-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UqBMmKOoPnpJM6GQmRx5a+x0etzGXiphtMahm4aZZSNF1A5Dr43GTus9LI/oUi6Z /ZVfz/5AS0o32IcLti7bUg== 0000950123-08-008276.txt : 20080724 0000950123-08-008276.hdr.sgml : 20080724 20080724161725 ACCESSION NUMBER: 0000950123-08-008276 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080724 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080724 DATE AS OF CHANGE: 20080724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHUBB CORP CENTRAL INDEX KEY: 0000020171 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 132595722 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08661 FILM NUMBER: 08968451 BUSINESS ADDRESS: STREET 1: 15 MOUNTAIN VIEW ROAD CITY: WARREN STATE: NJ ZIP: 07061 BUSINESS PHONE: 9089032000 MAIL ADDRESS: STREET 1: 15 MOUNTAIN VIEW ROAD CITY: WARREN STATE: NJ ZIP: 07061 8-K 1 y63796e8vk.htm FORM 8-K FORM 8-K
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
     
Date of Report (Date of earliest event reported)   July 24, 2008
     
 
THE CHUBB CORPORATION
(Exact name of registrant as specified in its charter)
         
New Jersey   1-8661   13-2595722
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer Identification No.)
     
15 Mountain View Road, Warren, New Jersey   07059
(Address of principal executive offices)   (Zip Code)
     
Registrant’s telephone number, including area code   (908) 903-2000
     
 
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
     
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

TABLE OF CONTENTS
 
Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
Signatures
Exhibit Index to Current Report on Form 8-K dated July 24, 2008
Press release dated July 24, 2008 (furnished pursuant to Item 2.02 of Form 8-K)
Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)

 

 

Item 2.02   Results of Operations and Financial Condition.
The following information, including the text of the exhibits attached hereto, is furnished pursuant to Item 2.02 of Form 8-K. On July 24, 2008, The Chubb Corporation (Chubb) issued a press release announcing its financial results for the quarter ended June 30, 2008. On July 24, 2008, Chubb also posted on its web site at www.chubb.com the Supplementary Investor Information Report (SIIR) relating to its 2008 second quarter results. Copies of the press release and the SIIR, both of which are incorporated by reference into this Item 2.02 as if fully set forth herein, are attached to this Form 8-K as Exhibits 99.1 and 99.2, respectively. In its press release, the SIIR and the conference call to discuss its 2008 second quarter results, scheduled to be webcast at 5:00 P.M. on July 24, 2008, Chubb presents, and will present, its results of operations in the manner that it believes is most meaningful to investors, which includes certain measures that are not based on accounting principles generally accepted in the United States.
Item 9.01   Financial Statements and Exhibits.
  (d)   Exhibits.
         
  99.1    
Press release dated July 24, 2008 (furnished pursuant to Item 2.02 of Form 8-K)
  99.2    
Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)

 

 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  THE CHUBB CORPORATION
 		  
Date: July 24, 2008  By:   /s/ Henry B. Schram    
    Name:   Henry B. Schram   
    Title:   Senior Vice President and Chief Accounting Officer   
 

 

 

EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
DATED JULY 24, 2008
         
Exhibit No.   Description
  99.1    
Press release dated July 24, 2008 (furnished pursuant to Item 2.02 of Form 8-K)
  99.2    
Supplementary Investor Information Report (furnished pursuant to Item 2.02 of Form 8-K)

 

EX-99.1 2 y63796exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
Exhibit 99.1
         
(CHUBB LOGO)   News from The Chubb Corporation
 
 
      The Chubb Corporation
 
      15 Mountain View Road • P.O. Box 1615
 
      Warren, New Jersey 07061-1615
 
      Telephone: 908-903-2000
FOR IMMEDIATE RELEASE
Chubb Reports Second Quarter Net Income per Share of $1.27;
Operating Income per Share Declines 13% to $1.40;
Combined Ratio Is 88.5%
 
2008 Operating Income per Share Guidance
of $5.70 to $6.10 Is Affirmed
     WARREN, New Jersey, July 24, 2008 — The Chubb Corporation [NYSE: CB] today reported that net income in the second quarter of 2008 was $469 million or $1.27 per share, compared to $709 million or $1.75 per share in the second quarter of 2007.
     Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, declined to $518 million from $648 million in the second quarter of 2007. Operating income per share declined 13% to $1.40 from $1.60.
     Total net written premiums for the second quarter were flat at $3.0 billion. Premiums were down 3% in the U.S. and up 11% outside the U.S. (3% in local currencies).
     The second quarter combined loss and expense ratio was 88.5% in 2008, compared to 82.7% in 2007. Catastrophe losses for the second quarter of 2008 accounted for 5.4 percentage points of the combined ratio. In the second quarter of 2007, catastrophe losses accounted for 3.9 points of the combined ratio. The expense ratio for the second quarter was 29.8% in 2008 and 29.6% in 2007.
     Property and casualty investment income after taxes for the second quarter increased 4% to $327 million in 2008 from $313 million in 2007.
     During the second quarter, Chubb repurchased 5,477,480 shares of its common stock at a total cost of $281 million. As of June 30, 2008, there were 9,315,206 shares of common stock remaining under the current repurchase authorization.

 

2

     “In an otherwise excellent quarter, our results were adversely impacted by unusually high catastrophe losses and by one large Surety loss,” said John D. Finnegan, Chairman, President and Chief Executive Officer. The catastrophe losses were primarily related to storms in the Midwest United States that mostly affected Chubb’s commercial Property & Marine insurance line.
Six-Month Results
     For the first six months of 2008, net income was $1.1 billion or $3.04 per share, compared with $1.4 billion or $3.46 per share for the first half of 2007. Operating income for the first half of 2008 totaled $1.1 billion or $3.05 per share, compared with $1.3 billion or $3.13 per share for the first half of 2007.
     Total net written premiums for the first six months increased 1% to $6.0 billion. Premiums declined 2% in the U.S. and increased 13% outside the U.S. (4% in local currencies).
     The combined loss and expense ratio for the first six months was 86.2% in 2008, compared to 83.1% in 2007. Catastrophe losses in the first half of 2008 accounted for 3.6 percentage points of the combined ratio. In the first half of 2007, catastrophe losses accounted for 3.2 points of the combined ratio. The expense ratio for the first six months was 30.1% in 2008 and 30.0% in 2007.
     Property and casualty investment income after taxes for the first six months increased 6% to $654 million in 2008 from $618 million in 2007.
     During the first six months, Chubb repurchased 16,797,464 shares of its common stock at a total cost of $863 million.
Outlook for 2008
     “Since our catastrophe losses in the first six months were higher than expected and we’re now in the midst of the hurricane season,” said Mr. Finnegan, “we have increased our catastrophe loss assumption for the full year from 3 points to 4 points. Nevertheless, in light of the strong underlying performance of our businesses in the first half and the outlook for the second half, we are affirming the guidance we provided last January for full-year 2008 operating income per share of $5.70 to $6.10.” The impact of each point of catastrophe losses on operating income per share for the year is approximately $0.20.

 

3

     The updated operating income guidance also assumes:
  •   Flat to modestly lower net written premiums for the full year;
 
  •   A combined ratio between 86% and 88% for the year, based on combined ratios of 85% to 87% for Chubb Personal Insurance, 90% to 92% for Chubb Commercial Insurance and 82% to 84% for Chubb Specialty Insurance;
 
  •   Growth of property and casualty investment income after taxes of 3% to 5% for the year; and
 
  •   Average diluted shares outstanding of 368 million for the year.
     Guidance and related assumptions are subject to the risks outlined in the company’s forward-looking information safe-harbor statement below.
Second Quarter Operations Review
     Chubb Personal Insurance (CPI) net written premiums grew 4% in the second quarter to $1.0 billion. CPI’s combined ratio for the quarter was 81.9%, compared to 85.3% in the second quarter of 2007. Catastrophe losses for the quarter accounted for 4.5 percentage points in 2008 and 8.1 points in 2007.
     Net written premiums for Homeowners grew 3%, and the combined ratio was 75.1%. Personal Automobile net written premiums declined 2%, and the combined ratio was 86.7%. Other Personal lines grew 15% and had a combined ratio of 101.5%.
     Chubb Commercial Insurance (CCI) net written premiums declined 1% in the second quarter to $1.3 billion. The combined ratio for the quarter was 93.7% in 2008 and 85.4% in 2007. Catastrophe losses accounted for 9.2 percentage points in the second quarter of 2008 and 3.3 percentage points in the second quarter of 2007.
     Average second quarter renewal rates in the U.S. were down 6% for CCI, which retained 85% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1.1 to 1.
     Chubb Specialty Insurance (CSI) net written premiums declined 4% in the second quarter to $711 million. The combined ratio was 89.3%, compared to 75.6% in the second quarter of 2007.

 

4

     Professional Liability (PL) net written premiums declined 4%, and the business had a combined ratio of 84.0%. Average second quarter renewal rates in the U.S. were down 3% for PL, which retained 88% of the U.S. premiums that came up for renewal. In the U.S., the ratio of new to lost business was 1.2 to 1.
     Surety net written premiums were down 10%, and the combined ratio was 128.4% due to one large loss.
Webcast Conference Call to be Held Today at 5 P.M.
     Chubb’s senior management will discuss the company’s second quarter performance with investors and analysts today, July 24th, at 5 P.M. Eastern Daylight Time. The conference call will be webcast live on the Internet at http://www.chubb.com and archived later in the day for replay.
About Chubb
     Founded in 1882, the Chubb Group of Insurance Companies provides property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb’s global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.
     Chubb’s Supplementary Investor Information Report has been posted on its Internet site at http://www.chubb.com.
     All financial results in this release and attachments are unaudited.
         
For further information contact:
  Investors:   Glenn A. Montgomery
(908) 903-2365
 
        
 
  Media:   Mark E. Greenberg
(908) 903-2682

 

5

Definitions of Key Terms
Operating Income
Operating income, a non-GAAP financial measure, is net income excluding after-tax realized investment gains and losses. Management uses operating income, among other measures, to evaluate its performance because the realization of investment gains and losses in any given period is largely discretionary as to timing and can fluctuate significantly, which could distort the analysis of trends.
Underwriting Income (Loss)
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies 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 tax.
Book Value per Common Share with Available-for-Sale Fixed Maturities at Amortized Cost
Book value per common 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 fair 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 Loss and Expense Ratio or Combined 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.

 

6

FORWARD-LOOKING INFORMATION
          Certain statements in this document are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995 (PSLRA). These forward-looking statements are made pursuant to the safe harbor provisions of the PSLRA and include statements regarding management’s 2008 operating income per share guidance and related assumptions. Forward-looking statements are made based upon management’s current expectations and beliefs concerning trends and future developments and their potential effects on Chubb. These statements are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties, which include, among others, those discussed or identified from time to time in Chubb’s public filings with the Securities and Exchange Commission and those associated with:
•   global political conditions and the occurrence of terrorist attacks, including any nuclear, biological, chemical or radiological events;
 
•   the effects of the outbreak or escalation of war or hostilities;
 
•   premium pricing and profitability or growth estimates overall or by lines of business or geographic area, and related expectations with respect to the timing and terms of any required regulatory approvals;
 
•   adverse changes in loss cost trends;
 
•   our ability to retain existing business;
 
•   our expectations with respect to cash flow projections and investment income and with respect to other income;
 
•   the adequacy of loss reserves, including:
  —   our expectations relating to reinsurance recoverables;
 
  —   the willingness of parties, including us, to settle disputes;
 
  —   developments in judicial decisions or regulatory or legislative actions relating to coverage and liability, in particular, for asbestos, toxic waste and other mass tort claims;
 
  —   development of new theories of liability;
 
  —   our estimates relating to ultimate asbestos liabilities;
 
  —   the impact from the bankruptcy protection sought by various asbestos producers and other related businesses; and
 
  —   the effects of proposed asbestos liability legislation, including the impact of claims patterns arising from the possibility of legislation and those that may arise if legislation is not passed;
•   the availability and cost of reinsurance coverage;
 
•   the occurrence of significant weather-related or other natural or human-made disasters, particularly in locations where we have concentrations of risk;

 

7

•   the impact of economic factors on companies on whose behalf we have issued surety bonds, and in particular, on those companies that file for bankruptcy or otherwise experience deterioration in creditworthiness;
 
•   the effects of disclosures by, and investigations of, companies relating to possible accounting irregularities, practices in the financial services industry, investment losses or other corporate governance issues, including:
  —   claims and litigation arising out of stock option “backdating,” “spring loading” and other option grant practices by public companies;
 
  —   the effects on the capital markets and the markets for directors and officers and errors and omissions insurance;
 
  —   claims and litigation arising out of actual or alleged accounting or other corporate malfeasance by other companies;
 
  —   claims and litigation arising out of practices in the financial services industry;
 
  —   claims and litigation relating to uncertainty in the credit and broader financial markets; and
 
  —   legislative or regulatory proposals or changes;
•   the effects of changes in market practices in the U.S. property and casualty insurance industry, in particular contingent commissions and loss mitigation and finite reinsurance arrangements, arising from any legal or regulatory proceedings, related settlements and industry reform, including changes that have been announced and changes that may occur in the future;
 
•   the impact of legislative and regulatory developments on our business, including those relating to terrorism and catastrophes;
 
•   any downgrade in our claims-paying, financial strength or other credit ratings;
 
•   the ability of our subsidiaries to pay us dividends;
 
•   general economic and market conditions including:
  —   changes in interest rates, market credit spreads and the performance of the financial markets;
 
  —   the effects of inflation;
 
  —   changes in domestic and foreign laws, regulations and taxes;
 
  —   changes in competition and pricing environments;
 
  —   regional or general changes in asset valuations;
 
  —   the inability to reinsure certain risks economically; and
 
  —   changes in the litigation environment; and
•   our ability to implement management’s strategic plans and initiatives.
     Chubb assumes no obligation to update any forward-looking information set forth in this document, which speak as of the date hereof.

 

     8
THE CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
(Unaudited)
                                 
    Periods Ended June 30  
    Second Quarter     Six Months  
    2008     2007     2008     2007  
            (in millions)          
PROPERTY AND CASUALTY INSURANCE
                                
Underwriting
                                
Net Premiums Written
   $ 3,047     $ 3,058     $ 5,983     $ 5,925  
Decrease (Increase) in Unearned Premiums
     (61 )     (94 )     (21 )     24  
 
                        
Premiums Earned
     2,986       2,964       5,962       5,949  
 
                        
Losses and Loss Expenses
     1,749       1,572       3,333       3,152  
Operating Costs and Expenses
     904       905       1,798       1,775  
Increase in Deferred Policy Acquisition Costs
     (23 )     (56 )     (36 )     (53 )
Dividends to Policyholders
     9       3       18       8  
 
                        
 
                                
Underwriting Income
     347       540       849       1,067  
 
                        
 
                                
Investments
                                
Investment Income Before Expenses
     418       396       836       788  
Investment Expenses
     8       6       16       17  
 
                        
 
                                
Investment Income
     410       390       820       771  
 
                        
 
                                
Other Income
     —       1       3       4  
 
                        
 
                                
Property and Casualty Income
     757       931       1,672       1,842  
 
                                
CORPORATE AND OTHER
     (52 )     (38 )     (106 )     (65 )
 
                        
 
                                
CONSOLIDATED OPERATING INCOME BEFORE INCOME TAX
     705       893       1,566       1,777  
 
                                
Federal and Foreign Income Tax
     187       245       428       495  
 
                        
 
                                
CONSOLIDATED OPERATING INCOME
     518       648       1,138       1,282  
 
                                
REALIZED INVESTMENT GAINS (LOSSES) AFTER INCOME TAX
     (49 )     61       (5 )     137  
 
                        
 
                                
CONSOLIDATED NET INCOME
   $ 469     $ 709     $ 1,133     $ 1,419  
 
                        
PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX
   $ 327     $ 313     $ 654     $ 618  
 
                        

 

9

                                 
    Periods Ended June 30  
    Second Quarter     Six Months  
    2008     2007     2008     2007  
OUTSTANDING SHARE DATA
                                
(in millions)
                                
Average Common and Potentially Dilutive Shares
     369.4       405.7       372.6       410.0  
Actual Common Shares at End of Period
     360.6       393.3       360.6       393.3  
 
                                
DILUTED EARNINGS PER SHARE DATA
                                
Operating Income
   $ 1.40     $ 1.60     $ 3.05     $ 3.13  
Realized Investment Gains (Losses)
     (.13 )     .15       (.01 )     .33  
 
                        
Net Income
   $ 1.27     $ 1.75     $ 3.04     $ 3.46  
 
                        
 
                                
Effect of Catastrophes
   $ (.28 )   $ (.18 )   $ (.37 )   $ (.30 )
 
                        
                                 
            June 30   Dec. 31   June 30
            2008   2007   2007
 
                                
BOOK VALUE PER COMMON SHARE
           $ 39.19     $ 38.56     $ 35.13  
 
                                
BOOK VALUE PER COMMON SHARE,
with Available-for-Sale Fixed Maturities at Amortized Cost
             39.29       37.87       35.61  
PROPERTY AND CASUALTY UNDERWRITING RATIOS
PERIODS ENDED JUNE 30
                                 
    Second Quarter   Six Months
    2008   2007   2008   2007
Losses and Loss Expenses to Premiums Earned
     58.7 %     53.1 %     56.1 %     53.1 %
Underwriting Expenses to Premiums Written
     29.8       29.6       30.1       30.0  
 
                                
 
                                
Combined Loss and Expense Ratio
     88.5 %     82.7 %     86.2 %     83.1 %
 
                                
 
                                
Effect of Catastrophes on Combined Loss and Expense Ratio
     5.4 %     3.9 %     3.6 %     3.2 %
PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS
PERIODS ENDED JUNE 30
                                 
    Second Quarter     Six Months  
    2008     2007     2008     2007  
            (in millions)          
Paid Losses and Loss Expenses
   $ 1,508     $ 1,319     $ 2,812     $ 2,779  
Increase in Unpaid Losses and Loss Expenses
     241       253       521       373  
 
                        
 
                                
Total Losses and Loss Expenses
   $ 1,749     $ 1,572     $ 3,333     $ 3,152  
 
                        

 

10

PROPERTY AND CASUALTY PRODUCT MIX
                                         
                            Combined Loss and  
    Net Premiums Written     Expense Ratios  
                    % Increase              
    2008     2007     (Decrease)     2008     2007  
    (in millions)                          
SIX MONTHS ENDED JUNE 30
                                        
 
                                        
Personal Insurance
                                        
Automobile
   $ 303     $ 311       (3 )%     89.8 %     88.8 %
Homeowners
     1,213       1,174       3       77.4       77.4  
Other
     376       330       14       97.7       93.3  
 
                                    
Total Personal
     1,892       1,815       4       83.3       82.3  
 
                                    
 
                                        
Commercial Insurance
                                        
Multiple Peril
     607       613       (1 )     78.9       85.0  
Casualty
     896       897       —       92.1       93.4  
Workers’ Compensation
     461       481       (4 )     80.2       74.5  
Property and Marine
     677       626       8       107.3       88.4  
 
                                    
Total Commercial
     2,641       2,617       1       90.5       86.7  
 
                                    
 
                                        
Specialty Insurance
                                        
Professional Liability
     1,230       1,246       (1 )     83.8       84.8  
Surety
     184       178       3       81.4       32.0  
 
                                    
Total Specialty
     1,414       1,424       (1 )     83.6       79.4  
 
                                    
 
                                        
Total Insurance
     5,947       5,856       2       86.5       83.5  
 
                                        
Reinsurance Assumed
     36       69       (48 )     *       *  
 
                                    
 
                                        
Total
   $ 5,983     $ 5,925       1       86.2       83.1  
 
                                    
 
                                        
QUARTERS ENDED JUNE 30
                                        
 
                                        
Personal Insurance
                                        
Automobile
   $ 161     $ 164       (2 )%     86.7 %     82.3 %
Homeowners
     674       654       3       75.1       83.8  
Other
     180       157       15       101.5       93.8  
 
                                    
Total Personal
     1,015       975       4       81.9       85.3  
 
                                    
 
                                        
Commercial Insurance
                                        
Multiple Peril
     312       306       2       79.5       86.7  
Casualty
     436       456       (4 )     91.9       92.4  
Workers’ Compensation
     213       224       (5 )     77.8       72.0  
Property and Marine
     340       325       5       120.4       83.7  
 
                                    
Total Commercial
     1,301       1,311       (1 )     93.7       85.4  
 
                                    
 
                                        
Specialty Insurance
                                        
Professional Liability
     626       649       (4 )     84.0       80.5  
Surety
     85       94       (10 )     128.4       32.7  
 
                                    
Total Specialty
     711       743       (4 )     89.3       75.6  
 
                                    
 
                                        
Total Insurance
     3,027       3,029       —       88.9       82.9  
 
                                        
Reinsurance Assumed
     20       29       (31 )     *       *  
 
                                    
 
                                        
Total
   $ 3,047     $ 3,058       —       88.5       82.7  
 
                                    
*   Combined loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off.
EX-99.2 3 y63796exv99w2.htm EX-99.2: SUPPLEMENTARY INVESTOR INFORMATION EX-99.2
Exhibit 99.2
         
The
  Supplementary   June 30, 2008
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
JUNE 30, 2008
         
    Page  
 
        
The Chubb Corporation:
        
Consolidated Balance Sheet Highlights
     1  
Share Repurchase Activity
     2  
 
        
Summary of Invested Assets:
        
Corporate
     3  
Property and Casualty
     3  
 
        
Investment Income After Taxes:
        
Corporate
     4  
Property and Casualty
     4  
 
        
Property and Casualty Insurance Group:
        
Statutory Policyholders’ Surplus
     4  
Change in Net Unpaid Losses
     5  
Underwriting Results — Year-To-Date
     6-10  
Underwriting Results — Quarterly
     11-15  
 
        
Definitions of Key Terms
     16  

 

 

THE CHUBB CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
                 
    June 30     Dec. 31  
    2008     2007  
    (in millions)  
Invested Assets (at carrying value)
                
Short Term Investments
   $ 2,677     $ 1,839  
Fixed Maturities
                
Tax Exempt
     18,258       18,559  
Taxable
     15,673       15,312  
Equity Securities
     1,996       2,320  
Other Invested Assets
     2,154       2,051  
 
            
Total Invested Assets
   $ 40,758     $ 40,081  
 
            
 
                
Capitalization
                
Long Term Debt
   $ 4,435     $ 3,460  
Shareholders’ Equity
     14,133       14,445  
 
            
Total Capitalization
   $ 18,568     $ 17,905  
 
            
 
                
DEBT AS A PERCENTAGE OF TOTAL CAPITALIZATION
     23.9 %     19.3 %
 
                
Actual Common Shares Outstanding
     360.6       374.6  
 
                
Book Value Per Common Share
   $ 39.19     $ 38.56  
 
                
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost
   $ 39.29     $ 37.87  

Page 1 of 16

 

THE CHUBB CORPORATION
SHARE REPURCHASE ACTIVITY
(dollars in millions, except per share amounts)
                         
    Periods Ended June 30    
    Second   Six   From
    Quarter   Months   December 2005
    2008   2008   to June 30, 2008
 
                        
Cost of Shares Repurchased
   $281     $863     $4,439  
 
                        
Average Cost Per Share
   $51.40     $51.38     $51.21  
 
                        
Shares Repurchased
     5,477,480       16,797,464       86,684,794  
In December 2005, the Board of Directors authorized the repurchase of up to 28,000,000 shares of the Corporation’s common stock. No shares remain under the 2005 share repurchase authorization.
In December 2006, the Board of Directors authorized the repurchase of up to 20,000,000 shares of the Corporation’s common stock. In March 2007, the Board of Directors authorized an increase of 20,000,000 shares to the authorization approved in December 2006. No shares remain under the 2006 share repurchase authorization.
In December 2007, the Board of Directors authorized the repurchase of up to 28,000,000 shares of the Corporation’s common stock. The authorization has no expiration date. As of June 30, 2008, 9,315,206 shares remained under the share repurchase authorization.

Page 2 of 16

 

THE CHUBB CORPORATION
SUMMARY OF INVESTED ASSETS
CORPORATE
                                 
    Cost or     Carrying  
    Amortized Cost     Value (a)  
    June 30     Dec. 31     June 30     Dec. 31  
    2008     2007     2008     2007  
    (in millions)  
 
                                
Short Term Investments
   $ 1,696     $ 934     $ 1,696     $ 934  
 
                                
Taxable Fixed Maturities
     1,007       1,050       997       1,045  
 
                                
Equity Securities
     262       289       344       478  
 
                        
 
                                
TOTAL
   $ 2,965     $ 2,273     $ 3,037     $ 2,457  
 
                        
PROPERTY AND CASUALTY
                                 
    Cost or     Carrying  
    Amortized Cost     Value (a)  
    June 30     Dec. 31     June 30     Dec. 31  
    2008     2007     2008     2007  
            (in millions)          
 
                                
Short Term Investments
   $ 981     $ 905     $ 981     $ 905  
 
                                
Fixed Maturities
                                
 
                                
Tax Exempt
     18,183       18,208       18,258       18,559  
 
                                
Taxable
     14,796       14,216       14,676       14,267  
 
                                
Equity Securities
     1,583       1,618       1,652       1,842  
 
                                
Other Invested Assets
     2,154       2,051       2,154       2,051  
 
                        
 
                                
TOTAL
   $ 37,697     $ 36,998     $ 37,721     $ 37,624  
 
                        
(a)   Short term investments are carried at amortized cost, which approximates fair value. Fixed maturities and equity securities are carried at fair value. Other invested assets, which include private equity limited partnerships, are carried at Chubb’s equity in the net assets of the partnerships.

Page 3 of 16

 

THE CHUBB CORPORATION
INVESTMENT INCOME AFTER TAXES
                                 
    Periods Ended June 30  
    Second Quarter     Six Months  
    2008     2007     2008     2007  
    (in millions)  
 
                                
CORPORATE INVESTMENT INCOME
   $ 13     $ 22     $ 26     $ 36  
 
                        
 
                                
PROPERTY AND CASUALTY INVESTMENT INCOME
                                
 
                                
Tax Exempt Interest
   $ 184     $ 182     $ 369     $ 360  
Taxable Interest
     127       115       254       233  
Other
     21       20       41       36  
Investment Expenses
     (5 )     (4 )     (10 )     (11 )
 
                        
TOTAL
   $ 327     $ 313     $ 654     $ 618  
 
                        
 
                                
Effective Tax Rate
     20.2 %     19.7 %     20.2 %     19.8 %
 
                                
After-Tax Annualized Yield
     3.48 %     3.46 %     3.49 %     3.45 %
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 fair value.
STATUTORY POLICYHOLDERS’ SURPLUS
                         
    June 30   Dec. 31   June 30
        2008           2007           2007    
    (in millions)
 
                        
Estimated Statutory Policyholders’ Surplus
   $ 13,250     $ 12,998     $ 12,250  
 
                        
Rolling Year Statutory Net Premiums Written
   $ 11,901     $ 11,829     $ 11,873  
 
                        
Ratio of Statutory Net Premiums Written to Policyholders’ Surplus
     0.90:1       0.91:1       0.97:1  
Statutory Policyholders’ Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.

Page 4 of 16

 

THE CHUBB CORPORATION
PROPERTY AND CASUALTY
CHANGE IN NET UNPAID LOSSES
SIX MONTHS ENDED JUNE 30, 2008
                                         
                                    All Other  
    Net Unpaid Losses     IBNR     Unpaid Losses  
                    Increase     Increase     Increase  
    6/30/08     12/31/07     (Decrease)     (Decrease)     (Decrease)  
                    (in millions)                  
Personal Insurance
                                        
Automobile
   $ 412     $ 411     $ 1     $ —     $ 1  
Homeowners
     707       705       2       9       (7 )
Other
     792       748       44       35       9  
 
                              
 
                                        
Total Personal
     1,911       1,864       47       44       3  
 
                              
 
                                        
Commercial Insurance
                                        
Multiple Peril
     1,607       1,619       (12 )     46       (58 )
Casualty
     5,739       5,540       199       254       (55 )
Workers’ Compensation
     1,952       1,910       42       39       3  
Property and Marine
     841       677       164       79       85  
 
                              
 
                                        
Total Commercial
     10,139       9,746       393       418       (25 )
 
                              
 
                                        
Specialty Insurance
                                        
Professional Liability
     7,635       7,526       109       195       (86 )
Surety
     129       71       58       (1 )     59  
 
                              
 
                                        
Total Specialty
     7,764       7,597       167       194       (27 )
 
                              
 
                                        
Total Insurance
     19,814       19,207       607       656       (49 )
 
                                        
Reinsurance Assumed
     1,023       1,109       (86 )     (56 )     (30 )
 
                              
 
                                        
Total
   $ 20,837     $ 20,316     $ 521     $ 600     $ (79 )
 
                              

Page 5 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2008     2007     2008     2007     2008     2007     2008     2007  
 
                                                                
Net Premiums Written
   $ 303     $ 311     $ 1,213     $ 1,174     $ 376     $ 330     $ 1,892     $ 1,815  
Increase (Decrease) in Unearned Premiums
     (8 )     (18 )     (9 )     15       22       21       5       18  
 
                                                
 
                                                                
Net Premiums Earned
     311       329       1,222       1,159       354       309       1,887       1,797  
 
                                                
 
                                                                
Net Losses Paid
     188       206       548       529       186       138       922       873  
Increase (Decrease) in Outstanding Losses
     1       (8 )     2       —       44       52       47       44  
 
                                                
 
                                                                
Net Losses Incurred
     189       198       550       529       230       190       969       917  
 
                                                
 
                                                                
Expenses Incurred
     88       89       393       373       123       105       604       567  
 
                                                                
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
 
                                                                
Statutory Underwriting Income (Loss)
   $ 34     $ 42     $ 279     $ 257     $ 1     $ 14     $ 314     $ 313  
 
                                                
 
                                                                
Ratios After Dividends to Policyholders:
                                                                
 
                                                                
Loss
     60.8 %     60.2 %     45.0 %     45.6 %     65.0 %     61.5 %     51.4 %     51.1 %
Expense
     29.0       28.6       32.4       31.8       32.7       31.8       31.9       31.2  
 
                                                
 
                                                                
Combined
     89.8 %     88.8 %     77.4 %     77.4 %     97.7 %     93.3 %     83.3 %     82.3 %
 
                                                
 
                                                                
Premiums Written as a % of Total
     5.1 %     5.2 %     20.3 %     19.8 %     6.3 %     5.6 %     31.7 %     30.6 %

Page 6 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2008     2007     2008     2007     2008     2007     2008     2007     2008     2007  
 
                                                                                
Net Premiums Written
   $ 607     $ 613     $ 896     $ 897     $ 461     $ 481     $ 677     $ 626     $ 2,641     $ 2,617  
Increase (Decrease) in Unearned Premiums
     (21 )     (20 )     32       33       21       23       61       23       93       59  
 
                                                            
 
                                                                                
Net Premiums Earned
     628       633       864       864       440       458       616       603       2,548       2,558  
 
                                                            
 
                                                                                
Net Losses Paid
     284       300       357       386       199       173       286       280       1,126       1,139  
Increase (Decrease) in Outstanding Losses
     (12 )     15       199       179       42       63       164       39       393       296  
 
                                                            
 
                                                                                
Net Losses Incurred
     272       315       556       565       241       236       450       319       1,519       1,435  
 
                                                            
 
                                                                                
Expenses Incurred
     216       216       249       251       103       105       232       222       800       794  
 
Dividends Incurred
     —       —       —       —       17       7       —       —       17       7  
 
                                                            
 
                                                                                
Statutory Underwriting Income (Loss)
   $ 140     $ 102     $ 59     $ 48     $ 79     $ 110     $ (66 )   $ 62     $ 212     $ 322  
 
                                                            
 
                                                                                
Ratios After Dividends to Policyholders:
                                                                                
 
                                                                                
Loss
     43.3 %     49.8 %     64.3 %     65.4 %     57.0 %     52.3 %     73.0 %     52.9 %     60.0 %     56.3 %
Expense
     35.6       35.2       27.8       28.0       23.2       22.2       34.3       35.5       30.5       30.4  
 
                                                            
 
                                                                                
Combined
     78.9 %     85.0 %     92.1 %     93.4 %     80.2 %     74.5 %     107.3 %     88.4 %     90.5 %     86.7 %
 
                                                            
 
                                                                                
Premiums Written as a% of Total
     10.1 %     10.3 %     15.0 %     15.1 %     7.7 %     8.2 %     11.3 %     10.6 %     44.1 %     44.2 %

Page 7 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2008     2007     2008     2007     2008     2007  
 
                                                
Net Premiums Written
   $ 1,230     $ 1,246     $ 184     $ 178     $ 1,414     $ 1,424  
Increase (Decrease) in Unearned Premiums
     (88 )     (74 )     14       24       (74 )     (50 )
 
                                    
 
Net Premiums Earned
     1,318       1,320       170       154       1,488       1,474  
 
                                    
 
Net Losses Paid
     654       636       26       5       680       641  
Increase (Decrease) in Outstanding Losses
     109       149       58       (1 )     167       148  
 
                                    
 
Net Losses Incurred
     763       785       84       4       847       789  
 
                                    
 
Expenses Incurred
     319       315       58       52       377       367  
 
Dividends Incurred
     —       —       1       1       1       1  
 
                                    
 
Statutory Underwriting Income (Loss)
   $ 236     $ 220     $ 27     $ 97     $ 263     $ 317  
 
                                    
 
Ratios After Dividends to Policyholders:
                                                
 
Loss
     57.9 %     59.5 %     49.7 %     2.6 %     56.9 %     53.6 %
Expense
     25.9       25.3       31.7       29.4       26.7       25.8  
 
                                    
 
Combined
     83.8 %     84.8 %     81.4 %     32.0 %     83.6 %     79.4 %
 
                                    
 
Premiums Written as a % of Total
     20.5 %     21.0 %     3.1 %     3.0 %     23.6 %     24.0 %

Page 8 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2008     2007     2008     2007     2008     2007  
 
Net Premiums Written
   $ 5,947     $ 5,856     $ 36     $ 69     $ 5,983     $ 5,925  
Increase (Decrease) in Unearned Premiums
     24       27       (3 )     (51 )     21       (24 )
 
                                    
 
Net Premiums Earned
     5,923       5,829       39       120       5,962       5,949  
 
                                    
 
Net Losses Paid
     2,728       2,653       84       126       2,812       2,779  
Increase (Decrease) in Outstanding Losses
     607       488       (86 )     (115 )     521       373  
 
                                    
 
Net Losses Incurred
     3,335       3,141       (2 )     11       3,333       3,152  
 
                                    
 
Expenses Incurred
     1,781       1,728       17       47       1,798       1,775  
 
Dividends Incurred
     18       8       —       —       18       8  
 
                                    
 
Statutory Underwriting Income (Loss)
   $ 789     $ 952     $ 24     $ 62       813       1,014  
 
                                    
 
Increase in Deferred Acquisition Costs
                                     36       53  
 
                                            
 
GAAP Underwriting Income
                                   $ 849     $ 1,067  
 
                                            
 
Ratios After Dividends to Policyholders:
                                                
 
Loss
     56.5 %     54.0 %     * %     * %     56.1 %     53.1 %
Expense
     30.0       29.5       *       *       30.1       30.0  
 
                                    
 
Combined
     86.5 %     83.5 %     * %     * %     86.2 %     83.1 %
 
                                    
 
Premiums Written as a % of Total
     99.4 %     98.8 %     0.6 %     1.2 %     100.0 %     100.0 %
     
*   Combined, loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off.

Page 9 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                 
                    Outside        
                    the     Worldwide  
    United States     United States     Total  
    2008     2007     2008     2007     2008     2007  
 
Net Premiums Written
   $ 4,479     $ 4,592     $ 1,504     $ 1,333     $ 5,983     $ 5,925  
Increase (Decrease) in Unearned Premiums
     (43 )     (76 )     64       52       21       (24 )
 
                                    
 
Net Premiums Earned
     4,522       4,668       1,440       1,281       5,962       5,949  
 
                                    
 
Net Losses Paid
     2,305       2,339       507       440       2,812       2,779  
Increase (Decrease) in Outstanding Losses
     340       153       181       220       521       373  
 
                                    
 
Net Losses Incurred
     2,645       2,492       688       660       3,333       3,152  
 
                                    
 
Expenses Incurred
     1,262       1,307       536       468       1,798       1,775  
 
Dividends Incurred
     18       8       —       —       18       8  
 
                                    
 
Statutory Underwriting Income (Loss)
   $ 597     $ 861     $ 216     $ 153       813       1,014  
 
                                        
 
Increase in Deferred Acquisition Costs
                                     36       53  
 
                                            
 
GAAP Underwriting Income
                                   $ 849     $ 1,067  
 
                                            
 
Ratios After Dividends to Policyholders:
                                                
 
Loss
     58.7 %     53.5 %     47.8 %     51.5 %     56.1 %     53.1 %
Expense
     28.3       28.5       35.6       35.1       30.1       30.0  
 
                                    
 
Combined
     87.0 %     82.0 %     83.4 %     86.6 %     86.2 %     83.1 %
 
                                    
 
Premiums Written as a % of Total
     74.9 %     77.5 %     25.1 %     22.5 %     100.0 %     100.0 %

Page 10 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                                 
    Personal                     Other     Total  
    Automobile     Homeowners     Personal     Personal  
    2008     2007     2008     2007     2008     2007     2008     2007  
 
Net Premiums Written
   $ 161     $ 164     $ 674     $ 654     $ 180     $ 157     $ 1,015     $ 975  
Increase (Decrease) in Unearned Premiums
     6       —       61       70       1       2       68       72  
 
                                                
 
                                                                
Net Premiums Earned
     155       164       613       584       179       155       947       903  
 
                                                
 
                                                                
Net Losses Paid
     86       96       280       286       109       58       475       440  
Increase (Decrease) in Outstanding Losses
     5       (6 )     (10 )     23       12       35       7       52  
 
                                                
 
                                                                
Net Losses Incurred
     91       90       270       309       121       93       482       492  
 
                                                
 
                                                                
Expenses Incurred
     45       45       209       202       61       53       315       300  
 
                                                                
Dividends Incurred
     —       —       —       —       —       —       —       —  
 
                                                
 
                                                                
Statutory Underwriting Income (Loss)
   $ 19     $ 29     $ 134     $ 73     $ (3 )   $ 9     $ 150     $ 111  
 
                                                
 
                                                                
Ratios After Dividends to Policyholders:
                                                                
 
Loss
     58.7 %     54.9 %     44.1 %     52.9 %     67.6 %     60.0 %     50.9 %     54.5 %
Expense
     28.0       27.4       31.0       30.9       33.9       33.8       31.0       30.8  
 
                                                
 
                                                                
Combined
     86.7 %     82.3 %     75.1 %     83.8 %     101.5 %     93.8 %     81.9 %     85.3 %
 
                                                
 
                                                                
Premiums Written as a % of Total
     5.3 %     5.4 %     22.1 %     21.4 %     5.9 %     5.1 %     33.3 %     31.9 %

Page 11 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                                                 
                                    Commercial     Commercial        
    Commercial     Commercial     Workers’     Property     Total  
    Multiple Peril     Casualty     Compensation     and Marine     Commercial  
    2008     2007     2008     2007     2008     2007     2008     2007     2008     2007  
 
Net Premiums Written
   $ 312     $ 306     $ 436     $ 456     $ 213     $ 224     $ 340     $ 325     $ 1,301     $ 1,311  
Increase (Decrease) in Unearned Premiums
     2       (7 )     7       21       (10 )     (6 )     20       22       19       30  
 
                                                            
 
                                                                                
Net Premiums Earned
     310       313       429       435       223       230       320       303       1,282       1,281  
 
                                                            
 
                                                                                
Net Losses Paid
     146       140       229       156       101       87       139       135       615       518  
Increase (Decrease) in Outstanding Losses
     (9 )     20       47       124       13       22       139       15       190       181  
 
                                                            
 
                                                                                
Net Losses Incurred
     137       160       276       280       114       109       278       150       805       699  
 
                                                            
 
                                                                                
Expenses Incurred
     110       109       120       128       50       53       114       111       394       401  
 
                                                                                
Dividends Incurred
     —       —       —       —       9       3       —       —       9       3  
 
                                                            
 
                                                                                
Statutory Underwriting Income (Loss)
   $ 63     $ 44     $ 33     $ 27     $ 50     $ 65     $ (72 )   $ 42     $ 74     $ 178  
 
                                                            
 
                                                                                
Ratios After Dividends to Policyholders:
                                                                                
 
                                                                                
Loss
     44.2 %     51.1 %     64.4 %     64.4 %     53.3 %     48.0 %     86.9 %     49.5 %     63.2 %     54.7 %
Expense
     35.3       35.6       27.5       28.0       24.5       24.0       33.5       34.2       30.5       30.7  
 
                                                            
 
                                                                                
Combined
     79.5 %     86.7 %     91.9 %     92.4 %     77.8 %     72.0 %     120.4 %     83.7 %     93.7 %     85.4 %
 
                                                            
 
                                                                                
Premiums Written as a % of Total
     10.2 %     10.0 %     14.3 %     14.9 %     7.0 %     7.3 %     11.2 %     10.7 %     42.7 %     42.9 %

Page 12 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                 
    Professional                     Total  
    Liability     Surety     Specialty  
    2008     2007     2008     2007     2008     2007  
 
Net Premiums Written
   $ 626     $ 649     $ 85     $ 94     $ 711     $ 743  
Increase (Decrease) in Unearned Premiums
     (24 )     (8 )     (3 )     18       (27 )     10  
 
                                    
 
                                                
Net Premiums Earned
     650       657       88       76       738       733  
 
                                    
 
                                                
Net Losses Paid
     352       282       14       4       366       286  
Increase (Decrease) in Outstanding Losses
     30       86       69       (1 )     99       85  
 
                                    
 
                                                
Net Losses Incurred
     382       368       83       3       465       371  
 
                                    
 
                                                
Expenses Incurred
     158       159       29       27       187       186  
 
                                                
Dividends Incurred
     —       —       —       —       —       —  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 110     $ 130     $ (24 )   $ 46     $ 86     $ 176  
 
                                    
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     58.8 %     56.0 %     94.3 %     4.0 %     63.0 %     50.6 %
Expense
     25.2       24.5       34.1       28.7       26.3       25.0  
 
                                    
 
                                                
Combined
     84.0 %     80.5 %     128.4 %     32.7 %     89.3 %     75.6 %
 
                                    
 
                                                
Premiums Written as a % of Total
     20.5 %     21.2 %     2.8 %     3.1 %     23.3 %     24.3 %

Page 13 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                 
    Total     Reinsurance     Worldwide  
    Insurance     Assumed     Total  
    2008     2007     2008     2007     2008     2007  
 
                                                
Net Premiums Written
   $ 3,027     $ 3,029     $ 20     $ 29     $ 3,047     $ 3,058  
Increase (Decrease) in Unearned Premiums
     60       112       1       (18 )     61       94  
 
                                    
 
                                                
Net Premiums Earned
     2,967       2,917       19       47       2,986       2,964  
 
                                    
 
                                                
Net Losses Paid
     1,456       1,244       52       75       1,508       1,319  
Increase (Decrease) in Outstanding Losses
     296       318       (55 )     (65 )     241       253  
 
                                    
 
                                                
Net Losses Incurred
     1,752       1,562       (3 )     10       1,749       1,572  
 
                                    
 
                                                
Expenses Incurred
     896       887       8       18       904       905  
 
                                                
Dividends Incurred
     9       3       —       —       9       3  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 310     $ 465     $ 14     $ 19       324       484  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     23       56  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 347     $ 540  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     59.2 %     53.6 %     * %     * %     58.7 %     53.1 %
Expense
     29.7       29.3       *       *       29.8       29.6  
 
                                    
 
                                                
Combined
     88.9 %     82.9 %     * %     * %     88.5 %     82.7 %
 
                                    
 
                                                
Premiums Written as a % of Total
     99.3 %     99.1 %     0.7 %     0.9 %     100.0 %     100.0 %
 
*   Combined, loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in run-off.

Page 14 of 16

 

THE CHUBB CORPORATION — WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2008 AND 2007
(MILLIONS OF DOLLARS)
                                                 
                    Outside        
                    the     Worldwide  
    United States     United States     Total  
    2008     2007     2008     2007     2008     2007  
 
                                                
Net Premiums Written
   $ 2,344     $ 2,426     $ 703     $ 632     $ 3,047     $ 3,058  
Increase (Decrease) in Unearned Premiums
     89       107       (28 )     (13 )     61       94  
 
                                    
 
                                                
Net Premiums Earned
     2,255       2,319       731       645       2,986       2,964  
 
                                    
 
                                                
Net Losses Paid
     1,165       1,172       343       147       1,508       1,319  
Increase (Decrease) in Outstanding Losses
     230       40       11       213       241       253  
 
                                    
 
                                                
Net Losses Incurred
     1,395       1,212       354       360       1,749       1,572  
 
                                    
 
                                                
Expenses Incurred
     648       684       256       221       904       905  
 
                                                
Dividends Incurred
     9       3       —       —       9       3  
 
                                    
 
                                                
Statutory Underwriting Income (Loss)
   $ 203     $ 420     $ 121     $ 64       324       484  
 
                                        
 
                                                
Increase in Deferred Acquisition Costs
                                     23       56  
 
                                            
 
                                                
GAAP Underwriting Income
                                   $ 347     $ 540  
 
                                            
 
                                                
Ratios After Dividends to Policyholders:
                                                
 
                                                
Loss
     62.1 %     52.3 %     48.4 %     55.8 %     58.7 %     53.1 %
Expense
     27.8       28.2       36.4       35.0       29.8       29.6  
 
                                    
 
                                                
Combined
     89.9 %     80.5 %     84.8 %     90.8 %     88.5 %     82.7 %
 
                                    
 
                                                
Premiums Written as a % of Total
     76.9 %     79.3 %     23.1 %     20.7 %     100.0 %     100.0 %

Page 15 of 16

 

THE CHUBB CORPORATION
Definitions of Key Terms
Underwriting Income (Loss)
Management evaluates underwriting results separately from investment results. The underwriting operations consist of four separate business units: personal insurance, commercial insurance, specialty insurance and reinsurance assumed. Performance of the business units is measured based on statutory underwriting results. Statutory accounting principles applicable to property and casualty insurance companies 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 common 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 fair 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 16 of 16

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