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) April 19, 2012
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) |
Registrants 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):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Index to Current Report on Form 8-K filed on April 19, 2012 |
||
Press release dated April 19, 2012 (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 this Item 2.02 of Form 8-K. On April 19, 2012, The Chubb Corporation (Chubb) issued a press release announcing its results for the quarter ended March 31, 2012. On April 19, 2012, Chubb also posted on its web site at www.chubb.com the Supplementary Investor Information Report (SIIR) relating to its 2012 first 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 furnished as Exhibits 99.1 and 99.2, respectively, to this Form 8-K. In its press release, the SIIR and the conference call to discuss its 2012 first quarter results, scheduled to be webcast at 5:00 P.M. on April 19, 2012, 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 prepared in accordance with accounting principles generally accepted in the United States.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 | Press release dated April 19, 2012 (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) |
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: April 19, 2012 | By: | /s/ John J. Kennedy | ||||
Name: John J. Kennedy | ||||||
Title: Senior Vice President and Chief Accounting Officer |
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
DATED APRIL 19, 2012
Exhibit No. |
Description | |
99.1 | Press release dated April 19, 2012 (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) |
Exhibit 99.1
|
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 First Quarter Net Income per Share of $1.83;
Operating Income per Share Is $1.70;
Combined Ratio Is 90.2%
WARREN, New Jersey, April 19, 2012 The Chubb Corporation [NYSE: CB] today reported that net income in the first quarter of 2012 was $506 million, compared to $509 million in the first quarter of 2011. Net income per share increased 8% to $1.83 from $1.70 per share.
Average diluted shares outstanding for the first quarter were 276.2 million in 2012 and 300.0 million in 2011.
Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, was $469 million in the first quarter of 2012 and $405 million in the first quarter of 2011. First quarter operating income per share increased 26% to $1.70 in 2012 from $1.35 in 2011.
The first quarter combined loss and expense ratio was 90.2% in 2012 and 93.7% in 2011. The impact of catastrophes on the first quarter combined ratio was 0.8 percentage points in 2012 and 9.5 points in 2011. Excluding the impact of catastrophes, the first quarter combined ratio was 89.4% in 2012 and 84.2% in 2011. The expense ratio for the first quarter was 32.2% in 2012 and 31.7% in 2011.
Net written premiums for the first quarter increased 3% to $2.9 billion. Excluding the effect of foreign currency translation, premiums were up approximately 4%. Premiums were up 5% in the U.S. and down 1% outside the U.S. (up 2% in local currencies).
Property and casualty investment income after taxes for the first quarter was $308 million in 2012, compared to $310 million in 2011.
2
Net income for the first quarter of 2012 reflected net realized investment gains of $56 million pre-tax ($0.13 per share after-tax). Net income for the first quarter of 2011 reflected net realized investment gains of $160 million pre-tax ($0.35 per share after-tax), related mostly to the companys alternative investments.
Chubb is off to a strong start in 2012, said John D. Finnegan, Chairman, President and Chief Executive Officer of Chubb. We produced excellent results in the first quarter, with operating income per share of $1.70 and a combined ratio of 90.2%. We are especially encouraged by the momentum of renewal rate increases we experienced during the quarter in both standard commercial and specialty lines, as well as the continued rate improvement in personal lines.
During the first quarter of 2012, Chubb repurchased approximately 4.4 million shares of its common stock at a total cost of $301 million (an average of $68.44 per share). As of March 31, 2012, there was $963 million available for share repurchases under the current authorization.
Book value per share was $57.37 at March 31, 2012, compared to $52.33 at March 31, 2011 and $56.15 at December 31, 2011. The book value amounts reflect the effect of the companys adoption of new guidance related to accounting for costs associated with acquiring or renewing insurance contracts. This guidance was retrospectively applied to prior periods.
First Quarter Operations Review
Chubb Personal Insurance (CPI) net written premiums increased 5% in the first quarter to $940 million. CPIs combined ratio for the quarter was 85.5%, compared to 93.8% in the first quarter of 2011. The first-quarter impact of catastrophes accounted for 1.2 percentage points in 2012, compared to 7.8 points in 2011. Excluding the impact of catastrophes, CPIs first quarter combined ratio was 84.3% in 2012 and 86.0% in 2011.
Net written premiums for Homeowners increased 4%, and the combined ratio was 80.1%. The impact of catastrophes in the first quarter accounted for 1.9 percentage points of the Homeowners combined ratio. Excluding the impact of catastrophes, the combined ratio for Homeowners was 78.2%. Personal Automobile premiums increased 1%, and the combined ratio was 91.3%. For Other Personal lines, premiums increased 11% and the combined ratio was 97.3%.
3
Chubb Commercial Insurance (CCI) net written premiums increased 6% in the first quarter to $1.4 billion. The combined ratio for the quarter was 93.3% in 2012 and 100.7% in 2011. The impact of catastrophes in the first quarter accounted for 0.9 percentage points of the combined ratio in 2012, compared to 16.2 points in 2011. Excluding the impact of catastrophes, CCIs first quarter combined ratio was 92.4% in 2012 and 84.5% in 2011.
In the United States, average first quarter CCI renewal rates increased 8%, renewal premium retention was 83% and the ratio of new to lost business was 0.9 to 1.
Chubb Specialty Insurance (CSI) net written premiums declined 6% in the first quarter to $602 million. The combined ratio for CSI was 93.6%, compared to 82.4% in the first quarter of 2011.
Professional Liability (PL) net written premiums were down 2%, and the combined ratio was 98.5%. Average first quarter renewal rates for PL in the U.S. increased 4%, renewal premium retention was 85% and the ratio of new to lost business was 0.8 to 1.
Surety net written premiums were down 27%, and the combined ratio was 56.3%.
Webcast Conference Call to be Held Today at 5 P.M.
Chubbs senior management will discuss the companys first quarter performance with investors and analysts today, April 19th, 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.
4
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. Chubbs global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.
Chubbs 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, certain 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 results 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 (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporations available-for-sale fixed maturities, which are carried at fair value. The appreciation or depreciation of 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.
Net Written Premiums Growth (Decrease) Excluding the Impact of Currency Fluctuation: Management uses net written premiums growth (decrease) excluding the impact of currency fluctuation, a non-GAAP financial measure, to evaluate the trends in net written premiums, exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which international business is transacted. In net written premiums growth (decrease) excluding the impact of currency fluctuation, the effect of fluctuations in the exchange rates is excluded as these rates may fluctuate significantly and could distort the analysis of trends. Net written premiums growth (decrease) excluding the impact of currency fluctuation is determined by using the same exchange rate to translate each foreign currency denominated net written premium amount in both periods.
6
FORWARD-LOOKING INFORMATION
In the conference call identified above and otherwise, we may make statements regarding our results of operations, financial condition and other matters that 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. Forward-looking statements frequently can be identified by words such as believe, expect, anticipate, intend, plan, will, may, should, could, would, likely, estimate, predict, potential, continue, or other similar expressions. Forward-looking statements are made based upon managements 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 Chubbs 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 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; and |
| the impact from the bankruptcy protection sought by various asbestos producers and other related businesses; |
| the availability and cost of reinsurance coverage; |
7
| the occurrence of significant weather-related or other natural or human-made disasters, particularly in locations where we have concentrations of risk; |
| 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: |
| 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, including: |
| changes in 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; |
| our ability to implement managements 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)
Three Months Ended | ||||||||
March 31 | ||||||||
2012 | 2011 | |||||||
(in millions) | ||||||||
PROPERTY AND CASUALTY INSURANCE |
||||||||
Underwriting |
||||||||
Net Premiums Written |
$ | 2,949 | $ | 2,859 | ||||
Decrease (Increase) in Unearned Premiums |
2 | (5 | ) | |||||
|
|
|
|
|||||
Premiums Earned |
2,951 | 2,854 | ||||||
|
|
|
|
|||||
Losses and Loss Expenses |
1,707 | 1,765 | ||||||
Operating Costs and Expenses |
947 | 904 | ||||||
Increase in Deferred Policy Acquisition Costs |
(14 | ) | (25 | ) | ||||
Dividends to Policyholders |
8 | 8 | ||||||
|
|
|
|
|||||
Underwriting Income |
303 | 202 | ||||||
|
|
|
|
|||||
Investments |
||||||||
Investment Income Before Expenses |
391 | 391 | ||||||
Investment Expenses |
11 | 10 | ||||||
|
|
|
|
|||||
Investment Income |
380 | 381 | ||||||
|
|
|
|
|||||
Other Income (Charges) |
(1 | ) | 5 | |||||
|
|
|
|
|||||
Property and Casualty Income |
682 | 588 | ||||||
CORPORATE AND OTHER |
(59 | ) | (63 | ) | ||||
|
|
|
|
|||||
CONSOLIDATED OPERATING INCOME BEFORE INCOME TAX |
623 | 525 | ||||||
Federal and Foreign Income Tax |
154 | 120 | ||||||
|
|
|
|
|||||
CONSOLIDATED OPERATING INCOME |
469 | 405 | ||||||
REALIZED INVESTMENT GAINS AFTER INCOME TAX |
37 | 104 | ||||||
|
|
|
|
|||||
CONSOLIDATED NET INCOME |
$ | 506 | $ | 509 | ||||
|
|
|
|
|||||
PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX |
$ | 308 | $ | 310 | ||||
|
|
|
|
9
Three Months Ended | ||||||||
March 31 | ||||||||
2012 | 2011 | |||||||
OUTSTANDING SHARE DATA |
||||||||
(in millions) | ||||||||
Average Common and Potentially Dilutive Shares |
276.2 | 300.0 | ||||||
Actual Common Shares at End of Period |
270.0 | 292.5 | ||||||
DILUTED EARNINGS PER SHARE DATA |
||||||||
Operating Income |
$ | 1.70 | $ | 1.35 | ||||
Realized Investment Gains |
.13 | .35 | ||||||
|
|
|
|
|||||
Net Income |
$ | 1.83 | $ | 1.70 | ||||
|
|
|
|
|||||
Effect of Catastrophes |
$ | (.06 | ) | $ | (.59 | ) | ||
|
|
|
|
Mar. 31 2012 |
Dec. 31 2011 |
Mar. 31 2011 |
||||||||||
(Restated) | (Restated) | |||||||||||
BOOK VALUE PER COMMON SHARE |
$ | 57.37 | $ | 56.15 | $ | 52.33 | ||||||
BOOK VALUE PER COMMON SHARE, |
||||||||||||
with Available-for-Sale Fixed Maturities at Amortized Cost |
51.58 | 50.37 | 49.48 |
Book value per common share at December 31, 2011 and March 31, 2011 has been restated to reflect the adoption of new guidance issued by the Financial Accounting Standards Board related to the accounting for costs associated with acquiring or renewing insurance contracts. The adoption of this guidance decreased shareholders equity by $273 million as of December 31, 2011 and March 31, 2011. The effect of the adoption of the new guidance on net income for the three months ended March 31, 2012 and March 31, 2011 was not material.
PROPERTY AND CASUALTY UNDERWRITING RATIOS
THREE MONTHS ENDED MARCH 31
2012 | 2011 | |||||||
Losses and Loss Expenses to Premiums Earned |
58.0 | % | 62.0 | % | ||||
Underwriting Expenses to Premiums Written |
32.2 | 31.7 | ||||||
|
|
|
|
|||||
Combined Loss and Expense Ratio |
90.2 | % | 93.7 | % | ||||
|
|
|
|
|||||
Effect of Catastrophes on Combined Loss and Expense Ratio |
0.8 | % | 9.5 | % |
PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS
THREE MONTHS ENDED MARCH 31
2012 | 2011 | |||||||
(in millions) | ||||||||
Paid Losses and Loss Expenses |
$ | 1,651 | $ | 1,467 | ||||
Increase in Unpaid Losses and Loss Expenses |
56 | 298 | ||||||
|
|
|
|
|||||
Total Losses and Loss Expenses |
$ | 1,707 | $ | 1,765 | ||||
|
|
|
|
10
PROPERTY AND CASUALTY PRODUCT MIX
THREE MONTHS ENDED MARCH 31
Net Premiums Written | Combined Loss and | |||||||||||||||||||
% Increase | Expense Ratios | |||||||||||||||||||
2012 | 2011 | (Decrease) | 2012 | 2011 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Personal Insurance |
||||||||||||||||||||
Automobile |
$ | 164 | $ | 162 | 1 | % | 91.3 | % | 92.8 | % | ||||||||||
Homeowners |
555 | 533 | 4 | 80.1 | 94.8 | |||||||||||||||
Other |
221 | 199 | 11 | 97.3 | 92.2 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total Personal |
940 | 894 | 5 | 85.5 | 93.8 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Commercial Insurance |
||||||||||||||||||||
Multiple Peril |
261 | 267 | (2 | ) | 93.2 | 105.9 | ||||||||||||||
Casualty |
450 | 436 | 3 | 93.7 | 83.5 | |||||||||||||||
Workers Compensation |
298 | 243 | 23 | 95.2 | 89.5 | |||||||||||||||
Property and Marine |
396 | 380 | 4 | 93.6 | 125.1 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total Commercial |
1,405 | 1,326 | 6 | 93.3 | 100.7 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Specialty Insurance |
||||||||||||||||||||
Professional Liability |
538 | 551 | (2 | ) | 98.5 | 86.8 | ||||||||||||||
Surety |
64 | 88 | (27 | ) | 56.3 | 50.5 | ||||||||||||||
|
|
|
|
|||||||||||||||||
Total Specialty |
602 | 639 | (6 | ) | 93.6 | 82.4 | ||||||||||||||
|
|
|
|
|||||||||||||||||
Total Insurance |
2,947 | 2,859 | 3 | 90.6 | 93.9 | |||||||||||||||
Reinsurance Assumed |
2 | | * | * | * | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total |
$ | 2,949 | $ | 2,859 | 3 | 90.2 | 93.7 | |||||||||||||
|
|
|
|
* | The change in net premiums written and the combined loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in runoff. |
Exhibit 99.2
The |
Supplementary | March 31, 2012 | ||
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. |
| |
THE CHUBB CORPORATION
Adoption of New Accounting Pronouncement
Shareholders equity and book value per common share at December 31, 2011 and March 31, 2011 and return on equity and operating return on equity for the three months ended March 31, 2011 have been restated to reflect the adoption of new guidance issued by the Financial Accounting Standards Board related to the accounting for costs associated with acquiring or renewing insurance contracts. The adoption of this guidance decreased shareholders equity by $273 million as of December 31, 2010 and 2011 and each of the quarter-end balances within 2011. The effect of the adoption of the new guidance on net income for the three months ended March 31, 2012 and March 31, 2011 was not material.
(i)
THE CHUBB CORPORATION
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
MARCH 31, 2012
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 |
6-10 | |
Definitions of Key Terms |
11-12 |
THE CHUBB CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(in millions, except per share amounts)
Mar. 31
2012 |
Dec. 31 2011 |
|||||||||||||||
% of Total | % of Total | |||||||||||||||
(Restated) | ||||||||||||||||
Invested Assets (at carrying value) |
||||||||||||||||
Short Term Investments |
$ | 1,772 | 4 | % | $ | 1,893 | 4 | % | ||||||||
Fixed Maturities |
||||||||||||||||
Tax Exempt |
20,032 | 47 | 20,211 | 47 | ||||||||||||
Taxable |
17,293 | 40 | 16,973 | 40 | ||||||||||||
Equity Securities |
1,620 | 4 | 1,512 | 4 | ||||||||||||
Other Invested Assets |
2,139 | 5 | 2,180 | 5 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Invested Assets |
$ | 42,856 | 100 | % | $ | 42,769 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Unrealized Appreciation of Investments |
||||||||||||||||
Fixed Maturities |
$ | 2,405 | $ | 2,422 | ||||||||||||
Equity Securities |
350 | 248 | ||||||||||||||
|
|
|
|
|||||||||||||
2,755 | 2,670 | |||||||||||||||
Deferred Income Tax Liability |
964 | 934 | ||||||||||||||
|
|
|
|
|||||||||||||
$ | 1,791 | $ | 1,736 | |||||||||||||
|
|
|
|
|||||||||||||
Capitalization |
||||||||||||||||
Long Term Debt |
$ | 3,575 | $ | 3,575 | ||||||||||||
Shareholders Equity |
15,490 | 15,301 | ||||||||||||||
|
|
|
|
|||||||||||||
Total Capitalization |
$ | 19,065 | $ | 18,876 | ||||||||||||
|
|
|
|
|||||||||||||
Debt as a Percentage of Total Capitalization |
18.8 | % | 18.9 | % | ||||||||||||
Actual Common Shares Outstanding |
270.0 | 272.5 | ||||||||||||||
Book Value Per Common Share |
$ | 57.37 | $ | 56.15 | ||||||||||||
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost |
$ | 51.58 | $ | 50.37 |
Page 1 of 12
THE CHUBB CORPORATION
SHARE REPURCHASE ACTIVITY
(dollars in millions, except per share amounts)
Three Months Ended March 31, 2012 |
From December 2005 to March 31, 2012 |
|||||||
Cost of Shares Repurchased |
$301 | $9,979 | ||||||
Average Cost Per Share |
$68.44 | $52.94 | ||||||
Shares Repurchased |
4,391,046 | 188,481,639 |
During the period from December 2005 through December 2010, under several share repurchase authorizations the Board of Directors authorized the repurchases of a total of 185 million shares of the Corporation's common stock. No shares remain under these repurchase authorizations.
In January 2012, the Board of Directors authorized the repurchase of up to $1.2 billion of the Corporation's common stock. The authorization has no expiration date. As of March 31, 2012, approximately $963 million remained under the share repurchase authorization.
Page 2 of 12
THE CHUBB CORPORATION
SUMMARY OF INVESTED ASSETS
CORPORATE
Cost or Amortized Cost |
Carrying Value (a) |
|||||||||||||||
Mar. 31 2012 |
Dec. 31 2011 |
Mar. 31 2012 |
Dec. 31 2011 |
|||||||||||||
(in millions) | ||||||||||||||||
Short Term Investments |
$ | 780 | $ | 1,035 | $ | 780 | $ | 1,035 | ||||||||
Taxable Fixed Maturities |
1,133 | 955 | 1,163 | 983 | ||||||||||||
Equity Securities |
200 | 200 | 175 | 179 | ||||||||||||
Other Invested Assets |
26 | 27 | 26 | 27 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL |
$ | 2,139 | $ | 2,217 | $ | 2,144 | $ | 2,224 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
PROPERTY AND CASUALTY
|
| |||||||||||||||
Cost or Amortized Cost |
Carrying Value (a) |
|||||||||||||||
Mar. 31 2012 |
Dec. 31 2011 |
Mar. 31 2012 |
Dec. 31 2011 |
|||||||||||||
(in millions) | ||||||||||||||||
Short Term Investments |
$ | 992 | $ | 858 | $ | 992 | $ | 858 | ||||||||
Fixed Maturities |
||||||||||||||||
Tax Exempt |
18,638 | 18,786 | 20,032 | 20,211 | ||||||||||||
Taxable |
15,149 | 15,021 | 16,130 | 15,990 | ||||||||||||
Equity Securities |
1,070 | 1,064 | 1,445 | 1,333 | ||||||||||||
Other Invested Assets |
2,113 | 2,153 | 2,113 | 2,153 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL |
$ | 37,962 | $ | 37,882 | $ | 40,712 | $ | 40,545 | ||||||||
|
|
|
|
|
|
|
|
(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 include private equity limited partnerships carried at the Corporation's equity in the net assets of the partnerships. |
Page 3 of 12
THE CHUBB CORPORATION
INVESTMENT INCOME AFTER TAXES
Three Months Ended March 31 |
||||||||
2012 | 2011 | |||||||
(in millions) | ||||||||
CORPORATE INVESTMENT INCOME |
$ | 7 | $ | 8 | ||||
|
|
|
|
|||||
PROPERTY AND CASUALTY INVESTMENT INCOME |
||||||||
Tax Exempt Interest |
$ | 187 | $ | 192 | ||||
Taxable Interest |
116 | 116 | ||||||
Other |
12 | 9 | ||||||
Investment Expenses |
(7 | ) | (7 | ) | ||||
|
|
|
|
|||||
TOTAL |
$ | 308 | $ | 310 | ||||
|
|
|
|
|||||
Effective Tax Rate |
18.9 | % | 18.6 | % | ||||
After-Tax Annualized Yield |
3.21 | % | 3.20 | % |
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
Mar. 31 2012 |
Dec. 31 2011 |
Mar. 31 2011 |
||||||||||
(in millions) | ||||||||||||
Estimated Statutory Policyholders Surplus |
$ | 14,250 | $ | 13,958 | $ | 14,620 | ||||||
Rolling Year Statutory Net Premiums Written |
$ | 11,857 | $ | 11,778 | $ | 11,360 | ||||||
Ratio of Statutory Net Premiums Written to Policyholders Surplus |
0.83:1 | 0.84:1 | 0.78:1 |
Statutory Policyholders Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.
Page 4 of 12
THE CHUBB CORPORATION
PROPERTY AND CASUALTY
CHANGE IN NET UNPAID LOSSES
THREE MONTHS ENDED MARCH 31, 2012
Net Unpaid Losses | IBNR Increase (Decrease) |
All Other Unpaid Losses Increase (Decrease) |
||||||||||||||||||
3/31/12 | 12/31/11 | Increase (Decrease) |
||||||||||||||||||
(in millions) | ||||||||||||||||||||
Personal Insurance |
||||||||||||||||||||
Automobile |
$ | 400 | $ | 404 | $ | (4 | ) | $ | (2 | ) | $ | (2 | ) | |||||||
Homeowners |
723 | 769 | (46 | ) | 5 | (51 | ) | |||||||||||||
Other |
885 | 902 | (17 | ) | 11 | (28 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Personal |
2,008 | 2,075 | (67 | ) | 14 | (81 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial Insurance |
||||||||||||||||||||
Multiple Peril |
1,762 | 1,735 | 27 | 25 | 2 | |||||||||||||||
Casualty |
6,327 | 6,274 | 53 | 43 | 10 | |||||||||||||||
Workers Compensation |
2,451 | 2,392 | 59 | 53 | 6 | |||||||||||||||
Property and Marine |
1,080 | 1,118 | (38 | ) | 8 | (46 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Commercial |
11,620 | 11,519 | 101 | 129 | (28 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty Insurance |
||||||||||||||||||||
Professional Liability |
7,218 | 7,180 | 38 | 24 | 14 | |||||||||||||||
Surety |
78 | 75 | 3 | 4 | (1 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty |
7,296 | 7,255 | 41 | 28 | 13 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Insurance |
20,924 | 20,849 | 75 | 171 | (96 | ) | ||||||||||||||
Reinsurance Assumed |
451 | 480 | (29 | ) | (28 | ) | (1 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 21,375 | $ | 21,329 | $ | 46 | $ | 143 | $ | (97 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
Page 5 of 12
THE CHUBB CORPORATION WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(DOLLARS IN MILLIONS )
Personal Automobile |
Homeowners | Other Personal |
Total Personal |
|||||||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||
Net Premiums Written |
$ | 164 | $ | 162 | $ | 555 | $ | 533 | $ | 221 | $ | 199 | $ | 940 | $ | 894 | ||||||||||||||||
Decrease (Increase) in Unearned Premiums |
2 | 1 | 63 | 68 | (15 | ) | (6 | ) | 50 | 63 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Premiums Earned |
166 | 163 | 618 | 601 | 206 | 193 | 990 | 957 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Losses Paid |
105 | 96 | 318 | 309 | 138 | 108 | 561 | 513 | ||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
(4 | ) | 5 | (47 | ) | 44 | (14 | ) | 1 | (65 | ) | 50 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Losses Incurred |
101 | 101 | 271 | 353 | 124 | 109 | 496 | 563 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Expenses Incurred |
50 | 50 | 201 | 192 | 82 | 71 | 333 | 313 | ||||||||||||||||||||||||
Dividends Incurred |
| | | | | | | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Statutory Underwriting Income (Loss) |
$ | 15 | $ | 12 | $ | 146 | $ | 56 | $ | | $ | 13 | $ | 161 | $ | 81 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||||||||||
Loss |
60.8 | % | 62.0 | % | 43.9 | % | 58.8 | % | 60.2 | % | 56.5 | % | 50.1 | % | 58.8 | % | ||||||||||||||||
Expense |
30.5 | 30.8 | 36.2 | 36.0 | 37.1 | 35.7 | 35.4 | 35.0 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Combined |
91.3 | % | 92.8 | % | 80.1 | % | 94.8 | % | 97.3 | % | 92.2 | % | 85.5 | % | 93.8 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Premiums Written as a % of Total |
5.6 | % | 5.7 | % | 18.8 | % | 18.6 | % | 7.5 | % | 7.0 | % | 31.9 | % | 31.3 | % |
Page 6 of 12
THE CHUBB CORPORATION WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(DOLLARS IN MILLIONS)
Commercial Multiple Peril |
Commercial Casualty |
Commercial Workers Compensation |
Commercial Property and Marine |
Total Commercial |
||||||||||||||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||||
Net Premiums Written |
$ | 261 | $ | 267 | $ | 450 | $ | 436 | $ | 298 | $ | 243 | $ | 396 | $ | 380 | $ | 1,405 | $ | 1,326 | ||||||||||||||||||||
Decrease (Increase) in |
20 | 15 | (40 | ) | (36 | ) | (62 | ) | (46 | ) | (37 | ) | (50 | ) | (119 | ) | (117 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Premiums Earned |
281 | 282 | 410 | 400 | 236 | 197 | 359 | 330 | 1,286 | 1,209 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Losses Paid |
125 | 150 | 217 | 159 | 110 | 98 | 256 | 153 | 708 | 560 | ||||||||||||||||||||||||||||||
Increase (Decrease) in |
26 | 41 | 55 | 64 | 60 | 31 | (36 | ) | 153 | 105 | 289 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Losses Incurred |
151 | 191 | 272 | 223 | 170 | 129 | 220 | 306 | 813 | 849 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Expenses Incurred |
103 | 102 | 123 | 121 | 61 | 51 | 128 | 123 | 415 | 397 | ||||||||||||||||||||||||||||||
Dividends Incurred |
| | | | 7 | 7 | | | 7 | 7 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Statutory Underwriting |
$ | 27 | $ | (11 | ) | $ | 15 | $ | 56 | $ | (2 | ) | $ | 10 | $ | 11 | $ | (99 | ) | $ | 51 | $ | (44 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends |
||||||||||||||||||||||||||||||||||||||||
Loss |
53.7 | % | 67.7 | % | 66.4 | % | 55.7 | % | 74.2 | % | 67.9 | % | 61.3 | % | 92.7 | % | 63.6 | % | 70.6 | % | ||||||||||||||||||||
Expense |
39.5 | 38.2 | 27.3 | 27.8 | 21.0 | 21.6 | 32.3 | 32.4 | 29.7 | 30.1 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Combined |
93.2 | % | 105.9 | % | 93.7 | % | 83.5 | % | 95.2 | % | 89.5 | % | 93.6 | % | 125.1 | % | 93.3 | % | 100.7 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Premiums Written as a % of Total |
8.8 | % | 9.3 | % | 15.3 | % | 15.3 | % | 10.1 | % | 8.5 | % | 13.4 | % | 13.3 | % | 47.6 | % | 46.4 | % |
Page 7 of 12
THE CHUBB CORPORATION WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(DOLLARS IN MILLIONS)
Professional Liability |
Surety | Total Specialty |
||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Net Premiums Written |
$ | 538 | $ | 551 | $ | 64 | $ | 88 | $ | 602 | $ | 639 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
57 | 53 | 13 | (5 | ) | 70 | 48 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
595 | 604 | 77 | 83 | 672 | 687 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
356 | 362 | 6 | 6 | 362 | 368 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
42 | (20 | ) | 3 | 9 | 45 | (11 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
398 | 342 | 9 | 15 | 407 | 357 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
170 | 166 | 28 | 28 | 198 | 194 | ||||||||||||||||||
Dividends Incurred |
| | 1 | 1 | 1 | 1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income (Loss) |
$ | 27 | $ | 96 | $ | 39 | $ | 39 | $ | 66 | $ | 135 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
66.9 | % | 56.6 | % | 11.9 | % | 18.3 | % | 60.6 | % | 52.0 | % | ||||||||||||
Expense |
31.6 | 30.2 | 44.4 | 32.2 | 33.0 | 30.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
98.5 | % | 86.8 | % | 56.3 | % | 50.5 | % | 93.6 | % | 82.4 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
18.2 | % | 19.3 | % | 2.2 | % | 3.0 | % | 20.4 | % | 22.3 | % |
Page 8 of 12
THE CHUBB CORPORATION WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(DOLLARS IN MILLIONS)
Total Insurance |
Reinsurance Assumed |
Worldwide Total |
||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Net Premiums Written |
$ | 2,947 | $ | 2,859 | $ | 2 | $ | | $ | 2,949 | $ | 2,859 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
1 | (6 | ) | 1 | 1 | 2 | (5 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
2,948 | 2,853 | 3 | 1 | 2,951 | 2,854 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
1,631 | 1,441 | 20 | 26 | 1,651 | 1,467 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
85 | 328 | (29 | ) | (30 | ) | 56 | 298 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
1,716 | 1,769 | (9 | ) | (4 | ) | 1,707 | 1,765 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
946 | 904 | 1 | | 947 | 904 | ||||||||||||||||||
Dividends Incurred |
8 | 8 | | | 8 | 8 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income (Loss) |
$ | 278 | $ | 172 | $ | 11 | $ | 5 | 289 | 177 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Increase in Deferred Acquisition Costs |
14 | 25 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
GAAP Underwriting Income |
$ | 303 | $ | 202 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
58.4 | % | 62.2 | % | * | % | * | % | 58.0 | % | 62.0 | % | ||||||||||||
Expense |
32.2 | 31.7 | * | * | 32.2 | 31.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
90.6 | % | 93.9 | % | * | % | * | % | 90.2 | % | 93.7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
99.9 | % | 100.0 | % | 0.1 | % | 0.0 | % | 100.0 | % | 100.0 | % |
* | Combined, loss and expense ratios are no longer presented for Reinsurance Assumed since this business is in runoff. |
Page 9 of 12
THE CHUBB CORPORATION WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(DOLLARS IN MILLIONS)
United States | Outside the United States |
Worldwide Total | ||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Net Premiums Written |
$ | 2,082 | $ | 1,986 | $ | 867 | $ | 873 | $ | 2,949 | $ | 2,859 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
103 | 126 | (101 | ) | (131 | ) | 2 | (5 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
2,185 | 2,112 | 766 | 742 | 2,951 | 2,854 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
1,262 | 1,152 | 389 | 315 | 1,651 | 1,467 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
(5 | ) | 98 | 61 | 200 | 56 | 298 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
1,257 | 1,250 | 450 | 515 | 1,707 | 1,765 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
646 | 604 | 301 | 300 | 947 | 904 | ||||||||||||||||||
Dividends Incurred |
8 | 8 | | | 8 | 8 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income (Loss) |
$ | 274 | $ | 250 | $ | 15 | $ | (73 | ) | 289 | 177 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Increase in Deferred Acquisition Costs |
14 | 25 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
GAAP Underwriting Income |
$ | 303 | $ | 202 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
57.7 | % | 59.4 | % | 58.7 | % | 69.4 | % | 58.0 | % | 62.0 | % | ||||||||||||
Expense |
31.1 | 30.5 | 34.7 | 34.4 | 32.2 | 31.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
88.8 | % | 89.9 | % | 93.4 | % | 103.8 | % | 90.2 | % | 93.7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
70.6 | % | 69.5 | % | 29.4 | % | 30.5 | % | 100.0 | % | 100.0 | % |
Property and casualty underwriting results for the first three months of 2011 reflect a reclassification of certain business that was previously considered outside the United States business and is now considered United States business. This reclassification had no impact on worldwide total amounts.
Page 10 of 12
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, certain 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 results 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 (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporations available-for-sale fixed maturities, which are carried at fair value. The appreciation or depreciation of 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.
Page 11 of 12
THE CHUBB CORPORATION
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.
Return on Equity and Operating Return on Equity
Return on equity is the ratio of annualized net income divided by average shareholders' equity. Average shareholders' equity is the average of the beginning and all quarter-end balances within the period.
Operating return on equity, a non-GAAP measure, is the ratio of annualized operating income divided by average shareholders' equity excluding the after-tax unrealized appreciation or depreciation of investments. Consolidated shareholders' equity includes, as part of accumulated other comprehensive income (loss), the after-tax appreciation or depreciation, including unrealized other-than-temporary impairment losses, of the Corporation's available-for-sale fixed maturities and equity securities, which are carried at fair value. The appreciation or depreciation of available-for-sale fixed maturities and equity securities is subject to fluctuation and could distort the analysis of trends. Average shareholders' equity excluding the after-tax unrealized appreciation or depreciation of investments is the average of the beginning and all quarter-end balances within the period. Management uses operating return on equity, among other measures, to assess the overall performance of the Corporation.
Three Months Ended March 31 |
||||||||
2012 | 2011 | |||||||
(dollars in millions) | ||||||||
(Restated) | ||||||||
Annualized Net Income |
$ | 2,024 | $ | 2,036 | ||||
Average Shareholders Equity |
$ | 15,396 | $ | 15,282 | ||||
Return on Equity |
13.1 | % | 13.3 | % | ||||
Annualized Operating Income |
$ | 1,876 | $ | 1,620 | ||||
Average Shareholders Equity Excluding Unrealized Appreciation or Depreciation |
$ | 13,632 | $ | 14,190 | ||||
Operating Return on Equity |
13.8 | % | 11.4 | % |
Page 12 of 12
8ANHK$3(Y_=F-@.$[:KH.H: MXU/%J*&5CY/J#K*E9RF*IIM=1UB=:VM)[N\43>+,DME.0E,HZ(JF$C03E*H% M15AG7"YO&M:,J'G#8JOF@)\$:\?&H0*$GQ<7@YP.A4%7;#:`P#CC<6VG2A MT9]6'6,YM+..X&X-56?H>,6I2*=-U9%JDLS="\DI5RWD7T.\2;'-B9>G M7+%RB;=WZ:Y0$R!"&*8:>N?1->VYZD*CFZAIN#>6GLY=BW S[^/J&CVZ-4O)BJ7]+ M)R,0V 6I>3D7#9&F#_`)!E _DM[XQQ;@^5]0X/E9W[.E^>Y?OE[B.[FR_J+W'<4 MY KGJ3:CC?;MZ0>JO`N2J MHXYQGE_ZOP7BN[[]FZMZRMOS:7N_E+]U_K-P"/[D?33@/*O-.XT_SCPO/\_! M.9\S#?\`R<3S=T\F.G59S_W/=\'<':#N-]6>7=]X5S'6V/" ?W6WI5V=R/W! D>K]NN'Y':AV4\*]*[H\8XIL_^<]]RMQW#;^4WG?-CYO;T__9 ` end
'!A8VME="!B96=I;CTG[[N_)R!I9#TG5S5-,$UP
M0V5H:4AZ >M]!<`KF@]OD4
M7H%,:GD05!=I#H!Y"\];Z+;B8.:N7\%>>M]%JOR[[^"O/6^BW]1ATZY.O??;
M;;J)="\];Z`XBL$KM`XX5Q$QJ?UR@R23<+SUOI1RR/$.=-P\:6<.CHL5N8O(";YBIP)V6M&1.`'%*<*\0I27-;A6BVGG%VPJ$C(SM^UBE1C9`I)Y
M6":LI.!:6=LH'@!SOBR8:D4B2'U9+J<"$)W&[^1$/_Q%]6W&'TL?PCUI&\7<
MT&7V>G,;Q;WDL?;]W#1X)^ZO.*>&9.$/D'X)_P!EU>&^A2\)?)+>W_K_`/#8
M_]H`"`$!``$%`'R?U^0[W>X-_H]P;_1[@W^CW!O]'N#?Z.>GVAMEC>0\BKMT
MP:9&W`H)7`NB2Z%;@231E/