income rose six percent, but fell short of Wall Street's expectations because of a poor performance in its large commercial property-casualty insurance business.

Warren, New Jersey-based Chubb, which has a Bermuda office, said operating income, which excludes realised investment gains, rose to $163.5 million compared with $154.4 million in the year-ago quarter.

On a per-share basis, operating income rose to $1.00, up from 90 cents in the year-ago quarter, but below Wall Street's consensus estimate of $1.04 as tallied by First Call.

Shares of Chubb fell $1.125 to to $63.75 in midday trading on the New York Stock Exchange.

Net income rose to $193.3 million, or $1.18 a share, compared with $184.2 million or $1.08 a share in the year-ago quarter.

Catastrophe losses in the second quarter were $46.8 million compared with $62.3 million in the year-ago quarter.

Net premiums written were flat in the second quarter at $1.4 billion.

In its standard commercial property-casualty business, premiums fell 9 percent to $455.4 million as the company turned down business that it believed was mispriced.

"We made continued progress in improving pricing in our standard commercial lines during the quarter,'' Chubb Chairman and Chief Executive Dean O'Hare said.

"We have retained business we want to keep at more attractive rates, while walking away from unprofitable or under-priced renewals,'' he said.

The commercial business remained unprofitable, producing a combined ratio of 120.8 percent compared with 121.1 percent in the year ago quarter.

The combined ratio is a key measure of underwriting profitability. A ratio below 100 percent indicates an underwriting profit.

O'Hare said it will take at least two renewal cycles to adequately reprice the entire standard commercial book of business and during that time, the company will continue to have losses from non-renewed policies.

He said it will be mid-2000 before the benefits of the repricing action flow to the bottom line.

Chubb said speciality commercial premiums were flat at $527.7 million.

But Chubb said its personal property insurance business turned in a strong performance.