Private-Equity Rebound Boosts Insurance Funds

The gains of Chubb Corp. and Travelers Cos. show alternative investments flourished in the fourth quarter.

(January 29, 2010) — U.S. property and casualty insurers Chubb Corp. and Travelers Cos. are continuing to profit from gains in private equity investments, following the global stock-market rally during the second half of 2009.

As of last year’s fourth quarter, Chubb held about $2.1 billion in alternative investments, which increased by $169 million in the last three months of 2009. Comparatively, its alternative investments, which include private equity, suffered a $125 million loss the year before during the same period, according to Bloomberg. The Warren, New Jersey-based insurer reported its fourth-quarter net income increased 71% to $695 million, compared to $407 million in the fourth quarter of 2008.

Travelers’ non-fixed income investments, including private equity, hedge funds and real estate partnerships, earned $69 million, beating analysts’ forecasts. Comparatively, it lost $164 million in the fourth quarter of 2008. Of its $75 billion portfolio, Travelers has about $3 billion in non-fixed income assets, Bloomberg reported.

The insurers’ positive earnings may signal the profitability of alternative investments in the fourth quarter, and suggest improvements for competing insurers with alternative investments.

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