A number of insurers have begun to release their financial results for Q3 2010. The following is a compilation of their announcements:

 

The Allstate Corp.

The Allstate Corporation reported financial results for the third quarter of 2010. The insurer’s third-quarter 2010 net income was $367 million, or $0.68 per diluted share, compared to $221 million in the third quarter of 2009, primarily due to lower realized capital losses in 2010 versus 2009. Operating income was $452 million, or $0.83 per diluted share, in the third quarter of 2010 compared to $538 million in the same period of 2009, reflecting a decline in property/liability partly offset by increases in Allstate Financial.

“Profitability at Allstate Protection remains strong, with the underlying combined ratio consistently meeting our annual outlook range,” said Thomas Wilson, chairman, president and CEO. “We remain comfortable with our range of 88 to 90 for the year. Overall policies in force declined, but standard auto new issued applications improved as we implemented new marketing and growth initiatives. Allstate Financial’s net and operating income improved this quarter from a year ago, reflecting progress on its strategic repositioning.”

Allstate’s consolidated investment portfolio was $102.2 billion at September 30, 2010, up $2.3 billion from June 30, 2010, as strong investment returns more than offset impacts from reductions in Allstate Financial’s contractholder funds. Investment returns reflect lower interest rates, improved equity markets, and significant cash flow generated by the portfolio. Allstate’s net unrealized gain at September 30, 2010 was $2.7 billion, pre-tax, compared to a net unrealized gain of $400 million, pre-tax, at June 30, 2010 and a net unrealized loss of $2.5 billion, pre-tax, at September 30, 2009.

 

Aflac Inc.

Aflac Inc. reported its Q3 results. Reflecting the benefit from a stronger yen/dollar exchange rate, Aflac reported that its total revenues rose 19.2% to $5.4 billion during Q3 2010, compared with a year ago. The insurer's net earnings were $690 million, or $1.46 per diluted share, compared with $363 million, or $.77 per share, a year ago.  

Aflac's net earnings in Q3 2010 included after-tax realized investment gains of $6 million, or $.01 per diluted share, compared with realized investment losses of $226 million, or $.48 per share a year ago. The company's realized investment gains in Q3 included several small securities transactions and impairments that produced a net loss of $3 million, or $.01 per diluted share.

Additionally, the company recognized a gain of $9 million, or $.02 per diluted share, from valuing foreign currency, interest rate and credit default swaps on certain variable interest entities that were required to be consolidated following adoption of Accounting Standards Codification (ASC) 810, effective Jan. 1, 2010. The bonds associated with these swaps were in an unrealized gain position at Sept. 30, 2010, and changes in the fair value of the bonds are reflected in shareholders' equity.

Aflac believes that an analysis of operating earnings, a non-GAAP financial measure, is vitally important to an understanding of the company's underlying profitability drivers. Aflac defines operating earnings as the profits derived from operations before realized investment gains and losses from securities transactions and the impacts from ASC 810 and ASC 815, as well as nonrecurring items. Management uses operating earnings to evaluate the financial performance of Aflac's insurance operations because realized gains and losses from securities transactions, the impacts from ASC 810 and ASC 815, and nonrecurring items tend to be driven by general economic conditions and events, and therefore may obscure the underlying fundamentals and trends in Aflac's insurance operations.

 

Arthur J. Gallagher & Co.

Arthur J. Gallagher & Co. reported its financial results for the quarter and 9-month period ended Sept. 30, 2010.  

The insurer's Q3 compensation expense ratio was 0.1 pts lower than the same period in 2009. After eliminating the impact of book gains and supplemental commission timing, the third quarter compensation expense ratio was 1.2 pts higher than the same period in 2009. Increased producer and field management incentive compensation costs of 1.1 pts and increased management and long-term deferred stock-based compensation costs of 0.9 pts, partially offset by 1.1 pts due to reduced headcount, primarily impacted the ratio.

"We are encouraged by our results and accomplishments this quarter," J. Patrick Gallagher Jr., chairman, president and CEO, said in a statement. "Posting slightly positive organic growth in our Brokerage Segment in this rate and economic environment is a testament to our sales culture. In Risk Management, the team did an excellent job of closing the GAB Robins transaction and we are actively welcoming over 400 employees and over 200 clients to Gallagher Bassett. Throughout the company, we continue to build tremendous resources that provide great service to our clients."

Additionally, the company's Q3 operating expense ratio was 0.5 pts lower than the same period in 2009. After eliminating the impact of book gains and supplemental commission timing, the third quarter operating expense ratio was 0.2 pts lower than the same period in 2009. All operating expense categories were generally consistent with the same period in 2009.

 

The Chubb Corp.

The Chubb Corp. reported that net income in Q3 2010 was $572 million or $1.80 per share, compared to $596 million or $1.69 per share in Q3 2009. Average diluted shares outstanding for the third quarter were 317.3 million in 2010 and 353.5 million in 2009.

Operating income, which Chubb defines as net income excluding after-tax realized investment gains and losses, was $537 million in the third quarter of 2010 compared to $552 million in the third quarter of 2009. Operating income per share increased 8% to $1.69 from $1.56.

Chubb says that the impact of catastrophes in Q3 2010 was $58 million pre-tax, compared with $22 million pre-tax in the third quarter of 2009.  The impact of catastrophes on third quarter net income and operating income per share was $0.12 in 2010 and $0.04 in 2009. 

Net written premiums for Q3 2010 were up 1% to $2.7 billion. Foreign currency translation did not have a significant effect on premiums, which were flat in the U.S. and up 6% outside the U.S. (up 4% in local currencies). 

The third-quarter combined loss and expense ratio was 86.2% in 2010, compared to 85.4% in 2009. The impact of catastrophes in Q3 2010 accounted for 2.1 percentage points of the combined ratio, compared to 0.8 points in the third quarter of 2009. Excluding catastrophes, the combined ratio for the third quarter improved to 84.1% in 2010 from 84.6% in 2009.  

The expense ratio for the third quarter was 31.7% in 2010 and 31.2% in 2009.

Property/casualty investment income after taxes for the third quarter was $317 million, unchanged from 2009.

Net income for the third quarter of 2010 reflected net realized investment gains of $54 million pre-tax ($0.11 per share after-tax), compared to $69 million pre-tax ($0.13 per share after-tax) in Q3 2009.

During the third quarter, Chubb repurchased 10.2 million shares of its common stock at a total cost of $555 million (an average cost of $54.63 per share). As of Sept. 30, 2010, there were 6.6 million shares of common stock remaining under the current repurchase authorization.

"In the third quarter, Chubb again demonstrated the ability to generate outstanding profitability and book value growth during a period of challenging economic and industry conditions," said John D. Finnegan, chairman, president and CEO. "By continuing our focus on the bottom line and maintaining our discipline in risk selection and pricing, all three business units produced excellent results. Based on these results for the third quarter and our favorable outlook for the fourth quarter, we are increasing our 2010 full-year operating income per share guidance to a range of $5.75 to $5.85 from the previous guidance range of $5.15 to $5.55. This revised guidance is based on operating income per share of $4.22 in the first nine months and our forecast of a range of $1.53 to $1.63 for the fourth quarter." 

 

The Travelers Cos. Inc. 

The Travelers Cos. Inc. has reported net income of $1.005 billion, or $2.11 per diluted share, for the quarter ended Sept. 30, 2010, compared to $935 million, or $1.65 per diluted share, for the same quarter in 2009. Operating income in the current quarter was $858 million, or $1.81 per diluted share, compared to $914 million, or $1.61 per diluted share, in the prior year quarter.

Travelers Chairman and CEO Jay Fishman described the company's third-quarter results as "very strong." Total revenues of $6.482 billion represent a 2% growth compared with Q3 2009.

Travelers had a 15% return on equity for the quarter and a consolidated combined ratio of 90.6%, which Fishman attributed to strong underwriting results across each of the company's business segments.

"Net investment income remained solid although modestly lower than the prior year quarter," Fishman said.

In personal lines, the company saw "positive renewal premium changes," Fishman said. The number of policies grew through retention and the addition of new business.

"While current profitability across our diversified commercial insurance businesses is solid, the general economic environment continues to present challenges," Fishman said.

Commercial business challenges include low reinvestment yields, exposure and flat pricing, he said.

"On a positive note, our retention continues to be, in general, at historical highs and loss cost trends remain benign," Fishman said. Account growth in Travelers business insurance sector has been "impressive," Fishman added.

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