(Updates with book value, guidance in eighth paragraph.)
Oct. 24 (Bloomberg) -- Chubb Corp., the insurer of corporate boards and high-end homes, said profit advanced 1.5 percent as premium revenue climbed on higher rates. The company extended by two years the term of Chief Executive Officer John Finnegan, who will stay on until the end of 2016.
Third-quarter net income rose to $541 million, or $2.10 a share, from $533 million, or $1.98, a year earlier, the Warren, New Jersey-based company said today in a statement. Operating profit, which excludes some investment results, was $2.06 a share, beating by 16 cents the average estimate of 19 analysts in a Bloomberg survey.
“Chubb has been a leader in raising prices, especially in some of the professional lines,” Josh Stirling, an analyst at Sanford C. Bernstein & Co., said in an interview before the release. “The reason they have pricing power at the moment is because the industry itself is following along.”
Finnegan, 64, has been pursuing higher rates after low bond yields and costs from catastrophes including superstorm Sandy pressured results in previous quarters. Property-and-casualty insurers increased year-over-year commercial rates by 4 percent in July and August and 5 percent in September, according to U.S. MarketScout data compiled by Bloomberg.
The CEO would have had to step down at the end of next year under a policy that sets 65 as retirement age. The board waived the rule “based on its high level of satisfaction” with Chubb’s performance since Finnegan took over in late 2002, according to a separate statement.
Paul Krump, 53, who runs commercial and specialty lines, will become president of personal lines and claims as of Jan. 1, Chubb said. Dino Robusto, 55, who oversees the personal lines, will take the post running the commercial business.
Chubb has climbed 23 percent this year to $92.94 as of 4:02 p.m. in New York. Results were released after the close of regular trading. The insurer’s stock more than tripled since the end of 2002, while the Standard & Poor’s 500 Index doubled.
Book value, a measure of assets minus liabilities, climbed to $62.04 per share from $60.76 at the end of June. The insurer boosted its full-year guidance for per-share operating income to a range of $7.90 to $8. That compares with a projection in July of $7.30 to $7.50.
Premium revenue climbed 1.7 percent to $3.03 billion for the quarter. Chubb had an underwriting profit of 14.3 cents for every dollar in premium collected for the quarter, up from 13.7 cents a year earlier.
Investment income at the property casualty business fell to $342 million from $364 million a year earlier as lower interest rates limited what the company earned on its bond portfolio.
--With assistance from Noah Buhayar in New York. Editors: Dan Kraut, Dan Reichl