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» The Chubb Corporation Q1 2010 Earnings Call Transcript
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Please also note that no portion of this conference call may be reproduced or rebroadcast in any form without the prior written consent of Chubb. Replay of this webcast will be available through August 20, 2010. Those listening after July 22nd, 2010 should please note that the information and forecasts provided in this recording will not necessarily be updated and it is possible that the information will no longer be current.Now, I will turn the call over to Mr. Finnegan. John Finnegan Thank you and thanks for joining us. We are very pleased to report excellent results for the second quarter in the first half not withstanding substantially higher than expected catastrophe losses in both quarters. Operating income per share for the second quarter with a $1.41 despite $0.38 of CAT that compares to $1.49 in last year's second quarter when the impact of CATs was only $0.08. The second quarter combined ratio in 2010 was a very strong 90.4 even including 6.9 points of cash; our highest second quarter can impact ever. The ex-CAT combined ratio for the quarter was 83.5 nearly a point better than last year's second quarter. For the first six months, operating income per share was $2.54 and the combined ratio was 92 which is exceptionally good considering included 9.6 points of CATs. The six month ex-CAT combined ratio of 82.4 with nearly 3.5 points better than the first half of last year. In addition our investment portfolio continue to perform extremely well. During the second quarter, it produced the net realized capital gain before tax of $90 million. At June 30, our net unrealized depreciation before tax totaled $1.900 billion which is an increase of $88 million over March 31. The effect of these investment and operating results was a reported book value per share of $49.39 at June 30, 2010, a 19% increase compared to a year ago.
Our excellent capital position enabled us to substantially increase our share repurchase program in order to take advantage of the attractive opportunity in the market to acquire our own shares. Ricky will talk more about the buyback program in his remarks.As you will recall, last January we provided 2010 operating income guidance of $5.15 to $5.55 per share, based in part and an assumption of three points of CATs for the year. Substantially higher than expected CATs in the first half have let us to change that assumption to seven points of CATs for the full year. Nonetheless we are affirming our January earnings guidance based on our excellent ex-CAT results year-to-date and our outlook for the second half of the year. I'll elaborate on our updated guidance in my closing remarks. Let me turn it over now to John Degnan who will talk about our operating results. John Degnan Thanks, John. I am going to begin with the review of the individual business units for the second quarter. Chubb personal insurance, net written premiums increased 5% lead by strong growth outside the US, about half of that growth was attributable to currency fluctuation and CPI produced the combined ratio of 92.9 compared to 84.2 last year. CAT losses for CPI were 13.8 points in the second quarter of 2010 compared to only 3.2 points a year earlier. So excluding the CAT impact CPI's combined ratio improved nearly two points to 79.1 from 81. Homeowner's premiums were up 2% and the combined ratio was 94.5 including 20.3 point of CAT. Our personal auto premiums were up 14% with the combined ratio of 90.2. In other personal lines which include the accident business, premiums increased 9% and the combined ratio was 90.5. Premiums for both personal auto and accident reflect strong growth outside the US and the positive effect of currency. At Chubb Commercial Insurance, premiums were flat. It was the first time since the first quarter of 2008 that CCI's reported premiums did not decline. The combined ratio was 92.9 compared to last year's 89.2 but CCI's second quarter included a 5.6 point of impact of CATs compared with only 1.2 points in 2009. So excluding the CAT impact CCI's combined ratio for the quarter improved to 87.3 from 88 last year. Read the rest of this transcript for free on seekingalpha.com