UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 24, 2014
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)) |
Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
Exhibit Index to Current Report on Form 8-K filed on July 24, 2014
Press release dated July 24, 2014 (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 July 24, 2014, The Chubb Corporation (Chubb) issued a press release announcing its financial results for the quarter ended June 30, 2014. On July 24, 2014, Chubb also posted on its website at www.chubb.com the Supplementary Investor Information Report (SIIR) relating to its 2014 second quarter results. Copies of the press release and the SIIR, both of which are incorporated by reference into this Item 2.02 as if fully set forth herein, are 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 2014 second quarter results, scheduled to be webcast at 5:00 P.M. on July 24, 2014, 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 July 24, 2014 (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 hereunto duly authorized.
THE CHUBB CORPORATION | ||||||
Date: July 24, 2014 | 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 JULY 24, 2014
Exhibit |
Description | |
99.1 | Press release dated July 24, 2014 (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) |
The Chubb Corporation 15 Mountain View Road P.O. Box 1615 Warren, New Jersey 07061-1615 Telephone: 908-903-2000 |
FOR IMMEDIATE RELEASE
Chubb Reports Second Quarter Net Income per Share of $2.03;
Operating Income per Share Is $1.70;
Combined Ratio Is 90.0% including Catastrophe Impact of 4.8 Points
2014 Operating Income per Share Guidance
Is Revised to Range of $6.75 to $6.95
WARREN, New Jersey, July 24, 2014 The Chubb Corporation [NYSE: CB] today reported that net income in the second quarter of 2014 was $499 million compared to $579 million in the second quarter of 2013. Net income per share declined 8% to $2.03 from $2.21.
Operating income, which the company defines as net income excluding after-tax realized investment gains and losses, was $418 million in the second quarter of 2014 compared to $463 million in the second quarter of 2013. Operating income per share declined 4% to $1.70 from $1.77.
Average diluted shares outstanding for the second quarter were 246.2 million in 2014 and 261.5 million in 2013.
The impact of catastrophes in the second quarter was $146 million before tax ($0.39 per share after tax) in 2014 compared to $237 million before tax ($0.59 per share after tax) in 2013.
The second quarter combined loss and expense ratio was 90.0% in 2014 compared to 88.8% in 2013. The impact of catastrophes accounted for 4.8 percentage points of the combined ratio in the second quarter of 2014 compared to 7.9 points in the second quarter of 2013. Excluding the impact of catastrophes, the second quarter combined ratio was 85.2% in 2014 and 80.9% in 2013.
The expense ratio for the second quarter of 2014 was 31.3% compared to 32.1% in the corresponding year-earlier quarter.
Net written premiums for the second quarter of 2014 increased 4% to $3.2 billion. Excluding the effect of currency fluctuation, premiums grew 5%. Premiums were up 5% in the U.S. and up 1% outside the U.S. (up 5% in local currencies).
Property and casualty investment income after taxes for the second quarter declined 4% to $275 million in 2014 from $286 million in 2013.
Net income for the second quarter of 2014 reflected net realized investment gains of $125 million before tax ($0.33 per share after-tax), compared to $179 million before tax ($0.44 per share after-tax) in the second quarter of 2013.
During the second quarter of 2014, Chubb repurchased approximately 4.0 million shares of its common stock at a total cost of $375 million (an average of $92.95 per share). As of June 30, 2014, there remained approximately $823 million available for share repurchases under the current authorization.
Chubb produced solid results in the second quarter of 2014, with operating income of $1.70 per share and net income of $2.03, said John D. Finnegan, Chairman, President and Chief Executive Officer. Our results benefited from strong premium growth and retention as well as excellent performance in our long-tail lines of business such as Professional Liability, Casualty and Workers Compensation. However, our results this quarter were adversely impacted by catastrophe and non-catastrophe losses related to severe weather in the United States as well as an unusually high level of Homeowners and Commercial fire losses.
We remain encouraged by the mid-single-digit increases in our U.S. rate change metrics that we achieved in all of our businesses during the second quarter, while also attaining our highest overall level of retention in three years, said Mr. Finnegan.
Six-Month Results
For the first six months of 2014, net income was $948 million compared to $1.2 billion in the first half of 2013. Net income per share for the first half declined 18% to $3.83 from $4.69.
Operating income for the first six months of 2014 was $792 million compared to $1.0 billion in the first half of 2013. Operating income per share for the first half of 2014 declined 18% to $3.20 from $3.91.
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Average diluted shares outstanding for the first six months were 247.7 million in 2014 and 263.2 million in 2013.
The impact of catastrophes in the first six months of 2014 was $345 million before tax ($0.91 per share after-tax), compared to $255 million before tax ($0.63 per share after-tax) in the first half of 2013.
The combined ratio for the first six months was 91.6% in 2014 compared to 86.7% in 2013. The impact of catastrophes in the first half accounted for 5.7 percentage points of the combined ratio in 2014 and 4.3 points in 2013. Excluding the impact of catastrophes, the combined ratio for the first half was 85.9% in 2014 and 82.4% in 2013.
The expense ratio for the first six months was 31.7% in 2014 and 32.2% in 2013.
Net written premiums for the first six months of 2014 increased 2% to $6.3 billion. Excluding the effect of currency fluctuation, premiums grew 3%. Premiums were up 4% in the U.S. and down 3% outside the U.S. (flat in local currencies).
Property and casualty investment income after taxes for the first six months declined 4% to $552 million in 2014 from $574 million in 2013.
Net income for the first six months of 2014 reflected net realized investment gains of $241 million before tax ($0.63 per share after-tax). Net income for the first half of 2013 reflected net realized investment gains of $317 million before tax ($0.78 per share after-tax).
During the first six months of 2014, Chubb repurchased approximately 8.8 million shares of common stock at a total cost of $784 million (an average of $89.59 per share).
Outlook for 2014
Chubb also announced a revision of full year 2014 operating income per share guidance to a range of $6.75 to $6.95 from the $7.10 to $7.40 range provided in its January 2014 guidance. The revised guidance reflects the companys actual results in the first six months and its outlook for the second half of the year.
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The revised guidance assumes for the 2014 full year:
| A 2% to 4% increase in net written premiums. |
| Catastrophe losses of 5.3 percentage points of the combined ratio. The impact of each percentage point of catastrophe losses on 2014 full year operating income per share is approximately $0.33. |
| A combined ratio of between 90% and 91%. |
| A decline of 4% to 6% in property and casualty investment income after taxes. |
| Approximately 244 million average diluted shares outstanding. |
Guidance and related assumptions are subject to the risks outlined in the companys forward-looking information safe-harbor statements (see below).
Second Quarter Operations Review
Chubb Personal Insurance (CPI) net written premiums increased 5% in the second quarter of 2014 to $1.2 billion. CPIs combined ratio for the quarter was 92.7% compared to 89.6% in the second quarter of 2013. The impact of catastrophe losses in the second quarter accounted for 7.5 percentage points of the combined ratio in 2014 and 12.7 points in 2013. Excluding the impact of catastrophe losses, CPIs second quarter combined ratio was 85.2% in 2014 and 76.9% in 2013.
Net written premiums for Homeowners increased 4%, and the combined ratio was 92.2%. Personal Automobile net written premiums were flat, and the combined ratio was 95.6%. Other Personal lines premiums increased 10%, and the combined ratio was 93.1%.
Chubb Commercial Insurance (CCI) net written premiums increased 3% in the second quarter of 2014 to $1.4 billion. The combined ratio for the second quarter was 93.3% in 2014 and 89.9% in 2013. The impact of catastrophe losses in the second quarter accounted for 4.9 percentage points of the combined ratio in 2014 and 8.1 points in 2013. Excluding the impact of catastrophe losses, CCIs second quarter combined ratio was 88.4% in 2014 and 81.8% in 2013.
In the U.S., average second quarter CCI renewal rates were up 4%, renewal premium retention was 87% and the ratio of new to lost business was 1.2 to 1.
4
Chubb Specialty Insurance (CSI) net written premiums increased 5% in the second quarter of 2014 to $655 million. The second quarter combined ratio improved to 78.7% in 2014 from 86.0% in 2013.
Professional Liability (PL) net written premiums were up 4%, and the business had a combined ratio of 83.2%. In the U.S., average second quarter PL renewal rates were up 6%, renewal premium retention was 88% and the ratio of new to lost business was 1.2 to 1.
Surety net written premiums were up 8%, and the combined ratio was 45.3%.
Webcast Conference Call to be held Today at 5 P.M.
Chubbs senior management will discuss the companys second quarter performance with investors and analysts today, July 24th, at 5 P.M. Eastern Daylight Time. The conference call will be webcast live on the Chubb website at http://www.chubb.com and archived later in the day for replay.
About Chubb
Since 1882, members of the Chubb Group of Insurance Companies have provided property and casualty insurance products to customers around the globe. These products are offered through a worldwide network of independent agents and brokers. The Chubb Group of Insurance Companies is known for financial strength, underwriting and loss-control expertise, tailoring products for the needs of high-net-worth individuals and commercial customers in niche markets and select industry segments, and outstanding claim service.
The Chubb Group of Insurance Companies is the marketing term used to describe several separately incorporated insurance companies under the common ownership of The Chubb Corporation. The Chubb Corporation is listed on the New York Stock Exchange [NYSE: CB] and, together with its subsidiaries, employs approximately 10,200 people throughout North America, Europe, Latin America, Asia and Australia. For more information regarding The Chubb Corporation, including a listing of the insurers in the Chubb Group of Insurance Companies, visit www.chubb.com.
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Chubbs Supplementary Investor Information Report is available on the Chubb website 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 |
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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 tax exempt investment income to total investment income 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.
7
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) and 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 Foreign Currency Translation:
Management uses net written premiums growth (decrease) excluding the impact of foreign currency translation, 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. The impact of foreign currency translation is excluded as exchange rates may fluctuate significantly and the effect of fluctuations could distort the analysis of trends. When excluding the impact of foreign currency translation, management uses the same exchange rate to translate each foreign currency denominated net written premium amount in both periods.
8
FORWARD-LOOKING INFORMATION
In this press release, 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 and include statements regarding managements 2014 operating income per share guidance and related assumptions. 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, economic and market conditions, particularly in the jurisdictions 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; |
| the effects of the outbreak or escalation of war or hostilities; |
| the occurrence of terrorist attacks, including any nuclear, biological, chemical or radiological events; |
| 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 at acceptable rates; |
| our expectations with respect to cash flow and investment income and with respect to other income; |
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| 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; |
| 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 we insure, particularly with respect to our lines of business that have a longer time span, or tail, between the incidence of a loss and the settlement of the claim; |
| the impact of legislative, regulatory, judicial and similar developments on companies we insure, particularly with respect to our longer tail lines of business; |
| the impact of legislative, regulatory, judicial and similar developments on our business, including those relating to insurance industry reform, terrorism, catastrophes, the financial markets, solvency standards, capital requirements, accounting guidance and taxation; |
| any downgrade in our claims-paying, financial strength or other credit ratings; |
| the ability of our subsidiaries to pay us dividends; |
| our plans to repurchase shares of our common stock, including as a result of changes in: |
| our financial position and financial results; |
| our capital position and/or capital adequacy levels required to maintain our existing ratings from independent rating agencies; |
| our share price; |
| investment opportunities; |
| opportunities to profitably grow our property and casualty insurance business; and |
| corporate and regulatory requirements; and |
| 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.
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THE CHUBB CORPORATION
SUPPLEMENTARY FINANCIAL DATA
(Unaudited)
Periods Ended June 30 | ||||||||||||||||
Second Quarter | Six Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
PROPERTY AND CASUALTY INSURANCE |
||||||||||||||||
Underwriting |
||||||||||||||||
Net Premiums Written |
$ | 3,223 | $ | 3,100 | $ | 6,285 | $ | 6,157 | ||||||||
Increase in Unearned Premiums |
(159 | ) | (105 | ) | (192 | ) | (158 | ) | ||||||||
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Premiums Earned |
3,064 | 2,995 | 6,093 | 5,999 | ||||||||||||
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Losses and Loss Expenses |
1,792 | 1,694 | 3,637 | 3,262 | ||||||||||||
Operating Costs and Expenses |
1,004 | 991 | 1,983 | 1,974 | ||||||||||||
Increase in Deferred Policy Acquisition Costs |
(21 | ) | (16 | ) | (34 | ) | (57 | ) | ||||||||
Dividends to Policyholders |
11 | 9 | 21 | 18 | ||||||||||||
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Underwriting Income |
278 | 317 | 486 | 802 | ||||||||||||
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Investments |
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Investment Income Before Expenses |
345 | 361 | 696 | 724 | ||||||||||||
Investment Expenses |
9 | 12 | 19 | 24 | ||||||||||||
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Investment Income |
336 | 349 | 677 | 700 | ||||||||||||
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Other Income (Charges) |
(2 | ) | 9 | (4 | ) | 14 | ||||||||||
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Property and Casualty Income |
612 | 675 | 1,159 | 1,516 | ||||||||||||
CORPORATE AND OTHER |
(59 | ) | (58 | ) | (119 | ) | (121 | ) | ||||||||
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CONSOLIDATED OPERATING INCOME BEFORE INCOME TAX |
553 | 617 | 1,040 | 1,395 | ||||||||||||
Federal and Foreign Income Tax |
135 | 154 | 248 | 366 | ||||||||||||
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CONSOLIDATED OPERATING INCOME |
418 | 463 | 792 | 1,029 | ||||||||||||
REALIZED INVESTMENT GAINS AFTER INCOME TAX |
81 | 116 | 156 | 206 | ||||||||||||
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CONSOLIDATED NET INCOME |
$ | 499 | $ | 579 | $ | 948 | $ | 1,235 | ||||||||
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PROPERTY AND CASUALTY INVESTMENT INCOME AFTER INCOME TAX |
$ | 275 | $ | 286 | $ | 552 | $ | 574 | ||||||||
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Periods Ended June 30 | ||||||||||||||||
Second Quarter | Six Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
OUTSTANDING SHARE DATA |
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(in millions) |
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Average Common and Potentially Dilutive Shares |
246.2 | 261.5 | 247.7 | 263.2 | ||||||||||||
Actual Common Shares at End of Period |
240.5 | 255.5 | 240.5 | 255.5 | ||||||||||||
DILUTED EARNINGS PER SHARE DATA |
||||||||||||||||
Operating Income |
$ | 1.70 | $ | 1.77 | $ | 3.20 | $ | 3.91 | ||||||||
Realized Investment Gains |
.33 | .44 | .63 | .78 | ||||||||||||
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Net Income |
$ | 2.03 | $ | 2.21 | $ | 3.83 | $ | 4.69 | ||||||||
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Effect of Catastrophes |
$ | (.39 | ) | $ | (.59 | ) | $ | (.91 | ) | $ | (.63 | ) | ||||
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June 30 2014 |
Dec. 31 2013 |
June 30 2013 |
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BOOK VALUE PER COMMON SHARE |
$ | 68.60 | $ | 64.83 | $ | 60.76 | ||||||
BOOK VALUE PER COMMON SHARE, |
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with Available-for-Sale Fixed Maturities at Amortized Cost |
63.87 | 61.86 | 57.03 |
PROPERTY AND CASUALTY UNDERWRITING RATIOS
PERIODS ENDED JUNE 30
Second Quarter | Six Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Losses and Loss Expenses to Premiums Earned |
58.7 | % | 56.7 | % | 59.9 | % | 54.5 | % | ||||||||
Underwriting Expenses to Premiums Written |
31.3 | 32.1 | 31.7 | 32.2 | ||||||||||||
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Combined Loss and Expense Ratio |
90.0 | % | 88.8 | % | 91.6 | % | 86.7 | % | ||||||||
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Effect of Catastrophes on Combined Loss and Expense Ratio |
4.8 | % | 7.9 | % | 5.7 | % | 4.3 | % |
PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSES COMPONENTS
PERIODS ENDED JUNE 30
Second Quarter | Six Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Paid Losses and Loss Expenses |
$ | 1,756 | $ | 1,723 | $ | 3,550 | $ | 3,561 | ||||||||
Increase (Decrease) in Unpaid Losses and Loss Expenses |
36 | (29 | ) | 87 | (299 | ) | ||||||||||
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Total Losses and Loss Expenses |
$ | 1,792 | $ | 1,694 | $ | 3,637 | $ | 3,262 | ||||||||
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PROPERTY AND CASUALTY PRODUCT MIX
Net Premiums Written | Combined Loss and Expense Ratios |
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% Increase (Decrease) |
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2014 | 2013 | 2014 | 2013 | |||||||||||||||||
(in millions) | ||||||||||||||||||||
QUARTERS ENDED JUNE 30 |
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Personal Insurance |
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Automobile |
$ | 195 | $ | 195 | | % | 95.6 | % | 95.3 | % | ||||||||||
Homeowners |
766 | 734 | 4 | 92.2 | 86.9 | |||||||||||||||
Other |
248 | 225 | 10 | 93.1 | 93.3 | |||||||||||||||
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Total Personal |
1,209 | 1,154 | 5 | 92.7 | 89.6 | |||||||||||||||
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Commercial Insurance |
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Multiple Peril |
285 | 277 | 3 | 91.5 | 94.4 | |||||||||||||||
Casualty |
404 | 402 | | 85.3 | 94.8 | |||||||||||||||
Workers Compensation |
285 | 266 | 7 | 84.5 | 86.6 | |||||||||||||||
Property and Marine |
384 | 374 | 3 | 110.5 | 83.0 | |||||||||||||||
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Total Commercial |
1,358 | 1,319 | 3 | 93.3 | 89.9 | |||||||||||||||
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Specialty Insurance |
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Professional Liability |
572 | 549 | 4 | 83.2 | 91.9 | |||||||||||||||
Surety |
83 | 77 | 8 | 45.3 | 42.1 | |||||||||||||||
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|
|
|
|||||||||||||||||
Total Specialty |
655 | 626 | 5 | 78.7 | 86.0 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total Insurance |
3,222 | 3,099 | 4 | 90.0 | 89.0 | |||||||||||||||
Reinsurance Assumed |
1 | 1 | * | * | * | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total |
$ | 3,223 | $ | 3,100 | 4 | 90.0 | 88.8 | |||||||||||||
|
|
|
|
|||||||||||||||||
SIX MONTHS ENDED JUNE 30 |
||||||||||||||||||||
Personal Insurance |
||||||||||||||||||||
Automobile |
$ | 368 | $ | 371 | (1 | )% | 98.5 | % | 94.7 | % | ||||||||||
Homeowners |
1,358 | 1,304 | 4 | 98.3 | 84.5 | |||||||||||||||
Other |
496 | 466 | 6 | 92.8 | 93.6 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total Personal |
2,222 | 2,141 | 4 | 97.2 | 88.2 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Commercial Insurance |
||||||||||||||||||||
Multiple Peril |
546 | 549 | (1 | ) | 91.6 | 88.9 | ||||||||||||||
Casualty |
850 | 850 | | 87.4 | 94.0 | |||||||||||||||
Workers Compensation |
595 | 565 | 5 | 84.3 | 87.7 | |||||||||||||||
Property and Marine |
792 | 795 | | 99.8 | 73.6 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total Commercial |
2,783 | 2,759 | 1 | 90.9 | 85.9 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Specialty Insurance |
||||||||||||||||||||
Professional Liability |
1,124 | 1,098 | 2 | 83.9 | 92.1 | |||||||||||||||
Surety |
155 | 160 | (3 | ) | 82.2 | 46.6 | ||||||||||||||
|
|
|
|
|||||||||||||||||
Total Specialty |
1,279 | 1,258 | 2 | 83.7 | 86.7 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Total Insurance |
6,284 | 6,158 | 2 | 91.6 | 86.9 | |||||||||||||||
Reinsurance Assumed |
1 | (1 | ) | * | * | * | ||||||||||||||
|
|
|
|
|||||||||||||||||
Total |
$ | 6,285 | $ | 6,157 | 2 | 91.6 | 86.7 | |||||||||||||
|
|
|
|
* | The change in net premiums written and the combined loss and expense ratios are no longer presented for the Reinsurance Assumed business since it is in runoff. |
13
The |
Supplementary |
June 30, 2014 | ||
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
SUPPLEMENTARY INVESTOR INFORMATION
TABLE OF CONTENTS
JUNE 30, 2014
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 - Quarterly |
6-10 | |
Underwriting Results - Year-To-Date |
11-15 | |
Definitions of Key Terms |
16-17 |
THE CHUBB CORPORATION
CONSOLIDATED BALANCE SHEET HIGHLIGHTS
(in millions, except per share amounts)
June 30 2014 |
December 31 2013 |
|||||||||||||||
% of Total | % of Total | |||||||||||||||
Invested Assets (at carrying value) |
||||||||||||||||
Short Term Investments |
$ | 1,845 | 4 | % | $ | 2,114 | 5 | % | ||||||||
Fixed Maturities |
||||||||||||||||
Tax Exempt |
19,220 | 44 | 18,421 | 43 | ||||||||||||
Taxable |
18,842 | 43 | 18,670 | 44 | ||||||||||||
Equity Securities |
1,969 | 5 | 1,810 | 4 | ||||||||||||
Other Invested Assets |
1,595 | 4 | 1,598 | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Invested Assets |
$ | 43,471 | 100 | % | $ | 42,613 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Unrealized Appreciation of Investments |
||||||||||||||||
Fixed Maturities |
$ | 1,749 | $ | 1,132 | ||||||||||||
Equity Securities |
863 | 753 | ||||||||||||||
|
|
|
|
|||||||||||||
2,612 | 1,885 | |||||||||||||||
Deferred Income Tax Liability |
914 | 660 | ||||||||||||||
|
|
|
|
|||||||||||||
$ | 1,698 | $ | 1,225 | |||||||||||||
|
|
|
|
|||||||||||||
Capitalization |
||||||||||||||||
Long Term Debt |
$ | 3,300 | $ | 3,300 | ||||||||||||
Shareholders Equity |
16,498 | 16,097 | ||||||||||||||
|
|
|
|
|||||||||||||
Total Capitalization |
$ | 19,798 | $ | 19,397 | ||||||||||||
|
|
|
|
|||||||||||||
Debt as a Percentage of Total Capitalization |
16.7 | % | 17.0 | % | ||||||||||||
Actual Common Shares Outstanding |
240.5 | 248.3 | ||||||||||||||
Book Value Per Common Share |
$ | 68.60 | $ | 64.83 | ||||||||||||
Book Value Per Common Share, with Available-for-Sale Fixed Maturities at Amortized Cost |
$ | 63.87 | $ | 61.86 |
Page 1 of 17
THE CHUBB CORPORATION
SHARE REPURCHASE ACTIVITY
(dollars in millions, except per share amounts)
Periods Ended June 30 | ||||||||||||
Second Quarter 2014 |
Six Months 2014 |
From December 2005 to June 30, 2014 |
||||||||||
Cost of Shares Repurchased |
$ | 375 | $ | 784 | $ | 12,697 | ||||||
Average Cost Per Share |
$ | 92.95 | $ | 89.59 | $ | 57.50 | ||||||
Shares Repurchased |
4,031,286 | 8,752,012 | 220,824,946 |
During the period from December 2005 through January 2013, the Board of Directors periodically authorized share repurchase programs. Pursuant to these authorizations, approximately 213 million shares of the Corporations common stock were repurchased. No shares or funds remain available under these authorizations.
In January 2014, the Board of Directors authorized the repurchase of up to $1.5 billion of the Corporations common stock. The January 2014 authorization has no expiration date and, as of June 30, 2014, approximately $823 million remained under this authorization.
Page 2 of 17
THE CHUBB CORPORATION
SUMMARY OF INVESTED ASSETS
CORPORATE
Cost or Amortized Cost |
Carrying Value (a) |
|||||||||||||||
June 30 2014 |
Dec. 31 2013 |
June 30 2014 |
Dec. 31 2013 |
|||||||||||||
(in millions)
|
||||||||||||||||
Short Term Investments |
$ | 574 | $ | 864 | $ | 574 | $ | 864 | ||||||||
Taxable Fixed Maturities |
1,381 | 1,115 | 1,402 | 1,130 | ||||||||||||
Equity Securities |
| | | 2 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL |
$ | 1,955 | $ | 1,979 | $ | 1,976 | $ | 1,996 | ||||||||
|
|
|
|
|
|
|
|
PROPERTY AND CASUALTY
Cost or Amortized Cost |
Carrying Value (a) |
|||||||||||||||
June 30 2014 |
Dec. 31 2013 |
June 30 2014 |
Dec. 31 2013 |
|||||||||||||
(in millions)
|
||||||||||||||||
Short Term Investments |
$ | 1,271 | $ | 1,250 | $ | 1,271 | $ | 1,250 | ||||||||
Fixed Maturities |
||||||||||||||||
Tax Exempt |
18,168 | 17,808 | 19,220 | 18,421 | ||||||||||||
Taxable |
16,764 | 17,036 | 17,440 | 17,540 | ||||||||||||
Equity Securities |
1,106 | 1,057 | 1,969 | 1,808 | ||||||||||||
Other Invested Assets |
1,595 | 1,598 | 1,595 | 1,598 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL |
$ | 38,904 | $ | 38,749 | $ | 41,495 | $ | 40,617 | ||||||||
|
|
|
|
|
|
|
|
(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 Corporations equity in the net assets of the partnerships. |
Page 3 of 17
THE CHUBB CORPORATION
INVESTMENT INCOME AFTER TAXES
Periods Ended June 30 | ||||||||||||||||
Second Quarter | Six Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
CORPORATE INVESTMENT INCOME |
$ | 4 | $ | 4 | $ | 8 | $ | 9 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
PROPERTY AND CASUALTY INVESTMENT INCOME |
||||||||||||||||
Tax Exempt Interest |
$ | 166 | $ | 175 | $ | 332 | $ | 352 | ||||||||
Taxable Interest |
100 | 103 | 204 | 208 | ||||||||||||
Other |
14 | 16 | 28 | 30 | ||||||||||||
Investment Expenses |
(5 | ) | (8 | ) | (12 | ) | (16 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL |
$ | 275 | $ | 286 | $ | 552 | $ | 574 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Effective Tax Rate |
18.2 | % | 18.1 | % | 18.5 | % | 18.0 | % | ||||||||
After-Tax Annualized Yield |
2.79 | % | 2.88 | % | 2.80 | % | 2.91 | % |
After-tax annualized yield is based on the average invested assets for the periods presented, with fixed maturities at amortized cost and equity securities at fair value.
STATUTORY POLICYHOLDERS SURPLUS
June 30 2014 |
Dec. 31 2013 |
June 30 2013 |
||||||||||
(in millions) |
||||||||||||
Estimated Statutory Policyholders Surplus |
$ | 15,130 | $ | 15,024 | $ | 14,600 | ||||||
Rolling Year Statutory Net Premiums Written |
$ | 12,348 | $ | 12,214 | $ | 11,968 | ||||||
Ratio of Statutory Net Premiums Written to Policyholders Surplus |
0.82:1 | 0.81:1 | 0.82:1 |
Statutory Policyholders Surplus and Net Premiums Written include all domestic and foreign property and casualty subsidiaries.
Page 4 of 17
THE CHUBB CORPORATION
PROPERTY AND CASUALTY
CHANGE IN NET UNPAID LOSSES
SIX MONTHS ENDED JUNE 30, 2014
Net Unpaid Losses | All Other | |||||||||||||||||||
June 30 2014 |
Dec. 31 2013 |
Increase (Decrease) |
IBNR Increase (Decrease) |
Unpaid Losses Increase (Decrease) |
||||||||||||||||
(in millions) | ||||||||||||||||||||
Personal Insurance |
||||||||||||||||||||
Automobile |
$ | 397 | $ | 390 | $ | 7 | $ | 3 | $ | 4 | ||||||||||
Homeowners |
798 | 715 | 83 | 44 | 39 | |||||||||||||||
Other |
995 | 968 | 27 | 28 | (1 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Personal |
2,190 | 2,073 | 117 | 75 | 42 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commercial Insurance |
||||||||||||||||||||
Multiple Peril |
1,781 | 1,745 | 36 | 24 | 12 | |||||||||||||||
Casualty |
6,519 | 6,576 | (57 | ) | 91 | (148 | ) | |||||||||||||
Workers Compensation |
2,848 | 2,793 | 55 | 4 | 51 | |||||||||||||||
Property and Marine |
936 | 886 | 50 | 36 | 14 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Commercial |
12,084 | 12,000 | 84 | 155 | (71 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty Insurance |
||||||||||||||||||||
Professional Liability |
6,760 | 6,889 | (129 | ) | 19 | (148 | ) | |||||||||||||
Surety |
74 | 71 | 3 | 2 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty |
6,834 | 6,960 | (126 | ) | 21 | (147 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Insurance |
21,108 | 21,033 | 75 | 251 | (176 | ) | ||||||||||||||
Reinsurance Assumed |
290 | 311 | (21 | ) | (2 | ) | (19 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 21,398 | $ | 21,344 | $ | 54 | $ | 249 | $ | (195 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
Page 5 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Personal | Other | Total | ||||||||||||||||||||||||||||||
Automobile | Homeowners | Personal | Personal | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Net Premiums Written |
$ | 195 | $ | 195 | $ | 766 | $ | 734 | $ | 248 | $ | 225 | $ | 1,209 | $ | 1,154 | ||||||||||||||||
Decrease (Increase) in Unearned Premiums |
(16 | ) | (17 | ) | (91 | ) | (87 | ) | | | (107 | ) | (104 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Premiums Earned |
179 | 178 | 675 | 647 | 248 | 225 | 1,102 | 1,050 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Losses Paid |
109 | 100 | 429 | 315 | 110 | 102 | 648 | 517 | ||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
7 | 14 | (13 | ) | 43 | 20 | 18 | 14 | 75 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Losses Incurred |
116 | 114 | 416 | 358 | 130 | 120 | 662 | 592 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Expenses Incurred |
60 | 61 | 234 | 232 | 101 | 90 | 395 | 383 | ||||||||||||||||||||||||
Dividends Incurred |
| | | | | | | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Statutory Underwriting Income (Loss) |
$ | 3 | $ | 3 | $ | 25 | $ | 57 | $ | 17 | $ | 15 | $ | 45 | $ | 75 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||||||||||
Loss |
64.8 | % | 64.0 | % | 61.6 | % | 55.3 | % | 52.4 | % | 53.3 | % | 60.0 | % | 56.4 | % | ||||||||||||||||
Expense |
30.8 | 31.3 | 30.6 | 31.6 | 40.7 | 40.0 | 32.7 | 33.2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Combined |
95.6 | % | 95.3 | % | 92.2 | % | 86.9 | % | 93.1 | % | 93.3 | % | 92.7 | % | 89.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Premiums Written as a % of Total |
6.0 | % | 6.3 | % | 23.8 | % | 23.7 | % | 7.7 | % | 7.2 | % | 37.5 | % | 37.2 | % |
Page 6 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Commercial | Commercial | |||||||||||||||||||||||||||||||||||||||
Commercial | Commercial | Workers | Property | Total | ||||||||||||||||||||||||||||||||||||
Multiple Peril | Casualty | Compensation | and Marine | Commercial | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||||
Net Premiums Written |
$ | 285 | $ | 277 | $ | 404 | $ | 402 | $ | 285 | $ | 266 | $ | 384 | $ | 374 | $ | 1,358 | $ | 1,319 | ||||||||||||||||||||
Decrease (Increase) in Unearned Premiums |
(5 | ) | 1 | 1 | 9 | (15 | ) | (7 | ) | (34 | ) | (23 | ) | (53 | ) | (20 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Premiums Earned |
280 | 278 | 405 | 411 | 270 | 259 | 350 | 351 | 1,305 | 1,299 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Losses Paid |
130 | 143 | 258 | 263 | 133 | 136 | 207 | 227 | 728 | 769 | ||||||||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
23 | 12 | (29 | ) | 7 | 29 | 24 | 62 | (55 | ) | 85 | (12 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Losses Incurred |
153 | 155 | 229 | 270 | 162 | 160 | 269 | 172 | 813 | 757 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Expenses Incurred |
105 | 107 | 116 | 117 | 61 | 59 | 129 | 127 | 411 | 410 | ||||||||||||||||||||||||||||||
Dividends Incurred |
| | | | 10 | 8 | | | 10 | 8 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Statutory Underwriting Income (Loss) |
$ | 22 | $ | 16 | $ | 60 | $ | 24 | $ | 37 | $ | 32 | $ | (48 | ) | $ | 52 | $ | 71 | $ | 124 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||||||||||||||||||
Loss |
54.7 | % | 55.8 | % | 56.6 | % | 65.7 | % | 62.3 | % | 63.7 | % | 76.9 | % | 49.0 | % | 62.8 | % | 58.6 | % | ||||||||||||||||||||
Expense |
36.8 | 38.6 | 28.7 | 29.1 | 22.2 | 22.9 | 33.6 | 34.0 | 30.5 | 31.3 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Combined |
91.5 | % | 94.4 | % | 85.3 | % | 94.8 | % | 84.5 | % | 86.6 | % | 110.5 | % | 83.0 | % | 93.3 | % | 89.9 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Premiums Written as a % of Total |
8.9 | % | 8.9 | % | 12.5 | % | 13.0 | % | 8.9 | % | 8.6 | % | 11.9 | % | 12.1 | % | 42.2 | % | 42.6 | % |
Page 7 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Professional | Total | |||||||||||||||||||||||
Liability | Surety | Specialty | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net Premiums Written |
$ | 572 | $ | 549 | $ | 83 | $ | 77 | $ | 655 | $ | 626 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
4 | 19 | (3 | ) | | 1 | 19 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
576 | 568 | 80 | 77 | 656 | 645 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
364 | 419 | 9 | 6 | 373 | 425 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
(51 | ) | (71 | ) | (5 | ) | (4 | ) | (56 | ) | (75 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
313 | 348 | 4 | 2 | 317 | 350 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
165 | 168 | 33 | 30 | 198 | 198 | ||||||||||||||||||
Dividends Incurred |
| | 1 | 1 | 1 | 1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income (Loss) |
$ | 98 | $ | 52 | $ | 42 | $ | 44 | $ | 140 | $ | 96 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
54.3 | % | 61.3 | % | 5.1 | % | 2.6 | % | 48.4 | % | 54.3 | % | ||||||||||||
Expense |
28.9 | 30.6 | 40.2 | 39.5 | 30.3 | 31.7 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
83.2 | % | 91.9 | % | 45.3 | % | 42.1 | % | 78.7 | % | 86.0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
17.7 | % | 17.7 | % | 2.6 | % | 2.5 | % | 20.3 | % | 20.2 | % |
Page 8 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Total | Reinsurance | Worldwide | ||||||||||||||||||||||
Insurance | Assumed | Total | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net Premiums Written |
$ | 3,222 | $ | 3,099 | $ | 1 | $ | 1 | $ | 3,223 | $ | 3,100 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
(159 | ) | (105 | ) | | | (159 | ) | (105 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
3,063 | 2,994 | 1 | 1 | 3,064 | 2,995 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
1,749 | 1,711 | 7 | 12 | 1,756 | 1,723 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
43 | (12 | ) | (7 | ) | (17 | ) | 36 | (29 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
1,792 | 1,699 | | (5 | ) | 1,792 | 1,694 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
1,004 | 991 | | | 1,004 | 991 | ||||||||||||||||||
Dividends Incurred |
11 | 9 | | | 11 | 9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income |
$ | 256 | $ | 295 | $ | 1 | $ | 6 | 257 | 301 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Increase in Deferred Acquisition Costs |
21 | 16 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
GAAP Underwriting Income |
$ | 278 | $ | 317 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
58.7 | % | 56.9 | % | * | % | * | % | 58.7 | % | 56.7 | % | ||||||||||||
Expense |
31.3 | 32.1 | * | * | 31.3 | 32.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
90.0 | % | 89.0 | % | * | % | * | % | 90.0 | % | 88.8 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
100.0 | % | 100.0 | % | 0.0 | % | 0.0 | % | 100.0 | % | 100.0 | % |
* | Combined, loss and expense ratios are no longer presented for the Reinsurance Assumed business since it is in runoff. |
Page 9 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE QUARTERS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
United States | Outside the United States |
Worldwide Total |
||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net Premiums Written |
$ | 2,508 | $ | 2,389 | $ | 715 | $ | 711 | $ | 3,223 | $ | 3,100 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
(201 | ) | (153 | ) | 42 | 48 | (159 | ) | (105 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
2,307 | 2,236 | 757 | 759 | 3,064 | 2,995 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
1,352 | 1,314 | 404 | 409 | 1,756 | 1,723 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
62 | (37 | ) | (26 | ) | 8 | 36 | (29 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
1,414 | 1,277 | 378 | 417 | 1,792 | 1,694 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
722 | 708 | 282 | 283 | 1,004 | 991 | ||||||||||||||||||
Dividends Incurred |
11 | 9 | | | 11 | 9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income |
$ | 160 | $ | 242 | $ | 97 | $ | 59 | 257 | 301 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Increase in Deferred Acquisition Costs |
21 | 16 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
GAAP Underwriting Income |
$ | 278 | $ | 317 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
61.6 | % | 57.3 | % | 49.9 | % | 54.9 | % | 58.7 | % | 56.7 | % | ||||||||||||
Expense |
28.9 | 29.7 | 39.4 | 39.8 | 31.3 | 32.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
90.5 | % | 87.0 | % | 89.3 | % | 94.7 | % | 90.0 | % | 88.8 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
77.8 | % | 77.1 | % | 22.2 | % | 22.9 | % | 100.0 | % | 100.0 | % |
Page 10 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Personal Automobile |
Homeowners | Other Personal |
Total Personal |
|||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
Net Premiums Written |
$ | 368 | $ | 371 | $ | 1,358 | $ | 1,304 | $ | 496 | $ | 466 | $ | 2,222 | $ | 2,141 | ||||||||||||||||
Decrease (Increase) in Unearned Premiums |
(11 | ) | (21 | ) | (17 | ) | (18 | ) | (16 | ) | (21 | ) | (44 | ) | (60 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Premiums Earned |
357 | 350 | 1,341 | 1,286 | 480 | 445 | 2,178 | 2,081 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Losses Paid |
230 | 207 | 807 | 790 | 222 | 212 | 1,259 | 1,209 | ||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
11 | 14 | 86 | (131 | ) | 28 | 28 | 125 | (89 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net Losses Incurred |
241 | 221 | 893 | 659 | 250 | 240 | 1,384 | 1,120 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Expenses Incurred |
114 | 117 | 431 | 434 | 202 | 185 | 747 | 736 | ||||||||||||||||||||||||
Dividends Incurred |
| | | | | | | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Statutory Underwriting Income (Loss) |
$ | 2 | $ | 12 | $ | 17 | $ | 193 | $ | 28 | $ | 20 | $ | 47 | $ | 225 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||||||||||
Loss |
67.5 | % | 63.2 | % | 66.6 | % | 51.2 | % | 52.1 | % | 53.9 | % | 63.6 | % | 53.8 | % | ||||||||||||||||
Expense |
31.0 | 31.5 | 31.7 | 33.3 | 40.7 | 39.7 | 33.6 | 34.4 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Combined |
98.5 | % | 94.7 | % | 98.3 | % | 84.5 | % | 92.8 | % | 93.6 | % | 97.2 | % | 88.2 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Premiums Written as a % of Total |
5.9 | % | 6.0 | % | 21.6 | % | 21.2 | % | 7.9 | % | 7.6 | % | 35.4 | % | 34.8 | % |
Page 11 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Commercial | Commercial | |||||||||||||||||||||||||||||||||||||||
Commercial | Commercial | Workers | Property | Total | ||||||||||||||||||||||||||||||||||||
Multiple Peril | Casualty | Compensation | and Marine | Commercial | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||||
Net Premiums Written |
$ | 546 | $ | 549 | $ | 850 | $ | 850 | $ | 595 | $ | 565 | $ | 792 | $ | 795 | $ | 2,783 | $ | 2,759 | ||||||||||||||||||||
Decrease (Increase) in Unearned Premiums |
11 | 8 | (39 | ) | (27 | ) | (57 | ) | (56 | ) | (93 | ) | (77 | ) | (178 | ) | (152 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Premiums Earned |
557 | 557 | 811 | 823 | 538 | 509 | 699 | 718 | 2,605 | 2,607 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Losses Paid |
260 | 296 | 527 | 489 | 269 | 250 | 416 | 523 | 1,472 | 1,558 | ||||||||||||||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
37 | (17 | ) | (44 | ) | 51 | 53 | 73 | 51 | (232 | ) | 97 | (125 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net Losses Incurred |
297 | 279 | 483 | 540 | 322 | 323 | 467 | 291 | 1,569 | 1,433 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Expenses Incurred |
209 | 213 | 237 | 241 | 128 | 121 | 261 | 263 | 835 | 838 | ||||||||||||||||||||||||||||||
Dividends Incurred |
| | | | 19 | 17 | | | 19 | 17 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Statutory Underwriting Income (Loss) |
$ | 51 | $ | 65 | $ | 91 | $ | 42 | $ | 69 | $ | 48 | $ | (29) | $ | 164 | $ | 182 | $ | 319 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||||||||||||||||||
Loss |
53.3 | % | 50.1 | % | 59.5 | % | 65.6 | % | 62.1 | % | 65.6 | % | 66.8 | % | 40.5 | % | 60.7 | % | 55.3 | % | ||||||||||||||||||||
Expense |
38.3 | 38.8 | 27.9 | 28.4 | 22.2 | 22.1 | 33.0 | 33.1 | 30.2 | 30.6 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Combined |
91.6 | % | 88.9 | % | 87.4 | % | 94.0 | % | 84.3 | % | 87.7 | % | 99.8 | % | 73.6 | % | 90.9 | % | 85.9 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Premiums Written as a % of Total |
8.7 | % | 8.9 | % | 13.5 | % | 13.8 | % | 9.5 | % | 9.2 | % | 12.6 | % | 12.9 | % | 44.3 | % | 44.8 | % |
Page 12 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Professional | Total | |||||||||||||||||||||||
Liability | Surety | Specialty | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net Premiums Written |
$ | 1,124 | $ | 1,098 | $ | 155 | $ | 160 | $ | 1,279 | $ | 1,258 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
32 | 54 | (2 | ) | (1 | ) | 30 | 53 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
1,156 | 1,152 | 153 | 159 | 1,309 | 1,311 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
746 | 759 | 52 | 15 | 798 | 774 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
(120 | ) | (50 | ) | 6 | (5 | ) | (114 | ) | (55 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
626 | 709 | 58 | 10 | 684 | 719 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
334 | 336 | 67 | 64 | 401 | 400 | ||||||||||||||||||
Dividends Incurred |
| | 2 | 1 | 2 | 1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income (Loss) |
$ | 196 | $ | 107 | $ | 26 | $ | 84 | $ | 222 | $ | 191 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
54.2 | % | 61.5 | % | 38.4 | % | 6.3 | % | 52.3 | % | 54.9 | % | ||||||||||||
Expense |
29.7 | 30.6 | 43.8 | 40.3 | 31.4 | 31.8 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
83.9 | % | 92.1 | % | 82.2 | % | 46.6 | % | 83.7 | % | 86.7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
17.9 | % | 17.8 | % | 2.4 | % | 2.6 | % | 20.3 | % | 20.4 | % |
Page 13 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
Total Insurance |
Reinsurance Assumed |
Worldwide Total | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net Premiums Written |
$ | 6,284 | $ | 6,158 | $ | 1 | $ | (1) | $ | 6,285 | $ | 6,157 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
(192 | ) | (159 | ) | | 1 | (192 | ) | (158 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Premiums Earned |
6,092 | 5,999 | 1 | | 6,093 | 5,999 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Paid |
3,529 | 3,541 | 21 | 20 | 3,550 | 3,561 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
108 | (269 | ) | (21 | ) | (30 | ) | 87 | (299 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net Losses Incurred |
3,637 | 3,272 | | (10 | ) | 3,637 | 3,262 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Expenses Incurred |
1,983 | 1,974 | | | 1,983 | 1,974 | ||||||||||||||||||
Dividends Incurred |
21 | 18 | | | 21 | 18 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Statutory Underwriting Income |
$ | 451 | $ | 735 | $ | 1 | $ | 10 | 452 | 745 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Increase in Deferred Acquisition Costs |
34 | 57 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
GAAP Underwriting Income |
$ | 486 | $ | 802 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Ratios After Dividends to Policyholders: |
||||||||||||||||||||||||
Loss |
59.9 | % | 54.7 | % | * | % | * | % | 59.9 | % | 54.5 | % | ||||||||||||
Expense |
31.7 | 32.2 | * | * | 31.7 | 32.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Combined |
91.6 | % | 86.9 | % | * | % | * | % | 91.6 | % | 86.7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Premiums Written as a % of Total |
100.0 | % | 100.0 | % | 0.0 | % | 0.0 | % | 100.0 | % | 100.0 | % |
* | Combined, loss and expense ratios are no longer presented for the Reinsurance Assumed business since it is in runoff. |
Page 14 of 17
THE CHUBB CORPORATION - WORLDWIDE
PROPERTY AND CASUALTY UNDERWRITING RESULTS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(DOLLARS IN MILLIONS)
United States | Outside the United States |
Worldwide Total |
||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net Premiums Written |
$ | 4,707 | $ | 4,527 | $ | 1,578 | $ | 1,630 | $ | 6,285 | $ | 6,157 | ||||||||||||
Decrease (Increase) in Unearned Premiums |
(109 | ) | (64 | ) | (83 | ) | (94 | ) | (192 | ) | (158 | ) | ||||||||||||
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Net Premiums Earned |
4,598 | 4,463 | 1,495 | 1,536 | 6,093 | 5,999 | ||||||||||||||||||
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Net Losses Paid |
2,696 | 2,802 | 854 | 759 | 3,550 | 3,561 | ||||||||||||||||||
Increase (Decrease) in Outstanding Losses |
151 | (390 | ) | (64 | ) | 91 | 87 | (299 | ) | |||||||||||||||
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Net Losses Incurred |
2,847 | 2,412 | 790 | 850 | 3,637 | 3,262 | ||||||||||||||||||
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Expenses Incurred |
1,383 | 1,373 | 600 | 601 | 1,983 | 1,974 | ||||||||||||||||||
Dividends Incurred |
21 | 18 | | | 21 | 18 | ||||||||||||||||||
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Statutory Underwriting Income |
$ | 347 | $ | 660 | $ | 105 | $ | 85 | 452 | 745 | ||||||||||||||
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Increase in Deferred Acquisition Costs |
34 | 57 | ||||||||||||||||||||||
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GAAP Underwriting Income |
$ | 486 | $ | 802 | ||||||||||||||||||||
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Ratios After Dividends to Policyholders: |
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Loss |
62.2 | % | 54.3 | % | 52.8 | % | 55.3 | % | 59.9 | % | 54.5 | % | ||||||||||||
Expense |
29.5 | 30.5 | 38.0 | 36.9 | 31.7 | 32.2 | ||||||||||||||||||
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Combined |
91.7 | % | 84.8 | % | 90.8 | % | 92.2 | % | 91.6 | % | 86.7 | % | ||||||||||||
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Premiums Written as a % of Total |
74.9 | % | 73.5 | % | 25.1 | % | 26.5 | % | 100.0 | % | 100.0 | % |
Page 15 of 17
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 tax exempt investment income to total investment income 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) and the ratio of statutory underwriting expenses to premiums written (expense ratio) after reducing both premium amounts by dividends to policyholders.
Page 16 of 17
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 Corporations 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.
Periods Ended June 30 | ||||||||||||||||
Second Quarter | Six Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(dollars in millions) | ||||||||||||||||
Annualized Net Income |
$ | 1,996 | $ | 2,316 | $ | 1,896 | $ | 2,470 | ||||||||
Average Shareholders Equity |
$ | 16,362 | $ | 15,770 | $ | 16,274 | $ | 15,789 | ||||||||
Return on Equity |
12.2 | % | 14.7 | % | 11.7 | % | 15.6 | % | ||||||||
Annualized Operating Income |
$ | 1,672 | $ | 1,852 | $ | 1,584 | $ | 2,058 | ||||||||
Average Shareholders Equity Excluding |
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Unrealized Appreciation or Depreciation |
$ | 14,783 | $ | 14,103 | $ | 14,813 | $ | 14,006 | ||||||||
Operating Return on Equity |
11.3 | % | 13.1 | % | 10.7 | % | 14.7 | % |
Page 17 of 17
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