Chubb Reports Second Quarter Net Income per Share of $1.27; Operating Income per Share Declines 13% to $1.40; Combined Ratio Is 88.5%

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WARREN, N.J., July 24 /PRNewswire-FirstCall/ — The Chubb Corporation (NYSE: CB) today reported that net income in the second quarter of 2008 was $469 million or $1.27 per share, compared to $709 million or $1.75 per share in the second quarter of 2007.

Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, declined to $518 million from $648 million in the second quarter of 2007. Operating income per share declined 13% to $1.40 from $1.60.

Total net written premiums for the second quarter were flat at $3.0 billion. Premiums were down 3% in the U.S. and up 11% outside the U.S. (3% in local currencies).

The second quarter combined loss and expense ratio was 88.5% in 2008, compared to 82.7% in 2007. Catastrophe losses for the second quarter of 2008 accounted for 5.4 percentage points of the combined ratio. In the second quarter of 2007, catastrophe losses accounted for 3.9 points of the combined ratio. The expense ratio for the second quarter was 29.8% in 2008 and 29.6% in 2007.

Property and casualty investment income after taxes for the second quarter increased 4% to $327 million in 2008 from $313 million in 2007.

During the second quarter, Chubb repurchased 5,477,480 shares of its common stock at a total cost of $281 million. As of June 30, 2008, there were 9,315,206 shares of common stock remaining under the current repurchase authorization.

“In an otherwise excellent quarter, our results were adversely impacted by unusually high catastrophe losses and by one large Surety loss,” said John D. Finnegan, Chairman, President and Chief Executive Officer. The catastrophe losses were primarily related to storms in the Midwest United States that mostly affected Chubb’s commercial Property & Marine insurance line.

Six-Month Results

For the first six months of 2008, net income was $1.1 billion or $3.04 per share, compared with $1.4 billion or $3.46 per share for the first half of 2007. Operating income for the first half of 2008 totaled $1.1 billion or $3.05 per share, compared with $1.3 billion or $3.13 per share for the first half of 2007.

Total net written premiums for the first six months increased 1% to $6.0 billion. Premiums declined 2% in the U.S. and increased 13% outside the U.S. (4% in local currencies).

The combined loss and expense ratio for the first six months was 86.2% in 2008, compared to 83.1% in 2007. Catastrophe losses in the first half of 2008 accounted for 3.6 percentage points of the combined ratio. In the first half of 2007, catastrophe losses accounted for 3.2 points of the combined ratio. The expense ratio for the first six months was 30.1% in 2008 and 30.0% in 2007.

Property and casualty investment income after taxes for the first six months increased 6% to $654 million in 2008 from $618 million in 2007.

During the first six months, Chubb repurchased 16,797,464 shares of its common stock at a total cost of $863 million.

Outlook for 2008

“Since our catastrophe losses in the first six months were higher than expected and we’re now in the midst of the hurricane season,” said Mr. Finnegan, “we have increased our catastrophe loss assumption for the full year from 3 points to 4 points. Nevertheless, in light of the strong underlying performance of our businesses in the first half and the outlook for the second half, we are affirming the guidance we provided last January for full-year 2008 operating income per share of $5.70 to $6.10.” The impact of each point of catastrophe losses on operating income per share for the year is approximately $0.20.

The updated operating income guidance also assumes:

— Flat to modestly lower net written premiums for the full year;
— A combined ratio between 86% and 88% for the year, based on combined ratios of 85% to 87% for Chubb Personal Insurance, 90% to 92% for Chubb Commercial Insurance and 82% to 84% for Chubb Specialty Insurance;

— Growth of property and casualty investment income after taxes of 3% to 5% for the year; and

— Average diluted shares outstanding of 368 million for the year.

Guidance and related assumptions are subject to the risks outlined in the company’s forward-looking information safe-harbor statement below.

Second Quarter Operations Review

Chubb Personal Insurance (CPI) net written premiums grew 4% in the second quarter to $1.0 billion. CPI’s combined ratio for the quarter was 81.9%, compared to 85.3% in the second quarter of 2007. Catastrophe losses for the quarter accounted for 4.5 percentage points in 2008 and 8.1 points in 2007.

Net written premiums for Homeowners grew 3%, and the combined ratio was 75.1%. Personal Automobile net written premiums declined 2%, and the combined ratio was 86.7%. Other Personal lines grew 15% and had a combined ratio of 101.5%.

Chubb Commercial Insurance (CCI) net written premiums declined 1% in the second quarter to $1.3 billion. The combined ratio for the quarter was 93.7% in 2008 and 85.4% in 2007. Catastrophe losses accounted for 9.2 percentage points in the second quarter of 2008 and 3.3 percentage points in the second quarter of 2007.

Average second quarter renewal rates in the U.S. were down 6% for CCI, which retained 85% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1.1 to 1.

Chubb Specialty Insurance (CSI) net written premiums declined 4% in the second quarter to $711 million. The combined ratio was 89.3%, compared to 75.6% in the second quarter of 2007.

Professional Liability (PL) net written premiums declined 4%, and the business had a combined ratio of 84.0%. Average second quarter renewal rates in the U.S. were down 3% for PL, which retained 88% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1.2 to 1.

Surety net written premiums were down 10%, and the combined ratio was 128.4% due to one large loss.

Webcast Conference Call to be Held Today at 5 P.M.

Chubb’s senior management will discuss the company’s second quarter performance with investors and analysts today, July 24th, at 5 P.M. Eastern Daylight Time. The conference call will be webcast live on the Internet at http://www.chubb.com and archived later in the day for replay.

About Chubb

Founded in 1882, the Chubb Group of Insurance Companies provides property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb’s global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.

Editor’s Note: This article about Chubb originally appeared on CNN’s website. They have removed it, but we will keep it for archiving purposes.