EX-99.2 3 y05212exv99w2.htm EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION REPORT EX-99.2
 

Exhibit 99.2

         
   
 
        
The
  Supplementary   December 31, 2004
Chubb
  Investor    
Corporation
  Information    
 
 
        
     
This report is for informational purposes only. It should be read in conjunction with documents filed by The Chubb Corporation with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
  (CHUBB LOGO)

 

 

THE CHUBB CORPORATION
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
DECEMBER 31, 2004

           
      Page  
   
 
      
   
The Chubb Corporation:
      
   
Consolidated Balance Sheet Highlights
   1  
   
 
      
   
Summary of Invested Assets:
      
   
Corporate
   2  
   
Property and Casualty
   2  
   
 
      
   
Investment Income After Taxes:
      
   
Corporate
   3  
   
Property and Casualty
   3  
   
 
      
   
Property and Casualty Insurance Group:
      
   
Statutory Policyholders’ Surplus
   3  
   
Change in Net Unpaid Losses
   4  
   
Underwriting Results — Year-to-Date
   5-8  
   
Underwriting Results — Quarterly
   9-12  
   
 
      
   
Definitions of Key Terms
   13  

 

 

THE CHUBB CORPORATION

CONSOLIDATED BALANCE SHEET HIGHLIGHTS
AS OF DECEMBER 31

                 
    2004     2003  
    (in millions)  
Invested Assets (at carrying value)
                
Short Term Investments
   $ 1,307.5     $ 2,695.9  
Fixed Maturities
                
Tax Exempt
     14,388.5       11,621.0  
Taxable
     13,620.8       10,790.7  
Equity Securities
     1,841.3       1,514.4  
 
            
Total Invested Assets
   $ 31,158.1     $ 26,622.0  
 
            
 
                
Unrealized Appreciation of Fixed Maturities Carried at Amortized Cost
   $ 21.1     $ 35.2  
 
                
Capitalization
                
Long Term Debt
   $ 2,813.7     $ 2,813.9  
Shareholders’ Equity
     10,126.4       8,522.0  
 
            
Total Capitalization
   $ 12,940.1     $ 11,335.9  
 
            
 
                
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION
     21.7 %     24.8 %
 
                
Actual Common Shares Outstanding
     192.7       188.0  
 
                
Book Value Per Common Share
   $ 52.55     $ 45.33  
 
                
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost
   $ 49.83     $ 42.21  

Page 1 of 13

 

THE CHUBB CORPORATION

SUMMARY OF INVESTED ASSETS
AS OF DECEMBER 31

CORPORATE

                                                 
    Cost or     Market     Carrying  
    Amortized Cost     Value     Value  
    2004     2003     2004     2003     2004     2003  
    (in millions)  
Short Term Investments
   $ 219.8     $ 714.3     $ 219.8     $ 714.3     $ 219.8     $ 714.3  
Taxable Fixed Maturities
     1,098.5       433.1       1,108.7       436.4       1,108.7       436.4  
Equity Securities
     4.7       8.4       7.3       9.5       7.3       9.5  
 
                                    
TOTAL
   $ 1,323.0     $ 1,155.8     $ 1,335.8     $ 1,160.2     $ 1,335.8     $ 1,160.2  
 
                                    

PROPERTY AND CASUALTY

                                                 
    Cost or     Market     Carrying  
    Amortized Cost     Value     Value  
    2004     2003     2004     2003     2004     2003  
    (in millions)  
Short Term Investments
   $ 1,087.7     $ 1,981.6     $ 1,087.7     $ 1,981.6     $ 1,087.7     $ 1,981.6  
Fixed Maturities
                                                
Tax Exempt
     13,839.8       10,976.7       14,409.6       11,656.2       14,388.5       11,621.0  
Taxable
     12,264.2       10,098.7       12,512.1       10,354.3       12,512.1       10,354.3  
Common Stocks
     1,645.7       1,333.3       1,791.3       1,458.2       1,791.3       1,458.2  
Preferred Stocks
     36.9       39.7       42.7       46.7       42.7       46.7  
 
                                    
TOTAL
   $ 28,874.3     $ 24,430.0     $ 29,843.4     $ 25,497.0     $ 29,822.3     $ 25,461.8  
 
                                    

Page 2 of 13

 

THE CHUBB CORPORATION

INVESTMENT INCOME AFTER TAXES

                                 
    PERIODS ENDED DECEMBER 31  
    FOURTH QUARTER     TWELVE MONTHS  
    2004     2003     2004     2003  
    (in millions)  
CORPORATE INVESTMENT INCOME
   $ 8.0     $ 8.1     $ 30.8     $ 20.3  
 
                        
 
                                
PROPERTY AND CASUALTY INVESTMENT INCOME
                                
(Amounts are shown net of applicable income taxes)
                                
 
                                
Dividends
   $ 13.9     $ 10.2     $ 40.1     $ 30.1  
Taxable Interest
     97.9       91.7       370.6       344.8  
Tax Exempt Interest
     145.3       126.7       553.4       484.1  
Investment Expenses
     (3.6 )     (4.6 )     (14.8 )     (15.9 )
 
                        
 
                                
TOTAL
   $ 253.5     $ 224.0     $ 949.3     $ 843.1  
 
                        
Effective Tax Rate
     19.9 %     20.5 %     19.8 %     20.3 %
 
                                
After Tax Annualized Yield
     3.56 %     3.73 %     3.55 %     3.80 %

After tax annualized yield is based on the average invested assets for the periods presented with fixed maturities at amortized cost and equity securities at market value.

PROPERTY AND CASUALTY STATUTORY POLICYHOLDERS’ SURPLUS

                         
    Dec. 31     Dec. 31     Dec. 31  
    2004     2003     2002  
    (in millions)  
Estimated Statutory Policyholders’ Surplus
   $ 7,800     $ 6,368     $ 4,512  
 
                        
Rolling Year Statutory Net Premiums Written
     12,005       11,071       9,034  
 
                        
Ratio of Statutory Net Premiums Written to Estimated Policyholders’ Surplus
     1.54:1       1.74:1       2.00:1  

Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.

Page 3 of 13

 

THE CHUBB CORPORATION

PROPERTY AND CASUALTY

CHANGE IN NET UNPAID LOSSES
TWELVE MONTHS ENDED DECEMBER 31, 2004

                                         
                                    All Other  
    Net Unpaid Losses             Unpaid Losses  
                            IBNR     Increase  
    12/31/04     12/31/03     Increase     Increase     (Decrease)  
    (in millions)  
PERSONAL INSURANCE
                                        
Automobile
   $ 378.4     $ 342.6     $ 35.8     $ 12.9     $ 22.9  
Homeowners
     648.3       564.2       84.1       37.5       46.6  
Other
     372.5       312.0       60.5       28.8       31.7  
 
                              
Total Personal
     1,399.2       1,218.8       180.4       79.2       101.2  
 
                              
COMMERCIAL INSURANCE
                                        
Multiple Peril
     1,303.9       1,248.2       55.7       153.7       (98.0 )
Casualty
     4,157.6       3,922.6       235.0       197.8       37.2  
Workers’ Compensation
     1,110.0       890.9       219.1       167.4       51.7  
Property and Marine
     518.6       483.1       35.5       30.7       4.8  
 
                              
Total Commercial
     7,090.1       6,544.8       545.3       549.6       (4.3 )
 
                              
SPECIALTY INSURANCE
                                        
Executive Protection
     4,780.6       3,995.0       785.6       579.0       206.6  
Financial Institutions
     2,074.8       1,720.4       354.4       216.8       137.6  
Other
     1,464.0       1,042.2       421.8       267.9       153.9  
 
                              
Total Specialty
     8,319.4       6,757.6       1,561.8       1,063.7       498.1  
 
                              
TOTAL
   $ 16,808.7     $ 14,521.2     $ 2,287.5     $ 1,692.5     $ 595.0  
 
                              

Page 4 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2004     2003     2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 629.1     $ 590.0     $ 1,635.3     $ 1,485.4     $ 565.9     $ 514.9     $ 2,830.3     $ 2,590.3  
Increase (Decrease) in Unearned Premiums
     21.5       30.3       73.3       98.6       25.5       22.0       120.3       150.9  
 
                                                
Net Premiums Earned
     607.6       559.7       1,562.0       1,386.8       540.4       492.9       2,710.0       2,439.4  
 
                                                
Net Losses Paid
     368.2       354.2       905.9       892.4       218.3       193.7       1,492.4       1,440.3  
Increase (Decrease) in Outstanding Losses
     35.8       35.9       84.1       75.9       60.5       40.7       180.4       152.5  
 
                                                
Net Losses Incurred
     404.0       390.1       990.0       968.3       278.8       234.4       1,672.8       1,592.8  
 
                                                
Expenses Incurred
     168.9       172.2       537.7       513.6       173.4       166.0       880.0       851.8  
Dividends Incurred
     0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
 
                                                
Statutory Underwriting Income (Loss)
   $ 34.7     $ (2.6 )   $ 34.3     $ (95.1 )   $ 88.2     $ 92.5     $ 157.2     $ (5.2 )
 
                                                
Ratios After Dividends to Policyholders:
                                                                
Loss
     66.5 %     69.7 %     63.4 %     69.8 %     51.6 %     47.6 %     61.7 %     65.3 %
Expense
     26.8       29.2       32.9       34.6       30.6       32.2       31.1       32.9  
 
                                                
Combined
     93.3 %     98.9 %     96.3 %     104.4 %     82.2 %     79.8 %     92.8 %     98.2 %
 
                                                
Premiums Written as a % of Total
     5.2 %     5.3 %     13.6 %     13.4 %     4.7 %     4.7 %     23.5 %     23.4 %

Page 5 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                                                 
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2004     2003     2004     2003     2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 1,191.4     $ 1,088.6     $ 1,552.1     $ 1,362.1     $ 741.5     $ 625.9     $ 1,078.5     $ 1,032.4     $ 4,563.5     $ 4,109.0  
Increase (Decrease) in Unearned Premiums
     40.8       72.8       82.3       125.0       42.0       75.7       1.3       51.1       166.4       324.6  
 
                                                            
Net Premiums Earned
     1,150.6       1,015.8       1,469.8       1,237.1       699.5       550.2       1,077.2       981.3       4,397.1       3,784.4  
 
                                                            
Net Losses Paid
     453.7       516.8       714.8       583.0       254.1       234.9       393.7       415.9       1,816.3       1,750.6  
Increase (Decrease) in Outstanding Losses
     55.7       23.8       235.0       396.6       219.1       144.3       35.5       111.9       545.3       676.6  
 
                                                            
Net Losses Incurred
     509.4       540.6       949.8       979.6       473.2       379.2       429.2       527.8       2,361.6       2,427.2  
 
                                                            
Expenses Incurred
     401.2       397.6       420.3       391.9       168.4       149.1       366.6       352.5       1,356.5       1,291.1  
Dividends Incurred
     0.0       0.0       0.0       0.0       18.2       11.9       0.0       0.0       18.2       11.9  
 
                                                            
Statutory Underwriting Income (Loss)
   $ 240.0     $ 77.6     $ 99.7     $ (134.4 )   $ 39.7     $ 10.0     $ 281.4     $ 101.0     $ 660.8     $ 54.2  
 
                                                            
Ratios After Dividends to Policyholders:
                                                                                
Loss
     44.3 %     53.2 %     64.6 %     79.2 %     69.4 %     70.4 %     39.8 %     53.8 %     53.9 %     64.4 %
Expense
     33.6       36.5       27.1       28.8       23.3       24.3       34.0       34.1       29.9       31.5  
 
                                                            
Combined
     77.9 %     89.7 %     91.7 %     108.0 %     92.7 %     94.7 %     73.8 %     87.9 %     83.8 %     95.9 %
 
                                                            
Premiums Written as a % of Total
     9.9 %     9.8 %     12.9 %     12.3 %     6.1 %     5.7 %     8.9 %     9.3 %     37.8 %     37.1 %

The Property and Casualty underwriting results for 2004 include the effect of net losses of $75.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 75.3% for Multiple Peril, 88.6% for Casualty and 82.1% for Total Commercial.

The Property and Casualty underwriting results for 2003 include the effect of net losses of $250.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 87.8% for Casualty and 89.2% for Total Commercial.

Page 6 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                                                 
    Executive     Financial     Other     Total     Worldwide  
    Protection     Institutions     Specialty     Specialty     Total  
    2004     2003     2004     2003     2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 2,201.0     $ 2,113.6     $ 871.6     $ 830.0     $ ,1586.5     $ 1,425.0     $ 4,659.1     $ 4,368.6     $ 12,052.9     $ 11,067.9  
Increase (Decrease) in Unearned Premiums
     64.3       162.8       33.1       44.3       33.1       202.8       130.5       409.9       417.2       885.4  
 
                                                            
Net Premiums Earned
     2,136.7       1,950.8       838.5       785.7       1,553.4       1,222.2       4,528.6       3,958.7       11,635.7       10,182.5  
 
                                                            
Net Losses Paid
     887.8       899.6       418.2       515.3       418.7       381.8       1,724.7       1,796.7       5,033.4       4,987.6  
Increase (Decrease) in Outstanding Losses
     785.6       659.7       354.4       139.9       421.8       250.9       1,561.8       1,050.5       2,287.5       1,879.6  
 
                                                            
Net Losses Incurred
     1,673.4       1,559.3       772.6       655.2       840.5       632.7       3,286.5       2,847.2       7,320.9       6,867.2  
 
                                                            
Expenses Incurred
     519.7       506.0       218.3       220.9       541.4       486.5       1,279.4       1,213.4       3,515.9       3,356.3  
Dividends Incurred
     0.0       0.0       7.7       7.1       3.5       3.8       11.2       10.9       29.4       22.8  
 
                                                            
Statutory Underwriting Income (Loss)
   $ (56.4 )   $ (114.5 )   $ (160.1 )   $ (97.5 )   $ 168.0     $ 99.2     $ (48.5 )   $ (112.8 )     769.5       (63.8 )
 
                                                                
Increase in Deferred Acquisition Costs
                                                                     76.6       168.3  
 
                                                                            
GAAP Underwriting Income
                                                                   $ 846.1     $ 104.5  
 
                                                                            
Ratios After Dividends to Policyholders:
                                                                                
Loss
     78.3 %     79.9 %     93.0 %     84.2 %     54.2 %     52.0 %     72.8 %     72.1 %     63.1 %     67.6 %
Expense
     23.6       24.0       25.3       26.8       34.2       34.2       27.5       27.9       29.2       30.4  
 
                                                            
Combined
     101.9 %     103.9 %     118.3 %     111.0 %     88.4 %     86.2 %     100.3 %     100.0 %     92.3 %     98.0 %
 
                                                            
Premiums Written as a % of Total
     18.3 %     19.1 %     7.2 %     7.5 %     13.2 %     12.9 %     38.7 %     39.5 %     100.0 %     100.0 %

The Property and Casualty underwriting results for 2004 include the effect of net losses of $75.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 91.7% for Worldwide Total.

The Property and Casualty underwriting results for 2003 include the effect of net losses of $250.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 95.5% for Worldwide Total.

Page 7 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                 
                                    Worldwide  
    United States     Foreign     Total  
    2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 9,885.4     $ 9,134.4     $ 2,167.5     $ 1,933.5     $ 12,052.9     $ 11,067.9  
Increase (Decrease) in Unearned Premiums
     353.7       780.1       63.5       105.3       417.2       885.4  
 
                                    
Net Premiums Earned
     9,531.7       8,354.3       2,104.0       1,828.2       11,635.7       10,182.5  
 
                                    
Net Losses Paid
     4,481.3       4,580.4       552.1       407.2       5,033.4       4,987.6  
Increase (Decrease) in Outstanding Losses
     1,565.2       1,236.0       722.3       643.6       2,287.5       1,879.6  
 
                                    
Net Losses Incurred
     6,046.5       5,816.4       1,274.4       1,050.8       7,320.9       6,867.2  
 
                                    
Expenses Incurred
     2,795.7       2,685.8       720.2       670.5       3,515.9       3,356.3  
Dividends Incurred
     29.4       22.8       0.0       0.0       29.4       22.8  
 
                                    
Statutory Underwriting Income (Loss)
   $ 660.1     $ (170.7 )   $ 109.4     $ 106.9       769.5       (63.8 )
 
                                        
Increase in Deferred Acquisition Costs
                                     76.6       168.3  
 
                                            
GAAP Underwriting Income
                                   $ 846.1     $ 104.5  
 
                                            
Ratios After Dividends to Policyholders:
                                                
Loss
     63.6 %     69.8 %     60.6 %     57.5 %     63.1 %     67.6 %
Expense
     28.4       29.5       33.2       34.7       29.2       30.4  
 
                                    
Combined
     92.0 %     99.3 %     93.8 %     92.2 %     92.3 %     98.0 %
 
                                    
Premiums Written as a % of Total
     82.0 %     82.5 %     18.0 %     17.5 %     100.0 %     100.0 %

Page 8 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2004     2003     2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 155.0     $ 146.4     $ 417.7     $ 371.2     $ 140.2     $ 123.5     $ 712.9     $ 641.1  
Increase (Decrease) in Unearned Premiums
     0.6       1.9       10.4       5.0       (0.1 )     (1.2 )     10.9       5.7  
 
                                                
Net Premiums Earned
     154.4       144.5       407.3       366.2       140.3       124.7       702.0       635.4  
 
                                                
Net Losses Paid
     98.2       92.5       234.6       238.9       63.7       48.2       396.5       379.6  
Increase (Decrease) in Outstanding Losses
     2.0       9.3       (58.8 )     (5.5 )     7.3       17.5       (49.5 )     21.3  
 
                                                
Net Losses Incurred
     100.2       101.8       175.8       233.4       71.0       65.7       347.0       400.9  
 
                                                
Expenses Incurred
     40.3       41.7       137.0       128.4       43.9       41.0       221.2       211.1  
Dividends Incurred
     0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0  
 
                                                
Statutory Underwriting Income (Loss)
   $ 13.9     $ 1.0     $ 94.5     $ 4.4     $ 25.4     $ 18.0     $ 133.8     $ 23.4  
 
                                                
Ratios After Dividends to Policyholders:
                                                                
Loss
     64.9 %     70.4 %     43.2 %     63.7 %     50.6 %     52.7 %     49.5 %     63.1 %
Expense
     26.0       28.5       32.8       34.6       31.3       33.2       31.0       32.9  
 
                                                
Combined
    90.9 %     98.9 %     76.0 %     98.3 %     81.9 %     85.9 %     80.5 %     96.0 %
 
                                                
Premiums Written as a % of Total
     4.9 %     5.0 %     13.6 %     12.7 %     4.6 %     4.2 %     23.1 %     21.9 %

Page 9 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                                                 
    Commercial     Commercial     Workers'     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2004     2003     2004     2003     2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 312.0     $ 279.2     $ 382.1     $ 352.1     $ 168.3     $ 150.0     $ 261.7     $ 266.3     $ 1,124.1     $ 1,047.6  
Increase (Decrease) in Unearned Premiums
     8.9       19.5       1.0       15.9       (12.2 )     1.6       (9.9 )     12.4       (12.2 )     49.4  
 
                                                            
Net Premiums Earned
     303.1       259.7       381.1       336.2       180.5       148.4       271.6       253.9       1,136.3       998.2  
 
                                                            
Net Losses Paid
     115.3       115.2       146.1       168.2       60.5       56.8       93.2       84.3       415.1       424.5  
Increase (Decrease) in Outstanding Losses
     34.8       18.4       150.8       273.2       65.1       55.5       34.4       43.0       285.1       390.1  
 
                                                            
Net Losses Incurred
     150.1       133.6       296.9       441.4       125.6       112.3       127.6       127.3       700.2       814.6  
 
                                                            
Expenses Incurred
     99.4       102.1       101.8       99.6       39.5       36.7       80.6       90.3       321.3       328.7  
Dividends Incurred
     0.0       0.0       0.0       0.0       4.8       2.2       0.0       0.0       4.8       2.2  
 
                                                            
Statutory Underwriting Income (Loss)
   $ 53.6     $ 24.0     $ (17.6 )   $ (204.8 )   $ 10.6     $ (2.8 )   $ 63.4     $ 36.3     $ 110.0     $ (147.3 )
 
                                                            
Ratios After Dividends to Policyholders:
                                                                                
Loss
     49.5 %     51.4 %     77.9 %     131.3 %     71.5 %     76.8 %     47.0 %     50.2 %     61.9 %     81.8 %
Expense
     31.9       36.6       26.7       28.3       24.2       24.8       30.8       33.9       28.7       31.4  
 
                                                            
Combined
     81.4 %     88.0 %     104.6 %     159.6 %     95.7 %     101.6 %     77.8 %     84.1 %     90.6 %     113.2 %
 
                                                            
Premiums Written as a % of Total
     10.1 %     9.5 %     12.4 %     12.0 %     5.5 %     5.1 %     8.5 %     9.1 %     36.5 %     35.7 %

The Property and Casualty underwriting results for the fourth quarter of 2004 include the effect of net losses of $75.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 71.5% for Multiple Peril, 92.7% for Casualty and 84.0% for Total Commercial.

The Property and Casualty underwriting results for the fourth quarter of 2003 include the effect of net losses of $250.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 85.2% for Casualty and 88.1% for Total Commercial.

Page 10 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                                                 
    Executive     Financial     Other     Total     Worldwide  
    Protection     Institutions     Specialty     Specialty     Total  
    2004     2003     2004     2003     2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 590.7     $ 587.6     $ 231.9     $ 226.6     $ 420.6     $ 427.5     $ 1,243.2     $ 1,241.7     $ 3,080.2     $ 2,930.4  
Increase (Decrease) in Unearned Premiums
     47.5       73.4       10.1       18.8       (1.2 )     67.2       56.4       159.4       55.1       214.5  
 
                                                            
Net Premiums Earned
     543.2       514.2       221.8       207.8       421.8       360.3       1,186.8       1,082.3       3,025.1       2,715.9  
 
                                                            
Net Losses Paid
     139.3       240.8       173.6       117.7       125.4       116.1       438.3       474.6       1,249.9       1,278.7  
Increase (Decrease) in Outstanding Losses
     317.4       184.0       (4.8 )     56.1       94.5       87.0       407.1       327.1       642.7       738.5  
 
                                                            
Net Losses Incurred
     456.7       424.8       168.8       173.8       219.9       203.1       845.4       801.7       1,892.6       2,017.2  
 
                                                            
Expenses Incurred
     120.4       124.7       52.3       57.2       142.0       144.3       314.7       326.2       857.2       866.0  
Dividends Incurred
     0.0       0.0       1.8       1.5       1.0       1.1       2.8       2.6       7.6       4.8  
 
                                                            
Statutory Underwriting Income (Loss)
   $ (33.9 )   $ (35.3 )   $ (1.1 )   $ (24.7 )   $ 58.9     $ 11.8     $ 23.9     $ (48.2 )     267.7       (172.1 )
 
                                                                
Increase in Deferred Acquisition Costs
                                                                     11.6       34.6  
 
                                                                            
GAAP Underwriting Income (Loss)
                                                                   $ 279.3     $ (137.5 )
 
                                                                            
Ratios After Dividends to Policyholders:
                                                                                
Loss
     84.1 %     82.6 %     76.8 %     84.3 %     52.3 %     56.6 %     71.4 %     74.3 %     62.7 %     74.4 %
Expense
     20.4       21.2       22.7       25.4       33.8       33.8       25.4       26.3       27.9       29.6  
 
                                                            
Combined
     104.5 %     103.8 %     99.5 %     109.7 %     86.1 %     90.4 %     96.8 %     100.6 %     90.6 %     104.0 %
 
                                                            
Premiums Written as a % of Total
     19.2 %     20.1 %     7.5 %     7.7 %     13.7 %     14.6 %     40.4 %     42.4 %     100.0 %     100.0 %

The Property and Casualty underwriting results for the fourth quarter of 2004 include the effect of net losses of $75.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 88.1% for Worldwide Total.

The Property and Casualty underwriting results for the fourth quarter of 2003 include the effect of net losses of $250.0 million related to asbestos claims. Excluding the effect of the asbestos losses, the combined loss and expense ratio was 94.8% for Worldwide Total.

Page 11 of 13

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(MILLIONS OF DOLLARS)

                                                 
                                    Worldwide  
    United States     Foreign     Total  
    2004     2003     2004     2003     2004     2003  
Net Premiums Written
   $ 2,509.2     $ 2,399.2     $ 571.0     $ 531.2     $ 3,080.2     $ 2,930.4  
Increase (Decrease) in Unearned Premiums
     32.8       176.5       22.3       38.0       55.1       214.5  
 
                                    
Net Premiums Earned
     2,476.4       2,222.7       548.7       493.2       3,025.1       2,715.9  
 
                                    
Net Losses Paid
     1,226.7       1,230.3       23.2       48.4       1,249.9       1,278.7  
Increase (Decrease) in Outstanding Losses
     302.7       487.4       340.0       251.1       642.7       738.5  
 
                                    
Net Losses Incurred
     1,529.4       1,717.7       363.2       299.5       1,892.6       2,017.2  
 
                                    
Expenses Incurred
     679.7       690.8       177.5       175.2       857.2       866.0  
Dividends Incurred
     7.6       4.8       0.0       0.0       7.6       4.8  
 
                                    
Statutory Underwriting Income (Loss)
   $ 259.7     $ (190.6 )   $ 8.0     $ 18.5       267.7       (172.1 )
 
                                        
Increase in Deferred Acquisition Costs
                                     11.6       34.6  
 
                                            
GAAP Underwriting Income (Loss)
                                   $ 279.3     $ (137.5 )
 
                                            
Ratios After Dividends to Policyholders:
                                                
Loss
     61.9 %     77.4 %     66.2 %     60.7 %     62.7 %     74.4 %
Expense
     27.2       28.9       31.1       33.0       27.9       29.6  
 
                                    
Combined
    89.1 %     106.3 %     97.3 %     93.7 %     90.6 %     104.0 %
 
                                    
Premiums Written as a % of Total
    81.5 %     81.9 %     18.5 %     18.1 %     100.0 %     100.0 %

Page 12 of 13

 

THE CHUBB CORPORATION

Definitions of Key Terms

Underwriting Income (Loss)
Management evaluates underwriting results separately from investment results. The underwriting operations consist of three separate business units: personal insurance, commercial insurance and specialty insurance. Performance of the business units is based on statutory underwriting results. Statutory accounting principles differ in certain respects from generally accepted accounting principles (GAAP). Under statutory accounting principles, policy acquisition and other underwriting expenses are recognized immediately, not at the time premiums are earned. Statutory underwriting income (loss) is arrived at by reducing premiums earned by losses and loss expenses incurred and statutory underwriting expenses incurred.

Management uses underwriting results determined in accordance with GAAP, among other measures, to assess the overall performance of the underwriting operations. To convert statutory underwriting results to a GAAP basis, policy acquisition expenses are deferred and amortized over the period in which the related premiums are earned. Underwriting income (loss) determined in accordance with GAAP is defined as premiums earned less losses and loss expenses incurred and GAAP underwriting expenses incurred.

Property and Casualty Investment Income After Income Tax
Management uses property and casualty investment income after income tax, a non-GAAP financial measure, to evaluate its investment performance because it reflects the impact of any change in the proportion of the investment portfolio invested in tax-exempt securities and is therefore more meaningful for analysis purposes than investment income before income taxes.

Book Value per Common Share with Available-for-Sale Fixed Maturities at Amortized Cost
Book value per share represents the portion of consolidated shareholders’ equity attributable to one share of common stock outstanding as of the balance sheet date. Consolidated shareholders’ equity includes, as part of accumulated other comprehensive income, the after-tax appreciation or depreciation on the Corporation’s available-for-sale fixed maturities, which are carried at market value. The appreciation or depreciation on available-for-sale fixed maturities is subject to fluctuation due to changes in interest rates and therefore could distort the analysis of trends. Management believes that book value per common share with available-for-sale fixed maturities at amortized cost, a non-GAAP financial measure, is an important measure of the underlying equity attributable to one share of common stock.

Combined Ratio or Combined Loss and Expense Ratio
The combined loss and expense ratio, expressed as a percentage, is the key measure of underwriting profitability. Management uses the combined loss and expense ratio calculated in accordance with statutory accounting principles applicable to property and casualty insurance companies to evaluate the performance of the underwriting operations. It is the sum of the ratio of losses and loss expenses to premiums earned (loss ratio) plus the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.

Page 13 of 13