHARE DATA
(in millions)
Average Common and Potentially
Dilutive Shares...............
Actual Common Shares...........
178.2
173.2
180.2
174.5
178.6
173.2
178.3
174.5
DILUTED EARNINGS PER SHARE DATA
Operating Income...............
Realized Investment Gains......
Net Income.....................
$ .80
.03
$ .83
$1.00
.02
$1.02
$1.76
.04
$1.80
$1.85
.04
$1.89
Effect of Catastrophe Losses...
$ .29
$ .09
$ .33
$ .20
June 30
2001
Dec. 31
2000
BOOK VALUE PER COMMON SHARE............................
$40.55
$39.91
BOOK VALUE PER COMMON SHARE,
with Available-for-Sale Fixed Maturities
at Amortized Cost.....................................
39.02
38.60
PROPERTY AND CASUALTY UNDERWRITING RATIOS
PERIODS ENDED JUNE 30
Second Quarter
2001
2000
Six Months
2001
2000
Losses to Premiums Earned.................
Expenses to Net Premiums Written..........
70.0%
33.5
65.9%
32.7
68.5%
33.2
67.5%
32.7
Combined Loss and Expense Ratio...........
103.5%
98.6%
101.7%
100.2%
PROPERTY AND CASUALTY CLAIMS AND CLAIM EXPENSE COMPONENTS
PERIODS ENDED JUNE 30
Second Quarter
Six Months
2001
2000
2001
2000
(in millions)
Paid Claims and Claim Expenses.......... $
Increase in Unpaid Claims and
Claim Expenses.........................
964.5
$925.2
$2,110.8
$1,817.6
178.6
71.6
113.3
206.6
Total Claims and Claim Expenses......... $1,143.1
$996.8
$2,224.1
$2,024.2
6
PROPERTY AND CASUALTY PRODUCT MIX
SIX MONTHS ENDED JUNE 30
Personal Insurance
Automobile........................ $
Homeowners........................
Other.............................
Total Personal
Net Premiums
Written
2001
2000
(in millions)
Combined Loss and
Expense Ratios
2001
2000
231.7
507.1
217.8
956.6
97.5%
115.6
75.0
102.1
94.9%
106.2
72.5
95.8
$
192.0
443.3
196.4
831.7
Commercial Insurance
Multiple Peril....................
Casualty..........................
Workers' Compensation.............
Property and Marine...............
Total Commercial
373.4
381.4
180.2
272.5
1,207.5
358.1
393.9
165.7
254.2
1,171.9
105.1
110.9
94.2
123.8
109.6
111.4
116.5
104.4
116.0
113.2
Specialty Insurance
Executive Protection..............
Financial Institutions............
Other.............................
Total Specialty
648.6
292.9
265.3
1,206.8
626.7
256.5
233.1
1,116.3
92.2
93.3
97.5
93.6
83.7
87.9
105.5
89.1
$3,370.9
$3,119.9
Total
101.7%
100.2%
THREE MONTHS ENDED JUNE 30
Net Premiums
Written
2001
2000
(in millions)
Combined Loss and
Expense Ratios
2001
2000
Personal Insurance
Automobile........................ $
Homeowners........................
Other.............................
Total Personal
125.1
283.6
119.3
528.0
103.3
245.8
106.1
455.2
98.3%
117.0
76.4
103.4
92.7%
102.7
75.3
94.1
Commercial Insurance
Multiple Peril....................
Casualty..........................
Workers' Compensation.............
Property and Marine...............
Total Commercial
168.9
175.9
72.0
127.5
544.3
165.8
171.5
64.7
109.5
511.5
105.9
111.8
95.4
134.8
112.8
111.4
112.5
101.0
110.8
110.4
Specialty Insurance
Executive Protection..............
Financial Institutions............
Other.............................
Total Specialty
318.8
132.8
114.1
565.7
321.4
121.1
121.4
563.9
93.9
85.3
107.1
94.7
83.6
83.6
113.3
90.1
$1,638.0
$1,530.6
Total
$
103.5%
98.6%
The property and casualty product mix for 2000 includes certain reclassifications to conform
with the 2001 presentation, which more closely reflects the way the property and casualty
business is now managed. The total net premiums written and combined loss and expense ratio
are not affected.