Chubb Corp (CB.N) posted a surprise operating profit even as the property and casualty insurer booked a pre-tax catastrophe loss of $882 million related to superstorm Sandy, the largest loss from a natural disaster in the company's history.
Chubb also said it planned to increase insurance rates in the U.S. Northeast, which was battered by Sandy on October 29.
Chubb was one of the most exposed insurers to the storm.
The company forecast operating earnings of between $6.40 and $6.80 per share for 2013, well above the average analyst estimate of $6.26.
"As we think about storm Sandy within the context of the last several years of increasing weather-related losses, we recognize the need for additional price increases," said Executive Vice President Dino Robusto said on a post-earnings conference call with analysts on Thursday.
"Prior to Sandy, we had implemented mid single-digit rate increases for homeowners in the Northeast," he said. "Post Sandy we plan to file for rate increases up to the low teens in some areas of the northeast."
Chubb said it had approved a new $1.3 billion share repurchase program to replace a $1.2 billion program suspended while it calculated losses from the storm.
The company had bought back about $979 million of shares under the earlier program.
Net income for the fourth quarter fell to $102 million, or 38 cents per share, from $452 million or $1.60 per share, a year earlier.
On an operating basis, profit fell more than 90 percent to $44 million, or 16 cents per share. Analysts on average had expected a loss of 45 cents per share, according to Thomson Reuters I/B/E/S.
Chubb has not posted an operating loss on a per-share basis since the third quarter of 2002, according to Thomson Reuters data.
Net written premiums for the fourth quarter declined 2 percent to $2.9 billion, while property and casualty investment income fell 6 percent to $296 million.
"We expect some benefit to be offset by what we assume will be a reversion to more normalized levels of non-CAT (weather losses)," Chief Executive John Finnegan said on the call.
"We also expect headwinds in the form of lower investment income in 2013 due to continued low interest rates."
Chubb's shares were up about 1.5 percent in extended trading after closing at $80.31 on the New York Stock Exchange.
The stock is trading at life-high levels and have gained more than 8 percent in the last month.
The S&P 500 property & casualty insurance index .SPLRCINPC has risen 9 percent in the same period.
(Reporting by Ashutosh Pandey in Bangalore; Editing by Maju Samuel and Ted Kerr)