Chubb Corp., the insurer of corporate boards and mega-yachts, said second-quarter profit fell 14 percent and lowered its 2014 forecast after margins worsened on claims costs tied to fires.
Net income was $499 million, or $2.03 a share, compared with $579 million, or $2.21, a year earlier, the Warren, N.J.-based company said in a statement. Profit excluding some investment results was $1.70 a share, missing the $1.90 average estimate of 20 analysts surveyed by Bloomberg.
Results were hurt by “severe weather in the United States as well as an unusually high level of homeowners and commercial fire losses,” CEO John Finnegan said in the statement.
The insurer spent 90 cents of every premium dollar on claims and expenses in the second quarter, worse than the 88.8 cents of costs a year earlier. Finnegan has sought to boost prices for coverage as weather-related damage drove up costs in recent years.
Chubb now expects full-year operating profit of $6.75 to $6.95 a share, according to the statement. That compares with a projection in January of $7.10 to $7.40.
Chubb declined 10 cents to $92.76 at 4 p.m. in New York. It has fallen 3.9 percent this year, compared with the 0.6 percent gain by the seven-company Standard & Poor’s 500 Property & Casualty Insurance Index. Results were released after the close of regular trading.
Share Repurchases
Book value, a measure of assets minus liabilities, rose to $68.60 a share from $66.36 as of March 31. The insurer spent $375 million in the second quarter on buybacks, repurchasing about four million shares at an average price of $92.95.
Travelers Cos., the only property/casualty insurer in the Dow Jones Industrial Average, said on July 22 that second- quarter profit missed analysts’ estimates on natural disaster claims. Allstate Corp., the largest publicly traded U.S. auto and home insurer, has said its costs tied to catastrophes such as hailstorms and tornadoes were $936 million before taxes in the quarter.
Chubb’s policy sales rose 4 percent to $3.22 billion. Investment gains narrowed to $125 million before tax from $179 million a year earlier.
—With assistance from Noah Buhayar in New York.