þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
NEW JERSEY | 13-2595722 | |
(State or other jurisdiction of incorporation or organization) |
(I. R. S. Employer Identification No.) |
|
15 MOUNTAIN VIEW ROAD, WARREN, NEW JERSEY | 07059 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
Page 1
Second Quarter | Six Months | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues |
||||||||||||||||
Premiums Earned |
$ | 2,913 | $ | 2,799 | $ | 5,767 | $ | 5,581 | ||||||||
Investment Income |
416 | 426 | 820 | 836 | ||||||||||||
Other Revenues |
2 | 3 | 4 | 7 | ||||||||||||
Realized Investment Gains (Losses), Net |
||||||||||||||||
Total Other-Than-Temporary
Impairment Losses on Investments |
(14 | ) | (6 | ) | (16 | ) | (6 | ) | ||||||||
Other-Than-Temporary Impairment
Losses on Investments Recognized
in Other Comprehensive Income |
| (2 | ) | | (3 | ) | ||||||||||
Other Realized Investment Gains, Net |
83 | 98 | 245 | 226 | ||||||||||||
Total Realized Investment
Gains, Net |
69 | 90 | 229 | 217 | ||||||||||||
Total Revenues |
3,400 | 3,318 | 6,820 | 6,641 | ||||||||||||
Losses and Expenses |
||||||||||||||||
Losses and Loss Expenses |
1,847 | 1,660 | 3,612 | 3,390 | ||||||||||||
Amortization of Deferred Policy
Acquisition Costs |
816 | 765 | 1,591 | 1,505 | ||||||||||||
Other Insurance Operating Costs
and Expenses |
104 | 107 | 211 | 222 | ||||||||||||
Investment Expenses |
12 | 8 | 23 | 18 | ||||||||||||
Other Expenses |
3 | 4 | 5 | 8 | ||||||||||||
Corporate Expenses |
72 | 72 | 147 | 148 | ||||||||||||
Total Losses and Expenses |
2,854 | 2,616 | 5,589 | 5,291 | ||||||||||||
Income Before Federal and Foreign
Income Tax |
546 | 702 | 1,231 | 1,350 | ||||||||||||
Federal and Foreign Income Tax |
127 | 184 | 303 | 368 | ||||||||||||
Net Income |
$ | 419 | $ | 518 | $ | 928 | $ | 982 | ||||||||
Net Income Per Share |
||||||||||||||||
Basic |
$ | 1.43 | $ | 1.60 | $ | 3.14 | $ | 2.99 | ||||||||
Diluted |
1.42 | 1.59 | 3.12 | 2.97 | ||||||||||||
Dividends Declared Per Share |
.39 | .37 | .78 | .74 |
June 30, | Dec. 31, | |||||||
2011 | 2010 | |||||||
(in millions) | ||||||||
Assets |
||||||||
Invested Assets |
||||||||
Short Term Investments |
$ | 1,690 | $ | 1,905 | ||||
Fixed Maturities |
||||||||
Tax Exempt (cost $19,216 and $19,072) |
20,164 | 19,774 | ||||||
Taxable (cost $16,440 and $15,989) |
17,203 | 16,745 | ||||||
Equity Securities (cost $1,292 and $1,285) |
1,663 | 1,550 | ||||||
Other Invested Assets |
2,337 | 2,239 | ||||||
TOTAL INVESTED ASSETS |
43,057 | 42,213 | ||||||
Cash |
71 | 70 | ||||||
Accrued Investment Income |
458 | 447 | ||||||
Premiums Receivable |
2,227 | 2,098 | ||||||
Reinsurance Recoverable on Unpaid Losses and Loss Expenses |
1,778 | 1,817 | ||||||
Prepaid Reinsurance Premiums |
328 | 325 | ||||||
Deferred Policy Acquisition Costs |
1,634 | 1,562 | ||||||
Deferred Income Tax |
| 98 | ||||||
Goodwill |
467 | 467 | ||||||
Other Assets |
1,422 | 1,152 | ||||||
TOTAL ASSETS |
$ | 51,442 | $ | 50,249 | ||||
Liabilities |
||||||||
Unpaid Losses and Loss Expenses |
$ | 23,269 | $ | 22,718 | ||||
Unearned Premiums |
6,399 | 6,189 | ||||||
Long Term Debt |
3,975 | 3,975 | ||||||
Dividend Payable to Shareholders |
113 | 112 | ||||||
Deferred Income Tax |
106 | | ||||||
Accrued Expenses and Other Liabilities |
1,789 | 1,725 | ||||||
TOTAL LIABILITIES |
35,651 | 34,719 | ||||||
Contingent Liabilities (Note 6) |
||||||||
Shareholders Equity |
||||||||
Common Stock $1 Par Value; 371,980,460 Shares |
372 | 372 | ||||||
Paid-In Surplus |
157 | 208 | ||||||
Retained Earnings |
18,643 | 17,943 | ||||||
Accumulated Other Comprehensive Income |
1,130 | 790 | ||||||
Treasury Stock, at Cost 86,055,742 and 74,707,547 Shares |
(4,511 | ) | (3,783 | ) | ||||
TOTAL SHAREHOLDERS EQUITY |
15,791 | 15,530 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 51,442 | $ | 50,249 | ||||
Second Quarter | Six Months | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Net Income |
$ | 419 | $ | 518 | $ | 928 | $ | 982 | ||||||||
Other Comprehensive Income (Loss),
Net of Tax |
||||||||||||||||
Change in Unrealized Appreciation of Investments |
290 | 56 | 232 | 163 | ||||||||||||
Change in Unrealized Other-Than-Temporary
Impairment Losses on Investments |
(1 | ) | 1 | 1 | 4 | |||||||||||
Foreign Currency Translation Gains (Losses) |
24 | (66 | ) | 85 | (94 | ) | ||||||||||
Amortization of Net Actuarial Loss and Prior
Service Cost Included in Net Postretirement
Benefit Costs |
11 | 9 | 22 | 19 | ||||||||||||
324 | | 340 | 92 | |||||||||||||
Comprehensive Income |
$ | 743 | $ | 518 | $ | 1,268 | $ | 1,074 | ||||||||
2011 | 2010 | |||||||
(in millions) | ||||||||
Cash Flows from Operating Activities |
||||||||
Net Income |
$ | 928 | $ | 982 | ||||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities |
||||||||
Increase in Unpaid Losses and Loss Expenses, Net |
402 | 272 | ||||||
Increase in Unearned Premiums, Net |
147 | 70 | ||||||
Increase in Premiums Receivable |
(129 | ) | (51 | ) | ||||
Change in Income Tax Payable or Recoverable |
(174 | ) | 19 | |||||
Amortization of Premiums and Discounts on Fixed Maturities |
90 | 89 | ||||||
Depreciation |
29 | 31 | ||||||
Realized Investment Gains, Net |
(229 | ) | (217 | ) | ||||
Other, Net |
(216 | ) | (196 | ) | ||||
Net Cash Provided by Operating Activities |
848 | 999 | ||||||
Cash Flows from Investing Activities |
||||||||
Proceeds from Fixed Maturities |
||||||||
Sales |
832 | 1,593 | ||||||
Maturities, Calls and Redemptions |
1,445 | 1,215 | ||||||
Proceeds from Sales of Equity Securities |
66 | 42 | ||||||
Purchases of Fixed Maturities |
(2,644 | ) | (2,457 | ) | ||||
Purchases of Equity Securities |
(61 | ) | (52 | ) | ||||
Investments in Other Invested Assets, Net |
128 | 1 | ||||||
Decrease (Increase) in Short Term Investments, Net |
221 | (275 | ) | |||||
Increase in Net Payable from Security Transactions Not Settled |
200 | 118 | ||||||
Purchases of Property and Equipment, Net |
(19 | ) | (25 | ) | ||||
Net Cash Provided by Investing Activities |
168 | 160 | ||||||
Cash Flows from Financing Activities |
||||||||
Increase in Funds Held Under Deposit Contracts |
11 | 24 | ||||||
Proceeds from Issuance of Common Stock Under Stock-Based Employee Compensation
Plans |
56 | 31 | ||||||
Repurchase of Shares |
(855 | ) | (976 | ) | ||||
Dividends Paid to Shareholders |
(227 | ) | (239 | ) | ||||
Net Cash Used in Financing Activities |
(1,015 | ) | (1,160 | ) | ||||
Net Increase (Decrease) in Cash |
1 | (1 | ) | |||||
Cash at Beginning of Year |
70 | 51 | ||||||
Cash at End of Period |
$ | 71 | $ | 50 | ||||
Page 5
Page 6
June 30, 2011 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Appreciation | Depreciation | Value | |||||||||||||
(in millions) | ||||||||||||||||
Fixed maturities |
||||||||||||||||
Tax exempt |
$ | 19,216 | $ | 1,008 | $ | 60 | $ | 20,164 | ||||||||
Taxable |
||||||||||||||||
U.S. Government and government
agency and authority obligations |
803 | 36 | 7 | 832 | ||||||||||||
Corporate bonds |
6,453 | 419 | 17 | 6,855 | ||||||||||||
Foreign government and
government agency obligations |
6,312 | 222 | 12 | 6,522 | ||||||||||||
Residential mortgage-backed
securities |
1,061 | 53 | 6 | 1,108 | ||||||||||||
Commercial mortgage-backed
securities |
1,811 | 76 | 1 | 1,886 | ||||||||||||
16,440 | 806 | 43 | 17,203 | |||||||||||||
Total fixed maturities |
$ | 35,656 | $ | 1,814 | $ | 103 | $ | 37,367 | ||||||||
Equity securities |
$ | 1,292 | $ | 421 | $ | 50 | $ | 1,663 | ||||||||
December 31, 2010 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Appreciation | Depreciation | Value | |||||||||||||
(in millions) | ||||||||||||||||
Fixed maturities |
||||||||||||||||
Tax exempt |
$ | 19,072 | $ | 824 | $ | 122 | $ | 19,774 | ||||||||
Taxable |
||||||||||||||||
U.S. Government and government
agency and authority obligations |
807 | 31 | 9 | 829 | ||||||||||||
Corporate bonds |
6,258 | 411 | 21 | 6,648 | ||||||||||||
Foreign government and
government agency obligations |
5,943 | 231 | 13 | 6,161 | ||||||||||||
Residential mortgage-backed
securities |
1,293 | 63 | 6 | 1,350 | ||||||||||||
Commercial mortgage-backed
securities |
1,688 | 70 | 1 | 1,757 | ||||||||||||
15,989 | 806 | 50 | 16,745 | |||||||||||||
Total fixed maturities |
$ | 35,061 | $ | 1,630 | $ | 172 | $ | 36,519 | ||||||||
Equity securities |
$ | 1,285 | $ | 340 | $ | 75 | $ | 1,550 | ||||||||
Page 7
The amortized cost and fair value of fixed maturities at June 30, 2011 by contractual maturity were as follows: |
Amortized | Fair | |||||||
Cost | Value | |||||||
(in millions) | ||||||||
Due in one year or less |
$ | 1,991 | $ | 2,023 | ||||
Due after one year through five years |
11,536 | 12,102 | ||||||
Due after five years through ten years |
11,870 | 12,647 | ||||||
Due after ten years |
7,387 | 7,601 | ||||||
32,784 | 34,373 | |||||||
Residential mortgage-backed securities |
1,061 | 1,108 | ||||||
Commercial mortgage-backed securities |
1,811 | 1,886 | ||||||
$ | 35,656 | $ | 37,367 | |||||
June 30 | December 31 | |||||||
2011 | 2010 | |||||||
(in millions) | ||||||||
Fixed maturities |
||||||||
Gross unrealized appreciation |
$ | 1,814 | $ | 1,630 | ||||
Gross unrealized depreciation |
103 | 172 | ||||||
1,711 | 1,458 | |||||||
Equity securities |
||||||||
Gross unrealized appreciation |
421 | 340 | ||||||
Gross unrealized depreciation |
50 | 75 | ||||||
371 | 265 | |||||||
2,082 | 1,723 | |||||||
Deferred income tax liability |
729 | 603 | ||||||
$ | 1,353 | $ | 1,120 | |||||
Page 8
Page 9
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Depreciation | Value | Depreciation | Value | Depreciation | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Fixed maturities |
||||||||||||||||||||||||
Tax exempt |
$ | 1,453 | $ | 22 | $ | 253 | $ | 38 | $ | 1,706 | $ | 60 | ||||||||||||
Taxable |
||||||||||||||||||||||||
U.S. Government and government agency and authority obligations |
108 | 3 | 47 | 4 | 155 | 7 | ||||||||||||||||||
Corporate bonds |
552 | 10 | 156 | 7 | 708 | 17 | ||||||||||||||||||
Foreign government and
government agency
obligations |
1,120 | 10 | 42 | 2 | 1,162 | 12 | ||||||||||||||||||
Residential mortgage-backed securities |
70 | 2 | 23 | 4 | 93 | 6 | ||||||||||||||||||
Commercial mortgage-backed securities |
45 | 1 | | | 45 | 1 | ||||||||||||||||||
1,895 | 26 | 268 | 17 | 2,163 | 43 | |||||||||||||||||||
Total fixed
maturities |
3,348 | 48 | 521 | 55 | 3,869 | 103 | ||||||||||||||||||
Equity securities |
114 | 14 | 189 | 36 | 303 | 50 | ||||||||||||||||||
$ | 3,462 | $ | 62 | $ | 710 | $ | 91 | $ | 4,172 | $ | 153 | |||||||||||||
Page 10
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Depreciation | Value | Depreciation | Value | Depreciation | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Fixed maturities |
||||||||||||||||||||||||
Tax exempt |
$ | 2,498 | $ | 79 | $ | 284 | $ | 43 | $ | 2,782 | $ | 122 | ||||||||||||
Taxable |
||||||||||||||||||||||||
U.S. Government and government agency and authority obligations |
111 | 3 | 45 | 6 | 156 | 9 | ||||||||||||||||||
Corporate bonds |
474 | 12 | 166 | 9 | 640 | 21 | ||||||||||||||||||
Foreign government and government agency obligations |
990 | 12 | 27 | 1 | 1,017 | 13 | ||||||||||||||||||
Residential mortgage-backed securities |
9 | 1 | 41 | 5 | 50 | 6 | ||||||||||||||||||
Commercial mortgage-backed securities |
38 | 1 | | | 38 | 1 | ||||||||||||||||||
1,622 | 29 | 279 | 21 | 1,901 | 50 | |||||||||||||||||||
Total fixed
maturities |
4,120 | 108 | 563 | 64 | 4,683 | 172 | ||||||||||||||||||
Equity securities |
69 | 14 | 299 | 61 | 368 | 75 | ||||||||||||||||||
$ | 4,189 | $ | 122 | $ | 862 | $ | 125 | $ | 5,051 | $ | 247 | |||||||||||||
Periods Ended June 30 | ||||||||||||||||
Second Quarter | Six Months | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Change in unrealized appreciation
of fixed maturities |
$ | 430 | $ | 331 | $ | 253 | $ | 442 | ||||||||
Change in unrealized appreciation
of equity securities |
15 | (243 | ) | 106 | (185 | ) | ||||||||||
445 | 88 | 359 | 257 | |||||||||||||
Deferred income tax |
156 | 31 | 126 | 90 | ||||||||||||
$ | 289 | $ | 57 | $ | 233 | $ | 167 | |||||||||
Page 11
Periods Ended June 30 | ||||||||||||||||
Second Quarter | Six Months | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Fixed maturities |
||||||||||||||||
Gross realized gains |
$ | 10 | $ | 19 | $ | 23 | $ | 57 | ||||||||
Gross realized losses |
(4 | ) | (6 | ) | (15 | ) | (11 | ) | ||||||||
Other-than-temporary
impairment losses |
| (2 | ) | | (3 | ) | ||||||||||
6 | 11 | 8 | 43 | |||||||||||||
Equity securities |
||||||||||||||||
Gross realized gains |
10 | 3 | 29 | 12 | ||||||||||||
Gross realized losses |
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
Other-than-temporary
impairment losses |
(14 | ) | (6 | ) | (16 | ) | (6 | ) | ||||||||
(5 | ) | (4 | ) | 12 | 5 | |||||||||||
Other invested assets |
68 | 83 | 209 | 169 | ||||||||||||
$ | 69 | $ | 90 | $ | 229 | $ | 217 | |||||||||
Page 12
(i) | The carrying value of short term investments approximates fair value due to the short maturities of these investments. |
(ii) | Fair values for fixed maturities are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service or, in the case of securities for which prices are not provided by a pricing service, from independent brokers. For fixed maturities that have quoted prices in active markets, market quotations are provided. For fixed maturities that do not trade on a daily basis, the pricing service and brokers provide fair value estimates using a variety of inputs including, but not limited to, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, bids, offers, reference data, prepayment rates and measures of volatility. Management reviews on an ongoing basis the reasonableness of the methodologies used by the relevant pricing service and brokers. In addition, management, using the prices received for the securities from the pricing service and brokers, determines the aggregate portfolio price performance and reviews it against applicable indices. If management believes that significant discrepancies exist, it will discuss these with the relevant pricing service or broker to resolve the discrepancies. | ||
(iii) | Fair values of equity securities are based on quoted market prices. | ||
(iv) | Fair values of long term debt issued by Chubb are determined by management, utilizing prices obtained from an independent, nationally recognized pricing service. |
June 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
(in millions) | ||||||||||||||||
Assets |
||||||||||||||||
Invested assets |
||||||||||||||||
Short term investments |
$ | 1,690 | $ | 1,690 | $ | 1,905 | $ | 1,905 | ||||||||
Fixed maturities |
37,367 | 37,367 | 36,519 | 36,519 | ||||||||||||
Equity securities |
1,663 | 1,663 | 1,550 | 1,550 | ||||||||||||
Liabilities |
||||||||||||||||
Long term debt |
3,975 | 4,262 | 3,975 | 4,318 |
Page 13
June 30, 2011 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in millions) | ||||||||||||||||
Fixed maturities |
||||||||||||||||
Tax exempt |
$ | | $ | 20,156 | $ | 8 | $ | 20,164 | ||||||||
Taxable |
||||||||||||||||
U.S. Government and government
agency and authority
obligations |
| 832 | | 832 | ||||||||||||
Corporate bonds |
| 6,666 | 189 | 6,855 | ||||||||||||
Foreign government and
government agency obligations |
| 6,516 | 6 | 6,522 | ||||||||||||
Residential mortgage-backed
securities |
| 1,092 | 16 | 1,108 | ||||||||||||
Commercial mortgage-backed
securities |
| 1,886 | | 1,886 | ||||||||||||
| 16,992 | 211 | 17,203 | |||||||||||||
Total fixed maturities |
| 37,148 | 219 | 37,367 | ||||||||||||
Equity securities |
1,655 | | 8 | 1,663 | ||||||||||||
$ | 1,655 | $ | 37,148 | $ | 227 | $ | 39,030 | |||||||||
Page 14
December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in millions) | ||||||||||||||||
Fixed maturities |
||||||||||||||||
Tax exempt |
$ | | $ | 19,765 | $ | 9 | $ | 19,774 | ||||||||
Taxable |
||||||||||||||||
U.S. Government and government
agency and authority
obligations |
| 829 | | 829 | ||||||||||||
Corporate bonds |
| 6,483 | 165 | 6,648 | ||||||||||||
Foreign government and
government agency obligations |
| 6,135 | 26 | 6,161 | ||||||||||||
Residential mortgage-backed
securities |
| 1,329 | 21 | 1,350 | ||||||||||||
Commercial mortgage-backed
securities |
| 1,757 | | 1,757 | ||||||||||||
| 16,533 | 212 | 16,745 | |||||||||||||
Total fixed maturities |
| 36,298 | 221 | 36,519 | ||||||||||||
Equity securities |
1,537 | | 13 | 1,550 | ||||||||||||
$ | 1,537 | $ | 36,298 | $ | 234 | $ | 38,069 | |||||||||
Page 15
Revenues and income before income tax of each operating segment were as follows: |
Periods Ended June 30 | ||||||||||||||||
Second Quarter | Six Months | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues |
||||||||||||||||
Property and casualty insurance Premiums earned |
||||||||||||||||
Personal insurance |
$ | 980 | $ | 933 | $ | 1,937 | $ | 1,858 | ||||||||
Commercial insurance |
1,234 | 1,164 | 2,443 | 2,316 | ||||||||||||
Specialty insurance |
697 | 698 | 1,384 | 1,399 | ||||||||||||
Total insurance |
2,911 | 2,795 | 5,764 | 5,573 | ||||||||||||
Reinsurance assumed |
2 | 4 | 3 | 8 | ||||||||||||
2,913 | 2,799 | 5,767 | 5,581 | |||||||||||||
Investment income |
405 | 393 | 796 | 789 | ||||||||||||
Total property and casualty
insurance |
3,318 | 3,192 | 6,563 | 6,370 | ||||||||||||
Corporate and other |
13 | 36 | 28 | 54 | ||||||||||||
Realized investment gains, net |
69 | 90 | 229 | 217 | ||||||||||||
Total revenues |
$ | 3,400 | $ | 3,318 | $ | 6,820 | $ | 6,641 | ||||||||
Income (loss) before income tax |
||||||||||||||||
Property and casualty insurance Underwriting |
||||||||||||||||
Personal insurance |
$ | 3 | $ | 42 | $ | 84 | $ | 18 | ||||||||
Commercial insurance |
(54 | ) | 68 | (98 | ) | 111 | ||||||||||
Specialty insurance |
144 | 131 | 279 | 281 | ||||||||||||
Total insurance |
93 | 241 | 265 | 410 | ||||||||||||
Reinsurance assumed |
10 | 1 | 15 | 14 | ||||||||||||
103 | 242 | 280 | 424 | |||||||||||||
Increase in deferred policy
acquisition costs |
32 | 21 | 57 | 43 | ||||||||||||
Underwriting income |
135 | 263 | 337 | 467 | ||||||||||||
Investment income |
394 | 385 | 775 | 772 | ||||||||||||
Other income (charges) |
11 | 4 | 16 | (3 | ) | |||||||||||
Total property and casualty
Insurance |
540 | 652 | 1,128 | 1,236 | ||||||||||||
Corporate and other loss |
(63 | ) | (40 | ) | (126 | ) | (103 | ) | ||||||||
Realized investment gains, net |
69 | 90 | 229 | 217 | ||||||||||||
Total income before income tax |
$ | 546 | $ | 702 | $ | 1,231 | $ | 1,350 | ||||||||
\
Page 16
Page 17
Periods Ended June 30 | |||||||||||||||||||
Second Quarter | Six Months | ||||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||||
(in millions, | |||||||||||||||||||
except for per share amounts) | |||||||||||||||||||
Basic earnings per share: |
|||||||||||||||||||
Net income |
$ | 419 | $ | 518 | $ | 928 | $ | 982 | |||||||||||
Weighted average
shares outstanding |
293.6 | 324.5 | 296.0 | 328.7 | |||||||||||||||
Basic earnings per share |
$ | 1.43 | $ | 1.60 | $ | 3.14 | $ | 2.99 | |||||||||||
Diluted earnings per share: |
|||||||||||||||||||
Net income |
$ | 419 | $ | 518 | $ | 928 | $ | 982 | |||||||||||
Weighted average
shares outstanding |
293.6 | 324.5 | 296.0 | 328.7 | |||||||||||||||
Additional shares from assumed
exercise of stock-based
compensation awards |
1.8 | 2.2 | 1.7 | 2.1 | |||||||||||||||
Weighted average
shares and potential shares
assumed outstanding for computing
diluted earnings per share |
295.4 | 326.7 | 297.7 | 330.8 | |||||||||||||||
Diluted earnings per share |
$ | 1.42 | $ | 1.59 | $ | 3.12 | $ | 2.97 | |||||||||||
Item 2 | Managements Discussion and Analysis of Financial Condition and Results of Operations |
| 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 and attract new business; | |
| our expectations with respect to cash flow and investment income and with respect to other income; |
| the adequacy of our 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 or changes to our estimates (or the assessments of rating agencies and other third parties) of our potential exposure to such events; | |
| 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 equity 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 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, regulatory and similar developments on our business, including those relating to terrorism, catastrophes, the financial markets, solvency standards, capital requirements and accounting guidance; | |
| any downgrade in our claims-paying, financial strength or other credit ratings; | |
| the ability of our subsidiaries to pay us dividends; |
| general political, economic and market conditions, whether globally or in the markets in which we operate and/or invest, including: |
| changes in credit ratings, interest rates, market credit spreads and the performance of the financial markets; | ||
| currency fluctuations; | ||
| 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 managements strategic plans and initiatives. |
| Net income was $928 million in the first six months of 2011 and $419 million in the second quarter compared with $982 million and $518 million, respectively, in the same periods of 2010. The decrease in net income in the first six months and the second quarter of 2011 was due to lower operating income compared with the same periods in 2010. We define operating income as net income excluding realized investment gains and losses after tax. | ||
| Operating income was $779 million in the first six months of 2011 and $374 million in the second quarter compared with $841 million and $460 million, respectively, in the same periods of 2010. The lower operating income in the 2011 periods was due to lower underwriting income in our property and casualty business. Property and casualty investment income increased slightly in the first six months and second quarter of 2011 compared with the same periods in 2010. Management uses operating income, a non-GAAP financial measure, among other measures, to evaluate its performance because the realization of investment gains and losses in any period could be discretionary as to timing and can fluctuate significantly, which could distort the analysis of operating trends. | ||
| Underwriting results were profitable in the first six months and second quarter of both 2011 and 2010. Our combined loss and expense ratio was 94.3% in the first six months of 2011 and 94.9% in the second quarter compared with 92.0% and 90.4% in the respective periods of 2010. The less profitable results in the first six months of 2011 were due to a higher impact from catastrophes as well as a higher current accident year loss ratio excluding catastrophes, due partly to a higher impact from non-catastrophe related property losses. Underwriting results in the second quarter of 2011 were less profitable than in the second quarter of 2010 primarily due to a substantially higher impact from catastrophes. The impact of catastrophes accounted for 10.4 percentage points of the combined ratio in the first six months of 2011 and 11.3 percentage points in the second quarter, compared with 9.6 and 6.9 percentage points, respectively, in the same periods of 2010. | ||
| During the first six months and second quarter of 2011, we estimate that we experienced overall favorable development of about $425 million and $205 million, respectively, on loss reserves established as of the previous year end. In both periods, the most significant amounts of favorable development occurred in the commercial liability and professional liability classes. In the first six months and second quarter of 2010, we estimate that we experienced overall favorable development of about $400 million and $180 million, respectively, due primarily to favorable loss experience in the professional liability, commercial liability and personal insurance classes. |
| Total net premiums written increased by 5% in the first six months of 2011 and 6% in the second quarter compared with the same periods in 2010. Premium growth occurred both in the United States as well as outside the U.S. Net premiums written in the United States increased by 2% in the first six months of 2011 and 3% in the second quarter. Net premiums written outside the U.S. increased by 12% in the first six months and 14% in the second quarter. Premium growth outside the United States was also strong in the first six months and second quarter of 2011 when measured in local currencies. The growth in net premiums written in the U.S. in the first six months and second quarter of 2011, while benefiting from positive pricing trends in the standard commercial market, continued to reflect our emphasis on underwriting discipline in a market environment that remains competitive. | ||
| Property and casualty investment income after tax increased by 1% in the first six months of 2011 and 2% in the second quarter compared with the same periods in 2010, in what continued to be a low yield investment environment. Approximately half of the increase in the second quarter was attributable to the effect of currency fluctuation on income from our investments denominated in currencies other than the U.S. dollar. Management uses property and casualty investment income after 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. | ||
| Net realized investment gains before tax were $229 million ($149 million after tax) in the first six months of 2011 and $69 million ($45 million after tax) in the second quarter compared with $217 million ($141 million after tax) and $90 million ($58 million after tax) in the comparable periods of 2010. The net realized gains in the first six months and second quarter of both years were primarily related to investments in limited partnerships, which generally are reported on a quarter lag. |
Six Months | Second Quarter | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Property and casualty insurance |
$ | 1,128 | $ | 1,236 | $ | 540 | $ | 652 | ||||||||
Corporate and other |
(126 | ) | (103 | ) | (63 | ) | (40 | ) | ||||||||
Consolidated operating income before
income tax |
1,002 | 1,133 | 477 | 612 | ||||||||||||
Federal and foreign income tax |
223 | 292 | 103 | 152 | ||||||||||||
Consolidated operating income |
779 | 841 | 374 | 460 | ||||||||||||
Realized investment gains
after income tax |
149 | 141 | 45 | 58 | ||||||||||||
Consolidated net income |
$ | 928 | $ | 982 | $ | 419 | $ | 518 | ||||||||
Periods Ended June 30 | ||||||||||||||||
Six Months | Second Quarter | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Underwriting |
||||||||||||||||
Net premiums written |
$ | 5,914 | $ | 5,651 | $ | 3,055 | $ | 2,886 | ||||||||
Increase in unearned premiums |
(147 | ) | (70 | ) | (142 | ) | (87 | ) | ||||||||
Premiums earned |
5,767 | 5,581 | 2,913 | 2,799 | ||||||||||||
Losses and loss expenses |
3,612 | 3,390 | 1,847 | 1,660 | ||||||||||||
Operating costs and expenses |
1,859 | 1,751 | 955 | 889 | ||||||||||||
Increase in deferred policy
acquisition costs |
(57 | ) | (43 | ) | (32 | ) | (21 | ) | ||||||||
Dividends to policyholders |
16 | 16 | 8 | 8 | ||||||||||||
Underwriting income |
337 | 467 | 135 | 263 | ||||||||||||
Investments |
||||||||||||||||
Investment income before expenses |
796 | 789 | 405 | 393 | ||||||||||||
Investment expenses |
21 | 17 | 11 | 8 | ||||||||||||
Investment income |
775 | 772 | 394 | 385 | ||||||||||||
Other income (charges) |
16 | (3 | ) | 11 | 4 | |||||||||||
Property and casualty income before tax |
$ | 1,128 | $ | 1,236 | $ | 540 | $ | 652 | ||||||||
Property and casualty investment income
after tax |
$ | 628 | $ | 624 | $ | 318 | $ | 311 | ||||||||
Six Months Ended June 30 | Quarter Ended June 30 | |||||||||||||||||||||||
2011 | 2010 | % Incr. | 2011 | 2010 | % Incr. | |||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||
Personal insurance |
$ | 1,957 | $ | 1,882 | 4 | % | $ | 1,063 | $ | 1,008 | 5 | % | ||||||||||||
Commercial insurance |
2,636 | 2,452 | 8 | 1,310 | 1,209 | 8 | ||||||||||||||||||
Specialty insurance |
1,319 | 1,312 | 1 | 680 | 666 | 2 | ||||||||||||||||||
Total insurance |
5,912 | 5,646 | 5 | 3,053 | 2,883 | 6 | ||||||||||||||||||
Reinsurance assumed |
2 | 5 | * | 2 | 3 | * | ||||||||||||||||||
Total |
$ | 5,914 | $ | 5,651 | 5 | $ | 3,055 | $ | 2,886 | 6 | ||||||||||||||
* | The change in net premiums written is not presented since the business is in runoff. |
Periods Ended June 30 | ||||||||||||||||
Six Months | Second Quarter | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Loss ratio |
62.8 | % | 60.9 | % | 63.6 | % | 59.5 | % | ||||||||
Expense ratio |
31.5 | 31.1 | 31.3 | 30.9 | ||||||||||||
Combined ratio |
94.3 | % | 92.0 | % | 94.9 | % | 90.4 | % | ||||||||
Six Months Ended June 30 | % Incr. | Quarter Ended June 30 | ||||||||||||||||||||||
2011 | 2010 | (Decr.) | 2011 | 2010 | % Incr. | |||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||
Automobile |
$ | 343 | $ | 314 | 9 | % | $ | 181 | $ | 168 | 8 | % | ||||||||||||
Homeowners |
1,214 | 1,164 | 4 | 681 | 647 | 5 | ||||||||||||||||||
Other |
400 | 404 | (1 | ) | 201 | 193 | 4 | |||||||||||||||||
Total personal |
$ | 1,957 | $ | 1,882 | 4 | $ | 1,063 | $ | 1,008 | 5 | ||||||||||||||
Periods Ended June 30 | ||||||||||||||||
Six Months | Second Quarter | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Automobile |
92.4 | % | 90.8 | % | 92.0 | % | 90.2 | % | ||||||||
Homeowners |
96.1 | 103.8 | 97.7 | 94.5 | ||||||||||||
Other |
95.4 | 88.9 | 98.6 | 90.5 | ||||||||||||
Total personal |
95.3 | 98.6 | 96.9 | 92.9 |
Six Months Ended June 30 | Quarter Ended June 30 | |||||||||||||||||||||||
2011 | 2010 | % Incr. | 2011 | 2010 | % Incr. | |||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||
Multiple peril |
$ | 562 | $ | 540 | 4 | % | $ | 295 | $ | 286 | 3 | % | ||||||||||||
Casualty |
855 | 812 | 5 | 419 | 398 | 5 | ||||||||||||||||||
Workers compensation |
463 | 409 | 13 | 220 | 187 | 18 | ||||||||||||||||||
Property and marine |
756 | 691 | 9 | 376 | 338 | 11 | ||||||||||||||||||
Total commercial |
$ | 2,636 | $ | 2,452 | 8 | $ | 1,310 | $ | 1,209 | 8 | ||||||||||||||
Periods Ended June 30 | ||||||||||||||||
Six Months | Second Quarter | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Multiple peril |
114.1 | % | 103.6 | % | 122.2 | % | 95.2 | % | ||||||||
Casualty |
83.7 | 89.7 | 84.0 | 91.0 | ||||||||||||
Workers compensation |
91.8 | 90.8 | 93.9 | 91.5 | ||||||||||||
Property and marine |
119.1 | 90.8 | 113.2 | 93.9 | ||||||||||||
Total commercial |
101.6 | 93.4 | 102.5 | 92.9 |
Six Months Ended June 30 | % Incr. | Quarter Ended June 30 | ||||||||||||||||||||||
2011 | 2010 | (Decr.) | 2011 | 2010 | % Incr. | |||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||
Professional liability |
$ | 1,146 | $ | 1,153 | (1 | )% | $ | 595 | $ | 583 | 2 | % | ||||||||||||
Surety |
173 | 159 | 9 | 85 | 83 | 2 | ||||||||||||||||||
Total specialty |
$ | 1,319 | $ | 1,312 | 1 | $ | 680 | $ | 666 | 2 | ||||||||||||||
Periods Ended June 30 | ||||||||||||||||
Six Months | Second Quarter | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Professional liability |
85.6 | % | 86.7 | % | 84.6 | % | 87.2 | % | ||||||||
Surety |
47.5 | 43.9 | 44.5 | 47.7 | ||||||||||||
Total specialty |
81.2 | 81.7 | 80.0 | 82.5 |
Net | ||||||||||||||||||||
Gross Loss Reserves | Reinsurance | Loss | ||||||||||||||||||
June 30, 2011 | Case | IBNR | Total | Recoverable | Reserves | |||||||||||||||
(in millions) | ||||||||||||||||||||
Personal insurance |
||||||||||||||||||||
Automobile |
$ | 268 | $ | 158 | $ | 426 | $ | 17 | $ | 409 | ||||||||||
Homeowners |
395 | 396 | 791 | 9 | 782 | |||||||||||||||
Other |
377 | 651 | 1,028 | 143 | 885 | |||||||||||||||
Total personal |
1,040 | 1,205 | 2,245 | 169 | 2,076 | |||||||||||||||
Commercial insurance |
||||||||||||||||||||
Multiple peril |
675 | 1,194 | 1,869 | 35 | 1,834 | |||||||||||||||
Casualty |
1,372 | 5,196 | 6,568 | 355 | 6,213 | |||||||||||||||
Workers compensation |
903 | 1,579 | 2,482 | 178 | 2,304 | |||||||||||||||
Property and marine |
781 | 636 | 1,417 | 341 | 1,076 | |||||||||||||||
Total commercial |
3,731 | 8,605 | 12,336 | 909 | 11,427 | |||||||||||||||
Specialty insurance |
||||||||||||||||||||
Professional liability |
1,496 | 6,317 | 7,813 | 422 | 7,391 | |||||||||||||||
Surety |
25 | 50 | 75 | 8 | 67 | |||||||||||||||
Total specialty |
1,521 | 6,367 | 7,888 | 430 | 7,458 | |||||||||||||||
Total insurance |
6,292 | 16,177 | 22,469 | 1,508 | 20,961 | |||||||||||||||
Reinsurance assumed |
255 | 545 | 800 | 270 | 530 | |||||||||||||||
Total |
$ | 6,547 | $ | 16,722 | $ | 23,269 | $ | 1,778 | $ | 21,491 | ||||||||||
Net | ||||||||||||||||||||
Gross Loss Reserves | Reinsurance | Loss | ||||||||||||||||||
December 31, 2010 | Case | IBNR | Total | Recoverable | Reserves | |||||||||||||||
(in millions) | ||||||||||||||||||||
Personal insurance |
||||||||||||||||||||
Automobile |
$ | 257 | $ | 155 | $ | 412 | $ | 17 | $ | 395 | ||||||||||
Homeowners |
383 | 327 | 710 | 18 | 692 | |||||||||||||||
Other |
359 | 663 | 1,022 | 145 | 877 | |||||||||||||||
Total personal |
999 | 1,145 | 2,144 | 180 | 1,964 | |||||||||||||||
Commercial insurance |
||||||||||||||||||||
Multiple peril |
607 | 1,136 | 1,743 | 38 | 1,705 | |||||||||||||||
Casualty |
1,446 | 5,058 | 6,504 | 363 | 6,141 | |||||||||||||||
Workers compensation |
897 | 1,512 | 2,409 | 175 | 2,234 | |||||||||||||||
Property and marine |
664 | 487 | 1,151 | 332 | 819 | |||||||||||||||
Total commercial |
3,614 | 8,193 | 11,807 | 908 | 10,899 | |||||||||||||||
Specialty insurance |
||||||||||||||||||||
Professional liability |
1,477 | 6,329 | 7,806 | 418 | 7,388 | |||||||||||||||
Surety |
16 | 50 | 66 | 8 | 58 | |||||||||||||||
Total specialty |
1,493 | 6,379 | 7,872 | 426 | 7,446 | |||||||||||||||
Total insurance |
6,106 | 15,717 | 21,823 | 1,514 | 20,309 | |||||||||||||||
Reinsurance assumed |
261 | 634 | 895 | 303 | 592 | |||||||||||||||
Total |
$ | 6,367 | $ | 16,351 | $ | 22,718 | $ | 1,817 | $ | 20,901 | ||||||||||
Periods Ended June 30 | ||||||||||||||||
Six Months | Second Quarter | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Net realized gains |
||||||||||||||||
Fixed maturities |
$ | 8 | $ | 46 | $ | 6 | $ | 13 | ||||||||
Equity securities |
28 | 11 | 9 | 2 | ||||||||||||
Other invested assets |
209 | 169 | 68 | 83 | ||||||||||||
245 | 226 | 83 | 98 | |||||||||||||
Other-than-temporary
impairment losses |
||||||||||||||||
Fixed maturities |
| (3 | ) | | (2 | ) | ||||||||||
Equity securities |
(16 | ) | (6 | ) | (14 | ) | (6 | ) | ||||||||
(16 | ) | (9 | ) | (14 | ) | (8 | ) | |||||||||
Realized investment gains
before tax |
$ | 229 | $ | 217 | $ | 69 | $ | 90 | ||||||||
Realized investment gains
after tax |
$ | 149 | $ | 141 | $ | 45 | $ | 58 | ||||||||
Level 1 Unadjusted quoted prices in active markets for identical assets. | |||
Level 2 Other inputs that are observable for the asset, either directly or indirectly. | |||
Level 3 Inputs that are unobservable. |
Total Number of | Maximum Number of | |||||||||||||||
Shares Purchased | Shares that May | |||||||||||||||
Total Number | Average | as Part of | Yet Be Purchased | |||||||||||||
of Shares | Price Paid | Publicly Announced | Under the | |||||||||||||
Period | Purchased(a) | Per Share | Plans or Programs | Plans or Programs(b) | ||||||||||||
April 2011 |
178,539 | $ | 62.68 | 178,539 | 21,750,504 | |||||||||||
May 2011 |
4,485,375 | 65.03 | 4,485,375 | 17,265,129 | ||||||||||||
June 2011 |
2,362,676 | 64.71 | 2,362,676 | 14,902,453 | ||||||||||||
Total |
7,026,590 | 64.86 | 7,026,590 | |||||||||||||
(a) | The stated amounts exclude 2,089 shares and 328 shares delivered to Chubb during the months of April 2011 and May 2011, respectively, by employees of the Corporation to cover option exercise prices in connection with the Corporations stock-based compensation plans. | |
(b) | On December 9, 2010, the Board of Directors authorized the repurchase of up to 30,000,000 shares of common stock. The authorization has no expiration date. |
Exhibit | ||||
Number | Description | |||
- | Rule 13a-14(a)/15d-14(a) Certifications | |||
31.1
|
Certification by John D. Finnegan filed herewith. | |||
31.2
|
Certification by Richard G. Spiro filed herewith. | |||
- | Section 1350 Certifications | |||
32.1
|
Certification by John D. Finnegan filed herewith. | |||
32.2
|
Certification by Richard G. Spiro filed herewith. | |||
- | Interactive Data File | |||
101.INS*
101.SCH*
101.CAL*
101.LAB*
101.PRE*
101.DEF*
|
XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document |
* | Pursuant to applicable securities laws and regulations, the Corporation is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Corporation has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability. |
THE CHUBB CORPORATION (Registrant) |
||||
By: | /s/ John J. Kennedy | |||
John J. Kennedy | ||||
Senior Vice-President and Chief Accounting Officer | ||||
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
(1) | The Quarterly Report on Form 10-Q of the Corporation for the quarterly period ended June 30, 2011 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
(1) | The Quarterly Report on Form 10-Q of the Corporation for the quarterly period ended June 30, 2011 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Fixed Maturities | Â | Â |
Tax exempt, Cost | $ 19,216 | $ 19,072 |
Taxable, Cost | 16,440 | 15,989 |
Equity Securities, Cost | $ 1,292 | $ 1,285 |
Shareholders' Equity | Â | Â |
Common Stock, Par Value | $ 1 | $ 1 |
Common Stock, Shares Issued | 371,980,460 | 371,980,460 |
Treasury Stock, Shares | 86,055,742 | 74,707,547 |
Invested Assets (Details 5) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Realized investment gains and losses [Abstract] | Â | Â | Â | Â |
Fixed maturities, Gross realized gains | $ 10 | $ 19 | $ 23 | $ 57 |
Fixed maturities, Gross realized losses | (4) | (6) | (15) | (11) |
Fixed maturities, Other-than-temporary impairment losses | 0 | (2) | 0 | (3) |
Total fixed maturities | 6 | 11 | 8 | 43 |
Equity securities, Gross realized gains | 10 | 3 | 29 | 12 |
Equity securities, Gross realized losses | (1) | (1) | (1) | (1) |
Equity securities, Other-than-temporary impairment losses | (14) | (6) | (16) | (6) |
Total equity securities | (5) | (4) | 12 | 5 |
Other invested assets | 68 | 83 | 209 | 169 |
Total Realized Investment Gains, Net | $ 69 | $ 90 | $ 229 | $ 217 |
Document and Entity Information (USD $)
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Document and Entity Information [Abstract] | Â | Â |
Entity Registrant Name | CHUBB CORP | Â |
Entity Central Index Key | 0000020171 | Â |
Document Type | 10-Q | Â |
Document Period End Date | Jun. 30, 2011 | |
Amendment Flag | false | Â |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Well-known Seasoned Issuer | Yes | Â |
Entity Voluntary Filers | No | Â |
Entity Current Reporting Status | Yes | Â |
Entity Filer Category | Large Accelerated Filer | Â |
Entity Public Float | Â | $ 15,687,942,111 |
Entity Common Stock, Shares Outstanding (actual number of shares) | 285,924,718 | Â |
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Contingent Liabilities
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Contingent Liabilities [Abstract] | Â |
Contingent Liabilities |
6) Contingent Liabilities
Chubb and certain of its subsidiaries have been involved in the investigations by
various Attorneys General and other regulatory authorities of several states, the U.S.
Securities and Exchange Commission, the U.S. Attorney for the Southern District of New York
and certain non-U.S. regulatory authorities with respect to certain business practices in the
property and casualty insurance industry including (1) potential conflicts of interest and
anti-competitive behavior arising from the payment of contingent commissions to brokers and
agents and (2) loss mitigation and finite reinsurance arrangements. In connection with these
investigations, Chubb and certain of its subsidiaries received subpoenas and other requests
for information from various regulators. The Corporation has cooperated fully with these
investigations. The Corporation has settled with several state Attorneys General and
insurance departments all issues arising out of their investigations. Nevertheless, it is
possible that actions could be brought against the Corporation with respect to some or all of
the issues that were the focus of the business practice investigations.
Individual actions and purported class actions arising out of the investigations into
the payment of contingent commissions to brokers and agents have been filed in a number of
federal and state courts. On August 1, 2005, Chubb and certain of its subsidiaries were
named in a putative class action entitled In re Insurance Brokerage Antitrust Litigation in
the U.S. District Court for the District of New Jersey (N.J. District Court). This action,
brought against several brokers and insurers on behalf of a class of persons who purchased
insurance through the broker defendants, asserts claims under the Sherman Act, state law and
the Racketeer Influenced and Corrupt Organizations Act (RICO) arising from the alleged
unlawful use of contingent commission agreements. On September 28, 2007, the N.J. District
Court dismissed the second amended complaint filed by the plaintiffs in its entirety. In so
doing, the court dismissed the plaintiffs’ Sherman Act and RICO claims with prejudice for
failure to state a claim, and it dismissed the plaintiffs’ state law claims without prejudice
because it declined to exercise supplemental jurisdiction over them. The plaintiffs appealed
the dismissal of their second amended complaint to the U.S. Court of Appeals for the Third
Circuit (Third Circuit). On August 13, 2010, the Third Circuit affirmed in part and vacated
in part the N.J. District Court decision and remanded the case back to the N.J. District
Court for further proceedings. As a result of the Third Circuit’s decision, the plaintiffs’
state law claims and certain of the plaintiffs’ Sherman Act and RICO claims were reinstated
against the Corporation. The Corporation and the other defendants filed on October 1, 2010
motions to dismiss the reinstated claims. Since that time, several of the defendants entered
into settlement agreements with the plaintiffs, which are in the process of being approved by
the N.J. District Court. In view of these settlements and their impact on the litigation,
the N.J. District Court on June 17, 2011 dismissed without prejudice the motions to dismiss
filed by the Corporation and the other non-settling defendants. The Corporation is reviewing
the N.J. District Court’s decision.
Chubb and certain of its subsidiaries also have been named as defendants in other
putative class actions relating or similar to the In re Insurance Brokerage Antitrust
Litigation that have been filed in various state courts or in U.S. district courts between
2005 and 2007. These actions have been subsequently removed and ultimately transferred to
the N.J. District Court for consolidation with the In re Insurance Brokerage Antitrust
Litigation. These actions are currently stayed.
In the various actions described above, the plaintiffs generally allege that the
defendants unlawfully used contingent commission agreements and conspired to reduce
competition in the insurance markets. The actions seek treble damages, injunctive and
declaratory relief and attorneys’ fees. The Corporation believes it has substantial defenses
to all of the aforementioned legal proceedings and intends to defend the actions vigorously.
The Corporation cannot predict at this time the ultimate outcome of the aforementioned
ongoing investigations and legal proceedings, including any potential amounts that the
Corporation may be required to pay in connection with them. Nevertheless, management
believes that it is likely that the outcome will not have a material adverse effect on the
Corporation’s results of operations or financial condition.
|
Fair Values of Financial Instruments (Details 2)
|
Jun. 30, 2011
|
---|---|
Fair Values of Financial Instruments (Textual) [Abstract] | Â |
Percentage of fair value amounts for fixed maturities provided by a pricing service | 99.00% |
Fair Values of Financial Instruments (Details) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Carrying values and fair values of financial instruments [Abstract] | Â | Â |
Equity securities, Fair value | $ 1,663 | $ 1,550 |
Short term investments | 1,690 | 1,905 |
Total fixed maturities, Fair value | 37,367 | 36,519 |
Long term debt | 3,975 | 3,975 |
Carrying Value [Member]
|
 |  |
Carrying values and fair values of financial instruments [Abstract] | Â | Â |
Equity securities, Fair value | 1,663 | 1,550 |
Short term investments | 1,690 | 1,905 |
Total fixed maturities, Fair value | 37,367 | 36,519 |
Long term debt | 3,975 | 3,975 |
Fair Value [Member]
|
 |  |
Carrying values and fair values of financial instruments [Abstract] | Â | Â |
Equity securities, Fair value | 1,663 | 1,550 |
Short term investments | 1,690 | 1,905 |
Total fixed maturities, Fair value | 37,367 | 36,519 |
Long term debt | $ 4,262 | $ 4,318 |
Earnings Per Share (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings Per Share (Tables) [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted earnings per share |
|
Accounting Pronouncements Not Yet Adopted
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Accounting Pronouncements Not Yet Adopted [Abstract] | Â |
Accounting Pronouncements Not Yet Adopted |
2) Accounting Pronouncements Not Yet Adopted
(a) In June 2011, the Financial Accounting Standards Board (FASB) issued new guidance
related to the presentation of comprehensive income. The guidance provides that an entity
has the option to present the components of net income and the components of other
comprehensive income either in a single statement of comprehensive income or in
two separate, but consecutive, statements. The guidance does not change whether items are
reported in net income or in other comprehensive income and does not change the guidance on
whether or when items of other comprehensive income are reclassified to net income. This
guidance is to be applied retrospectively and is effective for the Corporation for the year
beginning January 1, 2012. The adoption of this guidance will not have an effect on the
Corporation’s financial position or results of operations. The Corporation is in the process
of evaluating the presentation options permitted by the guidance.
(b) In October 2010, the FASB issued new guidance related to the accounting for costs
associated with acquiring or renewing insurance contracts. The guidance identifies those
costs relating to the successful acquisition of new or renewal insurance contracts that
should be capitalized. This guidance is effective for the Corporation for the year beginning
January 1, 2012 and may be applied prospectively or retrospectively. The Corporation
is continuing to assess the effect that the implementation of the new guidance will have on
its financial position and results of operations. The amount of acquisition costs the
Corporation will defer under the new guidance will be less than the amount deferred under the
Corporation’s current accounting practice. If prospective application is elected, net income
in the year of adoption would be reduced as the amount of acquisition costs eligible for
deferral under the new guidance would be lower. Amortization of the balance of deferred
policy acquisition costs as of the date of adoption would continue over the period in which
the related premiums are earned. If retrospective application is elected, deferred policy
acquisition costs and related deferred taxes would be reduced as of the beginning of the
earliest period presented in the financial statements with a corresponding reduction to
shareholders’ equity.
|
Invested Assets (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Amortized cost and fair value of fixed maturities and equity securities |
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Amortized cost and fair value of fixed maturities by contractual maturity |
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Components of unrealized appreciation or depreciation of investments |
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Fair value and gross unrealized depreciation of investments in an unrealized loss position |
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Change in unrealized appreciation or depreciation of investments carried at fair value |
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Realized investment gains and losses |
|
Fair Values of Financial Instruments (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Values of Financial Instruments (Tables) [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying values and fair values of financial instruments |
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Fair values of fixed maturities and equity securities categorized based upon the lowest level of input |
|
Earnings Per Share
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings Per Share [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
7) Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
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Invested Assets
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Invested Assets [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Invested Assets |
3) Invested Assets
(a) The amortized cost and fair value of fixed maturities and equity securities were
as follows:
At June 30, 2011 and December 31, 2010, the gross unrealized depreciation of fixed
maturities included $3 million and $4 million, respectively, of unrealized
other-than-temporary impairment losses recognized in accumulated other comprehensive income.
Actual maturities could differ from contractual maturities because borrowers may have
the right to call or prepay obligations.
The Corporation’s equity securities comprise a diversified portfolio of primarily U.S.
publicly-traded common stocks.
The Corporation is involved in the normal course of business with variable interest
entities (VIEs) primarily as a passive investor in residential mortgage-backed securities,
commercial mortgage-backed securities and private equity limited partnerships issued by third
party VIEs. The Corporation is not the primary beneficiary of these VIEs. The Corporation’s
maximum exposure to loss with respect to these investments is limited to the investment
carrying values included in the Corporation’s consolidated balance sheet and any unfunded
partnership commitments.
When the fair value of an investment is lower than its cost, an assessment is made to
determine whether the decline is temporary or other than temporary. The assessment of
other-than-temporary impairment of fixed maturities and equity securities is based on both
quantitative criteria and qualitative information and also considers a number of other
factors including, but not limited to, the length of time and the extent to which the fair
value has been less than the cost, the financial condition and near term prospects of the
issuer, whether the issuer is current on contractually obligated interest and principal
payments, general market conditions and industry or sector specific factors.
In determining whether fixed maturities are other than temporarily impaired, the
Corporation is required to recognize an other-than-temporary impairment loss when it
concludes it has the intent to sell or it is more likely than not it will be required to sell
an impaired fixed maturity before the security recovers to its amortized cost value or it is
likely it will not recover the entire amortized cost value of an impaired debt security. If
the Corporation has the intent to sell or it is more likely than not that the Corporation
will be required to sell an impaired fixed maturity before the security recovers to its
amortized cost value, the security is written down to fair value and the entire amount of the
writedown is included in net income as a realized investment loss. For all other impaired
fixed maturities, the impairment loss is separated into the amount representing the credit
loss and the amount representing the loss related to all other factors. The amount of the
impairment loss that represents the credit loss is included in net income as a realized
investment loss and the amount of the impairment loss that relates to all other factors is
included in other comprehensive income.
For fixed maturities, the split between the amount of other-than-temporary impairment
losses that represents credit losses and the amount that relates to all other factors is
principally based on assumptions regarding the amount and timing of projected cash flows.
For fixed maturities other than mortgage-backed securities, cash flow estimates are based on
assumptions regarding the probability of default and estimates regarding the timing and
amount of recoveries associated with a default. For mortgage-backed securities, cash flow
estimates are based on assumptions regarding future prepayment rates, default rates, loss
severity and timing of recoveries. The Corporation has developed the estimates of projected
cash flows using information based on historical market data, industry analyst reports and
forecasts and other data relevant to the collectability of a security.
In determining whether equity securities are other than temporarily impaired, the
Corporation considers its intent and ability to hold a security for a period of time
sufficient to allow for the recovery of cost. If the decline in the fair value of an equity
security is deemed to be other than temporary, the security is written down to fair value and
the amount of the writedown is included in net income as a realized investment loss.
The following table summarizes, for all investment securities in an unrealized loss
position at June 30, 2011, the aggregate fair value and gross unrealized depreciation,
including unrealized other-than-temporary impairment losses, by investment category and
length of time that individual securities have continuously been in an unrealized loss
position:
At June 30, 2011, approximately 600 individual fixed maturity and equity securities
were in an unrealized loss position, of which approximately 570 were fixed maturities. The
Corporation does not have the intent to sell and it is not more likely than not that the
Corporation will be required to sell these fixed maturities before the securities recover to
their amortized cost value. In addition, the Corporation believes that none of the declines
in the fair values of these fixed maturities relate to credit losses. The Corporation has
the intent and ability to hold the equity securities in an unrealized loss position for a
period of time sufficient to allow for the recovery of cost. The Corporation believes that
none of the declines in the fair value of these fixed maturities and equity securities were
other than temporary at June 30, 2011.
The following table summarizes, for all investment securities in an unrealized loss
position at December 31, 2010, the aggregate fair value and gross unrealized depreciation,
including unrealized other-than-temporary impairment losses, by investment category and
length of time that individual securities have continuously been in an unrealized loss
position:
The change in unrealized appreciation or depreciation of investments carried at
fair value, including the change in unrealized other-than-temporary impairment losses, was as
follows:
(c) Realized investment gains and losses were as follows:
(d) As of June 30, 2011 and December 31, 2010, fixed maturities still held by the
Corporation for which a portion of their other-than-temporary impairment losses were
recognized in other comprehensive income had cumulative credit-related losses of $20
million and $21 million, respectively, recognized in net income.
|
Fair Values of Financial Instruments
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Fair Values of Financial Instruments [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Financial Instruments |
4) Fair Values of Financial Instruments
Fair values of financial instruments are determined using valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable inputs. Fair
values are generally measured using quoted prices in active markets for identical assets or
liabilities or other inputs, such as quoted prices for similar assets or liabilities, that
are observable either directly or indirectly. In those instances where observable inputs are
not available, fair values are measured using unobservable inputs for the asset or liability.
Unobservable inputs reflect the Corporation’s own assumptions about the assumptions that
market participants would use in pricing the asset or liability and are developed based on
the best information available in the circumstances. Fair value estimates derived from
unobservable inputs are affected by the assumptions used, including the discount rates and
the estimated amounts and timing of future cash flows. The derived fair value estimates
cannot be substantiated by comparison to independent markets and are not necessarily
indicative of the amounts that would be realized in a current market exchange. Certain
financial instruments, particularly insurance contracts, are excluded from fair value
disclosure requirements.
The methods and assumptions used to estimate the fair values of financial instruments
are as follows:
The carrying values and fair values of financial instruments were as follows:
A pricing service provides fair value amounts for approximately 99% of the Corporation’s
fixed maturities. The prices obtained from a pricing service and brokers generally are
non-binding, but are reflective of current market transactions in the applicable financial
instruments.
At June 30, 2011 and December 31, 2010, the Corporation held an insignificant amount of
financial instruments in its investment portfolio for which a lack of market liquidity
impacted the determination of fair value.
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels as follows:
Level 1 — Unadjusted quoted prices in active markets for identical
assets.
Level 2 — Other inputs that are observable for the asset, either
directly or indirectly.
Level 3 — Inputs that are unobservable.
The fair value of fixed maturities and equity securities categorized based upon the
lowest level of input that was significant to the fair value measurement was as follows:
|
Segments Information (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
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Revenues [Abstract] | Â | Â | Â | Â |
Premiums Earned | $ 2,913 | $ 2,799 | $ 5,767 | $ 5,581 |
Investment Income | 416 | 426 | 820 | 836 |
Corporate and other revenues | 13 | 36 | 28 | 54 |
Realized investment gains, Net | 69 | 90 | 229 | 217 |
Total Revenues | 3,400 | 3,318 | 6,820 | 6,641 |
Property and casualty insurance [Member]
|
 |  |  |  |
Revenues [Abstract] | Â | Â | Â | Â |
Premiums earned related to insurance business | 2,911 | 2,795 | 5,764 | 5,573 |
Premiums earned related to reinsurance assumed | 2 | 4 | 3 | 8 |
Premiums Earned | 2,913 | 2,799 | 5,767 | 5,581 |
Investment Income | 405 | 393 | 796 | 789 |
Total property and casualty insurance revenues | 3,318 | 3,192 | 6,563 | 6,370 |
Property and casualty insurance [Member] | Personal insurance [Member]
|
 |  |  |  |
Revenues [Abstract] | Â | Â | Â | Â |
Premiums earned related to insurance business | 980 | 933 | 1,937 | 1,858 |
Property and casualty insurance [Member] | Commercial insurance [Member]
|
 |  |  |  |
Revenues [Abstract] | Â | Â | Â | Â |
Premiums earned related to insurance business | 1,234 | 1,164 | 2,443 | 2,316 |
Property and casualty insurance [Member] | Specialty insurance [Member]
|
 |  |  |  |
Revenues [Abstract] | Â | Â | Â | Â |
Premiums earned related to insurance business | $ 697 | $ 698 | $ 1,384 | $ 1,399 |
Earnings Per Share (Details) (USD $)
In Millions, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
|
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Basic earnings per share [Abstract] | Â | Â | Â | Â |
Net Income | $ 419 | $ 518 | $ 928 | $ 982 |
Weighted average shares outstanding | 293.6 | 324.5 | 296.0 | 328.7 |
Basic earnings per share | $ 1.43 | $ 1.60 | $ 3.14 | $ 2.99 |
Diluted earnings per share [Abstract] | Â | Â | Â | Â |
Net Income | $ 419 | $ 518 | $ 928 | $ 982 |
Weighted average shares outstanding | 293.6 | 324.5 | 296.0 | 328.7 |
Additional shares from assumed exercise of stock-based compensation awards | 1.8 | 2.2 | 1.7 | 2.1 |
Weighted average shares and potential shares assumed outstanding for computing diluted earnings per share | 295.4 | 326.7 | 297.7 | 330.8 |
Diluted earnings per share | $ 1.42 | $ 1.59 | $ 3.12 | $ 2.97 |
Segments Information
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Jun. 30, 2011
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Segments Information |
5) Segments Information
The principal business of the Corporation is the sale of property and casualty
insurance. The profitability of the property and casualty insurance business depends on the
results of both underwriting operations and investments, which are viewed as two distinct
operations. The underwriting operations are managed and evaluated separately from the
investment function.
The property and casualty insurance subsidiaries underwrite most lines of property and
casualty insurance. Underwriting operations consist of four separate business units:
personal insurance, commercial insurance, specialty insurance and reinsurance assumed. The
personal segment targets the personal insurance market. The personal classes include
automobile, homeowners and other personal coverages. The commercial segment includes those
classes of business that are generally available in broad markets and are of a more commodity
nature. Commercial classes include multiple peril, casualty, workers’ compensation and
property and marine. The specialty segment includes those classes of business that are
available in more limited markets since they require specialized underwriting and claim
settlement. Specialty classes include professional liability coverages and surety. The
reinsurance assumed business is in run-off following the transfer of the ongoing business to
a reinsurance company in 2005.
Corporate and other includes investment income earned on corporate invested assets,
corporate expenses and the results of the Corporation’s non-insurance subsidiaries.
|
Segments Information (Details 1) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Income (loss) before income tax [Abstract] | Â | Â | Â | Â |
Total property and casualty insurance | $ 540 | $ 652 | $ 1,128 | $ 1,236 |
Corporate and other loss | (63) | (40) | (126) | (103) |
Realized investment gains, Net | 69 | 90 | 229 | 217 |
Income Before Federal and Foreign Income Tax | 546 | 702 | 1,231 | 1,350 |
Property and casualty insurance [Member]
|
 |  |  |  |
Income (loss) before income tax [Abstract] | Â | Â | Â | Â |
Underwriting income related to insurance business | 93 | 241 | 265 | 410 |
Reinsurance assumed underwriting income | 10 | 1 | 15 | 14 |
Statutory underwriting income | 103 | 242 | 280 | 424 |
Increase in deferred policy acquisition costs | 32 | 21 | 57 | 43 |
Underwriting income | 135 | 263 | 337 | 467 |
Investment income | 394 | 385 | 775 | 772 |
Other income (charges) | 11 | 4 | 16 | (3) |
Property and casualty insurance [Member] | Personal insurance [Member]
|
 |  |  |  |
Income (loss) before income tax [Abstract] | Â | Â | Â | Â |
Underwriting income related to insurance business | 3 | 42 | 84 | 18 |
Property and casualty insurance [Member] | Commercial insurance [Member]
|
 |  |  |  |
Income (loss) before income tax [Abstract] | Â | Â | Â | Â |
Underwriting income related to insurance business | (54) | 68 | (98) | 111 |
Property and casualty insurance [Member] | Specialty insurance [Member]
|
 |  |  |  |
Income (loss) before income tax [Abstract] | Â | Â | Â | Â |
Underwriting income related to insurance business | $ 144 | $ 131 | $ 279 | $ 281 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Consolidated Statements of Comprehensive Income [Abstract] | Â | Â | Â | Â |
Net Income | $ 419 | $ 518 | $ 928 | $ 982 |
Other Comprehensive Income (Loss), Net of Tax | Â | Â | Â | Â |
Change in Unrealized Appreciation of Investments | 290 | 56 | 232 | 163 |
Change in Unrealized Other-Than-Temporary Impairment Losses on Investments | (1) | 1 | 1 | 4 |
Foreign Currency Translation Gains (Losses) | 24 | (66) | 85 | (94) |
Amortization of Net Actuarial Loss and Prior Service Cost Included in Net Postretirement Benefit Costs | 11 | 9 | 22 | 19 |
Total Other Comprehensive Income, Net of Tax | 324 | 0 | 340 | 92 |
Comprehensive Income | $ 743 | $ 518 | $ 1,268 | $ 1,074 |
Invested Assets (Details 4) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Change in unrealized appreciation or depreciation of investments carried at fair value [Abstract] | Â | Â | Â | Â |
Change in unrealized appreciation of fixed maturities | $ 430 | $ 331 | $ 253 | $ 442 |
Change in unrealized appreciation of equity securities | 15 | (243) | 106 | (185) |
Change in unrealized appreciation of fixed maturities and equity securities | 445 | 88 | 359 | 257 |
Deferred income tax | 156 | 31 | 126 | 90 |
Total change in unrealized appreciation of fixed maturities and equity securities, Net of tax | $ 289 | $ 57 | $ 233 | $ 167 |
Invested Assets (Details 6) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Invested Assets (Textuals) [Abstract] | Â | Â |
Fixed maturities other-than-temporary impairment losses in gross unrealized depreciation | $ 3 | $ 4 |
Individual fixed maturity and equity securities in unrealized loss position | 600 | Â |
Individual fixed maturities in unrealized loss position | 570 | Â |
Cumulative credit losses recognized in net income | $ 20 | $ 21 |
General
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
General (Policies) [Abstract] | Â |
General |
1) General
The accompanying consolidated financial statements have been prepared in accordance with
U.S. generally accepted accounting principles (GAAP) and include the accounts of The Chubb
Corporation (Chubb) and its subsidiaries (collectively, the Corporation). Significant
intercompany transactions have been eliminated in consolidation.
The amounts included in this report are unaudited but include those adjustments,
consisting of normal recurring items, that management considers necessary for a fair
presentation. These consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes in the Notes to Consolidated Financial
Statements included in the Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2010.
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Segments Information (Tables)
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Jun. 30, 2011
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Segments Information (Tables) [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues and income before income tax of each operating segment |
|
Invested Assets (Details 2) (USD $)
In Millions |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Components of unrealized appreciation or depreciation of investments [Abstract] | Â | Â |
Fixed maturities, Gross unrealized appreciation | $ 1,814 | $ 1,630 |
Fixed maturities, Gross unrealized depreciation | 103 | 172 |
Fixed maturities, Unrealized appreciation (depreciation), Net | 1,711 | 1,458 |
Equity securities, Gross unrealized appreciation | 421 | 340 |
Equity securities, Gross unrealized depreciation | 50 | 75 |
Equity securities, Unrealized appreciation (depreciation), Net | 371 | 265 |
Total fixed maturities and equity securities, Unrealized appreciation (depreciation), Net | 2,082 | 1,723 |
Deferred income tax liability | 729 | 603 |
Total fixed maturities and equity securities, Unrealized appreciation (depreciation), Net of tax | $ 1,353 | $ 1,120 |
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